Sarvottam Construction PVt. LTd, V. ITO Ward-7 (3),

ITA 2005/DEL/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65730 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 27-08-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 22-05-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: R P MALL S
• Keywords: Business income
• Section: 234B; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.2005/DEL/2008 ASSESSMENT YEAR : 2003-04 M/S SARVOTTAM CONSTRUCTION ITO, PVT. LTD. 31/15, EAST PATEL NAGAR, CIRCLE-7 (3), NEW DELHI. V. NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AAGCS AAGCS AAGCS AAGCS- -- -3124 3124 3124 3124- -- -G GG G APPELLANT BY : SHRI SALIL AGARWAL & SHRI R.P. MALL, ADVOCATES. RESPONDENT BY : SHRI SHAILESH GUPTA, ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD CIT(A) DATED 4.3.2008. THE GROUNDS RAISED BY THE ASSESSEE ARE A S UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) X, NEW DELHI HAS ERRED IN LAW AND ON FACTS IN UPHOLDI NG THE DISALLOWANCE OF ` .24,48,344/- ON ACCOUNT OF EXPENDITURE INCURRED ON RENOVATION OF PROPERTY NO.193-JOR BAGH, NEW DELH I. THE ACTION OF THE LD CIT(A)-X IS ILLEGAL AND BASED ON SURMISES AND CONJECTURES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD CIT(A)-X NEW DELHI HAS ERRED IN LAW ON FACTS IN CONFI RMING THE ITA NO2005/DEL/08 2 DISALLOWANCE OF ` .50,000/- ON ACCOUNT OF EXPENDITURE INCURRED UNDER THE HEAD FESTIVAL EXPENSES IGNORING THE FACT THA T EXPENDITURE HAD BEEN INCURRED FOR THE PURPOSE OF ASS ESSEES BUSINESS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A)- X, NEW DELHI HAS ERRED AND ON FACTS IN CONFIRMING THE ADDITION ON ACCOUNT OF INTEREST CHARGED U/S 234A, 234B & 234C OF INCOME TAX ACT, 1961 WHEN THE ASSESSEE HAD NOT COMMITTED SUCH DEFAULT. THE ACTION OF THE LD CIT(A)-X IS ILLEGAL A ND BAD IN LAW. 4. THAT NO REASONABLE OPPORTUNITY OF HEARING WAS GRANTED TO THE ASSESSEE. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, MODIFY OR ALTER GROUNDS OF APPEAL BEFORE THE APPEAL IS DECIDED. 2. THE BRIEF FACTS OF THE CASE ARE THAT AS PER ASSESSMENT ORDER, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF REAL ESTATE AND IT FI LED ITS RETURN OF INCOME ON DATED 21.11.2003 DECLARING AN INCOME O F ` .86,966/-. THE CASE WAS SELECTED FOR SCRUTINY. DURING ASSESSMENT PROCEEDIN GS, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD SOLD PROPERTY AT 1 93-JOR BAGH, NEW DELHI ON 25.3.2003 AND IT HAD DECLARED TH E PROFIT EARNED FROM IT AS BUSINESS INCOME. THE ASSESSING OFFICER ALSO NOT ED THAT ASSESSEE HAD PURCHASED THE SAID PROPERTY FOR ITS DEVELOPME NT AND PURCHASE AND FURTHER SALE AND FOR THIS PURPOSE IT HAD ENTERED INTO AN AGREEMENT WITH M/S CORN HILLS PROMOTERS PVT. LTD. WHE REIN IT WAS AGREED THAT M/S CORN HILLS PROMOTERS PVT. LTD. WILL R ECONSTRUCT THE ENTIRE BASEMENT FIRST, SECOND FLOOR AND WILL INCUR EX PENSES FROM ITS OWN SOURCES. IN RETURN THE ASSESSEE WAS TO RETAIN BASEMENT AND GROUND FLOOR WHEREAS THE FIRST & SECOND FLOORS WERE TO BE TAK EN OVER BY THE DEVELOPERS. THE ASSESSING OFFICER FURTHER NOTED THAT ASS ESSEE HAD ENTERED INTO AN AGREEMENT TO SELL WITH MRS. KAVITA AG ARWAL FOR THE SALE ITA NO2005/DEL/08 3 OF BASEMENT AND GROUND FLOOR FOR A TOTAL CONSIDERATIO N OF ` .80 LAKHS VIDE AGREEMENT DATED 16 TH AUGUST, 2002 AND ASSESSEE HAD CLAIMED TO HAVE RECEIVED ` .25 LAKHS FROM SAID SMT. KAVITA AGARWAL BUT SUBSEQUENTLY THE TRANSACTION COULD NOT MATERIALIZE AND THE AMOUNT WAS SHOWN TO BE REFUNDED TO SMT. KAVITA AGARWAL AND F INALLY THE PROPERTY WAS SOLD TO ONE MR. AMIT SIBAL FOR A TOTAL C ONSIDERATION OF ` .1,01,00,000/- VIDE SALE DEED EXECUTED ON 25.3.2003. THE ASSESSING OFFICER FURTHER OBSERVED THAT ASSESSEE HAD DEBITED A SUM OF ` .52,60,758/- ON CONSTRUCTION AND IMPROVEMENT OF BASEM ENT AND GROUND FLOOR AS PER THE ALLEGED REQUIREMENT OF BUYE R SHRI AMIT SIBAL. THE ASSESSEE CLAIMED THAT AT THE DIRECTION OF BUYER SHR I AMIT SIBAL THE ASSESSEE HAD TO MAKE CERTAIN RENOVATIONS/MODIFICATIONS IN THE EXISTING STRUCTURE AND THEREFORE HAD TO SPEND THE ABOVE AMOUNT . THE ASSESSING OFFICER, HOWEVER, DID NOT AGREE WITH THE CONTENTION S OF ASSESSEE AND DISALLOWED THE WHOLE AMOUNT DUE TO FOLLOWING REASONS:- A. THAT THE APPELLANT HAD NOT PRODUCED BOOKS OF ACCOUN TS AND ORIGINAL BILLS, VOUCHERS FOR VERIFICATION. B. THAT AS PER AGREEMENT BETWEEN THE APPELLANT AND M/S CORN HILLS PROMOTERS PVT. LTD. THE TOTAL COST OF CONSTR UCTION OF THE BUILDING WAS TO BE BORNE BY M/S CORN HILLS PROM OTERS PVT. LTD. WITH ITS OWN FUNDS AND APPELLANT WAS NOT REQUIRED TO INCUR ANY EXPENDITURE. C. THAT THE APPELLANT HAD NOT BROUGHT ON RECORD ANY EV IDENCE TO JUSTIFY ANY EXPENDITURE ON CONSTRUCTION AND IT FUR NISHED ONLY PHOTO COPIES OF BILLS AND BUILDING ACCOUNT. D. THAT THE APPELLANT HAD NOT PROVIDED ANY CERTIFICATE OF CLEARANCE FROM THE CIVIC BODY LIKE MCD & NDMC TO SHO W THE PERIOD OF INCURRING OF THESE EXPENDITURE AS CLAIM ED ON RECONSTRUCTION /RENOVATION OF THE BUILDING. ITA NO2005/DEL/08 4 THE ASSESSING OFFICER ALSO DISALLOWED AN AMOUNT OF ` .50,000/- OOUT OF FESTIVAL EXPENSES ON THE BASIS THAT NO FESTIVAL EXPENSES WE RE CLAIMED IN THE IMMEDIATE PRECEDING YEAR AGAINST CLAIM OF ` . 2 LAKHS DURING THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER FURTHER NOTED THAT AMOUNT OF CLAIM WAS ON HIGHER SIDE KEEPING IN VIEW TH E FACT THAT ASSESSEE HAD ONLY ONE PROPERTY AND THAT WAS SOLD TO ONLY ONE PARTY. 3. DISSATISFIED WITH THIS ORDER, THE ASSESSEE FILED APPEAL BEFORE LD CIT(A) AND SUBMITTED AS UNDER:- 1. THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING DISALLOWANCE OF ` .52,60,758/- OF EXPENDITURE INCURRED BY THE APPELLANT ON CONSTRUCTION AND IMPROVEMENT OF BASEMENT AND GROUND FLOOR AS PER THE REQUIREMENT OF THE PURCHASER SHRI AMIT SIBAL. 2. THAT THE ACCOUNTS OF THE ASSESSEE WERE DULY AUDITED AND ALL THE VOUCHERS WERE VERIFIED BY THE AUDITORS AND AUDIT REPO RT IN FORM, NO.3CD WAS ALSO ENCLOSED WITH THE RETURN AND THE AUDIT ORS HAD NOT QUALIFIED THE BALANCE SHEET & P&L ACCOUNT. 3. THAT COPY OF MOU WITH M/S CORN HILLS PROMOTERS PVT. L TD. AND COPY OF SALE DEED WERE DULY PRODUCED BEFORE ASSESSING OF FICER ALONG WITH REGULAR BOOKS OF ACCOUNTS BUT NO DEFECT WA S POINTED OUT BY THE ASSESSING OFFICER. 4. THE LD CIT(A) FORWARDED THE ABOVE SUBMISSIONS TO ASSE SSING OFFICER IN THE LIGHT OF FACT THAT APPELLANT HAD CON TENDED THAT ORIGINAL BOOKS OF ACCOUNTS AND VOUCHERS WERE PRODUCED BEFORE A SSESSING OFFICER DURING ASSESSMENT PROCEEDINGS WHEREAS ASSESSING OF FICER HAD MADE A FINDING THAT BOOKS OF ACCOUNTS WERE NOT PRODUC ED BEFORE HIM. THE ASSESSING OFFICER WAS ASKED TO SUBMIT HIS REPORT AFTE R VERIFICATION ITA NO2005/DEL/08 5 OF GENUINENESS OF THE EXPENSES CLAIMED AND AFTER MAKING NECESSARY ENQUIRIES FROM THE RELEVANT PARTIES. THE ASSESSING OFFICE R IN HIS REMAND REPORT DATED 29.8.2007 POINTED OUT THAT MOST OF THE BILLS SUBMITTED BY THE APPELLANT WERE ORIGINALLY IN THE NA ME OF M/S NAHAR THEATRE PVT. LTD, NEW DELHI AND NAME OF THE ASSESSEE WA S OVER-WRITTEN ON THE BILLS. HE FURTHER REPORTED THAT IN ORDER TO V ERIFY THE GENUINENESS OF THE BILLS, SUMMONS U/S 131 WERE ISSUED TO SOME OF THE P ARTIES. THE ASSESSING OFFICER FURTHER REPORTED THAT TWO OUT OF FOUR PARTIES HAD STATED THAT THEY DO NOT HAVE ANY DEALINGS WITH THE ASSE SSEE WHEREAS TWO OF THE PARTIES SUBMITTED THAT THEY HAD DEALING WI TH NAHAR THEATRE PVT. LTD. THE ASSESSING OFFICER FURTHER REPORTED THAT O N THE COPY OF THE BILLS, THERE WERE STAMP OF SECURITY STAFF OF M/S NAHA R THEATRE PVT. LTD. WHO HAD PUT THEIR SIGNATURES ALONG WITH DATES OF RECEI PT OF MATERIAL WHICH CLEARLY PROVED THAT GOODS WERE SOLD TO NAHAR TH EATRE PVT. LTD. AND WERE DELIVERED AT NAHAR THEATRE PVT. LTD. THE A SSESSING OFFICER FURTHER POINTED OUT IN RESPECT OF COPIES OF BILLS SUBMI TTED BY THE ASSESSEE ABOUT ONE DEBIT NOTE OF ` .13,65,000/- FROM M/S DELUXE PROPERTIES LTD. AND STATED THAT NO DETAIL OF MATERIAL SUPPLIED HAS BEEN GIVEN ON IT AND IT MENTIONS ONLY DEBIT NOTE ON ACCOU NT OF MATERIAL SUPPLIED BETWEEN 1.4.2002 TO 31.3.2003. THEREFORE, O N THE BASIS OF ABOVE FACTS, THE ASSESSING OFFICER IN HIS REMAND REPORT SUBMITTED THAT ADDITION MADE IN THE ASSESSMENT ORDER DESERVES TO BE CONF IRMED. COPY OF THE REMAND REPORT WAS GIVEN TO THE ASSESSEE. 5. THE ASSESSEE IN HIS REJOINDER SUBMITTED THAT EXPENDITU RE WAS INCURRED ON THE BASIS OF CONDITION IMPOSED BY THE INT ENDING PURCHASER AND BUILDING MATERIAL WAS PURCHASED IRRESPECTIVE OF TH E FACT THAT WHETHER BILLS WERE RAISED IN THE NAME OF APPELLANT OR IN THE NAME OF ITS GROUP COMPANIES. MOREOVER, IT SUBMITTED THAT PAYMENTS WERE MADE FROM THE BANK ACCOUNTS OF THE APPELLANT. THE LD AR F URTHER SUBMITTED ITA NO2005/DEL/08 6 BEFORE LD CIT(A) THAT MATERIALS WERE NOT UTILIZED BY M/S NAHAR THEATRE PVT. LTD. AND NO DEDUCTION WAS CLAIMED BY THEM AND H ENCE THERE WAS NO DOUBLE BENEFITS OF THESE BILLS/VOUCHERS/INVOICES. TH E LD AR ALSO SUBMITTED THAT REQUEST FOR CROSS VERIFICATION OF THE SUP PLIER WAS MADE TO ASSESSING OFFICER BUT HE DID NOT EXAMINE THE SUPPLIER S. THE LD AR ALSO FILED AN AFFIDAVIT OF THE DIRECTOR IN RESPECT OF EXPENDITURE INCURRED AND ALSO FILED A LETTER FROM SHRI AMIT SIBAL SHOWING A REQUEST BY HIM TO CONDUCT RENOVATION AND IMPROVEMENT IN THE BUILDING. IN RESPECT OF THE NAME OF NAHAR THEATRE APPEARING ON THE BILLS, THE LD AR SUBMITTED THAT ONE OF THE MAIN PROJECT WAS CARRIED OUT BY M/S NAHAR THEATRE FOR A CINEMA-CUM-COMMERCIAL COMPLEX AND THE CONTRACTORS W HO WERE SUPPLYING THE MATERIAL TO THE APPELLANT FOR THE RECONSTRUCTION/IMPROVEMENT OF BUILDING AT JOR BAGH, NEW DELHI AND AT NAHAR THEATRE WERE GENERALLY COMMON AND MAJOR REQUI REMENT OF MATERIAL WAS AT NAHAR THEATRE. THE SUPPLIER HAD SUP PLIED THE MATERIAL AS PER REQUIREMENTS OF VARIOUS SITES. THE LD AR FURTHER SUBMITTED THAT BY MISTAKE BILLS WERE RAISED BY SUPPLIERS IN THE NAME OF NAHAR THEATRE WHICH WERE LATER ON CORRECTED AND ACCORDINGLY THE P AYMENTS WERE MADE BY APPELLANT COMPANY FOR THE MATERIAL SUPPLIED FOR RECONSTRUCTION/IMPROVEMENT OF THE BUILDING AT JOR BA GH. WITH REGARD TO MATERIAL PURCHASED FROM M/S DELUXE PROPERTIES LTD., IT WAS SUBMITTED THAT MATERIAL WAS INITIALLY PURCHASED BY THEM WHICH COULD NOT BE UTILIZED BY THEM ON ACCOUNT OF DELAY IN THEIR PROJE CT AND THE SAME WAS SOLD TO APPELLANT AND APPELLANT HAD MADE THE PAYMENT BY ACCOUNT PAYEE CHEQUE. THE LD CIT(A) AFTER GOING THROUGH THE SUBMISSIONS MADE BY LD AR OF THE ASSESSEE SEGREGATED THE AMOUNT OF B ILLS INTO TWO CATEGORIES I.E. ONE WHEREIN ORIGINALLY THE NAME OF N AHAR THEATRE WAS WRITTEN AND THE ASSESSEES NAME WAS OVER-WRITTEN AND THE ONE WHEREIN THE NAME OF THE APPELLANT WAS WRITTEN. ON THAT BASIS, HE HELD THAT AN AMOUNT OF ` .23,58,344/- WHERE THE NAME OF THE ASSESSEE WAS OVER ITA NO2005/DEL/08 7 WRITTEN DESERVES TO BE UPHELD AS DISALLOWANCE AND FOR T HE REMAINING AMOUNT OF ` .25,62,414/- THE LD CIT(A) DELETED THE ADDITION. S IMILARLY, OUT OF TOTAL LABOUR CHARGES OF ` .3,40,000/- THE LD CIT(A) ALLOWED THE EXPENDITURE OF ` .2 LAKHS AND UPHELD THE ADDITION WITH RESPECT TO REMAINING AMOUNT ` .1,40,000/-. IN NUTSHELL, THE LD CIT(A) UPHELD THE TOTAL DISALLOWANCE TO THE EXTENT OF ` .24,98,344/-. THE REVENUE IN ITS APPEAL HAS TAKEN THIS AMOUNT AS ` .24,48,344/- WHICH SEEMS TO BE A TYPING ERROR. 6. IN RESPECT OF SECOND DISALLOWANCE, IT WAS SUBMITTED B EFORE THE LD CIT(A) THAT FESTIVAL EXPENSES WERE ACTUALLY INCURRED F OR THE PURPOSE OF BUSINESS BUT LD CIT(A) DID NOT ACCEPT THE CONTENTIONS O F THE ASSESSEE AND CONFIRMED THE ADDITION OF ` .50,000/-. 7. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THIS TRIB UNAL. 8. AT THE OUTSET, THE LD AR ARGUED THAT OUT OF TOTAL CLAIM OF EXPENSES AMOUNTING TO ` .52,60,758/-, AN AMOUNT OF ` .25,62,414/- WAS ACCEPTED BY LD CIT(A) AND DEPARTMENT HAS NOT FILED ANY APPEAL. THEREFORE, THE PART DELETION BY LD CIT(A) HAD BECOM E FINAL. IN THE LIGHT OF ABOVE, HE ARGUED THAT ONCE THE LD CIT(A) HAD ACC EPTED THE PART OF THE EXPENDITURE AND NOTHING ADVERSE WAS BROUGHT OUT I N RESPECT OF REMAINING EXPENDITURE EXCEPT CUTTING ON BILLS, THE W HOLE OF IT SHOULD HAVE BEEN ALLOWED AS LD CIT(A) HAD FUNDAMENTALLY AG REED TO THE CONTENTION OF ASSESSEE THAT EXPENDITURE WAS INCURRED. HE FURTHER ARGUED THAT THOUGH INVOICES OF MATERIAL WERE ORIGINA LLY IN THE NAME OF NAHAR THEATRE PVT. LTD. BUT MATERIAL WAS NOT USED BY THEM AND WAS TRANSFERRED TO THE SITE OF THE ASSESSEE AND PAYMENTS FOR THE MATERIAL WERE MADE FROM THE BANK ACCOUNT OF THE ASSESSEE. AS REG ARDS LETTERS FROM SUPPLIERS INDICATING THAT THEY HAD NO DEALING W ITH THE ASSESSEE HE ITA NO2005/DEL/08 8 ARGUED THAT ASSESSING OFFICER SHOULD HAVE EXAMINED THEM. OUR ATTENTION WAS INVITED TO PAGE 117 OF PAPER BOOK WHER E A LETTER FROM ASSESSEE TO ASSESSING OFFICER WAS PLACED IN WHICH THE ASSESSEE HAD REQUESTED FOR EXAMINATION OF SUPPLIERS. RELIANCE WAS P LACED ON THE JUDGMENT IN THE CASE OF COMMISSIONER OF INCOME-TAX V. REAL TIME MARKETING P. LTD. [2008] 306 ITR 35 (DEL). ON THE BASIS OF ABOVE JUDGMENT, THE LD AR ARGUED THAT BEFORE ARRIVING AT ANY CONCLUSION, ASSESSING OFFICER SHOULD HAVE EXAMINED THE SUPPLIERS. 9. ON THE SECOND GROUND OF APPEAL, THE LD AR ARGUED THAT ASSESSING OFFICER HAD MADE THE ADDITION ARBITRARILY AND WITHOUT ANY OBSERVATION. RELIANCE WAS PLACED IN THE CASE OF STATE OF ORISSA. V. MAHARAJA SHRI B. P. SINGH DEO 76 ITR 690. 10. ON THE OTHER HAND, LD DR SUBMITTED THAT BOOKS OF ACCOUNTS WERE REJECTED. NO EVIDENCE OF COMPLETION CERTIFICATE WAS FURNISHED AND ASSESSEE HAD FAILED TO SHOW AS TO FOR WHAT PURPOSES THE EXP ENSES WERE INCURRED. HE FURTHER ARGUED THAT GOODS WERE RECEIVED AT NAHAR THEATRE AND THERE WAS NO PROOF OF TRANSFERRING THE MATERIAL T O JOR BAGH. WITH REGARD TO ARGUMENT OF LD AR THAT THE EXPENDITURE WA S NOT CLAIMED BY NAHAR THEATRE. THE LD DR SUBMITTED THAT EACH ASSESSEE I S A SEPARATE ASSESSEE AND THERE IS NO PROOF THAT NAHAR THEATRE HAS NOT CLAIMED SUCH EXPENSES. HE FURTHER ARGUED THAT CEILING WORK IS G ENERALLY DONE AT THE COMPLETION STAGE WHEREAS IN THE PRESENT CASE AFTER INVOICES OF CEILING EXPENSES THERE WERE INVOICES OF RORI AND BRICK S ETC. HE FURTHER ARGUED THAT ALL CONSTRUCTION WORK WAS DONE BY DEVELOP ER AS PER AGREEMENT WITH THEM AND ASSESSEE WAS NOT ABLE TO DEMONSTR ATE AS TO WHAT PARTICULAR WORK IT HAD DONE. WITH REGARD TO PA YMENT BY THE ASSESSEE FROM ITS BANK ACCOUNT, THE LD DR SUBMITTED THAT MERE PRODUCTION OF VOUCHERS AND PAYMENT THROUGH CHEQUES AL ONE CANOT ITA NO2005/DEL/08 9 PROVE THE GENUINENESS OF THE EXPENSES. RELIANCE WAS PLAC ED ON THE FOLLOWING JUDGMENTS:- 1. COMMISSIONER OF INCOME TAX. V. CHANDRAVILAS HOT EL. 164 ITR 102. 2. LAKSHMIRATAN COTTON MILLS COMPANY LIMITED. V. COMMISSIONER OF INCOME TAX, UTTAR PRADESH 73 ITR 634. 3. CIT V. MODI STONE LTD. (20-3 TAXMAN 123 ). 11. IN HIS REJOINDER, THE LD AR ARGUED THAT ORDER OF ASSESSING OFFICER MERGES WITH THE ORDER OF LD CIT(A) AND LD CIT(A) HAD OVER RULED THE ASSESSING OFFICERS ORDER. HE ARGUED THAT LD CIT(A) HAD GIVEN PART RELIEF AND DEPARTMENT HAD NOT FILED ANY APPEAL AGAI NST THAT RELIEF. WITH RESPECT TO TRANSFER OF MATERIAL THE LD AR ARGUED THA T ASSESSEE WAS NOT DIRECTED TO PRODUCE PROOF FOR TRANSFER OF MATERIAL F ROM SITE NAHAR THEATRE TO JOR BAGH. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND HAS GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE FACTS OF THE CASE, WE HAVE NOTED THAT EARLIER THE DEAL WAS FIXED WITH SMT. KAVITA AGARWAL VIDE AGREEMENT DATED 16.8.2002 FOR A CONSIDERATION O F ` .80 LAKHS AND SUM OF ` .25 LAKHS WAS SAID TO HAVE BEEN RECEIVED WHICH WAS ALLE GED TO HAVE BEEN REFUNDED ON 24.10.2002 DUE TO THE FACT TH AT THE DEAL COULD NOT BE MATERIALIZED. THEN AGAIN THE SAME PROPERTY WAS SOLD TO SHRI AMIT SIBAL FOR A SUM OF ` .1,01,00,000/- BUT THE ASSESSEE HAS CLAIMED TO HAVE INCURRED AN EXPENDITURE OF ` .52,60,758/- TO REMOVE CERTAIN DEFECTS IN THE CONSTRUCTION AND THEREFORE IN FACT THE BUILDING WAS SOLD FOR A NET CONSIDERATION OF ` .48.31 LAKHS AS AGAINST THE EARLIER AGREEMENT WITH SMT. KAVITA AGARWAL FOR ` .80 LAKHS. IT IS NOT UNDERSTOOD AS TO WHAT PRUDENCE THE ASSESSEE HAD USED AT THE FIRST PLA CE BY REFUNDING THE AMOUNT OF ` .25 LAKHS RECEIVED FROM SMT. KAVITA AGARWAL WITHOUT FORFEITING WHICH ALWAYS REMAINS AS THE STANDAR D CONDITION IN ITA NO2005/DEL/08 10 ANY AGREEMENT TO SELL AND THEN BY AGREEING TO SELL T HE SAME TO ANOTHER BUYER AFTER A PERIOD OF ABOUT FIVE MONTHS AT A MUCH LOWER NET CONSIDERATION AFTER CONSIDERING THE ALLEGED CLAIM OF EXPENSES. THIS SITUATION DOES NOT ARISE IN REALITY AND IS AGAINST THE NORMAL HUMAN BEHAVIOR. 13. THE LD AR HAS NOT DEMONSTRATED ANY PARTICULAR DEF ECT IN THE PROPERTY WHICH MAY HAVE PROMPTED THE ASSESSEE TO SELL IT AT SUCH A DISCOUNTED PRICE AS COMPARED TO ORIGINAL AGREEMENT T O SELL WITH SMT. KAVITA AGARWAL. MOREOVER, DESPITE VARIOUS REQUESTS BY T HE ASSESSING OFFICER AND DESPITE ISSUE NOTICE U/S 131 TO SMT. KAVITA AGARWAL, NEITHER SMT. KAVITA AGARWAL APPEARED NOR ANY EFFORT WAS MADE BY THE ASSESSEE FOR HER APPEARANCE BEFORE THE ASSESSING OFFICER. 14. THE ASSESSEE DID NOT SUBMIT THE ORIGINAL INVOICES OF CONSTRUCTION ALLEGED TO HAVE BEEN DONE ON THE PROPERTY. IT HAD SU BMITTED ONLY PHOTO COPY OF INVOICES AND MOST OF THE INVOICES WERE I N THE NAME OF NAHAR THEATRE PVT. LTD. AND NAME OF THE ASSESSEE WAS WRI TTEN AFTER CUTTING THE NAME OF NAHAR THEATRE PVT. LTD. 15. FROM THE DETAILS OF INVOICES AS PLACED AT PAGE 11 TO 13 OF PAPER BOOK, THE DATES OF INVOICES ARE BETWEEN APRIL, 2002 T O MARCH, 2003, ONE BILL AT SL.NO.87 IS IN THE FORM OF DEBIT NOTE PL ACED AT PAGE 134 IS ISSUED BY M/S DELUXE PROPERTIES LTD., WHICH DESCRIBES THA T THIS DEBIT NOTE IS FOR SUPPLY OF BUILDING MATERIAL SUPPLIED BETWE EN THE PERIOD FROM APRIL, 2002 TO MARCH, 2003 AND WHICH DOES NOT SP ECIFY ANY MATERIAL AND FURTHER NO EVIDENCE OF ANY BREAK UP OF SUCH MATERIAL HAS BEEN PLACED BY LD AR IN THE PAPER BOOK. 16. THE ANALYSIS OF INVOICES NOTED AT PAGES 11 TO 13 R EVEALS THE ITA NO2005/DEL/08 11 POSITION AS UNDER:- TOTAL AMOUNT OF INVOICES. ` .49,34,240/- LESSS: AMOUNT OF INVOICES FROM 24.10.2002 I.E. WHEN THE ORIGINAL AGREEMENT WITH SMT.KAVITA AGARWAL WAS TERMINATED. ` .11,08,813/- ALLEGED AMOUNT OF EXPENDITURE BETWEEN PERIOD 7.4.2002 TO 23.10.2002. ` .38,,25,427/- 17. FROM THE ABOVE EVEN WITHOUT CONSIDERING THE LABO UR CHARGES, IT IS APPARENT THAT MAJOR AMOUNT WAS ALLEGED TO HAVE BE EN SPENT BETWEEN 7.4.2002 TO 23.10.2002. THEREFORE, HOW IT C AN BE CLAIMED THAT ALTERATION/ADDITION/RENOVATIONS WERE DONE AT THE DIR ECTION OF ULTIMATE BUYER SHRI AMIT SIBAL BECAUSE AGREEMENT TO SELL COULD ONLY BE ENTERED INTO WITH HIM AFTER TERMINATION OF FIRST AGREEMENT OF DATED 16.,8.2002 WHICH WAS SAID TO HAVE BEEN TERMINATED ON 24.10.2002. THEREFORE, IT EMERGES FROM THE ABOVE THAT MOST OF THE EXPENSES RELATE D TO THE PERIOD BEFORE ENTERING INTO AGREEMENT TO SELL WITH SHRI AMIT SIBAL WHICH ULTIMATELY IMPLIES THAT EXPENSES INCURRED BEFORE AGREEMENT WITH SHRI AMIT SIBAL CANNOT BE SAID TO HAVE BEEN INCURRED AT HIS BEHEST. 18. THERE IS ONE MORE GLARING CONTRADICTION AND THAT IS THAT THE REQUEST LETTER BY SHRI AMIT SIBAL PLACED AT PAGE 167 OF PAPER BOOK IS OF DATED 2.4.2002. WHEN EVEN THE FIRST AGREEMENT TO SELL WITH SMT. KAVITA AGARWAL ALSO WAS NOT EVEN EXECUTED. ALL THESE FACTS AR E SELF CONTRADICTORY. 19. DURING REMAND PROCEEDINGS, THE ASSESSING OFFICER HAD ISSUED SUMMON U/S 131 TO FEW PARTIES FROM WHOM MATERIALS WERE ALLEGED TO HAVE BEEN PURCHASED AND REPLIES OF PARTIES I.E. THAT TWO PARTIES HAD DENIED OF HAVING ANY DEALINGS WITH ASSESSEE AND TWO HA D REPLIED THAT ITA NO2005/DEL/08 12 THEY HAD ENTERED INTO TRANSACTION WITH NAHAR THEATRE PVT. LTD. FROM THE COPY OF INVOICES PLACED IN THE PAPER BOOK IT IS A PPARENT THAT THE MATERIAL WAS RECEIVED AT THE PREMISES OF NAHAR THEATRE AND THERE IS NO EVIDENCE OF ANY SOUGHT OF SHIFTING OF MATERIAL TO THE SITE OF ASSESSEE. THIS FACT IS FURTHER STRENGTHENED BY THE FACT THAT MOST OF THE INVOICES WERE IN THE NAME OF NAHAR THEATRE. THE CONTENTION O F LD AR THAT THE ASSESSEE WAS NOT DIRECTED TO FURNISH PROOF OF TRANSFER OF MATERIAL FROM NAHAR THEATRE TO JOR BAGH IS NOT TENABLE IN VIEW OF THE FACT THAT THIS WAS A MATERIAL EVIDENCE WHICH ASSESSEE SHOULD HAVE FURNISH ED AT ITS OWN TO JUSTIFY ITS CLAIM. 20. THE DEBIT NOTE OF A SIGNIFICANT AMOUNT OF ` .13,65,000/- DO NOT GIVE ANY PARTICULAR OR MATERIAL WHICH IS AGAIN NOT A S PER NORMAL BUSINESS PRACTICE. THE ASSESSEES CONTENTION DURING REMAND PROCEEDINGS AND DURING PROCEEDINGS BEFORE US RESTED ONL Y ON ONE POINT THAT THE PAYMENTS WERE MADE FROM ASSESSEES BANK ACCOUNT. HOWEVER, KEEPING IN VIEW THE TOTALITY OF FACTS AND C IRCUMSTANCES, THIS ARGUMENT OF ASSESSEE CANNOT HAVE ANY FORCE. THE ARGUME NT OF LD AR THAT ASSESSING OFFICER SHOULD HAVE EXAMINED THE SUPPLIER DO NOT CARRY ANY FORCE IN VIEW OF THE FACT THAT ASSESSING OFFICER WH ILE DISALLOWING THE CLAIM OF EXPENSES HAD RELIED UPON NUMBER OF OTHER FACTORS SUCH AS FURNISHING OF PHOTO COPY OF BILLS, CUTTING ON BILLS, N ON PRODUCTION OF BOOKS OF ACCOUNTS AND JUSTIFICATION OF EXPENSES CLAIME D. THE CLAIM OF THE ASSESSEE THAT PAYMENTS OF CONSTRUCTION WERE MADE FROM ITS BANK ACCOUNT DO NOT CARRY MUCH FORCE IN VIEW OF THE FACT THAT PAYMENTS MADE BY ASSESSEE CAN ALWAYS BE DEBITED TO OTHER COMPANY NAMELY NAHAR THEATRE (P) LTD. AS IT IS A GROUP COMPANY. 21. THEREFORE, ON THE BASIS OF ABOVE DISCUSSIONS, THE FIR ST GROUND OF APPEAL OF THE ASSESSEE IS REJECTED. ITA NO2005/DEL/08 13 22. REGARDING SECOND GROUND OF APPEAL BY THE ASSESSEE F OR UPHOLDING THE DISALLOWANCE OF ` .50,000/-, WE ARE OF THE OPINION THAT KEEPING IN VIEW THAT ASSESSEE HAD ONLY ONE PROPERTY, TH E DISALLOWANCE OF ` .50,000/- OUT OF TOTAL FESTIVAL EXPENSES OF ` .2 LAKHS WAS JUSTIFIED. THEREFORE, SECOND GROUND OF APPEAL IS ALSO DISMISSED. 23. GROUND NO.3 IS CONSEQUENTIAL. GROUND NO.4, 5 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 24. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DI SMISSED. 25. ORDER PRONOUNCED IN THE OPEN COURT ON 19TH DAY OF OCTOBER, 2012. SD/- SD/- (I.C. SUDHIR) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 19.10.2012. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 28.8.2012 DATE OF DICTATION 15.10.2012 ITA NO2005/DEL/08 14 DATE OF TYPING 16.10.2012 DATE OF ORDER SIGNED BY 19.10.2012 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET 22.10.2012 & SENT TO THE BENCH CONCERNED.