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TMI Blog2016 (9) TMI 1557X X X X Extracts X X X X X X X X Extracts X X X X ..... t the evidences which he had gathered during the course of assessment proceedings. No doubt it is the principle of natural justice that any evidence which has been collected at the back of the assessee and which is utilized against the assessee should be confronted to the assessee before making any such addition. However, in the instant case we find since the assessee did not appear before the AO despite repeated opportunities, there was no occasion on the part of the AO to confront these statements recorded or ledger extracts obtained from various parties. Therefore, the ground raised by the assessee on this issue is also dismissed. Statements of several suppliers were recorded by the AO Shri J.Y. Chauhan, ITO, Ward-2 of Satara office which is impermissible in law - No merit in the above ground raised by the assessee in shape of an additional ground. An officer sitting at a place can always take the help of another officer by issuing necessary commission to record the statements of various persons who are assessed under his charge. Here, in the instant case, the Additional Commissioner sitting at Pune has taken the help of the AO Shri J.Y. Chauhan, ITO, Ward-2, Satara to reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion are agricultural lands situated beyond 8 kms from the municipal limits and therefore these are rural agricultural lands and do not form part of the capital asset within the meaning of section 2(14)(iii)(b) - HELD THAT:- As perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We find the AO in the assessment order has made addition to the total income of the assessee on account of unaccounted income from land business. He arrived at this figure by reducing the cost of land from the sale proceeds. We find the assessee before the Ld.CIT(A) in his recasted financial statements had shown the profit on sale of land at ₹ 96,78,970/- after making an adjustment of compensation expenses amounting to ₹ 23,81,325/-. Since the assessee has earned a profit of ₹ 96,78,970/- from such land dealings the Ld.CIT(A) enhanced the income to ₹ 96,78,970/- as against ₹ 11,13,750/- determined by the AO. Nature of land aspect was not properly looked into by the AO or the CIT(A) as the necessary evidences which the assessee has enclosed with the paper book such as 7/12 extracts etc were not properly looked into. Further, the main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red before the AO and submitted a revised profit and loss account signed by the assessee admitting additional receipts from contract of ₹ 1,66,61,839/- and claiming additional expenditure of ₹ 1.53 crores. The AO, therefore, asked the assessee to prove the claim of additional expenditure of ₹ 1.53 crores with proof of creditors shown in the original and revised balance sheet and the date for compliance was kept on 17-12-2009. However, there was non-compliance on the said date for which the AO issued a summon u/s.131 and asked the assessee to prove the claim of expenditure in the original return, additional expenditure of ₹ 1.53 crores in the revised profit and loss account and proof of sundry creditors in the original and revised balance sheet, total turnover etc. However, there was non-compliance till the completion of the assessment. Therefore, the AO inferred that the assessee is not complying with the terms of the notices issued willfully to thwart investigations which have been carried on by making enquiries from the parties with whom the assessee is having transactions running into crores of rupees which are not recorded in the books of account. In thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RRB Pvt. Ltd. He further noted from the information received from Vestas Wind Tech India Pvt. Ltd. that the total bills raised by the assessee during the period from 01-04-2006 to 31-03-2007 was ₹ 10,39,52,580/- against which the assessee has received payment of ₹ 888,98,855/- and amount of ₹ 1,50,53,725/- was receivable from Vestas Wind Tech India Pvt. Ltd. as on 31-03-2007. Therefore, the AO held that income of ₹ 10,39,52,580/- has accrued to the assessee during A.Y. 2007-08 for the contract works done by him for Vestas Wind Tech India Pvt. Ltd. since the assessee is following mercantile system of accounting. However, the assessee has disclosed turnover of ₹ 7,46,40,581/- only in his return of income from Vestas Wind Tech India Pvt. Ltd.. Thus, the assessee has suppressed turnover of ₹ 2,93,11,599/-. Since the concealed turnover is ₹ 2,93,11,999/- and assessee has admitted only ₹ 1,66,61,839/- in the revised financial statements the AO specifically asked question on this issue in the statement recorded u/s.131 of the I.T. Act on 19-12-2009 from the assessee. Rejecting the various explanations given by the assessee in the statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,53,94,840/- by furnishing the necessary evidences, the details of which are as under : S.No. Name Amount 1 Gatiman Earth Movers 600000 2 Masai Multi Service 25,18,500 3 Sachin Constructions 14,50,000 4 Sanskruti Constructions 14,50,000 5 S.R. Patil 12,18,000 6 Yashoda Earth Movers 12,45,000 7 Mohanlal Devichand Sons 69,13,340 Total 1,53,94,840 10. Similarly, the assessee also could not justify the genuineness of additional expenditure to the tune of ₹ 69,13,340/- towards construction expenditure in the name of M/s. Mohanlal Devichand and Sons. The AO issued summons u/s.131 to the above party. In its reply, it was stated by M/s. Mohanlal Devichand and Sons that they did not have any trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and and Sons the AO noted that the assessee has claimed expenditure of ₹ 59 lakhs in the name of the above party in the original return of income. In the statement recorded u/s.131 M/s. Mohanlal Devichand and Sons had stated that they have not done any transaction with Shri Deepak H. Pawar during A.Y. 2007-08 and they have also confirmed that no amount is receivable from the assessee. The AO therefore disallowed the claim of expenditure of ₹ 59 lakhs in the name of M/s. Mohanlal Devichand and Sons. 12. Similarly, for violation of provisions of section 40(a)(ia) the AO made addition of ₹ 31 lakhs in the name of Gatiman Earth Movers, ₹ 80,69,217/- in the name of Masai Multi Services, ₹ 26,05,000/- in the name of Sachin Constructions and ₹ 13 lakhs in the case of Sanskruti Constructions. The AO similarly made addition of ₹ 1 lakh u/s.40A(3) on account of cash payment in excess of ₹ 20,000/- to Gatiman Earth Movers and Pratik Bricks. The AO further disallowed an amount of ₹ 2,100/- under the head donations. Thus, he disallowed the expenditure to the tune of ₹ 4,00,73,036/-. 13. The AO analysed the balance sheet and noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o ₹ 15,15,878/- was set off, leaving the balance unabsorbed depreciation to be carried forward to subsequent years at ₹ 41,50,219/-. The income from windmill declared by the assessee for A.Y. 2007-08 is ₹ 15,60,970/- which he set off against the brought forward unabsorbed depreciation of ₹ 41,50,219/- and thereby rejected the claim of deduction u/s.80IA. Thus, the AO completed the assessment on a total income of ₹ 10,67,03,361/- as against the returned income of ₹ 54,00,167/-. 16. Before CIT(A) the assessee filed revised set of financial accounts as additional evidence under Rule 46A of the Income Tax Rules. It was requested for admission of the same as additional evidence. It was argued that though the assessee had got his accounts audited u/s.44AB the counsel who represented the assessee before the AO during assessment proceedings did not present the matter properly leading to unreconciled differences which led the AO to reject the books. It was further argued that though the AO had passed the assessment order u/s.143(3), however, the same was infact completed in the manner provided in section 144. The assessee argued that the assessee s cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come and particularly being admissible in the light of Rule 46A of the Income Tax Rules. Ground No 2: On the facts and in the circumstances of the case CIT (A) has erred in sustaining the addition of ₹ 2,93,11,999/- on the ground of undisclosed contract receipts while at the same time making an addition of ₹ 36,64,000/- by estimating the net profit @ 12.5% on the said contract receipts. Ground No 3 : On the facts and in the circumstances of the case CIT (A) has erred in estimating the net profit of ₹ 36,64,000/- on the alleged unaccounted contract receipt of ₹ 2,93,11,999/- and has also further erred in sustaining the similar estimation made by the Assessing Officer at ₹ 76,69,719/-. Ground No 4: On the facts and in the circumstances of the case CIT(A) has erred in sustaining the disallowance of ₹ 2,12,09,217/- u/s. 40(a)(ia) of the Income Tax Act, 1961. Ground No 5: On the facts and in the circumstances of the case CIT (A) has erred in sustaining the disallowance of ₹ 1,00,000/- u/s. 40A(3)of the Income Tax Act, 1961. Ground No 6: On the facts and in the circumstances of the case CIT(A) has erred in sustaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d since the Additional Commissioner of Income Tax, Pune who was holding charge of Satara Circle has conducted and completed the assessment proceedings at Pune. Since the assessee, instead of attending at Satara office of the Income Tax Office, had to attend at the Pune office for assessment proceedings, therefore, it has caused undue harassment to the assessee. Therefore, the AO who had no jurisdiction to assess the assessee of Satara by sitting at Pune, the order should be held as null and void on the issue of jurisdiction. 25. He submitted that the AO has obtained assessee s ledger extracts from the books of his customers without providing the same to the assessee for reconciling the difference and thereby making huge additions which is uncalled for and legally not tenable. Similarly, the AO has recorded the statements of various suppliers through ITO, Ward(2) of Satara which is impermissible. Further, those statements were never provided to the assessee nor any opportunity to cross examination was granted to the assessee. He submitted that inadequate opportunities were granted to the assessee to furnish the requisite details. He accordingly submitted that in view of the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espective returns of income. Relying on the amendment to section 40(a)(ia) by the Finance Act, 2012 w.e.f. 02-04-2013 he submitted that disallowance u/s.40(a)(ia) of the Act need not be made if the assessee is not deemed to be an assessee in default under the first proviso to section 201(1). Referring to the decision of the Pune Bench of the Tribunal in the case of ITO Vs. Gaurimal Mahajan and Sons vide ITA No.1852/PN/2012 order dated 06-01-2014 for A.Y. 2008-09 he submitted that the Tribunal after considering various decisions restored the issue to the file of the AO with a direction to examine the contention of the assessee that the payees have filed their return disclosing the amount received. He accordingly submitted that the issue may be restored to the file of the AO with a direction to verify as to whether the payees have disclosed such receipts and paid tax on that and if so to delete the disallowance. 30. The Ld. Counsel for the assessee further submitted that all the payments have been actually made and nothing is payable at the end of the year. Therefore, in view of the decision of the Hon ble Allahabad High Court in the case of Vector Shipping Company reported in 262 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grievance petition before the concerned CIT or CCIT. Since the assessee has participated in the assessment proceedings without bringing to the notice of the higher authorities about his difficulties now he cannot challenge the validity of jurisdiction. He cannot have any grievance. Therefore, the additional ground raised by the assessee on the issue of jurisdiction should be dismissed. 35. So far as the statements recorded from different persons through ITO, Ward-2 of Satara is concerned he submitted that the ITO was given necessary permission to record the statements of various suppliers. The AO having jurisdiction over the assessee had issued commission to an officer of the department for conducting local enquiry and there is nothing wrong in it. 36. So far as non supply of statements recorded and the ledger extracts obtained from different parties are concerned he submitted that the assessee was non-cooperative during the course of assessment proceedings. When he was not participating properly he cannot say that he was not provided such statements or ledger extracts. 37. So far as the merit of the case is concerned he submitted that the assessee has got his accounts au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence under Rule 46A of the Act. 40. So far as the merit of the case is concerned the Ld.CIT(A) almost confirmed the various additions made by the AO apart from disallowance u/s.40A(3), 40(a)(ia) etc. 41. It is the submission of the Ld. Counsel for the assessee that the various additions made by the AO and upheld by the CIT(A) are uncalled for since assessee has filed revised set of financial accounts before the Ld.CIT(A) which contained each and every item duly reconciled and there was no scope for any addition. However, the Ld.CIT(A) rejected the additional evidence. Further, the various ledger extracts obtained and statements recorded from various parties were not confronted to the assessee. The AO sitting at Pune has called the assessee from Satara to appear before him at Pune Office and therefore there was undue hardship caused to the assessee. 42. So far as the additional ground relating to validity of jurisdiction is concerned, we do not find any merit in the arguments advanced by the Ld. Counsel for the assessee. Admittedly, the AO who was sitting at Pune was also holding charge of Satara Range, Satara. The assessee is assessed at Satara. The Addl. Commissioner has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Satara office which is impermissible in law is concerned, we also do not find any merit in the above ground raised by the assessee in shape of an additional ground. An officer sitting at a place can always take the help of another officer by issuing necessary commission to record the statements of various persons who are assessed under his charge. Here, in the instant case, the Additional Commissioner sitting at Pune has taken the help of the AO Shri J.Y. Chauhan, ITO, Ward-2, Satara to record the statements of various persons of Satara only. This according to us cannot be held as impermissible in law. Ground raised by the assessee therefore being devoid of any merit is dismissed. 45. So far as the ground relating to non admission of additional evidences filed during the course of appeal proceedings is concerned, i.e. revised statements of financial accounts produced before the CIT(A) we find the Ld.CIT(A) has validly rejected such revised financial statements. Admittedly, the accounts were audited by the auditors and the audit report was filed along with the return of income and such audit report was also duly signed by the assessee himself. Therefore, we fail to understand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Shri Kuldeep Deepak pawar) : 48. The Revised grounds of appeal and Additional grounds raised by the assessee are as under : Additional Ground No.1: - On the facts and in the circumstances of the case the order passed by the Assessing Officer is bad in law and invalid on the jurisdictional ground that despite appellant's jurisdiction lying with Additional Commissioner of Income Tax, Satara Range, Satara most of the Scrutiny Assessment Proceedings were conducted and completed at Pune. Additional Ground No.2: - On the facts and in the circumstances of the case and without prejudice to above additional Ground No.1the order passed by the Assessing Officer is bad in law and invalid on the following grounds:- i. Requiring to attend at Pune for assessment proceedings; ii. Obtaining appellant's ledger extracts from the books of his customers and without providing the same to the appellant for reconciling the difference; iii. Recording the statements of several suppliers by the Assessing Officer namely Mr. J.Y. Chavan, ITO Ward 2, Satara, which is impressible in law. iv. Recording the statements of the above several suppliers at the back of the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 2 and the other grounds 1,2, 3 4 by the assessee are identical to the grounds in ITA No.1734/PN/2014. We have already decided the issue and restored the matter to the file of the AO with certain directions. We have also dismissed some of the additional grounds raised by the assessee. Following the same reasoning, the above grounds are decided accordingly. 50. So far as grounds of appeal No.5 is concerned, this is a new ground. Facts of the case, in brief, are that the AO during the course of assessment proceedings observed that the assessee during the impugned assessment year has carried out land business. He has acted as a mediator between the windmill companies and the land owners. The difference between the amount received by the assessee from the windmill company and the amount paid to the land owner is the profit of the assessee. However, the assessee did not recognize profit for such land deals. The AO, therefore, confronted the same to the assessee. In response to the same the assessee filed computation of profit from sale of land according to which the sale consideration was shown at ₹ 39,18,500/- and the purchase cost was ₹ 28,04,750/-. The AO, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that the income from agricultural activity is exempt. Since the assessee has filed necessary documents along with 7/12 extracts etc. of the agricultural lands, certificate of Gram Panchayat for population and distance from the nearest municipality and had demonstrated that these are the rural agricultural lands and do not form part of the capital asset within the meaning of section 2(14)(iii)(b) of the I.T. Act. Relying on the following decisions he submitted that these transactions cannot constitute the transaction entered in the course of any business activity or in no way it is an adventure in nature of trade : a. Barendra Prasad Ray reported in 129 ITR 295 (SC) b. Lala Indra Sen reported in 8 ITR 187 (Allahabad High Court) c. Kaur Singh reported in 144 ITR 756 (Punjab Haryana High Court) d. Venkatasubbiah Reddiar reported in 221 ITR 18 (Madras High Court He accordingly submitted that necessary relief should be granted to the assessee. 54. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A) on this issue. He submitted that when the assessee is purchasing and selling land and has even claimed certain expenses in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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