Income Tax Appellate Tribunal - Chandigarh
M/S Sai Apartments & Infrastructure, ... vs Dcit, C-6(1), Mohali on 27 April, 2022
आयकर अपीलीय अिधकरण,च डीगढ़
अिधकरण च डीगढ़ यायपीठ ''बी.'', च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH
BENCH 'B' CHANDIGARH
BEFORE: SMT. DIVA SINGH, JUDICIAL MEMBER &
SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No. 940/CHD/2019
Assessment Year : 2011-12
M/s Sai Apartments & Infrastructure, बनाम The DCIT-I,
House No. 58, Sector - 9, VS Circle 6(1),
Panchkula. Mohali.
थायी लेखा सं./PAN /TAN No: ABTFS1260Q
अपीलाथ /Appellant यथ /Respondent
िनधा रती क ओर से/Assessee by : Shri Parikshit Aggarwal, CA
राज व क ओर से/ Revenue by : Shri Sarabjit Singh, CIT-DR
तारीख/Date of Hearing : 15.03.2022
उदघोषणा क तारीख/Date of Pronouncement : 27.04.2022
HEARING VIA WEBEX AND PHYSICAL HEARING
आदेश/ORDER
PER DIVA SINGH The present appeal has been file d by the assessee assailing the correctness of the order dated 28.02.2019 of CI T(A)-I, C h a nd i ga r h pe r ta i ni ng to 2 0 1 1-1 2 a s se s sme n t year on the f oll ow i ng gr ou nd s :
1. That on the facts, circumstances and legal position of the case, the Worthy CIT(A) in Appeal No. 779/13-14 has erred in passing that order in contravention of the provisions of S. 250(6) of the Income Tax Act, 1961.
2. That on law, facts and circumstances of the case, the Worthy CIT(A) has erred in confirming the action of Ld. AO in initiating, then continuing and then completing the impugned assessment u/s 143(3) r.w.s. 147 of the Act even when the whole proceedings deserves to be declared void ab initio.
3. That on law, facts and circumstances of the case, the Worthy CIT(A) has erred in confirming the action of Ld. AO in making addition of Rs. 5,18,89,786/- on account of alleged difference in opening and closing stocks for FYs 2010-11 & 2011-12 in the books of the appellant maintained at its registered office :
(i) even when there was no difference and the Ld. AO failed to appreciate different presentation mechanisms in the ITA 940 /CHD/2019 A.Y. 2011-12 Page 2 of 35 Financial Books, Balance sheet, P&L A/c and ITR filed by the appellant. The Worthy CIT(A) ;
(ii) by relying solely the surrender statement of the partner of the appellant recorded at the time of survey u/s 133A when the said statement has no evidentiary value, was tendered on incorrect understanding of facts and law, stands retracted in the ITR.
4. That on law, facts and circumstances of the case, the Worthy CIT(A) has erred in confirming the action of Ld. AO in making addition of Rs. 4,22,767/- u/s 36(l)(iii) by disallowing interest paid on unsecured loans by holding that giving of interest free advances to some parties deserves such disallowance.
5. That on law, facts and circumstances of the case, the orders of Ld. AO as well as Worthy CIT(A) deserves to be set-aside and quashed since the orders have been passed by both of them without granting reasonable opportunity of being heard to the appellant.
6. That the appellant craves leave for any addition, deletion or amendment in the grounds of appeal on or before the disposal of the same."
2. Th e h e a r i ng i n t h e p re se nt ca se st a rt e d on a vi r tua l mod e vi a W e be x o n 22. 0 2. 2 02 2 , h ow e ve r , c oul d n ot be c onc lu d e d on th e s a id d a te a s a r e s ul t of co nn e ct iv it y d ue to s ome ong oin g st ri k e of l oc a l El e c tr ic it y De p a rtme n t. O n th e ne xt da te i.e. 2 4 .0 2 .2 0 2 2 a g a in , t he re we re some con ne cti vi ty i ss ue s a t the e n d of the p a r tie s w h o i nf or me d th a t th e se we re possi b l y d ue to e le c tr i ci ty re st ora tio n sti l l pe n d in g i n a l l a re a s . I n the sa id b a ck gr ou nd , th e e f fe cti ve he a r in gs to ok p la c e on 09. 0 3. 2 0 22 a nd 1 5 .0 3 .2 0 2 2 in the C ou r t in a p h ysi ca l he a r in g w h ic h ha d r e s ume d .
3. B e f ore a d d re ss ing the gr ie v a nce p os e d b y t he a ss e ssee in th e p re se nt a p p e a l , it i s a p p ro pr i a te to f ir st r e fe r to ce r ta in r e le v a nt fa c ts on r e co rd . Th e a s se sse e re tur ne d a n i n come of Rs. 7 ,3 2 , 06 0 /- b y f i l i ng it s r e t ur n on 30 . 09 . 2 01 1 . Af te r re c or d in g of ITA 940 /CHD/2019 A.Y. 2011-12 Page 3 of 35 r e a s ons a nd is su a nc e of n oti ce u/s 1 4 8 , th e a ss e ss me n t w as ma d e w he re in cer ta i n a d d it ion s un d e r c ha l le n ge i n th e p r e sent p r oce e d in gs we re ma d e b y the or de r d a te d 30 . 0 1. 20 14 .
4. Th e f ir s t a d di ti o n c ha l l e n ge d b y th e a sse ssee i s a g it a ted vi d e g r oun d N o. 3 in th e p r e se n t p r oce e d i ngs . Th e a d di ti on w a s ma d e in v ie w of th e f a ct th a t i n the sur ve y ope r a ti on ca r r i e d u /s 1 3 3A a t t he bu si n e ss p re mis e s of the a sse sse e on 06 . 1 1. 2 01 2 th e vol un ta r y d is cl osu r e of Rs . 5 ,1 8 ,8 9 ,7 8 6 /- ma d e by the a ss e s see w a s n ot of fe re d fo r t a x. For th e s a k e of comp l e te ne ss, i t ma y b e re fe r re d th a t i n 20 1 2-1 3 a sse ss me nt ye a r v ol un ta ry d is cl osu r e of Rs. 10 , 6 7, 2 3 ,5 0 0 /- w a s a ls o ma d e a nd th e s a id d is cl osu r e wa s h on or e d by th e a sse sse e a nd he nce n ot in d is p ute n or a s ub je ct ma tte r of con si de r a ti on i n th e p r e se nt p r oce e d in gs . Re ve rt in g b a ck to the is sue a t h a nd , th e AO r e q u ire d the a sse s see to e xp l a in w hy th e s ur re n de r ma d e d u r in g th e s ur ve y fo r the ye a r u nde r c ons i de r a tio n w a s not h on or e d by th e a sse s see . Th e a sse ssee a d mi tte dl y i n re sp on se to the not ice i ssu e d u/s 1 4 8 re pl ie d tha t the e a r li e r I TR f il e d on 30 . 11 . 2 01 1 b e con si de re d a s a r e tu r n i n re spo ns e to the notic e u/s 1 4 8 o f th e Act . Th e A O sh ow ca us e d t he a ss e s see a ga in r ef e r r i ng to the su r r e nde r le tte r d a te d 0 6 . 11 . 2 012 f il e d be f ore the S ur ve y Te a m. Re pl y fi le d b y th e a sse ssee , th ou gh e xt r a cte d in the or de r w as d is ca r d e d by th e Ass e s si ng O ff ice r h ol d in g tha t th e a sse sse e ha d i n f a ct u nd e r va lu e d it s cl osi n g sto ck in it s P &L A cco un t a nd ITA 940 /CHD/2019 A.Y. 2011-12 Page 4 of 35 r e d uce d i ts i ncome a cc or di n gl y. He f ur the r he ld th at the r e tr a c ti on wa s a b a l d r e tr a c tio n a n d ma d e the a d d iti on of Rs . 5 ,1 8 , 89 , 78 6 /- r e l yin g on th e su rre nd e r le tte r.
5. Th e n e xt a dd i tion ch a ll e n ge d by th e a s se s se e is a g it a ted vi d e G r oun d N o . 4 in the pre sen t p r oce e d in gs . Th e asse ss in g of fi ce r ma d e th e sa i d a d d i ti on r e je c tin g th e cl a im of in te r e s t p a i d on un se cur e d lo a n. The a d d it ion w a s ma d e hol d in g tha t th e a ss e s see cou ld n ot pr ov e b us i ne s s e xi ge n cy for g iv in g i n te rest f re e a d va n ce s .
6. B oth th e is sue s w e re ca r r ie d in a p pe a l be f ore the F i rs t Ap p e l l a te Au tho ri ty . The su b mis si ons of t he a sse ssee a n d the AO b y w a y o f a r e ma n d a nd th e re p l y of the ass e ssee t o the Re ma nd Re po rt p la c e d on re cor d on th e f ir s t i ssue h a ve been e x tr a cte d i n th e i mpu gn e d or de r i n p a r a 6. 1 to 6. 4 c ons i de r in g w hi c h the CI T(A ) h a s con fi r me d t he a d d it ion h ol d ing a s un d e r :
"6.5. Held: I have perused the assessment order, remand report, assessment record and reply of the assessee. The brief facts of the case are that a survey u/s 133A of the Act was conducted on 06.11.2012 at business premises of M/s Sal Apartments & Infrastructures. A Trial Balance and Balance Sheet was obtained from the computer of the assessee during Survey Proceedings. In the Balance Sheet of financial year 2010-11 thus obtained by the survey party it is found that Closing Stock of Project Land & Other Land was shown at Rs. 13,55,77,072/-, whereas the closing stock was shown in the P & L A/c just at Rs.8,36,87,287/- which is short by Rs.5,18,89,785/-. The assessee was shown the copy of income tax return form for the AY 2012-13 found during survey, wherein the opening stock as on 01/04/2011 was taken as Rs. 13,55,77,072/-. When confronted with the discrepancies found, the assessee's partner Sh Sumit Garg in his statement accepted this discrepancy, the assessee admitted the fact and promised to revise the return vide surrender letter dated 06.11.2012. Thereafter, on 15.11.2012 by stating that after perusal of audited report Profit & Lost A/c, Balance ITA 940 /CHD/2019 A.Y. 2011-12 Page 5 of 35 Sheet, books of account and income tax returns for AY 2011-12- & 2012- 13 the purchases of Rs.5,18,89,785/- were taken to Balance Sheet directly instead of routing through profit & loss account. Assessee has total purchases of Rs.14.10 Crore and only Rs.8.36 crore was routed through P & L A/c. Hence there is no discrepancy. The arguments of the assessee are not acceptable. The AR during appellate proceedings has submitted that balance amount of purchases are also routed through P & L A/c of Audited Report. This Audit Report is dated 27.09.2011. On perusal of, Income Tax Return e-filed on 30.09.2011 closing stock is again shown at Part-A-P&L Account at Sl.No.4 of the return to the tune of Rs. 8,36,87,287/- only. When the Ld. AR was confronted that if he is claiming that in the audited report the figure of Rs.5,18,89,785/- is routed through P&L Account then how come the original return which was filed subsequent to the audit report is showing the value of closing stock which was found during survey proceedings. Even after issuing notice u/s 148 of the Act on 22.01.2012, the assessee confirmed his earlier stand and requested the AO to consider his ITR already filed on 30.09.2011 as against notice u/s 148 of the Act. The AR has no satisfactory explanation of this discrepancy. It is clear that the partner of the Assessee Sh. Sumit Garag was knowing that they have committed mistake and accepted the discrepancy pointed out by the Survey party and subsequently surrendered the same amount. The retraction letter also talks about the fact that they have perused the audited report, Profit & Lost A/c, Balance Sheet, books of account and income tax -erorns for AY 2011-12- & 2012-13 and there is no discrepancy. The assessees stand is contradictory since the time of survey and during assessment proceedings and even during appellate proceedings. It is in these facts and circumstances, the audited report, cannot be relied. It is held that Ld. AO has rightly made addition of Rs.5,18,89,786/- on detailed findings given in the assessment order and as discussed at Para 6 supra. The arguments of the Ld.AR are not true to the facts and circumstances of the case. AO is right in placing reliance on the case of Avadh Kishore Das v. Ram Gopal AIR 1979 SC 861 wherein it held that 'It was held that evidentiary admissions are not conclusive proof of the facts admitted and may he explained or shown to be wrong, but they do raise an estoppels and shift the burden of proof on to the person making them. The Supreme Court further held that unless shown or explained to be wrong, they are an efficacious proof of the facts admitted.' In the case of Asstt. CIT v. Rameshchandra R. Patel [2004] 89 ITD 203 (Ahd.)(TM) it was held that: 'It was accepted that the assessee had a right to retract but that has to be based on evidence brought on record to the contrary and there must be justifiable reason and material accepting retraction i.e., cogent and sufficient material have to be placed on record for acceptance or retraction. Ail that has to be done by the assessee if he is to retract the statement which was recorded in the presence of witnesses unless there is evidence of pressure or coercion. The facts of each case have to be considered to reach the conclusion whether retraction was possible or not as there can be no universal rule.' In the case of Manharial Kasurchand Chokshs vs. Asstt. CIT [1997] 61 ITD 55 (And.), it was held that: 'Proof of threat or coercion is necessary for valid retraction. The allegation that the assessee was tortured and harassed ITA 940 /CHD/2019 A.Y. 2011-12 Page 6 of 35 by the search team and was forced to make an admission is not enough.' The Ld. AR has failed to establish that there was any coercion while accepting the discrepancy and surrendering the same during survey proceedings. He has also failed to establish his case in the light of facts & circumstances discussed supra. Hence, the assessee has failed to show as to how earlier admission/ statement does not state the true facts or that there was coercion, inducement or threat while getting his earlier statement/ admission. The Ground of Appeal No.2 is dismissed."
7. Th e a d d it ion ma de b y w a y of di sa ll ow a nc e of i n ter e s t p a id on u ns e cu re d loa ns w a s a ls o con fi r me d . Ag gr ie ve d b y these d e ci si on s on me ri t, th e a sse ssee is in a pp e a l be fo re t he I TA T. 7 .1 I t i s a l so re le van t to me nt ion th a t gr ou nd N o. 2 r a is e d in th e pre se n t p r oce e d in gs c ha l le ngi ng th e va l i d ity o f th e re- op e n in g w a s a l so a sub j e c t ma tte r o f ch a l le nge bef or e the F irst Ap p e l l a te A uth or i ty and t he sub mi ss ion s t he re on and the r e a so ni ng h a ve bee n e xt ra c te d in pa r a 5 a n d 5 .2 .
8. Th e l d . A R r e fe r ri ng t o the re s pe cti v e or de r s o f the A O a nd th e CI T(A ) a n d c a r r yi ng the B e n ch th ro ugh th e P a p e r B ook f il e d on r e c or d , a dd res si ng th e gr oun ds sub mi tte d th a t g ro un d N os . 1 , 5 a nd 6 ma y b e tre a te d a s ge ne r a l i n n a ture a n d d o n ot r e q u ire a n y spe c if ic a d j ud i ca ti on .
8 .1 . I t w a s sub mi tte d t ha t the a ss e ssee see ks a d ju d ic a ti on on l y on g ro un d N os . 2 , 3 a n d 4 . I t w a s fu rt he r su bmitt e d t ha t the ch a l le nge p ose d to the p r oce e d in gs vi d e gr oun d N o. 2 on f a cts i s i nte r -li n ke d wi th th e a r gu me nt s on me r i ts ch a l le ng e d in gr ou nd N o. 3. Ac cor d in gl y, i t w a s h is s ub mi ssi on th a t f or see ki n g a d j ud ic a ti on on gr oun d N o. 2 , it w oul d be re le van t f or h im to ITA 940 /CHD/2019 A.Y. 2011-12 Page 7 of 35 a l so s imu lt a ne ous ly a r g ue g r oun d N o. 3 in t he p re se n t p r oce e d in gs .
8 .2 . Ad d re ss in g the re le va n t f a ct s a s no te d i n the a ss e s sme n t or d e r , the l d . AR r e l ie d e x te n si ve ly on the de ta i le d a r gu me nts a d va n ce d be f ore th e AO e x tr a cte d i n th e or de r a nd th e de ta ile d su b mis si ons a l so e xtr a c te d i n the i mp ug ne d or de r . C a r r yi ng the B e n ch t hr ou gh th e re spe c ti ve or d e r s a nd the Pa p e r B ook on r e c or d s ub mi tted th a t th e re i s n o sh re d of e v id e nce w ith the Re ve n ue to su ppor t th e a d d i tio n. Th e c a se of the Re ve nue , it w a s su bmi tte d , is e n ti re l y b u il t on the i nc or rec t u ni nf or me d su r r e nde r ma d e by one pa r tn e r . I t w a s a rg ue d th a t i t i s n ot in d is p ute th a t t he su rr e nd e r wa s ma d e w ith ou t th e be ne fi t o f r e le v a nt a nd comp l e te re c or d s or a n y f in a n ci a l or l e g a l e xpe rt . Th e e n ti r e c a se of t he De p a rt me n t, i t w a s a r gue d is b ui l t on the su r r e nde r of th e a ss e ssee . The r e a s on s a d v a nc e d i n d e ta i l re l ied up on on the b a s is of d ocu me n ts an d e v ide nce s on re cor d , it w a s su b mit te d , ha v e n ot been u p se t by the d e p ar tme nt. Th e r e tr a c ti on, i t w as s ub mi tte d i gn or i ng the e vi de nce s i s h e l d by th e ta x a u th or itie s to be un ju sti fie d fo r no sta te d r e a son s. It w a s h is su b mi ss io n th a t r ig ht f r om th e a ss e ss m e n t sta ge the a ss e s see h a s be e n re pe a te d l y a rgui n g tha t the s ur r e n de r w a s ma d e on th e b asi s of th e co mpu te r i ze d ta l ly e xtr a ct e d b y the S ur ve y Te a m a t t he t ime of th e su rv e y. Thi s fa ct it w a s sta te d i s n ot in d i sp u te . I t w a s a l so h is s ub mi ssi on t ha t a t th e re le va n t ITA 940 /CHD/2019 A.Y. 2011-12 Page 8 of 35 p oi nt of ti me , th e a s se s se e 's p a rtne r, w h o i s the sign a tor y of the su r r e nde r le tte r d i d n ot ha v e t he b e ne f i t of the Ta x Au d it Re p or t. Th i s f a ct a l so i s no t in di sp u te. Re fe r r in g to th e a sse s sme n t or d e r , it was hi s s ub mis si on that th e re a re no s ta te me nts r e c or de d of a ny p a rt ne r o r e mp l oyee to s up p or t th e s ur re n der ma d e a n d the r e is n o d is cr e p a n cy p oi nt e d out or not ic e d b y the S ur ve y te a m or the a s se s si ng o ff ic e r wh o ha d the e n ti re re cord a va i l a b le . Th e b oo ks st a nd a c ce p te d . N o d is cr e pa n cy ha s b een p oi nte d ou t e i the r th er e in or th e Ta x Aud i t Re p or t a l wa y s a va i l a b le on r e co rd e xce pt fo r the comp u te r i ze d ta l ly w hi ch i s r e p or te dl y st a ted to b e ha v in g a cl e r i ca l e r r or a n d a t be st a p r e se nt a tio n i ssu e . Th e i mp oun d e d d oc ume nts a ls o sup p or t th e a ss e s see 's cl a i m and r e ma i n i gn or e d . Re fer r in g to the a ss e s sme n t or de r a n d th e imp u gn e d or de r , i t w a s hi s su bmi ss io n th a t th e a sse ssee h a s e xp l a ine d i n d e ta i l re pe a te d ly th a t i t i s on ly a ca se o f m e tho d of r e po rt ing a n d e v e n if i t i s c on ce de d f or a mo me n t tha t i t i s no t t he be st me th od for r e p or ti ng , th e fa ct r e ma i ns th a t i t doe s not imp a c t th e i nc ome . I t wa s a r gu e d th a t th e ta x a uth or it ie s a re re q ui re d to c ons id e r o n f acts th e i nc ome to b e b r ough t to ta x a n d n ot bu ild it s ca s e for taxa ti on on th e mi sta k e s or s ur r e n de r le tte r ma d e on t he b a si s of la c k o f i nc or r e ct fa c ts. Ta xe s c a nn ot be le vie d o n s uc h mis ta k e s. It w a s a r gue d th a t w h a t h a s to be b r oug ht to ta x i s th e i n come . Th e se a rg ume n ts h a ve re pe a te dly b e e n ma d e be fore the ta x ITA 940 /CHD/2019 A.Y. 2011-12 Page 9 of 35 a u thor i ti e s . Th e la ck of re le va n t fa c ts w i th the p art ie s i s n ot d is p ute d b y th e Re ve nue . O u r a t te n ti on w a s i nv i te d to th e sp e ci fi c d oc umen ts a p pe nde d i n the P a pe r B ook i n sup p or t of th e sa i d su b mis si ons . O n th e b a si s of th e se a r gu me n ts, on f a cts and s ub mi ss ion s, r e pe a te d ly ad va nc e d on rec or d, it was su b mit te d th a t th e re -ope n i ng itse l f i s n ot ma i nt a in a b le a s i t i s a ca se of non -a pp li ca t ion o f min d b y th e AO .
8 .3 . Ou r sp e c i fi c a tten ti on w a s i n vi te d t o P a p e r B o ok p a ge 15 to 3 7 w h ic h i s th e cop y of th e I TR f il e d . The l d . A /R c a r r ie d th e B e n ch th r ou gh the c opy of the a ck no wl e d ge me n t of t he re tu rn f il e d a l ong w ith co mp u ta ti on o f i nc ome a n d I TR F or m f or th e ye a r u nde r c ons id e ra tio n. Re fe rr in g to P a g e 15, 1 8 a n d 1 9 h ig hl ig hti n g th e fa cts re fle c te d q ua t he re spe c tive c olu mns in th e B a la n ce S hee t f ile d , it w as s ub mi tte d tha t th e se we re r e f le cte d in C urr e nt A sse ts a nd F in i sh e d G oods i .e . C l os in g S tock i n the re spe cti ve col umn s r e a d w ith P a pe r B ook pa g e 2 1. H e a gree d t ha t th e re t ur n w a s f il e d ta k i ng t he f igur e s fr om th e ve r y s a me s oft wa re ta l l y a s c ons id e re d b y t he S ur ve y Te a m. H ow e ve r , ti me f or fi l in g th e Re v ise d re tu r n w a s a vail a b l e to the a ss e s see . I t w as r e -ite r a te d tha t th e r e co rd re fer r e d t o b y th e S ur ve y Te a m wa s d ow nl oa d e d f rom th e comp ut er so ftw ar e a nd th e Ta x A ud it Re po rt w a s not a v a il a b le the re . B a se d on th e d ow nl oa d e d sof tw a r e c onf r on te d t he a sse ssee 's p a r tn e r ma d e a su r r e nde r. I t w a s sub mi tte d th a t i t is un di s p u te d th a t the ITA 940 /CHD/2019 A.Y. 2011-12 Page 10 of 35 a ss e s see 's p a r tne r ma d e a su rr e nd e r . H ow e v e r, t he l a w d oe s n ot r e q u ire t ha t a sse ssme nt be ma d e e xc lu d ing th e re c or d s r e l yi ng on a mi s ta k e n f a ct/u nd e r s ta nd i ng . Th e fa c ts w he n r e l ie d up on to r e tr a c t fr om th e s ur re n de r ar e ne ce ssa ri ly r e q u ire d to be loo ke d in to by the t a x a ut hor i ti e s. The y ca nn ot r e pe a te d ly re l y on l y on th e s ur r e n de r le tte r ig nor i ng the f a cts . A tte n tion w a s i nvi te d to th e i mp ou nd e d do cume nts of th e S ur ve y Te a m . S pe ci f ic do cume nt s a t p a ge 38 , 3 9 a n d 4 0 w e re re fe r re d to w hi ch i s a cop y of th e b a la n ce s he e t, P r of it & Los s A cco un t a n d Tr ia l B a l a n ce of the a s se s see i mp oun d e d b y th e S ur ve y Te a m. P a pe r B oo k p ag e 4 0 , i t w a s sub mi tte d, w ou ld sh ow t ha t w he n St ock of La n d ( oth e r t ha n p r oje cte d l a n d) a nd P ur c ha se Ac count s ( P ur ch a se of La nd [ P r oj e ct La nd ] ) are tot a le d, the n i t c a n b e see n th a t a ll f a cts s ta n d d i sc los e d . Th e Ta x Au di t Re por t a v a il a b l e on re cor d i s ne it he r f aul te d w it h b y th e De p a rt me n t b u t r e l yi n g on sur r e n de r le tter is r e p e a te d ly d is ca r d e d for un st a te d r e a son s. It was a r gu e d tha t th e se cu r r e nt a sse ts we re se p a r a te , in de pe n de n t tr a n sa ct ion s ma d e b y se p a ra te P ur cha se De e d s a nd the se we re i nd e pe nde n t tr a n sa ct ion s a nd w e re all sh ow n as cu r re nt a sse ts to be su b se q ue n tl y a ll otte d to ot he r p roje cts w h ic h h a d n ot be e n ye t st a rt e d . It was s ub mi tte d tha t a ll n e c e ss a r y f a ct s s tood d is cl ose d . I t w a s cl a r if ie d on q ue ry th a t th e a s se sse e w a s in the b us in e s s of re a l e sta te . He a g re e d tha t th i s s houl d h a ve bee n ITA 940 /CHD/2019 A.Y. 2011-12 Page 11 of 35 ta k e n in to p ur cha s e a nd r oute d i t th r ough the P ro fi t & Los s Ac cou nt . I n the s a i d b a c kg r oun d, a tte nt ion w a s i nvi te d to p age 4 3 w hi ch i s a re tr a cti on d a te d 15 . 1 1. 2 01 2 of th e sur re n de r ma d e . S a me is r e pr od u ce d he re und e r f or comp l e te ne s s :
The Asstt. Commissioner of Income Tax, 15.11.2012 Range VI, Mohali.
Subject: Survey Proceedings under section 133A of the Income Tax Act. Madam, At the time of survey the assessee has given the letter dated 06-11-2012. In this regard it is stated that now we have gone through the audited profit & loss account, balance sheet, books of accounts, income tax return forms and other records for the A.Y. 2011- 12 & 2012-13 and found that the purchases amounting to Rs. 5,18,89,785/- were taken in closing stock directly to balance sheet instead of routing through the same from profit & loss account while filing the income tax return for the year ending 31/03/2011.
The assessee has made total purchases of Rs. 14,10,32,635/- out of these purchases the amount of Rs. 8,91,42,850/- was routed through purchase account and the balance amount of Rs. 5,18,89,785/- was directly taken in the balance sheet as closing stock. Hence there is no difference of any kind in the stock.
For Sai Apartments & Infrastructures Sd/-
(Partner) 8 .4 Atte nti on w a s i nvi te d t o cop y of the a ud i te d Fi n a nc ia l S ta te me nts a t pa g e s 4 4 & 4 5. I t w a s h is s ub mi ssi on tha t i t is on ly a ma tte r of p r e se n ta ti on h avi ng n o imp a c t o n the i n come . I n vi ti ng a tte n ti on to P a pe r B ook page 1 20 w hi c h is a l so d ow nl oa d e d fr om the s a me s oft wa re b y the De p ar tme nt, i t w a s p oi nte d out tha t it a ls o sh ow s the ope n in g s tock of Rs .1 3 ,5 5 ,7 7 , 07 2 . 28 a s on 01 . 0 4. 2 0 11 to 3 1 .0 3 .2 0 1 2 . I t w a s h i s su b mis si on tha t the cl os in g s tock f or the ye a r un der co ns id e r a ti on is th e ope n i ng s tock f or th e ne xt a sse ssme nt ye a r a n d th us , me r e ly b e ca u se of pre se n ta ti on o f a cc oun ts i n the so ftw a r e Ta l ly d ow n loa de d b y the De p a r tme n t a nd a ls o in it ia l l y ITA 940 /CHD/2019 A.Y. 2011-12 Page 12 of 35 r e l ie d up on b y the a sse ssee w hi le f il i ng the re t ur n w he n see n a n d r e a d a l ong w ith th e Ta x Aud i te d Re por t , i t wo ul d s how th a t th e re i s no mi st a ke . Th e o pe ni n g st ock of th e su b se q ue n t a ss e s sme n t ye a r i. e . 2 0 12 -1 3 as se s sme n t ye a r w hi ch sh ou ld h a ve bee n th e clos in g st ock fo r t h e ye a r un de r c on si de r a tio n i s on ly a ca s e of mis ta k e of th e ass e s see e xp l a ined i n de ta i l on r e c or d. Th e e xp l a n a tio n h a s n ot b ee n r e bu tte d. I t ha s b e e n d i sca r d e d onl y on th e gr ou nd tha t th e a sse s see h a d ma d e a su r r e nde r. I n vi ti ng a tte nt ion to th e re le va n t p r ov is ion s of th e Ac t, i t w a s h is s ub mi ss ion tha t t he a s se s se e ha v in g f il e d it s r e tu r n on 30 . 09 .2 01 1 w a s ve ry muc h e n tit le d to f i le a re v ise d r e tu r n a s the time f or f i li n g the r e v ise d re tu r n had not e xp ire d. Th e mis ta k e , it wa s fi l e d w a s r e cti fi a b le . I t w a s s ub mi tte d th a t h e d oe s n ot w a nt to go i nt o the r e a son w hy Re v is e d re tur n w a s n ot f i le d. Th e fa c t r e ma i n s i t cou ld h a ve b ee n re vise d, t hu s, th e a d d it ion ma d e i n th e or de r u /s 1 4 3 ( 3) b y i ss ua n ce of not ice u /s 1 4 8 w a s n ot ma i n ta i na b l e a n d th a t to o i gn or in g t he fa c ts a nd e v ide nce s fo r no r a ti on a l r ea s on in g. Th us, in t he sa id b a ck gr ou nd , r e ver ti n g a ga i n to th e me r i ts of t he ad d i tio n ma d e w hi c h a r e r e le v ant f or con si d e r in g th e j ur i sd i cti on a l i ss ue a l so, a tte nt ion w a s in vi te d to Pa pe r B ook p a ge 1 11 . It was his su b mis si on th a t th e tota l l a n d p ur ch a se d in the ye a r un der co ns id e r a ti on i ncl ud e d the p u r ch a se s of la n d amo un ti ng to Rs . 5 ,1 8 , 89 , 78 5 /- w h i ch i s t he su b je ct ma tte r for con si d e r a ti on in ITA 940 /CHD/2019 A.Y. 2011-12 Page 13 of 35 gr ou nd N o. 3 a n d ha s b e e n a de qua te ly e xp la i ne d b e fo re the ta x a u thor i ti e s th a t i t wa s on a c c ou nt of th e p u r cha se of thr e e se p a ra te la n d pa rc e l s d ul y Re g is te re d wi th the La n d R e ve nue Au th or it y. I t w a s su bmi tte d th a t th e se P ur ch a se D ee d s ha d n ot b ee n r ou te d th roug h t he Pr of i t & Loss Ac cou nt b e c a use the se p ur c ha se s, a s pe r a sse ssee 's und e r sta n d in g, si nc e the se we re n ot a l lo tte d to a sp e c if i c p r oje ct , w e re no t r e q u ire d t o b e r ou te d th r oug h i t. H ow e ve r , a ll n e ce ss ar y f a cts st ood d i s cl ose d. Th e s e se p a ra te p ur c has e s re fe r re d to be fore the ta x aut hor i ti e s ha ve b ee n e xp l a ine d a t p a ge 1 1 1 of t h e P a pe r B oo k a n d in f a ct ha v e b ee n e x tr a cte d i n a sse ssee 's su bmi ss i ons be for e the CI T( A) a t p a ge 1 6 a ls o. Docu me n ts su p por t in g the se t hree se p a r a te S ale D ee d s we re a va il a b le on re c or d a n d w ith f ul l n a r ra t ion s a r e r e fe r re d to a t p a ge 7 0 a n d 7 1 a s the f ol low i ng n a r ra ti ons :
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ITA 940 /CHD/2019 A.Y. 2011-12 Page 14 of 35 ...... ...... ...... ... ...... .... .. .
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8 .5 A tte n ti on w a s i nv ite d to P a p er B ook p a ge 7 2 t o 7 6 , 9 0 to 9 4 , 9 5 to 99 . A tte n ti on w a s a l so i n vi te d to P a pe r B ook p a ge 131 w hi c h is a s ur r e n de r le t te r on th e b a si s of w hic h th e e n tire a d d it ion h a s b e e n ma de . Sa me is e xt r a cte d he re un d e r fo r re a d y r e fe re n ce :
8 .6 I nv i tin g a tte nt ion a ga i n to P a p e r B ook pa g e 4 3, it w a s h i s su b mis si on th a t th e re tr a cti on i s wi th in a fe w d a ys. On a r e a d i ng t he re fore , i t w a s su bm i tte d t ha t i nf a ct t he re i s n o d if f e re n ce , i t i s onl y a pr e se n ta ti on i ssu e w h ic h ha s no p ro fi t or ITA 940 /CHD/2019 A.Y. 2011-12 Page 15 of 35 f in a nc ia l i mp a ct w h a tsoe ve r. Ad d i ti on ma d e in the ci r cu msta n ce s i gno ri n g th e de ta il e d su bmi ss io ns o n f a cts a nd a r gu me n ts me r e ly be ca u se a n i ncor r e ct s ur re n de r w a s ma d e on a mi sta k e n b e l ie f a n d r e tr a cte d wi thi n a fe w d a ys , it w a s h i s su b mis si on i s u n fa i r e xe r ci se of po we r . Th e not ic e is sue d u /s 148 a p pe nde d at p a ge 132 of th e P a pe r Book and th e p r oce e d in gs i n pu r su a nc e the re to, i t w a s hi s p ra y e r ma y be st ru ck a s t he re i s in f a ct no e sc ap e me n t of in come w h a tsoe ve r.
At te n ti on w a s i nvi te d to P a pe r B ook p a ge 68 w hi ch i s a cop y o f th e re a s ons re cor d e d . C a r r yi n g th e Be n ch t hr ou gh t he re a son s r e c or de d , i t w a s hi s s ub mi ssi on th a t i nf a ct t he re w a s n o ne w ma te ri a l be fore the AO . The a dd i ti on h a s p ur e ly b e e n ma d e on th e b a si s of the so c a l le d s ur r e nd e r le tte r d ur i ng the su r ve y . It w a s hi s s ub mis s i on th a t w he n the a sse ssee ha d ex pl ai ne d th a t co mpu te r i ze d deta i ls d ow nl oa d e d f r om th e so ftw a r e c on fr on te d to t he a sse ssee le d t o th e su rr e n de r ma d e a n d w h e n cr os s ch e c ki n g the se f ro m the Ta x Au di t Re p or t w hi ch a d mit te d l y w a s n ot a v a il a b l e at the b us ine s s p r e mi se s d u r in g t he su rve y, r e tr a c ti on w a s ma de w i th in a fe w d a ys . I n the c irc ums ta nc e s , th e e xe r c ise of pow e r for re -ope n ing th e a s se s smen t ign or i ng the f a cts and su b mis si ons on r e cor d , it was su b mitt e d , was ch a l le nge d be f ore th e CI T( A) a l so .
8 .7 Th e i ss ue s w h ic h c ons e q ue nt ly ca n a r is e f or con si d e r a ti on, i t w a s h is su b mi s si on w oul d b e th a t i f a t a ll t he re w a s a n e xce s s ITA 940 /CHD/2019 A.Y. 2011-12 Page 16 of 35 st ock , th e n th a t f a ct b y i ts e l f c a nn ot be th e subj e c t ma t te r of a d d it ion i n the ye a r un de r c ons i de r a tio n. A t t he ver y be st, i t w as su b mit te d i t cou ld h a ve le d t o en ha n ce me n t of in come in th e su b se q ue n t ye a r . I t w a s hi s submi ss io n t ha t the a s se s sme n t f or b oth th e ye a r s we re ope n be f ore the AO a n d the fac t th a t t he AO has p r oc ee de d to c on si de r the a dd i ti on in the ye a r un de r co ns id e r a ti on it se l f de mons tr a te s tha t the AO di d no t e ve n c are to a p p l y hi s mi n d a s to w hi ch yea r th e a d d it ion if a t a l l wa s to b e ma d e , the b asi s of the a d d it ion b e i ng the sur re nde r le t ter i tse lf , the sa me stood w e l l e xp l a i ne d be fo re the A O. I n the f a ct s of the p re se n t ca s e , i t w a s a r gue d the re is no a ll e ga ti on of a ny mon e y h a vi ng b e e n spe n t or a ny u nd i scl os e d a s se t a v a i la b l e to th e a sse ssee . It is a t be st a c a se of p re se n tati on of fa c ts. W i thou t co nc e d in g th e ma i n a rg ume n t th a t on fac ts n o a d d it ion was ma i n ta in a b le w ha ts oe ve r e i the r in t he ye a r un de r co ns id e r a ti on or th e sub se q ue nt ye a r , it w a s hi s su b mis si on th a t i f a t a l l the AO wa s s til l i nc li ne d to ma k e a d di ti on , the n the ye ar un d e r con si de r ati on w a s no t t he r i ght ye a r . Exa mi ni ng th i s a r gu me n t, we d o n ot fi n d our se l ves i n a gree me nt wit h the l d . A R b e c a use i f the re i s a l ow e r c losi ng sto ck i n the ye a r un de r co ns id e r a ti on a nd a h ig he r open i ng stoc k i n the su b se q ue n t a ss e s sme n t ye a r, th e n a d mi tte d ly e xce s s sto ck is in the ye a r un d e r con si de r a ti on . S o w e d o not fi nd ou r se l ve s i n a gr e e me n t w i th th e w i th out p r e j ud ice a r gume nt a d va n ce d to c a nv a ss th a t ITA 940 /CHD/2019 A.Y. 2011-12 Page 17 of 35 th e AO has made an e r r or in se le cti n g t he ye a r un d e r co ns id e r a ti on f or t he a d d iti on . Th e ld . A R ma i n ta in i ng h is st a nd su b mit te d th a t t he sa i d a r gume nt was w i th out pr e ju d ice a r gu me n t to th e ma i n a r gu me nt a nd r e ve r ti ng to th a t i t w a s h i s su b mis si on th a t in fa c t n o a d di ti on w a s ma i nt a in a b le . Th e l d . AR su bmi tte d t ha t t he re is no ta ng ib l e ma te ria l w hat soe ve r r e fe r re d to i n the a sse ss me n t or de r or i n t he imp u gne d or de r to h old t ha t the re ha s be e n a n e s ca pe me n t of i n come . Re fe r r i ng to th e re a s on s r e cor de d , it was s ub mi tte d , th a t th e re is no a l le ga ti on th a t pur ch a se s h a ve no t b ee n b ook e d . The r e i s n o a l le ga ti on tha t th e re is an e xce s s s tock and th e re is no a l le ga ti on th a t th e re i s a sup p re s si on of pr of i ts. It was his su b mis si on th a t h e wo ul d a ga i n wa nt to hi gh l ig ht th e f a cts . Th e su r ve y took p l a ce on 0 6 .1 1 .2 0 1 2 . Re tr a cti on w a s ma d e on 1 5 .1 1 .2 0 1 2 a nd t he r e a son s re cor de d we re on 2 2 .1 1 .2 0 1 2 . Re tur n f ile d on 3 0 .0 3 .2 0 1 1 , it w a s su b mit te d , cou l d h a ve been r e c tif ie d b y f il i ng a Re v ise d Re tu rn .
8 .8 Re fe r r in g to un -nu mb e r e d p a ge 5 of th e a s se ssme nt or d e r a n d c a r ry in g th e B e n ch th ro ugh th e fa c ts a s d i scuss e d the re i n, i t w a s h is s ub m is si on th a t t he b a si s of the s ur r e n de r w a s the p r in t ou t ta k e n fr om th e c omp ut e r t a ll y. N oti ci ng th a t in th e cl os in g s toc k of th e ne xt ye a r a n d th e o pe ni n g s tock a s a v a il a ble i n the p r in t o ut the re w a s a d i ff e re n ce , t he su r re nd e r w a s ma d e . Th e a u di te d Fi n a n ci a l Re p or t wa s n ot a v a il a b l e a t the ti me o f ITA 940 /CHD/2019 A.Y. 2011-12 Page 18 of 35 su r ve y . S ta te me n t o f a sse ssee 's Di r e c tor i s e xtr a cte d i n the or d e r a n d on a r e a d in g the re f rom, it w a s a rg u e d , i t c a n be cl e a r l y see n tha t th is i s w hy th e s ur r e n de r w a s m a de b y mis ta k e and th e re is no sta te me n t recor d e d of any oth e r pe r so n w ha t soe ve r a nd no oth e r fa c t i s re fe r re d .
8 .9 I n the sa i d b a ck g ro un d, i t w a s hi s sub mi ss io n tha t th e re - op e n i ng w a s ba d in l a w a s a l l f a cts w e re be f ore the A O a nd the re w a s no occ a si on or r e a s on to re ope n the p r oce e d i ng s w h ic h we re l iv e a n d c ur re n t. Th e a s se s se e un d e r the S ta tute h a d t he ri gh t to r e vi se t he re tu r n a nd si nce it was me re ly an is sue of p r e se nt a tio n of fa c ts i gn or in g t h e de t a ile d e xpl an ati on o ff e re d b e f ore t he AO , th e f oc us of the D e p a r tme nt ri ght fr om t he AO a n d the C I T( A ), h a s b e e n tha t th e a d d i tio n i n te r ms of th e su r r e nde r ha s to be ma d e a n d no a l le ga ti on of a ny in come or p ur c ha se s n ot re cor de d is se t ou t i n the or de r s. Re fe r r in g to p a ge s 6 a nd 7 of the a s se s sme n t or de r , the a sses si ng of fi ce r's a l le ga ti on th a t it w a s a n a f te r th oug ht on t he p a r t o f the a s se s se e or a t p a ge 1 0 tha t the re is no e vi de nce , it w a s s ub mi tte d i s co ntr a r y to l a w a nd f a ct s a l r e a d y a v a il a b l e on r e c or d. R e fe r r in g to th e se t tle d le ga l p osi ti on on th e se is sue s, f ol lo wi n g c a se s we re r e fe r re d to by w ay of a n i l lu st ra t iv e sa mp l e of the l e g a l p os it ion i n th e re s pe ct ive ca s e l a w P a p e r B oo ks fi l e d on 0 4 .0 3 . 20 2 2 a nd 2 3 .0 2 . 2 0 2 2 :
ITA 940 /CHD/2019 A.Y. 2011-12 Page 19 of 35 8 .1 0 Re l yi ng up on the se , i t w a s hi s s ub mi ssi on tha t it w a s i nc umb e n t u p on th e Ta x A uth or it i e s, the AO a s we ll a s l d . CI T( A) to sp e ci f ic a ll y re fe r to t he ma te r i a l su pp or ti n g th e a dd i ti on.
Me r e ly be ca u se the re i s a sur r e n de r w h ic h s ta n ds r e tr a c ted w i thi n 7 -8 d a ys i gn or in g th e f a ct th a t i t is a me r e p re se nta t ion i ssu e w he re i n n o d e fe ct ha s be e n po in te d ou t, i t w as s ub mi tte d i s c ont ra r y to l a w a nd f a ct s. He n ce , the a d d i tion, i t w a s h i s p r a ye r , ma y b e de le te d.
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9. Pr oc ee d i ng to ad dr e ssi n g the sp e c if i c p u rc ha ses of l a nd p a r ce l s w hi ch we re re fle c te d in " C ur r e n t A sse ts " a s th e se we re n ot a l l otte d to a ny sp e c if i c Pr ojec ts i n the S oft war e ta l l y e xtr a ct, on t he s a id un de r sta n d i ng/c le r ica l mi sta k e i t w as not i nc l uded i n th e cl osi n g stoc k . H ow e ve r , i t stoo d r e f le cte d the re in a ls o in C u rr e nt As se t s. I t w a s s ub mi tte d, th a t t he se a r gume nts w ou ld a l so e l a b or a te the n or ma l p ra cti ce fo ll owe d whe n loa n s a d va n ce d f or p ur ch a si n g la n ds a s a b u sine ss p ur p ose i s a dd r e s se d i n G r oun d N o. 4. Th i s pr a c ti ce w oul d s ho w th e fu nc ti oni n g o f the a ss e s see . The a sse ssee , it w a s sub mi tte d , i s n ot gi vi ng i n te re s t f re e a d v a nce s to a ny one w i thout a ny p ur p ose . Th e un se c ur e d l oa ns w e re t a ke n fo r co m me r ci a l e xpe die ncy a n d a mo un ts w e r e a d va n ce d a l so for c om me r ci a l e xp e d ie n cy. The d i s a ll ow a n ce of i nte re st p a id a ccor di n gly i s in cor r e c t i n l a w a n d on fa c ts. Th e cl a i m i n G r ou n d no. 4 it wa s sub mi tte d ca n a ls o be we ll un d e r st ood f r om the se f a cts on r e cor d . Th e a sse ss ee a s p e r its f un cti on in g is re q ui re d t o ma k e a d va nce p a y men ts to p a rt ie s f ro m w ho m th e a sse sse e ul ti ma te l y p u r ch a se s l a nd s an d th e a ss e s see ha s r e gu l a rl y be e n p ur ch a si ng l a nd s f r o m th e s e k no wn p a r ti e s t o w hom a dv a nc e mon i es a r e ha b i tua l l y gi v e n. Th e a r gu me n ts he n ce w ou ld cov e r b oth g ro un d nu mb e r s 3 a nd 4. F or th e sa id p ur p ose , a t te n tio n w a s i n vi te d to P a p e r B oo k p a ge 10 9 a n d 11 0 r e a d w i th pa ge s 70 & 7 1 of th e P a p e r Boo k. Re fe r ri ng to th i s, i t w a s h is su bmi s si on, it w ou ld s how th a t for p ur c ha se ITA 940 /CHD/2019 A.Y. 2011-12 Page 21 of 35 of la n d f r om one of h is a ge n t Shr i G ul z a r I nde r S i ngh . He h as ma d e ch e q ue p a yme n t of Rs . 1 .2 0 la c s on 2 1 . 09 . 20 1 0 a nd a n oth e r c he q ue p a yme nt of Rs. 1 . 75 l a cs on 2 0 . 01 . 2 01 1 a nd ma d e a ca s h p a yme n t of o nl y Rs. 1 ,3 4 ,3 7 5 /- a nd a ga i n ma d e a ch e q ue p a yme n t of Rs. 5 4 l a cs . I n th e n a r ra t ion s g iv e n , i t w a s su b mit te d t ha t th e a sse ssee h a s sp e l t out the q ua n ti ty of l a nd p ur c ha se d v ide Re gis tr a ti on Dee d i nc lu di n g S tamp Du ty p a id th e re o n e t c. F or e a ch o f th e se tr an sa ct ion s, si mi lar l y th e e n ti re d e ta i l s a re sp e lt out . N one of th e se f a cts ha ve be e n u ps e t by th e Re ve n ue , the a dd i ti on h a s b ee n a r b i tr a r il y ma d e a n d sus ta i ne d. El a b or a ti ng f ur th e r , a t te n ti on wa s i n vi te d to p age 1 1 0 of the P a p e r B ook . R e fe r r in g to i t, th e l d. AR sub mi tte d t ha t i t w ou ld sh ow th a t th e re i s a not he r a gen t Sh r i Ha r i nd e r S i ng h C h a ha l w ho p u rc ha s e s la nd s f or the a s se s se e , C he q ue pa y me n t o f Rs. 9 0 la c s a n d Rs . 9 0 l a cs wa s ma d e on 2 7 .0 1 . 201 1 a n d a ca sh p a yme n t of o nl y Rs. 3 ,1 7 ,2 0 0 /- wa s ma de t ota l in g Rs . 1 ,8 3 , 17 , 20 0 /-. Th e p a y me n ts w e re ma d e a n d re fle c te d in a w hi c h S a le Dee d w a s r e gi ste re d on a s p e ci f ic De e d . F or th i s ch e q ue of Rs. 27 la c s f or pu r ch a si ng a noth e r La n d D e e d w a s p a i d a s a n a d va n ce . I t w a s a r gued tha t th e se a re ad v a nc e s ma d e i n t he re gu la r c our s e of b us in e ss t o hi s id e nti f ie d a ge n ts a nd th is is r e gu la r p r a cti c e of t he a sse ssee . Evi de n ce in su pp or t of th e cl a i m is on r e c or d . I t h a s n ot b ee n u ps e t. Thu s, o n f a cts , n o a d d i tio n w a s ma in ta i na b l e .
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10. Th e l d . D R a d dr e ssi n g g r oun d N o. 2 su b mit te d t ha t he r e l ie s up on the imp u gne d or d e r a n d th e a sse s sme n t or d e r to a r gu e th a t the jur i sd i cti on ha s b ee n c or re ct ly ass ume d by the As se ssi n g O f fi ce r.
1 0 .1 A dd r e s si ng grou nd N o. 3 it was s ub mit te d t ha t th e a d d it ion ma y b e ma i nta i n e d . At te n ti on w a s in vi te d to the fa c ts on r e co rd . The S u r ve y Act ion of th e de p a r tme n t on th e a s se sse e a n d the su rre nder ma d e by the a ss e s see a nd the f ind i ng s of the AO a n d the CI T( A) . S p e ci f ic a tte nti on w a s i nv ite d to P a p e r B ook p a ge 70 whe re in it was h is su b mis si on tha t th e a s se sse e me n ti ons th a t a s pe ci fi c p u r cha se w a s ma d e vi de Re gi str a t ion D ee d d a te d 2 2 .09 . 20 1 0 fr om S hr i Gu lz a r I n de r Sin gh a n d a g a in on 2 8 .0 1 .2 0 1 1 a s pe ci fi c pu r ch a se w a s ma d e vi d e Re gi str a t ion D ee d d a te d 2 8 .01 . 20 1 1 a ga i n f rom Sh r i G ul z a r I nd e r S in gh a nd f ro m S hr i H a r in d e r S in gh C h a ha l vi de Re gi str a tion D ee d d a te d 2 8 .0 1 .2 0 1 1 w hi c h the l d . AR ha s h i ghl i gh te d s o a s t o e xpl a i n the a d d it ion of R s. 5 C r or e od d , h ow e ve r , i t w a s su b mitt e d tha t f or th e tr a ns a cti on da te d 2 8 .0 1 .2 0 1 1 a t p a ge 7 1 , the na r r a ti on gi ve n i s 7 B i gha 1 4 B is w a 5 B i s wa s hi l a nd p a r ce l b e ing p u r cha se d i ns te a d o f me nt io ni ng th e Re gi s tr a ti on De e d t o show tha t l a nd h a s be e n p u r ch ase d . I t is w r i tte n a s 'de t a il a s per R e gi str a t ion D ee d '. I t w a s hi s su bmi ss io n t ha t no R e gi st ra t ion D ee d in su p po rt o f th e sa me i s a v a il a b l e on r e c or d f or th is t ra n sa c ti on.
ITA 940 /CHD/2019 A.Y. 2011-12 Page 23 of 35 Th u s pos si b ly th e re we re s ome tra n sa c ti ons n ot r e c or de d . He nce h e re lie d on the or d e r s of the CI T (A ) a n d th e A. O.
11. Th e ld . AR a d d re ss in g the a r gume nt f or G r ou nd N o. 3 a d va n ce d b y the Re ve n ue , s ubmi tte d th a t th e a r g u me n ts so a d va n ce d n ow b y th e l d . DR is not th e ca s e of th e A sse ss in g O ff i ce r a l so. Re fe r r in g to t he o rde rs , i t w a s s ub mi tte d th a t the AO ha s no t d oub te d or q ue st io ne d the se tr a ns a ction s. Th e P a p e r B ook p a ge 7 1 re fe r re d to b y ld . C I T-D R it w a s s ub mi tte d , is a n a d va n ce p a yme n t f or l a nd a nd s in ce the S a l e Dee d ma y n ot ha v e f ru cti f ie d, the det a il s ma y not h a ve be e n a va i l a ble. H ow e ve r , i t was e mp h a si z e d tha t t he e xa ct a d d it io n ma d e a nd un d er co ns id e r a ti on is o f Rs . 5 C r od d w hi ch sta n d s e xp l ain e d b y the d e ta i l s a nd tr a ns a cti on s r e fe r re d to a t p a ge 7 0 wh i ch h a ve n ot b ee n re fe r re d e i the r b y the a u th or it ie s or b y the ass e s see be f ore th e I TA T.
12. Th e ld . C I T-DR i n r e sp on se su bmit te d th a t no d oub t it i s n ot t he ca se of th e A O , howe ve r , i t a dd re s se s the so ca lle d p r a cti ce of the as se sse e a n d a l so ca st s a dou b t on th e e vi de n ce s a n d su p po rt s the a d d i tio n a dd re sse d a n d he n ce , re le va n t f or co ns id e r a ti on .
13. Th e l d . AR a c c o r d i ngl y so ugh t t i me to ve r if y th e fa c tua l p osi ti on s q u a t hi s is su e s o a s to a d d re ss the q ue ry r a i se d b y th e l d. DR . Acc or d in gl y, th e ca se wa s a d j ou rn e d .
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14. On the ne xt d a te , l d. AR a ga i n i nv it e d a t te n ti on to P a per B ook p a ge 7 0 a nd 7 1 . Re fe rr i ng to t he tr a n sa c tion of p ur c ha se q u e sti one d b y t he ld . C I T- DR ma de f ro m Sh r i Ja g d e v S i ng h w hi c h h a s b ee n e xp la i ne d a s a n a d va n ce a ga i nst l a nd , i t w a s su b mit te d th a t thi s w a s a ll a lon g a va i la b l e in t he P a pe r B oo k. H ow e ve r , b y mis ta k e u nde r con fu si on he cou ld n ot re fe r to i t on th e l a st d a te of h e a r i ng. Re fe r r in g to the sa i d d ocu me n t, it w a s su b mit te d th a t ul ti ma te l y t he se a dv a nc e p a yme n ts a ls o re s ul te d i n a D e e d re gi ste re d in a ss e ssee' s f a vou r. I n th e sa i d fa c tua l b a ck gr ou nd it was a r gue d t ha t th e a dd i tio n was n ot ma i nta in a b le a n d th e ju r is d ic tio n w a s in cor r e c tl y assu me d .
15. Th e ld . C I T DR r e l ie d on th e re sp e ct ive o rde rs of th e ta x a u thor i ti e s .
16. We h a ve he a rd th e r iv a l s ubmi ssi on s a n d p e r use d the ma te ri a l a va i la b l e on re co rd . On a con si de r a ti on t he re of, we f in d on fa c ts tha t th e a d d i tio ns un d e r c ha l le nge v ide gr ou nd N o. 3 on me r its h a s to be de le te d . Th e re a son s for comi ng to th e sa i d c onc lu si on a r e be i ng e l a bor a te d he re in a fte r . Ho we ve r, b e f ore p ro cee d in g to a d d re ss th e sa me , w e f in d t h a t th e p ra yer ma d e b y t he a s se s se e on gr ou nd N o. 2 i n a s mu ch a s t ha t th e or d e r be q ua s he d be come s of a c a de mic i nt e re s t i n v i e w of th e f a cts a nd e v ide nce s c ons ide re d on th e me r its of t he a dd i ti on. Th e a ss u mp ti on o f j ur i sd i cti on ch a ll e n ge d w he n r e a d a l ong in ITA 940 /CHD/2019 A.Y. 2011-12 Page 25 of 35 th e fa c tua l ba ck gr oun d o f the r e a son s r e cor d e d an d th e me r it s of th e a d di ti on ma d e i n the a s se s sme n t or de r , w e f i nd ma y o n th e f ir st b l us h ha ve a n e le me nt of j ust if ic a ti on i n t he p r a ye r of th e a sse ssee . H ow e ve r , con si de r i ng th e ma cr o vi e w on the i ss ue, w e le a ve i t ope n. W h il e so p r oc eed i ng , w e ha ve s ee n th a t i n the r e tu r n f ile d , w he re in the re w a s a mi st a ke in as mu ch a s th e sa me a mo un t h a s b e e n ta ke n int o c on si de r a tio n a s h a s b e e n f oun d r e f le cte d in th e comp ute r iz e d t a ll y e xtr a ct e d f ro m the a ss e s see 's comp u te r w hi ch ha s b e e n the b a si s of the sur re n de r l e tte r a ls o. Th e f a ct r e ma in s th at i n t he I mp oun d e d d ocu me nt s i tse lf the re fle c tion i n t he Tr ia l B a l a n ce un de r C ap i ta l As se ts f or l a nd p ur ch a se not c oll e c te d to spe ci fi c P r oje ct wa s a f a ct on r e c or d w hi c h rema i ns u nr e b u tte d. I t i s a ls o a f a ct th a t the re w a s a Ta x A ud i t Re por t w he re in t he cor re c t c losi ng stoc k w a s f oun d r e fle c te d . Th e se fa ct s a re n ot in d is pu te . I t i s a l so a ma tte r of f a ct th a t the re tur n f ile d b y t he a s se s se e w a s a me na b l e to r e c ti fi ca ti on b y th e a sse ssee i n a s muc h a s ti me w a s s ti ll a va i l a b le for fi li ng a r e vi se d re tu rn . Ho we ve r, we a r e gui de d b y th e f a ct th a t i n th e p re se n t ca se , n o ot he r a sse ss me nt or de r u /s 1 4 3( 3 ) ha s bee n p a ss e d e xce p t f or th e p re se n t a sse ss me n t or der w hi c h ha s b e e n p a ss e d u/s 1 4 3 (3 ) a f te r i ssu a nce of n oti ce u /s 1 4 8. Ac cor d i ngl y, w e le a ve the sa i d i ss ue ope n f or c ons id e r a t ion i n ca se the a sse ss ee is p re j ud i ced a nd p r oce e d to a d d re ss the gr i e v a nce p ose d i n Gr ou nd N o. 3 i. e . on the me r i ts of the ITA 940 /CHD/2019 A.Y. 2011-12 Page 26 of 35 a d d it ion . El a b ora ti ng the re a sons f or comi ng t o the con cl us ion th a t th e a dd i ti on ma d e i n Gr ou n d N o. 3 w a s n ot s us ta i na b l e , we h a ve gi ve n our du e con si de r a ti on to the f a cts a v a il a b l e o n r e cor d w hi c h ha v e a l rea d y b ee n b r ie f ly tou ch e d u p on i n the e a rlier f in d in gs of f a cts a d d r e sse d i n th is p a r a a l on g w i th th e s ur re n d er l e tte r d a te d 0 6 .1 1 . 20 1 2 ma d e a v a il a b l e on r e c or d by the a ss e s see d ur i ng th e sur ve y op e r ati on ca r r i e d u /s 1 3 3 A w h i ch w e h a ve e xtr a cte d in t he e a r l ie r par t of t hi s or de r . W e h a ve a lso co ns id e re d the r e tr a c ti on le tte r fi l e d by t he as se s se e d a te d 1 5 .1 1 .2 0 1 1 i . e . fi le d w i th in a fe w da y s a l so. Thi s h a s a l so b ee n e x tr a cte d in th i s o rd e r. We ha ve a ls o ta k e n i n to c ons id e ra t ion th e de t a ile d e lab or a te a r gume nts a d va n ce d on b e h a lf of the a ss e s see be f ore th e AO a n d t he CI T ( A) a n d n ow b e for e us . 1 6 .1 We f i nd o n a per u sa l of t he re c ord th a t t he su b mis si ons of th e a sse s see tha t su rr e nde r w as ma d e o n th e b a si s of th e p osi ti on of fa c ts a s co nf ro nte d to th e p a r tne r w hi ch a d mi tte d l y w a s th e c omp ute r t a ll y w h ic h i n c or r e ct ly re fle c te d c los in g s tock a s i t r e ma in e d co nf in e d to P r oje cts i n ha n d a nd d id n ot i nc lu d e th e p ur ch a se s of la n d w h i ch h a d n ot b ee n al l otte d to a n y sp e ci fi c Pr oje ct. I t i s a l s o a ma tte r of f a ct th a t the Ta x Aud i t Re po rt w a s not a va i l a b le , e i the r to the a s se s see or the S ur ve y Te a m du r in g the s ur ve y. I t i s a lso a ma tte r of r e cor d th a t i n th e co ur se of the s ur v e y, n o s ta te me nt of a ny pe r so n in re g a rd to ITA 940 /CHD/2019 A.Y. 2011-12 Page 27 of 35 a n y un d i scl ose d p ur ch a se or sa le a cti vi ty of t he a ss e ssee w as r e c or de d . Th e b a si s o f the s ur re nd e r w a s on ly the comp ut e r ta l l y w hi c h a s we n ow s ee , in cor re c tl y re cor de d the c los ing sto ck . I t i s a co nsi s te n t a r gume nt o n f a ct s u p po rt e d by the r e cor d th a t the cl os in g st ock so r e f le cte d i n the comp ut e r ta ll y w as on a cc oun t of th e p ra c ti ce f oll owe d by the a sse ssee wh e re i n ce rt a in p ur c ha se s of l a n d s ma d e no d ou bt b y w a y of Re gi st e re d Dee d s, h ow e ve r , h a d not b ee n a l lo tte d to a ny sp e c if i c P r oj e ct , he n ce , w e re no t r ou te d thr ou gh th e Pr of i t & Lo ss Ac cou nt. Th e f a ct th a t th e se we re p ur ch a se d a nd re fle cte d i n "C ur re n t A ss e ts " i s n ot d is p ute d. Th e f a ct th a t th e s e P ur cha s e De e d s we r e re fe r re d to a n d a s s ee n l a r ge l y p u rc ha se d b y c he q ue s a re fa c ts a v a i la b l e on r e c or d w h i ch a lso h a ve n ot be e n di sp u te d b y f il i ng a ny con tr a r y e v ide nce a s a s sa i l in g th e e vi den ce on re c or d. Th e ca s e of the Re ve n ue is e n ti re ly bu i lt o n th e s ur r e n de r of th e as se s se e . Th i s su r r e nde r, we ha ve se e n i s b a s ed on th e mis ta k e s on fa cts. I t ma y be a p pr op r i a te and r e le va nt to e x tr a ct t he sp e c ific r e a s oni n g a d op te d in t he a sse ss me n t or de r a t t hi s sta ge . The AO h a s a dd r e s se d the is sue s in pa r a s 3 to 5 a s un d e r :
3. The voluntary' disclosure of Rs. 5,18,89,786/- which was made for F.Y. 2010-11 (i.e. A.Y. 2011-12) is discussed in detail as under:
During the course of Survey Operation, it was found that the books of 1: were maintained by the assessee on the computer in its office. The Balance Sheet and Profit & Loss account for all the years were obtained from the same. On examination of the same, it was seen that the assessee had shown Stock as on 31.03.2011L at Rs.8,36,87,287/- and Opening Stock as on 01.04.2012 at Rs. 13,55,77,073/-. Thus, it was seen that there was a difference Rs. 5,18,89,786/- {13,55,77,073 - 8,36,87,287) between the two values of Stock shown. While recording the statement of Sh. Sumit Garg, Partner of the assessee Firm, he was confronted on this issue and asked to explain the ITA 940 /CHD/2019 A.Y. 2011-12 Page 28 of 35 difference between the two figures. He was not able to offer any plausible explanation for the same. Accordingly, the assessee offered to surrender an amount of Rs. 5,18,89,786/- on account of difference in Closing Stock and agreed to revise its Income Tax Return for the A.Y. 2011-12 and to raise the Closing Stock as on 31.03.2011 to Rs. 13,55,77,073/-. The surrender letter given the assessee in this regard' is reproduced as under:
"During the F.Y. 2010-11, the closing stock has been valued at Rs.8.36 Crores due to clerical and inadvertent error, whereas the closing stock as on 31.03.2011 comes to the tune of Rs. 13.55 Crores. There is difference of Rs.5.19 crores. We hereby agree that to revise the return for A. Y. 2011-12 and raised the closing stock as on 31.03.2011 to Rs. 13.55 Crores. I hereby submit that the above said disclosure to buy peace of mind and subject to no penal action under the Income Tax Act of any other law."
4. On a perusal of the surrender letter, it is seen that a voluntary disclosure of Rs.5,18,89,786/- was made by the assessee firm on account of difference between the Closing Stock of A.Y. 2011-12 (i.e. Rs. 8,36,87,287/-) and Opening Stock of A.Y. 2012-13 (i.e. Rs. 13,55,77,073/-). Further, the assessee had agreed to revise its Return of Income of A.Y. 2011-12 and raise the closing stock as on 31.03.2011 to Rs. 13,55,77,073/-. Since the disclosure was made voluntarily and has made for the assessment year 2011-12 relevant to financial year 2010-11, therefore the assessee was required to revise its ITR and voluntarily increase the value of closing stock to Rs. 13,55,77,073/- thereby raising its Net Profit.
5. However, it was seen that the assessee failed to honour the voluntary disclosure that was made by him vide surrender letter dated 06.11.2012 and did not revise its return. Accordingly, on 22.11.2022 the proceedings in this case were opened u/s 147 of the Income Tax Act, 1961 by the O/o the Income Tax Officer, Ward 6(4), Mohali by recording the reasons which are placed on record and notice u/s 148 was issued to the assessee on 22.01.2012. In reply, the assessee vide his written reply dated 08.04.2012 submitted that his earlier ITR on 30.09.2011 be considered as its return in response to notice u/s 148.
Thus, it was seen that even after opening of proceedings u/s 147, the assessee had failed to revise its return.
1 6 .2 The d e ta ile d re pl y of the a sse sse e is e xtr acte d a nd d is ca r d e d on the gr ou nd th a t dis cl osu r e wa s vol un ta r y. Th e d e n ia l is n ot on the fa c t of the for ce/p r e ss ur e , the d e n ia l /r e tr a c ti on is on the gr ou nd s of mis ta k e of p a r tn e r . Th e s e f a cts sta n d e xp l ain e d be f ore t he AO a s w e ll a s be for e the CI T( A) a n d no w b e f ore us a nd ha v e re ma in e d u nre bu tte d on r e c or d. We h a ve a l so se e n f r om th e I mp ou nd e d Do cume nt of t he S ur ve y Te a m i tse l f ( p a g e s 3 8 -4 2 ) sp e c ifi ca l l y p a ge 4 0 tha t th e se a re ITA 940 /CHD/2019 A.Y. 2011-12 Page 29 of 35 r e f le cte d i n the C ur r e n t As se t s. W e h a ve gone th r ough th e d e ta i l s a v a il a b le i n th e re s pe ct ive P a p e r B o ok s a n d fi n d tha t th e mi sta k e w h ic h is the b a s is of the sur r e n de r a nd th e ve r y s a me mi sta k e w hi ch i s r e f le cte d in t he r e t ur n fi le d a l so w a s ca p a b l e of b e i ng re cti fie d an d a n y w a y st and s e xp la i ne d and on ce the se sp e ci fi c P ur ch a se De e d s a moun ti ng to Rs .5 . 18 Cr odd is co ns id e re d. I t wou ld sh ow th a t inf a ct th e ope ni ng stoc k ta ke n i n 2 01 2 -1 3 a s se s sme n t ye a r a nd t he cl os in g stoc k a s p e r t he Ta x Au d it R e p or t in the ye a r un d er con si de r a ti on i s th e sa me . H e n ce , the mi s ta k e in t he re tur n f i le d st a nd s a dd r e sse d . Be in g sa t is fi e d b y the d e t a ile d e x pl a na ti ons on r e cor d, w e fi nd th a t a d d it ion ma de i n G r oun d N o . 3 b y th e AO a n d s us ta in e d in a p p e a l b y the CI T( A ) ca n n ot b e up h e l d . Th e c a se l a w a n d the p osi ti on of la w a s con si d e re d in the c onte xt of the ci r cu la r s of th e C B D T r e q u ir i ng th e Su r ve y Te a m to su pp o r t i ts ca se on e v ide nce s in ste ad of r e l yin g sol el y u p on t he su rr e nde r le t te r s, w e f in d ne e d not be e l a b or a te d a n d s ta nd s we ll a d d r e sse d in va r i ou s d e c i si ons of th e C our ts r e q ui r in g n o fu rt he r spe c if i c r e fe re n ce . We fu r th e r fi nd sup po rt f r om le tte r N o. C I T( A) - 1 /C H D /2 0 1 6 -17 /7 1 2 d a te d 0 6 .09 . 20 1 6 a t Pa pe r B o ok p a ge 14 4 a d d r e sse d to t he AO b y CI T( A )-I C ha nd i ga r h r e q ui r in g th e A O to f il e a re ma n d re p or t on the said is sue co nsid e r i n g w hi ch ul ti ma te ly ha s be e n de ci de d a ga in st th e a s se sse e . W e h a ve see n th e re pl y e xtr a cte d i n t he imp u gn e d or de r . W e f in d th a t th i s ITA 940 /CHD/2019 A.Y. 2011-12 Page 30 of 35 d ocu me n t fu r the r s up p or ts th e or d e r p a sse d . Th e r e l e va n t e x tr a ct the re f r om r e a d s a s u nde r :
"2. The assessee has filed an appeal against the order of the Assessing Officer whereby he has challenged both the additions. The assessee in the business of purchasing hand, under taking development, constructing flats and selling the same. The Opening & Closing Stock are the assessee of comprises of land and flats/houses. On going through the addition on account of difference in Closing stock, it is seen that the Assessing Officer has not brought out clearly the detail of items on account of which the difference arose. You are requested to give the details of property on account of which difference of Opening & Closing Stock of Ra. 5.18,89,786/- was added to the if of the assessee ."
(emphasis supplied) 1 6 .3 We h a ve se e n th a t in the re p ly u lti ma te ly the sur r e n der l e tte r i s the sole e vi de n ce wi th th e Re ve nue . The d e ta i l s of p a yme n ts sta n d f ul l y e xp l a i ne d b e f ore the t a x auth or i ti e s. No i nf ir mi ty i s p oi nt e d out. Ac cor d i ngl y w e f i nd on a c ons id e ra t ion of th e fa c ts a nd e vi de n ce s on re cor d t ha t G ro un d no . 3 of th e a ss e s see f or the re a son s e l a bor a te d he re i na bov e in de ta il d e se r ve s t o be a l low e d . O rde rd a ccor di n gl y.
17. Th e fa c ts re la t a bl e to G r ou nd N o . 4 ha v e bee n addr e sse d in p a r a 5 to 5 . 1 i n th is or d e r . Th e f act s a re se t out a t un -nu mb e r e d p a ge 1 0 p a r a 1 2 of th e a s se s sme nt or d e r . A p e r usa l of th e s a me sh ow s t ha t t he AO r e co rd s tha t; " During the course of assessment proceedings, on verifications of information/details filed it was seen that the assessee had debited an expenses to the tune of Rs. 4,22,767/- as "Interest Paid on Unsecured Loans'. However, on perusal of the balance sheet of the assessee it was seen that the assessee had given large amounts of interest free loans and advances to various parties. Vide this office questionnaire dated 16.12.2013, the assessee was asked to explain the business exigency of the same along with the relevant documentary ITA 940 /CHD/2019 A.Y. 2011-12 Page 31 of 35 evidences. In response vide written reply dated 03.01.2014, the counsel submitted that, the said advances were given by the assessee as advance against purchase of land and said advances stands adjusted in the next year. The counsel further submitted that since the said amounts were advanced for the purpose of purchasing land for the business of the firm, therefore, the said advances were in the nature of business advance. However, the assessee was not able to furnish any corroboratory documentary evidences to justify its claim. In view of die above, vide this office letter dated 06.01.2014 the assessee was asked to show cause as to why an amount of Rs. 4,22,767/- debited by the assessee as 'Interest Paid on Unsecured Loans' be not disallowed keeping in view the provisions of Section 36(l)(ii) and in light of the judgment of Hon'ble Pb. & Haryana High Court in the case of CIT v Abhishek Industries Limited (288 ITR l)........."
1 7 .1 Th e r e p l y of the a ss e s see w a s d isca r d e d b y the AO h ol d in g a s un d e r :
" 1 2 ....... . Thus, the amount of expenditure incurred by the assessee on account of interest paid during the year needs to be disallowed as it is highly improbable that a prudent business concern would take loans on interest and at the same time advance loans to other persons without charging any interest thereon. Such an act on the part of a business concern defies logic.
13. In view of the above, I am of the opinion that an interest amounting b Rs.4,22,767/- debited by the assessee under the head 'Interest Paid on Unsecured Loans' needs to be disallowed in this case. Accordingly, the said amount c Rs.4,22,767/- is hereby disallowed and an addition on this issue is made to the Returned Income of the assessee..........."
1 7. 2 . I t is se en th a t co ns ide r in g th e f a ct s f or th e se co nd a d di ti on , th e C I T( A) a ft e r e xtr a c tin g th e su b mis si o ns on b e h a lf of th e a sse ssee , c ons i de re d the r ema n d r e p or t of t h e A O a n d the r e p ly the re to of t he a sse s see . The se ha v e be en e xt ra c te d in p a r a s 7 .1 t o 7 .3 of the o rde r. Con si d e r i ng the se th e a d d it ion ITA 940 /CHD/2019 A.Y. 2011-12 Page 32 of 35 ha s b e e n con fi rme d i n p a r a 7 .4 . Th e C I T(A ) c o ns id e ri n g the l e ga l pos i tio n on t he i nte re s t free a d v a nce s ma d e ou t of mi xed fu nd s he ld tha t th e on us w a s up on th e a sse sse e t o d e mon st ra te b usi n e ss e x pe d ie nc y. C on si de rin g the a r gu ment s and the su bmi s si ons h e h e l d th a t the re w a s n o d oc ume n t pr od u ce d to sh ow w ha t bu si ne ss pu r po se o r com me r c ia l e xp e die n cy w as se rve d by ma k i ng th ose a d van ce s , he n ce , con fi r me d the a d di ti on .
18. Th e ld . AR h a s r e i te r a te d t he su bmi s si ons a s a d va n ce d b e f ore the ta x a u tho ri ti e s . Ap a r t f ro m p le a di n g b us in e ss e x ige nc ie s, i t w as a l so s ub mit te d th a t wh i le a r g uing t he e a rl ie r gr ou nd on me r i ts, he has h i gh li gh te d the ve r y na tur e of a ss e s see 's b us in e s s w he re i n l a nd p a rc e l s a r e pur c ha s e d f or w hi c h a d va n ce p a yme n ts h a ve to b e ma d e to th e ow ne rs o f the p r op e r ty. I t h as b e e n s ub mi tte d th a t i t i s a r e gu l a r o ngo in g a ct iv it y of th e a s se s se e 's b u si ne ss. Th e s pe ci fic i l lu str a ti on s r e fe r re d to a t pa ge s 70 -7 1 a lo ngw i th sup p or ti ng e vi de n ce s , i t w a s s ub mit te d , e sta b l i she s th is cl a i m. Att e nt io n h a s a l so b een i nv it e d to P a pe r B oo k p a ge 1 44 to 1 4 5 w h ic h is a le tte r d a te d 0 6 .0 9 .2 0 1 6 a d dr e s se d by the CI T( A ) to th e A O re q ue sti n g a r e ma n d re p or t whi ch d ocu me n t itse l f e sta b l i she s that t he re w a s n o s pe ci fi c a l le ga ti on of non b u si ne ss p ur p ose c ite d b y the AO w hi c h t he a sse ssee cou ld me e t. The r ele v a nt pa rt of th e l e tte r i s e x tr a cte d he re u nd e r :
ITA 940 /CHD/2019 A.Y. 2011-12 Page 33 of 35 "3. The Assessing officer while making addition on account of interest on Borrowed Capital u/s 36(1)(iii) has-hot brought on record specific details of n of borrowed fund for non-business purposes on account of which r st was disallowed.
You are requested to provide the details.
1 8 .1 A cc or di n gl y, it was hi s su bmi ss io n tha t th e a s se sse e ca n n ot b e r e q ui re d to p r ove the n e ga t ive . I t i s for th e A O or the C I T( A ) to poi n t ou t the n on- bu si ne ss us age . Th is is n otw it hs ta nd i ng th e a rg ume n t tha t th e a s se sse e h a d s uf fi ci e nt a va i l a b le fu nd s to a d v a nc e th e lo a n f or b u si ne ss p u rp ose s. Ac cor d i ng ly, it w a s hi s p r a ye r tha t th e a d d iti on be d e le te d .
19. Th e l d . D R a d d r e ss in g g ro un d N o . 4 su bmi tt e d tha t le t the i ssu e s be re ma n d e d b a ck to the AO f or c ons id e ra t io n.
20. Th e s a id p r a ye r w a s ob j e c te d to b y th e l d . A/R i n the face of th e re c or d a nd su b mis si ons on r e cor d .
21. We h a ve he a rd th e r iv a l s ubmi ssi on s a n d p e r use d the ma te ri a l a va i la b l e on re co rd . On a con si de r a ti on th e re of, we f in d th a t the r e is n o b a s is f or d i sa l l ow in g the i n te re s t p a i d on un se cu re d l oa ns. We ha ve g one th r ough the e vi de n ce s on r e c or d and we ha ve se e n th a t in the n a tu r e of a ss e ss ee ' s b us in e s s, a d va n ci ng of l oa n s for pu r ch a se of l a nd s i s a n o ngoi n g a ct iv it y. We ha v e see n t ha t as a re s ul t of th e se ad v a nce s, Re gi ste re d Sa le D e e d s f or p ur ch ase of la n d s h a ve b ee n e xe cu te d i n fa v our of th e a sse sse e . B us ine s s e xi ge n cie s c lai me d on th e f a cts a v a il a b l e , we h a ve s ee n sta n d we ll a d dr e sse d. N otw i th sta n d in g the fa ct t hat the a sse s see has a r gue d ITA 940 /CHD/2019 A.Y. 2011-12 Page 34 of 35 a va i l a b il i ty of in te re st f r om a d va n ce s to i t. Th e Re ve n ue in th e sp e ci fi c f a cts of th e c a se c ons id e ri n g the pe cul ia r b us in e ss a ct iv it ie s o f the a sse ssee w a s re qui r e d to po in t out w hi ch loa n a d va n ce d b e i n g con si d e re d to f or non -b us in e ss p ur p o se s . Th e a ss e s see c a nn ot be re q ui re d to mee t t he ne ga t ive . H e n ce , we f i nd th a t the a d d i tion ma d e on fa cts d e se r ve s to be de le te d . O r de re d a c cor d i ngl y,
19. Gr ou nd N o. 5 st a te d t o b e ge ne ra l i n n a tur e a nd ha s n ot b ee n a rg ue d b y t he a sse s see . W e f in d i t c a nn ot b e r e ga r de d a s a ge ne ra l gr ou nd , h ow e ve r , the a sse s see h a s c hosen n ot to a r gu e th e s a i d gr oun d . I t is d i smi sse d a s not p re ss e d . Gr oun d N os. 1 to 6 b e i n g ge ne r al r e q u i re n o a dj udi ca t ion .
20. I n the re su lt , a ppe a l of the a sse ssee i s p a r tly a l l ow e d .
O r d e r p r on o u n ce d o n 2 7 t h A p r i l , 2 0 2 2 .
Sd/- Sd/-
(VIKRAM SINGH YADAV) (DIVA SINGH)
लेखा सद य/ Accountant Member याियक सद य/ Judicial Member
"Poonam/Das*
ITA 940 /CHD/2019
A.Y. 2011-12
Page 35 of 35
आदेश क ितिलिप अ ेिषत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु / CIT
4. आयकर आयु (अपील)/ The CIT(A)
5. िवभागीय ितिनिध, आयकर अपीलीय आिधकरण, च डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar
1. Draft dictated 21.03.2022,28.03.2022, 19.04.2022 Sr.PS
2. Draft first placed before author 23.03.2022
3. Approved draft comes to Sr.PS/PS 30.03.2022, 19.04.2022,20.04.2022, 27.4.22 4 Final draft placed before author
5. Order signed and pronounced on 6 File sent to the Bench Clerk 27.04.2022 Sr.PS
7. Date on which file goes to the AR