Smt. Jiya Devi Sharma, JODHPUR V. ACIT, JODHPUR

ITA 212/JODH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70227 (ITAT-JODHPUR)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-09-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 05-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR DEEPAK SEHGALCIT
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Search and seizure; Document seized; Documents seized; Revenue expenditure
• Section: 40A(3); 50C; 153A; 234B; 132

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NOS. 211 & 212/JODH/2013 (A.YS. 2008-09 & 2009-10) SMT. JIYA DEVI SHARMA VS THE ACIT, 221-222, SHYAM NAGAR SCHEME CENTRAL CIRCLE - 2 PAL LINK ROAD, JODHPUR JODHPUR PAN NO. AWDPS 1278 H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT KOTHARI DEPARTMENT BY : DR. DEEPAK SEHGAL-CIT- DR. DATE OF HEARING : 17/09/2013. DATE OF PRONOUNCEMENT : 20/09/2013. O R D E R PER BENCH. : THE ABOVE CAPTIONED TWO APPEALS OF THE SAME ASSESS EE ARISE FROM SEPARATE ORDERS OF LD. CIT(A)-I, JAIPUR, EVEN DATED 07/02/2013 PERTAINING TO A.YS. 2008-09 AND 2009-10. SINCE BOTH THE APPEALS WERE HEARD TOGETHER, WE ARE DISPOSING THEM OFF BY THIS C OMMON ORDER FOR THE SAKE OF BREVITY AND CONVENIENCE. 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED A RETURN OF INCOME [ROI] ON 9.2.2009 DECLARING TOTAL INCOME OF RS. 2,51,560/-. SEARCH AND SEIZURE PROCEEDINGS U/S 132 OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT', FO R SHORT] WERE CARRIED OUT AT THE RESIDENCE OF SHRI MURLIDHAR SHARMA AND S HRI GAUTAM SHARMA ON 15.12.2009 DURING WHICH CERTAIN DOCUMENTS BELONG ING TO THE ASSESSEE WERE FOUND AND SEIZED. ON EXAMINATION OF THESE SEIZED DOCUMENTS, IT WAS FOUND THAT SOME PAPERS BELONGED T O SMT. JIYA DEVI SHARMA, THE ASSESSEE BEFORE US. AFTER RECORDING SA TISFACTION NOTE ON 18.8.2011, IN THE CASE OF THE SEARCHED PERSONS, THA T IS, SHRI MURLIDHAR SHARMA AND SHRI GAUTAM SHARMA REGARDING INITIATION OF ACTION U/S 153C OF THE ACT IN THE CASE OF THIS ASSESSEE, A NOT ICE U/S 153C OF THE ACT WAS ISSUED ON 18.8.2011 WHICH WAS DULY SERVED O N THE ASSESSEE ON 26.8.2011. IN RESPONSE TO THIS NOTICE, THE ASSESSE E FILED HER RETURN ON 18.10.2011 DECLARING TOTAL INCOME OF RS. 3,26,070/- FOR A.Y. 2008-09. THE ASSESSEE TOOK VARIOUS OBJECTIONS TO THE NOTICE INCLUDING CHALLENGING THE VERY INITIATION OF PROCEEDINGS U/S 153C OF THE ACT. IN THE ASSESSMENT ORDER, SOME ADDITIONS WERE MADE AS P ER PARA 5, 6 & 7 AND TOTAL INCOME WAS COMPUTED AT RS. 32,77,070/-. AGGRIEVED, THE ASSESSEE WENT BEFORE THE LD. CIT(A) WHO HAS GIVEN P ART RELIEF TO THE ASSESSEE. BUT THE ASSESSEE IS STILL AGGRIEVED. IN THE SECOND APPEAL 3 FILED BEFORE THE APPELLATE TRIBUNAL, AS MANY AS 8 G ROUNDS HAVE BEEN RAISED IN THE MEMO OF APPEAL. 2.1 AT THE TIME OF HEARING, GROUND NO 1 WITH ITS CL AUSES A), B), C), D) AND E) WERE NOT PRESSED. THEREFORE, THIS GROUND ST ANDS DISMISSED AS NOT PRESSED. 2.2 GROUND NOS. 6 AND 8 ARE GENERAL IN NATURE AND D O NOT REQUIRE ANY SPECIFIC ADJUDICATION ON OUR PART. 2.3 GROUND NO. 7 IS REGARDING CHARGING OF INTEREST U/SS 234A, 234B AND 234C. CHARGING OF INTEREST IS MANDATORY UNDER THE ACT. THEREFORE, THIS GROUND CANNOT BE ALLOWED AND HENCE STANDS DISMISSED. 3. GROUND NO 2 OF THIS APPEAL RELATES TO ADDITION O F RS. 21,14,745/- OUT OF LAND DEVELOPMENT EXPENSES. 3.1 BRIEFLY STATED, THE FACTS OF THIS GROUND ARE TH AT THE A.O. OBSERVED IN HIS ORDER DURING THE YEAR UNDER CONSIDERATION TH AT THE ASSESSEE HAD CLAIMED LAND DEVELOPMENT EXPENSES OF RS. 42,29,490/ -. SHE HAD NOT FURNISHED ANY DETAILS LIKE THE NAMES OF THE PERSONS TO WHOM THESE 4 PAYMENTS WERE MADE, WHETHER ANY TDS WAS DEDUCTED OR DEPOSITED, LEDGER ACCOUNT OF THE EXPENSES, NATURE OF WORK, WHE THER PAYMENT WAS MADE IN CASH OR BY CHEQUE. THEREFORE, HE HAS DISAL LOWED 50% OF THE CLAIM RESULTING INTO AN ADDITION OF RS. 21,14,745/- . 3.2 THE CASE OF THE ASSESSEE IN THIS REGARD IS THAT THE ASSESSEE HAD CLAIMED THIS EXPENDITURE IN HER ORIGINAL RETURN FIL ED U/S 139(1) OF THE ACT AND THE SAME WAS ALLOWED. IT WAS STATED THAT U /S 153A, THERE IS NO BASIS TO REJECT THE GENUINE EXPENDITURE CLAIMED BY THE ASSESSEE. IT WAS STATED THAT THE ASSESSEE, VIDE LETTER DATED 30. 11.2011, HAD SUBMITTED INFORMATION IN RELATION TO THE LAND DEVEL OPMENT EXPENSES CLAIMED IN CONNECTION WITH VAIBHAV ENCLAVE SCHEME C ARRIED OUT BY THE ASSESSEE DURING THE YEAR. IT WAS FURTHER STATED TH AT THE LAND DEVELOPMENT EXPENSES WERE INCURRED UNDER SELF-SUPER VISION AND NO CONTRACT OR SUB-CONTRACT WAS GIVEN BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. SINCE NO CONTRACT HAD BEEN GI VEN, THERE WAS NO LIABILITY OF ANY TDS TO BE MADE FROM THE PAYMENT MA DE BY THE ASSESSEE. IT WAS STATED THAT THE EXPENSES INCURRED WERE FULLY EVIDENT FROM THE REGULAR BOOKS OF ACCOUNT. THEREFORE, NO D ISALLOWANCE WAS JUSTIFIED. THE LD. CIT(A) HAS ALSO CONFIRMED THIS ADDITION. 5 3.3 BEFORE US, SIMILAR ARGUMENTS WERE REITERATED BY BOTH THE SIDES. WE HAVE FOUND THAT THE ASSESSEE HAD PRODUCED COMPLE TE BOOKS OF ACCOUNT BEFORE THE A.O. DETAILS OF LAND DEVELOPMENT EXPENSES INCURRED WERE EVEN PRODUCED BEFORE THE LD. CIT(A). THE A.O. HAS NOT MADE ANY SPECIFIC OBJECTION REGARDING ANY EXPENDITURE. WE HA VE FOUND THE SUBMISSION OF THE LD. A.R. AS CORRECT THAT THE ASSE SSEE HAD FILED REPLY THROUGH DAK, VIDE LETTER DATED 30.11.2011 WHEREIN O N PAGE 5, PAGE 32, IT HAS BEEN SUBMITTED THAT THE COST OF LAND DEVELOP MENT EXPENSES OF VAIBHAV ENCLAVE WAS RS. 42,29,490/-. THIS FACT WAS ALSO MENTIONED IN THE TRADING ACCOUNT ATTACHED WITH ITR. IN THE TRAD ING AND PROFIT AND LOSS ACCOUNT THE AMOUNT OF RS.42,49,490/-HAS BEEN DEBITED UNDER THE HEAD 'LAND DEVELOPMENT EXPENSES'. HOWEVER, THE LD. AR HAS CONSISTENTLY FAILED TO FILE ANY DETAILS REGARDING T HE NATURE OF THESE EXPENSES OR THE PERSONS TO WHOM THEY WERE PAID. NO SUBSTANTIATING EVIDENCE BY WAY OF BILLS OR VOUCHERS HAS BEEN SUBMI TTED EITHER DURING THE ASSESSMENT PROCEEDINGS OR DURING THE APPELLATE PROCEEDINGS TO JUSTIFY THIS CLAIM OF EXPENDITURE. IN OUR CONSIDER ED OPINION, THIS ADDITION IS NOT WARRANTED BECAUSE IT IS BEYOND THE SCOPE OF PROVISION OF SECTION 153A OF THE ACT BECAUSE THIS EXPENDITURE HAD BEEN CLAIMED EVEN IN THE ORIGINAL RETURN AND WAS RIGHTLY ALLOWED . THERE IS NO MATERIAL TO DEVIATE FROM THE EARLIER FINDING AND HO LDING IT INGENUINE. 6 THE ASSESSEE DID NOT GET THIS WORK DONE THROUGH ANY SUB-CONTRACTOR. THEREFORE, NO QUESTION OF DEDUCTING ANY TDS. MOREO VER, THERE IS NO SPECIFIC OBJECTION MADE BY THE A.O. REGARDING ANY P ARTICULAR EXPENDITURE. THE A.O. HAS ACCEPTED THE EXPENDITURE IN PRINCIPLE AND IN OUR CONSIDERED OPINION, THERE IS NO REASON FOR M AKING ADHOC DISALLOWANCE OF 50% EXPENDITURE CLAIMED BY THE ASSE SSEE. THEREFORE, WE CANNOT APPROVE OF ANY SUBJECTIVE AND ADHOC DISAL LOWANCE LIKE THE ONE UNDER REFERENCE. ACCORDINGLY, WE ORDER TO DELE TE THIS ADDITION OF RS. 21,14,745/- AND ALLOW GROUND NO. 2 OF THIS APPE AL. 4. GROUND 3 RELATES TO THE INVALIDITY OF ADDI TION OF RS. 1,26,000/- MADE OUT OF ADDITION OF RS. 3,56,250/- MADE BY THE A.O. IN RESPECT OF ALLEGED UNEXPLAINED INVESTMENT IN PURCHASE OF RESID ENTIAL PLOT IN BALAJI NAGAR YOJNA. 4.1 BRIEFLY STATED, THE FACTS OF THIS GROUND ARE TH AT THE AO OBSERVED IN HIS ORDER THAT AS PER THE SALE DEED SEIZED DURIN G THE COURSE OF SEARCH AND ANNEXURIZED AS AS-3, PAGE NOS. 32-35, TH E ASSESSEE HAD PURCHASED A RESIDENTIAL PLOT IN BALAJI NAGAR YOJNA, VILLAGE PAL MEASURING 1425 SQ. FT. ON 15/11/2007. THE SALE CONS IDERATION AS PER THE SALE DEED WAS RS.1,26,000/- WHEREAS THE DLC RAT ES OF THE LAND 7 WERE RS.3,56,250/-. THE ASSESSEE HAD FAILED TO SHOW THIS ASSET IN HER BOOKS OF ACCOUNTS OR IN HER BALANCE SHEET AND CAPIT AL ACCOUNT. SHE HAD ALSO NOT FURNISHED ANY DETAILS REGARDING THE SOURCE OF INVESTMENT IN THIS TRANSACTION AND SO THE A.O. MADE AN ADDITION O F RS.3,56,250/- ON ACCOUNT OF UNEXPLAINED INVESTMENT. THIS ADDITION HA S ALSO BEEN CONFIRMED TO THE EXTENT OF RS. 1,26,000/-. THE ASS ESSEE IS FURTHER AGGRIEVED. 4.2 AFTER HEARING BOTH THE SIDES WE HAVE FOUND THAT AS PER THE SALE DEED, INVESTMENT ONLY TO THE EXTENT OF RS. 1,26,000 /- IS FOUND TO BE INCURRED AS INVESTMENT IN PURCHASE OF HOUSE AND BEY OND THAT THERE IS NO EVIDENCE. THE ASSESSEE CLAIMED THAT THE ABOVE I NVESTMENT OF RS.1,26,000/- WAS MADE BY THE ASSESSEE, THOUGH THE SAME WAS NOT APPEARING IN THE BALANCE SHEET BUT IT IS SUBMITTED THAT NO ADDITION CAN BE MADE AS THE INVESTMENT IN THE SAID PLOT WAS MADE OUT OF SAVINGS. ALTERNATIVELY, IT WAS SUBMITTED THAT IN ANY CASE, I F AT ALL ANY ADDITION WAS REQUIRED TO BE MADE, ONLY THE AMOUNT OF INVESTM ENT AMOUNTING TO RS.1,26,000/- COULD HAVE BEEN TREATED AS INCOME OF THE ASSESSEE. THE DLC VALUE OF THE LAND COULD NOT BE ADOPTED FOR THE PURPOSES OF CONSIDERING THE INVESTMENT IN THE LAND. THERE IS NO PROVISION LIKE 50C FOR CONSIDERING THE SALE CONSIDERATION IN SECTION 6 9/69A. THE LD. A.R. 8 FURTHER PLEADED THAT THE BENEFIT OF TELESCOPING EFF ECT ALSO DESERVED TO BE CONSIDERED IN RELATION TO ADDITIONS IN HIS CASE AS WELL AS THE ADDITIONS MADE IN THE CASE OF FIRM M/S AYUSHI BUILD ERS AND DEVELOPERS WHERE APPELLANT IS ONE OF THE PARTNER. THE ASSESSEE HAS CLAIMED THAT THIS INVESTMENT IS OUT OF HER PAST SAVINGS, ALTHOUG H THERE IS NO EVIDENCE OF THE SAME. THEREFORE, WE CANNOT ALLOW T HIS GROUND AND CONFIRM THE SAME AS THIS INVESTMENT DOES NOT STAND PROVED. GROUND NO. 3 STANDS DISMISSED. 5. GROUND NO. 4 RELATES TO THE ADDITION OF RS. 4,80 ,000/- FOR ALLEGED VIOLATION OF SECTION 40A(3) OF THE ACT FOR PURCHASE OF AGRICULTURAL LAND AT VILLAGE MAYAKORIA, TEHSIL PHALODI FROM SHRI SURE SH KUMAR THANVI. 5.1 BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE AO OBSERVED IN HIS ORDER THAT THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF LAND. ON PERUSAL OF THE RECORD S AND THE OTHER DETAILS FURNISHED IT WAS NOTICED THAT THE ASSESSEE HAD MADE CASH PAYMENTS OF RS.4,80,000/- FOR PURCHASE OF AGRICULTU RAL LAND IN TEHSIL PHALODI, DISTT. JODHPUR. SINCE THE PAYMENT IN CASH WAS MORE THAN RS.20,000/- THE ENTIRE AMOUNT OF RS.4,80,000/- WAS DISALLOWED BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE A CT. 9 5.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD AR SUBMITTED THAT THE ASSESSEE HAD NO BANK A/C IN PHALODI AND TH EREFORE THE PAYMENTS HAD TO BE MADE IN CASH AND WAS COVERED UND ER RULE 6DD OF THE I.T. RULES, 1962. HE FURTHER SUBMITTED THAT AGR ICULTURAL LANDS PURCHASED ARE REQUIRED TO BE CONVERTED INTO THE RES IDENTIAL AND ONLY THEREAFTER, THE SAME BECOMES TRADABLE COMMODITY. UN TIL THE AGRICULTURAL LAND IS CONVERTED INTO URBAN LAND AFTE R OBTAINING PERMISSION U/S 90B AND AFTER PAYMENT OF CONVERSION CHARGES ETC., THE AGRICULTURAL LAND, CANNOT PARTAKE THE CHARACTER OF STOCK IN TRADE. THE PAYMENT MADE TOWARDS PURCHASE OF AGRICULTURAL LAND IS AN ASSET UNTIL THE SAME IS CONVERTED. THE UNCONVERTED AGRICULTURAL LAND CANNOT BE REGARDED AS A REVENUE EXPENDITURE. HE RELIED ON TH E DECISION IN THE CASE OF KANSHIRAM MADAN LAL VS. ITO [1983] 3 ITD [D EL] 290. 5.3 WE HAVE HEARD RIVAL SUBMISSIONS. BOTH PARTIES H AVE REITERATED THEIR OLD STAND. WE HAVE FOUND THAT THE PAYMENT TO AGRICULTURISTS WERE MADE UNDER CIRCUMSTANCES WHICH ARE EXCLUDED UNDER T HE PROVISIONS OF RULES. THE AGRICULTURAL LAND CANNOT BE CONVERTED T O STOCK IN TRADE UNTIL PERMISSION IS OBTAINED AND THE PROVISIONS OF SECTION 40A(3) OF THE ACT CANNOT BE INVOKED IN THIS CASE ACCORDING TO THE PREVAILING LAW. PRINCIPLES OF SECTION 40A(3) OF THE ACT CANNOT BE I NVOKED IN RESPECT OF 10 AGRICULTURAL LAND. IN THIS REGARD THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GOPAL SUGAR MILLS REPORTED AT 40 ITR 618, IS RELEVANT. ACCORDINGLY, WE ORDER TO DELETE THE IMPUG NED DELETION OF RS. 4,80,000/- MADE IN THIS REGARD AND ALLOW GROUND NO. 4 OF THIS APPEAL. 6. GROUND NO 5 PERTAINS TO TELESCOPING EFFECT AGAIN ST SUSTAINED ADDITIONS. THERE IS NO NEED TO MENTION THAT IN SUCH CASES WHERE ADDITIONS ARE SUSTAINED, TELESCOPING EFFECT IS TO B E ALLOWED TO THE EXTENT THE SOURCE OF UNEXPLAINED INVESTMENT. TO THA T EXTENT, GROUND NO. 5 OF THIS APPEAL IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ITA NO. 212/JODH/2013 (A.Y. 2009-10) 8. GROUND NO. IS NOT PRESSED. ALL OTHER GROUNDS AR E DISPOSED OFF IN THE SAME MANNER AS WE HAVE DONE IN A.Y. 2008-09. T HERE IS ONLY DIFFERENCE OF QUANTUM OF ADDITIONS BUT THE REASONS OF ADDITIONS AND REASONS FOR DELETION ARE SAME AND SIMILAR. ACCORDI NGLY, THIS APPEAL OF THE ASSESSEE IS ALSO PARTLY ALLOWED. 11 9. IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALLOW ED. ORDER PRONOUNCED IN THE COURT ON 20 TH SEPTEMBER, 2013. SD/- SD/- (N.K.SAINI) [HARI OM MARAT HA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20 TH SEPTEMBER, 2013. VL/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR