K.D. Enterprises, Mumbai vs Department Of Income Tax

आयकर अपील य अ धकरण, मंब ु ई IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES 'A' MUMBAI सव ी आय.पी. बंसल, या यक सद य एवं डी. क णाकर राव,ु लेखा सद य

BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND

SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.9092/MUM/2010 नधा रण वष /Assessment Year 2007-08.

The ACIT 25(3), बनाम/ M/s.K.D.Enterprises, C-11, R.No.308, 121/122, Sona Shopping Vs. Pratyaksha Kar Bhavan, Center, Trikamdas Road, Bandra Kurla Complex, Kandivali (West), Bandra(East), Mumbai - 67.

Mumbai 400051

थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AAEFK3339G (अपीलाथ /Appellant) .. ( यथ / Respondent)

Appellant by Shri Jeevanlal Lavidiya Respondent by Shri Nirav Vora सनु वाई क" तार$ख / Da te o f Hearing : 09/06/2015 घोषणा क" तार$ख /Date of Pronouncement : 09/06/2015 आदे श / O R D E R

PER I.P.BANSAL,J.M:

This is an appeal filed by the Revenue and it is directed against order passed by Ld. CIT(A)-35, Mumbai dated 18/10/2010 for assessment year 2007-08. Grounds of appeal read as under:

(i) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.16,37,969/- made by the Assessing Officer based on NP admitted by the assessee during the course of Survey."

(ii) The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the AO be restored."

2. A survey was conducted at the premises of the assessee under section 133A of the Income Tax Act, 1961 (the Act) on 21/08/2007. During the course of survey it 2 आयकर अपील सं. / ITA No.9092/MUM/2010 नधा रण वष /Assessment Year 2007-08.

was found that the project being developed by the assessee namely "Palm Spring" was completed during the year under consideration and net profit as per books of accounts was shown as Rs.79.62 lacs. During the course of survey it was admitted by the partner of the assessee firm that profit as per profit and loss account is a sum of Rs.79.62 lacs, which will accordingly be disclosed in the return to be filed. Another amount of Rs.2.25 crores was also surrendered which was in accordance with loose paper found during the course of survey and for which there is no dispute in the present appeal as the same was duly disclosed by the assessee in the return of income and accepted by the AO.

3. However, it was found by the AO that in place of Rs.79.62 lacs shown as profit by the assessee from "Palm Spring" property, the assessee had shown an income of Rs.63,24,031/- ( Rs.2,88,24,031 being returned income (-) Rs.2,25,00,000/- being amount declared during the course of survey in respect of loose paper). He, therefore, required the assessee to explain the shortfall of Rs.16,37,969/- (Rs.79,62,000 (-) Rs.63,24,031/-). The assessee has filed the reply as under:

" The net profit of Rs.79.62 lacs stated on the date of survey in PALM SPRING project was total net profit of the whole project. Net profit shown year wise is Rs.71.82 as per statement enclosed herewith. It was typographic error that the profit stated was approximately and not actual. We were in such state of mind during the survey that we have not noted the mistake. Over and above what we have declared Rs.2.25 crores is also part of profit only".

3.1 The AO did not accept such submission of assessee and on the basis of statement recorded during the course of survey, the relevant portion of which has been reproduced in the assessment order, made the addition.

4. Before Ld. CIT(A) it was submitted that the assessee did not alter any of the entry in the P&L Account found during the course of survey and it was only due to mistake, the profit was stated at Rs.79.62 lacs and following reconciliation was submitted to contend that the profit as per P&L Account found during the course of survey was in accordance with the profit declared by the assessee in the return of income.

3 आयकर अपील सं. / ITA No.9092/MUM/2010 नधा रण वष /Assessment Year 2007-08.

"The net profit derived approximately Rs.79.62 lacs before the depreciation claimed throughout the project and expenses for the year 2006-07 as under:

Rs. In lakhs.

Profit estimated during the survey 79.62 Actual profit of the project(as per working enclosed which is referred in the order para 5.1 71.82

---------

7.80

a) Depreciation claimed during the projects:

Year Rs. 2002-03 79,628 2003-04 1,59,985 2004-05 1,58,300 2005-06 96,361 2006-07 47,736 6,42,010

b)Expenses for the year Rs. 1,39,962

Total of a + b = Rs.7,80,972 i.e. Rs.7,80 lakhs"

He submitted that the appellant already admitted profit in the earlier years as shown below:

A.Y 2002-03 Rs. 71,000 A.Y 2003-04 Rs.1,56,000 A.Y.2004-05 Rs.2,01,000 A.Y.2005-06 Rs.4,30,000 A.Y. 2007-08 Rs.63,24,000 ---------------------- Total Rs.71,82,000 ---------------------

4.1 Ld. CIT(A) confronted the AO with the aforementioned reconciliation

submitted by the assessee and required the AO to produce copy of P&L Account and other documents found during the course of survey so as to verify the contention of the assessee. However, AO could not produce any documents according to which it could be said that the profit of the assessee was to the tune of Rs.79.62 lacs in place of profit declared by the assessee at a sum of Rs.63,24,031/-. It is in these circumstances Ld. CIT(A) has deleted the addition of Rs.16,37,969/-, against which Revenue is aggrieved and has raised aforementioned grounds of appeal.

5. Ld. DR relied upon the order passed by the AO and Ld. AR relied upon the order of Ld. CIT(A).

4 आयकर अपील सं. / ITA No.9092/MUM/2010 नधा रण वष /Assessment Year 2007-08.

7. We have heard both the parties and their contentions have carefully been considered. The assessee had submitted reconciliation statement before Ld. CIT(A). The said reconciliation statement was confronted by Ld. CIT(A) to the AO, who could not produce any documents to verify the stand taken by the AO that profit declared by the assessee in the P&L Account found during the course of survey was to the tune of Rs.79.62 lacs. If the documents found during the course of survey really shown the net profit of Rs.79.62 lacs, then the said documents was required to be brought on record to contradict the profit shown by the assessee in the return of income. The addition has been made by the AO simply on the basis of statement recorded during the course of survey, which was rebuttable. On the basis of accounts maintained by the assessee profit of Rs.63,24,031/- was shown and AO did not specify that which entry was changed by the assessee in the P&L Account attached with the return of income as compared to the P&L Account found during the course of survey. Therefore, we are of the opinion that Ld. CIT(A) has rightly deleted the addition and no interference is called for in the deletion of addition.

8. In the result, the appeal filed by the Revenue is dismissed.

Order pronounced in the open court on 09/06/2015 आदे श क" घोषणा खुले यायालय म* +दनांकः 09/06/2015 को क" गई ।

Sd/- Sd/- (डी. क णाकर रावु / D.KARUNAKARA RAO) (आय.पी. बंसल / I.P. BANSAL) लेखा सद य / ACCOUNTANT MEMBER या यक सद य / JUDICIAL MEMBER मंब ु ई Mumbai; +दनांक Dated 09/06/2015 5 आयकर अपील सं. / ITA No.9092/MUM/2010 नधा रण वष /Assessment Year 2007-08.

आदे श क त ल प अ!े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. आयकर आयु/त(अपील) / The CIT(A)- 4. आयकर आयु/त / CIT

5. 0वभागीय त न2ध, आयकर अपील$य अ2धकरण, मुंबई / DR, ITAT, Mumbai

6. गाड फाईल / Guard file.

आदे शानुसार/ BY ORDER, स या0पत त //True Copy//

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai व. न.स./Vm, Sr. PS