R.Amrith Krishna, CHENNAI V. ACIT, CHENNAI

CO 66/CHNY/2013

• Counselvise Citation: [2013] 129 COUNSELVISE.COM (IT) 9990 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-08-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 17-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V S JAYAKUMAR
• Assessee Lawyers: SHRISHAJI P JACOB

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHENNAI. BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO. 407/MDS/2013 ASSESSMENT YEAR : 2009-10 & C.O. NO. 66/MDS/2013 [IN ITA NO.407/MDS/2013] THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE I, CHENNAI. VS. SHRI R. AMRITH KRISHNA, NO. 30, DESIKA ROAD, MYLAPORE, CHENNAI 600 004. [PAN:AGYPA1305J] (APPELLANT) (RESPONDENT/ CROSS OBJECTOR) A PPELLANT BY : SHRI SHRI SHAJI P. JACOB, ADDL. CIT RESPONDENT BY : SHRI V.S. JAYAKUMAR, ADVOCATE DATE OF HEARING : 12.08.2013 DATE OF PRONOUNCEMENT : 29.08.2013 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE AND CROSS OBJECTION FILE D BY THE ASSESSEE, EMANATE FROM THE ORDER OF THE COMMISSIONE R OF INCOME TAX (APPEALS) VI, CHENNAI DATED 26.11.2012 RELEVANT TO THE ASSESSMENT YEAR 2009-10. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDU AL CARRYING OF CONSULTANCY BUSINESS IN REAL ESTATE. DURING THE YEA R 2008-09, THE ASSESSEE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.40 4040 407 77 7/MDS/1 /MDS/1 /MDS/1 /MDS/13 33 3 & & & & C CC C.O. NO. .O. NO. .O. NO. .O. NO. 66/MDS/13 66/MDS/13 66/MDS/13 66/MDS/13 2 HAS SOLD THE FLAT AT PRITHVI AVENUE AND INCURRED CE RTAIN EXPENSES. THE ASSESSING OFFICER HAS DISALLOWED MAJOR PORTION OF T HE EXPENSES INCURRED FOR IMPROVEMENT OF FLAT. 3. IN THIS APPEAL, THE REVENUE HAS RAISED THREE GR OUNDS VIZ. (I) DELETION OF ADDITION TOWARDS PURCHASE OF FLATS AT ` .1,94,050/-, (II) DELETION OF ADDITION TOWARDS COST OF IMPROVEMENT AT ` .25,00,000/- AND (III) DELETION OF ADDITION TOWARDS COST OF IMPROVEMENT OF THE PROPERTY AFTER T HE DATE OF DATE OF ` .11,74,855/-. 4. SO FAR AS FIRST GROUND RAISED BY THE REVENUE IS CONCERNED, THE ASSESSING OFFICER HAS DISALLOWED THE ABOVE AMOUNT O N ACCOUNT OF NOT FILING SUPPORTING VOUCHERS. BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAS NOT FURNISHED THE EVIDENCE IN RESPECT OF THE ABOVE AMOU NT. THEREFORE, THE ASSESSING OFFICER HAS DISALLOWED THE SAME AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. ON APPEAL, THE LD. CIT(APPEALS) HAS NOTICED THA T THE ASSESSEE HAS PAID ` .8,36,705/- TO VARIOUS PEOPLE TOWARDS INTERIOR AND IMPROVEMENTS DURING THE FINANCIAL YEAR 2007-08. THIS HAS ALSO BE EN CAPITALIZED. OUT OF THIS, THE ASSESSEE COULD NOT FURNISH VOUCHERS FOR ` 1,94,050/-, BUT THE PAYMENTS ARE MADE BY CHEQUES OR DEBIT ENTRIES BY THE BANK. S INCE THE PAYMENTS ARE MADE BY CHEQUES AND THEY ARE ALREADY CAPITALIZED IN THE FINANCIAL YEAR I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.40 4040 407 77 7/MDS/1 /MDS/1 /MDS/1 /MDS/13 33 3 & & & & C CC C.O. NO. .O. NO. .O. NO. .O. NO. 66/MDS/13 66/MDS/13 66/MDS/13 66/MDS/13 3 2007-08, THE LD. CIT(APPEALS) FELT THAT IT IS NOT D ESIRABLE TO DISTURB THEM AT THIS POINT OF TIME AND ALLOWED THE GROUND RAISED BY THE ASSESSEE. 6. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 7. THE LD. DR SUPPORTED THE ORDER PASSED BY THE AS SESSING OFFICER. 8. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(APPEALS). 9. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND HAVE ALSO GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE LD. CIT(APPEALS) HAS GIVEN A CATEGORICAL FINDINGS THAT THE ASSESSEE HAD MADE PAYMENT BY WAY OF CHEQUES AND THE SAME WERE CAPITALIZED IN THE BOOKS OF ACCOUNTS. THE ASSESSING OFFICER HAS DISALLOWED THE EXPENSES ON AC COUNT OF LACK OF VOUCHERS BUT THE EXPENDITURE INCURRED BY THE ASSESS EE WAS NOT DOUBTED BY HIM. THEREFORE, WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(APPEALS) AND THIS GROUND OF APPEAL RAISED B Y THE REVENUE IS DISMISSED. 10. THE SECOND GROUND RELATES TO DISALLOWANCE OF ` .25.00 LAKHS PAID TO M/S. ROMCONS. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE ASSESSING OFFICER HAS OBSERVED ON PERUSING THE DETA ILS, THE ASSESSEE HAS PAID AN AMOUNT OF ` .50.00 LAKHS + ` .25.00 LAKHS TO M/S. ROMCONS. TO VERIFY I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.40 4040 407 77 7/MDS/1 /MDS/1 /MDS/1 /MDS/13 33 3 & & & & C CC C.O. NO. .O. NO. .O. NO. .O. NO. 66/MDS/13 66/MDS/13 66/MDS/13 66/MDS/13 4 THE SAME, FOLLOWING INFORMATIONS UNDER SECTION 133( 6) WERE CALLED FOR FROM M/S. RAMCONS VIDE LETTER DATED 17.10.2011: (A) NATURE OF TRANSACTION WITH DATE. (B) BREAK-UP OF THE TRANSACTION. (C) WHETHER TDS WAS ATTRACTED IN ANY OF THE TRANSAC TION, IF SO, DETAILS THEREOF. (D) COPY OF LEDGER ACCOUNT OF SUNDRY DEBTORS AND LO ANS AND ADVANCES FOR THE FINANCIAL YEARS 2006-07 AND 2007-08. 11. ON PERUSAL OF THE ABOVE DETAILS FURNISHED BY M /S. RAMCONS, IT WAS FOUND THAT THEY TREATED THIS INTEREST OF LOAN OF ` .25.00 LAKHS AS CONTRACT RECEIPT FROM THE ASSESSEE SHRI AMRITH KRISHNA AND N OT AS INCOME FROM OTHER SOURCES. THE ABOVE AMOUNT WAS ALSO ACCOUNTED BY M/S . RAMCONS ON 16.06.2008, BUT M/S. RAMCONS HAVE ALREADY GIVEN A S TATEMENT VIDE THEIR RECEIPT DATED 04.04.2009 THAT THEY HAVE RECEIVED ON LY ` .5,95,000/- DURING APRIL, 2008 TO MARCH, 2009 FROM SHRI AMRITH KRISHNA FOR THE ADDITIONAL INTERIOR WORK DONE AT FLAT NO. 1, PRITHIVI AVENUE. APART FRO M THIS, THE ASSESSING OFFICER HAS NOTED FROM THE CERTIFICATE ISSUED BY TH E BANK OF INDIA, MYLAPORE BRANCH THAT THE ASSESSEE HAD OBTAINED A LOAN OF ` .1,17,27,069/- FROM THE BANK FOR THE PURPOSE OF ACQUISITION OF THE ABOVE PR OPERTY. THEREFORE, THE ASSESSING OFFICER HAS HELD THAT THE AMOUNT OF ` .25.00 LAKHS IS IN NO WAY RELATED TO THE COST OF IMPROVEMENT UNDER SECTION 48 (II). 12. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFO RE THE LD. CIT(APPEALS). I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.40 4040 407 77 7/MDS/1 /MDS/1 /MDS/1 /MDS/13 33 3 & & & & C CC C.O. NO. .O. NO. .O. NO. .O. NO. 66/MDS/13 66/MDS/13 66/MDS/13 66/MDS/13 5 13. THE LD. CIT(APPEALS) HAS CONSIDERED THE ISSUE AND OBSERVED THAT THE MAIN GROUND OF THE ASSESSING OFFICER TO DISALLOW TH E AMOUNT IS PARTLY BECAUSE ` .5,92,299/- WAS ALREADY RECEIVED BY M/S. RAMCONS ON 04.04.2009 TOWARDS IMPROVEMENTS CARRIED OUT BY THEM AND PARTLY FOR THE MISTAKE IN ACCOUNTING NARRATION AS INTEREST TOWARDS LOAN. HOWE VER, AS DEMONSTRATED BY THE AR, THE IMPROVEMENT HAD BEEN CARRIED OUT IN 200 8-09 AND EVEN AFTER SALE OF FLAT. IT WAS ADMITTED BEFORE THE LD. CIT(AP PEALS) THAT THE ACCOUNTING TREATMENT OF THE TRANSACTIONS ARE NOTHING TO WRITE HOME ABOUT. BESIDES, IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAS ALSO V ISITED THE FLAT DURING THE ASSESSMENT PROCEEDINGS AND INSPECTED THE WORKS CARR IED OUT. ON THE OTHER HAND, THE MONIES PAID BY THE ASSESSEE TO M/S. RAMCO NS ARE ALSO OFFERED AS INCOMES BY THE LATTER. ON THIS COUNT, THE LD. CIT(A PPEALS) ACCEPTED THAT THE ASSESSEE IS ENTITLED FOR THE RELIEF DESPITE THE ACC OUNTANTS DEVIL IN THE NARRATION AND THE LACK OF ACCOUNTING TREATMENT IN T HE BOOKS OF M/S. RAMCONS. OBVIOUSLY, NO PRUDENT PERSON WILL PAY INTE REST OF ` .25.00 LAKHS ON A LOAN OF ` .50.00 LAKHS, ESPECIALLY FROM A FATHER. HAVING CUL DE SAC BY THE DEVILISH ACCOUNTING AND HAVING VISITED THE FLAT, TH E ASSESSING OFFICER SHOULD HAVE MADE EFFORTS TO RETRIEVE HIMSELF OUT OF THESE WOODS. THE LD. CIT(APPEALS) HAS ALSO STATED THAT APPARENT IS NOT A LWAYS REAL AND ONE, ESPECIALLY TAX AUTHORITIES SHALL SEE BEYOND WHAT IS SEEN BEFORE THEM. SINCE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.40 4040 407 77 7/MDS/1 /MDS/1 /MDS/1 /MDS/13 33 3 & & & & C CC C.O. NO. .O. NO. .O. NO. .O. NO. 66/MDS/13 66/MDS/13 66/MDS/13 66/MDS/13 6 THE MONIES RECEIVED BY M/S. RAMCONS ARE SPECIFICALL Y AND SEPARATELY ACCOUNTED FOR IN THEIR PROFIT AND LOSS ACCOUNT, THE LD. CIT(APPEALS) FIND NO REASON TO SUSTAIN THE ADDITION AND DIRECTED THE ASS ESSING OFFICER TO DELETE THE ADDITION. 14. ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL B EFORE THE TRIBUNAL. 15. THE LD. DR HAS SUBMITTED THAT BEFORE THE ASSES SING OFFICER, IT WAS SUBMITTED THAT IT WAS INTEREST PAYMENT AND M/S. RAM CONS TREATED IT AS CONTRACT RECEIPT. THE LD. DR HAS FURTHER SUBMITTED THAT IT WAS NOT CLEAR FOR WHAT PURPOSE, IT WAS PAID AND THE SAME CANNOT BE AL LOWED. 16. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASS ESSEE HAS SUBMITTED THAT THE ASSESSING OFFICER HAS CALLED FOR ALL DETAI LS FROM M/S. RAMCONS AND M/S RAMCONS HAS SHOWN IT AS CONTRACT RECEIPT AND TH EREFORE, HAVING ACCEPTED THE DETAILS SUBMITTED BY M/S. RAMCONS, THE CLAIM MADE BY THE ASSESSEE CANNOT BE DENIED. 17. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIAL S ON RECORD AND HAVE ALSO GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE HAS BORROWED AN AMOUNT OF ` .50.00 LAKHS FROM M/S. RAMCONS FOR THE PURPOSE OF ACQUIRING THE FLAT. SUBSEQUENTLY, THE ASSESSEE HAS PAID ` . 50.00 LAKHS AND ` .25.00 LAKHS TO M/S. RAMCONS. WHEN THE ASSESSING OF FICER HAS ASKED THE ASSESSEE, IT WAS SUBMITTED THAT ` .25.00 LAKHS WAS PAID AS INTEREST. WHEN I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.40 4040 407 77 7/MDS/1 /MDS/1 /MDS/1 /MDS/13 33 3 & & & & C CC C.O. NO. .O. NO. .O. NO. .O. NO. 66/MDS/13 66/MDS/13 66/MDS/13 66/MDS/13 7 THE ASSESSING OFFICER HAS CALLED FOR THE DETAILS FR OM M/S. RAMCONS, IT WAS FOUND THAT THEY TREATED IT AS CONTRACT RECEIPT AND ADMITTED THAT THEY HAVE RECEIVED THE PAYMENT FROM THE ASSESSEE. HOWEVER, TH E ASSESSING OFFICER HAS NOT ACCEPTED THE ABOVE PAYMENT ON THE GROUND TH AT M/S. RAMCONS HAVE ALREADY GIVEN A STATEMENT VIDE THEIR RECEIPT DATED 04.04.2009 THAT THEY HAVE RECEIVED ONLY ` .5,95,000/- DURING APRIL, 2008 TO MARCH, 2009 FROM THE ASSESSEE IN RESPECT OF ADDITIONAL INTERIOR WORK DON E AT FLAT NO. 1, PRITHIVI AVENUE. APART FROM THAT THE ASSESSEE HAS ALSO BORRO WED ` .1,17,27,069/- FROM THE BANK OF INDIA, MYLAPORE BRANCH FOR ACQUISI TION OF THE PROPERTY. THEREFORE, THE ASSESSING OFFICER HAS HELD THAT THAT THE AMOUNT OF ` .25.00 LAKHS WAS IN NO WAY RELATED TO THE COST OF IMPROVEM ENT UNDER SECTION 48(II). HOWEVER, THE LD. CIT(APPEALS), AFTER CONSIDERING TH E SUBMISSIONS AND DETAILS AVAILABLE ON RECORD HAS DIRECTED THE ASSESSING OFFI CER TO DELETE THE ADDITION. 18. WE FIND FROM THE RECORD THAT THE ASSESSEE HAD BORROWED ` .50.00 LAKHS FROM M/S. RAMCONS, A PROPRIETARY CONCERN OF ASSESSE ES FATHER AND THE ASSESSEE REPAID ` .75.00 LAKHS [I.E. ` .50.00 LAKHS + ` .25.00 LAKHS]. IT IS NOT CLEAR FROM THE ORDERS OF THE ASSESSING OFFICER AND THE LD. CIT(APPEALS) THAT FOR WHAT PURPOSE, THE ASSESSEE PAID ` .25.00 LAKHS. INITIALLY IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT IT WAS PAID AS AN INTEREST TO M/S. RAMCONS, WHEREAS, M/S. RAMCONS HAS TREATED IT AS CONTRACT RE CEIPT. THE ASSESSING OFFICER DISALLOWED THE SAID AMOUNT BASED ON THE STA TEMENT OF M/S. RAMCONS I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.40 4040 407 77 7/MDS/1 /MDS/1 /MDS/1 /MDS/13 33 3 & & & & C CC C.O. NO. .O. NO. .O. NO. .O. NO. 66/MDS/13 66/MDS/13 66/MDS/13 66/MDS/13 8 VIDE THEIR RECEIPT DATED 04.04.2009 THAT M/S. RAMCO NS HAVE RECEIVED ONLY ` .5,95,000/- DURING APRIL 2008 TO MARCH 2009 FOR THE ADDITIONAL INTERIOR WORK DONE AT FLAT NO.1, PRITHIVI AVENUE. THE LD. CIT(APP EALS) HAS PLAINLY STATED THAT THE AR HAS DEMONSTRATED THAT IMPROVEMENTS HAD BEEN CARRIED OUT IN 2008-09 AND EVEN AFTER SALE OF FLAT. IT IS TRUE THA T NO PRUDENT PERSON WILL PAY INTEREST OF ` .25.00 LAKHS ON A LOAN OF ` .50 LAKHS. IT IS A FACT THAT THE ASSESSEE HAS PAID ` .25.00 LAKHS TO M/S. RAMCONS AND ALSO PAID ` .5,95,000/-. THE ABOVE PAYMENTS WERE NOT DISPUTED BY THE ASSESSING O FFICER. NEITHER THE ASSESSING OFFICER NOR THE LD. CIT(APPEALS) EXAMINED THE DETAILS OF THE ABOVE EXPENDITURE AND DECIDED THE ISSUE. WE, THEREFORE, O F THE OPINION THAT THE DETAILS IN RESPECT OF THE ABOVE TWO PAYMENTS ARE I. E. ` .25.00 LAKHS AND ` .5,95,000/- HAVE TO BE EXAMINED AND DECIDE THE ISSU E AFRESH. HENCE, WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(APPEALS) ON THIS ISSUE AND REMIT THE MATTER BACK TO THE ASSESSING OFFICER, WHO SHALL EXAMINE THE DETAILS AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTE R ALLOWING SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE. 19. THE NEXT GROUND RELATES TO DISALLOWANCE OF EXP ENDITURE OF ` .11,75,805/-. SO FAR AS THIS GROUND OF APPEAL IS CO NCERNED, THERE IS NO BREAK-UP AVAILABLE IN THE ASSESSMENT ORDER AS WELL AS CIT(APPEALS)S ORDER. BUT, THE LD. CIT(APPEALS) HAS MADE A MENTION THAT A SSESSEES AR HAS FURNISHED BREAK-UP AND BILL BEFORE HIM AS WELL AS A SSESSING OFFICER, BUT NO I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.40 4040 407 77 7/MDS/1 /MDS/1 /MDS/1 /MDS/13 33 3 & & & & C CC C.O. NO. .O. NO. .O. NO. .O. NO. 66/MDS/13 66/MDS/13 66/MDS/13 66/MDS/13 9 DETAILS ARE AVAILABLE EITHER FROM ORDER OF ASSESSIN G OFFICER OR LD. CIT(APPEALS). THE LD. CIT(APPEALS) HAS OBSERVED THA T EVEN AFTER THE SALE, THE ASSESSEE MUST HAVE BEEN INCURRED CERTAIN EXPENS ES AS PER THE UNDERSTANDING BETWEEN THE ASSESSEE AND THE BUYER AN D THESE AGREEMENTS OR UNDERSTANDINGS MAY NOT FIND PLACE IN THE SALE DE ED. ACCORDINGLY, THE LD. CIT(APPEALS) PARTLY ALLOWED THE CLAIM OF THE ASSESS EE EXCLUDING ` .1.00 LAKH. WE FIND THAT NO DETAILS ARE AVAILABLE AND THERE IS NOTHING ON RECORD THAT ON WHAT BASIS FOR WHICH THE ASSESSEE HAS INCURRED THE EXPENDITURE AFTER SALE. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(AP PEALS) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO VERIFY THE DETAILS AND DECIDE THE ISSUE AFRESH, AFTER GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE . 20. IN THE CROSS OBJECTION THE ONLY GROUND RAISED BY THE ASSESSEE RELATES TO CONFIRMATION OF DISALLOWANCE OF ` .1.00 LAKH. SINCE WE HAVE SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND REM ITTED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISS UE AFRESH, THE CROSS OBJECTION FILED BY THE ASSESSEE BECOME INFRUCTUOUS AND THE SAME IS DISMISSED AS INFRUCTUOUS. 21. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE AND THE CROSS OBJECTION FILED B Y THE ASSESSEE IS DISMISSED. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.40 4040 407 77 7/MDS/1 /MDS/1 /MDS/1 /MDS/13 33 3 & & & & C CC C.O. NO. .O. NO. .O. NO. .O. NO. 66/MDS/13 66/MDS/13 66/MDS/13 66/MDS/13 10 ORDER PRONOUNCED ON THURSDAY, THE 29 TH OF AUGUST, 2013 AT CHENNAI. SD/ - SD/ - (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 29.08.2013 VM/- TO: THE ASSESSEE/A.O./CIT(A)/CIT/D.R.