ITO 20(1)(2), MUMBAI V. GIRISH & ASSOICATES, MUMBAI

ITA 1282/MUM/2010

• Counselvise Citation: 128219914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 28-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 17-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK TRASHWALA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, G BENCH, MUMBAI. BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER I.T.A NO.1282/ MUM/2010 ASSESSMENT YEAR: 2006-07 INCOME TAX OFFICER, (1)(2) .. APPELLANT ROOM NO. 606, 6 TH FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI-012. VS GIRISH & ASSOCIATES ,. RESPONDEN T 1, PANCH RATNA, PANCH MARG, OFF YARI ROAD, VERSOVA, ANDHERI(W),MUMBAI. APPEARANCES: ANURAG PRASAD, FOR THE APPELLANT DEEPAK TRASHWALA, FOR THE RESPONDENT O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HA S CALLED INTO QUESTION CORRECTNESS OF CIT(A)S ORDER DATED 18.11.2009, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR TH E ASSESSMENT YEAR 2006-07. 2. GROUND NOS.I & II ARE AS UNDER:- I. THE LD CIT (A) HAS ERRED ON FACTS AND IN LAW AN D IN THE CIRCUMSTANCES OF THE CASE IN ALLOWING THE DEDUCTION U/S. 80-IB (10) OF THE ACT TO THE EXTENT OF ` .9,63,289. II. THE LD CIT (A) FAILED TO APPRECIATE THE FACT TH AT IF THE ASSESSEE DID NOT SATISFY THE CONDITIONS LAID DOWN IN SECTION 80IB-10 SINGLY OR SEVERALLY, THEN I.T.A NO.1202/ MUM/2010 GIRISH & ASSOCIATES 2 THE ASSESSEE IS NOT ENTITLED TO THE DEDUCTION UNDER THIS SECTION. HE FAILED TO APPRECIATE THE FACT THAT EVIDENCE IN THIS REGARD ON HAS NOT BEEN DISPUTED BY THE ASSESSEE. 3. LEARNED REPRESENTATIVES AGREE THAT THE ISSUE UND ER CONSIDERATION IN THIS GROUND OF APEPAL IS COVERED BY THE ITAT (PUNE) SPEC IAL BENCH IN THE CASE OF BRAHMA ASSOCIATES V JCIT(111 ITD 113), WHICH HAS SINCE BEE N CONFIRMED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BRAHMA AS SOCIATES, 51 DTR 298 (BOM). IT HAS BEEN HELD BY THEIR LORDSHIPS THAT SECTION 80 IB (10) IS TO BE ALLOWED IN ENTIRETY TO THE HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORIT Y HAVING RESIDENTIAL UNITS WITH COMMERCIAL USER. THE DEDUCTION ALLOWED TO THE ASSESSEE IS IN CONFORMITY WITH THE LAW LAID DOWN BY THE HONBLE HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES (SUPRA). THEREFORE, WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE. 4. GROUND NOS. I & II ARE THUS DISMISSED. 5. IN GROUND NOS.III & IV, THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCES:- III. THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW I N THE CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF ` .20,00,000 MADE ON THE BASIS OF THE STATEMENT OF A PARTNER. IV. THE LD CIT (A) FAILED TO APPRECIATE THE FACT TH AT THE PARTNER OF THE ASSESSEES FIRM HAS ALREADY ADMITTED IN THE STATEMENT RECORDED DURING THE SURVEY, THAT THE FIRM HAS EARNED PROFIT ON SALE OF FLATS TO THE EXTENT OF ` .20,00,000 WHICH HAS NOT BEEN WITHDRAWN BY HIM AT ANY LATER STAGE. 6. BRIEFLY STATED THE MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE WAS SUBJECTED TO A SURVEY PROCEEDINGS IN JANUARY, 2006 AND IN THE COUR SE OF SURVEY PROCEEDINGS, ONE SHRI ANAND P BHAGTANI, PARTNER MADE A DISCLOSURE OF ` .20,00,000 AS ADDITIONAL INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER NOTED THAT NO SUCH AMOUNT IS APPARENTLY SHOWN IN THE INCO ME RETURNED BY THE ASSESSEE. IN RESPONSE TO ASSESSING OFFICERS REQUISITION TO SHOW CAUSE AS TO WHY ` .20,00,000 NOT BE ADDED TO THE INCOME RETURNED BY THE ASSESSEE, IT WAS SUBMITTED BY THE ASSESSEE THAT THE INCOME RETURNED BY THE ASSESSEE TAKES INTO ACCOUNT THE PROFIT EARNED ON SALE OF FLATS IN PANCHAVATI A BUILDING, IN RESPECT OF W HICH THE SAID DISCLOSURE WAS MADE. IT I.T.A NO.1202/ MUM/2010 GIRISH & ASSOCIATES 3 WAS SUBMITTED THAT THE NET PROFIT AFTER REDUCING AD MINISTRATIVE EXPENSES WORKS OUT TO ` .9,63,289, WHICH IS TOTALLY EXEMPTED UNDER SECTION 80-IB(10) OF THE INCOME TAX ACT, 1961 AND AS SUCH THERE IS NO NEED FOR ADDITION OF ` .20,00,000 AS PROPOSED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER, HOWEVER, WAS NOT SATISFIED. HE PROCEED TO ADD ` .20,00,000 BY OBSERVING AS FOLLOWS:- THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE. D URING THE SURVEY PROCEEDINGS, THE PARTNER OF THE ASSESSEE FIRM HAS C LEARLY STATED THAT THE ASSESSEE FIRM HAS EARNED THE PROFIT OF ` .20,00,000 ON WHICH THEY HAVE WILLING TO PAY ADVANCE TAX AMOUNTING TO ` .6,12,000. THE AR OF THE ASSESSEE STATED THAT THE ASSESSEE HAS EARNED THE GROSS PROFIT OF ` .23,72,636, ON WHICH CLAIMED THE FURTHER ADMINISTERED EXPENSES IS NOT TENABLE. THE P ARTNER OF THE ASSESSEE FIRM HIMSELF AGREED THAT THEY HAVE EARNED PROFIT OF ` .20,00,000 AFTER TAKING CARE OF ALL EXPENSES INCURRED DURING THE YEAR AND AGREED FO R PAY ADVANCE TAX WHICH IS ON NET PROFIT OF THE FIRM AND NOT ON THE GROSS PROF IT. HENCE, CONSIDERING THE STATEMENT RECORDED DURING THE COURSE OF SURVEY, THE PROFIT OF ` .20,00,000 IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE OVER AND ABOVE OF THE REGULAR PROFIT OF THE ASSESSEE FIRM. FURTHER, THE DEDUCTION U/S. 80- IB ON THE ABOVE AMOUNT IS DISALLOWED AS DISCUSSED VIDE PARA 4. SINCE THE ASS ESSEE HAS FURNISHED INACCURATE PARTICULARS, PENALTY PROCEEDINGS U/S.271(1)(C) ARE INITIATED SEPARATELY. 7. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(A). THE CIT(A) NOTED THAT NO DISCREPANCIES OR DEFECTS ARE P OINTED OUT BY THE ASSESSING OFFICER IN WORKING OUT THE PROFITS SHOWN BY THE ASS ESSEE IN HIS PROFIT AND LOSS ACCOUNT AND THAT IN ANY EVENT THE IMPUGNED ADDITION IS MADE SOLELY ON THE BASIS OF STATEMENT OF THE PARTNER. HE, THUS, DELETED THE AD DITION OF ` .20,00,000 AND WHILE DOING SO, HE OBSERVED AS FOLLOWS 3.3. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER AS WELL AS THE SUBMISSIONS AND ARGUMENTS OF THE AR AS DISCUSSED ABOVE. I HAVE ALSO GONE THROUGH THE STATEMENT RECORDED DURING THE SURVEY OF SHRI ANAND P. BHAGTANI, PARTNER OF THE APPELLANT FIRM, PRODUCED BY THE AR WHICH IS PLACED ON RECORD. AS PER HIS ANSWER TO QUESTION NO.25, THE SAID PARTNER HAS SUBMITTED AS UNDER: Q.. 25 : IN AY 2006-07, DO YOU HAVE ANY PLANS FOR C LAIMING DEDUCTION U/S.80-IB. ANS: IN AY 2006-07, WE HAVE SOLD 2 FLATS AT PANCHVA TI TILL DATE, IN RESPECT OF WHICH WE HAVE EARNED PROFIT OF ` .20,00,000 APPROX. AS PANCHAVATI-A IS NOT ENTITLED FOR BENEFIT U/S.80IB, THE ADVANCE TAX THEREON AMOUNTING TO ` .6,12,000 WILL BE PAID BY US BEFORE THE END OF THIS MONTH. FURTHER, ANY AD VANCE TAX THAT MAY ARISE OUT OF FURTHER SALES OF FLATS WILL ALSO BE PAID BY US. I.T.A NO.1202/ MUM/2010 GIRISH & ASSOCIATES 4 3.3.1 THEREFORE, FROM THE STATEMENT OF THE PARTNER, IT IS APPARENT THAT THE SAME IS A GENERAL STATEMENT BASED ON SALE OF TWO FL ATS TILL THE DATE OF SURVEY. AS AGAINST THE SAME, THE APPELLANT SOLD 3 FLATS DURING THE RELEVANT ASSESSMENT YEAR ON WHICH AS PER ITS AUDITED P&L ACCOUNT, IT HAS EAR NED A NET PROFIT OF ` .9,63,289. NO DISCREPANCIES OR DEFECTS ARE NOTICED BY THE AO IN THE WORKING OF PROFITS BY THE APPELLANT AS SHOWN IN ITS P&L ACCOUNT FOR THE R ELEVANT ASSESSMENT YEAR. THEREFORE, TO MY CONSIDERED OPINION, BASED ON THESE FACTS OF THE CASE, IT PRIMA FACIE APPEARS THAT THE AO IS NOT JUSTIFIED IN MAKIN G AN ADDITION OF ` .20 LAKHS, PURELY BASED ON THE STATEMENT OF THE PARTNER, WHICH ITSELF IS NOT BASED ON SUFFICIENT EVIDENCE. EVEN OTHERWISE SINCE THE APPE LLANTS ENTIRE PROFITS ARE ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE ACT, IT H AS NO IMPLICATION ON ITS TAXABLE INCOME FOR THE RELEVANT ASSESSMENT YEAR. THEREFORE , ON ACCOUNT OF AFORESAID DISCUSSION AND FACTS OF THE CASE AS STATED ABOVE, TH E AO IS DIRECTED TO DELETE THE ENTIRE ADDITION MADE ON THIS ACCOUNT. THIS GROUND OF APPEAL IS, THEREFORE, ALLOWED. 8. THE ASSESSING OFFICER IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 9. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PERU SED THE MATERIAL ON RECORD, WE SEE NO REASON TO INTERFERE WITH THE WELL REASONED ORDER OF THE CIT(A). WE HAVE ALSO NOTED THAT THERE IS NO MATERIAL WHATSOEVE R SAVE AND EXCEPT THE ADMISSION MADE BY THE PARTNER IN ASSESSEE-FIRM, WHICH IS CLEA RLY OF GENERAL NATURE AND WHICH IS IN ANY EVENT NOT BINDING ON THE ASSESSEE. IT IS WE LL SETTLED LAW THAT ADDITION CANNOT BE MADE SOLELY ON THE BASIS OF STATEMENT RECORDED D URING THE COURSE OF SURVEY PROCEEDINGS AS HAS ALSO BEEN HELD BY HONBLE KERALA HIGH COURT IN THE CASE OF PAUL MATHEWS & SONS V CIT (263 ITR 101). KEEPING IN MIN D THESE DISCUSSIONS, AS ALSO THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE , WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE CIT (A) AND DECLINE TO INTERFERE. 10. GROUND NOS.III & IV ARE DISMISSED. 11. IN THE RESULT, APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARI NG I.E. ON 28.4.2011 SD/- (D.MANMOHAN) VICE PRESIDENT SD/- (PRAMOD KUMAR) (ACCOUNTANT MEMBER) MUMBAI, DATED 29 TH APRIL, 2011 PARIDA I.T.A NO.1202/ MUM/2010 GIRISH & ASSOCIATES 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),31, MUMBAI 4. COMMISSIONER OF INCOME TAX, XI , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH G, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI