The DCIT, Central Circle-2(2), Ahmedabad V. Shri Pukhraj G. Sharma, Ahmedabad

ITA 915/AHD/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0469 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 30-10-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 01-03-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHELLEY JINDAL
• Keywords: Unexplained investment; Unexplained expenditure; Document seized; Valuation report; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C, AHMEDABAD BEFORE SHRI TK SHARMA, JM AND SHRI DC AGARWAL, AM ITA NO.915/A/2007 (ASSESSMENT YEAR 2004-05) DCIT, CENT.CIR.2(2) VS SHRI PUKHRAJ G SHARMA AHMEDABAD C/O ROYAL GUARDS P LTD GHB MEGHANINAGAR AHMEDABAD PAN ADBPS7550H (APPELLANT) (RESPONDENT) C.O. NO.109/A/2007 (ARISING OUT OF ITA NO.915/A/2007) (ASSESSMENT YEAR 2004-05) SHRI PUKHRAJ G SHARMA VS DCIT, CENT.CIR.2(2) AHMEDABAD AHMEDABAD (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI SHELLEY JINDAL ASSESSEE BY: NONE O R D E R D.C. AGARWAL : THIS IS AN APPEAL FILED BY THE REVEN UE AND CROSS OBJECTION FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS)-III, AHMEDABAD DATED 20-12-20 06 FOR THE ASSESSMENT YEAR 2004-05. 2. THE REVENUE, IN ITS APPEAL HAS RAISED FOLLOWING EFFECTIVE GROUNDS OF APPEAL: 1. THE LD.CIT(APPEAL) ERRED IN LAW AND ON FATS IN DELETING THE ADDITION MADE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN PROPERTY AT SURDHARA-4 AT RS.90,000/ - IGNORING THAT THE AFFIDAVIT OF SHRI DEEPAK B SHAH SUBMITTED BY ASSSSEE IN HIS SUPPORTING IN GENERAL I N ITA 915/A/2007 CO 109/A/2007 2 NATURE AS THE SAME DOES NOT CONTAIN COMPLETE ADDRES S OF PROPERTY IN QUESTION, AMOUNT INVOLVED AND ALSO T HE FACT THAT CONTENTS OF SUCH AFFIDAVIT WERE NOT SUBSTANTIATED BY EVIDENCES. 2. THE LD.CIT(APPEAL) ERRED IN LAW AND ON FACTS IN HOLDING THAT THE TOTAL EXPENDITURE TOWARDS CONSTRUCTION / MODIFICATION / RENOVATION OF THE HOUSE SITUATED AT 533, CAMP SARDAR BAZAR, AHMEDABAD SHOWN BY THE ASSESSEE AT RS5.75 LACS IS APPROPRIATE WHEREAS AS P ER VALUATION REPORT SUBMITTED BY A.V.O. SUCH EXPENDITU RE COMES TO RS.18,38,947/-. 3. THE LD.CIT(APPEAL) ERRED IN LAW AND ON FACTS IN RESTRICTING ADDITION (WHICH WAS BASED ON VALUATION REPORT OF AVO) OF RS.20,75,000/- TO RS.3,12,987/- MADE ON A/C OF UNACCOUNTED INVESTMENT TOWARDS REPAIRING / MODIFICATION / RENOVATION OF PROPERTY. 3. THE ASSESSEE, IN ITS CROSS OBJECTION HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS: 1. THE LD.CIT APPEALS HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ADDITION TO THE EXTENT OF RS.312987/ - ON ACCOUNT OF ALLEGED UNACCOUNTED EXPENDITURE IN PURCH ASE / CONSTRUCTION OF THE HOUSE. 2. UNDER THE FATS AND CIRCUMSTANCES OF THE RESPONDE NT AND CONSIDERING THE LEGAL DECISIONS, THE LD.CIT APPEALS OUGHT TO HAVE DELETED THE SAID ADDITION ALSO AND SH OULD HAVE ACCEPTED THE RETURNED INCOME. IT BE SO HELD N OW. 4. AT THE TIME OF HEARING NOBODY WAS PRESENT ON BEH ALF OF THE ASSESSEE DESPITE SERVING THE NOTICE OF HEARING BY R PAD ON THE ASSESSEE. THEREFORE, THE MATTER WAS PROCEEDED EXPA RTE QUA THE ASSESSEE, AND ARE DISPOSED OF AFTER HEARING THE LEA RNED DEPARTMENTAL REPRESENTATIVE AND PERUSING THE MATERIAL AVAILABLE ON RECORD. 5. THE FIRST ISSUE IN REVENUE APPEAL IS WITH REGARD TO ADDITION OF RS. 90,000 MADE BY THE ASSESSING OFFICER ON THE BASIS O F PAGE 86 OF ITA 915/A/2007 CO 109/A/2007 3 ANNEXURE A-9 FOUND DURING THE COURSE OF THE SEARC H WHICH WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF THE ASSESS EE ON 17-10-2003. THE DOCUMENT SHOWED A PAYMENT OF RS.1,80,000 MADE O N 13-04-2002 AND IT ALSO INDICATED RS.90,000 AS BALANCE. THE PA PER ALSO CONTAINED THE NAME OF ONE SHRI DEEPAKKUMAR BABULAL SHAH, 502 , POSTAL UNIT, 56 APO. THE ASSESSEE HAD EXPLAINED THAT THIS PERSON W AS A SOLDIER AND THAT HE HAD BOOKED A HOUSE AT RAMOL VASTRAL. HE HA D ALSO TAKEN A LOAN FROM THE BANK TO PURCHASE THE PROPERTY BUT THE LOAN WAS NOT GRANTED AND ACCORDINGLY HE HAD CANCELLED THE DEAL AND RECEIVED BACK PART PAYMENT FROM THE BUILDER GIVEN AT THE TIME OF BOOKING. THE REMAINING AMOUNT OF RS.90,000 WAS RECEIVED BACK BY HIS WIFE. THE ASSES SEE FURTHER EXPLAINED THAT HE ONLY HELPED SHRI DEEPAKKUMAR BAB ULAL SHAHS WIFE TO RECOVER THE BALANCE. AN AFFIDAVIT FROM SHRI SHRI D EEPAKKUMAR BABULAL SHAH WAS FILED. THE ASSESSING OFFICER REJECTED THI S EVIDENCE ON THE GROUND THAT THE DETAILS OF THE FLAT AT SURDHARA A LLEGED TO HAVE BEEN BOOKED BY SHRI DEEPAKKUMAR BABULAL SHAH WAS NOT FI LED, AFFIDAVIT SO FILED WAS GENERAL IN NATURE WHICH DID NOT REFER TO ANY PROPERTY IN QUESTION AND FURTHER THAT THE ALLEGED DOCUMENT HAS BEEN FOUN D FROM THE POSSESSION OF THE ASSESSEE AND THEREFORE HE HELD TH AT IT IS THE BENAMI INVESTMENT OF THE ASSESSEE. HE ACCORDINGLY ADDED R S.90,000 AS UNDISCLOSED INCOME. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND FOUND THAT IMPU GNED DOCUMENT BORE THE NAME OF SHRI DEEPAKKUMAR BABULAL SHAH AS WELL AS THE NAME OF THE SCHEME, SURDHARA. IT INDICATED THAT A SUM OF RS.1.8 LAKHS WAS PAID AS AN ADVANCE ON 13-04-2002 AND RS.90,000 WAS RETURNED OUT OF IT ON 13-10-2003. IT ALSO REFLECTED THE BALANCE RS.90 ,000. THE DOCUMENT SHOWED THE COST OF THE HOUSE AT RS.5.5 LAKHS AND IN DICATED FURTHER THAT POSSESSION OF THE HOUSE WILL BE GIVEN AFTER SIX MON THS. THE LEARNED ITA 915/A/2007 CO 109/A/2007 4 COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT NO EVIDENCE OF OWNERSHIP OR ACQUISITION OF HOUSE NO.4, SURDHARA HA VE BEEN FOUND DURING THE COURSE OF SEARCH OR DURING POST SEARCH E NQUIRIES. FURTHER, THE ASSESSEE HAD FILED AN AFFIDAVIT AND THE ASSESSING O FFICER DID NOT CARRY OUT ANY ENQUIRIES ON THE AVERMENTS MADE IN THE AFFIDAVI T TO PROVE THEM OTHERWISE NOR ANY EXPLANATION WAS CALLED FOR. THUS , THE FIRST APPELLATE AUTHORITY HELD THAT THE ASSESSING OFFICER HAS MADE A HURRIED AND UNSUSTAINABLE ADDITION, WHICH THE LEARNED COMMISSIO NER OF INCOME TAX (APPEALS) DELETED. 7. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATI VE SUBMITTED THAT DOCUMENT IS FOUND FROM THE POSSESSION OF THE ASSESS EE AND THEREFORE, THE ONUS IS ON THE ASSESSEE TO EXPLAIN SATISFACTORI LY THE CONTENTS OF THE DOCUMENTS. THE EXPLANATION WAS FURNISHED BY THE AS SESSEE WHICH WAS NOT FOUND SATISFACTORY AND THEREFORE, THE ADDITION WAS MADE. 8. AFTER CONSIDERING SUBMISSIONS MADE BY THE LEARNE D DEPARTMENTAL REPRESENTATIVE AND CAREFULLY PERUSING THE MATERIAL ON RECORD, WE ARE OF THE VIEW THAT NO SUSTAINABLE ADDITION HAS BEEN MADE BY THE ASSESSEE. IT IS TRUE THAT THE ONUS IS ON THE ASSESSEE TO EXPLAIN THE DOCUMENT FOUND DURING THE COURSE OF SEARCH, BUT THE ASSESSEE HAS C LEARLY DISCHARGED HIS ONUS BY EXPLAINING THE CONTENTS AND BY FILING AFFID AVIT FROM SHRI DEEPAKKUMAR BABULAL SHAH WHICH WAS NOT CONTROVERTE D BY THE ASSESSING OFFICER. IF THE ASSESSING OFFICER IS SAT ISFIED THAT NO FURTHER ENQUIRY IS REQUIRED, THEN CLEARLY NO ADDITION IS CA LLED FOR. THE DOCUMENT FOUND WAS SELF EXPLANATORY AND IN ORDER TO IMPOSE T AX LIABILITY IN RELATION TO A DOCUMENT INDICATING NAME OF SOME OTHER PARTY T HEN IT IS INCUMBENT UPON THE ASSESSING OFFICER TO FIND OUT WHETHER THAT PARTY EXISTED AND IF SO WHAT HE HAS TO STAY ABOUT THE DOCUMENT. IT IS ONLY THEREAFTER WHEN THE ASSESSING OFFICER COUNTERS THE INITIAL EXPLANATION REFLECTED IN THE ITA 915/A/2007 CO 109/A/2007 5 DOCUMENT, THE ONUS WILL BE SHIFTED BACK TO THE ASSE SSEE TO EXPLAIN THE CONTENTS OF THE DOCUMENT. ON THE FACE OF CLEAR NAR RATION ON THE DOCUMENT SUPPORTED BY THE AFFIDAVIT, THE INITIAL ON US LYING ON THE ASSESSEE IS DISCHARGED AND THE ASSESSING OFFICER HA VING NOT FOUND ANYTHING CONTRARY TO IT, THE ADDITION HAS BEEN RIGH TLY DELETED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). WE U PHOLD HIS ORDER ON THIS ISSUE. GROUND 1 OF THE REVENUE IS REJECTED . 9. THE NEXT ISSUE IS ADDITION OF RS.20,75,000 MADE BY THE ASSESSING OFFICER ON THE BASIS OF DVOS REPORT. THE FACTS ARE THAT THE ASSESSEE PURCHASED AN OLD HOUSE FROM TWO BROTHERS, VIZ. SHRI RAJESHBHAI AND SHRI MAHESHBHAI, SONS OF LATE SMT. KANCHANBEN FOR RS.5 L AKHS IN APRIL, 2003 FOR WHICH AN ADVANCE OF RS.2 LAKHS WAS PAID. THE H OUSE WAS REPORTEDLY VERY OLD SITUATED ON LEASEHOLD LAND. SUBSEQUENTLY THE ASSESSEE SPENT RS.5.75 LAKHS ON ITS REPAIRS AND RENOVATION AND DIS CLOSED THE SAME IN THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2004-0 5. NO EVIDENCE WAS FOUND IN THE SEARCH TO INDICATE ANY EXPENDITURE OVE R AND ABOVE THAT AMOUNT DECLARED IN THE RETURN. HOWEVER, THE ASSESS ING OFFICER REFERRED THE PROPERTY U/S 142A TO THE VALUATION CELL OF THE DEPARTMENT WHICH SUBMITTED A REPORT VALUING THE POST RENOVATION COST OF CONSTRUCTION AT RS.26,50,000. SINCE THE ASSESSEE HAS ALREADY DECLA RED AN INVESTMENT OF RS.5,75,000 ON RENOVATION THE ASSESSING OFFICER ADDED THE DIFFERENCE BEING RS.20,75,000 AS UNDISCLOSED EXPENDITURE. IN FACT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFI CER HAD RECEIVED AN INTERIM REPORT INDICATING THE SAME FIGURE AND DURIN G THE COURSE OF APPELLATE PROCEEDINGS FINAL VALUATION REPORT WAS SU BMITTED AGAIN INDICATING THE SAME FIGURE. IN THE VALUATION REPOR T THE VALUATION OFFICER ESTIMATED THE COST OF CONSTRUCTED PORTION AT RS.18, 38,947 AND THE COST OF THE LAND AT RS.8,12,097. IT WAS EXPLAINED TO THE L EARNED COMMISSIONER OF INCOME TAX (APPEALS) THAT AS PER THE SEIZED DOC UMENT TOTAL ITA 915/A/2007 CO 109/A/2007 6 EXPENSES OR THE PAYMENT ON RENOVATION WAS WORKED OU T AT RS.3,97,072 WHICH IS COMPRISED IN THE SUM OF RS.5,75,000 DECLAR ED BY THE ASSESSEE IN THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 200 4-05. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) RELIED ON THE FACT THAT TOTAL EXPENDITURE DECLARED IN THE BOOKS IS RS.5.75 LAKHS WHEREAS THE SEIZED DOCUMENTS DID NOT INDICATE EXPENDITURE OVER RS.4 LA KHS. FURTHER, SINCE THE BUILDING WAS VERY OLD AND THEREFORE, THE PLINTH AREA RATE AND ESTIMATION OF COST AS ON 01-04-2003 WOULD NOT BE AP PLICABLE. SEIZED DOCUMENT ALSO INDICATED THAT PETTY EXPENDITURE WAS INCURRED ON ITEMS REQUIRED FOR RENOVATION BETWEEN 20 TH APRIL, 2003 TO SEPTEMBER, 2003. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HO WEVER, ENHANCED THE LAND PRICE TO RS.8,12,997 AS AGAINST V ALUE OF RS.5 LAKHS SHOWN BY THE ASSESSEE AND ACCORDINGLY UPHELD AN ADD ITION OF RS.3,12,987. 10. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESEN TATIVE AND PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THERE IS NO CASE FOR ANY INTERFERENCE IN THE ORDER OF THE LEARNED CO MMISSIONER OF INCOME TAX (APPEALS). WE NOTICE THAT THE DVO HAS DETERMIN ED THE COST OF CONSTRUCTION AS IF IT IS A NEW HOUSE CONSTRUCTED BY THE ASSESSEE WHEREAS THE FACT IS THAT AN OLD HOUSE WAS PURCHASED AND REN OVATION WAS CARRIED OUT ON IT. THE DOCUMENTS FOUND IN THE SEARCH DID N OT INDICATE THAT ANY EXPENDITURE OVER AND ABOVE RS.5.75 LAKHS HAVE BEEN INCURRED BY THE ASSESSEE IN RENOVATING THE HOUSE. THEREFORE, THE E STIMATE MADE BY THE DVO THAT A SUM OF RS. 18,38,947 MIGHT HAVE BEEN SPE NT ON THE CONSTRUCTION IS NOT REASONABLE. THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS) HAS RIGHTLY POINTED OUT THAT THE DVO HAS ADOPTED PLINTH AREA RATE AS ON 01-04-2003 IGNORING THE FACT THAT W HAT THE ASSESSEE PURCHASED WAS AN OLD HOUSE. ACCORDINGLY NO REASONA BLE CASE IS MADE OUT FOR MAKING ADDITION IN RESPECT OF COST OF RENOV ATION. THE ASSESSING ITA 915/A/2007 CO 109/A/2007 7 OFFICER HAS NOT CLEARLY MADE THE REFERENCE TO THE D VO FOR DETERMINING THE COST OF RENOVATION. RATHER, HE HAS SOUGHT TO MAKE THE REFERENCE TO DETERMINE THE COST OF CONSTRUCTION. ACCORDINGLY TH E BASIC PREMISES OF REFERENCE BECOME INCORRECT. HOWEVER, THE ADDITION SUSTAINED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN RES PECT OF COST OF THE LAND IS NOT UNREASONABLE LOOKING TO THE FACTS AND C IRCUMSTANCES OF THE CASE. HIS ORDER IS ACCORDINGLY CONFIRMED. 11. AS A RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALSO DISMI SSED. 12. ORDER PRONOUNCED ON 13 TH DAY OF NOVEMBER, 2009. SD/- SD/- (T.K. SHARMA) (D.C. AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DT : 13 TH NOVEMBER, 2009 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-(A) 4. THE CIT 5. THE DR, C BENCH /TRUE COPY/ DY. REGISTRAR / ASST.REGISTRAR ITAT, AHMEDABAD BENCHES