Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’ NEW DELHI
Before: SHRI B.P. JAIN
सुनवाई क� तार�ख/Date of Hearing : 25/04/2017 घोषणा क� तार�ख /Date of Pronouncement: 25/04/2017 ORDER This appeal of the assessee arises from the order of learned CIT(A)-X, New Delhi, vide order dated 20.04.2015 for the assessment year 2012-13. The assessee has raised the following grounds of appeal as under: (i) That the order confirmed by the worthy commissioner of Income tax is bad in law and facts, and is arbitrary. (ii) That the worthy commissioner of Income Tax (Appeals) has erred in confirming the disallowance of Rs.507569/- being 15% of Rs.3383793/- of cost of construction expenses debited to Profit & loss account on adhoc basis thereby increasing the business income. (iii) That the worthy commissioner of Income Tax (Appeals) has also erred in confirming the Long Term Capital Gain at Rs. 6265209/- against 5319970/- declared by the assessee. (iv) That the worthy commissioner of Income Tax (Appeals) has also erred in confirming the disallowance of Rs. 945239/- (6265209-5319970) spent by the assessee for construction of property on adhoc basis. (v) The appellant craves leave to amend or add further grounds of appeal for the cause of justice as may be considered necessary before or during the course of hearing.”
The brief facts of the case as are emanating from the order of the Assessing Officer are reproduced hereinbelow:
The assessee is in business of construction & sale of flats. During the course of assessment proceedings CA & AR of the assesssee vide show cause notice dated 16.02.2015 and 03.03.2015 was asked to produce Bills/Vouchers and explain the source of cost of construction amounting to Rs.33,83,793/- debited to profit and loss account and cost of construction & expenses amounting to Rs.63,01,593/- claimed as deduction as cost of improvement under the head Long term Capital gain. On 19.02.2015 the husband of the assessee Shri Gautam aggarwal alongwith the Shri Prashant Khandelwal C.A. & A.R. of the assessee attended the assessment proceedings and filed the reply in respect cost of construction amounting to Rs.33,83,793/- debited to profit and loss account stating that the copy of few bills which are in possession of the assessee are being filed herewith. The major bills related to fitting and fixtures of respective flats were given to buyers for their record and future maintenance, therefore, are not in possession of the assessee and bills of Rs. 24,48,031/- are hereby attached. On examining the bills submitted by the assessee it is found that only four Bills amounting to Rs.II,79,295/- pertains to F.Y.2011-12 and these are further not supported by any ledger accounts and confirmations from related parties. In the absence of documentary evidences genuineness of expenses and source of payment cannot be established. Further regarding cost of construction & expenses amounting to Rs.63,01,593/- claimcd towards cost of improvement of the property for computing Long term Capital Gain, it is submitted by the assessee that the she is the owner of property situated at Block-B .Rarnprastha at Ghaziabad, U.P. since long and invested an amount of Rs.6301593/- in the renovation and extension between 2009 and 2012. In support of the said renovation, extension and construction. She has filed the valuation report dated 05.02.2012 taken from engineer mentioning valuation amount as Rs.65,93,000/- and has in capital gain of Rs.53,19,970/- in purchase of another residential house situated at Block-E, sector-Alpha Noida for Rs.5371,100/- and the deduction of the same was claimed u/s 54. She has filed a diary reflecting all the expenditure made alongwith few bills. the total amount of bills herewith is Rs.22,48,482/-. On examining the bills submitted by the assessee it is found that even Bills amounting on Rs.22,48,482/- are not supported by any ledger accounts and confirmations from related parties. Therefore, the case was adjourned to 26.02.2015 for final hearing to submit the complete details. On 26.02.2015 neither anybody attended nor filed any details. Therefore, again on 03.03.2015 show cause notice issued fixing the case for 09.03.2015. On 05.03.2015 the counsel the assessee appeared and filed a letter enclosing Sale/Construction account of Shalimar property & Ramaprastha property related to business and capital gain respectively. But these details are not supported by any documentary evidences i.e. confirmations from concerned parties, copy of ledger accounts, source mode or payments and source of Investment etc. Accordingly the counsel of the assessee asked to produce books of accounts and the case was adjourned to 10.03.2015. On 10.03.2015 no body attended the office. Therfore summon u/s 131 was issued to the assessee to attend the office on 18.03.2015. On 18.03.2015 Shri Prashant Khandelwal CA. and A.R. of the assessee attended and submitted that we have already submiited our all written submissions. In view of the above facts it is clear that the assessee is not maintaining any books of account and even does not have Bills/vouchers, supporting documents to explain source/mode of payments and source of Investment in the property. Therefore, looking in to the nature of business of the assessee a sum of Rs.5,07,569/- being 15% of Rs.33,83,793/- cost of construction expenses debited to profit & loss account is disallowed and further sum of Rs.9,45,239/- being 15% of Rs.63,01,593/- claimed as cost of improvement under the head Long term capital gains is disallowed and added to the income of the assessee on adhoc basis.”
Learned CIT(A) confirmed the action of the Assessing Officer.
I have heard the rival contentions and perused the facts of the case. It was argued by learned DR that assessee has not produced the books of account, and therefore, the Assessing Officer has rightly made the estimations, whereas the learned AR argued and pointed out at page 3 of the submission made before the learned CIT(A) that before the Assessing Officer he has submitted the following:
1. 1. Substantail bill for construction house. 2. Sources of flow of fund statement. 3. Valuation report of property confirming construction cost.
4. Assessing Officer has personally verified both the houses to ascertain the cost of construction and also verified the fact of sale from the current owners of the properties.
5.1 No defect has been pointed out in the valuation report submitted by the assessee by either of the authorities below. No authorities below have referred the matter to DVO and no books of account has been rejected. At the outset sale consideration has been accepted is not under dispute. Under such circumstances having produced all the evidences fund flow statement and valuation report and Assessing Officer personally verified the houses, there are no basis to even reject the books of account which in the present case has not been rejected and in such circumstances no estimations can be made and no addition can be made. Moreover, the difference between the declared value and assessed value is less than 15% and therefore in view of the decision of Hon’ble Supreme Court in the case of CB Gautam vs. Union of India reported in 191 ITR 530 (SC). The difference being less than 15%, the same can be ignored also. In such circumstances and facts of the present case, no addition is called for and additions so made is directed to be deleted and the order of the ld. CIT(A) is reversed. Thus, all the grounds of the assessee are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on this day 27th April, 2017