Income-tax Officer, V. Shri Shivaji Gangadhar Aher, Ahmednagar

ITA 778/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1887 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-11-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 16-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISH KUMAR SINGH
• Assessee Lawyers: S N DOSHI
• Keywords: Source of fund; Fair market value; Tax effect
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 442/PN/2014 %' ( ')( / ASSESSMENT YEAR : 2010-11 SHIVAJI GANGADHAR AHER, A/P-GHARGAON, TAL.-SANGAMNER, DISTT.-AHMEDNAGAR PAN : ANZPA1318D ....... / APPELLANT ' / V/S. INCOME TAX OFFICER, WARD 4, AHMEDNAGAR / RESPONDENT / ITA NO. 778/PN/2014 %' ( ')( / ASSESSMENT YEAR : 2010-11 INCOME TAX OFFICER, WARD 4, AHMEDNAGAR ....... / APPELLANT ' / V/S. SHRI SHIVAJI GANGADHAR AHER, A/P-GHARGAON, TAL.-SANGAMNER, DISTT.-AHMEDNAGAR PAN : ANZPA1318D / RESPONDENT ASSESSEE BY : SHRI S.N. DOSHI REVENUE BY : SHRI MANISH KUMAR SINGH / DATE OF HEARING : 18-02-2016 / DATE OF PRONOUNCEMENT : 16-05-2016 2 ITA NOS. 442 & 778/PN/2014, A.Y. 2010-11 * / ORDER PER VIKAS AWASTHY, JM : THE APPEAL OF THE ASSESSEE IN ITA NO. 442/PN/2014 IS DIR ECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)- IT/TP, PUNE DATED 28-01-2014 FOR THE ASSESSMENT YEAR 2010-11. TH E REVENUE HAS FILED CROSS APPEAL AGAINST THE AFORESAID ORDER OF COMMISSION ER OF INCOME TAX (APPEALS) IN ITA NO. 778/PN/2014. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MONEY-LANDING (HUN DEKARI) UNDER THE NAME AND STYLE OF M/S. HANUMAN HUNDEKARI AND RENTING OF UTENSILS. APART FROM THE ABOVE, THE ASSESSEE HAS INCOME FROM PROPERTIES, TRANSPORT BUSINESS AND BANK INTEREST. THE A SSESSEE FILED HIS RETURN OF INCOME FOR THE FIRST TIME IN ASSESSMENT YEAR 2010-11 ON 26-07-2011 DECLARING TOTAL INCOME OF ` 1,99,330/- AND AGRICULTURAL INCOME OF ` 3,05,000/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS AND ACCORDINGLY NOTICE U/S. 143(2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS ISSUED TO THE ASSESSEE ON 31-07-2012. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS DE CLARED OPENING BALANCE OF CAPITAL ACCOUNT AS ` 41,28,566/-. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE T HE OPENING CAPITAL BALANCE, AS PRIOR TO THE ASSESSMENT YEAR 2010-11 THE A SSESSEE HAS NEVER MAINTAINED BALANCE SHEET NOR ANY RETURN OF INCOME WAS FILED. AGAINST THE OPENING BALANCE OF ` 41,28,566/- AS ON 01-04-2009, NO CREDIT WAS AVAILABLE TO THE ASSESSEE. THE ASSESSING OFFICER MADE 3 ITA NOS. 442 & 778/PN/2014, A.Y. 2010-11 ADDITION OF ` 41,28,566/- BEING FICTITIOUS CREDIT IN THE CAPITAL BALANCE. APART FROM THE ABOVE, THE ASSESSING OFFICER MADE ADDITION O F ` 20,09,390/- AS UNEXPLAINED DEPOSIT IN SAVING BANK ACCOUNT . THE ASSESSING OFFICER ALSO MADE ADDITION ON ESTIMATION BASIS IN RESPECT OF HUNDEKARI COMMISSION ` 30,469/-, UTENSILS RENT ` 50,579/- AND INCOME FROM TRANSPORT BUSINESS ` 74,821/-. AGGRIEVED BY THE ASSESSMENT ORDER DATED 14-02-2013, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER CO NSIDERING THE DOCUMENTS FURNISHED BY THE ASSESSEE DURING THE COU RSE OF FIRST APPELLATE PROCEEDINGS AND THE REMAND REPORT SOUGHT FROM THE ASSESSING OFFICER ON THE ADDITIONAL DOCUMENTS PLACED ON RECORD DELETE D THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER EXCEPT ` 16,50,000/- IN RESPECT OF OPENING CAPITAL BALANCE. THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT THE THREE ANCESTRAL PROPERTIES WHICH ARE OSTENSIBLY ACQUIRED BY THE ASSESSEE AND HAVE BEEN INCLUDED TOWARD S THE OPENING CAPITAL BALANCE, THEIR VALUES HAVE NOT BEEN SUPPORTED BY ANY DOCUMENTARY EVIDENCE. FURTHER, THE ASSESSEE HAS NOT B EEN ABLE TO SHOW THAT THE BUILDINGS PURPORTEDLY CONSTRUCTED BY TH E ASSESSEE WERE FROM HIS OWN FUNDS. AS REGARDS OTHER ADDITIONS THE COMM ISSIONER OF INCOME TAX (APPEALS) ACCEPTED THE CONTENTIONS OF THE AS SESSEE AND DELETED THE SAME. AGAINST THE FINDINGS OF COMMISSIONER OF IN COME TAX (APPEALS), BOTH, THE ASSESSEE AND THE REVENUE ARE IN APPE AL BEFORE THE TRIBUNAL. 3. THE ONLY ISSUE RAISED BY THE ASSESSEE IN APPEAL IS AG AINST CONFIRMING THE ADDITION OF ` 16,50,000/- IN RESPECT OF VALUE OF 4 ITA NOS. 442 & 778/PN/2014, A.Y. 2010-11 IMMOVABLE PROPERTIES DISCLOSED IN BALANCE SHEET. THE REVEN UE ON THE OTHER HAND HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INC OME TAX (APPEALS) IN DELETING THE ADDITION OF ` 20,09,392/- MADE ON ACCOUNT OF UNEXPLAINED DEPOSIT. 4. SHRI S.N. DOSHI APPEARING ON BEHALF OF THE ASSESSEE SUBM ITTED THAT THE ASSETS REFLECTED IN THE BALANCE SHEET AS ON 3 1-03-2010 ARE ACQUIRED BY THE ASSESSEE IN PAST AND HAVE BEEN CARRIED FORWARD. THESE ASSETS INCLUDE : I. HOUSE NO. 592 (671) ` 2,75,000/- II. HOUSE NO. 691 (362) ` 3,00,000/- III. HOUSE NO. 895 ` 12,75,000/- ALL THE ABOVE SAID PROPERTIES WERE CONSTRUCTED ON THE A NCESTRAL LAND IN PAST. THE LD. AR ALSO REFERRED TO EXTRACT OF GRAMPANC HAYAT RECORD FROM THE ASSESSMENT YEAR 1994-95 IN RESPECT OF PROPERT Y BEARING NO. 671 AND FOR PROPERTY BEARING NO. 362 ASSESSMENT YEAR 1 992-93 AND FOR PROPERTY NO. 895 ASSESSMENT YEAR 2004-05. THE LD. AR FU RTHER REFERRED TO THE PARTITION DECREE AWARDED BY CIVIL JUDGE, JUNIOR DIVIS ION, SANGAMNER ON 22-04-2012 VIDE WHICH THE AFORESAID THREE PROPERTIES FALL IN THE SHARE OF THE ASSESSEE. THE LD. AR CONTENDED T HAT THE AUTHORITIES BELOW HAVE NOT DENIED THE FACT THAT THESE IMM OVABLE PROPERTIES WERE ANCESTRAL PROPERTIES BELONGING TO HUF. IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE SHOWING THE VALUE OF PROPERT IES THE FAIR MARKET VALUE OF THE PROPERTIES SHOULD HAVE BEEN ADOPTED . THE LD. AR SUBMITTED THAT ALTHOUGH THE DOCUMENTS SUBSTANTIATING TH AT THE PROPERTIES HAVE BEEN ACQUIRED BY THE ASSESSEE THROUGH DECREE OF PARTITION WERE AVAILABLE AT THE TIME OF ASSESSMENT, HOWEVE R, 5 ITA NOS. 442 & 778/PN/2014, A.Y. 2010-11 INADVERTENTLY THEY WERE NOT PLACED ON RECORD. THE ASS ESSEE REALIZING HIS MISTAKE RECTIFIED THE SAME BY FURNISHING ALL THE RELEVANT DOCUMENTS BEFORE THE FIRST APPELLATE AUTHORITY. THE COMMISSIONER OF I NCOME TAX (APPEALS) IT THE ABSENCE OF ASSESSMENT ORDER FOR ASSESSME NT YEARS 2008-09 AND 2009-10 AND KNOWING THE FACT THAT NOTICES HAVE BEEN ISSUED U/S. 148 FOR THE SAID ASSESSMENT YEARS MADE ADDIT ION OF ` 16,50,000/- AGAINST THE IMMOVABLE PROPERTIES DISCLOSED IN TH E BALANCE SHEET. THE LD. AR FURTHER CONTENDED THAT THE AUTHORITIE S BELOW HAVE ERRED IN COMING TO THE CONCLUSION THAT THE ASSESSEE HAS NOT BEEN ABLE TO SHOW FROM RECORDS THAT THE CONSTRUCTION WAS MADE ON THE PROPERTIES IN EARLIER YEARS AND THAT THE ASSESSEE HAD NO MEANS FOR CONSTRUCTION OF PROPERTIES AS THE INCOME OF THE ASSESSEE WAS BELOW THE TAXABLE LIMIT PRIOR TO THE ASSESSMENT YEAR 2010-11. THE LD. AR REBUT TING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) CONTENDED TH AT THE PROPERTY TAX RECEIPT ISSUED BY GRAMPANCHAYAT, GHARGAON CLEARLY SHOWS THAT THE BUILDINGS ON THE LAND WERE IN EXISTENCE FOR A LONG TIME. AS FAR AS THE SOURCE OF FUNDS FOR CONSTRUCTION IS CONCERNED, T HE ASSESSEE HUF IS AN AGRICULTURIST, THE BUILDINGS WERE CONSTRUCTED FROM THE NON-TAXABLE INCOME ARISING FROM AGRICULTURAL OPERATIONS. THE LD. AR SUBMIT TED THAT THE OBSERVATIONS OF THE COMMISSIONER OF INCOME TAX (APPE ALS) WITH REGARD TO THE VALUE OF PROPERTIES IS MERELY BASED ON SU RMISES AD CONJECTURES AND FAR AWAY FROM THE FACTS OF THE CASE. TH E LD. AR PRAYED FOR SETTING ASIDE THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE ADDITION OF ` 16,50,000/-. THE LD. AR FURTHER REFERRED TO THE ASSESSMENT ORDERS FOR ASSESSMENT YEARS 2008-0 9 AND 2009-10 PASSED IN PURSUANCE TO PROCEEDINGS INITIATED U/S. 148 OF THE ACT, WHEREIN THE QUESTION RELATING TO OPENING CAPITAL BALANCE TO THE TUNE OF 6 ITA NOS. 442 & 778/PN/2014, A.Y. 2010-11 ` 41,28,566/- WAS RAISED. DURING THE ASSESSMENT PROCEEDING S IN BOTH THE ASSESSMENT YEARS, SIMILAR EXPLANATION WAS FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER ACCEPTED THE SAME WITHOUT MAKING ANY ADDITION IN RESPECT OF OPENIN G CAPITAL BALANCE. IN RESPECT OF APPEAL FILED BY THE REVENUE THE LD. AR SUBMIT TED THAT THE ISSUE RAISED BY THE DEPARTMENT IN THE APPEAL IS ONLY WITH RESPECT TO DELETING THE ADDITION OF ` 20,09,392/- MADE ON ACCOUNT OF UNEXPLAINED DEPOSITS. THE APPEAL OF THE DEPARTMENT IS LIABLE TO BE DISMISSED ON ACCOUNT OF LOW TAX EFFECT IN VIEW OF CBDT CIRCULA R NO. 21/2015, DATED 10-12-2015. 5. ON THE OTHER HAND SHRI MANISH KUMAR SINGH REPRESENT ING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIO NER OF INCOME TAX (APPEALS) IN CONFIRMING THE DISALLOWANCE OF ` 16,50,000/-. THE LD. DR SUBMITTED THAT AT THE TIME OF ASSESSMENT NO E XPLANATION WAS GIVEN BY THE ASSESSEE. IT WAS FOR THE FIRST TIME BEFO RE THE COMMISSIONER OF INCOME TAX (APPEALS), THAT THE ASSESSEE FU RNISHED THE DOCUMENTS TO SHOW THE EXISTENCE OF BUILDINGS ON THE ANCE STRAL LAND ACQUIRED BY THE ASSESSEE. THE ASSESSEE THEREAFTER, CHA NGED HIS EXPLANATION. THE ASSESSEE HAS BEEN TAKING INCONSISTENT P LEA BEFORE VARIOUS AUTHORITIES. EVEN DURING THE REMAND PROCEEDINGS THE PLEA TAKEN BY THE ASSESSEE WAS INCONSISTENT WITH THE PLEA TA KEN BEFORE COMMISSIONER OF INCOME TAX (APPEALS). THE LD. DR PRAYED FOR DISMISSING THE APPEAL OF THE ASSESSEE AND CONFIRMING THE AD DITION MADE BY THE COMMISSIONER OF INCOME TAX (APPEALS). 7 ITA NOS. 442 & 778/PN/2014, A.Y. 2010-11 IN RESPECT OF THE APPEAL FILED BY THE DEPARTMENT, THE LD. D R CONTENDED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN NOT CONSIDERING THE FACT THAT THE ASSESSEE HAS NOT SUBMITTED AN Y DETAILS REGARDING CASH DEPOSIT OF ` 20,09,392/- IN THE SAVING BANK ACCOUNT. EVEN DURING THE REMAND PROCEEDINGS THE ASSESSEE FREQUE NTLY CHANGED HIS EXPLANATION REGARDING CASH DEPOSIT IN THE SAVING BANK ACCOUNT AND THE EXPLANATION IS WITHOUT ANY COGENT EVIDENCE. HOWEVER, THE LD. DR FAIRLY ADMITTED THAT THE APPEAL FILED BY THE DEPARTMENT HA S TAX EFFECT LESS THAN ` 10 LAKHS AND THUS IS HIT BY CBDT CIRCULAR NO. 21/2015, DATED 10-12-2015. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENT ATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. IN APPEAL, THE ASSESSEE HAS ASSAILED THE ADDITION OF ` 16,50,000/- SUSTAINED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IN RE SPECT OF THREE HOUSES I.E. HOUSE NO. 592 (671), HOUSE NO. 691 (362) AND HOUSE NO. 895. THE COMMISSIONER OF INCOME TAX (APPEALS) IN HIS ORD ER HAS CATEGORICALLY STATED THAT THE ASSESSEE HAS FURNISHED DO CUMENTS WHICH SUPPORT THAT THESE ASSETS WERE IN EXISTENCE DURING THE YEAR STATED BY THE ASSESSEE. HOWEVER, THE DISALLOWANCE WAS MADE ONLY FO R THE REASON THAT THE VALUATION GIVEN BY THE ASSESSEE WAS NOT SUPPO RTED BY ANY DOCUMENTARY EVIDENCE AND THAT THE AFORESAID HOUSES WER E NOT CONSTRUCTED DURING THE YEARS OUT OF THE ASSESSEES OW N FUNDS. WE DO NOT CONCUR WITH THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) FOR MAKING SUCH DISALLOWANCE. ONCE, THE ASSESSEE HAS BEEN ABLE TO SHOW FROM DOCUMENTARY EVIDENCE THAT THE HOUSES WERE IN EXISTENCE AS ON THE DATE OF BALANCE SHEET, IT IS IMMATERIAL WHETHER THE HOUSES WERE 8 ITA NOS. 442 & 778/PN/2014, A.Y. 2010-11 CONSTRUCTED FROM THE ASSESSEES OWN FUNDS OR WERE INHE RITED BY THE ASSESSEE. THE LD. AR OF THE ASSESSEE HAS PLACED ON RECO RD THE PROPERTY TAX RECEIPTS. A PERUSAL OF SAME CLEARLY SHOWS THAT THE HOUSE NO. 592 (671) WAS IN EXISTENCE IN THE YEAR 1994-95, THE HOUSE NO. 691 (362) WAS IN EXISTENCE IN THE YEAR 1992-93 AND HOUSE NO. 895 WAS IN EXISTENCE SINCE 2004-05. 7. SO FAR AS THE VALUATION OF THE ABOVE SAID PROPERTIES ARE CONCERNED, IF THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE SAME FROM DOCUMENTARY EVIDENCE, THE ASSESSING OFFICER SHOULD HAVE RE FERRED THE MATTER TO DEPARTMENTAL VALUATION OFFICER (DVO). HOWEVER, THE ASSESSING OFFICER CHOOSE NOT TO SEEK THE EXPERT ADVICE OF THE DVO. IN SUCH CIRCUMSTANCES WE FIND THAT THE AUTHORITIES BELOW HAV E ERRED IN MAKING ADDITION OF ` 16,50,000/- WHICH ARE REPRESENTED BY THE IMMOVABLE PROPERTIES DECLARED BY THE ASSESSEE. THUS, THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE ARE SET ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 778/PN/2014 (REVENUES APPEAL) 8. IN APPEAL THE SOLITARY ISSUE RAISED BY THE DEPARTMENT IS WITH REGARD TO DELETING THE ADDITION OF ` 20,09,392/- CASH DEPOSITED IN THE SAVING BANK ACCOUNT. UNDISPUTEDLY THE TAX EFFECT IN THE APPEAL FILED BY THE REVENUE IS LESS THAN ` 10 LAKHS. THE CBDT VIDE CIRCULAR NO. 21/2015, DATED 10-12-2015 HAS RAISED THE MONETARY LIMIT OF TAX EFFECT FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE THE TRIBUNAL TO ` 10 LAKHS. THE CIRCULAR APPLIES TO THE APPEALS TO BE FILED BY THE DEPA RTMENT IN FUTURE, AS WELL AS THE APPEALS PENDING BEFORE THE TRIBUNAL. THUS, IN 9 ITA NOS. 442 & 778/PN/2014, A.Y. 2010-11 VIEW OF THE CBDT CIRCULAR THE PRESENT APPEAL OF THE REVEN UE IS LIABLE TO BE DISMISSED ON ACCOUNT OF LOW TAX EFFECT. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED AN D THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON MONDAY, THE 16 TH DAY OF MAY, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 16 TH MAY, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-IT/TP, PUNE 4. ' / THE CIT-I, PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE