The ITO,Wrd-5(1),, Ahmedabad v. Nishant Construction Pvt. Ltd., Ahmedabad

ITA 813/AHD/2008 | 2002-2003
Pronouncement Date: 20-08-2010 | Result: Allowed

Appeal Details

RSA Number 81320514 RSA 2008
Bench Ahmedabad
Appeal Number ITA 813/AHD/2008
Duration Of Justice 2 year(s) 5 month(s) 17 day(s)
Appellant The ITO,Wrd-5(1),, Ahmedabad
Respondent Nishant Construction Pvt. Ltd., Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 20-08-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted D
Tribunal Order Date 20-08-2010
Date Of Final Hearing 27-07-2010
Next Hearing Date 27-07-2010
Assessment Year 2002-2003
Appeal Filed On 04-03-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI N.S.SAINI ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH JUDICIAL MEMBER ITA NO.813/AHD/2008 ASSESSMENT YEAR:2002-03 DATE OF HEARING:27.7.10 DRAFTED:16.8.10 INCOME TAX OFFICER WARD-5(1) AHMEDABAD V/S . NISHANT CONSTRUCTION PVT. LTD. 705 B-1 RGENCY PARK KALYAN SOCIETY ELLISBRIDGE AHMEDABAD PAN NO.AAACN3752B (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI SUDHANSHU S JHA DR RESPONDENT BY:- SHRI S.N.SOPARKAR SR-AR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE O RDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-XI AHMEDABAD IN APPEAL NO. CI T(A)-XI/138/07-08 DATED 28- 12-2007. THE ORDER GIVING EFFECT TO THE ORDER OF IT AT BY ITO WARD-5(1) AHMEDABAD WAS PASSED DATED 16-04-2007 FOR ASSESSMENT YEAR 200 2-03. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE ADDITION MADE ON ACCOUNT OF INCOME FRO M CONSTRUCTION ACTIVITY. FOR THIS REVENUE HAS RAISED THE FOLLOWING EFFECTIVE GROUND NO.1 :- 1. THE LD. COMMISSIONER OF INCOME TAX (A)-XI AHME DABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1 21 33 000/- MADE ON ACCOUNT FROM INCOME FROM CONSTRUCTION ACTIVITY. 3. THE BRIEF FACTS ARE THAT ASSESSEE IS A COMPANY R EGISTERED UNDER THE COMPANIES ACT 1956 ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPER AND FILED ITS RETURN OF INCOME ON 25-010-2002 FOR ASSESSMENT YEAR 2002-03 DECLARING TOTAL ITA NO.813/AHD/2008 A.Y.2002-03 ITO WD-5(1) ABD V. NISHANT CONSTRUCTION P. LTD. PAGE 2 INCOME AT NIL. THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT WITHOUT THERE BEING ANY VARIATION TO THE RETURN OF INCOME. THEREAFTER T HE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND ISSUED NOTICE U/S.143(2) OF THE ACT ON 22-10- 2003 AND ASSESSMENT U/S.143(3) COMPLETED AT TOTAL I NCOME OF RS.1 38 46 040/-. ACCORDING TO THE ASSESSEE ORIGINALLY DURING THE R ELEVANT PREVIOUS YEAR THE ASSESSEE HAS SHOWN DEVELOPMENT FEES FROM DEMOCRATIC CO-OP. H OUSING SOCIETY LTD AND THE ASSESSING OFFICER ASSESSEE OUGHT TO HAVE OFFERED 10 % OF THE COST OF CONSTRUCTION INCURRED BY THE SAID SOCIETY RIGHT FROM THE INCEPTI ON TILL 31-03-2002 AS ITS INCOME FOR THE YEAR UNDER CONSIDERATION. FOR THE PURPOSE OF CA LCULATING THE SAID TOTAL COST OF CONSTRUCTION AO ONCE AGAIN GOES BACK TO THE TOTAL DEVELOPMENT CHARGED OFFERED BY THE ASSESSEE AS INCOME OVER THE PERIOD FROM ASSESSM ENT YEARS 1998-99 TO 2002-03 AND GROSSED UP THE SAID TOTAL DEVELOPMENTAL INCOME BY MULTIPLIER OF 10. AFTER CALCULATING THE SAID TOTAL DEVELOPMENTAL CHARGES AT RS.13 48 11 120/- AND AO REDUCES THE DEVELOPMENTAL CHARGES ALREADY OFFERED A S INCOME BY THE ASSESSEE AND ON THE REMAINING AMOUNT ONCE AGAINST CALCULATED NET PROFIT @ 10% AMOUNTING TO RS.1 21 33 000/- AND ADDED THE SAME AS DEEMED INCOM E OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THE ASSESSMENT ORDER WAS FURTHER CHALLENGED INTO APPEAL BEFORE CIT(A) WHO VIDE ORDER DATED 06-12-2005 PART LY ALLOWED THE APPEAL. HOWEVER GROUND RELATING TO ADDITION OF NET INCOME OF RS.`1 21 33 000/- WAS DISMISSED BY CIT(A). THEREUPON THE ASSESSEE CARRIED THE ORDER O F CIT(A) FURTHER INTO APPEAL BEFORE TRIBUNAL WHICH VIDE ORDER DATED 13-100-2006 SET ASIDE THE ORDER OF CIT(A) BACK TO THE FILE OF AO WITH CERTAIN DIRECTIONS. THE TRIBUNAL IN ITA NO.183/AHD/2006 VIDE ORDER DATED 13-10-2006 HAS DIRECTED THE ASSESS ING OFFICER AS UNDER:- 7.WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT T HE ASSESSEE WAS REQUIRED TO FILE THE FOLLOWING EIGHT INFORMATION AS REFERRE D TO IN THE ASSESSMENT ORDER AS UNDER:- 1. COPIES OF PURCHASE DEED OF LAND IN THE NAME OF CO.OP. SOCIETIES. 2. PAN AND INCOME-TAX PARTICULARS OF ALL THE CO.OP. SOCIETIES ALONG WITH THE DESIGNATION OF ASSESSING OFFICER WITH WHOM THESE CO .OP. SOCIETIES ARE FILING THEIR RETURN OF INCOME 3. NAMES AND ADDRESS OF CHAIRMAN SECRETARY AND MEM BERS OF ALL THE CO.OP. SOCIETIES AT THE TIME OF FORMATION OF CO.OP. SOCIET Y. 4. NAMES AND ADDRESS OF THE MEMBERS TO WHOM THE FLA TS HAVE BEEN ALLOTTED OR SOLD BY THE COMPANY FROM THE BEGINNING TO 31/3/2 002. ITA NO.813/AHD/2008 A.Y.2002-03 ITO WD-5(1) ABD V. NISHANT CONSTRUCTION P. LTD. PAGE 3 5. ASSESSMENT YEAR-WISE FULL DETAILS OF RECEIPT OF DEVELOPMENT CHARGES FROM ALL THE COOP. SOCIETIES. 6. THE DETAILS OF VALUE OF CONSTRUCTION WORK CARRIE D OUT BY THE COMPANY FROM BEGINNING TO 31/3/2002 PLEASE ATTACH THE CONSTRUCTI ON ACCOUNT OF EACH HOUSING PROJECT FROM BEGINNING TO TILL DATE. 7. PLEAS FURNISH ALL THE BOOKS OF ACCOUNTS DOCUME NTS VOUCHERS AS MAINTAINED BY THE ASSESSEE COMPANY. 8. ON THE BASIS OF THE AVAILABLE MATERIALS ON RECOR D IT IS CONCLUDED THAT THE ALL THE CO OPERATIVE SOCIETIES HAVE TRANSFERRED ALL THE POWERS AND FUNCTIONS TO THE PROJECT: THEREON FOR THE PURPOSE OF DEVELOPING LAND AND CONSTRUCTED THE HOUSING PROJECTS THEREON. WE FIND THAT THE ASSESSEE HAS NOT PRODUCED ANY EVID ENCE IN RESPECT OF CO- OPERATIVE SOCIETY OR ANY INFORMATION HAS BEEN FIND THAT THE ASSESSING OFFICER HAS DECIDED THE MATTER WITHOUT HEARING THE COOPERAT IVE SOCIETY. WITHOUT HEARING THE SOCIETY AND LOOKING INTO THE MATERIAL A S APPEARING WITH THE SOCIETY IT WAS NOT POSSIBLE TO COME TO THE CONCLUS ION THAT THE SOCIETY WAS SHAM OR BENAMI AND THAT THE ASSESSEE HAS FLOATED T HE SOCIETY AND ALL HE ACTIVITIES WERE CARRIED OUT BY THE ASSESSEE AND THE ASSESSEE COMPANY HAS EARNED THE PROFIT. WE THERFORE REVERSED THE FINDIN G OF THE CIT(A) AND RESTORE THIS MATTER TO THE FILE OF THE AO TO DECIDE THE MAT TER AFRESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. WE DIRE CT THE AO ACCORDINGLY. NEEDLESS TO MENTION THAT IF THE SOCIETIES ARE GENUI NE AND NOT BENAMI OF THE ASSESSEE AND THE TRANSACTIONS ARE AT ARMS LENGT H NO ADDITION WOULD BE CALLED FOR. ON THE CONTRARY IF THEY ARE NOT SO THEN ONLY THE PROFIT ACTUALLY EARNED OF THE RESPECTIVE SOCIETIES CAN BE ADDED IN THE ASSESSMENT OF THE ASSESSEE. 4. PURSUANT TO TRIBUNALS DIRECTIONS THE ASSESSING OFFICER REFRAMED THE IMPUGNED ASSESSMENT ORDER DETERMINING THE SAME TOTA L INCOME WITHOUT GOING INTO THE ASPECT OF BENAMI AND HAS NOT COMPLIED THE DIREC TIONS OF THE TRIBUNAL. AGGRIEVED THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A) WHO DE LETED THE ADDITION BY GIVING FOLLOWING FINDINGS IN PARA-2.2 AND 2.2.1 OF HIS APPELLATE ORDER:- 2.2 I HAVE CAREFULLY CONSIDERED THE FACTS AND CIRC UMSTANCES OF THE CASE. I HAVE ALSO GONE THROUGH THE DECISIONS REFERRED AS A BOVE WHICH ARE RELIED UPON BY THE A.R AND THE OBSERVATIONS OF THE ASSESSI NG OFFICER AND THE SUBMISSIONS OF THE A.R. OF THE APPELLANT. IT IS TO BE MENTIONED THAT THE CONTROVERSY IS VERY LIMITED AFTER THE SPECIFIC DIR ECTIONS BY THE ITAT. IT IS FURTHER TO BE MENTIONED THAT AS PER THE DIRECTIONS OF THE ITAT THE ASSESSING OFFICER HAS TO DETERMINE WHETHER THE CO-OPERATIVE S OCIETY IS GENUINE AND NOT A BENAMI OF THE APPELLANT COMPANY AND THE TRANSACTION S HAVE BEEN ENTERED INTO AT ARMS LENGTH AND SECONDLY IF THE COOPERATIVE SOC IETY IS HELD TO BE NON- GENUINE AND BENAMI OF THE APPELLANT COMPANY THE PR OFIT ACTUALLY EARNED BY THIS SOCIETY IS TO BE ADDED IN THE HANDS OF THE APP ELLANT COMPANY. ITA NO.813/AHD/2008 A.Y.2002-03 ITO WD-5(1) ABD V. NISHANT CONSTRUCTION P. LTD. PAGE 4 2.2.1 ON CAREFUL PERUSAL OF THE ORDER OF THE ASSESS ING OFFICER AS WELL AS ORDER OF ITAT I FIND THAT THE NONE OF THE DIRECTIONS OF THE ITAT HAVE BEEN FOLLOWED BY THE ASSESSING OFFICER. FIRSTLY IN THE ORDER GIV ING EFFECT TO THE ORDER OF THE ITAT I DO NOT FIND ANY DISCUSSION OR FINDING TO E FFECT THAT THE SOCIETIES ARE NOT GENUINE AND BENAMI OF THE APPELLANT. THE SUBMISSION S OF THE APPELLANT THAT THE SOCIETIES HAVE BEEN DULY REGISTERED WITH THE ST ATE GOVERNMENT AND THEREFORE A SEPARATE LEGAL ENTITY HAS NOT BEEN CO NTROVERTED BY THE ASSESSING OFFICER. MOREOVER THE ACCOUNTS OF THE SOCIETY ARE D ULY AUDITED BY THE GOVERNMENT AUDITORS AND THERE ALSO THERE IS NO SUCH ALLEGATION THAT THE SOCIETY IS NOT GENUINE OR BENAMI OF THE APPELLANT C OMPANY. THE FACT THAT THE MEMBERS WHO ORIGINALLY FLOATED THE SOCIETY ARE NOT THE PRESENT MEMBERS AND THE SOCIETY HAS BEEN INCORPORATED AFTER THE INCORPO RATION OF THE APPELLANT COMPANY CANNOT BE TAKEN AS GROUNDS FOR HOLDING THA T THE SOCIETY IS A NON- GENUINE AND/OR BENAMI OF THE APPELLANT. LEGALLY IT IS WELL SETTLED THAT THE BURDEN TO PROVE BENAMI TRANSACTIONS IS ALWAYS SOON THE REVENUE AS HELD BY HONBLE THE SUPREME COURT REPORTED DECISIONS (49 IT R 165 82 ITR 540 & 49 ITR 165). SINCE THERE ARE DIRECTIONS FROM THE HONOU RABLE ITAT THE A.O. SHOULD HAVE ASCERTAINED THE FACTS TO FIND OUT WHETH ER THE SOCIETY IS A BENAMI OR NON-GENUINE. THIS APPEARS HAS NOT BEEN ASCERTAIN ED BY THE ASSESSING OFFICER. I THEREFORE HOLD THAT HAVING FAILED TO PRO VE THAT THE SOCIETY IS A BENAMI OR NON-GENUINE. IT IS NOT OPEN TO THE ASSESSING OFF ICER TO DISTURB THE INCOME OF THE APPELLANT AND THEREFORE AS PER THE CLEAR DIREC TIONS OF THE ITAT NO ADDITION CAN BE MADE. RESULTANTLY THE ADDITION OF RS.1 21 33 000/- MADE IN THE HANDS OF THE APPELLANT IS HEREBY DELETED. THESE GROUNDS ARE THEREFORE ALLOWED. 5. BEFORE US THE LD. SR-COUNSEL FOR THE ASSESSEE S HRI S.N.SOPARKAR STATED THAT THE TRIBUNAL HAS IN NO UNCERTAIN TERMS DIRECTED TH AT IN ANY CASE EVEN IF IT IS HELD THAT THE SOCIETIES ARE NOT GENUINE AND ARE THE BENAMI OF THE ASSESSEE WHAT CAN BE ADDED IS ONLY THE PROFIT ACTUALLY EARNED BY THE RES PECTIVE SOCIETIES. HOWEVER AO HAS ONCE AGAIN ADDED ESTIMATED PROFITS OF THE SOCIETIES IN THE HANDS OF THE ASSESSEE. THIS ACTION OF AO IS COMPLETELY AGAINST THE EXPLICI T DIRECTIONS OF TRIBUNAL WHICH IS NOT PERMISSIBLE UNDER THE LAW. AO HAS GROSSLY IGNORED T HE DIRECTIONS OF TRIBUNAL INASMUCH AS WHAT WOULD HAVE BEEN ADDED THAT TOO A FTER GIVING A FINDING THAT THIS IN COMPLETE DEFIANCE OF THE DIRECTIONS OF TRIBUNAL AND THEREFORE ILLEGAL AND WITHOUT JURISDICTION. 6. ON THE OTHER HAND SR-DR SHRI SUDHANSHU JHA REL IED ON THE ASSESSMENT ORDER AND EVEN STATED THAT THE ASSESSING OFFICER HA S NOT COMPLIED WITH THE DIRECTIONS IN THAT CASE THE MATTER CAN BE REMITTED BACK TO THE FILE OF AO TO COMPLY WITH THE DIRECTIONS OF THE TRIBUNAL. ITA NO.813/AHD/2008 A.Y.2002-03 ITO WD-5(1) ABD V. NISHANT CONSTRUCTION P. LTD. PAGE 5 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE DIRECTI ON OF THE TRIBUNAL AS REPRODUCED ABOVE ARE VERY CLEAR THAT THE ASSESSING OFFICER HAS TO GIVE A FINDING AS REGARDS TO THE FACT THAT THE SOCIETY WAS SHAM OR BENAMI OF THE ASSESSEE. ALTHOUGH THE AO HAS LEVIED SPECIFIC CHARGE OF BENAMI IN RESULT AMOUNT ING TO HOLDING NTC A BENAMI AND ADDING THE INCOME IN THE HANDS OF THE ASSESSEE. THE AO DESPITE SPECIFIC DIRECTIONS FROM THE TRIBUNAL HAS NOT EXAMINED THE ISSUE AS REG ARDS TO CHARGE OF BENAMI. WE ARE AWARE THAT THE CIT(A) HAS NOT POWER TO SET ASID E THE ISSUE AND HE HAS EITHER TO CONFIRM REDUCE ENHANCE OR ANNUL THE ASSESSMENT BU T HE HAS NO POWER TO SET ASIDE. BUT WE FEEL THAT THE DIRECTIONS OF THE TRIBUNAL AR E NOT COMPLIED WITH BY THE ASSESSING OFFICER HE IS AGAIN DIRECTED TO VERIFY T HE CHARGE OF BENAMI AS DIRECTED BY THE TRIBUNAL IN ITS ORDER DATED 30-10-2006 AND DECIDE THE ISSUE ACCORDINGLY. NEEDLESS TO SAY THE AO WILL PROVIDE REASONABLE OPP ORTUNITY OF BEING HEARD TO ASSESSEE. THIS ISSUE OF THE REVENUES APPEAL IS ALL OWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT REVENUES APPEAL IS ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 20/08/2010 SD/- SD/- (N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD DATED : 20/08/2010 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-XI AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD