The ITO, Ward-6(3), Surat V. Shri Nareshkumar Chandmal Shah, Surat

ITA 1365/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9792 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-12-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 25-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Tax effect
• Section: 44AD; 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER & SHRI KUL BHARAT, JUDICIAL MEMBER) ITA NO: 1365/AHD/2012 (ASSESSMENT YEAR: 2004-05) & C.O. NO.118/AHD/2012 (ASSESSMENT YEAR: 2004-05) THE INCOME-TAX OFFICER, WARD-6(3), ROOM NO.616, AAYAKAR BHAVAN, MAJURA GATE, SURAT SHRI NARESHKUMAR CHANDMAL SHAH, 2, SHRUSHTI SOCIETY, SHASHTRI ROAD, BARDOLI, DIST. SURAT. VS & VS SHRI NARESHKUMAR CHANDMAL SHAH, 2, SHRUSHTI SOCIETY, SHASHTRI ROAD, BARDOLI, DIST. SURAT. THE INCOME-TAX OFFICER, WARD-6(3), ROOM NO.616, AAYAKAR BHAVAN, MAJURA GATE, SURAT (APPELLANT) (RESPONDENT) PAN: ACIPS4970M BY REVENUE : SHRI DINESH SINGH, SR. D.R. BY ASSESSEE : WRITTEN SUBMISSION (NONE) DATE OF HEARING : 30-12-2015 DATE OF PRONOUNCEMENT : 08 -01-2016 ITA NO .1365/AHD/2012 & C.O. NO. 118 / AHD/ 12 A.Y. 2004- 05 2 ( )/ ORDER PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THESE TWO APPEALS OF WHICH ONE IS FILED BY REVENUE AND THE OTHER I.E. CROSS OBJECTION BY ASSESSEE ARE AGAINST THE ORDER OF CIT(A)-IV, SURAT DATED 30.03.2012 FOR A.Y. 2004-05. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIALS ON RECORD ARE AS UNDER: 3. THE ASSESSEE IS AN INDIVIDUAL STATED TO BE ENGAGED IN THE BUSINESS OF CARTING OF BUILDING MATERIAL AND IN THE DEVELOPMENT OF RESI DENTIAL AND COMMERCIAL PROJECTS. ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y.2004-05 ON 25.01.2005 DECLARING TOTAL INCOME AT RS.74,170/-. SUBSEQUENTLY A NOTICE U/S.148 OF THE ACT WAS ISSUED ON 28.03.2011 AND THE REAFTER ASSESSMENT WAS FRAMED U/S.143(3) R.W.S. 147 VIDE ORDER DATED 25.11 .2011 AND THE TOTAL INCOME WAS DETERMINED AT RS.20,74,170/-. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFO RE THE CIT(A) WHO VIDE ORDER DATED 30.03.2012 GRANTED PARTIAL RELIEF TO TH E ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFOR E US AND ASSESSEE HAS ALSO FILED THE C.O. THE GROUNDS RAISED BY THE REVE NUE IN ITA NO.1365/AHD/2012 READS AS UNDER: 1. AS PER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING RELIEF OF RS.16,64,000/- TO T HE ASSESSEE OUT OF THE ADDITION OF RS.20,00,000/- MADE BY THE ASSESSING OF FICER ON ACCOUNT OF UNDISCLOSED INCOME EARNED FROM SALE OF ROW HOUSES I N THE PROJECT OF MANAV PARK. 2. AS PER THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION IN RESPECT OF EXPEN SES @ 88% OF SALE ITA NO .1365/AHD/2012 & C.O. NO. 118 / AHD/ 12 A.Y. 2004- 05 3 CONSIDERATION OF RS.28,45,818/- {(28,00,000 X 100/8 8)- RS.3,36,000)} IN CONTRAVENTION TO THE PROVISIONS OF SECTION 69C OF T HE I.T. ACT. ON THE OTHER HAND, THE GROUND RAISED BY ASSESSEE IN HIS C.O. NO.118/AHD/2012 READS AS UNDER: 1. THE LEARNED CIT(A) GROSSLY ERRED IN ESTIMATING PROFIT AT 12% INSTEAD OF 8% ON PROJECT WHICH WAS CARRIED OUT IN A VILLAGE TY PE AREA AT BARDOLI. 4. ON THE DATE OF HEARING NONE APPEARED ON BEHALF OF A SSESSEE THOUGH THE NOTICE FIXING HEARING WAS SERVED ON THE ASSESSEE, B UT HOWEVER WRITTEN SUBMISSION WAS FILED. WE, THEREFORE, PROCEED TO DI SPOSE OF THE APPEAL EX PARTE QUA ASSESSEE, ON THE BASIS OF MATERIAL AVAILA BLE ON RECORD. 5. IN THE WRITTEN SUBMISSION, AS FAR AS REVENUES APPE AL IS CONCERNED IT IS SUBMITTED THAT THE DEPARTMENTS APPEAL NEEDS TO BE DISMISSED ON ACCOUNT OF LOW TAX EFFECT AS STIPULATED IN THE RECENT CBDT CIR CULAR.. THE LD. D.R. ON THE OTHER HAND ON THE ISSUE OF REVENUES APPEAL DID NOT DISPUTE ABOUT THE TAX EFFECT BEING LOW BUT HOWEVER ON MERITS SUPPORTED TH E ORDER OF LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON PERUSING THE GROUNDS OF APPEAL RAISED BY THE REVENU E, WE FIND THAT REVENUE IS AGGRIEVED BY DELETION OF AGGREGATE ADDITION OF R S. 20,00,000/-, THE TAX EFFECT OF WHICH IS BELOW RS. 10 LACS. AS PER THE AN NOUNCEMENT OF CENTRAL BOARD OF DIRECT TAXES (CBDT) DATED 10.12.2015 (CIRC ULAR NO. 21 OF 2015), NO DEPARTMENT APPEALS ARE TO BE FILED AGAINST RELIE F GIVEN BY LD. CIT(A) BEFORE THE INCOME TAX TRIBUNAL UNLESS THE TAX EFFEC T, EXCLUDING INTEREST EXCEEDS RS. 10 LACS AND IT FURTHER STATES THAT THE INSTRUCTIONS WILL APPLY RETROSPECTIVELY TO THE PENDING APPEALS. IN THE PRES ENT CASE, SINCE IT IS AN UNDISPUTED FACT THAT ON THE ADDITIONS WHICH ARE IN DISPUTE THE TAX EFFECT IS ITA NO .1365/AHD/2012 & C.O. NO. 118 / AHD/ 12 A.Y. 2004- 05 4 LESS THAN RS. 10 LACS, WE ARE OF THE VIEW THAT THE MONETARY LIMIT PRESCRIBED BY THE INSTRUCTIONS OF THE AFORESAID CBDT CIRCULAR WOULD BE APPLICABLE TO THE PRESENT APPEAL OF THE DEPARTMENT AND THEREFORE THE PRESENT APPEAL OF REVENUE IS NOT MAINTAINABLE ON ACCOUNT OF LOW TAX E FFECT. IN SUCH CIRCUMSTANCES, WE DISMISS THE APPEAL OF REVENUE WIT HOUT EXPRESSING ANY OPINION ON MERITS OF THE CASE. 7. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. 8. AS FAR AS THE CROSS OBJECTION OF THE ASSESSEE IS CO NCERNED, WE FIND THAT LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASS ESSEE HAS GRANTED PARTIAL RELIEF TO ASESSEE BY HOLDING AS UNDER: 3.2. I HAVE GONE THROUGH THE FACTS OF THE CASE. THE STATEMENT RECORDED BY THE A DIT, THE ACCEPTANCE OF THE APPELLANT IN THIS STATEMENT AND T HE INVESTIGATIONS CARRIED OUT BY THE A.O. WITH THE PURCHASERS OF THE ROW HOUSES, ALL IND ICATE THAT THE ROW HOUSES HAD BEEN DEVELOPED BY THE APPELLANT. THE APPELLANT HAS NOT H ELPED HIS CAUSED BY NOT PRODUCING THE LAND OWNER, DEVELOPER OR THE BOOKS OF ACCOUNTS OF T HESE PERSONS. RELIANCE PLACED BY THE APPELLANT ON THE FACT THAT THE RECEIPTS FROM THE SA LE DO NOT APPEAR IN HIS BANK ACCOUNT WILL NOT HELP THE APPELLANT AS THE PROJECT WAS NEVE R INTENDED TO BE RECORDED. THIS IS ESTABLISHED BY THE FACT THAT CONSTRUCTED ROW HOUSES WERE SOLD BUT DOCUMENTS HAD BEEN EXECUTED FOR LAND PORTION ALONE. NO ENTRY WOULD THE REFORE BE FOUND IN THE BANK ACCOUNTS. THE CONCLUSION OF THE A.O. THAT THE PROJECT WAS DEV ELOPED BY THE ASSESSEE AND INCOME ACCRUES TO HIM IS REQUIRED TO BE UPHELD. I AM HOWEV ER NOT ABLE TO AGREE WITH THE INCOME DETERMINED BY THE A.O. THE A.O. HAS ACCEPTED THE SA LE AMOUNT OF RS.28,00,000/-. THIS INCLUDES THE LAND AS WELL AS CONSTRUCTION PRICE. IF THE INCOME OF RS.20,00,000/- IS ACCEPTED, IT WOULD AMOUNT TO 71.5% OF TURNOVER WHIC H IN MY OPINION IS IMPOSSIBLE TO ACHIEVE. THE APPELLANT HAS ASKED FOR THE DETERMINAT ION OF INCOME AS PER SECTION 44AD AND HAS ALSO RELIED ON DECISIONS WHERE INCOME FROM DEVELOPMENT HAS BEEN CONSIDERED AT 8% TO 10%, THE INCOME OF THE APPELLANT CANNOT BE DE TERMINED U/S. 44AD AS HE IS THE OWNER AND DEVELOPER OF THE PROJECT AND NOT JUST EXE CUTING CIVIL CONTRACTS. IN MY OPINION, IT WOULD BE REASONABLE TO ADOPT A PROFIT RATE OF 12 % ON SALE PRICE. THE INCOME OF THE APPELLANT FROM VOW HOUSE PROJECT IS THEREFORE DETER MINED AT RS.3,36,000/-. THE A.O. IS DIRECTED TO CONSIDER THIS IN THE COMPUTATION OF INC OME. THE GROUNDS ARC PARTLY ALLOWED. 8.1 AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW I N APPEAL BEFORE US. 8.2 BEFORE US, LD. D.R. SUPPORTED THE ORDER OF LOWER AU THORITIES. ITA NO .1365/AHD/2012 & C.O. NO. 118 / AHD/ 12 A.Y. 2004- 05 5 8.3WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATER IAL ON RECORD. WE FIND THAT CIT(A) WHILE GRANTING PARTIAL RELIEF TO ASSESS EE HAS GIVEN A FINDING THAT THE INCOME OF THE ASSESSEE CANNOT BE DETERMINED U/S .44AD OF THE ACT AS HE IS THE OWNER AND DEVELOPER OF THE PROJECT AND NOT J UST EXECUTING CIVIL CONTRACT AND IN SUCH A SITUATION, IT WOULD BE REASO NABLE TO ADOPT PROFIT RATE OF 12% ON SALE PROFIT AND HE ACCORDINGLY DETERMINED TH E PROFIT AT RS.3,36,000/- (12% OF RS.28LACS). BEFORE US, NO MATERIAL HAS BEE N PLACED ON RECORD TO DEMONSTRATE ANY FALLACY IN THE FINDING OF LD. CIT(A ). IN VIEW OF THE AFORESAID FACTS, WE ARE OF THE VIEW THAT NO INTERFE RENCE TO THE ORDER OF LD. CIT(A) IS CALLED FOR AND THUS, THE GROUND OF ASSESS EE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF REVENUE AND CROSS OBJE CTION OF ASSESSEE BOTH ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 08.01.2016 SD/- SD/- (KUL BHARAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED. TRUE COPY S K SINHA COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD