SHRI GULREZ KHAN, Ujjain V. THE ITO 1(1), Ujjain

ITA 275/IND/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5714 (ITAT-INDORE)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 27-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G S GAUTAM
• Assessee Lawyers: S S DESHPANDE
• Keywords: Unexplained investment; Capital asset; Depreciation; Capital expenditure
• Section: 131

Judgement Text

ITA NO. 275/IND/2015 GULRAJ KHAN 1 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, INDORE BEFORE SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO. 275/IND/2015 A.Y.2009-10 GULREZ KHAN UJJAIN PAN ALBPK 9072A ::: APPELLANT VS INCOME TAX OFFICER 1(1) UJJAIN ::: RESPONDENT APPELLANT BY SHRI S.S. DESHPANDE RESPONDENT BY SHRI G.S. GAUTAM DATE OF HEARING 12.1.2016 DATE OF PRONOUNCEMENT 12.1.2016 O R D E R THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LEARNED CIT(A), UJJAIN, DATED 5.1.2015. ITA NO. 275/IND/2015 GULRAJ KHAN 2 2. BY WAY OF THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- (I) THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE ADD ITION OF RS.4,20,000/- BEING THE INVESTMENTS IN BODY RENOVAT ION AND DISALLOWING THE DEPRECIATION OF RS.1,26,000/- A ND INTEREST OF RS.23,472/- FOR BODY RENOVATION. (II) COMPLETE DETAILS WERE FILED IN RESPECT OF BODY RENOVATION AND IT WAS PROVED BEFORE THE LD. CIT(A) THAT THE ASSESSEE HAS NOT DEBITED THIS AS AN EXPENDITURE IN THE P&L A/C, THUS THE ADDITION MADE ON ACCOUNT OF BO DY RENOVATION, DEPRECIATION AND INTEREST ARE ILLEGAL A ND BAD IN LAW AND HENCE BE DELETED. (III) THE OFFER OF THE APPELLANT REGARDING ADDITION AL INCOME COULD NOT HAVE BEEN TAKEN INTO CONSIDERATION SINCE IT DOES NOT CONSTITUTE ANY INCOME TO THE APPELLANT. ITA NO. 275/IND/2015 GULRAJ KHAN 3 3. THE FACTS, IN NUTSHELL, ARE THAT THE ASSESSEE IS RU NNING BUSES ON HIRE FOR MARRIAGE, PICNIC PARTIES AND TOURS. DURING THE YEAR, UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN INCOME FROM SUCH BUSINESS AT RS.3,40,727/-. T HE ASSESSEE HAS SHOWN ADDITION OF RS.4,20,000/- TO THE FI XED ASSETS REPRESENTING COMPLETE RENOVATION OF BODY BUILD ING OF TWO BUSES INCLUDING COLOUR, SEATS, GLASS, ETC. TO ME ET OUT THIS EXPENDITURE, THE ASSESSEE CLAIMED TO HAVE TAKEN L OAN OF RS.4,20,000/- FROM ICICI BANK. IN SUPPORT OF THE EXPENDITURE HAVING BEEN INCURRED, THE ASSESSEE PRODU CED A BILL DATED 18.10.2008 ISSUED BY GOPAL BODY BUILDERS & REPAIRS, INDORE, WITH REGARD TO COMPLETE RENOVATION OF BODY OF TWO BUSES. IN ORDER TO VERIFY THE VERACITY OF THE CLAIM OF THE ASSESSEE, THE ASSESSING OFFICER ISSUED SUMMONS U /S 131 OF THE ACT TO SHRI PURANMAL JANGID, PROPRIETOR OF GOPAL BODY BUILDERS & REPAIRS, INDORE, AND RECORDED HIS ITA NO. 275/IND/2015 GULRAJ KHAN 4 STATEMENT WHEREIN HE CATEGORICALLY DENIED HAVING DONE AN Y BODY BUILDING WORK FOR THE ASSESSEE. THEREAFTER, THE ASSESSING OFFICER CONFRONTED THE ASSESSEE WITH THE AB OVE STATEMENT OF THE PROPRIETOR OF GOPAL BODY BUILDERS & REPAIRS, INDORE, AND RECORDED HIS STATEMENT THEREON, WHEREIN THE ASSESSEE, IN REPLY TO QUESTION NO. 24, ST ATED I SHALL PRODUCE THE REPORT OF THE SURVEYOR OF ICICI B ANK IN SUPPORT OF HAVING DONE THE RENOVATION WORK. HOWEVER, INSTEAD OF FURNISHING THE SURVEY REPORT, THE ASSESS EE VIDE HIS LETTER DATED 29.11.2011 VOLUNTARILY OFFERED THE AM OUNT OF RS. 4,20,000/- AS HIS ADDITIONAL INCOME WITH A VIEW ONLY TO BUY PEACE AND TO AVOID FURTHER LITIGATION IN THE MAT TER. 4. IN VIEW OF THE ABOVE FACTS, THE ASSESSING OFFICER HELD THAT THE AMOUNT OF RS. 4,20,000/- CLAIMED TO HAVE BEEN INCURRED ON RENOVATION OF BODY OF TWO BUSES WAS NOT S PENT AND THE BILLS PRODUCED THEREFOR WERE NOT GENUINE. HE , ITA NO. 275/IND/2015 GULRAJ KHAN 5 THEREFORE, TREATED THE SAME AS UNEXPLAINED INVESTMENT AN D ADDED IT TO THE RETURNED INCOME OF THE ASSESSEE. ACCORDINGLY, THE DEPRECIATION OF RS. 1,26,000/- AND I NTEREST OF RS. 23,472/- DEBITED TO THE P&L ACCOUNT WAS DISALL OWED BY THE ASSESSING OFFICER. ON APPEAL, THE LEARNED CIT( A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER AGAINST WHICH THE ASSESSEE HAS APPROACHED THE TRIBUNAL BY WAY OF FILI NG THE PRESENT APPEAL. 5. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE DR EW OUR ATTENTION TO PAGE 14 OF THE PAPER BOOK AND VEHEMEN TLY ARGUED THAT VIDE LETTER DATED 19.11.2011 THE ASSESSEE H AD REQUESTED ICICI BANK, UJJAIN, TO SUPPLY HIM A COPY OF T HE SURVEYORS REPORT ON WHICH THE ICICI BANK HAS ENDORSE D WE HAVE TO CHECK PROCESS AND THEN WE WILL CONFIRM TO CUSTOMER. THE LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT THE ASSESSEE IS STILL READY AND WILLING TO ITA NO. 275/IND/2015 GULRAJ KHAN 6 FURNISH THE SURVEYORS REPORT. ON THE OTHER HAND, TH E LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BE LOW AND SUBMITTED THAT IT IS PROVED ON RECORD THAT THE ASSE SSEE HAS NO CASE AND AS SUCH THE ORDERS OF THE AUTHORITIES BE LOW NEED TO BE SUSTAINED. 6. WE HAVE HEARD BOTH THE SIDES. THE REVENUE IS ABLE T O ESTABLISH THAT THIS EXPENDITURE CLAIMED BY THE ASSESSEE TOWARDS RENOVATION OF TWO BUSES WAS NOT GENUINE. HOWEVER, ONCE THE ASSESSEE ESTABLISHES THAT SOURCE OF THIS NON-GENUINE EXPENDITURE WAS ICICI BANK THEN NO ADDITI ON CAN BE MADE. SINCE THIS CLAIM WAS FOR MAKING CAPITAL EXPENDITURE IN THE FORM OF RENOVATION OF TWO BUSES AN D NOT DEBITED TO PROFIT AND LOSS ACCOUNT, THEREFORE, THE ADD ITION OF RS. 4,20,000/- CANNOT BE SUSTAINED. HOWEVER, SINCE TH IS EXPENDITURE WAS BOGUS CAPITAL EXPENDITURE, THEREFORE, NO CAPITAL ASSET WAS ACQUIRED ON WHICH DEPRECIATION COULD BE ITA NO. 275/IND/2015 GULRAJ KHAN 7 CLAIMED BY THE ASSESSEE. THE DEPRECIATION SO CLAIMED SH ALL NOT BE ADMISSIBLE TO THE ASSESSEE AND WE CONFIRM THIS DECISION OF THE LOWER AUTHORITIES. SINCE THIS LOAN TAK EN FROM ICICI BANK WAS NOT UTILIZED FOR BUSINESS PURPOSES, THEREFORE, INTEREST THEREON SHALL ALSO NOT BE ALLOWABL E. WE ORDER ACCORDINGLY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PAR TLY ALLOWED. PRONOUNCED IN OPEN COURT ON 12.1.2016 SD/- (B.C. MEENA) ACCOUNTANT MEMBER 2ND MARCH, 2016 DN/- ITA NO. 275/IND/2015 GULRAJ KHAN 8