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Shri C. Shankar Reddy Versus The Deputy Commissioner of Income Tax, Central Circle -1 (1) , Bangalore

2017 (7) TMI 424 - ITAT BANGALORE

Addition on an account of investment in house construction - Held that:- When the property in question comes under the state PWD jurisdiction then the state PWD rates has to be applied for the purpose of computing the cost of construction on estimate basis. The DVO’s valuation of cost of construction is only an estimated valuation based on CPWD rates. Therefore the AO is directed to apply the state PWD rates for estimating the cost of construction of the house in question. - As regards the s .....

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for self supervision. The Jodhpur bench of the tribunal in the case of ITO Vs Dr. Anand Chhabra (2006 (11) TMI 268 - ITAT JODHPUR) has held that such supervision rebate shall be given ranging from 7% to 10%. Therefore, in view of the various decisions of the tribunal on this issue we direct the AO to allow a rebate of 10% on account of self supervision while computing the rate of cost of construction. Hence this ground of the assessee’s appeal is partly allowed. - Addition on account of int .....

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t of NSC at ₹ 2,641/-. Therefore, prima facie it appears that the interest received from the bank has been duly reflected as part of the interest income of ₹ 72,642/-. However, since the CIT(A) has not adjudicated this issue therefore, for the limited purpose of verification of this fact we set aside this issue to the record of AO to verify the record and particularly schedule 4 & 5 of financial statement of the assessee and then decide the issue after giving an opportunity of hearin .....

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rresponding expenses. Considering the quantum of the expenses which is less than 15% of the gross receipts we find that the adhoc disallowance of 30% is exorbitant and is an extreme view. Accordingly,when the claim of the assessee is less than 15% of the gross professional receipts we restrict the disallowance for want of supporting evidence to 10% of the expenses instead of 30%. Accordingly, we modify the orders of the authorities below and direct the AO to restrict the disallowance at 10%. - .....

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t aside this issue to the record of the AO for applying the rate of gold as prevailing at the time of the wedding as well as births of the children of the assessee by considering the proportionate amount of jewellery on the occasions being wedding and birth. - Addition being cash found in the bank locker - Held that:- When there is no dispute that the cash was found from the locker it has to be included in the income of the assessee in the absence of any explanation. However, the assessee is .....

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directed against the composite order dated 31.08.2015 of CIT(A) for the assessment years 2011-12 to 2013- 14. Since these three appeals are arising from the assessments framed u/s. 143(3) r.w.s. 153A of the IT Act and involve common issues therefore, these three appeals were clubbed together for the purpose of hearing and are being disposed of by this composite order. 2. There is a delay of 43 days in filing these appeals by the assessee. The assessee has filed a petition for condonation of del .....

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as well as by the Assessing Officer. It took sometime for them to make available the certified copies and therefore the assessee could not file these appeals within a period of limitation and there was a delay of 43 days in filing these appeals. The ld. AR has submitted the delay in filing the appeals is neither deliberate nor willful but it was due to the reasons beyond control of the assessee. Hence he has pleaded that the delay of 43 days in filing of the appeal may be condoned. 3. On the ot .....

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order and therefore the assessee applied for certified copies of the order passed by the CIT(A) as well as the Assessing Officer. This process of taking the certified copy took sometime and therefore there is a delay in filing the appeals. It is pertinent to note that there is nothing on record to suggest that by filing the appeal belatedly the assessee intended to achieve some ulterior purpose or motive. Therefore when the assessee was not going to take any benefit by delaying the filing of ap .....

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vised grounds. 1. The order of the learned CIT (A) is opposed to law, facts and evidence in this case. 2. The learned CIT (A) erred in law in sustaining addition to the tune of ₹ 20,40,000/- as unexplained investment in house construction. 3. The learned CIT(A) erred in law in confirming the addition of ₹ 51,347/- in respect of interest earned or FDR invested in earlier years. 4. The learned CIT (A) erred in law in sustaining the disallowance of ₹ 24,987/- estimated at 30% of t .....

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es for valuation of the house property. 8. The learned CIT (A) ought to have granted self-supervision charges at 10% of the total cost of house construction as against 6% allowed by the District Valuation Officer. 9. For These and such other grounds as may be advanced on or before the date of hearing, he appellant humbly prays that this Hon'ble Tribunal be pleased to allow this appeal and to render justice to the appellant. 6. Ground No. 1 is general in nature and does not require any specif .....

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377; 1,40,72,700/-. The AO made addition of ₹ 33,93,325 for the assessment year 2011-12 based on the valuation of the DVO. The assessee challenged the action of the Assessing Officer before the CIT(A). The CIT(A) after considering the sources explained by the assessee has reduced the addition to ₹ 20,40,000/- as against 33,93,325/- made by the Assessing Officer. 8. Before the tribunal the ld. AR of the assessee has submitted that the DVO has valued the cost of construction by applyin .....

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hat the Hon ble High Court has held that the working out the cost of construction on state PWD rate should be considered. He has also relied upon the decision of the Chennai bench of the tribunal in case of K. Damodaraswamy Naidu Vs ACIT (1997) 59 ITD 0510 and submitted that the tribunal while dealing with the identical issue of CPWD rates or state PWD rates held that the valuation shall be computed following the state PWD rates. Thus the ld. AR has contented that the AO may be directed to apply .....

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R has relied upon the orders of the authorities below and submitted that the CIT(A) has already allowed the substantial relief to the assessee and therefore no further reduction in the addition on account of investment in cost of construction of house can be allowed. 10. We have considered the rival submissions as well as the relevant material on record. The limited grievance of the assessee in respect of this issue is application of CPWD rates or state PWD rates while computing the cost of cons .....

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n instead of CPWD rates. Hon ble Rajasthan High Court in case of CIT Vs Dinesh Talwar 265 ITR 344(Raj) has affirmed the decision of the tribunal directing the AO to apply state PWD rate while computing the cost of construction of the building. Similar view has been taken by the Hon ble Madras High Court in case of CIT Vs K. Jayakumar(supra). Thus when the property in question comes under the state PWD jurisdiction then the state PWD rates has to be applied for the purpose of computing the cost o .....

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. The AO has given 6% rebate on account of self supervision. However, the assessee is demanding 10% rebate on this account. The ld. AR of the assessee has relied upon the decision of the Chennai bench of the tribunal in the case of DCIT Vs Smt. C.K. Sumathy (supra) wherein 15% deduction was directed to be allowed for self supervision. The Jodhpur bench of the tribunal in the case of ITO Vs Dr. Anand Chhabra (supra) has held that such supervision rebate shall be given ranging from 7% to 10%. Ther .....

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the assessee earned interest. During the year the assessee received interest on Fixed Deposits of ₹ 51,347. On query the assessee submitted that interest on investment is reflected in the return of income wherein the interest income was shown at ₹ 72,642/-. Thus, the assessee contented before the AO that this amount of ₹ 51347/- is part of the interest income of ₹ 72,642/-. The AO did not accept this explanation of the assessee and made an addition of ₹ 51,347/-. T .....

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has already offered the interest income in the return of income. On the other hand, the ld. DR has relied upon the order of the AO and submitted that the AO has verified the record and found that the assessee has not offered the interest of ₹ 51,347/- 14. We have considered the rival submissions as well as relevant material on record. The AO made an addition of ₹ 51,347/- on account of interest on Fixed Deposit and National Savings Certificate. The assessee categorically stated befor .....

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om the bank has been duly reflected as part of the interest income of ₹ 72,642/-. However, since the CIT(A) has not adjudicated this issue therefore, for the limited purpose of verification of this fact we set aside this issue to the record of AO to verify the record and particularly schedule 4 & 5 of financial statement of the assessee and then decide the issue after giving an opportunity of hearing to the assessee. 15. Ground No. 4 is regarding disallowance of ₹ 24,987/- being .....

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ssessee stated that he was an advocate and in full time employment in 2007-08 and parallelly started practice in Financial Year 2008-09. He has further stated that he got into full time practice since Financial Year 2011-12. The AO noted that the assessee has not provided any documentary evidence towards administrative expenses of ₹ 83,339/- as are reflected in Income and Expenditure account. Accordingly, the AO has made adhoc disallowance of 30% amounting to ₹ 24,987/-. The assessee .....

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the quantum of administration expenses in relation to the total professional receipts are reasonable and are below the normal claim in similar cases. The ld. AR has even referred the amendment vide Finance Bill 2016 in section 44ADA which provides for estimating the income of an assessee engaged in any profession whose total gross receipt does not exceed ₹ 50 Lakhs in the previous year. Thus, the revenue considered 50% of the gross receipt of the profession as reasonable expenses to be all .....

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record. The assessee has shown the professional receipts of ₹ 5,72,356/- against which the assessee has claimed administrative expenses of ₹ 83,339/- which is less than 15% of the professional receipts. Once the professional income and gross receipts are not in dispute then it is an impossible proposition that the professional income should be earned without any corresponding expenses. Considering the quantum of the expenses which is less than 15% of the gross receipts we find that t .....

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ing revised grounds. 1. The order of the learned CIT (A) is opposed to law, facts and evidence in this case. 2. The learned CIT (A) erred in law in sustaining addition to the tune of ₹ 6,11,823/- as unexplained investment in house construction. 3. The learned CIT (A) erred in law in sustaining the disallowance of ₹ 89,655/- estimated at 30% of the administrative related to the professional income of the appellant. 4. The learned CIT (A) erred in law in not granting proper and suffici .....

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tion as against 6% allowed by the District Valuation Officer. 8. For these and such other grounds as may be advanced on or before the date or hearing, the appellant humbly prays that this Hon'ble Tribunal be pleased to allow this appeal and to render justice to the appellant. 19. Ground No. 1 is general in nature and does not require any specific adjudication. 20. Ground No. 2 is regarding addition on account of investment in construction of house. This issue is common as for the assessment .....

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IT (A) is opposed to law, facts and evidence in this case. 2. The learned CIT (A) erred in law in sustaining addition to the tune of ₹ 13,47,877/- as unexplained investment in house construction. 3. The learned CIT (A) erred in law in sustaining additions on account of unexplained gold and silver to the extent of ₹ 17,71,225/- 4. The learned CIT (A) erred in law in confirming the addition of ₹ 10,00,000/- being case found in the bank locker as unexplained income. 5. The learned .....

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struction. 8. The learned CIT (A) ought to have adopted the KPWD rates rather than the CPWD rates for valuation of the house property. 9. The learned CIT (A) ought to have granted self-supervision charges at 10% of the total cost of house construction as against 6% allowed by the District Valuation Officer. 10. For these and such other grounds as may be advanced on or before the date of hearing, he appellant humbly prays that this Hon'ble Tribunal be pleased to allow this appeal and to rende .....

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the course of search u/s. 132, gold articles(Jewellery) weighing 1072.77 gram and silver articles weighing 773.5 grams were found as inventories at bank locker belonging to the assessee. Apart from this, gold jewellery weighing 322 grams was also found at the residence of the assessee. In the assessment the AO made an addition of ₹ 38,63,176/- as unexplained investment in jewellery. The assessee challenged the action of the AO before the CIT(A). The CIT(A) has allowed the credit for 800 g .....

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e applied for valuing the jewellery in question. The ld. AR has further submitted that the family of the assessee consist of himself, his wife and two sons born in the year 2002 and 2007. Since the assessee belongs to Reddy community whether it is customary to receive gifts on occasions like wedding, birthday etc. The AO has wrongly assumed that the jewellery was acquired during the Financial Year 2012-13 and applied the prevailing rate at the time of search instead of the rate prevailing when t .....

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see had explained the occasions and times of jewellery received by the wife of the assessee then the rates prevailing at that point of time should have been applied for the purpose of addition. 27. On the other hand, the ld. DR has relied upon to orders of the authorities below and submitted that when the jewellery was detected during the search and no record was produced by the assessee regarding the acquisition / purchase of the jewellery then presumption is raised that the jewellery was acqui .....

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the assessee. As per the descriptions of the articles found during the search we note that all these gold items are jewellery meant for women. Therefore, the entire jewellery found during the search was women jewellery. The assessee claimed that the majority of the jewellery was received by the wife of the assessee at the time of marriage in the year 1998 and remaining was received on the occasion of the birth of first son in the year 2002 and second son in the year 2007. Thus, the assessee clai .....

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the jewellery was received by his wife at the time of wedding as well as at the occasion of the birth of sons then it becomes relevant to consider whether the jewellery found during the search was old jewellery or it was a newly made jewellery. When the AO has not given a finding that the jewellery was newly made jewellery then the jewellery items as per the list clearly reflects that these are of routine jewellery items of women some of which are considered as part of ishtridhan and are part of .....

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