PASHANKAR AUTO WHEELS PVT LTD,PUNE vs. CIT(A) CIRCLE-4, PUNE

However, the Assessing Officer was not satisfied with the arguments advanced by the assessee. He noted that the assessee has received interest amounting to Rs.18,228/- from Bank of India which was not offered to tax. He, therefore, added the same to the total income of the assessee. He further noted that the assessee has received rent amounting to Rs.48,69,390/- from Alfa Laval India Pvt. Ltd. The assessee also admitted the same for which he made addition of Rs.34,09,000/- after allowing deduction of Rs.14,60,817/- being 30% of such rent u/s 24 of the Act. The Assessing Officer further noted that the assessee during the year under consideration has sold immovable properties on various dates total of which comes to Rs.3,97,76,613/-. He obtained the copies of sale agreements from the office of the Sub Registrar through verification unit of the Department. The Assessing Officer rejected the submissions of the assessee that the income from sale of such properties have already been disclosed in the previous year in absence of any return of income filed by the assessee for the preceding years. Rejecting the various explanations given by the assessee, the Assessing Officer made addition of Rs.3,82,76,613/- as long term capital gain after deducting an amount of Rs.15 lakh as indexed cost of acquisition of the said properties. The Assessing Officer accordingly determined the total income of the assessee at Rs.4,17,03,841/-.

In appeal, the Ld. CIT(A) / NFAC upheld the action of the Assessing Officer.

Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal by raising the following grounds:

The Ld. Counsel for the assessee at the outset filed copies of sale deeds and submitted that the name of the assessee is appearing as a consenting party only and the assessee has not received any consideration on account of sale of those properties. Further the properties were transferred to the Joint Venture and the Joint Venture has already declared the profit on sale of the flats. Thus, these vital aspects were never considered by the Assessing Officer or the Ld. CIT(A) / NFAC. This being the additional evidence, the same should be accepted and the matter may be restored to the file of the Assessing Officer.

So far as the interest income is concerned, the Ld. Counsel for the assessee fairly conceded the same.

So far as the addition of rental income is concerned, he submitted that the assessee was consistently treating such rental income as ‘business income’ and the various expenses required to maintain the corporate status and as a going concern was allowed in the past, therefore, ‘income from house property’ should be treated as ‘business income’. He, however, submitted that this plea was not taken before the lower authorities and therefore, he has no objection if the matter is restored to the file of the Assessing Officer with a direction to verify the past records of the department and pass appropriate order.

The Ld. DR on the other hand heavily relied on the order of the Ld. CIT(A) / NFAC.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. So far as the addition of Rs.3,82,76,613/- is concerned, we find the Ld. CIT(A) / NFAC while deciding the issue against the assessee has observed as under: “6.3.3 On examining the submissions of the appellant and material available on record, it is seen that appellant claimed that the income was already accounted for in prior financial years, however, the AO highlighted that no return of income was filed by the appellant for those years to substantiate this claim. The mere assertion that capital gains were previously declared, without any documentary evidence or supporting records, renders the appellant's plea devoid of merit. At the appellate stage also, appellant did not furnish any documentary evidence to substantiate its claim that it booked the income during earlier years. 6.3.4 The AO obtained copies of the sale agreements from the Sub- Registrar through the Department's verification unit. These documents revealed that the sale of immovable property was executed during the financial year under consideration. Despite being provided ample opportunity, including a letter dated 30.01.2023 requesting evidence, the appellant failed to furnish proof supporting its contention that the income did not pertain to the year under review. Additionally, the appellant did not provide any details regarding the cost of acquisition of the property. In the absence of this crucial evidence, the AO computed the indexed cost at Rs.15,00,000/- and determined the taxable capital gains to be Rs.3,82,76,613/-. 6.3.5 The Assessing Officer (AO) has conducted a thorough examination of the facts, including third-party verification, and has arrived at well-founded factual conclusions. These findings form the basis of a reasonable and well- articulated assessment order. Given the above discussion, it is my considered opinion that the AO's assessment is guided by the principles of fairness and due process. The findings are based on available records, coupled with the appellant's failure to substantiate their claims. Furthermore, the appellant's lack of cooperation and inability to provide supporting evidence reinforce the AO's decision to tax the income in the year under consideration. Therefore, ground of appeal no. 3 & 5 are hereby dismissed.”

Architect fee for advisory services - 893800 2. Repairs and maintenance to building - 150858 3. Interest on term loan-1512333.49 4. Interest on vehicle loan-4021251.00 5. Bank charges-4021251.00 6. Professional fees-53500 7. Brokerage charges-3600000 8. Other expenses-750 To support the expenses, we are attaching the loan statement, tds certificates of expenses claimed and tds deducted for your reference." 6.4.2 At the very outset, it is observed that the appellant has failed to attach any loan statement, nor does such a document find mention within the acknowledgment of submissions, wherein the list of appended documents is enumerated. Furthermore, no additional evidence of a documentary nature has been tendered to substantiate the claim advanced. It is a well-founded principle that no assertion may be accepted at mere face value or upon the strength of a solitary declaration. 6.4.3 In view of the above, additional contention of the appellant is found devoid of merit, thus not acceptable.”

It is the submission of the Ld. Counsel for the assessee that the past records show that such income was being assessed as ‘business income’. Further, due to leaving of the staff of the assessee company, records were not readily traceable for which the full details could not be provided. Since it is the submission of the Ld. Counsel for the assessee that given an opportunity, the assessee is in a position to substantiate its case by filing the requisite details before the Assessing Officer, therefore, we remit this issue to the file of the Assessing Officer with a direction to adjudicate the same afresh and in accordance with law after providing due opportunity of being heard to the assessee. We hold and direct accordingly. The second issue raised by the assessee is accordingly allowed for statistical purposes.

In the result, the appeal filed by the assessee is allowed for statistical purposes.