Sh. Sant Kumar Vashishth, Panchkula V. ITO, Panchkula

ITA 652/CHANDI/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5326 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 24-09-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 30-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Presumptive income; Deemed to accrue or arise in india
• Section: 44AD; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B , CHANDIGARH , !'# $' % & , '( BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO.652/CHD/2016 / ASSESSMENT YEAR : 2011-12 SH.SANT KUMAR VASHISHTH, H.NO.913, SECTOR-7, PANCHKULA. THE INCOME TAX OFFICER, WARD-1, PANCHKULA. ./PAN NO: AACZPV1297M /ASSESSEE BY : SHRI SHASHANK GUPTA, CA PROXY FOR PARIKSHIT AGGARWAL, CA / REVENUE BY : SHRI MANJIT SINGH, SR.DR ! /DATE OF HEARING : 28.01.2019 '#$% /DATE OF PRONOUNCEMENT: 28.01.2019 ') /ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), PANHKULA (IN SHORT CIT(A) DATED 26.2.2 016 PASSED U/S 250(6) OF THE INCOME TAX AT, 1961 (HEREI NAFTER REFERRED TO AS ACT). 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THAT ON THE FACTS, CIRCUMSTANCES OF THE CASE AND IN LAW, THE WORTHY CIT(A) THROUGH HIS ORDER DATED 26.02.2016 HAS ERRED IN PASSING THAT ORDER IN CONTRAVENTION OF THE PROVISIONS OF S. 250(6) OF THE INCOME TAX ACT, 1961. 2. THAT ON THE LAW, FACTS AND CIRCUMSTANCES OF THE CASE, THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREIN HE HAD MADE ADDITION OF ITA NO.652/CHD/2016 A.Y.2011-12 2 RS.17,27,000/- BY ERRONEOUSLY HOLDING THAT THE CASH DEPOSITS (ON VARIOUS DATES) IN THE SAVING BANK ACCOUNT OF THE APPELLANT MAINTAINED WITH SOUTH INDIAN BANK, SECTOR-20, PANCHKULA ARE FROM UNEXPLAINED SOURCES AND IS DEEMED INCOME OF THE APPELLANT U/S 68 OF THE ACT EVEN WHEN THE SAID DEPOSITS WERE OUT OF EXPLAINED SOURCES. 3. THAT ON THE LAW, FACTS, CIRCUMSTANCES OF THE CAS E AND IN LAW, THE WORTHY CIT(A) HAS ERRED IN CONFIRMI NG THE ACTION OF LD. AO WHEREIN HE HAD MADE ADDITION O F RS.20,50,000/-BYERRONEOUSLYDISALLOWINGTHECLAIM OF CONSTRUCTION/REPAIR 85 RENOVATION EXPENSE INCURRED BY THE APPELLANT AND CLAIMED AS COST IN RESPECT OF H.NO.39, SEC 2, PANCHKULA WHILE COMPUTING THE PROFIT THERE-FROM. 4. THAT ON THE LAW, FACTS, CIRCUMSTANCES OF THE CAS E AND IN LAW, THE WORTHY CIT(A) HAS ERRED IN CONFIRMI NG THE ACTION OF LD. AO WHERE IN HE HAD MADE ADDITION OF RS.16,00,000/-BY ERRONEOUSLY DISALLOWING THE CLAIM OF CONSTRUCTION/REPAIR & RENOVATION EXPENSE INCURRED BY THE APPELLANT AND CLAIMED AS COST IN RESPECT OF H.NO.1475-P, SEC15, PANCHKULA WHILE COMPUTING THE PROFIT THERE-FROM. 5. THAT ON THE FACTS, CIRCUMSTANCES OF THE CASE AND IN LAW, THE WORTHY CIT(A) HAS ERRED IN HOLDING THAT THE SURPLUS FROM SALE OF H.NO. 39, SEC 2, PANCHKULA IS TO BE ASSESSED IN THE HANDS OF THE APPELLANT EVEN WHEN THE APPELLANT WAS ONLY A GPA HOLDER AND THEREFORE THE INCOME ASSESSED ON ACCOUNT OF SALE OF THIS HOUSE IN THE HANDS OF THE APPELLANT DESERVES TO BE DELETED. 6. THAT ON THE FACTS, CIRCUMSTANCES OF THE CASE AND IN LAW, THE WORTHY CIT(A) HAS ERRED IN HOLDING THAT THE SURPLUS FROM SALE OF H.NO. 1475-P, SEC 15, PANCHKULA IS TO BE ASSESSED IN THE HANDS OF THE APPELLANT EVE N WHEN THE APPELLANT WAS ONLY A GPA HOLDER AND THEREFORE THE INCOME ASSESSED ON ACCOUNT OF SALE OF THIS HOUSE IN THE HANDS OF THE APPELLANT DESERVES TO BE DELETED. 7. THAT THE APPELLANT CRAVES LEAVE FOR AN Y ADDITION, DELETION OR AMENDMENT IN THE GROUNDS OF APPEAL ON OR BEFORE THE DISPOSAL OF THE SAME. 3. GROUND NOS.1 AND 7 ARE GENERAL IN NATURE AND NEE D NO ADJUDICATION. ITA NO.652/CHD/2016 A.Y.2011-12 3 4. GROUND NO.2 RELATES TO THE ADDITION MADE TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF CASH FOUND DEPOSITED IN BANK OF THE ASSESSEE REMAINING UNEXPLAINED. 5. BRIEFLY FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSING OFFICER (IN SHORT REFERRED TO AS AO), N OTED THAT THERE WERE CASH DEPOSITS TO THE EXTENT OF RS.17,27, 000/- IN THE SAVING BANK ACCOUNT OF THE ASSESSEE WITH SOUTH INDIAN BANK LTD. ON DIFFERENT DATES. ON CONFRONTING THE SA ME TO THE ASSESSEE AND ASKING HIM TO EXPLAIN THE SOURCE OF TH E SAME, THE ASSESSEE CONTENDED THAT THEY WERE OUT OF HIS CI VIL CONSTRUCTION RECEIPTS. THE AO DID NOT ACCEPT THIS EXPLANATION OF THE ASSESSEE, SINCE THE ASSESSEE COU LD NOT SUBSTANTIATE WITH EVIDENCE THE SOURCE OF CASH RECEI VED. HE THEREFORE TREATED THE CASH DEPOSITS AS UNEXPLAINED AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 6. BEFORE THE LD.CIT(A) THE ASSESSEE REITERATED HIS CONTENTION THAT THE CASH DEPOSITS WERE ATTRIBUTABLE TO THE CIVIL CONSTRUCTION BUSINESS, INCOME FROM WHICH HAD BEEN RETURNED TO TAX ON PRESUMPTIVE BASIS U/S 44AD OF TH E ACT. THE ASSESSEE FILED HIS CASH BOOK AS WELL OTHER BOOK S OF ACCOUNT INCLUDING RELEVANT BANK ACCOUNT SHOWING NAR RATION OF EACH AND EVERY DEBIT ENTRY IN IT. THE LD.CIT(A) REJECTED THE CONTENTION OF THE ASSESSEE HOLDING THAT THE ASS ESSEE HAD FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT OF HIS CO NTENTION THAT HE WAS CARRYING OUT CIVIL CONSTRUCTION BUSINES S. RELEVANT FINDINGS OF THE CIT(A) AT PARA 5.2 OF HIS ORDER ARE AS UNDER: ITA NO.652/CHD/2016 A.Y.2011-12 4 5.2 I HAVE GONE THROUGH THE FACTS OF THE CASE AND W RITTEN SUBMISSION FILED BY THE APPELLANT. THE APPELLANT HAS DECLARED NET PROFIT AT 8% ON CIVIL CONSTRUCTION BUS INESS UNDER THE PROVISIONS OF SECTION 44AD. THE AO ON FIND ING THAT APPELLANT WAS NOT ABLE TO PRODUCE ANY EVIDENCE IN FO RM OF CONTRACT OR BILL/VOUCHER IN RESPECT OF CLAIMED CIVIL CO NTRACT RECEIPT FOUND THE CASH DEPOSITS OF RS.17,27,000/- IN TH E SAVING BANK ACCOUNTS AS UNEXPLAINED AND ADDED TO TH E TAXABLE INCOME. ALTHOUGH THE APPELLANT HAS OPTED TO DECLARE INCOME ON PRESUMPTIVE BASIS UNDER THE PROVISIONS OF SECTION 44AD BUT THE APPELLANT HAS NOT BEEN ABLE TO JUSTIFY ANY EVIDENCE REGARDING CONDUCT OF CIVIL CONSTRUCTION BUSINESS. THE SECTION 44AD IS APPLICABLE FOR THE ELIGI BLE PERSON ENGAGED IN ELIGIBLE BUSINESS. THE ELIGIBLE BUSINESS HAS BEEN EXPLAINED IN THE EXPLANATION BELO W SUB SECTION (6) OF SECTION 44AD OF THE ACT. THE APPELLA NT HAS NOT PROVIDED ANY EVIDENCE IN SUPPORT OF ITS ELIGIBLE BU SINESS. HERE, IT MAY ALSO BE NOTED THAT THE INFORMATION REGARDING TH E CASH DEPOSITS IN SAVING BANK ACCOUNT WAS RECEIVED THROUG H AIR AND EVEN SUCH ACCOUNT OR ANY INTEREST EARNED THEREON WA S NOT DECLARED IN THE RETURN OF INCOME. THE AO HAS NOWHERE ACCEPTED THE CIVIL CONSTRUCTION BUSINESS OR THE GROSS RECEIP T SHOWN BY THE APPELLANT. ALTHOUGH AS PER PROVISION OF SECTION 44AD, THE APPELLANT IS HOT REQUIRED TO MAINTAIN ANY BOOKS OF A CCOUNT, HOWEVER, THE APPELLANT PRODUCED THE COMPUTERIZED BOO KS OF ACCOUNT IN FORM OF CASH BOOK AND LEDGER. ON PERUSAL OF CASH BOOK AND LEDGER, THE ONLY ENTRIES RECORDED IN CASH BO OK ARE IN FORM OF CASH RECEIVED AGAINST CIVIL WORK ON VARIOUS DATES. HOWEVER, THERE IS NO NARRATION ABOUT THE PERSON FRO M WHOM SUCH CASH WAS RECEIVED AND THE PURPOSE OF THE WORK DONE. EVEN, THE APPELLANT HAS NOT PRODUCED ANY EVIDENCE IN FORM OF EITHER ANY CONTRACT, AGREEMENT OR ANY BILL FOR UNDER TAKING THE CIVIL CONSTRUCTION WORK ON BEHALF OF THIRD PARTIES. IN THE ABSENCE OF ANY EVIDENCE TO JUSTIFY THE CIVIL CONSTRUCTION WO RK CARRIED ON BY THE APPELLANT, I AM OF THE VIEW THAT THE APPELLANT WAS NOT ENGAGED IN ELIGIBLE BUSINESS AND THUS, THE PROVISIONS OF SECTION 44AD WERE NOT APPLICABLE. THE APPELLANT WAS NO T ABLE TO JUSTIFY THE SOURCE OF CASH DEPOSITS IN ITS UNDIS CLOSED SAVING BANK ACCOUNT. THEREFORE, I DO NOT FIND ANY REASON T O DIFFER WITH THE FINDING OF THE AO IN TREATING THE CASH DEPOSITS O F RS.17,27,000/- AS UNEXPLAINED CASH U/S 68 OF THE ACT. FURTHER, THE APPELLANT HAS RELIED ON THE JUDGMENT O F HON'BLE P&H HIGH COURT IN THE CASE OF SURINDER PAL ANAND (SU PRA) WHERE THE FINDINGS OF CIT(A) AND TRIBUNAL WERE UPHE LD BY HON'BLE HIGH COURT. THE FACTS OF THAT CASE SHOW THA T THERE WAS NO FINDING THAT THE APPELLATE AUTHORITIES ACCEPTED TH AT THE ASSESSEE WAS ENGAGED IN THE ELIGIBLE BUSINESS. HOWEVE R, THE FACTS OF THE INSTANT CASE ARE DISTINGUISHABLE ON TH E GROUND THAT IN THE PRESENT CASE THE APPELLANT HAS NOT BEEN ABLE TO PROVE BY ANY EVIDENCE THAT HE WAS ENGAGED IN THE ELIGIBLE BUS INESS WHICH IS APPLICABLE FOR THE PROVISIONS OF SECTION 44A D OF THE ACT. THEREFORE, THE ADDITION OF RS.17,27,000/- IS CON FIRMED. THUS, THIS GROUND OF APPEAL IS DISMISSED. ITA NO.652/CHD/2016 A.Y.2011-12 5 7. DURING THE COURSE OF HEARING BEFORE US, THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT THE FINDINGS OF THE LOW ER AUTHORITIES THAT THE ASSESSEE HAD FAILED TO ESTABLI SH THAT HE WAS CARRYING OUT CIVIL CONSTRUCTION BUSINESS TO WH ICH THE CASH DEPOSITS WERE ATTRIBUTABLE, WERE CONTRARY TO T HE FACTS OF THE CASE. THE LD.COUNSEL FOR THE ASSESSEE CONTEN DED THAT THE REVENUE AUTHORITIES HAD IN FACT ACCEPTED THE F ACT OF ASSESSEE CARRYING OUT CIVIL CONSTRUCTION BUSINESS B Y ACCEPTING PROFITS RETURNED FROM THE SAME ON PRESUMP TIVE BASIS U/S 44AD OF THE ACT AND ALSO BY INITIATING PE NALTY U/S 271A &B OF THE ACT FOR NON MAINTENANCE OF BOOKS OF ACCOUNTS RELATING TO THE SAID BUSINESS AND FOR NOT GETTING THE SAME AUDITED. LD. COUNSEL FOR ASSESSEE POINTED OUT FROM PARA 3 &4 OF THE ASSESSMENT ORDER THAT THE A.O. HAD NOTED THAT THE ASSESSEE WAS DOING BUSINESS OF SALE AND PU RCHASE OF PROPERTY IN ADDITION TO CIVIL CONTRACTOR AND HAD FURTHER STATED THAT THE ASSESSEE WAS HAVING GROSS RECEIPTS IN RESPECT OF CIVIL CONSTRUCTION BUSINESS TO THE TUNE OF RS.40,50,000/- AND HIS TOTAL TURNOVER BEING RS.2,85,00,000/- HE WAS REQUIRED TO MAINTAIN COMPL ETE BOOKS OF ACCOUNT AS PER SECTION 44AA OF THE ACT AND GET THEM AUDITED U/S 44AB OF THE ACT AND HAVING FAILED TO DO SO PENALTY PROCEEDINGS U/S 271A AND 271B OF THE ACT WE RE INITIATED. THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT IN THE SAME ORDER AFTER ACCEPTING THAT THE ASSESSEE WA S CARRYING ON THE BUSINESS AS CIVIL CONTRACTOR AND I NITIATING PENALTY PROCEEDINGS U/S 271 A &B OF THE ACT FOR FAI LING TO MAINTAIN COMPLETE BOOKS OF ACCOUNT IN THIS REGARD A ND ITA NO.652/CHD/2016 A.Y.2011-12 6 GETTING THEM AUDITED, THE A.O. HAD PROCEEDED TO HOL D THAT THE CASH DEPOSITED IN BANK COULD NOT BE ATTRIBUTED TO THE CIVIL CONSTRUCTION BUSINESS OF THE ASSESSEE IN THE ABSENCE OF ANY EVIDENCE FILED IN THIS REGARD. THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT THE A.O., THEREFORE, WAS BL OWING HOT AND COLD AT THE SAME TIME AND GIVING CONTRARY FINDI NGS. HE THEREFORE, CONTENDED THAT THERE WAS NO REASON TO HO LD THE CASH DEPOSITS AS UNEXPLAINED. THE LD. COUNSEL FOR A SSESSEE FURTHER SUBMITTED THAT UNDER THE PROVISIONS OF SECT ION 44AD THE ASSESSEE WAS NOT REQUIRED TO COMPULSORILY MAINT AIN ALL RECORDS AND, THEREFORE, NON PRODUCTION OF EVIDENCE OF CONSTRUCTION BUSINESS CARRIED ON BY HIM CANNOT BE T AKEN ADVERSELY AGAINST HIM. THE LD. COUNSEL FOR ASSESSE E RELIED UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIG H COURT IN THE CASE OF CIT VS. SUNDER PAL ANAND, 48 DTR 135 FOR THE PROPOSITION THAT WHERE NATURE OF BUSINESS, NET PROF IT AND TURNOVER WHEREFROM STANDS ACCEPTED, EXPLANATION OF SOURCE OF CASH DEPOSITS THAT THE SAME CAME OUT OF THE SAID BUSINESS SHOULD HAVE BEEN ACCEPTED. 8. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF THE CIT(A). 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE FIND MERIT IN T HE CONTENTION OF THE LD. COUNSEL FOR ASSESSEE. AS DEMO NSTRATED BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE US, THE REVENUE HAD ACCEPTED THE FACT THAT THE ASSESSEE WAS CARRYIN G OUT THE BUSINESS OF CIVIL CONSTRUCTION WHICH IS EVIDENT BY THE FACT ITA NO.652/CHD/2016 A.Y.2011-12 7 THAT INCOME RETURNED ON THE SAID BUSINESS ON PRESUM PTIVE BASIS U/S 44AD OF THE ACT WAS ACCEPTED BY THE REVE NUE AND FURTHER BY THE FACT THAT PENALTY WAS INITIATED FOR NOT MAINTAINING BOOKS RELATING TO THE SAID BUSINESS AND GETTING THEM AUDITED THOUGH THE TURNOVER FROM THE SAME EXCE EDED THE PRESCRIBED LIMIT. THE REVENUE HAS BEEN UNABLE T O CONTROVERT THE SAID FACTS. HAVING ACCEPTED NET PROF ITS RETURNED ON PRESUMPTIVE BASIS ON ACCOUNT OF THE SAI D BUSINESS ,IT CANNOT BE DENIED THAT THE REVENUE HAD ACCEPTED THAT THE ASSESSEE HAD TURNOVER FROM THE SAID BUSINE SS DECLARED TO THE EXTENT OF RS. 40,50,000/-. IN THE L IGHT OF THESE FACTS WE FAIL TO UNDERSTAND HOW THE REVENUE C AN NOW DENY THIS FACT BY STATING THAT THE ASSESSEE HAD FAI LED TO PRODUCE DOCUMENTARY EVIDENCE PROVING THAT IT WAS CA RRYING OUT CIVIL CONSTRUCTION BUSINESS, FOR ATTRIBUTING TH E SOURCE OF CASH DEPOSITED IN THE BANK TO THE TUNE OF RS.17,27, 000/- TO THE SAID BUSINESS. AS RIGHTLY CONTENDED BY THE LD. COUNSEL FOR ASSESSEE, SECTION 44AD OF THE ACT, WHICH LEVIES TAX ON PRESUMPTIVE BASIS ON THE CIVIL CONSTRUCTION BUSINES S, GIVES IMMUNITY TO PERSONS SHOWING INCOME UNDER THIS SECT ION, FROM MAINTAINING COMPLETE BOOKS OF ACCOUNT. THEREFO RE, WHEN THE ASSESSEE HAD RETURNED PROFITS FROM THE SAI D BUSINESS U/S 44AD AND THE SAME WAS ACCEPTED BY THE REVENUE ALSO, THE DENIAL OF BENEFIT OF CASH DEPOSIT ED IN BANK FROM THE SAID BUSINESS FOR LACK OF EVIDENCE OF CARR YING OUT THE BUSINESS IS UNWARRANTED, UNJUST AND AGAINST THE PROVISIONS OF LAW. WE THEREFORE HOLD THAT THE SOUR CE OF CASH DEPOSITS TO THE EXTENT OF RS.17,27,000/- STAND DULY ITA NO.652/CHD/2016 A.Y.2011-12 8 EXPLAINED FROM THE BUSINESS OF CIVIL CONSTRUCTION C ARRIED ON BY THE ASSESSEE. IN VIEW OF THE SAME, GROUND OF APP EAL NO.2 RAISED BY THE ASSESSEE STANDS ALLOWED. 10. GROUND OF APPEAL NOS.3 TO 6 RAISED BY THE ASSES SEE RELATE TO THE ISSUE OF COMPUTATION OF BUSINESS PROF ITS FROM THE BUSINESS OF PURCHASE AND SALE OF PROPERTY CARRI ED ON BY THE ASSESSEE. THE FACTS RELATING TO THE SAME ARE TH AT DURING ASSESSMENT PROCEEDINGS THE A.O. NOTED THAT THE ASSE SSEE HAD ENTERED INTO TRANSACTIONS OF PURCHASE AND SALE OF TWO PROPERTIES, PROFITS FROM WHICH HAD NOT BEEN DECLARE D IN THE RETURN OF INCOME. THE ASSESSEE THEREAFTER FURNISHED DETAILS OF THE PROFITS EARNED FROM THE SAME. THE A.O. NOTED FROM THE SAID DETAILS THAT THE ASSESSEE HAD CLAIMED EXPENDIT URE INCURRED ON CONSTRUCTION/REPAIR OF THE SAID PROPERT IES. IN THE ABSENCE OF ANY DETAILS OR EVIDENCE REGARDING TH E SAME, THE A.O. ALLOWED EXPENSES ONLY ON ACCOUNT OF MINOR REPAIRS AND THEREBY INCREASED THE PROFIT FROM THE SAID BUSI NESS OF THE ASSESSEE BY RS.20,50,000/- AND RS.16,00,000/-. 11. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT(A) WHO UPHELD THE ORDER OF THE A.O. 12. BEFORE US THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT THE ADDITION MADE IN THE IMPUGNED YEAR RELATED TO S ALE OF TWO PROPERTIES; 1) HOUSE NO.39, SECTOR 2, PANCHKULA SOLD FOR A CONSIDERATION OF RS.1.50 CRORES THROUGH GPA ON 5.4.2010 (PURCHASE PRICE OF WHICH WAS RS.1.05 CROR ES, ITA NO.652/CHD/2016 A.Y.2011-12 9 COST OF IMPROVEMENT INCURRED ON THE SAME RS.39,65,500/-, ALLOWED BY THE A.O. RS.2 LACS.). 2) HOUSE NO.1475P, SECTOR 15, PANCHKULA SOLD FOR A TOTAL CONSIDERATION OF RS.1.07 CRORES THROUGH GPA O N 27.10.2010 (PURCHASE PRICE OF WHICH RS.90 LACS CONSTRUCTION EXPENSES RS.16,50,000/- AND EXPENSES ALLOWED BY THE A.O. RS.1 LAC.) 13. THE LD. COUNSEL FOR ASSESSEE STATED THAT HIS CO NTENTION AGAINST THE ADDITION MADE WITH REGARD TO BOTH THE PROPERTIES WAS IDENTICAL. HE THEREAFTER STATED THAT HIS FIRST CONTENTION WAS THAT THE ASSESSEE WAS NOT THE PURCHA SER OF PROPERTY AND IT WAS IN FACT WAS HIS SON WHO WAS THE PURCHASER OF THE PROPERTY WHILE HE WAS ONLY A GPA H OLDER. THE LD. COUNSEL FOR ASSESSEE DREW OUR ATTENTION TO THE COPY OF AGREEMENT TO SELL IN FAVOUR OF THE SON AND GPA I N FAVOUR OF THE ASSESSEE ANNEXED IN PAPER BOOK PAGE NOS.22 T O 34. THE LD. COUNSEL FOR ASSESSEE FURTHER POINTED OUT TH AT THE PROPERTY WAS SOLD BY THE ASSESSEE AS A GPA HOLDER O N BEHALF OF HIS SON AND, THEREFORE, THERE WAS NO REASON FOR MAKING ANY ADDITION ON ACCOUNT OF PROFITS EARNED ON THE SA ME IN HIS HANDS. 14. THE LD. DR IN THIS REGARD DREW OUR ATTENTION TO THE FINDINGS OF THE LD.CIT(A) IN THIS REGARD DISMISSING THIS CONTENTION OF THE ASSESSEE BY POINTING THAT ADMITTE DLY THE PURCHASE AND SALE OF THESE PROPERTIES HAD BEEN CARR IED OUT BY THE ASSESSEE AS GPA HOLDER AND ENTIRE PAYMENTS F OR THE TRANSACTION AND SALE PROFITS HAD BEEN RECEIVED BY T HE ITA NO.652/CHD/2016 A.Y.2011-12 10 ASSESSEE IN HIS BANK ACCOUNT. THEREFORE, IT WAS CLE ARLY EVIDENT THAT IT WAS THE ASSESSEE WHO HAD VENTURED I NTO BUSINESS TRANSACTION OF PURCHASE AND SALE OF PROPER TIES TO EARN PROFITS AND IT WAS IMMATERIAL THAT THE SONS OF THE ASSESSEE WERE SHOWN AS OWNERS IN THE AGREEMENT TO S ELL. OUR ATTENTION WAS DRAWN TO THE FINDINGS OF THE LD.C IT(A) AT PARA 6.5 OF HIS ORDER AS UNDER: 6.5 I HAVE GONE THROUGH THE FACTS OF THE CASE, WRITTEN SUBMISSION FILED BY THE APPELLANT, REPORT O F THE AO AND REJOINDER FILED BY THE APPELLANT. IT IS NOT ED THAT THE APPELLANT CARRIED ON BUSINESS TRANSACTIONS IN T HE SALE/PURCHASE OF PROPERTIES AS EVIDENT FROM THREE TRANSACTIONS UNDERTAKEN DURING THE YEAR. THE BUSINE SS TRANSACTIONS WERE CARRIED OUT WITH A CO-OWNER SH. RAKESH GIRI. IT IS APPARENT THAT APPELLANT PURCHASE D THE PROPERTY THROUGH GPA OBTAINED FROM THE OWNER WHICH WAS LATER ON SOLD THROUGH GPA BY THE APPELLAN T TO THE THIRD PERSON. THE PAYMENTS FOR THE TRANSACTI ONS HAVE BEEN MADE AND SALE PROCEEDS HAVE BEEN RECEIVED BY THE APPELLANT WHICH IS REFLECTED IN ITS BANK ACCOUNTS. EVEN THOUGH HE WAS A GPA HOLDER BUT THE FACTS SHOW THAT IT IS THE APPELLANT WHO VENTURED IN TO BUSINESS TRANSACTION IN THE PURCHASE AND SALE OF PROPERTY TO EARN PROFIT. SO, IT IS IMMATERIAL ABOUT THE OWNERSHIP AND NAME OF SONS OF APPELLANT AND HIS CO- OWNER IN THE AGREEMENT TO SELL. AT THIS STAGE SUCH SUBMISSION MADE BY THE COUNSEL FOR THE APPELLANT IS ONLY TO DIVERT FROM THE REAL ISSUE OF TAXABLE PROFI T EARNED BY THE APPELLANT. 15. WE HAVE CONSIDERED THE CONTENTION OF THE ASSESS EE AND HAVE ALSO GONE THROUGH THE FINDINGS OF THE LD.CIT(A ) IN THIS REGARD. WE FIND NO REASON TO DISAGREE WITH THE LD.C IT(A). ADMITTEDLY THE PURCHASE AND SALE OF THE IMPUGNED PROPERTIES HAD BEEN CONDUCTED BY THE ASSESSEE AS A GPA HOLDER HAVING PAID AND RECEIVED CONSIDERATION FOR T HE PROPERTIES THROUGH BANK ACCOUNT. THEREFORE, AS RIGH TLY HELD BY THE CIT(A) IT WAS THE ASSESSEE WHO HAD ENTERED I NTO THESES TRANSACTIONS ONLY AND THE FACTS THAT HIS SON S WERE ITA NO.652/CHD/2016 A.Y.2011-12 11 SHOWN AS OWNERS IN THE AGREEMENT TO SELL THE PROPER TIES IS WHOLLY IMMATERIAL. THIS CONTENTION RAISED BY THE AS SESSEE IS, THEREFORE, DISMISSED. 16. THE NEXT CONTENTION RAISED BEFORE US WAS THAT T HE ASSESSEE BE ALLOWED CLAIM OF EXPENSES INCURRED ON THE REPAIR/CONSTRUCTION OF THESE PROPERTIES CARRIED OUT BY IT. THE LD COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSESSEE HAD INCURRED EXPENSES ON RENOVATION OF THE SAID PRO PERTIES TO THE TUNE OF RS.22,35,000/- AND RS.16,50,000/- RESPECTIVELY SINCE THE HOUSES PURCHASES WERE IN DIL APIDATED CONDITION HAVING BEEN CONSTRUCTED IN WAY BACK 1981- 82 AND, THEREFORE, AFTER RENOVATING THE SAME THEY WERE SOLD. THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT IT HAD MADE PAYMENTS ON ACCOUNT OF THE SAME THROUGH ACCOUNT PAY EE CHEQUES TO SHRI CHETANAYA VASHISHTH AND SHRI GOBIND VASHISHTH AND THEREFORE THERE WAS NO REASON TO DOUB T THE GENUINENESS OF THE SAME. THE LD. COUNSEL FOR ASSESS EE CONTENDED THAT THE ASSESSEE HAD TAKEN POSSESSION OF THE PROPERTY IN JANUARY, 2010 AFTER MAKING TOKEN ADVANC E PAYMENT OF RS.10 LACS AND HAD IMMEDIATELY STARTED IMPROVEMENT ACTIVITY AND FINALLY SOLD THE PROPERTY IN MAY 2010, AFTER A PERIOD OF FOUR MONTHS DURING WHICH TH E IMPROVEMENT EXERCISE WAS CARRIED OUT. THAT THE MAJ OR PORTION OF THIS COST RELATED TO THE PAYMENT MADE TO SHRI CHETANAYA VASHISHTH AND SHRI GOBIND VASHISHTH AS ST ATED ABOVE TO WHOM THE PAYMENTS HAD BEEN MADE BY WAY OF CHEQUES. THE LD. COUNSEL FOR ASSESSEE POINTED OUT T HAT THE ITA NO.652/CHD/2016 A.Y.2011-12 12 REVENUE AUTHORITIES HAD REJECTED THIS CLAIM OF THE ASSESSEE STATING THAT THE PERIOD OF PURCHASE OF PROPERTY AND SALE THEREOF WAS TOO SHORT FOR CARRYING OUT ANY CONSTRUC TION WORK. THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT T HE PERIOD WORKED OUT BY THE REVENUE WAS FROM THE DATE OF EXECUTION OF THE SALE DEED AT THE TIME OF PURCHASE AND AT THE TIME OF SALE, WHILE THE FACT WAS THAT THE ASSESSEE HAD TAKEN POSSESSION OF THE PROPERTY IN JANUARY, 2010 ITSELF ON MAKING A TOKEN ADVANCE PAYMENT AND HENCE, HAD ENOUG H TIME TO RECONSTRUCT THE PROPERTY. THE LD. COUNSEL F OR ASSESSEE FURTHER POINTED OUT THAT NO MAP OF APPROVA L FOR CONSTRUCTION CARRIED OUT WAS ALSO AVAILABLE SINCE T HE ASSESSEE WAS NOT REGISTERED OWNER OF THE PROPERTY A ND HAD NOT APPLIED FOR THE NECESSARY APPROVAL. IT WAS FURT HER CONTENDED THAT THE CONTRACTORS TO WHOM PAYMENTS WER E MADE COULD NOT BE PRODUCED BEFORE THE A.O. BUT ALL PARTICULARS RELATING TO THEM HAD BEEN FILED AND THE A.O. HAD NEVER ISSUED ANY SUMMONS TO THEM, THOUGH THE ASSESS EE HAD REQUESTED FOR SOME TIME TO PRODUCE THEM BUT WIT HOUT AFFORDING ANY OPPORTUNITY THE A.O. COMPLETED THE ASSESSMENT IN THIS CASE. THE LD. COUNSEL FOR ASSESS EE FURTHER CONTENDED THAT THESE PROPERTIES WERE CO-OWN ED ALONGWITH OTHER OWNERS, AND NO ADDITION HAD BEEN MA DE IN THE HANDS OF OTHER CO-OWNERS IN THIS REGARD. 17. THE LD. DR, ON THE OTHER HAND, DREW OUR ATTENTI ON TO THE FINDINGS OF THE LD.CIT(A) IN THIS REGARD. DRAWI NG OUR ATTENTION TO PARA 6.6 OF THE CIT(A)S ORDER THE LD. DR POINTED ITA NO.652/CHD/2016 A.Y.2011-12 13 OUT THAT THE CIT(A) HAD NOTED FROM THE AGREEMENT TO SELL DATED 5.4.2010, THAT THE SELLER WOULD HAND OVER THE HOUSE TO THE PURCHASER TEN DAYS BEFORE THE LAST DATE OF EXEC UTION OF SALE DEED AND IN THE LIGHT OF THE SAME, THE CONTENT ION OF THE ASSESSEE THAT IT HAD TAKEN POSSESSION OF THE PROPER TY IN THE MONTH OF JANUARY AT THE TIME OF MAKING ADVANCE PAYM ENT OF RS.10 LACS TO THE SELLER WITHOUT ANY SUPPORTING EVI DENCE IN THIS REGARD, WAS UNTENABLE AND UNACCEPTABLE. FURTHE R REGARDING THE FACT THAT THE PAYMENT WAS MADE BY CHE QUE TO THE CONTRACTORS AND THEY HAD ISSUED BILLS ALSO OF T HE WORK CARRIED OUT, LD. DR POINTED OUT FROM PARA 6.7 OF T HE CIT(A)S ORDER, THAT THE CHEQUES WERE ISSUED TO THE SE PARTIES ON 1.3.2011 WHICH WAS MUCH AFTER THE DATE OF SALE O F PROPERTY IN MAY, 2010 AND, THEREFORE, IT WAS CLEARL Y AN AFTERTHOUGHT. VIS-A-VIS THE CONTENTION OF THE ASSES SEE THAT IT WAS UNABLE TO PRODUCE THE CONTRACTORS, IT WAS POINT ED OUT THAT THE CONTRACTORS WERE RELATIVES OF THE ASSESSEE AND THERE WAS NO REASON WHY THE ASSESSEE COULD NOT HAVE PRODU CED THEM BEFORE THE AO. 18. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTI ES CAREFULLY AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ONLY ISSUE TO BE ADJUDICATE IS WHETHER T HE REVENUE AUTHORITIES HAVE RIGHTLY RESTRICTED THE ASS ESSEES CLAIM OF EXPENDITURE INCURRED ON CONSTRUCTION/RENOV ATION OF TWO PROPERTIES SOLD DURING THE YEAR IN THE COURSE O F CARRYING OUT ITS BUSINESS OF PURCHASE AND SALE TO RS.3 LACS AS AGAINST RS.38,85,000/- CLAIMED BY THE ASSESSEE. ITA NO.652/CHD/2016 A.Y.2011-12 14 19. HAVING GONE THROUGH THE ORDER OF THE LD.CIT(A) WE DO NOT FIND ANY REASON TO DISAGREE WITH HIM. AS RIGHTL Y POINTED OUT BY THE LD.CIT(A), THE ASSESSEES CLAIM OF HAVIN G INCURRED EXPENDITURE IS TOTALLY UNACCEPTABLE CONSIDERING THE FACT THAT THERE WAS NO SUFFICIENT TIME BETWEEN THE PURCHASE A ND SALE OF PROPERTY FOR THE ASSESSEE TO HAVE CARRIED OUT AN Y MAJOR REPAIR OR CONSTRUCTION WORK. ADMITTEDLY, THE PROPER TIES WERE SOLD WITHIN 10-15 DAYS FROM PURCHASE OF THE SAME AN D CLAIM OF THE ASSESSEE THAT HE HAD TAKEN POSSESSION OF PRO PERTY BY MAKING ADVANCE PAYMENT FOUR MONTHS BACK, IS AGAINST THE CONTENTS OF THE AGREEMENT TO SELL WHICH CATEGORICAL LY STATED THAT POSSESSION WOULD BE GIVEN TO THE ASSESSEE ONLY 10 DAYS PRIOR TO THE EXECUTION OF SALE. THE LD.COUNSEL FOR THE ASSESSEE HAS BEEN UNABLE TO CONTROVERT THE ABOVE FA CTS. MOREOVER THE ASSESSEE, WE FIND HAS BEEN UNABLE TO SUBSTANTIATE WITH EVIDENCE THE FACT OF HAVING INCUR RED RENOVATION EXPENSES. THE CLAIM OF THE ASSESSEE THAT IT HAD MADE PAYMENTS FOR THESE EXPENSES TO SH CHAITANYA AN D GOVIND VASHISHT, HAS BEEN RIGHTLY REJECTED BY THE L D.CIT(A) SINCE ADMITTEDLY THESE PAYMENTS WERE MADE MUCH AFTE R THE SALE OF THE PROPERTY, HAVING BEEN MADE ON 01-03-201 1 WHILE THE PROPERTY WERE SOLD IN MAY 2010, WHICH IS HIGHLY IMPROBABLE. THE CIT(A) HAS ALSO NOTED THAT THESE PE RSONS WERE SONS OF THE ASSESSEE AND THERE WAS NO REASON T HEREFORE WHY THEY COULD NOT BE PRODUCED FOR EXAMINATION. NON E OF THE ABOVE FACTS HAVE BEEN CONTROVERTED BY THE LD.COUNSE L FOR THE ASSESSEE. CONSIDERING THE ENTIRE FACTS RELATING TO THE ISSUE THEREFORE, WE AGREE WITH THE LD.CIT(A) THAT T HE ITA NO.652/CHD/2016 A.Y.2011-12 15 ASSESSEE HAD FAILED TO SUBSTANTIATE HIS CLAIM OF RE NOVATION EXPENSES INCURRED AND THE EXPLANATION OFFERED WAS O NLY A CONCOCTED STORY. 20. WE THEREFORE UPHOLD THE ORDER OF THE LD.CIT(A) REJECTING THE CLAIM OF THE ASSESSEE TO RENOVATION EXPENSES IN CURRED AMOUNTING TO RS.38,85,000/-. 21. GROUND OF APPEAL NOS.3 TO 6 RAISED BY THE ASSES SEE ARE, THEREFORE, DISMISSED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- # % $' & (SANJAY GARG ) ANNAPURNA GUPTA) /JUDICIAL MEMBER '( /ACCOUNTANT MEMBER *# /DATED: 28 TH JANUARY, 2019 * ' * #&' ()*) / COPY OF THE ORDER FORWARDED TO : 1. + / THE APPELLANT 2. ',+ / THE RESPONDENT 3. - ! / CIT 4. - ! ( )/ THE CIT(A) 5. )./' 0 , 0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35 / GUARD FILE #& ! / BY ORDER, 6 / ASSISTANT REGISTRAR