SHRI TIAKM KHANDELWAL, Jaipur V. ACIT, Jaipur

ITA 1410/JPR/2010

• Counselvise Citation: 141023114 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: 2007-2008
• 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 JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.1410/ JP/2010 ASSESSMENT YEAR 2007-08 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. K HUTETA 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 HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A), CENTRAL JAIPUR DATED 26-10-2010 FOR THE ASSESSMENT YEAR 2007-08. 2.1 THE FIRST GROUND OF THE ASSESSEE IS THAT THE LD . CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 78,850/- BY CONFIRMI NG 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. THIS ISSUE HAS BEEN CONSIDERED BY US WHILE DECIDING THE APPEAL OF THE ASSESSEE FOR THE A SSESSMENT YEAR 2008-09. IN THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESS EE HAS SHOWN THE N.P. 2 RATE OF 12%. DURING THE YEAR UNDER REFERENCE, THE A SSESSEE HAS DONE CONSTRUCTION ON ONE PLOT WHILE OTHER TWO PROPERTIES HAVE BEEN SOLD AS PLOT. THE COST OF CONSTRUCTION IS RS. 219/- PER SQ. FT. C ONSIDERING THE N.P. RATE SHOWN AND THE CONSTRUCTION RATE SHOWN BY THE ASSESS EE, WE FEEL THAT IT WILL BE FAIR AND REASONABLE TO RESTRICT THE DISALLOWANCE T O RS. 25,000/-, 3.1 THE SECOND GROUND OF THE ASSESSEE IS THAT THE L D. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 40.75 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. THIS ISSUE HAS BEEN CONSIDERED BY US WHILE DECIDING THE APPEAL OF THE ASSESSEE FOR THE A SSESSMENT YEAR 2008-09. WE HAD ALREADY HELD THAT ADDITION ON THE BASIS OF P AGE 23 AN 25 OF ANNEXURE- A-25, CANNOT BE MADE BECAUSE THESE PAPERS WERE NOT IN THE POSSESSION AND CONTROL OF THE ASSESSEE. ON MERITS, THE ASSESSEE HAS STATED THAT PLOT NO. 37, MARUDHAR NAAR WAS PURCHASED IN MA RCH, 2005 FOR RS. 7.11 LACS AND HAS BEEN SOLD IN AUG. 2006 FOR RS. 13.25 L ACS. THERE CANNOT BE DEPRECIATION TO THE EXTENT OF 04 TIMES WITHIN ONE Y EAR AND FOUR MONTHS. THERE HAS BEEN NO EVIDENCE TO SHOW THE RECEIPT OF C ONSIDERATION OVER AND ABOVE THE CONSIDERATION SHOWN IN THE SALE DEED. HEN CE, THERE WAS NO CASE OF MAKING ADDITION BY HOLDING THAT THE ASSESSEE SUPPRE SSED THE SALE CONSIDERATION IN RESPECT OF PLOT 37, MARUDHAR NAGA R. 3 3.3 IN THE WRITTEN SUBMISSION, IN RESPECT OF PLOT NO. 99-100, VIKAS NAGAR, IT HAS BEEN STATED THAT PLOTS WERE SUBDIVIDED INTO FOUR PLOTS AND THE TOTAL SALE CONSIDERATION IN RESPECT OF ALL THE FOUR PLOTS IS RS. 32.00 LACS. THUS THE CONSIDERATION SHOWN BY THE ASSESSEE IN RESPECT OF FOUR PLOTS SUBDIVIDED FROM TWO PLOTS CANNOT BE CONSIDERED AS SUPPRESSED S ALE. HENCE, THERE WAS NOT CASE OF MAKING ADDITION OF S 24.00 LACS IN PLOT S AT VIKAS NAGAR. THUS GROUND NO. 2 OF THE ASSESSEE IS ALLOWED. 4.1 THE THIRD GROUND OF APPEAL OF THE ASSESSEE IS T HAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OUT OF TAXI EX PENSES 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 APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN RESTRICTING THE CLAIM OF DEPRECIATION ON T AXIES TO THE EXTENT OF THE POSITIVE INCOME FROM TAXIES. 4.3 WE HAVE HEARD BOTH THE PARTIES. DURING THE YEAR UNDER REFERENCE, THE ASSESSEE WAS HAVING THREE TAXIES FOR WHOLE OF THE Y EAR. THE PRESENT ASSESSMENT HAS BEEN MADE U/S 153A OF THE ACT. THE A SSESSMENT U/S 153A IS DIFFERENT FROM THE BLOCK ASSESSMENT U/S 158BC OF TH E ACT. THE BLOCK ASSESSMENT WAS BEING MADE FOR MAKING THE ASSESSMENT 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 4 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 NUMBER OF TAXIES AVAILABLE FOR THE Y EAR, WE FEEL THAT IT WILL BE FAIR AND REASONABLE TO RESTRICT THE INCOME FROM TAX IES AT RS. 36,000/- AFTER ALLOWING DEPRECIATION. HENCE, THE GROUND NO. 3 AND 4 OF THE ASSESSEE ARE ALLOWED AS INDICATED ABOVE. 5.1 THE FIFTH GROUND OF APPEAL OF THE ASSESSEE IS T HAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 50,000/- OU T OF RS. 54,000/- 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 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 5 ACCOUNT ARE BEING REJECTED. HENCE, THE DISALLOWANCE OF RS. 50,000/- IS BEING DELETED 6.1 THE SIXTH GROUND OF APPEAL OF THE ASSESSEE IS T HAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 2,03,177/- BY CONFIRMING THE DISALLOWANCE OUT OF TOTAL EXPENSES OF M/S. S.R. AGE NCIES TO THE EXTENT OF 20% AS AGAINST 33.3% MADE BY THE AO. 6.2 WE HAVE HEARD BOTH THE PARTIES. THE ASSESSEE HA S CLAIMED THE EXPENSES OF RS. 6,15,552/-. THE DETAILS ARE AVAILAB LE AT PAGE 7 OF THE ASSESSMENT ORDER. THERE ARE CERTAIN EXPENSES FOR WH ICH NO DISALLOWANCE IS REQUIRED TO BE MADE. THERE CAN BE DISALLOWANCE TO S OME EXTENT FROM TELEPHONE EXPENSES AND PETROL EXPENSES. LOOKING TO THE QUANTUM OF TELEPHONE EXPENSES AND PETROL EXPENSES, WE FEEL THA T IT WILL BE FAIR AND REASONABLE TO DISALLOW A SUM OF RS. 15,000/-. THUS GROUND NO. 6 OF THE ASSESSEE IS PARTLY ALLOWED. 7.1 THE SEVENTH GROUND OF APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN NOT ANNULLING THE ASSESSMENT ORDER. 7.2 WE HAVE HEARD BOTH THE PARTIES. THIS ISSUE HAS BEEN DECIDED BY US IN THE CASE OF SHANKAR LAL KHANDELWAL IN ITA NO. 155/ JP/2011 DATED 12-08- 2011. FOLLOWING THAT ORDER, WE HOLD THAT THE LD. C IT(A) WAS JUSTIFIED IN NOT 6 ANNULLING THE ASSESSMENT ORDER. THUS GROUND NO. 7 O F THE ASSESSEE IS DISMISSED. 8. 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.1410/JP /10) A.R, ITAT, JAIPUR 7 8