Shri Yogeshbhai H. Trivedi, Bhavnagar v. The Income tax Officer, Ward-1(2),, Bhavnagar

ITA 1074/AHD/2006 | 1997-1998
Pronouncement Date: 24-02-2010 | Result: Partly Allowed

Appeal Details

RSA Number 107420514 RSA 2006
Assessee PAN AARPT2395J
Bench Ahmedabad
Appeal Number ITA 1074/AHD/2006
Duration Of Justice 3 year(s) 9 month(s) 22 day(s)
Appellant Shri Yogeshbhai H. Trivedi, Bhavnagar
Respondent The Income tax Officer, Ward-1(2),, Bhavnagar
Appeal Type Income Tax Appeal
Pronouncement Date 24-02-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 16-12-2008
Date Of Final Hearing 11-02-2010
Next Hearing Date 11-02-2010
Assessment Year 1997-1998
Appeal Filed On 02-05-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE SHRI N.S.SAINI ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH JUDICIAL MEMBER ITA NO.1074-1079/AHD/2006 ASSESSMENT YEARS:1997-98 TO 2002-03 DATE OF HEARING:18.2.10 DRAFTED:22.2.10 SHRI YOGESHBHAI HARIPRASAD TRIVEDI C/O. VISHVAS BUILDERS VIRBHADRA NAGAR PLOT NO.15A JAIL ROAD NR. NILAMBAUG BHAVNAGAR PAN NO.AARPT2395J V/S . INCOME TAX OFFICER WARD-1(2) BHAVNAGAR (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI M.J. SHAH AR REVENUE BY:- SHRI GOVIND SINGHAL SR-DR O R D E R PER BENCH:- THESE SIX APPEALS BY THE ASSESSEE ARE ARISING OUT OF DIFFERENT ORDERS OF COMMISSIONER OF INCOME-TAX (APPEALS)-XIX AHMEDABAD IN APPEAL NOS. CIT(A)- XIX/36 43 37 & 44/WD.1(2)/BNR/05-06 ALL DATED 31-01 -2006. THE ASSESSMENTS WERE FRAMED BY THE INCOME-TAX OFFICER WARD-1(2) BHAVNAG AR U/S.143(3) R.W.S. 147 OF THE INCOME-TAX ACT 1961 (HEREINAFTER REFERRED TO AS T HE ACT) VIDE HIS ORDERS OF EVEN DATE 29-03-2005 FOR THE ASSESSMENT YEARS 1997-98 T O 2002-03. 2. THE FIRST COMMON ISSUE IN ITA NO.1074 TO 1077/AHD/2006 OF THE ASSESSEES APPEALS IS AS REGARDS TO THE ORDER OF CIT(A) CONFIR MING THE PROFIT AT 5% ESTIMATED BY THE ASSESSING OFFICER AT 13.27%. FOR THIS THE ASS ESSEE HAS RAISED COMMON AND IDENTICAL WORDED GROUNDS IN ALL THE YEARS THE RELE VANT GROUND FOR THE SAKE OF CONVENIENCE AND BREVITY IS BEING REPRODUCED FROM AS SESSMENT YEAR 1997-98 AS IT IS:- ITA NO.1074-1079/AHD/2006 A.YS.97-98 TO 02-03 YOGESHBHAI H TRIVEDI V. ITO WD-1(2) BNR PAGE 2 1] THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN DETERMINING THE INCOME OF THE APPELLANT AT RS.225180/- BY ESTIM ATING PROFIT @ 5% ON RS.18078435/- DISTRIBUTING THE SAME IN FOUR YEARS. 2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE DETERMINATION OF INCOME @ RS.225980/- IS TOO HEAVY AND ARBITRARY AND NOT WARRANTED BY THE FACTS OF THE CASE. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE BRIEF FACTS ARE THA T THE ASSESSEE IS ENGAGED IN CIVIL CONSTRUCTION ACTIVITIES AND A SURVEY U/S.133A OF TH E ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF MAHAGAUTAMESHWARNAGAR SIHOR C ORPORATION SIHOR ON 21-01- 2003. DURING THE COURSE OF SURVEY INCRIMINATING DO CUMENTS WERE FOUND THE PERIOD FROM FINANCIAL YEAR 1996-97 TO 30-09-1999 AND FROM THESE DOCUMENTS IT WAS FOUND THAT THE ASSESSEE WAS INDULGED IN CARRYING OUT UNAC COUNTED BUSINESS OF LAND AND ESTATE WHICH WAS NOT DISCLOSED IN HIS RETURN OF INC OME. THE ASSESSEE ADMITTED THAT THESE INCRIMINATING DOCUMENTS WERE IN HIS HANDWRITI NGS AND PERTAINED TO THE LAND AND ESTATE BUSINESS CARRIED OUT BY HIM AND THE SAME WAS NOT DISCLOSED IN ASSESSEES RETURN OF INCOME. THE ASSESSEE ADMITTED THAT REGULAR BOOKS OF ACCOUNT WERE NOT MAINTAINED. FURTHER YEAR-WISE PURCHASES A ND SALES OF KALIABID LAND WERE NOT FURNISHED. THE ASSESSING OFFICER HAS RECORDED T HE STATEMENT OF ASSESSEE ON OATH WHEREIN HE HAS ADMITTED THAT HE HAD CARRIED OUT PURCHASES AND SALES OF PLOTS OF KALIABID LAND AND INITIALLY EARNED PROFIT THEREO N BUT LATER ON HE SUFFERED HUGE LOSS. HOWEVER THE ASSESSEE COULD NOT SUBSTANTIATE HIS CO NTENTION BY ANY DOCUMENTARY PROOF. CONSIDERING ALL THESE FACTS THE ASSESSING O FFICER ESTIMATED INCOME FROM KALIABID PROJECT AT RS.24 LAKHS AND TAXED EQUALLY I N FOUR YEARS FROM ASSESSMENT YEARS 1997-98 TO 2000-01. SIMILARLY THE AO HAS ALS O FOUND THAT THE ASSESSEE HAD CARRIED OUT CONSTRUCTION JOB-WORK IN THE NAME OF HI S PROPRIETARY CONCERN M/S. VISWAS BUILDERS FROM ASSESSMENT YEARS 1998-99 ONWARDS BUT THE RECEIPTS DISCLOSED WERE NOT FOUND TO BE SUBSTANTIATED BY ANY DOCUMENTARY EV IDENCE. THEREFORE HE ESTIMATED PROFIT @ 8% OF ESTIMATED RECEIPTS FROM CO NSTRUCTION BUSINESS. AGGRIEVED AGAINST THE ASSESSMENT OF RS.6 LAKHS AND ESTIMATION OF PROFIT @ 8% ON ESTIMATED RECEIPTS FROM CONSTRUCTION BUSINESS IN EACH OF THE ASSESSMENT YEAR (FOUR ASSESSMENT YEARS) THE ASSESSEE PREFERRED APPEAL BE FORE CIT(A). ITA NO.1074-1079/AHD/2006 A.YS.97-98 TO 02-03 YOGESHBHAI H TRIVEDI V. ITO WD-1(2) BNR PAGE 3 4. THE CIT(A) AFTER CONSIDERING THE FACTS OF THE CA SE ESTIMATED THE GP RATE AT 5% AND DIRECTED THE ASSESSING OFFICER TO TAX A SUM OF RS.2 25 980/- IN EACH OF THE ASSESSMENT YEAR. THE CIT(A) HELD IN PARA-7 AS UNDER:- 7. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE. PROPER THOUGHT WAS GIVEN TO THE WRITTEN SUBMISSIONS AS WEL L AS ORAL ARGUMENTS MADE BY THE AUTHORIZED REPRESENTATIVES. I HAVE GONE THROUGH THE ASSESSMENT ORDERS. I HAVE ALSO VERIFIED THE RELEVAN T IMPOUNDED MATERIALS WHICH ARE MADE BASIS FOR ESTIMATING UNA CCOUNTED INCOME EARNED FROM KALIABID LAND TRANSACTION. I HAVE ALSO GONE THROUGH THE STATEMENTS OF THE APPELLANT RECORDED BY THE ASSESSI NG OFFICER DURING THE COURSE OF 133A OPERATION CONDUCTED AT THE BUSIN ESS PREMISES OF MAHAGAUTAMESHWARNAGAR SIHOR CORPORATION SIHOR AS WELL AS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE APPELLAN T HAS ADMITTED TO HAVE PURCHASED AND SOLD PLOTS OF KALIABID LAND. IT IS CRYSTAL CLEAR FROM PAGE NO.39 OF ANNEXURE X-1 WHEREIN THE APPELLANT HA S PREPARED P & L ACCOUNT-CUM-BALANCE SHEET FOR THE TOTAL LAND TRANSA CTION OF KALIABID UP TO 30.9.1999. THIS PIECE OF PAPER IS IN THE HANDWRI TING OF THE APPELLANT. THE TOTAL PURCHASE LAND PAID TO SHRI NILESHBHAI IS RS.180 78 435/- FOR WHICH THE APPELLANT HAS NOT DISPUTED. THE SALE PRIC E SHOWN BY THE ASSESSEE IS RS.1 68 13 910/-. IT IS WORTHWHILE TO R EPRODUCE THE P & L ACCOUNT PREPARED ON PAGE NO.39 OF ANNEXURE X-1 WHI CH IS AS UNDER: DR CR. TO NILESHBHAI RS.1 80 78 435 BY SALE RS.1 68 13 910 (JAMIN KHARID) CIR CLE PROFIT 19 30 500 INTEREST 24 62 604 YOGES HBHAI & PANKAJBHAI 15 67 299 BHUDEV 4 19 585 ANILBH AI & BHAVNSANGBHAI 14 14 045 PROFIT BUDELIA 3 86 100 PROFIT + INTEREST 9 44 030 PURCHASE PLOT AT NATURAL PARK 2 10 000 2 25 00 754 2 25 00 754 ASSET 1 PLOT NATURAL PARK 194 VAR ASHWASHALS 1500 VAR H.C. (COMMERCIAL) THE ASSESSING OFFICER HAS MENTIONED THAT THE ASSESS EE DID NOT CLARIFY THE CIRCLE PROFIT OF RS.19 30 500/-. IN SIMILAR WAY CRE DITS IN THE NAME OF YOGESHBHAI AND PANKAJBHAI ANILBHAI AND BHAVSANGBHA I WERE ALSO NOT EXPLAINED. WHILE ON THE OTHER HAND THE ASSESSEE HA D CLAIMED PAYMENT OF INTEREST AMOUNTING TO RS.24 62 604/-. NO DETAILS OF LOANS TAKEN WERE FURNISHED. THE ASSESSING OFFICER HAD ASKED THE DETA ILS OF THE PARTIES FROM WHOM LOAN WAS TAKEN AND HOW THE SAME WAS UTILIZED B UT THE ASSESSEE EXPRESSED HIS INABILITY TO GIVE THE DETAILS OF THE LOAN. AS PER THIS PIECE OF PAPER THE ASSESSEE HAD SHOWN NAFA BUDEV AMOUNTING TO RS.3 86 100/- AND NAFO + INTEREST-VANANI OF RS.9 44 030/-. IT WAS CON TENDED THAT THESE WERE ITA NO.1074-1079/AHD/2006 A.YS.97-98 TO 02-03 YOGESHBHAI H TRIVEDI V. ITO WD-1(2) BNR PAGE 4 COMMISSION PAYMENT FOR WHICH DEDUCTION MAY BE ALLOW ED. HOWEVER THE CONTENTION OF THE ASSESSEE IS NOT FOUND TO BE CORRE CT BECAUSE THE SAME AMOUNT HAS BEEN SHOWN ON PAGE NO.29 OF ANNEXURE X-1 WHEREIN SALE PROCEEDS OF ASHWASHALA PLOTS HAD BEEN SHOWN WHICH A RE AS UNDER:- ASHWASHALA 1. 10 31 000/- JAGDISHBHAI 1055 2. 9 03 450/- VANANIBHAI 951 3. 3 86 100/- BUDELIA 290 4. 10 77 000/- LABHUBHAI 1684 33 97 550 FROM THE ABOVE IT IS CRYSTAL CLEAR THAT A PLOT OF 951 SQ.YD. WAS SOLD TO VANANIBHAI AT THE COST OF RS.9 03 450/- AND ANOTHER PLOT OF 290 SQ. YD. WAS SOLD TO SHRI BUDELIA AT THE COST OF RS.3 86 100/-. THUS TOTAL SALES OF ASHWASHALA WAS RS.33 97 550/-. THESE TOTAL SALES OF ASHWASHALA ARE INCLUDED IN TOTAL SALES PROCEEDS OF RS.1 68 13 110/ - AS MENTIONED ON PAGE NO.39 OF ANNEXURE X-1. THUS THE ASSESSEE DID NOT CL ARIFY THE DEBIT ENTRIES IN THE FORM OF PROFIT IN THE NAMES OF VANANIBHAIO AND BUDELIA WHILE AS PER PAGE NO.29 OF ANNEXURE X-1 THESE ARE SALE PROCEEDS. HEN CE THE CONTENTION OF THE APPELLANT THAT THESE ARE COMMISSION PAYMENTS TO VAN ANIBHAI AND BUDELIA IS NOT FOUND TO BE CORRECT. FURTHER THE ASSESSEE HAD SHOWN PAYMENT OF RS.4 19 585/- TO BUDEV. THIS PAYMENT IS EXPLAINED A S COMMISSION FOR SALE OF PLOTS. THE NAME OF BUDEV EXPLAINED TO REPRESENT SHR I PRAVINBHAI N PANDYA. HOWEVER NO SUCH COMMISSION HAS BEEN SHOWN BY SHRI PRAVINBHAI IN HIS RETURNS OF INCOME. THE APPELLANT HAS ADMITTED HIS S TATEMENT THAT INITIALLY HE HAD EARNED PROFIT IN KALIABID LAND TRANSACTIONS BUT SUBSEQUENTLY HE HAD SUFFERED GREAT LOSS. HE COULD NOT SUBSTANTIATE THIS CONTENTION BY ANY AUTHENTIC EVIDENCE. IN LIGHT OF THESE FACTS AND IN ABSENCE OF REGULAR BOOKS OF ACCOUNT THE ASSESSING OFFICER HAD NO ALTERNATIVE BUT TO EST IMATE THE INCOME FROM KALIABID LAND TRANSACTIONS ON THE BASIS OF TOTAL PU RCHASE PRICE OF LAND WHICH IS COMPLETE AND EVIDENT FROM THE IMPOUNDED MATERIAL W HILE THE SALES DISCLOSED WERE NOT FOUND TO BE COMPLETE. THEREFORE THE ACTIO N OF THE ASSESSING OFFICER IN ESTIMATING NET INCOME ON THE BASIS OF PURCHASE P RICE IS FOUND TO BE JUSTIFIED. TRADING TRANSACTIONS ASSESSEE CARRIED OU T WITH AN INTENTION TO EARN PROFIT. IN TRADING ACTIVITIES GENERALLY NET PROFIT VARIES BETWEEN 5% TO 15% DEPENDING UPON THE NATURE OF BUSINESS. IN THE PRES ENT CASE THE NATURE OF BUSINESS IS ESTATE BUSINESS WHERE MARGIN OF PROFIT MAY BE GREATER THAN OTHER BUSINESS. IT IS APPARENT FROM PAGE NO.39 OF ANNEXUR E X-1 THAT THE ASSESSEE HAD PAID INTEREST AS WELL AS OTHER EXPENSES. NO DOU BT THAT THE ASSESSEE HAD FAILED TO FURNISH THE DETAILS OF SUCH EXPENSES BUT THE INCOME AND EXPENSES RECORDED IN IMPOUNDED MATERIAL CANNOT BE IGNORED. T HE ASSESSING OFFICER HAS ESTIMATED INCOME OF RS.24 LAKHS WHICH IS 13.27% OF TOTAL PURCHASE PRICE BUT CONSIDERING THE NATURE OF TRANSACTION AND RECORDED EXPENSES ON THE IMPOUNDED MATERIAL THE ESTIMATED INCOME APPEARS TO BE EXCESSIVE. IN MY OPINION 5% PROFIT ON TOTAL COST PRICE OF LAND WILL JUSTIFY THE INCOME EARNED FROM KALAIBID LAND TRANSACTION. IN THIS ESTIMATE ALL EX PENSES INCLUDING LOSS IF ANY FOR ALL THE YEARS WILL BE COVERED. THUS 5% OF RS.1 80 78 435/- COMES TO RS.9 03 922/- WHICH IS CONSIDERED AS PROFIT EARNED ON TOTAL SALE OF KALIABID LAND IN FOUR YEARS. HOWEVER THE PURCHASES AND SALE S ARE NOT SHOWN YEAR- ITA NO.1074-1079/AHD/2006 A.YS.97-98 TO 02-03 YOGESHBHAI H TRIVEDI V. ITO WD-1(2) BNR PAGE 5 WISE AND THE APPELLANT EXPRESSED HIS INABILITY TO G IVE YEAR-WISE DETAILS THEREFORE THE ESTIMATED PROFIT OF RS.9 03 922/- IS EQUALLY TAXED IN FOUR ASSESSMENT YEARS I.E. FROM ASSESSMENT YEAR 1997-98 TO 2000-01. ACCORDINGLY THE ASSESSING OFFICER IS DIRECTED TO T AX RS.2 25 980/- IN EACH YEAR FROM 1997-98 TO 2000-01. THUS THE APPELLANT GE TS RELIEF OF RS.3 74 020/- IN EACH YEAR. AGGRIEVED AGAINST THE ACTION OF CIT(A) IN DIRECTING THE ASSESSING OFFICER TO MAKE ADDITION OF RS.2 25 980/- IN EACH OF THE ASSESSMENT YEAR BY MAKING ESTIMATE THE ASSESSEE PREFERRED APPEAL BEFORE TRIBUNAL. 5. WE FIND THAT THE CIT(A) AFTER GOING THROUGH THE INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SURVEY FOR THE ABOVE 4 YEARS FOUND THAT THE TOTAL RECEIPTS WERE TO THE TUNE OF RS.1 80 78 435/-. THE CIT(A) NOTED THE FACT THAT THE ASSESSEE IS NOT MAINTAINING ANY BOOKS OF ACCOUNT AND ACCORDINGLY HE ESTIMATED THE PROFIT RATE AT 5%. THE FACTS AS NARRATED BY THE CIT(A) ARE NOT IN DISP UTE. ONLY ISSUE AGITATED BY THE REVENUE THAT THE CIT(A) HAS RIGHTLY ESTIMATED THE P ROFIT @ 5% HENCE THE SAME SHOULD NOT BE DISTURBED. ON THE OTHER HAND LD. COU NSEL FOR THE ASSESSEE FAIRLY AGREED THAT NO DOUBT THERE IS LOSS AS REFLECTED IN THE SEIZED PAPERS BUT HE IS READY FOR VERY REASONABLE ESTIMATE IF MADE BY THE TRIBUN AL. IN VIEW OF THE ABOVE FACTS WE ARE OF THE VIEW THAT AN AD HOC ADDITION OF RS.4 LAK H I.E. RS.1 LAKH IN EACH OF THE ASSESSMENT YEAR WILL SUFFICE LOOKING INTO THE FACTS OF THE CASE. ACCORDINGLY WE DIRECT THE ASSESSING OFFICER TO ADOPT THE FIGURE OF RS.1 L AKH AS INCOME IN EACH OF THE ASSESSMENT YEAR FOR THESE 4 ASSESSMENT YEARS. HOWEV ER IT IS TO BE CLARIFIED THAT NO FURTHER ADDITION IN RESPECT TO ESTIMATED RECEIPTS F ROM CONSTRUCTION BUSINESS WILL BE MADE SEPARATELY. ACCORDINGLY THIS COMMON ISSUE OF 4 APPEALS OF THE ASSESSEE IS PARTLY ALLOWED AS INDICATED. 6. THE NEXT COMMON ISSUE IN ITA NO.1078-1079/AHD/2006 OF THE ASSESSEES APPEALS IS AGAINST THE ORDER OF CIT(A) IN CONFIRMIN G THE GROSS PROFIT (GP) @ 8% ON GROSS RECEIPTS. FOR THIS THE ASSESSEE HAS RAISED T HE COMMON GROUND IN BOTH THE YEARS AND THE RELEVANT GROUND READ AS UNDER:- 1] THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN ESTIMATING THE TOTAL INCOME @ THE RATE OF 8% OF THE ESTIMATED GROS S RECEIPT OF RS.2250000/-. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ESTI MATE OF INCOME IS TOO HEAVY AND ARBITRARY AND NOT WARRANTED BY THE FACTS OF THE CASE. ITA NO.1074-1079/AHD/2006 A.YS.97-98 TO 02-03 YOGESHBHAI H TRIVEDI V. ITO WD-1(2) BNR PAGE 6 7. AS WE HAVE ALREADY ESTIMATED THE INCOME AT RS 1 LAKH IN THE ABOVE 4 APPEALS FOR EACH OF THE ASSESSMENT YEAR TAKING A CONSISTEN T VIEW WE ALSO DIRECT THE ASSESSING OFFICER FOR THESE TWO ASSESSMENT YEARS T HE AO WILL COMPUTE THE INCOME AT RS.1 LAKH AS ADDITION OF UNACCOUNTED INCOME. TH IS COMMON ISSUE OF THE ASSESSEES APPEAL IS PARTLY ALLOWED. 8. IN THE RESULT ASSESSEES APPEALS ARE PARTLY ALLOWE D AS INDICATED ABOVE. ORDER PRONOUNCED IN OPEN COURT ON 24/02/2010 SD/- SD/- (N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD DATED : 24/02/2010 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- XIX AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD