SHRI RAMESH HARI PRASAD CHOUKSE, Indore V. THE JCIT-RANGE-2, Indore

ITA 80/IND/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7715 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-05-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 19-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V J BORICHA
• Assessee Lawyers: N D PATWA A RS
• Keywords: Capital asset; Business income; Additional evidence; Set aside
• Section: 143(3); 54F

Judgement Text

[ITA NO.80/IND/2016] [RAMESH HARI PRASAD CHOUKSE, INDORE] , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.80/IND/2016 ASSESSMENT YEAR: 2011-12 RAMESH HARI PRASAD CHO UKSE 12-C/I, SHUBASH NAGAR, INDORE (M.P. / VS. JCIT RANGE-2 INBDORE ( APPELLANT ) ( REVENUE ) P.A. NO. AEFPC9133D APPELLANT BY S/SHRI ASHISH GOYAL & N.D. PATWA, A.RS RESPONDENT BY SHRI V.J. BORICHA, SR. D.R. DATE OF HEARING: 13.06.2019 DATE OF PRONOUNCEMENT: 24.07.2019 / O R D E R PER KUL BHARAT, J.M: APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF TH E CIT(A)-1, INDORE DATED 27.10.2015 PERTAINING TO THE [ITA NO.80/IND/2016] [RAMESH HARI PRASAD CHOUKSE, INDORE] 2 ASSESSMENT YEAR 2011-12. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITIO N OF RS.86,90,000/- BEING DEDUCTION CLAIMED U/S 54F. 2. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.1,60,010/- BEING ENHANCEMENT IN BUSINESS INCOME. 3. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY OF T HE SAID GROUND OF APPEAL. 2. THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSME NT AND THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) WAS FRAMED VIDE ORDER DATED 6.2.2014. WHILE FRAMING THE ASSESSMENT, THE A.O . OBSERVED THAT ASSESSEE HAD SOLD 3 PIECES OF AGRICULTURAL LANDS FOR RS.1.20 CRORES AND COMPUTED LONG TERM CAPITAL GAIN AS AT RS. NIL BY CLAIMING THAT HE PURCHASED 3 PIECE S OF AGRICULTURAL LANDS FOR RS.33,93,445/- AND INVESTED RS.86,90,000/- IN CONSTRUCTION OF NEW RESIDENTIAL PR OPERTY WITHIN 3 SUBSEQUENT YEARS AND CLAIMED DEDUCTION U/S 54F OF THE ACT. THE ASSESSING OFFICER REJECTED THE CLAIM OF [ITA NO.80/IND/2016] [RAMESH HARI PRASAD CHOUKSE, INDORE] 3 DEDUCTION U/S 54F OF THE ACT. THE A.O. FURTHER MADE ADDITION IN RESPECT OF ESTIMATION OF PROFIT FROM MANUFACTURING OF BRICKS OF RS.1,60,000/-. AGGRIEVED AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS, DISMI SSED THE APPEAL. NOW THE ASSESSEE IS IN PRESENT APPEAL. 3. GROUND NO.1 OF THE ASSESSEES APPEAL IS AGAINST REJECTION OF HIS CLAIM MADE U/S 54F OF THE ACT AMOUNTI NG TO RS.86,90,000/- FOR CONSTRUCTION OF A NEW ASSET. L D. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. THE SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED AS UNDER: [ITA NO.80/IND/2016] [RAMESH HARI PRASAD CHOUKSE, INDORE] 4 [ITA NO.80/IND/2016] [RAMESH HARI PRASAD CHOUKSE, INDORE] 5 [ITA NO.80/IND/2016] [RAMESH HARI PRASAD CHOUKSE, INDORE] 6 [ITA NO.80/IND/2016] [RAMESH HARI PRASAD CHOUKSE, INDORE] 7 [ITA NO.80/IND/2016] [RAMESH HARI PRASAD CHOUKSE, INDORE] 8 [ITA NO.80/IND/2016] [RAMESH HARI PRASAD CHOUKSE, INDORE] 9 4. DURING THE PRESENT PROCEEDINGS, THE ASSESSEE HAS AL SO FILED AN APPLICATION UNDER RULE 29 OF THE INCOME TAX APPELLATE RULES, 1963 FOR ESTIMATION OF ADDITIONAL EVI DENCE. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIO NS AS MADE IN THE APPLICATION. THE CONTENTS OF THE APPLICATIO N ARE REPRODUCED AS UNDER: IN THE PRESENT CASE THE APPELLANT HAD SOLD THREE A GRICULTURAL LANDS FOR RS.1,20,00,000/- IN F.Y. 2010-11 AND REINVESTED THE PART OF SALE PROCEED IN PURCHASE OF THREE AGRICULTURAL LAND FOR RS.33,93,445/- THUS CLAIMING EXEMPTION U/S 54B. FURTHER RS.86,90, 000/- WERE INVESTED IN CONSTRUCTED OF NEW RESIDENTIAL HOUSE. THE RESIDENTIAL HOUSE WAS CONSTRUCTED IN PLOT OWNED BY APPELLANTS WIFE SMT. KIRAN CHOUKSE AT 439, CLERK COLONY, INDORE. THE ASSESSME NT WAS COMPLETED U/S 143(3) ON 10.12.2010 AT TOTAL INCOME OF RS.90,95,480/-. THE LD. A.O. DENIED THE EXEMPTION U/S 54F ON THE GROUND THAT THE CASH WAS UTILIZED FOR CONSTRUCTION OF HOUSE IN NAME OF HIS WIFE WAS NOT ELIGIBLE U/S 54F. THE DENIAL O F EXEMPTION U/S 54F BY LD. A.O. WAS FURTHER APPEALED TO LD. CIT(A). THIS ORDER WAS CONFIRMED BY LD. CIT(A). HOWEVER, WITHOUT DISCUSSI NG THE BASIS ON WHICH THE LD. A.O. MADE DISALLOWANCE, THE LD. CIT(A ), TOOK HIS OWN REASONS FOR DISALLOWANCE. THE ASSESSEE WAS NOT GIVEN ANY OPPORTUNITY TO SUBM IT THE DOCUMENTARY EVIDENCES FOR THE NEW FINDINGS GIVEN BY LD. CIT(A) FOR DISALLOWING THE CLAIM. THE SAME HAVE BEEN RECEIVED NOW, WHICH IS ENCLOSED AS UNDER: A) ELECTRICITY BILLS PB 29 B) PROPERTY TAX RECEIPTS PB 30 31 C) INAUGURAL PHOTOGRAPHS OF HOUSE PB 39 41 D) AFFIDAVIT FROM ASSESSEE. [ITA NO.80/IND/2016] [RAMESH HARI PRASAD CHOUKSE, INDORE] 10 IT IS MOST HUMBLY PRAYED, THAT THE ABOVE DOCUMENTS MAY BE ADMITTED IN THE INTEREST OF JUSTICE AS 1. THE APPELLANT HAD NO OPPORTUNITY TO SUBMIT THESE DO CUMENTS EARLIER. 2. THE DOCUMENT (A) & (B) FURTHER ARE GOVERNMENT RECOR DS OF ELECTRICITY CORPORATION AND MUNICIPAL CORPORATION, AND WOULD NOT REQUIRE ANY INQUIRY IN THIS REGARD. 3. THE DOCUMENT (D) ABOVE IS JUST AN AFFIRMATION OF WH AT HAS BEEN STATED EARLIER. 5. LD. D.R. OPPOSED THESE SUBMISSIONS AND SUBMITTED THAT AT SUCH A BELATED STAGE, ADDITIONAL EVIDENCES SHOUL D NOT BE ADMITTED. LD. D.R. ALSO SUBMITTED THAT IT WAS INCUMBENT UPON THE ASSESSEE TO PROVE THAT HE HAS CONSTRUCTED A NEW ASSET, OUT OF THE SALE CONSIDERATION OF THE CAPITAL ASSET. IT WAS FURTHER CONTENDED THAT THE SAL E CONSIDERATION WAS UTILISED FOR CONSTRUCTION OF THE NE W ASSET IN THE NAME OF THE ASSESSEE WIFE WHICH WOULD NOT QUALIF Y FOR DEDUCTION U/S 54F OF THE ACT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE EVIDENCES [ITA NO.80/IND/2016] [RAMESH HARI PRASAD CHOUKSE, INDORE] 11 FURNISHED ARE ELECTRICITY BILLS, PROPERTY TAX RECEIP TS, INAUGURAL PHOTOGRAPH OF HOUSE AND THE AFFIDAVIT FROM THE ASSESSEE. CONSIDERING THE TOTALITY OF THE FACTS, THES E EVIDENCE GOES TO THE ROOT OF THE ISSUE, AND ARE MATERI AL EVIDENCE TO PROVE THE CONSTRUCTION OF A NEW ASSET. W E THEREFORE, ADMIT THE SAME AND SET ASIDE THE ORDERS OF T HE AUTHORITIES BELOW ON THIS ISSUE AND REMIT THE ISSUE O F ALLOWABILITY OF DEDUCTION U/S 54F OF THE ACT TO THE A.O. THE A.O. WOULD DECIDE THE ISSUE AFTER CONSIDERING THE EV IDENCES PLACED ON RECORD IN ACCORDANCE WITH LAW. THIS GROUND OF THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES . 7. GROUND NO.2 IS IN RESPECT OF ADDITION MADE BY THE A.O. TOWARDS ENHANCEMENT OF BUSINESS INCOME. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE SYNOPSIS. THE ASSESSEE HAS BEEN ENGAGED IN THE BUSINE SS OF MANUFACTURING OF BRICKS AND DECLARED PROFIT AT RS.1,39,990/-. THE A.O. HOWEVER ESTIMATED THE SAME T O [ITA NO.80/IND/2016] [RAMESH HARI PRASAD CHOUKSE, INDORE] 12 RS.3 LAKHS AND ADDED THE DIFFERENCE OF RS.1,60,010/- TO THE INCOME OF THE ASSESSEE. THE LD. CIT(A) CONFIRMED TH E ADDITION. LD. COUNSEL SUBMITTED THAT THE ADDITION IS PURELY MADE ON THE BASIS OF ESTIMATION. THERE WAS NO MATERIAL BEFORE THE A.O. TO MAKE ESTIMATION AT RS.3 LAKHS. 8. LD. D.R. OPPOSED THESE SUBMISSIONS. LD. D.R. ST ATED THAT THE ASSESSEE WAS REQUIRED TO PROVE RECEIPTS FROM BUSINESS BY FURNISHING PROPER ACCOUNTS. IN THE ABSEN CE OF THE ACCOUNTS, THE ASSESSING AUTHORITY WOULD BE LEFT WI TH NO OTHER ALTERNATIVE BUT TO ESTIMATE THE INCOME. IT IS CONTENDED THAT THE ESTIMATION IS REASONABLE LOOKING TO THE NATURE OF THE BUSINESS CARRIED OUT BY THE ASSESSEE. 9. WE HAVE HEARD THE PARTIES. WE FIND THAT THE A.O. H AS NOT STATED AS TO WHAT IS THE BASIS OF ENHANCEMENT OF THE GROSS PROFIT. WHY HE HAS ESTIMATED NET PROFIT AT RS.3 LAKHS. THE A.O. OUGHT TO HAVE MADE ENQUIRIES FROM THE SIMILAR LY SITUATED ASSESSEES WHO ARE IN THE SAME LINE OF BUSINESS . [ITA NO.80/IND/2016] [RAMESH HARI PRASAD CHOUKSE, INDORE] 13 THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE DID N OT DISCLOSE THE GROSS RECEIPTS. HOWEVER, THE LD. CIT (A) IN PARA 7.1 OF HIS ORDER HAS DECIDED THE ISSUE AS UNDER: 7.1 FROM THE ABOVE IT IS SEEN THAT THE ADDITION IS MADE BY THE A.O. AS APPELLANT HAS NOT MAINTAINED ANY BOOKS OF ACCOUN TS AND HAS SHOWN THE INCOME ON ESTIMATED BASIS. THE APPELLANT HAS CONTENDED THAT THE BUSINESS WAS SEASONAL IN NATURE AND AS PER P&L ACCOUNT FILED SALE PROCEED WERE AT RS.729700/- AND THE PROF IT WAS RS.139990/-. CONSIDERING THE FACT THAT NO P&L ACCO UNT HAS BEEN PRODUCED AND NO BASIS HAS BEEN GIVEN BY THE APPELLA NT FOR ESTIMATION OF GROSS RECEIPTS AND THE PROFIT THEREON THE ESTIMATION MADE BY THE AO IS UPHELD WHICH IS BASED ON THE FIGU RES GIVEN IN THE INCOME TAX RETURN BY THE APPELLANT AS STATED IN THE ASSESSMENT ORDER. IN VIEW OF THE ABOVE THIS GROUND OF THE APP ELLANT IS ALSO DISMISSED. 10. LD. CIT(A) AFFIRMED THE VIEW OF THE A.O. WITHOUT MAKING ANY INDEPENDENT ENQUIRY. THE LAW IS WELL SETT LED WHERE THE A.O. MAKES BEST JUDGEMENT BY ESTIMATING TH E PROFIT. HE IS REQUIRED TO MAKE INDEPENDENT ENQUIRIES, IF HE IS NOT SATISFIED WITH THE PROFIT DECLARED BY THE ASSES SEE FROM THE SIMILARLY SITUATED ASSESSEES. IN THE PRESENT CASE, THE SALES AS DECLARED BY THE ASSESSEE WERE OF RS.7,29, 700/- THE A.O. HAS MADE ADDITION PURELY ON THE BASIS THAT GROS S RECEIPTS ARE NOT DECLARED. HOWEVER, THE ASSESSEE HAS [ITA NO.80/IND/2016] [RAMESH HARI PRASAD CHOUKSE, INDORE] 14 DECLARED THE GROSS PROFIT. WE FIND THAT THE LD. CIT (A) IN HIS ORDER HAS STATED A FIGURE OF RS.7,29,700/- AS THE S ALE PROCEEDS WHICH COULD BE TAKEN AS GROSS RECEIPTS. THER EFORE, THE VERY FOUNDATION OF MAKING ESTIMATION IS NOT CORRE CT. HENCE, WE CANNOT CONFIRM THIS ADHOC AND CASUAL APPROAC H OF THE ASSESSING AUTHORITY, HE IS THEREFORE HEREBY DI RECTED TO DELETE THE ADDITION. THIS GROUND OF THE ASSESSEE S APPEAL IS ALLOWED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 24. 07.2019. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 24/07/2019 VG/SPS COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER ASSISTANT REGISTRAR, INDORE