M/s. Bajrang Developers, Ahmedabad V. The Asstt. Commissioner of Income Tax, Circle-3(3), Surat

ITA 1837/AHD/2016

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2527 (ITAT-SURAT)
• Duration Of Justice: 5 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-01-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 10-07-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANUPMA SINGLA
• Keywords: Rule of consistency
• Section: 148; 133A; 48

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No.1837 & 1838/AHD/2016 (AY 2010-11 & 11-12) (Hearing in Virtual Court) Bajarang Developers, Kalpesh S.Doshi & Co., Chartered Accountants, 608- 609, Pratiksha Complex, Mahalaxmi Paanch Rasta, Near plaid Cross Road, Ahmedabad – 380007. Vs The Assistant Commissioner of Income Tax, Circle-3(3), Surat. Appellant/ Revenue Respondent/ Assessee Assessee by None. Revenue by Mrs. Anupma Singla – Sr. DR Date of hearing 11/01/2022 Date of pronouncement 11 /01/2022 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. These two appeals by the Assessee are directed against common order of ld.Commissioner of Income Tax (Appeals)-3, Surat dated 18.03.2016 for Assessment Years (AY) 2010-11 and 2011-12. In both the years the assessee has raised certain common grounds of appeal, except variation of addition on account of income disclosed during the survey, further facts in both the years are common, therefore, both the appeals were clubbed and are decided by a consolidated order to avoid the conflicting decisions. For appreciation of ITA No’s.1837 & 1838/AHD/2016 (AY 2010-11 & 2011-12) M/s.Bajrang Developers, Surat 2 facts, facts in appeal for the A.Y. 2010-11 is treated as lead case. The assessee in appeal for A.Y. 2010-11 has raised following grounds of appeal: “1. That, the learned CIT(a) has wrongly assessed total income at Rs.16,68,412/ and wrongly made addition of Rs.6,15,873/-. 2. That, the findings of the learned CIT(A) is not justified and are bad-in-law. The appellant craves to add, alter, amend or delete any of the above grounds of appeal.” 2. Brief facts of the case as extracted from the orders of the lower authorities that assessee is a partnership firm engaged in the business of construction land development. A survey action under section 133A of the Act was carried out on the partner of firm Mahendrabhai B.Pandya on 18.02.2013. During the course of survey statement of partner of assessee firm was recorded, who admitted that they have earned Net Profit of Rs.16,68,412/- in A.Y.2010-11 and Rs.27,08,000/- in A.Y. 2011-12. Till data of survey, the assessee firm has not filed return of income, therefore, the assessing officer (AO) after recording reasons of reopening issued notice under section 148 of the Act to the assessee on -------------. In response to notice under section 148 of the Act, the assessee filed return of income for the A.Y. 2010-11 declaring income of Rs.10,52,539/-. During the assessment, the Assessing Officer(AO) recorded that in the survey action, one of the partners, namely i.e. Mahendrabhai B. Pandya admitted that firm has earned net profit of Rs. 16,68,412/-, however, ITA No’s.1837 & 1838/AHD/2016 (AY 2010-11 & 2011-12) M/s.Bajrang Developers, Surat 3 in the return of income the assessee has shown income of Rs.10,52,539/-. On the basis of aforesaid difference in the return of income and in income declared during the survey, the AO issued show cause notice as to why the difference of Rs.6,15,873/- should not be added to the income of assessee. The assessee filed its reply dated 06.03.2014. In the reply, the assessee stated that during the survey, the income was declared on the basis of estimation. The accounts were not ready and all financial data was looked after another diseased partner. The books of accounts were written later on and figure of profit of Rs.10,52,539/- is their net profit. The reply of assessee was not accepted by the AO. The AO held that partner of assessee specifically stated in the statement recording during the survey that his firm has earned profit of Rs.16,68,412/-. The bills of expenses submitted during the assessment are not verifiable and self-made bills, accordingly, the AO added the difference of Rs.6,15,873/-. 3. Aggrieved by the additions, the assessee filed appeal before the ld.CIT(A), the assessee filed appeal before the ld.CIT(A). Before the ld.CIT(A), the assessee repeated the similar submission as submitted before the AO. The submission of assessee is recorded in para 7 of the order of ld.CIT(A). The ld.CIT(A) held that it can be seen from the statement recorded that assessee was asked to consider all expenses before declaring Net Profit and that he has done so. ITA No’s.1837 & 1838/AHD/2016 (AY 2010-11 & 2011-12) M/s.Bajrang Developers, Surat 4 On the basis of aforesaid observation, the ld.CIT(A) dismissed the appeal of the assessee. Further aggrieved, the assessee has filed present appeal before this Tribunal. 4. None appeared on behalf of the assessee despite the service of notice through RPAD on more than one occasions on assessee. The notice was also served to the ld. Authorised Representative (ld.AR) of the assessee at his Ahmedabad address. These appeals relates to A.Y.2010-11& 2011-12 and were filed in the year 2016. Despite the service of notice on the assessee as well as on its representative, none is appearing, in these circumstances, we left no other option, except to decide these appeals on the basis of statement of facts, material placed before, order of Lower Authorities and after hearing the submission of ld. Sr. Departmental Representative (ld. Sr. DR) for the Revenue. 5. The ld.Sr.DR for the Revenue submits that survey action was carried out on the partner of assessee on 08.02.2013, during the survey statement of one of the partners of the assessee firm was recorded. In the stamen the partner of assessee firm admitted net profit of Rs.16,68,412/- for AY 2010-11. However, while filing return of income, the assessee has disclosed income of Rs.10,52,539/- only. On show cause notice, the assessee claimed certain expenses which were not verifiable and claimed on the basis of self-prepared ITA No’s.1837 & 1838/AHD/2016 (AY 2010-11 & 2011-12) M/s.Bajrang Developers, Surat 5 bills. The AO rejected the contention of the assessee and brought the difference of disclosed income qua the returned income and made addition thereto. During the appellate stage, the assessee was again asked reasons for short-fall of difference in both the years. The assessee furnished its submission dated 15.12.2015 for both the assessment years. The figures prepared during the survey and figures given in the return of income was compared by the ld.CIT(A) for both the years. On perusal of such figures, the ld.CIT(A), find that there is difference in Gross Receipts as well as in the expenditure and arrived at the conclusion that during survey the disclosure was made on the basis of papers relating to plots sold and there was no estimation involved therein in disclosing the net profit. Therefore, the change in stand is unexplained and the ld. CIT(A) confirmed the order of AO. The ld.Sr.DR submits that order of the ld.CIT(A) may be upheld. 6. We have considered the submissions of the ld Sr DR for the revenue and perused the record carefully. On perusal of record we find that find that the assessee has placed on record written submission filed before the Tribunal, return of income, copy of Audit Report, copy of statement recorded at the time of survey, copy of submission filed before the AO as well as ld. CIT(A), Ledger of sales of plot, copy of Ledger of Accounts of all expenses and copy of cash book for the month of April and May, 2009. ITA No’s.1837 & 1838/AHD/2016 (AY 2010-11 & 2011-12) M/s.Bajrang Developers, Surat 6 7. The assessee has also filed copy of following case laws on record :  CIT vs. S. Khader Khan Sons 23 Taxmann.com 413 (SC)  Paul Mathews and sons vs. CIT 29 Taxmann 416 (Kerala HC).  Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC)  Pushpa Vihar vs ACIT 48 TTJ 389 (ITAT Bombay)  ACIT vs. M/s. Motiwala & Sons 108 2/Del/2007 (ITAT Delhi)  Hemraj Nebhomal & Sons vs CIT 146 Taxmann 3 45 (HC of MP)  Vishal Infrastructures Ltd. vs ACIT 104 ITD 537 (ITAT Hyderabad)  Mahesh Ohri vs ACIT 35 taxmann.com 301 (ITAT Tribunal)  ACIT vs Ajov Bakli 312/KOL/2013 (ITAT Kolkata)  CIT vs. P. Balasubramanian 33 Taxmann.com 130 (HC of Madras)  M/s. IIBS Infonet (P) Ltd. vs ACIT 6509/Del/20147 (ITAT Delhi)  CIT vs. Dhingra Metal Works 196 taxmann 488 (HC of Delhi)  ACIT vs. Maya Trading Co. 34 Taxmann.com 144 (ITAT Agra)  DCIT vs. Bansal Credits Ltd. 74 taxmann.com 224 (ITAT Delhi)  TDI Marketing (P.) Ltd. vs. ACIT (ITAT Delhi) 8. We have considered the written submission of assessee and documentary evidence placed on record. We have also deliberated on all the case laws relied and filed by the assessee. We find that survey action under section 133A was carried on assessee firm on 18.02.2013. It is an admitted fact no return of income for the A.Y. 2010-11 and 2011-12 was filed till the day of survey. Though PAN number was allotted to the assessee in 2007. The statement of one of the partners was recorded. During the survey, it was revealed that assessee was developing project mainly Royal Residency, Ambica Park and Green Park. The number of plots sold in all there projects was provided from ITA No’s.1837 & 1838/AHD/2016 (AY 2010-11 & 2011-12) M/s.Bajrang Developers, Surat 7 the year 2008-09 to 2012-13 was provided to the survey team. It was further disclosed that land in the projects were not shown in the books of accounts [Answer to question no.10]. In answer to the question No. 14, the partner of assessee disclosed profit of Rs.16,68,412/- for AY 201011 as per the following details : SR.NO. F.Y. NET PROFIT FROM ROYAL RESIDENCY NET PROFIT FROM GREEN PARK AND AMBIKA PARK TOTAL NET PROFIT 1. 2009-10 6,75,000/- 9,93,412/- 16,68,412/- 2. 2010-11 14,08,000/- 13,00,000/- 27,08,000/- 3. 2011-12 26,36,000/- 12,98,750/- 39,34,750/- 4. 2012-13 3,06,97,000/- 13,02,000/- 3,19,99,000/- TOTAL 4,03,10,162/- 9. The partner of the assessee also disclosed that they will file the income tax return by properly mentioning the profit disclosed in respective yea and also pay due tax arising thereon before 31.03.2013. 10. On the basis of incriminating material and evidence collected during the survey, the case of the assessee was reopened under section 148 of the Act. The assessee filed return of income declaring income of Rs.10,52,539/- against the disclosure of Rs.16,68,412/-. The AO made addition of Rs.6,15,873/-. On the difference in return of income and the disclosure made during the survey. Though the assessee claimed certain expenses, however, ITA No’s.1837 & 1838/AHD/2016 (AY 2010-11 & 2011-12) M/s.Bajrang Developers, Surat 8 the expenses were not allowed. The action of AO was upheld by the ld.CIT(A) in a detailed and reasoned order. 11. Before us, the assessee has filed detailed written submission in the form of paper book. Basically, in written submission, the assessee tried to explain that partner has declared income on estimation basis as it was difficult to draw real figure without books of accounts. The assessee after preparing books of accounts derived the real income and the books of assessee was duly audited. The books of assessee was not completed and therefore, profit from various data cannot be reduced exactly in a very short period of time. The assessee has also tried to explain the applicability of ratio of various decisions. We find that it is an admitted case that no return of for the A.Y. 2010-11 or 2011- 12. No proper books of accounts were maintained till the date of survey. The assessee made entire exercise for preparing books of account after the date of survey and that too, after disclosing profit for various years. The entire exercise made by the assessee in preparing the alleged audited books of account and nothing but afterthought exercise of the assessee. In our view, the books of accounts prepared subsequent to the date of survey, particularly, for the A.Y. 2010-11 and 2011-12 are nothing but an afterthought which cannot be accepted. Therefore, we do not find any merit in the grounds of appeal raised by assessee. The ratio of the various case laws relied by the ITA No’s.1837 & 1838/AHD/2016 (AY 2010-11 & 2011-12) M/s.Bajrang Developers, Surat 9 assessee are not applicable on the facts of the present case. As the facts of the present case is unique as the assessee neither filed return of income for relevant assessment years nor any books of accounts were maintained. Even otherwise the assessee has not come forward to explain the facts of its case despite granting numerous opportunity. In the result, grounds of appeal raised by the assessee are dismissed. 12. In the result, appeal of the assessee is dismissed. ITA No.1838/AHD/2016 for A.Y. 2011-12: 13. Considering the fact that on the common facts and identical grounds of appeal, we have dismissed the appeal of Assessee in ITA No.1837/AHD/2016. Therefore, following the principle of consistency, we dismiss the appeal filed by the Assessee for this year as well with same observation as made in AY 2010-11, accordingly, the grounds of appeal raised by the Assessee in ITA No.1838/AHD/2016 are also dismissed with similar direction. 14. In the result, both the appeal of the Assessee are dismissed. Order announced on 11 th January, 2022 in open court by placing result on the notice board. Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 11/01/2022 /SGR* Copy to: ITA No’s.1837 & 1838/AHD/2016 (AY 2010-11 & 2011-12) M/s.Bajrang Developers, Surat 10 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR 6. Guard File By order / / TRUE COPY / / Sr. Pvt. Secretary, ITAT, Surat