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Income Tax Appellate Tribunal, “B”, BENCH KOLKATA
Before: SHRI A.T. VARKEY, JM &DR. A.L.SAINI, AM
आदेश / O R D E R
Per Dr. A. L. Saini, AM:
The captioned appeal filed by the revenue, pertaining to assessment year 2015-16, is directed against the order passed by the Commissioner of Income Tax (Appeal)-2, Kolkata, in appeal no. 10472/CIT(A)-2/2017-18, which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (in short the ‘Act’) dated 29/12/2017.
The grounds of appeal raised by the revenue are as follows:
2 M/s Dhoot Developers Pvt. Ltd. Assessment Year:2015-16 1. Whether on the facts and circumstances of the case, ld. CIT(A) erred in law in deleting the addition of Rs. 5,47,69,164/- made by the Assessing Officer as undisclosed income on sale of flats.
2. Whether on the facts and circumstances of the case, ld. CIT(A) erred in law in holding that the assessee was a mere confirming party in the sale deeds without appreciating the fact that the assessee itself accepted that it received sale considerations and showed the same as advance received in its balance sheet, schedule 3.06.
3. Whether on the facts and circumstances of the case, ld. CIT(A) erred in law in accepting contention of the assessee without considering the fact that the liability of advance as shown in schedule 3.06 of balance sheet is much lesser than the total amount received as advance as reported by assessee in letter dated 19.12.2017.
Whether on the facts and circumstances of the case, ld. CIT(A) erred in law in holding that the assessee has already offered profit from sale of the relevant property in West Bengal in the FY 2006-07 whereas the property reported in AIR is registered by Jt. Sub Register Kurla, Mumbai as reflected in AIR information.
5. That the appellant craves for leave to add, delete or modify any of the grounds of appeal before or at the time of hearing.
Brief facts qua the issue are that the assessee is engaged in the business of selling of flats after construction. During the course of assessment proceedings, it was observed by Assessing Officer from the return of income filed by assessee on 30.09.2015 in Scheduleof “Profit& Loss account” that the assessee had sold flats amounting to Rs 1,87,93,862/-.However, from the AIR information, it was noticed that the assessee had sold the 11 number of properties during the concerned year and the sale value as per information amounts to Rs 7,35,63,026/-. The same is also reflected from the registered sale deeds, the copies of which are submitted by the assessee. The assessee was asked to explain the discrepancy between the two figures vide e-mail dated 22.12.2017. A reply of the said e-mail was received on 27.12.2017, wherein it was stated that in some cases theflats were sold, the amount received from the customer is shown as advance receipt from customer under the head “Other Current Liabilities” in the Balance Sheet.
3 M/s Dhoot Developers Pvt. Ltd. Assessment Year:2015-16 4. However, Assessing Officer rejected the contention of the assessee and held that the revenue is to be recognized by theassessee as and when the sale was made. All the above referred properties mentioned in AIR information were sold and even registered on various dates which are within the concerned financial year. Registration of the “Deed of Conveyance” was done during the year as a full and final settlement of transactions in respect of sale of the flats. There is no provision in the I.T. Act,1961 that even after selling of product, the sale proceeds may be taken as “Advance” rather than sale. In view of above, Rs 5,47,69,164/-,(Rs 735,63,026/- less Rs 1,87,93,862/-), being the difference of sale made by the assessee during the year and what was offered to tax by the assessee is added back to the total income of the assessee.
Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition made by the Assessing Officer.
Aggrieved by the order of the ld. CIT(A), the revenue is in appeal before us.
