Shri Dr. Rajendra Prabhudas Padiya, Bhavnagar v. The Income tax Officer,Ward-2(4),, Bhavnagar

CO 194/AHD/2009 | 2005-2006
Pronouncement Date: 16-09-2011 | Result: Dismissed

Appeal Details

RSA Number 19420523 RSA 2009
Assessee PAN ACYPP2126P
Bench Ahmedabad
Appeal Number CO 194/AHD/2009
Duration Of Justice 2 year(s) 23 day(s)
Appellant Shri Dr. Rajendra Prabhudas Padiya, Bhavnagar
Respondent The Income tax Officer,Ward-2(4),, Bhavnagar
Appeal Type Cross Objection
Pronouncement Date 16-09-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 16-09-2011
Date Of Final Hearing 08-09-2011
Next Hearing Date 08-09-2011
Assessment Year 2005-2006
Appeal Filed On 24-08-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD BEFORE SHRI D. K. TYAGI JUDICIAL MEMBER AND SHRI A. K. GARODIA ACCOUNTANT MEMBER I.T.A. NO. 2231/ AHD/2009 (ASSESSMENT YEAR 2005-06) ITO WARD 2(4) BHAVNAGAR VS. SHRI RAJENDRA PRABHUDAS PADIA NEAR KUBERBAG MAHUVA DISTT. BHAVNAGAR C.O.NO.194/AHD/2009 (ASSESSMENT YEAR 2005-06) SHRI RAJENDRA PRABHUDAS PADIA VS. ITO WARD 2(4) NEAR KUBERBAG BHAVNAGAR MAHUVA DISTT. BHAVNAGAR PAN/GIR NO. : ACYPP2126P (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI S S JHA SR. DR RESPONDENT BY: SHRI TUSHAR HEMANI AR DATE OF HEARING: 08.09.2011 DATE OF PRONOUNCEMENT: 16.09.2011 O R D E R PER SHRI A. K. GARODIA AM:- THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST HE ORDER OF LD. CIT(A) XX AHM EDABAD DATED 15.05.2009 FOR THE Y 2005-06. 2. FIRST WE TAKE UP THE APPEAL OF THE REVENUE. TH E GROUNDS RAISED BY THE REVENUE ARE AS UNDER: I.T.A.NO. /AHD/200 2 1. THE LD CIT(A)-XX AHMEDABAD HAS ERRE D IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS 15 08 976/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED INVESTME NT IN HOUSE PROPERTY WITHOUT PROPERLY APPRECIATING THE/ FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD B Y THE ASSESSING OFFICER 1.2 IN DOING SO THE LD. CIT(A)-XX AHMEDABAD HAS E RRED FN LAW AND ON FACTS IN NOT APPRECIATING THAT AS PE R THE CERTIFICATES OF THE CIVIL ENGINEER FURNISHED TO THE BANK FOR RELEASING THE LOAN AMOUNT OF RS.23 LACS DURING THE FINANCIAL YEAR 2004-05 THE COST OF CONSTRUCTION INCURRED BY THE ASSESSEE DURING THE FINANCIAL YEAR 2004-05 AMOUNTED TO RS.39 86 000/- WHILE THE ASSESSEE HAD ONLY SHOWN RS.24 77 024/- AS THE COST OF CONSTRUCTION INCURRED BY HIM DURING THE SAID FINANCIAL YEAR IN HIS ACCOUNTS. 1.3 IN DOING SO THE LD. CIT(A)-XX AHMEDABAD HAS E RRED IN LAW AND ON FACTS IN OBSERVING THAT THE AO HAD NO T OBTAINED ANY CLARIFICATION FROM THE BANK WHETHER TH E SAID CONSTRUCTION WAS INCLUSIVE OF THE COST OF LAND WITH OUT APPRECIATING THAT THE CERTIFICATES OF THE CIVIL ENG INEER AS WELL AS THE LETTER DATE 20.10.2007 OF THE BANK TO THE A. O. WERE QUITE EXPLICIT THAT THE EXPENDITURE OF RS.39 86 000 /- WAS INCURRED TOWARDS THE CONSTRUCTION COST OF THE SAID PROPERTY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3. IT IS THEREFORE PRAYED THAT THE ORDER OF THE C IT(A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. 3. THE BRIEF FACTS OF THE CASE TILL THE ASSESSMENT STAGE ARE NOTED BY LD. CIT(A) IN PARA 3.1 OF HIS ORDER WHICH IS REPRODUC ED AS UNDER: DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A O NOTICED THAT THE ASSESSEE CONSTRUCTED RESIDENTIAL BUILDING AND HOSPITAL BUILDING DURING THE PREVIOUS YEAR RELEVANT TO THE Y EAR UNDER APPEAL. THE AO CALLED FOR AND OBTAINED DETAILS OF C OST OF CONSTRUCTION OF BOTH THE RESIDENTIAL ARID HOSPITAL BUILDINGS. THE AO FOUND THAT THE ASSESSEE HAD OBTAINED LOAN FROM S TATE BANK OF INDIA 1. THE AO THEREFORE OBTAINED DETAILS OF LOONS I.T.A.NO. /AHD/200 3 SANCTIONED DATE OF DISBURSEMENT OF INSTALLMENT OF LOAN AMOUNT DISBURSED AND COST OF CONSTRUCTION SHOWN BY THE ASS ESSEE COPY OF CERTIFICATES ISSUED BY THE ENGINEER. DURING THE PREVIOUS YEAR RELEVANT TO THE YEAR UNDER APPEAL THE BANK HAD GRA NTED INSTALLMENTS OF LOAN IN AGGREGATE OF RS.23 LACS AGA INST THE COST OF CONSTRUCTION OF RS.39.86 LACS AS PER THE CERTIFI CATES ISSUED BY THE ENGINEER WHEREAS AS PER THE COPY OF COST OF CON STRUCTION ACCOUNT FURNISHED BY THE ASSESSEE BEFORE THE AO DUR ING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAD DEBITED CO ST OF CONSTRUCTION OF RS.24 77 024/-. THUS THERE WAS DIF FERENCE OF RS.15 08 976/- BETWEEN THE COST OF CONSTRUCTION CER TIFIED BY THE ENGINEER AND THE COST OF CONSTRUCTION SHOWN BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT. THE A.O. HAD GIVEN AN OPPORTU NITY TO THE ASSESSEE FOR EXPLAINING THE DIFFERENCE VIDE HIS SHO W-CAUSE NOTICE DATED 22/11/2007. SINCE THE ASSESSEE DID NOT COMPLIED WITH THE TERMS OF SHOW CAUSE NOTICE WITHIN THE TIME ALLOWED THE AO MADE THE ASSESSMENT ORDER MAKING THE ADDITIO N OF RS.15 08 976/- AS PROPOSED BY HIM IN THE SHOW CAUSE NOTICE. 4. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) WHO DELETED THE ADDITION AND NOW THE RE VENUE IS IN APPEAL BEFORE US. 5. LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). IT WAS ALSO SUB MITTED BY HIM THAT THE OPENING BALANCE ON ACCOUNT OF HOSPITAL PLOT RESIDE NTIAL BUILDING AND HOSPITAL BUILDING WERE RS.5 77 024/- RS.10 93 282/ - AND RS.3 38 350/- RESPECTIVELY. IT IS ALSO SUBMITTED THAT THE RELEV ANT SUPPORTING I.E. COPY OF LEDGER ACCOUNTS ARE AVAILABLE ON PAGES 15-16 OF THE PAPER BOOK. IT WAS ALSO SUBMITTED THAT DURING THE PRESENT YEAR THE AS SESSEE HAS INCURRED TOTAL CONSTRUCTION COST OF RS.28 15 374/- AS PER THE BOOK S OF ACCOUNT OF THE ASSESSEE AND THE AGGREGATE VALUE INCLUDING THE COST OF LAND OF RS.10 93 282/- COMES TO RS.39 08 656/-. IT IS FURT HER SUBMITTED THAT AS PER THE CERTIFICATE ISSUED BY THE CIVIL ENGINEER TO THE BANK THE ESTIMATION I.T.A.NO. /AHD/200 4 FOR THE COST OF CONSTRUCTION WAS CALCULATED AT RS.3 9.86 LACS AND THE SAME WAS INCLUSIVE OF COST OF LAND. IN SUPPORT OF THIS CONTENTION OUR ATTENTION WAS DRAWN TO THE COPY OF ENGINEERS CERTIFICATE APP EARING ON PAGE 6 OF THE PAPER BOOK AND IT WAS POINTED OUT THAT THE VALU E ADOPTED BY THE ENGINEER INCLUDES COST OF LAND ALSO. IT WAS FURTHE R SUBMITTED THAT MEAGER DIFFERENCE OF RS.77 344/- IS ON ACCOUNT OF ESTIMATI ON BY THE ENGINEER AND THE ACTUAL COST AS PER THE BOOKS OF ACCOUNTS OF THE ASSESSEE WHICH IS NEGLIGIBLE AND SINCE IT IS LESS THAN 15% THE SAME IS REQUIRED TO BE IGNORED AS PER THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CB GAUTAM VS UOI 199 ITR 530 (S.C.). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT THE A.O. HAS MADE ADDITION ON THIS BASIS THAT THE ENGINEER HAS REPORTED IN HIS CERTIFICATE THAT THE VALUE OF THE B UILDING WAS RS.39.86 LACS WHEREAS THE ASSESSEE HAS SHOWN COST OF CONSTRUCTIO N AT RS.24 77 024/-. BUT THE A.O. HAS IGNORED THIS VITAL ASPECT THAT THE VALUE REPORTED BY THE CIVIL ENGINEER IN HIS CERTIFICATE OF R.39.86 LACS INCLUDED COST OF LAND ALSO OF RS.10.93 LACS AS PER THE COPY OF ENGINEERS CERT IFICATE AVAILABLE ON PAGE 6 OF THE PAPER BOOK. IT WAS ALSO FURTHER OVER LOOKED THAT THE ASSESSEE HAS DEBITED TOTAL COST OF CONSTRUCTION UNDER TWO AC COUNTING HEADS AS NOTED BY LD. CIT(A) IN PARA 3.4 OF HIS ORDER. PA RT AMOUNT WAS DEBITED BY THE ASSESSEE TO HOUSE PROPERTY ACCOUNT AND SOME PART WAS DEBITED TO HOSPITAL PROPERTY ACCOUNT. BUT THE A.O. HAD CONSID ERED ONLY THE COST DEBITED BY THE ASSESSEE TO HOSPITAL PROPERTY ACCOUN T. THE RELIEF HAS BEEN ALLOWED BY THE LD. CIT(A) AS PER PARA 3.4 OF HIS OR DER WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: I.T.A.NO. /AHD/200 5 3.4 THE FACTS OF THE CASE AND THE SUBMISSIONS MADE BY THE LEARNED COUNSEL OF THE APPELLANT HAVE BEEN CAREFULL Y CONSIDERED BY ME. THE A.O. HAS MADE THE ADDITION U/S.69C OF TH E ACT CONSIDERING THE FACT THAT THE APPELLANT HAD UNDER STATED THE COST OF CONSTRUCTION IN HIS BOOKS OF ACCOUNT AS AGAINST EXPENDITURE INCURRED ON CONSTRUCTION WHICH WAS SHOWN TO THE BA NK FOR OBTAINING THE LOAN. ON PERUSAL OF COPY OF CONSTRUCT ION ACCOUNT IT IS NOTICED THAT THE APPELLANT HAD INCURRED COST OF CONSTRUCTION OF RS.24 77 024/- DURING THE PREVIOUS YEAR RELE VANT TO THE YEAR UNDER APPEAL. THE FIRST CERTIFICATE ISSUED BY THE CIVIL ENGINEER ON THE BASIS' OF THE CONSTRUCTIONS CARRIED OUT BY THE APPELLANT IRRESPECTIVE OF THE FA CT THAT CONSTRUCTION WAS EARNED OUT DURING THE YEAR UNDER A PPEAL OF EARLIER YEAR WHICH HE HAD CLARIFIED THAT THE SOLD C ERTIFICATE INCLUDED THE COST OF LAND. THE APPELLANT HAD DEBITE D THE AMOUNT OF RS.10 93 282/- BEING THE COST OF LAND UNDER HOSP ITAL PLOT ACCOUNT AND COST OF CONSTRUCTION OF RS.3 38 350/- U NDER THE HEAD HOUSE PROPERTY ACCOUNT IN THE F.Y. 2003-04 REL EVANT TO THE A.Y. 2004-05 WHICH THE APPELLANT BROUGHT FORWAR D IN THE SUBSEQUENT YEAR I.E. F.Y. 2004-05 RELEVANT TO THE A .Y. 2005-06 WHICH THE AO OUGHT TO HAVE CONSIDERED DURING THE AS SESSMENT PROCEEDINGS FOR A.Y. 2005-06 FOR ARRIVING AT THE CO RRECT FIGURE OF DIFFERENCE OF COST OF CONSTRUCTION SHOWN ON ESTI MATED BASIS TO THE BANK AND THAT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. IT IS A MATTER OF FACT THAT THE AO HAS NOT REJECTED THE B OOKS MAINTAINED BY THE APPELLANT IF HE WAS OF THE OPINIO N THAT THERE ARE DISCREPANCIES IN THE BOOKS OF ACCOUNT HE WOULD HAVE GIVEN HIS FINDINGS IN THIS REGARD IN THE ASSESSMENT ORDER . FURTHER THE AO HAS ALSO NOT GOT ANY CLARIFICATION FROM THE BANK AS TO WHETHER THE FIRST DISBURSEMENT OF RS.10 LACS GRANTE D TO THE APPELLANT WAS SOLELY FOR THE CONSTRUCTION OF BUILDI NG OR INCLUSIVE OF COST OF LAND. IN THE REMAND REPORT TH E AO HAS ALTHOUGH MENTIONED THE POSITION OF BALANCE SHEET FO R ASSESSMENT YEARS 2004-05 AND 2005-06 WHERE THE APPE LLANT HAS SHOWN THE VALUE OF PROPERTIES UNDER THE HEAD ' HOSPITAL PLOT 'BUILDING ACCOUNT' AND 'HOSPITAL BUILDING' WHICH CL ARIFIES THE POSITION AT THE APPELLANT HAD ALREADY PURCHASED AND OWNED THE PLOT OF LAND AS ON 31.03.2004. THE APPELLANT HAS AL SO FURNISHED A CERTIFICATE FROM THE BANKER CLARIFYING COST OF PR OJECT (SPECIFYING THE COST OF LAND) AND MEANS OF FINANCE VIDE THEIR LETTER DT.28-03-09. IF ALL THESE FACTS ARE CONSIDER ED CORRECTLY THE DIFFERENCE AS EXPLAINED BY THE LEARNED A.R. COMES O NLY TO I.T.A.NO. /AHD/200 6 RS.77 3447-. FURTHER THE AO HAS RELIED ON THE CERT IFICATES ISSUED BY THE ENGINEER WHEREIN THE ESTIMATE OF COST OF CONSTRUCTION WAS MADE FOR THE PURPOSE OF DISBURSEME NT OF LOAN BY THE BANKER FROM TIME TO TIME. ACTUALLY IT WAS N OT THE VALUATION OF COST OF CONSTRUCTION BASED ON SCIENTIF IC METHOD AS USUALLY ADOPTED BY A REGISTERED VALUER. FURTHER TH E DIFFERENCE OF RS.77 3447- SHOWN BY THE APPELLANT IS LESS THAN 5%. CONSIDERING ALL THESE FACTS I HOLD THAT THE AO IS NOT JUSTIFIED IN MAKING THE ADDITION OF RS.15 08 9767-. IN VIEW OF T HE DISCUSSION MADE ABOVE THE ADDITION MADE IS DIRECTE D TO BE DELETED. 7. FROM THE ABOVE PARA OF LD. CIT(A)S ORDER WE FI ND THAT BEFORE ALLOWING RELIEF TO THE ASSESSEE LD. CIT(A) OBTAINE D REMAND REPORT ALSO FORM THE A.O. AND IT IS OBSERVED BY LD. CIT(A) THAT IN THE REMAND REPORT THE A.O. HAS NOT DISPUTED THAT THE ASSESSEE HAD SHO WN THE VALUE OF THE PROPERTY UNDER THE HEAD HOSPITAL PLOT ACCOUNT LAN D ACCOUNT AND HOSPITAL BUILDING ACCOUNT WHICH CLARIFIED THE POSITION THA T THE ASSESSEE HAD ALREADY PURCHASED AND OWNED THE PLOT OF LAND AS ON 31.03.2004. CONSIDERING ALL THESE FACTS WE FEEL THAT NO INTERF ERENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. WE THEREFORE UPHOLD THE SAME. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. 8. NOW WE TAKE UP THE C.O. FILED BY THE ASSESSEE. THE GROUNDS RAISED BY THE ASSESSEE IN THE C.O. ARE AS UNDER: 1. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LEARNED AO IN ADDING RS 48 714/- ON ACCOUNT OF LOW WITHDRAWAL OF HOUSEHOLD EXPENSES. 2. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRM ING THE ACTION OF LEARNED AO IN LEVYING INTEREST UNDER SEC.234A/B/C/D OF THE ACT. 3. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONF IRMING THE ACTION OF LEARNED AO IN INITIATING PENALTY UNDE R SECTION I.T.A.NO. /AHD/200 7 271(L)(C) OF THE ACT WITHOUT RECORDING MANDATORY SATISFACTION AS CONTEMPLATED UNDER THE ACT. 9. IT WAS SUBMITTED BY THE LD. A.R. OF THE ASSESSEE THAT GROUND NO.2 IS CONSEQUENTIAL AND GROUND NO.3 IS PREMATURE. WE HOLD ACCORDINGLY. 10. REGARDING GROUND NO.1 IT WAS SUBMITTED THAT TH E ASSESSEE WAS LIVING IN A SMALL PLACE MAHUVA WHICH IS A TOWN AND LIFE STYLE OF THE ASSESSEE IS MODERATE AND THE WIFE OF THE ASSESSEE I S ALSO HAVING SOURCE OF INCOME AND SHE HAS ALSO CONTRIBUTED IN HOUSE HOLD E XPENSES AND HENCE NO ADDITION IS REQUIRED ON THIS ACCOUNT. LD. D.R. SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHO RITIES BELOW. WE FIND THAT ALTHOUGH THE ASSESSEE HAS SUBMITTED A PAP ER BOOK CONTAINING 17 PAGES BUT NO EVIDENCE HAS BEEN FURNISHED BY THE ASS ESSEE TO SHOW THAT HIS WIFE IS ALSO HAVING INCOME AND SHE HAS ALSO CONTRIB UTED TO HOUSE HOLD EXPENSES AND HOW MUCH WAS HER CONTRIBUTION IN THE P RESENT YEAR IF IT WAS THERE. WE ALSO FIND THAT HE A.O. HAS ALSO ESTIMATE D THE HOUSE HOLD EXPENSES OF THE ASSESSEE AT RS.12 000/- PER MONTH I .E. RS.1.44 LACS FOR THE WHOLE YEAR WHEREAS ASSESSEE HAS SHOWN ONLY RS.64 80 0/- TOWARD HOUSE HOLD EXPENSES. IN ADDITION TO THIS THE A.O. HAS A LSO ALLOWED BENEFIT OF TELEPHONE EXPENSES AND ELECTRICITY EXPENSES OF RS.3 0 486/- BEING ADDITION MADE BY HIM ON ACCOUNT OF DISALLOWANCE OF THESE EXP ENSES AND HE HAD MADE ADDITION ON ACCOUNT OF LOW WITHDRAWAL FOR THE BALANCE AMOUNT ONLY OF RS.48 714/-. CONSIDERING THE FACTS OF THE PRESE NT CASE IN ITS ENTIRETY AND CONSIDERING THE FACT THAT NO EVIDENCE IS BROUGH T ON RECORD TO SHOW THAT ANY CONTRIBUTION WAS MADE BY THE WIFE OF THE A SSESSEE TOWARDS HOUSE I.T.A.NO. /AHD/200 8 HOLD EXPENSES WE FEEL THAT NO INTERFERENCE IS CALL ED FOR IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. THIS GROUND OF THE ASSESSEE S CROSS OBJECTION IS REJECTED. 12. IN THE RESULT APPEAL OF THE REVENUE AND THE CR OSS OBJECTION OF THE ASSESSEE ARE DISMISSED. 13. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEP. 2011. SD./- SD./- (D.K. TYAGI) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED : 16 TH SEP. 2011 SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR AHMEDABAD BY ORDER 6. THE GUARD FILE AR ITAT AHMEDABAD 1. DATE OF DICTATION 13.09 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER14.09 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 15.09 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 16.09 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S. 16.09 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 16.09.2011 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 8. DATE OF DESPATCH OF THE ORDER.