M/s. Bafna Builders and Land Developers, Jalgaon V. Joint CIT, Range-1, Jalgaon

MA 27/PUN/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5455 (ITAT-PUNE)
• Duration Of Justice: 9 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 18-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHABANA PARVEEN
• Section: 14A; 27; 28; 10; 2

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM M A NO S . 27 & 2 8 /P U N/201 8 ARISING OUT OF ITA NO S . 706 /P U N/201 3 & ITA NO.162/PUN/2015 ASSESSMENT YEAR S : 20 0 9 - 1 0 & 2011 - 12 M/S. BAFNA BUILDERS AND LAND DEVELOPERS, NAYANTARA, SUBHAS CHOWK, JALGAON, PIN - 425 001, PAN : AADFB 4627P . APP LICANT VS. T HE JOINT COMMISSIONER OF INCOME TAX, RANGE 1, JALGAON . RESPONDENT APPLICANT BY : SHRI SUNIL GANOO RESPONDENT BY : MS. SHABANA PARVEEN / DATE OF HEARING : 01 . 02 .201 9 / DATE OF PRONOUNCEMENT: 04 . 0 2 .201 9 / ORDER PER D. KARUNAKARA RAO, AM : : THERE ARE TWO MISCELLANEOUS APPLICATIONS UNDER CONSIDERATION. MISCELLANEOUS APPLICATION NOS.27 & 28/PUN /2018 AROSE FROM ASSESSEES APPEAL IN ITA NOS.706/PUN/2013 AND 162/PUN/2015, FOR ASSESSMENT YEARS 2009 - 10 & 2011 - 12, RESPECTIVELY. THESE MISCELLANEOUS APPLICATIONS AROSE FROM COMMON ORDER OF THE TRIBUNAL DATED 30.10.2017. 2 M A NO S . 27 & 28 /P U N/201 8 2. BRINGING OUR ATTENTION TO MISC ELLANEOUS APPLICATION NO.27/PUN/2018, THE LEARNED COUNSEL FOR ASSESSEE MENTIONED THAT THERE ARE FOUR MISTAKES FOR RECTIFICATION IN THE ORDER OF TRIBUNAL (SUPRA). 3. REFERRING TO FIRST MISTAKE, THE LEARNED COUNSEL FOR ASSESSEE BROUGHT OUR ATTENTION TO PARA 3 OF ORDER OF TRIBUNAL AND SUBMITTED THAT THE WORD DELETED APPEARING IN FIRST LINE OF SAID PARA 3 REQUIRES TO BE REPLACED BY EXPRESSION CONFIRMED. 4. ON SEEING THE MISTAKE APPARENT ON RECORD, WE PROCEED TO RECTIFY THE SAME. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. THIS PART OF MISCELLANEOUS APPLICATION IS ALLOWED. 5. REFERRING TO SECOND MISTAKE, THE LEARNED COUNSEL FOR ASSESSEE BROUGHT OUR ATTENTION TO THE WORD NOT IN PARA 7 AT PAGE 5 OF THE ORDER OF THE TRIBUNAL , THE LEARNED COUNSEL FOR AS SESSEE SUBMITTED THAT THE WORD NOT APPEARING IN LINE 7 OF THE SAID PARA NEEDS TO BE DELETED. ON CONSIDERING THE SAID WORD SUPERFLUOUS AND ABSURD, W E ORDER ACCORDINGLY IN FAVOUR OF THE ASSESSEE . THIS PART OF MISCELLANEOUS APPLICATION IS ALSO ALLOWED. 6 . NOW, REFERRING TO THIRD MISTAKE WHICH RELATES TO CONFIRMATION OF ADDITION OF RS.6 LAKHS OUT OF TOTAL ADDITION OF RS.30 LAKHS, THE LEARNED COUNSEL FOR ASSESSEE ARGUE D THAT THE ENTIRE ADDITION OF RS.30 LAKHS IS REQUIRED TO BE DELETED. IN THIS REGARD, ARGU MENT OF LEARNED COUNSEL FOR ASSESSEE IS THAT THE FINDING OF TRIBUNAL , WITH REFERENCE TO THE GENERALITY OF EXPLANATION GIVEN BY ASSESSEE IN MATTERS RELATING 3 M A NO S . 27 & 28 /P U N/201 8 TO DISCOUNT CLAIMED IN THE BOOKS , REQUIRES TO BE RECTIFIED. THE LEARNED AR SUBMITS THAT THE SAID EX PLANATION IS NOT GENERAL ONE. FURTHER, HE ARGUE D THAT THE SAID SUM OF RS.6 LAKHS, OFFERED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS, WAS GIVEN UNDER DIFFERENT CIRCUMSTANCES CONDITIONALLY. 7. ON THE OTHER HAND, LEARNED DR RELIED ON THE ORDER OF TH E TRIBUNAL. 8 . ON HEARING BOTH THE PARTIES ON THIS ISSUE, WE PERUSED THE SAID RELEVANT PART OF THE ORDER OF TRIBUNAL AND FIND THAT CONTENTS IN PARAS 7 TO 10 ARE RELEVANT AND DEALS WITH THIS ISSUE. THE OBJECTIONS RAISED BY LEARNED COUNSEL FOR ASSESSEE W ITH REFERENCE TO OUR OBSERVATIONS OF GENERALITY OF EXPLANATION IS FOUND TO BE THE FRUIT OF WELL CONSIDERED THOUGHT AND , THEREFORE, OUR INTERFERENCE AT THIS STAGE INTO THE SAID FINDING WILL AMOUNT TO REVIEW OF THE ORDER OF TRIBUNAL. FOR THE SAKE OF COMPLET ENESS, WE PROCEED TO EXTRACT PARA NOS.10 AND 11, WHERE SUM OF RS.6 LAKHS WAS CONFIRMED IN PLACE OF RS.30 LAKHS. 10. IT IS UNDISPUTED FACT THAT ASSESSEE SOLD THE RESIDENTIAL FLATS AT DIFFERENT RATES OF SELL PRICE. THE ASSESSEE, IN RESPONSE TO THE ABOVE QUE RIES, FURNISHED EXPLANATION AND THEY WERE CONSIDERED AND DISMISSED AS GENERAL IN NATURE. THEREFORE, AO REJECTED NOT ONLY EXPLANATION OF THE ASSESSEE BUT ALSO THE OFFER OF ADDITIONAL INCOME OF RS. 6,00,000/ - FOR THE A.Y. 2009 - 10 GIVEN BY THE ASSESSEE. AS SU CH, THE AO DID NOT HAVE ANY DIRECT EVIDENCE TO DEMONSTRATE THAT THE SALE PRICE IS RECEIVED BY THE ASSESSEE IN CASH IN PART AND THE SAME IS UNACCOUNTED IN THE BOOKS OF ACCOUNT. THEREFORE, IT IS NOT A CASE OF OUTRIGHT SUPPRESSION OF SALE PROCEEDS. AO ALSO FA ILED TO PROVE THE FACT OF GRANTING DISCOUNT TOWARDS BULK PURCHASES, KNOWN PERSONS AND THE SOCIAL OBLIGATIONS ETC., IS NOT GENUINE. THEREFORE, IN OUR VIEW, IT IS A CASE OF AD - HOC ADDITION. OF COURSE, ALL IS NOT WELL WITH THE SALE PRICES RECORDED BY THE A SSESSEE IN THE BOOKS OF ACCOUNTS AND THERE IS NEED FOR SOME ADDITION OF INCOME. IT IS A SETTLED LEGAL PROPOSITION THAT IN PRINCIPLE, THE BUSINESS DISCOUNTS CONSTITUTE AN ALLOWABLE DEDUCTION. HOWEVER, THE DISCOUNTS GIVEN FOR PERSONAL REASONS ARE NOT ALLOW ABLE. FROM THE LIST OF SUCH DISCOUNTS - BENEFICIARY, WE FIND ALL THE DISCOUNTS ARE NOT BUSINESS LINKED DISCOUNTS. FOR EXAMPLE, THE LOWER SALE PRICE GIVEN IN RESPECT OF FLATS SOLD TO THE LANDLORD, GOVT. AUTHORITIES ETC. FURTHER, AT THE SAME TIME, WE FIND T HAT IT IS A CASE OF AO DIRECTING THE ASSESSEE TO DO HIS BUSINESS OF SALE FLATS IN A PARTICULAR FASHION IN MATTERS OF GRANTING SUCH DISCOUNT IGNORING PRACTICAL OBLIGATIONS AND SOCIAL REALITIES, IS NOT PROPER. THEREFORE, WE ARE NOT WITH THE AO ON THIS. THUS , 4 M A NO S . 27 & 28 /P U N/201 8 THERE ARE PROBLEMS IN THE ORDER OF THE AO AS WELL AS THE ASSESSEES BOOKS OF ACCOUNT QUA THE SALE PRICE OF FLATS. HAVING HELD SO, WE SHALL NOW TAKE UP THE CORRECTNESS OF THE OFFER OF RS. 6,00,000/ - VS. RS. 30,00,000/ - ADDED BY THE AO IN HIS ORDER. 11 . IN THE ABOVE PARAGRAPH, WE HAVE HELD THAT THE ADDITION OF RS. 30,00,000/ - IS A CASE OF AD - HOC ADDITION. IT SHOT UP THE GROSS PROFIT RATE TO THE LEVELS WHICH IS NOT THERE IN THIS LINE OF BUSINESS. WITH THIS ADDITION, THE GP OF THE ASSESSEE RECORDS EXTRE MELY HIGH. AS SUCH, THE ASSESSEE OFFERED THE ADDITIONAL INCOME OF RS. 6,00,000/ - VIDE HIS LETTER DATED 20 - 12 - 2011 AND THE SAME IS NEVER RETRACTED TILL DATE. ON MERITS OF THE AOS OBSERVATION, WE FIND THE ASSESSEE GRANTED DISCOUNTS TO VARIOUS CUSTOMERS B OTH FOR BUSINESS AS WELL AS PERSONAL REASONS. IN ABSENCE OF ANY DIRECT EVIDENCE TO DEMONSTRATE THE CONCEALMENT OF SALE PRICE, REJECTING THE ASSESSEES EXPLANATION WHICH IS GENERAL IN NATURE, REJECTING THE OFFER OF ADDITIONAL INCOME OF RS. 6,00,000/ - GIVEN BY THE ASSESSEE VIDE HIS LETTER DATED 28 - 12 - 2011, IS NOT APPROPRIATE. FURTHER, WE ARE OF THE VIEW THAT SAID ADDITION OF RS. 30,00,000/ - COULD NOT BE SUSTAINED IN FULL AS THE AO FAILED TO CONSIDER THE AVERAGE SALE PRICE OF THE FLATS, WHILE WORKING OUT THE VARIATION IN IT. HENCE, WE APPROVE THE ASSESSEES VARIATION OF RS.18.88 LAKHS SAY 19 LAKHS ROUNDED OFF). THEREFORE, WE DIRECT THE AO TO RESTRICT THE ADDITION TO THE SAID ASSESSEES OFFER OF RS.6 LAKHS, WHICH CONSTITUTES AROUND 31.50% OF THE VARIATION OF R S.18.88 LAKHS FOR THIS YEAR. IN EFFECT, THE BASIS, WHICH IS CONSIDERED PRUDENT BY THE ASSESSEE, WHILE OFFERING THE SAID ADDITIONAL INCOME OF RS.6,00,000/ - IS APPROVED. ACCORDINGLY GROUND NO. 1 AND 2 RAISED BY THE ASSESSEE IN APPEAL ARE PARTLY ALLOWED. 9 . CONSIDERING THE SAME, WE ARE OF THE OPINION THAT THIS PART OF PRAYER OF ASSESSEE STANDS DISMISSED AS IT FALLS IN THE SCOPE OF REVIEW OF THE ORDER. WE ORDER ACCORDINGLY. 10 . THE LAST REQUEST OF LEARNED COUNSEL FOR ASSESSEE WITH REFERENCE TO OUR FINDING ON THE ISSUE RELATING TO DISALLOWANCE IS UNDER SECTION 14A R.W.S. 37 AND 36(1)(III) OF THE ACT. THE LIMITED ARGUMENT OF ASSESSEE IN THIS REGARD INCLUDES THAT THE TRIBUNAL FAILED TO CONSIDER SOME OF DECISIONS CITED BY ASSESSEE IN MAKING ORDER OF THE TRIBUN AL. IN THIS REGARD, HE BROUGHT OUR ATTENTION TO PARAS 12 TO 17 OF ORDER OF TRIBUNAL AND SUBMITTED THAT THE TRIBUNAL ALLOWED THE GROUND OF ASSESSEE FOR STATISTICAL PURPOSES. HE READ OUT THE CONTENTS OF PARA 17 IN THIS REGARD. FOR THE SAKE OF COMPLETENESS , THE SAID PARA 17 IS EXTRACTED AS FOLLOWS: 5 M A NO S . 27 & 28 /P U N/201 8 17. WE HAVE HEARD BOTH SIDES AND PERUSED THE ORDERS AND ARGUMENTS MADE BEFORE US. ON FACTS, WE FIND THE PROVISIONS OF SECTION 36(1)(III) OF THE ACT AND ITS PROVISO AND EXPLANATION ARE INAPPLICABLE TO THE FACTS O F THIS CASE. SIMILARLY, AO HAS NOT PROPERLY MADE OUT IF THE PROVISIONS OF SECTION 14A R.W.R 8D (2) OF THE I.T RULE APPLY TO FACTS DISCUSSED IN HIS ORDER. FURTHER, THE APPLICABILITY OF THE PROVISIONS OF SECTION 37 OF THE ACT IS COMPLETELY GIVEN A MISS. FURT HER, WE FIND THE CLAIM OF PAYMENT OF INTEREST TO THE CO - OWNERS OF THE LAND IS A MATTER TO BE DECIDED AFTER COMPREHENSIVELY DISCUSSING THE RELEVANT FACTS NEEDED FOR APPLYING PROVISIONS OF SECTION 37 OF THE ACT OR AS PER PROVISIONS OF SECTION 36(1) (III) OF THE ACT OR 14A OF THE ACT, AS THE CASE MAY BE. THERE IS NO CLARITY IN AOS ORDER AS TO WHY THE SAID PROVISIONS WERE INVOKED. THE INTEREST CLAIM MENTIONED IN SECTION 36 OF THE ACT RELATES TO THE CLAIM OF INTEREST LINKED TO THE CAPITAL BORROWED BY THE ASSES SEE. IN THIS CASE THERE IS NO CAPITAL BORROWED BY THE ASSESSEE. MORE FACTS ARE NEEDED FOR ADJUDICATION OF THIS ISSUE. THEREFORE, WE DISMISS THE LD. ARS REQUEST FOR NOT REMANDING TO THE FILE OF AO. THEREFORE, IN THE INTEREST OF PRINCIPLE OF NATURAL JUST ICE, THE MATTER IS REMANDED TO THE FILE OF AO FOR FRESH EXAMINATION. AO SHALL GIVE REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. AS SUCH, WE HAVE NO EVIDENCE LINKING THE INTEREST CLAIM TO THE BUSINESS PURPOSES OR PERSONAL PAYMENTS OR OTHERWISE. AO S HALL EXAMINE ALL PARAMETERS WHILE DECIDING THE ISSUE BY PASSING A SPEAKING ORDER ON EACH OF THE OBJECTION RAISED BY THE ASSESSEE. ACCORDINGLY, GROUND NO. 3 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 1 1 . ON HEARING BOTH THE PARTIES ON THI S ISSUE, WE FIND THE DECISION OF TRIBUNAL REMANDING THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER AND THE ASSESSING OFFICER IS UNDER OBLIGATION TO PASS SPEAKING ORDER AFTER CONSIDERING EACH OF THE OBJECTIONS RAISED BY ASSESSEE INCLUDING OBJECTION THAT RE VOLVES AROUND THE APPLICABILITY OF DECISIONS / JUDGMENTS SAID TO HAVE BEEN CITED BY THE LEARNED COUNSEL FOR ASSESSEE BEFORE US. THEREFORE, WE ARE OF THE OPINION THAT FINDING GIVEN IN PARA 17 DOES NOT CALL FOR INTERFERENCE. ACCORDINGLY, THIS PART OF PRAYE R OF ASSESSEE STANDS DISMISSED. THE MISCELLANEOUS APPLICATION OF ASSESSEE IS PARTLY ALLOWED. MA NO.28/PUN/2018 1 2 . SINCE THIS MISCELLANEOUS APPLICATION ALSO ARISES FROM THE COMMON ORDER OF TRIBUNAL (SUPRA), THE ABOVE DECISION IN MA NO.27/PUN/2018 SHALL APPL Y TO THIS 6 M A NO S . 27 & 28 /P U N/201 8 MISCELLANEOUS APPLICATION ALSO . ACCORDINGLY, THIS MISCELLANEOUS APPLICATION IS PARTLY ALLOWED. 1 3 . IN THE RESULT, BOTH THE MISCELLANEOUS APPLICATION S OF APPLICANT ARE PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 4 TH DAY OF FEBR UARY , 201 9 . SD/ - SD/ - ( /VIKAS AWASTHY) ( . / D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE ; DATED : 4 TH FEBR UARY , 201 9 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A ) - 2, NASHIK 4. CIT 2, NASHIK 5. , , A BENCH PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE