The ACIT, Central Circle-2(4), Ahmedabad V. M/s. Anand Infrastructure Pvt. Ltd., Ahmedabad

ITA 2149/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8187 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 23-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PARIKH
• Assessee Lawyers: RAJESH MEENA
• Section: 133A; 2

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.2149/AHD/2014 ASSTT. YEAR : 2010-2011 ACIT, CENT.CIR.2(4) AHMEDABAD. VS. M/S.ANAND INFRASTRUCTURE P.LTD. 20-21-22, SHRI RATNA BUILDING NR. SUDHARA CIRLCE SUN-N-STEP CLUB THALTEJ,AHMEDABAD 380 015. PAN : AADCA 8939 L ( APPLICANT ) ( RESPONENT ) ASSESSEE BY : SHRI RAJESH MEENA, SR.DR REVENUE BY : SHRI D.K. PARIKH, AR / DATE OF HEARING : 11/10/2017 / DATE OF PRONOUNCEMENT: 20/11/2017 56/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST OR DER OF LD.CIT(A)-III, AHMEDABAD PASSED FOR ASSTT.YEAR 2010-11. 2. SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD.CIT (A) HAS ERRED IN DELETING ADDITION OF RS.51,49,936/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 31.3.2011 DECLARING TOTAL INCOME AT RS.17,92,047 /-. THE ASSESSEE AT THE RELEVANT TIME WAS ENGAGED IN THE BUSINESS OF CONSTR UCTION OF RESIDENTIAL FLATS AND COMMERCIAL PROPERTIES. IT HAS DEVELOPED A PROJ ECT VIZ. PANCHVATI BUNGALOWS AT RANIP, AHMEDABAD. ACCORDING TO THE A O A SURVEY UNDER ITA NO.2149/AHD/2014 2 SECTION 133A OF THE INCOME TAX ACT WAS CARRIED OUT ON 30.5.2008 IN CONNECTION WITH SEARCH CARRIED OUT IN THE GROUP CAS ES OF ADI-AVIRAT ON 23.5.2008. DURING THE COURSE OF SURVEY, CERTAIN DO CUMENTS WERE FOUND EXHIBITING RECEIPT OF ON-MONEY. THE ASSESSEE HAD S OLD TWO BUNGALOWS IN THE ASSTT.YEAR 2008-09 AND FOUR BUNGALOWS IN THE ASSTT. YEAR 2009-10 ACCORDING TO THE AO, AVERAGE PRICE FOR THESE BUNGALOWS WAS RS .33,67,334/- PER BUNGALOW. THIS PRICE WAS DETERMINED ON THE BASIS O F EVIDENCE FOUND DURING THE COURSE OF SURVEY. IN THE ASSTT.YEAR 2010-11, T HE ASSESSEE HAS SOLD 21 BUNGALOWS THEREOF, AVERAGE PRICE WAS WORKED AT OUT RS.20,79,850/-. THE AO WAS OF THE OPINION THAT SINCE AVERAGE PRICE CHARGED BY THE ASSESSEE RANGES IN- BETWEEN RS.25 LAKHS TO RS.141 LAKHS, THEREFORE, THE ASSESSEE SHOULD HAVE ESTIMATED GP AT 20% ON THE SALE SHOWN BY THE ASSESS EE AND MADE ADDITION OF RS.51,49,936/-. ON APPEAL, THE LD.CIT(A) HAS DELET ED ADDITION BY OBSERVING AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE FACTS AND THE O BSERVATIONS OF THE AO AND THE SUBMISSIONS MADE BY THE APPELLANT. THE ISSU E WHICH IS TO BE DECIDED IS WHETHER, IN THE ABSENCE OF ANY EVIDENCE OR MATERIAL REGARDING ANY RECEIPT OF ON-MONEY DURING THE ASSESS MENT YEAR UNDER CONSIDERATION, ADDITION CAN BE MADE ON THE BASIS OF SUCH ADDITION MADE IN EARLIER YEARS ON THE BASIS OF SURVEY ACTION ?. S ECONDLY, WHETHER THE ADDITION CAN BE MADE ON THE BASIS OF BUNGLOWS SOLD IN SUBSEQUENT YEAR OF THE SAME PROJECT OR WHETHER IN CASE OF REAL ESTA TE THE YEAR IS MORE IMPORTANT ? 4.1 HAVING CAREFULLY CONSIDERING THE ABOVE QUESTION S WITH REFERENCE TO THE SUBMISSIONS MADE AND THE ABOVE JUDGMENT OF THE GUJARAT HIGH COURT IN THE CASE OF CIT VS JAYABEN RATILAL SARATHI A TAX APPEAL NO. 914 OF 2012 AS ALSO THE DECISIONS OF THE HON'BLE IT AT MUMBAI IN THE CASE OF SRINIVAS DEVELOPERS P LTD ITA NO. 3495/MUM/ 2010 AND HON'BLE ITAT AHMADABAD IN THE CASE OF DHARA ASSOCIA TES ITA NO 1946 TO 1951/AHD/2007, I AM OF THE VIEW THAT THE RA TIO OF ABOVE JUDGMENTS IS SQUARELY APPLICABLE. IT IS NOTICED THA T THE AO HAS MADE ADDITION MERELY ON THE BASIS OF ADMISSION MADE BY T HE APPELLANT IN THE EARLIER YEAR DURING THE COURSE OF SURVEY ON THE BAS IS OF SOME NOTINGS IN ITA NO.2149/AHD/2014 3 THE NOTE BOOK BUT NO SUCH EVIDENCE OR MATERIAL IS F OUND DURING THE YEAR UNDER CONSIDERATION. THUS IT IS HELD THAT THE ADDIT ION AT 20% OF THE ALLEGED ON-MONEY WORKED OUT BY THE AO FOR THE YEAR UNDER APPEAL ON THE BASIS OF AVERAGE SALES PRICE OF EARLIER YEAR IS BASED MERELY ON PRESUMPTION AND NO EXTRAPOLATION IS JUSTIFIED BEYON D THE PERIOD OF SURVEY AS HELD BY GUJARAT HIGH COURT ON THE SPECIFI C QUESTION THAT WHAT IS IMPORTANT IS THE 'YEAR' AND NOT THE 'PROJEC T' AND AS THERE WAS NO MATERIAL AVAILABLE WITH THE AO WITH RESPECT TO SALE TRANSACTIONS IN THE PARTICULAR ASSESSMENT YEAR NO ADDITION COULD BE MAD E. IN MY CONSIDERED VIEW THAT THE VERY ADDITION MADE BY THE AO ON SUCH PRESUMPTION IS UNTENABLE SINCE IN THE BUSINESS OF R EAL ESTATE, A PROJECT MAY LAST FOR A NUMBER OF YEARS AND THE SALE PRICE M AY EVEN INCREASE OR DECREASE IN LATER YEARS DEPENDING UPON THE MARKET T REND. TO HOLD ON PRESUMPTION THAT SALE PRICE INCLUDING ON-MONEY FOUN D IN ONE YEAR WILL CONTINUE TO BE THE SAME IS AGAINST THE COMMON EXPER IENCE AND IS NOT BASED ON ANY LEGAL SANCTION. IN ANY CASE, NO ADDITI ON IS PERMISSIBLE MERELY ON THE GROUND THAT IN SOME EARLIER YEAR WHEN SOME NOTING WAS FOUND RELATING TO SOME BUNGALOWS SOLD WHEN NO SUCH EVIDENCE OR NOTING IS FOUND IN SUBSEQUENT YEAR. I THEREFORE DIR ECT THE AO TO DELETE THE ADDITION OF RS.51,49,936/- MADE BY THE AO. GROU ND NO.1 IS THEREFORE ALLOWED. SINCE THE ADDITION ITSELF IS DEL ETED, THE ALTERNATIVE SUBMISSION THAT THE PERCENTAGE OF GP BEING ONLY 6.8 9% AS AGAINST 20% APPLIED BY THE AO DOES NOT REQUIRE TO BE CONSIDERED . AS REGARDS THE NOTICE FOR ENHANCEMENT, FOR THE SAME REASONS AND ALSO SINCE THE FACTS IN THE CASE BEFORE THE HON'BLE RAJK OT TRIBUNAL IN THE CASE OF M/S RUSHABH VATIKA ARE QUITE DIFFERENT IN A S MUCH AS THE AMOUNT WAS ACTUALLY CREDITED BY THE ASSESSEE IN THA T CASE IN ITS PROFIT AND LOSS ACCOUNT, THE TRIBUNAL WAS CONCERNED WITH T HE SAID NET PROFIT DECLARED BY THE ASSESSEE AND THEREFORE IT WAS HELD THAT NO FURTHER DEDUCTION WAS PERMISSIBLE. THE HON'BLE RAJKOT TRIBU NAL HAS IN FACT HELD THAT THE JUDGMENT OF THE GUJARAT HIGH COURT IN THE CASE OF GURUBACHSINGH JUNEJA AND PRESIDENT INDUSTRIES ARE N OT APPLICABLE IN CASE OF ACTUAL ON-MONEY FOUND WHERE THE PROFIT ONLY CAN BE ADDED. THE HON'BLE TRIBUNAL HAS IN FACT DISTINGUISHED THE SAID JUDGMENTS AS THE FACTS IN THE CASE BEFORE THE TRIBUNAL WERE DIFFEREN T AND THERE WAS CLEAR ADMISSION OF THE GROSS AMOUNT WHICH CAME TO BE CRED ITED BY THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT HENCE THERE WAS NO CASE FOR MAKING ADDITION OF MERELY PROFIT THEREON. ITA NO.2149/AHD/2014 4 4.2. SINCE THE VERY ADDITION MADE BY THE AO AT 20% ON ALLEGED ON- MONEY IS DELETED BY ME AS ABOVE, THE ENHANCEMENT NO TICE DOES NOT STAND. I HOLD ACCORDINGLY. 4. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD. THERE IS AN OLD LEGAL DICTUM, NAMELY, FALSUS IN UNO FALSUS IN OMNIBUS. THIS DICTUM IS APPLICABLE IN CRIMINAL LAWS AND IT R ELATES TO CREDIBILITY OF WITNESSES. IT CONTEMPLATES THAT IF A PERSON WAS FO UND DEPOSING FALSELY THEN HIS CONDUCT WOULD ALWAYS BE DOUBTED. THUS, IF DURI NG THE COURSE OF SEARCH AND SURVEY WHICH IS LAST RESORT TO THE DEPARTMENT, THE ASSESSEE FOUND IN POSSESSION OF INCRIMINATING MATERIALS WHICH WERE FO RMED AS BASIS FOR CONCEALED INCOME, OBVIOUSLY FOR OTHER PERIOD ALSO, CONDUCT OF THE ASSESSEE WOULD NOT BE FREE FROM DOUBT. IN THE PRESENT CASES , DURING THE COURSE OF SURVEY, THE ASSESSEE WAS FOUND TO BE POSSESSED CERT AIN INCRIMINATING MATERIAL EXHIBITING RECEIPT OF MONEY. THIS WOULD GIVE AN IN DICATION TO THE AO TO EXAMINE ACCOUNTS OF THE ASSESSEE MORE SUSPICIOUSLY FOR OTHER ACCOUNTING YEARS ALSO, WHEREIN SAME WAS SOLD. HOWEVER, IT IS NOT AN ABSOLUTE RULE. THE AO COULD DOUBT ACCOUNTS OF THE ASSESSEE AS WELL AS DEAL EVIDENCE BY IT. BUT HE FAILED TO BRING ANY MATERIAL ON THE RECORD WHICH CAN INDICATE THAT THIS YEAR ALSO THE ASSESSEE MIGHT HAVE CHARGED HIGHER PRICE. HE HAS SIMPLY HARPED ON A BELIEF OF PROBABILITY I.E. IF IN ONE YEAR THE ASSES SEE HAS CHARGED HIGHER PRICE, AND THEN IT WOULD HAVE CHARGED THE HIGHER PRICE IN THE SUBSEQUENT YEAR ALSO. TO OUR MIND, IT COULD BE AN INFORMATION FOR STARTIN G INVESTIGATION, BUT IT COULD NOT BE CONSIDERED AS A UNIFORM RULE FOR ASSUMING TH AT ON-MONEY FOR SALE OF OTHER BUNGALOWS. THERE MAY BE ADDITIONAL FACILITIE S. THERE MAY BE SOME OTHER FACTORS FOR NEGOTIATIONS. THERE MAY BE DOWN- TREND IN MARKET PRICE. ALL THESE FACTORS ARE TO BE CONSIDERED BY THE AO BEFORE ARRIVING AT A CONCLUSION THAT INCOME OF THE ASSESSEE DESERVES TO BE DETERMIN ED BY ADOPTING 20% OF THE GROSS PROFIT ON THE TURNOVER. THE AO HAS NOT POINT ED OUT ANY DEFECT IN THE ITA NO.2149/AHD/2014 5 BOOKS. HE HAS NOT EXAMINED VENDEES OF THE BUNGALOW S. THEREFORE, WE ARE OF THE VIEW THAT THE LD.CIT(A) HAS APPRECIATED THE FA CTS IN RIGHT PERSPECTIVE AND NO INTERFERENCE IS CALLED FOR. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 20 TH NOVEMBER, 2017 AT AHMEDABAD. SD/- (MANISH BORAD) ACCOUNTANT MEMBER SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 20/11/2017