Rashmi Infrastructure Developers Ltd. Vs DCIT (ITAT Mumbai)
In this case ld. AO however completely ignored all the submissions of the assessee and merely relied on the rejection order of the ITSC and proceeded to tax the on money receipts independently without granting any deduction for expenses incurred against those on money receipts.
We find that the ld. AR before us had filed a chart containing filing of various details before the ld. AO and ld. CIT(A) in respect of each of the allegations leveled by the lower authorities. We find that none of these submissions were considered by the lower authorities. Infact the Director of the assessee company Mr Umashankar had even filed a retraction statement which ise enclosed in pages 34 to 36 of the Paper Book 1. There is absolutely no whisper in the orders of the lower authorities in this regard. The details of unit wise eligibility u/s 80IB(10) of the Act are enclosed in pages 71 to 72 of the Paper Book. Architect Certificate is enclosed in Page 129 of the Paper Book. There is absolutely no discussion about these documents and workings in the orders of the lower authorities. The assessee had furnished the details of unaccounted expenses together with the supporting evidences in pages 151 to 580 of the Paper Book. There is absolutely no discussion about these documents in the orders of the lower authorities.
In view of the aforesaid facts and the manner in which the orders of the lower authorities had been passed , we deem it fit and appropriate, in the interest of justice and fairplay, to remand these appeals to the file of ld. AO for denovo adjudication in accordance with law.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
These appeals in ITA No.3128/Mum/2018 & 3243/Mum/2018 for A.Y.2013-14 & 2014-15 respectively arise out of the order by the ld. Commissioner of Income Tax (Appeals)-8, Mumbai in appeal No.CIT(A)-8/IT-01/17-18 & CIT(A)-8/IT-02/17-18dated 16/03/2018 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 07/08/2017 by the ld. Dy. Commissioner of Income Tax-3(3)(1), Mumbai (hereinafter referred to as ld. AO).
Identical issues are involved in both these appeals, they are taken up together and disposed of by this common order.
2. Though the assessee has raised several grounds of appeal for both the assessment years, we find that it had raised a preliminary ground for both the years that the orders have been passed by the lower authorities in gross violation of principles of natural justice and without following the due process of law. Since this is a preliminary issue, we deem it fit and appropriate to address this issue first. With the consent of both the parties, the facts prevailing in Asst Year 2013-14 are taken as the lead case and both the parties agreed that the decision rendered thereon would apply with equal force for Asst Year 2014-15 also in view of identical facts, except with variance in figures.
3. We have heard the rival submissions and perused the materials available on record. We find that the assessee company is engaged in the business as a Builder / Developer. The return of income for the Asst Year 2013-14 was filed by the assessee company on 27.9.2013 declaring total income of Rs 60,12,040/-, which was later revised on 8.7.2014 declaring total income at Rs Nil. In the revised return, the assessee claimed deduction u/s 80IB(10) of the Act for Rs 60,12,044/-. This revised return was filed within the time prescribed u/s 139(5) of the Act which fact is also conceded by the ld. AO in page 1 para 1 of his order.
3.1. A survey action u/s 133A of the Act was conducted on 18.10.2013 in the business premises of the assessee. During the course of survey proceedings, certain materials relating to unaccounted receipts from sale of residential flats in the project ‘Rashmi Heights’ were impounded. In the survey, the assessee company admitted unaccounted income of Rs 7,64,20,047/- on the basis of documents found at the time of survey, which included declaration on account of unaccounted cash receipts amounting to Rs 7,49,69,700/- and excess claim of provision of expenditure made in final accounts for the Asst Year 2013-14 amounting to Rs 14,50,347/-.
3.2. During the course of survey action u/s 133A of the Act, it was found that the assessee company was following project completion method for recognizing the income for the construction project. A statement on oath u/s 131 of the Act of the Director was recorded wherein he voluntarily disclosed a sum of Rs 7,64,20,047/- (74969700+1450347) for the Asst Year 2013-14 in respect of Rashmi Heights project. The assessee filed an application before the Hon’ble Income Tax Settlement Commission (ITSC) on 2.2.2015. The ITSC vide its order u/s 245D(1) of the Act dated 11.2.2015 allowed the application to be proceeded with. The ITSC vide its order u/s 245D(4) of the Act dated 9.8.2016 rejected the settlement application of the assessee company. Aggrieved by the order of the ITSC, the assessee filed a writ petition before the Hon’ble Jurisdictional High Court in W.P. No. 2814 of 2016. The Hon’ble Bombay High Court vide its order dated 20.1.2017 dismissed the petition of the assessee company. Accordingly, the assessment proceedings which were earlier abated, got resumed and the ld. AO proceeded with the same.
3.3. The ld. AO observed that assessee company constructed a building named ‘Rashmi Heights’ under Slum Redevelopment Scheme in Malad East, Mumbai and the construction was completed in Asst Year 2013-14. The assessee stated that two other entities involved viz Reliance Construction Company , which was into construction activities and another entity by the name was R.C. Developers. The Building has 130 flats out of which 64 flats were to be sold by the assessee, 53 by Reliance Construction Company and 13 flats by R.C. Developers. In terms of square feet, the total saleable area was 176790 sq.ft. and was to be divided among the three partners as under:-
