ACT 25(1), MUMBAI V. ASHAPURA DEVELOPERS, MUMBAI

ITA 5390/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8584 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-10-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 19-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PARAS S SAVLA; DR K SHIVARAM
• Section: 133A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI . . , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND , SHRI RAJENDRA, ACCOUNTANT MEMBER I.TA. NO. 5390/MUM/2011 ASSESSMENT YEAR 2008-09 ASST. COMMISSIONER OF INCOME TAX 25(1), C-11, PRATYAKSHAKAR BHAVAN, R.NO. 202, BANDRA KURLA COMPLEX,BANDRA (EAST) MUMBAI 400 051. VS. M/S. ASHAPURA DEVELOPERS, 6, OM SAI WELFARE SOCIETY, SAVARPADA JUNCTION, KRISHNA AVENUE, BORIVALI (E),MUMBAI. PAN: AANFA 1971 F ( / APPELLANT ) ( ! / RESPONDENT ) REVENUE BY : SHRI MANOJ KUMAR (DR) ASSESSEE BY : DR. K. SHIVARAM & SHRI PARAS S. SAVLA ' # $% / DATE OF HEARING : 03-10-2012 &'( # $% / DATE OF PRONOUNCEMENT : 10-10-2012 ) / O R D E R PER RAJENDRA, AM THE PRESENT APPEAL IS DIRECTED AGAINST THE ORDER DT D.11-05-2011 OF THE CIT(A)-35, MUMBAI.FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED BY THE ASSESSING OFFICER (AO): (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT (A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE OF DECLARATION MADE BY THE ASSESSEE DURING SURVEY PROCEEDINGS AT R S 20,53,37083/ AND RETURN OF INCOME SUBSEQUENTIY FILED AT RS. 20,14,23970/ (II)THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. (III)THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER A NY GROUND OR ADD A NEW GROUND. 2. ASSESSEE-FIRM,ENGAGED IN THE BUSINESS OF CONSTRUCTI ON OF BUILDING IN SRA SCHEME AND DEVELOPMENT OF REAL ESTATE,FILED ITS RETURN OF INCOME ON 29-09-2008 DECLARING TOTAL INCOME OF RS. 20.14 CRORES.ASSESSMENT U/S.143 (3) OF THE INCOME-TAX ACT,1961 (ACT) WAS FINALISED BY THE AO ON 21.12.2010 DETERMI NING TOTAL INCOME OF THE ASSESSEE AT RS.20.54 CRORES. 2.1. A SURVEY ACTION U/S. 133A OF THE ACT WAS CONDUCTED ON 05-09-2008 AT THE BUSINESS PREMISES OF THE ASSESSEE.DURING THE SURVEY PROCEEDINGS STATEMENTS OF SHRI HIMMATLAL S. BHADRA, ONE OF THE PARTNERS OF THE FIR M,WERE RECORDED.HE ADMITTED THAT FIRM HAD NOT PAID ANY TAXES ON THE PROFITS EARNED D URING THE FINANCIAL YEARS 2007-08 AND 2008-09.HE FURTHER ADMITTED THAT FIRM WOULD PAY TAXES ON INCOME OF RS. 24.55 CRORES AND RS.1.35 CRORES RESPECTIVELY FOR THE FYS 2007-08 AND 2008-09.FURTHER I I.TA. NO. 5390/MUM/2011 M/S. ASHAPURA DEVELOPERS, 2 STATEMENTS OF SHRI BHADRA WERE RECORDED ON 15-09-20 08. 2.2. AS PER THE AO,THE ASSESSEE HAD FILED RETURN OF INCO ME FOR RS. 20.14 CRORES, WHEREAS IT HAD DECLARED AN AMOUNT OF RS.20.53 CRORE S FOR THE AY UNDER CONSIDERATION DURING THE SURVEY ACTION.HE CALLED FOR EXPLANATION FROM THE ASSESSEE-FIRM IN THIS REGARD.AFTER CONSIDERING THE REPLY FILED BY THE ASS ESSEE,HE ADDED AN AMOUNT OF RS. 39.78 LAKHS TO THE TOTAL TAXABLE INCOME OF THE ASSE SSEE. 3. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA).AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE ASSESSMENT ORDER, HE HELD THAT THE STATEMENTS OF THE ONE OF THE PARTNERS WERE RECORDED BEFORE THE TAX AUDIT REPORT WAS FINALISED,THAT AS PER THE REVISED UN-AUDITED P&L A/ C,SUBMITTED ON 15-09-2008, TAXABLE INCOME OF THE AASESSEE WAS RS. 20.53 CRORES,THAT AO HAD COMPARED THE SAME WITH THE TOTAL INCOME ADMITTED IN THE RETURN INSTEAD OF COMP ARING IT WITH THE NET PROFIT SHOWN IN THE AUDITED P&L A/C,THAT IF THE NET PROFIT,AS PE R AUDITED ACCOUNT,WAS TO BE CONSIDERED THE DIFFERENCE WAS ONLY OF RS.30.88 LAKH S AND NOT OF RS.39.78 LAKHS AS DETERMINED BY THE AO,THAT THE AO DID NOT REFER TO T HE LEDGER ACCOUNTS SUBMITTED BY THE ASSESSEE-FIRM WITH REGARD TO THE DIFFERENCE AND THE NATURE OF ENTRIES PASSED ON 31- 03-2008,THAT SECTION 133A DID NOT PROVIDE FOR DETER MINATION OF TOTAL INCOME ON THE DATE OF SURVEY,THAT TOTAL INCOME WAS TO BE DETERMIN ED BASED ON THE AUDITED BOOKS OF ACCOUNTS AT THE TIME OF ASSESSMENT,THAT AO COULD NO T PRE-DETERMINE THE TOTAL INCOME EVEN BEFORE THE APPELLANT FILED ITS RETURN OF INCOM E,THAT THERE COULD BE DIFFERENCE BETWEEN AUDITED AND UN-AUDITED P&L A/CS.,THATAO DID NOT EXAMINE AUDITED ACCOUNTS, THAT HE RELIED ON UN-AUDITED P&L A&C ONLY,THAT THER E WAS INCREASE IN EXPENDITURE AS WELL AS INCOME OF THE ASSESSEE AS PER THE AUDITED A /CS. FILED BY THE ASSESSEE FOR THE AY UNDER CONSIDERATION,THAT DIFFERENCE BETWEEN THE TWO FIGURES WAS ON ACCOUNT OF PROVISION OF INTEREST OF RS. 44.57 LAKHS FOR WHICH ENTRIES WERE PASSED ON 31-03-2008, THAT OTHER DIFFERENCE WAS ONLY ON ACCOUNT OF TRANSF ER OF ENTRIES AND JOURNAL ENTRIES PASSED ON 31-03-2008,THAT AO DID NOT POINT OUT ANY DEFECT IN THE AUDITED BOOKS OF ACCOUNTS OF THE ASSESSEE-FIRM.RELYING UPON THE ORDE R OF THE S. KHADER KHAN SONS (300ITR157)DELIVERED BY THE HONBLE HIGH COURT OF M ADRAS,HE HELD THAT SECTION 133A DID NOT EMPOWER ANY INCOME TAX AUTHORITY TO E XAMINE ANY PERSON ON OATH,THAT STATEMENTS RECORDED DURING SURVEY PROCEEDINGS HAD N O EVIDENTIARY VALUE,THAT STATEMENT OF ONE OF THE PARTNERS,RECORDED ON 15-09 -2008,COULD NOT FORM BASIS FOR MAKING ADDITION TO THE INCOME OF THE ASSESSEE. FINA LLY,HE DELETED THE ENTIRE ADDITION MADE BY THE AO.HE NOTICED THAT APPELLANT HAD TRANSF ERRED RS. 3.51 LAKHS FROM DONATION ACCOUNT TOWARDS ADVERTISEMENT ACCOUNT. SO, HE HELD THAT SAME COULD NOT BE ALLOWED AS DEDUCTIBLE EXPENDITURE,WHILE COMPUTING T HE INCOME FOR THE AY UNDER CONSIDERATION. 3. BEFORE US,DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTE D THAT STATEMENTS OF 15-09- 2008 WERE NOT CONTINUATION OF THE STATEMENTS RECORD ED ON THE DATE OF SURVEY, THAT TAX AUDIT WAS NOT PRODUCED BEFORE THE AO.AUTHORISED REP RESENTATIVE (AR) SUBMITTED THAT STATEMENTS RECORDED DURING THE SURVEY ACTION W ERE BASED ON THE UN-AUDITED BOOKS OF ACCOUNTS, AUDITED BOOKS WERE AVAILABLE WITH THE AO AT THE TIME OF ASSESSMENT, THAT AO IGNORED THE AUDITED BOOKS OF ACCOUNTS AND MADE T HE ADDITIONS,THAT FAA IN THE ANNEXURE 1 AND 2 TO HIS ORDER HAD GIVEN THE DETAILS OF DIFFERENCE OF NET PROFIT AS PER AUDITED A/CS. AND AS PER THE FIGURES AVAILABLE ON D ATE OF SURVEY,THAT SAID ANALYSIS DEALT WITN DIRECT AS WELL AS INDIRECT EXPENSES. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL SUPPLIED BY THE ASSESSEE-FIRM. UNDISPUTED FACTS IN THIS CASE ARE AS UNDER: I).SURVEY ACTION U/S.133A WAS CARRIED OUT ON 05-09- 2008 AND ONE OF THE PARTNERS ADMITTED INCOME OF RS. 24.55 CRORES FOR THE AY UNDE R CONSIDERATION; I I.TA. NO. 5390/MUM/2011 M/S. ASHAPURA DEVELOPERS, 3 II)ON 15-09-2008 INCOME AMOUNTING TO RS. 20.53 CROR ES WAS ADMITTED,ON BEHALF OF THE FIRM BY ONE OF THE PARTNERS; III)WHILE FILING THE RETURN OF INCOME,ASSESSEE-FIRM ADMITTED TOTAL INCOME OF RS. 20.14 CRORES CLAIMING VARIOUS DEDUCTIONS; IV)THE NET PROFIT AS PER AUDITED P&L A/C WAS 20.21 CRORES; V)AFTER COMPARING THE FIGURES OF THE STATEMENT DTD. 15.09.2008 AND THE FIGURES SHOWN IN THE RETURN OF INCOME AO ADDED DIFFERENCE OF RS. 39.13 LAKHS(20.53 CRORES 20.14 CRORES) TO THE TOTAL INCOME OF THE ASSESSEE-FIRM. H E IGNORED THE CLAIM OF THE APPELLANT THAT THE DIFFERENCE WAS ON ACCOUNT OF TRANSFER OF E NTRIES AND JOURNAL ENTRIES PASSED ON AUDIT. VI)THE ASSESSEE-FIRM FILED TAX AUDIT REPORT ON 27-0 9-2008 ALONG WITH THE RETURN OF INCOME AND AS PER AUDITED A/CS. NET PROFIT WAS RS. 20.21 CRORES. 4.1. WE FIND THAT WHILE FINALISING THE ASSESSMENT ORDER, AO TOTALLY IGNORED THE AUDITED BOOKS OF ACCOUNTS AND TAX AUDIT REPORT.FAA HAS RIGH TLY HELD THAT INCOME ADMITTED BY THE ASSESSEE DURING SURVEY PROCEEDINGS CANNOT BE MADE THE BASIS FOR FINALISING THE ASSESSMENT.THE DUTY OF THE AO TO DETERMINE CORRECT INCOME OF ASSESSEE.FINAL TAX- LIABILITY OF ASSESSEE DEPENDS ON VARIOUS FACTORS AN D AO IS SUPPOSED TO CONSIDER ALL SUCH FACTORS THAT CAN CHANGE THE TAXABLE INCOME FOR A PARTICULAR AY.WE FIND THAT AO WHILE COMPUTING THE ASSESSMENT FOR THE YEAR UNDER C ONSIDERATION HAS SOLELY RELIED UPON THE STATEMENTS OF SHRI HIMMATLAL BHADRA RECORD ED ON 15-09-2008.IN OUR HUMBLE OPINION,APPROACH OF AO IN IGNORING THE TAX AUDIT RE PORTS AND AUDITED BOOKS OF ACCOUNTS WAS NOT PROPER. AO HAS,NOWHERE, POINTED OU T THE DEFECTS, IF ANY, FOUND IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE.WE FIND THAT ASSESSEE FIRM HAD EXPLAINED THE DIFFERENCE OF RS. 39.13 LAKHS.FAA HAS CATEGORICALLY GIVEN A FINDING OF FACTS THAT EXCEPT FOR THE AMOUNT OF RS.3.51 LAKHS,THE DIFFEREN CE WAS RE-CONCILED BY THE ASSESSEE. IN THESE CIRCUMSTANCES,WE DO NOT WANT TO INTERFERE WITH THE ORDER OF THE FAA. GROUND NOS. 1 TO 3 FILED BY THE AO ARE REJECTED. APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH OCTOBER, 2012. SD/- SD/- ( . . / I.P. BANSAL ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI, *' DATE: 10 TH OCTOBER, 2012 TNMM ) ) ) ) # ## # $+ $+ $+ $+ ,+($ ,+($ ,+($ ,+($ / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR A BENCH, ITAT, MUMBAI 6. GUARD FILE !+$ $ //TRUE COPY// )' )' )' )' / BY ORDER, - -- - / . . . . DY./ASSTT. REGISTRAR , / ITAT, MUMBAI