9911796707
TMI Blog2002 (12) TMI 553X X X X Extracts X X X X X X X X Extracts X X X X ..... T (Appeals), Amritsar has grossly erred in not allowing 10% deduction for bona fide difference of opinion in the cost of construction as estimated by Regd. Valuer and as estimated by Departmental Valuer. 2004] DALJIT SINGH v. ASSTT. CIT (ASR.) 255 4.That the ld. CIT(A) Amritsar has grossly erred in confirming the addition of Rs. 58,000 made by the Assessing Officer on account of investment made by the assessee in FDRs. 5.That the learned CIT(A). Amritsar has grossly erred in sustaining the addition of Rs. 1,00,000 out of an addition of Rs. 3,00,000 made by Assessing Officer on account of cash found at the residence of the assessee. 6.That the learned CIT (Appeals), Amritsar, has grossly erred in not appreciating the fact that the Cash Book of the assessee-firm showed a cash of Rs. 4,76,346. 7.That the learned CIT(A), Amritsar, has grossly erred in confirming the addition of Rs. 55,000 made by the Assessing Officer on account of investment in Chit Fund. 8.That the learned CIT(A), Amritsar has grossly erred in not dealing with the ground of Appeal No. 5 pertaining to addition of Rs. 48,000 on account of Truck income estimated under section 44AE of the Income-tax Act, 1961. 9.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Before starting search, the Authorised Officer recorded the statement of the assessee and asked him as to how much cash was available with him. It was stated that the cash belonging to the firm was kept in safe custody at the residence. At the time of search no cash book was produced. However, subsequently, the cash book was produced which showed cash-in-hand at Rs. 4 lacs & odd. During the assessment proceedings, the assessee submitted that the cash found at the residence was available from the cash of the firm M/s. Narula Filling Station. It was stated that a sum of Rs. 1 lac was sent to the Bank for making a draft and remaining amount of Rs. 3 lacs and odd was kept at the residence. However, the Assessing Officer did not accept the contention of the assessee and made the addition of Rs. 3 lacs by stating that the availability of the cash in hand of the assessee remained unexplained. He also mentioned that a day before the search i.e., 8-10-1997, the sale from 2.30 p.m. onward amounted to Rs. 12,183 only, and there was not much of stock at the petrol station. On the aforesaid basis, the Assessing Officer concluded that the cash available with the assessee could not be attributed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat a sum of Rs. 3 lacs pertained to M/s. Narula Service Station and was duly appearing as cash in hand in the cash book of the aforesaid firm. It was submitted that the photocopy of the cash book for 9-10-1997 was filed before the Assessing Officer and the same is available on the assessment record but the Assessing Officer as well as the learned CIT(A) both disbelieved the cash book of the assessee in which the cash in hand was Rs. 4,76,346 on 9-10-1997. The learned Counsel for the assessee submitted that it was difficult for any person to remember the exact availability of the cash in house and since cash book showed sufficient cash in hand to explain the entire cash found at the residence, there was no occasion to sustain the addition of Rs. 1 lac when the learned CIT(A) himself admitted that the cash available as per cash book was Rs. 4 lacs and odd. He stressed that the learned CIT(A) held that the Assessing Officer had not doubted or disputed the cash availability in the cash book of the firm and the cash availability for the purchase of the draft, however, he is allowed the relief of Rs. 2 lacs only and arbitrarily sustained the addition of Rs. 1 lac which is not called for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground raised by the department is dismissed and that of the assessee is allowed. 7. Now we will proceed to the remaining grounds of the assessee's appeal. Vide ground No. 1, the assessee is aggrieved by the confirmation of addition of Rs. 24,765 on account of unexplained investment in lands. 7.1 The Assessing Officer noted in the block assessment order dated 25-10-1999 that the value of the investment in the property was at Rs. 79,765, for which the assessee did not furnish the source of the investment. However, he accepted the submissions of the assessee that the surrender on account of investment in land amounted to Rs. 37,000 and Rs. 18,000 on account of truck income was added in the block return. According to him, the balance of Rs. 24,765 remained unexplained and the same was added to the income of the assessee as undisclosed income. 7.2 Before the learned CIT(A), it was stated that the assessee had a truck income of 24,000 and further surrendered a sum of Rs. 24,508, as such funds of Rs. 48,508 were available with the assessee for the purchase of the land for Rs. 24,508 and, therefore, he was left with a sum of Rs. 24,000 and the investment of Rs. 24,765 was made from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 54000 29000 10800 100000 216840 - 100000 10200 14000 216000 840 18000 FDR 24000 1995-96 840 54000 17000 10800 25000 125640 25000 - - 8000 125603 37000 18000 House 60000 - - 8603 24000 1996-97 37 72000 10000 10800 - 92837 30000 - - 25437 79437 13400 24000 1997-98 13400 24000 6000 10800 - 54200 30000 - - 20000 50000 4200 1998-99 4200 12000 4000 10800 - 31000 - - - - - 31000 327000 194000 59340 237008 891785 370000 118000 - 164208 158140 786340 2004] DALJIT SINGH v. ASSTT. CIT (ASR.) 261 7.4 In his rival submissions, the learned Sr. D.R. strongly supported the order of the learned CIT(A) and stated that the addition made by the Assessing Officer and confirmed by the learned CIT(A) was as per law and, therefore, deserved to be upheld. 7.5 We have consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same. However, the learned CIT(A) did not find any merit in the contentions of the assessee and observed that it had not been clarified as to what could be the items on which there was difference of opinion and the estimate made by the DVO was based on the CPWFD schedule rates which are prescribed for the construction of Government buildings in which higher value items were not used. According to him, the assessee being a rich person would have been used higher value items for the construction of his house. He accordingly sustained the addition made by the Assessing Officer. 262 SELECTED ORDERS OF ITAT [Vol. 1 8.3 Before us, the learned Counsel for the assessee reiterated the submissions made before the authorities below and also stated that the assessee constructed a house during the years 1991 to 1995 and in this regard, an inquiry was raised by the ITO Survey-cum-CIB vide letter dated 16-1-1996 and the assessee vide his reply dated 25-4-1997 fully explained the cost of construction before him at Rs. 10,16,925. It was stated that no action was taken on the basis of the explanation of the assessee. In other words, it was submitted that the explanation given by the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is noticed that for making the addition, the Assessing Officer relied on the valuation made by the D.V.O. It is also true that before the search an enquiry was conducted by the ITO Survey-cum-CIB for the cost of construction and no addition was made in the regular assessment. It is also true that during the enquiry conducted by the ITO Survey-cum-CIB, the assessee explained that the investment had been made by withdrawing the amounts from the various firms in which the assessee was the partner. It is also noticed that the department has not found any material during the search to show that the assessee had incurred any expenditure outside the books towards the cost of construction of the residential house. It seems that the addition has been made by the Assessing Officer only on the basis of the value determined by the DVO. A similar question was before the Hon'ble Bombay High Court in the case of Vinod Danchand Ghodawat (supra) where in on a reference the Hon'ble High Court observed as under :- "The said question refers to an addition of Rs. 2,49,350 made on account of unexplained expenses in the construction of a residential bungalow by the assessee. Here also, Chapter XIV- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessment proceedings, the Assessing Officer raised the quarries relating to such paper. In the reply, the assessee had explained a large number of loose papers to be relating to the construction of the complex. However, no finding was recorded by the Assessing Officer that a single paper/document was found unrecorded in the books of account. Similarly, no evidence was found as result of search to establish that the sale proceeds of the part portion of the complex was not properly recorded. Thus, it could not be said that there was any undisclosed income detected, as a result of search relating to either construction or sale of the commercial complex. Even on the facts of the case, the addition was not justified. It was a very peculiar situation that the department while estimating the cost of construction had allowed a rebate of 7.5 per cent on estimated contractors profit. On the other hand, while determining the profit on sale of part portion had estimated the profit at 35 per cent. No plausible explanation could be given by the revenue for adopting different yardstick as above. The assessee had disclosed the profit at 24.42 per cent in respect of portion of the complex sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1991-92. 9.2 Before the learned CIT(A), the assessee submitted that the investment of Rs. 40,000 in the STDRs was explained by the undisclosed cash declared by the firms namely M/s. Narula Crushing Co. M/s. Narula Stone Crushing Co. M/s. D.S. Stone Crushing Co. and M/s. Narula Service Station in their Block period returns and the shares received by the assessee was sufficient to explain the investment of Rs. 40,000. As regards to the addition of Rs. 18,000, it was stated that the same was available to the assessee from the income earned and surrendered in the Block assessment. However, the learned CIT(A) did not find any merit in the explanation of the assessee and confirmed the addition made by the Assessing Officer. 9.3 We have heard both the parties at length and also carefully gone through the material available on the records. In our view, the facts of this issue are identical to the fact given to the ground No. 1 of the assessee's appeal (supra). We have already remanded the issue raised by the assessee vide ground No. 1, so this issue is also remanded back to the file of the Assessing Officer and the directions given while disposing of ground No. 1 will also be applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und is disposed of accordingly. 12. Vide ground No. 8, the assessee is aggrieved by the addition of Rs. 48,000 made by the Assessing Officer on account of truck income estimated under section 44AE of the Income-tax Act, 1961. 12.1 The Assessing Officer discussed this issue at page 8 of the assessment order, wherein it has been stated that the assessee had shown the income in the assessment year 1997-98 from plying of trucks under section 44AE of Rs. 24,000 only. According to the Assessing Officer the assessee was owner of three trucks and had not shown the income in respect of two trucks. The assessee submitted before the Assessing Officer that these two trucks were out of order, as such no income was earned. It was stated by the assessee that this fact was noted down by the search party. However, the Assessing Officer observed that the assessee had not produced any evidence in support of his contention. He, therefore, made the addition of Rs. 48,000. 12.2 The learned CIT(A) has not discussed this issue at all. It is noticed that this ground was raised by the assessee vide ground No. 5 of the grounds of appeal he filed before the learned CIT(A) which is apparent from the grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 24,000 only and also direct the Assessing Officer to give the benefit of the said income against another unexplained investment for which the separate additions, if any, had been made. This ground is dispose of in the aforesaid manner. 13. Vide ground No. 9, the assessee is aggrieved that the learned CIT(A) had not dealt with ground No. 9 raised before him. The ground No. 9 raised before the learned CIT(A) reads as under- "9. That the learned ACIT Inv. Cir-1, Amritsar, has failed to appreciate that the assessee was a partner M/s. Narula Crushing Co.; M/s. Narula Stone Crushing Co.; M/s. D.S Stone Crushing Co., M/s. Daljit Singh & Bros., M/s. Daljit Singh & Bros., Pathankot, M/s. Jaswant Singh & Co., Mohali, M/s. Narula Service Station, Pathankot and that these firms had sufficient cash from undisclosed sources surrendered in their Block assessment returns which was available with the assessee for making various investment alleged to have been made from personal undisclosed income of the assessee." From the above ground No. 9 raised before the learned CIT(A), it is noticed that the assessee had not narrated how much cash was available from the firms in which the assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot ask the assessee to do something impossible and at the same time, penalise him for not being able to do so. Admittedly, the photocopies of the documents were made available to the assessee by the Income-tax Department in the month of October, 1998. Considering all the facts of the present case and also keeping in view the ratio of the decision of the ITAT, Patna Bench in the case of DCIT v. Late Rattan Lal Jain (supra), we are of the opinion that in the instant case, the assessee was prevented by sufficient cause from filing the return for the block period, in time. In our view, reasonable cause can be reasonably said to be a cause which prevents a man of average intelligence or ordinary prudence, acting under normal circumstances, without negligence or inaction or want of bona fides. 18.1 In view of the above, we do not find any justification in levying the interest under section 158BFA of the Income-tax Act, 1961. We accordingly direct the Assessing Officer not to charge interest under section 158BFA of the Act." 2004] DALJIT SINGH v. ASSTT. CIT (ASR.) 269 So by respectfully following our earlier order dated 26th June, 2002 in the case of Narula Transport Co. (supra), we ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
