MALBAR INDUSTRIES P.LTD, MUMBAI V. ITO 5(2)(3), MUMBAI

ITA 4241/MUM/2012

• Counselvise Citation: 424119914 RSA 2012
• Duration Of Justice: 3 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-06-2015
• Assessment Year: 1999-2000
• Appeal Filed On: 19-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGESH KAMAT SR
• Assessee Lawyers: S C TIWARI
• Keywords: Opportunity of being heard; Additional evidence; Corroborative evidences
• Section: 143(3)

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - B, BENCH , , BEFORE S/SH. JOGINDER S INGH , JUDICIAL MEMBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA / 4241 & 424 2 /MUM/20 1 2 , / AY .S. - 19 99 - 00 & 20 02 - 03 M/S. MALABAR INDUSTRIES PVT. LTD. 101, CHITRAKOOT, 10TH FLOOR ALTAMOUNT ROAD, MUMBAI 400 026. PAN: AACCM 1317 K V S INCOME TAX OFFICER 5(2)(3) MUMBAI . ( / A PPELLANT ) ( / RESPONDENT ) /ASSESSEE BY :SHRI S.C. TIWARI / REVENUE BY :SHRI YOGESH KAMAT - SR.A R / DATE OF HEARING : 22 0 6 2015 / DATE OF PRONOUNCEMENT : 05 0 8 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM CHALLENGING THE ORDER S OF CIT(A) 9 , MUMBAI , DATED 19.3.2012 THE ASSESSEE HAS F I LED THE FOLLOWING GROUNDS OF APPEAL FOR THE ABO V E MENTI ONED TWO ASSESSMENT YEARS : ITA 4241/MUM/2012 (AY :1999 - 00) 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE OF THE APPELLANT AND IN LAW LEARNED CIT (APPEALS) HAS ERRED IN NOT DIRECTING THE DEDUCTION OF RS. 1,700,000/ - BEING THE AMOUNTS REFUNDE D BY THE APPELLANT TO SHRI C J PATEL AND M/ S ARYAN INTERNATIONAL TRANSPORT ALLOWED BY HIS PREDECESSOR ORDER DATED 24.03.2006 AND ACCEPTED BY THE DEPARTMENT. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE OF THE APPELLANT AND IN LAW LEARNE D CIT (APPEALS) HAS ERRED IN NOT DIRECTING THE DEDUCTION OF RS.36,695,990/ - BEING COMPENSATION PAID ON SURRENDER OF FLATS, THUS FLOUTING THE ORDER OF HON'BLE ITAT DATED 18.12.2009 IN ITA NO. 3483/ MUM/2006. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE OF THE APPELLANT AND IN LAW LEARNED CIT (APPEALS) HAS ERRED IN NOT DIRECTING TH E DEDUCTION OF RS.29,480,530/ - BEING THE EXPENDITURE INCURRED B Y THE APPELLANT IN THE SUBSEQUENT YEARS IN RELATION TO INCOME ASSESSED FOR ASSESSMENT YEAR 1999 - 2000/ - . 4. ALL THE ABOVE GROUNDS OF APPEAL ARE INDEPENDENT AND WITHOUT PREJUDICE TO EACH OTHER. 5.THE ASSESSING OFFICER'S ORDER BEING CONTRARY TO LAW, EVIDENCE AND FACTS OF THE CASE MAY KINDLY BE SET ASIDE, AMENDED OR MODIFIED IN THE LIGHT OF THE GROUNDS ENUMERATED ABOVE. 6.THE APPELLANT CRAVES LEAVE TO RESERVE TO HIMSELF THE RIGHT TO ADD TO, ALTER OR AMEND ANY OF THE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING AND TO PRODUCE SUCH FURTHER EVIDENCES, DOCUMENTS AND PAPERS AS MAY BE NECESSARY. ITA 4242/MUM/2012 (AY :2002 - 03) 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE OF THE APPELLANT AND IN LAW LEARNED CIT (APPEALS) HAS ERRED IN NOT DIRECTIN G THE DELETION OF THE SUM OF RS. 21,903,394/ - AS BEING DOUBLE ASSESSMENT OF T HE INCOME ALREADY BROUGHT TO ASSESSMENT FOR ASSESSMENT YEAR 1999 - 2000. 4241 & 4242 MALABAR 99 00 AND 02 03 2 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE OF THE APPELLANT AND IN LAW LEARNED CIT (APPEALS) HAS ERRED IN NOT DIRECTING THE DELETION OF THE SUM OF RS. 21,903,394/ - BECAUSE IN ANY CASE THIS SUM O F RS. 21,903,394/ - DOES NOT PERTAIN TO ASSESSMENT YEAR 2002 - 03 AND TH EREFORE CANNOT BE BROUGHT TO ASSESSMENT AS THE INCOME CHARGEABLE TO TAX FOR ASSESSMENT YEAR 2002 - 03. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE OF THE AP PELLANT AND IN LAW LEARNED CIT (APPEALS) HAS ERRED IN NOT DI RECTING THE DEDUCTION OF THE EXPENDITURE INCURRED BY THE APPELLANT IN RELATION T O THE PROJECT IN HAND DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR 2002 - 03. 4. ALL THE ABOVE GROUNDS OF APPEAL AR E INDEPEND ENT AND WITHOUT PREJUDICE TO EACH OTHER. 5. ASSESSING OFFICER'S ORDER BEING CONTRARY TO LAW, EVIDENCE AND FAC TS OF THE CASE MA Y KINDLY BE SET ASIDE, AMENDED OR MODIFIED IN THE LIGHT OF THE GROUNDS ENUMERATED ABOVE. 6. THE APPELLANT CRAVES LEA VE TO RESERVE TO HIMSELF T HE RIGHT TO ADD TO, ALTER OR AMEND ANY OF THE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING AND TO PRODUCE SUCH FURTHER EVIDENCES, DOCUMENTS AND PAPERS AS MAY BE NECESSARY. ASSESSEE COMPANY ,EN GAGED IN THE BUSINESS OF BUI LDERS AND DEVELOPERS , FILED RETURN OF INCOME ON 31.12. 19 99, DECLARING I NCOME OF RS. 7.01 LACS. ASSESS ING OFFICER (AO) COMPLETED THE ASSESSMENT U / S. 143(3) OF THE ACT ON 30.3.2005, DETERMINING ITS TOTAL INCOME AT RS. 5.77 CR ORES . IT PREFERRED AN APPEAL BEFORE THE FIR ST APPELLATE AUTHORITY ( FAA ) WHO GRANTED PARTIAL RELIEF. ASSESSEE AS WELL AS THE AO APPROACHED THE TRIBUNAL AND VIDE ITS ORDER, D ATED 18.12.2009, (ITA NO.3568/MUM/06 AND ITA/ 3483/M UM /06) IT SET ASIDE THE ORDER OF THE AO WITH REGARD TO CERTAIN GROUNDS AND CERTA IN GROUNDS FILE D BY THE ASSESSEE WERE ALLOWED. AS THE ASSESSEE DID NOT APPEAR BEFORE THE TRIBUANL,SO IT DECIDED THE MATTER ON THE BASIS OF THE MATERIAL AVAILABLE AND AFTER HEARING THE REPRESENTATIVE OF THE DEPARTMENT. THE TRIBUNAL SET ASIDE GROUND NO.2 AND 3 TO THE FILE OF THE AO.IT WAS ALSO HELD THAT THE PROJECT WAS SUBSTANTIALLY COMPLETED IN THE AY.1999 2000 AND THAT THE RECEIPT FROM THE PROJECTS HAD TO BE ASSESSED IN THE THAT AY.ONLY. IN PURSUANCE OF THE ORDER OF THE TRIBUNAL , THE AO COMPE LE TED THE ASSESSMEN T ON 30.12.10 U/S.143(3) R.W.S. 254 OF THE ACT, DETERMINING THE INCOME OF THE ASSESSEE AGAIN AT RS.5,77,77,896/ . 2. F IRST GROUND OF APPEAL IS ABOUT DEDUCTION OF R S.17.00 LACS BEING THE AMOUNTS REFUNDED BY THE ASSESSEE TO CJ PATEL (CJP) AND M/S. ARYAN INTER NATIONAL TRANSPORT (AIT). DURING THE ORIGINAL ASSESSMENT PROCEEDINGS, THE AO HAD MADE A DISALLOWANCE OF RS.17 LACS. IT WAS FOUND THAT THE ASSE S SEE HAD CLAIMED THAT IT HAD RETURNED MONEY TO CJP AND AIT . AGGREIVED BY THE ORDER OF THE AO THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA),WHO CONFIRMED THE ORDER OF THE AO. 2.1. BEFORE US, THE AUTHORISED REPRESENTATIVE(AR)SUBMITTED THAT IN THE FIRST ROUND OF LITIGATION THE FAA HAD DELETED THE ADDITION,THAT THE AO HAD NOT CHALLENGED THE ORDE R OF THE THEN FAA,THAT THE ISSUE HAD BECOME FINAL AT THAT POINT OF TIME,THAT THE AO WAS NOT JUSTIFIED IN DISALLOWING THE SAME DURING THE SECOND ASSESSMENT PROCEEDINGS.HE REFERRED TO THE PAGE NO.61 AND 62 OF THE PAPER BOOK.DEPARTMENTAL REPRESENTATIVE(DR)LEF T THE ISSUE TO THE DISCRETION OF THE BENCH. 2.2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD.WE FIND THAT WHILE DECIDING THE APPEAL FOR THE AY.UNDER APPEAL ON 24.03.2006,THE THEN FAA HAD DEALT WITH THE ISSUE OF REFUNDING OF MONEY TO CJP AND AIT AS UNDER: DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS STATED BY THE APPELLANT THAT AS PER THE BALANCE SHEET, TOTAL ADVANCES RECEIVED BY THE APPELLANT COMPANY WERE RS. 21,59,40,112/ - WHICH INCLUDED AMOUNT OF RS. 17,00,000/ - RECEIVED F ROM SHRI C.J. PATEL (RS. 4LACS) AND M/S. ARYAN INTERNATIONAL TRANSPORT ( RS.13 LACS). SINCE NO FLAT WAS ALLOTTED TO THESE TWO PERSONS, THIS AMOUNT WAS REFUNDED IN THE F.Y. 2004 - 2005. ACCORDINGLY, THE APPELLANT SOUGHT EXCLUSION OF THIS AMOUNT 4241 & 4242 MALABAR 99 00 AND 02 03 3 FROM THE RECEI PTS APPEARING IN THE BALANCE SHEET. HOWEVER, REJECTING THE CLAIM OF THE APPELLANT, THE AO PROCEEDED TO ADOPT THE TOTAL RECEIPTS OF THE APPELLANT AT RS. 21.46,98,875/ - AS APPEARING IN ITS BALANCE SHEET AS ON 31.3.99. 4.1 BEFORE ME, IT WAS SUBMITTED THAT IN THE BALANCE SHEET OF THE APPELLANT COMPANY AS ON 31.3.99, CURRENT LIABILITIES AND PROVISIONS AMOUNTING RS.21,63,40,1121 - WERE SHOWN. THIS AMOUNT INCLUDED THE ADVANCES RECEIVED AGAINST THE SALE OF FLATS AND GARAGES AT RS.21,46,98,875/ - . IT WAS SUBMITTED TH AT THIS AMOUNT INCLUDED AN AMOUNT OF RS. 4 LAC FROM SHRI C.J. PATEL AND RS.13 LAC FROM M/S. ARYAN INTERNATIONAL TRANSPORT. SINCE BOTH THESE PERSONS WERE NOT ALLOTTED ANY FLAT, THE SUM OF RS. 17 LACS HAS BEEN REFUNDED TO THEM IN THE F. Y. 2004 - 2005. ACCORDI NGLY, THE RECEIPTS OF THE APPELLANT AS ON 31.03.99 IN RESPECT OF THE PROJECT SHOULD BE TAKEN ONLY AT RS. 21,29,98,875/ - . 4.2 1 HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE LD. AR. VIDE MY LETTER DATED 5 .7.2005, THE AO WAS ASKED TO COMMENT ON THE C LAIM OF THE APPELLANT REGARDING EXCLUSION OF RS. 17 LACS FROM THE RECEIPTS. VIDE HIS LETTER DATED 29. DEC,2005 THE AO SUBMITTED THAT THE RECEIPTS ARE REQUIRED TO BE TAKEN AT RS. 21,46.98,8751 - AS APPEARING IN THE BALANCE SHEET AS ON 31.03.99. ON PERUSAL OF THE DETAILS FILED BY THE APPELLANT, IT IS SEEN THAT THE ADVANCES OF RS. 21,46,98,875/ - INCLUDED THE AMOUNT OF RS. 17 LACS RECEIVED FROM SHRI C.J. PATEL AND M/S. ARYAN INTERNATIONAL TRANSPORT. ON PERUSAL OF THE LIST OF ALLOTTEES OF THE FLAT, IT IS SEEN THAT NO FLAT WAS ALLOTTED TO THESE TWO PERSONS BY THE APPELLANT. THEREFORE, THE ADVANCES RECEIVED FROM THESE PERSONS CANNOT BE INCLUDED IN THE RECEIPTS. THE SAME IS DIRECTED TO BE DELETED FROM THE RECEIPTS FOR THE PURPOSE OF WORKING OUT THE INCOME OF THE APPEL LANT FROM THE PROJECT. FROM THE ABOVE,IT IS CLEAR THAT THE ISSUE ABOUT THE REFUND OF MONEY TO TWO PARTIES HAD ATTAINED FINALITY DURING THE FIRST ROUND OF LITIGATION.FROM THE ORDER OF THE TRIBUNAL ALSO, IT IS EVIDENT THAT THE ORDER OF THE FAA WAS NOT CHAL LENGED BY THE AO WITH REGARD THIS ISSUE.IN THESE CIRCUMSTAN CES,ADDITION MADE BY THE AO AND CONFIRMED BY THE FAA IS HELD BE TO UNJUSTIFIED. REVERSING THE ORDER OF THE FAA PERTAINING TO THE ISSUE UNDER CONSIDERATION,WE DECIDE GROUND NO.1 IN FAVOUR OF THE A SESSEE . 3 .N EXT GROUND OF APPEAL DEALS WITH DEDUCTION OF RS.3 , 66 , 95,990/ , BEING COMPENSATION PAID ON SURRENDER OF FLATS .AS STATED EARLIER,THE AO HAD COMPUTED THE TOTAL INCOME OF THE ASESSEE AT RS.5.77 CRORES IN THE SECOND ROUND ALSO.ONE OF THE ITEMS ADDED DURING THE ORIGINAL ASSESSMENT WAS ABOUT COMPENSATION PAID ON SURRENDER OF FLATS.THE ISSUE HAD TRAVELLED UP TO THE TRIBUNAL. 3.1. BEFORE US,THE AR CONTENDED THAT IN THE FIRST ROUND OF APPEAL THE ISSUE WAS DECIDED IN FAVOUR OF THE ASESSEE ,THAT THE AO HAD CHA LLENGED THE ORDER OF THE FAA BEFORE THE TRIBUNAL,THAT THE TRIBUNAL VIDE ITS ORDER DATED 18.12.2009(SUPRA)HAD DECIDED THE ISSUE AGAINST THE AO,THAT THE AO AND THE FAA HAD INCORRECTLY MADE THE ADDITION/UPHELD THE ADDITION IN THE SECOND ROUND.HE REFERRED TO T HE PAGE NO.63 67 AND 22 27 OF THE PAPER BOOK.DR STATED THAT ISSUE COULD BE DECIDED ON MERITS. 3.2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT ISSUE OF COMPENSATION PAID ON SURRENDER OF FLATS WAS DISCUSSED IN LENGTH B Y THE TRIBUNAL WHILE ADJUDICATION THE APPEAL FILED BY THE AO IN ITS ORDER DATED 18.12.2009. FIRST,W E WOULD LIKE TO REPRODUCE THE GROUND OF APPEAL RAISED BY THE AO AND SAME READS AS UNDER: '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 PERSONS AS THE COST OF THE PROJECT IGNORING THE FACT THAT ASSESSEE FAILED TO FURNISH ANY EVIDENCE IN SUPPORT OF THE COMPENSATION CLAIMED TO HAVE BEEN PA ID BY IT. THE TRIBUNAL DELIBERATED UPON THE MATTER AND DECIDED IT IN FOLLOWING MANNER: 18. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS SUBMITTED BEFORE THE ASSESSING OFFICER THAT VARIOUS PERSONS HAD BOOKE D FLATS WITH THE ASSESSEE BY 4241 & 4242 MALABAR 99 00 AND 02 03 4 PAYING ADVANCES. HOWEVER,SINCE THE PROJECT GOT DELAYED EXTRAORDINARILY, SOME OF THE PERSONS WANTED TO TERMINATE THEIR AGREEMENTS WITH THE ASSESSEE. THE ASSESSEE ENTERED INTO AGREEMENTS WITH THEM AGREEING TO PAY SOME COMPENSATIO N TO THEM AGAINST WHICH THEY TERMINATED THEIR AGREEMENTS IN RESPECT OF ALLOTMENT OF FLATS IN FAVOUR OF THE ASSESSEE. THE ASSESSEE THEREAFTER ALLOTTED THOSE FLATS WHICH WERE TERMINATED TO SOME OTHER PERSONS AND THE SALE CONSIDERATION RECEIVED WAS MUCH HIGHE R THAN THE COMPENSATION PAID BY THE ASSESSEE TO THE ORIGINAL FLAT OWNERS. THE ASSESSEE INCLUDED THIS COMPENSATION OF RS.3,67,95,990 IN THE COST OF PROJECT ON ACCOUNT OF COMPENSATION PAID 19.HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE CLAIM OF THE ASS ESSEE 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 WAS ANY CLAUSE EXISTED THEREIN REGARDING THE TERMS OF PAYMENT OF COMPENSA TION IN THE EVENT OF TERMINATION OF THE AGREEMENT FURTHER THE ASSESSEE ALSO DID NOT FILE ANY CONFIRMATIONS FROM THESE PARTIES CONFIRMING THE RECEIPT OF THE COMPENSATION ON SURRENDER OF FLATS. 20.BEFORE CIT(A)THE ASSESSEE FURNISHED THE DETAILS OF COMPENSAT ION PAID TO 9 PERSONS AMOUNTING TO RS.3,67,95,990. IT WAS SUBMITTED THAT THE ASSESSEE HAS PRODUCED COPIES OF THE AGREEMENTS ENTERED INTO WITH THESE PERSONS VIDE WHICH COMPENSATION WAS PAID TO THEM. IT WAS FURTHER SUBMITTED THAT THE PAYMENTS TO THESE PERSON S HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES/DRAFTS. THE COPIES OF THE BANK ACCOUNT EVIDENCING CLEARANCE OF CHEQUES ISSUED TO THOSE PERSONS WERE ALSO FILED BEFORE THE CIT(A).THE ASSESSEE ALSO GAVE THE DETAILS OF 9 PERSONS TO WHOM THE FLATS OF RS.7,03,66,767WH ICH IS MUCH HIGHER THAN THE AMOUNT OF COMPENSATION PAID. IT WAS FURTHER SUBMITTED THAT IN CASE THE COMPENSATION 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 THESE FLATS INCLUDED IN THE RECEIPTS SHOULD ALSO BE EXCLUDED. BASED ON THE ARGUMENTS 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 VARIOU S PERSONS 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 REVENUE IS IN APPEAL BEFORE US. 22.AFTER HEARING THE LEARNED DR AND ON PERUSAL OF THE OR DERS OF THE AUTHORITIES BELOW,WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CITCA). WE FIND THE CIT(A) WHILE DIRECTING THE ASSESSING OFFICER TO TREAT THE COMPENSATION PAID TO VARIOUS PERSONS AS THE COST OF THE PROJECT HAS CALLED FOR THE REMAND REPORT A ND AFTER CONSIDERING THE SAME HAS PASSED AN ELABORATE ORDER ON THIS ISSUE.THE RELEVANT PORTION 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 ORDER,IT IS SEEN THAT THE AO REJECTED THE CLAIM OF THE APPELLANT 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 CONFIRMATIO NS FROM THE CONCERNED PERSONS AND ALSO BECAUSE OF THE FACT THAT THE APPELLANT HAD FAILED TO PRODUCE THE ORIGINAL AGREEMENTS ENTERED INTO WITH THESE PERSONS AT THE TIME OF BOOKING OF FLATS TO ENABLE THE AO TO ASCERTAIN WHETHER THERE WAS ANY CLAUSE ALLOWING COMPENSATION AT THE TIME OF THE TERMINATION OF BOOKING. IT WAS THE CLAIM OF THE APPELLANT THAT THE COPIES OF AGREEMENT ON THE BASIS OF WHICH COMPENSATION WAS PAID WERE FILED BEFORE THE AO. SINCE THOSE COPIES WERE NOT TAKEN NOTE OF BY THE AO DURING THE COU RSE OF ASSTT PROCEEDINGS, VIDE LETTER DT 5.7.2005; THE A O 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 REPRODUCED HEREUNDER: 'WHILE COMPUTING THE TOTAL INCOME, TH E APPELLANT HAD CLAIMED DEDUCTION ON ACCOUNT OF COMPENSATION OF RS.3,67,95,900/ - . THE AO DID NOT ALLOW DEDUCTION ON THE GROUND THAT THE APPELLANT DID NOT SUBMIT THE ORIGINAL AGREEMENTS ENTERED INTO WITH THESE PERSONS. FURTHER, THE APPELLANT DID NOT SUBMIT CONFIRMATION FROM THE 9 PERSONS REGARDING THE RECEIPT OF COMPENSATION. IT HAS BEEN SUBMITTED BY THE LD. AR BEFORE ME THAT THE AO DID NOT ASK THE 4241 & 4242 MALABAR 99 00 AND 02 03 5 APPELLANT TO FURNISH THESE DOCUMENTS. I FEEL THAT THE ISSUE HAS NOT BEEN PROPERLY EXAMINED BY THE AO.YOU ARE RE QUESTED TO - AGAIN EXAMINE THE ISSUE AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE APPELLANT AND THEREAFTER 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 WAS PAID TO THEM FOR CANCELLATION OF BOOKINGS. THE APPELLANT ALSO FILED COPIES OF ITS BANK ACCOUNT THROUGH WHICH PAYMENTS IN RESPECT OF COMPENSATION WERE PAID TO THE ALLOTTEES. AFTER EXAMINING TH E ISSUE,THE AO SENT HIS 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,ASSE SSEE'S REPRESENTATIVE SUBMITTED THAT IT IS DIFFICULT TO RACE OUT THE PARTY AFTER ALMOST 20 YEARS.HOWEVER, WE HAVE GIVEN YOU COPIES OF SAMPLE RECEIPTS RECEIVED BY THE PARTY FOR THE PAYMENT RECEIVED BY HIM 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 AGRE EMENT MADE FOR THE SURRENDER OF THE FLATS VIDE THEIR LETTER DATED 17.5.2004. THE SAME COPIES OF AGREEMENT FOR SURRENDER OF FLAT FILED BY THE ASSESSEE'S REPRESENTATIVEON 26.8.2005.THEY HAVE ALSO MENTIONED THAT THE ASSESSEE COMPANY HAS CONSIDERABLY RECEIVED FROM MONEY THAN WHAT HE HAS PAID.IN ALL ASSESSEE HAS PAID RS.3,67,95,990/ AGAINST THE RECEIPT OF RS.7,03,66,767/ AND THE DIFFERENCE BETWEEN TWO HAS SHOWN AS A INCOME.IT IS IMPORTANT TO NOTE THAT THESE PAYMENTS HAVE BEEN RECEIVED AND PAID ALMOST 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 AGREEMENT 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 HAVE ALSO GONE THROUGH THE REMAND REPORT RECEIVED FROM THE AO.VARIOUS EVIDENCES FILED BY T HE APPELLANT LIKE COPIES OF BANK ACCOUNTS, COPIES OF AQREEMENTS ETC.,HAVE ALSO BEEN EXAMINED BY ME.ON PERUSAL OF VARIOUS DOCUMENTS FILED BY THE APPELLANT,IT IS SEEN THAT THE APPELLANT HAD PAID COMPENSATION TO VARIOUS PERSONS, WHO HAD CANCELLED THEIR BOOKIN GS, THROUGH CHEQUES/DEMAND DRAFTS.THE APPELLANT HAS FILED COPIES OF AGREEMENTS ON THE BASIS OF WHICH THESE PAYMENTS HAVE BEEN MADE BEFORE THE AO AS WELL AS BEFORE ME. IN MOST OF THE CASES, THE SAMPLE COPIES OF RECEIPTS OBTAINED IN RESPECT OF PAYMENT OF CO MPENSATION TO VARIOUS PERSONS HAVE BEEN FILED BEFORE THE AO.FURTHER, ON PERUSAL OF COPIES OF VARIOUS BANK ACCOUNTS FILED BY THE APPELLANT, IT IS SEEN THAT ALL THE CHEQUES ISSUED TO VARIOUS PARTIES HAVE BEEN CLEARED. IN THE BANK STATEMENTS, THE NAME OF THE PERSON TO WHOM THE PAYMENT IN RESPECT OF A PARTICULAR CHEQUE HAS BEEN MADE, HAS BEEN SPECIFIED.THE COPIES OF AGREEMENTS AND THE PROOF HAVING MADE THE PAYMENTS THROUGH CHEQUES ARE SUFFICIENT EVIDENCE TO SUPPORT THE CLAIM OF THE APPELLANT OF HAVING PAID COMP ENSATION TO VARIOUS PARTIES AGAINST CANCELLATION OF FLATS. SINCE THE PAYMENTS IN RESPECT OF COMPENSATION WERE MADE ABOUT 18 TO 20 YEARS BACK THE INABILITY OF THE APPELLANT TO FURNISH CONFIRMATIONS FROM THE REQUIRED PERSONS CAN BE WELL APPRECIATED. FURTHER, AS AGAINST THE COMPENSATION OF RS.3,67,95,990/ - FROM THE PERSONS TO WHOM THE CANCELLED FLATS 4241 & 4242 MALABAR 99 00 AND 02 03 6 WERE RESOLD. THE SAID AMOUNT HAS BEEN SHOWN BY THE APPELLANT AS A PART OF ITS INCOME. HAD THE APPELLANT NOT PAID THE COMPENSATION TO THE ORIGINAL ALLOTTEES, IT WO ULD NOT HAVE RECEIVED THESE SALE PROCEEDS FROM THE RESALE OF FLATS. EVEN IF THERE WAS 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 A S A DEDUCTION ON THE PRINCIPLE OF BUSINESS EXPEDIENCY. IN VIEW OF THIS DISCUSSION, THE AO IS DIRECTED TO TREAT THE COMPENSATION OF RS.3,67,95,990/ - PAID TO VARIOUS PERSONS AS THE COST OF THE PROJECT THE PROFITS IN RESPECT OF WHICH HAVE BEEN ASSESSED FOR TH E YEAR UNDER CONSIDERATION. 23.THE LEARNED DR COULD NOT CONTROVERT THE ABOVE FACTUAL FINDINGS GIVEN BY THE CIT(A). WE FIND THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE ORIGINAL AGREEMENTS OR CONFIRMATIONS FROM THE PARTIES TO WHOM THE COMPENSATION FOR SUR RENDERING OF INCOMPLETE FLATS HAS 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 ASSESSEE HAS PRODUCED THE COPIES OF THE BANK ACCOUNT AND THE COPIES OF AGREEMEN TS, ETC.,BEFORE THE ASSESSING OFFICER. FURTHER THE ASSESSEE BY CANCELLING THE AGREEMENTS HAS PAID COMPENSATION OF RS.3,67,95,990 AND BY RESELLING THE FLATS HAS RECEIVED AN AMOUNT OF RS.7,03,66,767 WHICH HAS BEEN DISCLOSED AS THE RECEIPTS AND WHICH IS MUCH HIGHER THAN THE COMPENSATION SO PAID. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED DISCUSSION BY THE CIT(A)IN HIS ORDER ON THIS ISSUE, WE DO NOT FIND ANY INFIRMITY IN THE SAME AND ACCORDINGLY, THE SAME IS UPHELD THIS GROUND RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. FROM THE ABOVE ORDER OF THE TRIBUNAL, IT IS VERY CLEAR THAT THE ISSUE WAS DECIDED AGAINST THE AO IN THE FIRST ROUND ITSELF.IN OUR OPINION,THE AO OR THE FAA HAD NOT PROPERLY FOLLOWED THE DIRECTIONS OF THE TRIBUNAL,WHILE COMPLETING T HE ASSESSMENT/ DECIDING THE APPEAL IN THE SECOND ROUND. PRINCIPLES OF TAXATION JURISPRUDENCE DEMANDS THAT I F AN ISSUE HAS ATTAINED FINALITY , IT SHOULD NOT BE REVIVED AGAIN.IT IS NOT THE CASE WHERE THE TRIBUNAL HAD SET ASIDE THE MATTER TO THE FILE OF THE AO FOR FRESH ADJUDICATION AND THE AO AFTER MAKING INQUIRY COMPUTED THE TAX LIABILITY .THE FAA HAD, IN THE FIRST ROUND,DELETED THE ADDITION MADE BY THE AO, THEN THERE WAS NO JUSTIFICATION ON HIS PART IN UPHOLDING THE SAME IN THE SECOND ROUND ESPECIALLY AFTER THE ORDER OF THE TRIBUNAL. THEREFORE, REVERSING THE ORDER OF THE FAA ON THE ISSUE AND FOLLOWING THE EARLIER ORDER OF THE ITAT,WE DECIDE GROUND NO.2 IN FAVOUR OF THE ASESSEE . 4. LAST EFFECTIVE GROUND OF APPEAL IS ABOUT DEDUCTION OF RS.2 , 94 , 80,530/ BEING THE EXP ENDITURE INCURRED BY THE APPELLANT IN THE SUBSEQUENT YEARS IN RELATION TO INCOME ASSESSED FOR THE A Y. UNDER CONSIDERATION. FACTS OF THE MATTER ARE THAT DURING THE ORIGINAL ASSESSMENT PROCEEDINGS,THE ASESSEE CLAIMED THAT IT HAD INCURRED CERTAIN EXPENDITURE IN RESPECT OF PROJECT CONSISTING OF 34 FLOORS AFTER 31.03.1999,THAT THE EXPENDITURE SHOULD BE CONSIDERED A PART OF THE COST OF THE PROJECT.THE ASESSEE ESTIMATED THE COST OF THE PROJECT AT RS.90 LAKHS.THE AO DID NOT ACCEPT THE CLAIM OF THE ASESSEE ON THE GROU ND THAT NO SUPPORTING EVIDENCES WERE FILED TO SUBSTANTIATE THE CLAIM OF ESTIMATED EXPENDITURE ON PLASTERING AND PAINTING. 4.1. BEFORE THE FAA,IN THE FIRST ROUND OF HEARING, AN ADDITIONAL GROUND WAS RAISED .THE ASSESSEE CLAIMED THAT THE ACTUAL EXPENDITURE AMOU NTED TO RS.3.45 CRORES AND NOT RS.90 LAKHS AS CLAIMED BEFORE THE AO .BEFORE HIM,IT WAS SUBMITTED BY THAT THE FIGURE OF RS.90 LACS WAS ONLY A PROVISIONAL FIGURE,THAT THE DETAILED WORKING FILED BY IT BEFORE HIM WAS NOT EARLIER FILED BEFORE THE AO FOR THE REAS ON THAT THE ASSESSEE WAS CONTESTING THAT THE PROJECT WAS TO BE CONSIDERED COMPLETED ONLY IN THE A.Y.2005 06, THAT THE ESTIMATED FIGURE OF RS. 90 LACS PERTAINED PLASTERING AND PAINTINGS ONLY. IT WAS STATED THAT THE ADDITIONAL EVIDENCE FILED BY IT MAY BE CON SIDERED ADMISSIBLE UNDER RULE 46A OF I.T. RULES. FURTHER, IT WAS SUBMITTED THAT EVEN THE AO DID NOT GIVE 4241 & 4242 MALABAR 99 00 AND 02 03 7 ANY OPPORTUNITY TO THE APPELLANT TO FILE EVIDENCE IN RESPECT OF THE CLAIM THAT THE ADDITIONAL GROUND TAKEN BY IT AND THE ADDITIONAL EVIDENCE FILED IN S UPPORT THEREOF SHOULD BE ADMITTED.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THE FAA HELD THAT ALL THE EXPENSES CLAIMED BY IT IN THE ADDITIONAL GROUND OF APPEAL WERE INCURRED IN F.Y. 2004 05 AND 2005 06 I.E AFTER THE RETURN OF INCOME FOR THE AY.UN DER CONSIDERATION WAS FILED ON 20.02.2004,THAT THE GROUND TAKEN BY THE ASSESSEE COULD NOT HAVE BEEN TAKEN EARLIER BEFORE THE AO.REFERRING TO THE JUDGMENT OF JUTE CORPORATION OF INDIA (187 ITR 688),HE ADMITTED THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE . HE DECIDED THE ISSUE AS UNDER: THE FIGURE OF RS. 3,45,69,104/ - GIVEN BY THE APPELLANT NOW IS ACTUAL ONE. WHEN THE DEPARTMENT HAS DECIDED TO ASSESS THE PROFIT ARISING TO THE APPELLANT FROM THE PROJECT CONSISTING OF 34 FLOORS IN A. Y. 1999 - 2000, IT IS LO GICAL THAT ALL THE EXPENSES RELATING TO THE SAID PROJECT AS WELL AS ALL THE RECEIPTS FROM THE SAID PROJECT SHOULD BE TAKEN INTO CONSIDERATION FOR WORKING OUT THE PROFITS FROM THE SAID PROJECT. THEREFORE, I AM OF THE VIEW THAT THE EXPENSES OF RS. 3,45,6 9.1041 - ARE REQUIRED TO APPORTIONED TOWARDS THE COST OF THE PROJECT CONSISTING OF 34 FLOORS WHILE COMPUTING THE PROFIT THEREFRORN.THE OTHER PROJECT TOWARDS WHICH THESE EXPENSES COULD HAVE BEEN SAID TO BE INCURRED RELATED TO THE ADDITIONAL FSI COMPRISIN G OF 3000 SQ.FT. FROM WHICH AMOUNT OF RS.3,90,00,000/ - HAS BEEN RECEIVED BY THE APPELLANT. IN THE RATIO OF RECEIPTS, OUT OF THE EXPENSES OF RS.3,45,69,104/ - THE AMOUNT OF RS.2,94,80,530/ - IS APPORTIONED TOWARDS THE PROJECT CONSISTING OF 34 FLOORS. THE BA LANCE AMOUNT IS ALLOCABLE TOWARDS THE PROJECT INVOLVING FSI OF 3000 SQ.FT. WHICH HAS BEEN SOLD BY THE APPELLANT FOR RS.3.90 CRORES. ACCORDINGLY,THE AO IS DIRECTED TO CONSIDER THE AMOUNT OR RS. 2,94,80,530/ - AS A PART OF THE COST OF THE PROJECT CONSISTING OF 34 FLOORS WHILE COMPUTING THE PROFIT THEREFROM. THIS ALLOCATION HAS BEEN DONE BY TAKING THE RECEIPTS FROM THE PROJECT AT RS.22,61, 02,956/ - .THE SAME WILL CHANGE IF THE AO CHANGES THE FIGURE OF RECEIPTS FROM THE PROJECT AFTER VERIFICATION. THE AO CHALLENGED THE ORDER OF THE FAA BEFORE THE TRIBUNAL,WHO RESTORED THE MATTER BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN FOLLOWING MANNER: 26.BEFORE CIT(A)IT WAS SUBMITTED THAT THE FIGURE OF RS.90 LAKHS GIVEN BEFORE THE ASSESSING OFFICER WAS MEREL Y 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 EXPENDITURE. IT WAS SUBMITTED THAT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE SHOULD BE ADMITTED UNDER RULE 46A OF THE INCOME - TAX RULES,1962 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 TH E DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF JUTE CORPORATION OF INDIA REPORTED IN 87 ITR 688 ADMITTED THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE AND CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER. AFTER CONSIDERING THE REMAND REPORT FR OM THE ASSESSING OFFICER, A COPY OF THE SAME WAS SUPPLIED TO THE ASSESSEE CALLING FOR ITS COMMENTS.AFTER CONSIDERING THE REMAND REPORT FROM THE ASSESSING OFFICER AND THE REPLIES OF THE ASSESSEE TO 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 COMPUTING THE PROFIT THEREFROM. THE BALANCE AMOUNT WAS DIRECTED TO BE ALLOCABLE TOWARDS THE PROJECT INVOLVING FSI OF 3000 SQ. FT. WHICH HAS BEEN SOLD BY THE ASSESSEE FOR RS. 3.90 CRORES. 28.AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE REVENUE 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 CLAIM ED AN AMOUNT OF RS.90 LAKHS WHICH WAS INCURRED IN RESPECT OF THE PROJECT CONSISTING OF 34 FLOORS AFTER 31ST 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 ASSESSIN G 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 4241 & 4242 MALABAR 99 00 AND 02 03 8 IN THE NATURE OF REPAIRS. FURTHER THE ASSESSING OFFICER HAD ALSO ' REPORTED THAT THE ENTIRE BU ILDING WAS OCCUPIED BY THE FLAT OWNERS LONG / BACK. THEREFORE, QUESTION OF ADDITIONAL EXPENDITURE TOWARDS THE PROJECT DOES NOT ARISE. HOWEVER, THE CIT(A) ALLOWED THE EXPENDITURE TO BE RELATING TO THE PROJECT CONSISTING OF 34 FLOORS ON THE GROUND THAT THE A SSESSEE WAS HAVING ONLY ONE PROJECT AND THE EXPENSES CLAIMED BY THE ASSESSEE CANNOT RELATE TO ANY OTHER PROJECT WE FIND 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 ES TIMATE BASIS AND THE FIGURE OF RS.3,47,69,104 GIVEN BY THE ASSESSEE WAS ACTUAL. HOWEVER, WE DO NOT FIND ANY SOUND LOGIC BY THE CIT(A) WHILE ACCEPTING THIS FIGURE AS ACTUAL ESPECIALLY WHEN THE ASSESSEE FAILED BEFORE THE ASSESSING OFFICER TO SUBSTANTIATE THE EXPENDITURE OF RS.90.00 LAKHS.IN OUR OPINION THE POWERS OF THE ASSESSING OFFICER DURING THE REMAND PROCEEDINGS ARE LIMITED, SINCE THERE IS ALREADY VARIATION BETWEEN THE FIGURES GIVEN BEFORE THE ASSESSING OFFICER AND BEFORE THE CIT(A),THEREFORE,WE IN THE I NTEREST OF JUSTICE, DEEM,IT PROPER TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO GIVE ONE MORE OPPORTUNITY 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 PROJECT AND WHICH IS NOT IN THE NATURE OF REPAIRS.THE ASSESSING OFFICER SHALL DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE.WE HOLD AND DIRECT ACCORDINGLY. THE GROUND BY T HE REVENUE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. FAA HELD THAT THE AO HAD ISSUED NOTICE OF HEARING ON 3.3.2010 BUT THE ASSESSEE DID NOT ATTEND NOR FURNISHED THE REQUISITE DETAILS BEFORE HIM,THAT LATER ON THREE MORE OPPORTUNITIES WERE GIVEN TO T HE ASSESSEE BUT SAME WERE NOT AVAILED,THAT THE AO ISSUED FINAL SHOW CAUSE DATED 1.12.2010 AND ASKED IT TO FURNISH THE DETAILS AS REQUIRED IN COMPLIANCE TO THE ORDER OF THE TRIBUNAL,THAT IT DID NOT COMPLY WITH THE DIRECTIONS OF THE AO, THAT AO WAS CONSTRA INED TO HOLD THAT THE PROJECT WAS COMPLETED IN AY 1999 2000,THAT HE HAD TO DETERMINE THE INCOME OF THE ASSESSEE AT RS.5.77 CRORES,THAT THE ASSESSEE HAD FAILED TO FURNISH NECESSARY AND RELEVANT EVIDENCES TO SUBSTANTIATE THE GENUINENESS OF THE CLAIM OF RS.2, 94,80,530/ AS PART OF THE PROJECT COST THAT IT FURTHER FAILED TO FURNISH RELEVANT DETAILS ON THE ISSUE OF COMPENSATION OF RS.3,67,95,990/ PAID TO VARIOUS PERSONS AS COST OF THE PROJECT.FINALLY,HE HELD THAT THE AO HAD RIGHTLY TAXED THE ASSESSEE AT RS.5,77 ,77, 896/ . 4. 2 . BEFORE US,THE AR STATED THAT THE ASESSEE WAS FOLLOWING PROJECT COMPLETION METHOD,THAT TILL AY.2005 06 IT DID NOT CALCULATE PROFIT,THAT ASSESSMENT FOR THE AY.1999 2000 WAS REOPENED U/S.147 OF THE ACT HOLDING THAT ALL THE FLATS WERE SOLD IN THAT YEAR.HE REFERRED TO THE PAGE NO.85 OF THE PAPER BOOK WHEREIN THE AO HAD CALCULATED THE GROSS RECEIPTS OF THE PROJECT AT RS.21.46 CRORES AND EXPENDITURE AT RS.15.69 CRORES FOR THE AY.UNDER APPEAL.HE FURTHER ARGUED THAT IF THE AY.UNDER CONSIDERATION WAS TO BE CONSIDERED FINAL YEAR THEN EXPENDITURE INCURRED BY IT IN SUBSEQUENT YEARS SHOULD BE ALLOWED,THAT DURING THE FIRST ROUND OF APPEAL THE FAA HAD ADMITTED ADDITIONAL EVIDENCES AND HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE ,THAT THE DOCUMENTS WERE A VAILABLE TO THE DEPARTMENTAL AUTHORITIES,THAT THE ASSESSEE COULD NOT APPEAR BEFORE THE TRIBUNAL,THAT THE FAA DECIDED THE ISSUE AFTER OBTAINING A REPORT FROM THE AO,THAT THE FACT OF SUBMISSION OF THE REMAND REPORT BY THE AO WAS NOT BROUGHT TO THE NOTICE OF THE ITAT,THAT THE DISPUTE WAS NOT ABOUT THE GENUINENESS OF THE EXPENDITURE BUT ABOUT THE NATURE OF THE EXPENDITURE I .E.WHETHER IT WAS RENOVATION OR NOT.HE REFERRED TO PAGE NO.69 OF THE PAPER BOOK AND STATED THAT THE ASSESSEE WAS READY TO APPEAR BEFORE ANY AUTHORITY. HE ALSO REFERRED TO THE DOCUMENTS THAT WERE ADMITTED BY THE FAA AS ADDITIONAL EVIDENCE. THE DR SUPPORTED THE ORDER OF THE FAA. 4. 3 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT DURING THE FIRST ROUND OF HEARIN G THE FAA HAD ADMITTED ADDITIONAL EVIDENCE AND HAD CALLED FOR A REMAND REPORT FROM THE AO,THAT HE HAD FORWARDED THE PAPER SUBMITTED BEFORE HIM TO THE AO,THAT THE AO 4241 & 4242 MALABAR 99 00 AND 02 03 9 HAD SUBMITTED THE REPORT AND HAD STATED THAT IT WAS DIFFICULT TO COMMENT UPON THE ADMISSIBI LITY OF ADDITIONAL EVIDENCES.THUS,THE EXISTENCE OF REMAND REPORT IS PROVED.IF THE ASSESSEE HAD SUPPLIED ALL THE PAPERS DURING THE FIRST ROUND OF LITIGATION AND HAD REQUESTED THE AO TO REFER TO THE ORDER OF THE THEN FAA THE AO SHOULD HAVE CONSIDERED THE DOC UMENTS.WE ARE UNABLE TO UNDERSTAND AS TO HOW THE AO AND THE FAA HAD DETERMINED THE INCOME OF THE ASSESSEE AGAIN AT RS.5.77 CRORES ESPECIALLY WHEN THE TRIBUNAL HAD ALLOWED RELIEF TO THE ASSESSEE .IT IS TRUE THAT THE ASSESSEE HAD NOT APPEARED BEFORE THE AO, BU T THE FAA HAD ALL THE DOCUMENTS TO DECIDE THE CASE ON MERITS. BUT,HE CONFIRMED THE ORDER OF THE AO.CONSIDERING THE PECULIAR FACTS OF THE CASE,WE ARE OF THE OPINION THAT IN THE INTEREST OF JUSTICE, THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION.HE WOULD AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE ,AFTER CONSIDERING THE DOCUMENTARY EVIDENCES ADMITTED BY THE FAA DURING THE FIRST ROUND OF LITIGATION. THE ASSESSEE IS DIRECTED TO APPEAR BEFORE THE AO AND TO EXTEND FUL L COOPERATION.GROUND NO.3 IS DECIDED IN FAVOUR OF THE ASSESSEE IN PART. ITA 4242/MUM/2012 (AY :2002 - 03) THE EFFECTIVE GROUND OF APPEAL IS ABOUT SUM OF RS. 2 ,1 9 , 03,394/ . BEFORE US,THE AR CONTENDED THAT DISPUTED AMOUNT DID NOT PERTAIN TO THE YEAR UNDER APPE AL,THAT IT WAS ALREADY ASSESSED IN THE YEAR 1999 2000,THAT SAME AMOUNT HAS BEEN ADDED TWICE. THE DR ALSO AGREED THAT ANY ITEM OF INCOME CANNOT BE TAXED TWICE. THE ASSESSEE HAS CLAIMED THAT THE AMOUNT IN QUESTION DOES NOT PERTAIN TO THE YEAR UNDER APPEAL,THER EFORE THE AO IS DIRECTED TO VERIFY THE FACT AND DELETE IT FROM THE COMPUTATION FOR THE YEAR UNDER CONSIDERATION,IF SAME HAS BEEN TAXED DURING THE AY.1999 2000. EFFECTIVE GROUND OF APPEAL IS ALLOWED IN FAVOUR OF THE ASSESSEE,IN PART. AS A RESULT,APPEAL S FILED BY THE ASSESSEE FOR BOTH THE YEARS STAND ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH AUGUST ,2015. 5 TH , 2 015 SD/ - SD/ - ( / JOGINDER S INGH ) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 05 .0 8 .2015 . . . JV . SR .PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 4241 & 4242 MALABAR 99 00 AND 02 03 10 5. DR BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.