DCIT, New Delhi v. M/s. Ridgeview Developers Pvt. Ltd., New Delhi

ITA 5471/DEL/2013 | 2009-2010
Pronouncement Date: 04-04-2014 | Result: Dismissed

Appeal Details

RSA Number 547120114 RSA 2013
Assessee PAN AACCR8019D
Bench Delhi
Appeal Number ITA 5471/DEL/2013
Duration Of Justice 6 month(s)
Appellant DCIT, New Delhi
Respondent M/s. Ridgeview Developers Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 04-04-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 04-04-2014
Assessment Year 2009-2010
Appeal Filed On 04-10-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SH. R. S. SYAL AM AND SH. A. T. VARKEY JM ITA NO. 5471/DEL/2013 : ASS TT. YEAR : 2009-10 DY. COMMISSIONER OF INOCME TAX CENTRAL CIRCLE- 18 ROOM NO. 327 3 RD FLOOR ARA CENTRE E-2 JHANDESWALAN EXTN. NEW DELHI VS M/S RIDGEVIEW DEVELOPERS PVT. LTD. H-69 UGF OUTER CIRCLE CONNAUGHT PLACE NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AACCR8019D ASSESSEE BY : NONE REVENUE BY : SHRI M. B. REDDY DATE OF HEARING : 3.4.2014 DATE OF PRONOUNCEMENT : 4.4.2014 ORDER PER R. S. SYAL AM: THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE CIT(A) ON 26.7.2013 IN RELATION TO THE ASSESSME NT YEAR 2009-10. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE DELETION OF ADDITION OF RS. 40 LAC MADE BY THE A.O ON ACCOUNT O F FORFEITURE OF ADVANCES ON CANCELLATION OF SALE DEED. BRIEFLY STA TED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF DEVELOPMENT OF RESIDENTIAL AND COMMERCIAL COMPLEXES AND OTHER REAL ESTATE BUSINESS. SEARCH AND SEIZURE ACTION WAS TAKEN U/S 132 ITA NO. 5471/DEL/2013 RIDGEVIEW DEVELOPERS PVT. LTD . 2 ON CERTAIN GROUP COMPANIES. THEREAFTER A SURVEY W AS CONDUCTED U/S 133A ON THE ASSESSEE. THE ASSESSEE CLAIMED DEDUCTIO N OF RS. 40 LAC TOWARDS FORFEITURE OF ADVANCE FOR PURCHASE OF PLOT AT GURGAON. IN SUPPORT OF THIS CLAIM THE ASSESSEE STATED THAT IT ENTERED INTO THE AGREEMENT WITH DR. PREM NATH FOR THE PURCHASE OF PL OT MEASURING 446 SQ. MTR. BEARING NO. 1323 SECTOR-46 GURGAON FOR COMMERCIAL DEVELOPMENT. A SUM OF RS. 60 LAC WAS PAID TO THE VE NDOR NAMELY DR. PREM NATH BY MEANS OF THREE CHEQUES OF RS. 20 LAC EACH. AGREEMENT TO SALE DATED 2.2.2009 WAS ENTERED INTO F OR THE TOTAL VALUE OF RS. 2 97 50 000/-. SINCE THERE WAS A RECES SION IN THE REAL ESTATE MARKET AND THE PRICES WERE MOVING DOWN THE ASSESSEE REQUESTED THE VENDOR TO EXTEND TIME FOR EXECUTION O F SALE DEED. DESPITE THE EXTENSION OF TIME THE PRICES CONTINUE D ITS DOWNSLIDE. THE ASSESSEE REALIZED THAT IF THE PROJECT WAS TAKEN UP THERE WOULD BE LOSS. A REQUEST WAS MADE TO THE VENDOR FOR CANCELL ATION OF THE DEAL. THE MATTER WAS FINALLY SETTLED BY WHICH THE DEAL WAS CALLED OFF AND THE ASSESSEE GOT REFUND OF RS. 20 LAC WITH THE REMA INING SUM OF RS. 40 LAC FORFEITED BY THE VENDOR. IT IS THIS SUM OF RS. 40 LAC THAT THE ASSESSEE CLAIMED AS DEDUCTION AS BUSINESS LOSS. THE ASSESSING OFFICER OBSERVED THAT THE ADVANCE WAS GIVEN AFTER T HE DATE OF SURVEY WHICH WAS FORFEITED IMMEDIATELY THEREAFTER. IN HIS OPINION IT WAS A PLOY TO REDUCE THE INCOME OFFERED IN THE COURSE OF SURVEY TO THE EXTENT OF RS. 2 CRORE. HE THEREFORE DID NOT ACCEP T THE GENUINENESS ITA NO. 5471/DEL/2013 RIDGEVIEW DEVELOPERS PVT. LTD . 3 OF THE FORFEITURE OF THE ADVANCE AND MADE THE ADDIT ION OF RS. 40 LAC. THE LD. CIT(A) NOTICED THAT THE VENDOR DID NOT APPE AR TO HAVE BEEN EXAMINED BY THE AO. HE DIRECTED THE AO VIDE HIS LET TER DT. 04.12.2012 A COPY OF WHICH HAS BEEN PLACED ON RECO RD BY THE LD. DR TO SUBMIT COPY OF QUESTIONNAIRE AND ORDER SHEET ENTRIES AS TO WHEN THE ASSESSEE WAS ASKED TO PRODUCE SH. PREM NAT H. IF THE REPLY WAS IN NEGATIVE THEN HE DIRECTED THE AO TO EXAMINE THE VENDOR ABOUT THE VERACITY OF THE SAID TRANSACTION AND SEND THE REQUISITE REPORT ACCORDINGLY. DESPITE THE CIT(A)S ABOVE LETT ER DATED 4.12.2012 THERE WAS NO COMPLIANCE FROM THE SIDE O F THE A.O. IT WAS AGAIN REMINDED BY THE LD. CIT(A)S LETTER DATED 30.1.2012 11.4.2013 AND 29.4.2013. IN THE ABSENCE OF ANY REMA ND REPORT FORTHCOMING FROM THE SIDE OF THE A.O THE LD. CIT(A ) VIDE LETTER DATED 15.5.2013 GAVE LAST OPPORTUNITY TO THE A.O FO R SENDING THE REQUISITE REPORT BY 10.6.2013. SINCE NO REPORT WAS FURNISHED BY THE A.O THE LD. CIT(A) TREATED THE TRANSACTION AS GENU INE AND HENCE ORDERED FOR THE DELETION OF ADDITION BY TREATING IT AS A BUSINESS LOSS. THE REVENUE IS IN APPEAL AGAINST THE GRANTING OF RE LIEF BY THE LD. CIT(A). 3. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVAN T MATERIAL ON RECORD. THERE IS NO APPEARANCE FROM THE SIDE OF THE ASSESSEE DESPITE NOTICE. IT IS SEEN THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF RESIDENTIAL AND COMMERCIAL COMPLEXES AND OTHER ITA NO. 5471/DEL/2013 RIDGEVIEW DEVELOPERS PVT. LTD . 4 REAL ESTATE BUSINESS. UNDOUBTEDLY IT ENTERED INTO AN AGREEMENT WITH DR. PREM NATH FOR THE PURCHASE OF A PLOT IN GURGAON FOR ITS COMMERCIAL DEVELOPMENT. DUE TO RECESSION IN THE MAR KET THE DEAL DID NOT FRUCTIFY AND EVENTUALLY THE ASSESSEE GOT SA TISFIED WITH FORFEITURE OF ADVANCE OF RS. 40 LAC GIVEN TO DR. PR EM NATH. AS THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF RESIDENTIAL AND COMMERCIAL COMPLEXED AND THE ADVANCE WAS GIVEN FOR THE PURCHASE OF A PLOT FOR ITS COMMERCIAL DEVELOPMENT NON-RECOVERY OF SUCH ADVANCE IS OTHERWISE A BUSINESS LOSS. THE FACT OF THE MATTER IS THAT THE ASSESSING OFFICER DID NOT GRANT DEDUCTION FOR THIS SUM OF RS. 40 LAC BY OPINING THAT THE TRANSACTION WITH DR. PREM NATH WAS NOT GENUINE AND THE FORFEITURE OF THE ADVANCE WAS A MECHANISM TO REDUCE THE ADDITIONAL INCOME. SUCH VIEW WAS CANVASS ED BY THE ASSESSING OFFICER WITHOUT EXAMINING DR. PREM NATH. THIS SHOWS THAT IT WAS ONLY ONE-SIDED VIEW OF THE ASSESSING OF FICER IN DISREGARDING THE TRANSACTION WITHOUT ANY COGENT REA SON. WHEN THE LD. CIT(A) REQUESTED THE ASSESSING OFFICER TO EXAMI NE DR. PREM NATH THE A.O AGAIN REPEATEDLY FAILED TO DO THE NEE DFUL IN SUBMITTING THE REMAND REPORT. THE LD. DR HAS FAIRLY PLACED ON RECORD THE LETTER DT. 4.12.2012 WRITTEN BY THE LD. CIT(A) AND THE AOS LETTER DT. 21.1.2013 SEEKING TIME UP TO APRIL 2013 WHICH WAS DULY GRANTED BY THE LD. FIRST APPELLATE AUTHORITY. THERE IS NO SEMBLANCE OF EVIDENCE TO SHOW THAT THE AO EXAMINED DR. PREM ITA NO. 5471/DEL/2013 RIDGEVIEW DEVELOPERS PVT. LTD . 5 NATH EITHER DURING THE COURSE OF ORIGINAL ASSESSMEN T PROCEEDINGS OR THE REMAND PROCEEDINGS. THIS SHOWS THAT THE ASSESSI NG OFFICER COULD NOT MAKE OUT A CASE OF TRANSACTION WITH DR. P REM NATH BEING NON-GENUINE. ONCE THIS TRANSACTION IS HELD TO BE GE NUINE WHICH RESULTED INTO BUSINESS LOSS OF RS. 40 LAC THE SAME HAS NECESSARILY TO BE ALLOWED AS DEDUCTION. WE THEREFORE UPHOLD THE IMPUGNED ORDER ON THIS ISSUE. 4. IN THE RESULT THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4/4/2014. SD/- SD/- (A. T. VARKEY) (R. S. SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 4/4/2014 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR