D.b. Income Tax Appeal v. M/S Unique Builders & Developers(Reality

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR (1) D.B. Income Tax Appeal No. 173 / 2015 Principal Commissioner Of I T(Central) ----Appellant Versus M/S Unique Builders & Developers(Reality ----Respondent (2) D.B. Income Tax Appeal No. 174 / 2015 Principal Commissioner Of I T(Central) ----Appellant Versus M/S Unique Builders & Developers(Reality ----Respondent (3) D.B. Income Tax Appeal No. 175 / 2015 Principal Commissioner Of I T(Central) ----Appellant Versus M/S Unique Builders & Developers(Reality ----Respondent (4) D.B. Income Tax Appeal No. 176 / 2015 Principal Commissioner Of I T(Central) ----Appellant Versus M/S Unique Builders And Developers ----Respondent (5) D.B. Income Tax Appeal No. 177 / 2015 Principal Commissioner Of I T(Central) ----Appellant Versus M/S Unique Builders & Developers Jaipur ----Respondent (6) D.B. Income Tax Appeal No. 178 / 2015 Principal Commissioner Of I T(Central) ----Appellant Versus M/S Unique Builders & Developers(Ajit) ----Respondent (7) D.B. Income Tax Appeal No. 179 / 2015 Principal Commissioner Of I T(Central) ----Appellant VersusM/S Unique Builders & Developers(Ajit) ----Respondent (8) D.B. Income Tax Appeal No. 89 / 2016 Principal Commissioner Of I T (Central) ----Appellant Versus M/S Unique Builders & Developers ----Respondent (9) D.B. Income Tax Appeal No. 165 / 2016 Principal Commissioner Of I T-2 Jaipur ----Appellant Versus M/S Unique Builders & Developers ----Respondent _____________________________________________________ For Appellant(s) : Mr. Anil Mehta Mr. K.D. Mathur for Mr. R.B. Mathur in appeal no.165/2016 For Respondent(s) : Mr. Naresh Gupta _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERIHON'BLE MR. JUSTICE INDERJEET SINGHJUDGMENT 19/05/2017 1. Since identical question of law and fact are involved in boththese appeals, they are decided by this common judgment. 2.By way of these appeals, the appellant has assailed thejudgment and order of the Tribunal whereby Tribunal hasdismissed the appeal preferred by the department and allowed theappeal preferred by the assessee confirming the order of CIT(A). 3.This court while admitting the appeals framed followingsubstantial questions of law:- 3.1Appeal No.173/2015 “(i) Whether the Tribunal was justified in holdingthat the Assessing Officer as well as CIT(A) haveerred in rejecting the books of accounts of theassessee under Section 145(3) of the Act andthereby reversing the findings given by AssessingOfficer as well as CIT(A), ignoring the undisputedfacts that the assessee has failed to maintainquantitative and qualitative stock registers andvouch the expenses incurred by it 'on money'received by it has not been disclosed. (ii) Whether the Tribunal was justified in rejectingthe application of percentage completion methodadopted by the Assessing Officer, when thisrejection means acceptance of loss returns of theassessee engaged in construction and sale ofresidential/commercial projects in contraventionof Accounting Standard 7 and 9 issued by ICAI. (iii) Whether on the facts and in law, the Tribunalwas correct in holding the view that the CIT(A)and it had the power to relax statutory conditionsfor claiming deductions under the provisions ofthe Income Tax Act, 1961 and accordinglyallowing assessee's claim u/s 80IB(10) of theIncome Tax Act, 1961 made for the first time inappeal before the CIT(A).” 3.2Appeal No.174/2015 (ii) Whether the Tribunal was justified in rejectingthe application of percentage completion methodadopted by the Assessing Officer, when thisrejection means acceptance of loss returns of theassessee engaged in construction and sale ofresidential/commercial projects in contraventionof Accounting Standard 7 and 9 issued by ICAI. (iii) Whether on the facts and in law, the Tribunalwas correct in holding the view that the CIT(A)and it had the power to relax statutory conditionsfor claiming deductions under the provisions ofthe Income Tax Act, 1961 and accordinglyallowing assessee's claim u/s 80IB(10) of theIncome Tax Act, 1961 made for the first time inappeal before the CIT(A).” 3.2Appeal No.174/2015 “(i) Whether the Tribunal was justified in holdingthat the Assessing Officer as well as CIT(A) haveerred in rejecting the books of accounts of theassessee under Section 145(3) of the Act andthereby reversing the findings given by AssessingOfficer as well as CIT(A), ignoring the undisputedfacts that the assessee has failed to maintainquantitative and qualitative stock registers andvouch the expenses incurred by it 'on money'received by it has not been disclosed. (ii) Whether the Tribunal was justified in rejectingthe application of percentage completion methodadopted by the Assessing Officer, when thisrejection means acceptance of loss returns of theassessee engaged in construction and sale ofresidential/commercial projects in contraventionof Accounting Standard 7 and 9 issued by ICAI. (iii)Whether on the facts and in law, the Tribunalwas correct in holding the view that the CIT(A)and it had the power to relax statutory conditionsfor claiming deductions under the provisions ofthe Income Tax Act, 1961 and accordinglyallowing assessee's claim u/s 80IB(10) of theIncome Tax Act, 1961 made for the first time inappeal before the CIT(A).” 3.3Appeal No.175/2015 “(i) Whether the Tribunal was justified in holdingthat the Assessing Officer as well as CIT(A) haveerred in rejecting the books of accounts of theassessee under Section 145(3) of the Act andthereby reversing the findings given by AssessingOfficer as well as CIT(A), ignoring the undisputedfacts that the assessee has failed to maintainquantitative and qualitative stock registers and vouch the expenses incurred by it 'on money'received by it has not been disclosed. (ii) Whether the Tribunal was justified in rejectingthe application of percentage completion methodadopted by the Assessing Officer, when thisrejection means acceptance of loss returns of theassessee engaged in construction and sale ofresidential/commercial projects in contraventionof Accounting Standard 7 and 9 issued by ICAI. (iii)Whether on the facts and in law, the Tribunalwas correct in holding the view that the CIT(A)and it had the power to relax statutory conditionsfor claiming deductions under the provisions ofthe Income Tax Act, 1961 and accordinglyallowing assessee's claim u/s 80IB(10) of theIncome Tax Act, 1961 made for the first time inappeal before the CIT(A).” 3.4Appeal No.176/2015 “(i) Whether the Tribunal was justified in holdingthat the Assessing Officer as well as CIT(A) haveerred in rejecting the books of accounts of theassessee under Section 145(3) of the Act andthereby reversing the findings given by AssessingOfficer as well as CIT(A), ignoring the undisputedfacts that the assessee has failed to maintainquantitative and qualitative stock registers andvouch the expenses incurred by it 'on money'received by it has not been disclosed. (ii) Whether the Tribunal was justified in rejectingthe application of percentage completion methodadopted by the Assessing Officer, when thisrejection means acceptance of loss returns of theassessee engaged in construction and sale ofresidential/commercial projects in contraventionof Accounting Standard 7 and 9 issued by ICAI. (ii) Whether the Tribunal was justified in rejectingthe application of percentage completion methodadopted by the Assessing Officer, when thisrejection means acceptance of loss returns of theassessee engaged in construction and sale ofresidential/commercial projects in contraventionof Accounting Standard 7 and 9 issued by ICAI. (iii)Whether on the facts and in law, the Tribunalwas correct in holding the view that the CIT(A)and it had the power to relax statutory conditionsfor claiming deductions under the provisions ofthe Income Tax Act, 1961 and accordinglyallowing assessee's claim u/s 80IB(10) of theIncome Tax Act, 1961 made for the first time inappeal before the CIT(A).” 3.5Appeal No.177/2015 “(i) Whether the Tribunal was justified in holdingthat the Assessing Officer as well as CIT(A) haveerred in rejecting the books of accounts of theassessee under Section 145(3) of the Act andthereby reversing the findings given by AssessingOfficer as well as CIT(A), ignoring the undisputedfacts that the assessee has failed to maintainquantitative and qualitative stock registers andvouch the expenses incurred by it 'on money'received by it has not been disclosed. (ii) Whether the Tribunal was justified in rejectingthe application of percentage completion methodadopted by the Assessing Officer, when thisrejection means acceptance of loss returns of theassessee engaged in construction and sale ofresidential/commercial projects in contravention ofAccounting Standard 7 and 9 issued by ICAI. (iii)Whether on the facts and in law, the Tribunalwas correct in holding the view that the CIT(A)and it had the power to relax statutory conditionsfor claiming deductions under the provisions of theIncome Tax Act, 1961 and accordingly allowingassessee's claim u/s 80IB(10) of the Income TaxAct, 1961 made for the first time in appeal beforethe CIT(A).” 3.6Appeal No.178/2015 “(i) Whether the Tribunal was justified in holdingthat the Assessing Officer as well as CIT(A) haveerred in rejecting the books of accounts of theassessee under Section 145(3) of the Act andthereby reversing the findings given by AssessingOfficer as well as CIT(A), ignoring the undisputedfacts that the assessee has failed to maintainquantitative and qualitative stock registers andvouch the expenses incurred by it 'on money'received by it has not been disclosed. (ii) Whether the Tribunal was justified in rejectingthe application of percentage completion methodadopted by the Assessing Officer, when thisrejection means acceptance of loss returns of theassessee engaged in construction and sale ofresidential/commercial projects in contravention ofAccounting Standard 7 and 9 issued by ICAI. (iii)Whether on the facts and in law, the Tribunalwas correct in holding the view that the CIT(A)and it had the power to relax statutory conditions for claiming deductions under the provisions of theIncome Tax Act, 1961 and accordingly allowingassessee's claim u/s 80IB(10) of the Income TaxAct, 1961 made for the first time in appeal beforethe CIT(A).” 3.7Appeal No.179/2015 “(i) Whether the Tribunal was justified in holdingthat the Assessing Officer as well as CIT(A) haveerred in rejecting the books of accounts of theassessee under Section 145(3) of the Act andthereby reversing the findings given by AssessingOfficer as well as CIT(A), ignoring the undisputedfacts that the assessee has failed to maintainquantitative and qualitative stock registers andvouch the expenses incurred by it 'on money'received by it has not been disclosed. (ii) Whether the Tribunal was justified in rejectingthe application of percentage completion methodadopted by the Assessing Officer, when thisrejection means acceptance of loss returns of theassessee engaged in construction and sale ofresidential/commercial projects in contravention ofAccounting Standard 7 and 9 issued by ICAI. (ii) Whether the Tribunal was justified in rejectingthe application of percentage completion methodadopted by the Assessing Officer, when thisrejection means acceptance of loss returns of theassessee engaged in construction and sale ofresidential/commercial projects in contravention ofAccounting Standard 7 and 9 issued by ICAI. (iii)Whether on the facts and in law, the Tribunalwas correct in holding the view that the CIT(A)and it had the power to relax statutory conditionsfor claiming deductions under the provisions of theIncome Tax Act, 1961 and accordingly allowingassessee's claim u/s 80IB(10) of the Income TaxAct, 1961 made for the first time in appeal beforethe CIT(A).” 3.7Appeal No.89/2016 “(i) Whether the Tribunal was justified in holding thatthe Assessing Officer as well as CIT(A) have erred inrejecting the books of accounts of the assessee underSection 145(3) of the Act and thereby reversing thefindings given by Assessing Officer as well as CIT(A),ignoring the undisputed facts that the assessee hasfailed to maintain quantitative and qualitative stockregisters and vouch the expenses incurred by it 'onmoney' received by it has not been disclosed. (ii) Whether the Tribunal was justified in rejecting theapplication of percentage completion method adoptedby the Assessing Officer, when this rejection means acceptance of loss returns of the assessee engaged inconstruction and sale of residential/commercialprojects in contravention of Accounting Standard 7and 9 issued by ICAI. (iii)Whether on the facts and in law, the Tribunal wascorrect in holding the view that the CIT(A) and it hadthe power to relax statutory conditions for claimingdeductions under the provisions of the Income TaxAct, 1961 and accordingly allowing assessee's claimu/s 80IB(10) of the Income Tax Act, 1961 made forthe first time in appeal before the CIT(A).” 3.9Appeal No.165/2016 “(i) Whether on the facts and in the circumstances ofthe case and in law the ITAt was justified law inholding that the CIT(A) and Assessing Officer haderred in rejecting the books of accounts of assesseeunder Section 145(3) of the IT Act, and therebyreversing the findings given by the Assessing Officerand CIT(A), ignoring the undisputed facts that theassessee failed to maintain quantities and qualitativestock registers and vouch the expenses incurred byits. (ii) Whether on the facts and in the circumstances ofthe case and in law the ITAT was justified law inrejecting the application of percentage completionmethod adopted by the Assessing Officer, when thisrejection means acceptance of loss returns of theassessee engaged in construction and sale ofresidential/commercial project in contravention ofAccounting Standard- 7 and Accounting Statdard-9by ICAI. (iii) Whether on the facts and in the circumstancesof the case and in law, the ITAT was justified law hadthe powers to relax statutory condition for claimingdeduction u/s 80IB of the IT Act and accordingly,allowing assessee's claim u/s 80IB(10) of the Act,not claimed by the assessee in its return of income. 4.Regarding issue no.1 & 2 since tribunal has relied upon thedecision of Unique Builders which has been upheld by us in taxappeal no.23/2013 (CIT, Central Jaipur vs. M/S Unique Buildersand Developers Jaipur) decided on 19.5.2017 wherein it has beenheld as under:- “15.In view of the observations made in para12, 12.1 onwards and 13, by the Tribunal, we areof the opinion that the Tribunal while consideringthe case has gone in detail and after consideringthe facts on record has given a finding. In ourconsidered opinion the Tribunal being a fact findingauthority, it will not be appropriate for us to reappreciate the evidence which has already beenappreciated by the Tribunal. 16.Therefore, in view of the decision of thisCourt and the Gujarat High Court, referred to byMr. Jhanwar, the first issue is answered in favourof the assessee. “15.In view of the observations made in para12, 12.1 onwards and 13, by the Tribunal, we areof the opinion that the Tribunal while consideringthe case has gone in detail and after consideringthe facts on record has given a finding. In ourconsidered opinion the Tribunal being a fact findingauthority, it will not be appropriate for us to reappreciate the evidence which has already beenappreciated by the Tribunal. 16.Therefore, in view of the decision of thisCourt and the Gujarat High Court, referred to byMr. Jhanwar, the first issue is answered in favourof the assessee. 17.In view of the decision of Supreme Courtreferred hereinabove, the second issue is alsorequired to be answered in favour of the assessee. 18.In view of the decision of Gujarat HighCourt in the case of S.A. Builders (supra), theissue No.(iii) is answered in favour of the assesseeand against the department." 4.1 In that view of the matter, the issue no.1 & 2 are answeredin favour of the assessee. 5.In view of decision of first issue, issue no.3 is only academic. 6.The issue is answered in favour of the assessee and against the department. The appeals stand dismissed. A copy of this judgment be placed in each file. (INDERJEET SINGH),J. (K.S. JHAVERI),J. Brijesh 42 to 49 & 51.