Income Tax Appellate Tribunal - Chandigarh
Thakur Singh (Huf) vs Ito on 22 March, 2002
Equivalent citations: (2004)89TTJ(CHD)478
ORDER
DK Singh, J.M. With this common order we propose to dispose of all these appeals together for the sake of convenience because the facts in all these cases are almost identical except variation in figures and further because the effective issue required to be resolved by this Bench is also identical.
2. Firstly we would like to briefly state the facts relating to ITA No. 173/Chd/1995 filed by the assessee and ITA No. 245/Chd/1995 filed by the revenue arising out of the order of Commissioner (Appeals) in Appeal No. 420/IT/1993-94, dated 24-10-1994. Originally the assessee in his appeal has taken five grounds. Ground No. 3 was revised with the permission of the Bench which reads as under:
"3. The learned CIT erred in having sustained an addition of Rs. 60,747 out of addition made by the assessing officer amounting to Rs. 2,69,422 without any convincing reasons and that also only in one year."
The other remaining grounds Nos. 1, 2, 4 and 5 have not been pressed by the learned authorised representative for the assessee and the same are dismissed as not pressed.
Whereas in ITA No. 245/Chd/1995, the revenue has taken the following effective grounds:
"1. On the facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in allowing relief of Rs. 2,08,675 out of addition of Rs. 2,69,422 made on account of unexplained investment in the construction of house."
2. The learned Commissioner (Appeals) was not justified in giving benefit of intangible additions from the assessment years 1974-75 to 1992-93 especially when the assessee had not taken this stand before the assessing officer and he has not led any evidence to the effect that the amount was in fact available with him. "
"3. The learned Commissioner (Appeals) has further erred in not directing the assessing officer to initiate penalty proceedings under section 271(1)(c) of IT Act with Expln. 2 thereto."
"4. The learned Commissioner (Appeals) has erred in law and on the facts in giving credit for the sum of Rs. 50,000 debited in the capital account of Smt. Krishna w/o Shri Thakur Singh on 7-3-1992, towards the construction of house especially when the house was completed on 31-3-1992. The order of learned Commissioner (Appeals) is perverse to the facts of the case."
2.1 In this case the assessee, Shri Thakur Singh (HUF) has shown investment in the property at Rs. 2,99,000 whereas the same was estimated by the valuation officer (VO) at Rs. 5,48,422 and since, according to the assessing officer, the difference in the investment was not explained by the assessee, so, he made the addition of Rs. 2,69,422. On appeal the Commissioner (Appeals) giving benefit of Rs. 50,000 being withdrawal by the wife of the assessee and assessee's share of Rs. 1, 12,704 in the firm M/s Tirath Singh Parkash Singh & Co. and further share in the firm Tirath Singh Parkash Singh & Co. Rs. 25,505 being available to the assessee for investment and also allowing as rebate of 10 per cent for self-supervision against 7.5 per cent allowed by the assessing officer, susained the addition to the extent of Rs. 60,747 against Rs. 2,69,422 made by the assessing officer. Now against the addition, sustained by the Commissioner (Appeals) and relief of Rs. 2,08,675 allowed by the Commissioner (Appeals) to the assessee, both the parties are in appeal before us.
3. Now we would briefly state the facts relating to ITA No. 172/Chd/1995 filed by the assessee and ITA No. 243/Chd/1995 filed by the revenue arising out of the order of Commissioner (Appeals) in Appeal No. 421/IT/1993-94 dated 24-10-1994. Originally the assessee in his appeal has taken five grounds. Ground No. 3 was revised with the permission of the Bench which reads as under:
"3. The learned CIT erred in having sustained an addition of Rs. 74,038 out of addition made by the assessing officer amounting to Rs. 2,45,094 without any convincing reasons and that also only in one year."
The other remaining grounds Nos. 1, 2, 4 and 5 have not been pressed by the learned authorised representative for the assessee and the same are dismissed as not pressed.
Whereas in ITA No. 243/Chd/1995, the revenue has taken the following effective grounds:
"1. On the facts and in the circumstances of the case; the learned Commissioner (Appeals) has erred in allowing relief of Rs. 1,71,056 out of addition of Rs. 2,45,094 made on account of unexplained investment in the construction of house."
"2. The learned Commissioner (Appeals) was not justified in giving benefit of the intangible additions made from the assessment years 1974-75 to 1992-93 especially when the assessee had not taken this stand before the assessing officer and he has not been able to lead any evidence to the effect that the amount was in fact available with him."
"3. The learned Commissioner (Appeals) has further erred in not directing the assessing officer to initiate penalty proceedings under section 271(1)(c) of Income Tax Act read with ExpIn. 2 thereof."
"4. The learned Commissioner (Appeals) has erred in law and on facts in giving credit for the sum of Rs. 50,000 debited in the capital account of Smt. Pritam Kaur w/o Shri Parkash Singh on 7-4-1992, towards the construction of house especially when the house was completed on 31-3-1992. The order of Commissioner (Appeals) is perverse to the facts of the case. "
3.1 In this case, assessee Shri Parkash. Singh (HUF) has shown investment in the property at Rs. 2,99,000 whereas the same was estimated by the VO at Rs. 5,44,094 and since, according to the assessing officer, the difference in the investment remained unexplained by the assessee, so, he made the addition of Rs. 2,45,094. On appeal the Commissioner (Appeals) giving benefit of Rs. 50,000 being withdrawal by the wife of the assessee and assessee's share of Rs. 1,12,704 in the firm and also allowing as rebate on account of self-supervision at 10 per cent against 7.5 per cent allowed by the assessing officer, sustained the addition to the extent of Rs. 74,038 against Rs. 2,45,094 made by the assessing officer. Now against the addition, sustained by the Commissioner (Appeals) and relief of Rs. 1,71,056 allowed by the Commissioner (Appeals) to the assessee, both the parties are in appeal before us.
4. In the last briefly stated the facts for ITA No, 356/Chd/1995 filed by the assessee and ITA No. 666/Chd/1995 filed by the revenue arising out of the order of Commissioner (Appeals) in Appeal No. 210/IT/Commissioner (Appeals)/Ldh/1994-95 dated 20-1-1995, are that originally the assessee in his appeal has taken five grounds. Ground No. 2 was revised with the permission of the Bench which reads as under:
"2. The learned Commissioner erred in having sustained an addition of Rs. 73,224 out of the addition made by the assessing officer amounting to Rs. 2,82,115 without any convincing reasons and that also only in one year."
The other remaining grounds Nos. 1, 3, 4, 5 have not been pressed by the learned authorised representative for the assessee and the same are dismissed as not pressed.
Whereas in ITA No. 666/Chd/1995, the revenue has taken the following effective grounds :
"1. On the facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in allowing relief of Rs. 2,08,891 on account of addition of unexplained investment in the construction of property. The addition was made on the basis of report of the AVO. "
"2. The learned Commissioner (Appeals) has further erred in ignoring Explanation 2 to section 271(1)(c) and not directing the assessing officer to initiate penalty proceedings under that section while allowing credit as such."
"I The learned Commissioner (Appeals) has further erred in allowing credit for intangible additions made from 1974-75 to 1992-93 as money spent for the investment in house property."
"4. The learned Commissioner (Appeals) has also erred in allowing credit for the sum of Rs. 50,000 debited in the capital account of wife of Shri Santokh Singh on 7-4-1992 towards construction of the house especially when the house was completed on 31-3- 1992. The order of the learned Commissioner (Appeals) is perverse both in law and on facts."
4.1 In this case, assessee Shri Santokh Singh (HUF) has shown investment in the property at Rs. 2,99,000 whereas the same was estimated by the AVO at Rs. 5,76,000 and since, according to the assessing officer the difference in the investment was not explained by the assessee, so, he made an addition of Rs. 2,77,000. On appeal before the Commissioner (Appeals), the Commissioner (Appeals) giving benefit of Rs. 50,000 being withdrawal by the wife and assessee's share of Rs. 1,12,704 in the firm M/s Tirath Singh Parkash Singh and further share in the firm Tirath Singh and Parkash Singh & Co. 25,505 being available to the assessee for investment and also allowing a rebate of 10 per cent for self-supervision against 7.5 per cent allowed by the assessing officer, sustained the addition to the extent of Rs. 73,224 against Rs. 2,77,000 made by the assessing officer. Now against this addition, sustained by the Commissioner (Appeals) and relief of Rs. 2,08,891 allowed by the Commissioner (Appeals) to the assessee, both the parties are in appeal before us.
5. In all these cases, the main contention of the learned authorised representative for the assessee before us, is that in all these cases the cestruction of house property for which the additions have been made by the assessing officer, and reduced by the Commissioner (Appeals), pertained to 1-4-1988 to 31-3-1992 and this fact along with detailed investment in construction during relevant assessment years 1989-90 to 1992-93 were given to the assessing officer and the same also finds mentioned in the order of valuation officer because he has estimated the cost of construction separately during the assessment years 1989-90 to 1992-93 so the tax authorities below were not justified in making entire addition for the difference in the cost of construction in the assessment year 1992-93 and so, the same was liable to be deleted. In support of his contention he has placed reliance on the order of this Bench, dated 12-1-2001, in the case of Shri Ram Singh Rana v. Income Tax Officer in ITA No. 659/Chd/1994, assessment year 1988-89, wherein in para 12, the Tribunal held as under:
"In this case, from the order of Commissioner (Appeals) it appears that the assessee has supplied information in respect of cost of construction incurred by him from assessment years 1981-82 to 1988-89 under consideration, so, the addition sustained by the Commissioner (Appeals) only for assessment year 1988-89 for the entire cost of construction was not justified and liable to be deleted on this account, as has been held by the Tribunal, Chandigarh Bench in the case of Mithai Lal Panwala v. ITO vide para 6 of the order cited supra."
Learned authorised representative further contended that section 69 of Income Tax Act, which reads as under:
"69 Unexplained Investments-Where in the financial year immediately preceding the assessment year the assessee has made investment which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the assessing officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year."
makes it clear that if the investment has been made by the assessee in the previous year i.e. in the financial year relevant to assessment year under question and that investment remains unexplained only then the addition can be made by the assessing officer in the assessment year under question. It further means that for other previous years, i.e., the investment made earlier to accounting year under consideration, no addition under section 69 can be made in the assessment year under consideration (sic) the unexplained investments by the assessee. In these cases, since it is not in dispute that the assessee has incurred the expenditure on construction in different assessment years, i.e., from 1989-90 to 1992-93, so, the difference in the total cost of construction, estimated by the Valuation Officer and given by the assessee cannot be added only in the year under consideration i.e. in assessment year 1992-93 but the same could have been spread over by the assessing officer in this case during assessment years 1989-90 to 199293. Thus, he contended that as the assessing officer has failed to establish that the difference in the entire cost of construction shown by the assessee and estimated by the Valuation Officer was incurred by the assessee only in the assessment year 1992-93, so, the addition for the impugned amount could not have been made under section 69 in assessment year 1992-93. Learned departmental Representative for the revenue did not succeed in controvering the factual position narrated by the learned authorised representative for the assessee in his submissions nor he was able to give any citation in which contrary view has been taken by the Tribunal or by the High Court to the view taken by the Tribunal Bench, Chandigarh, in the case cited (supra) by the learned authorised representative. He was also not able to repell the submission of 'learned authorised representative for the assessee that as per the provisions of section 69, only unexplained investment can be added in the year under consideration for which the investment was made by the assessee in the previous year.
6. On considering these submissions of both the parties, perusing the records and carefully going through the orders of tax authorities below, we find force in the submissions of learned authorised representative for the assessee. In these cases, it is not in dispute that the cost of construction was incurred by the assessee from assessment years 1989-90 to 1992-93 for which separate bifurcations were given by the assessee to the assessing officer and same find recorded even in the order of the Valuation Officer because he has also estimated the cost of construction in each and every relevant assessment year separately. However, the addition considered in the year under consideration, has been considered after taking into consideration the total cost of construction given by the assessee and estimated by the Valuation Officer and the difference of the same has been straightaway added only in the assessment year 1992-93. Following the decision of Tribunal, Chandigarh Bench (supra) relied upon by the learned authorised representative for the assessee, it is clear that the tax authorities below, were not justified in making the addition/allowing relief to the assessee only in assessment year 1992-93 when admittedly the period of construction was spread over from assessment years 1989-90 to 1992-93. On this reason alone, the additions made by the assessing officer and sustained by the Commissioner (Appeals), are liable to be deleted because in view of the decision of Tribunal, Chandigarh Bench in such facts and circumstances, no addition could be made by the tax authorities below. We are further of the opinion that in these cases, the tax authorities below have not been able to establish that the additions made/sustained by the tax authorities below, are on account of unexplained investments in the case of construction by the assessee relating to previous year relevant to assessment year 1992-93, so, no addition can be made/sustained under section 69 of Income Tax Act.
7. For the reasons stated above, ground of appeal taken by the assessee's in each of their appeals, is allowed whereas grounds of all the appeals filed by the revenue, are rejected.
8. In the result, ITA Nos. 173, 172 & 356/Chd/1995 filed by the assessee are allowed in part whereas ITA Nos. 245, 243 & 666/Chd/1995 filed by the revenue are dismissed.