A.C.I.T., C.C., Agra V. Sh. Yogendra Kumar Singhal, Agra

ITA 281/AGR/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72806 (ITAT-AGRA)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-02-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 31-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH KUMAR
• Assessee Lawyers: DEEPENDRA MOHAN; PRARTHANA JALAN
• Keywords: Value adopted by valuation officer; Unexplained expenditure; Search and seizure; Valuation report
• Section: 69C; 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ITA NO.281/AGRA/2013 ASSESSMENT YEAR: 2003-04 ASSTT. COMMISSIONER OF INCOME TAX, VS. SHRI YO GENDRA KUMAR SINGHAL, CENTRAL CIRCLE, AGRA. B-565, KAMLA NAGAR, AGRA. 88, SECTOR-3, (PAN AEDPS 2976 L). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIRUDH KUMAR, CIT (D.R.) RESPONDENT BY : SHRI DEEPENDRA MOHAN, C.A. & MISS. PRARTHANA JALAN, C.A. DATE OF HEARING : 25.02.2014 DATE OF PRONOUNCEMENT : 28.02.2014 ORDER PER PRAMOD KUMAR, ACCOUNTANT MEMBER: BY WAY OF THIS APPEAL THE ASSESSING OFFICER HAS CHA LLENGED CORRECTNESS OF LD. CIT(A)S ORDER DATED 11.03.2013 IN THE MATTER OF AS SESSMENT UNDER SECTION 153A READ WITH SECTION 143(3) OF THE INCOME TAX ACT, 196 1, FOR THE ASSESSMENT YEAR 2003-04. 2. IN THE FIRST GROUND OF APPEAL, THE A.O. HAS RAIS ED THE FOLLOWING GRIEVANCE :- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITION OF RS.38,000/- ON ACCOUNT OF LOW WITHD RAWAL FOR HOUSE HOLD EXPENSES WITHOUT ASSIGNING ANY REASON. ITA NO.281 /AGRA/2013 A.Y. 2003-04 2 3. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE BEFORE US WAS SUBJECTED TO SEARCH AND SEIZURE OPERATION ON 18.02.2009. DURING THE COURSE OF SUBSEQUENT ASSESSMENT PROCEEDINGS, THE A.O. NOTI CED THAT THE ASSESSEE HAS SHOWN WITHDRAWAL FOR HOUSEHOLD EXPENSES AT RS.58,00 0/- WHICH, IN THE OPINION OF THE A.O., WERE VERY LOW CONSIDERING THE SIZE OF THE ASSESSEES FAMILY, HIS STATUS AND HIS STANDARD OF LIVING. ACCORDINGLY, THE A.O. ESTIMATED THE HOUSEHOLD EXPENSES AT RS.8,000/- PER MONTH WHICH THUS WORKS O UT TO RS.96,000/- FOR THE ENTIRE YEAR. ACCORDINGLY, AN AMOUNT OF RS.38,000/- (RS.96,000 - 58,000) WAS CONSIDERED TO BE UNEXPLAINED EXPENDITURE INCURRED B Y THE ASSESSEE FOR HOUSEHOLD EXPENSES. 4. AGGRIEVED BY THE STAND SO TAKEN, THE ASSESSEE CA RRIED THE MATER IN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) WAS OF THE C ONSIDERED VIEW THAT THE A.O. HAS FAILED TO BRING ON RECORD ANY COGENT MATERIAL T O JUSTIFY THE ADDITION IN QUESTION, AND THAT IN ANY EVENT, NO INCRIMINATING MATERIAL HA S BEEN FOUND TOWARDS ANY EXCESS EXPENDITURE HAVING BEEN INCURRED BY THE ASSESSEE TO WARDS HIS HOUSEHOLD EXPENSES. WITH THESE OBSERVATIONS, THE LD. CIT(A) DELETED THE IMPUGNED ADDITION. THE A.O. IS AGGRIEVED AND IS IN APPEAL BEFORE US. 5. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PE RUSED THE MATERIAL ON RECORD, WE ARE OF THE CONSIDERED VIEW THAT THE GRIE VANCE OF THE A.O. IS DEVOID OF ITA NO.281 /AGRA/2013 A.Y. 2003-04 3 ANY SUSTAINABLE MERIT. WE HAVE NOTED THAT THERE WA S NO INCRIMINATING MATERIAL WHATSOEVER TO SUGGEST AS TO ANY EXPENDITURE WHICH H AS NOT BEEN DULY EXPLAINED BY THE AVAILABLE FUND OF THE ASSESSEE AND HAS NOT OTHE RWISE BEEN DISCLOSED BY THE ASSESSEE. THE ESTIMATION RESORTED TO BY THE A.O. W AS ALSO NOT BASED ON ANY EVIDENCE OR MATERIAL IN SUPPORT OF SUCH ESTIMATION. IN THESE CIRCUMSTANCES, WE APPROVE AND CONFIRM THE CONCLUSION ARRIVED AT BY TH E LD. CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 6. GROUND NO.1 IS THUS DISMISSED. 7. IN GROUND NO.2, THE A.O. HAS RAISED THE FOLLOWIN G GRIEVANCE :- 2. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.19,81,041/.- U/S. 69C O N ACCOUNT OF UNDISCLOSED EXPENDITURE/INVESTMENT IN HOUSE PROPERT Y BEING THE DIFFERENCE BETWEEN THE VALUE DISCLOSED BY THE ASSES SEE AND THE ESTIMATION BY THE DVO WITHOUT APPRECIATING THE FACT THAT THE ADDITION WAS MADE AFTER GIVING THE ADEQUATE OPPORTUNITY OF B EING HEARD TO THE ASSESSEE. 8. SO FAR AS THIS GRIEVANCE OF THE ASSESSEE IS CONC ERNED, IT IS ENOUGH TO TAKE NOTE OF ONLY A FEW FACTS. IN THE COURSE OF THE ASSESSME NT PROCEEDINGS SUBSEQUENT TO SEARCH AND SEIZURE OPERATION, IT WAS NOTICED BY THE A.O. THAT THE ASSESSEE HAD INCURRED EXPENSES TOWARDS IMPROVEMENT AND RENOVATIO N IN THE RESIDENTIAL PROPERTY AFTER ITS PURCHASE. WHEREAS THE ASSESSEE HAS SHOWN THE EXPENDITURE OF ITA NO.281 /AGRA/2013 A.Y. 2003-04 4 RS.6,40,500/- IN THE A.Y. 2002-03 AND RS.21,45,991/ - IN THE A.Y. 2003-04, THE VALUATION OFFICER, TO WHOM REFERENCE WAS MADE FOR V ALUATING THESE RENOVATION AND CONSTRUCTIONS, ESTIMATED THE EXPENSES AT RS.12,31,7 68/- AND RS.41,27,032/- RESPECTIVELY. THE A.O., BASED ON THE ESTIMATION OF THE VALUATION OFFICER, MADE AN ADDITION OF RS.19,81,041/- AS UNEXPLAINED EXPENDITU RE. 9. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) IN HIS VERY DETAILED AND ERUDITE ORD ER DELETED THE IMPUGNED ADDITION ON MORE GROUNDS THAN ONE. THE LD. CIT(A) WAS OF THE CONSIDERED VIEW THAT THE VERY REFERENCE MADE TO THE VALUATION OFFIC ER WAS UNSUSTAINABLE IN LAW AS NEITHER THERE WAS ANY INCRIMINATING MATERIAL/DOCUME NT FOUND DURING THE COURSE OF SEARCH NOR ANY DEFECT IN THE RECORDS AND DETAILS OF INVESTMENT FURNISHED BY THE ASSESSEE HAS BEEN NOTED. THE LD. CIT(A) ALSO NOTED THAT VARIOUS OBJECTIONS RAISED BY THE ASSESSEE TO THE VALUATION REPORT WERE FORWAR DED TO THE A.O. BUT THE A.O. HAS NOT EVEN CARED TO SUBMIT HIS REMAND REPORT ON SUCH OBJECTIONS. LD. CIT(A) THEN PROCEEDED TO DEAL WITH THESE OBJECTIONS ON MERIT AN D LARGELY APPROVED THE SAME. LD. CIT(A) ALSO REFERRED TO VARIOUS JUDICIAL PRECED ENTS IN SUPPORT OF THE PREPOSITION THAT UNLESS THERE IS SOME MATERIAL FOUN D DURING THE COURSE OF SEARCH TO SUGGEST ANY INVESTMENT AGAINST CONSTRUCTION OR RENO VATION HAS REMAINED TO BE ACCOUNTED, REFERENCE CANNOT BE MADE TO THE VALUATIO N OFFICER. THE LD. CIT(A) BASED ON THE DETAILED CALCULATION SET OUT AT PAGE N O.29 OF HIS ORDER, CAME TO THE ITA NO.281 /AGRA/2013 A.Y. 2003-04 5 CONCLUSION THAT AFTER ASSESSEES OBJECTIONS ARE DUL Y CONSIDERED THE DIFFERENCE BETWEEN VALUATION AS PER VALUERS REPORT AND AS PER EXPENSES SHOWN IN ASSESSEES BOOKS OF ACCOUNT WILL BE RESTRICTED TO LESS THAN 15 % WHICH IS WITHIN THE PERMISSIBLE LIMITS AND ACCORDINGLY NO ADDITION IS WARRANTED. T HE ADDITION OF RS.19,81,041/- WAS, ON THIS BASIS, DELETED. THE A.O. IS NOT SATIS FIED WITH THE STAND SO TAKEN BY THE LD. CIT(A) AND IS IN APPEAL BEFORE US. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVING PERUSED THE MATERIAL ON RECORD. DURING THE COURSE OF HEARING BEFORE US, LD . DEPARTMENTAL REPRESENTATIVE MAINLY RELIED UPON THE EXTRACTS FROM THE APPRAISAL REPORT WHICH, ACCORDING TO HIM, CONSTITUTES INCRIMINATING MATERIAL. OUR ATTENTION WAS INVITED TO THE OBSERVATION MADE IN THE APPRAISAL REPORT TO THE FACT THAT ASSES SEES HOUSE WAS BEAUTIFULLY CONSTRUCTED IN HUGE AREA IN THE POSH LOCALITY OF KA MALA NAGAR, AGRA AND INVESTMENT IN RENOVATION/ALTERNATION FROM THE PERIO D FROM 01.04.2002 TO TILL CURRENT FINANCIAL YEAR NEEDS THOROUGH EXAMINATION 11. IT WAS SUBMITTED BY THE LD. DEPARTMENTAL REPRES ENTATIVE THAT THIS APPRAISAL REPORT CONSTITUTES INCRIMINATING MATERIAL AND WHEN OBSERVATION IN THIS REGARD IS BASED ON SOME MATERIAL, REFERENCE TO THE VALUATION OFFICER IS JUSTIFIED. HE ALSO SUBMITTED THAT IN THE NORMAL COURSE OF ASSESSMENT I T IS NOT POSSIBLE FOR THE REVENUE AUTHORITIES TO SEE AS TO WHAT IS THE QUALITY OF CON STRUCTION AND IT WAS ONLY WHEN THE ITA NO.281 /AGRA/2013 A.Y. 2003-04 6 ASSESSEE WAS SUBJECT TO SEARCH AND SEIZURE PROCEEDI NG THAT THE REVENUE AUTHORITIES HAD A FIRST HAND OPPORTUNITY TO SEE THE QUALITY OF THE CONSTRUCTION WHICH WAS LAVISH ENOUGH TO WARRANT REFERENCE TO THE VALUATION OFFICE R. 12. LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND , SUBMITTED THAT THE APPRAISAL REPORT IS PREPARED MUCH AFTER THE SEARCH AND SEIZUR E OPERATION CARRIED OUT AND EVEN IF IT IS TO BE ACCEPTED THAT THE OBSERVATION OF THE OFFICER WHO CONDUCTED SEARCH AND SEIZURE OPERATION CAN BE VIEWED AS INCRIMINATING MA TERIAL, THE RELEVANT OBSERVATION SHOULD BE CONTAINED IN PANCHNAMA BUT THEN PANCHNAMA DOES NOT HAVE ANY MENTION ABOUT THE QUALITY OF THE CONSTRUCTION ETC. LD. COUNSEL FOR THE ASSESSEE THEN TOOK US THROUGH THE LD CIT(A)S ELABORATE ORDE R AND POINTED OUT THAT EVEN ON MERIT THE ADDITION WAS UNWARRANTED. HE SUBMITTED T HAT ASSESSEES OBJECTIONS TO THE VALUATION WERE SUMMARILY BRUSHED ASIDE BY THE A.O. AND THAT WHEN THE APPROPRIATE ADJUSTMENTS ARE MADE THESE OBJECTIONS B ETWEEN EXPENDITURE AS PER THE VALUATION REPORT AND AS PER THE ASSESSEES BOOKS OF ACCOUNT WILL BE REDUCED TO ONLY MINOR DIFFERENCE WHICH IS PERMISSIBLE. LD. COUNSEL FOR THE ASSESSEE ALSO LAID EMPHASIS ON THE FACTS THAT THERE WAS NO MATERIAL FO UND DURING THE SEARCH & SEIZURE OPERATION WHICH ESTABLISH OR EVEN SUGGEST THAT THER E WAS SUPPRESSION OF EXPENSES ON RENOVATION/CONSTRUCTION ETC. ON THE INSTANCE OF THESE, FURTHER HE URGED US TO UPHOLD THE ORDER OF LD. CIT(A). IN HIS BRIEF REJOI NDER, THE LD. DEPARTMENTAL REPRESENTATIVE ONCE AGAIN SUBMITTED THAT THE QUALIT Y OF CONSTRUCTION AND LAVISH ITA NO.281 /AGRA/2013 A.Y. 2003-04 7 RENOVATION COULD ONLY HAVE BEEN SEEN WHEN THE REVEN UE AUTHORITIES HAD THE OPPORTUNITY TO VISIT THE ASSESSEES PREMISES AND, T HEREFORE, THE RESULTS OF THIS VISUAL EXAMINATION SHOULD ALSO BE CONSIDERED AS INCRIMINAT ING MATERIAL JUSTIFYING REFERENCE TO VALUATION OFFICER. HE THUS URGED US T O VACATE THE RELIEF SO GRANTED BY THE LD. CIT(A) AND RESTORE THE ORDER OF A.O. 13. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING P ERUSED THE MATERIAL ON RECORD, WE ARE OF THE CONSIDERED VIEW THAT ON FACTS OF THE CASE IT CANNOT BE SAID THAT ANY INCRIMINATING MATERIAL OR EVIDENCE WAS FOUND DU RING THE SEARCH & SEIZURE OPERATION. AS FOR LD. DEPARTMENTAL REPRESENTATIVE S SUBMISSION ABOUT THE QUALITY AND LAVISHNESS OF THE CONSTRUCTION, EVEN IF THAT IS SO, SUCH A CONSTRUCTION CANNOT CONSTITUTE INCRIMINATING MATERIAL BECAUSE UNLESS TH ERE IS SOMETHING TO SUGGEST THAT EXPENDITURE INCURRED HAS NOT BEEN SHOWN IN THE BOOK S OF ACCOUNT THERE IS NO WARRANT FOR THE INFERENCE THAT EXPENSES HAVE BEEN S UPPRESSED FROM AN ACCOUNT. AS THE LD. CIT(A) HAS RIGHTLY NOTICED THAT IN THE ABSE NCE OF ANY SUCH MATERIAL THE VERY REFERENCE TO VALUATION OFFICER IS VITIATED IN LAW. WE ALSO NOTICE FOR A MATTER OF RECORD THAT NO DEFECT OR SHORTCOMINGS WERE FOUND IN THE DETAILS SUBMITTED BY THE ASSESSEE SO AS TO JUSTIFY THE REFERENCE TO THE VALU ATION OFFICER. THE OBJECTIONS MADE BY THE ASSESSEE TO THE VALUATION REPORT WERE A LSO SUMMARILY BRUSHED ASIDE BY THE A.O. AND NOW THAT THEY HAVE BEEN CONSIDERED IN DETAIL. THE DIFFERENCE BETWEEN THE VALUE AS PER VALUATION REPORT AND EXPENSES AS P ER THE BOOKS OF ACCOUNT IS ITA NO.281 /AGRA/2013 A.Y. 2003-04 8 REDUCED TO LESS THAN 15% WHICH CAN ALSO BE JUSTIFIE D ON ACCOUNT OF NORMAL PERMISSIBLE ESTIMATION DIFFERENCE. IN VIEW OF THES E DISCUSSIONS, AS ALSO BEARING IN MIND THE ENTIRETY OF THE CASE, WE APPROVE AND AFFIR M THE LD. CIT(A)S VERY WELL RESOUND ORDER AND DECLINE TO INTERFERE IN THE MATTE R. 14. GROUND NO.2 IS ALSO DISMISSED. 15. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2014) SD/- SD/- (BHAVNESH SAINI) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 28 TH FEBRUARY, 2014 PBN/* COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY