Puran Foods Pvt. Ltd, Bhubaneswar V. ACIT, Bhubaneswar

ITSSA 25/CTK/2010

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8423 (ITAT-CUTTACK)
• Duration Of Justice: 5 month(s) 14 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 22-08-2012
• Assessment Year: misc
• Appeal Filed On: 29-11-2010
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: S K AGARWALAC R DAS ARS
• Keywords: Search and seizure; Cost of acquisition; Block assessment

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T (SS) A.NO. 025/CTK/2010 BLOCK PERIOD 1988 - 89 TO 27.8.1997 PURAN FOODS PVT. LTD., 30, VIP AREA, NAYAPALLI, BHUBANESWAR 751 015, ORISSA PAN: AADCP 1022 F - - - VERSUS - ASST. COMMISSIONER OF I NCOME - TAX CIRCLE 2(1), BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI S.K.AGARWALA/C.R.DAS, ARS / FOR THE RESPONDENT: / SMT. PARAMITA TRIPATHY, DR / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THIS APPEAL FILED BELATEDLY BY THE ASSESSEE ENCLOSES A CONDONATION PETITION FOR THE DELAY OF 29 DAYS ON ACCOUNT OF THE ASSESSEES MANAGING DIRECTOR BEING INDISPOSED AND AGED HAD CLOSED THE BUSI NESS NOW LEADS A RETIRED LIFE. THE LEARNED DR HAD NO OBJECTION ON THIS PETITION. WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING. 2. THIS IS THE SECOND INNINGS FOR THE ISSUE TO BE DELIBERATED BY THE TRIBUNAL. ON THE FIRST OCCASION THE TRIBUNAL HAD C ATEGORICALLY NOTED THAT THE CLAIM OF DEVELOPMENT EXPENSES AMOUNTING TO 7,54,545 COULD NOT FORM PART OF THE UNDISCLOSED INCOME OF THE ASSESSEE ONLY WHEN THE SAID CLAIM HAD BEEN MADE BY THE ASSESSEE IN ITS REGULAR RETURN. THIS WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DETERMINATION AFRESH. 3. THE ASSESSEE BEFORE U S HAS RAISED THE FOLLOWING GROUNDS. 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS - IL) HAS ERRED BOTH IN LAW AND ON FACTS IN CIRCUMSTANCE BY NOT CONSIDERING THE GROUND NO.1 OF THE APPEAL BEFORE HIM THAT, THE I.T(SS)A.NO. 025/CTK/2010 2 ORDER IS TIME BARRED AS IT IS PASSED AN D SERVED ON THE ASSESSEE AFTER THE TIME OF LIMITATION AS PER THE LAW. 2. THAT, THE AUTHORITIES BELOW ERRED BOTH IN LAW AND FACTS IN CIRCUMSTANCES BY NOT WORKING AS PER THE DIRECTION OF THE HONBLE ITAT. I.E., THE HONBLE ITAT HAS GIVEN THE DIRECTION THA T, IN VIEW OF THE ABOVE AND IN THE INTEREST OF JUSTICE, THE MATTER IS RESTORED BACK TO THE FILE OF THE AO TO FIND OUT IF THE IMPUGNED EXPENDITURE OF 7,54,545 HAD ALREADY BEEN DISCLOSED BY THE ASSESSEE IN THE REGULAR RETURN WHILE COMPUTING CAPITAL GAINS ON SALE OF LAND. THE AO IS ALSO DIRECTED TO DEAL WITH THE MATTER BY EXERCISING HIS POWER OF REOPENING FOR THE AY 1995 - 96 IF SUCH EXPENDITURE ARE NOT FOUND BY HIM DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNT AND DISCLOSED TO THE DEPARTMENT. OTHERWISE, THE AO MAY AGAIN PROCEED TO PROCESS THE SAME BY MAKING ADDITION IN THE BLOCK ASSESSMENT ORDER FRAMED U/S 158BC(C). 4. THE BRIEF FACTS ON THE ISSUE ARE THAT A SEARCH OPERATION U/S.132(1) OF THE ACT WAS CARRIED OUT AT THE FACTORY CUM OFFICE PREMISES OF THE ASSESSEE APPELLANT ON 27.8.1997 IN CONSEQUENCE TO THE SEARCH OPERATION, THE ORIGINAL BLOCK ASSESSMENT WAS COMPLETED U/S.158BC(C) ON 31.8.1999. THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY WHO CONFIRMED THE BLOCK ASSESSMENT WHICH INTERALIA INC LUDED THE AMOUNT OF 7,54,545 AS PURPORTED EXPENDITURE CLAIMED BUT NOT DISCLOSED IN THE REGULAR RETURN WAS APPROPRIATE FOR CONSIDERATION IN THE BLOCK PERIOD UNDER THE HEAD UNDISCLOSED INCOME . 5. AS MENTIONED ABOVE, THE TRIBUNAL RESTORED THE ISSUE TO THE FILE OF THE ASSESSIN G OFFICER TO VERIFY WHETHER THE SAID SUM HAD BEEN CLAIMED AS EXPENDITURE BY THE ASSESSEE IN ITS REGULAR RETURN. THE ASSESSING OFFICER ON THE DIRECTION OF THE TRIBUNAL HEARD THE ASSESSEE ON 7.11.205 AND PASSED THE ORDER ON 12.1.2006 CLEARLY INDICATING THAT EXAMINATION OF INCOME TAX RETURN FOR THE ASST. YEAR 1995 - 96 AND ALL THE DOCUMENTS ANNEXED WITH THE SAID INCOME TAX RETURN I.E., AUDITED FINANCIAL STATEMENT OF ACCOUNTS, TAX AUDIT REPORT, COMPUTATION OF INCOME AND DETAILS FURNISHED DURING THE ASSESSMENT PRO CEEDINGS REVEALED THAT ASSESSEE HAD NEVER CLAIMED ANY EXPENDITURE I.T(SS)A.NO. 025/CTK/2010 3 AMOUNTING TO 7,54,545 AS WELL AS DEVELOPMENT EXPENSES IN THE RETURN WHICH ONLY SHOWED A PROFIT OF 11,39,182 ON SALE OF LAND. THE SEARCH AND SEIZURE OPERATION REVEALED THAT THE ASSESSEE H AD RECEIVED 34,05,200 AS TOTAL CONSIDERATION FOR SALE OF LAND DURING THE FINANCIAL YEAR 1995. THE COST OF ACQUISITION IS 15,11,473 AS DETERMINED IN THE ORIGINAL BLOCK ASSESSMENT ORDER. HENCE, TOTAL GAIN IS 18,93,797 OUT OF WHICH 11,39,182 IS DISCLO SED. HENCE 7,54,545/ - IS THE UNDISCLOSED INCOME. AGGRIEVED, THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY WHO AFTER INCORPORATING THE DELIBERATION OF THE ASSESSEE AS WELL AS THE DIRECTION OF THE TRIBUNAL CONCLUDED AS UNDER : THE AO HAVING E XAMINED THE ISSUE IN DETAIL HAS COME TO A FINDING THAT THE ADDITION WAS SUITABLY MADE. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND UPON SUCH CONSIDERATION, I AM OF THE CONSIDERED VIEW THAT THERE IS SUFFICIENT MERIT IN AOS REPORT IN COMING TO THE FACTUAL CONCLUSION THAT THE APPELLANT HAD NEVER CLAIMED ANY EXPENDITURE AMOUNTING TO 7,54,545 TOWARDS DEVELOPMENT EXPENDITURE. ACCORDING TO THE AO DIRECTIONS OF THE HON BLE ITAT WAS RESTRICTIVE IN NATURE. THE ITAT HAS DIRECTED THE AO TO ONLY VERIFY WHETHER THE SAID DEVELOPMENT EXPENSE WAS DISCLOSED BY THE ASSESSEE IN HIS RETURN OF INCOME OR COMPUTATION OF INCOME. THIS ISSUE WAS RE - EXAMINED BY THE AO IN ACCORDANCE WITH THE DIRECTIONS AND THE AO GAVE A FACTUAL FINDING THAT THE ASSESSEE HAS NEVER CLAIMED ANY EXPENDITURE AMOUNTING TO 7,54,545 TOWARDS DEVELOPMENT EXPENDITURE AND HENCE, THE A O CONCLUDED THAT ADDITION WAS SUITABLY MADE. SINCE THE ASSESSMENT WAS DONE IN ACCORDANCE WITH THE SPECIFIC MANDATE OF THE ITAT, THE AO HAS URGED THAT NO EVIDENTIARY VALUE BE ASSIGNED TO THE DOCUMENTS SUBMITTED BY THE ASSESSEE IN SUPPORT OF THE DEVELOPMENT EXPENDITURE AS DISCUSSED BY THE AO. THERE IS ENOUGH MERIT IN THE SUBMISSION OF THE AO AND I TEND TO AGREE WITH THE SAME. 6. THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE US SUBMITTED A PAPER BOOK WHICH INTERALIA INCLUDES THE VARIOUS ASSESSMENT ORDERS AND THAT OF THE TRIBUNAL AND FINANCIAL STATEMENT FOR THE ASSESSMENT YEAR 1995 - 96 WHICH HAVE BEEN PERUSED. THE LEARNED COUNSELS INSISTENCE THAT THE AMOUNT WAS I.T(SS)A.NO. 025/CTK/2010 4 SPENT IS SUPPORTED BY THE LEDGER COPY OF THE ACCOUNT IN THE BOOKS OF THE ASSESSEE (PAGES 21 TO 23 OF THE PAPER BOOK) UNDER THE HEAD LAND DEVELOPMENT EXPENSES TOTALING 7,54,545. ON A SPECIFIC QUERY BY THE BENCH WHETHER THIS AMOUNT HAS BEEN CLAIMED IN THE REGULAR RETURN HAS NOT BEEN INDICATED IN THE FINANCIAL STATEMENT, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE INCOME ON THE SALE OF ASSETS HAS BEEN INDICAT ED AT PAGE 13 OF THE PB AT 11,39,182 CONCLUDES THAT THE TOTAL AMOUNT WAS SPENT. HOWEVER, THE LEARNED COUNSEL FOR THE ASSESSEE COULD NOT EXPLAIN THE CLAIM OF THE EXPENDITURE IN THE P & L ACCOUNT AS WAS SOUGHT TO BE PUT FORTH BY THE ASSESSEE BEFORE THE ASSE SSING OFFICER ON THE DIRECTION OF THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO POINTED OUT THAT THE ASSESSEE ADJUSTED THE COST OF ACQUISITION IN THE FIXED ASSETS SCHEDULE GIVEN ON PAGE 11 OF THE PB BY REDUCING THE AMOUNT FROM THE TOTAL LAND HOLD ING BY 15,11,473. THEREFORE, IT JUSTIFIED THE CLAIM OF EXPENDITURE WHICH MAY KINDLY BE CONSIDERED IN ITS ENTIRETY. HOWEVER, HE ALSO INSISTED ON THE ASSESSING OFFICER HAVING PASSED THE ORDER U/S.158BC(C)/254 BEYOND THE STIPULATED PERIOD AS PROVIDED UNDER LAW. FOR THIS PROPOSITION, HE HAS RELIED ON THE DECISION OF HONBLE ORISSA HIGH COURT IN THE CASE OF CIT V. ORISSA FOREST DEVELOPMENT CORPORATION LTD. [2007] 290 ITR 543 (ORI). HE SUBMITTED THAT THE ASSESSING OFFICER OUGHT NOT TO HAVE PASSED THE ORDER BEYOND THE PERIOD OF ONE YEAR AS ENVISAGED ON THE APPLICATION OF SECTION 153(2A). 7. THE LEARNED DR OPPOSED THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE INDICATING THAT THE CASE LAW CITED IS NOT APPLICABLE TO THE FACTS OF THE CASE INSOFAR AS THERE IS NO TI ME LIMIT PROVIDED TO THE ASSESSING OFFICER TO CARRY OUT THE DIRECTION OF THE TRIBUNAL UNDER THE PROVISIONS OF SECTION 254. ON MERITS SHE ARGUED THAT AT THE TIME OF SEARCH CARRIED OUT, THE DOCUMENT SUGGESTING THE SALE OF LAND AT 34,05,200 WAS FOUND AGAINST WHICH THE I.T(SS)A.NO. 025/CTK/2010 5 INCOME SHOWN BY THE ASSESSEE WAS ONLY 11,39,182. IN ORDER TO COVER UP THE DIFFERENCE THE ASSESSEE CLAIMED BEFORE THE TRIBUNAL A SUM OF 7,54,545 WAS SPENT FOR THE DEVELOPMENT WHICH ALONE SHOULD BE REDUCED FROM THE SALE CONSIDERATION WAS NOT SU PPORTED BY ANY DOCUMENTARY EVIDENCE WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR CONSIDERATION AFRESH. EVEN NOW THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO SUPPORT ITS CONTENTION INSOFAR AS THE REGULAR BOOKS OF ACCOUNT RETURNED BY TH E ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR CLEARLY INDICATE THAT THE CONSIDERATION WAS SHOWN LESS BY 7,54,545 WAS NOT THE CASE OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO FURNISH THE DETAILS AS CLAIMED BY IT BEFORE THE FIR ST APPELLATE AUTHORITY ALSO WHO AFTER HAVING CALLED FOR THE REMAND REPORT CONCLUDED AS MENTIONED ABOVE. SHE CONCLUDED HER ARGUMENT BY SUBMITTING THAT THE ORDERS OF THE AUTHORITIES BELOW ARE FIT FOR CONFIRMATION IN ALL RESPECTS. 8. WE HAVE HEARD THE RIVAL C ONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THIS BEING THE SECOND INNINGS THE ASSESSEE OUGHT TO HAVE BEEN EQUIPPED WITH THE EVIDENCES AND EXPLANATION AS WERE CLAIMED TO BE HELD BY HIM WHEN EARLIER BEFORE THE TRIBUNAL IT PRAYED FOR RESTORATION OF THE MATTER FOR CONSIDERATION AFRESH BY THE ASSESSING OFFICER. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE ITS CLAIM OF HAVING INCURRED THE EXPENDITURE FOR THE PROPOSITION THAT THE INCOME SO RENDERED BY THE ASSESSEE IN ITS REGULAR BOOKS OF ACCOUNT INCORPORATED THE CLAIM OF EXPENSES WHICH APPARENTLY HAS NEITHER BEEN CLAIMED IN THE PROFIT & LOSS ACCOUNT AND NOR HAD BEEN CAPITALIZED ON THE ADJUSTMENT OF THE LAND COST BY REDUCING THE SAME TO 15,11,473 FROM THE TOTAL VAL UE OF THE LAND AS BLOCK OF ASSETS. WE ARE OF THE CONSIDERED VIEW THAT THE SALE CONSIDERATION COULD NOT HAVE BEEN REDUCED BY INFLATING THE COST OF ACQUISITION WITH THAT OF I.T(SS)A.NO. 025/CTK/2010 6 THE LAND DEVELOPMENT EXPENSES INCURRED. THE SAID SUM HAS RIGHTLY BEEN BROUGHT TO TAX AS UNDISCLOSED INCOME. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 13 TH MAY, 2011 S D/ - S D/ - ( . . . ) , ( K.S.S.PRASAD RAO), JUDIC IAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 13 TH MAY, 2011 - COPY OF THE ORDER FORWAR DED TO: 1 . / THE APPELLANT : PURAN FOODS PVT. LTD., 30, VIP AREA, NAYAPALLI, BHUBANESWAR 751 015, ORISSA. 2 / THE RESPONDENT: ASST. COMMISSIONER OF INCOME - TAX CIRCLE 2(1), BHUBANESWAR. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECRETARY ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY.