Appeal details
Counselvise Citation
[2016] 133 COUNSELVISE.COM (IT) 0689 (ITAT-AMRITSAR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 9 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
13-06-2016
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
31-05-2016
Assessment Year
2011-2012
Appeal Filed On
29-08-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NOS.388 & 537(ASR)/2014 ASSESSMENT YEARS:2010-11 & 2011-12 PAN: AAACK1375K DY. COMMR. OF INCOME TAX, VS. M/S. KHANNA PAPER MIL LS LTD., CENTRAL CIRCLE, AMRITSAR. FATEHGARH CHURIAN ROAD, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH.UMESH TAKKYAR, DR RESPONDENT BY: SH.SATISH BANSAL, CA DATE OF HEARING: 31/05/2016 DATE OF PRONOUNCEMENT: 13/06/2016 ORDER PER A.D. JAIN, JM THESE ARE THE DEPARTMENTS APPEALS FOR THE ASSESSM ENT YEARS 2010-11 & 2011-12, AGAINST THE ORDERS, DATED 20.03. 2014 & 12.06.2014, PASSED BY THE LD. CIT(A)-1, LUDHIANA. AS THE ISSU E INVOLVED IN BOTH THE APPEALS IS IDENTICAL, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON AND CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE GROUNDS RAISED BY THE DEPARTMENT IN ITA NO.3 38(ASR)/2014, FOR THE ASSESSMENT YEAR 2010-11 ARE REPRODUCED HERE UNDER, WHICH ARE SIMILAR IN ITA NO.537(ASR)/2014 FOR THE A.Y. 2011-1 2, EXCEPT VARIATION IN AMOUNT: ITA NOS. 388 & 537(ASR)/2014 ASSESSMENT YEARS: 2010-11 & 2011-12 2 1. THAT THE LD. CIT(A)-1, LUDHIANA HAS ERRED IN DEL ETING THE ADDITION OF RS. 19,34,70,868/- BY HOLDING IT AS REL ATABLE TO THE BUSINESS INCOME. 2. THAT THE LD. CIT(A)-1, LUDHIANA HAS ERRED IN HOL DING THAT THE ADDITIONAL INCOME OF RS. 12.50 CRORES ON ACCOUNT OF EXCESS STOCK DECLARED BY THE ASSESSEE IS BUSINESS INCOME A ND NOT INCOME FROM OTHER SOURCES. 3. THAT THE LD. CIT(A)-1, LUDHIANA HAS ERRED IN HOL DING THAT THE JUDGEMENT OF PUNJAB & HARYANA HIGH COURT IN THE CAS E OF M/S KIM PHARMA (P) LTD. V/S CIT ITA NO. 106 OF 2011 IS DISTINGUISHABLE ON FACTS AND HENCE NOT APPLICABLE I N THIS CASE. 4(I). THAT THE LD. CIT(A)-1, LUDHIANA HAS ERRED IN DELETING THE ADDITION OF RS.19,34,70,868/- INCLUDING RS. 12.50 C RORES ON ACCOUNT OF EXCESS VALUATION OF STOCK, HOLDING THAT IF THE SAME IS NOT ON ACCOUNT OF QUANTITY THE ONLY INESCAPABLE CONCLUSION IS THAT DIFFERENCE IS ON ACCOUNT OF VALU ATION AND SAME HAD BEEN DULY ADMITTED BY THE APPELLANT. THIS BEING SO, THE ASSESSEE ACCORDINGLY CREDITED THE SAID EXCE SS AMOUNT IN HIS PROFIT AND LOSS ACCOUNT AND WORKED OUT THE R ESULTANT FIGURE OF NET PROFIT AFTER CLAIMING THE VARIOUS EXP ENSES AS PER BOOKS OF ACCOUNTS. THE ASSESSING OFFICER HAS NOT BE EN ABLE TO BRING ON RECORD ANY ITEM OF EXPENDITURE WHICH HA S BEEN FOUND TO BE EITHER BOGUS OR EXCESSIVE. 4(II). THAT THE LD. CIT(A)-1, LUDHIANA HAS ERRED I N NOT APPRECIATING THE FACTS THAT IF THE DISCLOSURE OF AD DITIONAL INCOME WAS ON ACCOUNT OF VALUATION OF STOCK, THE EX CESS AMOUNT OF VALUATION REPRESENT THE AMOUNT PAID BY TH E ASSESSEE REPRESENTING UNEXPLAINED INVESTMENT IN EXC ESS VALUATION OF STOCK OF RS. 12.50 CRORES, ON ACCOUNT OF EXCESS VALUATION OF STOCK, INCOME OF WHICH HAS RIGHTLY BEE N ASSESSED AS INCOME FROM OTHER SOURCES. 5. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE G ROUNDS OF APPEAL ON OR BEFORE IS HEARD AND DISPOSED OFF. 6. IT IS PRAYED THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), BE SET-ASIDE AND THAT OF THE AO BE R ESTORED ON MERITS. ITA NOS. 388 & 537(ASR)/2014 ASSESSMENT YEARS: 2010-11 & 2011-12 3 3. THE DEPARTMENT HAS ALSO TAKEN AN ADDITIONAL GROU ND OF APPEAL, WHICH READS AS UNDER: THAT THE LD. CIT(A)-I, LUDHIANA HAS ERRED IN NOT A PPRECIATING THE FACTS THAT THE ASSESSEE HAS A NET INCOME OF RS. 12. 5 CRORES ON ACCOUNT OF INVESTMENT IN UNACCOUNTED AND UNEXPLAINE D CLOSING STOCK. THE SAID INCOME HAS TO BE ASSESSED U/S 69B O F THE INCOME TAX ACT, 1961 AS DEEMED INCOME AND NOT AS PART OF I TS BUSINESS INCOME AND NO EXPENSES CLAIMED AGAINST IT CAN BE AL LOWED AS BUSINESS EXPENSES NOR ANY BUSINESS LOSS BE ALLOWED TO GET SET-OFF U/S 70 & 71 OF THE INCOME TAX ACT, 1961 AS MENTIONE D IN THE ASSESSMENT ORDER. 4 THE ADDITIONAL GROUND OF THE DEPARTMENT IS ADMITT ED IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F NATIONAL THERMAL POWER CO. LTD. VS. CIT, 229 ITR 383(SC). 5. THE BRIEF FACTS OF THE CASE, AS RECORDED BY THE A.O. IN PARA 3 OF THE ASSESSMENT ORDER ARE THAT THE SEARCH PROCEEDINGS U/ S 132(2) OF THE INCOME TAX ACT, 1961 ON THE FACTORY PREMISES OF THE ASSESSEE COMPANY LED TO INVENTORIZATION OF THE AVAILABLE STOCKS OF T HE AVAILABLE STOCKS WHICH WERE VALUED AT RS.2,34,44,49,901/- THE VALUE OF THE CLOSING STOCK AS PER BOOKS OF ACCOUNT WAS RS.2,01,57,55,233/-. THE EXCES S STOCK OF RS.32,86,94,668/- WAS ADMITTED BY THE DIRECTOR OF T HE ASSESSEE COMPANY TO BE UNEXPLAINED AS ONE PARTICULAR SEIZED DOCUMENT AT ANNEXURE A-27 OF PAGE 11 ALSO RECORDED THE EXCESS STOCK AS DISCOV ERED ON PHYSICAL INVENTORIZATION. THE ASSESSEE COMPANY DISCLOSED AN AMOUNT OF RS.34,50 CRORES U/S 132(4) IN THE TWO ASSESSMENT YEARS, I.E ., RS.12.50 CRORES IN AY 2010-11 AND RS.22 CRORES IN AY 2011-12. THE AO A LSO OBSERVED THAT ITA NOS. 388 & 537(ASR)/2014 ASSESSMENT YEARS: 2010-11 & 2011-12 4 THE ASSESSEE HAD INCLUDED THE ABOVE DISCLOSED INCO ME OF RS.12.50 CRORES IN ITS PROFIT AND LOSS ACCOUNT AND THE RETURNED IN COME AFTER THE SAID INCLUSION WAS AT RS.2,25,16,123/-. THE RETURNED INC OME FOR AY 2009-10 WAS RS.6,81,78,801/-, DESPITE THE INCREASE IN TURN OVER IN THE CURRENT ASSESSMENT YEAR BY AN AMOUNT OF RS.1,81,39,28,100/- . THE AO, THEREFORE, TREATED THE DISCLOSED INCOME OF RS.12.50 CRORES AS INCOME FROM OTHER SOURCES RATHER THAN INCOME FROM BUSINE SS AND PROFESSION, AS DONE BY THE ASSESSEE. 6. AGGRIEVED BY THE ORDER, THE ASSESSEE WENT IN APP EAL BEFORE THE LD. CIT(A), WHO DELETED THE ADDITION MADE BY THE AO BY OBSERVING, AS FOLLOWS: 8. I HAVE CONSIDERED THE FACTS OF THE CASE, THE BASIS OF ADDITION MADE BY THE ASSESSING OFFICER AND THE ARGUMENTS OF THE AR ON THE ISSUE DURING ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS. THE SEARCH PROCEEDIN GS UNDER SECTION 132 OF INCOME TAX ACT, 1961 IN THE CA SE OF THE APPELLANT HAD LED TO DISCREPANCY IN THE TOTA L VALUE OF THE STOCK AND THE SAME HAD BEEN WORKED OUT AT RS.12.50 CRORE. THE SAID DISCREPANCY IS VERY CLEARL Y NOT ON ACCOUNT OF ANY UNACCOUNTED PURCHASES IN TERMS OF QUANTITY OR WITH REFERENCE TO ANY SPECIFIC PURCHASE BILL. THE TOTAL VALUE OF THE STOCK WORKED OUT AT RS.12.50 CRORES IS EXPLAINED BY THE APPELLANT ON ACCOUNT OF DIFFERENCE IN VALUATION AND THE SAME HAS ALSO BEEN APPARENTLY RECORDED IN DOCUMENT SEIZED DURING THE COURSE 0F SEARCH OPERATION ON SPECIFICALLY SAME AMO UNT AND WITH THE SAME DESCRIPTION. IT IS ALSO CLEAR THA T THE APPELLANT HAS NOT RETRACTED FROM THE FACT OF EXCESS STOCK IN TERMS OF VALUE AND HAS ACCORDINGLY CREDITE D THE DISCLOSED AMOUNT OF RS.12.50 CRORE IN HIS PROFIT & LOSS ACCOUNT AS ADMITTED IN THE STATEMENT MADE UNDER SECTION 132(4) OF THE INCOME TAX ACT, 1961. THE ASSESSING OFFICER HAS TIME AND AGAIN TRIED TO RAISE THE ITA NOS. 388 & 537(ASR)/2014 ASSESSMENT YEARS: 2010-11 & 2011-12 5 ISSUE THAT THE IMPUGNED DISCREPANCY IN THE VALUATIO N OF STOCKS WAS NOT ON ACCOUNT OF VALUATION/APPLICATION OF RATES BUT ON ACCOUNT OF SOME OTHER DISCREPANCY. I D O NOT AGREE AS TO HOW THIS VIEW COULD BE MAINTAINED IN TH E ABSENCE OF ANYTHING TO CORROBORATE THE SAME. IT IS VERY SIMPLE THAT THE DISCREPANCY IN STOCKS FOUND COULD B E EITHER ON ACCOUNT OF QUANTITY OR ON ACCOUNT OF VALU ATION. IF THE SAME IS NOT ON ACCOUNT OF QUANTITY THE ONLY INESCAPABLE CONCLUSION IS THAT DIFFERENCE IS ON ACC OUNT OF VALUATION AND SAME HAD BEEN DULY ADMITTED BY THE APPELLANT. THIS BEING SO, THE ASSESSEE ACCORDINGLY CREDITED THE SAID EXCESS AMOUNT IN HIS PROFIT & LOS S ACCOUNT AND WORKED OUT THE RESULTANT FIGURE OF NET PROFIT AFTER CLAIMING THE VARIOUS EXPENSES AS PER B OOKS OF ACCOUNTS. THE ASSESSING OFFICER HAS NOT BEEN ABL E TO BRING ON RECORD ANY ITEM OF EXPENDITURE WHICH HAS B EEN FOUND TO BE EITHER BOGUS OR EXCESSIVE. NO DOCUMENTS HAVE BEEN FOUND DURING THE COURSE OF SEARCH OPERATI ON TO SUGGEST THAT THE ASSESSEE HAD BOOKED ANY BOGUS EXPENSES WHICH COULD NOT BE VERIFIED. THE INCOME DISCLOSED BY THE ASSESSEE IS DIRECTLY ON ACCOUNT OF DISCREPANCY IN THE STOCKS OF THE APPELLANT CONCERN AND THEREFORE AS PER CORRECT ACCOUNTING PRINCIPLES THE SAME HAD BEEN CREDITED IN THE PROFIT AND LOSS ACCOUNT. T HE ASSESSING OFFICER'S CONTENTION THAT THE SAID DISCRE PANCY COULD NOT BE TERMED OR TREATED BEING ON ACCOUNT OF BUSINESS BUT ON ACCOUNT OF ANYTHING OTHER THAN BUSINESS AND HENCE UNDER THE HEAD 'INCOME FROM OTHE R SOURCES' IS NOT LOGICAL AT ALL. THE JUDGMENT OF HON 'BLE PUNJAB AND HARYANA HIGH COURT HAS BEEN APPLIED BY THE ASSESSING OFFICER ON THE GROUND THAT THE DISCREPANCY WAS UNDER THE HEAD 'INCOME FROM OTHER SOURCES' AND THEREFORE NO SETTING OFF OF LOSSES COU LD BE ALLOWED. IF THE JUDGMENT OF HON'BLE PUNJAB & HARYAN A HIGH COURT IN THE CASE OF M/S KIM PHARMA V/S CIT V IDE ITA NO. 106 OF 2011 RELIED UPON BY THE ASSESSING OFFICER IS READ IN DETAIL, THEN IT BECOMES ABUNDANT LY CLEAR THAT THERE HAS BEEN CLEAR DISTINCTION BETWEEN INCOME UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION' AND INCOME UNDER THE HEAD INCOME FROM ITA NOS. 388 & 537(ASR)/2014 ASSESSMENT YEARS: 2010-11 & 2011-12 6 OTHER SOURCES. THE HONBLE COURT HAS UPHELD THE TREATMENT OF ADDITIONAL INCOME OF RS. 10 LACS ON ACCOUNT OF SUNDRY CREDITS, REPAIRS TO BUILDING AND ADVANCES TO STAFF TO BE TREATED UNDER THE HEAD 'INC OME FROM BUSINESS AND PROFESSION' AND SAME WAS DIRECTLY RELATABLE TO THE BUSINESS OF THE APPELLANT. IT WAS ONLY IN RESPECT OF CASH FOUND TO THE TUNE OF RS.5 LACS T HAT NO CLEAR SOURCE COULD BE ESTABLISHED BY THE ASSESSEE A ND THEREFORE SAME IS TO BE TREATED UNDER THE HEAD 'INC OME FROM OTHER SOURCES'. THE FACTS IN THE CASE OF THE APPELLANT ARE CLEARLY SUCH THAT THE DISCREPANCY ON ACCOUNT OF STOCK VALUATION CANNOT BE TREATED UNDER ANY OTHER HEAD BUT INCOME FROM BUSINESS AND PROFESSION AS ENTIRE QUANTITY OF STOCK IS CORRECTLY RECORDED IN T HE BOOKS OF ACCOUNTS MAINTAINED BY THE APPELLANT AND DESPITE SEARCH CONDUCTED IN THE CASE OF THE APPELLA NT, NO DISCREPANCY IN THE STOCK HAS BEEN BROUGHT ON REC ORD. THEREFORE, I AM OF THE CONSIDERED OPINION THAT JUDG MENT OF HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CAS E OF M/S KIM PHARMA V/S CIT ITA NO. 106 OF 2011 HAS BEEN WRONGLY APPLIED TO THE FACTS OF THE CASE OF TH E APPELLANT. THE ASSESSEE DESERVES TO SUCCEED ON THIS GROUND. IT IS ALSO TO BE APPRECIATED THAT THE ASSES SEE HAS NOT CLAIMED ANY BROUGHT FORWARD OR SET OFF OF L OSSES AND ONLY WORKED OUT ITS INCOME AS PER THE BOOKS OF ACCOUNTS AFTER CREDITING IMPUGNED AMOUNT OF RS. 12. 50 CRORES. IF THE ASSESSING OFFICER HAD FOUND ANY DISALLOWABLE EXPENDITURE TO SHOW THAT ASSESSEE HAD MANIPULATED ITS BOOKS OF ACCOUNTS TO BRING DOWN ITS TOTAL INCOME, THEN THE CASE WOULD HAVE BEEN DIFFERE NT. SINCE NO SUCH EVIDENCE HAS BEEN BROUGHT ON RECORD T O EVEN SUGGEST THAT THE ASSESSEE HAD BOOKED BOGUS EXPENDITURE, THERE IS NO REASON TO DOUBT THE VERACI TY OF BOOKS OF ACCOUNTS AND HENCE THE EXPENDITURE DEBITED THEREIN. THE APPELLANT COMPANY IN FACT HAD NOT SET OFF ANY LOSSES UNDER SECTION 70 & 71 OF THE INCOME TAX ACT, 1961. THE POSITION OF TAXABLE INCOME AS SUBMIT TED BY THE APPELLANT TO SUPPORT HIS CASE IS AS UNDER:- ITA NOS. 388 & 537(ASR)/2014 ASSESSMENT YEARS: 2010-11 & 2011-12 7 PARTICULARS AMOUNT NET PROFIT BEFORE DEPRECIATION 465450761 LESS: SURRENDERED AMOUNT 125000000 340450761 EXPENSES ADDED BACK AS PER COMPUTATION 8937468 LES: EXPENSES ALLOWABLE AS PER COMPUTATION 10399386 PROFIT BEFORE DEPRECIATION & SURRENDERED AMOUNT 338988843 LESS: DEPRECIATION FOR THE CURRENT YEAR 441472720 UNABSORBED DEPRECIATION OF CURRENT YEAR (102483877) LESS: SURRENDERED AMOUNT 125000000 GROSS TOTAL INCOME 22516123 IN VIEW OF THE ABOVE DETAILED ANALYSIS, FACTS AND CIRCUMSTANCES OF THE CASE, THERE IS NO LOGICAL BASI S FOR THE ASSESSING OFFICER TO MAKE ADDITION OF RS.12.50 CROR ES. THE SAME IS THEREFORE DIRECTED TO BE DELETED. 9. IT IS ALSO SEEN THAT THE ASSESSING OFFICER HAS G ONE ONE STEP FURTHER AND DISALLOWED 26% OF VARIOUS EXPENSES DEBITED IN PROFIT & LOSS ACCOUNT DEEMING THE SAME T O BE UNACCOUNTED WITH REFERENCE TO REVALUATION OF STOCK OF RS. 12.50 CRORE. THERE IS NO NEXUS BETWEEN THE EXPENSES CLAIMED AND THE DISALLOWANCE MADE ON ONE HAND AND T HE REVALUATION OF STOCKS ON THE OTHER HAND. NO SPECIFI C EXPENSE HAS BEEN HIGHLIGHTED IN TERMS OF ITS DISALLOWABILITY UNDER SECTION 37(I). IT HAS ALSO NO T BEEN POINTED OUT THAT THERE WAS ANY BOGUS EXPENSE OR INF LATED EXPENSE. THE ASSESSING OFFICER HAS MERELY PROCEEDED TO DEEM 26% OF THE ENTIRE SET OF EXPENDITURE AS DISALL OWABLE ON THE PRESUMPTION THAT THE SAME PERTAINS TO THE REVALUATION OF STOCK TO THE TUNE OF RS.12.50 CRORE. I AM NOT ABLE TO RECONCILE WITH THE BASIS ADOPTED BY THE ASS ESSING OFFICER TO REJECT THE BOOKS OF ACCOUNTS AND ALSO TO DEEM 26% OF VARIOUS EXPENSES DULY SUPPORTED BY BOOKS OF ACCOUNTS AND VOUCHERS TO BE DISALLOWABLE. THE ADDIT ION ON ACCOUNT OF SUCH PRESUMPTIVE DISALLOWANCE IS DIRECTE D TO BE DELETED. ITA NOS. 388 & 537(ASR)/2014 ASSESSMENT YEARS: 2010-11 & 2011-12 8 7. THE LD. DR CONTENDED THAT THE LD. CIT(A) HAS ERR ED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE HAS A NET I NCOME OF RS.12.5 CRORES ON ACCOUNT OF INVESTMENT IN UNACCOUNTED AND UNEXPLAINED CLOSING STOCK. HE FURTHER SUBMITTED THAT THE SAID INCOME H AS TO BE ASSESSED U/S 69B OF THE ACT AS DEEMED INCOME AND NOT AS PART OF ITS BUSINESS INCOME AND NO EXPENSES CLAIMED AGAINST IT CAN BE ALLOWED A S BUSINESS EXPENSES NOR ANY BUSINESS LOSS BE ALLOWED TO BE SET OFF U/S( S) 70 & 71 OF THE I.T. ACT, 1961. 8. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND SUBMITTED THAT THE ISSUE INVOLVED IN PRESENT APPEALS IS SQUARELY C OVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE RECENT DECI SION OF THIS BENCH OF THE TRIBUNAL, DATED 19.05.2016, IN THE CASE OF J.B . RESORTS, FAZILKA VS. INCOME TAX OFFICER, ABOHAR, PASSED IN ITA NO.488(A SR)/2015 FOR THE ASSESSMENT YEAR 2011-12 AND REQUESTED THAT THE APPE ALS OF THE DEPARTMENT MAY BE DISMISSED. 9. HAVING HEARD BOTH THE PARTIES IN THE LIGHT OF TH E MATERIAL PLACED ON RECORD, WE ARE OF THE CONSIDERED VIEW THAT THE FAC TS AND CIRCUMSTANCES OF THE ISSUE INVOLVED IN THE PRESENT APPEALS ARE SIMI LAR, AS WERE DECIDED RECENTLY BY THIS BENCH OF THE TRIBUNAL, IN THE CASE OF J.B. RESORTS, FAZILKA VS. INCOME TAX OFFICER, ABOHAR, PASSED IN ITA NO.488(ASR)/2015 FOR THE ASSESSMENT YEAR 2011-12. THE RELEVANT FINDI NGS GIVEN THEREIN, ARE AS UNDER: ITA NOS. 388 & 537(ASR)/2014 ASSESSMENT YEARS: 2010-11 & 2011-12 9 8. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE M ATERIAL AVAILABLE ON RECORD. APROPOS THE CONTENTION OF THE LD. DR THAT GAURISH STEELS P. LIMITED (SUPRA), IS PER INCURIA M KIM PHARMA P. LIMITED (SUPRA). THESE ARE ONE AT ONE WITH THE LD. DR. IN GAURISH STEELS P. LIMITED (SUPRA), THE TRIBUNAL HAS TAKEN NOTE OF THE FACT THAT IN KIM PHARMA P. LIMITED (SUPRA), THE ONLY ISSUE WAS TAXABILITY OF THE CASH SURRENDERED DURING THE COURSE OF SURVEY, W HICH WAS ALSO GIVEN IN GAURISH STEELS P. LIMITED (SUPRA). THE T RIBUNAL HELD THAT THE OTHER AMOUNT SURRENDERED, ON ACCOUNT F DISCREPA NCY IN THE COST OF CONSTRUCTION, DISCREPANCY IN STOCK AND DISCREPA NCY IN ADVANCES AND RECEIVABLE, HAS TO BE CONSIDERED AS BUSINESS IN COME, WHEREAS THE CASH SURRENDERED WAS NOT TO BE SO CONSIDERED. I T HAS NOT BEEN SHOWN AS TO HOW THIS ACTION OF THE TRIBUNAL IN GA URISH STEELS P. LIMITED (SUPRA), IS AT VARIANCE WITH KIM PHARMA P . LTD. (SUPRA). ACCORDINGLY, THIS ARGUMENT OF THE LD. DR IS REJECTE D. 9. NOW COMING TO THE FACTS OF THE PRESENT CASE, IN THE SURVEY CONDUCTED, THE ASSESSEE OFFERED RS.10 LAKHS AS ADDI TIONAL INCOME. THE QUESTION AS TO WHETHER THIS CASH IS RELATABLE T O THE BUSINESS OF THE ASSESSEE, IN ACCORDANCE WITH KIM PHARMA P. LIM ITED (SUPRA) AND IF SO, WHETHER IT IS NOT A BUSINESS INCOME. TH E SURVEY IN THIS CASE WAS CONDUCTED ON 24.01.2011. THE ASSESSEE MAIN TAINS THAT ITS MARRIAGE PALACE WAS STARTED BEING LET OUT FROM 10.1 0.2010. A COPY OF THE LEDGER ACCOUNT CONTAINING THE BUILDING ACCOU NT HAS BEEN PLACED ON RECORD IN THE ASSESSMENT PROCEEDINGS. THE SAME HAS BEEN FILED BEFORE US ALSO. THIS IS ALSO FOR THE PERIOD F ROM 01.04.2010 TO 31.03.2011. THE OPENING BALANCE THEREOF STANDS AT R S.34,03,578/-. AS ON 24.01.2011, THE AMOUNT DEBITED ON ACCOUNT OF BUILDING IS RS. 10,00,000/-. AS PER LEDGER ACCOUNT, THE PALACE INCO ME FOR THE PERIOD 01.04.2010 TO 31.03.2011 HAS BEEN SHOWN AT RS.4,65, 000/-. NOW, THE AO ASSESSED THE AMOUNT OF RS.4,65,000/- AS BUSI NESS INCOME. THIS INCLUDED THE RECEIPTS AMOUNTING TO RS.3,44,000 /- FOR THE PERIOD FROM 10.10.2010 TO 16.01.2011, AS ACCOUNTED FOR IN THE PALACE INCOME OF THE ASSESSEE IN THE LEDGER. THIS INCOME H AS BEEN SHOWN ON ACCOUNT OF LETTING OUT OF THE MARRIAGE PALACE FO R THE PERIOD FROM 10.10.2010 TO 16.01.2011. AS SUCH, AS RIGHTLY CONTE NDED. THE AO HAS ACCEPTED THIS INCOME OF THE ASSESSEE AS BUSINES S INCOME. THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE FOR THE PERIO D FROM 04.02.2011 TO 31.03.2011. SHOWN PALACE INCOME BY RS.4,65,000/- , THE DETAILS OF WHICH ARE, AS ABOVE. THEREFORE, THE GRIEVANCE OF THE ASSESSEE IN THIS REGARD IS CORRECT AND THE SAME IS ACCEPTED. 10. IN KEEPING WITH KIM PHARMA P. LIMITED (SUPRA) , AS RELIED ON IN GAURISH STEELS P. LIMITED (SUPRA), THIS INCOME HAS BEEN CONSIDERED AS THE ASSESSEES BUSINESS INCOME AND NO T AS DEEMED INCOME U/S 69A OF THE ACT. AS SUCH, THE BUSINESS L OSSES INCURRED BY THE ASSESSEE DURING THE YEAR CAN BE SET OFF AGAINST THE INCOME ITA NOS. 388 & 537(ASR)/2014 ASSESSMENT YEARS: 2010-11 & 2011-12 10 SURRENDERED. AS PER THE REQUIREMENT OF SECTION 71 O F THE ACT, THE AO IS DIRECTED TO ACT ACCORDINGLY. THUS, GROUND NOS. 1 TO 3 ARE ACCEPTED. 10. THEREFORE RESPECTFULLY FOLLOWING THE RECENT DE CISION OF THIS BENCH OF THE TRIBUNAL, IN THE CASE OF J.B. RESORTS, FAZI LKA VS. INCOME TAX OFFICER, ABOHAR, PASSED IN ITA NO.488(ASR)/2015, D ATED 19.05.2016, FOR THE ASSESSMENT YEAR 2011-12, WE CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. WE FIND THAT THE LD. CIT(A) HAS ALSO PASSED A DETAILED AND WELL REASONED ORDER. 11. AS REGARDS ITA NO.537(ASR)/2014 FOR THE A.Y. 20 11-12, THE SAME IS ALSO DISMISSED IN VIEW OF OUR FINDINGS GIVEN HER EINABOVE IN ITA NO. 388(ASR)/2014, WHICH APPLY MUTATIS MUTANDIS TO THIS APPEAL. 11. IN THE RESULT, BOTH THE APPEALS OF THE DEPARTME NT ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/06/ 2016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 13/06/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. KHANNA PAPER MILLS, AMRITSAR 2. THE DCIT, CENTRAL CIRCLE, AMRITSAR 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER
