The ACIT, Mehsana Circle, Mehsana V. Alap Construction Pvt.Ltd., Mehsana

ITA 3479/AHD/2007

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6889 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 05-12-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 13-08-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Income from undisclosed sources; Deemed to accrue or arise in india
• Section: 133A; 131; 69

Judgement Text

-1- IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI MUKUL KR. SHRAWAT - JM & SHRI B P JAIN - AM ITA NOS.3479 & 3480/AHD/2007 (ASSESSMENT YEARS:-2003-04 & 2004-05) THE ASST. COMMISSIONER OF INCOME-TAX, MEHSANA CIRCLE, MEHSANA V/S ALAP CONSTRUCTION PVT. LTD., G-2, INDRAPRASTHA FLAT, NR. GURUDWARA, JAIL ROAD, MEHSANA PAN: AABCA 7889 B [APPELLANT] [RESPONDENT] ITA NOS.3477 & 3478/AHD/2007 (ASSESSMENT YEARS:-2003-04 & 2004-05) THE ASST. COMMISSIONER OF INCOME-TAX, MEHSANA CIRCLE, MEHSANA V/S SANDIP KUMUDCHANDRA SHETH, G-2, INDRAPRASTHA FLAT, NR. GURUDWARA, JAIL ROAD, MEHSANA PAN: AESPS 3880 A [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI JAMES KURIAN, DR ASSESSEES BY:- SHRI SAKAR SHARMA, AR DATE OF HEARING:- 05-12-2011 DATE OF PRONOUNCEMENT:- 09-12-2011 O R D E R PER BENCH :- THESE FOUR APPEALS OF THE REVENUE ARISE FROM FOUR DIFFERENT ORDERS OF LEARNED CIT(A)-XXI, AHMEDA BAD EACH DATED 08-05-2007 FOR TWO DIFFERENT ASSESSEES I.E., ALAP CONSTRUCTION PVT. LTD. AND SANDIP KUMUDCHANDRA SHET H FOR 2 ASSESSMENT YEARS 2003-04 AND 2004-05. THE REVENUE H AS RAISED THE FOLLOWING GROUNDS OF APPEAL:- ALAP CONSTRUCTION PVT. LTD. AY 2003-04 IN ITA NO.3479/AHD/2007 :- [1] THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE BOOKS OF ACCOUNTS WERE WRONGLY REJ ECTED BY THE A.O. [2] THE LEARNED CIT(APPEALS) OUGHT TO HAVE APPRECIA TED THAT VARIOUS DEFECTS AND DISCREPANCIES WERE NOTICED DURI NG THE COURSE OF SURVEY OPERATIONS AND THE REASONS FOR REJ ECTING THE BOOK RESULTS WERE SPECIFICALLY LAID OUT IN PARA (7. 2) OF THE ASSESSMENT ORDER. [3] THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND O N FACTS IN DELETING THE ADDITION OF RS.15,99,693/- BEING ESTIM ATED PROFIT ON THE BASIS OF THE STATEMENT MADE BY THE ASSESSEE SUP PORTED BY INCRIMINATING EVIDENCE DETECTED DURING THE COURSE O F SURVEY U/S 133A OF THE ACT. [4] THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND O N FACTS IN DELETING THE INTEREST EXPENSES OF RS.3,92,722/-. [5] THE LEARNED CIT(APPEALS) OUGHT TO HAVE APPRECIA TED THAT THE ASSESSEE WAS A DEVELOPER AND WAS ENTITLED FOR FIXED RATE OF DEVELOPMENT CHARGES AND THE ASSESSEE HAS BEEN FOUND COLLECTING THE CASH COMPONENT OF THE DEVELOPMENT CHARGE IN THE BEGINNING ITSELF AND THEREFORE THERE WAS NO NECESSITY FOR BOR ROWAL OF THE FUNDS. [6] THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND O N FACTS IN DIRECTING TO GIVE SET OFF AND CARRY FORWARD OF EARL IER YEAR'S LOSS AGAINST THE DEEMED INCOME U/S 69 OF THE ACT. [7] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(APPEALS) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3 [8] IT IS THEREFORE, PRAYED THAT THE OF THE LEARNED CIT(APPEALS) MAY BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO TH E ABOVE EXTENT. ALAP CONSTRUCTION PVT. LTD. AY 2004-05 IN ITA NO.3480/AHD/2007 :- [1] THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE BOOKS OF ACCOUNTS WERE WRONGLY REJ ECTED BY THE A.O. [2] THE LEARNED CIT(APPEALS) OUGHT TO HAVE APPRECIA TED THAT VARIOUS DEFECTS AND DISCREPANCIES WERE NOTICED DURI NG THE COURSE OF SURVEY OPERATIONS AND THE REASONS FOR REJ ECTING THE BOOK RESULTS WERE SPECIFICALLY LAID OUT IN PARA (7. 2) OF THE ASSESSMENT ORDER. [3] THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND O N FACTS IN DELETING THE INTEREST EXPENSES OF RS.4,81,264/-. [4] THE LEARNED CIT(APPEALS) OUGHT TO HAVE APPRECIA TED THAT THE ASSESSEE WAS A DEVELOPER AND WAS ENTITLED FOR FIXED RATE OF DEVELOPMENT CHARGES AND THE ASSESSEE HAS BEEN FOUND COLLECTING THE CASH COMPONENT OF THE DEVELOPMENT CHARGE IN THE BEGINNING ITSELF AND THEREFORE THERE WAS NO NECESSITY FOR BOR ROWAL OF THE FUNDS. [5] THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND O N FACTS IN DIRECTING TO GIVE SET OFF AND CARRY FORWARD OF EARL IER YEAR'S LOSS AGAINST THE DEEMED INCOME U/S 69 OF THE ACT. [6] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(APPEALS) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. [7] IT IS THEREFORE, PRAYED THAT THE OF THE LEARNED CIT(APPEALS) MAY BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO TH E ABOVE EXTENT. SANDIP KUMUDCHANDRA SHETH AY 2003-04 IN ITA NO.3477/AHD/2007:- 4 [1] THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND O N THE FACTS IN HOLDING THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WAS MAINTAINED PROPERLY AND WAS THEREFORE NOT LIABLE FO R REJECTION. [2] THE LEARNED, CIT(APPEALS) HAS FAILED TO APPRECI ATE THAT THE INCOMPLETENESS OF THE, BOOKS OF ACCOUNTS AND THE RE CEIPT OF ON MONEY RECEIPT WERE NOTICED DURING THE COURSE OF SUR VEY U/S 133A OF THE ACT AND THEREFORE SUCH DEFECTS CANNOT B E OBLITERATED BY ACCEPTING THE BOOKS OF ACCOUNTS WRIT TEN AND ADJUSTED SUBSEQUENT TO THE SURVEY. [3] THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND O N THE FACTS IN DELETING THE ADDITION OF RS.8,10,615/- BY ESTIMATIN G THE INCOME. [4] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(APPEALS) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. [5] IT IS THEREFORE PRAYED THAT THE OF THE LEARNED CIT(APPEALS) MAY BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO TH E ABOVE EXTENT. SANDIP KUMUDCHANDRA SHETH AY 2004-05 IN ITA NO.3478/AHD/2007:- [1] THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND O N THE FACTS IN HOLDING THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WAS MAINTAINED PROPERLY AND WAS THEREFORE NOT LIABLE FO R REJECTION. [2] THE LEARNED, CIT(APPEALS) HAS FAILED TO APPRECI ATE THAT THE INCOMPLETENESS OF THE, BOOKS OF ACCOUNTS AND THE RE CEIPT OF ON MONEY RECEIPT WERE NOTICED DURING THE COURSE OF SUR VEY U/S 133A OF THE ACT AND THEREFORE SUCH DEFECTS CANNOT B E OBLITERATED BY ACCEPTING THE BOOKS OF ACCOUNTS WRIT TEN AND ADJUSTED SUBSEQUENT TO THE SURVEY. [3] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(APPEALS) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. [4] IT IS THEREFORE PRAYED THAT THE OF THE LEARNED CIT(APPEALS) MAY BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO TH E ABOVE EXTENT. 5 2 ALL THESE APPEALS ARE BEING TAKEN UP BY THIS CONS OLIDATED ORDER SINCE THE ISSUES INVOLVED IN THESE APPEALS AR E IDENTICAL. FIRST OF ALL WE TAKE UP THE APPEAL OF THE REVENUE I N THE CASE OF M/S ALAP CONSTRUCTION PVT. LTD. FOR AY 2003-04 IN I TA NO.3479/AHD/2007, AS UNDER:- 3 IN GROUND NOS. 1, 2 AND 3 OF THE REVENUES APPEAL , THE BRIEF FACTS ARE THAT A SURVEY WAS CONDUCTED U/S 133A ON 0 9-08-2004 ON M/S ALAP CONSTRUCTION PVT. LTD. AND SANDIP KUMUDCHA NDRA SHETH. ON THE BASIS OF THE SURVEY, THE CASE OF THE ASSESSEE FOR THE IMPUGNED YEAR AND FOR THE FOLLOWING YEAR ALONG WITH THE CASE OF SANDIP KUMUDCHANDRA SHETH FOR THE SAID ASSESSMENT Y EARS WERE REOPENED. THE ASSESSEE IS ENGAGED IN CARRYING OUT DEVELOPMENT OF REAL ESTATE AND LAND, ETC. FOR NTCS AND INDIVID UAL MEMBERS. DURING THE COURSE OF SURVEY, REGULAR BOOKS OF ACCOU NT WERE NOT FOUND BY THE DEPARTMENT. THE ASSESSEE HAD MAINTAINE D ROUGH BOOKS OF ACCOUNT SHOWING RECEIPTS OF THE ASSESSEE-C OMPANY AS WELL AS THAT OF SANDIP KUMUDCHANDRA SHETH. A STATE MENT OF SHRI SANDIP KUMUDCHANDRA SHETH WHO IS ALSO A DIRECTOR OF THE ASSESSEE-COMPANY WAS RECORDED U/S 131 ON THE DATE O F SURVEY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE WAS ASKED TO PRODUCE THE BOOKS OF ACCOUNT. THE ASSESSEE SUBMITTED THAT OUT OF THE ROUGH RECEIPT BOOK IN WHICH ENTRIES OF M/S ALAP CONSTRUCTION PVT. LTD. AND SANDIP KUMUDCHANDRA SHET H WHICH ARE OWNED BY THE SAME FAMILY MEMBERS ARE WRITTEN TO GETHER BUT FOR MAINTAINING THE REGULAR BOOKS OF ACCOUNT IN THE COMPUTER THEY ARE SEPARATED AND RECONCILED. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS THE COMPUTERIZED BOOKS OF AC COUNT COULD 6 NOT BE PRODUCED DUE TO SOME PROBLEM WITH THE HARD-D ISK IN THE COMPUTER. SINCE THE BOOKS OF ACCOUNT ARE AUDITED, T HE ASSESSEE RE-WROTE THE BOOKS AND PRODUCED THE SAME BEFORE THE AO. THE AO DID NOT ACCEPT THE RE-WRITTEN BOOKS AND REJECTED THE SAME AFTER GIVING SHOW CAUSE NOTICE AND ESTIMATED THE IN COME ON THE BASIS OF THE STATEMENT RECORDED DURING THE COURSE O F SURVEY THAT THE ASSESSEE HAD COMPLETED THE PROJECT WHICH AMOUNT ED TO RS.1,25,00,000/- AND THE ASSESSEE HAD EARNED 20% OF THE SAME. THE ASSESSEE ACCORDINGLY SURRENDERED RS.25,00,000/- IN AY 2004-05 AND 2005-06 I.E. RS.15,00,000/- IN TOTAL IN CASE OF ASSESSEE WHEREAS RS.10,00,000/- HAVE BEEN SURRENDER ED IN THE CASE OF SANDIP KUMUDCHANDRA SHETH IN AY 2004-05. TH E AO, HOWEVER, WORKED OUT THE INCOME AT THE RATE OF 20% O F RS.1,25,00,000/- AT RS.15,00,000/- OF THE ASSESSEE DURING THE YEAR. THE ASSESSEE HAVING DECLARED DEVELOPMENT RECE IPTS OF RS.9,00,307/-, THEREFORE, WORKED OUT UNACCOUNTED RE CEIPTS AT RS.15,99,693/- AND ADDED THE SAME TO INCOME OF THE ASSESSEE FOR THE IMPUGNED YEAR. 4 THE LEARNED CIT(A) VIDE PARA 5.3 AND 5.4 OF HIS O RDER OBSERVED THAT THE ASSESSEE HAD RECEIVED RS.1,25,00, 000/- FROM TWO SCHEMES OF ANAND VILLA-I AND ANAND VILLA-II AND IT IS NOWHERE MENTIONED OR STATED IN THE STATEMENT RECORD ED ON 09-08- 2004 BY THE ASSESSEE THAT THE ENTIRE WORK OF ANAND VILLA-I AND ANAND VILLA-II WERE CARRIED OUT DURING THE IMPUGNED YEAR RELEVANT TO AY 2003-04. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT WHATEVER WAS STATED DURING THE COURSE O F SURVEY PROCEEDINGS, WAS NOT ACTUAL AMOUNT OF THE PROJECTS BUT THE ACTUAL 7 AMOUNT IS WHAT IS REFLECTED IN ITS AUDITED BOOKS OF ACCOUNT. THEREFORE, THE LEARNED CIT(A) OBSERVED THAT FROM TH E PERUSAL OF IMPUGNED PAPERS WHICH DID NOT BEAR THE NAME OF THE ASSESSEE OR IT IS NOT ON RECORD THAT IT HAS BEEN WRITTEN BY ANY DIRECTOR OR EMPLOYEE OF THE ASSESSEE-COMPANY, THEREFORE, NO COG NIZANCE COULD BE GIVEN TO SUCH PAPERS. IT WAS FURTHER OBSER VED BY THE LEARNED CIT(A) THAT OTHERWISE ALSO NONE OF THE ENTR IES OF ANY OF THE IMPUGNED PAPERS REFERRED TO BY THE AO IN THE RE MAND REPORT ESTABLISHED THE FACT THAT THE ASSESSEE HAD RECEIVED ANY AMOUNT MORE THAN WHAT IS RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IN THE RELEVANT YEAR. THE ASSESSEE HAD AL READY OFFERED ADDITIONAL INCOME OF RS.5 LAKHS AND RS.10 LAKHS FOR THE AY 2004-05 AND 2005-06 WHICH IS EVIDENT FROM THE COMPU TATION OF INCOME PRODUCED AT LEARNED CIT(A)S ORDER IN PARA-5 .4 AT PAGE 31. AS NO SPECIFIC DEFECTS HAD BEEN POINTED OUT BY THE AO IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE IN THE RELEVANT YEAR WHICH ARE AUDITED AND, THEREFORE, THE LEARNED CIT(A ) OBSERVED THAT THE AO WAS NOT JUSTIFIED IN REJECTING THE BOOK S OF ACCOUNT AND FURTHER HE WAS NOT JUSTIFIED IN MAKING THE ADDI TION OF UNACCOUNTED INCOME OF RS.15,99,693/-. ACCORDINGLY, HE DIRECTED THE AO TO DELETE THE ADDITION SO MADE. 5 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERU SED THE FACTS OF THE CASE. THE ASSESSEE-COMPANY AND SANDIP KUMUDCHANDRA SHETH ARE CONCERNS WHICH ARE CARRYING ON THE BUSINESS OF DEVELOPMENT OF REAL ESTATE AND LAND, ET C. BOTH THE ASSESSEES WERE MAINTAINING SOME ROUGH NOTE BOOKS IN WHICH ENTRIES PERTAINING TO THE BUSINESS OF BOTH THE ASSE SSEES WERE 8 RECORDED. IT IS NOT UNDER DISPUTE THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE AND SANDIP KUMUDCHANDRA SHETH ARE AUDITED. NO DEFECTS IN THE BOOKS OF ACCOUNT HAD BEEN POINTED OUT BY THE AO DURING THE ASSESSMENT PROCEEDINGS. THE AO ON THE BASIS OF THE STATEMENT THAT THE ASSESSEE HAD COMPLETED THE CONTRACT WORK O F RS.1,25,00,000/- DURING THE IMPUGNED YEAR, HAS COMP UTED THE INCOME AT THE RATE OF 20% AND ACCORDINGY AFTER DEDU CTING THE DECLARED INCOME, HAD MADE THE ADDITION. THERE IS N OTHING ON RECORD SHOWN BY THE LEARNED DR THAT THE ASSESSEE HA D STATED THAT THE CONTRACT WORK OF RS.1,25,00,000/- HAD BEEN COMP LETED DURING THE IMPUGNED YEAR IN THE CASE OF THE PRESENT ASSESS EE. THE ASSESSEE WAS MAINTAINING THE BOOKS OF ACCOUNT ON CO MPUTER AND IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE SE COMPUTERIZED BOOKS WERE ALSO SHOWN TO THE DEPARTMEN TAL PERSONS DURING THE COURSE OF SURVEY PROCEEDINGS. HOWEVER, D URING THE ASSESSMENT PROCEEDINGS, DUE TO TECHNICAL DEFECTS IN THE HARD-DISK IN THE COMPUTER, COMPUTERIZED BOOKS WERE NOT PRODUC ED AND, THEREFORE, FROM THE AVAILABLE RECORD, BOOKS WERE RE -WRITTEN. THE AO DID NOT TAKE COGNIZANCE OF SUCH RE-WRITTEN BOOKS . THERE IS NOTHING ON RECORD THAT THESE RE-WRITTEN BOOKS ARE D IFFERENT FROM THE AUDITED BOOKS WHICH WERE BEFORE THE AO ALONG WI TH THE RETURN OF INCOME AND NO DEFECTS WHATSOEVER HAS BEEN POINTED OUT. THEREFORE, IN THE CIRCUMSTANCES AND FACTS OF THE CA SE, THE AO WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT AND HE IS NOT FURTHER JUSTIFIED IN MAKING ANY ADDITION TO THE INC OME AS DECLARED BY THE ASSESSEE. WE FIND NO INFIRMITY IN THE IMPUGN ED ORDER OF THE LEARNED CIT(A) IN THIS REGARD. THUS, GROUND NO S. 1, 2 AND 3 OF THE REVENUES APPEAL ARE DISMISSED. 9 6 AS REGARDS GROUND NOS. 4 AND 5, THE BRIEF FACTS A RE THAT THE ASSESSEE HAS DEBITED RS.3,92,722/- AS INTEREST DURI NG THE IMPUGNED YEAR. THE AO OBSERVED THAT THE ASSESSEE-CO MPANY DEVELOPS LAND ON BEHALF THE MEMBERS AND ONLY DEVELO PMENT CHARGES AT THE RATE OF 20% OF THE CONSTRUCTION ARE CHARGED. THE NATURE OF BUSINESS OF THE ASSESSEE DOES NOT CAST AN Y OBLIGATION ON THE ASSESSEE TO AMASS FUNDS FOR THE MEMBERS AND THE REFORE, THE INTEREST DOES NOT APPEAR TO BE FOR THE BUSINESS PUR POSE AND ACCORDINGLY HE DISALLOWED THE SAME. 7 THE LEARNED CIT(A) VIDE PARA 6.4 OF HIS ORDER WAS OF THE VIEW THAT THE AO HAS NOT BROUGHT ANY MATERIAL ON RE CORD TO ESTABLISH THAT THE AMOUNT CHARGED BY THE ASSESSEE H AS BEEN UTILIZED FOR ANY NON-BUSINESS PURPOSE AND, THEREFOR E, THE AO WAS NOT REQUIRED TO DISALLOW THE SAME AND ACCORDINGLY T HE DISALLOWANCE AS MADE BY THE AO WAS DIRECTED TO BE D ELETED. 8 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LEARNE D CIT(A) THAT THERE IS NOTHING ON RECORD BROUGHT BY THE AO THAT T HE FUNDS HAVE BEEN UTILIZED FOR NON-BUSINESS PURPOSE. THE AO CANN OT STEP INTO SHOES OF THE BUSINESSMAN AND THE BUSINESSMAN IS THE BEST JUDGE TO MANAGE HIS OWN AFFAIRS. THEREFORE, IN THESE CIRC UMSTANCES AND FACTS OF THE CASE, WE FIND NO INFIRMITY IN THE ORDE R OF THE LEARNED CIT(A) WHO HAS RIGHTLY DELETED THE ADDITION MADE BY THE AO. THUS, GROUND NOS.4 AND 5 OF THE REVENUES APPEAL AR E DISMISSED. 10 9 AS REGARDS GROUND NO.6, THE AO HAS NOT MADE ANY DISCUSSION IN HIS ASSESSMENT ORDER. THE LEARNED CIT (A) VIDE PARA 9.1 OF HIS ORDER HAS OBSERVED THAT AFTER GIVING EFF ECT TO THE RELIEF GRANTED BY THE LEARNED CIT(A), THERE IS NO POSITIVE INCOME AND THEREFORE, NO SET OFF OF UNABSORBED BROUGHT FORWARD BUSINESS LOSS IS REQUIRED TO BE DONE. ACCORDINGLY, THE LEARNED CI T(A) DISPOSED OF THE GROUND. 10 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE GROUND TAKEN BY THE REVENUE DOES N OT ARISE OUT OF THE ORDER OF THE LEARNED CIT(A) WHERE THE LEARNE D CIT(A) IN PARA 9.1 OF HIS ORDER HAS OBSERVED THAT NO SET OFF OF UNABSORBED BROUGHT FORWARD BUSINESS LOSS IS REQUIRED TO BE DON E AFTER ALLOWING RELIEF GRANTED BY THE LEARNED CIT(A). AS A MATTER OF FACT, THIS ISSUE HAS NOT BEEN DECIDED BY THE LEARNE D CIT(A) AND THEREFORE, THERE CANNOT BE ANY GRIEVANCE OF THE REV ENUE IN THIS REGARD. THEREFORE, IN THE CIRCUMSTANCES AND FACTS O F THE CASE, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 11 GROUND NOS.7 AND 8 OF THE REVENUES APPEAL ARE G ENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ANY ADJUDICATIO N. 12 IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.3479/AHD/2007 IS DISMISSED. 13 NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR THE AY 2004-05 IN ITA NO.3480/AHD/2007. 11 14 IN GROUND NOS.1 AND 2 OF THE REVENUES APPEAL, T HE BRIEF FACTS ARE IDENTICAL TO THE FACTS IN ASSESSEES OWN CASE FOR AY 2003-04 WHERE THE AO HAD REJECTED THE BOOKS OF ACCO UNT FOR THE REASONS MENTIONED THEREIN. THE ASSESSEE HAS SURREND ERED RS.5 LACS DURING THE YEAR WHICH HAS BEEN INCLUDED IN THE RETURNED INCOME AGAINST WHICH THE ASSESSEE HAS ADJUSTED CARR IED FORWARD LOSS AND DEPRECIATION AMOUNTING TO RS.2,54,267/-. 15 THE LEARNED CIT(A) VIDE PARA 4.1 OF HIS ORDER OB SERVED THAT THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS IN ASSESSEES OWN CASE FOR AY 2003-04 AND, THEREFORE, THE AO WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT. 16 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. SINCE THE FACTS IN THE PRESENT CASE AR E IDENTICAL AS FAR REJECTION OF BOOKS OF ACCOUNT ARE CONCERNED TO THE FACTS IN THE ASSESSEES OWN CASE FOR AY 2003-04 IN ITA NO.3479/A HD/2007 WHICH HAS BEEN DECIDED BY US HEREINABOVE. FOLLOWING THE SAME BEING ON IDENTICAL FACTS, WE FIND NO INFIRMITY IN T HE ORDER OF THE LEARNED CIT(A) IN PARA 4.1 OF HIS ORDER. THUS, GROU ND NOS.1 AND 2 OF THE REVENUES APPEAL ARE DISMISSED. 17 AS REGARDS GROUND NOS. 3 AND 4, THE AO DISALLOWE D THE INTEREST OF RS.4,81,264/- ON IDENTICAL FACTS AS IN ASSESSEES OWN CASE FOR AY 2003-04 WHICH WERE DELETED BY THE LEARN ED CIT(A) VIDE PARA 6.1 OF HIS ORDER FOR SAME REASONING THAT THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS IN ASSESSEE S OWN CASE FOR AY 2003-04. 12 18 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE FACTS IN THE PRESENT CASE ARE IDEN TICAL TO THE FACTS IN ASSESSEES OWN CASE FOR AY 2003-04 WHICH HAS BEE N DECIDED BY US HEREINABOVE AND THEREFORE, IN THE CIRCUMSTANC ES AND FACTS OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF T HE LEARNED CIT(A) WHO HAS RIGHTLY DELETED THE ADDITION. THUS, GROUND NOS. 3 AND 4 OF THE REVENUES APPEAL ARE DISMISSED. 19 AS REGARDS GROUND NO.5, THE FACTS ARE THAT THE A SSESSEE HAD OFFERED FOR TAXATION RS.5 LACS AS INCOME SURRENDERE D DURING THE SURVEY WHICH HAS BEEN SET OFF AGAINST THE CARRIED F ORWARD LOSS AND DEPRECIATION AMOUNTING TO RS.2,54,267/-. THE AO DID NOT ALLOW THE SAID CARRIED FORWARD LOSS AND DEPRECIATIO N. 20 THE LEARNED CIT(A) DID NOT AGREE WITH THE FINDIN GS OF THE AO FOR THE REASONS THAT THE ADDITIONAL INCOME OFFER ED BY THE ASSESSEE DURING THE COURSE OF SURVEY CANNOT BE TREA TED AS DEEMED INCOME U/S 69 OF THE ACT. AS PER THE RECORDS THE ON LY INCOME OF THE ASSESSEE IS INCOME FROM BUSINESS AND DEVELOPMEN T OF LAND ETC. AND THEREFORE, THE ADDITIONAL INCOME SO DECLAR ED BY THE ASSESSEE HAS TO BE TREATED AS INCOME FROM BUSINESS AND NOT AS A DEEMED INCOME U/S 69 / 69A OF THE ACT. THEREFORE, T HE DECISION IN THE CASE OF FAKIR MOHAMAD HAJI HUSAN VS. CIT 120 TAXMAN 41 CANNOT BE MADE APPLICABLE IN THE PRESENT CASE. THER EFORE, THE LEARNED CIT(A) DIRECTED THE AO TO ALLOW THE SET OFF OF BROUGHT FORWARD BUSINESS LOSS AGAINST THE ADDITIONAL INCOME DECLARED OF RS.5 LACS BY THE ASSESSEE IN THE IMPUGNED YEAR. 13 21 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LEARNE D CIT(A) THAT THERE IS NOTHING ON RECORD THAT THE ASSESSEE IS HAV ING ANY OTHER SOURCE OF INCOME EXCEPT THE BUSINESS OF DEVELOPMENT OF LAND ETC. BEING CARRIED OUT BY THE ASSESSEE DURING THE IMPUGN ED YEAR. THEREFORE, THE POSSIBILITY OF INCOME FROM ANY OTHER SOURCE CANNOT BE THERE. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A ) IN PARA 7.3 OF HIS ORDER AT PAGES 21 TO 24 WHICH APPEARS TO BE REA SONED ONE. THUS, GROUND NO.5 OF THE REVENUES APPEAL IS DISMIS SED. 22 GROUND NOS.7 AND 8 OF THE REVENUES APPEAL ARE G ENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ANY ADJUDICATIO N. 23 NOW WE TAKE UP THE APPEAL OF THE REVENUE IN THE CASE OF SANDIP KUMUDCHANDRA SHETH FOR AY 2003-04 IN ITA NO.3477/AHD/2007. 24 THE BRIEF FACTS IN THE GROUNDS OF APPEAL ARE IDE NTICAL TO THE FACTS AS IN THE CASE OF M/S ALAP CONSTRUCTION PVT. LTD. IN ITA NO.3479/AHD/2007. ACCORDINGLY, THE AO REJECTED THE BOOKS OF ACCOUNT IN THE PRESENT CASE AND ESTIMATED THE INCOM E AT 8% OF RS.1,25,00,000/- AT RS.10,00,000/- OUT OF WHICH RS. 1,89,385/- DECLARED BY THE ASSESSEE WERE DEDUCTED AND THE AO M ADE AN ADDITION OF RS.8,10,615/- TO THE INCOME OF THE ASSE SSEE. 25 THE LEARNED CIT(A) VIDE PARA 4.1 OF HIS ORDER OB SERVED THAT THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS IN THE CASE OF M/S ALAP CONSTRUCTION PVT. LTD. IN AY 2003-04, A ND THEREFORE, 14 THE AO WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT AND HE FURTHER DELETED THE ADDITION MADE BY THE AO VIDE PA RA 5.1 OF HIS ORDER. 26 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LEARNE D CIT(A) IN PARA 4.1 AND 5.1 OF HIS ORDER SINCE THE FACTS IN TH E PRESENT CASE ARE IDENTICAL TO THE FACTS IN THE CASE OF M/S ALAP CONSTRUCTION PVT. LTD. WHICH HAS BEEN DECIDED BY US HEREINABOVE. FOLLOWING THE SAME, WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) WHO HAS RIGHTLY REVERSED THE ORDER OF THE AO AND HA S RIGHTLY OBSERVED THAT THE AO WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT AND MAKING ADDITION TO THE INCOME OF THE AS SESSEE. THUS, ALL THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMIS SED. 27 NOW, WE TAKE UP THE APPEAL OF THE REVENUE IN THE CASE OF SANDIP KUMUDCHANDRA SHETH FOR AY 2004-05 IN ITA NO.3478/AHD/2007. THE BRIEF FACTS IN THE GROUNDS OF APPEAL OF THE REVENUE ARE IDENTICAL TO THE FACTS IN THE CASE OF M/S ALAP CONSTRUCTION PVT. LTD. IN ITA NO.3479/AHD/2007 DECI DED BY US HEREINABOVE. THE AO HAD REJECTED THE BOOKS OF ACCOU NT ON IDENTICAL FACTS BUT HAD NOT MADE ANY ADDITION UNDER THE HEAD BUSINESS OR PROFESSION HAVING ACCEPTED THE SURREN DERED INCOME OF RS.10 LACS EXCEPT A SPECIFIC DISALLOWANCE OF RS. 9200/- OUT OF TELEPHONE EXPENSES WHICH IS NOT UNDER DISPUTE. 28 THE LEARNED CIT(A) VIDE PARA 4.1 OF HIS ORDER RE VERSED THE ORDER OF THE AO BY OBSERVING THAT THE AO IS NOT JUS TIFIED IN 15 REJECTING THE BOOKS OF ACCOUNT SINCE THE FACTS ARE IDENTICAL TO THE FACTS IN THE OF M/S ALAP CONSTRUCTION PVT. LTD. FOR AY 2003-04. 29 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LEARNE D CIT(A) THAT THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS IN THE CASE OF M/S ALAP CONSTRUCTION PVT. LTD. IN ITA NO.3479/A HD/2007 DECIDED BY US HEREINABOVE. THEREFORE, FOLLOWING TH E SAME, WE FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT( A). THUS, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 30 IN THE RESULT, ALL THE APPEALS FILED BY THE REVE NUE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 09-12-2011 SD/- SD/- (MUKUL KR. SHRAWAT) JUDICIAL MEMBER (B P JAIN) ACCOUNTANT MEMBER DATE : 09-12-2011 COPY OF THE ORDER FORWARDED TO: 1. 2. ALAP CONSTRUCTION PVT. LTD., G-2, INDRAPRASTHA FLAT , NR. GURUDWARA, JAIL ROAD, MEHSANA SANDIP KUMUDCHANDRA SHETH, G-2, INDRAPRASTHA FLAT, NR. GURUDWARA, JAIL ROAD, MEHSANA 3. THE ASST. COMMISSIONER OF INCOME-TAX, MEHSANA CI RCLE, MEHSANA 4. CIT CONCERNED 5. CIT(A)-XXI, AHMEDABAD 6. DR, ITAT, AHMEDABAD BENCH-D, AHMEDABAD 16 7. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD