Amrut stone Quarry, Surat V. The Income tax Officer,Ward-6(1), Surat

ITA 1062/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0277 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 07-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y P VERMA
• Assessee Lawyers: ANIL R SHAH
• Keywords: Business income; Depreciation; Deemed to accrue or arise in india; Revenue expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , .. , '# ' $ BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI T.R.MEENA, ACCOUNTANT MEMBER 1. ./ I.T.A. NO.1062/AHD/2010 A.Y. 2006-07 2. ./ I.T.A. NO.1512/AHD/2010 A.Y. 2006-07 1. AMRUT STONE QUARRY AT & POST : ZAB TAL. : MANDVI DIST. SURAT PIN 394 160 2.THE ITO WARD-6(1) SURAT % / VS. 1. THE ITO WARD-6 (1) SURAT 2. AMRUT STONE QUARRY SURAT ./ ./ PAN/GIR NO. : AALFA 3556 A ( / APPELLANTS ) .. ( / RESPONDENTS ) AND CO NO.163/AHD/2010 2006-07 (IN ITA NO.1512/AHD/2010) AMRUT STONE QUARRY VS. ITO SURAT WARD-6 (1),SURAT (CROSS OBJECTOR .. (RE SPONDENT) ASSESSEE BY : SHRI ANIL R.SHAH REVENUE BY : SHRI Y.P.VERMA, SR.D.R. / DATE OF HEARING : 8.2.2013 !' / DATE OF PRONOUNCEMENT : 15/2/13 #$ / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : CROSS APPEALS HAVE BEEN FILED BY THE ASSESSEE AS A LSO BY THE REVENUE ARISING FROM THE ORDER OF CIT(A)-IV, SURAT DATED 28/01/2010. ITA NOS.1062/AHD/2010 (BY ASSESSE E) 1512/AHD/2010 (BY REVENUE) AND CO NO.163/AHD/2010 (BY ASSESSEE) AMRUT STONE QUARRY VS. ITO ASST.YEAR 2006-07 - 2 - THE ASSESSEE HAS ALSO FILED A CROSS OBJECTION. GRO UNDS OF APPEAL AS ALSO THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSES SEE ARE REPRODUCED BELOW:- [A] ASSESSEES APPEAL, ITA NO.1062/AHD/2010 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE AS SESSEE IN ITS APPEAL: FOLLOWING GROUNDS ARE WITHOUT PREJUDICE TO EACH OTH ER: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- IV, SURAT IS AGAINST LAW AND FACT OF THE CASES. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-IV ERRED IN UPHOLDING THE ADDITION OF RS.1,55,000/- ON ACCOUNT OF INCOME U/S.44AE IS NOT OFFERED FOR TAXATION. HE ERRED IN HOLDING THAT NO CASE HAS BEEN MADE BY THE A.R. THAT IT WAS PREVENTE D BY ANY SUFFICIENT CAUSE TO FILE HIS EXPLANATION OR THAT IT WAS FURNISHED YET REFUSED BY THE A.O. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-IV ERRED IN NOT PROPERLY APPRECIATING THE SUBMISSIONS MADE BY THE APPELLANT AND CONSEQUENTLY ERRED IN CONFIRMING THE ADDITION O F RS.1,55,000/- ON ACCOUNT OF INCOME U/S.44AE. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-IV ERRED IN CONFIRMING THE DISALLOWANCE OF RS.67,588/- CONSIDER ING THE SAME IS DISPROPORTIONATE TO THE CRUSHING JOB WORK INCOME. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-IV ERRED IN NOT PROPERLY APPRECIATING THE SUBMISSIONS MADE BY T HE APPELLANT AND CONSEQUENTLY ERRED IN CONFIRMING THE ADDITION O F RS.67,588/- ON ACCOUNT OF DISPROPORTIONATE ELECTRICITY EXPENSES . 2.1. ADDITIONAL GROUND :- THE ASSESSMENT ORDER PASSED BY INCOME-TAX OFFICER, WARD-6(1), SURAT U/S.143(3) OF THE ACT IS BAD IN LAW AND VOID SINCE THE SAME IS DATED 6-12-08 (SATURDAY/HOLIDAY). ITA NOS.1062/AHD/2010 (BY ASSESSE E) 1512/AHD/2010 (BY REVENUE) AND CO NO.163/AHD/2010 (BY ASSESSEE) AMRUT STONE QUARRY VS. ITO ASST.YEAR 2006-07 - 3 - IT IS SUBMITTED BY YOUR APPELLANT THAT AS PER PROVI SIONS OF LAW AND FACTS AND OF THE CASE THE ASSESSMENT ORDER AND THE DEMAND RAISED THERE UNDER IS REQUIRED TO BE CANCELLED. IT IS THEREFORE SUBMITTED THAT RELIEFS CLAIMED ABOV E BE ALLOWED AND THE ORDER OF THE ASSESSING OFFICER BE MODIFIED ACCO RDINGLY. 3. APROPOS TO GROUND NOS.1, 2 & 3, WE HAVE NOTED TH AT VIDE AN ORDER U/S.143(3) DATED 10/12/2008 ALTHOUGH THE AO HAS MAD E A REMARK VIDE PARAGRAPH NO.3 THAT THE ASSESSEE HAD SHOWN AN INCOM E OF RS.1,55,000/- U/S.44AE BUT THAT WAS NOT OFFERED FOR TAXATION, HEN CE REQUIRED TO BE ADDED IN THE TOTAL INCOME OF THE ASSESSEE. BUT WHI LE COMPUTING THE CHARGEABLE INCOME AT PAGE-8 OF THE ASSESSMENT ORDER , THE TOTAL INCOME AS PER COMPUTATION OF INCOME WAS TAKEN AT RS.NIL AND C ERTAIN ADDITIONS WERE MADE ON ACCOUNT OF DEPRECIATION, UNEXPLAINED C ASH CREDIT AND ELECTRICITY EXPENSES, HOWEVER, NO ADDITION WAS MADE IN THIS REGARD, I.E. THE INCOME U/S.44AE. WE HAVE THEREFORE ASKED THE L D.AR THAT WHAT EXACT PREJUDICE HAS BEEN CAUSED IF THE SAID INCOME IS NOT ADDED IN THE TOTAL ASSESSED INCOME. NO SATISFACTORY REPLY WAS GIVEN B Y LD.AR, HOWEVER HE HAS ARGUED THAT THE P&L ACCOUNT WAS IN RESPECT OF T HE CRUSHING JOB-WORK INCOME AND IN ADDITION TO THAT INCOME, THE ASSESSEE HAS ALSO SHOWN PROFIT AS DEEMED INCOME U/S.44AE IN RESPECT OF THREE TRUCK S BY APPLYING THE PROVISIONS OF SECTION 44AE AT RS.1,55,5000/- AND TH E BUSINESS LOSS WAS SET OFF AND NIL INCOME WAS DISCLOSED. HOWEVER, ON FURTHER ENQUIRY FROM THE BENCH IN RESPECT OF THE BASIS OF THE SAID ADJUS TMENT AND THE REASON OF DISCLOSING A DEEMED INCOME, THE LD.AR HAS EXPRESSED TO PALACE RELIANCE ON THE SUBMISSIONS FILED. ITA NOS.1062/AHD/2010 (BY ASSESSE E) 1512/AHD/2010 (BY REVENUE) AND CO NO.163/AHD/2010 (BY ASSESSEE) AMRUT STONE QUARRY VS. ITO ASST.YEAR 2006-07 - 4 - 4. WE ARE NOT CONVINCED WITH THE MANNER IN WHICH TH IS GROUND HAS BEEN CONTESTED BY THE ASSESSEE. EVEN BEFORE LD.CIT (A), NO SATISFACTORY REPLY WAS GIVEN, THEREFORE IT WAS HELD THAT NO CASE HAS BEEN MADE OUT BY THE ASSESSEE SPECIALLY WHEN THE AO HAS TAKEN THE NI L INCOME AS PER THE COMPUTATION OF INCOME, MEANING THEREBY, SUCH IMPUGN ED INCOME WAS NOT SUBJECTED TO TAX IN THE HANDS OF THE ASSESSEE. AS FAR AS LAW IS CONCERNED, THE SAME IS EXPLICITLY CLEAR THAT ONLY I N CASE OF GRIEVANCE CAUSED DUE TO AN ADDITION AN APPEAL CAN BE FILED OR A GROUND CAN BE RAISED. BUT IN THE PRESENT CASE, THERE WAS NO SUCH REASON TO RAISE THIS GROUND WHEN ADMITTEDLY THERE WAS NO ADDITION OF THE SAID INCOME IN THE TOTAL ASSESSED INCOME OF THE ASSESSEE. WE ARE OF T HE OPINION THAT THESE GROUNDS ARE REDUNDANT, HENCE HEREBY DISMISSED. 5. APROPOS TO GROUND NOS.4 & 5, IT WAS NOTED BY THE AO THAT THE ASSESSEE HAS CLAIMED ELECTRICITY EXPENSES OF RS.3,3 7,942/-. ACCORDING TO AO, THE CRUSHING JOB-WORK INCOME WAS SHOWN ONLY RS. 2,54,485/-. IN HIS OPINION, THE ELECTRICITY EXPENSES WERE DISPROPORTIO NATE, HENCE 20%, I.E. RS.67,588/- WAS ADDED. WHEN THE MATTER WAS CARRIED BEFORE THE LD.CIT(A), THE ACTION OF THE AO WAS CONFIRMED. 6. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE HAVE NOTED THAT THE ENERGY CHARGES WAS ONLY TO THE TUNE OF RS.79,04 2/-, HOWEVER, THE ASSESSEE HAS INCURRED EXPENDITURE ON NEW CONNECTION CHARGES, ETC. OF ITA NOS.1062/AHD/2010 (BY ASSESSE E) 1512/AHD/2010 (BY REVENUE) AND CO NO.163/AHD/2010 (BY ASSESSEE) AMRUT STONE QUARRY VS. ITO ASST.YEAR 2006-07 - 5 - RS.2,58,900/-. ON THE BASIS OF THOSE FACTS, THE CO NTENTION OF THE ASSESSEE IS THAT THE CRUSHING JOB-WORK OF RS.2,54,485/- WAS GENERATED AFTER THE UTILIZATION OF ELECTRICITY OF RS.79,042/-. REST OF THE AMOUNT WAS ONLY IN RESPECT OF INSTALLATION OF NEW ELECTRICITY CONNECTI ON WHICH WAS OTHERWISE REQUIRED TO BE UTILIZED AND DEPRECIATION WOULD HAVE BEEN ALLOWED. BUT IN EITHER CASE, THE EXPENDITURE WAS TO BE ALLOWED IN T HE YEAR WHEN IT WAS CLAIMED AS REVENUE EXPENDITURE OR IN SEVERAL YEARS PROPORTIONATELY. 7. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES A S ALSO CONSIDERING THE FACTUAL ASPECT OF THE CASE, WE ARE OF THE CONSI DERED VIEW THAT NO PROPORTIONATE DISALLOWANCE SHOULD HAVE BEEN MADE BY THE AO SPECIALLY WHEN THE CASE OF THE ASSESSEE IS THAT TOTAL JOB-WOR K INCOME WAS AT RS.2,54,485/- WHICH WAS GENERATED ON CONSUMPTION OF ELECTRICITY OF RS.79,042/-. HENCE, ACCORDING TO US, NO PROPORTION ATE DISALLOWANCE IS WARRANTED. WE, THEREFORE, DIRECT TO DELETE THE ADD ITION. THESE TWO GROUNDS ARE HEREBY ALLOWED. 8. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED. ADDITIONAL GROUNDS HAVE NOT BEEN PRESSED BY THE LD.AR, HENCE T HE SAME IS DISMISSED. REVENUES APPEAL, ITA NO.1512/AHD/2010 9. THE ONLY GROUND OF THE REVENUE IS REPRODUCED BEL OW:- ITA NOS.1062/AHD/2010 (BY ASSESSE E) 1512/AHD/2010 (BY REVENUE) AND CO NO.163/AHD/2010 (BY ASSESSEE) AMRUT STONE QUARRY VS. ITO ASST.YEAR 2006-07 - 6 - [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT(A)-IV, SURAT HAS ERRED IN DELETING THE ADDI TION OF RS.17,52,808/- MADE BY THE AO U/S.68 OF THE I.T.ACT . 10. IT WAS NOTED BY THE AO THAT THE ASSESSEE HAS IN TRODUCED CAPITAL IN THE NAME OF THE PARTNERS AS FOLLOWS:- I) RAJNIKANT B.KATHIRIA - RS.6,00,808/- OUT OF THE INTRODUCTION OF CAPITAL OF RS.6,00,808/- , RS.1,50,808/- HAS BEEN INTRODUCED FROM OWN SOURCE A ND REMAINING AMOUNT OF RS.4,50,000/- HAS INTRODUCED AF TER TAKING LOAN FROM FOLLOWING PARTIES:- I) JAGJIVAN B.KATHIRIYA RS.1,50,000 II) BHARTIBEN R.KATHIRIYA RS.1,50,000 III)RAJUBHAI V.GAJERA RS. 50,000 IV) KIRTIBHAI BHALAL RS.1,00,000 II) RAJESH V.RUPARELIYA - RS.6,01,000/- THE BIFURCATION OF SOURCE OF CAPITAL OF RS.6,01,000 /- IS AS UNDER: RS.3,01,000 - FOR OWN FUND RS.2,00,000 - FROM KIRTIBHAI N.BHALALA RS.1,00,000 - FROM RAJUBHAI V.GAJERA III) JITENDRA D.PATEL RS.5,51,000/- RS.3,01,000 - FROM OWN FUND RS.1,00,000 - FROM BHUPENDRABHAI GAJERA RS.1,50,000 - FROM MANISHABEN PAT EL 10.1. THE AO WAS OF THE VIEW THAT ON PERUSAL OF THE RETURNS OF INCOME OF THE PARTNERS/DEPOSITORS, IT WAS NOTED THAT THEIR CR EDITWORTHINESS COULD NOT BE PROVED. BY RECITING FEW CASE LAWS, THE AO HAD TA XED TOTAL RS.7,52,808/- AS INTRODUCTION OF UNACCOUNTED CAPITA L IN THE HANDS OF THE PARTNER. ITA NOS.1062/AHD/2010 (BY ASSESSE E) 1512/AHD/2010 (BY REVENUE) AND CO NO.163/AHD/2010 (BY ASSESSEE) AMRUT STONE QUARRY VS. ITO ASST.YEAR 2006-07 - 7 - 11. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST AP PELLATE AUTHORITY, THE LD.CIT(A) HAS GRANTED RELIEF BY FOLLOWING THE D ECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. ROHINI BU ILDERS (2002) 256 ITR 360, ETC. CIT VS. PRAGATI CO-OP.BANK LTD. (2005 ) 278 ITR 170 AND DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. STELLAR INVESTMENT LTD. (1991)192 ITR 287 IN THE FOLLOWING MANNER:- THE A.R.FURTHER INFORMED THAT THE PARTNERS HAVE SU BMITTED COPIES OF CONFIRMATION LETTERS. BANK PASS BOOK AND IT RETU RNS FOR THE AY 2006-07 OF THE DEPOSITORS FROM WHOM PARTNERS HAVE T AKEN LOANS WERE ALSO SUBMITTED TO THE A.O. THE APPELLANT ENCL OSED ALL THESE EVIDENTIAL COPIES WITH THIS OFFICE ALSO, EXCEPT IN THE CASE OF SHRI RAJESH GAJERA, BHUPATBHAI GAJERA AND HASMUKH PATEL FORM WHOM THE PARTNERS HAVE TAKEN LOAN. THE A.R. FURTHE R EXPLAINED THAT THE PARTNERS HAVE TAKEN LOANS FROM FRIENDS AND RELATIVES IN THEIR PERSONAL CAPACITY. ALL THE DEPOSITORS ARE HA VING BUSINESS INCOME AND ASSESSED TO TAX SINCE LAST SEVERAL YEARS AND HAVE ADVANCED MONEY THROUGH ACCOUNT PAYEE CHEQUES. THE APPELLANT HAD SUBMITTED NECESSARY DOCUMENTS LIKE CONFIRMATION LETTERS, COPIES OF IT RETURNS, BANK PASS BOOK AS EVIDENTIARY PROOF TO THE A.O. DESPITE OF THE PRODUCTION OF ALL THE DOCUMENT ARY PROFS, THE A.O. HAVE MADE ADDITION ON THE FRIVOLOUS GROUNDS LI KE THE ASSESSEE FAILED TO PROVE THE SOURCE OF SOURCE OF THE SOURCE, WHICH IS BEYOND THE HAND OF THE APPELLANT. HE FURTHER ARGUED THAT THE APPELLANT WAS NEVER REQUESTED BY THE AO TO PRODUCE THE ANY OF THE PARTNER OF THE FIRM OR INDIVIDUALS, FROM WHOM THE PARTNERS HAV E TAKEN DEPOSITS FOR EXAMINATION OF THEIR CREDIT WORTHINESS AND GENUI8NENESS OF THE TRANSACTION. MOREOVER, THE AO HAD NOT ASKED FOR DETAILS OF THE SOURCE OF THE SOURCE FROM THE AP PELLANT. FOR HIS RELIANCE THE APPELLANT CITED JUDGMENT OF HONBLE GU JARAT HIGH COURT IN THE CASE OF CIT VS. PRAGATI CO-OP.BANK LTD . (2005) 278 ITR 0170, CIT VS. ROHINI BUILDERS (2002) 256 ITR 36 0, ETC. AND FINALLY HE STATED THAT UNDER NO CIRCUMSTANCES THE C APITAL CONTRIBUTED BY THE INDIVIDUAL PARTNERS OF THE FIRM CAN BE REGARDED AS UNDISCLOSED INCOME OF THE APPELLANT FIRM, RELYIN G ON THE ITA NOS.1062/AHD/2010 (BY ASSESSE E) 1512/AHD/2010 (BY REVENUE) AND CO NO.163/AHD/2010 (BY ASSESSEE) AMRUT STONE QUARRY VS. ITO ASST.YEAR 2006-07 - 8 - JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. STELLAR INVESTMENT LTD. 1991 192 ITR 0287. AT T HE END HE REQUESTED TO DELETE THE ADDITION MADE BY THE A.O. 12. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE HAVE NOTED THAT THOSE PARTNERS HAVE FILED CONFIRMATIONS, COPY OF BA NK ACCOUNTS AND COPY OF THE RETURNS RESPECTIVELY. IT HAS ALSO BEEN NOTE D THAT IN THEIR RESPECTIVE BANK ACCOUNTS, THERE WAS CASH DEPOSIT BY THEM. CON SIDERING THIS ASPECT IN MIND, LD.CIT(A) HAS HELD THAT IN THE LIGHT OF TH E CONFIRMATION FILED BY THE PARTNERS THE VIEW TAKEN BY THE AO WAS NOT REQUI RED TO BE CONFIRMED. IN HIS OPINION, THE IMPUGNED AMOUNT COULD NOT BE TA XED AS INCOME OF THE FIRM. HOWEVER, IN HIS OPINION, THERE WAS NOTHING W HICH HAS STOPPED AO FOR INVESTIGATING THE GENUINENESS OF THE LOANS MADE BY THE PARTNERS IN THEIR RESPECTIVE HANDS. RATHER HE HAS DIRECTED TO TAKE AN APPROPRIATE ACTION. WE ARE NOT INCLINED TO DISTURB THE VIEW TA KEN BY THE LD.CIT(A) SPECIALLY FOLLOWING THE JUDGEMENT IN THE CASE OF ME GH MALHAR DEVELOPERS 134 ITD 437 (AHD.) AND ROHINI BUILDERS 256 ITR 360 (GUJ.) WE FIND NO FORCE IN THIS GROUND OF THE REVEN UE, HENCE DISMISSED. 13. ASSESSEES CROSS OBJECTION NO.163/AHD/2010 THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSE SSEE IN ITS CROSS OBJECTION. 1) THE LEARNED CIT(A) HAS CORRECTLY HELD THAT ON F ACTS OF THE CASE AND AS PER PROVISIONS OF LAW RS.17,52,808 IS NOT LI ABLE TO BE ADDED IN THE HANDS OF THE RESPONDENT FIRM AS INCOME U/S.68 OF THE ACT. 2) IT IS FURTHER SUBMITTED BY THE RESPONDENT THAT IN VIEW OF THE OBSERVATION MADE BY THE LEARNED CIT(A) REGARDING IN ITIATION OF PROCEEDINGS U/S.148/147 IN THE HANDS OF THE PARTNER S ON THE BASIS ITA NOS.1062/AHD/2010 (BY ASSESSE E) 1512/AHD/2010 (BY REVENUE) AND CO NO.163/AHD/2010 (BY ASSESSEE) AMRUT STONE QUARRY VS. ITO ASST.YEAR 2006-07 - 9 - OF PRINCIPAL LAID DOWN BY VARIOUS TRIBUNALS, HIGH C OURTS AND SUPREME COURT THIS APPEAL FILED BY THE DEPARTMENT I S INFRUCTUOUS AND IS REQUIRED TO BE DISMISSED. 13.1. THE CROSS OBJECTION HAS NOT BEEN PRESSED, HEN CE THE SAME IS DISMISSED AS SUCH. 14. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED WHEREAS, REVENUES APPEAL AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. SD/- SD/- ( %..&' ) ( & & ' ) # () # ( T.R. MEENA ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 15 / 2 /2013 %.., .)../ T.C. NAIR, SR. PS '' ( )*+ ,'+- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. + ,- . / CONCERNED CIT 4. . () / THE CIT(A)-IV, SURAT 5. 123 )),-, ,-', 4&#+# / DR, ITAT, AHMEDABAD 6. 356 7 / GUARD FILE. ''% / BY ORDER, 1 ) //TRUE COPY// ./ / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD