The ACIT, Circle-1(3), Ahmedabad V. M/s. Saumya Construction Pvt.Ltd., Ahmedabad

ITA 943/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9292 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 05-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P M MEHTA; S N SOPARKAR
• Assessee Lawyers: VIBHA BHALLA
• Keywords: Sale consideration of property below Jantri Value; Earning of tax free income
• Section: 50C; 14A; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER) ITA. NO: 693 & 943/AHD/2013 (ASSESSMENT YEAR: 2010-11) SAUMYA CONSTRUCTION PVT. LTD. 1 ST FLOOR, ADITYA, NR. KHADAYATA-COLONY, ELLISBRIDGE, AHMEDABAD- 380006 ACIT, CENTRAL CIRCLE-1(3), AHMEDABAD V/S V/S ACIT, CENTRAL CIRCLE-1(3), AHMEDABAD SAUMYA CONSTRUCTION PVT. LTD. 1 ST FLOOR, ADITYA, NR. KHADAYATA-COLONY, ELLISBRIDGE, AHMEDABAD- 380006 (APPELLANT) (RESPONDENT) PAN: AAFCS 3523G APPELLANT BY: SHRI S.N. SOPARKAR & P.M. MEHTA, A. R. RESPONDENT BY: MS. VIBHA BHALLA, CIT/DR ( )/ ORDER DATE OF HEARING : 08 -02-201 7 DATE OF PRONOUNCEMENT : 14 -02-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: ITA NO . 693 & 943/AHD/2013 . A.Y. 2010-1 1 2 1. ITA NOS. 693 & 943/AHD/2013 ARE CROSS APPEALS BY TH E ASSESSEE AND THE REVENUE PREFERRED AGAINST THE ORDER OF THE LD. CIT( A)-I, AHMEDABAD DATED 21.01.2013 PERTAINING TO A.Y. 2010-11. 2. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE DISP OSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVIT Y. ITA NO. 693/AHD/2013 ASSESSEES APPEAL FOR A.Y. 201 0-11 3. ASSESSEE HAS RAISED TWO SUBSTANTIVE GROUNDS OF APPE AL. GROUND NO. 1 RELATES TO THE ADDITION MADE U/S. 14A OF THE ACT AM OUNTING TO RS. 12,80,892/-. 4. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE ASSESSEE WAS ASKED TO SHOW CAUSE WHY THE PROVISIONS OF SECTION 1 4A SHOULD NOT BE INVOKED IN RESPECT OF INVESTMENTS IN SHARES, THE IN COME OF WHICH IS EXEMPT FROM TAX. THE ASSESSEE STRONGLY CONTENDED THAT IT I S HAVING SUFFICIENT INTEREST FREE FUNDS FOR MAKING INVESTMENT IN EQUITY SHARES. THOUGH, THIS CONTENTION WAS PRIMARILY ACCEPTED BY THE A.O. BUT H E WAS OF THE OPINION THAT THE ASSESSEE FAILED TO PROVIDE NEXUS OF INVEST MENTS MADE IN EQUITY SHARES OUT OF INTEREST FREE FUNDS. THE A.O. WAS OF THE FIRM BELIEF THAT THE MANDATE OF SECTION 14A IS TO DISALLOW AND EXPENDITU RE DIRECTLY OR INDIRECTLY INCURRED IN RELATION TO THE EXEMPT INCOME WHICH IS CLAIMED AGAINST THE ITA NO . 693 & 943/AHD/2013 . A.Y. 2010-1 1 3 INCOME TAXABLE. THE A.O. ACCORDINGLY COMPUTED THE D ISALLOWANCE U/S. 14A READ WITH RULE 8D AND DISALLOWED RS. 12,80,892/-. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT( A) BUT WITHOUT ANY SUCCESS. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REITERA TED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. 7. AFTER GIVING A THOUGHTFUL CONSIDERATION TO THE ORDE R OF THE AUTHORITIES BELOW. WE FIND THAT THERE IS NO DISPUTE THAT THE AS SESSEE WAS HAVING SUFFICIENT INTEREST FREE FUNDS AVAILABLE WITH IT FO R MAKING THE INVESTMENTS IN SHARES. IT IS EQUALLY TRUE THAT THE ASSESSEE COULD NOT DEMONSTRATE THE NEXUS BETWEEN THE INTEREST FREE FUNDS AND THE PURCHASES O F SHARES. IN OUR CONSIDERED OPINION AND TO MEET THE INTEREST OF JUST ICE, THE DISALLOWANCE U/S. 14A SHOULD BE MADE TO THE EXTENT OF THE EXEMPT INCOME CLAIMED BY THE ASSESSEE. WE, ACCORDINGLY, DIRECT THE A.O. TO R ESTRICT THE DISALLOWANCE TO THE EXTENT OF EXEMPT INCOME. GROUND NO. 1 IS PAR TLY ALLOWED. 8. GROUND NO. 2 RELATES TO THE ADDITION TO THE EXTENT OF RS. 25,15,655/- OUT OF TOTAL ADDITION OF UNDISCLOSED INCOME. 9. A SEARCH OPERATION WAS CONDUCTED AT THE BUSINESS AN D RESIDENTIAL PREMISES OF THE ASSESSEE AND ITS DIRECTORS. DURING THE SEARC H PROCEEDINGS, THE ITA NO . 693 & 943/AHD/2013 . A.Y. 2010-1 1 4 ASSESSEE HAD DISCLOSED AN AMOUNT OF RS. 9 CRORES EA RNED AS UNACCOUNTED ON MONEY ON SALE OF 278 UNITS OUT OF WHICH 223 WERE CONVEYED AND 55 WERE BOOKED. THE A.O. WORKED OUT THE AVERAGE ON MO NEY OF RS. 3,23,741/- PER UNIT ON 278 UNITS. THE A.O. FURTHER WORKED OUT THAT AVERAGE OF RS. 373.65 PER SQ. YD. WAS THE ON MONEY ON THE TOTAL SI ZE OF THE PLOT. THE A.O. WAS OF THE FIRM BELIEF THAT THE ASSESSEE MUST HAVE ALSO TAKEN ON MONEY ON THE UNITS THAT WERE BOOKED/CONVEYED AFTER THE DATE OF SEARCH I.E. 07.10.2009. THE A.O. FOUND THAT THE HIGHEST RATE TH AT HAS BEEN CHARGED IN THE AANTARKSHITIJ SCHEME WAS AT RS. 2813 PER SQ. YD . THE A.O. ADDED TO THIS. THE AVERAGE ON MONEY PER SQ. YD. CALCULATED AS REF ERRED TO HEREINABOVE AND CAME TO A MINIMUM RATE OF RS. 3186 PER SQ. YD. THE A.O. FOUND THAT THE ASSESSEE HAS SOLD/BOOKED PLOTS WHOSE TOTAL AREA IS 19470 SQ. YD. OF 24 UNITS AFTER 07.10.2009. MULTIPLYING THE MINIMUM SALES PRI CE CALCULATED HEREINABOVE, THE A.O. CAME TO THE CONCLUSION THAT T HE ASSESSEE MUST HAVE EARNED ON MONEY TO THE TUNE OF RS. 1,01,63,340/- AN D ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 10. THE ASSESSEE STRONGLY AGITATED THIS MATTER BEFORE T HE FIRST APPELLATE AUTHORITY. 11. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, TH E LD. CIT(A) HELD AS UNDER:- 10. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SU BMISSIONS AND ARGUMENTS OF THE AR OF THE APPELLANT CAREFULLY. IT IS SEEN THAT THE ASSESSING OFFICER HAS CALCULATED THE AVERAGE RATE OF 'ON MONEY ' CHARGED ON THE BOOKINGS AND SALE MADE BY THE APPELLANT BY DIVIDING THE ENTI RE ON MONEY RECEIVED IN- ITA NO . 693 & 943/AHD/2013 . A.Y. 2010-1 1 5 RESPECT OF BOOKINGS / SALES MADE BY THE TOTAL AREA SOLD. HE HAS THEN ADDED THIS 'ON MONEY' TO THE HIGHEST RATE OF SALE IN RESPECT OF THE PROJECT AANTARKSHITIJ SCHEME IN OCTOBER 2009 TO ARRIVE AT THE RATE ON WHI CH THE BALANCE OF THE LANDS SOLD DURING THE YEAR. THE ABOVE CONTENTION OF THE A SSESSING OFFICER IS NOT RIGHT. THERE IS NO DOUBT THAT THE APPELLANT HAD CHARGED ON MONEY ON THE LAND TRANSACTIONS PRIOR TO THE SEARCH. HOWEVER FOR DETER MINING THE ON MONEY CHARGED AFTER THE SEARCH THE 'ASSESSING OFFICER WAS NOT JUS TIFIED IN TAKING THE HIGHEST RATE OF LAND' SOLD IN OCTOBER -2009 AND OVER AND ABOVE T HAT RATE ADDING A SUM OF RS. 373.65 PER SQUARE YARD. FOR CALCULATING THE AVERAGE ON MONEY RATE THE ASSESSING OFFICER HAS CONSIDERED THE AVERAGE OF ENTIRE SALES HENCE HE CANNOT TAKE THE HIGHEST RATE FOR DETERMINING THE RATE OF SALES OF T HE REMAINING PLOTS. IT IS ALSO SEEN THAT THE AVERAGE SALE RATE RECORDED FOR THE EN TIRE PLOTS IS RS.2,169/- PER SQ. YARD. THE HIGHEST RATE IS RS.2,813/- PER SQ. YARD I N OCTOBER, 2009 AND THE LOWEST RATE IS RS.3,586/- PER SQ. YARD IN APRIL, 2009. IT IS SEEN THAT THE AVERAGE RATE OF. THE LANDS SOLD DURING SEPTEMBER 2009 IS RS. 24137- PER SQUARE YARD AND THE AVERAGE RATE IN AUGUST IS RS. 2420/- PER SQUARE YAR D AND THE AVERAGE RATE IN JULY 2009 IS 1600/- PER SQUARE YARD. IN VIEW OF THE ABOV E THE ASSESSING OFFICER IS DIRECTED TO ADOPT THE RATE OF RS. 24207- PER SQUARE YARD AND. ADD TO THIS RATE A SUM OF RS, 373.65 FOR CALCULATING THE ON MONEY CHARGED ON THE LANDS SOLD I.E. 19470 SQ. YARDS. THE ADDITION WORKS OUT TO RS.25,15 ,654.50 AS UNDER: (2793.65X 19470) = 54392365.50- 5,18,76,711=25,15,6 54.50 . THE ADDITION MADE BY THE A.O. IS HENCE REDUCED AS I NDICATED ABOVE. 12. AGGRIEVED BY THIS, BOTH THE ASSESSEE AND THE REVENU E ARE BEFORE US. THE REVENUES GRIEVANCE IS AT GROUND NO. 2 OF ITS APPEAL IN ITA NO. 943/AHD/2013 WHICH IS CONSIDERED AT THE LATTER PART OF THIS APPE AL. ITA NO . 693 & 943/AHD/2013 . A.Y. 2010-1 1 6 13. RIVAL SUBMISSIONS WERE HEARD AT LENGTH. HAVING HEAR D THE RIVAL CONTENTIONS, WE HAVE CAREFULLY PERUSED THE ORDER OF THE AUTHORIT IES BELOW AND WITH THE ASSISTANCE OF THE LD. SENIOR COUSNEL, WE HAVE CONSI DERED THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECORD IN THE LIGH T OF RULE 18(6) OF THE ITAT RULES. 14. THE UNDISPUTED FACT IS THAT DURING THE COURSE OF TH E SEARCH PROCEEDINGS, THE ASSESSEE ADMITTED OF HAVING RECEIVED ON MONEY ON TH E FLATS SOLD BY IT OR BOOKED BY IT. A PERUSAL OF THE ASSESSMENT ORDER SHO WS THAT THE A.O. HAS CALCULATED THE ON MONEY POST SEARCH OPERATIONS ON T HE BELIEF THAT AFTER 07.10.2009 ALSO, THE ASSESSEE MUST HAVE TAKEN ON MO NEY AS HE HAD TAKEN PRIOR TO 07.10.2009. IN OUR CONSIDERED OPINION, THE ENTIRE ADDITIONS MADE BY THE A.O. PARTLY CONFIRMED BY THE LD. CIT(A) ARE SOLELY BASED UPON MATHEMATICAL CALCULATIONS. BUT IN THE INCOME TAX AS SESSMENT PROCEEDINGS, THE ADDITIONS/DISALLOWANCES HAVE TO BE MADE ON THE BASIS O F DOCUMENTARY EVIDENCES AND JUDICIAL DECISIONS. 15. THERE IS NOT EVEN A SINGLE PIECE OF EVIDENCE LEST I T BE COGENT MATERIAL EVIDENCE WHICH COULD JUSTIFY THE IMPUGNED ADDITIONS MADE BY THE A.O. 16. THE ENTIRE ADDITIONS MADE BY THE A.O. ARE BASED UPO N THE SURMISE AND THE PRESUMPTION THAT THE ASSESSEE MUST HAVE EARNED ON M ONEY POST 07.10.2009 ALSO. THESE OBSERVATIONS HAVE FORMED THE BASIS OF THE ADDITION. IN LALCHAND BHAGAT AMBICA RAM VS. CIT 37 ITR 288, T HE HONBLE SUPREME ITA NO . 693 & 943/AHD/2013 . A.Y. 2010-1 1 7 COURT DISAPPROVED THE PRACTICE OF MAKING ADDITIONS IN THE ASSESSMENT ON MERE SUSPICION AND SURMISES OR BY TAKING NOTE OF TH E NOTORIOUS PRACTICE PREVAILING IN TRADE CIRCLES. 17. THE ASSESSEE HAD GIVEN COMPLETE DETAILS OF BOOKING RECEIVED AFTER 06.10.2009 AND THE SAME IS AS UNDER:- SAUMYA CONSTRUCTION PVT. LTD. AANTARKSHITIJ DETAILS OF BOOKING RECD AFTER 06/10/2009 PHASE UNIT NAME ADDRESS PAN NO. PHASES 0169 PRAKASH J HARIBHAKTI 76, TAPOVAN SOCIETY, NR. MANEKBAUG HALL, AMBAVADI, AHMEDABAD AAEPH1911M PHASES 0057 RAJESHWARI SANJAY PATEL 11 NANDI HILL ', JASWANTLAL BIDIWALA PARK, JODHPUR TEKRA, AHMEDABAD ACRPP3751C PHASES 0058 SAN J AY J. PATE L ' NANDI HILL ', JASWANTLAL BIDIWALA PARK, JODHPUR TEKRA, AHMEDABAD AATPP8013D PHASES 0059 SANJAY J. PATEL 11 NANDI HILL ', JASWANTLAL BIDIWALA PARK, JODHPUR TEKRA, AHMEDABAD AATPP8013D PHASES 0060 RAJESHWARI SANJAY PATEL ' NANDI HILL ', JASWANTLAL BIDIWALA PARK, JODHPUR TEKRA, AHMEDABAD ACRPP3751C PHASES 057A RAJESHWARI SANJAY PATEL ' NANDI HILL ', JASWANTLAL BIDIWALA PARK, JODHPUR TEKRA, AHMEDABAD ACRPP3751C PHASES 058A SANJAY J. PATEL ' NANDI HILL ', JASWANTLAL BIDIWALA PARK, JODHPUR TEKRA, AHMEDABAD AATPP8013D ITA NO . 693 & 943/AHD/2013 . A.Y. 2010-1 1 8 PHASES 0176 NILAMBARICSHETH B-40,ARYAMAN BUNGLOWS, OPP; ANAND NIKETAN SCHOOL NEAR THALTEJ RAILWAY CROSSING, AHMEDABAD AIJPS6137R PHASES 0118 MONAL DHANVIN. PUJ 201, AKASH SAGAR FLAT, PANCHVATI IIND LANE, BEHIND MONALISHA, AMBAWADI, AHMEDABAD AMYPP1788L PHASES 0147 SATISH VORA B/24, SHALIGRAM - 3, PRAHLADNAGAR, SATELLITE, AHMEDABAD ABAPV4346F PHASES 0116 ATULJASVANTLALSHAH B/204, VRAJ VIHAR - 4, OPP. CHANDAN PATY PLOT, JODHPUR, SATELLITE, AHMEDABAD ACIPS7564F PHASES 0117 JASHWANTLAL G. SHAH 301, KRISHNA TOWER, PARTHSARTHI PLAITS, NR. SHYAMAAL RAW HOUSE II, SATELLITE 132 FT RING ROAD, AHMEDABAD AACCN6152D PHASES 0119 VINODCHANDRA S. THAKKAR 20, VRUNDAVAN BUNGALOWS III, THALTEJ SHILAJ ROAD, SHILAJ, AHMEDABAD AAHPT2912M PHASES 0157 JAYANTKUMAR M. PANDYA 25, SHIVALIK BUNGALOWS, ANANDNAGAR, SATELLITE 100 FT. ROAD, AHMEDABAD ABEPP0742R PHASE UNIT NAME ADDRESS PAN NO. PHASES 0158 JAYANTKUMAR M. PANDYA 25, SHIVALIK BUNGALOWS, ANANDNAGAR, SATELLITE 100 FT. ROAD, AHMEDABAD ABEPP0742R PHASES 0120 KAMLABEN BABULAUAIN 94/1, GIRDHARNAGAR SOCIETY, SHAHIBAUG, AHMEDABAD - 4 AAQPJ7763F PHASES 0121 KAMLABEN BABULAUAIN 94/1, GIRDHARNAGAR SOCIETY, SHAHIBAUG, AHMEDABAD - 4 AAQPJ7763F PHASES 0189 JWALIT A. DAVE 4, KEDAR, ADHYAPARK MITRA MANDAL SOCIETY, NR. KETAV PETROL PUMP, POLYTECHNIC, AMBAWADI, AHMEDABAD ABXPD2004M ITA NO . 693 & 943/AHD/2013 . A.Y. 2010-1 1 9 PHASES 0190 KAMLESH N. RAVAL B/22, MARUTI NANDAN VILLA, OPP. LA HABITAT, NR. SUVARNA VILLA, 100FT RING ROAD, AHMEDABAD ADAPR1999Q PHASES 0162 NARMADABEN GHEVARCHAND JAIN 301, SUDARSHAN FLAT, OPP. SHAH HOSPITAL, 13, SHANTINAGAR SOCIETY, ASHRAM ROAD, AHMEDABAD AABPJ5829K PHASES 0163 PRAVIN J. SHAH 24, TRIBHUVAN PARK, NR. PARASMANI SOCIETY, JAWAHAR CHOWK, AHMEDABAD AAIPS9115Q PHASES 0164 DINESH RAMANLALSHAH 102, SUDARSHAN APPARTMENT, NR. DR. ANJNABEN DISPENSARY, NR. SHANTINAGAR JAIN TAMPLE, AHMEDABAD AAIPS9087M PHASES 0056 JIGNESH DASHRATHBHAI PATEL 51, ANURAG BUNGLOWS, NEAR SARASWATI SCHOOL, SOLA SCIENCE SITI ROAD,SOLA, AHMEDABAD AAMPP6712C PHASES 0088 RANKIT KISHORKUMAR THAKKAR C-34, RBI OFFICERS QUARTERS, NORTH AVENUE ROAD, SANTACRUZ(WEST) MUMBAI ADIPT0134H 24 18. A PERUSAL OF THE AFOREMENTIONED LIST SHOWS THAT TH E A.O. WAS INCOMPLETE POSSESSION OF ALL THE DETAILS IN RESPECT OF ALL THE PERSONS WHO HAD BOOKED/PURCHASED FLAT AFTER 06.10.2009. THERE IS NO T EVEN A SINGLE PIECE OF EVIDENCE TO SHOW THAT ANY ENQUIRY WAS MADE BY THE A .O. FROM THESE PURCHASERS. WE FIND FURTHER THAT ALL THE SALES WERE MADE AT JANTRY RATE . 19. IN OUR UNDERSTANDING OF THE LAW, THE ASSESSING AUTH ORITY HAS NO POWER TO DISTURB THE SALE PRICE SHOWN EXCEPT IN THREE CASES. THE FIRST IS UNDER SECTION 145 OF THE ACT. WHERE THE SALE OF PROPERTIES IS PAR T OF THE BUSINESS OF THE ITA NO . 693 & 943/AHD/2013 . A.Y. 2010-1 1 10 ASSESSEE, THE ASSESSING OFFICER, IF HE IS OF THE OP INION THAT THE ACCOUNTS ARE NOT CORRECT AND COMPLETE, MAY PROCEED TO REJECT THE BOOKS OF ACCOUNTS AND THEREAFTER MAKE A BEST JUDGMENT ASSESSMENT OF THE I NCOME IN THE MANNER PRESCRIBED BY SECTION 144. THE SECOND IS THE CASE W HERE SECTION 50C OF THE ACT IS INVOKED ON THE BASIS OF THE PRICES FIXED BY THE STAMP VALUATION AUTHORITIES OF THE STATE GOVERNMENT. THE THIRD IS T HE CASE OF SECTION 92BA INSERTED BY THE FINANCE ACT, 2012 W. E. F. 01.04.20 13. THIS SECTION GIVES POWER TO THE ASSESSING OFFICER TO RECALCULATE THE P ROFITS SHOWN BY THE ASSESSEE IN CASES OF SPECIFIED DOMESTIC TRANSACTIO NS WHERE THE AGGREGATE OF SUCH TRANSACTION ENTERED INTO IN THE RELEVANT AC COUNTING YEAR EXCEEDS A SUM OF RS. 5 CRORES. 20. THE POWER OF THE ASSESSING OFFICER TO RAISE VALID Q UERIES ON THE BASIS OF THE FACTS OR UNUSUAL FEATURES NOTICED BY HIM MUST BE CO NCEDED. THE FEATURES NOTICED BY HIM IN THE ASSESSEES BUSINESS CERTAINLY CONSTITUTE A STARTING POINT OF INQUIRY. THEY ARE, HOWEVER, NOT TO BE TAKE N AS EVIDENCE OR MATERIAL SHOWING ANY SUPPRESSION OR UNDERSTATEMENT OF THE SA LE PRICE. IF ON FURTHER PROBE, THE ASSESSING OFFICER WAS ABLE TO UNEARTH AN Y EVIDENCE OR MATERIAL ON THE BASIS OF WHICH ACTUAL SUPPRESSION OF THE SAL E PRICE COULD BE FOUND, THEN THE ADDITIONS MADE ON THAT BASIS WOULD BE VALI D. BUT IT IS NOT OPEN TO HIM, MERELY ON THE BASIS OF WHAT HE PERCEIVES TO BE THE MARKET CONDITIONS, TO MAKE ADDITIONS TO THE SALE PRICE OR THE PROFITS, WITHOUT ANY EVIDENCE OF UNDERSTATEMENT. ITA NO . 693 & 943/AHD/2013 . A.Y. 2010-1 1 11 21. IN OUR CONSIDERED OPINION, THE ASSESSING OFFICER HA S DRAWN A PRESUMPTION THAT ALL THE UNITS BOOKED AFTER 07.10.2009 MUST HAV E ALSO FETCHED ON MONEY TO THE ASSESSEE. THE A.O. HAS NOT MADE ANY FU RTHER ENQUIRY TO SUBSTANTIATE OR JUSTIFY HIS PRESUMPTION. THE A.O. H AS NOT POINTED OUT A SINGLE TRANSACTION IN THE BOOKS OF ACCOUNTS AS NOT PROPERLY ACCOUNTED FOR IN THE BOOKS VIS--VIS THE DETAILS FURNISHED BY THE AS SESSEE. 22. NO DOUBT, THE ASSESSEE HAS MADE DISCLOSURE OF ADDIT IONAL INCOME OF RS. 9 CRORES FOR THE CONVEYANCE DONE AND BOOKINGS DONE FO R THE PERIOD BETWEEN 01.04.2009 AND 06.10.2009 BUT THIS BY ITSELF CANNOT PROMPT THE A.O. TO PRESUME THAT THE ASSESSEE MUST HAVE DONE THE SAME T HING WHICH HE HAS DONE PRIOR TO 07.10.2009. 23. THE ASSESSING OFFICER HAS PROCEEDED TO MAKE IMPUGNE D ADDITION ARBITRARILY ON ASSUMPTION, SURMISES AND CONJECTURES BRUSHED ASI DE ALL WRITTEN SUBMISSIONS MADE IN THE COURSE OF ASSESSMENT PROCEE DINGS. IT IS A SETTLED PROPOSITION OF LAW THAT NO ADDITION CAN SUSTAIN WHI CH IS BASED ON PRESUMPTION/SURMISES/CONJECTURES. THEREFORE, THE AS SESSMENT ORDER IS ERRONEOUS ON THIS COUNT AND THE FIRST APPELLATE AUT HORITY FURTHER ERRED IN PARTLY CONFIRMING AN ERRONEOUS ASSESSMENT. 24. WE, THEREFORE, SET ASIDE THE FINDINGS OF THE LD. CI T(A) AND DIRECT THE A.O. TO DELETE THE ENTIRE ADDITION OF RS. 1,01,63,340/-. GR OUND NO. 2 IS ACCORDINGLY ALLOWED AND GROUND NO. 2 OF REVENUES APPEAL IS DIS MISSED. ITA NO . 693 & 943/AHD/2013 . A.Y. 2010-1 1 12 25. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 943/AHD/2013 REVENUES APPEAL FOR A.Y. 2010 -11 26. REVENUE HAS RAISED TWO SUBSTANTIVE GROUNDS OF APPEA L. GROUND NO. 1 RELATES TO THE DELETION OF THE DISALLOWANCE OF INTE REST OF RS. 9,07,942/- MADE U/S. 36(1)(III) OF THE ACT AND GROUND NO. 2 RE LATES TO THE RESTRICTION OF THE ADDITION MADE ON ACCOUNT OF UNDISCLOSED ON MONE Y TO RS. 25,25,655/- OUT OF TOTAL RS. 1,01,63,640/-. 27. GROUND NO. 2 IS DISMISSED QUA OUR DETAILED DISCUSSI ON GIVEN IN ALLOWING GROUND NO. 2 OF ASSESSEES APPEAL IN ITA NO. 693/AH D/2013 (SUPRA). 28. THIS LEAVES WITH ONLY GRIEVANCE OF THE REVENUE RELA TING TO THE DELETION OF THE DISALLOWANCE OF RS.9,07,942/-. 29. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCE EDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN THE INTEREST EXPENDITURE CLAIM ED U/S. 36(1)(III) OF THE ACT AND TO JUSTIFY THE REASONABLENESS OF THE INTERE ST CHARGED ON THE ADVANCES GIVEN DURING THE COURSE OF ITS BUSINESS. A FTER PERUSING THE DETAILED SUBMISSIONS OF THE ASSESSEE, THE A.O. WAS OF THE OPINION THAT THE ASSESSEE HAS GIVEN ADVANCES AT A RATE LOWER THAN TH E AVERAGE RATE OF THE THREE ASSESSMENT YEARS WHICH WORKS OUT TO 14.94% AN D SINCE THE ASSESSEE HAS GIVEN INTEREST BEARING ADVANCES AT A RATE LESSE R THAN 15%, THE A.O. WORKED OUT THE DISALLOWANCE AT RS. 9,07,942/-. ITA NO . 693 & 943/AHD/2013 . A.Y. 2010-1 1 13 30. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED ITS CONTENTION. 31. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS AND THE TWO DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF MUNJAL SAL ES CORPORATION 298 ITR 298 AND S. A. BUILERS LTD. 288 ITR 1, THE LD. CIT(A ) OBSERVED THAT SIMILAR ADDITIONS WERE MADE IN A.Y. 2008-09 & 2009-10 BY TH E A.O. WHICH HAVE BEEN DELETED BY HIS PREDECESSOR. THEREFORE, FOLLOWI NG THE SAME, THE LD. CIT(A) DELETED THE DISALLOWANCE. 32. BEFORE US, THE LD. D.R. STRONGLY SUPPORTED THE FIND INGS OF THE A.O. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. 33. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORI TIES BELOW. THE A.O. HAS NOT DISPUTED THE FACT THAT THE ASSESSEE HAS SUF FICIENT INTEREST FREE FUNDS, THEREFORE, THE RATIO LAID DOWN BY THE HONBL E SUPREME COURT IN THE CASE OF MUNJAL SALES CORPORATION (SUPRA) SQUARELY A PPLY. FURTHER, WE FIND THAT THE A.O. HAS QUESTIONED THE COMMERCIAL PRUDENC E OF THE ASSESSEE WHICH IS AGAINST THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS LTD. (SUPRA) WHEREIN THE HON BLE SUPREME COURT HAS HELD THAT THE BUSINESSMAN ALONE CAN DECIDE THE REAS ONABLENESS OR BUSINESS EXPEDIENCY OF THE EXPENDITURE. WE, FURTHER FIND IDE NTICAL ADDITIONS WERE DELETED IN AN EARLIER ASSESSMENT YEARS. WE, THEREFO RE, DO NOT FIND ANY ERROR ITA NO . 693 & 943/AHD/2013 . A.Y. 2010-1 1 14 OR INFIRMITY IN THE FINDINGS OF THE LD. CIT(A). GRO UND NO. 1 IS ACCORDINGLY DISMISSED. 34. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 14 - 02- 20 17 SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 14/02/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD