ITO, Ward-2(2), Nashik, V. Paras Construction, Nashik

ITA 1460/PUN/2007

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62746 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-06-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 15-11-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ALOK MISHRA
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI R.S. PADVEKAR JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO. 1460 & 1461/PN/2007 (ASSTT. YEARS : 2000-01 & 2001-02 ) INCOME TAX OFFICER ... APPELLANT WARD-2(2), NASHIK V. M/S. PARAS CONSTRUCTION RESPONDENT S.NO. 35 ANANDVALI, GANGAPUR ROAD, NASHIK PAN : AAFFP 7816C APPELLANT BY : SMT. DEEPA KHARE RESPONDENT BY : SHRI. ALOK MISHRA DATE OF HEARING : 06/6/2012 DATE OF PRONOUNCEMENT : 19/6/2012 ORDER PER R.S. PADVEKAR, JM THESE TWO APPEALS ARE FILED BY THE REVENUE CHALLEN GING THE IMPUGNED ORDERS OF THE LD CIT(A) II, NASIK DATED 3 1 ST AUGUST 2007 FOR THE A.YS. 2000-01 AND 2001-02. THE REVENUE HAS TAK EN THE FOLLOWING GROUNDS WHICH ARE COMMON IN BOTH THE APPEALS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT (A)-II, NASHIK HAS ERRED IN DELETING THE ADDITION MADE OF R S. 7,20,000/- AND RS. 77,500/- IN RESPECT OF A.Y. 2000-01 & 2001- 02 ON ACCOUNT OF ON MONEY ACCEPTED BY THE ASSESSEE ON THE GROUND THAT THE AO HAD NO EVIDENCE SHOWING THAT MONEY RECEIVED OF RS. 14.86 LACS WAS ON MONEY EVEN THOUGH THE ADMISSION WAS MADE ON THE BASES OF NOTINGS IN DIARY. 2. ON THE FACTS AND CIRCUMSTANCE OF THE CASE THE CI T(A), NASHIK HAS ERRED IN GIVING ENTIRE RELIEF OF RS. 7,20,000/- FOR A.Y. 2000-01 AND RS. 77500/- FOR A.Y. 2001-02 INSTEAD OF ENHANCI NG ASSESSED INCOME TO RS. 48,59,938/- FOR A.Y. 2000-01 AND RS. 14,31,757/- ITA . NOS. 1460 & 1461//PN/2007 PARAS CONSTRUCTION A.YS. 2000-01 & 2001-02 PAGE OF 6 2 FOR A.Y. 2001-02, AS REQUESTED IN THE REMAND REPORT , TO THE ASSESSEE WITHOUT TAKING INTO ACCOUNT EVIDENCE FOUND DURING THE SURVEY IN THE FORM OF DIARY AND STATEMENT GIVEN BY THE PARTNER ON THE CONTENTS OF THE DIARY. 2. THE FACTS RELEVANT TO THE ISSUES WHICH REVEAL FR OM THE RECORD ARE AS UNDER. THE ASSESSEE IS THE BUILDER AND HAD UNDERTA KEN CONSTRUCTION OF PROJECT IN NASIK. SURVEY ACTION WAS CARRIED OUT U/ S. 133A OF THE ACT AGAINST THE ASSESSEES PARTNER NAMELY SHRI. HARISH PARASNATH GUPTA. DURING THE COURSE OF SURVEY PROCEEDINGS, SHRI HARIS H P GUTA DECLARED THE ADDITIONAL INCOME OF RS. 14,86,000/-. THE A.O HAS OBSERVED THAT DURING THE COURSE OF THE SCRUTINY PROCEEDINGS IN THE CASE OF SHRI HARISH P GUPTA, ADDITIONS WERE MADE AND IT WAS CLAIMED THAT THE SUM OF RS. 14.86 LAKHS OFFERED WERE THE RECEIPTS FROM THE SALE OF FLATS AN D SHOPS IN THE CASE OF ASSESSEE, I.E. PARAS CONSTRUCTION. IT IS OBSERVED BY THE A.O. THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE PARTICULA RS OF INCOME AND EXPENSES SHOWN BY THE ASSESSEE WERE VERIFIED BUT REQUIRED EVIDENCES WERE NOT PRODUCED I.E. ANY BILLS, VOUCHERS, DEVELOPMENT AGREEMENT ETC., AS NOTED BY THE A.O, THE DIARY WAS FOUND AND AS PER THE NOTINGS IN THE SAID DIARY, ASSESSEE HAS ACCEPTED MONEY IN CASH AN D CHEQUES FROM THE CUSTOMER PURCHASERS AS UNDER : FINANCIAL YEAR AMOUNT 1999-2000 ` 14,40,000/- 2000-2001 ` 1,55,000/- THE A.O. SOUGHT THE EXPLANATION OF THE ASSESSEE AS TO WHY THE ENTIRE AMOUNT SHOULD NOT BE TREATED AS ON-MONEY. THE ASSE SSEE STATED BEFORE THE A.O THAT THE AMOUNT RECEIVED FROM THE CUSTOMERS WAS PAID TO THE CONTRACTOR AND UTILIZED FOR PURCHASE OF MATERIAL F OR THE PROJECT. ASSESSEE ITA . NOS. 1460 & 1461//PN/2007 PARAS CONSTRUCTION A.YS. 2000-01 & 2001-02 PAGE OF 6 3 ALSO STATED THAT FOR THE ACCOUNTING PURPOSE, THE AS SESSEE WAS FOLLOWING PROJECT COMPLETION METHOD AND ACCORDINGLY THE PROFI T WOULD BE OFFERED. THE A.O WAS NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE. THE A.O. BROUGHT TO TAX 50% OF RS. 14.40 LACS I.E. RS . 7,20,000/- AS ON- MONEY FOR A.Y. 2000-01 AND ON THE SAME REASON MADE THE ADDITION OF RS. 77,500/- IN THE A.Y. 2001-02, WHICH WAS 50% OF RS. 1.55 LACS. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) AND LD CIT(A) DELETED THE ADDITION. THE OPERATIVE PART OF THE FINDINGS O F THE LD CIT(A) IS AS UNDER : 12. THE APPELLANT ADMITTED TO HAVE ACCEPTED MO NEY RECEIVED IN CASH AND ALSO BY CHEQUES FROM VARIOUS CUSTOMERS/PUR CHASERS IN RESPECT OF RAUNAK ARCADE. BUT SUBSEQUENTLY THE A PPELLANT CHANGED HIS STAND AND STATED THAT THE MONIES NOTED DOWN IN THE SAID DIARY REPRESENTED THE ADVANCE RECEIPTS FROM VA RIOUS CUSTOMERS/PURCHASERS REGARDING THE BOOKING FLATS/SH OPS IN RESPECT OF AFORESAID PROJECT BEING BUILT BY HIM. IT IS AN UNDISPUTED FACT THAT THE AMOUNTS ARE RS. 14,40,000/- IN RESPECT OF THE F.Y. 1999- 2000 AND RS. 1,55,000/- IN RESPECT OF F.Y. 2000-200 1 RECORDED IN THE DIARY. THE A.O. TREATED THESE AMOUNTS AS ON-MO NEY AND ASSESSED 50% THEREOF AS INCOME OF THE APPELLANT IN THE RESPECTIVE ASSESSMENT YEARS BASED ON THE STATEMENT GIVEN BY TH E APPELLANT ON 03.08.2000 AT THE TIME OF SURVEY. SURPRISINGLY, TH E A.O. DID NOT BRING OUT WHAT IS THE ACCOUNTED PROFIT WHICH IS TO BE TAXED AND FURTHER DID NOT MAKE ANY EFFORTS IN THIS REGARD. IF THE AMOUNTS NOTED IN THE DIARY ARE TO BE TREATED AS ON-MONEY, THERE SHOULD BE ACCOUNTED RECEIPTS WHICH ARE ALSO TO BE TAXED ALONG WITH THE ON- MONEY. THUS, THERE IS AN INCONSISTENT STAND TAKEN BY THE A.O. THE APPELLANTS CLARIFICATION STATING THAT THESE AMOU NTS NOTED IN THE DIARY REPRESENTED THE ADVANCE RECEIPTS IN RESPECT OF THE PROPERTY BEING BUILT BY HIM CANNOT BE IGNORED IN THE ABSENCE OF CONTRARY EVIDENCE. THE A.O. SHOULD HAVE PROVED WHAT IS NOTE D IN THE DIARY IS ONLY ON-MONEY OVER AND ABOVE THE ACCOUNTED RECEI PTS. IN THE INSTANT CASE NO REGULAR BOOKS OF ACCOUNTS WERE MENT IONED IN THE APPELLANT. THE SAME WERE PREPARED ONLY AFTER THE DA TE OF SURVEY BASED ON THE VARIOUS MATERIAL FOUND INCLUDING THE R ECEIPTS ITA . NOS. 1460 & 1461//PN/2007 PARAS CONSTRUCTION A.YS. 2000-01 & 2001-02 PAGE OF 6 4 MAINTAINED BY IN THE DIARY, WHICH WERE REJECTED BY THE A.O. A NORMAL UNDERSTANDING OF ON-MONEY IS THAT EXTRA CON SIDERATION RECEIVED OVER AND ABOVE THE ACCOUNTED/RECORDED CONS IDERATION. IN THIS CASE, NO REGULAR BOOKS WERE FOUND AT THE TIME OF SURVEY, THEREFORE THE PRESUMPTION OF THE A.O. THAT WHATEVE R RECORDED IN THE DIARY AS ON-MONEY IS NOT LOGICAL. THE APPELLANT IN ANSWER TO Q.NO.14 CLEARLY STATED THAT THE AMOUNTS SO COLLECTE D WERE ALSO PAID TO THE CONTRACTOR FOR CONSTRUCTION OF THE PROJECT. FOR THE SAKE OF CONVENIENCE, ANSWER TO THE Q.NO.14 OF THE STATEMENT RECORDED NO 03.08.2000 IS REPRODUCED BELOW : Q.NO.14 ANS ON MONEY FROM THE PURCHASERS OF FLATS AND SHOPS, FOR WHICH NO RECEIPT HAS BEEN ISSUED AND NEV ER WILL BE ISSUED. THIS AMOUNT OF RS. 14,86,000/- HAS BEEN GIVEN TO MY CONTRACTOR TOWARDS CONSTRUCTION EXPENSES. I AM AFTER FULLY CONSIDERING THE FACTS, OFFER THIS AMOU NT AS AN ADDITIONAL INCOME IN MY INDIVIDUAL CAPACITY FOR THE FINANCIAL YEAR 1999-2000 RELEVANT TO ASSESSMENT YEAR 2000-200 1. THE STATEMENT OF SHRI HARISH P. GUPTA WAS PARTLY CO NSIDERED FOR THE PURPOSE OF ESTIMATING THE INCOME WITHOUT EXAMINING OTHER MATERIALS. NO ENQUIRIES WERE CONDUCTED NOR ANY MA TERIAL GATHERED FROM THE PURCHASERS OF THE FLATS AND SHOPS TO PROVE THE POINT THAT WHAT WAS RECORDED IN THE DIARY WAS OVER AND ABOVE THE ACCOUNTED CONSIDERATION AND REPRESENTS ON-MONEY. SIMILARLY, THE AMOUNTS PAID TO THE CONTRACTOR WERE ALSO NOT PROVED AS UNAC COUNTED EXPENDITURE BY THE A.O. THERE IS NO PRESUMPTION AV AILABLE TO THE A.O. AS IS AVAILABLE UNDER THE PROVISIONS OF SECTIO N 132(4A) OF THE I.T. ACT, 1961, IN RESPECT OF THE MATERIAL FOUND TO BE REPRESENTING THE TRUE FACTS DURING THE COURSE OF THE SURVEY. ME RE STATEMENT BY THE APPELLANT CANNOT BE THE BASIS FOR ESTIMATING TH E INCOME WITHOUT CORROBORATIVE EVIDENCE. THE REVENUE BEING AGGRIEVED IS IN APPEAL FOR BOTH THE A.YS. 3. WE HAVE HEARD RIVAL SUBMISSIONS OF THE PARTIES A ND PERUSED THE RECORD. THE LD. D.R. RELIED ON THE ORDER OF THE A.O. THE FACTS ARE IN NARROW COMPASS IN THIS CASE. AS MENTIONED EARLIER, THE ASSESSEE IS A BUILDER AND DEVELOPER. THERE WAS A SURVEY ACTION A GAINST THE PARTNER OF ITA . NOS. 1460 & 1461//PN/2007 PARAS CONSTRUCTION A.YS. 2000-01 & 2001-02 PAGE OF 6 5 THE ASSESSEE U/S. 133A OF THE ACT. DURING THE SURV EY ACTION, ONE DIARY WAS FOUND IN WHICH SOME MONEY TRANSACTIONS WERE REC ORDED WHICH WAS RELATING TO THE SALE OF FLATS AND SHOPS. ON THE BA SIS OF DIARY FOUND WITH THE PARTNER OF ASSESSEE FIRM, THE A.O SOUGHT THE EX PLANATION OF THE ASSESSEE WHY THE ENTIRE TRANSACTIONS RECORDED IN TH E DIARY SHOULD NOT BE TREATED AS A ON-MONEY IN RESPECT OF THE SALE OF THE FLATS. IN THIS CASE, ADMITTEDLY, NO BOOKS OF ACCOUNT WERE FOUND NOR THE A.O HAS BROUGHT ON RECORD THAT WHAT WERE THE RECORDED RECEIPTS IN RESP ECT OF THE SALE OF THE FLATS AND WHAT WERE THE FIGURES APPEARING IN THE DI ARY FOUND IN THE PARTNER OF THE ASSESSEE. THE CONTENTION OF THE ASS ESSEE IS THAT ASSESSEE IS FOLLOWING THE PROJECT COMPLETION METHOD AND ALL THE TRANSACTIONS WHICH WERE APPEARING IN DIARY ARE DULY RECORDED IN THE RE GULAR BOOKS OF ACCOUNT AND ALSO THE PROFIT ON THE SAID RECEIPTS IS DECLAR ED AS PER THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. WE FIND THAT THE LD CIT(A) DELETED THE ADDITION AS IN HIS VIEW, THE A.O SHOULD HAVE BR OUGHT OUT WHAT WAS THE ACCOUNTED PROFIT AND WHEN IT IS ACCEPTED THAT T HE TRANSACTIONS RELATE TO THE SALE OF THE FLATS AND HOW THE ENTIRE RECEIP TS CAN BE TREATED AS ON- MONEY. THE LD CIT(A) HAS OBSERVED THAT NORMAL UNDE RSTANDING OF ON- MONEY IS THAT EXTRA CONSIDERATION RECEIVED OVER AND ABOVE CASH RECEIPTS ACCOUNTED. ADMITTEDLY, IN THIS CASE THE A.O IS TOT ALLY SILENT IN RESPECT OF THE BOOKS OF ACCOUNT WHICH WERE MAINTAINED BY THE A SSESSEE AND MORE PARTICULARLY, THE TRANSACTIONS RECORDED IN THE SAI D BOOKS. IN OUR OPINION, THERE WAS NO MATERIAL BEFORE THE A.O TO ARRIVE AT A CONCLUSION EVEN THOUGH THE TRANSACTIONS FOUND IN THE DIARY WERE REL ATING TO THE SALE OF THE FLATS IN THE ASSESSEES PROJECTS. THE A.O SHOULD HA VE BROUGHT ON RECORD COGENT EVIDENCE AND SUPPORTING FIGURES TO DEMONSTRA TE THAT THE ADDITION WAS NOTHING BUT TRANSACTIONS RECORDED IN THE DIARY WERE IN RESPECT OF THE ITA . NOS. 1460 & 1461//PN/2007 PARAS CONSTRUCTION A.YS. 2000-01 & 2001-02 PAGE OF 6 6 SO CALLED ON-MONEY. WE FIND NO INFIRMITY IN THE OR DER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. 4. IN RESULT, BOTH THE APPEALS OF THE REVENUE ARE D ISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19TH J UNE 2012. SD/- SD/- ( R.K. PANDA ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER PUNE, DATED THE 19TH JUNE, 2012 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT I, NASHIK 4. THE CIT(A)-II, NASHIK 4. THE D.R. B BENCH, PUNE 5. GUARD FILE /-TRUE COPY-/ BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE