M/s. Deoria Realty Pvt. Ltd., Delhi V. DCIT, New Delhi

ITA 6536/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6166 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 22-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Keywords: Rejection of books of accounts; Principle of natural justice
• Section: 27

Judgement Text

1 ITA NO. 6536/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO. 6536/DEL/20 16 (A.Y 2012-13) DEORIA REALTY PVT. LTD. 6, COMMUNITY CENTRE, SAKET, DELHI AACCD4222A (APPELLANT) VS DCIT CIRCLE-7(1) NEW DELHI (RESPONDENT) APPELLANT BY MS. KANIKA JAIN, ADV RESPONDENT BY MS. ASHIMA NEB, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 13/10/2016 PASSED BY CIT(A)-3, NEW DELHI FOR ASSESSMENT YEAR 2012-13. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1) THAT ORDER MADE U/S 250 OF THE INCOME TAX ACT DA TED 13/10/2016 BY THE LEARNED CIT (APPEALS)-37 IS UNJUST AND UNFAIR A S ORDER WAS PASSED EX- PARTE WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE ASSES SEE/APPELLANT OF BEING HEARD. 2) THAT BY PASSING THE ORDER EX-PARTE THE ID CIT (APPEALS)-37 CONFIRMED THE ORDER OF DCIT A CIRCLE 7(1) IN TOTO WHICH IS BAD IN LAW. 3) THAT THE ADDITIONS MADE BY THE ID AO AMOUNTING TO RS. 1,67,68,950/- ON ACCOUNT OF UNDISCLOSED SALES IS TOTALLY WRONG AND U NCALLED FOR AS THE ENTIRE SALES HAD ALREADY BEEN BOOKED IN THE BOOKS OF THE P ARENT COMPANY UNDER THE DATE OF HEARING 10.01.2019 DATE OF PRONOUNCEMENT 24.01.2019 2 ITA NO. 6536/DEL/2016 TERMS OF AGREEMENT. TAXING THE SAME INCOME TWICE IS TOTALLY UNFAIR AND IS AGAINST ALL THE PRINCIPLES OF EQUITY AND NATURAL JU STICE. THE ID AO NOT ONLY ERRED AS ABOVE BUT FURTHER ERRED IN TAXING THE WHOLE SALES CONSIDERATION INSTEAD OF THE INCOME ELEMENT THEREIN . IN OTHER WORDS THE FULL SALES VALUE OF THE PROPERTIES ARE TAXED WITHOUT EVE N DEDUCTING THE COST OF THE PROPERTIES THERE FROM. 4) THE IMPOSITION OF PENALTY U/S 27 IB OF THE ACT FOR NON AUDIT OF ACCOUNTS U/S 44AB OF THE INCOME TAX ACT IS UNJUST AS THE ENT IRE SALES HAD ALREADY BEEN BOOKED IN THE PARENT COMPANY AS STATED ABOVE. 5) THE REJECTION OF BOOKS OF ACCOUNTS U/S 145(3) OF T HE INCOME TAX ACT IS TOTALLY UNFAIR, UNJUST AND WITHOUT ANY BASIS. 3. DURING THE YEAR UNDER CONSIDERATION, THE ASSESS EE IS ENGAGED IN THE BUSINESS OF REAL ESTATE ACTIVITIES. VIDE LETTER DA TED 23.12.2014, THE ASSESSEE FURNISHED COPY OF LEDGER ACCOUNT OF LAND COST (KOCH I), WHEREIN OPENING BALANCE AS ON 01.04.2011 IS SHOWN AT RS. 8,60,69,245/- AND CLOSING BALANCE AS ON 31.03.2014 IS SHOWN AT RS.7,00,83,575/-. OPENING BA LANCE OF LEGAL AND OTHER MISCELLANEOUS CHARGES AS ON 01.04.2011 WAS SHOWN AT RS.3,13,100/- AND CLOSING BALANCE AS ON 31.03.2014 WAS SHOWN AT RS.2, 54,948. ACCOUNT OF STAMP DUTY AND REGISTRATION CHARGES, OPENING BALANCE AS O N 01.04.2011 WAS SHOWN AT RS.69,62,651 /- AND CLOSING BALANCE AS ON 31.03.201 4 WAS SHOWN AT RS.56,69,475/-.THE ASSESSING OFFICER OBSERVED THAT THERE IS AN APPARENT DIFFERENCE AS PER THE DETAILS FURNISHED BY THE ASSE SSES, AND AS PER THE AUDITED BALANCE SHEET AND INCOME TAX RETURN FURNISHED BY TH E ASSESSEE. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS OF THE ASSES SEE. THE ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF UNDISCLOSED SALES AMOUN TING TO RS.1,67,68,950/-. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT (A). THE CIT (A) DISMISSED THE APPEAL OF T HE ASSESSEE EX-PARTE. 5. THE LD. AR SUBMITTED THAT GROUND NO. 1 & 2 ARE N OT PRESSED. HENCE, WE 3 ITA NO. 6536/DEL/2016 ARE DISMISSING GROUND NOS. 1 & 2. 6. AS REGARDS GROUND NO.3, THE LD. AR SUBMITTED THA T IN THE SUBSEQUENT ASSESSMENT YEAR NO ADDITION WAS MADE ON ACCOUNT OF THIS ADDITION. THE LD. AR SUBMITTED THAT THE DEVELOPMENT AGREEMENT WAS PRODUC ED BEFORE THE ASSESSING OFFICER AS WELL AS CIT (A) AND TAX SHOULD BE DETERM INED IN THE HANDS OF HOLDING COMPANY AND NO ADDITION ON THIS ACCOUNT BE MADE TO THE INCOME OF THE ASSESSEE. 7. THE LD. DR SUBMITTED THAT THE TITLE REMAINS WITH THE ASSESSEE COMPANY AND DEVELOPMENT AGREEMENTS DOES NOT SHOW THAT THE T ITLE WAS PASSED TO HOLDING COMPANY. THEREFORE, THE ASSESSING OFFICER RIGHTLY REJECTED THE BOOKS OF ACCOUNTS. THE LD. DR RELIED UPON THE ORDER OF THE C IT(A) AND THE ASSESSMENT ORDER. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. FROM THE ASSESSMENT ORDER, THERE IS NO P LAUSIBLE REASON GIVEN BY THE ASSESSING OFFICER WHILE REJECTING THE BOOKS OF ACCO UNTS AS PER THE PROVISIONS OF INCOME TAX ACT, 1961. THE CIT(A) ALSO PASSED AN EX -PARTE ORDER. THEREFORE, IT WILL BE APPROPRIATE TO REMAND BACK THIS MATTER TO T HE FILE OF THE ASSESSING OFFICER. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN PR OPER OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPALS OF NATURAL JUSTICE. 9. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2019 . (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 24/01/2019 R. NAHEED * 4 ITA NO. 6536/DEL/2016 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 21.01.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21.01.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 2 5 .01.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 2 5 .01.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2 5 .01.2019 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK