The Deputy Commissioner of Income Tax, Circle-1(1), , Guntur V. Sai Balaji Constructions, , Guntur

ITA 465/VIZ/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9256 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 11-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: P BALA SRINIVAS
• Keywords: Capital asset; Depreciation; Cost of acquisition; Tax effect
• Section: 69C; 143(3); 201; 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER& SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ I.T. A.NO. 465 /VIZ/201 8 ( / A SSESSMENT Y EAR : 20 06 - 07 ) DY . COMMISSIONER OF INCOME TAX CIRCLE - 1 (1) GUNTUR VS. M/S SAI BALAJI CONSTRUCTIONS B - 8, SVN COLONY GUNTUR [PAN : A BAFS6923M ] ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SMT.SUMAN MALIK, DR / RESPONDENT BY : SHRI P.BALA SRINIVAS, AR / DATE OF HEARING : 2 3 . 0 9 . 201 9 / DATE OF PRONOUNCEMENT : 25 .09. 201 9 / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : DELAY : THERE IS A DELAY OF DELAY OF 1 DAY IN FILING THE APPEAL BY THE REVENUE. THE REVENUE FILED CONDONATION PETITION AND REQUESTED TO CONDONE THE DELAY. AFTER GOING THROUGH THE APPLICATION FILED, WE OBSERVE THAT THERE IS 2 I.T.A. NO . 465 /VIZ/201 8 , A.Y.20 06 - 07 M/S SAI BALAJI CONSTRUCTIONS ., GUNTUR SUFFICIENT CAUSE FOR THE DELAY IN FILING THE APPEAL, HENCE, WE CONDONE THE DELAY AND ADMIT THE APPEAL. THIS APP EAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 1, GUNTUR VIDE A PPEAL NO. 99/2014 - 15 DATED 26 .0 6 .201 8 FOR THE ASSESSMENT YEAR (A.Y.) 20 06 - 07 . 2. ALL THE GROUNDS OF APPEAL IN THIS CASE ARE RELATED TO THE ADDITION MADE BY THE ASSESSING OFFICER (AO) U/S 69C OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). THOUGH THE TAX EFFECT IS BELOW RS.50 LAKHS, THE DEPARTMENT HAS RAISED GROUND NO.4 , STATING THAT THIS CASE IS COVERED BY THE EXCEPTIONS PROVIDED UNDER CLAUSE ( C) OF PARA 10 OF CBDT CIRCULAR NO. 03/2018, DATED 11 . 07 . 2018 . THE SAME EXCEPTION IS ALSO PROVIDED IN THE LATEST CIRCULAR ISSUED BY THE BOARD BEARING NO.17/2019 DATED 8 TH AUGUST 2019 . 3. BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.25,16,663/ - AND THE ASSESSMENT WAS COMPLETED U/S 143(3) ON TOTAL INCOME OF RS.25,60,039/ - BY AN ORDER DATED 24.12.2008. 3.1. SUBSEQUENTLY, THE ASSESSING OFFICER (AO) REOPENED THE ASSESSMENT U/S 147 OF THE ACT AND PASSED THE ORDER U/S 143(3) R.W.S. 147 ON 3 I.T.A. NO . 465 /VIZ/201 8 , A.Y.20 06 - 07 M/S SAI BALAJI CONSTRUCTIONS ., GUNTUR 21.03.2014 DETERMINING TOTAL INCOME AT RS.34,95,660/ - . IN THE REASSESSMENT MADE U/S 143(3) R.W.S. 147 OF THE ACT, THE AO MADE THE DISALLOWANCE OF RS.1,54,920/ - U/S 69C OF THE ACT RELATING TO THE PURCHASE COST OF MACHINE RY . IT IS FOUND FROM THE ASSESSMENT ORDER THAT IN THE ORIGINAL ASSESSMENT, THE ASSESSEE HAS STATED TO HAVE PURCHASED THE MACHINERY WORTH RS.1,54,920/ - AND CLAIMED THE DEPRECIATION OF RS.43,376/ - ON THE SAID ASSET . ACCORDING TO THE AO, THE ASSESSEE HAS NO T PURCHASED THE MACHINERY WORTH RS.1,54,920/ - , HENCE MADE THE ADDITION OF THE ENTIRE COST OF ASSET U/S 69C OF THE ACT . 4. AGAINST THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) DELETED THE ADDITION MADE BY THE AO OBSERVING THAT THE PROVISIONS OF SECTION 69C ARE APPLICABLE, IN CASE WHERE THE ASSESSEE FAILED TO EXPLAIN THE SOURCE FOR INCURR ING THE EXPENDITURE. IN THE INSTANT CASE, THE AO HAS NOT DOUBTED THE SOURCE OF THE EXPENDITURE INCURRED , THEREFORE, HELD THAT THERE IS NO CASE FOR MAKING THE ADDITION . FOR THE SAKE OF CLARITY AND CONVENIENCE, WE EXTRACT RELEVANT PART OF THE ORDER OF THE LD.CIT(A) WHICH READS AS UNDER : THE AO MADE AN ADDITION OF RS. 1,54,920/ - U/ S.69C OF THE ACT. IN THE ORIGINAL ASSESSMENT, DEPRECIATION WAS DISALLOWED ON A MACHINERY FOR WHICH PROPER EVIDENCE WAS NOT PRODUCED BY THE APPELLANT. IN THE REASSESSMENT PROCEEDI NGS, THE AO BROUGHT THE COST OF THE MACHINERY TO TAX. IN THIS CONNECTION, THE APPELLANT CLAIMED THAT THE COST OF THE MACHINERY WAS SOURCED FROM THE BOOKS OF ACCOUNT, HENCE, INVOICING THE PROVISIONS OF SEC. 4 I.T.A. NO . 465 /VIZ/201 8 , A.Y.20 06 - 07 M/S SAI BALAJI CONSTRUCTIONS ., GUNTUR 69C OF ACT IS NOT CORRECT. THE SUBMISSIONS MADE BY THE APPELLANT AND THE MATERIAL FACT AVAILABLE ON RECORD HAVE BEEN VERIFIED. IT IS A FACT THAT THE MID1IHEY WAS PURCHASED BUT THE SAME WAS NOT PROVED BEYOND DOUBT WITH PROPER EVIDENCES. IF THE MONEY WAS SPENT OUTSIDE THE BOOKS TO ACQUIRE ANY MACHINERY, THE N SEC. 69C OF THE ACT IS APPLICABLE. HOWEVER, IN THIS CASE, THERE IS NO EVIDENCE BROUGHT ON RECORD BY THE AO TO SAY THAT THE MACHINERY WAS PURCHASED FROM THE FUNDS OUTSIDE THE BOOKS. HENCE, THERE IS MERIT IN THE CONTENTION OF THE APPELLANT AND THIS GROUND IS ALL OWED . THE ADDITION MADE BY THE AO IS HEREBY DELETED. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. AS SEEN FROM THE ASSESSMENT ORDER, THE ASSESSEE HAD FAILED TO PRODUCE EVIDENCE FOR PURCHASE OF MACHINERY WORTH RS.1,54,920/ - . THERE IS NO DISPUTE THAT THE ASSESSEE HAS NOT CLAIMED THE SA ID AMOUNT OF RS.1,54,920/ - AS EXPENDITURE IN THE P&L ACCOUNT. THE ONLY ISSUE IS THE ASSESSEE HAD PURCHASED THE CAPITAL ASSET FOR WHICH THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE TO THE SATISFACTION OF THE AO. AS PER PROVISIONS OF SECTION 69C OF THE ACT, WHERE IN ANY FINANCIAL YEAR, THE ASSESSEE HAD INCURRED ANY EXPENDITURE FOR WHICH THE ASSESSEE FAILED TO EXPLAIN THE SOURCE MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. IN THE INSTANT CASE, THERE IS NO DISPUTE THAT THE AO DID NOT DOUBT THE SOURCE OF EXPENDITURE INCURRED. FROM THE ASSESSMENT ORDER, IT IS FOUND THAT THE AO HELD THAT THE PURCHASE OF ASSET IS NOT ESTABLISHED WITH PROPER EVIDENCE. THEREFORE, THERE IS NO CASE FOR MAKING THE ADDITION U/S 69C OF THE ACT. THUS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) AND THE SAME IS UPHELD. 5 I.T.A. NO . 465 /VIZ/201 8 , A.Y.20 06 - 07 M/S SAI BALAJI CONSTRUCTIONS ., GUNTUR 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH S EPTEMBER, 2019 S D/ - S D/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 25 .09.2019 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1 . / THE REVENUE - DY . COMMISSIONER OF INCOME TAX, CIRCLE - 1 (1), GUNTUR 2. / THE ASSESSEE - M/S SAI BALAJI CONSTRUCTIONS, B - 8, SVN COLONY, GUNTUR 3. THE PR. COMMISSIONER OF INCOME TAX , GUNTUR 4. THE COMMISSIONER OF INCOME TAX (APPEALS) - 1 , GUNTUR 5. , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM