M/s Rukmani Amusement Ltd., Bhopal V. The ACIT, 3(1), Bhopal

CO 58/IND/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7208 (ITAT-INDORE)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 09-05-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2001-2002
• Appeal Filed On: 19-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ARUN DEWAN
• Keywords: Business income; Depreciation; Loose papers; Opportunity of being heard
• Section: 143(3); 133A; 32; 68; 145

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNALINDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JM AND SHRI R.C. SHARMA , AM ITA NO.282/IND/2011 A.Y.2001-02 ACIT 3(1) BHOPAL ::: APPELLANT VS RUKMANI AMUSEMENT LIMITED BHOPAL PAN AABCR 8389R ::: RESPONDENT C.O. NO.58/IND/2011 ARISING OUT OF ITA NO.282/IND/2011 RUKMANI AMUSEMENT LIMITED BHOPAL ::: OBJECTOR VS ACIT 3(1) BHOPAL ::: RESPONDENT DEPARTMENT BY SHRI ARUN DEWAN RESPONDENT BY SHRI SUMIT NEMA DATE OF HEARING 8 .05.2012 DATE OF PRONOUNCEMENT 9 .05.2012 2 O R D E R PER R.C. SHARMA, AM THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE AGAINST THE ORDER DATED 11.7.2011 OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FOR THE ASSESSMENT YEAR 2001-0-2. 2. FOLLOWING GROUND HAVE BEEN TAKEN BY THE REVENUE :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , T HE CIT(APPEAL) HAS ERRED IN - 1. DELETING THE ADDITION OF RS. 1,25,417/- MADE BY THE A.O. ON ACCOUNT OF UNRECORDED INVESTMENT IN PURCHASE OF ICE-CREAM AND ALSO IN DELETING THE ADDITION OF RS.25081/- ON ACCOUNT OF PROFIT ON SALE OF ICE-CREAM 2. DELETING THE ADDITION OF RS. 25000/- MADE ON ACCOUNT OF PROFIT AS UNRECORDED MISCELLANEOUS RECEIPTS OF RS. 1,00,000/- 3 3. DELETING THE ADDITION OF RS. 617446/- MADE ON ACCOUNT OF UNRECORDED INVESTMENT TOWARDS CASH PAYMENT FOR MATERIAL PURCHASES. 4. ALLOWING A RELIEF OF RS. 1450000/-N OUT OF TOTAL ADDITION OF RS.2700000/- MADE BY THE A.O. AS ACCOUNT OF SHARE APPLICATION MONEY. 5. DELETING THE ADDITION OF RS. 19,82,554/- MADE BY THE A.O. ON ACCOUNT OF INVESTMENT IN CONSTRUCTION OF BUILDING. 6. DELETING THE ADDITION OF RS. 67,500/- REGARDING DISALLOWANCE OF CLAIM OF DEPRECIATION. 7. DELETING THE ADDITION OF RS.100000/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED UNSECURED LOAN. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY RUNNING AN AMUSEMENT PARK. THERE WAS SURVEY U/S 133A OF THE ACT AT THE PARK PREMISES ON 11.12.2002. DURING THE COURSE OF SURVE Y, STATEMENT OF SHRI B.M. PATIDAR, DIRECTOR OF THE COM PANY, 4 WAS RECORDED. THE A/C BOOKS, DIARIES, LOOSE PAPERS WHICH WERE AVAILABLE IN THE PREMISES WERE IMPOUNDED. THE IMPOUNDED MATERIAL CONTAINED IN THE BUSINESS TRANSACTIONS OF THE ASSESSEE COMPANY FOR AY UNDER CONSIDERATION. IN THIS ASSESSMENT ORDER THE DEPOSIT ION MADE BY SRI BM PATIDAR DIRECTOR IN THE STATEMENT & PAPERS IMPOUNDED IN THE COURSE OF SURVEY OPERATION HAVE BEEN CONSIDERED 3. THE ASSESSMENT WAS MADE U/S 143(3) OF THE ACT VI DE ORDER DATED 17.3.2004 WHEREIN ADDITION OF RS.56.83 LACS WAS MADE. THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE ITS ORDER DATED 21.12.2005 DELETED ALL THE ADD ITIONS AGAINST WHICH THE REVENUE HAD PREFERRED APPEAL BEFO RE THE I.T.A.T. VIDE ORDER DATED 25.11.2009, THE MATTER W AS REMANDED BY THE TRIBUNAL TO THE FILE OF THE ASSESSI NG OFFICER FOR FRESH ADJUDICATION IN ACCORDANCE WITH L AW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 4. IN THE SET ASIDE PROCEEDINGS, THE ADDITION OF RS . 1,25,417/- WAS MADE ON ACCOUNT OF UNRECORDED 5 PURCHASES. THE COMMISSIONER OF INCOME TAX (APPEALS ) DELETED THE SAME BY OBSERVING THAT THE ASSESSEE HAS A FILED EVIDENCE IN THE FORM OF LETTER DATED 1.2.2005 FROM THE ICE CREAM SUPPLIER M/S RAMANI ICE CREAM PRIVATE LIMITED STATING THAT THE ICE CREAM MENTIONED IN THE AFORESA ID BILS WAS DELIVERED TO ARVIND PATIDAR WHO WAS ICE CREAM V ENDOR AT THE AMUSEMENT PARK RUN BY THE ASSESSEE AND THAT BY OVERSIGHT BILLS HAVE BEEN RAISED IN THE NAME OF APP ELLANT COMPANY INSTEAD OF SHRI ARVIND PATIDAR. THE SAID IC E CREAM SUPPLIER ALSO CONFIRMED HAVING RECEIVED THE PAYMENT OF AFORESAID ICE CREAM BILLS TOTALING TO RS.1,25,417/- FROM SHRI ARVIND PATIDAR. SHRI ARVIN D PATIDAR HAS GIVEN DULY SWORN AFFIDAVIT CONFIRMING T HAT IT WAS HE WHO PURCHASED ICE CREAM WORTH RS. 1,25,417/- FROM M/S RAMANI ICE CREAM CO. LTD. AND MADE PAYMENT . 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES, GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW 6 AND FIND FROM RECORD THAT THE BILL OF THE ALLEGED P URCHASES WAS SUBSEQUENTLY CLARIFIED TO BE ISSUED TO MR. ARVI ND PATIDAR WHO WAS RUNNING ICE CREAM PARLOUR AT THE AMUSEMENT PARK. THE CONFIRMATION LETTER HAS BEEN G IVEN BOTH BY ARVIND PATIDAR AS WELL AS SUPPLIER OF THE I CE CREAM, M/S RAMANI ICE CREAM PRIVATE LIMITED. THE DETAILED FINDING HAS BEEN RECORDED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AT PAGE 6 OF THE ORDER WHICH HAS NOT BEEN CONTROVERTED BY THE DEPART MENT BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCOR DINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING T HE ADDITION MADE ON ACCOUNT OF UNRECORDED INVESTMENT I N PURCHASE OF ICE CREAM AMOUNTING TO RS.1,25,417/-. 5. AS WE HAVE ALREADY DELETED THE ADDITION MADE ON ACCOUNT OF PURCHASE OF ICE CREAM, THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PROFIT EARNED O N SALE OF SUCH ICE CREAM ALSO DESERVES TO BE DELETED IN VI EW OF THE FINDINGS RECORDED BY THE LEARNED COMMISSIONER OF IN COME 7 TAX (APPEALS). WE, THEREFORE, CONFIRM THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) FOR DELETION OF BOTH THESE ADDITIONS. 6. THE ADDITION MADE ON ACCOUNT OF ESTIMATED RECEIP T OF RS. 1 LAC FROM IMPOUNDED NOTE BOOK WAS DELETED BY T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AFTER HAVING MADE THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE FINDINGS AND OBSERVATIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. I HAVE ALSO CONSIDERED THE SUBMISSIONS MADE BY THE LD. AR. I FIND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANTS CASE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.25,000/- BEING PROFIT ON UNRECORDED BOOKING RECEIPTS OF RS.1,00,000/-. I FIND THAT ASSESSING OFFICER HAS NOT POINTED OUT ANY DEFECTS IN THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT. THE APPELLANT HAS SHOWN MISC. RECEIPTS OF RS.1,38,951/- FROM RESTAURANT, PROGRAMS IN ITS PROFIT AND LOSS ACCOUNT. I FIND THAT ASSESSING OFFICER HAS MADE THE ADDITION OF RS.25,000/- MERELY ON THE BASIS OF NOTING IN THE NOTE BOOK MENTIONING TWO NAMES WITHOUT ANY CORROBORATIVE EVIDENCE THAT THESE PERSONS ACTUALLY PAID BOOKING AMOUNT OF RS.80,000/- OR RS.84,500/- AS 8 MENTIONED. THE ASSESSING OFFICER HAS NOT BROUGHT ANY DATE ON WHICH SUCH BOOKING WERE DONE AND AMOUNT RECEIVED BY THE APPELLANT NOR THE ASSESSING OFFICER RELATED THE PAPERS TO CONTAIN ANY SIGNATURE OR CONFIRMATION OF RECEIPT OF AMOUNT AS MENTIONED. IT IS ALSO SEEN FROM THE LIST OF BOOKS/DOCUMENTS FOUND AND SEIZED DURING THE SURVEY ON 11.12.2002 THAT THERE IS NO MENTION THAT THE NOTE BOOK NO.8 WAS FOUND AND SEIZED FROM THE TICKET COUNTERS. I FIND FORCE IN THE SUBMISSIONS OF THE LD AR THAT RECORDINGS ON THE NOT BOOK MAY RELATE TO ENQUIRY RELATED TO PARK BOOKING IN THE ABSENCE OF ANY OTHER CORROBORATIVE EVIDENCE SEIZED DURING SURVEY OR AVAILABLE WITH THE ASSESSING OFFICER. IT IS SEEN THAT MY LD PREDECESSOR VIDE ORDER DATED 21.12.2005 DELETED THAT SAID ADDITION OF RS.25,000/- IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE AND RELYING ON THE JUDICIAL PRONOUNCEMENTS (SUPRA) CITED BY THE APPELLANT. RESPECTFULLY, FOLLOWING THE SAME, ADDITION OF RS.25,000/- MADE ON ACCOUNT OF PROFIT ON UNRECORDED MISC. RECEIPTS OF RS.1,00,000/- IS HEREBY DELETED. THE GROUND NO.4 IS DECIDED IN FAVOUR OF THE APPE L LANT . 7. THE FINDING RECORDED BY THE COMMISSIONER OF INCO ME TAX (APPEALS) HAS NOT BEEN CONTROVERTED BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN DELETING THE ADDITION MADE BY THE 9 ASSESSING OFFICER ON THE BASIS OF UNRECORDED MISCELLANEOUS RECEIPTS OF RS. 1 LAC. 8. THE ADDITION OF RS.6,17,446/- MADE ON ACCOUNT O F UNRECORDED INVESTMENT TOWARDS CASH PAYMENT FOR MATE RIAL PURCHASED WAS DELETED BY THE COMMISSIONER OF INCOME TAX (APPEALS) JUST BY STATING THAT AR OF THE ASSES SEE HAS EXPLAINED EACH VOUCHER FOUND DURING THE COURSE OF S URVEY, PART OF SOME EXPENSES WAS ALREADY RECORDED IN THE B OOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. 9. THE FINDINGS GIVEN BY THE LEARNED COMMISSIONER O F INCOME TAX (APPEALS) ARE AS UNDER :- I FIND THAT THE LD AR HAS ELABORATELY EXPLAINED THAT FACTS PERTAINING TO EACH VOUCHER. I FIND THAT PART OF SOME EXPENSES ARE ALREADY RECORDED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT AS THIS HAS BEEN ACCEPTED BY THE ASSESSING OFFICER ALSO. I FIND FORCE IN THE LD.ARS SUBMISSION THAT ONLY VOUCHERS AGAINST WHICH NO PAYMENT HAS BEEN MADE ARE NOT RECORDED IN THE BOOKS OF ACCOUNT FOR ANY REASON BEING THE SAME ARE EITHER UNSIGNED OR NOT PASSED BY DIRECTOR FOR PAYMENT OR NOT CONTAINING PAYEES SIGNATURE. 10 HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT CONTROVERTED THE DETAILED FINDINGS RECORDED BY THE ASSESSING OFFICER WHILE MAKING THE ADDITION TOWARDS DIFFERENT VOUCHERS FOUND DURING SURVEY TOWARDS PAYM ENT OF MATERIAL. EVEN THE SUBSEQUENT DETAILS FURNISHED BY THE ASSESSEE WITH REGARD TO PAYMENT MADE TO DIFFERENT PERSONS WAS ALSO NOT CO-RELATED WITH THE BOOKS OF ACCOUNTS. SINCE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS NEITHER CONTROVERTED THE ASSESSING OF FICERS FINDING NOR RECORDED ANY OF HIS OWN FINDING JUSTIFY ING THE DELETION OF ADDITIONS SO MADE BY THE ASSESSING OFFI CER, WE DO NOT FIND ANY MERIT IN THIS PART OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). IN THE INTER EST OF JUSTICE, THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING AFRESH AFTER CONSIDERING THE D ETAILS FILED BY THE ASSESSEE. 10 THE NEXT GRIEVANCE OF THE REVENUE RELATES TO DEL ETION OF ADDITION OF RS. 14,50,000/- OUT OF THE TOTAL ADD ITION OF RS.27 LACS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF 11 SHARE APPLICATION MONEY. THE REVENUE IS IN APPEAL BEFORE US AGAINST DELETION OF ADDITION OF RS. 14.50 LACS A ND THE ASSESSEE HAS FILED CROSS OBJECTION FOR RETAINING TH E ADDITION OF RS. 12.50 LACS. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES, GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FIND FROM RECORD THAT THE ADDITION WAS MADE BY THE ASSESSING OFFICER WITH RESPECT TO THE AMOUNT OF RS. 27 LACS ALLEGED TO HAVE BEEN RECEIVED FROM THE FOLLOWING PA RTIES ON ACCOUNT OF SHARE CAPITAL :- SL.NO. NAME OF APPLICANTS AMOUNT MODE OF PAYMENT 1 RAM KISHAN 50000 CASH 2 UMRAOSINGH 150000 CASH 3 GIRDHIRAL PATIDAR 100000 CASH 4 HARIPRASAD PATIDAR 50000 CASH 5 SHYMLAL PATIDAR 125000 CASH 6 MANSINGH PARMAR 75000 CASH 7 DINESHKUMAR PATIDAR 125000 CASH 8 MUKESH PATIDAR 50000 CASH 9 AVADNARAYAN PATIDAR 150000 CASH 10 SOYESH PATIDAR 75000 CASH 11 RAJENDRA PATIDAR 100000 CASH 12 GULABSINGH PARMAR 100000 CASH 13 SEETARAM YADAV 100000 CASH 14 GOVIND PATIDAR 150000 CASH 15 OM PRAKASH PATIDAR 650000 CASH 16 LILA KISHAN PATIDAR 649500 CASH 12 TOTAL 2699500 12. THE ASSESSING OFFICER OBSERVED THAT THE ASSESS EE HAS JUST FILED CONFIRMATION OF SHARE HOLDERS. HOWE VER, NO OTHER DETAIL OF SHARE HOLDERS WAS FILED NOR ANY OTH ER DETAILS OF AGRICULTURAL LAND HOLDING OF SUCH INVEST ORS, PROOF OF AGRICULTURAL PRODUCE, ETC. WERE FILED BY THE ASS ESSEE WHICH COULD PROVE THE INVESTMENT OF THE INVESTOR. THE ASSESSING OFFICER ALSO STATED THAT THE ASSESSEE HAS NOT SUBMITTED A SINGLE DOCUMENT WHICH COULD PROVE THE IDENTITY OF THE SHARE HOLDERS. 13 BY THE IMPUGNED ORDER, THE COMMISSIONER OF INCOM E TAX (APPEALS) DELETED THE ADDITION OF RS. 14,50,000 /- WHEREAS RETAINED THE ADDITION OF RS.12,50,000/- AFT ER MAKING THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE FINDINGS AND OBSERVATIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. I HAVE ALSO CONSIDERED THE SUBMISSIONS MADE BY THE LD 13 AR. IT IS SEEN THAT IN THE CASE OF SHRI GOVIND PATIDAR, THE APPELLANT HAS FILED NOT ONLY CONFIRMATION LETTER BUT ALSO COPY OF HIS BANK ACCOUNT, DULY SWORN AFFIDAVIT CONFIRMING THE INVESTMENT IN SHARE CAPITAL OF RS.1,50,000/- ALONGWITH KHASRA RECORDS OF AGRICULTURAL LANDS OWNED BY HIM. FURTHER, IN THE CASE OF SHRI OMPRAKASH PATIDAR AND SHRI LILAKISHAN PATIDAR, THE APPELLANT HAS FILED CONFIRMATION LETTERS CONFIRMING INVESTMENT IN SHARE CAPITAL OF THE APPELLANT COMPANY AMOUNTING TO RS.6,05,500/- AND RS.6,49,500/- RESPECTIVELY. IT IS SEEN THAT BOTH SHRI OM PRAKASH PATIDAR AND SHRI LILAKISHAN PATIDAR ARE INCOME TAX ASSESSEE HOLDING PAN NO. WHICH HAS BEEN FILED BEFORE THE ASSESSING OFFICER. BOTH OF THEM ARE ALSO DIRECTORS OF THE APPELLANT COMPANY. IT IS ALSO SEEN THAT MY LD. PREDECESSOR IN THE APPELLANT COMPANYS 14 APPEAL FOR THE ASSTT. YEAR 2000-01 IN ITA NO. 12/2004-05 VIDE ORDER DATED 03.03.2008 WHEREIN SHRI OMPRAKASH PATIDER AND SHRI LILAKISHAN PATIDAR INVESTED RS.3,47,000/- AND RS.3,55,000/- IN THE SHARE CAPITAL OF THE APPELLANT ACCEPTED THE INVESTMENT AND DELETED THE ADDITION MADE U/S 68 OF THE I. TAX ACT. THEREFORE, I FIND THAT ON THE FACTS OF THE APPELLANTS CASE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.14,50,000/- (RS.1,50,000/- GOVIND PATIDAR, RS.6,50,500/- OMPRAKASH PATIDAR AND RS.6,49,500/- LILAKISHAN PATIDAR) U/S 68 OF THE I.TAX ACT AS THE IDENTITY OF THE SHAREHOLDERS IS PROVED. I FIND THE APPELLANT IS A PUBLIC LIMITED COMPANY AND RELYING ON THE JUDICIAL DECISIONS IN THE CASE OF HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (SUPRA) AS WELL AS HONBLE DELHI HIGH COURT IN 15 THE CASE OF STELLAR INVESTMENT LTD (SUPRA) WHICH STANDS AFFIRMED BY THE HONBLE SUPREME COURT, THE ADDITION OF RS.14,50,000/- U/S 68 OF THE I.TAX ACT IS DELETED. AS REGARDS, SHARE CAPITAL INVESTMENT IN THE NAME OF OTHER 13 PERSONS TOTALING TO RS.12,50,000/-, I FIND THAT EXCEPT FILING CONFIRMATION LETTERS, THE APPELLANT HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE AS REGARDS IDENTITY AS WELL AS GENUINENESS OF THE TRANSACTION. IT IS SEEN THAT THE APPELLANT COMPANY HAS FILED RETURN OF ALLOTMENT SHOWING ALL THESE PERSONS AS SHAREHOLDERS BEFORE THE REGISTRAR OF COMPANIES BUT THEIR ADDRESSES ARE NOT COMPLETE AND NO OTHER EVIDENCE HAS BEEN PRODUCED TO PROVE THEIR IDENTITY. THEREFORE, THE APPELLANT COMPANY HAS NOT ESTABLISHED THE EXISTENCE AND IDENTITY OF THESE 13 OTHER SHAREHOLDERS FROM WHEN 16 SHARE CAPITAL INVESTMENT OF RS. 12,50,000/- IS RECEIVED AND THEREFORE, THE FINDINGS AND OBSERVATIONS MADE BY THE ASSESSING OFFICER IN THIS RESPECT DESERVE TO BE ACCEPTED AND ADDITION MADE OF RS.12,50,000/- U/S 68 OF THE I.TAX ACT IS HEREBY CONFIRMED. THUS, IN THIS GROUND, THE APPELLANT GETS PART RELIEF OF RS.14,50,000/- WHEREAS ADDITION OF RS.12,50,000/- IS SUSTAINED 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF TH E PARTIES, GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FIND FROM RECORD THAT THE ASSESSEE HAS FILED CONFIRMATION LETTERS FROM THE SHARE HOLDERS AND ALS O COPIES OF BANK STATEMENTS IN SOME OF THE CASES. AF TER DISCUSSING IN DETAIL EACH AND EVERY SHAREHOLDER, TH E COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED T HE ADDITION IN RESPECT OF SHARE HOLDERS AMOUNTING TO R S. 14,50,000/-. IN RESPECT OF THE BALANCE OF THE SHAR E HOLDERS, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS 17 GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE HAS N OT BEEN ABLE TO PRODUCE ANY EVIDENCE AS REGARDS IDENTITY AS WELL AS GENUINENESS OF THE TRANSACTION. A FINDING HAS BEEN RECORDED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) TO