The ACIT, Central Circle-2,, Surat v. Shri Ramchandra S. Goyal, Vapi

ITA 992/AHD/2007 | 2003-2004
Pronouncement Date: 16-04-2010 | Result: Allowed

Appeal Details

RSA Number 99220514 RSA 2007
Assessee PAN AACFJ3681N
Bench Ahmedabad
Appeal Number ITA 992/AHD/2007
Duration Of Justice 3 year(s) 1 month(s) 9 day(s)
Appellant The ACIT, Central Circle-2,, Surat
Respondent Shri Ramchandra S. Goyal, Vapi
Appeal Type Income Tax Appeal
Pronouncement Date 16-04-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted C
Tribunal Order Date 16-04-2010
Date Of Final Hearing 13-04-2010
Next Hearing Date 13-04-2010
Assessment Year 2003-2004
Appeal Filed On 07-03-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND D. C. AGRAWAL AM) ITA NO.992/AHD/2007 A. Y: 2003-04 THE A. C. I. T CENTRAL CIRCLE-2 ROOM NO.504 AAYAKAR BHAVAN MAJURAGATE VS SHRI RAMCHANDRA S. GOYAL PROP. GAYATRI BUILDERS LIG/1/44/439 NR. GUNJAN CINEMA GIDC VAPI PA NO.AACFJ 3681N (APPELLANT) (RESPONDENT) APPELLANT BY SHRI M. C. PANDIT DR RESPONDENT BY NONE O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-II AHMEDAB AD DATED 29 TH DECEMBER 2006 FOR ASSESSMENT YEAR 2003-04 ON THE F OLLOWING GROUND: 1. THE CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN DIRECTING TO DELETE THE ADDITION OF RS.15 60 000/- MADE BY TH E ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED INCOME ADMITTED AT THE TIME OF SURVEY U(/S. 133A OF THE ACT. 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRE CTING TO DELETE THE ADDITION OF RS.74 280/-- MADE BY THE ASS ESSING OFFICER ON ACCOUNT OF ON-MONEY RECEIPTS. 2. WE HAVE HEARD THE LEARNED DR AND PERUSED THE ORD ERS OF THE AUTHORITIES BELOW. HOWEVER NONE APPEARED ON BEHA LF OF THE ASSESSEE DESPITE SERVICE OF NOTICE THROUGH REGISTERED POST. A/D CARD DULY SERVED ON THE ASSESSEE IS AVAILABLE ON RECORD. THE ASSESSE E IS THEREFORE PROCEEDED EX-PARTE. ITA NO.992/AHD/2007 RAMCHANDRA S. GOYAL 2 3. BRIEFLY FACTS OF THE CASE ARE THAT AO MADE ADDI TION ON ACCOUNT OF UNACCOUNTED INCOME OF RS.19 21 350/- AS AGAINST RS. 2 87 070/- DECLARED BY THE ASSESSEE UNDER THE PROVISIONS OF SE CTION 44AD OF THE IT ACT. IT WAS SEEN THAT IN PARA 3 OF THE ASSESSMENT O RDER THE AO REFERRED TO STATEMENT U/S 133A OF THE IT ACT RECORDED ON 17- 07-2002 WHEREIN THE ASSESSEE HAD ADMITTED RS.15 60 000/- AS ADDITIONAL INCOME. HE HAS REFERRED TO QUESTION NO.11 OF THE STATEMENT WHEREIN THE ASSESSEE HAD AGREED TO UNRECORDED INCOME OF RS.15 60 000/-. IT W AS STATED THAT IN ANOTHER STATEMENT U/S 131 OF THE IT ACT THIS FACT W AS ALSO CONFIRMED. HOWEVER THE ASSESSEE HAD SHOWN INCOME OF RS.2 87 0 70/- ON THE TOTAL RECEIPT OF RS.35 88 350/- WORKED OUT AS UNDER: TOTAL AREA 31937 SQ. FT. NOT SOLD 6319. SQ. FT . SOLD OUT OR ADVA. REC. 25618 SQ. FT. SOLD OUT IN 2002-03 2 FLATS RS. 489000 RECEIPTS DISCLOSURE @RS.75 PER SQ. FT. 19213 50 ADVANCE RECEIVED AGAINST SOME FLATS 1178 000 TOTAL RECEIPTS FOR A. Y. 2003-04 3588350 THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSE E ON THE FOLLOWING REASONS: 1) THE ASSESSEE HAD CONFESSED THE ADDITIONAL INCOME OF ON- MONEY RECEIPTS OF RS.75/- PER SQ. FT. (375-300) ON THE FLATS OF B AND C WING OF SARDAR PATEL MARKET. 