M/s. Orbit Inn Resorts, SRIGANGANAGAR V. ITO, SRIGANGANAGAR

CO 32/JODH/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 9184 (ITAT-JODHPUR)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-12-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-12-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 09-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: R N JANGID
• Keywords: Gift; Valuation report
• Section: 68; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER ITA NO.424/JODH/2013 ASST. YEAR: 2009-10 INCOME TAX OFFICER, VS. M/S ORBIT INN RESORTS, WARD-2, SRIGANGANAGAR. SURATGARH ROAD, SRIGANGANAGAR. (PAN: AABFO 9399 M) C.O. NO.32/JODH/2013 (IN ITA NO.424/JODH/2013) ASST. YEAR: 2009-10 M/S ORBIT INN RESORTS, VS. INCOME TAX OFFICER, SURATGARH ROAD, WARD-2, SRIGANGANAGAR. SRIGANGANAGAR. (PAN: AABFO 9399 M) (APPELLANTS) (RESPONDENTS) REVENUE BY : SHRI N.A. JOSHI, D.R. ASSESSEE BY : SHRI R.N. JANGID DATE OF HEARING : 09.12.2013 DATE OF PRONOUNCEMENT : 10.12.2013 ORDER PER HARI OM MARATHA, JUDICIAL MEMBER: THE APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD CIT(A), BIKANER DATED 16.05 .2013. 2 ITA NO.424 & CO NO.32/JODH/2013 A.Y. 2009-10 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FIRM FILED ITS RETURN OF INCOME FOR A.Y. 2009-10, ON 26.03.2010, DECLARIN G TOTAL INCOME AS NIL IN THE STATUS OF FIRM. THE ASSESSEE IS RUNNING A MARRIAGE PALACE. ON GOING THROUGH THE BALANCE SHEET, IT WAS NOTICED THAT THE ASSESSEE HAS SHOWN INVESTMENT IN CONSTRUCTION ACCOUNT OF RS.41,71,386/- TOWARDS MARR IAGE PALACE AND RS.49,42,913/- TOWARDS PANDAL SHED, TOTALING TO RS. 91,14,299 AS ON 31.03.2009. THE ASSESSEE STATED THAT THE LAND WAS GIFTED TO SHR I OMPRKASH ON 01.09.2008. AS PER CONSTRUCTION ACCOUNT OF THE FIRM W.E.F. 09.08.2 008 TO 27.03.2009 THE TOTAL EXPENDITURE HAS BEEN SHOWN AT RS.64,63,160/- BUT IN THE REPLY FURNISHED ON 22.12.2010, THE TOTAL EXPENDITURE HAS BEEN DECLARED AT RS.41,71,386/-. WHEN EXPLANATION WAS SOUGHT AND WAS ASKED TO FILE THE VA LUATION, THE ASSESSEE STATED THAT IT HAS MAINTAINED AND KEPT REGULAR BOOKS OF ACCOUNT REGARDING THE CONSTRUCTION OF THE BUILDING WHICH IS DULY SUPPORTED BY VOUCHERS OF EXPENSES. HOWEVER, THE A.O. REFERRED THE MATTER FOR VALUATION UNDER SECTION 142 A OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) ON 28.06.2011. THE OBJECTI ON OF THE ASSESSEE WAS THAT THE A.O. HAD NOT RECORDED ANY FINDING THAT HE IS NOT SA TISFIED WITH THE BOOKS OF ACCOUNT/RECORDS MAINTAINED IN THIS REGARD BY THE AS SESSEE AND THE BOOKS DESERVE TO BE REJECTED. THEREFORE, AS PER THE ASSESSEE, ITS M ANDATORY REQUIREMENT HAS BEEN VIOLATED, THEREFORE, REFERENCE IS INVALID. IN THIS REGARD, THE ASSESSEE RELIED ON VARIOUS DECISIONS OF HONBLE JURISDICTIONAL HIGH CO URT AND HONBLE SUPREME 3 ITA NO.424 & CO NO.32/JODH/2013 A.Y. 2009-10 COURT. THE ASSESSEE ALSO OBJECTED THAT THE BILLS A ND VOUCHES PRODUCED BEFORE THE A.O. AND VALUATION OFFICER DID NOT FIND ANY MENTION ANYWHERE IN THE ASSESSMENT ORDER AS WELL AS OF VALUATION OF SUCH REPORT. BUT THE A.O. RELIED ON THE VALUATION REPORT OF THE DVO OBTAINED UNDER SECTION 142A OF TH E ACT. ACCORDING TO WHICH ADDITION OF RS.98,47,850/- HAS BEEN MADE. THE ASSE SSEE CHALLENGED THIS ADDITION BEFORE THE LD. CIT(A) BY TAKING LEGAL AS WELL AS ME RITORIOUS GROUNDS. IT WAS VEHEMENTLY ARGUED THAT THE DVOS REPORT WAS BASED O N CPWD RATES WHEREAS THE LOCAL PWD RATES OF STATE OF RAJASTHAN HAS TO BE ADO PTED IN VIEW OF THE SETTLED LAW ON THE SUBJECT. AFTER CONSIDERING THE RIVAL SUBMIS SIONS, THE LD. CIT(A) BY FOLLOWING THE DECISION OF HONBLE RAJASTHAN HIGH CO URT IN THE CASE OF CIT VS. HOTEL JOSHI REPORTED IN 242 ITR 478 DELETED THE IMP UGNED ADDITION. THE ASSESSEE ALSO OBTAINED REGISTERED VALUERS REPORT DATED 23.0 8.2011 WHO HAS DETERMINED THIS COST AT RS.77,49,000/- IN CONTRAST TO DETERMINED AT RS.1,89,62,149/- BY THE DVO. AFTER CONSIDERING THE RIVAL STAND, THE LD. CIT(A) H AS ACCEPTED THE DECLARED INVESTMENT AND HAS DELETED THE IMPUGNED ADDITION. NOW, THE REVENUE IS AGGRIEVED. 3. BEFORE US, BOTH THE PARTIES HAVE TAKEN SIMILAR S TAND AS WAS TAKEN BEFORE THE LOWER AUTHORITIES. 4 ITA NO.424 & CO NO.32/JODH/2013 A.Y. 2009-10 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE ALSO IN AGREEMENT WITH THE LD. CIT(A). IN THIS CASE THE A.O. HAS NOT SATISFIE D THE REQUISITE CONDITIONS UNDER SECTION 142A OF THE ACT BEFORE REFERRING THE MATTER TO THE DVO. THE A.O. HAS NOT REJECTED THE BOOKS OF ACCOUNT. THE A.O. HAS NOT EV EN MENTIONED THE DEFECT IN THE BOOKS SO MAINTAINED FOR THE PURPOSE BY THE ASSESSEE . THE DVOS REPORT IS BASED ON CPWD RATE WHEREAS THE REPORT OF THE REGISTERED V ALUER IS BASED ON LOCAL PWD RATES. THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT ON WHICH THE LD. CIT(A) HAS RELIED BY GIVING DETAILS AT PAGE NO.5 OF HIS ORDER ARE FOUND TO BE CORRECT INFERENCE DRAWN BY HIM. ACCORDINGLY, ONLY LOCAL PW D RATES CAN BE USED TO ESTIMATE THE COST OF INVESTMENT AND NOT THE CPWD RA TES. AS A RESULT, WE DO NOT FIND ANY INFIRMITY IN THIS FINDING AND CONFIRM THE SAME. RESULTANTLY, GROUND NO.1 OF THIS APPEAL STANDS DISMISSED. 5. GROUND NO.2 PERTAINS TO DELETION OF ADDITION OF RS.19,43,000/- MADE UNDER SECTION 68 OF THE ACT. 6. THE FACTS APROPOS THIS GROUND ARE THAT THE ASSES SEE HAS TAKEN UNSECURED LOAN FROM (1) SHRI MOHAN LAL CHABRA OF RS .6,00,000/- TAKEN THROUGH CHEQUE DATED 23.02.2009, (2) SHRI LAL CHAND SETIA OF 5 ITA NO.424 & CO NO.32/JODH/2013 A.Y. 2009-10 RS.8,43,000/- & (3) M/S. MOHAN LAL ASHOK KUMAR OF R S.5,00,000/- TOTALING TO RS.19,43,000/-. THE ASSESSEE WAS ASKED TO EXPLAIN THESE UNSECURED LOANS IN TERMS OF PROVISIONS OF SECTION 6 8 OF THE ACT. THE ASSESSEE FILED CONFIRMATORY LETTERS FROM THESE PART IES. THE ASSESSEE HAS ALSO FILED THEIR PANS AND COMPLETE ADDRESSES. THEY HAVE ALSO EXPLAINED THEIR SOURCES BUT THE A.O. WANTED THE ASS ESSEE TO PROVE THE SOURCE OF THE SOURCE AND ON THAT REASON ONLY HE DID NOT FIND THESE CREDITORS AS EXPLAINED AND ACCORDINGLY HAS ADDED RS .19,43,000/- IN THE HANDS OF THE ASSESSEE UNDER SECTION 68 OF THE ACT. BEFORE THE LD. CIT(A) SIMILAR ARGUMENTS WERE GIVEN AND AFTER CONSI DERING THEM HE HAS FOUND ALL THESE THREE CREDITORS HAVE BEEN EXPLA INED AS PER LAW. THEREFORE, HE HAS DELETED THIS ADDITION. 7. BEFORE US, BOTH THE PARTIES HAVE TAKEN SIMILAR A RGUMENTS IN SUPPORT OF THEIR CASE. 8. AFTER CONSIDERING RIVAL SUBMISSIONS, WE HAVE FOU ND THAT THE ASSESSEE HAS EXPLAINED THE IDENTITY OF THE THREE PE RSONS. THE ASSESSEE HAS EXPLAINED THE GENUINENESS OF THESE DEPOSITS. T HE ASSESSEE HAS ALSO 6 ITA NO.424 & CO NO.32/JODH/2013 A.Y. 2009-10 PROVED THE CREDITWORTHINESS OF ALL THESE THREE PART IES. AS PER LAW, THE ASSESSEE CANNOT BE ASKED TO PROVE THE SOURCE OF THE SOURCE. THE ASSESSEE HAS PRODUCED CONFIRMATORY LETTERS FROM THE THREE PARTIES. THE AMOUNTS WERE TAKEN THROUGH BANKING CHANNELS. THE A SSESSEE HAS PROVIDED COMPLETE INFORMATION REGARDING THEM INCLUD ING THEIR PANS. COPIES OF THEIR BANK ACCOUNTS WERE ALSO FILED. THE REFORE, IN OUR CONSIDERED OPINION, THE ASSESSEE HAS DULY EXPLAINED ALL THESE THREE UNSECURED LOANS. ACCORDINGLY, WE CONFIRM THE IMPUG NED DELETION AND DISMISS GROUND NO.2 OF THIS APPEAL. 9. THE FACTS APROPOS GROUND NO.3 PERTAINS TO DELETI ON OF ADDITION OF RS.5,10,000/- MADE ON ACCOUNT OF INVESTMENT BY PART NER NAMELY SHRI OM PRAKASH IN THE FIRM. ON THE VERY FACE OF IT, AS THERE IS NO DISPUTE REGARDING THE FACTS ON THIS GROUND, ANY INVESTMENT MADE BY A PARTNER CANNOT BE ADDED IN THE HANDS OF THE FIRM. ACCORDIN GLY, THIS DELETION IS ALSO IN ORDER. 10. AS A RESULT, APPEAL OF THE REVENUE STANDS DISMI SSED. 7 ITA NO.424 & CO NO.32/JODH/2013 A.Y. 2009-10 C.O. NO.32/JODH/2013 BY THE ASSESSEE 11. THE C.O. WAS NOT PRESSED BY THE LD. AUTHORIZED REPRESENTATIVE SHRI R.N. JANGID. THEREFORE, IT ALSO STANDS DISMIS SED. 12. IN THE RESULT, APPEAL FILED BY THE REVENUE AS W ELL AS CROSS OBJECTION FILED BY THE ASSESSEE, BOTH STAND DISMISS ED. (ORDER PRONOUNCED IN THE OPEN COURT ON 10.12.2013) SD/- SD/- (N.K. SAINI) (HARI OM MARATHA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10 TH DECEMBER, 2013 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, JODHPUR BENCH, JODHPUR 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE T RIBUNAL, JODHPUR