PNR BUILDERS & DEVELOPERS, MUMBAI V. ITO 17(2)(3), MUMBAI

ITA 2914/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3649 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 15-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 15-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S R KIRTNEY
• Keywords: Unexplained expenditure; Additional evidence
• Section: 69C; 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C , MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA , ACCOUNTANT MEMBER ITA NO. 2914 /MUM/2013 : (A.Y : 200 9 - 1 0 ) M/S. PNR BUILDERS AND DEVELOPERS 165/B, KAMALA TERRACE, HINDU COLONY, AMBEDKAR ROAD, DADAR, MUMBAI 400 014 (APPELLANT) PAN : AAIFP9506G VS ITO 17(2)(3), MUMBAI (RESPONDENT) APPELLANT BY : DR. K. SHIVARAM, SHRI RAHUL HAKANI RESPONDENT BY : SHRI S.R. KIRTNEY (DR) DATE OF HEARING : 1 0 /02/2016 DATE OF PRONOUNCEMENT : 09 /0 3 /2016 O R D E R PER ASHWANI TANEJA , A M : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - 29 , MUMBAI (IN SHORT REFERRED TO AS CIT(A)) DT. 15 . 2 .2013 PASSED AGAINST THE ASSESSMENT ORDER OF THE ASSESSING OFFICER (IN SHORT REFERRED TO AS AO) U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT REFERRED TO AS THE ACT) DT. 16 .12.2011 FOR THE A.Y 200 9 - 1 0 ON THE FOLLOWING GROUNDS : ADDITION OF RS.20,00 ,000/ - 1. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.20,00,000/ - WITHOUT APPRECIATING THE FACT THAT THE AMOUNT HAD NOT ACCRUED THE CONDITIONS IN RELATION TO THE CONTRACT WERE NOT COMPLETED, THE PROJECT HAD EVEN NOT STARTED 2 M/S. PNR BUILDERS AND DEVELOPERS ITA NO. 2914/MUM/2013 AND THE SAME WAS REFLE CTED IN THE BALANCE SHEET AS ADVANCE AMOUNT PAYABLE. HENCE THE AMOUNT OF RS.20,00,000/ - MAY BE DELETED. 2. WITHOUT PREJUDICE TO ABOVE, THE CIT(A) FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE ITSELF HAS NOT RECEIVED ANY RIGHT WHICH CAN BE TRANSFERRED, AS THE SRA PROJECT IS IN DISPUTE. AS THERE IS NO TRANSFER, NO INCOME CAN ACCRUE TO THE ASSESSEE AND HENCE THE ADDITION MAY BE DELETED. 3. WITHOUT PREJUDICE TO ABOVE, THE CIT(A) FAILED TO APPRECIATE THE FACT THAT, THE INITIAL AGREEMENT WAS MADE ON 21ST FEBRUARY, 2007 AND THE PART ADVANCE AMOUNT OF RS.20,00,000/ - WAS RECEIVED IN A.Y. 2007 - 2008 AND HENCE NO ADDITION CAN BE MADE IN THE IMPUGNED ASSESSMENT YEAR I.E. A.Y. 2009 - 2010. ENHANCEMENT OF RS.80,00,000/ - 4. THE LD. CIT(A) ERRED IN ENHANCING THE INCOME OF RS.80,00,000/ - BY ASSESSING THE ADDITION AT RS.1,00,00,000/ - AS AGAINST ADDITION MADE OF RS.20,00,000/ - WITHOUT APPRECIATING THE FACT THAT THE AMOUNT HAD NOT ACCRUED THE CONDITIONS IN RELATION TO THE CONTRACT WERE NOT COMPLETED, THE PROJECT HAD E VEN NOT STARTED AND THE SAME WAS REFLECTED IN THE BALANCE SHEET AS ADVANCE AMOUNT PAYABLE. HENCE THE ADDITION MAY BE DELETED. 5. WITHOUT PREJUDICE TO ABOVE, THE CIT(A) FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE ITSELF HAS NOT RECEIVED ANY RIGHT WHICH CAN BE TRANSFERRED, AS THE SRA PROJECT IS IN DISPUTE. AS THERE IS NO TRANSFER, NO INCOME CAN ACCRUE TO THE ASSESSEE AND HENCE THE ADDITION MAY BE DELETED. 6. WITHOUT PREJUDICE TO ABOVE, THE CIT(A) FAILED TO APPRECIATE THE FACT THAT, THE INITIAL AGREEMENT WAS MADE ON 21ST FEBRUARY, 2007 AND THE PART ADVANCE AMOUNT OF RS.20,00,000/ - WAS RECEIVED IN A.Y. 2007 - 2008 AND HENCE NO ADDITION CAN BE MADE IN THE IMPUGNED ASSESSMENT YEAR I.E. A.Y. 2009 - 2010. ADDITION OF RS.1,00,00,000/ - U/S 69C 7. THE LD. CIT( A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ASSESS THE RS.1,00,00,000/ - IN A.Y. 2007 - 2008 AS UNEXPLAINED EXPENDITURE U/S 69C, ON THE GROUND THAT THE SAME WAS REFERRED IN THE DEED OF ASSIGNMENT DT.21 - 02 - 3 M/S. PNR BUILDERS AND DEVELOPERS ITA NO. 2914/MUM/2013 2007 WITHOUT APPRECIATING THE FACT THAT THE ASSES SEE HAD NOT INCURRED ANY SUCH EXPENDITURE. HENCE THE AMOUNT OF RS.1,00,00,000/ - MAY BE DELETED. 8. WITHOUT PREJUDICE TO ABOVE, THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT SECTION 69C IS NOT AT ALL APPLICABLE TO THE FACTS OF THE CASE, AS NEITHER THE A.O. NOR THE CIT(A) HAS PROVED THAT THE APPELLANT HAS ACTUALLY INCURRED ANY SUCH EXPENDITURE WHICH CAN BE TREATED AS UNEXPLAINED. 9. WITHOUT PREJUDICE TO ABOVE, THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT THERE IS NO OTHER BUSINESS OF THE APPELLANT AND HENCE THERE IS NO OTHER SOURCE OF INCOME OTHER THAN THIS PROJECT AND HENCE NO ADDITION CAN BE MADE U/S 69C. 10. THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT AS PER SECTION 150(2) NO DIRECTION COULD BE GIVEN AS FOUR YEARS HAD ALREADY BEEN COMPLETE D AT THE TIME OF PASSING OF CIT(A) ORDER. HENCE THE DIRECTION GIVEN U/S 150(1) IS BAD IN LAW AND MAY BE DELETED. 11. ON MERITS THE APPELLANT DENIES ITS LIABILITY TO THE LEVY OF PENAL INTEREST U/S. 234A, 234B AND 234C, HENCE THE INTEREST LEVIED MAY BE DIRE CTED TO BE DELETED. 12. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE BY DR. K. SHIVARAM AND SHRI RAHUL HAKANI ON BEHALF OF THE ASSESSEE AND SHRI S.R. KIRTNEY ON BEHALF OF THE REVENUE. 3. IT HAS BEEN ARGUED, AT THE VERY OUTSET, BY THE LEARNED COUNSEL THAT HE HAS FILED A PETITION UNDER RULE 29 SEEKING TO PLACE ADDITIONAL EVIDENCE S WHICH COULD NOT BE FILED EARLIER BEFORE THE LOWER AUTHORITIES DUE TO FRESH DEVELOPMENTS WHICH HAVE TAKEN PLACE SUBSEQUENTLY. IT HAS BEEN SUBMITTED THAT MOST OF THE ISSUES TO BE DECIDED BY THE TRIBUNAL ARE WITH REGARD TO YEAR OF TAXABILITY OF INCOME OF THE ASSESSEE. IT HAS BEEN SUBMITTED THAT THE ASSESSEE HAD AGREED TO ASSIGN A ND TRANSFER THEIR RIGHT, 4 M/S. PNR BUILDERS AND DEVELOPERS ITA NO. 2914/MUM/2013 TITLE AND INTEREST IN LAND AT CHEMBUR, TAL. KURLA SITUATED AT CHEMBUR, MUMBAI INCLUDING THE DEVELOPMENT RIGHT S GRANTED BY THEM TO M/S. GRACE URBAN DEVELOPMENT CORPORATION VIDE AGREEMENT DT. 24.4.2008 , BUT THE ASSESSEE COULD NOT OFF ER ANY INCOME ARISING FROM THE SAID TRANSACTION BECAUSE OF HUGE LITIGATION THAT HAD TAKEN PLACE AND DUE TO WHICH THE TRANSACTION COULD NOT MATERIALIZE. OUR ATTENTION WAS DRAWN TO VARIOUS PAGES OF THE PAPER BOOK SHOWING VARIOUS ORDERS OF THE COURTS. IT WA S SUBMITTED THAT SUBSEQUENT TO THE ORDERS PASSED BY THE LOWER AUTHORITIES, THERE HAS BEEN LOT OF LEGAL DEVELOPMENTS , AND THE LITIGATION WAS FINALLY PUT TO REST BY THE HON'BLE SUPREME COURT VIDE ITS ORDER DT. 24.8.2015. IT WAS FURTHER SUBMITTED THAT COMMENCEMENT CERTIFICATE WAS GIVEN ON 2.1.2015 WHICH IS ENCLOSED AT PAGE 778 OF THE PAPER BOOK. IT WAS SUBMITTED THAT ALL THESE DOCUMENTS HAVE DIRECT BEARING ON THE ISSUES INVOLVED BEFORE THE TRIBUNAL. IT WAS FURTHER REQUESTED THAT IN THE INTEREST OF JUS TICE AND FAIR PLAY, THESE DOCUMENTS HAVE TO BE LOOKED INTO BEFORE DETERMINING THE FINAL TAX LIABILITY OF THE ASSESSEE. 4. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE (IN SHORT THE DR) HAS EXPRESSED NO SERIOUS OBJECTION IF ALL THE ISSUES A RE SENT BACK TO THE FILE OF THE AO. 5. WITH THE ASSISTANCE OF BOTH THE PARTIES, WE HAVE GONE THROUGH THE ORDERS PASSED BY THE LOWER AUTHORITIES AS WELL AS THE DOCUMENTS SOUGHT TO BE PLACED AS ADDITIONAL EVIDENCE UNDER RULE 29. THESE DOCUMENTS SHOW THAT T HERE HAS BEEN ENORMOUS LITIGATION WITH RESPECT TO THE TRANSACTION DONE BY THE ASSESSEE AND THE MATTER HAD REACHED BEFORE HON'BLE SUPREME COURT AFTER THE ORDERS WERE PASSED BY THE HON'BLE BOMBAY HIGH COURT. EVEN THE COMMENCEMENT CERTIFICATE WAS GIVEN AS LA TE AS ON 2.1.2015. ALL THESE DOCUMENTS WERE NOT CONSIDERED BY THE LOWER AUTHORITIES WHILE 5 M/S. PNR BUILDERS AND DEVELOPERS ITA NO. 2914/MUM/2013 PASSING THEIR RESPECTIVE ORDERS. B UT IN OUR CONSIDERED OPINION, THESE DOCUMENTS ARE VERY CRUCIAL AND MAY HAVE DIRECT BEARING ON THE ASSESSMENT OF INCOME OF THE ASSES SEE. THEREFORE, WE SEND ALL THE GROUNDS BACK TO THE FILE OF THE AO FOR CONSIDERING ALL THESE ISSUES AFRESH AS PER LAW AND FACTS. THE AO SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE AND THE ASSESSEE SHALL SUBMIT ALL THE DOCUMENTS AS MAY BE REQUIRED BY THE AO OR AS MAY BE CONSIDERED APPROPRIATE BY THE ASSESSEE. THE ASSESSEE IS FREE TO TAKE ALL LEGAL AND FACTUAL ISSUES BEFORE THE AO. THE AO SHALL DECIDE ALL THE ISSUES AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE AND MATERIAL ON RECORD. THUS, THESE GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 9 T H MARCH , 2016. SD/ - SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER (ASHWANI TANEJA) ACCOUNTANT MEMBER MUMBAI, DATE : 9 T H MARCH , 2016 COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, C BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR *SSL* I.T.A.T, MUMBAI