The DCIT, Circle-3, Surat V. M/s. Sun Corporation, Surat

ITA 567/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9232 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 06-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K PANDEY
• Assessee Lawyers: SN SOPARKARAR
• Keywords: Unexplained investment; Business income; Income from undisclosed sources
• Section: 69C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.567/AHD/2012 ( / ASSESSMENT YEAR : 2008-09) THE DCIT CIRCLE-3 SURAT / VS. M/S.SUN CORPORATION SUN RESIDENCY T.P. NO.12 F.P.NO.119/120, BHULKA BHAVAN ADAJAN, SURAT-395 005 ./ ./ PAN/GIR NO. : ABCFS 2022 H ( ' / APPELLANT ) .. ( #' / RESPONDENT ) ' $ / APPELLANT BY : SHRI A.K. PANDEY, SR.DR #' % $ / RESPONDENT BY : SHRI S.N. SOPARKAR, AR &'( % ) / DATE OF HEARING 24/02/2016 *+, % ) / DATE OF PRONOUNCEMENT 09/03/2016 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-II, SURAT [CIT(A) IN SHORT] DATED 28/11/2011 PERTAINING TO ASSESSMENT YEAR (AY) 2008-09. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- ITA NO.567/AHD/ 2012 THE DCIT, CIR-3, SURAT VS. M/S.SUN CORPORATION ASST.YEAR 2008-09 - 2 - [1] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD.CIT(A)-II, SURAT HAS ERRED IN DELETING ADDITION OF RS.3,00,00,000/- MADE UNDER SECTION-68, SECTION-69 AND SECTION- 69C OF THE I.T.ACT, WITHOUT APPRECIATING THE FACT T HAT ASSESSEE FAILED TO OFFER AN EXPLANATION REGARDING THE SOURCE OF RS.3,00,00,000/- CREDITED IN ITS BOOKS OF ACCOUNT AS WIP, EVENTHOUGH DURING THE COURSE OF SURVEY U/S.133A OF THE I.T.ACT ON 13.03.2008, THE PARTNERS OF THE ASSESSEE FIRM AC CEPTED RS.3,00,00,000/- AS THE RECEIPT OF THE FIRM FROM UN DISCLOSED SOURCES. [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. [3] IT IS, THEREFORE, PRAYED THAT THE ORDER OF TH E CIT(A) MAY BE SET- ASIDE AND THAT OF ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EXTENT. 2. BRIEFLY STATED FACTS ARE THAT A SURVEY ACTION U/ S.133A OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS CARRIED OUT ON 13/03/2008 AT THE BUSINESS PREMISES OF THE ASSESSEE . DURING THE COURSE OF SURVEY, THE ASSESSEE DISCLOSED AMOUNT OF RS.3 CR ORES AS UNACCOUNTED INCOME. SUBSEQUENTLY, THE CASE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT ,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DAT ED 22/11/2010. WHILE FRAMING THE ASSESSMENT, THE AO BY FOLLOWING THE ORD ER OF THE CIT(A)-II, SURAT NO.CAS/II/390/2009-10, DATED 31.8.2010 PASSED IN THE CASE OF M/S.D.R.CONSTRUCTION, MADE ADDITION OF RS.3-CRORES AS UNEXPLAINED INVESTMENT. THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE LD.CIT(A), WHO ITA NO.567/AHD/ 2012 THE DCIT, CIR-3, SURAT VS. M/S.SUN CORPORATION ASST.YEAR 2008-09 - 3 - AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DELETED THE ADDITION. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), NOW THE RE VENUE IS IN APPEAL BEFORE US. 3. THE LD.SR.DR SHRI A.K. PANDEY VEHEMENTLY ARGUED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITIO N. HE REITERATED THE SUBMISSIONS AS WERE MADE IN THE STATEMENT OF FACTS AND SUBMITTED THAT THE FINDING OF THE LD.CIT(A) IS NOT JUSTIFIED. 3.1. ON THE CONTRARY, LD.SR.COUNSEL FOR THE ASSESSE E SHRI S.N.SOPARKAR SUBMITTED THAT THERE IS NO ILLEGALITY INTO THE ORDE R OF THE LD.CIT(A) AND IT IS IN ACCORDANCE WITH THE SETTLED PRINCIPLE OF LAW. HE SUBMITTED THAT THE AO HAS WRONGLY PLACED RELIANCE ON THE DECISION OF T HE LD.CIT(A) IN THE CASE OF M/S.D.R.CONSTRUCTION(SUPRA). HOWEVER, REL IANCE WAS PLACED ON THE DECISION OF M/S.D.R.CONSTRUCTION WHICH HAS BEEN REVERSED BY THE TRIBUNAL. THEREFORE, THERE IS NO ILLEGALITY INTO THE ORDER OF THE LD.CIT(A). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE DECISION IN THE CASE OF M/S.D.R.CONS TRUCTION. THE AO WAS OF THE VIEW THAT THE UNACCOUNTED INCOME OF RS.3-CRO RES OFFERED BY THE ASSESSEE DURING THE COURSE OF SURVEY, NO EXPENSES CAN BE CLAIMED IN ANY ITA NO.567/AHD/ 2012 THE DCIT, CIR-3, SURAT VS. M/S.SUN CORPORATION ASST.YEAR 2008-09 - 4 - MANNER WHATSOEVER, VIZ. BY DEBITING CORRESPONDING E XPENSES ACCOUNT AND TRANSFERRING IT TO WORK-IN-PROGRESS ACCOUNT AS DONE BY THE ASSESSEE. THE AO REJECTED THE CONTENTION OF THE ASSESSEE FOR THE REASON THAT THE INCOME OF RS.3-CRORES DISCLOSED DURING THE SURVEY SHOULD N OT BE TAXED BECAUSE THE PROJECT OF THE ASSESSEE WAS NOT COMPLETE AS ALS O NOT ACCEPTABLE ON THE GROUND THAT THE ASSESSEE DID NOT FILE ANY EVIDENCE TO SHOW THAT THE INCOME DISCLOSED DURING SURVEY WAS GENERATED FROM T HE PROJECTS WHICH WERE UNDER CONSTRUCTION. HOWEVER, THE LD.CIT(A) IN HIS ORDER HAS GIVEN A FINDING ON FACT THAT THE DISCLOSURE OF INCOME WAS MADE BY THE PARTNERS OF THE ASSESSEE-FIRM DURING THE COURSE OF SURVEY AT THE BUSINESS PREMISES OF THE ASSESSEE. THIS DISCLOSURE IS THE ONLY BASIS OF SUCH INCOME. THERE IS NO OTHER EVIDENCE OF INCOME IN THE POSSESSION OF THE REVENUE DEPARTMENT. IN THE STATEMENT RECORDED DURING SURVE Y, IT WAS SPECIFICALLY MENTIONED THAT THE DISCLOSURE WAS ON ACCOUNT OF UN ACCOUNTED CURRENT BUSINESS RECEIPTS THE ASSESSEE DOES NOT CARRY OU T ANY ACTIVITY OTHER THAN THE BUSINESS OF HOUSING DEVELOPMENT PROJECT. THIS FINDING OF THE LD.CIT(A) HAS NOT BEEN CONTROVERTED BY THE LD.SR.DR BY PLACING ANY CONTRARY MATERIAL ON RECORD. THE COORDINATE BENCH IN THE CASE OF M/S. D.R. CONSTRUCTION VS. ITO IN ITA NO.2735/AHD/2010 F OR AY 2008-09 VIDE ORDER DATED 08/04/2011, UNDER THE IDENTICAL FA CTS, HAS EXAMINED THE ISSUE AT LENGTH AFTER CONSIDERING THE VARIOUS JUDIC IAL PRONOUNCEMENTS AND CAME TO THE CONCLUSION THAT THE ADVANCE MONEY RECEI VED EITHER BY WAY OF CHEQUE OR BY WAY OF CASH WILL PARTAKE THE CHARACTER OF TAXABLE INCOME ITA NO.567/AHD/ 2012 THE DCIT, CIR-3, SURAT VS. M/S.SUN CORPORATION ASST.YEAR 2008-09 - 5 - WHEN REGISTERED SALEDEED OF THE FLATS IS EXECUTED IN SUBSEQUENT YEARS. IN THE SAID CASE, THE COORDINATE BENCH OF THIS TRIBUNA L OBSERVED THAT IF THE AMOUNT GIVEN BY CHEQUE CARRIES THE CHARACTER AS AN ADVANCE AGAINST SALE CONSIDERATION, THEN ON-MONEY IN CASH WILL ALSO CA RRY THE SAME CHARACTER. BOTH TYPES OF RECEIPTS, I.E. RECEIPT TH ROUGH CHEQUES AND RECEIPT THROUGH CASH AS ON-MONEY WILL ARISE AS INCOME TO THE ASSESSEE AS SOON AS TRANSFER OF IMMOVABLE PROPERTY IS EXECUTED AND N OT BEFORE, OR POSSESSION THEREOF IS HANDED OVER AND FOR THIS IT I S NECESSARY THAT SUCH IMMOVABLE PROPERTY SHOULD BE IN EXISTENCE. THEREFO RE, THE COORDINATE BENCH WAS OF THE CONSIDERED VIEW THAT ON-MONEY RE CEIVED BY THE ASSESSEE DID NOT HAVE THE CHARACTER OF INCOME BUT W AS ONLY AN ADVANCE LIKE THE ONE RECEIVED THROUGH CHEQUE. BOTH WILL BE COME PART OF THE SALE CONSIDERATION TO THE ASSESSEE SIMULTANEOUSLY ON EIT HER HANDLING OVER THE POSSESSION OF THE FLATS OR ON EXECUTION OF TRANSFER -DEED WHICHEVER HAPPENS EARLIER. IN THE INSTANT CASE, DURING THE COURSE OF SURVEY, THE PARTNERS OF THE ASSESSEE-FIRM HAD STATED THAT THE A MOUNTS SO DISCLOSED WAS THE BUSINESS RECEIPTS. THE REVENUE HAS NOT BROUGHT ON RECORD ANY CONTRARY MATERIAL TO CONTROVERT SUCH STATEMENT. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE L D.CIT(A), SAME IS HEREBY UPHELD. GROUNDS RAISED BY THE REVENUE IN T HIS APPEAL ARE REJECTED. ITA NO.567/AHD/ 2012 THE DCIT, CIR-3, SURAT VS. M/S.SUN CORPORATION ASST.YEAR 2008-09 - 6 - 5. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN THE COURT ON WEDNESDAY, THE 9 TH DAY OF MARCH, 2016 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( PRAMOD KUMAR ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 09/ 03 /2016 0)..& , '.&../ T.C. NAIR, SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #' / THE RESPONDENT. 3. 123 4 / CONCERNED CIT 4. 4 ( ) / THE CIT(A)-II, SURAT 5. 5'6 &23 , ) 23 , , 1 / DR, ITAT, AHMEDABAD 6. 689 :( / GUARD FILE. / BY ORDER, #5 //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 25.2.16 (DICTATION-PAD 9+ PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..01.3.2016 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 09/03/2016 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 09/03/2016 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER