SAI VISHWA PROMOTERS BUILDERS AND DEVELOPERS,PUNE vs. ITO WARD 3(4), PUNE

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ITA 59/PUN/2020Status: DisposedITAT Pune16 October 2025AY 2009-10Bench: SHRI MANISH BORAD (Accountant Member), SHRI VINAY BHAMORE (Judicial Member)1 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found that the assessee's claim for expenses related to slum dwellers and additional consideration for project delays was not sufficiently substantiated. However, it also noted that the income determined by the CIT(A) was on the higher side. The Tribunal directed the AO to re-determine the income by applying an estimated net profit rate of 12% on gross receipts.

What were the facts?

The assessee, a partnership firm engaged in real estate development, failed to file its return of income for AY 2009-10. The AO, after gathering information from bank accounts, treated a significant portion of the credits as undisclosed income and completed the assessment under Section 144.

What were the issues?

Whether the expenses claimed by the assessee for slum dwellers and additional consideration were allowable, and if the estimated net profit rate applied by the AO was reasonable given the lack of books of accounts.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 144,Section 68,Section 271(1)(c),Section 271B,Section 44AB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

Before: SHRI MANISH BORAD & SHRI VINAY BHAMORE

For Appellant: Smt. Deepa Khare
For Respondent: Shri Akhilesh Srivastva
Hearing: 30.07.2025Pronounced: 16.10.2025

Assessment Year : 2009-10 Sai Vishwa Promoters Vs. ITO, Ward-3(4), Pune. Builders And Developers, S.No.82/23, Near Ashish Garden, Kothrud, Pune- 411038. PAN : ABKFS9649A Appellant Respondent Assessee by : Smt. Deepa Khare Revenue by : Shri Akhilesh Srivastva Date of hearing : 30.07.2025 Date of pronouncement : 16.10.2025 आदेश / ORDER

PER VINAY BHAMORE, JM:

1.

This appeal filed by the assessee is directed against the order dated 18.10.2019 passed by Ld. CIT(A)-3, Pune. [‘Ld. CIT(A)’] for the assessment year 2009-10.

2.

The appellant has raised the following grounds of appeal :- “1) On the facts and in the circumstances of the case the Learned Commissioner of Income Tax (Appeals) 3 erred in rejecting claim of expenses of Rs. 12,00,000/- being part of the consideration for transfer of development rights/purchase price of the property. 2) The Learned Commissioner of Income Tax (Appeals) 3 erred in rejecting the appellant's claim of Rs. 60,00,000/- being cost of construction for agreed area given to the owners and forming part of consideration for transfer. 3) The appellant craves leave to add, amend, alter or delete any of the grounds of appeal

.”

3. Facts of the case, in brief, are that the assessee is a partnership firm engaged in the business of promoters, developers and builders. The assessee has not furnished its return of income for the period under consideration. The assessee firm was in possession of Transferable Development Right (TDR), received from Pune Municipal Corporation. This TDR was sold on 07.04.2008 for a consideration of Rs.85,00,000/- and the agreement of sale of TDR was registered at Sub-Registrar, Haveli No.15 on 05.08.2008. However, the assessee firm has not filed its return of income, therefore, after obtaining approval from appropriate authority notice u/s 148 was issued on 26.02.2015. The assessee failed to make any compliance to the above notice. Various letters were issued to the assessee but no compliance was made by the assessee. Therefore, the Assessing Officer gathered information about the bank account maintained by the assessee with Seva Vikas Cooperative Bank and Union Bank of India and obtained bank statements from the respective banks. The total credits in above bank accounts was Rs.1,93,64,405/-. The Assessing Officer treated Rs.85,00,000/- TDR as business income and deducted it from the above credited amounts in bank and treated the balance amount of Rs.1,08,64,405/- (1,93,64,405- 85,00,000) as undisclosed income of the assessee. Since the assessee never cooperated in the assessment proceedings despite due service of notices of hearing, the assessment was completed u/s 144 of the Act determining total income of Rs.1,93,64,410/- as against no return filed by the assessee. The above assessed income includes income from sale of TDR at Rs.85,00,000/- and addition of Rs.1,08,64,405/- u/s 68 as undisclosed income deposited in bank account. The Assessing Officer also initiated penalty proceedings u/s 271(1)(c) of the Act and also initiated penalty u/s 271B of the Act for not getting the books of accounts audited as per the provisions of section 44AB of the Act, since the turnover of the assessee was more than Rs.40,00,000/-.

4.

Being aggrieved, the assessee preferred first appeal before Ld. CIT(A). After considering the reply of the assessee, Ld. CIT(A) partly allowed the appeal of the assessee and reduced the addition of Rs.1,93,64,405/- to Rs.61,24,405/- by observing as under :- “7.10 Further, it is seen that the appellant claimed an amount of Rs.88,10,760/- as expenses during the year under consideration.

Out of this an amount of Rs 6,10,760/- is on account of construction activity. The AO has stated that the appellant could not furnish any expenses vouchers. However, the AR stated that the appellant ran into losses and because of disputes books of accounts could not be maintained and audited. However, claim of expenses of Rs 6,10,760/- appears reasonable considering the fact that construction activities were carried on during the year under consideration therefore the expenses of Rs 6,10,760/- should be allowed to the appellant. 7.10.1 Another component of expenses of Rs 88,10,760/- is Rs 12,00,000/- claimed on account of payment to slum dwellers. On this issue, the AO has reported that the appellant firm relied on para 3(B) of development agreement dated 31.03.2008 wherein it is stated that Rs 50,000/- will be paid to each flat holder in cash. However, in said para, it is also mentioned that said payment will be made before the commencement of construction. The PMC issued commencement certificate on 26.03.2007 and the assessee has incurred expenses of Rs 58,69,240/- towards the project till 31.03.2008. Therefore, the payment of Rs 12,00,000/- must be made before 26.03.2007 or in FY 2007-08 and not in the financial year 2008-09 Thus, the claim of expenses of Rs 12,00,000/- during the year is not correct and not acceptable. I agree with the AO. This indicates that the amount of Rs 12,00,000/- should be part of closing WIP of Rs 1,16,29,240/- and should not be allowed. Therefore the claim of Rs 12,00,000/- is rejected. 7.10.2 The appellant also claimed an expense of Rs 70,00,000/- (being part of current year expenses of Rs 88,10,760/-) on account of additional consideration on account of delay in completion of the project & additional land of 2856 sq ft. On this issue, the AO has reported that the appellant firm relied upon a supplementary agreement dated 10.01.2008 executed between the firm and Parshuram Kumbare & Chhaya B Kumbare. The AO stated that this agreement is notarized agreement, not a registered agreement and also that the appellant firm was asked about the mode of payment of Rs 10 Lakhs and name of the person to whom payment was made, however, the appellant firm could not submit the details. The AO also stated that the appellant was asked to submit the permission of competent authority for construction of additional 6000 sq ft and other documents for construction, however, the firm could not submit any documents in support of the claim, therefore, the claim of expenses of Rs 70,00,000/- (Rs 10,00,000/- plus Rs 60,00,000/-) on the basis of a notarized agreement merely is not allowable.

During the appellate proceedings, the appellant furnished copy of bank account in Seva Vikas Cooperative Bank Kothrud bank to show that the amount of Rs 10,00,000/- was paid to Sh Tanaji Kumbare of Kumbare family on 27-Sep-2008 through banking channel. Therefore, the amount of Rs 10,00,000/- should be allowed to the appellant as expenses.”

5.

It is the above order against which the assessee is in appeal before this Tribunal.

6.

Ld. AR appearing from side of the assessee submitted before us that Ld. CIT(A) ought to have allowed the appeal in full instead of allowing the appeal in part. Ld. AR submitted before us that the assessee partnership firm is engaged in the business of slum development and rehabilitation work. The books of accounts for assessment year 2008-09 were regularly maintained and audited u/s 44AB of the Act and the auditor’s report was furnished along with return of income for assessment year 2008-09. Ld. AR further submitted that due to some dispute amongst the partners the books of accounts for assessment year 2009-10 could not be maintained and therefore audit u/s 44AB of the Act could not be done. However, Ld. AR submitted before us that the assessee partnership firm is admittedly engaged in the construction work and development of slum and rehabilitation work therefore the profit percentage cannot be that much high to earn an income of Rs.61,24,405/- as determined by Ld. CIT(A). Ld. AR further submitted that out of the total receipts of Rs.1,93,64,405/- appearing in bank account an amount of Rs.22,44,971/- pertains to capital contribution therefore the remaining amount of Rs.1,71,19,434/- is undisputedly business receipt and out of above amount net profit cannot be more than 8%. Accordingly, in the absence of books of accounts and proper vouchers Ld. AR requested to estimate a reasonable net profit.

7.

Ld. DR appearing from side of the Revenue relied on the orders passed by the subordinate authorities and requested to confirm the same.

8.

We have heard Ld. Counsels from both the sides and perused the material available on record including the paper book furnished by the assessee. In this regard, we find that it is an admitted fact that assessee partnership firm is engaged in building construction, development of slum and rehabilitation work. It is also an admitted fact that for assessment year 2009-10 books of accounts neither maintained nor audited u/s 44AB of the Act. It is also admitted that books of accounts for assessment year 2008-09 were maintained and audit was also done. It is also admitted by the assessee that the Rs.1,71,19,434/- and according to the Assessing Officer, the business receipts are Rs.1,93,64,405/-. According to the assessee, the difference amount of Rs.22,44,971/- pertains to capital contribution by the partners. However, we find that no supporting evidence with regard to capital contribution was furnished by the assessee either before Ld. CIT(A) or before us. Therefore, we accept the gross turnover of Rs 1,93,64,405/- which is determined by the Assessing Officer.

9.

Considering the totality of the facts of the case & in the light of paper book furnished by the assessee wherein along with other relevant documents, audited financial statements for preceding assessment year are also produced & also in the light of the fact that the assessee is involved in civil construction work, rehabilitation & development of slum area & providing residential facility for particular class of people, we find some force in the arguments of Ld. Counsel of the assessee that determination of income by Ld. CIT(A) at Rs.61,24,405/- is on higher side, however at the same time in the absence of books of accounts we also deem it appropriate to apply some reasonable estimated net profit rate on gross receipts determined by the Assessing Officer. Accordingly,

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