SHRI RAM BABU VIJAY , KOTA V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTA

ITA 1253/JPR/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6174 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 05-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABHISHEK SHARMA CIT DHK
• Assessee Lawyers: B V MAHESHWARI
• Keywords: Search and seizure; Wrong claim; Capital Gains
• Section: 80C; 153A; 139(1); 132

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH SMC, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; DS LE{K BEFORE: SHRI SHRI VIJAY PAL RAO, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 1253 & 1254/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 & 11-12. SHRI R AM BABU VIJAY, C/O B. VISHAL & CO., CA RAGHUKUL, 15, UIT PLOTS, NR. GUMANPURA POLICE STATION, JHALAWAR ROAD, KOTA. CUKE VS. THE DCIT CENTRAL CIRCLE, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AALPV 5282 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI B. V. MAHESHWARI (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI ABHISHEK SHARMA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 30.09.2019. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 04/10/2019. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGA INST TWO SEPARATE ORDERS OF LD. CIT (APPEALS)-2, UDAIPUR BOTH DATED 20.08.20 18 FOR THE ASSESSMENT YEARS 2010-11 & 11-12 RESPECTIVELY. FOR THE ASSESSMENT Y EAR 2010-11 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE LD. A.O. GROSSLY ERRED ON LAW TO ASSE SS THE INCOME U/S 153A. THAT IN THIS CASE THE SEARCH WAS CONSEQUENTI AL, HENCE THE LD. A.O. SHOULD RESTRICT HIS ASSESSMENT ON THE PAPERS RELATING TO KOTA DAL MILL GROUP, FURTHER THE LD. CIT (A) ALS O ERRED IN COMMENTING THAT NO INFIRMITY IS FOUND IN THE ORDER MADE LD. AO. 2. THAT THE LD. AO GROSSLY ERRED ON LAW AND FACTS I N MAKING DISALLOWANCE OF RS. 15,544.00 OUT OF DEDUCTION UNDE R CHAPTER VI-A. THE LD. CIT (A) ERRED IN SUSTAINING THEREOF. 2 ITA NOS. 1253 & 1254/JP/2018 SHRI RAM BABU VIJAY, KOTA. 3. THAT THE LD. AO GROSSLY ERRED ON LAW AND FACTS I N NOT ALLOWING INTEREST EXPENSES CLAIMED UNDER THE HEAD INCOME FR OM OTHER SOURCES OF RS. 26,928/- AND THE LD. CIT (A) ERRED IN SUSTAINING THEREOF. 4. THAT THE LD. AO GROSSLY ERRED ON LAW AND FACTS I N MAKING ADDITION IN LTCG RS. 1,12,643.00 AND THE LD. CIT (A ) ALSO ERRED IN SUSTAINING THEREOF. 5. ANY OTHER GROUNDS AT THE TIME OF HEARING. GROUND NO. 1 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SEPA RATE FINDING. GROUND NO. 2 IS REGARDING DISALLOWANCE OF DEDUCTION UNDER SECTION 80C OF THE IT ACT IN RESPECT OF TUITION FEES PAID B Y THE ASSESSEE. 2. THE LD. A/R OF THE ASSESSEE HAS SUBMITTED THAT T HERE WAS A SEARCH AND SEIZURE ACTION IN CASE OF KOTA DAL MILL GROUP ON 2 ND JULY, 2015. THE ASSESSEE IS BELONGING TO THE SAID GROUP AND COVERED UNDER THE S EARCH AND SEIZURE ACTION. HOWEVER, HE HAS SUBMITTED THAT AS ON THE DATE OF SE ARCH, THE ASSESSMENT FOR THESE TWO ASSESSMENT YEARS I.E. 2010-11 AND 11-12 WERE NO T PENDING AND, THEREFORE, THIS WAS NOT A CASE OF ABATED ASSESSMENT DUE TO THE REAS ON OF SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE ACT. HE HAS FURTHER SUBM ITTED THAT WHILE FRAMING THE ASSESSMENT UNDER SECTION 153A READ WITH SECTION 143 (3), THE AO HAS MADE ADDITION ON ACCOUNT OF DISALLOWANCE OF DEDUCTION UNDER SECTI ON 80C WITHOUT HAVING ANY INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE C OURSE OF SEARCH. THUS HE HAS SUBMITTED THAT THE DISALLOWANCE MADE BY THE AO IS N OT SUSTAINABLE AND LIABLE TO BE DELETED. HE HAS FURTHER SUBMITTED THAT THOUGH THE A O HAS PARTLY ALLOWED THE CLAIM UNDER SECTION 80C ON ACCOUNT OF TUITION FEES PAID T O THE SCHOOL IN RESPECT OF ELDER CHILD, HOWEVER, THE ASSESSEE HAS LOST/MISPLACED THE RECEIPT IN RESPECT OF THE 3 ITA NOS. 1253 & 1254/JP/2018 SHRI RAM BABU VIJAY, KOTA. PAYMENT OF RS. 15,544/- AND, THEREFORE, THE AO DISA LLOWED THE CLAIM. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE PRECEDENTS O N THIS ISSUE THAT NO ADDITION CAN BE MADE IN THE PROCEEDINGS UNDER SECTION 153A IN TH E ABSENCE OF ANY INCRIMINATING MATERIAL. THE LD. A/R HAS RELIED UPON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN CASE OF JAI STEEL INDIA VS. ACIT, 219 TAXM AN 223 (RAJ.). 3. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED THA T THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE REGARDING THE EXPENDITURE INC URRED BY THE ASSESSEE ON ACCOUNT OF TUITION FEES SO AS TO CLAIM THE DEDUCTIO N UNDER SECTION 80C. THUS THE LD. D/R HAS SUBMITTED THAT IT IS NOT A CASE OF REVIEWIN G THE DECISION BY THE AO BUT THE CLAIM OF THE ASSESSEE WAS FOUND TO BE UNACCEPTABLE WHEN THE EVIDENCE OF INCURRING THE EXPENDITURE WAS NOT PRODUCED BY THE ASSESSEE. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE IN THE RETURN OF INCOME FILED UNDER SECTION 139(1) CLAIMED THE DEDUCTION UNDER SECTION 80C OF RS. 1,00,000/- INCLU DING SCHOOL FEES OF HIS CHILDREN. THE AO NOTED THAT THE ASSESSEE HAS PRODUCED THE EVI DENCE TO THE EXTENT OF RS. 84,456/- BUT NO EVIDENCE HAS BEEN PRODUCED FOR DEDU CTION OF RS. 15,544/-. ACCORDINGLY, THE AO DISALLOWED THE CLAIM TO THE EXT ENT OF RS. 15,544/-. THE ASSESSEE THOUGH CHALLENGED THE ACTION OF THE AO BEF ORE THE LD. CIT (A), HOWEVER COULD NOT PRODUCE ANY EVIDENCE IN SUPPORT OF THE CL AIM. EVEN BEFORE THE TRIBUNAL, THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE IN SUPPO RT OF THE CLAIM OF PAYMENT OF TUITION FEES TO THE EXTENT OF RS. 15,544/- WHICH WA S DISALLOWED BY THE AO. THUS IT IS A MATTER OF FACT OF INCURRING THE EXPENDITURE AN D NOT A MATTER OF DISCRETION OF THE AO OR A DECISION TO BE TAKEN BY THE AO. THEREFORE, IN THE ABSENCE OF ANY EVIDENCE 4 ITA NOS. 1253 & 1254/JP/2018 SHRI RAM BABU VIJAY, KOTA. IN SUPPORT OF THE EXPENDITURE THAT TOO TOWARDS THE TUITION FEES OF THE CHILD, THE CLAIM OF THE ASSESSEE CANNOT BE ALLOWED. THERE IS NO DISPUTE THAT IF A CLAIM WHICH IS NOT DISALLOWED BY THE AO WHILE ACCEPTING THE RETURN OF INCOME FILED UNDER SECTION 139(1), THEN A COMPLETED ASSESSMENT ON THE DATE OF SEARCH CANNOT BE DISTURBED WITHOUT INCRIMINATING MATERIAL FOUND AND SEIZED REV EALING UNDISCLOSED INCOME OR WRONG CLAIM MADE BY THE ASSESSEE IN THE RETURN OF I NCOME. IN THE CASE IN HAND, IT IS NOT A CLAIM TO BE DECIDED AS THE PROVISIONS OF SECT ION 80C ARE NOT A MATTER OF DISCRETION OF THE AO IF THE INVESTMENT OR EXPENDITU RE IS INCURRED FALLING UNDER THE CATEGORY PROVIDED UNDER THE SAID PROVISION. THE IS SUE IN THIS APPEAL IS ONLY SUBSTANTIATING THE EXPENDITURE ITSELF AND NOT THE A LLOWABILITY OF THE CLAIM. ONCE THE EXPENDITURE IS NOT SUBSTANTIATED BY THE ASSESSEE BY PRODUCING ANY EVIDENCE THEN SUCH CLAIM CANNOT BE ALLOWED. GROUND NO. 3 IS REGARDING DISALLOWANCE OF INTEREST. I HAVE HEARD THE LD. A/R AS WELL AS LD. D/R AND CON SIDERED THE RELEVNT MATERIAL ON RECORD. 5. THE ASSESSEE IN THE RETURN OF INCOME FILED UNDER SECTION 139(1) HAS REFERRED THE INTEREST INCOME AFTER DEDUCTION OF INTEREST EXP ENDITURE. THUS THE ASSESSEE OFFERED NET INTEREST INCOME TO TAX. IN THE ASSESSM ENT COMPLETED UNDER SECTION 153A, THE AO DISALLOWED THE CLAIM ON THE GROUND THA T THE INTEREST EXPENDITURE WAS NOT INCURRED FOR EARNING THE INTEREST INCOME. THERE FORE, SUCH DISALLOWANCE MADE BY THE AO BY TAKING A VIEW THAT THE INTEREST EXPENDITU RE CANNOT BE HELD TO BE INCURRED FOR EARNING THE INTEREST INCOME IS NOT PERMISSIBLE WHEN THERE IS NO INCRIMINATING MATERIAL FOUND IN THE SEARCH AND SEIZURE ACTION. HE NCE THE CLAIM OF THE ASSESSEE WAS 5 ITA NOS. 1253 & 1254/JP/2018 SHRI RAM BABU VIJAY, KOTA. ACCEPTED WHEN THE ASSESSMENT WAS NOT PENDING AS ON THE DATE OF SEARCH. ACCORDINGLY, IN VIEW OF THE DECISION OF HONBLE JUR ISDICTIONAL HIGH COURT IN CASE OF JAI STEEL INDIA VS. ACIT, 219 TAXMAN 223 (RAJ.), THE AO IS NOT PERMITTED TO MAKE AN ADDITION IN THE ABSENCE OF ANY INCRIMINATING MATERI AL. HENCE THE DISALLOWANCE MADE BY AO ON ACCOUNT OF INTEREST EXPENDITURE IS DELETED . GROUND NO. 4 IS REGARDING AN ADDITION MADE IN LONG TERM CAPITAL GAINS. 6. I HAVE HEARD THE LD. A/R AS WELL AS THE LD. D/R AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE AO HAS MADE AN ADDITION OF RS. 1,12,643/- ON ACCOUNT OF LONG TERM CAPITAL GAIN ON SALE OF PROPERTY. IT IS NOTED THAT THE SAID ADDITION HAS BEEN MADE BY THE AO BY MAKING A DISALLOWANCE OF COS T OF IMPROVEMENT AND INDEXED COST WHEREAS IT IS CLAIMED THAT THE ASSESSEE HAS IN CURRED THE COST OF IMPROVEMENT ON ACCOUNT OF REGISTRATION CHARGES AND SOME EXPENDI TURE OF RS. 3,020/- TOWARDS TRANSFER OF THE PROPERTY. THE AO HAS IGNORED THE RE GISTRATION CHARGES WHICH IS AN EXPENDITURE ASSOCIATED WITH THE TRANSFER OF PLOT OF LAND ITSELF AND CAN BE VERIFIED INDEPENDENTLY. THEREFORE, THE DISALLOWANCE MADE BY THE AO IN THE ABSENCE OF ANY INCRIMINATING MATERIAL TO SHOW THAT THE CLAIM OF TH E ASSESSEE IS BOGUS OR OTHERWISE FALSE, THE DISALLOWANCE MADE BY THE AO ON ACCOUNT O F LONG TERM CAPITAL GAIN IS NOT PERMISSIBLE. HENCE THE SAME IS DELETED. FOR THE ASSESSMENT YEAR 2011-12, THE ONLY ISSUE RA ISED BY THE ASSESSEE IS REGARDING DISALLOWANCE OF INTEREST EXPE NSES WHICH IS COMMON AS IN THE APPEAL FOR THE ASSESSMENT YEAR 2010-11. 6 ITA NOS. 1253 & 1254/JP/2018 SHRI RAM BABU VIJAY, KOTA. 7. I HAVE HEARD THE LD. A/R AS WELL AS THE LD. D/R AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. IN VIEW OF MY FINDING ON THIS ISSUE FOR THE ASSESSMENT YEAR 2010-11, THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF INTEREST EXPENDITURE IS NOT SUSTAINABLE IN LAW AND THE SAME IS DELETED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO. 1253/JP/2018 IS PARTLY ALLOWED APPEAL IN ITA NO. 1254/JP/2018 IS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 04/10/20 19. SD/- ( FOT; IKY JKWO (VIJAY PAL RAO) U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 04/10/2019. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI RAM BABU VIJAY, KOTA. 2. THE RESPONDENT THE DCIT CENTRAL CIRCLE, KOTA. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 1253 & 1254/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 7 ITA NOS. 1253 & 1254/JP/2018 SHRI RAM BABU VIJAY, KOTA.