Sh. Jagjeet Singh, Chandigarh v. ACIT, Circle 5(1), Chandigarh

ITA 789/CHANDI/2009 | 2006-2007
Pronouncement Date: 12-10-2010 | Result: Partly Allowed

Appeal Details

RSA Number 78921514 RSA 2009
Assessee PAN AOJPS9789M
Bench Chandigarh
Appeal Number ITA 789/CHANDI/2009
Duration Of Justice 1 year(s) 2 month(s) 15 day(s)
Appellant Sh. Jagjeet Singh, Chandigarh
Respondent ACIT, Circle 5(1), Chandigarh
Appeal Type Income Tax Appeal
Pronouncement Date 12-10-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 12-10-2010
Date Of Final Hearing 07-07-2010
Next Hearing Date 07-07-2010
Assessment Year 2006-2007
Appeal Filed On 27-07-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI G.S.PANNU ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA JUDICIAL MEMBER ITA NO. 789/CHD/2009 ASSESSMENT YEAR: 2006-07 SHRI JAGJIT SINGH VS. THE ACIT CIRCLE 5(1) CHANDIGARH CHANDIGARH PAN NO.AOJPS9789M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.MUKHI RESPONDENT BY: SHRI N.K.SAINI ORDER PER SUSHMA CHOWLA JM THE APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CHANDIGARH DATED 27.6.2009 RELATING TO ASSESSMENT Y EAR 2006-07 AGAINST THE ORDER PASSED UNDER SECTION 144 OF THE I.T. ACT. 2. THE GROUND NOS.1 & 2 RAISED BY THE ASSESSEE ARE NOT PRESSED HENCE THE SAME ARE DISMISSED AS NOT PRESSED. 3. THE GROUND NO.3 RAISED BY THE ASSESSEE IS AS UND ER:- 3. THAT THE LEARNED CIT(A) IS NOT JUSTIFIED IN CONFIRM ING THE DISALLOWANCE OF RS. 1 17 070/- BEING GENUINE LO SS OF PROPRIETARY CONCERN OF THE APPELLANT M/S MILK TI ME FROZEN FOOD FOR WHICH REQUISITE DETAILS WERE FILED AND EVEN OFFER WAS MADE BEFORE THE CIT(A) TO PRODUCE TH E BOOKS OF ACCOUNT FOR WHICH NO OPPORTUNITY WAS GIVEN EITHER BY THE ASSESSING OFFICER OR BY THE CIT(A). 2 (B) THAT WITHOUT PREJUDICE TO ABOVE THE APPELLANT D ISPUTES THE QUANTUM OF DISALLOWANCE AS EXCESSIVE AND BAD IN LAW. 4. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT D URING THE YEAR THE ASSESSEE HAD CLAIMED LOSS OF RS. 1 17 070/- FROM HI S PROPRIETORSHIP BUSINESS M/S MILK TIME FROZEN FOODS. THE ASSESSEE FAILED TO PRODUCE ANY BOOKS OF ACCOUNT AND ANY BILLS OR VOUCHERS BEFO RE THE ASSESSING OFFICER AND IN THE ABSENCE OF THE SAME THE LOSS S HOWN BY THE ASSESSEE WAS DISALLOWED. IN APPEAL BEFORE THE CIT (A) TH E PLEA OF THE ASSESSEE WAS THAT NO REASONABLE OPPORTUNITY WAS PROVIDED TO THE ASSESSEE REGARDING PRODUCTION OF BOOKS OF ACCOUNT. THE CIT (A) HAD S OUGHT A REMAND REPORT FROM THE ASSESSING OFFICER FOR WHICH THE MATTER WA S REFERRED BACK TO THE ASSESSING OFFICER. THE CIT(A) NOTES THAT THE ASSE SSEE FAILED TO PRODUCE ANY DETAILS BEFORE THE ASSESSING OFFICER AND EVEN BEFORE THE CIT(A) NO REASONABLE EXPLANATION WAS GIVEN EXCEPT TO SAY THAT THE BOOKS OF ACCOUNT COULD BE PRODUCED. ACCORDINGLY THE ORDER OF ASSES SING OFFICER WAS UPHELD BY THE CIT (A). 5. THE LEARNED AR FOR THE ASSESSEE DREW OUR ATTENTI ON TO THE BALANCE SHEET FILED AT PAGES 5 ALONG WITH TRADING PROFIT A ND LOSS ACCOUNT AT PAGE 6 AND DETAILS OF STOCK AT PAGE 9 OF THE PAPER BOOK AND POINTED OUT THAT THE DETAILS WERE FILED ALONG WITH THE RETURN OF INCOME. THE LEARNED AR FURTHER POINTED OUT THAT SIMILAR BUSINESS LOSS HAD BEEN ACCEPTED IN ASSESSMENT YEAR 2004-05 VIDE ORDER PASSED U/S 143(3 ) OF THE ACT. THE LEARNED DR PLACING RELIANCE ON THE ORDERS OF THE AU THORITIES BELOW POINTED OUT THAT THOUGH SUFFICIENT OPPORTUNITY WAS AFFORDED TO THE ASSESSEE BUT THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNT . 3 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE LOSS SHOWN BY THE ASSESSEE IN HIS SOLE PROPRIETORSH IP CONCERN IS CLAIMED TO BE BACKED BY THE TRADING PROFIT AND LOSS ACCOUNT P LACED AT PAGE 6 OF THE PAPER BOOK AND BALANCE SHEET AT PAGE 5 OF THE PAPER BOOK. THE ASSESSEE HAS ALSO FURNISHED THE DEPRECIATION CHART AT PAGE 7 THE VALUATION OF FINISHED STOCK AT PAGES 8 & 9 AND LIST OF SUNDRY DE BTOR AND CREDITORS AT PAGE 10 OF THE PAPER BOOK. DURING THE COURSE OF A SSESSMENT PROCEEDINGS THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNT NOR ANY BILLS OR VOUCHERS WERE PRODUCED. THE CIT(A) HAD ASKED FOR A REMAND REPORT IN THE CASE AND OPPORTUNITY WAS AFFORDED BY THE ASSESS ING OFFICER TO THE ASSESSEE TO EXPLAIN HIS CASE. THE ASSESSEE FAILED TO FURNISH HIS EXPLANATION BEFORE THE ASSESSING OFFICER EVEN DURIN G THE REMAND PROCEEDINGS AND BEFORE THE CIT(A) THE PLEA OF THE ASSESSEE WAS THAT BOOKS OF ACCOUNT CAN BE PRODUCED BUT NO SUCH BOOK S OF ACCOUNT WERE PRODUCED NOR ANY EVIDENCE JUSTIFYING THE LOSS WAS F URNISHED BEFORE THE CIT(A). IN THE CIRCUMSTANCES BECAUSE OF LACK OF EVIDENCE BEING LED BY THE ASSESSEE TO JUSTIFIABLY PROVE THE LOSS SHOWN BY THE ASSESSEE THE BOOK RESULTS CAN NOT BE ACCEPTED. WE ARE IN CONFORMITY WITH THE ORDER OF CIT(A) THAT IN THE ABSENCE OF THE REQUISITE DETAILS NOT BEING FURNISHED BY THE ASSESSEE THE ORDER OF THE ASSESSING OFFICER I N REJECTING THE LOSS FROM THE PROPRIETORY BUSINESS MERITS TO BE UPHELD. THE GROUND NO.3 RAISED BY THE ASSESSEE IS THUS DISMISSED. 7. THE GROUND NO.4 RAISED BY THE ASSESSEE IS AS UND ER:- 4. THAT THE LEARNED CIT(A) IS NOT JUSTIFIED IN ALLOWIN G ONLY PARTIAL RELIEF TO THE EXTENT OF RS. 20 000/- A GAINST THE DECLARED AGRICULTURAL INCOME OF RS. 14 50 000/- WHICH IS QUITE UNREASONABLE AND UNNATURAL LOOKING IN TO THE LAND HOLDING AND OTHER EVIDENCES PRODUCED AN D THUS NEEDS INTERFERENCE BY THE HON'BLE BENCH. 4 (B) THAT WITHOUT PREJUDICE TO ABOVE THE APPELLANT D ISPUTE THE QUANTUM OF ADDITION AS EXCESSIVE AND ILLEGAL. 8. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD SHOWN AGRICULT URAL INCOME OF RS. 14 50 000/-. THE ASSESSING OFFICER REQUISITIONED T HE ASSESSEE TO PROVIDE DETAILS OF HIS AGRICULTURAL LAND ALONGWITH THE DOCU MENTARY EVIDENCE REGARDING THE AGRICULTURAL INCOME. THE ASSESSEE VI DE REPLY DATED 22.8.2008 FILED THE COPY OF DEED OF AGRICULTURAL LA ND SITUATED AT ANDHRA PRADESH. THE SAID DEED WAS NOT IN ENGLISH AND LE ARNED AR FOR THE ASSESSEE WAS ASKED TO PRODUCE THE ENGLISH TRANSLATI ON OF THE SAID DEED. THE ASSESSEE FAILED TO FURNISH THE ENGLISH TRANSLAT ION OF THE SAID DEED NOR ANY DETAILS OF SALE OF AGRICULTURAL PRODUCTS AND / OR RELATED EXPENDITURE INCURRED TO EARN THE SAID INCOME WERE FURNISHED DE SPITE SEVERAL OPPORTUNITIES BEING ALLOWED BY THE ASSESSING OFFICE R. THE ASSESSING OFFICER THUS TREATED THE SUM OF RS. 14 50 000/- AS UNEXPLAINED INCOME OF THE ASSESSEE. BEFORE THE CIT(A) THE FIRST GRIEVA NCE OF THE ASSESSEE WAS THAT NO REASONABLE OPPORTUNITY WAS ALLOWED BY THE A SSESSING OFFICER BEFORE MAKING THE AFORESAID ADDITIONS. THE CIT(A) ON PERUSAL OF THE ASSESSMENT ORDER ISSUED LETTER DATED 13.1.2009 TO T HE ASSESSING OFFICER CONTENTS OF WHICH ARE REPRODUCED IN PARA 4 AT PAGES 3 TO 5 OF THE APPELLATE ORDER. THE CIT(A) DIRECTED THE ASSESSING OFFICER TO OFFER ANOTHER OPPORTUNITY TO THE ASSESSEE WHICH WAS SO GRANTED BY THE ASSESSING OFFICER. THE CIT(A) THUS HELD THAT THE ASSESSEE HAD BEEN OFFERED SUFFICIENT TIME. THE CIT(A) PERUSED THE REPORT OF THE ASSESSING OFFICER DATED 25.2.2009 IN WHICH IT WAS REITERATED THAT TH E ASSESSEE FILED VOUCHERS OF SALES OF AGRICULTURAL PRODUCTS AND ALSO DOCUMENTS OF LAND IN TELUGU. IN APPEAL THE ASSESSEE VIDE WRITTEN SUBMI SSIONS POINTED OUT THAT THE PROPER TRANSLATION FROM TELGU TO ENGLISH OF THE SALES BILLS HAD BEEN 5 PROVIDED AND ALSO THE ENGLISH TRANSLATION OF LAND H OLDINGS FROM THE MANDAL SURVEYOR MANDASA WAS FILED. FURTHER THE AS SESSEE CLAIMS TO HAVE FILED THE ACKNOWLEDGMENT OF INCOME TAX DEPARTMENT U NDER VDIS SCHEME WHEREBY THE LAND HOLDING WAS DECLARED WHICH WAS CL AIMED TO BE THE PROOF OF THE ASSESSEE HOLDING THE LAND. THE ASSESSEE FU RTHER EXPLAINED THAT IT WAS RUNNING A PLANTATION NURSERY UNDER THE NAME AND STYLE OF M/S FLOROCENT NURSERIES AND PLANTATION WHERE COCONUT P LANTS WERE GROWN AND SAME WAS SOLD ON CASH BASIS THROUGH CASH RECEIPTS. THE ASSESSEE FURTHER SUBMITTED THAT SUCH PLANT WERE GROWN ON THE LAND IT SELF AND FROM THIS LAND OF NURSERY THEY WERE SHIFTED TO SOME OTHER PLACE W HEN SOLD. THE INCOME WAS CLAIMED TO BE AGRICULTURAL INCOME. IT WAS FU RTHER CLARIFIED THAT AS THE ASSESSEE WAS NOT GROWING OR HARVESTING FOOD GRA IN CROPS FOR WHICH ISSUE OF FORM J WAS PREVALENT IN INDIA. THE CIT( A) VIDE PARA 20 OF THE APPELLATE ORDER OBSERVED THE ASSESSEE TO HAVE OWNED MORE THAN 10 ACRES OF LAND WHICH IN TURN WAS EVIDENT FROM THE CERTIFICAT E ISSUED BY MANDAL SURVEYOR MANDASA. THE CIT(A) FURTHER NOTED THAT TH E ASSESSEE HAD DECLARED THE VALUE OF THE SAID LAND AT RS. 53 000/- UNDER THE VDIS SCHEME. THE CIT(A) HELD THAT IT WAS HIGHLY IMPROBA BLE THAT THE ASSESSEE WAS SHOWING AGRICULTURAL INCOME OF RS. 14 50 000/- FROM LAND OF 10 ACRES ONLY. FURTHER THE CIT(A) HELD THAT THERE IS NO EVIDENCE WITH THE ASSESSEE TO PROVE SUCH HUGE INCOME FROM COCONUT PLA NTS . MERE STATEMENT THAT THE PLANTS WERE GROWN AND THE SAME WERE SOLD O N CASH BASIS WAS FOUND BY CIT(A) TO BE NOT SUFFICIENT TO PROVE THE A GRICULTURAL INCOME AND IN THE ABSENCE OF ANY EVIDENCE IT WAS DIFFICULT TO ACCEPT THE INCOME OF RS. 14 50 000/-. THE CIT(A) HELD THAT EVEN IF THE INCO ME FROM PLANT NURSERY IS AGRICULTURAL INCOME THEN ALSO THE ASSESSEE HAD TO FILE SUFFICIENT EVIDENCE THAT 10 ACRES OF LAND WAS HAVING THE CAPAC ITY TO PRODUCE SUCH INCOME BY WAY OF PLANTATION OF NURSERY. THE CIT(A ) ESTIMATED THE 6 ANNUAL RETURN AT THE RATE OF 20% OF THE INVESTMENT MADE BY THE ASSESSEE IN PURCHASING THE AGRICULTURAL LAND AND FOUND IT REASO NABLE TO ESTIMATE THE AGRICULTURAL INCOME OF RS. 20 000/- PER YEAR. THE BALANCE ADDITION OF RS. 14 30 000/- WAS CONFIRMED BY CIT(A). THE ASSESSEE IS IN APPEAL AGAINST THE SAID ORDER OF THE CIT(A). 9. THE LEARNED AR FOR THE ASSESSEE POINTED OUT THAT THE TOTAL LAND HOLDING OF THE ASSESSEE WAS 23.45 ACRES OF LAND. O UR ATTENTION WAS DRAWN TO THE COMPILATION OF LAND HOLDING AT PAGE 43 OF TH E PAPER BOOK AND THE DEEDS OF PURCHASE OF LAND AT PAGES 44 TO 65 OF THE PAPER BOOK. THE LEARNED AR FURTHER POINTED OUT THAT THE SAID LAND WAS WITH THE ASSESSEE FROM 1988 AND DECLARATION IN RESPECT OF THE INVESTMENT IN THE SAID LAND WAS MADE UNDER THE VDIS SCHEME. THE COPY OF THE DECLARATION UNDER VDIS SCHEME AND ACKNOWLEDGMENT OF FILING THE RETURN UNDER THE V DIS SCHEME ARE PLACED AT PAGES 66 AND 67 OF THE PAPER BOOK. THE L EARNED AR FAIRLY ADMITTED THAT THE ENGLISH TRANSLATION OF THE SAID D EEDS COULD NOT BE FILED DURING THE ASSESSMENT PROCEEDINGS HOWEVER THE SAM E ARE BEING FILED DURING THE COURSE OF THE PRESENT APPELLATE HEARING. HE FURTHER DREW OUR ATTENTION TO THE RETURN OF INCOME FILED FOR THE EAR LIER YEARS COPIES OF WHICH ARE PLACED IN THE PAPER BOOK WHEREIN AGRICULT URAL INCOME OF RS. 7 LACS EACH WAS DECLARED IN ASSESSMENT YEARS 2004-05 AND 2005-06. THE ASSESSMENT RELATING TO ASSESSMENT YEAR 2004-05 WAS COMPLETED U/S 143(3) OF THE ACT. THE LEARNED DR POINTED OUT THAT THE C OMPLETE PARTICULARS OF LAND ARE MISSING IN THE VDIS DECLARATION. FURTHER THE ASSESSEE HAS ONLY FURNISHED THE TRANSLATION OF TOP OF THE BILL OF SAL E OF AGRICULTURAL ITEMS BUT THE DETAILS OF ITEMS SOLD AND RATE APPLIED WERE NOT FURNISHED BY THE ASSESSEE AND IN THE ABSENCE OF THE SAME THE AGRICU LTURAL INCOME CANNOT BE COMPUTED. THE LEARNED DR FOR THE REVENUE FURTHER M ADE A REFERENCE TO 7 THE OPERATIONAL GUIDELINES FOR IMPLEMENTATION OF CO MMUNITY BASED COCONUT NURSERY AND POINTED OUT THAT THE SALE PRICE SO FIXED BY THE AUTHORITIES SIGNIFIES THAT THE INCOME SHOWN BY THE ASSESSEE WAS HIGHLY EXCESSIVE. IN THE ABSENCES OF ANY DETAILS BEING FI LED BY THE ASSESSEE THE LEARNED DR EMPHASIZED THAT THE ORDER OF THE CIT(A) MERITS TO HE UPHELD. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ASSESSEE DURING THE YEAR ENDING 31.3.2006 I.E. THE YEAR UNDER APPEAL E HAD DECLARED AGRICULTURAL INCOME OF RS. 14 50 000/- . THE CLAIM OF THE ASSESSEE WAS THAT IT WAS HAVING A PLANTATION NURSER Y WHERE COCONUT PLANTS WERE GROWN ON THE LAND ITSELF AND THE SAME WERE SOL D IN CASH TO VARIOUS PARTIES AS PER THE SALE BILLS ISSUED FROM DAY TO DA Y. THE CIT(A) HAS ACCEPTED THE PLEA OF THE ASSESSEE THAT IT IS DERIVI NG INCOME FROM PLANTATION NURSERY WHICH IN TURN IS AGRICULTURAL IN COME EARNED BY THE ASSESSEE. HOWEVER