Navpad Developers, Surat V. Income Tax Officer, Ward-1(3)(8), Surat, Surat

ITA 839/SRT/2023

• Counselvise Citation: [2024] 130 COUNSELVISE.COM (IT) 2675 (ITAT-SURAT)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-03-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 03-12-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND Dr. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No. 839 & 840/Srt/2023 (AY: 2011-12 & 2012-13) (Physical hearing) Navpad Developers, C/o-Dipak Nagindas Chauhan, 1, Aagam Co-Op Society, Tadwadi, Rander Road, Surat. PAN No. AAHFN 8083 H Vs. I.T.O., Ward-1(3) (8), Aayakar Bhavan, Majura Gate, Surat. Appellant/ assessee Respondent/ revenue Assessee represented by Shri P M Jagasheth, CA Department represented by Shri Ravi Kant Gupta, CIT-DR Date of institution of appeals 05/12/2023 Date of hearing 05/03/2024 Date of pronouncement 05/03/2024 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. These two appeals by the assessee(s) are directed against the separate orders of National Faceless Appeal Centre, Delhi (NFAC)/learned Commissioner of Income Tax (Appeals) [in short, the ld. CIT(A)] both dated 17/11/2023 for the Assessment Year (AY) 2011-12 and 2012-13 respectively. Certain facts and grounds of both these appeals are common except variation in additions, therefore, with the consent of parties both these appeals were clubbed, heard together and are being decided by this consolidated order to avoid the conflicting decision. For appreciation of facts, the appeal in ITA No. 839/Srt/2023 for the A.Y. 2011-12 is treated as a “lead case”. In this appeal, the assessee has raised following grounds of appeal: “1. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in ITA No.839 & 840/Srt/2023 Navpad Developers Vs ITO 2 confirming the action of the Assessing Officer in re-opening the assessment and issuing notice u/s. 148 of the Act without appreciating facts and legal aspects of the case. 2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.6,56,23,635/- on account of alleged unexplained/undisclosed income. 3. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.8,86,466/- on account of alleged on money receipts treated as alleged unexplained income. 4. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has not offered adequate opportunities to hear the case and passed ex-parte order and hence the case may please be set aside and restored back to the CIT(A) or AO. 5. It is therefore prayed that the above addition may please be deleted as learned members of the tribunal may deem it proper. 6. The appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of appeal.” 2. Rival submissions of both the parties have been heard and record perused. The learned Authorised Representative (ld. AR) of the assessee submits that the assessee has filed present appeal on 23/01/2019 against high pitched addition in assessment order. The assessee was served notice for the first time in March, 2021 which was severe pandemic period. Notice for filing submission was again served on 04/10/2023. The assessee sought adjournment for 15 days. The assessee was allowed adjournment, however, immediately, the assessee was served notice for filing submission on or before 10/11/2023. The assessee could not file his submission and the impugned order was passed by ld CIT(A). Such facts clearly suggest that the assessee was not given fair and reasonable opportunity. It is not the case of ld CIT(A) that the assessee was not responding ITA No.839 & 840/Srt/2023 Navpad Developers Vs ITO 3 to the notice of ld CIT(A). The assessee has good case on merit and is likely to succeed if one more opportunity is given to assessee. The ld. CIT(A) has not passed the order as per the mandate of Section 250(6) of the Income Tax Act, 1961 (in short, the Act). 3. The ld. AR of the assessee by inviting our attention on para 1 of assessment order and would submit that case of assessee was opened on the basis of information that the assessee has received cash of Rs. 6.56 crores against the sale of 31 flats. The Assessing Officer while passing the assessment order, made addition of entire closing stock without appreciating the facts. The assessee has received total sale consideration of Rs. 4.58 crores only. The Assessing Officer has neither followed the basic principle of accounting nor the decisions of Hon'ble Jurisdictional High Court in making addition of profit on the transaction, rather added the entire transaction in the assessment order. Entire closing stock can never be the profit of assessee and no stretch of imagination, such addition can be made. Similarly, the case of assessee for AY 2012-13 was also reopened on the basis of information that the assessee has made Satakhat and received a cash of Rs. 6.56 crores and Rs. 50.00 lacs against the sale consideration of flats in Navpad residency. The Assessing Officer while passing the assessment order made addition of on-money of Rs. 1.70 crores as well as addition of unexplained income of Rs. 2.70 crores without appreciating the principle of accounting. The additions in both the years were upheld by ld CIT(A) in ex-party and non-speaking order. the ld CIT(A) even has not considered the basis facts available in the assessment order. The ld. AR of the assesse submits that the matter may be restored back to the file of Assessing ITA No.839 & 840/Srt/2023 Navpad Developers Vs ITO 4 officer instead of ld. CIT(A). In case the matter is restored to ld. CIT(A), the ld. CIT(A) may require remand report on various submissions and evidences of assessee which may be a long drawn process. For appreciation of evidence and facts and to avoid such long drawn process and in the interest of justice, the matter may be restored to the file of Assessing Officer in both the years for deciding all the issues afresh. 4. On the other hand, the learned Commissioner of Income Tax- Departmental Representative (ld. CIT-DR) for the revenue supported the order of ld. CIT(A). The ld. CIT-DR for the revenue submits that the assessee was given reasonable opportunity but the assessee has chosen not to contest the proceedings. In case, this Bench is of the view that the assessee deserve any further opportunity before the lower authorities, the matter may be restored back to the file of ld. CIT(A) as the Assessing officer has already passed a detailed assessment order. 5. We have considered the submissions of both the parties and perused the orders of lower authorities carefully. We find that the Assessing Officer in A.Y. 2011- 12 while passing the assessment order made addition of Rs. 6.65 cores by on the basis of satakat which contains the reference of 31 flats admeasuring area of 44191 @ Rs. 1485/- per square feet. The assessee received Rs. 2.00 Crore upto the date of execution of said satakat and remaining of Rs. 4.56 Crore by 31.12.2010. The explanation of the assessee was that the said flats were sold to different persons, the details of all the persons, area of flats and cost of sale was furnished. The assessing officer still made additions on the basis of alleged satakat with Mohak A Gupta by taking a view that Flat No. 104 was sold to ITA No.839 & 840/Srt/2023 Navpad Developers Vs ITO 5 Mohak A Gupta and that the said satakat is the real satakat. We find that entire sale consideration or on money can never be profit of the builder. The assessing officer made addition without deducting the cost of construction/ project. Thus, on prima facia the addition is not justified. 6. The assessing officer also made addition of on-money of Rs. 8,86,466/- by taking a view that the assessee has sold two shops having area of 447.71 square feet at an average price of Rs. 1980/-. The rate mentioned in the diary is Rs. 2100 per square feet. The Assessing Officer adopted the price of shops at Rs. 3960/- and worked out the addition of Rs. 8,86,466/-. We find that no corroborative evidence is referred by Assessing Officer nor any investigation was carried out nor the purchaser is examined before making such calculation. On our prima facie view, such addition is uncalled for. 7. The ld. CIT(A) confirmed both the additions in an ex parte proceedings and non-speaking order. We find that the Assessing officer has made addition of Rs. 6.56 crores as well as Rs. 8,86,466/- without bringing any adverse material on record. Considering the fact that the impugned order is passed ex-parte and without discussing the merits of the case as mandated by section 250(6) of the Act, therefore, we deem it appropriate to restore the issue back to the file of Assessing Officer instead of ld. CIT(A) to avoid long drawn process of seeking remand report from the Assessing Officer, to decide the issue afresh in accordance with law. The Assessing Officer shall pass the assessment order afresh without being influenced by our prima facie observation in the preceeding paras. Needless to direct that before passing the order, the Assessing Officer shall grant opportunity of hearing to the assessee. The ITA No.839 & 840/Srt/2023 Navpad Developers Vs ITO 6 assessee is also directed to be more vigilant in future and not to cause further delay and seek adjournment without any valid reason and to furnish all the details and his submissions and evidences on various grounds of appeal raised by him, as soon as possible, if so desired without any further delay. In the result, the grounds of appeal raised by the assessee are allowed for statistical purposes. 8. In the result, this appeal of assessee is allowed for statistical purposes only. ITA No. 840/Srt/2023 for A.Y. 2012-13 9. We find that in this appeal, the assessee has raised similar ground of appeal. We also find that the facts of this appeal is common to the facts and grounds as raised in ITA No. 839/Srt/2023 for A.Y. 2011-12, which we have restored back to the file of Assessing Officer. Therefore, keeping in view the principle of consistency on similar set of facts, this appeal of assessee is also restored back to the file of Assessing Officer for deciding the same afresh with similar direction. In the result, grounds of assessee’s appeal are allowed for statistical purposes only. 10. In the result, both the appeals of assessee are allowed for statistical purposes. Order pronounced in the open court on 5 th March, 2024. Sd/- Sd/- (Dr. ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 05/03/2024 *Ranjan Copy to: 1. Assessee – 2. Revenue - 3. CIT ITA No.839 & 840/Srt/2023 Navpad Developers Vs ITO 7 4. DR By order 5. Guard File Sr. Private Secretary, ITAT, Surat