×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
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The appeal by the Revenue and the cross objection by the assessee are directed against the order of the Commissioner of Income Tax (Appeals)-34, Mumbai [in short ‘CIT(A)’] and arise out of the order passed by the Assessing Officer (AO) u/s 143(3) r.w.s. 254 of the Income Tax Act 1961, (the ‘Act’).
2. The grounds of appeal filed by the revenue read as under:
1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A)- 34, Mumbai has erred in not considering WIP at Rs.26,18,08,847/-(Rs.61,63,16,666/- (-) opening balance WIP Rs.34,45,07,819/-) and restricting it to Rs.22,52,70,653/- and without any reason allowing relief in WIP of Rs.3,65,38,194/-.
2. On the facts and in the circumstances of the case and law, the Ld. CIT(A)-34, Mumbai in doing so erred by not following the Hon’ble ITAT’s decision dated 06.12.2013 for the impugned assessment year.
3. Briefly stated, the facts are that the assessee-firm filed its return of income for the assessment year (AY) 2009-10 on 25.03.2010 declaring total income at Rs.5,26,93,040/-. The assessment was completed u/s 143(3) on 29.12.2011 determining the total income at Rs.16,45,30,120/-. In the said order, the Assessing Officer (AO) made addition of Rs.9,36,82,560/- on account of suppression of income on sale of flat and addition of Rs.18,34,524/- on account of unexplained cash payment. Also the AO determined the income @ 12% on gross receipts of Rs.57,51,08,600/- i.e. Rs.6,90,13,032/- instead of Rs.5,26,93,040/- shown by the assessee and made an addition of the difference of Rs.1,63,19,995/-.
Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A), who vide order dated 31.05.2012 deleted the addition of Rs.9,36,82,560/- made by the AO on account of suppression of income on sale of flats and confirmed the action of the AO in respect of determination of income under the percentage completion method.
The said decision of the Ld. CIT(A) was not accepted by the assessee and the department and the cross appeal were filed before the ITAT. It is seen that the ITAT vide order dated 06.12.2013 confirmed the order of the Ld. CIT(A) with regard to deletion of addition of Rs.9,36,82,560/- and set aside the issue of determining the income under the percentage completion method and restored the matter back to the file of the AO for fresh determination/estimation of profit.
In the set aside assessment proceedings, the assessee filed a submission dated 26.02.2015, wherein the cost of project which was earlier estimated at Rs.366 95,00,000/- was revised and shown at Rs.266,35,00,000/-. However, the assessee also revised its estimation of sales considerations of Rs.414,60,00,000/- shown earlier to Rs.275,80,00,000/- In this revised estimate of sales considerations, the assessee had reduced the value of closing stock by reducing 37,733 sq. ft. from the saleable area on account of the following:
However, the AO was not convinced with the above explanation of the assessee for the reason that the plan for the project stood approved by the competent authority, which did not show any reduction in area. Regarding litigation in respect of TDR of 5 members, the AO observed that the Hon’ble Bombay High Court had granted permission to carry out finishing work and apply to BMC for completion certificate. Accordingly, the AO issued a show cause notice dated 05.03.2015 to the assessee to explain as to why profits should not be estimated by considering the total sale value at Rs.414,60,00,000/- as per its submission dated 20.12.2014 and cost of the project be estimated at Rs.266,35,00,000/- as per submission dated 26.02 2015. In response to it, the assessee filed submission dated 13.03.2015, wherein it had givenworking, showing total sale consideration at Rs.275,80,00,000/- and cost of project at Rs.266,35,00,000/- which translated into total profitability of the project of less than Rs.10 crore. The AO found it unacceptable as the assessee had itself offered Rs.5.26 crores as income in AY 2009-10 and revised income of Rs.8.56 crore in AY 2011-12. As the assessee had not disputed the cost of project, the AO adopted it at Rs.266,35,00,000/- and estimated the profit of Rs.20,82,87,006/-. As the assessee itself had offered income of Rs.5,26,93,037/- on percentage completion method, the AO added back the difference of Rs.15,55,93,969/-.
4. Aggrieved by the above order of the AO, the assessee filed an appeal before the Ld. CIT(A). During the appellate proceedings, the assessee submitted that the direction given by the Tribunal, while setting aside the matter has not been followed by the AO. It was also submitted before the Ld. CIT(A) that because it cannot be implemented, the ground regarding non-reduction of disputed TDR from the total