Assistant Commissioner of Income Tax, Central Circle-2(2), Bangalore V. M/s. SLV Housing Development Corporation, Bangalore

ITA 1874/BANG/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 4638 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-02-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 30-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KANNAN NARAYANAN J
• Assessee Lawyers: M V SESHACHALA
• Keywords: Opportunity of being heard; Additional evidence; Onus to prove; Set aside
• Section: 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES A, BANGALORE BEFORE SHRI CHANDRA POOJARI, AM & SHRI GEORGE GEORGE K, JM ITA NO.1874/BANG/2018 : ASST.YEAR 2012-2013 THE ASST.COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE 2(2) BANGALORE. V. M/S.SLV HOUSING DEVELOPMENT CORPORATION NO.14, SRI GANESH KRUPA, NEW BANK COLONY, CHUNCHUNGHATTA MAIN ROAD KONANAKUNTE BENGALURU 560 062 PAN : ABAFS5822P. (APPELLANT) (RESPONDENT) APPELLANT BY : SRI.KANNAN NARAYANAN, JCIT-DR RESPONDENT BY : SRI.M.V.SESHACHALA, SR.ADVOCATE DATE OF HEARING : 10.02.2021 DATE OF PRONOUNCEMENT : 11.02.2021 O R D E R PER GEORGE GEORGE K, JM : THIS APPEAL AT THE INSTANCE OF THE REVENUE IS DIRECTED AGAINST CIT(A)S ORDER DATED 15.03.2018. THE RELEVANT ASSESSMENT YEAR IS 2012-2013. 2. THE GROUNDS RAISED READ AS FOLLOWS:- 1. BASED ON THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WHETHER THE LD.CIT(A) WAS CORRECT IN ALLOWING THE APPEAL OF THE ASSESSEE WHEN THE SALE DEEDS AND OTHER DOCUMENTS, BASED ON WHICH THE CIT(A) ALLOWED THE APPEAL, WERE PRODUCED BEFORE THE CIT(A) BUT THESE DOCUMENTS WERE NOT PRODUCED BEFORE THE A.O. AND THE CIT(A) DID NOT PROVIDE ANY OPPORTUNITY TO THE AO TO EXAMINE THE NEW EVIDENCE AS REQUIRED UNDER RULE 46A OF INCOME TAX RULES. 2. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WHETHER THE LD.CIT(A) WAS CORRECT IN ALLOWING THE SUM OF ITA NO.1874/BANG/2018 M/S.SLV HOUSING DEVELOPMENT CORPORATION. 2 RS.2,93,75,000/- AS PURCHASES, WHEN FOR A.Y. 2012-13 THERE ARE NO TRADING RECEIPTS IN THE PROFIT AND LOSS ACCOUNT, AND THUS THE FINDING OF CIT(A) THAT THE PROFIT ON SALE OF SUCH PURCHASES ACCEPTED BY THE A.O. IS FACTUALLY INCORRECT. 3. THE BRIEF FACTS OF THE CASE ARE AS FOLLOW: THE ASSESSEE FIRM IS A REAL ESTATE DEVELOPER. FOR THE ASSESSMENT YEAR 2012-2013, THE RETURN OF INCOME WAS FILED ADMITTING TOTAL INCOME OF RS.1,08,70,540. THE ASSESSMENT WAS TAKEN UP FOR SCRUTINY BY ISSUANCE OF NOTICE U/S 143(2) OF THE I.T.ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE HAD DEBITED A SUM OF RS.3,75,09,950 AS EXPENSES UNDER THE HEAD PURCHASES. THE ASSESSEE WAS ASKED BY THE A.O. TO FURNISH THE DETAILS AND BREAK-UP OF THE EXPENDITURE CLAIMED UNDER THE HEAD PURCHASES. THE DETAILS WERE FURNISHED BY THE ASSESSEE AND IT WAS FOUND BY THE A.O. THAT A SUM OF RS.2,93,75,000 HAS BEEN DEBITED UNDER THE SUB- HEAD ADDITIONAL CONSIDERATION DEMANDED. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS WITH REGARD TO THE SUM CLAIMED AS EXPENDITURE AMOUNTING TO RS.2,93,75,000. IN RESPONSE, THE ASSESSEE VIDE LETTER DATED 30.03.2015 SUBMITTED THAT IT HAD DEVELOPED A PROPERTY BY THE NAME GOKUL GARDENS, WHICH WERE RESIDENTIAL SITES. IT WAS STATED THAT GOKUL GARDENS WAS A JOINT DEVELOPMENT PROJECT, WHERE THE ASSESSEE-FIRM WAS THE DEVELOPER, RECEIVED 40% OF THE PROJECT AND THE LAND OWNER WAS TO RETAIN 60% OF THE SHARE IN THE SAID PROJECT. IT WAS STATED THAT DURING THE FINANCIAL YEAR, SOME OF THE SITES BELONGING TO THE LAND OWNERS SHARE WAS PURCHASED BY THE ASSESSEE FOR A TOTAL CONSIDERATION OF RS.2,93,75,000. IT WAS STATED THAT, ITA NO.1874/BANG/2018 M/S.SLV HOUSING DEVELOPMENT CORPORATION. 3 SUBSEQUENTLY THE SAME WERE SOLD TO THIRD PERSON AND THE PROFITS WERE DECLARED IN THE RETURN OF INCOME FILED. IT WAS FURTHER CONTENDED THAT THE PAYMENTS ARE MADE THROUGH CHEQUES AND BANK ACCOUNTS STATEMENT WERE FURNISHED. THE ASSESSING OFFICER, HOWEVER, REJECTED THE SUBMISSIONS MADE BY THE ASSESSEE. THE A.O. DISALLOWED THE EXPENSES OF RS.2,93,75,000 AND BROUGHT THE SAME TO TAX. THE RELEVANT FINDING OF THE ASSESSING OFFICER IN BRING TO TAX THE SUM OF RS.2,93,75,000 READS AS FOLLOW:- 4.6 THE ASSESSEE FIRM HAS EXECUTED THE RESIDENTIAL PROJECT GOKULAM GARDEN AND AS PER THE AGREEMENT GOT 40% OF THE DEVELOPED PROJECT AS IT SHARE. THE ASSESSEE NOW CLAIMS THAT ADDITIONAL EXPENDITURE HAD BEEN INCURRED FOR PURCHASE OF THE SITES FROM THE OWNER OF LAND ON WHICH THE PROJECT WAS DEVELOPED. THE ASSESSEE HAS NOT FURNISHED ANY DETAILS AS TO WHICH WERE THE SITES THAT WERE PURCHASED OUT OF THIS ADDITIONAL CONSIDERATION PAID, WHETHER THE SITES PURCHASED NOW HAVE BEEN ACCOUNTED IN ITS BOOKS OF ACCOUNTS, IF THEY HAVE BEEN SOLD THEN WHAT IS THE CONSIDERATION RECEIVED AND THE PROFIT EARNED FROM IT. 4.7 THE ASSESSEE HAS NOT FURNISHED ANY DOCUMENT IN THE FORM EITHER AN AGREEMENT TO SALE OR A G.P.A. ENTERED WITH SRI.K.JAIDEV FOR HAVING PURCHASED THE SITES. THE ASSESSEE HAD NOT SUBSTANTIATED THE CLAIM THROUGH THE SUBMISSION OF EITHER THE ENCUMBRANCE CERTIFICATE OR THE KATHA TO VERIFY WHETHER THE ASSESSEE HAD GAINED ANY RIGHTS OVER THOSE SITES WHICH IS CONTENDED TO HAVE BEEN PURCHASED FOR ADDITIONAL CONSIDERATION OF RS.2,93,75,000/-. 4.8 THE ASSESSEE IN ITS SUBMISSION STATES THAT THE SOME OF THE SITES THAT HAVE BEEN PURCHASED BY THE ADDITIONAL CONSIDERATION PAID HAVE ALSO BEEN SOLD DURING THE YEAR AND THE PROFIT HAS BEEN OFFERED TO TAX. THE ASSESSEE TO SUPPORT ITS CLAIM HAS NOT FURNISHED THE DETAILS OF AS TO WHICH ARE THE SITES THAT HAVE BEEN SOLD OUT OF THE PURCHASES MADE AS ABOVE AND WHAT WAS THE PROFIT EARNED THAT HAS BEEN OFFERED TO TAX. THE ASSESSEE HAS NOT FURNISHED EVEN A SINGLE SALE DOCUMENT TO ESTABLISH THAT IT HAD SOLD SOME OF THE SITE WHICH IT HAD PURCHASED FROM THE OWNER SRI.K.JAIDEV OUT OF THE ADDITIONAL CONSIDERATION PAID. THE ASSESSEE OTHER THAN FURNISHING THE BANK STATEMENT WHERE THE ITA NO.1874/BANG/2018 M/S.SLV HOUSING DEVELOPMENT CORPORATION. 4 NAME OF SRI.K.JAIDEV APPEARS HAVE NOT FURNISHED ANY OTHER DOCUMENTARY EVIDENCE TO SUBSTANTIATE THE CLAIM OF EXPENDITURE. 4.9 THE ASSESSEE WAS GIVEN AN OPPORTUNITY TO SUBSTANTIATE THE CLAIM WHICH THE ASSESSEE HAS FAILED TO DO SO. IT IS AN ACCEPTED PRINCIPLE THAT THE ONUS TO PROVE ANY CLAIM MADE IS FIRST ON THE ASSESSEE. HERE THE ASSESSEE HAS NOT DISCHARGED THE BURDEN OF PROOF AND ESTABLISHED THE CLAIM BEYOND DOUBT. 4. AGGRIEVED BY THE ASSESSMENT ORDER IN MAKING DISALLOWANCE OF EXPENSES OF RS.2,93,75,000, THE ASSESSEE PREFERRED AN APPEAL TO THE FIRST APPELLATE AUTHORITY. BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE PRODUCED JOINT DEVELOPMENT AGREEMENT DATED 07.03.2008, REGISTERED SALE DEED, WHICH THE ASSESSEE HAD ENTERED WITH THE THIRD PERSON, ETC. IT WAS CONTENDED BEFORE THE FIRST APPELLATE AUTHORITY THAT THE AMOUNT PAID TO THE LAND OWNER HAS BEEN ACCOUNTED FOR AS ADDITIONAL CONSIDERATION AND THE A.O. HAVING FAILED TO LOOK UP THE DETAILS, HAS RECORDED PERVERSE FINDING BY HOLDING THAT THIS ADDITIONAL CONSIDERATION CANNOT BE ALLOWED AS A DEDUCTION. THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE AND DIRECTED THE A.O. TO DELETE THE DISALLOWANCE OF RS.2,93,75,000. 5. REVENUE BEING AGGRIEVED HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS FURNISHED ADDITIONAL DOCUMENTS BEFORE THE CIT(A) AND THE CIT(A) DID NOT PROVIDE AN OPPORTUNITY TO THE A.O. TO EXAMINE THE NEW EVIDENCE AS REQUIRED UNDER RULE 46A OF THE INCOME-TAX RULES. IT WAS FURTHER SUBMITTED THAT THE CIT(A) HAS ERRED IN ALLOWING THE EXPENDITURE OF RS.2,93,75,000 BECAUSE THERE WAS NO TRADING RECEIPTS IN THE PROFIT AND LOSS ITA NO.1874/BANG/2018 M/S.SLV HOUSING DEVELOPMENT CORPORATION. 5 ACCOUNT FOR RELEVANT ASSESSMENT YEAR AND THUS, THE FINDING OF THE CIT(A) THAT THE PROFIT ON SALE OF SUCH PURCHASES WAS ACCEPTED BY THE A.O. IS FACTUALLY INCORRECT. 6. THE LEARNED AR, ON THE OTHER HAND, RELIED ON THE FINDINGS OF THE CIT(A). 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE CLAIMED THAT IT HAD INCURRED ADDITIONAL EXPENSES FOR PURCHASE OF SITES FROM THE OWNER OF LAND ON WHICH A PROJECT BY NAME `GOKUL GARDENS WAS DEVELOPED. BEFORE THE A.O., THE ASSESSEE HAD NOT FURNISHED ANY DETAILS AS TO WHICH ARE THE SITES PURCHASED OUT OF THE ADDITIONAL CONSIDERATION PAID. WHETHER THE SITES PURCHASED HAVE BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT AND IF THEY HAVE BEEN SOLD, THEN WHAT WAS THE CONSIDERATION RECEIVED AND PROFITS EARNED FROM IT. BEFORE THE A.O. THE ASSESSEE HAS NOT FURNISHED EVEN A SINGLE SALE DOCUMENT TO ESTABLISH THAT IT HAD SOLD SOME OF THE SITES WHICH HAD PURCHASED FROM LAND OWNER (FOR WHICH ADDITIONAL CONSIDERATION HAS BEEN PAID). ADMITTEDLY, THE SALE DEEDS TO THIRD PARTIES WERE PRODUCED FOR FIRST TIME BEFORE THE CIT(A). THE CIT(A) DURING THE COURSE OF APPELLATE PROCEEDING HAD NOT CALLED FOR THE REMAND REPORT FROM THE ASSESSING OFFICER AND HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WITHOUT GIVING OPPORTUNITY TO THE A.O. TO REBUT THE ADDITIONAL EVIDENCE PRODUCED BEFORE HIM. 7.1 THE PRESCRIPTION OF RULE 46A IS CLEAR. THE ASSESSEE IS ORDINARILY NOT ENTITLED TO PRODUCE ADDITIONAL EVIDENCE BEFORE THE ITA NO.1874/BANG/2018 M/S.SLV HOUSING DEVELOPMENT CORPORATION. 6 CIT(A) OTHER THAN THAT FURNISHED TO THE AO EXCEPT IN THE FOUR CIRCUMSTANCES ENUMERATED IN CLAUSE (A) TO (D) OF SUB-RULE (1). SUB-RULE (2) HOWEVER PROVIDES THAT NO EVIDENCE SHALL BE ADMITTED UNDER SUB-RULE (1) UNLESS THE CIT(A) RECORDS IN WRITING THE REASONS FOR ITS ADMISSION. SUB-RULE (3) FURTHER STIPULATES THAT THE CIT(A) SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE AO HAS BEEN ALLOWED A REASONABLE OPPORTUNITY TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS EXAMINE THE WITNESS PRODUCED BY THE ASSESSEE OR TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE. 7.2 IN THE INSTANT CASE, AS MENTIONED EARLIER, THE CIT(A) HAS ADMITTED AS FRESH EVIDENCE, THE SALE DEEDS EXECUTED BY THE ASSESSEE WITH THIRD PARTIES. THESE WERE PROPERTIES PURCHASED BY THE ASSESSEE FROM THE LAND OWNER FOR WHICH ADDITIONAL CONSIDERATION WAS PAID. THE CIT(A) HAD ALLOWED THE APPEAL OF THE ASSESSEE BY PLACING RELIANCE ON DOCUMENTS / EVIDENCE NOT PRODUCED BEFORE THE A.O. THE ADMISSION OF ADDITIONAL EVIDENCE WITHOUT GIVING AN OPPORTUNITY TO THE A.O. TO REBUT THE SAME, GOES AGAINST THE PRINCIPLES LAID DOWN UNDER RULE 46A OF THE I.T. RULES. ACCORDINGLY, THE IMPUGNED ORDER OF THE CIT(A) IS SET ASIDE AND THE MATTER IS REMITTED TO THE A.O. FOR DECIDING THE ISSUE AFRESH AS PER LAW AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. NEEDLESS TO STATE, THE ASSESSEE SHALL EXTEND FULL COOPERATION TO THE A.O. SO AS TO FACILITATE HIM FOR PROPER FRAMING OF THE ASSESSMENT AND WOULD BE ENTITLED TO FILE ANY ADDITIONAL EVIDENCE BEFORE THE A.O. IN SUPPORT OF ITS CLAIM. IT IS ORDERED ACCORDINGLY. ITA NO.1874/BANG/2018 M/S.SLV HOUSING DEVELOPMENT CORPORATION. 7 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 11 TH DAY OF FEBRUARY, 2021 . SD/- SD/- ( CHANDRA POOJARI ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE; DATED : 11 TH FEBRUARY, 2021. DEVADAS G* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A)-11, BANGALORE. 4. THE PR.CIT (CENTRAL), BANGALORE. 5. THE DR, ITAT, BENGALURU. 6. GUARD FILE. ASST.REGISTRAR/ITAT, BANGALORE