MOGRA BUILDERS AND DEVELOPERS P.LTD, PUNE V. ACIT 6(3), MUMBAI

ITA 1996/MUM/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9810 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 29-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 12-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Keywords: Business expenditure; Additional evidence
• Section: 133A; 37

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -FBENCH MUMBAI , , , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND RAM LAL NEGI,JUDICIAL MEMBER ./I.T.A./5220/MUM/2010, /ASSESSMENT YEAR: 2006-07 THE ACIT-CIR.-6(3) ROOM NO.522, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. VS. M/S. MOGRA BUILDERS & DEVELOPERS P.LTD. 16, ANUPAM INDUSTRIAL ESTATE OPP. P&T COLONY, LBS MARG MULUND (W),MUMBAI-400 080. PAN:AACCM 8311 K ( /APPELLANT ) ( / RESPONDENT ) ./I.T.A./5309/MUM/2010, /ASSESSMENT YEAR: 2006-07 ./I.T.A./1996/MUM/2013, /ASSESSMENT YEAR: 2009-10 M/S. MOGRA BUILDERS & DEVELOPERS P.LTD. MUMBAI-400 080. VS. THE ACIT-CIR.-6(3) MUMBAI-400 020. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI B.S. BIST ASSESSEE BY: SHRI DHARMESH SHAH / DATE OF HEARING: 01.05.2017 / DATE OF PRONOUNCEMENT:26.07.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDERS,DATED 21.01.2009 AND 29.01.2 013,OF THE CIT(A)-12MUMBAI,THE ASSESSEE AND THE ASSESSING OFFICER(AO)HAVE FILED TH E APPEALS,AS MENTIONED ABOVE.ASSESSEE- COMPANY IS ENGAGED IN CONSTRUCTION BUSINESS.DETAILS OF FILING OF RETURNS OF INCOME RETURNED INCOMES,ASSESSED INCOMES, ETC, CAN BE SUMMARISED AS UNDER :- A.Y. ROI FILED ON RETURNED INCOME ASSESSMENT DT. AS SESSED INCOME 2006-07 30/11/2006 NIL 29/12/2008 RS.4,68,27,960/- 2009-10 13/10/2010 RS.60,710/- 30/12/2011 RS.2,00,6 0,710/- 2. THE ASSESSEE HAD FILED ADDITIONAL GROUNDS AS WELL A S ADDITIONAL EVIDENCES FOR THE AY.2009- 10.DURING THE COURSE OF HEARING BEFORE US,THE AUTHO RISED REPRESENTATIVE(AR)STATED THAT ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE WOULD GO TO THE ROOT OF THE MATTER,THAT ALL THE FACTS WERE AVAILABLE ON RECORD,THAT IT DEALT WI TH THE DETAILS OF EXPENSES,THAT THE ASSESSEE HAD DEDUCTED TAX AT SOURCE IN RESPECT OF CERTAIN EX PENSES. WITH REGARD TO THE ADDITIONAL EVIDENCES,HE STATED T HAT THE ISSUE IN DISPUTE WAS ALLOWABILITY OF CREDIT OF INCOME DECLARED DURING THE COURSE OF SURV EY CARRIED OUT DURING THE AY.2006-07 TOWARDS SALE OF UNUTILISED FSI AND TDR IN AY.2009-1 0,THAT IT HAD SUO-MOTU CLAIMED DISALLOW -ANCE OF RS.52.95 LAKHS U/S.40(A)(IA) OF THE ACT ON ACCOUNT OF NON- PAYMENT OF TDS, THAT TAX WAS DEDUCTED AND PAID IN AY.2009-10,THAT THE ASSESS EE WANTS TO SUBMIT LEDGER ACCOUNT OF EXPENSES AND THE CHALLANS EVIDENCING PAYMENT OF TDS ,THAT THE ADDITIONAL EVIDENCES WERE NOT 5309&5220/M/10(06-07) 1996/M/13(09-10) 2 PRODUCED BEFORE THE AO DURING THE ASSESSMENT PROCEE DING FOR THE AY. 2009-10.HE RELIED UPON THE CASE OF PRABHAVATI S. SHAH (231ITR1).THE D EPARTMENTAL REPRESENTATIVE(DR) OPPOSED THE ADDITIONAL GROUND AS WELL AS ADDITIONAL EVIDENCES. 2.1. WE HAVE GONE THROUGH THE APPLICATIONS MADE BY ASSES SEE FOR ADMITTING ADDITIONAL EVIDENCE.WE FIND EVIDENCES WOULD HELP THE TRIBUNAL TO ADJUDICATE THE ISSUE.THOUGH THE DETAILS WERE MADE AVAILABLE TO THE AO IN THE EARLIE R YEAR, BUT WERE NOT PRODUCED FOR THE YEAR UNDER APPEAL.THEREFORE, WE ARE ADMITTING THE ADDITI ONAL EVIDENCES AS PER THE PROVISION OF RULE 29 OF THE ITAT RULES,1963. THE ADDITIONAL GROU NDS,RAISED BY THE ASSESSEE,ARE LEGAL IN NATURE AND GO TO THE ROOT OF THE ISSUE BEFORE US.TH EREFORE, SAME ARE BEING ADMITTED. ITA/5220/MUM/2010 -AY.,2006-07: 3. FIRST GROUND OF APPEAL,RAISED BY AO IS ABOUT ACCEPT ING THE ADDITIONAL EVIDENCES IN VIOLATION OF RULE 46A OF THE INCOME TAX RULES(RULE S).GROUND OF APPEAL NO.2 AND 5 ARE ALSO RELATED WITH FIRST GROUND,TO SOME EXTENT. BRIEF FACTS: 3.1. ON 14/9/2007,A SURVEY ACTION WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE LOCATED AT PUNE,DADAR AND MULUND.IT WAS FOUND THAT THE ASSESSEE WAS CONSTRUCTING A PROJECT NAMELY,EDEN PARK,AT PUNE,THAT THE CONSTRUCTION WORK WAS OVER IN ALL RESPECTS AND THAT FLATS WERE HANDED OVER TO THE PURCHASERS, THAT IT WAS SHO WN AS INCOMPLETE PROJECT IN THE BOOKS OF ACCOUNTS.STATEMENTS OF DIRECTOR OF THE COMPANY,BIPI N B. SHAH,WERE RECORDED WHEREIN HE STATED THAT POSSESSION OF MOST OF THE FLATS HAD BEE N GIVEN AND THAT CERTAIN PERMISSIONS WERE TO BE OBTAINED FOR THE PROJECT.HE AGREED TO TREAT THE PROJECT AS COMPLETED AND OFFERED THE INCOME OF RS. 2 CRORES TO TAX.ACCORDING TO HIM,TOTAL COST OF THE PROJECT AMOUNTED TO RS.9.52 CRORES. TOTAL SALE PROCEEDS RECEIVED WERE SHOWN AT RS.11.59 CRORES.THE DIRECTOR FURTHER STATED THAT RETURN OF INCOME WOULD BE REVISED AND TAX WOULD BE PAID ACCORDINGLY.IN THE COMPUTATION OF INCOME IT OFFERED AN INCOME OF RS.1.47 CRORES AS AD DITIONAL INCOME TO COVER ANY ERROR OR OMISSION WITH REGARD TO EDEN PARK PROJECT.THE AO AC CEPTED THE OFFER MADE BY THE DIRECTOR OF THE COMPANY. DURING THE ASSESSMENT PROCEEDINGS,HE FURTHER FOUND THAT RS.94.69 LAKHS AND RS.1.89 CRORES WERE SHOWN AS OUTSTANDING EXPENSES FOR THE AY.S 200 7-08 AND 2008-09.HE OBSERVED THAT THE PROJECT WAS COMPLETE,THAT THERE WAS NO NECESSITY FO R INCURRING ANY FURTHER EXPENDITURE, THAT THE DIRECTOR HAD SURRENDERED RS.2.00 CRORES AFTER T AKING INTO CONSIDERATION THE AMOUNT INCURRED ON VARIOUS OFFICE EXPENSES,THAT THE EXPENS ES INCLUDED AN AMOUNT OF RS.1.09 CRORES ON ACCOUNT OF SUPERVISORY CHARGES PAID TO ONE SUKHW ANI CHAWLA(SC)IN THE AY.2008-09,THAT 5309&5220/M/10(06-07) 1996/M/13(09-10) 3 THE EXPENDITURE WAS NOT ALLOWABLE,THAT THE PROJECT WAS COMPLETED IN THE AY.2006-07,THAT ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE FOR THE PUR CHASES,THAT EXPENDITURE WAS DISALLOWABLE U/S.40(A)(IA).FINALLY,THE PROVISIONS FOR OUTSTANDIN G EXPENSES(RS.94,69,354+ RS.1,89,71,445) WERE DISALLOWED AND ADDED TO THE INCOME OF THE ASSE SSEE. 4. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM,IT WAS STATED T HAT AMOUNT OF RS.1.47 CRORES,IN ADDITION TO RS.52.95 LAKHS DISALLOWED U/S. 40(A)(IA),WAS OFF ERED AS INCOME TO COVER ANY OMISSION/ ERROR OR ANY ADDITION TO BE MADE DURING THE ASSESSM ENT PROCEEDINGS,THAT THE AMOUNT HAD NOT BEEN ADJUSTED AGAINST THE ADDITIONS MADE IN THE ASS ESSMENT,THAT THE ASSESSEE HAD SUFFERED A LOSS OF RS.16.12 LAKHS IN THE PROJECT,THAT THE AO H AD DISALLOWED THE ENTIRE OUTSTANDING EXPENSES WHILE AT THE SAME TIME HAD TAXED THE INCOM E RECEIVABLE REFLECTED IN THE BALANCE SHEET.AFTER CONSIDERING THE ASSESSMENT ORDER AND SU BMISSION OF THE ASSESSEE,THE FAA HELD THAT ON THE DATE OF SURVEY THE ASSESSEE HAD ALREAD Y FILED THE RETURN OF INCOME FOR AY.2006-07 IN WHICH EXPENSES ON THE PROJECT (APPROX. RS.94 LAK HS)HAD BEEN INCLUDED IN THE WIP, THAT THE PROJECT WAS COMPLETED ONLY IN THE AY.2008-09,WHEN T HE ENTIRE INCOME AND THE EXPENDITURE WAS BOOKED.HE FURTHER OBSERVED THAT THE ASSESSEE HA D AGREED WITH THE VIEW TAKEN BY THE AO, THAT THE PROJECT SHOULD BE TREATED AS COMPLETED IN THE AY.2006-07,THAT IT GAVE A BROAD ESTIMATE OF RECEIPT/EXPENSES,THAT DISALLOWANCE WAS PRIMARILY OF OUTSTANDING EXPENSES,THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAD FILED A REVISED P&L ACCOUNT IN WHICH CERTAIN FIGURES UNDER THE HEAD SALES, BALANCE OUTST ANDING AND OTHER RECEIPT WERE SHOWN,THAT THE COST OF CONSTRUCTION DURING THE YEAR WAS RS.9.8 4 LAKHS,AS PER THE BALANCE SHEET, THAT THE OUTSTANDING EXPENSES FOR AY.2007-08 CONSISTED OF RS .1.69 CRORES CONSISTING OF PURCHASE, OTHER DIRECT EXPENSES AND PAYMENTS DUE-TO CONTRACTO RS WERE OF RS.19.67 LAKHS,THAT THE ASSESSEE HAD TREATED THE PROJECT COMPLETED ONLY IN THE AY.2008-09,THAT THE DISPUTED AMOUNTS HAD BEEN DEBITED TO WIP ACCOUNT IN AY.S 2006-07 AND 2007-08,THAT IT HAD ACCEPTED THE DEPARTMENTS VALUE,THAT THE TOTAL VALUE OF WIP HAD TO BE TAKEN INTO ACCOUNT AS THE COST OF CONSTRUCTION IN THE AY.2006-07,THAT THE COST SHOWN WERE DEBITED IN THE WIP IN THE SUBSEQUE -NT TWO YEARS,THAT ALL SUCH EXPENSES WOULD ALSO HAV E TO BE INCLUDED IN THE WORKING OF THE RESULTING PROFIT FROM THE PROJECT.HE FURTHER OBSERV ED THAT EVEN IF THE VIEW OF THE AO ABOUT COMPLETION OF THE PROJECT IN AY.2006-07 WAS ACCEPTE D THE TOTAL PROFIT FROM PROJECT SHOULD NOT EXCEED RS.2 CRORES WHICH WAS DECLARED BY THE ASSESS EE AND WAS ACCEPTED BY THE DEPARTMENT, THAT THE ESTIMATED PROFIT COULD BE ALTERED ONLY IF THERE WAS SUFFICIENT EVIDENCE CONTRARY TO THE ASSERTION MADE BY THE ASSESSEE,THAT THE AO HAD NOT BROUGHT ANY EVIDENCE ON RECORD THAT THE EXPENDITURE WAS BOGUS OR NOT GENUINE, THAT THE AO H AD DISALLOWED THE EXPENDITURE ONLY ON 5309&5220/M/10(06-07) 1996/M/13(09-10) 4 THE GROUND THAT PROJECT WAS COMPLETE EARLIER, THAT THE DISALLOWANCE COULD BE MADE U/S.69 AND NOT U/S. 37 OF THE ACT,THAT THE AO HAD NOT REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE,THAT ITS INCOME WAS ESTIMATED,THAT IT HAD DECLARED THE I NCOME IN THE RETURN NOT AS PROFIT FROM PROJECT BUT AGAINST ANY ADDITION TO HIS INCOME MADE IN ASSESSMENT ON THE BASIS OF SURVEY,THAT THE DISALLOWANCE OF OUTSTANDING EXPENSES WOULD FALL IN THAT CATEGORY,THAT THE AMOUNT OF DISALLOWED EXPENSES SHOULD BE ADJUSTED AGAINST RS. 1.47 CRORES.THE FAA GAVE DETAILS OF OUTSTANDING EXPENSES FOR THE AY.S.2006-07 AND 2007- 08 AND OBSERVED THAT THE CONSTRUCTION EXPENSES FOR AY.2006-07 INCLUDED ELECTRICAL FITTING S, PLUMBING, PAYMENT TO CONTRACTORS,THE ADMINISTRATIVE EXPENSES INCLUDED INTEREST PAID AND COMPENSATION TO CURRENT ASSOCIATES,THAT IN THE AY.2007-08 CONSTRUCTION EXPENSES INCLUDED RS.1. 29 CRORES TO SC, THAT THE ASSESSEE HAD CLAIMED THAT IT HAD ENTERED INTO AN AGREEMENT WITH SC,THAT AS PER THE AGREEMENT HE WAS ENTITLED TO GET SPACE IN FLATS OF APPROX. 43,430 SQ .FT @650 PER SQ.FT., THAT THE FLATS WOULD BE SOLD BY THE ASSESSEE,THAT THE DIFFERENCE BETWEEN TH E SALE PRICE AND AGREED PRICE HAD TO BE THE SHARE OF THE ASSESSEE,THAT THE AMOUNT OF SALE CONSI DERATION WAS CREDITED TO P&L A/C. OF THE ASSESSEE,THAT PAYMENT TO ASSESSEE WAS DEBITED IN AY .2007-08,THAT IN THE EARLIER YEARS SAME WAS SHOWN AS ADVANCE IN THE ACCOUNT OF SC,THAT THE ACCOUNT WAS SQUARED OFF IN AY.2007- 08.AS PER THE FAA THE ASSESSEE HAD SUBMITTED THE ST ATEMENTS OF ACCOUNTS AND COPIES OF RETURNS OF SC FOR AY.S2004-05 AND 2005-06 WHEREIN H IS SHARE IN THE FLATS SOLD WAS DECLARED. IT ALSO FURNISHED DETAILS OF FLATS SOLD ON BEHALF O F SC, NAME OF PURCHASERS AREAS OF FLATS AND PROFIT SHARES WITH SC.HE FOUND THAT RS.1.09 CRORES WAS THE NET AMOUNT THAT WAS PAID TO ASSESSEE.HE FURTHER OBSERVED THAT ENTIRE SALE PROCE EDS WERE DEPOSITED IN A BANK ACCOUNT UNDER THE CONTROL OF THE ASSESSEE,THAT IN THE BOOKS OF AS SESSEE (YEAR ENDING ON 31/3/06)PROFIT FROM INVESTMENT IN THE ASSESSEES CONSTRUCTION ACTIVITY WAS SHOWN AS RS.72.59 LAKHS(NET PROFIT),THAT IN THE RETURN OF INCOME FILED BY ASSES SEE PROFIT OF RS.72,76,642/- WAS DECLARED,THAT FACT OF OBTAINING FINANCE FROM ASSESSEE FOR SHARE IN THE PROFIT WAS EVIDENT FROM DOCUMENTS ABOVE,THAT THE PAYMENT TO ASSESSEE WAS AN EXPENDIT URE ON THE PROJECT. AFTER TAKING INTO CONSIDERATION PAYMENT MADE BY ASS ESSEE,THE FAA CALCULATED OUTSTANDING EXPENSES FOR AY.S 2006-07 AND 2007-08.IT WAS CLAIME D BEFORE FAA THAT ALL THE EXPENSE SHOWN OUTSTANDING WERE NOT NECESSARILY INCURRED IN AY.S.2006-07 AND 2007-08, THAT CERTAIN EXPENDITURE WERE INCURRED PRIOR TO THAT PERIOD,THAT SAME WERE DEBITED TO THE BOOKS WHEN PROJECTS WERE ALMOST COMPLETE,THAT ASSESSEE HAD DE DUCTED TAX AT SOURCE BEFORE MAKING THE PAYMENT,THAT IN THE CASES WHERE THE TAX WAS NOT DED UCTED AT SOURCE THE EXPENDITURE WAS OFFERED TO TAX AS PER PROVISIONS OF SECTION 40(A)(I A).HE FOUND THAT ASSESSEE HAD MADE DISALLOWANCE OF EXPENSES OF RS.52,95,145/- IN AY.20 07-08.CONSIDERING THE ABOVE FACTS,HE 5309&5220/M/10(06-07) 1996/M/13(09-10) 5 HELD THAT OUTSTANDING EXPENSES SHOULD BE REGARDED A S GENUINE BUSINESS EXPENSES,THAT SAME WERE JUSTIFIABLY REDUCED IN ARRIVING AT PROFIT FROM PROJECT,THAT THE ASSESSEE HAD PROPOSED TO REDUCE THESE EXPENSES FROM FINAL PROFIT IN AY.2008- 09,THAT THE PROFIT OF THE PROJECT WAS COMPUTED IN AY.2006-07. HE FURTHER FOUND THAT OUTSTANDING EXPENDITURE CONTA INED CERTAIN EXPENSES WHICH COULD NOT BE ALLOWED AS COST OF CONSTRUCTION, THAT THESE EXPENSE S INCLUDED ROUTINE ADMINISTRATIVE DAY TO DAY EXPENSES, THAT THEY HAD TO BE ALLOWED AS DEDUCT ION ONLY IN THE YEAR OF INCURRING I.E. AY.S. 2006-07 OR 2007-08, THAT SAME COULD NOT BE ADJUSTED AGAINST THE PROJECT THAT WAS COMPLETED PRIOR TO THE ABOVE YEARS.FINALLY,HE UPHELD THE DIS ALLOWANCE TO THAT EXTENT.HE FURTHER OBSERVED THAT THE ASSESSEE HAD ARRIVED AT AN ESTIMATE PROFIT OF RS.2 CRORES FROM THE PROJECT,THAT IT HAD FILED A RETURN OF INCOME OF RS.2 CRORES,THAT IT INC LUDED DISALLOWANCE U/S.40(A)(IA) OF RS.52 LAKHS,THAT IT WAS A LEGAL DISALLOWANCE, THAT WAS NO T PART OF THE PROFIT DERIVED FROM THE PROJECT, THAT THE PROFIT DERIVED FROM THE PROJECT HAD TO BE ASSESSED AT RS.2 CRORES OVER AND ABOVE EXPENDITURE U/S.40(A)(IA). 5. BEFORE US,THE DEPARTMENTAL REPRESENTATIVE(DR)ARGUED THAT SC WAS TO BE PAID SUPERVISION CHARGES ONLY,THAT HE WAS NOT TO BE GIVEN DIFFERENCE IN SALE VALUE AS CLAIMED BY THE ASSESSEE, THAT ASSESSEE HAD CONSTRUCTED 138 FLATS, THAT 43 FL ATS WERE SOLD TO SC,THAT 30 FLATS WERE PURCHASED BY ONE OTHER PERSON AND REMAINING OTHER 6 5 FLATS WERE SOLD BY THE ASSESSEE,THAT FAA HAD NOT GIVEN ANY CLEAR FINDING THAT FOR WHAT P URPOSES THE EXPENSES WERE INCURRED,THAT HE HAD NOT EXPLAINED THAT AS ON 31/3/2006 WHICH POR TION OF THE PROJECT WAS INCOMPLETE,THAT THE ASSESSEE HAD MADE DISCLOSURE OF RS.2 CRORES, TH AT THE FAA HAD ADMITTED THAT ADDITIONAL EVIDENCE WITHOUT AFFORDING AN OPPORTUNITY TO THE AS SESSEE TO EXAMINE THEM. THE AUTHORISED REPRESENTATIVE(AR) ARGUED THAT THE A SSESSEE HAD INCURRED THE EXPENSES IN THE SUBSEQUENT YEARS,THAT THE FAA HAD GIVEN FINDING OF FACTS THAT EXPENSES WERE RELATED WITH COMPLETION OF THE PROJECT, THAT HE HAD NOT ALLOWED THE ADMINISTRATIVE EXPENSES.HE RELIED UPON THE CASE OF TRIVENI ENGINEERING INDUSTRIES LTD. (33 6ITR374), OF THE HON'BLE DELHI HIGH COURT. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT AN ACTION U/S. 133A WAS CARRIED OUT AT THE BUSINESS PR EMISES OF THE ASSESSEE AT MUMBAI AND PUNE,THAT IT HAD COMPLETED A RESIDENTIAL PROJECT IN PUNE, THAT IT HAD BUSINESS TRANSACTIONS WITH SC,THAT IT HAD ENTERED INTO AGREEMENT WITH IT FOR P URCHASE OF 63 FLATS,THAT DURING THE APPELLATE PROCEEDINGS,THE FAA HAD ADMITTED CERTAIN DOCUMENTS WHICH WERE NOT MADE AVAILABLE TO AO DURING THE ASSESSMENT PROCEEDINGS, THAT BASED ON TH OSE DOCUMENTS THE FAA HAD GIVEN RELIEF 5309&5220/M/10(06-07) 1996/M/13(09-10) 6 TO THE ASSESSEE,THAT THERE WAS DISPUTE ABOUT INCURR ING OF EXPENDITURE IN THE SUBSEQUENT YEARS AND THE ALLOWABILITY OF THE SAME. WE ARE OF THE OPINION THAT THE FAA SHOULD HAVE DECI DED THE APPEAL AFTER PROVIDING A COPY OF THE DOCUMENTS,TO THE AO,THAT WERE PRODUCED BEFORE HIM FOR THE FIRST TIME.HE SHOULD HAVE CALLED FOR A REMAND REPORT FROM THE AO. FROM HIS OR DER IT IS CLEAR THAT THE DOCUMENTS OF SC WERE NOT ADMITTED BY INVOKING THE PROVISIONS OF CLA USE 4 OF RULE 46A OF THE INCOME-TAX RULES,1962. 6.1. IT IS FOUND THAT IN LETTER DTD.19/11/2007 (PG.9) OF THE PB THE DIRECTOR OF THE ASSESSEE- COMPANY HAD STATED THAT THERE WAS NO SUPPRESSION OF INCOME OR INFLATION OF EXPENSES,THAT ALL THE INCOME/EXPENSES WERE GENUINELY RECORDED IN THE BOOKS OF ACCOUNT AND WERE VERIFIABLE, THAT IN THAT STATEMENT IT WAS ALSO EXPLAINED THAT T HE DECLARATION WAS TO COVER ANY ERROR OR TO COVER ANY FUTURE INCOME TOWARD LOADING OF TDR OR SE LLING OF BALANCE FSI/TDR. AT PG.11 OF THE PB SIMILAR ASSERTION HAS BEEN MADE IN THE COMPU TATION OF INCOME.IN OUR OPINION,BOTH THESE PAPERS HAVE TO BE CONSIDERED WHILE DECIDING T HE ISSUE IN RIGHT PERSPECTIVE. IT IS A FACT THAT AMOUNTS WERE DUE TO SC AND DOCUMENTARY EVIDENC E WERE MADE AVAILABLE TO FAA.WE HOLD THAT WITHOUT CONSIDERING THE SAME THE TAXABLE INCOME OF THE ASSESSEE CANNOT BE DETER - MINED.IT IS ALSO A FACT THAT SC HAD ALSO SHOWN THE INCOME ARISING OUT OF SALE OF FLATS SOLD BY THE ASSESSEE ON HIS BEHALF.SECONDLY,IF THE INCOME H AS TO BE ASSESSED THEN EXPENDITURE RELATED TO SAME TRANSACTION WILL HAVE TO BE ALLOWED.THIS AS PECT WAS NOT LOOKED INTO BY THE AO.THE ASSESSEE WAS FOLLOWING A PARTICULAR METHOD OF ACCOU NTING FOR THE PROJECT.INCOME EARNED FROM THE PROJECT AND EXPENDITURE INCURRED FOR THE PROJEC T FOR VARIOUS YEARS HAVE TO BE TAKEN INTO CONSIDERATION BEFORE ARRIVING AT THE FINAL CONCLUSI ON.THE ASSESSEE HAD CLAIMED THAT IT HAD SUFFERED A LOSS IN THE PROJECT.IT IS FOUND THAT THE AO HAS NOT OFFERED ANY COMMENT WITH REGARD TO THE CLAIM OF LOSS.THUS,THERE ARE MANY AN ASPECTS OF THE ASSESSMENT THAT HAVE NOT BEEN DEALT WITH OR HAVE NOT BEEN ADJUDICATED PROPERLY.THEREFOR E,WE ARE OF THE OPINION THAT MATTER NEEDS FURTHER INVESTIGATION AND VERIFI CATION.BEFORE US,R EPRESENTATIVES OF BOTH THE SIDES ALSO AGREED THAT MATTER COULD BE SENT BACK TO THE AO.SO,IN THE INTEREST OF JUSTICE,WE ARE REMITTING BACK THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION. HE IS DIRECTED TO CONSIDER THE ADDITIONAL EVIDENCE FILED BEFORE US BEFORE DECIDING THE TAXABI LITY OF THE ASSESSEE.HE WOULD AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSE.GR .S NO.1,2 AND 5 RAISED BY THE AO ARE DECIDED IN HIS FAVOUR,IN PART. ADDITIONAL GROUND OF APPEAL,FILED BY THE ASSESSEE,A LSO STANDS PARTLY ALLOWED.THE AO,AS DIRECTED EARLIER,WOULD HEAR THE MATTER AFRESH. ITA/5309/MUM/2010 -AY.,2006-07: 5309&5220/M/10(06-07) 1996/M/13(09-10) 7 7. THE EFFECTIVE GROUND OF APPEAL RAISED BY THE ASSESS EE FOR THE YEAR UNDER APPEAL IS ABOUT DECLARATION OF RS.2 CRORES AS INCOME. 8. BEFORE US,THE AR ARGUED THAT THE FAA SHOULD NOT HAV E TAKEN THE DISCLOSURE AT RS.2 CRORES, THAT THE DISCLOSURE WAS ABOUT SALE OF TDR, THAT SAM E WAS TO ACCRUE IN FUTURE.HE REFERRED TO PG-9 & 11 OF THE PB.THE DR SUPPORTED THE ORDER OF T HE FAA. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD.AS STATED EARLIER, THE ASSESSEE HAD MADE THE DISCLOSURE ABOUT FUTURE S ALE OF TDR/FSI.THE AO AND THE FAA HAS NOT GIVEN A CLEAR CUT FINDING ABOUT TAXABILITY OF T HE AMOUNT ARISING OUT OF THE SALE OF TDR ETC. IT APPEARS THAT THE STATEMENTS MADE DURING SURVEY A ND THE SUBMISSIONS MADE LATER ON WERE NOT CONSIDERED TOGETHER.WE DIRECT THE AO TO DELIBERATE UPON THE ISSUE AGAIN AND DECIDE THE YEAR OF TAXABILITY AFTER AFFORDING A REASONABLE OPPORTUN ITY OF HEARING TO THE ASSESSEE. 10. NEXT GROUND OF APPEAL IS ALSO ABOUT DISCLOSURE.THE FAA HAD HELD THAT THE DISCLOSURE OF RS.2 CRORES WAS IN ADDITION TO THE DISALLOWANCE OF RS. 53 LAKHS MADE U/S.40(A)(IA) OF THE ACT. 10.1. IT IS FOUND THAT THE ASSESSEE HAD MADE THE DISCLOSU RE TO COVER THE ERRORS AND OMISSION IN THE PROJECT COMPLETED BY IT.IN THE EARLIER PARAGRAP HS,WE HAVE RESTORED BACK ENTIRE ISSUE OF DISCLOSURE TO THE FILE OF THE ASSESSEE.WE FEEL THAT THIS ISSUE SHOULD ALSO BE ADJUDICATED AFRESH BY THE AO,AS IT IS ALSO CONNECTED WITH THE MAIN ISS UE.THE AO WOULD AFFORD A REASONABLE OPPORTUNITY OF HEARING THE ASSESSEE.GROUND NO.2,RAI SED BY THE ASSESSEE,STANDS PARTLY ALLOWED. ITA/1996/MUM/2013,AY.2009-10: 11. THE ASSESSEE DID NOT PRESS FIRST GROUND OF APPEAL,D URING THE COURSE OF HEARING BEFORE US.SO,THE SAME STANDS DISMISSED AS NOT PRESSED. 12. WITH REGARD TO GROUND NO.2 THE AR STATED THAT IT WA S THE SAME DISCLOSURE THAT WAS MADE BY THE ASSESSEE ABOUT TDR,THAT ASSESSEE WAS NOT GIV EN SET OFF AGAINST THE DISCLOSURE OF AY.2006-0.AS WE HAVE RESTORED BACK THE MAIN ISSUE T O THE FILE OF THE AO,SO,THE CONNECTED ISSUE HAS ALSO TO DECIDED AFTER ADJUDICATING THE SA ME.SECOND GROUND OF APPEAL,FILED BY THE ASSESSEE STANDS ALLOWED,IN PART. AS A RESULT, APPEAL/APPEALS FILED BY THE AO AND THE ASSESSEE STAND PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH JULY, 2017. , 2017 SD/- SD/- ( / RAM LAL NEGI ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 26.07 .2017. JV.SR.PS. 5309&5220/M/10(06-07) 1996/M/13(09-10) 8 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR F BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.