DCIT, Jaipur V. MURANO DEELOPERS (P) LTD., Jaipur

ITA 1009/JPR/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5257 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 23-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Document seized; Documents seized
• Section: 145

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF;D LN L; DS LE{K BEFORE:SHRI BHAGCHAND, AM & SHRI LALIET KUMAR, J M VK;DJ VIHY LA-@ ITA NO. 1009/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13 THE DCIT CENTRAL CIRCLE- 2 JAIPUR CUKE VS. M/S. MURANO DEVELOPERS (P) LTD. 338, TRIPOLIA BAZAR, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAFCM 0318 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY: SHRI O.P. BHATEJA, ADDL. CIT -DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL, CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 13/06/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 16/06/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)- 4, JAIPUR DATED 30-10-2015 FOR THE ASSESSME NT YEAR 2012-13 RAISING THEREIN FOLLOWING GROUNDS OF APPEAL. (1) WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION O F RS. 1,08,40,944/- MADE ON THE BASIS OF SEIZED DOCUMENTS . ITA NO. 1009/JP/2015 THE DCIT, CENTRAL CIRCLE- 2, JAIPUR VS. M/S. MURAN O DEVELOPER (P) LTD. JAIPUR . 2 (2) WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) WAS JUSTIFIED IN NOT CONFIRMING TH E ADDITION OF RS. 1,08,40,944/- MADE BY THE AO BY ADOPTING THE PERCENTAGE COMPLETION METHOD FOR COMPUTING THE TRUE AND CORRECT INCOME OF THE ASSESSEE. 2.1 AT THE OUTSET OF THE HEARING, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ISSUES RAISED BY THE REVENUE IN THIS APPEA L ARE COVERED BY ITAT COORDINATE BENCH, JAIPUR FROM THE CASE OF M/S. UNIQ UE BUILDERS & DEVELOPERS (KRISHNA) ANOTHER CONCERN OF THE SAME GR OUP FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10. THE LD. CIT( A) HAS GRANTED THE RELIEF TO THE ASSESSEE ON THE BASIS OF DECISION OF THE ITAT COORDINATE BENCH CONSIDERING THE CASE OF M/S. UNIQUE BUILDERS & DEVELOPERS (KRISHNA), (SUPRA). 2.2 THE LD. DR RELIED ON THE ORDER OF THE AO. 2.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT EMERGES FROM THE RECORD THA T IN THE CASE OF THE ASSESSEE I.E. M/S. MURANO DEVELOPERS (P) LTD. , REL IEF HAS BEEN GRANTED BY THE LD. CIT(A) ON THE BASIS OF THE DECISION OF ITAT COORDINATE BENCH IN THE CASE OF UNIQUE BUILDERS & DEVELOPERS (KRISHNA) (SUPRA) BY OBSERVING AS UNDER:- ITA NO. 1009/JP/2015 THE DCIT, CENTRAL CIRCLE- 2, JAIPUR VS. M/S. MURAN O DEVELOPER (P) LTD. JAIPUR . 3 3.3 I HAVE DULY CONSIDERED ASSESSEE'S SUBMISSION AND ALSO TAKEN A NOTE OF FACTUAL MATRIX OF CASE AS EMANATING FROM THE ASSESSMENT ORDER PASSED BY THE AO. IN THIS CASE, A SSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS. 97,40,548/- AGAI NST THE RETURNED LOSS OF RS. 48,70,466/- WHEREIN ADDITION ON ACC OUNT OF PROFIT COMPUTED BY CHANGE IN METHOD OF ACCOUNTING TO PERCE NTAGE COMPLETION METHOD. IN THIS CASE, AT THE END OF F.Y. RELEVANT TO A.Y. 2012-13 APPELLANT HAS COMPLETED THE PROJECT. IN TH E ASSESSMENT ORDER, AO HAS OBSERVED THAT DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PRODUCE/ FUR NISH, STOCK REGISTER BASIS OF VALUATION OF CLOSING STOCK AS WEL L AS DETAIL/ INFORMATION INCLUDING ORIGINAL VOUCHERS FOR THE PAY MENT MADE IN RESPECT OF DIRECT EXPENSES. HOWEVER, THE ASSESSEE COULD NOT PRODUCE THE STOCK REGISTER AND ARGUED THAT CLOSING STOCK WAS VALUED AT COST. THE ASSESSEE STATED THAT STOCK OF COMPANY AND DIRECT EXPENSE, WHICH FORM PART OF STOCK OF PROJECT-IN-PRO GRESS. IN THIS REGARD, THE AO HELD THAT THIS PROVED THAT THE ASSES SEE DID NOT MAINTAIN ITS BOOKS OF ACCOUNTS AS REQUIRED BY LAW A ND THAT ITS BOOKS DID NOT PRESENT TRUE AND FAIR PICTURE OF ITS AC COUNTS AND FINANCIAL TRANSACTIONS, THEREBY CONTRAVENING THE PROVISIONS O F ACCOUNTING STANDARD (AS-1) ISSUED BY THE INSTITUTE OF CHARTERE D ACCOUNTANTS OF INDIA (ICAI) AS WELL. IN VIEW OF THESE ASSESSEE WAS SHOW CAUSE AS TO WHY ITS BOOKS OF ACCOUNT SHOULD NOT BE REJECT ED U/S 145(3) OF THE ACT AND INCOME BE DETERMINED AS PER PERCENTAGE COMPLETION METHOD. IN COMPLIANCE, ASSESSEE SUBMITTED A DETAILE D EXPLANATION VIDE ITS LETTER DATED 26-12-2004 WHICH IS REPRODUC ED BY THE AO IN THE ASSESSMENT ORDER IN PARA 6. AO HAS DISCUSSED TH IS ISSUE IN PARA 7 OF THE ASSESSMENT ORDER AND HELD THAT ASSESSEE, B Y FOLLOWING PROJECT COMPLETION METHOD, HAS NOT DECLARED COMPLET E AT CORRECT PROFIT AND AT THE SAME TIME BY NOT FOLLOWING AS-9 A ND AS-7, WHICH TANTAMOUNT TO NOT FOLLOWING AS-1 AS PER SECTION 145 (2) OF THE ACT, THE BOOKS DO NOT REPRESENT TRUE AND FAIR PICTURE AN D THEREFORE, REJECTED THE BOOKS OF ACCOUNT AND BY APPLYING PERCE NTAGE COMPLETION METHOD DETERMINED PROFIT OF THE BUSINESS AT RS. 1,08,40,944/- RESULTING IN ADDITION OF RS. 97,40,54 8/-. ITA NO. 1009/JP/2015 THE DCIT, CENTRAL CIRCLE- 2, JAIPUR VS. M/S. MURAN O DEVELOPER (P) LTD. JAIPUR . 4 AR OF THE ASSESSEE HAS CONTENDED THAT THE ASSESSEE IS MAINTAINING ITS DAY TO DAY BOOKS OF ACCOUNTS ALONG WITH COMPLETE RECORD OF MATERIAL PURCHASED AND EXPENSES INCURRED TOWARDS PROJECT DEVELOPMENT. AS PER THE CONSISTENT ACCOUNTING POLIC Y FOLLOWED BY THE ASSESSEE, THE REVENUE IS RECOGNIZED WHEN ALL SI GNIFICANT RISK AND TOWARDS OF OWNERSHIP ARE TRANSFERRED TO THE BUY ER AND NO EFFECTIVE CONTROL OF THE REAL ESTATE TO A DEGREE US UALLY ASSOCIATED WITH THE OWNERSHIP IS RETAINED. THUS THE ASSESSEE HAS BEEN CONSISTENTLY FOLLOWING PROJECT COMPLETION METHOD OF ACCOUNTING IN WHICH SALE IS RECOGNIZED ONLY WHEN TRANSACTION I S COMPLETE AND POSSESSION OF THE PROPERTY IS HANDED OVER TO THE BU YER. THEREFORE, AR HAS ALSO CLARIFIED THAT ASSESSEE'S CA SE IS COVERED BY THE DECISION OF HON'BLE ITAT JAIPUR BEN CH IN CASE OF M/S. UNIQUE BUILDERS & DEVELOPERS (KRISHNA) ANOTHER CONCERN OF THE SAME GROUP FOR A.Y. 2008-09 TO 2009-10 WHEREIN HON'BLE ITAT BENCH JAIPUR VIDE ITS ORDER DATED 14-03-2013 L (ITA NO. 73 TO77/JP/2012 AND 689 TO 590/JP/2012) ON SIMILAR FAC TS AND SIMILAR ISSUE HAS DELETED THE ENTIRE ADDITION MADE AND HELD THAT THE COMPUTATION OF INCOME BY FOLLOWING THE PROJECT COMP LETION METHOD IS THE CORRECT METHOD FOR THE RECOGNITION OF THE INCOME OF THE ASSESSEE, WHICH IS REGULARLY FOLLOWED BY THE AS SESSEE. FURTHER, FOR A.Y. 2010-11 & 2011-12 LD. CIT(A) CENT RAL JAIPUR FOR A.Y. 2010-11 & 2011-12 VIDE ITA NO. 601/ 12-13 DATED 12-12-13 AND ITA NO. 832/13-14 DATED 7-05-2014 RESP ECTIVELY HAS REVERSED THE AOS ACTION OF REJECTING BOOKS OF ACCO UNTS U/S 145(3) OF THE ACT AND COMPUTATION OF INCOME ON PERCENTAGE COMPLETION METHOD AND FINALLY GIVEN FULL RELIEF TO THE ASSESSE E. IT IS ALSO A FACT THAT AO HAS NOT BROUGHT ON RECORD ANY EVIDENCE OR C ASE LAW TO CONTROVERT THE FINDINGS OF THE HON'BLE ITAT IN THE RELATED CASE OF THE GROUP OF THE APPELLANT ON THE SAME FACTS, I FIN D THAT THE FACTS OF THIS CASE IS DIRECTLY COVERED BY AFOREMENTIONED DEC ISION OF HON'BLE ITAT BENCH JAIPUR (SUPRA) IN CASE OF M/S. UNIQUE BU ILDERS & DEVELOPERS (KRISHNA) ANOTHER CONCERN OF THE SAME GR OUP FOR AYS 2008-09 & 2009-10 AND LD. CIT(A), CENTRAL JAIPUR IN ASSESSEE'S OWN CASE FOR A.Y. 2010-11 & 2011-12. ITA NO. 1009/JP/2015 THE DCIT, CENTRAL CIRCLE- 2, JAIPUR VS. M/S. MURAN O DEVELOPER (P) LTD. JAIPUR . 5 IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CA SE AND ALSO RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE ITAT AND LD. CIT(A), CENTRAL, JAIPUR THE GROUNDS OF APPEAL NO.1, 2.0 & 2.1 ARE DECIDED IN FAVOUR OF THE ASSESSEE AND ADDITION MADE OF RS. 1,08,40,944/- BY FOLLOWING PERCENTAGE COMPLETION ME THOD, RESULTING INTO ADDITION OF RS. 97,70,548/- IS HEREB Y DELETED. BY RESPECTFULLY FOLLOWING THE DECISION OF COORDINAT E BENCH (SUPRA), WE DISMISS THE APPEAL OF THE REVENUE. 3.0 IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 /06/201 6. SD/- SD/- YFYR DQEKJ HKKXPUN (LALIET KUMAR) (BHAGCHAND ) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 16 /06/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT, CIRCLE-2. JAIPUR 2. IZR;FKHZ@ THE RESPONDENT-M/S.MURANO DEVELOPES (P) LTD. JAI PUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 1009/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR