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Income Tax Appellate Tribunal, BANGALORE BENCH ‘B’
(Asst. Year – 2007-08) The Dy. Commissioner of Income-tax, Central Circle-2(1), Bangalore. Assessee Vs. Smt. Veena N Manjunath, No.190, ‘Soundarya Damini’, 4th Phase, Dollars Colony, JP Nagar, Bangalore. Respondent Appellant by : Smt. Neera Malhotra, CIT Respondent by : None Date of Hearing : 24-08-2015 Date of Pronouncement : 04 -09-2015 O R D E R PER SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER :
This appeal by the Revenue is against the order of the Commissioner of Income-tax (Appeals) – I at Bangalore dated 30-10- 2014 relating to assessment year 2007-08. 2. The assessee is an individual. There was a search u/s 132 of the Income-tax Act 1961 (Act) initiated in the case of Shri P.N Manjunath and others on 28.12.2007. During the said search proceedings certain documents were found and seized. It was noticed that the documents marked as 1/STD page 6 to 11, 59 to 61, 22/SPD page 3 to 5, 38 to 41 and 57 to 73 pertained to Smt. Veena N Manunath, the assessee herein.
The proceedings u/s 153C of the Act was initiated and notice u/s 153C r.w.s 153A of the Act was duly served. The assessee filed return of income on 6.12.2009 declaring income of Rs,399,099/- for the asst. year 2007-08.
In response to notices issued u/s 143(2) & 142(1) of the Act, 1961, the assessee did not submit any books of accounts. The assessment was completed on the basis of information available in the absence of production of books of accounts.
The AO noticed that the assessee had purchased site and constructed apartments thereon during asst. year 2004-05. The project was named as ‘Soundarya Nivas’ and the construction was concluded during asst. year 2008-09. This project consists of 8 flats out of which 5 flats were sold and 3 flats were under agreement to sell. During the course of deposition u/s 131 of the Act, the assessee stated that her husband Shri PN Manjunath handles all project related matters and he will be in a position to answer all the question. She further stated that his answers and explanations will be binding on her.
Shri PN Manjunath submitted the cost and revenue computation based on the % of completion method.
Cost computation % completion method Assessment 2003-04 2004-05 2005-06 2006-07 200708 2008-09 Year % of 24% 23% 27% 26% completion Cumulative 24% 47% 74% 100% Cost 1653533 3209800 5057866 6808666 Revenue computation % completion Method % Basis 0 2026419 2933638 6198459 8344080 Revenue Amount 0 0 0 3208400 8344080 8344080 recd.
Min. of 0 3208400 6198459 8344080 above Less cost 1653533 3209800 5057866 6808666 as above Income -1653533 1400 1140593 1535414 cumulative Income 1140593 394821 yearwise
Based on the above submissions, Smt. Veena N Manjunath offered her income offered asst. years as below :
Asst. Year 2007-08 2008-09 Total Income 11,40,593/- 3,94,821/- 15,35,414/-
Based on the above information and observations, income of the year computed as below by the AO:
Rs.
A. Income from Business/Profession As declared 3,99,099
Add: (i) Sale of flats income 11,40,593 offered for the period 01.04.06 to 31.03.07 (A.Y 2007-08)
Total Taxable Income 15,39,692
During the course of hearing with learned CIT(A), the assessee filed letter dated 21.12.2009 along with calculations addressed to the AO in which it was claimed that these were pending works relating to the project “Soundarya Nivas” to the extent of Rs.1200,000/- for which payments are yet to be made and thus it was not considered in the calculations given earlier. This aspect was not submitted before AO, the matter was remanded back to AO by the CIT(A). The remand report submitted on 18.12.2013, it was submitted by the AO that the addition was made based on the calculations submitted by the assessee.
The assessee has submitted photographs of the unfinished works with the CIT(A). The assessee also submitted that the returned income of Rs.399,099/- consists of professional income of Rs.44,300/- and income on sale of flats of Rs.354715/- and therefore, the addition made by the AO would amount to double addition.
Having considered the assessee’s submission, CIT(A) observed as below:-
“4.3. Considering the facts and evidences, I find that the argument of the appellate has some basis that there are some pending finishing works which are visible in the photographs. Further, the appellant should also be given credit for the income admitted on sale of flats while arriving at addition on account of admitted income. Hence, AO is directed to rework the addition after giving credit for proportionate expenditure on account of pending works for this year and also giving credit for appellant’s returned income on account of sale of flats.”
Aggrieved with the order of CIT(A), the department is on appeal before us:
Despite service of notice on the assessee, none appeared for the assessee. We therefore proceed to decide the appeal on merits after hearing the submissions of the learned DR.
The learned DR submitted as under :
(a) the assessee had not submitted any bifurcation of professional income and income from sale of flat at the time of hearing with the Assessing Officer.
(b) The assessee not filed any books of accounts even on repeated request by the AO.
(c) The learned CIT(A) had considered the additional cost based on the photograph submitted by the assessee. It is not proper evidence to estimate the pending works.
(d) The addition of income by the AO was based on the submission made by the assessee’s husband Shri PN Manjunath, which was binding on her because of deposition u/s 131 of the Act, which was filed by her.
We have considered the submissions of the learned DR. We find that additional cost on incomplete project, based on photograph, may not be acceptable. No reasons were adduced for not filing the evidence filed before CIT(A),before the AO. We, therefore, direct the AO to rework the addition if any, after careful consideration of cost records from the assessee. The assessee is, therefore, directed to submit the factual information and proper cost records to the Assessing Officer, not merely the photograph, so as to substantiate its claim. The assessee is also given liberty to file proper estimation from registered valuer. To carry out the above direction of the bench, the entire issue is restored on the file of the AO.
In the result, the appeal of the Revenue is treated as allowed for statistical purpose. Order pronounced in the open Court on 4th September, 2015.