Shri Surendra Kumar Tripathi, Indore V. ITO3(3), Indore

ITA 186/Ind/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5994 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 26-06-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R.K. KHANDELWAL
• Keywords: Depreciation; Set aside; Bogus
• Section: 143(3); 133(6); 143(2)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HONBLE RAJPAL YADAV, VICE PRESIDENT AND SHRI MANISH BORAD, ACCOUNTANT MEMBER VIRTUAL HEARING ITA NO.186/IND/2020 ASSESSMENT YEAR: 2015-16 SURENDRA KUMAR TRIPATHI INDORE PAN:AARPT4096N : APPELLANT V/S ITO 3(3) INDORE : RESPONDENT APPELLANT BY SHRI R.K. KHANDELWAL, AR REVENUE BY SHRI HARSHIT BARI, SR. DR DATE OF HEARING 05.08.2021 DATE OF PRONOUNCEMENT 07.09.2021 O R D E R PER MANISH BORAD, A.M THE ABOVE CAPTIONED APPEAL FILED AT THE INSTANCE O F THE ASSESSEE FOR ASSESSMENT YEAR 2015-16 IS DIRECTED AG AINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS) (I N SHORT LD. CIT],-1 INDORE DATED 11.02.2020 WHICH IS ARISING O UT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(IN SHORT THE ACT) DATED 18.12.2017 FRAMED BY ITO-3(3), INDORE. SHRI SURENDRA KUMAR TRIPATHI ITA NO.186/IND/2020 2 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL IN ITANO.186/IND/2020: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE DEMAND UNDER SECTION 143(3) OF THE ACT. THE APPELLANT PRAYS THAT THE SAID DEMAND TO BE DELETED. 2. WITHOUT PREJUDICE THE ABOVE, ON THE FACTS OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.13,45,000/- ON ACCOUNT OF DISALLOWANCE U/S 41(1) OF THE ACT AS CESSATION OF TRADING LIABILITY. WHILE PROPERTY A GAINST WHICH ADDITION IS MADE, IS NOT A STOCK-IN-TRADE BUT IS A FIXED ASSET. THE APPELLANT PRAYS THAT THE SAID ADDITION TO BE DELETE D. 3. WITHOUT PREJUDICE THE ABOVE, ON THE FACTS OF THE CASE AND IN LAW THE LD. CIT(A) HAS PASSED THE ASSESSMENT ORDER WITHOUT GIVING INTIMATION REGARDING NON-RECEIPT OF GROUNDS OF APPEAL ALONG WITH APPEAL AND EVEN FAILED TO CALL FOR GROUNDS OF APPEAL AT THE TIME OF HEARING. THE APPELLANT PRAYS THAT THE SAID DEMAND TO BE DELETED. 4. THE APPELLANT CRAVES LEAVE TO ADD, TO LATER, AME ND, MODIFY SUBSTITUTE, DELETE AND OR RESCIND ALL OR ANY OF THE GROUNDS OF APPELLANT ON OR BEFORE FINAL HEARING, IT NECESSARY SO ARISES . 2. BRIEF FACTS AS CULLED OUT FROM THE RECORDS ARE T HAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN REAL ESTATE BUSINESS IN COME OF RS. 5,95,150/- DECLARED IN THE E-RETURN OF INCOME FILED ON 24.09.2015 PERTAINING TO A.Y. 2015-16. CASE SELECTED FOR THROU GH CASS FOR LIMITED SCRUTINY TO VERIFY THE LARGE INCREASE IN SU NDRY CREDITORS WITH RESPECT TO TURNOVER AS COMPARED TO PRECEDING Y EAR. NOTICES U/S 143(2) & 141(1) OF THE ACT DULY SERVED UPON THE ASSESSEE. LD. SHRI SURENDRA KUMAR TRIPATHI ITA NO.186/IND/2020 3 AO OBSERVED THAT UNDER THE HEAD SUNDRY CREDITORS SU M OF RS.13,45,000/- WAS PAYABLE TO PRIDE CONSTRUCTION. I NFORMATION CALLED BY LD. AO BY ISSUING NOTICE U/S 133(6) OF TH E ACT WAS NOT REPLIED BY SHRI PRAMOD KUMAR JAIN PROPRIETOR OF PRI DE CONSTRUCTION. LD. AO WANTED TO TREAT IT AS A BOGUS ENTRY. ASSESSEE SUBMITTED THAT HE PURCHASED PLOT FROM PRID E CONSTRUCTION OF RS.48,81,100/- DURING F.Y. 2011-12 AND IT IS AN OPENING BALANCE AND A GENUINE CREDITOR. LD. AO WAS NOT SATISFIED AND HE TREATED IT AS AN INCOME U/S 41(1) OF THE ACT AS DEEMED CESSATION OF TRADING LIABILITY AND ADDED IT TO THE RETURNED INCOME OF THE ASSESSEE. INCOME ASSESSED AT RS.19,40,150/-. 3. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD. CIT(A) BUT FAILED TO SUCCEED. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. LD. COUNSEL FOR THE ASSESSEE MADE DETAILED SUBMISSIONS REFERRIN G TO THE WRITTEN SUBMISSION AND RELEVANT DOCUMENTS PLACED A T PAGES 1 TO 144 OF THE PAPER BOOK ON 16 TH JULY,2021. 5. PER CONTRA LD. DR VEHEMENTLY ARGUED SUPPORTING T HE ORDERS OF BOTH LOWER AUTHORITIES. 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. ASSESSEES SOLE GRIEVANCE IS AGAI NST THE FINDING SHRI SURENDRA KUMAR TRIPATHI ITA NO.186/IND/2020 4 OF LD. CIT(A) CONFIRMING THE ADDITION MADE BY THE L D. AO U/S 41(1) OF THE ACT FOR CESSATION OF TRADING LIABILITY OF RS.13,45,000/- 7. WE NOTE THAT SUNDRY CREDITOR OF RS.13,45,000/- W AS APPEARING AS AN AMOUNT PAYABLE TO PRIDE CONSTRUCTION. LD. AO COULD NOT RECEIVE THE INFORMATION FROM PRIDE CONSTRUCTION IN REPLY TO NOTICE U/S 133(6) OF THE ACT. LD. AO AND TREATED IT AS BOG US ENTRY LIABLE TO TAX U/S 41(1) OF THE ACT. 8. WE FURTHER OBSERVE THAT THE ASSESSEE HAD PURCHAS ED AN OFFICE PREMISE FROM PRIDE CONSTRUCTION SITUATED AT G-1, PR IDE MERIDIAN, 2-A, SHRI NAGAR NX, INDORE FOR RS.47,81,000/- ON 16 .03.2012. COPY OF REGISTRY IS PLACED AT PAGES 78 TO 99. AT PA GE 6 OF THE REGISTRY (PAPER BOOK PAGE 78) WE FIND THAT THE DETA IL OF PURCHASE CONSIDERATION OF RS.44.35 LACS IS MENTIONED. THIS D ETAIL CONSIST OF 4(FOUR) PAYMENTS INCLUDING ONE OF RS. 13,45,000/- G IVEN BY CHEQUE NO.245003 DATED 28.03.2012. THE REMAINING 3 (THREE) PAYMENTS WERE ENCASHED BY SELLER BUT THE CHEQUE OF RS.13,45,000/- REMAINED UN-PRESENTED. 9. WE FURTHER OBSERVE THAT THE ALLEGED PAYMENT OF R S.13,45,000/- IS PART OF THE PURCHASE CONSIDERATION UTILIZED FOR PURCHASE OF OFFICE WHICH IS SHOWN AS A FIXED ASSETS IN THE BALA NCE SHEET. SHRI SURENDRA KUMAR TRIPATHI ITA NO.186/IND/2020 5 BOOKS OF ACCOUNTS ARE AUDITED. IN SCHEDULE-V ATTACH ED TO BALANCE SHEET DATED 31.03.2015 IN THE FIXED ASSET CHARGED A T SERIAL NO.1 OFFICE AT PRIDE MERIDIAN PURCHASED AT RS.47,81,000/ - IS APPEARING. NO DEPRECIATION HAS BEEN CLAIMED. THIS F ACT SHOWS THAT THE ASSESSEE HAS NOT CLAIMED RS.13,45,000/- AS ANY TRADING EXPENDITURE. IT IS ALSO FACT THAT THE LIABILITY TO PAY THE M/S PRIDE CONSTRUCTION IS STILL LIVE AS IT IS PART OF THE REG ISTERED SALE DEED. 10. LD. AO HAS APPLIED THE PROVISION OF SECTION 41( 1) OF THE ACT FOR MAKING THE ADDITION IN THE HANDS OF ASSESSEE. PROVI SION OF SECTION 41(1) COMES INTO OPERATION WHEREIN ALLOWANCE OR DED UCTION HAS BEEN MADE IN THE ASSESSMENT FOR ANY YEAR IN RESPECT OF LOSS, EXPENDITURE OR TRADING LIABILITY INCURRED BY THE AS SESSEE. BUT ON PERUSAL OF THE FACTS OF THE INSTANT CASE WE FIND TH AT THE ALLEGED AMOUNT IS NEITHER TRADING LIABILITY NOR HAS BEEN CL AIMED AS EXPENDITURE IN ANY OF THE YEAR AND NO RELIEF FROM T AX HAS BEEN CLAIMED. THEREFORE, UNDER NO CIRCUMSTANCES THE PROV ISIONS OF SECTION 41(1) OF THE ACT ARE APPLICABLE ON THE TRAN SACTION IN QUESTION. 11. WE, THEREFORE, UNDER THE GIVEN FACTS AND CIRCUM STANCES OF THE CASE, ARE OF THE CONSIDERED VIEW THAT THE ALLEGED P AYMENT IS MERELY A LIABILITY AGAINST PURCHASE OF FIXED ASSETS AND CANNOT BE SHRI SURENDRA KUMAR TRIPATHI ITA NO.186/IND/2020 6 HELD TO BE A TRADING LIABILITY AND THEREFORE, BOTH THE LOWER AUTHORITIES ERRED IN APPLYING THE PROVISIONS OF SEC TION 41(1) OF THE ACT, ON THE ALLEGED SUM. NO ADDITION IS THUS CALLED FOR U/S 41(1) OF THE ACT. WE, ACCORDINGLY SET ASIDE THE FINDING O F LD. CIT(A) AND DELETE THE ADDITION OF RS.13,45,000/- AND ALLOW GRO UND NO.2 RAISED ON MERIT BY THE ASSESSEE. 12. GROUND NO.1 & 4 ARE GENERAL IN NATURE WHICH NEE DS NO ADJUDICATION AND GROUND NO.3 IS RAISED ALTERNATIVE TO GROUND NO.2 AND THE SAME BECOMES INFRUCTOUS AS WE HAVE ALREADY ALLOWED GROUND NO.2 RAISED BY THE ASSESSEE. 13. IN THE RESULT, ASSESSEES APPEAL IN ITANO.186/IND/2020 IS ALLOWED. THE ORDER PRONOUNCED AS PER RULE 34 OF ITAT RULES, 1963 ON 07.09.2021. SD/- SD/- (RAJPAL YADAV) (M ANISH BORAD) VICE PRESIDENT ACCOUNTANT MEMBER / DATED : 07.09.2021 PATEL/PS COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE