Income Tax Officer-2(4), Kanpur V. (Shri) Sohail Ahmed Shah, Kanpur

ITA 124/LKW/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5147 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 13-11-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 14-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Keywords: Unexplained cash credit; Unexplained investment; Unexplained expenditure; Income from undisclosed sources; Source of fund; Reasonable cause; Condonation of delay; Revenue expenditure
• Section: 69C; 69

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.124/LKW/2012 A.Y.:2004 - 05 INCOME TAX OFFICER - 2(4), KANPUR. VS. SHRI SOHAIL AHMED SHAH, 113/14, SWAROOP NAGAR, KANPUR. PAN:ALIPS5514Q (APPELLANT) (RESPONDENT) C.O.NO.50/LKW/2013 (IN ITA NO.124/LKW/2012) A.Y.:2004 - 05 SHRI SOHAIL AHMED SHAH, 113/14, SWAROOP NAGAR, KANPUR. PAN:ALIPS5514Q VS. INCOME TAX OFFICER - 2(4), KANPUR. (OBJECTOR) (RESPONDENT) REVENUE BY SHRI ALOK MITRA, D.R. ASSESSEE BY SHRI ABHINAV MEHROTRA, ADVOCATE DATE OF HEARING 14/11/2013 DATE OF PRONOUNCEMENT 2 7 /11/2013 O R D E R PER A. K. GARODIA, A.M. THE APPEAL IS FILED BY THE REVENUE AND THE CROSS OBJECTION IS FILED BY THE ASSESSEE, WHICH ARE DIRECTED AGAINST THE ORDER OF CIT(A) - II, KANPUR DATED 30/12/2011 FOR ASSESSMENT YEAR 2003 - 2004. 2 2. FIRST WE TAKE UP THE CROSS OBJECTION FILED BY THE ASSESSEE. THE CROSS OBJECTION HAS BEEN FILED BY THE ASSESSEE ON 14/11/2013 WHEREAS THE ORDER OF LEARNED CIT(A) IS DATED 30/12/2011 AND THE NOTICE ALONG WITH THE GROUNDS OF APPEAL WERE SENT TO THE ASSESSEE IN MARCH, 2012 AS PER ORDER SHEET ENTRY DATED 14/03/2012. ON 13/03/2012, THE HEARING WAS ADJOURNED ON THE REQUEST OF THE ASSESSEE AND THERE IS NO MENTION F OR ANY REQUEST FROM LEARNED COUNSEL FOR THE ASSESSEE THAT THE GROUNDS OF APPEAL FILED BY THE REVENUE WERE NOT SUPPLIED TO HIM AND THEREFORE, IT HAS TO BE ACCEPTED THAT THE CROSS OBJECTION FILED BY THE ASSESSEE IS DELAYED. T H ERE IS NO REQUEST BY THE ASSESSEE FOR CONDONATION OF DELAY BY GIVING A REASONABLE CAUSE FOR SUCH DELAY AND HENCE, SUCH DELAY IN FIL ING THE CROSS OBJECTION IS NOT CONDONED AND CROSS OBJECTION IS DISMISSED AS NOT ADMITTED BECAUSE OF DELAY IN FILING. AS A RESULT, THE CROSS OBJECTION IS DISMISSED. 3. NOW WE TAKE UP THE APPEAL FILED BY THE REVENUE. GROUND NO. 1 & 2 ARE INTER CONNECTED, WHICH READ AS UNDER: 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN JAW AND ON FACTS IN DELETING THE ADDITION OF RS.20,21,363/ - ON ACCOUNT OF DIFFERENCE IN VALUATION OF PROPERTY WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE ABOVE ADDITION OF RS.20,21,363/ - ON ACCOUNT OF UNEXPLAINED INVESTMENT, WITHOUT APPRECIATING THE FACT THAT THE ASSESSING OFFICER HAD MADE THIS ADDITION OF RS.20,21,363/ - ON ACCOUNT OF UNEXPLAINED INVESTMENT 3 COVERED UNDER SECTION 69/69B, AND NOT ON ACCOUNT OF UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF INCOME TAX ACT, 1961. 4. BRIEF FACTS ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE AND SAL E OF FLATS AFTER DOING SOME CONSTRUCTION IN THE NAME OF SHAH BUILDERS. IN THE PRESENT YEAR, THE ASSESSING OFFICER MADE AN ADDITION OF RS.20,21,363/ - ON THE BASIS OF VALUATION OF THE PROPERTY DONE BY THE D.V.O. AND AS PER RECORDS OF THE ASSESSEE. BEING AGG RIEVED, THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO DELETED THE ADDITION AND NOW THE REVENUE IS IN APPEAL BEFORE US. 5. IT WAS SUBMITTED BY LEARNED D.R. OF THE REVENUE THAT THE FINDING OF LEARNED CIT(A) IS THAT THE ASSESSING OFFICER CANNOT REFER THE CASE TO VALUATION OFFICER ON ISSUES RELATING TO SECTION 69C, IS NOT CORRECT BECAUSE THE ASSESSING OFFICER CAN REFER THE MATTER TO D.V.O. AS PER THE PROVISION OF SECTION 142A OF THE ACT TO FIND OUT THE VALUE OF ANY INVESTMENT REFERRED TO IN SECTION 69/ 69A OR 69B. HE SUBMITTED THAT IT IS NOT COMING OUT FROM THE ORDER OF THE ASSESSING OFFICER THAT THIS ESTIMATION WAS IN RESPECT OF SECTION 69C AND IT HAS TO BE ACCEPTED THAT IT WAS IN RESPECT OF SECTION 69 OR 69B AND THEREFORE, THE REFERENCE TO D.V.O. BY T HE ASSESSING OFFICER IS AS PER LAW. 6. AS AGAINST THIS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A) AND ALSO POINTED OUT THAT LEARNED CIT(A) HAS FOLLOWED THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. AARPEE APARTME NTS PVT. LTD.188 TAXMAN 39 AND THEREFORE, THE ORDER OF LEARNED CIT(A) SHOULD BE CONFIRMED. 4 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT WHATEVER EXPE NSES HAVE BEEN INCURRED BY THE ASSESSEE ON CONSTRUCTION OF THE FLATS, WERE CLAIMED BY THE ASSESSEE AS REVENUE EXPENDITURE FOR WORKING OUT ITS INCOME AND THEREFORE, THE FACTS IN THE PRESENT CASE ARE SIMILAR TO THE FACTS IN THE CASE OF AARPEE APARTMENTS PVT. LTD. (SUPRA). IN THAT CASE IT WAS HELD BY HON'BLE DELHI HIGH COURT THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN EXERCISING THE POWER TO REFER THE MATTER TO D.V.O. U/S 142A OF THE ACT FOR THE PURPOSE OF GETTING HIMSELF SATISFIED ABOUT THE COST OF CONST RUCTION CLAIMED BY THE ASSESSEE AS REVENUE EXPENDIT URE. RESPECTFULLY FOLLOWING THIS JUDGMENT OF HON'BLE DELHI HIGH COURT , WE DECLINE TO INTERFERE IN THE ORDER OF LEARNED CIT(A) ON THIS ISSUE. THESE TWO GROUNDS OF THE REVENUE ARE REJECTED. 8. GROUND NO. 3 OF REVENUES APPEAL IS AS UNDER: 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.19,50,000/ - ON ACCOUNT OF UNEXPLAINED CREDIT BALANCES WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 9. BRIEF FACTS ARE THAT AN ADDITION OF RS. 1 9 .50 LAKHS WAS MADE BY THE ASSESSING OFFICER ON THE BASIS THAT THIS AMOUNT WAS REPAID BY THE ASSESSEE TO THE ALLOTTEES OF FLATS OUT OF UNDISCLOSED SOURCES OF INCOME IN THE PRESENT YEAR. THIS ADDITION WAS DELETED BY LEARNED CIT(A) ON THE BASIS THAT AS PER THE ENTIRE CASH FLOW OF THE ASSESSEE, THERE IS NO PAYMENT OF RS. 19.50 LAKHS AND THERE IS NO SUCH RECEIPT OF THIS AMOUNT AND THEREFORE, THIS ADDITION IS NOT JUSTIFIED. NOW THE REVENUE IS IN APPEAL BEFORE US. 5 10. IT WAS SUBMITTED BY LEARNED D.R. OF THE REVENUE THAT THE BALANCE SHEET AND CASH FLOW WAS REVISED BY THE ASSESSEE SEVERAL TIMES AND THEREFORE, THE SAME ARE NOT RELIABLE. HE SUPPO RTED THE ASSESSING OFFICER AND SUBMITTED THAT THE ORDER OF LEARNED CIT(A) SHOULD BE REVERSED AND THAT OF THE ASSESSING OFFICER SHOULD BE RESTORED. AS AGAINST THIS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT AS PER THE BALANCE SHEET OF THE ASSESSEE, REPRODUCED ON PAGE 3 OF THE ASSESSING OFFICER, SUNDRY ADVANCE FROM FLAT ALLOTTEES WERE SHOWN AT RS.22.01 LAKHS AND THE CAPITAL WAS SHOWN AT RS.34.20 LAKHS. AS PER ANOTHER BALANCE SHEET, REPRODUCED BY THE ASSESSING OFFICER ON PAGE 7 OF THE ASSESSMENT ORDER, THIS AMOUNT WAS REDUCED FROM THE SUNDRY ADVANCE AND THE SAME WAS ADDED IN CAPITAL . I T WAS THE SUBMISSION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER, AS NOTED BY ASSESSING OFFICER ON PAGE 16 THAT THIS AMOUNT OF RS.19.50 LAKHS REPRESENTS THE OTHER CREDITS I.E. AMOUNT RECEIVED FROM RELATIVES AND FRIENDS TAKEN IN THE YEAR 2000FOR THE PURPOS E OF INVESTMENT IN THE PROPERTY AT 113/21, SWAROOP NAGAR, KANPUR AND HAVE BEEN CLUBBED AS PART OF OPENING CAPITAL WHILE PREPARING THE BALANCE SHEET. BUT NO FINDING IS GIVEN BY ANY OF THE AUTHORITIES BELOW IN RESPECT OF THIS AVERMENT OF THE ASSESSEE BEFORE US AND NO EVIDENCE HAS BEEN FURNISHED BY THE ASSESSEE IN SUPPORT OF THIS CONTENTION. IF THE ASSESSEE CAN FURNISH THE EVIDENCE IN SUPPORT OF THIS CONTENTION THAT THIS AMOUNT WAS RECEIVED BY THE ASSESSEE FROM FRIENDS AND RELATIVES IN THE YEAR ENDED 31/03/2 000 AND THE SAME WAS USED FOR THE PURPOSE OF INVESTMENT IN THAT YEAR THEN 6 OBVIOUSLY NO ADDITION CAN BE MADE IN RESPECT OF THAT AMOUNT IN THE PRESENT YEAR AND EVEN IF THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE CREDI TORS THEN ALSO ADDITION CAN BE MADE IN THE RELEVANT ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2000 - 2001 BUT IN THE ABSENCE OF SUCH EVIDENCE HAVING BEEN BROUGHT ON RECORD BY THE ASSESSEE, IT HAS TO BE ADDED IN THE PRESENT YEAR BECAUSE IN THE PRESENT YEAR ONLY TH E ASSESSEE HAS INCLUDED THIS AMOUNT IN HIS CAPITAL FOR THE FIRST TIME. SINCE NO FINDING IS AVAILABLE BY ANY OF THE AUTHORITIES BELOW AND NO EVIDENCE HAS BEEN BROUGHT BEFORE US BY THE ASSESSEE TO SUPPORT ITS CONTENTION, WE FEEL THAT IN THE INTEREST OF JUSTICE, THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF LEARNED CIT(A) FOR FRESH DECISION AFTER EXAMINING THE VERACITY AND HENCE, WE SET ASIDE THE ORDER OF LEARNED CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO HIS FILE FOR FRESH DECISION. WE WANT TO MAKE IT CLEAR TAT THE BURDEN IS ON THE ASSESSEE TO PROVE THAT THIS AMOUNT OF RS.19.50 LAKHS WAS RECEIVED BY THE ASSESSEE FROM HIS FRIENDS AND RELATIVES DURING THE YEAR ENDING ON 31/03/2000 AND THE SAME WAS INVESTED IN THAT YEAR IN PROPERTY AT 113/21, S WAROOP NAGAR, KANPUR AND IF THE ASSESSEE IS ABLE TO ESTABLISH THIS THEN NO ADDITION SHOULD BE MADE IN THE PRESENT YEAR IN RESPECT OF THIS AMOUNT ALTHOUGH THE ASSESSING OFFICER IS AT LIBERTY TO EXAMINE THIS CASH CREDIT IN THE RELEVANT ASSESSMENT YEAR AS PER LAW. HOWEVER, IF THE ASSESSEE FAILS TO BRING EVIDENCE IN SUPPORT OF ITS CONTENTIONS THEN THE ADDITION IN THE PRESENT YEAR IS JUSTIFIED BECAUSE IN THE PRESENT YEAR ONLY THE ASSESSEE HAS ADDED THIS AMOUNT IN HIS CAPITAL FOR THE FIRST TIME. THIS GROUND STA NDS ALLOWED FOR STATISTICAL PURPOSES. 7 12. THE REMAINING GROUNDS ARE GENERAL IN NATURE AND DO NOT CALL FOR SEPARATE ADJUDICATION. 13. IN THE RESULT, THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AND APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTI CAL PURPOSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 7 / 1 1 / 2 0 1 3 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. DR, ITAT, LUCKNOW ASSTT. REGISTRAR