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Before: SHRI N.K. SAINI & SMT. BEENA PILLAI
ORDER
PER BEENA PILLAI, JUDICIAL MEMBER:
The present appeal has been filed by the assessee against the order of the ld. CIT(A)’s-XVII, New Delhi vide his order dated 22/10/2012 for A.Y. 2008-09 on the following grounds: 1. “Under the facts and circumstances of the case, the ld. CIT(A) has grossly erred in law in upholding the rejection of books of accounts made by the ld. Assessing Officer disregarding the method of accounting regularly employed by the appellant company.
2. Under the facts and circumstances of the case, the ld. CIT(A) has grossly erred in law in holding that the appellant is a contractor and not a builder or developer.
3. Under the facts and circumstances of the case, the ld. CIT(A) has grossly erred in directing the ld. Assessing Officer to compute income in respect of Haridwar Project based on the percentage of completion method when the various conditions prescribed for recognition of revenue under ‘AS-7 on Construction Contacts and AS-9 on Revenue recognition read with Guidance Note on Recognition of revenue by the Real Estate Developer’s are not satisfied in the case of the appellant. 4. Under the facts and circumstances of the case, the ld. Assessing Authority has grossly erred in treating the interest, depreciation and preliminary and preoperative expenses, and general management and administration expenses of Rs. 16,77,299/- as Work-in-progress instead of revenue expense claimed by the assessee and ld. CIT(A) has grossly erred in holding the said expenses are not general in nature rather relatable to the specific projects allowable for deduction at the time of computation of income through percentage completion method. 5. The appellant craves to add, withdraw, and revise any or all the above ground of appeal
, either before or during the course of hearing in the interest of justice.”
2. Brief facts of the case as recorded by the ld. Assessing Officer are as under: The assessee is involved in the business of development of Real Estate, residential township project at Haridwar & Jaipur. The assessee had filed its return of income on 28/02/2009 declaring a total income of Rs. 4,20,970/-. The case was selected for scrutiny and notice u/s 143(2) of the I.T. Act dated 29/09/2009 was issued. During the assessment proceedings, the ld. Assessing Officer observed that, assessee had incurred certain costs of land and the amount incurred on development were treated as inventory/work in progress, till the time the same can be sold/transferred. The assessee had also included the booking money received in phased manner under current liabilities, till the criteria for recognition of the income pursuant to the transfer of the property is met.
The ld. Assessing Officer treated the entire booking money received by the assessee during the relevant financial year as well as during the preceding financial year being 2006-07 as its income, and computed taxable income, by reducing there from, the total cost incurred till 31/03/2008, in respect of land and development work, to arrive at the income of the assessee for the relevant assessment year under consideration. The ld. Assessing Officer also capitalized the expenses amounting to Rs. 16,77,299/- as work in progress. The ld. Assessing Officer completed the assessment at an income of Rs. 3.06.42,224/-.
4. Aggrieved by the order of the ld. Assessing Officer the assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) partly allowed the appeal of the assessee and he had directed the ld. Assessing Officer to compute the exact percentage of project completion achieved by the assessee by the end of the year and, accordingly the income from Haridwar Project was to be computed. In respect of the Jaipur Project the ld. CIT(A) had stated that as the said project was in the initial stage, and the ascertainable percentage has not been completed, therefore, percentage completion method could not be applied for the relevant year.
5. Aggrieved by the order of the ld. CIT(A) the assessee is in appeal before us. The issue that arises for consideration before us pertains to recognition of Revenue in respect of a project undertaken by the assessee at Haridwar.
6. The ld. AR today has filed a petition for admission of additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963, wherein certain additional documentary evidences have been enclosed. The application under Rule 29 as filed by the assessee reads as follows: “Petition for admission of additional evidence under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963 This is with reference to the last hearing dated 12.08.2015, wherein the appellant was directed by the Hon. Bench of ITAT to file a detailed petition substantiating the reason as to why the additional evidences were not filed before the lower authorities, i.e., the ld. Assessing Officer and ld. CIT(A) and what is the relevance of the said additional evidences to the present appeal. In this regards, it is hereby submitted as under:
1. 1. The appellant has vide petition dated 26.11.2014, filed in terms of Rule 29 of Income Tax (Appellate Tribunal) Rules, 1963, submitted certain additional documentary evidences.
2. The additional evidences were basically in the form of certain FIRs lodged against the appellant company/directors of the appellant company, legal notices received for refunding the booking money paid by the various applicants of Haridwar project, cases filed before various consumer courts/forums by the applicants against the appellant company. The same were enclosed on page no. 1 to 16 of the paper book filed under Rule 29 of Income Tax (Appellate Tribunal) Rules, 1963.
3. As regards the reason for non-submission of the aforesaid documents at the assessment stage, it is hereby submitted that the aforesaid dispute documents pertain to the period after the date of deciding of appeal by the Hon. First Appellate Authority, thus the same were not earlier available with the appellant company and, therefore, the appellant was prevented by reasonable cause from furnishing the same before lower authorities.
As regards the relevance of the aforesaid documents to the present appeal matter, it is hereby submitted as under: 4.1 The main issue involved in the present appeal is that the ld. CIT(A) has vide her order dated 17.10.2012 directed the ld. Assessing Officer to compute the exact percentage of project completion achieved by the appellant by the end of the year and accordingly compute the income from the Haridwar project. In this regards, the detailed submissions have been covered in the appeal paper book dated 26.11.2014 filed by the assessee. 4.2 The plea of the appellant is that the aforesaid direction of the ld. CIT(A) is not maintainable as the percentage completion method prescribed under AS-7 cannot be applied in the case of appellant as the outcome of the Haridwar project cannot be reliably estimated. This is on account of various disputed going on against the appellant company and related to Haridwar Project. The appellant has in the main appeal paper book dated 26.11.2014 already filed the copies of other documents in support of the fact of disputes being going on against the appellant company, directors of the appellant company. 4.3 The perusal of the additional documentary evidences would reveal that the position of the Haridwar project even as on present date is highly contentious. Even as on present date large numbers of fresh dispute cases are being filed against the company. In the light of the aforesaid submissions and documentary evidences in support of disputes, it is hereby submitted that even as on present date the outcome of the project cannot be reliably estimated. More than 7.5 years have elapsed from the inception of the project and there is not much progress in the development as on date. Therefore, the percentage completion method as prescribed under AS- 7 cannot be applied as the outcome of the project is still is dark and it is really doubtful as to whether the Haridwar project would ever be able to see the light of the day.
Thus, keeping the aforesaid in view, the applicant hereby prays that in exercise of the powers conferred under Rule 29 of Income Tax (Appellate Tribunal) Rules, 1963, the additional documents compiled in the additional paper book dated 26.11.2014 may kindly be admitted and considered by this Hon. Court for the judicial disposal of the present appeal of the appellant.
The kind attention of this Hon. Court is invited to the decision of the Jurisdictional Delhi High Court in the case of “CIT vs. Text Hundred India Pvt. Ltd., 239 CTR 263.” In that case, their Lordships have held that Rule 29, enables the Tribunal to admit any additional evidence which would be necessary to do substantial justice in the matter. Their Lordships further observed that the various procedures, including that relating to filing of additional evidence, is handmade for justice and justice should not be allowed to be choked only because of some inadvertent error or omission on the part of one of the parties to lead evidence. The relevant observations of the Court are reproduced hereunder: “13. The aforesaid case law clearly lays down a neat principle of law that discretion lies with the Tribunal to admit additional evidence in the interest of justice once the Tribunal affirms the opinion that doing so would be necessary for proper adjudication of the matter. This can be done even when application is filed by one of the parties to the appeal and it need not to be a suo motto action of the Tribunal. The aforesaid rule is made enabling the Tribunal to admit the additional evidence in its discretion if the Tribunal holds the view that such additional evidence would be necessary to do substantial justice in the matter. It is well settled that the procedure is handmade of justice and justice should not be allowed to be choked only because of some inadvertent error or omission on the part of one of the parties to lead evidence at the appropriate stage. Once it is found that the party intending to lead evidence before the Tribunal for the first time was prevented by sufficient cause to lead such an evidence and that this evidence would have material bearing on the issue which needs to be decided by the Tribunal and ends of justice demand admission of such an evidence, the Tribunal can pass an order to that effect.” (emphasis supplied) 7. In view of the aforesaid, it is submitted that additional evidence placed by the applicant may kindly be admitted and taken into account by your Honour’s for disposing the appeal as the same are necessary to do substantial justice in the matter.”
On bare perusal of these additional documents, we note that these are certain FIRs lodged against the assessee/directors of the assessee, legal notices received, cases filed before various forums/courts against the assessee. It is also observed that the same relates to the period after the date of order by the ld. CIT(A). Thus, these documents could not be made available by the assessee before the authorities below.
In order to meet the ends of justice, we set aside the issue to the files of the ld. Assessing Officer for consideration of these documents and to decide the matter afresh. 9. Accordingly, the appeal filed by the assessee stands statistically allowed. The order is pronounced in the open court on 02/12/2015 Sd/- Sd/- (N.K. SAINI) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 02/12/2015 *Kavita, P.S.