AS THE ASSESSEE HAD FAILED TO FILE THE EVIDENCE OF EARNING THE HUGE INCOME FROM THE SAID NURSERY AND I N THE ABSENCE OF THE EVIDENCE TO PROVE THAT 10 ACRES OF LAND OWNED BY TH E ASSESSEE HAD THE CAPACITY TO PRODUCE SUCH HIGH AGRICULTURAL INCOME A ND IN VIEW OF THE TOTAL COST OF THE LAND OWNED BY THE ASSESSEE AND DECLARED IN THE VDIS SCHEME THE AGRICULTURAL INCOME WAS ESTIMATED AT RS. 20 000 /- PER YEAR. THE ASSESSEE IN CONTRAST CLAIMS THAT IT HAS A LAND POOL ING OF 23.45 ACRES WHICH HE IS HOLDING SINCE 1988. DURING THE COURSE OF AS SESSMENT PROCEEDINGS THE ASSESSEE WAS REQUISITIONED TO FILE THE EVIDENCE OF HIS AGRICULTURAL LAND HOLDINGS. THOUGH THE ASSESSEE FILED THE COPIES OF THE PURCHASE DEEDS IN TELUGU BUT THE ENGLISH VERSION OF THE SAME WERE N OT FURNISHED BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDING S OR EVEN DURING THE REMAND PROCEEDINGS. THE ASSESSEE BEFORE US HAD FURN ISHED THE LAND HOLDINGS OF THE ASSESSEE AT PAGE 43 OF THE PAPER BO OK ALONG WITH THE 8 PURCHASE DEED IN TELGU AT PAGES 44 TO 65 OF THE PAP ER BOOK. THE ASSESSEE HAS ALSO FURNISHED THE ALLEGED TRANSALATION OF THE FIRST PAGE OF SALE DEED FILED AT PAGES 45 TO 64 OF THE PAPER BOOK BUT ONLY TOP PORTION HAS BEEN SO TRANSLATED. THE SAID ENGLISH VERSION WAS ADMIT TEDLY NOT FURNISHED DURING THE COURSE OF PROCEEDINGS BEFORE THE LOWER A UTHORITIES. FURTHER THE ASSESSEE HAD DECLARED CERTAIN ASSETS UNDER THE VDIS SCHEME WHICH HE CLAIMS TO BE THE VALUE OF THE ALLEGED AGRICULTURAL LAND. HOWEVER THE PERUSAL OF DETAILS AT PAGES 66 & 67 OF THE PAPER BO OK REVEALS THE NAMES OF DIFFERENT ASSETS WHICH ARE IN THE NAMES OF DIFFE RENT PERSONS BUT NOT THE ASSESSEE AND EVEN THE COMPLETE PARTICULARS OF LAND ARE MISSING. THE PERUSAL OF THE CERTIFICATE AT PAGE 71 OF THE PAPER BOOK BY MANDAL SURVEYOR MANDASAR REFLECTS THE TOTAL LAND HOLDIN GS AT 10 ACRES AS AGAINST THE CLAIM OF THE ASSESSEE THAT HE IS HOLDING LAND M EASURING 23.45 ACRES. FURTHER THE ONUS IS UPON THE ASSESSEE TO ESTABLISH WITH EVIDENCE THE QUANTUM OF INCOME EARNED BY HIM FROM HIS AGRICULTUR AL OPERATIONS. THE ASSESSEE HAS PLACED RELIANCE ON THE SALES BILLS ISS UED FROM DAY TO DAY COPIES OF WHICH ARE PLACED AT PAGES 113 TO 280 OF T HE PAPER BOOK. THE SAID BILLS ARE ALSO IN TELUGU. THE ASSESSEE HAS FI LED ON RECORD ENGLISH TRANSLATION OF TOP OF THE BILLS AT PAGE 69 OF THE P APER BOOK HOWEVER THE ENGLISH VERSION OF DETAILS OF THE ITEMS SOLD AND RA TES APPLIED HAVE NOT BEEN FILED. IN THE TOTALITY OF FACTS AND CIRCUMST ANCES OF THE PRESENT CASE AND IN VIEW OF THE ENGLISH TRANSLATION OF THE CERTA IN DOCUMENTS BEING NOT FURNISHED BEFORE THE ASSESSING OFFICER WE ARE OF T HE VIEW THAT PROPER ADJUDICATION OF THE ISSUE COULD NOT BE CARRIED OUT IN THE CIRCUMSTANCES OF THE CASE. THE FIRST ISSUE TO BE ADJUDICATED IN THE CASE IS THE EXTENT OF THE LAND HOLDINGS OF THE ASSESSEE. THE ASSESSEE HAS FU RNISHED SOME DETAILS / DOCUMENTS BEING ENGLISH VERSION OF THE DOCUMENTS W HICH WERE NOT CONFRONTED TO THE ASSESSING OFFICER AND IN THE INTE REST OF JUSTICE WE DEEM 9 IT FIT TO DIRECT THE ASSESSEE TO PRODUCE THE ENGLIS H VERSION OF THE SALE DEEDS BEFORE THE ASSESSING OFFICER IN ORDER TO EST ABLISH HIS CLAIM OF OWNING 23.45 ACRES OF LAND. FURTHER THE ASSESSEE IS ALSO DIRECTED TO JUSTIFIABLY PROVE THE EARNING OF AGRICULTURAL INCOM E OF RS. 14.50 LACS AND INCURRENCE OF RELATED EXPENDITURE DURING THE YEAR A S COMPARED TO AGRICULTURAL INCOME RS. 7 LACS EACH DECLARED IN ASS ESSMENT YEARS 2004- 05 AND 2005-06 BY THE ASSESSEE HIMSELF. THE ASSESS ING OFFICER SHALL AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE A SSESSEE AND DECIDE THE ISSUE AFTER CONSIDERING THE EVIDENCE IN TOTALITY AN D IN ACCORDANCE WITH LAW. WE FIND NO RELEVANCE IN THE RELIANCE OF LEAR NED DR ON THE GUIDELINES FOR OPERATION OF COCONUT NURSERY AND AS THE SAME CANNOT BE CONSIDERED CONCLUSIVE. THUS THE GROUND NO.4 RAISE D BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 11. THE GROUND NO.5 RAISED BY THE ASSESSEE IS AS UN DER:- THAT THE LEARNED CIT(A) IS NOT JUSTIFIED IN CONCUR RING WITH THE LEARNED ASSESSING OFFICER AND THEREBY CONFIRMING THE ADDITION OF RS. 22 99 986/- AS INCOM E OF THE APPELLANT WITHOUT APPRECIATING CORRECT FACTS CIRCUMSTANCES AND ALSO THE PROVISIONS OF LAW AND AS SUCH THE ORDER OF LEARNED CIT(A) IS PERVERSE AND BA D IN LAW. 12. THE ASSESSEE DURING THE YEAR HAS SHOWN LEASE RE NT ON VEHICLES GIVEN TO M/S MILK SPECIALTIES LTD. AS PER THE AGREEMENT OF LEASE OF VEHICLES THE SAID VEHICLES WERE TAKEN ON LEASE AT RS. 1 500/ - PER MONTH IN THE CASE OF HEAVY COMMERCIAL VEHICLE AND FOR RS. 1 000 /- PE R MONTH IN THE CASE OF LIGHT COMMERCIAL VEHICLES. FURTHER AS PER THE TER MS OF THE AGREEMENT THE ENTIRE EXPENSES ON RUNNING OF VEHICLES DURING THE H IRE PERIOD WERE TO BE BORNE BY THE SAID COMPANY. IN ADDITION THE COMPAN Y WAS TO PAY THE MARGIN MONEY AND INSTALLMENT TO THE FINANCER DURING THE PERIOD OF FINANCE AGAINST THE FINANCE OF VEHICLES.. THE ASSESSING O FFICER ASKED THE 10 ASSESSEE TO PROVIDE DETAILS REGARDING THE TREATMENT OF EXPENSES IN THE ACCOUNTS OF THE COMPANY. IN REPLY DATED 22.8.200 8 THE ASSESSEE STATED THAT THE COMPANY WAS ASSESSABLE AT CIRCLE 4(1) AND ALL THE INFORMATION WAS AVAILABLE IN THE CONCERNED JURISDICTION. IN SECOND REPLY DATED 24.10.2008 THE ASSESSEE STATED THAT MARGIN MONEY AND VEHICLE F INANCE CHARGES WERE CHARGED TO LEASE RENT ACCOUNT WHILE OTHER EXPENSES WERE CHARGED TO THE RESPECTIVE HEADS OF THE COMPANY. THE ASSESSEE FAIL ED TO FILE ANY COPY OF ACCOUNT OR ANY OTHER DOCUMENT ALONGWITH HIS REPLY. THE ASSESSING OFFICER NOTED THAT DURING THE COURSE OF TDS SURVEY ACTION ON M/S MILK SPECIALTIES LTD. CHANDIGARH THE BOOKS OF ACCOUNT FOR THE FINANCIAL YEAR 2005-06 SHOWED THE COMPANY TO HAVE PAID A SUM OF RS . 22 99 986/- AS MARGIN MONEY FOR PURCHASE OF TRUCKS INCLUDING INSTA LLMENTS FOR LOANS TAKEN BY THE ASSESSEE. THE INSURANCE EXPENSES VEHI CLE RUNNING AND MAINTENANCE EXPENSES WERE ALSO INCURRED BY THE COMP ANY. THE ASSESSING OFFICER NOTED THE ASSESSEE TO HAVE SHOWN LEASE INCO ME OF RS. 3 50 800/-. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE EXP ENDITURE MADE FOR MARGIN MONEY AND THE INSTALLMENTS OF LOANS TAKEN FO R PURCHASE OF VEHICLES WAS IN THE NATURE OF CAPITAL EXPENDITURE AND THUS F ORMS PART OF HIS INCOME FOR THE CURRENT YEAR. THE SAID SUM OF RS. 22 99 98 6/- WAS INCLUDED AS UNDISCLOSED INCOME OF THE ASSESSEE BY THE ASSESSING OFFICER. IN APPEAL THE PLEA OF THE LEARNED AR WAS THAT THERE WAS NO RE ASONABLE BASIS FOR SUCH DISALLOWANCE AS THE SAME WAS PURELY BASED ON THE TD S SURVEY ON THE COMPANY M/S MILK SPECIALTIES LTD. IT WAS FURTHER POINTED OUT THAT IN THE ABSENCE OF THE TDS BEING DEDUCTED THE SAID AMOUNT WERE DISALLOWED IN THE HANDS OF THE COMPANY AND IN CASE THE COMPANY P AYS SUCH TDS IN THE NEXT FINANCIAL YEAR THE SAID EXPENDITURE WOULD BE ALLOWED IN THAT PREVIOUS YEAR. IT WAS FURTHER SUBMITTED THAT TILL THAT PERIOD SUCH EXPENSES WERE DISALLOWED AND TAXED IN THE HANDS OF THE COMPANY THE 11 TAXATION OF SUCH RECEIPTS IN THE HANDS OF THE COMPA NY WOULD MEAN DOUBLE TAXATION. THE CIT(A) OBSERVED THAT IF IN THE HANDS OF THE COMPANY THE SAID WAS EXPENDITURE THEN IN THE HANDS OF THE ASSE SSEE IT WOULD BE INCOME. THE SAID EXPENDITURE WAS DISALLOWED IN THE HANDS OF THE COMPANY BECAUSE OF THE NON DEDUCTION OF TDS HOWEVE R THE MARGIN MONEY WHICH WAS CLAIMED AS AN EXPENDITURE BY THE CO MPANY BECOMES THE INCOME OF THE ASSESSEE. THUS THE ORDER OF THE AS SESSING OFFICER WAS UPHELD IN THIS REGARD. 13. THE LEARNED AR FOR THE ASSESSEE POINTED OUT THA T THE LIST OF VEHICLES OWNED BY THE ASSESSEE IS PLACED AT PAGE 30 OF THE P APER BOOK AND THE COPY OF AGREEMENT WITH THE COMPANY M/S MILK SPECIALTIES LTD IS PLACED AT PAGE 4 OF THE PAPER BOOK. THE LEARNED AR FURTHER CLAIM S THAT THE LEASE RENTALS ON THE SAID VEHICLE HAVE BEEN DECLARED BY THE ASSES SEE IN ITS RETURN OF INCOME ON SIMILAR FACTS THE INCOME SHOWN IN ASSESSM ENT YEAR 2004-05 HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. IT WAS FURTHER POINTED OUT BY THE LEARNED AR THAT AS PER THE TERMS OF THE AGREEME NT INSTALLMENTS DUE FOR THE FINANCE RAISED WERE PAID BY THE COMPANY. T HE LEARNED DR FOR THE REVENUE PLACING RELIANCE ON THE ORDER OF THE AUTHOR ITIES BELOW POINTED OUT THAT THE COMPANY HAD BOOKED THE SAID AS AN EXPENDIT URE AND CONSEQUENTLY THE SAME WAS ASSESSED AS INCOME OF THE ASSESSEE. 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ASSESSEE IS THE MANAGING DIRECTOR OF M/S MILK SPECI ALTIES LTD AND HAS ENTERED INTO AN AGREEMENT FOR THE LEASE OF VEHICLES BOTH LIGHT VEHICLES AND HEAVY VEHICLES AND MOTOR CARS. THE LIST OF VEHICLE S CLAIMS TO BE LEASED BY THE ASSESSEE TO THE COMPANY IS PLACED AT PAGE 30 OF THE PAPER BOOK. THE 12 COPY OF THE AGREEMENT BETWEEN THE ASSESSEE AND THE SAID COMPANY IS PLACED AT PAGE 4 OF THE BOOK. AS PER THE TERMS OF THE AGREEMENT THE COMPANY WOULD HIRE THE COMMERCIAL VEHICLE OWNED BY THE ASSESSEE FOR ITS USE. THE ENTIRE EXPENSES ON RUNNING OF VEHICLES LIKE COST OF DIESEL OIL TYRES AND OTHER MAINTENANCE EXPENSES WERE TO BE BOR NE BY THE COMPANY. FURTHER AS PER CLAUSE (4) OF THE AGREEMENT IT IS PROVIDED THAT THE COMPANY WILL ALSO PAY THE MARGIN MONEY AND INSTALLM ENTS TO FINANCERS DURING THE PERIOD OF FINANCE . THE LEASE MONEY TO BE PAID IS AS PER CLAUSE (5) OF THE AGREEMENT. THE PERUSAL OF THE TERMS OF THE SAID AGREEMENT REVEALS THE COMPANY TO INCUR THE EXPENDITURE ON THE RUNNING OF THE VEHICLES AND EVEN FOR PAYING THE MARGIN MONEY AND T HE INSTALLMENTS TO THE FINANCER DURING THE PERIOD OF FINANCE. THE COMPAN Y AS PER ITS RECORDS HAD PAID A SUM OF RS. 22 99 986/- ON ACCOUNT OF MA RGIN MONEY AND HIRE PURCHASE INSTALLMENTS ON BEHALF OF THE ASSESSEE. THE SAID PAYMENT IS IN ADDITION TO THE LEASE RENT OF RS. 3 50 800/- PAID TO THE ASSESSEE. AS PER THE TERMS OF THE AGREEMENT BETWEEN THE ASSESSEE AND THE COMPANY IN ADDITION TO THE LEASE / HIRE CHARGES PAID AT THE RA TES AGREED UPON BETWEEN THE PARTIES THE ENTIRE EXPENSE OF RUNNING THE VEHI CLES HAS BEEN INCURRED BY THE COMPANY. THE COMPANY HAD BOOKED THE SAID EX PENSES UNDER THE RESPECTIVE HEADS OF EXPENDITURE IN ITS BOOKS OF ACC OUNT. FURTHER THE COMPANY M/S MILK SPECIALTIES LTD HAD ALSO PAID MARG IN MONEY AND INSTALLMENTS DUE AGAINST THE FINANCE OF THE VEHICLE S OWNED BY THE ASSESSEE TOTALING RS. 22 99 986/-. AS PER CLAUSE (4) OF THE AGREEMENT DATED 1.4.2002 PLACED AT PAGE 4 OF THE PAPER BOOK IT I S AGREED BETWEEN THE PARTIES THAT SUCH CHARGES WOULD BE PAID BY THE COMP ANY IN ADDITION TO ALL ITS OTHER OBLIGATION INCLUDING LEASE RENT AND THE E XPENDITURE OF RUNNING THE VEHICLES. THE AFORESAID PAYMENT MADE BY THE S AID COMPANY IS THE OBLIGATION OF THE ASSESSEE WHO HAD TAKEN THE SAID F INANCE FROM THE 13 RESPECTIVE FINANCERS AGAINST THE VEHICLES PURCHASED BY IT. THE OBLIGATION OF THE ASSESSEE IN THE PRESENT SET OF FACTS AND CIR CUMSTANCES HAS BEEN MET BY ANOTHER PARTY I.E. THE COMPANY IN WHICH HE IS TH E MANAGING DIRECTOR WITHOUT ANY OBLIGATION TO RETURN THE SAME. SUCH P AYMENTS ON BEHALF OF THE ASSESSEE BEING THE MARGIN MONEY AND INSTALLMENT S PAID TO THE FINANCERS AGAINST FINANCE OF VEHICLE OWNED BY ASSES SEE IS TO BE TREATED AS INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERA TION IN THE CIRCUMSTANCES OF THE CASE. THE SAID COMPANY HAD AL SO BOOKED THE SAID PAYMENTS AS ITS EXPENDITURE WHILE COMPUTING ITS IN COME. A SURVEY UNDER THE TDS PROVISION WAS CARRIED OUT AT THE PREMISES O F THE COMPANY AND THE BOOKING OF THE EXPENDITURE HAS BEEN SO CONSIDERED B Y THE SURVEY TEAM. AS THE COMPANY HAD FAILED TO DEDUCT TDS ON SUCH PAY MENTS THE EXPENDITURE WAS DISALLOWED IN THE HANDS OF THE COMP ANY. SUCH TECHNICAL DISALLOWANCE IN THE HANDS OF THE COMPANY DOES NOT ALTER THE TAXABILITY OF SUCH RECEIPTS IN THE HANDS OF ASSESSEE. IN THE TO TALITY OF FACTS AND CIRCUMSTANCES WE UPHOLD THE ORDER OF CIT(A) AND DI SMISS THE GROUND OF APPEAL NO. 5 RAISED BY THE ASSESSEE. 15. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF OCTOBER 2010. SD/- SD/- (G.S.PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 12 TH OCTOBER 2010 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 14