M/s Gnanaganga Gruha Nirmana Sahakara Sangha Niyamitha, Mysore V. ACIT, Mysore

ITA 537/BANG/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0548 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 26-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V S SREELEKHA
• Assessee Lawyers: ASWATHANARAYAN
• Keywords: Opportunity of being heard; Principle of natural justice; Reasonable cause; Set aside
• Section: 143(3)

Judgement Text

PAGE 1 OF 5 ITA NO.537/BANG/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B' BEFORE SHRI K P T THANGAL, VICE PRESIDENT AND SHRI N L KALRA, A.M. ITA NO.537/BANG/09 (ASST. YEAR 2006-07) GNANAGANGA GRUHA NIRMALA SAHAKARA SANGHA NIYAMITHA, 365, 10TH MAINROAD, 'C' BLOCK, J P NAGAR, MYSORE-570 008. - APPELLANT VS THE ADDL. COMMISSIONER OF INCOME TAX, RANGE-2, MYSORE-8. - RESPONDENT APPELLANT BY : SHRI M S ASWATHANARAYAN RESPONDENT BY : SMT. V S SREELEKHA O R D E R PER N L KALRA : THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF LEARNED CIT(A), MYSORE DATED 13TH MARCH, 2009. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER:- I) THE IMPUGNED ASSESSMENT ORDER DATED 30.12.2008 PASSED BY THE LEARNED RESPONDENT U/S 143(3) IS ARBITRARY, DEFECTIVE, INCORRECT AND BAD IN LAW AND IS NOT MAINTAINABLE AS IT ADOPTS AN ERRONEOUS PAGE 2 OF 5 ITA NO.537/BANG/2009 2 METHOD OF APPLICATION OF THE PRINCIPLE FOR DETERMINING THE PROFITS IF ANY AND HENCE DESERVES TO BE SET ASIDE FOR A DE NOVO CONSIDERATION WITH A DIRECTION TO APPLY THE PERCENTAGE COMPLETION METHOD PROPERLY. II) NOTWITHSTANDING WHAT IS STATED ABOVE, THE LEARNED ADDITIONAL COMMISSIONER HAS APPLIED AN ERRONEOUS BASIS IN APPORTIONING THE COST, IN THAT HE HAS ADOPTED THE NUMBER OF SITES TO ARRIVE AT THE COST PER SITE WHICH IS GROSSLY ERRONEOUS. THE CORRECT METHOD WOULD BE TO ADOPT THE DEVELOPED AND SALEABLE AREA AND TO ARRIVE AT THE COST PER SQUARE FEET OF DEVELOPED AREA WHICH CAN BE COMPARED WITH THE COMPARABLE REVENUE TO ARRIVE AT CORRECT PROFIT OR LOSS IF ANY, IN ACCORDANCE WITH THE ACT. HENCE, THE ASSESSMENT NEEDS TO BE CANCELLED AND REMITTED BACK TO THE LEARNED RESPONDENT FOR REDOING THE SAME ON THE BASIS OF THE DIRECTION ISSUED BY THIS HON'BLE TRIBUNAL. 3. THE ASSESSEE FILED AFFIDAVIT FOR CONDONING THE DELAY IN FILING THE APPEAL BY 11 DAYS. THE DELAY WAS D UE TO THE PREOCCUPATION OF THE MEMBERS OF THE COMMITTEE OF TH E APPELLANT SOCIETY INCLUDING ITS PRESIDENT WITH THE G ENERAL BODY MEETING AND NON-AVAILABILITY OF MEMBERS TO TAKE A DE CISION FOR FILING THE APPEAL. 4. SINCE THERE IS REASONABLE CAUSE FOR DELAY IN FIL ING THE APPEAL, THE DELAY IS CONDONED. PAGE 3 OF 5 ITA NO.537/BANG/2009 3 5. THE AO DURING THE COURSE OF PROCEEDINGS INFORME D THE ASSESSEE THAT IT PROPOSED TO RECOGNIZE THE INCO ME ON THE BASIS OF PERCENTAGE COMPLETION METHOD AS FOLLOWED I N THE ASST. YEAR 2005-06. THE ASSESSEE REQUESTED TO ALLOW FUTUR E EXPENDITURE TO BE INCURRED TOWARDS ASPHALTING, WATE R SUPPLY, PRORATE WATER CHARGES PAYABLE TO MUDA ETC. HENCE, O N THE BASIS OF PERCENTAGE COMPLETION METHOD, THE ASSESSEE REQUESTED THAT THE EXPENDITURE INCURRED ON THE ABOVE-REFERRED WORK DURING THE FINANCIAL YEAR 2006-07 AND 2007-08 IS TO BE CONSIDERED TO ASCERTAIN THE PROPORTIONATE EXPENDITU RE AGAINST THE SITES TRANSFERRED DURING THE FINANCIAL YEAR 2005 -06. THE ASSESSING OFFICER REJECTED THE REQUEST AND ACCORDIN GLY RECOGNIZED THE REVENUE ON THE BASIS OF PERCENTAGE C OMPLETION METHOD WITHOUT CONSIDERING THE EXPENDITURE WHICH IS REQUIRED TO BE INCURRED FOR THE WHOLE PROJECT AND TO BE APPO RTIONED IN RESPECT OF THE SITES SOLD DURING THE YEAR. 6. THE TRIBUNAL HAS DECIDED THE APPEAL OF THE ASSESSEE FOR THE ASST. YEAR 2005-06 VIDE ORDER DATED 30TH APRIL, 2009 IN ITA NO.1349/BANG/2008. THE TRIBUNAL VIDE PARA 6 OF THE ORDER OBSERVED AS UNDER:- 'WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. WE ARE OF THE OPINION THAT THE PRINCIPLES OF NATURAL JUSTICE HAVE BEEN VIOLATED AS THE ASSESSEE WAS NOT PROVIDED ADEQUATE OPPORTUNITY TO REPRESENT PAGE 4 OF 5 ITA NO.537/BANG/2009 4 ITS CASE BEFORE THE AO. THE CIT(A) HAS ALSO NOT CONSIDERED THE MATTER IN THE CORRECT PERSPECTIVE. HE HAS NOT EXAMINED THE OBJECTION OF THE ASSESSEE. MOREOVER, THE HON'BLE SUPREME COURT IN THE CASE OF TIN BOX CO. V CIT (249 ITR 216) HELD, REVERSING THE DECISION OF THE HIGH COURT, AS FOLLOWS: 'THAT THE ASSESSEE COULD HAVE PLACED EVIDENCE BEFORE THE FIRST APPELLATE AUTHORITY OR BEFORE THE TRIBUNAL IS REALLY OF NO CONSEQUENCE FOR IT IS THE ASSESSMENT ORDER THAT COUNTS. THAT ORDER MUST BE MADE AFTER THE ASSESSEE HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF SETTING OUT HIS CASE. WE, THEREFORE, DO NOT AGREE WITH THE TRIBUNAL AND THE HIGH COURT THAT IT WAS NOT NECESSARY TO SET ASIDE THE ORDER OF ASSESSMENT AND REMAND THE MATTER TO THE ASSESSING AUTHORITY FOR FRESH ASSESSMENT AFTER GIVING TO THE ASSESSEE A PROPER OPPORTUNITY OF BEING HEARD'. TAKING TOTALITY OF CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, THE MATTER NEEDS TO BE RESTORED TO THE FILE OF THE AO FOR AFFORDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. ACCORDINGLY, THE MATTER IS RESTORED TO THE FILE OF THE AO WHO SHALL AFFORD ADEQUATE OPPORTUNITY TO THE ASSESSEE TO PUT FORTH ITS CASE'. PAGE 5 OF 5 ITA NO.537/BANG/2009 5 7. SINCE THE AO HAS FOLLOWED HIS ORDER FOR THE ASS T. YEAR 2005-06 FOR RECOGNIZING REVENUE AND SINCE THAT ORDER HAS BEEN SET ASIDE BY THE TRIBUNAL, THEREFORE, IT WILL B E FAIR AND REASONABLE TO SET ASIDE THIS ASSESSMENT ON THE FILE OF THE ASSESSING OFFICER. THE AO WILL GIVE ADEQUATE OPPOR TUNITY TO THE ASSESSEE AND WILL DECIDE THE ISSUE ON THE SAME BASIS AS TO BE ADOPTED IN THE ASST. YEAR 2005-06 FOR THE PURPOSE OF RECOGNIZING REVENUE ON THE BASIS OF PERCENTAGE COMP LETION METHOD. 8. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON 16TH OCTOBER, 2009 . SD/- SD/- (K P T THANGAL) (N L KALRA) VICE PRESIDENT ACCOUNTANT MEMBER BANGALORE, DTD. 16/10/2009 COPY TO : 1. THE ASSESSEE 2.THE REVENUE 3. THE CIT( A) CONCERNED.4. THE CIT CONCERNED. 5. THE DR 6. GUAR D FILE. 7. GF, ITAT, NEW DELHI. MSP/14.10. BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.