Vishnu Apartments Pvt. Ltd., Jaipur V. DCIT, New Delhi

ITA 5710/DEL/2013

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6702 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 10-07-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 23-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Opportunity of being heard; Principle of natural justice; Set aside
• Section: 271(1)(c); 142(1); 153A; 250; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.1686/DEL./2012 (ASSESSMENT YEAR : 2006-07) ITA NO.5710/DEL./2013 (ASSESSMENT YEAR : 2006-07) M/S. VISHNU APARTMENTS PVT. LTD., VS. ACIT, C/O 4/17B, MGF HOUSE, CENTRAL CIRCLE 7, ASAF ALI ROAD, NEW DELHI. NEW DELHI. (PAN : AAACV6397E) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI I.P. BANSAL, ADVOCATE SHRI VIVEK BANSAL, ADVOCATE MS. SUMAN SAPRA, CA REVENUE BY : SHRI J.K. MISHRA, CIT DR DATE OF HEARING : 15.10.2019 DATE OF ORDER : 30.10.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : SINCE COMMON QUESTIONS OF FACTS AND LAW HAVE BEEN R AISED IN THE AFORESAID APPEALS, THE SAME ARE BEING DISPOS ED OFF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DISCUSSIO N. ITA NO.1686/DEL./2012 ITA NO.5710/DEL/2013 2 ITA NO.1686/DEL/2012 2. APPELLANT, M/S. VISHNU APARTMENTS PVT. LTD. (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESEN T APPEAL BEING ITA NO.1686/DEL/2012, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 27.01.2012 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, NEW DELHI QUA THE ASSESSMENT YEAR 2006-07 ON THE GR OUNDS INTER ALIA THAT:- GROUND NO.1: THE LD. COMMISSIONER OF INCOME TAX (APPEALS) -1, NEW DELHI (HEREINAFTER REFERRED TO AS 'CIT(A)') HAS ERRED IN LAW AND IN THE FACT & CIRCUMSTANCES OF THE CASE BY PASSING THE ORDER DATED 27.01.2012 U/S 250 OF TH E INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'T HE ACT'). THE ORDER PASSED BY THE CIT(A) IS ILLEGAL BE ING AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND AGAIN ST THE PROVISIONS OF THE ACT. GROUND NO.2: THE CIT(A) HAS ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ADDITION MADE BY THE ASSESSI NG OFFICER (HEREIN AFTER REFERRED TO AS 'AO') AMOUNTIN G TO RS.5,30,38,150 ON ACCOUNT OF ALLEGED GAIN ARISING O UT OF THE SALE OF LAND WITHOUT APPRECIATING THE FACTS IN PROPER PERSPECTIVE ESPECIALLY THE FACT THAT THE LAND SOLD OUT WAS PART OF INTEGRATED PROJECT AND THE SALE CONSIDERATI ON AMOUNTED TO RECOVERIES FROM THE PROJECT. THE TOTAL INCOME CONFIRMED AT RS. 5,30,91,542 IS ON LY ON SURMISES CONJECTURES AND SHOULD BE DELETED. 3. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE ISSUE AT HAND ARE : THE ASSESSEE IS ENGAGED INTO THE BUSINES S OF CONSTRUCTION/ LEASING OF RESIDENTIAL HOUSES, COMMERCIAL BUILDINGS , FLATS ETC. AND TO ACT AS BUILDERS, COLONIZERS AND CIVIL AND CONSTRUCTIONA L CONTRACTORS. ON THE ITA NO.1686/DEL./2012 ITA NO.5710/DEL/2013 3 BASIS OF SEARCH AND SEIZURE OPERATION CONDUCTED UND ER SECTION 132 OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT), NOTICE U/S 153A OF THE ACT WAS ISSUED AND IN RESPONSE THERETO, ASSESSEE PREFER RED TO TREAT THE RETURN FILED ON 17.02.2009 AS REPLY TO THE NOTICE. THEREA FTER, THE ASSESSEE WAS REQUIRED TO FILE NECESSARY DETAILS IN RESPONSE TO T HE NOTICE U/S 143 (2) AND 142(1) ALONG WITH A QUESTIONNAIRE. ASSESSEE WI TH AN OPENING STOCK OF RS.12.58 CRORES DURING THE YEAR UNDER ASSESSMENT PURCHASED LAND OF RS.12.13 CRORES FOR AN INTEGRATED PROJECT BY INCURR ING AN AMOUNT OF RS.7.51 CRORES AS CONSTRUCTION EXPENSES AND THEREBY REDUCED AN AMOUNT OF RS.12.66 CRORES AS RECOVERIES FROM THE PURCHASE OF TOTAL AMOUNT SHOWN UNDER THE HEAD CONSTRUCTION WORK-IN-PROGRESS AS PER FOLLOWING DETAILS :- AMOUNT (RS. IN LACS) OPENING STOCK AS ON 01.04.2006 (COMMERCIAL COMPLEX AT JAIPUR) LAND COST AT SHIKHOPUR (GURGAON) 1,231.71 26.85 ADD : LAND PURCHASED AT ULLAWAS, GURGAON LAND PURCHASED AT BEHRAMPUR, GURGAON SUBSEQUENTLY EXCHANGED IN LIEU OF LAND AT VILLAGE TIGRA, MAIDAWAS, GURGAON 735.61 477.84 CONSTRUCTION COST INCURRED AT COMMERCIAL COMPLEX AT JAIPUR 751.65 3,223.66 LESS : SALE CONSIDERATION FOR LAND AT ULLAWAS AT GURGAON 1,266.00 TOTAL 1,957.34 ITA NO.1686/DEL./2012 ITA NO.5710/DEL/2013 4 4. FINDING THE DETAILS GIVEN BY THE ASSESSEE AS TO ITS INTEGRATED PROJECT AS NOT SUSTAINABLE ON FACTS AND LAW, ASSESS ING OFFICER (AO) DISALLOWED ADJUSTMENT OF EXPENSES WHICH WERE NOT RE LATED TO PROJECT ON THE GROUND THAT THE ASSESSEE HAS SOLD LANDS WHICH WERE LYING AS STOCK-IN-TRADE IN DIFFERENT PLACES OTHER THAN THE P LACE WHERE THE MAIN PROJECT WAS CARRYING OUT AND THEREBY MADE AN ADDITI ON OF RS.5,30,38,150/- (RS.12,66,00,000/- - RS.7,35,61,85 0/- = RS.5,30,38,150/-). 5. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS CONFIRMED THE ADDITION BY DISMISSIN G THE APPEAL. FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 6. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UP ON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF TH E FACTS AND CIRCUMSTANCES OF THE CASE. 7. AT THE VERY OUTSET, LD. AR FOR THE ASSESSEE CONT ENDED THAT TO PROVE THE FACT THAT THE PROJECT WAS INTEGRATED ONE, ASSESSEE HAD PRODUCED RESOLUTION AND APPLICATION FORM OF JUMERA RESIDENTI AL BLOCK AT GURGAON WHICH WAS NOT CONSIDERED BY THE AO NOR THE SAME HAS BEEN CONSIDERED BY LD. CIT (A) WHICH IS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 8. UNDISPUTEDLY, ASSESSEE HAD ONE PROJECT AT JAIPUR AND FOUR LAND HOLDINGS AT SHIKHOPUR, ULLAWAS, TIGRA AND MAIDAWAS ALL IN GURGAON. IT ITA NO.1686/DEL./2012 ITA NO.5710/DEL/2013 5 IS THE CASE OF THE ASSESSEE THAT THE PROJECT AT GUR GAON IS AN EXTENSION OF THE PROJECT AT JAIPUR TO GIVE ALLOTMENT FOR RESIDEN TIAL COMPLEXES TO THE BUYERS OF SHOPS IN JAIPUR PROJECT. THE ISSUE BEFOR E THE AO TO BE DECIDED WAS, AS TO WHETHER THE PROJECT AT GURGAON IS AN EXTENSI ON OF METROPOLITAN PROJECT AT JAIPUR AND THIS QUESTION WAS DECIDED BY THE AO IN NEGATIVE AND TAXED THE PROFITS OF THE SALE OF LAND WHEREAS THE ASSESSEE HAS REDUCED THE SALE CONSIDERATION OF LAND FROM WORK-IN- PROGRESS AND HAS NOT OFFERED THE PROFITS FOR TAXATI ON. 9. WHEN WE EXAMINE THE CONTENTION RAISED BY THE LD. AR FOR THE ASSESSEE THAT THE EVIDENCE BROUGHT ON RECORD BY THE ASSESSEE THAT JUMERA RESIDENTIAL BLOCK AT GURGAON WAS PART OF THE INTEGR ATED PROJECT HAS NOT BEEN APPRECIATED BY THE AO AS WELL AS LD. CIT (A) P ARTICULARLY THE FINDINGS RETURNED BY THE LD. CIT (A) IN THE IMPUGNE D ORDER ON THE ISSUE IN QUESTION, IN PARA 4.2, IT IS APPARENT ON RECORD THAT SUFFICIENT OPPORTUNITY TO EXPLAIN AND ADDUCE THE EVIDENCE IN S UPPORT OF ITS STAND HAS NOT BEEN GIVEN. IT IS RECORDED BY LD. CIT (A) IN THE IMPUGNED ORDER THAT THE ASSESSEE HAS MERELY RELIED UPON BOARD RESO LUTION PASSED ON VARIOUS DATES BUT LD. CIT (A) DECLINED THE CONTENTI ON OF THE ASSESSEE ON THE GROUND THAT THE THIRD PARTY EVIDENCE TO SUBSTAN TIATE ITS CONTENTION THAT BOTH THE PROJECTS AT GURGAON AND JAIPUR ARE IN TEGRATED ONE HAS NOT BEEN LED. 10. WE ARE OF THE CONSIDERED VIEW THAT WHEN ASSESSE E HAS CATEGORICALLY RELIED UPON BOARD RESOLUTION OF THE C OMPANY TO PROVE THE ITA NO.1686/DEL./2012 ITA NO.5710/DEL/2013 6 FACT THAT BOTH THE PROJECT AT GURGAON AND JAIPUR WE RE INTEGRATED PROJECTS WHICH CERTAINLY GETS CORROBORATION FROM THE AUDITED ACCOUNTS, SUMMARILY DISMISSING THE CLAIM OF ASSESSEE IS CERTAINLY VIOLA TION OF RULES OF NATURAL JUSTICE. 11. LD. CIT (A) HAS NOT DELIBERATED IN ANY MANNER A S TO WHAT WOULD BE THE OUTCOME OF BOARD RESOLUTIONS RELIED UPON BY THE ASSESSEE WHEN EXAMINED IN THE LIGHT OF THE AUDITED ACCOUNTS. ALL THESE BOARD RESOLUTIONS ARE AVAILABLE AT PAGES 8 TO 10 OF THE P APER BOOK AND AUDITED FINANCIALS ARE AVAILABLE AT PAGES 11 TO 20 OF THE P APER BOOK. LD. CIT (A) WAS REQUIRED TO GET THE BOARD RESOLUTIONS EXAMINED IN THE LIGHT OF THE AUDITED FINANCIALS AND THE OTHER CIRCUMSTANTIAL EVI DENCE DURING APPELLATE PROCEEDINGS BUT HE HAS DISMISSED THIS ARGUMENT OF T HE ASSESSEE BY MERELY RECORDING THE FINDINGS THAT NO THIRD PARTY E VIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE. ALL THESE FACTS GO TO PROVE THAT THE ISSUE IS REQUIRED TO BE EXAMINED AFRESH BY THE AO I N THE LIGHT OF THE BOARD RESOLUTIONS AND AUDITED FINANCIALS OF THE COM PANY AND THE EVIDENCE AVAILABLE ON RECORD BY PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. CONSEQUENTLY, IMPUGNED ORDE R PASSED BY THE LD. CIT (A) IS SET ASIDE AND THE FILE IS REMANDED BACK TO THE AO TO DECIDE AFRESH AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. ITA NO.1686/DEL./2012 ITA NO.5710/DEL/2013 7 ITA NO.5710/DEL./2013 12. SINCE INITIATION OF PENALTY U/S 271(1)(C) OF TH E ACT IS IN CONSEQUENCE TO THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) NOW SET ASIDE, THE PENALTY APPEAL U/S 271(1)(C) IS ALSO SET ASIDE TO THE AO TO PROCEED IN ACCORDANCE WITH LAW AFTER PASSING FRESH ASSESSMENT ORDER ON THIS ISSUE, AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. CONSEQUENTLY, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 13. RESULTANTLY, BOTH THE APPEALS FILED BY THE ASSE SSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH DAY OF OCTOBER, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 30 TH DAY OF OCTOBER , 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-I, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.