ACIT, Jaipur V. PRESTIGE CITY DEVELOPERS PVT. LTD., Jaipur

ITA 821/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5506 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 30-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATEJA
• Assessee Lawyers: ROHAN SOGANI C AS DH R
• Section: 143(3); 142(1); 145

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 821/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 . ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-2, JAIPUR. CUKE VS. M/S. PRESTIGE CITY DEVELOPERS PVT. LTD., 1-SF, KAMAL COMPLEX, PANCH BATTI, M.I. ROAD, JAIUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AADCP 4030 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BATEJA (ADDL.CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJEEV SOGANI & SHRI ROHAN SOGANI (C.AS) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 16.02.2016. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 19/02/2016. VKNS'K@ ORDER PER SHRI T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE EMANATING FROM THE ORDER OF LD. CIT (A)-I, JAIPUR DATED 01.08.2013 FOR THE A.Y. 2009-10 . THE EFFECTIVE GROUNDS RAISED IN THE APPEAL ARE AS UNDER :- 1) (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE LD. CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 52,15,183/- MADE BY THE AO AFTER INVOKING THE PROVISIONS OF SECTION 145 (3) SINCE THE ASSESSEE HAS NOT MAINTAINED ITS BOOKS ON PERCENTAGE COMPLETION M ETHOD PRESCRIBED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS, INDIA. (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) WAS JUSTIFIED IN IGNORING THE FACT THAT BY FOLLOWING PROJECT COMPLETION METHOD ASSESSEE HAS NOT FOLLOWED THE ACC OUNTING STANDARDS PRESCRIBED IN AS-9 AND AS-7 WHICH TENTAMOUNTS TO NO T FOLLOWING AS-1 PROVIDED IN SEC. 145(2) OF THE IT ACT. 2 ITA NO. 821/JP/2013 A.Y. 2009-10. ACIT VS. M/S. PRESTIGE CITY DEVELOPERS PVT. LTD. 2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT (A) WAS JUSTIFIED IN IGNORING THE FACT THAT THE ASSESSEE WAS NOT MAINTAINING STOCK REGISTER & CERTAIN EXPENSES WERE NOT SUPPORTED BY BILLS & THEREFORE REJECTION OF BOOKS BY THE AO WAS JUSTIFIE D. BOTH THE GROUNDS OF REVENUE ARE AGAINST DELETING TH E ADDITION OF RS. 52,15,183/- AFTER INVOKING PROVISIONS OF SEC. 145(3) AND ESTIMATING T HE INCOME ON THE BASIS OF PERCENTAGE COMPLETION METHOD. 2. THE ASSESSEE IS A REAL ESTATE DEVELOPER, HAS FIL ED ITS RETURN FOR THE ASSESSMENT YEAR 2009-10 DECLARING INCOME OF RS. 10,54,630/- ON 31.0 3.2010. THE CASE WAS SCRUTINIZED UNDER SECTION 143(3) OF THE IT ACT. THE AO ISSUED D ETAILED QUESTIONNAIRE UNDER SECTION 142(1) OF THE ACT FOR ASSESSING THE INCOME ON THE B ASIS OF PERCENTAGE COMPLETION METHOD. THE AO CONSIDERED THE AUDIT REPORT AND TO TAL RECEIPTS FROM THE PURCHASERS SHOWN DURING THE YEAR AND PRESCRIBED GUIDELINES ISS UED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS BY WAY OF ACCOUNTING STANDARD AS-7, AND HELD THAT INCOME OF THE ASSESSEE IS TO BE ASSESSED ON THE BASIS OF PERCENTAGE COMPLE TION METHOD. BUT ASSESSEE WAS FOLLOWING THE PROJECT COMPLETION METHOD DURING THE YEAR UNDER CONSIDERATION. ON THE BASIS OF PERCENTAGE COMPLETION METHOD, HE ESTIMATED THE TOTAL INCOME AT RS. 52,15,183/-. 3. THE ASSESSEE CHALLENGED THIS ISSUE BEFORE LD. CI T (A), WHO ALLOWED THE ASSESSEES APPEAL BY FOLLOWING THE DECISION OF ITAT JAIPUR BEN CH IN THE CASE OF M/S. KRISH INFRASTRUCTURE PVT. LTD. VS. ACIT IN ITA NO. 1096 & 1097/JP/2011 DATED 25.04.2013 WHEREIN IT HAS BEEN HELD THAT IT WAS NOT MANDATORY FOR ALL REAL ESTATE DEVELOPERS TO FOLLOW PERCENTAGE COMPLETION METHOD. SIMILAR VIEW HAS BEEN EXPRESSED BY THE BENCH IN THE CASE OF M/S. UNIQUE BUILDERS & DEVELOPERS VS . DCIT IN ITA NOS. 73 TO 77/JP/2012 3 ITA NO. 821/JP/2013 A.Y. 2009-10. ACIT VS. M/S. PRESTIGE CITY DEVELOPERS PVT. LTD. AND 689 TO 690/JP/2012 DATED 14.03.2013. HE FURTHE R RELIED ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF MANISH BUIL DWELL PVT. LTD. (ITA NO. 928/2011 DATED 15.11.2011) WHEREIN APEX COURT DECISION IN TH E CASE OF M/S. BILAHARI INVESTMENT PVT. LTD., 299 ITR 1 HAS BEEN CONSIDERED AND HELD T HAT IT CANNOT BE SAID THAT PROJECT COMPLETION METHOD FOLLOWED BY THE ASSESSEE WOULD RE SULT IN DEFERMENT OF PAYMENT OF TAXES. THE LD. CIT (A) FURTHER OBSERVED THAT APART FROM THIS NO SPECIFIC DEFECT HAS BEEN POINTED OUT BY THE AO IN THE BOOKS OF ACCOUNT MAINT AINED BY THE ASSESSEE TO SHOW THAT THE ACCOUNTS WERE NOT CORRECT AND COMPLETE. METHOD OF ACCOUNTING AND ACCOUNT STANDARD REGULARLY FOLLOWED BY THE APPELLANT CANNOT BE CHALLENGED WITHOUT POINTING OUT SERIOUS DEFECT IN THE METHOD. IN VIEW OF THESE FIN DINGS, THE LD. CIT (A) DELETED THE ADDITION. 4. NOW THE REVENUE IS BEFORE US. 4.1. THE LD. D/R VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND ARGUED THAT ASSESSEE TRIED TO DEFER THE PAYMENT ON THE BASIS OF PROJECT COMPLETION METHOD. WHATEVER DEFECT POINTED OUT BY THE AO ARE SUFFICIENT TO REJECT THE BOOKS RESULT UNDER SECTION 145(3) OF THE IT ACT. ACCORDINGLY HE REQUESTED TO CONFIRM THE ADDITION MADE BY THE AO. 4.2. ON THE OTHER HAND, LD. A/R SUPPORTED THE ORDE R LD. CIT (A) AND REQUESTED TO CONFIRM THE ORDER OF LD. CIT (A). 4.3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE MATERIAL AVAILABLE ON RECORD. THE AO HAS NOT POINTED OUT ANY DEFECT IN T HE BOOKS OF ACCOUNT THAT THE ASSESSEES INCOME CANNOT BE DEDUCED CORRECTLY. THE LD. AO REJECTED THE BOOK RESULT ON THE BASIS OF CONTRAVENTION OF GUIDELINES ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA AND ACCOUNTING STANDARD-7 READ WITH AS-9, NO DAY TO DAY STOCK 4 ITA NO. 821/JP/2013 A.Y. 2009-10. ACIT VS. M/S. PRESTIGE CITY DEVELOPERS PVT. LTD. REGISTER WAS MAINTAINED AND EXPENSES WERE NOT SUPPO RTED WITH PROPER VOUCHERS ARE GENERAL OBSERVATIONS WHICH CANNOT BE HELD VALID REA SON FOR REJECTING THE BOOKS OF ACCOUNT U/S 145(3) OF THE IT ACT. FURTHER, THE COOR DINATE BENCH HAD CONSIDERED THIS ISSUE IN VARIOUS CASES OF REAL ESTATE DEVELOPERS TO APPLY THE PROJECT COMPLETION METHOD OR PERCENTAGE COMPLETION METHOD. WE FIND THAT ASSES SEE HAS NOT EVADED TAX BY FOLLOWING PROJECT COMPLETION METHOD AND, THERE IS N O EVIDENCE THAT ASSESSEE HAS DEFERRED THE TAXES. THE FINDING OF THE LD. CIT (A) HAS NOT BEEN CONTROVERTED BY THE LD. D/R. THEREFORE, WE UPHOLD THE ORDER OF THE LD. CIT (A). 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.02.201 6. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 19/02/2016. DAS/ VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ACIT, CIRCLE-2, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT-M/S. PRESTIGE CITY DEVELOPERS PVT. LT D., JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 821/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR 5 ITA NO. 821/JP/2013 A.Y. 2009-10. ACIT VS. M/S. PRESTIGE CITY DEVELOPERS PVT. LTD.