SHANKAR LAL KAHANDELWAL, Jaipur V. ACIT, Jaipur

ITA 153/JPR/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54111 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 24-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K L MOOLCHANDAN I; R K KHUNTETA
• Keywords: Unexplained cash credit; Business income; Depreciation; Opportunity of being heard; Principle of natural justice; Additional evidence; Cost of acquisition
• Section: 40A(3); 68

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.153/JP/2011 ASSESSMENT YEAR 2004-05 PAN: ADRPK 5003 F SHRI SHANKAR LAL KHANDELWAL VS. THE ACIT A-2, RANA PRATAP NAGAR CENTRAL CIRCLE- 1 JHOTWARA, JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ITA NO.227/JP/2011 ASSESSMENT YEAR 2004-05 PAN: ADRPK 5003 F THE ACIT VS SHRI SHANKAR LAL KHANDELWAL CENTRAL CIRCLE- 1 A-2, RANA PRATAP NAGAR JAIPUR JHOTWARA, JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI K.L. MOOLCHANDANI & SHRI R.K . KHUNTETA DEPARTMENT BY : SHRI SUNIL MATHUR DATE OF HEARING: 7-07-2011 DATE OF PRONOUNCEMENT: 19-08-2011 : ORDER PER N.L. KALRA, AM:- THE ASSESSEE AS WELL AS REVENUE HAVE FILED APPEALS AGAINST THE ORDER OF THE LD. CIT(A)-CENTRAL, JAIPUR DATED 31-12-2010 FOR THE ASSESSMENT YEAR 2004-05. 2 2.1 THE FIRST GROUND OF THE ASSESSEE IS THAT THE LD . CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 4,87,929/- BY CONFIR MING THE DISALLOWANCE OF 15% ON CONSTRUCTION OF AND WIP AS AGAINST DISALLOWA NCE OF 13.00 LACS MADE BY THE AO 2.2 THE REVENUE IN GROUND NO. 1 IS AGGRIEVED AGAINS T ALLOWING RELIEF OF RS. 8,12,071/- FROM DISALLOWANCE OUT OF CONSTRUCTIO N AND WIP EXPENSES. 2.3 THE FINDINGS ON THIS ISSUE BY THE AO AND THE LD. CI T(A) ARE SIMILAR AS MENTIONED IN THE ORDER OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09. 2.4 WE HAVE HEARD BOTH THE PARTIES. PAGE 26 OF THE PAPER BOOK CONTAINS THE CHART WHICH CONTAINS THE FOLLOWING DETAILS. 1. PROPERTY ADDRESSES. 2. PURCHASES MADE 3. INTEREST INCURRED FOR THE PERIOD FROM PURCHASES TO THE PERIOD OF SALES 4. CONSTRUCTION AMOUNT 5. TOTAL CONSTRUCTION AREA IN SQ. FT. 6. CONSTRUCTION RATE PER SQ. FT. 7. TOTAL PURCHASE COST 8. TOTAL SALES MADE 9. PROFIT 10. PROFIT IN PERCENTAGE THE CONSTRUCTION COST FOR DIFFERENT PROPERTIES HAS VARIED FROM RS. 298.09 PER SQ. FT. TO RS. 333.74 PER SQ. FT. THE PROFIT RATE I N PERCENTAGE VARIES FROM 6% 3 TO 12%. THE ASSESSEE HAS SHOWN PROFIT AT 6% IN RESP ECT OF PROPERTY WHERE CONSTRUCTION COST HAS BEEN TAKEN AT RS. 333.74 PER SQ. FT. EXCEPT THE GENERAL ARGUMENT, THE ASSESSEE IS NOT HAVING MATERIAL EVIDE NCE TO GET THE CONSTRUCTION COST VERIFIED. IN RESPECT OF TWO PROPE RTIES, THE ASSESSEE HAS SHOWN THE PROFIT AT 12% AND IN RESPECT OF OTHER THR EE PROPERTIES, THE PROFIT IS AT 6%, 9% AND 10%. CONSIDERING THAT PROFIT RATE HAS VARIED AND EXPENSES ARE NOT VERIFIABLE, WE FEEL THAT IT WILL BE FAIR AND RE ASONABLE TO ESTIMATE THE DISALLOWANCE AT RS. 50,000/-..WE HAVE NOTICED THAT IN CASE THE DISALLOWANCE WHICH HAS BEEN CONFIRMED BY THE LD. CIT(A) THEN NE T PROFIT RATE WILL COME TO 28.64%. SUCH ABNORMAL N.P. RATE CANNOT BE APPLIE D UNLESS SOME COMPARABLE CASE IS GIVEN. THUS GROUND NO. 1 OF THE ASSESSEE IS PARTLY ALLOWED AND GROUND NO. 1 OF THE REVENUE IS DISMISSE D 3.1 THE SECOND GROUND OF THE ASSESSEE IS THAT THE L D. CIT(A) HAS ERRED IN ENHANCING THE ADDITION TO RS. 77.14 LACS AS AGAINST 73.14 LACS MADE BY THE AO. 3.2 THE ADDITION IS MADE ON THE BASIS OF PAGES 23 A ND 25 OF ANNEXURE-. A25. 3.3 BEFORE US, THE LD. AR HAS FILED FOLLOWING WRITT EN SUBMISSIONS ON THIS ISSUE. 4 OBVIOUSLY THE FINDINGS OF THE AUTHORITIES BELOW ON THE POINT ARE DEVOID OF MERITS AND ARE ASSAILED FOR THE FOLLOWING REASONS: (A) ON CAREFUL STUDY OF THE PAPER UNDER CONSIDERATI ON (PAGE 23-25 OF EX. A-25 WHICH IS PLACED IN THE PAPE R BOOK AT PAGE NO. 29 & 30 FOR READY REFERENCE) YOUR HONORS W OULD APPRECIATE THAT THE AFORESAID PAPER IS ACTUALLY A D EAF AND DUMB PAPER FOR THE FOLLOWING REASONS: (I) ON PERUSAL OF THE SAID PAPERS, YOUR HONORS WOULD NOTE THAT THESE ARE COPIES OF A PRINT OUT OF PROPERTY A/C GROUP SUMMARY FOR TWO FINANCIAL YEARS I.E. 1 ST APRIL, 2006 TO 31 ST .MARCH, 2007 (PAGE NO.23) & 1 ST APRIL, 2005 TO 31 ST MARCH, 2006. ON THE BLANK SPACE OF THESE SHEETS, THERE IS ROUGH JOTTINGS AND WORKING IN HAND. ON CAREFUL STUDY OF THESE JOTTINGS YOUR HONORS WOULD NOTE THAT THERE IS NO MENTION OF ANY DATE, MONTH OR YEA R, MEASUREMENT OR ANY SIZE OF THE PLOT OR PROPERTY IN HAND WRITTEN JOTTINGS, THERE IS NO MENTION OF THE NATURE OF PROPERTY I.E. WHETHER IT IS A PLOT OR A FLAT, THERE IS NO SPECIFICATION OF THE DIGITS DENOTING THE EXACT AMOUNT OF THE SALE CONSIDERATION AS PER THE LIST OF THE PROPERTIES SOLD DURING THE YEAR UNDER CONSIDERATION. IT IS NOT UNDER-STOOD FROM WHERE THE AUTHORITIES BELOW COULD DEDUCE THE SHOWN FIGURES IN LACS , WHEN THERE IS NO SPECIFIC MENTION OF LAC ANY WHERE IN THE HAND-WRITTEN JOTTINGS. IN THE CIRCUMSTANCES, THE APPELLANT HAD BEEN CORRECTLY PLEADING THAT THESE ARE DEAF AND DUMB PAPERS ONLY CARRYING NO EVIDENTIARY VALUE AS OPINED BY NUMBER OF JUDICIAL AUTHORITIES IN NUMBER OF CASES AS REFERRED TO IN THE WRITTEN SUBMISSION MADE FROM TIME TO TIME.(KINDLY REFER TO PAGE NO. 11-12 OF PB). IN VIEW OF THESE FACTS, IT IS ESTABLISHED BEYO ND DOUBT THAT THESE PAPERS ARE DEAF AND DUMB PAPERS AS BEING PLEADED BEFORE THE AUTHORITIES BELOW. 5 (II) NOW COMING TO THE CORRECTNESS OF THE CHART AS DRAWN BY THE LD. AO AT PAGE NO. 11 OF THE ASSESSMEN T ORDER, YOUR HONORS WOULD NOTE THAT THE PROPERTIES FOR WHICH ADDITION OF RS.73,14,000/- WAS MADE IS SHOW N AT S.NO.2 TO 4 IS DISCUSSED ONE BY ONE AS UNDER: (I) 174, SHYAMPURI. ON CAREFUL STUDY OF THE JOTTINGS ON THESE PAPERS, YOUR HONORS WOULD NOTE THAT THERE IS NO SPECIFIC MENTION OF ANY SUCH PROPERTY KNOWN AS 174 , SHYAMPURI IN SUCH JOTTINGS. FURTHER IT WOULD BE NOTED THAT SYAMPURI HAD BEEN MENTIONED AT 3 PLACES IN BOTH THE SHEETS, MENTIONING DIFFERENT DIGITS AGAINST EACH OF SHYAMPURI LIKE 170- 177-164-165, 207- 35 & 22 ETC . IN THE CIRCUMSTANCES, IT IS NOT UNDERSTOOD ON WHAT BASIS THE AO COULD CONCLUDE THAT THE PROPERTY KNOWN AS 174, SHYAMPURI WAS ONE OF THE PROPERTIES MENTIONED IN THE JOTTINGS. THE SAID PROPERTY WAS PURCHASED IN SEPTEMBER, 2002 FOR RS. 1,51,000/- AND AFTER CONSTRUCTION WORK SAME WAS SOLD IN JANUARY, 2004 FOR RS. 7,51,000/-. IT IS WORTHWHILE TO MENTION THAT AO HAS ACCEPTED THE PURCHASE AMOUNT OF THE SAID PLOT. NOW IT IS FOR CONSIDERATION AS TO WHETHER, A PLOT PURCHASED FOR RS. 1,51,000/- ABOUT 15 MONTHS BACK COULD FETCH THE PRICE OF RS. 15 LAC AS TAKEN BY THE AO. OBVIOUSLY, THE FIGURES AS TAKEN BY THE AO ARE INCORRECT AND WITHOUT ANY BASIS ON THE FACE OF SUCH DOCUMENTED EVIDENCES. MORE-OVER THE APPELLANT DID NEVER OWN SO MANY PROPERTIES IN SHYAMPURI AS MENTINED ON SUCH SHEETS. ALL THESE FACT GO TO SHOW THAT ALL THESE JOTTINGS ARE ROUGH WORKING ONLY AND NOTHING ELSE. MOREOVER THIS PROPERTY WAS ALSO SOLD LONG BACK IN 2004 AND THERE WAS NO LOGIC TO 6 MAKE ANY JOTTING IN RESPECT OF SUCH SOLD PROPERTY AFTER THE LAPSE OF 3 YEARS OR SO. (II) 31, 32-CHITERKOOT: THERE IS NO MENTION OF PLOT NO.31,32. IN ABSENCE OF SPECIFIC MENTION OF THE PLOT NO. OF A PARTICULAR SCHEME, NO FAIR AND DEFINITE AND LOGICAL INFERENCE COULD BE DRAWN ON THE BASIS OF SUCH ROUGH JOTTINGS MENTIONING THE NAME OF THE SCHEME ONLY. IN THE CIRCUMSTANCES, THE ROUGH JOTTING MENTIONING MERELY THE NAME OF CHITRAKOOT IS IMMATERIAL AND IRRELEVANT CONVEYING NO MEANING AT ALL. THE SAID PLOTS WERE PURCHASED BY THE APPELLANT IN APRIL, 2001 FOR RS. 65,000/- EACH AND WERE SOLD AFTER 3 YEARS IN MARCH, 2004 FOR RS. 1,50,000/- EACH. IT IS WORTHWHILE TO MENTION THAT AO HAS ACCEPTED THE PURCHASE AMOUNT OF THE SAID PLOT. NOW IT IS FOR CONSIDERATION AS TO WHETHER, A PLOT PURCHASED FOR RS. 65,000/- ABOUT 3 YEARS BACK COULD FETCH THE PRICE OF RS. 20 LAC AS TAKEN BY THE AO. OBVIOUSLY, THE FIGURES AS TAKEN BY THE AO ARE INCORRECT AND WITHOUT ANY BASIS ON THE FACE OF SUCH DOCUMENTED EVIDENCES. MOREOVER THIS PROPERTY WAS ALSO SOLD LONG BACK IN 2004 AND THERE WAS NO LOGIC TO MAKE ANY JOTTING IN RESPECT OF SUCH SOLD PROPERTY AFTER THE LAPSE OF 3 YEARS OR SO. (III) 162, KALYANPURI: ON CAREFUL STUDY OF THE JOTTINGS ON THESE PAPERS, YOUR HONORS WOULD NOTE THAT THERE IS NO SPECIFIC MENTION OF ANY SUCH PROPERTY KNOWN AS 162 , KALYANPURI IN SUCH JOTTINGS. FURTHER IT WOULD BE NOTED THAT KALYANPURI HAD BEEN MENTIONED AT 4 PLACES IN BOTH THE SHEETS, MENTIONING DIFFERENT DIGITS AGAINST EACH OF KALYANPURI LIKE 45 , 15X2 07-, 25X2 30-0, 170-177- 7 164-165 , 207- 35 & 22 ETC . IN THE CIRCUMSTANCES, IT IS NOT UNDERSTOOD ON WHAT BASIS THE AO COULD CONCLUDE THAT THE PROPERTY KNOWN AS 162, KALYANPURI WAS ONE OF THE PROPERTIES MENTIONED IN THE JOTTINGS MORE-OVER THE APPELLANT DID NEVER OWN SO MANY PROPERTIES IN KALYANPURI AS MENTIONED ON SUCH SHEETS. ALL THESE FACT GO TO SHOW THAT ALL THESE JOTTINGS ARE ROUGH WORKING ONLY AND NOTHING ELSE. MOREOVER THIS PROPERTY WAS ALSO SOLD LONG BACK IN 2004 AND THERE WAS NO LOGIC TO MAKE ANY JOTTING IN RESPECT OF SUCH SOLD PROPERTY AFTER THE LAPSE OF 3 YEARS OR SO. THE APPELLANT HAD PURCHASED THIS PROPERTY IN FEBRUARY, 2004 FOR RS. 1,00,000/- AND SOLD THE SAME IN MARCH, 2004 FOR RS. 1,35,000/- I.E. AFTER ONE MONTH. IT IS WORTHWHILE TO MENTION THAT AO HAS ACCEPTED THE PURCHASE AMOUNT OF THE SAID PLOT . NOW IT IS FOR CONSIDERATION AS TO WHETHER, A PLOT PURCHASED FOR RS. 1,00,000/- ABOUT ONE MONTH BACK COULD FETCH THE PRICE OF RS. 30 LAC AS TAKEN BY THE AO. OBVIOUSLY, THE FIGURES AS TAKEN BY THE AO ARE INCORRECT AND WITHOUT ANY BASIS ON THE FACE OF SUCH DOCUMENTED EVIDENCES. THUS IN THE GIVEN CIRCUMSTANCES, THE SAID JOTTINGS CAN SAFELY BE TAKEN A DEAF AND DUMB AS CONTENDED BY THE APPELLANT. IN VIEW OF ABOVE DISCUSSIONS, IT IS PROVED BEYOND DOUBT THAT THE JOTTINGS AS CONTAINED IN THE AFORESA ID EXHIBITS ARE DEAF AND DUMB JOTTINGS AND CARRY NO EVIDENTIARY VALUE. HERE IT WOULD NOT BE OUT OF PLAC E TO MENTION THAT AT THE TIME OF SEARCH OPERATIONS ALSO, THE APPELLANT WAS CONFRONTED WITH THESE PAPERS AND WAS SPECIFICALLY REQUIRED TO EXPLAIN THE NATURE OF THES E 8 JOTTINGS. AT TIME ALSO, THE APPELLANT HAD EXPLAINED THE NATURE OF SUCH JOTTINGS FOR WHICH THE CONCERNED AUTHORIZED OFFICER FELT SATISFIED AND DID NOT ATTAC H MUCH IMPORTANCE TO SUCH DEAF AND DUMB PAPER AND ACCORDIN GLY DID NOT INSIST FOR ANY DISCLOSURE OF ADDITIONAL INCOME ON THE BASIS OF THESE EXHIBITS. RELEVANT EXTRACT FROM HIS STATEMENT IS REPRODUCED HERE-UNDER FOR READY REFERE NCE: IZU 18 ESA VKIDKS ANNEX. A-17, A-25 O A-28 FN[KK JGK GWA A D`I;K CRK;S FD BLESA FDL RJG DS FOOJ.K NTZ GS A MRRJ % BUESA LS VF/KDRJ PROPERTY DH [KJHN FCDZH LS LACAF/KR DKXTKR GS A ANNEX A-17 , IJ IST LA[;K 23 LS 47 ESA FOFHKUU O;FDR;KSA LS IZKIR DH XBZ JKFK;KSA RFKK FO FHKUU O;FDR;KSA DKS FD;S X;S HKQXRKUKSA DH DETAILS GS A ANNEX. A-25 DS IST LA[;K 23 LS 25 ESA FOFHKUU PROPERTIES DH DETAILS 'KKFEY GS A RFKK BL ANNEX. DS IST LA[;K 1 LS 4 ESA GEKJS }KJK [KJHNS O CSPH X BZ PROPERTIES DH DETAILS FY[KH XBZ GS A FY[KH XBZ GS A FY[KH XBZ GS A FY[KH XBZ GS A A-28 ESA FOFHKUU FINANCIAL TRANSACTIONS FY[KS GQ, GS A ANNEX. A-24 ESA HKH BLH IZDKJ DH PROPERTIES DH DETAILS FY[KH GQBZ GS A FURTHER THE ABSURDITY OF THIS ADDITION CAN VERY WEL L BE UNDER-STOOD FROM THE FACTS AS DISCUSSED IN THE FORE -GONE PARAS WHILE DISPUTING THE ADDITIONS OF RS. 13,00,000 AS M ADE BY AO. & REDUCED TO RS. 4,87,929/- BY THE LD. CIT (A) UNDER THE HEAD OF CONSTRUCTION EXPENSES. WHILE MAKING AND CONFIRMING SUCH ADDITION ON ACCOUNT OF CONSTRUCTION EXPENSES, THE AUTHORITIES BELOW HAD OUT-RIGHTLY IGNORED THE ADDIT ION AS MADE AND CONFIRMED BY THEM ON THE BASIS OF SUCH DEAF AND DUMB PAPER ON ACCOUNT OF THE ALLEGED SUPPRESSED SALES AS BEING APPREHENDED BY THEM. WHILE MAKING AND CONFIRMING T HE ADDITION ON ACCOUNT OF THE CONSTRUCTION EXPENSES, N EITHER DID THEY HAD TAKEN CARE OF SUCH ALLEGED SUPPRESSED S ALES NOR DID THEY TAKE CARE OF THE CONSEQUENT N.P RESULTS ON AC COUNT OF SUCH ALLEGED SUPPRESSED SALES. IF ALL THE ADDITION S AS CONFIRMED BY THE CIT (A) UNDER BOTH THE HEADS ARE TAKEN TOG ETHER THEN THE PERCENTAGE OF THE N.P. WOULD GO TO UN-IMAGINED HEIGHTS OF WHICH IS RATHER IMPOSSIBLE IN THIS LINE OF BUSINES S WHICH IS IN 9 THE VICINITY OF 8 TO 10%. AS PER RULES OF ACCOUNTAN CY, SUPPRESSED SALES IS PART OF TRADING RESULTS ONLY. O NCE TRADING RESULTS ARE ESTIMATED AFTER REJECTING THE BOOKS U/ S 145(3) OF THE ACT, THEN NO FURTHER ADDITION IS WARRANTED ON ACCOU NT OF ANY OTHER DEFECT OR DEFICIENCY. BEFORE PARTING WITH THE POINT AT ISSUE, IT WOULD BE IN THE FITNESS OF THINGS TO BRING IT ON RECORD THAT THE JO TTINGS UNDER CONSIDERATION ARE APPEARING ON THE COMPUTER PRINT-O UTS OF THE PROPERTY A/C PERTAINING TO THE FINANCIAL YEARS 200 6-07 AND PRECEDING YEAR, MEANING THEREBY THESE PRINT-OUTS C OULD BE OBTAINED ONLY AFTER THE FINANCIAL YEAR ENDING ON 31 .03.2007. THUS AS A NATURAL COROLLARY, THE JOTTINGS ON SUCH S HEETS COULD BE MADE ONLY AFTER 31.03.2007 ONLY. IN THE CIRCUMSTANC ES, SUCH JOTTINGS COULD NOT BE AUTHENTIC IN ANY CIRCUMSTANCE S HAVING CONSIDERED THE ABOVE FACTS, YOUR HONOR WOULD APPRECIATE THAT THE AUTHORITIES BELOW HAVE MADE AND CONFIRMED THE ADDITION OF RS.77,14,000/- WITHOUT ANY VALID GR OUND. WITHOUT PREJUDICE TO THE ABOVE CONTENTIONS, THIS AD DITION IS FURTHER ASSAILED ON THE FOLLOWING LEGAL AND TECHNIC AL GROUNDS: (I) WHILE MAKING SUCH ADDITION, THE LEARNED AO DID NOT MENTION ANY SECTION OF LAW UNDER WHICH HE WAS MAKING THIS ADDITION. AS PER JUDICIAL DISCIPLINE, THE LD. AO WAS LEGALLY REQUIRED TO MENTION THE RELEVANT SECTION OF LAW FOR WHICH HE WAS MAKING THE ADDITION. FOR SUCH LAPSE, THE ADDITION SO MADE IS BAD IN LAW AND DESERVES TO THE DELETED IN LIMINE. (II) AGAIN THE AUTHORITIES BELOW SEEM TO BE CONFUSED ABOUT THE EXACT NATURE OF THE ADDITION SOUGHT TO BE MADE/CONFIRMED BY THEM. THEY HAD OPINED THAT THESE ARE SUPPRESSED SALES. IN THAT CASE, ONLY N.P. EARNED ON SUCH SUPPRESSED SALES IS TO BE TAKEN INTO ACCOUNT, WHEREAS THE AUTHORITIES BELOW HAD ADDED THE ENTIRE AMOUNT OF THE SUPPRESSED SALES. THUS THE ADDITION SO MADE IS CONTRARY TO THE PRINCIPLES OF ACCOUNTANCY. IN SUCH CASE THE LOGICAL ADDITION 10 WOULD BE TO THE EXTENT OF N.P. EARNED ON SUCH SUPPRESSED SALES ONLY AND NOT THE ENTIRE SALE CONSIDERATION AS DONE BY THE AUTHORITIES. 3.4 ON THE OTHER HAND, THE LD. DR HAS REITERATED TH E ARGUMENTS WHICH HAVE BEEN MADE WHILE ARGUING THE APPEAL FOR THE ASSESSME NT YEAR 2008-09. 3.5 WE HAVE HEARD BOTH THE PARTIES. 174, KALYANPURI 3.6 THE AO HAS ACCEPTED THE SALE CONSIDERATION AT R S. 15.00 LACS AS AGAINST RS. 7.51 LACS SHOWN IN THE BOOKS OF ACCOUNT . THIS SPECIFIC PROPERTY IS NOT MENTIONED AT PAGES 23 AND 25 OF ANNEXURE- A-25. THE AO HAS NOT COLLECTED ANY OTHER EVIDENCE TO HOLD THAT THE ASSES SEE HAS RECEIVED EXCESS CONSIDERATION. HENCE, THE ADDITION OF RS. 7.49 LACS CONFIRMED BY THE LD. CIT(A) IS DELETED. 31-32, CHITRAKOOT NAGAR 3.7 THESE PLOTS WERE PURCHASED IN APRIL, 2001 FOR R S. 65,000/- EACH AND HAVE BEEN SOLD IN MARCH 2004 FOR RS. 1.50 LACS EACH . PAGES 23 AND 25 OF ANNEXURE- A-25 ARE COMPUTER SHEET FOR THE FINANCIAL YEAR 2005-06 AND 2006- 07. THE PROPERTY UNDER REFERENCE HAS BEEN SOLD PRIO R TO THESE FINANCIAL YEARS. HENCE, THE NOINTGS MENTIONED AT PAGES 23 AND 25 OF ANNEXURE- A-25 ARE NOT RELEVANT FOR MAKING ADDITION. HENCE THE ADDITION OF RS. 41.00 LACS ENHANCED BY THE LD. CIT(A) FROM RS. 37.00 LACS MADE BY THE A O IS DELETED. 11 162, KALYANPURI 3.8 WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. A R AND HAVE PERUSED THE PAGES 23 AND 25 OF ANNEXURE- A-25. THERE IS NO MENTION OF PROPERTY 162, KALYANPURI. PLOT NO. 162, KALYANPURI WAS PURCH ASED IN FEB. 04 AND HAS BEEN SOLD IN MARCH 04. THERE CANNOT BE AN APPRECIAT ION IN THE VALUE OF PROPERTY TO THE EXTENT OF RS. 28.65 LACS ON PROPERT Y SO PURCHASED FOR RS. 1.00 LACS. HENCE, ON THE BASIS OF THE HUMAN PROBABILITY, WE FEEL THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 28.65 LACS 4.1 THE THIRD GROUND OF THE ASSESSEE IS THAT THE L D. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 75,000/- MADE BY THE AO BY APPLYING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. 4.2 FOLLOWING OUR ORDER FOR THE ASSESSMENT YEAR 200 8-09 AND 2007-08, WE HOLD THAT NO DISALLOWANCE U/S 40A(3) IS TO BE MADE IN CASE THE BOOKS OF ACCOUNT ARE BEING REJECTED. HENCE, THE DISALLOWANCE CONFIRMED BY THE LD. CIT(A) IS DELETED. THUS GROUND NO. 3 OF THE ASSESSE E IS ALLOWED. 5.1 THE 4 TH GROUND OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OUT OF JOB EXPENSES RS. 30,000/-. 5.2 THE REVENUE IN GROUND NO. 4 IS AGGRIEVED AGAIN ST ALLOWING RELIEF OF RS. 94,800/- AS THE AO HAS MADE THE ADDITION OF RS. 1,24,800/-. 12 5.3 THE ASSESSEE HAS DECLARED GROSS RECEIPTS FROM F URNITURE JOB WORK AT RS. 1.50 LACS AND CLAIMED EXPENSES AGAINST THE JOB WORK AT RS. 1,24,800/-. AS PER THE AO, THE ASSESSEE HAS SHOWN THE RECEIPTS ON 24-04-03 AT RS. 1.00 LAC AND RS. 50,000/- ON 22-8-03. THE AO HAS BOOKED THE CASH PAYMENT TOTALING TO RS. 1,24,800/- FROM 25-03-04 TO 31-03-0 4. HENCE, THE AO HAS DISALLOWED THE JOB WORK EXPENSES AT RS. 1,24,800/-. 5.4 BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT TH E ASSESSEE HAS DISCLOSED THE N.P. RATE OF 16.8% ON FURNITURE JOB WORK. THE A O HAS NOT ALLOWED ANY EXPENSES. THE LD. CIT(A) HAS AGREED WITH THE VIEW O F THE LD. AR THAT DISALLOWANCE OF ENTIRE EXPENDITURE MADE BY THE AO I S TOTALLY UNJUSTIFIED. 5.5 WE HAVE HEARD BOTH THE PARTIES. WE FEEL THAT TH E LD. CIT(A) WAS JUSTIFIED IN ESTIMATING THE DISALLOWANCE AS THE ASS ESSEE WAS NOT HAVING THE PROPER DETAILS. THUS GROUND NO. 4 OF THE ASSESSEE I S DISMISSED AND GROUND NO. 4 OF THE REVENUE IS ALSO DISMISSED. 6.1 THE 5 TH GROUND OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 23.40 LACS AS AGAINS T RS. 31,93,100/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 6.2 THE REVENUE VIDE GROUND NO. 3 IS AGGRIEVED AGAI NST THE RELIEF ALLOWED BY THE LD. CIT(A). 13 6.3 THE REVENUE VIDE GROUND NO. 5 TH IS AGGRIEVED AGAINST ADMISSION OF ADDITIONAL EVIDENCES BY THE LD. CIT(A. 6.4 WHILE DECIDING THE APPEAL OF THE ASSESSEE FOR T HE ASSESSMENT YEAR 2008-09 AND 2008-07, WE HAD ALREADY HELD THAT THE L D. CIT(A) WAS JUSTIFIED IN ADMITTING THE ADDITIONAL EVIDENCES. THE ADDITION AL EVIDENCES INCLUDE THE AFFIDAVITS AND CONFIRMATIONS AND THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION ON THE BASIS OF THE AFFIDAVITS AND CONFIRM ATIONS. THE LD. CIT(A) HAS CONFIRMED THE ADDITION U/S 68 OF THE ACT IN RESPECT OF 27 PERSONS. 