The ITO, Ward-1(4), Surat V. M/s Paras Builders Pvt.Ltd., Surat

ITA 982/AHD/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6011 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 30-06-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 04-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Unexplained cash credit; Unexplained investment; Opportunity of being heard; Deemed to accrue or arise in india

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , ! ' #$ #$ #$ #$ %, ' BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER $./ I.T.A. NO.982/AHD/2011 ( ( )( ( )( ( )( ( )( / / / / ASSESSMENT YEAR : 2007-08) THE ITO WARD-1(4) SURAT / VS. M/S.PARAS BUILDERS PVT.LTD. B-105, GOPAL CHAMBERS NR.AJANTA SHOPPING CENTRE RING ROAD, SURAT '* ! $./+, $./ PAN/GIR NO. : AABCP 3534 A ( *- / // / APPELLANT ) .. ( ./*- / RESPONDENT ) *- 0 / APPELLANT BY : SHRI P.L. KUREEL, SR.DR ./*- 1 0 / RESPONDENT BY : -NONE- 2 1 ! / / / / DATE OF HEARING 30/06/2014 34) 1 ! / DATE OF PRONOUNCEMENT 25/07/2014 5 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-I, SURAT (CIT(A) IN SHORT) DATED 21/01/2011 PERTAINING TO ASSESSMENT YEAR (AY) 2007-08. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- [1] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITIONS MADE ON ACCOUNT OF DISALLOWANCE OF LAND DEVELOPMENT CHARGES AND OTHER RELATED EXPENSES INSPITE O THE FAILURE ON THE PART OF THE A SSESSEE TO PRODUCE BOOKS OF ACCOUNTS AND OTHER DOCUMENTARY EVI DENCES FOR ITA NO.982/AHD/ 2011 THE ITO VS. PARAS BUILDERS PVT.LTD. ASST.YEAR 2007-08 - 2 - PROVING THE GENUINENESS OF THE EXPENDITURE CLAIMED U/S.37(1) OF THE I.T.ACT, 1961. [2] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITIONS MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S.69 EVEN THOUGH THE ASSES SEE FAILED TO EXPLAIN THE SOURCE OF INVESTMENT. [3] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITIONS MADE ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S.68 INSPITE OF THE FAIL URE ON THE PART OF THE ASSESSEE TO PRODUCE NECESSARY DOCUMENTARY EV IDENCES. [4] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESS ING OFFICER. [5] IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) MAY BE SET- ASIDE AND THAT OF ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EXTENT. 2. IN THIS CASE, NOTICE OF HEARING WAS SENT TO THE ASSESSEE. NONE APPEARED ON BEHALF OF THE ASSESSEE. AGAIN, A NOTIC E OF HEARING WAS SENT FOR HEARING THE APPEAL ON 15/04/2014. ON 26/05/201 4, A NOTICE OF HEARING WAS SERVED UPON THE ASSESSEE THROUGH DEPART MENTAL REPRESENTATIVE. A LETTER DATED 17/06/2014 IS RECEI VED BY THE REGISTRY FROM SHRI VIKRAM RATNOO, INCOME TAX OFFICER, WARD-1 (4), SURAT STATING THAT NOTICE DATED 26/05/2014 FIXING HEARING IN THE ABOVE CASE ON 30/06/2014 IS SERVED UPON THE ASSESSEE ON 17/6/2014 . 3. DESPITE HAVING BEEN SERVED THE NOTICE ON HEARING , NONE APPEARED ON BEHALF OF THE ASSESSEE. THEREFORE, WE HAVE NO O PTION BUT TO PROCEED IN THE MATTER IN THE ABSENCE OF THE ASSESSEE. ITA NO.982/AHD/ 2011 THE ITO VS. PARAS BUILDERS PVT.LTD. ASST.YEAR 2007-08 - 3 - 4. BRIEFLY STATED FACTS ARE THAT THE RETURN OF INCOME FOR THE ASST.YEAR 2007-08 WAS FILED ON 31/10/2007. THE CASE WAS PIC KED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.144 OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED V IDE ORDER DATED 25/12/2009, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE VA RIOUS ADDITIONS; NAMELY, EXPENDITURE MADE UNDER THE HEAD LAND DEVELOPMENT EXPENSES AMOUNTING TO RS.1,24,78,500/- AND 25% OF THE EXPENSES DEBITED UNDER THE HEAD(S) SALARY & BONUS; GENERA L EXPENSES; BANK CHARGES AND AUDIT FEES WHICH AGGREGATES TO RS.1, 26,460/- AND COMES OUT AT RS.31,615/-. THE AO ALSO MADE ADDITION OF R S.10 LACS AS UNEXPLAINED INVESTMENT AND ADDITION OF RS.3,44,659/ - AS ON-MONEY. 5. FIRST GROUND IS AGAINST DISALLOWANCE OF EXPENSES CLAIMED AS LAND DEVELOPMENT CHARGES. THE LD.SR.DR SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION AND HE SUBMI TTED THAT THE ASSESSEE HAD CLAIMED SUCH A HUGE EXPENDITURE. IN SUPPORT OF EXPENDITURE CLAIMED NO BILLS OR VOUCHERS WERE PRODUCED. THEREFORE, THE AO WAS JUSTIFIED IN MAKING THE DISALLOWANCE. HE FURTHER SUBMITTED THA T THE ONUS IS ON THE ASSESSEE TO PROVE THAT EXPENDITURE HAVE BEEN INCURR ED FOR CARRYING OUT THE BUSINESS ACTIVITY. IN THE ABSENCE OF THE MATERIAL EVIDENCE, SUCH EXPENDITURE CANNOT BE ALLOWED. HE FURTHER SUBMITTE D THAT THE AO HAS CATEGORICALLY SUBMITTED THAT NO DETAILS HAVE BEEN F ILED BY THE ASSESSEE DESPITE HAVING BEEN GIVEN VARIOUS OPPORTUNITIES. 6. WE HAVE HEARD THE LD.SR.DR, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE AO IN ITA NO.982/AHD/ 2011 THE ITO VS. PARAS BUILDERS PVT.LTD. ASST.YEAR 2007-08 - 4 - HIS ORDER HAS OBSERVED THAT DESPITE HAVING BEEN GIV EN OPPORTUNITY TO THE ASSESSEE, ASSESSEE DID NOT PRODUCE ANY EVIDENCE IN SUPPORT OF ITS CLAIM OF EXPENDITURE. THE AO HAS ALSO RECORDED THAT THE ASS ESSEE-COMPANY WAS REQUESTED VIDE VARIOUS NOTICES TO PRODUCE ALL BOOKS OF ACCOUNTS, COMPLETE BILLS/VOUCHES AND LEDGER FOR VERIFICATION. HE HAS OBSERVED THAT DESPITE THE VARIOUS NOTICES, THE ASSESSEE FAILED TO PROVIDE THE BASIC DETAILS WHICH COULD SUBSTANTIATE THE CLAIM REGARDING BALANCE AS D ISCLOSED IN THE BALANCE-SHEET AND THE EXPENDITURE CLAIMED BY THE AS SESSEE. WE FIND THAT THE LD.CIT(A) HAS GIVEN A VERY CRYPTIC FINDING IN H IS ORDER IN PARA-6 BY STATING THAT DURING THE YEAR GP MARGIN HAS BEEN SHO WN AT 0.95% AS AGAINST 0.20% IN THE IMMEDIATE PRECEDING YEAR. THE ADDITION OF THE WHOLE EXPENDITURE CLAIMED, SHOWS THAT THE A.O. HAS ACTED IN ARBITRARY MANNER WITHOUT APPLYING HIS MIND. THIS ASSESSMENT CANNOT BE TERMED AS BEST JUDGEMENT ASSESSMENT U/S.144 AND THE ADDITIO N DESERVED TO BE DELETED. IN OUR CONSIDERED VIEW, THIS FINDING OF LD.CIT(A) IS NOT CORRECT. THE LD.CIT(A) HAS NOT GIVEN FINDING AS TO HOW THE E XPENDITURE CLAIMED IN THE P&L ACCOUNT CAN BE ALLOWED WITHOUT ANY SUPPORTI NG EVIDENCE. THE LD.CIT(A) HAS ALSO NOT GIVEN ANY FINDING AS TO HOW HE HAS ARRIVED AT THE CONCLUSION THAT THE EXPENSES SO CLAIMED BY THE ASSE SSEE ARE CORRECT WITHOUT SEEKING ANY REMAND REPORT FROM THE AO. THE REFORE, THIS ISSUE IS RESTORED BACK TO THE FILE OF LD.CIT(A) TO DECIDE TH E SAME AFRESH. LD.CIT(A) IS HEREBY DIRECTED TO PASS A SPEAKING ORD ER AFTER OBTAINING THE REMAND REPORT FROM THE AO. NEEDLESS TO SAY THAT WH ILE PASSING THE ORDER, LD.CIT(A) WOULD ALSO AFFORD OPPORTUNITY TO THE ASSE SSEE FOR PRODUCING THE EVIDENCES, IF ANY, IN SUPPORT OF ITS CLAIM AND THE LD.CIT(A), ON RECEIPT OF ITA NO.982/AHD/ 2011 THE ITO VS. PARAS BUILDERS PVT.LTD. ASST.YEAR 2007-08 - 5 - SUCH EVIDENCE, WOULD SEEK COMMENTS OF THE AO AND PA SS A DECISION AFRESH. 7. GROUND NO.2 IS AGAINST THE DELETION OF ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S.69 OF THE ACT. THE LD.S R.DR SUPPORTED THE ORDER OF AO AND SUBMITTED THAT THE LD.CIT(A) WAS NO T JUSTIFIED IN DELETING THE ADDITION WITHOUT GIVING ANY BASIS OF S UCH DELETION. HE SUBMITTED THAT THE LD.CIT(A) HAS SIMPLY STATED THAT INVESTMENT HAS BEEN FULLY EXPLAINED BY THE LD.AR IN HIS SUBMISSION. HE SUBMITTED THAT NO REMAND REPORT WAS SOUGHT FROM THE AO. 8. WE HAVE HEARD THE LD.SR.DR, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND THAT THE AO IN HIS ORDER VIDE PARAS-12 & 12.1 HAS O BSERVED AS UNDER:- 12. DURING THE ASSESSMENT PROCEEDINGS AN INTIMATIO N WAS RECEIVED FROM ITO, WARD-5(2), KOLKATA FORWARDING THEREIN A L ETTER OF ITO, WARD- 3(2), NEW DELHI. IN THE SAID INTIMATION IT WAS INF ORMED THAT THE ASSESSEE-COMPANY HAS MADE AN INVESTMENT AS SHARE CA PITAL / UNSECURED LOAN AMOUNTING RS.40,81,850/- WITH M/S.CE E AAR DECORS PVT.LTD., NEW DELHI. THIS FACT WAS BROUGHT TO THE NOTICE OF THE AR OF THE ASSESSEE-COMPANY VIDE ORDER SHEET ENTRY DATED 24/12 /2009. THE RELEVANT EXTRACTS OF THE SAME ARE REPRODUCED HEREIN BELOW FOR REFERENCE: . RECENTLY, THIS OFFICE HAS RECEIVED AN INFOR MATION FROM DELHI OFFICE THAT SUM OF RS.40,81,850/- HAS BE E INVESTED BY THE A CO. AS SHARE APPLICATION MONEY/UNSECURED LO AN IN A COMPANY CALLED M/S.CEE AAR DECORS PVT.LTD. YOU ARE REQUESTED TO EXPLAIN/FURNISH EVIDENCES TO PROVE SOU RCE OF SUCH INVESTMENTS ELSE SHOW CAUSE AS TO WHY THE SAME MAY NOT BE CONSIDERED AS UNEXPLAINED INVESTMENT MADE BY THE CO . AND MAY NOT BE ADDED BACK TO THE TOTAL INCOME OF THE A CO MPANY. . ITA NO.982/AHD/ 2011 THE ITO VS. PARAS BUILDERS PVT.LTD. ASST.YEAR 2007-08 - 6 - 12.1. IN RESPONSE, THE AR SIMPLY SIGNED THE ORDER S HEET AND DID NOT COMMENT. HOWEVER HE ORALLY SUBMITTED THAT THESE EN TRIES MIGHT BE REFLECTED IN THE BANK ACCOUNT, THE COPY OF WHICH HA D ALREADY BEEN FURNISHED ALONG-WITH A COPY OF THE BANK BOOK. ON V ERIFICATION, THE CONTENTION OF THE AR WAS FOUND PARTLY CORRECT AS TH E ENTRIES AGGREGATING RS.30,81,850/- WERE REFLECTED IN THE BANK STATEMENT SUBMITTED WHICH SHOWS WITHDRAWALS OF RS.30,00,000/- ON 11/01/2007 A ND RS.81,950/- BEING WITHDRAWN ON 19/03/2007 IN THE NAME OF M/S.CE E AAR DECORS PVT.LTD. BY THIS IT CAN BE INFERRED THAT THE ASSES SEE-COMPANY MIGHT HAVE MADE INVESTMENT UPTO THIS EXTENT FORM THIS ACC OUNT AS REFLECTED IN THE BALANCE SHEET. HOWEVER, INVESTMENT TO THE TUNE OF RS.10,00,000/- REMAINS UN-EXPLAINED AS NO EXPLANATION/EVIDENCES RE GARDING THE SOURCE OF SUCH INVESTMENT HAS BEEN PUT FORTH BY THE LD.AR OF THE ASSESSEE- COMPANY AND NO CORRESPONDING ENTRIES IN THE ASSESSE ES BOOKS OF ACCOUNTS HAS BEEN DISCLOSED. ACCORDINGLY, THE SAID SUM OF RS.10,00,000/- IS HELD TO BE THE DEEMED INCOME IN T HE HANDS OF THE ASSESSEE-COMPANY UNDER PROVISIONS OF SEC.69 OF THE ACT. PENALTY PROCEEDINGS U/S.271(1)(C) ARE SEPARATELY IN ITIATED ON THE ISSUE FOR FURNISHING INACCURATE PARTICULARS AND THEREBY C ONCEALMENT OF INCOME. 8.1. HOWEVER, LD.CIT(A) IN PARA-6.2. OF HIS ORDER H AS SIMPLY STATED THAT THE INVESTMENT HAS BEEN FULLY EXPLAINED BY THE AR. MOREOVER, THE LD.CIT(A) HAS NOT SOUGHT ANY REMAND REPORT FROM THE AO. THEREFORE, THIS GROUND IS ALSO RESTORED BACK TO THE FILE OF LD .CIT(A) TO DECIDE IT AFRESH, AFTER OBTAINING THE COMMENTS FROM THE AO AN D PROVIDE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 9. GROUND NO.3 IS AGAINST DELETION OF ADDITION OF R S.3,44,659/- MADE U/S.68 OF THE IT ACT. THE LD.SR.DR SUPPORTED THE O RDER OF THE AO AND SUBMITTED THAT THE LD.CIT(A) IS NOT JUSTIFIED IN DE LETING THE ADDITION. HE SUBMITTED THAT THE ORDER OF THE LD.CIT(A) IS CRYPTI C. ITA NO.982/AHD/ 2011 THE ITO VS. PARAS BUILDERS PVT.LTD. ASST.YEAR 2007-08 - 7 - 10. WE HAVE HEARD THE LD.SR.DR, PERUSED THE MATERI AL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND THAT THE AO HAS OBSERVED THAT THERE IS AN INCREASE IN UN SECURED LOANS AND THE ASSESSEE WAS ASKED TO EXPLAIN THE INCREASE IN SECUR ED LOANS AND TO FURNISH THE DETAILS. THE AO OBSERVED THAT THE ASSESSEE-COM PANY FAILED TO PRODUCE THE DETAILS OF THE PERSONS/PARTIES FROM WHO M THESE LOANS HAD BEEN CLAIMED TO HAVE BEEN TAKEN. THEREFORE, THE AO PROCEEDED TO MAKE ADDITION OF RS.3,44,659/- IN THE TOTAL INCOME OF TH E ASSESSEE. WE FIND THAT THE LD.CIT(A) HAS GIVEN A FINDING ON FACT THAT THIS AMOUNT DOES NOT REPRESENT CASH CREDIT BUT THIS IS IN FACT LOAN/ADVA NCE GIVEN. HOWEVER, NO REMAND REPORT WAS CALLED FOR. THEREFORE, THIS ISSU E IS ALSO RESTORED BACK TO THE FILE OF LD.CIT(A) TO DECIDE IT AFRESH AFTER SEEKING THE COMMENTS FROM THE AO. THUS, THIS GROUND IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 11. REMAINING GROUNDS ARE GENERAL IN NATURE REQUIRE NO INDEPENDENT ADJUDICATION. 12. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( ) ( %) ! ' ' ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 25/ 07 /2014 8.., .../ T.C. NAIR, SR. PS ITA NO.982/AHD/ 2011 THE ITO VS. PARAS BUILDERS PVT.LTD. ASST.YEAR 2007-08 - 8 - 5 1 .9 : 9) 5 1 .9 : 9) 5 1 .9 : 9) 5 1 .9 : 9)/ COPY OF THE ORDER FORWARDED TO : 1. *- / THE APPELLANT 2. ./*- / THE RESPONDENT. 3. $$ ; / CONCERNED CIT 4. ;() / THE CIT(A)-I, SURAT 5. 9%< . , , / DR, ITAT, AHMEDABAD 6. <=( >2 / GUARD FILE. 5 5 5 5 / BY ORDER, /9 . //TRUE COPY// ? ?? ?/ // / $+ $+ $+ $+ ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 10.7.14 (DICTATION-PAD 11-P AGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 10/16 .7.14 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.25.7.14 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 25.7.14 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER