The ACIT, Central Circle, Vijayawada v. M/s Vengamamba Cold Storage Pvt Ltd., Vijayawada

ITSSA 46/VIZ/2004 | misc
Pronouncement Date: 24-02-2010 | Result: Dismissed

Appeal Details

RSA Number 4625316 RSA 2004
Bench Visakhapatnam
Appeal Number ITSSA 46/VIZ/2004
Duration Of Justice 5 year(s) 8 month(s) 13 day(s)
Appellant The ACIT, Central Circle, Vijayawada
Respondent M/s Vengamamba Cold Storage Pvt Ltd., Vijayawada
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 24-02-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 24-02-2010
Assessment Year misc
Appeal Filed On 11-06-2004
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER IT(SS)A NO.46/VIZAG/2004 BLOCK ASSESSMENT PERIOD : 1.4.1990 TO 24.10.2000 ACIT CENTRAL CIRCLE VIJAYAWADA M/S. VENGAMAMBA COLD STORAGE (P) LTD. VIJAYAWADA (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI SUBRATA SARKAR DR RESPONDENT BY: SHRI S. RAMA RAO ADVOCATE ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) ON FOLLOWING GROUNDS:- 1. THE ORDER OF THE CIT(A) IS ERRONEOUS ON FACTS IN LA W. 2. THE CIT(A) OUGHT TO HAVE NOTICED THAT THE DIRECTOR OF THE COMPANY HAD STATED IN WRITING BEFORE THE DDIT (INV) THAT BO OKS OF ACCOUNT WERE NOT AVAILABLE AND NO CONSTRUCTION ACCOUNT WAS FURNISHED. 3. THE CIT(A) OUGHT TO HAVE SUSTAINED THE ADDITION MAD E TOWARDS COST OF CONSTRUCTION. 4. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF A PPEAL. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE FACTS BORNE OUT FROM THE RECORD ARE THAT THE SEARCH WAS CONDUCTED AT THE ASSESSEE COMPANY AS WEL L AS ON ITS DIRECTORS. DURING THE COURSE OF SEARCH PROCEEDINGS THE STATEM ENTS OF SHRI K. CHINNA VENGAIAH WAS RECORDED AND IN HIS STATEMENT HE HAS D EPOSED THAT THE COMPANY HAD MADE AN INVESTMENT OF RS.1 57 00 000/- TOWARDS THE CONSTRUCTION OF COLD STORAGE IN WHICH RS.1 19 00 00 0/- WAS BORROWED FROM A.P. STATE FINANCE CORPORATION AND REMAINING RS.38 LAKHS WAS INVESTED BY THE SIX DIRECTORS AS SHARE CAPITAL OUT OF WHICH RS .25 00 000/- WAS UNEXPLAINABLE AND ULTIMATELY RS.25 LAKHS WAS OFFERE D TO TAX BY THE RESPECTIVE DIRECTORS. RELYING UPON THE STATEMENT THE DDI HAS MADE A REFERENCE TO THE 2 D.V.O. WHO VALUED THE INVESTMENT IN THE COLD STORAG E AT RS.3 57 70 000/-. THE A.O. ADOPTED THE SAME AND MADE THE ADDITION OF THE DIFFERENCE AT RS.2 48 13 363/- AFTER TAKING THE COST OF CONSTRUCT ION OF THE FACTORY BUILDING AT RS.1 09 56 647/-. 3. THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE CIT(A) WITH THE SUBMISSION THAT THE ASSESSEE IS A PRIVATE LIMITED C OMPANY AND IT HAS ALREADY DECLARED THE INVESTMENT IN THE COLD STORAGE IN ITS RETURN OF INCOME PERTAINING TO THE ASSESSMENT YEAR 1999-2000. THE RETURN OF IN COME WAS FILED ON 30.12.1999 BEFORE THE DATE OF THE SEARCH. NO INCRI MINATING MATERIAL WAS FOUND WITH REGARD TO THE UNEXPLAINED INVESTMENT IN THE COLD STORAGE DURING THE COURSE OF SEARCH. THE D.D.I. HAS SIMPLY DRAWN AN INFERENCE WITH REGARD TO THE UNEXPLAINED INVESTMENT BY THE ASSESSEE COMPA NY ON THE BASIS OF THE STATEMENT OF THE MANAGING DIRECTOR. 4. THE CIT(A) EXAMINED THE ISSUE IN THE LIGHT OF AS SESSEES CONTENTIONS AND BEING CONVINCED WITH THE EXPLANATIONS OF THE AS SESSEES HE DELETED THE ADDITION. 5. NOW THE REVENUE HAS PREFERRED AN APPEAL BEFORE T HE TRIBUNAL AND PLACED A HEAVY RELIANCE UPON THE ORDER OF THE ASSES SING OFFICER. THE LD. COUNSEL FOR THE ASSESSEES HAS INVITED OUR ATTENTION TO THE STATEMENT OF M.D. WHICH IS AVAILABLE AT PAGE 49 OF THE COMPILATION OF THE ASSESSEES IN WHICH THE M.D. HAS DEPOSED THAT HE HAS MADE A TOTAL INVESTMEN T IN CONSTRUCTION OF COLD STORAGE AT RS.1.57 CRORES OUT OF WHICH RS.1.19 CRO RES WAS BORROWED FROM THE A.P. STATE FINANCE CORPORATION AND THE REMAINING RS .38 LAKHS WAS INVESTED BY THE 6 DIRECTORS OUT OF THAT RS.25 LAKHS WAS UNE XPLAINABLE. THIS RS.25 LAKHS WAS OFFERED BY RESPECTIVE DIRECTORS AS AN UND ISCLOSED INCOME IN THEIR OWN HANDS. EXCEPT THIS STATEMENT NOTHING WAS BROU GHT OUT BY THE ASSESSING OFFICER TO ESTABLISH THAT ASSESSEE HAS MADE SOME UN DISCLOSED INVESTMENT IN THE CONSTRUCTION OF COLD STORAGE. THE ASSESSEE HAS ALSO FILED THE COPY OF THE RETURN PERTAINING TO THE ASSESSMENT YEAR 1999-2000 WHICH SHOWS THE ACKNOWLEDGEMENT OF THE RETURN DATED 30.12.1999 THAT IS BEFORE THE DATE OF THE SEARCH. ALONG WITH THE RETURN THE BALANCE SHE ET AND THE STATEMENT OF 3 ASSET WERE ALSO FILED IN WHICH ASSESSEE HAS ALWAYS DISCLOSED THE INVESTMENT IN THE COLD STORAGE AT RS.1 57 00 255/-. THE COPY OF THE RETURN IS AVAILABLE AT PG.50 OF THE COMPILATION AND THE STATEMENT OF FIXED ASSET IS AVAILABLE AT PAGE 9. THE LD. COUNSEL FOR THE ASSESSEES FURTHER CONTE NDED THAT SINCE THE ASSESSEE HAS ALREADY FILED REGULAR RETURN OF INCOME IN WHICH HE DISCLOSED THE INVESTMENT IN THE COLD STORAGE AND IF THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE DISCLOSURE HE SHOULD HAVE MADE NECESSARY VERIFICATION IN THE REGULAR ASSESSMENT. BUT IN THE CASE OF A SEARCH THE SCOPE IS VERY LIMITED AND ONLY THOSE ISSUES CAN BE EXAMINED ON WHICH SOME INCRIMIN ATING MATERIALS ARE FOUND DURING THE COURSE OF SEARCH. 6. WE HAVE CAREFULLY EXAMINED THE ORDER OF THE LOWE R AUTHORITIES AND THE MATERIAL PLACED BEFORE US AND WE FIND THAT BEFORE T HE DATE OF SEARCH ASSESSEE ITSELF HAS FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 1999- 2000 DECLARING THE INVESTMENT IN THE COLD STORAGE. DURING THE COURSE OF SEARCH STATEMENT OF M.D. OF THE ASSESSEE COMPANY W AS RECORDED IN WHICH HE HAS DISCLOSED THE INVESTMENT FOR THE CONSTRUCTION O F COLD STORAGE AND WITH REGARD TO THE SOURCE HE DEPOSED THAT RS.38 LAKHS W AS INVESTED BY THE 6 DIRECTORS OUT OF RS.25 LAKHS WAS UNEXPLAINABLE AND THIS UNEXPLAINED AMOUNT WAS OFFERED TO TAX BY THE RESPECTIVE DIRECTORS. NO THING HAS BEEN BROUGHT OUT BY THE REVENUE THAT ASSESSEE HAS MADE SOME UNEXPLAI NED INVESTMENTS IN THE CONSTRUCTION OF COLD STORAGE. WE THEREFORE OF THE VIEW THAT IN THE ABSENCE OF ANY INCRIMINATING EVIDENCE THE ALLEGED ADDITIONS A RE BEYOND THE SCOPE OF BLOCK ASSESSMENT. WE HAVE ALSO CAREFULLY EXAMINED THE ORDER OF THE CIT(A) AND WE FIND THAT CIT(A) HAS PROPERLY ADJUDICATED TH E ISSUES BEFORE HOLDING THAT THE ADDITIONS MADE BY THE A.O. IS UNCALLED FOR IN THE LIGHT OF THE EVIDENCE PLACED BY THE ASSESSEES. WE ACCORDINGLY CONFIRM TH E ORDER OF CIT(A). 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON 24.2.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 24 TH FEBRUARY 2010 4 COPY TO 1 THE ACIT CENTRAL CIRCLE VIJAYAWADA 2 M/S. VENGAMAMBA COLD STORAGE PVT. LTD. 14-11-17 HANUMANPET VIJAYAWADA 3 THE CIT VIJAYAWADA 4 THE CIT(A) VIJAYAWADA 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM