ITO, Ludhiana V. Smt. Suman Chawla, Ludhiana

ITA 1276/CHANDI/2010

• Counselvise Citation: 127621514 RSA 2010
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 10-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Keywords: Unexplained cash credit; Additional evidence
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI D.K.SRIVASTAVA, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1276/CHD/2010 (ASSESSMENT YEAR : 2006-07) ITO-III(3), V SMT.SUMAN CHAWLA, LUDHIANA. PROP. M/S CHAWLA BUILDERS, 743, WAIT GANG, LUDHIANA. PAN: AGBPC-1315P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K.SAINI RESPONDENT BY : SHRI SUDHIR SEHGAL DATE OF HEARING : 09.11.2011 DATE OF PRONOUNCEMENT : 30.11.2011 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME-TAX(APPEALS), LUDHIANA DATED 13.08.2010 RELATING TO ASSESSMENT YEAR 2006-07 AGAINST THE ORD ER PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN ADMITTING THE ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE BEFORE HIM DURING THE APPELLATE PROCEEDINGS IGNORING SUB-RULE 2 AND ALSO WITHOUT GIVING ANY OPPORTUNITY TO THE AO AND THUS IGNORING SUB RULE 3 OF RULE 46A OF THE INCOME TAX RULES. 2. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN LAW AND FACTS IN 2 ADMITTING THE ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE BEFORE HIM DURING THE APPELLATE PROCEEDINGS IGNORING THE FACTS :- (I) THAT THE CIRCUMSTANCES EXPLAINED BY THE ASSESSEE DO NOT FALL UNDER CLAUSES (A) (B) (C) AND (D)OF RULE 46A(1) OF INCOME TAX RULES, 1961. (II) THAT SUFFICIENT OPPORTUNITIES WERE ALLOWED TO THE ASSESSEE TO FURNISH THE RELEVANT DOCUMENTS AND PRODUCE THE BOOKS OF ACCOUNT DURING THE ASSESSMENT PROCEEDINGS, WHICH THE ASSESSEE FAILED TO FURNISH/PRODUCE. 2. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEALS), HAS ERRED IN LAW & ON FACTS IN DELETING THE ADDITION OF RS.11,44,729/- MADE BY AO ON ACCOUNT OF COST OF CONSTRUCTION, IGNORING THE FACT THAT THE ASSESSEE ONLY PRODUCED THE VOUCHERS AMOUNTING TO RS.40,190/- PERTAINING TO COST OF CONSTRUCTION OUT OF TOTAL COST OF RS.11,84,919/- CLAIMED BY THE ASSESSEE DESPITE NUMEROUS OPPORTUNITIES GIVEN TO THE ASSESSEE. 3. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S IN DELETING THE ADDITION OF RS.9,00,000/-MADE BY AO ON ACCOUNT OF UNEXPLAINED CASH CREDITS ON EXCESS AMOUNT RECEIVED ON SALE OF PROPERTY NO.108B, BRS NAGAR, LUDHIANA WHEN ASSESSEE HAS NOT REVEALED ANY SALE MADE TO M/S KONICA RESORTS TO THE AO AND THAT NO BOOKS OF ACCOUNT WERE PRODUCED BEFORE THE AO DESPITE THE NUMEROUS OPPORTUNITIES GIVEN TO THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E, DURING THE COURSE OF ASSESSMENT PROCEEDINGS FAILED TO PRODUCE THE BOOKS OF ACCOUNT AND VOUCHERS. THE ASSESSEE ALSO FAILED TO C OMPLY WITH THE VARIOUS NOTICES ISSUED BY THE AO. ACCORDINGLY, THE ASSESSMENT IN THE CASE WAS COMPLETED BY THE AO U/S 144 OF THE INCOME- TAX ACT. THE 3 ASSESSEE WAS CARRYING ON THE BUSINESS OF BUILDERS A ND DEVELOPERS AND HAD, DURING THE YEAR UNDER CONSIDERATION, DECLARED TURN-OVER OF RS.55,00,000/- AND GROSS PROFIT OF RS.1,93,215/- WA S SHOWN BY THE ASSESSEE. THE OPENING STOCK OF RS.67,31,866/- COMP RISED OF VARIOUS PLOTS AS ENUMERATED UNDER PARA 5.1 OF THE ASSESSMEN T ORDER. THE TOTAL CLOSING STOCK REFLECTED BY THE ASSESSEE AT RS .11,10,000/- COMPRISED OF TWO PLOTS I.E. ONE NO. 432B, BRS NAGAR , LUDHIANA AND OTHER NO.179A, RAJ GURU NAGAR, LUDHIANA. THE ASSES SEE HAD SHOWN COST OF CONSTRUCTION OF RS.11,84,919/-. THE ASSESS EE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS FURNISHED THE COPI ES OF PURCHASE DEED AND SALE DEEDS AND ALSO PRODUCED THE COPIES OF VOUCHERS PERTAINING TO COST OF CONSTRUCTION. THE AO ADMITS TO THE ABOVESAID FACTUAL ASPECTS. THE AO, ON PERUSAL OF THE VOUCHERS FOUND THE SAME TO BE FOR A SUM OF RS.8,77,349/- WHICH DID NOT RELA TE TO THE PERIOD UNDER CONSIDERATION AND FOUR VOUCHERS TOTALING RS.4 0,190/- PERTAIN TO THE RELEVANT PERIOD. THE AO, ACCORDINGLY DISALLOWE D THE COST OF CONSTRUCTION OF RS.11,44,729/-. THE AO ALSO, FROM THE PERUSAL OF THE SALE DEED FURNISHED BY THE ASSESSEE, FOUND THAT THE TOTAL PRICE INDICATED IN THE SALE DEEDS WAS RS.57,50,000/- WHER EAS THE ASSESSEE HAD ONLY SHOWN SALE CONSIDERATION OF RS.55,00,000/- . THE AO, ACCORDINGLY TREATED THE DIFFERENCE OF RS.2,50,000/- AS INCOME OF THE ASSESSEE. IN RESPECT OF SALE DEED OF PLOT NO.108B RAJ GURU NAGAR DATED 03.01.2006, THE SALE DEED REFLECTED THE MODE OF PAYMENT AS BY CHEQUE RS.21,00,000/- AND RS.1,00,000/- BY CASH. THE ANALYSIS OF THE BANK STATEMENT OF CORPORATION BANK, LUDHIANA RE VEALED, THERE WERE CREDIT ENTRIES WITH THE NOTE WRITTEN ALONGSIDE I.E. RS.11,00,000/- BY CHEQUE AND RS.10,00,000/- BY CASH, AGAINST WHICH NOTE GIVEN BY THE ASSESSEE WAS 108B. THE AO, FROM THE ABOVESAID EVIDENCE 4 PRESUMED THAT THE ASSESSEE HAD RECEIVED RS.9,00,000 /- EXCESS IN CASH THAN REPORTED TO THE REGISTRATION AUTHORITY AND THE SAME WAS TREATED AS INCOME OF THE ASSESSEE. 4. IN APPEAL, THE EXPLANATION OF THE ASSESSEE WAS T HAT THE PLOT NO.108B RAJ GURU NAGAR, LUDHIANA, AFTER CONSTRUCTIO N WAS SOLD FOR RS.22,00,000/-. THE ASSESSEE FURTHER EXPLAINED THA T AS ON 01.04.2005, THE VALUE OF THE PLOT WAS DECLARED AT R S.7,55,550/-. HOWEVER, AS PER THE COPY OF SALE DEED, THE PROPERTY WAS CONSTRUCTED ON COVERED AREA OF 2900 SQ.FT. APPROXIMATELY AND TH E TOTAL COST OF CONSTRUCTION WAS RS.11,44,729/-. THE SALE CONSIDER ATION HAS BEEN ACCEPTED FOR THE ABOVESAID PROPERTY AND ACCORDINGLY , THERE IS NO MERIT IN THE ADDITION OF RS.11,44,729/-. THE NEXT PLEA OF THE ASSESSEE BEFORE THE CIT(A) WAS THAT IT HAD CARRIED THE BOOKS OF ACCOUNT DURING THE ASSESSMENT PROCEEDINGS BUT THE AO HAD STATED TH AT HE WOULD CROSS VERIFY THE SAME ON THE NEXT DATE OF HEARING. THE A SSESSEE MADE REFERENCE TO THE LEDGER COPIES OF VARIOUS ACCOUNTS FURNISHED BEFORE THE AO. FURTHER, AN AFFIDAVIT DATED 26.10.2010 OF SHRI SANJIV KUMAR GUPTA, ACCOUNTANT WAS FILED IN WHICH HE DEPOSED THA T HE HAD CARRIED THE BOOKS OF ACCOUNT TO THE OFFICE OF THE AO ON FEW DATES WHICH THE AO ASKED TO BRING ON ANOTHER DATE. THE CIT(A) NOTE D THAT THE AO HAD ACCEPTED THE SALE CONSIDERATION OF THE PROPERTY WHICH WAS ORIGINALLY A PLOT VALUED AT RS.7,55,550/-. THEREAF TER, VARIOUS PAYMENTS HAVE BEEN CLAIMED BY THE ASSESSEE TOWARDS COST OF CONSTRUCTION AND THE TOTAL CONSTRUCTED AREA WAS 290 0 SQ.FT. THE CIT(A) ACCEPTED THE COST OF CONSTRUCTION DECLARED A T RS.11,84,919/- WHICH GAVE AVERAGE COST OF CONSTRUCTION OF RS.409/- PER SQ.FT., WHICH COULD NOT BE HELD TO BE EXCESSIVE. THE ADDITIONS M ADE BY THE AO ON THIS ACCOUNT WERE, THUS DELETED. THE SECOND ADDITI ON MADE BY THE AO 5 IN RESPECT OF THE DIFFERENCE ON ACCOUNT OF SALE OF PROPERTY OF RS.2,50,000/- WAS NOT PRESSED BY THE ASSESSEE AND H ENCE THE GROUND OF APPEAL WAS DISMISSED BY THE CIT(A). THE LAST ADD ITION MADE BY THE AO WAS ON ACCOUNT OF THE SO CALLED EXCESS AMOUNT RE CEIVED ON SALE OF PROPERTY NO.108B, BRS NAGAR, LUDHIANA. THE EXPLANA TION OF THE ASSESSEE BEFORE THE CIT(A) IN THIS REGARD WAS THAT THE ASSESSEE HAD SOLD THE PROPERTY AT RAJ GURU NAGAR, LUDHIANA FOR T OTAL CONSIDERATION OF RS.22,00,000/- THROUGH POWER OF ATTORNEY, WHICH WAS REGISTERED IN THE NAME OF SHRI SHIV CHAWLA I.E. THE HUSBAND OF TH E ASSESSEE. SINCE THE REGISTRATION DEED WAS EFFECTED BY SHRI SHIV CHA WLA, THE CHEQUE WAS RECEIVED IN HIS NAME AND THE SAME WAS CREDITED TO HIS ACCOUNT AND THE NECESSARY ADJUSTMENTS WERE MADE IN THE ACCO UNT OF SHRI SHIV CHAWLA IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. TH E AMOUNT OF RS.10,00,000/- RECEIVED BY CASH HAD BEEN REFLECTED IN THE CASH BOOK ON 03.01.2006. THUS, THE CIT(A) OBSERVED THAT THE PAYMENT OF RS.10,00,000/- WAS DEPOSITED IN THE ASSESSEE'S BANK ACCOUNT OUT OF HER CASH BOOK. ACCORDINGLY, THE ADDITION OF RS.9,0 0,000/- WAS DELETED BY THE CIT(A). 5. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF TH E CIT(A). 6. GROUND NO. 1 AND 2 RAISED BY THE REVENUE IS AGAI NST THE ADMISSION OF THE ADDITIONAL EVIDENCE AND NON-COMPLI ANCE OF THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES. WH EN CONFRONTED, LD. DR FOR THE REVENUE FAILED TO POINT OUT THE ADDI TIONAL EVIDENCE FURNISHED BEFORE THE CIT(A) EXCEPT FOR POINTING OUT THAT NO BOOKS OF ACCOUNT WERE PRODUCED BEFORE THE AO AND ONLY AN AFF IDAVIT IN THIS RESPECT WAS FURNISHED BEFORE THE CIT(A). IN VIEW O F LD. DR FAILING TO POINT OUT THE ADDITIONAL EVIDENCE CONSIDERED BY THE CIT(A), WE FIND NO MERIT IN GROUND NOS. 1 AND 2 RAISED BY THE REVENUE. 6 7. THE ISSUE IN GROUND NO.2 RAISED BY THE REVENUE I S AGAINST DELETION OF ADDITION OF RS.11,44,729/-. THE CONTEN TION OF THE LD. DR FOR THE REVENUE WAS THAT THE ASSESSEE HAD FAILED TO PRODUCE THE VOUCHERS EXCEPT FOR A SUM OF RS.40,190/-. LD. AR F OR THE ASSESSEE POINTED OUT THAT WHILE MAKING THE AFORESAID ADDITIO N, THE AO HAD FAILED TO GIVE CREDIT FOR THE COST OF CONSTRUCTION FROM THE SALE CONSIDERATION SHOWN BY THE ASSESSEE. ADMITTEDLY, T HE ASSESSEE HAD REFLECTED THE SALE OF PROPERTY NO.108B RAJ GURU NAG AR, LUDHIANA FOR RS.22,00,000/- DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAD SHOWN THE VALUE OF THE PLOT AT RS.7,55,550/- AS ITS OPENING STOCK AS ON 01.04.2005. THE SAID PROPERTY WAS CONSTRUCTED D URING THE PERIOD UNDER CONSIDERATION AND THE TOTAL COVERED AREA WAS ABOUT 2900 SQ.FT. IN THE SALE DEED, IT WAS MENTIONED THAT THE PROPERT Y WITH COVERED AREA OF ABOUT 2900 SQ.FT. IS BEING SOLD. THE COPY OF TH E SAID SALE DEED WAS FILED BEFORE THE AO AND CIT(A). THE AVERAGE CO ST OF CONSTRUCTION OF THE SAID AREA WORKS OUT TO RS.400/- PER SQ.FT. ADMITTEDLY, WHERE THE ASSESSEE HAS SOLD A CONSTRUCT ED PROPERTY AS AGAINST PLOT OF LAND DECLARED AS ITS OPENING STOCK, THE AMOUNT REPRESENTING COST OF CONSTRUCTION IS TO BE ALLOWED AS A DEDUCTION IN THE HANDS OF THE ASSESSEE. THE TOTAL CONSTRUCTED A REA WAS ABOUT 2900 SQ.FT. THE ASSESSEE HAD SHOWN THE AVERAGE COST OF CONSTRUCTION AT RS.409/- PER SQ.FT. AND THE TOTAL COST OF CONSTRUCT ION AT RS.11,84,919/-. IN THE ENTIRETY OF THE FACTS AND C IRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT DUE CREDIT FOR THE CO ST OF CONSTRUCTION OF THE SAID PROPERTY IS TO BE ALLOWED IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A) IN T HIS REGARD AND DISMISS GROUND NO.2 RAISED BY THE REVENUE. 7 8. NEXT GROUND NO.3 RAISED BY THE REVENUE IS AGAINS T THE DELETION OF ADDITION OF RS.9,00,000/-. THE AO, WHILE COMPLE TING THE ASSESSMENT IN THE PRESENT CASE FROM THE ENTRIES IN THE BANK ACCOUNT WITH CORPORATION BANK, LUDHIANA NOTED THAT IN FRONT OF TWO ENTRIES I.E. CHEQUE OF RS.11,00,000/- DEPOSITED ON 03.11.20 06 AND CASH OF RS.10,00,000/- DEPOSITED ON 06.01.2006, THE NOTE GI VEN BY THE ASSESSEE WAS 108B. ADMITTEDLY, THE ASSESSEE HAD RE FLECTED THE SALE OF THE SAID PROPERTY NO. 108B RAJ GURU NAGAR, LUDHI ANA DURING THE YEAR. THE TOTAL CONSIDERATION SHOWN BY THE ASSESSE E WAS RS.22,00,000/- OUT OF WHICH, RS.21,00,000/- AS PER THE ASSESSEE WAS RECEIVED IN CHEQUE AND RS.1,00,000/- WAS RECEIVED I N CASH. HOWEVER, IN VIEW OF THE ABOVESAID NOTE IN THE BANK STATEMENT , THE AO WAS OF THE VIEW THAT RS.9,00,000/- WAS RECEIVED IN CASH OV ER AND ABOVE THE AMOUNT DECLARED TO THE REGISTERING AUTHORITIES. TH E EXPLANATION OF THE ASSESSEE IN THIS REGARD WAS THAT THE SALE DEED WAS EXECUTED BY SHRI SHIV CHAWLA, WHO IS THE HUSBAND OF THE ASSESSE E AND POWER OF ATTORNEY HOLDER. THE SALE CONSIDERATION WAS ALSO R ECEIVED IN THE NAME OF SHRI SHIV CHAWLA FOR WHICH NECESSARY ENTRIE S WERE MADE IN THE COPY OF ACCOUNT OF SHRI SHIV CHAWLA IN THE BOOK S OF ACCOUNT OF THE ASSESSEE. THE SAID COPY OF ACCOUNT IS PLACED A T PAGE 37 OF THE PAPER BOOK IN WHICH THERE IS A CREDIT OF RS.20,00,0 00/- ON ACCOUNT OF PROPERTY NO.108B. THE NEXT PLEA OF THE ASSESSEE WA S THAT OUT OF ITS CASH IN HAND, SUM OF RS.10,00,000/- WAS DEPOSITED I N THE CORPORATION BANK ON 06.01.2006. THE ASSESSEE HAS FURNISHED THE COMPLETE CASH BOOK AT PAGES 38 TO 41 OF THE PAPER BOOK REFLECTING THE SAID CASH PAYMENT OF RS.10,00,000/- DEPOSITED IN THE CORPORAT ION BANK. THE SECOND CREDIT OF RS.11,00,000/- IS AN AMOUNT RECEIV ED FROM M/S KONICA RESORTS AND HAS NO CONNECTION WITH THE SALE PROCEEDS OF THE 8 PROPERTY SOLD. THE COPY OF ACCOUNT OF M/S KONICA R ESORTS IS PLACED AT PAGE 34 OF THE PAPER BOOK. IN THE ENTIRETY OF TH E FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO MERIT IN THE AFORESAID ADDITION OF RS.9,00,000/- BEING ATTRIBUTABLE TO THE SALE CON SIDERATION OF PROPERTY NO.108B RAJ GURU NAGAR, LUDHIANA. UPHOLDI NG THE ORDER OF THE CIT(A), WE DISMISS GROUND NO.3 RAISED BY THE RE VENUE. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DAY OF NOVEMBER, 2011. SD/- SD/- (D.K.SRIVASTAVA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH NOVEMBER, 2011 POONAM COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH