ACIT, Erode V. Point Extiles (P) Ltd., Erode

ITA 749/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8214 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 17-10-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 28-03-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: T BANUSEKAR
• Keywords: Capital asset; Business income; Depreciation; Search and seizure; Capital receipt; Retraction; Revised return
• Section: 133A; 68; 148; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , . . ' # $ , % &' ( [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D. S. SUNDER SINGH, ACCOUNTANT MEMBER ] ./ I.T.A.NO.2164/MDS/2015 / ASSESSMENT YEAR : 2010-11 M/S POINT TEXTILES (P) LTD R-37, R-38, G-7, G-8 & F-22 SIPCOT INDUSTRIAL GROWTH CENTRE PERUNDURAI VS. THE INCOME TAX OFFICER WARD II(2) ERODE [PAN AAECP 6116 F] ( )* / APPELLANT) ( +,)* /RESPONDENT) ./ I.T.A.NO.749/MDS/2016 & C.O.NO.77/MDS/2016 / ASSESSMENT YEAR : 2011-12 THE ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE 2 ERODE VS. M/S POINT TEXTILES (P) LTD R-37, R-38, G-7, G-8 & F-22 SIPCOT INDUSTRIAL GROWTH CENTRE PERUNDURAI (APPELLANT) (RESPONDENT /CROSS OBJECTOR ) ASSESSEE BY : SHRI T. BANUSEKAR, CA DEPARTMENT BY : SHRI A.V. SREEKANTH, JCIT / DATE OF HEARING : 17 - 10 - 2016 / DATE OF PRONOUNCEMENT : 28 - 10 - 2016 ITA NO.2164/15, 749/16 C.O 77/16 :- 2 -: / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2010-11 IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER O F INCOME-TAX (APPEALS)-3, COIMBATORE, DATED 31.8.2015. THE APPEA L OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE FOR ASSES SMENT YEAR 2011-12 ARE DIRECTED AGAINST THE ORDER OF THE VERY SAME CIT (A) DATED 8.12.2015. 2. FIRST WE TAKE UP ASSESSEES APPEAL I.T.A.NO. 2164/ MDS/2015 FOR ASSESSMENT YEAR 2010-11. 3. THE FIRST ISSUE IS WITH REGARD TO TREATING THE DIFF ERENCE AMOUNT OF ` 22,91,738/- IN CREDIT BALANCE APPEARING IN THE ACC OUNT OF SUPPLIERS OF CAPITAL GOODS. 4. THE ASSESSING OFFICER FOUND DURING THE COURSE OF AS SESSMENT THAT THERE WAS A DIFFERENCE IN THE CREDITORS ACCOUN TS TO THE TUNE OF ` 22,91,738/- WHICH WAS EXPLAINED AS THE AMOUNT RECEI VED AS UNDISCLOSED DISCOUNT FROM SUPPLIERS AND CONTRACTORS AND THE BUILDING MACHINERY AND OTHER ASSETS INSTALLED IN THE FACTORY . SUCH AMOUNTS WERE PLOUGHED BACK INTO THE COMPANY AS SHARE APPLIC ATION MONEY. THEY ARE DIRECTLY REFERABLE AND RELATABLE TO THE AC TUAL COST OF ASSETS AND HENCE, ARE TO BE REDUCED WHILE ASCERTAINING THE ACTUAL COST. SINCE ITA NO.2164/15, 749/16 C.O 77/16 :- 3 -: THE AMOUNTS WERE DIRECTLY RELATED TO THE PRICES PAI D FOR THE PURCHASE OF MACHINERY ETC., THE ASSESSEE REQUESTED THE ASSE SSING OFFICER TO REDUCE THE SAME FROM THE COST OF ASSETS. THE ASSESS EE FURTHER REQUESTED THE AO TO RECOMPUTE THE DEPRECIATION BY R EDUCING THE ASSET VALUES. THE ASSESSING OFFICER HELD THAT THE ASSESS EE-COMPANY RECEIVED UNDISCLOSED DISCOUNT FROM THE SUPPLIERS AN D THE SAME REMAINED AS CREDITS IN THE NAME OF THE ABOVEMENTION ED PARTIES, AND THEREFORE, THE SAID AMOUNT WAS TREATED AS UNPROVED CREDITS AND ASSESSED U/S 68 OF THE ACT. 5. THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE CIT(A) CONFIRMED THE ADDITION. BEFORE THE CIT(A) T HE ASSESSEE HAS TAKEN TWO GROUNDS. THE FIRST GROUND IS RELATING TO SEC. 41(1) OF THE ACT AND THE SECOND GROUND IS RELATING TO SECTION 68 OF THE ACT. THE CIT(A) AFTER CONSIDERING THE ASSESSEES SUBMISSIONS OF NO COMMERCIAL ACTIVITY WAS UNDERTAKEN DURING THE PREVIOUS YEAR, HELD THAT SECTION 41(1) HAS NO APPLICATION IN THE ASSESSEES CASE AND CONFIRMED THE ADDITION U/S 68 OF THE ACT. 6. DURING THE APPEAL BEFORE US, THE LD. AR ARGUED THAT THE ASSESSING OFFICER MADE ADDITION OF ` 22,91,738/- REPRESENTING THE CREDIT BALANCES OF THE SUNDRY CREDITORS AS UNDER: ITA NO.2164/15, 749/16 C.O 77/16 :- 4 -: S.NO. PARTY NAME BALANCE AS ON 31.3.2010 AS PER SUNDRY CREDITORS AS PER CONFIRMATION GIVEN BY SUNDRY CREDITORS DIFFERENCE 1. HI TECH ENGINEERS 134869 NIL 134869 2. METTUR CONSTRUCTION 376226 CONFIRMATION LETTER RETURNED BY POSTAL AUTHORITY 376226 3. SUKRUTA AGENCIES 145205 CONFIRMATION LETTER RETURNED BY POSTAL AUTHORITY 145205 4. TATA BLUE STEEL 1500000 -- 1500000 5. UNITED RUBBER AGENCY 104898 91064 13834 6. CITYSON ELECTRICALS 121784 NIL 121784 ` 22,91,738/ - 7. THE LD. AR SUBMITTED THAT ALL THE CREDITORS ARE REL ATING TO THE SUPPLIES MADE DURING THE CONSTRUCTION PERIOD AND TH E OUTSTANDING BALANCES WERE REDUCED FROM THE COST OF THE ASSETS I N THE SUBSEQUENT YEAR AS PER THE DETAILS SUBMITTED IN PARTY WISE ACC OUNTS. THE LD. AR ARGUED THAT SINCE THE OUTSTANDING CREDIT BALANCES W ERE RELATING TO THE COST OF THE ASSETS, THIS WOULD GO TO REDUCE THE ACT UAL COST OF THE ASSETS, AND THE SAME CANNOT BE TREATED AS INCOME. LD. AR FURTHER SUBMITTED THAT CREDIT BALANCES WERE RELATED TO ACQU IRING THE CAPITAL ASSETS WHICH CANNOT BE TREATED AS AN INCOME. FURTH ER, ARGUED THAT ITA NO.2164/15, 749/16 C.O 77/16 :- 5 -: THE CREDITS WERE OPENING BALANCES AND NOT THE CREDI TS MADE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THEREFORE, OPENING BALANCES CANNOT BE MADE ADDITION IN THE YEAR UNDER CONSIDERATION. THE LD. AR ALSO RELIED ON VAR IOUS JUDGMENTS AS PER THE PAPER BOOK FILED. 8. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 9. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL PLACED BEFORE US. THE ASSESSING OFFICER MADE ADDIT ION U/S 68 OF THE ACT WHICH WAS CONFIRMED BY THE CIT(A). AS PER SEC. 68 OF THE ACT, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR, THE SUM SO CREDITED MAY BE CHARGED T O INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. FOR READY REFERENCE, WE REPRODUCE HEREUNDER SECTION 68 OF THE ACT: S.68 CASH CREDITS WHERE ANY SUM IS FOUND CREDITE D IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS Y EAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATUR E AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY IM IS NOT, IN THE OPINION OF THE [ASSESSING OFFICER] SATISFACTORY, TH E SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. 10. FROM THE ABOVE, IT IS CLEAR THAT THE AMOUNT FOUND C REDITED IN THE YEAR IN WHICH IT WAS CREDITED SHOULD BE BROUGHT TO TAX IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR. SIN CE THE CREDITS IN THE ITA NO.2164/15, 749/16 C.O 77/16 :- 6 -: BOOKS OF ACCOUNT WERE FOUND RELATING TO OPENING BAL ANCE OF EARLIER YEARS, THE SAME CANNOT BE BROUGHT TO TAX IN ASSESSM ENT YEAR 2010-11. THE ADDITION SHOULD BE MADE IN THE YEAR IN WHICH TH E CREDIT WAS MADE. THEREFORE, IT IS NOT CORRECT TO MAKE ADDITION U/S 68 OF THE ACT. THIS VIEW IS UPHELD BY THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS USHA STUD AGRICULTURAL FARMS LTD, 301 ITR 384., WHE REIN IT WAS HELD AS UNDER: 6. ACCORDING TO THIS SECTION, ANY SUM FOUND CREDITED IN THE BOOKS OF THE ASSESSEE MAINTAINED FOR A PREVIOUS YEAR MAY BE CHARGED TO IN COME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR, IF ( I )THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATUR E OF SOURCES OF SUCH SUM, OR ( II )THE EXPLANATION OFFERED BY HIM IS, IN THE OPINION OF THE ASSESSING OFFICER, NOT SATISFACTORY. 7. HERE, THE CIT(A) HAS DELETED THE ADDITION OF RS. 1 5 LAKHS MAINLY ON THE GROUND THAT THIS CREDIT BALANCE OF RS. 15 LAKHS IS BEING R EFLECTED IN THE ACCOUNTS OF THE ASSESSEE OVER THE PAST FOUR TO FIVE YEARS OR SO AND HENCE THIS WAS NOT A FRESH CREDIT ENTRY OF THE PREVIOUS YEAR UNDER CONSIDERATION AND THESE CREDIT ENTRIES WERE ALREADY MADE AND ACCOUNTED FOR IN THE ASSESSMENT YEARS 1995 -96 AND 1997-98 WHICH WERE INTRODUCED IN THE FORM OF ADVANCE AGAINST BREEDING STALLIONS OWNED BY THE ASSESSEE AND THUS THESE CREDIT ENTRIES DID NOT RELATE TO THE YEAR UNDER CONSIDERATION FOR BEING CONSIDERED UNDER SECTION 68 OF THE ACT. 8. SINCE IT IS A FINDING OF FACT RECORDED BY THE CIT( A) THAT THIS CREDIT BALANCE APPEARING IN THE ACCOUNTS OF THE ASSESSEE, DOES NOT PERTAIN TO THE YEAR UNDER CONSIDERATION, UNDER THESE CIRCUMSTANCES, THE ASSES SING OFFICER WAS NOT JUSTIFIED IN MAKING THE IMPUGNED ADDITION UNDER SECTION 68 OF TH E ACT AND AS SUCH NO FAULT CAN BE FOUND WITH THE ORDER OF THE TRIBUNAL WHICH HAS E NDORSED THE DECISION OF THE CIT(A). 11. ACCORDINGLY, WE HOLD THAT THE ASSESSING OFFICER MAD E THE ADDITION INCORRECTLY AND THE SAME IS DELETED. THE ASSESSEES GROUND ON THIS ISSUE IS ALLOWED. 12. THE ASSESSEE HAS ALSO MADE SUBMISSION DURING THE A PPEAL THAT THE SUNDRY CREDITORS ARE RELATING TO OPENING B ALANCES AND THE ITA NO.2164/15, 749/16 C.O 77/16 :- 7 -: ASSESSEE HAS ALREADY REDUCED THE OPENING BALANCES R EDUCING THE COST OF ASSETS. THE ASSESSEE HAS TAKEN THE SAME STAND BEFORE THE LOWER AUTHORITIES ALSO. WE AGREE WITH THE ASSESSEE THAT WRITING OFF OF AMOUNTS PAYABLE TO THE SUNDRY CREDITORS RELATING TO THE COST OF ASSETS WOULD GO TO REDUCE THE ACTUAL COST OF ASSETS AND TH E DEPRECIATION IS REQUIRED TO BE REWORKED ACCORDINGLY. SINCE THE ASS ESSING OFFICER HAS MADE ADDITION U/S 68 OF THE ACT AND HAS NOT CONSID ERED THE CORRECT AMOUNT OF DEPRECIATION, WE REMIT THIS ISSUE BACK TO THE ASSESSING OFFICER TO RECOMPUTE THE CORRECT AMOUNT OF DEPRECIA TION AFTER REDUCING THE OUTSTANDING BALANCES I.E ` 22,91,738/- FROM THE COST OF THE ASSET AND ALLOW CORRECT AMOUNT OF DEPRECIATION AS PER LAW . 13. THE NEXT ISSUE IS ADDITION OF ` 12,39,064/- BEING INTEREST RECEIVED FROM BANK. DURING THE ASSESSMENT PROCEEDI NGS, THE ASSESSING OFFICER FOUND THAT A SUM OF ` 12,39,064/- WAS OMITTED TO INCLUDE AS INCOME IN THE HANDS OF THE ASSESSEE. A SURVEY U/S 133A WAS CONDUCTED IN THE ASSESSEES CASE AND DURING THE COURSE OF SURVEY, THE ASSESSEE PROMISED TO PAY TAX AND FILE REVISED RETURN OF INCOME ADMITTING ADDITIONAL INCOME OF ` 12,39,064/- TOWARDS INTEREST EARNED FROM BANK DEPOSITS. HOWEVER, THE ASSESSEE HAS NOT ADMITTED THE SAME IN RESPONSE TO THE NOTICE ISSUED U/S 148 OF T HE ACT IN THE REVISED RETURN OF INCOME. THE ASSESSEE, DURING TH E COURSE OF ITA NO.2164/15, 749/16 C.O 77/16 :- 8 -: ASSESSMENT PROCEEDINGS, STATED THAT THE INTEREST ON BANK DEPOSITS WAS EARNED DURING THE CONSTRUCTION PERIOD WHICH GOES TO REDUCE THE COST OF ASSETS AND RELIED ON THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF INDIAN OIL PANIPAT POWER CONSORTIUM LTD VS ITO, 315 ITR 255. THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE EX PLANATION AND MADE THE ADDITION RELYING ON THE STATEMENT GIVEN BY THE ASSESSEE DURING THE COURSE OF SURVEY. 14. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, TH E ASSESSEE WENT ON APPEAL BEFORE THE CIT(A). THE CIT (A) DISTINGUISHED THE CASE LAWS RELIED UPON BY THE ASSESSEE I.E. CIT VS BOKARAO STEEL LTD, 236 ITR 315 AND DELHI HIGH COURT IN INDIA OIL PANIPET POWER CONSORTIUM LTD VS ITO, 315 ITR 255, AND RELYING ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF TUTICORIN ALKA LI & FERTILIZERS LTD VS CIT, 227 ITR 172, CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 15. BEFORE US, THE LD. AR ARGUED THAT THE INTEREST WAS EARNED DURING THE CONSTRUCTION PERIOD AND IT IS A CAPITAL RECEIPT TO BE REDUCED FROM THE COST OF ASSETS. THE ASSESSEE REITERATED THE SUBMISSIONS MADE BY HIM BEFORE THE CIT(A) AND RELIED ON THE CAS E LAWS CITED SUPRA. ITA NO.2164/15, 749/16 C.O 77/16 :- 9 -: 16. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL PLACED BEFORE US. THE ASSESSEE, DURING THE COURSE OF SURVEY, ADMITTED THE ADDITIONAL INCOME. THE ASSESSEE-COMPANY EARNE D INTEREST ON WHICH THE TDS WAS DEDUCTED. DURING SURVEY, THE DIR ECTORS OF THE COMPANY AGREED TO FILE REVISED RETURN OF INCOME. T HE CIT(A) HAS DISTINGUISHED THE CASE LAWS RELIED UPON BY THE ASSE SSEE AND UPHELD THE ADDITION. THE CIT(A) HAS GIVEN A FINDING THAT IN THE INSTANT CASE THERE WAS NO NEXUS BETWEEN THE FUNDS DEPOSITED IN T HE PUNJAB & SINDH BANK WHICH HAS YIELDED INTEREST AND THE ACTIV ITY OF THE SETTING UP OF THE BUSINESS. THE CIT(A) FURTHER HELD THAT THE REVENUE RECEIVED WAS NOT INEXTRICABLY LINKED TO THE SETTING UP THE ASSESSEES BUSINESS. IN THE ABSENCE OF ANY EVIDENCE TO PROVE THAT THE IN TEREST EARNED FROM PUNJAB & SINDH BANK HAS A CLEAR NEXUS WITH SETTING UP OF THE BUSINESS UNIT, THE SAME CANNOT BE CAPITALIZED AND REDUCED FR OM THE COST OF THE ASSETS. FURTHER, THE ASSESSEE HIMSELF HAS ACCEPTE D DURING THE COURSE OF SURVEY AS INCOME IN HIS HANDS AND AGREED TO FILE REVISED RETURN. THE STATEMENT RECORDED DURING THE COURSE OF SURVEY IS A GOOD PIECE OF EVIDENCE UNLESS IT IS REBUTTED WITH PROPER MATERIAL . THE ASSESSEE RELIED ON THE JUDGMENT OF SUPREME COURT IN THE CASE OF CIT VS KHADER KHAN SON, 352 ITR 480 WHEREIN IT WAS HELD THAT STAT EMENT RECORDED ON OATH DURING THE COURSE OF SURVEY IS NOT A VALID PIECE OF EVIDENCE. HOWEVER, THIS ISSUE HAS BEEN CONSIDERED BY THE HONBLE BOMBA Y HIGH ITA NO.2164/15, 749/16 C.O 77/16 :- 10 -: COURT IN THE CASE OF DR. DINESH JAIN V. INCOME TAX OFFIICER-11(2) -2, [2014] 45 TAXMANN.COM 442 (BOMBAY) MUMBAI AND HELD THAT STATEMENT UNDER SECTION 133A DOES NOT LOSE ITS EVID ENTIARY VALUE MERELY BECAUSE IT IS MADE ON OATH. IN THE CITED CAS E HONBLE HIGH COURT HELD AS UNDER : 4. WE SHALL NOW CONSIDER THE QUESTIONS AS PROPOSED FOR THE APPEAL RELATING TO ASSESSMENT YEARS 2006-07 FOR OUR CONSID ERATION. (A) REGARDING QUESTION NO.A: (I) THE GRIEVANCE OF THE APPELLANT BEFORE US IS THAT NO RELIANCE CAN BE PLACED UPON THE STATEM ENT MADE BY THE APPELLANT DURING THE SURVEY PROCEEDINGS UNDER SECTION 133A OF THE ACT FOR THE R EASON THAT IT WAS RECORDED ON OATH. IT IS UNDISPUTED THAT EVEN UNDER SECTION 133A OF THE ACT DEALING WITH SURVEY PROCEEDINGS, THE REVENU E AUTHORITIES ARE ENTITLE D TO RECORD THE STATEMENT OF ANY PERSON WHICH MAY B E USEFUL OR RELEVANT TO PROCEEDINGS UNDER THE ACT. THE POWER TO RECORD A STATEMENT DURING SURVEY PROCEEDINGS IS FOUND IN SEC TION 133A (3) OF THE ACT. THE RELEVANT PORTION OF WHICH READS AS UND ER: 'POWER OF SURVEY SECTION 133A (1) TO (2) (3) AN INCOME TAX AUTHORITY ACTING UNDER THIS SECTI ON MAY: (I) & (II)** ** ** (III ) RECORD THE STATEMENT OF ANY PERSON WHICH MAY BE U SEFUL FOR, OR RELEVANT TO, ANY PROCEEDING UNDER THIS ACT.' THE R EQUIREMENT OF RECORDING A STATEMENT ON OATH IS FOUN D IN SECTION 132 OF THE ACT I.E. DURING SEARCH AND SEIZURE PROCE EDING AND SUCH A REQUIREMENT IS NOT FOUND IN SECTION 133A OF THE ACT . NEVERTHELESS, A STATEMENT UNDER SECTION 133A OF THE ACT DOES NOT LO OSE ITS EVIDENTARY VALUE MERELY BECAUSE IT IS MADE ON OATH. BESIDES, T HE STATEMENT IN THIS CASE IS ONE OF THE EVIDENCES BEING RELIED UPON AND NOT THE SOLE EVIDENCE. THE TRIBUNAL IN THE IMPUGNED ORDER HAS RE CORDED THAT THE ADDITION OF INCOME IS BASED NOT ONLY O N THE STATEMENT OF THE APPELLANT-ASSESSEE BUT ALSO BASED ON 'PAGE NO.17'. THE CASE LAW RELIED UPON BY THE APPELLANT IN THE MA TTER OF CIT V. S. ITA NO.2164/15, 749/16 C.O 77/16 :- 11 -: KHADER KHAN SON [2013] 352 ITR 480/[2012] 210 TAXMAN 248/25 TAXMANN.COM 413 (SC) ARISING FROM THE DECISION OF MADRAS HIGH COURT IN CIT V. S. KHADER KHAN SON [2008] 300 ITR 157 PROCEEDED ON THE FACT THAT THE AUTHORITIES DID NOT ACCEPT THE RETRACTION MADE BY A DEPONENT OF A STATEMENT MADE ON OATH DURING SURVE Y PROCEEDINGS UNDER SECTION 133A OF THE ACT. THIS WAS ON THE GROU ND THAT STATEMENT WAS MADE ON OATH. BESIDES THE SOLE EVIDEN CE AGAINST THE ASSESS EE IN THAT CASE WAS THE STATEMENT MADE ON OATH DURI NG THE SURVEY PROCEEDINGS WHICH IS NOT THE CASE IN THE PRE SENT FACTS. FURTHER, IN THIS CASE THE APPELLANT- ASSESSEE HAS NOT BEEN ABLE TO SHOW THAT THE STATEMENT MADE IS NOT CORRECT AND/OR UNBELIEVABLE. THEREFORE, THE CASE LAW RELIED UPON BY THE APPELLAN T- ASSESSEE IS COMPLETELY DISTINGUISHABLE AND NOT APPLICABLE TO TH E PRESENT FACTS. FURTHER, THE HONBLE ALLAHABAD HIGH COURT IN THE C ASE OF SANJEEV AGRAWAL V. INCOME TAX SETTLEMENT COMMISSIONER, ALLAHABAD [2015] 56 TAXMANN.COM 214 HELD THAT THE STATEMENT G IVEN DURING THE SURVEY IS A VALID PIECE OF EVIDENCE AND CANNOT BE R ETRACTED AT THE WHIMS AND FANCIES OF THE ASSESSEE. WE REPRODUCE HE REUNDER THE RELEVANT PARAGRAPH OF THE JUDGEMENT OF THE HON HIG H COURT. 10. IN PULLANGODE RUBBER PRODUCE CO. LTD. V. STATE OF KERALA [1973] 91 ITR 18 (SC) THE SUPREME COURT HELD THAT AN ADMISSION IS A PIEC E OF EVIDENCE THOUGH IT IS NOT CONCLUSIVE. CONSEQUENTLY, A STATEMENT MADE VOLUNTARY UNDER SECTION 133A OF THE ACT CANNOT BE R ETRACTED UNLESS THE ASSESSEE FILES EVIDENCE TO SHOW THAT THE ADMISSION MADE IN THE STATEMENT AT THE TIME OF SURVEY WAS WRONG AND AGAIN ST THE MATERIAL ON RECORD. THE MERE FACT THAT THE COMMISSIONER OF INCO ME TAX IN HIS REPORT HAS HELD THAT THE STATEMENT GIVEN BY THE PET ITIONER WAS ON OATH AND THEREFORE, IT CANNOT BE RETRACTED IS IMMATERIAL IN THE CONTEXT OF WHAT WE HAVE SAID AFORESAID. 11. NO DOUBT, SECTIONS 132(4) AND 133A OF THE ACT ARE DISTINCT AND DIFFERENT. UNDER SECTION 133A OF THE ACT, THERE IS NO PROVISION TO ADMINISTER OATH AND TO TAKE A SWORN STATEMENT WHERE AS UNDER SECTION 132(4) OF THE ACT THERE IS NO PROVISION TO EXAMINE A PERSON ON OATH. BUT IT DOES NOT MEAN THAT A STATEMENT UNDER SECTION 133 A OF THE ACT CAN BE RETRACTED AT THE WHIM AND FANCY OF THE ASSESSEE. IN THE LIGHT OF THE ITA NO.2164/15, 749/16 C.O 77/16 :- 12 -: AFORESAID, THE ASSERTIONS MADE BY THE LEARNED COUNS EL FOR THE PETITIONER CANNOT BE ACCEPTED. 17 . THEREFORE, IT IS AN ADMITTED FACT THAT THE ASSESSEE FILED THE RETURN OF INCOME WITHOUT ADMITTING THE AMOUNT OF ` 12,39,064/- IN THE ORIGINAL RETURN AND AT THE TIME OF SURVEY OMISSION OF INCOME HAS COME TO THE NOTICE AND THE ASSESSEE HAS AGREED TO OFFER THE SAME AS ADDITIONAL INCOME AND SUBSEQUENTLY RETRACTED WITHOU T PROPER EVIDENCE. THE ASSESSEE HAS FAILED TO ESTABLISH THAT THE INTE REST EARNED IS INEXTRICABLY LINKED WITH SETTING UP OF PLANT. THER EFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A ) AND THE SAME IS UPHELD. THE GROUND OF APPEAL IS DISMISSED. 18 . IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR AS SESSMENT YEAR 2010-11 IS PARTLY ALLOWED FOR STATISTICAL PURP OSES. 19 . NOW COMING TO THE REVENUES APPEAL FOR ASS ESSMENT YEAR 2011-12, ALL THE GROUNDS ARE RELATED TO SETTING OFF OF THE INCOME ASSESSED U/S 68 OF THE ACT AGAINST THE CURRENT YEA RS LOSSES. 20 . DURING THE ASSESSMENT PROCEEDINGS, THE ASSE SSING OFFICER MADE AN ADDITION OF ` 2,15,68,340/- AND DID NOT ALLOW THE SET OFF OF THE INCOME AGAINST THE CURRENT YEARS BUSINESS LOS SES OF THE COMPANY. A SURVEY U/S 133A OF THE ACT WAS CONDUCTED ON 2.8. 2011 AND DURING ITA NO.2164/15, 749/16 C.O 77/16 :- 13 -: THE COURSE OF SURVEY, THE DIRECTORS OF THE ASSESSEE -COMPANY HAVE ACCEPTED THE ADDITIONAL INCOME RELATING TO SHARE A PPLICATION MONEY OF ` .2,07,71,984/- AS UNEXPLAINED SOURCE. SUBSEQUENTLY , THE ASSESSEE SUBMITTED A LETTER BEFORE THE A.O EXPLAINING THE SO URCE FOR ` 45 LAKHS AND ADMITTED THE BALANCE AMOUNT OF ` 1,62,71,984/- AS ADDITIONAL INCOME VIDE LETTER DATED 29.1.2014 AND FILED THE RE TURN OF INCOME DECLARING THE INCOME OF ` .1,62,71,984/-. LATER ON VIDE LETTER DATED 27.2.2014 THE ASSESSEE FURTHER EXPLAINED THAT THE AMOUNT OF ` 1,62,71,984/- REPRESENTED THE AMOUNT IS UNDISCLOSED DISCOUNTS FROM THE SUPPLIERS AND CONTRACTORS ON THE BUILDING, MAC HINERY AND OTHER ASSETS IN THEIR FACTORY WHICH WAS PLOUGHED BACK AS SHARE APPLICATION MONEY AND ARE DIRECTLY RELATABLE TO THE COST OF THE ASSETS AND HENCE THE SAID AMOUNTS WERE DO NOT REPRESENT THE REVENU E RECEIPT WHICH GOES TO REDUCE THE ACTUAL COST OF THE ASSETS. THUS THE ASSESSEE REQUESTED THE ASSESSING OFFICER TO IGNORE THE RETUR N OF INCOME FILED ADMITTING THE TOTAL INCOME OF ` 1,62,71,984/- AND REQUESTED TO ASSESS THE INCOME BY MAKING NECESSARY ADJUSTMENTS IN THE D EPRECIATION. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION AND MADE THE ADDITION OF ` 1,62,71,984/- IN THE ASSESSMENT ORDER AND DID NOT ALLOW SET OFF OF LOSS CLAIMED BY THE ASSESSEE. ITA NO.2164/15, 749/16 C.O 77/16 :- 14 -: 21 . AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, TH E ASSESSEE WENT ON APPEAL BEFORE THE CIT(A). THE CIT(A) CONFIRMED THE ADDITION OF ` 1,62,71,984/- AND ALLOWED SET OFF OF THE INCOME AGA INST THE CURRENT YEARS LOSSES. THE CIT(A) RELIED ON THE DECISION OF ITAT CHENNAI I N THE CASE OF ERODE ANNAI SPINNING MILLS P LTD VS ACIT IN I.T.A.NO.1389 /MDS/2015 DATED 30.9.2015 AND THE JURISDICTIONAL HIGH COURT DECISION REPORTED IN 291 ITR 258. 22 . WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US. A SURVEY U/S 133A OF THE ACT WA S CONDUCTED IN THE PREMISES OF THE ASSESSEE AND DURING THE COURSE OF SURVEY, THE ASSESSEE HAS ADMITTED ADDITIONAL INCOME U/S 68 OF THE ACT FOR AN AMOUNT OF ` 2,07,71,984/-. SUBSEQUENTLY VIDE LETTER DATED 29. 1.2014 THE ASSESSEE HAS EXPLAINED THE SOURCE FOR ` 45 LAKHS CREDITED IN THE CAPITAL ACCOUNT OF SHRI P. BALASUBRAMANIAM AND THE BALANCE AMOUNT OF ` 1,62,71,984/- WAS ADMITTED AS ADDITIONAL INCOME AN D FILED THE RETURN. THE FIRST APPELLATE AUTHORITY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER AND ALLOWED THE SET OFF OF T HE INCOME AGAINST THE CURRENT YEARS BUSINESS LOSSES AS PER THE FOLLOW ING DISCUSSION MADE IN THE FIRST APPELLATE ORDER. 6.2.1 . THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V CHENSING VENTURES (291 ITR 258) HELD AS UNDER: ' S E C T ION 71 OF THE INCOME TAX ACT 1961 - L OSSES - S ET OFF , FROM O NE HEAD AGAI N S 1 INCOME FROM ANOTHER - ASSESS M ENT YEA R 2002-03 - WHE THER LO SS S USTA INED I N A Y E A R UNDER ANY HEADS OF INCOME SHOULD BE SET OF F ITA NO.2164/15, 749/16 C.O 77/16 :- 15 -: AG AINS T I NCO ME UNDER A NY O TH E R HEAD - HELD Y ES - ASS ESSEE SUR R ENDERE D CASH OF R S . 28 .5 0 LAK HS AT TI ME OF SUR V EY C ONDUCTED AT ITS BUSIN ESS P RE M I SES F OR TAXAT I O N - IN ITS RET URN O F INCO M E , AS SESSEE DECLARED A LOSS OF RS . 11, 9 5,3 89 AND A DMITTED RS . 2 8 . 50 L A KHS A S ITS IN C OME FROM UNDISCLOSED SOURCES - W HI LE COMPL ET ING ASSESSME N T, AS S ESSING OFFIC ER MA D E ADDITION OF RS. 28.50 LAKHS AS U NDISC LOSE D INCOME UND E R SE C TION 6 9 B UT D I D NOT SET OFF BUSINESS LOSS AGAIN ST SAID I N C O M E - WHETHER SINCE BENE F IT PR OVIDED UNDE R SECTION 71 COULD NOT BE DE N I ED AND R EVENUE WAS ALSO UNABLE T O E XP LAIN OR G IVE REASONS WHY ASSESSEE, W AS N OT E N TITLE D TO BENEF I T OF SECTION 7 1 , AS S ESSING OFFI C ER ' S ORDER WAS UNSUSTAINABL E - HEL D YES.' 6 .2 . 2 THE BINDING DECISION IS RESPE C T F ULLY C O NSI DERED. THE SET OFF OF LOS S IS E L I GIBLE U N DER SECTION 71 THA T IS CURRE NT YEA R BUS INESS LOSS AGAINST INCOME FRO M OT HER SOURC E S DETERMINED AT RS. 1,62 , 71 , 984 / - IS ALL OW ED. THE DEC I SION OF TH E J URISDICTION A L T R IBUNAL IN P. SUB R AMANIAN V S . ITO IS A L SO C ONSIDERED. 'N O T ONLY DOES NOT PREVENT THE I T O FRO M T R EATING , BUT E NT ITLES H I M T O TR E AT THE UN E XP L AINED CASH CRE D ITS AS INCO ME FROM AN U NDISCLOSED SOURCE WHIC H FALLS UNDER THE HEAD 'INCOME FROM OTH ER S OUR C E S' U NLESS THE A SSESSEE , B Y INDEPENDENT AND SATISFACTORY EVIDENCE , E STA B L ISH E D THAT THOSE AMO U NTS RELATE O R A RE REFERABLE TO THE UNDIS C LOSED INCOME O F THE VERY KNO WN OR DISCLOSED SO U RCES , NA M E LY, THE BUS I NESS WHOSE INCOME HAD ALR E A D Y BEE N E STIMATED . ' 6.2.3 F OLLOWING THIS, TH E INCOME DE T E RM INED AT RS. 1,62 , 71 , 984/ - FALLS C L E A R LY UNDER TH E HEAD 'I COME FROM OTHE R SOURCES' AS A GREED BY T HE APPEL LA NT IN THE GROUNDS OF APPEAL . H ENCE , CARRIED FO R W AR D B U S INESS LOSS, IF AN Y, CANNOT BE SET OFF, UNDE R THE HEAD SECTION 72 AGAINST THIS I NCO ME . F OLLOW I NG TH E D ECISION OF J URISD ICTIONAL HI G H COURT SET OFF I S LIMITED TO CUR R E NT YEAR BUSINESS LOSS . T H IS I S IN ACC ORDANCE WITH THE DECISION OF THE JU R I SD ICTION AL T R I BUNAL IN E R ODE ANNAI SPINNING MILLS P. LTD. VS THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -1, COIMBATORE IN I.T.A. NO.1389/MDS/2015 DATED 30 TH SEPTEMBER, 2015. 23 . WE HAVE GONE THROUGH THE SUBMISSIONS AND THE CIT(A) S ORDER. THE CIT(A) HAS ALLOWED THE SET OFF OF THE IN COME ASSESSED UNDER THE INCOME FROM OTHER SOURCES AGAINS T THE ITA NO.2164/15, 749/16 C.O 77/16 :- 16 -: BUSINESS INCOME WHICH IS ALLOWABLE AS PER SECTION 7 1 OF INCOME TAX ACT. THE CIT(A) FOLLOWED THE HONBLE JURISDICTI ONAL HIGH COURT DECISION FOR ALLOWING THE SET OFF OF LOSSES. THE REV ENUE HAS NOT BROUGHT ANY OTHER DECISION TO CONTROVERT THE SAME. T HEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CI T(A) AND THE SAME IS UP HELD. THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL ARE DISMISSED. 24 . THE ISSUE RAISED BY THE ASSESSEE IN ITS CROS S OBJECTION IS RELATING TO THE ADDITION OF ` 7,96,356/- U/S 68 OF THE ACT. 25 . THE ASSESSING OFFICER MADE ADDITION OF ` 7,96,356/- REPRESENTING THE DIFFERENCES IN BALANCES OF SUNDRY CREDITS. THE ASSESSEE SUBMITTED THAT THE DIFFERENCES WERE RELATI NG TO DISCOUNTS OF SUPPLIERS AND CONTRACTORS ON THE BUILDING. HOWEVER , THE ASSESSEE FILED THE RETURN OF INCOME CLAIMING THE DEPRECIA TION WITHOUT REDUCING THE SAME FROM THE COST OF ASSETS. THEREFORE, THE A SSESSING OFFICER MADE THE ADDITION U/S 68 OF THE ACT. THE LD.CIT(A ), IN APPEAL, CONFIRMED THE ADDITION HOLDING THAT THIS CLAIM OF T HE ASSESSEE IS NEITHER VERIFIABLE NOR SATISFACTORILY EXPLAINED. 26 . BEFORE US ALSO THE ASSESSEE HAS NOT FURNISHE D ANY EVIDENCE TO PROVE THE CLAIM OF THE ASSESSEE EXCEPT IN TWO CASE S DISCUSSED IN THIS ITA NO.2164/15, 749/16 C.O 77/16 :- 17 -: PARAGRAPH. BEFORE THE ASSESSING OFFICER AS WELL AS THE CIT(A) THE ASSESSEE CONTENDED THAT THE AMOUNT REPRESENT THE OF UNDISCLOSED DISCOUNT FROM THE SUPPLIERS AND THE CONTRACTORS ON BUILDING, MACHINERY AND OTHER ASSETS INSTALLED IN THE FACTORY. THE ASSE SSEE HAS FURNISHED THE PAPER BOOK CONTAINING LEDGER ACCOUNT COPIES IN RESPECT OF MAK CONTROLS AND SIPCOT FOR ` 1,52,600/- AND ` 1,60,849/- WRITTEN OFF IN THE ACCOUNTS CONCERNED IN THE SUBSEQUENT YEAR. THE SAME EXPLANATION WAS OFFERED BY THE ASSESSEE BEFORE ASSESSING OFFICER A LSO. THEREFORE WE ARE OF THE OPINION THAT THE SAID AMOUNTS OF RS. ` .1,52,600/- AND ` 1,60,849/- SHOULD GO TO REDUCE THE COST OF ASSETS AND DO NOT FALL UNDER SECTION 68 OF THE ACT AS DECIDED BY US IN THE APPEAL FOR THE A.Y 2010-11. THEREFORE, WE REMIT THE MATTER BACK TO ASS ESSING OFFICER TO VERIFY THE CLAIMS OF THE ASSESSEE IN THE LINES OF D ISCUSSION IN THIS ORDER AND RECOMPUTE THE DEPRECIATION AFTER GIVING OPPORTU NITY TO THE ASSESSEE. FOR THE BALANCE AMOUNT OF ` 4,82,907/- NO EVIDENCE IS FURNISHED BEFORE US ALSO. HENCE, THE ADDITION IS CO NFIRMED. 27 . IN THE RESULT, THE CROSS OBJECTION OF THE ASSE SSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 28 . IN THE RESULT, THE APPEAL OF THE REVENUE IS D ISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE FOR ASSESSMENT YEA R 2011-12 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.2164/15, 749/16 C.O 77/16 :- 18 -: 29 . TO SUMMARIZE, THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2010-11 AND CROSS OBJECTION FOR ASSESSMENT YEAR 201 1-12 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE APPEAL OF TH E REVENUE FOR ASSESSMENT YEAR 2011-12 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH OCTOBER, 2016, AT CHENNAI. SD/- SD/- ( . . . ) ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( . . ' # $ ) (D.S. SUNDER SINGH) % / ACCOUNTANT MEMBER / CHENNAI ! / DATED: 28 TH OCTOBER, 2016 RD !' # $% &% / COPY TO: 1 . '( / APPELLANT 4. ) / CIT 2. #*'( / RESPONDENT 5. %+, # - / DR 3. ) () / CIT(A) 6. ,/ 0 / GF