Shri Kantibhai L.Patel, Ahmedabad v. The Dy.CIT.,Circle-9,, Ahmedabad

ITA 2837/AHD/2008 | 2005-2006
Pronouncement Date: 30-09-2011 | Result: Partly Allowed

Appeal Details

RSA Number 283720514 RSA 2008
Assessee PAN AEVPP5710K
Bench Ahmedabad
Appeal Number ITA 2837/AHD/2008
Duration Of Justice 3 year(s) 1 month(s) 22 day(s)
Appellant Shri Kantibhai L.Patel, Ahmedabad
Respondent The Dy.CIT.,Circle-9,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 30-09-2011
Date Of Final Hearing 21-09-2011
Next Hearing Date 21-09-2011
Assessment Year 2005-2006
Appeal Filed On 08-08-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND A. K. GARODIA AM) ITA NO.2837/AHD/2008 A. Y.: 2005-06 KANTIBHAI L. PATEL 39 SANGASTHAN SOCIETY VASTRAPUR AHMEDABAD VS THE D. C. I. T. CIRCLE-9 B WING VASUPUJYA BUILDING ASHRAM ROAD AHMEDABAD PA NO. AEVPP 5710 K (APPELLANT) (RESPONDENT) ITA NO.3038/AHD/2008 A. Y.: 2005-06 THE D. C. I. T. CIRCLE-9 B WING VASUPUJYA BUILDING ASHRAM ROAD AHMEDABAD VS KANTIBHAI L. PATEL 39 SANGASTHAN SOCIETY VASTRAPUR AHMEDABAD PA NO. AEVPP 5710 K (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI S. N. SOPARKAR AR RESPONDENT BY SHRI O. P. BATHEJA DR DATE OF HEARING: 21-09-2011 DATE OF PRONOUNCEMENT: 30-09-2011 O R D E R PER BHAVNESH SAINI: BOTH THE APPEALS ARE DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-XV AHMEDAB AD DATED 19 TH JUNE 2008 FOR ASSESSMENT YEARS 2005-06. ITA NO.2837 AND 3038/AHD/2008 KANTIBHAI L. PATEL 2 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. THE LEARNED DR MERELY RELIED UPON THE ORDER OF THE AO. ON THE OTHE R HAND THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO CERTAI N PAGES FROM THE PAPER BOOK FILED ON RECORD. BOTH THE CROSS APPEALS ARE DECIDED ISSUE- WISE AS UNDER. ISSUE NO.1 3. THE ASSESSEE ON GROUND NO.1 OF THE APPEAL CHALL ENGED THE ADDITION OF RS.15 33 847/- AND IN THE ALTERNATE CON TENTION GROUND NO.2 RAISED CLAIMING DEDUCTION U/S 80 IB (10) OF TH E IT ACT WITH REGARD TO THIS ADDITION. THE REVENUE ON GROUND NO.1 OF THE APPEAL CHALLENGED THE ADDITION OF RS.9 33 000/-. 4. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A CIVIL CONTRACTOR ENGAGED IN THE BUSINESS OF CONSTRUCTING HOUSING PROJECT. DURING THE YEAR THE ASSESSEE DEVELOPED 26 RESIDENT IAL UNITS NAMED AS SAHAJANAND VILLA ON THE LAND BEARING SURVEY NO.6 50/P TOWN PLANNING SCHEME NO.22 FINAL PLOT NO.199/1 ADMEASUR ING ABOUT 4461 SQUARE METRES AT VILLAGE CHANDKHEDA TALUKA GANDHIN AGAR DISTRICT GANDHINAGAR AHMEDABAD. THE ASSESSEE DERIVED BUSINE SS INCOME ON ACCOUNT OF WORKING AS PARTNER HAVING 10% SHARE I N SAHAJANAND ASSOCIATES SAHAJANAND DEVELOPERS PROPRIETARY CONC ERNS OF THE ASSESSEE AND SAHAJANAND INFRASTRUCTURE PROPRIETARY CONCERN OF THE ASSESSEE RECEIVING INCOME FROM DEVELOPMENT OF RESI DENTIAL PROJECTS. A SURVEY OPERATION WAS CONDUCTED AT THE OFFICE PREM ISES OF THE ASSESSEE ON 09-09-2005. CERTAIN PAPERS WERE FOUND D URING THE ITA NO.2837 AND 3038/AHD/2008 KANTIBHAI L. PATEL 3 SURVEY WHICH SHOWED THAT MONEY HAD BEEN RECEIVED AG AINST BUNGALOWS/RESIDENTIAL UNITS BY THE ASSESSEE BUT IT WAS NOT REFLECTED IN THE BOOKS OF ACCOUNTS AND ON THIS THE ASSESSEE D ISCLOSED THE FOLLOWING AMOUNTS IN TWO PROPRIETARY CONCERNS: 1) SAHAJANAND DEVELOPERS RS. 9 33 000/- 2) SAHAJANAND INFRASTRUCTURE RS.15 33 847/- TOTAL RS.24 71 847/- THE AO DISCUSSED THIS ISSUE IN PARA 3 OF THE ASSESS MENT ORDER. THE LEARNED CIT(A) NOTED THAT THE ASSESSEE FILED SEPARA TE BALANCE SHEETS AND PROFIT & LOSS ACCOUNTS IN HIS TWO PROPRIETARY C ONCERNS SEPARATE INCOME FOR EACH ONE HAD BEEN OFFERED FOR TAXATION D URING THE SURVEY. HOWEVER WHEN THE ASSESSEE FILED RETURN OF INCOME HE DECLARED RS.9 33 000/- DISCLOSED DURING THE SURVEY FOR SAHAJ ANAND DEVELOPERS BY MENTIONING THE SAME AMOUNT IN THE PROFIT & LOSS ACCOUNT OF THE PROPRIETARY CONCERN BUT IN THE CASE OF SAHAJANAND I NFRASTRUCTURE INCOME DISCLOSED DURING THE SURVEY WAS NOT OFFERED IN THE PROFIT & LOSS ACCOUNTS. THE TRADING AND PROFIT & LOSS ACCOUN TS FILED WITH THE RETURN OF INCOME OF OTHER PROPRIETARY CONCERN SAHAJ ANAND INFRASTRUCTURE SHOWS WORK IN PROGRESS AT RS.2 76 76 000/- WITHOUT ANY SALE AND OTHER INCOME. THUS THE PROFIT OF SAHAJANA ND DEVELOPERS OF RS.12 67 827/- AND PROFIT OF RS.1 04 60 660/- OF SA HAJANAND INFRASTRUCTURE TOTALING TO RS.1 13 82 676/- WAS SHO WN AS BUSINESS INCOME IN THE COMPUTATION OF INCOME FILED WITH THE RETURN. THE AOS POINT WAS THAT THE INCOME OFFERED DURING THE SURVEY TOTALING TO RS.24 71 747/- SHOULD BE TAXED U/S 69 OF THE IT ACT BECAUSE IT HAD NOT BEEN DISCLOSED IN THE RETURN THOUGH IT WAS DISC LOSED DURING THE ITA NO.2837 AND 3038/AHD/2008 KANTIBHAI L. PATEL 4 SURVEY. IN THE STATEMENT OF FACT IT WAS SUBMITTED BY THE ASSESSEE THAT INCOME OF RS.9 33 000/- OFFERED DURING THE SURVEY I N THE CASE OF SAHAJANAND DEVELOPERS HAS BEEN SHOWN IN THE PROFIT & LOSS ACCOUNTS OF THE CONCERN AND IT SHOULD NOT BE ADDED. FOR INCO ME OFFERED DURING THE SURVEY IN THE CASE OF SAHJANAND DEVELOPERS IT WAS EXPLAINED THAT INCOME OF RS.15 38 747/- (RS.21 01 000/- MINUS RS.5 62 253/-) WAS OFFERED BECAUSE CERTAIN LOOSE PAPERS AND RECORDS WE RE FOUND DURING THE SURVEY WHICH REFLECTED THAT MEMBERS COLLECTION FOR RS.21 01 000/- AND CONSTRUCTION COST OF RS.5 62 253/- HAD NOT BEEN ACCOUNTED. IT WAS EXPLAINED THAT IN THE RETURN FILED AFTER SURVEY MEMBERS COLLECTION OF RS.21 01 000/- WAS SHOWN AS PART OF MEMBERS COLL ECTION OF RS.52 70 000/- WAS SHOWN AS OTHER LIABILITIES IN TH E BALANCE SHEET AND RS.5 62 253/- AS PART OF LABOUR COST IN THE PROFIT & LOSS ACCOUNT I T WAS THUS ARGUED THAT THE INCOME OFFERED DURING THE SURVEY HAD BEEN ACCOU NTED FOR WHILE FILING THE RETURN OF INCOME. IT WAS ALSO STATED IN THE STATEMENT OF FACTS THAT THE ASSESSEE HAD BEEN FOLLOWING PERCENTAGE COM PLETION METHOD OF ACCOUNTING AND FOLLOWED CLOSING WORK IN PROGRESS AS PER ACCOUNTING STANDARD 7 THEREFORE ON THE BASIS OF R ECEIPT OF MEMBERS COLLECTION AND PERCENTAGE BASIS OF COMPLETION OF WO RK THE ASSESSEE HAD OFFERED RS.1 04 60 659/- AS BUSINESS INCOME IN THE RETURN OF INCOME. IT WAS ALSO STATED THAT THE ASSESSEE HAD RE CEIVED CASH FROM THE MEMBERS FOR VARIOUS BUNGALOWS THAT HE HAD CONST RUCTED AND ALLEGED UNACCOUNTED INCOME IS HIS BUSINESS INCOME THEREFORE CANNOT BE TREATED AS INCOME FROM OTHER SOURCES U/S 69 OF THE IT ACT. THE LEARNED CIT(A) ON GOING THROUGH THE SUBMISSIONS AND MATERIAL ON RECORD FOUND THAT RS.9 33 000/- HAS BEEN DECLARE D SEPARATELY AS INCOME DISCLOSED DURING THE COURSE OF SURVEY OPERAT ION IN THE PROFIT & ITA NO.2837 AND 3038/AHD/2008 KANTIBHAI L. PATEL 5 LOSS ACCOUNT OF ONE OF THE PROPRIETARY CONCERN SAHA JANAND DEVELOPERS HOWEVER RS.15 38 747/- HAS NOT BEEN SE PARATELY DECLARED IN THE CASE OF SAHAJANAND INFRASTRUCTURE. THE LEARNED CIT(A) ALSO FOUND THAT INCOME WHICH WAS NOT ACCOUNT ED AS MEMBERS COLLECTION OF RS.21 01 000/- DURING THE COURSE OF S URVEY WHICH WAS STATED TO BE PART OF RS.52 70 000/-. THE LEARNED CI T(A) ALSO NOTED THAT AT THE TIME OF MAKING DISCLOSURE FOR SAHAJANAN D INFRASTRUCTURE THE ASSESSEE WAS AWARE OF THE SYSTEM OF ACCOUNTING THAT HE WAS FOLLOWING AND TO SHOW THAT THIS AMOUNT OF RS.15 38 747/- HAS BEEN TAKEN INTO ACCOUNT WHILE WORKING OUT THE PROFIT OF SAHAJANAND INFRASTRUCTURE IS NOT CONVINCING. THE LEARNED CIT(A ) THEREFORE HELD THAT ADDITION OF RS.15 38 747/- SHALL HAVE TO BE MA DE AND ADDITION WAS ACCORDINGLY UPHELD. HOWEVER SINCE RS.9 33 000/ - WAS DECLARED IN THE RETURN OF INCOME THEREFORE SEPARATE ADDITI ON WAS DELETED. 5. ON CONSIDERATION OF THE SUBMISSIONS OF THE PARTIES WE ARE OF THE VIEW THE PART ADDITION SUSTAINED BY THE LEARNED CIT(A) IS ALSO NOT JUSTIFIED. THE LEARNED CIT(A) FOUND THAT RS.9 33 00 0/- HAS BEEN DECLARED SEPARATELY AS INCOME DISCLOSED DURING SURV EY OPERATION. THE LEARNED DR HAS NOT PRODUCED ANY MATERIAL BEFORE US TO CONTRADICT THE FINDINGS OF THE LEARNED CIT(A). SINC E THIS AMOUNT IS ALREADY DISCLOSED IN THE RETURN OF INCOME AND THE S TATEMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE WAS FOUND CORRECT BY THE LEARNED CIT(A) THEREFORE THERE IS NO INFIRMITY IN THE ORD ER OF THE LEARNED CIT(A) IN DELETING THE ADDITION. PB-1 IS THE PROFIT & LOSS ACCOUNTS OF SAHAJANAND DEVELOPERS WHICH SHOWS THAT THE AMOUNT O F RS.9 33 000/- IS TAKEN INTO INCOME OF THIS CONCERN. THEREFORE THE ITA NO.2837 AND 3038/AHD/2008 KANTIBHAI L. PATEL 6 LEARNED CIT(A) HAS RIGHTLY DELETED THE ADDITION. TH E DEPARTMENTAL APPEAL HAS NO MERIT AND IS ACCORDINGLY DISMISSED. A S REGARDS THE ADDITION OF RS.15 33 847/- IS CONCERNED ON WHICH TH E ASSESSEE HAS RAISED GROUND NO.1 OF THE APPEAL WE FIND THAT THE ASSESSEES CONTENTION IS CORRECT THAT THE AMOUNT OF RS.21 01 0 00/- HAS BEEN TAKEN INTO CONSIDERATION AND IS ACCOUNTED FOR IN TH E RECORD OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE REFE RRED TO PB-15 WHICH IS TRADING AND PROFIT & LOSS ACCOUNT FOR THE YEAR UNDER CONSIDERATION OF SAHAJANAND INFRASTRUCTURE IN WHICH THE ASSESSEE HAS SHOWN CLOSING WORK IN PROGRESS IN A SUM OF RS.2 76 76 000/- AND PB- 21 PARA 4 GIVES THE DETAILS OF INVENTORIES OF THIS CONCERN IN WHICH THE COMPLETE WORK WAS VALUED AT RS.2 55 75 000/- AS PER ACCOUNTING STANDARD 7. THUS THE DIFFERENCE WOULD BE RS.21 01 000/-. THUS AS PER ACCOUNTING STANDARD 7 THE ASSESSEE VALUED WORK IN PROGRESS AT THE LESSER AMOUNT BUT IN THE PROFIT & LOSS ACCOU NT THE WORK IN PROGRESS IS SHOWN AT HIGHER AMOUNT WOULD SHOW THAT RS.21 01 000/- HAS BEEN TAKEN CARE OF AND THE SAME BECAME PART OF WORK IN PROGRESS. THUS THE AMOUNT INCLUDES AN AMOUNT OF RS .15 38 747/- AS ARGUED BEFORE THE LEARNED CIT(A). THUS THERE WAS N O REASON FOR THE LEARNED CIT(A) TO HOLD THAT THE EXPLANATION OF THE ASSESSEE REGARDING SAHAJANAND INFRASTRUCTURE WAS NOT CONVINCING. SINCE THE AMOUNT DECLARED IN THE SURVEY IN RESPECT OF SAHAJANAND INF RASTRUCTURE IS ALREADY INCLUDED IN THE WORK IN PROGRESS THEREFORE THERE WAS NO NEED TO MAKE SEPARATE ADDITION. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.15 33 847/-. IN THE RESULT GROUND NO.1 OF THE APPEAL OF THE ASSESS EE IS ALLOWED. IN VIEW OF THIS FINDING GROUND NO.2 OF THE APPEAL OF THE ASSESSEE ITA NO.2837 AND 3038/AHD/2008 KANTIBHAI L. PATEL 7 CLAIMING ALTERNATIVE RELIEF U/S 80 IB (10) OF THE I T ACT HAS BECOME INFRUCTUOUS AND IS DISMISSED. 6. CHARGING OF INTEREST IS NOT ARGUED BY THE LEARNE D COUNSEL FOR THE ASSESSEE IN GROUND NO. 3 OF THE APPEAL OF THE A SSESSEE WHICH IS CONSEQUENTIAL IN NATURE AND IS DISMISSED. 7. NO OTHER POINT IS RAISED IN THE ASSESSEES APPEA L. 8. ISSUE NO.1 STANDS DISPOSED OF. ISSUE NO.2 9. ON GROUND NO.2 OF THE APPEAL THE REVENUE CHALLE NGED THE ORDER OF THE LEARNED CIT(A) IN DELETING THE DISALLO WANCE OF CLAIM OF EXEMPTION U/S 80 IB OF THE IT ACT TO THE TUNE OF RS.1 04 60 660/-. THE AO DISCUSSED THIS POINT IN THE ASSESSMENT ORDER WHICH SHOWS THAT DEDUCTION HAS NOT BEEN ALLOWED TO THE ASSESSEE BECAUSE BUILDING USE PERMISSION OF AUDA IS DATED 12-12-2005 AND 21-12-2005 ACCORDING TO THE AO THESE DATES ARE BEY OND FINANCIAL YEAR 2004-05 HENCE DEDUCTION U/S 80IB (10) OF THE IT ACT WAS DENIED. THE AO OBSERVED THAT THE ASSESSEE HAD APPLI ED FOR BUILDING USE PERMISSION TO AUDA IN OCTOBER 2005 AND THE AUD A HAD GRANTED SUCH PERMISSION IN THE MONTH OF DECEMBER 2005 HEN CE CONSTRUCTION OF BUNGALOW CANNOT BE SAID TO BE READY DURING THE F INANCIAL YEAR 2004-05 RELEVANT TO THE ASSESSMENT YEAR UNDER APPEA L. DEDUCTION WAS ACCORDINGLY DENIED U/S 80IB (10) OF THE IT ACT. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT ASSESSEE PURCHASED T HE LAND IN QUESTION AT CHANDKHEDA AHMEDABAD ON WHICH THE ASS ESSEE HAD ITA NO.2837 AND 3038/AHD/2008 KANTIBHAI L. PATEL 8 DEVELOPED 26 RESIDENTIAL UNITS NAMES AS SAHAJANAND VILLA AND SUCH PROJECT WAS COMMENCED IN THE ASSESSMENT YEAR 2005-0 6. THE ASSESSEE WAS FOLLOWING PERCENTAGE COMPLETION METHOD OF ACCOUNTING WHEREIN INCOME IS OFFERED TO TAX ON THE BASIS OF PE RCENTAGE OF WORK COMPLETED AND ON ESTIMATION OF PROFIT TO BE REALIZE D BY HIM ON SALE OF THE UNITS. THE ASSESSEE FIRM HAS BEEN OFFERING THE PROFIT FOR TAXATION EVEN BEFORE SALE BECAUSE IT HAS RECEIVED ORDER FOR SALE AND SUCH METHOD OF ACCOUNTING WAS ACCORDING TO THE ACCOUNTIN G STANDARD ISSUED BY INSTITUTE OF CHARTERED ACCOUNTANTS OF IND IA (ICAI) RELATED TO INCOME FROM CONSTRUCTION ACCOUNT. THE ASSESSEE EXPL AINED THAT CONDITIONS OF SECTION 80 IB (10) OF THE IT ACT ARE SATISFIED IN THIS CASE BECAUSE APPROVAL OF AUDA WAS GRANTED ON 27-10-2004. IT WAS COMPLETED IN THE FINANCIAL YEAR 2005-06. SIZE OF TH E PLOT OF LAND WAS AS PER THE ABOVE PROVISIONS AND MAXIMUM BUILT-UP AR EA WAS ALSO ACCORDING TO LAW THEREFORE BUILDING USE PERMISSIO N RECEIVED IN DECEMBER 2005 IS AS PER LAW. IT WAS SUBMITTED THAT THE ASSESSEE SATISFIED ALL THE CONDITIONS OF SECTION 80 IB (10) OF THE IT ACT. IT WAS ALSO SUBMITTED THAT IF THE ASSESSEE DID NOT FULFILL ED THE CONDITIONS THEN INCOME OFFERED EARLIER SHOULD NOT HAVE BEEN TA XED. IT WAS SUBMITTED THAT AS THE ENTIRE CONSTRUCTION OF THE HO USING PROJECT WAS COMPLETED IN THE FINANCIAL YEAR 2005-06 AND THE ASS ESSEE APPLIED FOR BUILDING USE PERMISSION IN OCTOBER 2005 AND SUCH P ERMISSION WAS OBTAINED FROM AUDA IN DECEMBER 2005 I.E. WITHIN FO UR YEARS FROM THE DATE OF APPROVAL FROM THE LOCAL AUTHORITY THER EFORE THE ASSESSEE FULFILLED ALL THE CONDITIONS OF SECTION 80 IB (10) OF THE IT ACT. THE AO FILED REMAND REPORT BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) ON EXAMINING THE RECORD AND MATERIAL BEFORE HIM FOUND THAT THE ITA NO.2837 AND 3038/AHD/2008 KANTIBHAI L. PATEL 9 ASSESSEE DEVELOPED THE PROJECT IN QUESTION AND ACCO RDING TO SECTION 80 IB (10) (A) (II) OF THE IT ACT THE HOUSING PR OJECT WHOSE APPROVAL HAS BEEN GIVEN BY THE LOCAL AUTHORITIES ON OR AFTER 01-04-2004 WHICH IS THE CASE OF THE ASSESSEE AS APPROVAL WAS GRANTED BY AUDA ON 27 TH OCTOBER 2004 SUCH HOUSING PROJECT IS REQUIRED TO BE COMPLETED WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEA R IN WHICH THE HOUSING PROJECT WAS APPROVED BY THE LOCAL AUTHORIT IES. IN THE CASE OF THE ASSESSEE HOUSING PROJECT WAS COMPLETED IN DECEM BER 2005 AS PER BUILDING USE PERMISSION. THEREFORE THE ASSESSE E HAS FURTHER TIME TILL 31-03-2009 FOR COMPLETION OF THE PROJECT. THE LEARNED CIT(A) THEREFORE FOUND THAT ALL THE CONDITIONS OF SECTION 80 IB (10) OF THE IT ACT ARE SATISFIED IN THIS CASE AND ACCORDINGLY THE AO WAS DIRECTED TO GRANT DEDUCTION ACCORDINGLY. ON GONG THROUGH THE OR DER OF THE LEARNED CIT(A) WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A). THE LEARNED CIT(A) RIGHTLY APPRECIATED THE FACTS OF THE CASE IN THE LIGHT OF THE PROVISIONS OF THE IT ACT. THE ORDE R CONTAINS COMPLETE DETAILS OF THE PROJECT ALONG WITH APPROVAL AND COMP LETION OF THE PROJECT. THE LEARNED DR HAS NOT POINTED OUT ANY IN FIRMITY IN THE ORDER OF THE LEARNED CIT(A). IN THE ABSENCE OF ANY CHALLE NGE TO THE FINDINGS OF THE LEARNED CIT(A) AND IN THE ABSENCE OF ANY EVI DENCE OR MATERIAL ON RECORD CONTRARY TO THE FINDINGS OF THE LEARNED C IT(A) WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). WE CONFIRM HIS FINDINGS AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. IN THE RESULT GROUND NO.2 OF THE APPEAL O F THE REVENUE IS DISMISSED. ITA NO.2837 AND 3038/AHD/2008 KANTIBHAI L. PATEL 10 ISSUE NO.3 10. ON GROUND NO.3 OF THE APPEAL THE REVENUE CHALL ENGED THE DELETION OF ADDITION ON ACCOUNT OF UNEXPLAINED CRED ITS U/S 68 OF THE IT ACT TO THE TUNE OF RS.26 80 000/-. THE AO DISCUSSED THIS ISSUE IN PARA 6 OF THE ASSESSMENT ORDER AND MADE THE ADDITIO N HOLDING THAT THE CONFIRMATION FROM THE NEW CREDITORS HAD NOT BEE N FILED. BEFORE THE LEARNED CIT(A) THE ASSESSEE FILED DETAILED SUBMISSI ON GIVING CASH CONFIRMATION LETTERS COPY OF BANK ACCOUNT COPY OF RETURNS ETC. IN SUPPORT OF TWO FRESH DEPOSITS FROM GOVINDBHAI PATEL AND DIVYAM REAL ESTATE PVT. LTD. FOR THE REMAINING THREE DEPOSITS IT WAS EXPLAINED THAT NO FRESH DEPOSITS HAVE BEEN TAKEN FROM THEM DU RING THE YEAR UNDER CONSIDERATION. THESE AMOUNTS ARE OF RS.1 00 0 00/- RS.2 00 000/ AND RS.1 00 000/- EACH IN CASE OF JAYA NTILAL PRANLAL KANTILAL PATEL HUF AND NILESH POONAMCHANDA. THE SU BMISSIONS OF HT4E ASSESSEE WERE FORWARDED TO THE AO AND HE WAS A SKED TO CONDUCT INQUIRY IF REQUIRED. THE REMAND REPORT WAS FILED BEFORE THE LEARNED CIT(A) IN WHICH THE AO STATED THAT REQUISIT E DETAILS WERE NOT FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE LEARNED CIT(A) ON GOING THROUGH THE MATERIALS ON RECORD AND THE REMAND REPORT NOTED THAT SUFFICIENT EVIDENCES WERE FILED T O EXPLAIN GENUINE CASH CREDITS IN THE CASE OF GOVINDBHAI PATEL AND DI VYAM REAL ESTATE PVT. LTD. WHICH WERE SUPPORTED BY THEIR CONFIRMATIO N PERMANENT ACCOUNT NUMBER AND COPY OF BANK ACCOUNT ETC. ADDITI ONS IN THEIR CASES WERE ACCORDINGLY DELETED AND IN THE CASE OF T HE REMAINING THREE CREDITORS IT WAS FOUND THAT LOANS HAVE NOT BE EN TAKEN DURING THE YEAR UNDER CONSIDERATION BECAUSE THEIR NAMES WERE A PPEARING IN THE ITA NO.2837 AND 3038/AHD/2008 KANTIBHAI L. PATEL 11 BALANCE SHEET FILED FOR THE PRECEDING ASSESSMENT YE AR 2004-05. ADDITIONS WERE ACCORDINGLY DELETED. 11. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) IN DEL ETING THE ADDITIONS. THE LEARNED DR HAS NOT POINTED OUT ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) IN DELETING THE ADDITIONS. THOUGH N O DETAILS WERE FILED AT THE ASSESSMENT STAGE BUT COMPLETE DETAILS WERE F ILED AT THE APPELLATE STAGE ON WHICH REMAND REPORT WAS CALLED F OR FROM THE AO. THE RECORD PRODUCED BEFORE THE LEARNED CIT(A) SHOWS THAT IN THE CASE OF THREE CREDITORS NO FRESH LOANS HAVE TAKEN DURING THE YEAR UNDER CONSIDERATION AND THE AMOUNTS SHOWN AGAINST T HEM WERE FOUND MENTIONED IN THE BALANCE SHEET OF THE PRECEDI NG ASSESSMENT YEAR 2004-05. THE CARRY FORWARD OF THE AMOUNT FROM THE EARLIER YEAR CANNOT BE TREATED AS CASH CREDIT GENERATED DURING T HE YEAR UNDER CONSIDERATION; THEREFORE ADDITIONS HAVE BEEN RIGHT LY DELETED IN THEIR CASES. IN THE CASE OF GOVINDBHAI PATEL AND DIVYAM R EAL ESTATE PVT. LTD. SUFFICIENT EVIDENCES WERE FILED ON RECORD TO SHOW THAT THEY WERE ASSESSED TO TAX AND THEIR IDENTITY IS ESTABLISHED A LONG WITH THEIR SOURCES OF INVESTMENTS AND THEY HAVE ALSO CONFIRMED THE CASH CREDITS. THE LEARNED CIT(A) ON PROPER APPRECIATION OF THE FACTS AND MATERIAL ON RECORD HAS RIGHTLY DELETED THE ADDITION . GROUND NO.3 OF THE APPEAL OF THE REVENUE HAS NO MERIT AND IS ACCOR DINGLY DISMISSED. ISSUE NO.4 12. ON GROUND NO.4 THE REVENUE CHALLENGED THE DELE TION OF DISALLOWANCE OF INTEREST OF RS.1 74 147/-. THIS ADD ITION WAS MADE ON ITA NO.2837 AND 3038/AHD/2008 KANTIBHAI L. PATEL 12 ACCOUNT OF UNEXPLAINED DEPOSITS. SINCE THE LEARNED CIT(A) FOUND THAT CASH CREDITS ARE GENUINE THEREFORE ADDITION ON AC COUNT OF INTEREST WAS DELETED. IT IS CONSEQUENTIAL IN NATURE ON ACCOU NT OF DELETION OF ADDITION ON ACCOUNT OF CASH CREDIT. THEREFORE THIS GROUND OF APPEAL OF THE REVENUE HAS NOT MERIT AND IS DISMISSED. ISSUE NO.5 13. ON GROUND NO.5 OF THE APPEAL THE REVENUE CHALL ENGED THE DELETION OF ADDITION ON ACCOUNT OF FRESH CAPITAL IN TRODUCED TO THE TUNE OF RS.29 01 042/-. THE AO DISCUSSED THIS ISSUE IN P ARA 8 OF THE ASSESSMENT ORDER. SINCE NO SATISFACTORY EXPLANATION REGARDING SOURCES OF THE AMOUNT APPEARING IN THE CAPITAL ACCO UNT WAS FOUND THEREFORE ADDITION WAS MADE. IT WAS SUBMITTED BEFO RE THE LEARNED CIT(A) THAT NECESSARY BOOKS OF ACCOUNTS AND BANK BO OKS WERE SUBMITTED. THE ASSESSEE SUBMITTED THE LEDGER ACCOUN T OF THE ASSESSEE FROM HIS PROPRIETARY CONCERN SAHAJANAND IN FRASTRUCTURE TO SHOW THAT AMOUNT PERTAINS TO GANDHINAGAR NAGRIK CO- OPERATIVE BANK LTD. LOAN ACCOUNT. THE AMOUNT OF RS.8 66 500/- (RS. 4 50 000 PLUS RS.2 16 500/- + RS.2 00 000/-) HAS BEEN RECEIVED FR OM HIS PERSONAL BANK ACCOUNT WITH GANDHINAGAR NAGRIK COOPERATIVE BANK LTD. AND C OPY OF BANK PASS BOOK WAS PRODUCED TO SHOW THAT AMOUNT WAS TRAN SFERRED FROM ONE PROPRIETARY CONCERN TO OTHER. IT WAS ALSO EXPLA INED THAT THE AMOUNT OF RS.20 34 542/- IS SIMILARLY TRANSFERRED F ROM HIS INDIVIDUAL NAME TO THE PROPRIETARY CONCERN IN RESPECT OF LAND PURCHASED FOR RAISING THE HOUSING COMPLEX AT CHANDKHEDA. THE LEAR NED CIT(A) FOUND THE EXPLANATION OF THE ASSESSEE TO BE CORRECT BECAUSE DESPITE ITA NO.2837 AND 3038/AHD/2008 KANTIBHAI L. PATEL 13 GIVING OPPORTUNITY TO THE AO AT THE APPELLATE STAGE TO FILE REMAND REPORT THE AO HAS NOT BROUGHT ANYTHING ON RECORD T O REBUT THE DOCUMENTS OF THE ASSESSEE. ADDITION WAS ACCORDINGLY DELETED. 14. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE D O NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE ASSESSEE EXPLAINED THAT THE AMOUNTS WERE TRANSFERRED FROM ON E CONCERN TO ANOTHER CONCERN OF THE ASSESSEE AND THE LAND PURCHA SED IS IN HIS PERSONAL CAPACITY WAS TAKEN INTO PROPRIETARY CONCER N OF SAHAJANAN INFRASTRUCTURE ON WHICH THE HOUSING PROJECT WAS DEV ELOPED. THEREFORE SUCH ENTRIES CANNOT BE TREATED AS UNEXPL AINED CASH CREDIT. THE LEARNED CIT(A) CALLED FOR THE REMAND REPORT FRO M THE AO ON THE EVIDENCES AND DOCUMENTS FILED BY THE ASSESSEE BUT T HE AO DESPITE GIVING OPPORTUNITY DID NOT BRING ANYTHING ON RECORD TO JUSTIFY THE ADDITION. THE LEARNED CIT(A) ON PROPER APPRECIATION OF THE FACTS AND MATERIAL ON RECORD RIGHTLY DELETED THE ADDITION. GR OUND NO.5 OF THE APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. ISSUE NO.6 15. ON GROUND NO.6 THE REVENUE CHALLENGED THE DELE TION OF ADDITION OF DISALLOWANCE OUT OF TELEPHONE EXPENSES VEHICLE AND CAR REPAIR DEPRECIATION ON CAR AND CAR INSURANCE. THE AO DISALLOWED 20% OF THE EXPENSES WHICH HAVE BEEN REDUCED TO BY 1 0% BY THE LEARNED CIT(A). NO INFIRMITY HAS BEEN POINTED OUT IN THE ORDER OF THE LEARNED CIT(A). ACCORDINGLY THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. ITA NO.2837 AND 3038/AHD/2008 KANTIBHAI L. PATEL 14 16. NO OTHER POINT IS ARGUED OR PRESSED. 17. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AND THE DEPARTMENTAL APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A. K. GARODIA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD