M/s. Prerna Developers, Gandhinagar V. Income Tax Officer,Ward-3, Gandhinagar

ITA 820/AHD/2015

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9338 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 09-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Assessee Lawyers: S N DIVATIA
• Keywords: Set aside
• Section: 131; 68

Judgement Text

ITA 820/AHD/2015 ITA 2347/AHD/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA NO. 820/AHD/2015 AY: 2006-07 ITA NO. 2347/AHD/2016 AY: 2006-07 M/S PRERNA DEVELOPERS, GANDHINAGAR, KOBA HIGHWAY, AT KUNDASAN, GANDHINAGAR-382421 (PAN: AAIFP5685J) VS INCOME TAX OFFICER, WARD-3, GANDHINAGAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI S.N. DIVATIA, AR RESPONDENT BY: SHRI S.K. DEV, SR. DR DATE OF HEARING : 27.06.2019 DATE OF PRONOUNCEMENT: 01.10.2019 ORDER PER SUDHANSHU SRIVASTAVA, J.M.: BOTH THE APPEALS HAVE BEEN PREFERRED BY THE ASSES SEE. ITA NO. 820/AHD/2015 IS THE ASSESSEES APPEAL AGAIN ST THE ORDER DATED 19/01/2015 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), GANDHINAGAR, WHEREIN THE ISSUE IN DI SPUTE IS THE QUANTUM ADDITION OF RS. 52,14,000/-. ITA NO. 2347/ AHD/2016 ITA 820/AHD/2015 ITA 2347/AHD/2016 2 IS AGAINST THAT ORDER OF THE LD. COMMISSIONER OF IN COME TAX (APPEALS), GANDHINAGAR WHEREIN THE LD. FIRST APPELL ATE AUTHORITY HAS UPHELD THE IMPOSITION OF PENALTY IMPOSED UNDER SECTION 271 (1) (C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CA LLED THE ACT). BOTH THE APPEALS PERTAIN TO ASSESSMENT YEAR 2006 07. BOTH THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF THROUGH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS AS BUILDER S AND DEVELOPERS. THE RETURN OF INCOME WAS FILED DECLARIN G A GROSS TOTAL LOSS OF RS. 9,33,845/-. THE RETURN WAS INITIALLY PR OCESSED SECTION 143 (1) OF THE ACT AND CASE WAS LATER SELECTED FOR SCRUTINY. THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS. 49,33, 155/- AFTER MAKING ADDITION OF RS. 6,53,000/- TO THE PARTNERS CAPITAL ACCOUNT AND RS. 52,14,000/- BEING BOOKING ADVANCE D EPOSITS REMAINING UNCONFIRMED. 2.1 AGGRIEVED, THE ASSESSEE APPROACHED THE LD. FIR ST APPELLATE AUTHORITY WHO DELETED THE ADDITION OF RS. 6,53,000/- MADE ON ACCOUNT OF PARTNERS CAPITAL BUT CONFIRMED THE ADDITION OF RS. 52,14,000/- ON ACCOUNT OF BOOKING ADVANCE DE POSITS. ITA 820/AHD/2015 ITA 2347/AHD/2016 3 2.2 AGGRIEVED, THE ASSESSEE AS WELL AS THE DEPARTM ENT APPROACHED THE TRIBUNAL WHO, VIDE ORDER DATED 29/07 /2011 IN ITA NUMBERS 02/09/2004/AHD/2009 AND 3028/AHD/2009, RESTORED ON BOTH THE ISSUES TO THE FILE OF THE ASSE SSING OFFICER FOR FRESH ADJUDICATION. 2.3 DURING THE SECOND ROUND OF PROCEEDINGS BEFORE THE ASSESSING OFFICER, THE ASSESSING OFFICER ONCE AGAIN MADE THE ADDITION OF RS. 52,14,000/- AS INCOME OF THE ASSESS EE UNDER SECTION 68 OF THE ACT ON THE GROUND THAT ALTHOUGH T HE ASSESSEE HAD FURNISHED CONFIRMATIONS IN RESPECT OF THE BOOKI NG ADVANCES RECEIVED FROM 14 PARTIES, ALL THE 14 PARTIES HAD FA ILED TO RESPOND TO THE NOTICES ISSUED UNDER SECTION 133 (6) OF THE ACT. THE LD. COMMISSIONER OF INCOME TAX (APPEALS), ON APPEAL BY THE ASSESSEE, CONFIRMED THIS ADDITION OF RS. 52,14,000/ - ON THE GROUND THAT ALTHOUGH THE ASSESSEE HAD SUBMITTED CON FIRMATIONS FROM ALL THE 14 DEPOSITORS AND HAD ALSO SUBMITTED C OPIES OF THEIR PAN, COPY OF LEDGER ACCOUNTS AND COPY OF RETURNS OF INCOME BUT THE ASSESSEE HAS NOT PROVIDED ANY BANK STATEMENTS O F THE THIRD PARTIES TO PROVE THE SOURCE OF INCOME. THE LD. FIRS T APPELLATE AUTHORITY PROCEEDED TO CONFIRM THIS ADDITION OF RS. 52,14,000/- ITA 820/AHD/2015 ITA 2347/AHD/2016 4 AND NOW THE ASSESSEE IS BEFORE THIS TRIBUNAL AGAIN AND HAS CHALLENGED THE CONFIRMATION BY THE LD. FIRST APPELL ATE AUTHORITY. 2.4 THE ASSESSING OFFICER ALSO PROCEEDED TO IMPOSE A PENALTY OF RS. 14,40,710/- UNDER SECTION 271 (1) (C ) OF THE ACT ON THE ADDITION OF RS. 52,14,000/-. THIS PENALTY WAS A LSO CONFIRMED BY THE LD. CIT (APPEALS) AND THE ASSESSEE IS BEFORE THIS TRIBUNAL CHALLENGING THE CONFIRMATION OF THE PENALTY ALSO. 3.0 THE LD. AUTHORISED REPRESENTATIVE SUBMITTED TH AT VIDE ORDER SHEET ENTRY DATED 29/11/2018, THE BENCH HAD D IRECTED THE DEPARTMENT TO SUBMIT A REMAND REPORT FROM THE ASSES SING OFFICER BY NOTING THAT THE ASSESSING OFFICER OUGHT TO HAVE INVESTIGATED THE ISSUE WITH MORE VIGOUR THAN SIMPLY ISSUING NOTICE U NDER SECTION 133 (6) OF THE ACT. IT WAS SUBMITTED THAT THE ASSES SING OFFICER WAS DIRECTED TO FIRST ASCERTAIN THE IDENTITY OF ALL THE 14 PERSONS/ENTITIES WHO HAD MADE BOOKING WITH THE ASSE SSEE AND THEREAFTER THE ASSESSING OFFICER WAS DIRECTED TO VE RIFY THE FACT AS TO WHETHER THEY HAVE MADE THE BOOKING/S OR NOT, WHE THER THEY HAVE PAID TO THE ASSESSEE OR NOT AND WHETHER THEY H AVE RECEIVED BACK THEIR MONEY OR NOT AND CANCELLATION IF ANY. 3.1 THE LD. AUTHORISED REPRESENTATIVE SUBMITTED TH AT THE REMAND REPORT, AS DIRECTED BY THE TRIBUNAL, HAD SIN CE BEEN ITA 820/AHD/2015 ITA 2347/AHD/2016 5 OBTAINED AND WAS AVAILABLE ON PAGE 3 OF THE PAPER-B OOK. HE DREW OUR ATTENTION TO THE REMAND REPORT DATED 16/01/2019 AND SUBMITTED THAT IN THIS REMAND REPORT THE ASSESSING OFFICER HAD STATED THAT SUMMONS HAD BEEN ISSUED UNDER SECTION 1 31 OF THE ACT TO THE 14 PERSONS WHO HAD MADE BOOKING WITH M/S PRERNA DEVELOPERS I.E. THE ASSESSEE AND OUT OF THE 14 PERS ONS, 13 PERSONS WERE EXAMINED ON OATH BY RECORDING THEIR ST ATEMENT UNDER SECTION 131 OF THE ACT. THE LD. AUTHORISED RE PRESENTATIVE FURTHER SUBMITTED THAT ONE OF THE PERSONS SH. SANJA Y PATEL COULD NOT ATTEND THE OFFICE AS HE WAS ABROAD. IT WAS FURT HER SUBMITTED THAT AS PER THE REMAND REPORT THE ASSESSING OFFICER HAS EXAMINED THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSAC TIONS ON OATH AND IT HAS BEEN VERIFIED FROM THE STATEMENT/S RECOR DED THAT ALL THE 13 PERSONS HAVE MADE THEIR BOOKINGS AND HAVE IN VESTED/PAID TO THE ASSESSEE FOR BOOKING OF THE PROPERTY OF M/S PRERNA DEVELOPERS. THE LD. AUTHORISED REPRESENTATIVE FURTH ER SUBMITTED THAT THE STATEMENTS RECORDED BY THE ASSESSING OFFIC ER WERE ALSO FORWARDED TO THE TRIBUNAL FOR PERUSUAL. IT WAS FURT HER SUBMITTED THAT AS PER THE REMAND REPORT, OUT OF 13 PERSONS 9 PERSONS HAD STATED THAT THEY HAD CANCELLED THEIR BOOKINGS AND H AD RECEIVED BACK THEIR BOOKING AMOUNTS AND HAD SUBMITTED CONFIR MATIONS IN ITA 820/AHD/2015 ITA 2347/AHD/2016 6 THIS REGARD. IT WAS FURTHER SUBMITTED THAT THE REMA INING 3 PERSONS HAD STATED THAT THE CANCELLATION AMOUNTS WE RE CONVERTED INTO UNSECURED LOANS AND INTEREST WAS RECEIVED BY T HEM ON THE SAID AMOUNTS. IT WAS FURTHER SUBMITTED THAT AS PER THE REMAND REPORT IN THE CASE OF SMT. SMITABEN MAHINDRA KUMAR PATEL, IT HAD BEEN CONFIRMED THAT SHE WAS ALLOTTED SHOP NO. 3 AGAINST HER BOOKING. 3.2 THE LD. AUTHORISED REPRESENTATIVE SUBMITTED TH AT IN VIEW OF THE DETAILED OBSERVATIONS IN THE REMAND REP ORT, NO ADDITION WAS SUSTAINABLE. 3.3 IT WAS FURTHER SUBMITTED THAT THE PENALTY BEIN G CONSEQUENTIAL WAS ALSO TO BE DELETED. 4.0 IN RESPONSE, THE LD. SENIOR DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE FINDINGS OF T HE LD. FIRST APPELLATE AUTHORITY. THE LD. SENIOR DEPARTMENTAL RE PRESENTATIVE HOWEVER COULD NOT NEGATE THE FACT THAT THE REMAND R EPORT DATED 16/01/2019 FORTIFIED THE ASSESSEES CLAIM REGARDING THE ADVANCES HAVING BEEN RECEIVED. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE A LSO PERUSED THE MATERIAL ON RECORD. IT IS THE GRIEVANCE OF THE ASSESSEE THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN ITA 820/AHD/2015 ITA 2347/AHD/2016 7 CONFIRMING THE ADDITION OF RS. 52,14,000/- WHICH PE RTAINED TO ADVANCE/DEPOSITS. THE ASSESSEE IS ENGAGED IN THE BU SINESS OF REAL ESTATE DEVELOPMENT AND IT HIS CLAIM THAT HE HA D RECEIVED THE IMPUGNED AMOUNT FROM 14 PERSONS AS BOOKING ADVANCE/ S. AFTER THE MATTER TRAVELLING UP TO THE TRIBUNAL IN THE FIR ST ROUND OF PROCEEDINGS, THE ISSUE WAS REMITTED TO THE ASSESSIN G OFFICER FOR FRESH INVESTIGATION AND EXAMINATION. IN THE FRESH A SSESSMENT PROCEEDINGS, IN PURSUANCE TO THE DIRECTIONS OF THE TRIBUNAL, THE ASSESSING OFFICER INITIATED INVESTIGATION AND THE A SSESSEE DID SUBMIT CONFIRMATIONS, BANK DETAILS AND ADDRESSES OF THE 14 PERSONS. AS PER THE ASSESSING OFFICER, HE HAD ISSUE D SUMMONS/NOTICES UNDER SECTION 133 (6) OF THE ACT RE QUIRING RESPONSE FROM THESE 14 PARTIES BUT SOMEHOW NONE OF THEM RESPONDED TO THE QUERY OF THE ASSESSING OFFICER. TH E ASSESSING OFFICER, THEREAFTER, DID NOT CARRY OUT ANY FURTHER INVESTIGATION AND AGAIN MADE THE SAME ADDITION. THE APPEAL TO THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ALSO DID NOT B RING ANY RELIEF TO THE ASSESSEE. THEREAFTER, AFTER THE MATTE R HAVING REACHED THE TRIBUNAL AGAIN, ON AN EARLIER DATE, THE BENCH, VIDE ORDER SHEET ENTRY DATED 29/11/2018 NOTED THAT THE ASSESSI NG OFFICER SHOULD HAVE INVESTIGATED THE ISSUE WITH MORE VIGOUR THAN BY ITA 820/AHD/2015 ITA 2347/AHD/2016 8 SIMPLY ISSUING NOTICE UNDER SECTION 133 (6) OF THE ACT. THE BENCH CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFIC ER BY DIRECTING HIM TO FIRST ASCERTAIN THE IDENTITY OF ALL THE 14 P ERSONS ENTITIES THAT HAD MADE BOOKINGS WITH THE ASSESSEE. THE ASSES SING OFFICER WAS FURTHER DIRECTED THAT HE SHOULD VERIFY THE FACT AS TO WHETHER THEY HAVE MADE THE BOOKINGS OR NOT, WHETHER THEY HA VE PAID THE AMOUNT TO THE ASSESSEE OR NOT AND WHETHER THEY HAVE RECEIVED BACK THEIR MONEY OR NOT ON CANCELLATION. 5.1 SUBSEQUENT TO THE DIRECTIONS OF THE BENCH, THE REMAND REPORT HAS BEEN RECEIVED WHICH IS DATED 16 TH OF JANUARY 2019 AND IS PLACED ON RECORD. IN THE REMAND REPORT IT HAS BE EN STATED BY THE ASSESSING OFFICER THAT SUMMONS WERE ISSUED TO 1 4 PERSONS UNDER SECTION 131 OF THE ACT AND OUT OF 14 PERSONS 13 PERSONS RESPONDED AND THAT THE RECORDING THEIR STATEMENT/S UNDER SECTION 131 OF THE ACT WAS CONCLUDED. THE ASSESSING OFFICER HAS FURTHER STATED THAT ONE OF THE PERSONS SH. SANJAY P ATEL COULD NOT ATTEND THE OFFICE AS HE WAS ABROAD. IT HAS BEEN FUR THER STATED IN THE REMAND REPORT THAT THE CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS WERE EXAMINED ON OATH AND IT IS VERIFIED FROM THE STATEMENT/S RECORDED THAT ALL THE 13 PERSONS HA VE MADE THEIR BOOKINGS AND THAT THEY HAVE INVESTED WITH THE ASSES SEE FOR ITA 820/AHD/2015 ITA 2347/AHD/2016 9 BOOKING OF THE PROPERTY. IT HAS ALSO BEEN STATED BY THE ASSESSING OFFICER THAT OUT OF THE 13 PERSONS, 9 PERSONS HAVE STATED THAT THEY HAVE CANCELLED THEIR BOOKINGS AND HAVE RECEIVED BAC K THEIR BOOKING AMOUNTS AND HAVE ALSO SUBMITTED THEIR CONFI RMATIONS IN THIS REGARD. THE REMAND REPORT FURTHER STATES THAT THE REMAINING 3 PERSONS HAVE STATED THAT THE CANCELLATION AMOUNTS WERE CONVERTED INTO UNSECURED LOANS AND INTEREST WAS REC EIVED BY THEM ON THE SAID AMOUNTS. IT HAS ALSO BEEN MENTIONE D IN THE REMAND REPORT THAT IN THE CASE OF ONE SMT SMITABEN MAHENDRA KUMAR PATEL SHE WAS ALLOTTED SHOP NO. 3 AGAINST HER BOOKING. THUS A PERUSAL OF THE REMAND REPORT SUBMITTED BY TH E ASSESSING OFFICER IN THIS REGARD CLINCHES THE ISSUE IN FAVOUR OF THE ASSESSEE IN AS MUCH AS OUT OF THE 14 PERSONS, 13 PERSONS HAV E DULY ACCEPTED AND CONFIRMED THE TRANSACTIONS. THE ASSESS ING OFFICER HAS ALSO EXAMINED THEIR CREDITWORTHINESS AND HAS NO T DRAWN ANY NEGATIVE INFERENCE IN THIS REGARD. ONLY ONE OUT OF THE 14 PERSONS, ONE SH. SANJAY PATEL WAS NOT AVAILABLE FOR RECORDIN G OF THE STATEMENT UNDER OATH AS HE WAS ABROAD. IT IS SEEN T HAT SH. SANJAY PATEL HAS ONLY ADVANCED AN AMOUNT OF RS. 51, 000/- AND LOOKING INTO THE FACTS AND TOTALITY OF THE CIRCUMST ANCES THAT OTHER 13 PERSONS OUT OF THE 14 PERSONS HAVE CONFIRMED THE ITA 820/AHD/2015 ITA 2347/AHD/2016 10 TRANSACTIONS OF THE ASSESSEE, THE AMOUNT OF RS. 51, 000/- LOSES SIGNIFICANCE. ACCORDINGLY, IN VIEW OF THE REMAND RE PORT OF THE ASSESSING OFFICER, WE ARE OF THE CONSIDERED OPINION THAT THE IMPUGNED ADDITION DOES NOT HAVE ANY FOUNDATION TO S URVIVE. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. COMMI SSIONER OF INCOME TAX (APPEALS) AND DIRECT THE ASSESSING OFFIC ER TO DELETE IMPUGNED ADDITION. 5.2 SINCE THE QUANTUM ADDITION STANDS DELETED, THE CONSEQUENTIAL PENALTY IMPOSED UNDER SECTION 271 (1) (C) ALSO DOES NOT SURVIVE. THE SAME ALSO STANDS DELETED. 6.0 IN THE FINAL RESULT BOTH THE APPEALS OF THE AS SESSEE STAND ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 01.10.2019 SD/- SD/- (AMARJIT SINGH) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 01 ST OCTOBER, 2019 TRUE COPY *DRAGON* COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER ASSTT. REGISTRAR ITAT, NEW DELHI