PAREEK SHREEVASTAVA & ASSOCIATES, Kota V. ITO, Kota

ITA 399/JPR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5650 (ITAT-JAIPUR)
• Duration Of Justice: 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 18-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DR DHK

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 399/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 M/S. PAREEK SHREEVASTAVA & ASSOCIATES OLD DHANMANDI, KOTA CUKE VS. THE ITO WARD- 2 (1), KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABFP 3841 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: NONE JKTLO DH VKSJ LS@ REVENUE BY :SHRI R.A. VERMA, ADDL CIT-. DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 19/01/2017 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 24 /01/2017 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A), KOTA DATED 18-02-2016 FOR THE ASSESSMENT YEAR 2007 -08 RAISING THEREIN FOLLOWING GROUNDS:- 1. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) KOTA ERRED IN CONFIRMING NON-ALLOW ABILITY OF INTEREST PAID TO PARTNERS OF FIRM PROPERTY INCOM E IGNORING DIRECTIONS OF HON'BLE ITAT VIS-A-VIS OF ORDER OF L D. CIT(A) FOR ASSESSMENT YEARS 2006-07 & 2008-09. ITA NO. 399/JP/2016 M/S. PAREEK SHREEVASTAVA & ASSOCIATES VS. ITO, WARD - 2(1), KOTA . 2 2. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) KOTA ERRED IN NOT ALLOWING DEDU CTION OF INTEREST PAID TO PARTNERS RS. 1,66,401/- FROM PROPE RTY INCOME. 2.1 NONE APPEARED ON BEHALF OF THE ASSESSEE IN SPIT E OF SERVICE OF NOTICE OF THIS HEARING. CONSEQUENTLY THE BENCH IS LEFT WITH NO ALTERNATIVE BUT TO DECIDE THE APPEAL ON MERITS, EX PARTE QUA TH E ASSESSEE, AFTER HEARING LD. DR AND AFTER PERUSAL OF THE MATERIALS AVAILABLE ON RECORD. 3.1 APROPOS GROUND NOS. 1 AND 2 OF THE ASSESSEE, THE FACTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) IS AS UNDER:- I HAVE GONE THROUGH ASSESSEES SUBMISSION AND AO S FINDINGS. THE HON'BLE ITAT HAD GIVEN VERY CLEAR DIRECTIONS WH ILE RESTORING THE PROCEEDINGS TO THE A.O THAT-THE ASSESSING OFFICER SHALL VERIFY THE ACTUAL CAPITAL BORROWED FOR THIS PURPOSE AND ALLOW DEDUCTION ACCORDINGLY. THE ORDER OF THE ITAT ITSELF WAS PASSED IN 2013. IT IS NOT THAT THE ITAT WAS NOT AWARE THAT THE MATTER WAS VERY OLD AND THE ASSESSEE COULD NOT PRODUCE THE LINKAGE OF THE PARTNERS CAPITAL WITH T HE CONSTRUCTION. THE ASSESSEE WAS REQUIRED TO SHOW THE SPECIFIC DETAILS OF PURCHASE AND CONSTRUCTION, SOME RECORD TO SHOW THAT THE CAPITAL OF THE PARTNERS WAS USED TO BUY THE LAND AND CONSTRUCT THE BUILDING THE REON, ONLY THEN COULD THE A.O ALLOW THE DEDUCTION OF INTEREST. THI S IS CLEAR FROM THE USE OF THE WORDS FOR THIS PURPOSE BY ITAT. HOWEV ER, IN RESPONSE TO NOTICES SENT BY THE A.O IN THE SET ASIDE PROCEEDING S, THE ASSESSEE TOOK THE PLEA AS UNDER:- (II) AS PROPERTY WAS CONSTRUCTED BEFORE 17-18 YEARS DATE WAS PAYMENT DETAILS FOR CONSTRUCTION IS NOT AVAILABLE. HOWEVER, COPIES OF PARTNERS CAPITAL ACCOUNTS ARE ATTACHED VIDE ANNEXURE A-1 & A -2 TO THIS LETTER WHEREFROM TOTAL CONSTRUCTION COST IS VERIFIABLE. ...VALUATION OF LAND WAS TAKEN AS AGREED BY ALL 8 PARTNERS AT THAT TIME. WE SUBMIT IT WAS THE MINIMUM ONE. IT IS NOT P OSSIBLE FOR US TO ITA NO. 399/JP/2016 M/S. PAREEK SHREEVASTAVA & ASSOCIATES VS. ITO, WARD - 2(1), KOTA . 3 PROVIDE INCOME TAX COMPUTATION, PROFIT & LOSS AND B ALANCE SHEETS RELATED TO ASS. YEAR 1996-97 & 1997-98 OF ALL PARTN ERS. INTEREST DURING ASS. YEAR 1995-96 TO 2007-08 WAS CREDITED TO PARTNE RS ACCOUNT IN CONSONANCE TO PROVISIONS OF PARTNERSHIP DEED. WHEN THE INTEREST WAS PAID DURING ASS. YEAR 1995-96 TO ASS. YEAR 2007-08 IS NOT POSSIBLE TO GIVE. WE SUBMIT IT HAS NO RELEVANCY AT ALL .. IT IS WRONG ON THE PART OF THE ASSESSEE TO CLAIM TH AT THE A.O WAS ONLY SUPPOSED TO VERIFY THE ACTUAL CAPITAL CONTRIBUTED B Y THE PARTNERS AND ALLOW INTEREST DEDUCTION ACCORDINGLY. CAPITAL ACCOU NT DEBITS DO NOT NECESSARILY MEAN THAT THE AMOUNT WAS UTILIZED FOR L AND OR BUILDING COST. THE A.O WAS CORRECT IN DEDUCING THAT IN ABSENCE OF THE DIRECT LINKAGE IN ANY MANNER, ANY SUPPORTING DOCUMENTS, LEDGERS, A CCOUNT COPIES ETC, THE CLAIM OF DEDUCTION ON ACCOUNT OF INTEREST WAS N OT ALLOWABLE. I SEE NO REASON TO INTERFERE WITH THE ASSESSMENT OR DER. THIS GROUND OF APPEAL IS TREATED AS DISMISSED. 3.2 DURING THE COURSE OF HEARING THE LD. DR RELIED ON T HE ORDERS OF THE AUTHORITIES BELOW. 3.3 I HAVE HEARD THE LD. DR AND PERUSED THE WRITTE N SUBMISSION OF THE LD. AR OF THE ASSESSEE AND OTHER MATERIALS AVAILAB LE ON RECORD. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 1,09,810/- ON 19-03-2008. THE ASSESSE E DERIVED INCOME FROM HOUSE CONSTRUCTION. THE ASSESSMENT WAS COMPLET ED U/S 254/148/143(3) ON 30-08-2013 BY THE AO COMPUTING TH E TOTAL INCOME OF THE ASSESSEE AS UNDER:- TOTAL INCOME AS PER ASSESSMENT ORDER DATED 20-11-20 09 RS. 4,86,880/- ASSESSED TOTAL INCOME RS. 4,86,880/- ITA NO. 399/JP/2016 M/S. PAREEK SHREEVASTAVA & ASSOCIATES VS. ITO, WARD - 2(1), KOTA . 4 IN FIRST APPEAL, THE LD. CIT(A) HAD NOT ALLOWED THE DEDUCTION OF INTEREST PAID TO PARTNERS AMOUNTING TO RS. 1,66,401/- FROM H OUSE PROPERTY INCOME WITH FOLLOWING OBSERVATIONS. IT IS WRONG ON THE PART OF THE ASSESSEE TO CLAIM TH AT THE A.O WAS ONLY SUPPOSED TO VERIFY THE ACTUAL CAPITAL CONT RIBUTED BY THE PARTNERS AND ALLOW INTEREST DEDUCTION ACCORDINGLY. CAPITAL ACCOUNT DEBITS DO NOT NECESSARILY MEAN THAT THE AMOUNT WAS UTILIZED FOR LAND OR BUILDING COST. THE A.O WAS CORRECT IN DEDUCING THA T IN ABSENCE OF THE DIRECT LINKAGE IN ANY MANNER, ANY SUPPORTING DOCUME NTS, LEDGERS, ACCOUNT COPIES ETC, THE CLAIM OF DEDUCTION ON ACCOU NT OF INTEREST WAS NOT ALLOWABLE. IN APPEAL BEFORE THIS BENCH, THE WRITTEN SUBMISSION FILED BY LD. AR OF THE ASSESSEE HAS ALSO BEEN TAKEN INTO CONSIDERATION WH ILE ADJUDICATING UPON THE APPEAL OF THE ASSESSEE WHICH COULD NOT CONTROVE RT THE FINDINGS OF THE LD. CIT(A) THAT THE CAPITAL ACCOUNT DEBITED BY THE ASSESSEE DOES NOT NECESSARILY MEAN THAT THE AMOUNT WAS UTILIZED FOR L AND OR BUILDING COST. FURTHER IN ABSENCE OF THE DIRECT LINKAGE IN ANY MAN NER, ANY SUPPORTING DOCUMENTS, LEDGERS, ACCOUNT COPIES ETC. BEFORE THE LOWER AUTHORITIES, THE LD. CIT(A) WAS CORRECT IN NOT ALLOWING THE CLAIM OF DEDUCTION ON ACCOUNT OF INTEREST PAYABLE TO PARTNERS AMOUNTING TO RS. 1 ,66,401/-. HENCE, I CONCUR WITH THE FINDINGS OF THE LD. CIT(A) ON THE I SSUE IN QUESTION. THUS THE APPEAL OF THE ASSESSEE IS DISMISSED. ITA NO. 399/JP/2016 M/S. PAREEK SHREEVASTAVA & ASSOCIATES VS. ITO, WARD - 2(1), KOTA . 5 4.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 /01/2 017 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 24 /01/ 2017 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-M/S.PAREEK SHREEVASTAVA & ASSOCIATES, KOTA 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD 2(1), KOTA 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 399/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR