Sri Balaji Builders, Secunderabad V. THE ACIT, Rajahmundry

ITA 112/VIZ/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8819 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 06-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DEBAKUMAR SONOWAL
• Keywords: Validity of assessment
• Section: 143(3); 131; 132

Judgement Text

ITA NO.111&112/VIZAG/2015 M/S. SRI BALAJI BUILDERS, KAKINADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.111&112/VIZAG/2015 ( / ASSESSMENT YEAR: 2008-09 & 2009-10) M/S. SRI BALAJI BUILDERS KAKINADA ACIT, CENTRAL CIRCLE RAJAHMUNDRY [PAN NO. ABKFS2908J ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI DEBAKUMAR SONOWAL, DR / DATE OF HEARING : 03.01.2018 / DATE OF PRONOUNCEMENT : 10.01.2018 / O R D E R PER BENCH: THESE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AG AINST ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) {CIT(A)}, GUNTUR VIDE ITA NO.444&445/CIT(A)/GNT/10-11 DATED 24.2.201 4 FOR THE ASSESSMENT YEARS 2008-09 & 2009-10. SINCE, THE FACT S ARE IDENTICAL AND ITA NO.111&112/VIZAG/2015 M/S. SRI BALAJI BUILDERS, KAKINADA 2 ISSUES ARE COMMON, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED-OFF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENI ENCE. ITA 111/VIZAG/2015 (A.Y. 2008-09): 2. A SEARCH & SEIZURE OPERATION WAS CARRIED OUT IN THE GROUP CASES OF THE ASSESSEE ON 3.2.2009. CONSEQUENTLY, THE A.O. I SSUED NOTICE U/S 153C OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLE D AS 'THE ACT') AND COMPLETED THE ASSESSMENT U/S 143(3) R.W.S. 153C OF THE ACT ON TOTAL INCOME OF ` 45,53,768/-. 3. THE ASSESSEE CONSTRUCTED THE APARTMEN TS AT DOOR NO.65-2- 6/4, NARASANNA NAGAR, KAKINADA IN 1011 SQARE YARDS OF SITE TAKEN ON DEVELOPMENT BASIS FROM THE LAND LORD AND AS PER THE AGREEMENT THE ASSESSEE HAS TO CONSTRUCT 34 FLATS IN TOTAL BUILT U P AREA OF 29600 SQUARE FEET AND TO HAND OVER 9 FLATS WITH BUILT UP AREA OF 8662 SQ. FEET TO THE LAND LORD. THE ASSESSEE WOULD GET HIS SHARE OF 2093 8 SQUARE FEET. AS PER THE ENQUIRIES CONDUCTED BY THE AO FROM SHRI VVS VEN UGOPAL WHO HAS PURCHASED TWO FLATS CONSISTING OF 1307 SQUARE FEET AND 630 SQ FEET HAS STATED THAT, HE HAD AGREED FOR PAYMENT OF CONSIDERA TION OF RS.24.50 LACS WHICH WORKS OUT RS.1264/ PEER SFT. THEREFORE THE AO DETERMINED THE SALE PRICE AT RS.1250/- PER SFT AND WORKED OUT THE REALIZABLE VALUE OF RS.2,61,72,500/- FOR ASSESSES SHARE OF 20938 SFT A ND COST OF CONSTRUCTION WAS ESTIMATED AT RS.650/- FOR SFT. DUR ING THE YEAR UNDER ITA NO.111&112/VIZAG/2015 M/S. SRI BALAJI BUILDERS, KAKINADA 3 CONSIDERATION THE ASSESSEE SOLD 12 FLATS WITH BUILT UP AREA OF 14,261 SFT AND THE AO ESTIMATED THE PROPORTIONATE SALE CONSIDE RATION AT RS.1,78,26,250/- @ 1250 PER SFT AND THE COST OF CON STRUCTION OF THE SOLD FLATS WAS ESTIMATED AT RS.1,31,04,482/- AND ARRIVED AT THE PROFIT OF RS.47,21,768/- AND MADE THE ADDITION OF RS.40,15,93 1/- BEING THE DIFFERENCE AMOUNT. 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE THIS TRIBUNAL AND RAISED THE FOLLOWING GROUN DS AGAINST THE ORDER OF THE CIT(A). 1. YOUR APPELLANT SUBMITS THAT IN ABSENCE OF ANY IN CRIMINATING MATERIAL, THE ASSESSMENT UNDER SECTION 143(3) R.W.S 153C IS B AD IN LAW AND THE NOTICE UNDER SECTION 153C IS NOT WARRANTED. 2. THE CIT(A) ERRED IN LAW AND FACTS OF THE CASE IN NO T ACCEPTING THE METHOD OF ACCOUNTING FOLLOWED BY YOUR APPELLANT. YO UR APPELLANT HAS BEEN FOLLOWING PROJECT COMPLETION METHOD AND ADMITT ED INCOME ACCORDINGLY, THEREFORE THE ADDITION OF RS. 27,14,24 0/- MAY BE DELETED. 3. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THERE IS NO DIFFERENCE IN SALE VALUE PER FLAT AND BOOKS BEING N OT REJECTED, OUGHT TO HAVE ACCEPTED THE RETURNED INCOME. 4. YOUR APPELLANT SUBMITS THAT THERE IS NO INCRIMINATI NG MATERIAL SEIZED AND INCOME OFFERED UNDER SECTION 132(4) FOR AY 2009 -10 HAS BEEN ADMITTED, BASED ON POST SEARCH ENQUIRIES OR ON ESTI MATION OF SALE PRICE PER SQ. YRD, NO ADDITION CAN BE MADE, YOUR APPELLAN T PRAYS THAT THE ADDITION BE DELETED. 5. THE LD. CIT(A) CONFIRMED THE ADDITION TO THE EXTENT OF ` 27,14,240/-. DURING THE APPELLATE PROCEEDINGS THE LD. CIT(A) EXAMINED THE STATEMENTS RECORDED FROM THE FLAT BUYERS AND OB SERVED THAT THERE WAS DIFFERENCE IN THE STATED CONSIDERATION OF THE B UYERS AND THE ITA NO.111&112/VIZAG/2015 M/S. SRI BALAJI BUILDERS, KAKINADA 4 CONSIDERATION ADMITTED BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS. THE CONSIDERATION RECEIVED VARIED FROM RS. 905/- PER SF T TO RS.1109/- PER SFT. AFTER ANALYZING THE INFORMATION, THE LD CIT(A) WORK ED OUT THE UNDISCLOSED CONSIDERATION AT RS.190/- PER SFT AND A CCORDINGLY ESTIMATED THE UNDISCLOSED CONSIDERATION AT RS.27,14,240/- FOR THE AREA SOLD DURING THE YEAR AND CONFIRMED THE ADDITION TO THE EXTENT O F RS.27,14,240/- AND DELETED THE BALANCE ADDITION. 6. AGGRIEVED BY THE ORDER OF THE LD.CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US. DURING THE APPEAL HEARING, THE ASSESSEE RAISED THE VALIDITY OF ASSESSMENT MADE U/S 153C R.W.S. 143(3) OF THE ACT I N THE ABSENCE OF INCRIMINATING MATERIAL. DURING THE APPEAL HEARING, THE LD. A.R. SUBMITTED THAT THE A.O. MADE THE ADDITION ENTIRELY ON SURMISES AND ASSUMPTIONS AND ON ESTIMATION BASIS AND THERE WAS N O INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH WHAT SO EVER RELATING TO THE ASSESSEE FOR ASSESSMENT YEAR 2008-09. HENCE, THE I SSUE OF NOTICE U/S 153C OF THE ACT WITHOUT INCRIMINATING MATERIAL REQU IRED TO BE QUASHED AND RELIED ON HONBLE SUPREME COURT JUDGEMENT IN TH E CASE OF CIT VS. SINHAGAD TECHNICAL EDUCATION SOCIETY, [2017] 84 TAXMANN.COM 290 (SC) WHEREIN THE HONBLE SUPREME COURT UPHELD THE ORDER OF THE HONBLE BOMBAY HIGH COURT IN QUASHING THE NOTICE U/S 153C O F THE ACT. ITA NO.111&112/VIZAG/2015 M/S. SRI BALAJI BUILDERS, KAKINADA 5 7. ON THE OTHER HAND, THE LD. D.R. SUPPORTED THE OR DERS OF THE LOWER AUTHORITIES. 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. IN THE ASSESSEES CASE, THE ASSESSMENT WAS COMPLETED ON ES TIMATION OF INCOME IN RESPECT OF THE FLATS SOLD ON THE BASIS OF THE ST ATEMENTS RECORDED FROM THE FLAT BUYERS MR. V.V.S. VENUGOPAL AND OTHERS U/S 131 OF THE ACT. THE AO OBSERVED THAT THE BOOKS OF ACCOUNTS WERE NOT LOC ATED DURING THE SEARCH/ SURVEY PROCEEDINGS, HENCE HELD THAT THE ASS ESSEE WAS NOT MAINTAINING THE BOOKS OF ACCOUNTS AND ACCORDINGLY I NITIATED THE PROCEEDINGS U/S 153C OF THE ACT. HOWEVER IT WAS CON TENDED THAT THE ASSESSEE WAS MAINTAINING THE REGULAR BOOKS OF ACCOU NTS AND THE SAME WERE DULY AUDITED BY THE QUALIFIED ACCOUNTANT AND T HE ASSESSEE HAD FILED THE RETURN OF INCOME AS PER THE BOOKS OF ACCOUNTS F OR THE AY 2008-09 ON 01/10/2008. THE ASSESSEE ALSO PRODUCED THE BOOKS OF ACCOUNT BEFORE THE ASSESSING OFFICER WHICH WERE EXAMINED BY THE AO DURING THE ASSESSMENT PROCEEDINGS. THE AO HAS NEITHER MADE ANY EFFORT TO LOCATE THE BOOKS OF ACCOUNTS NOR RECORDED THE STATEMENT FR OM THE ACCOUNTANT WHO AUDITED THE BOOKS OF ACCOUNTS AT THE TIME OF SU RVEY. THEREFORE THE OBSERVATION OF THE AO THAT THE ASSESSEE WAS NOT MAI NTAINING THE BOOKS OF ACCOUNTS WAS NOT BASED ON ANY BASIS HENCE CANNOT BE ACCEPTED. ITA NO.111&112/VIZAG/2015 M/S. SRI BALAJI BUILDERS, KAKINADA 6 MERELY BECAUSE OF THE BOOKS OF ACCOUNTS COULD NOT B E TRACED AT THE TIME OF SURVEY/SEARCH, IT CANNOT BE PRESUMED THAT THE BO OKS OF ACCOUNTS ARE NOT MAINTAINED UNLESS ALL OUT EFFORTS ARE MADE AND CLEAR FINDING IS GIVEN. THEREFORE WE ARE OF THE VIEW THAT THE ASSESSEE WAS MAINTAINING THE BOOKS OF ACCOUNTS AND ON THE DATE OF SURVEY THE DEP ARTMENT COULD NOT LOCATE THE BOOKS OF ACCOUNTS. FROM THE ABOVE DISCU SSION IT IS ESTABLISHED THAT THE ASSESSEE HAS MAINTAINED THE BO OKS OF ACCOUNTS. THERE WAS NO INCRIMINATING MATERIAL FOUND DURING TH E COURSE OF SEARCH IN RESPECT OF ASSESSMENT YEAR 2008-09 IN THE PREMISES OF THE SEARCHED PERSON WITH REGARD TO THE SUPPRESSION OF INCOME OR INFLATION OF EXPENDITURE. THE STATEMENT RECORDED U/S 132(4) OF THE ACT RELATED TO THE ASSESSMENT YEAR 2009-10 BUT NOT RELATED TO THE A.Y.2008-09. NOW IT IS SETTLED ISSUE THAT FOR INITIATING THE PROCEEDING S U/S 153C OF THE ACT, IT IS INCUMBENT UPON THE A.O. TO HAVE THE INCRIMINATIN G MATERIAL EVIDENCING THE UNDISCLOSED INCOME. IN THE ASSESSEE S CASE NO SUCH EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH IN T HE GROUP CASES. AS PER THE PROVISIONS OF SECTION 153C OF THE ACT, IT I S MANDATORY TO HAVE THE SATISFACTION OF THE A.O. THAT MONEY, BULLION, JEWEL LERY OR OTHER VALUABLE ARTICLE OR THING OR ANY BOOKS OF ACCOUNTS, DOCUMENT S SEIZED OR REQUISITIONED PERTAINS TO OR RELATES TO THE ASSESSE E, WHICH MEANS THAT UNLESS THERE IS AN INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE IS ITA NO.111&112/VIZAG/2015 M/S. SRI BALAJI BUILDERS, KAKINADA 7 FOUND, THE ACTION U/S 153C OF THE ACT IS NOT PERMIS SIBLE. IN THE ASSESSEES CASE THERE WAS NO INCRIMINATING MATERIAL FOUND AND SEIZED FROM THE PREMISES OF THE GROUP CASES. THEREFORE, W E HOLD THAT THE NOTICE ISSUED U/S 153C OF THE ACT IS NOT SUSTAINABL E AND ACCORDINGLY QUASHED. THIS VIEW IS UPHELD BY THE HONBLE SUPREM E COURT IN THE CASE OF CIT VS. SINHAGAD TECHNICAL EDUCATION SOCIETY (SU PR). RESPECTFULLY FOLLOWING THE JUDGEMENT OF THE HONBLE SUPREME COUR T, WE HOLD THAT THE NOTICE ISSUED U/S 153C OF THE ACT IS UNSUSTAINABLE AND ACCORDINGLY QUASHED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA NO.112/VIZAG/2015 (A.Y. 2009-10): 10. A SEARCH U/S 132 OF THE ACT WAS CONDUCTED IN TH E GROUP CASES OF THE ASSESSEE ON 3.2.2009. CONSEQUENTLY, THE NOTICE U/S 153C OF THE ACT WAS ISSUED IN THIS CASE AND THE ASSESSMENT WAS COMP LETED U/S 143(3) OF THE ACT ON TOTAL INCOME OF ` 16,13,333/-. DURING THE SEARCH PROCEEDINGS U/S 132 OF THE ACT, THE ASSESSEE HAD ADMITTED THE A DDITIONAL INCOME OF ` 20 LAKHS U/S 132(4) OF THE ACT AND ACCORDINGLY FILE D THE RETURN OF INCOME. HOWEVER, THE ASSESSING OFFICER COMPLETED T HE ASSESSMENT ESTIMATING THE INCOME. AGGRIEVED BY THE ORDER OF T HE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) SUSTAINED THE ADDITION OF ` 10,69,700/- AND DELETED THE BALANCE AMOUNT. ITA NO.111&112/VIZAG/2015 M/S. SRI BALAJI BUILDERS, KAKINADA 8 11. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSES SEE IS IN APPEAL BEFORE THIS TRIBUNAL AND THE ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS AGAINST THE ORDER OF THE CIT(A). 1. YOUR APPELLANT SUBMITS THAT IN ABSENCE OF ANY IN CRIMINATING MATERIAL, THE ASSESSMENT UNDER SECTION 143(3) R.W.S 153C IS B AD IN LAW AND THE NOTICE UNDER SECTION 153C IS NOT WARRANTED. 2. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT YOUR APPELLANT HAS ALREADY ADMITTED RS. 20,00,000/- DURNG THE SEARCH A ND THE SAME HAS BEEN INCLUDED IN THE RETURN OF INCOME, THEREFORE TH ERE IS NO NEED TO MAKE ADDITIONS OF RS. 10,69,700/-. 3. THE CIT(A) ERRED IN LAW AND FACTS OF THE CASE IN NO T ACCEPTING THE METHOD OF ACCOUNTING FOLLOWED BY YOUR APPELLANT. YO UR APPELLANT HAS BEEN FOLLOWING PROJECT COMPLETION METHOD AND ADMITT ED INCOME ACCORDINGLY, THEREFORE THE ADDITION OF RS. 10,69,70 0/- MAY BE DELETED. 4. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THERE IS NO DIFFERENCE IN SALE VALUE PER FLAT AND BOOKS BEING N OT REJECTED, OUGHT TO HAVE ACCEPTED THE RETURNED INCOME. 5. YOUR APPELLANT SUBMITS THAT THERE IS NO INCRIMINATI NG MATERIAL SEIZED AND INCOME OFFERED UNDER SECTION 132(4) FOR AY 2009 -10 HAS BEEN ADMITTED, BASED ON POST SEARCH ENQUIRIES OR ON ESTI MATION OF SALE PRICE PER SQ. YRD. NO ADDITION CAN BE MADE, YOUR APPELLAN T PRAYS THAT THE ADDITION BE DELETED. 12. DURING THE APPEAL HEARING, THE LD. A.R. OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD ADMITTED ADDITIONAL INCOME OF ` 20 LAKHS DURING THE COURSE OF SEARCH AND ACCORDINGLY FILED THE RETU RN OF INCOME WHICH WAS MORE THAN THE INCOME ESTIMATED BY THE A.O., HEN CE THERE IS NO NECESSITY TO THE A.O. TO RE-COMPUTE THE INCOME BY E STIMATION. HOWEVER, DURING THE APPEAL HEARING, THE LD. A.R. HA S NOT PRESSED THE GROUNDS OF APPEAL, THEREFORE, THE APPEAL IS DISMISS ED AS NOT PRESSED. ITA NO.111&112/VIZAG/2015 M/S. SRI BALAJI BUILDERS, KAKINADA 9 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE FOR THE A.Y. 2008-09 IS ALLOWED AND THE APPEAL FOR THE A.Y. 2009-10 IS D ISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 10 TH JAN18. SD/- SD/- ( . ) ( . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 10.01.2018 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT M/S. SRI BALAJI BUILDERS, C/O M. ANANDAM & CO., CHARTERED ACCOUNTANTS, 7A, SURYA TOWERS, S.P. ROAD, SECUNDERABAD. 2. / THE RESPONDENT THE ACIT, CENTRAL CIRCLE, RAJAH MUNDRY 3. + / THE CIT, GUNTUR 4. + ( ) / THE CIT (A), GUNTUR 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM