The ITO,Vapi Ward-4, Nani Daman V. M/s. Twina Polyplast, Nani Daman

ITA 1881/AHD/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0650 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 12-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 28-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Business income; Income from undisclosed sources; Initiation of penalty proceedings; Corroborative evidences; Retraction
• Section: 143(3); 80IB; 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ I.T.A. NO.1881/AHD/2012 (REVENUE) AND CO NO.186/AHD/2012 AY 2009-10 (ASSESSEE) ( / ASSESSMENT YEAR : 2009- 10) THE ITO VAPI WARD-4 NANI DAMAN / VS. M/S.TWINA POLY PLAST UNIT NO.G-12 CHIRAG INDUSTRIAL COMPLEX GOLDEN INDUSTRIAL ESTATE DABHEL, NANI DAMAN $ ./ ./ PAN/GIR NO. : AADFT 7341 L ( $& / APPELLANT ) .. ( '($& / RESPONDENT AND CROSS OBJECTOR ) $&) / APPELLANT BY : SHRI SANJAY KUMAR, SR.DR '($&*) / RESPONDENT BY : MS. URVASHI SODHAN, AR +* / DATE OF HEARING 12/07/2016 ,-./* / DATE OF PRONOUNCEMENT 29/08/2016 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-VALSAD DATE D 26/06/2012 ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 2 - FOR THE ASSESSMENT YEAR (AY) 2009-10 AND THE ASSESS EE IS IN CROSS OBJECTION THEREOF. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- 2.1. ASSESSEE IS A PARTNERSHIP-FIRM STATED TO BE EN GAGED IN THE BUSINESS OF MANUFACTURING OF PLASTIC ROLLS, SHEETS AND BAGS. ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR AY 20 09-10 ON 29/09/2010 DECLARING TOTAL INCOME OF RS.1,62,450/-. THE CA SE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT' ) VIDE ORDER DATED 30/12/2011 AND THE TOTAL INCOME WAS DETERMINED AT RS.2,46,25,990/-. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER (AO ), ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO VIDE ORDER DAT ED 26/06/2012 (IN APPEAL NO.CIT(A)/VLS/268/11-12) ALLOWED THE AP PEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD.CIT(A ), NOW THE REVENUE IS IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GR OUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON A CCOUNT OF UNACCOUNTED INCOME OF 26,50,000/- DISCLOSED DURING THE SURVEY. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE DEDUCTION U/S 80IB OF THE ACT STATING THAT DISALLOWANCE OF CLAIM OF DEDUCTION U/S 80IB OF THE ACT ON SOLE GROUND THAT THE ASSESSEE WAS NOT HAVING FACTORY LIC ENSE BEFORE IT STARTED MANUFACTURING ACTIVITIES IS WITHOUT ANY MERITS. ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 3 - 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDERING THE POINT THAT THE ASSESSEE HAS FAILED TO PROVE THAT IT HAS COMMENCED THE MANUFACTU RING ACTIVITY ON OR BEFORE 31.03.2004. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDERING THE FACT THAT D URING THE YEAR THE ASSESSEE HAS DEPLOYED THE AVERAGE MANPOWER 7 TILL T HE DATE OF THE SURVEY AS SUGGESTED BY THE SALARY REGISTER AND THER EFORE, THE ASSESSEE IS NOT ELIGIBLE TO AVAIL THE DEDUCTION UNDER THE PROVI SIONS OF SECTION 80IB OF THE ACT. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON A CCOUNT OF DISALLOWANCE OF INTEREST TO THE OTHERS OF 1,06,243/- AND DID NOT CONSIDER THE FACT THAT THE ASSESSEE COULD NOT FURNI SH THE MATERIAL EVIDENCES IN HIS FAVOUR OF CLAIM DURING THE ASSESSM ENT. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON A CCOUNT OF DISALLOWANCE OF DIFFERENCE IN CREDITORS OF 10,847/- AND DID NOT CONSIDER THE FACT THAT THE ASSESSEE COULD NOT FURNI SH THE MATERIAL EVIDENCES IN HIS FAVOUR OF CLAIM DURING THE ASSESSM ENT. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION MADE OF 2,16,42,301/- ON ACCOUNT OF THE UNEXPLAINED INVESTMENT AND DID NOT C ONSIDER THE FACT THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE CON TRARY TO THE FINDING OF THE AO EITHER AT THE TIME OF THE ASSESSMENT OR AT T HE TIME OF THE REMAND PROCEEDINGS. 2.1. ASSESSEE HAS FILED CROSS OBJECTION AND HAS RAI SED THE FOLLOWING GROUNDS:- ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 4 - 1. THE LEARNED CIT (A) HAS RIGHTLY HELD IN LAW AND ON FACTS THAT THE LD. AO ERRED IN MAKING ADDITION OF RS.26,50,000/- ON TH E BASIS OF MERE DISCLOSURE IN STATEMENT TAKEN DURING SURVEY PROCEED INGS WHICH WAS LATER RETRACTED. 2. THE LEARNED CIT (A) HAS RIGHTLY HELD IN LAW AND ON FACTS THAT THE LD AO ERRED IN DISALLOWING DEDUCTION CLAIMED BY APPELL ANT U/S 80 IB OF THE ACT OF RS.54,150/-. 3. THE LEARNED CIT (A) HAS RIGHTLY HELD IN LAW AND ON FACTS THAT THE LD. AO ERRED IN DISALLOWING INTEREST EXPENDITURE OF RS. 1, 06, 243/- AFTER CONSIDERING ALL THE DOCUMENTARY EVIDENCES. 4. THE LEARNED CIT (A) HAS RIGHTLY HELD IN LAW AND ON FACTS THAT THE LD AO ERRED IN DISALLOWING RS. 10, 847/-, BEING THE DI FFERENCE IN LEDGER OF M/S HARDIK INDUSTRIAL CORPORATION AS PER BOOKS OF A SSESSEE AND AS PER THE CONFIRMATION OF M/S HARDIK INDUSTRIAL CORPORATI ON, AFTER CONSIDERING ALL THE DOCUMENTARY EVIDENCES. 5. THE LEARNED CIT (A) HAS RIGHTLY HELD IN LAW AND ON FACTS THAT THE LD AO ERRED IN MAKING ADDITION OF RS.2,16,42,301/- AS UNEXPLAINED INVESTMENTS ON THE BASIS ON A ROUGH PAGE FOUND DURI NG SURVEY ON THE BASIS OF SURMISES AND PRESUMPTIONS. 6. LEVY OF INTEREST U/S 234 B, C & D IS UNJUSTIFIE D. 7. INITIATION OF PENALTY PROCEEDINGS U/S 271 (1)(C ) IS UNJUSTIFIED. 3. WE FIRST TAKE UP REVENUES APPEAL IN ITA NO.188 1/AHD/2012. 3.1. FIRST GROUND IS WITH RESPECT TO DELETION OF AD DITION OF UNACCOUNTED INCOME OF RS.26,50,000/- DISCLOSED DURING THE SURVE Y. 3.2. A SURVEY U/S.133A OF THE ACT WAS CARRIED OUT ON 16/09/2008 AT THE BUSINESS PREMISES OF THE ASSESSEE WHEREIN CERTAIN D OCUMENTS, PAPERS WERE IMPOUNDED. DURING THE COURSE OF SURVEY PROCEE DINGS, SHRI CHINTAN ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 5 - HARESH SAMPAT, THE KEY-PERSON WHO WAS LOOKING AFTER THE BUSINESS, WAS CONFRONTED WITH THE VARIOUS PAPERS SEIZED AND HE AD MITTED A DISCLOSURE OF RS.26,50,000/- AS UNACCOUNTED INCOME. AO NOTED THA T IN THE RETURN OF INCOME THAT WAS FILED BY THE ASSESSEE THE DISCLOSUR E OF ADDITIONAL INCOME MADE AT THE TIME OF SURVEY PROCEEDINGS WERE NOT OFF ERED FOR TAX. AO THEREFORE ADDED RS.26,50,000/- AS UNACCOUNTED INCOM E BASED ON THE DISCLOSURE MADE BY SHRI CHITAN H. SAMPAT. AGGRIEV ED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A ), WHO DELETED THE ADDITION BY HOLDING AS UNDER:- 5.3. DECISION :- I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS O F THE AO IN THE ASSESSMENT ORDER AS WELL AS THE SUBMISSIO N MADE BY THE LD.AR. THE AO MADE THE ADDITION SOLELY BASED ON TH E STATEMENT RECORDED DURING THE SURVEY. ON THE OTHER HAND THE LD.AR CONTENDED THAT NO DECLARATION WAS GIVEN BY FIRM M/S.TWINA POL Y PLAST DURING THE SURVEY. THAT THE DECLARATION GIVEN BY SHRI CHINTAN SAMPAT WAS IN HIS INDIVIDUAL CAPACITY AND SHRI CHINTAN SAMPAT HAS BEE N ASSESSED TO TAX SEPARATELY IN WARD 1, VAPI. FURTHER, THE LD.AR CON TENDED THAT IN REPLY TO THE QUESTION NO.8 IN STATEMENT I.E., IN WHICH C ONCERN THE DECLARATION OF RS.26,50,000/- WAS MADE? HE REPLIED THAT THE D ECLARATION OF INCOME OF RS.26,50,000/- WILL BE DISCUSSED WITH HIS C.A. AND WILL INFORM IN WHICH CONCERN THE DECLARATION WILL BE MADE IN TH E NEXT TWO DAYS. IT APPEARS FROM THE RECORD, THERE SEEMS TO BE NO FOLLO W UP ACTION FURTHER TO THE SAID STATEMENT BY SHRI SAMPAT. IN ABSENCE OF FOLLOW UP ACTION BY AO SUBSEQUENT TO THE SURVEY, THE APPELLANT COULD FI LE A RETRACTION STATEMENT BEFORE THE AO. THERE IS NOTHING ON RECOR D TO SUGGEST THAT THE DECLARATION OF RS.26,50,000/- WAS MADE IN THE APPEL LANT FIRM. THE DISCLOSURE DURING THE SURVEY ALSO HAS NOT BEEN LINK EITHER TO STOCK, EXPENSES OR UNACCOUNTED SALE. IN THAT CIRCUMSTANCE S, THE ADDITION MADE MERELY ON THE STATEMENT OF THE PARTNER WITHOUT ACCR EDIT TO ASSET IN ANY FORM IS NOT JUSTIFIED AND THIS PROPOSITION HAS BEEN UPHELD BY NUMEROUS JUDICIAL PRONOUNCEMENT. MOREOVER, THE SAME AMOUNT HAS BEEN TAKEN AS ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 6 - UNDISCLOSED INCOME IN THE HANDS OF SHRI CHINTAN H.S AMPAT FOR THE ASSESSMENT YEAR 2009-10, THE APPEAL WHICH IS TAKEN UP SIMULTANEOUSLY BY ME. IN VIEW OF THE ABOVE, IN MY OPINION THE ADD ITION MADE BY THE AO IS NOT JUSTIFIABLE AND LEGALLY NOT TENABLE. THEREF ORE, THE AO IS DIRECTED TO DELETE THE ADDITION MADE IN THIS GROUND. THE AP PELLANT GETS RELIEF IN THIS GROUND OF APPEAL. 3.3. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE I S NOW IN APPEAL BEFORE US. 3.4. BEFORE US, LD.SR.DR SUPPORTED THE ORDER OF AO. LD.AR, ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE THE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT DECLARATION GIVEN BY SHR I CHINTAN H.SAMPAT WAS IN HIS INDIVIDUAL CAPACITY AND THERE WAS NO DEC LARATION WITH RESPECT TO THE INCOME OF THE FIRM. LD.AR FURTHER SUBMITTED THAT THE ADDITION HAS BEEN CONFIRMED IN THE CASE OF CHITAN H. SAMPAT BY T HE ORDER OF COORDINATE BENCH OF TRIBUNAL (ITAT A BENCH AHMEDA BAD) IN ITA NOS.1970 & 1821/AHD/2012 FOR AY 2009-10 ORDER 09/02 /2016 AND THEREFORE THE GROUND OF REVENUE NEEDS TO BE DISMISS ED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) WHILE DELETING THE ADDIT ION HAS NOTED THAT THERE IS NOTHING ON RECORD WHICH COULD SUGGEST THAT THE DECLARATION MADE BY SHRI CHINTAN H.SAMPAT WAS WITH RESPECT TO THE AS SESSEE AND THE DISCLOSURE HAD NO LINK EITHER TO STOCK, EXPENSES OR UNACCOUNTED SALES. HE HAS FURTHER NOTED THAT THE UNDISCLOSED INCOME HAS B EEN CONSIDERED IN THE ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 7 - HAND OF SHRI CHINTAN H. SAMPAT. BEFORE US, REVENUE HAS NOT PLACED ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF LD .CIT(A) AND FURTHER IN VIEW OF THE LD.ARS SUBMISSION THAT THE ADDITION HA S BEEN CONFIRMED IN THE HANDS OF SHRI CHINTAN SAMPAT, WHICH FACT HAS NO T BEEN CONTROVERTED BY REVENUE, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. 