D.C.I.T. Amravati Circle, AMRAVATI V. M/s Busyland Construction Pvt. Ltd., AMRAVATI

ITA 273/NAG/2015

• Counselvise Citation: [2014] 117 COUNSELVISE.COM (IT) 8884 (ITAT-NAGPUR)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 23-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 23-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K BARAL
• Assessee Lawyers: RITESH ADATIY A
• Keywords: Unexplained expenditure; Valuation report
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE S HRI SHAMIM YAHYA (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 273 / NAG/2015 ASSESSMENT Y EAR: 2012 - 13 THE DEPUTY COMMISSIONER OF INCOME TAX, AMRAVATI CIRCLE, AAYAKAR BHAVAN, AMBAPETH, AMRAVATI - 444601 VS. M/S BUSYLAND CONSTRUCTION PVT. LTD., REVENUE 36/37, BUSYLAND COMPLEX, NANDGAONPETH, NAGPUR ROAD, AMRAVATI (M.S.) - 444605 PAN : AADCB8006H (APPELLANT) (RESPONDENT) REVENUE BY : SHRI R.K. BARAL (SR. D R) ASSESSEE BY : SHRI RITESH ADATIY A (CA ) DATE OF HEARING: 09 /05 /201 8 DATE OF PRONOUNCEMENT: 15 / 06 /201 8 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAINST THE ORDER DATED 09.07.2015 PASSED BY THE CO MMISSIONER OF INCOME TAX (APPEALS) - I , NAGPUR, WHEREBY THE LD. CIT (A ) HAS PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED UNDER SECTION 143 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. THE BRIEF FACTS OF T HE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012 - 13 DECLARING THE TOTAL INCOME OF RS. 28,29,690/ - . SINCE, THE CASE WAS SELECTED FOR SCRUTINY NOTICE U/S 143 (2) AND 142 (1) WERE ISSUED AND SERVED UPON THE ASSESSEE COMPAN Y. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED BEFORE THE A.O. AND PRESENTED THE CASE OF THE ASSESSEE. THE ASSESSEE HAD DERIVED INCOME FROM CONSTRUCTION AND SALE OF SHOPS AS WELL AS SALE OF LANDS. T HE ASSESSEE FURNISHED THE COPY OF AUDIT REPORT 2 ITA NO. 273 / NAG /2015 ASSESSMENT YEAR: 201 2 - 1 3 IN THE FORM NO. 3CA AND 3CD ALONG WITH BALANCE SHEET, PROFIT AND LOSS ACCOUNT, COMPUTATION OF INCOME AND BANK ACCOUNTS STATEMENT. THE ASSESSEE ALSO PRODUCED BOOKS OF ACCOUNTS AND VOUCHERS ETC. AS ASKED BY THE ASSESSING OFFICER. DURING THE ASSESSMENT PROCEE DINGS, THE ASSESSING OFFICER REFERRED THE CASE U/S 142A TO DIST RICT V ALUATION OFFICER (DVO), BHOPAL FOR DETERMINATION OF VALUE OF CLOSING STOCK AS ON 31 ST MARCH, 2010. ACCORDINGLY, THE DVO ISSUED NOTICE AND VISITED THE CONSTRUCTION SIT E ON 23 RD JANUARY 201 3. SINCE, IT WAS NOT POSSIBLE TO ARRIVE AT THE EVALUATION OF CLOSING STOCK AS ON 31 ST MARCH, 2010. THE DVO ESTIMATED THE COST OF ENTIRE CONSTRUCTION. THE DVO ACCORDINGLY ISSUED REPORT SHOWING THE ESTIMATED COST OF CONS TRUCTION OF RS. 44,36,82,436/ - WHICH IS 4.87% HIGHER THAN THE COST TO CONSTRUCTION AS PER THE BOOKS OF ACCOUNT. THE TOTAL DIFFERENCE OF RS. 2,06,14,003/ - WAS FURTHER DIVIDED YEAR WISE BASED ON THE COST OF CONSTRUCTION AS PER THE BOOKS OF ACCOUNT. ACCORDINGLY, FOR THE YEAR 2011 - 12 THE AMOUNT OF DIFFERENCE ESTIMATED BY DVO CAME TO RS. 49,79,670/ - . THE ASSESSING OFFICER ADDED THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE U/S 69C OF THE ACT. IN THE FIRST APPEAL, THE LD. CIT (A) DELETED THE SAID ADDITION AGAINST THE SAID ORDER. THE REVENUE HAS CHALL ENGED THE IMPUGNED ORDER ON THE FOLLOWING GROUND : ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 49,79,670 / - MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S 69C OF THE I.T . ACT, 1961. 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL IS COVERED BY THE DECISION OF THE NAGPUR BENCH OF ITAT IN THE ASSESSEES OWN CASE ITA NO. 488/NAG/2014 FOR THE A.Y. 2011 - 12. SINCE, TH E LD. CIT (A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE IN ACCORDANCE WITH THE DECISION OF THE ITAT IN ASSESSEES OWN CASE AFORESAID, THERE IS NO INFIRMITY IN THE ORDER OF THE LD.CIT (A). HENCE, THERE IS NO MERIT IN THE APPEAL OF THE REVENUE. 3 ITA NO. 273 / NAG /2015 ASSESSMENT YEAR: 201 2 - 1 3 4. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) DID NOT CONTROVERT THE FACT THAT THE IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE ITAT, NAGPUR IN THE ASSESSEES CASE FOR THE A.Y. 2011 - 12. HOWEVER, THE LD. DR RELYING ON THE ASS ESSMENT ORDER SUBMITTED THAT THE LD. CIT (A) HAS WRONGLY DEL E TED THE ADDITION MADE BY THE AO ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE MATERIAL ON RECORD INCLUDING CASES RELIED U PON BY THE AUTHORITIES BELOW. THE LD. CIT (A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY RELYING ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. AMBIENCE DEVELOPERS AND INFRASTRUCTURE PVT. LTD., 25 TAXMAN.COM 210, THE JUDGMEN T OF HONBLE RAJASTHAN HIGH COURT IN THE CIT VS. PRATAPSINGH, AMROSINGH RAJENDRA SINGH AND DEEPAK KUMAR, 64 TAXMAN 585 AND THE DECISION OF THE LUCKNOW BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF ITO VS. VIJETA EDUCATIONAL SOCIETY 118 ITD 382 IN WHICH IT HAS BEEN HELD THAT THE VALUATION REPORT OF THE DVO CAN BE TAKEN INTO CONSIDERATION ONLY WHEN THE BOOKS ARE NOT RELIABLE AND THE AO IS OF THE OPINION THAT NO RELIANCE CAN BE PLACE ON SUCH BOOKS OF ACCOUNT . IT WAS FURTHER HELD THAT THE PROVISIONS OF SECTION 142A CANNOT BE READ IN ISOLATION TO SECTION 145. 6. FURTHER, AS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE THE COORDINATE BENCH OF THE ITAT HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE BY UPHOLDING THE FINDINGS OF THE LD.CIT (A) . THE OP ERATIVE PART OF THE ORDER PASSED BY THE COORDINATE BENCH READS AS UNDER: - 4 . THE LD. DR SUBMITTED THAT IN THIS CASE, THE AO HAS REFERRED THE MATTER TO DVO FOR VALUATION OF CLOSING STOCK AND THE ASSESSEE HAD DONE THE VALUATION OF WORK - IN - PROGRESS BY ARCHI TECTURE AS IT INVOLVES TECHNICAL ISSUES, THEREFORE, IT WAS NOT 4 ITA NO. 273 / NAG /2015 ASSESSMENT YEAR: 201 2 - 1 3 POSSIBLE FOR ARCHITECTURE TO VERIFY EACH AND EVERY VOUCHERS AND SUPPORTING DOCUMENTS THAT EXPENSES CLAIMED. THEREFORE, AO HAS NO OPTION BUT TO REFERRED THE MATTER TO DVO AND IN THE CASE OF SARG AM CINEMA VS. CIT (A) FACTS ARE DIFFERENT. THEREFORE, THE CIT (A) IS NOT CORRECT IN DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE. 5. THE LD. AR REITERATED THE SAME CONTENTIONS AS STATED BEFORE THE LD. CIT (A) AND RELIED UPON HIS ORDER. 6. WE HAVE CONSIDE RED THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE DECISIONS RELIED UPON BY BOTH THE PARTIES. WE FIND THAT IN THE INSTANT CASE, THE ASSESSEE PRODUCED BOOKS OF ACCOUNTS AND IT WAS SUBJECTED TO AUDIT AND DURING THE COURSE OF A SSESSMENT PROCEEDINGS, THE REFERENCE WAS MADE TO DVO TO DETERMINE THE VALUATION OF CAPITAL WORK IN PROGRESS. WE HAVE GONE THROUGH ORDER OF AO, WE FIND THAT THE AO NOWHERE REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE AND WITHOUT REJECTING THE BOOKS OF ACCO UNT, THE AO HAS REFERRED THE MATTER TO DVO, THEREFORE, THE LD. CIT (A) WAS OF THE VIEW THAT WITHOUT REJECTING THE BOOKS OF ACCOUNT THE MATTER CANNOT BE REFERRED TO DVO. WE FIND THAT SIMILAR ISSUE HAD COME UP IN THE CASE OF CIT VS. PRATAPSINGH, AMROSINGH RA JENDRA SINGH AND DEEPAK KUMAR, 64 TAXMAN 585. THEREFORE, RESPECTFULLY FOLLOWING THE SAME WE DISMISS THE GROUND OF APPEAL TAKEN BY REVENUE. 7. THE COORDINATE BENCH HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2011 - 12. SINCE, THERE IS NO CHANGE IN THE FACTS OF THE CASE PERTAINING TO THE ASSESSMENT YEAR UNDER CONSIDERATION, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). THEREFORE, RESPECTFULLY FOLLOWING THE DECIS ION OF THE COORDINATE BENCH WE UPHOLD THE FINDINGS OF THE LD. CIT (A ) AND DISMISS THE SOLE GROUND OF THE APPEAL OF THE REVENUE. 5 ITA NO. 273 / NAG /2015 ASSESSMENT YEAR: 201 2 - 1 3 IN THE RESULT, APPEAL FILED BY THE REVENUE FOR A SSESSMENT YEAR 2012 - 2013 IS DISMISSED. ORDER PRONOUNCED IN THE OPE N COURT ON 15 TH JUNE , 2018 . SD/ - SD/ - ( SHAMIM YAHYA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER NAGPUR, DATED: 15 / 0 6 /201 8 ALINDRA, PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) 4. CIT 5. DR, ITAT, NAGPUR 6. GUARD FILE . BY O RDER, //TRUE COPY// ( SR. PS/PS ) ITAT, NAGPUR