Shri Ashok Lalwani Prop. M/s. Universal Book Depot, JODHPUR v. ACIT, JODHPUR

ITA 434/JODH/2012 | 2009-2010
Pronouncement Date: 28-10-2013 | Result: Partly Allowed

Appeal Details

RSA Number 43423314 RSA 2012
Assessee PAN AADPL6255H
Bench Jodhpur
Appeal Number ITA 434/JODH/2012
Duration Of Justice 10 month(s) 4 day(s)
Appellant Shri Ashok Lalwani Prop. M/s. Universal Book Depot, JODHPUR
Respondent ACIT, JODHPUR
Appeal Type Income Tax Appeal
Pronouncement Date 28-10-2013
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 25-10-2013
Date Of Final Hearing 25-10-2013
Next Hearing Date 25-10-2013
Assessment Year 2009-2010
Appeal Filed On 24-12-2012
Judgment Text
IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI N.K. SAINI ACCOUNTANT MEMBER. ITA NO.434/JODH/2012 (A.Y. 2009-10) SHRI ASHOK LALWANI VS. ACIT CIRCLE 3 PROP. M/S. UNIVERSAL BOOK DEPOT JODHPUR. C/O SHRI U.C. JAIN ADVOCATE SHATRUNJAY HARI SINGH NAGAR PALI ROAD JODHPUR. PAN NO. AADPL 6255 H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI U.C. JAIN DEPARTMENT BY : SHRI N.A. JOSHI- D.R. DATE OF HEARING : 25/10/2013. DATE OF PRONOUNCEMENT : 28/10/2013. O R D E R PER N.K.SAINI A.M THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE OR DER DATED 18/10/2012 OF LD. CIT (A) JODHPUR. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) ERRED IN NOT DECIDING THE GROUND OF APPEAL NO. 1 RE LATING TO THE VALIDITY OF THE ASSESSMENT ORDER PASSED U/S 143(3). 2 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) ERRED IN:- A) SUSTAINING TRADING ADDITION OF RS. 1 84 164/- B) SUSTAINING DISALLOWANCE OF EXPENSES AT RS. 52 2 07/- 3. WITHOUT PREJUDICED TO THE ABOVE AND IN THE ALTER NATIVE:- A) THE TRADING ADDITION AND DISALLOWANCE OUT OF EXP ENSES SUSTAINED BY LD CIT(A) ARE HIGHLY EXCESSIVE AND REQ UIRES SUITABLE MODIFICATION. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) ERRED IN SUSTAINING AN ADDITION OF RS. 2 53 775/- U NDER THE HEAD CAPITAL GAIN ON SALE OF HOUSE PROPERTY SITUATED AT SHASTRI NAGAR JODHPUR. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) ERRED IN NOT ALLOWING EXEMPTION U/S 54F TO THE EXTE NT OF RS. 9 59 250/- IN RESPECT OF CONSTRUCTION MADE IN THE N EWLY PURCHASED HOUSE. 6. THAT THE PETITIONER MAY KINDLY BE PERMITTED TO R AISE ANY ADDITIONAL OR ALTERNATIVE GROUND AT OR BEFORE THE TIME OF HEARING . 7. THE PETITIONER PRAYS FOR JUSTICE & RELIEF. 2. THE ASSESSEE ALSO RAISED AN ADDITIONAL GROUND WHI CH READS AS UNDER:- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE COMPUTATION OF LONG TERM CAPITAL GAIN ON THE SALE OF HOUSE PROPERT Y WITHOUT DEDUCTION OF COST OF ACQUISITION (COST OF PREVIOUS OWNER AS THE PROPERTY WAS RECEIVED UNDER A WILL) IS ERRONEOUS AS SECTION 48 SPECIFICAL LY LAID THAT THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAIN SHALL BE COM PUTED BY DEDUCTING THE COST OF ACQUISITION FROM THE FULL VALUE OF THE CONS IDERATION. 3 3. DURING THE COURSE OF HEARING LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ABOVE GROUND IS PURELY A LEGAL O NE FOR WHICH NO FRESH EVIDENCE OR MATERIAL IS REQUIRED AND AS SUCH SAME M AY BE ADMITTED. 4. LEARNED D.R. ALTHOUGH OPPOSED FOR ADMISSION OF TH E ADDITIONAL GROUND BUT COULD NOT CONTROVERT THE AFORESAID CONT ENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE GROUND RAISED IS PURELY LEGAL ONE FOR WHICH NO FRESH EVIDENCE OR MATERIAL IS REQUIRED. W E THEREFORE ADMIT THE ADDITIONAL GROUND. 5. LEARNED COUNSEL FOR THE ASSESSEE DID NOT ARGUE FOR GROUND NO.1 AND GROUND NOS. 6 & 7 WHICH ARE GENERAL IN NATURE SO DO NOT REQUIRE ANY COMMENTS ON OUR PART. 6 . VIDE GROUND NO. 2(A) THE GRIEVANCE OF THE ASSESS EE RELATES TO THE SUSTENANCE OF TRADING ADDITION OF RS. 1 84 164/-. 7. THE F ACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE AS SESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE DURING THE YEAR HAD SHOWN GROSS PROFIT (GP) RATE OF 13.54% WHICH WAS LOW IN COMPARISON TO THE PRECEDING YEAR AT 14.38%. THE ASSESSING OFFICER FURTHER STATED THAT THE ASSESSEE HAD NOT MAINTAINED STOCK REGISTER AND NO INVENTORY OF CLOSING AND OPENING STOCK WAS PRODUCED . HE ASKED THE 4 ASSESSEE TO GIVE COMPARATIVE DETAILS OF PURCHASE T O SUBSTANTIATE THE CLAIM OF LOWER MARGIN OF PROFIT. THE ASSESSING OFF ICER ALSO OBSERVED THAT THE SALE BILLS OF NOTE BOOK AND STATIONERY DID NOT BEAR THE PROPER DESCRIPTION OF THE QUALITY AND SIZE OF ITEMS SOLD THEREFORE IN THE ABSENCE OF COMPLETE DETAILS OF GOODS TRADED AND STO CK REGISTER TRADING RESULTS WERE NOT ACCEPTABLE. HE ACCORDINGLY REJE CTED THE BOOKS OF ACCOUNTS AND BY CONSIDERING THE PAST HISTORY APPLI ED GP RATE AT 14.38%. ACCORDINGLY AN ADDITION OF RS. 1 84 164/- WAS MADE . 8. THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT( A) AND SUBMITTED THAT DURING THE YEAR TURNOVER WAS INCREA SED BY RS. 45.59 LAC. WHICH REDUCED THE MARGIN ON SALE. IT WAS FURTHER S TATED THAT THE ASSESSEE HAS TO COMPETE IN THE MARKET AND EARN MORE PROFIT ON ENHANCED TURNOVER BUT THE ASSESSEE SOLD CERTAIN ITEMS ON LO W MARGIN WHICH ADVERSELY AFFECTED THE MARGIN OF PROFIT. LEARNED C IT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT NO IN VENTORY OF CLOSING AND OPENING STOCK WAS PRODUCED BEFORE THE ASSESSING OFF ICER OR BEFORE HIM AND THAT NO COMPARATIVE DETAILS OF PURCHASE WAS PRO DUCED DURING THE ASSESSMENT PROCEEDINGS. HE WAS OF THE VIEW THAT TH E ASSESSEE FAILED TO EXPLAIN SATISFACTORILY THE REASON FOR SHOWING LOW G P RATE. HE 5 ACCORDINGLY CONFIRMED THE ADDITION MADE BY THE ASS ESSING OFFICER. NOW THE ASSESSEE IS IN APPEAL. 9. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE SALES OF THE ASSESSEE INCREASED DURING THE YEAR WHICH AFFECTED T HE PROFIT MARGIN. THEREFORE THE GP RATE WAS SLIGHTLY LOW IN COMPARIS ON TO THE EARLIER YEAR BUT THE NET PROFIT (NP) RATE WAS INCREASED. HE FUR NISHED THE DETAILS IN THE FORM OF A CHART AT PAGE 1 OF THE WRITTEN SUBMIS SIONS FOR THE YEAR UNDER CONSIDERATION AS WELL AS THE EARLIER YEAR WH ICH READS AS UNDER:- PARTICULAR AY 2009 - 10 AY 2008 - 09 REMARK SALES RS. 2 19 24 260/- RS. 1 73 65 111/- INCREASED BY RS. 45 59 149/- (26.25%) GROSS PROFIT RS. 26 67 948/- RS. 24 96 241/- INCREASED BY RS. 4 71 707/ - (18.90%) RATE OF GROSS PROFIT 13.53% 14.38% DECREASED 0 .85% NET PROFIT RS. 9 33 597/- RS. 5 93 399/- I NCREASED BY RS. 3 40 198/- (57.33%) RATE OF NET PROFIT Q 4.26% 3.41% INCREASED 0. 85% 10. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SIN CE THERE WAS AN INCREASE IN THE NP IN COMPARISON TO THE EARLIER YEA R AND NO SPECIFIC DEFECT WAS POINTED OUT BY THE ASSESSING OFFICER AND THAT ALL THE REMARKS MADE BY THE ASSESSING OFFICER WERE GENERAL REMARKS THEREFORE THE 6 ADDITION SUSTAINED BY THE LEARNED CIT(A) WAS NOT JU STIFIED. RELIANCE WAS PLACED ON THE FOLLOWING CASE-LAWS:- 1) P. VENKANNA VS. CIT(A) [72 ITR 328 (MYS)] 2) ITO VS. SUBHASH SYNTHETICS [78 TTJ (JD) 567] 3) SHRI LAL CHAND CHOUDHARY VS. ACIT [ITA NO. 191/J U/2012 DATED 07/03/2013] 4) ITO VS. PRAKASH CHAND [100 TTJ (JD) 639] 11. IN HIS RIVAL SUBMISSIONS LEARNED D.R. STRONGLY SUP PORTED THE ORDERS OF THE AUTHORITIES BELOW. 12. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE IT IS AN ADMITTED FACT THAT TURNOVER OF THE A SSESSEE WAS INCREASED FROM RS. 1 73 65 111/- IN THE PRECEDING YEAR TO RS. 2 19 24 260/- IN THE YEAR UNDER CONSIDERATION WHICH WAS ABOUT 26.25%. THE INCREASE IN THE SAID TURNOVER AND COMPETITION IN THE MARKET MIGHT HAVE DECREASED THE GP MARGIN HOWEVER THE NP OF THE ASSESSEE WAS BETT ER IN COMPARISON TO THE EARLIER YEAR WHICH INCREASED TO RS. 9 33 597/- AS AGAINST RS. 5 93 399/- IN THE EARLIER YEAR. IN THE PRESENT CAS E THE ASSESSING OFFICER DID NOT POINT OUT ANY SPECIFIC INSTANCE OF SUPPRESS ED SALE AND INFLATED PURCHASES. HE ALSO ADMITTED THE INCREASE IN TURNOV ER AND EVEN IN THE 7 BODY OF THE ASSESSMENT ORDER IT IS CLEARLY MENTION ED THAT WHENEVER SALES INCREASED THERE WAS DECREASE IN THE GP RATE WHICH WAS AT 16.35% IN THE A.Y. 2008-09 SAME WAS THE POSITION FOR THE YEAR UN DER CONSIDERATION I.E. WHEN THERE WAS INCREASE IN THE TURNOVER THE GP RAT E DECREASED. WE THEREFORE ARE OF THE VIEW THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFIC ER PARTICULARLY WHEN THE NP OF THE ASSESSEE WAS BETTER IN COMPARISON TO THE EARLIER YEAR. ON THE SIMILAR ISSUE THIS BENCH OF THE TRIBUNAL IN TH E CASE OF ITO VS. SUBHASH SYNTHETICS (2003) 78 TTJ (JD) 567 (SUPRA) HAS HELD AS UNDER:- THE ASSESSEE-COMPANY WAS ASKED TO GIVE DETAILS OF ACTUAL SALE PRICE OF THOSE 25 ITEMS WHICH HAD BEEN SELECTED BY THE AO FOR ARRIVING AT THE NET PROFIT RATE OF 2.67 PER CENT. IT WAS FOUND THAT IN MOST OF THE CASES THE ACTUAL SALE PRICE WAS LESS THAN ESTIMATED AT THE TIME OF DECLARING BEFORE THE EXCISE DEPARTMENT. IT IS ONLY IN A FEW ITEMS THAT THE ACTUAL SALE PRICE TALLIES MORE OR LESS WITH THE ESTIMATED SALE PRICE. THE RESULT IS THAT AS PER WORKING OF ESTIMATED SALE PRICE THE APPELLANT IS DEEMED TO HAVE EARNED NET PROFIT IN ALL THE 25 I TEMS. THIS CLEARLY INDICATES THAT THE INCOME CANNOT BE ESTIMATED ON TH E BASIS OF SALE PRICE GIVEN IN THE EXCISE DECLARATION STATEMENT. T HE NET PROFIT RATE OF 2.67 PER CENT ARRIVED AT BY THE AO ON THE BASIS OF DECLARATION STATEMENT BEFORE THE EXCISE DEPARTMENT WAS NOT CORR ECT. FOR THE REASONS GIVEN BY THE CIT(A) THE FIGURES GIVEN BY THE ASSESSEE BEFORE THE EXCISE DEPARTMENT WAS ON ESTIMATE BASIS AND COR RECT PROFIT RATE EARNED BY THE ASSESSEE CANNOT BE ARRIVED AT ON THE BASIS OF THIS STATEMENT. BESIDES THE AO HAD NOT POINTED OUT ANY SERIOUS DEFECT FOR INVOKING THE PROVISIONS OF S.145 AND NET PROFIT RAT E DECLARED DURING THE YEAR UNDER APPEAL IS BETTER THAN NET PROFIT RAT E DECLARED DURING THE IMMEDIATELY PRECEDING TWO YEARS. THEREFORE IN TERFERENCE WITH THE ORDER OF THE CIT(A) IS DECLINED . 8 13. IN THE PRESENT CASE ALSO THE NP RATE OF THE ASSESS EE INCREASED TO 4.26% IN THE YEAR UNDER CONSIDERATION IN COMPARISON TO 3.41% IN THE PRECEDING YEAR WHICH CLEARLY SHOWS THAT NP RATE OF THE ASSESSEE WAS BETTER. THEREFORE THE ADDITION MADE BY THE ASSESSI NG OFFICER AND SUSTAINED BY THE LEARNED CIT(A) WAS NOT JUSTIFIED. IN THAT VIEW OF THE MATTER THE IMPUGNED ADDITION SUSTAINED BY THE LEAR NED CIT(A) IS DELETED. 14. THE NEXT ISSUE VIDE GROUND NOS. 2(B) AND 3(A) RELAT ES TO THE SUSTENANCE OF DISALLOWANCE OUT OF EXPENSES. 15. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAS CLAIMED CONVEYANCE ALLOWANCE TELEPHONE EXPENSES TRAVELLIN G EXPENSES SHOP EXPENSES AND DEPRECIATION ON CAR AT RS. 56 437/- R S. 1 35 748/- RS.18 371/- RS. 32 559/- AND RS. 70 143/- RESPECTI VELY BUT NOT MAINTAINED THE COMPLETE DETAILS OF THOSE EXPENSES. HE ALSO OBSERVED THAT THE ASSESSEE HAD NOT MAINTAINED LOG BOOK OF CA R RUNNING AND CALL REGISTER FOR TELEPHONE USE. HE THEREFORE DISALLO WED 1/6 TH OF THOSE EXPENSES AND MADE THE ADDITION OF RS. 52 207/-. WH EN THE MATTER WAS CARRIED TO THE LEARNED CIT(A) THE SAID ADDITION WA S CONFIRMED BY 9 OBSERVING THAT NO SATISFACTORILY EXPLANATION IN NON -MAINTENANCE OF LOG BOOK WAS GIVEN. NOW THE ASSESSEE IS IN APPEAL. 16. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE EXPENSES WERE INCURRED FOR BUSINESS PURPOSES AND NO INSTANCE WAS POINTED OUT TO SUBSTANTIATE THE NON-BUSINESS PURPOSE. THEREFORE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LEARNED CIT(A) WAS NOT JUSTIFIED. 17. IN HIS RIVAL SUBMISSIONS LEARNED D.R. SUPPORTED TH E ORDERS OF THE AUTHORITIES BELOW. 18. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTI ES IT IS NOTICED THAT THE ASSESSING OFFICER DID NOT POINT OUT ANY SP ECIFIC INSTANCE WHERE THE EXPENSES WERE INCURRED FOR NON-BUSINESS PURPOSE . AT THE SAME TIME IN SUCH TYPE OF CASES PERSONAL USE OF CAR AND TELE PHONE CANNOT BE RULED OUT. THEREFORE SOME DISALLOWANCE IS CALLED FOR. IN OUR OPINION DISALLOWANCE MADE BY THE ASSESSING OFFICER AND SUST AINED BY THE LEARNED CIT(A) APPEARS TO BE ON HIGHER SIDE. WE THEREFORE TO MEET THE ENDS OF JUSTICE DEEM IT APPROPRIATE TO SUSTAIN THE DISALLO WANCE OF RS. 25 000/- WHICH WILL MEET OUT THE LEAKAGE IF ANY. ACCORDING LY THE DISALLOWANCE OF RS. 25 000/- IS SUSTAINED AND THUS THE ASSESSEE WIL L GET THE RELIEF OF RS. 27 207/-. 10 19. THE NEXT ISSUE VIDE GROUND NO.4 RELATES TO THE SUS TENANCE OF ADDITION OF RS. 2 53 775/- UNDER THE CAPITAL GAIN O N SALE OF HOUSE PROPERTY SITUATED AT SHASTRI NAGAR JODHPUR. 20. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT T HE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD CLAIMED LONG TERM CAPITAL GAIN OF RS. 13 05 642/- ON THE SA LE OF SHASTRI NAGAR HOUSE. THE COST OF ACQUISITION OF THE SAID HOUSE W AS SHOWN AT RS. 4 71 095/- IN THE F.Y. 1992-93 AND COPY OF THE BAL ANCE SHEET FOR THE A.Y. 1996-97 SHOWING THE COST AT RS. 4 71 095/- WAS FURN ISHED. IT WAS STATED THAT THE COST HAD BEEN RECORDED IN THE BALANCE SHEE T SINCE THE F.Y. 1992- 93 BUT THE EARLIER RECORDS WERE NOT AVAILABLE. TH E ASSESSING OFFICER TAKE THE COST OF ACQUISITION AT RS. 4 71 095/- SHOWN IN THE BALANCE SHEET AS THE BASE YEAR OF ACQUISITION OF THE ABOVE HOUSE FOR COMPUTATION OF LONG TERM CAPITAL GAIN. HE WORKED OUT THE INDEXED COST OF ACQUISITION AT RS. 9 75 719/- AS AGAINST RS. 12 21 495/- CLAIMED BY TH E ASSESSEE AND ACCORDINGLY ADDITION OF RS. 2 53 775/- WAS MADE. 21. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMITTED THAT THE ASSESSEE INCURRED A S UM OF RS. 4 71 095/- FOR INVESTMENT ON BUILDING IN THE YEAR 1992-93 BUT THE ASSESSING OFFICER 11 HAD TAKEN THE COST OF BUILDING IN THE YEAR 1995-96. THEREFORE INDEXED COST WAS TAKEN LESS AND ADDITION WAS MADE. LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVE D THAT THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT OF CLAIM THAT THE COST OF ACQUISITION OF THE HOUSE AT RS. 4 71 095/- WAS IN T HE F.Y. 1992-93 WHEREAS COPY OF THE BALANCE SHEET FOR THE A.Y. 1996 -97 SHOWS THE COST OF THE ABOVE HOUSE AT RS. 4 71 095/-. HE ACCORDINGLY SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICER. NOW THE A SSESSEE IS IN APPEAL. 22. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE HOUSE IN QUESTION WAS ACQUIRED BY THE FATHER OF THE ASSESSEE AND AFTER HIS DEATH ON 13/10/1991 THE ASSESSEE BECAME THE OWNER OF THE HOUSE AS PER WILL OF HIS FATHER BUT NO ENTRY WAS MADE IN THE BOOKS O F THE ASSESSEE FOR THE PROPERTY INHERITED FROM HIS FATHER. IT WAS FURTHER STATED THAT IN THE F.Y. 1992-93 THE ASSESSEE SPENT A SUM OF RS. 4 71 095/- FOR IMPROVEMENT OF THE HOUSE AND CLAIMED INDEXED COST OF THE SAME WHIL E COMPUTING THE CAPITAL GAIN AND THE BALANCE SHEET AS ON 31/03/1996 WAS PRODUCED BEFORE THE LOWER AUTHORITIES TO PROVE THE CLAIM. IT WAS S UBMITTED THAT THE ASSESSING OFFICER COMPUTED THE INDEXED COST BY TAKI NG THE INDEX OF THE F.Y. 1995-96. THEREFORE THE ADDITION WAS NOT SUST AINABLE PARTICULARLY WHEN ALL THE FACTS RELATING TO ACQUIRING THE HOUSE WERE MENTIONED IN THE 12 SALE DEED FURNISHED TO THE ASSESSING OFFICER WHICH IS ALSO PLACED AT PAGE NOS. 37 TO 45 OF THE ASSESSEES PAPER BOOK. 23. IN HIS RIVAL SUBMISSIONS LEARNED D.R. SUPPORTED TH E ORDERS OF THE AUTHORITIES BELOW. 24. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTI ES AND MATERIAL ON RECORD IT IS NOTICED FROM THE SALE DEED PLACED AT PAGES NO. 37 TO 45 OF THE ASSESSEES PAPER BOOK THAT THE HOUSE IN QUESTIO N WAS SOLD ALONG WITH OTHER CO-OWNERS BY THE ASSESSEE. THE SAID HOUSE WA S ALLOTTED TO SHRI HOTU MOOLCHAND LALWANI FATHER OF THE ASSESSEE WHO EXPIRED ON 13/10/1991 AND AS PER WILL DATED 10/05/1984 THE AS SESSEE BECAME THE OWNER. THE CLAIM OF THE ASSESSEE IS THAT THE HOUSE WAS OLD AND CAME IN HIS POSSESSION AFTER THE DEATH OF HIS FATHER ON 13/ 10/1991 AND HE INCURRED A SUM OF RS. 4 71 095/- FOR IMPROVEMENT OF THE HOUSE IN THE F.Y. 1992-93. HOWEVER THE ASSESSING OFFICER WAS OF THE VIEW THAT AS THE ASSESSEE FURNISHED BALANCE SHEET AS ON 31/03/1996 A ND HAD SHOWN THE SAID COST. HE THEREFORE CONSIDERED THE COST OF T HE IMPROVEMENT IN THE F.Y. 1995-96 INSTEAD OF CLAIM OF THE ASSESSEE THAT THE EXPENSES WERE INCURRED IN THE F.Y. 1992-93. IN OUR OPINION THIS ISSUE REQUIRES RE- ADJUDICATION AND IF THE ASSESSEE WOULD BE ABLE TO P ROVE THE INVESTMENT 13 ON THE HOUSE WHEN THE HOUSE CAME TO HIS POSSESSION AS PER WILL OF HIS DECEASED FATHER ON 13/10/1991 AND THE EXPENSES WERE INCURRED IN THE F.Y. 1992-93 THEN INDEX OF THAT YEAR IS TO BE CONSI DERED WHILE COMPUTING THE CAPITAL GAIN. ACCORDINGLY THIS ISSUE IS SET A SIDE TO THE FILE OF ASSESSING OFFICER. 25. THE NEXT ISSUE VIDE GROUND NO.5 AND THE ADDITIONAL GROUND RELATES TO THE DEDUCTION OF COST OF ACQUISITION BY THE ASSE SSEE AND BY THE PREVIOUS OWNER OF THE PROPERTY. 26. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT T HE ASSESSEE CLAIMED A DEDUCTION OF RS. 14 59 250/- UNDER SECTION 54F OF THE I.T. ACT 1961 (HEREINAFTER REFERRED TO AS ACT IN SHORT). THE A SSESSING OFFICER MENTIONED THAT BILLS/VOUCHERS PRODUCED IN RESPECT O F CONSTRUCTION/ ADDITION IN NEW ASSET WERE NOT FOUND RELIABLE AND T HAT THE ASSESSEE NEITHER PRODUCED ANY CONSTRUCTION AGREEMENT NOR THE CONTRACTOR. THE ASSESSING OFFICER ALSO MENTIONED THAT HE DEPUTED AN INSPECTOR WHO SUBMITTED IN HIS REPORT THAT AS PER THE DETAILS AND MAP PROVIDED BY THE ASSESSEE TO HIM THE ADDITIONAL AREA CONSTRUCTED