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Income Tax Appellate Tribunal, KOLKATA BENCH, “SMC” AT KOLKATA
Before: Shri A. T. Varkey, JM]
ORDER
Per Shri A.T.Varkey, JM
This is an appeal preferred by the Assessee against the order of the CIT(A) – 12, Kolkata dated 06.03.2018 for Assessment Year 2011-12.
The main grievance of the assessee is against the action of the Ld. CIT(A) in confirming the addition of Rs. 9,84,864/- out of the total addition of Rs. 15,90,290/-.
The brief facts of the case is that the assessee is an individual and carries business of transport in his own name. He is also proprietor of M/s. Raj Trading Co. & M/s. Kamala Bhander. His income also consists of income from house property. The AO asked that the ld. AR of the assessee to furnish the valuation report from the Govt. registered valuer as well as segregation of cost of construction of the building of his house property located at Atghara, Rajarhat Road (Check Post), P.S. Rajarhat, near Tata Motor Workshop, Kolkata – 700136. Pursuant to the said direction of the AO, the assessee submitted the valuation made by the Govt. valuer who estimated year-wise investments in the construction of the said premises as under: Financial Year Assessment Year Amount 2007-08 2008-09 2244661.47 2008-09 2009-10 2321548.81 2009-10 2010-11 1475051.50 2010-11 2011-12 1590289.90 Total 76,31,551.68
Sanjeeb Kumar Singh AY- 2011-12 4. After taking note of the valuation report, the AO was of the opinion that the indexed cost of valuation report during the F.Y. 2010-11 that is A.Y. 2011-12 was found to be Rs. 15,90,290/-, so according to him the entire portion of the cost of construction need to be added back. So, he added back Rs. 15,90,290/-. Aggrieved the assessee preferred an appeal before the Ld. CIT(A) who was pleased to give partial relief to the assessee and gave a relief of Rs. 6,05,425/- to the assessee and confirmed Rs. 9,84,864/- against the assessee. Aggrieved the assessee is before us.
Having heard both the sides and after having perused the records it is noted that the assessee is an individual who carries out the business of transport and his income is also from house- property. According to the ld. AR, the appellant office premises was surveyed u/s 133A of the Act on 16.01.2013 and during the course of survey, the appellant disclosed an additional income of Rs. 10 lakhs which was stated to have been invested in house property. Therefore, the appellant was directed by the AO to verify the valuation report of his house property located at Atghara, Rajarhat Road (Check Post), P.S. Rajarhat, near Tata Motor Workshop, Kolkata – 700 136. The assessee complied with the aforesaid direction of the AO and the estimate prepared by the Govt. registered valuer, Dr. Shankar Bhattacharya was furnished to the AO and whose estimation year-wise break-up has been given (supra). After taking note of the estimation made by Dr. Shankar Bhattacharya, the AO was of the opinion that the amount of Rs. 15,90,290/- was the undisclosed cost of construction. To counter this opinion of AO, the learned AR drew our attention to the fact that the assessee had filed his return of income on 29.09.2011 showing total income of Rs. 11,08,800/-. According to the assessee during the course of assessment proceedings, it was submitted before the AO that the sum of Rs. 10 lakhs which was invested in the house property has been disclosed during survey on 16.01.2013 and have been duly added in the taxable income thereafter in the revised return thus reflected total taxable income after survey at Rs. 21,07,270/-. It was also brought to the notice of the AO that besides Rs. 10 lakhs disclosed during the course of survey, the assessee has income from business of grocery and transport. Besides that business, the appellant has also gets house rent amounting to Rs. 31,000/- every year. It was explained that Rs. 10 Lakhs appellant disclosed during survey operation has been invested in the house property and a sum of Rs. 5,14,850/- was invested out of current year’s income and old saving accumulated out of taxable income which is corroborated by a Sanjeeb Kumar Singh AY- 2011-12 perusal of balance sheet. The balance sheet as on 31.03.2013 was filed during the course of hearing before the AO and from a perusal of the balance sheet it is noted that the assessee has duly accounted for and explained the investment of Rs. 15,14,850/- as per Balance Sheet as on 31.03.2011 [Rs. 76,19,850 – Rs. 61,05,000/- balance as per Balance Sheet as on 31.03.2010] So when the registered valuer has estimated the expenditure incurred this year for construction of property at Rs. 15,90,289.90 and when the assessee has explained to have funds with him for spending a sum of Rs. 15,14,850/- resulting in difference of only Rs. 75,439.90/-. This difference was also explained by the assessee. In the previous years, A.Y. 2008-09, 2009-10 and 2010-11, the assessee has incurred more than what is estimated by the registered valuer. We note that for the house property as on 31.03.2011, the assessee had shown an investment of Rs. 76,19,850/- whereas as per the government recognized valuer it comes to total Rs. 76,31,551/- which included this year Rs. 15,90,290/-. So the difference comes down to Rs. 11,701/- (Rs. 76,31,551 - Rs. 76,19,850/-). So only the assessee has to explain Rs. 11,701/- for that we note that the cost of sand etc being transported for a subsidized cost because assessee is in the business of transportation. So this amount of Rs. 11,701/- can be thus explained. Further, we note that the Ld. CIT(A) has given the relief for the bills and vouchers submitted by the assessee amounting to Rs. 6,05,425/- and has confirmed the amount of Rs. 9,84,834/- for which no bills could be filed by the appellant. The expenditure to the tune of Rs. 9,04,424/- was explained by the assessee that it was incurred for wages & sand etc for which bills were not readily available. So considering the aforesaid facts and assessee able to reconcile the expenditure with the funds in hand and the difference of Rs. 11,701/- also stands reconciled as discussed supra. So, we do not countenance this approach of the Ld. CIT(A) when assessee explained the above facts. We note from the perusal of the balance sheet as on 31.03.2011 that the assessee had shown investment in the house property as under:
Accounting Year Assessment Year Investment in house property 2007-08 2008-09 22,86,598.00 2008-09 2009-10 23,59,791.00 2009-10 2010-11 14,58,611.00 2010-11 2011-12 15,14,850.00 Total investment in house property at Atghara, Check Post, Rajarhar, Kolkata Rs. 76,19,850/-
Sanjeeb Kumar Singh AY- 2011-12 6. The registered valuer Dr. Shankar Bhattacharya had estimated the value of the house property total upto assessment year 2011-12 at Rs. 76,31,551/-, so therefore, difference in expenditure is only of Rs. 11,701/- [Rs. 76,31,551/- - Rs. 76,19,850/-] only between the estimate made by the valuer and the actual expenditure made by the assessee in different four years. This meager amount of Rs. 11,701/-, the assessee has explained that being in the business of transport, he could get the material transported at comparatively cheaper rate. Therefore, we do find force in the contention of the learned AR in the light of facts as examined and find the version of assessee to be correct and assessee has been able to reconcile the expenditure, so the addition was not warranted and, therefore, we direct the deletion of Rs. 9,84,864/-.
Coming to the next ground No. 2 of appeal which is against the action of the Ld. CIT(A) in enhancing the rental income of Rs. 3,36,000/-. The assessee has also raised an alternate additional ground which is as follows:
3(a). Without prejudice to Ground No. 2, ld. CIT(a) ought to have granted the benefit of standard deduction @ 30% of the rental income as per section 24(a) against the enhanced rental income of Rs. 3,36,000/-.
The brief facts of the case is that during the appellate proceedings, the Ld. CIT(A) noted that the AO for A.Y. 2013-14 of order dated 09.03.2016 has added an amount of Rs. 3,36,000/- to assessee’s total income as income from house property. The Ld. CIT(A) noted that such income has not been shown by the assessee for A.Y. 2011-12, so he issued enhancement notice and thereafter not convinced with the reply of the assessee was pleased to make an enhancement of Rs. 3,36,000/- as income from house property. Aggrieved the assessee is before us.
I have heard both the sides and also perused the records. The learned AR submitted that during the survey on 16.01.2013, the department impounded a diary on 17th January (Paper Book Page 30) wherein it is seen that some scribbling are written against the name of Shri Amar and Shri Sonu. Based on that scribbling, the AO for A.Y. 2013-14 has calculated the rental income of the assessee at Rs. 3,26,000/-. It was brought to our notice that the assessee had purchased a plot in February, 2010 by a registered deed dated 16.02.2010 and according to the learned AR, the assessee did not get any parking fee from the property in this assessment year and since he started receiving parking fee from the Shri Amar and Shri
Sanjeeb Kumar Singh AY- 2011-12 Sonu, the amount was added in the A.Y. 2013-14. We do not agree with the ld. AR of the assessee, since on a close scrutiny of the impounded papers placed at page 30 of the Paper Book, we note that there is a scribbling of the date as on 21.03.2011 against Shri Sonu for an amount of Rs. 35,000/- and in respect of Shri Amar at Rs. 20,000/- and for March, 2011 another Rs. 10,000/-. Thus the total sum comes to Rs. 65,000/- for March, 2011 from these two parties.Further, from the perusal of the impounded document and on the strength of sums/amount recorded therein from Shri Sonu and Shri Amar from which the Assessing Officer has made the addition on rental income from house property from A.Y. 2013-14. Thus taking into consideration that assessee received rent of Rs. 65,000/- in the year, I confirm the addition of Rs. 65,000/- and direct the deletion of the balance of the additions made by ld. CIT(A). Needless to say that the standard deduction as per law should be given to the confirmed amount of rent in accordance to law.
In the result, the appeal of the assessee is partly allowed.
Order is pronounced in the open court on 13th March, 2019