KAPIL ASOK BAJAJ, MUMBAI V. ITO 20(1)(4), MUMBAI

ITA 162/MUM/2011

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2997 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 07-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY SINGH
• Assessee Lawyers: KIRAN MEHTA RAJAN MENDAL
• Keywords: Additional evidence; Reasonable cause; Corroborative evidences; Assessment record
• Section: 80IB; 263

Judgement Text

, THE INCOME-TAX APPELLATE TRIBUNAL -ABENCH MUMBAI , , BEFORE SH.RAJENDRA,ACCOUNTANT MEMBER AND S MT.BEENA PILLAI,JUDICIAL MEMBER /ITA NO.162//MUM/2011, /ASSESSMENT YEAR 2006-07) /ITA NO.4541//MUM/2012, /ASSESSMENT YEAR 2006-07) KAPIL ASHOK BAJAJ,9, SEA GLIMPSE, J.P. ROAD, SEVEN BUNGLOWS, ANDHERI (W),MUMBAI-58. PAN: AFBPB 7764 A VS. ITO-20(1)(4) C-13, PRATYAKSHAKAR BHAVAN, BKC, BANDRA (E) MUMBAI-400 050. ( / APPELLANT ) ( / RESPONDENT ) /ITA NO.4880//MUM/2012, /ASSESSMENT YEAR 2006-07) ITO-20(1)(4) MUMBAI-400 050. VS. KAPIL ASHOK BAJAJ MUMBAI-58. ( / APPELLANT ) ( / RESPONDENT ) / ASSESSEE BY : S/ SHRI KIRAN MEHTA, RAJAN MENDAL / REVENUE BY :SHRI SANJAY SINGH / DATE OF HEARING :27.10. 2015 / DATE OF PRONOUNCEMENT : 27.10 . 2015 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, A.M. CHALLENGING THE ORDER DATED 14.5.2012 OF THE CIT(A) -31,MUMBAI,THE ASSESSING OFFICER (AO) AND THE ASSESSEE HAVE FILED CROSS APPEAL FOR THE AB OVE MENTIONED ASSESSMENT YEAR(AY).THE ORDER OF THE FIRST APPELLATE AUTHORITY (FAA) IS REL ATED TO THE ORDER OF THE CIT-20,DATED 20.11. 2010,PASSED U/S. 263 OF THE ACT.AS ALL THE APPEALS ARE RELATED WITH THE SAME AY.,SO WE ARE ADJUDICATING THEM BY COMMON ORDER. DURING THE COURSE OF HEARING BEFORE US THE AUTHORIS ED REPRESENTATIVE(AR)STATED THAT THE ASSESSEE WAS NOT INTERESTED IN PURSUING THE APPEAL FILED BY IT AGAINST THE REVISIONARY ORDER PASSED BY THE CIT-20,MUMBAI AND WANTS TO WITHDRAW T HE SAME I.E.APPEAL NO.ITA/162/MUM/ 2011 .THE DEPARTMENTAL REPRESENTATIVE(DR)STATED THAT HE HAD NO OBJECTION,IF THE REQUEST MADE BY THE ASSESSEE IS ACCEDED TO.WE DISMISS THE APPEAL FILED BY THE ASSESSEE AS WITHDRAWN. ITA4880/MUM/2012: 2. ASSESSEE,AN INDIVIDUAL FILED ITS RETURN OF INCOME O N 30.10.2006,DECLARING TOTAL INCOME OF RS. NIL.THE ORIGINAL ASSESSMENT WAS COMPLETED U/S. 143( 3) OF THE ACT ON 24.12.2008. SUBSEQUENTLY, THE ASSESSMENT RECORDS WERE EXAMINED BY THE CIT-20, MUMBAI AND A REVISIONARY ORDER WAS PASSED BY HIM,AS STATED EARLIER.THE MATTER WAS SET ASIDE TO THE FILE OF THE AO WITH CERTAIN DIRECTIONS.IN THE ASSESSMENT ORDER,COMPLETED IN PUR SUANCE OF THE ORDER OF THE CIT,THE AO OBSERVED THAT THE ASSESSEE HAD SHOWN TOTAL WORK IN PROGRESS WIP AT RS.5.39 CRORES,THAT HE HAD CLAIMED THAT ALL THE PROJECT EXPENSES HAD BEEN CAPI TALISED,THAT NO PROFIT/LOSS HAD BEEN SHOWN AS ON 31.3.2006,THAT A SURVEY U/S.133A WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 24. 08.2007, THAT DURING THE SURVEY PROCEEDINGS IT WAS FOUND THAT THE ASSESSEE HAD COMPLETED TWO HOUSING PROJECTS NAMELY THE VASTU AT THANE AND SHANTI-KUTIR AT KANDIVILI,THAT HE HAD SUPPRESSED THE DETAILS/FACT OF COMPLETION OF THE PR OJECT BY SHOWING THE SAID TWO PROJECTS AS WORK IN PROGRESS, THAT THE PROFIT EARNED BY THE ASS ESSEE FROM THESE TWO PROJECTS WAS DEFERRED TO SUBSEQUENT YEARS, THAT THE ASSESSEE HAD MADE CLAIM FOR DEDUCTION U/S. 80IB(10) OF THE ACT, THAT THE BOOKS OF ACCOUNT WERE NOT COMPLETED EITHER IN M ANUAL FORM OR DIGITALLY, THAT THESE FACTS WERE CONFIRMED BY THE ASSESSEE IN HIS STATEMENT REC ORDED ON OATH,THAT THE SURVEY TEAM, ON THE BASIS OF DOCUMENT /MATERIAL FOUND HAD COMPUTED TOTA L SALES AT RS.4.95 CRORES,THAT THE TOTAL ITA NO.162 /11,4880/12,4541/12 KAPIL ASHOK 2 2 EXPENSES WERE CONSIDERED AT 3.30 CRORES,THAT THE NE T PROFIT EARNED FROM THE PROJECT WAS WORKED OUT AT RS.2.19 CRORES, THAT THE FLAT OWNERS OF B AN D C WING OF VASTU HAD FILED A COMPLAINT TO THE ASSESSEE REGARDING VARIOUS DEFECTS IN COMPLETIO N OF THE WORK,THAT THE COMPLAINT WAS OF AUGUST 2005,THAT THE COMPLAINT WAS A STRONG EVIDENC E TO PROVE THAT THE FLATS WERE SOLD OUT IN THE YEAR 2005,THAT THE PROFIT FROM THE PROJECT VAST U WAS ASSESSABLE IN THE YEAR 06-07. WITH REGARD TO SHANTI KUTIR PROJECT THE AO MENTIONED THA T THE ASSESSEE HAD CAPITALISED ALL THE EXPENSES INCURRED TOWARDS THE PROJECT, THAT THE WHO LE AMOUNT WAS INCLUDED IN THE WIP, THAT THE AMOUNT RECOVERED FROM THE PURCHASERS OF THE FLAT IN THE PROJECT WAS SHOWN AS ADVANCE FROM CUSTOMERS, THAT DURING THE COURSE OF SURVEY PROCEED INGS THE ASSESSEE HAD ADMITTED THAT THE PROJECT WAS COMPLETED IN THE YEAR UNDER APPEAL.THE AO MADE ADDITION TO THE INCOME OF THE ASSESSEE UNDER THE HEAD COMPENSATION PAID (RS.16.95 LACS), ALLOTMENT OF FLATS OTHER THAN TENANTS (RS.16.23 LACS), LAND COST (RS.10.65 LACS) UNPROVED PURCHASE (RS.11.18 LACS), AMOUNT INHERITED FROM FATHER (RS.10.45 LACS) EXPENSES CLAIMED OF OTH ER PROJECTS (RS.4.65 LACS), BROKERAGE (RS.1.72 LACS), PROPERTY TAX (RS.1.06 LACS).THE ASS ESSEE HAD MADE A CLAIM U/S.80IB OF THE ACT. WE WOULD DISCUSS THE ISSUE OF 80IB DEDUCTION AT APP ROPRIATE PLACE. FINALLY,THE AO DETERMINED THE INCOME OF THE ASSESSE E AT RS.2.04 CRORES 3. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM THE ASSESSEE PRODUCED VAR IOUS DOCUMENTS AND SUPPORTING EVIDENCES AND MADE ELABORATE SUBMISSIONS AGAINST TH E ADDITIONS MADE BY THE AO.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER,HE DELETED THE ADDITION OF RS.16.00 LACS, RS.16.23 LACS, RS.11.18 LACS MADE BY THE AO UNDER THE HEADS COMPENSATION PAID, ADDITIONAL COMPENSATION PAID AND UNPROVED PUR CHASES.THE FIRST THREE GROUNDS RAISED BY THE AO DEAL WITH DELETING THE ABOVE REFERRED DISALL OWANCES.GROUND NO.4 PERTAINS TO CONTRAVEN -TION OF RULE 46A OF THE INCOME TAX RULES,1962 (RUL ES). 4. DURING THE COURSE OF HEARING BEFORE US,THE DR STATE D THAT THE FAA HAD DELETED THE ADDITIONS RELYING UPON THE DOCUMENTS/EVIDENCES PRODUCED BEFOR E HIM, THAT HE DID NOT CALL FOR A REMAND REPORT FROM AO,THAT THE ACTION OF FAA WERE CONTRARY TO THE PROVISIONS OF RULE 46A OF THE RULES.THE AR STATED THAT THE ASSESSEE HAD SUBMITTED CERTAIN DOCUMENTS BEFORE FAA AS ADDITIONAL EVIDENCE AND HAD REQUESTED HIM TO ACCEPT THE SAME,THAT AFTER SUBMITTING THE APPLICATION NOTHING WAS IN THE HANDS OF THE ASSESSE E,THAT CALLING FOR THE REMAND REPORT WAS THE PREROGATIVE OF THE FAA. ON A SPECIFIC QUERY BY THE BENCH,THE AR STATED THAT HE HAD NOT RECEIVED ANY NOTICE FORM THE AO TO SUPPORT HIS CLAI M WITH REGARD TO ADDITIONAL EVIDENCES PRODUCED BEFORE THE FAA, THAT THE FAA HAD NOT REFER RED TO ANY OF THE SUB SECTIONS UNDER WHICH THE ADDITIONAL EVIDENCES WERE ACCEPTED BY THE FAA. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ASSESSEE HAD SUBMITTED NEW EVIDENCES BEFORE THE FAA AND HAD REQUESTED HIM TO ADMIT THE SAME, THAT HE DID NOT CALL FOR ANY REMAND REPORT FR OM THE AO, THAT HE ALSO DID NOT MENTION,IN HIS ORDER,THAT HE WAS ADMITTING ADDITIONAL EVIDENCE UNDER SUB.SECTION-4 OF RULE 46A OF THE RULES.IN THESE CIRCUMSTANCES,WE ARE OF THE OPINION THAT IN THE INTEREST OF JUSTICE THE MATTER SHOULD BE RESTORED BACK TO FILE OF AO FOR FRESH ADJ UDICATION WHO WILL DECIDE ISSUES RAISED BY HIM IN FIRST THREE GROUNDS OF APPEAL AFTER CONSIDER ING THE EVIDENCES PRODUCED BEFORE THE FAA AND AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEA RING TO THE ASSESSEE.GROUNDS OF APPEAL RAISED BY THE AO STAND ALLOWED, IN PART. ITA.NO.4541/M/12: 6. THE EFFECTIVE GROUND OF APPEAL RAISED BY THE ASSESS EE IS ABOUT DEDUCTION U/S. 80IB OF THE ACT.WHILE COMPLETING THE ASSESSMENT,AFTER THE REVIS IONARY ORDER OF THE CIT,THE AO HELD THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION U/ S. 80IB(10) OF THE ACT FOR THE VASTU PROJECT ITA NO.162 /11,4880/12,4541/12 KAPIL ASHOK 3 3 LOCATED AT THANE.THE AO OBSERVED THAT TWO OF THE FL ATS HAD AREA MORE THAN 1000 SQ.FT., THAT THE PROJECT PLAN ORIGINALLY CONSISTED OF 3 WINGS NAMELY A, B AND C, THAT LATER ON THE PLOT WAS SEGREGATED WITH TWO SEPARATE PROJECTS AS VASTU B AN D C AND ANOTHER AS SILVER WOOD, THAT DUE TO SEGREGATION OF THE PROJECTS THE LAND AREA WAS RE DUCED BELOW 1 ACRE, THAT THE CLAIM MADE BY THE ASSESSEE U/S. 80IB WAS NOT ADMISSIBLE. 7. BEFORE THE FAA, THE ASSESSEE STATED THAT OUT OF THE 73 FLATS ONLY IN TWO CASES THE BUILT UP AREA EXCEEDED 1000 SQ.FT., THAT THE PROJECT PLAN COMPRIS ED OF THREE (3) WINGS, THAT THEY WERE NEVER SEGREGATED,THAT ALL THE PROJECTS WERE CARRIED OUT O N THE SAME PLOT OF LAND, THAT EVEN IF THE PROJECT WAS SEGREGATED THE PROJECT COMPRISING WINGS B AND C BY ITSELF WAS ON THE PLOT OF LAND EXCEEDING ONE ACRE,THAT IT SATISFIED ALL THE CONDIT IONS LAID DOWN U/S. 80IB(10)OF THE ACT.THE ASSESSEE FURNISHED A COPY OF THE LAY-OUT PLAN OF TH E PROJECT PREPARED BY THE ARCHITECT AND SUBMITTED THAT THE B AND C WINGS WERE LOCATED ON A PLOT OF LAND COMPRISING OF 1.41 ACRES, THAT AO HAD NOT BROUGHT ON RECORD ANY MATERIAL TO PROVE THAT THE PROJECT WAS ON THE PLOT OF LAND HAVING AREA OF LESS THAN ONE ACRE. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AN D THE ASSESSMENT ORDER,THE FAA HELD THAT THE FINDINGS OF THE AO WERE BASED ON THE REPORT OF THE SURVEY PARTY.HE REFERRED TO THE PROVISIONS OF SEC.80IB(10) OF THE ACT AND OBSERVED THAT EACH OF THE FLATS SOLD BY THE ASSESSEE WAS SOLD SEPARATELY AND THE RESPECTIVE BUYERS AT TH EIR OWN CONVENIENCE HAD JOINED TOGETHER AS PER THEIR OWN CONVENIENCE,THAT ALL THE FLATS WERE SOLD SEPARATELY BY ENTERING INTO TWO DIFFERENT SALE AGREEMENTS, THAT THE ASSESSEE HAD NOT VIOLATED THE PROVISIONS OF SECTION 80IB(10) OF THE ACT. WITH REGARD TO THE TOTAL AREA IN RESPECT OF VASTU P ROJECT B AND C,THE FAA REFERRED TO THE APPROVED PLAN AND HELD THAT THE TOTAL FSI PERMISSIB LE FOR THE PURPOSE OF CONSTRUCTION OF B AND C WINGS WORKED OUT TO 3376.49 SQ.MTRS, THAT THE AR GUMENT OF THE ASSESSEE -THAT THE FSI AVAILABLE IN THE AREA AS PER THE INSTRUCTIONS OF TH ANE MUNICIPAL CORPORATION WAS 0.75% OF THE TOTAL AREA-WAS NOT CONVINCING,THAT THE CERTIFICATE OF THE PRIVATE ARCHITECT COULD NOT BE CONSIDER - ED A VALID PIECE OF EVIDENCE FOR THE PURPOSE OF ARE A COVERED UNDER THE SAID PROJECT,THAT THE ASSESSEE WAS ASKED TO PRODUCE A VALID DOCUMENT/CERT IFICATE FROM THANE MUNICIPAL CORPORATION OR FROM THE REVENUE DEPARTMENT OF THE STATE GOVT. C ERTIFYING THE ACTUAL AREA COVERED BY THE SAID PROJECT, THAT NO SUCH CERTIFICATE/EVIDENCE WAS BROUGHT ON RECORD,THAT THE CERTIFICATE OF THE ARCHITECT WAS BASED ON HYPOTHETICAL WORKING,THAT TH E PROJECT AREA PERTAINING TO ALL THE THREE WINGS WAS AN UNDIVIDED PIECE OF LAND IN REVENUE REC ORDS OF STATE GOVT.,THAT NO INDEPENDENT EVIDENCE WAS BROUGHT ON RECORD CERTIFYING THE ACTUA L LAND USED IN THE PROJECTS CONSISTING OF ALL THE THREE BLOCKS, THAT IT WAS INCORRECT ON THE PART OF THE ARCHITECT WHO HAD ISSUED CERTIFICATE TO BIFURCATE THE TOTAL PROJECT AREA INTO TWO DIFFERENT PARTS WITHOUT ANY AUTHENTICITY OR PROOF,THAT THE AUDIT REPORT IN FORM NO.10CCB COLUMN NO.23(E) OF TH E REPORT WAS BLANK AND IT DID NOT OFFER ANY QUALIFYING REMARKS,THAT THE THANE MUNICIPAL COR PORATION HAD APPROVED THE VASTU PROJECT BEFORE 1.4.2004, THAT THE ASSESSEE SHOULD HAVE COMP LETED THE PROJECT BEFORE 31.3.2008, THAT THE ASSESSEE HAD HIMSELF ADMITTED THAT THE A WING OF TH E PROJECT CALLED SILVER WOOD PROJECT WAS NOT COMPLETED BEFORE THE SAID DATE, THAT NO EVIDENC E WAS BROUGHT ON RECORD TO PROVE THAT B AND C WINGS OF THE PROJECT WAS APPROVED AS SEPARATE PRO JECT, THAT THE AO WAS FULLY JUSTIFIED IN DISALLOWING THE CLAIM MADE U/S. 80IB(10) OF THE ACT . 8. BEFORE US,THE AR ARGUED THAT THE CERTIFICATE OF THE ARCHITECT CLEARLY ESTABLISHED THAT THE AREA OF THE PROJECT WAS MORE THAN ONE ACRE, THAT DUE TO PROBLEM WITH THE ENVIRONMENT MINISTRY THE PROJECT SILVER WOOD I.E., WING-A COULD NOT BE COMPL ETED BEFORE 31.3.2008, THAT THERE WAS REASONABLE CAUSE FOR NOT COMPLETING THE PROJECT,THA T THE ASSESSEE HAD COMPLIED WITH ALL OTHER CONDITIONS OF SEC. 80IB(10) OF THE ACT.HE REFERRED TO THE CASE OF RAMSUKH PROPERTIES VS. DCIT(25 TAXMANN.COM 558)(PUNE). DR SUPPORTED THE OR DER OF THE FAA STATED THAT THE ASSESSEE HAD NEVER RAISED THE ISSUE OF ENVIRONMENT PROBLEM B EFORE THE AO OR THE FAA, THAT THE PROJECT ITA NO.162 /11,4880/12,4541/12 KAPIL ASHOK 4 4 WAS TREATED AS A SINGLE UNIT BY THE ASSESSEE AS WEL L AS THANE MUNICIPAL CORPORATION, THAT NO EVIDENCE WAS BROUGHT ON RECORD TO PROVE THAT AREA O F PLOT OF LAND WAS MORE THAN ONE ACRE BEFORE THE AO/FAA/TRIBUNAL, THAT THE BLANK COL. NO. 23(E) OF THE AUDIT REPORT CLEARLY PROVED THAT THE ASSESSEE HAD NOT PRODUCED THE REQUIRED MAT ERIAL/DETAILS FOR CLAIMING THE DEDUCTION EVEN BEFORE HIS AUDITOR. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT TMC HAD APPROVED PROJECT VASTU AT THANE BEFORE 1 ST APRIL 2004, THAT THE PROJECT WAS TO BE COMPLETED BY 31.3.2008, THAT ASSESSEE COMPLETED TWO WINGS OF THE PROJECT BEFORE THE STIPULATED DATE, THAT THE A-WING OF THE PROJECT WAS NOT COMPLE TED BEFORE 31.3.2008, THAT THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE BEFORE ANY AUTHORITY TO P ROVE THAT AREA OF THE LAND COVERED BY THE PROJECT WAS MORE THAN ONE ACRE.THE FAA HAD SPECIFIC ALLY ASKED THE ASSESSEE TO FURNISH DOCUMENTARY EVIDENCE OF THE TMC/STATE GOVT. OF MAHA RASHTRA TO STAKE THE CLAIM.IN OUR OPINION,A CERTIFICATE FROM ANY OF THOSE AUTHORITIES WOULD HAVE SETTLED THE ISSUE FOREVER.BUT THE ASSESSEE DID NOT FURNISH A CERTIFICATE FROM EITHER OF THE AUTHORITIES FOR THE REASONS BEST KNOWN TO HIM.THE ASSESSEE HIMSELF HAD ADMITTED THAT PROJECT A WAS NOT COMPLETED BEFORE THE STIPULATED TIME-LIMIT.THE ASSESSEE HAD NOT REBUTTED THE ARGUME NT OF THE AO AND THE FAA ABOUT BLANK COLUMN OF THE AUDIT REPORT.THEREFORE, WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT NEED ANY INTERFERENCE FROM OUR SIDE.CONFIRMING HIS ORDER WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE ASSESSEE. AS A RESULT,APPEAL FILED BY THE ASSESSEE STAND D ISMISSED AND BY THE AO STAND PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH OCTOBER,2015. 27 TH !'#$% ,2015 &'( SD/- SD/- ( / BEENA PILLAI ) ( %) / RAJENDRA ) * / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI, DATE: 27.10.2015 . . . JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR K BENCH, ITAT, MUMBAI / , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER / DY./ASST. REGISTRAR , /ITAT, MUMBAI.