ITO, BANGALORE vs. MAHESH G. SHETTY, BANGALORE

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ITA 1498/BANG/2014Status: DisposedITAT Bangalore17 June 2016AY 2008-095 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found the CIT(A)'s order to be cryptic and lacking reasoning. Therefore, the matter was set aside and restored to the CIT(A) for a fresh, speaking, and reasoned decision.

What were the facts?

The Assessing Officer (AO) found an unexplained investment of Rs. 87,83,617 in construction costs. The CIT(A) restricted the disallowance to 50% of this amount, giving credit for personal supervision and state PWD rates.

What were the issues?

Whether the CIT(A) erred in restricting the disallowance without proper reasoning and whether the matter should be remanded for a fresh decision.

Which sections of the Income-tax Act were involved?

Section 69,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCH ‘B’, BANGALORE

Before: SHRI A. K. GARODIA & SHRI VIJAY PAL RAO

For Appellant: Shri S.V.Ravi Shankar, Advocate
For Respondent: Dr. Shankar Prasad, JCIT, Shri S.V.Ravi Shankar, Advocate

This is assessee’s appeal directed against the order of the ld.

CIT(A)-II, Bangalore dated 21-08-2014 for the assessment year 2008- 09.

2.

In this appeal, the Revenue has raised the following grounds;

“1. The order of the ld.CIT(A) is opposed to law and facts of the case.

2. On the facts and circumstances of the case, the ld. CIT(A) erred in law in directing the AO to restrict the disallowance to 50% of the amount of undisclosed investment after giving credit for a personal supervision and adoption of State PWD rates without appreciating the fact that the assessee himself had arrived at the cost of construction as Rs.257.82 lakhs and the submission before the ld.CIT(A) is only an afterthought and the same is not supported by any evidence too, as admitted by the CIT(A).

3. For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT(A) in so far as it relates to the above grounds may be reversed and hat of the AO may be restored.

4. The appellant craves leave to add, alter, amend and/or delete any of the grounds mentioned above”.

3.

It was submitted by the ld. DR of the revenue that the order of the ld. CIT(A) is very cryptic and therefore, his order should be reversed and that of the AO be restored and alternatively, the matter may be sent back to the file of the ld. CIT(A) for a fresh decision by way of a speaking order.

4.

The ld. AR of the assessee supported the orders of the ld.CIT(A).

5.

We have considered the rival submissions. We find that it is noted by the AO on page no.2 of the assessment order that total cost of the construction at Rs.2,57,82,000/- out of which the assessee could explain the source of investment of Rs.1,69,98,383/- only and for the remaining amount of Rs.87,83,617/-, the assessee could not explain the source of investment. This issue has been decided by the ld. CIT(A) as

per para-4.4 at page 11 of her order wherein it was held that she is restricting the disallowance to 50% after giving credit for the personal supervision and adoption of State PWD rates in estimating the cost of construction. At para 4.3 she stated that there is merit in the assessee’s submission, regarding credit for personal supervision of the construction at 15% and 15% benefit by considering State PWD rates as against CPWD rates. Hence, it is seen that even the claim of the assessee was restricted to the extent of 30%, whereas ld. CIT(A) has granted relief of 50% and that too without giving any reasoning and therefore, we feel it proper that this matter should go back to the file of the ld. CIT(A) for a fresh decision by way of a speaking order. Hence, we set aside the order of the ld. CIT(A) and restore the matter back to his file for a fair decision by way of a speaking and reasoned order after providing adequate opportunity of being heard to both sides.

6.

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

Order pronounced in the open court on the date mentioned on the caption page.

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