Smt. Janak Agarwal, New Delhi V. ITO, New Delhi

ITA 232/DEL/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3372 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-04-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 13-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEDOBANI CHAUDHURI
• Keywords: Business income; Valuation report
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO.232/DEL/2017 ASSESSMENT YEAR 2012-13 JANAK AGARWAL A-7, EAST OF KAILASH, NEW DELHI PAN: AASPA 1976F VS. ITO, WARD-30(5), NEW DELHI (ASSESSEE) (RESPONDENT) REVENUE BY : MS. BEDOBANI CHAUDHURI, SR.D.R. ASSESSEE(S) BY : SHRI P.C. YADAV, ADV. / DATE OF HEARING : 25/04/2017 / DATE OF PRONOUNCEMENT: 25/04/2017 ORDER THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF LEARNED CIT(A)-X, NEW DELHI, VIDE ORDER DATED 20.04.2015 FO R THE ASSESSMENT YEAR 2012-13. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL AS UNDER: (I) THAT THE ORDER CONFIRMED BY THE WORTHY COMMISS IONER OF INCOME TAX IS BAD IN LAW AND FACTS , AND IS ARBITRARY . (II) THAT THE WORTHY COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.507569 / - BEING 15% OF RS.3383793 / - OF COST OF CONSTRUCTION EXPENSES DEBITED TO PROFIT & LOSS ACCOUNT ON ADHOC BASIS THEREBY INCREASING THE BUSINESS INCOME. (III) THAT THE WORTHY COMMISSIONER OF INCOME TAX (A PPEALS) HAS ALSO ERRED IN CONFIRMING THE LONG TERM CAPITAL GAIN AT RS . 6265209 / - AGAINST 5319970 / - DECLARED BY THE ASSESSEE. (IV) THAT THE WORTHY COMMISSIONER OF INCOME TAX (AP PEALS ) HAS ALSO ERRED IN CONFIRMING THE DISALLOWANCE OF RS . 945239 / - (6265209-5319970) SPENT BY THE ASSESSEE FOR CONST RUCTION OF PROPERTY ON ADHOC BASIS. ( V) THE APPELLANT CRAVES LEAVE TO AMEND OR ADD FURTH ER GROUNDS OF APPEAL FOR THE CAUSE OF JUSTICE AS MAY BE CONSIDERED NECESSARY BEFORE OR DURING THE COURSE OF HEARING . 2. THE BRIEF FACTS OF THE CASE AS ARE EMANATING FRO M THE ORDER OF THE ASSESSING OFFICER ARE REPRODUCED HEREINBELOW: ITA NO.232/DEL/2017 2 THE ASSESSEE IS IN BUSINESS OF CONSTRUCTION & SALE OF FLATS. DURING THE CO UR SE OF ASSESS M E N T PR O C EE DIN GS CA & A R OF TH E A SS E SSS EE VIDE S HOW C A U S E N OTIC E DA T ED 1 6. 0 2.20 1 5 A ND 03.03. 2 015 WAS A S K E D TO PR O DU CE BILL S / V O U C H E R S AND E X PL A IN TH E SO UR CE OF COS T OF CO N S TRU C TI O N A M O UNTIN G TO RS . 33 , 83 , 793 / - D E BIT E D T O PR O FIT AND L OSS ACCO UN T AN D COST OF CO N S TRUCTION & EX P E N SES AMOUNTIN G TO R S . 6 3, 01 , 593 / - CL A IM E D A S D E DU C TI O N AS C OS T O F IMPR OV EM E NT UNDER TH E H EA D L O N G TERM CAPITAL GA IN . ON 19 . 02 .20 15 THE HU S BAND O F TH E ASS E SSEE SHRI G A UT A M AGGA R WA L A L O NG W I T H TH E S HRI PR ASHANT KHANDEL WA L C . A . & A . R . O F TH E ASSESSEE A TT E ND E D TH E A SSESS M E NT PRO CE EDIN GS A ND FILED THE R E P L Y IN R ES PECT COST OF CON S TRUCTION AM O UNTIN G TO R S . 33, 83 , 7 93 / - D E BIT E D TO PROFIT AND LO SS ACCOUNT S T A TIN G THAT TH E C O P Y O F F EW BILL S W H IC H A R E IN P OSSESSIO N OF TH E ASSESS E E A R E B E IN G F ILED HER EW ITH . THE MA JO R BILL S R E L A T E D T O FITTIN G A ND FI XT UR ES OF R ES P ECT I VE F L A T S W E R E GIVE N T O BU YE R S F O R TH E IR R E CORD AND FUTUR E M A IN T EN A N CE, TH E R EFO R E, A R E N O T I N P OSSESS I O N OF TH E A SSESSEE A N D BILLS OF R S . 24,48 , 031/- ARE HEREBY A TT A CHED. ON EX AMININ G THE BILL S S UBMITTED B Y TH E A SS E SSEE IT I S FO UND THAT ONL Y FOUR B ILL S A M O UNTIN G TO R S .II , 79 , 2 9 5 / - PERT A IN S T O F. Y .2 011-1 2 AND TH ESE A R E FURTH E R N O T S UPPORTED B Y AN Y L EDGE R ACCO UN TS AN D CO N F I R M A T IO N S FR O M R E L A T ED P AR TI ES. IN TH E A B SE NCE O F D O CUMENT A R Y E V ID E N CES GENUINE N ESS OF EX P E N S E S A ND SO UR CE OF P AY M E NT CA NN O T BE ESTAB L IS H ED. FURTH E R R EG ARDIN G C OS T O F C O N S TRU C TI O N & EX P E N SES A M OU NT I N G T O R S . 63 , 01,593 / - C L A I MCD TOW A RD S CO S T OF IMPROVEMENT OF TH E PROP E RT Y F O R CO MPUTIN G L ON G T E RM CA PIT A L G A IN , IT IS SUBMITTED BY TH E A S SESSEE THAT THE S H E I S TH E O WN E R O F PR O P E RT Y S ITU A T E D AT BL O CK-B .RARNPR AS TH A A T GH AZ I A B A D , U. P . S IN CE L O N G A ND IN VES T ED A N A M O UN T OF R S.630 1 593 / - IN TH E R E N OVAT I O N A N D EXTE N S I O N BE T WEE N 2009 A ND 2012 . I N S UPPORT OF THE S AID RENOVATION, EXTE N S I O N A N D CO N ST R UC T ION. SH E H AS FIL E D TH E VA LU A TI O N R E P OR T D A T ED 0 5 . 02.2012 T A K E N FRO M ENGI N EE R M E NTI O NIN G VA LU A TI ON A M O UNT A S R S. 65 , 93 , 000 / - A ND H AS I N CA PIT A L G AI N OF R S.53 , 1 9 , 9 7 0 / - I N PURCH ASE O F A N O TH E R R ESI D E NTIAL H O U SE S ITUAT E D AT BL OCK - E , S EC T O R- AL PH A NO I DA FO R R S .53 71 ,1 00 / - A ND TH E D ED U C TI O N OF TH E SA M E WAS C LAIM E D U / S 5 4. S H E H AS F I LED A D I ARY REF L ECTING A LL T H E EX P E N D I T U RE M ADE A L O N GWI T H FEW BILLS. THE TOTAL AMOUNT OF BILLS HEREWITH IS RS.22, 48,482/-. ON EXAMINING THE BILLS SUBMITTED BY THE ASSESSEE IT IS FOUND THAT EVEN BILLS AMOUNTING ON R S.22,48,482/- ARE NOT S UPP O RTED B Y AN Y L E D GE R AC C O UNT S A N D CO NFIRM A T IO N S F R O M R E L A T ED P A RTI ES . T H E R E F ORE , TH E CASE WAS A D JO URN E D T O 26 . 02. 2015 F O R F IN A L H EA R I N G T O S UBMI T T H E CO MPL ETE D E T A IL S. O N 26.02.20 1 5 N E ITH ER A N Y B O D Y A TTENDED NOR FIL E D AN Y D E T AI L S. TH E R EFO R E, AGA IN O N 0 3.03.20 1 5 S H OW CA U SE N O TI CE I SS U ED FI XI N G TH E CAS E FOR 09 .03 .2 0 15 . ON 05.03.20 1 5 TH E CO UNSEL TH E ASSESS E E A PPE A R E D A ND FIL ED A L ET T ER E NCL OSI N G SA L E / CO N S TR UC T ION ACCOUNT OF SHALIMA R PR O PERT Y & RAMAPRAS T HA PR OPER T Y RE L ATED T O BU S IN ESS A ND CA P IT AL GA IN R E S PECTIVELY. BU T TH ESE DE T AI L S A R E NO T SUPPO RT E D B Y A N Y DOC UM E NT A R Y E V ID E NC ES I.E . C O NFIRMATI O N S FR O M CO N C ERN E D P A RTI ES, C O P Y OF L E D GE R AC C O UNT S, SO UR C E M O DE O R P AY M E NT S A ND SO URCE OF IN VES T ME NT E T C. ACCO RDIN G L Y T H E CO UNSEL OF TH E ASSESSEE AS K E D TO PR O DU CE B OO K S O F ACCO UNT S A ND TH E CASE WA S ADJO URN E D T O 1 0.03.2015 . O N 1 0 . 03.20 1 5 N O B O D Y A TT E N DED TH E O F F I CE . T H E RF O R E SUMM O N U / S 1 3 1 WAS I SS U ED TO T H E A SS ESSEE TO A T TEND TH E OFFICE ON 18 .03. 2015 . ON 18 . 03.20 1 5 S HR I P RAS H A NT KHAN DE L WA L C A . A ND A. R . OF TH E ASSESSEE A TT E N DED A ND S UBMITT E D TH A T W E H AV E A LR E A D Y S U B M II T E D O U R A LL W RITT E N S U B MI SS I O N S. IN VIE W OF THE AB OVE FAC T S I T I S C LE A R TH A T TH E ASSESSEE I S N O T M A INTA I NIN G AN Y B O OK S OF ACC O UNT A ND EV E N DOE S NOT H AV E BILL S / V O UCH E R S, S UPP O RTIN G D OC UM E NT S TO EXPLAIN SOURC E/ M O DE OF PAYMENTS AND SOURCE OF IN V ESTM E NT IN THE PROPERT Y . THER E F O R E, LOOKING IN TO THE N A TURE O F BU S IN E SS OF TH E A SS ESSEE A S UM OF R S. 5,07,569 / - B E IN G 1 5 % O F R S.33, 8 3 , 793 / - C OS T OF CON S TRU C T ION E X P E NSE S DEBIT E D TO PROFIT & L OSS ACCO UNT I S DI SA LL O W E D A ND FURTH E R S UM O F RS. 9, 4 5,2 39 / - B E IN G 15% OF RS.63,01,593/- CLAIMED AS COST OF IMPROVEMENT UNDER THE HEAD LONG TERM CAPITAL GAINS IS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE ON ADHOC BA SIS. 3. LEARNED CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER. 5. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE FACTS OF THE CASE. IT WAS ARGUED BY LEARNED DR THAT ASSESSEE HAS NOT PRODUCED THE ITA NO.232/DEL/2017 3 BOOKS OF ACCOUNT, AND THEREFORE, THE ASSESSING OFFI CER HAS RIGHTLY MADE THE ESTIMATIONS, WHEREAS THE LEARNED AR ARGUED AND POINTED OUT AT PAGE 3 OF THE SUBMISSION MADE BEFORE THE LEA RNED CIT(A) THAT BEFORE THE ASSESSING OFFICER HE HAS SUBMITTED THE F OLLOWING: 1. SUBSTANTAIL BILL FOR CONSTRUCTION HOUSE. 2. SOURCES OF FLOW OF FUND STATEMENT. 3. VALUATION REPORT OF PROPERTY CONFIRMING CONSTRU CTION COST. 4. ASSESSING OFFICER HAS PERSONALLY VERIFIED BOTH THE HOUSES TO ASCERTAIN THE COST OF CONSTRUCTION AND ALSO VERIFIE D THE FACT OF SALE FROM THE CURRENT OWNERS OF THE PROPERTIES. 5.1 NO DEFECT HAS BEEN POINTED OUT IN THE VALUATION REPORT SUBMITTED BY THE ASSESSEE BY EITHER OF THE AUTHORIT IES BELOW. NO AUTHORITIES BELOW HAVE REFERRED THE MATTER TO DVO A ND NO BOOKS OF ACCOUNT HAS BEEN REJECTED. AT THE OUTSET SALE CONSI DERATION HAS BEEN ACCEPTED IS NOT UNDER DISPUTE. UNDER SUCH CIRCUMSTA NCES HAVING PRODUCED ALL THE EVIDENCES FUND FLOW STATEMENT AND VALUATION REPORT AND ASSESSING OFFICER PERSONALLY VERIFIED THE HOUSE S, THERE ARE NO BASIS TO EVEN REJECT THE BOOKS OF ACCOUNT WHICH IN THE PRESENT CASE HAS NOT BEEN REJECTED AND IN SUCH CIRCUMSTANCES NO ESTIMATIONS CAN BE MADE AND NO ADDITION CAN BE MADE. MOREOVER, THE DIFFERENCE BETWEEN THE DECLARED VALUE AND ASSESSED VALUE IS LE SS THAN 15% AND THEREFORE IN VIEW OF THE DECISION OF HONBLE SUPREM E COURT IN THE CASE OF CB GAUTAM VS. UNION OF INDIA REPORTED IN 19 1 ITR 530 (SC). THE DIFFERENCE BEING LESS THAN 15%, THE SAME CAN BE IGNORED ALSO. IN SUCH CIRCUMSTANCES AND FACTS OF THE PRESEN T CASE, NO ADDITION ITA NO.232/DEL/2017 4 IS CALLED FOR AND ADDITIONS SO MADE IS DIRECTED TO BE DELETED AND THE ORDER OF THE LD. CIT(A) IS REVERSED. THUS, ALL THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY 27 TH APRIL, 2017 SD/- (B.P. JAIN) ACCOUNTANT MEMBER DATED: 27/04/2017 PRABHAT KUMAR KESARWANI, SR.P.S. COPY FORWARDED TO: 1.ASSESSEE 2.RESPONDENT 3.CIT 4.CIT(APPEALS) 5.DR: ITAT ASSTT. REGISTRAR, ITAT, NEW DELHI