M/s. Medha Real Estate (P) Ltd., Siliguri v. DCIT, Circle - 3, Siliguri, Siliguri

ITA 768/KOL/2010 | 2003-2004
Pronouncement Date: 30-04-2014

Appeal Details

RSA Number 76823514 RSA 2010
Assessee PAN AADCM1435H
Bench Kolkata
Appeal Number ITA 768/KOL/2010
Duration Of Justice 4 year(s) 14 day(s)
Appellant M/s. Medha Real Estate (P) Ltd., Siliguri
Respondent DCIT, Circle - 3, Siliguri, Siliguri
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2014
Appeal Filed By Assessee
Bench Allotted C
Tribunal Order Date 30-04-2014
Date Of Final Hearing 30-04-2013
Next Hearing Date 30-04-2013
Assessment Year 2003-2004
Appeal Filed On 16-04-2010
Judgment Text
C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE /AND ! ) [BEFORE SHRI MAHAVIR SINGH JM & SHRI SHAMIM YAHYA AM] ' / I.T.A NOS.767 TO 769/KOL/2010 #$ %&/ ASSESSMENT YEARS: 2002-03 TO 2004-05 M/S. MEDHA REAL ESTATE PVT. LTD. VS. DEPUTY COMM ISSIONER OF INCOME-TAX (PAN: AADCM1435H) CIRCLE-3 SILIGURI (() /APPELLANT ) (*+()/ RESPONDENT ) DATE OF HEARING: 01.04.2014 DATE OF PRONOUNCEMENT: 30.04.2014 FOR THE ASSESSEE: SHRI S. K. TULSIYAN ADVOCATE FOR THE REVENUE : SHRI A. K. SINGH CIT DR / ORDER PER SHRI MAHAVIR SINGH JM : ALL THESE APPEALS BY ASSESSEE ARE ARISING OUT OF CO MMON ORDER OF CIT(A) SILIGURI IN APPEAL NOS. 142 143 144 145 146/CIT(A)/SLG/07-0 8 DATED 15.02.2010. ASSESSMENTS WERE FRAMED BY DCIT CIRCLE-3 SILIGURI U/S. 143(3) OF T HE INCOME-TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEARS 2002 -03 TO 2004-05 VIDE HIS SEPARATE ORDERS ALL DATED 28.12.2007. 2. THE ONLY ISSUE IN ALL THESE THREE APPEALS OF ASS ESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITIONS MADE BY AO ON ACCOUNT OF R ECEIPTS BEING IN THE NATURE OF ADVANCES WHICH WAS ULTIMATELY CONVERTED INTO SALES. FOR THIS ASSESSEE HAS RAISED FOLLOWING GROUNDS IN ITA NO. 767/K/2010 FOR AY 2002-03: 1. THAT THE ORDER OF THE AO & LD. CIT(A) MAKING A ND CONFIRMING THE FOLLOWING ADDITIONS ARE BAD IN LAW. ADDITION OF RS. 2 62 000/-. ADDITION OF RS. 4 92 000/-. 2. ADMITTEDLY THE IMPUGNED DOCUMENTS AND BOOKS OF ACCOUNTS WERE FOUND IN COURSE OF SEARCH OF SHRI BABLU BHATTACHARJEE WHO FILED SETTLE MENT APPLICATION AND ADMITTED THAT THE IMPUGNED ENTRIES DO NOT PERTAIN TO APPELLANT AN D/OR REPRESENTS CANCELLED TRANSACTIONS. 3. THAT ADMITTEDLY THE AOS ADDITION OF THE IMPUGN ED AMOUNTS AND THE LD. CIT(A)S CONFIRMATION INSPITE OF THE RECEIPTS BEING IN THE N ATURE OF ADVANCE WAS IMPROPER IN AS 2 ITA NO. 767/TO 769/K/2010 M/S. MEDHA REAL ESTATE P. LTD. AY 2002-03 TO 2004- 05 MUCH AS IN ORDER TO ASSESS THE ADVANCE AS INCOME I T HAS TO BE CONVERTED INTO SALE. 4. THAT WITHOUT PREJUDICE TO FOREGOING GROUNDS EVEN IF T IS ASSUMED THAT THE IMPUGNED RECEIPTS NEEDS TO BE BROUGHT TO TAX IN THE HANDS OF APPELLANT ONLY THE PROFIT ELEMENT I. E. NOT MORE THAN 8% CAN BE SO ASSESSED IN THE HANDS OF THE APPELLANT. IN ITA NOS. 768/K/2010 & 769/K/2010 FOR AY 2003-04 & 2004-05 EXACTLY THE SAME ARE THE GROUNDS EXCEPT THE QUANTUM. HENCE WE WILL DECIDE THE ISSUE ON THE BASIS OF FACTS AVAILABLE IN AY 2002-03. 3. BRIEFLY STATED FACTS ARE THAT A SEARCH AND SEIZURE OPERATION U/S. 132 OF THE ACT WAS CARRIED OUT ON THE BUSINESS AND RESIDENTIAL PREMISE S OF BHATTACHARJEE GROUP ON 09.08.2005. DURING THE COURSE OF SEARCH BOOKS OF ACCOUNT OTHER DOCUMENTS AND ASSETS WERE SEIZED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S. 153A OF T HE ACT THE AO FOUND FROM THE SEIZED BOOKS OF ACCOUNT/DOCUMENTS THAT THE ABOVE-NOTED AMOUNTS I .E. THE AMOUNT OF RS.15 65 000/- AND RS.2 62 000/- WERE RECORDED IN SEIZED DOCUMENTS BB- 22 AND BBR-34 39 40 AND 50. HOWEVER THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THIS ADDITION IS MADE IN THE CASE OF THE ASSESSEE ON PROTECTIVE BASIS AND SUBSTANTIVE ADDITION WILL BE MADE IN THE HANDS OF ONE BABLU BHATTACHARJEE. THE AO HAS COMPLETELY BROUGHT OUT THE DETAILS OF RECEIPTS IN HIS ASSESSMENT ORDER. IN THIS REGARD SHRI BABLU BHATT ACHARJEE DIRECTOR OF THE ASSESSEE COMPANY STATED THAT THE PROJECTS OF TITAS APARTMENT PULIN MADAK SITE PULIN MADAK SITE (SECOND PART) AND MILAN PALLY SITE BELONGED TO ONE FIRM M/S. BAB LU BHATTACHARJEE AND NOT TO THE ASSESSEE. THIS FACT WAS AGAIN CONFIRMED BY M/S. BABLU BHATTAC HARJEE THE FIRM VIDE ITS LETTER DATED 10.12.2007. THE ASSESSEE BEFORE THE AO AS WELL AS BEFORE CIT(A) CONTENDED THAT RECEIPTS OF BOTH THE GROUP COMPANIES AND INDIVIDUAL BUSINESS CO NCERN I.E. M/S. MEDHA REAL ESTATE PVT. LTD. THE ASSESSEE AND THE FIRM M/S. BABLU BHATTACH ARJEE ARE RECORDED. IT WAS EXPLAINED THAT M/S. BABLU BHATTACHARJEE WAS IN THE SAME LINE OF BU SINESS AS INDIVIDUAL CAPACITY UNDER THE NAME AND STYLE OF M/S. BABLU BHATTACHARJEE. IT WAS CONTENDED THAT THE RECEIPTS OF SITE OF M/S. BABLU BHATTACHARJEE NAMELY PROJECT SITE OF (I) TIT AS APARTMENT II) PULIN MADAK SITE (III) PULIN MADAK SITE (SECOND PART) BELONGED TO THE FIRM M/S. BABLU BHATTACHJEE EXCLUSIVELY. EVEN OTHERWISE LD. COUNSEL FOR THE ASSESSEE BEFORE THE AO AS WELL AS BEFORE CIT(A) CONTENDED THAT THESE ARE TRADE ADVANCES AND CANNOT BE MADE ADDITIO N. BUT THE AO AS WELL AS CIT(A) HAS NOT ACCEPTED THE PLEA OF THE ASSESSEE AND CIT(A) FINALL Y CONFIRMED THE CONDITIONS BY OBSERVING AS UNDER: 3 ITA NO. 767/TO 769/K/2010 M/S. MEDHA REAL ESTATE P. LTD. AY 2002-03 TO 2004- 05 IN RESPECT OF AY 2002-03 AFTER VERIFICATION AND C ROSS VERIFICATION THE FOLLOWING AMOUNTS WERE FOUND TO BE UNDISCLOSED OUT OF TOTAL ADDITION OF RS.15 65 000/-. THE LD. AR HAS ALSO AGREED WITH THIS FACT. ORIGINAL S N OF SUBMISSION PAGE NO. NAME OF PERSONS AMOUNT INVOLVED 1 16 DEBASIS DAM 90 000/- 2 TO 5 17 ALPANA GHOSH 1 02 000/- 15 21 DIPALI SENGUPTA 40 000/- 22 TO 28 37 S S ROY & N ROY 2 20 000/- 29 39 B B THAPA TOTAL 40 000/- 4 92 000/- IN RESPECT OF ADDITION OF RS.2 62 000/- (A Y 2002-0 3) IN COURSE OF VERIFICATION THE LD AO FOUND THAT OUT OF THE FOLLOWING ENTRIES ONLY ENTRY IN RESPECT OF S. CHAKRABORTY OF RS.40 000/- FOUND RECORDED IN THE BOOKS OF M/S BABL U BHATTACHARJEE WHILE THE REST PERTAIN TO THE ASSESSEE AS THEY DO NOT FIGURE IN TH E RECORDS OF M/S BABLU BHATTACHARJEE. THE SAME ARE ALSO FOUND NOT RECORDED IN THE BOOKS O F THE ASSESSEE. NAME OF THE PARTY AMOUNT S. MITRA RS.37 000/- MITRA & DEY RS.75 000/- B. K.SINGH RS.10 000/- S. CHAKRABORTY RS.40 000/- SHELLY BHATTACHARJEE RS.1 00 000/- IN VIEW OF THE ABOVE FACT BOTH THE AMOUNTS OF RS.4 92 000/- AND RS.2 22 000/- ARE HELD TO BE UNACCOUNTED RECEIPTS OF THE ASSESSEE. SIMILARLY FOR AY 2003-04 AND 2004-05 CONFIRMED THE ADDITION BY OBSERVING AS UNDER: SIMILARLY IN CASE OF AY 2003-04 THE AO FOUND AN AMOUNT OF RS.25 000/- SHOWN IN THE NAME OF SRI GOPAL S SARKAR OUT OF RS. L 15 000/- AN D RS.21 10 50L/- HAVE NOT BEEN RECORDED IN THE BOOKS OF A/CS OF THE ASSESSEE. IN C ASE OF AY 2004-05 RS.4 13 500/- WAS NOT FOUND RECORDED IN THE BOOKS OF THE ASSESSEE COM PANY. THE LD AR HAS NOT DISPUTED THIS FACT. IN VIEW OF THE ABOVE FACT THIS THREE RECEIPT S ARE HELD TO BE UNACCOUNTED RECEIPTS OF THE ASSESSEE IN THE RESPECTIVE YEARS. SO FAR AS THE LD ARS CONTENTION THAT ONLY THE G P RATE MAY BE ADDED OF THE UNACCOUNTED RECEIPTS AS UNDISCLOSED INCOME OF THE ASSESSEE COMP ANY AND NOT THE SUM TOTAL OF SUCH UNACCOUNTED RECEIPTS IS NOT ACCEPTABLE ARGUMENT AN D THE SAME IS REJECTED ON ACCOUNT OF THE FOLLOWING REASONS: THAT THE ASSESSEE HAS ALREADY PREPARED ITS BOOKS OF ACCOUNT WHICH ARE DULY AUDITED AS WELL WITHOUT TAKING INTO ACCOUNT THE SAID RECEIPTS WHICH MEANS THAT ALL EXPENSES HAVE DULY BEEN ACCOUNTED FOR. . THAT IT IS A KNOWN FACT THAT IN THE BUSINESS OF R EAL ESTATE CERTAIN PORTION OF THE SALE PROCEEDS ARE RECEIVED IN THE FORM OF CASH WHICH IS NOT ACCOUNTED FOR IN THE BOOKS. IN CASE OF THE ASSESSEE SAME FACT IS ALSO ESTABLISHED. THE CONCEPT OF GROSS PROFIT HOLDS RELEVANCE IN TH E CASE OF TRADING BUSINESS WHERE FOR EVERY UNDISCLOSED SALES THERE MUST BE AN ELEMENT OF UNDISCLOSED PURCHASE. HOWEVER IN THE 4 ITA NO. 767/TO 769/K/2010 M/S. MEDHA REAL ESTATE P. LTD. AY 2002-03 TO 2004- 05 CASE OF REAL ESTATE BUSINESS THE SAME LOGIC CANNOT BE APPLIED BECAUSE IT IS NOT ALWAYS NECESSARY THAT THERE MUST BE AN EXPENDITURE AGAINST EVERY SUCH RECEIPT. IN VIEW OF THE ABOVE DISCUSSION THE ADDITIONS MADE ON ACCOUNT OF UNDISCLOSED RECEIPTS AR HERBY CONFIRMED TO THE EXTENT AS STATED BELOW: A Y AMOUNT (IN RS) 2001-02 RS. 20 000/- 2002-03 RS. 4 92 000/- AND RS. 2 22000/- 2003-04 RS. 25 000/- AND RS. 21 10 501/- 2004-05 RS.4 13 500/- AGGRIEVED IN ALL THE THREE YEARS ASSESSEE IS IN APP EAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. FIRST OF ALL IT IS SEEN THAT THE ASSESSEE HAS FILE D COPY OF INCOME TAX SETTLEMENT ORDER VIDE ENDORSEMENT NO. WB/SLG/2007-08/17/IT/695-701 DATED 05.12.2008 IN THE CASE OF SHRI BABLU BHATTACHARJEE WHEREBY HE HAS DECLARED ADDITIONAL IN COMES IN AYS 2002-03 2003-04 AND 2004- 05 AND THE RELEVANT DECLARATION ACCEPTED BY SETTLEM ENT COMMISSION READS AS UNDER: ASSESSMENT YEAR ADDL. AMOUNT OF INCOME INCOME RET URNED TOTAL INCOME DISCLOSED BEFORE ITSC TO BE ASSESSED 2002-03 40 00 000 3 78 100 43 78 100 2003-04 1 50 000 2 49 920 3 99 920 2004-05 2 88 660 2 88 660 APART FROM THIS LD. COUNSEL FOR THE ASSESSEE STATE D THAT ONCE THESE ARE HELD TO BE TRADING ADVANCES THIS CANNOT BE SUBJECT MATTER OF ADDITION. HE RELIED ON THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF SOUTH CALCUTTA PROMOTERS (PVT. ) LTD. VS. ITO ITA NOS. 2216 & 2217/K/2003 DATED 02.07.2004 WHEREIN TRIBUNAL HAS O BSERVED AS UNDER: 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THERE IS NO DISPUTE THAT THE AMOUNT RECEIVED DURING THE RELEVANT PERIOD BY THE ASSESSEE WAS IN THE NATURE OF ADVANCE. THE AMOUNT RECEIVED PER CHEQUE B Y THE ASSESSEE WAS SHOWN IN THE LIABILITY SIDE OF THE AUDITED BALANCE SHEET FILED BY THE ASSESSEE. THE A.O. HIMSELF HAS OBSERVED IN THE ASSESSMENT ORDER FOR TH E RELEVANT ASSESSMENT YEAR 1992-93 THAT THE AMOUNT OF RS.37 79 234/- AS PER TH E AUDITED BALANCE SHEET WAS SHOWN AS ADVANCE FROM PARTIES AND NO ADVERSE ACTIO N ON THIS AMOUNT HAS BEEN TAKEN BY THE A.O. WE FIND THAT ALTHOUGH THE ASSESSE E HAS NOT ACCOUNTED FOR THE AMOUNT OF RS.36 17 453/- RECEIVED IN CASH FROM THE PERSPECTIVE BUYERS IN ITS ACCOUNTS BUT IT SHALL NOT CHANGE THE CHARACTERISTI C OF THE AMOUNT RECEIVED BY THE ASSESSEE WHICH REMAINS AN ADVANCE FROM THE PARTIES ONLY. NO FLAT WAS SOLD DURING THE RELEVANT PERIOD. WE FIND THAT THE PAYEES OF THESE AMOUNTS IN CASH WERE NOT EXAMINED BY THE A.O. TO FIND OUT WHETHER T HE AMOUNT REPRESENTS SOME OTHER NATURE AND NOT ADVANCE FROM THE PAYEES FOR TH E PURCHASE OF THE FLATS. IT IS NOT THE OF THE DEPARTMENT THAT THE IDENTITY OF THE PAYEES OF THE ADVANCE MONEY IN CASH OR THE GENUINENESS OF THE TRANSACTION IS NOT P ROVED OR THAT THIS AMOUNT OF RS.36 17 453/- BELONGS TO THE ASSESSEE ITSELF. THE AMOUNT RECEIVED AS ADVANCE MONEY AGAINST THE BOOKING OF FLATS IS NOT ASSESSABL E AS INCOME IN THE HANDS OF THE 5 ITA NO. 767/TO 769/K/2010 M/S. MEDHA REAL ESTATE P. LTD. AY 2002-03 TO 2004- 05 ASSESSEE. THE PROFIT OR LOSS AS THE CASE MAY BE S HALL BE DETERMINED AND IS ASSESSABLE ONLY AS AND WHEN THE FLATS ARE SOLD BY T HE ASSESSEE. THE ASSESSEE HAS STARTED SELLING THE FLATS IN THE ASSESSMENT YEAR 19 94-95 ONLY. IT IS ALSO NOT IN DISPUTE THAT THE ADVANCE MONEY RECEIVED BY THE ASSE SSEE BY WAY OF CHEQUE OR IN CASH WAS DIRECTED TOWARDS THE CONSTRUCTION OF THE F LATS IN QUESTION. FOR THE RELEVANT ASSESSMENT YEAR 1992-93 THE CONSTRUCTION EXPENSES INCURRED BY THE ASSESSEE HAVE TO BE TRANSFERRED TO WORK-IN- PROGRES S ACCOUNT. WE FIND THAT IN FACT THE ASSESSEE HAS ACCOUNTED FOR THE PROFIT ON SALE OF FLATS IN THE ASSESSMENT YEAR 1995-96 AND HAS FILED A CHART OF CALCULATION OF NET PROFIT WHEREIN THE ENTIRE RECEIPTS INCLUDING THE DISPUTED AMOUNT OF RS .36 17 453/- AND THE EXPENSES DECLARED AS WELL AS RECORDED IN THE SEIZED PAPERS W ERE TAKEN INTO ACCOUNT. THE CASE OF C.I.T. VS. TOLLYGUNGE CLUB REPORTED IN 107 ITR 776 ( SC ) AND THE DECISION IN THE CASE OF C.I.T. VS. SITALDAS TARATHD AS REPORTED IN 41 ITR 367 SUPPORT THE ARGUMENT OF THE ASSESSEE. IN THE FACTS OF THE CASE WE HOLD THAT SINCE THE NATURE OF THE AMOUNT RECEIVED N CASH IS ADVANC E MONEY FROM THE PARTIES AND IS NOT INCOME IN THE HANDS OF THE ASSESSEE AND SINC E NO FLAT WAS SOLD DURING THE ACCOUNTING PERIOD RELEVANT TO THE ASSESSMENT YEAR 1 992-93 NO CASE FOR ASSESSING THIS AMOUNT OF RS.36 17 453/- AS INCOME IN THE HAND S OF THE ASSESSEE UNDER SECTION 69A OF THE ACT IS MADE OUT AND ACCORDINGLY THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND THE ADDITION S DELETED AND THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. IN THE PRESENT CASE ALSO IT IS A FACT THAT THE AMOU NT RECEIVED BY ASSESSEE REMAINS ADVANCE AND NOT SALE OF STOCK AS ADDED DURING THESE YEARS. ONC E THIS IS THE POSITION THE ISSUE IS SQUARELY COVERED BY THE DECISION OF CO-ORDINATE BENCH OF THI S INCOME-TAX APPELLATE TRIBUNAL IN THE CASE OF SOUTH CALCUTTA PROMOTERS (PVT.) LTD. (SUPRA). R ESPECTFULLY FOLLOWING THE SAME WE DELETE THE ADDITION MADE BY AO AND CONFIRMED BY CIT(A) IN ALL THE THREE YEARS. APPEALS OF ASSESSEE ARE ALLOWED. 5. IN THE RESULT APPEALS OF ASSESSEE ARE ALLOWED. 6. ORDER IS PRONOUNCED IN THE OPEN COURT ON 30.04.2 014. SD/- SD/- ! (SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30TH APRIL 2014 ./ #01 2 JD.(SR.P.S.) 6 ITA NO. 767/TO 769/K/2010 M/S. MEDHA REAL ESTATE P. LTD. AY 2002-03 TO 2004- 05 3 *4 5 4%6- COPY OF THE ORDER FORWARDED TO: 1 . () / APPELLANT M/S. MEDHA REAL ESTATE (PVR.) LTD. VID YAPITH ROAD DESHBANDHUPARA SILIGURI-734004 (DARJEELING) 2 *+() / RESPONDENT DCIT CIRCLE-3 SILIGURI. 3 . # ( )/ THE CIT(A) SILIGURI 4. 5. # / CIT SILIGURI 4:; *# / DR KOLKATA BENCHES KOLKATA +4 */ TRUE COPY #