M/s Ashish Kalyan Mandap, Bhubaneswar v. ITO, Bhubaneswar

ITA 98/CTK/2011 | 2001-2002
Pronouncement Date: 14-03-2011

Appeal Details

RSA Number 9822114 RSA 2011
Assessee PAN AAKFA2605D
Bench Cuttack
Appeal Number ITA 98/CTK/2011
Duration Of Justice 29 day(s)
Appellant M/s Ashish Kalyan Mandap, Bhubaneswar
Respondent ITO, Bhubaneswar
Appeal Type Income Tax Appeal
Pronouncement Date 14-03-2011
Appeal Filed By Assessee
Bench Allotted SMC
Assessment Year 2001-2002
Appeal Filed On 15-02-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (SMC) CUTTACK BENCH CUTTACK ( ) BEFORE . . HONBLE SHRI K.K.GUPTA ACCOUNTANT MEMBER. / ITA NO.098/CTK/2011 / ASSESSMENT YEAR 2001 - 02 M/S. ASHISH KALYAN MANDAP SAMANTARAPUR CHHAK BHUBANESWAR PAN: AAKFA 2605 D - - - VERSUS - INCOME - TAX OFFICER WARD 1(2) BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI A.K.KAMILLA AR / FOR THE RESPONDENT: / SHRI S.C.MOHANTY DR / ORDER (SMC) . . SHRI K.K.GUPTA ACCOUNTANT MEMBER . THIS APPEAL BY THE ASSESSEE AGITATES THE ACTION OF THE COMMISSIONER OF INCO ME - TAX (APPEALS) IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER BEING PROPORTIONATE DISALLOWANCE OF CAPITAL INTRODUCED FOR INVESTMENT IN THE PROPERTY AS FROM UNEXPLAINED SOURCES. 2. THERE IS A DELAY OF 32 DAYS IN FILING THE PRESENT APPEAL FOR WH ICH THE ASSESSEE HAS FILED A PETITION SEEKING CONDONATION OF SUCH DELAY. CONSIDERING THE AVERMENTS MADE IN THE SAID PETITION THAT THE MANAGING PARTNER WAS SUFFERING FROM IHD AND WAS UNDER TREATMENT AND WAS ADVISED HIM TO TAKE REST FROM 8.11.2010 TO 14.2.20 11 AND AFTER HEARING BOTH THE PARTIES I AM SATISFIED THAT THE DELAY IS UNINTENTIONAL. THEREFORE THE DELAY IS CONDONED AND THE APPEAL IS ADMITTED FOR HEARING. 3. THE BRIEF FACTS AS HAVE BEEN BROUGHT ON RECORD ARE THAT THE ASSESSING OFFICER CONSIDERED THE INVESTMENTS BY THE ASSESSEE IN CONSTRUCTION OF ASHISH ITA NO.098/CTK/2011 2 KALYAN MANDAP WHEN HE DENIED THE ASSESSEES CLAIM NO INVESTMENT IN THE PROPERTY ON ACCOUNT OF SELF SUPERVISION CHARGES WHILE COMPUTING THE SOURCE OF INVESTMENT IN THE SAID KALYAN MANDAP VIS - A - VIS THE ACTUAL INVESTMENT CONSIDERING THE AMOUNT OF SELF SUPERVISION CHARGES ON WHICH SEPARATE ADDITION OF 78 751 WAS MADE. THE ASSESSING OFFICER MADE A PROPORTIONATE ADDITION OF 39 540 ON CAPITAL INVESTMENT FOR THE IMPUGNED ASSESSMENT YEAR BEING THE PROPORTIONA TE DISALLOWANCE IN THE PROPERTY WHICH STOOD EXPLAINED UP TO 20 76 350 EXCLUDING SUPERVISION CHARGES. THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY WHO CONSIDERED THE CONTENTION OF THE ASSESSEE BEFORE HIM AND DELETED THE ADDITION OF 78 751 SIMPLY BECAUSE HE AGREED TO THE PROPOSITION THAT THE LOW COST OF INVESTMENT IN THE PROPERTY VIS - - VIS VALUATION WAS DUE TO SELF SUPERVISION CHARGES @ 12.5% AS SUBMITTED BY THE ASSESSEE THEREFORE COULD NOT BE FURTHER STRETCHED TO FINDING OF CAPITAL INTROD UCED INTO KALYAN MANDAP BY THE INDIVIDUAL PARTNERS WAS BEYOND EXPLANATION. HOWEVER HE CONFIRMED 39 540 FOR THE IMPUGNED ASSESSMENT YEAR AS THERE WAS NO RECORDED EVIDENCE FOR SUGGESTING THE SOURCE THEREOF. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT HAVING AGREED TO THE PROPOSITION THAT THE ASSESSEE COULD SAVE 78 751 TO BE ADDED BY THE ASSESSING OFFICER IN THE VALUATION OF THE KALYAN MANDAP THE REASON RECORDED BY THE ASSESSING OFFICER THAT THE PROPORTIONATE ADDITION PERTAIN TO THE YEAR IN DIS PUTE THEREFORE HAS NO LEGS TO STAND ON TO THE EXTENT THAT 39 540 IS LESS THAN 78 751 WHEN HE CHOSE TO ACCEPT THE ASSESSEES CONTENTION THAT THE VALUATION REMAINED UNEXPLAINED TO THE EXTENT OF 7 8 751 ONLY. 5. HE NOTED THAT THE PERCENTAGE OF PROGRESS IN CONSTRUCTION OF THE BUILDING DURING THE IMPUGNED ASSESSMENT YEAR AT 26.36% OF 1 50 000 WAS TO BE EXPLAINED SPREAD OVER THREE YEARS THEREFORE BECOMES IMMATERIAL TO ITA NO.098/CTK/2011 3 THE EXTENT THAT EVEN IF ACCEPTING AND NOT ASSUMING THAT THE SELF SUPE RVISION CHARGES DID NOT INVOLVE CASH OR INTRODUCTION OF CAPITAL THE 26.36% OF 78 751 WOULD NOT BE 39 540 TO BE BROUGHT TO TAX AS CAPITAL INTRODUCED FROM UNEXPLAINED SOURCES TO BE TAXED IN THE CAPITAL OF THE THREE PARTNERS WITHOUT IDENTIFYING ANY PARTICULAR PARTNER FOR INVE STMENT FROM UNDISCLOSED SOURCES. HE THEREFORE PRAYED THAT THE PART RELIEF GRANTED BY THE LEARNED CIT(A) ON IDENTICAL FACTS HAS TO BE TAKEN INTO CONSIDERATION FOR DELETION OF THE ADDITION OF 39 540 AS WELL. 6. THE LEARNED DR SUBMITTED THAT THE ADDITION O N ACCOUNT OF PROPORTIONATE CAPITAL INTRODUCED HAS NO BEARING TO THE DELETION OF ADDITION ON ACCOUNT OF SUPERVISION CHARGES BUT NOT ADHERED TO BY THE LEARNED CIT(A) AS CONSIDERED BY THE LEARNED ASSESSING OFFICER. HE POINTED OUT THAT THE AMOUNT INVESTED IN THE AYS 2000 - 01 TO 2003 - 04 WAS BASED ON THE BASIS OF ASSESSEES OWN STATEMENT RECORDING INVESTMENT OF 20 76 350 WHICH WAS INFLATED BY 78 751 ON ACCOUNT OF SELF SUPERVISION CHARGES WAS NEGATED BY THE ASSESSING OFFICER. THEREFORE THE PROPORTIONATE CAPITAL INVESTED IN THE PROPERTY WAS SOUGHT TO BE FROM UNDISCLOSED SOURCES WAS TO B E ADJUDICATED BY THE LEARNED CIT(A) WHICH HE HAS CONFIRMED EVEN WHEN HE HAS DELETED THE ADDITION ON ACCOUNT OF ENHANCEMENT IN THE PROPERTY AMOUNTING TO 78 751. HE FULLY SUPPORTED THE ORDER OF THE LEARNED CIT(A) FOR HIS PART SUBMISSIONS. 7. I HAVE HEARD TH E RIVAL SUBMISSIONS AND PERUSED THE MATERIALS MADE AVAILABLE ON RECORD. I FIND FORCE IN THE CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE THAT THE CASE BEFORE THE ASSESSING OFFICER WAS TO EVALUATE THE INVESTMENT IN THE CONSTRUCTION OF KALYAN MANDAP WHI CH THE ASSESSEE HA D DOCUMENTED AMOUNTING TO 20 76 350. NEGATING THE CLAIM OF THE ASSESSEE ON ACCOUNT OF SAVING IN COST OF CONSTRUCTION ON ACCOUNT OF SELF SUPERVISION ITA NO.098/CTK/2011 4 CHARGES THE ASSESSING OFFICER CHOSE TO SPREAD THE INVESTMENT IN THREE YEARS WHICH FURTHE R TWO YEARS WERE YET TO BE EXPLAINED. THE PROPORTIONATE DISALLOWANCE FOR CAPITAL INTRODUCED IN THE IMPUGNED ASSESSMENT YEAR THEREFORE HAS NO LEGS TO STAND ON INSOFAR AS WHAT W AS TO COME LATER COULD NOT BE ANTICIPATED AS CONFIRMED IN THE EARLIER YEAR SPEC IFICALLY WHEN THE FACT THAT THE ASSESSING OFFICER HIMSELF ADMIT ED THAT THE SELF SUPERVISION CHARGES WERE YET TO BE INVESTED IN LATER YEARS. THE LEARNED DR HAS NOT BEEN ABLE TO EXPLAIN HOW THE TWO HAVE NO BEARING TO THE EXTENT THAT THE ASSESSING OFFICER CHO SE TO EQUATE THE COST OF CONSTRUCTION FROM THE SOURCE OF INVESTMENT WHICH INCLUDED THE CAPITAL INTRODUCED BY THE PARTNERS HAVING ACCEPTED THE MAJOR CAPITAL INTRODUCED AMOUNTING TO 6 50 000 IN THE IMPUGNED ASSESSMENT YEAR VIS - - VIS 50 000 EACH INVESTED B Y THREE DIFFERENT PARTNERS .I DO NOT FIND ANY LOGIC IN THIS PROPOSITION AS CONSIDERED BY THE ASSESSING OFFICER TO THE EXTENT THAT ONCE THE SUM OF 78 751 HAS BEEN CONSIDERED FIT FOR DELETION BY THE LEARNED CIT(A) ON THE BASIS OF SAME FACT THAT THE SUPERVIS ION CHARGES DO NOT INVOLVE CASH INVESTMENT THEREFORE COULD NOT BE RELATED TO THE PROPORTIONATE DISALLOWANCE IN THE VERY COST OF CONSTRUCTION THE ASSESSING OFFICER HIMSELF HAS ACCEPTED WAS AVAILABLE TO THE ASSESSEES AS RETURNED BY IT . I DO NOT FIND ANY INFI RMITY IN THE CONTENTION OF THE LEARNED COUNSEL THAT ONCE A HYPOTHETICAL EXPENSE HAS BEEN CONSIDERED FIT FOR DELETION WHETHER COULD BE CONSIDERED FOR THE PURPOSE OF HOLDING THAT THE ACTUAL CASH CAPITAL INTRODUCED IN THE IMPUGNED ASSESSMENT YEAR COULD FURTHE R BE LINKED TO THE SUPERVISION CHARGES WHICH WOULD NOT BE INCURRED TO THE EXTENT THAT HAVING ACCEPTED THE INVESTMENTS AS RETURNED WAS SUFFICIENT FOR THE VALUE OF THE PROPERTY RETURNED THEREFORE WHETHER COULD BE RELATED TO THE PROPORTIONATE DISALLOWANCE YET TO BE INCURRED LATER. THEREFORE ON THE BASIS OF FACTS I DO NOT FIND ANY LOGIC BY THE LEARNED CIT(A) FOR RETAINING THE ADDITION BEING PRO RATA AMOUNT OF ITA NO.098/CTK/2011 5 1 50 000 AT 39 540 BEING 26.58% WAS YET TO BE INCURRED FOR ADDITION IN THE IMPUGNED ASSESSMENT Y EAR. THE ADDITION SO RETAINED BY THE LEARNED CIT(A) IS THEREFORE DELETED. 8. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 14 TH MARCH 2011 S D/ - ( . . ) (K.K.GUPTA) ACCOUNTANT MEMBER. ( ) DATE: 14 TH MARCH 2011 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : M/S. ASHISH KALYAN MANDAP SAMANTARAPUR CHHAK BHUBANESWAR 2 / THE RESPONDENT: INCOME - TAX OFFICER WARD 1(2) BHUBANESWAR. 3 . / THE CIT 4 . ( )/ THE CIT(A) 5 . / DR CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY / BY ORDER [ ] SENIOR PRIVATE SECRETARY ( ) (H.K.PADHEE) SENIOR.PRIVATE SECRETARY.