DCIT,Central Circle-I, Nashik V. M/s. Tejas constructions, Jalgaon

ITA 934/PUN/2009

• Counselvise Citation: 93424514 RSA 2009
• Duration Of Justice: 2 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-01-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 07-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARESHWAR SHARMA
• Keywords: Unexplained expenditure; Capital asset; Business expenditure; Source of fund
• Section: 69C; 143(3); 153A; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR, JUDI CIAL MEMBER AND G.S. PANNU, ACCOUNTANT MEMBER SR. NO. ITA NO. ASSTT. YEAR APP ELLANT V/S. RESPONDENT 1. 934/PN/2009 2001 - 02 DY. CIT, CENTRAL CIRCLE I, NASHIK M/S. TEJAS CONSTRUCTIONS, SITAMAI NAGAR,CHALISGAON DIST JALGAON PAN : AAAFT96374J 2 935/PN/2009 2002 - 03 - DO - - DO - 3. 936/PN/2009 2003 - 04 - DO - - DO - 4. 937/PN/20 09 2005 - 06 - DO - - DO - 5. 938/PN/2009 2004 - 05 - DO - - DO - 6. 1265/PN/2009 1999 - 2000 - DO - - DO - 7. 1266/PN/2009 2000 - 01 - DO - - DO - 8. 1267/PN/2009 2001 - 02 - DO - - DO - 9. 1268/PN/2009 2002 - 03 - DO - - DO - 10. 1269/PN/2009 2003 - 04 - DO - - DO - 11. 1270/PN /20 09 2004 - 05 - DO - - DO - 12. 1271/PN/2009 2005 - 06 - DO - - DO - APPELLANT BY : SHRI. HARESHWAR SHARM A RESPONDENT BY : SHRI. NIKHIL PATHAK DATE OF HEARING :13.1.12 DATE OF PRONO UNCEMENT: .1.12 ORDER PER I.C. SUDHIR, JM THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER R AISING THE FOLLOWING ISSUES : A.Y. 2001-02 1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS . 1,09,325/- MADE ON ACCOUNT OF UNDISPUTED DISALLOWANCE ALREADY MADE U/S . 143(3) WHICH WAS NOT DISCLOSED BY THE ASSESSEE IN THE RETURN FILED IN RE SPONSE TO NOTICE U/S. 153A OF I.T. ACT 196 A.Y. 2002-03 1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS . 2,49,000/- MADE ON ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 2 ACCOUNT OF DISMANTLING EXPENSES IGNORING THE FACT T HAT NO SEIZED MATERIALS INDICATED ANY SUCH EXPENSES. 2) WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT UNDER SECTION 153A, EXPENSES NOT RECORDED IN THE BOOKS OF ACCOUNT OR NOT NOTED IN SEIZED MATERIA L CAN BE ALLOWED ON PRESUMPTIVE BASIS. 3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN DIRECTING THE AO TO TAX TH E ON MONEY RECEIPTS AND ADVANCES IN THE YEAR OF TRANSFER OF SHOPS INSTEAD O F IN THE YEAR OF RECEIPT OF THE MONEY. 4) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN RELYING ON THE DECISION OF THE TRIBUNAL IN THE CASE OF GOLANI BROS VS. ACIT 75 ITD 1 IGNORING THE FACT THA T THE FACTS OF THE PRESENT CASE AND THAT OF THE GOLANI BROS ARE NOT IDENTICAL AND THE DECISION OF THE TRIBUNAL IS UNDER LITIGATION BEFORE THE HIGH COURT, BOMBAY. A.Y. 2003-04 1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 9,93,000/- ON A/C OF ADVANCES AND RS. 3,00,000/- ON ACCOUNT OF ON-MONEY DURING THE TRANSFER OF SHOPS DIRECTING THE A.O. THAT THE ADVANCES SHOULD B E TAXED IN THE YEAR OF TRANSFER AND NOT IN THE YEAR OF RECEIPT OF THE MONE Y. 2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN RELYING ON THE DECISION OF THE TRIBUNAL IN THE CASE OF GOLANI BROS. VS. ACIT 75 ITD 1 IGNORING THE FACT TH AT THE FACTS OF THE PRESENT CASE AND THAT OF THE GOLANI BROS ARE NOT IDENTICAL AND THE DECISION OF THE TRIBUNAL IS UNDER LITIGATION BEFORE THE HIGH COURT, BOMBAY. 3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS . 99,000/- ON A/C OF ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 3 DISALLOWANCE OF COMMISSION AND RS. 1,24,800/- ON A/ C OF DISALLOWANCE OF WATCHMANS SALARY WHICH WERE NOT SUPPORTED BY ANY EVIDENCE OR SEIZED MATERIAL HOLDING THAT EXPENSES NOT RECORDED IN THE BOOKS OF ACCOUNT OR NOT NOTED IN SEIZED MATERIAL CAN BE ALLOWED ON PRESUMPT IVE BASIS IN ASSESSMENT U/S. 153A. A.Y. 2004-05 1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS . 12,03,000/- ON A/C OF ADVANCES AND RS. 4,40,000/- ON ACCOUNT OF ON-MONEY DURING THE TRANSFER OF SHOPS DIRECTING THE A.O. THAT THE ADVANCES SHOULD B E TAXED IN THE YEAR OF TRANSFER AND NOT IN THE YEAR OF RECEIPT OF THE MONE Y. 2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN RELYING ON THE DECISION OF THE TRIBUNAL IN THE CASE OF GOLANI BROS VS. ACIT 75 ITD 1 IGNORING THE FACT THA T THE FACTS OF THE PRESENT CASE AND THAT OF THE GOLANI BROS ARE NOT IDENTICAL AND THE DECISION OF THE TRIBUNAL IS UNDER LITIGATION BEFORE THE HIGH COURT, BOMBAY. 3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS . 2,20,000/- ON A/C OF DISALLOWANCE OF COMMISSION AND RS. 1,53,600/- ON A/ C OF DISALLOWANCE OF WATCHMANS SALARY AND OF RS. 19,954/- ON ACCOUNT OF DISALLOWANCE OF DISMANTLING EXPENSES WHICH WERE NOT SUPPORTED BY A NY EVIDENCE OR SEIZED MATERIAL HOLDING THAT EXPENSES NOT RECORDED IN THE BOOKS OF ACCOUNT OR NOTED IN SEIZED MATERIAL CAN BE ALLOWED ON PRESUMPT IVE BASIS IN ASSESSMENT U/S. 153A. A.Y. 2005-06 1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS . 40,10,000/- ON A/C OF ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 4 ADVANCES IN THE TRANSFER OF SHOPS DIRECTING THE A. O. THAT THE ADVANCES SHOULD BE TAXED IN THE YEAR OF TRANSFER AND NOT IN THE YEAR OF RECEIPT OF THE MONEY. 2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN RELYING ON THE DECISION OF THE TRIBUNAL IN THE CASE OF GOLANI BROS VS. ACIT 75 ITD 1 IGNORING THE FACT THA T THE FACTS OF THE PRESENT CASE AND THAT OF THE GOLANI BROS ARE NOT IDENTICAL AND THE DECISION OF THE TRIBUNAL IS UNDER LITIGATION BEFORE THE HIGH COURT, BOMBAY. 3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS . 45,600/- ON A/C OF DISALLOWANCE OF WATCHMANS SALARY AND OF RS. 40,150 /- ON ACCOUNT OF SUPERVISION CHARGES AND RS. 8,804/- ON ACCOUNT OF DISALLOWANCE OF DISMANTLING EXPENSES WHICH WERE NOT SUPPORTED BY A NY EVIDENCE OR SEIZED MATERIAL HOLDING THAT EXPENSES NOT RECORDED IN THE BOOKS OF ACCOUNT OR NOT NOTED IN SEIZED MATERIAL CAN BE ALLOWED ON PRESUMPT IVE BASIS. 4) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITION U/ S 69C FROM RS. 2,14,663/- TO RS. 1,72,663/-, ALLOWING RELIEF OF RS. 42,000/- IG NORING THE FACT THAT SOURCE OF SUCH EXPENDITURE WAS UNEXPLAINED AND WOULD BE D EEMED TO BE THE INCOME OF THE ASSESSEE FOR THE RELEVANT FINANCIAL YEAR AS IS HELD BY THE HONBLE COLCATA HIGH COURT IN THE CASE OF CIT V BHAGWATI DEVELOPERS (P) LTD. (2003) 261 ITR 658 . BESIDES ABOVE, THE REVENUE HAS ALSO RAISED FOLLOWIN G 3 ADDITIONAL GROUNDS IN THE APPEAL FOR A.Y. 2001-02 , WITH THIS REQUEST THAT TH E SAME MAY BE ALLOWED FOR ADJUDICATION OF THE BENCH : ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 5 (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LEARNED CIT (A) WAS JUSTIFIED IN HOLDING THAT U/S. 153A, EXPENS ES NOT RECORDED IN THE BOOKS OF ACCOUNT OR NOT NOTED IN SEIZED MATERI AL CAN BE ALLOWED ON PRESUMPTIVE BASIS. (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LEARNED CIT(A) WAS JUSTIFIED IN DIRECTING THE AO TO TAX THE ON MONEY RECEIPTS OF RS. 3,20,000/- AND THE ADVANCES OF RS.2,10,000/- IN T HE YEAR OF TRANSFER OF SHOPS INSTEAD OF IN THE YEAR OF RECEIPT OF ON MONEY AND ADVANCES. (III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE EARNED CIT(A) WAS JUSTIFIED IN RELYING ON THE DECISION OF THE TRI BUNAL IN THE CASE OF GOLANI BROS. VS. ACIT 75 ITD 1 IGNORING THE FACT THAT THE FACTS OF THE PRESENT CASE AND THAT OF THE GOLANI BROS. ARE NOT IDENTICAL AND THE DECISION OF THE TRIBUNAL IS UNDER LITIGATION BEFORE THE BOMBAY HIGH COURT. 2. THE LD. D.R. SUBMITTED THAT THE ISSUES RAISED IN ABOVE ADDITION GROUNDS ARE LEGAL IN NATURE AND THE ADJUDICATION OF THE SAME DO NOT REQUIRE CONSIDERATION OF FRESH MATERIAL OUTSIDE THE RECORD. HE SUBMITTED F URTHER THAT THOUGH THE ABOVE ISSUES UNDER THE SIMILAR FACTS HAVE BEEN RAISED IN THE APPEALS FOR OTHER A.YS. BUT INADVERTENTLY IT REMAINED TO BE RAISED IN THE APPEA L FOR A.Y. 2001-02. 3. THE LD. A.R. OPPOSED THE ABOVE REQUEST FOR ALLOW ING THE SAID ADDITIONAL GROUNDS FOR ADJUDICATION OF THE BENCH. 4. WE FIND THAT THE ISSUES RAISED IN THE ADDITIONAL GROUNDS ARE LEGAL IN NATURE AND ADJUDICATION OF THE SAME DOES NOT REQUIRE C ONSIDERATION OF FRESH MATERIAL OUTSIDE THE RECORD. WE THUS ALLOW THE SAME FOR ADJ UDICATION OF THE BENCH. ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 6 ADDITIONAL GROUND NOS. (II) & (III) IN A.Y. 2001-0 2 AND ISSUE NOS. 3,4 IN A.Y. 2002-03 AND 1K, 2 IN A.YS 2004-05 & 2005-06 \ 5. THE LD. CIT(A) HAS PASSED A COMMON ORDER FOR THE A.YS. 1999-2000 TO 2005-06 AGAINST WHICH THE REVENUE HAS PREFERRED PR ESENT APPEALS UNDER CONSIDERATION. ALL THESE APPEALS ARE ACCORDINGLY D ISPOSED OFF VIDE A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. THE UNDISPUTED FACTS NOTED BY THE LD. CIT(A) IN PARA NOS. 3 TO 35 OF THE FIRST APPEL LATE ORDER ARE AS UNDER : 3. BRIEF FACTS OF THE CASE ARE THAT SEARCH AND SEIZ URE ACTION WAS CONDUCTED AGAINST THE AGRAWAL GROUP AT CHALISGAON ON I 03/11/2004. THE APPELLANT IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF BUILDERS AND CONTRACTORS FOR CONSTRUCTION WORK. DURING THE COURSE OF ACTION U/S.132 DIARIES WERE SEIZED AT ANNEXURE A-I TO A-3 CONTAINING NOTINGS IN RESPECT O F BUSINESS TRANSACTIONS OF THE APPELLANT FIRM IN RESPECT OF AMOUNTS RECEIVED B Y AGRAWAL GROUP FROM CUSTOMERS OF THE TWO MUNICIPAL DEVELOPMENT PROJECTS UNDERTAKEN BY M/S.TEJAS CONSTRUCTIONS AT S.NO.4016 AND F.P.48 OF CHALISGAON . THE NOTINGS IN SEIZED DIARIES REVEALED THAT THE CASH RECEIVED FROM THE CU STOMERS OF SHOP AT THE SAID PROJECTS AT C.S.NO.4016 AND F.P. 48 CHALISGAON WAS TO THE TUNE OF RS.10,25,000/- AND RS.75,48,OOO/- RESPECTIVELY TOTA LLING TO RS..85,73,OOO/-. FURTHER ADVANCES RECEIVED FROM THE SAID PROJECTS NOTED IN THE DIARIES FROM PROJECT AT FP 48 AND S.NO. 4016 WE RE TO THE TUNE OF RS. 33,28,000/- AND RS. 32,54,000/- RESPECTIVELY, TOTAL LING TO RS. 65,82,000/-. THE PARTNERS OF THE APPELLANT FIRM THEREFORE DECLARED ADDITIONAL INCOME OF RS. 85,00,000/- TO COVER UP THIS DISCREPANCY TOWARDS UN RECORDED CONSIDERATION RECEIVED FROM SHOP OWNERS RS. 60,73,000/-, INCOME F ROM PLOT TRADING BUSINESS ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 7 RS. 5,00,000/- AND ALSO TOWARDS ERRORS AND OMISSION S RS. 19,27,000/-. THE WORKING OF THE SAID ADDITIONAL INCOME STATED BY THE PARTNER OF THE APPELLANT FIRM IN STATEMENT RECORDED DURING THE COURSE OF SEA RCH ACTION IN RE[PLY TO Q.NOS. 9 TO 13 AS UNDER: A. CASH RECEIPTS/PREMIUM OF SALE OF SHOP IN RS.1,57,01,000/- C.S. NO. 4016& FP. 48, CHALISGAON (F.P.48 RS.1,13,21,000/- + C.S. NO.4016 (RS.43,80,000/- AS CASH RECEIVED NOT RECORDED IN BOOKS) LESS: RETURNS OF PAYMENT RS. 5,46,000/- TOTAL RS.1,51,55,000/- LESS: ADVANCES SINCE TRANSACTIONS NOT FINALLY COMPL ETE RS. 65,82,000/- LESS: EXPENSES NOT CLAIMED IN THE BOOKS LIKE BROKERAGE, SALARY DEMOLITION ETC. RS. 2 5,00,000 /- TOTAL RS. 60,73,000/- B PLOT BUSINESS EXTRA RECEIPTS / PREMIUM RS . 14,00,000/- LESS: EXPENSES NOT CLAIMED IN THE BOOKS RS . 9,00,000/- RS. 5,00,000/- ON DEMARCATION, LEVELING ETC. ------------------ C OUT OF CONTRACT BUSINESS ERRORS AND OMISSIONS, FAMILY MEMBERS RELATED PLO T BUSINESS ETC. RS. 19,27,000/- TOTAL DISCLOSURE RS. 85,00,000/- ============ 3.1 THE A,A. HAS ENCLOSED YEAR WISE CHART SHOWING BREAK UP OF NE T ON MONEY RECEIVED WITH ASSESSMENT ORDER FORMING PART OF THE SAME AS UNDER:- PARTICULARS 2000 - 01 200102 2002 - 03 2 003 - 04 200405 2005 - 06 TOTAL RECEIPTS F.P.48 1,70,000 3,20,000 4,90,000 23,00,000 31,43,000 11,25,000 75,48,000 PROJECT S.NO.4016 A A A 4,35,000 3,05,000 2,85,000 10,25,000 PROIECT TOTAL (A) 1.70.000 3.2 0.000 490000 27.35000 34.48.000 1410 000 85.73.000 ADVANCES F.P.48 68,000 60,000 2,50,00 8,73,000 5,00,000 18,02,000 33,28,000 PROJECT S.NO.4016 73,000 1,50,000 0 1,20,000 7,03,000 22,08,000 32,54,000 PROJECT TOTAL (B) 1,41,000 2.10.000 25000 993000 12,03.000 4010000 65.82.000 TOTAL CASH 3,11,000 5,30,000 5,15,000 37,28,000 46,51,000 54,20,000 1,51,55,000 ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 8 RECEIPTS (A+B ) RETURNED (C) 10,000 65,000 0 1,95,000 1,75,000 A 4,45,000 F.P.48 PROIECT NET CASH 3,01,000 4,65,000 5,15,000 35,33,000 44,76,000 54,20,000 1,47,10,000 RECEIPTS (A+B - C) 3.2 THE APPELLANT FIRM AND IT'S SISTER CONCERN SITAM AI AGRO FARMS HAVE RECEIVED PREMIUM ON SALE OF PLOTS RS.15,30,744/- AS UNDER: ASST. YEAR. M/S.TEIAS CONSTRUCTIONS SITAMAI ALTRO FARMS 2003 - 2004 4,03,230 0 20042005 1,38,900 803114 2005 - 2006 1,85.500 0 TOTAL 7,27,630 8,03,114 3.3 WHILE ASSESSING UNRECORDED PREMIUM ON SALE OF P LOTS THE A.O. HAS ALLOWED EXPENDITURE ON ACCOUNT OF COMMISSION ON SALE AT 2% AND DISALLOWED ALL THE OTHER EXPENSES CLAIMED BY THE APPELLANT. THE DETAILS OF T HE SAME ARE AS UNDER: A.Y. PREMIUM COMMISSION 2% ADDITION 2005-06 1,85.500 3,710 1,81,790 200405 1.38.900 2.778 1,36,122 2003 - 04 4.03.230 8.065 395.165 TOTAL 7,27,630 14553 7,13,077 3.4 THE APPELLANT FIRM HAS OFFERED TO TAX UNRECORDE D PREMIUM MONEY RECEIVED IN RESPECT OF SALE OF SHOPS AND PLOTS IN THE YEAR OF T RANSFER AND POSSESSION OF THE SAME TO CUSTOMERS. THE APPELLANT HAS ALSO CLAIMED U NRECORDED EXPENDITURE AGAINST THE SALE OF SHOPS AND PLOTS INCURRED OUT O F ON-MONEY RECEIVED. THE APPELLANT HAS PREPARED SEPARATE PROFIT AND LOSS ACC OUNTS FOR THE SAME AND OFFERED ADDITIONAL INCOME OF RS.61,60,946/- IN RETURNS OF I NCOME FOR A.YS 2003-2004, 2004-2005 & 2005-2006 FILED IN RESPONSE TO NOTICES U/S.153A OF THE ACT AS UNDER : INCOME AY. AY. AY. TOTAL 200506 2004 - 05 200304 PREMIUM RE CEIVED PROJECT FP 48 49,23,600 28,20,000 . 77,43,600 PROLECT CIS NO.4016 RUKMINI N ALLAR 1,85500 1,38.900 4,03,230 727,630 TOTAL 51,09,100 29,58900 4,03,230 84,71,230 EXPENDITURE COMMISSION 745000 6.45,000 2,42,000 1632,000 SUPERVISION CHARGES 1,35000 1,50,000 - 2,85,000 WATCHMAN'S SALARY 45.600 1,53,600 124,800 324,000 DEMOLITION EXPENSES 27,246 12,021 - 39,267 (PROPORTIONATE TO AREA SOLD) VAKIL FEES FOR SHOPS - 30000 - 30,000 N ET PROFIT 4156254 1968279 36,430 61,60,963 TOTAL 51,09,100 29,58,900 4,03,230 84,71,230 3;5; THE DETAILS OF INCOME RETURNED, ADDITIONS MADE AND INCOME ASSESSED FOR A.YS. 1999-2000 TO 2005-06 ARE AS UNDER: ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 9 ** EXPENSES ALLOWED BY THE A.O.(-) PARTICULARS A.Y. 2005-2006 A.Y. 2004-2005 A.Y. 2002 -2003 COMMISSION 3,13,233 93,000 -- SUPERVISION CHARGES 94,850 1,39,530 -- DISMANTLING EXPS. -- -- 2,49,000 TOTAL 4,08,083 2,32,530 2,49,000 ,'R OTHER ADDITION IN A.Y.1999 - 2000 DISALLOWANCE U/S.40A(3) RS. 10,688/ - CREDIT NOTES NOT ACCOUNTED RS. 9,202/- --- --------------- RS. 19,890/- =========== PARTICULARS A.Y. AY. A.Y.0304 AY. A.Y. A.Y. AY. TOTAL 05 06 0405 02 - 03 01 - 02 00 - 01 99 - 00 -------- 11614520 7765399 5795195 8102044 8580047 6240930 4041700 52139835 INCOME RETURNED ADDITION OF 4010000 1203000 993000 25000 210000 141000 - 6582000 ADVAN CES RECEIVED ADDITION OF 1410000 3448000 2735000 490000 320000 170000 - 8573000 PREMIUM OF RECEIPTS ADDITION 214663 211446 - - - 582000 75093 1531378 U/S.69C AND 448176 U/S.69 PROFIT OF PLOT 181790 136122 395165 . - - - 713077 BUSINESS ADDITION AS - - - 109325 - 200365 309690 PER ORDER U/S.143(3) OTHER - -- -- - . - - ' 19890 ADDITIONS' INCOME -4156254 -1968279 -36430 - - - - -6160963 OFFERED TO TAX REDUCED BY THE EXPENSES - 408083 - 232550 - - 249000 - - . - 88 9633 ALLOWED BY THE A.O.( - ) '** INCOME 12866636 10563138 9881930 8368044 9219372 7133930 47852224 62818274 ASSESSED ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 10 6. WE FIND THAT THE A.O HAS TAXED THE UNRECORDED PR EMIUM IN THE YEAR OF RECEIPT. THE LD CIT(A) WHILE DECIDING THE ISSUE OF RECEIPT O F ON MONEY HAS HELD THAT THE CONSIDERATION RECEIVED IN RESPECT OF PROPOSED SALE OF SHOPS CANNOT BE TAXED IN THE YEAR OF RECEIPT, IGNORING THE AMOUNT OF EXPENDITURE TOWA RDS CONSTRUCTION OF SHOP AND OTHER BUSINESS EXPENSES. HE PLACING RELIANCE ON THE DECI SIONS OF PUNE BENCH OF THE TRIBUNAL IN THE CASES OF GOLANI BROS., VS. ACIT 75 ITD 1, (PUN E) AND DHANVARSHA BUILDERS & DEVELOPERS (P) LTD. VS. DCIT (2006) 102 ITD 376 (P UNE) HAS DIRECTED THE A.O TO DELETE THE ADDITION MADE OF RS. 65,82,000/- IN RESPECT OF ADVANCES RECEIVED AND TAXED IN A.YS. 2000-01 TO 2005-06. THE LD. CIT(A) HAS DIRECTED T O TAX THE RECEIPT OF ON MONEY IN THE YEAR OF TRANSFER OF POSSESSION GIVEN TO THE CUSTOM ERS. 7. THE A.O. IN THE ASSESSMENT FOR A.Y. 2001-02 HAS OBSERVED THAT THE ASSESSEE HAS NOT CONSIDERED THE ADDITION OF RS. 1,09,384/- MADE U/S.143(3) WHILE FILING THE RETURN U/S. 153A. THE LD CIT(A) IN THIS REGARD HAS HELD THAT T HE ASSESSEE HAD ACCEPTED THE ADDITION MADE BY THE A.O IN THE ORIGINAL ASSESSMENT, U/S. 14 3(3) AND HAS PAID ALL THE TAXES, HENCE SEPARATE ADDITION IN THE ORDER U/S. 153A READ WITH SECTION 143(3) IS NOT JUSTIFIED. 8. AGAINST THE ABOVE ACTION OF THE LD CIT(A), REVE NUE IS IN APPEAL BEFORE US. 9. IN SUPPORT OF THE GROUNDS AND ADDITIONAL GROUNDS RAISED BY THE REVENUE, LD. D.R. HAS BASICALLY PLACED RELIANCE ON THE ASSESSMENT ORD ER WHEREAS THE LD. A.R. HAS TRIED TO JUSTIFY THE FIRST APPELLATE ORDER ON THE ISSUES. TH E LD. A.R POINTED OUT THAT THE A.O HAS NOT DISTURBED THE METHOD FOLLOWED IN BUILDERS BUSINE SS ON ACCOUNTED RECEIPTS. HE HAS ALSO PLACED RELIANCE ON THE DECISIONS IN THE CASES OF GO LANI BROS. VS. ACIT (2000), 75 ITD 1, ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 11 (PUNE) AND DHANVARSHA BUIDERS & DEVELOPS (P) LTD., VS. DCIT (2006), 102 ITD 375 (PUNE) FOLLOWED BY THE LD CIT(A) AND RECENT DECISIONS OF T HE PUNE BENCH OF THE TRIBUNAL IN THE CASES OF M/S. RANADE DIGHE AND ASSOCIATES VS. ITO, ITA NO. 466/PN/ 2010 (A.Y. 1999- 2000) ORDER DATED 26.8.2011 AND PRADEEP ASHOK RAHEJ A VS. ACIT AND ORS. ITA NOS. 327 & 316/PN/2004 (B.P.ENDING 29.6.99), ORDER DATED 3 1 ST DECEMBER 2008-09. HE LD. A.R. ALSO PLACED RELIANCE ON THE DECISION OF MUMBAI BEN CH OF THE TRIBUNAL IN THE CASE OF ACIT VS. SHRI MEHUL J. SOMAIAH, ITA NO. 7118/MUM/2008, A .Y. 2002-03, ORDER DATED 10 TH DECEMBER 2008. 10. THE ISSUE BEFORE US, IS AS TO WHAT WOULD BE THE YEAR OF TAXABILITY OF THE ON MONEY AGAINST THE SALE OF THE SHOPS. THE CONTENTION OF THE LD. AR. REMAINED THAT A CONSIDERATION RECEIVED IN RESPECT OF PROPOSED SALE OF SHOPS CANNOT BE TAXED IN THE YEAR OF ITS RECEIPT IGNORING THE AMOUNT OF EXPENDITURE I NCURRED AND TO BE INCURRED IN RESPECT OF CONSTRUCTION OF SHOPS AND OTHER BUSINESS EXPENSES. THE LD. A.R. ARGUED THAT DIFFERENT TREATMENT CAN NOT BE GIVEN TO THE ON MONEY RECEIPT THAN THE ADVANCES RECEIVED FROM CUSTOMERS AGAINST PROPOSED SALE OF SHOPS WHICH ARE RECORDED IN THE BOOKS FOR THE PURPOSE OF RECOGNIZING REVENUE. THE ASSESSEE HAS RECOGNIZE D THE RECEIPT OF ON MONEY IN THE YEAR OF TRANSFER OF SHOPS AND HANDING OVER ITS POSS ESSION TO THE CUSTOMERS. IN THIS REGARD, ABOVE DECISIONS HAVE BEEN CITED BY THE LD A .R. THE A.O HAS TAXED THE RECEIPT OF ON MONEY IN RESPECT OF SHOPS SOLD IN THE YEAR OF RECEIPT ITSELF. IN ITS REMAND REPORT, THE A.O HAS CONTENDED THAT THERE IS NO ESTABLISHED LAW FOR GIVING THE ABOVE TREATMENT TO THE ON MONEY RECEIVED DURING THE COURSE OF SALE S OF SHOP, AS CHOSEN BY THE ASSESSEE. THE LD CIT(A), HAS ACCEPTED THE CONTENTIONS OF TH E ASSESSEE IN VIEW OF THE ABOVE CITED DECISION OF PUNE BENCH IN THE CASES OF GOLANI BROS. VS. ACIT (SUPRA) AND DHANVARSHA BUILDERS & DEVELOPERS (P) LTD. VS. DCIT (SUPRA ). 11. HAVING GONE THROUGH THESE DECISIONS, WE FIND TH AT IN THE CASE OF GOLANI BROS, VS. ACIT (SUPRA), THE ASSESSEE HAD UNDERTAKEN THE PROJ ECT OF SHOPPING COMPLEX MARKET FOR JALGAON MUNICIPAL CORPORATION. A SEARCH AND SEIZUR E OPERATION U/S. 132 WAS CARRIED OUT ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 12 AT THE PREMISES OF THE ASSESSEE WHEREIN IT WAS REV EALED THAT THE ASSESSEE HAD RECEIVED CONSIDERATION FOR SHOPS WHICH WAS PARTIALLY RECORD ED IN THE BOOKS OF ACCOUNTS AND PARTLY IN THE FORM OF ON-MONEY WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT. THE ASSESSEE IN THAT CASE HAD ALSO INCURRED EXPENDITURE WHICH W AS PARTLY RECORDED IN THE BOOKS OF ACCOUNT AND WAS PARTLY INCURRED OUT OF BOOKS. THE RELEVANT PARAGRAPHS OF THE ORDER OF THE TRIBUNAL IN THE CASE OF GOLANI BROTHERS IS PARA NO. 42 WHEREIN WHILE DECIDING THE TAXABILITY OF INCOME AND ON-MONEY, THE TRIBUNAL H AS LAID DOWN VARIOUS STEPS SUMMARIZED AS UNDER : FIRST STEP TO CONSIDER TOTAL COST OF THE PROJEC T AS PER BOOKS OF ACCOUNTS SECOND STEP TO INCREASE THE ABOVE COST BY UNACC OUNTED EXPENDITURE THIRD STEP SUCH TOTAL COST OF THE PROJECT IS TO B E BIFURCATED ON THE TOTAL SALABLE AREA CONSTRUCTED. DETERMINE COST OF SALABLE AREA P ER SQ.FT. FOURTH STEP TO DETERMINE COST OF CONSTRUCTION YE AR WISE IN RESPECT OF SALABLE AREA OF THE SHOPS SOLD IN EACH YEAR. FIFTH STEP TO DETERMINE THE SUM OF ON-MONEY YEAR -WISE IN RESPECT OF SHOP SOLD IN EACH YEAR. SIXTH STEP TO TAKE SALE PROCEEDS OF SHOP SOLD IN EACH YEAR AS PER BOOKS OF ACCOUNTS. SEVENTH STEP THE SALE CONSIDERATION COMPUTED AS PER FIFTH STEP AND SIXTH STEP SHOULD BE TOTALED FOR EACH YEAR AND THE SAME SHALL BE TREATED AS TOTAL REVENUE RECEIPTS FOR COMPUTING THE PROFIT OF EACH YEAR. EIGHTH STEP THE DIFFERENCE BETWEEN TWO AMOUNTS AR RIVED AT AS PER STEP NO. 4 AND STEP NO. 7 WOULD BE ASSESSABLE AS PROFITS OF THE CO NCERNED YEAR. 12. THE TRIBUNAL APPROVED THE APPROACH ADOPTED BY THE A.O IN THE SIXTH STEP WHEREIN THE A.O HAS CONSIDERED THE SALE OF SHOPS IN THE YEA R IN WHICH POSSESSION WAS HANDED OVER TO THE VENDEE. IN THE CASE OF DHANVARSHA BUILDERS & DEVELOPERS (P) LTD., (SUPRA) THE TRIBUNAL HAS HELD THAT CONDUCT OF SEARCH AND SEIZUR E OPERATION IN A PARTICULAR YEAR DOES ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 13 NOT LEAD TO A INFERENCE THAT UNDISCLOSED INCOME DET ECTED AS A CONSEQUENCE THEREOF IN A.Y. RELEVANT TO PREVIOUS YEAR IN WHICH SEARCH WAS CONDUCTED. ACCOUNTING OF PROFITS HAS TO BE MADE ON THE BASIS OF METHOD OF ACCOUNTING FO LLOWED BY THE ASSESSEE. IN OTHER WORDS, METHOD OF RECOGNIZING REVENUE IS TO BE CONSI DERED FOR TAXING THE AMOUNTS RECEIVED IN CASH AS WELL AS AMOUNTS RECEIVED BY WAY OF CHEQU ES. THE PUNE BENCH OF THE TRIBUNAL IN THE CASES OF PRADEEP ASHOK RAHEJA VS/ ACIT (SUP RA) AND M/S. RANADE DIGHE AND ASSOCIATES VS. ITO (SUPRA) HAS FOLLOWED ITS EARLIE R DECISION IN THE CASE OF SHRI. D.J. HANSWANI, ITA NOS. 894/PN/97, 453/PN/98 AND C.O NO. 17/PN/99, ORDER DATED 29.6.2005. RELEVANT PARA NO. 3.1 OF THE ORDER OF THE TRIBUNAL IN THE CASE OF SHRI D.J. HANSWANI IS BEING REPRODUCED FOR READY REFERENCE : 3.1. WE HAVE CONSIDERED THE FACTS OF THE CASE AND RIVAL SUBMISSIONS. ON PERUSAL OF THE FACTS OF THIS YEAR, WE FIND THAT THE ASSESS EE HAS BEEN ACCOUNTING FOR PROFITS ON SALE BASIS AND NOT ON PROJECT COMPLETED BASIS AS MENTIONED IN THE STATEMENT OF FACT FILED BY THE REVENUE. THIS IS QUITE CLEAR TH AT FROM SUMMARY OF PROJECTS FILED BY THE LEARNED COUNSEL, WHICH GIVEN THE DETAILS OF SALE. IT MAY BE MENTIONED HERE THAT THE SALES STARTED FROM THE PREVIOUS YEAR RELE VANT TO A.Y. 1994-95 THOUGH THE PROJECT WAS INITIALED IN THE PREVIOUS YEAR RELEVAN T TO A.Y 1993-94. THE LEARNED DR HAD SOUGHT TO ARGUE THAT THE CHARACTER OF CASH RECE IPTS IS DIFFERENT FROM THE CONSIDERATION MENTIONED IN THE DOCUMENTS FOR THE RE ASON THAT NO EXTRA WORK WAS TO BE DONE IN RESPECT OF CASH RECEIPTS. IT WAS ALSO H IS CASE THAT BUT FOR THE SURVEY THESE RECEIPTS WOULD NOT HAVE COME TO THE NOTICE O F THE DEPARTMENT AND WOULD HAVE ESCAPED ASSESSMENT. THEREFORE, THESE RECEIPTS SHOULD BE TAXED ON CASH BASIS. WE ARE UNABLE TO AGREE WITH THIS ARGUMENT. IT MAY HAPPEN THAT A TRADER RECEIVES SALE CONSIDERATION IN CASH BY CHEQUE OR PA YMENT THROUGH CREDIT CARD. IT MAY ALSO HAPPEN THAT THE ASSESSEE MAY HAVE INTENTIO N TO HIDE THE WHOLE OR PART OF CASH SALES AND SUCH INTENTION MAY DETECTED IN THE COURSE OF SEARCH OR SURVEY. NONETHELESS, A CASH RECEIPT DOES NOT PARTAKE A DIFF ERENT A DIFFERENT CHARACTER FROM OTHER RECEIPTS MERELY BECAUSE IT WAS RECEIVED IN CASH AND POSSIBLE BECAUSE THERE WAS SOME INTENTION TO EVADE ITS DISCLOSURE TO THE DEPARTMENT. WE ARE OF THE VIEW THAT THE CHARACTER OF RECEIPT IS TO BE FOUND OUT FROM THE NATURE OF TRANSACTION. IN THE INSTANT CASE, THE ASSESSEE RECEIVED CERTAIN AM OUNTS BY WAY OF CHEQUES AND RECEIVED CERTAIN OTHER AMOUNTS BY WAY OF CASH, WHIC H WERE DETECTED IN THE COURSE OF SURVEY. BOTH THESE RECEIPTS WERE IN PURSUANCE OF AGREEMENTS FROM SALE OF ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 14 FLAT/SHOP. THE ASSESSEE HAS BEEN RECOGNIZING INCO ME ON SALE BASIS. THEREFORE, BOTH THE CASH RECEIPTS AND THE CHEQUE RECEIPTS RE MAIN AS DEPOSITS TILL THERE HAS BEEN TRANSFER OF FLAT/SHOP BY HANDING OVER POSSES SION TO THE BUYER, AS CONTEMPLATED IN SECTION 2(47). THEREFORE, WE ARE O F THE VIEW THAT CASH RECEIPTS CANNOT BE BROUGHT TO TAX ON CASH BASIS. LOOKING T O THE ORDER OF FIRST APPELLATE AUTHORITY, ARGUMENTS MADE IN THE COURSE OF HEARIN G BEFORE US AND THE SUMMARY OF PROJECTS, WE ARE OF THE VIEW THAT THE LEARNED CIT(A ) WAS RIGHT IN HOLDING EXTRA CONSIDERATION TO BE INTEGRAL PART OF SALE PROCEEDS AND RECOGNIZED AS INCOME WHEN SALE TOOK PLACE BY WAY OF TRANSFER U/S 2(47) OF THE I.T. ACT. IN THIS VIEW OF THE MATTER, WE AGREE WITH THE FINDINGS OF THE LEARNED C IT(A) IN ALL RESPECTS. THE MUMBAI BENCH OF TRIBUNAL IN THE CASE OF ACIT V/S. SHRI MEHUL J. SOMAIYA ( SUPRA) IN PARA NO. 7 OF ITS ORDER HAS HELD AS UNDER : 7. SECTION 145 AS APPLICABLE PRIOR TO A.Y. 1997-98 PROVIDED THAT INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUS INESS OR PROFESSION OR INCOME FROM OTHER SOURCES SHALL BE COMPUTED IN ACCORDANCE WITH THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE. UNDER THE LAW AS IT APPLIES TO ASSESSMENT PRIOR TO A.Y. 1997 98, AN ASSESSEE CAN FOLLOW EITHE R (A) THE CASH SYSTEM OF ACCOUNTING OR (B) MERCANTILE SYSTEM OF ACCOUNTING O R (C) MIXED OR HYBRID SYSTEM OF ACCOUNTING. AN ASSESSEE MAY HAVE DIFFERENT SOURCES OF INCOME WHICH IS CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM BUSINESS OR PROF ESSION OR INCOME FROM OTHER SOURCES. FOR EXAMPLE AN ASSESSEE MAY BE DOING (A) MANUFACTURING AND SALE OF CEMENTS (B) DEALING IN SHARES AND SECURITIES AS TRA DER AND (C) ACTING AS COMMISSION AGENT. HE WAS FREE TO FOLLOW EITHER OF THE THREE R ECOGNIZED SYSTEM OF ACCOUNTING FOR EACH OF THE ABOVE SOURCES. WHEN COMPUTATION OF INCOME UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION IS MADE, THE I NCOME FROM VARIOUS SOURCE UNDER THE SAID HEADS ARE MERELY AGGREGATED. IN DO ING SO, THERE CAY BE NO METHOD OF ACCOUNTING; THEREFORE SECTION 145 WHEN I T REFERS TO INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PR OFESSION OR INCOME FROM OTHER SOURCES IT REFERS TO INCOME ARISING FROM A PARTI CULAR SOURCE. INCOME ARISES OUT OF A PARTICULAR SOURCE AND NOT OUT OF A PARTICULAR HE AD OF INCOME. SECTION 145(1) WAS AMENDED W.E.FR. 1.4.1997 I.E. A.Y. 1997-98 AND THE AMENDED SECTION PROVIDES THAT INCOME CHARGEABLE TO TAX UNDER THE HEAD PROFITS AN D GAINS OF BUSINESS OR PROFESSION OR INCOME FROM OTHER SOURCES SHALL B E COMPUTED ONLY IN ACCORDANCE WITH EITHER THE CASH OR MERCANTILE SYSTEM OF ACCOUN TING REGULARLY EMPLOYED BY ON ASSESSEE. ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 15 13. IN VIEW OF THE ABOVE DECISION, COVERING THE IS SUE RAISED IN THE PRESENT APPEAL UNDER ALMOST SIMILAR FACTS, WE ARE OF THE VIEW THA T THE LD CIT(A) HAS RIGHTLY ACCEPTED THE CONTENTION OF THE ASSESSEE ON THE ISSUE. WE THUS D O NOT FIND REASON TO INTERFERE WITH THE SAME. THE SAME IS UPHELD. 14. THE ISSUE RAISED IN ADDITIONAL GROUND NOS. (II ) & (III) IS THUS DECIDED IN FAVOUR OF THE ASSESSEE. THIS ISSUE IS COMMON IN ALL A.YS. UNDER CONSIDERATION. ADDITIONAL GROUND NO. (I_) IN A.Y. 2001-02 AND ISS UE NO. 1, IN A.Y. 2001-02; 1 & 2 IN A.Y. 2002-03; 3 IN A.Y. 2003-04 & 2004-05; AND 3 & 4 IN A.Y. 2005-06. 15. ADDITIONAL GROUND NO. (I) RAISED IN THE A.Y. 2001-02 IS GENERAL IN NATURE, HENCE DOES NOT NEED ADJUDICATION. BESIDES, IN THE A.Y. 20 01-02, THE REVENUE HAS QUESTIONED THE FIRST APPELLATE ORDER WHEREBY THE LD CIT(A) HAS DE LETED THE ADDITION OF RS.1,09,325/- MADE ON ACCOUNT OF UNDISPUTED DISALLOWANCE ALREADY MADE U/S. 143(3) WHICH WAS NO DISCLOSED BY THE ASSESSEE IN THE RETURN FILED IN RE SPONSE TO NOTICE U/S. 153A OF THE ACT. 16. THE RELEVANT FACTS ARE THAT WHILE FRAMING ASSES SMENT U/S. 153A FOR A.Y. 2001--02, THE A.O. NOTICED THAT HIS PREDECESSOR HAD MADE AD DITION OF RS. 1,09,325/- IN THE ASSESSMENT FRAMED U/S. 143(3) ON 17.2.2004, WHICH H AS NOT BEEN CONTESTED BY THE ASSESSEE. THE A.O ACCORDINGLY RETAINED THE SAID AD DITION OF RS. 1,09,325/-- MADE ON ACCOUNT OF DISALLOWANCES OUT OF CLAIMED EXPENSES FO R THE ASSESSMENT FRAMED BY HIM U/S. 153A OF THE ACT. THE LD CIT(A) HAS ACCEPTED THE CO NTENTION OF THE ASSESSEE THAT ADDITION MADE IN ASSESSMENT CONCLUDED U/S. 143(3) OF THE ACT , WHICH IS NOT PENDING CANNOT BE AGAIN MADE WHILE ASSESSING INCOME OF THE ASSESSEE U /S. 153A READ WITH SECTION 143(3) OF THE ACT. IN THIS REGARD, RELIANCE WAS PLACED ON TH E DECISION OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF SHIVNATH RAI HARNARAYANAN ( INDIA) LTD. VS. DCIT, 304 ITR (AT) 271 (DELHI). THE LD CIT(A) HAS ALSO FOLLOWED THE SCOPE OF NEW SCHEME EFFECTED FOR SEARCH U/S. 132 EXPLAINED IN THE MEMORANDUM ACCOMPANYING THE FINANCE BILL, 2003. ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 16 17. IN SUPPORT OF THE GROUND, THE LD. D.R. HAS BASI CALLY PLACED RELIANCE ON THE ASSESSMENT ORDER. THE LD. A.R., ON THE OTHER HAND, HAS REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. 18. HAVING GONE THROUGH THE ABOVE CITED DECISION O F DELHI BENCH OF THE TRIBUNAL IN THE CASE OF SHIVNATH RAI HARNARAYANAN (INDIA) LTD. VS. DCIT (SUPRA), WE FIND THAT THE DELHI BENCH IN THAT CASE ON AN IDENTICAL ISSUE HAS HELD THAT NO INCOME WHICH WAS ALREADY SUBJECTED TO ASSESSMENT U/S. 143(3) OR U/S. 143(3) /147 OF THE ACT COMPLETED PRIOR TO SEARCH IN RESPECT OF THOSE ASSESSMENT YEARS REFERRE D TO SECTION 153A, 153B OF THE ACT AND SECOND PROVISO TO SECTION 153A, HAD BEEN INCLUD ED IN THE ASSESSMENT FRAMED U/S. 153A OF THE ACT. THE TRIBUNAL JUSTIFIED SUCH ACTIO N OF THE A.O IN FRAMING THE ASSESSMENT U/S. 153A OF THE ACT FOR THE A.YS. UNDER CONSIDERAT ION. THE MEMORANDUM OF ACCOMPANYING FINANCE BILL 2003 HAS ALSO EXPLAINED AS ASSESSMENT OR RE-ASSESSMENT, IF ANY, RELATING TO ANY A.Y. FALLING WITHIN THE PERIOD OF 6 A.YS. CONTAINING THE DATE OF INITIATION OF THE SEARCH U/S. 132 OR REQUISITION U /S. 132A AS THE CASE MAY BE SHALL ABET. SIMILAR VIEW HAS ALSO BEEN EXPRESSED BY THE PUNE BENCH OF THE TRIBUNAL IN ITS ORDER DATED 8.12.2010 IN THE CASE OF PRESENT ASSESSEE I N A.YS. 1999-00 AND 2000-01 IN ITA NOS. 932 & 932/PN./09. WE THUS FIND THAT ISSUE IS FULLY COVERED BY THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN THE AFORESAID CASE, AND B Y THE DECISION OF PUNE BENCH IN THE CASE OF ASSESSEE ITSELF FOR A.YS. 1999-00 AND 2000- 01. WE THUS DO NOT FIND INFIRMITY IN THE FIRST APPELLATE ORDER BASED UPON THE ABOVE CIT ED DECISION OF DELHI BENCH OF THE TRIBUNAL IN THIS REGARD. THE SAME IS UPHELD. THE ISSUE NO. 1 RAISED IN A.Y. 2001-02 IS ACCORDINGLY REJECTED. IN OTHER ISSUES RAISED IN THE APPEALS FOR DIFFEREN T ASSESSMENT YEARS, THE REVENUE HAS QUESTIONED THE DELETION/REDUCTION OF DIFFEREN T DISALLOWANCES MADE BY THE LD. CIT(A). IN SUPPORT THE LD. D.R. HAS TRIED TO JUSTIFY THE D ISALLOWANCES MADE BY THE A.O. WE HAVE DEALT WITH THESE ISSUES HEAD-WISE HEREUNDER. DISMANTING EXPENSES ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 17 19. IN THE A.YS. 2002-03 AND 2004-05, THE A.O HAS D ISALLOWED RS. 2,49,000/- AND RS. 19,954/- RESPECTIVELY ON ACCOUNT OF DISMANTLING EXP ENSES. THE LD CIT(A) HAS DELETED THE SAME. 20. THE ASSESSEE HAD CLAIMED DISMANTLING EXPENSES AT RS.1,80,000/- FOR A.Y. 2000-01 AND RS. 1,60,000/- FOR A.Y. 2001-02 ON THE BASIS OF ARCHITECTS SERVICES. THE A.O DID NOT ACCEPT THE CLAIM ON THE BASIS THAT NO SUCH EVIDENCE OF DISMANTLING EXPENSES WAS FOUND NOTED IN THE SEIZED MATERIAL. THE A.O HAS ALLOWED THE SAME IN THE A..Y. 2002-03 TO THE EXTENT OF RS. 2,49,000/- ON THE BASIS OF COPY OF B ILL RAISED BY THE ASSESSEE FOR EXPENDITURE INCURRED FOR DISMANTLING AND SUBMITTED TO CHALISG AON MUNICIPAL COUNCIL ON 10.7.2001. THE ASSESSEE HAD CAPITALIZED THE SAID EXPENDITURE OF RS.3,40,000/- AND CLAIMED THE SAME ON THE BASIS OF PROPORTIONATE AREA OF SHOPS, TRANSF ERRED IN EACH YEAR TO THE CUSTOMERS IN A.Y. 2004-05 AND 2005-06 AT RS. 27,246/- AND RS. 12 ,021/- RESPECTIVELY. AS THE EXPENDITURE INCURRED WAS ALLOWED AT RS.2,49,000 AS AGAINST CLAIMED BY ASSESSEE FIRM AT RS.3,40,000/- THE EXPENDITURE CLAIMED BY THE ASSESS EE ALREADY TO BE DISALLOWED IN SUCH PROPORTION, OBSERVED LD. CIT(A). HE HAS ACCORDINGL Y DIRECTED THE A.O TO DISALLOW THE DISMANTLING EXPENDITURE CLAIMED BY THE ASSESSEE TO THE EXTENT OF RS. 7,292/- AND RS. 3,217/- IN A.YS. 2004-05 AND 2005-06 RESPECTIVELY. THEREFORE, THE LD. CIT(A) HELD THAT THE DISMANTLING EXPENDITURE AMOUNTING TO RS. 2,49, 000/- GRANTED BY HIM WHILE ASSESSING INCOME OF THE A.Y. 2002-03. 21. AS DISCUSSED ABOVE, WE FIND THAT THE FIRST APPE LLATE ORDER ON THE ISSUE OF DISALLOWANCE OF DISMANTLING EXPENSES IS REASONED O NE, HENCE WE ARE NOT INCLINED TO INTERFERE THEREWITH. THE SAME IS UPHELD. THE ISS UE NO. 1 IN A.Y. 2002-03 AND ISSUE NO. 3 IN A.Y. 2004-05 RELATING TO THE DELETION OF ADDIT ION OF RS. 2,49,000/- AND RS. 19,954/- RESPECTIVELY MADE ON ACCOUNT OF DISMANTLING EXPEN SES ARE DECIDED AGAINST THE REVENUE. FIRST APPELLATE ORDER IN THIS REGARD IS UPHELD. COMMISSION EXPENSES 22. THE RELEVANT FACTS ARE THAT THE ASSESSEE CLAIME D TO HAVE PAID COMMISSION TO THE FOLLOWING PERSONS FOR SALE OF SHOPS AND ALSO FOR R ECOVERING THE AMOUNT OF SALE PROCEEDS FROM CUSTOMERS : ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 18 NAME OF THE PAYEE A.Y. 05 - 06 A.Y. 04 - 05 A.Y. 03 - 04 TOTAL K.B. CHHAJED 4,60,000 4,00,000 2,30,000 10,90,000 M.L. SHIRUDE 1,00,000 90,000 - 1 , 90,000 R.B. DESHMUKH 90,000 75 , 000 - 1,65,000 PRASHANT YEOLA 95,000 80,000 - 1,75,000 OTHERS - - 12,000 12,00 0 TOTAL 7,45,000 6,45,000 2,42,000 16,32,000 THE A.O. PARTLY ALLOWED COMMISSION TO SHRI K.B. CH HAJED STATING THAT THE ONLY DOCUMENT OF BROKERAGE PAID AS PER SEIZED MATERIAL IS ONLY R S.2,50,000/- RELATED TO A.Y. 2005-06. THE A.O ALLOWED COMMISSION OF RS. 93,020/- AT 2% OF ON MONEY RECEIPT OF RS. 46,51,000/- FOR A.Y. 2004-05. IN RESPECT OF ON MO NEY RECEIPT UP-TO THE DATE OF ACTION U/S. 132 OF THE ACT, A.Y. 2005-06 AMOUNTING TO RS. 54,20,000/- THE A.O HAS WORKED OUT COMMISSION AT 2% OF RS.1,08,400/-. THE A.O HAS ALL OWED COMMISSION AMOUNTING TO RS. 63,233/- PROPORTIONATELY FOR 7 MONTHS I.E. UP TO S EARCH OF 3.11.2004. 23. THE LD. D.R. SUBMITTED THAT ABOVE STATED CLAIME D EXPENSES WERE NOT SUPPORTED BY ANY EVIDENCE OR SEIZED MATERIAL AND HAVE BEEN ALLOW ED BY THE LD CIT(A) ON PRESUMPTIVE BASIS IN THE ASSESSMENT U/S. 153A. THE LD A.R., ON THE OTHER HAND, TRIED TO JUSTIFY THE FIRST APPELLATE ORDER ON THE ISSUE. 24. IN RESPECT OF DISALLOWANCE OF THE COMMISSION E XPENDITURE TO THE EMPLOYEE OF ASSESSEE FIRM, SHRI K.B. CHHAJED IN A.Y. 2005-06, THE ASSESSEE CONTENDED THAT IT IS NOT LIKELY THAT EMPLOYEE WHO WAS WORKING FOR 8 HOURS FO R THE ASSESSEE FIRM WOULD NOT HAVE BEEN PAID ANY SALARY. THE A.O DISALLOWED THE PAYUM ENT TO THE EMPLOYER AMOUNTING TO RS. 4 LAKHS IN A.Y. 2004-05 AND RS. 2,30,000/- IN A.Y. 2003-04 ON THE BASIS THAT THE SEARCH ASSESSMENT PROCEEDINGS TO BE FULLY ON MATERI AL SEIZED AND NO NOTINGS ABOUT SUCH EXPENDITURE WAS FOUND IN SEIZED MATERIAL. THE ASSE SSEE, HOWEVER, CONTENDED THAT IN RESPECT OF SEARCH AFTER 1.6.2003 PROVISIONS OF SEC. 153A, 153B & 153 C WOULD BECOME APPLICABLE TO THE SEARCH ASSESSMENTS AND AS PER NE W SCHEME OF SEARCH ASSESSMENTS, ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 19 THERE IS NO REQUIREMENT FOR AN ASSESSMENT 153A TO B E BASED ON ANY MATERIAL SEIZED IN THE COURSE OF SEARCH. IN SUPPORT, THE ASSESSEE PLA CED RELIANCE ON THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF SHIVNATH RAI H ARNARAYANAN (INDIA) LTD. VS. DCIT (SUPRA). THE LD CIT(A) HAS AGREED WITH THE SUBMISS ION OF THE ASSESSEE THAT SRI KB CHHAJED , AN EMPLOYEE OF THE ASSESSEE FIRM MUST HAV E BEEN PAID SALARY/ COMMISSION ALSO FOR A.YS. 2004-05 AND 2003-004 AS HE WAS PAID SALA RY/COMMISSION DURING A.Y. 2005-06 AT RS/ 2,50,000/- AS FOUND NOTED IN SEIZED MATERIAL AN D ALLOWED BY THE A.O AS AGAINST CLAIMED RS. 4,60,0O00/-. THE A.O HAD ALLOWED 55% OF SALARY/COMMISSION CLAIMED BY THE ASSESSEE AS PAID TO ITS EMPLOYEE SHRI K.B. CHHAJED. UNDER THESE FACTS, THE LD CIT(A) FOUND IT REASONABLE THAT 55% OF THE SALARY CLAIMED BY THE ASSESSEE IN A.YS. 2004-05 AND 2003-04 ON ACCOUNT OF SALARY/COMMISSION EXPENDITUR E PAID TO SHRI K.B. CHHAJED. THE LD CIT(A) HAS UPHELD THE BALANCE DISALLOWANCE OF COMMI SSION AMOUNTING TO RS. 8,92,194/-. THE FIRST APPELLATE ORDER ON THE ISSUE AS DISCUSSE D ABOVE IN REASONED ONE, HENCE WE ARE NOT INCLINED TO INTERFERE THEREWITH. THE SAME IS U PHELD. ISSUE NO. 3 IN A.Y. 2003-04 & 2004-05 RELATING TO COMMISSIONER PAYMENT IS THUS D ECIDED AGAINST THE REVENUE. WATCHMEN SALARY 25. SO FAR AS DISALLOWANCE OF WATCHMEN SALARY BY TH E A.O AT RS.1,24,800/- IN THE A.Y. 2003-04, RS. 1,53,600/- IN A.Y. 2004-05 AND RS. 45, 600/- IN A.Y. 2005-06 IS CONCERNED, WE FIND THAT THE ASSESSEE HAD SUBMITTED AFFIDAVITS OF WATCHMEN SUPPORTING PAYMENTS TO THEM BEFORE THE A.O. THE ASSESSEE HAD ALSO SUBMITT ED THAT THE FIRM HAD NOT CLAIMED ANY EXPENDITURE TOWARDS SALARY PAID TO WATCHMEN IN REG ULAR BUSINESS OF ACCOUNT MAINTAINED AS THE SAID SALARY WAS PAID OUT OF THE PREMIUM AMOU NT RECEIVED. IT WAS SUBMITTED THAT SALARY TO WATCHMEN IN RESPECT OF EACH SITE IS MUST IN THE LINE OF BUSINESS OF BUILDERS AND DEVELOPERS. IT WAS ALSO POINTED OUT THAT NO EXPEND ITURE TOWARDS SALARY TO WATCHMEN WAS CLAIMED IN THE FINANCIAL YEAR RELEVANT TO A.YS. 200 3-04 TO 2005-06. THE A.O HAS DISALLOWED THE CLAIM OF WATCHMEN SALARY ON THE BASI S THAT IT WAS NOT RECORDED ANYWHERE ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 20 IN THE SEIZED MATERIAL AND VOUCHERS FOR PAYMENT AN D THE AFFIDAVITS OF WATCHMEN FILED AFTER THE DATE OF SEARCH HAS NO EVIDENTIARY VALUE. 26. THE ASSESSEE RAISED SIMILAR CONTENTION THAT IN RESPECT OF SEARCH AFTER 1.6.2003, PROVISIONS OF SECTION 153A, 153B AND 153C WOULD B ECOME APPLICABLE TO SUCH SEARCH ASSESSMENTS AND AS PER THE NEW SCHEME OF SEARCH AS SESSMENTS, THERE IS NO REQUIREMENT FOR AN ASSESSMENT U/S 153A TO BE BASED ON ANY MATER IAL SEIZED IN THE COURSE OF SEARCH. IN SUPPORT, THE DECISION OF DELHI BENCH OF THE TRIB UNAL IN THE CASE OF SHIVNATH RAI HARNARAYANAN (INDIA) LIMITED VS. DCIT (SUPRA) WAS RELIED. 27. THE LD. CIT(A) ACCEPTING THE ABOVE SUBMISSION S OF THE ASSESSEE AND IN VIEW OF THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN TH E CASE OF SHIVNATH RAI HARNARAYANAN (INDIA) LIMITED VS. DCIT (SUPRA) HAS HELD THAT THE QUANTUM OF SALARY CLAIMED BY THE ASSESSEE IN EACH YEAR IS REASONABLE IN VIEW OF 3 SI TES REQUIRING SERVICES OF WATCHMEN. THE FIRST APPELLATE ORDER ON THE ISSUE IS REASONED ONE . HENCE, WE ARE NOT INCLINED TO INTERFERE THEREWITH. THE SAME IS UPHELD. ISSUE NO. 3 RELAT ING TO WATCHMAN SALARY IN A.YS. 2003- 04, 2004-05 AND 2005-06 IS THUS DECIDED AGAINST THE REVENUE. SUPERVISION CHARGES 28. IN THE A.Y. 2005-06, IN ISSUE NO.3, THE REVENU E HAS ALSO QUESTIONED THE ACTION OF THE LD CIT(A) IN DELETING THE DISALLOWANCE OF RS. 40,150/- ON ACCOUNT OF SUPERVISION CHARGES. WE FIND THAT A.O MADE DISALLOWANCE ON TH IS ACCOUNT OF RS. 10,450/- AND RS. 40,150/- IN THE ASSESSMENT YEARS 2004-05 AND 2005-0 6 RESPECTIVELY. 29. THE ASSESSEE CLAIMED THE EXPENDITURE ON ACCOUNT OF SUPERVISION CHARGES AS UNDER : ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 21 NAME OF THE PAYEE A.Y. 2005 - 06 A.Y. 2004 - 05 TOTAL S.B. KALE 90,000 80,000 1,70,000 G.P.KHAPARDE 45,000 70,000 1,15,000 TOTAL 1,35,000 1,50,000 2,85,000 30. THE A.O. ALLOWED SUPERVISION CHARGES OF RS. 1 ,39,530/- FOR A.Y. 2004-05 AT 3% OF ON MONEY RECEIPT OF 46,51,000/- IN RESPECT OF A.Y. 2005-06, THE A.O HAS ALSO WORKED OUT SUPERVISION CHARGES OF RS.1,62,600/- AT THE RATE OF 3% OF ON MONEY RECEIPT OF RS. 54,20,000/-. THE A.O HAS ALLOWED SUPERVISION CHARG ES AMOUNTING TO RS.7 MONTHS I.E. UP-TO THE DATE I.E. 3.11.2004. 31. THE ASSESSEE CONTENDED BEFORE THE LD CIT(A) TH AT THE EXPENDITURE HAS BEEN WORKED OUT BY THE A.O. ON THE BASIS OF RECEIPT OF ON MONEY UP TO DATE OF SEARCH AND NOT PER MONTH BASIS AND HENCE THE DISALLOWANCE MADE BY THE A.O. IS UNJUSTIFIED. THE LD CIT(A) FOUND THE CONTENTION OF THE ASSESSEE IN RES PECT OF A.Y. 2005-06 AS CORRECT AND HENCE ACCEPTED. HE HAS ACCORDINGLY DIRECTED DELETI ON OF DISALLOWANCE OF SUPERVISION CHARGES AMOUNTING TO RS. 40,150/- IN RESPECT OF A. Y. 2005-06 AND HAS UPHELD THE DISALLOWANCE OF RS. 10,470/- IN RESPECT OF A.Y. 20 04-05. 32. WE FIND THAT THE FIRST APPELLATE ORDER ON THE ISSUE, AS DISCUSSED ABOVE, IS REASONED ONE AND THUS NO INTERFERENCE THERETO IS C ALLED FOR. THE SAME IS UPHELD. ISSUE NO. 3 RELATING TO SUPERVISION CHARGES RAISED IN A.Y . 2005-06 IS THUS DECIDED AGAINST THE REVENUE. RESTRICTING/REDUCING OF ADDITION 33. SO FAR AS RESTRICTING OF ADDITION MADE U/S/. 69 C BY THE LD CIT(A) DURING A.Y. 2005- 06 IS CONCERNED, WE FIND THAT THE A.O HAD MADE FOLLOWING ADDITIONS : ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 22 SEIZED MATERIAL REFERRED AMOUNT REMARK A.Y.2005 - 2006 2,14,663 ANNEXURE B - 51 LOOSE PAPER BUNDLE PAPERS 1 TO 18 UNEXPLAINED EXPENDITURE ADDED U/S.69C ANNEXURE - B - 69 LOOSE PAPER BUNDLE 23,819 UNEXPLAINED EXPENDITURE ADDED U/S.69C ANNEXURE B - 70 22,704 UNEXPLAINED EXPENDITURE ADDED U/S.69C VOUCHERS ETC., ANNEXURE B - 78 43,437 UNEXPLAINED EXPENDITURE ADDED U/S.69C ANNEXURE B - 80 62,712 UNEXPLAINED EXPENDITURE ADDED U/S.69C INVENTORY NO.6 42,000 UNEXPLAINED EXPENDITURE A DDED U/S.69C 34. THE LD. CIT(A) HAS DEALT WITH THIS ISSUE IN P ARA NO. 6.1 OF THE FIRST APPELLATE ORDER. FOR A READY REFERENCE, THE SAME IS BEING R EPRODUCED HEREUNDER : 6.1 IN RESPECT OF DISALLOWANCE OF UNEXPLAINED EXPE NDITURE IN A.Y. 2005-06 AMOUNTING TO RS. 2,14,663/- THE APPELLANT CLAIMED T HAT, THE DISALLOWANCE U/S. 69C IS TO BE TELESCOPED AGAINST THE DISALLOWANCES OF EX PENSES SUCH AS COMMISSION, SUPERVISION CHARGES ETC.., CLAIMED BY THE APPELLANT OUT OF UNACCOUNTED ON-MONEY RECEIPTS. THE APPELLANT FURTHER CONTENDED THAT THE A.O. AS TAXED UNEXPLAINED RECEIPT OF RS. 42,000/- AS UNEXPLAINED EXPENDITURE WHILE MAKING ADDITION U/S. 69C AMOUNTING TO RS. 2,14,663/- INSTEAD OF TELESCOPING THE SAID UNRECORDED RECEIPT AGAINST UNRECORDED EXPENDITURE. THE CONTENTION OF THE APPELLANT ABOUT TELESCOPING OF EXPENSES DISALLOWED AGAINST THE EXP ENSES INCURRED OUT OF BOOKS IS REJECTED AS THE TELESCOPING CLAIM IS NOT PROVED B Y THE APPELLANT. HOWEVER, THE SECOND CONTENTION OF THE APPELLANT ABOUT TELESCOPI NG OF UNDISCLOSED RECEIPT OF 42,000/- AGAINST THE UNDISCLOSED EXPENDITURE ADDED RS.2.14,663/- IS ACCEPTED. THE ADDITION OF RS. 2,14,663/- U/S. 69C IS THEREFOR E REDUCED TO RS. 1,72,663/-. THE APPELLANT GETS RELIEF OF RS. 42,000/- IN A.Y. 2005- 2006 ON THIS COUNT. 35. WE FIND THAT THE FIRST APPELLATE ORDER ON THE I SSUE IS COMPREHENSIVE AND REASONED ONE, TO WHICH, IN OUR VIEW, NO INTERFERENCE IS REQ UIRED. THE SAME IS UPHELD. THE ISSUE NO. 4 RAISED IN THE APPEAL FOR A.Y. 2005-06 IS THU S DECIDED AGAINST THE ASSESSEE. 36. IN RESULT, ALL THE APPEALS ARE DISMISSED. ITA . NO 934 TO 938/PN/2009 & ETC., M/S. TEJA CONSTRUCTIONS A.Y. 2001-02 & ETC., PAGE OF 23 23 THE ORDER IS PRONOUNCED IN THE OPEN COURT ON THE D AY OF 31ST JANUARY, 2012. SD/- SD/- (G.S.PANNU) (I.C. SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED THE 31ST JANUARY, 2012 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT (CENTRAL), NAGPUR 4. THE CIT(A)-I, NASHIK 5. THE D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE