Dy. CIT,Central Circle-1, Nashik v. M/s. Tejas constructions, Jalgaon

ITA 932/PUN/2009 | 1999-2000
Pronouncement Date: 08-12-2010 | Result: Dismissed

Appeal Details

RSA Number 93224514 RSA 2009
Assessee PAN AAAFT9637J
Bench Pune
Appeal Number ITA 932/PUN/2009
Duration Of Justice 1 year(s) 4 month(s)
Appellant Dy. CIT,Central Circle-1, Nashik
Respondent M/s. Tejas constructions, Jalgaon
Appeal Type Income Tax Appeal
Pronouncement Date 08-12-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 08-12-2010
Assessment Year 1999-2000
Appeal Filed On 07-08-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI I.C. SUDHIR AND SHRI D. KARUNAKARA RAO ITA NO. 932 & 933/PN/09 (ASSTT. YEAR 1999-00 & 2000 -01) DCIT CENTRAL CIRCLE-1 NASHIK .... APPELLANT VS. M/S. TEJAS CONSTRUCTIONS SITAMAI NAGAR CHALISGAON DIST. JALGAON PAN NO. AAAFT9637J . RESPONDENT APPELLANT BY : SHRI R. KAUSHAL RESPONDENT BY : NONE ORDER PER D. KARUNAKARA RAO AM THESE ARE THE APPEALS BY REVENUE AGAINST THE COMBIN ED ORDERS OF THE CIT(A)-I NASHIK IDENTICALLY DATED 20-05-2009 FOR T HE A.Y 1999-00 & 2000-01. AT THE VERY OUTSET THE LD. DR DEMONSTRATED THAT THERE EX ISTS COMMONALITIES OF THE ISSUE IN THESE TWO APPEALS. THEREFORE WE PROCEED TO A DJUDICATE THE SAME IN THIS CONSOLIDATED ORDER. FOR THE SAKE OF COMPLETENESS THE GROUNDS FOR THE A.Y 1999-00 ARE REPRODUCED AS UNDER:- 1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO AT RS. 4 78 176/- BEING DISALLOWANCE U/S. 69C OF I.T. ACT 1961. 2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CIT(A) WHILE DECIDING THE ISSUE AS MENTIONED IN GRO UND NO.1 ABOVE IN FAVOUR OF THE ASSESSEE AND WHILE DOING SO WAS FURTHER JUST IFIED IN IGNORING THE FACT THAT THE HONBLE COLCATTA HIGH COURT IN THE CASE OF CIT V. BHAGWATI DEVELOPERS (P) LTD. (2003) 261 ITR 658 HAS HELD THA T SECTION 69C DEALS WITH UNEXPLAINED EXPENDITURE UNLESS ITS SOURCE IS SATIS FACTORILY EXPLAINED THE SAME WOULD ALSO BE DEEMED TO BE THE INCOME OF THE A SSESSEE FOR SUCH FINANCIAL YEAR. THE QUESTION OF ADDITION DEPENDS ON THE SATISFACTORY EXPLANATION OF THE SOURCE. IT CANNOT BE NEGATED SIM PLY BECAUSE THE ITA NOS. 932 & 933/PN/09 A.Y. 1999-00 & 2000-01 PAGE 2 OF 5 EXPENDITURE WAS ACTUALLY INCURRED. ON FAILURE TO EX PLAIN THE SOURCE OF EXPENDITURE IT IS LIABLE TO B ADDED TO THE TOTAL I NCOME. IN THE LIGHT OF ABOVE THE DISALLOWANCE MADE BY THE A.O APPEARS TO BE JUST IFIED AND SUBSTANTIAL RELIEF ALLOWED BY THE CIT(A) IS UNWARRANTED. 3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY THE A.O AT RS. 2 00 365/- ON ACCOUNT OF DISALLOWANCE OF DEPRECIATI ON IGNORING THE FACT THAT THE DISALLOWANCE OF DEPRECIATION WAS NOT CONSIDERED BY THE ASSESSEE IN THE RETURN FILED U/S. 153A. 4) THE ORDER OF THE LD. CIT(A)-I NASHIK MAY BE VA CATED AND THAT OF THE AO BE RESTORED. 2. FROM THE ABOVE IT IS EVIDENT THERE ARE A COUPLE OF ISSUES FOR ADJUDICATION BEFORE US. THERE WAS NONE FOR ASSESSEE TO REPRESENT THE CASE BEFORE US. WITH THE HELP OF LD. DR WE PROCEED TO ADJUDICATE THE SAME IN THE PRECEDING PARAS. 3. IN THE FIRST ISSUE THE REVENUE IS AGITATED BY TH E DECISION OF THE CIT(A) IN DELETING THE ADDITION MADE U/S. 69C OF THE INCOME T AX ACT AMOUNTING TO RS. 4 78 176/- FOR THE A.Y 1999-00. THE SAID AMOUNT IS M ENTIONED RIGHTLY AS RS. 4 48 176 AS SEEN FROM PARA 6.4 OF THE IMPUGNED ORDER. RELEVANT FACTS AND THE DECISION OF THE CIT(A) ARE GIVEN IN PARA 6.4 6.4.1 A ND 6.4.2 OF THE IMPUGNED ORDER. ESSENTIALLY LD. DR FOR THE REVENUE HAS RELIED ON TH E ORDER OF THE A.O. WE HAVE HEARD THE LD. DR AND PERUSED THE SAID PARAS. FOR THE S AKE OF COMPLETENESS THEY ARE REPRODUCED AS UNDER:- 6.4 IN RESPECT OF ADDITION U/S. 69C OF THE ACT AMO UNTING TO RS. 4 48 176/- IN THE A.Y 1999-00 THE APPELLANT SUBMITTED THAT TH E DETAILS OF DEMAND DRAFTS OF RS. 2 79 676/- RS. 1 26 000/- AND RS. 42 500/- AS MENTIONED BY THE A.O IN HIS ASSESSMENT ORDER ARE AS UNDER:- DT. OF BILL NAME OF THE PARTY BILL AMT. AMOUNT PAID REMARK 23/11/98 HYDERABAD INDUSTRIES 73 156 73 156 DD PURCHASED BY CHEQUE NO. 0040 DATED 23/11/98 OF U.W. BANK PARALI OF ABC MARKETING JV PASSED ON 31/03/1999. 21/12/98 HYDERABAD INDUSTRIES 1 45 000 1 45 000 DD PURCHASED BY CHEQUE NO. 0043 DATED 29/12/98 OF U.W. BANK PARALI OF ABC MARKETING JV PASSED ON 31/03/1999. 9/12/98 HYDERABAD INDUSTRIES 61 520 61 520 DD PURCHASED BY CHEQUE NO. 0046 DATED 9/2/1999 OF U.W. BANK PARALI OF ABC MARKETING JV PASSED ON 31/03/1999. ITA NOS. 932 & 933/PN/09 A.Y. 1999-00 & 2000-01 PAGE 3 OF 5 6.4.1. IN RESPECT OF THIS ADDITION U/S. 69C THE APPE LLANT SUBMITTED AS UNDER:- THE A.O. HAS MADE THE ADDITION STATING THAT THE AS SESSEE HAS NOT RECORDED THESE DEMAND DRAFTS ON THE DATES OF PURCHA SE BUT HAS RECORDED THE SAME ON 31/03/1999. THE A.O. CONCLUDED THAT THEREFORE THE PAYMENTS MADE TO THE ABOVE EXTENT OF RS. 4 54 3 36/- IS FROM UNDISCLOSED SOURCES AND MADE THE ADDITION U/S. 69C. IT WAS POINTED OUT TO THE A.O THAT THE DEMAND DRAFTS WERE PURCHASE D BY ISSUING BANK CHEQUES AND HENCE THERE IS NO QUESTION OF MAKING AN Y UNEXPLAINED EXPENDITURE FOR PURCHASING ABOVE DEMAND DRAFTS. THE JOURNAL ENTRIES WERE PASSED ON 31/03/1999 CREDITING THE BANK ACCOUN T AND DEBITING THE PARTIES ACCOUNTS INSTEAD OF PASSING THE SAME EN TRIES ON THE DATE OF PURCHASE OF D.D. THIS DOES NOT RESULT IN TO ANY UNE XPLAINED INCOME OR EXPENDITURE. IT IS VERY SADLY SUBMITTED THAT THE A. O. DID NOT UNDERSTAND THE SIMPLE ACCOUNTING PRINCIPLES AND HAS MADE INCORRECT ADDITION WITHOUT APPRECIATING THE FACTS POINTED TO HIM. THE ADDITION MADE BY THE A.O. BEING APPARENTLY INCORRECT AND UNJ USTIFIED MAY PLEASE BE DELETED. 6.4.2. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER OF THE A.O. AND THE SUBMISSION OF THE APPELLANT AND THE BANK STATEMENTS OF THE APPELLANT FIRM WHEREIN THE CHEQUES ISSUED FOR PURCHASE OF THE ABOVE D EMAND DRAFTS ARE NOTED. ON PERUSAL OF THE SUBMISSION AND THE OTHER RECO RD THE SOURCE OF THE PURCHASE OF DEMAND DRAFTS IS FOUND TO BE EXPLAINED. T HE BOOKS OF ACCOUNTS OF THE APPELLANT FIRM ARE REGULARLY MAINTAINED AND AUDI TED IN WHICH THE ABOVE CREDIT PURCHASES FROM THE SUPPLIERS ARE ALSO FOUND TO BE NOTED. THEREFORE I AM OF THE CONSIDERED VIEW THAT THE ABOVE PAYMENTS MA DE TO THE THREE PARTIES BY THE APPELLANT BY DEMAND DRAFTS WHICH ARE P URCHASED BY ISSUING BANK CHEQUES AND WHICH ARE DULY RECORDED IN REGULAR BOOK S OF ACCOUNTS MAINTAINED AND AUDITED CANNOT BE ADDED U/S. 69C AS UNEXPLAINED PAYMENTS. THE ADDITION OF RS. 4 48 176/- IN A.Y 1999-00 IS TH EREFORE DELETED. 4. FROM THE ABOVE IT IS EVIDENT THAT THE IMPUGNED TRA NSACTIONS ARE ACCOUNTED IN THE REGULAR BOOKS OF ACCOUNTS AND THE SAID ENTRIES MADE IN THE BOOKS OF ACCOUNTS ARE NOT FOUND BOGUS OR ERRONEOUS BY THE REVENUE. THESE ARE THE ENTRIES WHICH HAVE BEEN SUBJECTED TO INTERNAL AUDIT BY THE ASSESSE E FIRM BY THE QUALIFIED AUDITORS AND ENTRIES INVOLVED WERE ALSO CLEARED BY THEM. IN SUC H CIRCUMSTANCES WE AGREE WITH THE FINDING OF THE CIT(A) AND THEREFORE WE ARE O F THE OPINION THAT THE ORDER OF 24/04/98 RAMPRASAD BAGMAL MODI 28 320 24/04/98 RAMPRASAD BAGMAL MODI 28 320 24/04/98 RAMPRASAD BAGMAL MODI 23 600 24/04/98 RAMPRASAD BAGMAL MODI 28 320 24/04/98 RAMPRASAD BAGMAL MODI 23 600 1 26 000 IN RESPECT OF THE FIVE BILLS THE DD PURCHASED BY CHEQUE NO. 0083 DATED 02/05/1998 OF U.W. BANK CHALISGAON AMOUNTING TO RS. 1 26 000/- JV PASSED ON 31/03/1999. 17/08/98 SUNBRIGHT CEMENT AGENCY 42 500 42 500 DD PURCHASED BY CHEQUE NO. 27459 DATED 17/8/98 OF U.W. BANK CHALISGAON. TOTAL 4 54 336 4 48 176 ITA NOS. 932 & 933/PN/09 A.Y. 1999-00 & 2000-01 PAGE 4 OF 5 THE CIT(A) IN THIS REGARD DOES NOT NEED ANY INTERFERENC E. ACCORDINGLY RELEVANT GROUNDS OF THE APPEAL ARE DISMISSED . 5. THE NEXT ISSUE RELATES TO DELETION OF ADDITION OF RS. 2 00 365/- ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION IGNORING FACT THAT THE IMPUGNED DISALLOWANCE OF DEPRECIATION WAS NOT CONSIDERED BY THE ASSESSEE FOR TH E RETURN FILED U/S. 153A OF THE ACT. LD. DR HAS TAKEN US THROUGH PARA 6.7 AND 6.7.1 OF THE IMPUGNED ORDER IN FACTS AS WELL AS FOR THE DECISION OF THE CIT(A) IN THIS RE GARD. OTHERWISE THE LD. DR RELIED ON THE ORDERS OF THE A.O. WE PERUSED THE RELEVANT PARA WHICH READ AS FOLLOWS:- 6.7 THE NEXT ADDITION CONTESTED BY THE APPELLANT IS DISALLOWANCE OF DEPRECIATION OF RS. 2 00 365/- IN A.Y 1999-00. THE A .O WHILE ASSESSING INCOME OF A.Y 1999-00 U/S. 153A NOTICED THAT HIS PRE DECESSOR A.O HAS DISALLOWED DEPRECIATION AMOUNTING TO RS. 2 00 365/- WHILE ASSESSING INCOME OF THE APPELLANT BY PASSING ORDER U/S. 154 OF THE ACT . ON THIS ISSUE THE APPELLANT SUBMITTED THAT THE ADDITION IS NOT JUSTIF IED AS THE ASSESSMENTS ALREADY FINALIZED AND NOT PENDING CANNOT BE ABATED I N VIEW OF PROVISIONS OF SECTION 153A OF THE ACT. THE APPELLANT FURTHER POINTE D OUT THAT THIS VIEW IS SUPPORTED BY MEMORANDUM ACCOMPANYING THE FINANCE BILL 2003 EXPLAINING SCOPE OF NEW SCHEME EFFECTED FOR SEARCH U/S. 132. THE APPELLANT HAS FURTHER SUBMITTED THAT THE ABOVE CONTENTION IS SUPPORTED BY THE DECISION OF HONBLE ITAT DELHI IN THE CASE OF SHIVNATH RAI HARNARAIN (IN DIA) LTD. VS. DCIT DATED 15/02/2008 304 ITR 271. THE APPELLANT HAS ALSO POIN TED OUT THAT THE DEMAND RAISED BY THE A.O IN RESPECT OF ADDITIONS MADE IN ORIG INAL ASSESSMENT U/S. 154 OF THE ACT WAS PAID AND THE ASSESSMENT WAS NOT CONT ESTED IN APPEAL. 6.7.1 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDE R OF THE A.O AND THE SUBMISSION OF THE APPELLANT. ON PERUSAL OF MEMORANDUM ACCOMPANYING THE FINANCE BILL 2003 EXPLAINING SCOPE OF NEW SCHEME E FFECT FOR SEARCH U/S. 132 IT IS NOTICED THAT THE SAID MEMORANDUM STATES ASS ESSMENT OR REASSESSMENT IF ANY RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS PENDING ON THE DATE OF INITI ATION OF THE SEARCH U/S. 132 OR REQUISITION U/S. 132A AS THE CASE MAY BE SHA LL ABATE. FURTHER THE DECISION OF HONBLE ITAT DELHI RELIED ON BY THE APP ELLANT SUBSTANTIATE APPELLANTS CONTENTION THAT ADDITION MADE IN ASSES SMENT COMPLETED U/S. 154 OF THE ACT WHICH IS NOT PENDING CANNOT BE AGAIN MA DE WHILE ASSESSING INCOME OF THE ASSESSEE U/S. 153A R.W.S 143(3) OF THE ACT. THE APPELLANT HAS ACCEPTED THE ADDITIONS OF RS. 2 00 365/- MADE IN ORI GINAL ASSESSMENT AND ALSO PAID DEMAND RAISED BY THE A.O. IN VIEW OF THE A BOVE DISCUSSION I AM OF THE CONSIDERED VIEW THAT THE ADDITION OF RS. 2 00 36 5/- MADE BY THE A.O WHILE ASSESSING INCOME OF THE APPELLANT U/S. 153A R. W.S. 143(3) OF THE ACT FOR A.Y 1999-00 IS NOT JUSTIFIED AND HENCE THE SAME IS DELETED. THE A.O IS FURTHER DIRECTED TO REDUCE THE CREDIT IF ANY GIVEN TO THE APPE LLANT FOR TAX DEMAND PAID ON ORIGINAL ASSESSMENT MADE U/S. 154. 6. FROM THE ABOVE IT APPEARS THAT THE ISSUE UNDER CON SIDERATION IS INCIDENTAL TO THE CLOSED REGULAR ASSESSMENT AND THE RECTIFICATION TH EREOF. IN OUR OPINION THE CIT(A) IS RIGHT IN HOLDING THAT THE AO CAN NOT EXAMI NE SUCH ISSUE IN THIS ASSESSMENT ITA NOS. 932 & 933/PN/09 A.Y. 1999-00 & 2000-01 PAGE 5 OF 5 U/S. 153A OF THE ACT WHEN THERE IS NO PENDING ASSESS MENT TO BE ABATED. IN THAT SENSE WE HAVE NO REASON TO INTERFERE IN THE ORDER OF TH E CIT(A) ON THIS ISSUE. ACCORDINGLY RELEVANT GROUNDS ARE DISMISSED. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 933/PN/09 8. DURING THE PROCEEDINGS AS ALREADY NARRATED ABOVE LD DR DEMONSTRATED THAT THE GROUNDS ARE IDENTICAL TO THE ONES ADJUDICATED ABO VE. ON HEARING THE DR AND PERUSING THE ORDERS RELEVANT WE ARE OF THE OPINION B OTH THESE ISSUES IN THIS APPEAL STAND COVERED BY OUR DECISION GIVEN IN THE CONTEXT OF APPEAL VIDE ITA NO 932/PN/09. ACCORDINGLY THE RELEVANT GROUNDS ARE DISMISSED. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ORDERS PRONOUNCED IN THE OPEN COURT ON 08 TH DECEMBER 2010. SD/- SD/- (I.C. SUDHIR) (D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 08 TH DECEMBER 2010 R COPY OF THE ORDER IS FORWARDED TO : 1. DCIT CENTRAL CIRCLE -1 NASHIK 2. ASSESSEE 3. CIT(A)-I NASHIK 4. CIT(CENTRAL) NAGPUR 5. D.R. ITAT A BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE