LOK CONSTRUCTIONS, MUMBAI V. ITO 20(1)(4), MUMBAI

ITA 3324/MUM/2014

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6878 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 09-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMLATHA
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI M ANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO. 3324 / MUM/2014 ( ASSESSMENT YEAR : 20 09 10 ) LOK CONSTRUCTIONS LOK BHAWAN, LOK BHARATI COMPLEX MAROL MAROSHI ROAD, ANDHERI (E) MUMBAI 400 059 PAN AAAFL0521F . APPELLANT V/S INCOME TAX OFFICER WARD 20(1)(4), MUMBAI . RESPONDENT ASSESSEE BY : NONE REVENUE BY : MS. N. HEMLATHA DATE OF HEARING 2 3 .0 5 .2018 DATE OF ORDER 20.06.2018 O R D E R PER SAKTIJIT DEY, J.M. AFORESAID APPEAL BY THE ASSESSEE IS AGAINST ORDER DATED 6 TH MARCH 2014 , PASSED BY THE L EARNED COMMISSIONER (APPEALS) 32 , MUMBAI , FOR THE ASSESSMENT YEAR 20 09 10 . 2 . WHEN THE APPEAL WAS CALLED FOR HEARING, NO ONE WAS PRESENT FOR THE ASSESSEE IN SPITE OF SERVICE OF NOTICE OF HEARING ISSUED THROUGH RPAD WHICH IS EVIDENT FROM THE POSTAL ACKNOWLEDGMENT KEPT ON RECORD. EVEN , THERE IS NO APPLICATION BY THE ASSESSEE SEEKING 2 LOK CONSTRUCTIONS ADJOURNMENT. PERUSAL OF ORDER SHEET ENTRIES REVEAL T HAT ON EARLIER OCCASIONS ALSO THE ASSESSEE HAS EITHER SOUGHT ADJOURNMENT OR HAS REMAINED ABSENT. THESE FACTS CLEARLY REVEAL THAT THE ASSESSEE IS NEITHER DILIGENT NOR INTERESTED IN PROSECUTING THE APPEAL. IN VIEW OF THE AFOR ESAID, WE PROCEED TO DISPOSE OF T HE APPEAL EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL ON RECORD. 3 . GROUNDS NO.1 TO 11 ARE ON THE COMMON ISSUE OF ADDITION OF ` 2,63,05,675, AS PROFIT FROM SALE OF FLATS IN A HOUSING PROJECTS. 4 . BRIEF FACTS ARE, THE ASSESSEE A PARTNERSHIP FIRM IS ENGAGED IN THE BUSINESS OF BUILDER AND DEVELOPER. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 26 TH SEPTEMBER 2009, DECLARING NIL INCOME. DURING THE ASSESSMENT PROCEEDINGS, TO A QUERY RAISED BY THE ASSESSING OFFICER ASSESSEE SUBMITTED THA T IN THE RELEVANT PREVIOUS YEAR THE ASSESSEE HAS NOT EFFECTED SALES OF ANY FLAT IN A HOUSING PROJECT STYLED AS LOK M ILAN PROJECT. HOWEVER, THE ASSESSING OFFICER BEING NOT CONVINCED WITH THE CLAIM OF THE ASSESSEE ASKED FOR DETAILS OF ADVANCES RECEIVED ALONG WITH THE NAMES AND ADDRESSES OF THE CONCERNED PERSON S . ON VERIFYING THE DETAILS FURNISHED BY THE ASSESSEE, THE ASS ESSING OFFICER F OUND THAT SAME FLAT NUMBER S HAVE BEEN REPEATED MANY TIMES IN THE NAME OF DIFFERENT PERSONS. 3 LOK CONSTRUCTIONS THEREFORE, HE CALLED UPON THE ASSESSEE TO SUBMIT FURTHER DETAILS SUCH AS DETAILS OF PROJECT SITE WITH FULL ADDRESS, PHONE NUMBER, ETC., DATE OF COMM ENCEMENT OF PROJECT, DETAILS OF PURCHASE OF LAND, NUMBER OF FLATS AND SHOPS AND BUILDINGS TO BE CONSTRUCTED, STATUS OF COMPLETION OF EACH BUILDING AS ON 31 ST MARCH 2009, ETC. FROM THE DETAILS FILED BY THE ASSESSEE IN RESPONSE TO THE AFORESAID QUERY, THE AS SESSING OFFICER FOUND THAT OCCUPANCY CERTIFICATE HAS BEEN ISSUED BY THE LOCAL AUTHORITY IN RESPECT OF WING C/1, C/2 AND C/3 ON 20 TH JUNE 2008. ON THE BASIS OF ABOVE INFORMATION, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO FURNISH THE BREAK UP OF WORK COMPLETED IN RESPECT OF WING A, B AND C. AS ALLEGED BY THE ASSESSING OFFICER, THE ASSESSEE FAILED TO FURNISH THE DETAILS CALLED FOR. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER HIMSELF PROCEEDED TO CONDUCT ENQUIRY WITH PURCHASERS OF FLAT S AND FROM THE REP LY RECEIVED FROM SUCH PURCHASERS, HE FOUND THAT THE BUILDING IN C WING WAS COMPLETED AND NECESSARY OCCUPATION CERTIFICATE WAS ISSUED BY THE LOCAL AUTHORITIES ON 20 TH JUNE 2008. FURTHER , THE POSSESSION LETTER S FILED BY THE FLAT PURCHASERS REVEALED THAT THEY WERE GIVEN POSSESSION OF FLAT S PRIOR TO 31 ST MARCH 2008 IN MANY CASES. THUS, FROM THE AFORESAID FACTS THE ASSESSING OFFICER CONCLUDED THAT THE BUILDINGS IN C WING OF THE HOUSING PROJECT WERE COMPLETED IN THE IMPUGNED ASSESSMENT YEAR AND THE ASSESSEE HAS S OLD ALL THE FLATS IN THIS BUILDING TO THE RESPECTIVE BUYERS. THUS, HE TREATED THE ADVANCES 4 LOK CONSTRUCTIONS RECEIVED SHOWN BY THE ASSESSEE AT ` 8,45,01,106, AS SALE CONSIDERATION RECEIVED BY THE ASSESSEE AND AFTER REDUCING THE WORK IN PROGRESS SHOWN OF ` 5,81,95,741, DETERMINED THE NET PROFIT AT ` 2,63,05,675, WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED WITH THE AFORESAID ADDITION, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 5 . IN COURSE OF PROCEEDINGS BEFORE THE L EARNED COMMISSIONER (APPEALS), THE ASSESSEE FURNISHED CERTAIN DETAILS AND DOCUMENTS WHICH WERE FORWARDED TO THE ASSESSING OFFICER FOR VERIFICATION AND COMMENT. THE ASSESSING OFFICER AFTER VERIFYING THE EVIDENCES SUBMITTED HIS REPORT ON 17 TH FEBRUARY 2014. IN THE SAID REPORT, THE ASSESSING OFFICER OBSERVED THAT TO VERIFY ASSESSEES CLAIM OF ADVANCE RECEIVED FROM CUSTOMERS, NOTICES UNDER SECTION 133(6) OF THE ACT WERE ISSUED TO THE HOUSING SOCIETIES AND RESIDENT S AND IN REPLY THEY HAVE STATED THAT NO SUCH ADV ANCE GIVEN BY THEM IS OUTSTANDING. HE ALSO STATED THAT MAJORITY OF THE OCCUPANTS IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 133(6) OF THE ACT HAVE STATED THAT THE AGREEMENT FOR SALE OF FLATS WERE REGISTERED BETWEEN DECEMBER 2002 AND FEBRUARY 2007 AND T HE HOUSING SOCIETY WAS FORMED IN THE YEAR 2001. THUS, IT WAS STATED BY THE ASSESSING OFFICER THAT IN THE RELEVANT PREVIOUS YEAR, THE BUILDING WAS COMPLETED AND THE ASSESSEE HAD SOLD THE FLATS. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE REMAN D REPORT, 5 LOK CONSTRUCTIONS THE LEARNED COMMISSIONER (APPEALS) CONCLUDED THAT IN THE RELEVANT PREVIOUS YEAR THE HOUSING PROJECT WAS COMPLETED AND THE ASSESSEE HAD SOLD THE FLAT S WHICH IS EVIDENT NOT ONLY FROM THE OCCUPATION CERTIFICATE ISSUED BY THE LOCAL AUTHORITIES ON 20 T H JUNE 2006, BUT THE INFORMATION OBTAINED FROM THE HOUSING SOCIETY AND FLAT PURCHASERS. THUS, THE LEARNED COMMISSIONER (APPEALS) SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICER. 6 . T HE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELYING UPON THE OBSERV ATIONS OF THE LEARNED COMMISSIONER (APPEALS) SUBMITTED THAT THE ASSESSEE AT NO STAGE HAS BEEN ABLE TO DEMONSTRATE THAT THE SO CALLED ADVANCES RECEIVED BY IT FROM FLAT PURCHASERS ARE IN REALITY NOT SALE CONSIDERATION. THUS, HE SUBMITTED THAT THE ADDITION MA DE DESERVES TO BE UPHELD. 7 . WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD, THOUGH, THE ASSESSEE HAS CLAIMED THAT THE AMOUNT OF ` 8,45,01,416 IS IN THE NATURE OF ADVANCE ONLY, HOWEVER, ON THE BASIS OF ENQUIRY MADE BY THE ASSESSING OFFICER AT THE ASSESSMENT STAGE AND SUBSEQUENTLY DURING REMAND MATERIAL HAVE BEEN BROUGHT ON RECORD WHICH CLEARLY DEMONSTRATE THAT THE BUILDINGS IN C WING WERE NOT ONLY COMPLETED IN THE PREVIOUS YEAR RELEVANT TO THE IMPUGNED 6 LOK CONSTRUCTIONS ASSESSMENT YEAR BUT THEY WERE ALSO SOLD TO THE BUYERS. THERE IS CATEGORICAL FINDING OF THE LEARNED COMMISSIONER (APPEALS) THAT OCCUPATION CERTIFICATES HAVE NOT ONLY BEEN ISSUED BY THE L OCAL AUTHORITIES IN RESPECT OF THE FLATS ON 20 TH JUNE 2008, BUT THE FLAT OWNERS AND HOUSING SOCIETY HAVE ALSO STATED IN RESPONSE TO THE NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT THAT NO ADVANCE RELATING TO THEM IS PENDING WITH THE ASSESSEE. IT HAS ALS O BEEN NOTICED BY THE DEPARTMENTAL AUTHORITIES THAT THE ASSESSEE HAS ENTERED INTO REGISTERED SALE AGREEMENT WITH THE FLAT BUYERS BETWEEN IN THE YEARS 2002 AND 2007. THE ASSESSEE HAS NEITHER APPEARED BEFORE US NOR HAS FURNISHED ANY DOCUMENTARY EVIDENCE TO C ONTROVERT THE F ACTUAL FINDINGS OF THE DEPARTMENTAL AUTHORITIES. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER (APPEAL S) IN SUSTAINING THE ADDITION MADE BY THE ASSESSING OFFICER. GROUNDS RAISED ARE DISMISSED. 8 . IN GROUNDS NO.12 AND 13, THE ASSESSEE HAS RAISED THE ISSUE OF INCLUSION OF CERTAIN LOANS AND ADVANCES IN THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PROFITS FROM SALE OF FLATS. 9 . WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL RE PRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. THOUGH, IN THE GROUNDS RAISED THE ASSESSEE HAS URGED THAT AN AMOUNT OF ` 64,82 ,000 7 LOK CONSTRUCTIONS REPRESENTING LOANS AND ADVANCES HAVE BEEN TREATED AS PROFITS OF BUSINESS AND FURTHER AN AMOUNT OF ` 57,42,000 INCLUDED IN TH E SAID SUM IS A LOAN FROM BANK OF RAJASTHAN AND ASSESSEE ITSELF HAS OFFERED IT AS INCOME IN THE ASSESSMENT YEAR 2013 14, HOWEVER, ON A PERUSAL OF THE IMPUGNED ORDER OF THE LEARNED COMMISSIONER (APPEALS) IT IS SEEN THAT THE AFORESAID CLAIM OF THE ASSESSEE W AS DULY VERIFIED NOT ONLY BY HIM BUT ALSO BY THE ASSESSING OFFICER IN REMAND AND IT WAS FOUND THAT SUCH AMOUNT REPRESENTS SALE CONSIDERATION OF FLATS, HENCE, PART OF THE PR OFIT EARNED BY THE ASSESSEE. OF COURSE, AS REGARDS ASSESSEES CLAIM THAT A PART OF T HE AMOUNT WAS OFFERED AS INCOME IN ASSESSMENT YEAR 2013 14, THE LEARNED COMMISSIONER (APPEALS) HAS OBSERVED THAT THE ASSESSEE MAY MAKE A SUITABLE CLAIM BEFORE THE ASSESSING OFFICER FOR ASSESSMENT YEAR 2013 14 AND WHICH WOULD BE DEALT WITH BY THE ASSESSING OFFICER IN ACCORDANCE WITH THE PROVISIONS OF LAW. WE DO NOT FIND ANY INFIRMITY IN THE AFORESAID FINDINGS / OBSERVATIONS OF THE LEARNED COMMISSIONER (APPEALS) . IN VIEW OF THE ABOVE, GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. 10 . IN THE RESULT, ASSESSEES AP PEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.06.2018 SD/ - MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 20.06.2018 8 LOK CONSTRUCTIONS COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI