ACIT, New Delhi V. M/s. IAG Promoters & Developers (P) Ltd., New Delhi

ITA 1370/DEL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5494 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 23-12-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 07-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 40A(3); 143(3); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C NEW DELHI BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI A.T. VARKEY , JUDICIAL MEMBER ITA NO. 1746/DEL/2013 ASST T. YEAR 2006-07 IAG PROMOTERS & DEVELOPERS (P) LTD. VS. ACIT M-11, MIDDLE CIRCLE, CENTRAL CIRCLE-23, CANNAUGHT CIRCUS NEW DELHI. NEW DELHI. (PAN AAAC17995R) (APPELLANT) (RESPONDENT) AND ITA NO. 1370/DEL/2013 ASST T. YEAR 2006-07 ACIT VS. IAG PROMOTERS & DEVELOPERS (P) LTD. CENTRAL CIRCLE-23, M-11, MIDDLE CIRCLE, E-2, ARA CENTRE, CANNAUGHT CIRCUS JHANDEWALAN EXTENSION, N EW DELHI. NEW DELHI. (PAN AAAC17995R) (APPELLANT) (RESPONDENT) APPELLANT BY :SHRI V.S. RASTOGI, AR RESPONDENT :SHRI SATPAL SINGH, SR. DR O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THESE ARE THE CROSS APPEALS DIRECTED AGAI NST THE ORDER OF COMMISSIONER OF INCOME TAX APPEALS, XXXIII, NEW DELHI DATED 28.12.2 012 FOR THE ASSTT. YEAR 2006- 07. ITA . NOS.1746, 1370/DEL/2013 AY 2006-07 IAG PROMOTERS & DEVELOPERS (P) LTD. 2 2. BRIEF FACTS :- THE ASSESEE IS A COMPANY AND IS ENGAGED IN THE BUSINESS OF REAL ESTATE. IT FILED ITS RETURN OF INCOME ON 21.11.2006 , DECLARING AN INCOME OF RS.5,38,459/-. THE AO COMPLETED THE ASSESSMENT U/S 143(3) ON 31.12.2008 DETERMINING THE TAXABLE INCOME AT RS. 55,35,460/-, INTER ALIA MAKING ADDITIONS U/S 40A(3) OF RS. 17,72,960/-, ON ACCOUNT OF ADDITIONAL PAYMENTS OF RS. 37,500/- AND AN ADDITION U/S 2(22)(E) OF RS. 31,86,541/-. AGGRIEV ED THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE FIRST APPELLATE AUTHORITY DELETED TH E ADDITION MADE U/S 2(22)(E) OF THE ACT. AS REGARDS THE OTHER ADDITIONS THE FIRST APPEL LATE AUTHORITY CONFIRMED THE FINDINGS OF THE AO. AGGRIEVED THE ASSESEE IS IN APPEAL ON THE FOLLOWING GROUNDS :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW THE CIT(A) ERRED IN REJECTING APPELLANTS CONTENTION THAT ASSESSMENT OR DER MADE BY ASSESSING OFFICER WAS BAD IN LAW AND VOID AB-INITIO ON THE GROUND THA T IT OUGHT TO HAVE BEEN MADE U/S 153C OF THE INCOME TAX ACT, AND NOT, AS WAS DON E U/S 143(3) OF THE INCOME TAX ACT. 2. THAT WITHOUT PREJUDICE, ON THE FACTS AND CIRCUMSTAN CES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSI NG OFFICER IN RELYING UPON THE MATERIAL SEIZED IN THE CASE OF SEARCH ON M/S. BPTP GROUP OF CASES DESPITE :- I) THAT SUCH MATERIAL HAD NO NEXUS / RELEVANCE WITH TH E CASE OF THE APPELLANT AND, II) THAT, THE CIT(A) HIMSELF HOLDING THAT SUCH MATERIAL DID NOT BELONG TO THE APPELLANT. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW THE CIT(A) ERRED IN NOT ACCEPTING THE APPELLANTS CONTENTION THAT ADDIT IONAL PAYMENTS HAVING NOT BEEN ITA . NOS.1746, 1370/DEL/2013 AY 2006-07 IAG PROMOTERS & DEVELOPERS (P) LTD. 3 CLAIMED AS DEDUCTION BY APPELLANT, NO DISALLOWANCE COULD HAVE BEEN MADE IN THE HANDS OF THE APPELLANT. 3.1 THAT WITHOUT PREJUDICE THE CIT(A) ERRED IN UPHOLDIN G THE DISALLOWANCE OF ADDITIONAL PAYMENTS MADE TO THE RECIPIENTS WHO WERE NOT THE OWNERS OF LAND AND TO THE PAYMENT MADE IN CASH. 3.2 THAT WITHOUT PREJUDICE THE CIT(A) ERRED IN NOT HIMS ELF QUANTIFYING THE ADDITION TO BE MADE. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE U/S 40A(3) IN RESPECT OF WHICH NO DEDUCTION WAS CLAIMED BY THE APPELLANT. 4.1 THAT EVEN ON MERITS THE DISALLOWANCE WAS NOT JUSTIFIED. 5. THAT THE ORDERS PASSED BY THE ASSESSING O FFICER AND COMMISSIONER OF INCOME TAX (APPEALS)-XXXIII, NEW DELHI ARE BAD IN LAW AND VOID AB-INITIO. 3. REVENUE ALSO FILED AN APPEAL ON THE FOLLOWI NG GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 31,84,498/- MADE BY TH E ASSESSING OFFICER ON ACCOUNT OF INTEREST ON PDCS PAID OUT OF BOOKS OF AC COUNT. 2. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TEN ABLE ON FACTS AND IN LAW. 4. WE HAVE HEARD SHRI V.S. RASTOGI, LD. COUNSE L FOR THE ASSESSEE AND SHRI SATPAL SINGH, SR. DR ON BEHALF OF THE REVENUE. 5. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND A PERUSAL ON THE PAPERS ON RECORD AND ORDERS OF THE A UTHORITIES BELOW, AS WELL AS CASE LAWS WE HOLD AS FOLLOWS :- ITA . NOS.1746, 1370/DEL/2013 AY 2006-07 IAG PROMOTERS & DEVELOPERS (P) LTD. 4 5.1. WE FIRST TAKE UP THE ASSESSEES APPEAL . GROUND NO. 1,2,5 AND 6 ARE DISMISSED AS NOT PRESSED. GROUND NO. 3 TO 3.2 IS ON THE DISALLOWANCE MADE U/ S 37 OF THE ACT, ON ACCOUNT OF ADDITIONAL PAYMENTS FOR T HE PURCHASE OF LAND. THE ASSESSEES CASE IS THAT , IT HAD NOT CLAIMED ANY DE DUCTION ON ACCOUNT OF PURCHASE OF LAND AND HENCE NO DISALLOWANCE COULD BE MADE. LD. C IT(A) REMANDED THE MATTER TO THE AO AND THE AO ALLOWED THE ENTIRE CLAIM OF THE A SSSESSEE. AS THE ASSESEES CLAIM HAS BEEN ALLOWED, THIS GROUND IS NOT PRESSED BY THE ASSESSEE. IN THE RESULT THIS GROUND IS ALSO DISMISSED AS NOT PRESSED. 5.2. GROUND NO. 4 TO 4.1 IS ON THE DISALLOWANCE MADE U/S 40A(3) . 6. IT IS ADMITTED BY BOTH THE PARTIES THAT THE ISSUE UNDER CONSIDERATION IS IDENTICAL WITH THE ISSUE DEALT BY THE H BENCH OF THE ITAT IN ITA NO. 1752/DEL/2013 FOR THE ASSTT. YEAR 2006-07, IN THE CASE OF WESTLAND DEVELO PERS PVT. LTD. VS. ACIT ORDER DATED 22 ND AUGUST, 2014 WHEREIN THE TRIBUNAL IN PARA 10.10 AT PAGE 29 HELD AS FOLLOWS :- ACCORDINGLY ON A CONSIDERATION OF THE PECULIAR FAC TS AND CIRCUMSTANCES OF THE CASE AND THE JUDGMENTS RELIED UPON CONSIDERING THE RELEVANT PROVISION OF THE ACT NAMELY SECTION 40A(3), WE HOLD FOR THE DETAILED REASONS GIVEN HEREINABOVE THAT SECTION 40A(3) OF THE ACT HAS BEEN WRONGLY INVOKED AS ADMITTEDLY NO EXPENSES RELATABLE TO THE ADDITION HA S BEEN CLAIMED AND THE ASSESSEE HAS SUCCESSFULLY DEMONSTRATED THAT THE PAY MENT WERE RE- IMBURSEMENT MADE BY CWPPL. ACCORDINGLY GROUND NO. 4 IS ALLOWED. 7. CONSISTENT WITH THE VIEW TAKEN THEREIN, AS T HE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE ON THIS GROUND, THE QUESTION OF DISALLO WANCE BEING MADE U/S 40A(3) OF THE ACT DOES NOT ARISE. IN THE RESULT THIS GROUND O F THE ASSESSEE IS ALLOWED. 8. HENCE THE APPEAL OF THE ASSESEE IS ALLOWE D IN PART. ITA . NOS.1746, 1370/DEL/2013 AY 2006-07 IAG PROMOTERS & DEVELOPERS (P) LTD. 5 9. WE NOW TAKE UP THE REVENUES APPEAL. BOTH PARTIES AGREE THAT THE GROUNDS RAISED BY THE REVENUE DO NOT ARISE FROM THE ORDER O F THE AO OR THE ORDER OF THE FIRST APPELLATE AUTHORITY. HENCE THE GROUND IS MISCONCEIV ED AND HAS TO BE DISMISSED AS SUCH. IN THE RESULT THE REVENUES APPEAL IS DISMISS ED. 10. THUS THE APPEAL OF THE ASSESSEE IS ALLOWED I N PART AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH JANUARY, 2015. SD/- SD/- (A.T. VARKEY) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 5 TH JANUARY, 2015 VEENA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER DEPUTY REGISTRAR