The ITO, Ward-5(1), Baroda V. M/s. Baba Housing Corporation, Baroda

ITA 1811/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9127 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 02-09-2009
• Assessment Year: 2006-2007
• Appeal Filed On: 29-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: NONEWRITTEN SUBMISSIONS
• Keywords: Corroborative evidences; Revised return; Reassessment proceedings; TDS
• Section: 142(1); 194C; 143(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: AHMEDABAD BEN CHES D BENCH: AHMEDABAD (BEFORE S/SHRI H. L. KARWA, JM AND A N PAHUJA, AM) ITA NO. 1811/AHD/2009 AY: 2006-07 THE INCOME TAX OFFICER, WARD 5 (1), RACE COURSE CIRCLE, BARODA VS M/S. BABA HOUSING CORPORATION, SAI ARPAN COMPLEX, NEAR ALPANA CINEMA, PRATAPNAGAR, BARODA, [PAN: AAGMF 2711E] APPELLANT RESPONDENT REVENUE BY SHRI C.K. MISHRA, DR ASSESSEE BY NONE(WRITTEN SUBMISSIONS) ORDER A N PAHUJA: THIS APPEAL BY THE REVENUE DIRECTED AGAINST AN OR DER DATED 06-03-2009 OF THE LEARNED CIT(A)-V, BARODA. R AISES THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.18, 33,990/- BEING UNDISCLOSED PROFIT ON SALE OF BUILDING ONLY ON THE BASIS OF ARCHITECTS CERTIFICATE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 3, 61,772/-[ACTUALLY RS. 91,142] U/S. 40A(IA) MERELY ON THE BASIS OF A L ETTER OF THE ASSESSEE CLEARLY IN CONTRAVENTION TO THE FINDING OF HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS CIT 284 ITR 323, WHEREIN IT IS HELD THAT IT IS NOT OPEN TO THE ASSES SEE TO MAKE A CLAIM FOR DEDUCTION BY WAY OF A LETTER AND THE SAME SHOUL D BE MADE BY WAY OF FILING REVISED RETURN. 3. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD . CIT(A) BE SET SIDE AND THAT OF THE ORDER OF THE A. O. BE RESTORED. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING NIL INCOME FILED ON 31-12-2006 BY THE ASSESSEE, CARRYING ON CO NSTRUCTION BUSINESS, WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (H EREINAFTER REFERRED TO AS THE ACT). SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED U/S 147 OF THE ACT AFTER ITA NO. 1811/AHD/2009 M/S. BABA HOUSING CORPORATION 2 RECORDING THE REASONS THAT THE ASSESSEE FAILED TO OFFER THE AMOUNT FOR TAX IN TERMS OF PROVISIONS OF SEC. 40A(IA) OF THE ACT, ON WHICH TAX DEDUCTED AT SOURCE WAS NOT DEPOSITED IN THE GOVERNMENT ACCOUNT WITHIN THE STIPULATED TIME . ACCORDINGLY, A NOTICE U/S 148 OF THE ACT WAS ISSUED ON 19.2.2008. IN RESPONSE, THE ASSESSEE DID NOT FILE ANY RETURN. SUBSEQUENTLY, A NOTICE U/S 142(1) OF THE ACT WAS ISSUED ON 21-10-2008. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE REFLECTED PROFIT OF R S. 1,97,010/- ON SALE OF BANK OF BARODA BUILDING ON 20-10-2005 FOR A CONSIDERATION O F RS.20.31 LACS TO THREE DIFFERENT PERSONS NAMELY SHRI ASHUTOSH INDRAVADAN P ATEL, SHRI INDRAVADAN BECHARBHAI PATEL AND SMT. HANSABEN INDRAVADAN PATEL . IN RESPONSE TO A SHOW CAUSE NOTICE DATED 15-12-2008, THE ASSESSEE REPLIED VIDE LETTER DATED 22-12- 2008 THAT THE ASSESSEE PURCHASED THE SAID PROPERTY AT PRATAPNAGAR,VADODRA, INCLUDING OLD BANK OF BARODA BUILDING FOR DEVELOPI NG AND THUS, PROPERTY WAS TREATED AS STOCK-IN-TRADE. IT WAS MENTIONED THAT AL L THE TENANTS IN THE SAID BUILDING VACATED THEIR PORTIONS EXCEPT BANK OF BARODA. IN TH E NEW BUILDING, BANK OF BARODA WAS GIVEN A BLOCK OF 2600 SQ. FT. ON RENTAL BASIS. THIS BLOCK WAS SOLD TO THE AFORESAID PERSONS. THE PROFIT ON SALE OF THE SA ID BLOCK WAS COMPUTED AFTER DEDUCTING COST OF LAND @ RS. 318.56 PER SQ. FT. AS AGAINST COST OF RS.408.77 PER SQ. FT DETERMINED BY THE SUB REGISTRAR FOR THEIR SURVEY NUMBER WHILE ACTUAL COST OF CONSTRUCTION WORKED OUT TO RS. 386.82 PER SQ. FT . THUS, PROFIT ON SALE OF THIS BUILDING WORKED OUT TO 9.70%. HOWEVER, THE AO WAS O F THE OPINION THAT THE ASSESSEE DID NOT DISCLOSE THE CORRECT PROFIT EARNED ON ACCOUNT OF SALE OF THE AFORESAID PROPERTY IN VIEW OF THE FOLLOWING REASONS : 1. ON THE BASIS OF SUBMISSION OF THE ASSESSEE IN R ESPECT OF LAND PURCHASE OF RS.62,79,575/- FROM 01/04/2002 TO31/03/ 2003, IT WAS FOUND THAT THE ASSESSEE SIMPLY REFLECTED AN OPENING STOCK OF LAND OF RS.60,268/- AS ON 01/04/2005. THEREFORE, THE ABO VE MENTIONED LAND/PROPERTY WAS NOT REFLECTED IN THE BOOKS OF ACC OUNTS OF THE ASSESSEE. 2. THE ASSESSEE SIMPLY SUBMITTED THE CERTIFICATE OF ARCHITECT IN RESPECT OF COST OF CONSTRUCTION OF RS.10,14,000/- AND CLAIM ED EXPENSES ON SUCH LAND/BOB BUILDING. THE CONSTRUCTION COST WAS N OT SUPPORTED ITA NO. 1811/AHD/2009 M/S. BABA HOUSING CORPORATION 3 ALONG WITH THE DOCUMENTARY EVIDENCES AT THE TIME OF SUBMISSION AND HEARING. 3. AS REGARDS THE LETTER OBTAINED ON 23/12/2008 FRO M SUB-REGISTRAR, VADODARA-1, CITY SIMPLY INDICATES THE MARKET PREVAI LING RATES OF LAND WHICH DOES NOT PROVE THAT THE WORKING COST OF LAND WAS CORRECTLY TAKEN AT THE TIME OF SALE. 4. PROPERTY IN QUESTION WAS NOT REFLECTED ANYWHERE IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE WHICH WAS EXAMINED IN THE AY 2005-06. 5. THE ASSESSEE FAILED TO ESTABLISH THE BREAK UP OF STOCK IN TRADE IN RESPECT OF ITS CLAIM ON ACCOUNT OF SALE OF BOB PROP ERTY WHETHER THE SAME IS REFLECTED IN THE BOOKS OF ACCOUNT OF EARLI ER YEARS OR NOT. ACCORDINGLY, THE AO CONCLUDED THAT THE AMOUNT OF RS .18,33,990/- IS PART OF PROFIT NOT OFFERED FOR TAX AND ACCORDINGLY, ADDED TO THE I NCOME. 3. ON APPEAL, THE LEARNED CIT(A) DELETED THE ADDITI ON HOLDING AS UNDER: 4.5 I HAVE CAREFULLY EXAMINED THE FACTS OF THE CA SE AND PERUSED THE ARGUMENTS OF THE AO AND THE SUBMISSIONS MADE BY THE APPELLANT. BALANCE SHEET AS ON 31.03.2003 ATTACHED WITH THE SUBMISSION REFLECTS TOTAL VALUE OF LAND OF RS.62,79 ,575/- AND BALANCE SHEET AS ON 31.03.2004 AND 31.03.2005 REFLE CT VALUE OF BOB LAND AS RS.8,28,267/-. FURTHER, AMOUNT OF RS.60 ,260/- REFLECTED IN THE BALANCE SHEET AS ON 31.03.2005 IS OF CLOSING STOCK. FURTHER, IT IS ALSO OBSERVED THAT BOB BUILDING IS A PART OF WHOLE SAI ARPAN PROJECT WHICH IS BEING DEVELOPED BY THE APPE LLANT SINCE 2003. THE TOTAL WORK-IN-PROGRESS OF SAI ARPAN PRO JECT INCLUDES COST OF CONSTRUCTION OF BOB BUILDING ALSO. THUS, I AGREE WITH THE APPELLANT THAT VALUE OF LAND AND COST OF CONSTRUCTI ON OF BOB BUILDING ARE SHOWN AND ARE REFLECTED IN THE BOOKS O F ACCOUNT. CERTIFICATE OF ARCHITECT AND LETTER OF SUB-REGISTRA R, PRODUCED BEFORE THE AO ARE ONLY CORROBORATIVE EVIDENCES. IN THE CIR CUMSTANCES, THE ASSESSING OFFICER IS DIRECTED TO DELETE THIS ADDITI ON OF RS.18,33,990/-. THUS, THIS GROUND OF APPEAL IS ALLO WED. 4. THE REVENUE IS NOW IN APPEAL AGAINST THE AFORESA ID FINDINGS OF THE LEARNED CIT(A). THE LD. DR SUPPORTED THE FINDINGS O F THE AO WHILE NONE APPEARED ON BEHALF OF THE ASSESSEE. IN THEIR WRITTE N SUBMISSIONS, THE ASSESSEE STATED THAT THE AO DISALLOWED TOTAL COST OF RS.18,3 3,990/-. IT IS NOT UNDERSTOOD AS TO HOW THE BUILDING CANNOT HAVE ANY COST. ACCORDING TO THE AO, OPENING STOCK OF ITA NO. 1811/AHD/2009 M/S. BABA HOUSING CORPORATION 4 LAND - RS.60,268/- AS ON 01-04-2005 WAS NOT REFLECT ED IN THE BOOKS OF ACCOUNT. THE ASSESSEE CONTENDED THAT COST OF LAND IS RS.8,28 ,267/- AS EVIDENT FROM THE BALANCE SHEET AS ON 31-03-2005. AS REGARDS COST OF CONSTRUCTION, THE ASSESSEE PLEADED THAT THEY SUBMITTED A COPY OF CERTIFICATE O F ARCHITECT VALUING COST OF CONSTRUCTION AT RS.10.14 LACS. BALANCE SHEET OF THE ASSESSEE AS ON 31-3-2005 REFLECTED WORK IN PROGRESS OF RS.11.00 LACS AND AS ON 31-3-2006 OF RS.13,90,704.97. OUT OF THIS WORK IN PROGRESS, COST OF CONSTRUCTION ATTRIBUTED TO BANK OF BARODA BUILDING WAS WORKED OUT. IT WAS FURT HER POINTED OUT THAT THE BOOKS OF ACCOUNT FOR THE AY 2005-06 WERE NEVER EXA MINED BY THE AO. THE AO EXAMINED THE BOOKS FOR THE AY 2006-07.MOREOVER, TH E CLOSING STOCK OF RS.60,260/- REFERRED TO BY THE AO IS IN RESPECT OF BUILDING MATERIALS LIKE SAND, BRICKS ETC. AND NOT OF BANK OF BARODA BUILDING. IN THE LIGHT OF THESE SUBMISSIONS, THE ASSESSEE PLEADED THAT THE LEARNED CIT(A) WAS RI GHT IN DELETING THE ADDITION. 5. WE HAVE HEARD THE LEARNED DR AND GONE THROUGH TH E WRITTEN SUBMISSIONS. WE FIND THAT THE LD. CIT(A) ON PERUSAL OF BALANCE S HEET AS ON 31.03.2004 AND 31.03.2005 FOUND THE VALUE OF BOB LAND AT RS.8,28 ,267WHILE BOB BUILDING WAS A PART OF WHOLE SAI ARPAN PROJECT, BEING DEVELOPE D BY THE ASSESSEE SINCE 2003. THE TOTAL WORK-IN-PROGRESS OF SAI ARPAN PROJECT I NCLUDED COST OF CONSTRUCTION OF BOB BUILDING ALSO. ACCORDINGLY, THE LD. CIT(A) CONC LUDED THAT THE VALUE OF LAND AND COST OF CONSTRUCTION OF BOB BUILDING ARE REFLEC TED IN THE BOOKS OF ACCOUNT BEFORE US, THE LEARNED DR DID NOT PLACE ANY MATERIA L CONTROVERTING THE AFORESAID FINDINGS FACTS RECORDED BY THE LEARNED CIT(A). IN T HE LIGHT OF THESE UNDISPUTED FINDINGS, WE DO NOT FIND ANY REASON TO TAKE A DIFFE RENT VIEW IN THE MATTER. THEREFORE, GROUND NO.1 IS DISMISSED. 6. GROUND NO.2 RELATES TO DELETION OF ADDITION OF R S.3,61,772/- . THE ASSESSEE CLAIMED DEDUCTION FOR AN AMOUNT OF RS.4,53 ,914/-, WHICH WAS DISALLOWED BY THE AO IN TERMS OF PROVISIONS OF SECT ION 40A(IA) OF THE ACT IN THE AY 2005-06, ON ACCOUNT OF BELATED DEPOSIT OF TDS REQUI RED TO BE DEDUCTED U/S 194C OF THE ACT. SINCE THE PAYMENT OF TDS WAS MADE IN T HE YEAR UNDER CONSIDERATION, THE ASSESSEE CLAIMED DEDUCTION. HOWEVER, THE AO REJ ECTED THE CLAIM ON THE ITA NO. 1811/AHD/2009 M/S. BABA HOUSING CORPORATION 5 GROUND THAT THE SAID CLAIM CAN BE MADE ONLY BY FILI NG A REVISED RETURN. ACCORDINGLY, THE AO DISALLOWED THE CLAIM FOR DEDUCT ION OF RS.4,53,914/-. 7. ON APPEAL, THE ASSESSEE CONTENDED THAT THE ASSE SSEE IS ENTITLED TO DEDUCTION IN TERMS OF PROVISIONS OF THE ACT EVEN IF IT IS NOT CLAIMED. RELYING UPON THE DECISION IN THE CASE OF THOMAS KURIAN VS ACIT ( 2008) 303 ITR (AT) 110, JCIT VS HERO HONDA FINLEASE LTD. (2008) 115 TTJ 752 , GOETZE (INDIA) LTD. VS CIT (2006) 284 ITR 323(SC), CIT VS PRABHU STEEL IND USTRIES PVT. LTD. (1988) 171 ITR 530(BOM) AND CIT VS KANPUR COAL SYNDICATE (1964 ) 53 ITR 225 (SC), THE ASSESSEE CONTENDED THAT INCOME CANNOT BE TAXED TWIC E. IF THE CLAIM IS NOT ALLOWED IN THE YEAR UNDER CONSIDERATION, IT WOULD A MOUNT TO DOUBLE TAXATION, IT WAS PLEADED. IN THE LIGHT OF THESE SUBMISSIONS, THE LEARNED CIT(A) ALLOWED THE CLAIM TO THE EXTENT OF RS. 91,142, HOLDING AS UNDER : 5.3 I HAVE CONSIDERED THE FACTS OF THE CASE, OBSE RVATION OF AO AS ALSO SUBMISSION OF THE APPELLANT. IN VIEW OF THE LEGAL AND FACTUAL POSITION, THE SUBMISSION OF THE APPELLANT I S ACCEPTABLE. IT IS ALSO BROUGHT TO MY NOTICE BY THE AR THAT IN APPEAL OF AY 2005-06 THE ADDITION OF RS.453914/- WAS REDUCED TO RS.91142 /-. HENCE, I DIRECT THE ASSESSING OFFICER TO ALLOW CLAIM OF RS.9 1,142/- UNDER SECTION 40(A) (IA) OF THE ACT. THUS, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 8. THE REVENUE IS NOW IN APPEAL AGAINST THE AFORESA ID FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR WHILE SUPPORTING THE ORDER OF THE AO CONTENDED THAT NO FRESH CLAIM CAN BE MADE IN THE REASSESSMENT PROCEEDINGS IN VIEW OF DECISION OF THE APEX COURT IN CIT VS. SUN ENGINEERI NG WORKS (P.) LTD.,198 ITR 297(SC).ON THE OTHER HAND, THE ASSESSEE IN THEIR WR ITTEN SUBMISSIONS RELIED ON THEIR CONTENTIONS BEFORE THE LEARNED CIT(A). 9. WE HAVE HEARD THE LEARNED DR AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE . WE FIND THAT THE ASSESSEE MADE A FRESH CLAIM IN THE COURSE OF REASSESSMENT PROCEEDINGS FOR DEDUCTION OF AN AMOUNT OF RS.4,53,914/- DISALLOWED BY THE AO IN AY 2005-06, HAVING RECOURSE TO PROVISIONS OF SEC. 40A(IA) OF THE ACT. THE LD. CIT(A) ALLOWED ITA NO. 1811/AHD/2009 M/S. BABA HOUSING CORPORATION 6 DEDUCTION FOR AN AMOUNT OF ONLY RS. 91,142 AND NOT RS.3,61,772/- AS MENTIONED IN THE GROUND NO.2, THE DISALLOWANCE HAVING BEEN UP HELD TO THE EXTENT OF RS.91,142/-IN THE AY 2005-06. APPARENTLY, THE CLAIM FOR DEDUCTION HAS BEEN MADE DURING THE REASSESSMENT PROCEEDINGS. CONSIDERI NG THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION TH AT REASSESSMENT PROCEEDINGS ARE FOR THE BENEFIT OF REVENUE AS HELD IN THE CAS E OF CIT VS. SUN ENGINEERING WORKS PVT. LTD.,198 ITR 297(SC). HONBLE APEX COURT OBSERVED IN THE SAID DECISION THAT ALTHOUGH SECTION 147 IS PART OF A TAXING STATUTE, IT IMPOSES NO CHARGE ON THE SUBJECT BUT DEALS MERELY WITH THE MACHINERY OF ASSE SSMENT AND IN INTERPRETING A PROVISION OF THAT KIND, THE RULE IS THAT THAT CON STRUCTION SHOULD BE PREFERRED WHICH MAKES THE MACHINERY WORKABLE. SINCE THE PROCE EDINGS UNDER SECTION 147 OF THE ACT ARE FOR THE BENEFIT OF THE REVENUE A ND NOT AN ASSESSEE AND ARE AIMED AT GARNERING THE ' ESCAPED INCOME ' OF AN ASSESSEE, THE SAME CANNOT BE ALLOWED TO BE CONVERTED AS ' REVISIONAL ' OR ' REVIEW ' PROCEEDINGS AT THE INSTANCE OF THE ASSESSEE, THEREBY MAKING THE MACHINERY UNWORKABLE. 9.1 IT IS CLEAR FROM THE ABOVE DECISION OF THE HONBLE SUPREME COURT THAT PROCEEDINGS UNDER SECTION 147 OF THE ACT ARE FOR TH E BENEFIT OF THE REVENUE AND NOT FOR THE ASSESSEE; THE ASSESSEE CANNOT BE PERMIT TED TO CONVERT THE REASSESSMENT PROCEEDINGS TO HIS ADVANTAGE. SINCE NE ITHER THE AO NOR THE LD. CIT(A) CONSIDERED THE CLAIM IN THE LIGHT OF AFORESA ID DECISION OF THE HONBLE SUPREME COURT, RELIED UPON BY THE LD. DR, IN THE INTEREST OF JUSTICE, WE CONSIDER IT FAIR AND APPROPRIATE TO VACATE THE FINDINGS OF L D. CIT(A) AND RESTORE THE MATTER TO THE FILE OF AO WITH THE DIRECTIONS TO READJUDICA TE THE CLAIM IN THE LIGHT OF AFORESAID DECISION OF THE HONBLE APEX COURT AFTER ALLOWING SUFFICIENT OPPORTUNITY TO THE ASSESSEE. WITH THESE DIRECTIONS, GROUND NO. 2 IN THE APPEAL OF THE REVENUE IS DISPOSED OF. . 10. GROUND NO.3, BEING GENERAL IN NATURE, DOES NOT REQUIRE ANY SEPARATE ADJUDICATION AND IS,THEREFORE DISMISSED. ITA NO. 1811/AHD/2009 M/S. BABA HOUSING CORPORATION 7 11. IN THE RESULT, APPEAL IS PARTLY ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 11 TH SEPTEMBER,2009 SD/- SD/- (H.L KARWA) (A .N.PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, DATED : 11TH SEPTEMBER, 2009 COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE INCOME TAX OFFICER,WARD 5 (1), RACE COURSE CIRCLE,BARODA 3. CIT(A)-V, BARODA 4. THE CIT CONCERNED. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD