Ppr Development & Builders, Jalandhar vs Department Of Income Tax

Income Tax Officer, vs. M/s. PPR Developers & Builders, (TDS)-1, Jalandhar. Silver Oak Apartments, Nakodar Road, Jalandhar. (Appellant) (Respondent)

Appellant by:Sh.V.K.Singh, DR Respondent by:None

Date of hearing:19/02/2015 Date of pronouncement:26/02/2015

ORDER

PER A.D.JAIN,AM:

These are the Department's appeals for the assessment years 2008-09

& 2009-10 against the separate orders of CIT(A), Jalandhar, each dated

16.02.2012. Both these appeals are being disposed of by this common order,

since they involve a common issue.

2. The following common grounds in both the appeals have been

taken :

"1. That in the facts and circumstances of the case, the ld.

CIT(A) has erred in admitting additional evidence by not 2 ITA No.210 & 211(Asr)/2014

following the conditions as laid down in Rule 46 of I.T. Rules.

2. That the Ld. CIT(A) has erred in giving relief on the plea of the assessee that External Development charges were paid for getting approval for license of developing colony whereas these charges were paid for infrastructural development i.e. for roads, water supply, sewerage etc. which is different from license fee.

3. That the Ld. CIT(A) has not appreciated the provisions of section 5(5) of Punjab Apartment and Property Regulation Act, 1955 under which the assessee was required to enter into agreement with PUDA which in itself determined the character of the payments as being contractual.

4. That the Ld. CIT(A) has not appreciated that PUDA provides infrasture to the developers which is further developed by Municipal Corporation and other agencies and that the relationship of the assessee and PUDA is that of contractee and contractor."

3. Ground No.5 in ITA No.210(Asr)/2014 pertains to low tax,

contending that the appeal be decided on merits as the issue involved

pertains to other appeals also. This ground does not appear in ITA

No.211(Asr)/2014.

4. The notice issued to the assessee has not been received back unserved.

However, none put in appearance before us on behalf of the assessee. On

the earlier date also, i.e., on 30.12.2014, none had appeared on behalf of the

assessee, though the notice issued for that date had also not been received 3 ITA No.210 & 211(Asr)/2014

back unserved. As such, we are proceeding to decide this appeal in the

absence of representation on behalf of the assessee, on hearing the ld. DR.

5. As per ground No.1, the ld. CIT(A) has erred in admitting additional

evidence in violation of the provision of Rule 46A of the I.T. Rules. In this

regard, as available from the order under appeal, in the written submissions

dated 24.01.2014, filed by the assessee before the ld. CIT(A), the assessee

had, inter-alia, contended as follows:

"Sir, moreover, it is submitted that in regard to the payment of EDC we have called information from Jalandhar Development Authority under RTI Act, 2005 vide letter dated 16.12.2011, in response to which the Jalandhar Development Authority has sent information, which is reproduced herein below:

1. Permanent A/c No.JDA is AAALC0454G.

2. Status of Income Tax Jalandhar Development Authority is a regular Income-tax assessee since its formation i.e. 16.07.2007 and filed returns of income regularly and paid income tax due as per income tax returns.

3. That no such relation as license and contractor exist.

4. This organization itself does not undertake/carry out any development work on the basis of payment made to this department as External Development Charges.

5. This para does not relate to this department

6. The External Development Charges do no form a part of income of this department because this is a liability of the Department, which will be reimbursed to Govt. afterwars on their demand Copy of the same is also enclosed herewith.

Sir, it is submitted that from the above stated information it is very much clear that first, there is no such relation as licencee and contractor exist, secondly, the organization itself does not undertake/carry out any development work on the basis of payment 4 ITA No.210 & 211(Asr)/2014

made to this department as External Development Charges. Thirdly, the External Development Charges do not form the part of income of this department because this is a liability of the department, which will be reimbursed to Govt. afterward on their demand, therefore, all the things are clear that no contractor contractee relationship is established, no work has been done/executed by the Authority against EDC received by the Authority, so provision of section 194C is not applicable in the case of assessee and addition made by the AO may kindly be deleted.

Sir, work has already been executed by the Govt. and we are to make payment just to take benefit of the existing infrastructure of the Govt. so this payment cannot be covered under the provision of section 194C. Therefore, it is requested that considering the facts and circumstances of this case addition made by the Ld. Assessing Officer may kindly be deleted."

6. The Ld. CIT(A) deleted the demand of Rs.69,710/- raised by the AO

for the assessment year 2008-09 (Rs.5,72,547/- for the A.Y. 2009-10) on the

assessee u/s 201(1) and 201(1A) of the I.T.Act, 1961. While doing so, it was

observed as follows:

"I have also considered the other material brought on record. On careful consideration ot the material brought on record, I am of the opinion that payment made by the assessee to PUDA as license fee is not covered under the provision of section 194C of the Act, as is clear from the information called for by the assessee from Jaldandhar Development Authority (JDA) under RTI Act, 2005. The JDA vide letter dated 16.12.2011, most particularly in para 3, 4 & 5 which are most relevant here the JDA in para 3 has categorically stated that no such relation as license and contractor exist, in para 4, it has been stated that this organization itself does not undertake/carry out any development work on the basis of payment made to this department as External Development charges and in para 5, it is stated by JDA that the External Development Charges do not form a part of income of this department because this is a liability of the Department which will be reimbursed to the Govt. afterwards on their demand."

5 ITA No.210 & 211(Asr)/2014 7.4. In these facts and in the circumstances of the case and more particularly when the JDA itself admitted that they had not done any work on behalf of the assessee, I am of the considered opinion that there is no contractor/license relation between the assessee and JDA. I am, therefore, having no hesitation in deleting the demand raised by the AO at Rs.69,710/- u/s 201(1) & 201(1A) of the Income-tax Ac, 1961. Accordingly, the demand raised by the AO is, therefore, directed to be deleted. In the result, ground of appeal no.2 taken by the assessee is allowed."

7. Thus, it is evident that in deleting the demand raised by the AO on the

assessee, the ld. CIT(A) unilaterally took into consideration and made it the

basis of such deletion, the information contained in the letter dated

16.12.2011, issued to the assessee under the RTI Act. The department is

aggrieved of this action of the ld. CIT(A).

8. The Ld. DR has contended that the aforesaid action of the ld. CIT(A)

in deleting the demand is in violation of Rule 46A of I.T. Rules. The

grievance of the department is well founded. A reading of the order under

appeal, as above, shows that the ld. CIT(A) did not confront the AO with

the aforesaid letter issued under the RTI Act by the JDA on the request of

the assessee. The demand raised by the AO has been deleted taking this

letter as the sole basis for such deletion. This action is entirely violative of

Rule 46A of I.T. Rules. It is a settle principle of natural justice that any 6 ITA No.210 & 211(Asr)/2014

evidence which is used against a person must be confronted to such person

before using it.

9. In view of the above, we remit both these appeals to the file of the AO

to be decided afresh in accordance with law on duly taking into

consideration the JDA letter issued to the assessee. The assessee shall be

provided due and adequate opportunity of hearing to support his case. The

assessee shall co-operate with the AO in the remand proceedings.

10. In the result, both the appeals of the Revenue are treated as allowed

for statistical purposes.

Order pronounced in the open court on 26th February, 2015.

Sd/- Sd/- (B.P. JAIN) (A.D.JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 26th February, 2015 /SKR/ Copy of the order forwarded to:

1. The Assessee: M/s. PPR Developers & Builders, Jalanhdar

2. The ITO TDS-1, JLR

3. The CIT(A), JLR

4. The CIT, JLR.

5. The SR DR, ITAT, Amritsar.

True copy By order

(Assistant Registrar) Income Tax Appellate Tribunal, Amritsar Bench: Amritsar.

7 ITA No.210 & 211(Asr)/2014