Shri Mahendra Kataria, SILVASSA V. The Dy.CIT.,Cent.Circle-1, Surat

ITA 1572/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8858 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 22-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 19-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRADEEPKUMAR MAJMUDAR
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Tax effect
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NOS. 1263 & 1572/AHD/2014 (ASSESSMENT YEAR:2009-10) INCOME TAX OFFICER, VAPI WARD 2,VAPI APP ELLANT VS. SHRI MAHENDRA KATARIA PITRUKRUPA BUNGLOW, OPP. CANARA BANK, TOKARKHADA, SILVASSA, D & N.H. RESPONDENT/CROSS APPELLANT PAN: ACPPK1787M /BY REVENUE : SHRI PRADEEP KUMAR MAJMUDAR, SR. D.R. /BY ASSESSEE : MS. URVASHI SHODHAN /DATE OF HEARING : 22.03.2017 /DATE OF PRONOUNCEMENT : 24.03.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THE REVENUE AND ASSESSEE HAVE FILED THEIR INSTANT C ROSS APPEALS FOR ASSESSMENT YEAR 2009-10 AGAINST THE CIT(A)-II, AHME DABADS ORDER DATED 25.02.2014, PASSED IN APPEAL NO. CIT(A)-II/CC.1/280 /2011-12, IN PROCEEDINGS U/S.143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. ITA NOS. 1263 & 1572/AHD/2014 [ITO VS. SHRI MAHENDR A KATARIA] A.Y. 2009-10 - 2 - 2. WE ADVERT TO REVENUES APPEAL ITA NO.1263/AHD/20 14 FIRST. IT INTER ALIA PLEADS FOUR SUBSTANTIVE GROUNDS THAT THE CIT(A ) HAS ERRED IN DELETING SECTION 68 ADDITION OF UNACCOUNTED CASH CREDITS OF RS.4,50,000/-, UNACCOUNTED INVESTMENT ADDITION OF RS.3,16,040/-, A NOTHER UNACCOUNTED INVESTMENT OF RS.7,90,130/- AND FURTHER IN TREATING A SUM OF RS.79,130/- AS LONG TERM CAPITAL GAINS INSTEAD OF SHORT TERM ONES AND REVERSING BOGUS EXPENDITURE DISALLOWANCE OF RS.6,57,724/-; RESPECTI VELY. LEARNED DEPARTMENTAL REPRESENTATIVE FAIRLY CONCEDES THAT TH E TAX EFFECT INVOLVED IN ALL THESE GROUNDS IS IN ANY CASE LESS THAN RS.10LAC S PRESCRIBED IN CBDT CIRCULAR NO.21/2015 AS HELD APPLICABLE ON PENDING A PPEALS AS WELL. WE THUS DISMISS REVENUES INSTANT APPEAL TO BE INVOLVING TA X EFFECT LOWER THAN THE PRESCRIBED LIMIT OF RS.10LACS. 3. WE NOW COME TO ASSESSEES APPEAL. ITS FIRST SUB STANTIVE GROUND AVERS THAT THE CIT(A) HAS ERRED IN RESTRICTING SECTION 68 ADDITION OF UNACCOUNTED CASH CREDITS OF RS.40,45,570/- AS MADE BY THE ASSES SING OFFICER TO RS.17LACS IN THE LOWER APPELLATE ORDER UNDER CHALLENGE. THER E IS NO DISPUTE THAT THIS AMOUNT IN QUESTION OF RS.17LACS INVOLVES FIVE CREDI TORS NAMELY M/S. DINESH ARVIND RAVAL, S. K. DEVELOPERS, KESAR AGENCY, RAJ M OTORS AND RAJESH BARAF OF RS.75000/-, RS.11,00,000/- , RS.1.5LACS, RS.3LAC S AND RS.75,000/-; RESPECTIVELY. THE ASSESSEE IS FAIR ENOUGH IN NOT C ONTESTING THE LAST ADDITION OF RS.75,000/-. 4. WE PROCEED TO DEAL WITH REMAINING FOUR PARTIES. THE ASSESSING OFFICER OBSERVED IN ASSESSMENT ORDER DATED 28.12.2011 THAT ALTHOUGH THE ASSESSEE HAD TENDERED EXPLANATION AS WELL AS MADE REPAYMENTS, HI S JUSTIFICATION WAS NOT LIABLE TO BE ACCEPTED SINCE HE WAS ENGAGED IN REAL ESTATE MARKET WHEREIN ON MONEY TRANSACTIONS FLOURISHED ON ROUTINE BASIS. HE THEREFORE TREATED THE ITA NOS. 1263 & 1572/AHD/2014 [ITO VS. SHRI MAHENDR A KATARIA] A.Y. 2009-10 - 3 - ABOVE CREDITS AS MAKE BELIEVE ARRANGEMENTS COMING U NDER REASONABLE SUSPICION TO INVOKE SECTION 68 OF THE ACT. 5. THE ASSESSEE APPEARS TO HAVE FILED ADDITIONAL SU BMISSIONS BEFORE THE LOWER APPELLATE AUTHORITY. IT SOUGHT REMAND REPORT . THE ASSESSEE FILED NECESSARY EVIDENCE WHICH COULD NOT CONVINCE EITHER THE ASSESSING OFFICER OR THE CIT(A) . 6. WE HAVE HEARD BOTH THE LEARNED REPRESENTATIVES. THERE IS NO DISPUTE THAT WE ARE NOW LEFT WITH FOUR CREDITORS. FIRST ON E SHRI DINESH ARVIND RAVAL INVOKES A SUM OF RS.75,000/-. PAGE 118 OF THE PAPE R BOOK REVEALS THAT THE ASSESSEE HAD FILED HIS BANK STATEMENT, RETURN OF IN COME WITH ACKNOWLEDGEMENT AND HIS LEDGER COPY STATING OPENING BALANCE OF RS.2LACS TO PROVE GENUINENESS. THIS FOLLOWS A CONFIRMATION FRO M THE SAID CREDITORS AND AT PAGE 125 OF THE PAPER BOOK. WE TAKE INTO ACCOUN T ALL THESE DETAILS AS WELL AS THIS TRIBUNALS DECISION IN ITA NO.1335/AHD/2014 M/S. R. KANTILAL & CO. VS. CIT FOLLOWING HONBLE APEX COURTS DECISION IN ORISSA STILL CORPORATION CASE 159 ITR 78 AS WELL AS THAT OF HONBLE JURISDIC TIONAL HIGH COURTS JUDGMENT IN RANCHHOD JIVABHAI NAKHAVA 208 TAXMANN.C OM 35 TO CONCLUDE THAT THE ASSESSEE HAS DISCHARGED HIS ONUS WHEREAS T HERE IS NO SPECIFIC EVIDENCE FOR DISBELIEVING THE SAID EXPLANATION. CO MING TO NEXT CASE OF M/S. S. K. DEVELOPERS, IT IS EVIDENT FROM PAGES 135 IN T HE PAPER BOOK THAT ITS TAX CONSULTANT HAD SENT ALL DETAILS I.E. LOAN CONFIRMAT ION LETTER, LOAN LEDGER, BALANCE SHEET COPY AS ON 31.03.2009 SHOWING THE LOA N TRANSACTION IN QUESTION, PAN CARD, INCOME TAX RETURN ACKNOWLEDGEME NT AS WELL AS BANK STATEMENT. IT FURTHER CLARIFIED THE FACT THAT THE POSTAL AUTHORITYS REMARK IN NOT SERVING SECTION 133(6) NOTICE WAS NOT CORRECT. WE FIND HEREIN AS WELL THAT THE AUTHORITIES BELOW NOWHERE REBUT THE SAID EXPLAN ATION WITH CONCRETE EVIDENCE. WE THEREFORE ADOPT OUR PRECEDING REASONI NG IN THIS CASE AS WELL. ITA NOS. 1263 & 1572/AHD/2014 [ITO VS. SHRI MAHENDR A KATARIA] A.Y. 2009-10 - 4 - THE THIRD CREDITOR IS M/S. KESAR AGENCY QUA THE SUM IN QUESTION OF RS.1.5LACS. THE ASSESSEE CLAIMED THAT THIS AMOUNT WAS DEPOSITED IN HIS FIRM MS. PADMAVATI INFRACON PVT. LTD. WHICH WAS LATER ON TRANSFERRED BY WAY OF A JOURNAL ENTRY. THE ASSESSING OFFICER ISSUED SECTI ON 133(6) NOTICE. ONE SHRI DINESH B. KATARIA FILED REPLY ALONGWITH COPY OF BAL ANCE SHEET, THE ABOVE ENTITIES LEDGER ACCOUNT AND OTHER DETAILS. THE AS SESSING OFFICER OBSERVES AT PAGE 111 OF THE PAPER BOOK CONTAINING IN HIS REMAND REPORT THAT M/S. PADMAVATI INFRACONS BOOKS DULY SHOW THESE ACCOUNTS AN AMOUNT OF RS.1.5LACS IN QUESTION. WE THEREFORE OBSERVE THAT THE ASSESSEE HAS PROVED HIS CASE BY DISCHARGING THE PRIMARY ONUS AS NOT REBUTTE D BY THE LOWER AUTHORITIES. THE LAST CREDITOR M/S. RAJ MOTOR INVOLVES A SUM OF RS.3LACS. THE ASSESSING OFFICER HIMSELF OBSERVES IN HIS REMAND REPORT AT PA GE 133 OF THE PAPER BOOK THAT THIS ASSESSEES CLAIM REGARDING THE SAID ENTIT Y IS VERY MUCH ACCEPTABLE. WE THEREFORE FIND NO REASON TO AGGRIEVE WITH THE IM PUGNED ADDITION. THE ASSESSING OFFICER IS DIRECTED TO DELETE SECTION 68 ADDITION IN QUESTION OF RS.16.25LACS. THIS FIRST SUBSTANTIVE GROUND IS PAR TLY ALLOWED. 7. THE ASSESSEES LATTER SUBSTANTIVE GROUND CHALLEN GES BOTH THE LOWER AUTHORITIES ACTION TREATING PROFITS FROM SALE OF L AND OF RS.1,40,453/- AS SHORT TERM CAPITAL GAINS INSTEAD OF BUSINESS INCOME. THE RE IS NO QUARREL THAT THE ASSESSEE DEALS IN LAND AND CONSTRUCTION BUSINESS IN COMMERCIAL AS WELL AS RESIDENTIAL SECTOR. THE ASSESSING OFFICER HIMSELF IS VERY FAIR IN OBSERVING THESE FACTS. HE FURTHER TREATS THE ASSESSEE TO BE IN THE VERY BUSINESS AND PRECEDING ASSESSMENT YEAR 2008-09. THE ASSESSEE PU RCHASED THE LAND IN QUESTION ON 06.12.2007 AND SOLD IT ON 28.10.2008 TH EREBY DERIVING THE PROFIT IN QUESTION. THE ASSESSING OFFICER TOOK NOTICE OF THE FACT THAT THE ASSESSEE HAD HIMSELF SHOWN THE ABOVE LAND AS INVESTMENT TO T REAT THE INCOME IN QUESTION AS SHORT TERM CAPITAL GAINS AS AFFIRMED IN THE LOWER APPELLATE ORDER. THE REVENUE HOWEVER FAILS TO REBUT THE FACT THAT TH E ASSESSING OFFICER HAD ITA NOS. 1263 & 1572/AHD/2014 [ITO VS. SHRI MAHENDR A KATARIA] A.Y. 2009-10 - 5 - STILL TREATED THE ASSESSEE TO BE ENGAGED IN THE LAN D DEALING BUSINESS IN THE PRECEDING ASSESSMENT YEAR. WE THEREFORE ADOPT CONS ISTENCY HEREIN AS WELL AND DIRECT THE ASSESSING OFFICER TO TREAT THE ABOVE STATED INCOME DERIVED FROM SALE OF LAND AS BUSINESS INCOME. THE ASSESSEES LA TTER SUBSTANTIVE GROUND IS ACCORDINGLY ACCEPTED. 8. THE REVENUES APPEAL ITA NO.1263/AHD/2014 IS DIS MISSED AND ASSESSEES CROSS APPEAL ITA NO.1572/AHD/2014 IS PAR TLY ACCEPTED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 24 TH DAY OF MARCH, 2017.] SD/- SD/- ( MANISH BORAD ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD: DATED 24/03/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0