WA S ABOUT 70 SQ.FT. AND CONSTRUCTION WAS OF MEDIUM QUALITY. HE ESTIMATED T HE COST AT RS. 5 00 000/-. THE ASSESSING OFFICER ISSUED A NOTICE TO THE ASSESSEE TO 14 SHOW-CAUSE AS TO WHY THE EXCESSIVE DEDUCTION UNDER SECTION 54F OF THE ACT AMOUNTING TO RS. 9 59 250/- BE NOT DISALLOWED. THE ASSESSEE STATED THAT HE HAD MAINTAINED THE ACCOUNT WHICH SHOWS THE INVESTMENT OF RS. 14 59 250/- BUT THE ASSESSING OFFICER DID NOT FIND ANY MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND ESTIMATED COST OF I NVESTMENT AT RS. 5 00 000/- AS AGAINST DECLARED VALUE OF RS. 14 59 2 50/-. ACCORDINGLY THE EXCESSIVE EXEMPTION UNDER SECTION 54F OF THE ACT AM OUNTING TO RS. 9 59 250/- WAS DENIED. 27. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMITTED THAT AFTER PURCHASING THE HOUS E THE ASSESSEE MADE CONSTRUCTION/ADDITION ON IT BY INCURRING EXPENSES O F RS. 14 59 250/-. IT WAS FURTHER STATED THAT DURING THE ASSESSMENT PROCE EDINGS THE DETAILS ALONG WITH BILLS AND VOUCHERS WERE SUBMITTED BUT T HE ASSESSING OFFICER ALLOWED ONLY RS. 5 00 000/- ON THE BASIS OF INSPECT OR REPORT. IT WAS FURTHER STATED THAT COST OF CONSTRUCTION WAS PROPER LY SUPPORTED BY THE BILLS/VOUCHERS AND ENTERED IN THE BOOKS OF ACCOUNTS AND THAT FOR ESTIMATION OF RS. 5 00 000/- THE INSPECTOR HAD NOT GIVEN ANY SPECIFIC REPORT CONSIDERING THE AREA AND QUALITY OF CONSTRUC TION AS SUCH IT WAS NOT CORRECT REPORT COVERING FULL CONSTRUCTION. IT WAS FURTHER STATED THAT THE ASSESSEE MADE MAJOR PAYMENT TO M/S. J.N. MARKETING A-226 SHASTRI 15 NAGAR JODHPUR AND THAT THE ABOVE PERSON IS AN INCO ME TAX ASSESSEE. IN SUPPORT THE ASSESSEE FURNISHED COPY OF PAYMENT FOR CONSTRUCTION CONFIRMED BY THE CONTRACTOR. LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CONFIRMED THE ACTION O F THE ASSESSING OFFICER BY OBSERVING IN PARA 8.3 OF THE IMPUGNED ORDER WHI CH READS AS UNDER:- I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AND ORDER OF THE ASSESSING OFFICER AND FIND THAT THE APPELLANT HAS C LAIMED THAT HE HAD INCURRED EXPENSES OF RS. 14 59 250/- ON ACCOUNT OF THE CONSTRUCTIONS WORK DONE ON HIS NEW RESIDENTIAL HOUSE. BUT THE APPELLA NT COULD NOT SUBMIT ANY BILLS/VOUCHERS BEFORE THE ASSESSING OFFICER. FURTH ER THE APPELLANT NEITHER PRODUCED ANY CONSTRUCTION AGREEMENT NOR THE CONTRAC TOR NOR FURNISHED ANY AGREEMENT BEFORE THE ASSESSING OFFICER. THE ASSESS ING OFFICER THEREFORE ON THE INQUIRY OF THE INSPECTOR HELD THAT RS. 14 59 250/- SHOWN AS EXPENDITURE INCURRED IS VERY HIGH. HE THEREFORE C ONSIDERING THE TOTAL AREA CONSTRUCTED AND THE PREVAILING RATE OF CONSTRUCTION ESTIMATED RS. 5 00 000/- AS INVESTMENT IN NEW ASSET AS AGAINST THE DECLARED VALUE OF RS. 14 59 250/-. I FIND THAT DURING THE COURSE OF THE APPELLATE PROC EEDINGS APPELLANT HAS FAILED TO FURNISH EVIDENCE THAT INSPECTOR REPORT WA S NOT CORRECT. IN THIS CASE ADDITIONAL AREA CONSTRUCTED IS ABOUT 70 SQ.FT . AND CONSTRUCTION ALSO OF MEDIUM QUALITY THEREFORE THE COST OF CONSTRUCTION WAS ESTIMATED AT RS. 5 00 000/- BY APPLYING PREVAILING RATES OF RS. 700 PER SQ. THE APPELLANT FAILED TO STATE THAT TOTAL CONSTRUCTION WAS NOT MOR E THAN THAT OF REPORT BY THE INSPECTOR NOR HE OBJECTED THE RATE OF RS. 700/- PER SQ.FT. APPLIED BY THE ASSESSING OFFICER. UNDER THESE CIRCUMSTANCES I HO LD THAT THE ASSESSING OFFICER WAS JUSTIFIED IN ESTIMATING THE COST OF CON STRUCTION AT RS. 5 00 000/-. SO THE DISALLOWANCE OF EXCESS EXEMPTION OF RS. 9 59 250/- IS HEREBY UPHELD. NOW THE ASSESSEE IS IN APPEAL. 28. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE MAINTAINED THE DETAILS OF EXPENSES IN HIS BOOKS OF ACCOUNTS WHICH WERE 16 SUPPORTED BY BILLS AND VOUCHERS BUT THE ASSESSING OFFICER PREFERRED THE REPORT OF THE INSPECTOR WHO IS NOT A TECHNICAL MAN TO GIVE SUCH REPORT AND ESTIMATED THE COST AT RS. 5 00 000/- INSTEAD OF RS. 14 59 250/-. IT WAS FURTHER STATED THAT THE ASSESSING OFFICER HAD N OT GIVEN THE BENEFIT ON ACCOUNT OF COST OF THE PREVIOUS OWNER WHICH IS OTH ERWISE AVAILABLE UNDER SECTION 48 OF THE ACT. IT WAS STATED THAT THE LEA RNED CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER WHO RESTRICTED THE DEDUCTION UNDER SECTION 54F OF THE ACT TO RS. 5 00 000/- ONLY. RELIANCE WAS PLACED ON THE FOLLOWING CASE-LAWS:- 1. ITO VS. SURESH CHAND KOTHARI [118 TTJ (JD) 272] 2. HUKUMCHAND MILLS LTD. VS. CIT [63 ITR 232 (SC)] 3. AHMEDABAD ELECTRICITY CO. LTD. VS. CIT [199 ITR 351 (BOM)] 4. SIRDAR CARBONIC GAS CO. LTD. VS. CIT [204 ITR 88 6 (BOM)] 5. CIT VS. DR. P. RAJENDRAN [127 ITR 810 (KER)] 6. THE ASSAM TRIBUNAL VS. CIT [285 ITR 452 (GAU)] 29. IN HIS RIVAL SUBMISSIONS LEARNED D.R. SUPPORTED TH E ORDERS OF THE AUTHORITIES BELOW. 30. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTI ES AND THE MATERIAL ON RECORD IT APPEARS THAT THE ASSESSING O FFICER PREFERRED THE REPORT OF THE INSPECTOR WHO IS A NON-TECHNICAL MAN INSTEAD OF THE INVESTMENT SHOWN BY THE ASSESSEE IN HIS BOOKS OF AC COUNTS. IN OUR 17 OPINION THAT ACTION OF THE ASSESSING OFFICER WAS N OT JUSTIFIED PARTICULARLY WHEN NO DEFECT WAS POINTED OUT IN THE DETAILS OF TH E EXPENSES SHOWN IN THE BOOKS OF ACCOUNTS. THE ASSESSING OFFICER HAS A LSO NOT CONSIDERED THE COST INCURRED BY THE PREVIOUS OWNER AS PER SECTION 49(1) OF THE ACT. WE THEREFORE ARE OF THE VIEW THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER AND DEEM IT PROPER TO REMAND THIS ISSUE TO THE FILE OF THE ASSESSING OFFI CER FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 31. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY AL LOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE COURT ON 28 TH OCTOBER 2013). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH OCTOBER 2013. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR ITAT JODHPUR.