BENKATESH SYNTH PROCESSORS P LTD, MUMBAI V. DCIT CEN CIR 39, MUMBAI

ITA 7264/MUM/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4190 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 23-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 25-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MISHRA
• Assessee Lawyers: SHANKARLAL JAIN
• Keywords: Depreciation; Loose papers; Source of fund
• Section: 143(3); 142(1); 153A; 32; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI BEFORE SHRI AMIT SHUKLA, JM AND SHRI RAJESH KUMAR, AM ./ I.T.A. NO. 7264/MUM/2010 ( / ASSESSMENT YEAR: 2008-09) BENKATESH SYNTH PROCESSORS PVT. LTD., C/O. SHANKARLAL JAIN & ASSOCIATES, 12, ENGINEER BUILDING, 265, PRINCESS STREET, MUMBAI-400 002. / VS. DCIT; CENTRAL CIRCLE 39, MUMBAI. ./ ./PAN/GIR NO. AAACB2455K ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI SHANKARLAL JAIN / RESPONDENT BY : SHRI S.K. MISHRA / DATE OF HEARING : 05/01/2016 !'# / DATE OF PRONOUNCEMENT : 04/02/2016 $% / O R D E R PER RAJESH KUMAR, A. M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 22.09.2010 OF COMMISSIONER OF INCOME TAX (APPEALS)-41, MUMBAI (HE REINAFTER CALLED AS THE CIT(A) ) FOR ASSESSMENT YEAR 2008-09. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 2 ITA NO.7264/MUM/2010 BENKATESH SYNTH PROCESSORS PVT. LTD., VS. DCIT 1. 'THE LD. CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF DEPRECIATION AS CLAIMED BY THE APPELLANT OF RS.1644450/- ON ADDITION TO BUI LDING OUT OF ADDITIONAL INCOME DECLARED DURING THE SEARCH PROCEEDINGS FOR A .Y. 07-08 AND A.Y. 08-09 WITHOUT APPRECIATING THE SEIZED MATERIAL AS WELL AS STATEMENT RECORDED U/S 132(4) OF THE INCOME TAX ACT. 2. THE APPELLANT PRAY THAT NECESSARY DEPRECIATION BE A LLOWED, AS CLAIMED. 2. THE ISSUE RAISED IN THE 1 ST GROUND OF APPEAL RELATES CONFIRMATION OF DISALLOWANCE OF DEPRECIATION ON THE ADDITIONS TO FA CTORY BUILDING OUT OF INCOME DECLARED DURING SEARCH PROCEEDINGS U/S 132(4) OF TH E ACT. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED I TS RETURN OF INCOME ON DECLARING AN INCOME OF RS. 1,24,87,260/- INCLUDING UNDISCLOSE D INCOME OF 1,42,51,951/- AS OFFERED DURING THE COURSE OF SEARCH U/S 132(4) ON T HE ALL THE GROUP COMPANIES AND THEIR DIRECTORS WHICH WAS CONDUCTED ON10.10.2007. T HE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF WEAVING OF FABRICS ON JO B WORK BASIS. DURING THE COURSE OF SEARCH THE ASSESSEE SURRENDERED RS. 1,82,92,264 /- IN THE AY 2007-08 AND RS. 1,42,51,951/- IN AY 2008-09. STATUTORY NOTICES U/S 143(2) AND 142(1) WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE CAPITALI ZED UNDER THE HEAD FACTORY BUILDING THE ENTIRE AMOUNT OF SURRENDER RS. 3,25,44 ,215/-MADE DURING THE COURSE OF SEARCH INCLUDING SOME OTHER PETTY AMOUNT AND CLAIME D 16,44,450/- AS DEPRECIATION 3 ITA NO.7264/MUM/2010 BENKATESH SYNTH PROCESSORS PVT. LTD., VS. DCIT @ 5%.THE ENTIRE AMOUNT OF SURRENDER WAS CLAIMED TO HAVE BEEN SPENT ON THE ADDITIONS TO FACTORY BUILDING BY THE ASSESSEE BEFOR E THE AO & CIT(A). 4. THE LD AO DURING THE COURSE OF ASSESSMENT PROCEE DINGS REQUIRED THE ASSESSEE TO EXPLAIN THE ADDITIONS TO FACTORY BUILDI NG AND PRODUCE THE BILLS AND VOUCHERS WHICH THE ASSESSEE REPLIED THAT THE CASH R EALIZED OUT OF UNBILLED WEAVING CHARGES, SALE OF SCRAP, SALE OF SLEEPAGE, SALE OF C ARTOONS AND SALE OF TUBES ETC AS SURRENDERED DURING THE SEARCH WAS EXPENDED ON THE F ACTORY BUILDING AND THERE WERE NO BILLS AND VOUCHERS FOR THE SAME. THE AO FRAMED T HE ASSESSMENT U/S 143(3) R.W.S. 153A AT RS. 1,41,36,478/- BY INTER ALIA DISA LLOWING DEPRECIATION OF RS. 16,44,460/- ON THE GROUND THAT DETAILS OF ADDITIONS TO THE BUILDING WAS NOT SUPPORTED WITH ANY BILLS AND VOUCHERS AND SAME COUL D NOT BE ALLOWED. 5. THE LD CIT(A) UPHELD THE ORDER OF AO BY DISMISSI NG THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER:- 1.4 I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT, THE ORDER OF THE A.O. AND FACTS OF THE CASE IN BRIE F ARE THAT SEARCH & SEIZURE OPERATION U/S 132 AND SURVEY U/S.1 33A OF THE I.T.ACT,1961 WAS CARRIED OUT AT THE BUSINESS AN D RESIDENTIAL PREMISES OF THE GROUP COMPANY. CERTAIN 4 ITA NO.7264/MUM/2010 BENKATESH SYNTH PROCESSORS PVT. LTD., VS. DCIT INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED AND T HE STATEMENT OF SHRI DILIP PACHERIWALA, DIRECTOR OF TH E COMPANY WAS RECORDED U/S.132(4) OF THE I.T.ACT, 196 1. THE SEIZED PAPER WAS CONFRONTED TO THE DIRECTOR, WHO HA S ADMITTED THAT THESE ARE NOT RECORDED IN THE BOOKS O F ACCOUNTS AND DECLARED ADDITIONAL INCOME ON THIS ACC OUNT. IN THIS STATEMENT, IT WAS ALSO ADMITTED THAT THE AD DITIONAL INCOME DECLARED WAS INVESTED IN THE CONSTRUCTION OF FACTORY BUILDING AND DEPRECIATION ON THIS BUILDING AMOUNTING TO RS.16,44,450/- WAS CLAIMED. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. HAS CALLED FOR THE DOCUMENTARY EVIDENCES TO PROVE THE INVESTMENT MADE IN THE FACTORY BUILDING IN THE SHAPE OF BILLS AND VOUC HERS ETC. HOWEVER, THE A.R. OF THE APPELLANT HAS SUBMITTED TH AT THE INVESTMENT WAS MADE IN CASH AND NO DOCUMENTARY EVIDENCE IN THE SHAPE OF BILLS AND VOUCHERS IS MAIN TAINED TO PROVE THE INVESTMENT MADE IN THE CONSTRUCTION OF FACTORY BUILDING. ACCORDINGLY, THE A.O. HAS DISALLOWED THE CLAIM OF DEPRECIATION OF RS.16,44,450/-. DURING THE ASSESSME NT PROCEEDINGS, THE A.R. OF THE APPELLANT HAS SUBMITTE D THE 5 ITA NO.7264/MUM/2010 BENKATESH SYNTH PROCESSORS PVT. LTD., VS. DCIT SAME REPLY AS BEFORE THE A.O. AND NO FURTHER DOCUME NTARY EVIDENCE WAS PRODUCED TO SUBSTANTIATE ITS CLAIM. SI NCE THE PROVISION OF SECTION 32 OF THE I.T.ACT,1961 IS VERY CLEAR THAT ONUS IS ALWAYS ON THE ASSESSEE TO SUBMIT THE DOCUMENTARY EVIDENCE BEFORE THE A.O. TO PROVE THE OWNERSHIP OF THE BUILDING AND COST OF CONSTRUCTION WITH PROPER BILLS AND VOUCHERS BEFORE CLAIMING DEPRECIAT ION. IN THE PRESENT CASE, THE APPELLANT HAS ADMITTED THAT N O BILLS AND VOUCHERS HAD BEEN MAINTAINED AND THE INVESTMENT WAS MADE IN CASH. THESE FACTS SHOW THAT THE APPELLANT H AS FAILED TO DISCHARGE ITS ONUS B SUBMITTING ANY DOCUM ENTARY EVIDENCE BEFORE THE A.O. AND BEFORE ME, THEREFORE, THE DISALLOWANCE OF DEPRECIATION OF RS.16,44,450/- MADE BY THE A.O. IS CONFIRMED AND GROUND OF APPEAL IS DISMI SSED. 6. THE LD AR SUBMITTED BEFORE US THAT THE CIT(A) H AS GROSSLY ERRED IN CONFIRMING THE ORDER OF AO FOR THE REASONS THAT THE ASSESSEE DURING THE COURSE OF RECORDING OF STATEMENT HAD ADMITTED TO HAVE EXPENDE D THE SURRENDERED INCOME ON THE ADDITIONS TO FACTORY BUILDINGS DURING THE TWO Y EARS FOR WHICH THE ASSESSEE MADE SURRENDER MORE SPECIFICALLY IN REPLY TO QUESTION NO 14 AND 15 OF THE STATEMENT OF 6 ITA NO.7264/MUM/2010 BENKATESH SYNTH PROCESSORS PVT. LTD., VS. DCIT THE DIRECTOR OF THE ASSESSEE SHRI DILEEP KUMAR PACH ERIWALA RECORDED ON 18.10.2007 U/S 132(4) OF THE ACT. MR PACHERIWALA RE PLIED TO THE ABOVE QUERIES THAT THE CASH REALIZED FROM SALE OF VARIOUS ITEMS AS SUR RENDERED DURING THE SEARCH WAS SPENT ON THE ADDITIONS TO THE FACTORY BUILDING AND THEREFORE THE ASSESSEE WAS ENTITLED TO DEPRECIATION ON THE SAME. HE FINALLY PR AYED FOR THE REVERSING THE ORDER OF LOWER AUTHORITIES BY ALLOWING THE APPEAL OF THE ASSESSEE. PER CONTRA, THE LD DR RELIED HEAVILY ON THE ORDERS OF AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIALS ON RECORDS. WE FIND FROM THE PAPER BOOK FILED BY THE L D AR THAT IN THE STATEMENT U/S.132(4) OF THE ACT, THE DIRECTOR OF THE COMPANY SHRI DILEEP KUMAR PACHERIWALA SPECIFICALLY REPLIED WHILE EXPLAINING VARIOUS DOCUM ENTS SEIZED DURING THE SEARCH THAT THE AMOUNT OF INCOME SURRENDERED IN THE SEARCH WERE PARTLY SPENT ON THE ADDITIONS TO FACTORY BUILDING WHICH IS PLACED AT PA GE NO 1 TO 10 OF THE PAPER BOOK. THE ASSESSEES DIRECTOR WAS ASKED VIDE QUERY NO.14& 15 ABOUT OF THE SOURCES OF INCOME AS APPEARING IN THE LOOSE PAPERS NUMBERED 1- 62 INVENTORISED AS A-2 AS SEIZED DURING SEARCH. AS PER REPLIES OF MR. PACHERI WALA THE FOLLOWING AMOUNTS WERE SPENT ON THE CONSTRUCTION OF FACTORY BUILDING OUT OF THE SURRENDERED INCOME:- 7 ITA NO.7264/MUM/2010 BENKATESH SYNTH PROCESSORS PVT. LTD., VS. DCIT PAGE NO ASSESSMENT YEAR AMOUNT(RS.) 1-10 2008-09 47,24,434.00 27-50 2007-08 1,03,43,268.00 13-15 2008-09 17,94,185.00 20-26 2007-08 35,72,848.00 16-17 2008-09 6,04,480.00 59-62 2007-08 18,78,515.00 55-58 2006-07 14,67,225.00 18-19 2007-08 6,02,350.00 TOTAL 2,49,87,305.00 THUS, WE OBSERVE FROM PAGE NO 7 TO 16 OF THE PAPER BOOK FILED BY THE AR THAT THE ASSESSEE HAD ADMITTED TO HAVE SPENT RS. 2,49,87,305 /- OUT OF THE SURRENDER MADE OF RS.3,25,44,215/- OVER TWO YEARS NAMELY AY 2007-08 AND 2008-09 AND THE ASSESSEE DESERVED TO BE ALLOWED THE BENEFIT OF RS. 2,49,87,305/- AS FACTORY ADDITIONS AND ALSO ALLOWED DEPRECIATION THEREON. I N VIEW OF THE ABOVE FACTS THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THE AO IS DIRECTED TO ALLOW DEPRECIATION ON RS. 2,49,87,305/-. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 8 ITA NO.7264/MUM/2010 BENKATESH SYNTH PROCESSORS PVT. LTD., VS. DCIT ORDER PRONOUNCED IN THE OPEN COURT ON 4TH FEBRUARY, 2016 SD/- SD/- (AMIT SHUKLA) (RAJESH KUMAR) &' $ / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER ( ) MUMBAI; *$ DATED :04.02.2016 PS. ASHWINI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. ./0 ''12 , 12# , ( ) / DR, ITAT, MUMBAI 6. 045 6 / GUARD FILE / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, ( ) / ITAT, MUMBAI