6.5 BEFORE US, THE LD. AR HAS FILED THE FOLLOWING S UBMISSIONS. 1. SHRI AJAY PRAJAPAT RS. 18,00,000/- 2. SHRI ASHA DEVI RS. 51,000/- 3. SHRI KAILASH CHAND RS. 19,500/- 4. SHRI MANOJ SHARMA RS. 19,400/- 5. SHRI NITIN KUMAWAT RS. 19,000/- 6. RAHEESH KHAN RS. 19,600/- 7. SHRI RAKESH JANGID RS. 19,500/- 8. SHRI RISHIKESH MUKERJEE RS. 19,000/- 9. SHRIMATI SANGEETA RS. 19,500/- 10. SHRI SANJEEV RS. 19,500/- 11. SHRI SATISH RS. 19,500/- 12. SHRI SATISH SINGH RS. 19,200/- 13. SHRI SATISH SINGH RS. 19,200/- 14. SHRI SHEKHAR SINGH RS. 19,500/- 15. SHRI SHAKEEL RS. 19,500/- 16. SHRI SHANTANU RS. 19,600/- 17. SHRI SHIVAM SHRIVASTAV RS. 19,500/- 18. SHRI SHIV RAJ RS. 19,400/- 19. SHRI SUKUMAR SINGH RS. 19,600/- 20. SHRI SURENDER PAL RS. 19,500/- 21. SHRI TARUN LAL RS. 19,500/- 14 22. SHRI TRILOKI NATH RS. 19,500/- 23. SHRI VIJAY SINGH RS. 19,500/- 24. SHRI VISHNU YADAV RS. 18,500/- 25. SHRI VISHWAJEET RS. 18,000/- 26. SHRI RAMESH SHARMA RS. 19,500/- 27. SHRI RAKESH GUPTA RS. 25,000/- TOTAL: RS, 23,40,000/- THE AO HAD MADE ADDITION UNDER THIS HEAD FOR RS.31,93,100/- ON THE GROUND THAT THE APPELLANT HAD FAILED TO FURNISH THE REQUIRED CONFIRMATION LETTERS AND OTHER DETAILS IN RESPECT OF THE CASH CREDITORS. HOWEVER IN APPEAL, R EQUIRED DETAILS, CONFIRMATION LETTER, AFFIDAVITS AND SALE A GREEMENTS ETC. WERE FURNISHED U/S RULE 46A OF THE I.T. RULES, 1962 . THE LEARNED CIT (A) DID ADMIT THESE EVIDENCES BUT REJEC TED THE SAME SUMMARILY WITHOUT ASSIGNING ANY SPECIFIC REASON FOR THE SAME. HE HAD DELETED PART OF ADDITION FOR RS. 8,53,100/- FOR THE REASONS AS DISCUSSED BY HIM IN THE APPEAL ORDER. BR OADLY HE HAD TURNED DOWN THE AFFIDAVITS AS PROCURED BY THE APPELLANT FROM THE CREDITORS WITHOUT CROSS EXAMINING THE DEPONENTS . OBVIOUSLY, REJECTING SUCH AFFIDAVITS IN ABSENCE OF CROSS VERIFICATION OF THE DEPONENTS WAS CONTRARY TO THE S ETTLED LAW ON THE POINT. IT HAS BEEN REPEATEDLY HELD IN NUMBER OF JUDICIAL JUDGMENTS THAT SUCH AFFIDAVITS ARE LEGALLY MAINTAIN ABLE UNTIL AND UNLESS THE CONTENTS THEREOF ARE REBUTTED BY CROSS E XAMINATION. IN ABSENCE OF SUCH AN EXERCISE, THESE AFFIDAVITS COULD NOT BE BRUSHED ASIDE SUMMARILY AS DONE BY THE LEARNED CIT (A). THUS THE ADDITION SO CONFIRMED WITHOUT BRINGING ANY MATE RIAL ON RECORD TO CONTRADICT THE CONTENTS OF THE AFFIDAVITS IS BAD IN LAW 15 AND DESERVES TO BE DELETED SUMMARILY ON THIS LONE G ROUND. HOWEVER, FOR THE SAKE OF EQUITY AND NATURAL JUSTICE , WE ARE DISCUSSING THE MERITS OF EACH AND EVERY DEPOSIT ONE BY ONE AS UNDER:- (1) SHRI AJAY PRAJAPAT- RS. 18,00,000/- THIS SUM WAS RECEIVED FROM ONE SHRI AJAY PRAJAPAT, WHO WAS A CONTRACTOR IN SAUDI ARAB. HE HAD ADVANCED THIS SUM AGAINST THE BOOKING OF A CONSTRUCTED HOUSE. THE HOU SE SO GOT BOOKED WAS SUBSEQUENTLY SOLD TO HIM AFTER CONSTRUCTION IN APRIL, 2009. THE SALE OF THE SAID H OUSE TO THE DEPONENT IS EVIDENT FROM THE SALE DEED INSTRUME NT. IN SUPPORT OF ABOVE FACT, AN AFFIDAVIT, CONFIRMATION L ETTER AND COPY OF THE BANK STATEMENT (SHOWING THEREIN WITHDRAWALS OF RS. 16,50,000/- FOR MAKING SUCH ADVA NCE TO APPELLANT) WERE SUBMITTED. THE LEARNED CIT (A) H AD HOWEVER REJECTED THESE DOCUMENTS AND DETAILS ON THE PLEA THAT THESE FUNDS WERE ADVANCED IN CASH AFTER WITHDRAWAL FROM THE BANK WAS BEYOND COMPREHENSION. OBVIOUSLY SUCH FINDINGS ARE ILLOGICAL AND ARE DEVOID OF MERIT S. WHILE ARRIVING AT SUCH ILLOGICAL FINDINGS, THE LEAR NED CIT (A) HAD OVER-LOOKED THE VITAL FACT THAT SHRI PRAJAP AT CAME FROM NAGAUR DISTT. AND HAD LITTLE ACQUAINTANCE AT JAIPUR SO IN NORMAL COURSE, CASH PAYMENT WAS INSISTED UPON BY THE APPELLANT BY VIRTUE OF COMMON PRUDENCE . THE LEARNED CIT (A) HAD HOWEVER OVER-LOOKED SUCH PRACTICAL ASPECT OF THE TRANSACTION AND REJECTED TH E EXPLANATION OF THE APPELLANT ON THE GENERAL PLEA. (2) SMT. ASHA DEVI- RS.51.000/- THIS SUM WAS RECEIVED THROUGH ACCOUNT PAYEE CHEQUE NO.5373 OF JAIPUR NAGA UR GRAMIN ANCHLIK BANK, AMER (A/C NO. 1001801 ) ON 3.1.2004 TOWARDS BOOKING OF A PLOT. SUBSEQUENTLY S HE CHANGED HER MIND AND DEMANDED THE REFUND OF THE BOOKING AMOUNT. HAVING CONSIDERED THE BUSINESS EXPEDIENCY AND ALSO THE FACT THAT SHE WAS A PROSPEC TIVE CUSTOMER (SHE HAD SUBSEQUENTLY PURCHASED ANOTHER PL OT IN SEPT.., 2005 FOR RS. 5 LAC) THE AMOUNT WAS REFUNDED TO HER 16 BY A/C PAYEE CHEQUE AFTER RETAINING RS.1,000/- TOWA RDS OFFICE EXPENSES. THESE FACTS WERE CONFIRMED BY THE WITNESS IN AN AFFIDAVIT WHICH WAS PRODUCED BEFORE T HE LD. CIT (A) BUT HE WAS NOT WILLING TO ACCEPT THE CONTEN TS OF THE SAID AFFIDAVIT ON THE PLEA THAT NO DETAILS OF T HE BANK STATEMENT AND PAN WAS SUBMITTED. APPARENTLY SUCH FINDINGS ARE FACTUALLY INCORRECT. AS MENTIONED ABOV E, THE DETAILS OF THE BANK & ACCOUNT NO. OF THE CREDITOR W ERE DULY SUBMITTED, BUT THE COPY OF THE BANK STATEMENT WAS NOT AVAILABLE WITH THE APPELLANT SO THE SAME COULD NOT BE PRODUCED. IN ABSENCE OF THE COPY OF BANK STATEMENT, THE GENUINENESS OF THE TRANSACTION COULD NOT BE QUESTIO NED MERELY ON THE PLEA THAT THE COPY OF BANK STATEMENT WAS NOT FORTHCOMING WHICH WAS NOT WITHIN THE CONTROL OF THE APPELLANT TO PROCURE FROM THE CREDITOR AFTER THE LA PSE OF 5- 6 YEARS. FOR SUCH PRACTICAL CONSTRAINTS, THE DOCUME NTARY DETAILS LIKE NAME OF THE BANK & BANK A/C NO. ETC. A ND OTHER EVIDENCE IN THE FORM OF AFFIDAVIT AS PROCURED IN SUPPORT OF SUCH ADVANCE COULD NOT BE LOGICALLY IGNO RED. THUS THE CONCLUSION AS ARRIVED AT BY THE LEARNED CI T (A) ON THE PLEA OF NON-AVAILABILITY OF THE BANK STATEME NT AND PAN IS PATENTLY INCORRECT AND DEVOID OF MERITS SO T HE SAME DESERVES TO BE QUASHED. (3) IN REMAINING CASES, PETTY CASH FUNDS IN THE VICINIT Y OF RS.19,000/- OR SO WERE RECEIVED FROM VARIOUS CUSTO MERS TOWARDS THE BOOKING OF PLOTS UNDER A SPECIAL SCHEM E LAUNCHED FOR SMALL INVESTORS. UNDER SUCH SCHEME, BOOKING ADVANCE WAS TO BE PAID IN PERIODICAL L INSTALLMENTS OF SMALL AMOUNTS. HOWEVER SUCH SCHEME DID NOT CLICKED AND DID NOT FIND SUPPORT FROM THE P UBLIC AT LARGE. IN THE CIRCUMSTANCES THIS SCHEME WAS TO B E SCRAPED AND THE AMOUNTS AS RECEIVED FROM SUCH SMALL INVESTORS WERE TO BE REFUNDED. IN SUPPORT OF SUCH ADVANCE MONEY SO RECEIVED REQUIRED CONFIRMATION LET TERS ALONG-WITH AFFIDAVITS, THE IDENTITY PROOFS IN THE F ORM OF PAN, DRIVING LICENSES, & RATION CARDS ETC, WERE PROCURED. THE LEARNED CIT (A) DID NOT ACCEPT SUCH DETAILS AND THE DOCUMENTS ON THE GENERAL PLEA THAT ALL SUCH FUNDS WERE PETTY AMOUNTS AND WERE RECEIVED AND 17 REPAID IN CASH. OBVIOUSLY, THE FINDINGS OF THE LEA RNED CIT (A) ON THE POINT BY IGNORING THE VITAL EVIDENCE S OF THE IDENTITY PROOFS AND AFFIDAVITS ETC. WOULD APPEA R TO BE LEGALLY INCORRECT AND DESERVES TO BE QUASHED. 6.6 ON OTHER HAND, THE LD. DR SUPPORTED THE ORDER O F THE AO. 6.7 WE HAVE HEARD BOTH THE PARTIES. THE LD. CIT(A) HAS NOT ACCEPTED THE DEPOSITS IN THE NAME OF 24 PERSONS WHERE CREDITS VA RIED FROM RS. 11,500/- TO RS. 19,600/-. BEFORE THE LD. CIT(A), THE ASSESSEE H AS FILED THE AFFIDAVITS THAT THEY HAVE PAID THE AMOUNTS AGAINST PLOT BOOKING. TH E ASSESSEE LAUNCHED THE SCHEME FOR MIDDLE CLASS PERSON FOR BOOKING OF THE P LOT AGAINST DEPOSIT OF AMOUNT VARYING FROM RS. 8,000/-TO RS. 20,000/-. THE LD. CIT(A) HAS OBSERVED THAT IT IS DIFFICULT TO ARRIVE AT A CONCLU SIVE FINDING AS TO WHETHER THE CREDITS ARE GENUINE OR NOT . HOWEVER, THE LD. CIT(A ) HAS CONFIRMED THE ADDITION AND DIRECTED IT TO BE TELESCOPED ON ACCOUN T OF UNACCOUNTED SALE CONSIDERATION RECEIVED. THEREFORE, NO SEPARATE ADDI TION HAS BEEN CONFIRMED. ONCE THE ASSESSEE HAS FILED THE EVIDENCES IN THE FO RM OF AFFIDAVITS THEN SUCH AFFIDAVITS ARE TO BE ACCEPTED UNLESS THE REVENUE IS ABLE TO REBUT THE CONTENTIONS CONTAINED IN THE AFFIDAVITS. SIMILARLY , THE ADDITION OF RS. 18.00 LACS HAS BEEN CONFIRMED IN RESPECT OF CASH CREDIT. THE ASSESSEE HAS FILED THE AFFIDAVIT OF SHRI AJAY PRAJAPAT. THE LD. CIT(A) HAS REFERRED THAT THERE HAS BEEN WITHDRAWAL OF RS. 16.50 LACS FROM THE BANK ACC OUNT. THE ASSESSEE HAS 18 GIVEN THE REASONS AS TO WHY HE HAS ACCEPTED THE CAS H PAYMENT. ONCE THERE ARE WITHDRAWALS FROM THE BANK ACCOUNT AND THE ASSES SEE HAS FILED THE AFFIDAVIT THEN THERE WAS NO QUESTION IN NOT ACCEPTI NG THE GENUINENESS OF THE CASH CREDIT. THUS THE ADDITION OF RS. 23.40 LACS CO NFIRMED BY THE IS DELETED. HENCE THE GROUND NO. 5 OF THE ASSESSEE IS ALLOWED A ND GROUND NOS. 3 AND 5 OF THE REVENUE ARE DISMISSED. 7.1 THE 6 TH 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 EXPENSE MADE BY THE AO. 7.2 THE 7 TH GROUND OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN RESTRICTING THE CLAIM OF DEPRECIATION ON TAXIES TO THE EXTENT OF POSITIVE INCOME FROM TAXIES. 7.3 THE REVENUE VIDE GROUND NO. 2 IS AGGRIEVED AGAI NST RESTRICTING THE DISALLOWANCE OF TAXI HIRING EXPENSES TO 20% AS AGAI NST 33% MADE BY THE AO. THE ALTERNATE CONTENTION IS THAT THE LD. CIT(A) SHOULD HAVE ASSESSED THE POSITIVE INCOME IN CASE DEPRECIATION WAS BEING ALLO WED. 7.4 WE HAVE HEARD BOTH THE PARTIES. THE ASSESSEE WA S HAVING 05 TAXIES FOR THE ENTIRE YEAR WHILE ONE OF THE TAXI WAS AVAILABLE FOR 300 DAYS. THE RATE PER KILOMETER DURING THE YEAR UNDER REFERENCE WAS LESS AS COMPARED TO THE RATE BEING CHARGED IN SUBSEQUENT YEARS. LOOKING TO THE N UMBER OF TAXIES 19 AVAILABLE FOR ENTIRE YEAR AND CONSIDERING THE AVAIL ABILITY OF ONE TAXI FOR PART OF THE YEAR, WE FEEL THAT IT WILL BE FAIR AND REASO NABLE TO ESTIMATE THE INCOME FROM TAXIES AT RS. 75,000/- AFTER ALLOWING THE CLAI M OF DEPRECIATION. THUS GROUND NOS. 6 AND 7 OF THE ASSESSEE ARE PARTLY ALLO WED TO THE EXTENT INDICATED ABOVE WHILE GROUND NO. 2 OF THE REVENUE I S ALSO PARTLY ALLOWED TO THE EXTENT OF INDICATE ABOVE. 8.1 THE GROUND NO. 8 BY THE ASSESSEE IS AGAINST NOT ALLOWING THE BENEFIT OF TELESCOPING. 8.2 SINCE NO SPECIFIC ISSUE HAS BEEN RAISED IN THE WRITTEN SUBMISSIONS ON THIS ISSUE, THEREFORE, THIS GROUND OF APPEAL BECOME S ACADEMIC. 9.1 THE 9 TH GROUNDS OF APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) SHOULD HAVE HELD THE ORDER OF THE AO AS AB-INITIO VOID BEC AUSE THE AO HAS PROVIDED PROPER OPPORTUNITY OF BEING HEARD. 9.2 WE HAVE HEARD BOTH THE PARTIES. WE HAD POINTED OUT THE OPPORTUNITIES ALLOWED BY THE AO. MOREOVER ,THE LD. CIT(A) HAS ALS O ADMITTED THE ADDITIONAL EVIDENCE. HENCE, IT WAS NOT A CASE WHERE ASSESSMENT ORDER WAS REQUIRED TO BE ANNULLED. HENCE GROUND NO. 9 OF THE ASSESSEE IS DISMISSED. 10.1 THE GROUND NO. 6 OF THE REVENUE IS THAT THE LD . CIT(A) HAS ERRED IN DIRECTING THE AO TO GIVE SET OFF OF THE UNACCOUNTED SUPPRESSED SALE CONSIDERATION AS AGAINST THE ADDITION MADE U/S 68 O F THE ACT. 20 10.2 THIS ISSUE BECOMES ACADEMIC AS WE HAD ALREADY HELD THAT THE ADDITIONS ARE REQUIRED TO BE DELETED. THUS THIS ISS UE BECOMES ACADEMIC. 3. IN THE RESULT, THE APPEALS OF THE ASSESSEE AS WE LL AS OF THE REVENUE ARE PARTLY 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 SHANKAR LAL 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.153/JP /11) A.R, ITAT, JAIPUR 21 22