SHRI MOHAN LAL KANDELWAL, Jaipur V. ACIT, Jaipur

ITA 712/JPR/2011

• Counselvise Citation: 71223114 RSA 2011
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 03-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R K KHUTETA; SSH K L MOOLCHANDANI
• Keywords: Depreciation; Deemed to accrue or arise in india
• Section: 40A(3); 153A; 145

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SH. R.K. GUPTA, JUDICIAL MEMBER AND SH. N.L. KALRA, ACCOUNTANT MEMBER I.T.A. NOS.712 TO 717 /JU/2011 ASSESSMENT YEARS : 2003-04 TO 2007-08 PAN:AGZPK3084D SHRI MOHAN LAL KHANDELWAL, VS. ASSTT. COMMR. OF INC OME-TAX, JAIPUR. CENTAL CIRCLE-1, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY:S/SH. K.L. MOOLCHANDANI & R.K. KHU TETA RESPONDENT BY:SH. SUNIL MATHUR, DR DATE OF HEARING :06/01/2012 DATE OF PRONOUNCEMENT:20.01.2012 ORDER PER N.L. KALRA, AM THE ASSESSEE HAS FILED THESE APPEALS AGAINST THE R ESPECTIVE ORDERS OF LD. CIT(A) CENTRAL, JAIPUR. SINCE THE ISSUES INVOLVED I N THESE APPEALS ARE COMMON, THEREFORE, THESE ARE BEING DISPOSED OF BY SINGLE CO NSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. ITA NO. 712/JP/2011 ASSESSMENT YEAR 2002-03 THE FIRST GRIEVANCE OF THE ASSESSEE IS THAT THE LD . CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE TO THE EXTENT OF RS.26, 200/- UNDER SECTION 40A(3) OF THE INCOME-TAX ACT, 1961 ( IN SHORT, THE ACT). 2 2.1. THE AO DURING THE COURSE OF ASSESSMENT PROCEED INGS NOTICED THAT ASSESSEEE HAS PAID AN AMOUNT OF RS.6,50,000/- IN CASH ON 20.0 8.2001 FOR PURCHASE OF PLOT FROM SHRI BRAHM KUMAR SHARMA. THE ASSESSEE WAS ASKE D TO EXPLAIN THE REASONS FOR CASH PAYMENT AND WAS ALSO INFORMED THAT AS TO W HY THE PROVISIONS OF SECTION 40A(3) MIGHT NOT BE INVOKED. THE ASSESSEE FILED REP LY VIDE LETTER DATED 17.03.2009. IN THIS REPLY, IT WAS STATED THAT THE SELLER DEMAND ED CASH BECAUSE THE ASSESSEE WAS NEW TO HIM. THE SELLER REFUSED TO ACCEPT PAYMENT BY WAY OF CROSSED-CHEQUE. BECAUSE OF CASH PAYMENT THE ASSESSEE GOT HANDSOME DISCOUNT. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS NOT MAINTAINED REGU LAR BOOKS OF ACCOUNT. THEREFORE, PROVISIONS OF SECTION 40A(3) ARE NOT APPLICABLE. THE REPLY OF THE ASSESSEE WAS HELD AS NOT CONVINCING BY THE AO AND, THEREFORE, HE MADE AN ADDITION OF RS.1,30,000/- BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. 3. BEFORE THE LD, CIT(A), IT WAS SUBMITTED THAT THE ASSESSEE HAS MADE CASH PAYMENT OF RS.1,31,000/- AND NOT RS.6,50,000/- ADO PTED BY THE ASSESSEE. A SUM OF RS. 5,20,000/- WAS PAID THROUGH CHEQUE NO.811902 OU T OF LOAN TAKEN FROM PNB. COPIES OF RELEVANT LEDGER ACCOUNTS WERE ALSO FILED. BEFORE THE LD. CIT(A), THE ASSESSEE RELIED ON THE PROVISO TO SECTION 40A(3) OF THE ACT. THE PROVISO STATES THAT NO DISALLOWANCE IS TO BE MADE IN SUCH CIRCUMSTANCES , AS MAY BE PRESCRIBED HAVING REGARD TO THE NATURE AND EXTENT OF BANKING FACILITI ES AVAILABLE, CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS. ACC ORDING TO THE LD. CIT(A), THE 3 WORD HAVING REGARD TO NATURE AND EXTENT OF BANKING FACILITIES AVAILABLE ETC. ARE WITH REFERENCE TO SUCH CIRCUMSTANCES, AS MAY BE PRE SCRIBED. THE CIRCUMSTANCES HAS BEEN PRESCRIBED UNDER RULE 6DD. THE ASSESSEE HAS N OT BEEN ABLE TO ESTABLISH THE PARTICULARS OF SUB CLAUSE OF RULE 6DD TO SHOW THAT THE CASE IS COVERED UNDER EXEMPTION. ACCORDINGLY, THE LD. CIT(A) CONFIRMED T HE ADDITION OF RS.26,200/-. 4. WE HAVE HEARD BOTH THE PARTIES. THE PROPERTY SO PURCHASED HAS NOT BEEN SOLD AND THE SAME IS BEING REFLECTED IN THE CLOSING STOC K. MORREOVER, IN THE INSTANT CASE, THE ASSESSEE IS NOT MAINTAINING THE BOOKS OF ACCOUN T. THE PROFIT IS TO BE COMPUTED AS PER PROVISIOS OF SECTION 145 OF THE ACT. IN CASE , THE BOOKS OF ACCOUNT ARE REJECTED THEN THE PROVISIONS OF SECTION 40A(3) ARE NOT APPLICABLE. WHILE DECIDING THE APPEAL IN THE CASE OF SHRI SHANKAR LAL KHANDELW AL, JAIPUR VS. THE ACIT, IN ITA NO.392/JP/2011 FOR THE ASSESSMENT YEAR 2008-09, DATED 12.08.2011, WE HAVE HELD THAT NO DISALLOWANCE IS TO BE MADE IN CASE TH E BOOKS OF ACCOUNT ARE REJECTED. FOR THIS PROPOSITION, RELIANCE WAS PLACED ON THE DE CISION OF THE JURISDICTIOAL HIGH COURT IN THE CASE OF CIT VS. G.K. CONTRACTORS, 19 D TR 305. WE, THEREFORE, HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.26,200/- THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 5. IN THE NEXT GROUND OF APPEAL, THE ASSESSEE CONTE NDED THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.40,855/- OUT OF TOTAL ADDITION OF RS.68,090/-. 4 THE ASSESSEE HAS SHOWN INCOME FROM THE RUNNING OF T AXIS. THE AO HAS DISALLOWED 1/3 RD OUT OF PETROL EXPENSES. THE DEPRECIATION WAS DISAL LOWED BECAUSE SUCH BUSINESS WAS NOT SHOWN IN THE ORIGINAL RETURN. 5.1. THE LD. CIT(A) HAS REDUCED THE ADDITION OUT OF PETROL AND DIESEL EXPENSES TO RS.40,855/- AS AGAINST RS.68,090/- MADE BY THE AO. THE LD. CIT(A) RESTRICTED THE CLAIM OF DEPRECIATION UPTO NET PROFIT FROM TAXI BUS INESS TO RS.55,366/-. THE ASSESSEE IS AGGRIEVED AGAINST THE FINDINGS OF THE LD. CIT(A) AND IS NOW IN APPEAL BEFORE THIS BENCH. 6. WE HAVE HEARD BOTH THE PARTIES. THE ABOVE REFERR ED ISSUE HAS BEEN CONSIDERED BY US IN THE CASE OF SHRI SHANKAR LAL KH ANDELWAL, JAIPUR VS. ACIT (SUPRA). IN THAT CASE, WE HAVE HELD THAT IN CASE TH E INCOME IS BEING TAXED UNDER SECTION 153A THEN THE ASSESSEE CAN AGITATE THE ISSU E. THE BOMBAY BENCH OF ITAT IN THE CASE OF DCIT VS. EVERSMILE CONSTRUCTION PVT. LTD. (ITAT ON LINE.ORG) HAS HELD THAT ASSESSMENT MADE EARLIER AND DISALLOWANCE MADE AND ACCEPTED BY THE ASSSESSEE CAN BE AGITATED, IN CASE THE SAME ADDITIO NS ARE MADE, WHEN FRESH ASSESSMENT U/S 153A IS MADE. RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. SUN ENGINEERING W ORKS P. LTD., 198 ITR 297 AND IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT, ( 2006) 284 ITR 323. IT IS NOWHERE MENTIONED THAT ASSESSMENT U/S 153A IS ONLY FOR THE BENEFIT OF THE REVENUE. ONCE 5 FRESH ASSESSMENT IS MADE THEN THE ASSESSEE CAN MAKE CLAIM AGAINST INCOME WHICH IS NOW BEING INCLUDED AND THE ASSESSMENT MADE U/S 1 53A OF THE ACT. HENCE, WE HOLD THAT THE ASSESSEE IS ENTITLED FOR THE CLAIM OF DEPRECIATION. 6.1. IN THE INSTANT CASE, THE ASSESSEE HAS SHOWN IN COME FROM BUSINESS OR PROFESSION AT RS.1,07,626/-. THE ASSESSEE HAS CLAI MED DEPRECIATION OF RS.2,78,736/-. IT MEANS THAT THE ASSESSEE HAS CLAIM ED LOSS OF RS.1,71,000/-. THE ASSESSEE HAS NOT MAINTINED BOOKS OF ACCOUNT. THEREF ORE, THE RECEIPTS ARE NOT AT ALL VERIFIABLE. IN RESPECT OF GOODS CARRIAGE BUSINESS, THERE IS PROVISION OF ESTIMATING THE DEEMED INCOME. WE, THEREFORE, FEEL THERE CANNOT BE A NET LOSS EVEN AFTER DEPRECIATION. WE HAVE ALREADY HELD IN THE CASE OF SH. SHANAKER LAL KHANDELWAL VS. ACIT (SUPRA) THAT DEPRECIATION IS ALLOWABLE WHE N INCOME IS INCLUDED WHILE MAKING ASSESSMENT UNDER SECTION 153A. WE, THEREFORE , DIRECT THE AO TO ALLOW DEPRECIATION. THIS GROUND OF APPEAL IS ALLOWED. 7. ITA NO.713/JP/2011- ASSESSMENT YEAR 2003-04 THE ONLY GRIEVANCE OF THE ASSESSEE IS AGAINST DISA LLOWANCE OF PETROL AND DIESEL EXPENSES AND DISALLOWANCE OF DEPRECIATION. T HE ASSESSEE HAS SHOWN RECEIPTS OF RS.3,13,884/- AFTER CLAIMING ALL THE EXPENSES EX CEPT DEPRECIATION. THE ASSESSEE HAS SHOWN NET PROFIT OF RS.54804/-. FOLLOWING OUR F INDINGS FOR THE ASSESSMENT YEAR 6 2002-03 GIVEN HEREINABOVE, WE HOLD THAT THE ASSESSE E WILL BE ENTITLED TO THE CLAIM OF DEPRECIATION. THIS GROUND OF APPEAL OF THE ASSES SEE IS ALLOWED. 8. ITA NO.714/JP/2011 ASSESSMENT YEAR 2004-05 THE FIRST AND SECOND GROUNDS OF APPEAL ARE AGAINST THE DISALLOWANCE OF RS.23,094/- CONFIRMED BY THE LD. CIT(A) OUT OF TAXI S EXPENSES AND RESTRICTING THE CLAIM OF DEPRECIATION UPTO THE NET PROFIT FROM TAXI BUSINESS TO RS.46,689/-. FOLLOWING OUR FINDINGS GIVEN FOR THE ASSESSMENT YE AR 2002-03, WE HOLD THAT THE ASSESSEE WILL BE ENTITLED TO THE CLAIM OF DEPRECIAT ION. THESE GROUNDS OF APPEAL ARE ALALOWED. 9. THE THIRD GRIEVANCE OF THE ASSESSEE IS AGAINST C ONFIRMING THE ADDITION OF RS.20,000/- UNDER SECTION 40A(3) OF THE ACT. THIS I SSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE WHILE DECIDING THE APPEAL FOR THE A SSESSMENT YEAR 2002-03. FOLLOWING THAT ORDER, WE HOLD THAT THE LD. CIT(A) W AS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS.20,000/- UNDER SECTION 40A(3 ) OF THE ACT. 10. THE FOURTH GRIEVANCE OF THE ASSESSEE IS THAT TH E LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.88,105/- BY DISALLOW ING THE EXPENSES DEBITED UNDER CONSTRUCTION EXPENSES AND WORK-IN-PROGRESS EXPENSES AS AGAINST DISALLOWANCE OF RS.2,20,264/- MADE BY THE AO. THIS ISSUE HAS BEEN CONSIDERED BY US WHILE DECIDING THE CASE OF SHRI SHANKAR LAL KHANDELWAL, J AIPUR VS. ACIT, IN ITA 7 NO.392/JP/2011 FOR THE A.Y. 2008-09 (SUPRA). AT PAG E 72 OF THE ORDER DATED 12 TH AUGUST, 2011, WE HAVE HELD THAT DISALLOWANCE SHOULD BE MADE TO THE EXTENT OF 1% OF THE TURNOVER. AS PER ORDER OF THE AO, THE TURNOV ER IS TO THE EXTENT OF RS.10.21 LACS. THEREFORE, THE DISALLOWANCE IS TO BE RESTRICT ED TO RS.10,210/-. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 11. ITA NO. 715/JP/2011 ASSESSMENT YEAR 2005-06 THE FIRST AND SECOND GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.57,139/- OUT OF TOTAL ADDITION OF RS.95,231/- MADE BY THE AO AND RESTRICTING THE CLAIM OF DEPRECI ATION TO THE EXTENT OF NET PROFIT FROM TAXI BUSINESS AT RS.5,399/-. 12. THE ASSESSEE IS HAVING ONLY ONE TAXI. THEREFORE , FOLLOWING OUR FINDINGS GIVEN FOR THE ASSESSMENT YEAR 2002-03, WE DIRECT T HE ASSESSING OFFICER TO ALLOW THE CLAIM OF DEPRECIATION. 13. THE THIRD GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.64,918/- OUT OF EXPEN SES DEBITED UNDER CONSTRUCTION EXPENSES AND WORK-IN-PROGRESS EXPENSES AS AGAINST D ISALLOWANCE OF RS.1,62,295/- MADE BY THE AO. THE TOTAL CONSTRUCTION EXPENSES AR E TO THE EXTENT OF RS.3,24,590/- . LOOKING TO OUR FINDINGS IN THE CASE OF THE ASSESS EE FOR EARLIER YEARS, WE FEEL IT WILL 8 BE FAIR AND REASONABLE TO DISALLOW THE EXPENSES AT RS.4,000/-. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 14. ITA NO.716/JP/2011 ASSESSMENT YEAR 2006-07 THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.19,612/- OUT OF TOTAL ADDITION OF RS.32,688/- AS MADE BY THE AO. 14.1. THE ASSESSEE HAS SHOWN RECEIPTS AT RS.2,14,59 0/- AND THE EXPENSES DEBITED ARE TO THE EXTENT OF RS.1,82,881/-. THE INCOME FROM TAXI HAS BEEN SHOWN AT RS.31,709/-. THERE IS NO CLAIM OF DEPRECIATION. SIN CE THE ASSESSEE IS NOT MAINTAINING BOOKS OF ACCOUNT AND HAS NOT CLAIMED DE PRECIATION DURING THE YEAR, WE, THEREFORE FEEL, IT WILL BE FAIR AND REASONABLE TO ESTIMATE THE INCOME FROM TOUR AND TRAVELS AT RS.35000/- AS AGAINST RS.31709/- SH OWN BY THE ASSESSEE. THIS APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 15. ITA NO. 717/JP/2011 ASSESSMENT YEAR 2008-09 THE ONLY GREIVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE TO THE EXTENT OF RS.16 ,676/- OUT OF TOTAL ADDITION OF RS.27,793/- AS MADE BY THE AO. 9 16. IN THIS YEAR, THE ASSESSEE HAS SHOWN GROSS RECE IPTS AT RS.1,38,436/-. THE EXPENSES CLAIMED ARE OF RS.83,380/-. LOOKING TO TH E RECEIPTS AND EXPENSES, WE FEEL THAT SUCH RECEIPTS AND EXPENSES ARE REASONABLE AND THERE WAS NO CASE OF MAKING ANY DISALLOWANCE. THE DISALLOWANCE CONFIRMED BY THE LD. CIT(A) IS DELETED. ACCORDINGLY, THIS APPEAL OF THE ASSESSEE I S ALLOWED. 17. IN THE RESULT, THE APPEALS IN ITA NOS.712 TO 71 6/JP/2011 ARE PARTLY ALLOWED AND APPEAL IN ITA NO.717/JP-2011 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 /01/201 1 SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:20/01/2012 /SKR/ COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEESH. MOHAN LAL KHANDELWAL, JAIPUR 2. THE ACIT, CC-1, JAIAPUR. 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, ASR 6. GUARD FILE ITA NOS. 712 TO 717/JP/2011