M/S.ARHAM NEEJDEEP REALTORS, MUMBAI V. ACIT CIRCLE-4, THANE

ITA 766/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7302 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 07-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SOMNATH WAJALE
• Assessee Lawyers: S TANY SALDHANA
• Section: 133A; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A, BENCH M UMBAI BEFORE SHRI G. MANJUNATHA, AM & SHRI RAM LAL NEGI, J M ITA NO.766/MUM/2018 ( ASSESSMENT YEAR :2014-15 ) M/S. ARHAM NEEJDEEP REALTORS SHOP NO.8, MILAN APARTMENT NEAR POST OFFICE VASAI (W)-401 202 VS. ACIT, CIRCLE-4 THANE, ROOM NO.02 AWING, ASHAR IT PARK WAGLE INDL.ESTATE THANE-400 064 PAN/GIR NO. AA SFA6761C APPELLANT ) .. RESPONDENT ) ASSESSEE BY STANY SALDHANA REVENUE BY SOMNATH WAJALE DATE OF HEARING 1 7 / 07 /201 9 DATE OF PRONOUNCEME NT 17 / 0 7 /201 9 / O R D E R PER G.MANJUNATHA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX APPEALS23, THANE DATED 27/11/2017 AND IT PERTAINS TO THE ASSESSMENT YEAR 2014-15. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) , {LD. CIT (A) } ERRED IN UPHOLDING THE ADDITION OF RS. 26,98,750/- TO THE RE TURNED INCOME OF THE ASSESEE ALLEGEDLY ON ACCOUNT OF DIFFERENCE BETWEEN THE ESTIMATED PROFIT AS ON DATE OF SURVEY AND ACTUAL PROFIT AS PE R AUDITED PROFIT AND LOSS ACCOUNT AS ON 31.03.2014 RELYING ON THE STATEM ENT RECORDED WITHOUT ANY APPROPRIATE REASON AND ONLY ON THE BASI S OF ASSUMPTION AND CONJECTURES. 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), (LD. CIT (A)} ERRED IGNORING THE SUBMISSIONS MADE BEFORE HIM. ITA NO.766//MUM/2018 M/S. ARHAM NEEJDEEP REALTORS 2 3. THE APPELLANT CRAVE L EAVE TO ADD, AMEND OR DELETE THE ABOVE GROUND. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A FIRM ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT AND CON STRUCTION OF RESIDENTIAL AND COMMERCIAL BUILDINGS FILED ITS RETURN OF INCOME FOR AY 2014-15 ON 30/03/2015 DECLARING TOTAL INCOME AT RS. 1,15,01,25 0/-. IN THIS CASE, SURVEY U/S 133A WAS CARRIED OUT ON 09/12/2013. DURI NG THE COURSE OF SURVEY CERTAIN INCRIMINATING EVIDENCE IN THE FORM O F DAIRY WAS FOUND. A STATEMENT OF PARTNER SHRI. PARESH J.AJMERA WAS RECO RDED ON OATH U/S 131, DURING WHICH HE WAS CONFRONTED WITH INCRIMINATING E VIDENCES. IN RESPONSE, AS PER QUESTION NO.11, IN THE STATEMENT, HE HAS ADMITTED UN- DISCLOSED INCOME TOWARDS ON-MONEY RECEIPTS TO THE E XTENT OF RS. 82 LACS. FURTHER, HE HAD ALSO ADMITTED ESTIMATED PROFI T FOR THE FINANCIAL YEAR (FY) 2013-14 WILL BE AROUND RS. 60 LACS. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT ALTHOUGH ASSESSEE HAD ADMITTED ESTIMATED PROFIT OF RS. 60 LACS FOR FY 2013-14, BUT IN RETURN OF INCOME FILED FOR THE YEAR , HAS ADMITTED NET PROFIT OF RS. 33,01,250/- ONLY THEREFORE, CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY ADDITION SHALL NOT BE MADE TOWARDS PROFIT A DMITTED DURING THE COURSE OF SURVEY. IN RESPONSE, THE ASSESSEE VIDE IT S LETTER DATED 21/12/2016 EXPLAINED REASONS FOR REDUCTION IN PROF IT FOR THE YEAR WHEN, COMPARED TO ESTIMATED PROFIT DECLARED DURING THE CO URSE OF SURVEY ON 09/12/2013. THE AO AFTER CONSIDERING RELEVANT SUBMI SSIONS OF THE ITA NO.766//MUM/2018 M/S. ARHAM NEEJDEEP REALTORS 3 ASSESSEE AND ALSO TAKEN NOTE OF STATEMENT OF THE P ARTNER GIVEN DURING THE COURSE OF SURVEY HELD THAT THE ASSESSEE HAS FAI LED TO OFFER ANY EXPLANATION WITH EVIDENCES FOR REDUCTION IN PROFIT, HE THEREFORE MADE ADDITIONS OF RS. 26,98,750/-, BEING DIFFERENCE BETW EEN ESTIMATED PROFIT OF RS. 60 LACS ADMITTED DURING COURSE OF SURVEY AND N ET PROFIT DECLARED FOR THE YEAR UNDER CONSIDERATION. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A), THE ASSESSEE HAS REITERATED ITS SUBMISSIONS MADE BEFORE THE AO TO AR GUE THAT WHEN SURVEY TOOK PLACE THE PARTNER OF THE FIRM WAS STATED THAT ESTIMATED PROFIT FOR THE FY 2013-14, WILL BE AROUND RS. 60 LACS THEREFORE, IT IS CLEARLY INDICATES THAT THE FIGURE DERIVED RUING THE COURSE OF SURVEY IS ONLY ESTIMATED BUT NOT ACTUAL. FURTHER, WHEN FINANCIAL ACCOUNTS HAVE BEEN PREPARED FOR THE END OF FINANCIAL YEAR, THE PROFIT HAS BEEN DETERMINED A T RS. 33,01,250/- WHICH IS BASED ON FACTS AND FIGURES AND ALSO THE SAME HAS BEEN AUDITED AND CERTIFIED BY THE AUDITORS. THE AO NEITHER REJECTED OF BOOKS OF ACCOUNTS, NOR POINTED OUT ANY DISCREPANCY IN BOOKS OF ACCOUNT S. IN ABSENCE OF CONTRARY FINDING IN RESPECT OF BOOKS OF ACCOUNTS, N O ADDITIONS COULD BE MADE TOWARDS PROFIT ON THE BASIS OF ESTIMATED PROF IT DECLARED DURING COURSE OF SURVEY. THE LD. CIT(A), AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSESSEE AND ALSO TAKEN NOTE OF THE STATEMEN T OF PARTNER GIVEN DURING THE COURSE OF SURVEY HELD THAT ALTHOUGH THE ASSESSEE HAS DERIVED NET PROFIT OF RS. 60 LACS AS ON THE DATE OF SURVEY, I.E ON 09/12/2013 BUT ITA NO.766//MUM/2018 M/S. ARHAM NEEJDEEP REALTORS 4 DECLARED LOWER PROFIT WITHOUT ANY EXPLANATION TO JU STIFY DECLARING PROFIT, THEREFORE, HE OPINED THATTHERE IS NO ERROR IN THE F INDINGS OF THE AO AND ACCORDINGLY, SUSTAINED ADDITIONS MADE BY THE AO AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. AGGRIEVED BY THE CIT( A) ORDER, THE ASSESSE IS IN APPEAL BEFORE US. 5. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE L D. CIT(A) ERRED IN NOT CONSIDERING FACTS IN RIGHT PERSPECTIVE WHILE CO NFIRMING ADDITIONS TOWARDS DIFFERENCE IN NET PROFIT DECLARED FOR THE Y EAR, BECAUSE THE PROFIT FOR THE YEAR HAS BEEN DETERMINED ON THE BASIS OF BOOKS OF ACCOUNTS, WHICH HAVE BEEN AUDITED BY CHARTERED ACCOUNTANT WITHOUT A NY ADVERSE COMMENTS. FURTHER, WHEN SURVEY TOOK PLACE THE ASSES SEE HAS CATEGORICALLY STATED THAT THE PROFIT FOR THE YEAR W OULD BE AROUND RS. 60 LACS, THIS CLEARLY INDICATES THAT PROFIT WAS NOT QU ANTIFIED AT THE TIME OF SURVEY, THEREFORE MERELY ON THE BASIS OF ADMISSION DURING SURVEY NO ADDITIONS COULD BE MADE. I THIS REGARD, HE RELIED U PON THE DECISION OF ITAT, MUMBAI IN THE CASE OF SHRI. AMOD SHIVLAL SHAH VS ACIT IN ITA NO. 795/MUM/2015. 6. LD. DR, ON THE OTHER HAND, STRONGLY SUPPORTED TH E ORDER OF THE LD. CIT(A) 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. IT IS AN ADMITTED FACT THAT DURING SURVEY ON 09/12/2013, THE PARTNER OF THE FIRM, IN HIS STATEMENT RECORDED U/S 131, STATED THAT PROFIT FOR THE YEAR WILL BE AROUND ITA NO.766//MUM/2018 M/S. ARHAM NEEJDEEP REALTORS 5 RS. 60 LACS. IT IS ALSO AN ADMITTED FACT THAT SUCH PROFIT HAS BEEN ADMITTED WITHOUT FINALISATION OF BOOKS OF ACCOUNTS AND ALSO ON ESTIMATED BASIS. FURTHER, WHEN BOOKS OF ACCOUNTS ARE FINALISED, THE PROFIT HAS BEEN REDUCED TO RS. 33,01,250/-, WHICH IS BASED ON REGU LAR BOOKS OF ACCOUNTS AND SUCH BOOKS OF ACCOUNTS HAVE BEEN AUDITED BY A C HARTERED ACCOUNTANT. THE AO NEITHER REJECTED BOOKS OF ACCOUN TS NOR POINTED OUT ANY DISCREPANCIES IN BOOKS OF ACCOUNTS. THE AO MADE ADDITIONS ONLY ON THE BASIS OF ADMISSION OF THE PARTNER DURING THE SU RVEY PROCEEDINGS WITHOUT ANY FURTHER EVIDENCES TO PROVE THAT, IN FAC T ASSESSEE HAS EARNED RS. 60 LACS PROFIT FOR THE YEAR. ON THE OTHER HAND THE ASSESSEE HAS EXPLAINED THE DIFFERENCE BETWEEN PROFIT WITH PLAUSI BLE REASONS AS PER WHICH ESTIMATION OF PROFIT WAS ON THE BASIS OF MANY FACTORS SUCH AS SALES TAKE PLACE UP TO DATE OF SURVEY, EXPECTED SALES THE REAFTER, AND CORRESPONDING EXPENSES. WHEN THE BOOKS OF ACCOUNTS ARE FINALISED, IT WAS NOTICED THAT SALES EXPECTED AFTER THE DATE OF S URVEY NOT GOT MATERIALIZED. DUE TO THIS, THE PROFIT FOR THE YEAR HAS BEEN REDUCED, OTHERWISE THE PROFIT DECLARED BY THE ASSESSEE FOR T HE YEAR UNDER CONSIDERATION IS MORE THAN THE PROFIT DECLARED FOR IMMEDIATELY PRECEDING YEARS AND ALSO SUBSEQUENT TWO YEARS. UNDER THESE CI RCUMSTANCES, IT IS INCORRECT ON PART OF THE AO TO MAKE ADDITIONS ONLY ON THE BASIS OF SURVEY STATEMENT RECORDED U/S 131 OF THE I.T.ACT, 1961. NO DOUBT, STATEMENT RECORDED IN THE COURSE OF SURVEY IS A GOOD PIECE OF EVIDENCE BUT NOT CONCLUSIVE. UNLESS FURTHER CORROBORATIVE EVIDENCE S UPPORTS THE ITA NO.766//MUM/2018 M/S. ARHAM NEEJDEEP REALTORS 6 STATEMENTS, NO ADVERSE INTERFERENCE COULD BE DRAWN ONLY ON THE BASIS OF SURVEY STATEMENTS. THIS LEGAL PROPOSITION HAS BEEN UPHELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. S. KHADER KHAN SON 352 ITR 480 (SC). FURTHER, THE HONBLE SUPREME COURT IN THE CAS E OF PULLANGODE RUBBER PRODUCE CO.LTD. VS STATE OF KERALA AND OTHER 91 ITR 18 (SC) HAS REITERATED SIMILAR POSITION OF LAW. THE ITAT, MUMBA I IN THE CASE OF SHRI AMOD SHIVLAL SHAH VS ACIT IN ITA.NO.795/MUM/2015 HA S CONSIDERED IDENTICAL ISSUE AND HELD THAT UNLESS FURTHER CORROB ORATIVE EVIDENCES SUPPORTS ADMISSION OF INCOME DURING THE COURSE OF S URVEY U/S 133A, NO ADDITIONS COULD BE MADE ONLY ON THE BASIS OF STATEM ENT RECORDED DURING THE COURSE OF SURVEY. 8. IN THIS VIEW OF THE MATTER AND FOLLOWING THE RAT IOS OF CASE LAWS DISCUSSED HEREINABOVE, WE ARE OF THE CONSIDERED VIE W THAT THE AO AS WELL AS CIT(A) WERE ERRED IN MAKING ADDITIONS TOWARDS DI FFERENCE IN PROFIT DECLARED FOR THE YEAR. HENCE, WE DIRECT THE AO TO D ELETE THE ADDITIONS MADE TOWARDS DIFFERENCE IN NET PROFIT. 9 . IN THE RESULT, APPEAL FILED BY THE ASSESEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 /07/2 019 SD/- (RAM LAL NEGI) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 17 /07/2019 THIRUMALESH SR.PS ITA NO.766//MUM/2018 M/S. ARHAM NEEJDEEP REALTORS 7 COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//