The Dy. Commr. Of Income Tax, Cir.-1(2), RAJKOT-GUJARAT V. M/s Tirupati Housing Corporation P. Ltd., RAJKOT-GUJARAT

ITA 502/RJT/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6866 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2000-2001
• Appeal Filed On: 14-10-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARVIND SONTAKKE
• Keywords: Unexplained investment; Unexplained expenditure; Income from undisclosed sources
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV , JUDICIAL MEMBER ./ ITA NO . 502 / RJT / 20 1 5 / ASS TT. YEAR : 200 0 - 0 1 D C IT, CIR.1(2) RAJKOT. VS TIRUPATI HOUSING CORPORATION P.LTD. C/O. HASUBHAI JOSHI 3, KESHAV APPTT., JAGNATH PLOT , RAJKOT. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI ARVIND SONTAKKE, DR / DATE OF HEARING : 3 0 / 1 0 /201 7 / DATE OF PRONOUNCEMENT: 01 / 1 1 /201 7 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST ORDER OF LD.CIT(A) - 1, RAJKOT DATED 28.7.2015 PASSED FOR THE ASSTT.YEAR 2000 - 01. 2. SOLITARY GRIEVANCE OF THE REVENUE IS THAT THE LD.CIT(A) HAS ERRED IN DELETING ADDITION OF RS.40.00 LAKHS WHICH WAS ADDED BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PROJECT VENTAKESH PLAZA . 3. APPEAL WAS FIXED FOR HEARING ON THE BOARD ON 1.6.2017. SHRI SIDDHARTH TOLIA, DIRECTOR OF THE ASSESSEE - COMP A NY HAS FILED AN APPLICATION FOR ADJOURNMENT AND HEARING WAS ADJOURNED TO 21.8.2017. THEREAFTER, THE LD.COUNSEL FOR THE ASSES S EE APPEARED ON 21.8.2017 AND HEARING WAS ADJOURNED TO 21.9.2017. BUT O N THE NEXT DA TE, T HE LD.COUNSEL FOR THE ASSESSEE PLEADED NO INSTRUCTIONS F RO M THE ASSESSEE AND DID NOT APPEAR. HEARING WAS ADJOURNED TO 30.10.2017 AND NOTICE ITA NO 502 /RJT/201 5 2 W AS AGAIN ISSUED TO THE ASSESSEE THROUGH RPAD AS WELL AS THROUGH DEPARTMENTAL REPRESENTATIVE . REPORT FROM SHRI J.J. PUJARA, INSPECTOR HAS BEEN RECEIVED DEMONSTRATING THAT S ERVICE EFFECTED UPON TH E ASSESSEE THROUGH AFFIXTURE. REPO R T OF THE INSPECTOR SHOWING SERVICE HAS BEEN PLACED ON THE RECORD. I N RESPONSE TO THE NOTICE NO ONE HAS COME PRESENT ON BEHALF OF THE ASSESSEE. IT IS ALSO IMPORTANT TO NOTE THAT SHRI SIDDHARTH TOL IA, SOUGHT AD J OURNMENT, BUT DID NOT APPEAR ON THE NEXT DATE OF HEARING. THE COUNSEL WHO APPEARED BEFORE THE LD.CIT(A) PUT AN APPEAR ANCE WITHOUT ANY AUTHORITY, AND DUE TO TH ESE REASONS FRESH NOTICE WAS SERVED UPON THE ASSESSEE. 4 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 28.3.2001 DECLARING LOSS OF RS.4,223/ - . A SU R VEY UNDER SECTION 133A OF THE INCOME TAX ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 16.3.2000. DURING THE CO URSE OF SURVEY CERTAIN INCRIMINATING MATERIALS WERE FOUND AND IT WAS DETERMINED THAT COST OF CONSTRUCTION OF VENTAKESH PLAZA WAS AT RS.1,00,00,000/ - AS AGAINST THE ACTUAL AMOUNT DEBITED IN THE BOOKS OF ACCOUNTS AT RS.55,60,617/ - . DIRECTOR OF THE ASSESSE E WAS CONFRONTED WHO ADMITTED UNACCOUNTED INCOME OF RS.40.00 LAKHS IN HIS STATEMENT. HOWEVER, WHILE FILING RETURN, THE ASSESSEE DID NOT HONOUR THE ADMISSION MADE BY THE DIRECTOR. THE LD.AO HAS PASSED AN ASSESSMENT UNDER SECTION 143(3) OF THE ACT AND DETE RMINED TAXABLE INCOME AT RS.39,36,620/ - . THIS ORDER WAS CHALLENGED IN APPEAL BEFORE THE LD.FIRST APPELLATE AUTHORITY WHO GRANTED RELIEF OF RS.38,15,021/ - VIDE ORDER DATED 22.3.2005 . REVENUE TOOK THE MATTER TO THE TRIBUNAL VIDE ITA NO.818/RJT/2005. APPEA L OF THE REVENUE WAS ALLOWED FOR STATISTICAL PURPOSE AND THE MATTER WAS REMITTED TO THE FILE OF ASSESSING OFFICER FOR RE - VERIFICATION OF EACH ITEM CLAIMED BY THE ASSESSEE. IN FRESH ASSESSMENT ORDER, THE ITA NO 502 /RJT/201 5 3 LD.A O AGAIN MADE ADDITION WHICH WERE CHALLENGED BEFO RE THE LD.CIT(A), THE LD.CIT(A) DELETED THE ADDITION. 5. A PERUSAL OF THE R E CORD WOULD INDICATES THAT THE ASSESSEE DID NOT DISPUTE ABOUT DETERMINATION OF COST OF CONSTRUCTION OF RS.1,00,00,000/ - . IT DISPUTED THAT WHILE CALCULATING THE COST, RS . 55,60,621/ - DEBITED IN THE BOOKS OF ACCOUNTS CERTAIN ITEMS WERE LEFT. THESE ITEM S ARE (A) ADVANCES GIVEN TO VARIOUS PARTIES FOR CONSTRUCTION RS.20,09,887/ - (B) EXPENDITURE INCURRED AND BILLS RECEIVED BUT NOT YET ACCOUNTED RS.1,20,612/ - (C) BILLS IN RESPECT OF WHICH MATERIAL WAS RECEIVED WITH DELIVERY CHALLAN BUT BILLS W ERE RECEIVED LATER RS.64,307/ - (D) INTEREST TILL 31 - 3 - 99 FORMING PART OF OPENING WIP RS.11,26,979/ - (E) INTEREST TO BE PROVIDED FOR F.Y.1999 - 2000 RS.11,57,390/ - 6. IF THESE ITEMS ARE ADDED TO THE COST DEBITED IN THE BOOKS, THEN THE TOTAL COST OF CONSTRUCTION WOULD COME TO RS.1,00,39,796/ - WHICH IS NEAR TO THE COST DETERMINED BY THE SURVEY TEAM., THE LD.AO REJECTED THIS CONTENTION OF THE ASSES S EE AND REFERRED THE MATTER TO TH E DVO WHO DETERMINED THE COST AT RS. 1,52,95,882/ - . SIMILARLY REGISTERED VALUER OF THE ASSESSEE REPORTED COST OF RS.1,24,87,120/ - . THE DISPUTE BETWEEN THE PARTIES RELATES TO DETERMINATION OF ACTUAL COST OF CONSTRUCTION OF PROJECT VENTAKESH PLAZA . ACCOR DING TO THE ASSESSEE IT HAS NOT MADE ANY UNEXPLAINED EXPENDITURE, WHEREAS THE ASSESSING OFFICER HAS DETE RMINED THE AMOUNT OF UNEXPLAINED EXPENDITURE INCURRED BY THE ASSESSEE. THE LD.DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. ITA NO 502 /RJT/201 5 4 7. WITH THE AS SISTANCE OF THE LD.DR, WE HAVE GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT T HE ASSESSING OFFICER HAS RECORDED A CATEGORICAL FINDING WHEREIN HE OBSERVED THAT ALLEGED ITEM OF ADVANCES GIVEN BY THE ASSESSEE FOR DIFFEREN T CIVIL WORKS, INTER E ST EXPENDITURE ALLEGED TO BE AVAILABLE IN THE OPENING WORK - IN - PROGRESS AS WELL AS INTEREST TO BE PROVIDED FOR F.Y.1999 - 2000 ARE CONCERNED, THESE ITEMS WERE NOT PART OF COST WORKED OUT BY THE SURVEY TE A M AT RS.1,00,00,000/ - . IF ON THE BASIS OF SUBSEQUENT MAT E RIAL, THE A SSESSEE WANTS TO INCLUDE THESE ITEMS IN THE COST DEBITED IN THE BOOKS OF ACCOUNTS, TH E N, CORRESPONDING ADDITION IS TO BE MADE TO THE ITEMS CONSIDERED BY THE SURVEY TE A M WHILE DETERMINING THE COST OF PROJECT AT RS.1,00,00,000/ - . THIS WILL NULLIFY EACH OTH ER AND NET RESULT WOULD BE NIL. THE ASSESSEE FAILED TO GIVE ANY EXPLANATION TO THIS LOGIC OF THE ASSESSING OFFICER. IT IS PERTINENT TO OBSERVE THAT THERE W ERE FLAWS IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE SURVEY TEAM DETERMINED THE COST OF PROJECT AT RS.1,00,00,000/ - . THE ASSESSEE WAS REQUIRED TO EXPLAIN THE DIFFERENCE OF COST OF ITEMS WHICH WERE CONSI DERED BY THE SURVEY TEAM VIS - - VIS DEBITED IN THE BO OKS. IF THE ASSESSEE WANTS TO INCLUDE ANY ADDITIONAL ITEMS, TH E N CORRESPONDINGLY IT WILL BE INCLUDED IN THE COST INCLUDED BY THE SURVEY TEAM. THE LD.FIRST APPELLATE AUTHORITY HAS MISERABLY FAILED TO TAKE INTO ACCOUNT ANY OF THESE ITEMS. THERE IS NO DISP UTE WITH REGARD TO INCLUSION OF INTEREST EXPENDITURE AVAILABLE IN WIP AS WELL AS RELATABLE TO THE ACCOUNTING YEAR IN QUESTION, BUT, IT IS TO BE ASCERTAINED WHETHER THESE ITEMS WERE CONSIDERED BY TH E SURVEY TEAM OR NOT, IF NOT CONSIDERED, TH E N THEY WOULD BE INCLUDED CORRESPONDINGLY IN THE CO S T OF RUPEES ONE CRORE DETERMINED BY THE SURVEY TEAM. THE ASSESSING OFFICER HAS EMPHAS IS ED THIS ASPECT AND REJ E CTED THE EXPLANATION OF THE ASSESSEE. THE LD.FIRST APPELLATE A U T H ORITY HAS NOT GIVEN ANY HEED TO THIS LINE O F REASONING ADOPTED BY THE ASSESSING OFFICER. IT APPEARS THAT LD.CIT(A) SIMPLICITOR ACCEPTED THE ITA NO 502 /RJT/201 5 5 CONTENTION S OF THE ASSESSEE. THEREFORE, WE ALLOW TH IS GROUND OF APPEAL AND ALLOW APPEAL OF THE REVENUE. 8 . IN THE RESULTS, APPEAL OF THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE CO URT ON 1 S T NOVEMBER, 201 7 AT RAJKOT . S D / - S D / - ( PRAMOD KUMAR ) ACCOUNTANT MEMBER ( RAJPAL YADAV) JUDICIAL MEMBER