ACIT 19(1), MUMBAI V. GOVIND B BAJAJ, MUMBAI

ITA 6590/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1418 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 06-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 31-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR RAJENDRA KUMARDR
• Assessee Lawyers: KEYURI DESAI
• Section: 143(3); 142(1)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, G MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NOS.6590/MUM/2014 ASSESSMENT YEAR: 2010-11 ACIT-22(1), ROOM NO.322, 3 RD FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-400012 / VS. GOVIND B BAJAJ, FLAT NO.53, 33-B, SHEWA APARTMENT, 3 RD ROAD, KHAR (W), MUMBAI-400052 ( / REVENUE) ( !'# $ /ASSESSEE) PAN. NO . AFNPSB6353D ITA NOS.3243/MUM/2015 ASSESSMENT YEAR: 2011-12 ACIT-22(1), ROOM NO.322, 3 RD FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-400012 / VS. GOVIND B BAJAJ, FLAT NO.53, 33-B, SHEWA APARTMENT, 3 RD ROAD, KHAR (W), MUMBAI-400052 ( / REVENUE) ( !'# $ /ASSESSEE) PAN. NO . AFNPSB6353D !'# $ / ASSESSEE BY SHRI VIPUL JOSHI & MISS KEYURI DESAI / REVENUE BY DR. RAJENDRA KUMAR-DR ITA NO.6590/MUM/2014 & ITA NO.3243/MUM/2015 GOVIND B. BAJAJ 2 % & $ ' / DATE OF HEARING : 06/02/2017 & $ ' / DATE OF ORDER: 05/04/2017 / O R D E R PER JOGINDER SINGH(JUDICIAL MEMBER) THESE TWO APPEALS ARE BY THE REVENUE AGAINST THE IMPUGNED ORDERS DATED 11/08/2014 (FOR ASSESSMENT YE AR 2010-11) AND 18/03/2015 (FOR ASSESSMENT YEAR 2011-1 2) OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI. IN BOTH THE APPEALS, THE DEPARTMENT HAS CHALLENGED THE ADDITION OF RS.2,06,61,988/- (ASSESSMENT YEAR 2011-12) AND RS.1,53,57,319(ASSESSMENT YEAR 2010-11), WHICH WAS DELETED BY THE LD. COMMISSIONER OF INCOME TAX (APPE AL) IGNORING VARIATION IN THE RATES OF FLATS, SOLD BY T HE ASSESSEE AND THE ANOMALY IN SETTLING THE PRICES ADOPTED ON A PARTICULAR DAY FOR A PARTICULAR FLATS TO DIFFERENT PERSONS. 2. DURING HEARING, THE LD. DR, DR. RAJENDRA KUMAR, DEFENDED THE ADDITION MADE BY THE ASSESSING OFFICER BY CONTENDING THAT THERE WAS A VAST DIFFERENCE OF RATE S OF SALE IN THE SAME BUILDING AND THE ONUS WAS NEVER DISCHARGED BY THE ASSESSEE. IT WAS CONTENDED THAT ANY AND EVERY BUSIN ESS MAN WANTS TO MAXIMIZE HIS PROFIT, WHICH WAS NOT SUBSTAN TIATED BY THE ASSESSEE. THE ASSESSMENT ORDER WAS DEFENDED, W HEREIN, THE LD. ASSESSING OFFICER TOOK THE AVERAGE OF THE S ALE RATES AS NO PLAUSIBLE REASONING WAS ADDUCED BY THE ASSESSEE. OUR ATTENTION WAS INVITED TO PARA 5.8 AND 9 OF THE ASSE SSMENT ORDER ALONG WITH PARA 6.5.3 OF PAGE-22 FOR ASSESSME NT YEAR ITA NO.6590/MUM/2014 & ITA NO.3243/MUM/2015 GOVIND B. BAJAJ 3 2010-11 OF THE IMPUGNED ORDER. THE CRUX OF THE ARG UMENT IS THAT UNDER HAND MONEY EXCHANGE HANDS, THEREFORE, TH E ADDITION WAS RIGHTLY MADE BY THE ASSESSING OFFICER. 2.1. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE, CONTENDED THAT LETTER DATED 18/03/2014 WA S FILED BY THE ASSESSEE AND THE RATES DEPENDS UPON MANY FAC TORS AS ONE FLAT MAY FACE NALLA, WHEREAS, THE OTHER FLAT MA Y FACE ROAD/PARK OR BETTER LOCATION. IT WAS CONTENDED THAT NO ENQUIRY WAS MADE BY THE ASSESSING OFFICER FROM ANYB ODY AND THE ASSESSING OFFICER HAS NOT DISPUTED THE LOCATION , LIKE NALLA, ETC. IT WAS CLAIMED THAT THE EXPLANATION FI LED BEFORE THE ASSESSING OFFICER WAS IGNORED BY FURTHER CONTENDING THAT BOOKS OF ACCOUNTS WERE NOT REJECTED BY THE LD. COMM ISSIONER OF INCOME TAX (APPEAL) AND DEPARTMENT IS NOT IN APP EAL. RELIANCE WAS PLACED UPON THE DECISION IN NEELKAMAL REALTORS & ERECTORS INDIA PVT. LTD. VS DCIT (2013) 145 ITD 2 17(MUM.), DCIT VS M/S NARIMAN DEVELOPERS P. LTD. (ITA NO.3695/MUM/2009), ORDER DATED 20/05/2011 AND DCIT VS M/S SUMER VILLE INVESTMENTS (ITA NO.2657/MUM/2007), ORDER DATED 17/06/2011. IN REPLY THE LD. DR, INVITED OUR ATTENTION TO THE LETTER DATED 18/03/2014, WHEREIN, NO EXPLANATION WAS FILED BY THE ASSESSEE AND EVEN TODA Y NO PLAUSIBLE REASONING/EXPLANATION WAS ADDUCED. THE HU GE VARIATION IN THE SALE RATE WAS NOT EXPLAINED BY THE ASSESSEE AT ANY STAGE. ITA NO.6590/MUM/2014 & ITA NO.3243/MUM/2015 GOVIND B. BAJAJ 4 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACT S, IN BRIEF, ARE THAT THE ASSESSEE IS A BUILDER AND DEVELOPER, D ECLARED INCOME OF RS.74,10,350/- (ASSESSMENT YEAR 2011-12) ON 30/09/2011, WHICH WAS PROCESSED U/S 143(3) OF THE A CT. LIKEWISE, FOR ASSESSMENT YEAR 2010-11, THE ASSESSEE DECLARED INCOME OF RS.52,91,780/- ON 14/10/2010. TH IS RETURN WAS ALSO PROCESSED U/S 143(1) OF THE ACT. BO TH THE CASES WERE SELECTED FOR SCRUTINY, THEREFORE, NOTICE U/S 143(2) OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. NOTICE U/S 142(1) OF THE ACT ALONG WITH DETAILED QUESTIONN AIRE WERE ALSO ISSUED AND SERVED UPON THE ASSESSEE. IN RESPON SE TO THESE NOTICES, THE ASSESSEE ATTENDED THE PROCEEDING S. AS PER ASSESSMENT ORDER, THE ASSESSEE WAS ASKED TO PRODUCE THE NECESSARY DETAILS WITH RESPECT TO SUNDRY CREDITORS, ADVANCE RECEIVED, WORKING OF PROJECTS, UNSECURED LOANS, ETC . AS PR THE REVENUE, IN SPITE OF SEVERAL OPPORTUNITIES, PROVIDE D TO THE ASSESSEE, THE ATTITUDE OF THE ASSESSEE WAS INDIFFER ENT AND TRUE DETAILS WERE NOT FURNISHED WITH RESPECT TO GEN UINENESS OF THE CLAIM OF THE ASSESSEE. AS PER THE TAX AUDIT RE PORT, SUBMITTED ALONG WITH THE RETURN, IT WAS FOUND THAT THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNT ING AS PER WHICH THE INCOME AND EXPENDITURE IS ACCOUNTED F OR ON ACCRUAL BASIS. THE ASSESSEE FOLLOWS PERCENTAGE COMP LETION METHOD FOR ACCOUNTING THE PROFITS OF THE PROJECTS. DURING THE RELEVANT PERIOD, THE ASSESSEE SHOWED INCOME OF RS.52,91,780/- (ASSESSMENT YEAR 2010-11) WHEREAS, PROFIT ITA NO.6590/MUM/2014 & ITA NO.3243/MUM/2015 GOVIND B. BAJAJ 5 OF BUSINESS WAS RS.37,01,141/-. SO FAR AS, THE ISS UE IN HAND IS CONCERNED, THE ASSESSEE FURNISHED THE DETAILS OF SALE OF FLATS I.E. NAME AND ADDRESSES OF THE PARTY TO WHOM FLATS WERE SOLD, WHICH ARE SUMMARIZED AS UNDER:- ITA NO.6590/MUM/2014 & ITA NO.3243/MUM/2015 GOVIND B. BAJAJ 6 FROM THE AFORESAID DETAILS, IT WAS NOTICE BY THE ASSESSING OFFICER THAT THERE WAS A HUGE VARIATION O F RATES OF SALE PER SQ. FEET RANGING FROM RS.3519 TO RS.8657. THE ASSESSEE WAS ASKED TO RECONCILE AND EXPLAINED THE H UGE VARIATION. THE ASSESSEE WAS ASKED AS TO WHY THE SE LLING RATE MAY NOT BE DECIDED AS PER THE DECISION OF THE TRIBU NAL IN THE CASE OF DIAMOND INVESTMENT. AS PER THE REVENUE, NEI THER ANY REPLY WAS FILED BY THE ASSESSEE NOR WAS ANY SATISFA CTORY EXPLANATION ADDUCED. THE LD. ASSESSING OFFICER ULTI MATELY SUMMARIZED/NOTED THE FOLLOWING FACTS:- 1. THE ASSESSEE HAS SHOWN RATE OF SALE FOR THE SAME P ROJECT WITH THE VARIATION RANGING FROM 3519 TO 8657 PER SQ.FT. 2. AS PER DETAILS SUBMITTED BY THE ASSESSEE VIDE LET TER DATED 29.1.2013, IT IS SEEN THAT ASSESSEE HAS SOLD TWO FL AT BEARING NO. 701 C AND 702C TO THE SAME PERSON I.E. MANILAL WADHWA ON THE SAME DATE OF AGREEMENT I.E. 25.3.2010 WITH DIFFERENT RATE A S 701C FOR 6611.57 PER SQ.FT. AND 702C FOR 7058.82 PER SQ.FT . 3. IT IS FURTHER NOTED THAT FLAT SOLD TO MR. MISHRALAL SAHNI ON 18.11.2008 AT THE RATE OF 7,428.86 PER SQ.FT. AND FLA T SOLD TO MR. O'SOUZA ON 11.6.2009 AT THE RATE OF 5416 PER SQ.FT. FLAT WAS SOLD IN THE YEAR OF 2008 AT THE RATE OF 7428.86 PER SQ.FT. 4. AND IN THE YEAR 2009 FLAT WAS SOLD AT THE RATE OF 5416 PER SQ. FT WHICH IS LOWER THAN THE EARLIER YEAR RATE. 5. SIMILARLY AT SR. NO.9, FLAT WAS SOLD TO MR. MAHABAL A SHETTY ON 9.4.2009 AT THE RATE OF 8657.627 PER SQ.FT. AND AT S R. NO. 10 FLAT WAS SOLD TO MR. AZAD M. SINGHVI ON 23.12.2009 AT TH E RATE OF 4820.936 PER SQ.FT. 2.3. THE LD. ASSESSING OFFICER AS WELL AS THE LD. DR BEFORE US, POINTED OUT THAT THE ASSESSEE BOOKED THE FLATS FOR DIFFERENT RATES IN THE YEAR 2008, 2009 AND 2010 WHE RE THERE ITA NO.6590/MUM/2014 & ITA NO.3243/MUM/2015 GOVIND B. BAJAJ 7 IS VAST DIFFERENCE OF SALE RATES OF THE SAME PROJEC TS, WHICH IS GENERALLY NOT POSSIBLE. THE LD. DR QUOTED SOME FLAT S, WHERE, THERE WAS A VAST DIFFERENCE. CONSIDERING THE TOTALI TY OF FACTS AND FOLLOWING THE DECISION OF THE TRIBUNAL IN THE C ASE OF M/S DIAMOND INVESTMENT AND PROPERTIES (ITA NO.5537/MUM/2009) ORDER DATED 29/07/2010 MADE THE ADDITION. THE LD. ASSESSING OFFICER WAS OF THE VIEW THAT ADDITIONAL SALES INCOME AMOUNTING TO RS.1,53,57,319 /-, BEING EARNED BY THE ASSESSEE, WAS NOT OFFERED FOR T AXATION, THUS, HE WORKED OUT THE DIFFERENCE AS INDICATED IN BOTH THE APPEALS. 2.4. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCO ME TAX (APPEAL), THE ASSESSEE TOOK THE PLEA THAT DUE T O LOCATION ADVANTAGES/DISADVANTAGES LIKE THE FLATS FACING THE PARK, NALLA, ROAD SIDE, ETC. AND CONSIDERING VARIOUS DECI SIONS, IT WAS HELD THAT THE EXPLANATION FURNISHED BY THE ASSE SSEE WAS NOT CONSIDERED AND THEREFORE, THE ADDITION WAS DELE TED. THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE THIS T RIBUNAL. 2.5. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE BOOKED THE FLATS IN DIFFERENT RAT ES IN DIFFERENT YEARS, WHEREIN, THERE IS A VAST DIFFERENC E IN THE SALE RATES OF FLATS. ADMITTEDLY, SUCH A VAST DIFFERENCE IS PRACTICALLY ITA NO.6590/MUM/2014 & ITA NO.3243/MUM/2015 GOVIND B. BAJAJ 8 NOT POSSIBLE IN THE REAL ESTATE IN A SIMILAR PROJEC T AT THE SAME PLACE. AT THE SAME TIME, THIS IS ALSO AN ADMITTED P OSITION THAT DUE TO DIFFERENT REASONS LIKE PARK FACING FLAT, ROA D FACING FLAT, SEA FACING FLAT, NALLA FACING FLAT, JHUGGI CLUSTER FACING FLAT, THERE MAY BE MINOR VARIATION IN THE BUILDING. HOWE VER, WE NOTE THAT THE ASSESSING OFFICER HAS NOT EXAMINED TH E ISSUE IN THE CORRECT PERSPECTIVE AND MERELY MADE THE ADDITIO N SOLELY BY TAKING HIGHEST SALE RATES FOR DIFFERENT YEARS WHICH WAS NOT THE CORRECT APPROACH. THE ASSESSEE WAS IN POSSE SSION OF SALES AGREEMENT WITH THE VARIOUS BUYERS AND CONFIRM ATION IN THIS REGARD COULD HAVE BEEN OBTAINED BY THE ASSESSI NG OFFICER FROM THE RESPECTIVE BUYERS, WHICH HAS NOT BEEN DONE SO. THE FIRST APPELLATE AUTHORITY HAS ALSO NOT CONTRADICTED THE OBSERVATION MADE BY THE ASSESSING OFFICER IN RIGHT PERSPECTIVE AND IGNORED THE FACTUAL MATRIX. AT THE SAME TIME, THE LD. ASSESSING OFFICER HAS NOT QUOTED SALE INSTA NCES EITHER FROM THE SAME BUILDING OR FROM THE ADJOINING BUILDI NGS, THEREFORE, WITHOUT DELVING MUCH DEEPER INTO THE ISS UE AND CONSIDERING THE FACTUAL MATRIX, WE DEEM IT APPROPRI ATE TO REMAND BOTH THESE APPEALS TO THE FILE OF THE ASSESS ING OFFICER TO BRING COGENT MATERIAL TO SUBSTANTIATE HIS OBSERV ATION. THE ASSESSEE IS ALSO DIRECTED TO SUBSTANTIATE HIS CLAIM WITH THE HELP OF DOCUMENTARY EVIDENCES. THE ASSESSING OFFICE R IS DIRECTED TO EXAMINE THE CLAIM OF THE ASSESSEE AFTER AFFORDING DUE OPPORTUNITY TO THE ASSESSEE, THUS, BOTH THESE A PPEALS OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES ON LY. ITA NO.6590/MUM/2014 & ITA NO.3243/MUM/2015 GOVIND B. BAJAJ 9 FINALLY, BOTH THE APPEALS OF THE REVENUE ARE ALLOWE D FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 05/04/2017. SD/- SD/- ( MANOJ KUMAR AGGARWAL ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# /JUDICIAL MEMBER % MUMBAI; ) DATED : 05/04/2017 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,- / THE APPELLANT (RESPECTIVE ASSESSEE) 2. ./,- / THE RESPONDENT. 3. 0 0 1$ ( + ) / THE CIT, MUMBAI. 4. 0 0 1$ / CIT(A)- , MUMBAI, 5. 34 .$! , 0 +' ! 5 , % / DR, ITAT, MUMBAI 6. 6' % / GUARD FILE. / BY ORDER, /3+$ .$ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , % / ITAT, MUMBAI