Inder Singla, Pehowa V. ITO, Kurukshetra

ITA 901/CHANDI/2009

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7777 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-07-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 01-09-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Keywords: Unexplained investment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE MS.SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 893/CHD/2009 ASSESSMENT YEAR: 2006-07 INCOME TAX OFFICER, V SHRI INDER SINGLA, WARD-1, C/O MANCHANDA FILLING STATION, KURUKSHETRA. PEHOWA, KURUKSHETRA. PAN: ACRPS-7652-P ITA NO. 901/CHD/2009 ASSESSMENT YEAR: 2006-07 SHRI INDER SINGLA, V ITO, WARD-1, C/O MANCHANDA FILLING STATION, KURUKSHETRA. PEHOWA, KURUKSHETRA. PAN: ACRPS-7652P (APPELLANT) (RESPONDENT) DEPARTMENT BY : SMT.JAISHREE SHARMA ASSESSEE BY : SHRI SUDHIR SEHGAL DATE OF HEARING : 09.07.2012 DATE OF PRONOUNCEMENT : 26.07.2012 ORDER PER MEHAR SINGH, AM THESE ARE CROSS-APPEALS PREFERRED BY THE REVENUE A ND THE ASSESSEE, ARISING FROM THE ORDER OF THE CIT(APP EALS) DATED 16.06.2009 PERTAINING TO THE ASSESSMENT YEAR 2006-0 7. WE FIND IT EXPEDIENT TO DISPOSE OF THE TWO APPEALS BY WAY OF A COMMON ORDER. 2 2. IN APPEAL OF THE REVENUE, FOLLOWING GROUNDS OF A PPEAL HAVE BEEN RAISED: 1 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS. 15,75,000/- MADE UNDER THE HEAD UNEXPLAIN ED INVESTMENT IN THE PROPERTY. AS THE ASSESSEE HAS NOT SH OWN RS. 15,75,000/- AS PER HIS SHARE I.E. 70% OUT OF THE T OTAL CASH PAYMENT MADE OF RS.22,50,000/- IN THE BOOKS OF ACCO UNT. 2 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADD ITION OF RS. 1,65,500/- ON ACCOUNT OF IMPROVEMENT EXPENSES. AS THE ASSESSEE HAS FURNISHED THE VOUCHERS OF RS.6,84,860/-, OUT OF WHICH MOST OF THE VOUCHERS ARE SELF MADE. THE VOUCHERS PREPAID B Y THE ASSESSEE ARE AN INDICATIVE OF PAYMENT OF LABOUR CHA RGES BUT DOES NOT SUBSTANTIATE THE QUANTUM OF EXPENDITURE AS CLAI MED BY THE ASSESSEE. THEREFORE, 15% OF TOTAL EXPENSES OF RS. 6,84,860/- COMES TO RS. 1,65,500/- IS DISALLOWED. 3. THAT THE APPELLANT CRAVES FOR PERMISSION TO ADD, DELETE OR AMEND THE GROUNDS OF APPEAL, BEFORE OR AT THE TIME OF HEARING OF APPEAL. 3. IN APPEAL OF THE ASSESSEE, FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED : 1. THAT THE LD. C.I.T (APPEALS) IS NOT JU STIFIED IN CONFIRMING THE ADDITION OF RS. 2,06,180/- ON ACCOUN T OF LAND MEASURING 9 MLS OF WHICH NO PHYSICAL POSSESSION WAS RECEIVED BY THE ASSESSEE CONSEQUENTLY REDUCED FROM THE CLOSI NG STOCK AS WELL AS PURCHASE A/C AS PER ACCOUNTING RULES & THE APPELLANT AUTHORITY HENCE OVERLOOKED & IGNORED ON FACTS & LAW WHICH FINDINGS IS BEING PRAYED FOR VACATION. 2. THAT THE LD. C.I.T (APPEALS) IS ALSO NOT JUST IFIED IN CONFIRMING THE ADDITION OF 33,250/- ON A/C OF T.D.S ON INTEREST WHICH WAS DEPOSITED A BIT LATE, THE REASON BEING T AN NO. WAS NOT ALLOTTED; IT WAS BEYOND THE LIMITS OF ASSESSEE TO DEPOSIT 3 T.D.S WITHOUT TAN NO., EVEN OTHERWISE THE INTEREST FOR LATE DEPOSIT OF T.D.S WAS OF COMPENSATOR) NATURE AND NOT PENALARY & WAS ALLOWABLE AS EXPENSES & THIS LAPSE OCCURRED DUE TO NEW INTRODUCED TECHNOLOGY. 3. THAT THE LD. C.I.T (APPEALS) IS ALSO NOT JUST IFIED IN CONFIRMING THE ADDITION OF 7,450/- ON A/C OF TELEPH ONE EXPENSES DESPITE GIVING THE PHOTOCOPY OF ALL TELEPHONE BILLS . 4. THAT THE LD. C.I.T (APPEALS) IS ALSO NOT JUST IFIED IN CONFIRMING THE ADDITION OF RS.3,000/- ON A/C OF ENT ERTAINMENT EXPENSES DESPITE PRODUCING THE BILLS OF ENTERTAINME NT EXPENSES. 5. THAT THE ASSESSEE PRAY FOR GRANTING OF ANY CON SEQUENTIAL RELIEF AND ON LEGAL CLAIM ARISING OUT OF PRESENT AP PEAL BEFORE THE DISPOSAL OF THE SAME. 6. THAT THE ASSESSEE PRAYS FOR ANY ADDITION, DELETI ON, AMENDMENT, MODIFICATION & RECTIFICATION IN THE GROU NDS OF APPEAL BEFORE THE DISPOSAL OF THE SAME. ITA NO. 893/CHD/2009 (REVENUES APPEAL) 4. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, LD. 'DR' REFERRED TO THE BASIC FACTS OF THE CASE AND THE ISS UES INVOLVED THEREIN. LD. 'DR' REFERRED TO PARA 8 & 9 OF THE AP PELLATE ORDER PASSED BY THE CIT(A). LD. 'DR' STATED THAT F INDINGS OF THE CIT(A) ARE PERVERSE AND CONTRARY TO THE MATERIA L AVAILABLE ON RECORD. THE LD. CIT(A) FAILED TO BRING ANY MATER IAL ON RECORD TO SUPPORT HIS FINDINGS IN THE MATTER. LD. ' DR' PLACED RELIANCE ON THE ORDER PASSED BY THE AO AND ALSO REF ERRED TO CERTAIN DOCUMENTS FILED IN THE PAPER BOOK INCLUDING THE AGREEMENT FOR SALE. 5. LD. 'AR' SUPPORTED THE ORDERS OF THE CIT(A). 6. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS, FACTS OF THE CASE AND THE RELEVANT RECORD. IN THE COURSE OF 4 ASSESSMENT PROCEEDINGS, AO FOUND AGREEMENT OF SALE OF LAND DATED 26.12.2005 EXECUTED FOR RS.62 LACS PER A CRE, WHICH WAS EXECUTED BY ONE SHRI YASH PAL GUPTA, PETI TION WRITER, TEHSIL THANESAR, WHICH WAS DULY NOTARIZED. ASSESSEE WAS AFFORDED PROPER AND REASONABLE OPPORTUNITY TO E XPLAIN THE CONTENTS AND TRANSACTIONS, RECORDED IN THAT AGR EEMENT. HOWEVER, THE ASSESSEE FAILED TO FILE ANY REPLY ON THE SPECIFIC QUERY RAISED BY THE AO, IN RESPECT OF THE SAID AGRE EMENT. THE AO, FOUND THAT ON THE ASSET SIDE OF THE BALAN CE SHEET, ASSESSEE HAD SHOWN RS.32,50,000/- IS RECEIVABLE FRO M SHRI JAGTAR SINGH. AO, HELD THAT PAYMENT BY CHEQUE WAS PROPERLY SHOWN IN THE BOOKS OF ACCOUNT AND THE ASSESSEE ALSO REFLECTED THE SAME TO THE EXTENT OF HIS SHARE IN TH E BALANCE SHEET AS ON, 31.3.2006, AS RECEIVABLE FROM SHRI JAG TAR SINGH, WHO IS ONE OF THE SELLERS. THE AO, FURTHER FOUND T HAT WITH REFERENCE TO CASH PAYMENT, OUT OF WHICH 30% OF THE SHARE OF THE ASSESSEE, WORKS OUT TO RS.15,75,000/-, REMAINS UNACCOUNTED AND ACCORDINGLY, THE AO TREATED THE SAM E AS UNEXPLAINED INVESTMENT OF THE ASSESSEE. THE CIT(A) HAS DELETED THE IMPUGNED ADDITION ON THE GROUND THAT AO FAILED TO EXPLAIN AS TO HOW SUCH COPY OF SALE AGREEMENT WAS RECEIVED BY HIM AND UNDER WHAT CIRCUMSTANCES. SIMI LARLY, LD. CIT(A) OBSERVED THAT THE ASSESSEE NEVER ENTERE D INTO SUCH SALE AGREEMENT OF LAND AND MADE PAYMENT OF CAS H OF RS.15,75,000/-. THE FOUNDATION OF DELETING ADDITIO N BY CIT(A) IS BASED ON IMAGINARY GROUNDS. THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE TRANSACTIONS CONTAINED IN HIS BOOKS OF ACCOUNT VIS--VIS THE SAID SALE DEE D AND SALE 5 TRANSACTIONS. IT IS NOT THE CASE OF THE ASSESSEE T HAT THESE DOCUMENTS HAVE BEEN FABRICATED BY THE AO. EVEN OTH ERWISE, AO HAS NO INTEREST TO FABRICATE SUCH DOCUMENTS. HA VING REGARD TO THE ENTIRETY OF THE FACTS AND CIRCUMSTANC ES OF THE CASE AND TO MEET ENDS OF JUSTICE, WE DEEM IT FIT TO RESTORE THE ISSUE TO THE FILE OF THE AO TO ADJUDICATE THE SAME AFRESH. ASSESSEE IS DIRECTED TO RENDER NECESSARY COOPERATIO N AND FILE RELEVANT DOCUMENTS TO PROVE HIS CASE. ACCORDINGLY, THE ISSUE IS RESTORED TO THE FILE OF THE AO TO ADJUDICATE THE SAME AFRESH, IN ACCORDANCE WITH LAW, AFTER AFFORDING REA SONABLE OPPORTUNITY TO THE ASSESSEE. 7. IN GROUND NO.2, REVENUE CONTENDED THAT CIT(A) ER RED IN DELETING ADDITION OF RS.1,65,000/- ON ACCOUNT OF IMPROVEMENT EXPENSES. THE VOUCHER FILED BY THE ASSE SSEE, WERE IN THE NATURE OF SELF-MADE VOUCHERS. THEREFORE , 15% OF THE TOTAL EXPENSES WERE DISALLOWED BY THE AO. 8. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, BOTH LD. 'DR' AND LD. 'AR', SUPPORTED THEIR RIVAL CONTENTION S. HOWEVER, THE ADDITION BEING OF ADHOC NATURE AND THE CONTENTION MADE BY THE LD. 'AR' THAT ALL THE VOUCHE RS WERE PRODUCED BEFORE THE AO, WE DEEM IT FIT, TO RESTORE THIS ISSUE, TO THE FILE OF AO FOR ADJUDICATING AFRESH. FURTHER , THE AO IS DIRECTED TO OFFER REASONABLE AND PROPER OPPORTUNITY TO THE ASSESSEE AND ADJUDICATE THE ISSUE AFRESH, AS PER LA W. ASSESSEE IS ALSO DIRECTED TO RENDER NECESSARY COOPE RATION IN THE MATTER. 6 9. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 901/CHD/2009 (ASSESSEE'S APPEAL) 10. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, GROUND NOS. 2, 3 & 4 ARE NOT PRESSED BY THE LD. 'AR'. THE REFORE, THE SAME ARE DISMISSED AS NOT PRESSED. 11. GROUND NO. 5 & 6 ARE GENERAL IN NATURE AND NEED NO ADJUDICATION. HENCE, THE SAME ARE DISMISSED. 12. IN GROUND NO. 1, ASSESSEE CONTENDED THAT CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 2,06,180/- ON ACC OUNT OF LAND MEASURING 9 MLS OF WHICH NO PHYSICAL POSSESSIO N WAS RECEIVED BY THE ASSESSEE, AND CONSEQUENTLY REDUCED FROM THE CLOSING STOCK AS WELL AS PURCHASE. THE FACTS OF TH E CASE ARE THAT THE ASSESSEE IS A PROPERTY DEALER AND HAD CERTAIN OPENI NG STOCK OF LAND AND CERTAIN OTHER LAND PURCHASED DURI NG THE YEAR AND AFTER SALE, THE BALANCE LAND WAS THE CLOSING STOCK OF THE ASSESSEE, THE DETAIL OF LAND PURCHASED AND OPENING STOCK ARE GIVEN IN THE ASSESSMENT ORDER AT PAGE NO. 2. THE ASSESSEE HAS SH OWN CLOSING STOCK OF LAND LESS BY 9 MARLA (272.25 SQUARE YARD) WHICH HAS BEEN VALUED BY THE AO AT THE SAME RATE AT WHICH THE OTHE R CLOSING STOCK HAS BEEN VALUED BY THE ASSESSEE AND THE SAME IS ADD ED TO THE INCOME OF THE ASSESSEE AT RS. 2,06,180/-. THE ASSES SEE HAS NOT DENIED THAT THE STOCK WAS SHOWN LESS BY 9 MARLA BUT IT IS CLAIMED THAT ASSESSEE HAD PURCHASED A PIECE OF LAND MEASURI NG 9 KANAL 13 7 MARLA WITH OTHER CO-SHARERS BUT OUT OF THIS LAND, T HE ASSESSEE ALONG WITH OTHER CO-SHARERS COULD NOT GET THE POSSE SSION OF 2 KANAL 14 MARLA CLAIMING THAT THE SAID 2 KANAL 14 MA RLA LAND IS ALREADY IN POSSESSION OF JAI BHARTI PUBLIC SCHOOL A ND OUT OF THE SHORT POSSESSION OF LAND, ASSESSEE'S SHARE IS 9 MAR LA AND THEREFORE, ASSESSEE CLAIMED THAT THE CLOSING STOCK HAS BEEN SHOWN LESS BY 9 MARLA. 13. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, LD. 'AR' CONTENDED THAT THERE IS ADVERSE POSSESSION OF THE L AND AND, HENCE, THE SAME IS NOT IN POSSESSION OF THE ASSESSE E APPELLANT, THEREFORE, THE SAME WAS NOT INCLUDED IN THE CLOSING STOCK. LD. 'DR' PLACED RELIANCE ON THE ORD ER OF THE CIT(A). THE FINDINGS OF LD. CIT(A) ARE CONTAINED I N PARA 6 OF THE ORDER, WHICH ARE REPRODUCED HEREUNDER: 6. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE ASSESSEE. UNDISPUTEDLY ASSESSEE HAS PURCHASED THE 9 MARLA LAND WHICH IS CLAIMED TO BE NOT IN POSSESSION OF THE ASSESSEE BUT THE ASSESSEE HAS TAKEN THE CASE TO THE COURT AND THE REGISTERED DEED IS IN HIS NAME, THEREFORE, IT IS NE ITHER A BUSINESS LOSS SO FAR THE ISSUE IS NOT FINALLY SET TLED AND NOR CAN BE REDUCED FROM THE STOCK BECAUSE DEFINITELY THE PURCHASE OF THE LAND HAS BEEN CLAIME D AS AN EXPENDITURE, HENCE THE GROUND OF APPEAL OF TH E ASSESSEE IS REJECTED AND THE ADDITION IS CONFIRMED. 14. HAVING REGARD TO THE FACT-SITUATION OF THE PRES ENT CASE, AND CONSIDERING THE ACCOUNTING NORMS AND STATUTORY PROVISIONS, SUCH PROFITS CANNOT BE EXCLUDED FROM TH E CLOSING STOCK. THEREFORE, FINDINGS OF THE CIT(A) NEED NO I NTERFERENCE 8 AND, HENCE, THE SAME ARE UPHELD. THIS GROUND OF AP PEAL OF THE ASSESSEE IS DISMISSED. 15. APPEAL OF THE ASSESSEE IS DISMISSED. 16. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES AND THAT OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH JULY,2012. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 26 TH JULY,2012. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT ,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH