S.P. ENTERPRISES, THANE V. ITO WD 2(4), THANE

ITA 24/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49348 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 11-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 04-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAY KUMAR
• Assessee Lawyers: K SHIVARAM
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI PRAMOD KUMAR, A.M. AND SHRI V. DURGA RA O, J.M. ITA NO. 24/MUM/2010 ASSESSMENT YEAR: 2005-06 S.P. ENTERPRISES, APPELLANT SHOP NO. 7,8 & 9 PRATIKSHA ENCLAVE, NEW GOLDEN NEST ROAD, OPP. INDRALOK, PHASE-3, BHAYANDER (E), THANE 401105 (PAN AAXFS7678H)) VS. INCOME TAX OFFICER, RESPONDENT WARD 2(4), THANE. APPELLANT BY : MR. K. SHIVARAM & MR. PARAS SAVLA RESPONDENT BY : MR. JAY KUMAR . ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF CIT- I, THANE PASSED U/S 263 OF THE ACT, ON 18/0 3/2009 FOR THE ASSESSMENT YEAR 2005-06. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE DIRECTED AGAINST ORDER OF CIT PASSED U/S 263 OF THE ACT. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A BUILDER AND DEVELOPER AND FILED ITS RETURN OF INCOME DECLAR ING TOTAL INCOME OF RS. 41,789/-. ASSESSMENT WAS MADE U/S 143(3) OF THE ACT ON 28/03/07 ASSESSING THE INCOME OF THE ASSESSEE AT RS . 1,16,790/-.ON PERUSAL OF RECORDS, THE CIT NOTICED THAT THE FOLLOW ING ISSUES HAD NOT ITA NO. 24/M/2010 S.P. ENTERPRISES 2 BEEN PROPERTY EXAMINED BY THE AIO WHILE COMPLETING ASSESSMENT U/S 143(3) OF THE ACT:- 1. IT IS SEEN FROM RECORDS THAT ASSESSEE IS FOLLOWI NG THE PROJECT COMPLETION METHOD OF ACCOUNT. HOWEVER, THE SAME IS NOT INCONFORMITY WITH THE ACCOUNTING STANDARDS. ASSESSE E WAS HENCE ASKED TO SHOW-CAUSE AS TO WHY THE PERCENTAGE COMPLE TION METHOD OF ACCOUNTING SHOULD NOT BE ADOPTED. 2. THE ASSESSEE HAS UNDERTAKEN CONSTRUCTIONS OF BUI LDING NIRMAL PARK BUILDING 6 WHICH WAS NEARLY COMPLETE AND FINI SHING WORK WAS GOING ON WHEREAS PRATIKSHA BUILDING WAS JUST ST ARTED DURING FINANCIAL YEAR 2004-05 (AS MENTIONED IN ANNEX. 3 TO SUBMISSION DATED 25/11/2006 BY ASSESSEE FIRM). NIRMAL PARK BLD G. NO. 6 CONSIST OF 50 FLATS AND SHOPS WHEREAS THERE ARE ONL Y 41 FLATS & SHOPS IN PRATIKSHA BLDG. ASSESSEE HAD SOLD FLATS TO THE TUNE OF RS. 63,10,186/- (AS SEEN FROM SCHEDULE A TO P&L A /C) WHICH HAS BEEN ROUTED THROUGH PROFIT AND LOSS ACCOUNT. AS SESSEE HAD ALSO RECEIVED ADVANCE AGAINST SALE OF FLAT AND SHOP S OF NIRMAL PARK BLDG. NO. 6 AND PRATIKSHA BLDG. AGGREGATING TO RS. 98,71,750/- AND RS. 41,35,500/- RESPECTIVELY. THE S AME HAS BEEN REFLECTED IN THE BALANCE SHEET BUT NOT ROUTED THROUGH P&L A/C AND NOT OFFERED FOR TAXATION. THE ASSESSEE WAS HENCE ASKED TO EXPLAIN AS TO WHY SAME SHOULD NOT BE TREATED AS ITS INCOME. 4. IN VIEW OF THE ABOVE, THE CIT WAS OF THE VIEW TH AT THE ORDER OF THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTERES TS OF REVENUE, THEREFORE, NOTICE U/S 263 ISSUED ON 02/03/2009 ASKI NG ASSESSEE TO SHOW CAUSE AS TO WHY NECESSARY ACTIONS PROVIDED U/S 263 OF THE ACT SHOULD NOT BE TAKEN FOR THE VARIOUS SHORTCOMINGS ME NTIONED THEREIN. SINCE NO COMPLIANCE HAD BEEN MADE WITH THE SAID NOT ICE, THE CIT HELD THAT THE ASESSSEE WAS NOT HAVING ANY EXPLANATION TO OFFER ON THE ISSUES RAISED IN THE 263 NOTICE. THE ONUS WAS ON TH E ASSESSEE TO EXPLAIN EACH AND EVERY CLAIM MADE IN THE RETURN. TH E CIT, THEREFORE, SET ASIDE THE ORDER OF AO AND DIRECTED THE AO TO RE FRAME THE ASSESSMENT DENOVO AFTER GIVING PROPER OPPORTUNITIES AND EXAMINING THE RELEVANT DETAILS. IT WAS ALSO DIRECTED TO ADOPT THE PERCENTAGE COMPLETION OF ACCOUNTING WHILE FRAMING THE FRESH OR DER. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. ITA NO. 24/M/2010 S.P. ENTERPRISES 3 5. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE CIT HAS PASSED THE ORDER U/S 263 WITHOUT G IVING SUFFICIENT OPPORTUNITY TO PRESENT THE CASE. IT IS FURTHER CONT ENDED THAT THE CIT WRONGLY ASSUMED JURISDICTION ON THE PRESUMPTION THA T THE ASSESSEE FOLLOWED PROJECT COMPLETION METHOD, WITHOUT GOING T HROUGH THE RECORDS, WHEREIN THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDS AND ALSO AUDIT PROCEEDINGS HAD SPECIFICALL Y MENTIONED THAT IT IS FOLLOWED PERCENTAGE COMPLETION. IT IS FURTHER CO NTENDED THAT CIT ERRED IN HOLDING THAT THE ASSESSMENT ORDER PASSED U /S 143(3) IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE, ON GENERAL ASSUMPTIONS AND WITHOUT POINTING OUT ANY SPECIFIC D EFECTS. 6. AT THE TIME OF HEARING, BOTH THE PARTIES HAVE A GREED THAT THIS MATTER MAY BE SENT BACK TO THE CIT AND AN OPPORTUNI TY OF HEARING TO THE ASSESSEE MAY BE PROVIDED. THE LEARNED COUNSEL F OR THE ASSESSEE HAS SUBMITTED THAT HE WILL APPEAR BEFORE THE CIT WI THOUT SEEKING ADJOURNMENT. IN THE INTEREST OF JUSTICE, WE, THEREF ORE, REMIT THE MATTER BACK TO THE FILE OF THE CIT WITH A DIRECTION TO DEC IDE THE ISSUE AFRESH AFTER PROVIDING THE REASONABLE OPPORTUNITY OF HEARI NG TO THE ASSESSEE IN THE MATTER. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF JUNE, 2011. SD/- SD/- (PRAMOD KUMAR) (V. DURG A RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 24 TH JUNE, 2011 KV ITA NO. 24/M/2010 S.P. ENTERPRISES 4 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, E BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.