Bishwajeet Pattanayak, Keonjhar V. DCIT, Sambalpur

ITA 339/CTK/2012

• Counselvise Citation: 33922114 RSA 2012
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 22-05-2012
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHARJEE
• Assessee Lawyers: S K AGRAWAL
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 339/CTK/2012 / ASSESSMENT YEAR 2008 - 09 BISHWAJEET PATTANAYAK, BASANT KUNJ, JODA, KEONJHAR, ODISHA PAN: AGXPP 8750 D - - - VERSUS - DY.COMMISSIONER OF INCOME - TAX, CI RCLE 1(1), SAMBALPUR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI S.K.AGRAWAL, AR / FOR THE RESPONDENT: / SHRI A.BHATTACHARJEE, DR / DATE OF HEARING: 23.08.2012 / DATE OF PRONOUNCEMENT: 14.09.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE IS ON THE SOLITARY ISSUE THAT THE AUTHORITIES BELOW HAVE ERRED BOTH IN LAW AND ON FACTS AND C IRCUMSTANCES BY HOLDING THE VALUE OF THE BUILDING AS THE COST OF THE BUILDING AND TREATING THE DIFFERENCE BETWEEN THE VALUE OF THE BUILDING AND AMOUNT OF LOAN TAKEN COMPUTED AT 10,50,000 AS UNEXPLAINED INVESTMENT TO BE TAXED IN THE HANDS OF THE ASSESSEE. 2. THE BRIEF FACTS AS HAVE BEEN BROUGHT ON RECORD ARE THAT THE ASSESSEE IS A TRADER OF PETROLEUM PRODUCTS FILED RETURN OF INCOME OF 9,51,540 FOR THE ASSESSMENT YEAR 2007 - 08. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH THE SOURCE OF INVESTMENT IN THE FUNDS IN ACQUIRING THE PROPERTY WHEN HE HELD THAT A LOAN OF 36 LAKHS WAS SANCTIONED BEING THE VALUE OF THE PROPERTY BY ICICI BANK WHEN THE LOAN I.T.A.NO. 339/CTK/20 12 2 DISBURSED FROM THE ICICI BANK WAS 25,50,000 AND THE TOTAL AMOUNT INVE STED IN THE PROPERTY WAS 30,60,000 ONLY. 5,10,000 WERE PAID FROM THE ASSESSEES OWN DRAWINGS ON THE INCOME RENDERED TO TAX AND LOANS FROM WIFE AND BUSINESS. HE SOUGHT TO BRING THE DIFFERENCE OF THE VALUE OF PROPERTY DISCLOSED BY THE ICICI BANK AT 36 LAK HS BY REDUCING THE LOAN DISBURSED THERE FROM TO TAX THE SUM OF 10,50,000 AS INVESTMENT UNDER THE PROVISIONS OF SECTION 69. HE HAS MADE CERTAIN OTHER DISALLOWANCES AND ADDITIONS WHICH ALONG WITH THIS ADDITION WAS APPEALED BEFORE THE FIRST APPELLATE AUTHORI TY. THE LEARNED CIT(A) CONFIRMED THIS ADDITION BY OBSERVING THE FOLLOWING. 4.3.2. THE ASSESSEE HAD FURNISHED BEFORE THE AO A COPY OF THE LOAN SANCTION ORDER FROM ICICI BANK, RASULGARH, BHUBANESWAR. AS PER IT THE VALUE OF THE PROPERTY HAS BEEN MENTIONED AT 36,00,000 AGAINST WHICH THE BANK HAS FINANCED A SUM OF 25,50,000 ON 31.8.2007. KEEPING IN VIEW THE ABOVE FACTS, THE AO IS RIGHT IN BRINGING TO TAX THE BALANCE AMOUNT OF 10 ,50,000. THIS IS TO BE VIEWED AGAINST THE BACKDROP THAT THERE WAS NO COMPLIANCE B Y THE ASSESSEE ON 06.12.201 0 TO THE SPECIFIC QUERY REGARDING INVESTMENT IN HOUSE CONSTRUCTION MADE BY THE AO VIDE ORDER SHEET ENTRY DATED 22.11.2010. EXAMINED ON THE TOUCH - STONE OF THE ABOVE FACT, THE DISALLOWANCE OF 10,50,000 MADE BY THE AO IS CONFIRM ED . 3. THE LEARNED COUNSEL FOR THE ASSESSEE INITIATING HIS ARGUMENTS SUBMITTED THAT IT WAS NOBODYS CASE THAT THE BANK ON THE SANCTION LETTER FOR THE LOAN HAD NOTED THE VALUE OF THE PROPERTY AT 36 LAKHS WOULD BE THE APPROPRIATE VALUE TO BE PAID TO THE BUIL DERS ON ACQUISITION THEREOF WHEN THE ACTUAL AMOUNT OF THE PROPERTY PAID FOR ALONG WITH THE LOAN FROM THE BANK WAS 30,60,000 ONLY. IT WAS NOT THE CASE OF THE ASSESSING OFFICER TO MAKE THE I.T.A.NO. 339/CTK/20 12 3 ADDITION U/S.50C. FOR THIS PROPOSITION HE HAS FILED A PAPER BOK WHIC H INTER ALIA INCLUDES THE SANCTION LETTER OF ICICI BANK WHICH IS ON PAGE 59 OF THE PB INDICATES THE PROPERTY VALUE BUT ALSO INDICATES THE AMOUNT ACTUALLY FINANCED BY THE BANK. THE ASSESSING OFFICER THEREFORE FAILED TO OBSERVE THE FACT THAT THE BANKS ARE RE QUIRED TO HOLD BACK THE MARGIN TO CUSHION INTEREST WHICH IS TO BE PAID BY THE ASSESSEE AND IS ALLOWABLE AS SEPARATE DEDUCTION UNDER THE PROVISIONS OF THE I.T.ACT. HE VEHEMENTLY ARGUED THAT THE ASSESSEE HAS NOT DISCLOSED THE VALUE O F THE PROPERTY IN ITS BOO KS OF ACCOUNT AT 36 LAKHS COULD NOT BECOME THE INCOME OF THE ASSESSEE AS MARGIN HELD BACK BY THE BANK. HE FURTHER PERUSED THE ORDER OF THE LEARNED CIT(A) WHO HAS NOT DISPUTED THIS FACT BUT THE FACT THAT INVESTMENT BY THE ASSESSEE IN THE HOUSE CONSTRUCTION WAS NOT REPLI ED OR EXPLAINED TO THE ASSESSING OFFICER INSOFAR AS THE VALUATION OF THE PROPERTY COULD NOT BE EQUATED WITH THE ACTUAL AMOUNT PAID INSCRIBED IN THE BOOKS OF ACCOUNT BY THE ASSESSEE TO BE DISPUTED FOR REBUTTAL OR EXPLANATION. HE, THEREFORE PRAYED THAT HAVI NG DELETED THE OTHER ADDITIONS AND DISALLOWANCE, THE LEARNED CIT(A) OUGHT TO HAVE DELETED THIS A DDITION ALSO WHICH IS PURELY HYPOTHETICAL AND UNJUSTIFIED. 4. THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW FOR HIS PART OF SUBMISSIONS. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL ON RECORD. ON THE SOLITARY ISSUE RAISED BY THE ASSESSEE IN THIS APPEAL, WE ARE INCLINED TO UPHOLD THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSE SSEE INSOFAR AS THE AO MISDIRECTED HIMSELF TO INTERPRETE THE VALUE AS INSCRIBED BY THE BANK IN THE SANCTION LETTER INSOFAR AS THE ASSESSING OFFICER IN HIS ORDER HAS ALREADY ADJUDICATED ON THE ISSUE OF AMOUNT INVESTED IN THE PROPERTY BESIDES THE I.T.A.NO. 339/CTK/20 12 4 LOANS SANCT IONED FROM THE BANK. THEREFORE, IT WAS NOT THE CASE OF THE ASSESSING OFFICER TO EQUATE THE VALUE OF THE PROPERTY AS INSCRIBED IN THE BANK REMAINING UN EXPLAINED BY THE ASSESSEE FOR TAXATION UNDER THE PROVISIONS OF SECTION69.WHEN THE ASSESSEE HAS DISCLOSED T HE SOURCE OF INVESTMENT IN THE BOOKS OF ACCOUNT AT THE VALUE IN THE BALANCE SHEET FURNISHED BY THE ASSESSEE TO THE ASSESSING OFFICER, THE ASSESSEE COULD NOT HAVE EXPLAINED THE SOURCE OF INVESTMENT OF 1 0,50,000 WHICH NEVER W A S INVESTED AS NEGATIVE CANNOT B E PROVED. THE BANK HAS CLEARLY HELD THE MARGIN TO CUSHION ITS INTEREST CANNOT BE PART OF THE ASSESSEES INCOME AS UNEXPLAINED INVESTMENT. THEREFORE, THE LEARNED CIT(A) OBSERVING THAT THE ASSESSEE DID NOT COMPLY TO THE SPECIFIC QUERY REGARDING THE INVESTMEN T IN HOUSE CONSTRUCTION IS OF NO AVAIL INSOFAR AS HE HIMSELF AGREED TO DELETE THE OTHER ADDITIONS MADE IN RESPECT TO THE INVESTMENT IN THE PROPERTY WHICH WERE FORMING PART OF THE INVESTMENT IN THE BOOKS OF ACCOUNT IN THE PROPERTY. THE OVER ALL VIEW TAKEN B Y THE LEARNED CIT(A) REGARDING THE INCOME OF MORE THAN 9 LAKHS HAVING BEEN FILED JUSTIFIES THE CONTENTION OF THE ASSESSEE THAT HE WAS NOT TO EXPLAIN AN ARBITRARY AND HYPOTHETICAL FIGURE OF 10,50,000. FINDING NO MERIT IN THE CONFIRMATION THEREOF BY THE LE ARNED CIT(A), WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF 10,50,000. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. SD/ - SD/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 14.09.2012 ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. I.T.A.NO. 339/CTK/20 12 5 - COPY OF THE ORDER FORWARDED TO: 1. / THE APPELLANT : BISHWAJEET PATTANAYAK, BASANT KUNJ, JODA, KEONJHAR, ODISHA 2 / THE RESPONDENT: DY.COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), SAMBALPUR. 3. / THE CIT, 4. ( ) / THE CIT(A), 5. / DR, CUTTACK BENCH 6. GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. D ATE OF DICTATION 12.09.2012 .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13.09.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S 14.09.2012 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HE AD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..