The DCIT, Circle-9, Surat V. M/s. Sarjan Corporation, Surat

ITA 2871/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60454 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 03-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 16-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J P SHAH
• Keywords: Loose papers
• Section: 133A

Judgement Text

ITA NO.2871 /AHD/2009 A.YR.. 2006 -07. . 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, A HMEDABAD (BEFORE SHRI D. K. TYAGI, JM & SHRI ANIL CHATURVEDI A.M.) I.T.A. NO.287 1/AHD/2009 (ASSESSMENT YEAR: 2006-07) THE DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE-9, ROOM NO.423, AAYAKAR BHAVAN, MAJURA GATE, SURAT. (APPELLANT) VS. M/S.SARJAN CORPORATION, 0-8, PANCH RATNA TOWER, L.H.ROAD, SURAT. (RESPONDENT) PAN: AAXFS2969R BY REVENUE : SHRI VINOD TANWANI, SR. D.R. BY ASSESSEE : SHRI J.P. SHAH. ( )/ ORDER DATE OF HEARING : 3-5-2012. DATE OF PRONOUNCEMENT : 25-5-2012 PER: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF CIT(A-V, SURAT DATED 8-7-2009 FOR THE ASSESSMENT YEAR 2006-0 7. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE IS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER AT RS.46,58,878/- BASED UPON THE EVIDENCE OF THREE ITA NO.2871 /AHD/2009 A.YR.. 2006 -07. . 2 INSTANCES OF ON MONEY RECEIPTS IMPOUNDED DURING THE COURSE OF SURVEY. 3. ASSESSEE IS A FIRM ENGAGED AS BUILDER. IT FILED RETURN OF INCOME ON 22- 12-2006 DECLARING TOTAL INCOME OF RS.2,25,26,110/-. THE CASE WAS TAKEN UP FOR SCRUTINY. DURING THE RELEVANT YEAR, A SURVEY AC TION U/S.133A WAS CARRIED OUT ON 23-12-2005. SHRI DILIPBHAI KURJIBHAI RAVANI, THE PARTNER OF THE FIRM, BASED ON THE IMPOUNDED MATERIAL DECLARED UNDISCLOSE D INCOME OF THE FIRM OF RS.2,25,00,000/-. 4. DURING THE COURSE OF EXAMINATION OF THE SURVEY M ATERIAL, IT WAS NOTICED BY THE A.O. THAT THE ASSESSEE HAS RECEIVED RS.16,52,650/- FROM SHRI RUPIN DALAL FOR PURCHASE OF FLAT ADMEASURING 1 606 SQ. FT. AND THE SALE RATE WAS RS.1041 SQ. FT. SIMILARLY ANOTHER PAYMENT OF RS.15,91,546/- FOR SALE OF FLAT OF 1606 SQ. FT. WAS RECEIVED FROM MR. M.K. SHUKLA. THE RATE WAS THUS WORKED OUT TO RS.991/- SQ. FT. SIMILARLY IN TH E CASE OF A SALE OF ROW HOUSE TO JIGISHA MODI ON THE BASIS OF LOOSE PAPERS , THE A.O. CONCLUDED THAT THE ASSESSEE HAD TAKEN ON MONEY OF RS.4 LAC OV ER AND ABOVE THE REGISTERED VALUE IN BOOKS. IN VIEW OF THESE INSTANC ES, THE A.O. ESTIMATED THAT THE AVERAGE SALE PRICE OF RS.650/- PER SQ. FT. FOR ALL THE UNITS OF THE PROJECT AND ON THAT BASIS CALCULATED THE DIFFERENCE OF RS.46,58,878/- AS UNDISCLOSED INCOME. THE TOTAL INCOME WAS ACCORDINGL Y ASSESSED VIDE ORDER PASSED U/S.143(3) DATED 18-12-2007 AT RS.2,71,84,98 8/-. AGGRIEVED BY THE ACTION OF THE A.O., THE ASSESSEE PREFERRED APPEAL B EFORE CIT (A). 5. LD. CIT (A) DELETED THE ADDITION OF RS.46,58,878 /- BY HOLDING THAT THE ASSESSEE HAS BEEN SURVEYED TWICE AND BOTH TIMES SUB STANTIAL DISCLOSURE OF ITA NO.2871 /AHD/2009 A.YR.. 2006 -07. . 3 INCOME WAS MADE IN TWO CONTINUOUS YEARS. HE FURTHER OBSERVED THAT THE NET PROFIT RATE OF THE ASSESSEE COMES TO 28.50% WHI CH WAS QUITE HIGH WHEN THE A.O. HAD GIVEN A RANGE OF 10% TO 25%. HE FURTHE R HELD THAT WHEN THE BOOKS OF ACCOUNT WERE FULLY ACCEPTED, THE A.O. CANN OT MAKE SEPARATE ESTIMATION OF ADDITIONAL INCOME OVER AND ABOVE THE DISCLOSED AMOUNT ONLY ON THE BASIS OF 3 INSTANCES OF ON MONEY RECEIPTS AS MENTIONED IN THE SEIZED MATERIAL. 6. AGGRIEVED BY THE DECISION OF CIT (A), THE REVENU E IS IN APPEAL BEFORE US. 7. THE LD. D. R. VEHEMENTLY ARGUED THAT THE ADDITI ON MADE BY THE A.O. WAS BASED ON THE HARD FACTS AS EVIDENT FROM THE IMP OUNDED MATERIAL. IN THE DIARIES THAT WAS IMPOUNDED THE SALE PRICE OF SPECIF IC FLATS AND THE PAYMENTS MADE BY THE BUYERS WERE CLEARLY STATED. TH US, ACCORDING TO THE LD. D.R. THE A.O. WAS FULLY WITHIN HIS LIMITS TO DE CIDE THE PREPONDERANCE OF PROBABILITIES BASED ON THE EVIDENCE BEFORE HIM. THE LD. D.R. FURTHER RELIED ON THE DECISION OF COMMISSIONER OF SALES TAX VS. H. M. ESUFALI H.M. ABDULALI 90 ITR 271 (SC) WHEREIN THE HONBLE S. C. LAID DOWN THE PRINCIPLES IN ESTIMATING ANY ESCAPED TURNOVER NAMELY, IT IS IN EVITABLE THAT THERE IS SOME GUESS WORK; THE ASSESSING AUTHORITY WHILE MAKI NG BEST JUDGMENT ASSESSMENT SHOULD ARRIVE AT ITS CONCLUSION WITHOUT ANY BIAS AND ON RATIONAL BASIS AND IF THE ESTIMATE MADE BY THE ASSESSING AUT HORITY IS A BONAFIDE ESTIMATE AND IS BASED ON A RATIONAL BASIS, THE FAC T THAT THERE IS NO GOOD PROOF IN SUPPORT OF THAT ESTIMATE IS IMMATERIAL. IN THE CASE OF THE ASSESSEE TOO THERE WAS MATERIAL EVIDENCE IMPOUNDED DURING SU RVEY WHICH WAS USED ITA NO.2871 /AHD/2009 A.YR.. 2006 -07. . 4 BY THE A.O. FOR ESTIMATING ITS REAL INCOME. IN VIEW OF THE AFORESAID FACTS, THE LD. D.R. VEHEMENTLY URGED THAT THE ORDER OF THE A.O . BE UPHELD. 8. ON OTHER HAND THE LD. A.R. SUBMITTED ALL THE BOO KS OF ACCOUNTS HAVE BEEN FULLY ACCEPTED BY THE A. O. INCLUDING THE SALE S PRICE AND TOTAL SALES. THE BOOKS OF ACCOUNTS HAVE NOT BEEN REJECTED BY THE A.O. IN VIEWS OF THESE CIRCUMSTANCES THERE WAS NO QUESTION OF ESTIMA TION OF SALES PRICE OF THE UNITS. IT WAS FURTHER SUBMITTED THAT THE ESTIMA TION OF SALES PRICE MADE BY THE A.O. WAS PURELY AN ESTIMATION AND WITHOUT AN Y DOCUMENTARY EVIDENCE IN RESPECT OF ALL THE UNITS. IT WAS FURTHE R SUBMITTED THAT THERE WERE TWO DIFFERENT SURVEYS BY THE DEPARTMENT ON SAME PRO JECT IN THE CASE OF THE ASSESSEE IN TWO CONSECUTIVE YEARS. FIRST SURVEY WAS CARRIED OUT IN F.Y. 2004-05 AND THE ASSESSEE MADE DISCLOSURE OF RS.1.80 CRORE FOLLOWED BY FULL TAX PAYMENT. AGAIN SECOND SURVEY ON THE SAME P ROJECT OF THE ASSESSEE DURING F.Y. 2005-06 AND AGAIN THE ASSESSEE MADE DIS CLOSURE OF RS.2.25 CRORE AND PAID THE FULL TAXES. DURING BOTH THE SURV EYS, WHATEVER THE PORTION OF ON MONEY WAS THERE HAS BEEN DULY COVERED AND H ENCE THERE WAS NO QUESTION OF TAXING IT ONCE AGAIN. IT WAS FURTHER S UBMITTED THAT THE NET PROFIT RATIO OF THE WHOLE PROJECT IS 28.50% IS ON A QUITE HIGHER SIDE AS THE A.O. HIMSELF HAS STATED IN THE ASSESSMENT ORDER THAT THE PREVAILING NET PROFIT RATIO IN THE LINE OF BUSINESS OF THE ASSESSEE RANGE S FROM 10% TO 25%. 9. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED T HE MATERIAL ON RECORD. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPER OF REAL ESTATE. A SURVEY U/S. 133A WAS CARRIED OUT ON THE ASSESSEE. IN THE IMPOUNDED MATERIAL 3 INSTANCES OF MONEY RECEIPTS WERE NOTICED AND BASED ON THE SAME THE ESTIMATE TO THE EXTENT OF ITA NO.2871 /AHD/2009 A.YR.. 2006 -07. . 5 RS.46,58,878/- WAS MADE IN THE HANDS OF THE ASSESSE E. IT IS ALSO A FACT THAT THE BOOKS OF ACCOUNTS HAVE NOT BEEN REJECTED BY THE A.O. IT IS A FACT THAT THERE WERE TWO DIFFERENT SURVEYS BY THE DEPARTMENT ON SAME PROJECT IN THE CASE OF THE ASSESSEE IN TWO CONSECUTIVE YEARS. FIRS T SURVEY WAS CARRIED OUT IN F.Y. 2004-05 AND THE ASSESSEE MADE DISCLOSURE OF RS.1.80 CRORE AND THE ASSESSEE PAID THE TAXES DUE ON IT. AGAIN SECOND SURVEY ON THE SAME PROJECT OF THE ASSESSEE TOOK PLACE DURING F.Y. 2005 -06 AND AGAIN THE ASSESSEE MADE DISCLOSURE OF RS.2.25 CRORE AND PAID THE TAXES. DURING BOTH THE SURVEYS, WHATEVER THE PORTION OF ON MONEY WAS THERE HAS BEEN DULY CONSIDERED. THE NET PROFIT RATIO OF THE WHOLE PROJE CT AS WORKED OUT IS 28.50% IS ON A QUITE HIGHER SIDE AS THE A.O. HIMSEL F HAS STARTED IN THE ASSESSMENT ORDER THAT THE PREVAILING NET PROFIT RAT IO IN THE LINE OF BUSINESS OF THE ASSESSEE RANGES FROM 10% TO 25%. IN VIEW OF THE TOTALITY OF FACTS WE ARE OF THE CONSIDERED VIEW THAT THE CIT (A) HAS RIG HTLY DELETED THE ADDITION MADE BY THE A.O. AND THEREFORE, NO INTERFERENCE TO HIS ORDER IS CALLED FOR. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN OPEN COURT ON 25 5 - 2012. SD/- SD/- (D. K. TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACC OUNTANT MEMBER AHMEDABAD. S.A.PATKI. ITA NO.2871 /AHD/2009 A.YR.. 2006 -07. . 6 COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-V, SURAT. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. 1.DATE OF DICTATION 22 - 5 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 22 / 5 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 24 - 5 -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 25 - 5 -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 25 - 5 -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2 8 - 5 -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..