DCIT (OSD) CIR 2(2), MUMBAI V. MEHUL ESTATE P. LTD, MUMBAI

ITA 5452/MUM/2010

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0787 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 02-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN V P DR
• Section: 143(3); 133A; 145; 144

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.5452/MUM/2010 ASSESSMENT YEAR: 2007-08 ACIT, CIRCLE-2(2), R. NO.545, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. RAOD, MUMBAI-400020 / VS. M/S MEHUL ESTATE PVT. LTD. 304-21, VEENA CHAMBERS, DALAL STREET, FORT, MUMBAI-400001 ( / REVENUE) ( !' # /ASSESSEE) P.A. NO. AAACM4 243N / REVENUE BY SHRI ASGHAR ZAIN-V.P.-DR !' # / ASSESSEE BY SHRI VIPUL JOSHI $ % & # ' / DATE OF HEARING : 06/07/2015 & # ' / DATE OF ORDER: 04/08/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 16/04/2010 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. BROADLY, THE GROUND RAISED IN THIS APPEAL BY THE RE VENUE IS THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN M/S MEHUL ESTATE PVT. LTD ITA NO.5452/MUM/2010 2 HOLDING THAT THERE IS ACTION OF BOOKS OF ACCOUNTS B Y RESORTING TO THE PROVISIONS OF SECTION 145(3) OF THE ACT WAS WITHOUT ANY JUSTIFICATION, ESPECIALLY WHEN THE BOOKS OFF ACCOUN TS WERE REJECTED, BEING NOT FOUND CORRECT AND FURTHER IN HO LDING THAT THE ESTIMATION OF TOTAL INCOME U/S 144 OF THE ACT I S INCORRECT AND THUS ALLOWING PRIOR PERIOD EXPENSES OF RS.31,90 ,890/-. 2. DURING HEARING OF THIS APPEAL, SHRI ASGHAR ZAIN , V.P. LD. DR, ADVANCED HIS ARGUMENTS WHICH ARE IDENT ICAL TO THE GROUND RAISED, BY CONTENDING THAT THE LD. COMMI SSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN HIS CO NCLUSION. ON THE OTHER HAND, SHRI VIPUL JOSHI, LD. COUNSEL FO R THE ASSESSEE DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN THE DEVELOPMENT OF BUILDING PROJECT, WHICH WAS STARTED WAY BACK IN 199 8-99 AND MOST OF THE FLATS WERE SOLD DURING THE PERIOD. A SU RVEY ACTION U/S 133A OF THE ACT WAS CARRIED OUT ON 28/03/2009, WHEREIN, CERTAIN DISCREPANCIES WERE FOUND, WHEREIN, THE ASSESSEE OFFERED RS.65 LAKH AND ALSO PAID ADVANCE T AX ON THE OFFERED INCOME ON 31/03/2009. AS PER THE REVENUE, T HE ASSESSEE COMPLETED THE PROJECT IN FINANCIAL YEAR 20 05-06 AND SHOWED MINIMUM PROFIT OF RS.17,06,464/- FROM A TOTA L TURNOVER OF RS.10,19,64,200/- WHICH IS APPROXIMATEL Y 1.67% OF THE TOTAL TURNOVER. WHILE FILING THE RETURN, THE ASSESSEE CLAIMED VARIOUS EXPENSES LIKE ELECTRIC METER, LABOU R CHARGES, M/S MEHUL ESTATE PVT. LTD ITA NO.5452/MUM/2010 3 PROPERTY TAX, BMC EXPENSES, SITE SECURITIES EXPENSE S ETC. AMOUNTING TO RS.31,90,890/- WHICH RESULTED INTO NET INCOME OF RS.33,21,110/-. THUS, THE NET PROFIT TURNOVER C AME TO 4.63%, WHICH AS PER THE REVENUE IS QUITE LESS IN CO MPARISON TO SIMILAR BUSINESS. IT WAS FURTHER OBSERVED BY TH E ASSESSING OFFICER THAT THE EXPENSES CLAIMED BY THE ASSESSEE A RE NOT JUSTIFIED AND THE EXPENSES WERE HARDLY RELATED TO T HE PROJECT. THE ASSESSING OFFICER INVOKED THE PROVISION OF SECT ION 145 AND REJECTED THE BOOK RESULTS. THE TOTAL INCOME WA S ESTIMATED AT RS.1,26,93,536/-. 2.2. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INC OME TAX (APPEALS), THE SUBMISSIONS OF THE ASSESSEE WERE EXAMINED AND FOUND THAT THE ASSESSEE MADE VOLUNTARY OFFER OF RS.65 LAKH IN RESPECT OF RECEIPTS FROM PROJECTS . THE FULL DETAILS OF EXPENSES INCURRED BY THE ASSESSEE WERE F ILED BEFORE THE ASSESSING OFFICER, WHEREIN NO DEFECTS WERE POIN TED OUT IN THE BOOKS WHICH WERE DULY AUDITED. IDENTICALLY, FO R A.Y. 2006-07 ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT AND NO ADVERSE CONCLUSION WAS DRAWN WITH RESPECT TO BOO K RESULTS, THUS, WE FIND MERIT IN THE CONCLUSION OF T HE LD. COMMISSIONER OF INCOME TAX (APPEALS) REVERSING THE INVOCATION OF SECTION 145 OF THE ACT. WE FURTHER FI ND THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DULY EXAMI NED THE DETAILS AND OTHER MATERIAL AND THEN REACHED TO A CO NCLUSION, WHEREAS, THE ASSESSMENT WAS FRAMED ON PRESUMPTION B ASIS. THE IMPUGNED ORDER IS AFFIRMED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. M/S MEHUL ESTATE PVT. LTD ITA NO.5452/MUM/2010 4 THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN TH E PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 06/07/2015. SD/ - (RAJENDRA) SD/ - (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER $ % MUMBAI; ( DATED : 04/08/2015 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 $ 1# ( *+ ) / THE CIT, MUMBAI. 4. 0 0 $ 1# / CIT(A)- , MUMBAI 5. 34 .# , 0 *+' * 5 , $ % / DR, ITAT, MUMBAI 6. 6! 7% / GUARD FILE. / BY ORDER, /3+# .# //TRUE COPY// / (DY./ASSTT. REGISTRAR) , $ % / ITAT, MUMBAI