Mrs. Prafullaben J.Manani, Vapi V. The Income tax Officer,Ward-2, Vapi

ITA 1458/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1469 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 12-04-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 23-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: TUSHAR HEMANI WITH P B PARMAR
• Keywords: Income from undisclosed sources
• Section: 2

Judgement Text

I.T.A. NO . 1458 /AHD/ 20 1 1 ASSESSMENT YEAR: 20 0 5 - 06 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD C BENCH, AHMEDABAD [CORAM : PRAMOD KUMAR AM AND S S GODARA JM ] I.T.A. NO. 1458 /AHD/ 20 1 1 ASSESSMENT YEAR : 20 0 5 - 06 PRAFULLABEN J. MANANI .............. APPELLANT 40/399, LIG - 1, KUNJAN CHAR RAS TA, GIDC, VAPI 396 191. [PAN: A GVPM 0567 H ] VS. INCOME TAX OFFICER , WARD 2, VAPI. .......... . RESPONDENT APPEARANCES BY: TUSHAR HEMANI WITH P.B. PARMAR , FOR THE APPELLANT K. MADHUSUDAN , FOR THE RESPONDENT D ATE OF CONCLUDIN G THE HEARING : APRIL 12 TH , 201 6 DATE OF PRONOUNCING THE ORDER : MAY 31 ST , 201 6 O R D E R PER PRAMOD KUMAR , AM : 1. THIS APPEAL CHALLENGES LEARNED CIT(A) S ORDER DATED 11 TH JANUARY 2011, FOR THE ASSESSMENT YEAR 2005 - 06, ON THE FOLLOWI NG GROUNDS : - 1. THE L EARN E D CI T (APPEALS) HAS ERRED IN LAW AND ON FACTS, IN CONFIRMING THE PARTI A L FROM OUT OF TOTAL ADDITION OF RS.8,21,342/ - MADE BY THE AO TOWARDS ALLEGED COST OF CONTRACT P A ID OUT OF UNDISCLOSED SOURCES. 2. ON THE FACTS A ND CIRCUMSTAN CES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT (APP E ALS) HAS ER R ED IN CONFIRMING PART OF THE ADDITION OF RS.3,50,000/ - FROM OUT OF TOTAL ADDITION OF RS.8,21,342/ - MADE BY THE A.O., AFTER ASSUMING THAT TH E APPELLANT HAS MET PART OF THE COST OF CONSTRUCTION OF THE SUB - CONTRACT UNDERTAKEN BY HER FROM OUT OF UNDISCLOSED SOURCES AS PER GROUND NO.1 ABOVE. 2. THE ISSUE IN APPEAL LIES IN VERY NARROW COMPASS OF FACTS. THE ASSESSEE IS A CONSTRUCTION CONTRACTOR A ND HIS INCOME IS ASSESSED, ON PRESUM PTIVE BASIS, UNDER I.T.A. NO . 1458 /AHD/ 20 1 1 ASSESSMENT YEAR: 20 0 5 - 06 PAGE 2 OF 3 SECTION 44A OF THE ACT. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, HOWEVER, THE ASSESSING OFFICER NOTED THAT WHILE THE ASSESSEE HAS SHOWN CONTRACTUAL RECEIPTS OF RS.8,91,267/ - , THE ASSESSEE HAS NOT WITHDRAWN A NY AMOUNT FROM T HE BANK TO MEET THE COST OF CONSTRUCTION. HE ALSO NOTICED THAT IN THE BOOKS OF KHIRA CONSTRUCTIONS , THE ASSESSEE WA S SHOWN AS CREDITOR FOR RS.8,21,342/ - . ON THESE FACTS, AND HAVING OBSERVED THAT ASSESSEE RECEIVES CONSTRUCTION WORK ONLY FROM KHIRA CONSTRU CTIONS, THAT ASSESSEE HAS NOT RECEIVED A NY MONEY FROM KHIRA CONSTRUCTIONS AND THAT IT IS IMPOSSIBLE TO COMPLETE CONSTRUCTION WORK WITHOUT MONEY, THE ASSESSING OFFICER PROCEEDED TO TAX RS.8,21,342/ - / - AS ASSESSEE S UNDISCLOSED INVESTMENT IN CONSTRUCTION BUS INESS. AGGRIEVED , ASSESSEE CARED THE MATT E R IN APPEAL BEFORE THE LD CIT(A) BUT WITHOUT COMPLETE SUCCESS . LEARNED CIT(A) RESTRICTED THE ADDITION TO RS.3,50,000/ - BY OBSERVING AS FOLLOWS : - 6.3 I HAVE CONSIDERED THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTION RAISED BY THE AR OF THE APPELLANT IN THE WRITTEN SUBMISSION. I FIND THAT THERE IS NO PLAUSIBLE REASON TO DISAGREE WITH THE CONTENTION OF THE APPELLANT THAT AS AGAINST THE AMOUNT OF RS.8,2 1 ,542/ - RECEIVABLE FROM KHIRA CONSTR UCTION, THERE IS A CORRESPONDING LIABILITY OF RS.4,88, 1 23/ - REFLECTED IN THE BALANCE SHEET TOWARDS THE LABOUR CHARGES PAYABLE TO SEVEN SUB CONTRACTORS, WHICH FACT HAS BEEN IGNORED BY THE AO WHILE ARRIVING AT A CONCLUSION THAT ENTIRE COST THE APPELLANT HAS BEEN INCURRED OR MET FROM HER UNDISCLOSED SOURCES. THE FACTS OF THE CASE AS REVEALED FROM THE BALANCE SHEET JUSTIFY THE PLEA THAT PART OF THE COST OF THE APPELLANT IS OUTSTANDING AND THEREFORE THE CONCLUSION OF THE AO THAT ENTIRE AMOUNT OF CONSTRUCTION COS T HAS BEEN INCURRED OUT OF UNDISCLOSED SOURCES DOES NOT HOLD WATER. I AM THEREFORE INCLINED TO GIVE PROPORTIONATE RELIEF TO THE APPELLANT AND AS AGAINST ADDITION OF RS. 8,2 1 ,342/ - MADE BY THE AO, ADDITION OF RS.3,50,000/ - WOULD BE JUSTIFIED. THE APPELLANT DESERVES RELIEF OF RS.4,71,342 / - AS THE ENTIRE COST OF CONTRACT WORK IS NOT PROVED TO HAVE BEEN MET OUT OF INCOME FROM UNDISCLOSED SOURCES. THUS, THE APPELLANT S GROUND NO.2 AND 3 ARE PARTLY ALLOWED . 3. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER AP PEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS , PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. I.T.A. NO . 1458 /AHD/ 20 1 1 ASSESSMENT YEAR: 20 0 5 - 06 PAGE 3 OF 3 5. WE FIND T HAT THE ASSESSING OFFICER HAS NOT EVEN BOTHERED TO FIND OUT AVAILABILITY OF CASH BALANCE IN THE BEGINNING OF THE YEAR WHICH IS STATED TO BE RS.3,14,195/ - IN THIS C A SE, AND HAS PROCEEDED ON THE ASSUMPTION THAT EXPENSES OF THE YEAR HAVE TO BE ESSENTIALLY MET OUT OF CURRENT YEA R S WITHDRAWALS . W E HAVE ALSO NOTED THAT THERE ARE OU TSTANDING EXPENSES , AMOUNTING TO RS.4,88,124/ - AT THE YEAR END. THE IMPUGNED ADDITION IS CLEARLY THEREFORE MADE WITHOUT ANY LEGALLY SUSTAINABLE MERITS. WE, ACCORDINGLY, DELETE THE ADDITION OF RS.3,50,000/ - WHICH, FOR THE REASONS SET OUT ABOVE, HAVE NO L EGAL MERITS. 6. IN THE RESULT, APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 31 ST DAY OF MAY , 2016. SD/ - SD/ - S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: THE 31 ST DAY OF MAY , 2016. PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD