M/s. Navratna Organisers & Developers Pvt.Ltd., Ahmedabad V. The Dy.CIT.,Cent.Circle-1(1), Ahmedabad

ITSSA 448/AHD/2011

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0704 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-04-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 28-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DEEPAK SONI AR
• Keywords: Business income; Opportunity of being heard; Principle of natural justice
• Section: 68

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI S. S. GODARA, JUDICIAL MEMBER IT(SS)A NO. 406/AHD/2011 / ASSESSMENT YEAR: 2007-08 ACIT, CENTRAL CIRCLE 1(1) AHMEDABAD M/S NAVRATNA ORGANIZERS & DEVELOPERS PVT LTD, 2 ND FLOOR, KAYCREST, OPP. GUJARAT GAS CO. LTD., NR. PARIMAL CROSSING, AHMEDABAD PAN : AAACN 5181 E IT(SS)A NO. 448/AHD/2011 / ASSESSMENT YEAR: 2007-08 M/S. NAVRATNA ORGANIZERS & DEVELOPERS PVT LTD, AHMEDABAD PAN : AAACN 5181 E ACIT, CENTRAL CIRCLE 1(1) AHMEDABAD / // / (APPELLANT) / // / (RESPONDENT) REVENUE BY : SHRI SUBHASH BAINS, CIT-DR ASSESSEE(S) BY : SHRI DEEPAK SONI, AR !' # $%&/ // / DATE OF HEARING : 08/04/2015 '( # $%& / // / DATE OF PRONOUNCEMENT: 10/04/2015 )* )* )* )*/ // / O R D E R PER G.D. AGRAWAL, VICE PRESIDENT: THESE ARE THE CROSS APPEALS FILED BY THE REVENUE AN D THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, AHMEDABAD DATED 25.03.2011 FOR ASSESSMENT YEAR 2007 -08. 2. IN THESE CROSS APPEALS, THE REVENUE HAS RAISED F OLLOWING GROUNDS:- IT(SS)A NOS 406 & 448/AHD/2011 ACIT VS. NAVRATNA ORG & DEV. PVT LTD AY: 2007-08 2 (1) THE LD. CIT(A) HAS ERRED IN LAW ON FACT IN D IRECTING TO VERIFY THE FRESH DETAILS TO BE SUBMITTED BY THE ASSESSEE AND PASS A SPEAKING APPEAL EFFECT ORDER WITH REGARD TO THE ADDITION OF RS.9,06,83,708/- BEI NG THE BUSINESS INCOME ARISING OUT OF KALHAR BUNGLOW PROJECT, AS THE DECIS ION OF LD.CIT(A) TANTAMOUNT TO SETTING ASIDE OF THE ISSUE FOR FRESH ADJUDICATION. (2) ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT (A) OUGHT TO HAVE UPHELD THE ADDITION OF RS.9,06,83,708/-. (3) THE LD.CIT(A) HAS ERRED IN LAW ON FACT IN DE LETING THE ADDITION OF RS.35,45,480/- BEING THE BUSINESS INCOME ARISING OU T OF KINGS SQUARE PROJECT. (4) ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT (A) OUGHT TO HAVE UPHELD THE ADDITION OF RS.35,45,480/-. (5) THE LD.CIT(A) HAS ERRED IN LAW ON FACT IN DE LETING THE ADDITION OF RS.1,19,55,000/-OUT OF TOTAL ADDITION OF RS.6,99,65 ,000/- MADE ON ACCOUNT OF CAPITAL GAIN ON TRANSFER OF SHARES OF SUJAN INFRAST RUCTURE PVT. LTD. (6) ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) OUGHT TO HAVE UPHELD THE ENTIRE ADDITION OF RS.6,99,55,000/- AS T HE SHORT TERM CAPITAL GAIN ON TRANSFER OF SHARES WAS WORKED OUT ON THE BASIS O F DETAILS AVAILABLE ON RECORD. (7) THE LD. CIT(A) HAS ERRED IN LAW ON FACT IN D ELETING THE ADDITION OF RS.46,50,293/-MADE U/S 68 OF THE I.T. ACT BY ADMITT ING FRESH EVIDENCES IN CONTRAVENTION OF THE PROVISIONS OF RULE 46A OF THE I.T. RULES. (8) ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT (A) OUGHT TO HAVE UPHELD THE ADDITION OF RS.46,50,293/- AS THE ASSESS EE DID NOT FURNISH COMPLETE DETAILS BEFORE THE AO AS REQUIRED U/S 68 OF THE ACT . (9) THE LD.CIT(A) HAS ERRED IN LAW ON FACT IN D IRECTING TO VERIFY DETAILS OF A.Y. 2006-07 & 2007-08 WHILE GIVING APPE, EFFECT WI TH REGARD TO ADDITION OF RS.59,91,910/-MADE ON ACCOUNT OF ACCRUED DEVELOPMEN T FEES, AS THE DIRECTION OF THE LD.CIT(A) TANTAMOUNT TO SETTING ASIDE THE IS SUE. (10) ON FACTS AND CIRCUMSTANCES OF THE CASE, THE L D. CIT (A) OUGHT NOT TO HAVE DIRECTED SUCH VERIFICATION AT APPEAL EFFECT ST AGE. (11) THE LD. CIT(A) HAS ERRED IN LAW ON FACT IN DEL ETING THE ADDITION OF RS.2,31,000/-MADE ON ACCOUNT OF NEGATIVE CASH BALAN CE. IT(SS)A NOS 406 & 448/AHD/2011 ACIT VS. NAVRATNA ORG & DEV. PVT LTD AY: 2007-08 3 (12) ON FACTS AND CIRCUMSTANCES OF THE CASE, THE L D.CIT(A) OUGHT TO HAVE UPHELD THE ADDITION OF RS.2,31,000/-. (13) IT IS THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. 3. THE GROUNDS RAISED BY THE ASSESSEE IN ITS APPEAL READ AS UNDER:- 1.0 THE CIT(A) ERRED IN NOT QUASHING THE ORDER PASS ED BY THE ASSESSING OFFICER. THE ORDER IS BAD IN LAW AND IS CONTRARY TO THE PROVISIONS OF LAW AND THE FACTS OF YOUR APPELLANT'S CASE. IT IS SUBMITTED THAT IT BE SO HELD NOW. 1.1 THE APPELLANT SUBMITS THAT ORDER HAS BEEN FRAME D BY THE ASSESSING OFFICER WITHOUT AFFORDING REASONABLE OPPORTUNITY OF BEING H EARD AND IS IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. THE ORDER BE THEREFOR E QUASHED AND VARIATIONS TO THE RETURNED INCOME BE DELETED. 1.2 THE ASSESSING OFFICER ERRED IN ERRONEOUSLY MAKI NG VARIOUS OBSERVATIONS IN BODY OF THE ASSESSMENT ORDER. THE OBSERVATIONS AND CONCLUSION BE QUASHED. 2.0 THE APPELLANT SUBMITS THAT OBSERVATIONS MADE BY THE ASSESSING OFFICER REGARDING NON-COMPLIANCE WITH THE NOTICE ARE CONTRA RY TO THE FACTS. THE APPELLANT SUBMITS THAT EACH AND EVERY NOTICE WAS DU LY COMPLIED WITH IN ACCORDANCE WITH THE PROVISIONS OF LAW. 3.0 THE CIT(A) ERRED IN NOT QUASHING ADDITION IN RE SPECT OF BUSINESS INCOME OF RS. 9,06,83,708/-. THE ADDITION REPRESENTS ONLY NOTIONAL INCOME BASED ON ESTIMATE WHICH HAD NEVER BEEN DERIVED. RS. 9,06,83, 708/- REPRESENTS LIABILITY OF THE APPELLANT. THE CONCLUSION AND ADDITION ON TH E PART OF THE ASSESSING OFFICER ARE UNFOUNDED AND BEYOND THE PROVISIONS OF THE INCOME TAX ACT, 1961. THE ADDITION BEING ERRONEOUS AND ILLEGAL BE QUASHED . 3.1 THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE A SSESSING OFFICER ERRED IN ESTIMATING PROFIT AND ACCORDINGLY ERRED IN ESTIMATI NG BUSINESS INCOME OF RS.9,06,83,708/-. THE ASSESSING OFFICER HAS ADMITTE DLY ESTIMATED PROFIT AND THEREFORE ESTIMATED BUSINESS INCOME OF RS. 9,06,83, 708/-. ADDITION IN RESPECT OF ESTIMATED PROFIT AND NOTIONAL INCOME IS GROSSLY INCORRECT, ILLEGAL AND ERRONEOUS ON THE PART OF THE ASSESSING OFFICER. THE ADDITION OF RS.90683708/- OUGHT TO HAVE BEEN QUASHED BY CIT(A). THE ADDITION BE QUASHED. 3.2 THE APPELLANT HAD BEEN FOLLOWING MERCANTILE SYS TEM OF ACCOUNTING AND FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING EACH AND EVERY INCOME WHICH IT(SS)A NOS 406 & 448/AHD/2011 ACIT VS. NAVRATNA ORG & DEV. PVT LTD AY: 2007-08 4 ACCRUED AND EACH AND EVERY EXPENDITURE WHICH WAS IN CURRED DURING THE PREVIOUS YEAR UNDER CONSIDERATION HAS BEEN CONSIDER ED IN PREPARING THE PROFIT AND LOSS ACCOUNT AND ALSO IN ARRIVING AT THE INCOME. 3.3 THE APPELLANT WITHOUT PREJUDICE TO ABOVE SUBMIT S THAT IN VIEW OF ADOPTING INCOME OF RS.9,42,29,188/- THE ASSESSING O FFICER OUGHT TO HAVE EXCLUDED GROSS RECEIPTS BY WAY OF DEVELOPMENT FEES/ CONSTRUCTION FEES CREDITED TO THE PROFIT AND LOSS ACCOUNT. THE APPELLANT SUBMI TS THAT IT BE SO HELD NOW. 4.0 THE CIT(A) ERRED IN UPHOLDING COMPUTATION OF CA PITAL GAIN OF RS. 580.10 LACS AND ADDITION THEREOF IN COMPUTATION OF THE TOT AL INCOME. THE APPELLANT SUBMITS THAT IT HAD NEVER DERIVED ANY CAPITAL GAIN OF RS. 580.10 LACS AND THEREFORE ADDITION IS UNFOUNDED IN THE EYES OF LAW AND CONTRARY TO THE FACTS. THE ADDITION BE QUASHED. 4.1 THE CIT(A) ERRED IN HOLDING THAT RS. 580.10 LAC S BE TAXED AS SHORT TERM CAPITAL GAIN. THE APPELLANT SUBMITS THAT ADDITION O F RS. 580.10 LACS IS BASED ON PRESUMPTION AND THERE WAS NO MATERIAL, EVIDENCE OR SUPPORT ACCEPTABLE IN EYES OF LAW. THE ADDITION OF RS. 580.10 LACS BEING ERRONEOUS AND CONTRARY TO THE FACTS BE QUASHED. 4.2 OBSERVATIONS MADE BY THE ASSESSING OFFICER AND THE CIT(A) ARE UNSUSTAINABLE AND CONTRARY TO THE FACTS, THE SAID O BSERVATIONS HAVE NO BASIS AND THE ADDITION OF RS. 580.10 LACS MADE ON THEIR B ASIS IS UNSUSTAINABLE IN THE EYE OF LAW AND CONTRARY TO THE FACTS. THE ADDIT ION BE QUASHED. 4.3 THE APPELLANT SUBMITS THAT VARIOUS COMPUTATION STATED BY THE ASSESSING OFFICER IN THE MATTER OF SALE VALUE OF THE PROJECT IN THE MATTER OF COST OF THE PROJECT, COST OF THE CONSTRUCTION, COST OF THE INVE STMENT ETC. ARE UNILATERAL IN NATURE AND FURTHER ARE UNFOUNDED AND GROSSLY ERRONE OUS AND IN CONSEQUENCE THEREOF COMPUTATION OF CAPITAL GAIN MADE BY THE ASS ESSING OFFICER IS ALSO ERRONEOUS AND BE QUASHED. 4.4 THE APPELLANT WITHOUT PREJUDICE TO ABOVE SUBMIT S THAT ESTIMATING MARKET PRICE AT RS. 1380.10 LACS AND FURTHER COMPUTATION O F CAPITAL GAIN OF RS. 580.10 LACS ARE ERRONEOUS ON FACTS AND IN LAW AND I N CONSEQUENCE THEREOF ADDITIONS OF RS. 580.10 LACS BE QUASHED AND/OR BE S UBSTANTIALLY REDUCED. THE APPELLANT SUBMITS THAT APPROPRIATE RELIEF BE ALLOWE D AS PER THE PROVISIONS OF LAW AND THE FACTS. 5.0 THE CIT(A) ERRED IN UPHOLDING VALIDITY OF NOTIC E OF DEMAND OF RS.5,89,46,575/-. THE APPELLANT SUBMITS THAT NOTICE OF DEMAND IS ILLEGAL AND THEREFORE DEMAND IS NOT SUSTAINABLE IN EYES OF LAW. THE APPELLANT SUBMITS THAT NOTICE OF DEMAND AND DEMAND BE QUASHED. IT(SS)A NOS 406 & 448/AHD/2011 ACIT VS. NAVRATNA ORG & DEV. PVT LTD AY: 2007-08 5 5.1 THE APPELLANT, WITHOUT PREJUDICE TO ABOVE, SUBM ITS THAT DEMAND IS ERRONEOUS AND EXCESSIVE AND THE DEMAND BE QUASHED A ND/OR REDUCED. THE APPELLANT SUBMITS THAT APPROPRIATE RELIEF BE ALLOWE D. 4. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSE L POINTED OUT THAT ON THE IDENTICAL FACTS THE APPEALS WERE FILED BY BOTH THE SIDES FOR ASSESSMENT YEARS 2001-02 TO 2005-06. THE ITAT VIDE ORDER DATED 30.08.2013 IN IT(SS)A NOS. 71, 526, 527, 528 & 529/AHD/2010 SET ASIDE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH THE FOLLOWING DIRECTI ONS:- 9. CONSIDERING THE TOTALITY OF FACTS AND IN VIEW O F THE AFORESAID DECISION OF HON. HIGH COURT WE ARE OF THE VIEW THAT TO MEET THE ENDS OF JUSTICE, THE MATTER BE REMANDED TO THE FILE OF ASSESSING OFFICER . WE THEREFORE DIRECT THE ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH AS PER LAW AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ADDITIONAL EVID ENCES FILED BY THE ASSESSEE BEFORE CIT(A) AND OTHER EVIDENCE THAT IT MAY LIKE T O RELY UPON AND AFTER GIVING A REASONABLE OPPORTUNITY OF HEARING TO ASSES SEE. THE ASSESSEE IS ALSO DIRECTED TO CO-OPERATE BY PROMPTLY FURNISHING THE D ETAILS CALLED FOR BY ASSESSING OFFICER. THUS THIS GROUND OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 10. SINCE THE ENTIRE MATTER HAS BEEN REMITTED BACK TO THE FILE OF ASSESSING OFFICER, THE OTHER GROUNDS DO NOT SURVIVE. THUS THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 11. ONE OF THE GROUND IN ALL THE APPEALS IS WITH RE SPECT TO CONTRAVENTION OF RULE 46A, WE FOR REASONS GIVEN HEREINABOVE WHILE DE CIDING THE APPEAL FOR A.Y. 2001-02 ALSO REMIT ALL THE APPEALS TO THE FILE OF ASSESSING OFFICER WITH SIMILAR DIRECTIONS. 12. SINCE ALL THE APPEALS OF THE REVENUE ARE RESTOR ED TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATION AND THEREFORE WE ARE OF THE VIEW THAT THE ISSUES IN THE PRESENT COS OF THE ASSESSEE FOR ALL THE ASS ESSMENT YEARS MAY ALSO BE RESTORED TO THE FILE OF ASSESSING OFFICER. THUS, TH E COS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. HE, THEREFORE, REQUESTED THAT SINCE MOST OF THE GR OUNDS RAISED IN THESE APPEALS ARE COMMON TO THE GROUNDS RAISED BEFORE THE ITAT FOR ASSESSMENT YEARS 2001-02 TO 2005-06, THE MATTER MAY BE SENT BA CK TO THE FILE OF THE ASSESSING OFFICER WITH THE SIMILAR DIRECTIONS. IT(SS)A NOS 406 & 448/AHD/2011 ACIT VS. NAVRATNA ORG & DEV. PVT LTD AY: 2007-08 6 5. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHE R HAND, RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 6. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE ORDER OF THE ITAT FOR ASSESSMENT YEARS 2001-02 TO 2005-06. WE FIND THAT MOST OF THE GROUNDS RAISED IN APPEAL BEFORE US ARE SIMILAR TO THE GROUN DS RAISED BEFORE THE ITAT FOR ASSESSMENT YEARS 2001-02 TO 2005-06. WE, THERE FORE, FIND NO JUSTIFICATION TO TAKE A VIEW DIFFERENT THAN THE VIEW TAKEN BY THE ITAT IN EARLIER YEARS. WE, THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DEC ISION OF THE ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2001-02 TO 2005-06, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THE MAT TER BACK TO THE FILE OF THE ASSESSING OFFICER TO MAKE THE ASSESSMENT AFRESH IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION THAT THE ASSESSING OFFICER WILL ALLOW ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND THER EAFTER HE WILL PASS THE ORDER AFRESH, AFTER CONSIDERING ALL THE EXPLANATION S AS WELL AS EVIDENCES AS MAY BE FURNISHED BY THE ASSESSEE BEFORE HIM. WE AL SO DIRECT THE ASSESSEE TO FURNISH ALL THE RELEVANT EVIDENCES/EXPLANATION BEFO RE THE ASSESSING OFFICER. 7. IN THE RESULT, THE REVENUES APPEAL AS WELL AS T HE ASSESSEES APPEAL, BOTH ARE DEEMED TO BE ALLOWED FOR STATISTICAL PURPO SES. ORDER PRONOUNCED IN THE COURT ON 10 TH APRIL, 2015 AT AHMEDABAD. SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (G.D. AGRAWAL) VICE-PRESIDENT AHMEDABAD; DATED 10/04/2015 BIJU T., PS IT(SS)A NOS 406 & 448/AHD/2011 ACIT VS. NAVRATNA ORG & DEV. PVT LTD AY: 2007-08 7 )* # $+ ,)+$ )* # $+ ,)+$ )* # $+ ,)+$ )* # $+ ,)+$/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. -- $ !. / CONCERNED CIT 4. !. ( ) / THE CIT(A) - I, AHMEDABAD 5. +12 $ , , / DR, ITAT, AHMEDABAD 6. 23 4' / GUARD FILE . )*! )*! )*! )*! / BY ORDER, TRUE COPY 5 55 5/ // / -6 -6 -6 -6 ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD