CHANDRA TOWER P.LTD, MUMBAI V. ITO 1(1)2, MUMBAI

CO 76/MUM/2012

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8245 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-01-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 17-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 22-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: MAHESH O RAJORA
• Keywords: Unexplained expenditure
• Section: 69C; 40A(3); 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C : MUMBAI BEFORE SHRI R.K.GUPTA, JUDICIAL MEMBER AND SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER ITA.NO.4969/MUM/2011 ASSESSMENT YEAR 2006-2007 INCOME TAX OFFICER - 1(1)(2) ROOM NO. 534/579, AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400 020. VS. M/S. CHANDRA TOWERS PVT. LTD. 3, CHATEAU MARINE, MARINE DRIVE, CHURCHGATE, MUMBAI 400 020. PAN AAACC4422F (APPELLANT) (RESPONDENT) C.O.NO. 76/MUM/2012 ARISING OUT OF ITA.NO.4969/MUM/2011 ASSESSMENT YEAR 2006-2007. M/S. CHANDRA TOWERS PVT. LTD. 3, CHATEAU MARINE, MARINE DRIVE, CHURCHGATE, MUMBAI 400 020. PAN AAACC4422F VS. INCOME TAX OFFICER - 1(1)(2) ROOM NO. 534/579, AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400 020. (CROSS - OBJECTOR) (RESPONDENT) FOR REVENUE : SHRI RAJARSHI DWIVEDY, SR.DR FOR ASSESSEE : S/SHRI VIJAY MEHTA & MAHESH O. R AJORA DATE OF HEARING : 17.01.2013 DATE OF PRONOUNCEMENT : 23.01.2013 ORDER PER R.K.GUPTA, J.M. 1. THE CROSS-OBJECTION FILED BY THE ASSESSEE WAS N OT PRESSED BY THE LEARNED A.R. DURING THE APPELLATE PROCEEDINGS. THER EFORE, THE SAME IS DISMISSED AS NOT PRESSED. 2 2. IN THE APPEAL FILED BY THE REVENUE, THE DEPARTM ENT HAS RAISED SIX GROUNDS OF APPEAL AND THE LEARNED D.R. HAS PLACED R ELIANCE ON THE ORDER OF THE ASSESSING OFFICER. ON THE OTHER HAND, THE LEARNED C OUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE ORDER OF THE CIT(A). NOW, TH E APPEAL OF THE DEPARTMENT IS DISPOSED OF IN THE FOLLOWING MANNER. 3. THE FIRST ISSUE IS AGAINST DELETION OF ADDITION OF RS.1,20,000/- MADE ON ACCOUNT OF DISALLOWANCE UNDER SECTION 40A(3 ). DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT ASSES SEE HAS PURCHASED LAND FOR RS.88,65,515/-. PAYMENT OF RS.6,10,000/- OUT OF THE ABOVE TOTAL AMOUNT, HAS BEEN PAID IN CASH. IN VIEW OF THE PROVISION OF SECT ION 40A(3) THE ASSESSING OFFICER DELETED A SUM OF RS.1,22,000/-. IT WAS STAT ED THAT THE LAND WAS PURCHASED FROM VARIOUS PARTIES INCLUDING SMALL VILL AGERS/FARMERS FROM WHOM LAND WAS PURCHASED FOR RS.5,10,000/- AND RS. 1 LAKH . IT WAS ALSO EXPLAINED THAT ASSESSEE HAS PURCHASED AGRICULTURAL LAND VIDE PLOT NO.418/613 VILLAGE BHARLIA, SHIVPUR FROM SHRI RAMJIT THROUGH THE POWER OF ATTORNEY HOLDER SHRI ARUN KUMAR SINGH FOR A CONSIDERATION OF RS.5,10,000 /- AND PLOT NO.418/2, 438/431 AT VILLAGE BHARLIA, SHIVPUR FROM SHRI SHIV KUMAR FOR A CONSIDERATION OF RS.1,00,000/-, TOTALING TO RS.6,10,000/-. SINCE THERE WAS NO BANK ACCOUNT IN THE VILLAGE AND THE FARMERS WERE ILLITERATE, THE REFORE, THE CASH PAYMENTS WERE MADE WHICH ARE CAME UNDER RULE 6DD. FURTHER, RELIAN CE WAS PLACED ON VARIOUS CASE LAWS REPORTED IN CIT VS. AVTAR SINGH & SONS (1 992) 194 ITR 80 (PUBNJ. & HAR.), GIRDHARILAL GOENKA VS. CIT (1989) 179 ITR 12 2 (CAL.) AND CIT VS. MEGHDOOT SALES (1993) 200 ITR 490 (DEL.). 4. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, LEARNED CIT(A) FOUND THAT THE ISSUE IS COVE RED UNDER RULE 6DD AND ALSO BY THE CBDT CIRCULAR NO. 220 DATED 31.05.1977 IN RE LATION TO RULE 6DD. IT WAS FOUND BY CIT(A) THAT MAJOR PAYMENTS HAVE BEEN MADE THROUGH CHEQUES AND ONLY SMALL PAYMENT OF RS.6,10,000/- HAS BEEN PAID T O FARMERS IN VILLAGE WHERE NO BANK ACCOUNT WAS THERE. THEREFORE, PROVISION OF SECTION 40A(3) ARE NOT 3 ATTRACTED IN RULE 6DD. ACCORDINGLY, ADDITION MADE B Y ASSESSING OFFICER WAS DELETED. 5. AFTER CONSIDERING THE ORDER OF THE ASSESSING OF FICER AND CIT(A), WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) WHO HA S ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE CONSIDERING THE BOARDS CIRCULAR (S UPRA) AND TAKING INTO CONSIDERATION OF VARIOUS CASE LAWS MENTIONED AS ABO VE. FINDING OF CIT(A) IS UNCONTROVERTED. THEREFORE, FOR THIS REASON ALSO, WE CONFIRM THE ORDER OF THE CIT(A) ON THIS ISSUE. 6. THE NEXT ISSUE RELATING TO DELETION OF ADDITION OF RS. 10 LAKHS MADE UNDER SECTION 69 OF THE ACT. THE ASSESSING OFFICER MADE ADDITION OF RS.10 LAKHS AS UNEXPLAINED EXPENDITURE TO THE INCOME OF THE ASS ESSEE. ASSESSING OFFICER RECORDED HIS FINDING THAT AS PER PROFIT AND LOSS AC COUNT THE ASSESSEE WAS FOUND PURCHASED LAND FOR RS.88,65,515/- AND HENCE, ASSESS ING OFFICER CONSIDERED THE DIFFERENCE IN DETAILS FURNISHED OF AMOUNT DEBITED T O THE P & L ACCOUNT AS UNEXPLAINED EXPENDITURE BY THE ASSESSEE AS THE ASSE SSEE COULD NOT FURNISH DETAILS OR EVIDENCE IN SUPPORT OF THE SUM OF RS. 10 ,00,000/- FOR ACQUISITION OF LAND. IT WAS SUBMITTED BEFORE THE CIT(A) THAT ASSES SING OFFICER COULD NOT UNDERSTAND THE ACCOUNTING ENTRIES. THE DETAILS WERE FILED BEFORE THE ASSESSING OFFICER AND IN VIEW OF THE ASSESSING OFFICER, THE A SSESSEE COULD NOT EXPLAIN THE SOURCE OF EXPENDITURE OF RS. 10 LAKHS. WHEREAS, THE ASSESSEE HAS FILED COMPLETE DETAILS. THE AMOUNT WAS PAID THROUGH ACCOUNT PAYEE CHEQUES TO SMT. ALKA CHANDRA WIFE OF LATE AMITABH CHANDRA. DETAILS OF CH EQUE AND OTHER DETAILS WERE FILED BY THE ASSESSEE BEFORE THE CIT(A) ALSO. 7. AFTER CONSIDERING THE SUBMISSIONS, CIT(A) FOUND THAT ASSESSING OFFICER MADE ADDITION WITHOUT UNDERSTANDING THE ISS UE IN PROPER MANNER. THE CIT(A) FOUND THAT ASSESSING OFFICER HAS MIS-CONSTRU ED THE PROVISION OF SECTION 69C WHILE ADDING THE ADDITION. ACCORDINGLY, THE CIT (A) RECORDED HIS FINDINGS IN PARA 6.2 AT PAGE 8 OF HIS ORDER WHICH ARE AS FOLLOW S :- 4 I HAVE CONSIDERED THE AOS ORDER AS WELL AS APPELL ANT ARS SUBMISSION. HAVING CONSIDERED BOTH I FIND THAT THE A.O. HAS MIS- CONSTRUED THE PROVISIONS OF SECTION 69C OF THE ACT, WHILE ADDING THE SUM OF RS.10,00,000/- TO THE INCOME OF THE APPELLAN T. THE APPELLANT HAS DEFINITELY DEBITED A SUM OF RS.88,65,515/- AS P URCHASE OF LAND TO THE P & L ACCOUNT. EVEN IF THE DETAILS FILED BY THE APPELLANT, IF IT IS TAKEN BY THE A.O. IN HIS CONTENTION AS CORRECT, THE N THE DIFFERENCE OF DETAILS FURNISHED OF THE LAND AND AMOUNT DEBITED TO THE P & L ACCOUNT CANNOT AMOUNTS TO UNEXPLAINED EXPENDITURE. THE APPELLANT HAS SUBMITTED THAT THE APPELLANT-COMPANY HAS PURCHA SED THE SAID LAND OF RS.10,00,000/- WITH PAYMENT OF RS.6,50,000/ - AND RS.3,50,000/- B CHEQUE NO.438422 DT. 5.1.2006 OF ID BI BANK AND CHEQUE NO.039489 DT. 5.1.2006 ON UNION BANK OF INDI A, TO THE SELLER OF THE LAND SMT. ALKA CHANDRA. THE SAID PAYMENT WAS MADE BY THE APPELLANT COMPANY OF RS.10,00,000/- TO THE SELLER O F THE LAND. THE DETAILS OF THE SAID LAND HAVE BEEN GIVEN BY THE APP ELLANT IN ITS SUBMISSION IN PARA 3 (C) WHICH IS GIVING COMPLETE D ETAILS OF THE LAND PURCHASED. IN VIEW OF THESE FACTS DISCUSSED ABOVE, I AM OF THE CONSIDERED VIEW THAT THE A.O. WAS NOT JUSTIFIED IN HIS ACTION WHILE MAKING ADDITION OF RS.10,00,000/- UNDER SECTION 69 OF THE ACT. THE APPELLANT HAS DEBITED THE SAID CONSIDERATION IN THE P & L ACCOUNT AND ALSO THE SAID LAND REFLECTS AS STOCK-IN-TRADE O F THE APPELLANT COMPANY IN THE FORM OF WORK IN PROGRESS. IN VIEW OF THE ABOVE DISCUSSION, I CONSIDER IT PROPER AND APPROPRIATE TO HOLD THAT THE A.O. WAS NOT JUSTIFIED IN HIS ACTION. ACCORDINGLY, THE A DDITION SO MADE BY THE A.O. IS DELETED. APPELLANTS THIS GROUND OF APP EAL IS ALLOWED. 8. THE ABOVE FINDING OF CIT(A) REMAIN UNCONTROVERT ED AND THE FINDING OF THE LEARNED CIT(A) ARE SELF-EXPLANATORY. THEREFO RE, WE SEE NO REASON TO INTERFERE WITH THE FINDING OF LEARNED CIT(A) IN RES PECT TO DELETION OF ADDITION OF RS. 10 LAKHS. ACCORDINGLY, WE CONFIRM THE FINDING O F CIT(A) ON THIS ISSUE ALSO. 5 9. THE NEXT ISSUE RELATES TO DELETING THE ADDITION OF RS.80,434/- MADE UNDER SECTION 41 (1) OF THE ACT. DURING THE ASSESSM ENT PROCEEDINGS ASSESSING OFFICER NOTED THAT AMOUNT OF RS.80,434/-WAS APPEARI NG AS OUTSTANDING CREDITOR IN THE BOOKS OF ACCOUNT OF THE ASSESSEE-COMPANY FOR MORE THAN 3 YEARS. HENCE, TAKING NOTE OF PROVISIONS OF LIMITATION ACT, THE AS SESSING OFFICER HELD THAT THE SAID LIABILITY DOES NOT EXIST TO THE ASSESSEE IN AC CORDANCE TO THE PROVISIONS OF LIMITATION ACT. HENCE, HE ADDED THE SAID SUM OF RS. 80,434/- UNDER SECTION 41(1) OF THE ACT. BEFORE THE CIT(A), IT WAS SUBMITT ED THAT IN FACT ALL THESE AMOUNTS HAS BEEN PAID IN SUBSEQUENT YEARS AND LIABI LITY WAS NOT CEASED TO EXIST. THEREFORE, THE ADDITION IS BAD IN LAW. CIT(A ) AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD FOU ND THAT ASSESSING OFFICER HAS MADE ADDITION CONSIDERING THE PROVISION OF LIMI TATION ACT. HOWEVER, HE HAS NOT CONSIDERED THE FACT THAT LIABILITY HAS NOT CEAS ED TO EXIST AND THE AMOUNT HAS BEEN PAID IN SUBSEQUENT YEAR. THEREFORE, ADDITI ON MADE UNDER SECTION 41 (1) OF THE ACT, WAS NOT CORRECT. ACCORDINGLY, HE DE LETED. 10. AFTER CONSIDERING THE ORDER OF THE ASSESSING O FFICER AND LEARNED CIT(A), WE FIND THAT THE LEARNED CIT(A) HAS ASCERTA INED FACTUAL ASPECT THAT LIABILITY DO NOT CEASED TO EXIST AND THE AMOUNT HAS BEEN PAID IN SUBSEQUENT YEARS. THEREFORE, THE ADDITION MADE UNDER SECTION 4 1 (1) WAS NOT JUSTIFIED. ACCORDINGLY, WE CONFIRM THE FINDING OF LEARNED CIT( A) ON THIS ISSUE ALSO. 11. THE NEXT ISSUE IS AGAINST DELETION OF ADDITION OF RS.62,799/- DISALLOWED BY THE ASSESSING OFFICER UNDER SECTION 4 0(A)(IA) OF THE ACT. THE ASSESSING OFFICER MADE ADDITION OF RS.62,799/- IN V IEW OF PROVISION OF SECTION 40(A)(IA) FOR NON-DEDUCTION OF TDS FROM THE CONTRAC TOR. IT WAS CONTENDED BEFORE THE CIT(A) THAT THE SAID TDS WAS DEDUCTED AND WAS A LSO PAID WITHIN THE TIME BEFORE FILING THE RETURN OF INCOME. AFTER ASCERTAIN ING THIS FACT, THE CIT(A) FOUND THAT TDS WAS DEDUCTED AND THE AMOUNT HAS ALREADY BE EN PAID. THEREFORE, HE DELETED THE ADDITION. SINCE THE AMOUNT OF TDS WAS D EDUCTED AND THE SAME WAS PAID BEFORE FILING THE RETURN, THEREFORE, WE FIND T HAT THE LEARNED CIT(A) WAS CORRECT IN DELETING THE ADDITION. ACCORDINGLY, WE C ONFIRM HIS ORDER ON THIS ISSUE. 6 12. THE NEXT ISSUE IS AGAINST DELETION OF ADDITION OF RS.5,94,918/- MADE UNDER SECTION 68 OF THE ACT. DURING THE ASSESS MENT PROCEEDINGS, THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH THE CONFIRMATION IN RESPECT OF LOAN RECEIVED FROM SMT. ALKA SINGH AND SMT. MEER A DEVI CHOUDHURY AS THE SAME IS LYING OUTSTANDING IN THEIR NAME BY RS.7,37, 716/- AND RS.5,57,202/- RESPECTIVELY. THE ASSESSEE COULD NOT FILE EXPLANATI ON IN RESPECT OF LOAN OF RS.5,94,918/-, THEREFORE, THE SAME WAS ADDED UNDER SECTION 68 BY THE ASSESSING OFFICER. DETAILED WRITTEN SUBMISSIONS WER E FILED BEFORE THE ASSESSING OFFICER. COPY OF LEDGER ACCOUNT IN THE CASE OF SMT. MEERA DEVI CHOUDHURY AND SMT. ALKA SINGH WERE FILED BEFORE THE CIT(A). IT WA S STATED THAT ALL THE AMOUNTS WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUES AND BOT H ARE ASSESSED TO TAX AND CONFIRMATION OF THESE PARTIES WERE ALSO FILED. 13. AFTER CONSIDERING THE SUBMISSIONS AND MATERIAL PLACED ON RECORD THE LEARNED CIT(A) FOUND THAT BOTH THE PARTIES I.E. , SMT. ALKA SINGH AND SMT. MEERA DEVI CHOUDHURY ARE ASSESSED TO TAX AND CONFIR MATION HAS BEEN FILED. COPY OF THE ACKNOWLEDGMENT OF RETURN WAS ALSO FILED ALONG WITH COPY OF BANK PASS BOOK AND AFTER EXAMINING ALL THESE DETAILS, TH E LEARNED CIT(A) FOUND THAT BOTH THE LENDERS ARE ASSESSED TO TAX AND THEY HAVE FILED THEIR CONFIRMATION ALONG WITH COPY OF RETURN. IT WAS ALSO FOUND THAT L OAN WAS REPAID ALSO THROUGH ACCOUNT PAYEE CHEQUE TO THE LENDER. ACCORDINGLY, IT WAS HELD THAT TRANSACTIONS ARE GENUINE AND THEY HAVE UNEXPLAINED ALSO. ACCORDI NGLY, ADDITION MADE BY ASSESSING OFFICER WAS DELETED BY LEARNED CIT(A). 14. AFTER CONSIDERING THE ORDER OF THE ASSESSING O FFICER AND CIT(A) ON WHICH RELIANCE HAS BEEN PLACED BY RESPECTIVE PARTIE S, WE FIND THAT LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE UNDER SECTION 68 OF THE ACT. BOTH THE PARTIES WERE ASSESSED TO TAX AND CONFIRMAT ION OF THE PARTIES WERE FILED ALONG WITH COPY OF RETURN OF INCOME AND COPY OF BAN K ACCOUNTS. THE LOAN WAS RECEIVED THROUGH ACCOUNT PAYEE CHEQUES AND WAS ALSO REPAID THROUGH ACCOUNT PAYEE CHEQUES. THEREFORE, ALL THE THREE CONDITIONS TO PROVE THE LOAN WERE 7 SATISFIED. THEREFORE, WE FIND NO REASON TO INTERFER E IN THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE AND ACCORDINGLY, WE CONFIRM HI S ORDER ON THIS GROUND. 15. THE REMAINING ISSUE IS AGAINST DELETION OF DIS ALLOWANCE OF RS.6,17,260/-MADE ON ADHOC BASIS BY THE ASSESSING O FFICER. THE ASSESSING OFFICER MADE ADHOC DISALLOWANCE @ 10% AT RS.6,17,26 0/- ON ADHOC BASIS BY OBSERVING THAT ASSESSEE HAS NOT FURNISHED DETAILS O F WORK-IN-PROGRESS AND VOUCHERS. DETAILED WRITTEN SUBMISSIONS WERE FILED B EFORE THE CIT(A) WHICH ARE REPRODUCED IN HIS ORDER AT PARA 10.1 AT PAGE 14 TO 16. AFTER CONSIDERING THE SUBMISSIONS, THE CIT(A) FOUND THAT DISALLOWANCE MAD E BY ASSESSING OFFICER IS AT HIGHER SIDE, THEREFORE, HE REDUCED DISALLOWANCE TO 50% WHICH WORKS-OUT TO RS.3,08,630/-. 16. AFTER CONSIDERING THE ORDER OF ASSESSING OFFIC ER AND LEARNED CIT(A) WE FIND THAT LEARNED CIT(A) HAS PASSED A REASONABLE ORDER BY RESTRICTING THE ADDITION TO 50%. ASSESSING OFFICER MADE ADDITION ON ADHOC BASIS BY DISALLOWING EXPENSES AT 10%. LEARNED CIT(A) HAS RESTRICTED THE DISALLOWANCE AT 50% OF THE TOTAL EXPENSES. DISALLOWANCE RESTRICTED BY CIT(A) I S REASONABLE. ACCORDINGLY, WE CONFIRM HIS ORDER ON THIS ISSUE ALSO. 17. IN THE RESULT, APPEAL OF THE DEPARTMENT AND CR OSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD JANUARY, 2013. SD/- SD/- (D.KARUNAKARA RAO) (R.K.GUPTA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE 23 RD JANUARY, 2013. VBP/- 8 COPY FORWARDED TO 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)-1, MUMBAI. 4. / CIT-1, MUMBAI. 5. , , !' / DR, C BENCH, ITAT, MUMBAI 6. #$ %' / GUARD FILE. '() * '() * '() * '() * / BY ORDER, * //TRUE COPY// + ++ +/ // /*, - *, - *, - *, - ( DY./ASSTT. REGISTRAR) , , , , !' / ITAT, MUMBAI