PRERANA REAL ESTAES P. LTD, MUMBAI V. ITO WD 3(2)(4), MUMBAI

ITA 7774/MUM/2011

• Counselvise Citation: 777419914 RSA 2011
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 17-05-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 17-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJIV DUTT
• Assessee Lawyers: RAKESH JOSI
• Keywords: Depreciation; Additional evidence; Difference of opinion; Assessment record; Tax effect; Change of opinion
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER, A ND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 7774/MUM./2011 (ASSESSMENT YEAR : 2005-06 ) PRERANA REAL ESTATES P. LTD. 101, B WING, MITTAL COURT NARIMAN POINT, MUMBAI 400 021 PAN AAACP2465R .. APPELLANT V/S INCOME TAX OFFICER WARD3(2)(4), MUMBAI .... RESPONDENT ASSESSEE BY : MR. RAKESH JOSI REVENUE BY : MR. SANJIV DUTT DATE OF HEARING 17.05.2012 DATE OF ORDER 25.05.2012 O R D E R PER J. SUDHAKAR REDDY THE PRESENT APPEAL PREFERRED BY THE ASSESSEE, IS DI RECTED AGAINST IMPUGNED ORDER DATED 28 TH OCTOBER 2011, PASSED BY THE COMMISSIONER (APPEALS)IV, MUMBAI, FOR ASSESSMENT YEARS 2005-06. 2. BRIEF FACTS, AS BROUGHT OUT BY THE ASSESSING OFFICE R IN HIS ASSESSMENT ORDER VIDE PARAS6 TO 9, ARE EXTRACTED BELOW:- 6. THE RELEVANT FACTS ARE: THE ASSESSEE, VIDE DEED OF ASSIGNMENT DATED 13.6.1994, HAD PURCHASED THE ONE-FOURTH UNDIV IDED SHARE IN PRERANA REAL ESTATES P. LTD. 2 LAND AND PREMISES SITUATED ON PLOT NO.14A, OF THE W ORLI ESTATE FOR A SUM OF ` 80,00,000. 6.1 THE ASSESSEE EXECUTED AN AGREEMENT DATED 21.3.2 000 WITH KHORSHED SORABJI PAVRI, MRS. PERVES SORABJI SEABROO K (NEE PAVRI) AND MR. KELLY SORABJI PAVRI (THEREIN ALL COLLECTIVELY C ALLED TENANTS). THESE TENANTS WERE INCOMPLETE PHYSICAL POSSESSION AND ENJ OYMENT OF SOUTH WING OF THE GROUND FLOOR PREMISES OF PREMISES OF TH E BUILDING KNOWN AS MON REPOS TOGETHER WITH ON SERVANTS QUARTERS AND GARAGE NO.2, IN THE OUT HOUSE SITUATED ON PLOT NO.14A, OF WORLI EST ATE. 6.2 THE ASSESSEE, VIDE AGREEMENT DATED 21.3.2000, P AID COMPENSATION OF ` 50,00,000 TO THE TENANTS NAMED HEREIN, IN PURSUANCE OF THE SURRENDER OF TENANCY AND HANDING O VER VACANT AND PEACEFUL POSSESSION OF THE SOUTH WING OF THE GROUND FLOOR PREMISES OF THE BUILDING KNOWN AS MON REPOS TOGETHER WITH ON SERVANTS QUARTERS AND GARAGE NO.2, IN THE OUT HOUSE SITUATED ON PLOT NO.14A, OF WORLI ESTATE. THE PAYMENT OF ` 50,00,000 WAS MADE BY THREE BANKERS CHQEUES ALL DATED 21.3.2000. 6.3 THE ASSESSEE HAS CLAIMED THE COST OF ` 50,00,000 BORNE IN VACATING THESE TENANTS IN THE RETURN OF INCOME FILE D FOR ASSTT. YEAR 2000-01. THUS, THE OPENING VALUE OF PROJECT AS ON 1 .4.2004, INCLUDES THE COST PAID TO THE SAID TENANTS. 6.4 M/S. AKTA REAL ESTATE PRIVATE LIMITED PURCHASED THE BALANCE 3/4 TH UNDIVIDED SHARE IN LAND AND PREMISES SITUATED ON P LOT NO.14A, OF THE WORLI ESTATE ON 8.8.2000. 6.5 THE ASSESSEE WAS IN POSSESSION OF VACANT AND UN -ENCUMBERED ONE FOURTH UNDIVIDED SHARE IN LAND AND PREMISES SIT UATED ON PLOT NO.14A, OF THE WORLI ESTATE ON 8.8.2000 (BEING THE DATE ON WHICH THE ASSESSEE ENETRED INTO AN AGREEMENT WITH AKTA REAL E STATE PRIVATE LIMITED FOR JOINT DEVELOPMENT OF THE SAID PROPERTY) . THE DEED OF ASSIGNMENT DATED 13.6.1994, IS SILENT WITH REGARD T O THE SAID PROPERTY BEING IN THE POSSESSION OF ANY TENANTS. 6.6 A READING OF PARA-7 ON PAGE-4 OF THE DEVELOPMEN T AGREEMENT DATED 8.8.2000, SHOWS THAT THE UNDIVIDED SHARE OF T HE PROPERTY PURCHASED BY AKTA REAL ESTATE PVT. LTD. (MENTIONED THEREIN AS FIRST DEVELOPER) WAS TENANTED AND THEREBY THE FIRST DEVEL OPER WAS UNABLE TO DEVELOP THE PROPERTY PURCHASED BY IT. IN THE GIV EN CIRCUMSTANCES, THE FIRST DEVELOPER APPROACHED THE SECOND DEVELOPER (THE ASSESSEE) FOR JOINT DEVELOPMENT OF THE SAID PROPERTY AS THE A SSESSEE WAS THE OWNER OF THE BALANCE ONE FOURTH OF THE SAID PROPERT Y. THE SAID PARA IS REPRODUCED BELOW FOR READY REFERENCE:- THE FIRST DEVELOPER IS DESIROUS OF DEVELOPING THE P ROPERTY AND CONSTRUCTING A RESIDENTIAL BUILDING FOR SALE AN D HAS CONSULTED THEIR ARCHITECT AND MUNICIPAL BLDG. PLAN AUTHORITIES, HOWEVER, THE PERMISSION FOR PART PRERANA REAL ESTATES P. LTD. 3 DEVELOPMENT AND REHABILITATION OF THE PART OF THE T ENANTS WERE NEITHER PERMISSIBLE NOR COMMERCIALLY FEASIBLE AND ACCORDINGLY FIRST DEVELOPER APPROACHED SECOND DEVEL OPER FOR THEIR CO-OPERATION AND CONSENT FOR DEVELOPMENT OF ENTIRE PROPERTY AS JOINT DEVELOPMENT I.E., OWN 3/4 TH SHARE & 1/4 TH SHARE OF SECOND DEVELOPER, AS CONSOLIDATED DEVELOPMENT AND PROVIDE THE FIRST DEVELOPER FULL AUTHORITY TO PREPARE & GET SANCTIONED PLAN AND DEVE LOP THE PROPERTY AND ALLOW THEM TO CARRY OUT CONSTRUCTI ON & DEVELOPMENT ON BEHALF OF BOTH PARTIES. 7. IN VIEW OF THE FACTS NARRATED ABOVE, THE ASSESSE E WAS NOT REQUIRED TO PROVIDE ACCOMMODATION TO TENANTS AS THE TENANTS WHO OCCUPIED ITS ONE-FOURTH SHARE OF THE SAID PROPERTY HAD ALREADY HANDED OVER VACANT AND PEACEFUL POSSESSION TO THE ASSESSEE IN PURSUANCE OF AGREEMENT DATED 21.3.2000. 8. THE JOINT VENTURE RESULTED IN TOTAL AREA BUILT O F 38901.08 SQ.FT. THE AREA ATTRIBUTABLE TO THE ASSESSEE IS 20% OF 389 01.08 SQ.FT. I.E., 7780.21 SQ.FT. THE AREA ATTRIBUTABLE TO THE FIRST D EVELOPER I.E., AKTA REAL ESTATE P. LTD. IS 80% OF 38901.08 I.E., 31120. 87 SQ.FT. ACCORDINGLY THE SALEABLE AREA SHOULD HAVE BEEN COMP UTED AS UNDER:- AKTA REAL ESTATE P. LTD. PRERANA REAL ESTATE P. LTD. TOTAL AREA BUILD UP AREA 31120.87 7780.21 38901.08 LESS: AREA PROVIDED TO TENANTS 8141.08 NIL 8141.08 SELEABLE AREA 22979.79 7780.21 30760.11 AREA APPORTIONED BY DEVELOPERS IN THE RATIO 80:20 24608 6152.00 30760 SHORT FALL IN AREA (-) 1628.21 1628.21 0 9. THE ASSESSEE RECEIVED SALE CONSIDERATION OF ` 9 CRORES FOR 6152 SQ.FT. WHICH WORKS OUT TO ` 14629 PER SQ.FT. APPLYING THIS RATE TO 1628.21 SQ.FT. WHICH WAS ALLEGEDLY USED FOR ACCOMMO DATING TENANTS, THE ASSESSEE HAD MADE UNDER RECOVERY OF SALE PROCEE DS TO THE EXTENT OF ` 2,38,16,545 FROM M/S. AKTA REAL ESTATE P. LTD . EVEN OTHERWISE, THE COST OF ACCOMMODATING TENANTS IS THE SOLE LIABI LITY OF AKTA REAL ESTATE P. LTD. AND NOT THAT OF THE ASSESSEE. IN THI S CONTEXT, IT IS INFERRED THAT THE AREA OF 1628.21 SQ.FT. HAS BEEN S OLD . HENCE, THE UNDER RECOVERY OF SALE PROCEEDS OF ` 2,38,16,545 IS TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE AND ADDED TO THE TOTAL INCOME. PRERANA REAL ESTATES P. LTD. 4 3. ACCORDINGLY, THE ADDITION IS MADE ON THE GROUND THA T THERE IS UNDER- RECOVERY OF SALE PROCEEDS ON AN INFERENCE THAT THER E IS A SALE. THE ASSESSING OFFICER FURTHER HELD THAT THE DECISION OF THE TRIBU NAL THAT SHARE OF SALEABLE AREA OF 80% AND 20% CANNOT BE DISTURBED IS NOT VACA TED BY THIS ADDITION AS THE ASSESSEE WAS APPORTIONED 7780.21 SQ.FT. INSTEAD OF 6152 SQ.FT. HE FURTHER DENIED THE ALTERNATIVE CONTENTIONS OF THE A SSESSEE THAT COST OF CONSTRUCTION OF THE SAID 1628.61 SQ.FT. BE GIVEN AS A DEDUCTION FOR THE REASON THAT 25% OF THE TOTAL COST OF CONSTRUCTION OF THE P ROJECT WAS ALREADY BORNE BY THE ASSESSEE. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFORE T HE FIRST APPELLATE AUTHORITY, WHEREIN THE COMMISSIONER (APPEALS) UPHEL D THE ORDER OF THE ASSESSING OFFICER BY OBSERVING AS FOLLOWS:- 8. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUB MISSIONS OF THE ASSESSEE. THE A.O. HAD GIVEN SUFFICIENT OPPORTUNITY TO THE ASSESSEE AND THERE IS NO MERIT IN THE CLAIM OF THE ASSESSEE THAT SUFFICIENT OPPORTUNITY WAS NOT GIVEN. THE JURISDICTION OF THE A.O. HAS ALREADY BEEN UPHELD AGAINST GROUND NO.1. THE ISSUE IN DISPU TE IS WHETHER ASSESSEE SHOULD HAVE ACCOUNTED FOR 20% OF SALEABLE AREA AFTER REDUCING THE BUILT UP AREA ALLOCATED TO THE TENANTS OF M/S. EKTA REAL ESTATE P. LTD. OR BEFORE ANY SUCH ALLOCATION TO TEN ANTS. ASSESSEE HAD CLEAR TITLE FOR 1/4 TH OF THE PROPERTY WHICH WAS VACANT AND THERE WAS NO TENANT AT ALL AND, THEREFORE, ASSESSEE WAS UNDER NO OBLIGATION TO PROVIDE ANY ACCOMMODATION TO ANY TENANT. ASSESSEE H AS BORNE 25% OF THE DEVELOPMENT EXPENSES AND, THEREFORE, HE HAS COM PLETELY PAID FOR THE DEVELOPMENT OF HIS PART OF THE PROPERTY ON THE CONTRARY ASSESSEE HAS ONLY RECEIVED 20% OF THE SALEABLE BUILT UP AREA AS HIS PART OF THE SHARE IN THE DEVELOPED PROPERTY AND, THEREFORE, THE RE WAS NO LOGIC OR REASON FOR BEARING ANY FURTHER LOSS TOWARDS PROVIDI NG ACCOMMODATION TO THE TENANTS OF THE OTHER 3/4 TH PORTION OF THE PROPERTY BELONGING TO M/S. EKTA REAL ESTATE P. LTD. THERE IS NO DOUBT THA T EVEN IN SUCH A SITUATION THE ASSESSEE COULD HAVE AGREED FOR BEARIN G FURTHER LOSSES ON WHATEVER ACCOUNT AS A PRUDENT BUSINESS PERSON, BUT THE ASSESSEE HAS NOT DONE SO BECAUSE IN THE AGREEMENT FOR DEVELOPMEN T OF PROPERTY ALSO, THERE IS NO CLAUSE OR PROVISION FOR PROVIDING FOR TENANTS OF ANY AREA BY THE ASSESSEE. HENCE, IT IS CLEAR THAT ASSES SEE SHOULD HAVE GOT 20% OF THE TOTAL DEVELOPED AREA BEFORE ANY ALLOCATI ON TO THE TENANTS OF M/S. EKTA REAL ESTATE P. LTD. THIS VIEW IS SUPPORTE D BY THE DEED OF DEVELOPMENT AND BY THE USUAL BUSINESS PRACTICES AND ALSO BY A LOGICAL CONCLUSION. THEREFORE, ASSESSEE HAS CONCEALED THE I NCOME TO THE EXTENT OF 1628.21 SQ.FT. OF SALEABLE AREA WHICH HAS NOT BEEN DISCLOSED PRERANA REAL ESTATES P. LTD. 5 BY THE ASSESSEE AND, THEREFORE, THE ADDITION OF EQU IVALENT AMOUNT AFTER CONVERSION INTO MONEY BY THE A.O. IS CONFIRME D AND THE GROUND OF APPEAL IS REJECTED. 5. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRI BUNAL ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER AS UNDISCLOSED INCOME OF ` 2,38,16,545 ON ACCOUNT OF NOTIONAL UNDER RECOVERY OF SALE PROCEEDS WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THE FA CT THAT M/S. AKTA REAL ESTATE P. LTD. THE DEVELOPER, HAS ALREADY PAID TAX ON THE INCOME ADDED IN THE HANDS OF THE APPELLANT AND THUS ADDITI ON IN THE HANDS OF APPELLANT IS AMOUNTING TO TAX TWICE THE SAME INCOME . 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION O F THE ASSESSING OFFICER IN WRONGLY INTERPRETING THE CLAUSES OF THE AGREEMENT DATED 08.08.2000 AND ACCORDINGLY CALCULATING THE SALABLE AREA WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CAS E. 6. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE, MR. SAJEEV DUTT, REPRESENTING THE REVENUE, FILED AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE. THE ADDITIONAL EVIDENCE RUNS INTO 49 PAGE S. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSE SSEE AND M/S. AKTA REAL ESTATE P. LTD. (FOR SHORT AREPL ), ARE SISTER CONCERNS AS WELL AS CO- DEVELOPERS. ACCORDING TO THE LEARNED DEPARTMENTAL R EPRESENTATIVE, THE ISSUE IS WHETHER THERE IS ANY LIABILITY ON BEHALF OF THE ASSESSEE TO INCUR LOSS OF SALABLE AREAS FROM ITS SHARE OF ALLOCATED AREA FOR THE REASON THAT CERTAIN AREA HAS TO BE ALLOTTED TO THE TENANTS. HE ARGUED THAT T HOUGH THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER (APPEALS) HAVE GONE ON THE PREMISE THAT AREPL HAS AN OBLIGATION TO PROVIDE ACCOMMODATION TO THE TENANTS BY ALLOCATING CERTAIN AREA AND THOUGH BOTH THE ASSESSI NG OFFICER AS WELL AS THE COMMISSIONER (APPEALS) HAVE HELD THAT THIS OBLIGATI ON NEED NOT BE BORNE BY THE ASSESSEE, FROM THE EXAMINATION OF THE FILE OF T HE SISTER CONCERN AREPL, PRERANA REAL ESTATES P. LTD. 6 CERTAIN AGREEMENTS AND DOCUMENTS WERE FOUND WHICH D EMONSTRATE THAT NEITHER THE ASSESSEE NOR AREPL WERE UNDER AN OBLIGA TION TO PROVIDE ACCOMMODATION TO THE TENANTS. HE SUBMITTED THAT THE SE ADDITIONAL EVIDENCES ARE COPIES OF DOCUMENTS FOUND IN THE ASSESSMENT REC ORD OF AREPL AND HAVE RELEVANCE IN THE MATTER AND THESE HAVE NOT BEEN EXA MINED EITHER BY THE ASSESSING OFFICER OR BY THE COMMISSIONER (APPEALS) OR THE COMMISSIONER IN 263 PROCEEDINGS AND THE SAME HAVE NOW BEEN FILED BE FORE THE TRIBUNAL AND IT HAS TO BE ADMITTED. HE VEHEMENTLY CONTENDED THAT THE TRUTH OF THE MATTER WOULD COME OUT IF THESE DOCUMENTS ARE EXAMINED. HE REFERRED TO THE ORDER OF THE TRIBUNAL PASSED AGAINST AN APPEAL UNDER SECT ION 263 AND POINTED OUT THAT THE TRIBUNAL AGREED WITH THE FINDINGS OF THE C OMMISSIONER THAT THE ISSUE AS TO WHETHER THE ASSESSEE WAS ENTITLED TO HIGHER R EVENUE IN TERMS OF THE AGREEMENT WITH AREPL IS TO BE EXAMINED BY EH ASSESS ING OFFICER. HE PRAYED THAT THE ADDITIONAL EVIDENCE BE ADMITTED AND THE IS SUE BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. 7. LEARNED COUNSEL, MR. RAKESH JOSI, REPRESENTING THE ASSESSEE, ON THE OTHER HAND, STRONGLY OPPOSED THE ADMISSION OF THE A DDITIONAL EVIDENCE ON THE GROUND THAT THE LEARNED DEPARTMENTAL REPRESENTATIVE CANNOT RAISE FRESH ARGUMENT AND MAKE OUT FRESH SET OF FACTS AND FRESH ISSUE FOR CONSIDERATION OF THE TRIBUNAL WHEN THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER (APPEALS) HAVE EXAMINED THE DOCUMENTS AND HAVE COME TO A CONCLUSION THAT THERE IS AN OBLIGATION ON THE PART OF AREPL TO PROV IDE ACCOMMODATION TO TENANTS AND THE ONLY ISSUE WAS WHETHER THE ASSESSEE WAS ENTITLED TO BEAR THE EXPENDITURE OF SUCH ALLOCATION OF AREA TO TENAN TS. HE SUBMITTED THAT ALL THESE PAPERS WERE FILED BY THE ASSESSEE IN THE CASE OF AREPL AND AFTER EXAMINING THESE PAPERS, THE ASSESSING OFFICER, IN T HAT CASE, CAME TO A CONCLUSION THAT THERE IS AN OBLIGATION ON AREPL TO PROVIDE ACCOMMODATION TO THE TENANTS. THUS, HE ARGUED THAT THE CONCLUSIONS D RAWN BY THE ASSESSING OFFICER IN THE CASE OF AREPL ON THE SAME SET OF DOC UMENTS CANNOT BE DISPUTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE BEFORE THE TRIBUNAL. ON THE ARGUMENT OF THE LEARNED DEPARTMENTAL REPRESENTA TIVE THAT THE ASSESSEE PRERANA REAL ESTATES P. LTD. 7 SUPPRESSED THESE MATERIALS AND HAS NOT FILED THE SA ME BEFORE THE ASSESSING OFFICER, THE LEARNED COUNSEL RELIED ON THE PROVISIO NS OF SECTION 143(2) OF THE ACT AND SUBMITTED THAT THE ASSESSEE IS REQUIRED TO PRODUCE ONLY SUCH EVIDENCE AND DOCUMENTS THAT ARE REQUIRED BY THE ASS ESSING OFFICER. HE SUBMITTED THAT THE ASSESSING OFFICER HAS NEVER ASKE D FOR THESE DOCUMENTS AND, HENCE, THERE WAS NO OCCASION FOR THE ASSESSEE TO PRODUCE THE SAME. WHEREAS, IN THE CASE OF AREPL, THE ASSESSING OFFICE R HAD ASKED FOR THESE DOCUMENTS AND THE ASSESSEE IMMEDIATELY PRODUCE THE SAME. THUS, HE SUBMITTED THAT THERE IS NO SUPPRESSION, AS ALLEGED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. HE FURTHER SUBMITTED T HAT THE ORDER UNDER SECTION 143(3) WAS PURSUANT TO THE DIRECTION UNDER SECTION 263 OF THE ACT AND ALLOWING ADMISSION OF ADDITIONAL EVIDENCE WOULD LEAD TO WIDENING THE SCOPE OF ASSESSMENT. HE POINTED OUT THAT AN ORIGINA L ORDER UNDER SECTION 143(3) OF THE ACT, AS CONFIRMED BY THE COMMISSIONER (APPEALS), WAS CHALLENGED BEFORE THE TRIBUNAL AND THE ASSESSEE SUC CEEDED. THUS, THOSE ISSUES CANNOT BE ONCE AGAIN AGITATED. THE PRESENT A SSESSMENT ORDER, ACCORDING TO THE LEARNED COUNSEL, IS ONLY ON THE LI MITED QUESTION RAISED IN THE ORDER UNDER SECTION 263, HAS CONFIRMED BY THE T RIBUNAL. THUS, HE PRAYED THAT THE ASSESSMENT ORDER, AS CONFIRMED BY THE COMM ISSIONER (APPEALS), BE EXAMINED ONLY ON THE POINTS RAISED IN THE ORDER PAS SED UNDER SECTION 263, BY THE COMMISSIONER ON ITS MERITS AND LEGALITY ON T HE AVAILABLE SET OF FACTS. 8. IN REPLY, THE LEARNED DEPARTMENTAL REPRESENTATIVE R EITERATED THE CONTENTIONS THAT THE ASSESSEE SUPPRESSED MATERIAL F ACTS AND HAVING DONE SO, THE ASSESSEE SHOULD NOT BE ALLOWED TO TAKE THE BENE FIT OF SUPRESSION AND THEN ESCAPE TAXATION. 9. ON MERITS, THE LEARNED COUNSEL TOOK THIS BENCH THRO UGH THE DIRECTIONS OF THE COMMISSIONER IN HIS ORDER PASSED UNDER SECTI ON 263, WHICH IS PLACED AT PAGE37/PARA-4 OF THE PAPER BOOK AND EMPHASIZED THAT THE COMMISSIONER HAS NEVER DOUBTED THE FACT THAT CERTAIN AREA HAS TO BE ALLOTTED TO THE TENANTS. HE REFERRED TO THE ORDER DATED 22 ND JANUARY 2010, PASSED BY THE PRERANA REAL ESTATES P. LTD. 8 TRIBUNAL IN ITA NO.7359/MUM./2008, WHICH WAS AGAINS T AN ORDER PASSED UNDER SECTION 143(3), AS CONFIRMED BY THE COMMISSIO NER (APPEALS) AND SUBMITTED THAT THE TRIBUNAL CATEGORICALLY OBSERVED THAT NEITHER THE AGREEMENT WAS FOUND FALSE NOR IS THE BONAFIDE INTEN TION OF THE ASSESSEE FOUND FALSE. HE SUBMITTED THAT THIS IS THE AGREEMEN T BETWEEN THE TWO CO DEVELOPERS AND THE REVENUE CANNOT STEP INTO THE ARR ANGEMENT AND DICTATE AS TO WHAT SHOULD BE THE REVENUE OR SHARE OF EACH PART Y. HE SUBMITTED THAT COST OF CONSTRUCTION WAS RECOVERED FROM THE TENANTS FOR THE AREA ALLOTTED TO THEM AND THE ASSESSEE ACCOUNTED FOR THIS RECOVERY I N ITS BOOKS AND THE ASSESSING OFFICER ACCEPTED THE SAME. HE POINTED OUT THAT THE SISTER CONCERN HAS OFFERED THE CONSIDERATION ON THE SALE OF THE BA LANCE AREA AS ITS INCOME AND HE FILED CERTIFICATES TO THAT EXTENT. HE VEHEME NTLY CONTENDED THAT THE INCOME IN QUESTION HAS BEEN ACCOUNTED FOR EITHER IN THE HANDS OF THE ASSESSEE OR IN THE HANDS OF SISTER CONCERN AND, HEN CE, THERE IS NO ESCAPEMENT OF INCOME AND IF THE ASSESSING OFFICERS ORDER IS UPHELD, IT WOULD BE A CASE OF DOUBLE TAXATION. 10. HE FURTHER SUBMITTED THAT THE INCOME IS SOUGHT TO B E BROUGHT TO TAX ON NOTIONAL BASIS. AS PER THE LEARNED COUNSEL, THERE I S NEITHER SALE NOR RECEIPT OF INCOME. AS THE ASSESSEE DOES NOT POSSESS ANY ASSET, NO TAX CAN BE LEVIED. HE RELIED ON THE DECISION OF CHENNAI BENCH OF THE T RIBUNAL IN CIT, V/S J. CHELLADURAI, 204 TAXMAN 258 (CHE.). 11. ON THE ISSUE THAT THE ASSESSING OFFICER CANNOT STEP INTO THE SHOES OF THE ASSESSEE AND DETERMINE AS TO WHAT SHOULD BE THE SHARE OF REVENUE OF EACH OF THE PARTIES IN A PARTICULAR ARRANGEMENT, TH E LEARNED COUNSEL RELIED ON THE FOLLOWING CASE LAWS: SINHA (D.N.) PVT. LTD. V/S CIT (CAL), [1976] 102 ITR 0491; CIT V/S WALCHAND AND CO. PRIVATE LTD. [1967] 065 ITR 0381. PRERANA REAL ESTATES P. LTD. 9 12. HE EMPHASIZED THE FACTS THAT THE SISTER CONCERN HAD PAID TAX ON 1628.21 SQ.FT., WHICH IS THE AREA IN ISSUE AND ONCE AGAIN TAXING IT IN THE HANDS OF THE ASSESSEE WOULD AMOUNT TO DOUBLE TAXATI ON. 13. LEARNED DEPARTMENTAL REPRESENTATIVE OPPOSED THE CON TENTIONS AND SUBMITTED THAT THE ASSESSING OFFICER HAS FAILED IN HIS DUTY TO CONDUCT PROPER ENQUIRY IN THE MATTER. HE SUBMITTED THAT THE ASSESS ING OFFICER HAS NOT TAKEN INTO ACCOUNT ALL THE RELEVANT FACTS AND THE ASSESSE E HAS SUPPRESSED THE FACTS. HE TOOK THIS BENCH THROUGH THE ADDITIONAL EVIDENCE FILED BY HIM AND SUBMITTED THAT THERE WAS NO REQUIREMENT WHATSOEVER EITHER FOR THE ASSESSEE OR FOR THE AREPL TO ALLOT AREA TO THE TENANTS. HE T RIED TO DEMONSTRATE THAT THE ENTIRE CLAIM BY AREPL AS WELL AS THE ASSESSEE I S FALSE AND IT IS NOT A QUESTION OF MERE ALLOCATION OF OBLIGATION TO ALLOT AREA TO TENANTS. HE SUBMITTED THAT THE PAPERS ARE FOUND IN THE ASSESSME NT RECORD OF THE CO OWNERS. ON A QUERY FROM THE BENCH, HE SUBMITTED THA T THE TRIBUNAL CAN DEFINITELY EXPAND THE SCOPE OF ENQUIRY. HE POINTED OUT THAT THE ASSESSEE HAD ALREADY PAID ` 50,00,00,000, FOR VACATING 25% OF THE PREMISE AND THE BALANCE OF THE PREMISE WAS VACATED BY THE OTHER TEN ANTS ON RECEIVING PAYMENT FROM THE SISTER CONCERN AND, HENCE, NO TENA NTS ARE STAYING IN THE PREMISE. HE VEHEMENTLY CONTENDED THAT THESE FACTS W ERE NOT EXAMINED BY THE ASSESSING OFFICER OR THE COMMISSIONER IN ITS 26 3 PROCEEDINGS OR THE COMMISSIONER (APPEALS) WHILE DISPOSING THE APPEAL O N THE ORDER UNDER SECTION 143(3) R/W 263 OF THE ACT AND, HENCE, THE E NTIRE ISSUE SHOULD BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR FRES H INVESTIGATION. ON A QUERY FROM THE BENCH, HE SUBMITTED THAT THE ASSESSING OFF ICER IN THE CASE OF AREPL, DID NOT DOUBT THE CLAIM OF THE ASSESSEE BUT THE ASSESSMENT OF AREPL ARE REOPENED NOW. HE REPEATED HIS CONTENTIONS THAT THE MATTER SHOULD BE SET ASIDE FOR FRESH INVESTIGATION. 14. IN REPLY, THE LEARNED COUNSEL OPPOSED THESE CONTENT IONS AND SUBMITTED THAT ONCE THE ASSESSING OFFICER OF AREPL HAD EXAMIN ED THESE VERY DOCUMENTS IN ITS ASSESSMENT AND CAME TO A CONCLUSIO N THAT THERE WAS A LEGAL PRERANA REAL ESTATES P. LTD. 10 OBLIGATION ON BEHALF OF THE ASSESSEE WHO ALLOTS CER TAIN AREAS TO THE TENANTS AFTER RECOVERING COST, THE LEARNED DEPARTMENTAL REP RESENTATIVE CANNOT ARGUE TO THE CONTRARY ON THE SAME SET OF DOCUMENTS AND RE QUEST FOR SET ASIDE. HE SUBMITTED THAT REOPENING, IF ANY, WOULD BE A CHANG E IN OPINION AND, HENCE, BAD IN LAW. 15. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON A PERUSAL OF THE P APERS ON RECORD, AS WELL AS THE CASE LAWS CITED BEFORE US, WE HOLD AS FOLLOW S:- 16. THE TRIBUNAL, WHILE UPHOLDING THE ORDER DATED 24 TH AUGUST 2011, PASSED UNDER SECTION 263, VIDE PARA9, HAS BROUGHT OUT THE ISSUE IN THE FOLLOWING WORDS: THE QUESTION WHETHER THE ASSESSEE WAS ENTITLED TO A HIGHER REVENUE IN TERMS OF THE AGREEMENT WITH AKTA AS ALSO THE QUESTION WHE THER THE ASSESSEE COULD REDUCE THE SALABLE AREA BY THE AREA OCCUPIED BY THE OLD TENANTS WERE NOT SPECIFICALLY EXAMINED BY THE ASSESSING OFFICER. 17. IN OUR OPINION, WHEN THE ISSUE HAS BEEN SET ASIDE B Y THE COMMISSIONER IN ITS PROCEEDINGS UNDER SECTION 263, TO THE FILE O F THE ASSESSING OFFICER FOR EXAMINATION OF A PARTICULAR ISSUE, THE SCOPE OF THE ASSESSING OFFICER IS RESTRICTED TO THESE DIRECTIONS ONLY. IT CANNOT BE A CASE OF DENOVO ASSESSMENT. 18. NOW COMING TO THE FINDINGS OF THE ASSESSING OFFICER ON THE ISSUE, WE FIND THAT THE ASSESSING OFFICER HAS NEVER DOUBTED T HE CLAIM OF THE ASSESSEE THAT AREPL WAS REQUIRED TO PROVIDE CERTAIN AREA TO THE OLD TENANTS. THE ONLY ISSUE THAT WAS CONSIDERED BY THE COMMISSIONER IN HI S ORDER DATED 29 TH MARCH 2010, PASSED UNDER SECTION 263 AND THE ASSESSING OF FICER IN HIS ORDER DATED 24 TH DECEMBER 2010, PASSED UNDER SECTION 143(3) R/W 263 , AND THE COMMISSIONER (APPEALS)IV, MUMBAI, IN HIS ORDER DAT ED 28 TH OCTOBER 2011, PASSED UNDER SECTION 250(6), IS WHETHER THE ASSESSE E WAS UNDER ANY OBLIGATION TO PROVIDE ACCOMMODATION TO THE TENANTS OR WHETHER THE ENTIRE PRERANA REAL ESTATES P. LTD. 11 OBLIGATION SHOULD BE OF AREPL. IN OTHER WORDS, ALL THE AUTHORITIES WERE CONCENTRATING ON THE ISSUE WHETHER THE OBLIGATION T O PROVIDE ACCOMMODATION TO THE TENANTS WAS TO BE SHARED BY THE ASSESSEE AND AREPL OR SHOULD IT BE THE SOLE BURDEN OF AREPL. THUS, THE ISSUE BEFORE US IS CONFINED TO THIS POINT. IT IS WELL SETTLED THAT THE POWERS OF THE TRIBUNAL ARE LIMITED TO THE SUBJECT MATTER OF THE APPEAL BEFORE IT. THE WORD THEREON , EXPRESSED UNDER SECTION 254(1), PLACES THIS RESTRICTION. IN THE CASE OF HUK UMCHAND MILLS V/S CIT, 63 ITR 232, THE HON'BLE SUPREME COURT HAS LAID DOWN TH AT THE EXPRESSION THEREON IN SECTION 254(1) CLEARLY AND INDUBITABLY POINTS T O THE CONCLUSION THAT THE POWERS OF THE APPELLATE TRIBUNAL ARE LIMIT ED TO THE SUBJECT MATTER OF THE APPEAL. IN THE CASE ON HAND, THE LEARNED DEPART MENTAL REPRESENTATIVE SEEKS TO FILE ADDITION EVIDENCE BEING DOCUMENTS GAT HERED FROM THE ASSESSMENT RECORDS OF AREPL AND ARGUES THAT THESE E VIDENCES SHOULD BE ADMITTED AS IT WOULD PROVE THAT AREPL ITSELF DOES N OT HAVE AN OBLIGATION TO PROVIDE THE TENANTS WITH CONSTRUCTED AREA. HE ARGUE D THAT THE AO, THE CIT AND THE CIT(A) HAVE NOT CONSIDERED THESE SIGNIFICAN T FACTS AND HAVE DECIDED THE ISSUE ON THE ASSUMPTION THAT THERE IS A LIABILI TY TO PROVIDE CONSTRUCTED AREA TO THE TENANTS. HE WANTS THE ISSUE TO BE SET A SIDE FOR FRESH INVESTIGATION. IN OUR OPINION, SUCH A REQUEST CANNO T BE ENTERTAINED FOR THE FOLLOWING REASONS (I) THE ADDITIONAL EVIDENCE IN QUESTION ARE NOTHING BUT PAPERS AVAILABLE IN THE ASSESSMENT RECORD OF AREPL. THE ASSESSING OFFICER, IN THE CASE OF AREPL, HAS, AFTER OBTAINING ALL THESE DOCUMENTS, EXAMINED THEM AND HAD COME TO A CONCLUSION THAT AREPL HAS AN OBLIGATION TO PROVIDE CONSTRUCTED PROPERTY TO THE OLD TENANTS. WHEN THIS IS THE CONCLUSION OF THE ASSESSING OFFICER ON THE VERY SET OF PAPERS, WE ARE UNABLE TO UNDERSTAND AS TO HOW A FRESH INVESTIGATION HELPS THE MATTER AND HOW THE ASSESSIN G OFFICER CAN NOW CHANGE HIS OPINION. THE PLEA THAT IN THE CASE OF AREPL, TH E ASSESSMENTS WERE RE OPENED, ALSO DOES NOT HELP THE REVENUE AS IT MIGHT BE A MATTER OF CHANGE OF OPINION. AT BEST, IT MAY BE AN ISSUE FOR INVOKING P OWER UNDER SECTION 263. THE ARGUMENT THAT THE ASSESSEE HAS SUPPRESSED THESE PAPERS, IS ALSO PRERANA REAL ESTATES P. LTD. 12 WITHOUT FORCE FOR THE REASON THAT THERE IS NO EVIDE NCE ON RECORD THAT THE ASSESSING OFFICER HAD ASKED FOR THESE RECORDS. UNDE R SECTION 143(3), THE ASSESSEE IS BOUND TO PRODUCE EVIDENCES AS THE ASSES SING OFFICER MAY REQUIRE ON SPECIFIC POINTS. WHEN THE ASSESSING OFFICER DID NOT CALL FOR THE INFORMATION, IT WOULD BE UNREALISTIC TO EXPECT THE ASSESSEE TO PRODUCE ALL SUNDRY EVIDENCES; (II) COMING TO THE ISSUE AS TO WHETHER THE LEARNED DEPARTMENTAL REPRESENTATIVE CAN SEEK FRESH PROBE ON THE ISSUE IN THE CASE OF SIYA LIFESTYLE LTD., ITA NO.4465/MUM./2010 & ORS., ORDER DATED 25 TH NOVEMBER 2011, VIDE PARAS14 TO 21, THE TRIBUNAL HELD AS FOLLOWS: 14. LEARNED DEPARTMENTAL REPRESENTATIVE RAISES A G ROUND BEFORE US THAT 100% OF THE PURCHASES SHOULD BE DIRECTED TO BE DISALLOWED BY THE ASSESSING OFFICER. IN OUR OPINION, SUCH A GROUND CA NNOT BE TAKEN BY THE LEARNED DEPARTMENTAL REPRESENTATIVE AT THIS STA GE. WE DO NOT UNDERSTAND AS TO HOW THE ASSESSING OFFICER CAN FILE A GROUND AGAINST HIS OWN FINDINGS. THE MUMBAI BENCH OF THE TRIBUNAL IN MS. AISHWARYA K. RAI (SUPRA) HELD THAT THE LEARNED DEPARTMENTAL R EPRESENTATIVE CAN SUPPORT THE ACTION OF THE ASSESSING OFFICER WITH AN Y ARGUMENTS AND THAT HE CAN RELY ON ANY CASE LAW IN SUPPORT OF THE ASSESSING OFFICERS CASE BUT HE CANNOT MAKE OUT ANY NEW CASE WHICH WAS NOT THE SUBJECT MATTER OF CONSIDERATION BY THE ASSESSING OFFICER OR THE FIRST APPELLATE AUTHORITY. IT FURTHER HELD THAT TO FIND FAULT IN TH E ASSESSMENT ORDER IS OUTSIDE THE DOMAIN OF THE ARGUMENT OF THE LEARNED D EPARTMENTAL REPRESENTATIVE AS SUCH POWERS VESTS WITH THE COMMIS SIONER UNDER SECTION 263 FOR REVISING ANY ORDER WHICH IS ERRONEO US AND PREJUDICIAL TO THE INTERESTS OF REVENUE. 15. THE TRIBUNAL, PUNE BENCH IN ANANT Y. CHAVAN (SU PRA) HAS HELD AS FOLLOWS:- THE DEPARTMENTAL REPRESENTATIVE ONLY REPRESENTS THE AO WHO CAN DO BETTER THAN TO JUSTIFY HIS OWN ACTION ON THE GROUNDS WHICH HAVE BEEN DISCUSSED IN THE ASSESSMENT ORDER O R PERHAPS EVEN ON EXTENDED GROUNDS. UNDOUBTEDLY, THERE CART B E OCCASIONS WHEN ASSESSING OFFICER FAILS TO BRING AN INCOME TO TAX OR GRANT EXCESSIVE DEDUCTION AND THE REMEDY FOR THE SE LAPSES ARE PRESCRIBED BY THE PROVISIONS OF SS. 147, 154 AN D 263, ETC. BUT ALL THESE SECTIONS HAVE CERTAIN TIME-LIMITS WIT HIN WHICH THESE SECTIONS CAN BE INVOKED. WHETHER IT IS A RECT IFICATION OF A MISTAKE, OR INITIATION OF PROCEEDINGS FOR INCOME ES CAPING ASSESSMENT, OR EVEN A REVISION PROCEEDING EVERYTHIN G MUST BE COMPLETED WITHIN THE PRESCRIBED TIME-LIMIT. TO SUGG EST THAT EVEN A PROCEEDING BEFORE THE TRIBUNAL IS A CONTINUA TION OF ASSESSMENT PROCEEDINGS AND, THEREFORE, THE AO CAN B E ALLOWED PRERANA REAL ESTATES P. LTD. 13 TO MAKE UP FOR HIS DEFICIENCIES WILL AMOUNT TO REND ERING ALL THESE TIME-LIMITS AS NUGATORY AND REDUNDANT. IT IS INDEED NOT OPEN FOR THE TRIBUNAL TO TAKE AWAY THE BENEFIT GIVE N BY THE AO. WHEN THE AO DECIDED TO GRANT DEDUCTION UNDER S. 80- 113(10) IN RESPECT OF RESIDENTIAL UNITS IT WAS T WELL-CONSI DERED AND CONSCIOUS DECISION ON HIS PART TO HAVE GRANTED THE BENEFIT OF DEDUCTION. WITH THE BENEFIT OF HINDSIGHT THIS BENEF IT OF DEDUCTION MIGHT HAVE BEEN LITTLE MORE GENEROUS THAN WHAT IS FOUND TO BE ADMISSIBLE BY THE TRIBUNAL, BUT THEN TH E DECISION OF THE TRIBUNAL HAS NOT YET REACHED FINALITY AND IT IS NOT AN END OF THE ROUTE SO FAR AS LEGAL DEVELOPMENTS IN THAT REGA RD ARE CONCERNED.IT IS NOT THE SCHEME OF THE ACT THAT ENT IRE ASSESSMENT IS OPEN BEFORE THE TRIBUNAL AND IT MUST CONSIDER THE SAME. GROUND WHICH WAS RAISED BY THE REVENUE WA S CONFINED TO PROFITS RELATABLE TO COMMERCIAL UNITS A ND THEREFORE, IT IS NOT REALLY OPEN TO THE TRIBUNAL TO GO BEYOND THE SAID GROUND.JEYPORE TIMBER & VENEER MILLS (P) LTD. VS. CIT (1982) 137 ITR 415 (GAU.) APPLIED; CIT VS. ASSAM TRAVELS S HIPPING SERVICE (1993) 199 ITR I (SC) AND JT. CIT VS. SAKUR A BANK LTD. (2006) 99 TTJ (MUMBAL) 689: (2006) 100 LTD 215 (MUM BAI) DISTINGUISHED; MCORP GLOBAL (P) LTD. VS. CIT (2009) 222 CM (SC) 110: (2009)19 DTR (SC) 153 : (2009) 309 ITR 43 4 (SC) FOLLOWED. 16 MUMBAI SPECIAL BENCH OF THE TRIBUNAL IN MAHINDRA & MAHINDRA LTD. V/S DCIT, (2009) 313 ITR (AT) 263 (SB), HELD A S FOLLOWS:- IN OUR CONSIDERED OPINION THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS NO JURISDICTION TO GO BEYOND THE ORDER PASSED BY THE ASSESSING OFFICER. HE CANNOT RAISE AN Y POINT DIFFERENT FROM THAT CONSIDERED BY THE ASSESSING OFF ICER OR THE COMMISSIONER OF INCOME-TAX (APPEALS). HIS SCOPE OF ARGUMENTS IS CONFINED TO SUPPORTING OR DEFENDING THE IMPUGNED ORDER. HE CANNOT SET UP AN ALTOGETHER DIFFERENT CASE. IF THE LEARNED DEPART. MENTAL REPRESENTATIVE IS ALLOWED TO TAKE UP A NEW CONTENTION DE HORS THE VIEW TAKEN BY THE ASSESSING OFFICER THAT WOULD MEAN THE LEARNED AUTHORISED REPRESENTATIVE ST EPPING INTO THE SHOES OF THE COMMISSIONER OF INCOME-TAX EXERCIS ING JURISDICTION UNDER SECTION 263. WE, THEREFORE, DO N OT PERMIT THE LEARNED DEPARTMENTAL REPRESENTATIVE TO TRANSGRESS T HE BOUNDARIES OF HIS ARGUMENTS. SIMILAR VIEW HAS BEEN TAKEN BY THE JODHPUR BENCH OF THE TRIBUNAL IN THE CASE OF KW AL PRO EXPORTS V. ASST. CIT [2008] 297 ITR (AT) 49. THIS C ONTENTION IS THEREFORE REPELLED AS DEVOID OF ANY MERIT. 17. THE HON'BLE SUPREME COURT IN MCORP GLOBAL P. LT D. (SUPRA) HAS HELD AS FOLLOWS:- HELD THAT UNDER SECTION 254(1) OF THE ACT, THE AP PELLATE TRIBUNAL HAD NO POWER TO TAKE BACK THE BENEFIT CONF ERRED BY THE ASSESSING OFFICER OR ENHANCE THE ASSESSMENT. SINCE THE ASSESSING OFFICER HAD GRANTED DEPRECIATION IN RESPE CT OF 42,000 BOTTLES THAT BENEFIT COULD NOT BE WITHDRAWN. PRERANA REAL ESTATES P. LTD. 14 18. IN VIEW OF THE AFORESAID JUDICIAL PRONOUNCEMENT S, WE HAVE NO HESITATION IN REJECTING THE PLEA OF THE LEARNED DEP ARTMENTAL REPRESENTATIVE THAT THE ASSESSMENT IN THIS CASE HAS TO BE ENHANCED BY THE TRIBUNAL, ON AN ADDITIONAL GRUOND THAT THE ASSE SSING OFFICER MAY BE ASKED TO FILE AGAINST THE ASSESSING OFFICERS OW N FINDING OF FACT. 19. COMING TO THE JUDGMENT OF HON'BLE SUPREME COURT IN ASSAM TRAVELS SHIPPING SERVICES (SUPRA), IT HAS BEEN HELD THAT THE APPELLATE ACIT WAS WRONG IN TAKING THE VIEW THAT HE HAD NO PO WER TO ENHANCE PENALTY AND IN SUCH CIRCUMSTANCES, THE TRIBUNAL HAD THE POWER TO REMAND THE CASE TO THE AUTHORITY COMPETENT TO MAKE AN ORDER IN ACCORDANCE WITH LAW. THIS IS NOT A CASE WHERE THE F ACTUAL FINDINGS OF THE ASSESSING OFFICER ARE DISPUTED BY THE REVENUE A T THE STAGE OF THE TRIBUNAL WITHOUT ANY FURTHER MATERIAL AND REMAND SO UGHT. IN OUR OPINION, THIS CASE DOES NOT APPLY TO THE FACTS OF T HE PRESENT CASE. 20. THE HON'BLE SUPREME COURT IN BHAVANA CHEMICALS LTD. (SUPRA) WAS NOT INCLINED TO GO INTO THE QUESTION AS THE MAT TER WAS REMANDED. IT HELD THAT IT WAS NOT NECESSARY TO EXAMINE THE QU ESTION OF THE POWER OF TRIBUNAL IN THIS MATTER. 21. THUS, THIS CASE DOES NOT COME TO THE RESCUE OF THE REVENUE. UNDER THESE CIRCUMSTANCES, WE REJECT THE ARGUMENTS OF THE REVENUE THAT IT BE PERMITTED TO FILE ADDITIONAL GROUNDS CHA LLENGING THE FINDINGS OF THE ASSESSING OFFICER AND TO ENHANCE THE DISALLO WANCE TO 100%. WE CONSIDER ONLY THE GROUNDS OF APPEAL THAT ARE FILED IN THE APPEALS FILED BY THE ASSESSEE AS WELL AS THE REVENUE. 19. UOP LLC V/S ADIT, [2007] 108 ITD 186 (DEL.), THE TR IBUNAL HAS HELD THAT IN AN APPEAL FILED BY THE ASSESSEE, ADDITIONAL EVIDENCE CAN BE ADMITTED AT THE INSTANCE OF THE REVENUE ON APPLICATION OF RU LE29 OF THE ITAT RULES, WHERE THE EVIDENCE WAS QUITE RELEVANT FOR THE JUST DECISION OF THE CASE AND WHICH CAME TO BE PROCESSED BY THE REVENUE AFTER FIL ING APPEAL BY THE ASSESSEE. IN THE CASE ON HAND, ON THE FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE TRIBUNAL HAS POWER TO ADMIT ADDITIONAL EVI DENCE FROM THE REVENUE. THIS IS NOT A CASE FOR ADMISSION OF ADDITIONAL EVID ENCE. 20. FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL AN D IN VIEW OF ALL THE REASONS CITED ABOVE, WE REJECT THE PLEA OF THE LEAR NED DEPARTMENTAL REPRESENTATIVE FOR ADMISSION OF ADDITIONAL EVIDENCE AND FOR ORDERING FRESH INVESTIGATION. PRERANA REAL ESTATES P. LTD. 15 21. WE NOW CONSIDER THE MERITS OF THE CASE. IN THE FIRS T ROUND OF APPELLATE PROCEEDINGS, THE TRIBUNAL IN ITA NO.7359/MUM./2008, ORDER DATED 22 ND JANUARY 2010, IN ASSESSEES OWN CASE FOR THE VERY S AME ASSESSMENT YEAR, HAS, AT PARAS10 AND 11, HELD AS FOLLOWS: 10. . THE ENTIRE PROJECT WAS GIVEN TO THE SISTER CONCERN AS PER AGREEMENT DATED 8.3.2000. THE ASSESSEE WAS 1/4 TH OWNER OF THE LAND IN QUESTION WHICH WAS DEVELOPED BY CODEVELOPER M/S . AKTA REAL ESTATE P. LTD. HOWEVER, THE ASSESSEE AGREED TO SHAR E THE PROFIT @ 20% WHEREAS HE SHOULD HAVE TAKEN 25% AS HE WAS OWNER OF 25% OF THE LAND IN QUESTION. IN ACCEPTING 20% OF SHARE, THE AS SESSING OFFICER HELD THAT THE ASSESSEE HAS EVADED TAX EFFECT BY PLACING RELIANCE ON THE DECISION OF SUPREME COURT IN CASE OF BRITISH PAINTS AND THE LEARNED CIT(A) HAS ALSO ACCEPTED THE DECISION OF THE ASSESS ING OFFICER WHILE CONFIRMING THE ADDITION ON PROTECTIVE BASIS. NEITHE R THE AGREEMENT WAS FOUND FALSE NOR IS BONAFIDE INTENTION OF ASSESSEE F OUND FALSE AS THE ASSESSEE WHO WAS HAVING A LAND IN ITS HAND SINCE LO NG AS PRUDENT BUSINESSMEN . THE ASSESSEE ENTERED INTO AGREEMENT WITH SISTER CONCERN M/S. AKTA REAL ESTATE PVT. LTD. WHO HAS TAK EN OVER THE CHARGE TO DEVELOP THE ENTIRE PROPERTY ON ITS BEHALF. THE E NTIRE EXPENDITURE WAS INCURRED BY M/S. AKTA REAL ESTATE PVT. LTD. ALL EFFORTS WERE DONE TO COMPLETE THE PROJECT WHICH TOOK NEARLY 4 YEARS FROM THE DATE OF AGREEMENT ENTERED IN THE YEAR 2000. ALL LABOUR EXPE NSES, MATERIAL EXPENSES WERE BORN BY SISTER CONCERN BY ARRANGING L OAN FROM BANK OR FROM THIRD PARTY. NO EFFORTS HAVE BEEN DONE BY EH A SSESSEE, NEITHER ANY FINANCIAL IMPLICATION WAS INVOLVED ON BEHALF OF THE ASSESSEE RATHER THE ASSESSEE HAD RECEIVED ` 1.55 CRORES AS ADVANCE ADJUSTABLE TOWARDS THE PROFIT WHEN THE PROJECT WAS TO BE COMPL ETED. THIS SUM OF ` 1.55 CRORES WAS UTILISED BY THE ASSESSEE IN ITS BU SINESS ACTIVITY. THE ASSESSEE RECEIVED THIS ADVANCE OF ` 1.55 CRORES WHICH WAS INTEREST FREE. IN THESE CIRCUMSTANCES, THE ASSESSEE AGREES T O SHARE 20% OF PROFIT INSTEAD OF 25%. IF FINANCIAL IMPLICATION IN DEVELOPMENT OF THE PROPERTY AND ADVANCE OF ` 1.55 CRORES TAKEN INTO CONSIDERATION, THEN IT IS FOUND THAT IT WAS A PRUDENT BUSINESSMENS DECISI ON OF SHARING THE PROFIT @ 20% INSTEAD OF 25% AS THERE WERE SO MANY F ORMALITIES INVOLVED IN COMPLETING THE DEVELOPMENT OF PROPERTY IN QUESTION. HOWEVER, ASSESSEE WAS FREE FROM ALL THESE RESPONSIB ILITIES AS CO DEVELOPER M/S. AKTA REAL ESTATE P. LTD. HAVE TAKEN ALL THE RESPONSIBILITIES TO COMPLETE THE PROJECT. 11. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, W E HOLD THAT SHARE PROFIT SHARED BY ASSESSEE @ 20% WAS REASONABL E AS THE SAME WAS COMMERCIALLY VIABLE AND A DECISION OF A PRUDENT BUSINESSMAN. IT IS A WELL SETTLED POSITION THAT BUSINESSMEN KNOW HOW T O RUN THE BUSINESS ACTIVITY. ACCORDINGLY, THE ADDITION MADE OF ` 1,44,98,140, WHICH WAS SUSTAINED BY THE CIT(A) ON PROTECTIVE BASIS IS DELE TED AND ASSESSING OFFICER IS DIRECTED TO ACCEPT THE PROFIT SHOWN BY A SSESSEE. PRERANA REAL ESTATES P. LTD. 16 22. ONCE THE AGREEMENT IS NOT DOUBTED AND THE INCOME HA S BEEN DISCLOSED IN THE HANDS OF ONE OF THE CODEVELOPERS, IT WOULD BE NOT CORRECT FOR THE REVENUE TO STEP IN AND DECIDE WHAT SHOULD BE THE SH ARE OF EACH PARTY. THE UNDERSTANDING OF THE PARTIES HAS TO BE THE BASIS UN LESS SOMETHING CONTRARY IS FOUND. 23. IN THE CASE ON HAND, THE ASSESSEE HAS FILED A CONFI RMATION LETTER FROM AKTA REAL ESTATE THAT THE AREA OF 1628.21 SQ.FT. WA S ACCOUNTED BY IT AND THE NET INCOME WAS OFFERED TO TAXATION IN ITS HAND FOR ASSESSMENT YEARS 2004 05, 200506 AND 200607. WHEN THE INCOME ON THIS AR EA HAS BEEN OFFERED TO TAX BY THE SISTER CONCERN, WE ARE OF THE OPINION THAT IT IS NOT PROPER FOR THE ASSESSING OFFICER TO SIT IN THE JUDGMENT AS TO WHICH FIRM IS ENTITLED TO THE REVENUE ON THIS AREA OF 1628.21 SQ.FT. THERE IS NO LOSS TO THE REVENUE AS ONE OF THE SISTER CONCERNS HAS OFFERED THE INCOME I N QUESTION TO TAX. AS ALREADY HELD BY THE TRIBUNAL IN ASSESSEES OWN CASE , IN THE EARLIER ROUND OF LITIGATION, THE ASSESSING OFFICER CANNOT STEP INTO THE SHOES OF BUSINESSMEN AND DECIDE AS TO WHAT SHOULD BE THE REVENUE OF IT. THE ADDITION WOULD AMOUNT TO TAXING THE SAME AMOUNT IN THE HANDS OF TW O ASSESSEES WHICH WOULD BE BADINLAW. 24. LOOKING AT THE ISSUE FROM ANOTHER ANGLE, THE ENTIRE ADDITION HAS BEEN ON THE GROUND THAT THERE IS NO UNDERRECOVERY OF SA LE PROCEEDS. THE ASSESSING OFFICER DREW AN INFERENCE THAT AN AREA OF 1628.21 SQ.FT. IS SOLD. THERE IS NO EVIDENCE WITH THE REVENUE THAT THE ASSE SSEE HAS SOLD THIS AREA OF 1628.21 SQ.FT. AND HAS EARNED ANY INCOME. THE EN TIRE ADDITION IS BASED ON SURMISES. NO ONE CAN INFER SALE AND THEN TAX THE IM AGINARY INCOME. IT IS WELL SETTLED THAT INCOME CANNOT BE TAXED ON NOTIONAL BAS IS. EVEN IF IT IS HELD THAT THE ASSESSEE IS ENTITLED TO AN AREA OF 1628.21 SQ.F T., THEN, AT BEST, IT WOULD BE THE CLOSING STOCK OF THE ASSESSEE AS THERE IS NO SALE AND THIS CLOSING STOCK WOULD BE VALUED A COST OF THE ASSESSEE WHICH IS THE COST OF CONSTRUCTION INCURRED. THE REVENUE, IF ANY, WOULD BE THE CONSTRU CTION COST RECOVERY FROM PRERANA REAL ESTATES P. LTD. 17 THE TENANTS. THIS DOES NOT LEAD TO ANY MARGI N TO THE ASSESSEE. IN ANY EVENT, NO TAX CAN BE LEVIED BY INFERENCE. FO R ALL THESE REASONS, WE ALLOW THE GROUNDS RAISED BY THE ASSESSEE. 25. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MAY 2012 SD/- R.S. PADVEKAR JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 25 TH MAY 2012 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, I BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI