ITO, Ward - 41(2), Kolkata, Kolkata V. Shri Uttam Kumar Kundu, Kolkata

ITA 106/KOL/2012

• Counselvise Citation: 10623514 RSA 2012
• Duration Of Justice: 3 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 06-03-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 18-01-2012
• Court: TRIBUNAL
• Department Lawyers: MD GHYAS UDDIN JCIT LD
• Keywords: Gift; Business income; Business expenditure; Retrospective amendment
• Section: 143(3)

Judgement Text

IT.A NO.106 & CO NO.10/KOL/2012 -B-AM SHRI UTTAM KUMAR K UNDU 1 IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, K OLKATA BEFORE : SHRI M. BALAGANESH, ACCOUNTANT MEMBER, AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A NO. 106/KOL/2012 A.Y 2006-07 I.T.O WARD 41(2), KOLKATA VS. SHRI UTTAM KUMAR KUNDU PAN:AFYPK1781M (APPELLANT/DEPARTMENT) (RESPONDENT/A SSESSEE) C.O NO.10/KOL/2012 [ A/O ITA NO.106/KOL/2012 A.Y 2006-07] SHRI UTTAM KUMAR KUNDU VS. I.T.O WARD 41(2), K OLKATA (CROSS OBJECTOR/ASSESSEE) (RESPONDENT/DEPART MENT) FOR THE APPELLANT/DEPARTMENT: MD. GHYAS UDDI N, JCIT, LD.SR.DR FOR THE CROSS OBJECTOR/ASSESSEE : SHRI MANOJ KR. TIWARI, FCA, LD.AR DATE OF HEARING: 26-10-2015 DATE OF PRONOUNCEMENT: 18 -11- 2015 ORDER SHRI M.BALAGANESH, AM THIS APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARISE OUT OF THE ORDER OF THE LEARNED CIT(A), XII, KOLKATA IN APPEAL NO. 444/XII/41(2)/08-09 DATED 21-10-2011 FOR THE ASST YEAR 2006-07 PASSED AGAINS T THE ORDER OF ASSESSMENT FRAMED BY THE LEARNED AO U/S. 143(3) OF THE INCOME TAX ACT , 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. MD.GHYASUDDIN,JCIT,LEARNEDSR.DR ARGUED ON BEHALF OF THE REVENUE AND SHRI MANOJ KR. TIWARI, FCA, LEARNED AR ARGUED ON BEHALF OF THE ASSESSEE. IT.A NO.106 & CO NO.10/KOL/2012 -B-AM SHRI UTTAM KUMAR K UNDU 2 3. THE FIRST AND SECOND ISSUE TO BE DECIDED IN TH IS APPEAL IS THAT WHETHER AN ADDITION OF RS. 1,76,113/- AND AN ADDITION OF RS. 2 4,240/- COULD BE MADE ON AN ESTIMATED BASIS IN THE FACTS AND CIRCUMSTANCES OF T HE CASE. 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE AS SESSEE IS A PROMOTER AND DEVELOPER OF REAL ESTATE AND RUNS THE BUSINESS UNDER THE NAME AN D STYLE OF M/S UTTAM KUMAR KUNDU. THE ASSESSEE CONSTRUCTED A RESIDENTIAL APAR TMENT AT 13A/27, ARIFF ROAD, KOLKATA 700 067 ON A PLOT OF LAND MEASURING 400.6 87 SQUARE METER. THE LEARNED AO OBSERVED THAT AS PER SANCTIONED PLAN THAT TOTAL FLOOR AREA OF 861.34 SQUARE METER WHICH INCLUDES SERVICE AREA OF 215.538 SQUARE METE R AND CAR PARKING OF 60 SQUARE METER WAS SANCTIONED TO BE CONSTRUCTED IN GROUND PL US 4 FLOORS APARTMENTS CONTAINING 12 FLATS AND 3 CAR PARKING SPACES. THE ASSESSEE H AD MAINTAINED THE BOOKS OF ACCOUNTS SUCH AS CASH BOOK, LEDGER, PURCHASE AND SALES REGIS TER AND BANK BOOK FOR THE FINANCIAL YEAR 2005-06 RELEVANT TO ASST YEAR 2006-07 AND THE SAME WERE PRODUCED BEFORE THE LEARNED AO DURING THE COURSE OF ASSESSMENT PROCEEDI NGS. THE ASSESSEE PLEADED BEFORE THE LEARNED AO THAT THE ASSESSEE IS NOT A CO NTRACTOR AND HENCE THE ACCOUNTING STANDARD 7 (AS-7) ISSUED BY THE INSTITUTE OF CHARTE RED ACCOUNTANTS OF INDIA (ICAI) ON CONSTRUCTION CONTRACTS IS NOT APPLICABLE TO THE A SSESSEE. THE ASSESSEE CHOSE TO OFFER THE INCOME UNDER COMPLETED CONTRACT METHOD I.E AS A ND WHEN THE FLATS ARE SOLD BY THE ASSESSEE, INCOME IS OFFERED TO TAX. THE ASSESSE E CHOSE TO FILE CONSOLIDATED PROFIT AND LOSS ACCOUNT AND CONSOLIDATED BALANCE SHEET FOR THE PERIOD 1.4.2003 TO 31.3.2006 IN RESPECT OF THE SUBJECT MENTIONED BUILDING PROJECT. THE ASSESSEE STATED THAT SALES REFLECTED IN THE SAID FINANCIALS COMPRISE FOR 10 FL ATS SOLD BY ASSESSEE. IN RESPECT OF TWO FLATS, THEY WERE NOT SOLD BUT INSTEAD GIVEN AS GIFT IN REALITY TO THE WIDOW OF HIS YOUNGER BROTHER. THE LEARNED AO DID NOT ACCEPT THIS ARGUME NT AND DISPUTED THE FACT OF FLATS GIVEN AS GIFT BY THE ASSESSEE AND FOUND THAT NO CLO SING STOCK WAS SHOWN IN THE FINANCIALS SUBMITTED BY HIM. ACCORDINGLY, HE PROCE EDED TO DETERMINE THE SALE PROCEEDS OF TWO FLATS AND MADE AN ADDITION AT THE R ATE OF 8% THEREON AMOUNTING TO RS. 1,76,113/- AS PROFITS DERIVED BY THE ASSESSEE IN RE SPECT OF THE SALE. IT.A NO.106 & CO NO.10/KOL/2012 -B-AM SHRI UTTAM KUMAR K UNDU 3 3.2. WITH REGARD TO THE ALLEGED SALE OF TWO CAR PA RKING SPACES, THE ASSESSEE STATED THAT THE SAME ARE USED ONLY FOR BUSINESS PURPOSES O F THE ASSESSEE AND HENCE THERE WAS NO SALE THAT HAD ACTUALLY HAPPENED IN ORDER TO DETE RMINE ANY ALLEGED PROFIT THEREON. BUT THIS ARGUMENT DID NOT HOLD WATER IN THE MIND OF THE LEARNED AO WHO PROCEEDED TO DETERMINE THE PROFIT ON AN ESTIMATED BASIS AMOUNTIN G TO RS. 24,240/- AND MADE ADDITIONS THEREON. 3.3. ON FIRST APPEAL, THE LEARNED CITA APPRECIATE D THE ENTIRE CONTENTIONS OF THE ASSESSEE AND DELETED THE ADDITIONS. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 1. LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACT IN DELETING THE ADDITION OF RS.1,76,113/- ON ACCOUNT OF ESTIMATED P ROFIT. 2. LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACT IN DELETING THE ADDITION OF RS.24,240/- ON ACCOUNT OF ESTIMATED PRO FITS. 3.4. THE LEARNED AR REITERATED THE FACTS STATED B Y HIM BEFORE THE LOWER AUTHORITIES. THE LEARNED AR ARGUED THAT THE BOOKS OF ACCOUNTS SU BMITTED BY THE ASSESSEE HAVE NOT BEEN REJECTED BY THE LEARNED AO AND HENCE THERE IS NO NEED TO ESTIMATE ANY PROFITS THEREON. HE ALSO STATED THAT NECESSARY MUTATION HA S BEEN MADE IN FAVOUR OF WIDOW OF HIS YOUNGER BROTHER IN THE MUNICIPAL RECORDS FOR FL AT NO. 3B AND FLAT NO. 3C. HE ALSO FILED EVIDENCE THAT ELECTRICITY CONNECTION AND BILL IS ONLY IN THE NAME OF HIS YOUNGER BROTHER IN RESPECT OF THESE TWO FLATS. HE ALSO ST ATED THAT THE FACTUM OF GIFTS GIVEN BY THE ASSESSEE AND THE CAR PARKING SPACE USED BY THE ASSESSEE FOR HIS BUSINESS PURPOSES HAVE BEEN DULY ACCEPTED BY THE LEARNED AO IN THE RE OPENED PROCEEDINGS FOR ASST YEAR 2005-06 AND PLACED THE COPY OF THE ASSESSMENT ORDER ON RECORD. HE ALSO FAIRLY STATED THAT THE SAID ORDER COPY WAS ALSO PLACED BEFORE THE LEARNED CITA BY THE ASSESSEE. IN RESPONSE TO THIS, THE LEARNED DR VEHEMENTLY SUPPORT ED THE ORDER OF THE LEARNED AO. IT.A NO.106 & CO NO.10/KOL/2012 -B-AM SHRI UTTAM KUMAR K UNDU 4 3.5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE IS ENGAGED IN BU ILDING PROMOTION AND DEVELOPMENT BUSINESS AS PROMOTER AND DEVELOPER. WE AGREE WITH THE CONTENTION OF THE LEARNED AR THAT THE ASSESSEE IS NOT A CONTRACTOR AND HENCE AS 7 ISSUED BY ICAI IS NOT APPLICABLE TO HIM. HENCE HIS CHOICE OF RECOGNIZING REVENUE UN DER COMPLETED CONTRACT METHOD IS CORRECT. BUT WHAT IS TO BE SEEN IS IN WHICH YEAR THE CONTRACTS ARE COMPLETED BY THE ASSESSEE. THE PROJECT IS COMPLETED BY THE ASSESSEE IN ASST YEAR 2005-06 BUT THE ASSESSEE HAS CHOSEN TO RECOGNIZE THE REVENUE IN RES PECT OF THE PROJECTS IN ASST YEAR 2006-07 BY DECLARING SALES IN RESPECT OF 10 FLATS A ND CAR PARKING SPACE TO THE TUNE OF RS. 1,08,79,800/- AND DECLARING PROFIT THEREON TO T HE TUNE OF RS. 6,78,561/-. ACCORDING TO ASSESSEE, ASST YEAR 2006-07 WAS THE YEAR IN WHIC H THE COMPLETION CERTIFICATE FOR THE PROJECT WAS OBTAINED BY THE ASSESSEE AND HENCE THE PROFITS DECLARED THEREON IS CORRECT. IT IS OBSERVED THAT THE ASSESSEE HAD FURNISHED THE CONSOLIDATED FINANCIAL STATEMENTS OF PROFIT AND LOSS ACCOUNT AND BALANCE SHEET FOR THE P ERIOD 1.4.2003 TO 31.3.2006 IN RESPECT OF THE SUBJECT MENTIONED BUILDING PROJECT. THE YEAR WISE DETAILS ARE TO BE ASCERTAINED ONLY FROM THE SALE VALUE AVAILABLE IN T HE REGISTERED DOCUMENTS BASED ON DATE OF SALE. THE BASIC ARGUMENT OF THE LEARNED AR IS THAT WITHOU T REJECTING THE BOOKS OF ACCOUNTS , THE LEARNED AO DOES NOT HAVE ANY POWER TO ESTIMATE THE PROFITS FROM ALLEGED SALE OF FLATS AND CAR PARKING SPACES. WE FIND THAT THE AC TION OF THE LEARNED AO IN THE FACTS OF THE CASE IS CORRECT IN VIEW OF THE FACT THAT THE AS SESSEE HAD NOT DISCLOSED THE COST OF CLOSING STOCK OF FLATS AND CAR PARKING SPACES IN TH E BOOKS OF ACCOUNTS WHICH ACCORDING TO THE LEARNED AO HAD BEEN ALLEGEDLY SOLD DURING AS ST YEAR 2006-07. IN THIS SCENARIO, THE ONLY POSSIBILITY LEFT TO THE LEARNED AO IS TO MAKE A FAIR ESTIMATION OF PROFITS. IN FACT, IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE LEARNED AO HAD EVEN REDUCED THE PROFIT DECLARED BY THE ASSESSEE IN THE SUM OF RS. 6,78,561/- AS HE HAD CHOSEN TO PROCEED AGAINST THE ASSESSEE IN ASST YEAR 2005-06. WE FIND THAT THE ADDITION HAS BEEN MADE SOLELY ON THE POINT THAT NO CLOSING STOCK OF FLATS ARE SHOWN IN IT.A NO.106 & CO NO.10/KOL/2012 -B-AM SHRI UTTAM KUMAR K UNDU 5 THE BOOKS OF ACCOUNTS OF THE ASSESSEE WHICH WOULD H AVE ENABLED THE ASSESSEE TO ALLEGEDLY SELL THE TWO FLATS. THE LEARNED AO HAD S TATED SUITABLE REMEDIAL ACTION WOULD BE TAKEN IN ASST YEAR 2005-06 FOR NOT DISCLOSING TH E COST OF THESE TWO FLATS AS CLOSING STOCK OF WORK IN PROGRESS. BUT THE LEARNED AR HAD STATED IN HIS WRITTEN SUBMISSIONS BEFORE THE LEARNED CITA WHICH ARE REPRODUCED IN LEA RNED CITA ORDER AT PAGE 2 PARA 3, THAT THE LEARNED AO HAD ACCEPTED THE FACTUM OF G IFT OF TWO FLATS TO THE WIDOW OF YOUNGER BROTHER OF THE ASSESSEE AS GENUINE IN ASST YEAR 2005-06. A COPY OF THE ASSESSMENT ORDER FOR ASST YEAR 2005-06 IS ALREADY O N RECORD. THE FINDING GIVEN BY THE LEARNED AO IN THIS REGARD IN THE REOPENED ASST YEAR 2005-06 IS REPRODUCED HEREUNDER:- PAGE 3 OF THE WRITTEN SUBMISSIONS: IN THE ASSESSMENT ORDER PASSED ON 09.12.2010, FOR THE FINANCIAL YEAR: 2004-05 RELEVANT TO THE ASSESSMENT YEAR: 2005 -2006, THE LD. ASSESSING OFFICER ON PAGE-2 HAS CONCLUDED AS UNDER: - ON 07.12.2010, IT WAS AMONG OTHER THINGS, EXPLAI NED THAT THE GARAGE IS USED FOR THE BUSINESS OF THE ASSESSEE SO HE DIDNT TAKE INTO ACCOUNT WHILE SHOWING WIP. EXTRACTS OF KMC RECORDS HAVE BEEN FURNISHED SHOWING THE BUSINESS ADDRESS AT 13A/27 ARIFF ROAD, WHERE THE FLAT CAME UP. BESIDES, THE AR PRODUCED PAPERS SHOWING MUNICIPAL O FFICE RECORDS SHOW MUTATION IN FAVOUR OF SMT. MITHU KUNDU WHO IS WIFE OF THE LATE BROTHER. .. IN RETROSPECT, MY PREDECESSOR REOPEN THE CASE INT ER ALIA ON THE GROUND THAT TWO FLATS AND TWO GARAGES WERE NOT SHOW N IN THE CLOSING STOCK AND HENCE THE AMOUNT PERTAINING TO THE SALE VALUE O F THE FLATS IS BELIEVED TO HAVE ESCAPED ASSESSMENT. IT IS GATHERED BY NOW THAT THERE IS SALE. THE WIP DOES NOT, THEREFORE, GIVE ANY UNDISCLOSED SALES. THIS GOES TO PROVE THAT THERE IS NO CASE FOR MAKING ANY ADDITION TOWARDS UNDISCLOSED SALE OF TWO FLATS AND PROFITS DERIVED THEREON ON AN ESTIMATED BASIS AS THE CONTENTION OF THE ASSESSEE WITH REGARD TO THE GIFTS GIVEN BY HIM TO THE WIDOW OF HIS YOUNGER BROTHER HAS BEEN ACCEPTED AS GENUINE BY THE LEARNED AO IN A SST YEAR 2005-06. HENCE WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CITA IN THIS REGARD. HENCE THE GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED. IT.A NO.106 & CO NO.10/KOL/2012 -B-AM SHRI UTTAM KUMAR K UNDU 6 3.6. WITH REGARD TO THE ADDITION MADE ON AN ESTIMA TED BASIS FOR SALE OF CAR PARKING SPACES OF RS. 24,240/- , THE LEARNED AO HAD STATED SUITABLE REMEDIAL ACTION WOULD BE TAKEN IN ASST YEAR 2005-06 FOR NOT DISCLOSING THE C OST OF TWO CAR PARKING SPACES AS CLOSING STOCK OF WORK IN PROGRESS. A COPY OF THE ASSESSMENT ORDER FOR ASST YEAR 2005-06 IS ALREADY ON RECORD. IT IS ALSO OBSERVED THAT THE LEARNED AO IN THE REOPENED ASSESSMENT FOR THE ASST YEAR 2005-06 HAD STATED AS BELOW:- PAGE 3 OF THE WRITTEN SUBMISSION PARA 6- IN RETROSPECT MY PREDECESSORS REOPEN THE CASE INTER ALIA ON THE GROUND THAT THE TWO FLATS AND TWO GARAGES WE RE NOT SHOWN IN THE CLOSING STOCK AND HENCE THE AMOUNT PERTAINING T O THE SALE VALUE OF THE FLATS IS BELIEVED TO HAVE ESCAPED ASSESSMENT . IT IS GATHERED BY NOW THAT THERE IS NO SALE. THE WIP DOES NOT, THEREF ORE, GIVE ANY UNDISCLOSED SALES. THIS GOES TO PROVE THAT THERE IS NO CASE FOR MAKING ANY ADDITION TOWARDS UNDISCLOSED SALE OF TWO CAR PARKING SPACES AND PROFITS DERIVED THEREON ON AN ESTIMATED BASIS. HENCE WE FIND NO INFIRMITY IN THE ORDER OF THE LEAR NED CITA IN THIS REGARD. HENCE THE GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 4. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS THAT WHETHER AN ADDITION IN THE SUM OF RS. 11,00,000/- TOWARDS ADVANCE RECEIVED ON SALE OF FLAT COULD BE ADDED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE AS A PROMOTER AND DEVELOPER OF REAL ESTATE HAD OBTAINED APPROVAL FOR CONSTRUCTION OF 12 FLATS ONLY. BUT WITHOUT APPROVAL HE HAD SOUGHT TO CONSTRUCT ONE MORE FLAT W HICH WAS ALSO FOUND AND CONFIRMED BY THE INSPECTOR OF INCOME TAX ON PHYSICAL VERIFICA TION. THE LEARNED AO FOUND THAT A SUM OF RS. 11,00,000/- WAS SHOWN AS ADVANCE RECEI VED FOR FLAT IN THE BALANCE SHEET OF THE ASSESSEE AS ON 31.3.2006. WHEN CONFRONTED BY THE LEARNED AO, NO EVIDENCE SHOWING THE DATE OF COMPLETION OF CONSTRUCTION OF T HE SAID FLAT WAS PRODUCED BY THE IT.A NO.106 & CO NO.10/KOL/2012 -B-AM SHRI UTTAM KUMAR K UNDU 7 ASSESSEE. THE LEARNED AO FOUND FROM THE DEED OF A GREEMENT THAT SRI KRIPA SINDHU PANJA HAD BOOKED THE SAID FLAT MEASURING 824 SQ.FT. FOR RS. 11,00,000/- AND THE SAID FLAT WAS COMPLETED IN ALL RESPECTS AND POSSESSION HANDED OVER TO SRI KRIPA SINDHU PANJA. HOWEVER, THE REGISTRATION OF THE SAID FLAT WAS NOT EXECUTED IN FAVOUR OF SRI KRIPA SINDHU PANJA BY THE ASSESSEE DURING ASST YEAR 2006- 07. THE LEARNED AO ALSO FOUND THAT THE COST OF CONSTRUCTION OF THE SAID FLAT WAS NOT REFLECTED AS CLOSING STOCK OF WORK IN PROGRESS BY THE ASSESSEE IN THE BALANCE SHEET AS ON 31.3.2006. THE LEARNED AO FURTHER FOUND THAT THE LABOUR CHARGES AND COST OF M ATERIALS FOR THE SAID FLAT WERE PAID DURING THE FINANCIAL YEAR 2005-06 WHICH INDICATED T HAT THE SAID FLAT WAS CONSTRUCTED DURING FINANCIAL YEAR 2005-06 AND WHICH HAD BEEN CL AIMED AS DEDUCTION BY THE ASSESSEE ALREADY IN THE REGULAR BOOKS. ACCORDING TO THE LEARNED AO THE SALE OF FLAT HAD BEEN COMPLETED IN ASST YEAR 2006-07 AND ACCORDINGLY TAXED THE SALE CONSIDERATION OF RS. 11,00,000/- AS UNDISCLOSED INCOME IN ASST YEAR 2006-07. ON FIRST APPEAL, THE ASSESSEE PLEADED BEFORE THE LEARNED CIT(A) THAT THE REGISTRATION DEED OF FLAT WAS EXECUTED ON 17.7.2008 AND CAPITAL GAINS OFFERED TO TAX IN ASST YEAR 2009-10 BY THE ASSESSEE. THE ASSESSEE PLEADED THAT THE ADVANCE OF RS 11,00,000/- WAS RECEIVED ONLY BY ACCOUNT PAYEE CHEQUE BY THE ASSESSEE. THE LEARN ED CITA APPRECIATED THE CONTENTIONS OF THE ASSESSEE AND DELETED THE ADDITIO N. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 3. LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACT IN DELETING THE ADDITION OF RS.11,00,000/- ON ACCOUNT OF ADVANCE RE CEIVED AGAINST FLAT BOOKING. 4.2. THE LEARNED AR REITERATED THE FACTS AND ARGUM ENTS ADVANCED BY HIM BEFORE THE LOWER AUTHORITIES. HE FURTHER ARGUED THAT IF THE A DDITION IS NOT DELETED IN ASST YEAR 2006-07, THEN IT WOULD AMOUNT TO DOUBLE ADDITION AS THE SAME HAS BEEN OFFERED BY THE ASSESSEE VOLUNTARILY IN ASST YEAR 2009-10 ON THE BA SIS OF REGISTRATION OF FLAT. IN RESPONSE TO THIS, THE LEARNED DR ARGUED THAT THIS I S THE 13 TH FLAT WHICH WAS CONSTRUCTED BEYOND THE APPROVAL OF THE SANCTIONED BUILDING PLAN AND THE ASSESSEE HAD CLAIMED THE IT.A NO.106 & CO NO.10/KOL/2012 -B-AM SHRI UTTAM KUMAR K UNDU 8 COST OF CONSTRUCTION IN HIS PROFIT AND LOSS ACCOUNT AS DEDUCTION BUT HAD NOT DELIBERATELY CHOSEN TO TREAT THE SALE CONSIDERATION AS AN ADVANC E RECEIVED FOR FLATS IN THE LIABILITY THEREBY TRYING TO POSTPONE THE RECOGNITION OF REVEN UE. 4.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE WITHOUT APPROVAL OF BUILDING PLAN HAD SOUGHT TO CONSTRUCT ONE MORE FLAT WHICH WAS ALSO FOUND AND CO NFIRMED BY THE INSPECTOR OF INCOME TAX ON PHYSICAL VERIFICATION. THIS FACT IS NOT DISPUTED BY THE ASSESSEE. IT IS FOUND THAT THE ENTIRE COST OF CONSTRUCTION OF THE SAID FLAT IS DISCLOSED IN THE BOOKS AND DEBITED IN PROFIT AND LOSS ACCOUNT AS DEDUCTION IN ASST YEAR 2006-07 AND HENCE THE SAME IS NOT REFLECTED AS CLOSING STOCK OF WORK IN P ROGRESS AS ON 31.3.2006 BY THE ASSESSEE. THE ARGUMENT OF THE LEARNED AR THAT ASSE SSEE HAD OFFERED TO TAX IN ASST YEAR 2009-10 ON THE BASIS OF REGISTRATION OF SALE D EED DOES NOT HOLD WATER AS THE ENTIRE WORK HAS BEEN COMPLETED ON THE SAID FLAT AND POSSES SION HANDED OVER TO SRI KRIPA SINDHU PANJA AND ON THE BASIS OF AGREEMENT DEED , E NTIRE SALE CONSIDERATION OF RS .11,00,000/- HAS BEEN RECEIVED BY THE ASSESSEE IN A SST YEAR 2006-07. WE HOLD THAT THE REGISTRATION OF THE PROPERTY IS NOT ESSENTIAL AS PO SSESSION IS ALREADY HANDED OVER TO THE BUYER AND CONSIDERATION FULLY RECEIVED FROM BUYER I N ASST YEAR 2006-07 AND HENCE TRANSFER OF FLAT IS FULLY COMPLETE IN ASST YEAR 200 6-07 ITSELF. WE HOLD EXECUTION OF SALE DEED AND REGISTERING THE SAME IS ONLY PROCEDUR AL IN NATURE. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT (JAIPUR BENCH) IN THE CASE OF CIT VS VISHNU TRADING & INVESTMENT CO. REPO RTED IN (2003) 259 ITR 724 (RAJ) WHICH IN TURN RELIED ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT VS PODDAR CEMENT PVT LTD AND OTHERS REPORTED IN 226 ITR 625 (SC) WHEREIN IT WAS HELD THAT :- PAGES 725,726 OF 259 ITR 724(RAJ.) THE TRIBUNAL HAS DECIDED THE ISSUE ONLY AN THE BA SIS OF NON- REGISTRATION OF THE TRANSFER DEED. THE TRIBUNAL HAS TAKEN THE VIEW THAT IN THE ABSENCE OF THE REGISTRATION OF THE SALE DEED, T HERE IS NO TRANSFER AND NO CAPITAL GAIN TAX IS ATTRACTED. IT.A NO.106 & CO NO.10/KOL/2012 -B-AM SHRI UTTAM KUMAR K UNDU 9 NOW THIS CONTROVERSY HAS BEEN RESOLVED BY THEIR LO RDSHIPS IN THE CASE OF CIT V. PODDAR CEMENT PVT. LTD [1997] 226 IT R 625. AT PAGES 653, THEIR LORDSHIPS OBSERVED AS UNDER: WE ARE CONSCIOUS OF THE SETTLED POSITION THAT U NDER THE COMMON LAW, OWNER MEANS A PERSON WHO HAS GOT VALID LITT LE LEGALLY CONVEYED TO HIM AFTER COMPLYING WITH THE REQUIREMENTS OF LAW SU CH AS THE TRANSFER OF PROPERTY ACT, REGISTRATION ACT, ETC. BUT, IN THE CONTEXT OF SECTION 22 OF THE INCOME-TAX ACT, HAVING REGARD TO THE GROUND RE ALITIES AND FURTHER HAVING REGARD TO THE OBJECT OF THE INCOME-TAX AC T, NAMELY, TO TAX THE INCOME, WE ARE OF THE VIEW , OWNER IS A PERSON W HO IS ENTITLED TO RECEIVE INCOME FROM THE PROPERTY IN HIS OWN RIGHT. FOLLOWING THE VIEW TAKEN BY THEIR LORDSHIPS, WE AR E OF THE VIEW THAT FOR TAXING THE CAPITAL GAIN, REGISTRATION OF THE SA LE DEED IS NOT NECESSARY UNDER THE PROVISIONS OF THE INCOME-TAX ACT. IN THE RESULT, WE ANSWER THE QUESTION IN THE NEGAT IVE I.E. IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. HOWEVER, WE FIND FROM THE STATEMENT OF THE LEARNED AR THAT THE SAID SUM IS OFFERED TO TAX BY THE ASSESSEE IN ASST YEAR 2009-10. HENCE WE DIRECT THE LEARNED AO TO DELETE THE SAME IN ASST YEAR 2009-10 IN ORDER TO AVOID DOU BLE TAXATION OF THE SAME AMOUNT. HENCE THE GROUND NO. 3 RAISED BY THE REVENUE IS ALL OWED. 5. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER AN ADDITION OF RS. 3,76,538/- ON ACCOUNT OF LABOUR CHARGES COULD BE MA DE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 5.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE AS SESSEE PAID LABOUR CHARGES TO THE FOLLOWING PERSONS DURING THE FINANCIAL YEAR 2005-06 RELEVANT TO ASST YEAR 2006-07 :- SRI DULAR PODDAR 26.4.2005 70,000 SRI GOBINDA BISWAS 23.5.2005 1,00,000 SRI ALOKE CHAKRABORTY 25.5.2005 50,000 DAS ENTERPRISES 10.6.2005 26,538 SRI ASHUTOSH CHOWDHURY 14.6.2005 1,00,000 SRI ALOKE CHAKRABORTY 30.6.2005 30,000 ------------- 3,76,538 IT.A NO.106 & CO NO.10/KOL/2012 -B-AM SHRI UTTAM KUMAR K UNDU 10 THE LEARNED AO FOUND THAT THE ASSESSEES GROSS RECE IPS IN THE PREVIOUS YEAR 2004-05 RELEVANT TO ASST YEAR 2005-06 HAD EXCEEDED RS. 40 L ACS AND HENCE IS LIABLE FOR TAX AUDIT AND ACCORDINGLY THE PROVISIONS OF CHAPTER XVI I B OF THE ACT CONTAINING TDS COMPLIANCE PROVISIONS ARE APPLICABLE TO HIM IN ASST YEAR 2006-07. THIS CONCLUSION WAS REACHED BY THE LEARNED AO BASED ON THE SALE OF FLATS COMPLETED BY HIM IN ASST YEAR 2005-06 FOR WHICH INDEPENDENT REMEDIAL ACTION WAS SOUGHT TO BE TAKEN BY THE LEARNED AO. SINCE THE AFORESAID PAYMENTS WERE MADE WITHOUT DEDUCTION OF TAX AT SOURCE , DISALLOWANCE U/S 40(A)(IA) OF THE ACT WAS MADE BY THE LEARNED AO. ON FIRST APPEAL, THE LEARNED CITA CONCLUDED THAT ASST YEAR 2 006-07 IS THE FIRST YEAR OF TAX AUDIT FOR THE ASSESSEE ON THE BASIS OF HIS BOOKS OF ACCOUNTS AND HENCE THERE IS NO OBLIGATION FOR HIM TO DEDUCT TAX AT SOURCE IN ASST YEAR 2006-07 AND ACCORDINGLY DELETED THE ADDITION MADE U/S 40(A)(IA) OF THE ACT. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 4. LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACT IN DELETING THE ADDITION OF RS.3,21,845/- ON ACCOUNT OF LABOUR CHARGES. 5.2. THE LEARNED AR RELIED ON THE ORDER OF THE LE ARNED CITA. IN RESPONSE TO THIS, THE LEARNED DR RELIED ON THE ORDER OF THE LEARNED A O. 5.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND WE FI ND THAT WE HAVE HELD IN THE PREVIOUS GROUNDS CONTAINED HEREINABOVE THAT CERTAIN SALE OF FLATS HAD TAKEN PLACE IN ASST YEAR 2005-06 AND WE HAVE ALSO PLACED RELIANCE ON THE ASSESSMENT ORDER FOR ASST YEAR 2005-06 FOR ARRIVING AT THE CONCLUSION FOR THE GROUND NUMBERS 1 & 2 RAISED BY THE REVENUE. IN VIEW OF THAT DECISION, WE HOLD THAT THE TDS PROVISIONS ARE APPLICABLE TO THE ASSESSEE FOR ASST YEAR 2006-07 AND HENCE SECTIO N 40(A)(IA) OF THE ACT HAS BEEN RIGHTLY INVOKED ON THE ASSESSEE FOR ASST YEAR 2006- 07. HOWEVER, WE FIND THAT THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT WHIC H IS INTRODUCED IN THE STATUTE WITH EFFECT FROM 1.4.2013 HAS BEEN HELD TO BE RETROSPECT IVE IN OPERATION BY THE RECENT IT.A NO.106 & CO NO.10/KOL/2012 -B-AM SHRI UTTAM KUMAR K UNDU 11 DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS ANSA L LAND MARK TOWNSHIP P LTD REPORTED IN 61 TAXMANN.COM 45 (DELHI HC) WHEREIN IT WAS HELD THAT :- SECTION 40(A)(IA) WAS INTRODUCED BY THE FINANCE (N O.2) ACT, 2004 TO ENSURE THAT AN EXPENDITURE SHOULD NOT BE AL LOWED AS DEDUCTION IN THE HANDS OF AN ASSESSEE IN A SITUATIO N WHERE INCOME EMBEDDED IN SUCH EXPENDITURE HAS REMAINED UNTAXED DUE TO TAX WITHHOLDING LAPSES BY THE ASSESSEE. HENCE, SECTION 40(A)(IA) IS NOT A PENALTY PROVISION FOR TAX WITHHOLDING LAPSE BUT IT IS A PROVISION INTRODUCED TO COMPENSATE ANY LOSS TO THE REVENUE IN CASES WHERE DEDUCTOR HASNT DEDUCTED TDS AN AMOUNT PAID TO DEDUCTEE AND, IN TURN, DEDUCTEE ALSO HASNT OFFERED TO TAX INCOME EMBEDDED IN SUCH AMOUNT. THE PENALTY FOR TAX WITHHOLDING LAPSE PER SE IS SEP ARATELY PROVIDED UNDER SECTION 271C AND, THEREFORE, SECTION 40(A)(IA) ISNT ATTRACTED TO THE SAME. HENCE, AN ASSESSEE COULD NOT BE PENALIZED UNDER SECTION 40(A)(IA) WHEN THERE WAS NO LOSS TO R EVENUE. THE AGRA TRIBUNAL IN THE CASE OF RAJIV KUMAR AGARWA L VS- ACIT [2014] 45 TAXMANN.COM 555(AGRA- TRIB) HAD HELD THAT THE SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2005, BEING THE DATE FROM WHICH SUB-CLAUSE(IA) OF SECTION 40(8) WAS INSERTED BY THE FINANCE NO.2) ACT, 2004, EVEN THOUGH THE FINANCE A CT, 2012 HAD NOT SPECIFICALLY STATED THAT PROVISO IS RETROSPECTI VE IN NATURE. THE HIGH COURT AFFIRMED THE RATIO LAID DOWN BY THE AGRA TRIBUNAL AND HELD THAT SAID PROVISO IS DECLARATORY AND CURATIVE IN NATURE AND HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2005 . ACCORDINGLY, WE DEEM IT FIT AND APPROPRIATE , IN TH E INTEREST OF JUSTICE AND FAIR PLAY, TO SET ASIDE THIS ISSUE TO THE FILE OF THE LEARNED AO TO EXAMINE THE ISSUE IN THE LIGHT OF THE DECISION RENDERED BY THE HONBLE DELHI HIGH COURT A S STATED SUPRA AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. THE ASSESSEE IS ALSO DIRECTED TO PROVIDE NECESSARY EVIDENCES AND DOCUMENTS TO PROVE THAT THE PAYEE HAD DULY DISCLOSED THE SUBJECT MENTIONED RECEIPT OF LABOUR CHARGES IN THEIR RESPEC TIVE RETURNS AND PAID THE DUE TAXES THEREON. IF THE SAME IS PROVED, THE ASSESSEE SHOUL D BE GIVEN RELIEF. ACCORDINGLY, THE GROUND NO. 4 RAISED BY THE REVENUE IS ALLOWED FOR S TATISTICAL PURPOSES. IT.A NO.106 & CO NO.10/KOL/2012 -B-AM SHRI UTTAM KUMAR K UNDU 12 6. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER AN ADDITION IN THE SUM OF RS. 3,21,845/- BEING THE DIFFERENCE BETWEEN THE DEPOSITS AND WITHDRAWALS COULD BE ADDED IN THE FACTS AND CIRCUMSTANCES OF THE CASE . 6.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LE ARNED AO FOUND ON PERUSAL OF BANK ACCOUNTS OF THE ASSESSEE BEARING ACCOUNT NUMBERS 28 01 AND 1183 AND THERE WERE NO RECEIPTS IN CASH AGAINST SALE OF FLATS DURING ASST YEAR 2006-07 BUT HOWEVER THE ASSESSEE HAS SHOWN RECEIPTS OF RS. 10,00,000/- FROM SRI K S PANJA AGAINST A FLAT ALTHOUGH THROUGH ACCOUNT PAYEE CHEQUES. THE LEARN ED AR ASKED THE ASSESSEE REGARDING THE EXPLANATION FOR DEPOSITS IN THE SAID BANK ACCOUNTS TO THE TUNE OF RS. 21,84,240/- BEING MORE THAN THE WITHDRAWALS TO THE TUNE OF RS. 18,62,395/- AND THE ASSESSEE FAILED TO OFFER ANY EXPLANATION BEFORE THE LEARNED AO REGARDING THE SAME. HENCE THE LEARNED AO ADDED THE DIFFERENCE AS UNEXPL AINED CASH DEPOSITS TO THE TUNE OF RS. 3,21,845/- . ON FIRST APPEAL, THE LEARNED C ITA FOUND THAT THE TRANSACTIONS IN THE SAID TWO BANK ACCOUNTS HAVE BEEN DULY REFLECTED BY THE ASSESSEE IN HIS AUDITED ACCOUNTS FILED ALONG WITH THE RETURN OF INCOME AND HENCE THERE IS NO NEED TO MAKE ANY SEPARATE ADDITION TOWARDS THE SAME. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 5. LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACT IN DELETING THE ADDITION OF RS.3,21,845/- ON ACCOUNT OF DIFFERE NCE IN DEPOSIT AND WITHDRAWAL FROM BANK. 6.2. THE LEARNED AR ARGUED THAT THE CASH BOOK, BA NK BOOK AND OTHER BOOKS OF ACCOUNTS WERE DULY PRODUCED BEFORE THE LEARNED AO W HICH CONTAINS THE TRANSACTIONS IN THE AFORESAID TWO BANK ACCOUNTS AND HENCE THERE IS NO NEED TO MAKE SEPARATE ADDITION TOWARDS THE DIFFERENCE BETWEEN DEPOSITS AN D WITHDRAWALS. IN RESPONSE TO THIS, THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF TH E LEARNED AO. 6.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND WE FI ND THAT THE ENTIRE BOOKS OF ACCOUNTS HAVE BEEN PRODUCED BY THE ASSESSEE BEFORE THE LEARNED AO WHICH FACT IS ALSO IT.A NO.106 & CO NO.10/KOL/2012 -B-AM SHRI UTTAM KUMAR K UNDU 13 MENTIONED IN THE ASSESSMENT ORDER. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE TRANSACTIONS IN THE SAID TWO BANK ACCOUNTS WERE NOT REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AS THE LEARNED AO HIMSELF STATES TH AT THE TOTAL DEPOSITS INCLUDES A SUM OF RS. 10 LACS RECEIVED BY ASSESSEE FROM SRI K.S.PA NJA TOWARDS ADVANCE FOR FLAT. WE ALSO FIND THAT THE ASSESSEE HAD CARRIED ON HIS BUSI NESS TRANSACTIONS WITH THE SAID TWO BANK ACCOUNTS AND ACCOUNTS HAVE BEEN DULY AUDITED U /S 44AB OF THE ACT BY AN INDEPENDENT CHARTERED ACCOUNTANT AND BOOKS OF ACCOU NTS WERE NOT REJECTED BY THE LEARNED AO. HENCE THERE IS NO CASE FOR MAKING ANY INDEPENDENT ADDITION IN THIS REGARD. HENCE WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) IN THIS REGARD. HENCE THE GROUND NO. 5 RAISED BY THE REVENUE IS DIS MISSED. 7. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER AN ADDITION OF RS. 1,37,692/- TOWARDS INTEREST ON BANK LOAN COULD BE M ADE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 7.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE AS SESSEE CLAIMED A SUM OF RS. 1,37,692/- TOWARDS INTEREST ON BANK LOAN AS BUSINESS EXPENDITU RE . ACCORDING TO THE LEARNED AO, THE LOANS BORROWED BY THE ASSESSEE WERE UTILIZED FO R ADVANCING INTEREST FREE LOANS TO DIFFERENT PERSONS SUCH AS M/S AKASH ASSOCIATES, AMA L CHAKRABORTY, KUNDU ASSOCIATES, KUNDU REFINARY WORK ETC TO THE TUNE OF RS. 30,82,430/-. HENCE HE CONCLUDED THAT THE BORROWED FUNDS WERE DIVERTED FOR NON BUSINESS PURPOSES AND DISALLOWED THE INTEREST OF RS. 1,37,692/- . ON FIR ST APPEAL, THE LEARNED CITA FOUND THAT THE ASSESSEE HAS MADE ADVANCES TO M/S KUNDU RE FINERY WORKS (PARTNERSHIP FIRM OF ASSESSEE) AND KUNDU ASSOCIATES (PARTNERSHIP FIRM OF ASSESSEE) AND FOUND THAT ASSESSEE IS HAVING HIS OWN CAPITAL OF RS. 28,69,669 /- AND BANK LOAN OF RS. 16,40,000/-. THE ADVANCES GIVEN INCLUDING THE TRADE ADVANCES ARE TO THE EXTENT OF RS. 35,52,606/- WHICH INCLUDES TRADE ADVANCE OF RS. 6,00,000/- GIVE N TO M/S AKASH ASSOCAITES FOR PURCHASE OF FLATS AND PAYMENT TO SRI AMAL CHAKRABOR TY WAS MADE TO ACQUIRE HIS TENANCY RIGHTS. HE ALSO FOUND THAT THE ASSESSEE H AS SHOWN INCOME FROM KUNDU IT.A NO.106 & CO NO.10/KOL/2012 -B-AM SHRI UTTAM KUMAR K UNDU 14 REFINERY WORKS IN THE FORM OF SHARE OF PROFIT AND S ALARY FROM KUNDU ASSOCIATES IN THE FORM OF SHARE OF PROFIT. HE FOUND THAT APART FROM THESE INCOMES, THE ASSESSEE HAS ALSO DISCLOSED INCOME FROM OTHER SORUCES IN THE FORM OF BANK INTEREST AND INCOME FROM SHARE TRADING AND INCOME FROM TANKER. HE GAVE A FINDING THAT THE NEXUS BETWEEN BORROWED FUNDS AND INTEREST FREE ADVANCES TO SISTER CONCERNS WERE NOT ESTABLISHED BY THE LEARNED AO AND HENCE NO DISALLOWANCE OF INTERES T COULD BE MADE. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GRO UND:- 6. LD. CIT(A)HAS ERRED IN LAW AS WELL AS ON FACT I N DELETING THE ADDITION OF RS.1,37,692/- ON ACCOUNT OF INTERES T ON BANK LOAN. 7.2. THE LEARNED AR REITERATED THE SUBMISSIONS MA DE BEFORE THE LEARNED CITA AND LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE LE ARNED AO AND ARGUED THAT NO EVIDENCE IS BROUGHT ON RECORD WHETHER THE LOANS AND ADVANCES (ASSET) REFLECTED IN THE BALANCE SHEET OF THE ASSESSEE INCLUDES TRADE ADVANC E OF RS 6 LACS PAID TO AKASH ASSOCIATES FOR PURCHASE OF FLATS AND ACCORDINGLY PR AYED FOR SET ASIDE TO THE FILE OF THE LEARNED AO. 7.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIALS AVAILABLE ON RECORD. WE HOLD THAT THE ADVANCES GIVEN TO KUNDU A SSOCIATES AND KUNDU REFINERY WORKS WHICH ARE PARTNERSHIP FIRM OF THE ASSESEE AN INCOMES RECEIVED THEREFROM ARE DULY OFFERED TO TAX BY THE ASSESSEE. HENCE THE BUS INESS INTEREST ON THE SAID ADVANCES IS PROVED BEYOND DOUBT. HENCE NO DISALLOWANCE OF INTE REST COULD BE MADE IN RESPECT OF ADVANCES MADE TO THESE TWO PARTIES ON A PROPORTIONA TE BASIS. WE FIND FROM THE BALANCE SHEET OF THE ASSESSSEE, TH E BREAK UP OF LOANS AND ADVANCES (ASSET) AS REFLECTED IN THE BALANCE SHEET IS NOT AV AILABLE ON RECORDS. WE ALSO FIND THAT ASSESSEE IS ALSO HAVING SOME OWN FUNDS WHICH WOULD DEFINITELY EXPLAIN THE INTEREST FREE ADVANCES GIVEN BY HIM TO VARIOUS PARTIES. HEN CE IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DEEM IT FIT AND APPROPRIATE, IN THE I NTEREST OF JUSTICE AND FAIR PLAY, TO SET IT.A NO.106 & CO NO.10/KOL/2012 -B-AM SHRI UTTAM KUMAR K UNDU 15 ASIDE THIS ISSUE TO THE FILE OF THE LEARNED AO TO T HE LIMITED EXTENT OF ASCERTAINING WHETHER THE ADVANCES GIVEN TO SRI AMAL CHAKRABORTY AND M/S AKASH ASSOCIATES WERE FOR THE PURPOSE OF BUSINESS. WE MAKE IT VERY CLEA R THAT IF THE ADVANCES MADE TO THESE TWO PARTIES ARE LESS THAN THE OWN FUNDS AVAILABLE W ITH THE ASSESSEE, THEN NO DISALLOWANCE OF INTEREST SHOULD BE MADE. ACCORDINGLY, THE GROUND NO. 6 RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES . 8. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER AN ADDITION OF RS. 37,173/- COULD BE MADE ON ACCOUNT OF VARIOUS EXPEND ITURES IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 8.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE AS SESSEE CLAIMED THE FOLLOWING EXPENSES AS DEDUCTION IN HIS RETURN:- GENERAL CHARGES 5,318 PERSONAL EXPENSES 8,000 BANK CHARGES 456 SERVICE CHARGES 400 TELEPHONE BILLS 2,422 GENERAL INSURANCE 28,577 ---------- 45,173 ACCORDING TO LEARNED AO THE AFORESAID EXPENSES WERE DEBITED TO PROFIT AND LOSS ACCOUNT WHICH COULD NOT BE SUBSTANTIATED WITH ANY C ORROBORATING EVIDENCE AND HENCE THE SAME WERE DISALLOWED IN THE ASSESSMENT. ON FIR ST APPEAL, THE ASSESSEE HAS OFFERED BUSINESS INCOME AND INCOME FROM OTHER SOURCES AND H ELD THAT THE AFORESAID EXPENDITURE EXCEPT PERSONAL EXPENSES OF RS. 8,000/- ARE ONLY BUSINESS EXPENDITURE AND HENCE ASSESSEE IS ENTITLED FOR RELIEF. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- IT.A NO.106 & CO NO.10/KOL/2012 -B-AM SHRI UTTAM KUMAR K UNDU 16 7. LD. CIT(A)HAS ERRED IN LAW AS WELL AS ON FACT IN DELETING THE ADDITION OF RS.37,173/- ON ACCOUNT OF VARIOUS EXPENDITURE. 8.2. THE LEARNED AR RELIED ON THE ORDER OF THE LE ARNED CITA AND ALSO STATED THAT THE ASSESSEE HAD REPORTED TRANSPORTATION INCOME IN HIS RETURN AND HENCE THE AFORESAID EXPENDITURES ARE ALLOWABLE EVEN AGAINST THAT INCOME . IN RESPONSE TO THIS, THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED AO . 8.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIALS AVAILABLE ON RECORD. WE FIND NO INTERFERENCE IS CALLED FOR IN T HE ORDER OF THE LEARNED CITA WHICH IS SELF EXPLANATORY. HENCE THE GROUND NO. 7 RAISED BY THE REVENUE IS DISMISSED . 9. THE LEARNED AR HAD WITHDRAWN THE CROSS OBJECTI ON FILED BY THE ASSESSEE AND HENCE THE SAME IS DISMISSED AS WITHDRAWN. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 106/KOL/2012 IS PARTLY ALLOWED AND CROSS OBJECTION OF THE ASSESSEE IS DISM ISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 18 / 11 /2015 COPY OF THE ORDER FORWARDED TO: 1.. THE APPELLANT : ITO W 41(2) 18 RABINDRA SARANI , 4 TH FL. KOL-1 2 THE RESPONDENT- SHRI UTTAM KUMAR KUNDU 18/8D ARI FF ROAD, KOL-67. 3 4.. /THE CIT, / THE CIT(A) SD/- ( S.S VISWANETHRA RAVI, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE 18 /11/2015 IT.A NO.106 & CO NO.10/KOL/2012 -B-AM SHRI UTTAM KUMAR K UNDU 17 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR ** PRADIP SPS