D.K.PLYWOOD (P) LTD., Alwar V. ITO, Alwar

ITA 463/JPR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5387 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 16-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA
• Assessee Lawyers: VARUNN BANSAL
• Keywords: Unexplained investment; Additional evidence; Valuation report
• Section: 143(3); 68

Judgement Text

1 ITA NO.463/JP/2014 IN THE INCOME TAX APPELLATE TRIBUNAL: JAIPUR BENCH [SMC] : JAIPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER I.T.A. NO. 463/JP/2014 ASSESSMENT YEAR: 2008-09 D. K. PLYWOOD (P) LTD., C/O. M/S. K. L. DATTA & CO., CHARTERED ACCOUNTANTS, CLOCK TOWER, ALWAR PAN:AAACD6154D VS THE INCOME TAX OFFICER, WARD 2 (3), 22, MOTI DUNGRI, ALWAR (APPELLANT) (RESPONDENT) APPELLANT BY SHRI VARUNN BANSAL, AR RESPONDENT BY SHRI RAJ MEHRA, JCIT DATE OF HEARING: 04-03-2016 DATE OF PRONOUNCEMENT: 9-03-2016 O R D E R PER MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATING F ROM THE ORDER OF THE LEARNED CIT (A), ALWAR DATED 29-04-2014 FOR ASSESSM ENT YEAR 2008-09. THE GROUNDS RAISED ARE HEREBY DECIDED AS FOLLOWS:- 1.0 THAT THE LD. CIT (A) HAS ERRED IN A LAW AS WEL L AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN ASKING THE AO TO MAKE A REFERENCE TO THE DVO FOR DETERMINING THE COST OF CONSTRUCTION OF THE BUILDIN G AND CONSEQUENTLY THE ADDITION OF RS.13,62,188.00 BASED UPON THE DVO REPO RT IS ILLEGAL PER-SE AND AGAINST THE FACTS. 2.0 THAT THE LD. DVO HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN VALUING THE COST OF CO NSTRUCTION OF THE BUILDING AT RS.26,29,000.00. 3.0 THAT THE LD. AO HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN MAKING AN ADDITION OF RS.5,07,000.00 U/S 69B OF THE I. T. ACT 1961 AND LD. CIT (A), ALWAR HAS ERRED IN ENHANCING THE SAME TO RS.1362188.00. 2 ITA NO.463/JP/2014 2. IN RESPECT OF THE ABOVE THREE GROUNDS, THE OBSER VATION OF THE LEARNED CIT (A) WAS THAT WHILE PASSING THE ASSESSMENT ORDER U/S 143(3) DATED 10-12-2010 THE AO HAS NOTICED THAT THE ASSESSEE HAD MADE AN IN VESTMENT IN CONSTRUCTION OF A FACTORY BUILDING AMOUNTING TO RS.12,66,712/-. THE DETAILS OF THE EXPENDITURE AS FURNISHED BY THE ASSESSEE WERE AS UNDER:- 1. MATERIAL PURCHASED RS.10,59,412/- 2. CEMENT RS. 2,08,300/- TOTAL RS.12,67,712/- OBJECTION WAS RAISED THAT WHY ANY EXPENDITURE TOWAR DS LABOUR PAYMENT FOR THE PURPOSE OF CONSTRUCTION WAS NOT INCURRED. THE ASSES SEES EXPLANATION WAS THAT IN THE BOOKS OF ACCOUNTS THE ASSESSEE HAS SHOWN EXPEND ITURE OF WAGES. THE ASSESSEES EXPLANATION WAS THAT THE SAID LABOURERS WERE ALSO USED FOR CONSTRUCTION WORK. THE AO WAS NOT SATISFIED AND HEL D HAT AT LEAST 40% OF THE CONSTRUCTION EXPENDITURE RELATES TO LABOUR PAYMENT. THEREFORE, ON AN INVESTMENT OF RS.12,66,712/- THE AO HAS WORKED OUT THE ESTIMAT ED LABOUR EXPENSES @40% AND, THEREFORE, AN ADDITION OF RS.5,07,000/- WAS MA DE. THE LEARNED CIT (A) HAS ASKED TO MAKE A REFERENCE TO THE DVO TO DETERMINE T HE COST OF CONSTRUCTION. THE UNEXPLAINED INVESTMENT AS PER THE REPORT OF THE DVO WAS COMPUTED AT RS.13,62,188/-, AS AGAINST THE ADDITION MADE BY THE AO OF RS.5,07,000/-. A COPY OF THE REMAND REPORT WAS FORWARDED TO THE ASSE SSEE. A DATE OF HEARING WAS FIXED ON 10-04-2014 AND THEREAFTER ON 28-04-2014. T HE ASSESSEE HAS ALSO OBTAINED A REPORT OF THE REGISTERED VALUER ON 28-06 -2014 WHO HAD DETERMINED THE COST OF CONSTRUCTION AT RS.17,55,000/- AS AGAIN ST THE COST OF CONSTRUCTION DETERMINED BY THE DVO AT RS.26,29,000/-. 3. IN THE LIGHT OF THE ABOVE FACTUAL MATRIX, TWO IS SUES HAVE BEEN ARGUED BEFORE ME. THE FIRST ONE WAS THAT THE LEARNED CIT ( A) HAS NOT GRANTED OPPORTUNITY TO FURNISH THE VALUATION REPORT OF THE REGISTERED VALUER. HOWEVER, THE SAME IS IMPORTANT TO DECIDE THE IMPUGNED ADDITI ON, HENCE, REQUESTED TO ADMIT THIS ADDITIONAL EVIDENCE. THE SECOND ARGUMENT IS THAT THE LEARNED CIT (A) 3 ITA NO.463/JP/2014 HAD MADE AN ENHANCEMENT BUT NO NOTICE WAS GIVEN TO THE ASSESSEE, THEREFORE, INFRINGED THE PROVISIONS OF SECTION 251(2) OF THE A CT. 4. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUM STANCES OF THE CASE AND AFTER HEARING BOTH THE SIDES, I AM OF THE VIEW THAT THE ASSESSEES BOTH THE ARGUMENTS SHALL BE SATISFIED IF THE MATTER GOES BAC K TO THE STAGE OF THE FIRST APPEAL. EVEN, OTHERWISE ALSO IF THIS BENCH ADMIT TH E ADDITIONAL EVIDENCE OF VALUATION OF THE REGISTERED VALUER, THEN NATURAL JU STICE DEMANDS TO GIVE OPPORTUNITY TO THE REVENUE DEPARTMENT AND FOR THAT PURPOSE IT IS JUSTIFIABLE TO RESTORE THE MATTER FOR ENQUIRY AS WELL AS AN INVEST IGATION BY THE REVENUE AUTHORITIES. LIKEWISE, BY RESTORING THIS MATTER TO THE STAGE OF FIRST APPEAL, THE SECOND GRIEVANCE OF THE ASSESSEE SHALL ALSO BE REDR ESSED THAT BEFORE ENHANCEMENT, NO FORMAL NOTICE OF HEARING AS WELL AS AN OPPORTUNITY OF HEARING WAS GRANTED BY THE LEARNED CIT (A). I, THEREFORE, H ELD THAT IN THE FITNESS OF THE CIRCUMSTANCES IT IS JUSTIFIABLE TO RESTORE THESE GR OUNDS BACK TO THE STAGE OF FIRST APPEAL TO BE DECIDED DE NOVO, NEEDLESS TO SAY AFTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE AS PRESCRIBED BY LAW. T HE GROUNDS RAISED IN THIS REGARD MAY BE TREATED AS ALLOWED BUT FOR STATISTICA L PURPOSE. 5. GROUND NO.4 OF THE APPEAL READS AS UNDER:- 4.0 THAT THE LD. AO HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN MAKING AN ADDITION OF RS.93000.00 U/S 68 OF THE I. TAX ACT 1961 AND LD. CIT (A), ALWAR HAS ERRED IN SU STAINING THE SAME. IN RESPECT OF THE CASH CREDITS APPEARING IN THE ACC OUNTS OF THE ASSESSEE AN OPPORTUNITY WAS GIVEN BY THE AO BUT THE AO HAS HELD THAT THE ONUS AS PRESCRIBED U/S 68 OF THE ACT WAS NOT DISCHARGED BY THE ASSESSEE. THE AO, THEREFORE, TAXED THE SAID AMOUNT OF RS.93,000/- U/S 68 OF THE ACT. AS AGAINST THAT THE ASSESSEES VEHEMENT CONTENTION WAS THAT THE CON FIRMATION LETTERS, POSTAL ADDRESSES ETC. OF THE CREDITORS WERE FURNISHED BEFO RE THE AO. ALL THE FIVE CASH CREDITORS WERE STATED TO BE THE CLOSE RELATIVES OF THE DIRECTORS OF THE COMPANY. 4 ITA NO.463/JP/2014 EVEN BEFORE THE LEARNED CIT (A), THE ASSESSEE HAS F URNISHED THE AFFIDAVITS OF THE CASH CREDITORS ALONG WITH THE SUBMISSIONS MADE BEFO RE THE AO. THE LEARNED CIT (A) HAS CALLED FOR A REMAND REPORT AND AFTER DISCUS SING FEW CASE LAWS, THE LEARNED CIT (A) HAS AFFIRMED THE ADDITION. 6. ON THIS ISSUE, THE SUBMISSION OF THE ASSESSEE IS THAT IN THE CASE OF DR. BHAGIRATH MEENA VS ITO, ITA NO.925/JP/2008 ORDER DA TED 29-08-2008 IT WAS EXPRESSED THAT IN A SITUATION WHEN THE CREDITS WERE SMALL AMOUNTS AND NOT A HUGE CASH CREDIT WAS RECEIVED, THEREFORE, IT WAS NO T JUSTIFIABLE TO SUSPECT THE CREDITWORTHINESS OF THE CREDITORS AND ADDITION WAS DELETED. 7. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, I AM OF THE VIEW THAT SINCE ONE OF THE GROUNDS HAS ALREADY BEEN RESTORED BACK TO THE FILE OF THE LEARNED CIT (A) FOR DE NOVO CONSIDERATION, THEREFORE, ON TH E SAME LINE THIS GROUND SHOULD ALSO BE REFERRED BACK TO THE FILE OF THE LEA RNED CIT (A) BECAUSE OF THE BASIC DIFFICULTY THAT THE ASSESSEE HAS ON ONE HAND CLAIMED TO HAVE FURNISHED THE CONFIRMATION LETTERS AND AFFIDAVITS STATING THEREIN THE PAN OF ALL THE CREDITORS ALONG WITH OTHER DETAILS AS PRESCRIBED U/S 68 OF TH E ACT. IN SOME OF THE AFFIDAVITS IT HAS ALSO BEEN STATED THAT THE ASSESSE E HAS REPAID THE LOAN AMOUNT WHICH WAS DULY RECEIVED BACK BY THOSE CREDITORS AS AFFIRMED IN THEIR RESPECTIVE AFFIDAVITS. THIS FACT OF REPAYMENT ALSO REQUIRES AN INVESTIGATION. HENCE, IT IS JUSTIFIABLE TO RESTORE THIS GROUND AS WELL BACK TO THE LEARNED CIT (A) TO DECIDE AFRESH AS PER LAW. 8. SINCE BOTH THE GROUNDS HAVE BEEN RESTORED FOR FR ESH ADJUDICATION, THEREFORE, THE GROUNDS RAISED MAY BE TREATED AS ALL OWED FOR STATISTICAL PURPOSE ONLY. 5 ITA NO.463/JP/2014 9. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF MARCH, 2016. SD/- (MUKUL K. SHRAWAT) JUDICIAL MEMBER JAIPUR, DATED: 9 TH MARCH, 2016 LAKSHMIKANT DEKA/SR. PS LAKSHMIKANT DEKA/SR. PS LAKSHMIKANT DEKA/SR. PS LAKSHMIKANT DEKA/SR. PS COPY FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T., CONCERNED 4. CIT (APPEALS), JAIPUR. 5. D.R., ITAT, JAIPUR. 6. GUARD FILE TRUE C OPY BY ORDER ASSISTANT REGISTRA R, INCOME TAX APPELLATE TRIBUNA L, JAIPUR BENCH, JAIPUR.