Deccan Builders &Developers P.Ltd., Hyderabad V. ITO, Hyderabad

ITA 884/HYD/2008

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77831 (ITAT-HYDERABAD)
• Duration Of Justice: 5 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-07-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 13-05-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: AJAY GANDHI
• Keywords: Business income; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.884/HYD/2008 ASSESSMENT YEAR 1998-1999 M/S. DECCAN BUILDERS & DEVELOPERS P. LTD. SECUNDERABAD. PAN AACCD 6868N VS. ITO, COMPANY WARD 1 (1) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. AJAY GANDHI FOR REVENUE : MS. K. HARITHA DATE OF HEARING : 11.02.2014 DATE OF PRONOUNCEMENT : 02.04.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS APPEAL IS BY ASSESSEE AGAINST THE ORDER OF T HE CIT(A)-II, HYDERABAD DATED 29.02.2008 FOR THE A.Y. 1998-1999. 2. THE ISSUE IN THIS APPEAL HAS A CHEQUERED HISTOR Y. BEFORE ADVERTING TO THE ISSUE, THE GROUNDS RAISED B Y THE ASSESSEE ARE EXTRACTED AS UNDER : 1. THAT THE LEARNED A.O. HAS WRONGLY APPRECIATED THE DIRECTIONS ISSUED BY HONBLE ITAT REGARDING VALUATION OF OPENING STOCK WHICH WILL DISTURB THE ENTIRE PREVIOUS YEARS RESULT. 2. THAT THE LEARNED A.O. HAS NOT FOLLOWED THE DIRECTIONS ISSUED BY THE HONBLE ITAT REGARDING ASCERTAINMENT OF COST OF SALE WHICH SHOULD NOT BE LESS THAN CONTRACT PRICE. 2 ITA.NO.884/HYD/2008 DECCAN BUILDERS & DEVELOPERS P. LTD. SECUNDERABAD 3. THAT THE ORDER OF LEARNED A.O. IS BASED ON TOTAL LY ARBITRARY AND WRONG ASSUMPTION THAT THE ADDITIONS WERE EVENLY MADE FOR THE ENTIRE BUILDING. 4. THAT THE LEARNED A.O. HAS ADOPTED WRONG FORMULA IN ADJUSTING LAND OWNERS SHARE. 5. THAT ENTIRE CALCULATIONS MADE BY LEARNED A.O. IS ARITHMETICALLY WRONG. 6. THAT LEARNED A.O. IS WRONG IN APPLYING COST METH OD INSPITE OF CLEAR DIRECTION OF THE HONBLE ITAT. 3. BRIEFLY STATED, ASSESSEE-COMPANY IS ENGAGED IN REAL ESTATE DEVELOPMENT AND BUILDING ACTIVITY. THE ASSESSEE- COMPANY HAD UNDERTAKEN BUILDING ACTIVITY AT KAMACHH A IN VARANASI AND THE PROJECT WAS NAMED AS KASIRAJ APAR TMENTS AND COMMERCIAL COMPLEX WHICH CONSISTED BOTH RESIDE NTIAL FLATS AND SHOPS. THE ASSESSMENT UNDER SECTION 143(3 ) WAS COMPLETED ORIGINALLY ON 30.03.2001 FOR A.Y. 1998-99 AT RS.52,55,509/- AS AGAINST RETURNED INCOME OF NIL DE CLARED BY THE ASSESSEE. 4. THE ADDITION OF RS.52,72,200/- WAS MADE ON ACCOUNT OF WORKING OUT THE CLOSING WORK IN PROGRESS AFTER ARRIVING AT COST OF SALE ON THE PROPERTY SOLD DURIN G THE YEAR. THE SAID ASSESSMENT WAS CONFIRMED BY THE CIT(A). AG AINST THE ORDER OF THE CIT(A), THE ASSESSEE HAD FILED AN APPE AL BEFORE THE ITAT. THE ITAT VIDE ITS ORDER IN ITA. NO. 334/HYD/2 002 DATED 17.09.2002 HAD SET ASIDE THE ISSUE OF VALUATION OF WORK IN PROGRESS TO THE FILE OF A.O. WITH CERTAIN OBSERVATI ONS AND DIRECTIONS. IN THE COURSE OF CONSEQUENTIAL ASSESSME NT PROCEEDINGS, A.O. WORKED OUT THE DIFFERENCE OF CLOS ING WORK IN PROGRESS AT RS.32,46,099/- AS A RESULT OF WHICH, TH E TOTAL INCOME WAS ASSESSED AT RS.32,29,408/-. THE A.O. HAD RESORTED TO VALUATION IN THE ABSENCE OF ANY INFORMATION BEIN G FURNISHED 3 ITA.NO.884/HYD/2008 DECCAN BUILDERS & DEVELOPERS P. LTD. SECUNDERABAD BY THE ASSESSEE, AS THE PROJECT WAS STATED TO HAVE BEEN COMPLETED LONG BACK. ASSESSEE CONTESTED THE SAME BE FORE THE CIT(A). THE CIT(A) SUMMARIZED THE DIRECTIONS OF THE ITAT VIDE PARA-3 AS UNDER : 1. THE METHOD ADOPTED BY THE ASSESSEE LEAVES CERTAIN WORK IN PROGRESS IN THE BOOKS OF THE COMPANY EVEN AFTER COMPLETION OF THE PROJECT WHICH IS WRONG. 2. THE COST OF SALE IS BASED ON THE ASSUMPTION THAT THE ENTIRE WORK OF CONSTRUCTION IS OUTSOURCING WHICH IS NOT BORNE OUT OF THE RECORD. PART OF THE WORK HAS BEEN UNDERTAKEN BY THE COMPANY ITSELF. ACCORDINGLY, THE AVERAGE CONTRACT WORK TAKEN BY THE ASSESSEE AT RS.350/- PER SQ. FT. FOR 97-98 AND RS.359/- PER SQ. FT FOR THE A.Y. 98-99 ON THE PREMISE THAT THE ENTIRE WORK IS OUTSOURCED CANNOT BE ACCEPTED. 3. THE VALUATION REPORT SUBMITTED BY THE ASSESSEE C ANNOT BE RELIED UPON. MOREOVER, NO DETAILED EFFORT HAS BE EN MADE BY THE VALUER TO ARRIVE AT ITEM-WISE RECORD TH OUGH IT IS STATED THAT MEASUREMENTS WERE TAKEN ON 31.03.1998. 5. THEREAFTER, THE CIT(A) MADE CERTAIN OBSERVATION S AS UNDER : 3.1. IN SHORT, THE ITAT REJECTED THE METHOD ADOPTE D BY THE ASSESSEE FOR ARRIVING AT THE COST OF SALES. AT THE SAME TIME, THE HONBLE ITAT OBSERVED THAT THE CALCULATIO N OF THE A.O. ALSO SEEMS TO BE ERRONEOUS FOR THE REASON THAT COST OF THE COMPLETED SHOP CANNOT BE LESS THAN THE CONTRACTED P RICE PAYABLE TO THE CONTRACTOR TO WHOM THE WORK WAS OUTS OURCED OR THE PRICE COMPANY INCURS TO COMPLETE THE CONSTRU CTION BY ITSELF. MOREOVER, THE A.O. HAS TO NECESSARILY CONSI DER THE COST OF CONSTRUCTION INCURRED BY THE ASSESSEE COMPANY ON AREA BELONGING TO THE LAND LORDS WHICH IS ATTRIBUTABLE T O THE AREAS SHOWN I.E., COST PER SQ. FT. OF LAND SOLD SHOULD BE ARRIVED. THE HONBLE ITAT BY WAY OF AN EXAMPLE GIVEN IN PARA-11 OF THE ORDER HAD EXPLAINED HOW THE A.OS CALCULATION CANNO T BE ACCEPTED. WITH THE ABOVE DIRECTION, THE HONBLE ITA T SET ASIDE ISSUE TO THE FILE OF THE A.O. TO CARRY OUT NECESSAR Y VALUATION AS PER LAW AFTER GIVING OPPORTUNITY TO THE ASSESSEE. T HE ITAT ALSO DIRECTED THE ASSESSEE TO APPEAR IN PERSON OR T HOUGH 4 ITA.NO.884/HYD/2008 DECCAN BUILDERS & DEVELOPERS P. LTD. SECUNDERABAD COUNSEL BEFORE THE ASSESSING AUTHORITY AND COOPERAT E FULLY IN FURNISHING THE INFORMATION AS MAY BE REQUIRED FOR P ROPERLY EVALUATING THE WORK IN PROGRESS. WITH THE ABOVE BAC KGROUND, THE PRESENT ASSESSMENT HAS BEEN FRAMED BY THE A.O. 6. CONSIDERING THAT A.O. HAS AFFORDED ADEQUATE OPPORTUNITY TO THE ASSESSEE AND ASSESSEE EXPRESSED ITS INABILITY TO PRODUCE BOOKS OF ACCOUNTS OR ANY INFOR MATION OTHER THAN WHAT HAS BEEN SUBMITTED DURING THE EARLIER PRO CEEDINGS, THE LD. CIT(A) CONFIRMED THE WORKING OF THE A.O. 7. AS PER THE A.O., OUT OF THE TOTAL AREA OF CONSTRUCTION OF 97422 SQ. FT., THE LAND OWNERS SHAR E WAS 19100 SQ. FT. WHICH IS ROUGHLY 19.6% OR 20% OF THE TOTAL AREA OF CONSTRUCTION. THE A.O. GAVE THE BENEFIT OF DOUBT TO THE ASSESSEE BY HOLDING THAT MAJOR PART OF THE ADDITION DURING THE YEAR GOES TO THE AREA SOLD AND TREATED 80% OF THE A DDITIONS TO THE AREA SOLD AND BALANCE 20% TO THE UNSOLD AREA I .E., LAND OWNERS SHARE. IN ACCORDANCE WITH THE DIRECTION OF T HE ITAT, THE A.O. ARRIVED AT THE OPENING WORK IN PROGRESS TO WHI CH, ADDITIONS MADE DURING THE YEAR OF RS.36,01,006/- WA S ADDED. THIS COST WAS ATTRIBUTED TO THE TOTAL AVAILABLE SAL EABLE AREA OF 75151 SQ. FT. (97422 SQ. FT. TOTAL AREA LAND OWNE R SHARE 19100 SQ. FT. SOLD AREA IN THE PREVIOUS YEAR 3171 SQ. F T.). THIS GAVE A RATE OF RS.319.94PS PER SQ. FT. ACCORDINGLY, THE CO ST OF SOLD AREA WAS COMPUTED AT RS.94,66,384/-. THUS, THE CLOSING W ORK IN PROGRESS WAS ARRIVED AS BELOW : OPENING WORK IN PROGRESS - RS.1,63,54,839 ADD: ADDITIONS DURING THE YEAR -RS. 36,01,006 ----------------------- RS.1,99,55,845 LESS: COST OF SALES MADE DURING THE YEAR. RS. 94,66,284 ------------------------ CLOSING WORK IN PROGRESS RS. 1,04,89,461 5 ITA.NO.884/HYD/2008 DECCAN BUILDERS & DEVELOPERS P. LTD. SECUNDERABAD SINCE THE ASSESSEE HAD SHOWN CLOSING WORK IN PROGRE SS OF RS.72,43,362/-, THERE WAS A DIFFERENCE IN WORK IN P ROGRESS OF RS.32,46,099/- WHICH WAS ADDED TO THE INCOME. BEING AGGRIEVED AGAINST THE AFORESAID ORDER, THE PRESENT APPEAL HAS BEEN FILED WITH THE GROUNDS OF APPEAL MENTIONED EAR LIER IN THIS ORDER. 8. LD. COUNSEL, REFERED PAPER BOOK CONTAINING PAGE S 1 TO 23 MAINLY ENCLOSING THE ORDER OF THE ITAT, SUB MISSIONS BEFORE THE CIT(A) AND PROFIT AND LOSS ACCOUNTS FOR THE YEARS ENDING 31.03.1995, 31.03.1996 AND 31.03.1997 AND ON E PAGE STATEMENT (PAGE 14) OF VALUATION OF WORK IN PROGRES S. IN THE COURSE OF PROCEEDINGS, THE LD. COUNSEL ALSO PLACED A AIDEMEMOIRE ALONG WITH TWO SHEETS OF WORKING OF THE WORK IN PROGRESS INCLUDING THE DETAILS OF SALES AND AREA SO LD IN QUANTITY OVER THE PERIOD OF PROJECT. AT OUR INSTANC E, THE ASSESSEE ALSO PLACED ON RECORD THE ASSESSMENT ORDER DATED 30.03.2001 AND THE CORRESPONDENCE AT THE TIME OF OR IGINAL ASSESSMENT AND THE BALANCE SHEET AND P & L ACCOUNT FOR THE YEAR ENDING 31.03.1998. LD.COUNSEL EXPLAINED THE ME THOD OF ARRIVING AT COST OF SALE TO CONTEND THAT NO ADDITIO N WAS REQUIRED. 9. LD. D.R. HOWEVER, SUPPORTED THE ORDERS OF THE A .O. IN DETERMINING THE CLOSING WORK IN PROGRESS AS ASSE SSEE HAS FAILED TO FURNISH THE NECESSARY DETAILS IN ARRIVING AT THE CORRECT VALUATION OF WORK IN PROGRESS. 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE PAPERS PLACED ON RECORD. AT THE OUTSET, WE MUST ADMIT THAT THE ISSUE IS LITTLE COMPLICATED, NOT ONL Y FOR WANT OF 6 ITA.NO.884/HYD/2008 DECCAN BUILDERS & DEVELOPERS P. LTD. SECUNDERABAD INFORMATION FROM THE ASSESSEE BUT ALSO DUE TO DELAY IN FINALISING THE PROCEEDINGS FOR A.Y. 1998-99 AT THIS POINT OF TIME. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE HA D BUILT A TOTAL AREA OF 97422 SQ. FEET CONSISTING OF APARTMEN TS AS WELL AS SHOPPING COMPLEX, OF WHICH 19,100 SQ. FEET WAS THE LANDLORD SHARE AND THE SALABLE AREA WAS 78322 SQ. FEET. HOWE VER, THE ASSESSEE WAS UNABLE TO FURNISH EITHER OF THE PLANS OF THE BUILDING OR THE AREA OF APARTMENTS AND SHOPS IN ORD ER TO ANALYSE WHICH PART IS HAVING MORE VALUE OR LESS VAL UE, WHICH IS ONE OF THE CONTENTIONS RAISED IN THE APPEAL. NOT ON LY THAT WHEN ASSESSEE WAS ASKED TO FURNISH THE AREA SOLD AND THE VALUES THE ASSESSEE HAS FURNISHED THE FOLLOWING STATEMENT : TABLE-I A.Y. AREA OF FLAT SOLD SALE VALUE 1997-1998 843 3,90,000 1998-1999 26,211 1,22,04,120 1999-2000 8,616 37,09,900 2000-2001 15,712 71,89,700 2001-2002 5,902 26,66,000 2002-2003 2,436 10,98,000 2003-2004 - 16,45,000 TABLE-II A.Y. AREA OF SHOP SOLD SALE VALUE 1997-1998 2,330 16,30,005 1998-1999 1,754 9,20,321 1999-2000 --- --- 2000-2001 216 1,93,200 2001-2002 265 2,48,800 2002-2003 714 6,41,340 2003-2004 --- 4,00,000 7 ITA.NO.884/HYD/2008 DECCAN BUILDERS & DEVELOPERS P. LTD. SECUNDERABAD TOTAL SALES TABLE III A.Y. TOTAL AREA SOLD TOTAL SALES AMOUNT COST OF SALE ADOPTED IN BOOKS TOTAL COST 1997-1998 3,172 20,20,005 13,82,254 1,15,64,590 1998-1999 29,588 1,31,54,441 1,26,34,767 55,61,386 1999-2000 8,616 37,09,900 37,04,880 35,23,291 2000-2001 15,928 73,82,900 68,74,840 40,98,617 2001-2002 6,167 29,34,800 28,14,950 56,03,638 2002-2003 3,150 17,39,340 15,05,820 17,80,385 2003-2004 ------- 20,45,000 15,22,907 64,998 3,29,86,386 3,04,40,419 3,21,31,907 THIS STATEMENT (TABLE I,II, III WAS EXTRACTED OUT O F THE CONSOLIDATED STATEMENT GIVEN BY THE ASSESSEE. ( UN-RECONCILED AREA IS 13,324 SQ.FT.) 10.1 AS CAN BE SEEN FROM THE ABOVE, EVEN THOUGH TH E TOTAL AREA SUPPOSED TO HAVE BEEN SOLD BY THE ASSESS EE COMES TO 78,322 SQ. FT. IN THE PROJECT, ASSESSEE COULD FURNI SH TOTAL AREA SOLD ONLY UP TO 64,998 SQ. FT. AND THE AREA SOLD IN A.Y. 2003-04 COULD NOT BE FURNISHED. THUS ASSESSEE WAS UNABLE TO FURNISH THE COMPLETE DETAILS OF AREA SOLD YEAR-WISE IN THE ENTIRE PROJECT EVEN AT THIS POINT OF TIME. 10.2. THE MAIN CONTENTION RAISED BY THE ASSESSEE I S WITH REFERENCE TO THE COST OF CONSTRUCTION. ACCORDING TO THE ASSESSEE, ASSESSEE HAS CONSTRUCTED PART OF THE PREM ISES ON ITS OWN AND LATER ON GIVEN THE CONTRACT TO M/S. EASWAR CONSTRUCTIONS CO. KOLKATA VIDE AGREEMENT DATED 01.0 7.1994 AND THE RATES OF CONTRACT WERE SHOWN TO BE AT RS.33 5/-, RS.350/-, RS.366/- AND RS.382/- PER SQ FT FOR THE Y EARS ENDING ON 31.03.1995, 31.03.1996, 31.03.1997 AND 31.03.199 8 8 ITA.NO.884/HYD/2008 DECCAN BUILDERS & DEVELOPERS P. LTD. SECUNDERABAD RESPECTIVELY. AS PER THE DIRECTIONS OF THE ITAT, TH E ASSESSEE WORKED OUT THAT OUT OF TOTAL SALEABLE AREA OF 97,42 2 SQ. FT, THE AREA FOR LAND OWNERS BEING 19100, THE TOTAL SALEABL E AREA RATIO IS AT 1.24 TIMES. SINCE THE AVERAGE CONTRACT PRICE, IF THREE YEARS WERE CONSIDERED, WAS AT RS.350/- WHEREAS, AVERAGE C ONTRACT PRICE FOR 4 YEARS WAS AT RS.358/- AND IF THE COST P ER SQ. FEET SALEABLE AREA IS TAKEN, THEN THAT GETS MULTIPLIED I N THE SAME RATIO WHICH COMES TO RS.436/- AND RS.446/- RESPECTI VELY. THEREFORE, THE COST OF SALE OF 3172 SQ. FT AREA SOL D IN A.Y. 1997- 98 WAS TO BE TAKEN AT RS.13,82,254/- UP TO MARCH, 1 997 AND 29,588 SQ. FEET AREA SOLD IN THE YEAR AT RS.1,31,96 ,248/- (AT A AVERAGE RATE OF RS.446/- FOR THE YEAR ENDING 31.03. 1998). THUS, ASSESSEE CONTENDS THAT AS AGAINST SALES EFFE CTED OF RS.1,31,54,441/- THE COST OF SALE ARRIVED WAS AT RS.1,31,96,248/- AS AGAINST COST OF SALE SHOWN IN T HE BOOKS AT RS.1,26,34,767/-. THIS STATEMENT OF THE ASSESSEE JU STIFYING THE COST OF SALE CANNOT BE ACCEPTED FOR THE SIMPLE REAS ON THAT ASSESSEE WENT BY THE AVERAGE CONTRACT PRICE WITHOUT INFORMING HOW MUCH AREA WAS CONSTRUCTED IN A PARTICULAR YEAR. WITHOUT HAVING THE AREA CONSTRUCTED, IT IS VERY UNREASONABL E TO GO BY THE AVERAGE RATE OF PRICE FOR THE WHOLE SALEABLE AR EA, WHEN THE FACTS INDICATE THAT ASSESSEE CONSTRUCTED ON ITS OWN SOME AREA AND BALANCE BY THE CONTRACT GIVEN TO THIRD PARTY AT A FIXED YEAR WISE RATE. THEREFORE, AVERAGING THE RATE AND JUSTIF YING COST OF SALE AS WAS DONE BY THE ASSESSEE CANNOT BE ACCEPTED . ANOTHER REASON WAS THAT THE COST OF SALE NOW ARRIVED AT WAS AT RS.1,31,96,248/- AS AGAINST RS.1,26,34,767/- SHOWN IN THE BOOKS OF ACCOUNTS. ASSESSEE HAS NOT JUSTIFIED HOW I T ARRIVED AT THE COST OF SALE IN THE BOOKS OF ACCOUNTS WHICH WAS ALREADY ANALYSED BY THE ITAT IN ITS ORDER EARLIER. WITHOUT RECONCILING, 9 ITA.NO.884/HYD/2008 DECCAN BUILDERS & DEVELOPERS P. LTD. SECUNDERABAD ASSESSEE FURNISHES A DIFFERENT FIGURE NOW. NOT ONLY THAT, AREA SOLD FOR A.Y. 1998-99 WAS FOR ARRIVING AT THE COST OF CONSTRUCTION AT RS.1,31,96,248/- WAS STATED TO BE A REA SOLD OF 29588 SQ. FEET WHEREAS, ASSESSEE HAS SHOWN ONLY 27, 965 SQ. FEET AREA IN THE STATEMENT GIVEN EXTRACTED ABOVE. T HUS, THE STATEMENTS GIVEN BY THE ASSESSEE EVEN AT THIS STAGE CANNOT BE RELIED UPON. 10.3 AS PER THE COST FIGURES GIVEN IN THE P & L ACCOUNT THE ASSESSEE HAS SPENT THE FOLLOWING AMOUNTS IN THE RESPECTIVE ASSESSMENT YEARS : DATE COST OF CONSTRUCTION AS PER P & L ACCOUNT. RS. 31.03.1994 (ASSESSEE) 9,68,743 31.03.1995 (ASSESSEE) 35,24,130 (CONTRACTOR) 21,90,150 31.03.1996 (ASSESSEE) - - - (CONTRACTOR) 49,26,204 31.03.1997 (ASSESSEE) - -- (CONTRACTOR) 55,72,618 31.03.1998 (ASSESSEE) - -- - (CONTRACTOR) 35,23,291 10.4. IT IS ADMITTED THAT ASSESSEE HAS SPENT ON IT S OWN RS.9,68,743/- UP TO 31.03.1994 AND AS PER P & L ACC OUNT PLACED ON RECORD FOR THE YEAR ENDING 31.03.1995, IT HAS SPENT RS.35,24,130/-ON ITS OWN. THUS, AN AMOUNT OF RS.44, 92,873/- WAS SPENT BY ASSESSEE ON ITS OWN. THE AREA CONSTRUC TED WAS NOT SPELT AT ANY POINT OF TIME. IT CAN BE FOR PILLA RS, OR IT CAN BE FOR FINISHING OR IT CAN BE FOR ANY OTHER WORK EXCEP T, OF COURSE, FOR FINISHING WORKS AS THE NATURE OF MATERIAL PURCH ASED SEEMS TO BE ONLY CEMENT, IRON AND STEEL, SAND, BRICKS AS PER P & L ACCOUNT. IN THE YEAR ENDING 31.03.1995 ASSESSEE PAI D AN AMOUNT OF RS.21,90,150/- TOWARDS PAYMENT TO CONTRAC TORS. AS 10 ITA.NO.884/HYD/2008 DECCAN BUILDERS & DEVELOPERS P. LTD. SECUNDERABAD PER THE ASSESSMENT ORDER, ASSESSEE GOT THE WORK CON STRUCTED AT AN AVERAGE RATE OF RS.335/- PER SQ. FEET. FOR THE YEAR ENDING 31.03.1996 ASSESSEE PAID AN AMOUNT OF RS.49,26,250/ - @ RS.350/- PER SQ. FEET. LIKE WISE, AS ON 31.03.1997 AN AMOUNT OF RS.55,72,618/- WAS PAID @ RS.366/- PEER SQ. FEET AND FOR THE YEAR ENDING 31.03.1998 AN AMOUNT OF RS.35,23,29 1/- WAS PAID @ RS.382/- PER SQ. FEET. THAT GIVES RISE TO CO NSTRUCTION OF 6537 SQ. FEET AS ON 31.03.1995 BY THE CONTRACTOR, 1 4074 BY 31.03.1996, 14679 IN THE YEAR 31.03.1997 AND 9223 A S ON 31.03.1998, ARRIVED AT BY THE BACKWARD CALCULATION OF TOTAL COST DIVIDED BY RATE. ACCORDINGLY, TOTAL CONSTRUCTE D AREA BY CONTRACTOR COMES TO 44,513 SQ. FEET AT THE END OF Y EAR MARCH 1998. IF WE CONSIDER THE COST INCURRED BY THE ASSES SEE OF RS.44,92,873/- UP TO 31.03.1995 TAKEN AT CONSERVAT IVE VALUE OF RS.250/- PER SQ. FEET, THEN ANOTHER 17,971 SQ. F EET WOULD COME TO MAKE IT TO TOTAL OF 62,484SQ,FT BEING CONS TRUCTED UP TO 31.03.1998. AS AGAINST THIS, THE ASSESSEE WANTS US TO WORK-OUT THE COST SPENT BY THE ASSESSEE TO BE DIVIDED BY TOT AL AREA OF 78,332 SQ.FT. OF THE ENTIRE PROJECT AREA. INSTEAD O F WORKING OUT THE ACTUAL AREA CONSTRUCTED, ASSESSEE WANTS TO TAKE ADVANTAGE OF COST INCURRED UP TO THAT DATE ON THE TOTAL AREA, WITHOUT ESTABLISHING THE TOTAL AREA GOT CONSTRUCTED AS ON 1 997-1998. AS PER THE TOTAL COST AND SALE DETAILS FURNISHED EX TRACTED ABOVE IN TABLE-III, THE COST INCURRED ON THE PROJECT UP T O A.Y. 2003- 2004 WAS RS.3,21,31,907/- OUT OF WHICH, AT THE END OF 31.03.1998, ASSESSEE HAS INCURRED RS.2,06,60,499/- AS ADMITTED. THEREFORE, ASSESSEES SUBMISSION OF ADOPT ING THE VALUES ON A TOTAL AREA TO BE CONSTRUCTED WITH ONLY PARTIAL COST INCURRED UP TO THAT DATE IS NOT CORRECT. AS RIGHTLY POINTED OUT BY THE A.O. AND THE CIT(A), ASSESSEE IS NOT FORTHCO MING IN 11 ITA.NO.884/HYD/2008 DECCAN BUILDERS & DEVELOPERS P. LTD. SECUNDERABAD GIVING ANY INFORMATION WITH REFERENCE TO THE AREA C ONSTRUCTED YEAR-WISE. 10.5. AS SEEN FROM THE FLAT AREA SOLD IN EACH YEAR , THE AVERAGE COST OF THE FLAT AREA SOLD IN 1997-98 WAS A T RS.463/-, IN 1998-99 IT WAS ABOUT RS.467/-, IN 1999-2000 AT R S.430/- IN A.Y. 2000-01 AS PER THE DETAILS GIVEN IT WAS RS. 458/- EVEN AS ON 2003-2004 THE COST SHOWN WAS AT RS.450/-. THA T MEANS THE FLATS FROM A.Y. 1997-98 TO 2003-04 WAS SOLD AT AN AVERAGE COST OF RS.450/- OR AROUND AND IN FACT THE COST HAS COME DOWN FROM RS.463/- TO RS.450/- OVER A PERIOD OF TIME. TH EREFORE, THE ASSESSEES AMOUNTS SHOWN AS SALE PROCEEDS AND THE A REA SOLD ALSO CANNOT BE RELIED UPON. (THIS RATE FOR SQ. FEET IS ARRIVED AT ON THE SALE PROCEED SHOWN AGAINST THE SALE OF FLATS AND THE AREA SOLD AS PER THE DETAILS FURNISHED BY THE ASSES SEE.) THIS INDICATES THAT ASSESSEE IS CONSISTENTLY UNDER-REPOR TING THE SALE PRICE. 10.6. THE SALE OF SHOP AREA WHICH ASSESSEE CONTEND S THAT HAS LESSER COST OF CONSTRUCTION ALSO HAS TO BE ANALYSED. AS PER THE AVERAGE PRICE REPORTED AGAINST THE SALE OF SHOPS THE PRICE IN 1997-98 IS RS.699/- PER SQ. FEET, IN 1998- 99 IT IS RS.524/- PER SQ. FEET, IN 2000-01 IT IS RS.894/- PE R SQ. FEET, IN 2001-2002 IT IS RS.939/- PER SQ. FEET AND 2002-2003 IT IS 898/- PER SQ. FEET. HERE ALSO, IN THE IMPUGNED YEAR , THE AVERAGE PRICE OF SHOPS SOLD WAS AT RIDICULOUSLY LOW FIGURE OF RS.524/- PER SQ. FEET AS AGAINST RS.699/- IN THE EA RLIER YEAR AND ABOVE RS.890/- IN LATER YEARS. THIS ALSO INDICA TES THAT EVEN THE SALE PRICE REPORTED BY THE ASSESSEE ON THE AREA OF SHOP SOLD IS NOT CONSISTENT WITH FACTS. 12 ITA.NO.884/HYD/2008 DECCAN BUILDERS & DEVELOPERS P. LTD. SECUNDERABAD 10.7. AS PER THE DETAILS ON RECORD, THE OPENING WO RK IN PROGRESS WAS RS.1,57,43,722/- THE COST ADDED DURING THE YEAR WAS RS.36,01,006/-. THUS, TOTAL COST OF THE PROJECT AS ON THE DATE WAS AT RS.1,93,44,728/-. THIS COST IS TO BE DI VIDED BY THE CONSTRUCTED AREA SO AS TO ARRIVE AT THE COST OF CON STRUCTION. AS ALREADY DISCUSSED ABOVE, THE ASSESSEE COULD CONSTRU CT ONLY APPROXIMATELY 62500 SQ. FEET TILL THE YEAR ENDING. THUS, MAKING THE COST OF CONSTRUCTION AT AN AVERAGE OF RS .309/-. EVEN IF WE TAKE RS.310/- AS AVERAGE RATE ON THE SOL D AREA OF 29,588 SQ. FEET OF AREA, THE COST WOULD COME TO RS. 91,72,280/-. THE A.O. HAS TAKEN THE COST OF SOLD AREA OF RS.94,6 6,384/-. THIS BEING MORE THAN WHAT WE ARRIVED AT ABOVE, WE A RE OF THE OPINION THAT ASSESSING OFFICERS WORKING IS JUSTIFI ED ON THE FACTS OF THE CASE. 10.8. IN THE ABSENCE OF ANY EXPLANATION OR DETAILS BY THE ASSESSEE THE ORDER OF THE A.O. IS FOUND TO BE REASO NABLE AND HE HAS GIVEN RELIEF FROM THE ORIGINAL AMOUNT OF RS. 52 LAKHS MADE AS AN ADDITION IN THE FIRST ROUND OF ASSESSMENT TO RS.32,46,099/- AS A RESULT OF HIS OWN WORKING, WHAT EVER SHORTCOMINGS MAY BE. EVEN THOUGH WE ARE AWARE ABOUT THE SHORTCOMINGS IN THE DETAILS AS FURNISHED BY THE ASS ESSEE AND ALSO THE VARIOUS WORKINGS MADE BY THE A.O., WE NOTI CE THAT THERE IS NO REASON TO SET ASIDE AGAIN TO THE A.O. F OR FRESH EXAMINATION IN THE LIGHT OF ANALYSIS MADE BY US. A SSESSEE IS NOT FORTHCOMING WITH ANY INFORMATION AND IN FACT, W E HAVE ASKED FOR SPECIFIC DETAILS OF YEAR-WISE CONSTRUCTED AREA AND THE TOTAL AREA SOLD WHICH IS ALSO NOT FORTHCOMING FROM THE ASSESSEE. IN THE ABSENCE OF ANY DETAILS BEING FURNI SHED BY THE ASSESSEE EITHER BEFORE THE A.O. OR BEFORE THE CIT(A ) OR BEFORE 13 ITA.NO.884/HYD/2008 DECCAN BUILDERS & DEVELOPERS P. LTD. SECUNDERABAD US, WE HAVE NO OPTION THAN TO CONFIRM THE ORDER OF THE A.O. ACCORDINGLY, WE DISMISS THE APPEAL OF THE ASSESSEE. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.04.2014. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 02 ND APRIL, 2014 VBP/- COPY TO : 1. M/S. DECCAN BUILDERS & DEVELOPERS P. LTD. 1-2-1 21 TO 125, S-505, 5 TH FLOOR, YAMSY SPAN COLLECTIVE HOME, MAYUR MARG, BEGUMPET, HYDERABAD 500 016. 2. INCOME TAX OFFICER, COMPANY WARD 1(1), HYDERABA D 3. CIT(A)-II, HYDERABAD 4. CIT-I, HYDERABAD 5. D.R. ITAT, A BENCH, HYDERABAD.