Shri Pramukhbhai Dahyabhai Patel, Gandhinagar V. The ACIT, Gandhinagar Circle, Gandhinagar

ITA 3029/AHD/2015

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4098 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 29-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Assessee Lawyers: P B PARMAR
• Keywords: Principle of natural justice; Proportionate interest; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER) ITA. NO: 3029/AHD/2015 (ASSESSMENT YEAR: 2010-11) SHRI PRAMUKHBHAI DAHYABHAI PATEL, AT: RAYSAN CHAWKDI, GH- ROAD, GANDINAGAR-382007 V/S ACIT, GANDHINAGAR CIRCLE, GANDHINAGAR (APPELLANT) (RESPONDENT) PAN: ANFPP 8868F APPELLANT BY : SHRI P.B. PARMAR, AR RESPONDENT BY : SHRI L.P. JAIN, SR. D.R. ( )/ ORDER DATE OF HEARING : 11 -03-201 8 DATE OF PRONOUNCEMENT : 13 -03-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), GANDHINAGAR, AHMEDABAD DATED 20.10.2014 PERTAINING TO A.Y. 2010-11 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO. 3029 /AHD/2015 . A.Y. 2010-1 1 2 1. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS IN PASSING AN EX- PARTE ORDER WITHOUT GIVING PROPER OPPORTUNITY OF HE ARING TO THE APPELLANT. 2. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON T HE FACTS OF THE CASE IN CONFIRMING THE ACTION OF AO IN ADDING INTEREST OF R S.27,84,547/- TO THE VALUE OF CLOSING STOCK AFTER TREATING IT AS DIRECT COST TO INVENTORIES. 3. ALTERNATIVELY AND WITHOUT PREJUDICE, THE ADDITION I F ANY, RESULTS INTO INCREASE IN THE VALUE OF CLOSING STOCK FOR THE YEAR UNDER CONSIDERATION, THE OPENING STOCK IN THE NEXT YEAR MAY KINDLY BE APPROP RIATELY INCREASED. 4. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF AO IN MAKING AN ADDITION O F RS. 10,00,000/- U/S 68 OF THE ACT ON ACCOUNT OF ALLEGED UNEXPLAINED UNS ECURED LOAN FROM M/S ANKUR OIL INDUSTRIES. 5. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDERS W ITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHER ERRED I N GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFORMATION S UBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEE N CONSIDERED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE LOWE R AUTHORITIES IS IN CLEAR BREACH OF LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHED. 6. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS O F THE CASE IN CONFIRMING ACTION OF THE ID. AO IN LEVYING INTEREST U/S 234A/B /C/D OF THE ACT. 7. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE ID. AO IN INITIATING PENALTY U/S 271( L)(C) OF THE ACT. 2. IN THIS CASE, ASSESSEE IS ENGAGED IN THE BUSINESS O F PURCHASE AND SALES OF LAND. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT IS O BSERVED THAT ASSESSEE HAS CLAIMED INTEREST EXPENDITURE OF RS. 33,24,048/-. TH E ENTIRE INTEREST COST IS ATTRIBUTABLE TO FUNDS USED BY THE ASSESSEE FOR PURC HASE OF LAND WHICH IS LYING MAINLY IN CLOSING STOCK. SINCE ASSESSEE HAS DONE BU SINESS OF TRADING IN LAND BY USING BORROWED FUNDS, INTEREST IS A COST DIRECTLY A TTRIBUTABLE TO THE COST OF LAND. IT IS A DIRECT COST FOR PURCHASE OF LAND. DURING TH E YEAR ASSESSEE HAS SOLD LAND OF RS. 86,21,513/- ONLY. THUS IT IS CLEAR THAT ONLY PA RT OF INTEREST ATTRIBUTABLE TO SALE OF LAND OF RS. 86,21,513/- IS AN EXPENDITURE P ERTAING TO YEAR UNDER CONSIDERATION AND PART OF INTEREST ATTRIBUTABLE TO STOCK OF LAND OF RS. ITA NO. 3029 /AHD/2015 . A.Y. 2010-1 1 3 531,26,118/~ IS NOT PERTAING TO LAND TRANSACTION OF YEAR UNDER CONSIDERATION. IN OTHER WORDS PROPORTIONATE INTEREST OF RS. 5,39, 500 /- (33,24,048 * 86,21,513 / 5,31,26,118) IS REQUIRED TO BE TREATED AS PART OF C OST OF LAND SOLD DURING YEAR AND RS. 27,84,547/- IS REQUIRED TO BE TREATED AS IN TEREST ATTRIBUTABLE TO LAND LYING AS CLOSING STOCK AND IS REQUIRED TO BE ADDED IN CLOSING STOCK OF LAND AS A PART OF COST THAT LAND. 3. IN VIEW OF THE ABOVE INTEREST OF RS. 27,84,547/- IS TREATED AS A COST OF UNSOLD LAND AND DISALLOWED IN THE YEAR UNDER CONSIDERATION . AND APART FROM THE ABOVE SAID ADDITION OF RS. 10,00,000/- WAS ALSO MADE IN T HE HANDS OF THE APPELLANT/ASSESSEE BECAUSE ASSESSEE WAS FAILED TO P RODUCE THE CONFIRMATION OF ALL PERSONS FROM WHOM NEW UNSECURED LOANS WERE RECE IVED DURING THE YEAR. AND FINALLY LD. A.O. MADE ADDITION OF RS. 67,39,990 /-. 4. AGAINST THE SAID ORDER, ASSESSEE PREFERRED FIRST ST ATUTORY APPEAL BEFORE THE LD. CIT(A) AND AS PER ASSESSEE IN THE ABSENCE OF ANY NO TICE BECAUSE OF SOME REASON, ASSESSEE COULD NOT APPEAR BEFORE THE LD. CI T(A). ON THE OTHER HAND, LD. CIT(A) OBSERVED THAT ASSESSEE ONCE APPEARED BEFORE HIM AND ALSO SOUGHT ADJOURNMENT BUT ON ADJOURNED DATED ASSESSEE/APPELLA NT DID NOT APPEAR. THEREAFTER, LD. CIT(A) CONFIRMED THE ACTION OF THE LD. A.O. 5. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. AT THE OUTSET, LD. A.R. REQUESTED THAT IN THE INTEREST OF JUSTICE, THIS MATTER MAY KINDLY BE SET ASIDE TO THE FILE OF THE LD. CIT(A) FOR FRESH ADJUD ICATION. WE ACCEDE THE PRAYER OF THE LD. A.R. SUBJECT TO THE CONDITION THAT ASSES SEE SHALL DEPOSIT OF RS. 10,000/- AS A FINE TO THE DEPARTMENT WITHIN THREE M ONTHS FROM THE RECEIPT OF THIS ORDER. THE LD. CIT(A) WILL PROCEED WITH THE MA TTER ONLY AFTER PRODUCTION OF ITA NO. 3029 /AHD/2015 . A.Y. 2010-1 1 4 THE RECEIPT OF RS. 10,000/- FROM THE ASSESSEE AND T HEREAFTER WILL DECIDE THE MATTER IN ACCORDANCE WITH LAW. HOWEVER, WE ARE NOT COMMENTING ON MERIT OF THE CASE. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSE AS PER TERM AND CONDITION MENTIONED ABOVE. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 13- 03- 2019 SD/- SD/- (AMARJIT SINGH) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 13/03/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD