SURGICAL METAL INDUSTRIES, MUMBAI V. DCIT CIR 15(1), MUMBAI

CO 67/MUM/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 8046 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-10-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 15-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 19-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Search and seizure
• Section: 143(3); 50C; 14A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.4331/MUM/2010 ASSESSMENT YEAR-2007-08 THE DCIT, CIRCLE-15(1), MATRU MANDIR, 1 ST FLOOR, TARDEO ROAD, MUMBAI-400 007 VS. M/S. SURGICAL METAL INDUSTRIES, 7, TALDHWAJ BHAVAN, 3 RD PANJRAPOLE LANE, C.P. TANK, MUMBAI-400 004 PAN - AAAFS 5938H (APPELLANT) (RESPONDENT) C.O. NO. 67/MUM/2011 (ARISING OUT OF ITA NO.4331/MUM/2010) ASSESSMENT YEAR-2007-08 M/S. SURGICAL METAL INDUSTRIES, 7, TALDHWAJ BHAVAN, 3 RD PANJRAPOLE LANE, C.P. TANK, MUMBAI-400 004 PAN-AAAFS 5938H VS. THE DCIT, CIRCLE-15(1), MATRU MANDIR, 1 ST FLOOR, TARDEO ROAD, MUMBAI-400 007 (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY: SHRI PAVAN VED CROSS OBJECTOR BY: SHRI CHETAN KARIA DATE OF HEARING :15.10.2012 DATE OF PRONOUNCEMENT: 17.10.2012 O R D E R PER N.K. BILLAIYA, AM: THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJE CTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE VERY SAME ORDER O F THE LD. CIT(A)-26, MUMBAI DT.26.3.2010 PERTAINING TO ASSESSMENT YEAR 2007-08. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL: ITA NO. 4331/M/2010 C .O. NO. 67/M.2011 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS IN LAW, THE LD. CIT(A) ERRED IN LAW IN HOLDING THAT BO OKS OF ACCOUNTS OF THE ASSESSEE CANNOT BE REJECTED, OVERL OOKING THE FACTS AO HAS BROUGHT SUFFICIENT EVIDENCE ON REC ORD BEFORE REJECTING THE BOOKS OF ACCOUNTS OF THE ASSES SEE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, THE LD. CIT(A) ERRED TO DELETE THE ADDITION ON ACCOUNT OF EXCESS COST OF CONSTRUCTION OF RS. 48,26 ,818/- MADE BY THE AO IGNORING MATERIAL FACTS AVAILABLE ON RECORD. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, THE LD. CIT(A) ERRED TO DELETE THE ADDITION MA DE BY THE AO ON ACCOUNT OF EXTRA SALES OF RS. 7,19,27,176 /- IGNORING THE MATERIAL FACTS AVAILABLE ON RECORD. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, THE LD. CIT(A) ERRED TO DELETE THE ADDITION TO WARDS LTCG ON SALE OF BINDAL GALA OF RS. 5,53,405/- AS VALUATION FOR STAMP DUTY MADE BY THE STAMP AUTHORIT Y WAS NEVER CHALLENGED AND IT IS NOT MANDATORY ON THE PART OF AO TO REFER THE MATTER TO THE VALUATION OFFICER SUO MOTO BECAUSE AS PER SECTION 50C(2), THE AO MAY REFE R THE MATTER TO THE VALUATION OFFICER AND THUS REFERE NCE IS NOT BINDING OVER THE AO AS THE WORD HAS BEEN USED MAY AND NOT SHALL. 3. THE ASSESSEES CROSS OBJECTION ARE AS UNDER: 1. THE LD. AO ERRED IN REJECTING BOOKS OF ACCOUNT S AND MAKING ADDITION OF RS. 48,26,818/- AND RS. 7,19,27, 176/- IN THE IMPUGNED ASSESSMENT YEAR. 2. THE LD. AO FAILED TO APPRECIATE THAT THE PROJEC T SHIV SHAKTI APARTMENT WAS NOT COMPLETED DURING THE RELEV ANT YEAR AND INCOME HAD BEEN OFFERED UNDER PERCENTAGE COMPLETION METHOD OF ACCOUNTING. 3. THE LD. AO ERRED IN MAKING DOUBLE ADDITION OF RS . 38,44,087/-. 4. THE RESPONDENT PRAYS THAT A) ORDER OF THE HONBLE COMMISSIONER OF INCOME TAX APPEALS MAY BE AFFIRMED; ITA NO. 4331/M/2010 C .O. NO. 67/M.2011 3 B) ANY OTHER RELIEF YOUR HONOURS MAY DEEM FIT. AS COMMON ISSUES ARE INVOLVED, BOTH ARE TAKEN UP TO GETHER FOR THE SAKE OF CONVENIENCE AND BREVITY. 4. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT FO R THE YEAR UNDER CONSIDERATION, AFTER THE APPELLATE ORDER DT. 26.3.2 010, THE ASSESSEE MOVED AN APPLICATION U/S. 245C(1) OF THE ACT ON 24.10.2011 F OR SETTLEMENT OF ITS CASE FOR THE ASSESSMENT YEARS 2005-06 TO 2011-12 BEFORE THE INCOME TAX SETTLEMENT COMMISSION, ADDITIONAL BENCH, MAHALAXMI CHAMBERS, MUMBAI. THE SEARCH AND SEIZURE ACTION U/S. 132 OF THE ACT W AS UNDERTAKEN IN THE CASE OF SHRI NARESH B. RAWAL, A GROUP OF WHICH THE ASSES SEE IS A PART ON 20.11.2010. THE MAIN CONTENTION OF THE REVENUE WAS THAT THE ASSESSEE WAS RECEIVING/COLLECTING ON-MONEY IN VARIOUS PROJECTS. DURING THE COURSE OF THE SEARCH PROCEEDINGS, THE ASSESSEE ALSO OFFERED INCOM E AT RS. 76 CRORES U/S. 132(4) OF THE ACT. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE FOR ASSESSMENT YEAR 2007-08, THE SETTLEMENT COMMISS ION IN ITS ORDER DT. 29.5.2012 AT PAGE-16 PARA-10 MADE THE FOLLOWING OBS ERVATIONS: IT WAS BROUGHT TO OUR NOTICE THAT THE AO, WHILE CO MPLETING THE ASSESSMENT FOR A.Y. 2007-08 VIDE ORDER U/S. 143(3) DT. 22.12.2009 HAD MADE THE UNDER MENTIONED ADDITIONS: A)ON ACCOUNT OF HIGHER COST OF CONSTRUCTION RS. 48 ,26,818/- B)ON ACCOUNT OF SALE VALUE DIFFERENCE RS.7,19,27,1 76/- C)DISALLOWANCE OF CLAIM OF LTCG BY APPLYING THE PROVISIONS OF SEC. 50C RS. 5,53, 405/- THESE ADDITIONS WERE MADE WITHOUT ANY EVIDENCE AND ON THE BASIS OF MERE PRESUMPTION. WE WERE TOLD THESE HAVE BEEN DELETED BY CIT(A) IN ORDER DT. 26.3.2010 AND DEPART MENT HAS TAKEN THE CASE BEFORE I.T.A.T WHICH IS PENDING ON DA TE. AR HAS CONTENDED THAT MATTER AT (A) IS DULY COVERED BY THE OFFER MADE BY THE APPLICANT AFTER APPLYING ENHANCED NET PROFIT RATE AND THE MATTER AT (B) & (C) GETS COVERED BY ENHANCED OFFER OF ON-MONEY ON SALE OF FLATS AND HENCE FURTHER ADDITION IS REQ UIRED TO BE MADE. THE OFFER MADE BY THE APPLICANT IS ON THE BA SIS OF EVIDENCES FOUND DURING SEARCH AND FURTHER THE ESTIM ATE OF ON- MONEY NOW MADE BY THE APPLICANT IS HIGHER THAN THE ESTIMATE MADE BY AO IN THE ASSESSMENT ORDER. THE OTHER TWO ITA NO. 4331/M/2010 C .O. NO. 67/M.2011 4 DISALLOWANCE NAMELY DISALLOWANCE U/S. 14A (RS. 91,2 04) AND PROFESSIONAL FEES (RS. 35,000) CONFIRMED BY CIT(A), HAS BEEN ADMITTED BY THE APPLICANT AND SHOWN IN RETURN OF IN COME FILED U/S. 153C. CIT(DR) AGREED TO THE VIEW OF AR. HENC E WE ACCEPT THE VERSION OF AR AND CONCLUDE THE MATTER. 5. WE FIND THAT THE ADDITIONS CONSIDERED BY THE SET TLEMENT COMMISSION ARE IDENTICAL WITH GROUND NOS. 2, 3 & 4 OF REVENUE S APPEAL. 6. THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY CONCE DED THAT SINCE AFTER THE APPELLATE ORDER IN THE SEARCH AND SEIZURE PROCE EDINGS THE ASSESSEE HAS OFFERED THE ON-MONEY RECEIVED ON SALE OF FLATS FOR INCOME TAX WHICH FACT HAS BEEN ACCEPTED BY THE SETTLEMENT COMMISSION, THE GRI EVANCE OF THE REVENUE BECOMES OTIOSE. 7. THE LD. COUNSEL FOR THE ASSESSEE EQUALLY CONCEDE D ON ITS C.O. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE ORDERS OF THE LOWER AUTHORITIES AND ALSO THE ORDER OF THE SET TLEMENT COMMISSION (SUPRA). WE AGREE WITH THE RIVAL PARTIES THAT THE ISSUES INVOLVED IN REVENUES APPEAL AND THE CROSS OBJECTION OF THE ASSESSEE HAVE BECOME OTIOSE IN THE LIGHT OF THE DECISION OF THE SETTLEMENT COMMISSION STATED HEREIN ABOVE. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE AND TH E C.O. FILED BY THE ASSESSEE ARE DISMISSED. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE AND TH E C.O. FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THIS 17 TH DAY OF OCTOBER, 2012 SD/- SD/- (H.L. KARWA) (N.K. BILLAIYA ) PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED 17 TH OCTOBER, 2012 RJ ITA NO. 4331/M/2010 C .O. NO. 67/M.2011 5 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR G BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI