SHRI TIAKM KHANDELWAL, Jaipur V. ACIT, Jaipur

ITA 1409/JPR/2010

• Counselvise Citation: 140923114 RSA 2010
• 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: 2005-2006
• Appeal Filed On: 14-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K L MOOLCHANDAN I; R K KHUTETA
• Keywords: Depreciation; Block assessment
• Section: 40A(3); 153A

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.1409/ JP/2010 ASSESSMENT YEAR 2005-06 PAN: AKGPK 7401 H SHRI TIKAM KHANDELWAL VS. THE ACIT A-2, RANA PRATAP NAGAR CENTRAL CIRCLE- 1 JHOTWARA, JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI K.L. MOOLCHANDANI & SHRI R.K. KHUTETA DEPARTMENT BY : SHRI SUNIL MATHUR DATE OF HEARING: 2-08-2011 DATE OF PRONOUNCEMENT: 19-08-2011 ORDER PER N.L. KALRA, AM:- THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A), CENTRAL JAIPUR DATED 25-10-2010 FOR THE ASSESSMENT YEAR 2005-06. 2.1 THE FIRST GROUND OF THE ASSESSEE IS THAT THE LD . CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 2,00,130/- BY CONFIR MING THE DISALLOWANCE OF CONSTRUCTION EXPENSES TO THE EXTENT OF 20% AS AGAIN ST 50% MADE BY THE AO. 2.2 WE HAVE HEARD BOTH THE PARTIES. DURING THE YEAR UNDER REFERENCE, THE ASSESSEE HAS SOLD FOUR PROPERTIES. THE MARGIN OF PR OFIT ON PROPERTY VARIES FROM 0.4% TO 30.45%. THE AVERAGE N.P. RATE IS 16.70 %. IN CASE THE DISALLOWANCE AS MADE BY THE LD. CIT(A) IS CONSIDERE D THEN THE N.P. RATE WILL 2 COME TO 24.14%. IN ONE OF THE PROPERTY, THE ASSESSE E HAS SHOWN THE N.P. RATE OF ONLY 0.4%. IN ONE OF THE PROPERTY, THE ASSE SSEE HAS SHOWN THE N.P. RATE OF 30.45% THOUGH IN RESPECT OF THIS PROPERTY T HERE HAS BEEN NO CONSTRUCTION, IT IS UNDISPUTED FACT THAT THE EXPENS ES DEBITED ARE NOT VERIFIABLE AND ABNORMALITY IS REQUIRED TO BE MADE AS EXPLAINED BY THE ASSESSEE. THE PROPERTY ON WHICH THE ASSESSEE HAS SHOWN THE NET PR OFIT RATE AT 0.4%, HAS BEEN SOLD AT RS. 5.51 LACS. CONSIDERING THE N.P. RA TE SHOWN FOR DIFFERENT PROPERTIES AT DIFFERENT FIGURES, WE FEEL THAT IT WI LL BE FAIR AND REASONABLE TO CONFIRM THE DISALLOWANCE TO THE EXTENT OF RS. 45,00 0/-. 3.1 THE SECOND GROUND OF THE ASSESSEE IS THAT THE L D. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 19.59 LACS IN RESPEC T OF TWO PROPERTIES ON THE BASIS OF PAPER NO. 24/23 OF ANNEXURE- A-25. 3.2 WE HAVE HEARD BOTH THE PARTIES. WE HAD ALREADY HELD THAT THE ADDITION ON THE BASIS OF THESE TWO PAPERS CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. ONE PROPERTY IS 49-B, AGRASEN NAGAR. THE SALE CONSI DERATION HAS BEEN TAKEN AT RS. 15.00 LACS AS AGAINST RS.4.91 LACS. PAGES 23 AND 25 OF ANNEXURE- A-25 ARE COMPUTER SHEET CONTAINING PROPERTY ACCOUNT FOR THE FINANCIAL YEAR 2006- 07 AND 2005-06. HENCE, THESE PAPERS ARE NOT RELEVAN T FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THIS PROPERTY WAS PURCHASED BY THE ASSESSEE ON 26-03- 2004 FOR RS. 1.00 LAC AND HAS BEEN SOLD ON 12-08-04 FOR RS. 4.91 LACS. THERE 3 CANNOT BE APPRECIATION IN THE VALUE OF THE PROPERTY TO THE EXTENT OF 15 TIMES DURING 4 MONTHS. THE AO HAS NOT COLLECTED ANY EVI DENCE TO SHOW THAT EXCESS CONSIDERATION HAS BEEN RECEIVED BY THE ASSES SEE. HOWEVER, THE PROPERTY 94, BRIJ MANDAL ON THE PAPER NO 23 AND 25 OF ANNEXURE- A-25, THE DIGIT 15 IS AVAILABLE ON ONE SHEET WHILE ON OTHER S HEET, IT IS MENTIONED AS 8. THE ASSESSEE WAS NEVER HAVING 23 PLOTS IN BRIJ MAN DAL. THUS THE NOTINGS AT PAGE 25 AND 23 ARE NOT SUFFICIENT TO HOLD THAT THE ASSESSEE HAS RECEIVED EXCESS CONSIDERATION. THUS THE LD. CIT(A) WAS NOT J USTIFIED IN CONFIRMING THE ADDITION OF RS. 19.59 LACS. HENCE, GROUND NO. 2 OF THE ASSESSEE IS ALLOWED. 4.1 THE THIRD GROUND OF THE ASSESSEE IS THAT THE LD . CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OUT OF TAXI EXPENSES TO THE EXTENT OF 20% AS AGAINST DISALLOWANCE OF 1/3 RD OF TAXI EXPENSES MADE BY THE AO 4.2 THE FOURTH GROUND OF THE ASSESSEE IS THAT THE L D. CIT(A) HAS ERRED IN RESTRICTING THE CLAIM OF DEPRECIATION ON TAXIES TO THE EXTENT OF POSITIVE INCOME FROM TAXIES. 4.3 DURING THE YEAR, THE ASSESSEE WAS HAVING TWO TA XIES FOR PART OF THE YEAR. TWO VEHICLES HAVE BEEN CONSIDERED AS AVAILABL E FOR BUSINESS PURPOSES. TWO TAXIES WERE AVAILABLE FOR 36 DAYS AND 136 DAYS RESPECTIVELY. THE PRESENT ASSESSMENT HAS BEEN MADE U/S 153A OF THE AC T. THE ASSESSMENT U/S 153A IS DIFFERENT FROM THE BLOCK ASSESSMENT U/S 158 BC OF THE ACT. THE 4 BLOCK ASSESSMENT WAS BEING MADE FOR MAKING THE ASSE SSMENT OF UNDISCLOSED INCOME AS PER THE MATERIAL FOUND DURING THE COURSE OF SEARCH OR ANY MATERIAL WHICH IS CONNECTED WITH THE MATERIAL FOUND DURING T HE COURSE OF SEARCH AND NOTICED AFTER THE SEARCH. THE BLOCK ASSESSMENT WAS SEPARATE AND DISTINCT FROM THE REGULAR ASSESSMENT. HOWEVER, THE ASSESSMEN T U/S 153A IS TO BE MADE AND THE REGULAR ASSESSMENT IF ANY PENDING STAN DS ABATED. HENCE, WHEN THE INCOME IS BEING ASSESSED IN A REGULAR WAY THEN THE ASSESSEE IS ENTITLED FOR DEPRECIATION. HENCE, THE DECISION OF JODHPUR TRIBUN AL IN THE CASE OF SUNCITY ALLOYS (P) LTD. VS. ACIT, CENTRAL CIRCLE- 1 IN ITA NOS.586 TO 588/JU/2008 ON WHICH AO HAS PLACED RELIANCE IS NOT APPLICABLE I N THE INSTANT CASE. LOOKING TO THE PERIOD DURING WHICH TAXIES WERE AVAI LABLE, WE FEEL THAT IT WILL BE FAIR AND REASONABLE TO RESTRICT THE TAXI INCOME AT RS. 10,000/- AFTER ALLOWING DEPRECIATION. HENCE, THE GROUND NO. 3 AND 4 OF THE ASSESSEE ARE ALLOWED AS INDICTED ABOVE. 5.1 THE FIFTH GROUND OF THE ASSESSEE IS THAT THE LD . CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 52,200/- MADE BY THE AO BY APPLYING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. 5.2 WE HAVE HEARD BOTH THE PARTIES. THE JAIPUR BENC H IN THE CASE OF SINGHAL BUILDERS CONTRACTORS VS. ADDL. CIT 12 TAXMA N.COM 199 HAS HELD THAT NO DISALLOWANCE CAN BE MADE U/S 40A(3) IN CASE THE GROSS PROFIT RATE OR 5 NET PROFIT RATE IS APPLIED. FOLLOWING OUR ORDER FOR THE ASSESSMENT YEAR 2008- 09 IN THE CASE OF SHRI SHANKAR LAL KHANDELWAL IN ITA NO . 392/JP/2011 , WE HOLD THAT THE NO DISALLOWANCE U/S 40A(3) IS TO BE M ADE BECAUSE THE BOOKS OF ACCOUNT ARE BEING REJECTED. HENCE, THE DISALLOWANCE OF RS. 52,500/- IS BEING DELETED 6.1 THE SIXTH GROUND OF THE ASSESSEE IS THAT THE LD . CIT(A) HAS ERRED IN NOT ANNULLING THE ASSESSMENT ORDER. 6.1 FOLLOWING OUR ORDER IN THE CASE OF THE SHANKAR LAL KHANDELWAL FOR THE ASSESSMENT YEAR 2006-07, WE HOLD THAT THE LD. C IT(A) WAS JUSTIFIED IN NOT ANNULLING THE ASSESSMENT ORDER 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED.. 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.1409/JP /10) A.R, ITAT, JAIPUR 6 7 8