The DCIT, Central Circle-1, Surat V. M/s. Global Enterprise, Surat

ITA 722/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85594 (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; Valuation report

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.722/AHD/2011 (ASSESSMENT YEAR:2008-09) THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, SURAT APPELLANT VS. M/S. GLOBAL ENTERPRISE, 2 ND FLOOR, ASCON CITY, CITY LIGHT ROAD, SURAT. RESPONDENT PAN: AAGFG5015P /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 GROUNDS: I.T.A. NO. 722/AHD/11 A.Y. 08-09 [DCIT VS. M/S. GLOBAL ENTERPRISE) 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.85,53,656 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 AND ALSO THE VALUATION REP ORT OF THE VALUER. 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 IN THE SISTER CON CERN CANNOT BE THE BASIS FOR HOLDING THAT SAME ON-MONEY WAS RECEIVED BY THE ASSESSEE ON THE SALE OF OTHER F LATS IGNORING THAT THE LD CIT(A) HIMSELF IN HIS ORDER HA S HELD THAT THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE FIRM WERE NOT PROPER AND NOT RELIABLE AS COMPLETE RECEIPTS WERE NOT SHOWN. IN THE CIRCUMSTANCES, THE ESTIMATION DONE BY THE ASSESSING OFFICER FOR OTHER FLATS BASED ON THE EVIDENCE OF ON - MONEY IN THE PROJECT OF THE SISTER CONCERN OF THE ASSESSEE IN THE VICINITY AS WELL AS BASED ON THE VA LUERS REPORT 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 ESTIMATION OF N.P 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 IGNORIN G THAT THE ASSESSING OFFICER HAD MADE THE ESTIMATION CONSIDERING THE VALUATION REPORT, AND ASSESSEES OW N ADMISSION OF ON-MONEY IN THE PROJECT. 2. ASSESSEE IS A PARTNERSHIP FIRM AND ENGAGED IN T HE CONSTRUCTION ACTIVITY. A SEARCH OPERATION TOOK PLA CE IN ASSESSEES CASE, ONE FILE BS-20 WAS SEIZED WHICH IN DICATED THAT DOCUMENTATION PRICE AGREED IN RESPECT OF FLAT NO. D -507 OF BUILT I.T.A. NO. 722/AHD/11 A.Y. 08-09 [DCIT VS. M/S. GLOBAL ENTERPRISE) PAGE 3 UP AREA 3500 SQ.FT. IN SURYA PALACE WAS OF RS.31,50 ,000/- WHEREAS PRICE VALUED BY GOVERNMENT APPROVED REGISTE RED VALUER WAS RS.57,75,000/- THUS, THERE WAS DIFFERENC E OF RS.750/- PER SQ.FT. WHICH WAS RECEIVED AS ON MONEY. ASSESSING OFFICER FURTHER OBSERVED THAT IN A SISTER CONCERN, ON MONEY OF RS.1,296/- PER SQ.FT. WAS RECEIVED IN SURYA ENCLAVE . THEREFORE, ASSESSING OFFICER ADOPTED RATE OF ON MONEY RECEIVED AT THE AVERAGE RATE OF RS.1,023.50 PER SQ.FT. FOR 92 FLATS AND RS.750/- PER SQFT. FOR 40 FLATS (PURCHASED BY THE PARTNER) A ND ESTIMATED ON MONEY TURNOVER OF RS.44,28,35,350/- AND APPLIED NET PROIT RATE OF 16% GIVING TOTAL PROFIT OF RS.7,08,53,656/- . AS ASSESSEE HAS OFFERED INCOME OF RS.6,23,00,000/-, ASSESSING O FFICER HAS MADE ADDITION FOR DIFFERENCE OF RS.85,53,656/-. 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) GRANTED RELI EF TO ASSESSEE. 2.2 SAME HAS BEEN OPPOSED ON BEHALF OF REVENUE INTE R ALIA LEARNED DEPARTMENTAL REPRESENTATIVE SHRI SUBHASH BA INS SUBMITTED THAT CIT(A) WAS NOT JUSTIFIED IN DELETING ADDITION OF RS.85,53,656/- MADE ON ACCOUNT OF ON MONEY RECEIVED BY ASSESSEE ON SALE OF FLATS IN SURYA PALACE PROJECT W ITHOUT APPRECIATING DOCUMENTARY EVIDENCE REGARDING ON MONE Y RECEIVED BY ASSESSEE AND ALSO THE VALUATION REPORT OF VALUER. CIT(A) ERRED IN HOLDING THAT ON MONEY RECEIVED IN O NE FLAT IN SISTER CONCERN CANNOT BE THE BASIS FOR HOLDING THAT SAME ON I.T.A. NO. 722/AHD/11 A.Y. 08-09 [DCIT VS. M/S. GLOBAL ENTERPRISE) PAGE 4 MONEY RECEIVED BY ASSESSEE ON SALE OF OTHER FLATS I GNORING THAT CIT(A) HIMSELF IN HIS ORDER HAS HELD THAT BOOKS OF ACCOUNTS MAINTAINED BY ASSESSEE WERE NOT PROPER AND NOT RELI ABLE AS COMPLETE RECEIPTS WERE NOT SHOWN. IN THE CIRCUMSTA NCES, ESTIMATION DONE BY ASSESSING OFFICER FOR OTHER FLAT S BASED ON EVIDENCE OF ON MONEY IN THE PROJECT OF SISTER CONCE RN OF ASSESSEE IN THE VICINITY AS WELL AS BASED ON VALUER S REPORT AND ALSO CONSIDERED ASSESSEES OWN ADMISSION OF ON MONE Y DURING COURSE OF SEARCH IN SAME PROJECT AND MARKET TREND I N REAL ESTATE OUGHT TO HAVE BEEN UPHELD BY CIT(A). CIT(A) FURTHER ERRED IN RESTRICTING THE ESTIMATION OF NET PROFIT @ 15% FROM 16% ESTIMATE BY ASSESSING OFFICER. IN SUM AND SUBS TANCE, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ORDER OF CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER ON THE ISSU E BE RESTORED. ON OTHER HAND, LEARNED AUTHORIZED REPRESENTATIVE SH RI RAJESH SHAH RELIED ON THE DECISION OF CIT(A). 2.3 AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATER IAL ON RECORD, WE FIND IT IS 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.6,23,00,000/- AS UNACCOUNTED INCOME ON THIS ACCO UNT. IN VIEW OF ABOVE, CIT(A) HELD THAT ASSESSING OFFICER W AS JUSTIFIED IN REJECTING BOOKS OF ACCOUNTS. IT IS NOT ISSUE BE FORE US. HOWEVER, THE ESTIMATION OF ON MONEY DONE BY ASSESSI NG OFFICER WAS NOT FOUND CORRECT AS FIGURES OF ON MONEY RECEIV ED IN ONE I.T.A. NO. 722/AHD/11 A.Y. 08-09 [DCIT VS. M/S. GLOBAL ENTERPRISE) PAGE 5 FLAT OF SISTER CONCERN CANNOT BE THE BASIS FOR HOLD ING THAT SAME ON MONEY WAS RECEIVED BY ASSESSEE FOR ALL FLATS. A T THE BEST, ON MONEY RECEIVED ON THE BASIS OF VALUATION REPORT FOR FLAT OF ASSESSEES PROJECT, CAN ONLY BE CONSIDERED WHICH IS ONLY RS.750/- PER SQ.FT. BY TAKING THIS, TOTAL ON MONEY RECEIVED ON TOTAL SQ. FT. AREA OF 470800 SQ.FT. FOR 132 FLATS G IVES ON MONEY OF RS.35,31,00,000/- ON WHICH ASSESSEE HIMSELF HAS DIS CLOSED PROFIT OF RS.6,23,00,000/- WHICH GIVES NET PROFIT R ATE OF 17.64%. HENCE, THERE WAS NO JUSTIFICATION FOR MAKI NG ANY ADDITION. THIS REASONED FACTUAL FINDING OF CIT(A) NEEDS NO INTERFERENCE 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, , ?