Sivasakthi Threads, Erode V. DCIT, Coimbatore

ITA 1374/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64410 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 11-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 21-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained expenditure; Depreciation; Deemed to accrue or arise in india; Unabsorbed depreciation
• Section: 69C; 143(3); 234B; 32; 69; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH CHENNAI BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ------- ITA NO.1374/MDS/2012 ASSESSMENT YEAR : 2007-08 M/S. SIVASAKTHI THREADS, 38, SIDCO INDUSTRIAL ESTATE, GOUNDAMPLAYAM, PALLADAM TALUK, PIN 641 605 V. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-III, COIMBATORE. (PAN : AALFS6870P) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE RESPONDENT BY : SHRI S. DASGUPTA, JCIT DATE OF HEARING : 11.1 0.2012 DATE OF PRONOUNCEMENT : 17.10.201 2 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE CIT(APPEALS)-II, COIMBATORE DATED 28-03-2012 FOR THE ASSESSMENT YEAR 2007-08. ITA NO.1374 /MDS/2012 2 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED R ETURN OF INCOME DECLARING NIL INCOME. THE ASSESSING OFFIC ER COMPLETED THE ASSESSMENT U/S 143(3) READ WITH SECTION 153B OF THE INCOME TAX ACT, 1961 ('THE ACT' FOR SHORT) ON 30-12 -2008 AND ASSESSED THE INCOME AT ` 31,83,700/- WHICH RESULTED IN THE TAX DEMAND OF ` 11,70,675/- AND THE CREDIT FOR THE UNABSORBED DEPRECIATION, ADVANCE TAX PAID AMOUNTING TO ` 6,00,000/- HAD NOT BEEN GIVEN BY THE ASSESSING OFFICER. THE ASSES SEE FILED A PETITION U/S 154 OF THE ACT BEFORE THE ASSESSING OF FICER CLAIMING SET OFF OF UNABSORBED DEPRECIATION AND CREDIT FOR A DVANCE TAX PAID. THE ASSESSING OFFICER HAD GIVEN CREDIT ONLY FOR THE ADVANCE TAX PAID AND HAD NOT SET OFF THE UNABSORBED DEPRECIATION WHICH RESULTED IN THE NET TAX DEMAND O F ` 4,50,660/-. IN MAKING THE ORDER U/S 154 OF THE ACT , THE ASSESSING OFFICER HAD CHARGED INTEREST OF ` 99,036/- U/S 234B OF THE ACT AS PER THE ORDER U/S 143(3) READ WITH SECTI ON 153B OF THE ACT. 3. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER BEFORE THE LEARNED CIT(APPEALS). BEFORE THE LEARNE D CIT(APPEALS) IT WAS SUBMITTED THAT IN THE 154 ORDER PASSED BY THE ASSESSING OFFICER HE HAS ONLY GIVEN CREDIT FOR THE ADVANCE ITA NO.1374 /MDS/2012 3 TAX PAID AND HAS NOT SET OFF THE UNABSORBED DEPRECI ATION. THE ASSESSING OFFICER HAS NOT CONSIDERED THE EXPLANATIO N GIVEN BY THE ASSESSEE AND SUBMITTED THAT THE ORDER PASSED BY THE ASSESSING OFFICER HAS TO BE REVERSED AND THE CLAIM OF THE ASSESSEE HAS TO BE ALLOWED. THE LEARNED CIT(APPEAL S) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD TH AT AS PER THE FACTS AVAILABLE ON RECORD IT IS SEEN THAT WHILE EVA LUATING THE PHYSICAL STOCK AT ` 53,83,730/- AT THE TIME OF SEARCH THERE HAD BEEN A MISTAKE IN THE CLASSIFICATION OF ITEMS AND T HE EXCESS VALUATION ON THIS ACCOUNT HAD BEEN IDENTIFIED WITH REFERENCE TO THE INVENTORY OF STOCK. THE VALUE OF 1000 METRE YA RN HAD BEEN ADOPTED AT THE RATE APPLICABLE TO 5000 METRE AND TH IS HAD RESULTED IN EXCESS VALUATION OF ` 22,00,030/- @ ` 3000 PER KG ON 7333.50 KG. THE MISTAKE WAS DULY CORRECTED AND THE VALUE OF PHYSICAL STOCK WAS ARRIVED AT BY THE ASSESSING O FFICER AT ` 31,83,700/-. THE LEARNED CIT(APPEALS) OBSERVED THA T THE ASSESSING OFFICER BY CONSIDERING THE DECISION OF TH E HONBLE GUJARAT HIGH COURT IN THE CASE OF FAKIR MOHAMED HAJ I HASAN V. CIT REPORTED IN 247 ITR 290 (GUJ) HAS RIGHTLY REJEC TED THE CLAIM OF THE ASSESSEE. ITA NO.1374 /MDS/2012 4 4. THE LEARNED CIT(APPEALS) FURTHER OBSERVED THAT T HE ASSESSING OFFICER HAS DENIED THE SET OFF OF UNABSOR BED DEPRECIATION FOR THE REASON THAT : THE DETAILS WERE VERIFIED, BUT IS IT FOUND THAT THE CREDIT FOR UNABSORBED DEPRECIATION LOSS CANNOT BE GIVEN, THE ADDITION OF ` 31,83,700/- REPRESENTS INVESTMENT OF THE ASSESSEE WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS CONSTITUTING DEEMED INCOME U/S 69 OF THE I.T. ACT, WHICH DOES NOT FALL UNDER INCOME FROM THE PROFITS AND GAINS OF BUSINESS. WITH THE ABOVE OBSERVATION THE LEARNED CIT(APPEALS) DISMISSED THE GROUND RAISED BY THE ASSESSEE. 5. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE LEARNED CIT(APPEALS) WITHOUT CON SIDERING THE SUBMISSIONS OF THE ASSESSEE DISMISSED THE APPEAL FI LED BY THE ASSESSEE AND THAT THE LEARNED CIT(APPEALS) OUGHT TO HAVE ALLOWED THE SET OFF OF UNABSORBED DEPRECIATION. 6. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORD S AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN THE PRESENT CASE THE ASSESSING OFFICER HAS COME TO THE CONCLUSI ON THAT THE VALUE OF THE PHYSICAL STOCK WAS ARRIVED AT ` 31,83,700/-. BASED ITA NO.1374 /MDS/2012 5 ON THE ABOVE FIGURE THE ADDITION WAS MADE IN THE CO URSE OF THE ASSESSMENT ORDER PASSED U/S 143(3). WHEN THE ASSES SEE FILED PETITION U/S 154 OF THE ACT THE ASSESSING OFFICER O BSERVED THAT THE DETAILS FILED BY THE ASSESSEE WERE VERIFIED BUT IT WAS FOUND THAT THE CREDIT FOR THE UNABSORBED DEPRECIATION LOS S COULD NOT BE GIVEN. THE ADDITION OF ` 31,83,700/- REPRESENTED INVESTMENT OF THE ASSESSEE WHICH WAS NOT REFLECTED IN THE BOOKS O F ACCOUNTS CONSTITUTING DEEMED INCOME U/S 69 OF THE ACT WHICH DID NOT FALL UNDER INCOME FROM THE PROFITS AND GAINS OF BUSINESS . AS PER SUB-SECTION (2) OF SEC. 32 OF THE ACT UNABSORBED DE PRECIATION CAN BE CARRIED FORWARD AND SET OFF ONLY AGAINST THE PROFITS AND GAINS OF THE ASSESSEES BUSINESS. THE ASSESSING OF FICER BY APPLYING THE DECISION IN THE CASE OF FAKIR MOHAMED HAJI HASAN V. CIT (SUPRA) REJECTED THE RECTIFICATION APPLICATION DATED 31-08-09. THE SAME WAS UPHELD BY THE LEARNED CIT(APPEALS). 7. AS PER SEC. 154 OF THE ACT, IF ANY MISTAKE IS OC CURRED IN PASSING THE ORDER, IT COULD BE RECTIFIED. BUT IN TH E PRESENT CASE THERE IS NO MISTAKE WHILE PASSING THE ORDER. THERE FORE, IT CANNOT BE SAID THAT THE LEARNED CIT(APPEALS) DISMISSED THE APPEAL FILED BY THE ASSESSEE WITHOUT CONSIDERING THE SUBMISSIONS . THE LEARNED CIT(APPEALS) BY CONSIDERING THE ORDER PASSE D BY THE ITA NO.1374 /MDS/2012 6 ASSESSING OFFICER U/S 154 OF THE ACT AND ALSO CONSI DERING THE SUBMISSIONS OF THE ASSESSEE AND ALSO BY FOLLOWING T HE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF FAKIR MOHAMED HAJI HASAN (SUPRA), HAS CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER. IN THE CASE OF FAKIR MOHAMED HA JI HASAN (SUPRA), THE HONBLE GUJARAT HIGH COURT HAS HELD AS UNDER: THE SCHEME OF SECTIONS 69, 69A. 69B AND 69C OF THE INCOME-TAX ACT, 1961, WOULD SHOW THAT IN CASES WHERE THE NATURE AND SOURCE OF INVESTMENTS MADE BY THE ASSESSEE OR THE NATURE AND SOURCE OF ACQUISITIO N OF MONEY, BULLION, ETC., OWNED BY THE ASSESSEE OR T HE SOURCE OF EXPENDITURE INCURRED BY THE ASSESSEE ARE NOT EXPLAINED AT ALL, OR NOT SATISFACTORILY EXPLAIN ED, THEN, THE VALUE OF SUCH INVESTMENTS AND MONEY OR THE VALUE OF ARTICLES NOT RECORDED IN THE BOOKS OF ACCOUNT OR THE UNEXPLAINED EXPENDITURE MAY BE DEEMED TO BE THE INCOME OF SUCH ASSESSEE. 8. THEREFORE, IN OUR OPINION, THE LEARNED CIT(APPEA LS) HAS CORRECTLY FOLLOWED THE DECISION OF THE HONBLE GUJA RAT HIGH COURT WHILE CONSIDERING SEC. 154 OF THE ACT IN UPHOLDING THE ORDER PASSED BY THE ASSESSING OFFICER. WE FIND NO INFIRM ITY IN THE ORDER PASSED BY THE LEARNED CIT(APPEALS) AND THEREF ORE WE CONFIRM THE SAME. ITA NO.1374 /MDS/2012 7 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 17 TH OF OCTOBER, 2012, AT CHENNAI. SD/- SD/- (N. S. SAINI) ( V.DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 17 TH OCTOBER, 2012. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE