SAI VISHWA PROMOTERS BUILDERS AND DEVELOPERS, PUNE V. ITO WARD 3(4), PUNE

ITA 59/PUN/2020

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The case involves Sai Vishwa Promoters Builders & Developers, a partnership firm engaged in the business of promoting and developing properties, which appealed against the order of the Commissioner of Income Tax (Appeals)-3, Pune. The appeal challenged the best judgment order of assessment passed under section 144 by the Income Tax Officer for the assessment year 2009-10. The main issues in the appeal were the rejection of claims for expenses related to the transfer of development rights and construction costs, which were part of the consideration for the property transfer. The Tribunal, after considering the submissions and evidence, including bank statements and agreements, upheld the lower authorities' decisions, rejecting the claims due to lack of sufficient evidential support.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135569 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-12-2022
• Assessment Year: 2009-2010
• Appeal Filed On: 15-01-2020
• Other Referred Cases: Durga Prasad More vs. Income Tax Officer, Sumati Dayal vs. Income Tax Officer
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income
• Section: 68; 148; 144

Judgement Text

आयकर अपीलीय न्यायाधिकरण, पुणे “बी” न्यायपीठ, पुणे में ॥ ITAT-Pune Page 1 of 8 IN THE INCOME TAX APPELLATE TRIBUNAL, PUNE “B” BENCH, PUNE BEFORE HON’BLE SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.59/PUN/2020 ननधधारण वर्ा / Assessment Year : 2009-10 Sai Vishwa Promoters Builders & Developers S.No.82/23, Near Ashish Garden, Kothrud, Pune – 411 038 PAN: ABKFS9649A . . . . . . . अपीलार्थी / Appellant बनाम / V/s Income Tax Officer, Ward 3(4), Pune . . . . . . . प्रत्यर्थी / Respondent द्वारा / Appearances Assessee by : None Revenue by : Shri M. G. Jasnani सुनवधई की तधरीख / Date of conclusive Hearing:05/12/2022 घोर्णध की तधरीख / Date of Pronouncement : 02/01/2023 आदेश / ORDER PER G. D. PADMAHSHALI, AM; By the present appeal, the assessee challenged the order of Commissioner of Income Tax (Appeals)-3, Pune [for short “CIT(A)”] dt. 18/10/2019 passed u/s 250 of the Income-tax Act, 1961 [for short “the Act”], confirming the best judgment order of assessment dt. 17/03/2016 passed u/s 144 by the Income Tax Officer, Ward-3(4), Pune [for short “AO”] for assessment year [for short “AY”] 2009-10 on the following grounds; Sai Vishwa Promoters Builders And Developers ITA No.59/PUN/2020 A.Y. 2009-10 ITAT-Pune Page 2 of 8 1) On the facts and in the circumstances of the case the Learned Commissioner of Income Tax (Appeals) 3 erred in rejecting claim of expenses of Rs.12,00,000/- being part of the consideration for transfer of development rights/purchase price of the property. 2) The learned Commissioner of Income Tax (Appeals) 3 erred in rejecting the appellant’s claim of Rs.60,00,000/- being cost of construction for agreed area given to the owners and forming part of consideration for transfer. 3) The appellant craves leave to add, amend, alter, or delete any of the above grounds of appeal. 2. When the matter called up for hearing, none represented the assessee, mindful to the conduct of appellant showing no appearance on as many as ten occasions, we in the interest of justice proceed to adjudicate the matters following rule 24 of the ITAT- Rules, which empowers the Tribunal to decide the appeal filed by the appellant ex–parte on merits where the appellant does not appear in person or through an authorised representative and the same is Sai Vishwa Promoters Builders And Developers ITA No.59/PUN/2020 A.Y. 2009-10 ITAT-Pune Page 3 of 8 done placing on record a no-objection from the respondent revenue. It is needless to mention further that, the proviso to the said rule carves out an exception by empowering the Tribunal to recall the ex–parte order, if the appellant appears afterwards and satisfies placing evidential material before the Tribunal that, there was sufficient cause for his non– appearance when the appeal was called for hearing and in the event of failure to substantiate the non- appearance, the recall exercise dies out. 3. After hearing to rival contentions of both the parties; and subject to the provisions of rule 18 ITAT, Rules,1963 perused case records, case laws relied upon by the appellant as well the respondent and duly considered the facts of the case in the light of settled legal position forewarned to either party. 4. We note that, the assessee is a resident partnership firm engaged in the business of promoters’ developers and builders, has for AY failed to file its ITR, whose case on the basis of information of sale of Sai Vishwa Promoters Builders And Developers ITA No.59/PUN/2020 A.Y. 2009-10 ITAT-Pune Page 4 of 8 transferable development rights [for short “TDR”] was reopened u/s 148 by service of notice dt. 26/02/2015 and called upon the assessee to file ITR which remained unresponded. When further opportunities remained futile, a final show cause notice u/s 144 of the Act was served, however the assessee continued to opt out of proceedings. In the event of failure on the part of assessee, the Ld. AO proceeded to assess total income in the light of TDR Sale and bank statements from two banks viz; Union bank of India and Seva Vikas Co-op. Bank and culminated the proceedings bringing to tax the entire sale proceeds of TDR ₹85.00Lakhs as business income and the credit summation of ₹1,08,64,405/- as unexplained cash credit u/s 68 of the Act. 5. In the course of first appellate proceedings, the assessee filed certain additional evidences in support of its claim for deduction of relevant expense in arriving at the taxable income, which were forwarded to Ld. AO for appropriate comments thereon and on Sai Vishwa Promoters Builders And Developers ITA No.59/PUN/2020 A.Y. 2009-10 ITAT-Pune Page 5 of 8 the basis of remand report, the Ld. CIT(A) restricted the entire addition to ₹61,24,405/- after allowing a credit for closing WIP of ₹1,16,29,240/-, construction expense of ₹6,10,760/- and sum of ₹10.00Lakhs paid through banking channels towards compensation for delayed completion of project & additional cost of construction incurred by the assessee. 6. Insofar as the ground number 1 relating to claim of expense against the TDR sale is concerned, we note that, Ld. CIT(A) while restricting the additions has allowed the balance of closing WIP as deduction therefrom which undisputedly is inclusive of expense of ₹12.00Lakhs paid to 24 dwellers incurred in relation to liability undertaken by an agreement entered therewith and hence we concur with both Ld. TAB in rejecting the claim for the reason expounded at para 7.10.1 of the first appellate order as; “7.10.1 Another component of expense of Rs 88,10,760/- is Rs 12,00,000/- claimed on account of payment to slum dwellers. On this issue, the AO has reported that the appellant firm relied on para 3(B) of Development Agreement dated 31.03.2008 wherein it is Sai Vishwa Promoters Builders And Developers ITA No.59/PUN/2020 A.Y. 2009-10 ITAT-Pune Page 6 of 8 stated that Rs 50,000/- will be paid to each fat holder in cash. However, in the said para, it is also mentioned that said payment will be made before the commencement of construction. The PMC issued commencement certificate on 26.03.2007 and the assessee has incurred expense of Rs 58,69,240/- towards the project till 31.3.2008. Therefore, the payment of Rs 12,00,000/- must be made before 26.03.2007 or in FY 2007-08 and not in the financial year 2008-09. Thus the claim of expenses of Rs 12,00,000/- during the year is not correct and not acceptable. I agree with the AO. Thus, this indicates that the amount of Rs 12,00,000/- should be part of closing WIP of Rs 1,16,29,240/- and should not be allowed. Therefore the claim of Rs 12,00,000/- is rejected.” 7. Coming to ground number 2 of the appeal memo, we observed that, the assessee claimed to have undertaken construction of additional space admeasuring 6000 sq.ft. by a notarised agreement and pursuant to which an amount of ₹70.00Lakhs was claimed to have incurred towards additional consideration for delay in completion and towards addition construction cost. However the appellant failed to adduce any evidential documents in support its claim for payment vis-à-vis incurring of such Sai Vishwa Promoters Builders And Developers ITA No.59/PUN/2020 A.Y. 2009-10 ITAT-Pune Page 7 of 8 expense to the satisfaction of both the Ld. TAB except laying a bank statement showcasing a payment of ₹10.00Lakhs made to Shri Tanaji Kumbhar through banking channel in terms of notarised agreement vide agreement dt. 10/01/2008 entered there between. 8. We note that, the balance payment of ₹60.00Lakhs claimed to have been incurred / paid in cash under a notarised agreement, however in the absence of bills, invoices and payment vouchers in support of the claim made by the appellant, both the Ld. TAB rejected the same applying the test of preponderance of human probability and in given facts & circumstance, we find no reasons to interfere in the light of Hon’ble Supreme Court decision in “Durga Prasad More” 82 ITR 540 and “Sumati Dayal” 214 ITR 801 whereby their lordships have held that; "the Courts and Tribunal have to judge the evidences before them by applying the test of human probabilities after considering the surrounding circumstances" Consequently the ground number 2 raised stands dismissed. Sai Vishwa Promoters Builders And Developers ITA No.59/PUN/2020 A.Y. 2009-10 ITAT-Pune Page 8 of 8 9. Resultantly, the appeal of the assessee is DISMISSED in aforestated terms. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Monday 02 nd day of January, 2023. -S/d- -S/d- S. S. VISWANETHRA RAVI G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; नदनधंक / Dated : 02 nd day of January, 2023. आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to : 1. अपीलधथी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The Pr. CIT-2, Pune (MH-India) 4. The CIT(A)-3, Pune(MH-India) 5. DR, ITAT, Pune Bench ‘B’, Pune 6.गधर्ाफ़धइल / Guard File. आदेशधनुसधर / By Order वऩरष्ठ ननजी सनिव / Sr. Private Secretary आयकर अपीलीय न्यधयधनधकरण, पुणे / ITAT, Pune.