Shri Hashmukh B.Patel, Navsari V. The Income tax Officer,Ward-2, Navsari

ITA 1299/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8978 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-12-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 06-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Agreed addition
• Section: 143(3)

Judgement Text

ITA NO. 1299 / AHD / 201 3 A SSESSMENT Y EAR: 20 08 - 09 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH, SMC , AHMEDABAD [CORAM: PRAMOD KUMAR AM] ITA NO. 1299 /AHD/201 3 ASSESSMENT Y EAR : 20 08 - 09 HASMUKH B. PATEL ..... .......... .APPELLANT 4/875, M/S. BIKHABHAI BHAJIAWALA & SONS, PATVA SHERI, MOTA BAZAR, NAVSARI. [PAN: A DWPP 1685 M ] VS. INCOME TAX OFFICER , WARD (2), NAVSARI. .. ......... RESPONDENT APPEARANCES BY: M EHUL SHAH , FOR THE APPELLANT MADHUSUDAN , FOR THE RESPONDENT D ATE OF CONCLUDING THE HEARING : 2 2.12 . 201 6 DA TE OF PRONOUNCING THE ORDER : 21 . 0 3 .2017 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 31 ST DECEMBER, 2012, PASSED BY THE LEARNED CIT(A), IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 20 08 - 09 . 2. IN THE FIRST GROUND OF APPEAL , THE GRIEVANCE RAIS E D BY THE ASSESSEE IS AS FOLLOWS : - 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL A S LAW ON THE SUBJECT, THE LEARNED C I T( A) HAS ERRED IN CONFIRMING THE ACTION OF A SSESSING O FFICER IN MAKING ADDITION OF RS.4,83,000/ - UNDER SECTION 69B OF THE ACT AS UNDISCLOSED INVESTMENT. ITA NO. 1299 / AHD / 201 3 A SSESSMENT Y EAR: 20 08 - 09 PAGE 2 OF 5 3. SO FAR AS THIS GRIEVANCE OF THE ASSESSEE IS CONCERNED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. DURING THE RELEVANT PREVIOUS YEAR THE ASSESSEE ACQUIRED TWO IMMOVABLE PROPERTIES OF RS.10 , 60 , 000 / - AND RS.9,51,000/ - RESPECTIVELY. THE ASSESSING O FFICER WAS OF THE VIEW THAT , CONSIDERING LOCALITY OF THE PROPERTIES AND AREA OF PROPERTY , VALUE SHOWN BY TH E ASSESSEE IS VERY LOW AS COMPARED TO PREVALENT MARKET RATE. HE REFERRED THE MATTER TO THE VALUATION OFFICER WHO ASSESSED THE VALUE OF THESE PROPERTIES AT RS. 13,71,000/ - AND RS.11,23,000/ - RESPECTIVELY. THE ASSESSING OFFICER WAS OF THE VIEW THAT IT IS V ERY WELL KNOWN TH A T ON - MONEY ALWAYS PASSES IN THE DEALING OF REAL ESTATE AND THAT SUCH ON - MONEY IS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. ON THESE FACTS, THE ASSESSING OFFICER PROCEEDED TO MAKE ADDITION UNDER SECTION 69B OF THE ACT IN RESPECT OF DIFF ERENCE OF VALUE STATED BY THE ASSESSEE IN THE BOOKS OF ACCOUNT VIS - A - VIS THE VALUATION AS PER TH E DVO. AGGRIEVED , ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) BUT WITHOUT ANY SUCCESS. THE LEARNED C IT(A) NOTED THAT THE VALUATION DIFFERE NCE WAS 29% IN RESPECT OF FIRST PROPERTY AND 18% IN RESPECT OF SECOND PR OPERTY AND TH E VALUATION W A S DONE ON THE BASIS OF FAIR CRITERIA. IT WAS ALSO NOTED THAT SO FAR AS THE CIRCLE RATE S ARE CONCERNED, THESE ARE BASED LOCATION OF THE PROPERTY. THE ASSESS ING OFFICER WAS THUS QUITE RIGHT IN REJECTING THE CIRCLE RATE AND PROCEEDING ON DVO S VALUATION. ADDITION WAS THUS CONFIRMED. AGGRIEVED BY WHICH THE ASSESSEE IS IN APPAL BEFORE ME. 4. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION. 5. I FIND THAT ONLY BASIS ON WHICH THE IMPUGNED ADDITION MADE IS DIFFERENCE BETWEEN VALUE STATED BY THE ASSESSEE AND THE VALUE AS PER THE DVO S REPORT. IN A SITUATION IN WHICH T HERE IS NO EVIDENCE OF ANY CASH PAYMENT INDICATING ITA NO. 1299 / AHD / 201 3 A SSESSMENT Y EAR: 20 08 - 09 PAGE 3 OF 5 PAYMENT OF ANY MONEY OTHER THAN WHAT HAS BEEN SPECIFIED BY THE ASSESSEE , IT IS WHOLLY UNREASONABLE TO MAKE ADDITION UNDER SECTION 69B OF THE ACT ONLY ON THE BASIS THAT THE VALUE OF PROPERTY WAS MORE THAN T HE VALUE OF PURCHASE. AS A MATTER OF FACT , THE STAND TAKEN BY THE AUTHORITIES BELOW IS WHOLLY UNSUSTAINABLE IN LAW IN AS MUCH AS EVEN WHEN IT IS ESTABLISHED THAT THE PROPERTY PURCHASED H AS HIGHER MARKET VALUE THAN THE VALUE O N WHICH IT PURCHASED, SUCH FIN DING CANNOT BE BASIS FOR MAKING ADDITION FOR UNDISCLOSED INVESTMENT. IN ANY CASE, THE ISSUE IS SQUARELY COV ERED IN FAVOUR O F THE ASSESSEE BY TH E JUDGEMENT OF HON BLE JURISDICTIONAL H IGH COURT IN THE CASE OF CIT VS. BER RY PLASTIC S (P.) LTD. (35 TAXMANN.COM 296) WHEREIN THEIR LORDSHIPS HAVE HELD THAT AN ADDITION UNDER SECTION 69B CANNOT BE MADE ON THE BASIS OF DVO S REPORT. I, THEREFORE, DEEM IT FIT AND PROPER TO DELETE THE IMPUGNED ADDITION. ASSESSEE GETS THE RELIEF ACCORDINGLY. 6. GROUND NO.1 IS THUS ALL OWED. 7. IN GROUND NO.2, THE ASSESSEE HAS RAIS E D T HE FOLLOWING GRIEVANCE 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKING ADDITION OF RS.41 ,507/ - ON ACCOUNT OF INTEREST INCOME. 8. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , IT WAS NOTED THAT THE ASSESSEE HAD CLAIMED INTEREST EXPENSE S OF RS.2 , 4 0,990/ - ON UNSECURED LOAN OBTAINED FROM VARIOUS PE R SONS AND HAD ALSO GIVEN INTEREST FREE ADVANCE O F RS.67 , 000 / - . T HE ASSESSING OFFICER FURTHER NOTED TH A T THE LOANS OBTAINED BY THE ASSESSE E AND ADVANCES GIVEN BY THE ASSESSEE WERE CLOSE RELATIVES IN THE SENSE TH A T IF THE ASS ESSEE HAD NOT GIVEN INTEREST FREE ADVANCES, THE ASSESS E E COULD HAVE REDUCED HIS INTEREST OUTGOING. ON THIS BASIS T HE ASSESSING O FFICER PROCEED TO COMPUTE THE INTEREST WHICH IN THE OPINION OF THE ASSESSING O FFICER ITA NO. 1299 / AHD / 201 3 A SSESSMENT Y EAR: 20 08 - 09 PAGE 4 OF 5 THE ASSESSEE OUGHT TO HAVE EARN E D FROM INTEREST FREE LOAN GIVEN TO SHRI RIDDI ENTERPRISE NAVSARI. A CCORDINGLY AN ADDITION OF RS.41,507/ - W A S MADE. AGGRIEVED , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) BUT WITHOUT ANY SUCCESS. THE LEARNED CIT(A) NOTED THAT THE A D DITIO N OF RS.41,507/ - WAS BASED ON CONCESSION GRANTED BY THE ASSESS E E AND CANNOT THEREFO RE BE CHALLENGED. THE ASSESSEE NOT SATISFIED AND IS I N APPEAL BEFORE ME. 9. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION. 10. I FIND THAT IN THE PRESENT CASE ASSESS E E HAS SUFFICIENT INTEREST FREE ADVANCE AVAILABLE TO HIM. THE CAPITAL ACCOUNT ALONE SHOWN THAT RS.42,98,534 / - WERE AVAILABLE TO T HE ASSESSEE AS INTEREST FREE CA PITAL. IN THIS VIEW OF THE MATTER , THE ADVANCE GRANTED BY THE ASSESSEE CANNOT BE SA ID TO BE OUT OF BORROWED FUND AND DISALLOWANCE ON INTEREST CANNOT BE MADE FOR THI S RE A SON. AS FOR ADDITION HAVING BEEN MADE ON ACCOUNT OF INCOME FROM INTEREST WHICH THE ASSESSEE OUGHT TO HAVE EARNED, IT IS ONLY ELEMENTARY THAT THE INCOME TAX IS LEVIED ON THE INCOME ACTUALLY EARNED AND NOT ON THE INCOME THE ASSESSEE SHOULD HAVE HYPOTHETICALLY EARNED IN IDEAL SITUATION. T HEREFORE THE ASSESSEE HAS FULLY JUSTIFIED IN H IS PLEA AGAINST THE IMPUGNED DISALLOWANCE ADDITION. AS FOR THE STAND TAKEN BY THE LEARNED C IT(A) THAT IT IS A CASE OF AGREED ADDITION , I FIND NO MATERIAL TO SUPPORT THE SAME. IN ANY WAY, THERE CANNOT BE ESTOPPELS AGAINST STATUTE AND THE RIGHTS OF THE ASSESSEE TO SEEK REMEDY AGAINST AN ADDITION WHICH WAS AGREED TO BY HIM UNDER BONA FIDE BELIEF O F IT S CORRECTNESS OR PRESSURE , HE DID NOT PRESS THE SAME AT AN EARLIER STAGE. I , THEREFORE , DEEM IT FIT AND PROPER TO DELETE THE ADDITION . 11. GROUND NO.2 IS THUS ALLOWED. ITA NO. 1299 / AHD / 201 3 A SSESSMENT Y EAR: 20 08 - 09 PAGE 5 OF 5 12. IN GROU ND NO.3 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : - 3. ON THE FA CTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF A SSESSING O FFICER IN MAKING ADDITION OF RS.30,000/ - ON ACCOUNT OF LOW HOUSE - HOLD WITHDRAWALS. 13. WHEN THIS GROUND CAME UP FOR HEARI NG , AFTER SOME DISCUSSIONS , LEARNED COUNSEL FOR THE ASSESSE E STATE D THAT HE DOES NOT W ISH TO PURSUE THE ABOVE GRIEVANCE IN VIEW OF SMALLNESS OF THE AMOUNT. THIS GROUND IS , THEREFORE , DISMISSED AS NOT PRESSED. 14. GROUND NO.3 IS THUS DISMISSED. 15. IN THE RESULT, APPEAL IS PARTLY ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF MARCH, 2017 . SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: THE 21 ST DAY OF MARCH , 2017 . PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD