Kishanchand Bachomal Kukreja, v. DCIT,

ITA 192/PUN/2009 | 2006-2007
Pronouncement Date: 15-10-2010 | Result: Allowed

Appeal Details

RSA Number 19224514 RSA 2009
Assessee PAN AAPPK1082F
Bench Pune
Appeal Number ITA 192/PUN/2009
Duration Of Justice 1 year(s) 8 month(s) 8 day(s)
Appellant Kishanchand Bachomal Kukreja,
Respondent DCIT,
Appeal Type Income Tax Appeal
Pronouncement Date 15-10-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 15-10-2010
Assessment Year 2006-2007
Appeal Filed On 06-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI I.C.SUDHIR JM AND SHRI RAJENDRA SINGH AM I.T.A. NOS. 190 TO 1 92/PN/2009 (ASSTT. YEARS : 2001-02 2002-03 & 2006-07 ) MR. KISHANCHAND BACHOMAL KUKREJA APPELLANT GANDHINAGAR KOLHAPUR PAN : AAPPK 1082 F VS. DCIT CENTRAL CIRCLE RESPONDENT KOLHAPUR APPELLANT BY : SHRI NIKHIL PATHAK RESPONDENT BY : SHRI HARESHWAR SHARMA ORDER PER RAJENDRA SINGH AM THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST COMMON ORDER DT.21.8.2008 OF CIT(A) FOR THE A.YS. 2001-02 2002- 03 AND 2006-07. AS THESE APPEALS WERE HEARD TOGETHER AND ALSO INVOLVE SOME C OMMON ISSUES THESE ARE BEING DISPOSED OF BY SINGLE CONSOLIDATED ORDER FOR THE SA KE OF CONVENIENCE. THE DISPUTES RAISED IN THESE APPEALS RELATE TO ADDITION ON ACCOU NT OF COST OF CONSTRUCTION SETTING OFF OF ADDITIONAL INTEREST INCOME AGAINST THE INVES TMENT AND DISALLOWANCE OF BAD DEBT TO THE TUNE OF RS. 2 30 000/-. 2. FIRST WE TAKE UP THE DISPUTE IN RELATION TO ADDI TION ON ACCOUNT OF COST OF CONSTRUCTION WHICH IS RELEVANT ONLY FOR A.Y. 2001- 02 AND 2002-03. 2.1 THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAD CONSTR UCTED A BUILDING AND COST OF CONSTRUCTION INCLUDING THE COST OF RENT OF RS.45 00 0/- WAS SHOWN AT RS.7 97 923/-. THE ASSESSEE HAD FILED THE REPORT OF THE REGISTERED VALUER SHOWING THE COST OF CONSTRUCTION AT RS.10 96 846/-. THE A.O HOWEVER REFERRED THE MATTER OF VALUATION TO THE VALUATION CELL AND THE DVO ESTIMATED THE COS T OF CONSTRUCTION EXCLUDING THE COST OF LAND AT RS.16 29 000/- OUT OF WHICH RS.6 88 132/- RELATED TO A.Y. 2001-02 AND RS. 9 40 583/- TO A.Y. 2002-03. BASED ON THIS REPORT THE UNEXPLAINED ITA NO. 190 TO 192/PN/2009 MR.KISHANCHAND BACHOMAL KUKREJA (A.YS. 2001-02 2002-03 & 2006-07) 2 INVESTMENT FOR THESE TWO YEARS WAS DETERMINED AT R S.3588991/- AND AT RS. 490593/- WHICH WAS ADDED BY THE A.O IN THE RELEVANT YEAR. THE ASSESSEE DISPUTED THE DECISION OF THE A.O BEFORE THE CIT(A) WHO NOTE D THAT THE SIMILAR ISSUE HAD ALREADY BEEN DECIDED IN CASE OF ANOTHER MEMBER OF T HE SAME GROUP WHO HAD CONSTRUCTED SIMILAR PROPERTY. IN THAT CASE THE TR IBUNAL FOLLOWING THE DECISION OF THE TRIBUNAL OF PUNE BENCH IN THE CASE OF HARPREET HOTE L HAD ALLOWED 15% ADJUSTMENT IN RELATION TO DELHI PLINTH AREA RATE AND 10% ON AC COUNT OF SELF SUPERVISION CHARGES. THE TRIBUNAL IN CASE OF HARPREET HOTEL HAD HELD THA T THE CBDT CIRCULAR REFERRED TO ONLY DELHI PLINTH AREA RATE AND SIMILAR RATE FOR SM ALLER CITIES SHOULD BE MUCH LOWER AND THEREFORE 15% ADJUSTMENT SHOULD BE MADE. CIT( A) THEREFORE DEDUCTED 15% OF ESTIMATED VALUE ON ACCOUNT OF DELHI PLINTH AREA ADJUSTMENT AND 10% ON ACCOUNT OF SELF SUPERVISION CHARGES CHARGES AND THE VALUES OF THE PROPERTY FOR THESE TWO YEARS WERE ESTIMATED AT RS.1274136/- IN PLACE OF RS .1629000/- ESTIMATED BY THE DVO AND DIRECTED TO SPREAD THE SAME OVER THE A.Y. 2001-02 AND 2002-03. AGGRIEVED BY THE SAID DECISION THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 2.2. BEFORE US THE LD. A.R. FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES WHERE THE LD. D.R PLAC ED RELIANCE ON THE ORDER OF THE CIT(A). WE FIND THAT CIT(A) HAS MADE THE VALUATION FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF PUNE IN THE CASE OF HARPREET H OTELS AURANGABAD. THE FACTS IN CASE OF THE ASSESSEE ARE IDENTICAL AND NO DISTINCTI VE FEATURES HAVE BEEN BROUGHT TO OUR NOTICE BY THE LD. A.R. WE THEREFORE SEE NO I NFIRMITY IN THE ORDER OF THE CIT(A) AND SAME IS THEREFORE UPHELD. 3. THE SECOND DISPUTE WHICH IS AGAIN RELEVANT FOR BOTH THE YEARS IS REGARDING SET OFF OF CASH BALANCE ON ACCOUNT OF HIGHER INTEREST I NCOME OF 11% TAKEN BY THE CIT(A) AGAINST THE INVESTMENT IN CONSTRUCTION OF HO USE PROPERTY. ITA NO. 190 TO 192/PN/2009 MR.KISHANCHAND BACHOMAL KUKREJA (A.YS. 2001-02 2002-03 & 2006-07) 3 3.1. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT DURI NG THE COURSE OF SEARCH CONDUCTED U/S. 132 OF THE I.T. ACT ON 18.5.2005 CE RTAIN DOCUMENTS WERE FOUND SHOWING MONEY LENDING ACTIVITY OF THE ASSESSEE FROM 1997. THE ASSESSEE IN THE STATEMENT AT THE TIME OF SEARCH HAD ADMITTED THAT INTEREST WAS CHARGED AT THE RATE OF 18 PAISE TO RUPEE 1/-. THE ASSESSEE HAD OFFERED INTEREST AT THE RATE OF 9% ON THE LOANS WHICH WERE NOT ACCEPTED BY THE A.O AND WH O APPLIED THE RATE OF 12%. IN APPEAL CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE HELD THAT INTEREST RATE WOULD BE 11%. THE CLAIM MADE BY THE ASSESSEE IN THIS GROUND IS THAT ADDITIONAL INCOME RECEIVED BY THE ASSESSEE AS PER T HE HIGHER RATE OF INTEREST ESTIMATED HAD TO BE SET OFF AGAINST THE INVESTMENT IN THE PROPERTY. 3.2. WE HAVE HEARD BOTH THE PARTIES PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE ASSESSEE HAD DECLARED INTERE ST RATE OF 9%. HOWEVER THE SAME HAS BEEN ESTIMATED BY THE CIT(A) AT 11%. THE INCOME OF THE ASSESSEE HAD BEEN COMPUTED ON THE BASIS OF INTEREST RATE OF 11% WHICH MEANS THAT THE ASSESSEE IN THE RELEVANT YEAR HAD MORE INTEREST INC OME THAN ACTUALLY DECLARED. THEREFORE THE ADDITIONAL INTEREST INCOME AVAILABLE IN THE YEARS UNDER CONSIDERATION SHOULD BE ALLOWED TO SET OFF AGAINST UNEXPLAINED IN VESTMENT IN THE HOUSE PROPERTY BECAUSE THE INVESTMENT TO THAT EXTENT WILL BE EXPLA INED FROM THE SAID ADDITIONAL INCOME. WE THEREFORE FIND THE PLEA OF THE ASSESSE E REASONABLE AND ACCORDINGLY HOLD THAT THE ASSESSEE WOULD BE ALLOWED SET OFF OF ADDITIONAL INTEREST INCOME AGAINST UNEXPLAINED INVESTMENT IN THE HOUSE PROPERTY WHILE MAKING ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PROPERTY. 4. THE THIRD DISPUTE IS REGARDING DISALLOWANCE OF BAD DEBT OF RS. 2 30 000/- IN RELATION TO HARNAK GASWALA AND T. RACHOMAL. THIS IS RELEVANT ONLY FOR A.Y. 2006- 07. IN THE SAID YEAR ASSESSEE HAD CLAIMED BAD D EBT OF RS. 13 36 600/- AGAINST THE MONEY LENDING INCOME. THE ASSESSEE GAVE THE DETAIL S OF BAD DEBT CLAIMED AS UNDER : ITA NO. 190 TO 192/PN/2009 MR.KISHANCHAND BACHOMAL KUKREJA (A.YS. 2001-02 2002-03 & 2006-07) 4 I HAVE CLAIMED THE BAD DEBTS OF RS 13 36 600/- FROM VARIOUS PARTIES MENTIONED IN THE STATEMENT OF THE BAD DEBTS IN THE F.Y. 2005-06. THE DETAILS OF BAD DEBTS ARE AS UNDER : SR. NO. NAME OF THE PARTY AMOUNT NO TRANSACTIO N SINCE F.Y. NO INT. RECEIVED SINCE A.Y. REMARK 1. CHAVAN C/O GPT 1 000 1997-98 1997-98 TIME BARRED 2. NAMIKRAM MANSHARAM 25 000 1997-98 1997-98 TIME B ARRED 3. AILDAS PREMCHAND 2 000 1997-98 1997-98 EXPIRED 4. HARUMAL TEJUMAL 16 000 1997-98 1997-98 EXPIRED 5. HIRANAND KHIYANI 32 000 2004-05 1997-98 EXPIRED 6. BRIJLAL RATANMAL 10 600 1997-98 1997-98 EXPIRED (INCLUDES INTEREST DUE OFRS.2 600/-) 1997-98 TIME BARRED 7. GHANSHAM P PANJAWANI 2 10 000 1997-98 1997-98 TIME BARRED 8. NARAYANDAS POPTANI 1 50 000 2000-01 2001-02 TIME BARRED 9. HARNAK GASWALA 2 00 000 1999-2000 2005-06 PARTY IN LOSS 10. VIJU JAMNANI 1 00 000 2003-04 2003-04 PARTY IN LOSS 11 MASTER KALACHAND PANJWANI(UMBRELLAWALA ) 10 000 1998-99 2004-05 EXPIRED 12. MAHESH MADHAVDAS (MUKESH) 10 000 2003-04 2003-04 PARTY IN LOSS 13. SAJANDAS C AHUJA 5 50 000 2004-05 2004-05 PARTY IN LOSS 14. TARACHAND ROCHOMAL 20 000 2005-06 2005-06 PA RTY IN LOSS TOTAL BAD DEBTS 13 36 600 4.1 THE ASSESSEE EXPLAINED THAT THESE ADVANCES WERE NOT RECOVERED AND THE ASSESSEE COULD NOT TAKE LEGAL ACTION AS HE WAS NOT HOLDING ANY MONEY LENDING LICENSE. IT WAS ALSO SUBMITTED THAT AS PER THE AME NDED PROVISIONS OF SEC. 36(1)(VII) APPLICABLE FROM 1.4.89 THE ASSESSEE WAS NOT REQUIR ED TO PROVE THAT THE DEBT HAD ACTUALLY BECOME BAD. THE A.O HOWEVER NOTED THAT IN SOME CASES THE ASSESSEE ITA NO. 190 TO 192/PN/2009 MR.KISHANCHAND BACHOMAL KUKREJA (A.YS. 2001-02 2002-03 & 2006-07) 5 HAD WRITTEN OFF THE DEBT EITHER IN THE VERY NEXT YE AR OR IN ONE OR TWO YEARS. THESE CASES RELATED TO FIVE PARTIES INVOLVING TOTAL SUM O F RS.8 80 000/- AS PER THE DETAILS GIVEN BELOW :- SR.NO. NAME OF THE PARTY AMOUNT NO TRANSACTION SINCE F.Y. NO INT. RECEIVED SINCE 1. HARNAK GASWALA 2 00 000 1999-2000 2005-06 2. VIJU JAMNANI 1 00 000 2003-04 2003-04 3. MAHESH MADHAVDAS (MUKESH) 10 000 2003-04 2003-04 4. SAJANDAS C AHUJA 5 50 000 2004-05 2004-05 5. TARACHAND ROCHOMAL 20 000 2005-06 2005-06 TOTAL BAD DEBTS 8 80 000 4.2 THE A.O. THEREFORE DISALLOWED THE CLAIM OF BA D DEBT TO THE TUNE OF RS. 8 80 000/-. IN APPEAL CIT(A) ALLOWED THE CLAIM IN RESPECT OF ALL THE PARTIES EXCEPT IN CASE OF HARNAK GASWALA AND T ROCHOMAL INVOLVING TOTAL AMOUNT OF RS. 2 30 000/-. IN RESPECT OF THESE TWO CASES CIT(A) OBSERVED THAT THESE NAMES DID NOT APPEAR IN SEIZED DIARY AND THEREFORE HE CONFIRMED THE ADDITI ON TO THAT EXTENT AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. 4.3. BEFORE US THE LD. A.R. FOR THE ASSESSEE SUBMI TTED THAT IT WAS NOT CORRECT THAT THE NAME OF THE TWO PARTIES DID NOT APPEAR IN SEIZ ED DIARY. HE REFERRED TO COPY OF SEIZED DOCUMENT PLACED AT PAGE 19 AND 20 OF PAPER B OOK TO POINT OUT THAT THE NAME OF TARACHAND ROCHOMAL CLEARLY APPEARED AT PAGE 19 A ND THE NAME OF HARNAK GASWALA ALSO APPEARED AT PAGE 20 OF THE PAPER BOOK. IT WAS ACCORDINGLY URGED THAT THE BAD DEBT SHOULD BE ALLOWED. THE LD. D.R. HOWEVER POINTED OUT THAT IT WAS NOT CLEAR WHETHER INCOME ON ACCOUNT OF THESE PA RTIES HAD BEEN TAKEN INTO ACCOUNT IN EARLIER YEAR. IN REPLY LD. A.R. SUBMIT TED THAT HE HAD NO OBJECTION IF THE MATTER WAS RESTORED TO A.O FOR VERIFICATION OF THIS ASPECT. ITA NO. 190 TO 192/PN/2009 MR.KISHANCHAND BACHOMAL KUKREJA (A.YS. 2001-02 2002-03 & 2006-07) 6 4.4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING DISALLOWANCE OF BAD DEBT IN RE LATION TO TARACHAND ROCHOMAL AND HARNAK GASWALA TO WHOM THE ASSESSEE HAD CLAIMED TO HAVE ADVANCED MONEY AS PART OF MONEY LENDING BUSINESS. THE CLAIM WAS DISA LLOWED BY A.O AND IN APPEAL IT WAS CONFIRMED BY THE CIT(A) ON THE GROUND THAT THE SE TWO NAMES DID NOT APPEAR IN SEIZED DOCUMENTS RELATING TO MONEY LENDING BUSINESS . THE LD. A.R. FOR THE ASSESSEE HAS HOWEVER POINTED OUT THAT THESE NAMES CLEARLY APPEARED ON SEIZED DOCUMENTS COPY OF WHICH HAS BEEN PLACED AT PAGE 1 9 & 20 OF THE PAPER BOOK. THE SEIZED DOCUMENTS DO SHOW THE NAMES OF T. ROCHOM AL AND HARNAK GASWALA. HOWEVER IT IS NOT CLEAR WHETHER THE ASSESSEE HAD SHOWN ANY MONEY LENDING ACTIVITY ON ACCOUNT OF THESE PARTIES IN EARLIER YEA R. THEREFORE THE MATTER REQUIRES VERIFICATION. WE THEREFORE RESTORE THIS ISSUE TO THE FILE OF THE A.O FOR PASSING A FRESH ORDER AFTER NECESSARY VERIFICATION AND AFTER ALLOWING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT APPEALS OF THE ASSESSEE IN A.Y. 2001-02 AND 2002-03 ARE PARTLY ALLOWED WHEREAS THAT FOR A.Y. 2006-07 IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15TH OCTO BER 2010 SD/- SD/- (I.C. SUDHIR) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED THE 15TH OCTOBER 2010 US COPY OF THE ORDER IS FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A)- KOLHAPUR 4. CIT-I/II KOLHAPUR/CIT (CENTRAL) PUNE ITA NO. 190 TO 192/PN/2009 MR.KISHANCHAND BACHOMAL KUKREJA (A.YS. 2001-02 2002-03 & 2006-07) 7 5. D.R. ITAT A BENCH 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES PUNE