ACIT, Alwar V. SMT. LAXMI SAINI, Alwar

ITA 433/JPR/2012

• Counselvise Citation: 43323114 RSA 2012
• Duration Of Justice: 2 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 04-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Depreciation; Income from undisclosed sources; Revised return
• Section: 133A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 433/JP/2012 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2006-07 THE A.C.I.T. CIRCLE-2, ALWAR CUKE VS. SMT. LAXMI SAINI, PROP- M/S PANKAJ BOTTLE MANUFACTURING CO., F-296(B) I.A. BHIWADI, ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AXPPS 6735 G VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI KAILASH MANGAL (JCIT) FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 09/12/2014 ?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 27/02/2015 VKNS'K @ ORDER PER: T.R. MEENA, A.M. 1. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER DT. 21.02.2012 PASSED BY THE LD. CIT(A), ALWAR FOR A.Y. 2006-07. THE SOLE GROUND OF APPEAL IS AS UNDER:- THAT THE LEARNED COMMISSIONER OF INCOME-TAX (A) HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANC ES OF ITA 433/JP/2012_ ACIT VS. SMT. LAXMI SAINI 2 THE CASE IN RESTRICTING THE ADDITION TO RS. 7,10,48 6/- OUT OF TOTAL ADDITION OF RS. 25,00,000/- ON ACCOUNT OF CONSTRUCTION OF FACTORY BUILDING ADMITTED BY THE AS SESSEE DURING THE COURSE OF SURVEY. 2. THE LD A.O. OBSERVED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF BOTTLES IN THE NAME OF M/S PANKAJ BOTTLE MANUFACTURING COMPANY. A SURVEY U/S 133A WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 29.08.2007. IN SURVEY, STATEMENT OF HUSBAND OF THE ASSESSEE SH. RAMANAND SAINI WAS RE CORDED ON OATH WHICH WAS ENDORSED BY ASSESSEE ALSO. IN THE STATEMENT IN REPLY TO QUESTION NO. 3, IT WAS DEPOSED THAT A PLOT WAS PURCHA SED IN THE NAME OF M/S PANKAJ BOTTLE MANUFACTURING COMPANY IN MAY, 2005 FOR RS. 5,38,000/- AND HAS INVESTED RS. 40,00,000/- ON CONS TRUCTION OF THE PLOT. THE CONSTRUCTION IS STATED TO BE DONE BETWEEN IN NOVE MBER, 2005 TO MARCH, 2006 BUT IN THE BALANCE SHEET AS ON 31.03.20 06 INVESTMENT IN CONSTRUCTION WAS SHOWN AT RS. 15,62,433/- ONLY. WHEN ASSESSEE WAS ASKED TO EXPLAIN THE DISCREPANCY, HE ADMITTED THE D ISCREPANCY AND SURRENDERED RS. 25,00,000/- ON ACCOUNT UNRECORDED I NVESTMENT. HOWEVER THE ASSESSEE VIDE HER LETTER DT. NIL ADDRESS ED TO THE ITO, WARD-2(2), ALWAR SUBMITTED AS UNDER:- ITA 433/JP/2012_ ACIT VS. SMT. LAXMI SAINI 3 AT THE TIME OF SURVEY AT OUR PREMISES THE AMOUNT O F RS. 23,00,000/- WAS SURRENDERED ON ACCOUNT OF UNACCOUNTE D INVESTMENT IN BUILDING. THE INVESTMENT IN BUILDING S ON 31.03.2006 WAS RS. 15.62 LACS. IT WAS ESTIMATED THAT THE TOTAL INVESTMENT IN BUILDING SEEMS TO RS. 38-39 LAC S. THEREFORE DURING THE SURVEY DUE TO DEPRESSION AND JU ST TO GAIN THE SYMPATHY OF THE DEPARTMENT, OUT OF TOTAL ESTIMATED VALUE BY REDUCING THE AMOUNT ACCOUNTED FO R UP TO 31.03.2006 AS INVESTMENT IN BUILDING BALANCE AMO UNT WAS SURRENDERED FOR TAX. LATER ON WHEN WE GONE THROUGH THE BOOKS OF ACCOUNTS FOR THE PERIOD 01.04.2006 TO 31.03.2007, WE FOUND THAT A SUM OF RS. 17.28 LACS HA S BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS IN CONNECTION WITH INVESTMENT IN BUILDING. IN THIS WAY T HE REAL AMOUNT OF SURRENDER COMES TO RS. 7.00 LACS (APPROX), THEREFORE WE HUMBLY REQUEST TO MAKE THE AMENDMENT IN THE STATEMENT LOOKING INTO THE FACTS O F THE CASE. APART FROM IT WE ALSO FOUND THAT WE HAD GIVEN A N ADVANCE OF RS. 16 LACS TO PURCHASE LAND, WHICH WAS NO T CONSIDERED IN OUR BOOKS OF ACCOUNTS AND THE SAME IS SURRENDERED. 3. THE AO IN THE ASSESSMENT PROCEEDINGS OBSERVED THA T IN SURVEY OPERATION THE BALANCE SHEET TAKEN FROM THE COMPUTER AT THE TIME OF SURVEY SHOWS INVESTMENT IN BUILDING AT RS. 15,45,886 /-. THE ASSESSEE IN THE STATEMENT STATED THAT THE CONSTRUCTION WAS START ED IN THE MONTH OF ITA 433/JP/2012_ ACIT VS. SMT. LAXMI SAINI 4 NOVEMBER,2005 AND COMPLETED IN MARCH, 2006. THEREFOR E THE CLAIM OF THE ASSESSEE IN THE LETTER THAT THE SAME CONTINUED TILL THE NEXT YEAR CANNOT BE ACCEPTED MORE PARTICULARLY WHEN NO FURTHER CONSTRUCTION WAS FOUND IN THE PRINT OF BALANCE SHEET FROM 01.04.2007 TO 27.08.2007 TAKEN FROM THE COMPUTER OF THE ASSESSEE. THE AO THER EFORE HELD THAT AS THE ADMISSION OF UNACCOUNTED INCOME IN RESPECT OF C ONSTRUCTION WAS SPECIFIC FOR THE SPECIFIC PERIOD, THE DISCLOSURE OF RS. 7 LACS MADE BY THE ASSESSEE ON THIS ACCOUNT HAS NO MERIT AND THUS ASSE SSED THE INCOME ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION A T RS. 25 LACS AS AGAINST RS. 7 LACS OFFERED BY THE ASSESSEE. 4. BEING AGGRIEVED BY THE ORDER OF THE AO, THE ASSE SSEE CARRIED THE MATTER BEFORE THE LD. CIT(A), ALWAR. THE LD. CIT(A) BY REFERRING TO Q. NO. 9 OF THE STATEMENT OF SH. RAMANAND SAINI RECORD ED ON 28.09.2007 OBSERVED THAT DISCLOSURE ON ACCOUNT OF BUILDING CON STRUCTION WAS MADE AT RS. 23 LACS AND RS. 2 LACS WAS ON ACCOUNT OF LOOS E PAPERS FOUND DURING THE COURSE OF SURVEY. THE ASSESSEE HAS ACCOR DINGLY CORRECTLY SURRENDERED RS. 23 LACS IN THE REVISED RETURN AND T HE AO WAS NOT CORRECT IN TAKING THE INCOME ADMITTED DURING THE SU RVEY AT RS. 25 LACS. ITA 433/JP/2012_ ACIT VS. SMT. LAXMI SAINI 5 IN RESPECT OF THE OBSERVATION OF THE AO THAT UNDISC LOSED INVESTMENT IN BUILDING IS RS. 25 LACS, HE GAVE THE FOLLOWING FINDI NGS:- SECONDLY, IT IS OBSERVED THAT THE AO HAS ASSESSED THE UNDISCLOSED INVESTMENT IN BUILDING AT RS. 25 LACS, SOLELY ON THE BASIS OF THE STATEMENTS RECORDED IN THE COUR SE OF SURVEY AND PRINT OUT OF THE BALANCE SHEET AS ON THE DATE OF SURVEY, WITHOUT LINKING THE SAME TO THE CORROBORA TIVE EVIDENCE FOUND IN THE COURSE OF SURVEY OR AVAILABLE AT THE TIME OF ASSESSMENT BY WAY OF BILLS AND VOUCHERS AND BOOKS OF ACCOUNTS FOR THE AY 2006-07 AND AY 2007-08 . I AM INCLINED TO AGREE WITH THE CONTENTION OF THE AR, IN VIEW OF THE CASE LAWS CITED, THAT AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE. IT IS OPEN TO THE PERSO N WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT. THE ASSESSEE, IN ITS REVISED STATEMENT BY WAY OF THE LE TTER HAS OFFERED RS. 7 LACS ON ACCOUNT OF INVESTMENT IN BUILDING AND RS. 16 LACS ON ACCOUNT OF ADVANCE GIVE N TO PURCHASE LAND NOT RECORDED IN THE BOOKS OF ACCOUNTS . THE ASSESSEE HAS SUBMITTED THAT A SUM OF RS. 17.28 L ACS HAD BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS FOR THE PERIOD 01.04.2006 TO 31.03.2007 AND THEREFORE, THE SURRENDER OF RS. 23 LACS MADE IN THE COURSE OF SURV EY WAS TO BE RESTRICTED TO RS. 7 LACS. THE AO HAS FOUND NO MERIT IN THIS SUBMISSION OF THE ASSESSEE ON THE GRO UND ITA 433/JP/2012_ ACIT VS. SMT. LAXMI SAINI 6 THAT INVESTMENT SHOWN IN THE COMPUTER PRINT OUT OF T HE BALANCE SHEET AS ON THE DATE OF SURVEY WAS RS. 15,45,886/-. FROM THE BALANCE SHEET FILED WITH THE ORIGINAL RETURN FOR AY 2006-07 IT IS SEEN THAT THE INVESTMENT IN THE BUILDING HAS BEEN SHOWN AT RS. 15,62,443/-. THE ASSESSEE HAS SUPPORTED ITS CONTENT ION OF INVESTMENT HAVING BEEN MADE DURING THE FY 2006-0 7 OF RS. 17.28 LACS WITH COPY OF LEDGER ACCOUNT, AUDIT ED BALANCE SHEET AND SCHEDULE OF FIXED ASSETS AND COPY OF BILL VOUCHERS FOR BUILDING CONSTRUCTION MADE BEFORE SURVEY. TOTAL INVESTMENT AS ON 31.03.2007 HAVE BEEN REFLECTED AT RS. 40 LACS IN THE BUILDING CONSTRUCTI ON LEDGER ACCOUNT IN WHICH OPENING BALANCE IS RS. 15,62,443/-, JOURNAL ENTRIES TOTALLING RS. 17,27,07 1/- AND CASH PAYMENTS OF RS. 7,10,486/-. IT HAS BEEN SUBMIT TED THAT SURRENDER AMOUNT WAS WORKED OUT AT APPROXIMATE FIGURE OF RS. 7 LACS WHICH HAS BEEN REFLECTED IN THE LEDGER ACCOUNT BY WAY OF CASH PAYMENTS. CONSIDERING THE ABOVE FACTS AND THE CASE LAWS RELIED UPON BY THE ASSESSEE THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION OF FACTORY BUILDING IS R ESTRICTED TO RS. 7,10,486/-. THE APPELLANT ACCORDINGLY GETS RE LIEF OF RS. 17,89,514/-. 5. NOW THE REVENUE IS IN APPEAL. THE LD. DR VEHEMENTL Y SUPPORTED THE ORDER OF THE AO AND ARGUED THAT WHEN THE ASSESSE E HAS ITA 433/JP/2012_ ACIT VS. SMT. LAXMI SAINI 7 SURRENDERED RS. 25 ,00,000/- IN THE STATEMENT RECOR DED IN SURVEY AFTER SPECIFICALLY STATING THE PERIOD OF CONSTRUCTION AS NOVEMBER, 2005 TO MARCH, 2006 AND THE COST OF CONSTRUCTION AT RS. 40 LACS WHEREAS THE INVESTMENT RECORDED IN THE BOOKS IS ONLY RS. 15.62 LACS, THE ADDITION OF RS. 25 LACS MADE ON ACCOUNT OF UNEXPLAINED INVESTME NT IN CONSTRUCTION IS RIGHTLY MADE BY THE AO AND THEREFORE IT WAS PRAYE D TO REVERSE THE ORDER OF THE LD. CIT(A). 6. AT THE OUTSET, THE LD. AR OF THE ASSESSEE SUBMIT TED THAT IN SURVEY ASSESSEES HUSBAND HAS STATED THAT UNEXPLAINED INVE STMENT IN THE BUILDING IS RS. 23 LACS AND NOT RS. 25 LACS AS TAKE N BY THE AO. FURTHER WHILE MAKING THIS SURRENDER, HE HAS NOT CONSIDERED T HAT RS. 17.28 LACS HAS BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT FOR THE PERIOD 01.04.2006 TO 31.03.2007. THEREFORE IMMEDIATELY AFTE R SURVEY ASSESSEE FILED THE LETTER CLARIFYING THIS POSITION AND OFFER ED RS. 7 LACS ON THIS ACCOUNT AND FURTHER OFFERED RS. 16 LACS ON ACCOUNT OF UNEXPLAINED ADVANCES TO MAKE THE TOTAL SURRENDER AT RS. 23 LACS AS ADMITTED BY HER HUSBAND. SO FAR AS INVESTMENT IN BUILDING CONSTRUCT ION IS CONCERNED, THE ASSESSEE HAS PLACED ON RECORD THAT FOR THE SUBSEQUE NT PERIOD THERE IS AN INVESTMENT OF RS. 17.28 LACS WHICH IS RECORDED I N THE BOOKS OF ITA 433/JP/2012_ ACIT VS. SMT. LAXMI SAINI 8 ACCOUNT. THE FACT THAT THE CONSTRUCTION OF BUILDING WAS NOT COMPLETED UP TO 31.03.2006 IS EVIDENT FROM THE DEPRECIATION C HART WHERE THE BUILDING IS SHOWN UNDER WORK IN PROGRESS AND NO DEPRE CIATION IS CLAIMED. THIS FACT IS NOT DENIED BY THE AO ALSO. FUR THER IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FILED THE BILLS OF CONSTRUCTION FOR THE SUBSEQUENT PERIOD AND THE COPY OF LEDGER AC COUNT OF THE CONSTRUCTION. THE EXPENDITURE ON CONSTRUCTION INCURR ED BY THE ASSESSEE AT RS. 17,27,071/- AS PER THESE BILLS HAS NOT BEEN DOUBTED/DENIED BY THE AO. THE PRINT OUT THE BALANCE SHEET AS ON 27.08. 2007 (I.E. AFTER 1 YEAR OF THE YEAR END), REFERRED BY THE AO IS APPARE NTLY NOT CORRECT IN AS MUCH AS THE AMOUNT OF BUILDING CONSTRUCTION AS PER THIS BALANCE SHEET IS RS. 15,45,886/- WHICH IS LOWER THAN THE AMOUNT OF RS. 15,62,443/- AS ON 31.03.2006. HENCE ON THE BASIS OF THIS COMPUTER GENERATED BALANCE SHEET NO ADVERSE INFERENCE CAN BE DRAWN. IT IS THERE FORE PRAYED TO CONFIRM THE ORDER OF THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE P ARTIES AND PERUSED THE MATERIAL ON RECORD. THE HUSBAND OF THE A SSESSEE IN HIS STATEMENT DT. 29.08.2007 HAS SURRENDERED RS. 25 LAC S ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION BUT AFTER SU RVEY HE FILED A LETTER ITA 433/JP/2012_ ACIT VS. SMT. LAXMI SAINI 9 TO THE AO EXPLAINING THAT FOR THE PERIOD 01.04.2006 TO 31.03.2007 IT HAS RECORDED FURTHER INVESTMENT OF RS. 17.28 LACS IN TH E BOOKS OF ACCOUNTS AND THUS THE TOTAL INVESTMENT AS PER BOOKS OF ACCOU NTS IS RS. 32.90 LACS AS AGAINST RS. 40 LACS ADMITTED IN SURVEY AND THUS REQUESTED TO AMEND THE STATEMENT AND TO CONSIDER THE SURRENDER AGAINST INVESTMENT IN THE CONSTRUCTION AT RS. 7 LACS AS AGAINST RS. 25 LACS M ADE IN THE STATEMENT. THE ASSESSEE IN THIS LETTER ADDITIONALLY SURRENDERED RS. 16 LACS ON ACCOUNT OF ADVANCE GIVEN TO PURCHASE THE LAND WHICH WAS NOT OFFERED IN THE STATEMENT RECORDED IN SURVEY AND FOR WHICH THERE IS NO MATERIAL WITH THE REVENUE ALSO. THIS SHOWS THE BONAFIDE OF THE ASSESSEE. THE ASSESSEE HAS ALSO EXPLAINED THE DISCREPANCY IN THE PRINT OUT OF THE BALANCE SHEET FROM 01.04.2007 TO 27.09.2007 WHICH I S AFTER A PERIOD OF 1 YEAR OF THE END OF THE RELEVANT ASSESSMENT YEAR. THIS APART, THE ASSESSEE HAS FURNISHED THE BILLS FOR CONSTRUCTION F OR THE SUBSEQUENT PERIOD IN COURSE OF THE ASSESSMENT PROCEEDINGS WHICH IS NOT DISPUTED BY THE AO. THEREFORE, WE UPHOLD THE ORDER OF THE CIT(A ) WHERE HE HAS CONSIDERED THE UNEXPLAINED INCOME IN CONSTRUCTION O F BUILDING AT RS. 7,10,486/- AS AGAINST RS. 25 LACS ADDED BY THE AO. ITA 433/JP/2012_ ACIT VS. SMT. LAXMI SAINI 10 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/02/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 27 TH FEBRUARY, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE A.C.I.T., CIRCLE-2, ALWAR 2. IZR;FKHZ @ THE RESPONDENT- SMT. LAXMI SAINI, BHIWADI, ALWAR . 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 433/JP/2012) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR