SHRI TIAKM KHANDELWAL, Jaipur V. ACIT, Jaipur

ITA 1408/JPR/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54117 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 14-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K L MOOLCHANDAN I; R K KHUNTETA
• Keywords: Unexplained investment; Document seized; Documents seized

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.1408/ JP/2010 ASSESSMENT YEAR 2004-05 PAN: AKGPK 7401 H SHRI TIKAM KHANDELWAL VS. THE ACIT A-2, RANA PRATAP NAGAR CENTRAL CIRCLE- 1 JHOTWARA, JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ITA NO.1455/ JP/2010 ASSESSMENT YEAR 2004-05 PAN: AKGPK 7401 H THE ACIT VS. SHRI TIKAM KHANDELWAL CENTRAL CIRCLE- 1 A-2, RANA PRATAP NAGAR JAIPUR JHOTWARA, JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI K.L. MOOLCHANDANI & SHRI R .K. KHUNTETA DEPARTMENT BY : SHRI SUNIL MATHUR DATE OF HEARING: 02-08-2011 DATE OF PRONOUNCEMENT: 19-08-2011 ORDER PER N.L. KALRA, AM:- THE ASSESSEE AS WELL AS REVENUE HAVE FILED APPEAL S AGAINST THE ORDER OF THE LD. CIT(A), CENTRAL JAIPUR DATED 25-10-2010 FOR THE ASSESSMENT YEAR 2004-05. 2 2.1 THE FIRST GROUND OF THE ASSESSEE IS THAT THE LD . CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF CONSTRUCTION EXPENSE S TO THE EXTENT OF 20% S AGAINST ADDITION OF RS. 7,86,722/- MADE BY THE AO B Y DISALLOWING 50% OF CONSTRUCTION EXPENSES. 2.2 THE REVENUE VIDE GROUND NOS 1 AND 2 IS ALSO AGG RIEVED AGAINST THE RELIEF ALLOWED OF RS. 4,72,033/- FROM THE DISALLOW ANCE OF CONSTRUCTION EXPENSES MADE BY THE AO AT RS.7,86,722/-.. 2.3 THE AO HAS DISALLOWED 50% OF THE EXPENSES CLAIM ED FOR THE REASONS GIVEN BY HIM WHILE FINALIZING THE ASSESSMENT ORDER OF SHRI SHANKAR LAL KHANDELWAL AND ALSO IN THE CASE OF THE ASSESSEE FOR EARLIER YEARS. 2.4 THE LD. CIT(A) HAS REDUCED THE DISALLOWANCE TO 20% ON SAME BASIS AS GIVEN BY HIM IN THE CASE OF SHRI SHANKAR LAL KHANDE LWAL. 2.5 WE HAVE HEARD BOTH THE PARTIES. DURING THE YEAR , THE ASSESSEE HAS SOLD 5 PROPERTIES. PAGE NO.17 OF THE PAPER BOOK CONTAINS THE DETAILS OF THE PROPERTIES PURCHASED AND THE AMOUNT FOR WHICH IT WA S SOLD. THE CONSTRUCTION COST IN RESPECT OF CONSTRUCTION MADE IN FIVE DIFFER ENT PROPERTIES VARIES FROM RS. 105/- PER SQ. FT. TO RS. 499/- PER SQ. FT. THE NET PROFIT RATE SHOWN BY THE ASSESSEE VARIES FROM 9.89% TO 13.89%. IN RESPECT OF THREE PROPERTIES, THE CONSTRUCTION COST IS RS. 423/- TO RS. 499/- PER SQ. FT. THE ASSESSEE HAS ALSO SUBMITTED THAT IN CASE THE DISALLOWANCE AS CONFIRME D BY THE LD. CIT(A) IS 3 CONSIDERED THEN THE N.P. RATE WILL COME TO 20.48%. THIS WILL BE THE ABNORMAL RATE OF PROFIT IN CASE THE DISALLOWANCE AS CONFIRMED BY THE LD. CIT(A) IS ADDED TO THE INCOME OF THE ASSESSEE. IT I S UNDISPUTED FACT THAT THE ASSESSEE IS NOT HAVING THE VOUCHERS IN RESPECT OF T HE EXPENSES INCURRED. IN THE CHART AVAILABLE AT PAGE 17 OF THE WRITTEN SUBMI SSIONS, THE ASSESSEE HAS ALSO NOT CONSIDERED THE INTEREST EXPENDITURE ON THE PURCHASE AMOUNT WHILE SHOWING THE N.P. RATE. ONLY IN RESPECT OF ONE PROPE RTY, THE INTEREST EXPENDITURE HAS BEEN CONSIDERED. THUS THE CHART PRE PARED FOR ASCERTAINING THE PROFIT FROM THE PURCHASE AND SALE OF THE PROPER TIES AFTER MAKING CONSTRUCTION IS NOT AT ALL VERIFIABLE AND THE ASSES SEE HAS NOT BEEN ABLE TO GIVE ANY SPECIFIC EXPLANATION AS TO WHY THE COST OF CONS TRUCTION PER SQ. FT. IN RESPECT OF ONE PROPERTY IS AT RS. 499/- PER SQ. FT. THE ASSESSEE HAS SHOWN THE N.P. RATE OF 10.71% ON TURNOVER OF RS. 32.21 LACS. IN VIEW OF THIS, WE FEEL THAT IT WILL BE FAIR AND REASONABLE TO ESTIMATE TH E N.P. RATE AT 12%. THE AO WILL COMPUTE THE DISALLOWANCE WHICH IS REQUIRED TO BE MADE FROM THE EXPENSES. HENCE, GROUND NO. 1 OF THE ASSESSEE IS PA RTLY ALLOWED WHILE GROUND NO. 1 AND 2 OF THE REVENUE ARE DISMISSED. 3.1 THE SECOND GROUND OF THE ASSESSEE IS THAT THE L D. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.39.94 LACS ON THE BAS IS OF SEIZED DOCUMENTS NO. 23 AND 25 OF ANNEXURE- A-25. 4 3.2 WE HAVE HEARD BOTH THE PARTIES. DURING THE YEAR , THE ASSESSEE HAS SOLD FOUR PLOTS NAMELY 165, 166, 173 AND 174, SHYAMPURI. THE ASSESSEE HAS ADOPTED THE SALE CONSIDERATION OF RS. 15.00 LACS FO R EACH PLOT. THE DIFFERENCE BETWEEN THE SALE CONSIDERATION TAKEN AND THE AO ON THE BASIS OF THE SEIZED PAPER AND SALE CONSIDERATION AS SHOWN IN THE REGIST ERED SALE DEED, HAS BEEN CONSIDERED AS UNDISCLOSED INCOME. WHILE DECIDING TH E APPEAL FOR THE ASSESSMENT YEAR 2008-09 WE HAVE HELD THAT PAGES 23 AND 25 OF ANNEXURE- A-25 CANNOT BE MADE A GROUND FOR MAKING ADDITION. I T IS ALSO FURTHER NOTICED AT PAGE 25 OF ANNEXURE- A-25, THAT THERE IS FOLLOWI NG NOTING. SOLD SHYAMPURI 170-177,164-165 15 X 4 = 60 THERE IS NO REFERENCE OF PLOT NO. 166, 173 AND 174 IN THE SEIZED DOCUMENTS. THE ASSESSEE HAS FILED THE REGISTERED SALE DEED BEF ORE THE AO AND THE AO HAS NOT BEEN ABLE TO ESTABLISH ANY CONSIDERATION OVER A ND ABOVE SHOWN IN THE REGISTERED SALE DEED. MOREOVER, THESE PLOTS HAVE BE EN SOLD AFTER MAKING CONSTRUCTION. THE CONSTRUCTION COST SHOWN BY THE AS SESSEE IN RESPECT OF THESE FOUR PLOTS IS TO THE EXTENT OF AROUND RS. 8.00 LACS . THE CONSTRUCTION COST SHOWN BY THE ASSESSEE HAS BEEN CONSIDERED FOR DISAL LOWANCE AND IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS NOT MADE THE CONSTRUCTION. THE N.P. RATE SHOWN BY THE ASSESSEE ON SALE OF SUCH PRO PERTIES IS NORMAL. IN CASE THE SALE CONSIDERATION AS ADOPTED BY THE A.O. IS TA KEN THEN N.P. RATE WILL 5 BE AROUND 144% IN CASE THE DISALLOWANCE OF EXPENSES IS ALSO CONSIDERED. HENCE, THE ONUS WAS HEAVILY ON THE REVENUE TO HAVE COLLECTED THE EVIDENCE FOR MAKING THE ADDITION. FOLLOWING OUR ORDER FOR TH E ASSESSMENT YEAR 2008- 09, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED I N CONFIRMING THE ADDITION OF RS. 39.94 LACS HENCE, THE GROUND NO. 2 OF THE AS SESSEE IS ALLOWED. 4.1 THE THIRD GROUND OF THE ASSESSEE IS THAT THE L D. CIT(A) HAS ERRED IN NOT ANNULLING THE ASSESSMENT ORDER. 4.2 THIS ISSUE HAS BEEN DECIDED BY US WHILE DECIDIN G THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09. FOLLOWING THAT ORDER, WE HOLD THAT THE LD. CIT(A) WAS JUSTIFIED IN NOT ANNULLING THE A SSESSMENT ORDER. THUS GROUND NO. 3 OF THE ASSESSEE IS DISMISSED. 5.1 THE GROUND NOS. 3 AND 4 OF THE REVENUE ARE AGAI NST RELIEF OF RS. 2.51 LACS MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT MADE U/S 69B OF THE ACT. 5.2 THE AO DURING THE COURSE OF ASSESSMENT PROCEEDI NGS NOTICED THAT THE ASSESSEE HAS PAID A SUM OF RS. 1.51 LACS FOR PURCHA SE OF PLOT NO 19, SHARVAN COLONY, JAIPUR THROUGH CHEQUE DRAWN ON SBBJ BANK. THE BANK STATEMENT DOES NOT SHOW SUCH TRANSACTION AND THEREFORE, A SUM OF RS. 1.51 LACS WAS ADDED TO THE INCOME OF THE ASSESSEE. THE AO FURTHER NOTICED THAT THE ASSESSEE HAS SHOWN PLOT NO. 49C- AGRASEN NAGAR, JAI PUR AS CLOSING STOCK IN THE BALANCE SHEET FOR THE ASSESSMENT YEAR 2004-05. THE PURCHASE OF THIS 6 PROPERTY WAS NEITHER SHOWN IN EARLIER YEAR. THEREFO RE, THE VALUE OF THIS PROPERTY SHOWN AT RS. 1.00 LAC WAS TREATED AS UNDI SCLOSED INCOME. ACCORDINGLY, THE AO MADE THE ADDITION OF RS. 2.51 L AKH. 5.3 BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED T HAT THE AO HAS MADE THE ADDITION WITHOUT ASKING THE ASSESSEE TO EXPLAIN THE INVESTMENT. THE ASSESSEE DEBITED THE PLOT PURCHASE ACCOUNT AND CRED ITED THE ACCOUNT OF SMT.NIRMALA DEVI IN RESPECT OF PROPERTY NO. 19, SHA RVAN COLONY, JAIPUR. THE PAYMENT HAS BEEN MADE IN NEXT ASSESSMENT YEAR O UT OF THE BOOKS OF SHRI SHANKAR LAL KHANDELWAL. THE ACCOUNT OF SMT. NIRMALA DEVI WAS TRANSFERRED TO THE ACCOUNT OF SHRI SHANKAR LAL KHANDELWAL. BEFO RE THE LD. CIT(A), IT WAS SUBMITTED THAT THE PLOT NO. 49-C , AGRASEN NAGA F, JAIPUR WAS PURCHASED FROM SHRI VIJAY SINGH YADAV. THE PAYMENT WAS MADE O UT OF THE BOOKS OF SHRI SHANKAR LAL KHANDELWAL TO THE ACCOUNT OF SHRI VIJAY SINGH YADAV. HENCE, IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THE INVESTMENT MADE STANDS EXPLAINED. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION AFTER OBSERVING AS UN DER:- 4.3 I HAVE CONSIDERED THE SUBMISSION OF THE A.R AND HAVE PERUSED THE ASSESSMENT ORDER AND RELEVANT RECORD. AS ALREADY MENTIONED THE COPY OF THE WRITTEN SUBMISSION AS WELL AS THE PAPER BOOK WAS GIVEN TO T HE A.O. A.O. HAS SEEN THE RELEVANT DETAILS. REGARDING PLOT NO. 19, SHRAVAN COLONY, JAI PUR, FROM PERUSAL OF PAPER BOOK PAGES 27 AND 28, I AGREE WITH SUBMISSION OF THE A.R THAT THE APPELLANT DEBITED THE PLOT 7 PURCHASE ACCOUNT AND CREDITED THE ACCOUNT OF SMT. N IRMALA DEVI. IN THE NEXT YEAR THE PAYMENT WAS MADE FROM THE BOOKS OF SH. SHANKAR KHAN DELWAL AND ACCOUNT WAS TRANSFERRED THROUGH JOURNAL ENTRY. 4.3.1 REGARDING PLOT NO. 49C AGRASEN NAGAR, FROM P ERUSAL OF PAPER BOOK PAGE 1, 15-18,23 AND 24 AS WELL AS THE PROFIT AND L OSS ACCOUNT AND THE BALANCE SHEET, I AGREE WITH THE SUBMISSIONS OF THE A.R. OF THE APPEL LANT THAT IT WAS THE TYPING MISTAKE IN THE CLOSING STOCK IN THE P&L ACCOUNT ABOUT PLOT NO. BEING TYPED AS 49C INSTEAD OF 49B. HOWEVER, DURING THE APPEAL HEARING, THE A.O. WAS ASKED TO MAKE COMMENT ON THE SUBMISSION OF THE A.R. AND TO FURNISH HIS OBJEC TIONS. BUT A.O. COULD NOT ADD ANYTHING FURTHER EXCEPT THAT 49C HAS BEEN MENTIONED IN CLOSING STOCK. HOWEVER, CONSIDERING THE AFORESAID POSITION, IT SEEMS TO BE A CASE OF TYPING ERROR AS NO OTHER DOCUMENT FOR PURCHASE OF PLOT 49C AGARSEN NAGAR IN THE NAME OF APPELLANT WAS FOUND, WHEREAS PURCHASE OF DOCUMENT OF 49B HAS BEEN FOUND AND THIS PLOT 49B HAS NOT BEEN SOLD. OBVIOUSLY, IT SHOULD HAVE APPEARED I N THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET AS CLOSING STOCK. 4.3.2 IN VIEW OF THE AFORESAID POSITION THE ADDITI ON OF RS. 2,51,000/- SO MADE BY THE A.O. IS HEREBY DELETED. 5.4 WE HAVE HEARD BOTH THE PARTIES. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS AND EXPLANATION OF THE ASSESSEE HAS DEL ETED THE ADDITION BECAUSE THE INVESTMENT MADE STANDS EXPLAINED. HENCE, WE FIN D NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH IS SUSTAINED. THUS TH E LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. THEREFORE, GROUND NOS. 3 AND 4 OF THE REVENUE ARE DISMISSED. 8 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19-08 -2011 SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 19 /08/2011 *MISHRA COPY FORWARDED TO :- 1. SHRI TIKAM KHANDELWAL, JAIPUR 2. THE ACIT, CENTRAL CIRCLE- 1, JAIPUR 3. THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5. THE LD.DR 6. THE GUARD FILE (ITA NO.1408/JP /10) A.R, ITAT, JAIPUR 9 10