M/s. A One Enterprise, Bharuch V. The Income tax Officer,Ward-1., Bharuch

CO 243/AHD/2010

• Counselvise Citation: [2016] 112 COUNSELVISE.COM (IT) 4021 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 11 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-07-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 08-07-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 11-08-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANTONY PARIATH
• Assessee Lawyers: S N DIVETIA
• Keywords: Unexplained expenditure; Business income; Audit objection; Tax effect
• Section: 69C; 40A(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER ./ ././ ./ ITA NO. 2197/AHD/2010 & CO NO.243/AHD/2010 / // / ASSESSMENT YEAR : 2004-05 INCOME-TAX OFFICER, WARD-1, BHARUCH VS M/S A ONE ENTERPRISE, KUMABHARIA BUILDING, NEAR RAILWAY STATION, BHARUCH PAN : AAHFA 8526 A / // / (APPELLANT) / // / (RESPONDENT) & CROSS-OBJECTOR REVENUE BY : SHRI ANTONY PARIATH, SR DR ASSESSEE BY : SHRI S.N. DIVETIA, AR / // / DATE OF HEARING : 08/07/2016 / // / DATE OF PRONOUNCEMENT: 11/07/2016 / // / O R D E R THIS APPEAL BY THE REVENUE AND THE CROSS-OBJECTION THEREOF FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME- TAX (APPEALS)-VI, BARODA DATED 05.04.2010 FOR AY 20 04-2005. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS IN ITS APPEAL:- 1(I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 3,78,00 0/- ON ACCOUNT OF RENTAL INCOME TREATED AS 'PROPERTY INCOME' INSTEAD OF 'BUSINESS INCOME' AND FURTHER ERRED IN DELETING THE DISALLOWA NCE OF RS. 84,000/- BEING INDIRECT EXPENSES DEBITED TO P & L ACCOUNT. 1(II) THE CIT(A) FAILED TO APPRECIATE THE FINDINGS O F THE ASSESSING OFFICER THAT THERE IS EVIDENCE IN THE FORM OF RENT AGREEMEN T WITH THE TENANT AND THE SAME CANNOT BE IGNORED. FURTHER, THE COMMERCIAL COMPLEX BUILT BY THE ASSESSEE FIRM IS SITUATED AT THE PRIME LOCALITY OF BHARUCH CITY AND THEREFORE, THE RENT INCOME SHOWN IN THE P & L ACCOUN T @ RS. 1000/- PER MONTH FROM SEVEN TENANTS IS VERY MEAGER AS COMP ARED TO THE PREVAILING MARKET RENT AT THE SAME LOCALITY. THEREF ORE, THE AO RIGHTLY WORKED OUT THE RENT INCOME OF RS. 5,40,000/- AS PER RENT AGREEMENTS IMPOUNDED DURING THE COURSE OF SURVEY U/S. 133A OF T HE ACT AND TREATED IT AS 'INCOME FROM HOUSE PROPERTY' INSTEAD OF 'BUSINESS SMC-ITA NO. 2197 & CO NO.243/AHD/2010 ITO VS. A ONE ENTERPRISE AY : 2004-05 2 INCOME', SINCE THE BUSINESS OF THE ASSESSEE FIRM IS NOT LETTING OUT PROPERTIES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 79,055/ - ON ACCOUNT OF PAYMENTS OF RS. 3,95,276/- MADE IN CONTRAVENTION OF SECTION 40A(3) OF THE ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 26, 872/- U/S. 69C ON ACCOUNT OF UNEXPLAINED EXPENDITURE.. 3. BEFORE ME, AT THE OUTSET, LD. AUTHORIZED REPRESE NTATIVE SUBMITTED THAT HE IS NOT PRESSING THE CROSS-OBJECTION; HENCE THE C ROSS-OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. 4. WITH RESPECT TO REVENUES PRESENT APPEAL, THE LD . AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE SAME NEEDS TO BE DISMISSED ON ACCOUNT OF LOW TAX EFFECT IN VIEW OF THE CBDT CIRCULAR NO.21 O F 2015 DATED 10.12.2015. THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY ADMITTED THAT THE TAX EFFECT IS LESS THAN THE LIMIT PRESCRIBED BY THE AFORESAID CBD T CIRCULAR. 5. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL ON RECORD. I FIND THAT PRIMA-FACIE THIS APPEAL OF THE REVENUE IS NOT MAINTAINABLE IN VIEW OF CBDT CIRCULAR NO. 21/2015 I N F.NO.279/MISC. 142/2007-ITJ (PT) DATED 10TH DECEMBER 2015, VIDE WHI CH IT HAS BEEN PROVIDED THAT IF THE TAX EFFECT BY VIRTUE OF THE CO MMISSIONER OF INCOME-TAX (APPEALS)S ORDER IS BELOW RS. 10 LACS, THEN THAT O RDER WOULD NOT BE CHALLENGED BEFORE THE TRIBUNAL IN FURTHER APPEAL. THE BOARD HAS PROVIDED EXEMPTIONS AT CLAUSE (8) OF THE INSTRUCTIONS WHEREI N IT HAS BEEN PROVIDED THAT THESE INSTRUCTIONS WILL NOT BE APPLICABLE, IF VIRES OF ANY PROVISIONS HAS BEEN QUASHED BY IMPUGNED ORDER OR ADDITION WAS MADE ON SOME AUDIT OBJECTIONS OR THE ADDITION RELATES TO UNDISCLOSED F OREIGN ASSETS/BANK SMC-ITA NO. 2197 & CO NO.243/AHD/2010 ITO VS. A ONE ENTERPRISE AY : 2004-05 3 ACCOUNTS, ETC. I FIND THAT THE PRESENT CASE DOES N OT FALL WITHIN THE EXEMPTION CLAUSE AND THE TAX IS LESS THAN RS.10 LACS. THERE FORE, THE PRESENT APPEAL IS NOT MAINTAINABLE AND HENCE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS-OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 11 TH JULY, 2016 AT AHMEDABAD. SD/- R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 11/07/2016 *BIJU T. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, TRUE COPY / // / ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD