Mr. Ijaz Modak, Pune V. ITO, Wd.-5(4), Pune

ITA 1359/PUN/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1969 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 03-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Rejection of books of accounts; Business income; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI G.S.PANNU, ACCOUNTANT MEMBER. ITA.NO.1359/PN/2011 (ASSTT. YEAR : 2006-07) SHRI IJAZ MODAK, 405, SAHAJANAND COMPLEX, EAST STREET, CAMP, PUNE 411001. .. APPELLANT PAN: AGTPM6594N VS. ITO, WARD-5(4), PUNE. .. RESPONDENT ASSESSEE BY : SHRI KISHOR PHADKE DEPARTMENT BY : MS.ANN KAPTHUAMA DATE OF HEARING : 21.03.2013 DATE OF PRONOUNCEMENT : 22.03.2013 ORDER PER SHAILENDRA KUMAR YADAV, JM : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS: 1. THE LEARNED CIT(APPEALS)-II, PUNE ERRED IN LAW AND ON FACTS IN PARTLY CONFIRMING THE ADDITION MADE BY THE ITO, WAR D 4(5), PUNE. HE ERRED IN RETAINING ADDITION OF RS.7,69,24 2/- OUT OF RS.13,82,739/- MADE BY THE ITO, WARD 4(5), PUNE. 2. THE LEARNED CIT(APPEALS)-II, PUNE ERRED IN LAW AND ON FACTS IN TREATING THE SALE VALUE OF 8 FLATS AND ONE SHOP AT RS.55,40,652/- INSTEAD OF RS.53,74,250/-. HE OUGHT TO HAVE APPRECIATED THAT DIFFERENCE OF RS.1,66,402/- IS ON ACCOUNT OF MSEB CHARGES COLLECTED BY THE ASSESSEE FROM THE CUS TOMERS AND PAID BACK TO THE MSEB. 3. FURTHER, THE LEARNED CIT(APPEALS)-II, PUNE ERRED IN LAW AND ON FACTS IN DISALLOWING THE SUBSEQUENT YEARS EXPENSES RELATING TO THE PROJECT AMOUNTING TO RS.3,03,900/-. 2 2. THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUS INESS OF CIVIL CONSTRUCTION IN THE NAME AND STYLE OF M/S.AHAD CONS TRUCTIONS. THE ASSESSING OFFICER COMPUTED BUSINESS INCOME OF T HE ASSESSEE AT RS.13,82,739/- AS AGAINST RETURNED INCOME OF RS.2,0 9,400/-. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AD CONSTRUCTED A RESIDENTIAL BUILDING AS PER UNDERSTANDING WITH TH E OWNER AND TENANTS. AS PER THE UNDERSTANDING THE TENANTS WERE ALLOTTED ONE FLAT EACH OUT OF THE EIGHT FLATS AND THE REMAINING FOUR WERE SOLD TO OUTSIDERS. IN THE RETURN OF INCOME THE ASSESSEE CL AIMED SALE TO THE TUNE OF RS.41,12,000/-. HOWEVER, THE ASSESSING OFF ICER ESTIMATED IT TO BE AT RS.53,74,250/- AS PER THE SALE AGREEMENTS. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT U/S.145(3) AN D COMPLETED THE ASSESSMENT ON THE BASIS OF EVIDENCE SUBMITTED BY TH E ASSESSEE AND AVAILABLE ON RECORD. THE ASSESSING OFFICER ASKED T HE ASSESSEE TO PREPARE PROJECT COSTING AND PRODUCE THE SUPPORTING EVIDENCE IN SUPPORT OF HIS CLAIM OF THE PROJECT. ON THE BASIS OF THE ABOVE, THE ASSESSING OFFICER PROCEEDED TO COMPUTE THE PROFIT O F THE ASSESSEE AT RS.13,82,739/-. MATTER WAS CARRIED BEFORE THE FIRS T APPELLATE AUTHORITY WHEREIN THE CIT(A) GRANTED RELIEF OF RS.6 ,79,899/- AND REMAINING AMOUNT WAS UPHELD. SAME HAS BEEN OPPOS ED BEFORE US. 3. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN RETAINING ADDITION OF RS.7,69, 242/- OUT OF RS.13,82,739/- MADE BY THE ASSESSING OFFICER. THE CIT(A) ERRED IN LAW AND ON FACTS IN TREATING THE SALE VALUE OF 8 FL ATS AND ONE SHOP AT RS.55,40,652/- INSTEAD OF RS.53,74,250/-. HE OUGHT TO HAVE APPRECIATED THAT DIFFERENCE OF RS.1,66,402/- IS ON ACCOUNT OF MSEB CHARGES COLLECTED BY THE ASSESSEE FROM THE CUSTOMER S AND PAID BACK TO THE MSEB. ON THE OTHER HAND LD. DEPARTMENTAL RE PRESENTATIVE SUPPORTED THE ORDER OF THE CIT(A) WHO HAS RETAINED THE ADDITION OF RS.7,69,242/- OUT OF RS.13,82,739/- MADE BY THE ASS ESSING OFFICER. 4. AFTER GOING THROUGH THE ABOVE SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE ASSESSING OFFICER HAS ASSE SSED THE TOTAL 3 INCOME OF THE ASSESSEE AT RS.13,82,739/- AS AGAINST RETURNED INCOME OF RS.2,09,400/-. THE ASSESSING OFFICER HAS RESORTED TO TAXING THE PROFIT OF THE ASSESSEE DURING THE YEAR U NDER CONSIDERATION BY OBSERVING THAT THE ENTIRE PROJECT WAS VIRTUALLY COMPLETED IN A.Y. 2006-07. THE ASSESSING OFFICER H AS CARRIED OUT VERIFICATION OF THE SALES AS WELL AS THE EXPENDITUR E MADE BY THE ASSESSEE FOR THE SAID PROJECT AND THEREAFTER HAS WO RKED OUT THE PROFIT. THE ASSESSING OFFICER DURING THE ASSESSMEN T PROCEEDINGS ALSO FOUND THAT THE ACCOUNTS OF THE ASSESSEE WERE N OT CORRECTLY MAINTAINED AND SUFFERING FROM DEFECTS, WHICH WAS NO T REBUTTED ON BEHALF OF THE ASSESSEE BEFORE THE ASSESSING OFFICER . ACCORDINGLY HE REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE BY I NVOKING PROVISIONS OF SECTION 145(3) OF THE ACT AND RESORTE D TO TAX THE PROFIT OF THE ASSESSEE ON THE BASIS OF THE EVIDENCE SUBMIT TED ON BEHALF OF THE ASSESSEE AND THOSE AVAILABLE ON RECORD. THE AS SESSEE HAS CONTESTED THAT THE ASSESSING OFFICER HAS ERRED IN A DOPTING HYPOTHETICAL NET PROFIT ON THE REVENUE OF RS.53,74, 250/- WHICH ITSELF WAS NOT CORRECT AS THE ASSESSEE FOLLOWED COMPLETED CONTRACT METHOD FOR RECOGNISING THE REVENUE FROM THE CONSTRUCTION A CTIVITY. IT WAS STATED ON BEHALF OF THE ASSESSEE THAT DURING THE YE AR THE ASSESSEE HAS SOLD ONLY THREE TENEMENTS AND GIVEN POSSESSION OF TOTAL EIGHT FLATS AND ONE SHOP AND THE BALANCE FLATS WERE SOLD IN THE SUBSEQUENT YEAR AS SUCH ASSESSING OFFICER WAS NOT J USTIFIED IN PREPONING THE ENTIRE SALE IN A.Y. 2006-07. AS DISC USSED ABOVE, THE ASSESSEE HAS CONSTRUCTED A RESIDENTIAL BUILDING AT MANGALWARPETH, PUNE. THE SAID BUILDING CONSISTS OF EIGHT FLATS AN D ONE SHOP. THE CONSTRUCTION OF THE BUILDING WAS STARTED IN THE MON TH OF MARCH 2005 AND WAS COMPLETED DURING A.Y. 2006-07. THE AS SESSING OFFICER HAS THEREFORE, RIGHTLY RESORTED TO TAX THE PROFIT OF THE SAID PROJECT AS PER PERCENTAGE COMPLETION METHOD THOUGH THE POSSESSION OF FIVE RESIDENTIAL UNITS AND ONE SHOP HAS BEEN GIV EN IN SUBSEQUENT YEARS. THE ASSESSING OFFICER HAS REJECTED THE BOOK S OF ACCOUNT AFTER VERIFICATION OF THE DETAILS OF SALES AND EXPENSES O F THE ASSESSEE. THE ASSESSEE COULD NOT BRING ANY COGENT MATERIAL ON REC ORD TO JUSTIFY THAT THERE WAS NO ERROR IN THE BOOKS OF ACCOUNT MAI NTAINED BY HIM. 4 THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN R EJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE NEXT ISSUE IS WITH REGARD TO SALE HAVING TAKEN PLACE OVER NEXT TWO TO THREE YEARS AND THAT SOME EXTRA COSTS HAVE BEEN INCURRED AT THE TIME OF SALES. THE ASSESSEE HAS NOT FURNISHED ANY SPECIFIC DETAILS OF SUCH EXPENSES. T HE CONTENTION OF THE ASSESSEE WAS CONSIDERED BY THE CIT(A). SOME EX PENSES RELATED TO SALES AND SUCH RELATED EXPENSES OF THE UNIT CONS TRUCTED WAS FOUND JUSTIFIED BY THE CIT(A). IN THE WORKING OF T HE PROJECT FOR THE PROJECT BY THE ASSESSING OFFICER NO SUCH SALES RELA TED EXPENSES WERE APPEARING. THE ASSESSEE HAD CLAIMED EXPENDITURE OF RS.4,03,900/- HOWEVER, CONSIDERING THE ENTIRE FACTS THE EXPENDITU RE OF RS.1,00,000/- WAS FOUND FIT FOR SUCH SUBSEQUENT EXP ENSES. AS THE ENTIRE PROFIT OF THE PROJECT HAS BEEN TAXED IN THE A.Y. 2006-07, IT WAS FOUND REASONABLE TO REDUCE THE SAME BY RS.1,00, 000/-. 5. THE OTHER CONTENTION OF THE ASSESSEE IS WITH REG ARD TO DOUBLE TAXATION AS STATED BY THE ASSESSEE AND IN THE ALTER NATE SUBMISSION BEFORE THE CIT(A) THE ASSESSEE PRODUCED COPIES OF R ETURNS AND COMPUTATION OF INCOME FOR THE NEXT THREE YEARS TO I NDICATE THAT THE PROFITS AMOUNTS TO RS.6,79,899/- WERE ALREADY OFFER ED TO TAX FOR THE SAME PROJECT IN THE LATER YEARS. THESE DETAILS ARE AS UNDER: A.Y. 2007-08 2,74,580/- A.Y. 2008-09 2,06,608/- A.Y. 2009-10 1,98,711/- 6,79,899/- 6. THE CIT(A) AGREEING TO THE CONTENTIONS OF THE AS SESSEE THAT DOUBLE TAXATION INDEED APPEARED TO HAVE TAKEN PLACE DUE TO RESORTING TO PERCENTAGE COMPLETION METHOD ADOPTED B Y THE ASSESSING OFFICER IN A.Y. 2006-07. THE ASSESSING O FFICER HAS TAKEN TOTAL SALES AT RS.53,74,250/- WHEREAS TOTAL RECEIPT S OF THE ENTIRE PERIOD I.E., UPTO A.Y. 2009-10 IS TAKEN INTO CONSID ERATION AND THE TOTAL SALES RECEIPTS WORKED OUT TO RS.55,40,652/- A S FURNISHED BEFORE THE ASSESSING OFFICER WHICH IS FOUND MORE TH AN RS.53,74,250/- TAKEN BY THE ASSESSING OFFICER BY RS .1,66,402/-. 5 AS AGAINST THE SAID RECEIPTS THE EXPENSES ALLOWABLE WORKED OUT TO RS.40,91,511/- (39,91,511 + 1,00,000) AND AS SUCH T HE PROFITS OFFERED TO TAX IN THE SUBSEQUENT THREE YEARS BY THE ASSESSEE WAS REQUIRED TO BE REDUCED FROM THE PROFITS ESTIMATED F OR A.Y. 2006-07. ACCORDINGLY, THE ASSESSEE WAS RIGHTLY GRANTED RELIE F OF RS.6,79,899/- AND ADDITION MADE BY THE ASSESSING OFFICER WAS REDU CED EQUIVALENT TO THE SAID AMOUNT. THIS REASONED FACTUAL FINDING NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 7. AS A RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 22 ND DAY OF MARCH, 2013. SD/- SD/- ( G.S.PANNU ) ( SHAILENDRA KUMAR YAD AV ) ACCOUNTANT MEMBER JUDICIAL MEMBER GSPS PUNE, DATED THE 22 ND MARCH, 2013 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE ITO, WARD-5(4), PUNE. 3. THE CIT(A)-II, PUNE. 4. THE CIT-II, PUNE. 5. THE DR A BENCH, PUNE. 6. GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.