Shreyans Builders, CHENNAI V. DCIT, CHENNAI

ITA 246/CHNY/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9715 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 19-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITA
• Assessee Lawyers: T BANUSEKAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.246/CHNY/2018 ( )( / ASSESSMENT YEAR :2009-10 M/S SHREYANS BUILDERS, 5C, EGA TRADE CENTRE, 809, POONAMALLEE HIGH ROAD, KILPAUK, CHENNAI - 600 010. PAN : AAZFS 1507 K V. THE DEPUTY COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE 10(1), CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH. T. BANUSEKAR, CA -.+, / 0 / RESPONDENT BY : MS. ANITA, JCIT 1 / 2% / DATE OF HEARING : 25.10.2018 3') / 2% / DATE OF PRONOUNCEMENT : 03.12.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -12, CHENNAI, DATED 11.12.2017 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2 I.T.A. NO.246/CHNY/18 2. SH. T. BANUSEKAR, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THIS IS SECOND ROUND OF LITIGATION B EFORE THIS TRIBUNAL. IN THE FIRST ROUND OF LITIGATION, ACCORDING TO THE LD. REPRESENTATIVE, THIS TRIBUNAL BY AN ORDER DATED 06.06.2014, REMITTED BAC K THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THE CERTI FICATE OF THE ARCHITECT PRODUCED BY THE ASSESSEE. AFTER CONSIDERING THE CE RTIFICATE OF THE ARCHITECT, ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSING OFFICER ONCE AGAIN FIXED THE PERCENTAGE OF THE WORK IN PROGRESS AT 91%. REFERRING TO THE ASSESSMENT ORDER, THE LD. REPRESENTATIVE SUBMIT TED THAT THE ASSESSING OFFICER FOUND THAT THERE WAS NO BASIS FOR ARRIVING AT 85% OF WORK IN PROGRESS BY THE ARCHITECT. REFERRING TO TH E ORDER OF THE CIT(APPEALS) DATED 27.12.2012, PASSED IN THE FIRST ROUND OF LITIGATION, MORE PARTICULARLY, AT PAGE 7 OF THE ORDER, A COPY OF WHICH IS AVAILABLE AT PAGE 8 OF THE PAPER-BOOK, THE LD. REPRESENTATIVE SU BMITTED THAT FOR THE ASSESSMENT YEAR 2005-06, THE ASSESSEE DECLARED THE PERCENTAGE COMPLETION AT 19%. FOR THE ASSESSMENT YEAR 2006-07 , IT WAS OFFERED AT 30%. FOR THE ASSESSMENT YEAR 2007-08, THE ASSESSEE OFFERED THE PERCENTAGE COMPLETION AT 58%. THESE THREE YEARS, A CCORDING TO THE LD. REPRESENTATIVE, THE ASSESSING OFFICER ACCEPTED THE PERCENTAGE OF COMPLETION OF THE PROJECT. FOR THE ASSESSMENT YEAR 2008-09 ALONE, THE ASSESSING OFFICER DISPUTES THE PERCENTAGE OF COMPLE TION OF THE PROJECT. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE D ECLARED 85% OF 3 I.T.A. NO.246/CHNY/18 PROJECT COMPLETION. HOWEVER, THE ASSESSING OFFICER TOOK IT AT 91%. IF THE ASSESSING OFFICER TOOK IT AT 91% FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THEN CORRESPONDINGLY, THE OPENING PE RCENTAGE OF PROJECT COMPLETION ALSO HAS TO BE CHANGED. IN THAT CASE, T HE TAXABLE INCOME WOULD BE REDUCED AND THE ASSESSEE HAS TO PAY ONLY L ESSER TAX. HOWEVER, THE ASSESSING OFFICER HAS NOT TOUCHED THE OPENING PROJECT COMPLETION EITHER FOR THE ASSESSMENT YEAR UNDER CON SIDERATION OR FOR THE NEXT ASSESSMENT YEAR. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE PERCENTAGE FIXED BY THE ASSESSING OFFICER AT 91 % IS NOT JUSTIFIED. ACCORDING TO THE LD. REPRESENTATIVE, THERE IS NO BA SIS FOR THE ASSESSING OFFICER TO ADOPT 91% OF PROJECT COMPLETION. FOR TH E SUBSEQUENT YEAR, THE ASSESSEE HAS OFFERED THE PROFIT FOR TAXATION AND PA ID TAXES. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSING OFFICER HAS N OT DISPUTED THE METHOD OF ACCOUNTING CONSISTENTLY FOLLOWED BY THE A SSESSEE. WHAT IS DISPUTED IS THE PERCENTAGE OF COMPLETION OF THE PRO JECT FOR THE YEAR UNDER CONSIDERATION ALONE. IN RESPECT OF THE EARLIER THR EE YEARS AND SUBSEQUENT YEAR, THE ASSESSING OFFICER HAS NOT DISPUTED THE PE RCENTAGE OF PROJECT COMPLETION DECLARED BY THE ASSESSEE. THEREFORE, TH E CIT(APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER. 3. ON THE CONTRARY, MS. ANITA, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT IN THE FIRST ROUND OF LITIGATION, TH E TRIBUNAL REMITTED BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO RECONSIDER THE MATTER IN 4 I.T.A. NO.246/CHNY/18 THE LIGHT OF CERTIFICATE ISSUED BY THE ARCHITECT. THE ASSESSING OFFICER, AFTER CONSIDERING THE CERTIFICATE OF THE ARCHITECT, FOUND THAT THERE WAS NO BASIC MATERIAL ON RECORD. THE ASSESSING OFFICER HA S ALSO FOUND THAT THERE WAS NO BASIS FOR THE ARCHITECT TO CERTIFY THE PROJECT. ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER FOUND THAT THE ARCHITECT IS NOT THE COMPETENT PERSON TO CERTIFY THE COMPLETION OF PROJE CT. THE SALE VALUE DECLARED BY THE ASSESSEE WORKS OUT TO 91% OF THE WO RK. ACCORDING TO THE LD. D.R., THE ACTUAL SALE VALUE IS 61,19,25,900/-. HOWEVER, WHAT WAS DECLARED BY THE ASSESSEE IS ONLY 51,40,17,756/-. THEREFORE, ACCORDING TO THE LD. D.R., THE DIFFERENCE OF 4,28,34,813/- WAS ASSESSED AS UNDISCLOSED INCOME AND BROUGHT TO TAXATION. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE IS FOLLOWING PROJECT COMPLETION METHOD. T HE ASSESSING OFFICER ADMITTEDLY ACCEPTED THE METHOD OF ACCOUNTING. FOR EARLIER THREE ASSESSMENT YEARS, IT IS ALSO NOT IN DISPUTE THAT TH E PERCENTAGE OF COMPLETION OF EARLIER WAS ACCEPTED BY THE ASSESSING OFFICER. IN OTHER WORDS, THE OPENING PERCENTAGE OF COMPLETION FOR THE YEAR UNDER CONSIDERATION IS ACCEPTED BY THE ASSESSING OFFICER. NOW ON THE BASIS OF THE SALE VALUE, THE ASSESSING OFFICER ESTIMATED THE PROJECT COMPLETION AT 91% AS AGAINST 84% DECLARED BY THE ASSESSEE. AS RI GHTLY CLAIMED BY THE LD. REPRESENTATIVE FOR THE ASSESSEE, IF THE CLOSING PERCENTAGE OF PROJECT 5 I.T.A. NO.246/CHNY/18 COMPLETION WAS ALTERED, THEN THE OPENING PERCENTAGE OF PROJECT COMPLETION FOR NEXT ASSESSMENT YEAR WILL ALSO BE AL TERED CORRESPONDINGLY. 5. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE PERCENTAGE OF COMPLETION FOR EARLIER THREE YEARS AN D SUBSEQUENT YEAR IS NOT IN DISPUTE, THERE IS NO REASON FOR DISPUTING TH E PERCENTAGE OF COMPLETION AT 84% AS DECLARED BY THE ASSESSEE. THE SALE VALUE DECLARED BY THE ASSESSEE CANNOT ALONE BE BASIS FOR THE PURPOSE OF ESTIMATING THE PERCENTAGE OF COMPLETION METHOD. TH E ACTUAL WORK EXECUTED BY THE ASSESSEE HAS TO BE TAKEN INTO CONSI DERATION. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHE N THE ASSESSING OFFICER HIMSELF ACCEPTED THE PERCENTAGE OF COMPLETION AS DE CLARED BY THE ASSESSEE FOR EARLIER ASSESSMENT YEARS AND FOR THIS ASSESSMENT YEAR, THE OPENING WORK IN PROGRESS WAS ALSO ACCEPTED, THERE I S NO REASON FOR DOUBTING THE CLAIM OF PERCENTAGE OF COMPLETION ON T HE BASIS OF SALE VALUE. THEREFORE, THIS TRIBUNAL IS UNABLE TO UPHOL D THE ORDERS OF THE AUTHORITIES BELOW. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ADDITION MADE BY THE ASSESSING OF FICER IS DELETED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 6 I.T.A. NO.246/CHNY/18 ORDER PRONOUNCED IN THE COURT ON 3 RD DECEMBER, 2018 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESA N) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 3 RD DECEMBER, 2018. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-12, CHENNAI 4. PRINCIPAL CIT-3, CHENNAI 5. 7: -2 /DR 6. ;( < /GF.