Ashok Kumar Agarwala, Mayurbhanj V. ITO, Baripada

ITA 424/CTK/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3876 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 11-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 19-10-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Keywords: Unexplained cash credit; Capital asset; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO.424/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 ASHOK KUMAR AGARWAL, WARD NO.5, RAIRANGPUR - 757043 VS. ITO, WAR - 1, PALABANI, BARIPADA PAN/GIR NO. AEAPA 9577 L (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 11 /04 / 2017 DATE OF PRONOUNCEMENT : 11 /04 / 2017 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - CUTTACK, DATED 25.5.2015 , FOR THE ASSESSMENT YEAR 2010 - 2011 . 2. THE LAST HEARING OF THE APPEAL WAS FIXED ON 5.4.2017 ON WHICH DATE, THE ADVOCATE OF THE ASSESSEE SHRI D.K.SHETH REQUESTED FOR ADJOURNMENT OF THE HEARING, WHICH WAS GRANTED IN THE COURT, WHICH WAS NOTED BY THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE. IT WAS ALSO POINTED OUT THAT THIS IS THE LAST OPPORTUNITY TO THE ASSESSEE AND NO FURTHER ADJOURNMENT WILL BE GRANT ED. 2 ITA NO.424/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 3. IN SPITE OF THIS, WHEN THE CASE WAS CALLED FOR HEARING, NONE WAS PRESENT ON BEHALF OF THE ASSESSEE AND NEITHER ANY ADJOURNMENT APPLICATION WAS FILED. IT IS OBSERVED FROM THE RECORD THAT THE APPEAL WAS ADJOURNED AT THE REQUEST OF LD AUTHORISED REP RESENTATIVE OF THE ASSESSEE ON 25.10.2016, 15.11.2016, 2.1.2017, 17.1.2017 AND 1.2.2017. AS SUFFICIENT ADJOURNMENTS WERE GRANTED TO THE ASSESSEE, THE APPEAL WAS HEARD EXPARTE QUA THE ASSESSEE AND DISPOSED OF CONSIDERING THE SUBMISSION OF LD DEPARTMENTAL R EPRESENTATIVE AND MATERIALS AVAILABLE ON RECORD. 4. GROUND NOS.1 & 7 ARE GENERAL IN NATURE AND REQUIRES NO SEPARATE ADJUDICATION BY ME. 5. GROUND NOS.2, 3,4 , 5 & 6 READ AS UNDER: 2. FOR THAT THE ADDITION OF RS.22,000/ - UNDER HEAD 'INVESTMENT IN HOTE L BUILDING' AS SUSTAINED BY THE LEARNED COMMISSIONER IS UNCALLED FOR . 3. FOR THAT THE ADDITION OF RS.39,000/ - IN RESPECT OF LOANS FROM DIFFERENT PERSONS AS SUSTAINED BY THE LEARNED COMMISSIONER IS ALSO IMPROPER . 4. FOR THAT THE ADDITION OF RS.4,00,000/ - UNDER HEAD 'UNEXPLAINED CREDIT IN BANK ACCOUNT' AS MADE BY THE AO SHOULD NOT HAVE BEEN SUSTAINED BY THE LEARNED COMMISSIONER AND SHOULD HAVE BEEN DELETED . 5. FOR THAT THE ADDITIONS UNDER HEAD 'DEPRECIABLE ASSETS' AS SUSTAINED BY THE L EARNED COMMISSIONER IS NOT JUSTIFIED AND THE SAME SHOULD HAVE BEEN DELETED . 6. FOR THAT THE ADDITIONS OF RS.32,800/ - & RS.3,290/ - AS MADE BY THE AO TOWARDS DIFFERENCE IN BILLS FOR A.C & TV ARE UNREASONABLE AND THE LEARNED COMMISSIONER IS NOT JUSTIFIED . 6. LD DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE CIT(A). 3 ITA NO.424/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 7. ` I FIND THAT THE LD CIT(A) HAS ADJUDICATED AND DECIDED THE ABOVE GROUNDS OF APPEAL AS UNDER: 3. THE ASSESSING OFFICER DURING SCRUTINY FOUND THAT THE ASSESSEE HAD SHOWN IN THE BALANCE SHEET AN INVESTMENT OF RS.20,00,000/ - TOWARDS CONSTRUCTION OF HOTEL BUILDING. BUT AS PER THE DEPARTMENTAL VALUER THE COST OF CONSTRUCTION IS RS.20,22,000/. THE DIFFERENCE OF RS.22,000/ - IS ADDED BY THE AO TO THE TOTAL INCOME OF THE ASSESSE E. THE AO FURTHER FOUND THAT THE ASSESSEE HAD SHOWN LOAN OF RS.1,90,000/ - FROM RELATIVES BUT COULD NOT FURNISH THE IDENTITY AND CREDITWORTHINESS OF THE PERSONS WHO HAVE ADVANCED THE LOAN. THE AO THEREFORE ADDED AN AMOUNT OF RS.1,90,000/ - TO THE TOTAL IN COME OF THE ASSESSEE. THE AO FOUND THAT THE ASSESSEE HAD RECEIVED SECURITY DEPOSIT AT RS.10,25,000/ - FROM THE TENANTS WHEREAS HAS ACCOUNTED FOR RS.7,25,000/ - IN THE BALANCE SHEET. SINCE THE ASSESSEE COULD NOT ANY SATISFACTORY EXPLANATION, THE AO ADDED B ACK THE DIFFERENCE OF RS.3,00,000/ - TO THE TOTAL INCOME OF THE ASSESSEE. THE AO FURTHER FOUND FROM THE BANK ACCOUNT OF THE ASSESSEE MAINTAINED AT ODISHA GRAMYA BANK, RAIRANGPUR THAT RS.4,00,000/ - HAS BEEN CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE. BUT T HE ASSESSEE COULD NOT OFFER ANY EXPLANATION REGARDING THE SOURCE OF SUCH INCOME. THE AO HAD ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 4. THE APPELLANT DURING APPEAL HEARING SUBMITTED THAT THE COST ESTIMATED BY THE VALUER REGARDING THE HOTEL BUILDING IS ONLY ON ESTIMATION BASIS AND THE CONSTRUCTION OF THE BUILDING WAS IN PROGRESS IN THE RELEVANT F.Y.. THE DIFFERENCE BEING NEGLIGIBLE AND ON ESTIMATE BASIS SHOULD BE IGNORED. I FIND THAT THE CONSTRUCTION OF THE HOTEL BUILDING OF THE APPELLANT WAS IN PROGRESS FOR THE YEAR AND THE INVESTMENTS WERE ESTIMATED BY THE VALUER. SINCE THERE HAS BEEN NO AUTHENTIC EVIDENCE REGARDING DIFFERENCE IN INVESTMENT, THE AO IS DIRECTED TO DELETE THE SAME. THE APPELLANT SUBMITTED THAT IN THE ASSES SMENT YEAR, THE AO HAS MENTIONED THAT OUT OF TOTAL LOAN OF RS.1,90,000/ - , THE ASSESSEE FURNISHED CONFIRMATIONS TO THE TUNE OF RS.L,51,000/ - AND FOR THE REST OF RS.39,000/ - NO EVIDENCE WAS PRODUCED. SINCE CONFIRMATIONS WERE PRODUCED FOR RS.1,90,000/ - FROM NI NE PERSONS, THE AO WITHOUT FURTHER FINDING HAS REJECTED THE CONFIRMATIONS AND GAVE A FINDING THAT IDENTITY AND CREDITWORTHINESS OF THE SAID PERSONS WERE NOT ESTABLISHED. FROM THE ASSESSMENT ORDER, IT IS EVIDENT THAT THE AO HAS NOT COMMENTED ON THE CONFIRMA TIONS PRODUCED BY THE ASSESSEE TO THE TUNE OF RS.1,51,000/ - . THE AO HAS NOT MENTIONED HOW THE IDENTITY AND CREDITWORTHINESS OF THE SAID PERSONS WERE NOT ESTABLISHED FROM THE SUCH CONFORMATIONS. AS THE FINDING OF THE AO HAS BEEN INADEQUATE AND THE ASSESSEE HAD PRODUCED CONFIRMATIONS TO THE TUNE OF RS.1,51,000/ - , THE AO IS DIRECTED TO RESTRICT THE ADDITION TO RS.31,000/ - ONLY. THE APPELLANT FURTHER SUBMITTED THAT IN THE BALANCE SHEET HE HAS SHOWN THE TOTAL SECURITY DEPOSIT AT RS.10,25,000/ - OUT OF WHICH RS.7, 25,000/ - WAS RECEIVED BY CHEQUE AND REST WAS RECEIVED IN CASH. IT IS A FACT THAT THE PREMISES HAVE BEEN LET OUT TO THE TENANTS AND RENT RECEIPTS HAVE BEEN DULY DISCLOSED AS INCOME. THEREFORE, NOT ACCEPTING THE SECURITIES AMOUNT SHOWN IN THE BALANCE SHEET I S NOT PROPER. IT APPEARS FROM THE ASSESSMENT ORDER THAT THE AO HAS 4 ITA NO.424/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 ACCEPTED THE SECURITY DEPOSIT OF RS.7,25,000/ - WHICH WERE RECEIVED THROUGH BANK AND THE REST OF RS.3,00,000/ - WHICH THE ASSESSEE HAD CLAIMED TO HAVE RECEIVED THROUGH CASH WAS NOT ACCEPTED BY THE AO. I DO NOT FIND ANY REASON IN ACCEPTANCE OF THE SAME. THE AO IS DIRECTED TO DELETE THE ADDITIONS. REGARDING ADDITION MADE BY THE AO OF RS.4,00,000/ - AS FOUND CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE, THE APPELLANT COULD NOT EXPLAIN THE SOURCE EVEN DURING APPEAL HEARING. THE ADDITION MADE BY THE AO IN THIS REGARD IS SUSTAINED. 5. THE AO FOUND THAT THE ASSESSEE HAS SHOWN RS.3,00,000/ - AS CREDITORS FOR BUILDING CONSTRUCTION, TRUCK PLYING AND HOTEL BUSINESS AND ALSO HAS SHOWN PAYABLE OF RS.4 0,000/ - TOWARDS PURCHASE OF BRICKS FOR BUILDING CONSTRUCTION. BUT IN THE STATEMENT U/S.131 OF THE ACT, THE ASSESSEE HAD STATED THAT HE GOT THE BRICKS MADE HIMSELF. THEREFORE, THE PAYABLE AMOUNT OF RS.40,000/ - WAS NOT ACCEPTED BY THE ASSESSEE. THE AO FURTHER FOUND THAT THE ASSESSEE COULD NOT PRODUCE THE DETAILS OR ANY DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM OF SUNDRY CREDITORS FOR EXPENSES AMOUNTING TO RS.2,21,440/ - . THE SAME IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE BY THE AO. THE AO FOUND THAT THE ASSESSEE HAD MADE ADDITION TO CAPITAL ASSETS TO THE TUNE OF RS.15,00,000/ - BUT FAILED TO FURNISH THE DOCUMENTARY EVIDENCE AND SUPPORTING BILLS REGARDING PURCHASE OF CAPITAL ASSETS AMOUNTING TO RS.5,48,000/ - . THE AO HAS CALCULATED THE DEPRECIATION CLAIM ED BY THE ASSESSEE AND ADDED AN AMOUNT OF RS.6,02,800/ - TO THE TOTAL INCOME OF THE ASSESSEE ON THIS ACCOUNT. THE AO FURTHER FOUND THAT THE ASSESSEE HAD PAID FOR THE COST OF ASSET AMOUNTING TO RS.7,18,750/ - IN CASH AND VIOLATED THE PROVISIONS OF SEC. 40 A(3 ) OF THE ACT. THE DEPRECIATION ON THE ASSETS OF RS.71,875/ - WAS DISALLOWED BY THE AO. THE AO FOUND THAT THE ASSESSEE HAS ESCALATED THE COST OF AIR CONDITIONER BY RS.32,800/ - AND COST OF TV BY RS.3,290/ - . THE AO ADDED THE SAME TO THE TOTAL INCOME OF THE ASS ESSEE. 6. THE APPELLANT SUBMITTED THAT EVEN IF THE BRICKS WERE MADE BY THE ASSESSEE DURING CONSTRUCTION, THE UNPAID LIABILITY TO THE LABOURERS HAVE REMAINED AT RS.40,000/ - WHICH ARE TO BE ACCEPTED. SIMILARLY, THE UNPAID LIABILITIES OF RS.2,21,440/ - CONSIST OF LABOUR PAYMENTS, BUILDING MATERIALS, SALARY TO STAFF, PAYMENT TO TRUCK DRIVERS ETC. BUILDING MATERIALS SAND AND OTHERS WHICH SHOULD HAVE BEEN ACCEPTED. FROM THE ABOVE, IT IS EVIDENT THAT MOST OF THE PAYABLES WERE IN THE NATURE OF LABOUR PAYMENT AND SALARY PAYMENTS. THE AO IS DIRECTED TO ALLOW THE SAME. HOWEVER, THE BUILDING MATERIALS OF RS.95,000/ - , RS.12,000/ - AND OTHERS OF RS.27,940/ - SHOULD NOT BE ALLOWED AS PAYABLE AS CLAIMED BY THE ASSESSEE IN THE ABSENCE OF EVIDENCE. THE AO IS DIRECTED TO DISALLOW THE SAME. THE APPELLANT SUBMITTED THAT IT RUNS THE BUSINESS OF HOTEL AND CAPITAL ASSET WERE REQUIRED TO RUN THE BUSINESS. THE APPELLANT FAILED TO FURNISH THE SUPPORTING BILLS OF CAPITAL ASSETS THOUGH HE HAD INVESTED IN THE SAME. IT APPEARS THAT TH E APPELLANT HAD SHOWN SUCH CAPITAL ASSET IN THE BALANCE SHEET AND LIABILITY AGAINST THAT HAS NOT BEEN QUESTIONED BY THE AO. THE AO IS THEREFORE DIRECTED TO RESTRICT THE DISALLOWANCE TO THE DEPRECIATION OF RS.54,800/ - CLAIMED BY THE ASSESSEE. THE APPELLANT FURTHER SUBMITTED THAT THE PURCHASES OF ASSETS WERE GENUINE AND CASH WAS PAID TO PURCHASE SUCH ASSET AS PER THE REQUEST OF THE SELLER. THE ASSESSEE HAD SHOWN SUCH CAPITAL ASSETS IN THE BALANCE SHEET. THE PROVISIONS OF SEC. 40 A(3) IS NOT EXTENDED TO THE PU RCHASES OF CAPITAL ASSETS. 5 ITA NO.424/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 SINCE THE PURCHASES ARE GENUINE, DEPRECIATION CLAIMED ON THAT SHOULD BE ALLOWED. 1 FIND PRUDENCE IN THE SUBMISSION OF THE ASSESSEE AND DIRECT THE AO TO DELETE THE ADDITION. THE AO HAD FOUND EXCESS CLAIM IN PURCHASES AMOUNTING TO RS.32,800/ - AND RS.3,290/ - . THE APPELLANT DURING APPEAL HEARING COULD NOT EXPLAIN THE DISCREPANCY. THE ADDITIONS MADE BY THE AO THEREFORE ARE SUSTAINED ON THIS ISSUE. 8. I AM FULLY SATISFIED AND IN AGREEMENT WITH THE ORDER OF THE LD CIT(A) QUOTED ABOVE AND DO NOT FIND ANY GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF LD CIT(A). HENCE, I CONFIRM THE ORDER OF THE LD CIT(A) AND DISMISS THE GROUNDS OF APPEAL OF THE ASSESSEE . 9. IN THE RESULT, THE APPEAL F ILED BY THE ASSESSEE IS DISMISSED ORDER PRO NOUNCED IN THE OPEN COURT ON 11 /04 /2017 . SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 11 /04 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : ASHOK KUMAR AGARWAL, WARD NO.5, RAIRANGPUR - 757043 2. THE RESPONDENT. ITO, WARD - 1, BARIPADA 3. THE CIT(A) CUTTACK 4. PR.CIT , CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//