Girish Kumar Khatri, ABU ROAD V. ITO, MOUNT ABU

ITA 549/JODH/2013

• Counselvise Citation: 54923314 RSA 2013
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-04-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 10-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Reassessment proceedings; Capital expenditure
• Section: 143(3); 234B; 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 549/JU/2013 ASSESSMENT YEAR: 2007-08 SHRI GIRISH KUMAR KHATRI VS. THE INCOME-TAX OFFIC ER 333, MANPUR MOUNT ABU. ABU ROAD PAN NO. ABUPK 0754 C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT KOTHARI DEPARTMENT BY : SHRI N.A. JOSHI, DR DATE OF HEARING : 02.04.2014 DATE OF PRONOUNCEMENT : 13.05.2014 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE FOR A.Y 2007-08 AGAINST THE ORDER OF THE CIT(A), JODHPUR, DATED 11.10.2013. 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED HIS RETURN OF INCOME [ROI] FOR A.Y. 2007-08 ON 7.9. 2009 DECLARING TOTAL INCOME OF RS. 98,596/-. SUBSEQUENTLY, IT WAS FOUND THAT THE ASSESSEE HAD SOLD A PLOT OF LAND MEASURING 1500 SQ. MTRS BEARING NO. G-154 SITUATED IN AMBAJI INDUSTRIAL AREA, ABU R OAD FOR A CONSIDERATION OF RS. 20,80,988/- AS AGAINST PURCHAS ED FOR RS. 12,50,000/-, GIVING RISE TO SHORT TERM CAPITAL GAIN OF RS. 8,30,988/-. BUT THIS CAPITAL GAIN HAS NOT BEEN DISCLOSED BY THE ASSESSEE IN HIS ROI. IT WAS ALSO NOTICED THAT DURING THE YEAR THE ASSESSEE HAD CARRIED OUT SOME CONSTRUCTION WORK AT HIS FACTORY S ITE AND HAD PURCHASED IRON AND STEEL ETC FOR CONSTRUCTION AMOUN TING TO RS. 1,92,439/-. THIS INVESTMENT WAS ALSO NOT DISCLOSED . ACCORDINGLY, THE A.O. INITIATED REASSESSMENT PROCEEDINGS U/S 147 R.W.S. 148 OF THE INCOME-TAX ACT, 1961 [THE ACT', FOR SHORT] WIT H A VIEW TO ASSESS INCOME AS THE ROI HAD BEEN ONLY PROCESSED U/S 143( 1) OF THE ACT ON 1.1.2008. THEREFORE, THE A.O. ISSUED NOTICE U/S 14 8 OF THE ACT ON 26.8.2009. IN COMPLIANCE, IT WAS PLEADED THAT THE RETURN FILED ORIGINALLY ON 7.9.2007 MAY BE TREATED AS ROI FILED IN COMPLIANCE OF THIS NOTICE. THE ASSESSEE DERIVED HIS INCOME FROM PURCHASE AND SALE OF MACHINERY PARTS. DURING THE YEAR, THE ASSE SSEE HAD INSTALLED 3 STONE CRUSHER AND STARTING DERIVING INCOME FROM MAN UFACTURE AND SALES OF KAPCHI AND BROKEN PIECES OF STONES WHICH A RE UTILIZED IN RCC WORK. THE ASSESSEE PRODUCED CASHBOOK AND LEDGER BUT DID NOT PRODUCE COMPLETE BOOKS OF ACCOUNT WHEN DEMANDED BY THE A.O. ACCORDINGLY, THE A.O. INVOKED THE PROVISIONS OF SEC TION 145(3) OF THE ACT AND MADE TRADING ADDITION OF RS. 3,21,248/-. T HE A.O. ALSO MADE OTHER ADDITIONS AND COMPUTED ASSESSEES TOTAL INCOME AT RS. 30,55,770/-. 3. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFOR E THE LD. CIT(A) WHO GAVE PART RELIEF TO THE ASSESSEE. THE A SSESSEE IS FURTHER AGGRIEVED AND HAS RAISED THE FOLLOWING GROUNDS: 1. THE ID. CIT(A) HAS ERRED IN SUSTAINING THE ORDE R PASSED BY THE ID. AO U/S 144/147 WHICH WAS BAD IN L AW AND BAD ON FACTS. 2. THE ID. CIT(A) HAS ERRED IN SUSTAINING THE INITIATION OF PROCEEDINGS U/S 148 WHICH IS BAD IN L AW AND BAD ON FACTS, AND WITHOUT PROPER JURISDICTION. 4 3A. THE ID. CTI(A) HAS ERRED IN SUSTAINING THE A DDITION OF RS. 8,47,939/- ON ACCOUNT OF ALLEGED UNEXPLAINED CAPITAL EXPENSES INCURRED ON ERECTION AND INSTALLAT ION OF PLANT AND MACHINERY. B. THE ADDITION SUSTAINED ONLY ON THE BASIS OF INSPECTOR REPORT, EVEN WITHOUT CONFRONTING THE SAME TO THE APPELLANT WAS BAD IN LAW AND BAD ON FACTS. C. THE ADDITION WAS UNWARRANTED AS NO SUCH ADDITI ON WAS MADE DURING THE YEAR AND THE SAME IS ONLY ON TH E BASIS OF SUSPICION AND SURMISES AND CONTRARY TO THE FACTS IN THE CASE OF THE APPELLANT. 4. THE INTEREST CHARGED U/S 234A AND 234B WAS BAD I N LAW AND BAD ON FACTS. THE APPELLANT PRAY FOR SUITAB LE COSTS. 4. GROUND NOS. 1 AND 2 ARE IN RESPECT OF INITIATION OF ACTION U/S 147 R.W.S 148 OF THE ACT. ACCORDING TO THE ASSESSE E, NO SUCH ACTION IS JUSTIFIABLE. WE DO NOT AGREE WITH THE LD. A.R. BECAUSE U/S 147 THE A.O. CAN ASSESS OR REASSESS INCOME. WHEN THE R OI HAD NOT BEEN REGULARLY VERIFIED AND IT WAS ONLY PROCESSED U/S 14 3(1) OF THE ACT, THE A.O. CAN ASSESS INCOME AFTER THE RETURN OF INCO ME [ROI] IS 5 PROCESSED U/S 143(3) OF THE ACT. THE A.O. HAS ENOU GH EVIDENCE OF ESCAPEMENT OF INCOME. ACCORDINGLY, WE CANNOT HOLD THAT THE ACTION TAKEN U/S 147 R.W.S.148 AND SECTION 144 IS N OT A VALID ACTION. THE A.O. CAN VERY WELL ASSESS AS WELL AS REASSESS T HE ROI IF IT IS SO DONE. THEREFORE, THE GROUND NOS. 1 AND 2 CANNOT BE ALLOWED AND WE DISMISS THE SAME. 5. FACTS APROPOS GROUND NO. 3 OF THIS APPEAL ARE TH AT ON THE BASIS OF INSPECTORS REPORT, THE A.O. HAS ESTIMATED THE EXPENDITURE ALLEGEDLY INCURRED ON ERECTION AND INSTALLATION OF PLANT AND MACHINERY. THE A.O. FOUND THAT THERE WERE CERTAIN PURCHASES MADE FROM VARIOUS PARTIES WHICH ARE NOT REFLECTED IN THE BOOKS OF ACCOUNT. THE A.O. HAS ESTIMATED THE AMOUNT OF CONS TRUCTION OF THE PLATFORM FOR CRUSHER, CHOWKIDAR ROOM, FOR PLANT AND MACHINERY, FOUNDATION WORK ETC. AND ACCORDINGLY THE ADDITION O F RS. 8,47,939/- WAS MADE IN THE HANDS OF THE ASSESSEE. 5.1 BEFORE THE LD. CIT(A), IT WAS ARGUED ON BEHALF OF THE ASSESSEE THAT THERE HAD BEEN NO SUCH CAPITAL EXPENDITURE WHI CH CAN BE STATED TO HAVE BEEN INCURRED DURING THE YEAR AND TH AT THE A.O. HAS 6 COMPLETELY FAILED TO DISCHARGE THE BURDEN OF PROVIN G ANY SUCH EXPENDITURE. IT WAS STATED THAT THE A.O. HAS FAILE D TO APPRECIATE THE INVESTMENT MADE IN THE PLANT AND MACHINERY WHIC H HAS ALREADY BEEN SHOWN IN THE PRECEDING YEARS AND DETAILS OF WH ICH ARE DULY FILED BEFORE HIM. THE ASSESSEE ALSO DISPUTED THE R EPORT OF THE INSPECTOR WHICH WAS NEVER CONFRONTED TO HIM. IN SU PPORT OF HIS SUBMISSION, THE ASSESSEE REFERRED TO HIS LETTER SUB MITTED DURING THE ASSESSMENT PROCEEDINGS. IT WAS STATED THAT IN A.Y. 2005-06 THE ASSESSEE HAD DISCLOSED EXPENDITURE OF RS. 9,46,400/ - AND DURING THE YEAR, THE INTEREST PAID ON PRE CONSTRUCTION EXPENDI TURE WHICH HAS BEEN TREATED AS CAPITAL EXPENDITURE AND HAS BEEN DE BITED TO THE PLANT AND MACHINERY ACCOUNT. THE ASSESSEE ALSO SUB MITTED COPIES OF BILLS IN RELATION TO THE ADDITION MADE. AFTER C ONSIDERING THE ABOVE SUBMISSIONS, THE LD. CIT(A) HAS ALSO CONFIRME D THIS ADDITION. THE ASSESSEE HAS CHALLENGED THIS ADDITION IN SECOND APPEAL. 5.2 IT WAS ARGUED BY THE LD. A.R. THAT THIS ADDITIO N IS SIMPLY BASED ON INSPECTORS REPORT WHICH WAS NEVER CONFRONTED TO THE ASSESSEE. IT WAS FURTHER ARGUED THAT NO SUCH CAPITAL EXPENDIT URE HAS BEEN MADE BY THE ASSESSEE DURING THE YEAR AND THE ADDITI ON IS BASED ON 7 SUSPICION AND SURMISES ONLY. THE LD. D.R. HAS SUPP ORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. WE HAVE FOUN D THAT THE GENESIS OF THIS ADDITION IS THE INSPECTORS REPORT. IT WAS FOUND FOR A FACT THAT THIS REPORT WAS NEVER CONFRONTED TO THE A SSESSEE. THE ASSESSEE HAS VEHEMENTLY ARGUED THAT NO SUCH CAPITAL EXPENDITURE WAS INCURRED DURING THE YEAR. ENTIRE WORKING AND F INDING OF THE LD. CIT(A) AGAIN IS FOUND TO BE BASED ON INSPECTORS RE PORT. UNTESTED STATEMENT OF THE INSPECTOR GIVEN IN HIS REPORT CANN OT BE MADE A BASIS OF ANY ADDITION UNLESS IT IS CONFRONTED WITH THE ASSESSEE AND MOREOVER, CERTAIN OTHER CORROBORATIVE EVIDENCE IS F OUND. THE ASSESSEE HAS REPEATEDLY AND VEHEMENTLY REFERRED TO PARA 13 OF THE LETTER DISCUSSED ABOVE WHICH WAS GIVEN DURING THE A SSESSMENT PROCEEDINGS AND COPY OF WHICH IS ENCLOSED AT PAGE 1 6 OF THE PAPER BOOK. THEREFORE, IN THESE CIRCUMSTANCES, WE FAIL T O UNDERSTAND AS TO HOW THE IMPUGNED ADDITION CAN BE MADE AND SUSTAI NED. ACCORDINGLY, WE ORDER TO DELETE THIS BASELESS ADDIT ION AND ALLOW GROUND NO. 3 OF ASSESSEES APPEAL. 8 7. GROUND NO. 4 IS REGARDING CHARGING OF INTEREST U /S 234A AND 234B WHICH IS MANDATORY, NO SUCH CLAIM CAN BE GRANT ED. 8. THE OTHER GROUNDS ARE FORMAL IN NATURE AND NEED NO ADJUDICATION. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 13 TH MAY, 2014. SD/- SD/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13 TH MAY, 2014 VL/- COPY TO: THE APPELLANT THE RESPONDENT THE CIT BY ORDER THE CIT(A) THE DR ASSISTANT REGISTRAR ITAT, JODHPUR