9911796707
TMI Blog2019 (12) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... d appeal has been filed at the instance of the Assessee against the order of the Learned Pr. Commissioner of Income Tax, Ahmedabad dated 18/03/2019 ( in short "Ld.CIT") arising in the matter of assessment order passed under s. 263 of the Income Tax Act, 1961 (here-inafter referred to as "the Act") dt. 29/08/2016 relevant to the Assessment Year 2014-2015. The assessee has raised the following ground of appeal. 2. The solitary issue raised by the assessee is that the learned CIT erred in holding the order passed by the AO under section 143(3) of the Act dated 29 August 2016 as erroneous insofar prejudicial to the interest of Revenue. 3. The facts in brief are that the assessee in the present case is a private limited company and engaged in the business of developing/building the real estate projects. The assessee purchased a piece of plot along with 2 parties namely Shri Amit Rajnikant Joshi and Shri Sureshbhai Thakkar vide sale deed bearing serial No. 8778 dated 11 May 2012. The total consideration of such piece of plot was ₹ 6,18,60000/- plus stamp duty of ₹ 30,31,200/- only. The share of the assessee in such piece of plot was 50% whereas the remaining p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elate to the projects of the assessee as discussed above. iii. The payment made by the assessee to the parties namely Shri Amit Rajnikant Joshi and Shri Sureshbhai Thakkar as per the agreement dated 28th March 2014 represents for the piece of land belonging to these persons. However, the assessee has claimed the same as revenue expenditure instead of capitalizing the same either as work in progress or closing stock. Accordingly the income of the assessee has been under assessed. In view of the above, the learned CIT was of the view that the assessment has been framed by the AO without proper enquiry, application of mind or proper verification of the facts as discussed above. Accordingly the learned CIT issued a notice under section 263 of the Act bearing No. Pr.CIT- 4/HQ/263/SPPL/2018-19 dated 11 December 2018 proposing the assessment order as erroneous insofar prejudicial to the interest of revenue. 5. The assessee in response to such notice submitted that the impugned sundry creditors are genuine as the payment was made to them in the year under consideration as well as in the subsequent years in pursuance to the development agreement which was duly registered dated 28 Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee against such revenue recognized the proportionate cost of 87.05% as per the guidance note issued by the Institute of chartered accountant of India. 6. However, the learned CIT after considering the submission of the assessee held the order of the AO as erroneous insofar prejudicial to the interest of revenue by observing as under: 6. I have considered the facts of the case and the submissions made. Admittedly, the assessee has made certain fresh submissions and documents during the present proceedings, which were neither enquired into by the A.O. nor any submission was made. Whether the Motera Project is on land held exclusively by the assessee or jointly with other co-owners, was not examined at all by the A.O. All the AMC approvals are in the name of the assessee though admittedly the land was held jointly with others. The A.O. never enquired how on a jointly held land, the municipal approvals etc. could be given to the assessee exclusively. The assessee has completed 87% of the project and 87% of revenue is credited. Whether this is actually so? Moreover, the land cost booked in the account is much higher than the actual cost incurred by the assessee and the co-ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the construction of the project continued in the 2nd year on the land owned by it as well as the land owned by the joint owners. As such at the fag-end of the 2nd year i.e. the year under consideration, the major cost of construction was completed. Accordingly, the assessee entered into a joint development agreement with the co-owners for acquiring the right on the land owned by them vide agreement dated 28th March 2014. As the major work was completed in the year under consideration, therefore the assessee incorporated the cost incurred on the acquisition of such land of the joint owners at ₹ 4.20 crores in the books of accounts in the year under consideration. Accordingly the assessee claimed to have completed its project to the extent of 87.05% in the year under consideration. 9.3 The assessee claimed to have incurred the cost on the development of project till 31-3-2014 with respect to its project DIVINE-1 in the manner as detailed under: Calculation of closing WIP Opening WIP-50% land & construction expenses up-to 31-03-2013 ₹ 6,49,75,489.00 Construction Expenses & development charges 50% of land Rs. 6,07,03,627.00 Purchases 13-14 ₹ 2,31,69 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of all the parties having credit balance of Rs,1,00,000/- and above. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 18. Furnish complete details in respect of inventories with supporting documentary evidences. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 22. Please furnish following details of purchases o ₹ 8,60,95,217/- 23. Furnish complete head wise details in respect of revenue from operation along with supporting documentary evidences. 24. Please furnish following details of sales of ₹ 7,54,21,991/- XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 33. Please produce books of accounts, bank statements, sales bill files, purchase bill files, vouchers and bills of expenditure invoices. 12.2 The reply of the assessee is placed on pages 6 to 9 of the paper book. The relevant points read as under: 17. Please find the list of major creditors as on 31st March 2014, Annexure IX. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 21. Please find the working for valuation of closing stock with supporting proof of price taken for valuation. Annexure XIII XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 24. Please ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be erroneous and prejudicial to the Revenue. By erroneous is meant contrary to law. Thus, this power cannot be exercised unless the CIT is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the Revenue. Thus where there are two possible views and the Assessing Officer has taken one of the possible views, no occasion to exercise powers of Revision, can arise. Nor can Revisional power be exercised for directing a fuller inquiry to find out if the view taken is erroneous, when a view has already been taken after inquiry. This power of Revision can be exercised only where no inquiry as required under the law is done. It is not open to enquire in cases of inadequate inquiry." 12.5 We also draw support and guidance on the judgment of Hon'ble Gujarat High Court in the case of CIT vs. R. K. Construction Company reported in 313 ITR 65 wherein it was held as under: "16. As far as law is concerned, the Assessing Officer has taken a particular view on the basis of evidence produced before him. On the basis of the said material and materials which were collected by the CIT in revisional proceedings, the Commissioner has taken a different view. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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