1999 (9) TMI 140 - AT - Income Tax

Summary

Issues Involved:
1. Validity of reassessment proceedings u/s 148.
2. Rejection of Account Books.
3. Estimation of "on money" received by the assessee.
4. Determination of unaccounted expenditure and addition u/s 69C.
5. Addition of cash credits u/s 68.
6. Disallowance u/s 43B on account of delayed payment pertaining to Provident Fund liability.
7. Directions by CIT(A) regarding set off of unaccounted investment.
8. Charging of interest u/s 234A, 234B, and 234C.

Summary:

1. Validity of reassessment proceedings u/s 148:
The issue was not pressed by the assessee and thus dismissed.

2. Rejection of Account Books:
The Tribunal held that the account books vis-a-vis civil works were correct and could not be rejected by the Assessing Officer. However, the rejection of account books vis-a-vis the V.V. Market Project was justified due to unaccounted payments and "on money" receipts.

3. Estimation of "on money" received by the assessee:
The Tribunal found that the Assessing Officer was justified in estimating the "on money" in respect of all 268 shops sold during the years under consideration. The CIT(A)'s reduction of the rate of "on money" to 45% was not justified. The Tribunal directed the Assessing Officer to apply a rate of 100% of the recorded price for shops on the first floor and 105.78% for shops on the ground floor.

4. Determination of unaccounted expenditure and addition u/s 69C:
The Tribunal upheld the use of the second valuation report by the DVO, determining the total unaccounted expenditure at Rs. 2,38,03,573. However, it was held that no addition u/s 69C could be made as the unaccounted expenditure was incurred out of "on money" received by the assessee.

5. Addition of cash credits u/s 68:
The Tribunal upheld the CIT(A)'s deletion of cash credits for assessment years 1990-91 and 1991-92, finding that the deposits were made out of the capital accounts of the family members of the partners and were duly reflected in their statements of accounts. For assessment year 1993-94, the Tribunal also upheld the CIT(A)'s deletion of cash credits, finding that the CIT(A) had given cogent reasons for the deletion.

6. Disallowance u/s 43B on account of delayed payment pertaining to Provident Fund liability:
The Tribunal upheld the CIT(A)'s direction to dispose of the matter in accordance with the ratio laid down by the Tribunal in the case of Hunsur Plywood Works Ltd. v. Dy. CIT[1995] 54 ITD 394.

7. Directions by CIT(A) regarding set off of unaccounted investment:
The Tribunal held that CIT(A) had no jurisdiction to travel beyond the assessment years involved before him and thus, his direction regarding set off of unaccounted investment for assessment year 1989-90 was not justified.

8. Charging of interest u/s 234A, 234B, and 234C:
The issue was held to be consequential in nature, and the Assessing Officer was directed to modify the demand based on the final order after giving effect to the Tribunal's order.

Conclusion:
All the appeals of the assessee as well as the revenue were partly allowed.