THE ITO, WARD-4(1), Nagpur V. MRS. MADHURI CHANDRAKUMAR GUPTA, Nagpur

ITA 22/NAG/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1652 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 20-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Assessee Lawyers: A C BAWANE
• Keywords: Unexplained investment
• Section: 69; 139

Judgement Text

1 ITA NO.22/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T. A. NO. 22 /NAG/201 4 ASSESSMENT YEAR : 200 7 08 . THE INCOME TAX OFFICER, MRS. MADHURI CHANDRAKUMAR GUPTA, WARD 4(1), NAGPUR. V/S. PROP. OF M/S SULABH INDUSTRIES, 1403, DESHPANDE LAYOUT, WARDHAMAN NAGAR, NAGPUR. PAN ADAPG 0556A. APPELLANT RESPONDENT. APPELLANT BY : SHRI NARENDRA KANE. RESPONDENT BY : SHRI A.C. B AWANE. DATE OF HEARING : 18 - 08 - 2015. DATE OF PRONOUNCEMENT : 24 TH SEPT., 2015. O R D E R PER SHRI SHAMIN YAHYA, A.M . THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) I, NAGPUR DATED 27 11 2013 AND PERTAINS TO ASSESSMENT YEAR 2007 08. GROUND OF APPEAL READS AS UNDER : WHETHER ON THE FACTS AND CIRCUMSTAN CES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION OF ` 26,00,000/ MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE IN VALUE OF ASSET SHOWN IN THE TWO AUDITED 2 ITA NO.22/NAG/2014 BALANCE SHEETS PROVIDED TO THE I.T. DEPARTMENT AND TO THE DISTRICT INDUSTRIES CENTRE (DIC) WHICH AMOUNTS TO UNDISCLOSED INVESTMENT OUT OF NON GENUINE AND UNPROVED LOANS. 2. THE BRIEF FACTS OF THE CASE ARE AS UNDER : THE REGULAR RETURN OF INCOME UNDER SECTION 139 WAS FILED ON 29 10 2007 DECLARING TOTAL INCOME AT ` 2,62,0 70/ . THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 2008 09, NOTICED THAT THE ASSESSEE HAS RECEIVED CAPITAL INCENTIVE FROM THE DISTRICT INDUSTRIES CENTRE (DIC). THE DICS SANCTION DOCUMENT SUBMITTED BY THE ASSESSEE SHOWED THE VALUE OF PLANT & MACHINERY ON THE HIGHER SIDE. HENCE THE DOCUMENTS WHICH WERE FILED BY THE ASSESSEE BEFORE THE DIC WERE CALLED FOR FROM DIC OFFICE. THE ASSESSING OFFICER FURTHER PROBED WITH THE DIC ABOUT THE CORRECTNESS OF THE CAPITAL INCENTIVE. THE ASSESS ING OFFICER CAME TO KNOW THAT THE ASSESSEE HAD PURPOSEFULLY SUBMITTED TWO SETS OF BALANCE SHEETS I.E. ONE WAS SUBMITTED TO THE INCOME TAX DEPARTMENT AND ANOTHER TO THE DIC TO OBTAIN ENHANCED SUBSIDY. THE ASSESSING OFFICER TREATED THE DIFFERENCE IN INVESTM ENT BETWEEN THE TWO BALANCE SHEETS AS UNEXPLAINED INVESTMENTS UNDER SECTION 69 OF THE I.T. ACT. 3. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) DELETED THE ADDITION HOLDING AS UNDER : ON CAREFUL EXAMINATION OF THE RECORDS, IT IS SEEN THAT THE AUDITED FIN ANCIAL STATEMENT SUBMITTED BEFORE THE DIC IS AN INDEPENDENT DOCUMENT DISCOVERED BY THE AO , IN THE COURSE OF ASSESSMENT PROCEEDINGS BY CAUSING CERTAIN ENQUIRIES WITH THE DIC. BASED ON SUCH INDEPENDENT EVIDENCE, THE AO HAS PROCEEDED TO MAKE AN ADDITION OF ` . 26 LAKHS AS UNEXPLAINED INVESTMENT WHICH IS NOT FOUND REFLECTED IN THE BOOKS OF ACCOUNT, HOWEVER, 3 ITA NO.22/NAG/2014 IT IS A FACT THAT THE AO HAS NOT TAKEN INTO CONSIDERATION THE LIABILITY SIDE OF THE BALANCE SHEET WHICH IS ALSO ENHANCED BY INSERTION OF EQUIVALENT AMOUNT OF ` . 26 LAKHS UNDER THE HEAD UNSECURED LOANS. THEREFORE, COMING TO THE ARGUMENT THAT IF THE ASSET SIDE IS CONSIDERED, THE LIABILITY SIDE SHOULD ALSO BE CONSIDERED, IT BECOMES CLEAR THAT THE AMOUNT OF ENHANCED FIGURES OF INVESTMENT IN ASSET SIDE AT ` . 2 6 LAKHS EXACTLY TALLY WITH THE AMOUNT OF DIFFERENCE IN LIABILITY SIDE ENHANCED UNDER THE HEAD UNSECURED LOANS IN THE BALANCE SHEET SUBMITTED TO DIC. IN OTHER WORDS, THE DIFFERENCE IN BOTH ASSETS AND LIABILITIES IS ` . 26 LAKHS EACH. THIS SHOWS THAT THE AP PELLANT HAD ATTEMPTED TO BALANCE THE FIGURES OF BALANCE SHEET BY INSERTION OF EQUIVALENT FIGURES OF LIABILITY TO MATCH THE INVESTMENT, AND TALLY THE BALANCE SHEET FAILING WHICH THE BALANCE SHEET WOULD NOT HAVE TALLIED AND AN INCOMPLETE BALANCE SHEET CAN NE ITHER BE CERTIFIED AS AUDITED NOR COULD HAVE BEEN PRODUCED BEFORE THE DIC FOR CLAIMING MORE INCENTIVE, THAN DUE, IN THE FORM OF SUBSIDY. LEARNED CIT(APPEALS) FURTHER PLACED RELIANCE UPON SEVERAL CASE LAWS AND FURTHER HELD AS UNDER : IT IS UNDISPUTED THA T THE BOOKS OF ACCOUNT OF THE APPELLANT ARE DULY AUDITED BY AN AUDITOR AND SUCH BOOKS OF ACCOUNT AND DOCUMENTS ALONG WITH THE RELEVANT BILLS AND VOUCHERS WERE PRODUCED BEFORE THE A.O. FOR VERIFICATION IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE A.O. HAD E XAMINED THE BOOKS OF ACCOUNT AND ACCEPTED THE SAME AS CORRECT WITHOUT ANY INFIRMITY OR DEFECT. THE MOTIVE OF THE APPELLANT TO PROCURE MORE SUBSIDIES FROM DIC BY ENHANCEMENT OF BALANCE SHEET FIGURES HAS ALSO NOT BEEN CHALLENGED. FURTHER THAT, THE ENHANCED F IGURES OF INVESTMENT SIDE OF ` 26 LAKHS IN THE BALANCE SHEET SUBMITTED BEFORE THE DIC FINDS EXACT MATCH WITH THE FIGURES OF ` 26 LAKHS SHOWN IN THE SAME BALANCE SHEET. THUS, THE A.O. COULD NOT HAVE TAKEN ONE FIGURE OF INVESTMENT SIDE IGNORING THE LIABILITY SIDE, WHICH IF WOULD HAVE BEEN CONSIDERED, NU LLIFY THE DIFFERENCE. 4 ITA NO.22/NAG/2014 THEREFORE, KEEPING IN VIEW OF THE JUDICIAL DECISIONS RELIED UPON BY THE APPELLANT AND THE FACTS OPF THE CASE, THE ADDITION MADE BY AO OF ` 26 LAKHS, TO MY CONSIDERED OPINION IS NOT JUSTIF IED, HENCE DIRECTED TO BE DELETED, AS THE RATIO LAID DOWN IN THE JUDICIAL DECISIONS RELIED UPON BY THE APPELLANT ARE SQUARELY APPLICABLE TO THE PRESENT CASE. HENCE, THE GROUND IS ALLOWED. 4. AGAINST THE ABOVE ORDER REVENUE IS IN APPEAL BEFORE US. 5. WE HA VE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT THE ADDITION IN THIS CASE HAS BEEN MADE BY THE ASSESSING OFFICER BY HOLDING THAT THERE IS UNDISCLOSED INVESTMENT IN PLANT AND MACHINERY TO THE TUNE OF ` . 26 LAKHS. NO CASE HAS BEEN MADE OUT B Y THE ASSESSING OFFICER THAT AFTER EXAMINATION OF THE BOOKS AND RECORDS OR BY ANY PHYSICAL VERIFICATION ETC. THE ASSESSING OFFICER FOUND THAT THERE IS UNDISCLOSED INVESTMENT OF ` . 26 LAKHS IN PLANT AND MACHINERY. THE SOLE BASIS OF THE ASSESSING OFFICER IS A BALANCE SHEET SUBMITTED BY THE ASSESSEE TO THE DISTRICT INDUSTR IES CENTRE FOR OBTAINING CAPITAL INCENTIVE. IN THIS BALANCE SHEET A HIGHER INVESTMENT OF ` 26 LAKHS HAS BEEN SHOWN AND AT THE SAME TIME AN HIGHER LIABILITY OF ` 26 LAKHS HAS ALSO BEEN SHOWN. THE ASSESSING OFFICER HAS CHOSEN TO PICK UP THE FIGURE OF PLANT AND MACHINERY FROM THIS BALANCE SHEET AND ADDED THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE. FIRSTLY WE FIND THAT DEHORSE ANY COGENT FINDING JUST A BALANCE S HEET SUBMITTED TO ANOTHER AGENCY CANNOT BE A BASIS OF ADDITION AS UNDISCLOSED INCOME/INVESTMENT. MOREOVER, EVEN IN THE SAID BALANCE SHEET THE SOURCE HAS BEEN SHOWN AS INCREASE IN LIABILITY. HENCE FROM THAT POINT OF VIEW ALSO IT CANNOT BE SAID THAT THERE IS ANY UNDISCLOSED INVESTMENT IN THE PLANT AND MACHINERY. BE AS IT MAY, DEHORSE ANY FINDING OF SUPPRESSION AS PER 5 ITA NO.22/NAG/2014 BOOKS AND RECORDS SIMPLY A BALANCE SHEET FILED WITH D. I . C CANNOT BE A BASIS OF ADDITION OF UNDISCLOSED INVESTMENT IN PLANT AND MACHINERY. FOR TH IS PROPOSITION HONBLE BOMBAY HIGH COURT DECISION IN THE CASE OF CIT V/S. A CROW INDIA LTD. 298 ITR 447 IS RELEVANT. IN THIS CASE IT WAS HELD THAT ADDITION MADE BY SIMPLY RELYING ON THE BASIS OF STOCK STATEMENT GIVEN BY THE ASSESSEE TO THE BANK CANNOT BE S USTAINED. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(APPEALS). ACCORDINGLY WE UPHOLD THE SAME. 6. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF SEPT. , 2015. SD/ SD/ (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR, DATED: 24 TH SEPT., 2015. COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT( A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. BY ORDER TRUE COPY. WAKODE ASSISTANT REGISTRAR, ITAT, NAGPUR