Shri Kamlesh Jadavjibhai Rami, Ahmedabad V. The Income Tax Officer, Ward-9(2), Ahmedabad

ITA 165/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8563 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 13-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Additional evidence; Cost of acquisition; Onus to prove

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.165/AHD/2015 ( / ASSESSMENT YEAR : 2008-09) KAMLESH JADAVAJIBHAI RAMI, PROP. SHARDHA CONSTRUCTION, 60M SHIVAM SOCIETY, NR. VRUNDAVAN SOCEITY, BHADUATNAGAR, MANINAGAR AHMEDABAD - 380008 / VS. THE INCOME TAX OFFICER WARD 9(2) AHMEDABAD. ./ ./ PAN/GIR NO. : ACVPR 1480 L ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : --NONE-- / RESPONDENT BY : SHRI ALOK KUMAR, SR. D.R. / DATE OF HEARING 25/07/2017 !'# / DATE OF PRONOUNCEMENT 15/09/2017 $% / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-XVI, AHMEDABAD, DATED 8 TH SEP, 2014, IN THE MATTER OF ASSESSMENT UNDER SECTION 143 (3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMEN T YEAR (AY) 2008-09, ON THE FOLLOWING GROUNDS: I. THE LEARNED CIT (A) ERRED IN LAW AND ON THE FACTS O F THE CASE IN CONFIRMING THE ORDER PASSED U/S.143(3) OF THE ACT B Y THE LD. A.O. WHO HAS COMPUTED THE INCOME AT RS.16,10,940/- AS AG AINST INCOME DECLARED BY THE ASSESSEE AT RS.1,06,058/-. ITA NO. 165/AHD /2015 KAMLESH JADAVAJIBHAI RAMI VS. ITO ASST.YEAR 2008-09 - 2 - II. THE LEARNED CIT (A) HAS ERRED IN MAKING ADDITION OF RS.10,11,387/- AS UNACCOUNTED CAPITAL GAIN. YOUR AP PELLANT HAS SOLD THE HOUSE PROPERTY AT RS.11,25,000/- AND SHOWN CAPITAL GAIN OF RS.15000/-, HOWEVER THE LEARNED CIT(A) HAS CONSI DERED ONLY LAND PURCHASE COST OF RS.80,000/- AND IGNORED THE C OST OF CONSTRUCTION OF HOUSE AMOUNTING TO RS.10,30,000/- A ND THEREBY CONFIRMED THE ADDITION OF THE LD.A.O. WITHOUT APPRE CIATING THE FACT THAT THERE CAN BE NO CAPITAL GAIN ON SALE OF T HE HOUSE WITHOUT TAKING INTO CONSIDERATION THE COST OF ACQUISITION/C ONSTRUCTION OF THE PROPERTY. III. THE LEARNED CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING INTEREST CHARGED U/S.234 B AND 234 C OF THE ACT. IV. THE APPELLANT CRAVES FOR LEAVE TO ADD, AMEND OR ALTER ALL OR ANY OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURS E OF HEARING OF THIS APPEAL. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- IN THIS CASE, ASSESSEE IS ENGAGED IN THE BUSINESS OF BUILDING CONSTRUCTION. DURING THE YEAR THE ASSESSEE HAS SHOW N CONSTRUCTION INCOME, SHOP RENT, PARTY PLOT COMMISSION INCOME AND SHARE FROM PARTNERSHIP FIRM. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS THE ASSESSEE WAS REQUIRED TO PRODUCE HIS BOOKS OF ACCOU NTS ALONG WITH BILLS AND VOUCHERS AND SAME WERE VERIFIED ON TEST CHECK B ASIS AND OFFERED EXPLANATION ON SEVERAL ISSUES AND A SHOW-CAUSE NOTI CE WAS ISSUED TO THE ASSESSEE WHICH IS REPRODUCED AS UNDER: 'PLEASE REFER TO THE ABOVE AND THE ONGOING ASSESSME NT PROCEEDINGS IN YOUR CASE BEFORE THE UNDERSIGNED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS YOUR AUTHORIZED REPRESENTATIVE WAS REQU IRED TO FURNISH CERTAIN DETAILS ESSENTIAL FOR COMPLETION OF ASSESSM ENT PROCEEDINGS IN ITA NO. 165/AHD /2015 KAMLESH JADAVAJIBHAI RAMI VS. ITO ASST.YEAR 2008-09 - 3 - YOUR CASE. HOWEVER THE SAME HAVE NOT BEEN FURNISHED TILL DATE. YOU ARE REQUIRED TO FURNISH THE FOLLOWING DETAILS IN CONTIN UATION WITH THE DETAILS SUBMITTED SO FAR IN THE PROCEEDINGS. I. PLEASE EXPLAIN SOURCE OF CAPITAL INTRODUCTION OF RS .32,500/- ALONG WITH SUPPORTING DOCUMENTARY EVIDENCE FAILING WHICH THE SAME SHALL BE TREATED AS YOUR UNACCOUNTED INVESTMENT AND ADDED TO YOUR TOTAL INCOME. II. PLEASE EXPLAIN SOURCE OF UNSECURED LOANS OF RS.4,50 ,000/- STATED TO BE RECEIVED FROM VARIOUS PERSONS WITH SUPPORTING DO CUMENTARY EVIDENCES FAILING WHICH THE SAME SHALL BE TREATED A S UNEXPLAINED CASH CREDITS AND ADDED TO YOUR TOTAL INCOME. III. YOU HAVE SHOWN JOB WORK RECEIPTS OF RS.7,09,981/- F ROM WHICH YOU HAVE DECLARED NET PROFIT OF RS.45,800/- ONLY AFTER DEBITING EXPENSES UNDER SEVERAL HEADS. PLEASE EXPLAIN AS TO WHY YOUR TOTAL INCOME SHOULD NOT BE COMPUTED. IV. YOU HAVE SHOWN SALE OF PROPERTY @ RS.11,25,000/- FR OM WHICH YOU HAVE SHOWN NET PROFIT OF RS.15,000/- PLEASE EXPLAIN AS TO HOW THE FACE VALUE OF THE SAID PROPERTY WAS COMPUTED AT R S.11,00,000/- WHEN AS PER THE PURCHASE DEED DATED 22/01/2003 THE COST OF THE PROPERTY WAS JUST RS.80,000/-. PLEASE FURNISH SUPPO RTING DOCUMENTARY EVIDENCE TO EXPLAIN THE WORKING OF NET PROFIT ON SALE OF LAND FAILING WHICH CAPITAL GAIN BE COMPUTED WITH RS .80,000/- AS COST OF ACQUISITION. V. PLEASE PRODUCE YOUR BOOKS OF ACCOUNTS ALONG WITH AL L THE BILLS AND VOUCHER FOR VERIFICATION. VI. PLEASE FURNISH COPIES OF BANK ACCOUNT STATEMENT FOR ALL THE BANK ACCOUNTS HELD BY YOU INDIVIDUALLY OR JOINTLY.' THE ASSESSEE DID NOT REPLY TO THE SHOW CAUSE NOTICE AND THEREFORE, THE ASSESSMENT WAS FINALIZED ON THE BASIS OF INFORMATIO N AVAILABLE ON RECORDS. UNACCOUNTED INVESTMENT PERUSAL OF THE CAPITAL ACCOUNT, IT WAS NOTICED THAT THE ASSESSEE HAS INTRODUCED CAPITAL OF RS.32,500/-, THE ASSESSEE WAS REQUIRED TO EXPLAIN THE SOURCE OF CAPITAL INTRODUCTION ALONGWITH SUPPOR TING DOCUMENTARY EVIDENCES. VIDE SHOW-CAUSE NOTICE WAS ISSUED TO THE ASSESSEE BUT HE ITA NO. 165/AHD /2015 KAMLESH JADAVAJIBHAI RAMI VS. ITO ASST.YEAR 2008-09 - 4 - FAILED TO RESPOND. THEREFORE, THE SAME IS TREATED A S UNACCOUNTED INVESTMENT AND ADDED BACK TO THE TOTAL INCOME OF TH E ASSESSEE. UNEXPLAINED CASH CREDIT PERUSAL OF THE BALANCE SHEET, THE ASSESSEE HAD BORR OWED UNSECURED LOANS FROM VARIOUS PARTIES AMOUNTING TO RS.4,50,000 /- AS UNDER: SR. NO. NAME OF THE PERSON AMOUNT (RS.) 1. PARIK DILIPBHAI 15,000 2. RAMI KISHORBHAI 15,000 3. AMIN BIPINBHAI 15,000 4. PATEL NARESHBHAI 15,000 5. AMIN VIPULBHAI 18,000 6. LAD ANILBHAI 18,000 7. RITABEN RASHIKBHAI RAMI 2,00,000 8. PATEL POPATBHAI 18,000 9. GANDHI NIKUNJBHAI 18,000 10. SHAH RASMIKABEN 15,000 11. JAIN BABUBHAI 15,000 12. PRAJAPATI JAYANTIBHAI 16,000 13. DOSI SUMANBHAI 8,000 14. PRAJAPATI NIRUBEN 16,000 15. BAROLIA BIPINBHAI 16,000 16. VAGADIYA MANSUKHBHAI 16,000 17. VAGADIYA BIPINBHAI K. 16,000 TOTAL 4,50,000 THE ASSESSEE WAS REQUIRED TO EXPLAIN THE SOURCE OF UNSECURED LOANS RECEIVED FROM VARIOUS PARTIES ALONGWITH SUPPORTING DOCUMENTARY EVIDENCES OF THE PERSONS FROM WHOM LOANS WERE RECEI VED LIKE CONFIRMATIONS, PROOF OF IDENTITY AND CREDITWORTHINE SS. HOWEVER, THE ASSESSEE DID NOT FURNISH ANY DOCUMENTARY EVIDENCES. NO CONFIRMATIONS WERE FILED FROM ANY OF THE PERSONS FROM WHOM UNSECU RED LOANS WERE ITA NO. 165/AHD /2015 KAMLESH JADAVAJIBHAI RAMI VS. ITO ASST.YEAR 2008-09 - 5 - RECEIVED. THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF UNSECURED LOANS, CONFIRMATIONS, CREDITWORTHINESS, THE ONUS TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE DEPOSITORS/LENDERS WAS UPON THE ASSESSEE AND THE ASSESSEE FAILED TO PROVE THE SAME WITH PROPER DOCUM ENTARY EVIDENCES. UNDER THE CIRCUMSTANCES, THE UNDERSIGNED IS CONSTRA INED TO TREAT THE AMOUNT OF RS.4,50,000/- UNEXPLAINED CONTRACT INCOME PERUSAL OF THE TRADING ACCOUNT, IT WAS NOTICED THAT THE ASSESSEE HAD DECLARED NET PROFIT OF RS.45,800/- ON TOTAL JOB WOR K RECEIPTS OF RS.7,09,981/-, AFTER DEBITING EXPENSES UNDER SEVERA L HEADS THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO WHY TOTAL INCOME SHOU LD NOT BE COMPUTED U/S.44AD OF THE ACT @8% GROSS RECEIPTS. THE ASSESSE E FAILED TO EXPLAIN THE SAME AND FAILED TO FURNISH DOCUMENTARY EVIDENCE S AS SUCH BILLS/VOUCHERS ETC., THEREFORE, NET PROFIT IS COMPU TED U/S.44AD OF THE ACT @8% ON GROSS RECEIPTS OF RS.7,09,981/- I.E. RS.56,7 98/- THEREFORE, RS.10,998/- (RS.56,798 RS.45,800/-) IS TREATED AS UNEXPLAINED INCOME AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. UNACCOUNTED CAPITAL GAIN PERUSAL OF THE NET PROFIT, IT WAS NOTICED THAT THE ASSESSEE HAD SHOWN SALE OF PROPERTY AT RS.11,25,000/- FROM WHICH NET P ROFIT WAS DECLARED AT RS.15,000/- AFTER TAKING COST ACQUISITION (FACE VAL UE @RS.11,00,000/-). THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO HOW THE FACE VALUE OF THE SAID ITA NO. 165/AHD /2015 KAMLESH JADAVAJIBHAI RAMI VS. ITO ASST.YEAR 2008-09 - 6 - PROPERTY WAS COMPUTED AT RS.11,00,000/-, HE WAS ALS O ASKED TO FURNISH DOCUMENTARY EVIDENCES TO EXPLAIN THE WORKING OF NET PROFIT ON SALE OF LAND FAILING WHICH CAPITAL GAIN WILL BE COMPUTED WI TH RS.80,000/- AS REFLECTED IN A PURCHASED DEED FURNISHED BY THE ASSE SSEE COST OF ACQUISITION. THE ASSESSEE FAILED TO EXPLAIN THE NET PROFIT ON SALE OF LAND AND FAILED TO FURNISH ANY DOCUMENTARY EVIDENCES OF DETERMINE NET PROFIT AT RS.15,000/-, THEREFORE, CAPITAL GAIN ON SALE OF LAND IS COMPUTED AS UNDER: TOTAL SALE CONSIDERATION RS.11,25,000/- LESS : INDEXED COST OF ACQUISITION RS. 98,61 3/- (COST OF ACQUISITION OF THE PROPERTY AS PER PURCHASE DEED DTD.22/01/2003 [RS.80,000/- 551/- ]/447) UNEXPLAINED CAPITAL GAIN RS. 10,26,387/- LESS : PROFIT DECLARED IN P&L ACCOUNT RS. 1 5,000/- TOTAL UNACCOUNTED CAPITAL GAIN RS.10,11,387/- AFTER DISCUSSION AND FROM THE DATA MADE AVAILABLE T HE TOTAL INCOME OF THE ASSESSEE IS DETERMINED AS UNDER: TOTAL INCOME AS PER RETURN DATED 22/09/2008 RS. 1,06,058/- ADD: AS DISCUSSED ABOVE (I) UNACCOUNTED INVESTMENT RS. 32,500/- (II) UNEXPLAINED CASH CREDIT RS. 4,50,000/- (III) UNEXPLAINED CONTRACT INCOME RS. 10,998/- (IV) UNEXPLAINED CAPITAL GAIN RS.10,11,387/- RS. 15,04,885/- ASSESSED TOTAL INCOME RS.16,10,943/- I.E. RS.16,10,940/- 3. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LEARNED CIT(A) WHO PARTLY ALLOWED THE AP PEAL OF THE ASSESSEE. ITA NO. 165/AHD /2015 KAMLESH JADAVAJIBHAI RAMI VS. ITO ASST.YEAR 2008-09 - 7 - 4. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. IT IS SUBMITTED BY THE ASSESSEE THAT HE HAD SPENT RS.1 0,30,000/- ON CONSTRUCTION OF THE HOUSE AND THE COST OF THE CONST RUCTION SHOULD HAVE BEEN ADDED TO THE COST OF ACQUISITION. IN HIS REMAN D REPORT OF THE AO HAS CONSIDERED ALL THE EVIDENCES FILED BY THE APPELLANT AS ADDITIONAL EVIDENCE BUT ASSESSEE HAS CONTROVERTER THE SAME. 5. THEREFORE, IN THE INTEREST OF THE JUSTICE WE REM IT THIS MATTER BACK TO THE FILE OF THE AO WHO WILL VERIFY THE COST OF CONS TRUCTION AND THEREAFTER WILL MAKE THE ADDITION. ASSESSEE IS ALSO DIRECTED T O SUBMIT ALL THE DETAILS PERTAINING THE COST OF CONSTRUCTION OF HOUSE AND AL SO SUBMIT DETAILS PERTAINING TO ADDITION OF RS.16,10,940/-. 6. SO FAR CONFIRMING INTEREST CHARGED U/S.234B AND 234C OF THE ACT IS CONCERNED AND SAME IS CONSEQUENTIAL AND DOES NOT RE QUIRE ANY ADJUDICATION. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 15/09/2017 SD/- SD/- IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; (PRADIP KUMAR KEDIA) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 15/09/2017 PRITI YADAV, SR.PS ITA NO. 165/AHD /2015 KAMLESH JADAVAJIBHAI RAMI VS. ITO ASST.YEAR 2008-09 - 8 - !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-XVI , AHMEDABAD. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY 1. DATE OF DICTATION 29/08/2017 (DICTATION-PAD 2 P AGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 04/09/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER