Greater Ashoka Land & Development Co. ... vs Department Of Income Tax

ACIT, vs. Greater Ashoka Land & Development Co. P. Ltd., Circle 12(1), Flat No. 104, Chiranjiv Tower, 43, Nehru Place, New Delhi. New Delhi. AAACG0896K (Appellant) (Respondent) Appellant by : Sh. T. Vayanthan, Sr. DR Respondent by : Sh. Salil Aggarwal, Adv. & Sh. Shailesh Gupta, CA

Date of Hearing: 28.04.2015 Date of Pronouncement: 20.05.2015 ORDER

PER SHRI C.M. GARG, J.M.

This appeal by the Revenue has been directed against the order of

the Commissioner of Income Tax (Appeals)-X, New Delhi dated

13/09/2010 in appeal no. 222/2009-10 for A.Y. 2005-06.

2. Effectively the Revenue has raised the following grounds in this

appeal:

1. "On the facts and circumstances of the case and in law, the order of the CIT(A) is wrong, perverse, illegal and against the provisions of law which is liable to be set aside;

2. On the facts and circumstances of the case and in law, the ld.

CIT(A) has erred in deleting the addition of Rs. 1,07,87,357/- out of total addition of Rs. 1,67,64,815/- made by the AO without going into the facts of the case though no such 2

submission relied upon the ld. CIT(A) were made before the AO during the assessment proceedings which is also in contradiction of Rule 46A(3)(1)."

3. Apropos the said grounds we have heard arguments of both the

sides and carefully perused the relevant material placed on record, inter-

alia, assessment order, impugned order, paper book of the assessee

spread over 197 pages and written synopsis filed by ld. DR and order of

the Hon'ble Jurisdictional High Court of Delhi in ITA No. 121/Del/2014

dated 01/04/2014 in the case of CIT vs. Girnar Infrastructure Pvt. Ltd. As

relied by the ld. Counsel of the assessee.

4. The ld. Departmental Representative drawn our attention towards

para 3 at page 1 and para 2 at page 2 of the assessment order and

submitted that the assessee was asked to submit parawise details of

such customers advances amounting to Rs. 4,12,69,480/- and in

response to that the assessee submitted the list of persons from whom it

claimed that it had received said advances. The ld. DR further drawn

our attention towards page no. 17 at para 9 of the impugned order and

submitted that the CIT(A) accepted the submission of the assessee that

the amount of Rs. 1,67,64,815/- had been wrongly assessed as income

for A.Y. 2005-06 and from the facts submitted by the assessee it

emerges that the AO had rightly assessed the amount of income for A.Y. 3

2005-06. The ld. DR vehemently contended that the AO was justified in

relying upon the statement of Shri Sunil Sharma, Director of the

assessee company in holding that liability amounting to Rs.

1,67,64,815/- as on 31.03.2007 had ceased to exist and the assessee

had voluntarily offered this sum as income in the year under

consideration. The ld. DR further pointed out that the CIT(A) has erred

in deleting the addition of Rs. 1,07,87,357/- out of total addition of Rs.

1,67,64,815/- made by the AO without any basis and without going into

the facts and circumstances of the case. The ld. DR further drawn our

attention towards paragraph no. 12 & 13 of the impugned order and

submitted that no such submission as relied upon the CIT(A) were made

before the AO during the assessment proceedings that the customer

advances apparently represented the sales made by the assessee

company.

5. The ld. DR strenuously contended that the CIT(A) was not justified

in holding that as per accounting principles the true and correct income

which could be taxed in the hands of the assessee company would be

after deduction of relevant expenses as shown by the assessee only

during first appellate proceedings. The ld. DR pointed out that the

CIT(A) went on to consider such submission and explanation of the

assessee which were not made before the AO during assessment 4

proceedings and the CIT(A) considered the same without confronting the

submissions and explanations of the assessee to the AO, in

contravention with Rule 46A(3)(i) of the I.T. Rules, 1962. The ld. DR

finally submitted that the impugned order may be set aside by restoring

that of the AO and alternatively prayed that this limited issue may be

restored to the file of AO for proper verification and examination of this

fact that whether the total cost of land and development charges after

deducting cost of land of shopping booths and cost of land as stock on

31.03.2007 and land development expenses pertaining to land as stock

was to be deducted from the amount of advances of customers and the

same was not reconciled in the trading results of the relevant

assessment years while computing the cost of land sold and

development charges thereon.

6. The ld. Counsel of the assessee drawn our attention towards

paper book page no. 191 to 196 at para 10 and submitted that the

assessee was not provided due opportunity of hearing before the AO

and the assessee submitted detailed submissions during first appellate

proceedings before CIT(A) vide letter dated 05.01.2010, wherein the

assessee elaborates and explained this fact that the total cost which is

required to be reduced from the income being assessed would be Rs.

1,07,87,357/- as cost of land and land development charges which 5

reflected the liability on account of customer advance on 31.03.2007 in

the balance sheet and also reflected the expenditure under the head

"current assets". The ld. Counsel of the assessee submitted that the

expenses towards cost of land and land development charges was to be

allowed and total income was to be computed after allowance of such

expenses. However, the ld. Counsel fairly accepted that these

submissions and explanation was not raised before the AO and the

CIT(A) did not call any remand report from the AO and the AO was not

also provided due opportunity to comment upon these explanation and

submissions of the assessee.

7. On careful consideration of above submissions of both the sides at

the very outset, we note that the assessee raised the issue of

allowability of the expenses towards cost of land and development

charges in A.Y. 2005-06 during first appellate proceedings. We also

note that the CIT(A) did not afford another opportunity to the AO to

submit his remand report and to comment upon the merits of the claim,

explanation and submission of the assessee which were not submitted

during assessment proceedings. The AO was not allowed to comment

upon said claim, explanation and submissions of the assessee on merits

and the CIT(A) considered and accepted the same in contravention of

Rule 46A(3) of the I.T. Rules, 1962.

6

8. Under above noted facts and circumstances, we are of the

considered opinion that this issue requires proper examination and

verification at the end as to whether the land and development charges

were included in the amount of liabilities of Rs. 1,67,64,815/- which was

assessed as income of the assessee for the year under consideration on

the basis of statement of Shri Sunil Sharma the Director of the company

recorded u/s 131 of the Act on 26/12/2009. The AO shall also verify and

examine that whether the amount of Rs. 1,07,87,357/- was not

reconciled while computing the trading results of the assessee for A.Y.

2005-06. Therefore, the only issue raised by the Revenue in this appeal

is restored to the file of AO for denovo adjudication after affording due

opportunity of hearing for the assessee and without being prejudice from

the earlier assessment and impugned order. Accordingly, ground no. 1

& 2 of the Revenue deemed to be allowed for statistical purposes.

9. In the result, the appeal of the assessee is allowed for statistical

purposes in the manner as indicated above.

This decision was pronounced in the open court on 20.05.2015.

Sd/- Sd/- (R.S. SYAL) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER 7

Dated: 20.05.2015 *Kavita, P.S.

Copy to:

1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, New Delhi. TRUE COPY

By Order

ASSISTANT REGISTRAR 8

Sl. Description Date No.

1. Date of dictation by the Author 08.05.2015

2. Draft placed before the Dictating Member 18.05.2015

3. Draft placed before the Second Member

4. Draft approved by the Second Member

5. Date of approved order comes to the Sr. PS

6. Date of pronouncement of order

7. Date of file sent to the Bench Clerk

8. Date on which file goes to the Head Clerk

9. Date of dispatch of order