The DCIT, Cent, Circle-1, Surat V. M/s. Surya Enclave Developers, Surat

ITA 707/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85599 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 07-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI N. S. SAINI, ACCOUNTANT MEMBER. ITA.NO.707/AHD/2011 (ASSESSMENT YEAR:2008-09) THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, SURAT APPELLANT VS. M/S. SURYA ENCLAVE DEVELOPERS, 2 ND FLOOR, ASCON CITY, CITY LIGHT ROAD, SURAT. RESPONDENT PAN: AABFS3082Q /BY APPELLANT : SHRI SUBHASH BAINS, CIT D.R. /BY RESPONDENT : SHRI RAJESH SHAH, A.R. !'# /DATE OF HEARING :23.01.2015 $%& !'# /DATE OF PRONOUNCEMENT :30.01.2015 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, A HMEDABAD, DATED 23.12.2010 FOR A.Y. 2008-09 ON THE FOLLOWING GROUND: I.T.A. NO. 707/AHD/11 A.Y. 08-09 [DCIT VS. M/S. SURYA ENCLAVE DEVELOPERS) PAGE 2 I) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND I N LAW, THE LD CIT(A) ERRED IN LAW AND IN FACTS IN DELETING THE ADDITION AT RS.48,97,984 MADE ON ACCOUNT OF ON- MONEY RECEIVED BY THE ASSESSEE ON SALE OF FLATS IN THE SURYA ENCLAVE PROJECT WITHOUT APPRECIATING THE DOCUMENTARY EVIDENCE REGARDING THE ON-MONEY RECEIVED BY THE ASSESSEE. II) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND I N LAW, THE LD CIT(A) ERRED IN LAW AND IN FACTS IN HOLDING THAT THE ON-MONEY RECEIVED IN ONE FLAT FROM AN NRI BUYER CANNOT BE THE BASIS FOR HOLDING THAT SAME ON-MONEY WAS RECEIVED BY THE ASSESSEE FOR ALL FLATS IGNORING THAT THE LD CIT(A) HIMSELF IN HIS ORDER HAS HELD THAT TH E BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE WERE N OT PROPER AND NOT RELIABLE AS COMPLETE RECEIPTS WERE N OT SHOWN . IN THE CIRCUMSTANCES, THE ESTIMATION DONE B Y THE ASSESSING OFFICER FOR OTHER FLATS BASED ON THE EVIDENCE AND ALSO CONSIDERING THE ASSESSEE'S OWN ADMISSION OF ON-MONEY DURING THE COURSE OF SEARCH I N THE SAME PROJECT AND THE MARKET TREND IN REAL ESTAT E OUGHT TO HAVE BEEN UPHELD BY THE LD CIT(A). III) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN LAW AND IN FACTS IN RESTRICT ING THE N.P ESTIMATION AT 15 % FROM 16% ESTIMATED BY THE ASSESSING OFFICE RELYING UPON THE DECISION OF HON.B LE ITAT IN OTHER CASES, WHERE THE FACTS ARE QUITE DIFF ERENT FROM THE FACTS OF THE INSTANT CASE AND ALSO IGNORED THAT THE ASSESSING OFFICER HAD MADE THE ESTIMATION CONSIDERING THE GROWTH OF PROPERTY MARKET ,THE MARK ET TREND IN REAL ESTATE AND ALSO BASED ON THE ON-MONEY RECEIVED BY THE ASSESSEE. 2. ASSESSEE IS A PARTNERSHIP FIRM. A SEARCH OPERA TION TOOK PLACE IN ASSESSEES CASE AND VARIOUS INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED. ASSESSEE HAS DEVELOPED SURY A ENCLAVE PROJECT. ONE SHRI DHEKHAR JAGDISCHANDRA, AN NRI, W HO PURCHASED FLAT NO.A-301 IN SURYA ENCLAVE ADMITTED I N HIS ON OATH U/S.131 OF INCOME TAX ACT THAT HE PAID ON MONE Y OF I.T.A. NO. 707/AHD/11 A.Y. 08-09 [DCIT VS. M/S. SURYA ENCLAVE DEVELOPERS) PAGE 3 RS.40,23,000/- FOR 3100 SQ.FT. FLAT WHOSE DOCUMENT PRICE WAS RS.24,80,000/-. ON THE BASIS OF THIS, ASSESSING OF FICER ADOPTED THE FIGURE OF RS.1296.77 PER SQ.FT. AS ON MONEY REC EIVED ON ALL THE FLATS OF PROJECT FOR TOTAL AREA OF 120000 SQ.FT . GIVING RISE THE TOTAL TURNOVER OF ON MONEY RECEIVED AT RS.15,56,12, 400/- AND APPLIED NET PROFIT RATE OF 16% GIVING TOTAL PROFIT OF RS.2,48,97,984/-. AS ASSESSEE HAS OFFERED INCOME O F RS.2 CRORE, ASSESSING OFFICER HAS MADE ADDITION FOR ADVA NCE OF RS.48,97,984/-. 2.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE AND HAVING CONSIDERED THE SAME, CIT(A) RESTRICTED T HE NET PROFIT @ 15% AND THEREBY ADDITION IN QUESTION WAS DELETED. 2.2 SAME HAS BEEN OPPOSED ON BEHALF OF REVENUE INTE R ALIA SUBMITTED THAT CIT(A) WAS NOT JUSTIFIED IN DELETING ADDITION OF RS.48,97,984/- MADE ON ACCOUNT OF ON MONEY RECEIVED BY ASSESSEE ON SALE OF FLATS IN SURYA ENCLAVE PROJECT WITHOUT APPRECIATING DOCUMENTARY EVIDENCE REGARDING ON MONE Y RECEIVED BY ASSESSEE. LEARNED DEPARTMENTAL REPRESE NTATIVE SHRI SUBHASH BAINS SUBMITTED THAT ON MONEY RECEIVED IN ONE PLOT FROM NRI BUYER WAS SOUND BASIS FOR CALCULATING ON MONEY RECEIVED BY ASSESSEE FOR ALL FLATS. IN SUCH SITUAT ION, CIT(A) WAS NOT JUSTIFIED IN RESTRICTING NET PROFIT ESTIMATION @ 15% FROM 16% ESTIMATED BY ASSESSING OFFICER. ACCORDINGLY, O RDER OF CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER O N THE ISSUE BE I.T.A. NO. 707/AHD/11 A.Y. 08-09 [DCIT VS. M/S. SURYA ENCLAVE DEVELOPERS) PAGE 4 RESTORED. ON OTHER HAND, LEARNED AUTHORIZED REPRES ENTATIVE SHRI RAJESH SHAH RELIED ON THE DECISION OF CIT(A). 2.3 AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATER IAL ON RECORD, IT IS FOUND UNDISPUTED THAT BOOKS OF ACCOUNTS MAINTAINED BY ASSESSEE WERE NOT PROPER AND NOT RELI ABLE AS COMPLETE RECEIPTS WERE NOT SHOWN. ASSESSEE HIMSELF ADMITTED RECEIPT OF ON MONEY AND DISCLOSED AN AMOUNT OF RS.2,00,00,000/- AS UNACCOUNTED INCOME ON THIS ACCO UNT. THE STATEMENT RECORDED OF ONE PURCHASER CONFIRMED THE F ACT THAT ASSESSEE WAS GETTING ON MONEY. IN VIEW OF THESE, A SSESSING OFFICER WAS JUSTIFIED IN REJECTING BOOKS OF ACCOUNT S. HOWEVER, ESTIMATION OF ON MONEY DONE BY ASSESSING OFFICER WA S NOT FOUND CORRECT BY CIT(A) AS FIGURES OF ON MONEY RECE IVED IN ONE FLAT FROM AN NRI BUYER CANNOT BE THE BASIS FOR HOLD ING THAT SAME ON MONEY WAS RECEIVED BY ASSESSEE FOR ALL FLAT S AND ALSO FROM THE PARTNER TO WHOM 11 FLATS WERE GIVEN. FURTH ER NET PROFIT RATE OF 16% APPLIED BY ASSESSING OFFICER WAS NOT FOUND JUSTIFIED BY CIT(A). HE OBSERVED THAT ITAT BENCH D ECIDED IN CASE OF NARESH B AGARWAL HUF AND MANGATULAL HARLALK AR HUF, NET PROFIT RATE OF 15% AS REASONABLE BY CIT(A). DR AWING THE STRENGTH FROM VARIOUS JUDICIAL PRONOUNCEMENTS OF IT AT BENCH, CIT(A) OBSERVED THAT ASSESSEE HAS SHOWN NET PROFIT OF RS. 2,00,00,000/- AND FOR THIS NET PROFIT @ 15%, CORRES PONDING ON MONEY COMES TO RS. 13,33,00,000/-.AS AGAINST ON MON EY ESTIMATED BY ASSESSING OFFICER AT RS. 15,56,12,400/ - (INCLUDING FLATS GIVEN TO PARTNER WITH ON-MONEY). HE TOOK OUT THE FLATS I.T.A. NO. 707/AHD/11 A.Y. 08-09 [DCIT VS. M/S. SURYA ENCLAVE DEVELOPERS) PAGE 5 GIVEN TO PARTNER, PROFIT SHOWN BY ASSESSEE OF RS.2, 00,00,000/- WAS MORE THAN THE REASONABLE AMOUNT OF NET PROFIT R ECEIVED ON BALANCE FLATS. ACCORDINGLY, ADDITION IN QUESTION WA S DELETED. THIS REASONED FACTUAL FINDING OF CIT(A) NEEDS NO IN TERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 3. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMIS SED. PRONOUNCED IN THE OPEN COURT ON THIS THE 30 TH DAY OF JANUARY, 2015. SD/- SD/- (N. S. SAINI) (SHAILENDR A KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R TRUE COPY S.K.SINHA ' ' ' ' !( !( !( !( )(&! )(&! )(&! )(&! / COPY OF ORDER FORWARDED TO:- 1. ,- / REVENUE 2. / ASSESSEE 3. 00! 1 / CONCERNED CIT 4. 1- / CIT (A) 5. (56 !, , / DR, ITAT, AHMEDABAD 6. 69: ;< / GUARD FILE. BY ORDER / ' , =/ 0, , ?