Income Tax Appellate Tribunal - Jaipur
Mohan Lal Khandelwal, Jaipur vs Assessee on 11 August, 2015
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,
JAIPUR
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BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM
vk;dj vihy la-@ITA No. 330/JP/2013
fu/kZkj.k o"kZ@Assessment Year : 2008-09
Mohan Lal Khandelwal, cuke Assistant Commissioner of
Prop.- M/s S.R. Tours & Vs. Income Tax,
Travels, A-21, Rana Pratap Central Circle-1, Jaipur.
Nagar, Jhotwara, Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AGZPK 3084 D
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@ Assessee by : K.L. Moolchandani (Adv) &
Shri R.K. Khuteta (CA)
jktLo dh vksj ls@ Revenue by : Shri Dilip Sharma (JCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 16/07/2015
mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 11/08/2015
vkns'k@ ORDER
PER: T.R. MEENA, A.M. This is an appeal filed by the assessee arises against the order dated 04/02/2013 passed by the learned C.I.T.(A) Central, Jaipur for the A.Y. 2008-09. The respective grounds of appeals are as under:-
2 ITA 330/JP/2013_ Mohanlal Khandelwal Vs. ACIT "1 On the facts and in the circumstances of the case the ld CIT has factually and legally erred in rejecting the request of the appellant for admitting additional evidence under Rule 46A of Income Tax Rules, 1962 on flimsy grounds. The additional evidence may kindly be admitted in the interest of equity and natural justice.
2. On the facts and in the circumstances of the case the authorities below have factually and legally erred in making and confirming the addition of Rs. 11,893/- on account of 1/3rd disallowance out of the taxi running expenses of Rs. 37,540/- without appreciating the facts of the case in right perspective. The addition so made and confirmed deserves to be deleted.
3. On the facts and in the circumstances of the case the authorities below have factually and legally erred in making and confirming addition of Rs. 14,99,000/- under Section 69B of the Act on account of the alleged undisclosed investment in the alleged purchase of plot No. 168, Shyampuri, Kalwad Road, Jaipur without appreciating the facts of the case in right perspective.
The so made and confirmed deserves to be deleted."
2. Ground Nos. 1 and 3 of the assessee's appeal are against confirming the addition of Rs. 14,99,000/- U/s 69B of the Income Tax Act, 1961 (in short the Act). The ld Assessing Officer observed that the assessee is having income from house property, business and other sources. He further observed that a search and seizure operation was carried out U/s 132(1) of the Act on 16/11/2007 at the business and 3 ITA 330/JP/2013_ Mohanlal Khandelwal Vs. ACIT residential premises of the assessee. During the course of search and seizure operation, documents/loose papers were found and seized. The assessee filed return for income on 20/01/2009 declaring income of Rs. 2,18,600/-, which inter alia included income from house property showing rental income from house No. A-2, Rana Pratap Nagar, Jaipur, income from business/job work of furniture, income from S.R. Tour & Travels as in last year's, income from other sources and income from interest on bank deposits. The ld Assessing Officer issued detailed questionnaire to the assessee in 04/2/2009. During the course of assessment proceedings, it was noticed by the Assessing Officer that the assessee had paid only amounting Rs. 1,01,000/- (in cash) on 24/04/2007 for purchase of plot 168, Shyampuri, Kalwad Road, Jaipur from Shri Murlidhar Purohit while sale consideration of Rs. 16,00,000/- . The assessee was asked to file confirmation and also produced Shri Murlidhar Purohit for verification and genuineness of this transaction. The assessee had failed to file confirmation and it was not possible to purchase this property by just giving amount of Rs. 1,01,000/- only and seller had not demanded balance of Rs. 14,99,000/- till date and the property had been shown stock of the assessee. In absence of any corroboration from the assessee, the balance amount of Rs.
4 ITA 330/JP/2013_ Mohanlal Khandelwal Vs. ACIT 14,99,000/- was treated paid outside the undisclosed income of the assessee. Therefore, he made addition of Rs. 14,99,000/- U/s 68B of the Act.
3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had confirmed the addition by observing that the main issue was revolving on the agreement dated 24/4/2007, therefore, he reproduced relevant paras of the sale agreement dated 24/4/2007 on page 14 of his order and held that on the basis of this agreement, plot was purchased for Rs. 16 lacs from Shri Murlidhar Purohit by the appellant and out of a total sale consideration of Rs. 16 lacs, payment of Rs. 1,01,000/- was made on the same date i.e. on 24/4/2007. The remaining amount of sale consideration was to be paid by the appellant within 15 days to the seller party. The above terms and conditions definitely indicated that for all practical purposes, such plot has been purchased and payment of subsequent remaining amount of Rs. 14,99,000/- and execution of sale deed was only after procedural requirement. The main point to be noted is that the document dated 24/4/2007 not only an agreement to sell but defacto document of sale as it specifically mentioned that the 5 ITA 330/JP/2013_ Mohanlal Khandelwal Vs. ACIT property is sold. There is no evidence with the assessee that subsequently this agreement to sell was cancelled without cancellation of this sale agreement no sale deed could have been executed, in fact the appellant was competent to execute sale deed at his own. Further it is also noted that after purchase of plot the appellant had shown this property in the books of account i.e. P&L account as closing stock and purchase consideration of Rs. 16 lacs is also shown. The vital question is that if the appellant was not having complete interest in such property how the property can be shown in the books of account as closing stock. The ld CIT(A) also reproduced P&L account submitted by the assessee during the assessment proceedings and concluded that plot No. 168 Shyampuri has been disclosed in closing stock at Rs. 16 lacs. Whereas the same amount is shown in the purchase account in debit side. The P&L account so furnished is sent by the appellant himself. The said documents furnished by the appellant during the assessment proceedings further proved that the plot was defacto purchase and only possible inference was accordingly that the remaining payment of Rs. 14,99,000/- was made in unaccounted manner. The revenue has discharged his burden of prove on the basis of material available on record including surrounding circumstances of 6 ITA 330/JP/2013_ Mohanlal Khandelwal Vs. ACIT human conduct and preponderance of probabilities. He relied on the following case laws:-
i) Indian and Eastern News Paper Society Vs. CIT (1979) 119 ITR 996 (SC).
ii) Dhakeshwari Cotton Mills Ltd. Vs. CIT (1954) 26 ITR 775 (SC).
iii) Chuharmal Vs. CIT (1988) 172 ITR 250 (SC)
iv) Dinssaw Barabshaw Shroff Vs CIT (1943) 11 ITR 172 (Bombay).
The essence of above mentioned judgments was that the proceedings for assessment for the Assessing Officer under the IT Act are of quasi judicial nature in character and admissibility of documents, evidence or material differs mainly in IT proceedings vis a vis Tribunal proceedings. Subsequently, this property was purchased by the third party. There was a clause in the agreement to sell dated 24/4/2007 that the second party i.e. the appellant could have got the sale deed executed in favour of any other party and in view of such specific provisions, there can be strong belief that subsequent registration of the plot in the name of any third party by the seller may have been at the instance of the appellant himself. During the appellate proceedings, the appellant filed affidavit from Shri Murlidhar Purohit dated 2/5/2011 wherein it has been mentioned that plot NO. 168, Shyampuri was still in possession of 7 ITA 330/JP/2013_ Mohanlal Khandelwal Vs. ACIT Shri Murlidhar Purohit i.e. the seller party. The affidavit is signed by the notary public. However, as per subsequent sale deed dated 20/10/2008, the plot is shown to have been sold to Shri Ramesh Sharma, it is indicated that as on date of signing of such affidavit dated 2/05/2011. The said plot was not in the possession of Shri Murlidhar Purohit inasmuch as vide sale deed dated 20/10/2008, it has already been sold to Shri Ramesh Sharma, therefore, the contents of the affidavit filed by Shri Murlidhar Purohit were definitely false and incorrect. Keeping in view of the above fact and particularly such corroboration and circumstantial evidence as discussed above, it is believed that the appellant has made such undisclosed investment/payment of Rs. 14,99,000/- in purchase of this plot and therefore the addition was rightly made by the Assessing Officer. Accordingly, he confirmed the addition.
4. Now the assessee in appeal before us. The ld AR of the assessee has submitted that the appellant belongs to the group cases of Shri Shankarlal Khandelwal of Jaipur where search operations were carried out on 16/11/2007 and 17/11/2007. In assessment, the ld Assessing Officer made addition of Rs. 1,01,000/- U/s 40A(3) of the Act for 8 ITA 330/JP/2013_ Mohanlal Khandelwal Vs. ACIT making cash payment towards the purchase of plot and Rs. 14,99,000/- U/s 68B of the Act for alleged undisclosed investing in the purchase of plot No. 168 Shyampuri Kalwad Road, Jaipur. The addition made U/s 40A(3) of the Act at Rs. 1,01,000/- was deleted by the ld CIT(A) whereas remaining addition of Rs. 11,893/- i.e. 1/3rd disallowance of expenses and Rs. 14,99,000/- U/s 69B was confirmed by the ld CIT(A). The assessee filed the additional evidence under Rule 46A of the Income Tax Rules, 1962 (in short the Rules), which has been ignored by the ld CIT(A) on the basis of additional evidence not permissible under Rule 46A of the Rules. The ld CIT(A) has not admitted the additional evidence on the ground that these evidences should have been produced before the Assessing Officer and also Shri Murlidhar Purohit was not produced before the Assessing Officer at the time of assessment proceedings. The assessee's case prima facie is not covered under Rule 46A, therefore, he did not take any cognizance of an affidavit filed. He further submitted that immediately after executing the agreement to sale deed in respect of said plot i.e. 168 Shyampuri Kalwad Road, Jaipur on 24/4/2007, a feud had erupted between the seller Shri Murlidhar Purohit and the appellant. The agreement to sell made on 24/4/2007 could not be materialized instead of selling the plot 9 ITA 330/JP/2013_ Mohanlal Khandelwal Vs. ACIT to the appellant. The seller had sold the plot directly to a third party Shri Ramesh Sharma of Merta City on 20/10/2008 for forfeiting Rs. 1,01,000/- paid by the appellant as advance to the seller. At the time of assessment proceedings in 2009, the appellant was not on talking terms with the seller due to feud over non-return of the advance money of Rs. 1,01,000/-. The advance money has not been paid back till date. However, at the time of appeal proceedings in 2011, the appellant had pursued the seller through a middleman to give an affidavit to this effect after great persuasion. After the lapse of one and half years, the appeal proceedings were resumed in November, 2012. Meanwhile the seller had expired leaving behind nobody. The appellant filed copy of sale deed dated 20/10/2008 before the ld CIT(A) which supports the assessee's claim that sale deed had directly made sale to this plot to Shri Ramesh Sharma for Rs. 8 lacs only. Therefore, the ld CIT(A)'s finding on additional evidence is devoid of merit and deserves to be quashed.
5. At the outset, the ld DR has vehemently supported the order of the ld CIT(A) and argued that the assessee was not able to produce Shri Murlidhar Purohit before the Assessing Officer to verify the fact.
10 ITA 330/JP/2013_ Mohanlal Khandelwal Vs. ACIT Further affidavit also contradictory wherein the seller admitted on 02/5/2011 that till this date the said plot was in possession of seller whereas the seller vide registered deed dated 20/10/2008 had sold to the third party. Therefore, order of the ld CIT(A) may please be confirmed.
6. We have heard the rival contentions of both the parties and perused the material available on the record. Whatever evidence narrated by the Assessing Officer and CIT(A) shows that the assessee had purchased plot No. 168 Shyampuri Kalwad Road, Jaipur at Rs. 16 lacs. The assessee had shown only Rs. 1,01,000/- paid on date of agreement i.e. on 24/4/2007 but the remaining amount of Rs. 14,99,000/- was paid from undisclosed source. The assessee's explanation is after thought when he has disclosed this plot in purchase as well as closing stock in P&L account and balance sheet submitted before the CIT(A) during the appeal proceedings. The affidavit filed by the appellant has partly considered by the ld CIT(A), which also goes against the fact of the case that Shri Murlidhar Purohit filed affidavit on 02/5/2011 and admitted the possession of plot with him. However, the registered deed with the third party was dated 11 ITA 330/JP/2013_ Mohanlal Khandelwal Vs. ACIT 20/10/2008, which is contradictory the fact of affidavit. We have considered view that this issue required further investigation from the side of seller of plot, from Shri Ramesh Sharma purchaser of plot, actual possession of plot etc. The Assessing Officer is directed to take final decision on the basis of enquiry and evidences. Accordingly, this ground of appeal is set aside for de novo. The Assessing Officer is directed to give sufficient time to the assessee before deciding this issue.
7. The 2nd ground of appeal is against confirming the addition of Rs. 11,893/- on account of 1/3rd disallowance out of taxi running expenses of Rs. 37,540/-. The ld Assessing Officer observed that the assessee had never disclosed any income from the taxi business. During the search, the assessee was confronted with incriminating documents seized and he admitted carrying on this business. These accounts had been complied on by after the search was conducted. Further no purchase bills had been produced of vehicles purchased and claimed used by the assessee in this year. The assessee had not produced bills/vouchers in respect of direct petrol expenses as well as repair and maintenance of vehicle expenses claimed. There is also no 12 ITA 330/JP/2013_ Mohanlal Khandelwal Vs. ACIT evidence to prove that the vehicle claimed to be running on hire as a taxi was actually in the business as no details like rate per km, total kilometer area covered and log book etc. in absence of which the declared profit was not acceptable. The assessee had claimed travelling expenses at Rs. 35,680/- for which no details had been filed nor any vouchers produced for verification and hence these expenses were not verifiable. The personal element of expenses under this head cannot be ruled out. Therefore, 1/3rd expenses at Rs. 11,983/- was disallowed by the ld Assessing Officer.
8. In first appeal, the ld CIT(A) was confirmed the addition by observing as under:-
"I have carefully considered the submissions of the appellant as also the findings of the A.O.. It may be noted that admittedly the appellant has not shown any such income from tours and travels before the search and such income has been shown only in returns filed in response to search action. The assessee has shown gross receipt from tours and travels at Rs. 159454/- against which travelling expenses etc. for Rs. 35680/- are claimed. The A.O's case is that such claim of Rs. 35680/- is not wholly supported inasmuch as no supporting vouchers and records for verification of income receipts expenses etc. are produced. The A.O. has specifically 13 ITA 330/JP/2013_ Mohanlal Khandelwal Vs. ACIT mentioned that bills and vouchers in respect of direct petrol expense as well as repairs and maintenance of vehicle expenses were not produced. The A.O. accordingly disallowed 1/3rd of such expenses and made addition of Rs. 11893/-. The appellant's case is that such expenditure of Rs. 37540/- was shown against taxi running business of Rs. 159454/- and that the assessee was not having its own taxies and such taxies for hiring were arranged through the market. It is also stated that complete detail of taxi income and expenses was submitted before the A.O. as also receipts of taxi business is through cheques. The issue is also stated to be covered by the decision of Hon'ble ITAT. On careful consideration of relevant fact it may be noted that the appellant has definitely not produced supporting vouchers in respect of such claim of Rs. 35680/- though the ledger detail of such expenses appear to have filed. The important issue to be noted that such claim of expenses of Rs. 35680/- was made by the appellant and the basic responsibility and onus was on the appellant prima facie prove by furnishing reliable documents in form of bill etc. in support of such claim. Simply filing ledger copy of detail of such expenses cannot said to be a proper justification for such claim. As regards the contention of the appellant that such issue was covered by the decision of the Hon'ble ITAT in the case of Sh. Mohan Lal Khandelwal Vs. ACIT, it may be noted that the issue in case of Sh. Mohan Lal Khandelwal Vs. ACIT was totally different inasmuch as in that 14 ITA 330/JP/2013_ Mohanlal Khandelwal Vs. ACIT case the Hon'ble ITAT has held that in the case of income being taxed U/s 153A, then the assessee can agitate the issue. The Hon'ble ITAT has referred to the decision of Bombay Bench of ITAT in the case of DCIT Vs. Eversmile Construction Pvt. Ltd. in which it has been held that the assessment made earlier and disallowance made and accepted by the assessee can be agitated in case the same additions are made when fresh assessment U/s 153A is made. The above facts will indicate that the issue under consideration before the Hon'ble ITAT was totally different. In view of these facts I am of the considered view that the assessee has failed to properly substantiate the claim of whole expenses of Rs. 35680/- and therefore disallowance 1/3rd of such expenses amounting to Rs. 11893/- was reasoned, fair and well justified. The addition made by the A.O. is accordingly confirmed."
9. Now the assessee is in appeal before us. The ld AR of the assessee submitted that the ld Assessing Officer has not brought on record nothing specific while making disallowance, which is deserved to be deleted on the basis of past history of the case. He further argued that in past, the ld Assessing Officer disallowed these expenses 1/3rd, however, the ld CIT(A) had confirmed 20% disallowances. Whereas 15 ITA 330/JP/2013_ Mohanlal Khandelwal Vs. ACIT the Hon'ble ITAT has confirmed these additions to a token amount i.e. Rs. 3,000/- to Rs. 4,000/-.
10. At the outset, the ld DR has vehemently supported the order of the ld CIT(A) and argued that there is no past history in this case as the assessee never had been shown this income from the tour and travel agency. Only during the course of search proceeding, he had admitted that he was having income from tour and travels business. Therefore, order of the ld CIT(A) may be confirmed.
11. We have heard the rival contentions of both the parties and perused the material available on the record. The assessee had shown total tour and travel receipt at Rs. 1,59,454/- against which he claimed expenses at Rs. 37,540/-. The assessee had not produced any evidence before the Assessing Officer as well as CIT(A) in support of expenses. However, without expenses, the income cannot be earned. The expenses claimed on diesel, petrol, salary of driver can be collected by the appellant but this business is totally unorganized. Therefore, we confirm addition at Rs. 5,000/- in place of disallowance made by the Assessing Officer at Rs. 11,893/- in the interest of justice. Accordingly this ground of appeal is partly allowed.
16 ITA 330/JP/2013_ Mohanlal Khandelwal Vs. ACIT
12. In the result assessee's appeal is partly allowed. Order pronounced in the open court on 11/08/2015.
Sd/- Sd/-
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(R.P.Tolani) (T.R. Meena)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- 11th August, 2015
*Ranjan
vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Shri Mohan Lal Khandelwal, Jhotwara, Jaipur.
2. izR;FkhZ@ The Respondent- The ACIT, Central Circle-1, Jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr¼vihy½@The CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 330/JP/2013) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar