ACIT 33(2), MUMBAI V. PARMAR BUILD TECH, MUMBAI

ITA 3385/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1861 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 18-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: Set aside

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) I.T.A. NO. 3385 /MUM/ 201 8 (ASSESSMENT YEAR 20 12 - 13 ) ACIT - 33(2) ROOM NO. 608 6 TH FLOOR PRATAKSHYAKAR BHAVAN, BKC BANDRA EAST MUMBAI - 400 051. V S . M/S. PARMAR BUILD TEC H PARMAR ESTATE, PAREKH NAGAR, SWAMI VEVEKANAND SCHOOL KANDIVALI (WEST) MUMBAI - 400 067. PAN : AAJFP2574F ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY SHRI CHAITANYA ANJARIA DATE OF HEARING 11.6 . 201 9 DATE OF PRONOUNCEMENT 18 . 6 . 201 9 O R D E R THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) DATED 23.2.2018 AND PERTAINS TO A.Y. 2012 - 13. 2. THE GROUNDS OF APPEAL READ AS UNDER : - 1 . 'WHETHER THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS. 1,28,21,750/ - BEING THE VALUE OF CONSIDERATION RECEIVED BY THE ASSESSEE WHEN IT WAS CLEAR THAT SUBSTANTIAL AMOUNTS HAVE BEEN RECEIVED BY THE ASSESSEE BEFORE SIGNING OF THE AGREEMENTS OF SALE DURING THE YEAR.' 2. 'WHETHER THE LD. CIT(A) WAS RIGHT IN ACCEPT ING THE DATE OF POSSESSION LETTERS AS DATE OF SALES WHEN IT WAS CLEAR FROM THE FACTS THAT MAJOR AMOUNTS HAVE BEEN RECEIVED UPON SIGNING OF SALE AGREEMENTS.' 3. 'THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CU(A) ON THE ABOVE GROUND BE SET ASIDE AND THA T OF THE ASSESSING OFFICER BE RESTORED.' 4. 'THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY.' 3. BRIEF FACTS OF THE CASE ARE AS UNDER : - M/S. PARMAR BUILD TECH 2 THE ASSESSEE IS A PARTNERSHIP FIRM AND IS ENGAGED IN THE BUSINES S OF CONSTRUCTION AND DEVELOPMENT OF PROPERTIES. THE RETURN OF INCOME FOR THE A .Y . 2012 - 13 WAS FIELD BY THE ASSESSEE ON 31.03.2013 DECLARING TOTAL INCOME OF RS. 10,11,640. CASE WAS SELECTED FOR SCRUTINY. DURING THE ASSESSMENT PROCEEDINGS THE AO ASKED THE A SSESSEE TO PROVIDE A RECONCILIATION OF TRANSACTIONS REPORTED IN AIR WITH ITS BOOKS OF ACCOUNT ALONG WITH OTHER DETAILS CALLED FOR. THE ASSESSEE SUBMITTED VARIOUS DETAILS ASKED FOR BY THE AO AND ALSO A LIST OF REGISTERED AGREEMENTS FOR SALE OF IMMOVABLE PRO PERTIES AS REPORTED IN AIR STATEMENT AND RECONCILIATION OF REVENUE RECOGNIZED IN THE BOOKS. THE ASSESSEE SUBMITTED THAT IT RECOGNIZES INCOME ON PROJECT COMPLETION METHOD BASIS I.E WHEN POSSESSION IS HANDED OVER TO THE PURCHASER OF THE PROPERTIES. THE ASSES SEE SUBMITTED THAT OUT OF TOTAL RS. 140,71,700 REPORTED IN AIR, SALE RECEIPTS OF RS. 12,50,000 WERE RECOGNIZED IN FY 2011 - 12, SALE OF RS, 1,28 ,21,700 IN FY 2012 - 13 AS UNDER : AIR NO. AGREEMENT VALUE SALES BOOKED IN F.Y. 2011 - 12 SALES BOOKED IN F.Y. 2012 - 13 1. 29,95,200 29,95,200 2. 25,00,000 25,00,000 3. 38,61,500 38,61,500 4. 12,50,000 12,50,000 5. 34,65,000 34,65,000 TOTAL 1,40,71,700 12,50,000 1,28,21,700 4. THE AO HELD THAT THE ASSESSEE IS FOLLOWING MERCANTIL E SYSTEM OF ACCOUNTING BUT DEFERRING RECOGNIZING OF REVENUE TO THE SUBSEQUENT YEARS AND MADE AN ADDITION OF RS.1,28,21,700 BEING THE SALES RECOGNIZED BY THE ASSESSEE IN THE SUBSE QUENT ASSESSMENT Y EAR. THE ASSESSING OFFICER FURTHER HELD AS UNDER : - M/S. PARMAR BUILD TECH 3 THE A R OF THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS STATED THAT FOR A.Y. 11 - 12 ASSESSMENT WAS FINALIZED U/S. 143(3 ) ON 25 - 3 - 2014 AT RS.3,8 7 ,99,807/ - AGAINST RETURNED INCOME OF RS.82,79,010 / - BY MAKING ADDITION ON THE BASIS OF AIR. DUE TO THE SAME, THE INCOME DECLARED IN FOLLO WING YEAR HAS BEEN TAXED IN F.Y. 2010 - 1 1 AND F.Y. 11 - 12. THEREFORE, THE ASSESSEE HAS ASKED FOR REDUCTION OF INCOME IN THE INSTANT YEAR I.E. A.Y . 2012 - 13 FO R THE ADDITION MADE IN A.Y 11 - 12. BUT THE ADDITION DURING THE YEAR IS LES S COMPARED TO ALLOW ABILITY OF SALES DUE TO WHICH THE BALANCE CREDIT OF SALES IS CARRIED FORWARD. IF IT IS FOLLOWED THEN FOLLOWING PICTURE EMERGES . S UBJECT TO ABOVE REMARKS THE TOTAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IS COMPUTED AS UN DER: - RS. RS. I. INCOME FROM BUSINESS & PROFESSION (AS PER COMPUTATION OF INCOME) 6,42,753 ADD : AS DISCUSSED 1 PARA 4.1 12821100 LESS : SALES CONSIDERED IN A.Y 11 - 12 NOW REVERSED (TO THE EXTENT AVAILABLE) (12821700) 6,42,753 II. INCOME FROM OTH ER SOURCES (AS PER COMPUTATION OF INCOME) 3,68,883 GROSS TOTAL INCOME 10,11,636 LESS: DEDUCTION U/S CHAPTER VI - A (AS PER COMPUTATION OF INCOME) NIL ASSESSED TOTAL INCOME 10,11,636 ROUNDED OFF TO U /S 288A 10,11,640 5. ON THE BASIS OF PRINCIP LE OF CONSISTENCY, THE AMOUNT OF SALES ADDED IN A.Y. 2011 - 12 IS ALLOWED TO SET OFF TO THE EXTENT OF ADDITION OF RS,1,28,21 ,700 / - OF THE CURRENT YEAR I.E. A.Y. 2012 - 13. AS THERE IS NO PROVISIONS FOR MAKING THE ASSESSMENT BELOW THE RETURN INCOME IN THE IT AC T, 1961, THE ASSESSMENT IS FINALIZED AT THE RETURN INCOME I.E. RS.10,11,640/ - . 6. UPON ASSESSEES APPEAL LEARNED CIT(A) NOTED THE ASSESSING OFFICER HAS ONLY GONE BY THE AGREEMENT OF SALE. LEARNED CIT(A) NOTED THAT HE HAS GONE THROUGH THE POSSESSION LETTE RS. ACCORDING TO WHICH THE POSSESSION WAS HANDED SUBSEQUENTLY. LEARNED CIT(A) FURTHER OBSERVED THAT ASSESSING OFFICER HAS NOT CALLED FOR BOOKS AND EXAMINED THE BOOKS OF ACCOUNT. LEARNED CIT(A) DELETED M/S. PARMAR BUILD TECH 4 THE ADDITION MADE BY THE ASSESSING OFFICER BY REFERRING TO REMAND REPORT OF THE ASSESSING OFFICER. LEARNED CIT(A) OBSERVED THAT THE ASSESSING OFFICER HAS COMPLICATED THE MATTER BY MAKING ADDITION AS WELL AS DELETION SIMULTANEOUSLY. AGAINST THIS ORDER THE ASSESSEE IS N APPEAL BEFORE THE ITAT. 7. I HAVE HEARD L EARNED DEPARTMENTAL REPRESENTATIVE. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTICE. 8. UPON CAREFUL CONSIDERATION I NOTE THAT THE ASSESSING OFFICER HAS PASSED THE VERY BIZARRE ORDER. HE HAS ADDED THE SUM OF RS. 1,28,21,700/ - AT THE SAME TIME HE DE LETED THE SAME. THIS FACT HAS ALSO BEEN NOTED BY LEARNED CIT(A) WHEN HE WAS CONCLUDING HIS ORDER. FURTHER I NOTE THAT LEARNED CIT(A) HAS OBSERVED THAT THE ASSESSING OFFICER HAS NOT CALLED FOR BOOKS, NOT EXAMINED THE BOOKS OF ACCOUNT. WHEN THE ASSESSING OFF ICER HAS NOT MADE ANY EXAMINATION, IT WAS INCUMBENT UPON THE LEARNED CIT(A) TO REMIT THE ISSUE TO THE ASSESSING OFFICER FOR PROPER EXAMINATION. IT HAS BEEN HELD BY HON'B LE APEX COURT IN THE CASE OF KAPURCHAND SHRIMAL VS. TAX RECOVERY OFFICER (72 ITR 623) T HAT IT IS THE DUTY OF THE APPELLATE AUTHORITY TO CORRECT THE ERRORS IN THE ORDERS OF AUTHORITIES BELOW AND REMIT THE MATTER WITH NECESSARY DIRECTION IF REQUIRED UNLESS PROHIBITED BY LAW. IN THE PRESENT CASE, I NOTE THAT LEARNED CIT(A) HAS GIVEN A FINDING T HAT THE ASSESSING OFFICER HAS NOT AT ALL EXAMINED THE BOOKS OF ACCOUNT. IN THESE CIRCUMSTANCES, I DEEM IT APPROPRIATE TO REMIT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER. ASSESSING OFFICER IS DIRECTED TO PASS A FRESH ASSESSMENT ORDER DE NOVO . 9. IN TH E RESU LT, APPEAL FILED BY THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 18 . 6 . 201 9 . SD/ - (SH A MIM YAHYA ) ACCOUNTANT MEMBER M/S. PARMAR BUILD TECH 5 MUMBAI ; DATED : 18 / 6 / 20 1 9 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRA R ) PS ITAT, MUMBAI