SHRI HARVINER SINGH , PATHANKOT V. INCOME TAX OFFICER WARD-6(1), PATHANKOT

ITA 98/ASR/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6181 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-02-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 21-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VAIBHAV AGGARWAL
• Keywords: Unexplained investment
• Section: 80IB; 201; 48; 13; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH AMRITSAR BEFORE SHRI L.P. SAHU, AM & SHRI RAVISH SOOD, JM . / ITA NO. 98 / ASR /201 8 ( / ASSESSMENT YEAR : 20 1 3 - 201 4 ) SHRI HARVINDER SINGH S/ O SHRI SOHAN SINGH, C/O M/S JANTA AUTO TRADING CO. DALHOUSIE ROAD, PATHANKOT VS. ITO, WARD - 6(1), PATHANKOT ./ PANNO. : A CEPS 5287 R ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI TEJ MOHAN SIN GH, ADVOCATE AND SHRI VAIBHAV AGGARWAL, CA /REVENUE BY : SHRI CHARAN DASS, DR / DATE OF HEARING : 0 5 / 02 /20 20 / DATE OF PRONOUNCEMENT : 07 / 02 /20 20 / O R D E R PER L.P.SAHU , A M : TH E REVENUE HAS FI LED THIS APPEAL AGAINST THE ORDER OF CIT(A) - 2 , AMRITSAR , DATED 07.12.2017 FOR ASSESSMENT YEAR 201 3 - 201 4 , ON THE FOLLOWING GROUNDS : - 1. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE ADDITION OF RS.4, 62,358/ - MADE BY DISALLOWING THE DEDUCTION CLAIMED UNDER SECTION 80IB IN UTTER DISREGARD OF THE EXPLANATIONS RENDERED WHICH IS ARBITRARY AND UNJUSTIFIED. 2. THAT THE ASSESSEE HAD MET ALL THE NECESSARY CONDITIONS REQUIRED TO CLAIM THE DEDUCTION U/S 80IB AND THE LOWER AUTHORITIES HAVE ON AN ERRONEOUS APPRECIATION OF FACTS HELD THAT THE MANUFACTURING ACTIVITIES COMMENCED ONLY AFTER 07.01.2013 AND NOT ON 30.03.2012 WHICH IS CONTRARY TO THE FACTS ON RECORD AND AS SUCH THE ORDER PASSED IS ARBITRARY AND UNJU STIFIED. 3. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS FURTHER ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE ADDITION OF ITA NO. 98/ ASR /201 8 2 RS. 48 ,91,000/ - TREA TING THE SAME TO BE UNEXPLAINED INVESTMENT IN PURCHASE OF LAND UNDER SECTION 68 IN UTTER DISREGARD O F THE FACTUAL POSITION DULY EXPLAINED DURING THE COURSE OF ASSESSMENT AS WELL AS A P PELLATE PROCEEDINGS WHICH IS ARBITRARY AND UNJUSTIFIED. 4. THAT THE PROVISIONS OF SECTION 68 ARE NOT APPLICABLE IN THE INSTANT CASE AS THERE ARE NO CASH CREDITS WHICH AR E APPEARING IN THE BOOKS OF ACCOUNT AND AS SUCH APPLICATION OF WRONG PROVISIONS OF THE ACT NOT REMOTELY CONNECTED IS ARBITRARY AND UNJUSTIFIED. 5. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS, ARBITRARY, OPPOSED TO LAW AND FACTS OF THE CASE AND IS, THUS, UNTENABLE. 2. GROUND NOS.1 & 2 RELATE TO DEDUCTION CLAIMED BY THE ASSESSEE U/S.80IB OF THE INCOME TAX ACT, 1961 AND GROUND NOS.3&4 RELATES TO THE ADDITION MADE U/S.68 OF THE ACT AT RS.48,91,000/ - ON ACCOUNT OF UNEXPLAINED I NVESTMENT IN PURCHASE OF LAND. 3 . FACTS IN BRIEF ARE THAT THE ASSESSEE FILED RETURN OF INCOME ELECTRONICALLY ON 01.10.2013 DECLARING TOTAL INCOME OF RS.4,33,530/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE GROSS RECEIPTS OF THE ASSESSEE WERE SHOWN AT RS.39,95,550/ - AND NET PROFIT WAS DECLARED AT RS.5,11,516/ - INCLUDING INTEREST ON FDR AT RS.49,157/ - . THE ASSESSEE CLAIMED DEDUCTIO N U/S.80IB OF THE ACT @100% OF NET PROFIT OF RS.4,62,358/ - AND A CERTIFICATE ISSUED BY THE CHARTERED ACCOUNT IN THE FORM 10CCB SHOWING THE DATE OF COMMENCEMENT OF OPERATION BY THE UNIT AS 30.03.2012 WITH THE YEAR 2012 - 2013 BEING THE INITIAL ASSESSMENT YEA R. THE GENERAL MANAGER DIC, KATHUA HAD GRANTED ITA NO. 98/ ASR /201 8 3 REGISTRATION BEARING NO. 07/0/05/1200434 ON 07.01.2013. AS PER SECTION 80IB(4) OF THE I.T.ACT, 1961 IN THE CASE OF INDUSTRIAL UNDERTAKING IN THE STATE OF JAMMU AND KASHMIR ONE OF THE CONDITIONS IS THAT THE UNIT BEGINS TO MANUFACTURE OR PRODUCE ARTICLES AND THINGS DURING THE PERIOD BEGINNING ON THE FIRST DAY OF APRIL, 1993 AND ENDING ON 31 ST MARC H , 2012. IN THIS REGARD, THE ASSESSEE WAS ASKED TO SUBSTANTIATE THAT THE PRODUCTION OF THE UNIT WAS STATED ON 30.0 3 .201 2, WHEREAS THE CERTIFICATE OF REGISTRATION HAS BEEN GRANTED ON 07.01.2013 BY THE DISTRICT INDUSTRY CENTRE, KATHUA, SCANNED COPY OF WHICH HAS BEEN INCORPORATED AT PAGE 4 OF THE ASSESSMENT ORDER . THE ASSESSEE TRIED TO JUSTIFY THAT THE PRODUCTION WAS COMMENC ED FROM 30.03.2012 AND IN SUPPORT OF THIS, THE ASSESSEE PROVIDED VARIOUS DOCUMENTS, VIZ. PURCHASE OF MATERIALS, ELECTRICITY BILL, LABOUR REGISTER, LORRY RECEIPTS, ETC. HE ALSO FILED MONTHWISE ELECTRICITY BILLS FROM JULY, 2011, WHICH WAS NOTICED BY THE AO A ND ACCORDING TO THE ANALYSIS OF THE ELECTRICITY CONSUMPTION, THE AO CALCULATED THAT THE MANUFACTURING ACTIVITIES WAS STARTED WITH EFFECT FROM JULY, 2012, WHICH WAS OUTSIDE THE PURVIEW OF THE PROVISIONS FOR CLAIMING DEDUCTION U/S.80IB(4) OF THE ACT. ACCORDI NG TO THE AO, THE PRODUCTION IS TO BE STATED FROM 01.04.1993 TO 31.03.2012 FOR CLAIMING DEDUCTION U/S.80IB(4) OF THE ACT AND IN THE IMPUGNED CASE HE WAS NOT SATISFIED THAT THE PRODUCTION WAS COMMENCED BEFORE 31.03.2012. THEREFORE, AFTER RELYING SOME CASE L AWS, HE ADDED THE ITA NO. 98/ ASR /201 8 4 ENTIRE DEDUCTION CLAIMED BY THE ASSESSEE OF RS.4,62,358/ - INTO THE TOTAL INCOME OF THE ASSESSEE. FURTHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE AO NOTED THAT THE ASSESSEE HAD PURCHASED 7 K ANALS 8 M ARLA INCLUDING THE SHED CONSTR UCTED OVER 2 KANAL 11 MARLA AT VILLAGE LOHGATE, KATHUA FROM SMT. NEELAM GUPTA, WIFE OF SHRI RAMAN GUPTA , R/O WARD NO.1, PWD COLONY, KATHUA AND SMT. ANITA GUPTA, W/O SH. MANISH KUMAR, R/O WARD NO.4, KATHUA ON 13 TH DECEMBER, 2012 FOR A CONSIDERATION OF RS.48 ,91,000/ - INCLUDING RS.29,60,000/ - TOWARDS COST OF LAND AND RS.19,31,000/ - TOWARDS COST OF SHED. THE SCANNED COPY OF THE SALE DEED HAS BEEN INCORPORATED BY THE AO AT PAGES 11 TO 13 OF THE ASSESSMENT ORDER . THE AO NOTED THAT THE VENDORS HAVE RECEIVED THE EN TIRE SALE CONSIDERATION FROM THE VENDEE AND NOTHING IS OUTSTANDING AGAINST HIM. IN THIS REGARD, THE ASSESSEE WAS ASKED TO CLARIFY IN RESPONSE TO WHICH THE ASSESSEE REPLIED, WHICH HAS ALSO BEEN INCORPORATED AT PAGE 15 OF THE ASSESSMENT ORDER . FROM THE SUBMI SSIONS MADE BY THE ASSESSEE AND DOCUMENTS PRODUCED, THE AO WAS NOT SATISFIED AND HE MADE ENTIRE SALE CONSIDERATION OF RS.48,91,000/ - AS UNEXPLAINED INVESTMENT. 4 . FEELING AGGRIEVED FROM THE ASSESSMENT ORDER , THE ASSESSEE APPEALED BEFORE THE CIT(A) , WHEREI N THE ASSESSEE FILED DETAILED WRITTEN SUBMISSIONS. T HE CIT(A) AFTER CONSIDERING ALL THE SUBMISSIONS AND DOCUMENTS PRODUCED BY THE ASSESSEE, CONFIRMED THE ACTION OF AO. ITA NO. 98/ ASR /201 8 5 5 . AGAINST THE ORDER OF THE CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. 6 . LD. AR REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND FILED PAPER BOOK CONTAINING PAGES 78, WHICH WAS DULY FILED BEFORE AUTHORITIES BELOW. LD. AR ALSO REFERRED THE DETAILS OF THE OPENING STOCK AND CLOSING STOCK OF THE MATERIALS AND COPY OF RG - 1, WHICH ARE PLACED AT PAGES NO.54 & 55 OF THE PAPER BOOK AND ALSO REFERRED TO THE DETAILS OF MATERIALS PURCHASED, LORRY RECEIPTS, WHICH ARE PLACED IN THE PAPER BOOK AND HE ALSO EXPLAINED THAT THE GENERAL MANAGER, DIC, KATHU A HAS CERTIFIED THAT THE PRODUCTION HAS BEEN COMMENCED FROM 30.03.2012. THE AO HAS MISINTERPRETED TO THE REGISTRATION CERTIFICATE WHICH HAS BEEN GRANTED ON 07.01.2013 AND WRONGLY ANALYZED THE CONSUMPTION OF ELECTRICITY. LD.AR ALSO SUBMITTED THAT THE ELECTR ICITY CONSUMPTION HAS BEEN STATED SINCE JULY, 2011 AND THE MAJOR ELECTRICITY HAS BEEN CONSUMED BY THE ASSESSEE IN MONTH OF MARCH, 2012. LD. AR ALSO REFERRED TO FORM NO.10CCB DULY CERTIFIED BY THE CHARTERED ACCOUNTANT. FURTHER IN RESPECT OF GROUND NOS.3 & 4 , LD. AR REFERRED TO THE SALE DEEDS AND SUBMITTED THAT THE PAYMENT WAS MADE COMPLETELY, WHICH IS EVIDENT FROM THE BALANCE SHEET UNDER THE HEAD UNSECURED LOAN THAT SMT. NEELAM GUPTA AND SMT. ANITA GUPTA ARE APPEARING AS UNSECURED LOAN CREDITORS AND DUE TO U NAWARENESS IN THE SALE DEED, WHICH HAS BEEN SHOWN WRONGLY THAT THE ENTIRE PAYMENT HAS ITA NO. 98/ ASR /201 8 6 BEEN RECEIVED. LD. AR ALSO REFERRED TO PAPER BOOK PAGE NO.7, WHICH IS SUBMISSIONS MADE BEFORE THE ITO, WARD - 1, PATHANKOT. AT THE END OF ORAL SUBMISSIONS, LD. AR REQUESTED FURTHER THAT THE MATTER MAY KINDLY BE SENT TO AO FOR FURTHER VERIFICATION. 7 . ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF AUTHORITIES BELOW AND SUBMITTED IN RESPECT OF GROUND NOS.1 & 2 THAT THE AUTHORITIES BELOW HAVE ANALYZED IN DETAIL TO THE ISSUE INVOLVED IN BOTH THE GROUNDS. THEREFORE, THE ORDER OF BOTH THE AUTHORITIES BELOW SHOULD BE UPHELD. IN ADDITION TO THIS, LD. DR SUBMITTED THAT THE AO HAS OBSERVED THAT THE REGISTRATION HAS BEEN GRANTED ON 07.01.2013 AFTER INCEPTION BY THE GENERAL MANAGER, DIC, KATHUA. FURTHER IN RESPECT OF UNEXPLAINED INVESTMENT, HE SUBMITTED THAT THE ASSESSEE COULD NOT CONTROVERT THE FINDINGS RECORDED BY BOTH THE AUTHORITIES BELOW. 8 . AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTIRE MATERIAL ON RECORD ALONG WITH THE O BSERVATIONS MADE BY BOTH THE AUTHORITIES BELOW IN THEIR RESPECTIVE ORDERS, IN RESPECT OF GROUND NOS.1&2, WE NOTICED THAT THE ASSESSEE TRIED TO JUSTIFY THAT THE PRODUCTION WAS COMMENCED ON 30.03.2012. DURING THE COURSE OF HEARING, LD. AR DREW OUR ATTENTION TO THE CERTIFICATE ISSUED BY THE GENERAL MANGER , DIC, KATHUA ON 07.01.2013, SCANNED COPY OF WHICH HAS BEEN INCORPORATED IN THE ASSESSMENT ORDER THAT THE GENERAL MANAGER, DIC, KATHUA HAS CLEARLY MENTIONED THAT THE COMMENCEMENT OF PRODUCTION IS WITH EFFECT FROM ITA NO. 98/ ASR /201 8 7 30.03.2012. THIS HAS NOT BEEN CONTROVERTED BY THE LD. DR BEFORE US. WE HAVE ALSO GONE THROUGH THE PAPER BOOK WITH REGARD TO THE DOCUMENTS NAMELY, PURCHASE OF MATERIALS, ELECTRICITY BILL, LABOUR REGISTER, LORRY RECEIPTS, ETC. AND THE ASSESSEE HAS ALSO SHOWN IN HIS TRADING ACCOUNT THE CLOSING STOCK OF MATERIAL OF RS.25,65,846/ - . THE ASSESSEE HAS ALSO PLACED A COPY OF RG - 1 REGISTERED, WHICH HAS BEEN FILED AT PAGES 54 & 55 OF THE PAPER BOOK. ON PERUSAL OF THE DETAILS OF THE CONSUMPTION OF THE ELECTRICITY, IT IS CLEAR THAT IN THE MONTH OF MARCH, THE CONSUMPTION OF ELECTRICITY WAS 1536 UNITS AND THE DOCUMENTS WERE ALSO PLACED BEFORE THE AO AND THESE DOCUMENTS HAVE NOT BEEN DISREGARDED BY THE AO AND THE AO HAS ACCEPTED THAT THE ELECTRICITY CONSUMPTION WAS MAD E IN THE MONTH OF MARCH, 2012 . THE ASSESSEE HAS ALSO SHOWN IN THE TRADING ACCOUNT AS ON 31.03.2012 WAGES EXPENSES OF RS.1,11,000/ - AND THE AO COULD HAVE EXAMINED THE PAYMENT OF WAGES OF RS.1,11,000/ - SHOWING IN THE TRADING ACCOUNT FOR THE FINANCIAL YEAR EN DING AS ON 31.03.2012. THE LABOUR REGISTER WAS PRODUCED BEFORE THE AO, WHICH HAS NOT BEEN DENIED . EVEN THE LABOUR REGISTER FOR THE SUBSEQUENT YEAR HAS ALSO BEEN PLACED BEFORE THE AO. IF THE AO HAS DOUBTED THE COMMENCEMENT OF PRODUCTION, HE COULD HAVE EXAM INED THE LABOURERS FOR BEING SATISFIED HIMSELF, HOWEVER, HE JUST STRENGTHENED HIS ANALYSIS OF THE ELECTRICITY CONSUMPTION AND THE DATE OF CERTIFICATE ISSUED BY THE GENERAL MANAGER, DIC, KATHUA. IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, THE ITA NO. 98/ ASR /201 8 8 CASE LAWS RELIED ON BY THE AUTHORITIES BELOW ARE NOT APPLICABLE IN THE PRESENT CASE. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE DOCUMENTS AVAILABLE BEFORE US, WE CONSIDER THE DATE OF COMMENCEMENT OF PRODUCTION AS 30.03.2012, AND, THEREF ORE, THE ASSESSEE IS ELIGIBLE FOR CLAIMING DEDUCTION U/S.80IB(4) OF THE ACT ON THE PROFIT DERIVED FROM THE INDUSTRIAL UNDERTAKING AS CLAIMED BY THE ASSESSEE. ACCORDINGLY, GROUND NOS.1&2 ARE ALLOWED. 9 . FURTHER, IN RESPECT OF GROUND NOS.3&4, AFTER CONSIDER ING BOTH THE SIDES AND ON PERUSAL OF PAGE 7 OF THE PAPER BOOK, WHICH IS SUBMISSION MADE BY THE ASSESSEE BEFORE THE AO AND OTHER RELATED DOCUMENTS AND CONSIDERING TO THE REQUEST OF LD.AR OF THE ASSESSEE, WE RESTORE THE ISSUE RAISED IN BOTH THE GROUNDS TO TH E FILE OF AO FOR FURTHER VERIFICATION. THE ASSESSEE IS ALSO DIRECTED TO APPEAR BEFORE THE CIT(A) WITH NECESSARY DOCUMENTS FOR SUBSTANTIATING HIS CLAIM AS RAISED BEFORE US. THE ASSESSEE IS ALSO DIRECTED NOT TO TAKE ANY UNNECESSARY ADJOURNMENTS AND COOPERATE WITH THE AO FOR EARLY DISPOSAL OF THE CASE. THUS, GROUND NOS.3&4 RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 10 . IN THE RESULT, GROUND NOS.1&3 APPEAL OF THE ASSESSEE ARE ALLOWED AND GROUND NOS.3&4 ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07 / 02 /20 20 . SD/ - ( RAVISH SOOD ) S D/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / AMRITSAR ; DATED 07 / 02 /20 20 PRAKASH KUMAR MISHRA, SR.P.S. ITA NO. 98/ ASR /201 8 9 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) ITAT CUTTACK BENCH, AMRITSAR 1. / THE APPELLANT - SHRI HARVINDER SINGH S/O SHRI SOHAN SINGH, C/O M/S JANTA AUTO TRADING CO. DALHOUSIE ROAD, PATHANKOT 2. / THE RESPONDENT - ITO, WARD - 6(1), PATHANKOT 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, AMRITSAR 6. / GUARD FILE. //TRUE COPY//