Income Tax Appellate Tribunal - Rajkot
Chaitanya Infrastructure Private ... vs The Assistant Commissioner Of Income ... on 30 November, 2018
आयकर अपील य अ धकरण: राजकोट यायपीठ: राजकोट
IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH:
RAJKOT
ी सी एमगग, या यक सद य एवं ी ओपीमीना, लेखा सद य के सम
BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND
SHRI O.P.MEENA, ACCOUNTANT MEMBER
आयकरअपीलसं. / IT(SS)A Nos.104 to 109/RJT/2012
नधारणवष/ Assessment Years: 2004-05, 2005-06 &
2007-08 to 2010-11
Chaitanya Infrastructure Pvt. Ltd., Vs. Asst. Commissioner of Income
1st Floor, Maruti Shopping Centre, Tax,
Astron Chowk, Central Circle-1,
Rajkot. Rajkot
[PAN: AABCC 9468Q]
(अपीलाथ /Appellant) ( यथ /Respondent)
नधा रती क ओरसे/Assessee by : Shri D.M. Rindani, A.R
राज वक ओरसे/Revenue by : Shri Jitender Kumar, D.R
सन
ु वाईक तार ख/Date of Hearing : 27-11-2018
घोषणाक तार ख /Date of Pronouncement : 27-11-2018
आदे श /ORDER
PER C.M. GARG, JUDICIAL MEMBER:
These six appeals have been filed by the Assessee against the common order of Commissioner of Income Tax (Appeals)-IV, Ahmedabad ('CIT(A)' for short) dated 25.10.2012 for the Assessment Years (A.Ys) 2004-05, 2005-06 & 2007-08 to 2010-11 respectively. 2
IT(SS)A Nos.104 to 109/RJT/2012 (A.Ys: 2004-05, 2005-06 & 2007-08 to 2010-11) M/s. Chaitanya Infrastructure Pvt. Ltd.
2. The respective ld. Representatives of both the sides agreed to the fact that the search and seizure operation was conducted on 15.09.2010 and thus, AY 2010-11 is the year of search. Both the ld. Representatives are also agreed to the fact that on the date of search i.e., 15.09.2010, the assessment for AY 2004-05, 2005-06 & 2007-08 were completed and thus, these three years are pertaining to the period of completed assessment which were not abated due to search and seizure operation and facts and circumstances of these three years are quite identical and similar therefore, we are adjudicating these appeals together.
3. As agreed by both the parties, we are taking up appeal of the assessee for AY 2003-04 as a lead case for deciding these said three appeals. The grounds raised by the Assessee in ITA No. 104/RJT/2012 for AY 2003-04 read as follows:
1. The Honorable CIT (A) IV Ahmedabad has erred in law and on facts in upholding the rejection of books of accounts u/s. 145 of the Income Tax Act, 1961 by the Assessing officer.
2. The Honorable CIT (A) IV Ahmedabad has erred in law and on facts in upholding the contention made by the Assessing officer that Appellant Company has received on-money in respect of sale of all shops and offices based on loose paper found during the course of search proceedings.
3. The Honorable CIT (A) IV, Ahmedabad has erred in law as on facts in upholding the estimation of sales price of shops situated at Ground, 1st and 2nd Floor at Rs. 30,042/- per sq. meter and Rs. 22,000 in respect of offices situated at 3rd, 4th, and 5th Floor for the purpose of estimating the unaccounted receipts of the project "Cosmo Complex".3
IT(SS)A Nos.104 to 109/RJT/2012 (A.Ys: 2004-05, 2005-06 & 2007-08 to 2010-11) M/s. Chaitanya Infrastructure Pvt. Ltd.
4. It is humbly prayed that the reliefs as prayed for hereinabove and such other relief as may be justified by the facts and circumstances of the case and as may meet the ends of justice should be granted.
4. We have heard the arguments of both sides and carefully perused the relevant material placed on the record of the Tribunal. The ld. Assessee's Representative (AR) submitted that there was no incriminating material found during the course of search and seizure operation held on 15.09.2010 for AY 2004-05, 2005-06 & 2007-08 in the hands of AO. He further submitted that since the assessments for these three years was completed on the date of search and therefore, assessment of these three assessment years has to be held as completed on the date of search and thus, these years are the years where the assessment was not abated but completed on the date of search.
5. The ld. AR further submitted that keeping in view the above noted facts and circumstances in these three years pertaining to the years of completed assessment no addition could have been made in absence of any incriminating material found during the course of search and seizure operation and the additions made by the AO and sustained by the ld. CIT(A) @ 36% profit on turnover without any incriminating material are not sustainable and thus, the same may kindly be deleted. He further placed reliance on the various decision of Hon'ble Jurisdiction High Court 4 IT(SS)A Nos.104 to 109/RJT/2012 (A.Ys: 2004-05, 2005-06 & 2007-08 to 2010-11) M/s. Chaitanya Infrastructure Pvt. Ltd.
Gujarat in the case of PCIT vs. Saumya Construction P. Ltd. reported in 387 ITR 529 (Guj.) and subsequent decision in the case of PCIT vs. Sunrise Finlease P. Ltd. reported as 252 Taxman 407 (Guj.) and submitted that it was not permissible for AO to make any addition u/s. 153A when no incriminating material had been found during course of search.
6. Replying to the above, the ld. Departmental Representative (DR) strongly supported the assessment and first appellate order and submitted that after verification of relevant documentary evidence and facts and circumstances of the case, it was clearly revealed that the assessee earned income of Rs. 1,41,68,928/- in AY 2004-05 and the AO estimated profit there from @ 50%, which was reduced to 36% by the ld. CIT(A) by taking a reasonable and balancing approach therefore, the final addition restricted by the ld. CIT(A) may kindly be confirmed. However, he could not controvert some glaring facts viz. the assessment for AY 2004- 05, 2005-06 & 2007-08 was completed on the date of search i.e., 15.09.2010 thus, these are the years, where assessment was not abated. The ld. DR also could not controvert the fact that no incriminating material was found during the course of search and seizure operation for these three years revealing the fact of earning on money or undisclosed income 5 IT(SS)A Nos.104 to 109/RJT/2012 (A.Ys: 2004-05, 2005-06 & 2007-08 to 2010-11) M/s. Chaitanya Infrastructure Pvt. Ltd.
and there was not incriminating material in the hands of AO for these three years.
7. In view of above, we are inclined to hold that there was no incriminating material found during the course of search and seizure operation in the hands of assessee for AY 2004-05. Hence, respectfully following the ratio of the decision rendered by Hon'ble Jurisdiction High Court of Gujarat in various cases including judgment in the case of Soumya Construction (supra), therefore, we hold that the AO is not entitled and empowered to make any addition in the assessment order framed u/s. 153A r/w s. 143(3) of the Act for AY 2004-05 in absence of any incriminating material therefore, the addition made by the AO and reduced by the ld. CIT(A) is not sustainable and thus, we direct the AO to delete the entire addition made in absence of incriminating material for AY 2004-05.
8. Since, facts and circumstances of AY 2005-06 and 2007-08 are identical and similar to the facts of AY 2004-05 therefore, our conclusion drawn for AY 2004-05 would apply mutatis mutandis to other two years i.e., for AY 2005-06 & 2007-08. Consequently, additions made by the AO and reduced by the ld. CIT(A) are not sustainable for these two years and we direct the AO to delete the entire addition made in said two years. 6
IT(SS)A Nos.104 to 109/RJT/2012 (A.Ys: 2004-05, 2005-06 & 2007-08 to 2010-11) M/s. Chaitanya Infrastructure Pvt. Ltd.
Accordingly, grounds of the assessee for all three years are allowed and additions made therein are deleted.
Appeals of the assessee in IT(SS)A Nos.107/RJT/2012 for AY 2008-09, 108/RJT/2012 for AY 2009-10 and 109/RJT/2012 for AY 2010-11:
9. The respective ld. Representatives of both the sides agreed to the fact that the search and seizure operation was conducted on 15.09.2010 and thus, AY 2010-11 is the year of search. Both the ld. Representatives are also agreed to the fact that on the date of search i.e., 15.09.2010, the assessment for AYs 2008-09, 2009-10 & 2010-11 were not completed and thus, these three years are pertaining to the period not completed assessment which were abated due to said search and seizure operation and facts and circumstances of these three years are quite identical and similar therefore, we are adjudicating these appeals together.
10. As agreed by both the parties, we are taking up appeal of the assessee for AY 2008-09 as a lead case for deciding these said three appeals. The grounds raised by the Assessee in ITA No.107/RJT/2012 for AY 2008-09 read as follows:
1. The Honorable CIT (A) IV Ahmedabad has erred in law and on facts in upholding the rejection of books of accounts u/s. 145 of the Income Tax Act, 1961 by the Assessing officer.
2. The Honorable CIT (A) IV Ahmedabad has erred in law and on facts in upholding the contention made by the Assessing officer that Appellant Company has received on-money in respect of 7 IT(SS)A Nos.104 to 109/RJT/2012 (A.Ys: 2004-05, 2005-06 & 2007-08 to 2010-11) M/s. Chaitanya Infrastructure Pvt. Ltd.
sale of all shops and offices based on loose paper found during the course of search proceedings.
3. The Honorable CIT (A) IV, Ahmedabad has erred in law as on facts in upholding the estimation of sales price of shops situated at Ground, 1st and 2nd Floor at Rs. 30,042/- per sq. meter and Rs. 22,000 in respect of offices situated at 3rd, 4th, and 5th Floor for the purpose of estimating the unaccounted receipts of the project "Cosmo Complex".
4. It is humbly prayed that the reliefs as prayed for hereinabove and such other relief as may be justified by the facts and circumstances of the case and as may meet the ends of justice should be granted.
11. We have heard arguments of both the sides and carefully perused the relevant material placed on the record of the Tribunal inter alia, impugned assessment order framed u/s. 153A r/w. 143(3) of the Act dated 28.12.2011 and first appellate order dated 25.10.2012. The ld. AR submitted that CIT (A) has erred in law and on facts in upholding the rejection of books of accounts u/s. 145 of the Income Tax Act, 1961 by the Assessing officer. The ld. AR further submitted that CIT (A) has erred in law and on facts in upholding the contention made by the Assessing officer that Appellant Company has received on-money in respect of sale of all shops and offices based on loose paper found during the course of search proceedings. It is also submitted that ld. CIT (A) has erred in law as on facts in upholding the estimation of sales price of shops situated at Ground, 1st and 2nd Floor at Rs. 30,042/- per sq. meter and Rs. 22,000 in respect of offices situated at 3rd, 4th, and 5th Floor for the purpose of estimating the unaccounted receipts of the project "Cosmo Complex".
8
IT(SS)A Nos.104 to 109/RJT/2012 (A.Ys: 2004-05, 2005-06 & 2007-08 to 2010-11) M/s. Chaitanya Infrastructure Pvt. Ltd.
12. The ld. AR vehemently pointed out that weighted average rates for ground floor, first floor, second floor, third floor, fourth floor, fifth floor was of Rs. 50251.77, Rs. 29,288.33, Rs. 17,703.97, Rs. 10,975.65, Rs.11,056.58 and Rs.11,545.41 per sq. mts. respectively, whereas the rate adopted by the ld. CIT(A) was Rs. 30,042/- for ground, first and second floor and Rs. 22,000/- for third, fourth and fifth floor, which is very excessive and unreasonable therefore, the same may kindly be reduced to weighted average rate. The ld. AR vehemently pointed out that the rate of ground floor cannot be applied to the first floor and second floor blindly and similarly the rate for third floor cannot be applied without any logic for fourth and fifth floor as the rate decreases when we go up from ground floor to top. The ld. AR also submitted that without disputing the other alleging facts and findings of the authorities below, the sole prayer and request of the assessee is that the addition made by the AO and sustained by the ld. CIT(A) should be proportionately reduced by taking into consideration weighted average rate of all six floors to reach and attain ends of justice.
13. Replying to the above, the ld. DR strongly supported the first appellate order and submitted that the findings recorded by the authorities below have not been controverter by the assessee that he 9 IT(SS)A Nos.104 to 109/RJT/2012 (A.Ys: 2004-05, 2005-06 & 2007-08 to 2010-11) M/s. Chaitanya Infrastructure Pvt. Ltd.
received on money in respect of sale of all shops and offices based on the loose paper found during the course of search proceedings in the years where the assessment were not completed and thus, this was the year of abated assessment. The ld. DR also submitted that the AO is entitled to make addition on the basis of incriminating material found during the course of search proceedings or during post search enquiries during the assessment proceedings u/s. 153A r/w s. 143(3) of the Act and the addition made by the AO has been substantially reduced by the ld. CIT(A) considering the entirety of facts and circumstances of the case and no further reduction or concession is required to be given to the assessee. However, he could not controvert the well accepted principle of valuation of multi- story building that the price of ground floor is highest looking to its use for shops and showrooms and this price reduces proportionately when we go up from first floor to top floor. In the present case, undisputedly, the AO adopted rate of Rs. 30,042/- for all six floors equally whereas the ld. CIT(A) approved the rate of Rs. 30,042/- for ground, first and second floor and reduce the same to Rs. 22,000/- for third, fourth and fifth floor.
14. We cannot ignore that the ld. DR could not controvert the weighted average rate submitted by the assessee for all six floors, which cannot be accepted blindly but have persuasive value for estimation of floor wise rate of shops and offices sold by the 10 IT(SS)A Nos.104 to 109/RJT/2012 (A.Ys: 2004-05, 2005-06 & 2007-08 to 2010-11) M/s. Chaitanya Infrastructure Pvt. Ltd.
assessee and for estimation of on money received by the assessee from sale of shops and offices on all six floors. Keeping into consideration totality of the facts and circumstances of the case, the general principle and guidance for valuation of rate of multi-story building from ground to top floor, rate adopted by the AO and ld. CIT(A) and weighted average rate submitted by the appellant, we are of the considered opinion that the assessee has not disputed the rate adopted by the ld. CIT(A) for ground and first floor of Rs. 30,042/-, which is must less than the weighted price of first floor as of Rs.50,251.77 and little higher than the weighted price of first floor of Rs.29,288.33 as submitted by the assessee and which has not been seriously objected or opposed by the ld. DR. Therefore, the adoption of rate by ld. CIT(A) for ground and first floor of Rs. 30,042/- per sq. mt. is confirmed.
15. So far as rate of second floor is concerned, the ld CIT(A) has adopted rate of Rs. 30,042/- for second floor and as per assesee the weighted rate for this floor is Rs. 17,703.97. Keeping in view these facts and figures submitted by both the parties and by taking a balancing and reasonable approach and view, we find it appropriate to take average rate of these two which is approximately Rs. 24,000/- per sq. mt. and AO is directed to recalculate the addition for second and third floors sale of shops and offices accordingly. 11
IT(SS)A Nos.104 to 109/RJT/2012 (A.Ys: 2004-05, 2005-06 & 2007-08 to 2010-11) M/s. Chaitanya Infrastructure Pvt. Ltd.
16. Further, for fourth and fifth floor, the ld. CIT(A) has adopted similar rate of Rs. 22,000/- per sq. mt. for both these floors, whereas weighted average as per assessee for these two floor are Rs. 11,056.58 and Rs. 11,545.41 respectively. Keeping in view these facts and figures submitted by both the parties and by taking a balancing and reasonable approach and view, we find it appropriate to take average rate of these two which is approximately Rs. 16,500/- per sq. mt. and AO is directed to recalculate the addition for fourth and fifth floors sale of shops and offices accordingly. Consequently, grounds of assessee for AY 2008-09 are partly allowed with the directions to the AO to recalculate the on money earned by the assessee from sale of shops and floors from first floor to top floor during the relevant financial period of FY 2007-08. Accordingly, grounds of the assesse are partly allowed.
Appeals of Assessee in IT(SS)A Nos.108 & 109/RJT/2012 for AY 2009-10 & 2010-11:
17. Since, facts and circumstances of AY 2009-10 & 2010-11 are identical and similar to the facts of AY 2008-09 therefore, our conclusion drawn for AY 2008-09 would apply mutatis mutandis to other two years i.e., for AY 2009-10 & 2010-11. Consequently, additions made by the AO and reduced by the ld. CIT(A) are not sustainable for these two years and we direct the AO to recalculate the addition as per our directions given 12 IT(SS)A Nos.104 to 109/RJT/2012 (A.Ys: 2004-05, 2005-06 & 2007-08 to 2010-11) M/s. Chaitanya Infrastructure Pvt. Ltd.
herein above for AY 2008-09. Accordingly, grounds of assessee for these two years are also partly allowed in the manner as indicated above.
18. In the result, appeals of the assessee for AY 2004-05, 2005-06 & 2007-08 are allowed and appeals for AY 2008-09, 2009-10 & 2010-11 are partly allowed.
Order pronounced in the open court on this day of 30th November, 2018 Sd/- Sd/-
(ओ.पी.मीना/O.P.MEENA) (सी.एम.गग /C.M.GARG) लेखासद य के सम / Accountant Member लेखासद य के सम /Judicial Member
Rajkot/राजकोट; &दनांक/Dated : 30th November, 2018/ EDN, Sr. P.S आदे श क! त#ल$प अ%े$षत/Copy of the Order is forwarded to :
1.अपीलाथ*/The Appellant;
2.+,यथ*/The Respondent;
3.आयकर आय. ु त(अपील)/The concerned CIT(A);
4.The concerned Prl. CIT;
5./वभागीय + त न ध, आयकर अपील य अ धकरण, / DR, ITAT, राजकोट/Rajkot;
6. गाडफाईल / Guard file.
// By order // Assistant Registrar, ITAT, Rajkot Bench, Rajkot