M/s Akash Ganga Homes Pvt Ltd, Patna V. DCIT, Central Circle-1, Patna

ITSSA 30/PAT/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0083 (ITAT-PATNA)
• Duration Of Justice: 2 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-09-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 06-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: INDERJI T SINGH
• Keywords: Document seized; Documents seized
• Section: 40A(3); 40(a)(ia); 37(1); 142(2A)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH, PATNA , . . , BEFORE SHRI CHANDRA MOHAN GARG, J M & SHRI L .P. SAHU, AM IT (SS) A NO. 30 / PAT /201 6 ( / ASSESSMENT YEAR : 20 06 - 20 07 ) M/S AKASH GANGA HOMES PVT. LTD 3 RD FLOOR, ASHIANA TOWERS, EXHIBITION ROAD, PATNA VS. DCIT, CENTRAL CIRCLE - 1, PATNA - 800001 ./ PAN NO. : A AECA 8030 F ( / APPELLANT ) .. ( / RESPONDEN T ) /ASSESSEE BY : SHRI NISHANT MAITIN, CA /REVENUE BY : SHRI INDERJIT SINGH , CIT - DR / DATE OF HEARING : 1 8 /0 9 /2019 / DATE OF PRONOUNCEMENT : 19 /0 9 /2019 / O R D E R PER BENCH : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY LEARNED CIT(A) - 3 , PATNA , DATED 23 .0 9 .201 6 FOR THE ASSESSMENT YEAR 20 06 - 20 07 ON THE FOLLOWING GROUNDS OF APPEAL : - 1. FOR THAT THE COMMISSIONER OF INCOME - TAX (APPEALS) - 3, PATNA HAS ERRED I N CONFIRMING THE PROCEEDING U/S 153C/153A OF THE INCOME TAX ACT. 2. FOR THAT THE COMMISSIONER OF INCOME - TAX (APPEALS) - 3, PATNA HAS ERRED IN NOT HOLDING THAT THE ORDER PASSED U/S 153C IS BARRED BY LIMITATION. 3. FOR THAT THE COMMISSIONER OF INCOME - TAX (A PPEALS) - 3, PATNA HAS ERRED IN NOT HOLDING THE SPECIAL AUDIT U/S 142(2A) AS AB - INITIO VOID, ARBITRARY, ILLEGAL AND CONTRARY TO THE PROVISIONS OF LAW. 4. FOR THAT THE COMMISSIONER OF INCOME - TAX (APPEALS) - 3, PATNA HAS ERRED IN NOT HOLDING THAT SPECIAL AUDI T CONDUCTED U/S 142 (2A) BY THE SPECIAL AUDITOR IS BARRED BY LIMITATION. IT (SS) A NO . 30 / PAT /201 6 2 5. FOR THAT THE COMMISSIONER OF INCOME - TAX (APPEALS) - 3, PATNA HAS ERRED IN SUSTAINING ADDITION OF RS 12,09,806/ - ON ACCOUNT OF PEAK DEFICIT. 6. FOR THAT THE COMMISSIONER OF INCOME - T AX (APPEALS) - 3, PATNA HAS ERRED IN NOT HOLDING THAT THE ORDER PASSED BY ID AO IS BAD BOTH IN LAW AND ON FACTS. 7. FOR THAT THE COMMISSIONER OF INCOME - TAX (APPEALS) - 3, PATNA HAS ERRED IN NOT HOLDING THAT ORDER OF LEARNED ASSESSING OFFICER IS BASED ON PRE SUMPTIONS, SURMISES AND CONJECTURES. 8. FOR ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 2. OUT OF THE ABOVE GROUNDS, LD. AR AT THE TIME OF HEARING DID NOT PRESS GROUND NOS.1 TO 4, ACCORDINGLY, THESE GROUNDS ARE DISMISSED AS NOT PRESSED. FU RTHER GROUND NOS.6 TO 7 ARE GENERAL IN NATURE, THEREFORE, THE SAME ARE NOT NECESSARY FOR ADJUDICATION. NOW, THE SOLE GROUND REMAINED I.E. GROUND NO.5 WITH REGARD TO SUSTENANCE OF ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PEAK DEFICIT. 3. IN REG ARD TO THE ABOVE SOLE GROUND LD. AR SUBMITTED THAT INCOME SHOULD BE COMPUTED FOR THE WHOLE PROJECT ON THE BASIS OF UNACCOUNTED RECEIPTS & UNACCOUNTED EXPENSES. IT WAS ALSO ARGUED THAT IN THE A.Y.2009 - 2010, INCOME FROM THIS PROJECT IS SHOWN AT RS.9,16,878/ - AND SURPLUS OF UNACCOUNTED RECEIPTS & EXPENSES FOR THREE YEAR WORK OUT TO RS.8,61,226/ - , THEREFORE, NO FURTHER ADDITION IS WARRANTED. 4 . ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF BOTH THE AUTHORITIES BELOW. 5. ON CAREFUL CONSIDERATION OF THE ABOV E RIVAL SUBMISSIONS OF BOTH THE PARTIES AS WELL THE MATERIAL AVAILABLE ON RECORD OF THE TRIBUNAL, WE IT (SS) A NO . 30 / PAT /201 6 3 FIND THAT THE ASSESSING OFFICER HAS RESORTED TO THE ADDITION ON ACCOUNT OF PEAK DEFICIT ON THE BASIS OF THE FACT THAT THE ASSESSEE WAS REQUIRED TO PREPARE A CASH FLOW CHART DATE WISE IN RESPECT OF UNACCOUNTED RECE IPTS AND UNACCOUNTED EXPENSES. IN APPEAL, THE CIT(A) SUSTAINED THE ADDITION OF RS.12,09,806/ - OBSERVING THAT FROM THE CASH FLOW CHART PRODUCED BY THE ASSESSEE, RS.12,09,806/ - IS PEAK SHORTFALL IN FUND FOR EXPENSES, WHICH INDICATES THAT THE ASSESSEE HAS INCURRED EXPENSES TO THE TUNE OF THE ABOVE DISPUTED AMOUNT, SOURCE OF WHICH HAS NOT BEEN EXPLAINED BY THE ASSESSEE. THE RELEVANT FINDING OF THE CIT(A) AT PAGE 12 OF THE APPELLATE ORDER READS AS UNDE R : - IT IS APPARENT FROM THE ABOVE FINDINGS THAT THE AO HAS RESORTED TO ADDITION OF RS. 45,67,579/ - UNDER ONE OR OTHER HEAD FOR THE EVIDENCES OF UNACCOUNTED RECEIPTS OF RS. 22,50,000/ - AND UNACCOUNTED EXPENSES OF RS. 27,69,046/ - . THE APPLICATION OF PROVIS ION OF SEC. 40A(3) AND 40(A)(IA) OF THE ACT AS WELL AS 37(1) OF THE ACT IN RESPECT OF ADDITIONS OF RS. 5,19,046/ - , RS. 5,21,683/ - , RS. 12,30,000/ - AND RS. 46,850/ - IS TOTALLY ILLOGICAL AND NOT IN ACCORDANCE WITH THE PROVISION OF THE ACT. THE DISALLOWANCES UNDER THESE PROVISIONS OF THE ACT ARE APPLICABLE FOR DEDUCTIONS CLAIMED BY THE ASSESSEE IN THEIR REGULAR BOOKS OF ACCOUNT. AS THE EXPENSES ARE CLEARLY SHOWN TO HAVE BEEN UNACCOUNTED EXPENSES AS PER REPORT OF THE SPECIAL AUDITOR, THERE CANNOT BE DISALLOWANC ES FOR THE DEDUCTIONS WHICH ARE NOT CLAIMED IN THE REGULAR BOOKS OF ACCOUNT OF THE APPELLANT. CONSIDERING THIS FACTUAL CIRCUMSTANCES, THE APPELLANT WAS REQUIRED TO PREPARE A CASH FLOW CHART DATE WISE IN RESPECT OF UNACCOUNTED RECEIPTS AND UNACCOUNTED EXPEN SES. THE APPELLANT HAS FILED THE CASH FLOW CHART FOR THE CURRENT AY IN RESPECT OF UNACCOUNTED RECEIPTS OF RS. 22,50,000/ - AND UNACCOUNTED EXPENSES OF RS. 27,69,046/ - AND FROM THIS CASH FLOW CHART, IT IS NOTICED THAT THE PEAK OF SHORTFALL IN FUND IT (SS) A NO . 30 / PAT /201 6 4 FOR EXPENS ES IS RS. 12,09,806/ - AS ON 08.01.2006. THIS SHORTFALL INDICATES THAT AS ON 08.01.2006, THE APPELLANT HAD INCURRED EXPENSES TO THE TUNE OF RS. 12,09,806/ - FOR WHICH THERE WAS NO EXPLAINABLE SOURCE - NOT EVEN UNACCOUNTED CASH RECEIPTS. THUS, IT IS APPARENT THAT THE APPELLANT HAD MET EXPENSES TO THE TUNE OF RS. 12,09,806/ - FROM UNDISCLOSED SOURCES IN THE CURRENT AY. THE APPELLANT CONTNEDED THAT INCOME SHOULD BE COMPUTED FOR THE WHOLE PROJECT ON THE BASIS OF UNACCOUTNED RECEIPTS & UNACCOUNTED EXPENSES. IT WAS ARGUED THAT IN THE AY 2009 - 10, INCOME FROM THIS PROJECT IS SHOWN AT RS. 9,16,878/ - AND SURPLUS OF UNACCOUNTED RECEIPTS & EXPENSES FOR THREE YEAR WORK OUT TO RS. 8,61,226/ - MEANING THEREBY NO FURTHER ADDITION IS WARRANTED. THIS CONTENTION IS NOT ACCEPTABLE IN VIEW OF THE FUND SHORTAGE WORKED OUT FROM CASH FLOW SUMMARY. THEREFORE, THE ONLY ADDITION OF UNDISCLOSED INCOME IN THE CURRENT AY ON THE BASIS OF SEIZED DOCUMENTS INDICATING UNACCOUNTED CASH RECEIPT OF RS. 22,50,000/ - AND UNACCOUNTED EXPENSES OF RS. 27, 69,046/ - CAN BE UPTO RS. 12,09,806/ - ONLY. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, THE UNDISCLOSED INCOME TO BE ADDED IN THE CURRENT AY TO THE TUNE OF RS. 12,09,806/ - IS CONFIRMED AND REST OTHER ADDITIONS UNDER VARIOUS HEADS MADE BY THE AO ARE HEREBY DEL ETED. ON PERUSAL OF THE ABOVE OBSERVATIONS OF THE CIT(A), WE ARE OF THE OPINION THAT THE FINDINGS RECORDED BY THE CIT(A) IN THIS REGARD ARE JUST AND PROPER TO WHICH OUR INTERFERE IS NOT CALLED FOR. ACCORDINGLY, WE UPHOLD THE SAME AND DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 6 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 /0 9 /201 9 . SD/ - (L.P.SAHU) SD/ - ( C.M.GARG ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER /PATNA ; DATED 19 / 0 9 /201 9 PRAKASH KUMAR MISHRA , S R.P.S. (ON TOUR) IT (SS) A NO . 30 / PAT /201 6 5 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE S ECRETARY ) , / ITAT, PATNA 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, PATNA 6. / GUARD FILE. //TRUE COPY//