ACIT CEN CIR 2, THANE V. GAHLOT CONSTRUCTION, NAVI MUMBAI

ITA 4895/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3227 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 12-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 26-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SHUKLA
• Assessee Lawyers: HITESH M SHAH
• Keywords: Retraction
• Section: 133A; 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL,MUMBAI BENCH G, MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.4895/MUM/2013 ASSESSMENT YEAR: 2008-09 ACIT CC-2, ROOM NO. 13, A-WINGH, 6 TH FLOOR, ASHAR IT PARK, ROAD NO. 16Z, WAGLE INDL. ESTATE, THANE-400604. VS. M/S GAHLOT CONSTRUCTION, PLOT NO. 28A, SECTOR-11, OPP. JUI NAGAR RAILWAY STATION, SANPADA, NAVI MUMBAI-400705. PAN: AAOFM5698J (APPELLANT) (RESPONDENT) ITA NO.4896/MUM/2013 ASSESSMENT YEAR: 2009-10 ACIT CC-2, ROOM NO. 13, A-WINGH, 6 TH FLOOR, ASHAR IT PARK, ROAD NO. 16Z, WAGLE INDL. ESTATE, THANE-400604. VS. M/S GAHLOT CONSTRUCTION, PLOT NO. 28A, SECTOR-11, OPP. JUI NAGAR RAILWAY STATION, SANPADA, NAVI MUMBAI-400705. PAN: AAOFM5698J (APPELLANT) (RESPONDENT) REVENUE BY : MS. ANUPAMA SHUKLA (DR) ASSESSEE BY : SHRI HITESH M. SH AH (AR) DATE OF HEARING : 12.04.2016 DATE OF PRONOUNCEMENT : 27.05.2016 O R D E R PER PAWAN SINGH, JM: 1. THESE TWO APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-1,THANE DATED 21.03.2013, FOR AYS 2008-09 & 2009-10 WERE HE ARD TOGETHER AS IDENTICAL GROUND ARE RAISED IN BOTH APPEALS AND BEING DISPO SED OF BY A CONSOLIDATED ORDER. 2 ITA NOS. 4895 & 4896/M/2013 M/S. GAHLOT CONSTRUCTIO N. 2. FIRST WE WILL DISCUSS THE FACT OF ITA NO. 4895/MUM/2013. 3. THE BRIEF FACTS OF THE CASE ARE THAT SEARCH AND SEI ZURE ACTION U/S. 132(1) OF THE I.T. ACT WAS INITIATED IN THE CASE OF M/S. GAJRA GROUP O N 19.02.2009, SIMULTANEOUSLY THE OFFICE PREMISES OF THE ASSESSEE AT PLOT NO. 28A , GAHLOT COMPLEX, SECTOR-18, NERUL, NAVI MUMBAI WAS ALSO SURVEYED U/S. 133A OF T HE ACT. CONSEQUENT UPON NOTICE U/S. 153C WAS SERVED UPON THE ASSESSEE. IN RESPONSE TO THE NOTICE, ASSESSEE FILED RETURN OF INCOME ALONG WITH PROFIT & LOSS A/C AND BALANCE SHEET ON 28.04.2010 DECLARING TOTAL INCOME OF RS. 10,92,965/ -. DURING THE COURSE OF ASSESSMENT PROCEEDING, THE ASSESSEE WAS SHOW CAUSED AS TO WHY INCOME OF RS.53,00,000/- SHOULD NOT BE ADDED TO THE TOTAL INC OME OF ASSESSEE ON THE BASIS OF PERCENTAGE COMPLETION METHOD. WHICH WAS ADMITTED D URING THE COURSE OF SEARCH PROCEEDING WHILE RECORDING THE STATEMENT U/S. 132( 4) TO THE ACT. THE ASSESSEE FILED REPLY DATED 26.04.2010 WHEREIN IT WAS CONTEND ED THAT ASSESSEE NEVER ADOPTED PERCENTAGE COMPLETED METHOD FOR REVENUE RECOGNITION AS A BUILDER AND SUBMITTED THAT THEY ARE FOLLOWING THE PROJECT COMPLETION METH OD, THE EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO. THE AO RECORDE D THAT DURING SEARCH PROCEEDING, THE ASSESSEE HAS VOLUNTARILY ADMITTED A ND OFFERED INCOME OF RS. 53,00,000/- ON THE BASIS OF PERCENTAGE COMPLETION M ETHOD FOR AY-2008-09 AND DETAILED WORKING WAS SIGNED BY SHRI RAMESH GAJRA AN D SHRI VIJAY GAJRA AND FURNISHED TO THE ADDL DIT (INV.), KALYAN ON 12.04.2 009. THE ASSESSEE HAS NOT FILED LETTER OF RETRACTION TILL DATE OF FILING OF R ETURN OF INCOME WHICH CLEARLY CONFIRMED THAT ASSESSEE VOLUNTARILY AGREED TO OFFER INCOME FOR TAX AND THUS ADDED RS. 53,00,000/- IN THE INCOME OF ASSESSEE BESIDES T HE OTHER ADDITION. 4. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE LD. CIT(A) AFTER HEARING THE APPEAL AND CONSIDERING THE SUBMISSION AND THE EVIDENCE PLACED ON RECORD AND CONCLUDED THAT AO HAD WRONGLY PROCEEDED TO ESTIMATE THE PROFIT OF ASSESSEE-FIRM ON PERCENTAGE COMPLETION METHOD AND ACCEPTED THE APPEAL. AND CONCLUDED THAT ASSESSEE WA S REGULARLY FOLLOWING AND OFFERING THE PROFIT FOR TAXATION ON PROJECT COMPLET ION METHOD. AND DELETED THE ADDITION IN THE IMPUGNED ORDER DATED 21.03.2003, AG AINST WHICH THE PRESENT APPEAL IS FILED BY REVENUE BEFORE US. 5. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. DEPARTMENTAL REPRESENTATIVE (D R) FOR REVENUE ARGUED THAT 3 ITA NOS. 4895 & 4896/M/2013 M/S. GAHLOT CONSTRUCTIO N. DURING THE SEARCH ACTION, THE ASSESSEE VOLUNTARILY MADE THE STATEMENT AND OFFERED THE INCOME AND THE ADDITION WAS MADE ON THE BASIS O F DECLARATION OFFERED BY THE ASSESSEE DURING THE SEARCH PROCEEDING. DR FURTHER A RGUED THAT RESTORED THE ORDER OF AO AND SET-ASIDE THE ORDER OF CIT(A). AUTHORISED REPRESENTATIVE (AR) OF THE ASSESSEE ARGUED THAT THE ASSESSEE-FIRM WERE FOLLOW ING PROJECT COMPLETION METHOD OF ACCOUNTING WHICH IS EVIDENT FROM THE RETURN OF I NCOME FILED ON RECORD FOR AY- 2008-09. THE ASSESSEE NEVER ADOPTED THE PERCENTAGE METHOD OF ACCOUNTING. DURING THE SEARCH PROCEEDING, THE STATEMENT OF SHRI RAMESH LALJI GAJRA, PARTNER OF THE GAJRA CONSTRUCTION WAS RECORDED WHEREIN IT WAS POINTED OUT BY THE SEARCH PARTY THAT AS PER ACCOUNTING STANDARD 15 ISSUED BY THE ICAI THE PERCENTAGE COMPLETION METHOD HAS BEEN MADE COMPULSORY IN CASE OF BUILDER & DEVELOPER W.E.F. 01.04.2004 WHICH HAS TO BE FOLLOWED AS PER S ECTION 155 OF THE ACT AND ON THE BASIS OF POINTING OUT SHRI RAMESH LALJI GAJRA A GREED TO OFFER INCOME OF RS. 53,00,000/- FOR AY 2008-09 AND RS. 1,60,00,000/- FO R AY 2009-10. AR FURTHER ARGUED THAT DECLARATION WAS NOT VOLUNTARY AND THAT IS WHY THE ASSESSEE DECIDED TO CONTINUE WITH THE PROJECT COMPLETION METHOD AND ACC ORDINGLY FILED RETURN OF INCOME U/S. 153A WITHOUT OFFERING THE INCOME AS DEC LARED WHILE MAKING STATEMENT U/S. 132(4) OF THE ACT. THE LD AR FOR ASSESSEE ARGU ED THAT SIMILAR ADDITIONS WERE MADE IN ASSESSEES SISTER CONCERN BUT ON APPEAL TO ITAT THE SAME DELETED VIDE ITA NO.1267/M/2013 DATED 15.05.2015. 6. WE HAVE CONSIDERED THE ARGUMENTS ADVANCED BY THE LD DR FOR REVENUE AND AR FOR ASSESSEE. WE HAVE NOTICED THAT IN THE CASE OF BHOOMI CONSTRUCTION PROJECT VS ACIT & ACIT VS BHOOMI CONSTRUCTION PROJECT VIDE ITA NO.1267/M/2013& ITA NO. 2174/M/2013 DATED 15.05.2015 ( CASE OF AS SESSEES SISTER CONCERN) THE CO-ORDINATE BENCH OF THIS TRIBUNAL ON IDENTICAL ISS UES HELD AS UNDER: ADDITIONAL INCOME OFFERED VOLUNTARILY - RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 153A - AT THE TIME OF SEARCH THE ASSESSE E HAD OFFERED TO DISCLOSE THE INCOME ON THE BASIS OF PERCENTAGE COMPLETION METHOD WHICH HAS BEEN RETRACTED LATER ON - HELD THAT:- THERE IS NO FINDIN G THAT THE ASSESSEE HAS BEEN FOLLOWING PERCENTAGE COMPLETION METHOD REGULARLY SI NCE BEGINNING OR IN ANY OTHER PROJECT. THERE IS NO SUCH EVIDENCE OR DOCUMEN TS WHICH HAVE BEEN FOUND DURING THE COURSE OF SEARCH INDICATING THAT THE ASS ESSEE HAD BEEN FOLLOWING PERCENTAGE COMPLETION METHOD REGULARLY. IF THE ASSE SSEE HAS BEEN FOLLOWING ONE OF THE RECOGNIZED METHODS AS PRESCRIBED BY AS-9 , THEN IT CANNOT BE HELD THAT THE REVENUE CAN IMPOSE A DIFFERENT METHOD UPON THE ASSESSEE UNLESS THERE IS A FINDING OF FACT THAT SUCH A METHOD IS NOT REFL ECTING THE TRUE PROFITS OF THE ASSESSEE. NOW IT HAS ALSO BEEN BROUGHT ON RECORD BY THE ID. 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 COM PLETION METHOD FOR 4 ITA NOS. 4895 & 4896/M/2013 M/S. GAHLOT CONSTRUCTIO N. RECOGNITION OF REVENUE AND ACCORDINGLY, HAS ASSESSE D THE INCOME OF THE PROJECT ON THE SAME METHOD. THUS, A CONTRARY VIEW C ANNOT BE TAKEN FOR THIS YEAR. - DECIDED AGAINST REVENUE. 7. WE HAVE NOTICED THAT ISSUE RAISED IN THIS APPEAL IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN ITA NO.1267/M/2013 DATED 15.05.2015 (CASE OF ASSESSEES SISTER CONCERN). HENCE KEEPING IN VIEW THE PRINCIPLE OF CO NSISTENCY, HENCE, WE DO NOT FIND ANY SUBSTANCE IN THE APPEAL FILED BY THE REVEN UE. ITA NO.4896/MUM/2013 8. SINCE THE IDENTICAL ISSUES ARE RAISED IN THIS APPEA L AND WE HAVE ALREADY DECIDED THE SIMILAR GROUNDS OF APPEAL AGAINST THE REVENUE IN IT A NO. 4895/M/2013, HENCE, BOTH THIS IS APPEAL OF THE REVENUE IS ALSO DISMISSE D. IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENU E ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH MAY, 2016. SD/- SD/- ( R.C. SHARMA ) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBE R MUMBAI; DATED 27/05/2016 S.K.PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / (ASSTT.REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. !'# / GUARD FILE. $ //TRUE COPY/