SHREE GOPAL HOUSING & PLANTATION CORPORATION ( FORMERLY KNOWN AS M.S, GHP CORPORATION), MUMBAI V. ACIT (OSD-II) CEN RG 7, MUMBAI

ITA 1075/MUM/2012

• Counselvise Citation: 107519914 RSA 2012
• Duration Of Justice: 2 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 05-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 14-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: NEELKANT KHANDELW AL
• Keywords: Unexplained cash credit; Capital receipt; Revised return
• Section: 68

Judgement Text

, BZ BZBZ BZ INCOME TAX APPELLATE TRIBUNAL,MUMBAI - E BENCH , !' , ! BEFORE S/SH.JOGINDER SINGH, JUDICIAL MEM BER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.1075/MUM/2012, # # # # $ $ $ $ / ASSESSMENT YEAR-2006-07 M/S SHRI GOPAL HOUSING & PLANTATION CORPORATION (FORMERLY KNOWN AS M/S. GHP CORPORATION), MILLENIUM TOWER, 3RD FLOOR, BEHIND IOC PETROL PUMP, POWAI, MUMBAI-400076 PAN: AACFS1525J # VS. ACIT (OSD-II) CENTRAL RANGE-7, OLD CGO BUILDING, M.K.ROAD, MUMBAI-400020 ( %& / APPELLANT) ( '(%& / RESPONDENT) /. ITA NO.1077/MUM/2012, # # # # $ $ $ $ / ASSESSMENT YEAR-2007-08 M/S SHRI GOPAL HOUSING & PLANTATION CORPORATION (FORMERLY KNOWN AS M/S. GHP CORPORATION), MILLENIUM TOWER, 3RD FLOOR, BEHIND IOC PETROL PUMP, POWAI, MUMBAI-400076 # VS. ACIT (OSD-II) CENTRAL RANGE-7, OLD CGO BUILDING, M.K.ROAD, MUMBAI-400020 ( %& / APPELLANT) ( '(%& / RESPONDENT) #)* #)* #)* #)* + + + + ! !! ! / ASSESSEE BY :SHRI NEELKANT KHANDELWAL , + ! / REVENUE BY : SHRI NEIL PHILIP # # # # , ,, , *- *- *- *- / DATE OF HEARING : 10 -02-2015 .$ , *- / DATE OF PRONOUNCEMENT : 10 -02-2015 # # # # , 1961 , ,, , 254(1) ! !! ! ** ** ** ** !/ !/ !/ !/ ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, A.M. ! !' ! # : AY.-2006-07 : CHALLENGING THE ORDER,DATED12.01.2012,OF THE CIT(A) -40,MUMBAI,THE ASSESSEE HAS FILED FOLLOWING GROUNDS OF APPEAL: THE GROUND OR GROUNDS OF APPEAL ARE WITHOUT PREJUDI CE TO ONE ANOTHER. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY LEVIED BY THE AO U/S.271(1)( C) FOR RS.1,48,19,500/-. 2. THE LD. CIT(A) FAILED TO APPRECIATED THAT: A) THE APPELLANT HAS NEITHER CONCEALED THE PARTICUL ARS OF ITS INCOME NOR FURNISHED ANY INACCURATE PARTICULARS OF SUCH INCOME; B) NO UNACCOUNTED CASH WAS RECEIVED BY THE APPELLAN T ON SALE OF PLOTS; C) NO INCOME HAS ARISED OR ACCRUED IN THE HANDS OF THE APPELLANT OUT OF RECEIPTS FROM M/S. ALOKIK TOWNSHIP CORPORATION; AND D) MERELY BECAUSE CERTAIN ADDITIONS ARE MADE REJECT ING THE BONAFIDE EXPLANATION PER SE WILL NOT BE SUFFICIENT TO ATTRACT PENALTY U/ S.271(1)(C). 3. IN REACHING TO THE CONCLUSION AND CONFIRMING THE PENALTY THE LD. CIT(A) OMITTED TO CONSIDER RELEVANT FACTORS, CONSIDERATIONS, PRINCIPL ES AND EVIDENCES WHILE HE WAS OVERWHELMED, INFLUENCED AND PREJUDICED BY IRRELEVAN T CONSIDERATIONS AND FACTORS. 4. THE PENALTY LEVIED BY THE LD. CIT(A) IS CONTRARY TO PROVISIONS OF LAW. 2 ITA NOS. 1075 & 1077/M/2012 M/S SHRI GOPAL HOUSING & PLANTATION CORPORATION THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND OR DELETE THE ABOVE GROUND OR GROUNDS OF APPEAL. FOR THE AY.2007-08 IDENTICAL GROUNDS WERE FILED BY THE ASSESSEE,THE ONLY DIFFERENCE IS IN AMOUNT OF PENALTY IMPOSED BY THE AO. ITA/1075/MUM/2012, 2 . ASSESSEE-FIRM,ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS, FILED ITS RETURN OF INCOME ON 30.10.2006 DISCLOSING TOTAL INCOME AT RS.4.08 CRORE S.LATER ON A REVISED RETURN OF INCOME WAS FILED ON 20.12.2007,WHEREIN THE INCOME IN RESPECT O F A PROJECT WAS INCORPORATED.A SEARCH AND SURVEY ACTION WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 18.01.2007.WHILE FINALISING THE ASSESSMENT, THE ASSESSING OFFICER (AO) MADE CERTAIN ADDITIONS TO THE INCOME OF THE ASSESSEE.ONE OF THE ADDITIONS WAS ABOUT RS. 1 CRORE ALLEGEDLY RE CEIVED IN CASH.THE ASSESSEE AGITATED THAT ISSUE BEFORE THE FIRST APPELLATE AUTHORITY (FAA),WHO NOT ONLY CONFIRMED THE ADDITION BUT ALSO MADE AN ENHANCEMENT TO THE INCOME OF THE ASSESSEE TO THE EX TENT OF RS.2 CRORES.SECOND ADDITION WAS ABOUT UNACCOUNTED CASH RECEIPT TO RS.1.40 CRORES ON SALE OF PLOTS.DURING THE APPELLATE PROCEEDINGS,THE FAA CONFIRMED THE ADDITION MADE BY THE AO.LAST ADDI TION OF RS.25 LAKHS,MADE BY THE AO,WAS DELETED BY THE FAA. 3. THE AO INITIATED THE PENALTY PROCEEDINGS BY ISSUING NOTICE U/S 274 R.W.S 271(1)(C) OF THE ACT. VIDE HIS ORDER,DATED 18.02.2011,HE HELD THAT ASSESS EE CONCEALED THE PARTICULARS OF INCOME FOR THE YEAR UNDER CONSIDERATION.AS A RESULT,HE LEVIED PENA LTY OF RS. 1.48 CRORES TAKING INTO CONSIDERATION THE ADDITION OF RS.2 CRORES MADE BY THE FAA. 4. DURING THE COURSE OF HEARING BEFORE US,AUTHORISED R EPRESENTATIVE(AR)STATED THAT THE TRIBUNAL VIDE ITS ORDER DATED 17.11.2014 (ITA NO. 2320AND 46 92/MUM/2010-AY 2006-07 & 2007-08)HAD DELETED THE ADDITION MADE BY THE AO/ENHANCED BY THE FAA,THAT THE PENALTY IMPOSED FOR THE ADDITIONS WOULD NOT SURVIVE.HE REFERRED TO PAGE NO. 6 & 9 OF THE ABOVE MENTIONED ORDER OF THE TRIBUNAL.DEPARTMENTAL REPRESENTATIVE (DR) RELIED UP ON THE ORDER OF THE FAA. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE TRIBUNAL IN ITS ORDER DATED 07.11.2014(SUPRA) AT PA RAGRAPH NO.11, WHILE DISCUSSING THE ADDITION OF RS. 3 CRORES HAS HELD AS UNDER: 11. WE HAVE ALREADY NOTICED THAT ALL RECEIPTS ARE N OT ASSESSABLE TO TAX. IN THE INSTANT CASE, THE ASSESSEE HAS RECEIVED THE IMPUGNED AMOUNT OF RS.3.0 0 CRORES AS ADVANCE FROM M/S ATC IN PURSUANCE OF MOU ENTERED BETWEEN THE ASSESSEE AND M /S ATC. THE FACT THAT THE ASSESSEE HAS RECEIVED THE ABOVE SAID AMOUNT OF RS.3.00 CRORES IS NOT DOUBTED WITH. WE HAVE ALSO SEEN THAT THE ABOVE SAID ADVANCE IS DESCRIBED AS 'REFUNDABLE ADVA NCE' IN THE MOU AND THE TERMS OF REPAYMENT OF ADVANCE ARE ALSO PROVIDED THEREIN. THE TAX AUTHO RITIES HAVE NOT BROUGHT ANYTHING ON RECORD TO SHOW THAT THE ABOVE SAID AMOUNT IS NOT REFUNDABLE A T ALL. AS STATED EARLIER, THEY HAVE NOT GIVING ANY FINDING WITH REGARD TO THE PURPOSE FOR WHICH TH E ABOVE SAID AMOUNT WAS PAID BY M/S ATC. HENCE, IN OUR VIEW, IT MAY NOT BE PROPER TO TAKE A VIEW THAT THE IMPUGNED ADVANCE IS NOT REFUNDABLE AT ALL. ONCE IT IS ACCEPTED THAT THE ASS ESSEE IS LIABLE TO REFUND RS.3.00 CRORES, THE NEXT QUESTION THAT ARISES IS WHETHER THE SAME IS EXIGIBL E TO TAX OR NOT. WE NOTICE THAT IT WAS NOT THE CASE OF THE TAX AUTHORITIES THAT THE SAME IS ASSESSABLE TO TAX AS UNEXPLAINED CASH CREDIT IN TERMS OF SEC. 68 OF THE ACT, SINCE THERE IS NO WHISPER ABOUT THE SAME AND FURTHER THEY HAVE ACCEPTED THAT GENUINENESS OF RECEIPT OF RS.3.00 CRORES FROM M/S A TC. HENCE THE 'REFUNDABLE ADVANCE' OF RS.3.00 CRORES RECEIVED BY THE ASSESSEE CONSTITUTES CAPITAL RECEIPT IN THE HANDS OF THE ASSESSEE, WHICH IS NOT LIABLE TO TAX UNDER ANY OF THE PROVISIONS OF THE AC T. FURTHER, A PERUSAL OF THE MOU WOULD SHOW THAT IT WAS A CASE OF JOINT DEVELOPMENT OF LAND BEL ONGING TO THE ASSESSEE AND THERE IS NO EVIDENCE TO SHOW THAT THE ASSESSEE HAS PARTED WITH THE LAND IN FAVOUR OF M/S ATC. HENCE, THE QUESTION OF CAPITAL GAINS ALSO, IN OUR VIEW, WOULD NOT ARISE. 3 ITA NOS. 1075 & 1077/M/2012 M/S SHRI GOPAL HOUSING & PLANTATION CORPORATION RESPECTFULLY,FOLLOWING THE ABOVE, WE ARE DELETING T HE PENALTY LEVIED FOR THE SAID AMOUNT AS. AS FAR AS THE ADDITION OF RS.1.40 CRORES IS CONCERN ED, THE TRIBUNAL HAS HELD AS UNDER: 18. WE FIND MERIT IN THE CONTENTIONS OF THE LD AR. FIRST OF ALL, WE NOTICE THAT THE ASSESSING OFFICER HAS DRAWN CERTAIN INFERENCES ON THE CHART FOUND DUR ING THE COURSE OF SURVEY. THE AO DID NOT MAKE ANY ATTEMPT TO CONDUCT ENQUIRIES WITH ANY OF THE PR OSPECTIVE BUYERS TO ASCERTAIN THE TRUE POSITION. ON THE BASIS OF SAID INFERENCES AND BY TAKING TWO I NSTANCES, THE AO HAS CONCLUDED THAT THE ASSESSEE WAS SELLING PLOTS @ RS.3,200/- PER SQ. YARD. BEFORE US, THE ASSESSEE HAS SHOWN THAT THE COMPUTATION MADE BY THE AO, IF FOLLOWED IN SOME OTH ER CASES, WOULD GIVE THE SELLING RATE OF RS.3,950/- AND RS. 4000/- PER SQ. YARD. WITH REGARD TO THE RATIO OF 70% AND 30%, WE EXAMINED THE RELEVANT SHEET ATTACHED AS 'ANNEXURE C' TO THE ASSE SSMENT ORDER. THOUGH THERE IS A REFERENCE TO THE RATIO OF 70:30 WITH THE CORRESPONDING AMOUNT OF RS.2,240/- AND RS.960/-, YET OTHER NOTING MADE THEREIN DOES NOT FIT IN THAT RATIO. WITH REGAR D TO THE LETTER WRITTEN BY ONE OF THE PROSPECTIVE BUYERS, THE ASSESSEE HAS EXPLAINED THAT THE SAID PE RSON HAD BOOKED THE PLOT THROUGH AN AGENT. IT IS QUIET COMMON THAT THE AGENT WOULD BOOK THE PLOTS AT A HIGHER RATE TO MAKE HIS OWN PROFIT. WE NOTICE THAT THE AO DID NOT TAKE ANY STEP TO DISPROV E THE SAID EXPLANATION. HOWEVER, THE SUBMISSION OF THE LD A.R WAS THAT THEY WERE ADVANCES RECEIVED ON BOOKING OF PLOTS AND 80% OF THE BOOKINGS GOT CANCELLED AND THE ASSESSEE WAS CONSTRAINED TO R EFUND THE ADVANCE AMOUNT. WE FURTHER NOTICE THAT THE AO DID NOT CONDUCT ENQUIRIES WITH ANY OF T HE PROSPECTIVE BUYERS TO SUBSTANTIATE HIS VIEWS. IN VIEW OF THE FOREGOING, WE ARE OF THE VIEW THAT T HE ASSESSING OFFICER HAS REACHED CONCLUSIONS ABOUT THE SELLING RATE OF PLOTS ONLY ON SURMISES AN D CONJECTURES WITHOUT BRINGING ANY CREDIBLE EVIDENCE ON RECORD. HENCE, IN OUR VIEW, THERE IS NO CASE TO PRESUME THAT THE ASSESSEE HAD RECEIVED A PORTION OF ADVANCE IN CASH WITHOUT ACCOUNTING THE SAME IN ITS BOOKS OF ACCOUNT. 19. EVEN OTHERWISE, WE FIND FORCE IN THE CONTENTION S OF LD A.R THAT MERE RECEIPT OF ADVANCE WOULD NOT GIVE RISE TO ANY INCOME ELEMENT. FROM THE EXPLA NATIONS FURNISHED BEFORE THE AO, WE NOTICE THAT THE ASSESSEE HAD PROPOSED TO EXECUTE SALE AGREEMENT S ONLY IN THE SUBSEQUENT YEARS AFTER THE RECEIPT OF NECESSARY APPROVALS, MEANING THEREBY THE ASSESSEE HAS RECEIVED ONLY ADVANCES DURING THE YEAR UNDER CONSIDERATION, WHICH ARE LIAB LE TO REFUNDED. ACCORDING TO LD A.R, THE ASSESSEE HAS REFUNDED ABOUT 80% OF BOOKINGS IN THE SUBSEQUENT YEAR. 20. IN VIEW OF THE FOREGOING, WE ARE OF THE VIEW TH AT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN PRESUMING THAT THE ASSESSEE HAD RECEIVED 30% OF SAL E CONSIDERATION AS ADVANCE IN THE FORM OF CASH WITHOUT ACCOUNTING FOR THE SAME. FURTHER, THE AO WA S NOT JUSTIFIED IN PRESUMING THAT THE SAID ADVANCE WOULD CONSTITUTE INCOME IN THE HANDS OF THE ASSESSEE, IN VIEW OF THE FACT THAT THE ASSESSEE DID NOT SELL ANY PLOT DURING THE YEAR UNDER CONSIDE RATION. ACCORDINGLY, WE ARE OF THE VIEW THAT THE LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THIS ADDI TION. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE ALSO AND DIRECT THE AO TO DELE TE THE SAID ADDITION. AS THE ADDITION CONFIRMED BY THE FAA HAS BEEN DELET ED BY THE TRIBUNAL IN QUANTUM APPEAL, SO THERE IS NO JUSTIFICATION FOR NOT DELETING THE PENA LTY FOR THE AMOUNT IN QUESTION.EFFECTIVE GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE. ITA NO. 1077/MUM/2012 AY.2007-08: THE FACTS OF THE CASE UNDER CONSIDERATION ARE SIMIL AR TO THE FACTS FOR THE LAST AY.THE ONLY DIFFERENCE IS ABOUT THE AMOUNT INVOLVED,AS STATED E ARLIER.THE AO HAD MADE AN ADDITION OF RS. 1.37 CRORES TO THE INCOME OF THE ASSESSEE AND FAA HAS UP HELD HIS ORDER.THE ADDITION WAS ABOUT THE SALE OF PLOTS OF LAND.FOLLOWING OUR ORDER FOR THE A Y 2006-07 WE DECIDE THE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. AS A RESULT, APPEALS FILED BY THE ASSESSEE FOR BOTH THE YEARS STAND ALLOWED. 0*1 #)* 3 4 , #5 #.., 7 8 , * 9 . ORDER PRONOUNCED IN THE O PEN COURT ON 10 TH ,FEBRUARY,2015. !/ , .$ ! 7 :# 10, 0;- , 201 5 , < 4 ITA NOS. 1075 & 1077/M/2012 M/S SHRI GOPAL HOUSING & PLANTATION CORPORATION SD/- SD/- ( /JOGINDER SINGH) ( !' / RAJENDRA) / JUDICIAL MEMBER ! ! ! ! / ACCOUNTANT MEMBER / MUMBAI, :# /DATE: 10.02.2015 SK !/ !/ !/ !/ , ,, , '*= '*= '*= '*= >!=$* >!=$* >!=$* >!=$* / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / %& 2. RESPONDENT / '(%& 3. THE CONCERNED CIT(A)/ ? @ , 4. THE CONCERNED CIT / ? @ 5. DR E BENCH, ITAT, MUMBAI / =A '*# BZ BZBZ BZ , . . . 6. GUARD FILE/ 0 (=* '* //TRUE COPY// !/# / BY ORDER, B / DY./ASST. REGISTRAR , /ITAT, MUMBAI