The DCIT, Circle-9, Surat V. Shri Jayantibhai Virjibhai Babriya, Surat

ITA 2194/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89619 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 29-05-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 02-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Keywords: Unexplained cash credit; Unexplained investment; Valuation report
• Section: 40A(3); 143(3); 133A; 194C; 68; 69; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: S H RI RAJPAL YADAV , JUDICIAL MEMBER AND SHR I ANIL CHATURVEDI , ACCOUNTANT MEMBER THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 9, SURAT - 395001 (APPELLANT) VS SHRI JAYANTIBHAI VIRJIBHAI BABARIYA, 56, MAHESHWARI SOCIETY, VARACHHA ROAD, SURAT PAN: AFHPB0820M (RESPONDENT) REVENUE BY : S H RI M.K. SINGH, SR. D . R. ASSESSEE BY: NONE DATE OF HEARING : 29 - 05 - 2 015 DATE OF PRONOUNCEMENT : 19 - 06 - 2 015 / ORDER P ER : RAJPAL YADAV , JUDICIA L MEMBER : - REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) - V , SURAT , DATED 11 - 05 - 2011 PASSED FOR ASSESSMENT YEAR 2006 - 07. I T A NO . 2 19 4 / A HD/20 11 ASSESSMENT YEAR : 2006 - 07 I.T.A NO. 2194/AHD/2011 A.Y. 2006 - 07 PAGE NO DCIT VS. JAYANTIBHAI VIRJIBHAI BABRIYA 2 2. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE READ AS UNDER : - [1] ON THE FACT S AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CLT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER AT RS.36,47,009/ - ON ACCOUNT OF UNEXPLAINED CASH CREDIT IN THE FORM OF THE ASSETS. [2] ON THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER AT RS.7,39,865/ - ON ACCOUNT OF EXPENDITURE U/S. 40A(3). [3] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) OUGH T TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. [4] IT IS, THEREFORE, PRAYED THAT THE APPELLATE ORDER OF THE LD. CLT(A) MAY BE CANCELLED AND THE ORDER OF THE A.O. MAY BE UPHELD . 3. THE BRIEF FACTS OF THE CASE THAT ASSESSEE HAS FILED HIS RETUR N OF INCOME ON 22 - 12 - 2006 DECLARING TOTAL INCOME AT RS. 1,11,15,719/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND A NOTICE U/S. 143(2) WAS ISSUED ON 26 - 12 - 2006. ACCORDING TO THE ASSESSING OFFICER, THIS NOTICE WAS D ULY SERVED UPON TH E ASSESSE AND SHRI ASWIN, CA, APPEARED ON BEHALF OF THE ASSESSE. HOWEVER, LD. ASSESSING OFFICER HAS PASSED AN EX - PARTE ASSESSMENT ORDER U/S. 144 OF THE INCOME TAX ACT R.W.S. 143(3) ON THE GROUND THAT ASSESSEE DID NOT SUBMIT REQUISITE DETAILS. THE LD. ASS ESSING OFFICER HAS DETERMINED THE TAXABLE INCOME OF TH E ASSESSE AT RS. 1,76,62,296/ - . HE MADE TWO ADDITIONS NAMELY; (A) ON ACCOUNT OF UNEXPLAINED CASH CREDIT IN THE FORM OF ASSETS RS. 36,47,099/ - (B) DISALLOWANCE ON ACCOUNT OF EXPENDITURES U/S. 40A(3) AND 40(IA) RS. 29,00,108 / - . I.T.A NO. 2194/AHD/2011 A.Y. 2006 - 07 PAGE NO DCIT VS. JAYANTIBHAI VIRJIBHAI BABRIYA 3 4. ON APPEAL, LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED BOTH THESE ADDITIONS. 5. IN THE FIRST GROUND OF APPEAL, REVENUE HAS PLEADED THAT COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION AT RS. 36,47,0 0,09/ - . THE RELEVANT FINDING RECORDED BY THE COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE READS AS UNDER: - 4.3. I HAVE CAREFULLY GONE THROUGH THE SUBMISSIONS OF APPELLANT AND ASSESSMENT ORDER. I FIND THAT THE APPELLANT HAD CHALLENGED THE ORDER U / S . 144 OF THE ACT ON THE GROUND THAT HE HAD SUBMITTED COPIES OF ALL PURCHASE DEEDS OF LAND TO ASSESSING OFFICER ON 20.10.2008. TO AVOID ANY CONTROVERSY, THE COPIES OF ALL DOCUMENTS WERE SUBMITTED TO ASSESSING OFFICER ON 06.03.2009 ALONGWITH THE PAPER BOOK OF 61 PAGES TO ASSESSING OFFICER WITH A DIRECTION TO SEND THE REMAND REPORT. THIS OFFICE, ALSO DIRECTED THE ASSESSING OFFICER TO OBTAIN REPORT FROM DVO LI / S . 142A OF THE ACT. THE ASSESSEE HAD ACCORDINGLY SUBMITTED ALL THE DETAILS TO DVO ON 27.05.2009, 06.06. 2009 AND 17.09.2009 AND THE DVO HAD ALSO VISITED THE SITE OF LAND ON 08.05.2009 AND 09.05.2009. THE DVO DID NOT SUBMIT HIS REPORT. HE WAS THEREFORE, REQUESTED TO SUBMIT THE REPORT. WHEN DVO CONTENDED THAT HE DOES NOT HAVE COPIES OF PURCHASE DEED OF LAND ON ACCOUNT OF CHANGE OF OFFICE OF DVO FROM BARODA TO SURAT, THE DVO WAS GIVEN AGAIN THE COPIES OF ALL THE PURCHASE DEED OF LAND. NEITHER THE DVO SUBMITTED THE VALUATION REPORT, NOR THE ASSESSING OFFICER SUBMITTED THE REMAND REPORT ON THE DETAILS AND EVIDENCE S SUBMITT ED DURING APPELLATE PROCEEDINGS. AFTER AWAITING FOR MORE THAN TWO YEARS, I HAVE NO ALTERNATIVE, BUT TO DECIDE THE APPEAL ON MERITS. I FIND THAT THE VERY CONTENTIONS OF ASSESSING OFFICER MAKING THE ADDITION U/S. 68 OF THE ACT FOR INVESTMENT IN LAND IS CONTRAROARY TO THE PROVISIONS OF LAW. FOR INVESTMENT IN LAND SECTION 68 DOES NOT APPLY. THE ASSESSING OFFICER ADDED THE ENTIRE AMOUNT OF RS. 36,47,099/ - SHOWN IN THE BALANCE SHEET OF ASSESSEE FILED WITH THE RETURN OF IN COME. THUS, THE INVESTMENT IS R EC ORDED IN THE REGULAR BOOKS OF ACCOUNT. FOR THIS INVESTMENT SECTION 69 OF THE ACT CANNOT BE APPLIED. THE SURVEY PROCEEDINGS U/S. 133A OF THE ACT WERE CARRIED OUT ON 17.01.2006 AND APPELLANT HAD MADE THE DISCLOSURE OF RS. 1,00,00,000/ - . AFTER PAYMENT OF TAX RS. 35,04,991/ - , THE APPELLANT H AD AVAILABLE CASH TO THE EXTENT OF RS. 64,95,009/ - . OUT OF THIS I.T.A NO. 2194/AHD/2011 A.Y. 2006 - 07 PAGE NO DCIT VS. JAYANTIBHAI VIRJIBHAI BABRIYA 4 BALANCE THE ASSESSEE HAD MADE INVESTMENT OF RS. 36,47,099/ - FROM 17.01.2006 TO 31.03. 2006. THEREFORE, THE SOURCE OF INVESTMENT IS EXPLAINED. FURTHER THE APPELL ANT HAD ESTABLISHED ON THE BASIS OF COMPARABLE CASE OF KRISHNA CORPORATION IN THE SAME AREA IN WHICH CASE THE SAME ASSESSING OFFICER HAD ACCEPTED THE PURCHASE PRICE OF LAND AND PRICE PAID BY APPELLANT IS HIGHER THAN THE PURCHASE PRICE PAID BY KRISHNA CORPO RATION. THEREFORE, T HERE ARE NO BASIS OF ESTIMATES. THE VALUATION REPORT OF DVO IS ALSO NOT REQUIRED AS THE ASSESSING OFFICER HAS ACCEPTED T HE BOOKS OF ACCOUNTS. X X X X X X X X X X X X X X X X X 6. IN RESPONSE TO THE NOTICE OF HE ARING, NO - ONE HAS COME PRESENT ON BEHALF OF THE ASSESSEE. 7. WITH THE A SSISTANCE OF LD. DR , WE HAVE GONE THROUGH RECORD CAREFULLY. LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF ASSESSING OFFICER AND CONTENDED THAT ASSESSEE FAILED TO DEMONSTRA TE THAT THE AMOUNT DISCLOSED DURING THE COURSE OF A SURVEY WAS AVAILABLE WITH THE ASSESSEE FOR MAKING INVESTMENT. FROM PERUSAL OF THE FINDING, LD. COMMISSIONER OF INCOME TAX (APPEALS) (EXTRACTED SUPRA) , IT REVEAL ED THAT ADDITION WAS MADE BY THE ASSESSING O FFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE LAND. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS OBSERVED THAT DURING THE COURSE OF SURVEY , ASSESSEE HAS OFFERED AN INCOME AT RS. 1 CRORE AFTER EXCLUDING THE TAX COMPONENT RS. 35,04, 991/ - , T HE ASSES SEE HAD THE CASH BALANCE OF RS. 64,95,000/ - . THIS AMOUNT IS HIGHER THAN THE ALLEGED INVESTMENT IN THE LAND. THE SO - CALLED UNEXPLAINED INVESTMENT CAN EASILY BE TAKEN CARE OF BY AVAILABILITY OF THIS CASH. TAK ING INTO CONSIDERATION THE WELL REASONED ORDER O F LD. COMMISSIONER OF INCOME TAX (AP PEALS), WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL. IT IS REJECTED. I.T.A NO. 2194/AHD/2011 A.Y. 2006 - 07 PAGE NO DCIT VS. JAYANTIBHAI VIRJIBHAI BABRIYA 5 8. AT THE COST OF R EPETITION, WE WOULD LIKE TO NOTE NEXT GROUND PLEADED BY THE REVENUE. IT READS AS UNDER: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER AT RS.7,39,865/ - ON ACCOUNT OF EXPENDITURE U/S. 40A(3). 9 . THE LD. ASSESSING OFFICER HAS MADE AN ADDITION AT RS. 29,100,108/ - U/S. 40A(3 ) AS WELL AS U/S. 40(IA). THE DISALLOWANCE U/S. 40(IA) IS TO BE MADE , IF ASSESSEE FAILED TO DEDUCT THE TDS WHILE MAKING PAYMENTS. THE DISALLOWANCE U/S. 40A(3) CAN BE MADE , IF ASSESSEE MAKES PAYMENT OVER AND ABOVE AT RS. 20,000/ - IN CASH THEN DISALLOWANCE IS TO BE MAD E. THE ASSESSMENT ORD ER ON THIS ISSUE IS TOTALLY VAGUE. LD. ASSESSING OFFICER HAS NO - WHERE SPECIFICALLY POINTED OUT ON WHICH ITEM, PAYMENT WAS MADE BY THE ASSESSEE IN VIOLATION OF SECTION 40A(3) AND ON WHICH PAYMENT , HE WAS SUPPOSED TO DEDUC T TDS. FOR REFERENCE PURPOSES, WE ARE TAKING NOTE OF THREE ISSUES CONSIDERED BY THE ASSESSING OFFICER. A) COMPOUNDWALL EXPENSES AS PER THE SUBMISSION MADE BY THE ASSESSEE VIDE LETTER DT. 18.12.2008 FOR ERECTING THE COMPOUND WALL ASSESSEE HAS INCUR RED EXPENSES OF RS.9,93,757/ - AN D RS. 59,865 I - HAS BEEN PAID IN CASH AND RS.9,33,892/ - IS DEBITED IN TO THE ACCOUNT OF PRAVINBHAI NANUBHAI WHO IS THE CONTRACTOR. IN THE PAYMENT OF CASH TO CONTRACTOR ASSESSEE HAS VIOLATED THE SECTION 40 (A)(3) OF THE I.T ACT BY PAYMENT OF CASH MORE THAN RS.20,000/ - FOR THE EXPENSES INCURRED BY HIM. SUBSEQUENTLY HE HAS CREDITED THE A/C OF PRAVIN NANUBHAI BY RS.9,33,892/ - BUT HAS NOT DEDUCTED TDS WHICH HE HAS TO DEDUCT U/S 194 C OF THE I.T ACT AND ALSO ATTRACTED THE PROVISIONS OF THE 40 (A)(IA) I.T.A NO. 2194/AHD/2011 A.Y. 2006 - 07 PAGE NO DCIT VS. JAYANTIBHAI VIRJIBHAI BABRIYA 6 OF THE I.T ACT. IN VIEW OF THAT THE ENTIRE AMOUNT RS. 9,93,757/ - IS HERE BY DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. B) ROAD AND DRAINAGE EXPENSES THE ASSESSEE HAS INCURRED TOTAL EXPENSES OF RS.6,74,300/ - UNDER THI S HEAD . HE HAS MADE PAYMENTS IN CASH TO AMINKHAN HARSANKHAN ,IBRAHIMBHAI, SHYAMBHAI, ANILBHAI DASHRATBHAI AND ALL THE PAYMENTS HAS BEEN MADE IN CASH AND OUT OF THE TOTAL PAYMENT OF RS.6,74,300/ - ASSESSEE HAS R S.5,30,000/ - IN THE FORM OF CASH ACCOUNTS MORE THAN 20,000/ - BY THIS ATTRACTING THE PROVISION OF 10(A)(3) AND TDS HAS NOT BEEN DEDUCTED FOR THE PAYMENT OF SUCH AMOUNT TO THESE SUBCONTRACTORS AS ENVISAGED IN THE SECTION 194C OF THE I.T. ACT. HENCE FOLLOWING THE WELL LAID PRINCIPLES OF THE I.T ACT U/S. 40 (A)(IA) THE ENTIRE EXPENDITURE RS. 6,74,300/ - IS HERE BY DISALLOWED UNDER THIS HEAD AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. C) WALL GATE ERECTION EXPENSES THE ASSESSEE HAS INCURRED RS. 7,06,221/ - AS EXPENSE UNDER THIS HEAD. OUT OF THIS RS. 1,50,000/ - HAS BEEN PAID BY THE ASSESSEE IN THE FORM OF CASH WHICH IS ATTRACTING THE PROVISION UNDER SECTION 40A(3) OF THE I.T. ACT. FURTHER ASSESSEE ALSO CREDITED AN ACCOUNT OF RS. 5,56,221/ - INTO THE SUBCONTRACTOR A/C WITHOUT DEDUCTING ANY TDS AS P ER THE PROVISIONS OF THE SECTION 194C OF THE I.T. ACT AND HENCE THE ENTIRE EXPENDITURE OF RS. 7,06,221/ - IS HERE BY DISALLOWED FOLLOWING THE PROVISIONS U/S. 40(A)(IA) OF THE I.T. ACT. I.T.A NO. 2194/AHD/2011 A.Y. 2006 - 07 PAGE NO DCIT VS. JAYANTIBHAI VIRJIBHAI BABRIYA 7 10 . IT IS ALSO PERTINENT TO NOTE THE FINDING OF LD. COMMISSIONER OF INC OME TAX (APPEALS) : - 5.3 I HAVE CAREFULLY GONE THROUGH THE SUBMISSIONS OF APPELLANT AND ASSESSMENT ORDER. I FIND THAT HE APPELLANT HAD NOT DEDUCTED TAX IN ACCORDANCE WITH THE PROVISION OF SECTION 194C(1)(K) OF THE ACT AND 194J PROVISO THERETO OF THE ACT. IN A.Y. 2005/06 THE TOTAL RECEIPTS OF ASSESSEE ON ACCOUNT OF BUSINESS TURNOVER IS RS. 1,15,000 ONLY. THE PROVISION OF SEC. 194C AND 194J OF THE ACT WOULD HAVE BEEN APPLICABLE HAD THE TURNOVER OF ASSESSEE IN A.Y. 2005/06 EXCEEDED RS. 40,00,000/ - . SINCE, PROVISION OF SECTION 44AB OF THE ACT WERE NOT APPLICABLE TO ASSESSEE IN A.Y. 2005 - 06, THE ASSESSE WAS NOT REQUIRED TO DEDUCT THE TAX IN A.Y. 2006 - 07. THE ENTIRE DISALLOWANCE OF RS. 29,00,108/ - IS NOT CORRECT. FOR THE FACTUAL PAYMENT OF RS. 9, 07,865/ - I FIND F R O M THE COPY OF THE LEDGER ACCOUNT OF EXPENSES, VOUCHERS AND BILLS PLACED AT PAGE 38 TO 61 OF THE PAPER BOOK THAT NO PAYMENT EXCEEDS RS. 20,000/ - AND HENCE, SECTION 40A(3) IS NOT APPLICABLE. ACCORDINGLY, ADDITION OF RS. 29,00,108/ - IS DELETED AND THE GROUND OF APPEAL IS ALLOWED. 11 . FROM THE PERUSAL OF THE GROUND OF APPEAL RAISED BY THE REVENUE , IT IS CLEAR THAT REVENUE IS NOT AGGRIEVED WITH THE DELETION OF D ISALLOWANCE MAD E U/S. 40(IA) . I T HAS PLEADED TH AT DISALLOWANCE U/S. 40A(3) MADE BY THE ASSESSING OFFICER HA D WRONGLY BEEN DELETED. LD. FIRST APPELLATE AUTHORITY HAS RECORDED A FINDING OF FACT THAT HE HAS PERUSED THE LEDGER ACCOUNT OF EXPENSES, VOUCHERS AND BILLS PLACED AT PAGES NO. 38 TO 61 OF THE PAPER BOOK FILED BEFORE HIM AND NO PA YMENT EXCEEDS RS. 20,000/ - , IF THAT BE SO , THEN , HOW THE DISALLOWANCE CAN BE MADE. LD. FIRST APPELLATE AUTHORITY HAS CALLED FOR REMAND REPORT F R O M THE ASSESSING OFFICER BUT T H E ASSESSING OFFICER DID NOT RESPOND TO HIS REQUEST. THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) HAS WAITED ALMOST FOR TWO YEARS FOR THE REMAND REPORT BUT LD. ASSESSING OFFICER FAILED TO SUBMIT ANY REMAND REPORT. BEFORE US ALSO, NO PAPER BOOK HAS BEEN FILED EXHIBITING HOW THE FINDING OF FACT RECORDED BY I.T.A NO. 2194/AHD/2011 A.Y. 2006 - 07 PAGE NO DCIT VS. JAYANTIBHAI VIRJIBHAI BABRIYA 8 THE COMMISSIONER OF INCOME TAX (APPEALS) IS WRONG. THEREFORE, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL. IT IS REJECTED. REST OF THE TWO GROUNDS ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY SPECIFIC FINDING TO BE RECORDED BY THE TRIBUNAL. 12 . IN THE RESULT, WE DO NOT FIND AN Y MERIT IN THIS APPEAL. IT IS DISMISSED. ORDER PR ONOU NCED IN THE OPEN COURT ON 19 - 06 - 2015 SD/ - SD/ - ( ANIL CHATURVEDI ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 19 /06 /2015 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,