DCIT, BHILWARA V. Shri Tilok Chand Chhabra, BHILWARA

ITA 494/JODH/2013

• Counselvise Citation: 49423314 RSA 2013
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-05-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 04-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR DEEPAK SEHGAL
• Assessee Lawyers: U C JAIN
• Keywords: Unexplained investment; Business income; Depreciation; Source of fund; Additional evidence; Cost of acquisition; Corroborative evidences; Valuation report
• Section: 69

Judgement Text

[1] IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N. K. SAINI, ACCOUNTANT MEMBER I.T.A. NO.494/JODH/2013 ASSESSMENT YEAR: 2009-10 THE D.C.I.T., VS. SHRI TILOK CHAND CHHABRA CIRCLE, BHILWARA. B-382, SOURABH, INCOME TAX ROAD, SHASTRI NAGAR, BHILWARA. (RAJASTHAN) PAN: AATPC 1311 M (APPELLANT) (RESPONDENT) C.O. NO. 05/JODH/2014 (IN I.T.A. NO. 494/JODH/2013) ASSESSMENT YEAR:2009-10 SHRI TILOK CHAND CHHABRA, VS. THE D.C.I.T., B-382, SOURABH, INCOME TAX CIRCLE, BHILWARA. ROAD, SHASTRI NAGAR, BHILWARA. (RAJASTHAN) PAN: AATPC 1311 M (OBJECTOR) (RESPONDENT) REVENUE BY : D.R. DEEPAK SEHGAL, D.R. ASSESSEE BY : SHRI U.C. JAIN & SHRI RAJENDRA JAIN DATE OF HEARING : 06/05/2014 DATE OF PRONOUNCEMENT : 09/05/2014 ORDER PER N.K. SAINI, A.M. THE APPEAL BY THE DEPARTMENT AND THE CROSS OBJECTI ON BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 30/8/ 2013 OF LEARNED [2] CIT(A)-AJMER. IN THE DEPARTMENTAL APPEAL, FOLLOWIN G GROUNDS HAVE BEEN RAISED:- GROUNDS OF I.T.A. NO. 494/JODH/2013 THE LD. CIT(A), AJMER IN THE PRESENT FACTS AND CIR CUMSTANCES OF THE CASE HAS ERRED IN:- 1. ALLOWING EXCESS RELIEF OF RS. 5,44,647/- FOR WHI CH VOUCHERS WERE NOT PRODUCED BY THE ASSESSEE BEFORE THE ASSES SING OFFICER DURING VERIFICATION ON THE BASIS OF REMAND REPORT UNDER RULE 46A; 2. DELETING THE DISALLOWANCE OF RS. 6,06,118/- ON A CCOUNT OF DEPRECIATION WITHOUT APPRECIATING THE FACTS OF THE CASE; 3. DELETING THE DISALLOWANCE OF RS. 2,73,497/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST; 4. ALLOWING RELIEF OF RS. 5,61,184/- MADE BY THE AS SESSING OFFICER U/S 69 OF THE IT ACT, 1961 WHILE THE ASSESSING OFF ICER ACCEPTED RS. 5,00,000/- IN THE REMAND REPORT UNDER RULE 46; 5. THE APPELLANT CRAVES TO ADD, AMEND, ALTER, DELE TE OR MODIFY THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN TH E CROSS OBJECTION:- GROUNDS OF C.O. 05/JODH/2014 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, LD. CIT(A) ERRED IN:- A. SUSTAINING AN ADDITION OF RS. 61184/- UNDER THE HEAD INCOME FROM LONG TERM CAPITAL GAIN ON SALE OF HOU SE PROPERTY SITUATED AT GHAZIABAD. B. SUSTAINING DISALLOWANCE OF RS. 99123/- OUT OF C LAIM OF INTEREST PAID TO CREDITORS. C. SUSTAINING DISALLOWANCE OF RS. 25091/- OUT OF C LAIM OF DEPRECIATION. 2. THE RESPONDENT MAY KINDLY BE PERMITTED TO RAISE ANY ADDITIONAL AND OR ALTERNATIVE GROUND AT OR BEFORE THE HEARING OF APPEAL. 3. THE RESPONDENT PRAYS FOR JUSTICE AND RELIEF. [3] 2. GROUND NO. 1 OF THE DEPARTMENTAL APPEAL AND THE GR OUND NO. 1 OF THE CROSS OBJECTION OF THE ASSESSEE RELATE TO THE R ELIEF/SUSTENANCE OF THE ADDITION MADE BY THE ASSESSING OFFICER UNDER THE HE AD INCOME FROM LONG TERM CAPITAL GAIN ON SALE OF HOUSE PROPERTY SITUATE D AT GHAZIABAD. 3. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THA T THE ASSESSEE CLAIMED TO HAVE SOLD A LAND AT GHAZIABAD (UP) FOR A SALE CO NSIDERATION OF RS. 24,15,000/- AND CLAIMED DEDUCTION OF PURCHASE COST (AFTER INDEXATION) OF RS. 23,88,819/-, AS SUCH DECLARED SHORT TERM CAPITA L GAINS OF RS. 26,181/-. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSME NT PROCEEDINGS POINTED OUT THAT THE SALE CONSIDERATION AS PER THE SALE DEED WAS AT RS. 24,30,000/- AND NOT RS. 24,15,000/-. HE ALSO MENTIO NED THAT INSPITE OF VARIOUS OPPORTUNITIES, THE ASSESSEE HAD NOT FILED T HE PURCHASE DEED OF THE SAID LAND, THEREFORE, THE DATE AND COST OF ACQUISIT ION COULD NOT BE PROVED. ACCORDINGLY, THE ASSESSING OFFICER TREATED THE COST OF ACQUISITION AS NIL AND ENTIRE AMOUNT OF SALE CONSIDERATION OF RS. 24,3 0,000/- WAS TREATED AS SHORT TERM CAPITAL GAIN FOR TAXATION PURPOSES. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER:- THE LD. ASSESSING OFFICER HAS ERRED ON FACTS AND L AW IN TREATING ENTIRE SALE CONSIDERATION OF THE LAND SOLD AS CAPIT AL GAIN AND IN NOT REDUCING THE COST OF LAND PURCHASED FROM THE SALE C ONSIDERATION. THE LD. ASSESSING OFFICER HAS ALLEGED THAT THE ASSESSEE FAI LED TO FURNISH THE DOCUMENTARY EVIDENCE IN SUPPORT OF COST OF PURCHASE OF LAND. [4] THE ASSESSEE HAS PURCHASED THE LAND FROM ALOK KUMA R JAIN, GAZIABAD FOR A CONSIDERATION OF RS. 15,00,000/- IN MAY, 2006. THE PAYMENT WAS MADE THROUGH CHEQUE NO. 029719 DATED 16 /05/2006 DRAWN ON AXIX BANK LTD. THE COST OF ACQUISITION OF LAND W ORKS OUT RS. 16,22,200/- AFTER ADDITION OF LAND REGISTRY CHARGES AND OTHER E XPENDITURE INCIDENTAL TO ACQUISITION THEREON. THE ASSESSEE HAS FURTHER INCURRED RS. 7,66,619/- I N IMPROVEMENT/CONSTRUCTION UPON. SUMMARY OF COST IS A S UNDER: PARTICULARS AMOUNT (RS.) COST OF LAND (MAY, 2006) PAID BY CHEQUE 15,00,000/- LAND REGISTRY CHARGES AND OTHER EXPENDITURE(MAY-JUN E, 2006) 1,22,200/- IMPROVEMENT/CONSTRUCTION (JUNE 2006 TO AUG, 2008) 7 ,66,619/- TOTAL 23,88,819/- THE LD. ASSESSING OFFICER HAS ERRED IN TREATING ENT IRE SALE CONSIDERATION AS CAPITAL GAIN WITHOUT DEDUCTING THE COST OF SOLD ASS ETS FROM SALE CONSIDERATION, HENCE THE ASSESSEE MOST HUMBLY REQUE ST TO DELETE THE ADDITION FULLY. THE COPY OF THE LEASE DEED REGISTERED AND COPY OF A GREEMENT TO SALE EXECUTED WITH THE SELLER BY THE ASSESSEE AND COPY O F THE RELEVANT PAGE OF BANK STATEMENT OF THE ASSESSEE, WHEREBY THE PAYMENT MADE FOR PURCHASE OF LAND IS VERIFIABLE ARE ENCLOSED HEREWITH AND MAR KED AS ANNEXURE 19. IN VIEW OF THE CIRCUMSTANCES EXPLAINED HEREINABOVE, WE MOST HUMBLY SUBMIT TO KINDLY CONSIDER THE ABOVE EVIDENCE AS AN ADDITIONAL EVIDENCE WHILE DECIDING THE CASE. 5. THE ASSESSING OFFICER ALSO FURNISHED HIS REMAND REPORT WHICH READ AS UNDER:- [5] (A) AGREEMENT TO SALE OF PLOT NO. A-7/41 SSGT ROAD , INDUSTRIAL AREA, GHAZIABAD DATED 15/04/2006 TO CONFIRM THE COS T OF PURCHASE OF THE LAND FOR CAPITAL GAIN (B) CONFIRMATION OF STATEMENT OF ACCOUNT OF SELLER (C) COPY OF LEDGER TO PROVE THE COST OF IMPROVEMENT. TH E SUBMISSION OF THE ASSESSEE IS GOT ANALYSED, IT IS FOUND THAT THE CASH PAYMENT OF RS. 06,01,440/- WERE DURING THE PERIOD 01/04/2006 TO 31 /03/2009 (P.B. 242) PAID FOR IMPROVEMENT/ CONSTRUCTION BUILDING AT GHAZ IABAD THE VOUCHERS OF THESE PAYMENT WERE NOT PRODUCED DURING THE REMAND R EPORT PROCEEDINGS, THEREFORE, THE AMOUNT OF RS. 6,01,440/- WILL BE DIS ALLOWED FOR THE PURPOSE OF THE COST OF CONSTRUCTION/IMPROVEMENT. IN THIS CA SE THE ASSESSEE HAS RECEIVED RS. 24,30,000/- THE SALE CONSIDERATION OF BUILDING AT GHAZIABAD, THE COST OF THIS SALE CONSIDERATION WAS TREATED AS NIL. DURING THE REMAND REPORT THE ASSESSEE COULD NOT PRODUCE THE EXPENSES VOUCHERS REGARDING IMPROVEMENT/ CONSTRUCTION BUILDING AT GHAZIABAD, TH EREFORE, RS. 6,01,440/- IS TO BE TREATED AS SHORT TERM CAPITAL GAIN. 6. THE ASSESSEE ALSO FILED REJOINDER TO THE REMAND REPORT STATING AS UNDER:- IT IS SUBMITTED THAT WITHOUT INCURRING EXPENDITUR E ON CONSTRUCTION, THE PHYSICAL BUILDING CANNOT COME INTO EXISTENCE. T HE ASSESSEE HAS STARTED CONSTRUCTION FROM MAY 2006 AND COMPLETED TH E SAME IN MARCH, 2007. THUS, IT IS ADMITTED FACTS THAT THE BUILDING WAS CONSTRUCTED DURING THE FINANCIAL YEAR 2006-07. IT IS FURTHER SUBMITTED THA T COST OF CONSTRUCTION WAS DULY RECORDED IN THE BOOKS OF ACCOUNT AND SHOWING T HE SAME IN BALANCE SHEET SINCE 2007. THE COST OF IMPROVEMENT/CONSTRUCT ION DO NOT RELATES TO ASSESSMENT YEAR 2009-10. IT WAS ALREADY INCURRED IN EARLIER YEAR. THE ASSESSEE IS REGULARLY SUBMITTING HIS INCOME TA X RETURN AND SHOWING THE COST OF BUILDING SINCE 2007 AND THE SAM E IS BEING ACCEPTED BY THE DEPARTMENT ALSO. IN VIEW OF THIS, NON ACCEPTANC E OF COST OF BUILDING WHILE CALCULATING THE SHORT TERM CAPITAL GAIN FOR T HE ASSESSMENT YEAR 2009- 10 BY THE ASSESSING AUTHORITY IS NOT CORRECT. FURTHER IT IS ALSO ADMITTED FACT THAT WHEREVER ANY DOCUMENTS ARE NOT AVAILABLE THEN ON THE BASIS OF VERIFICATION OF THE BUILDING AND TAKING INTO [6] CONSIDERATION THE VALUATION REPORT ON THE BASIS OF BEST JUDGMENT; THE COST OF THE BUILDING AT THAT POINT OF TIME COULD HAVE BE EN WORKED OUT. IN THE ABSENCE THEREOF ALTERNATIVELY FOR ASCERTAINMENT OF COST OF BUILDING, APPROVED VALUERS REPORT SHOULD HAVE BEEN CONSIDERE D. WE SUBMIT THE VALUERS REPORT, COPY OF A/C OF BUIL DING CONSTRUCTION, COPY OF BALANCE SHEET FOR 2007, 2008, 2009 FOR YOUR KIND CONSIDERATION AND DO HUMBLE PRAY TO CONSIDER THE COST OF THE BUIL DING FROM THE SALE VALUE FOR THE PURPOSE OF CALCULATION OF SHORT TERM CAPITA L GAIN. 7. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND REMAND REPORT OF THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE SOLD THE LAND AND BUILDING SITUATED AT PLOT NO. A-7 /41, SSGT ROAD, INDUSTRIAL AREA, GHAZIABAD FOR RS. 24.30 LACS, WHIC H WAS PURCHASED ON 15/4/2006 FROM SHRI ALOK JAIN FOR RS. 15 LACS AND P AYMENT WAS MADE BY CHEQUE. HE FURTHER OBSERVED THAT THE ASSESSEE PAID REGISTRY CHARGES AND OTHER EXPENSES OF RS. 1.22 LACS AND THEREAFTER CLAI MED THAT FROM JUNE 2006 TO AUGUST, 2008, A SUM OF RS. 7,66,619/- WERE INCURRED AS THE COST OF IMPROVEMENT. THE ASSESSEE FILED THE COPY OF AGREEME NT, CONFIRMATION OF SELLER AND COPY OF LEDGER ACCOUNT OF THE SAID LAND AND BUILDING. THE LD. CIT(A) POINTED OUT THAT THE ASSESSING OFFICER IN TH E REMAND REPORT HAD ACCEPTED THE PURCHASE COST AND CONSTRUCTION EXPENSE S EXCEPT A SUM OF RS. 6,01,440/- BY MENTIONING THAT THE ASSESSEE HAD MADE THE CASH PAYMENT OF THE SAID AMOUNT BUT NO VOUCHER WAS PRODU CED. THE LD. CIT(A) POINTED OUT THAT THE ASSESSEE HAD FILED THE REGULAR RETURN AND HAD SHOWN INVESTMENT OF RS. 23,32,026/- AS ON 31 ST MARCH, 2007 IN THE BALANCE SHEET [7] REGARDING THE SAID BUILDING AT GHAZIABAD. HE, THERE FORE, DIRECTED THE ASSESSING OFFICER TO GIVE THE CREDIT TO THE EXTENT OF RS. 23,32,026/- AS THE COST OF THE PROPERTY ALONGWITH APPROPRIATE INDEXATI ON AS PER LAW. NOW THE DEPARTMENT IS IN APPEAL AGAINST THE RELIEF GRANTED TO THE ASSESSEE WHILE THE ASSESSEE IS IN CROSS OBJECTION AGAINST THE ADDI TION SUSTAINED. 8. THE LD. D.R. SUPPORTED THE ORDER OF THE ASSESSIN G OFFICER AND REITERATED THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER WHILE THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSIONS MADE BEFORE THE LD. CIT(A) AND FURTHER STATED THAT THE ADDITION SUSTAINED BY THE LD. CIT(A) TO THE EXTENT OF RS. 61,184/- WAS NOT JUSTIF IED. IT WAS STATED THAT THE ASSESSEE HAD SHOWN THE INVESTMENT OF RS. 61,184/- O N ACCOUNT OF CONSTRUCTION FROM 01/4/2008 TO TILL THE DATE OF SAL E AND THE SAME WAS APPEARING IN THE BOOKS OF ACCOUNT. THEREFORE, THE L D. CIT(A) SHOULD HAVE DIRECTED THE ASSESSING OFFICER TO ALLOW THE SAME. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE LD. CIT(A) AFTER CONSI DERING THE SUBMISSIONS OF THE ASSESSEE, WHICH HAS BEEN REPRODUCED IN THE FORM ER PART OF THIS ORDER, ACCEPTED THE INVESTMENT IN THE PROPERTY IN QUESTION , WHICH WAS APPEARING IN THE BOOKS OF ACCOUNT UP TO 31 ST MARCH, 2007 AND SHOWN IN THE REGULAR BALANCE SHEET FILED ALONGWITH RETURN OF INCOME. IN THE PRESENT CASE, IT IS NOT CLEAR AS TO WHETHER THE AMOUNT OF RS. 61,184/- CLAIMED TO HAVE BEEN INCURRED FOR CONSTRUCTION FROM 01/4/2008 TO TILL TH E DATE OF SALE WAS ENTERED [8] IN THE BOOKS OF ACCOUNT OR NOT. WE, THEREFORE, MODI FY THE ORDER OF THE LD. CIT(A) TO THIS EXTENT THAT THE ASSESSING OFFICER IS DIRECTED TO GIVE THE CREDIT TO THE EXTENT OF RS. 23,32,026/- AND ALSO SHALL VER IFY FROM THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE AS TO WHETHER A SUM OF RS. 61,184/- WAS INCURRED FOR CONSTRUCTION PURPOSES AND IF THIS FACT WAS FOUND TO BE TRUE THEN CREDIT SHOULD ALSO BE GIVEN FOR THE SAID AMOUN T ALONGWITH APPROPRIATE INDEXATION AS PER LAW. IN THIS MANNER, GROUND NO. 1 OF THE DEPARTMENTAL APPEAL IS DISMISSED AND GROUND NO. 1 OF THE ASSESSE ES CROSS OBJECTION IS ALLOWED FOR STATISTICAL PURPOSES. 10. GROUND NO. 2 OF THE DEPARTMENTAL APPEAL AND GRO UND NO. 1(C) OF THE ASSESSEES CROSS OBJECTION RELATES TO DELETION/SUST ENANCE OF DISALLOWANCE OUT OF DEPRECIATION. 11. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE TH AT THE ASSESSING OFFICER MADE THE DISALLOWANCE OF DEPRECIATION ON BUILDING A MOUNTING TO RS. 6,31,209/- BY OBSERVING IN PARA 6 OF THE ASSESSMENT ORDER, THE LD. CIT(A) MENTIONED THE FACTS IN PARA 8.1 OF THE IMPUGNED ORD ER AS UNDER:- 8.1 AS PER THE ASSESSMENT ORDER, THE AO HAS DISALLO WED THE DEPRECIATION OF RS. 6,06,118 ON FOLLOWING ACCOUNT: A) DISALLOWANCE OF DEPRECIATION ON BUILDING RS. 6, 06,118 (A). THE AO HAS MENTIONED THAT ASSESSEE HAS MADE ADDITION TO THE LAND BUILDING IN PERSONAL CAPACITY FOR THE LAND BUI LDING AT ALLAHABAD OF RS. 5,00,000 AND ASSESSEE HAS NOT FURNISHED DOCUMEN TARY EVIDENCE IN SUPPORT OF THE ADDITIONS MADE. ACCORDINGLY, DEPRECI ATION CLAIMED ON THE SAME @10% I.E. RS. 50,000 WAS DISALLOWED. [9] (B). THE AO HAS MENTIONED THAT ASSESSEE HAS MADE A DDITION TO THE LAND BUILDING IN PERSONAL CAPACITY FOR THE LAND BUI LDING AT ALLAHABAD OF RS. 5,00,000 AND ASSESSEE HAS NOT FURNISHED DOCUMEN TARY EVIDENCE IN SUPPORT OF THE ADDITIONS MADE. ACCORDINGLY, DEPRECI ATION CLAIMED ON THE SAME @10% I.E. RS. 50,000 WAS DISALLOWED. (C). THE AO HAS MENTIONED THAT ASSESSEE HAS MADE A DDITION TO THE LAND BUILDING IN PERSONAL CAPACITY FOR THE LAND BUI LDING AT GOREGAON (OUTLET) OF RS. 7,50,000 AND ASSESSEE HAS NOT FURNI SHED DOCUMENTARY EVIDENCE IN SUPPORT OF THE ADDITIONS MADE. ACCORDIN GLY, DEPRECIATION CLAIMED ON THE SAME @10% I.E. RS. 75,000 WAS DISAL LOWED. (D). THE AO HAS MENTIONED THAT ASSESSEE HAS MADE A DDITION TO THE LAND BUILDING IN PERSONAL CAPACITY FOR THE LAND BUI LDING AT KOLHAPUR OF RS. 42,50,000. IN SUPPORT OF THE ADDITIONS MADE, THE ASSESSEE HAS FURNISHED VALUATION REPORT VALUING THE PROPERTY AT RS. 54,49,000. THE AO MENTIONED THAT YEAR OF CONSTRUCTION IN THE VALUER'S REPORT WAS GIVEN AS 2008 TO 2010 AND YEARWISE ADDITIONS MADE HAVE NOT B EEN MENTIONED IN THE VALUATION REPORT. THE AO POINTED OUT THAT ASSES SEE HAS ONLY FILED A PHOTOCOPY AND VALUATION REPORT IS SIGNED ON FIRST A ND LAST DAYS ONLY. FURTHER, NO SUPPORTING BILLS IN RESPECT OF ADDITION S HAVE BEEN FURNISHED. ACCORDINGLY, DEPRECIATION CLAIMED @10% I.E. RS. 4,2 5,000 WAS DISALLOWED. (E). THE AO HAS MENTIONED THAT ASSESSEE HAS MADE A DDITION TO THE LAND BUILDING IN PERSONAL CAPACITY FOR THE LAND BUI LDING AT GHAZIABAD OF RS. 61,184 AND ASSESSEE HAS NOT FURNISHED DOCUME NTARY EVIDENCE IN SUPPORT OF THE ADDITIONS MADE. ACCORDINGLY, DEPRECI ATION CLAIMED ON THE SAME @10% I.E. RS. 6,118 WAS DISALLOWED. (B) DISALLOWANCE OF DEPRECIATION ON BUILDING RS. 2,50,091 [10] THE AO MENTIONED THAT ASSESSEE HAS MADE VARIOUS AD DITIONS IN THE BUILDING ON VARIOUS HEADS. (A). AS PER BUILDING ACCOUNT, BILLS AND VOUCHERS O F RS. 10,000 OF M/S SHAKTI ENTERPRISES WAS NOT PRODUCED. ACCORDINGLY, D EPRECIATION OF RS. 1,000 HAS BEEN DISALLOWED. (B). AS PER CONSTRUCTION LABOUR ACCOUNT, BILLS AND VOUCHERS OF RS. 76,523 WERE NOT PRODUCED. ACCORDINGLY, DEPRECIATION OF RS. 7,652 HAS BEEN DISALLOWED. (C). AS PER CONSTRUCTION MATERIAL ACCOUNT, BILLS A ND VOUCHERS OF RS. 1,02,700 WERE NOT PRODUCED. ACCORDINGLY, DEPRECIATI ON OF RS. 10,270 HAS BEEN DISALLOWED. (D). AS PER THE MACHINERY ACCOUNT, BILLS AND VOUCHE RS OF RS. 24,675 WERE NOT PRODUCED. ACCORDINGLY, DEPRECIATION @ 25% OF RS. 6,119 HAS BEEN DISALLOWED. AS SUCH THE ASSESSING OFFICER DISALLOWED THE DEPREC IATION OF RS. 6,31,209/- AND ADDED BACK THE SAME TO THE INCOME OF THE ASSESSEE. 12. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R TO THE LD. CIT(A) AND SUBMITTED AS UNDER:- 'THE LD. AO HAS DISALLOWED DEPRECIATION OF RS. 6312 09 (50000+50000+75000+425000+6118+1000+7652+10270+6169 ) ON THE GROUND OF NON SUBMISSION OF SUPPORTING VOUCHER FOR ADDITION TO THE ASSETS. IT IS QUITE SURPRISING AND AMAZING THAT THE ID AO H AS NOT APPLIED HIS MIND AND ADDED DEPRECIATION OF RS 6,31,209 WHEREAS THE ASSESSEE HAS NOT CLAIMED ANY DEPRECIATION IN COMPUTATION. TH E ID AO HAS NATIONALLY CALCULATED DEPRECIATION ON THE INDIVIDUA L PROPERTIES OF ASSESSEE, WHICH WERE LEASE OUT ON RENT AND WAS TAXA BLE UNDER THE [11] HEAD INCOME FROM HOUSE PROPERTY. THIS PROVES BEYOND DOUBT THAT THE ID AO HAD ALREADY MADE UP HIS MIND TO MAKE VERY HIG H PITCH ADDITIONS. WE DRAW YOUR KIND ATTENTION ON PAGE NO 1 1 TO 14 OF THE ASSESSMENT ORDER WHEREIN THE ID AO HAS MENTIONED DE TAILS OF NOTIONAL DEPRECIATION CALCULATED AND ADDED. THE ASS ESSEE HAS NOT CLAIMED DEPRECIATION ON ITS INDIVIDUAL PROPERTIES W HICH HAS BEEN LEASED OUT. NECESSARY SUPPORTING IN RESPECT OF ADDITION TO THE FIXED ASSETS HAVE BEEN SUBMITTED DURING THE COURSE OF ASSESSMENT PROC EEDING. WE MOST HUMBLY REQUEST TO KINDLY DELETE THE ENTIRE ADDITION MADE ON ACCOUNT OF DEPRECIATION OF RS 6,31,209 MADE BY ID A O. ' THE ASSESSEE HAS FURTHER SUBMITTED AS UNDER: 'DEPRECIATION OF RS. 2699165 HAS BEEN CHARGED ON BU SINESS ASSETS ONLY (FIXED ASSETS AS PER SCHEDULE 07 OF BALANCE SH EET OF PROPRIETARY CONCERN M/S CAREPLUS ENCLOSED HEREWITH . NO DEPRECI ATION WAS CHARGED ON PROPERTY LET OUT AND/ OR OTHER PERSONAL ASSETS. ' 13. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE, SUSTAINED THE DISALLOWANCE OF RS. 25,091/- AND DELE TED THE DISALLOWANCE OF RS. 6,06,118/- BY OBSERVING IN PARA 8.3 OF THE IMPU GNED ORDER AS UNDER:- 8.3 I HAVE CONSIDERED THE CONTENTIONS OF THE APPEL LANT AS WELL AS ASSESSMENT ORDER. IT IS SEEN THAT THE AO HAS DISALL OWED DEPRECIATION OF RS. 6,06,118 FOR THE ADDITIONS TO THE BUILDING A T ALLAHABAD, GOREGAON, KOLHAPUR, GHAZIABAD. THE ASSESSEE HAS CON TENDED THAT NO DEPRECIATION ON ABOVE BUILDINGS WAS CLAIMED BY T HE ASSESSEE. IN SUPPORT OF THE SAME, ASSESSEE POINTED OUT THAT AS P ER COMPUTATION OF INCOME AND PROFIT AND LOSS ACCOUNT, DEPRECIATION OF RS. 26,99,165 ONLY FOR M/S CAREPLUS I.E. PROPRIETARY CO NCERN WAS CLAIMED, WHICH HAS BUILDING AT ROORKEE I.E. AT ITS SITE OF PLANT AND ADDITION TO BUILDING ACCOUNT AS PER THE DEPRECIATIO N CHART IS ONLY OF RS. 5,21,870+RS. 79,116 FOR M/S CAREPLUS. DEPRECIAT ION HAS NOT [12] BEEN CLAIMED IN RESPECT OF ANY OTHER PROPERTY. IN F ACT ADDITIONS HAVE BEEN MADE IN THE HOUSE PROPERTIES WHICH WERE L EASED OUT ON RENT AND RENTAL INCOME HAS BEEN OFFERED FOR TAXATIO N. FROM ABOVE FACTS IT IS APPARENT THAT ASSESSEE HAS NOT CLAIMED THE DEPRECIATION OF RS. 6,06,118 WHICH HAS BEEN DISALLO WED BY THE AO. IT HAS NOT BEEN SHOWN THAT THE ITEMS ON WHICH THE DEPR ECIATION HAS BEEN DISALLOWED ARE PART OF THE ROORKEE PLANT OF M/ S CAREPLUS, A PROPRIETARY CONCERN OF THE ASSESSEE. ACCORDINGLY, D ISALLOWANCE OF DEPRECIATION TO ABOVE EXTENT IS DELETED. AS REGARDING THE BALANCE DEPRECIATION OF RS. 25,091 DISALLOWED BY THE AO WHICH WAS CLAIMED ON BUILDING ACCOUNT (RS. 10,000 PAID TO SHAKTI ENTERPRISES), CONSTRUCTION LABOUR ACCOUNT (P AYMENT OF RS. 76,523), CONSTRUCTION MATERIAL ACCOUNT (RS. 1,02,70 0 TO THREE PARTIES) AND MACHINERY ACCOUNT (PAYMENT OF RS. 24,675), IT H AS BEEN EXPLAINED BY THE ASSESSEE THAT DISALLOWANCE WAS MAD E ONLY DUE TO THE REASON AS SUPPORTING BILLS/VOUCHERS WERE NOT AV AILABLE. THESE EXPENSES RELATE TO THE M/S CAREPLUS I.E. BUSINESS C ONCERN OF THE ASSESSEE AND ARE ACCOUNTED IN THE BOOKS. HOWEVER, T HE FINDINGS OF THE AO HAVE NOT BEEN CONTROVERTED AND NO BILLS AND VOUCHERS HAVE BEEN PRODUCED DURING APPEAL. ACCORDINGLY, DISALLOWA NCE OF DEPRECIATION OF RS. 25,091 MADE BY THE AO IS CONFIR MED. NOW BOTH THE PARTIES ARE IN APPEAL. 14. THE LD. D.R. SUPPORTED THE ORDER OF THE ASSESSI NG OFFICER WHILE THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT TH E ASSESSEE HAD NOT CLAIMED ANY DEPRECIATION IN RESPECT OF THE PROPERTI ES SUBJECT TO LEASE AS SUCH THERE WAS NO JUSTIFICATION TO DISALLOW THE DEP RECIATION AMOUNTING TO [13] RS. 6,06,118/- AND THE LD. CIT(A) RIGHTLY DELETED T HE SAME. AS REGARDS TO THE REMAINING DISALLOWANCE OF RS. 25,091/- SUSTAINE D BY THE LD. CIT(A), THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE MADE THE ADDITION AND IMPROVEMENT IN THE BUILDING WHICH WAS USED FOR BUSINESS PURPOSES. THE EXPENSES SO INCURRED WERE CAPITALISED AND WERE RECORDED IN THE BOOKS OF ACCOUNT WITH THE DETAIL NARRATION O F EXPENSES LIKE LABOUR, MATERIAL ETC. AND THE ASSESSING OFFICER ADMITTED TH E WRITTEN DOWN VALUE OF THE BUILDING IN THE SUBSEQUENT YEAR, THEREFORE, THE DISALLOWANCE SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. 15. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN TH E PRESENT CASE, IT APPEARS THAT THE ASSESSEE DID NOT CLAIM DEPRECIATIO N IN RESPECT OF BUILDING AT ALLAHABAD, GOREGAON, KOLHAPUR AND GHAZIABAD, HOW EVER, THE ASSESSING OFFICER MADE THE DISALLOWANCE OF DEPRECIA TION AMOUNTING TO RS. 6,06,118/-. THE LD. CIT(A) AFTER MAKING VERIFICATIO N FROM THE COMPUTATION OF INCOME AND PROFIT AND LOSS ACCOUNT, DELETED THE SAI D DISALLOWANCE MADE BY THE ASSESSING OFFICER. THEREFORE, WE DO NOT SEE ANY MERIT IN THE GROUND OF THE DEPARTMENTAL APPEAL ON THIS ISSUE. AS REGARD S TO THE DISALLOWANDE OF BALANCE DEPRECIATION AMOUNTING TO RS. 25,091/-, THE LD. CIT(A) CATEGORICALLY STATED THAT THE FINDINGS OF THE ASSES SING OFFICER WERE NOT CONTROVERTED BY THE ASSESSEE AND NO BILLS/VOUCHERS HAD BEEN PRODUCED BEFORE HIM. WE, THEREFORE, DO NOT SEE ANY MERIT IN THE GROUND OF THE CROSS OBJECTION RAISED BY THE ASSESSEE ON THIS ISSUE. [14] 16. THE NEXT ISSUE VIDE GROUND NO. 3 OF THE DEPARTM ENTAL APPEAL AND GROUND NO. 1(B) OF THE CROSS OBJECTION RELATES TO D ELETION/SUSTENANCE OF DISALLOWANCE OUT OF INTEREST. 17. FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT T HE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NOTICE D THAT THE ASSESSEE HAD GIVEN INTEREST FREE LOANS AND ADVANCES TO THE F OLLOWING PERSONS:- (A) O.P. KALYA RS. 2,18,550/- (B) SONAL JAIN RS. 8,50,880/- (C) SAROJ CHHABRA RS. 4,50,000/- TOTAL RS. 15,19,430/- THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD C LAIMED THAT THIS LOAN WAS GIVEN OUT OF NON INTEREST BEARING FUNDS, HOWEVE R, NO DOCUMENTARY EVIDENCE HAD BEEN FURNISHED. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAD USED THESE FUNDS FOR HIS OWN BUSIN ESS. HE COULD HAVE REDUCED THE INTEREST EXPENDITURE TO THAT EXTENT. AC CORDINGLY, IT WAS HELD THAT BORROWED FUNDS OF RS. 15,19,430/- HAD BEEN DIV ERTED BY THE ASSESSEE AND GIVEN AS INTEREST FREE LOANS AND ADVANCES. HE A CCORDINGLY, DISALLOWED THE INTEREST @ 18% ON THE SAID AMOUNT OF RS. 15,19, 430/-, AS SUCH INTEREST AMOUNTING TO RS. 2,73,497/- WAS DISALLOWED U/S 36(1 )(III) OF THE IT ACT, 1961 (HEREINAFTER REFERRED AS THE ACT). 18. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R TO THE LD. CIT(A) AND SUBMITTED AS UNDER:- 'THE LD. AO DISALLOWED THE INTEREST OF RS. 2,73,497 STATING THAT BORROWED FUND TO THE EXTENT OF RS. 15,19,430 H AVE BEEN [15] DIVERTED AS INTEREST FREE LOAN AND ADVANCE. THE CON TENTION OF THE ID AO IS ABSOLUTE CONTRARY TO THE MATERIAL ON RECORD. IN FACT A SUM OF RS 2,18,550 WAS PAID TO O P KALYA FOR PURCHASE OF EQUITY SHARES OF A K SPINTEX LTD. DETAIL IS AS UNDE R- DATE AMOUNT RS. NO OF SHARE TO BE ACQUIRED 17/03/2006 1,36,750 54700 EQUITY SHARE OF AK SPINTEX LTD. 26/03/2008 21,880 5470 EQUITY SHARE OF AK SPINTEX LTD. 26/03/2008 59,920 14980 EQUITY SHARE OF AK SPINTEX LTD. DUE TO OVERSIGHT THIS ACCOUNT WAS NOT TRANSFERRED I N THE INVESTMENT (SHARE ACCOUNT) BUT REMAINED IN HIS ACCOUNT. THEREFORE AFTER REDUCING THE ABOVE AMOUNT THE LOAN AMOUNT WOULD BE RS. 13,00,880/ AS AT 31.03.2009 FROM THE TWO PARTIE S ONLY. THE INTEREST @ 18% ON THESE TWO LOANS FOR FULL YEAR WORKS OUT ON LY RS 60,905. THE INTEREST CALCULATION IS AS UNDER - (THE LEDGER COPY OF PARTY ARE ENCLOSED AND MARKED A S ANNEXURE '21' ) NAME OF PERSON AVERAGE BALANCE FOR WHOLE YEAR RS. RATE OF INTEREST AMOUNT OF INTEREST RS. SAROJ CHHABRA 156164 18% 28110 SONAL JAIN 182192 18% 32795 TOTAL 338356 60905 THE ID AO HAS CALCULATED THE INTEREST ON THE CLOSIN G BALANCE OF THESE THREE PARTIES, WHEREAS THE AVERAGE BALANCE DURING T HE YEAR WITH THESE PARTIES REMAINED VERY LOW. WITHOUT PREJUDICE TO THE ABOVE SUBMISSION, WE HAVE TO SUBMIT THAT THE ID AO MISCONCEIVED THE FACT THAT ASSESSEE HAD TAKEN LO AN ON INTEREST AND IT [16] HAS CLAIMED THAT INTEREST IN ITS PROFIT AND LOSS AC COUNT AND HAD GIVEN INTEREST FREE LOAN. IN FACT ASSESSEE HAD NOT CLAIME D INTEREST IN THE PROFIT AND LOSS ACCOUNT, FROM ANY BUSINESS INCOME. THE LOA N TAKEN HAS BEEN USED IN PROPERTIES FOR WHICH DEDUCTION UNDER SECTIO N 24 HAS BEEN CLAIMED WHILE CALCULATING THE INCOME FROM HOUSE PRO PERTY. IT IS SUBMITTED THAT THERE IS NO NEXUS THAT INTERES T FREE LOAN WAS GIVEN OUT OF THE INTEREST BEARING FUND. THE ASSESSEE HAS SUFF ICIENT CAPITAL OF ITS OWN AND IT USES THEM FOR GIVING TO SOME RELATIVE IN CASE OF URGENCY. AT TIMES IT ALSO HAPPENS WHEN THE ASSESSEE IS IN NEED OF FUNDS, THEN IT ALSO TAKE INTEREST FREE LOAN FROM ITS RELATIVE. WITHOUT PREJUDICE TO THE ABOVE SUBMISSION, THE ASSESSEE HAD TAKEN LOAN AT INTEREST RANGING FROM 9% TO 12% ONLY. THE ASSESSEE HAD SUBMITTED ALL THE DETAILS DURING T HE COURSE OF HEARING WHICH IS NARRATED AS UNDER; THE ASSESSEE HAS SUBMITTED REPLIES AS UNDER; ORDER SHEET DATED: ASSESSEE REPLY 10.10.2011 THE ASSESSEE WAS ASKED TO SUBMIT DETAILS OF LOAN GIVEN. THE ASSESSEE VIDE ITS LETTER DATED 13.10.2011 AT POINT NO 25, REPLIED TO THE QUERIES OF THE ID AO' (PI REFER ANNEXURE '3' 13.10.2011 THE ASSESSEE WAS ASKED CERTAIN DETAILS ON INVESTMENT IN SHARES THE ASSESSEE VIDE ITS LETTER DATED 18.10.2011 (ANNEXURE '4')AT POINT NO 12 SUBMITTED ' WE HAVE GIVEN ADVANCE RS. 2,18,550 AGAINST PURCHASE OF SHARE OF A K SPINTEX LTD. AND ACQUISITION OF SHARE HAS COMPLETED ON 01 JANURAY 2009. WE ARE FURNISHING DETAIL LEDGER COPY OF OP KALYA A/C AND COPY OF INVESTMENT [17] LEDGER OF TILOK CHAND CHHABRA TO CONFIRMING THESE TRANSACTION. ' THE ASSESSEE ON 31.10.2011 (ANNEXURE '7') SUBMITTED 'WE ARE FURNISHING CONFIRMATION FROM OP KALYA. 19. THE ASSESSING OFFICER ALSO SENT HIS REMAND REPO RT WHICH READ AS UNDER:- LEDGER ACCOUNT OF (A) O.P. KALYA (B) SAROJ DEVI CH HABRA (C) SONAL JAIN. DURING THE REMAND REPORT THE SUBMISSION OF THE ASSE SSEE IS GOT VERIFIED. THE AO HAS WORKED OUT INTEREST ON THE FACTS, THEREF ORE, THE ACTION OF AO WAS CORRECT TO DISALLOWING INTEREST OF RS. 2,73,497 /-. 20. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE AND THE REMAND REPORT OF THE ASSESSING OFFICER, DEL ETED THE DISALLOWANCE OF RS. 2,73,497/- MADE BY THE ASSESSING OFFICER BY OBSERVING IN PARA 9.3 OF THE IMPUGNED ORDER AS UNDER:- 9.3 I HAVE CONSIDERED THE CONTENTIONS OF THE APP ELLANT AS WELL AS ASSESSMENT ORDER. IT IS SEEN THAT ASSESSEE HAS CLAI MED THAT AN AMOUNT OF RS. 2,18,550 PAID TO SHRI O.P. KALIA WAS FOR THE INVESTMENT IN THE PURCHASE OF SHARES OF M/S A.K. SPINTEX LTD. AS REGARDING THE BALANCE LOAN OF RS. 13,00,880, THE INTEREST ON THE AVERAGE BALANCE FOR THE FULL YEAR WORKS OUT TO BE RS. 60,905 ONLY. FURT HER IT HAS BEEN POINTED OUT THAT ASSESSEE HAD SUFFICIENT CAPITAL OF ITS OWN AND THERE IS NO NEXUS OF INTEREST BEARING LOANS BEING GIVEN A S INTEREST FREE LOANS. IN SUPPORT OF HAVING SUFFICIENT INTEREST FRE E FUNDS, ASSESSEE HAD SUBMITTED THE COPY OF THE BALANCE SHEET AS PER WHICH ASSESSEE [18] HAS CAPITAL OF RS. 5.99 CRORES AS ON 31.03.2008 WH ILE IT IS RS. 11.48 CRORES AS ON 31.03.2009. THE INTEREST FREE LOAN AMO UNT IS ONLY RS. 15,19,430 AS AGAINST THE CAPITAL OF RS. 11.48 CRORE S. THERE IS NO EVIDENCE TO SHOW THAT ASSESSEE HAS TAKEN THE LOAN T O PROVIDE THE INTEREST FREE LOANS TO VARIOUS PERSONS. IN VIEW OF ABOVE DISCUSSION, THE ADDITION MADE BY THE AO ON ACCOUNT OF INTEREST OF RS. 2,73,497 IS DELETED. NOW THE DEPARTMENT IS IN APPEAL AND THE ASSESSEE HA S FILED THE CROSS OBJECTION. 21. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON TH E RECORD. IT APPEARS THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS WITHOUT APPRECIATING THE FACTS IN RIGHT PERSPECTIVE. THE ASSESSING OFFIC ER COULD NOT ESTABLISH THE NEXUS BETWEEN THE INTEREST BEARING LOANS AND INTERE ST FREE ADVANCES ON THE CONTRARY, THE EXPLANATION OF THE ASSESSEE WAS T HAT INTEREST FREE LOANS WERE OF RS. 15,19,430/- AS AGAINST CAPITAL OF RS. 1 1.48 CRORES. IN THE PRESENT CASE, THE LD. CIT(A) CATEGORICALLY STATED T HAT THERE WAS NO EVIDENCE TO SHOW THAT THE ASSESSEE HAD TAKEN THE LO AN TO PROVIDE INTEREST FREE LOAN TO VARIOUS PERSONS. WE, THEREFORE, DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) FOR DELETING THE SAID DISAL LOWANCE OF RS. 2,73,497/-. AS REGARDS TO THE GROUND TAKEN BY THE ASSESSEE IN T HE CROSS OBJECTION FOR SUSTENANCE OF DISALLOWANCE OF RS. 99,123/-, IT IS N OTICED THAT NO SUCH SEPARATE DISALLOWANCE WAS MADE BY THE ASSESSING OFF ICER IN THE ASSESSMENT ORDER. THE ONLY DISALLOWANCE MADE WAS OF RS. 2,73,497/-. [19] THEREFORE, THE GROUND RAISED BY THE ASSESSEE IN THE CROSS OBJECTION IS NOT ARISING OUT OF THE IMPUGNED ORDER OF THE LD. CIT(A) , AS SUCH, IT IS DISMISSED. 22. THE LAST ISSUE AGITATED BY THE DEPARTMENT RELAT ES TO THE RELIEF OF RS. 5,61,184/- OUT OF THE ADDITION MADE U/S 69 OF THE A CT. 23. FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT T HE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NOTICE D THAT THE ASSESSEE HAD MADE INVESTMENT OF RS. 60,61,184/- IN THE PURCH ASE OF LAND AND BUILDING. THE EXTRACT OF CASH BOOK WERE SHOWING THE SOURCE OF FUNDS AT RS. 55 LACS ONLY. HE, THEREFORE, HELD THAT THE ASSESSEE HAD MADE UNEXPLAINED INVESTMENT OF RS. 5,61,184/-, WHICH WAS DISALLOWED U/S 69 OF THE ACT. 24. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R TO THE LD. CIT(A). AND SUBMITTED AS UNDER:- 'THE LD AO HAS MADE ADDITION ON ACCOUNT OF UNEXPLAI NED INVESTMENT IN LAND AND BUILDING BY A SUM OF RS 5,61,184. THE ASSESSEE WAS ASKED TO GIVE DETAILS OF INVESTMEN T IN PROPERTY OF RS 60,61,184 MADE IN CASH AND ITS SOURCE. THE ASSESSEE MAINTAINS REGULAR BOOKS OF ACCOUNTS WHEREIN ALL INVESTMENT MADE IN PR OPERTY HAS BEEN ACCOUNTED PROPERLY. THE AMOUNT OF RS 60,61,184 INVESTED IN PROPERTY IS OUT OF RS 55,00,000 FROM THE DIRECTLY WITHDRAWN FROM THE BANK ACCOUNTS AS PER DETAILS SUBMITTED WHICH IS ALSO NOT DISPUTED BY THE ID AO. THE ID AO HAD CONFUSION ABOUT THE AMOUNT OF RS 5, 00, 000 PAID BY MR. SAURABH CHHABRA VIDE CHEQUE NO 55608 FOR DEMAND DRAFT NO 00 4502 DATED [20] 11.12.2006 DRAWN ON DIRECTLY IN FAVOUR OF SHAKEEL A HMED NOOR JOBIN FROM WHOM THE ASSESSEE HAD PURCHASED THE PROPERTY OF ALL AHABAD. THE COPY OF THE SALE DEED OF ALLAHABAD PROPERTY, WHEREIN THE AB OVE PAYMENT IS SHOWN AS SALE CONSIDERATION RECEIVED IS ENCLOSED HEREWITH AND MARKED AS ANNEXURE '22 ' THIS AMOUNT WAS DEBITED IN ALLAHABAD PROPERTY ON 01.04.2008 BY CREDITING TO SAURABH CHHABRA. THIS EN TRY WAS MADE WHEN THE ACCOUNTS WERE RECONCILED IN NEXT YEAR, AND FOUN D THAT THE ABOVE PAYMENT MADE BY MR. SAURABH CHHABRA IS ON ACCOUNT O F PROPERTY PAYMENT OF TIRLOK CHAND CHHABRA, THEN TO RECTIFY THE ABOVE MISTAKE A JOURNAL ENTRY WAS PASSED ON 01.04.2008 BY DEBITING PROPERTY ACCOU NT AND CREDITING SAURABH CHHABRA. THEREFORE, THE SOURCE OF ALL INVES TMENT IS PROVED BEYOND DOUBT. THUS OUT OF RS 5,61,184 THE ENTRY OF RS 5,00 ,000/- AS EXPLAINED ABOVE IS PROVED, THE REMAINING AMOUNT OF RS 61,184 IS OUT OPENING CASH BALANCE AS AT 01.04.2008. AO HEARING ORDER SHEET DATED 12.09.2011 AND 13.10.2011 THE ASSESSEE VIDE ITS LETTER DATED 13.10.2011 (ANNEXURE '3') AT POINT NO 15 SUBMITTED DETAILS OF ADDITION ALONG WITH SOURCE OF INVESTMENT. FURTHER VIDE LETTER DATED 18.10.2011 (ANNEXURE '4') AT POINT NO 8, SUBMITTED EXTRACT OF THE CASH BOOK EXPLAINING THE IMMEDIATE SOURCE OF THE INVESTMENT OF TILOK CHAND CHHABRA SHOWING SOURCES OF FUND. THE ASSESSEE ALSO SUBMITTED THE BANK STATEMENT SHOWING THE CASH WITHDRAWAL TO CONFIRM THE CASH BOOK ENTRIES. CONFIRMATION LETTER FROM SAURABH CHHABRA IN THIS REGARD WAS FILED WITH THE ID AO. COPIES OF THE ABOVE ARE ENCLOSED HEREWITH AND MARKED AS ANNEXURE '22' [21] 25. IN HIS REMAND REPORT, THE ASSESSING OFFICER SUB MITTED AS UNDER:- COPY OF SALE DEED OF ALLAHABAD PROPERTY SHOWING THE AMOUNT USED BY TAKING LOAN FROM SAURABH CHHABRA OFRS. 5 LAKH, (B) COPY OF LEDGER ACCOUNT OF SAURABH CHHABRA. DURING THE REMAND REPORT PROCEE DINGS, IT IS VERIFIED THAT RS. 5 LAKH ARE TAKEN LOAN FROM SHRI SAURABH CH HABRA. ' 26. THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE AND THE REMAND REPORT OF THE ASSESSING OFFICER OBSE RVED THAT THE ASSESSING OFFICER HAD ACCEPTED CLAIM OF THE ASSESSE E THAT A SUM OF RS. 5 LACS WAS PAID BY SHRI SAURABH CHHABRA DIRECTLY TO S HRI SHAKIL AHMED NOOR FOR THE PURCHASE OF PROPERTY AT ALLAHABAD. AS REGAR DS TO THE BALANCE AMOUNT OF RS. 61,184/-, THE LD. CIT(A) OBSERVED THA T THIS AMOUNT RELATED TO GHAZIABAD PROPERTY, WHICH HAD BEEN SOLD DURING T HE YEAR AND THE CREDIT FOR THE SAID ADDITION TO THE COST OF PROPERTY HAD A LREADY BEEN DISALLOWED WHILE DECIDING THE ISSUE RAISED BY THE ASSESSEE DUE TO ABSENCE OF SUPPORTING EVIDENCE AND AS THE INVESTMENT IN COST O F CONSTRUCTION ITSELF HAD BEEN DISALLOWED, THERE COULD NOT BE FURTHER DIS ALLOWANCE OF THE SAME AMOUNT. ACCORDINGLY, THE ADDITION OF RS. 5,61,184/- WAS DELETED. NOW THE DEPARTMENT IN APPEAL. 27. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON TH E RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSING OFF ICER IN HIS REMAND REPORT ACCEPTED THE INVESTMENT OF RS. 5.00 LACS, THEREFORE , THE ADDITION TO THAT EXTENT WAS RIGHTLY DELETED BY THE LD. CIT(A). AS RE GARDS TO THE BALANCE AMOUNT OF RS. 61,184/-, IT IS NOTICED THAT THE ASSE SSEE AND THE DEPARTMENT [22] BOTH HAVE CHALLENGED THIS ISSUE VIDE GROUND NO. 1 O F THE RESPECTIVE APPEAL & CROSS OBJECTION AND WE HAVE ALREADY SET ASIDE THI S LIMITED ISSUE FOR VERIFICATION TO THE ASSESSING OFFICER. ACCORDINGLY, THIS GROUND OF THE DEPARTMENTAL APPEAL ON THE LIMITED ISSUE RELATING T O THE DISALLOWANCE OF RS. 61,184/- IS ALLOWED FOR STATISTICAL PURPOSES. 28. IN THE RESULT, APPEAL OF THE DEPARTMENT AND THE CROSS OBJECTION OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE S. (ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH MAY, 2014). SD/- SD/- ( HARI OM MARATHA ) ( N. K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED: 09 TH MAY, 2014 *RANJAN COPY FORWARDED TO: 1. APPELLANT- 2. RESPONDENT- 3. CIT(A) 4. CIT 5. D.R. BY ORDER ASSISTANT REGISTRAR JODHPUR