The DCIT, Circle-2, JUNAGADH V. M/s. Mangal Murty Market, Keshod

ITA 218/RJT/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72548 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-06-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 11-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MA THEWS D R RE
• Assessee Lawyers: MJ RANPURA
• Keywords: Block assessment

Judgement Text

I , IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. . . . . BEFORE SHRI T. K. SHARMA JM AND SHRI D. K. SRIVASTAVA AM ITA NO. 2 18/RJT/2011 R R / ASSESSMENT YEAR 200 1 - 02 THE DY. COMMISSIONER OF INCOME - TAX , CIRCLE - 2, JUNAGADH. ( / APPELLANT) M/S. MANGAL MURTY MARKET, OPP: CIVIL HOSPITAL, KESHOD. PAN : A ADFM3254D / RESPONDENT / REVENUE BY SHRI K. C. MA THEWS, D R. RE / ASSESSEE BY SHRI M. J. RANPURA , CA. / DATE OF HEARING 06 - 06 - 2013 / DATE OF PRONOUNCEMENT 01 - 0 8 - 2013 / ORDER . . , / T. K. SHARMA, J. M. : THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DATED 2 1 - 0 2 - 201 1 OF CIT (A) - IV, RAJKOT DELETING THE GP ADDITION OF RS.8,09,100/ - MADE BY AO FOR THE ASSESSMENT YEAR 200 1 - 02. 2. T HE FACTS , IN BRIEF ARE THAT THE ASSESSEE IS A FIRM ENGAGE D IN CONSTRUCTION OF COMMERCIAL - CUM - RESIDENTIAL FLATS. FOR THE ASSESSMENT YEAR UN DER APPEAL, IT FILED THE RETURN OF IN COME ON 3 0 - 0 7 - 2002 DECLARING TOTAL LOSS AT RS. 9 3,629 / - . AO FRAMED THE ASSESSMENT U/S.143(3) OF THE I.T. ACT, 1961 ON 2 9 - 03 - 2004 WHEREIN H E ESTIMATED THE GP @ 73.63% AND CONSEQUENTLY, COMPUTED THE TOTAL INCOME OF RS. 7,97,2 25 / - AS AGAINST DECLARED LOSS OF RS.93,629/ - . IN THIS ASSESSMENT ORDER, THE AO ADOPTED THE SALES FIGURE OF RS.13,80,000/ - WHICH WAS DULY CONSIDERED IN WORKING OUT INCOME I NCLUDED IN SETTLEMENT APPLICATION BEFORE SETTLEMENT COMMISSION . 3. ON APPEAL, IN THE IMPUGNED ORDER, THE LD. CIT (A) CONFIRMED THE ADDITION OF RS.81,760/ - OVER AND ABOVE THE LOSS OF RS.93,629/ - AND DELETED THE ADDITION OF RS.7,97,230/ - . THE REASONING GIVE N BY LD. CIT (A) FOR DELETING THE ADDITION IS CONTAINED IN PARA - 3.2 AND 3.3, WHICH READS AS UNDER: - ITA 2 18 - 201 1 2 3.2 I HAVE CAREFULLY CONSIDERED THE FINDING GIVEN BY THE ASSESSING OFFICER AND THE SUBMISSION OF THE AR OF THE APPELLANT. FROM THE FACTS, IT TRANSPIRES TH AT THE APPELLANT FIRM, ENGAGED IN CONSTRUCTION ACTIVITIES, HAD CARRIED OUT ONE PROJECT KNOWN AS MANGAL MURTI MARKET. DURING THE COURSE OF SEARCH, VARIOUS DOCUMENTS AND PAPERS RELATING TO THIS PROJECT, BEING INCRIMINATING IN NATURE, WAS FOUND AND SEIZED. SINCE THE PROCEEDINGS BEFORE THE HONBLE SETTLEMENT COMMISSION GOT ABATED, THE MATTER WAS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER. THE BLOCK ASSESSMENT WAS FINALLY COMPLETED ON 31.3.2009 AND THE PERIOD COVERED THEREIN WAS FROM 1.4.1988 TO 3.9. 1998. IT IS ALSO SEEN THAT BEFORE THE HONBLE SETTLEMENT COMMISSION, THE APPELLANT HAD ADMITTED ADDITIONAL INCOME OF RS.9,09,684 I.E.RS.21,613/ - FOR THE BLOCK PERIOD, RS.1,12,750/ - FOR ASSESSMENT YEAR 1999 - 2000 AND RS.7,75,321/ - FOR ASSESSMENT YEAR 2000 - 0 1. IT IS ALSO FOUND FROM RECORDS THAT THE ASSESSING OFFICER HAD FINALLY ASSESSED THE APPELLANTS INCOME FOR ASSESSMENT YEAR 99 - 00 AND 2000 - 01 AND THE REGULAR INCOME SO SHOWN BY THE APPELLANT, PLUS THE ADDITIONAL INCOME OFFERED BEFORE THE HONBLE SETTLEMENT COMMISSION BY THE APPELLANT. FROM PERUSAL OF THE BLOCK ASSESSMENT ORDER, I FIND THAT THE ASSESSING OFFICER HAS ESTIMATED THE PROFIT RATIO OF THE APPELLANT AT 15% AND ESTIMATED THE PROFIT FROM THIS PROJECT AT RS.20,21,830/ - . I ALSO FIND FROM RECORDS THAT , THE APPELLANT HAD SOLD THE UNITS IN THE BLOCK PERIOD, THOUGH HOWEVER, THE DOCUMENTS WERE EXECUTED IN THE SUBSEQUENT YEARS. ACCORDING TO THE AR OF THE APPELLANT, THE SALE CONSIDERATION OF RS.13,80,000/ - FOR 10 FLATS WHICH WAS RECEIVED DURING THE YEAR UND ER CONSIDERATION IS DULY COVERED IN THE SALES FIGURE FOR THE PERIOD 1.4.99 TO 31.3.2000 AND WHICH HAS ALREADY BEEN OFFERED BEFORE THE HONBLE SETTLEMENT COMMISSION. HOWEVER, AS THE DOCUMENTS WERE NOT EXECUTED AND GOT REGISTERED WITH THE SUB - REGISTRAR AT T HE RELEVANT TIME, THE SAME WERE EXECUTED AND GOT REGISTERED DURING THE YEAR UNDER REFERENCE ONLY. ON THE OTHER HAND, THE ASSESSING OFFICER HAS WORKED OUT THE GROSS PROFIT AT 73.60% BY RECASTING THE APPELLANTS TRADING ACCOUNT. 3 .3 HOWEVER, THE SALES CONS IDERATION OF 10 FLATS HAS BEEN OFFERED IN WORKING OUT THE INCOME DISCLOSED BEFORE THE HONBLE SETTLEMENT COMMISSION IS NOT FOUND PRIMA - FACIES VERIFIABLE. THE APPELLANT HIMSELF HAS SHOWN THE SALES CONSIDERATION OF RS.1380000/ - IN TRADING ACCOUNT AS MENTION ED BY THE ASSESSING OFFICER ON PAGE - 3 IN PARA - 5 OF THE ASSESSMENT ORDER. ONCE THE PROFIT IS SHOWN IN THE RETURN OF INCOME HOW CAN IT BE IGNORED. APPELLANT IS MAKING CONTRADICTORY SUBMISSION. ONCE INCOME IS OFFERED FOR TAXATION, THE ASSESSING OFFICER HAS NO OPTION BUT TO TAX THE SAME. HOWEVER, THE ASSESSING OFFICERS WORKING OF PROFIT @ 70.63% IS ARBITRARY AND WRONG. THUS, ONCE THE ASSESSING OFFICER HAD ARRIVED AT PROFIT OF 15% FOR THE ENTIRE PROJECT AND WHEN THERE EXISTED NO NEW COST OF CONSTRUCTION INC URRED DURING THE YEAR UNDER CONSIDERATION, EXCEPT SOME MINOR MISCELLANEOUS EXPENDITURE OF RS.40,355/ - , THERE IS NO LOGIC ON THE PART OF THE ASSESSING OFFICER TO ARRIVE AT A WHOPPING GP OF 73.63%. IT IS FOUND THAT IN THE BLOCK ASSESSMENT ORDER DATE 31 - 3 - 20 09 IN THE APPELLANTS CASE, THE ASSESSING OFFICER HAS CONSIDERED 15% AS THE NET INCOME FROM THE PROJECTS M/S. MAHARAJA AND M/S. MANGAL MURTI MARKET FOR THE TOTAL COST OF RS.19399322/ - . THIS YEAR APPELLANT HAS SHOWN ONLY 9% PROFIT IN TRADING ACCOUNT ON SAL E OF 10 FLATS. KEEPING IN VIEW THE FINDING OF THE ASSESSING OFFICER IN BLOCK ASSESSMENT, THIS YEAR ALSO, PROFIT IS TAKEN AT 15% OF THE SALES CONSIDERATION OF RS.1380000/ - WHICH COMES TO RS.207000/ - . APPELLANT HAS SHOWN PROFIT OF RS.125240/ - ONLY. THEREF ORE, BALANCE ADDITION OF RS.81760/ - (207000 125240) IS CONFIRMED OVER AND ABOVE LOSS OF RS.93629/ - . ACCORDINGLY, ADDITION OF RS.797230/ - IS DELETED. AGGRIEVED WITH THE ORDER OF LD. CIT (A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. ITA 2 18 - 201 1 3 4. AT THE TIM E OF HEARING BEFORE US, ON BEHALF OF REVENUE SHRI K. C. MATHEWS, DR APPEARED AND POINTED OUT THAT THE LD. CIT (A) DELETED THE GP ADDITION OF RS.8,09,100/ - WITHOUT CONSIDERING THE FACTS THAT THE PROFIT RATIO @ 73.63% WAS RIGHTLY APPLIED BY AO AND LD. CIT (A ) IS NOT CORRECT IN DELETING THE GP ADDITION MADE. AS AGAINST THIS, THE COUNSEL OF THE ASSESSEE FILED PAPER BOOK CONTAINING 31 PAGES WHICH INTER ALIA INCLUDED SUBMISSION MADE BEFORE AO VIDE LETTER DATED 23 - 03 - 2009 ALONG WITH ENCLOSURES, COPY OF ORDER OF TH E AO PASSED U/S.158BC R.W.S. 245HA(2) OF THE INCOME TAX ACT, 1961 DATED 31 - 03 - 2009 FOR THE BLOCK PERIOD FROM 01 - 04 - 1988 TO 03 - 09 - 1998 AND THE FOLLOWING TWO ASSESSMENT ORDERS: - (I) COPY OF ORDER OF THE AO PASSED U/S.143(3) R.W.S.245HA(2) OF THE INCOME TAX AC T, 1961 DATED 31 - 03 - 2009 FOR A.Y. 2000 - 01. (II) COPY OF ORDER OF THE AO PASSED U/S.143(3) R.W.S.245HA(2) OF THE INCOME TAX ACT, 1961 DATED 31 - 03 - 2009 FOR A.Y. 1999 - 2000. COUNSEL OF THE ASSESSEE POINTED OUT THAT ALL THE AFORESAID FOUR DOCUMENTS WERE BEFOR E AO AS WELL AS FIRST APPELLATE AUTHORITY. THE LD. CIT (A) AFTER TAKING INTO CONSIDERATION THE FACTUAL MATRIX OF THE CASE I.E. BEFORE HONBLE SETTLEMENT COMMISSION, THE ASSESSEE HAD ADMITTED ADDITION INCOME OF RS.9,09,684/ - I.E. RS.21,613/ - FOR THE BLOCK PERIOD, RS.1,12,750/ - FOR THE ASSESSMENT YEAR 1999 - 2000 AND RS.7,75,321/ - FOR THE ASSESSMENT YEAR 2000 - 01. IN PARA - 3.3 OF THE IMPUGNED ORDER, THE LD. CIT (A) AFTER TAKING INTO CONSIDERATION APPLIED GP RATE OF 15% AS AGAINST 9% SHOWN IN TRADING ACCOUNT OF S ALE OF 10 FLATS. IN THIS MANNER, THE LD. CIT (A) CONFIRMED THE ADDITION TO THE EXTENT OF RS.81,760/ - . KEEPING IN VIEW THE FACTUAL MATRIX DISCUSSED BY LD. CIT (A), THE COUNSEL OF THE ASSESSEE POINTED OUT THAT THE VIEW TAKEN BY LD. CIT (A) BE UPHELD. 5. HA VING HEARD BOTH SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WHETHER THE SALES OF CONSIDERATION OF 10 FLATS HA VE BEEN OFFERED IN WORKING OUT THE INCOME DECLARED BEFORE THE HONBLE SETTLEMENT COMMISSION, ACCORDING TO LD. CIT (A), I S NOT VERIFIABLE. THE ASSESSEE HAS SHOWN SALES CONSIDERATION OF RS.13,80,000/ - IN TRADING ACCOUNT . ONCE THE PROFIT IS SHOWN IN THE RETURN OF INCOME, THEREFORE IT CANNOT BE IGNORED AND AO HAS NO OPTION BUT TO TAX THE SAME. THIS YEAR THE ASSESSEE HAS SHOWN 9% PROFIT IN ITA 2 18 - 201 1 4 TRADING A/C. ON SALE OF 10 FLATS. IN BLOCK ASSESSMENT, AO TAKEN AT 15% OF SALE CONSIDERATIONS. WE FOUND CONSIDERABLE FORCE IN VIEW TAKEN BY LD. CIT (A) THAT WORKING OF PROFIT @ 73.63% BY AO IS ARBITRARY AND WRONG. THE LD. CIT (A) ADOPTED THE RATE OF 15% AND WORKED O UT THE ADDITION OF RS.81,760/ - OVER AND ABOVE LOSS OF RS.93,629/ - WHICH IN OUR OPINION, IS FAIR AND REASONABLE. WE THEREFORE DECLINED TO INTERFERE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. 7 . THIS O RDER PRONOUNCED IN O PEN COURT ON THE DATE MENTIONED HEREINABOVE. SD/ - SD/ - ( . . D. K. SRIVASTAVA ) ( . . R / T. K. SHARMA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / ORDER DATE 01 - 0 8 - 2013. /RAJKOT NVA/ - JO O / COPY OF ORDER FORWARDED TO: - 1 . / APPELLANT - THE DY. COMMISSIONER OF INCOME - TAX , CIRCLE - 2, JUNAGADH. 2 . / RESPONDENT - M/S. MANGAL MURTY MARKET, OPP: CIVIL HOSPITAL, KESHOD. 3 . I / CONCERNED CIT - III , RAJKOT. 4 . - / CIT (A) - IV, RAJKOT. 5 . I , I , / DR, ITAT, RAJKOT 6 . R / GUARD FILE. / BY ORDER TRUE COPY. PRIVATE SECRETARY, ITAT, RAJKOT