ADDL CIT 10(1), MUMBAI V. SRINIVAS DEVELOPERS P. LTD, MUMBAI

ITA 3495/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8445 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 23-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 04-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S D SRIVASTAVA
• Keywords: Business income
• Section: 133A

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI .. , ! ' # , $ ' , % BEFORE SHRI R.S.SYAL, AM AND SHRI VIVEK VARMA, JM ./ ITA NO.3495/MUM/2010 ( $' ( $' ( $' ( $' ( / / / / ASSESSMENT YEAR : 2006-2007) THE DY.COMMISSIONER OF INCOME-TAX CIRCLE 10(1) MUMBAI. M/S.SRINIVASA DEVELOPERS PVT. LTD. 148 VYAS BHAVAN, 2 ND FLOOR 6 TH LANE, HINDU COLONY, DADAR (EAST) MUMBAI 400 014. PAN : AAHCS8138B. ( )* / // / APPELLANT) ' ' ' ' / VS. ( +,)*/ RESPONDENT) )* - -- - . . . . / APPELLANT BY : SHRI S.D.SRIVASTAVA (CIT-DR) +,)* - . - . - . - . / RESPONDENT BY : SHRI RAJKUMAR SINGH ' - /! / / / / DATE OF HEARING : 23.10.2012 01( - /! / DATE OF PRONOUNCEMENT : 23.10.2012 '2 '2 '2 '2 / / / / O R D E R PER R.S.SYAL (AM) : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 19.02.2 010 IN RELATION TO THE ASSESSMENT YEAR 2006-2007. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE TOOK UP ONE PROJECT OF CONSTRUCTION AT MATUNGA WHEREIN THE EXISTING BUILDING WAS FIRST PURCHASED FROM RANE FAMILY WITH SIX TENAN TS. AGREEMENTS WERE ENTERED INTO WITH THE TENANTS THAT THEY WILL B E PROVIDED WITH FLATS IN THE NEW BUILDING TO BE CONSTRUCTED AND THE Y WILL ALSO BE PROVIDED WITH THE ALTERNATIVE ACCOMMODATION DURING THE COURSE OF CONSTRUCTION OF THE BUILDING. THE SAID BUILDING WAS DEMOLISHED AND A ITA NO.3495/MUM/2010. M/S.SRINIVASA DEVELOPERS PVT. LTD. 2 NEW ONE WAS CONSTRUCTED IN ITS PLACE. THE TENANTS W ERE GIVEN SIX FLATS AND THE REMAINING FLATS WERE SOLD TO OTHERS AND ALS O TO THE DIRECTORS OF THE ASSESSEE-COMPANY. THERE WAS A SURVEY ACTION U/S 133A ON 13.03.2006 IN THE OFFICE PREMISES OF THE ASSESSEE-C OMPANY. DURING THE COURSE OF THE SUCH SURVEY, SOME DOCUMENTS WERE FOUND EVIDENCING RECEIPT OF SALE PROCEEDS OF ON-MONEY IN RESPECT OF TWO FLATS AMOUNTING TO ` 73.50 LAKH. DURING THE COURSE OF SURVEY SHRI HEMANT ARYA, THE DIRECTOR OF THE ASSESSEE-COMPANY, ADMITTED THAT THE SALE TO THIS EXTENT WAS RECEIVED IN CASH BUT NOT RE CORDED. THE SAID AMOUNT WAS OFFERED FOR TAXATION ALSO. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERV ED THAT THE TOTAL SALES PROCEEDS FROM THE PROJECT WERE DECLARED BY TH E ASSESSEE AT ` 9,12,09,400 (ALSO INCLUDING THE SURRENDER OF ` 73.50 LAKH WHICH WAS IN RELATION TO TWO FLATS HAVING NOS. 601 AND 602). FROM THE MATERIAL GATHERED DURING THE COURSE OF SURVEY IT WAS OBSERVE D THAT THE ASSESSEE RECEIVED TOTAL CONSIDERATION AT THE RATE OF ` 8000 PER SQ.FEET IN RESPECT OF FLAT NOS. 601 AND 602 OUT OF WHICH ` 5000 PER SQ.FT. WAS RECEIVED BY CHEQUE AND REMAINING ` 3000 PER SQ.FT. IN CASH. IN THIS WAY IT WAS OBSERVED THAT THERE WAS CASH ELEMENT FROM THESE TWO TRANSACTIONS AMOUNTING TO ` 73.50 LAKH. HERE IT IS RELEVANT TO NOTE THAT THE DOCUMENTS FOUND DURING THE COURSE OF SURVEY ALSO EV IDENCED THE RECEIPT OF ` 73.50 LAKH IN CASH IN RESPECT OF THESE TWO FLATS. D RAWING AN ANALOGY FROM THE RECEIPT OF ` 3000 PER SQ.FT. IN CASH IN RESPECT OF THESE TWO FLATS, AND EXTENDING THE SAME TO OTHER FL ATS AS WELL, THE ASSESSING OFFICER HELD THAT THE SALE PROCEEDS IN RE SPECT OF THE PROJECT ITA NO.3495/MUM/2010. M/S.SRINIVASA DEVELOPERS PVT. LTD. 3 SHOULD HAVE BEEN DECLARED AT ` 11.65 CRORE AS AGAINST ` 9.12 CRORE. THIS FIGURE OF ` 11.65 CRORE INCLUDED NOT ONLY THE ALLEGED ON-MONEY AT THE RATE OF ` 3000 PER SQ.FT. RECEIVED IN CASH BUT ALSO THE ALLEG ED SALE PROCEEDS FROM PARKING SLOTS AT THE RATE OF ` 3 LAKH PER SLOT AND A FURTHER SUM OF ` 30 LAKH TOWARDS `SURPLUSES LIKELY IN THE PROJECT. ACCORDINGLY THE ADDITION OF ` 2.52 ( ` 11.65 CRORE BEING THE PRESUMED SALES MINUS ` 9.12 CRORE BEING THE ACTUAL SALES) WAS MADE. 3. DURING THE COURSE OF FIRST APPELLATE PROC EEDINGS, IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT ONLY A SUM OF ` 73.50 LAKH WAS RECEIVED AS ON-MONEY IN RESPECT OF FLAT NOS. 60 1 AND 602 AND THERE WAS NO BASIS WITH THE ASSESSING OFFICER TO PR ESUME THE RECEIPT OF SUCH ON-MONEY IN RESPECT OF OTHER FLATS AS WELL. IT WAS ALSO SUBMITTED THAT THE ASSESSEE DID NOT RECEIVE ANY SAL E CONSIDERATION IN RESPECT OF PARKING SLOTS. THE DOCUMENTS FOUND DURIN G THE COURSE OF SURVEY WHICH FORMED THE BEDROCK FOR THE ASSESSING O FFICER TO MAKE SUCH ADDITION, WAS CLAIMED AS `MARKETING STRATEGY DOCUMENT EXECUTED BEFORE THE COMMENCEMENT OF THE PROJECT. IT WAS STATED THAT THIS DOCUMENT WAS EXECUTED AS A PLAN FOR RECEIVING THE SALE CONSIDERATION SO THAT ADEQUATE FINANCES COULD BE RA ISED. IT WAS ALSO SUBMITTED THAT THE ASSESSEE DID NOT RECEIVE ANY AMO UNT IN THE NATURE OF `SURPLUS LIKELY IN THE PROJECT TO THE TUNE OF ` 30 LAKH WHICH WERE CONSIDERED BY THE ASSESSING OFFICER. THE LEARNED CI T(A) GOT CONVINCED WITH THE ASSESSEES SUBMISSION AND DELETE D THE ADDITION. THE REVENUE IS IN APPEAL AGAINST THE DELETION OF TH IS ADDITION. ITA NO.3495/MUM/2010. M/S.SRINIVASA DEVELOPERS PVT. LTD. 4 4. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD, WE FIND THAT BASICALLY THERE AR E THREE COMPONENTS OF THE ADDITION SO MADE AND DELETED. THE FIRST COMP ONENT IS THE ALLEGED RECEIPT OF ON-MONEY. IT IS ON THE BASIS OF RECEIPT OF ` 73.50 LAKH IN RESPECT OF FLAT NOS.601 AND 602 THAT THE AS SESSING OFFICER PRESUMED THE ASSESSEE TO HAVE RECEIVED ON-MONEY AT THE RATE OF ` 3000 PER SQ.FT. IN CASH FROM THE SALE OF OTHER FLAT S AS WELL. ON A SPECIFIC QUERY, IT WAS ADMITTED BY THE LEARNED DEPA RTMENTAL REPRESENTATIVE THAT NO MATERIAL WAS FOUND DURING TH E COURSE OF SURVEY TO INDICATE THAT THE ASSESSEE HAD, IN FACT, RECEIVED ON-MONEY IN RESPECT OF ANY FLATS OTHER THAN 601 AND 602 FOR WHICH THE ASSESSEE ITSELF OFFERED ` 73.50 LAKH AS ITS INCOME. IT FURTHER TRANSPIRED DUR ING THE COURSE OF ARGUMENT THAT THE ASSESSING OFFICER C OULD NOT FIND OUT ANY EVIDENCE EVEN AFTER RECORDING STATEMENT OF SOME OF THE BUYERS TO THE EFFECT THAT ANY ON-MONEY WAS GIVEN IN THIS REGA RD. WHEN THERE IS A SPECIFIC MENTION OF ON-MONEY OF ` 73.50 LAKH IN THE DOCUMENTS FOUND DURING THE COURSE OF SURVEY, IN OUR CONSIDERE D OPINION, THE ASSESSING OFFICER SHOULD NOT HAVE MADE ANY ADDITION ON ACCOUNT OF THE ALLEGED RECEIPT OF ON-MONEY FROM OTHER BUYERS O F THE FLAT WITHOUT ANY CLINCHING EVIDENCE IN SUPPORT OF HIS CASE. HERE IT NEEDS TO MENTION THAT THE ASSESSEE HAS BEEN SUBJECTED TO SUR VEY. IF ANY AMOUNT HAD BEEN RECEIVED, SUCH AMOUNT WOULD HAVE COME TO F ORE BY WAY OF ANY DOCUMENT DURING THE COURSE OF SURVEY. EVEN THE ATTEMPT MADE BY THE A.O. TO CONDUCT INQUIRIES WITH THE BUYERS REMAI NED FUTILE. UNDER SUCH CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINIO N THAT THERE IS NO ITA NO.3495/MUM/2010. M/S.SRINIVASA DEVELOPERS PVT. LTD. 5 BASIS FOR A PRESUMPTION THAT THE ASSESSEE DID RECEI VE ANY ON-MONEY FROM THE BUYERS OF FLATS OTHER THAN THOSE OF 601 AN D 602. 5. THE SECOND COMPONENT OF THIS ADDITION IS ABOUT T HE RECEIPTS FROM THE SALE OF PARKING SLOTS. THE DOCUMENTS ON TH E BASIS ON WHICH THE ASSESSING OFFICER PROCEEDED TO MAKE SUCH ADDITI ON STARTS WITH ANNEXURE IX = MARKETING STRATEGY.. IT IS IN THI S ARGUMENT THAT THERE IS A MENTION OF CAR PARKING SLOT OF ` 3 LAKH EACH EQUAL TO ` 0.24 CRORE. THE ASSESSEE CONTENDED THAT THIS DOCUME NT WAS PREPARED AT THE BEGINNING OF THE PROJECT ONLY AND WITH THE S OLE PURPOSE OF LURING THE FINANCIER OF THE PROJECT. THIS DOCUMENT WAS CONTAINING ONLY THE PROJECT STATEMENT AND NOT ACTUALS. ON A SPECIFI C QUERY FROM THE BENCH, THE LEARNED DEPARTMENTAL REPRESENTATIVE ADMI TTED THAT THIS DOCUMENT DOES NOT BEAR ANY DATE. WHEN WE CONSIDER TH E OTHER CONTENTS OF THIS DOCUMENT MORE SPECIFICALLY WITH RE FERENCE TO MARKETING STRATEGY IN THE BEGINNING OF THIS DOCUM ENT, IT BECOMES CLEAR THAT THIS DOCUMENT DOES NOT RECORD ANY TRANSA CTIONS HAVING BEEN TAKEN PLACE BUT ONLY A MARKETING STRATEGY TO BE ADO PTED, AS HAS BEEN MENTIONED ON THE FACE OF THE DOCUMENT ITSELF. WHEN S URVEY WAS CONDUCTED, ALL THE FLATS WERE SOLD OUT. NO EVIDENCE WAS FOUND INDICATING THE ASSESSEE TO HAVE RECEIVED ANY SEPARA TE SALE CONSIDERATION IN RESPECT OF CAR SLOTS. THUS, IT IS CLEAR THAT THERE WAS NO EVIDENCE INDICATING THE RECEIPT OF ` 24 LAKH TOWARDS SALE OF CAR PARKING SLOTS. ITA NO.3495/MUM/2010. M/S.SRINIVASA DEVELOPERS PVT. LTD. 6 6. SIMILAR IS THE POSITION REGARDING THE THIRD COMP ONENT OF THE ADDITION BEING SURPLUSES LIKELY IN THE PROJECT COS T OF ` 6.85 CRORE. THIS PART OF THE ADDITION IS ALSO BASED ON THE SOLE DOCUMENT FOUND DURING THE COURSE OF SURVEY STARTING WITH MARKETIN G STRATEGY. COMPONENTS OF THIS ` 30 LAKH HAVE BEEN MENTIONED IN THE DOCUMENT ITSELF, VIZ., DEMOLITION ` 7 LAKH, STAMP DUTY ` 10 LAKH, TENANTS TRANSIT ` 6 LAKH, MHADA ` 2 LAKH AND STAIRCASE PREMIUM ` 5 LAKH. ALL THE ITEMS, EXCEPT THE LAST BEING STAIRCASE PREMIUM OF ` 5 LAKH, FROM THEIR VERY NATURE ARE EXPENSES AND NOT ANY ON-MONEY RECEI VED BY THE ASSESSEE. INSOFAR AS THE LAST ITEM BEING STAIRCASE PREMIUM IS CONCERNED, THE POSITION IS SIMILAR TO THAT OF THE A LLEGED ON-MONEY RECEIVED IN RESPECT OF SALE OF CAR PARKING SLOTS AN D SALE OF OTHER FLATS. THERE IS NO EVIDENCE WORTH THE NAME THAT THE ASSESS EE KEPT ANY STAIRCASE PREMIUM OF ` 5 LAKH OUTSIDE THE BOOKS OF ACCOUNT. 7. IN OUR CONSIDERED OPINION, THE LEARNED CIT(A) WA S JUSTIFIED IN DELETING THESE ADDITIONS. 8. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 23 RD DAY OF OCTOBER, 2012. '2 - 01( 3''4 1 - 5 SD/- SD/- (VIVEK VARMA) (R.S.SYAL) $ ' $ ' $ ' $ ' / JUDICIAL MEMBER ! ' ! ' ! ' ! ' / ACCOUNTANT MEMBER MUMBAI ; 3'' DATED : 23 RD OCTOBER, 2012. DEVDAS* ITA NO.3495/MUM/2010. M/S.SRINIVASA DEVELOPERS PVT. LTD. 7 '2 - +$/6# 7#(/ '2 - +$/6# 7#(/ '2 - +$/6# 7#(/ '2 - +$/6# 7#(// COPY OF THE ORDER FORWARDED TO : 1. )* / THE APPELLANT 2. +,)* / THE RESPONDENT. 3. 8 () / THE CIT(A)-XXI, MUMBAI. 4. 8 / CIT 5. #;5 +$/$' , , / DR, ITAT, MUMBAI 6. 5< = / GUARD FILE. '2' '2' '2' '2' / BY ORDER, ,#/ +$/ //TRUE COPY// > > > >/ // /? ? ? ? ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI