DCIT, Secunderabad V. Shri K Ramakrishna, Hyderabad

ITA 1086/HYD/2004

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3140 (ITAT-HYDERABAD)
• Duration Of Justice: 5 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-06-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 16-11-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Keywords: Unexplained expenditure; Business income; Depreciation; Additional evidence; Revised return
• Section: 133A; 148

Judgement Text

ITA NO.1086 & 1087/HYD/2004 K. RAMAKRISHNA,HYD. 1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI AKBER BASHA, ACCOUNTANT MEMBER ITA NO.1086/HYD/04 : ASTT. YEAR: 2000-01 DCIT, CIR-6(1), HYDERABAD. VS SHRI K. RAMA KRISHNA, HYDERABAD. PAN/GIR NO.R-1176 (APPELLANT) ITA NO.1087/HYD/04 (RESPONDENT) ASST. YEAR: 2000-01 SHRI K. RAMA KRISHNA DCIT, CIR-6(1), HYDERABAD. HYDERABAD. PAN/GIR NO.R-1176 (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI SENTHIL KUMAR & KVN CHARYA RESPONDENT BY : SHRI K.C. DEVDAS O R D E R PER AKBER BASHA, ACCOUNTANT MEMBER: THESE ARE CROSS APPEALS, DIRECTED AGAINST THE OR DER OF THE CIT (A)-IV, HYDERABAD DATED 11-8-2004 PERTAINING TO THE ASSESSMENT YEAR 2000- 01. ITA NO.1086 & 1087/HYD/2004 K. RAMAKRISHNA,HYD. 2 2. GROUNDS RAISED BY THE REVENUE READ AS FOLLOWS:- '1. THE ORDER OF THE CIT (A) IS ERRONEOUS BOTH ON F ACTS AND CIRCUMSTANCES OF THE CASE. 2. THE CIT(A) ERRED IN NOT AFFORDING THE ASSESSING OF FICER AN OPPORTUNITY TO EXAMINE THE ADDITIONAL EVIDENCE IN RESPECT OF SUB CONTRACTORS SUBMITTED BY THE ASSESSEE BEFORE C IT(A) UNDER RULE 46A OF THE IT RULES. 3. THE CIT (A) ERRED IN ACCEPTING FURTHER EVIDENCE PRO DUCED BEFORE HIM REGARDING AGRICULTURAL ACTIVITY OF THE ASSESSEE WHICH WAS NOT PRODUCED BEFORE THE ASSESSING OFFICER. 4. THE CIT (A) IS NOT CORRECT IN DELETING THE ADDITIO N OF RS.22 LAKHS MADE ON ACCOUNT OF PURCHASE OF VEHICLE MADE BASED O N THE MATERIAL FOUND DURING THE COURSE OF SURVEY UNDER SE CTION 133A OF INCOME-TAX ACT, 1961. 5 THE CIT(A) IS NOT CORRECT IN DIRECTING TO VALUE THE AGRICULTURAL LANDS AT RS.30,000 PER ACRE WHEN THE ASSESSEE'S CHA RTED ACCOUNT HAS CERTIFIED THE ACTUAL COST AT RS.1,00,00 0 PER ACRE.' 3. ASSESSEE RAISED THE FOLLOWING GROUNDS IN HIS APP EAL:- 1. THE ORDER OF THE LEARNED CIT (A) IS ERRONEOUS BOTH IN LAW AND OF FACTS, IN SO FAR AS IT IS AGAINST THE INTERESTS OF THE ASSESSEE. 2. THE CIT (A) IS NOT JUSTIFIED IN NOT ALLOWING THE SU B CONTRACTORS' TURNOVER OF RS.1,87,93,605 FROM THE TURNOVER OF THE ASSESSEE CONTRACTOR FOR ARRIVING AT THE TURNOVER OF THE ASSE SSEE CONTRACTOR AND ESTIMATING HIS PROFIT. 3. THE CIT (A) IS NOT JUSTIFIED IN DIRECTING THE ASSES SING OFFICER TO FURTHER VERIFY THE SUB-CONTRACT COMMISSION STATING THAT IT VARIES BETWEEN 2% TO 5% AS IT IS ALREADY CONFIRMED BY THE SUBCONTRACTORS ITA NO.1086 & 1087/HYD/2004 K. RAMAKRISHNA,HYD. 3 IN THEIR SWORN STATEMENTS AND SHOWN IN THEIR BOOKS OF ACCOUNTS AND FINANCIAL STATEMENTS. 4. THE CIT (A) IS NOT JUSTIFIED IN UP HOLDING THE ESTI MATE OF GROSS PROFIT @ 12.5% ON THE NET TURN OVER OF THE ASSESSEE, DISRE GARDING THE SUBMISSIONS F THE ASSESSEE. 5. THE LEARNED CIT (A) IS NOT JUSTIFIED IN RESTRICTING THE CLAIM OF DEPRECIATION ON MARUTI ZEN TO RS.48,128, I.E., @ 20 % WHEN THE ACT CLEARLY SHOW THAT THE RATE OF DEPRECIATION APPLICAB LE IS 40% FOR THAT CATEGORY OF VEHICLES. 6. THE LEARNED CIT(A) IS NOT JUSTIFIED IN DISALLOWING THE CLAIM OF THE ASSESSEE ON ACCOUNT OF DEPRECIATION ON TEMPORARY SH EDS OF RS.2,85,963 DISREGARDING THE SUBMISSION OF THE ASSE SSEE. 7. THE LEARNED CIT(A) IS NOT JUSTIFIED IN UPHOLDING TH E ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ADDITIONAL C OMMISSION OF RS.30,00,000 RECEIVED BY THE ASSESSEE FROM SOME OF THE SUB- CONTRACTORS DISREGARDING THE SUBMISSIONS OF THE ASS ESSEE. 8. THE CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE ADDITI ON MADE BY THE ASSESSING OFFICER OF AN AMOUNT OF RS.3,00,000 ON AC COUNT OF FOREIGN TRAVEL MADE BY THE ASSESSEE DISREGARDING THE SUBMIS SIONS MADE BY THE ASSESSEE. 9. THE CIT (A) HAS ERRED IN SUSTAINING THE ADDITIONS M ADE BY THE ASSESSING OFFICER ON ACCOUNT FOR PURCHASE OF FLATS OF AN AMOUNT OF RS.9,91,275 DISREGARDING THE FACTS AND SUBMISSIONS MADE BY THE ASSESSEE. 10.THE CIT (A) OUGHT TO HAVE ACCEPTED THE PROFIT DE CLARED BY THE ASSESSEE, AS IT IS REASONABLE. 11.THE CIT (A) IS NOT JUSTIFIED IN REJECTING THE CO NTENTION OF THE ASSESSEE THAT NO FURTHER ADDITIONS SHALL BE MADE WH EN THE INCOME OF THE ASSESSEE IS ESTIMATED REJECTING THE BOOKS OF ACCOUNTS.' ITA NO.1086 & 1087/HYD/2004 K. RAMAKRISHNA,HYD. 4 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR FILED ITS RETURN OF INCOME ON 31-10-2000 DECLARING A TOTAL IN COME OF RS.36,54,040. NOTICE UNDER SECTION 148 WAS ISSUED ON 25-11-2002. PURSUANT TO THE NOTICE, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 27-3 -2002 DISCLOSING TOTAL INCOME AT RS.66,42,040. IN ITS RETURN OF INCOME, T HE ASSESSEE DISCLOSED COMMISSION OF RS.30 LAKHS, WHICH HE CLAIMED TO HAVE INVESTED IN ADDITIONAL CONSTRUCTION OF FLATS AT ROAD NO.10, JUBILEE HILLS, HYDERABAD, PURCHASE OF 8 ACRES OF AGRICULTURAL LAND AND PURCHASE OF GOLD. IN THE MEANWHILE, AT THE ASSESSEE'S BUSINESS PREMISES A SURVEY UNDER SECTION 133A WAS CONDUCTED ON 5-3-2002. IN THE SURVEY, THE DEPARTMENT FOUND THAT THE ASSESSEE HAS PURCHASED TWO FLATS AT ANITA ENCLAVE FOR RS.35,53,0 00. FINALLY, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143( 3) READ WITH SECTION 145(3) OF THE ACT DETERMINING THE TAXABLE INCOME OF THE ASSESSEE AT RS.2,43,72,000. AGGRIEVED BY THE ORDER OF THE ASS ESSING OFFICER, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT (A). THE CI T (A) GAVE SOME RELIEF TO THE ASSESSEE WHILE DISPOSING OF THE CASE AND THUS H E ALLOWED THE ASSESSEE'S APPEAL IN PART. THE DEPARTMENT IS IN APPEAL BEFORE US AGAINST THE RELIEF GIVEN TO THE ASSESSEE BY THE CIT (A) WHEREAS THE ASSESSEE IS IN APPEAL BEFORE US FOR THE ADDITIONS CONFIRMED BY THE CIT (A). FIRST, WE WILL TAKE-UP THE APPEAL OF THE ASSESSEE. 4. GROUND NOS. 1 AND 11 ARE GENERAL IN NATURE AND T HEY REQUIRE NO ADJUDICATION. GROUND NOS. 2 TO 4 RELATE TO THE ES TIMATION OF BUSINESS INCOME. THE ASSESSING OFFICER NOTICED THAT THE ASS ESSEE SHOWED GROSS CONTRACT RECEIPT AT RS.10,42,15,745 IN THE PROFIT A ND LOSS ACCOUNT WHICH INCLUDES SUB-CONTRACTS. SINCE THE ASSESSEE NOT FUR NISHED THE EVIDENCE IN SUPPORT OF THE SUB-CONTRACT, THE ASSESSING OFFICER REDUCED THE QUANTUM OF RS.98,72,214 ONLY TOWARDS SUB-CONTRACT PAYMENT. A FTER REDUCING THE SUB- CONTRACT PAYMENT, THE ASSESSING OFFICER ARRIVED NET CONTRACT RECEIPT AT RS.9,43,43,530 AND ESTIMATED THE INCOME AT 12.5% ON THE NET GROSS RECEIPTS AS HIS INCOME BY RELYING ON THE DECISION OF THIS TR IBUNAL IN THE CASE OF KMC ITA NO.1086 & 1087/HYD/2004 K. RAMAKRISHNA,HYD. 5 CONSTRUCTIONS LTD. IN ITA NO.280 AND 281/HYD/94 FOR THE ASSESSMENT YEARS 1991-92 AND 1992-93 AND ALSO ON THE GROUND THAT THE ASSESSEE NOT PRODUCED THE BOOKS OF ACCOUNT, BILLS AND VOUCHERS I N SUPPORT OF THE EXPENDITURE CLAIMED, STATING THAT BOOKS WERE DESTRO YED. DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE FURNISHED COPIE S OF INCOME-TAX CLEARANCE CERTIFICATE OBTAINED BY THE SUB-CONTRACTORS WHEREIN THE ASSESSEE'S SUB- CONTRACT WORK WITH SUB-CONTRACTORS SHOWED RS.5,12,8 1,195. THE CIT(A) FOUND MERIT IN THE ASSESSEE'S CONTENTION THAT THE S AID AMOUNT OF RS.5,12,81,195 GIVEN ON SUB-CONTRACT IS TO BE REDUC ED FROM THE GROSS CONTRACT RECEIPTS AND DIRECTED THE ASSESSING OFFICE R TO REDUCE THE SAME FROM THE GROSS CONTRACT RECEIPTS AND RECOMPUTE THE INCOM E AT 12.5% OF THE NET CONTRACT RECEIPTS OF THE ASSESSEE. HE ALSO DIRECTED THE ASSESSING OFFICER TO ASCERTAIN THE PERCENTAGE OF THE COMMISSION RECEIVED FROM THE SUB- CONTRACTORS FOR THE WORKS GIVEN ON SUB-CONTRACTS. AGGRIEVED BY THIS ORDER OF THE CIT [A], THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE INCOME DECLARED BY THE ASSESSEE IS AT 8.28% ON THE NET CON TRACT RECEIPTS AS AGAINST 12.5 % DETERMINED BY THE LOWER AUTHORITIES. HE FURN ISHED A COPY OF THE STATEMENT CONTAINING THE DETAILS OF THE INCOME DISC LOSED, PERCENTAGE OF INCOME TO THE GROSS RECEIPTS BY WAY OF A CHART BEFO RE US AND SUBMITTED THAT IN THE EARLIER ASSESSMENT YEAR 1999-2000, THE DEPAR TMENT ACCEPTED THE INCOME AT 3.23% ON GROSS RECEIPTS. IF THE ADDITION AL INCOME DISCLOSED BY THE ASSESSEE IN THE REVISED RETURN IS CONSIDERED, THE P ERCENTAGE OF BUSINESS INCOME IS AROUND 15%. THIS BENCH OF THE TRIBUNAL AL READY ADOPTED AT 8% CLEAR OF DEPRECIATION AS REASONABLE PROFIT FROM THE CONSTRUCTION BUSINESS AND THE SAME SHALL BE ADOPTED AS INCOME OF THE ASSESSEE . HE RELIED ON THE DECISION OF THE KERALA HIGH COURT IN THE CASE OF SAM URAI TECHNO TRADING COMPANY LIMITED VS. CIT (37 DTR 386) AND THE ASSES SEE'S OWN GROUP CASES IN ITA NO.461/HYD/2006 FOR THE ASSESSMENT YEAR 2004- 05 IN SUPPORT OF HIS CONTENTION. ALTERNATIVELY, HE SUBMITTED THAT THE BOOKS RESULTS DECLARED BY THE ASSESSEE SHALL BE ACCEPTED WHICH IS AT 8.28%. S INCE, THE ASSESSEE HAS ITA NO.1086 & 1087/HYD/2004 K. RAMAKRISHNA,HYD. 6 ALREADY DECLARED RS.30 LACS IN THE REVISED RETURN O F INCOME AS HIS ADDITIONAL INCOME TOWARDS COMMISSION ON SUB-CONTRACT WORKS, T HE ASSESSEE WILL HAVE ANY GRIEVANCE IF THE SAID ADDITIONAL INCOME DECLAR ED BY THE ASSESSEE IS TELESCOPED AGAINST THE INCOME ON SUB-CONTRACT WORKS . 6. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE SUBMITTED THAT THE NET CONTRACTS RECEIPTS ARRIVED B Y THE ASSESSING OFFICER SHOULD BE ADOPTED TO ARRIVE THE INCOME OF THE ASSES SEE. THE ASSESSING OFFICER TREATED RS.98,72,214 ONLY AS SUB-CONTRACT R ECEIPTS AND THE BALANCE OF RS.9.43 CRORES IS TO BE TREATED AS THE ASSESSEE'S O WN CONTRACTS ONLY. IN THIS REGARD, HE RELIED ON THE ORDERS OF THE ASSESSING OF FICER. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE CO-ORDINATE BENCH OF THIS TRIBUNAL HAS ALREADY DEALT THIS ISSUE IN THE ASSESS EE'S GROUP COMPANY CASE FOR THE ASSESSMENT YEAR 2003-04, IN ITA NO.1112/HYD/ 2007 DATED 23RD OCTOBER, 2008 WHEREIN IT WAS HELD THAT THE PROFIT A T 8% IN CASE OF OWN CONTRACTS AND PROFIT AT 5% IN CASE OF SUB-CONTRACTS AFTER ALLOWING THE DEPRECIATION IS REASONABLE AND JUSTIFIABLE ONE. SI NCE THE ASSESSEE HAD SHOWN THE INCOME AT 8.28% ON THE OWN CONTRACTS, WHICH IS MORE THAN 8% ADOPTED BY THIS TRIBUNAL, WE DIRECT THE ASSESSING OFFICER T O ACCEPT THE PROFIT DECLARED BY THE ASSESSEE ON OWN CONTRACTS. ACCORDINGLY, IN T HE CASE OF SUB-CONTRACTS, WE DIRECT THE ASSESSING OFFICER TO CONSIDER THE NET PROFIT AT 5% ON SUB- CONTRACT WORKS AS ADOPTED BY THIS TRIBUNAL IN THE AFORESAID CASE AND ALLOW TELESCOPIC BENEFIT AGAINST THE ADDITIONAL INCOME OF RS.30 LACS DECLARED BY THE ASSESSEE IN THE REVISED RETURN. IN VIEW OF THE AB OVE, THE GROUND OF THE ASSESSEE IS ALLOWED IN PART. 8. GROUND NO.5 RELATES TO DEPRECIATION ON CARS. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE CLAIMED DEPRECIATION AT 4 0% ON MARUTI ZEN CAR AND HE HELD THAT AS PER RULE-5 OF THE DEPRECIATION SCHE DULE, THE DEPRECIATION OF MOTOR CAR IS ALLOWABLE AT 20% ONLY AND HENCE HE RES TRICTED THE CLAIMS AT ITA NO.1086 & 1087/HYD/2004 K. RAMAKRISHNA,HYD. 7 20%. THE CIT (A) UPHELD THE ACTION OF THE ASSESSING OFFICER IN THIS REGARD. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT AS PER THE PROVISIONS OF SECTION 32(1) OF INCOME-TAX ACT AND THE RATES PRESC RIBED IN APPENDIX-I TO THE INCOME-TAX RULES CAR IS ELIGIBLE FOR DEPRECIATION A T 40%. IN THIS REGARD, HE REFERRED NOTES BELOW TO THE DEPRECIATION SCHEDULE W HEREIN COMMERCIAL VEHICLE INCLUDES LIGHT MOTOR VEHICLE. SINCE CAR IS A LIGHT MOTOR VEHICLE, THE ASSESSEE IS ELIGIBLE TO CLAIM 40% DEPRECIATION ON T HE CAR. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIE D ON THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS PER RULE 5, T HE DEPRECIATION ALLOWABLE FOR THE MOTOR CAR IS AT 20%. HIGHER RATE OF DEPREC IATION AT 40% IS ALLOWABLE ONLY FOR COMMERCIAL VEHICLES. THE CAR OWNED BY THE ASSESSEE IS NOT A COMMERCIAL VEHICLE AND HENCE HIGHER RATE OF DEPRECI ATION ON CAR CANNOT BE ALLOWED. HENCE, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 10. GROUND NOS. 6 AND 7 ARE NOT PRESSED AT THE TIME OF HEARING AND HENCE THESE GROUNDS ARE DISMISSED AS NOT PRESSED. GROUND NO.8 RELATES TO FOREIGN TRAVEL EXPENDITURE. DURING THE COURSE OF SURVEY, T HE ASSESSING OFFICER RECORDED A STATEMENT FROM THE ASSESSEE IN WHICH HE ADMITTED THAT HE TRAVELED TO USA WITH HIS FAMILY MEMBERS AND NO EXPE NDITURE WAS INCURRED BY HIM AS THE TICKETS WERE SENT BY HIS RELATIVE AND TH EIR STAY WAS WITH THEIR RELATIVES. THE ASSESSEE ADMITTED HAVING MADE TRIP TO EUROPE IN THOMAS COOK PACKAGE FOR 20 DAYS. THE ASSESSING OFFICER AD DED RS. 3 LAKHS TO THE INCOME OF THE ASSESSEE AS EXPENDITURE INCURRED OUT OF THE UNEXPLAINED SOURCES. THE CIT (A) CONFIRMED THE ADDITION. IN THIS REGARD, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSI NG OFFICER ERRED IN MAKING THE ESTIMATED ADDITION TOWARDS FOREIGN TRAVEL EXPEN DITURE AS THE EXPENDITURE ON THE TRIP TO USA INCLUDING THE AIR TICKETS WERE B ORN BY ONE MR. VINIL DEVABHAKTUNI, A RELATIVE OF THE ASSESSEE. IN THIS REGARD, HE FURNISHED A NOTARIZED LETTER FROM THE RELATIVE IN SUPPORT OF HI S CONTENTION WHICH IS PLACE ITA NO.1086 & 1087/HYD/2004 K. RAMAKRISHNA,HYD. 8 AT PAGE-44 OF THE PAPER BOOK. WE FIND THAT THE LETT ER FROM HIS RELATIVE EVIDENCES THAT THE EXPENDITURE OF TRAVEL ON HIS STA Y WAS MET BY HIM. HOWEVER, THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE IN SUPPORT OF TRAVEL MADE TO EUROPE. COPIES OF THE PASSPORT ARE ONLY AC CEPTABLE EVIDENCE TO DECIDE WHETHER THE ASSESSEE HAS UNDERTAKEN TRAVEL T O EUROPE OR NOT. SINCE THE ASSESSEE IS CLAIMING THAT HE DID NOT TRAVEL TO EUROPE FOR THE YEAR UNDER CONSIDERATION, AT THE SAME TIME, THE ASSESSEE NOT F URNISHED ANY EVIDENCE TO SUPPORT HIS CLAIM, WE FEEL IT PROPER TO RESTORE THI S MATTER TO THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH AND DIRECT THE ASSESSEE TO PRODUCE THE COPIES OF THE PASSPORT BEFORE THE ASSESSING OFFICER IN SUPPORT OF HIS CONTENTION. HENCE THIS GROUND IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 11. GROUND NO.9 RELATES TO THE ADDITION MADE ON ACC OUNT OF PURCHASE OF FLATS. THE ASSESSING OFFICER ADDED RS.13,86,275 A S UNEXPLAINED EXPENDITURE ON THE GROUND THAT THE ASSESSEE MADE A TOTAL INVEST MENT OF RS.52,52,825 FOR PURCHASE OF FLATS OUT OF WHICH THE ASSESSEE DECLARE D RS.38,66,550 IN THE ORIGINAL AND THE REVISED RETURN. THE CIT (A) AFTER ELABORATE DISCUSSION, DELETED THE ADDITION TO THE EXTENT OF RS.4,25,000 A ND THUS CONFIRMED ADDITION OF RS.9,61,275. WE FIND THAT THE ASSESSING OFFICER HAS MADE AFORESAID ADDITION BASED ON THE COPIES OF THE AGREEMENT ENTER ED BY THE ASSESSEE WITH THE VENDORS. THE CIT(A) SUSTAINED THE ADDITION BAS ED ON THE EVIDENCES FOUND IN THE COURSE OF SURVEY WHICH CLEARLY INDICAT ES THAT THE PAYMENT MADE BY THE ASSESSEE TOWARDS PURCHASE OF FLATS IS AT RS. 52,52,825 WHICH IS CLEAR FROM THE ORDER OF THE CIT(A) FROM PAGE NOS. 9 TO 12 WHEREIN THE CIT(A) ELABORATELY DISCUSSED THE ISSUE AND CONFIRMED THE INVESTMENT AT RS.52,52,825 AND THEREFORE, WE FIND THAT THE SAME IS IN ORDER. THE CIT (A) IS ALSO RIGHT IN DELETING THE ADDITION TO THE EXTENT O F RS.4,25,000 WHICH WAS PAID ON 11-5-2000 (BEYOND THE ACCOUNTING PERIOD REL EVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION). IN VIEW OF THE ABOVE, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE CIT (A) ON THIS ISSUE AND THE S AME IS CONFIRMED. THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. ITA NO.1086 & 1087/HYD/2004 K. RAMAKRISHNA,HYD. 9 12. GROUND NO.10 RELATES TO ACCEPTANCE OF PROFIT DE CLARED BY THE ASSESSEE. IN VIEW OF OUR FINDING IN PARA NO.7 THIS GROUND DOE S NOT REQUIRE ANY ADJUDICATION SEPARATELY. 13. GROUND NO.11 WAS NOT PRESSED AND THEREFORE THE SAME IS DISMISSED AS NOT PRESSED. 14. NOW, WE WILL TAKE UP THE APPEAL OF THE REVENUE. GROUND NO.1 AND 6 ARE GENERAL IN NATURE AND HENCE NO ADJUDICATION IS REQUIRED. GROUND NOS.2 AND 3 RELATE TO VIOLATION OF RULE 46-A OF INCOME-TA X RULES. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CIT (A) IS NOT CORRECT IN NOT AFFORDING AN OPPORTUNITY TO THE ASSESSING OFFICER T O EXAMINE THE ADDITIONAL EVIDENCE FILED IN RESPECT OF SUB-CONTRACTORS AND AG RICULTURAL ACTIVITIES OF THE ASSESSEE UNDER RULE 46A OF I T RULES. HE FURTHER SU BMITTED THAT THE ASSESSEE FURNISHED THE COPIES OF INCOME-TAX CLEARAN CE CERTIFICATES EVIDENCING THAT THE ASSESSEE CARRIED ON A CONSTRUCTION CONTRAC T WITH SUB-CONTRACTOR. IT IS ALSO SUBMITTED THAT THE ASSESSEE SUBMITTED COPIE S OF NEWSPAPER CUTTING REGARDING THE SCALE OF AGRICULTURAL ACTIVITIES UNDE RTAKEN BY THE ASSESSEE. BOTH THE ABOVE EVIDENCES ARE NOT FILED BEFORE THE A SSESSING OFFICER. HENCE, THE CIT (A) ERRED IN GIVING RELIEFS WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSING OFFICER. 15. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE REPLIED ON 20-11-2003 TO THE SUBM ISSIONS MADE BY THE ACIT, CIR-6(1), HYDERABAD ON 12-11-2003. IT IS SUBM ITTED THAT THE INCOME- TAX CLEARANCE CERTIFICATES ARE ISSUED BY THE SAME A SSESSING OFFICER AND ALL THE SUB-CONTRACTORS ARE ASSESSED IN THE SAME RANGE. HENCE, THESE EVIDENCES ARE ALREADY AVAILABLE IN THE RECORDS OF THE ASSESSE E. IN THIS REGARD, HE PLACED THE COPIES OF THE LETTER ADDRESSED TO THE CIT (A)-I V, HYDERABAD ON 20-11- 2003 ALONG WITH THE COPIES OF INCOME-TAX CLEARANCE CERTIFICATE. LIKEWISE, THE EVIDENCES PRODUCED IN SUPPORT OF AGRICULTURAL ACTIV ITIES ALSO SUBMITTED ONLY IN RESPONSE/REPLY TO THE SUBMISSIONS MADE BY THE ACIT. AS PER SUB-RULE (4) OF ITA NO.1086 & 1087/HYD/2004 K. RAMAKRISHNA,HYD. 10 RULE 46A OF INCOME-TAX RULES, THERE IS NO VIOLATION . HENCE, THE CIT (A) IS RIGHT IN ADMITTING THE SAME AND CONSIDERING THE EVI DENCES FILED BY THE ASSESSEE. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND MERIT IN THE ARGUMENTS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE CIT (A) CONSIDERED THE EV IDENCE RELATING TO SUB- CONTRACTORS WHICH WERE ALREADY AVAILABLE IN THE REC ORDS OF THE ASSESSING OFFICER. INCOME-TAX CLEARANCE CERTIFICXATES ARE GE NERALLY ISSUED ONLY ON THE BASIS OF RETURN, PROFIT AND LOSS ACCOUNT, TURNOVER DECLARED BY THE SUB- CONTRACTOR. THAT MEANS, ALL THE PRIMARY RECORDS ARE ALREADY AVAILABLE WITH THE ASSESSING OFFICER. SINCE, THE ASSESSEE AS WELL AS THE SUB-CONTRACTORS IS ASSESSED IN THE SAME RANGE, IT IS OBVIOUS THAT ALL THE ASSESSMENT PARTICULARS OF THE SUB CONTRACTORS ARE AVAILABLE WITH THE ASSES SING OFFICER. HOWEVER, THE EVIDENCES ARE FURNISHED BY THE ASSESSEE ONLY IN COU NTER RESPONSE TO THE SUBMISSIONS MADE BY THE ACIT. HENCE, THE PRODUCTION OF EVIDENCE BEFORE THE CIT (A) IS IN CONFORMITY WITH THE SUB-RULE (4) OF T HE RULE 46A OF I T RULES. HENCE, THE GROUNDS RAISED BY THE REVENUE IN THIS REG ARD ARE DISMISSED. 17. GROUND NO.4 RELATES TO THE DELETION OF ADDITION OF RS.22 LAKHS MADE ON ACCOUNT OF PURCHASE OF VEHICLE. THE CIT (A) ON PER USAL OF DEPRECIATION STATEMENT FILED BY THE ASSESSEE FOUND THAT THE PURC HASE OF BENZ VAN IS REFLECTED IN THE DEPRECIATION STATEMENT AS ON 31-3- 2000 AND HYUNDAI ACCENT CAR PURCHASED ONLY AFTER 1-9-2000. THE CA'S CERTIF ICATE DATED 13-3-2001, RELIED BY THE ASSESSING OFFICER FOR ADDITION, IS RE LEVANT FOR THE ASSESSMENT YEAR 2001-02. HENCE, THE CIT (A) WAS RIGHT IN DELETI NG THE ADDITION OF RS.22 LAKHS MADE BY THE ASSESSING OFFICER TOWARDS PURCHAS E OF CAR HOLDING THAT THERE IS NO CASE FOR MAKING ANY ADDITION TOWARDS PU RCHASE OF VEHICLES AS UN EXPLAINED EXPENDITURE. THEREFORE, WE DO NO SEE ANY INFIRMITY IN THE ORDER OF THE CIT (A) IN THIS REGARD AND THE SAME IS CONFIRME D. GROUND RAISED BY THE REVENUE IS DISMISSED. ITA NO.1086 & 1087/HYD/2004 K. RAMAKRISHNA,HYD. 11 18. GROUND NO.5 RELATES TO VALUATION OF AGRICULTURA L LAND AT RS.30,000 PER ACRE ADOPTED BY THE ASSESSEE AS AGAINST RS.1 LAKH P ER ACRE AS CERTIFIED BY THE ASSESSEE'S CA. THE ASSESSING OFFICER NOTICED T HAT AS PER THE CERTIFICATE ISSUED BY THE CA ON 14-4-1999 THE VALUE OF AGRICULT URAL LAND WAS RS.1 LAKH PER ACRE. THE ASSESSING OFFICER CALLED FOR THE DET AILS OF INVESTMENT MADE BY THE ASSESSEE IN PURCHASE OF AGRICULTURAL LAND. T HE ASSESSEE REPLIED THAT THE CERTIFICATE ISSUED BY THE CA IS FORGED AND FABRICAT ED. IT IS ALSO SUBMITTED THAT THE LANDS WERE PURCHASED DURING 1996-97 AND 97-98. THE ASSESSING OFFICER PERUSED THE DETAILS FURNISHED BY THE ASSESSEE AND F INALLY DETERMINED THAT THE ASSESSEE PURCHASED A TOTAL OF 24.29 ACRES OF AGRICU LTURAL LAND IN THE NAMES OF HIS FAMILY MEMBERS AND ADDED RS.57 LAKHS AS UNEXP LAINED INVESTMENT. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ON THE BASIS OF THE CERTIFICATE ISSUED BY THE CA, WHICH WAS FOUND DURIN G THE COURSE OF SURVEY, THE ASSESSING OFFICER ADDED RS. 57 LAKHS AS UNEXPLA INED INVESTMENT BY THE ASSESSEE FOR PURCHASE OF AGRICULTURAL LAND. HENCE, THE CIT (A) IS NOT RIGHT IN DELETING THE SAME. HE RELIED ON THE ORDERS OF THE ASSESSING OFFICER AS WELL AS CA'S CERTIFICATE ISSUED IN THIS REGARD. ON THE OTHE R HAND, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SUB-REGISTRAR'S VALUE FOR THE AGRICULTURAL LAND IS LESS THAN RS.30,000 AS ADOPTED BY THE CIT [ A] AND THE VALUE ADOPTED BY THE ASSESSING OFFICER IS VERY HIGH. IT IS SUBMI TTED THAT 3.33 ACRES OF AGRICULTURAL LAND WAS PURCHASED FROM THE GOVERNMENT IN JUNE, 2002 IN AN AUCTION FOR CONSIDERATION OF RS.RS.80,000 PER ACRE. THE CERTIFICATE ISSUED BY THE CA IS ONLY FOR THE PURPOSE OF VISA FORMALITIES. HENCE IT IS SUBMITTED THAT RS.30,000 PER ACRE AS AGAINST RS. 1 LAKH ADOPTED BY THE ASSESSING OFFICER FOR VALUING THE AGRICULTURAL LAND IS TO BE ACCEPTED. 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE CIT (A) DIREC TED THE ASSESSING OFFICER TO QUANTIFY THE ACREAGE OF THE AGRICULTURAL LAND NOT D ISCLOSED BY THE ASSESSEE. HENCE, THERE SHOULD NOT BE ANY GRIEVANCE IN THIS REG ARD. THE ONLY QUESTION THAT NEEDS TO BE ANSWERED IS WHETHER THE VALUE OF T HE AGRICULTURE LAND IS RS.30,000/- PER ACRE OR RS.1,00,000/- PER ACRE. EX CEPT FOR THE CA'S ITA NO.1086 & 1087/HYD/2004 K. RAMAKRISHNA,HYD. 12 CERTIFICATE, THE DEPARTMENT COULD NOT PRODUCE ANY D OCUMENT BEFORE US IN SUPPORT OF THEIR CONTENTION THAT THE VALUE OF THE S AID LAND WAS RS.1 LAKH PER ACRE. IT APPEARS THAT NO DOCUMENT WAS FOUND BY THE DEPARTMENT EVEN AT THE TIME OF SURVEY. IN OUR CONSIDERED VIEW, CA CERTIFI CATE CANNOT BE A BASIS OR VALID DOCUMENTARY EVIDENCE FOR VALUING THE AGRICULT URE LANDS AND THE SAME APPEARS TO HAVE BEEN ISSUED ONLY FOR THE PURPOSE OF VISA FORMALITIES. GENERALLY, CA CERTIFICATES ARE ISSUED AT HIGHER MAR KET PRICE FOR THE PURPOSE OF VISA FORMALITIES. IN VIEW OF THE ABOVE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT [A] IN VALUING THE AGRICULTURE LAND RS.30,0 00/- PER ACRE WHICH WAS BASED ON THE REGISTERED SALE DEEDS FURNISHED BY THE ASSESSEE. HENCE, HIS ORDER IS CONFIRMED ON THIS ISSUE. THE GROUND RAISE D BY THE REVENUE IS DISMISSED. 20. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSE AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER WAS PRONOUNCED IN THE COURT ON 30-6-2010. SD/- G.C.GUPTA SD/- AKBER BASHA VICE PRESIDENT ACCOUNTANT MEMBER. DT/- 30TH JUNE, 2010 COPY FORWARDED TO: 1. SHRI K. RAMAKRISHNA, 8-3-988/34/5, SBH COLONY, SR INAGAR COLONY, HYDERABAD. 2 DCIT, CIR-6(1), HYDERABAD. 3. 4. THE CIT, AP, HYDERABAD., CIT(A)-IV, HYDERABAD. DR, ITAT, HYDERABAD. JMR* ITA NO.1086 & 1087/HYD/2004 K. RAMAKRISHNA,HYD. 13