Preet Land Promoters and Developers Private Limited, Mohali V. DCIT, Mohali

ITA 1/CHANDI/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2582 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Unexplained expenditure; Principle of natural justice
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.1/CHD/2013 (ASSESSMENT YEAR : 2009-10) PREET LAND PROMOTERS & DEVELOPERS VS. THE D.C.I.T., PRIVATE LIMITED, SECTOR 86, CIRCLE 6(1), MOHALI. MOHALI. PAN: AADCP8893L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINEET KRISHAN RESPONDENT BY : SHRI SUSHIL KUMAR, CIT DR DATE OF HEARING : 15.12.2015 DATE OF PRONOUNCEMENT : 19.01.2016 O R D E R PER RANO JAIN, A.M . : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), CHANDIGARH DATED 17.10.2012 FOR ASSESSME NT YEAR 2009-10. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE WAS ENGAGED IN DEVELOPING A RESIDENTIAL PR OJECT DURING THE YEAR. SURVEY UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) WAS CARRIED OUT AT ITS PREMISES AS ON 6.3.2009. DURING THE COURSE OF SURV EY, 2 CERTAIN INCRIMINATING DOCUMENTS WERE FOUND AND THE ASSESSEE SURRENDERED AN AMOUNT OF RS.5,12,00,000/- AT THE TIME OF SURVEY. THE ASSESSEE DISCLOSED THE SAM E IN ITS RETURN OF INCOME. HOWEVER, THE ASSESSEE SHOWED THI S AMOUNT OF RS.5,12,00,000/- AS ITS PROJECT COST. WH EN ASKED ABOUT IT BY THE ASSESSING OFFICER, THE ASSESS EE EXPLAINED THAT THIS AMOUNT WAS DECLARED DURING THE COURSE OF SURVEY AND SO IT WAS INCLUDED IN THE PROJ ECT COST. THE ASSESSING OFFICER WAS NOT SATISFIED BY T HIS EXPLANATION. HE REDUCED THIS AMOUNT OF RS.5,12,00, 000/- FROM THE TOTAL PROJECT COST SHOWN BY THE ASSESSEE. 3. BEFORE THE LEARNED CIT (APPEALS), THE ASSESSEE CONTENDED THAT IT IS SETTLED LAW THAT WHATEVER SURR ENDER IS MADE EITHER UNDER STOCK IN TRADE OR IN PROJECT COST OR IN ANY UNEXPLAINED INVESTMENT, THEN THE SAID SURRENDER ED AMOUNT HAS TO BE ADDED IN THE SAID CLOSING STOCK OR PROJECT COST OR EXPENDITURE HEAD WITH THE SURRENDER ED AMOUNT BECAUSE THEN ONLY THE TRUE AND FAIR VIEW OF THE PROJECT COST OR STOCK IN TRADE OR INVESTMENT SHALL BE CALCULATED AND ASCERTAINABLE. THE LEARNED CIT (APP EALS), AFTER CONSIDERING THESE SUBMISSIONS, FORMED A VIEW THAT THE SURRENDERED AMOUNT CAN BE TREATED AS PART OF PR OJECT COST ONLY IF THE AMOUNT HAS BEEN UTILIZED TOWARDS PURCHASE OF MATERIAL/LAND FOR THE PROJECT OR EXPEND ITURE INCURRED FOR THE PROJECT. SINCE THE ASSESSEE HAD N OT EXPLAINED SO, THE ACTION OF THE ASSESSING OFFICER W AS CONFIRMED BY THE LEARNED CIT (APPEALS). 3 4. AGGRIEVED BY THIS ORDER OF THE LEARNED CIT (APPEALS), THE ASSESSEE HAS COME IN APPEAL RAISING THE FOLLOWING GROUNDS OF APPEAL : 1 . THAT THE ORDER DATED 17.10.2012 PASSED BY THE CIT (APPEALS) CHANDIGARH AND THE ORDER DATED 29.12.2011 PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 6(1), MOHALI FOR THE ABOVE REFERRED YEAR ARE BOTH BAD IN LAW AND AGAINST THE FACTS OF THE CASE. 2. THAT THE LD. CIT (APPEALS) HAS GREATLY ERRED IN LAW AND AGAINST FACTS OF THE CASE IN :- A) IN SUSTAINING THE ADDITION OF RS.34,27,999/- RECEIVED AS INTEREST ON FDR AND TAXING THE SAME AS 'INCOME FROM OTHER SOURCES' WITHOUT APPRECIATING THE FACTS OF THE CASE & NOT RELYING UPON THE SUBMISSION MADE. B) IN SUSTAINING THE ADDITION OF RS. 5,12,00,000/- WHICH WAS MADE BY THE DCIT BY REDUCING THE PROJECT COST BY RS. 5,12,00,000/- ON ACCOUNT OF INCOME SURRENDERED AGAINST UTTER DISREGARD OF ALL ACCOUNTING PRACTICES AND BOOK KEEPING ENTRIES & NOT UNDERSTANDING THE LOGIC & THE ACCOUNTING TREATMENT OF THIS ENTRY AND DISMISSING THE SUBMISSIONS OF THE APPELLANT ON FRIVOLOUS GROUNDS, WITHOUT APPRECIATING THE COMPLETE FACTS & LEGAL POSITION OF THE MATTER. 3. THAT THE ADDITION UPHELD BY THE CIT (APPEALS) IS BAD, UNJUST, ARBITRARY AND OUTSIDE THE SCOPE OF NATURAL JUSTICE AND ACCOUNTINGS PRACTICES AND HAS BEEN SUSTAINED WITHOUT APPRECIATING THE PROPER PROVISIONS OF THE I NCOME TAX ACT & ACCOUNTING PRACTICES. 4 4. THAT THE APPELLANT SEEKS PERMISSION TO ADD/AMEND ANY GROUND OF THE APPEAL AT THE TIME OF HEARING AND FUR THER TO SUBMIT PROPER EXPLANATION IN SUPPORT OF THE ADDITIO N MADE AT THE TIME OF HEARING. 5. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE PREFERRED NOT TO PRESS THE GROUND NO.2(A). THE GROUND NO.2(A) IS DISMISSED AS NOT B EING PRESSED. 6. AS REGARDS THE AMOUNT OF RS.5,12,00,000/- SURRENDERED DURING THE COURSE OF SURVEY, IT WAS SUB MITTED THAT THE ASSESSEE HAS BEEN FOLLOWING PROJECT COMPLE TION METHOD, SINCE THE SURRENDER WAS MADE ON ACCOUNT OF UNEXPLAINED EXPENDITURE, THEREFORE, NATURALLY THE A MOUNT SO SURRENDERED SHOULD FORM PART OF PROJECT COST. 7. THE LEARNED D.R. RELIED ON THE ORDER OF THE LEARNED CIT (APPEALS), SPECIALLY PAGE 4, PARA 4.3 A ND FURTHER STATED THAT BY TREATING THE SURRENDERED INC OME AS PART OF THE PROJECT COST, THE ASSESSEE WILL BE ENTI TLED TO ADJUST THE SAME AGAINST INCOMES GENERATED IN LATER YEARS AND IN THIS WAY, ITS TAX LIABILITY IN LATER YEARS W ILL GET REDUCED, WHICH IS NOT PERMISSIBLE AS PER LAW. 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. IN VIEW OF THE FACT THAT THE LEARNED COUNSEL FOR THE ASSESSEE 5 HAS NOT PRESSED GROUND NO.2(A), ALL OTHER GROUNDS R ELATE TO THE SURRENDERED AMOUNT OF RS.5,12,00,000/-, THE ONLY ISSUE TO BE DECIDED BY US IS WHETHER THE AMOUNT OF RS.5,12,00,000/- SURRENDERED BY THE ASSESSEE DURING THE COURSE OF SURVEY BE FORMED PART OF ITS PROJECT COST . THE LEARNED CIT (APPEALS) HAS DECIDED THE ISSUE AT PAGE 4, PARA 4.3 OF HIS ORDER, WHICH READS AS UNDER : 4.3 I HAVE CONSIDERED THE SUBMISSION OF THE LD. CO UNSEL. A PERUSAL OF THE SURRENDER LETTER REVEALS THAT THE AP PELLANT HAD AGREED TO BE TAXED ON ADDITIONAL INCOME OF RS. 5,12,0 0,000/- AS PER ANNEXURE A-I, A-II, A-III, A-V, A-8, A-9 AND A-12 OF TH E MATERIAL IMPOUNDED AT THE TIME OF SURVEY. THE SURRE NDER MADE CAN BE TREATED AS PART OF PROJECT COST ONLY IF THE AMOUNT HAD BEEN UTILIZED TOWARDS PURCHASE OF MATERIAL /LAN D FOR THE PROJECT OR EXPENDITURE INCURRED FOR THE PROJECT . THE APPELLANT HAS NOT EXPLAINED AS TO WHETHER THE AMOUNT WAS SO UTILIZED. HENCE, THE APPELLANT CANNOT BE ALLOWED TO INC REASE THE PROJECT COST BY THE AMOUNT OF SURRENDER AND SO ACTION OF THE ASSESSING OFFICER IN REDUCING THE PROJECT COST BY RS.5,12,00,000/- IS UPHELD. 9. ON GOING THROUGH THE SAME, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT (APPEALS) , SINCE THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ADDIT IONAL INCOME OF RS.5,12,00,000/- WAS SURRENDERED DURING T HE COURSE OF SURVEY AS THE SURRENDER WAS MADE ON THE B ASIS OF CERTAIN DOCUMENTS FOUND DURING THE COURSE OF SUR VEY. THESE DOCUMENTS ARE REFERRED TO AS ANNEXURE A-I, A- II, A- III, A-V, A-8, A-9 AND A-12 IN THE ORDER OF THE LEA RNED CIT (APPEALS). THIS FACT HAS NOT BEEN CONTROVERTED EVE N AT THE 6 TIME OF HEARING BEFORE US. EVEN IN THE SURRENDER L ETTER FILED BY THE ASSESSEE ITSELF, IT IS MENTIONED THAT FEW DOCUMENTS AND PAPERS ARE NOT READILY EXPLAINABLE. SECTION 292C OF THE ACT IS QUITE CLEAR THAT IN CASE OF ANY DOCUMENT FOUND DURING THE COURSE OF SURVEY, THE PRESUMPTION IS AGAINST THE ASSESSEE TO CONSIDER THA T THE DOCUMENT IS OWNED BY THE ASSESSEE. THOUGH THE PRESUMPTION IS A REBUTTABLE ONE, BUT IN THE PRESENT CASE, NOWHERE AT ANY STAGE THE ASSESSEE HAD EVEN TRIED TO REBUT THE SAME. SO FAR, THE ASSESSEE IS RIGHT IN ADDING THE SAID AMOUNT IN ITS RETURN OF INCOME. HOWEVER, ADDING TH E SAID AMOUNT IN ITS PROJECT COST WILL AMOUNT TO TAKING TH E FACT OF SURRENDERING THE INCOME TO AN UNREAL EXTENT. TH E AMOUNT IS CONSIDERED TO BE OF THE NATURE OF UNEXPLA INED EXPENDITURE, THE EXPENDITURE WHICH WERE NOT RECORDE D IN THE BOOKS OF ACCOUNTS, ONCE THE AMOUNT EXPANDED WER E OUT OF AN UNDISCLOSED INCOME OF THE ASSESSEE, THE A SSESSEE AFTER SURRENDERING THE SAME CANNOT ASK FOR INCREASE IN PROJECT COST BY THIS AMOUNT. THE CONTENTION OF THE LEARNED D.R. THAT BY ADDING THE SURRENDERED INCOME IN THE PROJECT COST ON THE ONE HAND AND PAYING TAXES ON SU CH INCOME ON THE OTHER HAND, WOULD AMOUNT TO NULLIFYIN G THE EFFECT OF SURRENDER, AS THE ASSESSEE WILL TAKE BENE FIT OF THE SAME IN SUCCEEDING YEAR, IS CORRECT. IN VIEW OF TH E ABOVE, THE ACTION OF THE ASSESSING OFFICER IN NOT ALLOWING THE 7 SURRENDERED AMOUNT TO BE CONSIDERED AS PROJECT COST IS FOUND TO BE CORRECT. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF JANUARY, 2016. SD/- SD/- (BHAVNESH SAINI) (RANO JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 19 TH JANUARY, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH