Shri Jatinkumar Amrutlal Shah, Ahmedabad V. The Asstt. Commissioner of Income Tax, Circel-5(1), Ahmedabad

ITA 307/AHD/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8874 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 18-09-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 06-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: CHHAJED
• Keywords: Capital asset; Valuation report; Onus to prove
• Section: 271(1)(c); 143(3); 142(1); 133(6)

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ./ ITA NO.307/AHD/2017 / ASSESSMENT YEAR: 2013-14 JATINKUMAR AMRUTLAL SHAH 2, SUJAY APARTMENTS, NR. SHALIBHADRA FLATS, AHMEDABAD-380007 PAN:AFAPS3001A VS ACIT(CENTRAL CIRCLE)-5(1) AHMEDABAD ! / (APPELLANT) '# ! / (RESPONDENT) APPELLANT BY : SHRI M.S. CHHAJED, AR REVENUE BY : SHRI VINOD TANWANI, SR. DR / DATE OF HEARING : 18/09/2019 / DATE OF PRONOUNCEMENT: 20/09/2019 $%/ O R D E R PER SHRI MANISH BORAD, A.M: THE ABOVE CAPTIONED APPEAL FILED AT THE INSTANCE OF ASSESSEE PERTAINING TO ASSESSMENT YEAR 2013-14 IS D IRECTED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TA X (APPEALS)-5 (IN SHORT LD.CIT(A)], AHMEDABAD DATED 02.12.2016 WHICH IS ARISING OUT OF THE ORDER U/S 143(3) OF THE ACT, 1961 DATED 28.03.2016 FRAMED BY ACIT, AHMEDABAD. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: ITA NO. 307/AHD/2017 JATINKUMAR AMRUTLAL SHAH FOR AY 2013-14 2 1.THE ORDER PASSED BY THE LD CIT IS WITHOUT GIVING ANY OPPORTUNITY TO THE APPELLANT AND HENCE SAME IS AGAI NST LAW, EQUITY & JUSTICE. 2. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN UPH OLDING THE ORDER OF THE LD. AO FOR DISALLOWANCE OF PURCHAS ES OF RS.51,12,040/- TREATING IT AS BOGUS EXPENSES. 3. THE APPELLANT GRAVES LEAVE TO ADD, ALTER MODIFY OR AMEND ANY OR ALL GROUND OF APPEAL BEFORE FINAL HEARING. 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL EARNING INCOME FROM S ALARY AND CAPITAL GAIN. RETURN OF INCOME FOR A.Y. 2013-14 WAS E-FILED ON 30.01.2014, DECLARING INCOME OF RS.21,75,220/-. CAS E SELECTED FOR SCRUTINY FOLLOWED BY SERVING OF NOTICES U/S 143 (2) & 142(1) OF THE ACT. LD. ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON OBSERVING THAT THE ASSESS EE HAD SHOWN INCOME UNDER THE HEAD OF SHORT TERM CAPITAL G AIN FROM SALE OF LAND CLAIMING CERTAIN EXPENSES RELATING TO BOUNDRY WALL CONSTRUCTION, LAND LEVELING ETC. CALLED FOR THE DET AILS. THE LAND PURCHASE ACCOUNT FOR F.YS 2010-11, 2011-12 & 2012- 13 WAS FILED WITH SUPPORTING DOCUMENTS WHICH INCLUDED BILL S FOR PURCHASE OF CEMENT, SAND, BRICKS AND LABOUR CHARGES . THE LD. AO FURTHER OBSERVED THAT THE VARIOUS BILLS WERE ISS UED BETWEEN JANUARY, 2011 TO JUNE, 2011 WERE SETTLED IN THE MON TH OF JUNE, 2012 WHICH CREATED DOUBTS IN HIS MIND REGARDI NG GENUINENESS OF THE EXPENSES. INFORMATION WAS CALLED FROM THE COMMERCIAL TAX DEPARTMENT ABOUT THE ALLEGED SUPPLIE R OF GOODS. THE ASSESSEE SUBMITTED BEFORE THE LD. AO THA T ALL THE ITA NO. 307/AHD/2017 JATINKUMAR AMRUTLAL SHAH FOR AY 2013-14 3 BILLS ARE GENUINE AND THE PARTIES ARE REGULAR SUPPL IERS OF BUILDING MATERIAL. REQUEST WAS ALSO MADE TO THE LD. AO TO SEND THE INSPECTOR TO VERIFY THE CLAIM OF THE ASSESSEE O F HAVING CONSTRUCTED BOUNDARY WALL AND LAND LEVELING WORK. L D. AO HOWEVER, WAS NOT CONVINCED AND DISALLOWED THE CLAIM OF EXPENSES PAID TO FIVE SUPPLIERS TOTALING TO RS.51,1 2,040/- HOLDING THEM TO BE BOGUS OBSERVING AS FOLLOWS: 1. GENERALLY IN CASE OF SUCH TYPE OF WORK, THE FIRST STAGE IS DIGGING; THEREAFTER THE WORK OF CONSTRUCTION OF WALL AND FINALLY THE WORK OF PLASTER IS BEING CARRIED OUT. I N THE PRESENT CASE R LAM ASSESSEE HAS FIRST OF ALL PURCHA SED 1020 BAGS OF CEMENT ON 03.01.20L1 AND 620 BAGS ON 04.02. 2011 FROM M/S MAHAVIR TRADERS AND 3700 KG. TMT BAR ON 07.01.2011 FROM M/S BHAVI TRADING CO. THE ASSESSEE WAS NOT HAVING ANY GODOWN TO STORE SUCH LARGE QUANTITY OF RAW MATERIAL. THE PURPOSE OF SUCH PURCHASES IS NOT CLEA R AS MANSION WORK PRIMARY REQUIRES BRICKS, CEMENT AND RE TI. THE ASSESSEE HAS PURCHASED BRICKS ON 16.02.2011 FOR THE FIRST TIME AND 12 TRUCKS OF RETI ON 10.01.2011. IN THE MEANTIME VARAHI CONTRACTOR CO. HAS RAISED THREE BIL LS TOTALING TO RS. 1,51,350/-UPTO 13.02.2011 FOR DIGGI NG AND CONSTRUCTION WORK OF 2018 SQ. FEET. WHEN THE ASSESS EE WAS NOT IN POSSESSION OF BRICKS TILL 16.02.2011 HOW THE WORK OF CONSTRUCTION WAS UNDERTAKEN IS BEYOND IMAGINATION. MOREOVER, NO STEEL IS REQUIRED IN CONSTRUCTION OF B OUNDARY WALL. 2. THE ASSESSEE HIMSELF HAS 'ADMITTED THAT THE LAND WAS PURCHASED BY HIM ON 07.02.2011 THAN IN WHAT CAPACIT Y HE STARTED THE WORK ON THIS LAND PRIOR TO 14.01.2011 I .E. THE DATE ON WHICH FIRST BILL HAS BEEN RAISED BY VARAHI CONTRACTOR CO. IN RESPECT OF COMPLETION OF 670 SQ. FEET DIGGING AND CONSTRUCTION WORK. IT IS WORTHWHILE TO MENTION HERE THAT EVEN THE SELLER HAS PURCHASED THIS LAND O N 05.01.2011 I.E. AFTER PURCHASE OF CEMENT ON 03.01.2 011 BY THE ASSESSEE WHICH CLEARLY INDICATED THAT PURCHASES ARE ITA NO. 307/AHD/2017 JATINKUMAR AMRUTLAL SHAH FOR AY 2013-14 4 BOGUS AS THEY PERTAIN TO THE PERIOD DURING WHICH TH ERE WERE THREE OWNERS OF LAND. 3. A PERUSAL OF BILLS SUBMITTED BY ASSESSEE IN RESP ECT OF LABOUR, ONLY ONE BILL DATED 23.05.2011 HAS MENTIONE D OF PLASTER WORK. 4. A PERUSAL OF BANK ACCOUNT WITH AHMEDABAD DISTRIC T CO- OP BANK REVEALS THAT THE ASSESSEE WAS HAVING OPENIN G BALANCE OF RS.4,179/- ONLY AND IN THE ORDER TO MANA GE THESE ALLEGED PAYMENTS ASSESSEE HAS BORROWED FUNDS FORM SHRI JIGNESH S. SHAH AND INSTEAD OF DEPOSITING THE SALE CONSIDERATION IN THIS ACCOUNT THE ASSESSEE HAS OPEN ED A NEW BANK ACCOUNT WITH STATE BANK OF INDIA ON 21.06. 2012 AND TOO AFTER GETTING RS.10,000/- TRANSFERRED FROM THE ACCOUNT OF SHRI JIGNESS S. SHAH. THEREAFTER, RS.3.2 4 CRORES OUT OF SALE CONSIDERATION OF RS.3.46 CRORES HAS BEE N TRANSFERRED IN THE ACCOUNT OF SHRI JIGNESH S. SHAH WITHIN THE MONTH OF JUNE 2012. THIS ALSO CREATES A DOUBT A BOUT THE GENUINENESS OF THESE EXPENSES. THE ASSESSEE HAD MADE PAYMENT AFTER A PERIOD OF ALMOST ONE AND HALF YEAR, HE SHOULD HAVE WAITED FOR ANOTHER FIFTEEN DAYS AS H E HAD RECEIVED RS.60 LACS OUT OF SALE CONSIDERATION ON 26.06.2013. THERE WAS NO NEED TO RAISE LOAN. IT ALS O GIVE SUPPORT TO THE CONCLUSION THAT ASSESSEE HAD ISSUED CHEQUES ONLY TO REDUCE TAX LIABILITY. 5. IT IS PERTINENT TO NOTE THAT EVEN THE ENTIRE LAB OUR PAYMENT HAVE MADE AFTER A LAPS OF ONE AND HALF YEAR, THE AS SESSEE HAS NOT PAID EVEN A SINGLE PENNY TO ANY OF THE LABO UR WHICH IS QUITE SURPRISING. IT IS A WELL KNOWN FACT THAT T HE LABOUR CLASS IS A POOR COMMUNITY AND THEY ARE HAND TO MOUT H. WHATEVER THEY EARN DURING A DAY, THEIR FAMILY SURVI VES ON THAT EARNING. THEY DO NOT HAVE PAST SAVINGS WITH TH EM TO MEET OUT THEIR EXPENSES FOR A LONG PERIOD SO THEY C ANNOT WAIT FOR SUCH A LONG PERIOD. THE CONTENTION OF THE ASSESSEE THAT THE WORK OF CONSTRUCTION OF BOUNDARY WALL AND LAND FILLING/LEVELING WAS ASSIGNED TO MR. RAJUBHAI DESAI , A LABOUR CONTRACTOR WITH UNDERSTANDING TO CARRY OUT A LL THE WORK WITH REQUISITE MATERIALS LIKE BRICKS, SAND, CE MENT ETC. AND ALSO LABOUR WORK RELATED WITH THE SAID JOB, IN TURN HE HAD PROVIDED ALL THE BILLS OF MATERIALS AS WELL AS LABOUR WITH THE INSTRUCTION TO MAKE DIRECT PAYMENT TO THE ITA NO. 307/AHD/2017 JATINKUMAR AMRUTLAL SHAH FOR AY 2013-14 5 RESPECTIVE PARTIES ALSO DOES NOT HAVE ANY FORCE AS ASSESSEE HAS NOT PLACED ANYTHING ON RECORD TO ESTAB LISH THAT WORK WAS CARRIED OUT BY MIDDLEMAN. 6. EVEN THE CONCERNS FROM WHICH MATERIAL HAS BEEN PURCHASE ARE NOT BIG DEALER/WHOLESALER/AUTHORIZED D EALER OF REPUTED COMPANIES RATHER THEY ARE RETAILERS HAVI NG NO TURNOVER/LOW TURNOVER AS INFORMED BY COMMERCIAL TAX AUTHORITIES. IF THEY WOULD HAVE ACTUALLY SOLD MATER IAL TO THE ASSESSEE THEY ALSO SHOULD NOT HAVE WAITED SO LONG F OR PAYMENT. 7. LOOKING TO THE QUANTITY OF BRICKS PURCHASED, IT DOES NOT SEEM POSSIBLE THAT A RETAILER WILL HAVE SUCH HUGE Q UANTITY IN HIS POSSESSION BECAUSE IT WILL REQUIRE A LOT OF OPEN SPACE. IF THE ASSESSEE WOULD HAVE MADE PURCHASE DIRECTLY F ROM THE KILN THAN IT WILL HAVE BEEN POSSIBLE. IT ALSO C REATED DOUBTS ABOVE THE GENUINENESS OF BILLS. 6. IN VIEW OF ABOVE FACT SAND DISCUSSION, THE PAYME NT AS PER DETAILS MENTIONED BELOW ALLEGED TO BE MADE DIFF ERENT CONCERNS IS TREATED AS BOGUS: 1. ARASURI ENTERPRISE RS.4,676,625/- 2. BHAVI TRADING CO. RS.1,50,180/- 3. HARIOM SALES RS.20,47,500/- 4. MAHAVIR TRADERS RS.18,72,610/- 5. VARAHI CONTRACTOR CO. RS.5,65,125/- TOTAL RS.51,12,040/- THEREFORE, THE AMOUNT OF RS.51,12,040/- IS DISALLOW ED AND ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSEE H AS FURNISHED INACCURATE PARTICULARS OF ITS INCOME BY C LAIMING BOGUS EXPENSES. IN VIEW OF ABOVE FACTS, THE PENALTY PROCEEDINGS FROM FURNISHING INACCURATE PARTICULARS OF TAXABLE INCOME ARE BEING INITIATED U/S 271(1)(C) OF THE I.T. ACT. 1961. 4. ACCORDINGLY, INCOME ASSESSED AT RS.72,87,260/- A FTER MAKING DISALLOWANCE OF BOGUS EXPENSES/PURCHASE AT RS.51,12 ,040/-. ITA NO. 307/AHD/2017 JATINKUMAR AMRUTLAL SHAH FOR AY 2013-14 6 5. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD. CIT(A) BUT FAILED TO SUCCEED, AS THE VIEW TAKEN BY THE LD. AO WAS CONFIRMED BY THE LD. CIT(A) OBSERVING AS FOLLOWS: 3.3. THE AO HAS NOTICED THAT THE ASSESSEE HAS DECL ARED INCOME OF RS.20,07,255/- UNDER THE HEAD SHORT TERM CAPITAL GAIN. FURTHER, BY VERIFICATION OF DETAILS FILED BY THE ASSESSEE THE AO HAS NOTICED THAT THE ASSESSEE HAD CLAIMED HU GE EXPENSES IN THE FORM OF EXPENSES INCURRED ON CEMENT PURCHASE, SAND PURCHASE, BRICKS PURCHASES AND MATI PURAN EXPENSES. THE AO HAS FURTHER NOTICED THAT ALL THE B ILLS WERE IS USED BETWEEN JANUARY, 2011 TO JUNE, 2011 WHEREAS PAYMENTS TO ALL THE PARTIES HAVE BEEN MADE IN THE M ONTHS OF JUNE, 2012. THE AO HAS MADE FURTHER INQUIRIES TO VERIFY THESE EXPENSES AND LETTERS WERE WRITTEN TO OFFICERS OF COMMERCIAL (TRADE) TAX DEPARTMENT. FROM THE REPLIES RECEIVED IN RESPONSE TO LETTER ISSUED U/S 133(6) OF THE ACT, THE AO HAS OBSERVED THAT ALL THE CONCERNS FROM WHOM THE ASSESSEE HAD OBTAIN BILLS IN RESPECT OF ALLEGED PUR CHASES WERE ENGAGED IN THE ACTIVITY OF ISSUING BOGUS BILLS AND THE COMMERCIAL AUTHORITIES AFTER MAKING DETAILED INQUIR IES HAVE CANCELLED THEIR TIN NUMBER AB-INITIO. THE AO HAS NO T ACCEPTED THE REPLY OF THE ASSESSEE ON THE GROUNDS S TATED IN PARA-5 OF THE ASSESSMENT ORDER. THE AO HAS DISA LLOWED AN AMOUNT OF RS.51,12,0407- TREATING THESE EXPENSES AS BOGUS. 3.4. DURING THE APPELLATE PROCEEDINGS, THE APPE LLANT HAS CONTENDED THAT HE HAS MADE PURCHASES FROM 5 PARTI ES TO DO IMPROVEMENT ON LAND SOLD. IT IS FURTHER CONTE NDED THAT DISALLOWANCE OF LAND IMPROVEMENT EXPENSES RELYING O NLY ON INFORMATION COLLECTED FROM COMMERCIAL TAX DEPARTMEN T AND FAILURE T& MAKE PURCHASES OF MATERIALS IN ORDER OF WORK REQUIRED TO BE DONE IGNORING EXPLANATIONS, FACTS AN D EVIDENCES FILED DURING THE ASSESSMENT PROCEEDINGS I S NOT JUSTIFIED. IT IS FURTHER CONTENDED THAT THE APPELLA NT HAS FURNISHED REQUIRED DETAILS OF ABOVE SUPPLIERS INCLU DING COPIES OF INVOICES INCORPORATING THEIR VAT REGISTRA TION NUMBER AND DETAILS OF MATERIALS PURCHASED FROM THEM FOR IMPROVEMENT COST CLAIMED WITH REFERENCE TO LAND SOL D DURING THE YEAR CLAIMED AS EXPENSES WHILE WORKING O UT ITA NO. 307/AHD/2017 JATINKUMAR AMRUTLAL SHAH FOR AY 2013-14 7 CHARGEABLE SHORT TERM CAPITAL GAIN. THE APPELLANT H AS ALSO CONTENDED THAT THE AO HAS CONCLUDED THAT ISSUANCE O F BILL AS COLORFUL DEVICE FOR INFLATING EXPENSES AND FURTH ER PRESUMED THAT MONEY HAVE COME BACK TO THE APPELLANT AFTER DEDUCTING CERTAIN AMOUNT OF COMMISSION WITHOUT BRIN GING ANY CLINCHING EVIDENCES ON RECORD THAT SUPPORT SAID PRESUMPTION ON THE PART OF THE AO. IT IS ALSO CONTE NDED THAT THE AO WITHOUT POINTING OUT ANY SPECIFIC DEFECT WIT H REFERENCE TO AFORESAID EVIDENCES FILED FOR LAND DEV ELOPMENT EXPENSES DISALLOWED THE EXPENSES. IT IS ALSO CONTEN DED THAT THE AO COULD HAVE COLLECTED RELEVANT DETAILS OF CON STRUCTION DIRECTLY FROM MATERIAL SUPPLIERS AND CONTRACTORS FO R CONSTRUCTION WORK DONE FOR WHICH HE HAS LEGITIMATE RIGHT. THE HAS RELIED UPON VARIOUS JUDGMENTS AS REPRODUCED IN THE PRECEDING PARAS OF THIS ORDER. 3.5. THE FACTS OF THE CASE AND THE SUBMISSIONS A RE CONSIDERED. THE AO HAS DISALLOWED THE EXPENSES ON T HE BASIS OF INQUIRIES CONDUCTED FROM THE COMMERCIAL T AX (TRADE) OFFICERS AND OTHER CIRCUMSTANTIAL EVIDENCES AS DISCUSSED IN THE ASSESSMENT ORDER. ON THE OTHER HAN D THE CASE OF THE APPELLANT IS THAT HE HAS FURNISHED ALL THE RELEVANT DETAILS AND THE AO HAS NOT MADE ANY INDEPENDENT INQUIRY BEFORE DISALLOWING THE SAID EXP ENSES. THE APPELLANT HAS CLAIMED THAT HE HAS INCURRED LAND DEVELOPMENT EXPENSES IN THE FORM OF CEMENT PURCHASE S, SAND PURCHASES, BRICKS PURCHASES AND MATI PURAN EXPENSES WHICH ARE GENUINE EXPENSES. HOWEVER FROM THE DETAILS FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO HAS DOUBTED GENUINE NESS OF THESE EXPENSES AND MADE INQUIRIES FROM THE OFFIC ERS OF COMMERCIAL TRADE TAX DEPARTMENT. THE REPLIES OF THE SE OFFICERS ARE PART OF THE ASSESSMENT ORDER. FRO M THE REPLIES IT IS CLEARLY ESTABLISHED THAT THESE PA RTIES FROM WHOM THE ASSESSEE HAS SHOWN PURCHASES WERE ENGAGE D IN THE ACTIVITY OF ISSUING BOGUS BILLS. DURING T HE ASSESSMENT PROCEEDINGS, THE AO HAS BROUGHT ALL THES E FACTS TO THE KNOWLEDGE OF THE ASSESSEE AND ASKED TO JUSTI FY THESE EXPENSES. IN RESPONSE TO THAT THE ASSESSEE HAS SIMPLY STATED THAT FULL DETAILS IN THIS REGARD HAVE BEEN FURNISHED WITH NECESSARY SUPPORTING AND THESE EXPENSES ARE G ENUINE ITA NO. 307/AHD/2017 JATINKUMAR AMRUTLAL SHAH FOR AY 2013-14 8 ONE. IT IS IMPORTANT TO MENTION HERE THAT ON THE BASIS OF THESE DETAILS ONLY THE AO HAS DOUBTED THE GENUINENE SS OF THESE EXPENSES AND MADE INQUIRIES U/S. 133(6) OF THE ACT. AFTER GETTING THE COMMUNICATION REGARDING THE INQUI RIES AND THE RESULTS THEREOF THE ASSESSEE HAS NOT FURNISHE D ANYTHING FURTHER TO PROVE THE GENUINENESS OF THESE EXPENSES. DURING THE APPELLATE PROCEEDINGS THE ONLY CONTENTION MADE BY THE APPELLANT IS THAT THE AO HAS NOT MADE ANY INDEPENDENT INQUIRIES BEFORE DISALLOWING T HE SAID DISALLOWANCES. ONCE THE AO HAS PRIMA-FACIE FOUND THAT CERTAIN EXPENSES ARE NOT GENUINE AND MADE FURTHER INQUIRIES TO VERIFY THE GENUINENESS OF THOSE EXPEN SES AND SATISFIED THAT THESE EXPENSES ARE NOT GENUINE THEN THE ONUS SHIFTS TO THE ASSESSEE TO PROVE THE GENUINENESS OF THOSE EXPENSES. HERE IN THE INSTANT CASE THE APPELLANT HAS FAILED TO DISCHARGE THE ONUS. AS THE ASSESSEE HAS F AILED TO PROVE THE GENUINENESS OF THESE EXPENSES, THE DISALL OWANCE MADE BY THE AO IS JUSTIFIED AND THE SAME IS CONFIRM ED. 6. AGGRIEVED ASSESSEE IS IN APPEAL BEFORE THE TRIBU NAL. 7. LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE PA PER BOOK SUBMITTED THAT LD. ASSESSING OFFICER VIDE PROCEEDI NG SHEET DATED 24.02.2016 ASKED THE APPELLANT TO JUSTIFY IMP ROVEMENT COST IN THE LIGHT OF DETAILS RECEIVED FROM JURISDIC TIONAL COMMERCIAL TAX OFFICER IN RESPECT OF ABOVE SUPPLIER S. APPELLANT FILED REPLY DATED 25.02.2016, COPY THEREOF FILED WI TH AO IS ATTACHED HEREWITH (PAGE NO.86) AND STATED THAT IMPR OVEMENT EXPENSES CLAIMED ARE GENUINE EXPENSES BEING STATUTO RY PAYMENTS TO GOVERNMENT, LAND LEVELING EXPENSES AND BOUNDARY CONSTRUCTION EXPENSES WITH REFERENCE TO LAND SOLD D URING THE YEAR. APPELLANT FURNISHED DOCUMENTARY EVIDENCES LIK E COPIES OF INVOICES FOR PURCHASES OF MATERIALS, LAND PURCHASES ACCOUNTS ITA NO. 307/AHD/2017 JATINKUMAR AMRUTLAL SHAH FOR AY 2013-14 9 FOR THE YEARS 2010-11, 2011-12 AND 2012-13, COPIES OF RELEVANT EXPENSES ACCOUNTS YEAR WISE, COPY OF BANK STATEMENT S WITH AHMEDABAD DISTRICT CO-OP BANK LTD FROM WHERE APPELL ANT MADE PAYMENTS FOR LAND IMPROVEMENT EXPENSES. COPIES OF DEED FOR PURCHASES AND SALE OF RELEVANT LAND VIDE ANNEXU RE-VI OF LETTER DATED 26/08/2015 COPY OF SAID LETTER WITH AN NEXURE-VI HAS BEEN FILED SUPRA. AO AGAIN REQUIRED APPELLANT T O ESTABLISH GENUINENESS OF LAND IMPROVEMENT EXPENSES. APPELLANT VIDE LATTER 'DATED' 21/03/2016 HAVE FURNISHED EXPL ANATION AND REITERATED THAT LAND IMPROVEMENT EXPENSES ARE GENUI NE INCURRED WITH REFERENCE TO CAPITAL ASSET SOLD DURIN G THE YEAR. COPY OF LETTER DATED 21/03/2016 FILED BEFORE AO IS ATTACHED HEREWITH (PAGE NO. 87 TO 88). FURTHER, EXPLAINED TH AT LAND IN QUESTION WAS 4 FEET BELOW THE ROAD LEVEL REQUIRING LEVEL OF 2 FEET ABOVE ROAD AS WELL AS BOUNDARY WALL TO PROTECT LAND FROM ENCROACHMENT. APPELLANT ALSO EXPLAINED THAT NORMALL Y TYPE OF WORK DISCUSSED ABOVE PERTAINING TO LAND IS CARRIED OUT THROUGH RELIABLE LOCAL LABOR CONTRACTORS FOR PROPER AND TIM ELY EXECUTION AND AVOIDING LOSS OF MATERIALS. HE ASSIGNED LAND LE VELING AND BOUNDARY WORK TO LOCAL CONTRACTORS WITH INTENSION T HAT ISSUES OF ENCROACHMENT PERTAINING TO LAND IN QUESTION BY O WNERS OF ADJOINING LAND, IF ANY, CAN BE SET RIGHT WITHOUT TR OUBLE. HENCE SAID WORK WAS ASSIGNED TO LOCAL CONTRACTOR AND HE W AS SHOULDERED RESPONSIBILITY OF ARRANGING MATERIALS AT SIGHT UPON CONDITION THAT PURCHASES AND. PAYMENT WILL BE IN TH E NAME OF APPELLANT AND DIRECT PAYMENT BY APPELLANT. APPELLAN T STATED THAT EXPENSES ARE GENUINE LAND IMPROVEMENT EXPENSES ITA NO. 307/AHD/2017 JATINKUMAR AMRUTLAL SHAH FOR AY 2013-14 10 REQUESTED TO ALLOW WHILE DETERMINING CHARGEABLE STC G. AO WITHOUT POINTING OUT ANY DEFECT WITH REFERENCE TO A FORE SAID EVIDENCES FILED FOR LAND IMPROVEMENT EXPENSES, WHIC H PROVES THAT ABOVE EXPENSES AS NON- GENUINE EXCEPT PRESUMPT ION BASED ON INFORMATION RECEIVED FROM JURISDICTIONAL COMMERC IAL TAX OFFICER, DISALLOWED OUT OF LAND IMPROVEMENT EXPENSE . THE DISALLOWANCE OUT OF LAND IMPROVEMENT EXPENSES OF RS.51,12,040/- FOR COMPUTING CHARGEABLE STCG BASED MERELY ON SURMISES AND CONJECTURES IS NOT JUSTIFIED AND DE SERVES TO BE DELETED. 8. FURTHER THE LD. COUNSEL FOR THE ASSESSEE TOOK US THROUGH THE LEDGER ACCOUNT FOR CONSTRUCTION OF MATERIAL, COPY O F INVOICES, COPY OF PURCHASE DEED, SALE DEED, BANK STATEMENT FR OM WHERE THE PAYMENTS WERE MADE, PHOTOGRAPHS OF THE WORK DON E ON THE ALLEGED LAND IN SUPPORT OF HIS CONTENTION THAT EXPE NSE CLAIM WAS GENUINE. 9. LD. DEPARTMENTAL REPRESENTATIVE (DR) VEHEMENTLY ARGUED SUPPORTING THE FINDING OF BOTH THE LOWER AUTHORITIE S AND ALSO SUBMITTED THAT BURDEN TO PROVE GENUINENESS OF EXPEN SE WAS ON THE ASSESSEE AND NONE OF THE SUPPLIERS APPEARED BEF ORE THE LD. AO. 10. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. THE SOLE GRIEVANCE OF THE ASSESSE E IS AGAINST THE FINDING OF LD. CIT(A) CONFIRMING THE DISALLOWAN CE OF PURCHASE OF RS.51,12,040/- FOR TREATING THEM AS BOG US. WE OBSERVE THAT THE ASSESSEE HAS SHOWN INCOME UNDER TH E HEAD OF ITA NO. 307/AHD/2017 JATINKUMAR AMRUTLAL SHAH FOR AY 2013-14 11 SHORT TERM CAPITAL GAIN FROM SALE OF LAND. LAND WAS PURCHASED DURING THE F.Y. 2010-11 AND THE ASSESSEE CLAIMED VA RIOUS EXPENSES FOR THE CONSTRUCTION OF BOUNDARY WALL, LAN D LEVELING EXPENSES, AHMEDABAD MUNICIPAL CORPORATION (AMC) CHA RGES, REGISTRATION FEES AND STAMP DUTY WHICH WERE INCURRE D DURING THREE FINANCIAL YEARS 2010-11, 2001-13 & 2012-13. T HE TRANSACTION OF PURCHASE OF SALE OF LAND IS NOT IN D ISPUTE. IT IS ONLY THE EXPENSES ON BUILDING MATERIAL AND LABOUR C HARGES PAID TO FOLLOWING FIVE PARTIES WHICH ARE IN DISPUTE BEFO RE US: 1. ARASURI ENTERPRISE RS.4,676,625/- 2. BHAVI TRADING CO. RS.1,50,180/- 3. HARIOM SALES RS.20,47,500/- 4. MAHAVIR TRADERS RS.18,72,610/- 5. VARAHI CONTRACTOR CO. RS.5,65,125/- TOTAL RS.51,12,040/- 11. THE ASSESSEE IN ORDER TO CLAIM THAT ALL THE EXP ENSES CLAIMED AND PAID TO THE ABOVE PARTIES ARE GENUINE HAS FILED LEDGER ACCOUNT OF CONSTRUCTION MATERIAL FOR ALL THE THREE YEARS, COPY OF INVOICES OF ALL THE PARTIES, BANK STATEMENT THROUGH WHICH THE PAYMENTS HAS BEEN MADE AND THE DETAILS ABOUT THE CO NTRACTOR WHO CARRIED OUT THE WORK. 12.IN RESPECT OF THE PARTIES WHICH HAVE SHOWN TAX I DENTIFICATION NO.(TIN) IN THEIR BILLS. LD. AO CALLED INFORMATION FROM THE COMMERCIAL TAX DEPARTMENT. AS FAR AS THE IDENTITY O F THE ALLEGED SUPPLIERS IS CONCERNED THEIR WAS ON ASSESSE E FAVOURING REPORT FROM THE COMMERCIAL TAX DEPARTMENT BUT WITH REGARD TO THE SALES TURNOVER IT WAS NOT MATCHING WITH THE SAL ES SHOWN BY ITA NO. 307/AHD/2017 JATINKUMAR AMRUTLAL SHAH FOR AY 2013-14 12 THESE SUPPLIERS. THIS WAS THE MAIN REASON WHICH CRE ATED DOUBTS IN THE MIND OF THE ASSESSING AUTHORITY. HOWE VER, THE ASSESSEE PLACED ALL THE DOCUMENTARY EVIDENCES BEFOR E THE LD. AO ALONG WITH PHOTOGRAPHS OF THE LAND AND THE WORK CARRIED OUT THEREON. IT WAS SPECIFICALLY REQUESTED DURING THE A SSESSMENT PROCEEDINGS BY THE ASSESSEE TO THE LD AO TO DEPUTE INSPECTOR FOR SITE VISIT SO THAT THE ISSUE RELATING TO GENUIN ENESS OF DEVELOPMENT EXPENSES CAN BE RESOLVED BUT THE REQUES T WAS DECLINED BY THE LD. AO. NO SUMMONS WAS ISSUED TO TH E ALLEGED SUPPLIERS OF THE LD. AO DIRECTLY AND ONLY REPORT OF COMMERCIAL TAX DEPARTMENT WAS TAKEN AS THE BASIS. 13. WE FURTHER OBSERVE THAT LD. AO FAILED TO CONSID ER THE FACT THAT ALL THE PAYMENTS WERE MADE THROUGH ACCOUNT PAY EE CHEQUES. AFTER RECEIVING RESPECTIVE BILLS ISSUED BY THE PARTIES AS WELL AS A CONTRACTOR IT WAS INCUMBENT ON THE LD. AO TO CARRY OUT THE INVESTIGATION BY SUMMONING THE SUPPLIERS. I N THE BODY OF THE ASSESSMENT ORDER LD. AO OBSERVED THAT THE AL LEGED SUPPLIERS ARE SMALL RETAIL SUPPLIERS HARDLY HAVING THE CAPACITY TO STORE THE BUILDING MATERIALS. WE FIND SUCH REMAR KS TO BE VERY GENERAL AND CASUAL WITH NO HOMEWORK. 14. AS FAR AS THE CLAIM OF THE ASSESSEE IS CONCERNE D, APART FROM PLACING THE COPY OF INVOICES, LEDGER ACCOUNT, BANK STATEMENT AND FEW PHOTOGRAPHS, THE ASSESSEE COULD NOT FILE AN Y CONFIRMATION FROM THE ALLEGED SUPPLIERS. IN THE SAL E DEED ALSO THERE IS NO MENTION ABOUT THE BOUNDARY WALL, LAND L EVELING WORK CARRIED OUT WHICH COULD HAVE JUSTIFY THE ASSES EES CLAIM. ITA NO. 307/AHD/2017 JATINKUMAR AMRUTLAL SHAH FOR AY 2013-14 13 NO VALUATION REPORT WAS FILED. PAYMENTS FOR VARIOUS EXPENSES MADE AFTER A PERIOD OF 12 MONTHS ALSO RAISES DOUBTS . HOWEVER, MERELY FOR THE PAYMENTS BEING LATE AND THE SUPPLIER S HAVING RETAIL BUSINESS, AND NOT PRODUCED BEFORE THE LD. AO CANNOT BE A SOUND BASIS TO DISPROVE THE CLAIM OF EXPENSES MADE BY THE ASSESSEE. 15.WE, THEREFORE, IN THE GIVEN FACTS OF THE CASE, A ND BEING FAIR TO BOTH THE PARTIES, ARE OF THE CONSIDERED VIEW THAT S USTAINING OF DISALLOWANCE @ 15% OF THE ALLEGED AMOUNT OF RS.51,1 2,040/- WILL MEET THE END OF JUSTICE. WE ACCORDINGLY, ORDER SO AND CONFIRM THE DISALLOWANCE OF EXPENSES AT RS.7,66,806 /- AND PARTLY ALLOW ASSESSEES APPEAL. 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 20 .09.2019. SD/- SD/- (AMARJIT SINGH) JUDICIAL MEMBER ( MANISH BORAD) ACCOUNTANT MEMBER AHMEDABAD; DATED 20 /09/2019 PATEL, PS ITA NO. 307/AHD/2017 JATINKUMAR AMRUTLAL SHAH FOR AY 2013-14 14 $% & ''() *$)' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! / CONCERNED CIT 4. ! ( ) / THE CIT(A)- XV, AHMEDABAD 5. $%& '' , , )*++ / DR, ITAT, AHMEDABAD 6. &,- . / GUARD FILE. $% + / BY ORDER, TRUE COPY ,/ - ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD