Karnala Infrastructure Projects Pvt.Ltd, Raigad V. Deputy Commissioner of Income-tax,Panvel Circle, Panvel

ITA 298/PUN/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7744 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-08-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 06-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VITTHAL BHOSALE
• Assessee Lawyers: SUBODH RATNAPARKHI
• Keywords: Business income; Tax effect; Set aside
• Section: 143(3); 201; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, J UDICIAL MEMBER . / ITA NO . 298 /PUN/201 8 / ASSESSMENT YEAR : 20 12 - 13 KARNALA INFRASTRUCTURE PROJECTS PVT. LTD., PLOT NO. 26, AASWAD VIJAY PATH, NEW PANVEL, DISTT. - RAIGAD - 410206 PAN : AACCK0122G ...... / APPELLANT / V/S. DCIT, PANVEL CIRCLE, PANVEL / RESPONDENT . / ITA NOS.334 & 335/PUN/2018 / ASSESSMENT YEARS : 2012 - 13 & 2014 - 15 DCIT, PANVEL CIRCLE, PANVEL ...... / APPELLANT / V/S. M/S. KARNALA INFRASTRUCTURE PROJECTS PVT. LTD., PLOT NO. 26, AASWAD VIJAY PATH, NEW PANVEL, DISTT. - RAIGAD - 410206 PAN : AACCK0122G / RESPONDENT ASSESSEE BY : SHRI SUBODH RATNAPARKHI REVENUE BY : SHRI VITTHAL BHOSALE / DATE OF HEARING : 0 3 - 08 - 2021 / DATE OF PRONOUNCEMENT : 24 - 0 8 - 2021 2 ITA NO S.298, 334 & 335/PUN/2018 / ORDER PER S.S. VISWANETHRA RAVI, JM : TH ESE THREE APPEALS BY THE ASSESSEE AND REVENUE AGAINST SEPARATE COMMON ORDER DATED 30 - 11 - 2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 2, THANE [CIT(A)] FOR ASSESSMENT YEAR S 2012 - 13 AND 2014 - 15. 2. SINCE, THE ISSUES RAISED IN ALL THE THREE APPEALS ARE SIMILAR BASING ON THE SAME IDENTICAL FACTS. THEREFORE, WITH THE CONSENT OF BOTH THE PARTIES, WE PROCEED TO HEAR ALL THE THREE APPEALS TOGETHER AND TO PASS A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. FIRST, WE SHALL TAKE UP APPEAL IN ITA NO. 298/PUN/2018 FOR A.Y. 2012 - 13 FILED BY THE ASSESSEE. 4. THE ASSESSEE RAISED TWO GROUNDS OF APPEAL AMONGST WHICH THE ONLY ISSUE EMANATES FOR OUR CONSIDERATION IS AS TO WHETHER THE CIT(A) JUSTIFIED IN CONFIRMING THE ADDITION TO AN EXTENT OF RS.1,21,02,433/ - IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE BRIEF FACTS RELATING TO THE ISSUE ON HAND ARE THAT THE ASSESSEE IS A COMPANY AND ENGAGED I N THE BUSINESS OF BUILDERS AND DEVELOPERS. THE ASSESSEE FILED RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.1,30,43,122/ - . UNDER SCRUTINY THE AO DETERMINED THE SAME AT RS.3,49,65,923/ - INTER ALIA MAKING THE ADDITION ON THE ACCOUNT OF RATE DIFFERENCE BE TWEEN AGREEMENT VALUE AND ACTUAL SELLING PRICE VIDE ITS ORDER DATED 30 - 03 - 2015 PASSED U/S. 143(3) OF THE ACT. THE CIT(A) ON DIFFERENT 3 ITA NO S.298, 334 & 335/PUN/2018 FOOTING BY APPLYING THE NET PROFIT @ 16.44% AS AGAINST @ 9.96% RESTRICTED THE ADDITION TO AN EXTENT OF RS.1,21,02,433/ - . 6. HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS NOTED ABOVE THE ASSESSEE HAS UNDERTAKEN TWO HOUSING PROJECTS IN ADAI AND BONSHET IN PANVEL TALUKA FOR THE A.YS. 2012 - 13 AND 2014 - 15 , RESPECTIVELY. FOR THE A.Y. 2012 - 13, THE ASSESSEE DECLARED NET PROFIT AT RS.1,86,38,123/ - @ 9.97% OF ITS SALES AND FOR A.Y. 2014 - 15 @ 34.99% . WE OBSERVE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF FLATS AND SHOPS SOLD TO DIFFERENT PARTIES ALONG WITH EXPLANATION REGARDING THE VARIATION IN RATES. AS IT EMANATING FROM THE RECORD AND THERE IS NO DISPUTE THAT THE ASSESSEE FURNISHED DETAILS OF FLATS AND SHOPS SOLD TO DIFFERENT PARTIES, DATE WISE BOOKING, SALE RATE, AREA SOLD, TOTAL CONSIDERATION, DATE OF AGREEMENT ALONG WITH EXPLAINING THE VARIATION IN THE SALE RATE. THE AO EXAMINED THE SAID DETAILS AND INFERRED THAT THE SALE RATE OF FLATS AND SHOPS SOLD IN SUBSEQUENT YEARS CANNOT BE LESSER THAN THE RATE AT WHICH THE FLATS AND SHOPS WERE SOLD IN THE E ARLIER YEARS AND THEREBY HELD THE ASSESSEE HAD SUPPRESSED TAXABLE PROFITS BY RECEIVING PART OF CONSIDERATION IN CASH. THEREFORE, IT IS CLEAR THAT IN OUR OPINION THAT THERE WAS EVIDENCE BEFORE THE AO THAT THE ASSESSEE SUPPRESSED ITS PROFITS BY ACCEPTING TH E CONSIDERATION IN CASH AND THE SAID VIEW IS BASED ON PRESUMPTION AND ASSUMPTION. IT IS , FURTHER, NOTED THAT THE ASSESSEE CONTENDED BEFORE THE CIT(A) THAT THERE WAS NO ABSOLUTELY EVIDENCE BEFORE THE AO OF ANY ALLEGED CASH CONSIDERATION BEING COLLECTED BY THE ASSESSEE. WE NOTE THAT THE CIT(A) DECIDED THE SAID ISSUE ON DIFFERENT PERSPECTIVE. ACCORDING TO HIM THE HIGHER RATE OF VARIATION AND NET PROFIT MARGIN @ 9.97% FOR A.Y. 2012 - 13 IS NOT TENABLE AS COMPARED TO A.Y. 2014 - 15 AND ALLOWED THE SALE RATE S VARI ATION TO AN EXTENT OF 5.25% AS CLAIMED IN 4 ITA NO S.298, 334 & 335/PUN/2018 A.Y. 2014 - 15 TO THE YEAR UNDER CONSIDERATION I.E. A.Y. 2012 - 13. ACCORDINGLY, A SUM OF RS.98,20,367/ - @ 5.25% ON TOTAL SALE CONSIDERATION ALLOWED AND CONFIRMED THE ADDITION TO AN EXTENT OF RS.1,21,02,433/ - (RS.2,19 ,22,801/ - - RS.98,20,367/ - ). AS NOTED ABOVE THE NET PROFIT RATIO AS DECLARED BY THE ASSESSEE IS @ 9.97% ON TOTAL SALES BUT HOWEVER BY THE ALLOWANCE OF VARIATION IN SALE RATES THE NET PROFIT RATIO AS DECIDED BY THE CIT(A) IS @ 16.44%. WE FIND THAT ABSOLUT ELY NO EVIDENCE TO THAT EFFECT BROUGHT ON RECORD BY THE REVENUE AND IN OUR OPINION THE ONUS LIES ON THE REVENUE TO BRING ON EVIDENCE TO SHOW THAT THE ASSESSEE SUPPRESSED THE TAXABLE INCOME BY ACCEPTING CASH FROM THE PURCHASING PARTIES . THEREFORE, THE VIEW OF AO THAT THE ASSESSEE ACCEPTED CASH AND THE VIEW OF CIT(A) IN ENHANCING NET PROFIT RATIO COMPARING TO A.Y. 2014 - 15 IS NOT JUSTIFIED. THUS, THE ORDER OF CIT(A) IS SET ASIDE AND THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, THE APP EAL OF ASSESSEE IS ALLOWED. ITA NO. 3 3 4/PUN/2018, (A.Y. 2012 - 13) BY THE REVENUE 8 . WE FIND THE TAX EFFECT INVOLVED IN THIS APPEAL IS BELOW MONETARY LIMIT FIXED BY THE CBDT CIRCULAR VIDE ITS LATEST CIRCULAR NO. 17/2019, DATED 08 - 08 - 2019. THUS, GROUNDS RAISED BY THE REVENUE FAIL AND THE APPEAL IS NOT MAINTAINABLE. THEREFORE, THE APPEAL OF REVENUE IS DISMISSED AS WITHDRAWN IN TERMS OF CBDT CIRCULAR MENTIONED HERE - IN - ABOVE. 9 . IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. 5 ITA NO S.298, 334 & 335/PUN/2018 ITA NO. 3 35 /PUN/2018, (A.Y. 201 4 - 15 ) BY THE REVENUE 10. THE REVENUE RAISED AS MANY AS 4 GROUNDS AMONGST WHICH THE ONLY ISSUED EMANATES FOR OUR CONSIDERATION IS CHALLENGING THE ACTION OF CIT(A) IN DELETING THE ADDITION MADE ON ACCOUNT OF UNACCOUNTED CASH RECEIPT IN THE FACTS AN D CIRCUMSTANCES OF THE CASE. 11. WE FIND THAT THE FACTS AND CIRCUMSTANCES OF THE CASE IN A.Y. 2012 - 13 ARE IDENTICAL TO THE FACTS INVOLVED RELATING TO THE ISSUE RAISED BY THE REVENUE IN THIS APPEAL FOR A.Y. 2014 - 15. IN THE AFOREMENTIONED PARAGRAPHS FOR A.Y. 2012 - 13 WE HELD THAT THE AO WITHOUT BRINGING ANY MATERIAL ON RECORD CANNOT BE PRESUMED THAT THE ASSESSEE ACCEPTED THE PART OF CONSIDERATION IN CASH AND ACCORDINGLY, WE DELETED THE ADDITION AS MADE BY THE AO. THE CIT(A) DELETED THE ESTIMATION OF UNACC OUNTED CASH RECEIPT AND THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A). ACCORDINGLY, THE ORDER OF CIT(A) IS JUSTIFIED AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 12. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. 13. TO SUM UP, THE APPEAL OF ASSESSEE IN ITA NO. 298/PUN/2018 IS ALLOWED AND BOTH THE APPEALS OF REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH AUGUST, 202 1 . SD/ - SD/ - ( R.S. SYAL ) ( S.S. VISWANETHRA RAVI ) VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 24 TH AUGUST, 202 1 . RK 6 ITA NO S.298, 334 & 335/PUN/2018 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A) - 2, THANE 4. THE PR. CIT - 2, THANE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. // // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE