The ACIT, Central Circle-1(2), Ahmedabad V. M/s. Sun Automobiles, Ahmedabad

ITSSA 799/AHD/2010

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0009 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-01-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 23-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRASHANT MAHARSHI
• Keywords: General deduction
• Section: 143(3)

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BENCH, AHMEDABAD .., ! ! ! ! ' #$, BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ I.T(SS).A. NO.799/AHD/2010 ( & '& & '& & '& & '& / / / / ASSESSMENT YEAR : 2006-07) ACIT CENTRAL CIRCLE-1(2) AHMEDABAD / VS. M/S.SUN AUTOMOBILES NR.SHAH WADI BUS-STOP NATIONAL HIGHWAY NO.8 NAROL, AHMEDABAD ( !./)* !./ PAN/GIR NO. : AAGFS 9455 F ( (+ / // / APPELLANT ) .. ( ,-(+ / RESPONDENT ) AND CO NO.336/AHD/2010 AY 2006-07 (IN IT(SS)A NO.799/AHD/2010 AY 2006-07) M/S.SUN AUTOMOBILES VS. ACIT, WARD- 1(2) AHMEDABAD .. AHMED ABAD (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI SUBHASH BAINS CIT-D.R. ASSESSEE BY : SHRI PRASHANT MAHARSHI, A.R. ' . / $0 / / / / DATE OF HEARING : 30/01/2014 12' / $0 / DATE OF PRONOUNCEMENT : 05/02/2014 3 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THE REVENUE AND THE ASSESSEE BOTH HAVE FILED THE A PPEAL AND THE CROSS OBJECTION RESPECTIVELY AGAINST THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-I, AHMEDABAD (CIT(A) FOR SHORT) DATED 16/09/2010 PERTAINING TO ASSESSMENT YEAR (AY) 2006- 07. IT(SS)A NO.799/AHD/2010(BY REVENUE)& CO NO.336/AHD/2010 (BY ASSESSEE) ACIT VS. M/S.SUN AUTOMOBILES ASST.YEAR 2006-07 - 2 - 2. AT THE OUTSET, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE DOES NOT WISH TO PRESS THE CROSS-OBJECTION. LD.CIT -DR HAS NO OBJECTION. IN VIEW OF THE STATEMENT MADE BY THE LD.COUNSEL FOR THE ASSESSEE, THE CROSS-OBJECTION FILED BY THE ASSESSEE IS HEREBY DIS MISSED. 3. NOW, WE TAKE UP THE REVENUES APPEAL IN IT(SS)A NO.799/AHD/2010 FOR AY 2006-07. THE REVENUE HAS RA ISED THE FOLLOWING GROUNDS OF APPEAL. 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN GRANTING RELIEF OF RS.8,25,356/- OUT OF THE TOTAL ADDITION OF RS.8,95, 531/- MADE U/S.69B ON ACCOUNT OF DIFFERENCE IN COST OF CONSTRUCTION OF TH E I.T.ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. 3. 1. BRIEFLY STATED FACTS OF THE CASE ARE THAT A S EARCH OPERATION U/S.132 WAS CONDUCTED IN QURESHI GROUP OF CASES ON 04/08/2 006. SUBSEQUENTLY, THE PROCEEDINGS U/S.153A OF THE ACT WAS INITIATED A ND ASSESSMENT U/S.153A(1)(B) R.W.S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DAT ED 31/12/2008, THEREBY THE ASSESSING OFFICER(AO) MADE ADDITION OF RS.8,95,531/- U/S.69B ON ACCOUNT OF DIFFERENCE IN COST OF CONSTRU CTION. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS, PARTLY ALLOWED THE APPEAL, THEREBY THE LD.CIT(A) DIRECTED AO TO RETAIN THE ADDITION OF RS.70,175/- OUT OF RS. 8,95,531/-. NOW, THE REVENUE IS IN APPEAL BEFORE US. IT(SS)A NO.799/AHD/2010(BY REVENUE)& CO NO.336/AHD/2010 (BY ASSESSEE) ACIT VS. M/S.SUN AUTOMOBILES ASST.YEAR 2006-07 - 3 - 4. APROPOS TO GROUND NO.1 OF REVENUES APPEAL, THE LD.CIT-DR SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT TH E LD.CIT(A) WAS NOT JUSTIFIED IN RESTRICTING THE ADDITION. ON THE CONT RARY, LD.COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT FINDING OF LD.CIT(A) IS BASED ON DVOS REPORT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE FINDINGS OF THE LD.CIT(A) AS CONTAINED IN PARA S-9 TO 9.3 OF HIS ORDER ARE IN THE FOLLOWING MANNER:- 9. I HAVE CONSIDERED THE AFOREMENTIONED FACTS AND SUBMISSION OF THE APPELLANT. IN THE PRESENT CASE, ONLY ISSUE EMERGES IS THAT WHETHER THE ADDITION OF RS.895531/- MADE BY AO TOWARDS THE COST OF CONSTRUCTION OF THE APPELLANT BASED ON REPORT OF DVO IS JUSTIFIED. IN THE PRESENT CASE, IT IS NOTICED THAT APPELLANT HAS CONSTRUCTED A GODOWN AT TELAV FROM AY 2004-05 TO 2007-08 AND TOTAL INVESTMENT SHOWN BY TH E APPELLANT IN THE BOOKS OF ACCOUNTS UPTO 31.3.2007 IS RS.15,07,525/-. THE BOOKS OF ACCOUNTS OF THE APPELLANT HAVE BEEN PRODUCED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. DETAILS OF CONST RUCTION COST INCURRED BY THE APPELLANT ARE SUPPORTED BY BILLS AND VOUCHER S. CONSTRUCTION ACTIVITY HAS BEEN CARRIED ON FROM AY 2004-05 TO 200 7-08 IN PIECEMEAL BASIS AND APPELLANT HAS SUBMITTED YEAR WISE COST OF CONSTRUCTION INCURRED BEFORE AO VIDE LETTER DATED 31.12.2008. A PPELLANT HAS STATED THAT DVO HAS INSPECTED THE PROPERTY ON 17.11.2008, THEREFORE, AS ON THE INSPECTION DATE, BOOKS OF ACCOUNTS OF THE APPELLANT WERE SHOWING THE COST OF CONSTRUCTION OF RS.15,07,525/-. APPELLANT HAS ALSO STATED THAT LEARNED AO HAS NOT CONSIDERED THE COST INCURRED BY THE APPELLANT FOR AY 2007-08 (UPTO 31.3.2007) OF RS.6,50,056/- WHEN T HE PROPERTY WAS INSPECTED BY DVO ON 17.11.2008 I.E. AFTER 31.3.2007 . THIS ARGUMENT OF THE ASSESSEE IS ACCEPTABLE AND THEREFORE THE ADDITI ON IS REDUCED BY RS.6,50,056/- OUT OF RS.8,95,531/-. IT(SS)A NO.799/AHD/2010(BY REVENUE)& CO NO.336/AHD/2010 (BY ASSESSEE) ACIT VS. M/S.SUN AUTOMOBILES ASST.YEAR 2006-07 - 4 - 9.2. FURTHER, APPELLANT AHS STATED THAT THEY HAVE N OT HIRED ANY ARCHITECT AND CONSTRUCTED BUILDING ON SELF SUPERVIS ION BASIS. DVO HAS GRANTED DEDUCTION OF SELF SUPERVISION CHARGES OF 5% OF THE COST OF CONSTRUCTION HOWEVER APPELLANT HAS CLAIMED THAT DVO SHOULD HAVE GRANTED 15% OF THE COST OF CONSTRUCTION FOR SELF SU PERVISION. FOR THIS APPELLANT HAS RELIED ON THE DECISION OF AHMEDABAD T RIBUNAL IN CASE OF RAJHANS BUILDER AND CONTENTION OF THE APPELLANT IS CORRECT AND ACCEPTABLE. FURTHER, APPELLANT HAS CARRIED OUT CON STRUCTION ACTIVITY IN FOUR ASSESSMENT YEARS, THE DVO HAS TAKEN CPWD RATES , THERE IS NO DEFECT IN THE BOOKS OF ACCOUNTS OF THE APPELLANT AN D THE EXPENSES ARE SUPPORTED BY PROPER VOUCHERS AND BILLS. THEREFORE I CONSIDER THAT FURTHER REDUCTION OF 10% OF THE VALUATION ARRIVED B Y DVO IS TO BE GRANTED. DUE TO THIS ADDITION, IS FURTHER REDUCED TO 10% OF RS.1753000/- I.E. 1,75,300/-. 9.3. BASED ON ABOVE, OUT OF THE ADDITION OF RS.8,95 ,531/- APPELLANT IS ALLOWED FOLLOWING RELIEF:- (I) DEDUCTION ON ACCOUNT OF COST OF CONSTRUCTION I NCURRED IN AY 2007- 08 OF RS.6,50,056/- AS RECORDED IN THE BOOKS OF ACC OUNTS AND BEFORE THE DATE OF INSPECTION BY DVO. (II) GENERAL DEDUCTION OF 10% OF THE AMOUNT ASCERT AINED BY DVO OF RS.17,53,000/- BEING RS.1,75,300/- ON ACCOUNT OF IS SUE OF DEDUCTION OF SELF SUPERVISION COST, REGULARITY OF BOOKS OF ACCOU NTS, SPREAD OF CONSTRUCTION ACTIVITY IN FOUR YEARS AND IN PIECEMEA L BASIS ETC. (III) BASED ON ABOVE APPELLANT GET RELIEF OF RS.8, 25,356/-. 5.1. WE FIND THAT THE FINDING OF THE LD.CIT(A) IS BASED ON THE DVOS REPORT AND THE REASONING GIVEN BY LD.CIT(A) IS NOT CONTROVERTED BY THE REVENUE BY PLACING CONTRARY MATERIAL ON RECORD. TH EREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A). THUS, THIS GROUND OF THE REVENUES APPEAL IS REJECTED. IT(SS)A NO.799/AHD/2010(BY REVENUE)& CO NO.336/AHD/2010 (BY ASSESSEE) ACIT VS. M/S.SUN AUTOMOBILES ASST.YEAR 2006-07 - 5 - 6. GROUND NOS.2 & 3 ARE GENERAL IN NATURE, NEED NO INDEPENDENT ADJUDICATION. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 8 . IN THE COMBINED RESULT, THE APPEAL OF THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE BOTH ARE DISMISSED. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) (' #$) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 05/ 02 /2014 60.., .../ T.C. NAIR, SR. PS 3 / ,$7 87'$ 3 / ,$7 87'$ 3 / ,$7 87'$ 3 / ,$7 87'$/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. !! $ '9 / CONCERNED CIT 4. '9() / THE CIT(A)-I, AHMEDABAD 5. 7 #: ,$ , , / DR, ITAT, AHMEDABAD 6. :;& <. / GUARD FILE. 3' 3' 3' 3' / BY ORDER, -7$ ,$ //TRUE COPY// = == =/ // / !) !) !) !) (DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 31.1.14 (DICTATION-PAD 1- P AGE ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 04.02.14 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 BEFOR E OTHER MEMBER 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.5.2.14 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 5.2.14 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