SHRI ASHOK BHURAMAL KOTHARI, Ahmedabad V. THE DY. CIT, CIRCLE-5, Ahmedabad

ITA 928/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 6544 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 26-05-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 26-03-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRIJAYANTJHAVERI
• Assessee Lawyers: SHRIJ M TRIVEDI

Judgement Text

INTHEINCOMETAXAPPELLATETRIBUNALATAHMEDABAD AHMEDABADCBENCH (BEFORES/SHRIR.V.EASWAR,VPANDA.N.PAHUJA,AM) ITA.NO.928/AHD/2009 [ASSTT.YEAR:2005-2006] ASHOKBHURMALKOTHARI 403,FLORENCE,OPP:POLICECHOKEY ASHRAMROAD,AHMEDABAD. PAN:ACFPK3374E VS. DCIT,CIR.5 AHMEDABAD. ITA.NO.840/AHD/2009 [ASSTT.YEAR:2005-2006] DCIT,CIR.5 AHMEDABAD. VS. ASHOKBHURMALKOTHARI 403,FLORENCE,OPP:POLICECHOKEY ASHRAMROAD,AHMEDABAD. (APPELLANT) (RESPONDENT) ASSESSEEBY : SHRIJ.M.TRIVEDI REVENUEBY : SHRIJAYANTJHAVERI ORDER PERR.V.EASWAR,VICE-PRESIDENT: THESEARECROSSAPPEALSPERTAINING TOTHEAY2005-06.THEASSESSEEISANINDIVIDUALEN GAGEDINCONSTRUCTION ACTIVITIESANDTRADINGINLAND.THEAPPEALSARISEOU TOFTHEASSESSMENTMADEON HIMU/S143(3)OFTHEITACT. ASSESSEESAPPEAL: 2. THEFIRSTGROUNDWHICHISAGAINSTTHEADDITIONO FTHECASHCREDITOF RS.2,40,500WASWITHDRAWNATTHETIMEOFTHEHEARIN G.THESAMEISDISMISSED ASSUCH. 3. THE SECOND GROUND IS AGAINST THE ADDITION OF RS. 44,296 BEING THE DIFFERENCEINTHECAPITALACCOUNT.THEASSESSINGOFF ICERVERIFIEDTHECAPITAL ACCOUNTOFTHEASSESSEEINWHICHTHELOSSWASSHOWN ATRS.26,743WHEREASIN PAGENO. 2 ITA.NO.928AND840/AHD/2009 -2- THEAUDITEDACCOUNTSTHESAMEWASSHOWNATAHIGHER FIGUREOFRS.71,037.ON THEGROUNDTHATTHEASSESSEECOULDNOTEXPLAINTHE DISCREPANCY,THEASSESSING OFFICERMADETHEADDITIONOFTHEDIFFERENCEBETWEEN THETWOFIGURES.THESAME WASCONFIRMEDBYTHECIT(A). 4. WEHAVECONSIDEREDTHEMATTER.THOUGHTHEAUDITED ACCOUNTSSHOWEDTHE LOSSATAHIGHERFIGURE,THEREISNODISCREPANCYIN THEBALANCESHEET,ACOPYOF WHICHISATPAGE16OFTHEPAPERBOOKFILEDBYTHE ASSESSEE.WHENTHEBOOKS WEREAUDITEDITISQUITEPOSSIBLETHATTHECORRECT LOSSWASCOMPUTEDATTHEHIGHER FIGUREANDDEBITEDTOTHECAPITALACCOUNT.THEAUDIT EDACCOUNTSANDTHEAUDITED BALANCESHEETDONOT SHOWANYDISCREPANCYANDTHEB ALANCEINTHECAPITAL ACCOUNTISANEGATIVEFIGUREOFRS.22,18,779.THEBA LANCESHEETTALLIES.ITIS QUITEPOSSIBLETHATTHECAPITALACCOUNTVERIFIEDBY THEASSESSINGOFFICERWASTHE PRE-AUDITEDACCOUNT.INTHESECIRCUMSTANCES,WEHOL DTHATTHEADDITIONISNOT JUSTIFIED.WEDELETETHESAMEANDALLOWTHEGROUND. 5. THETHIRDGROUNDISDIRECTEDAGAINSTTHEADDITIO NOFRS.1,42,660TOTHE VALUE OF THE CLOSING STOCK OF LAND. THE ASSESSEE INC URRED DEVELOPMENT EXPENSES,CHARGESPAIDTOAMCBYWAYOFDEVELOPMENT CHARGESETC.ANDSURVEY EXPENSES,AGGREGATINGTORS.4,04,655.THEASSESSING OFFICERTOOKTHEVIEWTHAT THE EXPENSES WILL INCREASE THE COST OF THE ENTIRE L AND. HE NOTED THAT THE EXPENSESCANNOTTHEREFOREBEALLOWEDASREVENUEEXP ENSES.TOTHEEXTENTOFTHE UNSOLDLANDREMAININGASCLOSINGSTOCK,HEREFUSED TOALLOWTHEPROPORTIONATE EXPENSESASREVENUEEXPENSESANDADDEDTHESAMETO THEVALUEOFTHELANDAT THEENDOFTHEYEAR.SUCHADDITIONCAMETORS.1,42, 660.ITWASCONFIRMEDIN APPEALBYTHECIT(A)WHOAGREEDWITHTHEASSESSINGO FFICERSVIEW. 6. THEARGUMENTOFTHELEARNEDREPRESENTATIVEFORT HEASSESSEEBEFOREUSIS THATSINCETHEBUSINESSHASSTARTEDANDISRUNNING, NOPARTOFTHEEXPENSESCANBE DISALLOWEDANDADDEDBACKTOTHESTOCKOFLAND.WE AREINCLINEDTOAGREEWITH PAGENO. 3 ITA.NO.928AND840/AHD/2009 -3- THESUBMISSION.THEASSESSEEISTRADINGINLAND.THE BUSINESSHASSTARTEDANDIN THEYEARUNDERAPPEALWASBEINGCARRIEDON.THEEXPE NSESOFTHENATUREREFERRED TOINTHEPRECEDINGPARAGRAPHAREINCIDENTALTOTHE BUSINESSANDTHEYCANNOTBE IDENTIFIED WITH THE PARTICULAR LAND THAT REMAINED U NSOLD, SO THAT THE PROPORTIONATEPARTOFTHEEXPENSESCANBEADDEDTO THEVALUEOFTHESTOCKOF LAND.WEACCORDINGLYHOLDTHATTHEDEPARTMENTALAUT HORITIESWERENOTJUSTIFIED INADDINGTHEPROPORTIONATEPARTOFTHEEXPENSESTO THEVALUEOFTHEUNSOLDLAND ATTHEENDOFTHEYEAR.WEDELETETHEADDITIONAND ALLOWTHEGROUND. 7. THEFOURTHGROUNDISDIRECTEDAGAINSTTHEADDITI ONOFRS.1,82,260BYWAY OFDISALLOWANCEOFTHEINTERESTCLAIM.THETOTALINT ERESTPAIDBYTHEASSESSEEWAS RS.17,98,874. IT WAS CLAIMED IN THE LAND BUSINESS A CCOUNT. THE ASSESSING OFFICERNOTEDTHATTHEASSESSEEHADWITHDRAWNAMOUN TSFROMTHISACCOUNTFOR NEEDSOTHERTHANBUSINESSANDTHEREWASADEBITBAL ANCEOFRS.22,18,779ASON 31-3-2005INTHEACCOUNT.RS.5LAKHSOUTOFTHEDRA WINGSWASINVESTEDINAFIRM FORINTEREST.THEASSESSINGOFFICERWASOFTHEVIEW THATTHEBALANCEREPRESENTED AMOUNTSDIVERTEDFORNON-BUSINESSUSEANDTHEINTER ESTONTHESAMECANNOTBE ALLOWED.HECALCULATEDTHESAMEATRS.1,82,260AND DISALLOWEDIT.ONAPPEALIT WASCONFIRMED. 8. WEHAVECONSIDEREDTHEISSUE.THECONTENTIONOFT HEASSESSEEWASTHATIT HAD INTEREST-FREE FUNDS, REPRESENTED BY CONTRIBUTIO N FROM MEMBERS, OF RS.33,17,656WHICHISSHOWNINTHEBALANCESHEETAN DTHISWASMORETHANTHE DEBITBALANCEINTHEASSESSEESCAPITALACCOUNTAND HENCEITCANNOTBESAIDTHAT INTEREST-BEARINGFUNDSWEREUSEDFORNON-BUSINESSP URPOSES.ONACONSIDERATION OFTHEMATTER,WEFINDTHATTHEINCOME-TAXAUTHORIT IESHAVENOTDEALTWITHTHIS ISSUEADEQUATELYWITHNECESSARYFACTS.THEASSESSEE SCONTENTIONBEFOREUSALSO NEEDSTOBEVERIFIED.INTHISVIEWOFTHEMATTERWE SETASIDETHEORDERSONTHIS ISSUEANDRESTORETHESAMETOTHEFILEOFTHEASSES SINGOFFICERFORTAKINGA PAGENO. 4 ITA.NO.928AND840/AHD/2009 -4- DECISIONAFRESHAFTERMARSHALLINGALLTHERELEVANT FACTSANDFIGURESANDAFTER GIVINGDUEOPPORTUNITYTOTHEASSESSEEOFBEINGHEA R.THEGROUNDISALLOWEDFOR STATISTICALPURPOSES. 9. THEFIFTHGROUNDISAGAINSTTHEADDITIONOFRS.5 0,000ONACCOUNTOFLOW HOUSEHOLD EXPENSES. THE WITHDRAWALS SHOWN WERE RS.1, 05,000 BUT THE EXPENSESSUMMARYSHOWEDRS.1,27,072.THECLAIMISTH ATTHEDRAWINGSOF RS.44,000OFTHEWIFEOFTHEASSESSEEHAVENOTBEEN CONSIDERED.THEPASSBOOK COPYOFTHEWIFEISENCLOSEDINTHEPAPERBOOKTOP ROVETHEDRAWINGS.TAKINGAN OVERALLVIEWOFTHEMATTERANDTHEFACTTHATTHEAS SESSINGOFFICERHASNOT POINTEDOUTANYPARTICULAREXPENDITUREOFALARGEO RSUBSTANTIALAMOUNT,WEARE SATISFIEDTHATTHEADDITIONISNOTWARRANTED.WEDE LETETHESAMEANDALLOWTHE GROUND. 10. THEOTHERGROUNDSAREGENERALANDREQUIRENODE CISION. DEPARTMENTSAPPEAL: 11. INTHISAPPEAL,OBJECTIONISTAKENTOTHERELIE FOFRS.7,02,135ALLOWEDBY THECIT(A)INRESPECTOFCASHCREDITADDITION.THEAC COUNTOFKARSANPARMAR SHOWEDOUTSTANDINGCREDITBALANCEOFRS.4,00,000.TH EASSESSEEEXPLAINEDTHAT CHEQUESFORRS.7,02,135WEREGIVENTOHIMAGAINSTL ABOURCONTRACTWORKANDHE HASCOMPLETEDWORKOFTHEVALUEOFRS.3,02,135FOR WHICHCREDITWASGIVENAND THEBALANCEOFRS.4,00,000WASSHOWNINTHEACCOUNT .THEASSESSINGOFFICER HASMADETHEADDITION,ACCORDINGTOTHEASSESSEE,W ITHOUTNOTINGTHESEFACTS.IT ISSUBMITTEDTHATTHEAMOUNTISNOTACASHCREDITB UTABUSINESSORTRADING TRANSACTIONANDPROPERATTENTIONWASNOTPAIDTOTH EACCOUNTCOPY.WEFINDTHAT BEFORE THE ASSESSING OFFICER THE ASSESSEE COULD NOT FURNISH THE COMPLETE PARTICULARSBUTBEFORETHECIT(A)THEYWEREFILEDO NTHEBASISOFWHICHTHE ADDITIONWASDELETED.THECOPYOFTHEACCOUNTOFKA RSANPARMARHASBEENFILED INPAGE3OFTHEPAPERBOOK.ITSHOWSCHEQUEPAYMEN TSDEBITEDTOTHEACCOUNT PAGENO. 5 ITA.NO.928AND840/AHD/2009 -5- INTHESUMOFRS.7,02,135,CREDITOFRS.3,02,135FO RLABOURCHARGESANDTHE BALANCEOFRS.4,00,000ISSHOWNASON31-3-2005.THE ADDITIONPRIMAFACIE APPEARSTOHAVEBEENMADEWITHOUTHAVINGPROPERREG ARDTOTHENATUREOFTHE TRANSACTIONSBETWEENTHEPARTIES.THEAMOUNTSARENO TCASHCREDITSASSUCH,BUT PARTITREFLECTSABUSINESSTRANSACTIONANDTHEOTH ERPARTREPRESENTSTHEBALANCEIN THEACCOUNT.WEHAVECONSIDEREDTHEPRAYEROFTHED EPARTMENTTHATTHEMATTER SHOULD BE RESTORED FOR VERIFICATION, BUT HAVING REG ARD TO THE NATURE OF THE ACCOUNT,WHICHHASBEENEXAMINEDBYTHECIT(A),ITS EEMSTOUSTHATTHE ADDITIONISUNWARRANTED.RESTORINGTHESAMETOTHE ASSESSINGOFFICERMAY,IN THE PECULIAR CIRCUMSTANCES, LEAD ONLY TO MULTIPLICI TY OF PROCEEDINGS. WE ACCORDINGLYCONFIRMTHEDECISIONOFTHECIT(A).THEA PPEALISDISMISSED. 12. INTHERESULT,THEASSESSEESAPPEALISPARTLY ALLOWEDANDTHEREVENUES APPEALISDISMISSED.NOCOSTS. ORDERPRONOUNCEDINOPENCOURTTHIS29 TH DAYOFMAY,2009. SD/- SD/- (A.N.PAHUJA) ACCOUNTANTMEMBER (R.V.EASWAR) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 29-05-2009 COPYOFTHEORDERFORWARDEDTO: 1) : ASSESSEE 2) : REVENUE 3) : CIT(A) 4) : CITCONCERNED 5) : DR,ITAT. BYORDER DR,ITAT,AHMEDABAD