The ITO, Ward-2, Gandhinagar V. Shri Hasmukhbhai Khodidas Patel, Gandhinagar

ITA 2727/AHD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80246 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 31-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 05-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: S N DEVETIA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SRI G.C. GUPTA, VICE PRESIDENT AND SHRI ANIL CHATURVEDI, ACCOUNTAN T MEMBER INCOME TAX OFFICER, WARD-2, GANDHINAGAR (APPELLANT) VS HASMUKHBHAI KHODIDAS PATEL, PLOT NO. 689/1, PANCHVATI PARK, SECTOR-23, GANDHINAGAR-382023 (RESPONDENT) REVENUE BY: SMT. SONIA KUMAR, SR.D.R. ASSESSEE BY: SRI S.N. DEVETIA, A. R. DATE OF HEARING : 31-07-2014 DATE OF PRONOUNCEMENT : 08-08-20 14 / ORDER PER : ANIL CHATURVEDI, ACCOUNTANT MEMBER:- THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF LD. CIT(A), GANDHINAGAR, AHMEDABAD DATED 03-09-2012 FOR A.Y. 20 09-10. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON REC ORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL STATED TO BE ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. ASSESSEE FILED HIS RETURN OF I NCOME FOR AY 09-10 ON 29. ITA NO. 2727/AHD/2012 ASSESSMENT YEAR 2009-10 I.T.A NO. 2727/AHD/2012 A.Y. 2009-10 PAGE NO ITO VS. HASMUKHBHAI KHODIDAS PATEL 2 9.2009 DECLARING TOTAL INCOME OF RS. 5,81,310/-. TH E CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 1 43(3) VIDE ORDER DATED 14.12.2011 AND THE TOTAL INCOME WAS DETERMINE D AT RS 81,12,220/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A). LD. CIT(A) VIDE ORDER DATED 3.9.2012 ALLOWE D THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), REVENU E IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING EFFECTIVE GR OUND: THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DE LETING THE ADDITION MADE BY THE AO ON ACCOUNT OF SALE CONSIDERATION TRE ATED AS UNDISPUTED INCOME OF RS. 75,30,905/- 4. ON THE BASIS OF AIR INFORMATION RECEIVED BY THE AO, IT WAS NOTED BY AO THAT ASSESSEE HAD SOLD IMMOVABLE PROPERLY ON 16. 7.2008 FOR RS 76 LAC BUT HAD SHOWN PROFIT FROM SALE OF LAND TO BE ONLY R S 69,095/-. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS AND EXPLA IN THE TRANSACTION. ASSESSEE INTERALIA SUBMITTED THAT THE LAND WAS AN A GRICULTURAL LAND AWAITING NA CLEARANCE AND IT WAS, EARLIER REFLECTED IN THE BOOKS OF MAHESHWARI BUILDERS, HIS PROPRIETARY CONCERN. ASSES SEE HAD GOT THE BOOKINGS OF THE PLOTS AND THE PROFITS WERE ALREADY REFLECTED IN EARLIER YEARS. ASSESSEE HAS PROMISED TO GET THE NA OF LAND DONE AN D SALE DEED EXECUTED. SINCE NA CLEARANCE COULD NOT BE OBTAINED AND SALE DEED COULD NOT BE EXECUTED, ASSESSEE PAID 2.5 TIMES THE BOOKIN G AMOUNT TO THE ALLOTTEES. THE SUBMISSIONS OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE AO. HE ACCORDINGLY CONSIDERED THE AMOUNT RECEIV ED BY THE ASSESSEE AND AFTER GIVING CREDIT OF THE PROFIT SHOWN BY THE ASSESSEE CONSIDERED THE BALANCE AMOUNT OF RS. 75,30,905 AS UNDISCLOSED INCO ME OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A). LD. CIT(A) AFTER CONSIDERING THE SUBMIS SIONS OF THE ASSESSEE, REMAND REPORT OF THE AO AND ASSESSEE'S SUBMISSION T O THE REMAND REPORT, DELETED THE ADDITION MADE BY THE AO BY HOLDING AS U NDER:- I.T.A NO. 2727/AHD/2012 A.Y. 2009-10 PAGE NO ITO VS. HASMUKHBHAI KHODIDAS PATEL 3 6. I HAVE THOROUGHLY EXAMINED THE ASSESSMENT ORDER , THE REMAND REPORTS, THE-SUBMISSIONS AND THE FACTS OF THE CASE. BRIEF FA CTS OF THE CASE ARE NARRATED AT THE COST OF REPETITION. THE AO ON THE BASIS OF AIR INFORMATION QUESTIONED T HE APPELLANT AS TO WHERE THE SALE OF IMMOVABLE PROPERTY WHICH WAS D ONE ON 16/7/2008 FOR AN AMOUNT OF 76,00,000/- HAS BEEN REFLECTED IN THE RETURN. IN THE RETURN, THE PROFIT FROM THE SALE OF THIS LAND (SURVEY NO. 1 74, KUDASAN) OF 69,095/- HAS BEEN SHOWN. THE APPELLANT STATED THAT THIS LAND WAS EARLIER REFLECTED IN ITS BOOKS OF ACCOUNTS IN THE NAME OF PROPRIETARY CONCERN M/S. MAHESHWARI BUILDERS AND THE LAND WAS AGRICULTURAL L AND WAITING NA CLEARANCE FROM THE RELEVANT AUTHORITIES AND THE BOO KING OF MOST OF THE PLOTS HAD ALREADY BEEN DONE AND PROFITS REFLECTED I N THE RETURNS FOR EARLIER YEARS, AND IN THE BOOKS MAINTAINED FOR M/S. MAHESHW ARI BUILDERS. IT WAS CLAIMED THAT AS NA CLEARANCE COULD NOT BE OBTAINE D; THE ALLOTTEES BECAME AGGRIEVED AND RESTLESS AND PURSUED THE MATTER WITH THE ASSESSEE. IT WAS DECIDED THAT WITHIN 6 MONTHS FROM 26/2/2008 ALL THE FORMALITIES OF NA CLEARANCE WOULD BE OBTAINED, IF POSSIBLE AND SALE DEEDS EXECUTED FAILING WHICH THE ALLOTTEES WOULD RECEIVE 2 1/2 TIMES THE PAYMENT MADE BY THEM FOR THE BOOKING. IT HAS BEEN CLAIMED T HAT TO ENSURE THE SINCERITY AND TO BUILD CONFIDENCE; IMMEDIATELY, SOM E CASH PAYMENTS WERE GIVEN TO THE ALLOTTEES AND POST DATED CHEQUES OF TH E REMAINING AMOUNTS ISSUED. SUBSEQUENTLY, WHEN THE APPELLANT FAILED TO GET THE CLEARANCE, THE APPELLANT HAS CLAIMED TO HAVE SOLD THE LAND AND MAD E THE PAYMENTS TO THE ALLOTTEES, AS PER PROMISE. THE TRANSACTIONS SUBSEQU ENT IN THE AGREEMENT WITH THE ALLOTTEES HAVE BEEN CLAIMED AFFECTED IN TH E HAND OF HASMUKHBHAI KHODIDAS PATEL, INDIVIDUAL INSTEAD OF THE PROPRIETA RY CONCERN M/S. MAHESHWARI BUILDERS. THE AO DID NOT ACCEPT THE EXPL ANATION OF THE APPELLANT DUE TO VARIOUS REASONS ENUMERATED IN THE ASSESSMENT ORDER, PARTICULARLY IN PARA.4.4 AND 4.5. THE CONSIDERATION OF RS. 76,00,000/- LESS THE PROFIT OF RS. 69,095/- I.E, RS. 75,30,905/- HAS BEEN ADDED TO THE TOTAL INCOME AS UNDISCLOSED INCOME. THE APPELLANT HAS PRODUCED THE FOLLOWING EVIDENCES AMONGST OTHERS TO SUPPORT ITS EXPLANATION: > COPY OF AGREEMENTS WITH ALL THE ALLOTTEES. > DETAILS OF PAYMENTS TO ALL OF THEM > PROOF OF PAYMENTS THROUGH CHEQUES > PROOF THAT THE TRANSACTIONS WITH RESPECT TO THE S AME PLOT WERE SHOWN IN EARLIER YEARS IN HIS OWN CASE BUT IN THE NAME OF PR OPRIETARY CONCERN M/S. MAHESHWARI BUILDERS. HAVING CONSIDERED THE OBJECTIONS OF THE AO TO THE E XPLANATION OF THE ASSESSEE BOTH IN THE ASSESSMENT ORDER AND IN TH E REMAND REPORT; THE FOLLOWING PERTINENT OBSERVATIONS ARE REQUIRED TO BE MADE, REGARDING THEM: I. OBJECTIONS OF THE AO ON THE FACTS OF THE TRANS ACTIONS: PARA. OBJECTION OBSERVATION I.T.A NO. 2727/AHD/2012 A.Y. 2009-10 PAGE NO ITO VS. HASMUKHBHAI KHODIDAS PATEL 4 4.4 OF THE ASSESSMENT ORDER AMOUNT RECEIVED FROM SHRI SHASHIKANT AMBALAL PATEL PRIOR TO AGREEMENT (FOR BOOKING) SHOWN BY THE ASSESSEE IS RS. 75,000/- WHEREAS AS PER CANCELLATION AGREEMENT IT IS RS. 45,000/- EXPLAINED TO BE TYPING MISTAKE. RECEIPTS OF PAYMENTS SHOW TOTAL PAYMENT EQUAL TO RS. 75,000/-. MORE IMPORTANTLY THE CLINCHING EVIDENCE IS THE 2 TIMES AMOUNT OF RS. 1,87,500/- MENTIONED IN THE AGREEMENT ITSELF WHICH WAS PAID BY CHEQUE. THE EXPLANATION HAS TO BE ACCEPTED WHEN VIEWED FROM THE FACT THAT IN ALL CASES 2 1/2 TIMES OF THE ORIGINAL PAYMENT HAS BEEN PAID. 4.5(II) OF THE ASSESSMENT ORDER IN DIFFERENT TRANSACTION, EG. SL. NO. 2 TO 8, 11, 13 TO 20 ETC. IT HAS BEEN NOTED BY THE AO THAT WHEREAS THE DATE OF CHEQUE HAS BEEN SHOWN AS 20/07/08 THE PAYMENTS ARE REFLECTED IN THE BANK ACCOUNT ON EARLIER DATE. THE APPELLANT HAS EXPLAINED THAT ONCE THE SALE BHANAKHAT WAS ENTERED INTO AND THEY HAD MONEY THE CHEQUES WERE AGAIN PRE-DATED TO MAKE EARLY PAYMENTS. THESE PAYMENTS HAVE BEEN VERIFIED FROM BANK ACCOUNT INCLUDING CHEQUE NUMBERS AND AMOUNTS AND THE NAME OF THE PAYEES. THE EXPLANATION HAS NOT BEEN ACCEPTED BY THE AO IN THE REMAND REPORT. 4.5(II) OF THE ASSESSMENT ORDER IN TRANSACTION SL. NO. 1,10 & 26 CHEQUES NOT FOUND IN THE BANK ACCOUNT ACCORDING TO AO. THE CHEQUES ARE DEBITED TO THE BANK ACCOUNT OF THE ASSESSEE, VERIFIED BY THE UNDERSIGNED AS WELL AS THE AO IN THE REMAND PROCEEDINGS. THE CHEQUE NUMBER FOR SL. NO. 26 WAS WRITTEN WRONG AND ACTUALLY IS 869740. 4.5(II) OF THE ASSESSMENT ORDER ADDITIONAL NAMES APPEAR IN THE BANK ACCOUNT FOR SL. NO. 22,30,37 THE APPELLANT HAD EXPLAINED THAT THE ALLOTMENT WAS IN JOINT NAMES, PROVED IT THROUGH RECEIPTS AND AGREEMENTS. I.T.A NO. 2727/AHD/2012 A.Y. 2009-10 PAGE NO ITO VS. HASMUKHBHAI KHODIDAS PATEL 5 THE AO HAS IN THE REMAND REPORT HAS NOT OBJECTED TO THE EXPLANATION. 4.5(II) OF THE ASSESSMENT ORDER DIFFERENT NAME APPEAR IN THE BANK ACCOUNT FOR SL. NO. 9,12,25 ACCORDING TO THE APPELLANT, IN THE SL. NO. 9, SHRI RAMESH IN WHOSE NAMES THE CHEQUE HAS BEEN ENCASHED IS ONE OF THE JOINT ALLOTTEES. THE AO HAS IN THE REMAND REPORT HAS NOT OBJECTED TO THE EXPLANATION. IN CASE OF SL. NO. 25. V.K. PATEL IS JOINT ALLOTTEE AND V. V. PATEL IS GRANDFATHER OF ANTOHER JOINT ALLOTTEE JAGDISH V. PATEL. WHEN THE TRANSACTION IS SUPPOSED BY AGREEMENT, RECEIPTS ETC, THE FACT THAT ONE OF THE JOINT ALLOTTEE HAS TAKEN PAYMENT IN THE ACCOUNT OF HIS RELATIVE CANNOT BE HELD AGAINST THE ASSESSEE. IN THE CASE OF NO. 12, MINAXIBEN IS ANOTHER JOINT ALLOTTEE AND THE ENTIRE PAYMENT HAS BEEN TAKEN IN HER BANK ACCOU NT. WHEN THE TRANSACTION IS SUPPORTED BY AGREEMENT, RECEIPTS ETC., THE FACT THAT ONE OF THE JOINT ALLOTTEE HAS TAKEN ENTIRE PAYMENT CANNOT BE HELD AGAINST THE EVIDENCE OF THE TRANSACTION. OBJECTIONS OF THE AO REGARDING ALLEGED DISCREPANCIE S IN THE BOOKS OF ACCOUNT VIS-A-VIS THE TRANSACTIONS CLAIMED: THE BASIC OBJECTIONS OF THE AO ARE (A) THE AUDIT RE PORT SHOWS THE PROFIT DIRECTLY WITHOUT SHOWING THE COMPLETE TRANSA CTIONS (ADDL, CIT IN HIS LETTER ENDORSING THE REMAND REPORT) (B) ONLY RS. 2, 93,498/- APPEARED IN THE I.T.A NO. 2727/AHD/2012 A.Y. 2009-10 PAGE NO ITO VS. HASMUKHBHAI KHODIDAS PATEL 6 BALANCE SHEET AS THE VALUE OF LAND-ASSET AS ON 31/3 /2008 (PARA. 4.5 (I) OF THE ASSTT. ORDER) (C) THE ENTIRE TRANSACTIONS AS CL AIMED BEFORE FY 2007-08 ARE NOT APPEARING IN THE BOOKS OF ACCOUNT OF M/S. H ASMUKHBHAI K. PATEL (INDL.) AND ONLY HAWALA TRANSACTIONS ARE APPEARING [PARA.4.5(III) TO 4.5 (VIII)] OF THE ASSTT ORDER] (D) ALL THE TRANSACTIONS SHOULD HAVE APPEARED FROM THE STARTING IN ONE BOOKS OF ACCOUNT EITHER OF M/S. HAS MUKHBHAI K. PATEL (INDL.) OR M/S. MAHESHWARI BUILDERS (PARA. 4.5 OF T HE ASSTT. ORDER) THE AO HAS OBJECTED TO THE TRANSACTION AS RECORDED IN THE BOOKS OF ACCOUNT WITHOUT UNDERSTANDING THE NATURE OF TRANSAC TIONS AND HOW THE ACCOUNTING HAS BEEN DONE. THE AGRICULTURAL LAND IN QUESTION WAS PURCHASED IN THE INDIVIDUAL NAME OF THE ASSESSEE. A WAITING NA FOR CONVERSION OF THE LAND, A PROJECT OF PLOTTING SCHEM E WAS CONCEIVED AND THE LAND AT COST WAS SHOWN TRANSFERRED, AS BOOK ENT RY ONLY TO M/S. MAHESHWARI BUILDERS. IT HAS TO BE UNDERSTOOD THAT THE LATTER IS ALSO SOLE OF THE APPELLANT AND TRANSACTIONS SHOWN BETWEEN AND SU CH PROPRIETORSHIP HAVE GOT NO RECOGNITION IN TAXATION AND REAL INCO ME SENSE AND ONLY ENABLE KEEPING OF SEPARATE ACCOUNTS FOR THE PROJE CT. SUBSEQUENTLY, THE BOOKING OF PLOTS WAS STARTED AND ALL THE ALLOTTEES KNEW THAT NA PERMISSION IS PENDING. ONCE RECEIPTS WERE ISSUED AGAINST THE BOOKING; THE APPELLANT'S RIGHTS TO THE ALLOTTED LAND WERE SUBSTA NTIALLY TRANSFERRED. IT HAS TO BE UNDERSTOOD THAT ONCE THE REVENUE FROM THE ALL OTMENT OF THESE PLOTS IS RECOGNIZED IN THE BOOKS AS WAS DONE BY THE APPELLAN T; THE OWNERSHIP OF THE PLOT AGAINST WHICH THE SALES WAS RECOGNIZED HAD TO BE SHOWN TRANSFERRED. THIS EXPLAINS THE CONSEQUENT REDUCTION IN THE STOCK OF LAND IN THE BOOKS AND ONLY THE UNALLOTTED PORTION NATURALLY REMAINED IN THE BALANCE SHEET. THIS IS THE AMOUNT RS. 2,93,498/- WH ICH THE AO AND THE ADDL. CIT ARE REFERRING TO. I DO NOT FIND ANY LOG IC AS TO HOW IT CAN BE TAKEN ADVERSELY AGAINST THE APPELLANT. SUBSEQUENTLY, EVEN AFTER A LONG TIME, THE NA COULD NOT BE OBTAINED. THE ALLOTTEES BECAME AGGRIEVED AND RESTL ESS AND PURSUED THE MATTER WITH THE ASSESSEE. IT WAS DECIDED THAT WITH IN 6 MONTHS FROM 26/2/2008 ALL THE FORMALITIES OF NA CLEARANCE WOULD BE OBTAINED, IF POSSIBLE AND SALE DEEDS EXECUTED FAILING WHICH THE ALLOTTEES WOULD RECEIVE 2 TIMES THE PAYMENT MADE BY THEM FOR THE BOOKING . AS THE LAND STOOD IN THE INDIVIDUAL NAME OF THE APP ELLANT, AGAIN THE SUBSEQUENT ENTRIES WERE PASSED IN THE INDIVIDUAL HA NDS AND NOT IN THE SEPARATE BOOKS OF M/S, MAHESHWARI BUILDERS. EVEN ON THE COST OF REPETITION, IT HAS TO BE SUBSTANTIATED TH AT TRANSACTIONS SHOWN BETWEEN INDIVIDUAL AND SUCH PROPRIETORSHIP HAVE GOT NO RECOGNITION IN TAXATION AND NO EFFECT CAN BE THERE ON REAL INCOME, WHATSOEVER. THE AO HAS FAILED TO APPRECIATE THE TRANSACTIONS AS RECORD ED IN THE TWO CAPACITIES BY NOT TAKING THEM TOGETHER. NATURALLY, ON THE SUB SEQUENT TRANSACTIONS ARE FOUND RECORDED IN THE INDIVIDUAL CAPACITY. THE OBJECTION OF THE AO REGARDING THE NON-SALEABILITY OF THE LAND WITHOUT N A IS NEITHER RELEVANT TO I.T.A NO. 2727/AHD/2012 A.Y. 2009-10 PAGE NO ITO VS. HASMUKHBHAI KHODIDAS PATEL 7 THE ISSUE NOR IT IS AGAINST THE PREVALENT BUSINESS PRACTICE. SUCH SCHEMES WHERE THE FACTS ARE KNOWN TO THE ALLOTTEES ARE MUCH PREVALENT AND IT CANNOT BE THE CASE THAT ONCE THE PLOTS ARE ALLOTTED THE INCOME SHOULD NOT BE SHOWN. THE APPELLANT CORRECTLY SHOWED THE INCOME IN THE EARLIER YEARS RECOGNIZING THE REVENUE FROM SUCH TRANSFER OF RIGHT S. NOW, ONCE THE APPELLANT WAS CORNERED, IT BOUGHT BACK THE RIGHTS O F THE LAND BY PAYING 2 1/2 TIMES THE AMOUNTS RECEIVED (NOT THE CONSIDERATI ON AGREED ORIGINALLY) FOR BOOKING. THEN ONLY IT CAN SELL THE PROPERTY WHI CH WAS EXISTING IN HIS NAME IN THE REVENUE RECORD. IT CANNOT BE SAID THAT THE COST TO REACQUIRE THE RIGHTS WOULD NOT BE ALLOWED AND ONLY THE ENTIRE SALE PROCEEDS WOULD BE TAXED. IT IS A WELL ACCEPTED PRINCIPLE OF INCOME -TAX LAW THAT ONLY REAL INCOME HAS TO BE TAXED. NOW, WE HAVE TO EXAMINE WHETHER THE REAL INCOME HAS BEEN OFFERED, FOR TAXATION BY THE ASSESSEE. THE APPELLA NT GIVEN THE FOLLOWING COMPUTATION DURING THE ASSESSMENT PROCEEDINGS AS R EPRODUCED BY THE AO ON PAGE-21 OF THE ORDER. LAND SALE UNDER AIR ON 16/07/2008 76,00,000 LESS: DEVELOPMENT EXPENSES INCURRED AND SHOWN IN RESPECTIVE YEAR/S FROM TIME TO TIME AS PER ACCOUNT** AMOUNT PAID TO EACH PLOT HOLDER AGAINST CANCELLATION OF BOOKING OF PLOT BY VIRTUE OF AGREEMENT-2 TIME OF THE AMOUNT PAID BY THE PLOT HOLDER* PROFIT SHOWN IN 04-05 230782 05-06 342134 06-07 28658 601578 08-09 69095 670669 74,04,00 1 DIFFERENCE/EXCESS SHOWN 4,001 ===== NOTE: *THIS AMOUNT IS ACTUALLY NET AMOUNT PAID TO A LLOTTEES I.E. TOTAL AMOUNT PAID (2 TIME OF THE AMOUNT PAID BY THE PLO T HOLDER MINUS ORIGINAL AMOUNT PAID BY THE PLOT HOLDER) (68,15,000 MINUS 27,26,000) ** INCLUDES COST OF PURCHASE OF LAND. WHAT HAS TO BE UNDERSTOOD IS TOTAL PROFIT OF THE SC HEME, PURCHASE AND SALE OF PROPERTY IN THE HANDS OF THE APPELLANT (INDIVIDUAL ACCOUNTS AND M/S MAHESHWARI BUILDERS TAKEN TOGETHER) WOULD BE RS . 6,66,668/- (76,00,000 LESS 28,44,332 LESS 40,89,000). THIS INC OME HAS BEEN UNDOUBTEDLY DECLARED BY THE APPELLANT IN THE EARLIE R YEARS AND IN THE I.T.A NO. 2727/AHD/2012 A.Y. 2009-10 PAGE NO ITO VS. HASMUKHBHAI KHODIDAS PATEL 8 ASSESSMENT YEAR 2009-10. THE INCOME FROM FINAL SALE OF LAND LESS ALL COSTS HAS ACCRUED TO THE APPELLANT WHEN THE SALE DE ED HAS FINALIZED AND ACCOUNTS WITH ALLOTTEES SETTLED. THEREFORE, IT HAS CORRECTLY BEEN OFFERED IN AY 2009-10 AND NOT IN AY 2008-09 WHEN THE AGREEMENT S ALLOWING POSSIBLE SALES, IN CASE NA WAS ACTUALLY NOT RECEIVE D WERE ENTERED. THE FACT THAT PAYMENTS HAD STARTED TO SOME OF THE ALLOT TEES IN EARLIER YEARS DOES NOT MEAN THAT THE PROFITS FROM SALE WHERE NO S ALE DEED HAS BEEN FINALLY SIGNED HAD ACCRUED. WHEN THE RECEIPTS OF THE TOTAL TRANSACTIONS I.E. FINAL SALE PROCEEDS AND EARLIER ALLOTMENT MONE Y RECEIVED (FOR ACCOUNTING IN ABOVE CALCULATION BY REDUCING THE EXP ENSES) ARE ACCOUNTED FOR AND NOT PROVED WRONG (BY PROVING OR EVEN ALLEGI NG UNDER HAND DEALINGS) AND ONLY REAL EXPENSES ARE CLAIMED FOR WO RKING THE ENTIRE WORKING; I FIND NO INFIRMITY IN THE INCOME OFFERED BY THE APPELLANT. THE EXPENSES CLAIMED ARE THE DEVELOPMENT EXPENSES WHICH WERE ALREADY SHOWN IN THE BOOKS OF ACCOUNTS OF M/S MAHESHWA RI BUILDERS, NATURALLY AS IN THOSE YEARS THE PROJECTS WERE ACCOUNTED FOR I N ITS BOOKS. ONLY REAL INCOME HAS TO BE TAXED. RELIANCE IS PLACED ON THE JUDGMENTS OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE O F SMT, JASHVIDABEN C. MEHTA 172 ITR 680 (GUJ), THAT OF HON'BLE KERALA HIG H COURT IN THE CASE OF KERALA STATE INDUSTRIAL DEVELOPMENT CORPORATION- 18 2 ITR 67 AND THAT OF HON'BLE DELHI HIGH COURT IN THE CAS E OF BRAHMAPUTRA CAPITAL FINANCIAL LTD-335 ITR 182. NOT EVEN WHEN THE PROF ITS HAVE BEEN SHOWN IN THE BOOKS OF ACCOUNTS BUT INCOME ACTUALLY HAS NO T ACCRUED, THE VARIOUS COURTS HAVE HELD THAT INCOME IS NOT TAXABLE AS IT I S NOT A REAL INCOME. THE DECISIONS OF HON'BLE ALLAHABAD HIGH COURT IN THE CA SE OF NATIONAL HANDLOOM DEVELOPMENT CORPN. 266 ITR 647 AND HON'BLE KERALA HIGH COURT IN THE CASE OF FEDERAL BANK LTD 301 ITR 188 H AVE DECIDED THE ISSUE ON THESE PRINCIPLES. IT IS THEREFORE HELD THAT NO A DDITION AT ALL CALLED FOR ON THE FACTS OF THE CASE. THE ADDITION MADE BY THE A O IS DIRECTED TO BE DELETED. THE GROUNDS OF APPEAL ARE ALLOWED. 5. THUS AGGRIEVED BY THE ORDER OF LD. CIT(A), REVEN UE IS NOW IN APPEAL BEFORE US. BEFORE US, LD DR TOOK US THROUGH THE FINDINGS OF AO AND SUPPORTED HIS ORDER. ON THE OTHER HAND, LD AR REITE RATED THE SUBMISSIONS MADE BEFORE CIT(A) AND SUPPORTED HIS ORDER. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD CIT(A) AT PARA 5.2 HAS NOTE D THAT THE ALLEGED DISCREPANCIES NOTED BY THE AO WERE NEVER CONFRONTED TO THE ASSESSEE AND THEREFORE HE DID NOT GET AN OPPORTUNITY TO CONTROVE RT THEM. LD. CLT(A) AFTER CONSIDERING THE SUBMISSIONS AND THE EVIDENCES PLACE D BEFORE HIM HAS IN I.T.A NO. 2727/AHD/2012 A.Y. 2009-10 PAGE NO ITO VS. HASMUKHBHAI KHODIDAS PATEL 9 TERALIA OVERRULED THE VARIOUS OBJECTIONS OF THE AO. HE HAS ALSO NOTED THAT TOTAL PROFIT OF THE SCHEME HAS BEEN DECLARED BY THE ASSESSEE IN EARLIER YEARS AND IN AY 09-10. HE HAS BY A DETAILED AND RE ASONED ORDER DIRECTED THE DELETION OF ADDITION MADE BY AO. BEFORE US, REV ENUE HAS NOT BROUGHT ANY MATERIAL TO CONTROVERT THE FINDINGS OF LD. CIT( A). WE THEREFORE FIND NO REASON TO INTERFERE WITH HIS ORDER. IN THE RESULT , THIS GROUND OF REVENUE IS DISMISSED. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (G.C. GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD : DATED 08/08/2014 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,