5. GROUND NOS.2 TO 4 ARE INTER-CONNECTED AND THEREF ORE CONSIDERED TOGETHER AND THESE ARE WITH RESPECT TO DEDUCTION U/ S.80IB OF THE ACT. 5.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A O NOTICED THAT ASSESSEE HAS CLAIMED DEDUCTION OF RS.54,150/- U/S.8 0IB OF THE ACT. ON VERIFICATION OF SALARY REGISTER IMPOUNDED DURING TH E COURSE OF SURVEY, AO NOTICED THAT THE AVERAGE WORKERS WERE SEVEN(7). HE WAS THEREFORE OF THE VIEW THAT THE NUMBER OF WORKERS EMPLOYED DURING THE YEAR WAS LESS THAN TEN (10) AND THEREFORE THE CONDITION MENTIONED IN C LAUSE (IV) OF SECTION (2) OF SECTION 80IB WAS NOT FULFILLED. THE ASSESSE E WAS THEREFORE ASKED TO SHOW-CAUSE AS TO WHY THE DEDUCTION NOT BE DENIED. THE ASSESSEE INTER- ALIA SUBMITTED THAT THERE WERE TWELVE(12) WORKERS IN AP RIL-2008. IT WAS FURTHER SUBMITTED THAT SALARY OF VARIOUS WORKERS WE RE PAID ON VOUCHERS. THE SUBMISSION WAS NOT FOUND ACCEPTABLE TO THE AO. HE ALSO NOTED THAT THE FACTORY LICENCE WAS ISSUED BY THE CHIEF INSPECT OR OF FACTORY ON 18/11/2004 AND IN THE ABSENCE OF FACTORY LICENCE, A SSESSEE CANNOT START ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 8 - MANUFACTURING ACTIVITY AND ON THIS GROUND, THE CLA IM OF ASSESSEE FOR DEDUCTION U/S.80IB WAS REJECTED IN EARLIER ASSESSME NT YEAR. AO THEREFORE HELD THAT ASSESSEE HAS FAILED TO PROVE THAT THE MAN UFACTURING PROCESS WAS STARTED ON OR BEFORE 30/03/2004. HE ACCORDINGLY, D ENIED THE CLAIM OF DEDUCTION U/S.80IB OF THE ACT. AGGRIEVED BY THE OR DER OF AO ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A) WHO ALLOWED THE CLAIM OF ASSESSEE BY FOLLOWING THE ORDER OF HIS PREDECESSOR IN THE IMMEDIATELY PRECEDING YEAR. THE RELEVANT PORTION OF THE ORDER OF THE LD.CIT(A) READS AS UNDER:- 6.3. DECISION : I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE SUBMISSIO N MADE BY THE LD.AR. THIS IS A COVERED MATTER BECAUSE AS RIGHTLY POINTED OUT BY THE LD.AR, VIDE APPEAL NO.CIT(A)/VLS/466/09-10 IN THE APPELLANTS OWN CASE THE BENEFIT U/S.80-IB WAS ALLOWED. THE FACTS BEING IDENTICAL IN THIS YEAR AS WELL, FOR THE SAKE OF CONSISTENCY, I ALLOW THIS GROUND OF APPEAL. 5.2. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE I S IN APPEAL BEFORE US. 5.3. BEFORE US, LD.SR.DR HAS SUPPORTED THE ORDER OF AO. LD.AR, ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT ON IDENTICAL FACTS, IN ASSESSEES OWN CASE, REVENUE CARRIED THE MATTER BEFORE THE TRIBUNAL FOR AYS 2005-06, 2006- 07 & 2007-08. THE TRIBUNAL VIDE ORDER DATED 20/03/ 2015 IN ITA NO.1452/AHD/2011 FOR AY 2007-08 AND IN ITA NOS.2776 & 3139/AHD/2010 FOR AYS 2005-06 & 2006-07 ORDER DATED 21/11/2014 ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 9 - RESPECTIVELY HAD DISMISSED THE APPEAL OF THE REVEN UE. IT WAS THEREFORE SUBMITTED THAT SINCE THE FACTS OF THE CASE IN THE Y EAR ARE IDENTICAL TO THAT OF AYS 2005-06, 2006-07 & 2007-08 AS HAS ALSO BEEN NOTED BY LD.CIT(A), NO INTERFERENCE TO THE ORDER OF LD.CIT( A) IS CALLED FOR. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO DE NIAL OF DEDUCTION U/S.80IB OF THE ACT. WE FIND THAT IN EARLIER YEAR IN ASSESSEES OWN CASE, AGAINST THE ORDER OF LD.CIT(A), THE REVENUE HAD CAR RIED THE MATTER BEFORE THE TRIBUNAL IN AY 2007-08. THE APPEAL OF REVENUE WAS DISMISSED BY THE COORDINATE BENCH BY HOLDING AS UNDER:- THIS IS AN APPEAL FILED BY THE REVENUE ARISING FRO M THE ORDER OF LEARNED CIT(A), VALSAD DATED 24.02.2011 AND THE GROUNDS RAI SED ARE REPRODUCED BELOW: '1. THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING THE DEDUCTION U/S.80IB OF THE ACT STATING THAT DISALLOWANCE OF CLAIM OF DEDUCTION U/S.80IB OF THE ACT ON THE SOLE GROUND THAT THE ASSESSEE WAS NOT HAVING FACTORY LIC ENSE BEFORE IT STARTED MANUFACTURING ACTIVITIES IS WITHOUT ANY MER ITS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED C1T(A) HAS ERRED IN NOT CONSIDERING THE POINT THAT THE ASS ESSEE HAS FAILED TO PROVE THAT IT HAS COMMENCED THE MANUFACTURING ACTIVITY ON OR BEFORE 31.03.2004, AS STIPULATED IN SECTION 80IB OF THE ACT.' 2. WHILE PASSING THE ORDER U/S.143(3) DATED 1 8.12.2009, THE AO HAS MENTIONED THAT THE ASSESSEE FIRM HAS CLAIMED A DEDU CTION U/S.80IB OF RS.16,41,375/-. ON PERUSAL OF THE CLAIM, IT WAS FOU ND THAT THE LICENSE WAS ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 10 - ISSUED ON 18.11.2004 THEN HE HAS MENTIONED THAT IN THE PAST FOR A.Y.2004-05 AND 2006-07 ON THAT BASIS THE CLAIM OF DEDUCTION U/ S.80IB WAS DISALLOWED. ON THE SAME LINE AS HAPPENED IN THE PAST, THE CLAIM OF DEDUCTION U/S.80IB WAS DISALLOWED FOR THE YEAR UNDER CONSIDERATION AS WELL . 3. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY, LEARNED CIT(A) HAS FOLLOWED THE PAST HISTORY AND GRANTED TH E CLAIM OF DEDUCTION. 4. WITH THIS FACTUAL BACKGROUND, WE HAVE BEEN INFOR MED THAT IN ASSESSEE'S OWN CASE FOR A.Y.2005-06 AND 2006-07 ITAT 'D' BENCH AHMEDABAD IN ITA NO.2776 & 3139/AHD/2010 ORDER DATED 21.11.2014, THE RESPECTED CO- ORDINATE BENCH HAS FOLLOWED FEW ORDERS OF THE HON'B LE HIGH COURT SPECIALLY THE DECISION OF JOLLY POLYMERS (APPEAL NO.L622/AHD/ 2012) ORDER DATED 21 ST FEBRUARY, 2013 AND DECIDED THE ISSUE IN FAVOUR OF T HE ASSESSEE. RESPECTFULLY FOLLOWING OF THOSE DECISIONS AND ALSO THE PAST HIST ORY OF THE CASE, WE HEREBY UPHOLD THE VIEW OF LEARNED CIT(A). RESULTANTLY, GRO UNDS OF APPEAL ARE DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE I S DISMISSED. 6.1. WE THEREFORE FIND THAT AS FAR AS DENIAL OF DED UCTION ON THE BASIS OF STARTING OF PRODUCTION IS CONCERNED, THE COORDINATE BENCH AND ON IDENTICAL FACTS, IN ASSESSEES OWN CASE HAS DECIDED THE ISSUE IN ITS FAVOUR IN PAST. IN THE ABSENCE OF ANY CONTRARY BINDING DE CISION, WE FIND NO REASON TO INTERFERENCE WITH THE ORDER OF LD.CIT(A) ON THE ASPECT OF PRODUCTION. 6.2. AS FAR AS THE ISSUE OF EMPLOYING LESS THAN 1 0 WORKERS IS CONCERNED, BEFORE US ASSESSEE HAS PLACED IN THE PAPER-BOOK AT PAGE NOS.17 TO 69, THE SALARY REGISTER AND FROM THAT IT WAS POINTED OUT TH AT THE NUMBER OF WORKERS WERE EXCEEDING TEN(10). THE AFORESAID SUB MISSION OF ASSESSEE HAS NOT BEEN CONTROVERTED BY REVENUE. THUS WHEN T HE ASSESSEE HAS DEMONSTRATED THAT IT HAD EMPLOYED MORE THAN 10 WORK ERS, THEN IN VIEW ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 11 - OF THE AFORESAID FACTS, WE SEE NO REASON TO INTERFE RE WITH THE ORDER OF LD.CIT(A) AND THUS GROUNDNO.2 TO 4 OF REVENUE ARE DISMISSED. 7. GROUND NO.5 IS WITH RESPECT TO DISALLOWANCE OF I NTEREST. 7.1. ON PERUSING THE PROFIT & LOSS A/C., AO NOTICED THAT ASSESSEE HAD DEBITED INTEREST OF RS.1,06,243/- ASSESSEE WAS ASK ED TO EXPLAIN ITS NATURE AND ALSO FURNISH THE DETAILS. AO NOTICED T HAT ASSESSEE DID NOT FURNISH ANY DETAILS OR CONFIRMATION IN SUPPORT OF I TS CLAIM. HE THEREFORE HELD THAT THE INTEREST PAID BY THE ASSESSEE TO BE P ENAL IN NATURE AND ACCORDINGLY DISALLOWED THE CLAIM OF INTEREST. AGGR IEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A) WH O DELETED THE ADDITION BY HOLDING AS UNDER:- DECISION :- I HAVE CONSIDERED THE OBSERVATION OF THE AO I N THE ASSESSMENT ORDER AS WELL AS THE SUBMISSION MADE BY THE AR CAREFULLY. THERE IS A FORCE IN THE ARGUMENT OF THE LD.AR IN TH IS MATTER. THE AO PREFERRED TO IGNORE THE EVIDENCE SUBMITTED BY THE A PPELLANT DURING THE REMAND PROCEEDING. THE REASON GIVEN IN THE ASSESSM ENT ORDER FOR MAKING ADDITION IS NOT ADEQUATE IN THE FACT OF STRO NG EVIDENCE RELIED UPON BY THE LD.AR AGAINST THE ADDITION. IN THIS CI RCUMSTANCES THE AO DIRECTED TO DELETE THE ADDITION MADE IN THIS GROUND . ACCORDINGLY THIS GROUND IS ALLOWED. 7.2. BEFORE US, LD.SR.DR SUPPORTED THE ORDER OF AO. LD.AR, ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND SUPPORTED THE ORDER OF LD.CIT(A). ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 12 - 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT LD.CIT(A) WHILE DELETING THE ADDITION HAS NOTED THAT IN THE REMAND PROCEEDINGS, AO HAD PREFERRED TO IGNORE THE EVIDENCES SUBMITTED BY THE ASSESSEE. BEFORE THE LD.CIT(A) IT WAS SUBMI TTED BY THE ASSESSEE THAT THE INTEREST EXPENSES WAS TOWARDS THE PAYMENT MADE TO MAJOR SUPPLIER OF RAW-MATERIAL ON ACCOUNT OF LATE PAYMENT S OF PURCHASE OF RAW- MATERIAL AND WHILE MAKING THE PAYMENT OF INTEREST T DS WAS ALSO DEDUCTED. THE AFORESAID SUBMISSIONS MADE BY THE AS SESSEE HAVE NOT BEEN CONTROVERTED BY THE REVENUE. FURTHER, REVENUE HAS ALSO NOT DEMONSTRATED THAT THE PAYMENT OF INTEREST WAS PENAL IN NATURE. IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMIS SED. 9. NEXT GROUND IS WITH RESPECT TO ADDITION ON ACCOU NT OF DIFFERENCE IN CREDITORS. 9.1. ON PERUSING THE BALANCE-SHEET, AO NOTICED THAT ASSESSEE HAS SHOWN SUNDRY CREDITORS OF RS.1,97,036/- BEING AMOUN T PAYABLE TO HARDIK INDUSTRIAL CORPORATION BUT ON VERIFICATION OF THE C ONFIRMATION RECEIVED FROM HARDIK INDUSTRIAL CORPORATION, AO NOTICED THAT IT SHOWED THE BALANCE OF RS.2,07,883/- RECOVERABLE FROM ASSESSEE. IN THE ABSENCE OF RECONCILIATION, THE DIFFERENCE OF RS.10,847/- (RS.2 ,07,883 RS.1,97,036) ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 13 - WAS ADDED TO THE TOTAL INCOME. AGGRIEVED BY THE OR DER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A) WHO DELETED THE ADDITION. 8.3. DECISION :- I HAVE CONSIDERED THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE SUBMISSION MADE BY THE AR OF THE APPELLANT. BECAUSE THE APPELLANT HAS FURNISHED THE ABOVE STATED RECONCILIATION, THE AO IS DIRECTED TO DELETE THE ADDITION. THIS GROUND IS ALLOWED. 9.2. BEFORE US, LD.SR.DR SUPPORTED THE ORDER OF AO. LD.AR, ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND SUPPORTED THE ORDER OF LD.CIT(A). 10. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) WHILE DELETING THE ADDIT ION HAS NOTED THAT ASSESSEE HAD FURNISHED RECONCILIATION OF THE BALANC E AND THE AMOUNT STANDS RECONCILED. BEFORE US, REVENUE HAS NOT PLA CED ANY MATERIAL ON RECORD TO CONTROVERT THE FINDING OF LD.CIT(A) NOR H AS POINTED OUT ANY FALLACY IN THE RECONCILIATION STATEMENT. IN VIEW O F THE AFORESAID FACTS, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE LD .CIT(A). THUS, THIS GROUND OF REVENUE IS DISMISSED. 11. NEXT GROUND IS WITH RESPECT TO ADDITION ON ACCO UNT OF UNEXPLAINED INVESTMENT. ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 14 - 11.1. DURING THE COURSE OF SURVEY, ONE LOOSE-PAPER FILE WAS IMPOUNDED. PERUSAL ON PAGE NO.98 OF THE LOOSE-PAPER REVEALED T HAT THERE WAS SOME TRANSACTION OF LAND OF RS.11 LACS, BUILDING OF RS.1 5 LACS AND RS.46 LACS AND AGGREGATE TRANSACTION AMOUNTING TO RS.2,16,42,3 01/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN THE IMPOUNDED MATERIAL. THE ASSESSEE INTER-ALIA SUBMI TTED THAT IT WAS A ROUGH PIECE OF PAPER SHOWING ESTIMATED COST LIKELY TO BE INCURRED FOR THE PROPOSED BUILDING. THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE AO AS HE WAS OF THE VIEW THAT THE ONUS WAS ON THE ASSESSEE TO EXPLAIN THE DETAILS AND THE SOURCE OF I TS SUM. AO THEREFORE HELD THAT THE TOTAL AMOUNT OF RS.2,16,42,301/- AS U NEXPLAINED INVESTMENT AND ADDED TO THE INCOME. AGGRIEVED BY THE ORDER O F AO, ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A) WHO DELETED THE ADDITION BY HOLDING AS UNDER:- 9.3. DECISION .:- I HAVE CONSIDERED THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE SUBMISSION MADE BY THE AR OF THE APPELLANT IN WRITTEN SUBMISSION. THE AO RELIED ON O NE PAGE I.E. 98 OUT OF 100 PAGES WHEREIN HE FOUND THAT THE APPELLANT HA D RECORDED TRANSACTIONS PERTAINING TO UNEXPLAINED INVESTMENT O F RS.2,16,42,301/-. THE GIST OF THE AOS FINDINGS ARE; [11.6] THE ASSESSEE HAS CONTENDED THAT PAGE NUMBER 98 IS A ROUGH PIECE OF PAPER. THE CONTENTION OF THE ASSESSEE IS N OT ACCEPTABLE FOR THE REASON THAT PERUSAL OF PAGE NUMBER 98 OF THIS LOOSE PAPER FILE REVEALS THAT SOME TRANSACTION RELATED TO LAND OF RS. 11,00, 000/-, BUILDING OF RS. ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 15 - 15,00,000/- RS,46,00,000/- IN FIGURES, AND AMOUNTS WITH VARIOUS NAMES ETC HAVE BEEN WRITTEN ON THIS PAGE. IT IS SEEN THAT THE ASSESSEE HAS NOT COME UP WITH ANY SUPPORTING EVIDENCE IN ITS CLAIM. [11.7] IT IS SETTLED LAW THAT THE ONUS IS ON THE ASSESSEE TO ESTABLISH THE SOURCE OF SUMS FOUND IN HIS NAME DURING THE CO URSE OF ASSESSMENT PROCEEDINGS. THE SOURCE AND THE NATURE OF THE RECEI PT HAS TO BE PROVED BY THE ASSESSEE, AND IF HE FAILS TO PROVE SATISFACT ORILY THE SOURCE AND THE NATURE OF THE AMOUNTS RECEIVED, THE ASSESSING AUTHO RITY IS ENTITLED TO DRAW AN INFERENCE THAT THE RECEIPT IS ASSESSABLE IN COME OF THE ASSESSEE. [11.8] AS DISCUSSED HEREINABOVE, IT IS CLEARL Y EVIDENT THAT THE ASSESSEE HAS NOT SUBMITTED ANY COGENT EVIDENCE WIT H REGARDS TO THE ABOVE. AS SUCH, IT IS QUITE CLEAR THAT THE ASSESSEE HAS NOT ANY EVIDENCES OR EXPLANATION WHICH PROVES THE GENUINENESS GENUIN ENESS OF TRANSACTION WRITTEN ON PAGE NUMBER 98 OF ANNEXURE B /8. THEREFORE, THE TOTAL AMOUNT OF RS.2,16,42,301/- HAS BEEN TREATED AS UNEXPLAINED INVESTMENT FOR THE YEAR UNDER CONSIDERATION AND ADD ED TO THE TOTAL INCOME OF THE ASSESSEE.' 9.3.1 IT IS IMPORTANT TO HAVE A LOOK AT THE FINDI NGS OF THE AO IN THE ASSESSMENT ORDER AND HIS FURTHER REPLY IN THE REMAN D REPORT. IN THE ASSESSMENT ORDER THE REASONS GIVEN FOR MAKING ADDIT ION IS THAT BECAUSE THERE ARE TRANSACTIONS RELATING TO LAND OF RS. 11,00,000/-, BUILDING OF RS.15,00,000/-, RS.46,00,000/- IN FIGURES, AND WITH AMOUNTS AGAINST VARIOUS NAMES AND ITEMS LIKE HIT, C EMENT, TILES ETC ARE NOTICED IN IMPOUNDED PAGE 98 OF B/8, THE AO MADE AD DITIONS OF THE TOTAL TRANSACTION AMOUNTING TO RS.2,16,42,301/- AS UNEXPLAINED INVESTMENT IN THE HAND OF THE APPELLANT. THOUGH HOW THE FIGURE OF RS.2,16,42,301/- WAS ARRIVED BY HIM WAS NOT GIVEN B UT SUM TOTAL OF THE FIGURES IN THAT PAGE WILL PROBABLY MATCH THAT FIGUR E. AT THE SAME SAME TIME THE AO HAD NOT IDENTIFIED THE ASSETS ON WHICH THE AMOUNT WAS INVESTED AND NOT DISCLOSED IN THE BOOKS OF A/C. F URTHER NO REASONS HAVE BEEN RECORDED IN THE ASSESSMENT ORDER WHY HE WAS NO T SATISFIED WITH THE EXPLANATION OFFERED BY THE ASSESSEE? ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 16 - 9.3.2. THE IN PARA 11.3 OF THE ASSESSMENT ORDER THE AO OBSERVED THAT ON VERIFICATION OF LOOSE PAPER FILE, IT IS SEEN TH AT PAGE 1 TO 71 ARE COMPUTER PRINTOUT OF SOME BOOKS OF ACCOUNTS PERTAIN S TO FINANCIAL YEAR 2007-08, PAGE NUMBER 71 TO 99 ARE THE AUDITED REPOR T ALONG WITH ITS ANNEXURE FOR F.Y. 2007-08 AND 91 TO 97 ARE COPY OF SALE DATED 27-01- 2005 FOR RS.2,50,000/- AND PAGE 98 PERTAINS TO VARI OUS TRANSACTION PAGE 99 IS A SITE PLAN AND PAGE 100 PERTAINS TO BALANCE PAYMENT. PAGE NUMBER 98 CONTAINS THE TOTAL TRANSACTION AMOUNTING TO RS.2,16,42,301/-. THAT MEANS THE PAPERS IMPOUNDED PERTAINS TO F.Y. 20 07-08 RELEVANT TO A.Y. 2008-09 AND EARLIER YEARS. IN THAT CASE HOW H E DECIDED TO MAKE ADDITION IN THE A.Y. 2009-10. IN MY VIEW THE AO HA S NOT DONE PROPER WORK TO ASCERTAIN THE BASICS TO CHARGE TO TAX. EVE N THE REMAND REPORT SUBMITTED BY THE AO DOES NOT ADDRESS ANY SUCH ISSUE S. THEREFORE, THE AO FAILED TO ASSESS THREE IMPORTANT ASPECTS FOR MAK ING SUCH HUGE ADDITIONS ANY THEY ARE; I) AO FAILED TO IDENTIFY THE CONTENTS OF THE PAGE 98. II) AO FAILED TO IDENTIFY AND ESTABLISH THE A SSETS ON WHICH THE APPELLANT MADE UNEXPLAINED INVESTMENTS; AND III) AO, NOT ONLY WRONGLY APPLIED THE PROVISIO NS U/S. 69 OF THE ACT BUT ALSO WRONGLY APPLIED PREVIOUS YEAR FOR THE PURP ORTED RELIED UPON DOCUMENTS. NEEDLESS TO MENTION THE AC) GOT A FRESH OPPORTUNITY TO HAVE A RE-LOOK AT THE FACTS ABOUT THE SAID PAGE DURING THE REMAND REP ORT PROCEEDING BUT DID NOT MAKE USE OF THAT OPPORTUNITY, RATHER, HE-SU BMITTED RR IN A ROUTINE MANNER IGNORING THE EVIDENCES FILED BY ASSE SSEE AND INCORPORATED IN THE PAPER BOOK. WITHOUT GOING INTO THE DETAIL OF SHORTCOMINGS IN THE RR, IN THE INTEREST OF JUSTICE AND EQUITY BOTH FOR THE DEPARTMENTS AND APPELLANTS POINTS, AN EXERCISE WA S DONE TO FIND OUT THE FACTUAL CONTENTS IN THE SAID PAGE 98 DURING THE APPELLATE PROCEEDING. THE ARGUMENTS OF THE LD.AR WAS THAT THE PAGE WAS ROUGH ESTIMATE FOR THE PROPOSED 9 FLATS BUILDINGS UNDERTA KEN BY M/S.TWINA CONSTRUCTION A PROPRIETARY CONCERN OF MR. CHINTAN SAMPAT. THE ID. AR ALSO CATEGORICALLY POINTED THAT THE CONSTRUCTION COST OF THIS APARTMENT AS WELL AS REVENUE FROM SALES ARE ACCOUNT ED FOR IN THE BOOKS ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 17 - OF TWINA CONSTRUCTION DURING F.Y. 2008-09 & 2009-10 . THE APPELLANT HAD FURNISHED COPY OF THE P&L A/C. AND B/S FOR BOTH THE YEARS IN THE. PAPER BOOK SENT FOR CALLING REMAND REPORT. THE AO R EMAINED SILENT ON THIS FACT IN THE REMAND REPORT PROCEEDING. HAVING O BSERVED THAT IT IS VERY IMPORTANT NOW TO EXAMINE THE CONTENTS IN THE S AID PAGE 98. RIGHT HAND SIDE OF THE PAGE, THERE ARE AMOUNTS AGAINST WH ICH CERTAIN DETAILS ARE MENTIONED. THE TOP FOUR AMOUNTS AGAINST WHICH THE NAMES GIVEN ARE AS UNDER: 50000 PATEL CARTING 67500 MAHESHWARI TRADING 39321 KESAR STEEL 125125 KESAR STEEL --------- 281946 TOTAL THE ID. AR EXPLAINED THAT THESE EXPENSES WERE INCUR RED TOWARDS THE BUILDING ACCOUNTS AND TO PROVE THIS, COPY OF LEDGER S ALONGWITH BILLS FROM PATEL CARTING, MANESHWARI TRADING AND KESAR ST EEL SUPPLIERS ARE ENCLOSED IN THE PAPER BOOK WHICH THE AO DID NOT VER IFY, WHILE, SUBMITTING REMAND REPORT. IN STEAD THE AO MENTIONED IN THE RR THAT THE APPELLANT DID NOT SUBMIT BILLS. 9.3.3 THE NEXT IS ABOUT SOME COMMON ENTRIES BOTH I N LEFT AND RIGHT HAND SIDE OF THE SAID PAGE 98/8-B EXPECTED EXPENDITURE 100000 RAHUL ELECTRIC 100000 27000 SHANTILAL PLUMBER 20000 53000 PLUMBING 30000 250000 LIFT 250000 200000 B.J. CHAUHAN 150000 100000 WINDOW 125000 130000 TILES LABOUR 100000 ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 18 - 50000 BRICKS 50000 100000 CEMENT 125000 50000 MARBLE 25000 DOOR FRAME 25000 25000 GRANITE 20000 SANITORY 20000 30000 PUTTI LBOUR 15000 PUTTI 45000 125000 DOORS 125000 5000 DOOR LABOUR 50000 COLOUR 50000 220000 TILES FLORING 80000 TILES BATHROOM 50000 35000 TILES BATHROOM 60000 50000 CEMENT & RETI 50000 125000 GATE 50000 50000 GRILL 50000 CEMENT & RETI 50000 PATEL 75000 19,15,000 TOTAL 16,00,000 20000 MAHESHWARI 150000 JANARDHAN 50000 RAHUL 20000 SHANTILAL 250000 LIFT 111000 WINDOWS 78000 TILES 100000 BRICKS 75000 CEMENT 20000 SANITARY 5000 PUTTI 15000 TILES 25000 GRILL 50000 GATE ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 19 - IN THIS REGARDS, THE ID. AR CONTENDED THAT: THOSE ARE ESTIMATE OF EXPENDITURES TO BE INCURRED FOR THE CONSTRUCTION OF 9 FLATS BUIL DING AND WHEN THE PROJECT WAS COMPLETED ALMOST ALL EXPENDITURES WERE IN THE LINE OF ESTIMATED FIGURE WHICH WE HAVE CLAIMED IN OUR FINANCIAL STATEMENTS O F THE RELEVANT YEAR; WE ARE ALSO ENCLOSING THE LEDGER COPIES OF VARIOUS ITEMS FOR YOUR REFERENCE IN ANNEXURE-6. FURTHER, THE LD.AR CONTENDED THAT NINE FLATS CONSTRUCTED AND SOLD DURING THE FINANCIAL YEAR 2009 -10 AT RS.744.50 PER SQ.FT. AVERAGE, WHICH WAS MUCH HIGHER THAN THE PREVAILING MARKET RATE. AND TO PROVE THIS THE COPY OF BALANCE SHEET OF TWINA CONSTRUCTION FOR THE A.Y. 2008-09 AND 2009-10 IS ATTACHED HEREWI TH. THE TOTAL SALES WAS OF RS.59,85,750/- FOR THE 9 FLATS. 1 HAVE CONSIDERED THE EXPLANATION GIVEN BY THE ID. AR IN THIS REGARDS. I HAVE ALSO CONSIDERED THE OBSERVATIONS OF THE AC) IN THE ASSESSMENT ORDER AND IN THE REMAND REPORT. IN THE PB THE APPEL LANT HAD GIVEN LEDGER A/C. OF ALL THE ITEMS NOTED IN PAGE 98 WITH BILLS. THE AO IGNORED TO VERIFY THEM WHILE SUBMITTING THE RR. IN THE RR H E SIMPLY REPEATED WHAT WAS STATED IN THE ASSESSMENT ORDER. CONSIDER ING THE NATURE OF ITEMS APPEARING IN THE SAID PAGE IT IS VERY CLEAR T HAT THEY ARE PERTAINING TO THE CONSTRUCTION OF 9 FLATS BUILDING. THE ID. AR ALSO SUPPORTED HIS ARGUMENTS WITH EVIDENCES SUCH AS LEDGER A/C AND BIL LS OF THOSE ITEMS. IT IS ALSO A FACT THAT THE APPELLANT HAD NO OTHER PROJ ECT EXCEPT THAT 9 FLAT BUILDING. IN THESE CIRCUMSTANCES, I AM NOT INCLINED TO HOLD THAT THE EXPENDITURES SHOWN IN PAGE 98 WAS RELATING TO UNEXP LAINED INVESTMENT. THEREFORE, THE FINDINGS OF THE AO IN THIS REGARDS I S FACTUAL!}' INCORRECT AND LIABLE TO BE REJECTED. 9.3.4 THE FIGURE OF RS. 46,00,000/- WAS THE EXPECTED TOTAL COST TO BE INCURRED FOR THE PROPOSED BUILDING AND THUS CAN NO WAY BE TREATED AS ANY UNDISCLOSED INCOME AS ALL THESE ARE RECORDED IN THE BOOKS OF ACCOUNTS. THE COPY OF BALANCE SHEET ENCLOSED FOR TH E TWO YEARS PROVES ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 20 - THAT THE EXPENSES OF RS.46,00,000/- ARE MOSTLY IN-L INE WITH THE EXPECTED COST OF CONSTRUCTION. JUST FIGURES WRITTEN & EXPLAINED ITEMS AMOUNT (IN RS.) EXPECTED COST OF BUILDING 2400000 EXPECTED COST OF BUILDING 2200000 ---------- 4600000 SIMILARLY THE AMOUNT OF RS.12,00,000/- WAS JUST A FIGURE WRITTEN WITHOUT ASSIGNING ANY SUBJECT TO IT. IT WAS ROUGHLY WRITT EN FOR SOME PURPOSE BUT NOW IT IS VERY DIFFICULT FOR US TO RECOLLECT IT AS NOTHING WAS WRITTEN ALONG WITH THE FIGURE. BUILDING & LAND EXPLANATION AMOUNT (IN RS.) EXPECTED PARTY OF PURCHASE AMOU NT IN (RS.) BUILDING LAND 700000 VIPUL SINGH 300000 300000 NARENDRA 300000 500000 TIWARI 500000 ---------------- ----------------------- ------ ------ 1500000 TOTAL 1100000 WITH REGARDS TO THE ABOVE NOTING IN THAT PAGE THE I D. AR EXPLAINED THAT THE NAMED PERSONS WERE THE PROSPECTIVE FLAT BUYERS AND THE AMOUNT (RS. 15,00,000) EXPECTED BY THE APPELLANT WAS PROPO SED TO BE SPENT ON DEVELOPMENT OF LAND (RS. 11,00,000) BUT THE DEAL WI TH THE ABOVE PEOPLE DID NOT MATERIALIZE. ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 21 - 9.3.5. FROM THE ABOVE DETAILS IT IS VERY CLEAR TH AT THE PAGE UNDER CONSIDERATION CONTAINS ESTIMATED FIGURES OF VARIOUS ITEMS FOR THE PROJECT UNDER TAKEN BY TWINA CONSTRUCTION. THE APPELLANT AL SO FURNISHED NECESSARY CORROBORATIVE EVIDENCES IN THE FORM OF LE DGER COPY OF THE ITEMS IN THE PAGE NO. 98 AND THE P & L A/C AND BALA NCE SHEET OF TWINA CONSTRUCTION HAVING ACCOUNTED BOTH EXPENDITURE AND SALES OF THE FLATS. THEREFORE, THE ADDITION MADE AS UNEXPLAINED EXPENDI TURE IN THE APPELLANT'S HAND ON THE BASIS OF SAID PAGE IS NOT J USTIFIED FOR THE FOLLOWING REASONS; (1) THE CONTENTS IN PAGE NO 18, DO NOT BELONG TO THE AP PELLANT. (2) AS RIGHTLY POINTED BY THE APPELLANT, THE CONTENTS I N THE SAID PAGE ARE ESTIMATES FOR THE CONSTRUCTION OF NINE FLA T BUILDING UNDERTAKEN BY THE TWINA CONSTRUCTION; (3) THE AO HAS FAILED TO IDENTIFY AND BROUGHT ON RECORD THE ASSET ON WHICH THE SO CALLED UNEXPLAINED INVESTMENT WAS M ADE BY THE APPELLANT. (4) FROM THE ANALYSIS FROM THE PAGE 98, WHAT IS VERY C LEAR WAS THAT THOSE ENTRIES HAVE NO LINK TO ANY UNEXPLAINED INVESTMENT. (5) THE CONTENTS IN THE DOCUMENT REFERRED WAS FOR THE PREVIOUS YEAR NOT RELEVANT TO THE A.Y. 2009-10. ON THE OTHER HAND THE CORROBORATIVE EVIDENCE FURNIS HED BY THE APPELLANT AMPLY MADE IT CLEAR THAT THOSE ARE THE ES TIMATED EXPENDITURE FIGURE FOR THE 9 BUILDING FLATS UNDERTAKEN BY TWINA CONSTRUCTION - A PROPRIETARY CONCERN OF SHRI. CHMTAN SAMPAT. THE EST IMATED EXPENDITURE FOR THE PROJECT BY AND LARGE MATCHED WI TH THE FINAL ACCOUNT OF THE BUILDING. FOR EXAMPLE, AS PER BALANCE SHEE T AS ON 31.03.2009, DURING THE YEAR WHEN THE SURVEY WAS CONDUCTED, THE WORK-IN PROGRESS SHOWN WAS 42.32 LACS WHEREAS THE ESTIMATED COST OF SAID BUILDING AS PER PAGE 98 WAS 46 LACS. THE NEXT QUESTION IS WHETHER T HE INVOCATION OF PROVISION U/S. 69 OF THE ACT BY THE AO IS JUSTIFIED IN THIS CASE? UNDER THIS SECTION THE VALUE OF INVESTMENTS MADE BY THE A SSESSEE IN A FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR MAY BE DEEMED TO BE INCOME OF THE ASSESSEE OF SUCH FINANCIAL- YEAR, IF - ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 22 - (I) SUCH INVESTMENTS ARE NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AND (II) A) THE ASSESSEE OFFERS NO EXPLANATION ABO UT THE NATURE AND SOURCE OF THE INVESTMENTS, OR (B) THE EXPLANATION OFFERED BY HIM IS, IN THE OPINI ON OF THE ASSESSING OFFICER, NOT SATISFACTORY. A CLOSE READING OF SECTION 69 MAKES IT CLEAR THAT I N ONLY WHERE INVESTMENT HAS BEEN MADE BUT HAS NOT BEEN SATISFACT ORILY EXPLAINED, THE INCOME SHOULD BE TREATED TO BE THE INCOME OF THE AS SESSEE. THAT MEANS ASSET IS SINE QUA NON TO INFER UNEXPLAINED INVESTME NT U/S. 69 OF THE ACT. IF ASSET IS NOT FOUND THERE CANNOT UNEXPLAINED INVE STMENT. AS MENTIONED EARLIER, IN THIS CASE NO ASSET WAS IDENTIFIED BY TH E AO WHICH CAN BE LINKED TO THE UNEXPLAINED INVESTMENT AND THEREFORE, SEC.69 OF THE ACT NOT APPLICABLE. IN VIEW OF THE ABOVE AND CONSIDERING TH E FACTUAL MATRIX OF THIS CASE, THE ADDITION MADE BY THE AO RELYING ON R OUGH WORKING SHEET IS NOT JUSTIFIED AND THEREFORE LIABLE TO BE DELETED . ACCORDINGLY, THE AO IS DIRECTED TO DELETE THE ADDITION. THUS, THIS GROUND OF APPEAL IS ALLOWED. 10. IN THE RESULT, THE APPELLANT'S APPEAL IS ALLOWED. 11.2. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), REVE NUE IS NOW APPEAL BEFORE US. 11.3. BEFORE US, LD.SR.DR SUPPORTED THE ORDER OF A O. LD.AR, ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND SUPPORTED THE ORDER OF LD.CIT(A). 12. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 23 - WE FIND WHILE DELETING THE ADDITION OF UNEXPLAINED INVESTMENT THAT WAS MADE BY AO, THE LD.CIT(A) HAS OBSERVED THAT AO HAD NOT IDENTIFIED THE ASSETS IN WHICH THE AMOUNTS WAS INVESTED AND WHICH WERE NOT DISCLOSED IN THE BOOKS OF ACCOUNT AND NO REASONS WERE RECORDE D IN THE ASSESSMENT ORDER AS TO WHY THE EXPLANATION OFFERED BY THE ASSE SSEE WAS NOT FOUND SATISFACTORY. LD.CIT(A) HAS ALSO NOTED THAT THE PA PERS IMPOUNDED PERTAINED TO FY 2007-08 RELEVANT TO AY 2008-09 BUT THE ADDITIONS HAVE BEEN MADE IN AY 2009-10 AND EVEN IN THE REMAND REPO RT THE AO HAD NOT ADDRESSED THE ISSUE. WE FURTHER FIND THAT THE LD.C IT(A) AFTER EXAMINING THE DETAILS AND EVIDENCES THAT WERE FURNISHED BY TH E ASSESSEE HAS GIVEN A FINDING THAT THE AMOUNTS MENTIONED WERE ESTIMATED F IGURE OF VARIOUS ITEMS FOR THE PROJECT UNDERTAKEN BY THE ASSESSEE AN D THE ENTRIES FOUND IN IMPOUNDED MATERIAL HAD NO LINK TO THE UNEXPLAINED I NVESTMENT. HE HAS FURTHER HELD THAT NO ASSET WAS IDENTIFIED BY THE AO WHICH COULD BE LINKED TO UNEXPLAINED INVESTMENT AND THEREFORE PROVISIONS OF SECTION 69 OF THE ACT WERE NOT APPLICABLE. BEFORE US, REVENUE HAS NO T PLACED ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF THE LD.CIT( A). IN VIEW OF THESE FACTS, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A). THUS, THIS GROUND OF REVENUE IS DISMISSED. 13. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 14. ASSESSEES CROSS OBJECTION NO.186/AHD/2012 FOR AY 2009-10. ITA NO.1881/AHD/12(BY REVENUE) AND CO NO.186/AHD/2012 ITO VS. TWINA POLYPLAST NANI DAMAN ASST.YEAR 2009-10 - 24 - 14.1. BEFORE US, LD.AR SUBMITTED THAT ASSESSEES CR OSS OBJECTION IS JUST SUPPORTIVE OF THE ORDER OF LD.CIT(A) AND NEEDS NO I NDEPENDENT ADJUDICATION. IN VIEW OF THE AFORESAID SUBMISSIO N OF LD.AR, THE CROSS OBJECTION FILED BY ASSESSEE IS DISMISSED. 15. IN THE RESULT, REVENUES APPEAL AND ASSESSEES CROSS OBJECTION ARE DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 29 /0 8 /2016 SD/- SD/- () () (RAJPAL YADAV) ( ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 29/ 08 /2016 3..,.../ T.C. NAIR, SR. PS !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT. 3. 456 7 / CONCERNED CIT 4. 7 ( ) / THE CIT(A)-VALSAD 5. 89:'56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<=+ / GUARD FILE. / BY ORDER, (8' //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD