SHANISH CONSTRUCTIONS PVT LTD, MUMBAI V. ITO WARD 11(1)(2), MUMBAI

ITA 672/MUM/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 5112 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 27-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Set aside
• Section: 143(3); 133(6); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI BASKARAN BR, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA Nos.672 & 671/M/2020 Assessment Years: 2010-11 & 2011-12 M/s. Shanish Constructions Pvt. Ltd., 83, Oshiwara Link Plaza, Opp. Oshiwara Police Station, Near Link Road, Oshiwara, Andheri (W), Mumbai – 400 102 PAN: AAFCS0716D Vs. Income Tax Officer, Ward 11(1)(2), Aayakar Bhavan, M.K. Road, Mumbai - 400020 (Appellant) (Respondent) Present for: Assessee by : Shri Nishit Gandhi, A.R. Revenue by : Shri Kanhiya Lal Kanak, D.R. Date of Hearing : 18 . 05 . 2022 Date of Pronouncement : 21 . 06 . 2022 O R D E R Per : Kuldip Singh, Judicial Member: For the sake of brevity aforesaid cross appeals bearing common question of law and facts are being disposed of by way of composite order. 2. Appellant M/s. Shanish Constructions Pvt. Ltd. (hereinafter referred to as the assessee) by filing present appeals sought to set aside the impugned order even dated 24.07.2014 passed by ITA Nos.672 & 671/M/2020 M/s. Shanish Constructions Pvt. Ltd. 2 Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)], on the grounds inter alia that: ITA No.672/M/2020 A.Y.2010-11 “1.0. The order of the Hon'ble Commissioner of Income-tax [Appeals] -18 ('CIT(A)') in so far as it is against the Appellant is opposed to law, weight of evidence, natural justice, facts and circumstances of the case. 2.0. In the facts and the circumstance of the case, the Hon'ble CIT(A)-18 erred upholding the order of the Ld AO for not giving an Opportunity to cross examine/verify the statement given by Ms Rakhi which was used by the Ld AO against the Appellant in respect of alleged payment given to the Appellant in respect of sale of the property to her. 3.0. Without Prejudice to the above, in the facts and the circumstance of the case, CIT(A)-18 erred in confirming the Ld AO's addition of Rs. 3,05,870/- made between the differences in closing balance of Rs.2,547,880 of the Appellant and closing balance of Rs. 23,27,500/- of M7s Rakhi Sawant, one of the buyer of properly sold by the Appellant without considering the facts that there was no difference between ;he Appellant and Ms Rakhi Sawant. 4.0. In the facts and the circumstance of the case, the Hon'ble CIT(A) erred in upholding addition of Rs.12,046/- on account of difference in the amount received as advance from customer and the value shown in the sale agreement without considering the fact that the entire income will be offered for sale in subsequent on completion of the project. 5.0. The Appellant craves leave to add, alter, delete or substitute any of the grounds urged above.” ITA No. 671/M/2020 A.Y. 2011-12 1. On the facts of the case and in law, the Hon. CIT(A)-18 erred in upholding additions of Rs.420,420/- on account of differences in amount received as advances from Customers and the Value in the Sale Agreement, which was not received and without considering the fact that the Real Estate Project was not completed due to pending Occupancy Certificate as at the end of the relevant year under Appeal and the Appellant had projected loss in the Project. ITA Nos.672 & 671/M/2020 M/s. Shanish Constructions Pvt. Ltd. 3 2. On the facts of the case and in law, the Hon. C1T(A)-18 erred in upholding additions of Rs.420,420/- on account of differences in amount received as advances from Customers and the Value in the Sale Agreement, which ':vas not received and without considering the fact that the the Appellant Company had not yet received the Occupancy Certificate and will have to incur further expenses towards Legal and Consultant Fee, BMC fee and other related expenses to obtain the OC and after incurring the expenses there would be loss in the Project. 3. In the facts and the circumstance of the case, the Hon'ble CIT(A) erred in upholding addition of Rs.420,420/- on account of difference in the amount received as advance from customer and the value shown in the sale agreement without considering the fact that the entire income will be offered for sale in subsequent on completion of the project.” 3. This is second round of litigation. The original assessment under section 143(3) of the Income Tax Act, 1961 (for short ‘the Act’) was framed by the Assessing Officer (AO) at the total income of Rs.1,88,68,614/- and Rs.15,74,770/- for A.Y. 2010-11 and 2011- 12 respectively by making certain disallowances and additions. 4. Assessee carried the matter before the Ld. CIT(A) by way of filing appeals who had partly allowed the same. Feeling aggrieved the assessee approached the Tribunal by way of filing appeals who has set aside the file to the AO to pass such order. 5. While framing fresh assessment under section 143(3) read with section 254 of the Act, the AO made an addition of Rs.3,05,870/- being the difference in the closing balance of Rs.25,47,880/- of the assessee and closing balance of Rs.23,27,500/- of Ms. Rakhi Sawant one of the buyers of the property sold in A.Y. 2010-11. The AO also made addition of Rs.12,046/- on account of difference in amount received as advance ITA Nos.672 & 671/M/2020 M/s. Shanish Constructions Pvt. Ltd. 4 from customer and value shown in the sale agreement of Rs.4,20,420/- in A.Y. 2011-12. 6. The Ld. CIT(A) in the second round of litigation upheld the addition made by the AO by dismissing the appeal. Feeling aggrieved the assessee has come up before the Tribunal by way of filing present appeals. 7. We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto. 8. We have perused para 13 of the order passed by the co- ordinate Bench of the Tribunal dated 11.01.2017 in the first round of litigation wherein the issue as to addition of Rs.3,05,870/- on account of difference in closing balance in case of Ms. Rakhi Sawant one of the buyers of the property sold by the assessee was sent back to the AO to decide after considering the confirmation made by Ms. Rakhi Sawant for A.Y. 2010-11. 9. However, perusal of the fresh assessment order passed under section 143(3) read with section 254 of the Act shows that the AO had issued a notice under section 133(6) of the Act which was reported to have received back unserved and no latest address of the parties have been furnished. Assessee company in its letter dated 11.10.2018 also submitted that Ms. Rakhi Sawant’s statement was used against the assessee without providing an opportunity of cross ITA Nos.672 & 671/M/2020 M/s. Shanish Constructions Pvt. Ltd. 5 examination/verification to the assessee by the AO and further submitted that they have not received the said amount from her towards the sale of the unit. 10. Though the AO has mentioned in para 4(iii) that enough opportunities were given to the assessee but keeping in view the facts and circumstances of the case wherein addition has been made merely on the basis of statement of Ms. Rakhi Sawant qua which no opportunity to cross examine/verify the statement has been given to the assessee and the fact that the Ld. A.R. for the assessee stated that one opportunity may be granted so that he can produce the confirmation of Ms. Rakhi Sawant as she was out of country before the AO, we are of the considered view that to substantiate the ends of justice and to decide the matter once for all by making proper enquiry this issue is remitted back to the AO to decide afresh after providing adequate opportunity to the assessee company. The Ld. D.R. for the Revenue has also not opposed this proposition to decide the matter on the basis of proper enquiry by the AO. 11. So far as addition of Rs.12,046/- made by the AO and confirmed by the Ld. CIT(A) on account of difference in the amount received as advance from customer and the value shown in the sale agreement is concerned, the assessee has failed to furnish any explanation by producing the relevant record and we are of the considered view that this issue has been decided by thrashing the facts on the basis of law applicable thereto and as such this addition of Rs.12,046/- made by the AO and confirmed by the Ld. CIT(A) is hereby upheld. ITA Nos.672 & 671/M/2020 M/s. Shanish Constructions Pvt. Ltd. 6 12. So far as addition of Rs.4,20,420/- made by the AO and confirmed by the Ld. CIT(A) on account of difference in amount received by advances from customer by the assessee and the value in the sale agreement is concerned, this issue was also remitted back by the co-ordinate Bench of the Tribunal in the first round of litigation with a direction that if the amount has been brought to tax in the subsequent years then no addition is required to be made. 13. Then the AO issued the notice to the assessee to furnish necessary details to explain the above differences of Rs.38,22,000/- and assessee has submitted that in respect of Amrit Project OC has been received and the entire sales shall be offered to tax after receipt of the OC. Then again assessee company was given final opportunity to furnish the details qua bringing the differential amount to tax but they have not furnished the same. 14. When the issue was to be decided on the basis of facts and record available with the assessee company which they have not produced before the AO despite sufficient opportunities rather made a further submission that the OC of the Amrit Project has not been received and till the completion of this project the assessee will have to incur further expenses towards legal and consultant fees, BMC fee and other related expenses to obtain the OC and after incurring the said expenses there would be loss in the Amrit Project. This submission/explanation of the assessee has been rejected by the AO/ Ld. CIT(A). 15. We are of the considered view that this issue pertains to A.Y. 2011-12 and assessee has not brought on record any facts nor ITA Nos.672 & 671/M/2020 M/s. Shanish Constructions Pvt. Ltd. 7 plausible explanation as to why the OC has not yet been issued in the face of the fact that when units have been sold away way back in A.Y. 2011-12, it is difficult to believe that the OC has not been issued. No document whatsoever has been brought on record by the assessee to substantiate its contention. So we are of the considered view that the AO as well as the Ld. CIT(A) have rightly decided the issue against the assessee by making impugned addition. Consequently, grounds No.1, 2 & 3 raised by the assessee in A.Y. 2011-12 are hereby dismissed. 14. In view of what has been discussed above, the appeal filed by the assessee for A.Y. 2010-11 is partly allowed for statistical purposes and appeal bearing No.671/M/2020 for A.Y. 2011-12 is dismissed. Order pronounced in the open court on 21.06.2022. Sd/- Sd/- (BASKARAN BR) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 21.06.2022. * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench ITA Nos.672 & 671/M/2020 M/s. Shanish Constructions Pvt. Ltd. 8 //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.