ACIT, JODHPUR V. Shri Jethmal Agarwal HUF, JODHPUR

ITA 466/JODH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70323 (ITAT-JODHPUR)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-11-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 26-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR DEEPAK SEHGAL
• Keywords: Unexplained investment; Unexplained expenditure
• Section: 69

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 466/JODH/2013 (A.Y. 2009-10) THE ACIT VS. SHRI JETHMAL AGARWAL HUF CENTRAL CIRCLE-2, 29, NEHRU PARK, JODHPUR JODHPUR. PAN NO. AAAHA2444Q (APPELLANT) (RESPONDENT) ITA NO. 467/JODH/2013 (A.Y. 2009-10) THE ACIT VS. SHRI RAJESH AGARWAL CENTRAL CIRCLE-2, 29, NEHRU PARK, JODHPUR JODHPUR. PAN NO. AAAPA8649P (APPELLANT) (RESPONDENT) DEPARTMENT BY : DR. DEEPAK SEHGAL, D.R. ASSESSEE BY : SHRI AMIT KOTHARI DATE OF HEARING : 27/11/2013. DATE OF PRONOUNCEMENT : 29/11/2013. O R D E R PER N.K.SAINI, A.M THESE TWO APPEALS BY THE DEPARTMENT ARE DIRECTED A GAINST THE SEPARATE ORDERS EACH DATED 18/07/2013 OF LD. CIT (A), CENTRA L, JAIPUR. SINCE THE ISSUES 2 INVOLVED IN THESE APPEALS ARE COMMON HAVING SIMILAR FACTS AND THE APPEALS RELATE TO THE ASSESSEES BELONGING TO THE SAME GROUP WHICH WERE HEARD TOGETHER, SO THESE ARE BEING DISPOSED OF BY THIS CO NSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE WILL DEAL WITH I.T.A. NO. 466/JODH/2013 . THE ONLY GRIEVANCE OF THE DEPARTMENT IN THIS APPEAL RELATES TO DELETION O F PROTECTIVE ADDITION OF RS. 20,00,000/- (50% OF THE SURRENDERED AMOUNT). 3. FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT TH E ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NOTICED THAT DURING THE COURSE OF SEARCH PROCEEDINGS, STATEMENT OF SHRI JETHMAL AGARW AL, KARTA OF JETHMAL AGARWAL HUF WAS RECORDED WHEREIN HE SURRENDERED/OFF ERED FOR TAX AN UNDISCLOSED INCOME OF RS. 3.5 CRORES IN THE GROUP, WHICH INCLUDED SURRENDER OF RS. 40 LACS ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION, FURNITURE & FIXTURE AND MACHINERY ETC. THE ASSESSING OFFICER POINTED OUT THAT THE SAID ADDITIONAL INCOME SURRENDERED WAS NOT OFFERED FOR T AXATION IN THE RETURN OF INCOME AND SINCE THE ASSESSEE IS ONE OF THE CO-OWNE R WITH SHRI RAJESH AGARWAL, HE, THEREFORE, MADE PROTECTIVE ADDITION OF RS. 20 LACS IN THE HANDS OF THE ASSESSEE BEING 50% SHARE OF THE CO-OWNER. BALAN CE AMOUNT OF RS. 20 LACS WERE ADDED IN THE HANDS OF SHRI RAJESH AGARWAL WHEREAS THE SUBSTANTIVE ADDITION OF RS. 40 LACS WAS MADE IN THE HANDS OF SH RI JETHMAL AGARWAL INDIVIDUAL. 3 4. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND THE SUBMISSIONS MADE ARE INCORPORATED IN PARA 5.2 O F THE IMPUGNED ORDER FOR THE COST OF REPETITION, THE SAME ARE NOT REPRODUCED HEREIN. 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DELETED THE ADDITION MADE BY THE ASSESSING OFFICER BY OBSERVING IN PARA 5.4 OF THE IMPUGNED ORDER AS UNDER:- 5.4 I HAVE CAREFULLY PERUSED THE ORDER OF THE AO, SUBMISSIONS OF THE AR ALONGWITH THE ORDER OF THE HON'BLE ITAT, JO DHPUR BENCH IN THE CASE OF SHRI. JETHMAL AGARWAL VS. ACIT FOR A.Y. 20 09-10 (SUPRA). THE HON'BLE ITAT HAS OBSERVED AS FOLLOWED ON PAGE 5, P ARA 2.4 OF ITS ORDER: AFTER HEARING BOTH THE SIDES AND GOING THROUGH THE WRITTEN SUBMISSIONS, WE HAVE FOUND THAT THE CONSTRUCTION WA S INCOMPLETE EVEN AT THE TIME OF SEARCH ON 6.11.2008. UPTO 31.3. 2009, SHRI. JETHMAL AGARWAL HUF, AND SHRI RAJESH AGARWAL HAVE S HOWN CONSTRUCTION OF RS. 15,55,000/- (8,75,000 + 6,80,00 0). DURING THE F.Y. 2009-10 BOTH HAVE SHOWN CONSTRUCTION OF RS. 5,95,00 0/-. THUS THE TOTAL COST OF CONSTRUCTION SHOWN BY BOTH OF THEM CO MES TO RS. 21,50,00/-. THE ASSESSING OFFICER MADE REFERENCE TO THE VO AS PER LETTER DATED 19.11.2010 (PG 66 APB) FOR THE VALUATI ON OF THE PROPERTY IN QUESTION INCLUDING THE FURNITURE AND FITTINGS AN D MACHINERY. THE REPORT OF THE VO (PAGE 68 OF PAPER BOOK) HAS VALUED THIS COST TILL 31.3.2009 AT RS. 30,00,144/- AND AS ON 31.3.2010 AT RS. 11,85,835/- TOTALING TO RS. 42,85,100/-. BUT THE ASSESSING OFFI CER HAS MADE ADDITION ON THE BASIS OF SURRENDER OF RS. 40 LACS W HICH IS EVEN MORE THAN ESTIMATED BY THE DVO. BEFORE US, IT WAS A RGUED THAT ADDITION IN THIS ACCOUNT. THEREFORE, WE ORDER TO DE LETE THE ENTIRE ADDITION AND ALLOW GROUND NO. 4 OF ASSESSEES APPEA L. IT IS SEEN THAT THE ADDITION MADE BY THE ASSESSIN G OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S 69 AND CONSTR UCTION OF THE PROPERTY SITUATED AT 126, SARAWATI NAGAR, JODHPUR I N HANDS OF THE APPELLANT ON PROTECTIVE BASIS AS A CO-OWNER OF RS. 20 LACS BEING 50% OF THE SURRENDERED AMOUNT HAS BEEN DELETED BY THE HON' BLE ITAT BY HIS 4 ORDER (SUPRA) IN HIS CASE IN INDIVIDUAL CAPACITY ON MERIT. THEREFORE, THE ADDITION IS COVERED BY THIS FINDING OF HON'BLE ITAT AND AS PER JUDICIAL DISCIPLINE THE ADDITION ON ACCOUNT OF UNEXPLAINED I NVESTMENT U/S 69 IN CONSTRUCTION OF RS. 20,00,000/- IS DELETED. NOW THE DEPARTMENT IS IN APPEAL. 6. THE LEARNED D.R. SUPPORTED THE ORDER OF THE ASSE SSING OFFICER AND THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSIONS MADE BEFORE THE AUTHORITIES BELOW AND STRONGLY SUPPORTED THE IMPUGN ED ORDER PASSED BY THE LD. CIT(A). 7. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PA RTIES AND THE MATERIAL AVAILABLE ON RECORD, IT IS NOTICED THAT THE ASSESSI NG OFFICER MADE THE SUBSTANTIVE ADDITION IN THE HANDS OF SHRI JETHMAL A GARWAL AND PROTECTIVE ADDITIONS WERE MADE IN THE HANDS OF THE ASSESSEE AN D SHRI RAJESH AGARWAL. IT IS NOTICED THAT THE ADDITION ON SUBSTANTIVE BASIS M ADE IN THE HANDS OF SHRI JETHMAL AGARWAL AMOUNTING TO RS. 40 LACS HAS BEEN D ELETED BY THIS BENCH OF THE ITAT IN I.T.A. NO. 149/JODH/2012 FOR THE ASSESS MENT YEAR 2009-10 VIDE ORDER DATED 28/6/2013 AND THE RELEVANT FINDINGS HAS BEEN GIVEN IN PARA 2.4, WHICH READS AS UNDER:- 2.4 AFTER HEARING BOTH THE SIDES AND GOING THROUGH THE WRITTEN SUBMISSIONS, WE HAVE FOUND THAT THE CONSTRUCTION WA S INCOMPLETE EVEN AT THE TIME OF SEARCH ON 6.11.2008. UPTO 31.3. 2009, SHRI. JETHMAL AGARWAL HUF, AND SHRI RAJESH AGARWAL HAVE S HOWN CONSTRUCTION OF RS. 15,55,000/- (8,75,000 + 6,80,00 0). DURING THE F.Y. 2009-10 BOTH HAVE SHOWN CONSTRUCTION OF RS. 5,95,00 0/-. THUS THE TOTAL COST OF CONSTRUCTION SHOWN BY BOTH OF THEM CO MES TO RS. 5 21,50,000/-. THE ASSESSING OFFICER MADE REFERENCE T O THE VO AS PER LETTER DATED 19.11.2010 (PG 66 APB) FOR THE VALUATI ON OF THE PROPERTY IN QUESTION INCLUDING THE FURNITURE AND FITTINGS AN D MACHINERY. THE REPORT OF THE VO (PAGE 68 OF PAPER BOOK) HAS VALUED THIS COST TILL 31.3.2009 AT RS. 30,99,144/- AND AS ON 31.3.2010 AT RS. 11,85,835/- TOTALING TO RS. 42,85,100/-. BUT THE ASSESSING OFFI CER HAS MADE ADDITION ON THE BASIS OF SURRENDER OF RS. 40 LACS W HICH IS EVEN MORE THAN ESTIMATED BY THE DVO. BEFORE US, IT WAS A RGUED THAT DEDUCTION ON ACCOUNT OF DIFFERENCE IN THE VALUATION ON THE BASIS OF CPWD RATES BY THE DVO AS AGAINST THE LOCAL PWD RATE S HAS TO BE FURTHER REDUCED @ 20% TO 30%. IN THIS REGARD, HE HA S RELIED ON NUMEROUS DECISIONS. REGARDING SELF-SUPERVISION HE H AS STATED THAT NORMALLY THE COURTS ARE ALLOWING DEDUCTIONS @ 10% T O 15%. ACCORDING TO THE LEARNED A.R. IN CASE BOTH THE ABOV E SUBMISSIONS, WHICH ARE WELL SUPPORTED BY THE JUDICIAL PRONOUNCEM ENTS ARE ACCEPTED, THERE WOULD BE NO MATERIAL DIFFERENCE BET WEEN THE TWO. WE HAVE FOUND MERIT IN THIS SUBMISSION OF THE LEARN ED A.R. ESPECIALLY WHEN NO RELATED MATERIAL WAS FOUND DURIN G SEARCH TO SUGGEST ANY SUCH UNEXPLAINED EXPENDITURE HAVING BEE N INCURRED BY THE ASSESSEE. THE RATES OF LOCAL PWD HAVE TO BE APPLIED AND NOT THAT OF CPWD AS HAS BEEN APPLIED BY THE DVO. NORMAL LY REDUCTION @ 20% FROM THE COST DETERMINED BY APPLYING CPWD RAT ES HAS TO BE ALLOWED IN VIEW OF THE ALMOST SETTLED POSITION OF L AW IN THIS REGARD. WE MAY QUOTE ONE SUCH DECISIONS OF THE HON'BLE RAJA STHAN HIGH COURT IN THE CASE OF CIT VS. HOTEL JOSHI (2010) 242 ITR 478 (RAJ.) AND THAT OF SMT. PREM KUMAR MURDIA VS. ACIT (2007) 211 CTR (RAJ) 500 AND CIT VS. DINESH TALWAR (2004) 264 ITR 344 (R AJ.). WE ALLOW 15% ON ACCOUNT OF SELF-SUPERVISION AND PROCUREMENT OF MATERIALS BOTH I.E. (10+5=15%). ACCORDINGLY, WE DO NOT FIND A NY NEED TO MAKE ANY FURTHER ADDITION IN THIS ACCOUNT. THEREFORE, WE ORDER TO DELETE THE ENTIRE ADDITION AND ALLOW GROUND NO. 4 OF ASSES SEES APPEAL. SINCE THE ADDITION MADE ON SUBSTANTIVE BASIS IN T HE CASE OF SHRI JETHMAL AGARWAL (SUPRA) HAS BEEN DELETED ON MERIT, THEREFORE, THE LD. CIT(A) 6 WAS JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE. 8. IN I.T.A. NO. 467/JODH/2013, IDENTICAL ISSUE HAV ING SIMILAR FACTS IS INVOLVED, THEREFORE, OUR FINDINGS GIVEN IN RESPECT OF I.T.A. NO. 466/JODH/2013 (SUPRA) SHALL APPLY MUTATIS MUTANDIS FOR THIS APPEA L ALSO. 9. IN THE RESULT, BOTH THE APPEALS OF THE DEPARTMEN T ARE DISMISSED. (ORDER PRONOUNCED IN THE COURT ON 29.11.2013). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 29.11.2013 RANJAN* COPY TO: 1. THE APPELLANTS 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.