R.K. City Developers Private Limited, Muktsar V. Principal Commissioner of Income Tax, Bathinda

ITA 243/ASR/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5544 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 25-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHARAM SINGH LD
• Assessee Lawyers: ASHWANI KUMAR LD
• Section: 40A(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. T.S. KAPOOR, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER I.T.A NO.243(ASR)/2015 ASSESSMENT YEAR:201 0-11 R. K. CITY DEVELOPERS PRIVATE LIMITED, MUKTSAR. PAN:AADCR-9807N VS. PR. CIT, BATHINDA. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. ASHWANI KUMAR (LD.CA) RESPONDENT BY: SH. DHARAM SINGH (LD.DR) DATE OF HEARING:26.07.2017. DATE OF PRONOUNCEMENT:31.07.2017 ORDER PER N.K.CHOUDHRY: THE FACTUAL MATRIX FOR DISPOSAL OF THE APPEAL IS AS UN DER: THE ASSESSEE FEELING AGGRIEVED AGAINST THE ORDER DATED 25 TH FEB. 2015 PASSED BY THE PR. CIT, BATHINDA U/S 263 OF THE I.T. ACT, PREFERRED THE INSTANT APPEAL ON THE SOLITAR Y GROUND. THAT THE ORDER PASSED U/S 263 OF THE INCOME TAX ACT , 1961 BY THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX (APPEALS), BATHINDA IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS HE WAS NOT JUSTIFIED IN HOLDING THE ASSESSMENT FRAMED BY THE LD. ASSESSI NG OFFICER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE IN NOT DISALLOWING THE AMOUNT OF RS.5,05,000/- UNDER SECTI ON 40A(3) OF THE ACT IBID ON ACCOUNT OF AMOUNT DEBITED TO THE CAPITA L WORK IN PROGRESS ACCOUNT (PART OF THE FIXED ASSETS). ITA NO.243 (ASR)/2015 ASST. YEAR : 2010-11 2 2. BRIEF FACTS OF THE CASE ARE AS UNDER : THE ASSESSEE IS A COLONIZER AND FILED ITS RETURN OF INCOME ON 29.10.2010 DECLARING THE TOTAL INCOME OF RS.1,58,87 0/- WHICH WAS PROCESSED U/S 143(1) AND SCRUTINY ASSESSMENT WAS COMPLETED IN THIS CASE BY THE INCOME TAX OFFICER, WARD-I I(2), MUKTSAR VIDE ORDER DATED 30 TH MARCH, 2013 AT A TOTAL INCOME OF RS.2,08,870/-. THE LD. PR. CIT ON PERUSAL OF THE RECORDS FOUND SOME DEFICIENCIES AND IRREGULARITIES IN THE ASSESSMENT ORDER, T HEREFORE, NOTICE U/S 263 OF THE I.T. ACT DATED 16 . 01.2015 WAS ISSUED IN THE ASST. YEAR:2010-11 WHICH IS REPRODUCED AS UNDER: FROM THE PERUSAL OF RECORDS REVEALS THAT YOU HAVE SHOWN THE VALUE OF LAND AT RS.79,03,188/- AND RS.60,40,000/- AS ON 31.03.2010 AND 31.03.2009 RESPECTIVELY IN THE SCHEDULE FIXED ASSETS. FURTHER, AN AMOUNT OF RS.16,00,000/- WAS SHOWN AS CAPITAL WORK-IN PROGRESS AS ON 31. 03.2010 (NIL AS ON 31.0 3.2009). FURTHER, IT WAS NOTICED THAT AS PER REGISTRATION DE ED DATED 25.08.2009 YOU HAVE PURCHASED LAND FOR 22,05,000/- + RS. 1,76,400/- (STAMP PAPERS) + OTHER EXPENSES. HOWEVER , IN THE SCHEDULE FIXED ASSETS, THE ACCRETION IN THE LAND HAS BEEN SHOWN AT RS.18,63,188/- AS AGAINST PURCHASE AMOUNT AT RS. 23.85 LACS APPROXIMATELY. THE REST OF THE AMOUNT HAS BEEN DEBI TED BY YOU IN THE ACCOUNT CAPITAL WORK-IN-PROGRESS). THE PAYMENT S MADE BY YOU THROUGH CHEQUE HAVE BEEN DEBITED IN THE LAND ACCOU NT AND PAYMENT MADE BY CASH HAS BEEN DEBITED IN CAPITAL W ORK-IN- PROGRESS FROM THE REGISTRATION DEED IT WAS NOTICED THAT YOU HAVE MADE PAYMENTS IN CASH FOR PURCHASE OF LAND AMOUNTIN G TO RS.5,05,000/-. THEREFORE, YOU HAVE MADE PAYMENT IN CASH IN VIOLATION OF PROVISIONS OF SECTION 40A(3) OF I. T. ACT, 1961. THUS, THE DEDUCTION CLAIMED ON ACCOUNT OF PURCHASES AMOUNTING TO RS.5,05,000/- IS NOT ALLOWABLE AS PER PROVISIONS OF SECTION 40A(3) OF I. T. ACT, 1961, BUT THE AO HAS FAILED TO MAKE SUCH DISALLOWANCES. FAILURE ON THE PART OF THE THEN AO IN MAKING THE DI SALLOWANCES, AS DISCUSSED ABOVE, HAS RENDERED THE ASSESSMENT ORDER DATED 30.03.2013 ERRONEOUS AND PREJUDICIAL TO THE INTERES TS OF REVENUE. ITA NO.243 (ASR)/2015 ASST. YEAR : 2010-11 3 IN VIEW OF THE ABOVE, YOU ARE HEREBY GIVEN AN OPPOR TUNITY TO EXPLAIN AS TO WHY THE ABOVE REFERRED ASSESSMENT ORD ER DATED 30.03.2013 MAY NOT BE CANCELLED U/S 263 OF THE INCO ME TAX ACT, 1961 FOR MAKING FRESH ASSESSMENT SINCE THE SAID ORD ER PASSED BY THE ASSESSING OFFICER PRIMA FACIE APPEARS TO BE ERR ONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. WHILE REPLYING TO THE NOTICE, THE ASSESSEE FIL ED THE REPLY AS UNDER: KINDLY IN REFERENCE TO YOUR NOTICE U/S 263 DATED 1 6.01.2015, IT IS HUMBLY SUBMITTED THAT THIS NOTICE HAS NOT BEEN RECE IVED BY THE ASSESSEE COMPANY DUE TO NON SERVICE. IT IS FURTHER SUBMITTED THAT DEBIT OF RS.5,25,000/- TO CAPITAL WORK IN PROGRESS INSTEAD OF THE LAND ACCOUNT IS A CLERICAL MISTAKE. WHILE INCORPORA TING THE ENTRIES IN THE BOOKS OF ACCOUNT FOR THE YEAR UNDER REFERENCE, THE ACCOUNTANT WAS NOT AWARE OF THE NATURE OF THE CASH PAID AS SUC H HE ACCORDING TO HIS KNOWLEDGE DEBITED THE FIXED ASSET ACCOUNT PE RTAINING TO THE CAPITAL WORK IN PROGRESS. THE FACTS HAVE BEEN EXPLA INED TO THE LD. ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS. THE INVESTMENT IN THE LAND AMOUNTING TO RS.23.85 LACS H AS BEEN EXPLAINED. THE ASSESSMENT ORDER FRAMED BY THE ASSES SING OFFICER IS NOT ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT IS HUMBLY PRAYED TO FILE THE NOTICE. THE LD. CIT(A) DID NOT SATISFY WITH THE REPLY AND AFT ER CONSIDERING THE SAME CONSIDERED THE AMOUNT OF RS.5,25,000 /- AS PAYMENT IN CASH IN VIOLATION OF PROVISIONS OF SEC.40A (3 ) OF THE I.T. ACT, 1961 AND THEREBY, THE DEDUCTION CLAIMED TO THE TU NE OF RS.5,05,000/- WAS NOT ALLOWED AS PER THE AFORESAID PROV ISION AND FINALLY THE LD. CIT HELD THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE ITS CLAIM TO BE ALLOWED AS THE AMOUNT WAS SHOWN UNDER CAPITA L WORK IN PROGRESS AND FINALLY FOUND THE ASSESSMENT ORDER HAS TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE DEPARTMENT. 3. FEELING AGGRIEVED AGAINST THE ORDER PASSED BY TH E LD. PR. CIT, THE ASSESSEE PREFERRED THE INSTANT APPEAL AND SUBMITTED T HAT THE ITA NO.243 (ASR)/2015 ASST. YEAR : 2010-11 4 ASSESSEE HAD SHOWN THE SAID AMOUNT IN THE LEDGER BOOK FRO M 1 ST APRIL, 2009 TO 31 ST MARCH, 2010 IN THE HEAD OF CAPITAL WORK IN PROGRESS ACCOUNT AS WELL AS TOTAL AMOUNT HAS BEEN SHOWN IN THE BAL ANCE SHEET AS ON 31 ST MARCH, 2010 AS RS.16 LACS. EVEN OTHERWISE THE SAID AMOUNT OF RS.50,5000/- RELATES TO THE CAPITAL IN NATURE AND IF THERE IS ANY CLERICAL MISTAKE T HAT CANNOT BE AFFECT THE HEAD OF THE AMOUNT. 4. ON THE CONTRARY, THE LD. DR RELIED UPON BY THE ORDER PASSED BY THE PR. CIT AND EMPHASIZED THAT THE ORDER IS REASONABL E, LOGICAL AND DOES NOT REQUIRE ANY INTERFERENCE BY THIS COURT. 5. WE HAVE GONE THROUGH THE CONTENTS OF SEC.40A(3) AS THE SAME DEALS WITH THE EXPENDITURE, IN THE INSTANT CASE THE SAID AMOUNT WAS IN THE HEAD OF CAPITAL IN NATURE. TO OUR MIND, IN CASE INADVERTENTLY, THE AMOUNT IF A NY SHOWN IN THE DIFFERENT HEAD EVEN THAT ITSELF DOES NOT CONSIDER T HE SAME IN A DIFFERENT HEAD BECAME THE SAME IS SPECIFIED IN THE BALA NCE SHEET IN THE FIXED ASSETS. THE ASSESSEE HAS SHOWN TOTAL AMOUNT OF RS.16 L ACS AS CAPITAL WORKED IN PROGRESS AND FROM THE LEDGER ACCOUN T FROM FIRST APRIL, 2009 TO 31 ST MARCH, 2010 THE AMOUNT OF RS.RS.16 LACS HAVE BEEN SEGREGATED AND THE ENTRY OF RS.5,05,000/- HAS BEE N SHOWN DATED 11 TH AUGUST, 2009 AS PAID TO SH. BEANT SINGH IN CASH. FRO M THE RECORD, IT REFLECTS THAT THE SAID AMOUNT FALLS WITHIN TH E HEAD OF FIXED ASSETS, THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES O F THE CASE, ITA NO.243 (ASR)/2015 ASST. YEAR : 2010-11 5 WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS ALREADY DEALT WITH THE ASSESSMENT PROCEEDINGS BY ASKING NECESSARY INFORMATION, DETAILS WHICH WERE FURNISHED BY THE ASSESSEE AND EVEN OTHERWISE THE ASSESSING OFFICER WAS FULLY SATISFIED QUA BOOKS OF ACCOUNT AL ONG WITH VOUCHERS FOR EXPENSES FILED BY THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY INFIRMITY AND ILLEGALITY WHICH APPEARS TO BE ERR ONEOUS AND PREJUDICE TO THE INTEREST OF THE REVENUE. HENCE, WE SET ASIDE THE ORDER PASSED BY THE PR. CIT BECAUSE THE SAME IS BASED ON HIS ASSUMPTION AND SURMISES AND CANNOT BE G IVEN LEGAL EFFECT. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.07. 2017. SD/- SD/- (T. S. KAPOOR) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED:31.07.2017. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER