Assistant Commissioner of Income Tax, Central Cir. -4, , Surat V. Shri Paril D Gangani, Surat

ITSSA 58/SRT/2022

AI Insights

The case involves an appeal by the Revenue against the decision of the CIT(A) which had deleted an addition of Rs.1,13,55,000 made by the Assessing Officer on account of unexplained expenditure under section 69C of the Income Tax Act, 1961. The expenditure was allegedly for renovation work carried out by M/s Venus Corporation. The Assessing Officer had made the addition based on an estimate provided by M/s Venus Corporation, which the assessee contested was not an actual execution of work but merely an estimate. The CIT(A) accepted the assessee's explanation, leading to the Revenue's appeal to the Tribunal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301744 (ITAT-SURAT)
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-03-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-02-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 31-07-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Set aside
• Section: 132; 69C; 153A; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./IT(SS)A No.58/SRT/2022 (Ǔनधा[रणवष[ / Assessment Years: (2018-19) (Physical Court Hearing) Assistant Commissioner of Income-tax, Central Circle-4, Surat, Room No. 508, 5th Floor, Aayakar Bhawan, Majura Gate, Surat-395001 Vs. Shri Paril D Gangani 18, Pushpak Row House, Near P.P. Savani School, Hira Baugh Circle, Surat-395006 èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AQJPG 7082 K (अपीलाथŎ /Appellant) (ŮȑथŎ /Respondent) िनधाŊįरती की ओर से /Assessee by : Shri Kiran K. Shah, CA राजˢ की ओर से/Revenue by : Shri Ashok B. Koli, CIT- DR स ु नवाई कȧ तारȣख/ Date of Hearing : 01/03/2023 घोषणा कȧ तारȣख/Date of Pronouncement : /03/2023 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the Revenue, pertaining to Assessment Year (AY) 2018-19, is directed against the order passed by the Learned Commissioner of Income-tax (Appeals)-4, Surat [Ld. CIT(A) for short] dated 18.05.2022, which in turn arises out of an assessment order passed by Assessing Officer under section 143(3)r.w.s 153A of the Income Tax Act, 1961 [hereinafter referred to as the “Act”] dated 30.09.2021. 2. Grounds of appeal raised by the Revenue are as follows: “[i] On facts and circumstances of the case and in law, the learned CIT(A) has erred in deleting the addition made by the Assessing Officer of Rs.1,13,55,000/- on account of unexplained expenditure under Sec.69C of the Act without appreciating the fact that the assessee has failed to explain the source of expenditure incurred for repair/alteration/interior work of the property. [ii] On facts and circumstances of the case and in law, the learned CIT(A) has erred in deleting the addition made by the Assessing Officer of Rs.1,13,55,000/- on Page | 2 IT(SS)A No.58/SRT/2022 A. Y. 2018-19 Sh. Paril D Gangani account of unexplained expenditure under Sec.69C of the Act by merely accepting the submissions of the assessee that the same was carried out through agencies other than Veenus Corporation, without even ascertaining who the other agencies were?. [iii] On facts and circumstances of the case and in law, the learned CIT(A) has erred in observing that the incriminating documents found from the i-phone of the assessee during the course of search and based on which the addition made by the AO, was merely abstract sheet which is in the nature of quotation and not an evidence that the work has already been carried out, even though the same contained all the details of work done including cost and mentions “Following extra work carry out for Paril D Gangani at Property No. A/1001,Vaikunthdham, TP 14, Pal, Surat. The cost of addition and alteration of and property is as under” and the same bear seal and is duly signed by the proprietor of Veenus Corporation. [iv] On facts and circumstances of the case and in law, the learned CIT(A) has erred in deleting the addition made by the Assessing Officer of Rs.1,13,55,000/- on account of unexplained expenditure u/s 69C of the Act ignoring the incriminating documents found during the course of search and accepting the submissions of the assessee that too without verifying the genuineness of the claim of the assessee that the repair//addition/interior work was got done from other agencies, source of expenditure incurred, agency to whom such payments were made etc. [v] On facts and circumstances of the case and in law, the learned CIT(A) has erred in deleting the addition made by the Assessing Officer of Rs.1,13,55,000/- on account of unexplained expenditure u/s 69C of the Act without appreciating the fact that the such addition was made in the hands of assessee on the basis of incriminating documents found and seized during the course of search proceedings and the relief granted by the CIT(A) is de-horse provisions of section 292C of the Act, and the affidavit submitted by the owners of “Veenus Corporation” was nothing but a self- serving instrument. [vi] On facts and circumstances of the case and in law, the learned CIT(A) has erred in deleting the addition made by the Assessing Officer of Rs.1,13,55,000/- on account of unexplained expenditure u/s 69C of the Act ignoring the principles of “Human Probability Test” i.e. preponderance of probabilities which is applicable for Income Tax proceedings. [vii] It is, therefore, prayed that the order the Ld. CIT(A)-4 Surat may be set aside and that of the AO may be restored to the above extent. [viii] The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal.” 3. Succinct facts are that assessee before us is an individual and filed his return of income u/s 139(1) for the assessment year under consideration on 29.09.2018 declaring total income of Rs.4,58,170/-. Subsequently the return of income of assessee was processed u/s143(1) of the Act. A search and seizure action was Page | 3 IT(SS)A No.58/SRT/2022 A. Y. 2018-19 Sh. Paril D Gangani conducted u/s 132 of the Act in Kuberji Group and residential premises of assessee. During the course of search proceedings, digital devices were found from the premises of Shri Dhirajbhai D Gangani along with assessee at Path: iphone-7\Paril- iTunes Backup\Files.files\images\cc6fc0b1-64sd4-4004-9025-480401568f9a.jpg pertaining to expenses incurred on renovation of Flat No.1001 of Vaikunth Dham Society, Surat by Venus Corporation. During the assessment proceedings, the assessee was asked to furnish the source of income for the interior work carried out through Venus Corporation in residential Flat no.A-1001 Vaikunthdham, dated 23.02.2018 of Rs.1,13,55,000/-. In response, the assessee replied that it is an estimate only and no any interior work was carried out through Venus Corporation. To support his contention, the assessee filed affidavit of Venus Corporation. However, the assessing officer rejected the contention of the assessee and made an addition of Rs.1,13,55,000/- to the total income of the assessee, under section 69C of the Act. 4. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Learned CIT(A) who has deleted the addition made by the Assessing Officer. Aggrieved by the order of the ld. CIT(A), the Revenue is in appeal before us. Learned DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. On the other hand, ld Counsel for the assessee pleaded that assessee had taken only an estimate of expenses for renovation for flat from M/s Venus Corporation, vide letter ref. No.AC/10/8332 dated 23.02.2018 and finally the work was not done by M/s Venus Corporation. Hence there is no execution of work by M/s Venus Corporation, and the estimate of expenses so done has been cancelled and the work was executed by other person, hence in these circumstances, no addition should be made. This way, ld Counsel defended the order passed by ld CIT(A). 5. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case Page | 4 IT(SS)A No.58/SRT/2022 A. Y. 2018-19 Sh. Paril D Gangani laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We note that assessing officer made addition on the basis of an estimate for renovation given by M/s Venus Corporation without appreciating the explanation given during the assessment proceedings. The assessee had taken estimate of expenses for renovation of flat from M/s Venus Corporation. The said party,( M/s Venus Corporation) had given lump sum estimate of cost for various items of work which may be carried out, vide ref. No.AC/10/8332 dated 23.02.2018. However, finally, the assessee had not assigned any work to M/s Venus Corporation, therefore question of addition on the basis of such estimate is unjustified. Therefore, we note that said party (M/s Venus Corporation) did not carry out any work, and M/s Venus Corporation had given an affidavit confirming that no such work was carried out by them and it was merely on estimate of amount for certain renovation job. We note that during the search proceedings, there is no other paper showing either work done or payment received by M/s Venus Corporation were found by search party. There is no bill number or VAT number as it was a mere letter head containing estimate of expenses. On examination of the incriminating material by ld CIT(A), it was noticed by ld CIT(A) that it is being an abstract-sheet dated 23.02.2018 from M/s Venus Corporation, which is not an invoice. It is merely an abstract sheet which is in the nature of a quotation and not an evidence that the work is already carried out. Further, the amounts specified in the said abstract sheet are on lump-sum basis without there being any quantity and rates for various types of works. Further, the assessee has furnished the details of expenses incurred on renovation of the flat for almost two financial years and the fact that M/s Venus Corporation in an affidavit has submitted that they have not executed the work for the assessee as stated in the abstract sheet. These evidences are crystal clear that the abstract sheet found during the course of search is merely an estimate or equation and not the evidence or invoice for having executed the work for renovation. Therefore, ld CIT(A) deleted the addition. We have gone through the order of ld CIT(A) and noted that there is no any infirmity in the order of ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid addition. His order on this Page | 5 IT(SS)A No.58/SRT/2022 A. Y. 2018-19 Sh. Paril D Gangani addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. 6. In the result, appeal filed by the Revenue is dismissed. Order is pronounced on 21/03/2023 by placing result on notice board. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat / Ǒदनांक/ Date: 21/03/2023 Dkp Outsourcing Sr.P.S. Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // True Copy // Sr. Private Secretary/Private Secretary/ Assistant Registrar, ITAT, Surat