The DCIT, Central Circle-1(1), Ahmedabad V. M/s. Navratna Organisers & Developers Pvt. Ltd., Ahmedabad

ITA 2143/AHD/2009

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80287 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 15-07-2014
• Assessment Year: 2000-2001
• Appeal Filed On: 06-07-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Transfer pricing; Search and seizure; International transaction; Difference of opinion; Change of opinion
• Section: 44AD; 143(3); 92E; 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH , AHMEDABAD (BEFORE SHRI MUKUL KR. SHRAWAT, J.M. & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 2143 /AHD/2009 & C.O. NO. 145/A/2009 (ASSESSMENT YEAR: 2000-2001 THE D.C.I.T., CENTRAL CIRCLE- 1(1), AHMEDABAD V/S M/S. NAVRATNA ORGANISERS & DEV. PVT. LTD. 2 ND FLOOR, KAYCREST, OPP. GUJARAT GAS CO. LTD., NR. PARIMAL CROSSING , C.G. ROAD, AHMEDABAD (APPELLANT) (RESPONDENT) M/S. NAVRATNA ORGANISERS & DEV. PVT. LTD. 2 ND FLOOR, KAYCREST, OPP. GUJARAT GAS CO. LTD., NR. PARIMAL CROSSING , C.G. ROAD, AHMEDABAD V/S THE D.C.I.T., CENTRAL CIRCLE- 1(1), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACN5181E APPELLANT BY : SHRI SUBHASH BAINS, CIT/D. R. RESPONDENT BY : SHRI DEEPAK SONI, A.R. ( )/ ORDER DATE OF HEARING : 15-07-2014 DATE OF PRONOUNCEMENT : 27-08-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-III, AHMEDABAD DATED 31.03.2009 FOR A.Y. 2000-01 AND ASSESSEE HAS ALSO FILED A C.O. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON REC ORD ARE AS UNDER. ITA NO 2143/AHD/09 & C.O NO. 145/A/09 . A.Y. 2000-2001 2 3. ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF CONSTRUCTION OF HOUSING PROJECTS. THE ASSESSEE FILED ITS RETURN OF INCOME F OR A.Y. 2000-2001 ON 30.11.2000 AND TOTAL INCOME OF RS. 18,749/- WAS DEC LARED U/S. 115JA OF THE ACT AND THE RETURN WAS PROCESSED U/S. 143(1) ON 14.02.2 002. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT ON 10.05.2006 AND DURING THE COURSE OF SEARCH AND SEIZURE OPERATION, CERTAIN DOCUMENTS WERE FOUND AND SEIZED, THE MODUS OPERANDI OF ASSESSEES BUSINESS WAS ALSO EXAMINED B Y THE ADIT AND IT WAS FOUND THAT THE ASSESSEE WAS THE REAL OWNER OF THE V ARIOUS PROJECTS CARRIED OUT IN THE NAME OF CO-OPERATIVE HOUSING SOCIETIES. ON B EING CONFRONTED WITH THE VARIOUS DOCUMENTS FOUND AND SEIZED, SHRI PRANAV SHA H, MANAGING DIRECTOR OF THE ASSESSEE ADMITTED UNDISCLOSED PROFIT FROM KALHA R BUNGALOW PROJECT (THE MAIN PROJECT WHICH WAS BEING DEVELOPED BY THE ASSES SEE DURING THE YEAR UNDER CONSIDERATION) .AT RS. 4 CRORE AND OFFERED TH E SAME FOR TAXATION. ON THE BASIS OF SEARCH AND SEIZURE OPERATION, NOTICE U/S. 148 WAS ISSUED AND SERVED ON ASSESSEE ON 23.02.2007 IN RESPONSE TO WHICH ASSE SSEE FILED RETURN OF INCOME ON 16/04/2007 DECLARING LOSS OF RS. 42,625/- . THEREAFTER ASSESSMENT WAS FRAMED U/S. 143(3) READ WITH SECTION 147 VIDE O RDER DATED 28.12.2007 AND THE TOTAL INCOME WAS DETERMINED AT RS. 53,00,095/-. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT (A) VIDE ORDER DATED 31.03.2009 PARTLY ALLOWED THE APPEAL OF THE ASSESSE E. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND A SSESSEE HAS ALSO FILED C.O. THE GROUNDS RAISED BY THE REVENUE READS AS UN DER:- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN D ELETING THE ADDITION OF RS. 14,95,000/- MADE U/S.68 OF THE I.T. ACT, WITHOUT CONSIDERING TH E FACT THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS CAST UPON IT U/S.68 OF THE I.T. ACT. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN D ELETING THE ADDITION AS MENTIONED IN GROUND NO.L, WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE ITSELF HAS ADMITTED VIDE REPLY DATED 26.12.2007 THAT IT WAS NOT POSSIBLE TO COLLEC T DETAILS WITHIN SHORT PERIOD AND HENCE THERE WAS NO QUESTION OF FURNISHING ALL DETAILS AS RELIED IN THE APPELLATE ORDER. THE LD.CIT(A) HAS FURTHER ERRED IN OBSERVING THAT SOME OF THE CREDITS WERE TRANSFERRED FROM OTHER CONCERNS IGNORING THAT THE ADDITION OF 9 FRES H CREDITS WAS MADE AS AGAINST 58 CREDITS IN ALL AMOUNTING TO RS.L .78 CRORES. 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.34,79,726/- MADE ON ACCOUNT OF BOGUS AND UNEXPLAINED LIABILITY, WITHOUT CONSIDERING THE GLARING FACTS THAT THE ASSESSEE HAS FAILED TO PROVE AS TO HOW THE LIABILITIES HAVE INCREASED WHEN THERE WAS NO PURCHASE OF GOODS AND EXPENSES TO SUCH EXTEN T. 4. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 3,11,094/- MADE BY APPLYING 8% NET PROFIT RATE, WITHOUT CONSID ERING THE FACTS OF SUPPRESSION OF RECEIPTS AND INCORRECT CLAIM OF EXPENSES CLAIMED T O BE RECOVERABLE FROM THE PROJECT. ITA NO 2143/AHD/09 & C.O NO. 145/A/09 . A.Y. 2000-2001 3 5. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING VARIOUS ADDITIONS WITHOUT CONSIDERING THE FACTS THAT SUFFICIENT OPPORTUNITIES OF BEING HEARD VIDE NOTICES DATED 07.09.2007, 26.10.2007, 23.11.2007 AND SHOW CAUSE DATED 20.12.2007 WERE PRO VIDED TO THE ASSESSEE BY ASSESSING OFFICER BESIDES ISSUE OF PENALTY NOTICE U/S.271(L)(B) DATED 26.10.2007. 4. ON THE OTHER HAND THE GROUNDS RAISED BY THE ASSE SSEE IN C.O READS AS UNDER:- 1.0 THE ORDER PASSED BY THE ASSESSING OFFICER WAS B AD IN LAW. THE ORDER WAS CONTRARY TO THE PROVISIONS OF LAW AND THE FACTS OF THE ASSESSEE'S C ASE. THE ORDER PASSED BY THE ASSESSING OFFICER OUGHT TO HAVE BEEN CANCELLED BY THE COMMISS IONER OF INCOME TAX (APPEALS). IT IS SUBMITTED THAT IT BE SO HELD NOW. 2.0 THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE VALIDITY OF NOTICE U/S 148 AND VALIDITY OF ORDER U/S. 147. THE APPELLANT S UBMITS THAT THE NOTICE ISSUED U/S 148 WAS INVALID. THE ASSESSEE SUBMITS THE NOTICE BEING INVA LID BE QUASHED. 2.1 THE ASSESSEE FURTHER SUBMITS THAT THE ORDER OF REASSESSMENT IS CONTRARY TO THE FACTS AND PROVISIONS OF LAW. THE ASSESSEE SUBMITS ORDER OF REASSESSMENT BEING INVALID OUGHT TO HAVE BEEN QUASHED BY THE COMMISSIONER OF INCOME TAX (APPEALS). THE ASSESSEE SUBMITS THAT THE ORDER BE QUASHED. WE FIRST TAKE UP THE CO OF ASSESSEE AS IT CHALL ENGES THE VALIDITY OF ISSUE OF NOTICE U/S. 148 AND THE REASSESSMENT FRAMED THEREUN DER:- THOUGH THE ASSESSEE HAS RAISED VARIOUS GROUNDS BUT BEFORE US IT WAS SUBMITTED BY LD. AR THAT THE ONLY QUESTION IS THAT THE VALIDITY OF ISSUE OF NOTICE U/S. 148 AND THE ASSESSMENT FRAMED U/S 143 (3) R.W. S. 147. 5. ASSESSEE HAS CHALLENGED THE RE-OPENING U/S. 147, 148 OF THE ACT. BEFORE US, THE LD. A.R. SUBMITTED THAT THE NOTICE U/S. 148 WAS ISS UED BEYOND 4 YEARS AND THE A.O WAS NOT HAVING ANY NEW MATERIAL ON THE BASIS OF WHICH HE HAD PROCEEDED FOR RE-ASSESSMENT. HE FURTHER SUBMITTED THAT A.O HA D EXAMINED THE MATERIAL AND THEREFORE RE-OPENING WAS ON ACCOUNT OF CHANGE O F OPINION AND IT WAS NOT PERMISSIBLE IN LAW. HE PLACED RELIANCE ON THE DECIS ION OF BOMBAY TRIBUNAL IN THE CASE OF H.V TRANSMISSION LTD. VS. ITO ITA NO. 2 230/MUM/2010 ORDER DATED 07.10.2011, SIGNATURE HOTELS P. LTD VS. ITO ( 2011) 338 ITR 51 (DEL) DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. ATUL JAIN & OTHERS (2008) 299 ITR 383, AND ALSO THE DECISION IN THE CASE OF C IT VS. KELVINATOR OF INDIA LTD (2010) 320 ITR 561 (SC). ITA NO 2143/AHD/09 & C.O NO. 145/A/09 . A.Y. 2000-2001 4 6. THE LD. D.R. ON THE OTHER HAND SUBMITTED THAT TH E ORIGINAL RETURN OF INCOME IN THE CASE OF ASSESSEE WAS PROCESSED U/S. 143(1) AND THERE WAS NO ASSESSMENT U/S. 143(3). HE FURTHER SUBMITTED THAT ADIT ON EXAM INING THE MODUS OPERANDI OF ASSESSEES BUSINESS FOUND THAT ASSESSEE WAS THE REAL OWNER OF VARIOUS PROJECTS CARRIED OUT IN THE NAME OF CO-OPERATIVE HO USING SOCIETIES AND THE MANAGING DIRECTOR OF ASSESSEE HAD ADMITTED UNDISCLO SED PROFIT AND ALSO OFFERED THE SAME TO TAX AND THUS THE ASSESSING OFFI CER HAD PROCEEDED TO RE- OPEN THE ASSESSMENT. HE FURTHER SUBMITTED THAT SINC E THE ORIGINAL ASSESSMENT WAS U/S. 143(1) THERE WAS NO APPLICATION OF MIND BY THE A.O AND THEREFORE THE A.O WAS FULLY JUSTIFIED IN RESORTING TO REOPENING O F ASSESSMENT. HE PLACED RELIANCE ON THE DECISION IN THE CASE OF RAJESH JAVE RI 291 ITR 500 AND IN THE CASE OF RAKESH AGARWAL ACIT 225 ITR 496 (DELHI). HE THUS SUPPORTED THE ORDER OF CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE, IT IS AN UNDISPUTED FACT THAT THE RETURN OF INCOME FOR A.Y. 2000-01 WAS FILED BY ASSESSEE ON 30/11/2000 AND IT WAS PROCESSED U/S. 143(1) OF THE ACT ON 14/12/2002. NO ASSESSMENT WAS SUBSEQ UENTLY MADE U/S. 143(3) OF THE ACT. HONBLE APEX COURT IN THE CASE OF RAJES H JAVERI (SUPRA) HAS HELD THAT INTIMATION U/S. 143(1)(A) CANNOT BE TREATED AS ASSESSMENT ORDER. IT IS ONLY WHEN REGULAR ASSESSMENT IS MADE, THE ASSESSING OFFI CER GETS AN OPPORTUNITY OF APPLYING HIS MIND TO VARIOUS ASPECTS CONCERNING THE ASSESSMENT. 8. SECTION 147 DEALS WITH INCOME ESCAPING ASSESSME NT AND EXPLANATION (2) PROVIDES FOR THE DEEMED CASES OF ESCAPEMENT OF INCO ME. THIS EXPLANATION HAS 5 CLAUSES NAMELY (A), (B), (BA), (C) AND (D) WHICH DEALS WITH DISTINCT AND DIFFERENT SITUATIONS OF ESCAPEMENT OF INCOME NAMELY WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE, WHERE RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE, BUT NO ASSESSMENT HAS BE EN MADE; WHERE ASSESSEE HAS FAILED TO FURNISHED REPORT IN RESPECT OF INTERNATIONAL TRANSACTIONS REQUIRED U/S. 92E ; WHERE ASSESSMENT HAS BEEN MADE AND WHERE A PERSON IS ITA NO 2143/AHD/09 & C.O NO. 145/A/09 . A.Y. 2000-2001 5 FOUND TO HAVE ANY ASSETS INCLUDING FINANCIAL INTERE ST IN ANY ENTITY LOCATED OUTSIDE INDIA. 9. THE PRESENT CASE FITS IN EXPL. 2 (B) WHICH STATE S THAT WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMEN T HAS BEEN MADE AND IT IS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESS EE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, A LLOWANCE OR RELIEF IN THE RETURN. ON PERUSAL OF THIS PROVISION, IT IS BORNE OUT THAT EVEN IF NO ASSESSMENT WAS ORIGINALLY MADE BY THE ASSESSING OFFICER BUT SU BSEQUENTLY IT COMES TO HIS NOTICE THAT THE ASSESSEE HAS UNDERSTATED THE INCOME , IT SHALL BE DEEMED TO BE A CASE OF ESCAPING ASSESSMENT. THE ONLY REQUIREMEN T FOR ASSUMING JURISDICTION IN THE LIGHT OF EXPLAN. 2(B) IS THAT IT IS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME ETC. THUS THE REQUIREMENT OF NOTICING IS OF UNDERSTATEMENT OF INCOME. WE ARE OF VIEW THAT S UCH NOTICING AS MAY BE FROM THE MATERIAL ALREADY ON RECORD OR SOME NEW MAT ERIAL COMING TO HIS KNOWLEDGE. SO LONG AS NOTICING OF UNDERSTATEMENT O F INCOME IS TRUE, THE SOURCE OF SUCH NOTICING AS EMANATING FROM SOME NEW MATERI AL OR AN EXISTING MATERIAL IS WHOLLY IRRELEVANT IN THE CONTEXT OF EXPLN. (B). IN THE PRESENT CASE, ON EXAMINATION OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH AND SEIZURE OPERATION, ADIT NOTICED THAT ASSESSEE WAS THE REAL OWNER OF VARIOUS PROJECTS AND THE MANAGING DIRECTOR OF THE ASSESSEE HAD ALSO ADMITTED TO UNDISCLOSED PROFIT FROM KALHAR BUNGLOW PROJECT, THE MAIN PROJEC T BEING DEVELOPED BY ASSESSEE AND OFFERED THE SAME TO TAX. WE ARE OF TH E VIEW THAT THE AFORESAID MATERIAL WAS SUFFICIENT TO THE ASSESSING OFFICER TO PROCEED WITH THE PROCEEDINGS OF REOPENING OF THE ASSESSMENT MORE SO IN VIEW OF T HE SETTLED LAW THAT AT THE STAGE OF ISSUE OF NOTICE, THE ONLY QUESTION IS WHET HER THERE WAS RELEVANT MATERIAL ON WHICH REASONABLE PERSON COULD HAVE FORM ED THE REQUISITE BELIEF. WHETHER MATERIAL WOULD CONCLUSIVELY PROVE ESCAPEMEN T OF INCOME IS NOT THE CONCERN AT THAT STAGE. WE FURTHER FIND THAT HONBL E APEX COURT IN THE CASE OF ACIT VS. RAJESH JAVERI STOCK BROKERS PVT. LTD (2007 ) 291 ITR 500(SC) HAS HELD THAT PRINCIPLES RELATING TO CHANGE OF OPINION ARE NOT APPLICABLE IN RESPECT OF THE PROVISIONS U/S. 147(1) WHERE THE RETURN WAS PRO CESSED. ITA NO 2143/AHD/09 & C.O NO. 145/A/09 . A.Y. 2000-2001 6 8. CONSIDERING THE AFORESAID DECISION OF HONBLE AP EX COURT IN VIEW OF THE FACT STATED ABOVE WE ARE OF THE VIEW THAT THE A.O WAS FULLY JUS TIFIED IN RE-OPENING THE ASSESSMENT. FURTHER THE DECISIONS RELIED BY THE LD. A.R ARE DISTINGUISHABLE ON FACTS AND ARE NOT APPLICABLE TO THE PRESENT FACTS. WE THE REFORE FIND NO INFIRMITY IN THE ORDER OF A.O IN RE-OPENING THE ASSESSMENT. THUS, TH E GROUNDS OF ASSESSEE ARE DISMISSED. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMISSED. WE NOW TAKE UP REVENUES APP EAL IN ITA NO. 2143/AHD/2009 GROUND NO. 1 AND 2 ARE INTERCONNECTED AND THEREFORE CONSIDERED TOGETHER. IT IS WITH RESPECT TO ADDITION U/S. 68 OF THE ACT. 10. DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS, A.O NOTICED THAT ASSESSEE HAD RECEIVED UNSECURED LOAN AGGREGATING TO RS. 14,95,00 0/- FROM 9 PARTIES LISTED ON PAGE 3 OF THE ASSESSMENT ORDER. THE ASSESSEE WAS AS KED TO EXPLAIN THE CASH CREDITS APPEARING IN THE BOOKS BY FURNISHING THE FU LL NAME, ADDRESSES, PAN NUMBERS, CONFIRMATION ETC. A.O NOTED THAT ASSESSEE FILED CONFIRMATION ONLY IN 2 CASES NAMELY IN THE CASE OF NEELA R. SHAH AND RAGNI CHOKSI. A.O ALSO NOTED THAT ASSESSEE DID NOT FILE THE OTHER DETAILS CALLED FOR AND THEREFORE A.O CONCLUDED THAT ASSESSEE HAS FAILED TO SATISFACTORILY EXPLAIN THE CASH CREDIT. HE ACCORDINGLY MADE ADDITION OF RS. 14,95,000/- U/S. 68 AS UNEXPLA INED CASH CREDIT. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BE FORE CIT(A). CIT(A) DELETED THE ADDITION MADE BY A.O BY HOLDING AS UNDER:- 11.1 IN RESPECT OF THE ADDITIONS OF RS. 14.95 LAKHS U/S. 68 OF THE ACT, IT IS SEEN THAT THE APPELLANT HAD VIDE REPLY DATED 26.12.2007, HAD FILE D COPIES OF ACCOUNT OF THE CREDITORS AND FURNISHED THEIR NAMES/ADDRESSES/CONFIRMATIONS. THE PAN OF SOME CREDITORS, THE DETAILS OF INTEREST/PAID AND/OR OF REPAYMENTS WERE ALSO FURNIS HED VIDE LETTER DATED 30.10.2007. THE TRANSACTIONS WERE ROUTED THROUGH BANK(S). A NUMBER OF DECISIONS OF EXAMPLES REPORTED IN 301 ITR 298 (RAJ), 251 ITR 263 (SC), 307 ITR 165 (GUJ), 256 ITR 360, ETC, WERE CITED TO STATE THAT OUTSTANDING LIABILITY OF PREDECESSOR ENTITY CO ULD NOT BE FASTENED ON THE SUCCEEDING ENTITY. THUS CERTAIN LOANS (LISTED AT S. NO. 1 TO 3 AND 5 T O 7) WERE RAISED BY M/S. NAVRATANA KAUSAMBI ASSOCIATION (NKA) AND WERE TRANSFERRED TO THE SUCCESSOR APPELLANT. IT IS SEEN THAT THE FACTS/DETAILS FURNISHED BY THE APPELLANT IN RES PECT OF CREDITORS WERE SIMILAR IN A.Y. 97-98 ITA NO 2143/AHD/09 & C.O NO. 145/A/09 . A.Y. 2000-2001 7 AS WELL. IN SIMILAR FACTS OF THE APPELLANT, THE THE N CIT(A)-XI, IN APPELLANTS APPEAL FOR A.Y. 97- 98 HAD HELD IN HIS ORDER, DATED 3.01.2005 IN APPEAL NO. CIT(A)-XI/112/01-02 THAT THE ADDITION MADE U/S. 68 WAS NOT SUSTAINABLE. CONSIDERING THE E XPLANATION/DETAILS FURNISHED AND FOLLOWING THE ORDER OF CIT(A) IN APPELLANTS OWN AP PEAL FOR A.Y. 97-98, THE ADDITION OF RS. 14.95 LAKH U/S. 68 OF THE ACT ARE DELETED. THE RELA TED GROUND OF APPEAL IS ALLOWED. 11. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NO W IN APPEAL BEFORE US. 12. BEFORE US, LD. D.R. SUBMITTED THAT LD. CIT(A) H AS NOTED THAT ASSESSEE HAD FILED COPIES OF THE ACCOUNT OF THE CREDITORS AND FURNISHE D THE NAMES AND ADDRESSES AND CONFIRMATION AND ALSO THE PAN OF THE SAME OF TH E CREDITORS AGAINST WHICH HE POINTED TO THE FINDINGS OF A.O WHERE A.O HAS NOTED THAT ASSESSEE HAD NOT FILED THE DETAILS CALLED FOR BY THE A.O. HE FURTHER SUBMI TTED THAT ON THE DETAILS FILED BY THE ASSESSEE BEFORE LD. CIT(A), LD. CIT(A) DID NOT CALL FOR ANY REMAND REPORT FROM A.O. HE FURTHER SUBMITTED THAT LD. CIT(A) HA S NOTED THAT SIMILAR ADDITIONS MADE IN 1997-1998 WERE DELETED BY CIT(A) BUT AGAINS T THE ORDER OF LD. CIT(A), THE REVENUE HAD PREFERRED APPEAL BEFORE THE HONBLE ITAT.. HONBLE ITAT VIDE ORDER IN ITA NO. 1114/A/2005 DATED 11.09.2009 HAD R EMITTED THE MATTER TO A.O TO CARRY OUT INDEPENDENT INVESTIGATION. HE POINTED TO PARA 24 ON PAGE 13 OF THE AFORESAID ORDER. HE THEREFORE SUBMITTED THAT IN THE YEAR UNDER CONSIDERATION ALSO THE MATTER MAY BE REMITTED TO THE FILE OF A.O WITH SUITABLE DIRECTIONS. ON THE OTHER HAND, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFO RE CIT(A) AND SUPPORTED HIS ORDER. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT A.O HAS NOTED THAT ASSESSEE HAD RECEIVED UNSECURED LOANS AGGREGATING TO RS. 14,95,000/- FROM 9 PARTIES BUT ASSESSE HAD N OT DISCHARGED THE ONUS BY PROVING THE IDENTITY, CAPACITY AND GENUINENESS OF T HE TRANSACTION. WE ALSO FIND THAT ADDITION U/S. 68 WERE ALSO MADE IN ASSESSEES CASE IN 1997-98. (THOUGH THE PARTIES WERE DIFFERENT FORM THOSE FROM WHOM THE ASS ESSEE HAD ACCEPTED DEPOSITS DURING THE YEAR.). THE CO-ORDINATE BENCH OF TRIBUNAL IN THAT CASE I.E. FOR A.Y. 97-98 HAS REMITTED THE MATTER TO THE FILE OF A SSESSING OFFICER BY NOTING DOWN AS UNDER:- ITA NO 2143/AHD/09 & C.O NO. 145/A/09 . A.Y. 2000-2001 8 24. ON THE OTHER HAND, THE LEARNED AUTHORISED REPRE SENTATIVE OF THE ASSESSEE DREW OUR ATTENTION TO PAGE NO.62 OF ITS PAPER-BOOK WHICH IS AN ACCOUNT OF AMP INVESTMENT ON THE LETTER- HAD OF THE ASSESSEE. IT SHOWED THE ADDRESS OF AMP I NVESTMENT AS 502, PANCHKUVA, AHMEDABAD-2 AND PAN AABFA7464 P. THEN, AT PAG E NO.63 OF THE PAPER-BOOK, THERE WAS INFORMATION ABOUT VICTORIA CAPITAL VENTURES LTD. IT GAVE THE ADDRESS AS BHARAT HOUSE, 1 ST FLOOR, 104, BOMBAY SAMACHAR MARG, BOMBAY-23 AND. ALSO SOME NUMBERS, SUCH AS, AAA - CV 3287- D/D,C.CIR(I)/L. THIS IS ALSO A COPY OF ACCOUNT OF VICTORIA CAPITAL VENTURES LTD. ON THE LETTER-HEAD OF NAVRATNA ORGANISERS & DEVELOPERS PVT. LTD. AT PAGE NO.68 OF THE PAPER BOOK, IS THE COPY OF ACCOUNT OF YOGESH ANUBHAI SHAH (HUF) WHICH SHOWS TH E ADDRESS OF THE PARTY AS 88, LAVANYA SOCIETY VASNA, AHMEDABAD-7. THIS IS ALSO ON THE LETTER-HEAD OF THE ASSESSEE. PAGE NOS. 72 AND 73 OF THE PAPER- BOOK SHOW ACCOUNT OF P AYAL YOGESH SHAH ON THE LETTER-HEAD OF THE ASSESSEE AND ALSO ADDRESS OF THAT PARTY. AT PAGE NO .77 OF THE PAPER-BOOK SHOWS THE ACCOUNT OF NILAY YOGESH SHAH ON THE LETTER-HEAD OF THE ASSESSE E WITH THE ADDRESS OF THE PARTY. THE COPIES OF ACCOUNT: SHOW THAT MONEY WAS TRANSFERRED THROUGH CHEQUE, I.E. THOUGH BANKING CHANNELS. IT IS NOT A CASE WHERE NO DATA IS AVAILABLE FOR VERIFICAT ION. THE ASSERTION OF THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE IS THAT THESE DOCUME NTS WERE SUBMITTED TO THE ASSESSING OFFICER. IN ANY CASE, WE RESTORE THE MATTER TO THE FILE OF A SSESSING OFFICER. THE ASSESSEE WILL SUBMIT THESE DOCUMENTS BEFORE THE ASSESSING OFFICER WITH COMPLET E DETAILS OF THE CREDITORS, NAME OF THE BANK THROUGH WHICH MONEY WAS TRANSFERRED TO THE ASSES SEE AND PAID BACK BY THE ASSESSEE. THE ASSESSEE WILL FURNISH THESE INFORMATION SO AS TO EN ABLE THE ASSESSING OFFICER TO CARRY OUT INDEPENDENT INVESTIGATION. INITIALLY, DOCUMENTS FO R ESTABLISHING IDENTITY OF THE CREDITORS, THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S WILL BE SUBMITTED BY THE ASSESSEE FOR FURTHER VERIFICATION BY THE ASSESSING OFFICER. 14. IN THE PRESENT CASE WE FIND THAT LD. CIT(A) HA S NOT GIVEN ANY FINDING WITH RESPECT TO THE DEPOSITS RECEIVED BY THE ASSESSEE AN D FURTHER THE DEPOSITERS ARE DIFFERENT IN BOTH THE ASSESSMENT YEARS I.E. A.Y. 20 00-01 AND A.Y. 97-98. BUT HOWEVER WE FEEL THAT IN THE INTEREST OF JUSTICE THA T THE ONE MORE OPPORTUNITY BE GRANTED TO ASSESSEE TO FURNISH ALL THE REQUIRED DET AILS CALLED FOR BY THE ASSESSING OFFICER SO AS TO DISCHARGE THE ONUS AS REQUIRED U/S . 68 OF THE ACT. WE THEREFORE REMIT THE ISSUE TO THE FILE OF ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH AS PER LAW AND AFTER CONSIDERING THE SUBMISSIONS OF ASSESS EE. WE ALSO DIRECT THE ASSESSEE TO SUBMIT ALL THE REQUIRED DETAILS CALLED FOR BY THE ASSESSING OFFICER PROMPTLY SO AS TO ENABLE THE A.O TO DECIDE THE ISSU E. FURTHER IN CASE THE ASSESSEE FAILS TO FURNISH THE REQUIRED DETAILS, THE A.O SHALL BE FREE TO DECIDE THE MATTER ON THE BASIS OF MATERIAL ON RECORD. NEEDLES S TO STATE THAT ASSESSING OFFICER SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO ASSESSEE. IN THE RESULT, THIS GROUND OF REVENUE IS ALLOWED FOR STATISTICAL P URPOSES. GROUND NO. 3 IS WITH RESPECT TO DELETION OF ADDITIO N OF RS. 34,79,726/- ON ACCOUNT OF BOGUS AND UNEXPLAINED LIABILITY. ITA NO 2143/AHD/09 & C.O NO. 145/A/09 . A.Y. 2000-2001 9 15. ON PERUSING THE BALANCE SHEET, ASSESSING OFF ICER NOTICED THAT THERE WAS INCREASE IN WORK IN PROGRESS BY RS. 38,88,672/- AND OUT OF THE TOTAL INTEREST COST OF RS. 35,21,145/-, 90% OF THE INTEREST AMOUNTING T O RS. 31,69,030/- WAS TRANSFERRED TO PROJECT COST. HE ALSO NOTICED THAT AT THE YEAR END, THE LIABILITY FOR GOODS INCREASED BY RS. 41,99,368/- THOUGH ASSESSEE HAS NOT SHOWN PURCHASES OF GOODS IN THE PROFIT AND LOSS ACCOUNT A ND FURTHER ASSESSEE HAD ALSO NOT FILED ANY DETAILS TO JUSTIFY THE LIABILITY . HE WAS THEREFORE OF THE VIEW THAT SINCE OUT TOTAL WORK IN PROGRESS OF RS. 38,88,672/- , THE INTEREST COMPONENT WAS RS. 31,69,030/- THERE WAS NO SCOPE FOR INCREASE IN LIABILITY FOR GOODS AMOUNTING TO RS. 41,99,368/-. ACCORDING TO ASSESSING OFFICER , THE INCREASE IN LIABILITY FOR GOODS COULD BE ONLY TO THE EXTENT OF RS. 7,19,642/- (BEING THE DIFFERENCE BETWEEN THE WORK IN PROGRESS OF RS. 38,88,672/- AND THE INTEREST COMPONENT OF RS. 31,69,030/- TRANSFERRED TO WORK IN PROGRESS.) AND HE THEREFORE CONSIDERED THE BALANCE LIABILITY OF RS. 34,79,726/- (BEING DIF FERENCE OF LIABILITY FOR GOODS OF RS. 41,99,368/- AND THE LIABILITY OF RS. 7,19,642/- ON ACCOUNT OF INTEREST) AS UNEXPLAINED BOGUS LIABILITY AND ADDED IT TO THE INC OME. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER B EFORE LD. CIT(A). LD. CIT(A) AFTER CONSIDERING THE SUBMISSION, DELETED TH E ADDITION BY HOLDING AS UNDER:- 12. IN RESPECT OF THE DISALLOWANCE FOR UNEXPLAINED LIABILITY, IT HAS BEEN POINTED OUT THAT THE NAME/BREAK UP OF LIABILITIES AS ON 31/3/19 99 AND 31/03/2000 HAD BEEN FURNISHED ALONG WITH DETAILS OF TRANSACTIONS. THE LIABILITIES ARISING OUT OF PURCHASES/EXPENSES WERE VOUCHED AND BOOKS WERE AUDITED. THE EXPENSES CONSI DERED DIRECTLY RELATED TO PROJECTS AND DEBITED TO PROJECT ACCOUNT WHILE EXPENSES INCUR RED IN RELATION TO BUSINESS OPERATIONS WAS DEBITED TO P & L ACCOUNT. THE ASSESSING OFFICE R HAS NOT DISPROVED THE CLAIM OF THE APPELLANT THAT EACH LIABILITY WAS SUPPORTED BY DOCU MENTARY EVIDENCE AS INVOICES, RECEIPTS OF GOODS NOTES, FREIGHT BILLS, NAME/ADDRESS/PAN OF PARTY AND THAT IT WAS BUSINESS RELATED AND ACCOUNTED FOR IN BOOKS. THE REASONS FOR INCREA SE IN LIABILITIES AND BREAK UP LIABILITIES ARISING ON ACCOUNT OF SUNDRY CREDITORS, EXPENSES AN D GOODS WERE FURNISHED ALONG WITH REPLY DATED 26/02/2007, TO THE ASSESSING OFFICER. THUS THE DISALLOWANCE OF RS. 34,79,726/- MADE BY THE ASSESSING OFFICER IS NOT BA SED ON PROPER APPRECIATION OF FACTS AND IT NOT SUPPORTED BY REQUISITE EVIDENCE TO THE C ONTRARY. THIS DISALLOWANCE IS THEREFORE UNSUSTAINABLE AND IS DELETED. ITA NO 2143/AHD/09 & C.O NO. 145/A/09 . A.Y. 2000-2001 10 16. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE I S NOW IN APPEAL BEFORE US. BEFORE US, LD. DR POINTED TO THE FINDINGS OF ASSESS ING OFFICER AND SUBMITTED THAT ASSESSEE HAD NOT FURNISHED ANY DOCUMENTARY EVIDENCE ABOUT THE INCREASING LIABILITY AND FURTHER CIT(A) ALSO DID NOT CALL FOR ANY REMAND REPORT FROM ASSESSING OFFICER BEFORE DECIDING THE ISSUE. HE THEREFORE SU BMITTED THAT THE MATTER MAY BE REMITTED TO A.O FOR VERIFICATION. THE LD. AR ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD. CIT(A) AND FURTH ER SUBMITTED THAT THE BOOKS OF ACCOUNTS ARE AUDITED BY CHARTERED ACCOUNTS AND HE THUS SUPPORTED THE ORDER OF LD. CIT(A). 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT AO WHILE DISALLOWING THE LIABILITY FOR EX PENSES HAS NOTED THAT ASSESSEE DID NOT FURNISH THE NECESSARY EVIDENCE AND ON THE O THER HAND LD. CIT(A) WHILE DELETING THE ADDITION HAS NOTED THAT AO HAS NOT DIS PROVED THE CLAIM OF ASSESSEE THAT EACH LIABILITY WAS SUPPORTED BY EVIDENCES AND THE REPLY WAS FURNISHED BEFORE ASSESSING OFFICER. WE FURTHER FIND THAT LD CIT(A) HAS NOT CALLED ANY REMAND REPORT FROM ASSESSING OFFICER. BEFORE US ALSO, NO DETAILS OF THE LIABILITY FOR EXPENSES, EXCEPT AS SHOWN IN THE BALANCE SHEET WAS PLACED ON RECORD. IN VIEW OF THE AFORESAID FACTS, WE ARE OF THE VIEW THAT THE ISSUE NEEDS RE-EXAMINATION AT THE END OF LD. CIT(A) AND THEREFORE REMIT THE MATTE R TO LD. CIT(A) FOR HIM TO RECORD THE FINDINGS ABOUT THE LIABILITY AND DECIDE THE ISSUE AS PER LAW. NEEDLESS TO STATE THAT LD. CIT(A) SHALL GRANT ADEQUATE OPPOR TUNITY OF HEARING TO BOTH THE PARTIES. THE ASSESSEE IS ALSO DIRECTED TO FURNISH ALL THE REQUIRED INFORMATION CALLED FOR DECIDING THE ISSUE PROMPTLY. THUS THIS GROUND OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. GROUND NO. 4 IS WITH RESPECT TO DELETION OF ADDITIO N OF RS. 3,11,094 BY APPLYING NET PROFIT RATE. 18. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON VERIFICATION OF THE ACCOUNTS ASSESSING OFFICER NOTICED THAT ON THE TOTAL CONSTRU CTION RECEIPTS OF RS. ITA NO 2143/AHD/09 & C.O NO. 145/A/09 . A.Y. 2000-2001 11 33,47,000/-, ASSESSEE HAD SHOWN NET PROFIT OF RS. 62,495/- WHICH WORKS OUT TO 1.87% OF RECEIPTS/WIP WHICH ACCORDING TO ASSESSING OFFICER WAS QUITE LOW FOR THE NATURE OF BUSINESS OF ASSESSEE. HE THEREFORE BY AP PLYING THE PROVISIONS OF S. 44AD OF THE ACT, ESTIMATED THE PROFIT @ 8% AND WORK ED OUT THE NET PROFIT AT RS. 3,11,094 AND MADE THE ADDITION. AGGRIEVED BY THE O RDER OF ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A). LD. CIT(A) DELETED THE ADDITION BY HOLDING AS UNDER:- 13. IN PARA 4 OF THIS ORDER THE AO HAS NOTED THAT THE CONSTRUCTION RECEIPTS HAVE BEEN SHOWN AT RS. 33.47 LAKHS. WHILE WORK-IN-PROGRESS HAS INCR EASED BY RS. 38,88,672/- AND SO FELT THAT RECEIPTS OF RS. 5,41,672/- WERE APPARENTLY SUP PRESSED FURTHER EXPENSES OF RS. 30.75 LAKHS, BEING GENERAL AND ADMINISTRATION IN NATURE, HAVE BEEN DEBITED TO P & L ACCOUNT. THE ASSESSING OFFICER FELT THAT REPLY OF THE ASSESS EE WAS THE ACTUAL OWNER OF THE PROJECTS AND SO PROFIT THEREFROM WAS ATTRIBUTABLE TO IT ALON E AND SOUGHT EXPLANATION VIDE LETTER DATED 23/11/2007. THE ASSESSING OFFICER FELT THAT REPLY OF THE ASSESSEE DATED 30/10/2007 WAS CONTRADICTORY AND SO BOOKS WERE UNRE LIABLE. THE ASSESSING OFFICER THEREFORE INVOKED PROVISIONS OF SECTION 44AD AND ES TIMATED NET PROFIT AT RS. 3,11,094/- I.E. @ 8% ON RECEIPTS OF RS. 38.88 LAKHS. THE ASSE SSING OFFICER HAS HOWEVER, NOT POINTED OUT WHICH EXPENSE(S) ARE UNRELATED TO BUSIN ESS OR TO THE PROJECTS ALONE. THE ASSESSING OFFICER HAS NOT POINTED OUT TO ANY INSTAN CE IN WHICH SUCH AN EXPENSE, DEBITED TO P & L ACCOUNT WAS RECOVERED FROM THE PROJECT(S). THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY DETAILS/INSTANCES OF UNVOUCHE D EXPENSES, AND OTHER DEFECTS IN THE BOOKS OF ACCOUNT. THE REJECTION OF BOOKS OF ACCOUN T, IN SIMILAR FACTS WAS NOT UPHELD BY THE CIT(A) IN RESPECT TO A.Y. 1997-98, IN THE AFORE MENTIONED APPEAL ORDER ALSO. THE APPELLANT HAD FURNISHED EXPLANATION TO THE ASSESSIN G OFFICER IN HIS REPLY DATED 30/10/2007 AND 26/12/2007. THUS ON A HOLISTIC CONS IDERATION, THE REJECTION OF BOOKS OF ACCOUNT AND ESTIMATION OF PROJECTS U/S. 44AD, CANNO T BE UPHELD. THE ADDITION OF RS. 3,11,094/- IS THEREFORE DELETED AND RELATED GROUND OF APPEAL IS ALLOWED. 19. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE I S NOW IN APPEAL BEFORE US. BEFORE US, LD. DR RELIED ON THE ORDER OF ASSESSING OFFICER. ON THE OTHER HAND, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE ASS ESSING OFFICER AND LD. CIT(A). HE THUS SUPPORTED THE ORDER OF LD. CIT(A). ITA NO 2143/AHD/09 & C.O NO. 145/A/09 . A.Y. 2000-2001 12 20. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD. CIT(A) WHILE DELETING THE ADDITION HA S NOTED THAT ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD OF ANY DETAI LS/INSTANCES OF UN-VOUCHED EXPENSES AND NOT POINTED ANY INSTANCE IN WHICH THE EXPENSES DEBITED TO PROFIT AND LOSS ACCOUNT ETC. WAS RECOVERED FROM THE PROJEC T. HE FURTHER NOTED THAT ON SIMILAR FACTS FOR A.Y. 97-98, THE REJECTION OF BOOK S OF ACCOUNTS WAS NOT UPHELD BY LD. CIT(A). BEFORE US, REVENUE WAS NOT BROUGHT ANY MATERIAL TO CONTROVERT THE FINDING OF LD. CIT(A). WE THEREFORE FIND NO REASON TO INTERFERE WITH HIS ORDER. THUS THIS GROUND OF REVENUE IS DISMISSED. 21. THUS THE APPEAL OF REVENUE IS PARTLY ALLOWED FO R STATISTICAL PURPOSES. 22. IN THE RESULT, THE APPEAL OF REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE C.O. OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 27 - 08 - 2014. SD/- SD/- (MUKUL KR. SHRAWAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, AHMEDABAD