Income Tax Officer-4(1), Lucknow V. M/s K.V.A Construction Co. Pvt. Ltd., Lucknow

ITA 640/LKW/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5748 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 04-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C K SINGH
• Assessee Lawyers: s c dixit
• Keywords: Unexplained cash credit; Unexplained expenditure; Additional evidence
• Section: 69; 143(3)

Judgement Text

I.T.A. NO.640/LKW/2016 ASSESSMENT YEAR:2012-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.640/LKW/2016 ASSESSMENT YEAR:2012-13 INCOME TAX OFFICER-4(1), LUCKNOW. VS. M/S K.V.A. CONSTRUCTION CO. PVT. LTD., E-4/103, SECTOR-M, ALIGANJ HOUSING SCHEME, LUCKNOW. PAN:AACCK 9555 F (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LEARNED CIT(A)-II, LUCKNOW DATED 23/08/2016 PERTAINING TO A SSESSMENT YEAR 2012- 2013. IN THIS APPEAL THE REVENUE HAS TAKEN THE FOL LOWING GROUNDS OF APPEAL: 1. THE COMMISSIONER OF INCOME TAX (APPEALS), LUCKN OW HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.75,37,384/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENTS IN OPENING STOCK U/S 69 OF THE IT. ACT, 1961 WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE COM PANY WAS UNABLE TO RECONCILE THE DISCREPANCY SHOWING CLO SING STOCK AT NIL IN RETURN FOR A.Y. 2011-12 AND OPENING STOCK AT RS.75,37,384/- IN RETURN FOR A.Y. 2012-13, BEFOR E THE ASSESSING OFFICER, DESPITE AVAILING AMPLE OPPORTUNI TIES. APPELLANT BY SHRI C. K. SINGH, D.R. RESPONDENT BY SHRI S. C. DIXIT, ADVOCATE DATE OF HEARING 30/01/2019 DATE OF PRONOUNCEMENT 31 / 01 /201 9 I.T.A. NO.640/LKW/2016 ASSESSMENT YEAR:2012-13 2 2. THE COMMISSIONER OF INCOME TAX (APPEALS), LUCKNO W HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.11,90,000/- MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT IN THE BANK ACCOUNT U/S 69 OF THE I.T. ACT,1 961 AND ADMITTING FRESH EVIDENCE WITHOUT ALLOWING THE OPPOR TUNITY UNDER RULE 46 A OF THE I.T. RULES, TO EXAMINE THE EVIDENCE OR DOCUMENTS PRODUCED BEFORE HIM ON WHICH HE PLACED RELIANCE TO HOLD THAT THE TRANSACTION WERE G ENUINE. 3. THE COMMISSIONER OF INCOME TAX (APPEALS), LUCKNO W HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITI ON TO RS.50,000/- AGAINST THE ADDITION OF RS.3,23,540/- M ADE ON ACCOUNT OF UNEXPLAINED EXPENDITURE CLAIMED WITHO UT APPRECIATING THE FACT THAT THE ASSESSEE COMPANY WAS UNABLE TO PROVE THE GENUINENESS BEFORE THE A.O. DES PITE AVAILING AMPLE OPPORTUNITIES. 2. AT THE OUTSET, LEARNED D. R. SUBMITTED THAT ASSE SSEE HAD NOT DISCLOSED CLOSING STOCK IN THE RETURN FOR ASSESSMEN T YEAR 2011-12 AND HAD INSTEAD TAKEN THE OPENING STOCK AT RS.75,37,384/- I N ASSESSMENT YEAR 2012- 13 THEREFORE, THE ASSESSING OFFICER HAD RIGHTLY MAD E THE ADDITION AS UNDISCLOSED INVESTMENT. LEARNED D. R. FURTHER SUBM ITTED THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERV ED THAT ASSESSEE HAD MADE CASH DEPOSIT IN THE BANK ACCOUNT AMOUNTING TO RS.11,90,000/- WHICH REMAINED UNEXPLAINED THEREFORE, THE ASSESSING OFFIC ER HAD MADE THE ADDITION WHEREAS LEARNED CIT(A) HAS WRONGLY DELETED THE ADDITION BY ADMITTING THE FRESH EVIDENCE IN THE FORM OF CASH BO OK WITHOUT ALLOWING OPPORTUNITY TO THE ASSESSING OFFICER. LEARNED D. R . FURTHER ARGUED THAT IN THE ABSENCE OF VOUCHERS, THE EXPENSES CLAIMED BY TH E ASSESSEE IN THE PROFIT & LOSS ACCOUNT REMAINED UNVERIFIED THEREFORE, THE A SSESSING OFFICER HAD RIGHTLY MADE THE DISALLOWANCE TO THE EXTENT OF 40% OF THE EXPENSES WHICH LEARNED CIT(A) HAS WRONGLY REDUCED TO RS.50,000/-. I.T.A. NO.640/LKW/2016 ASSESSMENT YEAR:2012-13 3 3. LEARNED A. R., ON THE OTHER HAND, INVITED OUR AT TENTION TO THE COPY OF INCOME TAX RETURN FOR ASSESSMENT YEAR 2011-12 PLACE D AT PAGES 9 TO 30 OF THE PAPER BOOK AND OUR SPECIFIC ATTENTION WAS INVIT ED TO PAGE 12 WHERE COPY OF RETURN SHOWING INVENTORIES UNDER THE HEAD CURRENT ASSETS AMOUNTING TO RS.75,37,384/- WAS PLACED. LEARNED A. R. SUBMITTED THAT THE ASSESSEE HAD DULY DISCLOSED THE CLOSING STOCK IN TH E INCOME TAX RETURN OF EARLIER YEAR, WHICH WAS SUPPORTED BY FIGURE IN THE BALANCE SHEET OF ASSESSMENT YEAR 2011-12 WHEREIN THE SAME AMOUNT WAS REFLECTED IN THE BALANCE SHEET, PLACED AT PAGE 55 OF THE PAPER BOOK. THEREFORE, IT WAS ARGUED THAT THE ASSESSING OFFICER HAD WRONGLY MADE THIS ADDITION WHICH LEARNED CIT(A) HAS RIGHTLY DELETED. 3.1 AS REGARDS THE DELETION OF ADDITION ON ACCOUNT OF DEPOSITS IN BANK ACCOUNT, LEARNED A. R. SUBMITTED THAT DEPOSITS WERE MADE OUT OF CASH BALANCE AVAILABLE WITH THE ASSESSEE AND THEREFORE, LEARNED CIT(A) HAS RIGHTLY ALLOWED THE SAME. 3.2 AS REGARDS THE THIRD DELETION OUT OF EXPENSES, LEARNED A. R. SUBMITTED THAT COMPLETE BOOKS OF ACCOUNT ALONG WITH VOUCHERS WERE AVAILABLE FOR INSPECTION BEFORE THE ASSESSING OFFIC ER AND ASSESSING OFFICER ARBITRARILY MADE THE DISALLOWANCE TO THE EXTENT OF 40%. IT WAS SUBMITTED THAT EXPENSES INCLUDED TELEPHONE EXPENSES, SALARY A ND WAGES, FREIGHT ETC. WHICH WERE DULY VERIFIABLE AND THEREFORE, LEARNED C IT(A) HAS RIGHTLY DELETED A PART OF THE ADDITION. 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. THE FIRST GROUND OF APPEAL IS AG AINST THE ACTION OF LEARNED CIT(A) BY WHICH HE HAD DELETED THE ADDITION OF RS.7 5,37,384/- WHICH THE ASSESSING OFFICER HAD MADE ON ACCOUNT OF NON DISCLO SURE OF CLOSING STOCK IN I.T.A. NO.640/LKW/2016 ASSESSMENT YEAR:2012-13 4 THE RETURN FOR ASSESSMENT YEAR 2011-12. IN THIS RE SPECT WE FIND THAT ASSESSEE HAD DULY DISCLOSED THE FIGURE OF STOCK IN ASSESSMENT YEAR 2011-12 WHICH IS APPARENT FROM THE COPY OF INCOME TAX RETUR N FOR THAT YEAR, PLACED AT PAGES 9 TO 30 OF THE PAPER BOOK. ON PAGE 12, UN DER THE HEADING CURRENT ASSETS, THE ASSESSEE HAD DULY DISCLOSED THE CLOSIN G STOCK AS ON 31/03/2011 TO THE EXTENT OF RS.75,37,384/-. WE FURTHER FIND T HAT IN THE BALANCE SHEET FOR ASSESSMENT YEAR 2011-12, PLACED AT PAGES 54-66 OF THE PAPER BOOK, THE ASSESSEE HAD DULY DISCLOSED THE FIGURE OF CLOSING S TOCK IN THE BALANCE SHEET, PLACED AT PAGE 55 WHICH MATCHES WITH THE FIGURE IN THE RETURN OF INCOME. THE FINDING OF THE ASSESSING OFFICER IS CONTRARY TO THE FACTS AVAILABLE ON RECORD AND THEREFORE, LEARNED CIT(A) HAS RIGHTLY AP PRECIATED THE FACTS AND HAS RIGHTLY DELETED THE ADDITION AS THE FIGURE OF O PENING STOCK WAS VERY MUCH AVAILABLE IN THE RETURN. IN VIEW OF THE ABOVE , GROUND NO. 1 IS DISMISSED. 5. NOW COMING TO GROUND NO. 2, WE FIND THAT ASSESSI NG OFFICER HAD MADE THE ADDITION ON ACCOUNT OF DEPOSITS IN THE BAN K ACCOUNT TO THE EXTENT OF RS.11,90,000/-. THE LEARNED CIT(A) DELETED THE ADDITION BY HOLDING THAT THE DEPOSITS WERE MADE OUT OF CASH BALANCE AVAILABL E IN THE CASH BOOK OF THE ASSESSEE. HOWEVER, THERE IS NO EXTRACT OF CASH BOOK AVAILABLE ON RECORD FROM WHERE THE LEARNED CIT(A) ARRIVED AT THE CONCLU SION THAT THE DEPOSITS WERE MADE OUT OF CASH BALANCE. LEARNED A. R. WAS A LSO NOT ABLE TO PRODUCE THE SAME. THEREFORE, WE DEEM IT APPROPRIATE TO REM IT THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER WHO SHOULD EXAMINE IT FRO M THE CASH BOOK OF THE ASSESSEE. THIS WILL ALSO SATISFY THE GRIEVANCE OF THE REVENUE REGARDING NON CONFRONTATION OF THE ADDITIONAL EVIDENCE TO THE ASS ESSING OFFICER. HERE WE ADD THAT THE BANK ACCOUNT REFERRED TO BY THE ASSESS ING OFFICER, WHERE THE PAYMENTS WERE MADE, IS PUNJAB & SINGH BANK FROM WHE RE THE ASSESSEE HAD OBTAINED CASH CREDIT LIMITS AND THE CLOSING BALANCE AS ON 31/03/2012 IN THE I.T.A. NO.640/LKW/2016 ASSESSMENT YEAR:2012-13 5 BANK STATEMENT MATCHES WITH THAT, BALANCE REFLECTED IN THE BALANCE SHEET AS ON 31/03/2012. IN VIEW OF THE ABOVE GROUND NO. 2 I S ALLOWED FOR STATISTICAL PURPOSES. 6. NOW COMING TO GROUND NO. 3, WE FIND THAT ASSESSE E HAD CLAIMED AN EXPENDITURE OF RS.7,55,509/- IN THE PROFIT & LOSS A CCOUNT WHICH INCLUDED EXPENSES OF SALARY AND WAGES, TELEPHONE EXPENSES, F REIGHT AND OTHER EXPENSES. A PART OF THE TOTAL EXPENSES INCLUDING S ALARY AND WAGES, TELEPHONE EXPENSES AND FREIGHT EXPENSES WERE VERIFI ABLE AS THESE WERE MADE TO EMPLOYEES OF THE COMPANY AND TO TELEPHONE C OMPANY THEREFORE, A FLAT DISALLOWANCE OF 40% OUT OF EXPENSES WAS NOT JU STIFIED. MOREOVER, WE FIND THAT THE ASSESSING OFFICER HAD MADE THE ASSESS MENT U/S 143(3) OF THE ACT AND NOWHERE HAD REJECTED THE BOOKS OF ACCOUNT T HEREFORE, HE COULD NOT HAVE MADE THE DISALLOWANCE AT ALL. THE ACTION OF L EARNED CIT(A) IN RESTRICTING THE DISALLOWANCE TO RS.50,000/- IS QUIT E JUSTIFIED IN THESE FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY, GROUND NO. 3 IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSES AND PARTLY DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 31/01/2019) SD/. SD/. ( A. D. JAIN ) ( T. S. KAPOOR ) VICE PRESIDENT ACCOUNTANT MEMBER DATED:31/01/2019 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW I.T.A. NO.640/LKW/2016 ASSESSMENT YEAR:2012-13 6 ASSISTANT REGISTRAR