Durga Developers, Kolhapur V. Income-tax Officer, Ward - 1, Ichalkaranji

ITA 305/PUN/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4178 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-10-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 21-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Revised return; Set aside
• Section: 142(1); 201; 13; 131; 12; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, J UDICIAL MEMBER . / ITA NO S.305 & 306 /PUN/2019 / ASSESSMENT YEAR S : 20 1 2 - 13 & 2014 - 15 DURGA DEVELOPERS, R.S. NO. 126/7, A/8, 9, 10, DURGA COMPLEX, BEHIND S.T. STAND PETH VADGAON, TAL. - HATKANANGALE, DIST. - KOLHAPUR PAN : AASFM2759G ....... / APPELLANT / V/S. THE INCOME TAX OFFICER, WARD 1, ICHALKARANJI / RESPONDENT ASSESSEE BY : SHRI M.K. KULKARNI REVENUE BY : S HRI S.P. WALIMBE / DATE OF HEARING : 26 - 10 - 2020 / DATE OF PRONOUNCEMENT : 29 - 10 - 2020 / ORDER PER S.S. VISWANETHRA RAVI, JM : BOTH THESE APPEALS BY THE ASSESSEE AGAINST THE COMMON ORDER DATED 18 - 12 - 2018 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 2, KOLHAPUR [CIT(A)] FOR ASSESSMENT YEARS 201 2 - 13 AND 2014 - 15. 2 ITA NO S.305 & 306/PUN/2019, A.YS. 2012 - 13 & 2014 - 15 2. WE NOTE THAT THE ISSUES RAISED IN BOTH THE APPEALS ARE SIMILAR BASING ON THE SAME IDENTICAL FACTS. THER EFORE, WITH THE CONSENT OF BOTH THE PARTIES, WE PROCEED TO HEAR BOTH THE APPEALS TOGETHER AND TO PASS A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. FIRST, WE SHALL TAKE THE APPEAL IN ITA NO.305/PUN/2019, A.Y. 2012 - 13. 4. THE ONLY ISSUE RAISED IN THIS APPEAL IS AS TO WHETHER THE CIT(A) IS CORRECT IN RESTRICTING THE CARR Y FORWARD LOSS AT RS. 22,69,353/ - INSTEAD OF RS.92,79,353/ - IN THE FACTS THE CIRCUMSTANCES OF THE CASE. 5. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A REGISTERED PARTNERSHI P FIRM ENGAGED IN THE BUSINESS OF SALE AND PURCHASE OF LAND, PURCHASE OF LAND AND CONSTRUCTION OF BUILDING. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE CONSTRUCTED PROJECT DURGA COMPLEX AND OTHER THREE PROJECTS AT KASBA VADGAON IN KOLHAPUR CONSIST ING OF RESIDENTIAL FLATS , COMMERCIAL SHOPS AND OFFICES. THE ASSESSEE FOLLOWED PROJECT COMPLETION METHOD FOR REVENUE RECOGNITION. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE CLAIMED BROUGHT FORWARD LOSS AT RS.92,79, 353/ - , BUT, A CCORDING TO AO ON EXAMINATION OF RETURN OF INCOME FOR A.Y. 2011 - 12 THE ASSESSEE SHOWN THE LOSS AT RS.22,69,353/ - AND BY NOTICING MISTAKES IN ACCOUNTS ISSUED A NOTICE U/S. 142(1) OF THE ACT REQUESTING THE ASSESSEE AS TO WHY EXCESS LOSS OF RS.70,00,000/ - WOULD NOT BE RESTRICT ED TO RS.22,69,353/ - (RS.92,79,353/ - - RS. 70,00,000/ - ). THE ASSESSEE CONTENDED BY MISTAKE THE WRONG OPENING STOCK WAS TAKEN FROM THE PREVIOUS YEAR CLOSING STOCK AND THE CARRY FORWARD LOSS IS CORRECTLY SHOWN AT RS.92,79,353/ - IN THE 3 ITA NO S.305 & 306/PUN/2019, A.YS. 2012 - 13 & 2014 - 15 UNAUDITED FINANCIAL STA TEMENTS. THE AO DID NOT FIND THE SUBMISSIONS AS ACCEPTABLE AND RESTRICTED THE CARRY FORWARD LOSS AT RS.22,69,353/ - . 6. IN THE FIRST APPELLATE PROCEEDINGS, THE ASSESSEE CONTENDED THAT THERE WAS A MISTAKE OF THE ACCOUNTANT WHO HAS VALUED THE STOCK LESS B Y RS.70 LAKHS AND TAKEN THE CLOSING STOCK AT RS.60,43,800/ - INSTEAD OF RS.1,30,43,800/ - , FU RTHER, THE ASSESSEE HAS RECASTED THE TRADING AND PROFIT AND LOSS ACCOUNT WITH OPENING STOCK AT RS.1,30,43,800/ - . THE CIT(A) DID NOT ACCEPT THE SUBMISSIONS OF ASSESS EE FOR THE REASON THAT THE ADJUSTMENT MADE BY THE ASSESSEE OWING TO INADVERTENT MISTAKE OF TAKING A SUBSTANTIAL AMOUNT OF LESS OPENING STOCK TO THE NOTICE OF THE AO IN THE SAID YEAR EITHER BY FILING A REVISED RETURN OR BY RECOURSING TO ANY OTHER MODES. FU RTHER, HE HELD THAT THERE WAS NO SUCH MATERIAL EVIDENCE FURNISHED BY THE ASSESSEE OR DEMONSTRATED IN THE APPELLATE PROCEEDINGS AS TO WHICH CAUSED SUCH GROSS INADVERTENT MISTAKE OF NON - DISCLOSING A HUGE AMOUNT OF RS.70,00,000/ - IN THE ORIGINAL ACCOUNTS PREP ARED AND FILED BY THE ASSESSEE TO THE REVENUE AUTHORITY. THEREBY, THE CIT(A) UPHELD THE ORDER OF AO. 7. BEFORE US, THE LD. AR, SHRI M.K. KULKARNI SUBMITTED THAT THE ASSESSEE IS READY TO DEMONSTRATE THE EVIDENCES REGARDING THE INADVERTENT MISTAKE CAUSED IN NOT SHOWING THE CARRY FORWARD LOSS OF RS.70,00,000/ - AND PRAYED TO REMAND THE MATTER TO THE FILE OF AO FOR HIS FRESH CONSIDERATION. 8. THE LD. DR, SHRI S.P. WALIMBE VEHEMENTLY OPPOSED THE ARGUMENTS OF LD. AR. IN REPLY, HE CONTENDS THAT THE ASSESSEE DID NOT BRING ON RECORD ANY EVIDENCE SHOWING THAT DUE TO INADVERTENT MISTAKE THE OPENING STOCK OF 4 ITA NO S.305 & 306/PUN/2019, A.YS. 2012 - 13 & 2014 - 15 RS.70,00,000/ - WAS NOT SHOWN IN THE RETURN OF INCOME AND THERE WAS NO STEPS TAKEN BY THE ASSESSEE TO RECTIFY THE MISTAKES IN THE AC COUNTS. HE REFERRED TO IMPUGNED ORDER AT PAGE 6 AND SUBMITTED THAT THERE WAS NO MATERIAL EVIDENCE TO DEMONSTRATE IN THE FIRST APPELLATE PROCEEDINGS BY THE ASSESSEE AS TO WHICH CAUSED SUCH GROSS INADVERTENT MISTAKE OF NOT DISCLOSING A HUGE AMOUNT OF RS.70, 00,000/ - TO BOTH THE AUTHORITIES. HE ARGUED THAT THERE WAS NO EVIDENCE EVEN BEFORE THIS TRIBUNAL IN SUPPORT OF THE CONTENTIONS OF LD. AR. 9 . WE NOTE THAT THE ASSESSEE SHOWN CLOSING STOCK FOR A.Y. 2011 - 12 AT RS.1,30,43,800/ - AND OPENING STOCK FOR A.Y. 2012 - 13 AT RS.60,43,800/ - . ACCORDING TO AO WHEN THE CLOSING STOCK AS ON 31 - 03 - 2011 IS RS.1,30,43,800/ - AND THE OPENING STOCK AS ON 01 - 04 - 2011 MUST HAVE BEEN AT RS.1,30,43,800/ - . WE NOTE THAT IN THE TRADING ACCOUNT WHICH WAS RE PRODUCED IN PAGE 5 OF AOS O RDER IT IS REFLECTING THE OPENING STOCK AS RS.60,43,800/ - FOR A.Y. 2012 - 13. WE ALSO NOTE THAT IN THE ACKNOWLEDGMENT OF RETURN OF INCOME FOR A.Y. 2011 - 12 WHICH IS RE PRODUCED AT PAGE 7 , THE ASSESSEE HAS SHOWN THE CURRENT YEAR LOSS AT RS. 22,69,353/ - BASING O N WHICH THE AO RESTRICTED THE CARRY FORWARD LOSS WHICH ADJUSTED IN THE YEAR UNDER CONSIDERATION. ON FINDING THE MISTAKES IN ACCOUNTING, THE AO ISSUED SUMMONS U/S. 131 OF THE ACT AND IN RESPONSE TO WHICH ONE OF THE PARTNERS OF ASSESSEE APPEARED. THE AO EX AMINED THE SAID PARTNER ON OATH WHICH IS REPRODUCED AT PAGE 6 OF THE AOS ORDER WHEREIN WE NOTE THAT THE ASSESSEE EXPLAINED THAT DUE TO MISTAKE THE OPENING STOCK SHOWN AT RS.60,43,800/ - WHICH IS INCORRECT. FURTHER, HE STATED BASED ON THE RECASTING OF THE FINANCIAL STATEMENT THE ASSESSEE SHOWN GROSS LOSS AT RS.26,82,848/ - AND NET LOSS AT RS. 44,06,604/ - . WE FIND THAT THE AO NOR 5 ITA NO S.305 & 306/PUN/2019, A.YS. 2012 - 13 & 2014 - 15 THE CIT(A) DID NOT LOOK IN TO THE FINANCIAL STATEMENTS RECTIFYING THE MISTAKE SHOWING THE OPENING STOCK ON 01 - 04 - 2011 . WE NOTE THAT THE ASSESSEE RAISED THE SAME BEFORE THE CIT(A) BUT HOWEVER HE FOUND THAT THE ASSESSEE FILED NO SUCH MATERIALS TO DEMONSTRATE AS TO WHICH CAUSED SUCH GROSS INADVERTENT MISTAKE OF NOT DISCLOSING A HUGE AMOUNT OF RS.70,00,000/ - . AS DISCUSSED ABOVE, THE LD. AR PRAYED BEFORE THIS TRIBUNAL TO REMAND THE MATTER TO THE FILE OF AO FOR ITS PROPER VERIFICATION OF ITS ACCOUNT IN DETERMINING THE ACTUAL LOSS. THE LD. DR AGREED, REPORTED NO OBJECTION IN REMANDING THE MATTER TO THE FILE OF AO. TAKING INTO CONSIDERATION THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE DISCUSSION MADE HERE - IN - ABOVE, WE DEEM IT PROPER TO REMAND THE MATTER TO THE FILE OF AO FOR ITS FRESH CONSIDERATION TO DETERMINE THE ACTUAL LOSS FOR THE YEAR UNDER CONSIDERATION AND SUBSE QUENT ASSESSMENT YEARS. THE ASSESSEE IS LIBERTY TO FILE EVIDENCES, IF ANY, IN SUPPORT OF ITS CLAIM. THUS, THE ORDER OF CIT(A) IS NOT JUSTIFIED AND IT IS SET ASIDE. ACCORDINGLY, ONLY GROUND RAISED BY THE ASSESSEE FOR A.Y. 2012 - 13 IS ALLOWED FOR STATISTIC AL PURPOSE. ITA NO. 306/PUN/2019, (A.Y. 2014 - 15) 10. WE NOTE THAT IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE CLAIMED SET OFF OF BROUGHT FORWARD LOSS FOR NEXT YEAR. THE AO HELD THERE WAS NO BROUGHT FORWARD LOSS FOR THE YEAR UNDER CONSIDERATION AND DETERMINED THE TOTAL INCOME OF ASSESSEE RS.3,79,729/ - AGAINST NIL INCOME. THE CIT(A) CONFIRMED THE ORDER OF AO IN DENYING THE SET OFF OF LOSS. A SIMILAR ISSUE BASING ON THE IDENTICAL FACTS WE HAVE TAKEN A DECISION IN THE APPEAL FOR A.Y. 2012 - 13 WHEREIN W E REMAND ED THE MATTER TO THE FILE OF AO FOR ITS VERIFICATION OF ACCOUNTS IN DETERMINING THE ACTUAL LOSS FOR A.Y. 2012 - 13 AND SUBSEQUENT YEARS. IN VIEW OF THE DECISION IN A.Y. 2012 - 13 WE DEEM IT 6 ITA NO S.305 & 306/PUN/2019, A.YS. 2012 - 13 & 2014 - 15 PROPER TO REMAND THE APPEAL IN THE YEAR UNDER CONSIDERATION T O THE FILE OF AO FOR ITS CONSIDERATION ALONG WITH THE APPEAL FOR A.Y. 2012 - 13 AND ALLOW THE SET OFF OF LOSS, IF ANY. ACCORDINGLY, THE APPEAL OF ASSESSEE FOR A.Y. 2014 - 15 IS ALLOWED FOR STATISTICAL PURPOSE. 11. IN THE RESULT, BOTH THE APPEALS OF ASSESSE E ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH OCTOBER, 2020. SD/ - SD/ - ( R.S. SYAL ) ( S.S. VISWANETHRA RAVI ) VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 29 TH OCTOBER, 2020. RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A) - 2, KOLHAPUR 4. THE PR. CIT - 2, KOLHAPUR 5. , , , / DR, ITAT, SMC BENCH, PUNE. 6. / GUARD FILE. // // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE