Shri Sanjay L. Sonawane,, Nashik v. ACIT, Central Circle-II, Nashik

ITA 653/PUN/2013 | 2009-2010
Pronouncement Date: 30-09-2016 | Result: Partly Allowed

Appeal Details

RSA Number 65324514 RSA 2013
Assessee PAN ARIPS9892B
Bench Pune
Appeal Number ITA 653/PUN/2013
Duration Of Justice 3 year(s) 6 month(s) 19 day(s)
Appellant Shri Sanjay L. Sonawane,, Nashik
Respondent ACIT, Central Circle-II, Nashik
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 30-09-2016
Date Of Final Hearing 21-09-2016
Next Hearing Date 21-09-2016
Assessment Year 2009-2010
Appeal Filed On 11-03-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE MS. SUSHMA CHOWLA JM AND SHRI ANIL CHATURVEDI AM . / ITA NO. 653 /PN/20 1 3 / ASSESSMENT YEAR: 200 9 - 1 0 SHRI SANJAY L. SONAWANE SONAWANE BUNGALOW KULKARNI COLONY SHARANPUR ROAD NASHIK . / APPELLANT PAN: A RIPS9892B VS. THE A SST . COMMISSIONER OF INCOME TAX CIRCL E - 2 NASHIK . / RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / RESPOND ENT BY : SHRI ANIL KUMAR CHAWARE / DATE OF HEARING : 2 1 .0 9 .201 6 / DATE OF PRONOUNCEM ENT: 30 . 0 9 .201 6 / ORDER PER SUSHMA CHOWLA JM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST ORDER OF CIT (A) - II NASHIK DATED 3 0 . 0 1 .201 3 RELATING TO ASSESSMENT YEAR 200 9 - 1 0 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) . UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) . ITA NO . 653 /PN/201 3 SHRI SANJAY L SONAWANE 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1 ) . ON THE FACTS AND IN LAW THE LD. CIT(A) - II NASHIK HAS ERRED IN DISALLOWING DEDUCTION CLAIMED U/S.54F CLAIMED BY THE APPELLANT RS.28 41 002/ - . 2) ON THE FACTS AND IN L AW THE LD. CIT(A) - II NASHIK HAS ERRED IN MAKING ADDITION OF RS.59 51 162/ - TO THE CAPITAL GAIN DECLARED BY THE APPELLANT. 3) ON THE FACTS AND IN LAW THE LD. CIT(A) - II NASHIK HAS ERRED IN NOT ALLOWING DEDUCTION ON ACCOUNT OF BROKERAGE PAID RS.3 50 000/ - WHILE ARRIVING AT TAXABLE CAPITAL GAIN. 4) ON THE FACTS AND IN LAW THE LD. CIT(A) NASHIK HAS ERRED IN NOT ALLOWING COST OF ACQUISITION DULY INDEXED BY THE APPELLANT TO THE EXTENT OF RS.10 10 522/ - . 5) ON THE FACTS AND IN LAW THE LD. CIT(A) NASHIK HAS E RRED IN NOT ALLOWING COST OF IMPROVEMENT DULY INDEXED BY THE APPELLANT TO THE EXTENT OF RS.18 79 375/ - . 6) ON THE FACTS AND IN LAW THE LD. CIT(A) NASHIK HAS ERRED IN ENHANCING THE INCOME OF THE APPELLANT ON ACCOUNT OF UNEXPLAINED EXPENDITURE TO THE EXTE NT OF RS.10 00 000/ - . 3. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO THE COMPUTATION OF LONG TERM CAPITAL GAINS IN THE HANDS OF ASSESSEE. 4. BRIEFLY IN THE FACTS OF THE CASE THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAD DECLARED INCOM E OF RS.1 30 49 400/ - . THE SAID INCOME CONSTITUTED OF INCOME FROM SALARY HOUSE PROPERTY LONG TERM CAPITAL GAINS AND OTHER SOURCES. THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY AND IT WAS OBSERVED THAT THE ASSESSEE HAD SOLD LAND AT AGRA ROAD NAS HIK ON 18.06.2008 FOR RS.1 75 00 000/ - . THE COST OF ACQUISITION WAS ADOPTED BY THE ASSESSEE AT RS. 9 30 000/ - . THE ASSESSEE CLAIMED COST OF SELLING I.E. COMMISSION PAID OF RS.3 50 000/ - AND ALSO CLAIMED COST OF IMPROVEMENT OF RS. 15 50 000/ - . FURTHER THE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 54(1) OF THE ACT AT RS.32 50 000/ - FOR CONSTRUCTING RESIDENTIAL HOUSE. THE ASSESSEE WAS ASKED TO PRODUCE THE NECESSARY EVIDENCES IN RESPECT OF ALL ITS CLAIMS. THE FIRST ISSUE CONSIDERED BY THE ASSESSING OFFICER W AS WITH REGARD TO COST OF ACQUISITION AND IMPROVEMENT TO THE PROPERTY AND THEREAFTER THE CLAIM OF EXPENDITURE OF COMMISSION. ALL THESE ISSUES ITA NO . 653 /PN/201 3 SHRI SANJAY L SONAWANE 3 WERE DECIDED AGAINST THE ASSESSEE. FURTHER THE CLAIM OF ASSESSEE IN RESPECT OF COST OF IMPROVEMENT WAS REJECTE D AS THE ASSESSEE HAD CLAIMED THE SAID IMPROVEMENT FOR THE PERIOD PRIOR TO ITS ACQUISITION. FURTHER THE ASSESSEE HAD FAILED TO PRODUCE NECESSARY BILLS AND VOUCHERS IN THIS REGARD AND HENCE THE CLAIM OF COST OF IMPROVEMENT AT RS.18 79 275/ - WAS REJECTED. THE COST OF ACQUISITION OF THE LAND WAS CONSIDERED ONLY AT RS.1 LAKH AS AGAINST THE CLAIM OF ASSESSEE AT RS.9 3 0 000/ - . THE ASSESSEES CLAIM OF COMMISSION EXPENDITURE WAS REJECTED AS NO EVIDENCE TO SUBSTANTIATE THE SAME WAS FILED. COMING TO THE CLAIM O F ASSESSEE OF INVESTMENT OF RS.32 50 000/ - UNDER SECTION 54F OF THE ACT THE ASSESSING OFFICER NOTED THAT THE LAND ON WHICH THE ASSESSEE HAD CLAIMED THAT HE HAD BUILT RESIDENTIAL HOUSE WAS IN THE NAME OF HIS MOTHER SMT. LILAWATI LAXMAN SONAWANE. THE COMME NCEMENT AND COMPLETION CERTIFICATE ISSUED BY THE NASHIK MUNICIPAL CORPORATION AND APPROVED CONSTRUCTION PLAN WAS ALSO IN HER NAME. THE ASSESSEE FAILED TO PRODUCE THE BILLS AND VOUCHERS AGAINST COST OF CONSTRUCTION. THE ASSESSEE ONLY PRODUCED COPIES OF RE GISTERS ON WHICH IT WAS SHOWN THAT ALL THE PAYMENTS WERE MADE IN CASH HENCE THE CLAIM OF ASSESSEE UNDER SECTION 54F OF THE ACT WAS REJECTED . 5. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER IN DISALLOWING THE COMMISSION EXPENSES AS THERE WAS NO ACTUA L DEAL OF SALE AND THE SALE WAS BETWEEN FAMILY MEMBERS. THE SECOND CLAIM OF THE ASSESSEE OF COST OF ACQUISITION OF RS.3 LAKHS STAMP DUTY AND REGISTRATION EXPENSES OF RS.1 60 000/ - AND FENCING AND OTHER EXPENSES OF RS.5 23 000/ - TOTALING RS.9 30 000/ - WAS ALSO UPHELD BY THE CIT(A) IN THE ABSENCE OF ANY FRESH EVIDENCE AND THE EXPENSES HAVING BEEN INCURRED PRIOR TO THE DATE OF ACQUISITION. THE CLAIM OF ASSESSEE AGAINST COST OF IMPROVEMENT WAS ALSO REJECTED IN THE ABSENCE OF ANY DETAILS OF PAYMENT BEING MADE FOR VACATION OF LAND. THE NEXT CLAIM OF THE ASSESSEE UNDER SECTION 54F OF ITA NO . 653 /PN/201 3 SHRI SANJAY L SONAWANE 4 THE ACT WAS ALSO FOUND TO BE NOT IN ORDER AS THE ASSESSEE CLAIMED EXPENDITURE O N CONSTRUCTION OF PLOT OF LAND WHICH WAS IN THE NAME OF HIS MOTHER. FURTHER EVEN THE PLAN OF CONSTR UCTION WAS APPROVED IN HER NAME. FURTHER THE CIT(A) HAS RELIED ON THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN ITO VS. SHRI KANTILAL C. KANKARIA IN ITA NO.461/PN/2011 RELATING TO ASSESSMENT YEAR 2003 - 04 ORDER DATED 25.07.2012. SINCE THE ASSESS EE HAD FAILED TO FULFILL THE CONDITIONS OF SECTION 54F OF THE ACT THE SAME WAS REJECTED. 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN THIS REGARD. 7. BOTH THE LEARNED AUTHORIZED REPRESENTATIVES PUT FORWARD THEIR CONTENTIONS. 8. WE HAVE H EARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE RAISED VIDE GROUND OF APPEAL NO.1 IS AGAINST DENIAL OF DEDUCTION CLAIMED UNDER SECTION 54F OF THE ACT AT RS.28 41 002/ - . THE FIRST ASPECT OF THE ISSUE IS THAT THE ASSESSEE HAD SOLD LAND ON WHI CH LONG TERM CAPITAL GAIN WAS COMPUTED BY THE ASSESSING OFFICER AGAINST WHICH SOME CLAIMS OF THE ASSESSEE VIS - - VIS COST OF ACQUISITION COST OF IMPROVEMENT AND BROKERAGE PAID W ERE DENIED TO THE ASSESSEE. WE SHALL DEAL WITH THESE ISSUES IN THE PARAS HERE INAFTER AGAINST THE RESPECTIVE GROUNDS OF APPEAL RAISED BY THE ASSESSEE. THE SECOND ASPECT OF COMPUTATION OF INCOME ON LONG TERM CAPITAL GAIN IN THE HANDS OF ASSESSEE IS ITS CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT. 9. UNDER SECTION 54F OF THE ACT IT IS PROVIDED THAT WHERE THE CAPITAL GAIN ARISES FROM TRANSFER OF ANY LONG TERM CAPITAL ASSETS NOT BEING RESIDENTIAL HOUSE AND THE ASSESSEE HAS WITHIN PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE OF TRANSFER PURCHASES OR HAS WITHIN PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED ITA NO . 653 /PN/201 3 SHRI SANJAY L SONAWANE 5 A RESIDENTIAL HOUSE THEN THE ASSESSEE IS ENTITLED TO CLAIM THE BENEFIT OF SAID INVESTMENT MADE IN THE NEW ASSET AGAINST GAINS ARISING ON SALE OF ORIGINAL ASSET. THE CONDITIONS FOR AVAILING THE DEDUCTION ARE PROVID ED UNDER SECTION 54F OF THE ACT ITSELF. THE BASIC CONDITION TO BE FULFILLED IS THAT THE ASSESSEE HAS FIRST TRANSFER RED ANY LONG TERM CAPITAL ASSET NOT BEING RESIDENTIAL HOUSE AND THE ASSESSEE THEREAFTER WITHIN STIPULATED PERIOD PURCHASES OR CONSTRUCTS A RESIDENTIAL HOUSE I.E. THE NEW ASSET THEN THE CAPITAL GAINS ARISING FROM THE SALE OF THE ORIGINAL ASSET IS TO BE COMPUTED AFTER CONSIDERING THE COST OF NEW ASSET VIS - - VIS THE NET CONSIDERATION RECEIVED ON THE SALE OF ORIGINAL ASSET. 10. COMING TO THE FACTS OF THE PRESENT CASE ADMITTEDLY THE ASSESSEE HAD SOLD LONG TERM CAPITAL ASSET AND ON WHICH CAPITAL GAIN HAD ARISEN IN THE HANDS O F ASSESSEE. THEREAFTER THE ASSESSEE CLAIMS THAT IT HAS MADE INVESTMENT IN CONSTRUCTION OF A RESIDENTIAL HOUSE. H OWEVE R THE LAND ON WHICH THE HOUSE WHICH THE ASSESSEE CLAIMS HAS BEEN CONSTRUCTED BY HIM IS IN THE NAME OF HIS MOTHER. THE BUILDING PLANS FOR CONSTRUCTION OF PROPERTY ON THE SAID LAND ARE APPROVED IN THE NAME OF HIS MOTHER AND EVEN THE COMPLETION CERTIFICATE IS IN THE NAME OF HIS MOTHER. THE ASSESSEE HAS FAILED TO ESTABLISH ITS CLAIM AND WHERE THE NEW ASSET PURCHASED / CONSTRUCTED BY THE ASSESSEE IS NOT IN HIS NAME THEN IN SUCH CIRCUMSTANCES THE ASSESSEE IS NOT ENTITLED TO CLAIM THE BENEFIT OF DEDUCTION UND ER SECTION 54F OF THE ACT. BESIDES SHOWING ENTRIES IN SOME REGISTERS OF CASH PAYMENT THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS P LACED UPON HIM TO ESTABLISH THAT THE NEW ASSET PURCHASED / CONSTRUCTED IS BY HIM AND IN THE ABSENCE OF THE SAME THE ASSES SEE CANNOT CLAIM THE BENEFIT OF SECTION 54F OF THE ACT AND THE SAME IS REJECTED. THE GROUNDS OF APPEAL NO.1 RAISED BY THE ASSESSEE IS THUS DISMISSED. ITA NO . 653 /PN/201 3 SHRI SANJAY L SONAWANE 6 11. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS GENERAL IN NATURE AND DOES NOT NEED ANY ADJUDIC ATION. 12. THE ISSUE IN GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE IS AGAINST THE DISALLOWANCE OF BROKERAGE PAID OF RS.3 50 000/ - WHICH WAS NOT PRESSED BY THE ASSESSEE AND HENCE THE SAME IS DISMISSED AS NOT PRESSED. 13. THE ISSUE IN GROUND OF APPEAL NO.4 IS AGAINST THE CLAIM OF COST OF ACQUISITION OF ASSET SOLD BY THE ASSESSEE AND GROUND OF APPEAL NO.5 IS AGAINST THE COST OF IMPROVEMENT CLAIMED BY THE ASSESSEE. THE ASSESSEE HAD CLAIMED THAT THE COST OF ACQUISITION OF THE PLOT WAS RS. 3 LAKHS ON THE BA SIS OF DEED OF RELINQUISHMENT OF RIGHTS BY OTHER FAMILY MEMBERS. THE ASSESSING OFFICER HAD NOTED THAT THOUGH THE CONSIDERATION HAD BEEN AGREED AT RS.30 000/ - PER MEMBER FOR TEN MEMBERS AT RS.3 LAKHS BUT THE ACTUAL PAYMENT WAS MADE AT RS.10 000/ - PER MEMBE R AND THE BALANCE PAYMENT OF RS.20 000/ - HAD NOT BEEN MADE. SINCE THE ASSESSEE COULD NOT SUBSTANTIATE THE BALANCE PAYMENT OF RS.2 LAKHS HENCE THE ASSESSING OFFICER HAD ALLOWED THE COST OF ACQUISITION AT RS.1 LAKH. 14. BEFORE THE CIT(A) THE CLAIM OF AS SESSEE WAS THE PAYMENT WAS PAYABLE HOWEVER THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE IN THIS REGARD. HENCE THE ORDER OF ASSESSING OFFICER WAS UPHELD BY THE CIT(A). 15. EVEN BEFORE US THE ASSESSEE HAS FAILED TO SUBSTANTIATE ITS CLAIM OF COST OF ACQU ISITION AT RS.3 LAKHS AND IN THE ABSENCE OF THE SAME WE UPHOLD THE ORDER OF ASSESSING OFFICER IN ADOPTING THE COST OF ACQUISITION OF PLOT OF LAND SOLD BY THE ASSESSEE AT RS.1 LAKH. ITA NO . 653 /PN/201 3 SHRI SANJAY L SONAWANE 7 16. THE SECOND CLAIM OF COST OF ACQUISITION WAS STAMP DUTY AND REGISTRA TION CHARGES OF RS.1 07 000/ - . THE CLAIM OF ASSESSEE WAS REJECTED AS IT WAS INCURRED IN THE YEAR PRIOR TO PURCHASE OF PLOT BY THE ASSESSEE I.E. IN THE YEAR 1975. THE ASSESSEE HAD PURCHASED THE PLOT OF LAND ON 20.04.2005 . THE ASSESSEE CLAIMS THAT THE STA MP DUTY AND REGISTRATION CHARGES WERE PAID IN THE YEAR 2004 IN ORDER TO REGULARIZE THE PLOT OF LAND. THE ASSESSING OFFICER HAD DENIED THE SAME. HOWEVER THE CIT(A) ALLOWED THE CLAIM OF ASSESSEE TO THE EXTENT OF RS.1 07 000/ - AND AFTER INDEXATION AT RS. 1 29 737/ - AND HENCE THE SAID CLAIM IS SETTLED IN FAVOUR OF THE ASSESSEE. 17. THE THIRD ITEM OF COST OF ACQUISITION WAS ON ACCOUNT OF FENCING OF PLOT AMOUNTING TO RS. 5 23 000/ - . SINCE THE ASSESSEE FAILED TO SUBSTANTIATE ITS CLAIM AND ALSO FAILED TO EXPLAIN THE MODE OF PAYMENT OF THE SAME THE ASSESSING OFFICER HAD DISALLOWED THE SAID EXPENDITURE AGAINST WHICH THE ASSESSEE HAS FURNISHED CONFIRMATION OF ONE SHRI RAJMAN WARMA FENCING CONTRACTOR. 18. THE CIT(A) NOTED THE FACTS OF THE CASE THAT THE PLOTS WERE NEVER IN PHYSICAL POSSESSION WITH THE ASSESSEE AND THEY WERE IN DISPUTE AGAINST WHICH THE ASSESSEE RECEIVED RS. 1 . 75 CRORES ON SURRENDER OF HIS RIGHTS IN FAVOUR OF M/S. SUN INFRASTRUCTURES (P) LTD. VIDE CANCELLATION DEED DATED 18.06.2008 . IN VIEW THEREOF THE CIT(A) HELD THAT THERE WAS NO QUESTION OF INCURRING ANY EXPENDITURE ON ACCOUNT OF FENCING OF THE PLOTS. THE CONFIRMATION FILED BY THE ASSESSEE WAS HELD TO BE CONCOCTED AND NOT ACCEPTED. THE PAYMENT WAS MADE TO PERSON WHO WAS AN EMPLOYEE OF ASSESSEE AND IN CASH. THE ASSESSEE FAILED TO PRODUCE ANY SOURCE OF THE SAID PAYMENT. SINCE THE EXPENDITURE WAS STATED TO HAVE BEEN INCURRED IN FINANCIAL YEAR 2004 - 05 WHEN THE ASSESSEE DID NOT HAVE THE PHYSICAL POSSESSION OF THE PROPERTY THE CLAIM OF ASSESSEE WA S REJECTED BY THE CIT(A). ITA NO . 653 /PN/201 3 SHRI SANJAY L SONAWANE 8 19. T HE ASSESSEE BEFORE US HAS FAILED TO CONTROVERT THE FINDING OF CIT(A) WHEREIN IT HAS BEEN CATEGORICALLY HELD THAT THE PLOTS WERE NEVER IN POSSESSION OF THE ASSESSEE AND THE ASSESSEE HAD RECEIVED THE CONSIDERATION ON SURREND ERING OF HIS RIGHTS VIDE CANCELLATION DEED DATED 18.06.2008 . ON CE THE PLOTS ARE NOT IN HIS POSSESSION THERE IS NO QUESTION OF INCURRING THE SAID EXPENDITURE. FURTHER THE ASSESSEE HAS FILED THE CONFIRMATION OF ONE OF HIS EMPLOYEE TO WHOM THE PAYMENT WAS MADE IN CASH FOR WHICH THE ASSESSEE HAS FAILED TO ESTABLISH THE SOURCE. ACCORDINGLY WE UPHOLD THE ORDER OF CIT(A) IN DISALLOWING THE COST OF ACQUISITION OF RS. 5 23 000/ - . 20. IT MAY BE POINTED OUT HEREIN ITSELF THAT VIDE PARA 10.3 THE CIT(A) HAD CLAR IFIED THAT OUT OF DISALLOWANCE MADE BY THE ASSESSING OFFICER AT RS. 10 10 522/ - (INDEXED VALUE) SUM OF RS. 1 29 737/ - IS ALLOWED AND THE BALANCE DISALLOWANCE WORKS OUT TO RS. 8 80 785/ - . 21. THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE DISALLOWANCE OF RS . 10 10 522/ - WHICH IS INCORRECT AND THE BALANCE DISALLOWANCE IS ONLY RS.8 80 785/ - WHICH IS CONFIRMED. THE GROUND OF APPEAL NO.4 RAISED BY THE ASSESSEE IS THUS DISMISSED. 22. NOW COMING TO THE NEXT CLAIM OF ASSESSEE I.E. COST OF IMPROVEMENT OF RS.15 50 000/ - . THE CLAIM OF ASSESSEE BEFORE THE AUTHORITIES BELOW WAS THAT THE PAYMENT WAS MADE TO THE ENCROACHERS FOR VACATING THE LAND BUT THE ASSESSEE HAS FAILED TO FURNISH ANY DETAILS OF PAYMENT TO ENCROACHERS FOR VACATING THE LAND AND NO EVIDE NCE IN RESPECT THEREOF WAS FILED. THE CIT(A) FURTHER NOTED THAT WHERE THE ASSESSEE HAS NOT IN PHYSICAL POSSESSION OF THE LAND IN QUESTION THE AUTHENTICITY OF ITA NO . 653 /PN/201 3 SHRI SANJAY L SONAWANE 9 EXPENDITURE IS NOT PROVED HENCE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OF RS. 18 79 375/ - (INDEXED VA LUE) WAS CONFIRMED BY THE CIT(A). 23. THE ASSESSEE BEFORE US HAS FAILED TO SUBSTANTIATE ITS CLAIM AND IN THE ABSENCE OF THE SAME AND WHERE THE ASSESSEE HAS FAILED TO FILE THE BASIC DETAILS OF THE LIST OF ENCROACHERS ITSELF ON THE SURMISE THAT THE PAYMENT HAS BEEN MADE TO SISTER CONCERN THE SAID EXPENDITURE CANNOT BE ALLOWED IN THE HANDS OF ASSESSEE. WE UPHOLD THE ORDERS OF AUTHORITIES BELOW IN THIS REGARD AND DISMISS THE GROUND OF APPEAL NO.5 RAISED BY THE ASSESSEE. 24. NOW COMING TO THE LAST ISSUE RAI SED VIDE GROUND OF APPEAL NO.6 WHICH IS AGAINST THE ENHANCEMENT MADE BY THE CIT(A) ON ACCOUNT OF UNEXPLAINED EXPENDITURE TO THE EXTENT OF RS.10 LAKHS. THE CIT(A) NOTED THE CLAIM OF ASSESSEE OF INCURRING EXPENDITURE AMOUNTING TO RS.32 50 000/ - ON CONSTRUC TION OF RESIDENTIAL PROPERTY ON THE LA ND BELONGING TO HIS MOTHER SMT. LILAWATI LAXMAN SONAWANE . THE CIT(A) FROM THE DETAILS OF CASH AND BANK PAYMENTS NOTED THAT PRIMA FACIE THERE WAS INSUFFICIENT CASH AVAILABLE WITH THE ASSESSEE TO JUSTIFY THE SAID EXPEN SES. THE ASSESSING OFFICER WAS ASKED TO FURNISH THE REPORT UNDER SECTION 250(4) OF THE ACT AND THE ASSESSEE WAS SUMMONED BY THE ASSESSING OFFICER UNDER SECTION 131 OF THE ACT AND WAS ASKED TO PRODUCE EVIDENCE / DOCUMENTS. THE ASSESSING OFFICER DURING THE COURSE OF REMAND PROCEEDINGS MADE CERTAIN ENQUIRIES VIS - - VIS THE SOURCE OF INVESTMENT OF RS.32 50 000/ - AND FURNISH ED ITS REMAND REPORT IN REPLY TO WHICH THE ASSESSEE FILED ITS OBJECTIONS. THEREAFTER THE CIT(A) WAS OF THE VIEW THAT THE ADDITION OF RS. 10 LAKHS ON ACCOUNT OF UNEXPLAINED EXPENSES IN THE CONSTRUCTION OF BUNGALOW IS TO BE MADE IN THE HANDS OF ASSESSEE AND THE INCOME OF ASSESSEE WAS ENHANCED BY RS.10 LAKHS. ITA NO . 653 /PN/201 3 SHRI SANJAY L SONAWANE 10 25. THE CASE OF THE ASSESSEE BEFORE US IS THAT THE CIT(A) HAS NO POWER TO MAKE ADD ITION ON ACCOUNT OF NEW SOURCE OF INCOME . IN THIS REGARD THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PLACED RELIANCE ON THE RATIO LAID DOWN BY PUNE BENCH OF TRIBUNAL IN M/S. VIJAY BUILDERS VS. ITO IN ITA NO. 863/PN/2013 RELATING TO ASSESSMENT YEAR 2008 - 09 ORDER DATED 25.02.2015 . 26. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF CIT(A) IN THIS REGARD. 27. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING BY WAY OF GROUND O F APPEAL NO.6 IS AGAINST THE ENHANCEMENT MADE BY THE CIT(A) WHEREIN THE INCOME OF ASSESSEE WAS ENHANCED BY RS.10 LAKHS. THE BASIS FOR ENHANCEMENT WAS THE CLAIM OF ASSESSEE THAT IT HAD SOURCED THE CONSTRUCTION COST OF RESIDENTIAL PROPERTY ON THE LAND BELO NGING TO HIS MOTHER. THE TOTAL COST OF CONSTRUCTION WAS CLAIMED TO BE RS. 32 50 000/ - . IN THE FIRST INSTANCE THE ASSESSEE WANTED THAT THE SAID INVESTMENT MADE BY IT SHOULD BE ALLOWED AS DEDUCTION UNDER SECTION 54F OF THE ACT WHICH WAS DENIED TO THE ASSE SSEE BY THE AUTHORITIES BELOW AND SUCH DENIAL HAS BEEN CONFIRMED BY US IN THE PARAS HEREINABOVE. THE CIT(A) HOWEVER WAS OF THE VIEW THAT THE ASSESSEE DOES NOT HAVE SUFFICIENT FUNDS TO MEET THE SAID EXPENDITURE IN VIEW OF THE CASH AND BANK POSITION. IN THIS REGARD THE ASSESSING OFFICER WAS ASKED TO FURNISH REPORT AND IN THE REMAND REPORT ENQUIRIES WERE MADE BY THE ASSESSING OFFICER AND ON THE BASIS OF THE SAID ENQUIRIES THE CIT(A) WAS OF THE VIEW THAT THE ADDITION OF RS.10 LAKHS AS UNEXPLAINED INVESTME NT IS JUSTIFIED IN THE HANDS OF ASSESSEE. 28. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN THIS REGARD SINCE THE INCOME HAS BEEN ENHANCED IN THE HANDS OF ASSESSEE BY NEW SOURCE OF ITA NO . 653 /PN/201 3 SHRI SANJAY L SONAWANE 11 INCOME. THE CIT(A) HAS WIDE POWERS OF ENHANCEMENT BUT THE S AID POWER OF ENHANCEMENT IS RESTRICTED ONLY TO SUCH INCOME WHICH WAS THE SUBJECT MATTER OF CONSIDERATION FOR THE PURPOSE OF ASSESSMENT . S UCH WAS THE PROPOSITION LAID DOWN BY THE HONBLE SUPREME COURT IN CIT VS. SHAPOORJI PALLONJI MISTRY REPORTED IN 44 ITR 891 (SC). 29. THE HONBLE SUPREME COURT FURTHER IN CIT VS. RAJ BAHADUR HARDUTROY MOTILAL CHAMARIA REPORTE D IN 66 ITR 443 (SC) HAD HELD THAT THE POWER OF ENHANCEMENT OF AAC IS RESTRICTED TO SUBJECT MATTER OF ASSESSMENT OR SOURCES OF INCOME WHICH HAVE BE EN CONSIDERED EXPRESSLY OR BY CLEAR IMPLICATION BY ITO FROM POINT OF VIEW OF TAXABILITY OF ASSESSEE. THEREFORE AAC HAD NO JURISDICTION TO ASSESSEE A SOURCE OF INCOME WHICH HAD NOT BEEN PROCESSED BY ITO AND WHICH WAS NOT DISCLOSED EITHER IN RETURN FILED B Y THE ASSESSEE OR IN ASSESSMENT ORDER. 30. THE HONBLE DELHI HIGH COURT THEREAFTER IN CIT VS. SARDARILAL AND COMPANY REPORTED IN 120 TAXMANN 295 (DELHI) HAS HELD THAT WHENEVER QUESTION OF TAXABILITY OF INCOME FROM A NEW SOURCE OF INCOME IS CONCERNED WHI CH HAS NOT BEEN CONSIDERED BY THE ASSESSING OFFICER JURISDICTION TO DEAL WITH SAME IN APPROPRIATE CASES MAY BE DEALT WITH UNDER SECTION 147/148 OF THE ACT AND SECTION 263 OF THE ACT IF REQUISITE CONDITIONS ARE SATISFIED. IT IS INCONCEIVABLE THAT IN PRESE NCE OF SUCH SPECIFIC PROVISIONS A SIMILAR POWER IS AVAILABLE TO THE FIRST APPELLATE AUTHORITY. 31. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. UNION TYRES REPORTED IN 107 TAXMANN 447 (DELHI) HAS ALSO HELD SIMILAR VIEW AND HELD THAT IT IS NOT OPE N TO THE APPELLATE COMMISSIONER TO INTRODUCE IN ASSESSMENT A NEW SOURCE OF INCOME AND ASSESSMENT HAS TO BE CONFINED TO THOSE ITEMS OF INCOME WHICH WAS SUBJECT ITA NO . 653 /PN/201 3 SHRI SANJAY L SONAWANE 12 MATTER OF ORIGINAL ASSESSMENT. THE RELEVANT OBSERVATIONS OF HONBLE DELHI HIGH COURT AT PARA NOS . 11 TO 13 OF THE ORDER READS AS UNDER: - 11. A QUESTION REGARDING POWERS OF THE FIRST APPELLATE AUTHORITY CAME UP FOR CONSIDERATION BEFORE THE SUPREME COURT RECENTLY IN CIT V. NIRBHERAM DALURAM [1977] 224 ITR 610/ 91 TAXMAN 181. FOLLOWING THEIR EARLIER DE CISIONS IN KANPUR COAL SYNDICATE'S CASE (SUPRA) AND JUTE CORPN. OF INDIA LTD.'S CASE (SUPRA) THOUGH THEIR LORDSHIPS REITERATED THAT THE APPELLATE POWERS CONFERRED ON THE COMMISSIONER UNDER SECTION 251 COULD NOT BE CONFINED TO THE MATTER WHICH HAD BEEN CONS IDERED BY THE ITO AS THE COMMISSIONER IS VESTED WITH ALL THE PLENARY POWERS WHICH THE ITO MAY HAVE WHILE MAKING THE ASSESSMENT BUT DID NOT COMMENT ON THE ISSUE WHETHER THESE WIDE POWERS ALSO INCLUDE THE POWER TO DISCOVER A NEW SOURCE OF INCOME. THEREFORE THE PRINCIPLE OF LAW LAID DOWN IN SHAPOORJI PALLONJI MISTRY'S CASE (SUPRA) AND RAI BAHADUR HARDUTROY MOTILAL CHAMARIA'S CASE (SUPRA) STILL HOLDS THE FIELD. 12. THUS THE PRINCIPLE EMERGING FROM THE AFORENOTED PRONOUNCEMENTS OF THE SUPREME COURT IS THAT THE FIRST APPELLATE AUTHORITY IS INVESTED WITH VERY WIDE POWERS UNDER SECTION 251(1)(A) AND ONCE AN ASSESSMENT ORDER IS BROUGHT BEFORE THE AUTHORITY HIS COMPETENCE IS NOT RESTRICTED TO EXAMINING ONLY THOSE ASPECTS OF THE ASSESSMENT ABOUT WHICH THE ASSESS EE MAKE A GRIEVANCE AND RANGES OVER THE WHOLE ASSESSMENT TO CORRECT THE ASSESSING OFFICER NOT ONLY WITH REGARD TO A MATTER RAISED BY THE ASSESSEE IN APPEAL BUT ALSO WITH REGARD TO ANY OTHER MATTER WHICH HAS BEEN CONSIDERED BY THE ASSESSING OFFICER AND DETE RMINED IN THE COURSE OF ASSESSMENT. HOWEVER THERE IS A SOLITARY BUT SIGNIFICANT LIMITATION TO THE POWER OF REVISION VIZ. THAT IT IS NOT OPEN TO THE COMMISSIONER TO INTRODUCE IN THE ASSESSMENT A NEW SOURCE OF INCOME AND THE ASSESSMENT HAS TO BE CONFINED TO THOSE ITEMS OF INCOME WHICH WERE THE SUBJECT - MATTER OF ORIGINAL ASSESSMENT. 13. APPLYING THE ABOVE WELL - SETTLED PRINCIPLES OF LAW TO THE FACTS OF THE INSTANT CASE WE ARE OF THE VIEW THAT THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT IN CALLING FOR A REMA ND REPORT ON THE AFORENOTED FOUR POINTS THE COMMISSIONER HAD EXCEEDED HIS JURISDICTION. WHILE COMPUTING THE TOTAL BUSINESS INCOME OF THE ASSESSEE THE ASSESSING OFFICER HAD ESTIMATED THE SALES AT AN ENHANCED FIGURE AND HAD APPLIED A HIGHER RATE OF GROSS P ROFIT. THUS THE ONLY MATTER DEALT WITH BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER WAS THE ESTIMATION OF PROFITS AND GAIN OF THE BUSINESS OF THE ASSESSEE. NONE OF THE AFORENOTED FOUR POINTS HAD ANY BEARING ON THE QUESTION OF ESTIMATION OF EITHER THE SALES OR THE GROSS PROFIT RATE. FROM THE OBSERVATIONS EXTRACTED ABOVE' IT IS EVIDENT THAT THE COMMISSIONER HAD HIS DOUBTS ABOUT THE CAPACITY OF THE ASSESSEE TO RAISE FINANCES FOR THE PURCHASE OF GOODS AND SHOW A HUGE TURNOVER IN THE VERY FIRST YEAR OF HI S BUSINESS. IN OTHER WORDS THE ENQUIRY ORDERED BY THE COMMISSIONER WAS TO SATISFY HIMSELF ABOUT THE SOURCE OF INVESTMENT BY THE ASSESSEE. IT IS AXIOMATIC THAT FAILURE TO PROVE THE SOURCES OF INVESTMENT WILL RESULT IN ADDITION IN THE HANDS OF THE ASSESSEE UNDER A DIFFERENT PROVISION OF LAW AND WILL NOT HAVE MUCH RELEVANCE IN THE ESTIMATION OF SALES AND GROSS PROFIT RATE ADOPTED BY THE ASSESSING OFFICER. IN OUR. OPINION ANY ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT WOULD CONSTITUTE A NEW SOURCE OF INCOM E WHICH WAS NOT THE SUBJECT - MATTER OF ASSESSMENT BEFORE THE ASSESSING OFFICER AND THEREFORE IT WAS NOT OPEN TO THE FIRST APPELLATE AUTHORITY TO DIRECT THE ASSESSING OFFICER TO CONDUCT ENQUIRY ON THE SAID FOUR POINTS. 14. FOR THE FOREGOING REASONS WE A NSWER THE QUESTION IN THE AFFIRMATIVE I.E. IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. NO ORDER AS TO COSTS. ITA NO . 653 /PN/201 3 SHRI SANJAY L SONAWANE 13 3 2. SIMILAR IS THE PROPOSITION LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN M/S. VIJAY BUILDERS VS. ITO (SUPRA). 33. IN VIEW OF THE SAM E WE HOLD THAT THERE IS NO MERIT IN THE ENHANCEMENT MADE BY THE CIT(A) OF RS.10 LAKHS ON ACCOUNT OF NEW SOURCE OF INCOME AND THE SAME IS DELETED. THE GROUND OF APPEAL NO.6 RAISED BY THE ASSESSEE IS THUS ALLOWED. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE PARTLY ALLOWED. 34 . IN THE RESULT APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 30 TH DAY OF SEPTEMBER 201 6 . SD/ - SD/ - ( ANIL CHATURVEDI ) ( SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; D ATED : 30 TH SEPTEMBER 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / T HE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - II NASHIK ; 4. / THE CIT - II NASHIK ; 5. / DR A ITAT PUNE; 6. / GUARD FILE . / BY ORDE R // TRUE COPY // / SR. PRIVATE SECRETARY / ITAT PUNE