Dev jeet Singh, Chandigarh V. ITO, Chandigarh

ITA 4/CHANDI/2015

• Counselvise Citation: 421514 RSA 2015
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 02-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 05-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: TEJ MOHAN SINGH
• Keywords: Unexplained investment; Depreciation
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 4/CHD/2015 ASSESSMENT YEAR: 2005-06 SHRI DEV JEET SINGH, VS THE ITO, SCO 19, 1 ST FLOOR, WARD 3(2), SECTOR 20-D, CHAND IGARH. CHANDIGARH. PAN: BAAPS3073E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SING H RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 03.12.2015 DATE OF PRONOUNCEMENT : 08.12.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. CIT(APPEALS) CHANDIGARH DATED 28.10.2014 FOR ASSESSMENT YEAR 2005-06 CHALLENGING THE ADDITION OF RS. 20,00,000/- ON ACCOUNT OF INVESTMENT IN THE PRE MISES OF FIXED ASSETS. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT SURVEY UN DER SECTION 133A OF THE INCOME TAX ACT WAS CARRIED OUT IN THIS CASE IN FEBRUARY, 2006 AND ORIGINAL ASSESSMENT WAS 2 COMPLETED UNDER SECTION 143(3) BY MAKING CERTAIN ADDITIONS. THE ASSESSEE FILED APPEAL BEFORE LD. CI T(APPEALS) WHO HAS CONFIRMED THE ADDITIONS. THE ASSESSEE PREF ERRED APPEAL BEFORE THE TRIBUNAL WHO HAD SET ASIDE THE M ATTER TO THE FILE OF ASSESSING OFFICER VIDE ORDER DATED 25.0 4.2012 IN ITA 393/CHD/2010. THE ASSESSING OFFICER FRAMED IMPU GNED ASSESSMENT BY, INTER-ALIA, MAKING ADDITION OF RS. 2 0 LACS ON ACCOUNT OF UNEXPLAINED INVESTMENT WHICH WAS CHALLENGED BEFORE LD. CIT(APPEALS). 3. IT IS STATED THAT ASSESSEE HAD STARTED THE BUSIN ESS OF PROVIDING COURSE IN HOTEL MANAGEMENT IN THE MONTH O F APRIL, 2004. IN HIS STATEMENT RECORDED DURING THE COURSE OF SURVEY, ASSESSEE HAD STATED THAT HE HAD MADE INVEST MENT OF RS. 8 TO 10 LACS AND SUBSEQUENTLY IN THE SAME STATE MENT, HE STATED IN REPLY TO QUESTION NO. 18 THAT HE HAD F ILED A CIVIL SUIT AND CLAIMED RS. 20 LACS AS INVESTMENT BE FORE CIVIL JUDGE, SENIOR DIVISION. THIS CLAIM WAS FILED BY WA Y OF AFFIDAVIT BEFORE THE COURT AND THE RELEVANT PORTION OF THE AFFIDAVIT IS AS UNDER : '4. THAT THE PLAINTIFF INVESTED ABOUT RS. 20 LACS ( RS. TWENTY LACS) AND STARTED RUNNING BUSINESS OF THE ABOVE INSTITUTION F ROM THE SAID RENTED PREMISES. THE NAME OF THE PLAINTIFF IS RENOWNED IN THE CITY FOR PROVIDING BEST EDUCATIONAL SERVICES. SINCE, THE DAT E OF INCEPTION OF THE TENANCY THE PLAINTIFF IS CONTINUOUSLY UTILIZING THE SAID PREMISES FOR THE PURPOSES OF RUNNING THE SAID EDUCATIONAL INSTITUTIO N.' 3 4. THE ASSESSEE HAD SUBMITTED BEFORE ASSESSING OFFICER THAT TOTAL VALUE OF THE ASSETS TAKEN OVER B Y THE ASSESSEE WAS RS. 8,79,000/-. ACCORDING TO THE ASSE SSEE, ACTUAL INVESTMENT MADE BY THE EARLIER OWNER WAS OF RS. 13 LACS AND HE HAD USED THE ASSETS FOR TWO YEARS AN D SO THE VALUE OF THE TAKEN OVER ASSET TO RS. 8,79,000/- WAS AFTER DEPRECIATION. THE ASSESSEE HAD ALSO SUBMITTE D THAT INVESTMENT STATED IN THE AFFIDAVIT TO RS. 20 LACS I NCLUDED THE ACTUAL COST SPENT BY THE EARLIER OWNER AND ALSO THE ELEMENT OF EFFORT/LOSS OF PROFIT/HARASSMENT OF LEGA L CASES/SHIFTING OF PREMISES. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD NEITHER SHOWN THIS INVESTMENT OF RS. 20 LACS AS LOAN NOR AS ADDITION IN THE BALANCE SHEET AS ON 31.03.2005 AND SO THE ASSESSING OFFICER WAS N OT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND HELD THAT INVESTMENT OF RS. 20 LACS WAS MADE OUTSIDE THE BOOKS OF ACCOUNT AND ACCORDINGLY ADDED THE SAME AMO UNT TO THE INCOME OF ASSESSEE. 5. THE LD. CIT(APPEALS), CONSIDERING THE SUBMISSION S OF THE ASSESSEE, CONFIRMED THE ADDITION AND DISMISS ED APPEAL OF THE ASSESSEE. HIS FINDINGS IN PARA 5 AND 6 OF THE IMPUGNED ORDER ARE REPRODUCED AS UNDER : 5. I HAVE CONSIDERED THE FACTS OF THE CASE. AS PER T HE AFFIDAVIT FILED BEFORE THE COURT, THE APPELLANT HAD INVESTED RS. 20,00,000/- AND STARTED RUNNING THE BUSINESS OF THE INSTITUTION FROM THE RENTED PREMISES. THIS MEANS THAT THE APPEL LANT HAD INVESTED RS. 20,00,000/- AFTER TAKING OVER THE PREM ISES. THE ARGUMENT OF THE LD. COUNSEL THAT THE AMOUNT INCLUDE D ASSETS 4 TAKEN OVER FROM THE EARLIER OWNER AND ELEMENT OF EF FORT/ LOSS OF PROFIT/ HARASSMENT OF LEGAL CASES/ SHIFTING THE PRE MISES CANNOT BE ACCEPTED, SINCE THE APPELLANT HAD CLEARLY MENTIONED IN THE AFFIDAVIT THAT HE HAD SPENT RS. 20,00,000/-. NO WHERE IN THE AFFIDAVIT, IT IS MENTIONED THAT THE AMOUNT INCLUDED ELEMENT OF EFFORT/ LOSS OF PROFIT/ HARASSMENT OF LEGAL CASES/ SHIFTING THE PREMISES. MOREOVER, THE SAID INVESTMENT OF RS. 20,0 0,000/- DOES NOT FIND PLACE IN THE BOOKS OF ACCOUNTS AND SO IS T O BE TREATED AS UNEXPLAINED INVESTMENT. HENCE, IT IS HELD THAT THE ADDITION OF RS. 20,00,000/- WAS RIGHTLY BEEN MADE BY THE ASSESS ING OFFICER AND IS ACCORDINGLY CONFIRMED. GROUNDS OF APPEAL TAK EN BY THE APPELLANT ARE DISMISSED. 6. IN THE RESULT, THE APPEAL IS DISMISSED. 6. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE FINDINGS OF AUTHORITIES BEL OW. THE LD. COUNSEL FOR THE ASSESSEE RESTRICTED HIS ARG UMENTS TO THE GRANT OF RELIEF TO THE EXTENT OF RS. 8,24,73 5/- WHICH IS THE W.D.V. OF THE ASSET/INVESTMENTS MADE I N THE PROPERTY AS PER BALANCE SHEET AS ON 31.03.2005 AND HAS GIVEN UP HIS REMAINING CLAIM SO RAISED IN THE GROUN D OF APPEAL. ON THE OTHER HAND, LD. DR RELIED UPON ORDE RS OF THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE THAT AS PER AFFIDAVIT FILED BEFORE THE COUR T, ASSESSEE HAD INVESTED RS.20 LACS AND STARTED RUNNIN G THE BUSINESS OF THE INSTITUTION FROM THE RENTED PREMISE S. THE LD. CIT(APPEALS) WAS, THEREFORE, JUSTIFIED IN H OLDING THAT ASSESSEE HAD INVESTED RS. 120 LACS AFTER TAKIN G OVER THE PREMISES. THE ASSESSEE HAS RAISED CONTRADICTOR Y PLEA 5 THAT THE INVESTMENT OF RS. 20 LACS INCLUDES THE ACT UAL COST SPENT BY EARLIER OWNER, HARASSMENT OF LEGAL CA SES AND SHIFTING OF THE PREMISES ETC. WHICH IS NOT MENT IONED IN THE AFFIDAVIT FILED BEFORE THE CIVIL COURT. FUR THER, NO EVIDENCE TO THAT EFFECT WAS ALSO FILED. WHEN ASSES SEE CLAIMED THAT EARLIER OWNER ALSO MADE INVESTMENT IN THE TENANTED PROPERTY WOULD MEAN THAT ACTUAL RS. 20 LAC S HAVE BEEN SPENT ON INVESTMENT FOR TENANTED PROPERTY WHICH COULD BE DONE ONLY AFTER TAKING OVER THE PREM ISES. FURTHER, NO EVIDENCE WAS FILED IF OWNER HAS SPENT A NY AMOUNT ON THE SAME. IN THE ABSENCE OF ANY EVIDENCE FILED BY THE ASSESSEE IN SUPPORT OF HIS CONTENTIONS , AUTHORITIES BELOW WERE JUSTIFIED IN HOLDING THAT AS SESSEE MADE INVESTMENT OF RS. 20 LACS IN THE PROPERTY. TH E AFFIDAVIT FILED IN THE CIVIL COURT IS EVIDENCE AGAI NST THE ASSESSEE IN WHICH ASSESSEE CONFIRMED TO HAVE MADE INVESTMENT OF RS. 20 LACS. HOWEVER, THE QUESTION W OULD BE WHETHER ADDITION OF RS. 20 LACS WOULD BE JUSTIFI ED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE AUTHO RITIES BELOW HAVE TAKEN RS. 20 LACS AS UNACCOUNTED INVESTM ENT MADE IN THE PROPERTY OUT OF THE BOOKS OF ACCOUNT. HOWEVER, THE ASSESSEE HAS FILED COPY OF THE ACCOUNT S TO SHOW THAT IN THE BOOKS OF ACCOUNT, ASSESSEE HAS SHO WN INVESTMENT IN THE PROPERTY IN A SUM OF RS. 8,24,735 /-. THEREFORE, ENTIRE AMOUNT OF RS. 20 LACS COULD NOT B E HELD TO BE MADE OUT OF THE BOOKS OF ACCOUNT. THE LD. CO UNSEL FOR THE ASSESSEE RESTRICTED HIS ARGUMENTS TO THE FA CT THAT ASSESSEE MAY BE GIVEN BENEFIT OF RS. 8,24,735/- AS THE 6 SAME AMOUNT HAS BEEN SHOWN AS INVESTMENT IN FIXED ASSETS IN THE BOOKS OF ACCOUNT. THE CONTENTION OF THE ASSESSEE TO THAT EXTENT IS CORRECT THAT ASSESSEE MA DE INVESTMENT ON FIXED ASSETS IN A SUM OF RS. 8,24,735 /- DURING THE ASSESSMENT YEAR UNDER APPEAL. THEREFORE , ASSESSEE WOULD BE ENTITLED FOR RELIEF TO THAT EXTEN T ONLY. THE ORDERS OF AUTHORITIES BELOW TO THAT EXTENT ARE MODIFIED AND ASSESSING OFFICER IS DIRECTED TO GRANT RELIEF TO THE ASSESSEE IN A SUM OF RS. 8,24,735/- OUT OF T HE ADDITION OF RS. 20 LACS AND THE BALANCE AMOUNT WOUL D BE ADDED AS UNDISCLOSED INVESTMENT IN THE PROPERTY. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA MEHROTRA ) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 8 TH DECEMBER, 2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD