ITO 18(2)(4), MUMBAI V. M/s. KAILASH PRASAD MALPANI, MUMBAI

ITA 3744/MUM/2008

• Counselvise Citation: 374419914 RSA 2008
• Duration Of Justice: 3 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 02-08-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 28-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOLI SRINIWAS RAO
• Assessee Lawyers: C N VAZE
• Keywords: Business income
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER. I.T.A. NO. 3744/MUM/2008. ASSESSMENT YEAR : 1999-2000. THE INCOME-TAX OFFICER, SHRI KAILASH PRASAD MALPANI, 18(2)(4), MUMBAI. VS. ADI HOUSE, GOKHALE ROAD, DADAR (WEST), MUMBAI. PAN AACPM 8963G. APPELLANT. RESPONDENT. APPELLANT BY : SHRI GOLI SRINIWAS RAO. RESPONDENT BY : SHRI C.N. VAZE. DATE OF HEARING : 02-08-2011 DATE OF PRONOUNCEMENT : O R D E R. PER P.M. JAGTAP, A.M. : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LEARNED CIT(APPEALS)-XVIII, MUMBAI DATED 25-03-2008. 2. THE RELEVANT FACTS OF THE CASE GIVING RISE TO TH IS APPEAL ARE AS FOLLOWS: THE ASSESSEE IS AN INDIVIDUAL WHO WAS ENGAGED IN T HE BUSINESS OF CONSTRUCTION IN PARTNERSHIP WITH HIS FATHER AND BRO THER UNDER THE NAME AND STYLE M/S GOPAL CONSTRUCTION. THE SAID FIRM WAS DISSOLVED ON 31-03-1988 AND THE ERSTWHILE PARTNERS WERE ALLOCATED UNFINISHED PROJEC TS OF THE PARTNERSHIP FIRM IN SATISFACTION OF THEIR DUES ON RETIREMENT. THE ASSES SEE TOOK OVER ASSETS AND LIABILITIES 2 ITA NO.3744/MUM/2008 ASSESSMENT YEAR : 1999-2000. OF TWO PROJECTS, NAMELY, SHIV DARSHAN AND SHIV P ARVATI OF THE ERSTWHILE FIRM AND COMMENCED THE BUSINESS OF CONSTRUCTION IN HIS I NDIVIDUAL CAPACITY. THE CONSTRUCTION OF THE SAID TWO PROJECTS WAS CARRIED O N BY THE ASSESSEE SINCE ASSESSMENT YEAR 1989-90 AND INCOME FROM THE SAID PR OJECT WAS OFFERED TO TAX IN ASSESSMENT YEAR 1994-95 ON THE BASIS OF PROJECT COM PLETION METHOD FOLLOWED BY THE ASSESSEE. VIDE AN ASSESSMENT COMPLETED U/S 143( 3) BY AN ORDER DATED 27 TH MARCH, 1997, THE AO ACCEPTED THE METHOD OF ACCOUNTI NG FOLLOWED BY THE ASSESSEE TO OFFER HIS INCOME FROM CONSTRUCTION OF TWO PROJEC TS ON COMPLETION. HE, HOWEVER, DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.3 ,25,34,130/- FOR ASSESSMENT YEAR 1994-95 AS AGAINST THE INCOME OF RS.41,11,350/- RET URNED BY THE ASSESSEE AFTER MAKING VARIOUS ADDITIONS. THE SAID ADDITIONS WERE T HE SUBJECT MATTER OF APPEAL FIRST BEFORE THE LEARNED CIT(APPEALS) AND THEN BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE ITS ORDER DATED 30 TH SEPT., 2002 SET ASIDE THE ASSESSMENT MADE BY THE A O VIDE AN ORDER DATED 27 TH MARCH, 1997 AND RESTORED THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO DETERMINE THE EXACT YEAR OF COMPLETION OF THE TWO PROJECTS UNDERTAKEN BY THE ASSESSEE AND TO REASSESS THE INCOME ACCORDIN GLY. IN COMPLIANCE WITH THE DIRECTION OF THE TRIBUNAL, FRESH ASSESSMENT WAS MA DE BY THE AO U/S 143(3) READ WITH SECTION 254 VIDE AN ORDER DATED 29 TH MARCH, 2004. THE SAID ASSESSMENT WAS AGAIN THE SUBJECT MATTER OF AN APPEAL FIRST BEFORE THE LEARNED CIT(APPEALS) AND THEN BEFORE THE TRIBUNAL. BY A COMBINED ORDER DATED 23 RD FEB., 2006 PASSED FOR ASSESSMENT YEARS 1994-95 AND 1995-96, THE TRIBUNAL HELD THAT INCOME FROM TWO PROJECTS VIZ. SHIV PARVATI AND SHIV DARSHAN WAS CHA RGEABLE TO TAX IN THE HANDS OF THE ASSESSEE IN ASSESSMENT YEAR 1999-2000. ACCORDIN GLY THE AO WAS DIRECTED BY THE TRIBUNAL TO BRING THE INCOME OF THE SAID TWO PR OJECTS TO TAX IN THE HANDS OF THE ASSESSEE IN ASSESSMENT YEAR 1999-2000 AFTER RECONSI DERING THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF VARIOUS EXPENS ES KEEPING IN VIEW THE 3 ITA NO.3744/MUM/2008 ASSESSMENT YEAR : 1999-2000. CONSTRUCTION/DEVELOPMENT THAT HAD TAKEN PLACE BETWE EN ASSESSMENT YEARS 1994-95 TO 1999-2000. 3. IN VIEW OF THE ORDER OF THE TRIBUNAL DATED 23 RD FEBRUARY, 2006 (SUPRA),THE ASSESSMENT OF THE ASSESSEE FOR ASSESSMENT YEAR 1999 -2000 WAS REOPENED BY THE AO BY ISSUING A NOTICE U/S 148 AND IN THE ASSESSMENT C OMPLETED VIDE AN ORDER DATED 28-12-2007 U/S 143(3) READ WITH SECTION 254, THE TO TAL INCOME OF THE ASSESSEE WAS DETERMINED AT RS.2,78,51,025/- AFTER MAKING VARIOUS ADDITIONS. THE ASSESSEE CHALLENGED THE SAID ADDITIONS MADE BY THE AO TO HIS TOTAL INCOME FOR ASSESSMENT YEAR 1999-2000 IN AN APPEAL FILED BEFORE THE LEARNE D CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE A SSESSEE BEFORE HIM AS WELL AS THE MATERIAL AVAILABLE ON RECORD INCLUDING THE ORDE RS OF HIS PREDECESSOR PASSED IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1994-95 WHE REIN SIMILAR ADDITIONS MADE BY THE AO WERE DELETED, THE LEARNED CIT(APPEALS) D ELETED MOST OF THE ADDITIONS MADE BY THE AO IN ASSESSMENT YEAR 1999-2000 WHICH W ERE OF A SIMILAR NATURE AS MADE IN ASSESSMENT YEAR 1994-95. AGGRIEVED BY THE O RDER OF THE LEARNED CIT(APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL BY TAKING THE FOLLOWING GROUNDS : I) THE LD. CIT(A) ERRED IN DIRECTING THE A.O. TO AL LOW ENTIRE EXPENSES CLAIMED ON ACCOUNT OF LAYOUT AND DEVELOPMENT EXPENS ES WITHOUT APPRECIATING THE FACT THAT THE IMPUGNED PORTION OF THESE EXPENDITURE TO THE TUNE OF RS.15,75,353/- IN RESPECT OF SHIV DARSHAN PROJECT AND RS.11,99,295/- PERTAINING TO SHIV PARVATI PROJECT WERE IN THE NATURE OF PROVISION ONLY AND NOT ACTUALLY INCURRED BY THE ASS ESSEE DURING THE YEAR UNDER CONSIDERATION. II) THE LD. CIT(APPEALS) ERRED IN DIRECTING THE A.O . TO DELETE THE ADDITION ON ACCOUNT OF BALCONY DEPOSIT AMOUNTING TO RS.1,90,490/- (10,57,449 8,66,959) WITHOUT APPRECIATING THE FAC T THAT THE AMOUNT SO 4 ITA NO.3744/MUM/2008 ASSESSMENT YEAR : 1999-2000. COLLECTED FROM THE CUSTOMERS THOUGH BEARS CHARACTER OF INCOME NEVER OFFERED FOR TAXATION, BY THE ASSESSEE. III) THE LD. CIT(APPEALS) ERRED IN DIRECTING THE A. O. TO DELETE THE ADDITION ON ACCOUNT OF DISCREPANCY IN FIGURE OF SAL E PROCEEDS AMOUNTING TO RS.7,32,252/- HOLDING THAT THE ADDITION WAS MADE RE FERRING TO IRRELEVANT RECORDS AND FACTS. THE LD. CIT(A) FAILED TO APPRECI ATE THE FACT THAT THE ADDITION WAS CORRECTLY MADE BY THE A.O. ON THE BASI S OF RECORDED STATEMENTS OF ONE OF THE PURCHASER AND OTHER DETAILS FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IV) THE LD. CIT(APPEALS) ERRED IN DIRECTING THE A.O . TO DELETE THE ADDITION ON ACCOUNT OF EXCESS CLAIM OF ARCHITECTURA L FEES AMOUNTING TO RS.9,35,000/- WITHOUT APPRECIATING THE FACTS THAT T HE ASSESSEE DID NOT SUBMIT ANY PROOF IN SUPPORT OF GENUINENESS OF THESE EXPENS ES, DURING THE COURSE OF PRESENT ASSESSMENT PROCEEDINGS. V) THE LD. CIT(APPEALS) ERRED IN DIRECTING THE A.O. TO DELETE THE ADDITION ON ACCOUNT OF INTEREST OF RS.1,94,216/- WI THOUT APPRECIATING THE FACT THAT NO SATISFACTORY EVIDENCE IN SUPPORT OF IT WAS PRODUCED BEFORE THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS TO SUBS TANTIATE THE CLAIM. VI) THE LD. CIT(APPEALS) ERRED IN DIRECTING THE A.O . TO DELETE THE ADDITION ON ACCOUNT OF INFLATED EXPENSES OF RS.52,3 5,814/- WITHOUT APPRECIATING THE FACT THAT NO SATISFACTORY EVIDENCE IN THE SUPPORT WAS PRODUCED BEFORE THE A.O. DURING THE COURSE OF ASSES SMENT PROCEEDINGS TO SUBSTANTIATE THE CLAIMS OF VARIOUS EXPENSES. VII) (A) THE LD. CIT(APPEALS) ERRED IN DIRECTING TH E A.O. TO DELETE THE ADDITION ON ACCOUNT OF SUPPRESSION OF SALE AMOUNTIN G TO RS.1,40,16,850/- WITHOUT CONSIDERATION OF THE FLAT IN THE RATION OF 40:60 IN CASH (ON MONEY) AND CHEQUE RESPECTIVELY, O N THE BASIS OF WHICH ADDITION WAS MADE. (B) THE LD. CIT(A) FAILED TO APPRECIATE THE FACT T HAT THE ASSESSEE NEITHER DURING THE COURSE OF ORIGINAL NOR IN THE RE VISED ASSESSMENT 5 ITA NO.3744/MUM/2008 ASSESSMENT YEAR : 1999-2000. PROCEEDINGS BROUGHT ON RECORD ANY EVIDENCE REGARDIN G NON ACCEPTANCE OF ON MONEY TOWARDS SALE CONSIDERATION. (C) THE LD. CIT(A) OUGHT TO HAVE NOTED THAT THE MO TIVE OF THE ASSESSEE TO RECEIVE CASH IN THE SPECIFIED RATIO IS TO KEEP THE SALE RECEIPTS OUT OF BOOKS AND THEREBY EVADE TAX ON CONC EALED INCOME. VIII) THE LD. CIT(A) ERRED IN DELETING A SUM OF RS. 6,182/- OUT OF THE DISALLOWANCE OF BROKERAGE OF RS.52,082/- WITHOUT CO NSIDERING THE FACT THAT THE EXPENSES INCURRED IS CLEARLY NOT RELATED T O THE PROJECTS UNDER ASSESSMENT AND IS NOT TO BE CONSIDERED FOR THE ASSE SSMENT OF INCOME CONCERNING THE PROJECT DURING THE YEAR. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. THE LEARNED COUNSEL FOR THE ASS ESSEE HAS SUBMITTED THAT MOST OF THE ADDITIONS IN THE YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 1999-2000 WERE MADE BY THE AO RELYING ON THE ASSESSMENT MADE IN TH E ASSESSEES CASE FOR ASSESSMENT YEAR 1994-95 WHEREIN SIMILAR ADDITIONS W ERE MADE WHILE COMPUTING THE INCOME OF THE ASSESSEE FROM TWO PROJECTS, NAMEL Y, SHIV DARSHAN AND SHIV PARVATI. HE SUBMITTED THAT THE SAID ADDITIONS MADE BY THE AO IN ASSESSMENT YEAR 1994-95 WERE SUBSEQUENTLY DELETED BY THE LEARNED CI T(APPEALS) SUBSTANTIALLY WHILE DISPOSING OF THE APPEAL FILED BY THE ASSESSEE . HE CONTENDED THAT THE AO, HOWEVER, STILL REPEATED THE SAME ADDITIONS IN THE Y EAR UNDER CONSIDERATION WITHOUT BRINGING ANYTHING NEW ON RECORD. HE CONTENDED THAT THE LEARNED CIT(APPEALS), HOWEVER, RELIED ON THE ORDER OF HIS PREDECESSOR FOR ASSESSMENT YEAR 1994-95 TO DELETE THE SIMILAR ADDITIONS MADE BY THE AO IN ASSE SSMENT YEAR 1999-2000 AFTER HAVING FOUND THAT THERE WAS NOTHING NEW BROUGHT ON RECORD BY THE AO TO CONTROVERT THE FINDINGS RECORDED IN THE APPELLATE O RDER FOR ASSESSMENT YEAR 1994-95 WHILE DELETING THE SIMILAR ADDITION. THE LEARNED CO UNSEL FOR THE ASSESSEE TOOK US THROUGH THE RELEVANT OBSERVATIONS OF THE LEARNED CI T(APPEALS) RECORDED IN THIS REGARD IN HIS IMPUGNED ORDER AND STRONGLY RELIED ON THE SAME. THE LEARNED DR, ON 6 ITA NO.3744/MUM/2008 ASSESSMENT YEAR : 1999-2000. THE OTHER HAND, HAS NOT BEEN ABLE TO CONTROVERT OR REBUT THE SAID OBSERVATIONS/FINDINGS RECORDED BY THE LEARNED CIT(A PPEALS) AND HAS SIMPLY RELIED ON THE ORDER OF THE AO IN SUPPORT OF THE REVENUES CASE ON THE ISSUES INVOLVED IN THIS APPEAL. 5. AFTER HAVING CONSIDERED THE RIVAL SUBMISSIONS AN D PERUSED THE RELEVANT MATERIAL ON RECORD, WE NOW PROCEED TO ADJUDICATE UP ON THE VARIOUS ISSUES INVOLVED IN THIS APPEAL GROUNDWISE. 6. AS REGARDS GROUND NO. 1 RELATING TO THE ASSESSEE S CLAIM FOR EXPENSES INCURRED ON ACCOUNT OF LAYOUT AND DEVELOPMENT, IT I S OBSERVED THAT THE PROVISION FOR COMMON LAYOUT EXPENSES IN RESPECT OF SHIV DARSHAN A ND SHIV PARVATI PROJECTS AMOUNTING TO RS.15,75,353/- AND RS.11,99,295/- WAS MADE BY THE ASSESSEE IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 1994-95 S INCE THE SAID TWO PROJECTS WERE CLAIMED TO BE COMPLETED BY THE ASSESSEE IN THAT YEA R. IN THE ASSESSMENT COMPLETED FOR ASSESSMENT YEAR 1994-95, THE SAID PROVISION MAD E BY THE ASSESSEE WAS DISALLOWED BY THE AO AND THE SAID DISALLOWANCE WAS REPEATED BY THE AO IN THE YEAR UNDER CONSIDERATION OBSERVING THAT THE COMMON LAYOUT EXPENDITURE WAS NEITHER INCURRED BY THE ASSESSEE IN ASSESSMENT YEAR 1999-2000 NOR THE PAYMENT THEREOF WAS MADE IN THAT YEAR. THE AO, HOWEVER, COM PLETELY OVERLOOKED THE DIRECTION GIVEN BY THE TRIBUNAL WHILE RESTORING THI S ISSUE TO RECONSIDER THE CLAIM OF THE ASSESSEE AFRESH KEEPING IN VIEW ITS DECISION TH AT THE TWO PROJECTS UNDERTAKEN BY THE ASSESSEE WERE COMPLETED IN ASSESSMENT YEAR 1999 -2000 AND THE CLAIM OF THE ASSESSEE FOR VARIOUS EXPENSES WAS REQUIRED TO BE RE CONSIDERED IN THAT YEAR AFTER TAKING INTO CONSIDERATION THE EVENTS AND DEVELOPMEN TS THAT HAD TAKEN PLACE BETWEEN ASSESSMENT YEAR 1994-95 AND 1999-2000. AS FOUND BY THE LEARNED CIT(APPEALS) IN THIS CONTEXT, THE LIABILITY TO SPEC IFICALLY BEAR THE COMMON LAYOUT EXPENSES WAS UNDERTAKEN BY THE ASSESSEE WHILE ACCEP TING THE OCCUPATION 7 ITA NO.3744/MUM/2008 ASSESSMENT YEAR : 1999-2000. CERTIFICATE OF MUNICIPAL CORPORATION THROUGH THE CO URT AND THE PROVISION MADE FOR THE SAID EXPENSES THUS REPRESENTED AN ACCRUED LIAB ILITY WHICH WAS DEDUCTIBLE WHILE COMPUTING THE BUSINESS INCOME OF THE ASSESSEE. WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) GIVI NG RELIEF TO THE ASSESSEE ON THIS ISSUE AND UPHOLDING THE SAME, WE DISMISS GROUN D NO.1 OF THE REVENUES APPEAL. 7. AS REGARDS GROUND NO. 2 RELATING TO THE ISSUE OF ADDITION OF RS.1,90,490/- MADE ON ACCOUNT OF BALCONY DEPOSITS, IT IS OBSERVED THAT THIS ADDITION WAS MADE BY THE AO ON THE GROUND THAT THE BALCONY DEPOSITS R EPRESENTING INCOMING RECEIPTS OF THE ASSESSEE SHOULD HAVE BEEN CREDITED TO HIS PR OFIT AND LOSS ACCOUNT. AS POINTED OUT ON BEHALF OF THE ASSESSEE BEFORE THE LEARNED C IT(APPEALS) AS WELL AS BEFORE US THE AMOUNT OF BALCONY DEPOSITS WAS CREDITED BY THE ASSESSEE TO THE B.M.C. CHARGES ACCOUNT AND ONLY THE NET AMOUNT OF B.M.C. C HARGES WAS DEBITED TO THE PROFIT & LOSS ACCOUNT FOR THE YEAR UNDER CONSIDERAT ION. THE AMOUNT OF BALCONY DEPOSITS THUS WAS TAKEN INTO CONSIDERATION WHILE WO RKING OUT THE PROFIT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AND THERE WAS NO JUSTIFICATION IN ADDING THE SAID AMOUNT AGAIN TO THE TOTAL INCOME OF THE AS SESSEE AS RIGHTLY HELD BY THE LEARNED CIT(APPEALS). WE, THEREFORE, UPHOLD THE IMP UGNED ORDER OF THE LEARNED CIT(APPEALS) DELETING THE ADDITION MADE BY THE AO O N ACCOUNT OF BALCONY DEPOSIT AND DISMISS GROUND NO. 2 OF THE REVENUES A PPEAL. 8. AS REGARDS GROUND NO.3 RELATING TO THE ISSUE OF ADDITION MADE ON ACCOUNT OF DISCREPANCY IN FIGURE OF SALE PROCEEDS, IT IS OBSER VED THAT THE SAID ADDITION WAS MADE BY THE AO RELYING ON THE STATEMENT OF ONE SHRI JOSEPH MATHEW, ONE OF THE CUSTOMERS OF THE ASSESSEE, WHEREIN HE HAD INDICATED THE MARKET RATES OF FLATS IN THE TWO PROJECTS DEVELOPED BY THE ASSESSEE. ADOPTING TH E SAID RATES AS SELLING RATES, THE AO WORKED OUT THE SUPPRESSED SALE PROCEEDS IN RESPE CT OF FLATS SOLD BY THE ASSESSEE 8 ITA NO.3744/MUM/2008 ASSESSMENT YEAR : 1999-2000. IN THE SAID TWO PROJECTS AND ADDED THE AMOUNT THERE OF TO THE TOTAL INCOME OF THE ASSESSEE. WHILE DOING SO, HE HEAVILY RELIED ON THE ASSESSMENT MADE IN ASSESSEES CASE FOR ASSESSMENT YEAR 1994-95 WHEREIN SIMILAR AD DITION WAS MADE RELYING ON THE STATEMENT OF SHRI JOSEPH MATHEW. BEFORE THE LEA RNED CIT(APPEALS), IT WAS POINTED OUT ON BEHALF OF THE ASSESSEE THAT SIMILAR ADDITION MADE IN ASSESSMENT YEAR 1994-95 HAD BEEN DULY DELETED BY THE LEARNED CIT(AP PEALS) AFTER OBTAINING REMAND REPORT FROM THE AO WHEREIN HE ACCEPTED THAT THERE WERE ACTUALLY NO SUCH DISCREPANCIES AS POINTED OUT IN THE ASSESSMENT ORDE R WHILE MAKING THE ADDITION ON ACCOUNT OF ALLEGED SUPPRESSED SALE PROCEEDS. IT WAS ALSO POINTED OUT THAT THE DECISION OF THE LEARNED CIT(APPEALS) ON THIS ISSUE GIVING RELIEF TO THE ASSESSEE IN ASSESSMENT YEAR 1994-95 WAS NOT CHALLENGED BY THE D EPARTMENT IN THE APPEAL FILED BEFORE THE TRIBUNAL. KEEPING IN VIEW THIS SUBMISSIO N OF THE ASSESSEE, THE LEARNED CIT(APPEALS) HELD THAT THE ADDITION MADE BY THE AO ON ACCOUNT OF ALLEGED SUPPRESSED SALE PROCEEDS WAS NOT SUSTAINABLE AS THE DISCREPANCIES ON THE BASIS OF WHICH THE SAID ADDITION WAS MADE WERE FOUND TO BE F ACTUALLY NOT IN EXISTENCE BY THE AO HIMSELF IN THE REMAND REPORT FILED DURING TH E COURSE OF APPELLATE PROCEEDINGS FOR ASSESSMENT YEAR 1994-95. AFTER HAVI NG CONSIDERED ALL THE FACTS OF THE CASE AND THE MATERIAL AVAILABLE ON RECORD, WE A RE OF THE VIEW THAT THE RELIEF GIVEN BY THE LEARNED CIT(APPEALS) TO THE ASSESSEE O N THIS ISSUE IS WELL FOUNDED AND HIS IMPUGNED ORDER ON THIS ISSUE DOES NOT CALL FOR ANY INTERFERENCE. THE SAME IS ACCORDINGLY UPHELD AND GROUND NO. 3 OF THE REVENUE S APPEAL IS ACCORDINGLY DISMISSED. 9. AS REGARDS GROUND NO. 4 RELATING TO THE ISSUE OF ASSESSEES CLAIM FOR DEDUCTION ON ACCOUNT OF ARCHITECTURAL FEES, IT IS O BSERVED THAT THE SAID CLAIM OF THE ASSESSEE WAS DISALLOWED BY THE AO RELYING ON THE FI NDINGS GIVEN IN THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 1994-95 ON A SIMILAR ISSU E. THE REASON GIVEN FOR THE 9 ITA NO.3744/MUM/2008 ASSESSMENT YEAR : 1999-2000. ADDITION WAS THAT THE ASSESSEE COULD NOT PRODUCE AN Y PROOF FOR PAYMENT OF ARCHITECTURAL FEES. BEFORE THE LEARNED CIT(APPEALS) , IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE ARCHITECTURAL FEES WAS PAID I N RESPECT OF TWO PROJECTS UNDERTAKEN BY THE ASSESSEE IN THE SUBSEQUENT YEARS AND THE UNPAID AMOUNT TO THE EXTENT OF RS.4,02,500/- WAS OFFERED AS INCOME OF TH E ASSESSEE IN ASSESSMENT YEAR 2002-03. THE LEARNED CIT(APPEALS) HELD THAT THE AMO UNT PAID BY THE ASSESSEE ON ACCOUNT OF ARCHITECTURAL FEES DURING THE ASSESSMENT YEARS 1995-96 TO 1999-2000 WAS LIABLE TO BE ALLOWED AS PER THE DIRECTION OF TH E TRIBUNAL TO TAKE NOTE OF THE EVENTS AND DEVELOPMENTS WHICH HAD TAKEN PLACE DURIN G THESE YEARS. AS REGARDS THE UNPAID ARCHITECTURAL FEES, HE HELD THAT THE SAME WA S ALREADY OFFERED TO TAX BY THE ASSESSEE IN ASSESSMENT YEAR 2002-03 AND, THEREFORE, THE ADDITION OF THE SAID AMOUNT AGAIN IN THE YEAR UNDER CONSIDERATION WAS NOT WARRA NTED. BEFORE US, THE LEARNED DR HAS NOT DISPUTED THE FACT THAT THE ARCHITECTURAL FEES PROVIDED BY THE ASSESSEE IN THE ASSESSMENT YEAR 1994-95 IN RESPECT OF TWO PROJE CTS UNDERTAKEN BY HIM WAS ACTUALLY PAID IN THE SUBSEQUENT YEARS I.E. ASSESSME NT YEARS 1995-96 TO 1999-2000 EXCEPT TO THE EXTENT OF RS.4,02,500/- WHICH REMAINE D UNPAID AND OFFERED AS INCOME OF THE ASSESSEE IN ASSESSMENT YEAR 2002-03. WE, THE REFORE, AGREE WITH THE LEARNED CIT(APPEALS) THAT THE DISALLOWANCE MADE BY THE AO O N ACCOUNT OF ARCHITECTURAL FEES WAS NOT WARRANTED AND UPHOLDING THE IMPUGNED O RDER OF THE LEARNED CIT(APPEALS) DELETING THE SAID DISALLOWANCE, WE DIS MISS GROUND NO. 4 OF THE REVENUES APPEAL. 10. AS REGARDS GROUND NO.5 RELATING TO THE ASSESSEE S CLAIM ON ACCOUNT OF INTEREST, IT IS OBSERVED THAT THE INTEREST EXPENDIT URE CLAIMED BY THE ASSESSEE WAS DISALLOWED BY THE AO MAINLY RELYING ON HIS ASSESSME NT ORDER FOR ASSESSMENT YEAR 1994-95 WHEREIN SAME AMOUNT OF INTEREST WAS DISALLO WED. BEFORE THE LEARNED CIT(APPEALS), IT WAS POINTED OUT ON BEHALF OF THE A SSESSEE THAT THE DISALLOWANCE OF 10 ITA NO.3744/MUM/2008 ASSESSMENT YEAR : 1999-2000. THE SAID AMOUNT OF INTEREST MADE IN ASSESSMENT YEAR 1994-95 BY THE AO WAS CONFIRMED BY THE LEARNED CIT(APPEALS) AND THE ASSES SEE HAD ACCEPTED THE DECISION OF THE LEARNED CIT(APPEALS) ON THIS ISSUE. THE LEAR NED CIT(APPEALS), THEREFORE, ACCEPTED THE STAND OF THE ASSESSEE THAT DISALLOWANC E OF THE SAME AMOUNT OF INTEREST AGAIN IN THE YEAR UNDER CONSIDERATION RESULTED IN D OUBLE ADDITION AND DELETED THE SAME. IN OUR OPINION, THERE IS NO INFIRMITY IN THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) DELETING THE ADDITION MADE BY THE AO O N THIS ISSUE AS THE SAME CLEARLY AMOUNTED TO DOUBLE ADDITION OF THE SAME AMO UNT AND UPHOLDING THE SAME, WE DISMISS GROUND NO. 5 OF THE REVENUES APPEAL. 11. AS REGARDS GROUND NO. 6 RELATING TO THE ISSUE O F ADDITION ON ACCOUNT OF INFLATED EXPENSES, IT IS OBSERVED THAT THE SAID ADD ITION WAS MADE BY THE AO MAINLY RELYING ON THE ASSESSMENT ORDER IN ASSESSEES CASE FOR ASSESSMENT YEAR 1994-95 WHEREIN THE SIMILAR ADDITION WAS MADE. BEFORE THE L EARNED CIT(APPEALS), IT WAS POINTED OUT ON BEHALF OF THE ASSESSEE THAT THE SAID ADDITION MADE ORIGINALLY IN ASSESSMENT YEAR 1994-95 WAS DELETED BY THE LEARNED CIT(APPEALS) IN BOTH THE ROUNDS OF APPELLATE PROCEEDINGS. IN THE FIRST ROUND , IT WAS DELETED BY THE LEARNED CIT(APPEALS) OBSERVING THAT NO CASE WAS MADE OUT BY THE AO FOR MAKING THE DISALLOWANCE OUT OF OTHER EXPENSES BY POINTING OUT ANY DEFECTS IN THE EVIDENCE PRODUCED BY THE ASSESSEE. IT WAS ALSO HELD BY THE L EARNED CIT(APPEALS) THAT THERE WAS NO COUNTER EVIDENCE BROUGHT ON RECORD BY THE AO TO PROVE THAT EXPENSES CLAIMED BY THE ASSESSEE OR EVEN PART THEREOF WERE B OGUS. THE ADDITION MADE BY THE AO TO THE EXTENT OF 20% OF THE ENTIRE COST OF CONST RUCTION TREATING THE SAME AS EXPENSES INFLATED BY THE ASSESSEE THUS WAS HELD TO BE TOO GENERAL BY THE LEARNED CIT(APPEALS) TO BE CONFIRMED. AS FURTHER POINTED OU T ON BEHALF OF THE ASSESSEE, EVEN IN THE SECOND ROUND OF LITIGATION, THE LEARNED CIT(APPEALS) HAD DELETED THE ADDITION MADE BY THE AO ON THIS ISSUE FOR THE SAME REASONS AS GIVEN IN THE FIRST 11 ITA NO.3744/MUM/2008 ASSESSMENT YEAR : 1999-2000. ROUND OF LITIGATION. THE LEARNED CIT(APPEALS) FOUND THAT INSPITE OF DELETION OF THE ADDITION MADE ON THIS ISSUE BY HIS TWO LEARNED PRED ECESSORS IN ASSESSMENT YEAR 1994-95, NO FRESH EVIDENCE WAS BROUGHT ON RECORD BY THE AO TO JUSTIFY THE SIMILAR ADDITION WHICH WAS MADE MERELY ON THE BASIS OF ASSE SSMENT FOR ASSESSMENT YEAR 1994-95. HE, THEREFORE, DELETED THE SAID ADDITION A ND, IN OUR OPINION, QUITE RIGHTLY SO. WHEN THE ADDITION MADE ON THIS ISSUE SIMILARLY IN ASSESSMENT YEAR 1994-95 WAS DELETED BY THE LEARNED CIT(APPEALS) SPECIFICALLY OB SERVING THAT THERE WAS NO EVIDENCE TO JUSTIFY THE SAME, THE AO, IN OUR OPINIO N, WAS ARBITRARY IN REPEATING THE SAID ADDITION MERELY ON THE BASIS OF ASSUMPTION AND SURMISES WITHOUT BRINGING ANY FRESH EVIDENCE ON RECORD TO JUSTIFY THE SAME. IN TH AT VIEW OF THE MATTER, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LEARNED CIT( APPEALS) DELETING THE ADDITION MADE BY THE AO ON THIS ISSUE AND UPHOLDING THE SAME , WE DISMISS GROUND NO. 6 OF THE REVENUES APPEAL. 12. AS REGARDS GROUND NO. 7 RELATING TO THE ISSUE O F ADDITION ON ACCOUNT OF SUPPRESSED SALES, IT IS OBSERVED THAT A STATEMENT O F SHRI V. MEHTA, ONE OF THE PURCHASERS OF THE FLAT OF THE ASSESSEE WAS RECORDED AT THE TIME OF SEARCH. IN THE SAID STATEMENT, SHRI V. MEHTA ADMITTED THAT HE HAS GIVEN RS.44,000/- IN CASH TO THE BUILDER WHICH WAS NOT RECORDED IN THE BOOKS OF ACCO UNT. ON THE BASIS OF THIS STATEMENT, A CONCLUSION WAS DRAWN BY THE AO IN THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 1994-95 PASSED IN ASSESSEES CASE T HAT THE ASSESSEE WAS ACCEPTING ON-MONEY FOR THE FLAT SOLD IN THE RATIO OF 60 : 40. ACCORDINGLY THE ON-MONEY FOR ALL THE FLATS SOLD IN TWO PROJECTS UNDERTAKEN BY THE AS SESSEE WAS WORKED OUT BY THE AO AT RS.1,40,16,850/- AND THE SAME WAS ADDED TO THE T OTAL INCOME OF THE ASSESSEE IN ASSESSMENT YEAR 1994-95 WHEN THE SAID PROJECTS WERE CLAIMED TO BE COMPLETED BY THE ASSESSEE. RELYING ON THE ASSESSMENT ORDER FOR A SSESSMENT YEAR 1994-95, THE AO MADE THE SIMILAR ADDITION ON ACCOUNT OF ON-MONEY IN ASSESSMENT YEAR1999-2000 12 ITA NO.3744/MUM/2008 ASSESSMENT YEAR : 1999-2000. WHICH WAS HELD TO BE THE YEAR OF COMPLETION OF TWO PROJECTS OF THE ASSESSEE BY THE TRIBUNAL. BEFORE THE LEARNED CIT(APPEALS), IT WAS S UBMITTED ON BEHALF OF THE ASSESSEE THAT THIS ISSUE WAS EXAMINED THOROUGHLY BY THE FIRST APPELLATE AUTHORITY IN ASSESSMENT YEAR 1994-95 WHEREIN CROSS EXAMINATION O F THE WITNESS RELIED UPON BY THE DEPARTMENT CLEARLY BROUGHT OUT THAT THE SAID WI TNESS NEVER HAD ANY DEALING WITH THE ASSESSEE. IT WAS SUBMITTED THAT THE STATEM ENT OF THE SAID WITNESS RECORDED IN CROSS VERIFICATION WAS PROVIDED TO THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION I.E. A SSESSMENT YEAR 1999-2000/- BUT HE STILL RELIED ON THE ORIGINAL STATEMENT TO MAKE T HE IMPUGNED ADDITION COMPLETELY IGNORING THE STATEMENT RECORDED IN CROSS VERIFICAT ION. IT WAS ALSO SUBMITTED THAT THE DECISION RENDERED BY THE LEARNED CIT(APPEALS) IN AS SESSMENT YEAR 1994-95 ON THIS ISSUE WAS NOT REBUTTED BY THE AO WITH ANY EVIDENCE OR ARGUMENTS WHILE REPEATING THE SAME ADDITION IN THE YEAR UNDER CONSIDERATION. THE LEARNED CIT(APPEALS) FOUND MERIT IN THE SUBMISSION MADE ON BEHALF OF THE ASSES SEE ON THIS ISSUE. HE HELD THAT WHEN SHRI V. MEHTA HAD NEVER BOUGHT ANY FLAT FROM T HE ASSESSEE AS BROUGHT OUT IN HIS CROSS EXAMINATION, THE ADDITION MADE BY THE AO ON ACCOUNT OF SUPPRESSION OF SALE RELYING ON HIS STATEMENT WAS UNSUSTAINABLE AS RIGHTLY HELD BY THE FIRST APPELLATE AUTHORITY IN ASSESSMENT YEAR 1994-95 ESPECIALLY WHE N THERE WAS NO OTHER EVIDENCE BROUGHT ON RECORD BY THE AO TO JUSTIFY THE SAME. 13. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE RELEVANT MATERIAL ON RECORD, WE FIND NO JUSTIFIABLE REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF ALLEGED SUPPRESSION OF SALE PROCEEDS BY THE ASSESSEE. THE S AID ADDITION WAS REPEATED BY THE AO ON THE BASIS OF ASSESSMENT IN ASSESSEES CASE FO R ASSESSMENT YEAR 1994-95 WHEREIN A SIMILAR ADDITION WAS MADE RELYING ON THE STATEMENT OF SHRI V. MEHTA STATED TO BE ONE OF THE PURCHASERS OF FLAT FROM THE ASSESSEE. IN THE SAID STATEMENT, 13 ITA NO.3744/MUM/2008 ASSESSMENT YEAR : 1999-2000. SHRI V. MEHTA WAS STATED TO HAVE ADMITTED THAT HE H AD PAID ON-MONEY IN CASH FOR PURCHASE OF FLAT FROM THE ASSESSEE. AS BROUGHT OUT IN THE COURSE OF CROSS EXAMINATION OF SHRI V. MEHTA DURING THE COURSE OF A PPELLATE PROCEEDINGS FOR ASSESSMENT YEAR 1994-95, HE HAD NEVER PURCHASED ANY FLAT FROM THE ASSESSEE. THE VERY BASIS OF THE ADDITION MADE ON THIS ISSUE THUS WAS DISLODGED IN THE CROSS EXAMINATION OF SHRI V. MEHTA AND RELYING ON HIS CRO SS EXAMINATION, THE LEARNED CIT(APPEALS) DELETED THE SAID ADDITION MADE BY THE AO IN ASSESSMENT YEAR 1994- 95. ALTHOUGH THIS RESULT OF CROSS EXAMINATION WAS B ROUGHT TO THE NOTICE OF THE AO BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PRO CEEDINGS FOR THE YEAR UNDER CONSIDERATION, THE FORMER COMPLETELY IGNORED THE SA ME AND REPEATED THE ADDITION MADE ON ACCOUNT OF SUPPRESSION OF SALE PROCEEDS ON THE BASIS OF ASSESSMENT FOR ASSESSMENT YEAR 1994-95 WHEREIN SIMILAR ADDITION WA S MADE RELYING ON THE STATEMENT OF SHRI V. MEHTA. HE EVEN DID NOT BOTHER TO BRING ANY FRESH EVIDENCE ON RECORD TO CORROBORATE AND JUSTIFY THE SAID ADDITION DESPITE THE FACT THAT THE SAME WAS FOUND TO BE UNSUSTAINABLE BY THE FIRST APPELLAT E AUTHORITY IN ASSESSMENT YEAR 1994-95 HOLDING THAT THE VERY BASIS OF THE SAID ADD ITION DID NOT SURVIVE AS A RESULT OF OUTCOME OF THE CROSS EXAMINATION OF SHRI V. MEHT A. IN OUR OPINION, THE ADDITION MADE BY THE AO ON THIS ISSUE THUS WAS TOTALLY ARBIT RARY AND UNSUSTAINABLE AND THE LEARNED CIT(APPEALS) WAS FULLY JUSTIFIED IN DELETIN G THE SAME. THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) ON THIS ISSUE IS, THERE FORE, UPHELD AND GROUND NO. 7 OF THE REVENUES APPEAL IS DISMISSED. 14. AS REGARDS THE ISSUE RAISED IN GROUND NO. 8 REL ATING TO THE DELETION OF DISALLOWANCE OF BROKERAGE BY THE LEARNED CIT(APPEAL S) TO THE EXTENT OF RS.6182/-, IT IS OBSERVED THAT THE DISALLOWANCE OF RS.42,082/- MADE BY THE AO ON ACCOUNT OF BROKERAGE WAS DELETED BY THE LEARNED CIT(APPEALS) T O THE EXTENT OF RS.6182/- BEING BROKERAGE PAID IN RESPECT OF KAILASH WATER SU PPLIERS PROJECT WHICH WAS 14 ITA NO.3744/MUM/2008 ASSESSMENT YEAR : 1999-2000. COMPLETED IN ASSESSMENT YEAR 1994-95 ITSELF AND THE INCOME OF WHICH WAS ALSO ASSESSED IN THAT YEAR. IT IS RELEVANT TO NOTE HERE THAT THE AMOUNT OF RS.6182/- WAS DISALLOWED BY THE AO RELYING ON THE ASSESSMENT ORDE R PASSED IN ASSESSEES CASE FOR ASSESSMENT YEAR 1994-95 IGNORING THE FACT THAT KAIL ESH WATER SUPPLIERS PROJECT WAS COMPLETED BY THE ASSESSEE IN ASSESSMENT YEAR 19 94-95 ITSELF AND THE BROKERAGE PAID IN RESPECT OF THE SAID PROJECT COULD NOT BE TH E SUBJECT MATTER OF ASSESSMENT FOR THE YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 1 999-2000. WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LEARNED C IT(APPEALS) DELETING THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF BROKERAGE PAYMENT OF RS.6182/- MADE IN RESPECT OF KAILESH WATER SUPPLIERS PROJECT AND U PHOLDING THE SAME ON THIS ISSUE, WE DISMISS GROUND NO. 8 OF THE REVENUES APPEAL. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED ON THIS 23RD DAY OF SEPT., 2011. SD/- SD/- (R.S. PADVEKAR) (P.M. J AGTAP) JUDICIAL MEMBER. ACCO UNTANT MEMBER MUMBAI, DATED: 23RD SEPT., 2011. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, H-BENCH. 6. GUARD FILE. *REDDY GP/WAKHODE