SHANISH CONSTRUCTIONS PVT LTD.,MUMBAI vs. ITO WARD 11(1)(2), MUMBAI

On the facts of the case and in law, the Hon. C1T(A)-18 erred in upholding additions of Rs.420,420/- on account of differences in amount received as advances from Customers and the Value in the Sale Agreement, which ':vas not received and without considering the fact that the the Appellant Company had not yet received the Occupancy Certificate and will have to incur further expenses towards Legal and Consultant Fee, BMC fee and other related expenses to obtain the OC and after incurring the expenses there would be loss in the Project.

This is second round of litigation. The original assessment under section 143(3) of the Income Tax Act, 1961 (for short ‘the Act’) was framed by the Assessing Officer (AO) at the total income of Rs.1,88,68,614/- and Rs.15,74,770/- for A.Y. 2010-11 and 2011- 12 respectively by making certain disallowances and additions.

Assessee carried the matter before the Ld. CIT(A) by way of filing appeals who had partly allowed the same. Feeling aggrieved the assessee approached the Tribunal by way of filing appeals who has set aside the file to the AO to pass such order.

While framing fresh assessment under section 143(3) read with section 254 of the Act, the AO made an addition of Rs.3,05,870/- being the difference in the closing balance of Rs.25,47,880/- of the assessee and closing balance of Rs.23,27,500/- of Ms. Rakhi Sawant one of the buyers of the property sold in A.Y. 2010-11. The AO also made addition of Rs.12,046/- on account of difference in amount received as advance & 671/M/2020 4 M/s. Shanish Constructions Pvt. Ltd.

The Ld. CIT(A) in the second round of litigation upheld the addition made by the AO by dismissing the appeal. Feeling aggrieved the assessee has come up before the Tribunal by way of filing present appeals.

We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.

We have perused para 13 of the order passed by the co- ordinate Bench of the Tribunal dated 11.01.2017 in the first round of litigation wherein the issue as to addition of Rs.3,05,870/- on account of difference in closing balance in case of Ms. Rakhi Sawant one of the buyers of the property sold by the assessee was sent back to the AO to decide after considering the confirmation made by Ms. Rakhi Sawant for A.Y. 2010-11.

However, perusal of the fresh assessment order passed under section 143(3) read with section 254 of the Act shows that the AO had issued a notice under section 133(6) of the Act which was reported to have received back unserved and no latest address of the parties have been furnished. Assessee company in its letter dated 11.10.2018 also submitted that Ms. Rakhi Sawant’s statement was used against the assessee without providing an opportunity of cross & 671/M/2020 5 M/s. Shanish Constructions Pvt. Ltd.

Though the AO has mentioned in para 4(iii) that enough opportunities were given to the assessee but keeping in view the facts and circumstances of the case wherein addition has been made merely on the basis of statement of Ms. Rakhi Sawant qua which no opportunity to cross examine/verify the statement has been given to the assessee and the fact that the Ld. A.R. for the assessee stated that one opportunity may be granted so that he can produce the confirmation of Ms. Rakhi Sawant as she was out of country before the AO, we are of the considered view that to substantiate the ends of justice and to decide the matter once for all by making proper enquiry this issue is remitted back to the AO to decide afresh after providing adequate opportunity to the assessee company. The Ld. D.R. for the Revenue has also not opposed this proposition to decide the matter on the basis of proper enquiry by the AO.

So far as addition of Rs.12,046/- made by the AO and confirmed by the Ld. CIT(A) on account of difference in the amount received as advance from customer and the value shown in the sale agreement is concerned, the assessee has failed to furnish any explanation by producing the relevant record and we are of the considered view that this issue has been decided by thrashing the facts on the basis of law applicable thereto and as such this addition of Rs.12,046/- made by the AO and confirmed by the Ld. CIT(A) is hereby upheld. & 671/M/2020 6 M/s. Shanish Constructions Pvt. Ltd.

So far as addition of Rs.4,20,420/- made by the AO and confirmed by the Ld. CIT(A) on account of difference in amount received by advances from customer by the assessee and the value in the sale agreement is concerned, this issue was also remitted back by the co-ordinate Bench of the Tribunal in the first round of litigation with a direction that if the amount has been brought to tax in the subsequent years then no addition is required to be made.

Then the AO issued the notice to the assessee to furnish necessary details to explain the above differences of Rs.38,22,000/- and assessee has submitted that in respect of Amrit Project OC has been received and the entire sales shall be offered to tax after receipt of the OC. Then again assessee company was given final opportunity to furnish the details qua bringing the differential amount to tax but they have not furnished the same.

We are of the considered view that this issue pertains to A.Y. 2011-12 and assessee has not brought on record any facts nor & 671/M/2020 7 M/s. Shanish Constructions Pvt. Ltd.

In view of what has been discussed above, the appeal filed by the assessee for A.Y. 2010-11 is partly allowed for statistical purposes and appeal bearing No.671/M/2020 for A.Y. 2011-12 is dismissed.