Bishnu Priya Nayak, Ganjam V. ACIT, Berhampur

ITA 151/CTK/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4189 (ITAT-CUTTACK)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2010
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 23-07-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 26-04-2010
• Court: TRIBUNAL
• Department Lawyers: R P SAHOO
• Keywords: Unexplained investment; Block assessment
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK (SMC) BENCH, CUTTACK BEFORE HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER . / I.TA.NO S . 151,152,153 AND 154 OF 2010 / ASSESSMENT YEAR 2000 - 01 . 1. SMT.BISHNU PRIYA NAYAK, 2. AMARENDRA NAYAK, 3.ANUJA KUMAR NAYAK 4. ARUNA KUMAR NAYAK ADDRESS FOR ALL : KELUAPALLI, BERHAMPUR (GANJAM) - - - VERSUS - . ASST.COMMISSIONER OF INCOME - TAX, BERHAMPUR. / A PPELLANT RESPONDENT FOR THE APPELLANT : SHRI R.P.SAHOO, AR FOR THE RESPONDENT : SHRI S.C.MOHANTY, DR / ORDER SHRI K.K.GUPTA, ACCOUNTANT MEMBER . T HESE FOUR APPEALS BY FOUR ASSESSEES HAV E RAISED A COMMON ISSUE BEFORE ME ON IDENTICAL FACTS WITH RESPECT OF ESTIMATION OF INVESTMENT IN CONSTRUCTION AS REPORTED BY THE DEPARTMENTAL VALUATION OFFICER (DVO) CONSIDERED AS UNDISCLOSED INVESTMENT BY THE ASSESSI NG OFFICER AFTER ALLOWING ESTIMATED DRAWINGS AVAILABLE TO THE ASSESSEES FOR INVESTMENT IN SUCH PROPERTY , APART FROM PART RELIEF GIVEN BY THE LEARNED CIT(A) A RESIDUAL BALANCE OF RS.49,150 EACH TO BE CONFIRMED BY HIM TO BE TAXED UNDER THE PROVISIONS OF SE CTION 69 OF THE INCOME - TAX ACT,1961. 2. SINCE COMMON ISSUE HA S BEEN RAISED BY ALL THE ASSESSEES ON IDENTICAL FACTS BEING CO - OWNER RELATIVES AND HAVING ONE FOURTH SHARE EACH IN THE SAID PROPERTY, I PROPOSE TO DISPOSE OF ALL THESE APPEAL TOGETHER FOR THE SA KE OF CONVENIENCE AND BREVITY. 3. THE LEARNED COUNSEL OF THE ASSESSEES HAS PUT FORTH THE FACTS RELATING TO THE ISSUE IN THE CASE OF AMARENDRA NAYAK WHICH HAVE BEEN TAKEN ON RECORD AS APPLICABLE FOR OTHERS AS WELL . / I.TA.NOS .151,152,153 AND 154 OF 2010 2 4. THE BRIEF FACTS AS NOTED BY THE AUT HORITIES BELOW ARE THAT THE ASSESSEE DERIVES INCOME FROM SALE OF KEWDA FLOWERS. THE RETURN OF INCOME FOR THE IMPUGNED ASST. YR. WAS FILED ON 30.03.2001 SHOWING A TOTAL INCOME OF RS.2,68,270 WHICH WAS PROCESSED U/S. 143(1) ON 31.03.2001. IN COURSE OF SEARC H AND SEIZURE OPERATION CONDUCTED ON 16.01.1998 IN THE CASE OF ONE GANGADHAR NAYAK AND SONS, MEMORANDUM OF AGREEMENT IDENTIFIED AS GN 33 WAS FOUND AND SEIZED WHICH REVEAL ED THAT ASSESSEE ALONG WITH HIS THREE BROTHERS HAD ENTERED INTO AN AGREEMENT WITH M/S. CREATIVE ENGINEERS AND BUILDERS, UTKAL ASHRAM ROAD, BERHAMPUR FOR CONSTRUCTION OF A BUILDING MEASURING 8800 SQ. FT. ON INVESTMENT OF RS. 32,04,000. SUBSEQUENTLY, DURING BLOCK ASSESSMENT PROCEEDING IN THE CASE OF M/S. CREATIVE ENGINEERS AND BUILDERS, IT WA S SUBMITTED IN AN AFFIDAVIT THAT ASSESSEE AND HIS THREE BROTHERS MADE TOTAL PAYMENT OF RS. 32,04,000 TO THE ABOVE FIRM TOWARDS COST OF CONSTRUCTION OF THE BUILDING. IT WAS ALSO SUBMITTED THAT THE COST OF MARBLES WAS BORNE BY THE CONTRACTEE. HOWEVER, NO MAT ERIAL EVIDENCE IN SUPPORT OF FURNISHING OF MARBLE COULD BE ADDUCED. DURING THE POST SEARCH INQUIRY, REFERENCE WAS MADE TO THE DEPARTMENTAL VALUATION CELL FOR DETERMINATION OF THE COST OF CONSTRUCTION OF THE SAID BUILDING. THE DVO, IN HIS REPORT, ESTIMATED THE COST OF CONSTRUCTION OF THE SAID BUILDING AT RS. 43, 97,200 AS AGAINST RS. 32,04,000. THE A.O. ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF UNDISCLOSED INVESTMENT DIFFERENTIAL AMOUNT OF RS. 2,98,300 EACH BEING L/4 TH OF SUCH DIFFERENCE IN INVESTMENT AT RS. 11,93,200. THE ASSESSEE FAILED TO EXPLAIN IT SATISFACTORILY. LOOKING TO THE RETURNED INCOME FOR THE IMPUGNED YEAR, HE TREATED RS. 1,00,000 AS EXPLAINED AND ADDED RS.1,98,300 AS UNEXPLAINED INVESTMENT IN THE HOUSE PROPERTY. 5. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY WHO AFTER HEARING THE ASSESSEE APPELLA NTS BEFORE HIM AND BY PLACING RELIANCE ON THE DECISIONS OF THE ITAT, CUTTACK BENCH IN THE CASE OF SMT. MEERA PANIGERAHI V. ITO IN ITA NO.322/CTK/2006, REDUCED THE COST O F CONSTRUCTION OF THE PROPERTY TORS.38,00,600 AND BY ALLOCATING THE SAME AMONGST THE FOUR CO - OWNE RS GAVE RELIEF OF RS.1,49,150 EACH OF THE ASSESSEES. / I.TA.NOS .151,152,153 AND 154 OF 2010 3 6. THE LEARNED COUNSEL BEFORE US HAS SUBMITTED THAT THE RESIDUAL AMOUNT REMAINING BEING TAXED U/S.69 IN CASE OF EACH OF THE ASSESSEE IS NOW RS.49,150 WHICH IN THE UNDISPUTED FACTS BROUGHT ON RECORD BY THE LEARNED ASSESSING OFFICER AND THE LEARNE D CIT(A) DO NOT HAVE BASIS TO CONTINUE IN SO FAR AS THE LEARNED CIT(A) VERY RIGHTLY NOTICED THAT THE DVO HAD ALSO RESORTED TO ESTIMATION AND THE INDIVIDUAL ASSESSEES HA D FILED RETURNS FOR THE IMPUGNED ASSESSMENT YEAR DECLARING INCOME AS UNDER: 1. ARUN KUMAR NAYAK .. RS.2,92,291 2. AMARENDRA NAYAK .. RS.3,04,584 3. ANUJA KUMAR NAYAK .. RS.2,94,384 4. BISHNU PRIYA NAY AK .. RS.3,07,041 THIS COUPLED WITH THE FACT THAT THE ASSESSING OFFICER HAD ESTIMATED DRAWINGS NOT TO BE CONSIDERED AS AVAILABLE FOR INVESTMENT FROM THE SAID SUM WAS SUFFICIENT TO MET THE PURPORTED UNEXPLAINED INVESTMENT IN THE PROPERTY ULTIMATELY WHEN HE CHOSE TO CONSIDER THAT RS.1 LAKH EACH WERE SUFFICIENT TO MEET THE DRAWINGS FOR THE INDIVIDUAL ASSESSEES. HE POINTED OUT THAT THE RESIDUAL AMOUNT OF RS.49,150 AS CONFIRMED BY THE LEARNED CIT(A) IS LESS THAN RS.1 LAKH ESTIMATED BY THE ASSESSING OFFICER TO H AVE BEEN WITHDRAWN WHICH MAY BE LOW ER IN VIEW OF ALL THE ASSESSEES STAYING TOGETHER. FURTHERMORE, THE LEARNED CIT(A) REDUCED THE ESTIMATION OF DVO VALUATION THEREFORE LEAVES SUFFICIENT AVAILABILITY AS THERE IS NO WATER - TIGHT METHOD FOR DETERMINING THE UNDI SCLOSED INVESTMENT IN THE SAID PROPERTY WHEN THE ASSESSEES HAD DECLARED A SUM OF RS.32,04,000 AS RECORDED IN DOCUMENTS . THEREFORE, IT BECOMES AN EXERCISE OF ASSUMPTION AND PRESUMPTION THE TAXING AUTHORITIES TO DERIVE AN AMOUNT OF RS.50,000 APPROXIMATELY AS NOT MADE BY THE INDIVIDUAL ASSESSEES FOR THEIR CONTRIBUTION FOR THE CONSTRUCTION. THE LEARNED COUNSEL IS NOT PRESSING THE OTHER GROUNDS RAISED BY THE ASSESSEES WITH RESPECT TO INITIATING PROCEEDINGS U/S.147, INITIATING PROCEEDINGS ON THE BASIS OF DVOS ES TIMATING THE COST OF CONSTRUCTION OR INVESTMENT WHICH HAS NOT BEEN REBUTTED BEFORE THE LEARNED ASSESSING OFFICER OR LEARNED CIT(A) AND THEREFORE, BY COMPLYING TO THE NOTICE IN PURSUING FURTHER APPEAL HAS RESULTED ONLY A SMALL AMOUNT CONSIDERED AS UNDISCL OSED INVESTMENT IN THE CONSTRUCTION OF PROPERTY TO BE TAXED U/S.69. HE PRAYED THAT THIS AMOUNT ALSO IS BOUND TO BE DELETED AS THE FACTS AND MATERIALS IN HAND ARE SELF - EXPLANATORY AND ONLY ENHANCEMENTS . / I.TA.NOS .151,152,153 AND 154 OF 2010 4 7. THE LEARNED DR SUBMITTED THAT THE LEARNED CIT(A) HA S ALREADY CONSIDERED THE ESTIMATION OF DRAWINGS, THEREFORE, CANNOT BE NOW RECONSIDERED ON THE SUBMISSIONS OF THE LEARNED COUNSEL THAT THE RESIDUAL AMOUNT CONFIRMED BY THE LEARNED CIT(A) WAS LESS THAN THE ESTIMATED DRAWINGS WHICH MAY HAVE CONTRIBUTED TO THE SAID CONSTRUCTION. HE FULLY SUPPORTED THE ORDER OF THE LEARNED CIT(A)FOR HIS PART OF SUBMISSIONS. 8. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. I FIND FORCE IN THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. PRIMARILY THE ASSESSEES HAD RETURNED INCOME MUCH HIGHER TO THE AMOUNT THAT WAS TO BE CONSIDERED AS FROM UNDISCLOSED SOURCE FOR INVESTMENT IN THE SAID PROPERTY. THE LEARNED ASSESSING OFFICER, THEREFORE, WAS LIBERAL TO CONSIDER THAT THE ASSESSEE HAD ONLY A R ESIDUAL AMOUNT OF INCOME WHICH COULD BE SAID TO HAVE BEEN INVESTED IN THE CONSTRUCTION B Y ESTIMATING DRAWINGS @ RS.1 LAKH EACH. ON THE OTHER HAND, THE LEARNED CIT(A) REDUCED THE VERY QUANTUM OF 1/4 TH SHARE OF INVESTMENT BY REDUCING THE ESTIMATION OF THE D VO WHICH VALUATION HAD NOT BEEN REBUTTED BY THE ASSESSEE APPELLANT BEFORE HIM. HERE AGAIN THE LEARNED CIT(A) WAS LIBERAL ENOUGH TO HOLD THAT THE ASSESSEE GETS RELIEF OF RS.1,49,150 IN EACH CASE OF THE ASSESSEE ON REDUCTION OF VALUE AS DETERMINED BY DVO . HE HELD RS.1 LAKH AS EXPLAINED, THEREFORE, HAD RESULTED IN A RESIDUAL BALANCE OF RS.49,150 EACH WHIC H AS PER THE ASSESSING OFFICER EARLIER WAS THE DIFFERENCE BETWEEN THE RETURNED INCOME AND THE INVESTMENT HELD BY HIM FROM UNDISCLOSED SOURCE. THIS INDICATES THAT BOTH THE AUTHORITIES IN THEIR OWN METHOD OF DETERMINING A UNDISCLOSED INVESTMENT ON SAME THE FACTS OBSERVED THAT THE ASSESSEES HAD SUFFICIENT FUNDS FOR INVESTMENT IN THE SAID PROPERTY IN SO FAR AS THEY HAD DECLARED INVESTMENT OF RS.32,04,000 TOGETHE R. THIS VALUE STOOD ENHANCED TO RS.38,00,600 BY THE LEARNED CIT(A) AS PER HIS DISCUSSIONS NOTED ABOVE, THERE LEFT A BALANCE OF RS.6 LAKHS APPROXIMATELY TO BE EXPLAINED WHICH IN MY CONSIDERED OPINION STANDS EXPLAINED BY THE SAME METHODOLOGY OF CONSIDERING T HE UNEXPLAINED INVESTMENT AS WAS BY THE ASSESSING OFFICER IN HIS ORDER, ON THE BASIS OF QUANTUM OF INCOME RETURNED IN THE IMPUGNED ASSESSMENT YEAR. THE SAME BEING MORE THAN THE DRAWINGS AND THE ACTUAL INVESTMENT NOW CONSIDERED BY THE LEARNED CIT(A) THERE FORE REQUIRES NO FURTHER ADDITION TO THIS SCORE. THE ESTIMATED DRAWINGS AND FINAL VALUE OF THE PROPERTY, IF TAKEN / I.TA.NOS .151,152,153 AND 154 OF 2010 5 TOGETHER, LEAVE SUFFICIENT AVAILABILITY OF FUNDS WITH THE CO - OWNERS AS EXPLAINED FOR INVESTMENT FROM THE RETURNED INCOME. 9. IN VIEW OF MY HAV ING RENDERED THE DECISION ON THE MERIT ADDITION, THE LEARNED COUNSEL HAS N OT PRESSED THE OTHER ISSUES AND ARE, THEREFORE , NOT ADJUDICATED. 10. IN THE RESULT, ALL THE APPEALS FILED BY ASSESSEES ARE ALLOWED. THIS ORDE R IS PRONOUNCED IN OPEN COURT ON DT. 27.07.2010 SD/ - (K.K.GUPTA), ACCOUNTANT MEMBER. DATE: 27.07.2010 - COPY OF THE ORDER FORWARDED TO : / THE APPELLANT : 1. SMT.BISHNU PRIYA NAYAK, 2. AMARENDRA NAYAK, 3.ANUJA KUMAR NAYAK 4. ARUNA KUMAR NAYAK ADDRESS FOR ALL : KELUAPALLI, BERHAMPUR (GANJAM) / THE R ESPONDENT : ASST.COMMISSIONER OF INCOME - TAX, BERHAMPUR. THE CIT, THE CIT(A), DR, CUTTACK BENCH GUARD FILE TRUE COPY , BY ORDER , [ ] SENIOR PRIVATE SECRETARY ( /) H.K.PADHEE SENIOR.PRIVATE SECRETARY.