ASST CIT CEN CIR 2, THANE V. TRIVENI DEVELOPERS, NAVI MUMBAI

ITA 4250/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9091 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 28-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B B RAJENDRA PRASAD
• Keywords: Business income; Search and seizure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI , BEFORE SHRI RAJENDRA, A.M. AND SHRI PAWAN SINGH,J.M . ./ ITA NO.4250/MUM/2013 / ASSESSMENT YEAR: 2008-09 ./ ITA NO.4251/MUM/2013 / ASSESSMENT YEAR: 2009-10 ACIT CENTRAL CIRCLE -2, THANE VS. TRIVENI DEVELOPERS PLOT NO.5/6,SECTOR -8, NAVI MUMBAI-410210 PAN: AAEFT0484D ( / // / APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI B.B.RAJENDRA PRASAD ASSESSEE BY: SH.RUSHABH MEHTA / // / DATE OF HEARING: 03.01.2017 / DATE OF PRONOUNCEMENT: 03.01.2017 , ,, , 1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , -PER RAJENDRA,AM: CHALLENGING THE ORDER,DATED 21.01.2013,OF THE CIT(A )-I,THANE THE ASSESSING OFFICERS(AO.S) HAVE FILED THE APPEALS FOR THE ABOVE MENTIONED TWO ASSESSMENT YEARS(AY.S).ASSESSEE-FIRM, IS A BUILDER AND DEVELOPER AND IT FILED ITS RETURN OF INCOME ON 28.04.2010,DECLARING INCOME OF RS. 17.97 LAKHS.THE AO COMPLETED THE ASSESSMENT U/S .143(3)R.W.S.153A OF THE ACT,ON 3.11. 2010,DETERMINING ITS INCOME AT RS.1.53 CRORES. ITA/4250/MUM/2013 AY 2008-09 : 2 .EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING THE A DDITION,MADE BY THE AO,AMOUNTING TO RS. 1.30 CRORES.BEFORE PROCEEDING FURTHER WE WOULD LIKE TO NARRATE THE BRIEF FACTS OF THE CASE.A SEARCH AND SEIZURE ACTION U/S 132(1) OF THE ACT WAS CARRIED OUT IN THE CASE OF GAJRA GROUP ON 19-2-2009. DURING THE COURSE OF SEARCH PROCEEDING, A SUM OF RS. 15 CRORES WAS VOLUNTARILY ADMITTED AND OFFERED FOR THE GROUP. OUT OF THE SAID DECLARATION OF RS. 15 CRORES, SUM OF RS. 1.30 CRORES PERTAINED TO THE ASSESSEE FOR A.Y. 2008 -09 ON ACCOUNT OF INCOME FROM THE PROJECT.HOWEVER, AT THE TIME OF THE FILING OF THE R ETURN OF INCOME, THE ASSESSEE DID NOT OFFER THIS INCOME IN THE RETURN OF INCOME FILED IN RESPON SE TO NOTICE U/S 153A. ACCORDINGLY, THE ASSESSEE WAS REQUIRED TO SHOW CAUSE AS TO WHY THE I NCOME OF RS. 63 LAKHS SHOULD NOT BE ADDED TO THE INCOME OF THE PROJECT ON THE BASIS OF 'PERCENTAGE COMPLETION METHOD' AS VOLUNTARILY ADMITTED AND OFFERED BY THE ASSESSEE DU RING THE COURSE OF SEARCH PROCEEDING, IN 4250/M/13 &4251/M/13-TRIVENI 2 THE STATEMENT RECORDED U/S 132(4). IN RESPONSE, THE ASSESSEE SUBMITTED THAT ITS HOUSING PROJECT COMMENCED FROM 29-9-2007 AND DURING THE YEAR UNDER CONSIDERATION IT WAS AN ONGOING PROJECT,THAT INCOME SHOWN IN THE RETURN OF INCOME W AS ONLY INDIRECT INCOME AND NO ELEMENT OF BUSINESS INCOME FROM THE PROJECT WAS SHOWN IN TH E RETURN OF INCOME,THAT IT WAS FOLLOWING 'PROJECT COMPLETION METHOD' FOR THE REVENUE RECOGNI TION AND NOT THE 'PERCENTAGE COMPLETION METHOD',THAT IT WAS FOLLOWING ACCOUNTING STANDARD - 9 FOR THE REVENUE RECOGNITION AS PRESCRIBED IN THE CASE OF BUILDER.HO WEVER, THE A.O. REJECTED THE ASSESSEE'S CONTENTION N THE GROUND THAT DURING THE COURSE OF S EARCH PROCEEDING, THE ASSESSEE ITSELF HAS OFFERED THE INCOME ON ESTIMATED BASIS FOR THE YEAR UNDER CONSIDERATION.HE MADE AN ADDITION OF RS. 1.30 CRORES TO THE INCOME OF THE ASSESSEE.AG GRIEVED BY THE ORDER OF THE AO,THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA),WHO ALLOWED ITS APPEAL. 3. DURING THE COURSE OF HEARING BEFORE US,THE AR AND T HE DR AGREED THAT THE IDENTICAL ISSUE WAS DELIBERATED UPON AND DECIDED BY THE TRIBUNAL WH ILE ADJUDICATING THE APPEALS,FILED BY THE GROUP CONCERNS.WE FIND THAT VIDE ITS ORDERS DATED 1 5.05.2015(ITA.S/1267-68 AND 2174-75 AY.S.2008-09 AND 2009-10)IN THE CASE OF BHOOMI CONS TRUCTION PROJECTS,THE TRIBUNAL HAD DEALT THE ISSUE AS UNDER: 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER. THE SOLE REASON FOR MAKING THE ADDI TION BY THE A.O. IS THAT, AT THE TIME OF SEARCH THE ASSESSEE HAD OFFERED TO DISCLOSE THE INC OME ON THE BASIS OF PERCENTAGE COMPLETION METHOD WHICH HAS BEEN RETRACTED LATER ON. HOWEVER, THERE IS NO FINDING THAT THE ASSESSEE HAS BEEN FOLLOWING PERCENTAGE COMPLETION METHOD REGULAR LY SINCE BEGINNING OR IN ANY OTHER PROJECT. THERE IS NO SUCH EVIDENCE OR DOCUMENTS WHI CH HAVE BEEN FOUND DURING THE COURSE OF SEARCH INDICATING THAT THE ASSESSEE HAD BEEN FOLLOW ING PERCENTAGE COMPLETION METHOD REGULARLY. IF THE ASSESSEE HAS BEEN FOLLOWING ONE O F THE RECOGNIZED METHODS AS PRESCRIBED BY AS-9, THEN IT CANNOT BE HELD THAT THE REVENUE CAN I MPOSE A DIFFERENT METHOD UPON THE ASSESSEE UNLESS THERE IS A FINDING OF FACT THAT SUCH A METHO D IS NOT REFLECTING THE TRUE PROFITS OF THE ASSESSEE. NOW IT HAS ALSO BEEN BROUGHT ON RECORD BY THE LD. COUNSEL THAT IN THE SUBSEQUENT YEAR I.E. IN THE YEAR OF COMPLETION OF THE PROJECT IN A. Y. 2012-13, THE REVENUE ITSELF HAS ACCEPTED THE PROJECT COMPLETION METHOD FOR RECOGNITION OF REVENU E AND ACCORDINGLY, HAS ASSESSED THE INCOME OF THE PROJECT ON THE SAME METHOD. THUS, A CONTRARY VIEW CANNOT BE TAKEN FOR THIS YEAR. MOREOVER, THE FINDING RECORDED BY THE LD CIT(A) AFT ER DETAIL DISCUSSION AS INCORPORATED ABOVE IS NOT ONLY FACTUALLY CORRECT BUT ALSO LEGALLY SUST AINABLE AND THEREFORE SUCH A FINDING AND CONCLUSION OF THE LD. CIT(A) IS AFFIRMED AND THE GR OUNDS RAISED BY THE REVENUE IS DISMISSED. 4250/M/13 &4251/M/13-TRIVENI 3 RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE TRIBU NAL,WE UPHOLD THE ORDER OF THE FAA AND DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE A O,AS THE FACTS OF THE MATTER FOR THE YEAR UNDER APPEAL ARE IDENTICAL TO THE FACTS OF BHOOMI C ONSTRUCTION(SUPRA). ITA/4251/MUM/2013 AY 2009-10 : FOLLOWING THE ORDER FOR THE EARLIER YEAR,WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO,AS THE FACTS FOR BOTH THE AY.S.ARE SIMILAR. AS A RESULT,APPEALS FILED BY THE AO . FOR BOTH THE AY.S. STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD ,JANUARY 2017. 03 2017 SD/- SD/- ( /PAWAN SINGH) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; !' DATED : 03.01.2017 . JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.