Ita/109/2016 Of Heavenly Homes (P) Ltd v. Deputy Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN THURSDAY, THE 29TH DAY OF SEPTEMBER 2016/7TH ASWINA, 1938 ITA.No. 109 of 2016 () ----------------------- AGAINST THE ORDER/JUDGMENT IN ITA 109/COCH/2015 ofI.T.A.TRIBUNAL,COCHIN BENCH DATED 28-01-2016 APPELLANT(S)/APPELLANT/ASSESSEE:----------------------------- HEAVENLY HOMES (P) LTD 5D, 5TH FLOOR, OXFORD BUSINESS CENTRE, SREEKANDATH ROAD, RAVIPURAM, KOCHI- 682016. BY ADVS.SRI.K.N.SREEKUMARAN SMT.V.P.SEENA DEVI RESPONDENT(S)/RESPONDENT/REVENUE: -------------------------------- DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(1), ERNAKULAM- 682018. BY SRI.CHRISTOPHER ABRAHAM, SC, IT DEPT. SRI.KMV.PANDALAI THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSIONON 29-09-2016, THE COURT ON THE SAME DAY DELIVERED THEFOLLOWING: ITA 109/2016 APPENDIX APPELLANT'S ANNEXURES ANNEXURE-A :COPY OF ASSESSMENT ORDER DATED 15.12.2009ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2(1),ERNAKULAM. ANNEXURE-B :COPY OF ORDER DATED 19.12.2014 IN APPEALNO.78/R-1/E/CIT(A)/14-15 OF THE COMMISSIONER OF INCOME TAX(APPEALS)-1, ERNAKULAM. ANNEXURE-C :CERTIFIED COPY OF ORDER DATED 28.01.2016 INITA NO.109/COCH/2015 FOR 2007-08 ISSUED BY THE INCOME TAXAPPELLATE TRIBUNAL, ERNAKULAM. //TRUE COPY// jg-1/10 PA TO JUDGE. THOTTATHIL B.RADHAKRISHNAN & ANU SIVARAMAN, JJ. .................................................................... ITA No.109 of 2016 .................................................................... Dated this the 29[th] day of September, 2016. J U D G M E N T Thottathil B.Radhakrishnan, J. 1.We have heard the learned counsel for the appellant/assessee inthis income tax appeal filed under Section 260A of the IncomeTax Act, 1961, for short, the 'Act', as also the learned standingcounsel for the Revenue.this income tax appeal filed under Section 260A of the IncomeTax Act, 1961, for short, the 'Act', as also the learned standingcounsel for the Revenue. 2.The appellant company is engaged in developing real estate,construction of flats and villas. It filed return for the relevantassessment year declaring a total business income of`33,26,933/-. That was taken up for scrutiny under Section143(2) of the Act. The scrutiny assessment was completed bymaking an addition, apparently to the same extent, that is to say,`33,10,533/-. Such assessment on scrutiny was made onaccount of low profits. The assessing authority did not accept theexplanation offered by the assessee for the low margin of profits. ITA109/16 The details filed on record were also considered by the assessingauthority, which proceeded to hold that the profits were quiteinadequate in that line of business, particularly when, in manyother cases the profit for the period relevant to the assessmentyear 2007-08 is far above the profit margin disclosed by theassessee. However, the assessing authority considered the factthat the assessee was new in the field of business and the lowrate quoted by the assessee was to overcome compensation.Accordingly, the assessing authority pegged up the net profit upto 2.5% to make the level of profit margin to a reasonable extent.This is how the addition of `33,10,533/- was made. ITA109/16 The details filed on record were also considered by the assessingauthority, which proceeded to hold that the profits were quiteinadequate in that line of business, particularly when, in manyother cases the profit for the period relevant to the assessmentyear 2007-08 is far above the profit margin disclosed by theassessee. However, the assessing authority considered the factthat the assessee was new in the field of business and the lowrate quoted by the assessee was to overcome compensation.Accordingly, the assessing authority pegged up the net profit upto 2.5% to make the level of profit margin to a reasonable extent.This is how the addition of `33,10,533/- was made. 3.The CIT (Appeals) confirmed the addition after adverting to andconsidering all relevant facts as disclosed in his order. It alsonoted that the assessee, on its part, did not produce anymaterial/document to show that the gross profit disclosed by theassessee is reasonable, compared to the other assessees in thesimilar line of business. It is also noted by the CIT(Appeals) thatconsidering all relevant facts as disclosed in his order. It alsonoted that the assessee, on its part, did not produce anymaterial/document to show that the gross profit disclosed by theassessee is reasonable, compared to the other assessees in thesimilar line of business. It is also noted by the CIT(Appeals) that ITA109/16 the assessee failed to substantiate that the book results of thecurrent year is reasonable with regard to gross profit disclosed bythe assessee in the earlier assessment years and the subsequentassessment years. In this factual scenario and having regard tothe findings of the assessing authority and the CIT (Appeals), theTribunal did not find any way to come to the aid of the assessee.We do not see any question of law arising for consideration on thedecision rendered by the Tribunal. The impugned order of theTribunal does not merit interference by this Court through anappeal under Section 260A of the Act. The appeal, therefore,fails. In the result, the income tax appeal is dismissed. (THOTTATHIL B.RADHAKRISHNAN, JUDGE) jg-29/9 (ANU SIVARAMAN, JUDGE)