We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials available on record. We note the Assessing Officer while making the addition of Rs. 5,47,69,164/- has noted that as per AIR information assessee has sold 11 number of properties / flats during the year, the sale value of which was Rs. 7,35,63,026/-. The Assessing Officer also noted that the sale was reflected as per the registered sale deed, copies of which were submitted by the assessee. The AIR information made available to the assessee, from where the Assessing Officer obtained information, is reproduced hereunder:
4 M/s Dhoot Developers Pvt. Ltd. M/s Dhoot Developers Pvt. Ltd. Assessment Year: Assessment Year:2015-16 As per the AIR information as reproduced herein As per the AIR information as reproduced herein above the A.O. has taken into above the A.O. has taken into consideration that the assessee has sold the above mentioned consideration that the assessee has sold the above mentioned consideration that the assessee has sold the above mentionedflats for Rs.7,35,63,026/- and as because sale has been reflected in the assessee’s book to and as because sale has been reflected in the assessee’s book to and as because sale has been reflected in the assessee’s book to 5 M/s Dhoot Developers Pvt. Ltd. Assessment Year:2015-16 the extent of Rs. 1,87,93,862/- the difference of Rs.5,47,69,164/- (7,35,63,026 - 1,87,93,862) has been added back as undisclosed sales.
The ld. Counsel submitted before us that the assessee company was the owner of approximately 232 cottahs of land at R.S Dag No. 321 /615 in Mouza Kochpukur. The assessee company had entered into a joint Development Agreement vide agreement dated 4lh day of August 2004 with M/s. Sanjeevani Projects Pvt. Ltd and its associates. As per clause 3 of the agreement, M/s. Sanjeevani Projects Pvt. Ltd. had an option to buy out of the said land on mutually agreed terms. In exercise of the option under clause 3 of the joint Development Agreement the assessee along with M/s. Sanjeevani Projects Pvt. Ltd. vide letter dated 18th January, 2007 mutually agreed for sale of the land at a total lump sum consideration of Rs. 9,00,00,000/-. The assessee booked profit on sale of the above referred land in the Financial Year 2006-07 relevant to Assessment Year 2007-08 for Rs.4,25,08,408/-. The assessee had during the course of assessment proceedings filed audited accounts as well as the assessment order framed for A.Y. 2007- 08 along with submissions filed on 21 -12 -2017 wherein profit from sale of land was booked. During the year under consideration the Developers along with others had after developing of the property entered into 11 sale agreements with prospective buyers and due to the reason that the agreement for transfer of land made between the assessee and the Developers was not registered and the assessee was made as confirming party in each of the conveyance entered into by the Developers with the prospective buyers. The indenture of conveyance made between the Developers and the prospective buyers clearly states that the assessee company is the confirming party and no further consideration has been received by the assessee company. As per the AIR data also the joint party details of the flats sold have been mentioned and as because the assessee was the confirming party the assessee company had to also affix signature before the Registrar of Assurances. All the indentures of conveyance made with the 11 parties were filed before the Assessing Officer during the course of assessment
6 M/s Dhoot Developers Pvt. Ltd. Assessment Year:2015-16 proceedings and the assessee company was only a confirming party and no consideration was ever received by the assessee company was clearly mentioned in the conveyance deeds. The A.O. therefore has erroneously held that the assessee has sold these flats for a total consideration of Rs.7,35,63,026/- and erroneously held that it has not booked sales to the extent of Rs. Rs.5,47,69,164/- (7,35,63,026 – 1,87,93,862). The AIR data only gives AO the guiding factor to verify and make enquiries and tax correct income. As the assessee was a confirming party to the conveyance deed its name was reflected in the AIR data but the AO should have examined it. It was clearly explained to the A.O. that the assessee had already sold their rights in the land in the financial year 2006–07and had booked the profit in that year itself and only because the agreement was not registered therefore at the time of conveyance to the individual purchasers by the Developers the assessee had to become a confirming party.It is not out of place to mention here that the profit on sale booked in the Profit & Loss Account of Rs. 1,87,93,862/- was in respect of profit on sale of Dhoot Business Centre and also land at Kalikapur. Therefore, addition of undisclosed sales of Rs. 5,47,69,164/- (7,35,63,026 – 1,87,93,862) made by Assessing Officer is not justified.
We note that ld. CIT(A) deleted the addition observing the following: “I have considered the grounds of appeal, statement of facts and submission of the authorized representative of the appellate company as well as the order of the assessing officer framed in the light of the materials available on record before the assessing officer during the assessment proceedings.
The facts of the case are that the assessee had e-filed return on 30.09.2015 declaring total income of Rs.17,33,690/-. The return was selected for scrutiny under CASS and notices were issued u/s 143(2) and 142(1) against which full compliance was made by the assessee. Assessment has been framed u/s 143(3) vide order dated 29.12.2017 on a total income of Rs.5,65,02,854/- by making addition of Rs.5,47,69,164/- on account of undisclosed income on sale of flats. The A.O. while making the addition of Rs.5,47,69,164/- has noted that as per AIR information assessee has sold 11 number of properties/flats during the year, the sale value of which was Rs.7,35,63.026/-. The A.O. also noted that the sale was reflected as per the registered sale deed, copies of which were submitted by the assessee. As per the AIR information as reproduced herein above the A.O. has taken into consideration that the assessee has sold the above mentioned flats for 7 M/s Dhoot Developers Pvt. Ltd. Assessment Year:2015-16 Rs.7,35,63,026/- and as because sale has been reflected in the assessee’s book to the extent of Rs.l,87,93,862/- the difference of Rs.5,47,69,164/- has been added back as undisclosed sales.
The fact of the matter is that the assessee company was the owner of approximately 232 cottahs of land at R.S. Dag No. 321/615 in Mouza Kochpukur. The assessee company had entered into a Joint Development Agreement vide agreement dated 4th day of August 2004 with M/s. Sanjeevani Projects Pvt. Ltd and its associates. As per clause 3 of the agreement M/s. Sanjeevani Projects Pvt. Ltd. had an option to buy out the said land on mutually agreed terms. In exercise of the option under clause 3 of the Joint Development Agreement the assessee along with M/s. Sanjeevani Projects Pvt. Ltd. vide letter dated 18.01.2007 mutually agreed for sale of the land at a total lump sum consideration of Rs. 9,00,00,000/. The assessee booked profit on sale of the above referred land in the Financial Year 2006- 07 relevant to Assessment Year 2007-08 for Rs.4,25,08,408/-. The assessee had during the course of assessment proceedings filed audited accounts as well as the assessment order framed for A.Y. 2007-08 along with submissions filed on 21.12.2017 wherein profit from sale of land was booked.
During the year under consideration the Developers along with others had after developing of the property entered into 11 sale agreements with prospective buyers and due to thereason that the agreement for transfer of land made between the assessee and the Developers was not registered the assessee was made as confirming party in each of the conveyance entered into by the Developers with the prospective buyers. The indenture of conveyance made between the Developers and the prospective buyers clearly states that the assessee company is the confirming party and no further consideration has been received by the assessee company. As per the AIR data also the Joint party details of the flats sold have been mentioned and as because the assessee as the confirming party the assessee company had to also affix signature before the Registrar of Assurances. All the indentures of conveyance made with the 11 parties were filed before the Assessing Officer during the course of assessment proceedings and the assessee company was only a confirming party and no consideration was ever received by the assessee company was clearly mentioned in the conveyance deeds. The A.O. therefore has erroneously held that the assessee has sold these flats for a total consideration of Rs 7,35,63,026/- and erroneously held that it has not booked sales to the extent of Rs. Rs.5,47,69,164/-. The AIR data is not sacrosanct and only gives AO the guiding factor to verify and make enquiries and tax correct income. As the assessee was a confirming party to the conveyance deed its name was reflected in the AIR data but the AO should have applied mind. It was clearly explained to the A.O. that the assessee had already sold their rights in the land in the financial year 2006 - 07and had booked the profit in thatyear itself and only because the agreement was not registered therefore at the time of conveyance to the individual purchasers by the Developers the assessee had to become a confirming/ party.
8 M/s Dhoot Developers Pvt. Ltd. Assessment Year:2015-16 I agree with the submission of the A.R. of the appellate company that the appellate has already disclosed the sale transactions and paid tax in the earlier years as mentioned supra. Hence, the A.O. is directed to delete the addition. In view of above, this ground of appeal is allowed.”
We do not find any infirmity in the order of ld. CIT(A). That being so, we decline to interfere in the order passed by the ld. CIT(A), his orders, on this issue, is hereby upheld and the grounds of appeal raised by the revenue are dismissed.
In the result, the appeal of the revenue is dismissed.
Order pronounced in the Court on 07.02.2020