2) THIS WAS ADMITTEDLY ADDITIONAL INCOME EARNED I.E . NET OF EXPENSES AS ADMITTED. 3) THE ASSESSEE IN STATEMENT U/S. 131 OF THE IT ACT DATED 9-9- 2002 CONFESSED THE INCOME EARNED AS ABOVE AND AGREE D TO PAY TAX THEREON. ITA NO.992/AHD/2007 RAMCHANDRA S. GOYAL 3 4) THE ASSESSEE HAS SHOWN SALE OF 2 FLATS AND FURTH ER SHOWN RECEIPTS OF ADVANCE AGAINST SALE OF SOME FLATS. THE SE ARE THE RECEIPTS OF A BUILDER AND NOT THAT OF A CONTRACTOR. 5) THE ASSESSEE IS A BUILDER AND NOT A CONTRACTOR C OVERED BY PROVISIONS OF SECTION 44AD OF THE ACT. THE DISCLOSU RE WAS MADE FOR THE ADDITIONAL INCOME EARNED IN RESPECT OF SALE OF 26 FLATS AND IT IS IN THE FORM OF ON MONEY AT THE RATE OF RS.75/- PE R SQ. FEET. RS.375/- PER SQ. FEET WAS STATED TO HAVE BEEN REGUL AR AND ACCOUNTED FOR ON SALE OF FLATS. 6) IT IS STATE BY THE ASSESSEE IN HIS SUBMISSION DA TED 15-2-2005 THAT SURVEY PARTY OF THE DEPARTMENT HAD NOT FOUND A NY OTHER INVESTMENT AND THAT HIS BANK BALANCES WERE AT THE B ARE MINIMUM. THE ASSESSEES REPLY IS NOT FACTUALLY CORRECT THAT THE ASSESSEE HAS OWNERSHIP AND RIGHT TO SELL THE FLATS OF THE B AN D C WING AND AS STATED BY THE ASSESSEE 26 FLATS WERE UNSOLD AS ON T HE DATE OF SURVEY. 7) SURVEY U/S 133A OF THE IT ACT WAS NOT CARRIED O UT ALL PREMISES AND IT IS NOT NECESSARY THAT DEPARTMENT SH OULD BE ABLE TO GET DETAILS OF ALL UNACCOUNTED INVESTMENTS IN SURVE Y OPERATION. IN VIEW OF THE ABOVE THE ON MONEY RECEIPT OF RS. 15 60 000/- WAS ADDED AND FURTHER ON MONEY RECEIPT OF RS.3 61 350/- WAS ALSO ADDED. THUS TOTAL ADDITION OF RS.19 21 350/- WAS MADE. TH E ASSESSEE HAD EXPLAINED BEFORE THE AO THAT REGULAR BOOKS OF ACCOU NT ARE NOT MAINTAINED EXCEPT THE BOOKS OF ACCOUNT IMPOUNDED U/ S 131 OF THE IT ACT. THE BOOKS OF ACCOUNT IMPOUNDED BY THE AO CONTA INED AGREEMENT BETWEEN SARDAR PATEL VEGETABLE MARKET CO-OPERATIVE SOCIETY. IT WAS SUBMITTED THAT THE SAID SOCIETY HAD ORGANIZED A PRO JECT FOR CONSTRUCTION OF SHOPS AND RESIDENTIAL FLATS. THE ASSESSEES TEND ER FOR CONSTRUCTION OF B WING OF THE PROJECT WAS ACCEPTED AND AN AGREEME NT WAS ARRIVED AT WITH THE SOCIETY. THIS AGREEMENT WAS ALSO IMPOUNDED . AS PER THE TERMS & ITA NO.992/AHD/2007 RAMCHANDRA S. GOYAL 4 CONDITIONS OF THE AGREEMENT IN CONSIDERATION OF TH E CONSTRUCTION WORK CARRIED OUT BY THE ASSESSEE THE PROCEEDS REALIZED FROM SALE OF FLATS OF FIRST FLOOR SECOND FLOOR AND THIRD FLOOR WOULD BE TAKEN BY THE ASSESSEE AS CONTRACTOR TOWARDS THE BILL OF CONSTRUCTION AS CONT RACT RECEIPTS. AS THE SOCIETY WAS NOT HAVING LIQUIDITY THE ASSESSEE WAS NOT PAID THE CONTRACT AMOUNT AND WAS ENTITLED TO APPROPRIATE THE SALE PRI CE OF FLATS AS ABOVE TOWARDS BILL. THE ASSESSEE WAS REQUIRED TO PROVIDE AMENITIES AS PER AGREEMENT INCLUDING COMPOUND WALL ELECTRICITY AND DRAINAGE CONNECTION ETC. IT WAS EXPLAINED THAT THE ASSESSEE WAS A CONTR ACTOR AND NOT BUILDER. THE AO WAS THEREFORE NOT JUSTIFIED IN CONCLUDING T HAT THE ASSESSEE WAS A BUILDER AND NOT A CONTRACTOR AND HENCE WAS NOT ELIG IBLE TO DECLARE INCOME U/S 44AD OF THE IT ACT. IT WAS SUBMITTED THAT IN TH E SIMILAR CIRCUMSTANCES FOR ASSESSMENT YEAR 2002-03 THE ASSES SEE WAS TREATED AS CONTRACTOR AND IT WAS HELD THAT RETURN FILED BY APP LYING PROVISIONS OF SECTION 44AD WAS TO BE ACCEPTED. THE LEARNED CIT(A) CONSIDERING THE EXPLANATION OF THE ASSESSEE DELETED THE ENTIRE ADDI TION. HIS FINDING IN PARA 4.1 ARE REPRODUCED AS UNDER: 4.1 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. AS CAN BE SEEN FROM P AGE 3 OF THE ASSESSMENT ORDER THE APPELLANT HAS OFFERED INCO ME OF RS.2 87 070/- @8% ON TOTAL GROSS RECEIPT OF RS.35 8 8 350/-. THIS RECEIPT INCLUDES RS.19 21 350/- ON ACCOUNT OF DISCLOSURE @ RS.75/- PER SQ. FT. IT IS ACCEPTED FACT THAT THIS AMOUNT INCLUDES RS.15 60 000/- ADMITTED AS UNACCOUNTED REC EIPTS U/S. 133A OF THE IT ACT. THIS IS ALSO CONFIRMED BY COMPUTATION ON PAGE 6 OF THE ASSESSMENT ORDER. HOWEVER THIS RE PRESENTS GROSS RECEIPTS. THE APPELLANT BEING A CONTRACTOR HE HAS TO INCUR EXPENSES FOR EARNING SUCH RECEIPTS. AS PER TH E AGREEMENT ALSO APPELLANT HAS TO PROVIDE VARIOUS FAC ILITIES WHICH REQUIRES INCURRING OF EXPENSES. HENCE APPELL ANT WAS JUSTIFIED IN DISCLOSING THE INCOME @8% OF SUCH GROS S RECEIPTS KEEPING IN VIEW SEC. 44AD. TAXING OF INCOME U/S. 44 AD OF THE IT ACT WAS UPHELD BY MY PREDECESSOR FOR ASSESSMENT 2002- 03 BEARING APPEAL NO. CIT(A)-II/CC.2/80/05-06 DATED 09.08.2005. THIS ISSUE IS NOT CHALLENGED BY DEPARTM ENT IN APPEAL BEFORE ITAT. KEEPING IN VIEW ABOVE FACTS I HOLD THAT ITA NO.992/AHD/2007 RAMCHANDRA S. GOYAL 5 ADDITION OF RS.19 21 350/- MADE THE AO INSTEAD OF I NCOME OF RS.2 87 070/- DECLARED BY THE APPELLANT IS NOT JUST IFIED. SUCH ADDITION IS DELETED. 4. THE LEARNED DR RELIED UPON THE ORDER OF THE AO A ND SUBMITTED THAT THE AO WAS JUSTIFIED IN MAKING THE ADDITION ON THE BASIS OF ADDITIONAL INCOME SURRENDERED BY THE ASSESSEE IN HIS VOLUNTARY STATEMENT. THE LEARNED DR SUBMITTED THAT THE LEARNED CIT(A) WRONGL Y TAKEN THE ADDITIONAL INCOME AS RECEIPTS OF THE ASSESSEE. THE LEARNED DR SUBMITTED THAT THE FACTS HAVE NOT BEEN CLEARLY DISCUSSED BY T HE LEARNED CIT(A). THEREFORE HIS ORDER MAY BE REVERSED. 5. WE HAVE CONSIDERED THE SUBMISSION OF THE LEARNED DR AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. IT IS UNDISP UTED FACT THAT SURVEY WAS CARRIED OUT IN THE PREMISES OF THE ASSESSEE ON 17-07-2002 RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL I.E. 2003-04. D URING THE COURSE OF SURVEY THE STATEMENT OF THE ASSESSEE WAS RECORDED A ND HE HAS ADMITTED AMOUNT OF RS.15 60 000/- AS HIS ADDITIONAL INCOME H AVING EARNED ON SALE OF FLATS OF B AND C WING OF SARDAR PATEL M ARKET @ RS. 75/- PER SQ. FT. IN THE YEAR UNDER CONSIDERATION. THE AO HAS REF ERRED TO QUESTION NO.11 AND ANSWER OF SUCH STATEMENT AT PAGE 2 OF THE ASSESSMENT ORDER WHICH CLEARLY REVEAL THAT THE ASSESSEE HAS ADMITTED ADDITIONAL UNDISCLOSED INCOME ON ACCOUNT OF ON MONEY RECEIVED IN A SUM OF RS.15 60 000/- AND ALSO AGREED TO PAY TAX THEREON W ITHIN ONE MONTH. THE ASSESSEE HAS THUS ADMITTED UNACCOUNTED INCOME O F RS.15 60 000/-. THE LEARNED CIT(A) HOWEVER CONFUSED HIMSELF BY THE ABOVE STATEMENT AND TAKEN THE AMOUNT OF RS.15 60 000/- BEING PART O F THE TOTAL AMOUNT OF RS.19 21 350/- AS RECEIPTS. MAY BE THE ADDITION AL AMOUNT OF RS.15 60 000/- WAS ALSO SHOWN AS PART OF THE TOTAL RECEIPTS BUT THE ASSESSEE HAS NOWHERE EXPLAINED THAT ANY ADDITIONAL EXPENDITURE WAS INCURRED BY THE ASSESSEE FOR EARNING UNDISCLOSED IN COME OF RS.15 60 000/-. THE STATEMENT OF THE ASSESSEE WAS V ERY SPECIFIC AND ITA NO.992/AHD/2007 RAMCHANDRA S. GOYAL 6 CLEAR TO HAVE ADMITTED ADDITIONAL UNACCOUNTED INCOM E OF RS.15 60 000/- AND THUS IT CANNOT BE TREATED AS TOTAL RECEIPT OF T HE ASSESSEE FOR THE PURPOSE OF APPLYING THE NET PROFIT RATE OF 8% IN OR DER TO COMPUTE INCOME U/S 44AD OF THE IT ACT. THE ASSESSEE ALSO DID NOT D ISPUTE VOLUNTARY STATEMENT BEFORE THE LEARNED CIT(A) BUT HAS CLAIMED THAT RS.15 60 000/- WAS NOT INCOME BUT WAS PART OF THE TOTAL RECEIPTS. HOWEVER THE FACT REMAINED THAT THE ASSESSEE ADMITTED RECEIPT OF UNAC COUNTED ON MONEY OF RS.15 60 000/- IN HIS STATEMENT AND AGREED TO PAY T AX THEREON. IT IS THEREFORE CLEAR THAT THE ASSESSEE ADMITTED UNACCOU NTED INCOME OF RS.15 60 000/- IN HIS STATEMENT. THE ADMISSION IS A GOOD EVIDENCE UNLESS THE ASSESSEE PROVES OTHERWISE AND ADDITION C AN BE MADE ON SUCH STATEMENT. WE MAY REFER TO THE FOLLOWING DECISIONS : (1) MANHARLAL KASTURCHAND CHOKSHI VS ACIT 61 ITD 55 (AHD) - IN WHICH IT WAS HELD THAT IN THE ABSENCE OF ANY EV IDENCE TO SHOW THAT THE ASSESSEE HAD MADE DISCLOSURE UNDER DURESS PRESSURE AND COERCION RETRACTION AFTER A LAPSE OF OVER TWO MONT HS WAS AN AFTERTHOUGHT. ADDITION JUSTIFIED. (2) V. KUNHAMBU AND SONS VS CIT 219 ITR 235 (KER.) IN WHICH HONBLE KERALA HIGH COURT HELD THAT WHEN VOLUNTARY STATEMENT OF PERSON REGARDING SUPPRESSION OF STOCK IS NIL ASSES SMENT ON THE BASIS OF VOLUNTARY STATEMENT WAS VALID. (3) ITO VS BIPIN FARASKHANA 73 ITD 334 (AHD) IN W HICH IT WAS HELD THAT THE SWORN TESTIMONY RECORDED U/S 132(4) W HICH WAS FULLY CORROBORATED BY DOCUMENTS AND RECORDS FOUND AT THE BUSINESS PREMISES ADDITION JUSTIFIED ON THE BASIS OF STATEM ENT RECORDED U/S 132(4) OF THE IT ACT. (4) HIRALAL MAGANLAL & CO. VS DCIT 96 ITD 113( MUM) IN WHICH IT WAS HELD THAT THE ASSESSEE HAVING MADE OF VOLUNTARY ITA NO.992/AHD/2007 RAMCHANDRA S. GOYAL 7 DECLARATION ON OATH AND INDUCED DEPARTMENTAL AUTHOR ITIES TO ACT UPON SAME AT THE TIME OF SEARCH CANNOT BE PERMITTE D TO TURN AROUND LATER ON AND DENY TRUTH OF THE SAID DECLARAT ION OR REPRESENTATION MADE THEREIN. (5) CARPENTERS CLASSICS (EXIM) PVT. LTD. VS DCIT 29 9 IYR (AT) 124 (BANGALORE) IN WHICH IT WAS HELD THAT RETRACTIO N OF ADMISSION AFTER THREE MONTHS. NO MATERIAL WOULD SUPPORT RETRA CTION. ASSESSMENT OF UNDISCLOSED INCOME JUSTIFIED. 6. THE ASSESSEE HAS NEVER RETRACTED FROM HIS STATEMENT AND HAS ALSO NOT WITHDRAWN HIS STATEMENT. THE ASSESSEE HAS ALSO NOT PROVED THAT HIS STATEMENT WAS NOT VOLUNTARY AND WHETHER HIS ADMISSI ON WAS INCORRECT OR IT IS NOT CORRECT STATE OF AFFAIRS. IN THE ABSENCE OF ANY OF THE ABOVE FACTS IT IS CLEAR THAT ASSESSEE NEVER DISPUTED HIS STATEMENT BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) WAS THEREFORE NOT JUST IFIED IN APPLYING NET PROFIT RATE OF 8% OF THE GROSS RECEIPTS FOR THE PUR POSE OF COMPUTING INCOME OF THE ASSESSEE AS SHOWN BY THE ASSESSEE IN THE COMPUTATION OF INCOME U/S 44AD OF THE IT ACT. THE DATE OF SURVEY I S 17-07-2002 WHICH FALLS IN THE ASSESSMENT YEAR IN QUESTION. NO FACT H AS BEEN BROUGHT ON RECORD AS TO HOW THE FACTS OF THE PRECEDING ASSESSM ENT YEAR 2002-03 ARE THE SAME BECAUSE THERE WAS NO SURVEY CONDUCTED IN T HE EARLIER ASSESSMENT YEAR. MAY BE IN THE ASSESSMENT YEAR 2002 -03 ASSESSEES STATUS HAD BEEN CONSIDERED AS A CONTRACTOR FOR THE PURPOSE OF COMPUTING INCOME U/S 44AD OF THE IT ACT WOULD NOT PROVE THAT NET PROFIT RATE OF 8% AS PER SECTION 44AD OF THE ACT WOULD BE APPLIED AGA INST UNDISCLOSED INCOME OF RS.15 60 000/-. THE FINDING GIVEN IN THE EARLIER YEAR AS PER ORDER OF THE LEARNED CIT(A) THUS WOULD NOT BE RELEV ANT TO THE MATTER IN ISSUE. IT IS WELL SETTLED LAW THAT TO PERPETUATE AN ERROR IS NOT HEROISM. TO RECTIFY IT IS A COMPULSION OF JUDICIAL CONSCIENCE. THE LEARNED CIT(A) WITHOUT CONSIDERING THE ISSUE IN PROPER PERSPECTIVE FOLLOWE D THE ORDER FOR THE ITA NO.992/AHD/2007 RAMCHANDRA S. GOYAL 8 PRECEDING ASSESSMENT YEAR AND DELETED THE ENTIRE AD DITION. THE LEARNED CIT(A) HAS THUS NOT PASSED SPEAKING ORDER WHILE DIS POSING OF THE APPEAL OF THE ASSESSEE. THE LEARNED CIT(A) HAS ALSO NOT CO NSIDERED THE OBJECTIONS OF THE AO WHILE ALLOWING THE APPEAL OF T HE ASSESSEE. CONSIDERING THE ABOVE DISCUSSIONS WE ARE OF THE VI EW THAT THE MATTER REQUIRES RE-CONSIDERATION BY THE LEARNED CIT(A). WE ACCORDINGLY SET ASIDE THE ORDER OF THE ORDER OF THE LEARNED CIT(A) AND RE STORE THIS ISSUE TO THE HIS FILE WITH DIRECTION TO RE-DECIDE THIS ISSUE IN THE LIGHT OF THE ADMISSION MADE BY THE ASSESSEE DURING THE COURSE OF SURVEY AN D IN THE LIGHT OF THE OBJECTIONS TAKEN BY THE AO. THE LEARNED CIT(A) SHAL L RE-DECIDE THIS ISSUE BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. 7. AS A RESULT APPEAL OF THE REVENUE IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16-04-2010. SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 16 - 04-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR ITAT AHMEDABAD