M/s Goodman Investors Relation Service Pvt Lat, v. The ACIT 5 (1),

ITA 276/IND/2008 | 2003-2004
Pronouncement Date: 28-01-2010 | Result: Dismissed

Appeal Details

RSA Number 27622714 RSA 2008
Bench Indore
Appeal Number ITA 276/IND/2008
Duration Of Justice 1 year(s) 7 month(s) 7 day(s)
Appellant M/s Goodman Investors Relation Service Pvt Lat,
Respondent The ACIT 5 (1),
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 28-01-2010
Date Of Final Hearing 28-01-2010
Next Hearing Date 28-01-2010
Assessment Year 2003-2004
Appeal Filed On 20-06-2008
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI B.R. KAUSHIK ACCOUNTANT MEMBER ITA NO.276/IND/2008 A.YS. 2003-04 GOODMAN INVESTORS RELATION SERVICES PVT. LTD. INDORE PAN AAACG-5979-K APPELLANT VS ASSTT. COMMISSIONER OF INCOME TAX 5(1) INDORE RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SMT. APARNA KARAN SR. DR O R D E R PER JOGINDER SINGH JM THIS APPEAL IS BY THE ASSESSEES AGAINST THE ORDER O F THE LEARNED CIT(A) DATED 20.3.2008 ON VARIOUS GROUNDS. DURING HEARING OF THIS APPEAL NOBODY IS PRESENT FOR THE ASSESSEE WHEREAS MRS. APARNA KARAN LEARNED SENIOR DR IS PRESENT FOR THE REVENUE. THE APPEAL WAS FILED BY THE ASSESSEE ON 20.6.2008 AND WAS FIXED FOR HEARING WHICH WAS ADJOURNED TO 28.1.2010. ON THIS DATE NONE WAS PRE SENT FOR THE ASSESSEE INSPITE OF SERVICE OF NOTICE THEREFORE T HE APPEAL WAS 2 DISMISSED FOR NON-PROSECUTION VIDE ORDER DATED 28.1 .2010. THE ASSESSEE FILED MISCELLANEOUS PETITION PRAYING FOR R EHEARING OF THE APPEAL ON MERIT. THIS PRAYER OF THE ASSESSEE WAS ALLOWED A ND THE BENCH VIDE ORDER DATED 10 TH MAY 2010 RECALLED THE EX PARTE ORDER. THE RELEVA NT PARA OF THE ORDER IS REPRODUCED HEREUNDER :- 3. REGISTRY IS DIRECTED TO FIX THE MAIN APPEAL OF THE ASSESSEE FOR HEARING ON 4 TH AUGUST 2010 FOR WHICH REGISTERED NOTICE BE SENT TO THE ASSESSEE. THE ASS ESSEE IS DIRECTED TO BE PRESENT ON THE NEXT DATE OF HEARI NG AND FURTHER DIRECTED NOT TO SEEK ADJOURNMENT WITHOUT CO GENT REASON IF ANY. FINALLY THE MISCELLANEOUS PETITION OF THE ASSESSE E IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH MAY 2010. IN THE AFORESAID BACKGROUND IT CAN BE SAID THAT TH E ASSESSEE WAS DIRECTED TO BE PRESENT ON THE NEXT DATE AND FURTHER DIRECTED NOT TO SEEK ADJOURNMENT. TODAY I.E. 4 TH AUGUST 2010 AT THE TIME OF HEARING THE ASSESSEE WAS NOT PRESENT AND MERELY SENT AN APPLICA TION FOR ADJOURNMENT ON THE PLEA THAT THE ASSESSEE WANTS TO CONSULT SENIOR COUNSEL FOR HIS LEGAL OPINION THEREFORE THE APPEA L MAY BE ADJOURNED. SINCE THE ORDER OF THE TRIBUNAL IN THE MISCELLANEOU S PETITION WAS PASSED ON 10 TH MAY 2010 THERE WAS ENOUGH TIME WITH THE ASSESSEE TO SEEK LEGAL OPINION THEREFORE THE REASON MENTIONED IN T HE ADJOURNMENT PETITION WAS NOT FOUND CONVINCING CONSEQUENTLY IT WAS REJECTED. SINCE THE ASSESSEE INSPITE OF SPECIFIC ORDER PASSED WHIL E DISPOSING OF MISCELLANEOUS PETITION OF THE ASSESSEE IS NOT PRES ENT EVEN TODAY TO 3 PURSUE ITS APPEAL THEREFORE WE HAVE NO OPTION BUT TO PROCEED EX-PARTE QUA THE ASSESSEE AND TO DISPOSE OF THIS APPEAL ON T HE BASIS OF MATERIAL AVAILABLE ON THE FILE. 3. THE FIRST GROUND RAISED BY THE ASSESSEE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE ADDITION OF RS.1 05 950/- UNDER THE HEAD REPAIR AND MAINTEN ANCE OF BUILDING WITHOUT ASSIGNING ANY REASON. THE LEARNED SENIOR DR INVITED OUR ATTENTION TO PARA 3 OF THE ASSESSMENT ORDER ALONG W ITH THE WRITTEN SUBMISSIONS OF THE ASSESSEE WHICH ARE REPRODUCED IN PARA 3.2 OF THE IMPUGNED ORDER. BEFORE COMING TO ANY CONCLUSION WE ARE TEMPTING TO REPRODUCE PARA 3 FROM THE ASSESSMENT ORDER :- THE ASSESSEE HAS DEBITED A SUM OF RS.1 05 950/- UNDER THE HEAD MAINTENANCE OF BUILDING. IT HAS NO BUILDING IN ITS FIXED ASSETS. ON SPECIFIC QUERY ON THIS POINT IT HAS BEEN STATED THAT THE REPAIR HAS BEEN C ARRIED OUT ON THE BUILDING REFER TO IN THE PRECEDING PARA I.E. THE BUILDING WHICH IT RECEIVED BY VIRTUE AGREEMENT WITH M/S P.D. AGRAWAL &CO. IT HAS FURTHER BEEN ARGUED THAT T HE REPAIR PETTY COST OF RS. 10 PER SQ.FT. VOUCHERS/BIL LS IN RESPECT OF REPAIR WERE CALLED FOR. IT IS SEEN FROM THE BILLS THAT MOST OF THE BILLS ARE ON PLAIN PAPERS SO ME OF THE BILLS DO NOT INDICATE NAMES OF THE ASSESSEE COMPANY. IT IS FURTHER OBSERVED THAT THERE REPAIRS DO NOT INDICATE THE SPECIFIC FLAT NUMBER ETC. IT IS NOTEWORTHY THAT THESE REPAIRS EVEN IF CARRIED OUT W OULD BE RELATING TO THE STOCK IN TRADE AS SUCH THE VALUE OF STOCK IN TRADE SHOULD HAVE BEEN INCREASED BY THIS AMOUNT. IF THE WRITTEN SUBMISSIONS OF THE ASSESSEE REPRODUC ED IN PARA 3.2 OF THE IMPUGNED ORDER ARE ANALYSED VIS--VIS THE CONCLUSIO N DRAWN IN THE AFORESAID PARA THE CLAIM OF THE ASSESSEE IS THAT A LL THE EXPENSES WERE 4 INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS THE PAYMENTS ARE NOT MADE TO ANY OF THE RELATIVES OF TH E DIRECTORS AND THESE EXPENSES WERE INCURRED FOR THE FIRST TIME IN THE LA ST THREE YEARS AND THE VOUCHERS ARE DULY SIGNED BY THE DIRECTOR OF THE ASS ESSEE COMPANY. WE ARE NOT IN AGREEMENT WITH THIS SUBMISSION OF THE AS SESSEE BECAUSE FIRSTLY MOST OF THE BILLS WERE ON PLAIN PAPERS ON SOME OF THEM EVEN THERE WAS NO NAME OF THE ASSESSEE COMPANY. THERE IS A ME NTION IN THE IMPUGNED ORDER THAT DURING THE LD. FIRST APPELLATE AUTHORITY THE PHOTOCOPY OF SUCH BILLS WERE FURNISHED AND THE CLAIM OF THE A SSESSING OFFICER WAS FOUND TO BE CORRECT. THERE IS A FURTHER FINDING IN THE ASSESSMENT ORDER THAT EVEN NO SPECIFIC FLAT NUMBER WAS MENTIONED WHE RE SUCH EXPENSES WERE CLAIMED TO HAVE INCURRED. IN VIEW OF THESE FAC TS WE FIND NO JUSTIFICATION TO TAKE A DIFFERENT VIEW THAN THE VIE W TAKEN BY LOWER AUTHORITIES. THIS GROUND OF THE ASSESSEE IS THEREF ORE DISMISSED. 4 THE NEXT GROUND PERTAINS TO CONFIRMING THE APPLIC ABILITY OF PROVISIONS OF SECTION 45(2) OF THE ACT AND FURTHER CONFIRMING THE MODE AND METHOD OF CALCULATION OF SHORT TERM CAPITAL GAI N OF RS.1 87 298/-. THE LEARNED SENIOR DR INVITED OUR ATTENTION TO PAGE 3 PARA 4.1 OF THE IMPUGNED ORDER BY FURTHER SUBMITTING THAT IDENTICAL LY FOR THE ASSESSMENT YEAR 1997-98 NO APPEAL WAS FILED BY THE ASSESSEE. OUR ATTENTION WAS ALSO INVITED TO PAGES 9 AND 10 13 PARA 4.8 OF THE IMPUGNED ORDER. 5 4. WE HAVE PERUSED THE MATERIAL AVAILABLE ON THE FI LE AND CONSIDERED THE ARGUMENTS ADVANCED BY THE LEARNED SENIOR DR. WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION AS CONTAINED IN PARA 4.1 OF THE IMPUGNED ORDER (PARA 2 OF THE ASSESSMENT ORDER) :- A BUILDING WAS CONSTRUCTED ON A PLOT OF LAND POSSESSED BY THE ASSESSEE AS FIXED ASSET WHICH WAS CONVERTED INTO STOCK IN TRADE IN THE YEAR RELEVANT TO THE A.Y. 1997-98. THE ASSESSEE ASSIGNED BUILDABLE RIGHTS TO M/S P.D. AGRAWAL &CO. WITH THE CONSIDERATION THAT THE ASSESSEE WILL BE ENTITLED TO 41% SHARE IN THE CONSTRUCTED PROPERTY AND THE REMAINING 59% WOULD BE UNDER THE OWNERSHIP OF P.D. AGRAWAL & CO. IT WAS FOUND BY THE A.O. DURING THE COURSE OF PROCEEDINGS U/S 147 FOR THE A.Y. 1997-98 THAT THE ASSESSEE WAS LIABLE TO CHARGE OF TAX ON SH ORT TERM CAPITAL GAIN WORKED OUT U/S 45(2) OF THE INCOMETAX ACT IN RESPECT OF THE DIFFERENCE BETWEEN THE FAIR MARKET VALUE AND THE VALUE OF INVESTMENT I N THE PLOT WHICH WAS WORKED OUT AT RS. 12 03 697/-. THIS CAPITAL GAIN WAS ASSESSABLE IN THE YEAR IN WHI CH PROPERTY OR A PART THEREOF WAS SOLD. THE ASSESSEE H AS SOLD 1980 SQ. FT. OF THE TOTAL CONSTRUCTED AREA DUR ING THE SUBJECT YEAR. AS SUCH THE CAPITAL GAIN CHARGE ABLE WOULD WORK OUT AS UNDER : TOTAL AMOUNT OF CAPITAL GAIN RS.12 03 69 7 CAPITAL GAIN CHARGEABLE DURING THE YEAR RS.12 03 697X1980/12725 RS.1 87 295/- THE ASSESSEE HAS ACCEPTED THE ABOVE WORKING WITH THE REMARK THAT IT WAS TAKING A VIEW THAT THER E WAS NO CONVERSION ON 31.3.19976. IT HAS FURTHER BE EN STATED THAT THE RATE OF PROPERTY OF GROUND FLOOR OU GHT NOT TO BE TAKEN AS ON THE SAME LINE AS OF THE PROPE RTY IN BACK PORTION OF ANY FLOOR. HOWEVER THE ASSESSE E HASA STATED FURTHER THAT IN ORDER TO PURCHASE MENTA L PEACE AND TO AVOID LITIGATION AND ALSO TO COOPERATE WITH THE DEPARTMENT HE WAS MAKING PAYMENT OF TAX UNDER PROTEST. IN VIEW OF THE ABOVE THE ASSESSEE HAS AGREED TO PAY THE TAX ON THE CAPITAL GAIN WORKED OUT AS AB OVE 6 AND PAID ACCORDINGLY A SUM OF RS.68 830/- ON 16.2.2006. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAD SUBMITTED THE DETAILS OF SALE OF CONSTRUCTED PROPERTY AS UNDER :- DATE AREA (SQ.FT.) NAME OF THE PURCHASER RATE AMOUNT (IN RS) A.Y. 19.1.2001 1346 RANI BARJATYA 482/SQ.FT. 6 50 000 2001-02 8.1.2003 997 DR. NAINA AGRAWAL 557/SQ.FT. 5 56 000 2003-04 19.2.2003 983 SMT. RUKIYA 981/SQ.FT. 9 61 000 2003-04 IF THE AFORESAID TABLE IS ANALYSED IT CAN BE SAID THAT THE CAPITAL GAIN CHARGEABLE TO TAX FOR THE ASSESSMENT YEAR 2001-02 W OULD BE IN THE SAME PROPORTION IN WHICH THE AREA OF 1346 SQ.FT. AS DONE IN SUBSEQUENT YEARS THEREFORE THE SHORT TERM CAPITAL GAIN WOULD BE CHARGED IN THE SAME MANNER. AS PER THE PROVISIONS OF SECTION 2(47) OF THE ACT CONVERSION OF INCOME INTO STOCK IN TRADE IS TREATED AS TRANSFER IN THE YEAR IN WHICH THE CAPITAL ASSET IS CONVERTED INTO STOCK IN TRADE. THE PLOT WAS PURCHASED ON 27.10.1994 WHICH WAS CONVERTED INTO ST OCK IN TRADE ON 11.1.1997. THEREFORE THE PROPERTY REMAINED AS INV ESTMENT FOR LESS THAN THREE YEARS AND AS SUCH IT AMOUNTED TO SHORT TERM C APITAL GAINS. THE DIFFERENCE IN COST AND THE PRICE REVALUED FOR CONVE RSION IN STOCK IN TRADE WAS THEREFORE RIGHTLY TREATED AS SHORT TERM CAPIT AL GAIN. EVEN OTHERWISE FOR THE ASSESSMENT YEAR 1997-98 IDENTICALLY IT WAS DECIDED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AGAINS T WHICH NO APPEAL WAS FILED BY THE ASSESSEE BEFORE THE TRIBUNAL THER EFORE IT CAN BE SAID 7 THAT IT HAS ATTAINED FINALITY ATLEAST UPTO THE LEVE L OF FIRST APPELLATE STATE. INSPITE OF OPPORTUNITY PROVIDED TWICE THE ASSESSEE DID NOT APPEAR BEFORE THE TRIBUNAL THEREFORE IT IS PRESUMED THAT THE AS SESSEE HAS NOTHING TO SAY IN THE MATTER AS THE ASSESSEE WAS WELL AWARE TH AT HE IS NOT SUPPOSED TO SEEK ADJOURNMENT AS SPECIFICALLY DIRECT ED BY THE TRIBUNAL WHILE DISPOSING OF MISCELLANEOUS PETITION. WE THER EFORE FIND NO INFIRMITY IN THE STAND OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND CONFIRM THE SAME. 5. THE NEXT GROUNDS I.E. GROUND NOS. 3 AND 4 PERTA IN TO CONFIRMING THE ADDITION OF RS.3 44 000/- IN THE HAN DS OF THE ASSESSEE WHEREAS SHRI D.S. SANCHETY OFFERED THE INCOME FROM SALE OF OFFICES IN HIS HANDS WHICH AMOUNTS TO DOUBLE TAXATION. THE LEA RNED SENIOR DR INVITED OUR ATTENTION TO PARA 5.1 (PAGE 14 AND PARA 5.3 (PAGE 17) OF THE IMPUGNED ORDER. 6. WE HAVE PERUSED THE RECORD AND CONSIDERED THE A RGUMENTS ADVANCED BY THE LEARNED SENIOR DR. WE ARE REPRODUC ING HEREUNDER THE RELEVANT PARA 5.1 OF THE IMPUGNED ORDER (PARA 1 OF THE ASSESSMENT ORDER) :- THE ASSESSEE HAS SOLD TWO BLOCK SO UNITS IN A BUILDING DURING THE YEAR FOR RS. 11 77 000/- ON WHI CH PROFIT AMOUNTING TO RS.2 02 306/- HAS BEEN CREDITED TO THE P&L A/C. ON VERIFICATION OF RECORDS IT WAS NO TICED THAT THE A.O. DURING THE ASSESSMENT PROCEEDINGS U/S 147 FOR THE A.Y. 1997-98 HAD OBSERVED THAT THE SAL E CONSIDERATION RECEIVED BY THE ASSESSEE DURING THE 8 PREVIOUS YEAR RELEVANT TO THEA.Y. 2003-04 WAS RS. 15 17 000/-. 6. THE ASSESSEE WAS ASKED BY THE REVENUE AUTHORITI ES TO EXPLAIN THE DISCREPANCY FOR WHICH THE ASSESSEE MADE THE FOLLOWING SUBMISSIONS :- THE OFFICE NO.G-2 WAS SOLD TO SHRI D.S.SANCHETI UNDER AGREEMENT OF SALE FOR RS.6 21 000/- ONLY. THE POSSESSION OF THE PREMISES WAS DELIVERED ON 1.4.02 HOWEVER THE SALE AGREEMENT WAS EXECUTED ON 31.3.2002. SHRI D.S. SANCHETI HAS LATER ON SOLD TH IS PREMISES TO KU. MARIA D/O SHRI HASAN BHAI TAMBUWALA FOR A VALUE OF RS.(9 65 000 96 500) = RS. 8 68 50 0/-. IF THE TOTALITY OF FACTS IS ANALYSED IT IS SEEN TH AT THE ASSESSEE SOLD TWO FLATS WHICH WERE CONVERTED INTO STOCK IN TRADE IN T HE YEAR 1996-97. THE ASSESSEE CLAIMED THAT ONE FLAT WAS SOLD TO SHRI D.S . SANCHETI UNDER AGREEMENT OF SALE FOR RS. 6 21 000/- AND ANOTHER TO DR. NEENA FOR RS.5 56 000/-. THE COPY OF CLAIMED AGREEMENT BY SHR I D.S.SANCHETI WAS NEVER PRODUCED AT ANY STAGE. EVEN BEFORE US NOTHI NG WAS PRODUCED. THE ASSESSEE FURTHER CLAIMED THAT SHRI D.S. SANCHE TI LATERON SOLD THE PREMISES TO KU. MARIA THROUGH HER MOTHER SMT. RUKIA FOR RS.9 65 000/- UNDER A DEED OF REGISTRATION ON 18.2.2003. HOWEVER NO PROOF OF SUCH TRANSACTION WAS PRODUCED AT ANY STAGE. THERE WAS N O DOCUMENTARY EVIDENCE EVER PRODUCED EVIDENCING SALE BY THE ASSES SEE COMPANY TO SHRI D.S. SANCHETI EXCEPT CONFIRMATION ON OATH ATTE STED BY A NOTARY. ADMITTEDLY THE AFFIDAVIT IS NORMALLY A SELF SERVIN G DOCUMENT AND IT HAS TO 9 BE CORROBORATED WITH EVIDENCE. FOR THE ASSESSMENT Y EAR 1997-98 THE SALE OF SECOND FLAT IS CLAIMED TO HAVE MADE THROUGH SMT. RUKIA ON 19.2.2003 FOR RS.9 61 000/- BUT NO SUCH CLAIM IS MA DE IN RESPECT OF SHRI D.S. SANCHETI. THERE IS A MENTION THAT THE ASSESSE E COMPANY LET OUT ONE FLAT TO SHRI D.S. SANCHETI ON RENT AND EARNED R ENTAL INCOME. HOWEVER NO DETAILS OF TENANTS LIKE NAMES AND ADDRE SS AREA RENTED OUT MONTHLY RENT DATE OF GIVING THE POSSESSION OF RENT ED PROPERTY AND VACATION OF POSSESSION THEREOF WERE PRODUCED AT ANY STAGE. NO COPY OF RENT AGREEMENT WAS EVER BROUGHT ON RECORD. IT IS C RYSTAL CLEAR THAT THE FLAT WAS SOLD TO SMT. RUKIA BY THE ASSESSEE AND THE SALE TO SHRI D.S. SANCHETI SEEMS TO BE AN AFTER-THOUGHT. THEREFORE O N THIS GROUND WE FIND NO MERIT IN THE CLAIM OF THE ASSESSEE CONSEQU ENTLY THE STAND OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS UPH ELD. 7. THE LAST GROUND RAISED IS THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS) ERRED IN NOT PASSING A SPEAKING ORDER WHI LE CONFIRMING THE CHARGING OF INTEREST U/S 234A OF THE ACT AT RS.16 0 30/- AND RS.96 075/- U/S 234B OF THE ACT. THE ARGUMENT PUT FORTH BY THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE IS THAT IT IS MANDATORY IN NATURE. IN VIEW OF THE FACTS NARRATED IN THE PRECEDING PAR A OF THIS ORDER WHEREIN WE HAVE AFFIRMED THE STAND OF THE REVENUE THEREFORE CHARGING OF INTEREST IS MANDATORY HENCE CONSEQUENTIAL IN N ATURE. THIS GROUND OF THE ASSESSEE IS THEREFORE REJECTED. 10 FINALLY THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 5 TH AUGUST 2010. SD SD (B.R. KAUSHIK) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER 5 TH AUGUST 2010 COPY TO: APPELLANT RESPONDENT CIT CIT(A) DR G UARD FILE *DN/