ACIT, New Delhi V. M/s. Janak Infra Project (P) Ltd., Kanpur

ITA 4152/DEL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6855 (ITAT-DELHI)
• Duration Of Justice: 4 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 25-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Depreciation; Search and seizure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.4152/DEL/2014 ASSESSMENT YEAR: 2009-10 ASST. CIT, CENTRAL CIRCLE-23, NEW DELHI. V. M/S. JANAK INFRA PROJECT (P) LTD., 113/127, SWAROOP NAGAR, KANPUR. TAN/PAN: AABCK 6213B (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI AMIT JAIN, SR.D.R. RESPONDENT BY: SHRI SANJAY KUMAR, CA. DATE OF HEARING: 23 07 2018 DATE OF PRONOUNCEMENT: 25 07 2018 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE IMPUGNED ORDER DATED 26.02.2014 PASSED BY THE CIT(A)-XXXIII, NEW DELHI FOR THE QUANTUM OF ASSESSM ENT PASSED U/S.143(3) FOR THE ASSESSMENT YEAR 2009-10. IN THE GROUNDS OF APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.2,68,68,814/- ON ACCOUNT OF UNACCOUNTED FIXED AS SETS U/S.69B, AS THERE IS MAJOR DISCREPANCY IN THE OBSER VATION OF THE LD. CIT(A) TO THE TUNE OF RS.1,09,81,726/- THAT THE LOSS ON THE SALE OF FIXED ASSETS AS PER BOOKS OF ACCOUNTS IS RE FLECTED IN THE INCREASE OF FIGURE OF P&L A/C (LOSS ON SALE OF FIXE D ASSETS). I.T.A. NO.4152/DEL/2014 2 2. THE BRIEF FACTS ARE THAT, A SEARCH AND SEIZURE ACTION U/S.132 WAS CARRIED OUT ON 19.01.2009 IN THE KURELE GROUP AND ALSO AT THE BUSINESS PREMISES OF THE ASSESSEE. DURING THE COURSE OF SEARCH AND SEIZURE ACTION, A BALANCE SHEE T WAS SEIZED AS ON 9.01.2009 WHICH WAS A TRIAL BALANCE, R EFLECTED VALUE OF FIXED ASSETS OF RS.3,43,89,576/-. DURING T HE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED AUDI TED BALANCE SHEET AS ON 31.03.2009, WHEREIN THE VALUE O F THE FIXED ASSETS WAS SHOWN AT RS.75,37,792. AS PER THE ASSESSING OFFICER NO EXPLANATION WAS FILED BY THE ASSESSEE WI TH RESPECT TO THE SEIZED MATERIAL AND ACCORDINGLY, HE HELD THA T HE HAS NO ALTERNATIVE BUT TO COMPLETE THE ASSESSMENT ON THE B ASIS OF THE RECORD. ACCORDINGLY, HE ADDED THE DIFFERENCE BETWEE N TRIAL BALANCE SHEET AS ON 9.01.2009 AND VALUE OF ASSET SH OWN IN THE AUDITED BALANCE SHEET AS ON 31.03.2009 IN THE F OLLOWING MANNER:- (I) DUE TO DIFFERENCE IN VALUE OF FIXED ASSETS -AS SHOWN IN SEIZED BALANCE SHEET AS ON 09.01.2009 - AS SHOWN IN AUDITED BALANCE SHEET AS ON 31.03.2009 3,43,89,576 75,37,792 2,68,51,784 (II) DUE TO DIFFERENCE IN VALUE OF INVESTMENT -AS SHOWN IN SEIZED BALANCE SHEET AS ON 09.01.2009 - AS SHOWN IN AUDITED BALANCE SHEET AS ON 31.03.2009 17,030 NIL 17,030 ADDITION U/S.69B RS.2,68,68,814 3. BEFORE THE LD. CIT (A), THE ASSESSEE MADE A DETA ILED I.T.A. NO.4152/DEL/2014 3 SUBMISSION AND POINTED OUT THAT DURING THE COURSE O F SEARCH IT WAS EXPLAINED THAT ASSESSEE WAS IN THE PROCESS O F SALE OF ITS ASSETS AND THERE WAS IN THE PROCESS OF CLOSURE OF I TS MANUFACTURING ACTIVITIES AND SAME WAS ALSO SOLD AND THAT IS THE REASON WHY IN THE FINAL AUDITED BALANCE SHEET, THE VALUE OF FIXED ASSETS HAS BEEN REDUCED. IT WAS FURTHER POINT ED OUT THAT THERE WERE CERTAIN MISTAKE IN ENTERING THE OPENING BALANCE AND CLOSING ENTRIES IN THE TRIAL BALANCE AND SUCH A MISTAKE WAS EXPLAINED AND THE EFFECT OF SUCH MISTAKE IN THE SEIZED TRIAL BALANCE WAS POINTED OUT. IN THE SAME MANNER, THE EFFECT OF VARIOUS CLOSING ENTRIES RELATING TO PROFIT AND L OSS ON SALE OF ASSETS AND DEPRECIATION PASSED IN THE YEAR ENDING 3 1 ST MARCH, 2008 WAS EXPLAINED IN THE FOLLOWING MANNER:- SL. NO. PARTICULARS BALANCE AS PER BALANCE SHEET AS ON 31.03.2007 BALANCE AS PER SEIZED TRIAL (1.4.09 TO 5.1.09) BALANCE AS PER BALANCE SHEET AS ON 31.3.2009 REMARKS (I) LAND 22,22,853 22,22,853 22,22,853 NO DIFFERENCE (II) FLAT 5,84,819 (1515,180) - DUE TO SALE OF 21 LACKS IN 31.3.2009 ONLY (III) FACTORY BUILDING 23,86,139 23,86,139 23,86,139 NO DIFFERENCE (IV) PLANT AND MACHINERY 3,07,48,355 2,26,14,319 NIL DUE TO SALE IN 31.3.2008 AND 31.3.2009 AND LOSS THEREON ONLY (V) FIRE EQUIPMENT 46,584 46,584 NIL DUE TO SALE IN 31.3.2008 ONLY. (VI) GENSET 35,38,447 30,63,447 NIL DUE TO DEPRECIATION IN 31.3.2008 AND SALE IN 31.3.2008 I.T.A. NO.4152/DEL/2014 4 AND 31.3.2009 AND LOSS THEREON (VII) LABORATORY EQUIPMENT 1,80,852 1,80,852 NIL DUE TO SALE IN 31.3.2008 ONLY (VIII) FURNITURE & FIXTURE 7,43,353 7,43,353 1,64,929 DUE TO DEPRECIATION AND SALE IN 31.3.2008 LOSS THEREON (IX) COMPUTER 3,91,494.51 3,91,494.51 1,80,093 DUE TO DEPRECIATION IN 31.3.2008 AND 31.3.2009 (X) VEHICLES 33,40,375.77 33,40,375.77 25,83,776. 55 DUE TO SALE IN 31.3.2008 AND LOSS THEREON (XI) ELECTRICAL EQUIPMENT 15,44,189.59 NIL NIL DUE TO SALE IN 31.3.2008 AND LOSS THEREON TOTAL RS. 4,57,27,464.62 4,57,27,464.62 75,37,792.27 4. LD. CIT (A) AFTER CONSIDERING THE ENTIRE FACT S AND MATERIAL ON RECORD OBSERVED THAT THE ENTIRE ADDITIO N MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INV ESTMENT IN THE FIXED ASSETS IS BASED ON TRIAL BALANCE SEIZED D URING THE COURSE OF SEARCH AND SEIZURE OPERATION FROM 01.04.2 008 TILL 09.01.2009 WHEN COMPARED TO THE FINAL BALANCE SHEET AS ON 31 ST MARCH, 2008 FILED ALONG WITH RETURN OF INCOME. IN EXAMINING THE ENTIRE ARGUMENTS AND THE MATERIAL PLA CED ON RECORD. HE FIRST OF ALL LISTED THE MAJOR DISCREPANCY IN THE SEIZED TRIAL AND BALANCE SHEET IN THE FIGURE ON 31 ST MARCH, 2009 IN THE FOLLOWING MANNER:- I.T.A. NO.4152/DEL/2014 5 S.NO. NAME OF THE ASSET FIGURE IN RS. AS PER SEIZED TRIAL AND BALANCE AS ON 9.1.2009 FIGURE IN RS. AS ON 31.3.2009 AS PER BALANCE SHEET FILED ALONGWITH RETURN OF INCOME. 1. PLANT AND MACHINERY 2,26,14,319.01 NIL 2. GENERATOR SET 30,63,447.09 NIL 3. FURNITURE & FIXTURE 7,43,353 1,64,929 4. LOSS AS P & L A/C (ASSET) 26,97,476 28,80,14,095 HE FURTHER NOTED THAT LIABILITY OF SEIZED TRIAL BAL ANCE AND FINAL BALANCE SHEET WERE ALMOST TALLIED WHICH WERE AS UND ER:- SL. NO. NAME OF THE LIABILITY FIGURE IN RS. AS PER SEIZED TRIAL AND BALANCE AS ON 9.1.2009 FIGURE IN RS. AS PER BALANCE SHEET AS ON 31.3.2009 1. SHARE CAPITAL 4,07,05,000 4,07,05,000 2. UNSECURED LOAN 2,20,27,016 2,21,27,016 3. CURRENT LIABILITY 29,13,822 24,15,577 5. ACCORDINGLY, LD. CIT (A) AGREED WITH THE CONTEN TION OF THE ASSESSEE THAT UNDER THE HEAD FIXED ASSETS, TH E SEIZED TRIAL BALANCE DOES NOT TAKE INTO ACCOUNT SALE OF ASSETS/D ISCREPANCY AS POINTED OUT BY THE ASSESSEE AS THERE IS INCREASE IN THE CUMULATIVE LOSS IN BALANCE SHEET; THUS, HE HELD THA T ADDITION MADE BY THE ASSESSING OFFICER AS UNEXPLAINED INVEST MENT U/S.69B AMOUNTING TO RS.2,68,68,814/- SHOULD BE DEL ETED. 6. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL O F THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER AS WE LL AS THE DOCUMENTS REFERRED TO BEFORE US, WE FIND THAT THE A DDITION WHICH HAS BEEN MADE BY THE ASSESSING OFFICER IS SOL ELY BASED ON THE DIFFERENCE IN THE VALUE OF FIXED ASSETS SHOW N IN THE SEIZED TRIAL BALANCE AS ON 09.01.2009 AND THE AUDIT ED BALANCE I.T.A. NO.4152/DEL/2014 6 SHEET AS ON 31 ST MARCH, 2009. NOWHERE FROM THE RECORDS, IT IS BORNE OUT THAT ANY UNACCOUNTED FIXED ASSETS OR INVE STMENTS WAS FOUND DURING THE COURSE OF SEARCH AND THE ENTIR E VARIATION IN THE FIGURES IN THE BALANCE SHEET AS ON 09.01.2009 WAS FULLY EXPLAINED BY BRINING ON RECORD THAT FIXED ASSETS WERE SOLD DURING THE YEAR FOR WHICH CERTAIN COMPUTA TION FOR LONG TERM CAPITAL GAIN HAS BEEN SHOWN BY THE ASSESS EE. THE DIFFERENCE IN THE FIGURE OF ASSET MAINLY RELATES TO PLANT & MACHINERY, FIRE EQUIPMENT, GENSET, LABORATORY EQUIP MENTS, FURNITURE AND FIXTURE, COMPUTER, ETC AND THE DIFFER ENCE IS PURELY ON ACCOUNT OF SALE OF ASSETS AND CLAIM OF DE PRECIATION MADE UNDER VARIOUS HEADS WHICH HAS NOT BEEN CONSIDE RED IN THE TRIAL BALANCE. SUCH A DIFFERENCE HAS BEEN AGAIN SOUGHT TO BE EXPLAINED THAT IT WAS DUE TO MISTAKE IN THE PRES ENTATION OF ASSETS IN THE ACCOUNTS WITHOUT TAKING INTO ACCOUNT THE SALE OR ADJUSTMENT BY WAY OF DEPRECIATION. THE ASSET SIDE D ECREASE IN THE PLANT & MACHINERY IN FINAL AUDITED BALANCE SHEE T IS COMPENSATED BY INCREASE IN LOSS AS PER P&L ACCOUNT AND HAD THERE BEEN ANY UNEXPLAINED INVESTMENT IN ASSETS, TH EN THERE SHOULD HAVE BEEN UNACCOUNTED LIABILITY ALSO IN THE TRIAL BALANCE. IN ABSENCE OF ANY BOGUS LIABILITY IN THE T RIAL BALANCE, THERE COULD NOT BE ANY UNACCOUNTED INVESTMENT AND OTHERWISE THE TRIAL BALANCE TALLIES WITH THE TOTAL DEBIT AND CREDIT OF THE PLANT & MACHINERY WHICH ARE OTHERWISE REFLECTED NOT ONLY IN THEIR EARLIER YEARS BALANCE SHEET, BUT ALSO SAME HAS BEEN SOLD DURING THE YEAR WHICH HAS LED TO REDU CTION IN THE FINAL VALUE OF ASSET. THUS, THE FINDING OF THE ASSESSING I.T.A. NO.4152/DEL/2014 7 OFFICER FOR MAKING THE ADDITION SIMPLY ON THE BASIS OF DIFFERENCE IN THE TRIAL BALANCE SHEET AS ON 09.01.2 009 AND FINAL AUDITED BALANCE SHEET AS ON 31.03.2009 IS COM PLETELY MISPLACED AND THE ADDITION MADE ON ACCOUNT OF SUCH A DIFFERENCE CANNOT BE SUSTAINED ON FACTS. ACCORDINGL Y, THE ORDER OF THE LD. CIT (A) IS CONFIRMED AND THE GROUN DS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JULY, 2018. SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 25 TH JULY, 2018 PKK: