M/s Roshan & Associates Pvt Ltd, V. ITO Wd - 3(1),

ITA 6153/MUM/2003

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49232 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 31-05-2011
• Assessment Year: misc
• Appeal Filed On: 12-09-2003
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SUBODH L RATHAPARKHI
• Keywords: Unexplained expenditure
• Section: 69; 69C; 133A

Judgement Text

1 ITA NO. 6153/MUM/2003 (ASST YEAR 1999-00) IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI H BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI J SUDHAKAR REDDY, AM & SHRI VIJAY PAL R AO, JM ITA NO. 6153/MUM/2003 (ASST YEAR 1999-00) M/S ROSHAN ASSOCIATES P LTD 11 GOKUL BUILDINGS HARI NIWAS M G ROAD, NAUPADA, THANE 400 602 VS THE INCOME TAX OFFICER WARD 3(1), THANE (APPELLANT) (RESPONDENT) PAN NO.AABCR019A A SSESSEE BY SHRI SUBODH L RATHAPARKHI REVENUE BY SHRI M R KUBAL PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 14.7.2003 OF THE CIT(A) FOR THE AY 1999-00. 2 THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS AS UNDER: THE CIT(A) ERRED IN CONCLUDING THAT THE EXPENDITURE OF RS. 26,39,355.00 IS UNACCOUNTED EXPENDITURE AND THE PROVISIONS OF SEC. 69 C ARE RIGHTLY APPLIED BY THE ASSESSING OFFICER . THE LD CIT(A) FAILED TO APPRECIATE THAT THE APPELLA NT HAD ADMITTED THE EXPENDITURE OF RS.26,39,355.00 INVENTORISED DURING SU RVEY PROCEEDINGS ON 6.1.1999 AND EXPRESSLY STATED THAT HE WILL ACCOUNT O F THIS EXPENDITURE AND WILL OFFER THE MATCHING INCOME FOR TAX. 2.1 THE LD AR OF THE ASSESSEE HAS STATED THAT OTHER GROUNDS OF THE APPEAL ARE IN SUPPORT OF THE GROUND NO.1 AND NOT INDEPENDENT GRO UND.S 3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT SURVEY U/S 133A WAS CONDUCTED AT THE RESIDENTI AL PREMISES O N 6.1.1999. DURING THE COURSE OF SURVEY, A LOOSE PAPER AT SL. NO.6 OF THE BUNDLE NO.29 WAS INVENTORIZED. 2 ITA NO. 6153/MUM/2003 (ASST YEAR 1999-00) THE ENTRY IN THE SAID LOOSE PAPER READS AS RS. 4 LACS PAID TO NIYAZ AS DEPOSIT IN CASH FOR OFFICE AND RENT FIXING 400/- PER MONTH. APART FROM THIS, THE ASSESSING OFFICER ALSO NOTED THAT THERE WAS A LOOSE PAPER AT SL. NO.22 OF THE BUNDLE 29, WHICH CONTAINS ENTRIES REGARDING MONTHLY DETAILS OF EXPENSES INCUR RED IN CASH FROM APRIL 1998 TO DEC 1998. THE TOTAL OF THESE EXPENSES UNDER THE HEADS W ERE NOTED AS REPRODUCED BY THE ASSESSING OFFICER AS UNDER: PARTICULARS AMOUNT (RS) LABOUR CHARGES 7,98,449 TRANSPORT CHARGES 3,31,940 MATERIAL 15,8,966 TOTAL 26,39,355 3.1 IN THE STATEMENT RECORDED U/S 133A, THE DIRECTO R SHRI ROSHAN G KHATRI OF THE ASSESSEE COMPANY STATED THAT THESE EXPENSES ARE INCURRED IN CASH BY M/S ROSHAN & ASSOCATES P LTD DURING APRIL 1998 TO DEC 1998 AN D ARE INCURRED FOR COMPANYS BUSINESS AND NOT ACCOUNTED IN THE BOOKS OF ACCOUNT. HENCE, I AM OFFERING THE AMOUNT OF RS. 26,39,355/- AS ADDITIONAL INCOME FOR CURRENT FY 1998-99 RELEVANT TO AY 1999-00 . T HE ASSESSEE, IN THE RETURN OF INCOME OFFERED THE NE T INCOME OF RS. 13,60,645/- AFTER DEBITING RS. 26,39,355/- IN T HE P&L ACCOUNT AND CLAIM THE WORK- IN-PROGRESS OF RS. 26,39,355/-. THE ASSESSING OFFIC ER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND ADDED THE UNACCOUNTED EXPENSES OF RS. 26,39,355/- TO THE TOTAL INCOME OF THE ASSESSEE U/S 69C OF THE I T ACT. 3.2 ON APPEAL, THE CIT(A) CONFIRMED THE ADDITION MA DE BY THE ASSESSING OFFICER . 4 BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITTE D THAT THE ASSESSEE IS IN THE BUSINESS OF CIVIL CONSTRUCTION. THE ASSESSEE OFFER ED THE GROSS INCOME OF RS. 26,39,355/- AS THE EXPENSES, WHICH WERE NOT RE CORDED IN THE BOOKS OF ACCOUNT TILL THE SURVEY ACTION WAS CONDUCTED; BUT THE ASSESSEE CAST THE ENTRY OF THE SAID EXPENSES AT THE END OF THE YEAR. THUS, THE SAID E XPENSES HAVE BEEN RECORDED IN 3 ITA NO. 6153/MUM/2003 (ASST YEAR 1999-00) THE BOOKS OF ACCOUNT AND ONLY THE ELEMENT OF THE PR OFIT CAN BE TAXED. THE ASSESSEE DISCLOSED THE TOTAL RS 40 LACS INCOME IN THE STATEM ENT RECORDED U/S 133A; THEREFORE, THE EXPENSES INCURRED IN CASH IS OTHERWISE FROM THE OTHER SOURCE, WHICH HAS BEEN OFFERED AS INCOME AND THE ASSESSEE IS ENTITLED FOR TELESCOPING OF THE PROFIT OFFERED OF RS. 40 LACS. HE HAS FURTHER CONTENDED THAT EVEN OT HERWISE THE ASSESSEE HAS SHOWN THE SAID EXPENDITURE OF RS. 26,39,355/- AS WORK-IN- PROGRESS; THEREFORE, THE SAME CANNOT BE TREATED AS INCOME OF THE ASSESSEE U/S 69C OF THE ACT. HE HAS FURTHER CONTENDED THAT THE ASSESSEE HAS EXPLAINED IN DETAIL THE NATURE AND PURPOSE AND EXTENT OF TOTAL DISCLOSURE OF RS. 40 LACS AND WITHO UT KNOWING LEGAL IMPLICATIONS AND CONSEQUENCES AND UNDER PRESSURE AND TO BUY PEACE OF MIND AND TO AVOID HUMILIATION HE HAS ACCEPTED IT. TO CONCLUDE WHAT HE COULD NOT DO OR WHERE HE FAILED AT THE MOST CAN BE DESCRIBED OR CONCLUDED TH AT FROM WHAT SOURCE HE SPENT ALL THIS MONEY HE DID NOT CORRELATE FOR WHICH HE AG REED OR ACCEPTED INCOME/DISCLOSURE. 4.1 THE LD DR, ON THE OTHER HAND HAS SUBMITTED THAT WHEN THE ASSESSEE HAS NOT RECORDED THESE EXPENSES IN CASH IN THE BOOKS OF ACC OUNT AS ON THE DATE OF SURVEY AND OFFERED THE SAME AS ADDITIONAL INCOME, THEN, CL AIMING THE SAID EXPENDITURE AGAINST THE INCOME OFFERED IS NOT ALLOWABLE AS PER THE PROVISIONS OF SEC. 69C OF THE I T ACT. HE HAS POINTED OUT THAT IN THE STATEMENT RECORDED U/S 133A DURING THE SURVEY, THE ASSESSEE HAS CATEGORICALLY ADMITTED TH E SAID AMOUNT OF ADDITIONAL INCOME; THEREFORE, THE SAME CANNOT BE TREATED AS P ART OF THE INCOME AS PER THE BOOKS OF ACCOUNT. HE HAS SUPPORTED THE ORDERS OF T HE LOWER AUTHORITIES 4 ITA NO. 6153/MUM/2003 (ASST YEAR 1999-00) 5 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERU SED THE RELEVANT MATERIAL ON RECORD. FROM THE STATEMENT OF THE DIRECTOR OF T HE ASSESSEE COMPANY RECORDED AT THE TIME OF SURVEY, IT IS CLEAR THAT THE ASSESSEE H AS ADMITTED RS. 26,39,355/- BEING INCURRED IN CASH AS ADDITIONAL INCOME BECAUSE THE S AME WAS NOT RECORDED IN THE BOOKS OF ACCOUNT. ONCE THE SAID INCOME HAS BEEN OFF ERED AS INCOME BEING EXPENDITURE INCURRED IN CASH AND NO EXPLANATION WA S ADVANCED REGARDING THE SOURCES OF THE SAID EXPENDITURE THEN SUBSEQUENTLY T HE SAID UNEXPLAINED EXPENDITURE CANNOT BE CLAIMED AS DEDUCTION AGAINST THE INCOME O F THE ASSESSEE. SEC. 69C AND PROVISO TO SEC. ARE S UNDER: WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABBOT THE SOURCE OF SUCH EX PENDITURE OR PART THEREOF, OR THE EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE AMOUNT COVERED BY SUCH EXPENDITURE OF PART THEREOF, AS THE CASE MAY BE, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR; PROVIDED T HAT, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHE R PROVISION OF THIS ACT, SUCH UNEXPLAINED EXPENDITURE WHICH IS DEE MED TO BE THE INCOME OF THE ASSESSEE SHALL NOT BE ALLOWED AS A DEDUCTION UN DER ANY HEAD OF INCOME. 5.1 IT IS MANIFEST FROM THE PROVISO TO SEC. 69 C TH AT SUCH UNEXPLAINED EXPENDITURE WHICH IS ADMITTED TO BE THE INCOME OF THE ASSESSEE U/S 69C SHALL NOT BE ALLOWED AS DEDUCTION UNDER ANY HEAD OF THE INCOME. THE CIT(A ) HAS CONSIDERED AND ADJUDICATED THE ISSUE IN PARA 2.3 AS UNDER: 2.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND TH E VARIOUS SUBMISSIONS GIVEN DURING THE APPELLATE PROCEEDINGS. I HAVE ALSO GONE THROUGH THE PROFIT AND LOSS ACCOUNT AND THE BALANCE SHEET FILED DURING THE YEAR ALONG WITH THE TAX COMPUTATION. IT IS SEEN THAT THERE ARE CLEAR CUT ENTRY IN SR NO.22 OF BUNDLE NO.29 FOUND DURING THE COURSE OF SURVEY. IT IS SEEN THAT THERE IS CLEAR CUT ENTRIES GIVING MONTHLY DETAILS OF EXPENDITURE INCURRED IN CA SH FROM APRIL, 1998 TO DEC 1998. I HAVE ALSO GONE THROUGH THE BOOKS OF ACCOUNT S OF THE APPELLANT COMPANY. ENTRIES FOR THE EXPENDITURE OF RS. 26,39,355 /-ARE NOT ENTERED IN THE REGULAR BOOKS OF ACCOUNTS FOR THE PERIOD MENTIONED IN THE LOOSE PAPER. IT IS SEEN THAT APPELLANT HAS SHOWN NET PROFIT OF RS. 10, 49,864/- IN THE REGULAR PROFIT AND LOSS ACCOUNT. THE NET PROFIT IS TAKEN IN THE P& L APPROPRIATION ACCOUNT DURING THE YEAR. IN THE PROFIT & LOSS APPROPRIATION AC COUNT, SURVEY INCOME OF 5 ITA NO. 6153/MUM/2003 (ASST YEAR 1999-00) RS. 40 LACS HAS BEEN CREDITED. IN THE PROFIT & LOSS APPROPRIATION ACCOUNT, SURVEY EXPENSES OF RS.26,39,355/- HAS BEEN DEBITED. IT IS THUS SEEN THAT THERE IS NO ENTRY IN THE REGULAR BOOKS OF A CCOUNTS FOR SURVEY EXPENSES OF RS. 26,39,355/- DURING THE YEAR. IT IS THUS SEEN THA T THERE IS NOT SOURCE OF EXPENSES INCURRED IN THE REGULAR BOOKS OF ACCOUNTS OF THE APPELLANT DURING THE PERIOD IN WHICH ENTRIES ARE MADE. APPELLANT HAD ALREADY ACCEPTED THAT THESE EXPENSES OF RS. 26,39,355/- PERTAIN TO ACTUAL EXPENDITURE INCURRED DURING THE MONTH. IN SPITE OF OPPORTUNITIES GIVEN, A PPELLANT HAS NOT EXPLAINED THE SOURCE OF CASH EXPENDITURE INCURRED DURING THE VA RIOUS MONTHS AS PER ENTRY FOUND IN THE LOOSE PAPER DURING THE COURSE OF S URVEY. SINCE THE SOURCE OF CASH EXPENDITURE S NOT EXPLAINED, ASSESSING OFFIC ER WAS RIGHT IN MAKING ADDITION OF RS. 26,39,355/- AS UNACCOUNTED EXPENDIT URE U/S 69C OF THE I T ACT 1961. IN VIEW OF THIS, I HEREBY SUSTAIN THE ADDITIO N OF RS. 26,39,355/ U/S 69C AS MADE IN THE ASSESSMENT ORDER. THUS, IN VIEW OF THE UNAMBIGUOUS LANGUAGE OF THE PR OVISO TO SEC. 69C AND PARTICULARLY THE PROVISIONS, THE SAID EXPENDITURE C ANNOT BE CLAIMED AGAINST THE INCOME OFFERED BY THE ASSESSEE. ACCORDINGLY, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF THE CIT(A), QUA THIS ISSUE. 6 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S DISMISSED. ORDER PRONOUNCED ON THE 29 TH , DAY OF JUNE 2011. SD/- SD/- ( (( ( J SUDHAKAR REDDY J SUDHAKAR REDDY J SUDHAKAR REDDY J SUDHAKAR REDDY ) )) ) ACCOUNTANT MEMBER ( (( ( VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO ) )) ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 29 TH , JUNE 2011 RAJ* 6 ITA NO. 6153/MUM/2003 (ASST YEAR 1999-00) COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI