Dadha Estates Pvt. Ltd., CHENNAI V. ACIT Corporate Circle 1, CHENNAI

ITSSA 4/CHNY/2018

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5155 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 18-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Block assessment
• Section: 143(3); 158BD

Judgement Text

आयकर अपीलीय अिधकरण ‘बी’ ायपीठ चे ई म । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHENNAI माननीय-ीवी. द ु गा3राव, ाियकसद5एवं माननीय-ी मनोज कु मार अ:वाल ,लेखा सद5 के सम<। BEFORE HON’BLE SHRI V. DURGA RAO, JUDICIAL MEMBER AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपीलसं./ IT(SS)A No.4/Chny/2018 (िनधा3रण/ Block Assessment : 1989-90 to 1998-1999) M/s. Dadha Estates Pvt. Ltd. No. 12, Poes Road, 4 th Street, Off. Eldams Road, Teynampet, Chennai – 600 018. बनाम/ V s . ACIT Corporate Circle 1, Chennai - 600 034. थायीलेखासं. /जीआइआरसं. /P AN / G I R N o . AAAC D- 3 1 7 7 - C (अ पीलाथ /Appellant) : ( थ / Respondent) अपीलाथ कीओरसे/ Appellant by : Shri D. Anand (Advocate) – Ld. AR थ कीओरसे/Respondent by : Shri S. Palani Kumar (CIT) – Ld. DR सुनवाईकीतारीख/ Date of Hearing : 10-02-2022 घोषणाकीतारीख / Date of Pronouncement : 22-02-2022 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee arises out of the order of learned Commissioner of Income Tax (Appeals)-1, Chennai [CIT(A)] dated 22- 12-2017 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) r.w.s. 158BD on 31-07-2003 for Block Period relating to IT(SS)A No. 4/Chny/2018 - 2 - AYs 1989-90 to 1998-99 & from 01.04.1998 to 15.12.1998. The grounds raised by the assessee read as under: 1) The order of the Learned C.I.T (A) - 1 is contrary to the facts of the case and is therefore unsustainable. 2) The Learned C.I.T (A) ought not to have sustained the addition of Rs. 10,00,000/- made by the Assessing Officer as the difference between the balances between the appellant company and its sister concern. The C.I.T(A) - 1 ought to have appreciated the fact that the difference in balances were for a period earlier to the block period and ought not to have sustained the addition of Rs.10,00,000/- on the appellant company. 3) The CIT(A)-1 ought to have appreciated the fact that the appellant company was served a notice u/s 158 BD only on 13.07.2001 and that it had kept accounts for the period from 1.4.90 onwards as it wasn't required to maintain account prior to that period and ought to have accepted the version of the appellant company that the difference in the balance weren't during the block period and ought not to have sustained additions on that score. As evident, the assessee is aggrieved by confirmation of addition of Rs.10 Lacs, being reconciliation difference. 2. The Registry has noted the delay of 14 days in the appeal, the condonation of which has been sought by the assessee on the strength of affidavit of the director of the assessee company. It has been submitted that the appeal papers got mixed up with order records in the Auditor’s office and it took some time to trace them. The Ld. DR opposed the condonation of delay. However, keeping in view the period of delay and contents of the affidavit, we condone the delay and admit the appeal for adjudication on merits. 3. Having heard the rival submissions and after going through the orders of lower authorities, our adjudication would be as given in succeeding paragraphs. 4.1 The assessee being resident corporate assessee is stated to be engaged in real estate business. Consequent to search action IT(SS)A No. 4/Chny/2018 - 3 - onassessee group on 15-12-1998, certain loose sheets and documents was seized from the office of Shri M. Mahendra Dadha (director of the assessee company). It transpired that the assessee was developing a building in the name of Lalmilap. Accordingly, a notice u/s 158BD was issued to the assessee on 09.07.2001 calling for return of income from block period 01.04.1988 to 15.12.1998. 4.2 During the course of assessment proceedings of related assessee i.e., L.Milapchand Dadha & Son (HUF) (in short LMD), AO noticed that the debit balance shown in Trial Balance of LMD HUF in the name of assessee did not match with that of balance in the Balance Sheet of the assessee. In other words, there was difference shown by LMD HUF and the assessee to the extent of Rs.10 Lacs. As per the Trial Balance of LMD as on 31.03.1989, the due from assessee were shown as Rs.16.20 Lacs whereas as per the records of the assessee, the due to LMD HUF was shown as Rs.26.20 Lacs. A further difference was found during financial year 1991-92. The Ld. AO held that the assessee did not furnish any explanation and therefore, the reconciliation difference of Rs.10 Lacs for AY 89-90 and difference of Rs.4.53 Lacs for AY 92-93 was to be added to the income of the assessee u/s 68. The reconciliation position was summarized by Ld. AO as under: - AY Credit of LMD in Assessee as per Trial Balance of LMD Credits Attributable to LMD as per books of assessee Excess Credits in the books of the Assessee 89-90 16,20,000/- 26,20,000/- 10,00,000/- 90-91 19,46,594/- 29.46.594/- 10,00,000/- 91-92 26,73,000/- 36,73,000/- 10,00,000/- 92-93 33,16,000/- 47,69,000/- 14,53,000/- 93-94 27,51,000/- 37,51,000/- 10,00,000/- IT(SS)A No. 4/Chny/2018 - 4 - 5. During appellate proceedings, the assessee, inter-alia submitted that notice u/s 158BD was served only on 13.07.2001 and by that date, it had kept books of accounts and other records for 10 years i.e., from 01.04.1991 till date. On that date, it was not required to keep books of accounts beyond 01.04.1991. The difference did not occur during the block period and it was there even before the block period and therefore, it could not be assessed in the block period. However, Ld. CIT(A) maintained that the difference continues to be there during period covered by the block assessment and in the absence of any explanation, the addition was to be confirmed. 6. After careful consideration of material facts, the undisputed position that emerges is that the assessee was served with notice u/s 158BD only on 13.07.2001. By that date, the assessee was required to preserve books of accounts and other records for 10 years i.e., from 01.04.1991 onwards only. On that date, it was not required to keep books of accounts beyond 01.04.1991. From the tabulation, quite clearly the reconciliation difference is arising since AY 1989-1990. For the said period, the assessee has not preserved the books of accounts and naturally, would not be able to reconcile the difference. To sustain addition u/s 68, it is prime requirement that there should be credit in the books of accounts during the period, which is not the case here. The prima-facie case is matter of reconciliation only. Therefore, the submissions of Ld. AR are to be accepted. Accordingly, we delete the impugned addition of Rs.10 Lacs and allow the appeal of the assessee. IT(SS)A No. 4/Chny/2018 - 5 - 7. The appeal stands allowed in terms of our above order. Order pronounced on 22 nd February, 2022. Sd/- (V. DURGA RAO) ाियकसद5 /JUDICIAL MEMBER Sd/- (MANOJ KUMAR AGGARWAL) लेखासद5 /ACCOUNTANT MEMBER चे)ई/ Chennai; िदनांक/ Dated : 22-02-2022 JPV JPVJPV JPV आदेशकीVितिलिपअ:ेिषत/Copy of the Order forwarded to : 1. अपीलाथ /Appellant2. यथ /Respondent 3. आयकरआयु (अपील)/CIT(A)4. आयकरआयु /CIT 5. िवभागीय ितिनिध/DR6. गाड फाईल/GF