Shri Prafulchandra J. Agarwal, Ahmedabad V. The ACIT, Circle-9, Ahmedabad

ITA 1642/AHD/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0676 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 26-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S N DIVATIA
• Assessee Lawyers: S K DEV
• Keywords: Depreciation; Additional evidence; Corroborative evidences
• Section: 143(3); 133A; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER DCIT(OSD) CIR-9, AHMEDABAD (APPELLANT) VS PRAFULCHANDRA J. AGARWAL, 4 TH FLOOR, KADAM JUDGES BUNGLOW ROAD, BODAKDEV, AHMEDABAD-380054 (RESPONDENT) PAN NO. AAB PA3 656 P PRAFULCHANDRA J. AGARWAL, 4 TH FLOOR, KADAM JUDGES BUNGLOW ROAD, BODAKDEV, AHMEDABAD-380054 PAN NO. AAB PA3 656 P (APPELLANT) VS ACIT CIR-9, AHMEDABAD (RESPONDENT) REVENUE BY: S. N. DIVATIA, AR ASSESSEE BY: S.K. DEV, SR. DR DATE OF HEARING : 21-02-2019 DATE OF PRONOUNCEMENT : 27-03-201 9 ITA NO. 1918/AHD/2014 ASSESSMENT YEAR: 2008-09 ITA NO. 1642/AHD/2014 ASSESSMENT YEAR: 2008-09 I.T.A.NOS.1918&1642/AHD/2014 A.Y. 2008-09 PAGE NO 2 /ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- THE APPEAL FILED BY THE REVENUE FOR A.Y. 2008-09 AN D APPEAL FILED BY THE ASSESSEE, ARISE FROM ORDER OF THE CIT(A)-VIII, AHMEDABAD DATED 31-03- 2014, IN PROCEEDINGS UNDER SECTION 143(3) OF THE IN COME TAX ACT, 1961; IN SHORT THE ACT. THE GROUNDS OF APPEAL OF THE REVENUE: 1A). THE LD. COMMISSIONER OF INCOME TAX (APPEALS)- VIII, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS. 12,06,342/- [OUT OF TOTAL DISALLOWANCE OF RS. 1,23,15,922/- MADE ON ACCOUNT O F DIFFERENCE BETWEEN DISCLOSURE AND BOOK PROFIT] WHICH INCLUDED INTEREST EXPENSES ON BORROWED FUNDS NOT USED FOR ASSESSEES BUSINESS. 1B). THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-V III, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS. 8,40,478/- MADE ON AMOUNT OF SHARAFI INTEREST ON BORROWED FUNDS NOT USED FOR ASSESSEES BUSINESS. 1C). THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-V III, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE INTEREST EXPENS ES & LOAN PROCESSING CHARGES AMOUNTING TO RS. 3,82,762/- & RS. 2,36,179/-, RESPE CTIVELY, ON PERSONAL LOANS OF ASSESSEE ON BORROWED FUNDS NOT USED FOR ASSESSEES BUSINESS. THE GROUNDS OF APPEAL OF THE ASSESSEE:- 1.1 THE ORDER PASSED U/S. 250 ON 31.03.2014 FOR A.Y . 2008-09 BY CIT(A)-VIII, ABAD, PARTLY UPHOLDING THE ADDITION TO THE EXTENT O F RS. 17,24,076/- IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NAT URAL JUSTICE. 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE EXPLANATIONS FURNISHED AND T HE EVIDENCE PRODUCED BY THE APPELLANT. 2.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN UPHOLDING THE ADDITION TO THE EXTENT OF RS. 17,24,076/- IN RESPEC T OF DIFFERENCE BETWEEN DISCLOSED INCOME AND NET PROFIT SHOWN IN THE RETURN OF INCOME . I.T.A.NOS.1918&1642/AHD/2014 A.Y. 2008-09 PAGE NO 3 2.2 THAT IN FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN CONFIRMING THE ADDITION OF RS. 17,24,076/- TOWARDS THE DIFFERENCE. ALL THE GROUNDS OF APPEAL OF THE REVENUE AND ASSE SSEE ARE INTERCONNECTED BASED ON COMMON FACTS THEREFORE FOR THE SAKE OF CONVENIENCE THEY ARE ADJUDICATED BY THIS COMMON ORDER: 2. IN THIS CASE RETURN OF INCOME DECLARING TOTAL IN COME OF RS. 1,41,80,610/- WAS FILED ON 27.09.2008. SUBSEQUENTLY NOTICE U/S. 143(2) OF THE ACT WAS ISSUED ON 14.09.2009. THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF BUILDER AND DEVELOPER. 3. IN THE CASE OF THE ASSESSEE A SURVEY ACTION U/S. 133A OF THE ACT WAS CONDUCTED ON THE ASSESSES BUSINESS PREMISES ON 23 .05.2008. DURING THE COURSE OF SURVEY IN ANSWER TO QUESTION NO. 18 OF ST ATEMENT THE ASSESSEE STATED THAT HE HAD PAID ADVANCE TAX OF RS. 7,00,000/- FOR F.Y. 2007-08 BUT HIS PROFIT WOULD BE APPROXIMATELY RS. 2.62 CRORE FROM HIS PROP ERTY CONCERN NAMELY M/S AGGARWAL ENTERPRISES. HOWEVER, THE ASSESSEE HAS FI LED RETURN OF INCOME ON 27.09.2008 SHOWING INCOME OF RS. 1,41,80,610/-. ON VERIFICATION OF P&L ACCOUNT THE AO HAS NOTICED THAT ASSESSEE HAS SHOWN NET PROFIT OF RS. 1,38,84,078/- AS HIS INCOME FROM M/S. AGARWAL ENTER PRISE. THEREFORE, HE OBSERVED THAT ASSESSEE HAS SHOWN HIS INCOME AT LOWE R SIDE BY THE AMOUNT OF RS.1,23,15,922/-. IN HIS EXPLANATION THE ASSESSEE HAS EXPLAINED THAT AT THE TIME OF SURVEY HE HAD CONSIDERED AND ESTIMATED TOTAL NET PROFIT OF HIS SCHEME KANAKDHARA BUT BECAUSE OF PENDING CONSTRUCTION WORK HE COULD NOT DISCLOSE NET PROFIT AT RS. 2.62 CRORE. ACCORDINGLY HE HAS DISCL OSED THE NET PROFIT UP TO THE STAGE OF COMPLETED CONSTRUCTION OF THE PROJECT TILL 31.03.2008. THE AO WAS NOT AGREED WITH THE EXPLANATION OF THE ASSESSEE AND STA TED THAT THE SURVEY WAS CONDUCTED AFTER THE COMPLETION OF THE PREVIOUS YEAR AND AT THE TIME OF SURVEY I.T.A.NOS.1918&1642/AHD/2014 A.Y. 2008-09 PAGE NO 4 ACTION THE ASSESSEE WAS WELL AWARE OF THE STAGE OF COMPLETION OF CONSTRUCTION WORK OF KANAKDHARA SCHEME, THEREFORE, EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTABLE THAT CONSTRUCTION WORK WAS PENDING. THE REFORE AFTER TAKING INTO CONSIDERATION THE DECLARED PROFIT OF RS. 2.62 CRORE IN HIS STATEMENT THE AO HAS MADE ADDITION OF RS. 1,23,15,922/- TO THE TOTAL INC OME OF THE ASSESSEE. 4. AGGRIEVED ASSESSEE HAS FILED BEFORE THE LD. CIT( A). THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND R ESTRICTED THE ADDITION TO THE AMOUNT OF RS. 17,24,076/-. THE RELEVANT PART OF TH E DECISION CIT(A) IS REPRODUCED HEREUNDER: 5.3 DECISION: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION OF THE APPELLANT. A SURVEY OPERATION WAS CONDUCTED AT THE PREMISES OF THE APPELLANT WHEREIN DISCLOSURE OF APPROXIMATELY 2.62 CRORES WAS MADE, BY THE APPELLAN T. HOWEVER IN THE RETURN OF INCOME WHICH WAS FILED SUBSEQUENT TO THE SURVEY THE APPELLANT SHOWN A RETURN OF INCOME OF RS. 1.4180610/- CRORES. THE AO ACCORDINGLY CONSIDERED THE DIFFERENCE AS UNDISCLOSED INCOME OF THE APPELLANT. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT WHO HAD FURNISHED ADDITIONAL EVIDENCES AND HAS SOUGHT TO EXPLAIN THE REASONS FOR DIFFERENCES BETWEEN THE DISCLOSURE MADE DURING THE COURSE OF SU RVEY AND THAT FILED IN THE RETURN OF INCOME. THE ASSESSING OFFICER HAS ALS O VERIFIED THE CLAIM OF THE APPELLANT AND HAS GIVEN HIS REPORT. THE APPELLA NT HAS SUBMITTED THAT THE DIFFERENCE HAD ARISEN MAINLY BECAUSE OF THE REA SON THAT PROFIT FROM KADAMBARI-1 PROJECT WAS CONCEDED TWICE, THE ADMINIS TRATIVE EXPENSES OF ABOUT 62 LACS WERE NOT CONSIDERED AT THAT TIME. THE APPELLANT HAS SUBMITTED THAT THE AO HAD CONSIDERED INCOME TAKING INTO ACCOUNT PROJECT EXPENSES ONLY. THE GENERAL AND ADMINISTRATIVE EXPEN SES AS PER THE CHART GIVEN BY THE APPELLANT HAVE TO BE CONSIDERED TO ARR IVE AT THE NET PROFIT. THE ASSESSING OFFICER IN THE REMAND REPORT HAS SUBM ITTED THAT THE CLAIM OF THE APPELLANT REGARDING PROFIT FROM KADAMBARI-1 PRO JECT IS ACCEPTABLE. IT HAS BEEN INFORMED BY HIM THAT AFTER EXAMINING THE D OCUMENTS IT WAS APPARENT THAT THE PROFIT WAS TAKEN TWICE AND THE AS SESSEES CONTENTION WAS CORRECT. REGARDING THE EXPENSES WHICH WERE NOT CONSIDERED AT THE TIME OF THE SURVEY IT HAS BEEN INFORMED BY THE AO THAT THE CLAI M OF THE APPELLANT OF I.T.A.NOS.1918&1642/AHD/2014 A.Y. 2008-09 PAGE NO 5 RS.4388714/- THE EXPENSES PERTAINING TO AGARWAL ENT ERPRISES, WAS EXAMINED. HE IS INFORMED THAT THE OTHER ITEMS OF EX PENSES APPEAR TO BE NORMAL HOWEVER THE INTEREST PAYABLE ON SARAFI AND S ALARY EXPENSES HAVE INCREASED ABNORMALLY AS COMPARED TO LAST YEAR. IN RESPONSE TO THE COMMENT GIVEN BY THE AO THE APPE LLANT HAS SUBMITTED THAT THE TABLE ITSELF INDICATE THAT THERE IS NO JUM P IN SALARY EXPENSES. HOWEVER THE INCREASE IN INTEREST EXPENSES IS DUE TO THE FACT THAT THE APPELLANT BUSINESS HAS INCREASED CONSIDERABLY AND T HE INTEREST EXPENDITURE HAVE ACCORDINGLY INCREASED. IT HAS BEEN EXPLAINED BY THE APPELLANT THAT THE INTEREST EXPENDITURE IS DULY ACC OUNTED FOR IN THE BOOKS OF ACCOUNTS. THE LOANS TAKEN ARE ALSO DULY REFLECTED I N THE REGULAR BOOKS OF ACCOUNTS OF THE APPELLANT WHICH WERE AUDITED AND TH EREFORE, THE INCREASE IN INTEREST IS DULY REFLECTED IN BOOKS OF ACCOUNTS AND SUPPORTED BY DOCUMENTS. AFTER EXAMINING THE COMPARISON OF VARIOUS EXPENSES IT IS NOTED THAT THERE IS NO NOTICEABLE INCREASE IN SALARY EXPENSES AS COMPARED TO THE EARLIER YEAR. THE INCREASE IS THERE IN RESPECT OF THE INTEREST EXPENS ES WHICH HAVE BEEN EXPLAINED BY THE APPELLANT BY WAY OF COPIES OF ACCOUNTS. THE BOO KS OF ACCOUNTS OF THE APPELLANT WERE AUDITED AND THE INTEREST IS DULY SHO WN IN REFLECTED IN THE BOOKS OF ACCOUNTS. IN VIEW OF THESE THE EXPLANATION GIVEN BY THE APPELLANT IS ACCEPTABLE TO THIS EXTENT THAT THE INCREASING INTEREST EXPENDITUR E IS DULY SUPPORTED BY FACTS. HOWEVER, THERE ARE OTHER EXPENSES ALSO WHICH ARE MI SCELLANEOUS IN NATURE, SUCH AS CAB EXPENSES OF RS. 1.93 LAKHS, PRINTING AND STA TIONARY EXPENSES OF 1.64 LACS, SALARY EXPENSES OF 4.03 LACS, TELEPHONE EXPENSES OF 1.02 LACS, TRAVELLING EXPENSES OF 1.84 LACS ETC. FOR WHICH THERE IS NO AP PARENT EXPLANATION ABOUT THE INCREASE THEREIN. IT IS IMPORTANT TO NOTE THAT THE SURVEY WAS CONDUCTED AT THE PREMISES OF THE APPELLANT AFTER THE CLOSE OF FINANC IAL YEAR. THE APPELLANT, AS CLAIMED BY HIM, IS MAINTAINING BOOKS OF ACCOUNTS A REGULAR BASIS AND THEREFORE, DURING THE STATEMENT RECORDED AT THE TIME OF SURVEY HE SHOULD HAVE BEEN AWARE ABOUT ALL THE EXPENSES WHICH HAVE BEEN INCURRED BY HIM AND SHOULD HAVE INFORMED THE CORRECT PROFIT. THE FINDINGS GIVEN BY THE AO IS PARTLY CORRECT TO THIS EXTENT THAT THE APPELLANT HAS INFLATED CERTAIN EXPE NDITURE IN ORDER TO REDUCE THE TAXABLE INCOME. THE VIEWS OF THE AO HAS ALSO BEEN C ORROBORATED BY THE PRESENT AO IN THE REMAND REPORT, IN VIEW OF THESE FACTS AND CIRCUMSTANCES AND CONSIDERING THE FACT THAT INTEREST EXPENDITURE WAS DULY RECORDED IN BOOKS OF ACCOUNTS THE CLAIM OF THE APPELLANT IS NOT ACCEPTED TO THE EXTENT OF RS. 10 LACS. THE OTHER EXPENSES WHICH REMAIN TO BE CONSIDERED WA S EXPENDITURE SUCH AS DEPRECIATION, AUDIT FEE, SARAFI INTEREST AND LOS S ON SALE OF CAR AGGREGATING TO RS. 1786603/-, WHICH ACCORDING TO THE APPELLANT WAS NOT TAKING INTO CONSIDERATION. THE ASSESSING OFFICER AFTER EXAMININ G THE CONTENTION OF THE APPELLANT DURING THE STAGE OF REMAND PROCEEDINGS HA S COMMENTED THAT THE EXPENSES APPEAR TO BE REASONABLE EXCEPT THE INTERES T EXPENDITURE. IN RESPECT OF THE INTEREST EXPENDITURE AS DISCUSSED IN THE PRECED ING PARAGRAPH IT IS NOTED THAT THE INTEREST EXPENDITURE IS DULY ACCOUNTED FOR. ACC ORDINGLY THE CONTENTION OF THE APPELLANT DESERVES TO BE ACCEPTED. I.T.A.NOS.1918&1642/AHD/2014 A.Y. 2008-09 PAGE NO 6 THE NEXT ITEM WHICH IS ALSO IS TO BE TAKEN INTO AC COUNT FOR RECONCILING THE DIFFERENCE IS THE INCORRECT COMPUTATION OF GP FOR W ORKING OUT THE PROFIT. THE APPELLANT HAS SUBMITTED ITS CHART INDICATING THE DI FFERENCE IN GP TAKEN AT THE TIME OF SURVEY AND ACTUALLY SHOWN IN THE BOOKS OF ACCOUN TS. FOR THE SAKE OF CONVENIENCE AND CLARITY THE COMPARISON CHART GIVEN BY THE APPELLANT IS REPRODUCED HERE UNDER: SR. NO. PARTICULARS SURVEY ACTUAL DIFFERENCE 1 KADAMBARI - I 68,82,194 60,01,491 8,80,703 2 KANAKDHARA 1,12,50,033 1,03,99,484 8,50,549 3 KADAMB ARI - III 3,53,523 5,44,624 (1,91,101) 4 KADAMBARI - II 13,12,882 13,23,138 (10,356 ) 5 KADAMBARI - IV 7, 30,920 7,30,920 - 6 OTHER INCOME 13,00,000 11,05,819 1,94,181 TOTA L ] 7,24,076/ - THE AO HAS REPORTED IN THE REMAND REPORT THAT THE APPELLANT HAD NOT BEEN ABLE TO GIVE ANY SATISFACTORY EXPLANATION REGA RDING THE DIFFERENCE OF INCOME WORKED OUT AT THE TIME OF SURVEY AND THE ACTUAL SHO WN IN THE BOOKS OF ACCOUNTS. THE TOTAL DIFFERENCE SHOWN IN THE ABOVE CHART IS RS . 1724076/- THE AO HAS INFORMED THAT THOUGH THE APPELLANT HAD GIVEN THE WO RKING OF DEVIATION BUT COULD NOT GIVE ANY SUPPORTING EVIDENCE IN SUPPORT O F THIS CLAIM. THE APPELLANT IN REJOINDER TO THE REMAND REPORT HA S SUBMITTED THAT THE EVIDENCE RELATING TO SUPERVISION CHARGES, WERE NOW BEING PRODUCED IN THE FORM OF DECLARATION GIVEN BY TWO PARTIES WHO HA VE SUPERVISED THE SERVICES IN THE PROJECTS OF KANAKDHARA PROJECT. THE SUBMISSION OF THE APPELLANT IS NOT ACCEPTABLE FOR THE REASON THAT THE APPELLANT HAS NOT GIVEN DETAILED EXPLANATI ON BEFORE THE AO DURING THE COURSE OF REMAND PROCEEDINGS WHERE ONE MORE OPP ORTUNITY WAS PROVIDED TO HIM. THE AO HAS VERY LOGICALLY AND CLEA RLY ANALYSED EVERY EVIDENCE PROVIDED BY THE APPELLANT AND HAS EVEN AGR EED WITH THE CONTENTIONS OF THE APPELLANT WHEREVER THE INFORMATI ON GIVEN BY THE APPELLANT WAS CORRECT. IT IS TO BE NOTED THAT THE S URVEY WAS CONDUCTED AT THE PREMISES OF THE APPELLANT AFTER THE CLOSE OF TH E FINANCIAL YTSAR AND THE APPELLANT MUST HAVE BEEN AWARE ABOUT THE ALL THE DE TAILS OF THE GROSS PROFIT WORKING. THEREFORE, LOGICALLY THE GROSS PROF IT ACCEPTED BY THE I.T.A.NOS.1918&1642/AHD/2014 A.Y. 2008-09 PAGE NO 7 APPELLANT DURING THE COURSE OF SURVEY SHOULD BE ACC EPTED. FURTHER THE REASONS FOR DEVIATION SUCH AS PAYMENT OF SUPERVISIO N CHARGES AND WRONG DEBIT OF PURCHASE IS NOT SUPPORTED BY ANY DOCUMENTA RY EVIDENCE. THE SUPE;VISION CHARGES CLAIM APPEARS TO BE AN AFTERTHO UGHT AS THERE IS NO MENTION OF THE SAME DURING THE SURVEY. THOUGH THE A PPELLANT HAS GIVEN SOME CERTIFICATES IN REGARDING SUPERVISION CHARGES IN THE REJOINDER TO THE REMAND REPORT, THE SAME CANNOT BE NOW ACCEPTED AS I T IS A CLEAR AFTERTHOUGHT AS THE APPELLANT COULD HAVE PRODUCED T HE SAME BEFORE THE AO DURING THE COURSE CT ASSESSMENT PROCEEDINGS OR EVEN IN THE COURSE OF REMAND PROCEEDINGS. IN VIEW OF THESE FACTS AND IN A BSENCE OF ANY CLEAR EXPLANATION THE EXTENT THE SUBMISSION OF THE APPELL ANT REGARDING DIFFERENCE OF RS. 1724076/- IS NOT ACCEPTABLE. IN VIEW OF THE ABOVE DISCUSSION, THE ADDITION MADE BY THE AO IS RESTRICTED TO RS. 1724076/-. THE GROUND OF APPEAL IS ACCORDINGLY, PARTLY ALLOWED. 5. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE S IDES AND PERUSED THE MATERIAL ON RECORD. DURING THE COURSE OF ASSESSMEN T THE A.O. HAS OBSERVED THAT DURING THE COURSE OF SURVEY U/S. 133A ON 23.05.2008 THE ASSESSEE STATED TO HAVE PAID ADVANCE TAX OF RS. 7 LAKHS AND THE CURRENT YEA R PROFIT WAS ESTIMATED AT RS. 2.62 CRORE. HOWEVER, THE NET PROFIT WAS SHOWN AT R S. 1,38,84,078/- FOR THE YEAR UNDER CONSIDERATION WHICH THE AO HAS FOUND TO BE LO WER THAN THE INCOME DECLARED DURING THE SURVEY. THE AO HAS COMPARED T HE EXPENSES FOR THE CURRENT YEAR AND THE PRECEEDING YEAR AND OBSERVED THAT AT T HE TIME SURVEY, THE ASSESSEE HAD NO PLANNING IN MIND TO SHOW LOWER PROFIT. THER EFORE, THE DIFFERENCE OF RS. 1,23,15,922/- BETWEEN THE DECLARED INCOME OF RS. 2. 62 CRORE AT THE TIME OF SURVEY AND RS. 1,38,84,078/- AS PER P.S.L. WAS ADDE D THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE HAS SUBMITTED THAT DIFFEREN CE IN THE PROFIT FROM KADAMBARI-I PROJECT HAS ARISEN BECAUSE OF THE FOLLO WING REASONS:- (I) THE PROFIT OF RS.43,82,194/- OF KADAMBARI-1 PR OJECT AS PER PAGE 63 OF THE IMPOUNDED MATERIAL WAS TAKEN TWICE. IT WAS ALRE ADY TAKEN INTO CONSIDERATION AT RS.68,82,194 IN THE COMPUTATION MA DE AT THE TIME OF SURVEY. I.T.A.NOS.1918&1642/AHD/2014 A.Y. 2008-09 PAGE NO 8 (II) THE EXPENSES AGGREGATING OF RS.43,88,714 OF AG RAWAL ENTERPRISE, THE PROPRIETARY CONCERN OF THE APPELLANT WAS LEFT OUT T O BE CONSIDERED. THE SAID EXPENSES ARE EVIDENCED FROM PAGE 33 OF THE IMP OUNDED MATERIAL. (III) AT THE TIME OF SURVEY, THE EXPENDITURE SUCH A S DEPRECIATION, AUDIT FEE, SHARAFI INTEREST AND LOSS ON SALE OF CAR AGGREGATIN G TO RS. 17,86,803/- WAS NOT TAKEN INTO CONSIDERATION. IT WILL BE APPRECIATI NG THAT THE SAID EXPENSES ARE NORMAL IN THE COURSE IN APPELLANTS BUSINESS AN D ITS ENTRIES ARE PASSED AT THE TIME OF FINALIZATION OF THE ANNUAL ACCOUNTS SO THAT THE SAME WERE CONSIDERED IN THE TENTATIVE P & L A/C PREPARED AT T HE TIME OF SURVEY. (IV) THERE IS A DIFFERENCE IN THE INCOME AS CONSIDE RED AT THE TIME OF SURVEY AND THE ACTUAL INCOME OF VARIOUS PROJECTS AS PER TH E CHART GIVEN HEREWITH. THE APPELLANT HAS ALSO FILED RECONCILIATION SHOWING THE NATURE OF SUCH DIFFERENCE AND THE MAIN REASON IS THE G.P. TAKEN ON HIGHER SIDE AT THE TIME OF SURVEY AND MISTAKES IN RESPECT OF SOME OF THE EX PENSES SUCH AS PURCHASES, TELEPHONE ETC. (V) THE APPELLANT HAS ALSO ENCLOSED HEREWITH A COMP ARATIVE CHART SHOWING THE NATURE OF ITEMS WHEREIN SUCH DIFFERENCE ARISES. 6. THE AO HAS ALSO REPORTED IN THE REMAND PART AS P ER PAGE NO. 17 OF THE CIT(A) ORDER THAT THE CLAIM OF THE ASSESSEE REGARDI NG PROFIT FROM KADAMBARI-I PROJECT IS ACCEPTABLE. WITH THE ASSISTANCE OF THE LD. REPRESENTATIVE WE HAVE GONE THROUGH THE MATERIAL ON RECORD AND OBSERVED TH AT THERE WAS NO ABNORMAL INCREASED IN THE SALARY EXPENSES, HOWEVER, THERE WA S INCREASED IN THE INTEREST EXPENSES COMPARED TO THE PRECEDING YEAR. IT IS NOT ICED THAT THE INTEREST EXPENSES HAS BEEN INCREASED AS PER THE BUSINESS NEE D OF THE ASSESSEE AND THE SAME WAS DULY ACCOUNTED IN THE BOOK OF ACCOUNTS. T HE AO HAS NOT DISPROVED THE MATERIAL FACT THAT BORROWED MONEY ON WHICH INTE REST PAID WAS NOT USED FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE. REGAR DING DIFFERENCE OF RS. 17,24,076/- IN RESPECT OF GROSS PROFIT TAKEN AT THE TIME OF SURVEY AND ACTUALLY DECLARED IN THE BOOKS OF ACCOUNT IN RESPECT SIX CAT EGORIES STATED AT PAGE 19 OF THE ORDER OF THE CIT(A), WE HAVE NOTICED FROM THE M ATERIAL AVAILABLE ON RECORD THAT THE ASSESSEE HAD FAILED TO EXPLAIN THE SAME WI TH APPROPRIATE MATERIAL AND SUPPORTING EVIDENCES. THE ASSESSEE HAS ALSO FAILED TO SUBSTANTIATE HIS CLAIM OF PAYMENT OF SUPERVISION CHARGES AND OTHER DEVIATION BEFORE THE AO AND BEFORE I.T.A.NOS.1918&1642/AHD/2014 A.Y. 2008-09 PAGE NO 9 THE LD. CIT(A) AS REPORTED AT PAGE NO. 20 OF THE LD . CIT(A). IN THIS CONNECTION WE HAVE PERUSED THE MATERIAL ON RECORD A ND CONSIDER THAT THERE IS NO INFIRMITY IN THE DECISION OF LD. CIT(A). 7. ACCORDINGLY BOTH THE GROUND OF THE REVENUE AND A PPEAL OF THE ASSESSEE ARE DISMISSED. 8. IN THE RESULT BOTH APPEAL OF THE REVENUE AND ASS ESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27-03- 2019 SD/- SD/- (RAJPAL YADAV) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 27/03/2019 TANMAY TRUE COPY / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,