Naini Resorts & Floriculture Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 5695/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3041 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 21-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJANA
• Keywords: Cost of acquisition
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI P. K. BANSAL, VICE PRESIDENT AND SMT BEENA A. PILLAI, JUDICIAL MEMBER ITA NO. 5695/DEL/2014 : A SSTT. YEAR : 2010-11 NAINI RESORTS & FLORICULTURE PVT. LTD. M-18, GREATER KAILASH-II NEW DELHI PAN : AABCN4603L VS. DCIT COMPANY CIRCLE-13(1) NEW DELHI [APPELLANT] [RESPONDENT] ASSESSEE BY : SH. VINOD JAIN, CA REVENUE BY : SH. P.DAM KANUNJANA, SR. DR DATE OF HEARING: 1 1 12 2017 DATE OF PRONOUNCEMENT: 11 12 2017 O R D E R PER P.K. BANSAL, VICE PRESIDENT : THIS APPEAL HAS BEEN FILED BY THE ASSESSE E AGAINST THE ORDER OF THE CIT(A) DATED 14.08.2014 BY TAKING THE FOLLOWING AFFECTIVE GROUND OF APPEAL :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE ASSESSMENT ORDER PASSED BY THE LEARNED AO, U/S 143( 3) OF THE INCOME TAX ACT IS BAD IN LAW AND ILLEGAL. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE AO ERRED IN NOT TREATING A SUM OF RS. 1,06,08,738/- TO WARDS ITA NO.5695/DEL./2014 2 CONSTRUCTION OF THE PROPERTY AND ENHANCING THE CAPI TAL GAIN BY RS. 1,06,08,738/-. 2. THE GROUND NO. 1 IS GENERAL AND DOES NOT RE QUIRE ANY ADJUDICATION. THE GROUND NO. 2 RELATE TO THE DISALLOWANCE OF A SUM OF RS. 1,06,08,738/- WHILE COMPUTING THE CAPITAL GAIN BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A). 3. THE BRIEF FACTS OF THE CASE ARE THAT DUR ING THE YEAR THE ASSESSEE SOLD THE PROPERTY PLOT BEARING NO. 39, BLOCK C, SECTOR-57, N OIDA, MEASURING 1800 SQ. METER ALONG WITH COVERED AREA ON GROUND FLOOR 960.9 6 SQ. METER PLUS COVERED AREA ON FIRST FLOOR 551.92 SQ. METER TOTALLING ON A LL FLOORS 2473.84 SQ METERS FOR A TOTAL CONSIDERATION OF RS. 3,45,00,000/- ON 7.8.200 9. THE ASSESSEE WHILE COMPUTING THE CAPITAL GAIN SUBMITTED THE DOCUMENTS IN RESPECT OF CONSTRUCTION EXPENSES AT RS. 1,06,08,738/- ALONG WITH THE BILLS AS DETAILED BELOW : S. NO. NAME OF THE PARTY ITEMS PURCHASED/ NATURE OF WORK DATE OF BILL AMOUNT 1. M/S. GANESH CARRIER BUILDING MATERIAL (RODI AND N.SAND) 15.06.2009 3,01,800 2. M/S. GANESH CARRIER BUILDING MATERIAL (RODI AND N.SAND) 30.06.2009 3,06,600 3. M/S. GANESH CARRIER BUILDING MATERIAL (RODI AND N.SAND) 31.07.2009 3,07,200 4. M/S. VIREDNER SINGH BUILDING MATERIAL (C.SAND) 31.07.2009 2,13,800 5. M/S. SWAMI TRADERS BUILDING MATERIAL (BRICK 1 ST QUALITY) 31.07.2009 3,28,000 6. M/S. AXIOM BUILDWELL P.LTD. EARTH WORK, SHUTTERING WORK, PLASTERING WORK, WATER PROOFING WORK, STEEL WORK ETC. 04.08.2009 85,00,000 ITA NO.5695/DEL./2014 3 4. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAS CREATED THESE DOCUMENTS TO INCREASE COST OF ACQUISITION AND REDUC ING THE CAPITAL GAIN. HE NOTED FROM THE FIXED ASSETS SCHEDULE OF THE BALANCE SHEET TOTAL VALUE OF THE LAND AND BUILDING AS UNDER ; LAND 28,90,003 BUILDING 6763526 . THE ASSESSING OFFICER TREATED THE COST OF CONSTRUCTION INCURRED BY THE ASSESSEE T O BE FALSE AS ACCORDING TO HIM THE VERBAL AGREEMENT OF THE SALE OF THE PROPERTY WA S MADE IN JUNE, 2009 AS THE ASSESSEE HAS RECEIVED A SUM OF RS. 1,50,00,000/- V IDE CHEQUE NO. 27927 ON 24.6.2009. HE WAS OF THE VIEW THAT NO SELLER WILL S PEND THE MONEY IN CONSTRUCTION ONCE, HE HAS AGREED FOR THE SALE OF THE PROPERTY. W HEN QUESTIONED IN THIS REGARD, THE ASSESSEE SUBMITTED THAT THE CONSTRUCTIO N OVER THE PLOT WAS CARRIED OUT FROM 2000-01 TO 2009-10 AND IT IS A GENERAL PRA CTICE OF THE BUILDING MATERIAL SUPPLIER TO KEEP ON SUPPLYING MATERIAL FROM TIME TO TIME AND RAISE THE BILL AT CERTAIN PERIODICITY. MAXMIMIM BRICKS WERE CONSUMED ON TERRACE FOR PARAPET WALL. THE ASSESSING OFFICER REJECTED THE CLAIM OF T HE ASSESSEE AS IN HIS OPINION. THIS WAS TO AVOID THE TAX AND MADE THE ADDITION ON ACCOUNT OF UNDISCLOSED CAPITAL GAIN AMOUNT INTO RS. 1,06,08,738/- . 5. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. WE HEARD THE RIVAL SUBMISSIO N AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDER OF THE TAX AUTHORITIES BE LOW, WE NOTED THE ADDITION OF RS. 1,06,08,738/- HAS BEEN REDUCED BY THE CIT(A) TO RS. 1,00,77,656/-. THEREFORE THE ISSUE BEFORE US RELATE TO THE SUSTENANCE OF THE ADDITION OF RS. 1,00,77,656/- NOT RS. 1,06,08,738. WE NOTED THIS IS A CASE WHERE THE ASSESSEE HAS ENGAGED CONTRACTOR M/S AXIOM BUILDWELL PVT. LTD. TO WHOM A SUM OF RS. 85,00,000/- WAS PAID THE ASSESSING OFFICER SOUGHT THE CONFIRMATION FROM THE CONTRACTOR M/S. AXIUM BUILDWELL PVT. LTD. BY ISSUING THE NOTICE U/S 133(6) WHICH WAS RECEIVED BY THEM ON 26.3.2013. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ON ITA NO.5695/DEL./2014 4 25.3.2013 THE CONTRACTOR SUBSEQUENTLY SUBMITTED HIS REPLY AND CONFIRMED THE FACT EVEN IT IS NOT A CASE WHERE THE ASSESSEE HAS N OT ONLY SHOWN COST OF CONSTRUCTION IN HIS BOOKS OF ACCOUNT. FROM PAGE 73 TO 81 OF THE PAPER BOOK, IT IS AN APPARENT THAT M/S. AXIOM BUILDWELL PVT. LTD. HAS DULY REPLIED ALONG WITH THE COPY OF THE BILL RAISED BY THEM IN FAVOUR OF THE AS SESSEE. THE COPY OF WHICH IS AVAILABLE AT PAGE 78 AND ALSO THE COPY OF TDS CERTI FICATE AVAILABLE AT PAGE 80 AND 81 OF THE PAPER BOOK. NOT ONLY THIS, M/S. AXIOM BU ILDWELL PVT. LTD. (NOW, ATYA CONTRACTS PVT. LTD.) VIDE HIS LETTER DATED 30 TH MARCH, 2013 AVAILABLE AT PAGE 73 DULY CONFIRMED BEFORE THE ASSESSING OFFICER BY SUBM ITTING ITS PROFIT AND LOSS ACCOUNT, BANK ACCOUNT AND THE COPY OF THE INCOME TA X RETURN THAT THEY HAVE CARRIED OUT THE WORK AND RECEIVED A SUM OF RS. 85, 00,000/-. NOT ONLY THIS, WE NOTED THAT THE ASSESSING OFFICER HAS DULY SUBMITTED THE BILLS OF M/S. GANESH CARRIER, M/S. VIRENDER SINGH, M/S. SWAMI TRADERS AN D AXIOM WATER BILL SHOWING THE EXPENSES INCURRED ON RODI N. SAND ETC. FROM T HE MONTH OF JUNE AND IN JULY. THE ASSESSING OFFICER OR REVENUE DID NOT BROUGHT ON RECORD ANY EVIDENCE PROVING THAT BILLS ARE NOT GENUINE OR BOGUS EVEN NO CONFIRM ATION EXCEPT AXIOM BUILDWELL PVT. LTD. WAS ASKED FOR. THE ASSESSING OFFICER SIMP LY TREATED THE EXPENSES INCURRED BY THE ASSESSEE ON THE CONSTRUCTION TO BE BOGUS. THIS IS A SETTLED LAW IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT I N THE CASE OF DAULAT RAM RAWATMULL 87 ITR 349 THAT ONUS IS ON THE PARTY WHIC H ALLEGES THAT APPARENT IS NOT REAL. NO COGENT MATERIAL OR EVIDENCE IS BROUGHT TO OUR KNOWLEDGE BY THE LD. DR WHICH MAY PROVE THAT THE EXPENDITURE INCURRED BY THE ASSESSEE WERE BOGUS, NOT ONLY THIS, WE NOTED FROM THE COPY OF THE BALANC E SHEET AUDITED BALANCE SHEET OF THE ASSESSEE ALONG WITH SCHEDULE OF THE FIXED AS SETS AVAILABLE AT PAGE 67 THAT THE ASSESSEE HAS DULY SHOWN THE ADDITION IN THE BUI LDING AT NOIDA AMOUNTING TO RS. 1,06,08,738/-. THE ASSESSING OFFICER IN CORREC TLY MENTIONED IN THE ASSESSMENT ITA NO.5695/DEL./2014 5 ORDER THAT IN THE SCHEDULE OF THE FIXED ASSETS COST OF THE BUILDING HAS BEEN SHOWN ONLY AT RS. 6763526/-. 6. IN VIEW OF THIS FACT, WE SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE ADDITION MADE BY THE ASSESSING OFFICER CONFIRMED BY THE CIT(A) WHICH WAS JUST BASED ON THE ASSUMPTION AND THE PRESUMPTIONS WITHOU T BRINGING ANY EVIDENCE ON RECORD. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 11/12/2 017) SD/- (BEENA A. PILLAI) SD/- (P.K.BANSAL) JUDICIAL MEMBER VICE PRESIDENT DATED: 11 .12.2017 *BINITA* COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSIST ANT REGISTRAR ITA NO.5695/DEL./2014 6 DATE INITIAL 1. DRAFT DICTATED ON 11/12/2017 2. DRAFT PLACED BEFORE AUTHOR 11/12/2017 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 11 /12/2017 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. ITA NO.5695/DEL./2014 7