TMI Blog2017 (2) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... out examining the assessment record was not justified as every issue raised in the show cause notice was examined by the AO. The AO raised specific query and assessee has filed specific reply to each and every point with detailed annexure which are on assessment file. Under this circumstance, we are not in agreement with conclusions drawn by the Commissioner that the assessment order is erroneous and prejudicial to the interest of revenue. - Decided in favour of assessee - I.T.A. No.2944/ Mum/2014 - - - Dated:- 8-2-2017 - SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR,(AM) For The Appellant : Shri Prakash Pandit For The Respondent : Shri Pratap Singh ORDER Per RAJESH KUMAR, Accountant Member: This is an appeal filed by the assessee and is directed against the order of the Ld. Commissioner of Income Tax-10, Mumbai dated 7.3.2014 pertaining to A.Y.2009-10. 2. The issue raised in all the grounds of appeal is against the setting aside the assessment order passed under section 143(3) of the Income Tax Act, 1961 dated 9.12.2011 by invoking revisionary jurisdiction u/s 263 of the Act by the CIT. 3. Brief facts of the case are that the return of income was fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled and after examining the vouchers and documents, have passed an order U/s.143(3), accepting the returned income as disclosed by us. It is also submitted that we are following Percentage Completion Method and the same has been accepted by the Assessing Officer while passing the order U/s.143(3) for subsequent assessment year. (3) Now we say and submit on the discrepancies as pointed in your show cause notice as under:- (a) Assessing Officer did not verify the basis of estimating the valuation of work in progress: The Company acquired the land for its Project Priyanaka Tulip located at Plot Nos.19 19A, Sector-14, Kalamboli, Tal. Panvel, Dist. Raigad, in the financial year 2007-08. After preparing the plans and completion of other formalities, it applied for Commencement Certificate to the Local Authority, M/s. CIDCO Ltd., on 17/03/2008. The Company got the permission to start the work from M/s. CIDCO Ltd., on 25/06/2008, copy of said Commencement Certificate (known as CC Certificate) is enclosed herewith for your ready reference. (Annexure - 1) During the year, the Company has incurred following expenses towards its project: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e customers with their names, address, Date of Booking, Amount received till 31 SI March, 2009 was given to the A.O. during the course of scrutiny assessments. Copy ofdetails submitted for booking advances is enclosed with this letter. (Annexure 4) Thus, it will be seen that the A.O. has passed an Assessment Order after necessary examination of' all the issues and after considering the necessary details and explanation given by us. These issues include issues which Your Goodself have raised in the present show cause notice. In view of the fact it is submitted that the order passed by the .0. is neither erroneous nor prejudice to the interest of Revenue. As the AO after due examination of the record and explanation has passed an assessment order and there is no error in said order. It is submitted that the provisions of Section 263 cannot be invoked on mere suspicion. It is further submitted that Section 263 contemplates two conditions namely, (l) the order of the A.O. is erroneous, and (2) the same is prejudice to the interest of Revenue. It is submitted that applying the said two conditions to the facts of our case, we have amply d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n we submit that the notice U/s.263 requires to be dropped. 4. All the details/explanations on the various points as raised by the Commissioner in the show cause notice were furnished in similar manner as submitted before the AO during the course of assessment proceedings and therefore, submitting that the proceedings under section 263 should not be invoked as AO has examined all the issues raked up by the commissioner in the show cause notice after calling for and raising specific query on each point. However, the ld. Commissioner did not accept the contention of the assessee and set aside the order of the AO by observing and holding as under: 4.1ii I have considered submission of the assessee. The argument of the assessee that the conditions laid down in the provisions of section 263 are, not satisfied cannot be accepted on the facts and merits of the case which is discussed in the following paragraphs. On the legal front, the Hon'ble Supreme Court in the case of M/s Malabar Industrial Co.Ltd 243 ITR 83(SC) has laid down the conditions precedent by which the CIT can invoke the provisions of section 263. The Hon'ble Supreme Court has held that If the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer cannot be erroneous, if the Assessing Officer has taken one of the two view possible. In such cases the order of the Assessing Officer is erroneous provided the Commissioner holds and Is able to demonstrate that the view taken by the Assessing Officer was not plausible, being legally unsustainable and Incorrect . 4.1.iii.The contention of the assessee that the stand taken In the notice u/s 263 is a mere change of opinion is also not tenable. Reliance In this regard is placed on the Chennai ITAT decision in the case of M/s Coimbatore Cable Net Private Limited Vs ACIT, Coimbatore 2012 TIOL 60 wherein it was held that when the AO believed the nomenclature given In the balance-sheet and simply accepted the claim of the assessee without application of mind and without examining the evidence of the expenditure incurred, CIT has rightly initiated the proceedings u/s 263. Similarly, the Chandlgarh ITAT In the case of MI5 Ind Sphinx Precision Ltd by an order dated November 10, 2006 has held that the Assessing Officer has passed the order without giving any reasons for accepting the contentions of the assessee, the Commissioner was well within his jurisdiction to Inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer has not examined properly the working of WIP, as there is a difference in proportionate land cost as mentioned hereinabove, and estimation of profit is without any base and support. Thus, the Assessing Officer has not applied his mind and has not verified the facts in proper prospective. Therefore, the assessment order dated 09.12.2011 is erroneous and prejudicial to the interest of revenue. Commissioner was competent to revise It. Reliance is also placed on the decision of Honourable ITAT, Indore Bench In the case of Frlgoscandla Winner Food Process System (79 ITD 357). 4.1.v.Hence, the contentions raised by the assessee against the Invocation of section 263 are not tenable and the same are rejected. 4.2. The assessee has submitted detail of WIP, direct expenses, Interest cost of ₹ 12.84 lacs and detail of advances received from the customers, vide their letter dated 22.10.2013. Further, detail has. been filed vide letter dated 28.10.2013. 4.2.1 I have considered the submission of the assessee. The facts and merits of the case are discussed In following paragraphs:- 4.2.1.i The assessee vide its letter dated 22.10.2013 filed the working of WIP of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Natrajan Sriram 302 15.03.2008 25.07.2008 4429.22 5 Natrajan Sriram 303 15.03.2008 25.07.2008 4365.38 6 Natrajan Sriram 304 15.03.2008 25.07.2008 4490.99 Similarly, there a is rate difference in the flats sold on the same floor and on the same date in case of Rekha Vinayak Naik [Flat no. 501 to 504]. The Assessing Officer has not enquired about the reasons for the rate variation as there is nothing on the record. Thus the Assessing Officer has not applied his mind and has not done any Investigation and required verification. During the revision proceedings the assessee was asked to give detail in this regard. The same was furnished vide letter dated 28.10.2013 as per Annexure-z . From this it is seen that the rate per sq. ft has been shown asunder:- Sr.No. Name of the Flat Owner Flat No. Date of booking Date of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le referring to page 24 of the paper book which contained the details of WIP of Kalamboli Project, pointed out that ₹ 12,83,780/- interest on loan was specifically shown in the details WIP at sr. no 6 of annexure 1 supra. On the point no. (d) of the show cause notice, which is regarding the genuineness of the advances received from customers, the ld. AR submitted that vide paras 12 13 of the questionnaire dated 17.6.2011, the AO asked the assessee to furnish details of booking advances as on 31.3.2007 in the specified format calling for various details such as . name of flat owner , date of booking, total area, rate, agreement value, amount received at the beginning and received during the year, total amount received and balance receivable which were replied by the assessee by filing the necessary details filed vide para 12 of the written submissions dated 20.6.2011 copies of which are placed in the paper book at page 29-30. The ld. AR submitted before us that the CIT has wrongly exercised the jurisdiction under section 263 of the Act as the conditions as provided in section 263 for invoking the provisions of section 263 were not satisfied as the assessment framed by the AO w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee by filing necessary details by way of written submissions dated 20.06.2011. The AO in the questionnaire dated 17.6.2011 vide para 23 specifically asked the assessee for the details of WIP qua Kalamboli which were filed by the assessee vide letter dated 20.9.2011 Annexure-2 submitting the details as called for by the AO copy of which is filed at page 24 of the paper book before us. On second issue raised by the CIT qua non verification of direct expenses as the project got occupancy certificate on 21.9.2010, the assessee in response to specific query filed necessary details of direct expenses vide Annexure-III filed copies of which are at pages 25 to 28 of the paper book. On issue no.3 in the show cause notice which is in respect of interest amount of ₹ 12.84 lakhs as direct expenses, we find from the page 24 of the paper book that third last item of expenses is interest on loan of ₹ 12,83,780/- which was also very much before the AO in the details of WIP of Kalamboli project as annexure-2. On the last point i.e 4 which is regarding non verification of genuineness of advances received from the customers, the AO called upon the assessee vide para 12 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment proceedings and the Respondent-assessee's response to it. In fact this Court in the case of Idea Cellular Ltd. v. Dy. CIT [2008] 301 ITR 407 has held that if a query is raised during assessment proceedings and responded to by the Assessee, the mere fact that it is not dealt with in the Assessment Order would not lead to a conclusion that no mind had been applied to it. 9. Moreover, from the nature of expenditure as explained by the petitioner to the Assessing Officer during the assessment proceedings itself indicates that the view that the same were in the realm of revenue expenditure, is a possible view. Therefore, we find no fault in the impugned order having followed the binding decision of the Supreme Court in the case of Max India Ltd. (supra), while allowing the appeal before it. In the case of Gera Developments (P.) Ltd.(supra), it has been observed and held as under : 7. We have considered the rival submissions. With regard to issue (a) i.e. taxability of the transfer of development right, we find that the impugned order of the ITAT records findings of Assessing Officer in detail from which it is evident that the Assessing Officer appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power under Section 263 of the Act to hold that if a query is raised during the assessment proceedings and responded to by the assessee, the mere fact that it has not been dealt with in the assessment order would not lead to a conclusion that the Assessing Officer has not applied his mind to the issues. 8. We thus find that on the issues (a) and (b) viz. consideration received on transfer of development right and warranty expenses are concerned, the impugned order of the ITAT has applied the principle of law laid down in Malabar Industrial Co. Ltd.'s case (supra) and Fine Jewellery (India) Ltd. (supra). Thus, the question as proposed does not give rise to any substantial question of law. Thus, the question as framed are not entertained. 9. Accordingly, appeal is dismissed. No order as to costs. 8. Considering the facts of the case in the light of aforesaid judgments, we find that the case of the assessee is squarely covered in favour of the assessee. In our opinion all the points as raised by the CIT u/s 263 in the show cause notice issued under section 263 of the Act were duly raised by the AO during the assessment proceedings and also replied by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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