TMI Blog2016 (1) TMI 1374X X X X Extracts X X X X X X X X Extracts X X X X ..... the old building while constructing the new building appears to be bonafide -addition made in the hands of both the assessees on account of undisclosed investment in the house property is hereby deleted - decided in favour of assessee. Addition on account of undisclosed investment in purchase of machinery in hands of Rajan Jhiriwal - Held that:- Given the undisputed fact that the assessee had withdrawn a sum of ₹ 31,85,751 from its bank account. The explanation of the assessee that besides other expenses, machinery worth only ₹ 25,500 was also purchased out of said withdrawal appears reasonable. In light of this, addition of ₹ 25,500 is deleted and ground no. 2 is allowed. Levy of interest u/s 234B & 234C by not considering the adjustment of cash of ₹ 19 lacs seized in course of search and deposited in the PD a/c - where there is an advance tax liability and there is a cash which is seized and lying in the PD a/c, would the AO be empowered to adjust the same automatically or would that require a specific authorization from the assessee - Held that:- It would be difficult to say that showing adjustment of seized cash against advance tax liability in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of search. ITA No. 72/JP/13 (i) That the ld. AO is seriously erred by making an addition of ₹ 97,794/- on account of undisclosed income in 3, Moti Dungri Alwar. The AO has failed to understand the provisions of section 55A alongwith rule 111AA. Hence, addition made on account of undisclosed investments of ₹ 97,794/- is deserved to be deleted. (ii) Under the facts and circumstances of the case order passed u/s 143(3) of the Income Tax Act, 1961 is illegal bad in law s it is charged the interest u/s 234B 234C on disclosed income ₹ 19,00,000/- seized during the course of search. ITA No. 73/JP/13 ITA No. 72/JP/13 Shri Rajan Jhiriwal Shri Robin Jhiriwal 2. Regarding ground no 1 which is common in both the appeals, relevant facts relevant for issue under consideration are as follows. 2.1 Both the assessees are partner in M/s Rajan Jhiriwal from where they derive income in form of remuneration and share of profit. Both these assessees started construction of house in F.Y. 2007-08 which was continued upto F.Y. 2009-10. The cost of construction amounting to ₹ 1,09,06,256/- was declared and borne by both the assessees equally. The AO refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as spread over a period of 7 years. The ratio of this decision is fully applicable in the present case and therefore, the addition confirmed by CIT(A) be deleted. Further, it was submitted that the DVO has ascertained the cost of construction by application of CPWD rates instead of local PWD rates. The Rajasthan High Court in case of CIT vs. Prem Kumar Murdia 296 ITR and 303 ITR 128 has held that where CIT(A) allow the deduction of 20% from the cost of construction estimated by DVO on account of difference in the cost on account of CPWD rates instead of local PWD rates which is confirmed by Tribunal, such finding of fact cannot be disturbed by the court. The CIT(A) has also observed that there is variation in the estimate of DVO due to adoption of CPWD rates instead of PWD rated but he has confirmed the addition only because assessee has not taken this argument. It is submitted that once the fact of variation in the estimate of cost made by DVO on account of nonapplication of PWD rates is accepted. CIT(A) ought to have deleted the addition. In view of above, the addition confirmed by CIT(A) be deleted. 2.3 We have heard the rival contentions and pursued the material on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried on over a period of 3 years. Further, it is correct that provisions of section 55A read with rule 111AA are not applicable in the instant case but at the same time, we agree with the ld AR that similar factual matter was under consideration before the Hon ble Patna High Court in case of Bimla Singh (Supra) wherein the High court has allowed relief to the assessee in the matter of valuation of property. In the instant case, the difference in the cost of construction as determined by the assessee and as determined by the DVO is only 9.14% and the construction has spread over a period of 3 years. Further, given that the assessee has purchased the land alongwith building, the explanation of the assessee that they had used some of the building material recovered from the old building while constructing the new building appears to be bonafide. In light of this facts and following the decision of the Hon ble Patna High Court in case of Bimla Singh (supra), the addition made in the hands of both the assessees on account of undisclosed investment in the house property is hereby deleted. Hence, ground no 1 in both the appeals are allowed. 3. Ground No.2 is specific to ITA No. 73/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eized. At the time of filing of the return on 21.09.2010, the assessee shown said cash deposit as part of advance tax in the return of income and in the computation of income. However, AO didn t consider the said seized cash towards advance tax and the assessment order was passed on 27.12.2011 where interest u/s 234B and 234C was charged. In course of assessment proceedings, assessee again requested the AO vide letter dated 30.03.2011 to adjust the cash lying in the PD a/c against the advance tax liability. Subsequent to passing of assessment order and in response to application filed by assessee under section 154 of the Act, the AO finally adjusted this amount against the outstanding demand raised by him. Being aggrieved, the assessee raised additional ground before ld CIT(A) against charging of interest u/s 234B 234C. The CIT(A) admitted the additional ground but referring to section 132B and the CBDT instruction dated 13.07.2006 held that seized cash can be adjusted only against the existing liability and since advance tax payment is not an existing liability u/s 132B, the interest levied/s 234B 234C is correct and decision of ITAT relied upon by the assessee in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial on record. The undisputed facts are that a search was conducted on 08.10.2009 at the premises of the assessee and cash amounting to ₹ 19 lacs was seized. The assessee while filing his return of income on 21.09.2010 considered ₹ 19 lacs towards advance tax payment. Subsequently the assessee vide letter dated 30.03.2011 requested for adjustment of cash against advance tax liability. The assessment was completed on 27.12.01 wherein the AO did not give credit for ₹ 19 lacs of seized cash against the advance tax liability and also levied interest u/s 234B 234C of the Act. Subsequently, pursuant to rectification application u/s 154 of the I.T. Act, the AO accepted the adjustment of ₹ 19 lacs from PD account towards the tax liability but rejected the claim of the appellant for non-charging of interest u/s 234B and 234C of the Act. The ld. CIT(A) confirmed the levy of interest u/s 234B 234 C of the Act and held that the advance tax payment cannot be said to be an existing liability within the meaning of existing liability defined in section 132B of the Act. In this regard, it would be relevant to note that an explanation no 2 to section 132B of the Act ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation is thus required to enable the AO to make such an adjustment. Further, reference can be drawn to provisions of section 245 of the Act which empowers the AO to adjust the refund against the sum remaining payable under this Act only after giving an intimation in writing to such person of the action proposed to be taken under that section and where such person can object to such adjustment. In other words, the AO is seeking the necessary authorization from the person to adjust the refunds against any other liability. Following the same principle, it would be essential that in respect of the cash seized, which belongs to the assessee, though lying with the department, the assessee authorizes the department to adjust the same against the advance tax liability. In the instant case the assessee has submitted that he has shown the cash seized amounting to ₹ 19 lacs towards advance tax payment in his return of income. Further the assessee has written a letter dated 30.03.2011 requesting for adjustment of cash against advance tax liability. In our view, it would be difficult to say that showing adjustment of seized cash against advance tax liability in the return of income tan ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
