M/s. Neptune Realty Pvt.Ltd., Baroda V. The Dy.CIT.,Cent.Circle-1, Baroda

ITA 2918/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9439 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 25-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R I PATEL
• Section: 234B; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA K. YADAV, JUDICIAL MEMBER AN D SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA NO. 2918/AHD/2011 / ASSESSMENT YEAR: 2009-10 M/S. NEPTUNE REALTY PVT LTD, 14, SAHJANAND KUTIR & LAGHU UDYOG, MUJHMAHUDA, AKOTA-VADODARA .. APPELLANT PAN : AAACN 9837 D VS DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, VADODARA .. RESPONDENT ASSESSEE(S) BY : SHRI MILIN MEHTA, AR REVENUE BY : SHRI R.I PATEL, CIT-DR / DATE OF HEARING 12/02/2016 /DATE OF PRONOUNCEMENT 19/02/2016 / O R D E R PER SHAILENDRA K. YADAV, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-IV, AHMEDABAD DATED 05.09.2011 FOR ASSESSMENT YEAR 2009-10, ON THE FOLL OWING GROUNDS:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF AO IN N OT RESTRICTING THE ASSESSMENT / ADDITIONS BASED ON THE MATERIAL FO UND DURING THE COURSE OF SEARCH. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN ESTIMATING THE AMOUNT OF ON MONEY RECEIPTS FROM THE GREENWOOD PROJECT AT RS. 1281.33 LACS DESPITE THE FACT THAT NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH BASED ON WHICH THE AO H AS COMPUTED THE AMOUNT OF ON MONEY. ITA NO. 2918/AHD/2011 M/S. NEPTUNE REALTY PVT LTD VS. DCIT AY : 2009-10 2 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN ESTIMATING THE PROFIT ON 'ON MONEY' RECEIPTS @ 25 % PURELY ON THE BASIS OF ASSUMPTIONS, SURMISES AND CONJECTURES. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF AO IN M AKING THE ADDITION OF RS.20,33,000 TO THE TOTAL INCOME OF THE APPELLANT BY ESTIMATING THE PROFITS @ 25 % ON 'ON MONEY' RECEIPT S. 5. WITHOUT PREJUDICE TO ABOVE QUANTUM RELIEF MAY PL EASE BE GRANTED. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN FACT AND IN LAW IN CHARGING INTEREST U/S. 234B OF T HE ACT. 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN FACT AND IN LAW IN CHARGING INTEREST U/S 234C OF TH E ACT. 8. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN FACT AND IN LAW IN INITIATING PENALTY PROCEEDINGS U /S 271AAA OF THE ACT. 9. YOUR APPELLANT CRAVES THE RIGHT TO ADD TO OR AL TER, AMEND, SUBSTITUTE, DELETE OR MODIFY ALL OR ANY OF THE ABOV E GROUNDS OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT IN THE FIE LD OF REAL ESTATE. THE ASSESSEE HAS DEVELOPED A HOUSING PROJECT NAMED 'GREENWOOD' IN THE CITY OF BARODA. THE SAID PROJECT COMPRISES OF 2 6 BUNGALOWS AND THE ENTIRE PROJECT CONSISTS OF HIGH END RESIDENTIAL UNI TS. A SEARCH U/S 132 OF THE ACT WAS CARRIED OUT IN THE AMOD GROUP OF CASES ON 11.02.2009. BASED ON THE SCRUTINY OF SEIZED MATERIAL RELATING T O BUNGALOW NO.B-26 AND BUNGALOW NO.B-15 AND STATEMENTS RECORDED DURING THE COURSE OF SEARCH PROCEEDINGS U/S 132(4) OF THE ACT, THE ASSES SING OFFICER ESTIMATED THE ON-MONEY RECEIPTS IN RESPECT OF 17 BU NGALOWS SOLD ITA NO. 2918/AHD/2011 M/S. NEPTUNE REALTY PVT LTD VS. DCIT AY : 2009-10 3 DURING THE YEAR AS WELL AS UPTO DATE OF SEARCH AT R S. 1281.33 LAKHS AS AGAINST THE SALE CONSIDERATION OF THESE 17 BUNGALOW S RECORDED IN BOOKS AT RS.1182.77 LAKHS AND, THEREAFTER, ESTIMATED THE PROFITS @ 25% OF THE ON-MONEY RECEIPTS WHICH CAME TO RS.3,20,33,000/-. S INCE THE ASSESSEE HAS ALREADY DISCLOSED AN AMOUNT OF RS.300 LAKHS ON ACCOUNT OF ON- MONEY RECEIPTS IN RESPECT OF GREENWOOD PROJECT, A N ET ADDITION OF RS.20,33,000/- WAS MADE BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE, WHICH WAS CONFIRMED BY THE CIT(A) IN APPEAL. 2.1 IN THIS REGARD, THE STAND OF THE ASSESSEE BEFOR E US WAS THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ESTIMATING T HE AMOUNT OF ON- MONEY RECEIPTS FROM THE GREENWOOD PROJECT AT RS.128 1.33 LAKHS DESPITE THE FACT THAT NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH BASED ON WHICH THE ASSESSING OFFICER HAS COMPUTED T HE AMOUNT OF ON- MONEY. THE ASSESSEE FURTHER CONTENDED THAT THE CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN E STIMATING THE PROFIT ON ON-MONEY RECEIPTS @ 25% PURELY ON THE BASIS OF A SSUMPTIONS, SURMISES AND CONJECTURES. THE ASSESSEE CONTENDED T HAT THE REVENUE AUTHORITIES WERE NOT JUSTIFIED IN MAKING THE ADDITI ON OF RS.20,33,000/- TO THE TOTAL INCOME OF THE ASSESSEE BY ESTIMATING T HE PROFITS @ 25% ON ON-MONEY RECEIPTS WHILE THE ASSESSEE HAS DISCLOSED AN AMOUNT OF RS.300 LAKHS ON ACCOUNT OF ON-MONEY RECEIPTS IN RES PECT OF GREENWOOD PROJECT. HE ACCORDINGLY PLEADED THAT THE ADDITION IN QUESTION MAY BE DELETED. ON THE OTHER HAND, LD. DEPARTMENTAL REPRE SENTATIVE SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 2.2 AFTER GOING THROUGH THE RIVAL CONTENTIONS AND M ATERIAL ON RECORD, WE FIND THAT A SEARCH ACTION U/S 132 WAS CA RRIED OUT IN AMOD ITA NO. 2918/AHD/2011 M/S. NEPTUNE REALTY PVT LTD VS. DCIT AY : 2009-10 4 GROUP CASES ON 11.02.2009. THE ASSESSEE ADMITTED U NACCOUNTED RECEIPTS FROM ITS GREENWOOD PROJECT AMOUNTING TO RS .300 LAKHS WHICH WAS OFFERED TO TAX. IT WAS ON THE BASIS OF PAGE NO. 1 OF ANNEXURE A-2 AND PAGE NO.5 OF ANNEXURE A-2 THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAD RECEIVED CASH AS ON-MONEY FOR BUNG ALOW NOS. B-26 AND B-15. THUS, THE ASSESSING OFFICER WORKED OUT TH E AMOUNT OF CASH RECEIVED @ 52% OF TOTAL RECEIPTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE MADE SUBMISSIONS FOR ESTA BLISHING THAT NO CASH WAS RECEIVED ON EITHER OF THESE PAPERS/CUSTOME RS AND FURTHER, NO CASH WAS RECEIVED OR RECEIVABLE IN RESPECT OF OTHER CUSTOMERS. THE STAND OF THE ASSESSEE HAS BEEN THAT NO CASH WAS REC EIVED BUT THE AMOUNTS AGAINST ALPHABET C REPRESENTED THE AMOUNT TO BE RECEIVED SUBJECTED TO THE CONFIRMATION FOR EXTRA WORK. THE ASSESSEE ALSO MENTIONED THAT THE DISCLOSURE OF RS.300 LAKHS MADE DURING THE COURSE OF SEARCH WAS SUFFICIENT TO COVER THE UNACCOUNTED M ONEY RECEIVED FROM THE PROJECT. IN THIS BACKGROUND, THE ASSESSING OFFICER REJECTED THE PLEA OF THE ASSESSEE AND PROCEEDED TO ESTIMATE THE AMOUNT OF ON- MONEY RECEIVED BY APPLYING THE EXTRAPOLATION METHOD . WE FIND THAT THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY MATE RIAL WAS FOUND DURING THE COURSE OF SEARCH EVIDENCING ON-MONEY REC EIVED FOR OTHER BUNGALOWS. IN SUCH SITUATION, THE EXTRAPOLATION MET HOD CANNOT BE APPLIED TO THE RECEIPTS OF OTHER BUNGALOWS. FURTHE R, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ESTIMATING THE PROFIT ON 'ON MONEY' RECEIPTS @ 25 %. THIS 25% ESTIMATION OF PROFIT ON ON-MONEY RECEIPTS IS PURELY ON THE BASIS OF ASSUMPTIONS, SURMISES AND CO NJECTURES. THUS, IN OUR OPINION, THE CIT(A) WAS NOT JUSTIFIED IN CONFIR MING THE ADDITION MADE BY THE ASSESSING OFFICER BY ESTIMATING THE PRO FIT ON 'ON MONEY' ITA NO. 2918/AHD/2011 M/S. NEPTUNE REALTY PVT LTD VS. DCIT AY : 2009-10 5 RECEIPTS @ 25% WHILE THE ASSESSEE HAS ALREADY OFFER ED TAX ON THE ADMITTED UNACCOUNTED RECEIPTS FROM ITS GREENWOOD PR OJECT AMOUNTING TO RS.300 LAKHS. UNDER THESE FACTS AND CIRCUMSTANC ES OF THE CASE, THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN MAKING THE A DDITION IN QUESTION AND CONFIRMING THE SAME; AND THEREFORE, THE ADDITIO N IN QUESTION IS DIRECTED TO BE DELETED. 3. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 19TH FEBRUARY 2016 AT AHMEDABAD. SD/- SD/- N.K. BILLAIYA SHAILENDRA K. YADAV (ACCOUNTANT MEMBER) (JUDICI AL MEMBER) AHMEDABAD; DATED 19/02/2016 BIJU T., PS !' #'$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! ' ' # / CONCERNED CIT 4. ' ' # ( ) / THE CIT(A) 5. &'( ! , ' ! , / DR, ITAT, AHMEDABAD 6. (- . / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD