Shri Prakashbhai Prahladbhai Gami, Surat V. The Income tax Officer,Ward-6(3), Surat

ITA 2386/AHD/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6228 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 23-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 04-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M J SHAH
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI PRAKASHBHAI PRAHLADBHAI GAMI, GANGA KRUPA , BUILDING, BEH. RAMDEV COMPLEX, BOMBAY MARKET, PUNA GAM, DIST. SURAT - 395010 PAN: ADSPP6520F (APPELLANT) VS THE ITO, WARD - 6(3), AAYAKAR BHAVAN, MAJURA GATE, SURAT (RESPONDENT ) REVENUE BY : S H RI MUDIT NAGPAL , SR. D . R. ASSESSEE BY: S H RI M.J. SHAH , A.R. DATE OF HEARING : 23 - 02 - 2 017 DATE OF PRONOUNCEMENT : 05 - 04 - 2 017 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THESE TWO ASSESSEE S APPEAL FOR A.Y. 2009 - 10 & 2010 - 11 , AR ISE FROM ORDER OF THE CIT(A) - I, SURAT DATED 08 - 11 - 2012 & 09 - 07 - 2013 IN APPEAL NO S . CAS - I/TFR - 6.67 /206/12 - 13 & CAS - I/581/TRFD/12 - 13 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO S . 214 & 2386 / A HD/20 13 A Y 200 9 - 10 & 2010 - 11 I.T.A NO S . 214 & 2386 / AHD/2013 A.Y. 2009 - 10 & 2010 - 11 PAGE NO SHRI PRAKASHBHAI PRAHLADBHAI GAMI VS. ITO 2 ITA NO. 214/AHD/2013 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. THE C.L.T.(APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS.31,3 8,181/ - ON ACCOUNT OF DISALLOWAN CE OF EXPENSES U/S.40(A)(IA) OF THE INCOME TAX ACT. THE DISALLOWANCE MADE IS BAD IN LAW AND THEREFORE REQUIRED TO BE DELETED. 2. THE C.I.T.(APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.3,06,294/ - ON ACCOUNT OF HOUSEHOLD EXPE NSES. IT IS SUBMITTED THAT IT BE SO DELETED NOW. 3. THE BRIEF FACTS OF THE CASE IS THAT RETURN OF INCOME DECLARING INCOME OF RS. 4 , 99 , 942/ - WAS FILED ON 24 TH SEPTEMBER, 2009. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING NOTICE U/S. 143 (2) ON 30 TH AUGUST, 2010. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD DE DUCTED TAX AT SOURCE @ 1.03% AND 1.12% AS PER THE AGGREGATE AMOUNT OF PAYMENT MADE TO THE SUB - CONTRACTORS. IN THIS CONNECTION, THE AS SESSING OFFICER STATED THAT AS PER THE F INA NCE A CT, 2008, THE ASSESSEE WAS REQUIRED TO DEDUCT THE TAX AT SOURCE @ 1.33% INCLUDING SURCHARGE. THEREFORE, THE ASSESSING OFFICER CONCLUDED THAT SINCE THE ASSESSEE HAS FAILED TO DEDUCT THE TAX AT SOURCE INCLUDIN G SU RCHARGE AS PER THE SECTION XVII - B WHERE THE AGGREGATE AMOUNT EXCEED RS. 10 LACS PAID TO THE CONTRACTOR/SUB - CONTRACTOR. IN VIEW OF THIS , THE AMOUNT OF EXPENSES DISALLOWED U/S. 40(A)(IA) WAS WORKED OUT BY THE ASSESSING OFFICER AS UNDER: - I.T.A NO S . 214 & 2386 / AHD/2013 A.Y. 2009 - 10 & 2010 - 11 PAGE NO SHRI PRAKASHBHAI PRAHLADBHAI GAMI VS. ITO 3 PAYEES NAME AMOUNT PAID (RS.) APPLICABLE RATE OF TDS INCLUDING SURCHARGE TDS MADE SHORT DEDUCTIO N DISALLOWABLE AMOUNT U/S. 40(A)(IA) CHETANBHAI PRAHLADBHAI PATE! 50,45,928 @1.33% @1.03 % 0.3% RS. 11,38,179 PRAKASH DIAMOND 58,42,302 @1.33% @1.03 % 0.3% RS. 13, 17,812 RAKESHKUMAR T. PATEL 10,35,592 @1.33% @1.12 % 0.21% RS. 1,63,515 SANJAYBHAI D. THAKOR 13,92,792 @1.33% @1.12 % 0.21% RS. 2,19,914 SURESHBHAI D. VAGASIYA 18,92,156 @1.33% @1.12 % 0.21% RS. 2,98,761 TOTAL MAJURI PAID: 1,5 2,08,770 RS. 31,38,181 4. AGGRIEVED AGAINST THE ORDER OF THE ASSESSING OFFICER, THE ASSESSING OFFICER PREFERRED APPEAL BEFORE THE LD. CIT(A) . THE LD. CIT(A) HAD CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: - 6.1 TH E APPELLANT SUBMITTED THAT SHORT DEDUCTION WAS ON ACCOUNT OF NOT CONSIDERING SURCHARGE WHILE DEDUCTING THE TAX AND THEREFORE, THE DISALLOWANCE MADE U/S 40(A)(IA) SHOULD BE DELETED. THE APPELLANT ALSO SUBMITTED THAT DEDUCTEES HAVE PAID TAXES AND THERE IS NO LOSS TO THE REVENUE. THE APPELLANT'S ARGUMENTS HAVE BEEN EXAMINED. THE SECTION 40(A)(IA) OF THE ACT IS A DEEMING PROVISION AND THEREFORE, IT HAS TO BE INTERPRETATED STRICTLY IN ACCORDANCE WITH THE LANGUAGE OF THE ACT. THE SECTION 40(A)(IA) DOES NOT PROVID E ANY SUCH EXEMPTION. SINCE THE APPELLANT HAS MADE SHORT DEDUCTION OF TAXES THE I.T.A NO S . 214 & 2386 / AHD/2013 A.Y. 2009 - 10 & 2010 - 11 PAGE NO SHRI PRAKASHBHAI PRAHLADBHAI GAMI VS. ITO 4 EXPENDITURE CORRESPONDING TO THE SHORT DEDUCTION IS NOT ALLOWABLE U/S 40(A)(IA) OF THE ACT. 6.2 THE ASSESSING OFFICER HAS WORKED OUT THE CORRESPONDING EXPENDITURE ON PRO - RATA BASIS AND MADE ADDITION OF RS. 31,38,181/ - , IN VIEW OF THE CLEAR LEGAL PROVISION IN THIS REGARD. THE APPELLANT ~S ARGUMENT IS NOT ACCEPTED AND THE ADDITION MADE BY THE ASSESSING OFFICER IS CONFIRMED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. W E FIND THAT THE CO - ORDINATE BENCH OF ITAT AHMEDABAD VIDE ITA 812/AHD/2011 IN THE CASE OF M/S. ASHA SILK MILLS DECIDED THE ISSUE AFTER KEEPING RELIANCE ON THE JUDICIAL PRONOUNCEMENT OF THE HON BLE HIGH COURT OF CALCUTTA AND JURISDICTIONAL HIGH COURT IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER: - 3. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. WE FIND THAT THE ISSUE AS TO WHETHER THE DISALLOWANCE UNDER SECTION 40(A)(IA) CAN BE INVOKED IN A CASE AND SHORT DEDUCTION OF TAX AT SOURCE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE HON'BLE CALCUTTA HIGH COURT DECISION IN THE CASE OF CIT VS. S.K. TEKRIWAL (361 ITR 43 2 (CAL)) WHEREIN IT IS HELD THAT 'THERE IS NOTHING IN THE SAID SECTION TO TREAT, INTER ALIA, THE ASSESSEE AS A DEFAULTER WHEN THERE IS SHORTFALL IN THE DEDUCTION'. OUR ATTENTION IS ALSO INVITED TO THE JUDGEMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE C ASE OF CIT VS. PRAYAS ENGINEERING LIMITED (TAX APPEAL NO.1237 OF 2014 JUDGEMENT DATED 17.11.2014 WHEREIN THEIR LORDSHIPS HAVE TAKEN THE SAME APPROACH. IN THIS VIEW OF THE MATTER AND RESPECTFULLY FOLLOWING THE ESTEEMED VIEWS OF JURISDICTIONAL HIGH COURT, WE HOLD THAT THE A.O. WAS INDEED UNJUSTIFIED IN INVOKING SECTION 40(A)(IA) OF THE ACT. ACCORDINGLY, THE A.O. IS DIRECTED TO DELETE THE IMPUGNED DISALLOWANCE OF RS.15,24,677/ - . THE ASSESSEE GETS THE RELIEF ACCORDINGLY. I.T.A NO S . 214 & 2386 / AHD/2013 A.Y. 2009 - 10 & 2010 - 11 PAGE NO SHRI PRAKASHBHAI PRAHLADBHAI GAMI VS. ITO 5 6. RESPECTFULLY FOLLOWING THE DECIS ION OF THE CO - ORDINATE BENCH AS SUPRA, WE ALLOW THE APPEAL OF THE ASSESSEE ON THE ISSUE. LOW HOUSE HOLD EXPENDITURE: - 7. ON THIS ISSUE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS SHOWN MONTHLY EXPENSES A T RS. 30,000/ - WHERAS THE HOUSEHOLD WITHDRAWAL FOR THE YEAR UNDER CONSIDERATION WAS SHOWN AT RS. 2 , 18 , 120/ - ,THEREFORE THE ASSESSING OFFICER ESTIMATED THE HOUSEHOLD EXPENDITURE OF THE ASSESSEE AT RS. 50,000/ - PER MONTH AND DETERMINED THE TOTAL HOUSEHOLD E XPENDITURE FOR THE YEAR AT RS. 6 LACS. THE ASSESSING OFFICER DEDUCTED TO RS. 1 , 51 , 356/ - SHOWN BY THE ASSESSEE OUT OF THE ESTIMATED HOUSEHOLD EXPENDITURE OF RS. 6 LACS AND ADDED THE DIFFERENCE OF RS. 4 , 48 , 644/ - TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEV ED AGAINST THIS ADDITION, THE ASSESSING OFFICER PREFERRED APPEAL BEFORE THE LD. CIT(A). LD. CIT(A) REDUCED THE ADDITION BY RS. 1 , 42 , 350/ - AND SUSTAINED THE ADDITION TO THE EXTENT OF RS. 3 , 06 , 294/ - BY OBSERVING AS UNDER: - 8. IT IS A FACT THAT THE APPELLAN T HIMSELF CLAIMED MONTHLY EXPENDITURE OF RS 30,000/ - PER MONTH IN THE YEAR 2005. IF, APPELLANT WAS LIVING IN JOINT FAMILY AT THAT PARTICULAR TIME, AND NUCLEAR FAMILY IN THE PRESENT ASSESSMENT YEAR, HIS EXPENSES WOULD INCREASE AND NOT REDUCE. HOWEVER, THE A PPELLANT IN THE CHART ABOVE HAS SHOWN WITHDRAWALS OF RS 69,100/ - IN THE NAME OF PRABHA P GARNI , RS. 25,250/ - IN THE NAME OF SHRI PRAKASH P GARNI (HUF) AND WITHDRAWAL OF RS 48,000 FROM EMBROIDERY UNIT. THEREFORE, THE SET OFF OF THESE AMOUNTS IS ALLOWED TO THE APPELLANT AND THE ADDITION MADE AT RS 4,48,6 44/ - IS I.T.A NO S . 214 & 2386 / AHD/2013 A.Y. 2009 - 10 & 2010 - 11 PAGE NO SHRI PRAKASHBHAI PRAHLADBHAI GAMI VS. ITO 6 REDUCED BY RS. 1,42,350/ - I.E. ADDITION IS SUSTAINED TO THE EXTENT OF RS 3,06, 294/ - . 8. WE HEARD THE RIVAL CONTENTIONS. WE NOTICED THAT THE LD. CIT(A) HAS ALLOWED THE DEDUCTION FOR THE HOUSEHOLD EXPENDITURE SHOWN BY THE OTHER FAMILY MEMBER BY THE AMOUNT OF RS. 1 , 42 , 350/ - . HOWEVER, AFTER TAKING INTO ACCOUNT, THE STATEMENT OF THE ASSESSEE THAT HE WAS LIVI NG WITH HIS BROTHER FOR PART OF THE PERIOD WE RESTRICT THE MONTHLY HOUSEHOLD EXPENDITURE TO TH E AMOUNT OF RS. 40,000/ - PER MONTH BEFORE THE SET - OFF ALLOWED BY THE LD. CIT(A). ITA NO. 2386 /AHD/2013 9 . THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. THE C.I.T(APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS. 5,71,995/ - ON ALLEGED SUPPRESSI ON OF SHORT TERM CAPITAL GAIN AS PER SEC. 50C OF THE ACT. 1.2 THE C.I.T. (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE RATE AS PER SEC. 50C WAS NOT THE CORRECT RATE AND IN FACT INDEPENDENT INQUIRY OUGHT TO HAVE BEEN MADE TO ASCERTAIN THE CORRECT RATE OF THE PROPERTY. 1.3 THE C.I.T.(APPEALS) ERRED IN NOT SENDING THE ISSUE TO THE VALUATION OFFICER TO ASCERTAIN THE CORRECT VALUE OF THE PROPERTY BEFORE UPHOLDING THE ADDITION U/S.50C. 2. THE C.I.T.(APPEALS) ERRED IN UPHOLDING THE ADDITION OF RS. 2,49,098/ - MADE ON ACCOUNT OF LOW HOUSEHOLD EXPENSES. 10 . THE BRIEF FACTS OF THE CASE IS THAT RETURN OF INCOME DECLARING TOTAL INCOME OF RS.9,86,327/ - WAS FILED ON 10 TH SEPTEMBER, 2010. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING NOTICE I.T.A NO S . 214 & 2386 / AHD/2013 A.Y. 2009 - 10 & 2010 - 11 PAGE NO SHRI PRAKASHBHAI PRAHLADBHAI GAMI VS. ITO 7 U/S. 143(2) ON 23 RD , AUGUST, 2011. THE ISSUE S IN THE GROUND OF APPEAL ARE DISCUSSED AS UNDER: - ADDITION ON ACCOUNT OF CAPITAL GAIN U/S. 50C OF THE ACT. 11 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NO TICED THAT ASSESSEE HAS PUR CHASED IMMOVABLE PROPERTY AT RS. 6 , 29 , 110/ - ON 16 TH DECEMBER, 2009 ALONG WITH TWO OTHER CO - OWNERS AND THE SAID PROPERTY WAS SOLD DURING THE YEAR FOR RS. 47 , 23 , 250/ - ON 30 TH MARCH, 2010. THEREAFTER, THE ASSESSING OFFICER OBTAINED THE MARKET VALUE OF THE SA ID PROPERTY DETERMINED BY THE SUB - REGISTRAR AS PER STAMP DUTY TO THE AMOUNT OF RS. 62 , 91 ,1 10/ - . THE ASSESSEE WAS SHOW CAUSED TO CALCULATE THE SHORT TERM CAPITAL GAIN U/S. 50C OF THE ACT AFTER CONSIDERING THE MARKET VALUE OF RS. 62 , 91 ,1 10/ - . THEREAFTER, T HE ASSESSING OFFICER DETERMINED THE SHORT TERM CAPITAL GAIN AS PER SECTION 50C BY STATING THAT ASSESSEE FAILED TO DETERMINE THE SAME. THEREFORE, THE ASSESSING OFFICER DETERMINED SHORT TERM CAPITAL GAIN U/S. 50C AT RS. 5 , 71 , 955/ - AS PER 36.48% SHARE OF TH E ASSESSEE IN THE PROPERTY. AGGRIEVED AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). LD. CIT(A) DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE BY STATING THAT LD. COUNSEL OF THE ASSESSEE HAS NOT PRESSED THIS GROUND OF APPEAL. RELEVANT PART FROM THE LD. CIT(A) IS REPRODUCED AS UNDER: -- 6. THE APPELLANT DID NOT PRESS THE THIRD GROUND OF APPEAL. THE ORDER SHEET PROCEEDINGS DATED 08.07.2013 REGARDING THE SAME ARE REPRODUCED HERE IN UNDER: - I.T.A NO S . 214 & 2386 / AHD/2013 A.Y. 2009 - 10 & 2010 - 11 PAGE NO SHRI PRAKASHBHAI PRAHLADBHAI GAMI VS. ITO 8 'SHRI DI PAK K. DUDHWALA ATTENDED. FILED WRITTEN SUBMISSION. GROUND NO. 3 REGARDING 50C NOT PRESSED AS NO REQUEST U/S. 50C(2) WAS MADE AT ASSESSMENT STAGE FOR REFERENCE TO VALUATION OFFICER NOR ANY EVIDENCE FURNISHED TO MAKE OUT A C ASE U/S. 50C(2). THEREFORE, ONLY GROUNDS NO. 1 AND 2 ARGUED. APPEAL HEARD. 12 . DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, LD. COUNSEL HAS CONTENDED THAT THE ASSESSEE HAS MADE ANY AFFIRMATION THAT THE GROUND OF APPEAL WAS NOT PRESSED. ON THE OTHER HAND, LD. DEPARTMENTAL REP RESENTATIVE RELIED ON THE ORDER OF THE LD. CIT(A). 13 . AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND THAT THERE IS NO EVIDENCE WHICH COULD INDICATE THAT ASSESSEE HAD NOT PRESS ED THIS GROUND OF APPEAL . THEREFORE, WE CONSIDER IT MORE AP PROPRIATE TO RESTORE THIS ISSUE TO THE FILE OF LD. CIT(A) TO DECIDE THIS GROUND OF APPEAL ON MERIT AFTER PROVIDING DUE OPPORTUNITY TO THE ASSESSEE. LOW HOUSEHOLD EXPENDITURE 14 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER HAS NOT ICED THAT ASSESSEE HAS SHOWN MONTHLY EXPENSES AT RS. 30,000/ - WHEREAS HOUSEHOLD WITHDRAWAL OF THE FAMILY MEMBER FOR THE YEAR UNDER CONSIDERATION WAS SHOWN AT RS. 3 , 50 , 902/ - . THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS SHOWN WITHDRAWAL EXPENSES ON THE LOWER SIDE. HE ESTIMATED THE MONTHLY HOUSEHOLD EXPENDITURE AT RS. 50,000/ - PER MONTH AND DETERMINED ANNUAL I.T.A NO S . 214 & 2386 / AHD/2013 A.Y. 2009 - 10 & 2010 - 11 PAGE NO SHRI PRAKASHBHAI PRAHLADBHAI GAMI VS. ITO 9 WITHDRAWAL TOWARDS HOUSEHOLD EXPENDITURE AT RS. 6 LACS. T HEREFORE , THE DIFFERENCES OF RS . 2,49,098/ - (6,00,000 - 350902=249,908/ - ) WAS TREATED AS HO USEHOLD EXPENDITURE MADE OUT OF THE UNACCOUNTED BY THE ASSESSEE . 15 . AGGRIEVED AGAINST THE DECISION OF THE ADDITION MADE BY THE ASSESSING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS RESTRICTED THIS ADDITION TO RS. 50, 000/ - PER MONTH AS IT WAS DONE IN THE CASE OF THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 2009 - 10. 16 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE RESTRICT THE HOUSEHOLD EXPENDIT URE AT RS. 40,000/ - PER MONTH BEFORE T HE SET - OFF ALLOWED BY THE LD.CIT(A) ON SIMILAR BASIS AS DECIDED IN THE CASE OF THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 2009 - 10. 17 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 05 - 04 - 201 7 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 05 /04 /2017 / COPY OF ORDER FORWARDED TO: - I.T.A NO S . 214 & 2386 / AHD/2013 A.Y. 2009 - 10 & 2010 - 11 PAGE NO SHRI PRAKASHBHAI PRAHLADBHAI GAMI VS. ITO 10 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. C IT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,