M/S. PATHAK CONSTRUCTION & FINANCE P. LTD, MUMBAI V. THE ITO WD 9(2)(4), MUMBAI

ITA 3549/MUM/2007

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 4674 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 20-09-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 08-05-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI R.S.PADVEKAR, JM ITA NO.3549/MUM/2007 : ASST.YEAR 2000-2001 M/S.PATHAK CONSTRUCTION & FINANCE PRIVATE LIMITED, C/O.SHANKARLAL JAIN & ASSOCIATES 12, ENGINEER BUILDING 265 PRINCESS STREET, MUMBAI 400 002. PA NO.AABCP4118L. VS. THE INCOME TAX OFFICER WARD 9(2)4 MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.GOPAL RESPONDENT BY : SHRI JITENDRA YADAV O R D E R PER R.S.SYAL (AM) : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 09.03.2007 IN RELATION TO THE ASSESSMENT YEAR 2000-2001. IT IS A RECALLED MATTER INASMUCH AS THE EARLIER PASSED BY THE TRIBUNAL WAS SUBSEQUENTLY RECALLED VIDE ORDER DATED 25.06.2010. 2. GROUND NOS.1 AND 6 AGAINST THE INITIATION OF REA SSESSMENT WERE NOT PRESSED BY THE LEARNED A.R. THESE, THEREFORE, STAND DISMISS ED. 3. GROUND NOS.2 TO 4 ARE AGAINST CONFIRMATION OF AD OPTION OF SALE PRICE OF FLAT AT RS.740 PER SQUARE FEET BASED ON THE VALUATION PLACE D BY THE STAMP DUTY AUTHORITIES. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE IS A BUILDER. AS PER ASSESSMENT ORDER, CONSTRUCTION OF THE BUILDING KN OWN AS SINDHU PALACE WAS STARTED IN FINANCIAL YEAR 1996-97 AND ENDED IN FINA NCIAL YEAR 1999-2000. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEA R 2001-2002 IT WAS CONFIRMED BY THE A.O. THAT THE PROJECT ENDED IN FINANCIAL YEA R 1999-2000 RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION. FROM THE DETAI LS FURNISHED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YE AR 2001-2002, IT WAS NOTICED ITA NO.3549/MUM/2007 M/S.PATHAK CONSTRUCTION & FINANCE PVT.LTD. 2 THAT THE ASSESSEE HAS RECEIVED FULL CONSIDERATION B Y 31.03.2000 IN RESPECT OF CERTAIN FLATS. THE ASSESSEE HAD SHOWN VARIED SALE RATE FROM RS.500 TO 740. ON THE BASIS OF THE VIEW TAKEN BY THE A.O. IN ASSESSMENT YEAR 2001- 2002, IT WAS OPINED IN THE INSTANT YEAR ALSO THAT THE SALE OF 15 FLATS ADMEASU RING 8625 SQ.FT. SHOULD BE TAKEN AT RS.740 PER SQ.FT. WHILE FINALIZING THE PRESENT ASSE SSMENT, THE ASSESSING OFFICER ALSO VALUED CLOSING STOCK OF 11695 SQ.FT. AT RS.740 PER SQ.FT. AND MADE THE RESULTANT ADDITION. NO RELIEF WAS ALLOWED IN THE FIRST APPEAL . 4. AT THE VERY OUTSET THE LEARNED COUNSEL FOR THE A SSESSEE CONTENDED THAT THE INSTANT PROCEEDINGS HAVE STARTED ON THE BASIS OF VI EW TAKEN BY THE A.O. IN ASSESSMENT YEAR 2001-2002 WHICH TRAVELLED BEFORE TH E TRIBUNAL. WHILE PLACING ON RECORD A COPY OF THE ORDER PASSED BY THE TRIBUNAL I N ITA NO.1637/MUM/2005 DATED 28.04.2008, THE LEARNED A.R. POINTED OUT THAT THE A DOPTION OF RATE OF RS.740 PER SQ.FT. AS APPLIED BY THE ASSESSING OFFICER HAS BEEN UPHELD BY THE TRIBUNAL. FURTHER THE REJECTION OF BOOKS OF ACCOUNT U/S.145 WAS APPRO VED BY THE TRIBUNAL. AS REGARDS THE ADDITION ON ACCOUNT OF VALUATION OF CLOSING STO CK, THE TRIBUNAL HELD THAT THE SAID ADDITION OF RS.5,88,000 WAS NOT SUSTAINABLE ON THE PREMISE THAT THE ASSESSEE COULD VALUE STOCK AT COST OR MARKET PRICE WHICHEVE R IS LESS. THE LEARNED A.R., WHILE REFERRING TO THE ASSESSMENT ORDER FOR ASSESSM ENT YEAR 2001-2002, SUBMITTED THAT IN CURRENT YEAR THERE IS CLOSING STOCK OF 3675 SQ.FT. AND TOTAL SALE WAS OF THE PROJECT WAS ADMEASURING 16645 SQ.FT., BOTH TOTALL ING TO 20320 SQ.FT. HE SUBMITTED THAT IN THE ASSESSMENT YEAR UNDER CONSIDERATION ALS O THE SALE IS ADMEASURING 8625 SQ.FT. AND THE CLOSING STOCK AT 11,695 SQ.FT., BOTH TOTALLING AREA OF 20320 SQ.FT. HE SUBMITTED THAT THE ADDITION ON ACCOUNT OF SALE OF 8 625 SQ.FT. IN THE ASSESSMENT YEAR 2000-2001 WAS SUBSEQUENTLY TAXED BY THE A.O. IN ASS ESSMENT YEAR 2001-2002 ALSO WHEREIN THE FIGURE OF 16,645 SQ.FT. WAS RECORDED WH ICH IS INCLUSIVE OF THE SALE MADE IN THE CURRENT YEAR. IT WAS FURTHER SUBMITTED THA T ONCE THE TRIBUNAL HAD SUSTAINED THE ADDITION IN RESPECT OF SALE PRICE BY ADOPTING S ALE RATE OF RS740 SQ.FT. ON THE AREA SOLD INCLUSIVE OF THAT FOR THE CURRENT YEAR, THEN THE ADDITION MADE IN THIS YEAR ITA NO.3549/MUM/2007 M/S.PATHAK CONSTRUCTION & FINANCE PVT.LTD. 3 SHOULD BE DELETED BECAUSE OTHERWISE IT WOULD AMOUNT TO MAKING OF THE DOUBLE ADDITION FOR THE SAME INCOME. IN THE OPPOSITION, TH E LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE IMPUGNED ORDER. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS SEEN THAT THE ADOPTION OF RATE OF RS7 40 SQ.FT. BY THE ASSESSING OFFICER IN THE CURRENT YEAR ON THE BASIS OF HIS VIEW TAKEN IN THE SUBSEQUENT YEAR, HAS BEEN APPROVED BY THE TRIBUNAL, IN WHICH SALE HAS BEEN S HOWN OF 16,645 SQ.FT. OF AREA. THE VIEW POINT OF THE LEARNED A.R. IS THAT THE SALE OF 15 FLATS ADMEASURING 8625 SQ.FT. IN THIS YEAR HAS BEEN INCLUDED BY THE A.O. IN ASSESSMENT YEAR 2001-2002 ALSO AND AS A RESULT OF THE SUSTENANCE OF ADDITION IN AS SESSMENT YEAR 2001-2002, NO ADDITION IS CALLED FOR IN THE YEAR. IN PRINCIPLE WE AGREE WITH THE ARGUMENT RAISED BY THE LEARNED A.R. THAT IF SALE OF 8625 SQ.FT. HAS B EEN TAXED BY THE A.O. IN THIS YEAR AS WELL AS THE SUBSEQUENT YEAR THEN WITH THE SUSTEN ANCE OF ADDITION BY THE TRIBUNAL IN SUCH SUBSEQUENT YEAR, NO ADDITION IS CALLED FOR IN THE ASSESSMENT YEAR UNDER CONSIDERATION. HOWEVER THE DETAILED FACTS IN THIS R EGARD ARE NOT AVAILABLE ON RECORD. UNDER SUCH CIRCUMSTANCES WE SET ASIDE THE IMPUGNED ORDER AND RESTORE THE MATTER TO THE FILE OF A.O. FOR VERIFYING WHETHER THE SA LE OF 15 FLATS ADMEASURING AREA OF 8625 SQ.FT. AS MADE IN THE ASSESSMENT YEAR 2000-200 1 IS PART AND PARCEL OF TOTAL SALE OF 16645 SQ.FT. IN ASSESSMENT YEAR 2001-2002. IF TH IS AREA HAPPENS TO BE THE SIMILAR, THEN OBVIOUSLY THE ADDITION IN THE INSTANT YEAR TO THIS EXTENT SHOULD BE DELETED. IF HOWEVER IT IS FOUND THAT BOTH THE AREAS ARE DIFFERE NT OR SOME OTHER PROJECT WAS ALSO UNDERTAKEN BY THE ASSESSEE, FROM WHICH SUCH SALES W ERE MADE, THEN THE ADDITION SHOULD BE SUSTAINED AS THE APPLICATION OF RATE OF R S740 PER SQ.FT. HAS BEEN UPHELD BY THE TRIBUNAL IN THE SUBSEQUENT YEAR. 6. INSOFAR AS THE ADDITION ON ACCOUNT OF VAL UATION OF CLOSING STOCK IS CONCERNED WHICH HAS BEEN MADE BY THE A.O. BY ADOPTING THE SAM E RATE OF RS740 PER SQ.FT., WE FIND THAT THE TRIBUNAL HAS DELETED SUCH ADDITION IN ASSESSMENT YEAR 2001-2002. THAT ITA NO.3549/MUM/2007 M/S.PATHAK CONSTRUCTION & FINANCE PVT.LTD. 4 BEING THE POSITION AND IN THE ABSENCE OF ANY DIFFER ENCE IN FACTS HAVING BEEN BROUGHT TO OUR NOTICE BY THE LD. DR, WE HOLD THAT THE ADDIT ION ON ACCOUNT OF VALUATION OF CLOSING STOCK IS NOT WARRANTED IN THIS YEAR. 7. GROUND NO.5 REGARDING REJECTION OF BOOKS OF ACCOUNT U/S.145 IS UPHELD AS THE SIMILAR VIEW WAS TAKEN BY THE TRIBUNAL IN SUBSEQUEN T YEAR ALSO. 8. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 24 TH DAY OF SEPTEMBER, 2010. SD/- SD/- ( R.S.PADVEKAR ) ( R.S.SYAL ) JUDICIAL MEMBER ACC OUNTANT MEMBER MUMBAI : 24 TH SEPTEMBER, 2010. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - IX, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.