ACIT, CIR-2, Nashik v. Mrs. Siddiqui Hasina Janamuddin,, Nashik

ITA 513/PUN/2007 | 2003-2004
Pronouncement Date: 31-03-2011 | Result: Dismissed

Appeal Details

RSA Number 51324514 RSA 2007
Assessee PAN ARHPS6113Q
Bench Pune
Appeal Number ITA 513/PUN/2007
Duration Of Justice 3 year(s) 11 month(s) 18 day(s)
Appellant ACIT, CIR-2, Nashik
Respondent Mrs. Siddiqui Hasina Janamuddin,, Nashik
Appeal Type Income Tax Appeal
Pronouncement Date 31-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 31-03-2011
Assessment Year 2003-2004
Appeal Filed On 12-04-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NO. 513/PN/2007 : A.Y. 2003-04 ASSTT. CIT CIR. 2 NASIK : APPELLANT VS. MRS. SIDDIQUI HASINA JANAMUDDIN C/O. M/S. PRESIDENT DEVELOPERS AND BUILDERS A-106 SONA SHOPPING CENTRE GANJMAL NASIK PAN ARHPS 6113 Q : RESPONDENT APPELLANT BY: SHRI NIKHIL PATHAK RESPONDENTS BY: SHRI HEMANT C. LEUVA ORDER PER G.S. PANU ACCOUNTANT MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-II NASIK DATED 29-01-2007 FOR A.Y. 2003-04 ON THE FOLLOWING GROUND S: 1. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 16 50 000/- BY FAILING TO APPRECIATE THAT SHE SO CALLED RETRACTION OF RS. 16 50 000/- BEING THE DIFFERENCE IN THE INCOME DECLARED IN SURVEY U/S 133 A OF THE ACT AND THE INCOME DECLARED IN THE RETURN WAS MADE AFTER A SPAN OF NEARLY 15 MONTHS WHICH WOULD NOT CONSTITUTE A REASONABLE TIME AND TH EREFORE LEGALLY UNACCEPTABLE. 2. CIT(A) ERRED IN ACCEPTING THE WORK-IN-PROGRESS IGNORING THE FACT THAT THE ASSESSEE DID NOT MAINTAIN THE BOOKS OF ACCOUNTS AND WAS FILING THE INCOME ON THE BASIS OF SECTION 44AD OF THE LT. ACT AS A CONTRACTOR. 3. CIT(A) ERRED IN RELYING ON SUCH EVIDENCES IN TH E APPELLATE PROCEEDINGS IGNORING THE FACT THAT THE WORK-IN-PROGRESS WAS NOT SCIENTIFICALLY EVALUATED AFTER PROPER AND COGENT REASONING AND IS NOT AS PER THE ACCOUNTING STANDARD. 4. CIT(A) ERRED IN DELETING THE SAID ADDITION IGNO RING THE FACT THAT AS PER ASSESSEE'S OWN ADMISSION NOTWITHSTANDING THAT THESE ARE LEGALLY ADMISSIBLE THAT THE INTEREST ELEMENT HAS TO BE TAKE N INTO ACCOUNT WHILE DETERMINING THE WORK IN PROGRESS. 5. CIT(A) ERRED IN IGNORING THE WRITTEN SIGNED CAL CULATIONS GIVEN DURING THE SURVEY OPERATIONS U/1 133A OF THE ACT THAT THE UNEX PLAINED INVESTMENT ON WORK IN PROGRESS OF RS 15 12 382/- AND FOR ERRORS A ND OMISSIONS OF RS. PAGE 2 OF 5 ITA NO.513/PN/2007 SIDDIQUI HASINA JANAMUDDIN A.Y. 2003-04 4 87 618/- AS PER WAS THE COMPUTATION MADE BY THE A SSESSEE VOLUNTARILY BEFORE THE A.O. 6. CIT(A) ERRED IN DELETING THE ADDITION OF RS.L 0 5 576/- MADE BY THE A.O U/S 40A(3) ON ACCOUNT OF CASH PAYMENTS EXCEEDING RS.20 OOO/-. 2. AS REGARDS ISSUE NO. 1 INVOLVED IN GROUNDS NO. 1 TO 5 THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PROPRIETOR OF PRESI DENT BUILDERS AND DEVELOPERS NASIK AND ENGAGED IN THE BUSINESS OF CONSTRUCTION OF RESI DENTIAL APARTMENTS/HOUSES. A SURVEY U/S 133A OF THE ACT WAS CONDUCTED ON 16-12-2 002. DURING THE SURVEY PROCEEDINGS THE ASSESSEE MADE A DECLARATION OF RS. 20 LAKHS ON ACCOUNT OF UNEXPLAINED WORK IN PROGRESS OF RS. 15 12 382/- AND FOR ERRORS AND OMISSIONS OF RS. 4 87 618/-. HOWEVER IN THE RETURN OF INCOME FILED ON 26-3-2004 THE ASSESSEE BROUGHT DOWN THE DECLARATION FROM RS. 20 00 000/- TO RS. 3 50 000/- COMPRISING OF ADDITIONAL INCOME OF RS. 3 07 435/- AND ERRORS AND OMISSIONS O F RS. 42 565/-. THE ASSESSING OFFICER FOUND THAT THE WORK IN PROGRESS WAS ESTIMAT ED AT RS. 89 98 100/- AS PER THE TENTATIVE BALANCE SHEET AND THE ACTUAL WORK IN PROG RESS WAS WORKED OUT AT RS. 1 05 10 482/-. HOWEVER THE ASSESSEE AFTER FINALIZ ING THE BOOKS OF ACCOUNTS WORKED OUT THE ACTUAL WORK IN PROGRESS AT RS. 1 02 03 047/- AS PER THE BALANCE SHEET FILED ALONG WITH THE RETURN OF INCOME AND ADMITTED THE DIFFEREN CE BETWEEN THE ACTUAL WORK IN PROGRESS ARRIVED AT DURING THE COURSE OF SURVEY AND THE WORK IN PROGRESS AS PER THE BALANCE SHEET FILED ALONG WITH THE RETURN OF INCOME . THUS THE DIFFERENCE OF RS. 3 50 000/- WAS DISCLOSED AS AN ADDITIONAL INCOME IN THE RETURN OF INCOME FILED BY THE ASSESSEE. THE ASSESSING OFFICER DID NOT FIND FAVO UR WITH THE ASSESSEES EXPLANATION AND ADDED THE AMOUNT TOWARDS ALLEGED DIFFERENCE IN WORK IN PROGRESS. DURING THE FIRST APPELLATE PROCEEDINGS THE CIT (A) ACCEPTED THE CLA IM O THE ASSESSEE BY OBSERVING AS UNDER: I HAVE GONE THROUGH THE DETAILED SUBMISSIONS AND O THER EVIDENCES PRODUCED BY THE ASSESSEE AND ALSO THE ASSESSING OFFICER S ASSE SSMENT ORDER. THE ASSESSEE MADE A DISCLOSURE OF RS. 20 LAKHS AT THE TIME OF SU RVEY BASED ON THE TENTATIVE BALANCE SHEET. HOWEVER RETRACTED FROM THE DISCLOS URE ON COMPLETION OF THE BOOKS OF ACCOUNTS AND DISCLOSED ADDITIONAL INCOME O F RS. 3 50 000/- ONLY. THE A.O DID NOT BRING OUT ANY MISTAKES IN THE BOOKS OF ACCOUNTS FINALIZED AFTER THE DATE OF SURVEY. THE A.O MERELY TRIED TO FIND OUT T HE DIFFERENCE BETWEEN THE FIGURES AS PER THE TENTATIVE BALANCE SHEET AND AS P ER THE COMPLETED BOOKS OF ACCOUNTS. THE A.O HIMSELF ADMITTED IN HIS ORDER TH AT THE BOOKS ACCOUNTS WERE PAGE 3 OF 5 ITA NO.513/PN/2007 SIDDIQUI HASINA JANAMUDDIN A.Y. 2003-04 INCOMPLETE AT THE TIME OF SURVEY. WHEN THE ASSESSE E FILED THE RETURN OF INCOME ON COMPLETION OF THE BOOKS OF ACCOUNTS THE A.O SHO ULD HAVE MADE A DETAILED EXAMINATION OF BOOKS TO FIND OUT WHETHER HE INCOME OFFERED BY THE ASSESSEE IS CORRECT OR NOT. WHEREAS THE A.O DID NOT MAKE ANY EFFORTS IN THIS REGARD WHEN THE DISCREPANCIES ARE FOUND OUT IT IS THE DUTY OF T HE A.O TO GET A PROPER EXPLANATION FROM THE ASSESSEE AND ARRIVE AT THE CON CLUSION FOR DETERMINING THE CORRECT TOTAL INCOME. MERE POINTING OUT OF THE DIS CREPANCIES OR THE DIFFERENCE IN ACCOUNTS CANNOT BE THE GROUND FOR DISBELIEVING THE ASSESSEES CLAIM. THE DISCLOSURE GIVEN BY THE ASSESSEE AS PER THE STATEME NT RECORDED AT THE TIME OF SURVEY CAN BE RELIED ON ONLY WITH CORROBORATIVE EVI DENCE. THE A.O TRIED TO JUSTIFY THE DISCLOSURE OBTAINED AT THE TIME OF SURVEY RATHE R THAN DETERMINING THE CORRECT INCOME AS PER THE FINAL BOOKS OF ACCOUNTS. FURTHER THE A.O FAILED TO PROVE THAT THE DISCREPANCIES POINTED OUT BY HIM WOULD RESULT I N HIGHER WORK IN PROGRESS THEREBY INCREASING THE UNACCOUNTED INCOME. THE A.O DID NOT BRING OUT ANY PROPER LOGIC OR REASONING SUCH DISCREPANCY WOULD RE SULT IN ADDITIONAL INCOME. THE ASSESSEES EXPLANATION REGARDING THE COT OF CON STRUCTION IS NOT ALSO ACCEPTABLE. THE ASSESSEES EXPLANATION IS BASED ON LOT OF ASSUMPTION AND PRESUMPTION WITHOUT ANY MATERIAL. HOWEVER WE CANN OT TOTALLY IGNORE THE ARGUMENTS REGARDING THE CAPITALIZATION OF INTEREST. THE INTEREST PAID BY THE ASSESSEE COMPANY ATTRIBUTABLE TO PROJECT WHICH WAS SOLD OUT CANNOT BE INCLUDED FOR THE PURPOSE OF WORK IN PROGRESS. TO THIS EXTEN T THE ASSESSEES ARGUMENT IS ACCEPTED. IF THIS IS CONSIDERED THE ADDITIONAL INC OME WOULD GET SUBSTANTIALLY REDUCED. THE TOTAL INTEREST CAPITALIZED THE ADDITI ONAL INCOME WOULD GET SUBSTANTIALLY REDUCED. THE TOTAL INTEREST CAPITAL IZED FOR VALUING THE WORK IN PROGRESS IS RS. 12 20 130/- OUT OF WHICH AN AMOUNT OF RS. 7.5 LAKHS PAID TO JHULELAL PATPEDHI RELATES TO THE PROJECT OF PRESIDE NT TOWERS WHICH WAS ALREADY SOLD OUT. THE ASSESSEE ALSO STATED THAT SOME OF TH E INTEREST OUT OF WHICH ALSO RELATES TO THE SALES EFFECTED AND ONLY 1/6 TH OF THE PROJECT WAS IN PROGRESS. THUS THE A.O IS NOT CORRECT IN CAPITALIZING THE INTEREST PAID FOR THE PURPOSE OF WORK IN PROGRESS DURING THE PERIOD RELEVANT TO THE A.Y 2003 -04. IN VIEW OF THE4SE REASONS I FIND NO BASIS FOR THE ADDITION MADE BY T HE A.O. HENCE CANNOT BE JUSTIFIED. 3. AFTER GOING THROUGH THE ABOVE CONCLUSION ARRIVED AT BY THE CIT(A) WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). AS RIGHTL Y OBSERVED BY THE CIT(A) THE ASSESSING OFFICER HAS MERELY NOTICED THE DIFFERENCE BETWEEN T HE FIGURES AS PER THE TENTATIVE BALANCE AND AS PER THE COMPLETED BOOKS OF ACCOUNTS. THE ASSESSEE OFFERED AN EXPLANATION. THE BOOKS OF ACCOUNTS WERE INCOMPLETE AT THE TIME OF SURVEY AND WHEN THE ASSESSEE FILED THE RETURN OF INCOME ON COMPLETION O F THE BOOKS OF ACCOUNTS IT WAS THE DUTY OF THE ASSESSING OFFICER TO HAVE MADE A DETAIL ED EXAMINATION OF THE BOOKS TO FIND OUT WHETHER THE INCOME OFFERED BY THE ASSESSEE WAS CORRECT OR NOT. THE DIFFERENCE COULD BE THE REASON TO EXAMINE THE ACCOUNT BOOKS FU RTHER BUT THE ADDITION COULD NOT BE JUSTIFIED BY MERELY POINTING OUT OF THE DISCREPANCI ES. THE CIT(A) HAS CORRECTLY NOTED THAT THE ASSESSING OFFICER HAS NOT BROUGHT OUT ANY LOGIC OR REASONING TO SHOW THAT THE PAGE 4 OF 5 ITA NO.513/PN/2007 SIDDIQUI HASINA JANAMUDDIN A.Y. 2003-04 EXPLANATION OF THE ASSESSEE IS WRONG OR THAT THE AC COUNT BOOKS DO NOT REFLECT THE CORRECT STATE OF AFFAIRS. IN ANY CASE THERE IS NO DISPUTE TO THE FACT THAT THERE IS NO JUSTIFICATION FOR INCLUDING THE INTEREST ELEMENT OF COST IN VALUI NG THE WORK IN PROGRESS AND SUCH AN ASSERTION BY THE CIT(A) CANNOT BE FAULTED. THE REL IEF GRANTED BY THE CIT(A) ON THIS SCORE IS FAIR AND REASONABLE. AS SUCH THE ASSESSI NG OFFICER WAS NOT CORRECT IN CAPITALIZING THE INTEREST PAID FOR THE PURPOSE OF W ORK IN PROGRESS DURING THE PERIOD RELEVANT FOR THE YEAR UNDER CONSIDERATION. CONSIDER ING THE TOTALITY OF FACTS AND CIRCUMSTANCES THE ORDER OF THE CIT(A) DOES NOT CAL L FOR ANY INTERFERENCE ON THIS ISSUE AND THE SAME IS UPHELD. 4. AS FAR AS THE SECOND ISSUE RELATING TO ADDITION OF RS. 1 05 576/- MADE BY THE A.O U/S 40A(3) OF THE ACT ON ACCOUNT OF CASH PAYMENTS E XCEEDING RS. 20 000/- IS CONCERNED WE FIND THAT THE A.O MADE AN ADDITION OF RS. 2 64 861/- ON ACCOUNT OF CASH PAYMENTS EXCEEDING RS. 20 000/- U/S 40A(3) OF THE A CT. THE TOTAL EXPENDITURE UNDER THIS HEAD WORKED OUT BY THE A.O WAS RS. 13 24 309/- WHEREAS THE ACTUAL FIGURE SUBMITTED BY THE ASSESSEE DURING THE FIRST APPELLAT E PROCEEDINGS WAS RS. 13 24 169/-. THE ASSESSEE HAS FURNISHED COMPLETE DETAILS BEFORE THE CIT(A). ON CONSIDERATION OF THE EXPLANATION OFFERED BY THE ASSESSEE THE CIT(A) DELETED THE ADDITION OF RS. 1 05 576/- BEING 20% OF THE AMOUNT OF RS. 5 28 843/ - AS NOT COMING UNDER THE PURVIEW OF SECTION 40A(3) OF THE ACT. WE FIND THAT WHILE GRANTING RELIEF TO THE ASSESSEE THE CIT(A) HAD CONSIDERED ALL THE EXPLANATION OFFERED B Y THE ASSESSEE AS WELL AS OTHER MATERIAL PRODUCED BEFORE HIM. THE CIT(A) DID NOT F IND ANY FAULT IN RELATION TO EXPLANATION AS WELL AS SUCH MATERIAL PRODUCED BEFOR E HIM. IN THIS VIEW OF THE MATTER WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A ). THE SAME IS UPHELD. PAGE 5 OF 5 ITA NO.513/PN/2007 SIDDIQUI HASINA JANAMUDDIN A.Y. 2003-04 5. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH 2011. SD/- SD/- (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER PUNE DATED THE 31 ST MARCH 2011 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A)- II NASIK 4. CIT- II NASIK 5. THE D.R B BENCH PUNE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE