CRP Associates, Gandhinagar V. The ACIT, Gandhinagar Cirle, Gandhinagar

ITA 1901/AHD/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6153 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 07-01-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 25-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Keywords: Business income
• Section: 133A; 143(2); 13; 11

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI RAJPAL YADAV, VICE-PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO. 1901/AHD/2015 / ASSESSMENT YEAR: 2010-11 CRP ASSOCIATES 117, FIRST FLOOR SUMAN CITY, SECTOR 11 GANDHINAGAR 382 010. PAN : AAFFC 9454 R VS ACIT, GANDHINAGAR CIR. GANDHINAGAR. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI TUSHAR HEMANI, SR.ADVOCATE SHRI P.B. PARMAR, AR REVENUE BY : SHRI L.P. JAIN, SR.DR / DATE OF HEARING : 07/01/2020 /DATE OF PRONOUNCEMENT : 13/02/2020 O R D E R PER RAJPAL YADAV, VICE-PRESIDENT: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST ORDER OF THE LD.CIT(A)-7, AHME DABAD DATED 23.03.2015 FOR THE ASSESSMENT YEAR 2010-11. 2. ASSESSEE HAS TAKEN FIVE GROUNDS OF APPEAL, BUT I TS GRIEVANCE REVOLVES AROUND A SINGLE ISSUE VIZ. THE LD.CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS.45,50,000/-. BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 27.9.2010 DECLARING TOTAL INCOM E AT RS.61,57,330/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. ACCORDING ITA NO.1901/AHD/2015 - 2 - TO THE AO, A SURVEY UNDER SECTION 133A WAS CONDUCTE D AT THE BUSINESS PREMISES OF THE ASSESSEE ON 10.9.2009. DURING THE COURSE OF SURVEY, THE ASSESSEE HAS DISCLOSED A SUM OF RS.80.00 LAKHS AS U NDISCLOSED INCOME OF THE ASSESSEE. OUT OF THE ABOVE DISCLOSURE, RS.68,5 0,000/- WAS DISCLOSED FOR THE ASSTT.YEAR 2010-11 IN THE HANDS OF CRP ASSO CIATES, AND RS.11,50,000/- WAS DISCLOSED IN THE HANDS OF SIDDHR AJ DEVELOPERS P.LTD. FOR THE ASSTT.YEAR 2009-10. IN THE CASE OF THE ASS ESSEE, OUT OF RS.68,50,000/- ONLY RS.23,00,000/- LAKHS WAS DISCLO SED AND REMAINING AMOUNT WAS NOT DISCLOSED. THE LD.AO HAS REPRODUCED REPLY TO QUESTION NO.13 AND MADE AN ADDITION OF RS.45 LAKHS TO THE IN COME OF THE ASSESSEE. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO TH E ASSESSEE. 3. WHILE IMPUGNING ORDER OF THE REVENUE AUTHORITIES , THE LD.COUNSEL FOR THE ASSESSEE RAISED MULTI-FOLD CONTENTIONS. IN THE FIRST FOLD OF CONTENTIONS, HE SUBMITTED THAT IF STATEMENT OF CHAITANYA BABUBHA I PATEL OF THE ASSESSEE- COMPANY RECORDED DURING THE COURSE OF SURVEY UNDER SECTION 133A IS BEING PERUSED, THEN IN REPLY TO QUESTION NO.10, HE HAS DISCLOSED THAT PIECE OF PAPER WHICH HAS BEEN CONFRONTED TO HIM, IS ONLY AN ESTIMATE GIVEN TO THE BUYERS ON CERTAIN SET OF PROJECTS OF HOUSES TO BE CONSTRUCTED. SIMILARLY, THE DISCLOSURE MADE IN ANSWER TO QUESTIO N NO.13, IT WAS AGAIN SPECIFICALLY DISCLOSED BY HIM THAT THESE PAPERS ARE JUST ESTIMATE FOR CALCULATION PURPOSE. THEY ARE NOT EVIDENCES TO SUG GEST THAT THE ASSESSEE HAS RECEIVED ON-MONEY. HOWEVER, IN ORDER TO AVOID ANY TYPE OF LITIGATION WITH THE DEPARTMENT, THE ASSESSEE WOULD DISCLOSE TH E AMOUNT OF RS.68,50,000/- TOWARDS UNACCOUNTED BOOKING AMOUNT. THUS, ON THE STRENGTH OF HONBLE SUPREME COURT DECISION IN THE C ASE OF CIT VS. S. KHADER KHAN SON, REPORTED 210 TAXMAN 248 (SC) WHICH HAS UPHELD DECISION OF HONBLE MADRAS HIGH COURT REPORTED IN 3 00 ITR 157 (MAD.) ITA NO.1901/AHD/2015 - 3 - HE CONTENDED THAT STATEMENT RECORDED UNDER SECTION 133A IS NOT ADMISSIBLE IN EVIDENCE BECAUSE AUTHORIZED OFFICER WAS NOT HAVI NG JURISDICTION TO ADMINISTER ON OATH TO THE DEPOSER. IT IS JUST A CO RROBORATIVE EVIDENCE. THERE IS NO OTHER EVIDENCE POSSESSED BY THE REVENUE EXCEPT CERTAIN PAPERS WHICH WERE DISCLOSED BY THE DEPONENT THAT THEY WERE ROUGH ESTIMATES. DEPARTMENT HAS NOT CARRIED OUT FURTHER INVESTIGATIO N, AND THUS ON THE BASIS OF THE STATEMENT NO ADDITION CAN BE MADE IN THE HAN DS OF THE ASSESSEE. 4. IN THE SECOND FOLD OF CONTENTIONS, HE SUBMITTED THAT AT THE MOST THIS ON-MONEY TAKEN ON THE BOOKING AMOUNT WOULD PARTAKE PURCHASE PRICE PAID BY THE ULTIMATE BUYER OF THE HOUSE. THE PROFIT ELE MENT EMBEDDED IN SUCH SALES OF THE ASSESSEE IS TO BE TAXED, AND NOT ON GR OSS AMOUNT. FOR BUTTRESSING THIS PROPOSITION, HE MADE REFERENCE TO THE FOLLOWING DECISIONS: I) DCIT VS. PANNA CORPORATION - TAX APPEAL NO.323 OF 2 000 (GUJ) (ANNEXURE 'D'); II) CIT VS. PRESIDENT INDUSTRIES - 258 ITR 654 (GUJ.); III) CIT VS. GURUBACHHAN SINGH J. JUNEJA - 302 ITR 63 (GU J); IV) CIT VS. SAMIR SYNTHETICS MILL - 326 ITR 410 (GUJ); V) MAN MOHAN SADANI VS. CIT - (2008) 304 ITR 52 (MP); VI) CIT VS. BALCHAND AJIT KUMAR - (2003) 263 ITR 610 (MP) 5. IN HIS NEXT FOLD OF CONTENTIONS, HE SUBMITTED TH AT THIS AMOUNT WOULD BECOME PART OF THE BUSINESS INCOME, AND ACCORDINGLY , PARTNERS ARE ENTITLED FOR REMUNERATION AS WELL AS INTEREST AGAINST THIS A MOUNT. HE POINTED OUT THAT THIS ASPECT WAS PLEADED BEFORE THE LD.CIT(A) W HEREIN THE ASSESSEE HAS HIGHLIGHTED THE FOLLOWING FACTS: PAGE NO.5 IN ADDITION TO THIS, PARTNERS HAVE NOT TAKEN ANY REMUNERATION (AGGREGATING TO RS. 48,03,761) AND INTEREST ON CAPI TAL (AGGREGATING TO RS. 28,50,000) IN ASSESSMENT YEAR 2009-2010 & AS SESSMENT YEAR 2010-2011) OTHERWISE THE PROFIT OF THE FIRM WOULD H AVE SHOWN A DECREASE TO A MAJOR EXTENT. THE PARTNERS DID NOT TA KE PERMISSIBLE ITA NO.1901/AHD/2015 - 4 - REMUNERATION OF RS.72,72,275 EVEN IN THE ASSESSMENT YEAR 2011- 2012. 6. FOR BUTTRESSING HIS CONTENTIONS, WITH REGARD TO THE ABOVE, HE RELIED UPON THE FOLLOWING DECISIONS: I) CHOKSHI HIRALAL MAGANLAL, 45 SOT 349/141 TTJ 1 (AHD ) II) DCIT VS. NEW UMIYA VIJAY SAW MILLS, ITA NO.2447/AHD /2012 7. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORD ER OF THE LD.CIT(A). HE CONTENDED THAT THE ASSESSEE ITSELF HAS ACCEPTED THE STAND DISCLOSED DURING THE COURSE OF SURVEY BY PARTLY ADMITTING THE INCOME AT RS.23 LAKHS. THEREFORE, NOW THE ASSESSEE IS PRECLUDED TO TAKE BE NEFIT OF JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF S. KHADER KHAN SON (SUPRA). 8. WE HAVE DULY CONSIDERED RIVAL SUBMISSIONS AND GO NE THROUGH THE RECORD. NO DOUBT A STATEMENT RECORDED DURING THE C OURSE OF SURVEY UNDER SECTION 133A IS ONLY AN INFORMATION AND NOT CONCLUS IVE EVIDENCE ON THE BASIS OF WHICH ADDITION CAN BE MADE. BUT IN THE PR ESENT CASE, THIS STATEMENT IS TO BE APPRECIATED KEEPING IN MIND THAT CERTAIN PAPERS AND DIARIES INVENTORISED AS ANNEXURE-4, 5 AND 6 WERE FO UND AND SEIZED. THE ASSESSEE ITSELF DID NOT DISPUTE DISCLOSURE MADE BY IT DURING THE COURSE OF SURVEY, AND HONOURED TO THE EXTENT OF RS.23 LAKHS. THEREFORE, ON THE STRENGTH OF HONBLE SUPREME COURT DECISION IN THE C ASE OF S. KHADER KHAN SON, THE ASSESSEE CANNOT PLEADED THAT FOR WANT OF S UFFICIENCY OF EVIDENCE ABOUT THE ACCEPTANCE OF ON-MONEY BY IT, ADDITION C ANNOT BE MADE. THERE IS SUFFICIENT EVIDENCE WHICH HAS BEEN AGREED BY THE ASSESSEE ITSELF CONFIRMING PARTLY IN THE RETURN OF INCOME. THEREFO RE, WE DO NOT FIND ANY MERIT IN THE FIRST FOLD OF CONTENTIONS. ITA NO.1901/AHD/2015 - 5 - 9. AS FAR S SECOND FOLD OF CONTENTIONS IS CONCERNED , ON-MONEY RECEIVED ON BOOKING OF THE FLATS/HOUSES WOULD PARTAKE CHARAC TER OF BUSINESS RECEIPTS AND WOULD BE TREATED EQUIVALENT TO THE AMOUNT WHICH ASSESSEE HAD CHARGED FROM ULTIMATE PURCHASERS OF THE HOUSE/FLAT. PROFI T EMBEDDED IN SUCH RECEIPTS DESERVES TO BE ASSESSED TO TAX. THE ASSES SEE HAS PRODUCED COMPARATIVE CHART SHOWING THE PROFIT RATE AT 5.4% I N THE ASSTT.YEAR 2010- 11 AND 4.33% IN THE ASSTT.YEAR 2011-12 ON THE TOTAL RECEIPT IT HAS RECEIVED. THE ASSESSEE HAS ALREADY DISCLOSED A SUM OF RS.23,00,000/- WHICH IS 33.57% OF THE TOTAL DISCLOSED AMOUNT OF RS .68,50,000/-. EVEN IF THIS AMOUNT OF RS.68.50 LAKHS IS ACCOUNTED FOR, THE N THE PROFIT ELEMENT ON THIS AMOUNT WOULD COME ONLY TO RS.3,07,565/- IF RAT E OF PROFIT DISCLOSED BY THE ASSESSEE IN THIS YEAR IS APPLIED TO THIS RECEIP T. THE ASSESSEE HAS ALREADY OFFERED MORE THAN THIS AMOUNT I.E. RS.23 LAKHS. TH EREFORE, NO FURTHER ADDITION IS REQUIRED TO BE MADE AND ACCORDINGLY ADD ITION OF RS.45,50,000/- IS DELETED. SINCE WE HAVE ACCEPTED ONE OF THE ALTER NATIVE CONTENTIONS, THEREFORE, WE NEED NOT TO EXAMINE WHETHER THE PARTN ERS ARE ENTITLED FOR REMUNERATION FROM THE BUSINESS PROFIT, AND INTEREST ON THEIR CAPITAL CONTRIBUTION, BECAUSE THESE CLAIMS WERE NOT MADE BY THE ASSESSEE IN THE RETURN, RATHER PLEADED ONLY BEFORE THE LD.CIT(A). NO FINDING RECORDED BY THE LD.CIT(A)ON THIS ASPECT. THEREFORE, HIS LAST AL TERNATIVE CONTENTION IS REJECTED. IN VIEW OF THE ABOVE, WE DELETE ADDITION OF RS.45,50,000/- MADE BY THE AO. NO OTHER RELIEF IS BEING GRANTED TO THE ASSESSEE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 13 TH FEBRUARY, 2020. SD/- (WASEEM AHMED) ACCOUNTANT MEMBER SD/- (RAJPAL YADAV) VICE-PRESIDENT AHMEDABAD; DATED, 13 /02/2020