DCIT, Parwanoo V. Sh. Darshan Singh Saini, Solan

ITA 1200/CHANDI/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73504 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-03-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 15-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 1200/CHD/2012 ASSESSMENT YEAR : 2005-06 D.C.I.T. PARWANOO VS. DARSHAN SINGH SAINI PROP. M/S SAINI ELECTRICALS & MECHANICAL WORKS SAI ROAD, BADDI DISTT. SOLAN AZBPS 8444C (APPELLANT) (RESPONDENT) APPELLANT BY SHRI AKHILESH GUPTA RESPONDENT BY: SHRI TEJ MOHAN SINGH DATE OF HEARING 4.3.2014 DATE OF PRONOUNCEMENT 11. 3.2014 O R D E R PER T.R.SOOD, A.M THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 21. .8.2012 OF THE LD CIT(A), SHIMLA. 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOW ING GROUNDS: 1 ON THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) HA S ERRED IN ESTIMATING RETAIL TURNOVER OF THE ASSESSEE AT RS . 6,00,000/- AGAINST THE ESTIMATION DONE BY THE ASSESSING OFFICE R AT RS. 15,00,000/-. 2 ON THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 13,62,500/- U/S 69 OF THE ACT MADE BY ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION OF THE HOUSE. 3 GROUND NO. 1 - AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSEE DID NOT FILE ANY DETAILS WITH REGARD TO SALES. IT WAS ALSO NOTED BY THE ASS ESSING OFFICER THAT THE ASSESSEE WAS HAVING A SHOP AT SAI ROAD, BADDI A ND IN THE ABSENCE OF RECORD, SALES DECLARED BY THE ASSESSEE A T RS. 315805/- CANNOT BE ACCEPTED. IT WAS NOTED THAT AFTER DECLAR ATION OF VARIOUS BENEFITS UNDER INDUSTRIAL PACKAGE TO THE STATE OF H IMACHAL PRADESH, 2 THE ACTIVITY AT SAI ROAD HAS INCREASED MANIFOLD. I N THE EARLIER YEARS THE SALE OF THE ASSESSEE WAS RS. 516495/- AND THE A SSESSEE HAS REDUCED THE SALES IN THE CURRENT YEAR. IN THIS BACK GROUND THE ASSESSING OFFICER ESTIMATED THE SALES AT RS 15 LAKH S AND MADE ADDITION OF RS. 43420/- IN RESPECT OF DIFFERENCE I N NET PROFIT. 4 ON APPEAL IT WAS MAINLY SUBMITTED THAT THE ASSESS EE WAS IN THE PROCESS OF CLOSING HIS SHOP AS HE HAS ALREADY START ED A BUSINESS OF CONTRACT WORK AND THAT IS WHY THE SALES HAVE REDUCE D. 5 THE LD. CIT(A) WAS PARTLY SATISFIED WITH THE SUBM ISSIONS. HOWEVER, SHE NOTED THAT IN EARLIER YEARS THE ASSESS EE HAD DECLARED SALES OF RS. 516495/- THEREFORE ADDITION OF RS 6 LA CK WAS JUSTIFIED. 6 BEFORE US. THE LD. D.R. FOR THE REVENUE SUPPORTED THE ORDER OF THE ASSESSING OFFICER WHEREAS THE LD. COUNSEL FOR T HE ASSESSEE SUPPORTED THE IMPUGNED ORDER. 7 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THIS ISSUE HAS BEEN ADJUDICATE BY THE LD. CIT(A) VIDE PARA 4.4 WHICH IS AS UNDER: THERE IS NO DENYING THE FACT THAT THE SALES OF THE APPELLANT IN HIS BUSINESS OF ELECTRICAL AND ELECTRONIC GOODS WER E TO THE TUNE OF RS. 5,16,495/- IN THE ASSESSMENT YEAR 2002-03AN D THAT HE WAS HAVING A SHOP AT SAI ROAD, BADDI WHICH IS A PRI ME LOCATION. A PERUSAL OF THE SALES TAX ASSESSMENT OR DER FURNISHED BY THE APPELLANT REVEALS THAT NO PROPER A CCOUNTS BOOKS WERE MAINTAINED AND PRODUCED BEFORE THE SAILS TAX AUTHORITIES BY THE APPELLANT. A FINDING TO THIS EF FECT HAS BEEN CLEARLY GIVEN IN THE ASSESSMENT ORDER DATED 15.12.2 006 BY THE S.T ASSESSING AUTHORITY, BADDI. ACCORDINGLY THE SA LES TAX ASSESSMENT HAS ALSO BEEN FRAMED ON AN ESTIMATE BASI S AT THE SALES OF RS. 3,21,000/-. THE SAID SALES TAX ASSESS MENT THUS CANNOT BE CONSIDERED A CONCLUSIVE EVIDENCE OF THE A PPELLANTS SALES BY ANY MEANS. THE ASSESSING OFFICER WAS JUST IFIED IN REFERRING TO THE OLD HISTORY OF THE ASSESSEES CASE WHILE ESTIMATING THE TURNOVER OF THE ASSESSEES BUSINESS FOR THE YEAR UNDER CONSIDERATION. AFTER CONSIDERING THE APPELLA NTS PLEA THAT HE HAD TURNED HIS ATTENTION TO THE CONTRACT BU SINESS, IT IS CONSIDERED REASONABLE TO ESTIMATE THE SALES OF THE ASSESSEES BUSINESS OF ELECTRICAL GOODS AT RS. 6,00,000/- DURI NG THE YEAR UNDER CONSIDERATION AS HIS TURNOVER FOR THE ASSESSM ENT YEAR 2002-03 WAS AT RS. 5,16,495/-. AS REGARDS THE APPL ICATION OF NET PROFIT RATE OF 10% THE SAME IS FOUND TO BE IN O RDER, AS THE ASSESSEE HIMSELF HAS RETURNED AT NET PROFIT RATE OF 10% ON HIS GROSS TURNOVER. THE APPELLANT ACCORDINGLY PARTLY S UCCEEDS ON THIS GROUND OF APPEAL. 3 ABOVE PARA OF IMPUGNED ORDER CLEARLY SHOWS THAT THE LD. CIT(A) HAS CORRECTLY ADJUDICATED THE ISSUE BECAUSE THE ASSESSE E WAS ALREADY IN THE PROCESS OF STARING NEW CONTRACT BUSINESS. WE F IND NO REASON TO DEVIATE FROM ABOVE FINDING AND ACCORDINGLY CONFIRM THE ORDER OF THE LD. CIT(A). 8 GROUND NO. 2 AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICE NOTICED THAT THE ASSESSEE HAS MADE CERTAIN CONSTRUCTIONS IN HIS RESIDENTIAL HOUSE AT VILLAGE KHARUNI, P.O MANPURA, TEHSIL NALAGARH (H P). AS NO INFORMATION WAS GIVEN BY THE ASSESSEE AND AN INSPEC TOR WAS DEPUTED WHO REPORTED THAT GROUND FLOOR AND FIRST FL OOR WERE MEASURING 25X60 AND SECOND FLOOR WAS HALF OF THE F IRST FLOOR. THEREFORE THE ASSESSING OFFICER HAS CONSIDERED THE TOTAL AREA 3750 SQFT ON WHICH A RATE OF RS. 550 PER SQFT WAS APPLIE D AND COST OF ADDITIONAL CONSTRUCTION WAS RS. 2062500/-. FURTHER A SUM OF RS. 2 LAKHS WAS ADDED ON ACCOUNT OF ADDITIONAL ITEMS LIKE MARBLE FLOORING AND TILES ETC. AND THUS TOTAL COST WAS ESTIMATED AT RS. 2262500/-. IT WAS FURTHER NOTICED THAT THE ASSESSEE HAS RAISED A LOAN FOR CONSTRUCTION OF RESIDENTICAL HOUSE AT RS. 9 LAKHS F ROM PUNJAB NATIONAL BANK, THEREFORE BALANCE SUM OF RS. 1362500 /- WAS ADDED TO THE INCOME OF THE ASSESSEE. 9 ON APPEAL, IT WAS MAINTLY SUBMITTED THAT THE HOUS E WAS VERY OLD AND BELONG TO ASSESSEES MOTHER, SMT. PREM KAUR WHO HAD RENOVATED THE SAME BY OBTAINING BANK LOAN OF RS. 9 LAKHS. THE ASSESSEE WAS ONLY A CO-BORROWER AND HAVE NOTHING TO DO WITH THE HOUSE. IT WAS ALSO POINTED OUT THAT SMT. PREM KAUR WAS REGULAR TAX PAYER AND HAD FILED HER RETURN OF INCOME INDEPENDEN TLY ON HER OWN SOURCES FOR REPAYMENT OF BANK LOAN. THE LD. CIT(A) ASKED FOR THE REMAND REPORT AND ASSESSING OFFICER VIDE REMAND REP ORT DATED 4 7.6.2012 CONFIRMED THAT THE PROPERTY WAS CONSTRUCTE D BY SMT. PREM KAUR. 10 THE LD. CIT(A) WAS SATISFIED WITH THIS EXPLANATI ON AND THEREFORE DELETED THE ADDITION. 11 BEFORE US THE LD. D.R. FOR THE REVENUE STRONGLY SUPPORTED THE ORDER OF ASSESSING OFFICER. 12 ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT FIRST OF AL THE HOUSE DID NOT BELONG TO THE AS SESSEE WHO WAS ONLY A CO-BORROWER. IN ANY CASE THE ADDITION COULD NOT HAVE BEEN MAD WITHOUT REFERRING THE MATTER TO THE DVO WHICH HAS NOT BEEN DONE. 13 WE HAVE GONE THROUGH THE RIVAL SUBMISSIONS CAREF ULLY. THE LD. CIT(A) HAS DECIDED THIS ISSUE VIDE PARA 5.3 WHICH I S AS UNDER: A PERUSAL OF HE ASSESSMENT ORDER REVEALS THAT THE ASSESSING OFFICER HAS NOT BROUGHT ANYTHING ON RECORD EITHER T O PROVE THAT AN INVESTMENT OF RS. 22,62,500/- WAS ACTUALLY MADE BY THE ASSESSEE IN THE CONSTRUCTION OF THE HOUSE, AND THAT THE ENTIRE INVESTMENT WAS MADE BY THE ASSESSEE HIMSELF AND ALS O DURING THE YEAR UNDER CONSIDERATION.THE COST OF CONSTRUCTI ON HAS SIMPLY ESTIMATED BY THE ASSESSING OFFICER WITHOUT S EEKING ANY INDEPENDENT REPORT FROM ANY TECHNICAL EXPERT OR THE VALUATION CELL OF THE DEPARTMENT. NOR HAS THE ASSESSING OFFIC ER CONDUCTED ANY OTHER ENQUIRY WHATSOEVER TO ESTABLISH THAT IT WAS THE APPELLANT WHO OWNED THE HOUSE UNDER CONSIDE RATION, OR THAT THE ACTUALLY INCURRED AN EXPENDITURE OF RS. 22 ,62,500/- DURING THE YEAR UNDER CONSIDERATION. THE MERE FACT THAT THE APPELLANT HAPPENS TO BE A CO-BORROWER ALONG WITH TH IS MOTHER FOR THE HOUSING LOAN OF RS. 9,00,000/- IS NOT SUFFI CIENT TO CONCLUDE THAT IT WAS THE APPELLANT WHO HAD INVESTED AN AMOUNT OF RS. 22,62,500/- IN THE CONSTRUCTION OF THE HOUSE . SINCE THE ASSESSING OFFICER HAS ACCEPTED THE GENUINENESS OF THE HOUSING LOAN AND HAS CONSIDERED THE INVESTMENT IN THE CONST RUCTION OF THE HOUSE EXPLAINED TO THAT EXTENT, THE ADDITION OF RS. 13,62,500/- MADE ON PURE ASSUMPTIONS WITHOUT ANY CO NCRETE FINDINGS IS NOT FOUND TO BE SUSTAINABLE. THE SAID ADDITION IS, THEREFORE DIRECTED TO BE DELETED. THE LD. CIT(A) HAS CORRECTLY DECIDED THE ISSUE. TH E ASSESSING OFFICER HAS NO AUTHORITY TO ESTIMATE THE COST OF CO NSTRUCTION AND IN CASE HE HAD ANY DOUBT THEN SAME SHOULD HAVE BEEN RE FERRED TO THE DVO. FURTHER IF THE HOUSE DID NOT BELONG TO THE AS SESSEE BUT TO HIS MOTHER WHO IS INDEPENDENTLY ASSESSED THEN NO ADDITI ON COULD HAVE 5 BEEN MADE IN THE HANDS OF THE ASSESSEE. THEREFORE WE FIND NOTHING WRONG WITH THE ORDER OF THE LD. CIT(A) AND CONFIRM THE SAME. 14 IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 11.3.2014 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11.3.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR