Srinvasan Athamanathan Iyer, Vadodara V. Asstt. Commissioner of Income Tax,Circle-3, Vadodara

ITA 3445/AHD/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5778 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 31-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 10-12-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Corroborative evidences

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD .., , !' BEFORE SHRI R.P. TOLANI, VICE PRESIDENT & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.3445/AHD/2015 ( / ASSESSMENT YEAR : 2011-12) SRINIVASAN ATHAMANATHAN IYER 55, FREEDOM FIGHTER COLONY NR.SAMTA, SUBHANPURA VADODARA / VS. THE ACIT CIRCLE-3 VADODARA-390 007 !% ./ ./ PAN/GIR NO. : AACP 18181Q ( %( / APPELLANT ) .. ( )%( / RESPONDENT ) %(* / APPELLANT BY : SHRI ANUJ KUMAR TIWARI, AR )%(+* / RESPONDENT BY : SHRI K. MADHUSUDAN, SR.DR ,+ / DATE OF HEARING 31/05/2017 -./+ / DATE OF PRONOUNCEMENT 01/06/2017 / O R D E R PER PRADIP KUMAR KEDIA, AM: THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-5, VADOD ARA [CIT(A) IN SHORT] DATED 08/09/2015 FOR THE ASSESSMENT YEAR (AY) 2011-12. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE R EAD AS UNDER:- ITA NO.3445/AHD /2015 SRINIVASAN A. IYER VS. ACIT ASST.YEAR 2011-12 - 2 - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE ASSESSING OFFICER ERRED IN MAKING ADDITIONS OF RS.1 5,24,175/- ON ACCOUNT OF DIFFERENCE BETWEEN 26-AS & RETURN OF INC OME. THEREFORE IT IS PRAYED THAT THIS ADDITION IS DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE ASSESSING OFFICER ERRED IN DISALLOWING THE ENTIRE C OST OF IMPROVEMENT DUE TO NON-AVAILABILITY OF DOCUMENTS. THE ASSESSEE HAS TAKEN A LOAN FOR THE PURPOSE OF IMPROVEMENT. THEREFORE IT IS PRAYED THAT COST OF IMPROVEMENT SHOULD BE ALLOWED AT LEAST UP TO THE AM OUNT OF LOAN TAKEN. 3. THE BRIEF FACTS CONCERNING GROUND NO.1 IS THA T THE ASSESSEE WAS RUNNING PROPRIETORSHIP UNDER THE NAME AND STYLE OF BALAJI ENGINEERING CONSTRUCTION COMPANY. DURING THE RELEVANT ASSESSME NT YEAR 2011-12 (FY 2010-11), THE AFORESAID PROPRIETORSHIP BUSINESS WAS TAKEN OVER BY A PRIVATE LIMITED COMPANY, NAMELY; UPPLI BALAJI ENGIN EERING CONSTRUCTION CO.PVT.LTD. (UBECCPL) WITH EFFECT FROM 28/02/2011. THIS PRIVATE LIMITED COMPANY WAS INCORPORATED ON 20 /07/2010 WITH ONE OF THE OBJECTIVES TO TAKE OVER THE BUSINESS OF THE PROPRIETORSHIP CONCERN. THE RETURN OF INCOME OF THE ASSESSEE FOR AY 2011-12 CONCERNING PROPRIETORSHIP CONCERN WAS REFLECTED TO SCRUTINY AS SESSMENT. IT WAS INTER ALIA FOUND BY THE ASSESSING OFFICER (AO) THAT THE RECEI PTS/INCOME DECLARED IN ITS RETURN OF INCOME DO NOT MATCH WITH THE CORRESPONDING RECEIPTS BELONGING TO THE ASSESSEE AS PER 26-AS STA TEMENT. THE DIFFERENCE BETWEEN THE RECEIPTS AS SHOWN IN THE FIN ANCIAL STATEMENTS QUA 26AS STATEMENT AMOUNTING TO RS.15,24,175/- WAS EVEN TUALLY TAKEN AS ITA NO.3445/AHD /2015 SRINIVASAN A. IYER VS. ACIT ASST.YEAR 2011-12 - 3 - SUPPRESSED SALES OF THE ASSESSEE AND ACCORDINGLY AD DED TO THE TOTAL INCOME OF THE ASSESSEE. 4. THE ASSESSEE APPROACHED THE CIT(A) SEEKING RELIE F AGAINST THE IMPUGNED ADDITIONS. THE CIT(A) HOWEVER, DECLINED T O GRANT ANY RELIEF ON THE GROUND THAT WHILE TDS HAS BEEN CLAIMED IN TH E HANDS OF THE ASSESSEE, THE CORRESPONDING RECEIPTS IS CLAIMED TO HAVE BEEN PURPORTEDLY OFFERED IN THE HANDS OF THE PVT.LTD.CO. (UBBCCPL). THE CIT(A) OBSERVED THAT BY CLAIMING THE TDS IN ITS OWN HANDS, THE ASSESSEE HAS ACCEPTED THAT CORRESPONDING INCOME BELONGS TO HIM. THE ORDER OF THE AO ON THE ISSUE WAS ACCORDINGLY SUSTAINED BY THE CIT(A ). 5. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LD.AR FOR THE ASSESSEE MR.ANUJKUMAR TIWARI C ONTENDED THAT THE DIFFERENCE IN THE RECEIPTS APPEARING IN THE FIN ANCIAL STATEMENT AS COMPARED TO STATEMENT - 26-AS IS ON ACCOUNT OF MIST AKE MADE BY THE PARTIES WHILE PUTTING QUOTING PAN OF PROPRIETARY-CO NCERN INCORRECTLY OWING TO CONFUSION PREVAILING DUE TO TAKE OVER OF P ROPRIETORSHIP CONCERN BY THE PVT.LTD.CO. THE LD.AR SUBMITTED THAT THE AS SESSEE HAS TIME AND AGAIN POINTED OUT BEFORE THE LOWER AUTHORITIES THAT THE AFORESAID RECEIPTS HAVE BEEN INCLUDED IN THE RETURN OF INCOME OF THE P VT.LTD.CO. THUS, THE AFORESAID RECEIPTS HAVE ALREADY BEEN SUBJECTED TO T AX IN THE HANDS OF THE PVT.LTD.CO. MERELY BECAUSE TDS HAS BEEN CLAIMED BY THE ASSESSEE AS ITA NO.3445/AHD /2015 SRINIVASAN A. IYER VS. ACIT ASST.YEAR 2011-12 - 4 - PER CREDIT RECEIVED WHICH WAS NOT CLAIMED BY THE PV T.LTD. CO., THE ADVERSE INFERENCE AGAINST THE ASSESSEE CANNOT BE DR AWN. THE LD.AR ACCORDINGLY PLEADED RELIEF AS PER GROUND RAISED IN THIS REGARD. 7. THE LD.DR, ON THE OTHER HAND, RELIED UPON THE OR DERS OF THE AO AND THE CIT(A) AND SUBMITTED THAT THE FACTUAL DETAI LS CONCERNING THE MISMATCH REQUIRES TO BE VERIFIED. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE ISSUE IN DISPUTE IS ADDITIONS ON ACCOUNT OF MISMATCH IN THE RECEIPTS BETWEEN THE FINANCIAL STATEMENTS AND THE RECEIPTS RECORDED IN 2 6-AS STATEMENT GENERATED UNDER THE PERMANENT ACCOUNT NUMBER (PAN) OF THE ASSESSEE. WE TAKE NOTICE OF THE PERSISTENT CLAIM OF THE ASSES SEE THAT THE DIFFERENTIAL RECEIPT OF RS.15,24,175/- HAS BEEN DULY AND CORRECT LY RECORDED IN THE HANDS OF THE PVT.LTD.CO. WHICH HAS ULTIMATELY TAKEN OVER THE BUSINESS OF THE PRESENT ASSESSEE. IF THAT IS SO, THE DEPARTMEN T OUGHT TO HAVE TAXED THE RECEIPT IN THE HANDS OF ONE PERSON WHO IS RIGHTFUL AND LEGITIMATE CLAIMANT OF THE RECEIPT. WE FIND THAT THE CIT(A) IS MERELY INFLUENCED BY THE CLAIM OF TDS BY ASSESSEE HEREIN WITHOUT DECLARING THE CO RRESPONDING RECEIPT WHICH, IN OUR VIEW, CANNOT BE SEEN IN ISOLATION TO THE OTHER ATTENDANT FACTS. THE CIT(A), IN OUR VIEW, HAS ACCORDINGLY CO MMITTED ERROR IN NOT APPRECIATING THE FACTS IN PERSPECTIVE. AS POINTED OUT ON BEHALF OF THE ASSESSEE, THE PROPRIETORSHIP CONCERN HAS BEEN TAKEN OVER BY THE ITA NO.3445/AHD /2015 SRINIVASAN A. IYER VS. ACIT ASST.YEAR 2011-12 - 5 - PVT.LTD.CO. THEREFORE, THERE EXISTS PLAUSIBLE CIRC UMSTANCES FOR PREVAILING CONFUSION IN QUOTING WRONG PAN WHILE DED UCTING TDS BY THE OUTSIDE PARTIES WHO HAVE SOURCED THE DIFFERENTIAL R ECEIPTS. UNDER THE CIRCUMSTANCES, WE CONSIDER IT JUST AND EXPEDIENT TO REMITTING THE MATTER BACK TO THE FILE OF THE AO FOR DE NOVO ADJUDICATION OF THE ISSUE IN ACCORDANCE WITH LAW AFTER EXAMINING THE ATTENDANT F ACTS FOR RIGHTFUL TAXATION OF DIFFERENTIAL RECEIPTS IN QUESTION. THE ASSESSEE SHALL BE AT LIBERTY TO ESTABLISH BEFORE THE AO BY CORROBORATIVE EVIDENCES THAT THE IMPUGNED DIFFERENTIAL RECEIPTS HAVE BEEN CORRECTLY TAXED IN THE HANDS OF THE PVT.LTD.CO. AS A RIGHTFUL CLAIMANT OF THE IMPUG NED RECEIPTS. IN TERMS OF ABOVE DIRECTION, THE ISSUE IS SET ASIDE AND REST ORED TO THE FILE OF THE AO FOR ITS DETERMINATION AFRESH. AS A RESULT, GROUND NO.1 OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 9. GROUND NO.2 CONCERNS CLAIM TOWARDS PURPORTED COS T OF IMPROVEMENT WHILE DETERMINING THE COST OF PURCHASE OF IMMOVABLE PROPERTY FOR THE PURPOSES OF COMPUTATION OF CAPITAL GAINS ON ITS SALE. THE RELEVANT FACTS CONCERNING THE AFORESAID ISSUE IS TH AT THE ASSESSEE SOLD A RESIDENTIAL HOUSE PROPERTY ON 28/03/2011 FOR A CONS IDERATION OF RS.30 LAKHS. THE ASSESSEE INTER ALIA CLAIMED COST OF IMPROVEMENT OF RS.8,88,704/- IN TANDEM WITH THE COST OF PURCHASE F OR DETERMINING THE CAPITAL GAINS ON SALE. THE IMPUGNED COST OF IMPROV EMENT WAS REJECTED BY THE AO AND CONSEQUENTLY ASSESSED LTCG CLAIMED ST OOD SWELLED TO ITA NO.3445/AHD /2015 SRINIVASAN A. IYER VS. ACIT ASST.YEAR 2011-12 - 6 - THAT EXTENT. THE AFORESAID ACTION OF THE AO WAS CO NFIRMED BY THE CIT(A). 10. IN THE SECOND APPEAL BEFORE THE TRIBUNAL, THE L D.AR FOR THE ASSESSEE CLAIMED THAT THAT IN SUPPORT OF THE CLAIM OF THE COST OF THE IMPROVEMENT WHILE COMPUTING THE LONG TERM CAPITAL G AIN (LTCG) ON THE SALE OF THE IMMOVABLE PROPERTY, THE ASSESSEE H AD FURNISHED BEFORE THE LOWER AUTHORITIES DOCUMENTS EVIDENCING LOANS FROM B ANKS TO UNDERTAKE THESE IMPROVEMENTS. A LOAN OF RS.3 LAKHS WAS TAKEN BY THE ASSESSEE FOR FY 2002-03 AND ANOTHER LOAN OF RS.1,98,000/- WAS TA KEN BY THE ASSESSEE IN FY 2003-04 FOR THE PURPOSE OF IMPROVEMENT TO RES IDENTIAL HOUSE. THE STATEMENT OF THESE LOANS AND CONFIRMATION FROM BANK AUTHENTICATING THE AMOUNT OF LOAN AND USE OF THE SAME FOR IMPROVEMENT OF PROPERTYWAS IGNORED BY THE LOWER AUTHORITIES. THE LD.AR ACCORD INGLY SOUGHT REVERSAL OF THE ACTION OF THE CIT(A) ATLEAST TO THE EXTENT O F QUANTUM OF LOAN I.E. RS.4,98,000/-. 11. THE LD.DR, ON THE OTHER HAND, SUBMITTED THAT TH E ASSESSEE FAILED TO PRODUCE ANY COGENT EVIDENCE IN THE FORM OF BILLS, V OUCHERS ETC. TO PROVE THE ACTUAL INCURRING OF COST OF IMPROVEMENT AS CLAI MED. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT IN SUPPORT OF THE COST OF IMPROVEMENT SO CLAIMED, THE ASSESSEE HAS FAILED TO ADDUCE ITA NO.3445/AHD /2015 SRINIVASAN A. IYER VS. ACIT ASST.YEAR 2011-12 - 7 - ANY PROPER EVIDENCE. THE ASSESSEE HAS ONLY RELIED ON ITS CLAIM ON THE BASIS OF TWO LOANS OF RS.3 LACS AND RS.1,98,000/- A S NOTED ABOVE. HOWEVER, THERE IS NO EVIDENCE ON RECORD TO ESTABLIS H THAT THE AFORESAID LOANS WERE ACTUALLY SPENT ON IMPROVEMENT OF HOUSE. THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY PAYMENT WAS MADE THROUGH BANKING CHANNELS. NO BILLS, VOUCHERS ETC. RELATING TO PURPORTED COST OF IMPROVEMENT WERE PRODUCED BEFORE THE LOWER AUTHORITIES OR BEFORE US. THUS, THE ASSESSEE HAS FAILED TO ESTABLISH THE VERACITY OF IMPUGNED CL AIM. THE LOAN STATEMENT IS EXTRANEOUS FOR DETERMINATION OF ISSUE. CONSEQUENTLY WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) IN DISALLOWING THE CLAIM OF THE EXPENDITURE OF RS.8,88,704/- TOWARD CO ST OF IMPROVEMENTS. ACCORDINGLY GROUND NO.2 OF ASSESSEES APPEAL IS DIS MISSED. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 01 / 0 6 /201 7 SD/- SD/- ( ..) ( ) ! ( R.P. TOLANI ) ( PR ADIP KUMAR KEDIA ) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD; DATED 01/ 06 /2017 3..,.4../ T.C. NAIR, SR. PS ITA NO.3445/AHD /2015 SRINIVASAN A. IYER VS. ACIT ASST.YEAR 2011-12 - 8 - !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. %( / THE APPELLANT 2. )%( / THE RESPONDENT. 3. 567 8 / CONCERNED CIT 4. 8 ( ) / THE CIT(A)-5, VADODARA 5. 9:;4467 , 67/ , 5 / DR, ITAT, AHMEDABAD 6. ;=, / GUARD FILE. / BY ORDER, )94 //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION ..31.5.17 (DICTATION-PAD 16- PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 31.5.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.01.06.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 01.06.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER