Mr Rajkumar Aswani, Pune V. DCIT, Pune

ITA 1124/PUN/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2781 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 31-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR JAIN
• Assessee Lawyers: R G NAHAR
• Keywords: Unexplained investment; Value adopted by valuation officer; Search and seizure; Document seized; Valuation report; Block assessment; Documents seized
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , AM . / ITA NO. 1124 /PN/201 2 / ASSESSMENT YEAR : 20 0 9 - 1 0 MR. RAJKUMAR ASWANI, MZSK & ASSOCIATES, (FORMERLY SHAH KHANDELWAL JAIN & ASSOCIATES) CHARTERED ACCOUNTANTS, LEVEL 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE 411001 . / APPELLANT PAN: A EXPA7340C VS. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1), PUNE . / RESPONDENT CENTRAL CIRCLE 1(1), PUNE . / RESPONDENT / APPELLANT BY : SHRI R.G. NAHAR / RESPONDENT BY : SHRI DH EERAJ KUMAR JAIN / DATE OF HEARING : 18 . 0 1 .201 6 / DATE OF PRONOUNCEMENT: 29 . 0 1 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - I , PUNE , DATED 1 5 . 1 2 .20 1 1 REL ATING TO ASSESSMENT YEAR 20 0 9 - 1 0 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - ITA NO. 1124 /PN/20 1 2 MR. RAJKUMAR ASWANI 2 1 . ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROV ISIONS OF THE ACT IT BE HELD THAT, THE ADDITION MADE OF RS.12,25,142/ - & 69,32,586/ - U/S. 69B OF THE INCOME TAX ACT ON ACCOUNT OF UNEXPLAINED INVESTMENT IN RESIDENTIAL BUNGALOWS IGNORING THE ENTRIES IN THE BOOKS OF ACCOUNT IS NOT IN ACCORDANCE WITH THE PRO VISIONS OF THE ACT. THE ADDITION SO MADE BE DELETED. JUST AND PROPER RELIEF BE GRANTED TO THE APPELLANT ON THIS SCORE. 2. THE APPELLANT PRAYS TO BE ALLOWED TO ADD, AMEND, MODIFY , RECTIFY, DELETE, RAISE ANY GROUNDS OF APPEAL AT THE TIME OF HEARING. 3 . T HE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE ADDITION OF RS.12,25,142/ - AND RS.69, 32,586/ - UNDER SECTION 69B OF THE ACT ON ACCOUNT OF UNEXPLAINED INVESTMENT IN RESIDENTIAL PROPERTIES. 4. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, SEARCH ACTION UN DER SECTION 132 OF THE ACT WAS CONDUCTED ON GROUP OF CASES OF THE ASSESSEE ON 13.08.2009. THE ASSESSEE FURNISHED THE RETURN OF INCOME FOR THE CURRENT YEAR ON 15.10.2010 DISCLOSING TOTAL INCOME OF RS. 78,10,630/ - . THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY AND A QUESTIONNAIRE ALONG WITH REQUISITE NOTICE WAS ISSUED TO THE ASSESSEE. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD CONSTRUCTED A BUNGALOW AT CTS NO.1426, PLOT NO.140, OPP. COSMOS BANK, PIMPRI, PUNE. THE ASSESSING OFFICER FURTHER NOTE D THAT THE CONSTRUCTION COST OF RS.3,13,84,858/ - HAD BEEN DEBITED IN THE BOOKS OF ACCOUNT. THE VALUATION OF THE SAID PROPERTY WAS REFERRED TO DEPARTMENTAL VALUATION OFFICER (IN SHORT DVO) FOR DETERMINING THE COST OF CONSTRUCTION AND FIXTURES OF THE SAID PROPERTY. THE DVO VALUED THE INVESTMENT IN THE PROPERTY AT RS.3,26,10,000/ - . THE ASSESSING OFFICER THEREAFTER, ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE EXCESS INVESTMENT OF RS. 12,25,142/ - SHOULD NOT BE ADDED IN THE HANDS OF THE ASSESSEE. IN RESPONSE, THE ASSESSEE CONTENDED THAT THE DIFFERENCE IN VALUE DONE BY THE DVO AND AS ACCOUNTED FOR IN THE BOOKS OF ACCOUNT WAS 4%, WHICH WOULD BE DUE TO CALCULATION AND PURCHASING DIFFERENCE OF THE MATERIAL. ITA NO. 1124 /PN/20 1 2 MR. RAJKUMAR ASWANI 3 THE ASSESSING OFFICER REJECTING THE EXPLANAT ION OF THE ASSESSEE, ADDED SUM OF RS.12,25,142/ - AS UNEXPLAINED INVESTMENT UNDER SECTION 69B OF THE ACT. FURTHER, THE ASSESSEE HAS ALSO CONSTRUCTED S.P. HEIGHTS, AT MUMBAI - PUNE ROAD, PUNE. THE CONSTRUCTION COST OF RS. 54,32,505/ - WAS DEBITED IN THE BOOKS OF ACCOUNT. THE DVO VALUED THE INVESTMENT AT RS. 1,25,02,000/ - AND THE ASSESSEE WAS ASKED TO EXPLAIN THE EXCESS INVESTMENT OF RS. 70,69,495/ - . THE ASSESSEE EXPLAINED ITS CASE BEFORE THE ASSESSING OFFICER AND POINTED OUT THAT IN ADDITION TO RS. 54,32,505/ - , FURTHER SUM OF RS.10,36,909/ - WAS EXPENDED ON THIS ACCOUNT BY M/S. ASWANI ASSOCIATES. THE PLEA OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER AND SUM OF RS.60,32,586/ - WAS CONSIDERED AS UNEXPLAINED INVESTMENT UNDER SECTION 69B OF THE ACT. 5. THE C IT(A) UPHELD THE ORDER OF ASSESSING OFFICER. THE PLEA RAISED BY THE ASSESSEE BEFORE THE CIT(A) WAS THAT NO DOCUMENT / EVIDENCE OF SUPPRESSION WAS FOUND IN RESPECT OF INVESTMENT IN THE SAID PROPERTIES. IT WAS SUPPRESSION WAS FOUND IN RESPECT OF INVESTMENT IN THE SAID PROPERTIES. IT WAS FURTHER CONTENDED BY THE ASSESSEE THAT THE ASS ESSING OFFICER HAD NOT FOUND ANY ENTRY IN BOOKS OF ACCOUNT AS INCORRECT AND HAD NOT REJECTED THE BOOKS OF ACCOUNT AND THEREFORE, HE COULD NOT HAVE REFERRED THE MATTER TO THE DVO, WITHOUT REJECTING THE BOOKS OF ACCOUNT. THE CIT(A) REJECTED THE CONTENTION O F THE ASSESSEE NOTING THAT THE APPEAL UNDER CONSIDERATION RELATED TO THE ASSESSMENT MADE UNDER SECTION 153A R.W.S. 143(3) OF THE ACT, BASED ON SEARCH CONDUCTED BY THE DEPARTMENT. AS PER THE CIT(A), THIS WAS NOT THE REGULAR ASSESSMENT AND WHERE THE ASSESSE E AND HIS GROUP WAS ENGAGED IN SUPPRESSION OF TRANSACTIONS, THEREFORE, THE BOOKS OF ACCOUNT REGULARLY MAINTAINED WERE ESTABLISHED TO BE UNRELIABLE. WHERE THE RETURN WAS NOT A REGULAR RETURN BASED ON THE BOOKS MAINTAINED IN THE REGULAR COURSE OF BUSINESS, THE SAME WERE NOT REQUIRED TO BE FIRST REJECTED BEFORE RESORTING TO THE SERVICES ITA NO. 1124 /PN/20 1 2 MR. RAJKUMAR ASWANI 4 OF THE DVO. RELIANCE PLACED UPON BY THE ASSESSEE IN THIS REGARD WAS HELD TO BE NOT APPLICABLE TO THE FACTS OF THE CASE AND THE ADDITION MADE BY THE ASSESSING OFFICER, WAS UPH ELD. 6. THE ASSESSEE IS IN APPEAL AGAINST THE AFORESAID ADDITION MADE IN HIS HANDS. 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE INVESTMENT IN BOTH THE RESIDENTIAL PROPERTIES WAS DEBITED TO THE BOOKS OF ACCOUNT MAINTAINE D BY THE ASSESSEE. THE ASSESSEE HAD RECEIVED REMUNERATION FROM M/S. ASWANI ASSOCIATES, AGAINST WHICH HE HAD FILED RETURN OF INCOME, WHICH WAS ACCEPTED BY THE DEPARTMENT. OUR ATTENTION WAS DRAWN TO THE ENTRIES AT PAGE 26 OF THE PAPER BOOK, WHEREIN THE DET AILS OF THE CONSTRUCTION ACCOUNT ARE MAINTAINED IN THE BOOKS OF ACCOUNT . HE THUS, CONTENTED THAT WHERE NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF CONTENTED THAT WHERE NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH, THERE WAS NO MERIT IN ANY ADDITION IN THE HANDS OF THE ASSESSEE. AN ALTERNATE PLEA WAS RAISED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT WHETHER IN THE CASE OF SEARCH OR OTHERWISE, THE LAW IS SETTLED BY THE HONBLE HIGH COURT OF KARNATAKA IN CIT VS. VASUDEV CONSTRUCTION (2014) 44 TAXMANN.COM 30 (KARNATAKA) , WHEREIN IT HA S BEEN HELD THAT WHERE NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH TO INDICATE THAT THE ASSESSEE HAD NOT RECORDED EXPENSES INCURRED ON CONSTRUCTION IN BOOKS OF ACCOUNT , IN THE ABSENCE OF ANY SEIZED MATERIAL AND SOLELY ON THE BASIS OF DVO REPORT, ADDI TION OF UNDISCLOSED INCOME UNDER SECTION 158BB OF THE ACT COULD NOT BE MADE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE REFERRED TO THE VALUATION REPORT OF THE DVO, COPY OF WHICH IS PLACED AT PAGES 27 TO 3 2 OF PAPER BOOK. THE PERUSAL OF THE S AID REPORT OF DVO REFLECTS THE COMMERCIAL BUILDING AT S.P. ITA NO. 1124 /PN/20 1 2 MR. RAJKUMAR ASWANI 5 HEIGHTS, TO BE CONSTRUCTED DURING THE PERIOD 2004 - 05 TO 2006 - 07. FURTHER, THE DVO REPORT IN RESPECT OF THE BUILDING AT PIMPRI REFLECTS THE PERIOD OF CONSTRUCTION TO BE 2006 - 07 TO 2007 - 08 . THE LEA RNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THUS, CONTENDED EVEN ASSUMING THAT THE ADDITION IS TO BE MADE IN THE HANDS OF ASSESSEE, THEN THERE IS NO REASON WHY THE ADDITION WAS MADE IN THIS YEAR I.E. ASSESSMENT YEAR 2009 - 10. 8. THE LEARNED DEPARTMENTA L REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF CIT(A). 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE WAS A PARTNER IN M/S. ASWANI ASSOCIATES. SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 13.08.2008. SUBSEQUENT THERETO, THE ASSESSEE FURNISHED REGULAR RETURN OF INCOME FOR THE CAPTIONED ASSESSMENT YEAR DECLARING TOTAL INCOME OF RS.78,10,630 / - . THE CAPTIONED ASSESSMENT YEAR DECLARING TOTAL INCOME OF RS.78,10,630 / - . THE ASSESSEE HAD RECEIVED REMUNERATION FROM THE PARTNERSHIP CONCERN . I N ADDITION THE ASSESSEE HAD RECORDED CONSTRUCTION C OST OF BUNGALOW AT PIMPRI AT RS.3,13,84,858/ - IN THE BOOKS OF ACCOUNT AND HAD ALSO SHOWN THE CONSTRUCTION COST OF COMMERCIAL BUILDING AT S.P. HEIGHTS, MUMBAI - PUNE ROAD, AT 54,32,505 / - IN THE BOOKS OF ACCOUNT. THE A SSESSEE WAS MAINTAINING BOOKS OF ACCOUNT REGULARLY. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS ALSO NOTED THAT THE COST OF CONSTRUCTION WAS DEBITED TO THE BOOKS OF ACCOUNT OF THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER MADE A REFERENCE TO THE DVO FOR DETERMINING THE COST OF CONSTRUCTION AND FIXTURES OF THE SAID PROPERTIES. THE COPY OF THE DVO REPORT IS ENCLOSED AT PAGES 27 TO 3 2 OF THE PAPER BOOK. THE PERUSAL OF THE REPORT FOR COMMERCIAL BUILDING AT S.P. HEIGHT S REFLECTS THAT THE PERIOD OF CONSTRUCTION OF THE SAID PROPERTY WAS 2004 - 05 ITA NO. 1124 /PN/20 1 2 MR. RAJKUMAR ASWANI 6 TO 2006 - 07 . FURTHER, THE PERIOD OF CONSTRUCTION OF THE PROPERTY AT PIMPRI WAS DURING 2006 - 07 TO 2007 - 08 . BOTH THE PROPERTIES WERE ADMITTEDLY, CONSTRUCTED BY THE ASSESSEE IN THE P ERIOD PRIOR TO THE YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2009 - 10. IN THE FIRST INSTANCE, WHERE THE COST OF CONSTRUCTION HAS BEEN INCURRED BY THE ASSESSEE IN THE PERIOD PRIOR TO THE YEAR UNDER APPEAL, THEN NO ADDITION CAN BE MADE IN THE HANDS OF TH E ASSESSEE ON THIS ACCOUNT FOR THE INSTANT ASSESSMENT YEAR . WE FURTHER FIND THAT THE ASSESSING OFFICER VIDE PARA 3 HAS NOTED THAT CERTAIN DOCUMENTS WERE SEIZED FROM THE ASSESSEE AND THE ASSESSMENT WAS FINALIZED AFTER GOING THROUGH THE APPRAISAL REPORT AND ANALYSIS OF THE SEIZED DOCUMENTS. IN THE BODY OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOT REFERRED TO ANY DOCUMENT BEING FOUND DURING THE COURSE OF SEARCH, WHICH RELATES TO THE COST OF CONSTRUCTION OR UNEXPLAINED INVESTMENT IN THE AFORESAID PR OPERTIES. WHERE NO DOCUMENT HAS BEEN FOUND FROM THE POSSESSION OF THE ASSESSEE DURING THE COURSE OF SEARCH INDICATING ANY SUPPRESSED COST OF CONSTRUCTION AND FIXTURES OF THE SAID PROPERTIES, AND WHERE THE ASSESSEE HAD RECORDED THE EXPENSES INCURRED ON CON STRUCTION IN THE BOOKS OF ACCOUNT, NO ADDITION IS WARRANTED IN THE HANDS OF ASSESSEE SOLELY ON THE BASIS OF DVO REPORT. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF KARNATAKA IN CIT VS. VASUDEV CONSTRUCTION (SUPRA) IN THIS REGARD , THOUGH IN THE CONTEXT OF BLOCK ASSESSMENT COMPLETED UNDER SECTION 1 58BD OF THE ACT . 10. NOW, COMING TO THE LAST OBJECTION OF THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT WHERE THE ASSESSEE IS MAINTAINING BOOKS OF ACCOUNT, NO REFERENCE CA N BE MADE TO THE DVO WITHOUT REJECTING THE BOOKS OF ACCOUNT. ADMITTEDLY, THE ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNT IN THE CASE OF ASSESSEE THOUGH THE ASSESSING OFFICER NOTES THAT THE ITA NO. 1124 /PN/20 1 2 MR. RAJKUMAR ASWANI 7 COST OF CONSTRUCTION IS REFLECTED IN THE BOOKS OF ACCO UNT. IN THIS REGARD, WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HON BLE DELHI HIGH COURT IN CIT VS. BAJRANGLAL BANSAL REPORTED IN 241 CTR 64 (DEL) FOR THE PROPOSITION THAT THE OPINION OF THE DVO PER SE WAS NOT AN INFORMATION AND COULD NOT BE RELIED U PON WITHOUT BOOKS OF ACCOUNT , BEING REJECTED . SINCE THE BOOKS OF ACCOUNT HA D NOT BEEN REJECTED IN THE PRESENT CASE AND FOLLOWING THE SAID PRINCIPLE, WE REVERSE THE ORDER OF CIT(A) IN THIS REGARD AND WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION S OF RS.12,25,142/ - AND RS.69,32,586/ - . THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 11 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 29 TH DAY OF JANUARY , 201 6 . SD/ - SD/ - SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 29 TH JANUARY , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE AP PELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - I, PUNE ; 4. / THE CIT (CENTRAL) , PUNE ; 5. , , / DR A , ITAT, PUNE; / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE