ACIT 32 (1), Mumbai V. Shubham Dynamic Real Estate Developers LLP, Mumbai

ITA 4606/MUM/2023

• Counselvise Citation: 460619914 RSA 2023
• Duration Of Justice: 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 26-06-2024
• Assessment Year: misc
• Appeal Filed On: 14-12-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH KUMAR
• Assessee Lawyers: RAHUL HAKKANI
• Keywords: Revised return
• Section: 143(3); 133A; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) ITA No. 4606/MUM/2023 Assessment Year: 2016-17 ACIT 32(1), 202, Kuatilya Bhavan, BKC, Bandra East, Mumbai-400051. Vs. Shubham Dynamic Real Estate Developers LLP, A-501, Gladdiola, Old Hanuman Road, Vile Parle East, Mumbai-400057. PAN NO. ABTFS 6658 L Appellant Respondent Assessee by : Mr. Rahul Hakkani Revenue by : Mr. Ashish Kumar, Sr. DR Date of He aring : 27/06/2024 Date of pronouncement : 19/08/2024 ORDER PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against order dated 30.10.2023 passed by the Ld. Commissioner of Income-tax (Appeals)-51, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2016-17, raising following grounds: G1. "Whether on the fact and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 67700000/ accepted in the statement recorded during the survey proceedings and disclosed the same as undisclosed income." 2. "Whether on the fact and in the circumstances of the case, the Ld. CIT(A) failed to appreciate the fact that the assessee earned income of Rs. 6,26,00,000/- 51,00,000/- on account of subscription fees, d his statement on oath recorded during the course of survey proceedings us 133A of the Income tax 3. "Whether on the fact and in the circumstances of the case, the Ld. CIT(A) erred in ignoring the judgment of the Hon'ble IT Mumbai in the case of Hiralal Maganlal & Company Vs. delete the addition which was disclosed by the assessee during the course of survey proceedings u/s 133A of the Income Tax Act." 2. Briefly stated, facts of the case are that engaged in the business of construction and development of real estate projects. The assessee commenced construction of residential project at Jogeshwari estate project followed construction incurred work in progress (WIP) and ‘current liability’ but t in the year of the completion of project on receipt of certificate. 2.1 A survey u/s 133A of the Act’) was carried out on 10.09.2015 Director of M/s Amal Realtors Pvt. Ltd. assessee, declared Rs.6.26 crores over and above the income of the firm from the sale of entire car parking spaces the current year. Further Shubham Dynamic Real Estate Developers LLP G1. "Whether on the fact and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 67700000/ accepted in the statement recorded during the survey proceedings and disclosed the same as undisclosed income." ether on the fact and in the circumstances of the case, the Ld. CIT(A) failed to appreciate the fact that the assessee earned income of Rs. on account of receipts from sale of car parking and Rs. on account of subscription fees, disclosed by the assessee in his statement on oath recorded during the course of survey proceedings us 133A of the Income tax Act. 3. "Whether on the fact and in the circumstances of the case, the Ld. CIT(A) erred in ignoring the judgment of the Hon'ble IT Mumbai in the case of Hiralal Maganlal & Company Vs. DCIT, SR delete the addition which was disclosed by the assessee during the course of survey proceedings u/s 133A of the Income Tax Act." Briefly stated, facts of the case are that the assessee is engaged in the business of construction and development of real . The assessee commenced construction of residential project at Jogeshwari, Mumbai and for declaring profit from the real estate project followed ‘project completion method incurred was carried forward from year to year as (WIP) and sale proceeds received were shown as but the profit from the project was to be completion of project on receipt of A survey u/s 133A of the Income-tax Act, 1961 ( in short ‘the was carried out on 10.09.2015, wherein Shri Manish Shah, Director of M/s Amal Realtors Pvt. Ltd., who is 50% partner in the declared Rs.6.26 crores over and above the income of the firm from the sale of entire car parking spaces . Further, Rs.51 lakhs was also Shubham Dynamic Real Estate Developers LLP 2 ITA No. 4606/MUM/2023 G1. "Whether on the fact and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 67700000/- which was accepted in the statement recorded during the survey proceedings and ether on the fact and in the circumstances of the case, the Ld. CIT(A) failed to appreciate the fact that the assessee earned income of Rs. on account of receipts from sale of car parking and Rs. isclosed by the assessee in his statement on oath recorded during the course of survey proceedings 3. "Whether on the fact and in the circumstances of the case, the Ld. CIT(A) erred in ignoring the judgment of the Hon'ble ITAT Bench D, DCIT, SR-52 and delete the addition which was disclosed by the assessee during the course of survey proceedings u/s 133A of the Income Tax Act." the assessee is engaged in the business of construction and development of real . The assessee commenced construction of residential Mumbai and for declaring profit from the real etion method’. The cost of was carried forward from year to year as received were shown as was to be declared completion of project on receipt of occupation tax Act, 1961 ( in short ‘the wherein Shri Manish Shah, is 50% partner in the declared Rs.6.26 crores over and above the regular income of the firm from the sale of entire car parking spaces during also declared as undisclosed income , which was received from be used for recreation facilities. The assessee filed revised return of income on 26.03.2017 declaring total income at Rs.3,04,30,000/ The assessee offered Rs.3,00,00,000/ income out under work in progress was declared during survey computation income project completion method and offered Rs.6,77,00,000/ peace and avoid litigation in different assessment yea Sr. No. Assessment year 1. 2016-17 2. 2017-18 3. 2018-19 4. 2019-2020 2.2 In the course of scrutiny proceedings, the assessee explained that rather than entire addition in the year under consideration assessee declared the reason that at the time of making statement, the assessee w under the presumption that entire car parking would be sold current year but same could not be sold rejected the contention of the assessee and made addition for the entire amount of Rs.6.77 crores declared by the assessee in the year under consideration. 3. Before the Ld. CIT(A), the assessee explained of journal entries passed profitability and WIP and Shubham Dynamic Real Estate Developers LLP undisclosed income , which was received from subscription fees recreation facilities. The assessee filed revised return of income on 26.03.2017 declaring total income at Rs.3,04,30,000/ he assessee offered Rs.3,00,00,000/- during the year work in progress, out of Rs.6,77,00,000/ during survey. In the note forming part of the computation income, the assessee stated that it project completion method and offered Rs.6,77,00,000/ peace and avoid litigation in different assessment yea Assessment year Declaration Assessment Order Rs.3 crores Order u/s 143(3) Rs.60 lakhs Order u/s 143(3) Rs.40 lakhs Order u/s 143(3) 2020 Rs.2,77,00,000/- Order u/s 143(1) In the course of scrutiny proceedings, the assessee explained entire addition in the year under consideration assessee declared the additional income in various years for the reason that at the time of making statement, the assessee w under the presumption that entire car parking would be sold same could not be sold. But the Assessing Officer rejected the contention of the assessee and made addition for the entire amount of Rs.6.77 crores, ignoring the amount of declared by the assessee in the year under consideration. Before the Ld. CIT(A), the assessee explained its stand by way passed in books of account and WIP and explained that there was no Shubham Dynamic Real Estate Developers LLP 3 ITA No. 4606/MUM/2023 subscription fees to recreation facilities. The assessee filed revised return of income on 26.03.2017 declaring total income at Rs.3,04,30,000/-. during the year as additional 7,00,000/-, which forming part of the the assessee stated that it was following project completion method and offered Rs.6,77,00,000/- to buy peace and avoid litigation in different assessment years as under: Assessment Order Order u/s 143(3) Order u/s 143(3) Order u/s 143(3) Order u/s 143(1) In the course of scrutiny proceedings, the assessee explained entire addition in the year under consideration, the income in various years for the reason that at the time of making statement, the assessee was under the presumption that entire car parking would be sold in But the Assessing Officer rejected the contention of the assessee and made addition for the the amount of Rs.3 crores declared by the assessee in the year under consideration. its stand by way and its effect on no tax impact in both the scenario of amount added to WIP and without adding to WIP. The assessee also submitted certificate by Accountant stating that survey declared by the assessee. Considering the submission of the ass Ld. CIT(A) deleted the addition observing as under: “7.9 In the present case, while during the course of the survey it was envisaged that the said project would get completed by December 2015 i.e during the assessment year under consideration itself and the entire receipts declared during the course of the survey shall be offered during the assessment year under contention itself, in reality the project got delayed and got completed only in AY 2019 income from the project ought to have been offered in the year of completion of the project i.e AY 2019 declaration, the declaration amount was offered for taxation in a staggered manner in AYs2016 payment of advance tax and advance tax was duly paid accordingly. The net profit from the project was calculated on the completion of the project in AY 2019 declaration made towards sale of the entire car parking spaces a subscription money to be collected from flat owners on handing over of possession of the flats. The survey declaration amount of Rs. 3,00,00,000/ under consideration i.e AY 2016 audited profit and loss account. Similarly, the balance amount of declaration was offered in AYs2017 which can also be seen from the respective audited profit and loss accounts for the respective years.As already pointed out AO has accepted the books of accounts and has not rejected them. Therefore, the audited book results also need to accepted and cannot be rejected and no adhoc addition can be allowed to be made. 7.10 It is also seen that the AO was in agreement accounting treatment of survey declaration adopted by the appellant in. AY 2017 offered Rs. 60,00,000/ total survey declaration of Rs. 6,77,00.000/ accepted the declaration so made in AY 2017 order dated 15.12.2019 passed u/s 143(3) of the Act. Similarly, in AY 2018-19 also the AO has accepted the declaration made by,the assessee vide assessment order dated 10.03.2021 passed u Shubham Dynamic Real Estate Developers LLP both the scenario of amount added to WIP and without adding to The assessee also submitted certificate by that survey declared amount was . Considering the submission of the ass Ld. CIT(A) deleted the addition observing as under: 7.9 In the present case, while during the course of the survey it was envisaged that the said project would get completed by December 2015 i.e during the assessment year under consideration itself and the entire receipts declared during the course of the survey shall be offered during the assessment year under contention itself, in reality the project got delayed and got completed only in AY 2019-20. While as per the Project Completion Method income from the project ought to have been offered in the year of completion of the project i.e AY 2019-20, to honour the Survey declaration, the declaration amount was offered for taxation in a staggered manner in AYs2016-17 to 2019-20for the purpos payment of advance tax and advance tax was duly paid accordingly. The net profit from the project was calculated on the completion of the project in AY 2019-20 after including the survey declaration made towards sale of the entire car parking spaces a subscription money to be collected from flat owners on handing over of possession of the flats. The survey declaration amount of Rs. 3,00,00,000/- was indeed offered to tax in the assessment year under consideration i.e AY 2016-17 which can be seen from audited profit and loss account. Similarly, the balance amount of declaration was offered in AYs2017-18, AY 2018-19 and 2019 which can also be seen from the respective audited profit and loss accounts for the respective years.As already pointed out AO has accepted the books of accounts and has not rejected them. Therefore, the audited book results also need to accepted and cannot be rejected and no adhoc addition can be allowed to be 7.10 It is also seen that the AO was in agreement accounting treatment of survey declaration adopted by the appellant in. AY 2017-18 and AY 2018-19 where the appellant has offered Rs. 60,00,000/-and Rs. 40,00,000/- respectively out of the total survey declaration of Rs. 6,77,00.000/-. The same A accepted the declaration so made in AY 2017-18 vide assessment order dated 15.12.2019 passed u/s 143(3) of the Act. Similarly, in 19 also the AO has accepted the declaration made by,the assessee vide assessment order dated 10.03.2021 passed u Shubham Dynamic Real Estate Developers LLP 4 ITA No. 4606/MUM/2023 both the scenario of amount added to WIP and without adding to The assessee also submitted certificate by a Chartered amount was offered to tax . Considering the submission of the assessee, the 7.9 In the present case, while during the course of the survey it was envisaged that the said project would get completed by December 2015 i.e during the assessment year under consideration itself and the entire receipts declared during the course of the survey shall be offered during the assessment year under contention itself, in reality the project got delayed and got completed 20. While as per the Project Completion Method, the income from the project ought to have been offered in the year of 20, to honour the Survey declaration, the declaration amount was offered for taxation in a 20for the purpose of payment of advance tax and advance tax was duly paid accordingly. The net profit from the project was calculated on the 20 after including the survey declaration made towards sale of the entire car parking spaces and subscription money to be collected from flat owners on handing over of possession of the flats. The survey declaration amount of Rs. was indeed offered to tax in the assessment year 17 which can be seen from the audited profit and loss account. Similarly, the balance amount of 19 and 2019-20 which can also be seen from the respective audited profit and loss accounts for the respective years.As already pointed out above, the AO has accepted the books of accounts and has not rejected them. Therefore, the audited book results also need to accepted and cannot be rejected and no adhoc addition can be allowed to be 7.10 It is also seen that the AO was in agreement with the accounting treatment of survey declaration adopted by the 19 where the appellant has respectively out of the . The same AO has 18 vide assessment order dated 15.12.2019 passed u/s 143(3) of the Act. Similarly, in 19 also the AO has accepted the declaration made by,the assessee vide assessment order dated 10.03.2021 passed u/s 143(3) of the Act. Ironically, during the AY under consideration i.e AY 2016-17 the AO did not accept the declaration amount of Rs. 3,00,00,00/- declaration amount of Rs, 6,77,00,000/ been done without rejecting the books of accounts of the appellant. The AO cannot adopt different stands on the same issue in different assessment years and so the action of the AO in AY 2016 be sustained. The appellant has also illustrated treatment of offering the declaration amount by debiting the WIP account and crediting the profit & loss account has no impact on taxable income calculated at the time of the completion of the project as alleged by the AO. 7.11 Therefore, keeping in view the above facts and the judicial pronouncements, addition of Rs. 6,77,00,000/ AY 2016-17 cannot be sustained and is hereby deleted. Ground No.1(a) of the appeal is accordingly allowed.” 4. We have considered rival sub perused the relevant material on record. Shri Manish Shah director of one of the partner of the assessee firm offered undisclosed income of Rs.6.77 crores for taxation which included Rs.6.26 crores from sale of entire car parking subscription fees toward use the assessee it offered years, interalia, Rs.3 cr lakhs in assessment year 20 2018-19 and Rs.2,77,00,000/ the Ld. Assessing Officer rejected the contention and ignored the undisclosed income of Rs.3 crores offered in the year under consideration and made additio to the total income declared by the assessee in the return of income. Thus the issue in dispute in the case is whether the Shubham Dynamic Real Estate Developers LLP 143(3) of the Act. Ironically, during the AY under consideration i.e 17 the AO did not accept the declaration amount of Rs. made by the assessee and instead added the entire declaration amount of Rs, 6,77,00,000/- in AY 2016 been done without rejecting the books of accounts of the appellant. The AO cannot adopt different stands on the same issue in different assessment years and so the action of the AO in AY 2016 be sustained. The appellant has also illustrated that the accounting treatment of offering the declaration amount by debiting the WIP account and crediting the profit & loss account has no impact on taxable income calculated at the time of the completion of the project as alleged by the AO. re, keeping in view the above facts and the judicial pronouncements, addition of Rs. 6,77,00,000/- made by the AO in 17 cannot be sustained and is hereby deleted. Ground No.1(a) of the appeal is accordingly allowed.” We have considered rival submission of the parties and perused the relevant material on record. Shri Manish Shah director of one of the partner of the assessee firm offered undisclosed income of Rs.6.77 crores for taxation which included Rs.6.26 crores from sale of entire car parking spaces and Rs.51 lakhs subscription fees toward use of recreation facilities. According to offered the entire survey declaration Rs.3 crores in assessment year 2016 in assessment year 2017-18; Rs.40 lakhs in assessment year 19 and Rs.2,77,00,000/- in assessment year 2019 the Ld. Assessing Officer rejected the contention and ignored the undisclosed income of Rs.3 crores offered in the year under tion and made addition for the amount of Rs.6.77 crores to the total income declared by the assessee in the return of income. Thus the issue in dispute in the case is whether the Shubham Dynamic Real Estate Developers LLP 5 ITA No. 4606/MUM/2023 143(3) of the Act. Ironically, during the AY under consideration i.e 17 the AO did not accept the declaration amount of Rs. made by the assessee and instead added the entire in AY 2016-17. This has been done without rejecting the books of accounts of the appellant. The AO cannot adopt different stands on the same issue in different assessment years and so the action of the AO in AY 2016-17 cannot that the accounting treatment of offering the declaration amount by debiting the WIP account and crediting the profit & loss account has no impact on taxable income calculated at the time of the completion of the project re, keeping in view the above facts and the judicial made by the AO in 17 cannot be sustained and is hereby deleted. Ground mission of the parties and perused the relevant material on record. Shri Manish Shah director of one of the partner of the assessee firm offered undisclosed income of Rs.6.77 crores for taxation which included Rs.6.26 crores spaces and Rs.51 lakhs as of recreation facilities. According to declaration amount in four ores in assessment year 2016-17; Rs.60 Rs.40 lakhs in assessment year in assessment year 2019-20. But, the Ld. Assessing Officer rejected the contention and ignored the undisclosed income of Rs.3 crores offered in the year under for the amount of Rs.6.77 crores to the total income declared by the assessee in the return of income. Thus the issue in dispute in the case is whether the assessee has honored the declaration made during the course of survey proceedings. We have verif undisclosed income from sale of car parking and subscription fee offered in assessment year assessment years 2017 completed u/s 143(3) of the Act by the Assess duly accepted the declaration made by the assessee. In assessment year 2019-20 also the declaration of Rs.2,77,00,000/ accepted by the Revenue under intimation issued u/s 143(1) of the Act. The income of Rs.3 crores declar consideration has also not been reduced by the Assessing Officer and therefore, the entire income of Rs.6.77 crores offered by the assessee stands declared in the return of the Assessing Officer is revenue significant change in tax rates favorable to assessee In view of the above, we do not find any infirmity in the order of the Ld. CIT(A) on the issue in dispute and accordingly same. The grounds of appeal raised by the Revenue are accordingly dismissed. 5. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on Sd/- (KAVITHA RAJAGOPAL JUDICIAL MEMBER Shubham Dynamic Real Estate Developers LLP assessee has honored the declaration made during the course of survey proceedings. We have verified the claim of the assessee undisclosed income from sale of car parking and subscription fee assessment years from 2016-17 to 2019 s 2017-18 and 2018-19 assessment completed u/s 143(3) of the Act by the Assessing Officer and duly accepted the declaration made by the assessee. In assessment 20 also the declaration of Rs.2,77,00,000/ accepted by the Revenue under intimation issued u/s 143(1) of the Act. The income of Rs.3 crores declared in the year under consideration has also not been reduced by the Assessing Officer and therefore, the entire income of Rs.6.77 crores offered by the assessee stands declared in the returns of income filed. of the Assessing Officer is revenue neutral unless there is significant change in tax rates favorable to assessee In view of the above, we do not find any infirmity in the order of the Ld. CIT(A) on the issue in dispute and accordingly, same. The grounds of appeal raised by the Revenue are accordingly In the result, the appeal of the Revenue is dismissed. nounced in the open Court on 19/08/2024. - Sd/ (KAVITHA RAJAGOPAL) (OM PRAKASH KANT MEMBER ACCOUNTANT MEMBER Shubham Dynamic Real Estate Developers LLP 6 ITA No. 4606/MUM/2023 assessee has honored the declaration made during the course of the claim of the assessee of undisclosed income from sale of car parking and subscription fee 17 to 2019-20. In 19 assessments have been ing Officer and he has duly accepted the declaration made by the assessee. In assessment 20 also the declaration of Rs.2,77,00,000/- has been accepted by the Revenue under intimation issued u/s 143(1) of the ed in the year under consideration has also not been reduced by the Assessing Officer and therefore, the entire income of Rs.6.77 crores offered by the of income filed. The action neutral unless there is significant change in tax rates favorable to assessee in other years. In view of the above, we do not find any infirmity in the order of the , we uphold the same. The grounds of appeal raised by the Revenue are accordingly In the result, the appeal of the Revenue is dismissed. /08/2024. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Mumbai; Dated: 19/08/2024 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Shubham Dynamic Real Estate Developers LLP Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Shubham Dynamic Real Estate Developers LLP 7 ITA No. 4606/MUM/2023 BY ORDER, Registrar) ITAT, Mumbai