M/s PBL Transport Corp Pvt Ltd, Visakhapatnam V. The DCIT, Central Circle-1, Visakhapatnam

CO 55/VIZ/2004

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 4538 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 year(s) 6 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-03-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 31-08-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C SUBRAMANYAM
• Assessee Lawyers: SUBRATA SARKAR
• Keywords: Depreciation; Search and seizure; Document seized; Capital receipt; Documents seized
• Section: 132

Judgement Text

PAGE 1 OF 6 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.114/VIZAG/2002 BLOCK PERIOD ENDING: 28.7.1999 DCIT, CENTRAL CIRCLE-1, VISAKHAPATNAM VS. PBL TRANSPORT CORPORATION (P) LTD., VISAKHAPATNAM (APPELLANT) (RESPONDENT) C.O.NO.55/VIZAG/2004 BLOCK PERIOD ENDING : 28.7.1999 DCIT, CENTRAL CIRCLE-1, VISAKHAPATNAM VS. PBL TRANSPORT CORPORATION (P) LTD., VISAKHAPATNAM APPELLANT BY: SHRI SUBRATA SARKAR, CIT(DR) RESPONDENT BY: SHRI C. SUBRAMANYAM, CA ORDER PER SHRI B R BASKARAN, ACCOUNTANT MEMBER : THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 13-05-2002 PAS SED BY THE LD CIT (A)-I, HYDERABAD AND THEY RELATE TO THE BLOCK PERIOD ENDIN G 28-7-1999. 2. THE EFFECTIVE GROUNDS RAISED BY THE REVENUE READ AS UNDER: 3. THE CIT(A) HAS NOT JUSTIFIED IN DELETING THE AD DITION ON THE GROUND THAT THE ASSESSEE HAS NOT CLAIMED EXTRA DEPR ECIATION ON THE VEHICLES SOLD. 4. THE CIT(A) WOULD HAVE BEEN APPRECIATED THE ACTIO N MADE ON THE GROUND THAT THE ASSESSEE DID NOT RECORD THE TRANSAC TIONS IN THE BOOKS OF ACCOUNT WHICH SHOW THE INTENTION OF THE AS SESSEE TO SUPPRESS THE SALE CONSIDERATION. PAGE 2 OF 6 IN THE CROSS OBJECTION, THE ASSESSEE IS QUESTIONING THE LEVY OF INTEREST U/S 158BFA (1) OF THE INCOME-TAX ACT. THOUGH THE ASSESSE E HAS FILED AN ADDITIONAL GROUND IN THE CROSS OBJECTION, AT THE TIME OF HEARI NG THE LD AR SUBMITTED THAT HE IS NOT PRESSING THE SAID GROUND. 3. THE FACTS RELATING TO THE ISSUES ARE STATED IN B RIEF. THE ASSESSEE, A PRIVATE LIMITED COMPANY IS ENGAGED IN THE BUSINESS OF TRANS PORT AND HANDLING CONTRACTS. THE DEPARTMENT CARRIED OUT SEARCH AND SEIZURE OPERA TION U/S 132 OF THE ACT ON 28.7.1999. THEREAFTER A NOTICE U/S 158BC WAS ISSUED ON 11/2/2000 AND THE SAME WAS SERVED ON THE ASSESSEE ON 16/2/2000. BY TH AT NOTICE THE ASSESSEE WAS REQUESTED TO SUBMIT ITS RETURN OF INCOME FOR THE BL OCK PERIOD (BLOCK RETURN) WITHIN 16 DAYS FROM THE DATE OF SERVICE OF NOTICE. THE ASSESSEE REQUESTED THE AO BY HIS LETTER ON 28.2.2000 TO GRANT MAXIMUM TIME PE RMITTED UNDER THE LAW TO FILE THE RETURN OF INCOME. IT MAY BE NOTED THAT U/S 158BC OF THE ACT, THE AO SHALL SERVE A NOTICE REQUIRING THE ASSESSEE TO FURNISH A RETURN WITHIN SUCH TIME NOT BEING LESS THAN FIFTEEN DAYS BUT NOT MORE THAN 45 D AYS. IN RESPONSE TO THE LETTER OF THE ASSESSEE, THE AO ALLOWED TIME TILL 27/03/200 0 TO FILE THE BLOCK RETURN AND ACCORDINGLY THE RETURN WAS FILED ON 27.3.2000, DECL ARING UNDISCLOSED INCOME OF RS.1,60,000/- REPRESENTING DEFICIT CASH BALANCE FOU ND IN THE CASH BOOK FOR THE FINANCIAL YEAR 1999-2000. THE CONTENTION OF THE AS SESSEE IS THAT IT HAS FILED THE BLOCK RETURN WITHIN THE MAXIMUM PERMISSIBLE TIME OF 45 DAYS AS PRESCRIBED U/S 158BC OF THE ACT. 4. DURING THE COURSE OF SEARCH, IT WAS NOTICED THAT THE ASSESSEE COMPANY HAD SOLD 3 TRAILERS IN BETWEEN MAY,1999 TO JULY,199 9 FOR A TOTAL SALE CONSIDERATION OF RS.12,95,000/-. HOWEVER, THE ASSES SEE HAD ACCOUNTED FOR ONLY RS.4,35,000/- IN ITS BOOKS OF ACCOUNT PRIOR TO THE SEARCH OPERATION. THUS IT WAS FOUND THAT THE ASSESSEE HAD NOT ACCOUNTED FOR THE B ALANCE AMOUNT OF RS.8,60,000/- IN ITS BOOKS OF ACCOUNT PRIOR TO THE DATE OF SEARCH. THE AO TREATED THE ABOVE AS UNRECORDED AMOUNT OF RS.8,60,000/- AS UNEXPLAINED MONEY WITHIN THE MEANING OF 69A OF THE ACT AND TREATED THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE. PAGE 3 OF 6 5. IN THE APPEAL PREFERRED BY THE ASSESSEE THE LD CI T (A) DELETED THE SAID ADDITION WITH THE FOLLOWING OBSERVATIONS: 10. AFTER GOING THROUGH THE ENTIRE FACTS AND CIRC UMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE ASSESSING OFFICE R HAS WRONGLY TAXED THE UNRECORDED RECEIPTS U/S 69A OF THE I.T ACT . THE SALE PROCEEDS OF VEHICLES NOT CREDITED IN BOOKS FLEW FRO M THE VEHICLES NAMELY SALE OF VEHICLES WHICH HAS BEEN DULY CONFIRM ED BY THE BUYERS. THE SALE OF VEHICLES TOOK PLACE IN THE MONT HS OF JUNE/JULY, 1999. IN THE RETURN OF INCOME FOR THE A.Y. 2000-01 F ILED ON 30-11- 2000, THE ENTIRE SALE VALUE OF VEHICLES OF RS.12,95 ,000/- HAS BEEN REDUCED FROM THE BLOCK OF ASSETS. THEREFORE, NO EXT RA DEPRECIATION HAS BEEN CLAIMED. THE SOURCE OF UNRECORDED AMOUNT H AS ALSO BEEN EXPLAINED BY WAY OF SALE OF VEHICLES DULY CONFIRMED BY THE BUYERS. THEREFORE, IN MY OPINION THE UNRECORDED AMOUNT CANN OT BE TAXED AS UNEXPLAINED MONEY U/S 69A OF THE I.T. ACT. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION OF RS.8,60, 000/- IS HELD TO BE INCORRECT AND THE SAME IS HEREBY DELETED. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 6. WHILE COMPLETING THE ASSESSMENT THE AO ALSO LEVI ED INTEREST U/S 158BFA (1) OF THE ACT. ACCORDING TO THE ASSESSEE THE SAID INTEREST IS NOT LEVIABLE AS THE BLOCK RETURN OF INCOME WAS FILED WITHIN THE STATUTO RY PERIOD OF 45 DAYS ONLY AFTER OBTAINING TIME FROM THE AO. HOWEVER, THIS CONTENTI ON OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE LD CIT (A). HENCE THE ASSESSEE HAS FILED CROSS OBJECTION ASSAILING THE DECISION OF THE LD CIT (A). 7. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE RECORD. THE AO HAS INVOKED SEC.69A FOR THE PURPOSE OF ASSESSING THE UN RECORDED SALE AMOUNT OF RS.8,60,000/-. THE SAID SECTION 69A READS AS UNDER: WHERE IN ANY FINANCIAL YEAR THE ASSESSEE IS FOUND TO BE OWNER OF ANY MONEY, BULLION, JEWELLERY, OR OTHER VALUABLE ARTICLES AND SUCH MONEY, BULLION, JEWELLERY OR VALUABLE ARTICLE IS NO T RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM, AND TH E ASSESSEE OFFERS NO EXPLANATION OR EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER SATISFACTORY, THE MONEY AND THE VALUE OF BULLION, JEWELLERY OR OTHER ARTICLES MAY B E DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR . PAGE 4 OF 6 IT IS NOT THE CASE OF AO THAT DURING THE COURSE OF S EARCH THE DEPARTMENT FOUND ANY MONEY NOT RECORDED IN THE BOOKS. HENCE IN THE A BSENCE OF ANY MONEY HAVING BEEN FOUND DURING THE COURSE OF SEARCH, IN O UR OPINION, SEC.69A CANNOT APPLY TO THE FACTS OF THE CASE. 8. THE CONTENTION OF THE ASSESSEE WAS THAT THE SALE PROCEEDS OF VEHICLES ARE CAPITAL RECEIPTS AND HENCE THEY CANNOT BE TREATED A S AN INCOME UNDER THE INCOME-TAX ACT. LD AR FURTHER SUBMITTED THAT THE DE PARTMENT DID NOT COME ACROSS ANY MATERIAL DURING THE COURSE OF SEARCH WIT H REGARD TO THE SALE OF IMPUGNED VEHICLES AND THE AO COULD COME TO KNOW OF SUCH SALE ONLY ON THE BASIS OF THE ADMISSIONS MADE BY THE ASSESSEE IN THE SWORN STATEMENT. THE LD AR ALSO SUBMITTED THAT THE UNDISCLOSED INCOME OF THE BLOCK PERIOD SHALL BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND HENCE THE SALE VALUE OF VEHICLES HAS TO BE REDUCED FROM THE BLOCK OF ASSETS AND IN T HAT CASE, IT WOULD NOT GIVE RISE TO ANY UNDISCLOSED INCOME. IF AT ALL ANY AMOUNT HAS TO BE ASSESSED AS UNDISCLOSED INCOME ONLY THE DIFFERENCE IN DEPRECIAT ION CAN BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. THE LD AR ALSO SUBMITTED THAT THE ASSESSEE HAD RECEIVED A SUM OF RS.1,90,000/- IN RESPECT OF O NE OF THE VEHICLES ON 22.7.99 AND SINCE THE BOOKS WERE FOUND UPDATED ONLY UP TO 2 1.7.99 ON THE DATE OF SEARCH, THIS RECEIPT DID NOT FIND PLACE IN THE BOOK S OF ACCOUNT. ACCORDINGLY THE LD AR CONTENDED THAT THE CREDIT SHOULD BE GIVEN FOR THE ABOVE SAID SUM OF RS.1,90,000/- ALSO AND THE DIFFERENCE SHOULD BE RES TRICTED TO ONLY RS.6,25,000/-. 9. ON THE CONTRARY LD DR SUBMITTED THAT THE DIR ECTOR OF THE ASSESSEE COMPANY, IN THE STATEMENT TAKEN FROM HIM HAS ADMITT ED THAT THE ASSESSEE COMPANY HAS OMITTED TO ACCOUNT THE FULL VALUE OF TH E SALE CONSIDERATION IN ITS BOOKS OF ACCOUNTS AND HENCE SUCH UNRECORDED MONEY I S ASSESSABLE U/S 69A OF THE ACT. 10. ON A CAREFUL CONSIDERATION OF THE RECORD AN D RIVAL SUBMISSIONS, WE NOTICE THAT THE LOWER AUTHORITIES HAVE NOT DISCUSSED ANY T HING ON THE ISSUES RELATING TO THE NON-AVAILABILITY OF SEIZED DOCUMENTS AND THE RE CEIPT OF MONEY OF PAGE 5 OF 6 RS.1,90,000/- ON 22.7.99. HENCE WE RESTRICT OURSEL VES TO THE TAXABILITY OR OTHERWISE OF RS.8,60,000/-. 11 AS CONTENDED BY THE ASSESSEE, IN OUR VIEW ALSO, THE SALE CONSIDERATION OF THE VEHICLES, PER SE, CANNOT BE TREATED AS UNDISCLO SED INCOME OF THE ASSESSEE. HOWEVER, AS PER THE DEFINITION OF THE UNDISCLOSED INCOME AS GIVEN IN SEC. 158B(B), THE UNDISCLOSED INCOME INCLUDES ANY INC OME BASED ON ANY TRANSACTIONS WHERE SUCH TRANSACTIONS REPRESENTS WHO LLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSE OF THIS ACT. AS SUBMITTED BY THE LD AR, THE SALE VALUE OF THE VEHICLES HAS TO BE REDUCED FROM THE BLOCK OF ASSETS WHILE COMPUTING TH E DEPRECIATION FOR THE PURPOSES OF INCOME TAX ACT. THE NON DISCLOSURE OF PART OF SALE PROCEEDS OF VEHICLES WOULD RESULT IN CLAIMING OF DEPRECIATION A T AN ENHANCED FIGURE. THE EXCESS DEPRECIATION SO CLAIMED WOULD AUTOMATICALLY TRANSLATE INTO UNDISCLOSED INCOME FROM THE TRANSACTION OF SALE OF VEHICLES WHI CH HAVE NOT BEEN DISCLOSED FOR THE PURPOSES OF INCOME TAX. HENCE, IN OUR OPINION, THE EXCESS DEPRECIATION ON THE UNRECORDED SALE PROCEEDS OF RS.8,60,000/- WOULD CONSTITUTE THE UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE AND WE DIRECT T HE AO TO COMPUTE THE EXCESS DEPRECIATION AND ASSESS THE SAME AS THE UNDISCLOSED INCOME. WE ORDER ACCORDINGLY. 12. IN THE CROSS OBJECTION FILED BY THE ASSESSE E, THE LEVY OF INTEREST U/S 158BFA(1) IS BEING QUESTIONED. AS OBSERVED EARLIER , SECTION 158BC GIVES POWER TO THE AO TO SPECIFY ANY PERIOD BEING NOT LESS THAN 15 DAYS AND NOT MORE THAN 45 DAYS FOR THE PURPOSE OF FILING THE BLOCK RETURN. THE AO INITIALLY GRANTED A PERIOD OF 16 DAYS AND UPON THE REQUEST OF THE ASSES SEE HAS EXTENDED THE PERIOD UP TO 27.3.2000 WHICH WAS LESS THAN THE MAXIMUM PER IOD OF 45 DAYS. ONCE THE AO HAS EXERCISED HIS POWER TO GRANT EXTENSION OF TI ME FOR THE PURPOSE OF FILING THE BLOCK RETURN WITHIN THE MAXIMUM PERMISSIBLE STA TUTORY PERIOD OF 45 DAYS AND IF THE ASSESSEE FILES THE BLOCK RETURN BY THAT EXTE NDED PERIOD, IN OUR OPINION, IT CANNOT BE SAID THAT THERE WAS DELAY IN FILING THE R ETURN WARRANTING THE LEVY OF INTEREST U/S 158BFA(1) OF THE ACT. ACCORDINGLY WE REVERSE THE ORDER OF LD CIT(A) PAGE 6 OF 6 ON THIS ISSUE AND DIRECT THE AO TO DELETE THE INTER EST LEVIED U/S 158BFA OF THE ACT. 13. IN THE RESULT THE APPEAL FILED BY THE REVENUE AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE ARE PARTLY ALLOWED. PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON 05-03 -2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 5 TH MARCH, 2010. COPY TO 1 THE DCIT, CENTRAL CIRCLE-1, VISAKHAPATNAM 2 M/S PBL TRANSPORT CORPN. (P)LTD., 47-10-13, FIRST FLOOR, REDNAM PLAZA, 2 ND ROAD, DWARAKANAGAR, VISAKHAPATNAM 530 016 3 THE CIT (APPEALS)-I, HYDERABAD THE CIT (CENTRAL), HYDERABAD 4 THE CIT, VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM