M/s Lucky coke Industriesw, V. ACIT,

ITA 15/RAN/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60096 (ITAT-RANCHI)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 08-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DEEPAK ROUSHAN SR S C
• Keywords: Unexplained investment; Search and seizure; Source of fund
• Section: 142(1)

Judgement Text

ITA NO15/RANCHI/2011 M/S. LUCKY COKE INDUSTRIES, DHA NBAD 1 IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI CIRCUIT BENCH, RANCHI BEFORE: SHRI B.R. MITTAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 15 / RANCHI / 20 11 ASSESSMENT YEAR : 2009 - 10 M/S. LUCKY COKE INDUSTRIES DHANBAD VS. ACIT, CENTRAL CIRCLE DHANBAD (APPELLANT) (RESPONDENT) PAN NO. AACFL 2396N APPELLANT BY: SHRI S.K. PODDAR WITH SHRI M.K. CHOUDHURY, ADVOCATES RESPONDENT BY: SHRI DEEPAK ROUSHAN, SR. S.C. DATE OF HEAR I NG: 1 6 .02.2012 DATE OF PRONOUNCEME NT: 24 .02.2012 ORDER PER B.R. MITTAL, JUDICIAL MEMBER:- THE ASSESSEE FILED THIS APPEAL FOR THE ASSESSMENT YEAR 2009-10 AGAINST THE ORDER OF THE LD. CIT(A) DATED 28.9.2011 ON THE FOLLOWING GROUNDS: 1. FOR THAT LD. CIT(A) WAS NOT JUSTIFIED IN MAKING AN ADDITION TO THE TOTAL INCOME ON THE BASIS OF SUGGESTED OUTFLOW AS DETAILE D BEFORE THE INVESTIGATION DEPARTMENT TO MAKE OUT A FIGURE OF DI SCLOSURE MENTIONED IN THE FIRST STATEMENT AT THE TIME OF SEARCH. THER E WAS NO UNACCOUNTED INVESTMENT IN THE FACTORY. AS SUCH, ES TIMATE OF RS.1 CRORE MADE BY LD. CIT(A) WAS UNJUSTIFIED AND INCORR ECT. 2. FOR THAT AS PER BALANCE SHEET OF THE APPELLANT RS.5 7,24,503/- WAS INVESTED IN THE FACTORY AS ADDITION DURING THE YEAR UNDER CONSIDERATION. THE LD. CIT(A) ESTIMATED THE ADDITION DURING THE YE AR UNDER CONSIDERATION. THE LD. CIT(A) ESTIMATED THE ADDITI ON OF RS.1 CRORE ON THE GROUND THAT IN THE SISTER CONCERN THIS INVESTME NT WAS ACCEPTED BY THE ASSESSEE. THIS HAS NO RELEVANCE AT ALL. IN TH E CASE OF THE APPELLANT INVESTMENT WAS SHOWN IN THE BOOKS OF ACCO UNTS, AS SUCH, NO ADDITION WAS CALLED FOR. 3. FOR THAT THE UNACCOUNTED STOCK AS PER DISCLOSURE WA S ESTIMATED AT RS.2,78,89,141/-. NO BOOKS OF ACCOUNTS WERE FOUND AND THE ESTIMATE WAS MADE IN HYPOTHETICAL MANNER ON THE BASIS OF TOT AL SALES AND STOCK AVAILABLE ON 31 ST MARCH, 2008 AND RATIO THEREOF. THE APPELLANT HAS ITA NO15/RANCHI/2011 M/S. LUCKY COKE INDUSTRIES, DHA NBAD 2 SHOWN A CLOSING STOCK AS ON 31.3.2009 AT RS.2,96,21 ,663/-. THE STOCK FOUND AS ON 28.2.2009 WAS RS.2,78,89,141/-. ESTIMA TED STOCK WAS RS.2,78,89,141/- WHICH CANNOT BE IMAGINED FOR A CON CERN HAVING A TURNOVER OF RS.22 CRORES APPROXIMATELY. THE ESTIMA TED ADDITION ON ACCOUNT OF OUTFLOW AND ON THE BASIS OF UNACCOUNTED STOCK AS ESTIMATED IS UNJUSTIFIED, ILLEGAL AND INCORRECT. 4. FOR THAT THE ESTIMATED ADDITION OF RS.1,01,64,609/- ON THE BASIS OF CUMULATIVE NET OUTFLOW IS UNJUSTIFIED, ILLEGAL AND INCORRECT. 5. FOR THAT NO DOCUMENT WHATSOEVER WAS FOUND TO SUGGES T ANY UNACCOUNTED INVESTMENT IN THE FACTORY. THE ADDITIO N MADE, THEREFORE OF RS.1 CRORE IS UNJUSTIFIED, ILLEGAL AND INCORRECT . 6. FOR THAT IN ANY VIEW OF THE CASE, THE ADDITION OF R S.1,01,64,609/- AS SUSTAINED BY LD. CIT(A) IS UNJUSTIFIED, ARBITRARY, ILLEGAL AND WITHOUT ANY BASIS. 7. FOR THAT OTHER GROUNDS IN DETAIL WILL BE ARGUED AT THE TIME OF HEARING. 2. AT THE TIME OF HEARING, LD. A.R. SUBMITTED THAT GROUND NOS.3, 4 & 6 ARE NOT PRESSED FOR. HENCE, GROUND NOS.3, 4 & 6 OF THE APPEAL ARE REJECTED. 3. NOW THE ONLY ISSUE WHICH IS DISPUTED BY THE ASSE SSEE IN THIS APPEAL IS AS TO WHETHER LD. CIT(A) IS JUSTIFIED TO MAKE AN AD DITION OF RS.1 CRORE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN FACTORY. 4. THE RELEVANT FACTS ARE THAT ASSESSEE DERIVES INC OME FROM MANUFACTURING AND TRADING OF HARD COKE. THERE WAS A SEARCH AND SEIZURE OPERATION U/S 132(1) OF THE INCOME-TAX ACT ON 27.2. 2009 IN THE BUSINESS AS WELL AS RESIDENTIAL PREMISES OF LUCKY GROUP OF CASE S. MR. AGGARWAL IN HIS STATEMENT U/S 132(4) OF THE INCOME-TAX ACT ADMITTED RS.15 CRORES AS UNDISCLOSED INCOME EARNED IN DIFFERENT YEARS BY VAR IOUS ASSESSEES OF THE GROUP. FURTHER, FOR THE PERIOD FROM ASSESSMENT YEA RS 2003-04 TO 2009-10 THE TOTAL DISCLOSURE OF THE GROUP OF ADDITIONAL INC OME OFFERED WAS RS.15,22,84,374/-. 5. A NOTICE U/S 142(1) ISSUED REQUESTING THE ASSESS EE TO SUBMIT THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONS IDERATION AND IN RESPONSE THERETO ASSESSEE FILED THE RETURN DISCLOSI NG TOTAL INCOME OF RS.3,05,73,504/-. THE ASSESSING OFFICER VIDE ORDER DATED 31.12.2010 MADE THE ASSESSMENT AT RS.7,74,44,806/-. DURING THE COU RSE OF ASSESSMENT ITA NO15/RANCHI/2011 M/S. LUCKY COKE INDUSTRIES, DHA NBAD 3 PROCEEDINGS, THE ASSESSING OFFICER HAS STATED THAT AT THE TIME OF APPRAISAL STAGE, THE ASSESSEE OFFERED INCOME AT RS.5,35,37,77 3/- BUT IN THE RETURN FILED THE INCOME IS DISCLOSED AT RS.3,05,73,504/-. THE A SSESSING OFFICER HAS STATED THAT IN THE APPLICATION OF FUNDS AT APPRAISAL STAGE AN UNACCOUNTED INVESTMENT IN FACTORY AT RS.1.5 CRORES WAS ESTIMATED. HOWEVER , THE ASSESSEE LATER ON STATED THAT THERE WAS NO SUCH INVESTMENT MADE IN TH E PLANT. THE ASSESSING OFFICER DID NOT ACCEPT THE SAID CONTENTION OF THE A SSESSEE AND WHILE COMPUTING THE TOTAL INCOME, ESTIMATED UNACCOUNTED I NVESTMENT IN THE FACTORY AT RS.1.5 CRORES IN THE ASSESSMENT YEAR UNDER CONSI DERATION. BEING AGGRIEVED ASSESSEE FILED APPEAL BEFORE LD. CIT(A). 6. IT WAS CONTENDED THAT THERE WAS NO EVIDENCE FOU ND DURING THE COURSE OF SEARCH TO SUGGEST THAT ANY SUCH INVESTMENT OF RS .1.5 CRORES WAS MADE IN THE FACTORY AND THEREFORE, THE ESTIMATE FOR NON-EXI STENT INCOME AS APPLICATION OF FUND WAS INCORRECT. IT WAS CONTENDED THAT THERE WAS TOTAL OUTFLOW OF RS.5,35,37,773/- AND IN THE SAID OUTFLOW IT WAS EST IMATED UNACCOUNTED INVESTMENT IN THE FACTORY OF RS.1.5 CRORES. IT WAS CONTENDED THAT TO COVER UNDISCLOSED INCOME DECLARED DURING THE COURSE OF SE ARCH AT RS.15 CRORES, SOME ESTIMATES AND ITEMS WERE INCLUDED IN THE SURRE NDER WHICH HAD NO BASIS. LD. CIT(A) AFTER OBTAINING THE REMAND REPORT AND SU BMISSIONS OF THE ASSESSEE HAS HELD THAT WHEN THE TOTAL OUTFLOW WAS CONSIDERED , THERE IS SOME MISTAKE AND IT RESULTED IN DOUBLE ADDITION. LD. CIT(A) STA TED THAT IN THE CASE OF A SISTER CONCERN OF THE ASSESSEE NAMELY M/S. LUCKY CO KE MANUFACTURER, UNDISCLOSED INVESTMENT IN THE FACTORY OF RS.1 CRORE WAS ADMITTED IN THE DISCLOSURE PETITION WHEREIN THE TURNOVER DURING THE YEAR WAS AT RS.22,51,05,707/- AS AGAINST IN THE CASE OF THE ASS ESSEE IS OF RS.21,43,82,187/-. LD. CIT(A) HAS STATED THAT BUSI NESS OF BOTH THE CONCERNS IS EXACTLY SAME AND THEREFORE IT WOULD MEET THE END S OF JUSTICE IF UNDISCLOSED INVESTMENT IN THE FACTORY IS TAKEN AT RS.1 CRORE. ACCORDINGLY, LD. CIT(A) HAS CONFIRMED THE ADDITION OF RS.1 CRORE AS AN ESTIMATE D UNACCOUNTED INVESTMENT IN THE FACTORY IN THE ASSESSMENT YEAR UNDER CONSIDE RATION. HENCE, ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. ITA NO15/RANCHI/2011 M/S. LUCKY COKE INDUSTRIES, DHA NBAD 4 7. THE LD. A.R. SUBMITTED THAT THE ASSESSEE HAS SHO WN IN ITS BALANCE SHEET RS.57,24,503/- AS AN INVESTMENT IN THE ASSESS MENT YEAR UNDER CONSIDERATION THEN THERE IS NO QUESTION OF MAKING F URTHER ESTIMATION OF UNDISCLOSED INVESTMENT IN THE FACTORY. LD. A.R. FI LED A COPY OF THE ASSESSMENT ORDER OF THE SISTER CONCERN LUCKY COKE M ANUFACTURER FOR THE ASSESSMENT YEAR 2009-10 AND SUBMITTED THAT ASSESSIN G OFFICER HAD NOT MADE ANY ADDITION ON ACCOUNT OF UNACCOUNTED INVESTMENT I N THE FACTORY IN THE SAID ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2009-10. HE S UBMITTED THAT THE VERY BASIS ON WHICH LD. CIT(A) HAS SUSTAINED AN ADDITION OF RS.1 CRORE BY PRESUMING THAT SUCH ADDITION HAD BEEN MADE IN THE C ASE OF A SISTER CONCERN IS NOT FACTUALLY CORRECT. HE SUBMITTED THAT ADDITI ON IS NOT BASED ON ANY DOCUMENT AND ONLY ON ESTIMATE, AND SAME SHOULD BE D ELETED. ON THE OTHER HAND, LD. D.R. DID NOT DISPUTE ABOVE CONTENTION OF THE ASSESSEE SAVE AND EXCEPT RELYING ON THE ORDER OF LD. CIT(A). 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES AND ORDERS OF THE AU THORITIES BELOW. WE HAVE ALSO PERUSED THE ASSESSMENT ORDER FOR THE ASSESSMEN T YEARS 2009-10 IN THE CASE OF LUCKY COKE MANUFACTURER, A COPY OF WHICH IS PLACED ON RECORD. 9. IT IS A FACT THAT AT THE TIME OF APPRAISAL, THE ASSESSEE WHILE GIVING OUTFLOW OF THE TOTAL AMOUNT OF RS.5,35,37,773/- STA TED UNACCOUNTED INVESTMENT IN THE FACTORY AT RS.1.5 CRORES. HOWEVE R, LD. CIT(A) HAS STATED THAT THERE IS AN INHERENT MISTAKE IN THE CASH FLOW STATEMENT FILED BY THE ASSESSEE AS CAPITAL IS A CREDIT ENTRY WHICH WILL AP PEAR AS A LIABILITY IN THE BALANCE SHEET, AND OTHER ITEMS ARE A DEBIT ENTRIES AND WILL APPEAR AS ASSETS IN THE BALANCE SHEET, BUT THE TWO ITEMS HAVE BEEN CONS IDERED TOGETHER IN THE CASH FLOW STATEMENT WHICH HAS RESULTED IN DOUBLE AD DITION. LD. CIT(A) HAS GIVEN AN EXAMPLE THAT IF IN A BUSINESS THERE IS UND ISCLOSED CAPITAL OF RS.1 CRORE AND THE SAME IS INVESTED IN ASSETS/STOCKS OF RS.1 CRORE, THE BALANCE SHEET STILL TALLY AT RS.1 CRORE BUT IF THE ITEMS OF LIABILITY SIDE AS WELL AS ASSETS SIDE ARE CONSIDERED AS UNDISCLOSED, THERE WILL BE R ESULTANT ADDITION OF RS.2 CRORES INSTEAD OF CORRECT ADDITION OF RS.1 CRORE. THEREFORE, CAPITAL IS AN ITEM ITA NO15/RANCHI/2011 M/S. LUCKY COKE INDUSTRIES, DHA NBAD 5 OF SOURCE OF FUNDS AND THE SAME CANNOT BE TAKEN AS APPLICATION OF FUNDS. HOWEVER, LD. CIT(A) HAS STATED THAT AS PER BALANCE SHEET, THERE IS AN ADDITION OF RS.57,24,503/- IN THE FIXED ASSETS OF T HE FACTORY AND THEREFORE, THE CLAIM OF THE ASSESSEE THAT NO INVESTMENT HAS BEEN M ADE IN THE ASSESSMENT YEAR UNDER CONSIDERATION IS NOT FACTUALLY CORRECT. WE OBSERVE THAT LD. CIT(A) HAS STATED THAT A SIMILAR ADDITION HAS BEEN MADE IN THE CASE OF A SISTER CONCERN ON ACCOUNT OF UNDISCLOSED INVESTMENT IN THE FACTORY WHERE THE TURNOVER IS SAME BUT ON PERUSAL OF ASSESSMENT ORDER , COPY PLACED BEFORE US WE FIND MERIT IN THE CONTENTION OF LD. A.R. THAT NO SUCH ADDITION HAS BEEN MADE IN THE SAID SISTER CONCERN OF THE ASSESSEE. T HEREFORE, THE VERY BASIS ON WHICH THIS ESTIMATED ADDITION OF RS.1 CRORE HAS BEE N MADE IS NOT FACTUALLY CORRECT. MOREOVER, WHEN LD. CIT(A) HAS STATED THAT AS PER BALANCE SHEET OF THE ASSESSEE THERE IS AN ADDITION OF RS.57,24,503/- IN THE FIXED ASSETS OF THE FACTORY, WE AGREE WITH LD. A.R. THAT THERE IS NO QU ESTION OF MAKING FURTHER ADDITION ON AN ESTIMATE BASIS TOWARDS CAPITAL INVES TMENT IN THE ASSESSMENT YEAR UNDER CONSIDERATION. HENCE WE DELETE THE SAID ADDITION OF RS.1 CRORE MADE ON AN ESTIMATE BASIS TOWARDS UNDISCLOSED INVES TMENT IN FACTORY. ACCORDINGLY, THE GROUND NO.5 READ WITH GROUND NO.2 OF THE APPEAL ARE ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER P RONOUNCED ON 24 TH FEBRUARY, 2012 SD/ - SD/ - ( SHAMIM YAH Y A ) ( B.R. MITTAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS RANCHI, DATED 24 TH FEBRUARY, 2012 ITA NO15/RANCHI/2011 M/S. LUCKY COKE INDUSTRIES, DHA NBAD 6 COPY TO 1 M/S. LUCKY COKE INDUST RIES, RATANJI ROAD, PURANA BAZAR, DHANBAD 2 ACIT, CENTRAL CIRCLE, DHANBAD 3 CIT, DHANBAD (JHARKHAND) 4 THE CIT (A) , DHANBAD (JHARKHAND) 5 THE DR, ITAT, DHANBAD 6 GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RANCHI/PATNA