Shri Sanjay Hiralal Thakkar, Ahmedabad V. The ACIT.,Cent.Circle-1(1), Ahmedabad

ITSSA 850/AHD/2010

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 1419 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 28-12-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 31-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Value adopted by valuation officer; Depreciation; Additional evidence; Valuation report
• Section: 153A; 68; 2

Judgement Text

IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 1 OF 29 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHRI S.S. GODARA , JUDICIAL MEMBER IT (SS) A NO. 828 / AHD /201 0 ASSESSMENT YEAR: 200 1 - 02 A.C.I.T. CENTRAL CIRCLE 1(1) , VS. SHRI SANJAY HIR ALAL THAKKAR, AHMEDABAD. DEVNANDAN PAL A CE, AMBLI - BOPAL ROAD, AHMEDABAD. [PAN A A RPT 3337 Q ] IT (SS) A NO. 849 /AHD/201 0 ASSESSMENT YEAR: 200 1 - 02 SHRI SANJAY HIRALAL THAKKAR, VS. A.C.I.T. CENTRAL CIRCLE 1(1), DEVNANDAN PAL A CE, AHMEDABAD. AMBLI - BOPAL ROAD, AHMEDABAD. [PAN AA RPT 3337 Q ] IT (SS) A NO. 829 /AHD/201 0 ASSESSMENT YEAR: 200 2 - 03 A.C.I.T. CENTRAL CIRCLE 1(1), VS. SHRI SANJAY HIRALAL THAKKAR, AHMEDABAD. DEVNANDAN PAL A CE, AMBLI - BOPAL ROAD, AHMEDABAD. [PAN AA RPT 3337 Q ] IT (S S) A NO. 8 50 /AHD/201 0 ASSESSMENT YEAR: 200 2 - 03 SHRI SANJAY HIRALAL THAKKAR, VS. A.C.I.T. CENTRAL CIRCLE 1(1), DEVNANDAN PAL A CE, AHMEDABAD. AMBLI - BOPAL ROAD, AHMEDABAD. [PAN AA RPT 3337 Q ] IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 2 OF 29 IT (SS) A NO. 836 /AHD/201 0 ASSESSMENT YEAR: 200 3 - 04 A.C.I.T. CENTRAL CIRCLE 1(1), VS. SHRI SANJAY HIRALAL THAKKAR, AHMEDABAD. DEVNANDAN PAL A CE, AMBLI - BOPAL ROAD, AHMEDABAD. [PAN AA RPT 3337 Q ] C.O. NO.16/AHD/2011 (IN IT (SS) A NO. 836 /AHD/201 0) ASSESSMENT YEAR: 200 3 - 04 SHRI SANJAY HIRALAL THAKKAR, VS. A.C.I.T. CENTRAL CIRCLE 1(1), DEVNANDAN PAL A CE, AHMEDABAD. AMBLI - BOPAL ROAD, AHMEDABAD. [PAN AA RPT 3337 Q ] (APPELLANT S) (RESPONDENT S ) A SSESSEE BY : SHRI S.N. SOPARKAR, A.R. RESPONDENT : SHRI NAGENDRA SINGH, SR. D.R. DATE OF HEARING : 2 8 .1 2 .2015 DATE OF PRONOUNCEMENT : 18. 01.2016 O R D E R PER S.S. GODARA , J.M. THIS IS A SET OF 6 CASES. THE REVENUE HAS FILED THREE APPEALS I.E. IT (SS) A NOS.828, 829 AND 836/AHD/2010 IN ASSESSMENT YEARS 2001 - 02, 2002 - 03 & 2003 - 04 AND THE ASSESS EE HA S FILED TWO APPEALS I.E. IT (SS) A NOS. 8 49 & 850/AHD/2010 IN FORMER TWO ASSESSMENT YEARS IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 3 OF 29 AND A CROSS OBJECTION NO.16/AHD/2011 IN THE THIRD ONE. ALL THESE CASES ARISE AGAINST THREE SEPARATE ORDERS OF THE CIT(A), AHMEDABAD , ALL DATED 18.10.2010 , IN PROCE EDINGS UNDER SECTION 153A(B) OF THE INCOME TAX ACT, 1961 . 2. WE PROCEED A SSESSMENT YEAR - WISE FOR THE SAKE OF CONVENIENCE AND BREVITY. A . Y . 2001 - 02 REVENUE S APPEAL IT ( SS ) A NO. 828/AHD/ 2010 AND ASSESSEE S CROSS APPEAL IT(SS) NO. 849/AHD/2010. 3. THE A SSESSEE AT THE OUTSET FILES BEFORE US A TABULATION CHART IN THESE CROSS APPEALS CLARIFYING THE SUBSTA NTIVE ISSUES IN VOLVED THEREIN. A PERUSAL THEREOF MAKES IT CLEAR THAT THE REVENUE IS STATED TO HAVE RAISED 13 GROUNDS CHALLENGING THE LOWER APPELLATE ORDER , INTER ALIA , DELETING DISALLO WANCE OF RS.4 , 52 , 089 / - OUT OF INTEREST EXPENSES, DIRECTING THE A SSESSING OFFICER TO DELETE SECTION 68 ADDITION OF UNEXPLAINED CASH CREDIT OF RS.47,11,849/ - AFTER V ERIFICATION OF FRESH EVIDENCES, DELETING ADDITION OF RS.24,80, 0 00/ - MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN COST OF LAND, RESTRICTING UNEXPLAINED INVESTMENT IN COST OF CONSTRUCTION OF ASSE SSEE S HOUSE PRO PERTY OF RS.24,31,000 / - AS AGAINST THAT WORKED OUT IN ASS ESSMENT ORDER OF RS.81,77, 058/ - THEREBY GRANTING RELI EF OF RS.34,71,693/ - , DELETING IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 4 OF 29 EXCESS DEPRECATION DISALLOWANCE OF RS.4,841/ - AND RESTRICTING ADDITION MADE ON ACCOUNT OF LAW WITHDRAWAL E XPENSES TO RS.6 , 000 / - O NLY AS AGAINST THE ONE MADE IN THE COURSE OF ASSESSMENT OF RS.25,000/ - RESPECTIVELY. 4. WE COME TO ASS ESSEE S CROSS APPEAL NOW. HE IS STATED TO HAVE PLEADED FIVE GROUNDS , INTER ALIA , RAISING FOUR SUBST ANTIVE ISSUE S IN CHALLEN GING THE LOWER APP ELLATE ORDER CONFIRMING DISA LLOWANCE OF RS.19,547 / - @ 20% OF TOTAL TELEPHONE EXPENSES, ADDITION OF LOW HOUS E HOLD WITHDR A WAL OF R S.6000 / - , S EC TION 68 ADDITIO N OF UNEXPLAINED CASH CREDIT TO THE EXTENT OF RS.70 , 000 / - IN THE NAME OF C HANDIRKA BEN THAKKAR AS WELL AS PARTLY RESTORING THE ISSUE BACK TO THE A SSESSING OFFICER IN CASE OF OTHER CREDITORS AND IN CONFIRMIN G AD D ITIO N OF RS.24,31,000 / - ARISING FR OM DIFFERENCE BETWEEN COST OF CONSTRUCTION OF RES IDENTIAL HOUSE AS PER BOOKS AND THAT ESTIMATED BY THE DVO, WITH A DIRECTION THAT THE SAME HAS TO BE SPREAD OVER PROPORTIONATELY IN THE RELEVANT YEARS OF CONSTRUCTION. 5. BOTH PARTIES FURTHER CLARIF Y DURING THE COURSE OF HEARING THAT SOME OF THE GROUNDS RAISED IN THE CROSS APPEALS ARE INTERCONNECTED. THEY REITERATE THEIR RESPECTIVE PLEADINGS THEREAFTER FOR CHALLENGING THE IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 5 OF 29 LOWER APP ELLATE FINDINGS. THE REV ENUE AS WELL AS ASS ESSEE FURTHER SUPPORT THE CIT(A) S ORDER TO THE EXTENT IT DECIDES THE RELEVANT ISSUES IN THEIR FAVOUR. 6. WE COME TO FACTS OF THE CASE FIRST. THE ASSESSEE INDIVIDUAL IS ENGAGED IN CONSTRUCTION AND H OTEL BUSINESS . H E FIL E D RETURN ON 31.10.2010 S TATING INCOME OF RS.2,37,230/ - . THE DEPARTMENT CARRIED OUT A SEARCH IN HIS CASE AS WELL AS THAT OF M/S D HAR AMDEV BUILDERS GROUP ON 0 9. 0 2.2005 ALLEGEDLY SEIZING INCRIMINATING MATERIAL AND EVIDENCE. THIS CULMINATED IN SECTION 153A NOTICE BEING ISSUED ON 17 . 0 4.2005. T HE ASS ESSEE FIL E D ITS RETURN IN RESPONSE THERETO ON 0 2. 0 2.2006 ADMITTING THE VERY INCOME DISCLOSED EARLIER. THE A SSESSING OFFICER THEREAFTER COMPLETED REGULAR ASSESSMENT ON 29.12.2006 , INTER ALIA , MAKING VARIOUS ADDITIONS SUBJECT MATTER OF THE INSTANT ADJUDICATION . T HESE CROSS APPEALS WHICH HAVE BEEN PARTLY INTERFERED IN LOWER APPELLATE PROCEEDINGS AS INDICATED HEREINABOVE LEADING BOTH PARTIES AGGRIEVED. 7. WE COME TO DEPARTMENT S APPEAL IT(SS) A NO.828/AHD/2010. ITS FIRST GROUND CHALLENGES THE LOWER APPELLATE ORDER DELETING INTEREST DISALLOWANCE OF RS.4,52,089/ - . THE ASSESSEE S PROFIT & LOSS ACCOUNT OF DIFFERENT PROPRIETARY CONCERN REVEALS HIS INTEREST CLAIM OF IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 6 OF 29 RS.4,32,129/ - IN CASE OF A V KAR GUEST H OUSE AND RS.19 ,9 60/ - IN RELATION TO SHRI SANJAY H. T HAKKAR (PERSONAL) AGGREGATING TO THE ABOVE STATED FIGURES. HE WAS FURTHER FOUND TO HAVE ADVANCED INTEREST FREE ADVANCES TO M/S . DEV P RIYA B UILDERS, M ILONI B UILDERS , D HAR AMNANDAN B UILDERS , S ANJAY T HAKKAR ( P ERSONAL) AND AVKAR G UEST H OUSE. THE A SSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE , ON THE ONE HAND , HAD ADVANCED HUGE AMOUNT AS INTEREST - FREE LOANS AND CLAIMED INTEREST ON BORROWED LOANS IN QUESTION AND, ON THE OTHER HAND , H E TOOK NOTICE OF THE FACT THAT THE ASSESSEE HAD PAID INTEREST O N DEPOSITS RECEIVED FROM SMT. SUSHILA H. T HAKKAR IN THE BOOKS OF AVKAR G UEST HOUSE BUT NOT CHARGED ANY INTEREST IN RESPECT OF LOAN OF RS.8,00,000/ - ADVANCED TO THE VERY DEPOSITOR FROM THE BOOKS OF M /S . DEV PRIYA B UILDERS. THE ASSESSING OFFICER FORMED AN O PINION THAT ALL THESE ARRANGEMENT CREATED ARTIFICIAL DEFICIENCY OF FUNDS. HE OBSERVED THAT THE ASSESSEE COULD HAVE AVOIDED THE IMPUGNED INTEREST - FREE LOANS BY NOT MAKING THE ABOVE INTEREST - FREE ADVANCES. HE PROCEEDED ON THE VERY REASONING TO DISALLOW THE ENTIRE INTEREST CLAIM OF RS.4,52,089/ - . 8. THE CIT ( A ) REVERSE D A SSESSING OFFICER S FIND I NGS AS FOLLOWS : - IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 7 OF 29 7. THE NEXT DISPUTED ADDITIONS IS DISALLOWANCE OF INTEREST OF RS.4,52,089/ - . IT IS STATED BY THE A.O. THAT THE APPELLANT HAD IN THE BOOKS OF A VKAR GUEST HOUSE DEBITED INTEREST EXPENDITURE OF RS.4,32,129/ - AND IN HIS PERSONAL BOOKS INTEREST EXPENDITURE OF RS.19,960/ - . HE HAS STATED THAT THE APPELLANT HAD HOWEVER, GIVEN INTEREST FREE ADVANCES FROM HIS DIFFERENT PROPRIETARY CONCERNS - . THEREFORE, IT IS STATED BY THE A.O. THAT THE APPELLANT HAD BORROWED FUNDS ON WHICH INTEREST IS PAID AND AT THE SAME TIME HUGE INTEREST FREE ADVANCE ARE GIVEN. THUS, THE APPELLANT HAD CREATED ARTIFICIAL DEFICIENCY OF FUNDS. THE APPELLANT COULD HAVE AVOIDED BORROWINGS BY RECOVERY OF INTEREST FREE ADVANCES GIVEN TO DIFFERENT CONCERNS. IT IS FURTHER STATED BY THE A.O. THAT THE APPELLANT HAD NOT ESTABLISHED NEXUS BETWEEN INTEREST FREE FUNDS AVAILABLE WITH HIM AND THE INTEREST FREE ADVANCES GIVEN BY HIM. HE HAS, THEREFORE, HE LD THAT THE INTEREST BEARING BORROWINGS CANNOT BE SAID TO BE FOR THE PURPOSE BUSINESS AND HENCE INTEREST IS NOT ALLOWABLE U/S. 36(1)(III). HE HAS REFERRED TO THE FOLLOWING CASES: I) CIT VS. MOTOR GENERAL FINANCE LTD. 254 ITR 449 II) CIT VS. H.R. SUGAR PVT. LTD. 187 ITR 363 (ALLAHABAD) III) K. SOMASUNDARAM & BROTHERS VS. CIT 238 ITR 938 (MAD.) IV) I BAY & CO. 254 ITR 248 (KERALA) V) ABHISHEK INDUSTRIES 286 ITR 1 (PUNJAB & HARYANA) 7.1 THE APPELLANT IN THIS CONNECTION SUBMITTED THAT FIRST OF ALL THE A.O. HAS APPRECIATED THE FACT THAT THERE ARE ADEQUATE INTEREST FREE FUNDS AVAILABLE WITH THE APPELLANT AND, THEREFORE, THERE WAS NO REASON FOR DISALLOWANCE OF ANY INTEREST. IN THIS CONNECTION, THE A. R. REFERRED TO THE DECISION OF THE ITAT, AHMEDABAD IN THE CASE OF TORRENT FINANCIERS REPORTED AT 73 TTJ 684. THE APPELLANT'S A.R. FURTHER REFERRED TO THE SUPREME COURT DECISION IN THE CASE OF MUNJAL SALES REPORTED AT 298 ITR 298 AND STATED THAT AS HELD BY THE SUPREME COURT, WHEN THE ASSESSEE IS HAVING ADEQUATE INTERES T FREE FUNDS, NO DISALLOWANCE WAS JUSTIFIED FOR ANY INTEREST FREE ADVANCES GIVEN. IN IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 8 OF 29 SUPPORT OF THIS ARGUMENT, THE APPELLANT'S A.R. FURNISHED DETAILS OF INTEREST FREE FUNDS AVAILABLE WITH HIM IN DIFFERENT PROPRIETARY CONCERNS IN THE FORM OF OWN CAPITAL AND ALSO INTEREST FREE ADVANCES FROM VARIOUS CONCERNS, ACCORDING TO WHICH THEY ARE HAVING INTEREST, FREE FUNDS OF AGGREGATE AMOUNT OF RS.1,75,25,534/ - . APART FROM THIS, ON FACTS, IT IS SUBMITTED BY THE A.R . THAT THE AMOUNT OF RS. 19,960/ - DEBITED IN PERSONAL B OOK IS INTEREST ON CAR LOAN WHICH WAS PURCHASED FOR THE PURPOSE OF BUSINESS. FURTHER, IT IS STATED THAT IN THE BOOKS OF AVKAR GUEST HOUSE, OUT OF INTEREST OF RS.4,32,129/ - , INTEREST OF RS.1,91,146/ - IS PAID TO SANJAY THAKKAR'S PERSONAL ACCOUNT WHICH IS CRE DITED IN THE BOOKS OF SANJAY PERSONAL. THIS TWO ENTRIES ARE NEUTRALIZED. AS SUCH, THERE IS NO QUESTION FOR DISALLOWANCE OF THAT AMOUNT. IT IS FURTHER STATED THAT APART FROM THIS, MOST OF THE ADVANCES ARE REPRESENTING OPENING BALANCES AND IN THE PAST, NO DI SALLOWANCES ON THIS ACCOUNT WAS MADE. 7.2 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE ABOVE SUBMISSIONS. IT IS NOT IN DISPUTE THAT THE APPELLANT HAS GIVEN INTEREST FREE ADVANCES TO DIFFERENT PROPRIETARY CONCERNS. AT THE SAME TIME, IT IS NOT IN DISPUTE THAT THE APPELLANT HAS INTEREST FREE FUNDS AVAILABLE WITH HIM. THEREFORE, CONSIDERING THE DECISION OF THE SUPREME COURT IN THE CASE OF MUNJAL SALES REPORTED AT 298 ITR 298, THERE WAS NO JUSTIFICATION FOR DISALLOWANCE OF INTEREST ON THIS GROUND. APART FROM THIS, HAVING REGARD TO THE FACTS STATED BY THE APPELLANT, THE DISALLOWANCE OF INTEREST ON CAR LOAN OF RS.19,960/ - IS NOT JUSTIFIED. SIMILARLY, THE INTEREST OF RS.1,91,146/ - AS STATED BY THE APPELLANT IS NEUTRALIZED IN THE TWO CONCERNS AND AS SUCH THE ADDIT ION TO THAT EXTENT IS ALSO NOT JUSTIFIED. THUS ON CONSIDERATION OF OVERALL SITUATION, THE ADDITION OF RS.4,52,089/ - MADE BY THE A.O. IS DIRECTED TO BE DELETED. 9. WE HAVE HEARD RIVAL CONTENTIONS. RELEVANT FACTS NARRATED HEREINABOVE ARE NOT REPEATED FOR THE SAKE OF CONVENIENCE AND BREVITY. THE CIT(A) RECORDS A FINDING THAT THE ASSESSEE HAD AVAILABLE AT HIS DISPOSAL SUFFICIENT INTEREST - FREE FUNDS SO AS TO BE ADVANCED WITHOUT IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 9 OF 29 CHARGING INTEREST. THIS IS ALSO NOT THE REVENUE S CASE THAT HE HAS DIVERTED INTER EST - BEARING FUNDS FOR ANY OTHER PURPOSES THAN THAT OF HIS BUSINESS. THIS HAS MADE THE CIT(A) TO FOLLOW HON BLE APEX COURT S DECISION IN MUNJAL SALES (SUPRA). THE REVENUE FAILS IN REBUTTING THE IMPUGNED CRUCIAL FINDINGS OF FACTS HOLDING AVAILABILITY OF S UFFICIENT NON - INTEREST BEARING FUNDS. WE ACCORDINGLY FIND NO REASON TO INTERFERE WITH THE CIT(A) S ACTION IN DELETING THE IMPUGNED INTEREST DISALLOWANCE OF RS.4,52,089/ - . THIS FIRST SUBSTANTIVE GROUND RAISED IN THE REVENUE S APPEAL FAILS. 10. THE RE VENUE S SECOND SUBSTANTIVE GROUND SEEKS TO RESTORE UNEXPLAINED CASH CREDIT ADDITION OF RS.47,11,849/ - MADE IN THE COURSE OF ASSESSMENT BUT REMIT TED BACK TO THE ASSESSING AUTHORITY FOR FRESH VERIFICATION OF EVIDENCE. WE FIND THAT THE ASSESSEE S THIRD SUBST ANTIVE GROUND (SUPRA) IS FOUND CONNECTED THER E TO. 11. RELEVANT F ACTS TO THIS COMMON ISSUE IN THESE CROSS APPEALS ARE THAT ASSESSEE S BALANCE SHEET REVEALED VARIOUS DEPOSITS/CASH CREDITS FROM DIFFERENT PARTIES AGGREGATING TO ABOVE STATED GROSS FIGURE. T HE ASSESSING OFFICER SOUGHT TO CONFIRM IDENTITY, GENUINENESS AND CREDIT WORTHINESS QUA ASSESSEE S CONCERNS M/S DEV P RIYA B UILDERS, M ILONI IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 10 OF 29 B UILDERS AND D HAR AMNANDAN B UILDERS RECEIVED THROUGH CHEQU E S. HE QUOTED ASSESSEE S FAILURE IN FILING ALL NECESSARY DET AILS ALONG WITH CREDITORS CONFIRMATION F OR INVOKING SECTION 68 OF THE ACT THEREBY ADDITION TO THE IMPUGNED SUM OF RS.47 , 81,849/ - BEING MADE IN ASSESSMENT ORDER. 12. WE COME TO LOWER APPELLATE PROCEEDINGS NOW. THE ASSESSEE , INTER ALIA , PLEADED LACK OF S UFFICIENT TIME TO PROVE ALL THE THREE ASPECTS OF HIS CLAIM. HE LEAD ADDITIONAL EVIDENCE BY PLACING ON RECORD HIS CREDITOR S PAN DETAILS, ACCOUNT COPIES, CREDIT CONFIRMATION AND ADDRESSES ETC. HE PLEADED REASON S FOR NON - FURNISHING OF PAN FOR TWO CREDITORS TO THE FACT THAT THEY WERE NOT ASSESSED TO TAX. THE CIT ( A ) SOUGHT REMAND DETAILS. THE ASSESSING OFFICER FILED THE SAME ON 24. 0 8.2010 STRONGLY OBJECTING TO ADMISSION OF ADDITIONAL EVIDENCE. HE COMMENTED ON MERITS THAT SOME OF THE PAN DETAILS DID NOT MATCH WITH THE ACTUAL ONES DUE TO ERROR IN FEW ALPHABETS THEREIN, CREDITORS CONFIRMATIONS WERE FOUND TO BE UNDATED ON X EROX COPIES AND THAT CONTRA ACCOUNTS CAPITAL ACCOUNTS, BALANCE SHEETS AND BOOKS OF ACCOUNTS HAD ALSO NOT BEEN PLACED ON RECORD. THE ASSESSEE IN REBUTTAL APPEARS TO HAVE FILED CORRECT PAN , PHOTOCOPIES, CREDITORS RESPECTIVE RETURNS, HIGHLIGHTED NON - MAINTENANCE OF BOOKS IN SOME IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 11 OF 29 CASES AND FURTHER PRODUCED BANK STATEMENTS. THE CIT ( A ) THEREAFTER PARTLY ACCEPTS ASS ESSEE S SUBMISSION AS UNDER : - 8. 5 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND THE CONTENTIONS OF THE A.O. IN THE ASSESSMENT ORDER AND THE REMAND REPORT. IT IS NOTICED THAT IN ALL THE CASES THE APPELLANT HAD FURNISHED THE CONFIRMATIONS OF THE RESPECTIVE PARTIES FOR THE AMOUNT DEPOSITED WITH THE APPELLANT. IT IS EXPLAINED BY THE A.R. THAT COPIES OF CONTRA ACCOUNTS FROM THE BOOKS OF DEPOSITORS ARE NOT POSSIBLE AS THE DEPOSITORS ARE NOT MAINTAINING PERSONAL BOOKS. THOUGH IN THE FIRST SUBMISSION, THE P.A. NOS OF THE DEPOSITORS WERE QUOTED IN THE CONFIRMATIONS, THE SAME WERE FOUND TO BE NOT TALLYING WITH PAN DATA BASE OF THE DEPARTMENT AS REPORTED BY THE A.O. HOWEVER, IN REBUTTAL OF SUCH REPORT OF THE A.O., THE APPELLANT HAS NOW FURNISHED THE CORRECT PA NOS. ALONG WITH COPIES OF PAN CARD OR RETURNS OF THE RESPECTIVE PARTIES. CONSIDERING THE FACT THAT THE CORRECT PA NOS. ARE NOW GIVEN IN REBUTTAL OF THE REMAND REPORT, IN THE INTEREST OF JUSTICE, IT IS DIRECTED THAT THE A.O. WILL VERIFY THE PA NO. AND IF THE PA NOS. GIVEN BY THE APPELLA NT NOW ARE FOUND TO BE CORRECT, THE ADDITION MADE IN RESPECT OF DEPOSIT OF SUCH PARTIES SHALL BE DELETED. THE A.O. IS DIRECTED TO PASS A SPEAKING ORDER ON THIS POINT. 8.6 IT IS, HOWEVER, NOTICED THAT IN THE FOLLOWING CASES THE APPELLANT HAS NOT BEEN AB LE TO GIVE P.A. NOS. O F THE DEPOSITORS: I) CHANDRIKA THAKKAR RS. 70,000/ - II) SHITAL AJITKUMAR RS. 9,00,000/ - III) SONAL GOSWAMI RS. 9,50,000/ - IV) GEETABEN GOSWAMI RS. 9,50,000/ - HOWEVER, IN RESPECT OF SHITAL AJITKUMAR, SONAL GOSWAMI AND GEETABEN, THE APPELLANT HAS GIVEN THE DETAILS THAT THEY HAD TAKEN LOAN FOR INVESTMENT IN HOUSE PROPERTY FROM THE BANK AND FROM SUCH LOAN, THEY HAD GIVEN DEPOSIT, FOR WHICH CONTRA ACCOUNT FROM BANK STATEMENT IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 12 OF 29 IS GIVEN. THUS CONSIDERING THE FACT THAT THE SOURCE OF AMOUNT DEPOSITED WITH THE APPELLANT IN THE CASE OF SHITAL AJITKUMAR, SONAL GOSWAMI AND GEETABEN GOSWAMI IS FROM THE BANK LOAN OBTAINED BY THEM, THE A.O. IS DIR ECTED TO CONSIDER THE SAID EVIDENCE AND IF THE SAME IS FOUND TO BE IN ORDER, HE SHALL DELETE THE ADDITION WITH REFERENCE TO THE DEPOSIT OF SAID PARTIES. 8.7 AS REGARDS TO THE LOAN IN THE CASE OF CHANDRIKA N. THAKKAR, WHERE THE DEPOSITORS IS NOT HAVING P.A . NO. AND SHE FAILED TO EXPLAIN HER SOURCE FOR DEPOSIT, THEREFORE, THE ADDITION IS OF RS.70,000/ - IS CONFIRMED. 13. THIS LEAVES BOTH THE PARTIES AGGRIEVED TO THE EXTENT INDICATED HEREINABOVE. 14. WE HAVE HEARD RIVAL CONTENTIONS. THERE IS NO DISPUTE T HAT THE ASSESSEE IN REBUTTAL HAS FURNISHED CORRECT PAN DETAILS WITH BANK ACCOUNT COPIES , CREDITORS CONFIRMATIONS AND THEIR INCOME TAX RETURNS. WE FIND THAT SECTION 251(1)(A) OF THE ACT NO MORE EMPOWERS THE CIT(A) TO REMAND A CASE W.E.F. 0 1. 0 6.2001. THE FACT ALSO REMAINS THAT THE ASS ESSEE HAS ALREADY MADE OUT A CASE FOR ADMITTING ADDITIONAL EVIDENCE BEFORE THE CIT(A). WE OBSERVE IN THESE FACTS THAT THE MAIN REASON ON THE PART OF THE CIT(A) FOR DIRECTING THE ASSESSING OFFICER TO VERIFY THE FACTS ONCE AGAI N IS BECAUSE OF THE FACT THAT THE ASSESSEE HAS BEEN ABLE TO FILE COMPLETE SET OF RELEVANT DOCUMENTS ONLY IN IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 13 OF 29 REBUTTAL STAGE. WE TAKE INTO ACCOUNT THE BAR IMPOSED BY THE LEGISLATURE ON THE CIT(A) S JURISDICTION IN SECTION 251(1)(A) HEREINABOVE AND INTERFERE TO THE LIMITED EXTENT THAT THE IMPUGNED REMAND DIRECTIONS SHALL FORM PART OF OUR INSTANT FINDING S . IN OTHER WORDS, WE INTERFERE ON THIS LEGAL ASPECT ONLY. HOWEVER, WE DIRECT THE ASSESSING OFFICER TO RE - DECIDE THIS ENTIRE ISSUE AFRESH AFTER TAKING INTO AC COUNT THE MATERIAL ON RECORD SUBMITTED BY WAY OF ADDITIONAL EVIDENCE AFTER AFFORDING ADEQUATE OPPORTUNITY OF HEARING. 15. THIS LEAVES US WITH LATER PART OF ASSESSEE S ARGUMENT S /PLEADINGS THAT THE CIT(A) HAS ERRED IN CONFIRMING THE IMPUGNED UNEXPLAINED CASH CREDIT ADDITION IN CASE OF CHAND RIKABEN THA K KAR TO THE TUNE O F RS.17,000/ - . IT IS EVIDENT TO US THAT THIS CREDITOR IS NEITHER HAVING ANY PAN CARD NOR HAS SHE BEEN ABLE TO EXPLAIN HER SOURCE. WE FIND NO REASON TO INTERFERE IN THE LOWER APPELLATE REA SONING UNDER CHALLENGE. THE SAME IS ACCORDINGLY UPHELD. OUR THESE FINDINGS ACCEPT REVENUE S SUBSTANTIVE GROUNDS FOR STATISTICAL PURPOSES AND REJECT CORRESPONDING GROUND RAISED IN ASSESSEE S APPEAL (SUPRA). 16. THE REVENUE S THIRD SUBSTANTIVE GROUND PLEA DS THAT THE CIT(A) HAS WRONGLY RESTRICTED ADDITION OF RS.74,20,963/ - AS UNDISCLOSED IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 14 OF 29 INVESTMENT IN THE COST OF CONSTRUCTION/LAND OF THE RESIDENTIAL PREMISES IN QUESTION KNOWN AS DEVNANDAN PALACE , AMBLI - BOPAL ROAD, AHMEDABAD. IT FURTHER AVERS THAT THE LOW ER APPELLATE ORDER HAS ERRED IN RESTRICTING UNEXPLAINED INVESTMENT IN COST OF CONSTRUCTION OF HOUSE OF RS.24,31,000 / - A S AGAINST THAT WORKED OUT IN ASSESSMENT ORDER AMOUNTING TO RS.81,77,058/ - THEREBY DIRECTING TO DELETE ADDITION OF RS.34,71,693/ - OUT OF RS.49,40,56 3 / - . THE ASSESSEE , ON THE OTHER HAND , RAISES A CORRESPONDING GROUND IN HIS APPEAL CHALLENGING CONFIRMATION OF ADDITION OF RS.24,31,000/ - (SUPRA). THIS ISSUE IS INTERCONNECTED IN THEIR TWO CROSS APPEALS IN HAND. WE NOTICE FR O M ASS ESSMENT ORDE R THAT THE A SSESSING OFFICER MADE SECTION 142A REFERENCE TO THE D EPARTMENTAL V ALUATION O FFICER WHO FILED HIS REPORT ON 15.12.2006 ASCERTAINING VALUE OF THE RESIDENTIAL PROPERTY IN QUESTION TO BE OF RS.1,46,28,300 AS ON 31. 0 3.2005 AS AGAINST THAT SHOWN IN B OOKS OF RS.64,51,242/ - . THE DVO ASCERTAINED COST OF THE LAND APPURTENANT TO THE HOUSE AS OF RS.30,97,500/ - ON 13.10.2000 TURNING OUT TO BE MUCH HIGHER THAN THAT DECLARED OF RS.6,17,100/ - . THE A SSESSING OFFICER ADOPTED THE DVO S VALU E AS ON 31. 03.2005 AS T H E BASIS FOR DETERMINING COST O F CONSTRUCTION ON 31 ST M ARCH OF EACH RELEVANT PREVIOUS YEAR THEREBY WORKING OUT THE SAME AS PER THE ABOVE STATED VALUATION REPORT. THIS FORMULA RESULTED IN ADDITION OF DIFFERENTIAL IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 15 OF 29 AMOUNT IN COST OF CONSTRUCTION OF RS.49,4 0, 563/ - AND R.24,80,400/ - RELEV A NT TO THE LAND COST AGGREGATING TO THE IMPUGNED ADDITION OF RS.74,20,963/ - . 17. THE CIT ( A ) PARTLY AGREED WITH ASSESS E E S ARGUMENT RAISED IN TH E LOWER APP ELLATE PROC E EDING AS UNDER : - 9.7 I HAVE CONSIDERED THE ASSESSME NT ORDER, THE DVO'S REPORT AND THE ABOVE SUBMISSIONS. FIRST OF ALL, I FIND THAT THE LAND VALUE AS PER THE BOOKS OF THE APPELLANT AND HIS WIFE IS AT THE COST OF RS.12.34 LAKH FOR WHICH THE LAND WAS PURCHASED. THE DVO HAS APPLIED INCORRECT RATE INASMUCH AS H E HAS FAILED TO APPRECIATE THAT THE LAND WAS PURCHASED ON 13 TH OCTOBER 2000 AND THUS EVEN AS PER THE SALE INSTANCES STATED BY THE DVO, RATE APPLICABLE WOULD BE RS.200/ - PER SQ.MTR. WHICH IS OF THE YEAR I.E. SALE INSTANCE NO.3. THAT APART, THE LAND PURCHASE DOCUMENT WAS REGISTERED WITH THE SUB - REGISTRAR AND THE VALUE WAS CERTIFIED BY THE STAMP DUTY AUTHORITY. CONSIDERING THESE FACTS THERE IS NO JUSTIFICATION FOR ADOPTING ANY VALUE OTHER THAN THE BOOK COST FOR THE PURPOSE OF INVESTMENT IN LAND. THE ADDITION O F RS.24,80,400/ - MADE ON THIS ACCOUNT IS, THEREFORE, DELETED. 9.8 IN SO FAR AS THE COST OF CONSTRUCTION IS CONCERNED, THE DVO HAS ESTIMATED THE COST AT RS.1,46,28,302/ - AS PER HIS VALUATION REPORT DATED 28 - 12 - 2006. HE HAS NOT GIVEN YEAR - WISE ESTIMATE. A PART FROM THIS, I FIND THAT THE DVO HAS IN HIS REPORT SPECIFICALLY OBSERVED THAT THE COST OF CONSTRUCTION MAY BE MORE OR LESS TO THE EXTENT OF 10% AND IF WEIGHTED MEAN PERIOD OF CONSTRUCTION AS PER DECLARED COST OF CONSTRUCTION WHICH FALLS IN THE EARLIER Y EARS IS CONSIDERED, THE ASSESSED COST MAY BE TAKEN IN PROPORTION OF THE YEAR - WISE DECLARED IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 16 OF 29 COST. THUS THE DVO HIMSELF HAS EXPRESSED VARIANCE OF ABOUT 10% IN THE COST ESTIMATED BY HIM. THE DVO HAS FURTHER STATED THAT IN THE CONSTRUCTION OF PRIVATE BUNGALOW WORKMANSHIP OF HOUSE IS OF HIGHEST STANDARD AND, THEREFORE, IT COSTS MORE. HOWEVER, HE HAS STATED THAT THE ASSESSEE MAY - HAVE ECONOMIZED TO SOME EXTENT. - IT IS FURTHER STATED BY THE DVO THAT THE NORMALLY 7.5% BUILDERS PROFIT IS CONSIDERED AND TO THAT EXTENT TO THE BEST JUDGMENT DEDUCTION MAY BE ALLOWED. AS FURTHER SUBMITTED BY THE APPELLANT, THE DVO HAS ADOPTED THE STANDARD RATE WHICH IS AS PER THE CPWD RATE WHEREAS THE COST IN THE APPELLANT'S CASE WOULD BE LESSER. THE APPELLANT HAS RIGHTLY FURTHER POINTED O UT THAT THE DVO THOUGH OBSERVED THAT HE HAS NOT CONSIDERED THE VALUE OF FURNITURE ITEMS, IN THE REPORT OF DVO IN HIS WORKING FURNITURE ITEMS ARE INCLUDED SUCH AS ACRYLIC SHEET, POP WORK , FALSE CEILING, CORNER BAND, WALL FURNISHING, FALSE CEILING, FIXED BED , WOODEN WORK, PLY WALL PANELLING , WOODEN FLOORING, GLASS SHUTTER. IT IS, THEREFORE, NECESSARY TO COMPARE THE VALUE ADOPTED BY THE DVO WITH THE COST OF CONSTRUCTION ALONG WITH THE COST OF FURNITURE AS PER THE BOOKS. 9.9. APART FROM THIS, IT IS RIGHTLY PO INTED OUT BY THE APPELLANT THAT THE APPELLANT BE.NG IN CONSTRUCTION BUSINESS, HE GETS DISCOUNT IN MATERIAL COST, LABOUR COST ETC. APART FROM THIS, THEY HAVE NOT TO INCUR ARCHITECT FEES, INTERIOR FEES, ENGINEER'S FEES WHICH ARE CONSIDERED BY THE DVO IN HIS REPORT. AS SUCH THOSE FIGURES ARE REQUIRED TO BE EXCLUDED FROM THE ESTIMATE OF COST MADE BY DVO. THE APPELLANT HAS ALSO POINTED OUT THAT THE COST OF CONSTRUCTION INCLUDES FLOORING COST WHEREAS THE DVO HAS SEPARATELY ADDED FLOORING ITEMS OF RS.19 LAKH WHICH RESULTS INTO DUPLICATION IN THE ESTIMATE. HOWEVER, IN THE ABSENCE OF ANY EVIDENCE AND SUPPORTING MATERIAL, THIS CONTENTION OF THE APPELLANT IS NOT ACCEPTED. IN THAT CASE THE ESTIMATED COST OF DVO WOULD BE REDUCED AS UNDER: RS. IN LAKH COST OF CONSTRUCTION AS PER DVO 146.28 LESS: 1) ADJUSTMENT TO THE EXTENT OF 10% 13.61 FOR PROBABLE WEIGHTAGE AS PER IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 17 OF 29 INSTRUCTION OF DVO 2) ARCHITECT FEES, INTERIOR FEES AND 10.16 CONTINGENCIES ESTIMATED BY DVO WHICH IS NOT REQUIRED 3) ESTIMATED PROFIT ELEMENT OF THE 10.20 BUILDERS TO THE EXTENT OF 7.5% AS STATED BY DVO 4) ESTIMATED SAVING IN THE MATERIAL 13.61 COST AND LABOUR COST FOR THE REA SONS EXPLAINED EARLIER ATLEAST TO THE EXTENT OF 10% -------- 47.58 BALANCE RS. 98.70 AS AGAINST THE ABOVE, COST OF CONSTRUCTION, AS PER THE APPELLANT'S BOOKS INCLUDING COST OF FURNITURE WORKS OUT OF RS.74.39 LAKH . THE ADDITION IS, THEREFORE, REDUCED TO RS.24,31,000/ - BEING THE DIFFERENCE BETWEEN THE ADJUSTED CONSTR UCTION COST ESTIMATED AS ABOVE AND THE COST OF CONSTRUCTION AS PER THE BOOKS OF THE APPELLANT. THIS DIFFERENCE OF RS.24.31 LAKH MAY BE TAXED IN PROPORTION OF COST OF CONSTRUCTION INCURRED BY THE APPELLANT IN RESPECTIVE YEARS, AS IS DONE IN RESPECTIVE ASSES SMENT ORDERS. THIS ORDER IS DISPOSED OFF ACCORDINGLY. 18. IT IS IN THIS BACKDROP OF FACTS THAT TH E REVENUE AS WELL AS THE ASSESS E E HAVE PLEADED THEIR RESPECTIVE GRIEVANCES AGAINST THE ABOVE EXTRACTED FINDINGS. THE AS S ESS EE S CASE BEFORE US IS THAT THE IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 18 OF 29 A SSESSING OFFICER NOWHERE REJECTED HIS BOOKS STATING COST O F CONSTRUCTION AND LAND BEFORE MAKING REFERENCE TO TH E DVO UNDER SECTION 142A. HE SUBMITS THAT THERE IS NO INCRIMINATING MATERIAL ON RECORD POINTING ANY DEFECT IN H IS BOOKS SO AS TO WARR A NT ANY DVO REFERENCE . OUR ATTENTION WAS INVITED TO SECTION 142(A) OF THE ACT . AS APPLICABLE IN TH E IMPUGNED A SSESSMENT YEAR . VARIOUS JUDICIAL PRECEDENTS ARE ALSO QUOTED IN SUPPORT OF THIS ARGUMENT . 19. THE REVENUE STRONGLY SUPPOR T S THE A SSESSING OFFICER S ACTI O N IN MAK I NG SECTION 142A REFERENCE TO THE DVO. IT TAKES US TO SECTION 142A AS INCORPORATED BY WAY OF THE F INANCE A CT N O.2 OF 2014 W.E.F. 0 1.10.2014 WHEREIN SUB - SECTION 2 TO SECTI O N 142A PROVIDES FOR SUCH A R EFERENCE TO THE DVO WHETHER OR NOT THE A SSESSING O FFICER IS SATISFIED ABOUT AN ASSESS EE S ACCOUNT. WE FIND THAT THE SAME APPLIES ONLY W.E.F. 0 1.10 .2014. W E REITERATE THAT TH E IMPUGNED A SSESSMENT YEAR BEFORE US IS 2001 - 02. THE HON BLE JURISDICTIONAL HIGH COURT DEALING WITH THE VERY STATUTORY PROVISION I N IT O VS. VIJAY K UMAR G UPTA , 365 ITR 470 ( GUJ ARAT) DEALS WITH A CASE WHEREIN THE A SSESSING OFFICER MADE A SIMILAR REFER ENCE WITHOUT REJECTING BOOKS OF ACCO U NT. THEIR L ORDSHIPS HOLDS THAT SUCH KIND OF REFERENCE WITHOUT REJECTI O N OF BOOK S IS NOT SUSTAINABLE IN THE EYE OF LAW. NEXT CASE LAW IS GOOD LUCK IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 19 OF 29 A UTOMOBILES VS. ACIT ( 2013 ) 359 ITR 306 (GUJ ARAT ). THE HON BLE JURISDICTIONAL HIGH COURT HOLDS IN THIS CASE LAW THAT A DVO REPORT CANNOT FORM BASIS FOR REJECTING AN ASSESS EE S BOOKS STATING COST OF CONSTRUCT ION IN QUESTION. SIMILAR IS THE LEG A L POSITION WITH CASE LAW IN SARGAM CINEMA VS. CIT , 328 ITR 513 (SC) HOLDING THAT AN ASSESSING AUTHORITY CANNOT MAKE A DVO S REFERE N CE UNDER SECTION 142A WITHOUT REJECTING BOOKS. WE ACCEPT ASSESSE E S ARGUMENT ACCO R D I NGL Y AND HOLD TH A T THE A SSESSING OFFICER S ACTION IN INVOKING SECTION 142A REFERENCE WITHOUT REJECTING ASSESSEE S BOOKS STATING COST OF CONSTRUCTION OF RESIDENTIAL PROPERTY IN QUESTION AS WELL AS TH E LAND APPURTENANT THERETO IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND IN T HE COURSE O F SE A RCH OR ANY INFIRMITY BEING PO I NTED OUT THERE. WE FOLLOW THE ABOVE STATED JUDICIAL PRECEDENTS AND DELETE TH E ENTIRE ADDITION AMOUNT OF RS.7 4 ,20,96 3 / - BEING MADE IN ASSESSMENT ORDER (SUPRA). OUR THIS LEGAL ADJUDICATI O N RE JECTS R EVENUE S CORRESPONDING GROUND AND ACCEPTS THE CORRESPONDING A S SESSE E S PLEA HEREINABOVE. 20. THE R EVENUE S NEXT SUBSTANTIVE GROUND CHALLENGES DISALLOWANCE/ADDITION OF RS.4,841/ - MADE ON ACCOUNT OF EXCESS DEPRECIATION. THE ASSESSEE HAD RAISED T HE IMPUGNED CLAIM AT THE RATE OF 25% INSTEAD OF 15% IN RESPECT OF ELECTRICAL INSTALLATION AND IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 20 OF 29 FITTINGS OF HIS H OTEL BUILDING. THIS SUM CAME TO BE RS.4,841/ - . WE DO NOT FIND ANY REASON BEING STATED IN PARA GRAPH NO. 5.1 OF THE A SSESSMENT O RDER BEFORE MAKING THE IMPUGNED DISALLOWANCE. WE NOTICE FROM THE LOWER APPELLATE ORDER THAT THE CIT ( A ) HAS A C CEPTED ASSES SEE S SUBMISSION RELYING UPON T RIBUNAL S DECISION IN THE CASE OF M ARWAR H OTELS L TD ., IT A NO. 881/AHD/2006 DECIDED ON 28.10.2006 AS WELL AS A SIMILAR ORDER PASSED BY THE CIT ( A ) - I IN GROUP CASE OF RA KESH H IRALAL T HAKKAR ( BROTHER OF THE ASSESSEE ) DECIDED ON 25.05.2007. T HE R EVENUE FAILS TO POINT OUT ANY DISTINCTION ON FACTS OR LAW BEFORE US SO AS TO REVERSE THE LOWER APP ELLATE FINDING , UPHOLDING THE IMPUGNED CLAIM OF EXCESS DEPRECATION @ 25% ON ELECTRICAL INSTALLATIONS WITH SANITARY FITTINGS IN ASSESS EE S H OTEL BUILDING. THIS SUBST ANTIVE GR O UND IS ACCORDINGLY REJECTED. 21. THIS LEAVES US WITH THE REVENUE S LAST SUBST ANTIVE GROUND RESTRICTING ADDITION MADE ON ACCOUNT OF LOW HOUSE HOLD EXPENSES WITHDRAWAL FROM RS.25,000 / - TO RS.6,000/ - . IT IS TO BE SEEN THAT THE AS S ESS E E HAS ALSO RAISED A CORRESPONDING SUBST ANTIVE GROUND NO.2 IN HIS APPEAL ASSAILING CORRECTNESS OF THE LOWER APPELLATE FINDING READING AS UNDE R : - IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 21 OF 29 6. THE NEXT ADDITION DISPUTED BY THE APPELLANT IS ON ACCOUNT OF ESTIMATE OF HOUSEHOLD EXPENSES RESULTING INTO ADDITION OF RS.25,000/ - . THE ADDITION HAS BEEN MADE FOR THE REASON THAT THE APPELLANT HAD SHOWN WITHDRAWALS OF RS.48,000/ - ONLY FOR HOUSEH OLD EXPENSES AND HIS WIFE HAD MADE WITHDRAWALS OF RS.18,000/ - . HE HAS ESTIMATED THE HOUSEHOLD EXPENSES OF RS.91,000/ - AND THEREFORE, THE ADDITION IS MADE FOR THE BALANCE AMOUNT OF RS.25,000/ - . 6.1 IN THIS CONNECTION, THE APPELLANT SUBMITTED THAT THE ADDIT ION IS MADE ONLY ON PRESUMPTION AND ESTIMATE BASIS AND THERE IS NO PROOF ABOUT ANY EXPENDITURE HIGHER THAN WHAT IS SHOWN BY WAY OF WITHDRAWALS. IT IS SUBMITTED THAT THE TELEPHONE AND PETROL EXPENSES ARE DEBITED IN THE BOOKS OF BUSINESS CONCERNS AND AS SUCH THE HOUSEHOLD WITHDRAWALS ARE ADEQUATE. IT IS SUBMITTED THAT CONSIDERING THE DECISION OF THE ITAT IN THE CASE REPORTED AT 19 TTJ 408, THE A.O. HAS. TO ESTABLISH THAT THE HOUSEHOLD EXPENSES SHOWN BY THE APPELLANT ARE NOT ADEQUATE. IT IS SUBMITTED THAT NO S UPPORTING EVIDENCE IS FOUND AS A RESULT OF SEARCH SO AS TO SHOW THAT THE APPELLANT HAS ANY FURTHER HOUSEHOLD EXPENSE. 6.2 ON CONSIDERATION OF THE FACT STATED BY THE APPELLANT, IT IS NOTICED THAT THE APPELLANT HAS SHOWN WITHDRAWAL OF RS.66,000/ - BY HIMSELF AND HIS WIFE. THE A.O. HAS NOT FOUND ANY MATERIAL EVIDENCE TO SHOW THAT THERE WAS ANY FURTHER EXPENDITURE ON HOUSEHOLD EXPENDITURE. HOWEVER, LOOKING TO THE STATUS OF THE APPELLANT HE H AS TO ESTIMATE THE EXPENDITURE OF RS.91,000/ - . HE MAY BE JUSTIFIED IN M AKING - ESTIMATE HAVING REGARD TO THE STATUS OF THE APPELLANT FAMILY. HOWEVER, LOOKING TO THE FACTS THAT EXPENDITURE ON TELEPHONE, VEHICLES ETC. ARE DEBITED IN THE BOOKS OF THE BUSINESS CONCERN, THE ESTIMATE MADE BY THE A.O. IS EXCESSIVE. I ESTIMATE THE HOUS EHOLD EXPENSES FOR THE YEAR AT RS.72,000/ - AND ACCORDINGLY THE ADDITION IS REDUCED TO RS.6,000/ - . 22. WE HAVE HEARD RIVAL CONTENTIONS. CASE FILE PERUSED. WE DO NOT W I SH TO REPEAT TH E ENTIRE FACTS RELEVANT TO THE ISSUE SO AS TO AVOID IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 22 OF 29 REPETITION. THE CIT ( A ) HAS AL READY TAKEN I NTO ACCOUNT ASSES SEE S SOCIO - ECONOMIC CIRCUMSTANCES FOR ESTIMATING THE IMPUGNED HOUSEHOLD WITHDRAWAL THEREBY RESTRICTING THE IMPUGNED ADDITION FROM RS.25,000 / - TO RS. 6 , 000 / - ONLY. THERE CA N BE HARDLY ANY DISPUTE ABOUT T H E SETTLE D PROPOS ITION THAT W HEREVER TWO VIEWS ARE POSSIBLE, THE ONE TAKEN BY THE CIT ( A ) IS TO BE CONFIRMED. THERE IS ALSO NO FACTUAL EVID ENCE PLACED ON RECORD EITHER OF THE PARTIES TO REBUT T HE FINDINGS U NDER CHALLENGE. WE ACCORDINGLY AFFIRM THE CIT (A) S ACTION THEREBY REJECTING THE CORRESPONDING GROUNDS RAISED IN BOTH THESE CROSS APPEALS. 23. REVENUE S APPE A L IT(SS)A NO. 828/AHD/2010 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 24. NOW WE COME TO ASSESS EE S CROSS APPEAL IT(SS ) A NO. 849/AHD/2010. HIS FIRST S UBST ANTIVE GROUND ASSAIL THE LOWER APP ELLATE FINDING CONFIRMING DISALLOWANCE OF RS.19,547/ - @ 2 0 % OF THE TOTAL TELEPHONE EXPENSES BY TERMING THE SAME TO BE INVOLVING PERSONAL ELEMENT AND NON - BUSINESS USE. THE ASSESSEE FAILS IN LEADING ANY E V ID E NCE TO PROV E THAT HE HAD BEEN USING ANY OTHER TELEPHONE OR OTHER COMMUNICATION SYSTEM EXCLUSIVELY FOR HIS PERSONAL AND NON - BUSINESS USE. WE SEE NO REASON TO IN TERFERE WITH BOTH THE LOWER AUTHORITIES IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 23 OF 29 ACTION IN INVOKING TH E IMPUGNED DISALLOWANCE. THIS FIRST SUBST ANT IVE GROUND STANDS DECLINED. 25. WE COME TO ASSESS EE S NEXT THREE SUBSTANTIVE GR OUNDS CHALLENGING AD D ITIONS OF LOW HOUSE HOLD WITHD RA WALS, UNEXPLAINED CASH CREDITS AND THAT OF A SU M OF RS.24 , 31 , 000 / - BE I NG ADDED AS UNDI S CLOSED INVESTMENT. I T IS TO BE SEEN THAT WE HAVE ALREADY DEALT WITH THE SAME IN REVENUE S APPEAL WITH THE CORRESPONDING GROU ND RAIS E D THEREIN. WE HAVE UPHELD THE C IT (A) ORDER ON TH E FORMER TWO ISSUES AND DELETED THE THIRD A DDITION OF RS.24,31,000/ - . WE OBSERVE THAT NOTHING FURTHER SUR VIV ES FOR OUR ADJUDICATION ONCE AGAIN IN TH E INSTANT APPEAL. 26. THIS ASSESS EE S APPEAL IT (SS)A NO. 849/AHD / 2010 IS PARTLY ACCEPTED ACCORDINGLY. A.Y. 2002 - 03 REV ENUE S APPEAL IT ( SS ) A NO.829/AHD/2010 AND ASSESS EE S CROSS APPEAL IT ( SS ) NO. 850/AHD/2010 . 2 7 . BOTH THE PARTIES AT THE OUTSET TAKE US THROUGH A TABULATION CHART ELABOR AT ING THE VARIOUS ISSUES RAISED IN THESE CROSS APPEALS. IT IS TO BE SEEN THAT THAT THE REVENUE S APPEAL RAISES FOUR SUBST ANTIVE IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 24 OF 29 GR OUNDS CHALLENGING THE CIT (A) S ORDER , INTER ALIA , DE LETING INTEREST DISALLOWANCE OF RS.5,66,170/ - , REMITTING THE ISSUE OF UNEXPLAINED CASH CREDIT UNDER SECTION 68 AMOUNTING TO RS.19,50,500/ - BACK TO THE A SSESSING OFFICER FOR FRESH VERIFICATION OF EVIDENCE SUBMITTED IN T HE COURSE OF LOWER APP ELLATE PROCEED INGS, RESTRICTING ADDITION MADE ON ACC OUNT OF UNE XPLAI NED INVESTMENT IN COST OF CONSTRUCTION TO RS.24,31,000 / - THEREBY DIRECTING TO DELETE RS.21,52,150/ - OUT OF AD D ITION OF RS.30,62,802/ - AND DISALLOWANCE OF RS.7,529/ - ON ACCOUNT OF EX CESS DEPRECIATION MAD E IN COURSE OF A SEA R CH ASSE SSMENT BEING FRAMED ON 29.12.2006. B OTH THE P A RTIES ARE FURTHER UNA N IMOUS THAT WE HAVE REJECT E D REVENUE S IDENTICAL GROUN D S EXCEPT THAT INVOLVE D IN ABOVE STATED UNEXPLAINED CASH CREDIT WHICH HAS BEEN ACCEPTED FOR STATI S TICAL PU RPOSES IN A SIMILAR R EVENUE S APPEAL DECIDED HERE I NABOVE I N A SSESSMENT YEAR 2001 - 02. NO DISTI NCTION ON FACTS OR LAW IS POINTED OUT. WE OBSERVE , IN THESE FACT S AND CIR CUMSTANCES, THAT ALL T HE GROUNDS RAISED THEREIN DESERVE FOLLOW SUIT IN ACCORDA NCE WITH THOSE DECIDED IN PRECEDING A SSESSMENT YEAR . THE REV ENUE S SUBST ANTIVE GROUND ON THE ISSUE S OF INTEREST EXPENSES, UNEXPLAINED INVES TMENT AND EXCESS DEPRECIATION CLAIM STAND DECLINED AND THAT OF UNEXPLAINED CASH CREDIT IS ALLOWED FOR STATISTICAL PURPOSES. IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 25 OF 29 2 8 . IT ( SS ) A N O . 829/AHD/2010 STANDS PARTLY ACCEPTED FOR STATISTICAL PURPOSES. 29 . WE COME TO ASSESSE E S CROSS APPEAL NOW , INTER ALIA , RAISING THREE SUB STANTIVE GROUNDS CHALLENGING DIS A LLOWANCE OF RS.30,414/ - BEING 20% OF TOTAL TELEPHONE EXPENS ES, THE A CTION O F THE CIT ( A ) IN DIRECTING THE A SSESSING OFFICER TO DELE TE CASH CREDIT IN THE NAMES OF M/S K OH INOOR CERAMICS , J ALA RAM G RAIN C ENTRE AND BHAGWATI ENTER PRISE S TOTALLING TO RS.19,50, 000/ - AFTER DUE VERIFICATION AND IN CONFIRMING UNEXPLAINED INVESTMENT AD DITION OF RS.24,31,000 / - QUA DIFFERENCE BETWEEN COST OF CONSTRUCTION O F RESIDENTIAL HOUSE. THE ASSESSE E FAIRLY CONCEDES THAT WE HAVE ALREADY REJECTED HIS FIRST TWO GROUNDS AND ACCEPTED THE THIRD ONE IN APPEAL IT ( SSA ) NO. 849/AHD/2010 DECIDED HEREINABOVE RE LEVANT TO THE PRECEDING A SSESSMENT YEAR . THE R EVENUE DOES NOT EXPRESS ANY SE R IOUS OBJECTION. WE ARE OF THE VIEW , IN THE PECULIAR FACTS AND CIRCUMSTANCES , THAT OUR REASONING IN ASSES S E E S APPEAL PERTAINING TO PRECEDING A SSESSMENT YEAR DECIDED HEREINABOVE SHALL FORM A PART OF OUR INSTANT ADJUD ICATION IN THE IMPUGNED A SSESSMENT Y EAR AS WELL. WE, ACCORDINGLY , CONFI RM THE CIT (A) S ORDER QUA FIRST TWO SUBSTANTIVE GROUNDS AND REV E RSE THE SAME ON THE THIRD ISSUE OF UNEXPLAINED IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 26 OF 29 INVESTMENT. THE ASSES S E E S FORMER T WO GRO U NDS FAIL. THE THIRD ONE SUCCEEDS. 30 . IT ( SS ) A NO. 850/AHD/2010 IS PARTLY ACCEPTED. A . Y . 2003 - 04 - REVEN U E S APPEAL IT ( SS ) A NO. 836/AHD/2010 AND A SSESS EE S CROSS OBJECTION NO. 16/AHD/2011. 3 1 . BOTH THE PARTIES DRAW OUR ATTENTION TO A TABULAT ION CHART FORMING PART OF THE CASE RECORD. IT IS EVIDENT THAT THE REVENUE S APPEAL HEREIN R AISES FOUR SUBSTA NTIVE GROUNDS , PLEADING THEREIN , THAT THE CIT ( A ) HAS , INTER ALIA , ERRED IN DELETING INTEREST DISALLOWANCE OF RS.2,51,949/ - , IN DIRECTING THE A SSESS ING OFFICER TO DELETE SECTION 68 UNEXPLAINED CASH CREDIT ADDITION OF RS.5,95,000/ - AFTER VERIFICATION OF FRESH EVIDENCE S AND IN RESTRICTING ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN COST OF CONSTRUCTION OF HOU S E TO RS.24,31,000 / - THEREBY DIRECT ING TO DELETE RS.18,104/ - OUT OF THE AD DITION OF RS.25,794/ - AND ALSO DELETING ADDI TION OF RS.2,85,357/ - MADE ON ACCOUNT OF EXCESS DEPRECIATION . 3 2 . THE ASSESSEE S C ROSS O BJECTION RAISES THREE SUBST ANTIVE GROUNDS IN ASSAILING CORRECTNESS OF TH E LOWER AU THORITIES ACTION IN CONFIRMING TELEPHONE EXPENDITURE DISALLOWANCE ON ASSUMPTION OF IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 27 OF 29 PERSONAL USE TO THE TUNE OF RS.24,831/ - , UNEXPLAINED CASH CREDIT A D DITION IN THE NAME OF LALITKUMAR BABULAL OF RS.3,00 ,000/ - AND IN CONFIRMING ADDITION TO T H E EXTENT OF RS. 24,31,000 / - QUA COST OF CONSTRUCTION OF HIS RES IDENTIAL HOUSE. 3 3 . BOTH THE LEARNED REPRESENTATIVES ARE FAIR ENOUGH IN PO I NTING OUT THAT OUR FINDINGS ON IDENTICAL ISSU E S IN THEIR SIMILAR CR OSS APPEAL S IN A SSESSMENT YEAR 2001 - 02 DECIDED HEREINABOVE WOULD APPLY MUTATIS MUTANDIS HEREIN AS WELL. WE APPRECIATE THEIR FAIR STAND. IT IS TO BE SEEN IN REVENUE S APPEAL THAT WE HAVE ALREADY UPHELD THE CIT(A) S ACTION IN DELETING INTEREST DIS A L LOWANCES . THE SECOND G ROUND OF UNEXPLAINED CASH CREDIT HAS BEEN ACCEPTED FOR STATISTICAL PURPOSES. T HE THIRD ONE PERTAINING TO UNEXPLAINED INVESTMENT STANDS DECIDED I N ASSESS EE S FAVOUR. SO HAS BEEN THE OUTCOME OF FOURTH AND LAST GROUND ON THE ISSUE OF EXCE S S DEPREC IATION. WE FOLLOW THE SUIT HEREIN AS WELL AND REJECT THE RE VENUE S ALL SUB STANTIVE GR OUNDS EXCEPT THE SECOND ONE ON THE ISSUE OF UNEXPLAINED CASH CREDIT ACCEPTED FOR STATISTICAL PURPOSES. THE REVENUE S APPEAL IT ( SS ) A NO. 836/AHD/2010 IS PARTLY ACCEPTED FOR STATISTICAL PURPOSES. 3 4 . WE COME TO THE ASSESSEE S CR OSS OBJECTION NOW. WE HAVE ALREADY UPHELD TELEPHONE EXPENDITURE DISALLOWANCE AS WELL AS THE IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 28 OF 29 CIT ( A ) S ACTION IN CONFIRMING UNE XPLAINED CASH CREDIT OF RS.3 ,00,000/ - ON ACCOUNT OF FAILURE IN EXPLAINING SOURCE OF THE CREDITOR IN QUESTION. THE SAME REASONING SHALL APPLY HEREIN AS WELL. T HE FIRST AND SECOND SUB STANTIVE GROUND S THUS FAIL. THIS LEAVES US WITH TH E THIRD SUB STANTIVE G R OUND QUA UNEXPLAINED INVESTMENT ADDITION OF RS.24,31,000/ - . W E HAVE ALRE A DY A C CEPT E D ASS ESSEE S CORRESPONDING LEGAL PLEA IN A SSE SSMENT Y EAR 2001 - 02 DECIDED HEREINABOVE. WE ADOPT THE SAME REASONING HEREIN AS WELL AND DELET E TH E I MPUGNED ADDITION. ASSESSEE S CROSS OBJECTION NO. 16/AHD/2011 IS PARTLY ACCEPTED. 3 5 . WE FOLLOW OUR DETAILED DISCUSSION S HEREINABOVE FOR PARTLY ACCEPTING REVENUE S APPEALS IT(SS) A NOS.828, 829 & 836/AHD/2010 FOR STATISTICAL PURPOSES . A SSE SSEE S TWO APPEALS I.E. IT(SS)A NOS. 849 & 850/AHD/2010 AND CROSS OBJECTION NO.16/AHD/2011 ARE PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF JANUARY , 201 6 . SD/ - SD/ - PRAMOD KUMAR S.S. GODARA (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, THE 18 TH DAY OF JANUARY, 2016 IT (SS) A NO S.828, 849, 829, 850,836/ AHD/ 20 1 0 & CO NO.16/AHD/2011 ASSESSMENT YEAR S : 2 0 0 1 - 02, 2002 - 03 & 2003 - 04 PAGE 29 OF 29 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMI SSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD