Mahendra Kumar Jain HUF, CHENNAI V. ITO, CHENNAI

ITA 1678/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7759 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 06-06-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTHJCIT
• Keywords: Business income

Judgement Text

, B/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL B/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ( ./ I.T.A.NOS.1678 TO 1681 /MDS./2016 / ASSESSMENT YEARS :2007-08 TO 2011-12 SHRI MAHENDRA KUMAR JAIN , HUF , 470,MINT STREET, SOWCARPET, CHENNAI 600 079. VS. THE ITO, N.C.W.5(3), CHENNAI. PAN AAAHM 3932 M ( / APPELLANT ) ( / RESPONDENT ) ./ I.T.A.NOS.1676, 1677 & 1682 /MDS./2016 / ASSESSMENT YEARS :2008-09,2009-10 & 2007-08 SHRI BINOD KUMAR JAIN , HUF , 470,MINT STREET, SOWCARPET, CHENNAI 600 079. VS. THE ITO, N.C.W.5(3), CHENNAI. PAN AADHB 3278 G ( / APPELLANT ) ( / RESPONDENT ) ITA NOS. 1676 TO 1682/MDS/2016 2 ! ' # / APPELLANT BY : MR.SUNIL KUMAR JAIN, C.A $% ! ' # / RESPONDENT BY : MR.A.V.SREEKANTH,JCIT, D.R & ' ' ( ) / DATE OF HEARING : 07.12.2016 *+ ' ( ) /DATE OF PRONOUNCEMENT : 28.12.2016 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: ALL THESE APPEAL ARE FILED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-5, CHENNAI DATED 23.0 3.2016 IN RESPECT OF ABOVE TWO ASSESSEES. SINCE ISSUES INVOLVED IN THESE TWO APPEALS ARE COMMON IN NATURE, THESE APPEALS ARE CLUBBED TOGETHE R, HEARD TOGETHER, DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF C ONVENIENCE. 2. IN ALL THESE CASES, THERE ARE DELAYS OF FILING T HE APPEALS BY THREE DAYS. THE ASSESSEES HEREIN FILED A CONDONATION PETI TION OF DELAY STATING THAT THE DELAY WAS DUE TO ASSESSEES CHARTERED ACCOU NTANT, WHO WAS PRE- OCCUPIED WITH OTHER PROFESSIONAL WORK. WE HAVE HEARD THE LD. REPRESENTATIVE AND THE LD. DR. WE FIND THAT THERE WAS SUFFICIENT CAUSE FOR NOT FILING THE APPEAL ITA NOS. 1676 TO 1682/MDS/2016 3 WITHIN THE STIPULATED TIME. THEREFORE, WE CONDONE THE DELAY AND ADMIT THE APPEAL. 3. FIRST, WE TAKE UP SIX APPEALS EXCEPT ITA NO.167 8/MDS./2016. 4. THE COMMON GROUND IN THESE APPEALS IS WITH REGARD TO CONFIRMING THE INCOME FROM SALE OF FLATS AT 25% OF NET SALES R ECEIPT, THOUGH THE TURNOVER IS LESS THAT ` 40 LAKHS FOR WHICH SEC.44AD IS APPLICABLE SO AS TO ESTIMATE 8% OF THE TURNOVER. 5. ON MERIT, WE CONSIDER THE FACTS NARRATED IN ITA NO.1676/MDS./2016 (BINOD KUMAR JAIN HUF, A.Y 2008-09). 5.1. IN THIS CASE, THE ASSESSEE SHRI BINOD KUMAR J AIN (HUF) ALONG WITH SHRI MAHENDRA KUMAR JAIN (HUF) ENTERED INTO AGREEME NT WITH CIVIL CONSTRUCTION BUSINESS FOR PROMOTING TWELVE HOUSING F LATS (NUMBERED 12 FLATS) IN THE LAND PURCHASED AT BANGALORE AND FOR D IVIDING THE PROFIT EARNED THROUGH IT IN THE RATIO 50 : 50. FURTHER, IT WAS NO TED THAT THE LAND PROPERTY, ADMEASURING TO THE EXTENT OF 4496 SQ.FT. T NO.16 & 17 HORAMAVU GROUP PANCHAYAT , KATHA NO.452 AND 453, HORAMAVU VI LLAGE, K.R.PURAM, HOBIL, BANGALORE EAST TALUK WAS PURCHASED BY THEM JOI NTLY ON ITA NOS. 1676 TO 1682/MDS/2016 4 22.01.2005THROUGH SALE DEED FOR CONSIDERATION OF ` 5,40,000/- WITH OTHER EXPENSES CONNECTED WITH THIS FROM ONE SRI JEEVARAJ A ND FIVE ANOTHER PARTIES. FOLLOWING THIS, THE ASSESSEE ALONG M/S.MAH ENDRA KUMAR & SONS STARTED THE PROJECT OF CONSTRUCTION OF 12 HOUSING F LATS ON THE LAND PURCHASED FOR BUSINESS ACTIVITY AND SOLD OUT 1 HOUS ING FLAT (NUMBERED 1C) GOT COMPLETED IN THE FINANCIAL YEAR 2007-08 RELEVAN T TO ASSESSMENT YEAR 2008-09 FOR SALE CONSIDERATION OF ` 30 LAKHS ON 08.08.2007 VIDE SALE DEED BEARING NO.1568/2007-08 ( HIS HALF SHARE OF IT IS ` 15 LAKHS). THIS AMOUNT WAS REALIZED BY THE ASSESSEE IN THAT YEAR ITSELF. THE SAME WAS NOT OFFERED FOR TAXATION. HENCE, THE ASSESSMENT WAS RE-OPENED. TH E AO ESTIMATED THE INCOME AT 25% OF NET SALE CONSIDERATION AND ASSESSE ES SHARE WAS WORKED AT ` 3,93,162/-. AGGRIEVED BY THE ORDER OF LD. ASSESSING OFFICER, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). ON APPEAL, THE LD.CIT(A) CONFIRMED THE ORDER OF AO. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE MAIN PLEA OF THE ASSESSEE IS THAT INSTEAD OF INC OME AT 25% ON THE NET SALE CONSIDERATION, 8% TO BE APPLIED. IN OUR OPINIO N, WE DO NOT FIND ANY ITA NOS. 1676 TO 1682/MDS/2016 5 MERIT IN THE ARGUMENT OF THE LD.A.R THAT 8% ON NET SALE CONSIDERATION TO BE COMPUTED. IN OTHER WORDS, WE ARE OF THE OPINION T HAT 8% INCOME TO BE ESTIMATED BY APPLYING SEC.44AD ON THE GROSS SALE RE CEIPTS. IN THE CASE OF ASSESSEE, THE AMOUNT SHOWN IN THE SALE DEED AND THE UNEXPLAINED CASH DEPOSIT TO THE BANK ACCOUNT TO BE CONSIDERED SEPARA TELY. THE UNEXPLAINED BANK DEPOSIT TO BE CONSIDERED U/S.69 OF THE ACT. TH US, THE RE-COMPUTATION IS DONE AS FOLLOWS:- INCOME FROM SALE CONSIDERATION ` 30,00,000/- 8% OF ` 30 LAKHS ` 2,40,000/- ADDITION TOWARDS UNEXPLAINED BANK DEPOSIT ` 1,92,905/- ` 4,32,905/- 50% OF ASSESSEES SHARE 2,16,453/- THUS, THE FINAL COMPUTATION SHOULD BE AS FOLLOWS:- RETURNED INCOME 1,20,374/- ADD : ASSESSEES SHARE OF INCOME FROM THE PROJECT 2,16,453/- TOTAL INCOME 3,36,827/- IN THE CASE OF OTHER ASSESSEES, THE AO IS DIRECTED TO COMPUTE THE INCOME AS ABOVE TREATING THE INCOME OF 8% FROM THE GROSS SALE CONSIDERATION AND UNEXPLAINED BANK DEPOSIT TO BE CO NSIDERED SEPARATELY AS ITA NOS. 1676 TO 1682/MDS/2016 6 INCOME FROM OTHER SOURCES U/S.69 OF THE ACT. ACCORD INGLY, THIS GROUND RAISED BY THE ASSESSEES IS PARTLY ALLOWED IN ALL APP EALS. 7. ITA NO.1678/MDS./16 (MAHINDRA KUMAR JAIN(HUF), A.Y 20 07-08) 7.1 THE MAIN GRIEVANCE IN THIS APPEAL IS NON CONDON ATION OF DELAY OF 180 DAYS BEFORE THE LD.CIT(A). THE ASSESSEE EXPLAIN ED THE DELAY WAS ON ACCOUNT OF PRE-OCCUPATION OF AUDITORS, WHO HAS TO F ILE THE APPEAL BEFORE THE LD.CIT(A). IN OUR OPINION, THE DELAY IN FILING THE APPEAL BEFORE THE LD.CIT(A) BY 180 DAYS IS GENUINE AND ACCORDINGLY, WE CONDONE THE DELAY IN FILING THE APPEAL BEFORE THE LD.CIT(A). FURTHER, THERE WAS A DELAY OF 3 DAYS IN FILING THE APPEAL BEFORE US. IN PARA NO.2 OF THIS ORDER, WE HAVE ALREADY CONDONED THE DELAY OF FILING THE APPEAL BEF ORE US. ACCORDINGLY, THE DELAY IS CONDEMNED. 8. NOW COMING TO THE MERIT OF ADDITION, SINCE WE HAV E ALREADY DECIDED IN OTHER CASES HEREIN ABOVE, WE DIRECT THE AO TO COM PUTE THE INCOME AT 8% OF THE GROSS SALES FROM THE SALE OF FLATS SEPARA TELY AS BUSINESS INCOME AND TREAT THE UNEXPLAINED DEPOSIT, IF ANY INTO BANK ACCOUNT AS INCOME ITA NOS. 1676 TO 1682/MDS/2016 7 FROM OTHER SOURCES AND COMPLETE THE ASSESSMENT ACC ORDINGLY. THIS GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 9. IN THE RESULT, ALL THE SEVEN APPEALS OF ASSESSE ES IN RESPECT OF SHRI MAHINDRA KUMAR JAIN (HUF) AND SHRI BINOD KUMAR JAIN (HUF) RELATING TO RELEVANT ASSESSMENT YEARS ARE PARTLY ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED ON 28 TH DECEMBER, 2016 AT CHENNAI. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 28 TH DECEMBER, 2016 . K S SUNDARAM. , ' $(-. /.( / COPY TO: 1 . ! / APPELLANT 3. & 0( () / CIT(A) 5. .3 4 $(5 / DR 2. $% ! / RESPONDENT 4. & 0( / CIT 6. 4 6 7 ' / GF