Assistant Commissioner of Income-tax, V. Smt. Ashadevi Sushil Agarwal, Pune

ITA 45/PUN/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7695 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-03-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 09-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income
• Section: 143(3); 133A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E , , , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVE DI, AM . / ITA NO. 2271/PUN/2014 / ASSESSMENT YEAR : 2008-09 MRS. ASHADEVI SUSHIL AGARWAL, BASERA, 46/26 PCNTDA, NIGDI, PUNE-411044. PAN :AARPA0352Q ....... / APPELLANT / V/S. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-9, PUNE. / RESPONDENT . / ITA NO. 45/PUN/2015 / ASSESSMENT YEAR : 2008-09 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-9, PUNE. ....... / APPELLANT / V/S. MRS. ASHADEVI SUSHIL AGARWAL, BASERA, 46/26 PCNTDA, NIGDI, PUNE-411044. PAN :AARPA0352Q / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI ACHAL SHARMA, ADD. CIT 2 ITA NO.2271/PUN/2014 ITA NO.45/PUN/2015 A.Y. 2008-09 / DATE OF HEARING : 05.03.2018 / DATE OF PRONOUNCEMENT : 24.04.2018 / ORDER PER ANIL CHATURVEDI, AM 1. ITA NO.2271/PUN/2014 FILED BY THE ASSESSEE AND ITA NO.45/PUN/2015 FILED BY THE REVENUE ARE CROSS APPEALS AND ARE EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL) I, PUNE, DATED 21.10.20 14 FOR A.Y. 2008-09. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER: ASSESSEE IS AN INDIVIDUAL STATED TO BE ENGAGED IN THE BU SINESS OF BUILDING CONSTRUCTION AND DEVELOPMENT ACTIVITIES. ASSESSEE FILED THE RETURN OF INCOME FOR AY 2008-09 ON 26.11.2010 DECLARING TOTAL INCOME OF RS.5,9 6,21,710/-. THE CASE WAS REOPENED BY ISSUING NOTICE U/S.148 AND THEREAFT ER THE ASSESSMENT WAS FRAMED U/S 143(3) R.W.S 147 OF THE ACT VIDE ORDER DTD. 31.12.2010 AND THE TOTAL INCOME WAS DETERMINED AT RS.11,25,21,710/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO VIDE OR DER DTD. 21.10.2014 (IN APPEAL NO.NSK/CIT(A)-I/493/2013-14) GRANTED PARTIAL RE LIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD CIT(A), ASSESSEE AND REVENU E ARE NOW IN APPEAL BEFORE US. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO .2271/PUN/2014 READS AS UNDER: 1 . THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOW ANCE OF DEDUCTION ON ACCOUNT OF ESTIMATED ACCRUED LIABILITY OF RS.4,01,6 4,364/- WITHOUT APPRECIATING THAT THE SAID AMOUNT WAS ALLOWABLE WHI LE COMPUTING THE INCOME OF THE ASSESSEE. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISAL LOWANCE OF CONSTRUCTION EXPENDITURE OF RS.3,45,38,840/- ON THE GROUND THAT THE ASSESSEE IN THE APPELLATE PROCEEDINGS HAD NOT PRESSED FOR THE CLAIM OF DEDUCTION WITHOUT 3 ITA NO.2271/PUN/2014 ITA NO.45/PUN/2015 A.Y. 2008-09 APPRECIATING THAT THE CLAIM MADE BY THE ASSESSEE WA S JUSTIFIED IN LAW AND ACCORDINGLY, THE DEDUCTION OF RS.3,45,38,840/- OUGH T TO HAVE BEEN ALLOWED. 3. THE ASSESSEE SUBMITS THAT SHE HAD INADVERTENTLY ACCEPTED THE DISALLOWANCE OF RS.3,45,38,840/- AND IT IS SUBMITTE D THAT THE SAID DEDUCTION MAY KINDLY BE ALLOWED EVEN THOUGH, THE AS SESSEE HAD NOT PRESSED FOR THE SAME IN THE APPELLATE PROCEEDINGS B EFORE THE CIT(A). 4. THE APPELLANT FURTHER SUBMITS THAT SHE WOULD APP LY FOR RECTIFICATION OF THE ORDER OF LEARNED CIT(A) ON THE GROUND THAT SHE HAD AGREED FOR THE ADDITION UNDER A MISTAKEN IMPRESSION OF FACT AND LA W AND HENCE, IT SHOULD NOT BE CONSIDERED AS BINDING ON HER. IN VIEW OF THI S POSITION, THE NECESSARY RELIEF MAY KINDLY BE ALLOWED. 5. THE LEARNED CIT(A) ERRED IN ALLOWING A DEDUCTION OF RS.1,99,45,036/- BEING 78% OF THE TOTAL EXPENDITURE OF RS.2,55,70,55 8/- (BEING THE EXPENDITURE INCURRED FOR PURCHASE OF TRANSFER OF DE VELOPMENT RIGHTS (TDR) AND PAYMENT OF ROYALTY TO PCMC) WITHOUT APPRECIATIN G THAT THE ACTUAL EXPENDITURE INCURRED TILL DATE WAS RS.3,02,77,109/- AND THEREFORE, 78% OF THE SAID EXPENDITURE AMOUNTING TO RS. 2,36,16,145/- SHOULD HAVE BEEN ALLOWED AS A DEDUCTION WHILE COMPUTING THE INCOME O F THE ASSESSEE. 6. THE LEARNED CIT(A) FURTHER ERRED IN NOT APPRECIA TING THAT THE ASSESSEE WAS REQUIRED TO INCUR FURTHER EXPENDITURE ON PAYMEN T OF PREMIUM TO PCMC ON ACCOUNT OF PURCHASE OF TDR AND THEREFORE, THE AS SESSEE SUBMITS THAT SHE SHOULD BE ALLOWED DEDUCTION ON ACCOUNT OF ANY F URTHER PAYMENT MADE BY HER TO PCMC ON ACCOUNT OF PREMIUM. 7. THE APPELLANT FURTHER PRAYS FOR CONSIDERING ALL THE FACTS/EVENTS/EVIDENCES TILL THE DECISION OF HON'BLE ITAT FOR DECIDING THE ISSUE ON MERITS. 8. THE APPELLANT REQUESTS FOR ADMISSION OF ADDITION AL EVIDENCES, IF ANY, IN SUPPORT OF ABOVE GROUNDS OF APPEAL. 9. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. ON THE OTHER HAND THE GROUNDS RAISED BY THE REVENU E IN ITA NO.45/PUN/2015 READS AS UNDER: 1.WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION OF RSA.15 CRORES AS SUBSTANTIVE ADDITION WHEREAS THE AO HAS CONSIDERED IT AS PROTECTIVE ADDITION IN VIEW OF THE FACT THAT THE AMOUNT OF RSA .15 CRORES IS REQUIRED TO BE ADDED U/S.68 OF THE I.T. ACT AS UNEXPLAINED CASH CREDIT ON THE GROUND THAT THE SAME IS CREDITED IN THE BOOKS OF THE ASSES SEE FOR A.Y.2007-08 THEREBY ADDITION WAS MADE ON SUBSTANTIVE ADDITION F OR A.Y.2007-08? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN NOT SUSTAINING THE ADDITION OF RS.5,29,OO,OOO/- MADE BY THE AO BASED ON THE DECLARATION MADE BY ASS ESSEE BASED ON DOCUMENTS IMPOUNDED DURING SURVEY AND ADMISSION MAD E ON OATH U/S.131 OF THE ACT, WHICH HAVE REMAINED UN RETRACTE D? 4 ITA NO.2271/PUN/2014 ITA NO.45/PUN/2015 A.Y. 2008-09 3.THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. 4. SINCE THE GROUNDS RAISED BY ASSESSEE AND REVENUE AR E INTERCONNECTED ALL THE GROUNDS ARE CONSIDERED TOGETHER: A SURVEY ACTION WAS UNDERTAKEN AT THE ASSESSEES BUS INESS PREMISES ON 20.2.2008. DURING THE COURSE OF SURVEY THE STATEMENT OF A SSESSEE WAS RECORDED WHEREIN DISCLOSURE OF RS 4.15 CRORE WAS MADE ON ACCOUNT OF CASH RECEIPTS THAT WAS OFFERED AS UNACCOUNTED ADDITIONAL INCOME, RS 5 CRORE ON ACCOUNT OF SALES TO APPROACH PROPERTY GROUP AND RS 7 CRORE ON ACCOUN T OF REGULAR BUSINESS PROFITS INCLUDING RENTAL INCOME. HOWEVER, IN THE RETURN OF INC OME, THE ASSESSEE DISCLOSED THE INCOME OF RS 5.96 CRORE. THE ASSESSEE WAS THEREFORE ASKED TO EXPLAIN AS TO WHY THE INCOME DECLARED DURING THE COURSE OF SURVEY NOT BE TREATED AS THE INCOME OF THE ASSESSEE. IN RESPONSE TO THE AFORESAID, ASSESSEE INTERALIA FILED AN AFFIDAVIT WHEREIN IT WAS STATED THAT THE ACT UAL INCOME DISCLOSED DURING THE SURVEY U/S 133A WAS RS 11.26 CRORE (RS 7.11 CRORE BEING REGULAR INCOME AND RS 4.15 CRORE BEING ADDITIONAL INCOME DISC LOSED ON ACCOUNT OF CASH RECEIPTS). THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE DIFFERENCE OF RS 5.29 CRORE (RS 11.26 CRORE AS PER AFFIDAVIT RS 5.97 CR ORE AS PER THE RETURN OF INCOME FILED ON 26.11.2010) NOT BE ADDED TO THE TOTAL INCO ME. THE SUBMISSIONS OF THE ASSESSEE WAS THAT AT THE TIME OF SURV EY THE EXPENSES INCURRED FOR SALES ALREADY BOOKED WERE NOT CONSIDERED AN D FURTHER ASSESSEE HAD ALSO TO INCUR RS 6.01 CRORE FOR THE AREA WHICH IS ALRE ADY SOLD. THE SUBMISSIONS OF THE ASSESSEE WERE NOT FOUND ACCEPTABLE TO AO AS ACCORDING TO HIM THE ESTIMATE OF EXPENSES WAS IN THE NATURE OF CONTIN GENT LIABILITY. HE ACCORDINGLY MADE ADDITION OF RS 5.29 CRORE. AGGRIEVED BY T HE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO DECIDED TH E ISSUE BY OBSERVING AS UNDER: 5 ITA NO.2271/PUN/2014 ITA NO.45/PUN/2015 A.Y. 2008-09 9. IN ORDER TO VERIFY THE CONTENTS OF STATEMENT OF MS ANUJA A. PHAL, WHEREIN SHE HAD REFERRED TO SOME PAPERS OF ANNEXURE A, FOUND AND IMPOUNDED FROM THE OFFICE PREMISES OF THE APPELLANT AT PREMIER PLAZA IN RELATION TO RECEIPT OF 'ON-MONEY' OF RS. 4.15 CRORE , THE AO WAS ASKED TO PROVIDE COPIES OF THE SAME. THE AO VIDE LETTERS DAT ED 08/07/2014 AND 20/08/2014 HAS, HOWEVER, STATED THAT THE SAME WERE NOT READILY TRACEABLE. NOTWITHSTANDING ABOVE, A SCANNED COPY OF PAGE 21 OF ANNEXURE- 1 SHOWING CASH RECEIPT OF RS. 4.15 CRORE AS 'ON- MO NEY' HAS ALREADY BEEN REPRODUCED IN PARA 3 OF THE ORDER. THE APPELLANT HA D ADMITTED AN UNDISCLOSED INCOME OF RS. 4.15 CRORE ON THE BASIS O F THIS DOCUMENT. 9.1 . AS REGARDS YEAR OF TAXABILITY OF 'ON-MONEY' OF RS. 4.15 CRORE, IN MY ORDER PASSED ON 21/10/2014 IN RESPECT OF APPEAL FOR THE A.Y.2007-08 IN THE CASE OF THE APPELLANT, I HAVE HELD THAT THE UNA CCOUNTED 'ON-MONEY' OF RS.4.15 CRORE RECEIVED BY THE APPELLANT IS REQUIRED TO BE TAXED DURING THE YEAR UNDER CONSIDERATION I.E. A.Y. 2008-09 AND CONS EQUENTLY THE SAME IS REQUIRED TO BE DELETED FROM A.Y.2007-08. A PERUSAL OF THE PROFIT AND LOSS ACCOUNT OF THE APPELLANT FOR A.Y. 2008-09 GIVEN IN PARA 3.2 ABOVE, REVEALED THAT SHE HAS ALREADY TAKEN INTO ACCOUNT RS. 4,15,00 ,000/- THAT SHE HAD DECLARED AS HER UNDISCLOSED INCOME ON ACCOUNT OF RE CEIPT OF 'ON-MONEY' FROM M/S APPROACH PROPERTIES TO WHOM THE APPELLANT HAD SOLD SUBSTANTIAL PORTION OF B, C, D & E BUILDINGS OF PREMIER PLAZA I.E. AREA MEASURING APPROX. 73,953 SQ. FEET FOR APPROXIMATELY 24.19 CRO RE IN A.Y. 2008-09. WHILE THE APPELLANT HAD SHOWN RS.14.75 CRORE AS 'AD VANCE AGAINST SALE OF SHOPS' AGAINST M/S APPROACH PROPERTIES IN A.Y. 2007 - 08, SHE HAS SHOWN RS . 24.19 CRORE AS SALE CONSIDERATION FROM APPROACH PRO PERTIES AND INCLUDED THE SAME UNDER THE HEAD 'SALES' IN A.Y. 20 08-09. A NOTING REGARDING RECEIPT OF CASH OF RS. 4.15 CRORE ON PAGE NO.21 OF BUNDLE NO.1 IMPOUNDED DURING THE COURSE OF SURVEY ON 29/02/2008 AND SUBSEQUENT STATEMENT OF THE APPELLANT ADMITTING THAT THIS AMOU NT REPRESENTED 'ON- MONEY' WHICH WAS NOT REFLECTED IN THE REGULAR BOOKS OF ACCOUNT AND THEREFORE, AMOUNTED TO HER UNDISCLOSED INCOME ON AC COUNT OF 'ON-MONEY', IS NOT DISPUTED. FURTHER, IT IS DEARLY ESTABLISHED THA T THE SAID 'ON-MONEY' OF RS.4.15 CRORE WAS SHOWN BY THE APPELLANT AS HER UND ISCLOSED INCOME IN THE P & L ACCOUNT FOR A.Y. 2008-09. THOUGH INITIALLY SHE DE CLARED THIS UNDISCLOSED INCOME FOR A.Y.2007-08, SUBSEQUENTLY SH E INCLUDED THE SAME IN HER RETURN FOR A.Y.2008-09. REASONS FOR TAXABILITY OF THE SAID UNDISCLOSED INCOME IN AY. 2008-09 HAVE A LREADY BEEN DISCUSSED IN DETAIL IN THE APPELLATE ORDER DATED 21/10/2014 IN T HE APPELL A NT'S OWN CASE FOR A.Y. 2007-08. WHI L E IT IS NOT DISPUTED THAT THIS AMOUNT WAS RECEIVED DURING A.Y. 2007-08, THE UNDISCLOSED 'ON-M ONEY' IS TAXABLE IN AY. 2008-09 AS THE APPELLANT HAS BOOKED SALE TO M / S APPROACH PROPERTI E S I N TH E P & L ACCOUNT OF THIS YEAR ONLY I.E. AY. 2008 - 09. IN AY. 2007-08, THE APPELLANT HAD SHOWN APPROX. RS.14.75 C RORE RECEIVED FROM M / S APPROACH PROPERTIES AS AD VA NCE FOR BOOKING OF SHOPS IN PREMIER PLAZA. V ARIOUS CASE LAWS INCLUDING THAT OF JURISDICTIONAL H IGH COURT OF MUMBAI HAVE HELD THAT 'ON-MONE Y' RECEI VE D ON ACCOUNT OF SALE OF FLATS IS REQUIRED TO BE TAXED IN THE YEAR IN WHI CH THE S A L E IS SHOWN - I N THE BOOKS. SINCE I T IS CLEARLY ESTABL I SHED FROM TH E PROFIT A ND L OSS ACCOUNT THAT THE APPELLANT HAS INCLUDED THIS UNDISC LOSED INCOME OF RS. 4 . 15 CRORE FOR THE PURPOSE OF HER COMPUTATION OF INCO ME FOR AY. 2008- 0 9 , NO S EPARATE ADDITION ON THIS ACCOUNT IS REQUIRED EVEN ON PROTEC TI V E BASIS AS HELD B Y TH E AO IN HIS ASSESSMENT ORDER. THE SEPARATE ADDITION O F RS. 4.15 CRORE MADE BY THE AO ON PROTECTIVE BASIS IS THEREFORE, DE LETED. 9.2 AS REGARDS AO'S EMPHASIS ON TENTATIVE PROFIT AND L OSS ACCOUNT SUBMITTED BY THE APPELLANT AS ON THE DATE OF SURVEY ACTION I.E, 29/02/2008 SHOWING A NET PROFIT OF RS. 7,11,36,154/ -, THE APPELLANT HAS SUBMITTED THAT MAJOR OBLIGATION IN RESPECT OF P URCHASE OF TDR AND RELATED EXPENDITURE (PREMIUM TO PCMC) ETC. WERE NOT CLAIMED. APPELLANT HAS SUBMITTED THAT THE PROFIT SHOWN IN TH E TENTATIVE P & L 6 ITA NO.2271/PUN/2014 ITA NO.45/PUN/2015 A.Y. 2008-09 A/C WAS, THEREFORE, ERRONEOUS. APPELLANT IN RESPONS E TO AO'S NOTICE U/S 143(2) ASKING FOR THE DIFFERENCE BETWEEN INCOME DEC LARED AT THE TIME OF SURVEY U/S 133A AND AS PER RETURN SUBMITTED ON 26/1 1/2010, VIDE LETTER DATED 29/12/2010 HAD STATED THAT AT THE TIME OF PREPARING THE TENTATIVE WORKS AND PROFIT AND LOSS ACCOUNT OF 29/0 2/2008, EXPENSES REQUIRED TO BE INCURRED FOR SALES, ALREADY BOOKED, WERE NOT CONSIDERED AS THAT TIME SHE WAS NOT AWARE OF THE SAME. AS REGA RDS APPELLANT'S CLAIM OF FUTURE COST OF AREA SOLD AMOUNTING TO RS.6 ,01,09,400/- INCLUDED IN THE 'OTHER DIRECT EXPENSES' AMOUNTING T O RS.6,18,43,305/- SHOWN IN THE PROFIT AND LOSS ACCOUNT FOR A.Y. 2008- 09 (SCHEDULE 9), THE APPELLANT HAS FURNISHED A CERTIFICATE FROM A PRIVAT E ARCHITECT STATING THAT AN EXPENDITURE OF RS.7,69,37,675/- WAS REQUIRE D TO BE INCURRED TO AUTHORIZE THE PROJECT. OUT OF THIS RS. 6.01 CRORE W AS STATED TO BE IN RESPECT F AREA WHICH WAS ALREADY SOLD. SHRI PARMAR, THE PRIVATE ARCHITECT IN HIS CERTIFICATE DATED 25.10.2010 HAS S TATED THAT WHILE THE TOTAL SALEABLE AREA OF PREMIER PLAZA WAS 280141.24 SQ. FT. AFTER LOADING TDR AND PAYING PREMIUM TO PCMC, PRESENTLY P ART OF THE PROJECT WAS UNAUTHORIZED. THE DETAILS OF THE FUTURE EXPENSE S ARE GIVEN AS UNDER: . 9.3 DURING THE COURSE OF PERUSAL OF THE IMPOUNDED D OCUMENTS, IT WAS FOUND THAT THERE WERE CERTAIN DIFFERENCES IN REGARD TO WORK-IN-PROGRESS, EXPENSES AND SALES FIGURE, VIS-A-VIS SHOWN BY THE A PPELLANT IN THE FINAL PROFIT AND LOSS ACCOUNT. THE APPELLANT WAS CONFRONT ED WITH THESE FINDINGS VIDE LETTER DATED 02/07/2014. FURTHER, IMPOUNDED PA PERS INTERALIA INCLUDED A COPY OF SALE AGREEMENT WITH M/S APPROACH PROPERTIES FOR SHOP NO.5, B WING FOR RS. 1.5 CRORE. THE APPELLANT WAS REQUIRED TO FURNISH DETAILS IN THIS REGARD ALSO. THE APPELLANT WAS ALSO CONFRONTED WITH THE NOTING ON PAGE 1 OF ANNEXURE 20 SHOWING A RECEIPT O F RS. 6 LAC IN CASH FROM M/S APPROACH PROPERTIES. THE APPELLANT VIDE LE TTER DATED SR. NO. PARTICULARS AMOUNT 1. COMPOUND WALL 26,58,250/- 2. SIDE ROAD 35,02,500/- 3. PARKING FLOORING 56,03,540/- 4. WATER FOUNTAIN 35,05,000/- 5. LIGHT FOUNTAIN 5,00,100/- 6. COMMON AREA TILING/TREE 950000/- 7. SIGN BOARD TILING/TREE 388710/- 8. GATE 1355000/- 9. INTERNAL BRIDGE 1514500/- 10. DOME 1855200/- 11. ELECTRICITY/ TRANSFORMER/METER 600500/- 12. WATER PROOFING 1104500/- 13. STREET LIGHT 700895/- 14. SEATING ARRANGEMENT 406450/- 15. PLUMBING 361790/- 16. WATER CONNECTION 410000/- 17. LIASIONING FEE 595000/- 18. COLORING 739000/- 19. TREES BEAUTY 295050/- 20. DRAINAGE PIPELINE 812500/- 21. PARKING SYTEM 13867850/- 22. TDR COSTING 25940 SQ.FT @800 20752000/- 23. PCMC PREMIUM 14459340/- TOTAL 76937675/- 7 ITA NO.2271/PUN/2014 ITA NO.45/PUN/2015 A.Y. 2008-09 08/07/2014 STATED THAT THE FIGURES FOUND RECORDED I N THE IMPOUNDED PAPERS (PAGE 24 OF ANNEXURE 18) WERE ESTIMATES/TENTA TIVE FIGURES AND SHE WAS NOT IN A POSITION TO RECONCILE THE SAME WITH TH E TOTAL FIGURES MENTIONED IN THE PROFIT AND LOSS ACCOUNT. SHE FURTHER STATED THAT SINCE THE BOOKS OF ACCOUNTS FOR A.Y.2007-08 WERE AUDITED, THE FIGURES MENTIONED THEREIN NEED TO BE TAKEN AS THE FINAL FIGURES. AS REGARDS R ECEIPT OF RS. 6 LAC FOUND RECORDED ON PAGE 1 OF ANNEXURE 20, THE APPELLANT STATED THAT THIS PAPER SHOWED AMOUNTS RECEIVED BY ACCOUNTANT FOR PAYMENT T O CONTRACTORS, ETC. ON BEHALF OF CUSTOMERS AND HENCE THE SAME WERE NOT REFLECTED IN EITHER OF THE PARTIES BOOKS. AS REGARDS SALE AGREEMENT WITH M /S APPROACH PROPERTIES FOR SALE OF SHOP, THE APPELLANT ADMITTED THAT THIS WAS IN LIEU OF CASH THAT WAS RECEIVED FROM M/S APPROACH PROPERTIES TO BUILD CONFIDENCE BETWEEN BOTH THE PARTIES. SHE FURTHER STATED THAT N O SUCH SHOP WAS SOLD TO M/S APPROACH PROPERTIES AS IS EVIDENT FROM THE DETA ILS FURNISHED BY HER. 9.4 AS REGARDS APPELLANT'S CLAIM FOR FUTURE COST OF AREA SOLD, IT WAS FURTHER SEEN THAT THE APPELLANT HAS SHOWN TO HAVE INCURRED AN EXPENDITURE OF RS. 4,92,68,533.61 ONLY AS ON 31/12/2012 AS AGAINST RS. 7,69,37,675/- CLAIMED IN THE ARCHITECT'S CERTIFICATE. FURTHER, TH ERE WAS A WIDE VARIATION IN THE ESTIMATED EXPENSES CLAIMED BY THE APPELLANT VIS -A-VIS EXPENSES STATED TO HAVE BEEN ACTUALLY INCURRED UPTO 31/12/2012 IN RESPECT OF VARIOUS ITEMS OF CIVIL CONSTRUCTION INCLUDING COMPOUND WALL , SIDE WALL, ETC. A PERUSAL OF THE ARCHITECT CERTIFICATE REVEALS THAT T HE APPELLANT HAS NOT INCURRED ANY EXPENSES ON PARKING, FLOORING, LIGHT F OUNTAINS, COMMON AREA TILING/TREE, SIGN BOARD TILING, ELECTRICITY / TRANS FORMER/METER, WATER PROOFING, PARKING SYSTEM, ETC. THE APPELLANT HAD CL AIMED THE FUTURE COST OF THE AREA SOLD IN THE RETURN OF INCOME FOR A.Y. 2008-09. AO IN HIS REMAND REPORT DATED 28/01/2014 HAS STATED THAT DUE TO PAUCITY OF TIME, THE EXPENSES WERE VERIFIED ON TEST CHECK BASIS. THE APP ELLANT'S BOOKS OF ACCOUNT FOR AY. 2008-09 ARE NOT AUDITED. THE APPELLANT'S CERTIFICATE FROM A PRIVATE ARCHITECT IN REGARD TO FUTURE COST OF ARE A SOLD CANNOT BE RELIED UPON FOR WANT OF SUPPORTING DOCUMENTARY EVIDENCES. IN MANY CASES EXPENSES HAVE BEEN SHOWN ON THE BASIS OF QUOTATIONS ONLY. IT IS FURTHER SEEN THAT WHILE QUOTATION HAS BEEN OBTAINED FROM X PAYMENT IS SHOWN TO HAVE BEEN TO Y. FURTHER, THE APPELLANT HAS NOT BEEN ABLE TO RECONCILE THE DIFFERENCES IN SOME OF FIGURES OF WORK IN PROGRESS, SALES, FUTURE EXPENSES FOUND RECORDED IN DOCUMENTS IMPOUNDED DURING SURVEY VIS A VIS P & L A/C FURNISHED BY THE APPELLANT ALONG WITH THE RETURN OF INCOME FOR A.YS. 2007- 08 AND 2008-09. THE APPELLANTS CONTENTION THAT THE FIGURES FOUND RECORDED IN PAPERS FOUND DURING SURVEY WERE ESTIMAT ES AND TENTATIVE IS WITHOUT ANY DOCUMENTARY PROOF. LAST BUT NOT THE LEA ST, THE APPELLANT IN HER LETTER DATED 24/07/2014 HAS ACCEPTED THAT DUE TO NO N- AVAILABILITY OF DOCUMENTS AND ALSO DUE TO NON-AVAILABILITY OF THE A CCOUNTANT WHO WAS WORKING AT THAT TIME, SHE WAS NOT IN A POSITION TO SUBSTANTIATE VARIOUS DETAILS IN REGARD TO CONSTRUCTION EXPENSES REQUISIT IONED VIDE THIS OFFICE LETTER DATED 02/07/2014. SHE FURTHER STATED THAT IN ORDER TO BUY PEACE OF MIND, DUE TO NON-AVAILABILITY OF FURTHER EXPLANATIO N OF THE VARIOUS PAPERS IMPOUNDED DURING SURVEY AND ALSO TO FINALIZE THE MA TTER SHE WAS NOT PRESSING FOR THE CONSTRUCTION EXPENSES OF RS.3,45,3 8,840/- OUT OF RS. 6,01,09,400/- THAT SHE HAD CLAIMED IN THE P & L A/C UNDER THE HEAD FUTURE COST OF AREA SOLD. 9.5 IN VIEW OF THE FACTS AND DISCUSSION GIVEN ABOVE , THE APPELLANT'S CLAIM FOR FUTURE COST AMOUNTING TO RS. 3,45,38,840/- ON C IVIL WORK IS DEVOID OF .MERIT AND HENCE NOT ACCEPTABLE IN AY. 2008-09. THE SAME IS, THEREFORE, REJECTED. THE APPELLANT HAS, HOWEVER, SHOWN TO HAVE PURCHASED TDR OF 2498.85 SQ. MTR. FOR RS.1,14,50,910/- FROM VARIOUS PERSONS FOR WHICH SHE HAS FILED DETAILS INCLUDING AGREEMENTS OF TRANSFER OF DEVELOPMENT RIGHTS (TDR). SHE HAS ALSO PAID A PREMIUM OF RS. 1,41,19,6 50/- TO PIMPRI CHINCHWAD MUNICIPAL CORPORATION (PCMC) IN LIEU OF T HE SAID TDR. IT HAS BEEN FURTHER FOUND THAT AS PER PARAGRAPH NO.29, PAG E NO.21 OF THE DEVELOPMENT AGREEMENT DATED 13/09/2002 WITH PCMC, T HE APPELLANT WAS 8 ITA NO.2271/PUN/2014 ITA NO.45/PUN/2015 A.Y. 2008-09 ALLOWED TO USE ADDITIONAL FSI/TDR ON PAYMENT OF ROY ALTY AS PER THE PREVAILING MARKET RATE TO PCMC FOR SUCH ADDITIONAL FSI/TDR. THE APPELLANT, THEREFORE, PURCHASED TDR OF 2498.85 SQ. MTR. FOR RS.1,14,50,910/- AND AID ROYALTY/PREMIUM OF RS. 1,4 1,19,650/- FOR 1568.50 SQ.MTR. TO PCMC ON 27/02/2012. THE APPELLAN T HAS FILED A LETTER DATED 27/04/2010 FROM PCMC ASKING FOR A PAYMENT OF 1,44,52.,40/- IN LIEU OF TDR OF 2409 SQ. MT. THESE EXPENSES ON TDR A ND PREMIUM TO PCMC ARE, THEREFORE, ASCERTAINED LIABILITY FOR WHICH A P ROPER PROVISION HAS BEEN MADE BY THE APPELLANT UNDER THE HEAD 'CURRENT LIABI LITIES & PROVISIONS' IN HER BOOKS OF ACCOUNT FOR AY. 2008-09 (SCHEDULE 4). IN RESPONSE TO ORDER SHEET NOTING DATED 29/05/2014, THE APPELLANT ALSO F ILED STATEMENTS RECONCILING THE AREA OF SHOPS IN THE SAID PROJECT A S PER APPROVED BUILDING PLANS WITH THE SALEABLE AREA. THE APPELLANT VIDE LE TTER DATED 21.10.2014 HAS FURTHER SUBMITTED THAT SHE HAS PAID ADDITIONAL RS.47,06,550/- TO PCMC ON 28.08.2014 ON ACCOUNT OF ROYALTY FOR T.D.R PURCHASED FOR THE SAID PROJECT. THE APPELLANT HAS ALSO FILED A LETTER CERTIFYING THEREIN THAT NONE OF THE SHOP PURCHASER IN THE SAID PROJECT HAS PAID/ CONTRIBUTED ANY AMOUNT FOR PURCHASE OF T.D.R. OR FOR PAYMENT OF PREMIUM OR T.D .R. TO P.C.M.C. OVER AND ABOVE THE AGREED PRICE OF THE SHO P. THE APPELLANT HAS STATED TO HAVE USED THE ENTIRE FSI/ADDITIONAL F SI IN CONSTRUCTION OF PREMIER PLAZA. THE APPELLANT HAS, HOWEVER, SOLD ONL Y 78% OF THE TOTAL SALEABLE AREA TILL 31/03/2008 AS PER THE\ARCHITECT' S CERTIFICATE. THE APPELLANT HAS SHOWN TO HAVE SOLD 218867.05 SQ. FT. OUT OF TOTAL SALEABLE AREA OF 280141.24 SQ. FT. UPTO 31/03/2008. AS APPELLANT HAD SOLD ONLY 78% OF THE SALEABLE AREA TILL AY. 2008-09 , EXPENDITURE TO THE EXTENT OF 78% ONLY INCURRED ON PURCHASE OF TDR AND PAYMENT OF PREMIUM TO PCMC IS PERMISSIBLE AS EXPENSES FOR A.Y. 2008-09. IN VIEW OF THE ABOVE, 78% OF THE TOTAL EXPENDITURE INCURRED ON PURCHASE OF TDR ( RS. 1,14,50,910/-) AND PAYMENT OF PREMIUM TO PCMC (RS.1,41,19,650/-) AMOUNTING TO RS. 1,99,45,036/- I S ALLOWED. BALANCE OF THE FUTURE EXPENDITURE OF RS.4,01,64,364/-[RS. 6 ,01,09,400/- - RS.1,99,45,036/- ] IS DISALLOWED AND ADDED BACK TO THE APPELLANT'S INCOME. NEEDLESS TO SAY THAT APPELLANT'S CLAIM FOR ALLOWABILITY OF THE REMAINING EXPENSES ON PURCHASE OF TDR AND PAYMENT O F PREMIUM SHALL BE CONSIDERED IN THE YEAR WHEN THE REMAINING 22% SA LEABLE AREA IS SOLD AND SALES REFLECTED IN THE BOOKS. THE APPELLAN T HAS SHOWN TO HAVE SOLD SHOPS NOS. 19 (WING B, G, F), 15 AND 15A (WING D, G, F) FOR RS.1.48 CRORE IN AY. 2009-10. THERE HAS BEEN NO SAL ES IN AY. 2010-11 AND THEREAFTER. 9.6 THUS TOTAL DISALLOWANCE ON ACCRUED LIABILITY WO RKS OUT TO RS.4,01,64,364/-. THE APPELLANT GETS A RELIEF OF RS .1,99,45,036/- ONLY (I.E. RS.6,01,09,400/- - RS.4,01,64,364/-). BUSINES S INCOME DISCLOSED BY THE APPELLANT IN THE COMPUTATION OF INCOME WILL BE RECOMPUTED AS UNDER:- BUSINESS INCOME DISCLOSED BY THE APPELLANT IN COMPUTATION OF INCOME RS.5,69,23,536/- ADD :- DISALLOWANCE OF ON ACCOUNT OF ESTIMATED ACCR UED LIABILITY AS DISCUSSED ABOVE RS.4,01,64,364/- TOTAL BUSINESS INCOME RS.9,70,87,900/- AO IS DIRECTED ACCORDINGLY. 5. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE AND REV ENUE ARE NOW BEFORE US. 9 ITA NO.2271/PUN/2014 ITA NO.45/PUN/2015 A.Y. 2008-09 6. BEFORE US, LD AR REITERATED THE SUBMISSIONS MADE BEFORE AO AND CIT(A) AND FURTHER SUBMITTED THAT IN THE RETURN OF INCOME FILED, AS SESSEE HAD DECLARED NET TAXABLE INCOME OF RS 5.69 CRORE WHICH WAS AFTER CONSID ERING THE FUTURE EXPENSES OF RS 6.01 CRORES. HE SUBMITTED THAT SINCE ASSE SSEE COULD NOT FURNISH THE FULL DETAILS OF THE PROBABLE EXPENSES OF RS 3.45 CRORES, THE SAME WAS NOT PRESSED AND ACCORDINGLY THE ASSESSEE OFFERED THE TOT AL BUSINESS INCOME OF RS 9.14 CRORES (RS 5.69 CRORE AS PER COMPUTATION OF INCOME A ND RS 3.45 CRORE BEING DISALLOWANCE ON ACCOUNT OF ESTIMATED ACCRUED LIABILITY N OT PRESSED. HE THEREFORE, SUBMITTED THAT THE DISALLOWANCE OF BALANCE EXPEN DITURE THAT HAS BEEN UPHELD BY CIT(A), BE ALLOWED. LD DR ON THE OTHER HAND TOOK US THROUGH THE FINDINGS OF AO AND SUBMITTED THAT ON THE BASIS OF DOC UMENTS IMPOUNDED DURING SURVEY, ASSESSEE HAD DECLARED THE ON MONEY AN D THAT WAS RIGHTLY CONSIDERED AS INCOME BY THE AO. HE THUS, SUPPORTED THE ORDER OF AO. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON R ECORD. THE ISSUE IN THE PRESENT GROUNDS IS WITH RESPECT TO DISA LLOWANCE OF EXPENDITURE THAT WAS CLAIMED BY THE ASSESSEE AND DELETION OF ADDITION MADE U/S.68 OF THE ACT. WE FIND THAT CIT(A) WHILE DECIDING THE ISSUE HAS NOTED THAT THE EXPENSES HAVE BEEN CLAIMED ON THE BASIS OF ARCHITECT CERTIFICATE. HE HAS NOTED THAT THERE WAS WIDE VARIATION BETWEEN THE ESTIMATED EXPENSES CLAIMED BY THE ASSESSEE VIS A VIS THE EXPENSES STATED TO HAVE BEEN ACTUALLY INCURR ED BY THE ASSESSEE, THE ASSESSEES BOOKS ARE NOT AUDITED, IN MANY CASES THE EX PENSES HAVE BEEN SHOWN ON THE BASIS OF QUOTATION, IT WAS NOTED THAT IN M ANY CASES THE QUOTATION HAS BEEN OBTAINED FROM X BUT THE PAYMENTS HA VE BEEN MADE TO Y. CONSIDERING THE AFORESAID AND FOR THE REASONS GIVEN IN THE ORDER, CIT(A) GRANTED PARTIAL RELIEF TO THE ASSESSEE. WITH RESPECT TO GRIEVANCE O F REVENUE ON THE ISSUE OF DELETION OF ADDITION U/S. 68 OF THE ACT, WE FIND THAT CIT (A) HAS NOTED THAT ON-MONEY OF RS.4.15 CRORES WAS SHOWN AS UNDISCLOSED INC OME BY ASSESSEE IN AY 2008-09 AS ASSESSEE HAD BOOKED SALE TO APPROACH PROPERTIES IN AY 2008-09 10 ITA NO.2271/PUN/2014 ITA NO.45/PUN/2015 A.Y. 2008-09 & SINCE THE AFORESAID AMOUNT WAS INCLUDED AS UNDISCLOSED INCOME, NO SEPARATE ADDITION ON PROTECTIVE BASIS WAS CALLED FOR AND THEREFORE, H E DIRECTED ITS DELETION. BEFORE US, NO FALLACY HAS BEEN POINTED IN THE FINDING S OF LD CIT(A). WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF CITA(A) AND THUS, THE GROUND OF ASSESSEE & REVENUE ARE DISMISSED. 8. IN THE RESULT, APPEAL OF ASSESSEE AND REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 24 TH DAY OF APRIL, 2018. SD/- SD/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; ! / DATED : 24 TH APRIL, 2018 SB !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEAL)-I, NASHIK. 4. THE CIT-V, PUNE. 5. '#$ %& , ' %& , ()* , / DR, ITAT, A BENCH, PUNE. 6. $+, -. / GUARD FILE. // TRUE COPY // '/ / BY ORDER, 0 %* /PRIVATE SECRETARY ' %& , / ITAT, PUNE.