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TaxTMI 
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2016 (1) TMI 1200
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.... Appeal IT(SS) No.849/Ahd/2010. 3. The assessee at the outset files before us a tabulation chart in these cross appeals clarifying the substantive issues involved therein. A perusal thereof makes it clear that the Revenue is stated to have raised 13 grounds challenging the lower appellate order, inter alia, deleting disallowance of Rs. 4,52,089/- out of interest expenses, directing the Assessing Officer to delete section 68 addition of unexplained cash credit of Rs. 47,11,849/- after verification of fresh evidences, deleting addition of Rs. 24,80,000/- made on account of unexplained investment in cost of land, restricting unexplained investment in cost of construction of assessee's house property of Rs. 24,31,000/- as against that worked out in assessment order of Rs. 81,77,058/- thereby granting relief of Rs. 34,71,693/-, deleting excess deprecation disallowance of Rs. 4,841/- and restricting addition made on account of law withdrawal expenses to Rs. 6,000/- only as against the one made in the course of assessment of Rs. 25,000/- respectively. 4. We come to assessee's cross appeal now. He is stated to have pleaded five grounds, inter alia, raising four substantive issues in cha....
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....ar Guest House. The Assessing Officer was of the view that the assessee, on the one hand, had advanced huge amount as interest-free loans and claimed interest on borrowed loans in question and, on the other hand, he took notice of the fact that the assessee had paid interest on deposits received from Smt. Sushila H. Thakkar in the books of Avkar Guest House but not charged any interest in respect of loan of Rs. 8,00,000/- advanced to the very depositor from the books of M/s. Dev Priya Builders. The Assessing Officer formed an opinion that all these arrangement created artificial deficiency of funds. He observed that the assessee could have avoided the impugned interest-free loans by not making the above interest-free advances. He proceeded on the very reasoning to disallow the entire interest claim of Rs. 4,52,089/-. 8. The CIT(A) reversed Assessing Officer's findings as follows :- "7. The next disputed additions is disallowance of interest of Rs. 4,52,089/-. It is stated by the A.O. that the appellant had in the books of Avkar Guest House debited interest expenditure of Rs. 4,32,129/- and in his personal books interest expenditure of Rs. 19,960/-. He has stated that the appella....
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....'s personal account which is credited in the books of Sanjay personal. This two entries are neutralized. As such, there is no question for disallowance of that amount. It is further stated that apart from this, most of the advances are representing opening balances and in the past, no disallowances on this account was made. 7.2 I have considered the assessment order and the above submissions. It is not in dispute that the appellant has given interest free advances to different proprietary concerns. At the same time, it is not in dispute that the appellant has interest free funds available with him. Therefore, considering the decision of the Supreme Court in the case of Munjal Sales reported at 298 ITR 298, there was no justification for disallowance of interest on this ground. Apart from this, having regard to the facts stated by the appellant, the disallowance of interest on car loan of Rs. 19,960/- is not justified. Similarly, the interest of Rs. 1,91,146/- as stated by the appellant is neutralized in the two concerns and as such the addition to that extent is also not justified. Thus on consideration of overall situation, the addition of Rs. 4,52,089/- made by the A.O. is....
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.... match with the actual ones due to error in few alphabets therein, creditors confirmations were found to be undated on xerox copies and that contra accounts capital accounts, balance sheets and books of accounts had also not been placed on record. The assessee in rebuttal appears to have filed correct PAN, photocopies, creditors' respective returns, highlighted non-maintenance of books in some cases and further produced bank statements. The CIT(A) thereafter partly accepts assessee's submission as under :- "8.5 I have considered the submissions of the appellant and the contentions of the A.O. in the assessment order and the Remand Report. It is noticed that in all the cases the appellant had furnished the confirmations of the respective parties for the amount deposited with the appellant. It is explained by the A.R. that copies of contra accounts from the books of depositors are not possible as the depositors are not maintaining personal books. Though in the first submission, the P.A. Nos of the depositors were quoted in the confirmations, the same were found to be not tallying with PAN data base of the department as reported by the A.O. However, in rebuttal of such report of the....
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....rebuttal stage. We take into account the bar imposed by the legislature on the CIT(A)'s jurisdiction in section 251(1)(a) hereinabove and interfere to the limited extent that the impugned remand directions shall form part of our instant findings. In other words, we interfere on this legal aspect only. However, we direct the Assessing Officer to re-decide this entire issue afresh after taking into account the material on record submitted by way of additional evidence after affording adequate opportunity of hearing. 15. This leaves us with later part of assessee's arguments/pleadings that the CIT(A) has erred in confirming the impugned unexplained cash credit addition in case of Chandrikaben Thakkar to the tune of Rs. 17,000/-. It is evident to us that this creditor is neither having any PAN card nor has she been able to explain her source. We find no reason to interfere in the lower appellate reasoning under challenge. The same is accordingly upheld. Our these findings accept Revenue's substantive grounds for statistical purposes and reject corresponding ground raised in assessee's appeal (supra). 16. The Revenue's third substantive ground pleads that the CIT(A) has wrongly restri....
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.... there is no justification for adopting any value other than the book cost for the purpose of investment in land. The addition of Rs. 24,80,400/- made on this account is, therefore, deleted. 9.8 In so far as the cost of construction is concerned, the DVO has estimated the cost at Rs. 1,46,28,302/- as per his valuation report dated 28-12-2006. He has not given year-wise estimate. Apart from this, I find that the DVO has in his report specifically observed that the cost of construction may be more or less to the extent of 10% and if weighted mean period of construction as per declared cost of construction which falls in the earlier years is considered, the assessed cost may be taken in proportion of the year-wise declared cost. Thus the DVO himself has expressed variance of about 10% in the cost estimated by him. The DVO has further stated that in the construction of private bungalow workmanship of house is of highest standard and, therefore, it costs more. However, he has stated that the assessee may-have economized to some extent.- It is further stated by the DVO that the normally 7.5% builders profit is considered and to that extent to the best judgment deduction may be allowed....
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....urred by the appellant in respective years, as is done in respective assessment orders. This order is disposed off accordingly." 18. It is in this backdrop of facts that the Revenue as well as the assessee have pleaded their respective grievances against the above extracted findings. The assessee's case before us is that the Assessing Officer nowhere rejected his books stating cost of construction and land before making reference to the DVO under section 142A. He submits that there is no incriminating material on record pointing any defect in his books so as to warrant any DVO reference. Our attention was invited to section 142(A) of the Act. As applicable in the impugned Assessment Year. Various judicial precedents are also quoted in support of this argument. 19. The Revenue strongly supports the Assessing Officer's action in making section 142A reference to the DVO. It takes us to section 142A as incorporated by way of the Finance Act No.2 of 2014 w.e.f. 01.10.2014 wherein sub-section 2 to section 142A provides for such a reference to the DVO whether or not the Assessing Officer is satisfied about an assessee's account. We find that the same applies only w.e.f. 01.10.2014. We ....
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....ellate finding, upholding the impugned claim of excess deprecation @ 25% on electrical installations with sanitary fittings in assessee' s Hotel building. This substantive ground is accordingly rejected. 21. This leaves us with the Revenue's last substantive ground restricting addition made on account of low house hold expenses withdrawal from Rs. 25,000/- to Rs. 6,000/-. It is to be seen that the assessee has also raised a corresponding substantive ground no.2 in his appeal assailing correctness of the lower appellate finding reading as under :- "6. The next addition disputed by the appellant is on account of estimate of household expenses resulting into addition of Rs. 25,000/-. The addition has been made for the reason that the appellant had shown withdrawals of Rs. 48,000/- only for household expenses and his wife had made withdrawals of Rs. 18,000/-. He has estimated the household expenses of Rs. 91,000/- and therefore, the addition is made for the balance amount of Rs. 25,000/-. 6.1 In this connection, the appellant submitted that the addition is made only on presumption and estimate basis and there is no proof about any expenditure higher than what is shown by way of w....
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....g any evidence to prove that he had been using any other telephone or other communication system exclusively for his personal and non-business use. We see no reason to interfere with both the lower authorities' action in invoking the impugned disallowance. This first substantive ground stands declined. 25. We come to assessee's next three substantive grounds challenging additions of low house hold withdrawals, unexplained cash credits and that of a sum of Rs. 24,31,000/- being added as undisclosed investment. It is to be seen that we have already dealt with the same in Revenue's appeal with the corresponding ground raised therein. We have upheld the CIT(A)' order on the former two issues and deleted the third addition of Rs. 24,31,000/-. We observe that nothing further survives for our adjudication once again in the instant appeal. 26. This assessee's appeal IT(SS)A No.849/Ahd/ 2010 is partly accepted accordingly. A.Y. 2002-03 - Revenue's appeal IT(SS)A No.829/Ahd/2010 and assessee's Cross Appeal IT(SS) No.850/Ahd/2010. 27. Both the parties at the outset take us through a tabulation chart elaborating the various issues raised in these cross appeals. It is to be seen that that ....
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....all form a part of our instant adjudication in the impugned Assessment Year as well. We, accordingly, confirm the CIT(A)'s order qua first two substantive grounds and reverse the same on the third issue of unexplained investment. The assessee's former two grounds fail. The third one succeeds. 30. IT(SS)A No.850/Ahd/2010 is partly accepted. A.Y. 2003-04 - Revenue's appeal IT(SS)A No.836/Ahd/2010 and assessee's Cross Objection No.16/Ahd/2011. 31. Both the parties draw our attention to a tabulation chart forming part of the case record. It is evident that the Revenue's appeal herein raises four substantive grounds, pleading therein, that the CIT(A) has, inter alia, erred in deleting interest disallowance of Rs. 2,51,949/-, in directing the Assessing Officer to delete section 68 unexplained cash credit addition of Rs. 5,95,000/- after verification of fresh evidences and in restricting addition made on account of unexplained investment in cost of construction of house to Rs. 24,31,000/- thereby directing to delete Rs. 18,104/- out of the addition of Rs. 25,794/- and also deleting addition of Rs. 2,85,357/- made on account of excess depreciation. 32. The assessee's Cross Objection r....