V.R. CONSTRUCTION CO., THANE V. ITO WD 2(4), THANE

ITA 146/MUM/2010

• Counselvise Citation: 14619914 RSA 2010
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 17-01-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 07-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUHACHAN RAM
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Opportunity of being heard
• Section: 143(3); 263

Judgement Text

1 ITA 146/MUM/2010 M/S V.R. CONSTRUCT ION CO. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI F BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI N.V. VASUDEVAN, J.M. AND SHRI R.K. PAN DA, A.M. ITA NO. 146/MUM/2010 (ASSESSMENT YEAR 2005-06) M/S V.R. CONSTRUCTION CO., A/I, RADHA RESIDENCY, NEW 150 FT. FLYOVER ROAD, BHAYANDER (W), THANE. VS COMMISSIONER OF INCOME-TAX- I, IST FLOOR, VARDHAN BLDG., MIDC WAGLE INDUSTRIAL ESTATE, THANE. (APPELLANT) (RESPONDENT) PAN NO. AAEFV 9466B APPELLANT BY DR. K. SHIVARAM RESPONDENT BY SHRI SUHACHAN RAM DATE OF HEARING 17.01.2012 DATE OF PRONOUNCEMENT 20.01.2012 ORDER PER R K PANDA, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 19.03.2009 OF THE CIT - 1, THANE RELATING TO ASSESS MENT YEAR 2005-06. 2. THE ASSESSEE IN ITS GROUNDS OF APPEAL HAS CHALLE NGED THE ORDER OF THE LD. CIT IN ASSUMING JURISDICTION U/S 263 OF THE I.T . ACT, 1961 WITHOUT GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 2.1 FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E IS A BUILDER AND DEVELOPER AND FILED ITS RETURN OF INCOME ON 30.10.2 005 DECLARING TOTAL INCOME OF RS. 14,176/-. THE A.O. VIDE HIS ORDER DA TED 28.2.2009 COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT ON A TOTAL INC OME OF RS. 29,176/-. 2 ITA 146/MUM/2010 M/S V.R. CONSTRUCT ION CO. 2.2 THE LD. CIT CALLED FOR THE RECORDS AND OBSERVED THAT THE FOLLOWING ISSUES HAVE NOT BEEN PROPERLY EXAMINED BY THE A.O. WHILE COMPLETING THE ASSESSMENT U/S 143(3):- 1) IT IS SEEN FROM RECORDS THAT ASSESSEE IS FOLLOWING THE PROJECT COMPLETE METHOD OF ACCOUNTING. HOWEVER, THE SAME IS NOT IN CONFORMITY WITH THE ACCOUNTING STANDARDS. ASSSESSEE WAS HENCE ASKED TO SHOW-CAUSE AS TO WHY THE PERCENTAGE COMPLETION METHOD OF ACCOUNTING SHOU LD NOT BE ADOPTED. 2) SCRUTINY REVEALED THAT DURING F.Y. 2004-05 RELEV ANT TO A.Y. 2005-06, ASSESSEE SOLD TWO BUILDING NAMELY ARYAN PLAZA AND MAHAVIR DARSHAN AS UNDER:- OPENING BALANCE SALES ARYAN PLAZA 10,02,960 ARYAN PLAZA 15,00,000 MAHAVIR DARSHAN 23,92,100 MAHAVIR DARSHAN 22,29,114 TOTAL 33,95,060 37,29,114 2.3 THE LD. CIT THEREFORE ISSUED NOTICE U/S 263 ASK ING THE ASSESSEE TO SHOW CAUSE AS TO WHY NECESSARY ACTION SHOULD NOT BE TAKEN U/S 263 SINCE THE ORDER PASSED BY THE A.O. WAS ERRONEOUS AND PREJ UDICIAL TO THE INTEREST OF THE REVENUE. IN RESPONSE TO THE SAME THE ASSESSEE S UBMITTED AND WHICH THE CIT MENTIONS IN PAGE 2 OF HIS ORDER THAT THE PROJEC T COMPLETION METHOD OF ACCOUNTING IS IN CONFORMITY WITH ACCOUNTING STANDAR D ISSUED BY ICAI. THEREFORE, THERE IS NO QUESTION OF ADOPTING PERCENT AGE COMPLETION METHOD OF ACCOUNTING. IT WAS SUBMITTED THAT DURING THE YEAR THE ASSESSEE SOLD TWO BUILDINGS AND THE PROFIT OF THE SAME ARE OFFERED FO R TAXATION. THE ASSESSEE ALSO SUBMITTED THAT IT IS THE RESPONSIBILITY OF THE DEPARTMENT TO ESTABLISH THAT THE ORDER OF THE A.O. WAS ERRONEOUS. 3 ITA 146/MUM/2010 M/S V.R. CONSTRUCT ION CO. 2.3 HOWEVER, THE LD. CIT REJECTED THE SUBMISSIONS M ADE BEFORE HIM. HE OBSERVED THAT BY FOLLOWING PROJECT COMPLETION METHO D THE ASSESSEE IS NOT SHOWING ITS CORRECT TAXABLE INCOME. HE THEREFORE H ELD THAT THE ORDER PASSED BY THE A.O. IS ERRONEOUS AND PREJUDICIAL TO THE INT EREST OF REVENUE AND SET ASIDE THE ORDER AND DIRECTED THE A.O. TO REFRAME TH E SAME DENOVO AFTER GIVING PROPER OPPORTUNITY TO THE ASSESSEE AND AFTER EXAMINING THE RELEVANT DETAILS. 3. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT THE CIT HAS PASSED THE ORDER U/S 263 WITHOUT GIVING SUFFICI ENT OPPORTUNITY TO THE ASSESSEE TO PRESENT HIS CASE. HE SUBMITTED THAT THE CIT HAS WRONGLY ASSUMED JURISDICTION ON THE PRESUMPTION THAT THE AS SESSEE FOLLOWED PROJECT COMPLETION METHOD, WITHOUT GOING THROUGH THE RECORD S, WHEREIN THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S HAD SPECIFICALLY MENTIONED THAT IT FOLLOWS PERCENTAGE COMPLETION MET HOD. HE SUBMITTED THAT THE LD. CIT ERRED IN HOLDING THAT THE ASSESSMENT OR DER PASSED U/S 143(3) IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE ON GENERAL ASSUMPTIONS AND WITHOUT POINTING OUT ANY SPECIFIC D EFECTS. REFERRING TO THE ORDER OF THE TRIBUNAL IN THE CASE OF SHREE AMBIKA B UILDERS VS. ITO VIDE ITA NO. 23/M/2010 ORDER DT. 24.6.2011 FOR A.Y. 2005-06 AND S.P. ENTERPRISES VS. ITO VIDE ITA NO. 24/M/2010 ORDER DT. 24.6.2011 FOR A.Y. 2005-06 HE SUBMITTED THAT UNDER IDENTICAL FACTS THE TRIBUNAL H AD RESTORED THE ISSUE TO THE FILE OF THE CIT FOR FRESH ADJUDICATION. 4 ITA 146/MUM/2010 M/S V.R. CONSTRUCT ION CO. 4. THE LD. D.R., ON THE OTHER HAND, WHILE SUPPORTIN G THE ORDER OF THE CIT FAIRLY CONCEDED THAT THE TRIBUNAL UNDER IDENTICAL C IRCUMSTANCES HAS RESTORED THE ISSUE TO THE FILE OF THE CIT. 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES AND PERUSED THE ORDER OF THE A.O. AND THE LD. CIT. WE FIND MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE LD. CIT ON WRONG PRESUMPTION AND WITHOUT GIVING OPPORTUNITY TO THE A SSESSEE HAS CONCLUDED THAT THE ASSESSEE IS FOLLOWING PROJECT COMPLETION M ETHOD WHEREAS THE ASSESSEE IS FOLLOWING PERCENTAGE COMPLETION METHOD. WE FURTHER FIND THE TRIBUNAL UNDER IDENTICAL FACTS IN THE CASE OF SHREE AMBIKA BUILDERS (SUPRA) AND S.P. ENTERPRISES (SUPRA) HAS RESTORED THE ISSUE TO THE FILE OF THE LD. CIT FOR FRESH ADJUDICATION. WE, THEREFORE, RESTORE THE ISSUE TO THE FILE OF THE CIT WITH A DIRECTION TO ADJUDICATE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ARE A LLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 20.01.2012. SD/- (N.V. VASUDEVAN) JUDICIAL MEMBER SD/- ( R K PANDA ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 20.01.2012. 5 ITA 146/MUM/2010 M/S V.R. CONSTRUCT ION CO. RK COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT - 1, THANE 4 ADDL. CIT RANGE 2, THANE, 5 DR BENCH F 6 MASTER FILE /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI