M/s. MALABAR INDUSTRIES P. LTD., MUMBAI V. ITO - 5(2)(3), MUMBAI

ITA 3568/MUM/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2585 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 1999-2000
• Appeal Filed On: 07-06-2006
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DAYA SHANKAR
• Keywords: Opportunity of being heard; Additional evidence; Difference of opinion; Corroborative evidences; Change of opinion
• Section: 143(3); 133A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VP & SHRI R.K. PANDA, AM I.T.A. NO. 3568/MUM/2006 (ASSESSMENT YEAR 1999-2000) M/S. MALABAR INDUSTRIES PVT. LTD. 101, CHITRAKOOT, 10 TH FLOOR, ALTAMOUNT ROAD, MUMBAI-400 026 PAN: AACCM1317K VS. I.T.O. 5(2)(3) R. NO. 566, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI -400 020 APPELLANT RESPONDENT I.T.A. NO. 3483/MUM/2006 (ASSESSMENT YEAR 1999-2000) I.T.A. NO. 4396/MUM/2006 (ASSESSMENT YEAR 2002-03) I.T.O. 5(2)(3) R. NO. 566, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI -400 020 VS. M/S. MALABAR INDUSTRIES PVT. LTD. 101, CHITRAKOOT, 10 TH FLOOR, ALTAMOUNT ROAD, MUMBAI-400 026 PAN: AACCM1317K APPELLANT RESPONDENT ASSESSEE BY: NONE REVENUE BY: SHRI DAYA SHANKAR O R D E R DATE OF HEARING: 20.10.2009 DATE OF ORDER: 18.12.2009 PER R.K. PANDA, AM: I.T.A. NO. 3568/MUM/06 AND I.T.A. NO. 3483/MUM/06 ARE CROSS APPEALS, THE FIRST ONE FILED BY THE ASSESSEE AND TH E SECOND ONE FILED BY THE REVENUE AND ARE DIRECTED AGAINST THE ORDER DATED 24 TH MARCH, 2006 OF THE CIT(A)-V, MUMBAI RELATING TO ASSESSMENT YEAR 1999-2 000. I.T.A. NO. 4396/MUM/06 IS AN APPEAL FILED BY THE REVENUE AND I S DIRECTED AGAINST THE ORDER DATED 5 TH JUNE, 2006 OF THE CIT(A)-V, MUMBAI RELATING TO ASSESSMENT YEAR 2002-03. FOR THE SAKE OF CONVENIEN CE ALL THE ABOVE M/S. MALABAR INDUSTRIES PVT. LTD. ====================== 2 APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS COMMON ORDER. 2. THE CASE WAS FIXED FOR HEARING ON A NUMBER OF TIMES AND WAS GETTING ADJOURNED FROM TIME TO TIME AT THE REQUEST OF THE LEARNED COUNSEL FOR THE ASSESSEE. THE CASE WAS LAST FIXED FOR HEAR ING ON 20 TH AUGUST, 2009 AND WAS ADJOURNED AT THE REQUEST OF THE LEARNED DR TO 20 TH OCTOBER, 2009. HOWEVER, ON 20 TH OCTOBER, 2009 NONE APPEARED ON BEHALF OF THE ASSES SEE. ACCORDINGLY, THE APPEALS ARE BEING DISPOSED OFF ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LEARNED D R. I.T.A. NO. 3568/MUM/2006 (BY ASSESSEE): 3. IN GROUNDS OF APPEAL NO. 1, THE ASSESSEE HAS CHALLE NGED THE ORDER OF THE CIT(A) IN CONFIRMING THE REOPENING OF THE AS SESSMENT MADE BY THE ASSESSING OFFICER U/S. 148 OF THE INCOME-TAX ACT, 1 961 (THE ACT). 4. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF BUILDINGS. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD FILED RETURN OF INC OME SHOWING LOSS OF RS.7,01,387 WHICH WAS PROCESSED U/S. 143(1)(A) OF T HE I.T. ACT ON 15.3.2000. LATER ON, SURVEY U/S. 133A WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 14.3.2003. DURING THE COURSE OF SURVEY VARIOUS DOCUMENTS WERE FOUND AND IMPOUNDED. ONE SU CH DOCUMENT WAS THE LETTER DATED 5.8.98 BEARING REFERENCE NO. 66:47 4 WRITTEN BY SHRI I.M. KADRI, ARCHITECT TO THE EXECUTIVE ENGINEER BUILDING PROPOSALS (CITY) MUNICIPAL CORPORATION OF GREATER MUMBAI SEEKING FUL L OCCUPATION CERTIFICATE ON THE GROUND THAT THE BUILDING UP TO 3 4 TH FLOOR WAS COMPLETE AS PER APPROVED PLANS. 4.1 FROM THE DOCUMENT IMPOUNDED DURING THE SURVEY ACTIO N, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS BEEN CONSTRUCTING THE BUILDING D AT PLOT BEARING NO. 356 MALABAR HILL, MUMBAI. THIS BUILDING WAS KNOWN AS PETIT HALL. THE ASSESSEE WAS FOLLOWING M/S. MALABAR INDUSTRIES PVT. LTD. ====================== 3 PROJECT COMPLETION METHOD IN RESPECT OF THIS BUILDI NG AND THE EXPENDITURE IN THE INVESTMENT IN THE SAID BUILDING WAS BEING SHOWN AS WORK-IN-PROGRESS. THE ASSESSING OFFICER A LSO OBSERVED THAT THE BUILDING CONSISTING OF 136 FLATS WAS COMPL ETE AND ALMOST ALL THE FLATS HAD BEEN DISPOSED OF AS ON 31.3.1999. THEREFORE, ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE SH OULD HAVE DECLARED PROFITS IN RESPECT OF THIS PROJECT IN A.Y. 1999-2000. IN VIEW OF THESE FACTS, THE ASSESSING OFFICER ISSUED N OTICE U/S. 148 OF THE ACT FOR THE YEAR UNDER CONSIDERATION. 5. BEFORE THE ASSESSING OFFICER THE ASSESSEE OBJECTED TO THE ISSUE OF NOTICE U/S. 148 ON VARIOUS GROUNDS. THE MAIN OBJEC TION OF THE ASSESSEE WAS THAT THE ACTION OF THE ASSESSING OFFICER AMOUNT ED TO MERE CHANGE OF OPINION WHICH CANNOT BE A PERMISSIBLE GROUND FOR RE OPENING THE ASSESSMENT U/S.147 OF THE ACT. HOWEVER, REJECTING THE PLEA OF THE ASSESSEE, THE ASSESSING OFFICER PROCEEDED TO COMPLE TE THE ASSESSMENT DETERMINING THE TOTAL INCOME AT RS.5,77,77,896. 6. IN APPEAL, THE LEARNED CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. WHILE DOING SO HE OBSERVED THAT THE CLAIM OF THE ASSESSEE THAT THE SAID PROJECT WAS NOT COMPLETE AS ON 31.3.1999 IS NO T CORRECT. HE OBSERVED THAT DURING THE COURSE OF SURVEY U/S. 133A A CERTIF ICATE DATED 5 TH AUGUST, 1998 ISSUED BY SHRI I.M. KADRI, ARCHITECT WAS FOUND AND IMPOUNDED WHICH SHOWS THAT THE ASSESSEE HAS DISCLOSED THE OCCUPATIO N OF ALL THE 34 FLOORS. FURTHER THE ASSESSEE HAD RECEIVED ALMOST FULL PAYME NT IN RESPECT OF THE 135 FLATS TILL 31.3.1999. ONLY IN RESPECT OF ONE F LAT (NO. D 53) PAYMENT HAS BEEN RECEIVED AFTER 31 ST MARCH, 1999. THEREFORE, IT IS CLEAR FROM THE FACT S THAT THE PROJECT WAS SUBSTANTIALLY COMPLETED UP TO 31 ST MARCH, 1999. HE REFERRED TO THE DECISION OF TRIBUNAL IN THE CASE OF CHAMPION CONSTRUCTION CO. VS. ITO REPORTED IN 5 ITD 495 WHEREIN IT HAS BE EN HELD THAT THE PROJECT WAS CONSIDERED TO BE COMPLETE SINCE THE ASSESSEE HA S SOLD ABOUT 80% OF THE AREA. SINCE IN THE INSTANT CASE, THE ASSESSEE HAS SOLD MORE THAN 80% OF THE AREA, FOLLOWING THE ABOVE DECISION, HE HELD THE PROJECT TO BE COMPLETE M/S. MALABAR INDUSTRIES PVT. LTD. ====================== 4 IN THE PREVIOUS YEAR RELEVANT TO THE A.Y. 1999-2000 . FURTHER THE CERTIFICATE OF I.M. KADRI, ARCHITECT DATED 5.8.1998 SHOWS THAT HE HAS CERTIFIED THE COMPLETION OF 34 FLOORS WHICH WAS IMP OUNDED DURING THE COURSE OF SURVEY. THEREFORE, THE ASSESSING OFFICER IS JUSTIFIED IN HAVING PRIMA FACIE MATERIAL BELIEVING THAT THE INCOME FROM PETIT HOUSE HAD ESCAPED THE ASSESSMENT SINCE THE ASSESSEE HAS NOT D ISCLOSED THE INCOME FROM THE SAID PROJECT IN ITS RETURN FOR A.Y. 1999-2 000 ALTHOUGH THE PROJECT WAS SUBSTANTIALLY COMPLETE. 7. HE ALSO REJECTED THE CONTENTION OF THE ASSESSEE THA T ACTION OF THE ASSESSING OFFICER TANTAMOUNT TO CHANGE OF OPINION. HE OBSERVED THAT THE RETURN FILED BY THE ASSESSEE WAS PROCESSED U/S. 143 (1)(A) OF THE ACT. SUBSEQUENT TO THE PROCESS OF RETURN THERE WAS NO AS SESSMENT U/S. 143(3) OF THE ACT. RELYING ON A NUMBER OF DECISIONS, HE R EJECTED THIS CONTENTION OF THE ASSESSEE ALSO. 8. AS REGARDS THE CONTENTION OF THE ASSESSEE THAT WHIL E COMPLETING THE ASSESSMENT U/S. 143(3) FOR THE A.Y. 2001-02, TH E ASSESSING OFFICER HAS GIVEN A FINDING THAT THE PROJECT CONSISTS OF 34 FLO ORS IN PETIT HOUSE WERE NOT COMPLETE, EVEN TILL 31.3.2002, HE OBSERVED ON P ERUSAL OF THE ASSESSMENT ORDER FOR THE 2001-02, THAT THE SAID ASS ESSMENT WAS COMPLETED ON 18 TH DECEMBER, 2002 WHEREAS SURVEY U/S. 133A WAS CONDUCTED ON 14 TH FEBRUARY, 2003. THEREFORE, THE DOCUMENTS WHICH WE RE FOUND DURING THE COURSE OF SURVEY WERE NOT AVAILABL E BEFORE THE ASSESSING OFFICER WHEN HE COMPLETED THE ASSESSMENT U/S. 143(3 ) FOR THE A.Y. 2001- 02. HE ACCORDINGLY REJECTED THIS OBJECTION ALSO BY THE ASSESSEE CHALLENGING THE RE-OPENING OF THE ASSESSMENT. 9. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US. 10. AFTER HEARING THE LEARNED DR AND ON PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). ADMITTEDLY, THE ASSESSMENT IN THE INSTANT CASE WAS NOT COMPLETED U/S. M/S. MALABAR INDUSTRIES PVT. LTD. ====================== 5 143(3) AND THE RETURN WAS ONLY PROCESSED U/S. 143(1 )(A) OF THE ACT ON 15 TH MARCH, 2000. THEREFORE, THERE IS NON APPLICATION OF MIND BY THE ASSESSING OFFICER. THEREFORE, IN VIEW OF THE DECIS ION OF THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAVER I STOCK BROKERS PVT. LTD., REPORTED IN 291 ITR 500 AND IN VIEW OF THE DE TAILED DISCUSSION BY THE LEARNED CIT(A) ON THIS ISSUE, WE DO NOT FIND ANY IN FIRMITY IN THE ORDER OF THE CIT(A) UPHOLDING THE ACTION OF THE ASSESSING OF FICER IN INITIATING THE RE-ASSESSMENT PROCEEDINGS U/S. 148 OF THE ACT. 11. IN GROUNDS OF APPEAL NO. 2 THE ASSESSEE HAS CHALLEN GED THE ORDER OF THE CIT(A) IN IGNORING THE METHOD OF COMPLETION OF PROJECTS. 12. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS SUBMITTED THAT IT IS FOLLOWI NG PROJECT COMPLETION METHOD FROM THE VERY BEGINNING WHICH HAS BEEN ACCEP TED BY THE DEPARTMENT FOR ALL THE YEARS INCLUDING THE A.Y. 200 1-02. THE ASSESSING OFFICER DID NOT ACCEPT THE ABOVE CONTENTION OF THE ASSESSEE. BEFORE THE CIT(A), IT WAS SUBMITTED THAT SINCE THE ASSESSEE IS CONSISTENTLY FOLLOWING THE PROJECT COMPLETION METHOD FROM THE VERY BEGINNI NG, THE ASSESSING OFFICER SHOULD HAVE ASSESSED THE INCOME IN THE YEAR IN WHICH THE PROJECT WAS COMPLETED. IT WAS SUBMITTED THAT THE MUNICIPAL CORPORATION OF GREATER MUMBAI HAS ISSUED THE OCCUPANCY CERTIFICATE IN RESPECT OF WHOLE PROJECT ON 29.11.2004. THEREFORE, THE INCOME RESUL TING FROM THE PROJECT REQUIRES TO BE ASSESSED IN THE A.Y. 2005-06. IT WA S SUBMITTED THAT THE SYSTEM OF ACCOUNTING OF WORKING OUT OF PROFIT ON CO MPLETE CONTRACT BASIS IS AN ACCEPTED SYSTEM OF ACCOUNTING AS THE SYSTEM G IVES A TRUE AND FAIR VIEW OF THE FINANCIAL POSITION INCLUDING PROFITS EA RNED BY THE ASSESSEE ON VARIOUS PROJECTS. RELYING ON A NUMBER OF DECISIONS , IT WAS SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISTURBI NG THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. 13. HOWEVER, THE CIT(A) REJECTED THIS GROUND OF THE ASS ESSEE BY HOLDING AS UNDER: M/S. MALABAR INDUSTRIES PVT. LTD. ====================== 6 3.1 I HAVE CONSIDERED THE CONTENTION OF THE APPELL ANT. I AGREE WITH THE CONTENTION OF THE APPELLANT THAT THE PROJECT COMPLETION METHOD IS AN ACCEPTED METHOD OF ACCOUNT ING. HOWEVER, FOR THE REASONS DISCUSSED IN PARA 2.4 ABOV E, I AM OF THE VIEW THAT THE PROJECT WAS COMPLETE IN THE PREVI OUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1999-2000. IT IS T HE CONTENTION OF THE APPELLANT THAT SINCE THE PROJECT WAS NOT 100?% COMPLETE AS ON 31.3.1999 THE PROFITS THEREFRO M CANNOT BE ASSESSED IN A.Y. 1999-2000. AS DISCUSSED IN FOR EGOING PARA, THE APPELLANT HAD RECEIVED FULL PAYMENT IN RE SPECT OF ABOUT 99% OF FLATS. IF THE CLAIM OF THE APPELLANT THAT THE PROJECT CAN BE CONSIDERED COMPLETE ONLY WHEN IT IS 100% COMPLETE IS ACCEPTED, ANY ASSESSEE CAN DELAY THE PA YMENT OF TAXES INDEFINITELY BY KEEPING A VERY SMALL PART OF THE PROJECT INCOMPLETE. SINCE THE PROJECT WAS SUBSTANTIALLY CO MPLETE IN THE PREVIOUS YEAR RELEVANT TO ASSTT. YEAR 1999-2000 , FOLLOWING THE DECISION IN THE CASE OF CHAMPION CONSTRUCTION C O. (SUPRA), THE PROFITS ARISING FROM THE SAID PROJECT HAVE TO B E ASSESSED IN THE ASSESSMENT YEAR 1999-2000. FOR WORKING OUT THE PROFITS IN RESPECT OF A PROJECT, ALL THE RECEIPTS AND EXPEN DITURE OF THE PROJECT HAVE TO BE CONSIDERED. HOWEVER, THIS ISSUE WILL BE ELABORATELY DISCUSSED IN THE SUCCEEDING GROUND OF A PPEAL. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSESS EE HAS PREFERRED AN APPEAL BEFORE US ON THIS ISSUE. 14. AFTER HEARING THE LEARNED DR AND ON PERUSAL OF THE ORDER OF THE CIT(A), WE DO NOT FIND ANY INFIRMITY IN THE ORDER O F THE CIT(A). WE FIND THE CIT(A) HAS GIVEN A CLEAR OBSERVATION THAT IF TH E CLAIM OF THE ASSESSEE THAT THE PROJECT CAN BE COMPLETED ONLY IF IT IS 100 % COMPLETE, THEN ANY ASSESSEE CAN DELAY PAYMENT OF TAXES INDEFINITELY BY KEEPING A VERY SMALL PART OF THE PROJECT INCOMPLETE. SINCE THE PROJECT WAS SUBSTANTIALLY COMPLETED IN THE IMPUGNED ASSESSMENT YEAR, THEREFOR E, IN OUR OPINION, THE RECEIPTS FROM THE SAID PROJECT HAS TO BE ASSESS ED IN THE IMPUGNED ASSESSMENT YEAR ONLY. IN THIS VIEW OF THE MATTER, WE UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE. 15. IN GROUNDS OF APPEAL NO. 3, THE ASSESSEE HAS CHALLE NGED THE ORDER OF THE CIT(A) IN NOT ACCEPTING THE VARIOUS EXPENSES CLAIMED BY THE ASSESSEE DURING THE HEARING OF THE ASSESSMENT PROCE EDINGS. M/S. MALABAR INDUSTRIES PVT. LTD. ====================== 7 16. AFTER HEARING THE LEARNED DR AND ON PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THE CIT(A) DURING THE CO URSE OF THE APPEAL HEARING HAD CALLED FOR A REMAND REPORT FROM THE ASS ESSING OFFICER ON THE VARIOUS SUBMISSIONS MADE BY THE ASSESSEE. AFTER OB TAINING THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER AND AFTER HEARING THE ARGUMENTS ADVANCED BY THE ASSESSEE INCLUDING THE RE PLY TO SUCH REMAND REPORT, THE CIT(A) DIRECTED THE ASSESSING OFFICER T O VERIFY CERTAIN FIGURES AND RECOMPUTE THE PROFIT FROM THE PROJECT CONSISTIN G OF 34 FLOORS AS PER HIS DIRECTIONS. WE FIND THE DIRECTIONS GIVEN BY TH E CIT(A) DO NOT SUFFER FROM ANY INFIRMITY. WE, THEREFORE, UPHOLD THE SAME . THIS GROUND BY THE ASSESSEE IS ACCORDINGLY DISMISSED. I.T.A. NO. 3483/MUM/06 (BY REVENUE): 17. GROUNDS OF APPEAL NO. 1 BY THE REVENUE READS AS UND ER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A), MUMBAI ERRED IN DIRECTING THE AO TO TREAT THE COMPENSATION OF RS.3,67,95,990/- PAID TO VARIOUS PE RSONS AS THE COST OF THE PROJECT, IGNORING THE FACT THAT ASS ESSEE FAILED TO FURNISH ANY EVIDENCE IN SUPPORT OF THE COMPENSATION CLAIMED TO HAVE BEEN PAID BY IT. 18. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS SUBMITTED BEFORE THE ASSESSI NG OFFICER THAT VARIOUS PERSONS HAD BOOKED FLATS WITH THE ASSESSEE BY PAYING ADVANCES. HOWEVER, SINCE THE PROJECT GOT DELAYED EXTRAORDINAR ILY, SOME OF THE PERSONS WANTED TO TERMINATE THEIR AGREEMENTS WITH T HE ASSESSEE. THE ASSESSEE ENTERED INTO AGREEMENTS WITH THEM AGREEING TO PAY SOME COMPENSATION TO THEM AGAINST WHICH THEY TERMINATED THEIR AGREEMENTS IN RESPECT OF ALLOTMENT OF FLATS IN FAVOUR OF THE ASSE SSEE. THE ASSESSEE THEREAFTER ALLOTTED THOSE FLATS WHICH WERE TERMINAT ED TO SOME OTHER PERSONS AND THE SALE CONSIDERATION RECEIVED WAS MUC H HIGHER THAN THE COMPENSATION PAID BY THE ASSESSEE TO THE ORIGINAL F LAT OWNERS. THE ASSESSEE INCLUDED THIS COMPENSATION OF RS.3,67,95,9 90 IN THE COST OF PROJECT ON ACCOUNT OF COMPENSATION PAID. M/S. MALABAR INDUSTRIES PVT. LTD. ====================== 8 19. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE C LAIM OF THE ASSESSEE ON THE GROUND THAT THE ORIGINAL AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH THE PERSONS TO WHOM COMPENSATION WAS PAID WERE NOT PRODUCED BEFORE HIM TO PROVE AS TO WHETHER THERE WA S ANY CLAUSE EXISTED THEREIN REGARDING THE TERMS OF PAYMENT OF COMPENSAT ION IN THE EVENT OF TERMINATION OF THE AGREEMENT. FURTHER THE ASSESSEE ALSO DID NOT FILE ANY CONFIRMATIONS FROM THESE PARTIES CONFIRMING THE REC EIPT OF THE COMPENSATION ON SURRENDER OF FLATS. 20. BEFORE CIT(A) THE ASSESSEE FURNISHED THE DETAILS OF COMPENSATION PAID TO 9 PERSONS AMOUNTING TO RS.3,67,95,990. IT WAS SUBMITTED THAT THE ASSESSEE HAS PRODUCED COPIES OF THE AGREEMENTS ENTE RED INTO WITH THESE PERSONS VIDE WHICH COMPENSATION WAS PAID TO THEM. IT WAS FURTHER SUBMITTED THAT THE PAYMENTS TO THESE PERSONS HAVE B EEN MADE BY ACCOUNT PAYEE CHEQUES/DRAFTS. THE COPIES OF THE BANK ACCOU NT EVIDENCING CLEARANCE OF CHEQUES ISSUED TO THOSE PERSONS WERE A LSO FILED BEFORE THE CIT(A). THE ASSESSEE ALSO GAVE THE DETAILS OF 9 PE RSONS TO WHOM THE FLATS WERE RESOLD. IT WAS SUBMITTED THAT THE ASSESSEE RE CEIVED AN AMOUNT OF RS.7,03,66,767 WHICH IS MUCH HIGHER THAN THE AMOUNT OF COMPENSATION PAID. IT WAS FURTHER SUBMITTED THAT IN CASE THE CO MPENSATION OF RS.3,67,95,990 WAS TO BE EXCLUDED FROM THE COST OF THE PROJECT, THEN THE RECEIPT OF RS.7,03,66,767 IN RESPECT OF SALE OF THE SE FLATS INCLUDED IN THE RECEIPTS SHOULD ALSO BE EXCLUDED. BASED ON THE ARG UMENTS ADVANCED BY THE ASSESSEE, THE CIT(A) CALLED FOR A REMAND REPORT AND ON THE BASIS OF SUCH REMAND REPORT, DIRECTED THE ASSESSING OFFICER TO TREAT THE COMPENSATION OF RS.3,67,95,990 PAID TO VARIOUS PERS ONS AS COST OF THE PROJECT, THE PROFITS IN RESPECT OF WHICH HAVE BEEN ASSESSED IN THE YEAR UNDER CONSIDERATION. 21. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US. M/S. MALABAR INDUSTRIES PVT. LTD. ====================== 9 22. AFTER HEARING THE LEARNED DR AND ON PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). WE FIND THE CIT(A) WHILE DIRECTING THE ASSESSING OF FICER TO TREAT THE COMPENSATION PAID TO VARIOUS PERSONS AS THE COST OF THE PROJECT HAS CALLED FOR THE REMAND REPORT AND AFTER CONSIDERING THE SAM E HAS PASSED AN ELABORATE ORDER ON THIS ISSUE. THE RELEVANT PORTIO N OF HIS ORDER WHICH IS REPRODUCED FOR THE SAKE OF CLARITY READS AS UNDER: 4.8 I HAVE CAREFULLY GONE THROUGH THE SUBMISSIONS MADE BY THE APPELLANT. ON PERUSAL OF THE ASSESSMENT ORD ER, IT IS SEEN THAT THE AO REJECTED THE CLAIM OF THE APPELLAN T SEEKING INCLUSION OF THE COMPENSATION PAID TO THE ORIGINAL ALLOTTEES FOR SURRENDER OF FLAT IN THE COST OF THE PROJECT ON THE GROUND THAT THE APPELLANT HAD NOT FILED CONFIRMATIONS FROM THE CONCERNED PERSONS AND ALSO BECAUSE OF THE FACT THAT THE APPELLANT HAD FAILED TO PRODUCE THE ORIGINAL AGREEM ENTS ENTERED INTO WITH THESE PERSONS AT THE TIME OF BOOK ING OF FLATS TO ENABLE THE AO TO ASCERTAIN WHETHER THERE WAS ANY CLAUSE ALLOWING COMPENSATION AT THE TIME OF THE TERMINATIO N OF BOOKING. IT WAS THE CLAIM OF THE APPELLANT THAT TH E COPIES OF AGREEMENT ON THE BASIS OF WHICH COMPENSATION WAS PA ID WERE FILED BEFORE THE AO. SINCE THOSE COPIES WERE NOT T AKEN NOTE OF BY THE AO DURING THE COURSE OF ASSTT. PROCEEDINGS, VIDE LETTER DT. 5.7.2005, THE AO WAS ASKED TO EXAMINE THE ISSUE AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE APPELLANT. THE RELEVANT PART OF THE LETTER SENT TO THE AO IS REPRO DUCED HEREUNDER: WHILE COMPUTING THE TOTAL INCOME, THE APPELLANT HAD CLAIMED DEDUCTION ON ACCOUNT OF COMPENSATION OF RS.3,67,95,900/-. THE AO DID NOT ALLOW DEDUCTION O N THE GROUND THAT THE APPELLANT DID NOT SUBMIT THE ORIGIN AL AGREEMENTS ENTERED INTO WITH THESE PERSONS. FURTHE R, THE APPELLANT DID NOT SUBMIT CONFIRMATION FROM THE 9 PE RSONS REGARDING THE RECEIPT OF COMPENSATION. IT HAS BEEN SUBMITTED BY THE LD. AR BEFORE ME THAT THE AO DID N OT ASK THE APPELLANT TO FURNISH THESE DOCUMENTS. I FEEL T HAT THE ISSUE HAS NOT BEEN PROPERLY EXAMINED BY THE AO. YO U ARE REQUESTED TO AGAIN EXAMINE THE ISSUE AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE APPELLANT AND THE REAFTER SEND THE REMAND REPORT REGARDING THE ADMISSIBILITY OF THE DEDUCTION CLAIMED BY THE APPELLANT. 4.8.1 BEFORE THE AO, THE APPELLANT FILED COPIES OF AGREEMENTS WITH THE NINE PERSONS VIDE WHICH THE COMPENSATION W AS PAID TO THEM FOR CANCELLATION OF BOOKINGS. THE APPELLAN T ALSO FILED M/S. MALABAR INDUSTRIES PVT. LTD. ====================== 10 COPIES OF ITS BANK ACCOUNT THROUGH WHICH PAYMENTS I N RESPECT OF COMPENSATION WERE PAID TO THE ALLOTTEES. AFTER EXAMINING THE ISSUE, THE AO SENT H IS REMAND REPORT VIDE HIS LETTER DT. 29.8.2005. THE RELEVANT PART OF THE SAID REPORT IS REPRODUCED HEREUNDER: ASSESSEE COMPANY HAS SUBMITTED COPY OF LETTER FROM M/S. INTERNATIONAL SEA FOODS PVT. LTD. DT. 22. 10.1986. ON 26.8.2005, ASSESSEES REPRESENTATIVE SUBMITTED T HAT IT IS DIFFICULT TO RACE OUT THE PARTY AFTER ALMOST 20 YEA RS. HOWEVER, WE HAVE GIVEN YOU COPIES OF SAMPLE RECEIPT S RECEIVED BY THE PARTY FOR THE PAYMENT RECEIVED BY H IM FROM TIME TO TIME. II) MRS. S.D. PARDIWALA III) MRS. KAMLA J. GEHANI IV) MRS. VIMAL ?S. THAKORE V) DR. C.L. ZAVERI & OTHERS VI) MRS. K.A. DAVE VII) M/S. INDO SAIGAON AGENCY VIII) MRS. MANJULA BABULAL IX) MR. BHARAT R. GUPTE IN THE CASE OF S. NO. (II) TO (IX) THE ASSESSEE HAS FILED COPIES OF THE AGREEMENT MADE FOR THE SURRENDER OF THE FLAT S VIDE THEIR LETTER DATED 17.5.2004. THE SAME COPIES OF A GREEMENT FOR SURRENDER OF FLAT FILED BY THE ASSESSEES REPRE SENTATIVE ON 26.8.2005. THEY HAVE ALSO MENTIONED THAT THE AS SESSEE COMPANY HAS CONSIDERABLY RECEIVED FROM MONEY THAN W HAT HE HAS PAID. IN ALL ASSESSEE HAS PAID RS.3,67,95,9 90/- AGAINST THE RECEIPT OF RS.7,03,66,767/- AND THE DIF FERENCE BETWEEN TWO HAS SHOWN AS A INCOME. IT IS IMPORTANT TO NOTE THAT THESE PAYMENTS HAVE BEEN RECEIVED AND PAID ALM OST BEFORE 18 YEARS AND AS SUCH THE QUESTION OF GIVING THE DETAILS SHOULD NOT ARISE AS THERE IS NO SECTION IN THE INCOME- TAX LAW WHICH ASK THE ASSESSEE TO GIVE THE DETAILS PRIOR TO 18 TO 20 YEARS. HENCE IN ABSENCE OF ORIGINAL AGREE MENT OR CONFIRMATION FROM THE PARTIES TO WHOM COMPENSATION FOR SURRENDER OF INCOMPLETE FLATS HAS BEEN PAID ARE NOT POSSIBLE TO VERIFY. 4.8.2 I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE APPELLANT. I HAVE ALSO GONE THROUGH THE REMAND REP ORT RECEIVED FROM THE AO. VARIOUS EVIDENCES FILED BY T HE APPELLANT LIKE COPIES OF BANK ACCOUNTS, COPIES OF AGREEMENTS ETC., HAVE ALSO BEEN EXAMINED BY ME. ON PERUSAL OF VARIOUS DOCUMENTS FAILED BY THE APPELLANT, IT IS SEEN THAT THE APPELLANT HAD PAID COMPENSATION TO VARIOUS PERSONS, WHO M/S. MALABAR INDUSTRIES PVT. LTD. ====================== 11 HAD CANCELLED THEIR BOOKINGS, THROUGH CHEQUES/DEMAN D DRAFTS. THE APPELLANT HAS FILED COPIES OF AGREEMEN TS ON THE BASIS OF WHICH THESE PAYMENTS HAVE BEEN MADE BEFORE THE ?AO AS WELL AS BEFORE ME. IN MOST OF THE CASES, THE SA MPLE COPIES OF RECEIPTS OBTAINED IN RESPECT OF PAYMENT OF COMPE NSATION TO VARIOUS PERSONS HAVE BEEN FILED BEFORE THE AO. FUR THER, ON PERUSAL OF COPIES OF VARIOUS BANK ACCOUNTS FILED BY THE APPELLANT, IT IS SEEN THAT ALL THE CHEQUES ISSUED T O VARIOUS PARTIES HAVE BEEN CLEARED. IN THE BANK STATEMENTS, THE NAME OF THE PERSON TO WHOM THE PAYMENT IN RESPECT OF A P ARTICULAR CHEQUE HAS BEEN MADE, HAS BEEN SPECIFIED. THE COPI ES OF AGREEMENTS AND THE PROOF HAVING MADE THE PAYMENTS THROUGH CHEQUES ARE SUFFICIENT EVIDENCE TO SUPPORT THE CLAIM OF THE APPELLANT OF HAVING PAID COMPENSATION TO VAR IOUS PARTIES AGAINST CANCELLATION OF FLATS. SINCE THE P AYMENTS IN RESPECT OF COMPENSATION WERE MADE ABOUT 18 TO 20 YE ARS BACK, THE INABILITY OF THE APPELLANT TO FURNISH CON FIRMATIONS FROM THE REQUIRED PERSONS CAN BE WELL APPRECIATED. FURTHER, AS AGAINST THE COMPENSATION OF RS.3,67,95,990/- FRO M THE PERSONS TO WHOM THE CANCELLED FLATS WERE RESOLD. T HE SAID AMOUNT HAS BEEN SHOWN BY THE APPELLANT AS A PART OF ITS INCOME. HAD THE APPELLANT NOT PAID THE COMPENSATIO N TO THE ORIGINAL ALLOTTEES, IT WOULD NOT HAVE RECEIVED THES E SALE PROCEEDS FROM THE RESALE OF FLATS. EVEN IF THERE W AS NO CLAUSE PERMITTING PAYMENTS OF COMPENSATION TO THE ORIGINAL ALLOTTEES IN CASE OF CANCELLATION OF BOOKINGS, THE PAYMENT OF COMPENSATION MADE IS REQUIRED TO BE ALLOWED AS A DE DUCTION ON THE PRINCIPLE OF BUSINESS EXPEDIENCY. IN VIEW O F THIS DISCUSSION, THE AO IS DIRECTED TO TREAT THE COMPENS ATION OF RS.3,67,95,990/- PAID TO VARIOUS PERSONS AS THE COS T OF THE PROJECT THE PROFITS IN RESPECT OF WHICH HAVE BEEN A SSESSED FOR THE YEAR UNDER CONSIDERATION. 23. THE LEARNED DR COULD NOT CONTROVERT THE ABOVE FACTU AL FINDINGS GIVEN BY THE CIT(A). WE FIND THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE ORIGINAL AGREEMENTS OR CONFIRMATIONS FROM THE PARTI ES TO WHOM THE COMPENSATION FOR SURRENDERING OF INCOMPLETE FLATS H AS BEEN PAID WERE NOT FURNISHED FOR WHICH IT WAS NOT POSSIBLE ON THE PART OF THE ASSESSING OFFICER TO VERIFY THE GENUINENESS. HOWEVER, WE FIND THE AS SESSEE HAS PRODUCED THE COPIES OF THE BANK ACCOUNT AND THE COPIES OF AG REEMENTS, ETC., BEFORE THE ASSESSING OFFICER. FURTHER THE ASSESSEE BY CAN CELLING THE AGREEMENTS HAS PAID COMPENSATION OF RS.3,67,95,990 AND BY RESE LLING THE FLATS HAS RECEIVED AN AMOUNT OF RS.7,03,66,767 WHICH HAS BEEN DISCLOSED AS THE M/S. MALABAR INDUSTRIES PVT. LTD. ====================== 12 RECEIPTS AND WHICH IS MUCH HIGHER THAN THE COMPENSA TION SO PAID. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED DISC USSION BY THE CIT(A) IN HIS ORDER ON THIS ISSUE, WE DO NOT FIND ANY INFIRMI TY IN THE SAME AND ACCORDINGLY, THE SAME IS UPHELD. THIS GROUND RAISE D BY THE REVENUE IS ACCORDINGLY DISMISSED. 24. GROUNDS OF APPEAL NO. 2 BY THE REVENUE READ AS UN DER: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A), MUMBAI ERRED IN DIRECTING T HE AO TO ALLOW THE EXPENSES OF RS.2,94,80,530/- AS PART OF T HE PROJECT COST IGNORING THE FACT THAT THESE EXPENSES WERE INC URRED IN SUBSEQUENT YEARS AND ARE IN THE NATURE OF REPAIRS. 25. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS CLAIMED THAT IT HAD INCURRED CERTAIN EXPENDITURE IN RESPECT OF THE PROJECT CONSISTING OF 34 FLOORS A FTER 31.3.1999 WHICH SHOULD ALSO BE CONSIDERED AS PART OF THE COST OF TH E PROJECT. THE AMOUNT OF THIS EXPENDITURE WAS ESTIMATED AT RS. 90 LAKHS. HO WEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE CLAIM OF THE ASSESSEE ON THE GROUND THAT NO SUPPORTING EVIDENCES WERE FILED TO SUBSTANTIATE THE CLAIM OF ESTIMATED EXPENDITURE ON PLASTERING AND PAINTING. 26. BEFORE CIT(A) IT WAS SUBMITTED THAT THE FIGURE OF R S.90 LAKHS GIVEN BEFORE THE ASSESSING OFFICER WAS MERELY ON ESTIMATE BASIS. HOWEVER, THE ACTUAL EXPENDITURE AMOUNTED TO RS.3,45,69,104 WHICH WAS INCURRED ON THE PROJECT CONSISTING OF 34 FLOORS AFTER 31.3.1999 . BY FILING AN ADDITIONAL GROUND, THE ASSESSEE CLAIMED DEDUCTION OF THIS EXPE NDITURE. IT WAS SUBMITTED THAT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE SHOULD BE ADMITTED UNDER RULE 46A OF THE INCOME-TAX RULES, 19 62 AS THE ASSESSING OFFICER DID NOT GIVE AN OPPORTUNITY TO THE ASSESSEE TO FILE THE EVIDENCE IN SUPPORT OF THE CLAIM. 27. THE CIT(A) FOLLOWING THE DECISION OF THE HONBLE SU PREME COURT IN THE CASE OF JUTE CORPORATION OF INDIA REPORTED IN 8 7 ITR 688 ADMITTED THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE AND CALLE D FOR A REMAND REPORT M/S. MALABAR INDUSTRIES PVT. LTD. ====================== 13 FROM THE ASSESSING OFFICER. AFTER CONSIDERING THE REMAND REPORT FROM THE ASSESSING OFFICER, A COPY OF THE SAME WAS SUPPLIED TO THE ASSESSEE CALLING FOR ITS COMMENTS. AFTER CONSIDERING THE REMAND REP ORT FROM THE ASSESSING OFFICER AND THE REPLIES OF THE ASSESSEE T O THE SAME, HE DIRECTED THE ASSESSING OFFICER TO CONSIDER AN AMOUNT OF RS.2 ,94,80,530 AS PART OF THE PROJECT COST CONSISTING OF 34 FLOORS WHILE COMP UTING THE PROFIT THEREFROM. THE BALANCE AMOUNT WAS DIRECTED TO BE A LLOCABLE TOWARDS THE PROJECT INVOLVING FSI OF 3000 SQ. FT. WHICH HAS BEE N SOLD BY THE ASSESSEE FOR RS.3.90 CRORES. 28. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US. 29. AFTER HEARING THE LEARNED DR AND ON PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS CLAIMED AN AMOUNT OF RS.90 LAKHS WH ICH WAS INCURRED IN RESPECT OF THE PROJECT CONSISTING OF 34 FLOORS AFTE R 31 ST MARCH, 1999. WE FIND THE SAID FIGURE HAS GONE UP TO RS.3,45,69,104 BEFORE THE CIT(A). WE FIND THE CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER WHO OBJECTED THE ALLOWABILITY OF THE EXPENDITURE IN THE A.Y. 1999-2000 SINCE THESE EXPENSES WERE INCURRED IN FINANCIAL YEAR 2004 -05 AND THE EXPENSES ARE IN THE NATURE OF REPAIRS. FURTHER THE ASSESSIN G OFFICER HAD ALSO REPORTED THAT THE ENTIRE BUILDING WAS OCCUPIED BY T HE FLAT OWNERS LONG BACK. THEREFORE, QUESTION OF ADDITIONAL EXPENDITUR E TOWARDS THE PROJECT DOES NOT ARISE. HOWEVER, THE CIT(A) ALLOWED THE EX PENDITURE TO BE RELATING TO THE PROJECT CONSISTING OF 34 FLOORS ON THE GROUND THAT THE ASSESSEE WAS HAVING ONLY ONE PROJECT AND THE EXPENS ES CLAIMED BY THE ASSESSEE CANNOT RELATE TO ANY OTHER PROJECT. WE FI ND THE CIT(A) HAD GIVEN A FINDING THAT THE ASSESSEE HAD GIVEN THE FIGURE OF INCOMPLETE WORK IN RESPECT OF THE PROJECT AT RS. 90 LAKHS ON ESTIMATE BASIS AND THE FIGURE OF RS.3,47,69,104 GIVEN BY THE ASSESSEE WAS ACTUAL. H OWEVER, WE DO NOT FIND ANY SOUND LOGIC BY THE CIT(A) WHILE ACCEPTING THIS FIGURE AS ACTUAL ESPECIALLY WHEN THE ASSESSEE FAILED BEFORE THE ASSE SSING OFFICER TO M/S. MALABAR INDUSTRIES PVT. LTD. ====================== 14 SUBSTANTIATE THE EXPENDITURE OF RS.90.00 LAKHS. I N OUR OPINION THE POWERS OF THE ASSESSING OFFICER DURING THE REMAND P ROCEEDINGS ARE LIMITED. SINCE THERE IS ALREADY VARIATION BETWEEN THE FIGURES GIVEN BEFORE THE ASSESSING OFFICER AND BEFORE THE CIT(A), THEREF ORE, WE IN THE INTEREST OF JUSTICE DEEM IT PROPER TO RESTORE THE ISSUE TO T HE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO GIVE ONE MORE OPPORTUNI TY TO THE ASSESSEE TO SUBSTANTIATE WITH EVIDENCE TO HIS SATISFACTION THAT IT HAS INCURRED EXPENDITURE OF RS.3,45,69,104 TOWARDS COST OF THE P ROJECT AND WHICH IS NOT IN THE NATURE OF REPAIRS. THE ASSESSING OFFICER SH ALL DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDIN GLY. THE GROUND BY THE REVENUE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURP OSES. 30. GROUNDS OF APPEAL NO. 3 BY THE REVENUE READS AS UND ER: 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A), MUMBAI ERRED IN DIRECTING T HE AO TO COMPUTE THE PROFIT FROM THE PROJECT ON THE BASIS OF RECEIPTS AGAINST SALE OF FLATS IN THE ACCOUNTING YEARS 1999- 00, 2000- 01, 2001-02, 2004-05 AFTER VERIFICATION, IGNORING T HE FACT THAT THE CONSTRUCTION OF THE BUILDING WAS ALREADY COMPLE TE IN THE FINANCIAL YEAR 1998-99 RELEVANT TO THE A.Y. 1999-00 . 31. AFTER HEARING THE LEARNED DR AND ON PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER HOLDING THAT THE PROJECT CONSISTI NG OF 34 FLOORS WAS COMPLETE AS ON 31.3.1999 SINCE ALMOST ALL THE FLATS HAVE BEEN SOLD BEFORE 31.3.1999. THE CIT(A) FURTHER HELD THAT ALL THE EX PENSES EVEN THOUGH INCURRED AFTER 31.3.1999 HAVE TO BE ALLOWED AS DEDU CTION WHILE COMPUTING THE INCOME OF THE ASSESSEE FROM THE PROJE CT. HE ACCORDINGLY HELD THAT ALL RECEIPTS RELATING TO THE PROJECT CONS ISTING OF 34 FLOORS EVEN THOUGH RECEIVED AFTER 31.3.1999 HAVE TO BE TAKEN IN TO CONSIDERATION WHILE WORKING OUT THE PROFITS OF THE PROJECT. HE ACCORDI NGLY WORKED OUT THE RECEIPTS AGAINST SALE OF FLATS IN RESPECT OF THE PR OJECT CONSISTING OF THE 34 FLOORS AS UNDER: M/S. MALABAR INDUSTRIES PVT. LTD. ====================== 15 ACCOUNTING YEAR 1999-2000 RS. AS PER BALANCE SHEET AS ON 31.3.99 21,46,98,875/- RECEIVED FROM MRINALINI HEGDE (D-283) AGAINST CAR PARKING 25,000/- RECEIVED FROM RENUKA KHOSLA (ADVANCE AGAINST FLAT NO. D-282) 82,52,500/- ------------------ 22,29,76,375 ACCOUNTING YEAR 2000-2001 RS. RECEIVED FROM ARVIND K. SHAH (AGAINST SALE OF FLAT NO. 3-53) 1,47,03,980/- RECEIV ED FROM RENUKA KHOSLA (D-282) 2,73,031/- RECEIVED FROM RENUKA KHOSLA (D-282) 5,46,813/- RECEIVED FROM YOGESH MEHRA (D-303) 2,29,050/- ------------------- 23,87,29,249/- ACCOUNTING YEAR 2001-2002 RS. AMOUNTS REFUNDED TO ARVIND K. SHAH (D- 53) (EXCESS REFUNDED) (-) 21,26,980/- ------------------- 23,66,02,269/- ACCOUNTING YEAR 2002-2003 NIL ACCOUNTING YEAR 2003-2004 NIL 23,66,02,269/- ACCOUNTING YEAR 2004-05 RS. RS. LESS: AMOUNT REFUNDED TO RENUKA KHOSLA AS NO FLAT ALLOTTED 87,99,313/- LESS: DEDUCTION ALLOWED AS PER GROUND OF APPEAL NO. 4(I) 17,00,000/- 1,04,99,313/- ------------------ 22,61,02,956/- 32. SINCE THIS ASPECT WAS NOT EXAMINED HE DIRECTED THE ASSESSING OFFICER TO VERIFY THE ABOVE FIGURES OF RECEIPTS AND ADOPT THE FIGURES AFTER VERIFICATION. AGGRIEVED WITH SUCH ORDER OF THE CIT (A), THE REVENUE IS IN APPEAL BEFORE US. 33. SINCE WE HAVE ALREADY RESTORED THE GROUNDS OF APPEA L NO. 2 BY THE REVENUE TO THE FILE OF THE ASSESSING OFFICER AND SI NCE THE CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO EXAMINE THE IMPUG NED ISSUE IN GROUND NO. 3 BY THE REVENUE, WE, THEREFORE, IN THE INTERES T OF JUSTICE DEEM IT PROPER TO RESTORE THIS GROUND TO THE FILE OF THE AS SESSING OFFICER FOR FRESH M/S. MALABAR INDUSTRIES PVT. LTD. ====================== 16 ADJUDICATION AND AS PER LAW AFTER GIVING DUE OPPORT UNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THI S GROUND BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NO. 4396/MUM/06 (BY REVENUE) 34. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE REA DS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.2,19,03,394/- OUT OF RECEIPT FROM PROJECT. 35. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSEE HAS SHOWN ADVANCES AGAINST SALE OF FLATS AND GARAGES AT RS.23 ,66,02,269. SINCE ADVANCES OF RS.21,46,98,875 HAS ALREADY BEEN BROUGH T TO TAX IN A.Y. 1999- 2000, HE TAXED THE DIFFERENCE AMOUNT OF RS.2,19,03, 94 IN THIS ASSESSMENT YEAR. 36. IN APPEAL, THE CIT(A) HELD THAT SINCE IN THE APPEAL FILED BY THE ASSESSEE FOR 1999-2000 HE HAS HELD THE RECEIPT OF R S.23,56,02,269 AS ASSESSABLE IN A.Y. 1999-2000, THEREFORE, THE RECEIP T OF RS.2,19,03,394 CONSIDERED BY THE ASSESSING OFFICER AS INCOME OF TH E ASSESSEE FOR A.Y. 2002-03 TANTAMOUNT TO TAXING THE SAME INCOME AGAIN. HE ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITI ON OF RS.2,19,03,394. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US. 37. AFTER HEARING THE LEARNED DR AND ON PERUSAL OF ORDE RS OF THE AUTHORITIES BELOW, WE FIND THE APPEAL OF THE REVENU E FOR A.Y. 1999-2000 ON THIS ISSUE HAS BEEN RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. WE, THEREFORE, DEEM IT PROPER TO RES TORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THIS GROUND BY THE REVENUE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. M/S. MALABAR INDUSTRIES PVT. LTD. ====================== 17 38. IN THE RESULT, I.T.A. NO. 3568/MUM/2006 BY THE ASSE SSEE IS DISMISSED, I.T.A. NO. 3483/MUM/06 BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND I.T.A. NO. 4396/MUM/06 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 18 TH DECEMBER, 2009. SD/- (D. MANMOHAN) VICE PRESIDENT SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI, DATED 18 TH DECEMBER, 2009 COPY TO: (1) THE APPELLANT, (2) THE RESPONDENT, (3) THE CIT (A)-V, MUMBAI, (4) THE CIT, MC-V, MUMBAI, (5) THE DR, A BENCH, ITAT, MUMBAI. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI TPRAO