The ITO, Ward-9(1), Ahmedabad V. Shree Raj Corporation, Ahmedabad

ITA 140/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63105 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-09-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 15-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: S N SOPARKAR
• Keywords: Unexplained investment; Unexplained expenditure; Retraction
• Section: 133A

Judgement Text

I TA NO 140/A HD/2010. . ASSESSMENT Y EAR 2006- 07 . 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 140/AHD/2010 (ASSESSMENT YEAR: 2006-07) INCOME TAX OFFICER, WARD 9(1) PRATYAKSHA KAR BHAVAN, NEAR PANJARA POLE, AMBAWADI, AHMEDABAD. (APPELLANT) VS. M/S.SHRI RAJ CORPORATION, RADHE DUPLEX ROW HOUSE, AHMEDABAD. (RESPONDENT) PAN: ABFFS 4219R APPELLANT BY : SHRI B.L. YADAV, SR. D.R. RESPONDENT BY : SHRI S. N.SOPARKAR, SR.ADV. ( )/ ORDER DATE OF HEARING : 12- 09- 2012 DATE OF PRONOUNCEMENT : 30-11-2012 PER: SHRI ANIL CHATURVEDI, A.M. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF LD. CIT (A)- XV, AHMEDABAD DATED 10-11-2009 FOR THE ASSESSMENT Y EAR 2006-07. 2. THE ONLY EFFECTIVE GROUND OF THE REVENUE READS A S UNDER:- I TA NO 140/A HD/2010. . ASSESSMENT Y EAR 2006- 07 . 2 THE LD. C.I.T. (A)-XV AHMEDABAD HAS ERRED IN LAW A ND ON FACTS IN DELETING THE ADDITION OF RS.20,50,000/- MADE ON ACC OUNT OF UNACCOUNTED EXPENDITURE U/S. 69 OF THE INCOME TAX A CT,1961. 3. THE ASSESSEE IS A PARTNERSHIP ENGAGED IN THE BUS INESS OF BUILDING CONSTRUCTION. THE ASSESSEE FILED ITS RETURN OF INCO ME ON 5-3-2007 DECLARING TOTAL INCOME OF RS.3,80,104/-. THE CASE WAS SELECTE D FOR SCRUTINY. 4. IN THIS CASE SURVEY OPERATION U/S. 133A OF THE A CT WAS CONDUCTED AT THE ASSESSEES BUSINESS PREMISES ON 10-5-2006.DURIN G THE COURSE OF SURVEY PROCEEDINGS THE STATEMENT OF SHRI SUSMITBHAI SAVJIBHAI ROKAD, THE MANAGING PARTNER OF THE FIRM WAS RECORDED U/S. 133A OF THE ACT, WHEREIN HE ADMITTED UNACCOUNTED EXPENDITURE OF RS. 20,50,000/- INCURRED ON THE PROJECT CARRIED OUT BY THE FIRM. HOWEVER, IN THE RE TURN OF INCOME FILED FOR A.Y. 2006-07 THE ASSESSEE DID NOT OFFER UNEXPLAINED EXPENDITURE ADMITTED DURING THE COURSE OF SURVEY AND THE ASSESSEE ALSO R ETRACTED FROM THE STATEMENT GIVEN BY HIS PARTNER. THE ASSESSEE WAS AS KED TO EXPLAIN AS TO WHY THE UNEXPLAINED INVESTMENT ADMITTED DURING THE SURVEY PROCEEDINGS BUT NOT INCLUDED IN THE RETURN OF INCOME BE ADDED T OINCOME. THE ASSESSEE INTERALIA SUBMITTED THAT THE STATEMENT OF SHRI S.S. ROKAD WAS RECORDED ON10-5-2006 UNDER GREAT STRESS AND WAS MADE WITHOUT ASSISTANCE OF THE ACCOUNTANT OR THE CHARTERED ACCOUNTANT OR ANY BOOKS OR RECORDS. THE ASSESSEE ALSO FILED AFFIDAVIT WHEREIN THE ASSESSEE STATED THAT THE AMOUNT OF WORK IN PROGRESS OF RS.77,50,000/- WORKED OUT BY THE DEPARTMENTAL OFFICERS WAS ON ESTIMATED BASIS AND NOT BASED ON A NY RECORD. THE OFFICER HAD NOT ESTIMATED THE EXPENSES ON COMMON AMENITIES LIKE ROAD, COMPOUND WALL, GATE ETC., WHICH WAS YET TO BE INCUR RED ON 10TH MAY, 2006. I TA NO 140/A HD/2010. . ASSESSMENT Y EAR 2006- 07 . 3 HE FURTHER SUBMITTED THAT THERE WERE 10 INCOMPLETE UNITS UNDER CONSTRUCTION AT DIFFERENT STAGES. THE OFFICER ASSUMED ALL THE 10 UNITS TO BE AT THE SAME STAGE WHICH WAS FAR FROM THE CORRECT POSITION. IN V IEW OF THE FACTS ENUMERATED IN THE AFFIDAVIT, THE AMOUNT OF INVESTME NT IN PROJECT OF RS.77,50,000/- WAS NOT CORRECT AND THEREFORE NEEDS TO BE REVISED. THE ASSESSEE ALSO SUBMITTED THAT IT HAD RECEIVED RS.55, 12,790/- FROM CUSTOMERS AGAINST THE CONSTRUCTION CONTRACT (AS PER STATEMENT RS.45 LACS).THERE WERE UNPAID CREDITORS OF RS.14,37,038/- (AS PER STATEMENT NIL AS AT 10-5-2006). FURTHER THE PARTNERS CAPITAL AS AT 10-5-2006 WAS OF RS.10,27,851/- AND CASH ON HAND WAS OF RS.40,500/- AND THE BANK BALANCE OF RS.8,30,836/-.IT WAS THUS SUBMITTED THAT THERE WAS NO UNACCOUNTED INVESTMENT AS ALLEGED. THE CONFIRMATION OF ADDITION AT THE TIME OF SURVEY WAS THEREFORE BASED ON INACCURATE FA CTS AND WAS THEREFORE RETRACTED AND ACCORDINGLY THERE WAS NO BASIS FOR AD DITION. 5. THE A.O. DID NOT ACCEPT THE CONTENTION OF THE AS SESSEE. HE THEREFORE CONSIDERED THE UNEXPLAINED EXPENDITURE OF RS.20,50, 000/- DETECTED DURING THE SURVEY AS BEING PERTAINING TO F.Y. 2005-06 AND FURTHER RELYING ON THE STATEMENT OF SHRI S.S. ROKAD HELD IT TO BE AS UNEX PLAINED EXPENDITURE WITHIN THE MEANING OF SEC.69 C OF THE ACT AND ADDE D TO THE TOTAL INCOME. AGGRIEVED BY THE ADDITION MADE BY THE A.O. THE ASSE SSEE CARRIED THE MATTER BEFORE THE CIT (A). 6. BEFORE CIT (A), IT WAS SUBMITTED THAT THE ASSESS EE WAS DEVELOPING 24 RESIDENTIAL TENEMENTS UNDER THE SCHEME FROM JULY, 2 005. ON THE DATE OF SURVEY 1/4 TH UNITS WERE FOUND COMPLETED WHILE IN 10 UNITS THE W ORK WAS IN PROGRESS. IT WAS FURTHER SUBMITTED THAT THE MEMBERS COLLECTION WAS NOT I TA NO 140/A HD/2010. . ASSESSMENT Y EAR 2006- 07 . 4 RS.45 LACS AS STATED DURING THE SURVEY BUT RS.55,12 ,700/- WHICH COMPRISES OF ADVANCE FROM MEMBERS OF RS.38,15,000/- FOR A PER IOD FROM 1-4-2005 TO 30-1-2006 AND RS.16,97,790/- FOR THE PERIOD 2-4-20 06 TO 10-5-2006. IT WAS FURTHER SUBMITTED THAT RS.14,37,038/- WAS ON ACCOUN T OF UNPAID CREDITORS. IT WAS FURTHER SUBMITTED THAT THE CONFESSION MADE DURI NG THE SURVEY DOES NOT HAVE ANY EVIDENTIARY VALUE AND FOR WHICH THE ASSESS EE PLACED RELIANCE ON THE DECISION OF PAUL MATHEWS & SONS VS. CIT 203 ITR 101 (KER) AND VINOD SOLANKI REPORTED IN 233 ELT 157 (SC).CIT (A) AGREED WITH THE CONTENTION OF THE ASSESSEE AND DELETED THE ADDITION MADE BY THE A .O. BY HOLDING AS UNDER:- 5. AFTER GOING THROUGH RIVAL SUBMISSIONS I AM OF T HE VIEW THAT BUT FOR RELYING ON THE STATEMENT OF THE PARTNER RECORDE D DURING SURVEY, THE A.O. HAS NOT MADE ANY EFFORT TO DISPROVE THE RETRAC TION BY FURTHER INQUIRIES/VERIFICATIONS, WHEREAS ON THE OTHER HAND THE APPELLANT HAS PRODUCED LEDGER ACCOUNTS OF MEMBERS WHERE BULK OF P AYMENTS ARE SHOWN THROUGH CHEQUES. FURTHER HONBLE SUPREME COUR T DECISION IN THE CASE OF VINOD SOLANKI REPORTED IN 233 ELT 157 ( SC) SUPPORTS THE CASE OF THE APPELLANT WHEREIN IT HAS BEEN HELD THAT EVIDENCES BROUGHT ON RECORD BY WAY OF CONFESSION WHICH STOOD RETRACTE D MUST BE SUBSTANTIALLY CORROBORATED BY OTHER INDEPENDENT AND COGENT EVIDENCES. 7. AGGRIEVED BY THE ORDER OF CIT (A) REVENUE IS NOW IN APPEAL BEFORE US. 8. BEFORE US THE LD. D.R. SUBMITTED THAT THE MANAGI NG PARTNER OF THE FIRM SHRI S.S. ROKAD HAD ADMITTED THE UNACCOUNTED E XPENDITURE OF RS.20,50,000/- IN THE PROJECT. THE LD. D.R. FURTHE R SUBMITTED THAT THE DETAILS OF THE MEMBERS CONTRIBUTION RECEIVED WITH REGARD TO THE CREDITORS OF I TA NO 140/A HD/2010. . ASSESSMENT Y EAR 2006- 07 . 5 THE UNPAID EXPENSES WERE NOT SUPPORTED BY BANK STAT EMENT OR CASH BOOK. HE FURTHER SUBMITTED THAT THE RETRACTION MADE ON 17 -5-2006 WAS AN AFTER THOUGHT AND SHOULD BE DISCARDED. HE THUS RELIED ON THE ORDER OF THE A.O. 9. ON THE OTHER HAND THE LD. A.R. SUBMITTED THAT TH E AMOUNT DISCLOSED AT THE TIME OF SURVEY WAS THE ESTIMATED AMOUNT AND WAS NOT BASED ON THE BASIS OF BOOKS OF ACCOUNTS. HE POINTED OUT TO QUES TIONNO.20 OF THE STATEMENT RECORDED AND ITS ENGLISH TRANSLATION WHIC H WAS PLACED AT PAGE 191 OF THE PAPER BOOK. HE ALSO PLACED ON RECORD A C OPY OF THE AFFIDAVIT AND THE ENGLISH TRANSLATION AT PAGE 195 TO 196 OF THE P APER BOOK. FROM THE ENGLISH TRANSLATION, HE POINTED OUT THAT THE INVEST MENTS OF RS.77,50,000/- MADE IN THE SCHEME WAS MADE ON ESTIMATE BASIS. HE F URTHER SUBMITTED THAT THE AMOUNT OF WORK IN PROGRESS WAS CALCULATED ON ASSUMPTION THAT ALL THE HOUSES WERE AT THE SAME STAGE WHICH IS FAR FROM TRUTH. OUT OF THE 24 RESIDENTIAL TENEMENTS WHICH WERE TO BE CONSTRUCTED 14 WERE READY AND THE REMAINING 10 WERE YET TO BE CONSTRUCTED. THE SOURCE OF INVESTMENTS WAS TREATED TO BE APPROXIMATE FIGURE. THE LD. A. R. ALS O PLACED ON RECORD THE COPY OF THE STATEMENT MADE BEFORE THE CIT (A) PAGES 202 TO 292. THE LD. A.R. POINTED THAT THE ASSESSEE HAD RECEIVED RS.55,1 2,790/- FROM CUSTOMERS AGAINST THE CONSTRUCTION WHEREAS IN THE S TATEMENT IT WAS RECORDED AS RS.45 LACS, UNPAID CREDITORS OF RS. 12 LACS, UNPAID LABOUR CHARGES WERE TO THE TUNE OF RS.3,25,917/- WHEREAS A S PER STATEMENT IT WAS RECORDED AS NIL. PARTNERS CAPITAL OF RS.10,27,851/ - WHICH WAS RECORDED IN THE STATEMENT CASH ON HAND BALANCE OF RS.40,500/- A ND BANK BALANCE OF RS.8,30,336/- WAS ALSO NOT RECORDED IN THE STATEMEN T. THE LD. A.R. ALSO POINTED OUT TO THE FACT THAT DURING THE COURSE OF A SSESSMENT PROCEEDINGS I TA NO 140/A HD/2010. . ASSESSMENT Y EAR 2006- 07 . 6 NECESSARY EVIDENCES IN SUPPORT OF THE SOURCE OF INV ESTMENTS WAS PRODUCED BEFORE THE A.O. THE A.O. DID NOT HOWEVER, ACCEPT T HE CONTENTIONS OF THE ASSESSEE OR CONSIDERED IT TO BE AFTER THOUGHT. THE LD. A.R. FURTHER RELIED ON THE DECISION IN THE CASE OF PAUL MATHEWS & SONS VS. CIT 263 ITR 101 AND THE DECISION OF THE AHMEDABAD BENCH IN THE CASE OF SMT. BABIBEN R. PATEL VS. ITO IN ITA.NO.32 & 33/AHD/2004 DATED 16-7-2010. THE LD. A.R. THUS SUBMITTED THAT THE ADDITIONS HAVE BEEN MADE BY THE A.O. ON THE BASIS OF STATEMENT OF THE ASSESSEE RECORDED DURING THE COURS E OF SURVEY AND ADMISSION MADE BY THE ASSESSEE. HE THEREFORE, URGE D THAT THE ORDER OF THE CIT (A) BE UPHELD. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE THE STATEMENT OF THE AS SESSEE WAS RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS U/S. 133A O N 10-5-2006. THE ADDITION OF RS.20,50,000/- WAS MADE ON THE BASIS OF STATEMENT OF THE PARTNER RECORDED AT THE TIME OF SURVEY. ASSESSEE LA TER ON RETRACTED THE ADMISSION BY WAY OF SWORN AFFIDAVIT DATED 17-6-2006 . WE FIND THAT THE ENTIRE ADDITION HAS BEEN MADE BY THE A.O. ONLY ON T HE BASIS OF THE STATEMENT OF THE ASSESSEE RECORDED DURING SURVEY AN D THE ADMISSION OF THE ASSESSEE. BEFORE US THE LD. A.R. SUBMITTED THAT TH E ADDITION HAS BEEN MADE ON THE BASIS OF ASSUMPTION AND PRESUMPTION. TH E REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE FI NDING OF CIT (A). THUS IN THE ABSENCE OF ANY MATERIAL TO THE CONTRARY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT (A). WE THUS UPHOLD T HE ORDER OF CIT (A) AND DISMISS THIS GROUND OF REVENUE I TA NO 140/A HD/2010. . ASSESSMENT Y EAR 2006- 07 . 7 IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON 30- 11- 2012. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) XV, AHMEDABAD. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD 1.DATE OF DICTATION 12 - 9 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 6 / 11/ 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S - -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT - -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S - -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK - -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER