ITO WD 2(3), THANE V. MAC ENTERPRISES, THANE

ITA 5710/MUM/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3363 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 10-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIMATI BHARTI SINGH
• Section: 143(3); 142(1); 133A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM ./ I.T.A. NO. 5710 /MUM/20 1 1 ( / ASSESSMENT YEAR : 20 07 - 08 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE - 2, QUORESHI MANSION, GOKHALE ROAD, NAUPADA, THANE(W),400602 / VS. M/S MAC ENTERPRISES, A - 102, SUJATA SHOPPING CENTRE NAVGHAR ROAD, BHAYANDER (E), THANE ./ PAN : AAHEM6285G / REVENUE BY SHRIMATI BHARTI SINGH / / ASSESSEE BY NONE / DATE OF HEARING : 2 3 . 5.2016 / DATE OF PRONOUNCEMENT : 9. 6 .2016 / O R D E R PER RAJESH KUMAR, A. M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 28.04.2011 OF COMMISSIONER OF INCOME TAX (APPEALS) - II , MUMBAI (HEREINAFTER CALLED AS THE CIT(A) FOR ASSESSMENT YEAR 2007 - 08 . 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. THE NOTICE OF H EARING WAS SENT TO THE ASSESSEE BUT IT WAS RETURNED UN - SERVED DUE TO INCOMPLETE ADDRESS. HENCE, WE PROCEED TO DECIDE THE APPEAL EX - PARTE ON MERITS AFTER PERUSING THE RECORDS BEFORE US AND HEARING THE LD DR. 2 5710 /MUM/ 2011 3 . COMMON ISSUE RAISED IN THE ALL THE GROUNDS O F APPEAL IS WITH RESPECT TO THE DELETION OF ADDITIONS OF RS.55 LAKHS BY THE LD. CIT(A) WHICH WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE BY THE AO ON THE GROUND THAT THE ASSESSEE SURRENDERED RS. 90.00 LACS DURING THE COURSE OF SURVEY, HOWEVER WHILE FI LING THE RETURN OF INCOME ONLY DISCLOSED RS.35 LAKHS AND HENCE SHORT RETURN BY RS.55 LAKHS. 4 . THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED ITS E - RETURN OF INCOME ON 31.10.2007 DECLARING A TOTAL INCOME OF RS.53,36,520/ - WHICH WAS PROCESSED UNDER SECTION 143( 1 ) OF THE ACT. THE ASSESSEE WAS CARRYING ON THE BUSINESS OF BUILDER AND DEVELOPERS. IT IS PERTINENT TO MENTION THAT A SURVEY ACTION UNDER SECTION 133A WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 14.11.2006. DURING THE COURSE OF SURVEY, THE ASSESSEE MADE A DISCLOSURE VIDE LETTER DATED 20.11.2006 AND SURRENDERED RS.105 LAKHS FOR THE TOTAL PROJECT ON ACCOUNT OF CASH MONEY ACCEPTED AT THE TIME OF SALE OF FLATS. THE SAID DISCLOSURE WAS MADE OVER A PERIOD OF TWO YEARS I.E. ASSESSMENT YEAR S 2 006 - 07 AND 2007 - 08 FOR AN AMOUNT OF RS.15 LAK H S AND RS.90 LAKHS FOR AREA SOLD OF 13000 SQ.FT AND 35000 SQ.FT RESPECTIVELY. THE CASE WAS SELECTED FOR SCRUTINY AND THE STATUTORY NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE A SSESSEE. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS CREDITED AN ADDITIONAL INCOME ON ACCOUNT OF DISCLOSURE 3 5710 /MUM/ 2011 DURING SURVEY OF RS.35 .00 LAKHS AS AGAINST THE ACTUAL AMOUNT SURRENDERED OF RS.90 LAKHS VIDE LETTER DATED 20.11.2006. THE AO CALLED FOR THE EXPLANATION FROM THE ASSESSEE TO SHOW CAUSE AS TO WHY THE ASSESSEE HAS DECLARED INCOME SHORT BY RS.55 .00 LAKHS. IN REPLY, THE ASSESSEE SUBMITTED THAT THE ENTIRE PROJECT WAS NOT SOLD DURING THE ASSESSMENT YEA R 2007 - 08 AND THEREFORE THE AFORESAID INCOME WAS CREDITED TO THE PROFIT AND LOSS ACCOUNT PURSUANT TO THE DECLARATION MADE DURING THE SURVEY. THE ASSESSEE WHILE REFERRING TO THE FOOT NOTE TO THE DECLARATION MADE DURING SURVEY SUBMITTED THAT THIS DECLARAT ION WILL BE FOR THE COMPLETION AND SALE OF THE ENTIRE PROJECT BUT IN THE CASE THE FLAT S /SHOP S REMAIN ED UNSOLD TH E N THE PROFIT WILL BE DECLARED IN THE NEXT ASSESSMENT YEAR BECAUSE MONEY FOR SALE OF FLAT S WAS NOT RE C EIVED FOR EACH AND EVERY FLAT . THEREFO RE, THE AO WHILE REJECTING THE CONTENTION OF THE ASSESSEE, FRAMED THE ASSESSMENT VIDE ORDER DATED 24.12.2009 PASSED UNDER SECTION 143(3) AT RS.1,08,36,520/ - BY MAKING ADDITION OF RS.55 LAKHS. THE RELEVANT PART OF THE ASSESSMENT ORDER IS REPRODUCED BE LOW: BELOW THE ABOVE DECLARATION THE ASSESSEE PUT AN ADDITIONAL NOTE THAT THIS DECLARATION WILL BE FOR THE COMPLETION AND SALE OF THE ENTIRE PROJECT TILL THE A.Y. 2007 - 08, BUT IN THE CASE THE FLAT/SHOP WILL REMAIN UNSOLD THAN THE PROFIT WILL BE DECLARED IN NEXT ASSESSMENT YEAR WITHOUT TAX BECAUSE MONEY FOR SALE OF FLAT WAS NOT RECEIVED FOR EACH AND EVERY FLAT I REJECT THE ABOVE CONTENTS OF THE NOTE OF THE ASSESSEE. BECAUSE ONCE A DECLARATION FOR A PARTICULAR YEAR IS DECLARED IT CANNOT BE PROLONGED FOR ANY OTHER ASSESSMENT YEAR ON ANY REASONS. A QUESTION ARISES WHY THE ASSESSEE 4 5710 /MUM/ 2011 HAS SHOWN AREA SOLD OF 35000 SQ FEET IN THE AY. 2007 - 08 ON THE BASIS OF WHICH HE HAS MADE DECLARATION OF RS.90,00,000/ - TO T HAT SPECIFIC ASSESSMENT YEAR. IT IS MERELY AN ADMITTA NCE OF THE ASSESSEE DUE TO UNRECORDED TRANSACTIONS FOUND DURING THE SURVEY PROCEEDINGS. THE ASSESSEE COULD RECOMPUTE THE DECLARATION GIVEN AND I NF ORM THE AO ACCORDINGLY . BUT HE HAS NOT DONE SO. HE CHOOSE TO INCLUDE ONLY PART OF THE DECLARATION I.E RS.35, 00 , 000/ - ONLY IN AY. 2007 - 08 INSTEAD OF COMMITMENTS OF RS. 90,00,000/ - AND TRIED TO POSTPONE THE TAX LIABILITY . H E FURTHER IN PARA 4 OF THE LETTER HAS ADMITTED T HAT ' JUST TO BUY PEACE OF MIND AND TO AVOID LITIGATION WITH THE DEPARTMENT WE HAVE OFFERED THI S DECLARATION WITH THE UNDERSTANDING THAT NO PENAL PROCEEDINGS U/S.271 (1 ) (C) SHALL BE INITIATED ON THE FIRM'. WHEN ON THE BASIS OF SUCH A COMMITMENT THE DECLARATION IS MADE BY THE ASSESSEE, WHY ON OTHER GROUNDS PART OF THE DECLARATION I.E . RS.35,00,000/ - ONLY IS OFFERED FOR TAXATION AND NOT THE WHOLE DECLARATION OF RS.90,00,000/ - FURTHER ON VERIFICATION OF BALANCE SHEET LIABILITY SIDE IT IS SEEN THAT THE ASSESSEE HAS SHOWN ADVANCES RECEIVED AGAINST FLATS OF R S .53,97,500/ - D URING THE SURVEY ACTION IT WAS OB SERVE D THAT THE ASSESSEE W AS ACCEPTING ON MONEY OF RS.300/ - PER SQUARE FEET ON AND ABOVE THE FLAT COST. IF THIS ASPECT IS CON SIDERED TH E ASSESSEE HAS ALREADY RECEIVED UNRECORDED ON MONEY IN RESPECT OF BOOKING OF THESE FLATS. BECAUSE IN THE BUILDER BUSINES S LINE ON MONEY FACTOR IS ACCEPTED I N ADVANCE HENCE SALE OF FLAT IS NOT THE ISSUE, RECEIPT OF MONEY IS THE MAIN ISSUE. AS THE ASSESSEE HAS ALREADY IN RECEIPT OF ON MONEY ALONGWITH BOOKING AMOUNT THE QUESTION OF SALE OF FLAT IS NOT CONSIDERABLE ISSUE. CONSI DERING THE ABOVE FACTS THE ADDITIONAL INCOME AS OFFERED IN LETTER FILED ON 20/11/2006 IS CONSIDERED THE DECLARATION FOR THE AY.2007 - 08 AND ADDITIONS OF BALANCE UNCOVERED DECLARATION OF RS.55,00,000/- IS MADE TO THE INCOME OF THE ASSESSEE. AGGRIEVED BY T HE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE GAVE RELIEF TO THE ASSESSEE. AGGRIEVED BY THE DECISION OF THE LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 5 . THE LD.DR RE ITERATED THE FACTS OF THE CASE AND HEAVILY RELIED ON THE ORDER OF THE AUTHORITIES BELOW. 5 5710 /MUM/ 2011 6 . WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD.DR AND PERUSED THE MATERIALS PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT THE ASSESSEE VIDE DECLARATION DATED 20.11.2006 SURRENDERED AN AMOUNT OF RS.105 LAKHS OVER TWO YEARS I.E. ASSESSMENT YEAR 2006 - 07 AND 2007 - 08 RS.15 LAKHS AND RS.90 LAKHS RESPECTIVELY. WE ALSO FIND FROM THE RECORD S THAT T H E ASSESSEE DECLARED THIS AMOUNT IN RESPECT O F THE ENTIRE PROJECT AND WHILE MAKING THE DECLARATION THE ASSESSEE APPENDED A NOTE IN DECLARATION WHICH READS AS UNDER : THIS DECLARATION WILL BE FOR THE COMPLETION AND SALE OF THE ENTIRE PROJECT TILL THE A.Y. 2007 - 08, BUT IN THE CASE THE FLAT/SHOP WILL REMAIN UNSOLD THAN THE PROFIT WILL BE DECLARED IN NEXT ASSESSMENT YEAR WITHOUT TAX BECAUSE MONEY FOR SALE OF FLAT WAS NOT RECEIVED FOR EACH AND EVERY FLAT THE RECORDS BEFORE US REVEALS THAT THE DECLARATION WAS MADE FOR THE ENTIRE PROJECT AND SINCE SOME SHOPS AND FLATS REMAINED UNSOLD DURING THE ASSESSMENT YEAR 2007 - 08 AND THEREFORE SOME MONEY FOR THE FLATS WAS NOT RECEIVED AND THEREFORE THE INCOME OF RS.35 LAKHS WAS CREDITED IN THE BOOKS OF THE ASSESSEE AS PER THE TERMS OF DECL AR ATION MADE BY THE ASSES SEE DURING THE COURSE OF SURVEY ACTION. THE FIRST APPELLATE AUTHORITY HAS CLEARLY OBSERVED IN PARA 4.5 OF HIS APPEAL ORDER THAT THE ASSESSEE HAS NOT RETRACTED FROM THE STATEMENT MADE DURING THE COURSE OF SURVEY PROCEEDINGS. AS NOTED HEREINABOVE THE ASSES SEE DURING T HE COURSE OF SURVEY MADE THE DISCLOSURE OVER A PERIOD OF TWO YEARS I.E. AY 2006 - 07 AND 2007 - 08 . IN RESPECT OF ASSESSMENT YEAR 2007 - 08, THE DISCLOSURE 6 5710 /MUM/ 2011 WAS MADE ON THE CONDITION THAT THE ENTIRE INCOME WOULD BE DISCLOSED IF THE ASSESSEE SUCCEEDED IN THE SELLING OF FLATS AND SHOPS IN THAT YEAR. BUT IF SOME STOCKS IN THE FORM OF SHOPS AND FLATS REMAIN TO BE SOLD THEN THE SAME WOULD BE CARRIED FORWARD AND THE ADDITIONAL INCOME QUA THOSE FLATS AND SHOPS AS SOLD IN THE NEXT YEAR WOULD BE SHOWN ACCORDI NGLY . ACCORDINGLY, THE LD. CIT(A) FURTHER OBSERVED THAT THE INCOME OF RS.90 LAKHS WAS FURTHER SPREAD OVER THE PERIOD OF 2 YEARS AND RS.35 LAKHS WAS OFFERED FOR TAX IN THE ASSESSMENT YEAR 2007 - 08 AND THE BALANCE ADDITION INCOME OF RS.55 LAKHS DECLARE D DURING THE YEAR 2008 - 09 AND THUS ENTIRE INCOME OF RS.90 LAKHS STOOD O FFERED TO TAX IN TWO YEA R S. WE ARE IN COMPLETE AGREEMENT WITH THE OBSERVATIONS OF THE LD CIT(A) THAT UNLESS AND UNTIL THERE WAS A SALE OF PROPERTY THERE COULD NOT BE A QUESTION OF PAY MENT OF ANY TAX ON AMOUNT OF UNREALIZED SALE PRICE. FURTHER, THE AO IN ORDER TO BRING THE AMOUNT OF RS.90 LAKHS IN THE ASSESSMENT YEAR 2007 - 08 HAD TO BRING ON RECORD EVIDENCE S THAT THE ASSESSEE HAD SOLD THE AREA OF 250000 SQ. FT IN THAT YEAR. WE THE REFORE AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE ORDER OF FIRST APPELLATE AUTHORITY ARE OF THE OPINION THAT THE ASSESSEES ADDITIONAL INCOME OF RS.90 LAKHS WAS DULY ASSESSED AND OFFERED TO TAX IN THE ASSESSMENT YEARS 2007 - 08 AND 20 08 - 09 AND THEREFORE , THE ADDITION AS MADE BY T HE AO IS WRONG AND UNWARRANTED , ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD.CIT(A) AND UPHOLD THE SAME BY DISMISSING THE APPEAL OF THE REVENUE . 7 5710 /MUM/ 2011 7 . IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9TH JUNE , 201 6 SD SD ( MAHAVIR SINGH ) (RAJESH KUMAR) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 9 . 0 6 .2016 SR.PS:SRL: / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY [ / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI