M/s.City Centre Builders & Developers, Trichur V. The ACIT, Trichur

ITA 1/COCH/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7531 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-01-2016
• Assessment Year: 2000-2001
• Appeal Filed On: 02-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR
• Assessee Lawyers: K KITTU
• Keywords: Tax effect; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

ITA NO . 1 & 73/C/2015 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH , COCHIN BEFORE S/SH RI B P JAIN , A M & G EORGE GEORGE.K , J M ITA NO . 73/COCH/2015 (ASST YEAR 2000 - 01 ) THE ASST COMMR OF INCOME TAX CIRCLE 2(1), RANGE 2 TRICHUR VS M/S CITY CENTRE BUILDERS & DEVELOPERS ROUND WEST THRISSUR 680 001 ( APPELLANT) (RESPONDENT) & ITA NO. 1/COCH/2015 M/S CITY CENTRE BUILDERS & DEVELOPERS ROUND WEST THRISSUR 680 001 VS THE ASST COMMR OF INCOME TAX CIRCLE 2(1), RANGE 2 TRICHUR ( APPELLANT) (RESPONDENT) PAN NO. AAAAC0706G ASS ESSEE BY SRI K KITTU REVENUE BY SRI K P GOPAKUMAR, SR DR DATE OF HEARING 20 JAN 201 6 DATE OF PRONOUNCEMENT 1 ST FEB 2015 OR D ER PER GEORGE GEORGE. K. J M: THESE ARE CROSS APPEALS DIRECTED AGAINST THE CIT(A)S ORDER DATED 27.10.2014. THE RELEVANT ASSESSMENT YEAR IS 2000 - 01. 2 FIRST, W E SHALL TAKE UP FOR ADJUDICATION THE ASSESSEES APPEAL IN ITA NO.1/COCH/2015. ITA NO . 1 & 73/C/2015 2 3 THE GROUNDS RAISED IN THE ASSESSEES APPEAL ARE AS FOLLOWS: THE CIT(A) HAS GONE WRONG IN NOT CONSIDERING THE APPELLANTS GROUND OF APPEA L IN RESPECT OF SALE OF 8430.50 SQFT WHICH WAS CONSIDERED WRONGLY IN THE REOPENED ASSESSMENT. AS PER THE ORIGINAL ASSESSMENT ORDER DT 19.12.2007, THE ASSESSMENT IS REOPENED IN RESPECT OF 3745.40 SQFT AND THE AO HAS GONE WRONG IN INCLUDING THE FLOOR AREA 84 30.50 SQ.FT ALSO IN THE ASSESSMENTS. THE REOPENING AND THE ASSESSMENT IS ONLY IN RESPECT OF 3745.50 SQ.FT AND IN THE REMAINING AREA SHOULD NOT CONSIDERED FOR THE PURPOSE OF ESTIMATING THE SALE VALUE ADS PER ORDER U/S 147 DT 19.12.2007. 4 BRIEFLY STATED THE FACTS , IN RELATION TO THE ABOVE GROUND , ARE AS FOLLOWS: THE ASSESSEE IS AN AOP. IT IS A DEVELOPER AND BUILDER. IT HAD UNDERTAKEN TO BUI LD A COMMERCIAL - CUM - OFFICE COMPLEX, BY NAME CITY CENTRE BUILDER S & DEVELOPER. THE RETURN OF INCOME FOR THE RELEVA NT ASSESSMENT YEAR WAS FILED ON 30.3.2002 DECLARING AN INCOME OF RS. 9,46,310/ - . THERE WAS A SURVEY CONDUCTED IN THE PREMISES OF ONE SHRI C K SUDHAKARAN, WHO HAD PURCHASED A SHOP NO. 115 IN ASSESSEES COMPLEX ON 8.9.1997. DURING THE SURVEY, AN AGREEMENT D ATED 12.5.1997 , ENTERED BETWEEN THE ASSESSEE AND SHRI C K SUDHAKARAN , WAS FOUND. AS PER THIS AGREEMENT, THE SALE CONSIDERATION OF THE SHOP NO.115 WAS RS. 49,91,842/ - ; WHEREAS THE ASSESSEE HAD ACCOUNTED , IN THE BOOKS OF ACCOUNT , ONLY A SUM OF RS. 8,97,152/ - . THEREFORE , REASSESSMENT PROCEEDINGS WERE INITIATED BY ISSUANCE OF NOTICE U/S 148 OF THE ACT DATED 11.1.2006 TO ASSESS THE ESCAPED INCOME. ALTHOUGH , THE AGREEMENT DATED 12.5.1997 WAS ONLY IN RESPECT OF THE SALE OF ONE SHOP, THE AO WAS OF THE VIEW THAT CONCEALMENT OF INCOME IS TO BE CONSIDERED IN RESPECT OF ALL THE SALES EFFECTED BY THE ASSESSEE DURING THE YEAR . ITA NO . 1 & 73/C/2015 3 ACCORDING LY , REASSESSMENT WAS COMPLETED U/S 143(3) R.W . S 147 ON 19.12.2007 DETERMINING THE TOTAL INCOME OF RS. 3,78,88,72 9/ - . AGGRIEVED BY REASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL TO THE C IT (A), WHICH WAS DISMISSED . ON FURTHER APPEAL TO THE ITAT, THE MATTER WAS REMANDED TO THE FILE OF THE AO IN ITA NO.98/COCH/2009 DATED 12.8.2011. THE AO WAS DIRECTED BY THE T RIBUNAL TO FOLLOW THE DIRECTIONS OF THE HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE FOR THE AY 1999 - 00 IN IT ANO.420/COCH/2009 DATED 6.9.201 2 , WHEREIN THE AO WAS DIRECTED TO FOLLOW PROGRESSIVE REDUCTION IN THE RATE PER SQ.FT IN RESPECT OF HIGHE R FLOORS AS THE SAME WILL NOT FETCH THE SAME PRICE AS THAT OF THE GROUND FLOOR. THE ASSESSEE ALSO ARGUED BEFORE THE TRIBUNAL THAT , AS AGAINST THE THE ESCAPEMENT OF RS. 2,30, 04,0 34/ - RECORDED AS THE REASON FOR ISSUANCE OF NOTICE U/S 148, THE UNACCOUNTED IN COME DETERMINED IN THE REASSESSMENT ORDER , WAS ERRONEOUSLY HAS TAKEN AT RS. 7,38,84,833/ - . 5. SUBSEQUENT TO THE REMAND BY THE TRIBUNAL, THE ASSESSMENT WAS COMPLETED BY ORDER DATED 28.3.2013 , WHEREIN THE TOTAL SALABLE AREA WAS FIXED AT 12175 SQ.FT AND BA SED ON THE SAME, THE CONCEALMENT OF INCOME WAS WORKED OUT AND THE ASSESSMENT WAS COMP LETED FIXING THE TOTAL INCOME AT RS. 1,66,11,034/ - . THE AO IN THE REASSESSMENT COMPLETED HAD FIXED AT RS. 7250/ - PER SQ.FT IN RESPECT OF THE GROUND FLOORS AND GAVE RED UCTION FOR THE OTHER FLOORS. THE DETAILS OF PRICE FIXED FOR OTHER FLOORS ARE AS FOLLOWS : BASEMENT 95% OF RS. 7250/ FIRST FLOOR 60% OF RS. 7250/ ITA NO . 1 & 73/C/2015 4 2 ND FLOOR 50% OF RS. 7250/ - 3 RD FLOOR 45% OF RS. 7250/ - & 4 TH FLOOR 35% OF RS. 7250/ - 6 AGGRIEVED BY THE ASSESSMENT, THE ASSESSEE PREFERRED APPEAL TO THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. AGAINST THE ORDER OF THE CIT(A), BOTH REVENUE AND THE ASSESSEE IS IN APPEAL BEFORE US. IN THE ASSESS EES APPEAL, THE ONLY GRIEVANCE RAISED IS THAT 148 PROCEEDINGS HAVE BEEN INITIATED ONLY IN RESPECT OF 3745 . 40 PER SQ.FT AREA OF THE BUILDING AND ONLY IN RESPECT OF 3745.40 SQ.FT, THE RATE OF RS. 7250/ - IS TO BE APPLIED AND THE CIT (A) ERRED IN ADOPTING THE CONCEALMENT FIGURES FOR THE ENTIRE SQ.FT AREA OF 12175 SOLD DURING THE YEAR . THE LD DR, PRESENT STRONGLY SUPPORTED THE ORDER S OF THE INCOME TAX AUTHORITIES . 7 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE CIT(A) HAS DECIDED THE ISSUE AGAINST THE ASSESSEE FOR THE REASON THAT NO MATERIAL/DOC UMENTS WERE PRODUCED BEFORE HIM TO DEVIATE FROM THE STAND TAKEN THE AO. THE RELEVANT FINDINGS OF THE C IT(A) READ AS UNDER (NO PARA OR PAGE NUMBER S IS SEEN MENTIONED IN CIT(A) S ORDER). A S REGARDS THE 1 ST GROUND AS TO ESTIMATE TE ESCAPED INCOME ONLY IN RESPECT OF SALE OF 3745 SFT OF COMMERCIAL AREA, AND NO ESTIMATION ON CONSTRUCTION UNDER CONTRACT IN RESPECT OF 8430 SFT AREA; THE APPELLANT WAS ASKED TO FURNISH THE EVIDENCE IN FORM OF AGREE MENTS ETC., TO SUBSTANTIATE THAT CLAIM AS TO HOW THERE COULD BE TWO DIFFERENT CATEGORY OF COMMERCIAL AREA SLD. BUT, THE APPELLANT FAILED TO ESTABLISH THEIR CLAIM BECAUSE THEY COULD NOT PRODUCE ANY AGREEMENT WITH THE PARTIES FORM WHOM CONSTRUCTION WERE DONE ON CONTRACT AND, THERE WERE NO SEPARATE LEDGER ACCOUNT OR ANY OTHER BOOKS OF ACCOUNTS MAINTAINED . IN VIEW ITA NO . 1 & 73/C/2015 5 OF THIS, THE APPEAL ON THIS GROUND IS DISMISSED AS THE SAME IS NOT SUBSTANTIABLE WITH THE FACT. 8 IN THE INSTANT CASE, AD MITTEDLY, THE TOTAL AREA THAT IS SOLD IN THE COMMERCIAL COMPLEX DURING THE RELEVANT YEAR IS 12175 SQ,.FT. THE PLEA OF THE ASSESSEE IS THAT THE ESCAPEMENT OF INCOME SHOULD BE CONFINED TO ONLY THE SALE OF 3745. SQ.FT OF COMMERCIAL AREA IS WITHOUT ANY BASIS. EVEN BEFORE US, THE ASS ESSEE HAS NOT PRODUCED ANY MATERIAL TO DISPEL THE FINDINGS OF THE INCOME TAX AUTHORITIES. THEREFORE, THE GROUND S RAISED IN ASSESSEES APPEAL IN ITA NO.1/COCH/ 2015 ARE REJECTED. ITA NO. 73/COCH/2015 (BY THE REVENUE) 9 THOUGH , TEN GROUNDS ARE RAISED IN THE REVENUES APPEAL, ALL THE GROUNDS RELATE TO THE SOLITARY ISSUE WHETHER THE CIT(A) IS JUSTIFIED IN FIXING THE SELLING RATE OF BASEMENT FLOOR AT RATE 60% OF RS. 7250/ - PER SQ,FT. THE CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE SALE PRICE FOR THE BASEMENT SHOULD BE FIXED PER SQ.FT AT 60% OF RS. 7250/ - BEING THE SAME RATE FOR THE FIRST FLOOR OF COMMERCIAL COMPLEX. THE RELEVANT FINDINGS OF THE CITA) READ AS UNDER ( AT PAGE 35 OF THE PAPER BO OK): IN THE BASEMENT, THE TOTAL AREA S OLD IS 4126 SFT. AS IT HAS BEEN DECIDED IN THE APPEAL FOR THE ASST YEAR 1999 - 2000, THE RATE OF BASEMENT IS EQUIVALENT TO THE RATE FOR THE 1 ST FLOOR; AS BOTH BEING DESCENDED AND ASCENDED BY IDENTICAL NUMBER OF STEPS; AND HENCE, THE RATE WAS CONSIDERED @60% OF THE RATE FOR THE GROUND FLOOR. THUS, THE DIFFERENCE IS WORKED AS UNDER: ITA NO . 1 & 73/C/2015 6 RATE CONSIDERED BY THE AO IS 6887.5 PER SQFT. (95% OF THE RATE OF GROUND FLOOR IS . RS. 7250 PER SQFT) RATE CONSIDERED BY THE ASSESSEE AS PER THEIR OWN VALUER RS. 4350 PSFT.IE. @ 60% AND UPHELD IN THE APPEAL FOR THE ASST YEAR 1999 - 2000. BASEMENT AREA R6887.5 RS 4350 = 2537 X 4126 SQFT = RS. 1,04,69,725/ - THUS, THE APPELLANT GETS REDUCTION IN ESTIMATE VALUE BY RS.1,04,69,725/ - 10. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LD DR PLACED ON RECORD THE APPROVED PLAN OF THE COMMERCIAL COMPLEX. THE LD DR SUBMITTED BY REFERRING TO THE APPROVAL PLAN THAT THE BASEMENT FLOOR AND THE FIRST FLOOR OF COMMERCIAL COMPLEX IS MORE OR LESS IDENTICAL AND THEREFORE, THE CIT(A) IS NOT JUSTIFIED IN FIXING THE SELLING PRICE OF THE BASEMENT FLOOR AT 60% OF RS. 7250/ - PER SQ.FT. THE LD AR PRESENT WAS DULY HEARD. 11 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS PERTINENT TO NOTE THAT FOR THE AY 1999 - 2000 , T HE DEPARTMENT APPEAL, ON THIS ISSUE, WAS REJECTED FOR THE REASON THAT THE TAX EFFECT WAS BELOW THE MONETARY LIMIT AS PER THE BOARD CIRCULAR NO.21 OF 2015 DATED 10.12.2015. IN THE INSTANT CASE, THE DEPARTMENT VALUER HAD FIXED THE RATE FOR THE BASEMENT FLOO R OF THE COMMERCIAL COMPLEX AT 90% OF RS. 7250/ - . T HE AO, IN THE ASSESSMENT ORDER HAD ENHANCED THE SAME TO 95 % OF RS. 7250/ - . THE CIT(A) HAD REDUCED THE SELLING RATE OF BASEMENT FLOOR TO 60% OF RS. 7250/ - WHICH IS THE SAME RATE FIXED FOR THE FIRST FLOOR BY THE AO. THE CIT(A) WHILE REDUCING THE SELLING RATE OF BASEMENT FLOOR, TOOK INTO CONSIDERATION THAT THE NUMBER OF STEPS FROM BASEMENT FLOOR TO GROUND FLOOR AND FROM GROUND FLOOR TO THE FIRST FLOOR IS IDENTICAL AND THERE IS NOT ITA NO . 1 & 73/C/2015 7 M UCH OF A DIFFERENCE BETW EEN BASEMENT FLOOR AND THE FIRST FLOOR. THEREFORE, A REASONABLE PRESUMPTION/ESTIMATE IS TAKEN THAT THE SAME RATE SHOULD BE ADOPTED FOR BOTH THE BASEMENT FLOOR AND THE FIRST FLOOR. THIS FINDING OF THE CIT(A) CANNOT BE SAID TO BE IRRATIONAL OR WITHOUT ANY B ASIS . MOREOVER, THERE IS NO OTHER MATERIAL PRODUCED BEFORE US , TO ALTER THE RATE OF BASEMENT FLOOR FROM 60% OF THE RATE OF GROUND FLOOR (RS.7250/ - ) TO ANY OTHER PERCENTAGE. HENCE, WE UPHOLD THE ORDER OF THE CIT(A) AND REJECT THE APPEAL OF THE REVENUE. IT IS ORDERED ACCORDINGLY. 1 2 IN THE RESULT, THE APPEALS, FILED BY BOTH THE REVENUE AND THE ASSESSEE, ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 1 ST DAY OF FEB 2016 . SD/ - SD/ - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 1 ST FEB 2016 RAJ* ITA NO . 1 & 73/C/2015 8 COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT , 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN