The ACIT, Circle-3, Surat V. M/s. Firdaus Co.Op.Housing So.Ltd., Surat

ITA 2092/AHD/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85867 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 19-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 18-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Assessee Lawyers: M K PATEL
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER ITA NO . 2092 /AHD/201 0 A. Y . 20 07 - 08 ACIT, CIRCLE - 3, SURAT. VS M/S . FIRDAUS CO - OP. HOUSING SOCIETY LTD, T .P. 11, PLOT NO.26, NEW ERA SCHOOL ROAD, ADAJAN PATIA, SURAT. PAN: AABFF 2159E (APPELLANT) (RESPONDENT) REVENUE BY : SHRI ROOP CHAND , SR.D.R. . ASSESSEE(S) BY : SHRI M.K. PATEL, A.R. / DATE OF HEARING : 19 / 0 3 /201 5 / DATE OF PRONOUNCEMENT: 25 / 0 3 /201 5 / O R D E R PER: MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF LE ARNED CIT(A) - II, SURAT , DATED 09 . 03 .201 0 AND THE GROUND RAISED IS REPRODUCED BELOW: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE REJECTION OF BOOK RESULTS U/S.145(3) OF THE ACT . AND THE ADDITION OF RS. 20,93,478/ - 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) DATED 30 TH OF SEPTEMBER, 2009 WERE THAT THE ASSESSEE IS A CO - OPERATIVE SOCIETY AND ENGAGED IN THE BUSINESS OF BUILDING CONSTRUCTION. A SURVEY U/S.133A WAS CONDUCTED ON 1 ST MARCH, 2007. IT WAS FOUND THAT THE ASSESSEE HAS RECEIVED UNACCOUNTED RECEIPTS . ONE OF ITA NO. 209 2 /AHD /201 0 M/S. FIRDAUS CO - OP. HOUSING SOCIETY LTD. FOR A.Y. 200 7 - 0 8 - 2 - THE PERSON OF CO - OPERATIVE HAS ALSO ADMITTED THAT DURING THE F INANCIAL Y EAR 2006 - 07 UNACCOUNTED RECEIPTS REMAINED TO BE DISCLOSED. AFTER THE SAID STATEME NT , A DISCLOSURE OF RS.1.05 CRORE WAS MADE. SINCE, THE ASSESSEE HAD OFFERED RS.84,06,522/ - , THEREFORE, THE DIFFERENCE BETWEEN THE T W O, I.E., RS.20,93,478/ - WAS PROPOSED TO BE TAXED IN THE HANDS OF THE ASSESSEE BY THE AO. THE AO HAS ALSO MENTIONED THAT CERT AIN EXPENDITURE WERE INCURRED WHICH WERE NOT FOR THE PURPOSE OF THE BUSINESS ; HENCE THE ACCOUNTS WERE NOT CORRECT, THEREFORE, THOSE WERE REJECTED BY THE AO BY INVOKING THE PROVISIONS OF SECTION 145(3) OF IT ACT. FINALLY , THE IMPUGNED DIFFERENCE OF RS.20,93 ,478/ - WAS A DDE D IN THE RETURN ED FILED AT RS.84,06,522/ - . THE SAID ADDITION WAS CHALLENGED BEFORE THE FIRST APPELLATE AUTHORITY. 3. LEARNED CIT(A) WAS OF THE VIEW THAT THE AMOUNT WHICH WAS OFFERED WAS PART OF THE PROFIT DISCLOSED BY THE ASSESSE E AND THE AO HAS NOT EXAMINED THE EXPENDITURE INCURRED AND MERELY TOOK A VIEW AGAINST THE ASSESSEE ON THE GROUND THOSE EXPENDITURE COULD NOT BE FOUND PART OF THE WIP. LEARNED CIT(A) HAS REVERSED THE ACTION OF THE AO IN THE FOLLOWING MANNER: 5. I HAVE CARE FULLY CONSIDERED BOTH THE POSITIONS. AT THE VERY OUTSET, IT IS ABSOLUTELY CLEAR THAT THE AO MADE THE ADDITION OF RS 20,93,478 SINCE, THIS WAS THE DIFFERENCE BETWEEN THE PROFIT OF RS 84,06,522 SHOWN IN THE P & L ACCOUNT OF THE ASSESSEE, AND THE DISCLOSURE O F RS 1.05 CRORES MADE BY THE ASSESSEE IN COURSE OF THE SURVEY U/S. 133A OF THE IT ACT. THERE WAS ABSOLUTELY NO RELATION OF THE SUM OF RS. 20,93,478/ - TO ANY OF THE EXPENSES CLAIMED IN THE P & L ACCOUNT. THE AO MERELY OBSERVED, WITHOUT EXAMINING THE EXPENSE S, THAT THE EXPENSES COULD NOT BE A PART OF THE WIP AND THAT, THE WIP OR THE CLOSING STOCK WAS ONLY AN ARITHMETICAL CALCULATION. I AGREE WITH THE AR THAT THE AO COULD NOT HAVE MADE SUCH AN OBSERVATION WITHOUT MAKING AN EFFORT TO EXAMINE FIRSTLY, THE BREAK - UP OF THE WIP, AND THEN THE VALUATION OF DIFFERENT ITEMS COMPRISING THE WIP. THEREFORE, THE REJECTION OF BOOKS ON SUCH A GROUND WAS CLEARLY NOT WARRANTED. ALL THE EXPENSES WERE DULY ACCOUNTED FOR IN THE BOOKS. THERE IS ABSOLUTELY NO MENTION AS TO WHETHER T HE BOOKS WERE EXAMINED AND WHETHER THERE WAS ANY DEFECT IN THE BOOKS, OR WHETHER ANY ITEM OF ANY ITA NO. 209 2 /AHD /201 0 M/S. FIRDAUS CO - OP. HOUSING SOCIETY LTD. FOR A.Y. 200 7 - 0 8 - 3 - EXPENDITURE CLAIMED IN THE P & L ACCOUNT WAS NOT FULLY VERIFIABLE. THE AO REPRODUCED THE STATEMENT OF SHRI SOYEBBHAI SHASUDDINBHAI GHAWTE, POSSIBLY A PARTNER/M EMBER OF THE ASSESSEE FIRM/SOCIETY, IN REPLY TO Q . NO . 17 WHERE HE HAD DISCLOSED THE SUM OF RS 1.05 CRORES ON ACCOUNT OF THE ON MONEY RECEIVED AGAINST ADDITIONAL WORK DONE IN DIFFERENT FLATS CONSTRUCTED BY THEM. THIS STATEMENT WAS OF NO RELEVANCE TO SUPPOR T THE VIEW TAKEN BY THE AO, AND MERELY REFLECTED THE GROUND ON WHICH THE DISCLOSURE WAS MADE. 5.1 GIVEN SUCH FACTS AND CIRCUMSTANCES OF THE CASE, IT IS ABSOLUTELY CLEAR THAT THERE WAS NO MERIT IN EITHER THE REJECTION OF THE BOOK RESULTS OR IN THE ADDITION MADE BY THE AO. THE ACTION OF THE AO IN REJECTING THE BOOK RESULTS U/S . 145(3) OF THE IT ACT IS STRUCK DOWN, AND THE ADDITION OF RS 20,93,478 / - IS DIRECTED TO BE DELETED. 4. FROM THE SIDE OF THE REVENUE - DEPARTMENT, LEARNED SR.D.R. MR. ROOP CHAND APPEARED AND PLEADED THAT THE ACCEPTED FACTUAL POSITION WAS THAT THE ASSESSEE HAD OFFERED A SUM OF RS.1.05 CRORE AT THE TIME OF SURVEY, THEREFORE, THE CONDUCT OF THE ASSESSEE WAS NOT RELIABLE. HE HAS FURTHER PLEADED THAT ON ONE HAND AN AMOUNT WAS OFFERED BUT ON TH E OTHER HAND SURVEY EXPENDITURE WAS CLAIMED WHICH WAS DOUBTED BY THE AO. THEREFORE, THE AO HAD TAKEN A VIEW THAT THE DIFFERENCE WAS NOT EXPLAINED BY THE ASSESSEE. IN THE RESULT, IT WAS RIGHTLY TAXED. 5. FROM THE SIDE OF THE ASSESSEE, LEARNED AR, MR. M. K. PATEL APPEARED AND PLACED A COPY OF THE AUDIT REPORT TO DEMONSTRATE THAT THE AMOUNT OF RS.1.05 CRORE WAS DULY REFLECTED IN P&L ACCOUNTS. HENCE, THE FAIR AND BONA FIDE CONDUCT OF THE ASSESSEE SHOULD NOT BE DOUBTED. AS FAR AS THE EXPENDITURE SHOWN BY THE AS SESSEE WERE CONCERNED , THE MAJOR AMOUNT WAS TOWARDS PURCHASE OF LAND AND CONSTRUCTION EXPENSES. ALL THE EXPENDITURE WERE SUBJECT TO SCRUTINY BY THE AUDITOR, THEREFORE, THERE WAS NO REASON TO CREATE DOUBT ON THE GENUINENESS OF THOSE EXPENDITURE. THE AO HAS REJECTED THE EXPENDITURE WITHOUT EXAMINING THE EVIDENCES IN SUPPORT OF THE EXPENDITURE CLAIMED. THE HOUSING SOCIETY WAS DISCLOSING ITA NO. 209 2 /AHD /201 0 M/S. FIRDAUS CO - OP. HOUSING SOCIETY LTD. FOR A.Y. 200 7 - 0 8 - 4 - GOOD FINANCIAL RESULTS BECAUSE ON THE SALES OF RS.3,14,26,587/ - AND AFTER INCLUDING A DISCLOSURE OF RS.1.05 CRORE , THE ASSESSEE HAS S HOWN A PROFIT OF RS.84,06,522/ - . LEARNED A.R. HAS , THEREFORE , PLEADED THAT THE RELIEF GRANTED BY LEARNED CIT(A) DESERVES TO BE CONFIRMED. 6. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH AND CAREFULLY PERUSED THE RECORD AVAILABLE BEFORE US. THE EXPENDITURE WHICH WERE CLAIMED BY THE ASSESSEE WERE APPARENTLY CONNECTED WITH THE CONSTRUCTION BUSINESS OF THE ASSESSEE. THE AO HAS NOT POINTED OUT THAT THERE WAS SOME DEFECT IN THE CLAIM OF EXPENDITURE OR THE EXPENDITURE WAS NOT FOUND SUPPORTED WITH THE EVIDENCES. A S PER THE AUDITED ACCOUNTS , IT WAS NOT IN DISPUTE THAT THE IMPUGNED DISCLOSURE OF RS.1.05 CRORE WAS CREDITED IN THE P & L ACCOUNT AND THEREAFTER THE NET PROFIT WAS COMPUTED. I N SUCH A SITUATION WHEN THERE WAS NO SPECIFIC DEFECT POINTED OUT BY THE AO IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THAT THE AMOUNT OFFERED HAD ALREADY BEEN DISCLOSED IN THE P & L ACCOUNT , W E FIND NO REASON TO INTERFERE WITH THE FINDINGS OF LEARNED CIT(A). RESULTANTLY , WE FIND NO FORCE IN THE GROUND OF THE REVENUE; HENCE HEREBY DISM ISSED . 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. SD/ - SD/ - ( ANIL CHATURVEDI ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 25 / 0 3 / 20 1 5 PRABHAT KR. KESARWANI , SR. P . S . S / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT ITA NO. 209 2 /AHD /201 0 M/S. FIRDAUS CO - OP. HOUSING SOCIETY LTD. FOR A.Y. 200 7 - 0 8 - 5 - 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD