M/s. Heritage Projects, Amritsar. V. Dy. Commissioner of Income-tax,, Amritsar.

ITA 187/ASR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4430 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-08-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 11-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PADAM BAHL
• Keywords: Business income; Business expenditure; Rule of consistency
• Section: 143(3); 142(1); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 187(ASR)/2012 ASSESSMENT YEAR: 2007-08 PAN: AAEFH1777J M/S HERITAGE PROJECTS, VS. DEPUTY COMMISSI ONER OF M-1F, GREEN AVENUE, INCOME TAX, CIRCLE V, AMRITSAR AMRITSAR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. PADAM BAHL, CA RESPONDENT BY: SH. MAHAVIR SINGH, SR. DR DATE OF HEARING: 27.08.2013 DATE OF PRONOUNCEMENT: 11.09.2013 ORDER PER BENCH 1) THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST IMPUGNED ORDER DATED 21.03.2012 PASSED BY THE COMMISSIONER O F INCOME TAX (APPEALS), AMRITSAR, FOR THE ASSESSMENT YEAR 2007-0 8 ON THE FOLLOWING GROUNDS:- I. THAT WORTHY COMMISSIONER OF INCOME TAX (APPEALS), A MRITSAR, GROSSLY ERRED IN CONFIRMING THE ORDER PASSED BY DCI T, CIRCLE V, AMRITSAR IN TREATING THE AMOUNT SURRENDERED AT RS. 1,64,00,000/- AS 2 I.T.A. NO. 187(ASR)/2012 ASSESSMENT YEAR: 2007-08 INCOME FROM OTHER SOURCES INSTEAD OF BUSINESS I NCOME OFFERED BY THE ASSESSEE U/S 133A AND IN ITS RETURN OF INCOME. II. THAT WORTHY COMMISSIONER OF INCOME TAX (APPEALS), A MRITSAR GROSSLY ERRED IN CONFIRMING THE ORDER PASSED BY DCI T, CIRCLE V, AMRITSAR IN REJECTING THE DEDUCTION ON ACCOUNT OF B ONA FIDE BUSINESS EXPENDITURE CLAIMED BY THE ASSESSEE AT RS. 10,58,335/- III. THAT BOTH WORTHY COMMISSIONER OF INCOME TAX(APPEALS ) AND DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE V, AMRITS AR GROSSLY ERRED IN NOT FOLLOWING THE ASSESSMENT ORDER FOR A/Y EAR 2006-07 OF PREDECESSOR OFFICE WHERE THE INCOME SURRENDERED U/S 133A WAS TREATED AS BUSINESS INCOME. 2) THE FACTS RELATING TO THE ISSUE IN DISPUTE ARE T HAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 31.03.2008 DECLARING INCOME OF RS. 1,53,41,660/- WHICH WAS PROCESSED UNDER SECTION 143 (1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON 26.03.2009. T HE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS AND N OTICE UNDER SECTION 143(3) WAS ISSUED ON 23.09.2008 AND WAS DULY SERVED UPON THE ASSESSEE ON 25.09.2008. THE ASSESSING OFFICER ALSO ISSUED NO TICE TO THE ASSESSEE UNDER SECTION 142(1) OF THE ACT ALONG WITH QUESTION NAIRE ON 27.10.2009. IN RESPONSE TO THE SAME, THE AUTHORIZED REPRESENTAT IVE OF THE ASSESSEE APPEARED AND FILED REQUISITE INFORMATION AS REQUIRE D BY THE ASSESSING OFFICER. IN THE CASE OF ASSESSEE, SURVEY UNDER SECT ION 133A OF THE ACT WAS CARRIED OUT ON 13.10.2006 BY THE INVESTIGATING WING AND IT WAS 3 I.T.A. NO. 187(ASR)/2012 ASSESSMENT YEAR: 2007-08 FOUND, AFTER COMING WITH THE INDISCRIMINATING DOCUM ENTS AND INFORMATION, THAT THE ASSESSEE FIRM HAD MADE HUGE C ASH PAYMENTS OF RS. 1.65 CRORES AND RS. 1.64 CRORES PERTAINING TO THE A SSESSMENT YEARS 2006- 07 AND 2007-08 RESPECTIVELY, AGGREGATING TO RS. 3.2 9 CRORES TO M/S SUKHBIR BUILDERS AND COLONIZERS(P) LTD., BATALA, A S ADVANCE AGAINST PURCHASE OF PROPERTY. AND AFTER EXAMINING OF BOOKS ACCOUNTS ON TEST CHECK BASIS AND PERUSING THE REQUISITE INFORMATION FURNISHED, THE ASSESSING OFFICER OBSERVED THAT IN SPITE OF THE FAC T THAT NO BUSINESS ACTIVITY WAS CARRIED OUT DURING THE PREVIOUS YEAR, THE ASSESSEE FIRM HAS CLAIMED HUGE EXPENSES WHICH BEING NOT ATTRIBUTABLE TO THE ASSESSEE- FIRMS BUSINESS ACTIVITIES, CANNOT BE ALLOWED UNDER SECTION 36 OF THE ACT AS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE ASSE SSEE-FIRMS BUSINESS. IT IS A MATTER OF RECORD THAT DURING THE COURSE OF SUR VEY ON 13.10.2006, STATEMENTS ON OATH OF BOTH THE PARTNERS, NAMELY, SH . KAPIL MEHRA AND RAJESH BHALLA WERE RECORDED BY THE INVESTIGATING WI NG, AMRITSAR, AND IN REPLY TO QUERY NO. 32 AND 26 TO THE EFFECT HAVE THE Y PAID OR DECLARED INCOME WHICH HAVE BEEN USED FOR THE ABOVE PAYMENTS OF RS. 3.29 CRORES IN THE RETURN INCOME, THEY REPLIED THAT THESE INCOM ES HAVE NOT BEEN DISCLOSED IN THE RETURN OF INCOME AND IN ORDER TO E XPLAIN THE DISCREPANCY, 4 I.T.A. NO. 187(ASR)/2012 ASSESSMENT YEAR: 2007-08 THEY MADE DISCLOSURE OF RS. 3.29 CRORES (RS. 1.65 C RORES IN FINANCIAL YEAR 2005-06 AND RS. 1.64 CRORES IN FINANCIAL YEAR 2006- 07). FINALLY, THE ASSESSING OFFICER HELD THAT THE EXPENSES CLAIMED AR E REQUIRED TO BE CAPITALIZED AND CANNOT BE DEDUCTED FROM THE AMOUNT SURRENDERED FROM UNDISCLOSED SOURCES AND HE DISALLOWED THE LOSS OF R S. 10,58,335/- AND THE SUM OF RS. 1,64,00,000/- SURRENDERED FROM UNDISCLOS ED SOURCES IS TREATED AS INCOME FROM OTHER SOURCES VIDE ORDER DATED 16.12 .2009 PASSED UNDER SECTION 143(3) OF THE ACT. 3) AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE FILED THE APPEAL BEFORE THE LEARNED FIRST APPELLATE AUTHORITY, WHO V IDE IMPUGNED ORDER DATED 21.03.2012, DISMISSED THE APPEAL OF THE ASSES SEE AND UPHELD THE ORDER OF THE ASSESSING OFFICER. 4) AT THE TIME OF HEARING, LEARNED AUTHORIZED REPRE SENTATIVE FILED A PAPER BOOK CONTAINING PAGES 1 TO 13 IN WHICH HE H AS ATTACHED COPY OF BALANCE SHEET AND PROFIT & LOSS A/C ETC. FOR A/YEAR 2006-07; COPY OF ASSTT. ORDER FOR ASSTT. YEAR 2006-07; COPY OF BALAN CE SHEET AND PROFIT & LOSS A/C ETC. FOR A/YEAR 2007-08; AND COPY OF WRITT EN SUBMISSION BEFORE THE ASSESSING OFFICER. HE HAS ALSO FILED WRI TTEN SUBMISSION BEFORE US IN WHICH HE HAS MAINLY STATED THAT DURING THE SU RVEY UNDER SECTION 5 I.T.A. NO. 187(ASR)/2012 ASSESSMENT YEAR: 2007-08 133A OF THE ACT CONDUCTED BY THE INVESTIGATING WING , AMRITSAR, ON 13.10.2006, ASSESSEE SURRENDERED INCOME OF RS. 329 LACS (AN AMOUNT OF RS. 165 LACS FOR THE ASSESSMENT YEAR 2006-07 AND RS . 164 LACS FOR THE ASSESSMENT YEAR 2007-08, TOTALING RS. 3.29 LACS) FO R BOTH THE ASSESSMENT YEARS. HE ALSO DREW OUR ATTENTION TOWARDS THE STATE MENTS OF PARTNERS, NAMELY, SH. KAPIL MEHRA AND SH. RAJESH BHALLA, WHI CH WERE ATTACHED WITH THE PAPER BOOK. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS ACCEPTED THE RETURNED INCOME OF THE ASSESSEE AT RS. 1,63,42,701/-, THEREBY ACCEPTING THE FACT THAT THE INCOME SURRENDERED AT R S. 1,65,00,000/- WAS BUSINESS INCOME OF THE ASSESSEE AND THE EXPENSES INCURRED AT RS. 2,02,298/- FOR ASSESSMENT YEAR 2006-07 HAVE BEEN AL LOWED AGAINST THE SAME. HE FURTHER STATED THAT THE FACTS OF THE ASSES SEES CASE FOR THE ASSESSMENT YEAR 2007-08 ARE IDENTICAL WITH THE FACT S OF ASSESSMENT YEAR 2006-07 BUT THE SURRENDER OF INCOME OF THE ASSESSEE HAS NOT BEEN ACCEPTED AS BUSINESS INCOME BY THE AUTHORITY BELOW FOR THE ASSESSMENT YEAR IN DISPUTE. HE ARGUED THAT THE REVENUE AUTHOR ITY COULD NOT HAVE GIVEN A DIFFERENT TREATMENT TO THE INCOME SURRENDER ED BY THE ASSESSEE FOR ASSESSMENT YEAR 2007-08 AND THEY COMMITTED ERROR IN TREATING THE SURRENDERED INCOME OF RS. 1,64,00,000/- FOR ASSESSM ENT YEAR 2007-08 AS 6 I.T.A. NO. 187(ASR)/2012 ASSESSMENT YEAR: 2007-08 INCOME FROM OTHER SOURCES AND IN REFUSING TO ADJU ST THE EXPENSES ON THE GROUND THAT NO BUSINESS HAD COMMENCED. FINALLY, HE STATED THAT IN VIEW OF PRINCIPLE OF CONSISTENCY, THE REVENUE AUTHO RITY OUGHT TO HAVE TREATED THE INCOME SURRENDERED BY THE ASSESSEE-FIRM AS BUSINESS INCOME AS DONE IN THE PREVIOUS ASSESSMENT YEAR I.E . A.Y. 2006-07. IN SUPPORT OF HIS CONTENTION, HE HAS CITED THE FOLLOWI NG JUDGMENTS: I. RADHASOAMI SATSANG VS. CIT; REPORTED IN (1992) 193 ITR 321 (S.C.) II. BERGER PAINTS INDIA LTD. VS. CIT; REPORTED IN (2004 ) 266 ITR 99 (S.C.) III. DIRECTOR OF INCOME TAX (EXEMPTION) VS. LOVELY BAL S HIKSHA PARISHAD; REPORTED IN (2004) 266 ITR 349 (DELHI). IV. CIT VS. VIKAS CHEMI GUM INDIA; REPORTED IN (2005) 2 76 ITR 32 (P&H) V. I.T.A.T. AMRITSAR BENCHS DECISION IN CASE OF M/S S MAA ENTERPRISES PVT. LTD. VS. ACIT, CIRCLE-1, JAMMU, PA SSED IN I.T.A. NO. 333(ASR)/2010 FOR A.Y. 2006-07. 5) ON THE CONTRARY, LEARNED DR RELIED UPON THE IMPU GNED ORDER PASSED BY LEARNED FIRST APPELLATE AUTHORITY. 6) WE HAVE HEARD BOTH THE PARTIES AND ALSO PERUSED THE RELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE DOCUMENTA RY EVIDENCE FILED BY 7 I.T.A. NO. 187(ASR)/2012 ASSESSMENT YEAR: 2007-08 THE LEARNED COUNSEL FOR THE ASSESSEE AND THE CASE LAWS RELIED UPON BY HIM AS MENTIONED ABOVE. WE ARE OF THE CONSIDERED VIEW T HAT IT IS A MATTER OF RECORD THAT IN THE CASE OF THE ASSESSEE A SURVEY UN DER SECTION 133 OF THE ACT WAS CARRIED OUT ON 13.10.2006 AND DURING THE SU RVEY ASSESSEE SURRENDERED INCOME OF RS. 329 LACS (RS. 165 LACS FO R A.Y. 2006-07 AND RS. 164 LACS FOR A.Y. 2007-08 I.E. FOR THE YEAR UND ER CONSIDERATION) FOR BOTH ASSESSMENT YEARS. AS PER RECORD, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ON 26.12.2008 UNDER SECTION 143(3) O F THE ACT FOR THE ASSESSMENT YEAR 2006-07 I.E. PREVIOUS YEAR AND HE A CCEPTED THE RETURNED INCOME OF THE ASSESSEE AT RS. 1,63,42,701/- BY ACCE PTING THE INCOME SURRENDERED AT RS. 1,65,00,000/- AS BUSINESS INCOME OF THE ASSESSEE AND ALLOWED THE EXPENSES AS CLAIMED BY THE ASSESSEE FOR ASSESSMENT YEAR 2006-07. BUT WE FAILED TO UNDERSTAND WHY THE REVENU E AUTHORITY HAS NOT ACCEPTED RS. 164 LACS SURRENDERED BY THE ASSESSEE F OR THE ASSESSMENT YEAR IN DISPUTE I.E. 2007-08 AND NOT GIVEN THE SIMILAR T REATMENT TO THE ASSESSMENT YEAR IN DISPUTE AS GIVEN IN THE PREVIOUS YEAR I.E. ASSESSMENT YEAR 2006-07 TO MAINTAIN RULE OF CONSISTENCIES. THE REVENUE AUTHORITIES OUGHT TO HAVE TREATED THE INCOME SURRENDERED BY THE ASSESSEE FOR THE ASSESSMENT YEAR IN DISPUTE AS BUSINESS INCOME, AS TREATED BY THEM IN 8 I.T.A. NO. 187(ASR)/2012 ASSESSMENT YEAR: 2007-08 THE PREVIOUS YEAR I.E. A.Y. 2006-07, IN THE LIGHT O F THE DECISIONS RENDERED BY THE HON'BLE SUPREME COURT OF INDIA AS WELL AS JU RISDICTIONAL HIGH I.E. RADHASOAMI SATSANG VS. CIT; BERGER PAINTS INDIA LTD . VS. CIT; DIRECTOR OF INCOME TAX (EXEMPTION) VS. LOVELY BAL S HIKSHA PARISHAD; CIT VS. VIKAS CHEMI GUM INDIA (SUPRA) . THIS BENCH HAS ALSO FOLLOWED THE RULE OF CONSISTENCY IN MANY CASES, ONE OF THE C ASES IS OF I.T.A.T. AMRITSAR BENCH PASSED IN I.T.A. NO. 333(ASR)/2010 F OR A.Y. 2006-07 IN THE CASE OF M/S SMAA ENTERPRISES PVT. LTD. VS. ASSI STANT COMMISSIONER OF INCOME TAX, CIRCLE-1, JAMMU, DECIDED ON 11.04.20 12. 7) KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES EXPL AINED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE IMPUGNED ORD ER HAS BEEN PASSED AGAINST THE PROVISIONS OF LAW AND CONTRARY TO THE F ACTS ON THE FILE. REVENUE AUTHORITIES HAVE ALSO NOT FOLLOWED THE RULE OF CONSISTENCY BY NOT TREATING THE INCOME SURRENDERED, AS BUSINESS I NCOME AS THEY HAD DONE IN THE PREVIOUS YEAR I.E. A.Y. 2006-07. 8) KEEPING IN VIEW THE AFORESAID DISCUSSIONS, WE CA NCEL THE IMPUGNED ORDER DATED 21.03.2012 PASSED BY LEARNED C IT(A), AMRITSAR, BY ACCEPTING THE APPEAL FILED BY THE ASSESSEE WITH A DIRECTION TO THE ASSESSING OFFICER TO TREAT THE INCOME OF RS. 1,64,0 0,000/- SURRENDERED BY 9 I.T.A. NO. 187(ASR)/2012 ASSESSMENT YEAR: 2007-08 THE ASSESSEE AS BUSINESS INCOME AND ALLOWED THE E XPENSES AS CLAIMED BY THE ASSESSEE AS PER PREVIOUS ASSESSMENT YEAR I.E . A.Y. 2006-07. 9) IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH SEPTEMBER, 2013 SD/./- SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH SEPTEMBER, 2013 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S HERITAGE PROJECTS, M-1F, GREEN A VENUE, AMRITSAR 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE V, AM RITSAR 3. THE CIT(A), AMRITSAR 4. THE CIT, AMRITSAR 5. THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.