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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: HON’BLE SHRI V. DURGA RAO & HON’BLE SHRI G. MANJUNATHA
आदेश / O R D E R
PER G. MANJUNATHA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is directed against the order of the
Commissioner of Income Tax (Appeals)-I, Tiruchirapalli, dated 20.09.2018
and pertains to AY 2001-02.
The assessee has raised the following grounds of appeal:
The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts, circumstances as also the legal position obtaining in the case of the appellant. 2. The learned Commissioner of Income Tax (Appeals) should and accepted the status and should not have disturbed the same in view of the various pronouncements made by various High Courts, which were already referred.
ITA No.3156/Chny/2018 :: 2 ::
Investment in property.
The assessee is doing the business of finance and certain amount realized from debtors is invested in the property. The assessing officer has not accepted the same and made additions on this. Cost of construction: The Commissioner (Appeals) failed to appreciate that the difference between the appellant's reported cost and state pwd rates of Rs.1,00,980/- (Rs.1926430- Rs.1825450) being less than 15%, no addition could be made and hence the addition is unsustainable both in law as well as facts. 2.2 The Commissioner (Appeals) further failed to appreciate that the predecessor Commissioner (Appeals) having held that no addition is warranted and there being no appeal by the department, the addition now made is untenable.
For these and other reasons that may be adduced at the time of hearing the appellant prays that the additions/disallowances made as above be deleted and the income returned be accepted.
The brief facts of the case are that the assessee is engaged in the
business of money lending, has received salary from partnership firm. The
assessment for the impugned AY 2001-02 has been completed u/s.143(3)
r.w.s.147 of the Act on 28.12.2006. The assessee preferred an appeal
before the Ld.CIT(A) and the Ld.CIT(A), Trichy, vide his order dated
02.09.2010 partly allowed the appeal filed by the assessee. The
Department has filed appeal against the order of the Ld.CIT(A) before the
ITAT and the ITAT vide its order dated 28.04.2011 set aside the order of
the Ld.CIT(A) and restored the matter back to the AO. Consequent to the
order of the ITAT, the AO has taken up the case for hearing and called upon
the assessee to justify various issues involved in the appeal. In response,
the assessee has filed necessary details including source of income for
investment in house property and also unexplained investment in
construction of house property. The AO after considering relevant
submissions of the assessee, has completed the assessment u/s.143(3)
ITA No.3156/Chny/2018 :: 3 ::
r.w.s.254 of the Act on 28.03.2013 and made various additions, including
addition towards unexplained investment for purchase of property at
Rs.7.00 lakhs, unexplained investment in cost of construction and addition
towards agricultural income, etc. The assessee carried the matter in appeal
before the Ld.CIT(A) and challenged the addition made by the AO towards
investment in property, difference in cost of construction and investment
in money lending business. The Ld.CIT(A), for the reasons stated in his
appellate order dated 20.09.2018, partly allowed the appeal filed by the
assessee, wherein, he has sustained additions made towards investment in
property, disallowance of agricultural income, difference in cost of
construction and unexplained investment in purchase of car. Aggrieved by
the Ld.CIT(A)’s order, the assessee is in appeal before us.
The first issue that came up for our consideration from the assessee’s
appeal is investment in purchase of property. The assessee claimed to
have invested in purchase of property out of outstanding debtors
receivables from money lending business to the tune of Rs.7.00 lakhs. The
AO did not accept the explanation of the assessee that investment to the
tune of Rs.7.00 lakhs is out of outstanding debtors from money lending
business, because, the assessee was unable to file necessary evidence to
support the claim that it has outstanding receivables from the money
lending business. On appeal, the Ld.CIT(A) has sustained the addition
made by the AO towards investment in property to the tune of Rs.7.00
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lakhs on the ground that the assessee has failed to explain the realization
of outstanding debtors with necessary evidences.
The Ld.AR submitted that the Ld.CIT(A) has erred in sustaining
addition made towards unexplained investment in property to the tune of
Rs.7.00 lakhs without consideration the explanation of the assessee that
source for investment is out of realization of outstanding debtors from the
money lending business. The Ld.AR referring to the Ld.CIT(A)’s order
submitted that if you go through the findings of the Ld.CIT(A), the
Ld.CIT(A) has sustained additions in one line without giving any reasons.
Therefore, the issue may be set aside to the file of the AO to give one more
opportunity to the assessee to explain source for investment in purchase
of property.
The Ld.DR, on the other hand, supporting the order of the Ld.CIT(A),
submitted that the assessee neither produced any details nor justified its
case before the Ld.CIT(A) by filing necessary evidences. Therefore, there
is no reason to give one more opportunity of hearing to the assessee.
We have heard both the parties, perused the materials available on
record and gone through orders of the authorities below. The AO has made
additions towards investment in property to the tune of Rs.7.00 lakhs on
the ground that the assessee has failed to file evidences to justify his claim
of realization of outstanding debtors from finance business. It was the
claim of the assessee that it has filed necessary financial statements to
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prove the availability of source of income and such source is explained out
of realization of outstanding debtors. Although, assessee claimed to have
filed necessary details including financial statement on perusal of the order
of the AO & the Ld.CIT(A), we find that the authorities below have made
additions by holding that the assessee has not filed any details. There are
contradictory arguments from both the sides, one side the assessee claims
to have filed various details to justify his case, on the other side, it was
observed that no details have been filed. Therefore, to ascertain the correct
facts with regard to source for investment in property and also to give one
more opportunity to the assessee, we deem it appropriate to set aside the
issue to the file of the AO. Hence, we set aside the issue to the file of the
AO and direct the AO to re-consider the issue in accordance with law after
giving one more opportunity of hearing to the assessee to file necessary
evidences.
The next issue that came up for our consideration from the assessee’s
appeal is difference in cost of construction of Rs.1,00,980/-. The assessee
claims that the AO as well as the Ld.CIT(A) have not arrived at difference
in cost of construction with reference to various details filed by the assessee
including bills and vouchers for construction. Therefore, submitted that the
issue may be set aside to the file of the AO to give one opportunity of
hearing to the assessee.
Heaving heard both sides, we find that the AO has made addition
towards difference in cost of construction by taking into account Valuation
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Report and cost of construction admitted by the assessee. Further, the AO
has allowed deduction towards available funds from rent advance, etc., to
arrive at difference of Rs.4,31,078/-. The Ld.CIT(A) has restricted the
addition to Rs.1,00,980/- without assigning any reasons as to how
difference in cost of construction worked out by the AO is not incorrect.
Since, there are contradictory findings from the AO as well as the Ld.CIT(A)
on the issue of difference in cost of construction and also fact that the
assessee claims to have filed all details to justify the amount invested for
cost of construction, we deem it appropriate to set aside the issue to the
file of the AO. Thus, the issue has been remitted back to the file of the AO
and direct the AO to re-consider the issue in accordance with law.
In the result, the appeal filed by the assessee is treated as allowed
for statistical purposes.
Order pronounced on the 23rd day of February, 2022, in Chennai.
Sd/- Sd/- (जी. मंजूनाथा) (वी. दुगा� राव) (G. MANJUNATHA) (V. DURGA RAO) लेखा सद�य/ACCOUNTANT MEMBER �याियक सद�य/JUDICIAL MEMBER चे�ई/Chennai, �दनांक/Dated: 23rd February, 2022. TLN, Sr.PS आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 4. आयकर आयु�/CIT 2. ��यथ�/Respondent 5. िवभागीय �ितिनिध/DR 3. आयकर आयु� (अपील)/CIT(A) 6. गाड� फाईल/GF