KRS Fashion Works Private Limited , Bangalore V. Income Tax Officer Ward-4(1)(2), Bangalore

ITA 2802/BANG/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3595 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 02-03-2020
• Assessment Year: 2015-2016
• Appeal Filed On: 05-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Corroborative evidences; Capital expenditure; Set aside
• Section: 69C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER IT A NO S . 2802/BANG/2018 ASSESSMENT YEAR: 2015 - 16 M/S KRS FASHION WORK PVT. LTD. NO.20, SPRINGVILLE, HARLUR ROAD, HSR LAYOUT, BANGALORE - 560102 PAN: AAFCK 2567G VS. THE INCOME TAX OFFICER, WARD 4(1)(2) BANGALORE. APPELLANT RESPONDENT APPELLANT BY : NONE RESPONDENT BY : S MT,R.PREMI, J CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 02.03 .2020 DAT E O F PRONOUNCEMENT : 05 .03 .2020 O R D E R PER PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTA NCE OF THE ASSESSEE AGAINST THE ORDER OF CIT(APPEALS) DATED 31.7.2018 A RISING FROM ASSESSMENT ORDER PASSED BY ASSESSING OFFICER (AO) U/S. 143(3) OF THE INCOME-TAX ACT, 1961 [THE ACT] DATED 31.12.2017 RELATING TO ASSESSM ENT YEAR 2015-16. 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IN THE PR ESENT APPEAL IS TOWARDS WRONG INVOCATION OF SECTION 69C OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. ITA NO. 2802/BANG/2018 PAGE 2 OF 3 3. WHEN THE MATTER WAS CALLED FOR HEARING, NONE APP EARED FOR THE ASSESSEE. ACCORDINGLY THE MATTER WAS PROCEEDED EX PARTE . 4. THE LD. DR RELIED ON THE ORDER OF THE LOWER AUTH ORITIES. 5. WE HAVE PERUSED THE ORDER OF CIT(APPEALS) AND TH E AO AS WELL AS THE MATERIAL PLACED ON RECORD. THE APPLICABILITY O F SECTION 69C IN THE CONTEXT OF THE CASE IS IN CONTROVERSY. THE ASSESSE E IN THE INSTANCE CASE HAS MADE CERTAIN ADDITIONS TO THE FIXED ASSETS DURI NG THE YEAR AMOUNTING TO RS.5,16,723 WHICH WAS RECORDED IN THE BOOKS OF ACCO UNT. THE SUPPORTING EVIDENCE IN THE FORM OF BILLS WERE, HOWEVER, PRODUC ED BEFORE THE AO TO THE EXTENT OF RS.1,10,197 ONLY. THE ADDITIONS TO THE F IXED ASSETS TO THE TUNE OF RS.4,06,526 HAS THUS REMAINED UNSUPPORTED. THE AO INVOKED THE PROVISIONS OF SECTION 69C OF THE ACT IN RESPECT OF DEPRECIATION OF RS.36,421 CLAIMED IN SUCH UNEXPLAINED ADDITIONS TO THE FIXED ASSETS. THE CIT(APPEALS) ALSO AFFIRMED THE ACTION OF THE AO IN THE FIRST APPEAL. 6. ON PERUSAL OF THE ASSESSMENT ORDER, IT IS NOTICE D THAT THE AO HAS DISALLOWED DEPRECIATION ON THE GROUND THAT DOCUMENT ARY PROOF TO SUBSTANTIATE THE ADDITIONS TO THE FIXED ASSETS IS N OT AVAILABLE ON RECORD. FOR SUCH REASONING, IN OUR VIEW, SECTION 69C COULD NOT BE INVOKED. IT IS ADMITTED POSITION THAT REQUISITE ENTRIES IN THE BOO KS OF ACCOUNT HAVE BEEN MADE BY THE ASSESSEE IN RESPECT OF ADDITION TO THE CAPITAL ASSETS. THE SOURCE OF EXPENDITURE THUS FLOWS FROM VARIOUS ENTRI ES IN THE BOOKS. THE CAPITAL EXPENDITURE ON ACCOUNT OF FIXED ASSETS HAS NOT BEEN RECORDED OUTSIDE THE BOOKS. WE SIMULTANEOUSLY NOTICE THAT S ECTION 69C ENCOMPASSES WITHIN ITS AMBIT EXPENDITURE FOR WHIC H THE ASSESSEE FAILS TO OFFER SATISFACTORY EXPLANATION. THE DEPRECIATION I N QUESTION IS IN THE NATURE OF ALLOWANCE/LOSS WHICH CANNOT BE EQUATED WITH EX PENDITURE. THUS, SECTION 69C WOULD NOT APPLY TO AN ITEM OF REVENUE N ATURE, OTHERWISE THAN EXPENDITURE. SECTION 69C, THUS, IN OUR VIEW, HAS N O APPLICABILITY IN THE FACTS ITA NO. 2802/BANG/2018 PAGE 3 OF 3 OF THE CASE. THE ORDER OF THE CIT(APPEALS) IS ACCO RDINGLY SET ASIDE AND THE AO IS DIRECTED TO DELETE THE ADDITION. 7. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS ALL OWED EX PARTE . PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF MARCH, 2020. SD/- ( N V VASUDEVAN ) SD/- ( P RAD I P K UMAR K EDIA ) VICE PRE SIDENT A CCOUNTANT M EMBER BANGALORE, DATED, THE 5 TH MARCH, 2020. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE