ITO, Central-2, Nashik V. Shri Chadulal Sadhuram Khemani, Nashik

ITA 628/PUN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79740 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 07-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Business income; Depreciation
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.628/PN/2013 (A.Y: 2005-06) DY. CIT, CENTRAL CIRCLE-2, NASHIK APPELLANT VS. SHRI CHADULAL SADHURAM KHEMANI 14, C.K. VILLA, VISE MALA, COLLEGE ROAD, NASHIK PAN: AMAPK1030G RESPONDENT APPELLANT BY : SHRI P.L.PA THADE RESPONDENT BY : SHRI SUN IL PATHAK DATE OF HEARING: 02.04.2014 DATE OF ORDER : 28.04.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-II, [IN SHOR T CIT(A)] NASHIK, DATED 26.12.2012 FOR A.Y. 2005-06 ON THE FO LLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDIT ION OF 55,70,418/- MADE AS PER PROVISION OF SECTION 69C. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE IN REGARD TO DISALLOWANCE OF 11,14,083/- MADE BY THE ASSESSING OFFICER IN VIEW OF PROVISIONS OF SECTION 40A(3). 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY, D ELETE AMEND ANY OF THE GROUNDS, AS PER THE CIRCUMSTANCES OF THE CASE. 2 4. THE APPELLANT PRAYS LEAVE TO ADDUCE SUCH FURTHER EVIDENCE TO SUBSTANTIATE ITS CASE AS OCCASION MAY D EMAND. 2. THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUS INESS OF LAND DEVELOPMENT AT NASHIK. THERE WAS SEARCH ACTIO N AGAINST ASSESSEE ON 09.10.2003 AND THIS WAS THE YEAR NOT TH E PERIOD COVERED UNDER SEARCH U/S.153A/143(3). THE ASSESSEE FILED RETURN OF INCOME ON 27.10.2005 DECLARING TOTAL INCO ME OF 3,06,950/-. THE ASSESSEE HAD SHOWN TOTAL SALES OF 60,48,408/- ON WHICH THE ASSESSEE HAD WORKED OUT NET PROFIT AT 3,25,913/- AFTER MAKING ADJUSTMENT OF DEPRECIATION. THE RETUR N WAS PROCESSED U/S.143(1)(A) ON 05.10.2006. A NOTICE U/ S.143(2) WAS ISSUED. THE ASSESSEE HAD CLAIMED DEDUCTION OF 55,70,418/- AS A PRO-RATA COST OF PLOTS OR LAND SOLD DURING THE PR EVIOUS YEAR RELEVANT TO A.Y. 2005-06. IT WAS FOUND FROM DOCUME NTS THAT THE PAYMENT FOR RELEVANT STOCKS OF LAND PERTAINING TO S UCH SALES WERE MADE IN CASH AND SUCH CASH PAYMENT WAS FOUND TO BE EXCEEDING 20,000/- IN THE CONTRAVENTION OF SECTION 40A(3). THE ASSESSEE HAD NOT BROUGHT OUT ANY CIRCUMSTANCES TO CLAIM EXCE PTION FOR SUCH CASH PAYMENT. ACCORDINGLY, THE ASSESSING OFFI CER MADE DISALLOWANCE @ 20% OF THAT PART OF CASH PAYMENT WHI CH WAS CLAIMED AS DEDUCTION IN PROFIT AND LOSS ACCOUNT. S INCE THE DEDUCTION CLAIMED BY ASSESSEE WAS 55,70,418/-, DISALLOWANCE CAME TO 11,14,083/- TO ASSESSEES INCOME U/S.69C OF ACT. NO SEPARATE ADDITION OF 11,14,083/- WAS MADE U/S.40A(3). 3. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AU THORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE AND HAVING CONSIDERED THE SAME, THE CIT(A) GRANTED RELIEF TO THE ASSESSEE ON BOTH ACCOUNTS. THE SAME HAS BEEN OPPOS ED BEFORE US ON BEHALF OF REVENUE AS EVIDENT FROM THE RESPECT IVE GROUNDS OF APPEAL AND ACCORDINGLY, REQUESTED TO SET ASIDE THE ORDER OF CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTO RED. ON THE 3 OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATIVE H AS SUPPORTED THE ORDER OF CIT(A). 3.1 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND M ATERIAL ON RECORD, WE FIND THAT AN ADDITION OF 55,70,418/- MADE UNDER THE PROVISIONS OF SECTION 69C OF THE ACT. THE ASSESSEE HAS CLAIMED TO HAVE ACQUIRED CERTAIN PROPERTIES OF LAND IN QUESTIO N PRIOR TO THE COMMENCEMENT TO THE PERIOD ENVISAGED FOR ASSESSMENT U/S.153A. THESE WERE CLAIMED BY ASSESSEE AS FORMIN G PART OF OPENING BALANCE AS ON DATE PRIOR TO THE COMMENCEMEN T OF THE PERIOD ENVISAGED FOR ASSESSMENT U/S.153A. THE ASSE SSEE HAD CLAIMED DEDUCTION FOR PROPORTIONATE INVESTMENT IN T HESE PROPERTIES, LYING IN STOCK AGAINST THE SALE PROCEED S REALIZED ON SALE OF AREA FROM THESE PROPERTIES, AS COST OF THE PROPERTIES SOLD AND OFFERED TO TAX THE PROFIT MADE THEREON. THE PR OPORTIONATE COST SO CLAIMED DURING THE YEAR UNDER APPEAL AGAINS T SALE OF PROPERTIES LYING IN OPENING STOCK SINCE THE PERIOD PRIOR TO PERIOD COVERED U/S.153A AMOUNTED TO 55,70,418/-. THE ASSESSING OFFICER HAD DISALLOWED THE SAME FOR THE REASON RECO RDED BY HIM IN PARA 12.1 AND 12.2 OF ASSESSMENT ORDER PASSED U/ S.153A FOR A.Y, 1998-99 BY APPLYING PROVISO TO SECTION 69C. I N APPEAL, THE CONCERNED CIT(A), NASHIK HAS STRUCK DOWN SUCH ADDIT ION MADE IN EARLIER YEARS COVERED UNDER SEARCH VIDE HER COMBINE D ORDER DATED 30.11.2007 IN APPEAL NO.125 TO 131 OF 2006-07. AGA INST THE SAID ORDER OF CIT(A), THE DEPARTMENT HAD PREFERRED AN AP PEAL BEFORE ITAT, PUNE BENCH AND THE APPEAL OF DEPARTMENT WAS D ISMISSED BY ITAT, PUNE B BENCH VIDE ITS ORDER DATED 31.10.20 12 IN ITA NOS. 383 TO 389 OF 2008 VIDE PARA 53 TO 59 OF PAGE NO.27 TO 30. NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWLEDGE ON BEHALF OF REVENUE. SO, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDING OF CIT(A), WHO HAD DELETED THE ADDITION OF 55,70,418/- MADE AS PER PROVISO TO SECTION 69C OF ACT. WE UPHOLD THE S AME. 4 4. THE NEXT ISSUE IS WITH REGARD TO DISALLOWANCE OF 11,14,083/- U/S.40A(3). THE ASSESSING OFFICER AFTE R DISALLOWING 55,70,418/- UNDER THE PROVISO TO SECTION 69C, HELD THAT THE PAYMENTS TO ACQUIRE THE PROPERTIES LYING IN OPENING STOCK WERE MADE IN CASH IN VIOLATION OF PROVISIONS U/S.40A(3) AND THEREFORE, REQUIRED DISALLOWANCE U/S.40A(3). ACCORDINGLY, HE DISALLOWED 11,14,083/- (20% OF 55,70,418/-) U/S.40A(3) THE DIFFERENCE FROM MAKING SEPARATE ADDITION FOR REASON THAT THE E NTIRE CORRESPONDING COST WAS DISALLOWED BY HIM UNDER THE PROVISO TO SECTION 69C. THE CONCERNED CIT(A) HAS STRUCK DOWN SUCH ADDITION ALSO MADE U/S.40A(3) IN EARLIER YEARS COVE RED UNDER SEARCH VIDE HER COMBINED ORDER DATED 30.11.2007 IN APPEAL NOS.125 TO 131 OF 2006-07. AGAINST THE SAID ORDER OF CIT(A), DEPARTMENT PREFERRED AN APPEAL BEFORE ITAT, PUNE BE NCH AND APPEAL OF THE DEPARTMENT WAS DISMISSED BY ITAT, PUN E B BENCH VIDE ITS ORDER DATED 31.10.2012 IN ITA NOS.383 TO 3 89 OF 2008 FOR THE REASONS DISCUSSED THEREIN. NOTHING CONTRARY HA S BEEN BROUGHT TO OUR KNOWLEDGE ON BEHALF OF REVENUE IN TH IS REGARD. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASONIN G, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDING OF CIT(A), W HO HAS ALLOWED THE APPEAL OF ASSESSEE IN RESPECT OF DISALLOWANCE O F 11,14,083/- MADE BY ASSESSING OFFICER IN VIEW OF THE PROVISIONS OF SECTION 40A(3). WE UPHOLD THE SAME. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 28 TH OF APRIL, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 28 TH APRIL, 2014 GCVSR 5 COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A)-II, NASHIK 4) THE CIT-II, NASHIK 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE