Shri Bhikhabhai Bhailalbhai Patel, Anand V. The Income tax Officer, Ward-1, Anand

ITA 1419/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0059 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-08-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 22-04-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: A L THAKKAR
• Keywords: Depreciation; Opportunity of being heard; Proportionate interest; Additional evidence

Judgement Text

IN THE INCOME IN THE INCOME IN THE INCOME IN THE INCOME TAX APPELLATE TRIBUNAL TAX APPELLATE TRIBUNAL TAX APPELLATE TRIBUNAL TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH A AA A BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI N NN N. .. .S. SAINI S. SAINI S. SAINI S. SAINI, , , , ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER AND AND AND AND SHRI SHRI SHRI SHRI MAHAVIR SINGH, JUDICIAL MEMBER MAHAVIR SINGH, JUDICIAL MEMBER MAHAVIR SINGH, JUDICIAL MEMBER MAHAVIR SINGH, JUDICIAL MEMBER DATE OF HEARING :16 8 10 DRAFTED ON: 16-8-10 ITA NO. 1419 TO 1421 /AHD/ 2008 ASSESSMENT YEARS :2003-04, 2004-05, 2005-06 SHRI BHIKHUBHAI BHAILALBHAI PATEL, SATNAM MAHDEV ROAD, VALLABH VIDYANAGAR. VS. INCOME TAX OFFICER, WARD 3, INCOME TAX OFFICE, STATION ROAD, ANAND. PAN/GIR NO. : ADOPP 8500 B (A PPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI A. L.THAKKAR. RESPONDENT BY: SHRI R. K.DHANESTA, D.R. O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THESE ARE THREE APPEALS FILED BY THE ASSESSEE AGAI NST THE CONSOLIDATED ORDER OF THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS)-IV, BARODA DATED 29-2-2008 FOR THE ASSESS MENT YEARS 2003-04 TO 2005-06. 2. GROUNDNO.1 IN ALL THE APPEAL RELATES TO DISALLOW ANCE OF INTEREST OF `.1,29,600/- U/S. 36(1)(III) . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE LEARNED ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS ADVANCED `.10,8 0,000/- TO SEVASI LAND. THE ASSESSEE EXPLAINED BEFORE THE LEAR NED ASSESSING OFFICER THAT THE LAND WAS PURCHASED AT VILLAGE SEVA SI, TAL. & DISTRICT BARODA FOR DEVELOPMENT OF BUSINESS. IT WAS FURTHER EXPLAINED THAT THE ASSESSEE WAS PLANNING TO ESTABLISH HOT MIX PLAN T ON THIS LAND FOR CONSTRUCTION BUSINESS. THE LEARNED ASSESSING OF FICER FURTHER OBSERVED THAT NO PROOF WAS GIVEN BY THE ASSESSEE TO SHOW THAT THE LAND WAS PURCHASED FOR ASSESSEES BUSINESS. THE PUR CHASE DEED OF - 2 - LAND WAS NOT COMPLETED AND THEREFORE, IT WAS TREATE D AS ADVANCE FOR BUSINESS. THE LEARNED ASSESSING OFFICER ALSO N OTED THAT THE ASSESSEE HAS STATED THAT ADVANCE WAS GIVEN TO SHRI JASBHAI BAKORBHAI PATEL WHEREAS ON 25-2-2005 IN THE SUBMISS ION IT WAS STATED THAT ADVANCE WAS GIVEN TO SHRI SUBHASHBHAI J ASBHAI PATEL. FROM THIS HE INFERRED THAT ASSESSEE HAS NOT GIVEN C ORRECT NATURE OF TRANSACTION MADE BY HIM IN THE NAME OF SEVASI LAND AND THE ASSESSEE HAS ALSO NOT FURNISHED INFORMATION AS TO W HEN HOT MIX PLANT WAS INSTALLED IN THE SUBSEQUENT YEAR. THEREFO RE, THE ASSESSEE FAILED TO PROVE THAT THE ADVANCE OF `.10,80,000/- W AS UTILISED FOR THE PURPOSE OF ASSESSEES BUSINESS. HE THEREFORE, D ISALLOWED PROPORTIONATE INTEREST EXPENSES @ 12% ON `.10,80,00 0/- WHICH WORKED OUT TO 1,29,600/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 4. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) FOLLOWING HIS ORDER DATED 16-11-2005 FOR ASSESSMENT YEAR 2002-03 CONFIRMED THE ACTION OF THE LEARNED AS SESSING OFFICER. THE LEARNED AUTHORISED REPRESENTATIVE OF T HE ASSESSEE FILED BEFORE US COPY OF CONSOLIDATED ORDER OF THE T RIBUNAL FOR ASSESSMENT YEARS 1999-00 AND 2002-03 IN ITA NO.199/ AHD/2006 DATED 27-3-2009 AND SUBMITTED THAT IN THE ASSESSMEN T YEAR 2002- 03 THE TRIBUNAL RESTORED THE MATTER BACK TO THE FIL E OF THE LEARNED ASSESSING OFFICER FOR FRESH ADJUDICATION AND THEREF ORE, FOLLOWING THE SAME IN THE PRESENT YEARS OF APPEAL ALSO THE MATTER SHOULD BE REMANDED THE MATTER FOR FRESH ADJUDICATION OF THE I SSUE. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE AGREED W ITH THE ABOVE SUBMISSION OF THE LEARNED AUTHORISED REPRESEN TATIVE OF THE ASSESSEE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE LEARNED ASSESSING OFFICER DISALLOWED INTEREST OF `.1,29,600 /- PERTAINING TO ADVANCE OF `.10,80,000/- PAID TO M/S. SEVASI LAND F OR PURCHASE OF - 3 - LAND WHICH WAS CONFIRMED BY THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) FOLLOWING HIS ORDER FOR ASSESSMENT YE AR 2002-03. IN THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2002 -03 THE TRIBUNAL SET ASIDE THE ORDER OF THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS) AND RESTORED THE MATTER BACK T O THE FILE OF THE LEARNED ASSESSING OFFICER FOR FRESH ADJUDICATIO N OF THE ISSUE BY OBSERVING AS UNDER :- WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AV AILABLE ON RECORD. WE FIND THAT THE EVIDENCE NOW BEING PRODUCE D ARE NOT ADDITIONAL EVIDENCE IN STRICT SENSE BE ELABORAT ED EVIDENCE ALREADY FILED. HOWEVER, THIS BEING RELEVAN T FOR CONSIDERATION OF THE ISSUES ON HAND, WE SET ASIDE T HE IMPUGNED ORDERS AND RESTORE BOTH THE APPEAL TO THE FILE OF LEARNED ASSESSING OFFICER. THE ASSESSEE SHALL FURNI SH MATERIAL AFRESH BEFORE THE LEARNED ASSESSING OFFICE R IN RESPECT OF THE ISSUE RAISED IN THESE APPEALS AND SU CH OTHER MATERIAL AS HE MAY DEEM FIT. THE LEARNED ASSESSING OFFICER SHALL RE-CONSIDER ALL THE EVIDENCE PRODUCED AND SHA LL PASS ORDER AFRESH IN ACCORDANCE WITH LAW AND AFTER PROVI DING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . THE ASSESSEE SHALL COOPERATE IN THE ASSESSMENT PROCEEDI NGS AS OTHERWISE THE LEARNED ASSESSING OFFICER MAY DRAW AD VERSE INFERENCE. 7. SINCE BOTH THE PARTIES HAVE SUBMITTED THAT THE I SSUE SHOULD BE RESTORED BACK TO THE FILE OF THE LEARNED ASSESSI NG OFFICER FOR FRESH ADJUDICATION IN ACCORDANCE WITH THE ABOVE DIR ECTION OF THE TRIBUNAL IN ASSESSMENT YEAR 2002-03 WE FOLLOWING T HE ORDER OF THE TRIBUNAL SET ASIDE THE ORDERS OF THE LOWER AUTHORI TIES AND RESTORE THE ISSUE BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR FRESH ADJUDICATION AS PER DIRECTION OF THE TRIBUNAL, IN A SSESSMENT YEAR 2002-03 AFTER ALLOWING REASONABLE OPPORTUNITY OF BE ING HEARD TO THE ASSESSEE. THUS, THIS GROUND OF APPEAL IS ALLOWE D FOR STATISTICAL PURPOSES. 8. GROUND NO.2 OF APPEAL IN THE ASSESSMENT YEAR 200 3-04 RELATES TO DISALLOWANCE OF MAJURI EXPENSES OF `.1,2 2,422/-. - 4 - 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE , `.1,74,893/- WAS DISALLOWED OUT OF THE EXPENSES INCURRED UNDER THE H EAD MAJURI EXPENSES ON THE GROUND THAT THE ASSESSEE COULD NOT PRODUCE SUPPORTING VOUCHERS. 10. ON APPEAL, LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) OBSERVED THAT EXPENSES UNDER THE HEAD RELATES TO PA YMENT TO MUKADAM AND LABOURER. ACCORDING TO THE LEARNED COM MISSIONER OF INCOME TAX (APPEALS) THOUGH MUKADAM OR LABOUR MAY N OT GIVE VOUCHERS BUT THEY SIGN THE VOUCHERS. CONSIDERING T HE FACT OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) OPINED THAT TO RESTRICT DISALLOWANCE TO 70% OF THE EXPENSE S NOT SUPPORTED BY VOUCHERS WOULD BE REASONABLE AND THEREFORE, REST RICTED THE DISALLOWANCE TO `.1,22,422/-. 11. BEFORE US THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE REITERATED THE SAME SUBMISSIONS WHICH WERE MADE BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 12. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORT ED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS). 13. WE FIND THAT IT IS NOT IN DISPUTE THAT EXPENSES OF `.1,74,893/- UNDER THE HEAD MAJURI EXPENSES WERE NOT SUPPORTED B Y VOUCHERS. NO MATERIAL WAS BROUGHT BEFORE US TO SHOW THAT THE CLAIM OF EXPENDITURE UNDER THE HEAD MAJURI EXPENSES WERE REA SONABLE KEEPING IN VIEW THE VOLUME OF THE ASSESSEES BUSINE SS VIS-A-VIS PAST RECORDS OF THE CASE OR ANY OTHER COMPARABLE CA SE. IN ABSENCE OF ANY SUCH MATERIAL BROUGHT BEFORE US TO SHOW THAT THE DISALLOWANCE WAS EXCESSIVE OR UNREASONABLE WE DO NO T FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE LEAR NED COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS CONFI RMED AND THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. - 5 - 14. GROUND NO.2 OF THE APPEAL IN ASSESSMENT YEAR 20 04-05 RELATES TO CONFIRMING ADDITION OF `.15,600/- ON ACC OUNT OF INTEREST PAID ON LOAN TO SMT. KOKILABEN R. PATEL. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS OBSERVED THAT THE AO HAS MADE ADDITION OF `.15,360/- ON ACCOUNT OF INTEREST PAID TO SMT. KOKILABEN R. PATEL AND THEREFORE, THERE IS A MISTAKE IN THE F IGURE OF INTEREST AS STATED IN THE GROUND OF APPEAL BY THE ASSESSEE. IN THE INSTANT CASE, THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASS ESSEE HAS GIVEN INTEREST FREE ADVANCE OF `.1,28,000/- TO SMT. KOKILABEN R. PATEL WITH WHOM THE ASSESSEE HAD NO BUSINESS TRANSA CTION. HE THEREFORE, ESTIMATED INTEREST ON THE ABOVE AMOUNT A T `.15,360/- @ 12% AND ADDED THE SAME TO THE INCOME OF THE ASSESSE E. 16. ON APPEAL, LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) CONFIRMED THE ABOVE ADDITION. 17. WE FIND THAT THE ASSESSEE HAS INTEREST FREE FUN D OF MORE THAN `.1 CRORE AVAILABLE AS PROPRIETORS CAPITAL FUND. THE REVENUE HAS BROUGHT NO MATERIAL ON RECORD TO SHOW THAT THE ASSE SSEE ACTUALLY EARNED `.15,360/- AS INTEREST ON THE ABOVE ADVANCE OF `.1,28,000/-. FURTHER, NO MATERIAL WAS ALSO BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT INTEREST FREE ADVANCE IN QUESTION WAS GIV EN OUT OF INTEREST BEARING FUND. IN THE ABOVE FACTS, AS INCO ME TAX IS PAYABLE ON THE REAL INCOME AND NOT ON ANY NOTIONAL INCOME I N OUR CONSIDERED VIEW, THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED IN ADDING `.15,360/- TO THE INCOME OF THE ASSESSEE WIT HOUT ANY MATERIAL AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING SUCH ADDITION. WE THEREFORE, DELETE THE ADDITION OF `.15,360/- AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. - 6 - 18. GROUND NO.3 RELATES TO THE CONFIRMING THE ADDIT ION ON ACCOUNT OF DEPRECIATION OF `.1,81,984/-IN M/S. BHAV ESH ASSOCIATES FOR THE ASSESSMENT YEAR 2004-05. 19. AT THE TIME OF HEARING THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE S AID GROUND WAS TAKEN BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AS GROUND NO.3 OF THE APPEAL. THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) HAS NOT ADJUDICATED THIS GROUN D OF APPEAL OF THE ASSESSEE. THE LEARNED DEPARTMENTAL REPRESENTATI VE ALSO AGREED WITH THE ABOVE SUBMISSIONS OF THE ASSESSEE. HENCE, WE RESTORE THIS ISSUE TO THE FILE OF THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS) FOR ADJUDICATING THE SAME AFTER ALLOW ING REASONABLE OPPORTUNITY TO BOTH THE PARTIES. THUS THIS GROUND O F APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 20. GROUND NO.2 FOR THE ASSESSMENT YEAR 2005-06 REL ATES TO THE CONFIRMING OF ADDITION OF `.40,380/- BEING INTEREST ON LOAN GIVEN TO MR. PRABHUDAS C. PATEL. 21. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS GI VEN INTEREST FREE ADVANCE OF `.3,41,500/- TO SHRI PRABHUDAS C. P ATEL WITH WHOM THE ASSESSEE HAD NO BUSINESS TRANSACTION. ACCORTDIN G TO THE LEARNED ASSESSING OFFICER SHRI PRABHUDAS C. PATEL I S A RELATIVE OF THE ASSESSEE AND FOR WHOM ASSESSEE STOOD A GUARANTO R IN THE BANK AND AS SHRI PRABHUDAS C. PATEL ABSCONDED THE ASSESS EE HAD TO PAY `.3,41,500/- TO THE BANK ON BEHALF OF SAID SHRI PRA BHUDAS C. PATEL. HE THEREFORE, ESTIMATED INTEREST ON THE ABOVE AMOUN T AT `.40,380/- @ 12% AND ADDED THE SAME TO THE INCOME OF THE ASSES SEE. 22. ON APPEAL, LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) CONFIRMED THE ABOVE ADDITION. - 7 - 23. WE FIND THAT THE ASSESSEE HAS INTEREST FREE FUN D OF MORE THAN `.1 CRORE AVAILABLE AS PROPRIETORS CAPITAL FUND. THE REVENUE HAS BROUGHT NO MATERIAL ON RECORD TO SHOW THAT THE ASSE SSEE ACTUALLY EARNED `.40,380/- AS INTEREST ON THE ABOVE ADVANCE OF `.3,41,500/-. FURTHER, NO MATERIAL WAS ALSO BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT INTEREST FREE ADVANCE IN QUESTION WAS GIV EN OUT OF INTEREST BEARING FUND. IN THE ABOVE FACTS, AS INCO ME TAX IS PAYABLE ON THE REAL INCOME AND NOT ON ANY NOTIONAL INCOME I N OUR CONSIDERED VIEW, THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED IN ADDING `.40,380/- TO THE INCOME OF THE ASSESSEE WIT HOUT ANY MATERIAL AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING SUCH ADDITION. WE THEREFORE, DELETE THE ADDITION OF `.40,380/- AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 24. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR A SSESSMENT YEAR 2003-04 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND FOR ASSESSMENT YEAR 2004-05 AND 2005-06 ARE ALLOWED IN THE MANNER INDICATED ABOVE. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 20 TH AUGUST,2010 SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNT ANT MEMBER AHMEDABAD: ON THIS 20 TH DAY OF AUGUST, 2010 COMPILED AND COMPARED BY: PATKI. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-IV, BARODA. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD - 8 - DATE INITIALS 1. DRAFT DICTATED ON 19-8-2010 -------------- ----- 2. DRAFT PLACED BEFORE AUTHORITY 19-8-2010 ---- --------------- 3. DRAFT PROPOSED & PLACED 19-8-2010 ----------- -------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 19-8-2010 ------------------- JM 5. APPROVED DRAFT COMES TO P.S 20-8-2010 --------- ----------- 6. KEPT FOR PRONOUNCEMENT ON 20-8-2010 --- ----------------- 7. FILE SENT TO THE BENCH CLERK 20-8-2010 ------- ------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- --- ------------------