THE EFFECT THAT THE ASSESSEE HAS NOT B EEN ABLE TO ESTABLISH EXISTENCE AND IDENTITY OF 13 OTHER SHA RE HOLDERS FROM WHOM THE SHARE CAPITAL OF RS. 12,50,00 0/- WAS RECEIVED. THE FINDING RECORDED BY THE COMMISSIO NER OF INCOME TAX (APPEALS) HAS NOT BEEN CONTROVERTED B Y BRINGING ANY POSITIVE MATERIAL ON RECORD EITHER BY THE ASSESSEE OR THE DEPARTMENT. IN THE CASE OF AGARWAL COAL CORPORATION BY PASSING A VERY DETAILED ORDER, THE T RIBUNAL HAS HELD THAT WHERE THE ASSESSEE IS UNABLE TO PROVE IDENTITY OF SHAREHOLDER, ADDITION IS TO BE MADE U/S 68 OF THE INCOME TAX ACT, 1961. ACCORDINGLY, WE CONFIRM THE ACTION OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION OF RS.12,50,000/- AND CONFIRM ING THE ADDITION OF RS. 7,50,000/-. 18 15. IN THE RESULT, THE GROUND TAKEN BOTH BY THE REV ENUE AND THE ASSESSEE ARE DISMISSED. 16 THE NEXT GROUND RELATES TO DELETION OF ADDITION OF RS.19,82,554/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF INVESTMENT IN CONSTRUCTION OF BUILDING WHICH WAS DELETED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER HAVING MADE THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE FINDINGS AND OBSERVATIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. I HAVE ALSO CONSIDERED THE SUBMISSIONS MADE BY THE LD. AR. I FIND THAT ON THE FACTS OF THE APPELLANTS CASE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.19,82,554/- ON ACCOUNT OF UNDISCLOSED INVESTMENT IN BUILDING CONSTRUCTION COST. I FIND THAT THE APPELLANT COMPANY HAS SHOWN EXPENDITURE IN CONSTRUCTION OF BUILDINGS OF RS.97,92,262/- AS ON 31.03.2001 AS PER ITS DULY AUDITED BOOKS OF ACCOUNTS. IT IS SEEN THAT THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DEFECT OR FALSITY IN THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT COMPANY AND NEITHER THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT PROCEEDINGS NOR THE ASSESSING OFFICER IN THE SET ASIDE ASSESSMENT PROCEEDINGS HAVE REJECTED THE BOOKS OF ACCOUNT OF THE 19 APPELLANT AND INVOKED PROVISIONS OF SECTION 145 OF THE I. TAX ACT. I FIND FORCE IN THE LD ARS SUBMISSIONS THAT THE ASSESSING OFFICER WITHOUT BRINGING ANY EVIDENCE OF RECORDS TOWARDS UNDISCLOSED INVESTMENT/EXPENDITURE IN BUILDING CONSTRUCTION COST WAS WRONG IN ESTIMATING THE TOTAL BUILDING COST AT RS.1,24,00,000/- AS AGAINST RS.97,92,262/- DULY RECORDED IN APPELLANTS BOOKS. IT IS SETTLED LAW THAT UNLESS SOME DEFECTS ARE POINTED OUT IN THE DETAILS OF CONSTRUCTION IN THE BOOKS MAINTAINED BY THE ASSESSEE, REFERENCE TO THE DVO IS INVALID. I FIND THAT THIS ISSUE WAS ALSO DECIDED IN APPELLANTS FAVOUR BY MY LD PREDECESSOR IN ITA NO. 45/2004-05 VIDE HIS ORDER DATED 21.12.2005 ACCEPTING THE LD.ARS CONTENTIONS AS WELL AS PLACING RELIANCE ON VARIOUS JUDICIAL PRONOUNCEMENTS (SUPRA) AND HOLDING THAT THERE WAS NEITHER ANY MATERIAL IN THE POSSESSION OF THE ASSESSING OFFICER TO ESTIMATE THE INVESTMENT IN BUILDING CONSTRUCTION COST NOR ANY EVIDENCE TO BUILD UP CASE MAKING REFERENCE TO DVO. THEREFORE, THE ENTIRE ADDITION OF RS.19,82,554/- IS HEREBY DELETED. THIS GROUND IS DECIDED IN FAVOUR OF THE APPELLANT. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES, GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FIND FROM RECORD THAT THE ASSESSEE COMPANY HAS SHOWN TOTAL CONSTRUCTION EXPENDITURE OF RS. 97.92 L ACS. 20 THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED T HE ADDITION BY OBSERVING THAT WITHOUT BRINGING ANY EVI DENCE ON RECORD TOWARDS UNDISCLOSED INVESTMENT/EXPENDITUR E IN BUILDING CONSTRUCTION, THE ASSESSING OFFICER HAS ES TIMATED THE TOTAL BUILDING COST AT RS. 1,24,00,000/- AS AGA INST RS. 97,92,262/-. THE COMMISSIONER OF INCOME TAX (APPEA LS) ALSO OBSERVED THAT UNLESS SOME DEFECTS ARE POINTED OUT IN THE DETAILS OF CONSTRUCTION IN THE BOOKS MAINTAINED BY THE ASSESSEE, REFERENCE TO DVO IS INVALID. THE FINDING RECORDED BY THE COMMISSIONER OF INCOME TAX (APPEALS) HAS NO T BEEN CONTROVERTED BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY I N THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION OF RS.19,82,554 /- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INVESTMENT I N CONSTRUCTION OF BUILDING. 18. THE NEXT GRIEVANCE OF THE REVENUE RELATES TO DISALLOWANCE OF DEPRECIATION OF RS. 67,500/- WHICH WAS 21 DELETED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER HAVING THE FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE FINDING AND OBSERVATIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. I HAVE ALSO CONSIDERED THE SUBMISSIONS MADE BY THE LD.AR. I FIND THAT ON THE FACTS OF THE APPELLANTS CASE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING PARTIAL CLAIM OF THE DEPRECIATION OF RS.67,500/- ON BUILDINGS LET OUT BY NOT TREATING THEM AS BUSINESS ASSETS. I FIND THAT THE APPELLANT COMPANY IS ENGAGED IN THE BUSINESS OF RUNNING AN AMUSEMENT CUM WATERPARK, THEREFORE, SHOPS AND RESTAURANTS IN THE PARK ARE ITS BUSINESS ASSETS. THAT LETTING OUT THIS SHOPS AND RESTAURANT IS ONLY INCIDENTAL TO THE MAIN BUSINESS OF THE APPELLANT COMPANY. I FIND THAT THE RENTAL INCOME OF FEW SHOPS LET OUT OF 26 SHOPS CONSTRUCTED BY THE APPELLANT HAS BEEN 22 TREATED AS BUSINESS INCOME BY THE ASSESSING OFFICER. I ALSO FIND THAT RESTAURANT BUILDING WAS INCOMPLETE TILL 31.03.2000 BUT THE SAME GOT COMPLETED DURING F.Y.2000-01. WHEN THE APPELLANT COMPANY COMMENCED COMMERCIAL OPERATIONS, THEREFORE THE ASSESSING OFFICER WAS NOT CORRECT IN HOLDING THAT DEPRECIATION HAS BEEN CLAIMED ON IN COMPLETE BUILDING. I ALSO RELY ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V/S NATIONAL STORAGE P. LTD. 55 ITR 596 WHERE IT WAS HELD THAT WHERE LETTING IS ONLY INCIDENTAL TO THE MAIN BUSINESS OF THE ASSESSEE, THE INCOME DERIVED FROM THE LETTING WILL NOT BE INCOME FROM PROPERTY BUT THE LET OUT ASSETS ARE BUSINESS ASSETS ENTITLED FOR DEPRECIATION U/S 32 OF THE I. TAX ACT. I ALSO FIND THAT MY LD. PREDECESSOR VIDE HIS APPELLATE ORDER IN ITA NO. 45/2004-05 DATED 21.12.2005 DELETED THE DISALLOWANCE OF DEPRECIATION CLAIM 23 OF RS.67,500/-. THEREFORE, THE DISALLOWANCE OF DEPRECIATION OF RS.67,500/- AGAIN MADE IN THE ASSESSMENT ORDER IS HEREBY DELETED. THIS GROUND OF THE APPELLANT IS HEREBY ALLOWED. 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES, GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FIND FROM RECORD THAT THE DISALLOWANCE OF DEPRE CIATION IS MADE BY THE ASSESSING OFFICER IN RESPECT OF THE SHOPS AND RESTAURANT WHICH WAS LET OUT BY THE ASSESSEE AN D WHICH WAS INCIDENTAL TO HIS BUSINESS OF AMUSEMENT P ARK. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN DELETI NG THE DISALLOWANCE OF DEPRECIATION BY RELYING UPON THE DE CISION OF THE HON'BLE SUPREME COURT IN THE CASE OF NATIONA L STORAGE PRIVATE LIMITED; 66 ITR 596. 20. THE LAST GRIEVANCE OF THE REVENUE RELATES TO DELETION OF ADDITION OF RS. 1 LAC ON ACCOUNT OF UNE XPLAINED UNSECURED LOANS WHICH WAS DELETED BY THE COMMISSION ER 24 OF INCOME TAX (APPEALS) AFTER HAVING MADE THE FOLL OWING OBSERVATIONS :- I HAVE GONE THROUGH THE FINDING AND OBSERVATIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. I HAVE ALSO CONSIDERED THE SUBMISSIONS MADE BY THE LD.AR. I FIND THAT ON THE FACTS OF THE APPELLANTS CASE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.1,00,000/- ON ACCOUNT OF UNSECURED LOAN ACCEPTED FROM GOVIND PATIDAR U/S 68 OF THE I. TAX ACT. I FIND THAT THE APPELLANT HAS SUBMITTED CONFIRMATION LETTER FROM SHRI GOVIND PATIDAR ALSONGWITH COPY OF HIS BANK STATEMENT WITH ALLAHABAD BANK, MISROD OF SB A/C NO. 100/81 EVIDENCING PAYMENT OF UNSECURED LOAN BY CHEQUE, DULY SWORN AFFIDAVIT CONFIRMING THE LOAN TRANSACTION AS WELL AS KHSARA OF HIS AGRICULTURAL LAND RECORDS. I FIND THAT LETTER DATED 09.02.2006 AND SUMMON DATED 17.11.2006 WAS ISSUED BY THE ASSESSING OFFICER AND SHRI GOVIND PATIDAR CONFIRMED ADVANCING UNSECURED LOAN OF RS.1 LAC TO THE APPELLANT COMPANY. IT HAS ALSO BEEN HELD BY MY LD. PREDECESSOR VIDE HIS APPELLATE ORDER IN ITA 45/2004-05 DATED 21.12.2005 THAT AFTER CONSIDERING BANK ACCOUNT DETAILS, AFFIDAVIT AND CONFIRMATION LETTER OF SHRI GOVIND PATIDAR, THE ADDITION OF RS.1,00,000/- DESERVES TO BE DELETED. 25 THEREFORE, RESPECTFULLY FOLLOWING THE SAME AND HOLDING THAT THE APPELLANT HAS BEEN ABLE TO PROVE THE IDENTITY, CAPACITY AND GENUINENESS OF SHRI GOVIND PATIDAR FROM WHOM LOAN OF RS.1 LAC WAS ACCEPTED, THE ADDITION OF RS.1,00,000/- IS HEREBY DELETED. THIS GROUND OF APPEAL IS ALLOWED. 21. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF TH E PARTIES, GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FIND FROM RECORD THAT THE DETAILED FINDING HAS BEEN RECORDED BY THE COMMISSIONER OF INCOME TAX (APPEALS ) WHICH ESTABLISHES IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF LOAN CREDITOR. THE ASSESSEE HAS DISCH ARGED ITS INITIAL ONUS. THE DETAILED FINDING RECORDED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS NO T BEEN DISLODGED BY THE DEPARTMENT BY BRINGING ANY PO SITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS SO RECORDED BY THE L EARNED COMMISSIONER OF INCOME TAX (APPEALS), RESULTING INT O DELETION OF ADDITION OF RS. 1.00 LAC U/S 68 OF THE INCOME TAX ACT, 1961. 26 22. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED IN PART FOR STATISTICAL PURPOSES WHEREAS TH E CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 9TH MAY, 201 2 SD SD (JOGINDER SINGH) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER 9 TH MAY, 2012 DN/-