The Assistant Commr. of Income Tax, Cen. Circle-2, RAJKOT-GUJARAT V. M/s P.P. Realities, RAJKOT-GUJARAT

ITA 258/RJT/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8871 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 04-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MJ RANPURA
• Keywords: Rejection of books of accounts; Fair market value

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT , , BEFORE SHRI PRADIP KUMAR KEDIA , A CCOUNTANT MEMBER & SHRI MAHAVI R PRASAD , JUDICIAL MEMBER ./ I.T.A. NO. 258 /RJT/201 5 ( / ASSESSMENT YEAR : 2010 - 11 ) ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIR - 2, RAJKOT / VS. M/S. P.P. REALITIES PRADHUMAN GREEN CITY, 80 FEET ROAD, VRUNDAVAN SOCIETY , RAJKOT . ./ ./ PAN/GIR NO. : AAJFP 8334 K ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI PRAVIN VERMA, D.R. / RESPONDENT BY : SHRI M. J. RANPURA, C.A. / DATE OF HEARING 12/03/2018 / DATE OF PRONOUNCEMENT 16 / 0 3 /201 8 / O R D E R PER MAHAVIR PRASAD JUDICIAL M EMBER : THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) - 11 , AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO. CIT(A) - 11/482 - R/CC.2/2014 - 15 DATED 1 1/03 /201 5 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.1 4 3(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') DATED 28 /03/2013 RELEVANT TO ASSESSMENT YEAR (AY) 2010 - 11 . ITA NO. 258 /RJT / 201 5 ACIT VS. M/S.P.P. REALITIES PRADHUMAN GREEN CITY ASST.YEAR 2010 - 11 - 2 - 2. THE G ROUND OF APPEAL RAISED BY THE REVENUE READ AS UNDER: - ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF SUPPRESSION OF COST NOT CONSTRUCTION OF FLAT SOLD DURING THE YEAR (DEDUCTION U/S.80IB(10) NOT GRANTED TO EXTENT) . 3. BRIEFLY STATED , FACTS ARE THAT T H E ASSESSEE FIRM WAS ENGAGED IN THE BUSINESS OF REAL ESTATE AND BUILDING CONSTRUCTION ACTIVITIES . HE CLAIMED DEDUCTION U/S.80IB(10) OF THE ACT ON PROFIT DERIVED FROM HOUS ING PROJECT PRADYUMAN GREEN CITY . THE RATE OF PROFIT WAS DISCLOSED AS 60.47% OF THE TOTAL SALES. 4. THE ASSESSING OFFICER , ON THE BASIS OF THE HIGHER RATE OF PROFIT, CON CLUDED THAT THE PROFIT WAS SHOWN FOR THE PURPOSE OF AVAILING MORE CLAIM OF DEDUCTIO N U/S.80IB (10) OF THE ACT. HE REFERRED FLAT NO.202, WHICH WAS PURCHASED BY SMT. SHANTADEVI AGARWAL FROM THE ASSESSEE, TO THE VALUATION CELL OF THE DEPARTMENT FOR DETERMINING FAIR MARKET VALUE . H E RECEIVED THE REPORT OF THE DVO, RAJKOT WHEREIN THE FAIR MARK ET VALUE OF FLAT NO.202 WAS ESTIMATED AT RS.28,05,000/ - AS ON 23/03/2010. IN THE REPORT, THE DVO ESTIMATED COST OF CONSTRUCTION @ RS.14,570/ - PER SQ. MTR. AGAINST THE RECORDED COST O F CONSTRUCTION @RS.6, 316/ - I N THE BOOKS OF THE ASSESSEE. IN VIEW OF THIS D IFFERENCE IN THE COST OF CONSTRUCTION, THE ASSESSING OFFICER ARRIVED AT A CONCLUSION THAT THERE WAS SUPPRESSION IN THE COST OF CONSTRUCTION OF THE FLAT UNDER CONSIDERATION AND ACCORDINGLY, HE AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE, REJECTED THE BOOKS OF ACCOUNTS U/S.145(3) OF THE ACT AND ESTIMATED PROFIT ON SALE OF 15 FLATS OF THE PROJECT AND ASSESSED TOTAL INCOME AT RS.45,36,620/ - . 5. AGAINST THE SAID ORDER APPELLANT PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO PARTLY ALLOWED THE APPEAL OF THE APPELLANT. ITA NO. 258 /RJT / 201 5 ACIT VS. M/S.P.P. REALITIES PRADHUMAN GREEN CITY ASST.YEAR 2010 - 11 - 3 - 6. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGNED ORDER. IN THIS CASE, APPELLANT FURNISHED AUDIT ACCOUNT S , BILLS VOUCHER S , BANKING RECORD S AND OTHER RELEVANT DETAILS JUSTIFYING COST OF CONSTRUCTION, SALES ETC. DURING THE COURSE O F PROCEEDING , ASSESSING OFFICER DID NOT DISPUTE ABOUT THE METHOD OF ACCOUNTING REGULARLY FOLLOWED BY THE ASSESSEE ALSO DID NOT POINT OUT ANY SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNTS AND BILLS OF VOUCHER S, WHICH HE EXAMINED DURING PROCEEDING. ASSESSING OFF ICER HIMSELF HAS MENTIONED IN PARA 5 AND ASSESSMENT ORDER THAT O N PERUSAL OF AFORESAID DETAILS, IT CAN BE SEEN THAT NET PROFIT SHOWN BY THE ASSESSEE COM ES TO 60.47 % OUT OF TOTAL SALES. SAME IS APPARENTLY THE RATE OF PROFIT SHOWN BY THE ASSESSEE IS ON HIGHER SIDE IN THE LINE OF BUSINESS ASSESSEE IS INVOLVED . 7. THERE IS SUBSTANCE IN THE PLEA OF THE ASSESSEE THAT PROFIT IS SO HIGH BECAUSE OF THE REASON, THERE WAS NO COST OF LAND WAS INCLUDED IN THE PROJECT AS LAND WAS OF HIS ANCESTRAL PROPERTY. IN MOS T OF SUCH PROJECTS , THE LAND COST INVARIABLY MORE THAN THE CONSTRUCTION COST. IN OUR CONSIDERED OPINION, LD. CIT(A) HAS PASS ED DETAILED AND REASONED ORDER AND WE ARE NOT INCLINE TO INTERFERE IN THE SAME. 8. IN THE RESULT, APPEAL FILED BY THE DEPARTMENT I S DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 16/ 0 3 /201 8 SD/ - SD / - ( ) ( ) ( PRADIP KUMAR K EDIA ) ( MAHAVIR PRASAD ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 16 /03 /2018 PRITI YADAV , SR. PS ITA NO. 258 /RJT / 201 5 ACIT VS. M/S.P.P. REALITIES PRADHUMAN GREEN CITY ASST.YEAR 2010 - 11 - 4 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - 11 , AHMEDABAD. 5. , , /DR,ITAT, RAJKOT 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, RAJKOT 1. DATE OF D ICTATION 12/03/2018 (DICTATION - PAD 3 PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13/03/2018 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S .. 5. DATE ON WHICH THE FAIR ORDER IS PL ACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S . 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE F ILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER .. 10. DATE OF DESPATCH OF THE ORDER