M/s. Mou Apartment, Hooghly V. ITO, Ward - 2(2), Hooghly, Hooghly

ITA 1871/KOL/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83059 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 06-10-2010
• Court: TRIBUNAL
• Department Lawyers: SANJAY MUKHERJEE JDIT
• Assessee Lawyers: S M SURANA
• Keywords: Opportunity of being heard
• Section: 143(3); 263

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , . . . . ! ! ! ! /AND ' #!' ' #!' ' #!' ' #!' , ) [BEFORE SHRI P. K. BANSAL, AM & SHRI MAHAVIR SINGH, JM] !$ / I.T.A NO.1871/KOL/2010 #% &'/ ASSESSMENT YEAR: 2004-05 M/S. MOU APARTMENT VS. INCOME-TAX OFFICER, WD- 2(2), HOOGHLY. (PAN: AAJFM2980N) ()* /APPELLANT ) (+,)*/ RESPONDENT ) DATE OF HEARING: 31.07.2014 DATE OF PRONOUNCEMENT: 28.08.2014 FOR THE APPELLANT: SHRI S. M. SURANA, ADVOCATE FOR THE RESPONDENT: SHRI SANJAY MUKHERJEE, JDIT, SR. DR / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXXVII, KOLKATA IN APPEAL NO. 749/CIT(A)-XXXVII/AAJFM2980N/KOL/09-10 DATED 15 .09.2010. ASSESSMENT WAS FRAMED BY ITO, WARD-2(2), HOOGHLY U/S. 143(3)/263 O F THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEARS 2004 -05 VIDE HIS ORDER DATED 29.12.2009. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE ADDITION MADE BY AO IN LIEU OF DIRECTIONS OF CIT IN THE REVISION PROCEEDING U/S. 263 OF THE ACT ON ACCOUNT OF SUPPRESSED PROFIT FROM DEVELOPMENT PR OJECT. . 3. BRIEFLY STATED FACTS ARE THAT ORIGINAL ASSESSMEN T WAS COMPLETED U/S. 143(3) OF THE ACT ON 29.12.2006 AT A RETURNED INCOME OF RS.66,900/-. SU BSEQUENTLY, THE ORIGINAL ASSESSMENT WAS SET ASIDE BY CIT, KOL-XX IN REVISION ORDER PASSED U/S. 263 OF THE ACT WITH A DIRECTION TO THE AO TO REDO THE ASSESSMENT AFTER PROPER SCRUTINY AND REASO NABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE FIRM IS ENGAGED IN THE BUSI NESS OF CONSTRUCTIONS AND SALE OF FLATS AND SHOPS. THE ASSESSEE IS A BUILDER MAINTAINING ITS A CCOUNT ON MERCANTILE BASIS AND INCOME WAS DISCLOSED ON THE BASIS OF YEAR TO YEAR ADOPTING THE COST OF THE PROJECT WORKED OUT FROM THE WORK-IN-PROGRESS ON PROPORTIONATE BASIS IN RELATION TO THE FLATS SOLD. THE AO DURING THE COURSE OF REVISION ASSESSMENT PROCEEDINGS NOTED THAT THE S ALE PRICE FIXED IN TERMS OF MERE ADVANCE AND THIS AMOUNT TOTALLING TO RS.29,17,459/- WAS ENVISAG ED BY THE ASSESSEE AS OUTSTANDING ADVANCE AND INCLUDED THE SAME IN TOTAL OUTSTANDING ADVANCE OF RS.39,37,359/-. THE CONTENTION OF THE 2 ITA NO.1871/K/2010 MOU APARTMENT AY 2004-05 ASSESSEE BEFORE THE AO WAS THAT SINCE THE REGISTRAT ION IS NOT DONE AND SALE IS INCOMPLETE, THE AMOUNT REALISED FROM THE PURCHASERS IS TREATED AS O UTSTANDING ADVANCE BUT THE AO HAS NOT ACCEPTED THE CONTENTION OF THE ASSESSEE AND ASSESSE D THE ENTIRE AMOUNT OF ADVANCE DISCLOSED AT RS.29,17,459/- AS INCOME OF THE ASSESSEE. 4. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT( A), WHO RESTRICTED THE ADDITION AT RS.15,79,066/- BY RECONSIDERING THE ENTIRE ISSUE AS UNDER: I AM OF THE CONSIDERED VIEW THAT THE ASSESSING OFF ICE IS CLEARLY IN ERROR TO ADOPT THE ENTIRE SALE PROCEEDS ON SALE OF SIX FLATS AND ONE S HOP AS PROFIT IGNORING THE CRUCIAL FACT THAT THE APPELLANT WAS SHOWING THE VERY SALE CONSID ERATION AS IN WORK-IN PRORESS. AS CAN BE SEEN FROM THE ORDER OF THE LD. CIT AND AL SO FROM THE WRITTEN SUBMISSIONS OF THE APPELLANT THAT THE TOTAL SALE VALUE OF 16 FLATS AND 10 SHOPS WAS TOTALING TO 87,47,440/-. EVEN CONSIDERING THE ABOVE ESTIMATED SALE VALUE, TH E A.O ARRIVING AT PROFIT AT RS. 29,84,350/- (TOTAL INCOME ASSESSED) IS ALSO UNREASO NABLE AND DOES NOT REFLECT THE TRUE PROFITS OF THE BUSINESS. CONSIDERING THE ABOVE FACTS, I AM OF THE VIEW THAT THE FINDINGS OF THE LD. CIT-XX, KOLKATA ARE APPROPRIATE AND THEREFORE THE SAME SHOU LD HAVE BEEN ADOPTED BY THE ASSESSING OFFICER AS PER WHICH THE PROFIT IS WORKIN G OUT AS UNDER :- TOTAL VALUE OF SALE CONSIDERATION FOR THE PROJECT= RS.87,47,440/- TOTAL SALE CONSIDERATION TOWARDS SALE OF 13 FLATS AND 1 SHOP SOLD FOR WHICH THE ENTIRE CONSIDERATION WAS RECEIVED AND WORK IN PROGRESS = RS.71 ,68,3 74/- DIFFERENCE = RS.15,79,066/- CONSIDERING THE ABOVE, PARTICULARLY CONSIDERING THE FACT THAT ALL THE EXPENDITURE OF THE PROJECT WERE ALREADY DEBITED IN THE P& L A/C. AND T HE FLATS AND SHOPS ARE FULLY READY AND DOES NOT REQUIRE ANY FURTHER EXPENDITURE THE PR OFIT ON SALE OF 13 FLATS AND 1 SHOP WORKS OUT AS PER THE WORKING ABOVE TO RS.15,79,066/ -. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO A DOPT THE SUPPRESSED PROFT AT = RS.15,79,066/- AGAINST RS. 2917459/-. (THE RELIEF I S (RS. 29,17,459/- - RS.15,79,066/- = RS. 13,38,393/-). AGGRIEVED, ASSESSEE CAME IN APPEAL BEFORE US. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. FACTS ARE UNDISPUTED THAT THE ENTIRE AMOUNT OF RS.2 9,17,459/- IS ADVANCE DECLARED IN THE P&L ACCOUNT AGAINST THE SALE OF THESE PROPERTIES. THE ONLY CLAIM OF THE ASSESSEE WAS THAT TITLE OF IMMOVABLE PROPERTY HAS NOT PASSED ON AND IT PASSES ONLY ON REGISTRATION OF DOCUMENT. ACCORDING TO THE ASSESSEE, HE IS MAINTAINING ACCOUN TING OF PROJECT ONLY ON THE BASIS OF REGISTRATION OF DOCUMENT AND TILL THEN THE AMOUNTS ARE TREATED AS ADVANCE. HE REFERRED TO PAGE 4 3 ITA NO.1871/K/2010 MOU APARTMENT AY 2004-05 OF THE ASSESSMENT ORDER WHEREIN THE AO HAS SUMMARIS ED THE ADVANCE MONEY RECEIVED FROM THE INTENDING BUYERS AMOUNTING TO RS.39,37,359/- (FOR O NE SHOP RS.1,97,100/- AND FOR SIX FLATS RS.29,17,459/-) AND IDENTIFIED THE AMOUNT AS SALE C ONSIDERATION RELYING UPON THE DIRECTION OF CIT-XX IN THE REVISION PROCEEDING U/S. 263 OF THE A CT. ACCORDING TO LD. COUNSEL, THE AO GAVE ATTENTION TO SCHEDULE F CLAUSE (B) OF THE AGREEMENT TO SALE WHERE IT WAS MENTIONED AS RS. I.E. THE BALANCE AMOUNT ONLY TO BE PAID WITHIN SEVEN DAY S BEFORE DELIVERY OF POSSESSION OF THE FLAT/SHOP. IN DEFAULT, BANKING INTEREST WILL BE CH ARGED ON THE AMOUNT AND MADE CONCLUSION IN HIS ORDER PAGE 4 WHICH RUNS AS BECAUSE, THE POSSES SION CLAUSE OF THE AGREEMENT OF SALE SPEAKS ABOUT THE PERFORMANCE OF THE CONTRACT THAT WOULD EN D UP IF THE SALE CONSIDERATION IS RECEIVED AND ACCEPTED BY THE VENDOR. ACCORDING TO HIM, THIS SUFFERS FROM WRONG INTERPRE TATION AND THIS IS MERE ASSUMPTIONS BASED ON UNSUSTAINABLE FACTS AN D FIGURES. LD. COUNSEL FOR THE ASSESSEE STATED THAT THE SALE DEEDS WERE REGISTERED IN THE N EXT YEAR AND THESE ADVANCES WERE TREATED AS SALE RECEIPTS IN THE IMMEDIATE SUCCEEDING YEAR WHER E THE INCOME IS ACCOUNTED FOR. LD. COUNSEL FOR THE ASSESSEE STATED THAT TILL THE TITLE OF IMMO VABLE PROPERTY IS NOT PASSED THROUGH REGISTRATION, THE ASSESSEE CANNOT BOOK THE INCOME A ND AMOUNT RECEIVED CAN ONLY BE TREATED AS ADVANCE WHICH THE ASSESSEE HAS RIGHTLY DONE. HE RE LIED ON THE DEFINITION OF TRANSFER U/S. 2(47) OF THE ACT. WE FIND THAT THE ENTIRE AMOUNT OF RS.2 9,17,459/- WAS UNDER DISPUTE ONLY FOR THE REASON THAT THE SAME WAS DISCLOSED AS ADVANCE RECEI VED ON ACCOUNT OF SALE OF SIX FLATS AND ONE SHOP. IT IS A FACT THAT THE ASSESSEE HAS GIVEN POS SESSION OF THE ABOVEMENTIONED FLATS AND ONE SHOP SUBSEQUENTLY I.E. DURING APRIL, 2004 TO FEBRUA RY, 2005 RELEVANT TO AY 2005-06 AND NOT RELEVANT TO THIS AY 2004-05. ONCE THE SALE AGREEME NT WAS ENTERED IN THE SUCCEEDING AY I.E. 2005-06 THE INCOME IS TO BE ASSESSED IN THAT YEAR O NLY AND THE ASSESSEE HAS RIGHTLY DONE SO. HENCE, WE REVERSE THE ORDERS OF LOWER AUTHORITIES I .E. CIT(A) AS WELL AS THE AO AND ALLOW THE APPEAL OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 7. ORDER PRONOUNCED IN OPEN COURT ON 28.08.2014. SD/- SD/- , . . . . , ' #!' ' #!' ' #!' ' #!' , (P. K. BANSAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28TH AUGUST, 2014 -. #/0 #1 JD.(SR.P.S.) 4 ITA NO.1871/K/2010 MOU APARTMENT AY 2004-05 2 +##3 43&5- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT M/S. MOU APARTMENT, LICHU BAGAN GREEN B ENDEL, HOOGHLY-712123. 2 +,)* / RESPONDENT ITO, WARD-2(2), HOOGHLY. 3 . # ( )/ THE CIT(A), KOLKATA 4. 5. # / CIT KOLKATA 3:#; +# / DR, KOLKATA BENCHES, KOLKATA ,3 +#/ TRUE COPY,