SHANKAR LAL KAHANDELWAL, Jaipur V. ACIT, Jaipur

ITA 154/JPR/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7190 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 24-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K L MOOLCHANDAN I; R K KHUTETA
• Keywords: Depreciation; Loose papers; Additional evidence; Cost of acquisition
• Section: 40A(3); 194C

Judgement Text

1 1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.154/ JP/2011 ASSESSMENT YEAR 2005-06 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.228/ JP/2011 ASSESSMENT YEAR 2005-06 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. KHUTETA DEPARTMENT BY : SHRI SUNIL MATHUR DATE OF HEARING: 07-07-2011 DATE OF PRONOUNCEMENT: 12-08-2011 ORDER PER N.L. KALRA, AM:- THE ASSESSEE AS WELL AS REVENUE HAVE FILED THE A PPEALS AGAINST THE ORDER OF THE LD. CIT(A), CENTRAL, JAIPUR DATED 29- 12-2010 FOR THE ASSESSMENT YEARS 2005-06. 2 2 2.1 THE FIRST GROUND OF APPEAL OF THE ASSESSEE IS T HAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 16,10,300/- BY CONFIRMING THE DISALLOWANCE OF 15% ON CONSTRUCTION AND WIP EXPENSE S TOTALING TO RS. 1,07,35,331/- AS AGAINST DISALLOWANCE OF RS. 40.00 LACS MADE B THE AO. 2.2 REVENUE IN GROUND NO. 1 IS ALSO AGGRIEVED AGAIN ST GIVING RELIEF F RS. 23,89,700/- ON ACCOUNT OF EXPENSES DEBITED UNDER T HE HEAD CONSTRUCTION EXPENSES AND WIP EXPENSES. 2.3 THE AO HAS DISALLOWED THE EXPENSES ON THE SAME REASONS AS GIVEN IN THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2008-0 9. THE LD. CIT(A) RESTRICTED THE DISALLOWANCE AT 15% ON THE SAME REAS ONS AS HAVE BEEN FOR THE ASSESSMENT YEAR 2008-09. 2.4 THE SUBMISSIONS OF THE LD. AR ARE THE SAME AS G IVEN DURING APPELLATE PROCEEDINGS FOR THE ASSESSMENT YEAR 2008-09. DURING THE YEAR UNDER REFERENCE, THE COST OF CONSTRUCTION IS RS. 339/- PE R SQ. FT . THE PWD BSR RATES AND CPWD RATES ETC. WERE ALSO IN THE VICINITY OF RS. 450/- TO 500/- PER SQ. FT THE ASSESSEE HAS SHOWN THE NET PROFIT RATE OF 9.39%. IN CASE THE DISALLOWANCE WHICH HAS BEEN MADE BY THE LD. CIT(A) IS CONSIDERED THEN THE NET PROFIT RATE WILL COME TO 23.77%. SUCH NET PROFI T RATE IS EXCESSIVE. 3 3 2.5 ON THE OTHER HAND, THE LD. DR HAS REITERATED TH E SAME ARGUMENTS WHICH HAVE BEEN GIVEN WHILE ARGUING THE APPEAL FOR THE ASSESSMENT YEAR 2008-09. 2.6 WE HAVE HEARD BOTH THE PARTIES. PAGE 24 OF THE PAPER BOOK CONTAINS THE DETAILS OF THE PROPERTIES , AMOUNT SPENT FOR PU RCHASE OF THE PROPERTIES, CONSTRUCTION AMOUNT SPENT, CONSTRUCTED AREA IN SQ.F T, CONSTRUCTION RATE, PURCHASE COST INCLUDING COST OF INTEREST, SALE AMOU NT, PROFIT AND THE PROFIT AS PERCENTAGE OF SALES. THE CONSTRUCTION COST PER SQ. FT IN RESPECT OF DIFFERENT PROPERTIES HAS VARIED FROM RS. 267/- PER SQ. FT TO RS. 400.52 PER SQ. FT . THE PROFIT IN PERCENTAGE IN RESPECT OF DIFFERENT PROPER TIES VARIES FROM 9% TO 10%. IN RESPECT OF FOUR PROPERTIES, THE PROFIT IS AT 9% WHILE IN RESPECT OF BALANCE SIX PROPERTIES, THE PROFIT IS AT 10%. FROM THE CHART, IT IS CLEAR THAT THE EXPENSES DEBITED FOR THE CONSTRUCTION ARE REASONABL E AND THE ASSESSEE HAS GIVEN REASONABLE NET PROFIT RATE. IT IS TRUE THAT T HE CONSTRUCTION COST PER SQ. FT HAS VARIED FROM ONE PROPERTY TO ANOTHER PROPERTY. T HE ASSESSEE IS ALSO NOT HAVING VOUCHERS FOR ALL THE EXPENSES. LOOKING TO TH E FACTS AS DISCUSSED ABOVE, WE FEEL THAT IT WILL BE FAIR AND REASONABLE IF THE ADDITION OF RS. 1.00 LAC IS MADE TO THE PROFIT DISCLOSED ON ACCOUNT OF NON-VERIFIABLE NATURE OF THE EXPENSES. 4 4 3.1 THE SECOND GROUND OF APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 87.25 LACS ON ACCOUNT OF SALE OF PROPERTIES ON THE BASIS OF CERTAIN NOTINGS MADE AT PAGES 23 AND 25 OF ANNEXURE A-25. 3.2 THE ADDITION MADE BY THE AO IS ON SIMILAR LINES AS GIVEN IN THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2008-09 AN D THE LD. CIT(A) HAS ALSO CONFIRMED THE ADDITION BY ACCEPTING THE NOTING S AS AVAILABLE AT PAGES 23 AND 25 OF ANNEXURE A-25. 3.3 BEFORE US, THE LD. AR HAS GIVEN THE SAME SUBMIS SIONS AS HAVE BEEN GIVEN FOR THE ASSESSMENT YEARS 2008-09 AND 2007-08. IT IS SUBMITTED THAT THAT THESE DOCUMENTS ARE DEAF AND DUMB DOCUMENTS. BEFORE US, THE LD. AR HAS FILED THE FOLLOWING SUBMISSIONS IN RESPECT OF DIFF ERENT PROPERTIES AND THESE ARE AS UNDER:- (A) ON CAREFUL STUDY OF THE PAPER UNDER CONSIDERATI ON (PAGE 23-25 OF EX. A-25 WHICH IS PLACED IN THE PAPER BOOK AT PAGE NO. 27 & 28 FOR READY REFERENCE) YOUR HONORS WOULD APPRECIATE THAT THE AF ORESAID PAPER IS ACTUALLY A DEAF AND DUMB PAPER FOR THE FOLLOWING RE ASONS: (I) ON PERUSAL OF THE SAID PAPERS, YOUR HONORS WOULD NO TE 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 WORKIN G IN HAND. ON CAREFUL STUDY OF THESE JOTTINGS YOUR HONORS WOULD N OTE 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, T HERE IS NO MENTION OF THE NATURE OF PROPERTY I.E. WHETHER IT IS A PLOT OR A FLAT, T HERE IS NO SPECIFICATION OF THE DIGITS DENOTING THE EXACT AMOUNT OF THE SALE CONSIDERATION AS PER THE LIST OF THE PROPERTIE S SOLD DURING THE 5 5 YEAR UNDER CONSIDERATION. IT IS NOT UNDER-STOOD FRO M 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 B EEN CORRECTLY PLEADING THAT THESE ARE DEAF AND DUMB PAPERS ONLY C ARRYING NO EVIDENTIARY VALUE AS OPINED BY NUMBER OF JUDICIAL A UTHORITIES IN NUMBER OF CASES AS REFERRED TO IN THE WRITTEN SUBMI SSION MADE FROM TIME TO TIME. IN VIEW OF THESE FACTS, IT IS ESTABLI SHED BEYOND DOUBT THAT THESE PAPERS ARE DEAF AND DUMB PAPERS AS BEING PLEADED BEFORE THE AUTHORITIES BELOW. (II) NOW COMING TO THE CORRECTNESS OF THE CHART AS DRAWN BY THE LD. AO AT PAGE NO. 11 OF THE ASSESSMENT ORDER. YOUR HONOR S WOULD NOTE THAT THE PROPERTIES FOR WHICH ADDITION OF RS.87,25, 000/- WAS MADE ARE SHOWN AT S.NO.5 TO 11 WHICH ARE DISCUSSED ONE BY ONE AS UNDER: (I) 32, KRISHNA NAGAR: RS. 10,00,000/- : ON CAREFUL STUDY OF THE JOTTINGS ON THESE PAPERS, YOUR HONORS WOULD NOT E THAT THERE IS NO SPECIFIC MENTION OF ANY SUCH PROPERTY KNOWN AS 32, KRISHNA NAGAR IN SUCH JOTTINGS. FURTHER IT WOULD BE NOTED THAT THE WORD KRISHNA NAGAR HAD BEEN MENTIONED AT TWO PLACES IN ONE SHEET 2007 WITH FOLLOWING NARRATIONS: 31-31-31A B1 (15X4) AT ONE PLACE AND AT SECOND PLACE IT HAS NARRATION OF FLAT- 120X6 . APPARENTLY THESE NARRATIONS CONVEY NO MEANING AT ALL AS THE AP PELLANT DID NEVER POSSESS SO MANY PLOTS OR FLATS IN THE SAI D NAGAR. . THE SAID PLOT WAS PURCHASED IN FEB., 2002 FOR RS. 1,50,000/- AND SOLD FOR RS. 5,00,000/- IN APRIL, 20 04 I.E. AFTER TWO YEARS. NOW IT IS FOR CONSIDERATION AS TO WHETHER, A PLOT PURCHASED FOR RS. 1,50,000/- ABOUT 2 YEARS BA CK COULD FETCH THE HUGE AMOUNT OF RS. 15 LAC AS TAKEN BY THE AO. MOREOVER THIS PROPERTY WAS ALSO SOLD LONG BACK IN APRIL, 2004 AND THERE WAS NO LOGIC TO MAKE ANY JOTTING IN RESPECT OF SUCH SOLD PROPERTY AFTER THE LAPSE OF 3 AND HALF YEARS OR SO. THUS THESE DIGITS AND NARRATIONS CONVEY NO MEAN ING AT ALL. OBVIOUSLY, THE FIGURES AS TAKEN BY THE AO ARE INCORRECT AND WITHOUT ANY BASIS ON THE FACE OF SUCH DOCUMENTE D EVIDENCES. (II) 164, KALYAN KUNJ: RS.36,58,000/- ON CAREFUL STUDY OF THE JOTTINGS ON THESE PAPERS, YOUR HONORS WOULD NOTE TH AT THERE IS NO SPECIFIC MENTION OF ANY SUCH PROPERTY KNOWN AS 164, KALYAN KUNJ IN SUCH JOTTINGS. FURTHER IT WOULD BE NOTED THAT THERE IS MENTION OF KALYAN KUNJ AT ONE PLACE ON THE SHEET OF 2006. BUT THERE IS NO SPECIFIC MENTION OF PROPERTY 6 6 NO. 164 IN ABSENCE OF SUCH SPECIFIC MENTION OF TH E NO. OF THE PROPERTY, NO INFERENCE COULD BE DRAWN. IN T HE CIRCUMSTANCES, IT IS NOT UNDERSTOOD ON WHAT BASIS T HE AO COULD CONCLUDE THAT THE PROPERTY MENTIONED AS KALYAN KUNJ IS THE SAME PROPERTY WHICH WAS SOLD DURING TH E YEAR. IN FACT, THE SAID PLOT WAS PURCHASED BY THE APPELLA NT IN MARCH, 2004 FOR RS.2,50,000/- AND SOLD IN APRIL, 20 04 AFTER CONSTRUCTION FOR RS. 8,15,000/-. NOW IT IS FOR CONS IDERATION AS TO WHETHER, A PLOT PURCHASED FOR RS. 2.5 LAC ABOUT ONE MONTHS BACK COULD FETCH THE HUGE AMOUNT OF RS. 45 L AC AS TAKEN BY THE AO, PARTICULARLY WHEN THE STAMP AUTHORITIES HAD ACCEPTED THE MARKET VALUE OF SUCH CONSTRUCTED PROPERTY AS SHOWN IN THE DEED. OBVIOUSL Y, THE FIGURES AS TAKEN BY THE AO ARE INCORRECT AND WITHOU T ANY BASIS ON THE FACE OF SUCH DOCUMENTED EVIDENCES. (III) 49, AGARSEN NAGAR: 12,90,000/-: AGAIN THERE IS NO SPECIFIC MENTION OF THIS PROPERTY ON THE SAID SHEETS. IN ABS ENCE OF SPECIFIC MENTION OF THIS PROPERTY I.E. 49 NO ADVE RSE INFERENCE IS CALLED FOR. THERE IS MENTION OF THE WO RD AGARSEN NAGAR AT ONE PLACE ON SHEET OF 2006 WITH THE FOLLOWING NARRATION 15X4 WHICH CONVEYED NO MEANING AT ALL AS THE APPELLANT DID NEVER OWN 4 PLOTS IN THE SAID NAGAR . IN FACT, THE APPELLANT OWNED TWO PLOTS IN THE SAID NAG AR NUMBERING 49 & 208. THE AO HAD RELATED THIS JOTTING TO PLOT NO. 49 TO WORK OUT THE SUPPRESSION OF SALES WI THOUT ANY BASIS AND REASON. IN FACT PLOT NO. 49 IN THE SAID N AGAR WHICH WAS SUBDIVIDED IN TWO PARTS; 49A & 49B . ONE PART 49A WAS SOLD BY THE APPELLANT FOR RS.2,10,000/- AND THE SECOND PART 49B WAS SOLD BY HIS BROTHER SHRI TIKAM KHANDELWAL FOR RS. 4,91,000. HOWEVER, THE LD. AO. H AD OVER-LOOKED THE FACT OF SUB-DIVISION AND MADE DOUBLE ADDITION IN RESPECT OF THE SAME PLOT ; IN THE CASE OF THE APPELLANT FOR 49A AND ALSO IN THE CASE OF HIS BROTHER SHRI TIKAM KHANDELWAL FOR 49B . ON THE FACE OF SUCH DOCUMENTARY EVIDENCES, THE WORKING OF THE SUPPRESSE D SALES IS APPARENTLY INCORRECT AND DESERVES TO BE DE LETED SUMMARILY. (IV) 173,SHYAMPURI: RS.10,00,000 /-: AGAIN THERE IS NO SPECIFIC MENTION OF THIS PROPERTY ON THE SAID SHEETS. IN ABS ENCE OF SPECIFIC MENTION OF THIS PROPERTY I.E. 173 NO ADV ERSE INFERENCE IS CALLED FOR. THERE IS MENTION OF THE WO RD SHYAMPURI AT THREE PLACE ON BOTH THE SHEETS OF 2006 & 2007 HAVING DIFFERENT NARRATIONS AS UNDER: SHYAMPURI- 7 7 22 SHYAMPURI- 170-177-164-165- 15X4 SHYAMPURI 207-35 ALL THESE NARRATIONS CONVEY NO DEFINITE MEANING TO ARRIVE AT ANY LOGICAL CONCLUSION. IN THE CIRCUMS TANCES, NONE OF THESE PLOTS COULD BE RELATED TO THE PLOT NO . 173 AS SHOWN SOLD BY THE APPELLANT DURING THE YEAR. NO PL OT BEARING NO. 173 WAS SOLD DURING THE YEAR. IN FACT THE APPELLANT HAD PURCHASED A PLOT BEARING NO. 173A ON 13.09.2002 FOR RS.1,65,000/- MEASURING 200 SQ. YARD S. THE SAID PLOT WAS SOLD DURING ON 21.07.2004 THE YEAR FO R RS. 5 LAC. IN THE CIRCUMSTANCES, THE SALE OF PLOT NO. 173 COULD NOT BE RELATED TO THIS PLOT NO. 173A AS OPINED BY THE A O. MORE- OVER THE PLOT PURCHASED FOR RS.1,65,000/- ABOUT ONE AND HALF YEAR BACK COULD NOT FETCH THE VALUE OF 15 LAC AS PRESUMED BY THE AO. IN THE CIRCUMSTANCES, THE WORKI NG OF THE AO IN THIS REGARD IS APPARENTLY INCORRECT. (V) 98, CHITRAKOOT: 2,00,000/-: AGAIN THERE IS NO SPECIFIC MENTION OF THIS PROPERTY ON THE SAID SHEETS. IN ABS ENCE OF SPECIFIC MENTION OF THIS PROPERTY I.E. 98 NO ADVE RSE INFERENCE IS CALLED FOR. THERE IS MENTION OF THE WO RD CHITRAKOOT AT ONE PLACE ON THE SHEET OF 2007 WITH THE NARRATION: CHITRAKOOT- 20X3 WHICH CONVEYED NO MEANING AT ALL AS THE APPELLANT DID NEVER OWN AS MANY PLOTS IN THE SAID SCHEME AS MENTIONED IN SUCH JOTTINGS. IN FAC T, THE APPELLANT DID NOT OWN ANY PLOT IN CHITRAKOOT AS MENTIONED BY THE LEARNED AO IN THE ORDER. AS SUCH NO ADDITION WAS CALLED FOR ON SUCH ASSUMPTION OR PRESU MPTION. HOWEVER, THE APPELLANT HAD A PLOT NUMBERING 98 IN CHITRAKOOT COLONY BUT THE NUMBER OF SUCH PLOT IS ALSO NOT MENTIONED AGAINST THE SCHEME OF CHITRAKOOT COL ONY AS WELL. THUS IN ABSENCE OF SPECIFIC MENTION OF NO. 98 AGAINST ANY OF THE SCHEME, NO ADVERSE INFERENCE COU LD BE DRAWN. THE PLOT NO. 98, CHITRAKOOT COLONY WAS PURCHASED ON 19.04.2001 FOR RS. 3 LAC WHICH WAS SOLD ON 18.06 .2004 FOR RS.18,00,000/-(AFTER THE CONSTRUCTION OF THE H OUSE) . IT IS NOT UNDER-STOOD AS HOW THE AO COULD RELATE THIS PROPERTY WITH THE JOTTINGS AS APPEARING ON THE SHEETS. (VI) 34 & 35, CHITRAKOOT COLONY : RS.50,000/- AGAIN THERE IS NO SPECIFIC MENTION OF THIS PROPERTY ON THE SAID SHEETS. IN ABSENCE OF SPECIFIC MENTION OF THE NUMBERS OF THIS PROPERTY I.E. 34 & 35 NO ADVERSE INFERENCE IS CALLED FOR. THERE IS MENTION OF THE WORD CHITRAKOOT COLONY AT TWO PLACES ON THE SHEET OF 2006 WITH THE NARRATION: CHITRAKOOT COLONY- 31=22X2 CHITRAKOOT COLONY 09=45 WHICH CONVEYED NO MEANING AT ALL. THE APPELLANT 8 8 HAD A PLOT NUMBERING 34 & 35 IN CHITRAKOOT COLONY BUT THE NUMBER OF SUCH PLOT IS ALSO NOT MENTIONED AGAIN ST THE SCHEME OF CHITRAKOOT COLONY AS WELL. THUS IN ABSE NCE OF SPECIFIC MENTION OF NO. 34 & 35 AGAINST ANY OF THE SCHEME, NO ADVERSE INFERENCE COULD BE DRAWN. THE PLOT NO. 3 4-35, CHITRAKOOT COLONY WAS PURCHASED ON 09.05.2004 FOR RS. 4 LAC (BY SINGLE DEED) WHICH WAS SOLD IN THREE PARTS (BY THREE REGISTERED INSTRUMENTS) ON 16.08.2004 FOR RS. 7 LA C, SECOND PART ON 6.12.2004 FOR RS.7,50,000/- & THIRD PART ON 18.01.2005 FOR RS.7,00,000/- TOTALING RS. 21,50,000 /-. THE AO HAD HOWEVER TAKEN THE SALE CONSIDERATION OF THIS HOUSE AT RS.22,00,000/- RELATING THE SAME WITH THE JOTTI NG OF CHITRAKOOT COLONY- 31 WITHOUT ANY BASIS. (VII) 52, RAM NAGAR: 15,00,000/-: AGAIN THERE IS NO SPECIFIC MENTION OF THIS PROPERTY ON THE SAID SHEETS. IN A BSENCE OF SPECIFIC MENTION OF THE NUMBER OF THIS PROPERTY I.E . 52 NO ADVERSE INFERENCE IS CALLED FOR. THERE IS MENTION O F THE WORD RAM NAGAR AT ONE PLACE ON THE SHEET OF 200 6 WITH THE NARRATION: RAM NAGAR 21X1= 15X4 WHICH CONVEYED NO MEANING AT ALL. THE APPELLANT DID NEVER OWNED AS MANY PLOT IN THE SAID NAGAR AS MENTIONED IN THE JOTTINGS . MORE- OVER IN THE ABOVE JOTTINGS THERE IS MENTION OF THE DIGITS OF 21 AND 15, SO HOW THE AO COULD PRESUME THE DIGIT OF 2 1 REPRESENTED THE COST OF THE PROPERTY WHEN THERE APP EARED THE DIGIT OF 15 ALSO. THUS ALL THESE DIGITS AS APPEARING IN THE JOTTINGS ARE MESSY AND DID NOT CONVEY ANY THING DEF INITELY AND CONCLUSIVELY . AS REGARDS THE PROPERTY UNDER CONSIDERATION, THE SAID PROPERTY IS LOCATED IN THE COLONY KNOWN AS SHRI RAMNAGAR B AND NOT RAM NAGER AS TAKEN BY THE AO ON THE BASIS OF SAID JOTTING. THE ALLEGED PROPERTY WAS PURCHASED ON 15.04.2004 FOR RS. 3 LAC AND SOLD FOR ON 22.11.2004 FOR RS. 6 LAC AFTER CONSTRUCTION. NOW IT IS FOR CONSIDERATION AS TO WHETHER, A PLOT PURCHASED FOR R S. 3 LAC ABOUT 7 MONTHS BACK COULD FETCH THE HUGE AMOUNT OF RS. 21 LAC AS TAKEN BY THE AO. ON THE FACE OF SUCH DOCUMEN TARY EVIDENCES; NO ADDITION WAS CALLED FOR ON THE BASIS OF SUCH ROUGH JOTTINGS. IN VIEW OF ABOVE DISCUSSIONS, IT IS PROVED BEYOND D OUBT THAT THE JOTTINGS AS CONTAINED IN THE AFORESAID EXHIBITS ARE DEAF AND DUMB JOTTINGS AND CARRY NO EVIDENTIARY VALUE. HERE IT WOULD NOT B E OUT OF PLACE TO MENTION THAT AT THE TIME OF SEARCH OPERATIONS ALSO, THE APPELLANT WAS CONFRONTED WITH THESE PAPERS AND WAS SPECIFICALLY R EQUIRED TO EXPLAIN THE NATURE OF THESE JOTTINGS. AT TIME ALSO, THE APPELLA NT HAD EXPLAINED THE NATURE OF SUCH JOTTINGS FOR WHICH THE CONCERNED AUT HORIZED OFFICER FELT 9 9 SATISFIED AND DID NOT ATTACH MUCH IMPORTANCE TO SUC H DEAF AND DUMB PAPER AND ACCORDINGLY 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 REFERENCE: 3.4 ON THE OTHER HAND, THE LD. DR REFERRED TO SECTI ON 132(4) OF THE ACT AND STATED THAT THE ENTRIES RECORDED IN THE SEIZED DOCU MENTS SHOULD BE CONSIDERED AS TRUE AND THE ADDITION IS REQUIRED TO BE MADE ON THE BASIS OF THE ENTRIES MENTIONED AT PAGES 23 AND 25 OF ANNEXURE A-25. 3.5 WE HAVE HEARD BOTH THE PARTIES. 32 KRISHNA NAGAR 3.6 THE AO HAS ADOPTED THE SALE CONSIDERATION AT RS . 15.00 LACS AS AGAINST RS. 5.00 LACS SHOWN IN THE BOOKS OF ACCOUNTS. THUS A SUM OF RS. 10.00 LACS HAS BEEN ADDED AS UNDISCLOSED INCOME. AT PAGE 23 OF ANNEXURE A-25, FOLLOWING NOTING IS THERE. 1. SOLD KRISHNA NAGAR 31, 31A B1 (15X4) 3.7 IN VARIOUS ASSESSMENT YEARS , THE ASSESSEE HAS SOLD 24 PROPERTIES AS PER CHART AVAILABLE AT PAGE 11 OF THE ASSESSMENT ORDER. ONLY ONE PROPERTY IN KRISHNA NAGAR NAMELY 32 KRISHNA NAGAR HAS BEEN SOLD . THE ASSESSEE IS NOT HAVING ANY OTHER PROPERTY AT KRISHNA NAGAR. THE CON TENTION OF THE ASSESSEE IS THAT THE NOTINGS AT PAGES 23 AND 25 OF ANNEXURE A-25 HAVE BEEN WRITTEN AS THE ASSESSEE WAS BEING CONTACTED FOR SALE OF PROPE RTIES BY OTHERS. THE 10 10 ASSESSEES SERVICES WERE UTILISED FOR PURCHASE AND SALE OF THE PROPERTIES. THE PLOT WAS PURCHASED FOR RS. 1.50 LACS AND THIS COULD NOT HAVE BEEN FETCHED RS. 15 LACS WITHIN TWO YEARS. MOREOVER, NO EVIDENCE HAS BEEN COLLECTED BY THE AO IN RESPECT OF EXCESS CONSIDERATION RECEIVED. TH US THE ADDITION OF RS. 10.00 LACS IS DELETED. 164 KALYAN KUNJ RS. 36.85 LACS 3.8 THE AO HAS TAKEN THE SALE CONSIDERATION OF RS. 45.00 LACS AS AGAINST RS. 8.15 LACS SHOWN IN THE BOOKS OF ACCOUNT AND THU S MADE AN ADDITION OF RS. 36.85 LACS. IN THIS CASE THE PLOT WAS PURCHASED IN MARCH 04 FOR RS. 2.15 LACS AND SOLD FOR RS. 8.15 LACS AFTER MAKING SOME C ONSTRUCTION ON THIS PLOT IN APRIL, 2004. THE ASSESSEE COULD NOT HAVE EARNED THE PROFIT OF RS. 36.85 LACS ON INVESTMENT OF RS. 8.15 LACS WITHIN ONE MONTH. WE THEREFORE, FEEL THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDIT ION OF RS. 36.85 LACS. 49, AGRASEN NAGAR 3.9 THE SALE CONSIDERATION HAS BEEN TAKEN AT RS. 15 .00 LACS AS AGAINST RS. 2.10 LACS SHOWN IN THE BOOKS OF ACCOUNT. THE AO THE REFORE, ADDED A SUM OF RS. 12.90 LACS. THERE IS NO SPECIFIC MENTION OF THE PROPERTY AT 49 AGRASEN NAGAR AT PAGS 23 AND 25 OF ANNEXURE- A-25. HOWEVER, DESCRIPTION AT PAGE 25 OF ANNEXURE- A-25 IS AS UNDER:- SOLD AGRASEN NAGAR 15 X 4 11 11 THE ASSESSEE HAS SUBDIVIDED PLOT NO. 49 X 49A & 49B . PLOT NO. 49A WAS SOLD BY THE ASSESSEE WHILE PLOT NO. 49B WAS SOLD BY HIS BROTHER. THUS THE SALE PROCEEDS ADOPTED BY THE AO IS NOT CORRECT AND THEREFORE, THE ADDITION OF RS. 12.90 LACS IS DELETED. 173, SHYAMPURI 3.10 THE AO HAS ADOPTED THE SALE CONSIDERATION AT R S. 15.00 LACS AS AGAINST RS. 5.00 LACS SHOWN IN THE BOOKS OF ACCOUNT. HENCE, THE SUM OF RS. 10.00 LACS HAS BEEN ADDED AS UNDISCLOSED INCOME. PAGES 23 AND 25 OF ANNEXURE- A-25 DO NOT REFER TO PROPERTY AT 173, SHYAMPURI. TH ERE IS MENTION OF SHYAMPURI-22, SHYAMPURI 170-`177-164-165, SHYAMPURI 207-35. HENCE, THERE IS NO MENTION OF SALES TO THE EXTENT OF RS. 1 5.00 LACS IN RESPECT OF 173, SHYAMPURI. THE AO HAS NOT COLLECTED ANY OTHER EVIDE NCE. HENCE, THE ADDITION OF RS. 10.00 LACS IS DELETED. 98, CHITRAKOOT 3.11 THE AO HAS ADOPTED THE SALE CONSIDERATION OF R S. 20,00 LACS AS AGAINST RS. 18.00 LACS SHOWN IN THE BOOKS OF ACCOUNT. HENCE THE ADDITION OF RS. 2.00 LACS HAS BEEN MADE. THERE IS NO SPECIFIC MENTION OF PROPERTY AT 98 CHITRAKOOT. THERE IS REFERENCE OF PLOT NO. 31 AND 0 9 OF CHITRAKOOT COLONY. IN RESPECT OF CHITRAKOOT, IT IS MENTIONED AS 20X3. IN ABSENCE OF ANY SPECIFIC 12 12 MENTION OF 98 CHITRAKOOT AT PAGES 23 AND 25 OF ANNE XURE- A-25, THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS. 2.0 0 LACS WHICH IS DELETED.. 34 & 35, CHITRAKOOT COLONY 3.12 AGAIN THERE IS MENTION OF THESE PLOTS AT PAGES 23 AND 25 OF ANNEXURE- A-25. HENCE, THE ADDITION OF RS. 50,000/- CONFIRMED BY THE LD. CIT(A) IS DELETED. 52, RAM NAGAR 3.13 THE AO HAS ADOPTED THE SALE CONSIDERATION AT R S. 15.00 LACS AS AGAINST RS. 6.00 LACS SHOWN IN THE BOOKS OF ACCOUNT. THE NA RRATION AS CONTAINED AT PAGE 25 OF ANNEXURE- A-25 IS AS UNDER:- SOLD RAM NAGAR 21X1= 15X4 THE DESCRIPTION DOES NOT CONVEY ANY SPECIFIC MEANIN G. HENCE, NO CONCLUSION CAN BE DRAWN THAT THE ASSESSEE HAS RECEI VED THE SALE CONSIDERATION OF RS. 15.00 LACS. HENCE, THE ADDITION OF RS. 15.00 LACS CONFIRMED BY THE LD. CIT(A) IS DELETED. 3.14 HENCE THE SECOND GROUND OF APPEAL OF THE ASSES SEE IS ALLOWED. 4.1 THE THIRD GROUND OF THE ASSESSEE IS THAT THE LD . CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 1.04 LACS MADE B Y THE AO BY APPLYING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. 13 13 4.2 THE AO HAS MADE DISALLOWANCE OF RS. 1,49,020/- U/S 40A(3) OF THE ACT. 4.3 THE LD. CIT(A) HAS EXCLUDED THE CASH PAYMENT IN CURRED FOR PURCHASE OF STAMP DUTY AND CASH EXPENSES FOR REGISTRATION. H ENCE, THE DISALLOWANCE WAS RESTRICTED TO RS. 1,04 LACS AS AGAINST RS. 1,49 ,020/- MADE BY THE AO. 4.4 WE HAVE HEARD BOTH THE PARTIES. THIS ISSUE HAS BEEN CONSIDERED BY US WHILE DISPOSING OFF THE APPEAL IN THE CASE OF THE A SSESSEE FOR THE ASSESSMENT YEARS 2008-09 AND 2007-08.WE HAVE HELD THAT IN CASE THE BOOKS OF ACCOUNT ARE REJECTED THEN NO DISALLOWANCE U/S 40A(3) IS TO BE MADE. SINCE IN THE INSTANT CASE, THE PROFIT IS BEING ESTIMATED THEREFO RE, NO DISALLOWANCE U/S 40A(3) IS TO BE MADE. HENCE, THE GROUND NO. 3 OF TH E ASSESSEE IS ALLOWED. 5.1 THE 4 TH GROUND OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 7,20,928/- OUT OF AD DITION OF RS. 57,31,427/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDI T. 5.2 THE REVENUE IN GROUND NOS. 3 AND 4 IS AGGRIEVED AGAINST DELETION OF ADDITION OF RS. 50,10,499/- BY THE LD. CIT(A) AFTER ACCEPTING THE ADDITIONAL EVIDENCES. 5.3 THE FACTS IN RESPECT OF ADMISSION OF ADDITIONAL EVIDENCES ARE THE SAME AS HAVE BEEN CONSIDERED BY US IN THE CASE OF THE AS SESSEE FOR THE ASSESSMENT YEARS 2008-09 AND 2007-08. FOLLOWING OUR FINDINGS F OR THOSE ASSESSMENT 14 14 YEARS, WE HOLD THAT THE LD. CIT(A) WAS JUSTIFIED IN ACCEPTING THE ADDITIONAL EVIDENCES. 5.4 BEFORE US, THE LD. AR HAS NOT PRESSED IN RESPEC T OF ADDITION OF RS. 79,000/- MADE AS TO CASH CREDIT IN THE NAME OF SMT. USHA JAIN. HENCE, THE ADDITION TO THE EXTENT OF RS. 79,000/- IS UPHELD 5.5 BEFORE THE LD. CIT(A), THE ASSESSEE HAS FILED T HE ADDITIONAL EVIDENCES IN RESPECT OF CASH CREDITS AND SUCH ADDITIONAL EVID ENCES ARE IN RESPECT OF CONFIRMATIONS AND AFFIDAVITS. 5.6 WE HAVE HEARD BOTH THE PARTIES. WE HAD ALREADY HELD WHILE DISPOSING OFF THE APPEAL FOR THE ASSESSMENT YEAR 2008-09 AND 2007-08 THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION ON THE BASI S OF ADDITIONAL EVIDENCES. THE LD. CIT(A) HAS CONFIRMED THE CASH CREDIT OF RS. 6,41,928/- IN THE NAME OF M/S. GUMAN FURNITURE & SERVICES LTD. THE CONCERN M/S. GUMAN FURNITURE & SERVICES LTD. IS MAINTAINING THE BOOKS OF ACCOUNT AND SUCH PAYMENT IS REFLECTED IN THEIR BOOKS OF ACCOUNT. WE THEREFORE, HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 6,41,928/-. HENCE THE GROUND NO. 4 OF THE ASSESSEE IS PARTLY ALLOWED AND GROUND NOS. 3 AND 4 OF THE REVENUE ARE DISMISSED. 15 15 6.1 THE 5 TH GROUND OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE OUT OF TAXI EXPENSE TO 20% AS AGAINST DISALLOWANCE OF 1/3 RD OF TAXI EXPENSES MADE BY THE AO 6.2 THE 6 TH GROUND OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN RESTRICTING THE CLAIM OF THE DEPRECIATION ON TAXIES TO THE EXTENT OF THE POSITIVE INCOME FROM TAXIES. 6.3 THE REVENUE IN GROUND NO. 2 IS AGGRIEVED AGAINS T THE RELIEF ALLOWED IN RESPECT OF DISALLOWANCE OUT OF TAXI EXPENSE AND THE ALTERNATE PLEA OF THE REVENUE IS THAT INCOME FROM TAXIES SHOULD HAVE BEEN ADOPTED AS POSITIVE AS PER PROVISIONS OF SECTION 44AE OF THE ACT. 6.4 WE HAVE HEARD BOTH THE PARTIES. SECTION 44AE IS APPLICABLE TO THE GOODS CARRIED AND NOT TO THE TAXIES. AS PER THE CHA RT AVAILABLE ON RECORD, THE ASSESSEE WAS HAVING 05 TAXIES FOR THE ENTIRE YEAR. ONE TAXI WAS UPTO 27 TH DEC. 04 AND SECOND TAXI WAS AVAILABLE FROM 2-03-05 TO 31-03-05. LOOKING TO THE NUMBER OF TAXIES AVAILABLE FOR THE ENTIRE YEAR AND SOME OF THE TAXIES AVAILABLE FOR PART OF THE YEAR, WE FEEL THAT IT WIL L BE FAIR AND REASONABLE TO ESTIMATE TAXI INCOME AT RS. 80,000/-. THIS INCOME I S AFTER ALLOWING DEPRECIATION. HENCE, THE GROUND NO. 5 OF THE ASSESS EE STANDS DISMISSED WHILE GROUND NO. 6 OF THE ASSESSEE IS ALLOWED AND G ROUND NO. 2 OF THE REVENUE IS PARTLY ALLOWED. 16 16 7.1 GROUND NO. 7 AND 8 TH OF THE ASSESSEE ARE GENERAL AND NO SPECIFIC ISSUED HAS BEEN RAISED BY THE ASSESSEE IN THE WRITT EN SUBMISSIONS. HENCE, THESE GROUNDS OF APPEAL ARE ACADEMIC. 7.2 THE REVENUE IN GROUND NO. 5 IS AGGRIEVED AGAINS T RELIEF OF RS. 23,10,840/- GIVEN BY THE LD. CIT(A). 7.3 THE AO IN HIS ORDER HAS MENTIONED THAT THE ASSE SSEE HAS NOT PRODUCED THE SUPPORTIVE EXPENSES VOUCHERS. IF THE PAYMENTS E XCEEDS RS. 50,000/-THEN TAX AT SOURCE WAS REQUIRED TO BE DEDUCTED AND IN C ASE TDS HAS NOT BEEN MADE THEN THE EXPENDITURE IS TO BE DISALLOWED U/S 4 0(A)(IA) OF THE ACT, 7.4 THE LD. CIT(A) HAS OBSERVE THAT THE INDIVIDUAL WAS NOT LIABLE TO DEDUCT THE TDS U/S 194C TILL 31-05-07. SUB-SECTION (1) OF SECTION 194C HAS BEEN SUBSTITUTED W.E.F. IST JUNE, 2007 TO INCLUDE P AYMENTS BY INDIVIDUAL AND HUF. IN VIEW OF THE PROVISIONS OF THE ACT, THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT THE TAX AT SOURCE. THEREFORE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 23,10,840/-. 8.1 THE REVENUE IN GROUND NO. 5 HAS MENTIONED THAT THE ASSESSEE WAS HAVING TURNOVER LESS THAN THE PRESCRIBED LIMIT AND HENCE THE TAX WAS REQUIRED TO BE DEDUCTED AT SOURCE. 17 17 8.2 WE HAVE CONSIDERED THIS SUBMISSION. THERE IS NO THING ON RECORD TO SUGGEST THAT THERE WAS VERBAL OR WRITTEN AGREEMENT BY THE ASSESSEE WITH THE PERSON TO WHOM PAYMENTS HAVE BEEN MADE. THE TDS CAN BE MADE U/S 194C IN CASE THERE IS A CONTRACT BETWEEN THE ASSESSEE AN D THE PARTY TO WHOM PAYMENT HAS BEEN MADE. IN ABSENCE OF ANY EVIDENCE O N RECORD TO SUGGEST THAT THESE WERE CONTRACTUAL PAYMENTS, HENCE THE ASS ESSEE WAS NOT REQUIRED TO DEDUCT THE TAX AT SOURCE. THUS NO DISALLOWANCE U/S 40(A)(IA) IS TO BE MADE 9. IN THE RESULT THE APPEALS OF THE ASSESSEE AS WEL L AS OF THE REVENUE ARE PARTLY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 12-08 -2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 12 /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.154/JP /11) A.R, ITAT, JAIPUR 18 18