DCIT 22(3), NAVI MUMBAI V. HOME BUILDER, NAVI MUMBAI

ITA 1754/MUM/2010

• Counselvise Citation: 175419914 RSA 2010
• Duration Of Justice: 1 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 29-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 05-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GOLI SRINIWAS
• Assessee Lawyers: PRAKASH
• Keywords: Additional evidence; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H : MUMBAI BEFORE SHRI B.R. MITTAL, (JUDICIAL MEMBER) AND SHRI RAJENDRA SINGH,(ACCOUNTANT MEMBER) ITA NO.1754/MUM/2010 ASSESSMENT YEAR : 2006-07 DY. COMMISSIONER OF INCOME TAX -22(3) 3 RD FLOOR, TOWER NO.6 VASHI RAILWAY STATION COMPLEX VASHI NAVI MUMBAI. ..( APPELLANT ) VS. M/S. HOME BUILDER SEA HOMES, 2 ND FLOOR PLOT NO.3 SECTOR-36 PALM BEACH ROAD, KARVE NERUL, NAVI MUMBAI. ..( RESPONDENT ) P.A. NO. (AACFH 1767 K) APPELLANT BY : SHRI GOLI SRINIWAS RESPONDENT BY : SHRI PR AKASH PANDIT AND SHRI VIJAY PANDIT DATE OF HEARING : 29.9.2011 DATE OF PRONOUNCEMENT : 14 TH OCTOBER, 2011 O R D E R PER RAJENDRA SINGH (AM). THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDE R DATED 7.3.2010 OF CIT(A) FOR THE ASSESSMENT YEAR 2006-07. TH E DISPUTE IS REGARDING DISALLOWANCE OF VARIOUS AMOUNTS CLAIMED TO BE RELATING TO THE COST OF ACQUISITION OF LAND. ITA NO.1754/M/10 A.Y:06-07 2 2. THE FACTS, IN BRIEF ARE THAT THE ASSESSEE WHO IS A BUI LDER HAD SHOWN SALES OF RS.11.52 CRORES IN RESPECT OF THE PROJECT RUP AREL GARDENS. THE ASSESSEE HAD SHOWN GP OF RS.70.22 LACS. THE AO ALSO NOTED THAT IN ADDITION TO OPENING WIP THE ASSESSEE DEB ITED EXPENDITURE OF RS.5.53 CRORE WHICH INCLUDED A SUM OF RS. 3.78 CRORES AGAINST COST OF LAND. THE AO ALSO NOTED FROM BALANCE SH EET THAT THE ASSESSEE HAD SHOWN A SUM OF RS.1,84,99,775/- AS OUTSTANDING LIABILITY TO THE LAND LORDS OF RUPAREL GARDEN PROJECT. THE AO ASKED THE ASSESSEE TO PRODUCE EVIDENCE REGARDING COST OF LAND AND ALSO ASKED TO PRODUCE THE PARTIES FROM WHOM LAND HAD BEEN PURCHASED ALONGWITH THE DOCUMENTS OF REGISTRATION OF THE SAID PROPERTIES. T HE ASSESSEE COULD NOT BRING THE PARTIES. HOWEVER, THE ASSESSEE SUBMITTE D THAT ANOTHER FAMILY KNOWN AS SHRI BM SUTAR HAD MADE THEI R CLAIM ON THE LANDLORD AND LEGAL DISPUTE AROSE WHICH WAS PENDING AND WHICH WAS THE REASON FOR WITHHOLDING THE PAYMENT TOWARDS LAND. THE ASSESSEE FILED A DRAFT OF CIVIL APPEAL BETWEEN LANDLORDS AND BM SUTAR BUT THE AO NOTED THAT THE SAME WAS UNSIGNED. THE AO, THEREFORE, DID N OT ACCEPT THE CLAIM OF THE ASSESSEE THAT A DISPUTE WAS PENDING AND A ST AY HAD BEEN GRANTED. AO ALSO OBSERVED THAT THE ASSESSEE HAD RECEIVED THE ENTIRE CONSIDERATION FROM THE SALE OF FLATS /SHOPS BUT CLAIMED THAT IT HAD NOT DISCHARGED LIABILITY TOWARDS LAND AMOUNTING TO RS.1,84, 99,775/-. THE ASSESSEE HAD ALSO FAILED TO PRODUCE THE PARTIES AND ALSO TH E REGISTERED ITA NO.1754/M/10 A.Y:06-07 3 DOCUMENTS RELATING TO SALE OF LAND. AO, THEREFORE TRE ATED LIABILITY OF RS.1,84,99,775/- AS NOT GENUINE AND ACCORDINGLY ADDED T O THE TOTAL INCOME. 2.1 THE ASSESSEE HAS ALSO CLAIMED THAT IT HAD MADE CASH PAYM ENTS OF RS.16,92,250/- TO THE LAND OWNERS DURING FINANCIAL YE AR 1998-99 TO 2005-06. THE AO HOWEVER, DISALLOWED THE CLAIM ON TH E GROUND THAT THERE WAS NO EVIDENCE PRODUCED REGARDING CASH PAYMENT S. THE ASSESSEE ALSO CLAIMED THAT IT HAD PAID A SUM OF RS.1.00 L ACS TO BALARAM PATIL ON 20.10.1999 AND RS.25,000/- TO SRIN IVAS PATIL ON 10.6.1999 BUT THE ASSESSEE COULD NOT PRODUCE BANK ACCOU NT TO PROVE THESE PAYMENTS. HE, THEREFORE DISALLOWED THESE CLAIMS A LSO AND ADDED A SUM OF RS.1,25,000/- TO THE TOTAL INCOME. 2.2 THE ASSESSEE DISPUTED THE DECISION OF AO AND MADE WRI TTEN SUBMISSIONS BEFORE CIT(A) WHICH WAS REMANDED BY THE CIT( A) TO THE AO FOR FURTHER EXAMINATION AND REPORT. IN THE REMAND PROCEEDINGS, AO EXAMINED BOTH LANDLORS I.E. BALARAM U. PATIL AND SHA MRAO PATIL. IN THEIR STATEMENTS, THE PARTIES SUBMITTED THAT BALAKRISHN A SUTAR HAD FILED CASE IN THANE COURT DEMANDING SHARE IN THE PLOT AND IN THE YEAR 2005 COURT HAD RESTRAINED M/S. HOME BUILDER TO MAKE ANY FU RTHER PAYMENTS. THE COURT HAD HOWEVER ALLOWED COMPLETION OF CONSTRUC TION AND AVAIL OCCUPANCY CERTIFICATES FROM THE AUTHORITIES. THEY A LSO STATED THAT ITA NO.1754/M/10 A.Y:06-07 4 DURING THE STAY PERIOD, THEY HAD RECEIVED SOME AMOUNT S AND BALANCE WAS STILL PENDING. THEY ALSO STATED THAT THEY HAD RECE IVED SOME AMOUNTS IN CASH ALSO. THE AO IN THE REMAND REPORT THE REFORE, STATED THAT THE PAYMENTS COULD NOT BE BRUSHED ASIDE AS BOGUS. CIT(A) THEREFORE, DELETED THE ADDITION OF RS.1,84,99,775/-. REGARDING CASH PAYMENTS, CIT(A) OBSERVED THAT IN RESPONSE TO QUESTION NO.8 BEFORE AO THE LAND LORDS HAD STATED THAT THEY HAD BEEN PAID CASH ON WHICH THE AO HAD GIVEN NO ADVERSE FINDING. HE, THEREFORE, ACCEPTED THE CLAIM OF CASH PAYMENT. REGARDING THE PAYMENT BY CHEQ UE, CIT(A) NOTED THAT PAYMENT VIDE CHEQUE NO.16324 FOR RS.1.00 LACS HAD BEEN MADE ON 20.10.99 WHICH WAS STATED TO BE ON ACCOUNT OF SRINIVAS PATIL. SIMILARLY THE BANK ACCOUNT SHOWED PAYMENT OF RS.25,00 0/- TO ONE SHRI SRINIVAS PATIL ON 14.6.1999. HE, THEREFORE, ACCEPTE D THESE PAYMENTS ALSO AND CIT(A) THUS DELETED ALL THESE ADDITIONS AGGRIE VED BY WHICH REVENUE IS IN APPEAL. 3. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE SUBMIT TED THAT THE ASSESSEE HAD SHOWN COST OF LAND AT RS.3,78,70,000/-. THER E WERE SOME DISPUTES PENDING WHICH WERE SETTLED RECENTLY AND C ONVEYANCE AS WELL AS SUPPLEMENT DEEDS HAVE ALSO BEEN DRAWN WHICH C ONFIRM TOTAL PAYMENT TO OWNERS OF THE LAND AT RS.4,11,25,640/- AG AINST CLAIM OF RS.3,78,70,000/-. THE LD. AUTHORISED REPRESENTATIVE R EQUESTED FOR ADMISSION OF THESE DOCUMENTS AS ADDITIONAL EVIDENCE AS SA ME CAME ITA NO.1754/M/10 A.Y:06-07 5 INTO POSSESSION OF THE ASSESSEE AFTER THE ORDER OF CIT(A). IT WAS REQUESTED THAT THIS EVIDENCE MAY ALSO BE CONSIDERED FOR DECIDING THE ISSUE. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTH ER HAND SUBMITTED THAT THE STATEMENT OF LANDLORDS SHOWED THAT T HEY WERE NOT VERY SPECIFIC IN GIVING DETAILS OF PAYMENTS RECEIVED. IN RESPONSE TO QUESTION NO.8 LANDLORDS ONLY STATED THAT CERTAIN AMOUN TS WERE PAID IN CASH WITHOUT GIVING SPECIFIC DETAILS. FURTHER, IN RESP ONSE TO QUESTION NO.9 IT WAS STATED THAT MORE THAN RS.1.00 CRORES WAS DUE TO THEM FROM THE ASSESSEE BUT THE ACTUAL OUTSTANDING SHOWN WAS RS.1,84, 99,775/-. THEREFORE THE MATTER REQUIRED FURTHER VERIFICATION. MOREOVER THE ASSESSEE HAD ALSO FILED ADDITIONAL EVIDENCE WHICH WAS REQ UIRED TO BE EXAMINED BY THE AO AND THEREFORE, THE MATTER MAY BE RESTORED TO THE AO. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVA L CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING ADDI TIONS MADE BY AO ON ACCOUNT OF EXPENDITURE RELATING TO THE ACQUISITIO N OF LAND FOR RUPAREL PROJECT. THE ASSESSEE HAD CLAIMED TOTAL EXPEND ITURE OF RS.3.78 CRORES AGAINST ACQUISITION OF LAND. HOWEVER A SU M OF RS.1,54,99,975/- WAS SHOWN AS OUTSTANDING AS ON 31.3.2006 . BEFORE AO, THE ASSESSEE COULD NOT PRODUCE PARTIES FOR EXAMINATI ON. HE THEREFORE, TREATED THE OUTSTANDING PAYMENT AS NOT GE NUINE AND ADDED TO THE TOTAL INCOME. THERE WERE ALSO CASH PAYMENTS OF RS.16,52,250/- ITA NO.1754/M/10 A.Y:06-07 6 WHICH WERE ALSO ADDED BY AO FOR WANT OF EVIDENCE. S IMILARLY TWO PAYMENTS BY CHEQUE TOTALING TO RS.1,25,000/- WERE ALSO NOT SUBSTANTIATED BY BANK ACCOUNT AND THEREFORE, ADDED TO TOTAL INCOME. THE CIT(A) ALLOWED THE CLAIMS OF THE ASSESSEE ON THE GROU ND THAT THE LANDLORDS IN THE STATEMENTS ADMITTED THAT THE AMOUNTS W ERE OUTSTANDING AND THE AO IN THE REMAND REPORT ALSO MENT IONED THAT THE CLAIMS COULD NOT BE BRUSHED ASIDE. HOWEVER, WE FIND THAT THE LAND LORDS IN RESPONSE TO Q.NO.9 HAD NOT GIVEN ANY SPECIFIC R EPLY AND ONLY MENTIONED THAT THE AMOUNTS OF MORE THAN RS.1.00 CRORE S WERE OUTSTANDING. THEREFORE, SPECIFIC FINDING ON THIS ASPECT W AS REQUIRED TO BE GIVEN BY THE AO IN THE REMAND REPORT AND IN CASE A O DID NOT GIVE SPECIFIC REPORT CIT(A) WAS REQUIRED TO OBTAIN A SPECIFIC R EPORT OR HIMSELF CONSIDER THE MATTER AND GIVE A FINDING AS TO T HE ACTUAL AMOUNTS OUTSTANDING. IN RELATION TO CASH PAYMENTS ALSO TH E LANDLORDS IN RELATION TO Q.NO.8 ONLY STATED THAT SOME CASH PAYME NTS HAD ALSO BEEN MADE WITHOUT GIVING ANY SPECIFIC DETAILS. THE AO ALSO GAVE NO SPECIFIC FINDING. THEREFORE IN OUR VIEW THE MATTER REQ UIRED FRESH VERIFICATION. SIMILARLY IN RESPECT OF CHEQUE PAYMENT OF RS.1.00 LACS, CIT(A) MENTIONED THAT PAYMENT MADE BY CHEQUE NO.1632 4 DATED 20.10.99 WAS STATED TO BE ON ACCOUNT OF SRINIVAS PATIL. NO SPECIFIC FINDING HAS BEEN GIVEN AS TO WHETHER THE CHEQUE WAS RE ALLY ON ACCOUNT OF SRINIVAS PATIL. BOTH, THE CHEQUE PAYMENTS AS WELL A S CASH PAYMENTS ITA NO.1754/M/10 A.Y:06-07 7 WERE MADE IN EARLIER YEARS BUT THERE IS NO FINDING TH AT THE SAID PAYMENTS HAVE BEEN DECLARED IN THE RETURN OF EARLIER YEARS. THE LD. AR HOWEVER HAS SUBMITTED BEFORE THE US THAT THE TOTAL PAYMENTS FOR PURCHASE OF LAND WAS TO THE TUNE OF RS.4,11,25,640/- AS PER THE COPY OF CONVEYANCE DEED IN RESPECT OF LAND PLACED ON RECORD. IT HAS ACCORDINGLY BEEN REQUESTED THAT THE CLAIMS OF DEDUCTION MADE BY THE ASSESSEE BEING BELOW THE AMOUNT MENTIONED IN DEED COULD NOT BE BRUSHED ASIDE TO BE NON-GENUINE. IN OUR VIEW, THE C ONSIDERATION RECORDED IN THE CONVEYANCE DEED WILL BE A RELEVANT FACT OR IN DECIDING THE GENUINENESS OF CLAIM ON ACCOUNT OF LAND PURCHASED AND THEREFORE, IF THE CLAIM IS LESS THAN THE CONSIDERATION MENTIONED IN DEED, THIS HAS TO BE CONSIDERED AS GENUINE EXPENDITURE SUBJECT TO THE V ERIFICATION OF PAYMENTS MADE BY THE ASSESSEE IN THE EARLIER YEARS. WE, THEREFORE, SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER B ACK TO AO FOR PASSING A FRESH ORDER AFTER NECESSARY EXAMINATION AND AFT ER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE REGARDING ALLOWA BILITY OF DEDUCTION OF RS.3,78,70,000/- ON ACCOUNT OF LAND. WE M AY CLARIFY HERE THAT THE DISPUTE BEFORE US IS ONLY REGARDING ALL OWABILITY OF DEDUCTION OF RS.1,84,99,775/-, RS.16,92,250/- AND RS.1, 25,000/- ON ACCOUNT OF PAYMENT FOR LANDS AND THEREFORE, DEDUCTION I F FOUND ALLOWABLE WILL BE LIMITED TO THE AMOUNTS MENTIONED ABOVE. ITA NO.1754/M/10 A.Y:06-07 8 5. IN THE RESULT APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14.10.2011. SD/- SD/- (B.R. MITTAL) (RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 14.10.2011. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.