Income Tax Appellate Tribunal - Ahmedabad
Dy.Cit.,Circle-9,, Surat vs Anilbhia Arvindbhai Lakhankiya, Surat on 6 February, 2017
आयकर अपील
य अ धकरण, अहमदाबाद यायपीठ 'सी', अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
" C " BENCH, AHMEDABAD
सव ी राजपाल यादव, या यक सद य एवं द प कुमार के डया, लेखा सद य के सम ।
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER
And SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER
आयकर अपील सं./I.T.A. No.2197/Ahd/2011
( नधा रण वष / Assessment Year : 2006-07)
The Dy.CIT बनाम/ Shri Anilbhai Arvindbhai
Circle-9 Vs. Lakhankiya
Surat 395 001 B-78, Hans Society
Varachha Road
Surat
थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : ABXPL 0860H
(अपीलाथ% /Assessee) .. ( &यथ% / Respondent)
अपीलाथ% ओर से / Assessee by : Mr. Prasoon Kabra, Sr.DR
&यथ% क( ओर से/Respondent by : None
ु वाई क( तार ख /
सन Date of Hearing 10/01/2017
घोषणा क( तार ख /Date of Pronounce ment 06/02/2017
आदे श / O R D E R
PER PRADIP KUMAR KEDIA, AM:
This appeal by the Revenue is directed against the order of the Commissioner of Income Tax(Appeals)-V, Surat [CIT1(A) in short] dated 24/05/2011 for Assessment Year (AY) 2006-07.
2. The Revenue has raised the following substantive ground of appeal:-
ITA No.2197/Ahd/2011DCIT vs. Shri Anilbhai Arvindbhai Lakhankiya Asst.Year - 2006-07 -2- On the facts and in the circumstances of the case and in Law the Ld.CIT(A) has erred in deleting the addition made by the A.O. at Rs.70,17,000/- on account of unaccounted sales consideration of 11 row houses in spite of the fact that the assessee has charged different prices for the same are from different persons mentioning any extra work without agreement.
3. None appeared for the respondent-assessee. It is seen from the record that the date of hearing was duly informed to the assessee's representative on the previous occasion. It is also seen that in the past, several opportunities have been granted to both sides for disposal of the appeal. The assessee has filed written submission on one occasion, a copy of which was provided to the other side. In these circumstances, it is presumed that the assessee does not seek oral hearing in the matter. The matter is accordingly proceeded ex-parte for disposal on the basis of material available on record and on the basis of arguments advanced on behalf of the Revenue.
4. On perusal of records, it is observed that the assessee is an individual engaged in the business of construction of Raw Houses on fixed contract basis. During the year, the assessee had carried out construction of 11 Raw Houses. The assessee had shown the gross contract receipt of Rs.1,02,64,000/-. The assessee had undertaken the basic Construction @ Rs.8,25,000/- per Raw Houses for 11 Raw Houses, the total ITA No.2197/Ahd/2011 DCIT vs. Shri Anilbhai Arvindbhai Lakhankiya Asst.Year - 2006-07 -3- consideration of which works out to Rs.90,75,000/-. The assessee had also undertaken the extra work in 2 Raw Houses as per the specifications given by the owners of Raw Houses. The consideration for extra work for such row houses were received Rs.11,89,000/. On total contract price of Rs.1,02,64,000/-, the assessee had shown the Gross Profit of Rs.10,34,798/- which is above 10.08%. The assessee had shown the Net Profit of Rs.8,23,839/- which is 8% of contract receipts.
4.1. The survey proceedings u/s. 133A of the Act were carried out on 25.01.2006 in which the assessee had admitted element of on-money receipts from Raw House owners @ Rs.1,30,000/- per Raw House. The total on-money receipts of Rs. 14,30,000/- was shown in the books of account as well as Return of income and tax thereon was paid.
4.2. The Assessing Officer found that the area of plot of Raw House is same but the assessee has charged different rates for the same construction area. The copies of agreement of assessee with Raw House owners do not mention any extra work as contended by assessee in his submission dated 14.07.2008. The Assessing Officer required the assessee to submit the reasons for charging higher amount in one case and less amount in other case for the same area of construction and similar plan. The assessee only contended that the excess amount received represent the consideration for extra work done.
ITA No.2197/Ahd/2011DCIT vs. Shri Anilbhai Arvindbhai Lakhankiya Asst.Year - 2006-07 -4- 4.3. The Assessing Officer also presumed that the assessee is not a contractor but is a builder as the assessee had made the disclosure of Rs. 14,30,000/- in survey proceedings as on money receipts. The Assessing Officer therefore, presumed that the entire planning of the project has been made by the assessee and his father in agreement with the land owner according to which the land owners executed agreements for purchase of land and the assessee executed agreement for construction. The Assessing Officer also contended that in a preliminary statement the assessee's father had agreed that his is having all the rights over the land and later on altered his statement saying that he has only made agreement with Mahendrabhai Savani to take construction income. The land was purchased by Shri Karasanbhai Mohanbhai Vasani by agreement dtd. 25.02.2003. Shri Karsanbhai Mohanbhai Vasani had converted the Agriculture land into non Agriculture land by necessary permission dtd. 10.04.2005. After obtaining the permission of sub- division of land on 08.12.2003 from Revenue Authorities, Shri Karsanbhai Mohanbhai Vasani prepared and got the sanction of plan of 26 plots. Shri Karsanbhai Mohanbhai Vasani had sold the land to Mahendrabhai Shivabhai Savani and as per instruction of Mahendrabhai Shivabhai Savani, Shri Karsanbhai Mohanbhai Vasani executed Registered sale deed of plots in favour of Raw House owners. The entire plan of land was sanctioned by the permission of Surat Municipal ITA No.2197/Ahd/2011 DCIT vs. Shri Anilbhai Arvindbhai Lakhankiya Asst.Year - 2006-07 -5- Corporation granted on 12.08.2004. According to Assessing Officer, all this planning was made by assessee.
4.4. After considering the assessee as a builder, the Assessing Officer estimated sale value of each Raw House at Rs. 18,00,000/-. He reduced the cost of land Rs.99,000/- and worked out the cost of construction at Rs.17,01,000/- per Raw House. The Assessing Officer assumed sale of 11 Raw House at Rs.1,87,11,000/- and reduced the contract receipt of Rs.1,02,64,000/- therefrom shown in the books of accounts. From the difference of Rs.84,47,000/- the Assessing Officer reduced Rs. 14,30,000/- disclosed by assessee and made the addition of Rs. 70,17,000/- by committing a mistake in not deducting the consideration of extra work of Rs. 11,89,000/- which was done in the case of assessee's father .
4.5. The A.O. has further given details of investment made by the assessee in plots of land which are as under:
Land Address Area of Total Amount Cost per New Jantry the land (in of purchase Sq. Mtr.(in Price /Sq.
Sq. Mtr.) price (in Rs.) Mtr.w.e.f.
Rs.)
Survey No. 184, plot No. 108, 181.38 Sq. Rs.2,21,000/- 1218Sq. Rs.14000/-
Haridarshan, adajan, surat Mtr. Mtr. Sq.Mtr.
Villange : Sarthan, Survey No. 83.81 Sq.Mtr. Rs. 10870 129,Sq. Rs. 7000 sq.rntr.
188/1, Anmol park housing frits.
society
ITA No.2197/Ahd/2011
DCIT vs. Shri Anilbhai Arvindbhai Lakhankiya
Asst.Year - 2006-07
-6-
Survey No. 18888, 199/2, 48.49 Sq.Mt. Rs.6305 Rs. Rs.6000/-Sq.Mtr.
Eilock No. 182, Anand 130/Siq|.
Park Society, Sarthana Mtr.
Survey No. 190/1, Block 183, 83.89 Sq. Mtr Rs. 10905 Rs. 129 Sq. Rs.7000/-Sq.mtr.
Sarthan, Kamrje Mtr
Survey No. 107/1, 170.26 Rs. 1,70, 000 998 sq.mtr. Rs.14000 sq.mtr.
Adajan, Surat Sq.mtr. Sq.mtr.
Survey No. 107/1, T.P. 96.35 sq.mtr. Rs.99,000 1027/sq. Rs.14000 sq.mtr.
Scheme-32, plot no. 85 adajan, mtr.:
surat
4.6. The Assessing Officer applied the Jantry prices of above land fixed by State Stamp Duty Valuation Authorities and applicable from 1.4.2008 to the cost of land purchased in A.Y. 2006/07.
4.7. At the same time the Assessing Officer himself estimated the investment on purchase of lands at Rs. 50,00,000/- over and above the cost of land shown by the assessee in his books of accounts. The Assessing Officer had issued the Show Cause Notice to explain the investment. The assessee had submitted that it had purchased 6 small plot of land and Provision of Section 50C, a deeming provision, is applicable to seller of land. The assessee also explained that Provision of Section 69B of the Act are not applicable to buyers of land. The assessee also explained that the Jantri rate of all the land are Rs.1000/- per Sq.Mts.
on the basis of the certificate from the Sub-Registrar, Surat who is having list of all documents and Jantri prices of land. The assessee had also submitted that the Jantri rate of Rs. 7,000/- for Agriculture land and ITA No.2197/Ahd/2011 DCIT vs. Shri Anilbhai Arvindbhai Lakhankiya Asst.Year - 2006-07 -7- Rs.14,000/- per meter for non Agriculture land in the Show Cause Notice w.e.f. 1.4.2008 are also incorrect since, the rate w.e.f. 1.4.2008 is Rs. l,000/- per meter. The Assessing Officer had assumed the rate at Rs. 7,000/- per Meter estimated the Unaccounted investment at Rs. 50,00,000/- but did not make any addition since he had estimated the Undisclosed Income from sale of Raw Houses. The Assessing Officer estimated that the consideration stated in the statements of account is much less than the market value of land. The CIT(A) had directed the Assessing Officer to get the valuation of land done by DVO. The Assessing Officer has not submitted his report to the CIT(A) despite reminders. Thus, the issue was decided by the CIT(A) as per material available on record.
4.8. It will be relevant to refer to submissions of assessee before the CIT(A) "ADDITION OF Rs. 70,17,OOO/- ON ACCOUNT OF ESTIMATION OF CONSTRUCTION / SALES INCOME:
The Assessing. Officer made the addition by taking the hypothetical sale price of 11 Row House at Rs.17,01,000/- per Row House instead of Rs. 8,25,000/- shown by assessee and evidenced by various construction agreements with Row House owners.
SUBMISSION FOR ASSESSMENT AS CONTRACTOR :
The assessee is a contractor engaged in Raw House Construction on fixed contract basis. The assessee should be treated as contractor since-
(i) The assessee neither purchased land ,nor obtained any rights of development as a developer of Land.ITA No.2197/Ahd/2011
DCIT vs. Shri Anilbhai Arvindbhai Lakhankiya Asst.Year - 2006-07 -8-
(ii) The Raw House Owners are owners and have absolute and unconditional' rights of enjoying ownership and possession on these land. ;
(iii) The Raw House land owners never gave any rights of ownership or possession in their land to assessee.
The Brief Facts of Ownership of land a. The land was owned by Shri Karsanbhai Mohanbhai Vasani who had purchased these land on 25.02.2003as per Registered Sale deed of even date.
b. Shri Karsanbhai Mohanbhai Vasahi obtained the non agriculture land permission as per the Order of The Collector Suraton 10.04.2003.
c.Shri Karsanbhai Mohanbhai Vasani sub-divided the land by the permission of sub-division grated by theTDO on 08.12,2003.
d. Shri Karsanbhai Mohanbhai Vasani prepared and approved the plan on sub-division plot No. 1 and Surat Municipal, Corporation approved 26 plots.
e. Shri Karsanbhai Mohanbhai Vasani agreed to sell the land to Shri Mahendrabhai Sivabhai Savani Residing at A/2, Hans Society, Varachha R.oad, Surat.
f. Shri Mahendrabhai Sivabhai Savani had instructed Shri Karsanbhai Mohanbhai Vasani to execute a Registered sale deed in favour, of 26 plot owners. Therefore, Shri, Karsanbhai Mohanbhai Vasani had to Act according to instruction- of Shri Mahendrabhai Sivabhai Savani.
g. Surat Municipal Corporation hadj sanctioned the plan on 12.08.2004 in the name of Shri Karsanbhai Mohanbhai Vasani. The copy of permission letter is enclosed on Page 11 in the ca.se of Arvindbhai L. Lakhankiya.
(v) The copy of following documents for purchases of land made by Raw House owners from Shri Karsanbhai Mohanbhai Vasani and Mahendrabhai ITA No.2197/Ahd/2011 DCIT vs. Shri Anilbhai Arvindbhai Lakhankiya Asst.Year - 2006-07 -9- Sawani are enclosed on Page 14 to 43 in the case of Arvindbhai L. Lakhankiya Date of Name of Raw House owners Raw House Amount Document Land Plot No. (Rs.) 26.10.05 Subhashbhai Chunibhai 3 99000 Gohil 10.10.05 Neetaben Nareshbhai Modi 24 99000 The Survey proceedings were carried out on 20.01.2006. The documents for sales were executed in favour of plot owners before the date of Survey. Therefore, the facts recorded in the Registered sale deed are conclusive evidences on the date of survey that the, plot owners had purchased the plots from Shri Karsanbhai Mohanbhai Vasani who had executed agreements as per the instructions of Shri Mahendrabhai Sfaabhai Savani. In the Registered sale deeds the confirming party Shri Mahendrabhai Sivabhai Savani had received the Confirming party profit of Rs. 22,285 per plot. On page 10 of the registered sale deed it has been mentioned that the land owner has received the consideration of Rs. 77,715/- per plot from Shri Mahendrabhai Sivabhai Savani. Therefore, Shri Mahendrabhai Sivabhai Savani had in the first instance purchased each plot at Rs. 77,715/- from Shri Karsanbhai Mohanbhai Vasani and sold to plot owners at R. 99,000/-, In the entire, transactions the assessee has no right or title at any stage of transactions right from agriculture land purchased by Shri Karsanbhai Mohanbhai Vasani to the final stage of execution of document of plot in favour of plot owners. Therefore, the assessee is not a builder as he has
a) not purchased, the land or obtained any right of development in land as a developer.
b) has not booked any plots.
c) has not implemented any planning of plotting.
d) has not got the plan approved from Surat Municipal Corporation. The plan was prepared and got approved by Shri Karsanbhai Mohanbhai ITA No.2197/Ahd/2011 DCIT vs. Shri Anilbhai Arvindbhai Lakhankiya Asst.Year - 2006-07
- 10 -
Vasani. The copy of Plan is enclosed on Page 44 in the case of Arvindbhai Lakhankiya.
e) has not instructed for execution of document in favour of plot owners.
f) has not been a confirming party in the document
g) has neither received nor paid any consideration for purchase or sale of any plot sold by Shri Karsanbhai Mohanbhai Vasani SUBMISSION ON FACTS"1RECORDED IN. STATEMETN U/S. 131 OF THE ACT ON 20.01.2006.
At the outset it is submitted that assessee has not given any statement. The statement of Shri Arvindbhai L. Lakhankia, father of assessee was recorded. The Authorized Officer has even hot taken the signature of assessee on the statement. Therefore, the statement is not binding oh assessee. However, since the assessee has paid the tax on the amount admitted by his father his results should be accepted.
Q.No 6 : Kindly explain in details your business relation with Shri Mahendrabhai Sivabhai Savani ?
Ans. 6 : For land of Uma Raw House; I have an agreement with them they shall execute document to whom I suggest I have a right on these land.
The statement was again recorded on 23.01.06. The correct facts were recorded in a statement on 23.01.06 which are reproduced as under:
Q.NO. 8 : Kindly, show how much investment you have made in Uma Raw House Project ? What is the Investment of your son Anil Patel in this Project?
Ans. 8 : I have Invested, Rs. 10,00,000/- in these project and my son has invested Rs. 2,00,000/-.
Q.NO.9: Please, state how much Investment you have made in purchase of land and construction out of Rs. 10,00,000/-?
Ans. 9 : We have not Invested any amount in land. The total investment of Rs.
12,00,000/- is in construction only.ITA No.2197/Ahd/2011
DCIT vs. Shri Anilbhai Arvindbhai Lakhankiya Asst.Year - 2006-07
- 11 -
Q. 10 : You have stated in reply to Q. No. 6 that you and your son Anil have rights in this land. Kindly clarify in this matter.
Ans. 10 : I wanted to state in reply to Q. No. 6 that our agreement is such that the consideration for land of Raw House is taken by Shri Mahendrabhai Sivabhaf Savani and I have to take the amount of construction price.
Thus, the Q. no. 8 to 10 recorded on 23.01.2006 after the assessee recovered from ailment clearly reveal the fact the assessee is only a contractor and has no right in land. If, the entire situation is reviewed on facts it is evident that the plot owners had already purchased the land on 10.10.2005 and the statement was recorded on 20.01.2006 i.e. after the Registration deed in favour of plot owners. Therefore, on the date of survey the existing facts are that plot owners had purchased the land from Shri. Mahendrabhai Sivabhai Savani and Karsanbhai Vasani and not from Assessee.
Therefore, Answer to Q. No. 8 to 10 are correct and Q. 6 is factually incorrect as whatever was stated in that reply never existed in real situation or supported by facts. In such circumstances the Hon'ble Kerala High Court in the case of Paul Mathews and Sons Vs. CIT reported at-263 ITR 101 clarified that facts are to be believed. The relevant part of the judgment is as under :
"Section 133A(3)(iii) -enables the authority to record the statement of any persons which may be; useful for or relevant to, any proceeding under the Act. Sept/on 133A, however, enables the income-tax authority only to/record any statement of any person which may be useful, but does not authorize taking any sworn statement. On the other hand, we find that such a power to examine a person on oath is specifically conferred on the authorized officer only under section 132(4) of the Income-tax Act in the course !of any search or seizure. Thus, the Income-tax Act, whenever it through fit and necessary to confer such power to examine persons on oath, the same has been expressly provided! whereas section 133A does not empower any Income-tax, Office, to examine any person on oath. Thus, in contradistinction to the power under Section 133A, Section 132(4) of the income-tax Act enables the authorized office to examine a person on oath and any statement made by Such person during, such examination can also be used in evidence under the Income-tax Act. On the other hand, whatever statement is recorded under section 133A of the Income-tax Act it is not given any evidentiary value obviously for the reason that the officer is not authorized to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law. Therefore ITA No.2197/Ahd/2011 DCIT vs. Shri Anilbhai Arvindbhai Lakhankiya Asst.Year - 2006-07
- 12 -
there is much force in the argument of learned counsel for the appellant that the statement elicited during the survey operation has not evidentiary value and the Income-tax Officer was well aware of this."
Thus, any affirmation made during the survey is not literally binding first on account of non applicability of the oath and evidences act to the Income-tax statute and secondly according to section 94lof the evidence Act the affirmation admission or confessionals irrelevant in view of the fact on records. The Hon'ble Supreme Court has further held in cases of Shri Kisahan Vs. Kurushetra University AIR 1996 SC 376 that the admission made-in ignorance of Iegal rights or without the knowledge of the correct facts does not bind the maker of admission. Similar view were held by the ITAT Jaipur Bench in ITO Vs. Ratan Devi Dunger 20 ITD 483. It was held by the Himachal Pradesh High Court in the decision reported at 106 ITR 64 that even though an admission constitutes a relevant piece of evidence, it cannot be relied upon as such, without understanding the real facts and records. Therefore, the Answer to Q.No. 6 which is inconsistent with the facts and evidences of Registered documents on records has no relevance in view of above decision of the Supreme Court and further, decision of ITAT Ahmedabad Bench in ITA No. 4105/A/2003 and 4104/A/2003.
SUBMISSION ON CONSTRUCTION INCOME:
The Assessing Officer estimated selling rate at Rs. 1200/- per Sq. Fts. for 1500 Sq. Ft.of area constructed by assessee and reduced the cost of land Rs. 99,000/- and worked out the value of Row House at Rs. 17,01,000/- the assessee submits that the consideration for contract for 11 Houses should not be taken at Rs. 17,01,000/-per RAW HOUSE since- I. The assessee had undertaken contract at different prices. The assessee has charged Rs. 90,7&000/- as contract receipts for 11 Raw House each of 1500 Sq. Fts. The assessee has carried out extra work of Rs. 11,89,000/- in 2 Raw House as per the details submitted on 14,07.2008.
II. The assessee has shown Net Profit of Rs. 6,74,839/- which is 6.6%.
III. The consideration should be taken at the real amount of Receipts of Rs. 1,02,64,000/-.
IV. The assessee had submitted all documents in the form of contracts with 11 Raw House owners.
ITA No.2197/Ahd/2011DCIT vs. Shri Anilbhai Arvindbhai Lakhankiya Asst.Year - 2006-07
- 13 -
V. The per meter cost of construction at Rs. 2,000/- to Rs. 2,500/-
mentioned on page 2 of Show Cause Notice is value believed by Assessing Officer without any actual evidences. The State Stamp Duty. Valuation Authorities have determined the value of construction in these area at Rs. 511/- per Sq. Fts. The Certificate from State Stamp Duty Valuation Authorities is enclosed. The assessee has taken the basic value of construction contract at Rs. 550 per Sq. Ft. If 8% profit is excluded the cost of construction comes to Rs, 506 per Sq.Ft for basic construction excluding extra work. Therefore, the cost of Rs. 506/- is more or less nearer to Rs. 511/- per Sq, Fts. fixed by, the State Stamp Duty Valuation Authorities.
VI. Therefore, the value of entire contract of 11 Raw House should be taken at Rs. 1,02,64,006/- and the profit of Rs. 6,74,839/- declared by assessee should be accepted without any modification. •, ;
VII. A large number of cases of builders /contractors are assessed in various circles / ranges in Surat. No officer has taken the rate of cost of construction at Rs. 2,000/- to Rs. 2,500/- per Sq. Fts. a\in any area of Surat. Therefore, the hypothetical rate which is far beyond imagination should not be applied in our case.
Out of 26 Raw Houses owners, as per the information given to assessee, your honour had Summoned 5 Raw Houses owners who attended before Assessing Officer with the required details and admitted that they had paid the contract price as per the price stated in the works contract executed, by them with the assessee. They also admitted that they have not paid any unaccounted consideration to assessee for cost of construction. They also admitted that they had purchased the land from Mahen Urabhai Savani and Karsanbhai Mohanbhai Vasani and given to assessee for construction only. They also admitted that they had instructed the assessee to carry, out certain extra work at the price mutually agreed upon which is as per the details submitted by assessee to Assessing. Officer who has not disclosed the result of these Investigation to assessee as it proves that-
I. The assessee has neither purchased land from Shri Mahendrabhai Sivabhai Savani nor sold the plot of land to Raw Houses pwners who had actually purchased the plots from Karsanbhai MohanbhsH;, Vasani and Shri Mahendrabhai Sivaphai Savani.
II. No transaction of on money payment is involved.
ITA No.2197/Ahd/2011DCIT vs. Shri Anilbhai Arvindbhai Lakhankiya Asst.Year - 2006-07
- 14 -
III. The assessee is a contractor and not a builder. IV. The assessee has not made any unaccounted Investment in construction.
The Assessing Officer has admitted on page 3 para 3 of your notice itself that cost of construction per Sq. Fts. in the locality of assessee is Rs.400/-:to Rs. 500/-. The cost of Rs. 400/- to Rs. 500/- per Sq. Ft. is correct and supported by the State Stamp Duty Valuation Authorities and valuation reports of various Registered Valuers and Departmental Valuers. The copy of Summon issued Shri Subhashbhai C. Gohil for Raw House No. 3 on 12.11.2008 who appeared on 18,11.2008 is enclosed on Page45 in the case-of Arvindbhai L. Lakhankiya. The Raw House owners are mostly Government Employees and had taken the loan for the purpose of payment of contract price of construction to assessee after they purchased plot of land and got it registered in their name. These are evidences that assessee is a contractor land was purchased by Karsanbhai Mohanbhai Vasani who sold plots to Raw House owners and no extra amount was paid by them to assessee for the purpose of carrying out the construction.
The addition, of Rs, 70,17,000/ should be deleted.
II. SUBMISSION ON INVESTMENT IN PURCHASE OF NEW LAND :
The assessee has purchased land of 170.26 and 96.35 Mts. in Uma Raw House Plots. Your honour stated that the Jantri prices of Rs. 10000/- per Sq, Mts. from 1.4.2008,should be applied as purchase price. The assessee had purchased the land in A.Y. 2006/07 and Jantri prices of A.Y. 2006/07 becomes applicable at the most if Provisions, of Sec. 50C are invoked. The Jantri Prices as on the date of purchases are Rs. 1000/- per Sq. Mts. The assessee had purchase these plots at the Jantry prices and has shown the investment of Rs. 2,99,050/- in the books of accounts including the Stamp Duty and Registration Expenses. The copy of Jantry price working is enclosed. (Page 12) The assessee has purchased the land according to the market rate / Jantri: rate determined by the State Stamp Duty Valuation Authorities as on the date of purchase. The Assessing Officer did not accept the request of assessee to calf the sellers of land u/s. 131 of the Act and examine as to.
Whether they have received or assessee has paid any extra amount to them for the purchase of land and to refer the issue of determining consideration u/s. 142A of the Act to the Departmental Valuation Officer to work out the amount of investment in land. The Assessing Officer cannot decide any consideration of land investment simply on the basis of presumption and surmises as the assessee has not ITA No.2197/Ahd/2011 DCIT vs. Shri Anilbhai Arvindbhai Lakhankiya Asst.Year - 2006-07
- 15 -
made any unaccounted investment in purchase of land. The issue is directly covered by the following decisions.
i. Omega Estate Vs. ITO reported at 112 TTJ 261.
ii. The decision of the Punjab & Haryaria High Court in CIT Vs. Siddhu
Rice and General Mills reported at 281 ITR 428.
The actual consideration is the correct consideration as stated in the Registered purchase deed. Similarly, the other 2 plots of Anmol Park, Anand Park and River View Park were purchased at Jantry Prices and the documents were cleared by the Stamp Duty Valuation Authorities as per the clearance stamp affixed on the last page of the document submitted on 14.07.2008. The addition was telescoped against the estimated income of from Row Houses and the disclosure made U/s. 133A of the Act. However, the addition should therefore^ be deleted.
III. ALTERNATIVE GROUND The learned Assessing Officer has grievously erred in law and on facts in
making the addition of Rs. 70,17,000/- by estimating the contract Receipts at Rs. 1,87,11,000/- at the rate of Rs. 17,01,000/- for 11 Row Houses without appreciating the facts that the additional receipts estimated at Rs. 84,47,000/- is not entirely taxable and only 8% of Rs. 84,47,000/- works out to Rs. 6,75,760/- only is taxable which is against eligible for telescoping against the disclosure of Rs. 14,30,000/- made U/s. 133A of the Act. On alternative ground of appeal, the addition if sustained, only 8% Net Profit be held as taxable and on telescoping of Net Profit against income disclosed U/s. 133A of the Act, the entire addition of Rs. 70,17,000/- should be deleted."
5. The CIT(A) on the basis of material placed before decided the issue in favour of assessee. The operative para of the order of the CIT(A) reads as under:-
"6. I have carefully gone through the assessment order and submission of the assessee. The Assessing Officer is not correct in assuming the assessee as a builder and not a Contractor. From thedetailed submission with evidences submitted by assessee it is clear that Shri Karsanbhai Mohanbhai Vasani, the owner of land has ITA No.2197/Ahd/2011 DCIT vs. Shri Anilbhai Arvindbhai Lakhankiya Asst.Year - 2006-07
- 16 -
executed registered sale deeds in favour of owners of all 11 Raw Mouses constructed by assessee and Mahendrabhai Shivabhai Savani had joined as a confirming party. The copy of sale deed of land no where refers to any involvement of appellant in the transaction of land. The Assessing Officer has examined 5 Raw House owners u/S. 131 of the Act who had confirmed to have purchased the land from Shri Karsanbhai Mohanbhal Vasani for their Raw House. All the 5 Raw House owners also confirmed that they had not paid any on money to appellant for construction of Raw House?. The Raw House owners are mostly Government Employees who Had taken loan for purchase of land and construction thereon. Some of the Raw House owners had separately executed agreement with the assessee for additional work to be carried out in their Raw House according to their requirement. For this additional construction appellant had charged a further price which was shown as construction receipt in the books of accounts of assessee. In the Show Cause Notice dtd. 14.11.2008 on page 3, para 3 of the Notice, the Assessing Officer himself had admitted that the cost of construction of similar project in the same locality shown by other assessees is Rs. 400/- per sq. ft. to Rs. 500/- per sq. ft. The assessee had produced the certificate from State Stamp Duty Valuation Authorities showing the cost of construction in the area of assessee's work at Rs. 511/- per sq. ft. before the Assessing Officer. As against the rate of Rs. 511/4 per State Stamp Duty Valuation Authorities, the assessee had shown the construction contract rate at* &s. 550/- per sq. ft. These facts have also been accepted by the Assessing Officer on page 2 and 3 of the assessment order that appellant had charged Rs. 8,25,000/- for 1500 Sq. Fts. which gives per sq. ft. rate of Rs. 550/-. Therefore, the contract price for construction is in accordance with the rate fixed by State Stamp Duty Valuation Authorities.
Though the Assessing Officer had rejected the books of accounts u/s, 145(3) of the Act and appellant had not taken any ground relating to rejection of books "of. accounts, yet, the Net Profit rate has to be seen evenif, it is assumed that there are certain defects in the books of accounts. The Net Profit shown by the assessee Ms 8% which is in accordance with the rate prescribed u/s. 44AD of the Act. Therefore, the Net Profit is also reasonable. The assessee has not carried out any such construction work either in A.Y. 2005/06 or in subsequent A.Y. 2007/08 and therefore, comparison is not possible. All the 5 Raw House owners examined by the Assessing Officer confirmed the basic rate of Rs.8,25,000/- per Raw House as well as the price paid by them for extra work done. The Assessing Officer: had not supplied copy of statement recorded of Raw House owners to assessee to Seek any comments thereon as no adverse statement was made by the Raw House owners. The Assessing Officer had simply relied on Q. No. 6 and Ans. thereon of the statement of assessee's father in which he stated that he has a right to execute document of land. From the statement ITA No.2197/Ahd/2011 DCIT vs. Shri Anilbhai Arvindbhai Lakhankiya Asst.Year - 2006-07
- 17 -
produced before me, find that immediately after Answering Q. No. 6 on 20.01.2006 father of assessee fell ill and his statement was again recorded on 23.01.2006. In the statement dtd. 23.01.2006, in response to Q. No.10 he clarified that while answering Q. No. 6 he meant that the price of land is to be taken by Shri Mahendrabhai Shivabhai Savani and price of construction cost is to be taken by him out of total price of Raw House received from customers.
Thus, he had clarified the situation to the satisfaction of the Authorised Officer.
The appellant is not the owner land and therefore, he cannot have any right of selling the land Under the Transfer of Property Act. Under such circumstances in view of the decision of the Kerala High Court in Paul Mathews and Sons V/s. CIT, reported at 263 ITR 101, no cognizance can be given to the factually incorrect statement of assessee. The /Assessing Officer, though mentioned in the assessment order that the rate of cost of construction in the locality of assessee is Rs. 2000/- to 2500/- Sq. Ft., has not cited any evidence in support of his assumption which is purely hypothetical. The assessee had also proved on the basis of books of accounts, bills and vouchers of material and labour that the cost of construction shown by him is Rs. 506/- per sq. ft. as against the incorrect working of cost at Rs. 739/- made by Assessing Officer. Even the Audited statements of accounts o not reveal the claim of assessee at Rs. 739/- per sq, ft. for cost of construction. The working of Assessing Officer is not correct.
Regarding the alleged estimated Unaccounted Investment I find that there is no evidence with Assessing Officer for such estimate. This office also directed the Assessing Officer to obtain report from DVO u/s.142A of the Act. Till date the Assessing Officer has not submitted the Remand Report as was asked for. After awaiting for more than two years, 1'have no alternative, but to decide the appeal on merits. I find that the assessee had established on the basis of certificate from Sub- Registrar that the purchase price is correct.
Therefore, the very two basis of determining the unaccounted income of Rs. 70,17,000/- based on 1) treating the appellant as builder and 2) estimating the unaccounted Investment in land at Rs. 50,00,000/- are incorrect as they are not /based upon any cogent evidence. Accordingly, the addition of Rs. 70,17,000/- is hereby deleted. Similarly, the Provision of Section 69B of the Act being not applicable to purchaser of land, the estimated investment Of Rs. 50,00,000/- in purchase of land is also not correct and is accordingly, deleted. Hence, all the three Grounds of Appeal are allowed."
ITA No.2197/Ahd/2011DCIT vs. Shri Anilbhai Arvindbhai Lakhankiya Asst.Year - 2006-07
- 18 -
6. Aggrieved by the order of the CIT(A), the AO filed an appeal before the Tribunal. Before the Tribunal, the Ld.DR relied upon the order of the Assessing Officer (AO).
7. None appeared on behalf of the respondent-assessee. From the record, it is seen that the assessee has filed written submissions dated 07/12/2015 through its representative Ashwin Parekh & Co. CAs. The relevant portion of the written submission of the assessee reads as under:-
"In this case the Revenue has not taken any Grounds of Appeal. Only Form No.36 has been filed on 02.09.2011. In the Grounds of Appeal it has been stated "As per Annexure enclosed". The Annexure enclosed is a Grounds of Appeal of some Maheshbhai Dhanjibhai Mangukiya for A.Y. 2008/09. The Copy of Grounds of Appeal attached with Form No.36 is enclosed. Since, Grounds of Appeal is not attached to the Appeal, the Re4venue has not taken any ground and therefore, the Appeal should be dismissed. The Calcutta High Court in the case of New India Construction Co. Vs. CIT reported at 120 ITR 763 and Rajasthan High Court in CIT V/s. Swastic Motors reported at 195 ITR 368 held that Appeal filed in Form No.36 without accompaniment of the requisite documents is not maintainable and should be dismissed. As per Rule-12 of the Income-tax Appellate Tribunal rules 1963 it is compulsory to file Grounds of Appeal with form No.36 and if it is not attached, the appeal is to be rejected. In view of the above facts the Appeal of the Revenue should be dismissed."ITA No.2197/Ahd/2011
DCIT vs. Shri Anilbhai Arvindbhai Lakhankiya Asst.Year - 2006-07
- 19 -
8. We have carefully considered the written submissions filed on behalf of the assessee, the assessment order passed by the AO as well as the appellate order passed by the CIT(A). We shall first dispose of the technical ground of non-maintainability of the appeal filed by the Revenue as raised in the written submission of the assessee. We note that the Revenue filed Form No.36 together with grounds of appeal. However, the grounds of appeal is in respect of some Maheshbhai Dhanjibhai Mangukiya for AY 2008-09 and does not pertain to Assessee. Thus, there was an apparent error in the grounds of appeal. The grounds of appeal do not relate at all to the assessee. The grounds of appeal was later replaced by the grounds relevant to the assessee. In these circumstances, we do not find any merit in the arguments of the assessee that the appeal is liable to be dismissed on such technical defect. Admittedly, the appeal has been filed in time. However, grounds of appeal pertaining to some other assessee appears to have been wrongly annexed. This is a human error which stands rectified. The assessee is not prejudiced since the grounds of appeal were replaced and fair opportunity was granted to the assessee to defend its case.
9. Hence, in such circumstances, the statutory remedy available to the parties before the Tribunal in our view cannot be shunned on mere technical defects. The defect has been admittedly cured and does not ITA No.2197/Ahd/2011 DCIT vs. Shri Anilbhai Arvindbhai Lakhankiya Asst.Year - 2006-07
- 20 -
survive or continue at the time of disposal of the appeal. Thus, we do not concur with the technical ground raised in this regard by Assessee. The objection of the assessee is thus disposed of in negative.
9. We shall now proceed to decide the issue on merits. We find ourselves in complete agreement with the decision rendered by the CIT(A) in the given set of facts as noted in the earlier paragraphs. We note that CIT(A) has examined the issue threadbare. We do not wish to amplify the same any further. The CIT(A) has correctly appreciated the facts and held that estimation made by the AO is without any evidence. We also note that the CIT(A) directed the AO to obtain report from the DVO under section 142A of the Act. The AO did not submit the remand report before the CIT(A) as called for. In the circumstances, the liability on estimations towards unaccounted investment in land etc. cannot be fastened on the assessee. The AO has apparently not discharged the onus which lay upon it while estimating the construction/sales income. The entire action of the AO smacks of conjectures and surmises without any tangible material in corroboration. The Revenue could not successfully point out any error which has impact on the conclusion drawn by CIT(A). In the circumstances, the decision arrived at by the CIT(A) merits acceptance. Therefore, no interference therewith is called for.
ITA No.2197/Ahd/2011DCIT vs. Shri Anilbhai Arvindbhai Lakhankiya Asst.Year - 2006-07
- 21 -
10. In the result, appeal of the Revenue is dismissed.
This Order pronounced in Open Court on 06/ 02/2017
Sd/- Sd/-
(राजपाल यादव) ( द प कुमार के डया)
या यक सद य लेखा सद य
(RAJPAL YADAV) ( PRADIP KUMAR KEDIA )
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 06/ 02 /2017
ट .सी.नायर, व. न.स./T.C. NAIR, Sr. PS
आदे श क ! त#ल$प अ%े$षत/Copy of the Order forwarded to :
1. अपीलाथ% / The Assessee
2. &यथ% / The Respondent.
3. संबं5धत आयकर आयु7त / Concerned CIT
4. आयकर आयु7त(अपील) / The CIT(A)-V, Surat
5. 8वभागीय त न5ध, आयकर अपील य अ5धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड फाईल / Guard file.
आदे शानुसार/ BY ORDER, स&या8पत त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad
1. Date of dictation .. 31.1.2017 (dictation-pad 18-pages attached at the end of this appeal-file)
2. Date on which the typed draft is placed before the Dictating Member ...01.02.2017
3. Other Member...
4. Date on which the approved draft comes to the Sr.P.S./P.S.................
5. Date on which the fair order is placed before the Dictating Member for pronouncement......
6. Date on which the fair order comes back to the Sr.P.S./P.S.......7.2.17
7. Date on which the file goes to the Bench Clerk.....................7.2.17
8. Date on which the file goes to the Head Clerk..........................................
9. The date on which the file goes to the Assistant Registrar for signature on the order..........................
10. Date of Despatch of the Order..................