M/s S.G. Capital Services Ltd., Ludhiana V. DCIT, Ludhiana

ITSSA 12/CHANDI/2005

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7546 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-04-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 17-02-2005
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Keywords: Depreciation
• Section: 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A, CHANDIGARH BEFORE MS SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER IT(SS)A NO. 12/CHD/2005 BP ENDING 1.4.1989 TO 24.6.1999 S.G. CAPITAL SERVICES LTD, V. D.C.I.T., 18, SAMPURAN COLONY, CENTRAL CIRCLE-I, LUDHIANA. LUDHIANA . PAN: (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ASHWANI KUMAR RESPONDENT BY: SMT. JYOTI KUMARI, CIT DATE OF HEARING: 01.03.2012 DATE OF PRONOUNCEMENT: 25.04.2012 ORDER PER SUSHMA CHOWLA, JM THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER OF CIT(A),I, LUDHIANA DATED 28.10.2004 RELATING TO BLO CK PERIOD 1.4.1989 TO 24.6.1999. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A) GRAVELY ERRED IN HAVING SUM MARILY CONFIRMED ARBITRARILY MADE DISALLOWANCE OF DEPRECIA TION ON FURNITURE, COMPUTE AS ALSO ON FAX MACHINE. IN ANY CASE, NO PART OF THE INCOME ASSESSED BEING FROM ALLEGED UNDISCLOSED SOURCES, COULD NOT BE SUBJECT MATTER OF ASSESSMENT FOR THE BLOCK P ERIOD AND ARBITRARY CONFIRMATION OF ITOS ACTION WAS THUS AGA INST LAW. 2. THAT NO YEARWISE ASSESSMENT HAVING BEEN MADE, EN TIRE ASSESSMENT STOOD VITIATED AND THAT ARBITRARY CONFIR MATION OF ASSESSING AUTHORITYS ACTION WAS HIGHLY UNWARRANTED AND UNJUSTIFIED. 3. THE ISSUE RAISED BY THE ASSESSEE IN THE PRESENT APPEAL IS AGAINST THE DISALLOWANCE OF DEPRECIATION ON FURNITURE, COMPUTER AS ALSO ON FAX MACHINE, WHILE DETERMINING THE INCOME FOR THE BLOCK PERIOD. 2 4. THE BRIEF FACTS OF THE CASE ARE THAT SEARCH U/S 132 OF THE ACT WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF THE ASSESS EE ON 24.6.1999. IN RESPONSE TO NOTICE U/S 158BC OF THE ACT FOR BLOCK P ERIOD FROM 1.4.1989 TO 24.6.1999 WAS ISSUED TO THE ASSESSEE. THE ASSESSEE FURNISHED THE RETURN OF INCOME FOR THE BLOCK PERIOD AT NIL. THE ASSESSEE W AS ASKED TO FURNISH CERTAIN CLARIFICATIONS ON VARIOUS DOCUMENTS/ASSETS FOUND AND SEIZED DURING THE COURSE OF SEARCH OPERATIONS. THE AO ON EXAMIN ATION OF THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF THE ASSESSEE C OMPANY FROM DATE OF ITS COMING INTO EXISTENCE TILL DATE OF SEARCH, FOUND TH E ASSESSEE TO HAVE CLAIMED DEPRECIATION ON ASSETS. THE ASSESSEE WAS A SKED TO FURNISH EVIDENCE OF ACTUAL ASSETS OWNED BY IT. THE ASSESSE E COMPANY HAD SHOWN ITS REGD. OFFICE AT 18-SAMPURAN COLONY, LUDHIANA, W HICH WAS THE RESIDENTIAL ADDRESS OF THE DIRECTOR OF THE ASSESSEE COMPANY, SANJEEV GUPTA AND NO SUCH ASSETS WERE FOUND AT THE REGD OFF ICE. IN THE STATEMENT RECORDED U/S 131 OF THE ACT, SANJEEV GUPTA ADMITTED THAT NO SUCH ASSET WAS INSTALLED AT THE REGD. OFFICE BUT WERE INSTALLE D AT ANOTHER BUILDING AT LUDHIANA, WHICH WAS TRANSFERRED TO HIS FRIEND BEFOR E ITS USE. THE FAX MACHINE WAS INSTALLED IN THE OFFICE OF M/S S.G. & C O. LUDHIANA. THE AO CONFRONTED THE ASSESSEE WITH THE VOUCHERS AND DO CUMENTS FOUND FROM THE PREMISES OF THE ASSESSEE AND OTHER CONCERN. AL L THE VOUCHERS FOUND RELATING TO WOOD WORK WERE NOT IN THE NAME OF THE A SSESSEE AND PAYMENTS WERE IN CASH. NO WOOD WORK WAS CARRIED AT THE REGD . OFFICE OF THE ASSESSEE. THE AO IN VIEW THEREOF DISALLOWED DEPRECI ATION ON THE ASSET CLAIMED BY THE ASSESSEE FOR ASSESSMENT YEARS 1995-9 6 TO 1999-2000. THE AO ALSO DISALLOWED DEPRECIATION ON FAX MACHINE WHIC H ADMITTEDLY WAS INSTALLED IN THE OFFICE OF THE M/S S.G. & CO., WHIC H WAS A STOCK BROKERAGE CONCERN OWNED BY SMT. SARITA GUPTA, MOTHER OF SANJE EV GUPTA. THE CIT(A) CONFIRMED THE ORDER OF THE AO. 5. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF T HE AO. IT HAS BEEN POINTED OUT BY THE LD AR FOR THE ASSESSEE THAT DISA LLOWANCE OF 3 DEPRECIATION AND ASSET COULD NOT BE SAID TO BE THE PART OF UNDISCLOSED INCOME AS ALL DETAILS WERE ON RECORD AND THE SAME S HOULD HAVE BEEN CONSIDERED AS PART OF REGULAR ASSESSMENT. THE LD. D R FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF THE AO. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE A DDITIONS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) RELAT ING TO BLOCK PERIOD. SEARCH & SEIZURE OPERATIONS WERE CARRIED AT THE PRE MISES OF THE ASSESSEE ON 24/06/1999. DURING THE COURSE OF SEARCH & SEIZUR E OPERATION, VARIOUS DOCUMENTS WERE IMPOUNDED, WHICH INCLUDED THE BILLS/ VOUCHERS IN RELATION TO WOOD WORK. THE REGD. OFFICE OF THE ASSESSEE WAS THE RESIDENCE OF THE DIRECTOR OF ASSESSEE COMPANY. THE ASSESSING OFFICER CONFRONTED THE ASSESSEE THAT NO SUCH WOOD WORK WAS CARRIED OUT ITS REGD. OFFICE. IN REPLY, THE ASSESSEE EXPLAINED THAT THE WOOD WORK WA S DONE AT BUILDING NO. 131, MODEL GRAM, LUDHIANA DURING FINANCIAL YEAR 199 5-96 AND THE SAID OFFICE WAS TRANSFERRED TO HIS FRIEND. FURTHER EVEN THE BILLS/VOUCHERS FOUND DURING THE COURSE OF SEARCH WERE FOUND TO BE NOT IN THE NAME OF ASSESSEE AND WERE PAID IN CASH. SIMILARLY FAX MACHINE WAS AL SO NOT FOUND FROM THE PREMISES OF THE ASSESSEE. WHEN CONFRONTED WITH THES E EVIDENCES, THE ASSESSEE FAILED TO EXPLAIN ITS STAND/CASE. THE DEPR ECIATION ON ASSETS WAS THUS DISALLOWED. THE PLEA OF THE LD. AR FOR ASSESSE E AGAINST THE ADDITION MADE WAS THAT THESE ARE UNWARRANTED U/S 158BC OF TH E ACT. 7. UNDER THE PROVISIONS OF SECTION 158BC OF THE ACT , THE ASSESSING OFFICER IS TO DETERMINE UNDISCLOSED INCOME OF THE B LOCK PERIOD. SECTION 158B(B), DEFINES UNDISCLOSED INCOME, WHICH READS AS UNDER:- 158B. (B) UNDISCLOSED INCOME INCLUDES ANY MONEY, BULLI ON, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANS ACTIONS, WHERE SUCH MONEY, BULLION, JEWELLERY, VALUABLE ARTI CLE, THING, ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENT OR TRANSACTION 4 REPRESENTS WHOLLY OR PARTLY INCOME OR PROPERTY WHIC H HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPO SES OF THIS ACT [, OR ANY EXPENSE, DEDUCTION OR ALLOWANCE CLAIM ED UNDER THIS ACT WHICH IS FOUND TO BE FALSE]. 8. THE FINANCE ACT, 2002, WREF 01/07/1995 HAD INSER TED THE FOLLOWING IN SECTION 158B(B) OF THE ACT: [, OR ANY EXPENSE, DEDUCTION OR ALLOWANCE CLAIMED U NDER THIS ACT WHICH IS FOUND TO BE FALSE]. 9. IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE H AD CLAIMED DEPRECIATION ON ASSETS I.E WOOD WORK, FAX MACHINE E TC., WHICH ASSETS DID NOT RELATE TO THE ASSESSEE NOR THE SAME WERE UNDER THE USE OF THE ASSESSEE. THE ASSESSEE IN HIS STATEMENT RECORDED DURING PROCE EDINGS ADMITTED TO THE SAME. IN VIEW THEREOF, ADMITTEDLY WHERE THE ASSETS IN QUESTION WERE NEITHER OWNED BY THE ASSESSEE NOR USED BY THE ASSES SEE, THE DEDUCTION CLAIMED BY WAY OF DEPRECIATION ON SUCH ASSETS WAS N OT ALLOWABLE IN THE HANDS OF ASSESSEE, IN VIEW OF THE AMENDED MEANING O F THE TERM UNDISCLOSED INCOME U/S 158B(B) OF THE ACT. CONSEQ UENTLY THE ASSESSEE IS NOT ENTITLED TO DEDUCTION CLAIMED. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF APRIL, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 25 TH APRIL, 2012 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR 5