M/s. Modi Projects Ltd., Ranchi V. Dy. CIT, Ranchi

ITSSA 7/RAN/2016

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2438 (ITAT-RANCHI)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 16-02-2016
• Court: TRIBUNAL
• Department Lawyers: DEEPAK ROUSHAN
• Assessee Lawyers: S K PODDAR
• Keywords: Unexplained expenditure; Depreciation; Business expenditure; Search and seizure; Document seized; Documents seized
• Section: 143(3); 153A; 234B; 132

Judgement Text

1 IT(SS)A NO. 07/RAN/2015, AY 2008-09 MODI PROJECTS LTD. IN THE INCOME TAX APPELLATE TRIBUNAL: RANCHI BENCH, RANCHI [BEFORE SHRI N. V. VASUDEVAN, JM & SHRI M. BALAGAN ESH, AM] I.T(SS).A NO. 07/RAN/2016 ASSESSMENT YEAR: 2008-09 M/S. MODI PROJECTS LTD. VS. DY. COMMISSIONER OF INCOME-TAX, MODI BHAWAN, KANKE ROAD, CENTRAL CIRCLE-2, RANCHI RANCHI. (PAN:AABCM8164H) (APPELLANT) (RESPONDENT) DATE OF HEARING: 08.09.2016 DATE OF PRONOUNCEMENT: 12.09.2016 FOR THE APPELLANT: S/SHRI S. K. PODDAR & DEVESH POD DAR, ADVOCATES FOR THE RESPONDENT: SHRI DEEPAK ROUSHAN, DR ORDER PER SHRI M. BALAGANESH, AM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-3, PATNA VIDE APPEAL NO. 377/CIT(A)-3/PATNA/2010-11 DATED 12.01.2 016. ASSESSMENT WAS FRAMED BY DCIT, CENTRAL CIRCLE-2, RANCHI U/S. 153A/ 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2008-09 VIDE HIS ORDER DATED 31.12.2010. 2. THE ASSESSEE IS A CIVIL CONTRACTOR WORKING WITH RAILWAYS IN EASTERN STATE. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT ON 20 .03.2009 AT THE BUSINESS AND RESIDENTIAL PREMISES OF THE ASSESSEE AT RANCHI AND AT KOLKATA. DURING THE SEARCH AND SEIZURE OPERATION TOTAL CASH SEIZED WAS RS.10,0 0,000/- OUT OF CASH FOUND RS.10,10,500/-. THE ASSESSMENTS FOR THE YEARS 2003 -04 TO 2008-09 WERE MADE U/S. 153A AND RETURN FILED THEREON WAS ACCEPTED FOR AYS 2003-04 TO 2007-08. NO INCRIMINATING DOCUMENTS OR PAPERS WERE FOUND FOR AN Y OF THESE YEARS. 2.1. FOR THE AY 2008-09 REGULAR BOOKS OF ACCOUNT WE RE FOUND WHICH WERE MAINTAINED ON COMPUTER USING TALLY SOFTWARE. THE H ARD DISK OF THE SYSTEM WAS SEIZED. SRI NARAYAN PRASAD MODI, DIRECTOR OF M/S. MODI PROJECTS LTD MADE A DISCLOSURE STATEMENT U/S 132(4) OF THE ACT BEFORE T HE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT AND ADMITTED AN UNDISCLOSED I NCOME OF RS. 10 CRORES. THE 2 IT(SS)A NO. 07/RAN/2015, AY 2008-09 MODI PROJECTS LTD. INCOME SO DISCLOSED U/S. 132(4) OF THE ACT WAS DISC LOSED IN THE RETURN OF THE DIRECTORS FILED FOR RS.3,20,00,000/-. THE ADDITION AL INCOME OF RS.2,96,55,000/- WAS ALSO OFFERED BY THE ASSESSEE FOR TAXATION FOR AY 20 08-09. ACCORDINGLY, THE TOTAL DISCLOSURE OF UNDISCLOSED INCOME UPTO THIS STAGE WA S RS. 6,16,55,000/-. THE ASSESSEE ALSO SUBMITTED BEFORE INVESTIGATING OFFICE R THAT THERE WERE SUNDRY CREDITORS SPREAD OVER DIFFERENT SITES WHICH WILL BE DIFFICULT TO IDENTIFY AND GET VERIFIED AND SUCH SUNDRY CREDITORS APPEARING AS MISCELLANEOUS C REDITORS WERE CALCULATED AT RS.6,36,08,844/-. ASSESSEE HAS FURTHER MENTIONED U /S. 132(4) OF THE ACT THAT ADDITIONAL INCOME OF RS.3,83,45,000/- WILL BE SHOWN IN THE AY 2009-10 WHICH WAS DISCLOSED BY INCREASING THE NET PROFIT DISCLOSED CO MPARED TO PREVIOUS YEAR AND THERE BY REDUCING THE UNVERIFIABLE CREDITORS. IN OTHER WORDS, THE UNDISCLOSED INCOME FOR AY 2009-10 WAS OFFERED IN THE FORM OF WRITE BACK OF UNVERIFIABLE SUNDRY CREDITORS TO THE PROFIT AND LOSS ACCOUNT IN THE REGULAR RETUR N FILED THEREON U/S 139(1) OF THE ACT (BEING THE YEAR OF SEARCH). BY THIS OFFER, THE PRO FIT AFTER DEPRECIATION FOR THE AY 2009-10 INCREASED SUBSTANTIALLY WHEN COMPARED TO TH AT IN THE EARLIER YEARS. 2.2. DURING SEARCH AND SEIZURE OPERATION, CERTAIN SHEETS OF TYPED PAPERS WERE FOUND VIDE SEIZED DOCUMENT REFERENCE SKM-11 ( PAGES 74 TO 76). IN THESE SHEETS FOLLOWING HEADINGS FOR VARIOUS BUSINESS EXPENDITURE WERE MENTIONED:- HEAD OF THE EXPENDITURE TOTAL FOR MODI PROJECTS LTD. (MPL) +MCC ADJUSTMENT AMOUNT EXPENDITURE AFTER ADJUSTMENT THE TOTAL AMOUNT MENTIONED AS ADJUSTMENT AMOUNT U NDER DIFFERENT HEADS WAS RS.14,54,49,116/-. THE LD. AO MADE ADDITION OF THI S AMOUNT TO THE TOTAL INCOME DISCLOSED FROM CONTRACT. THE BREAKUP OF THE ADDITI ON MADE AS UNDER: ADJUSTMENT FIGURE - RS.14,54,49,116/- LESS: ADMITTED UNDISCLOSED INCOME OFFERED FOR TAXAT ION - RS. 6,16,55,000/- -------------------------- ADDITION MADE FOR UNEXPLAINED EXPENDITURE UNDER THE HEAD ADJUSTMENT - RS. 8,37,94,116/- -------------------------- 3 IT(SS)A NO. 07/RAN/2015, AY 2008-09 MODI PROJECTS LTD. THE TOTAL INCOME ASSESSED WAS RS.14,39,61,496/- AGA INST INCOME AS PER RETURN RS.6,01,67,380/-. AS SUCH, ADDITION OF RS.8,37,94, 116/- WAS MADE. THIS ADDITION WAS CONFIRMED BY THE LD CITA. AGGRIEVED, THE ASSES SEE IS IN APPEAL BEFORE US ON THE FOLLOWING PRECISE GROUNDS:- 1. FOR THAT LD. CIT(A) WAS NOT JUSTIFIED IN CONFIR MING THE ADDITION OF RS.8,37,94,116/- MADE TO THE TOTAL INCOME ON THE BA SIS OF SEIZED DOCUMENT ON THE GROUND THAT THIS FIGURE WAS OUT OF ADJUSTMENT FIGUR E MENTIONED AT PAGE 74 OF SEIZED DOCUMENT SKM-11. APPELLANT SURRENDERED RS.6,16,55,0 00/- AS SUCH BALANCE AMOUNT OF RS.8,37,94,116/- WAS ADDED TO ARRIVE AT SO CALLE D ADJUSTED FIGURE OF RS.14,54,49,116/-. 2. FOR THAT LD. CIT(A) CONFIRMED THE ADDITION OF RS .8,37,94,116/- WHICH WAS MADE UNDER TOW DIFFERENT HEADS VIZ. ADMITTED UNDISCLOSE D INCOME RS.3,83,45,000/- AND UNEXPLAINED EXPENDITURE UNDER HEAD ADJUSTMENT AS D ISCUSSED RS.4,54,49,116/-. APPELLANT HAD NOT ADMITTED ANY UNDISCLOSED INCOME F OR THE ALLEGED ADJUSTMENT OF EXPENSES OF INFLATION OF EXPENSES ON THE BASIS OF A SEIZED DOCUMENT SMK-11, PAGE74. 3. FOR THAT SEIZED DOCUMENT SKM-11, PAGE 74 WAS A S TATEMENT OF THE FIGURES WHICH HAD BASICALLY THREE HEADS (1) EXPENDITURE ALREADY I NCURRED UNDER DIFFERENT HEADS (2) ADJUSTMENT AMOUNT AND (3) TOTAL EXPENDITURE AFTER A DJUSTMENT. AS A MATTER OF FACT, THESE ADJUSTMENT AMOUNTS WERE PART AND PARCEL OF EX PENDITURE INCURRED FOR EXECUTION OF CONTRACT FOR THE PERIOD ENDING 31 ST MARCH, 2008. LD. AO AS WELL AS LD. CIT(A) ACCEPTED THE PROFIT DISCLOSED AS PER BOOKS O F ACCOUNT IN WHICH ALL THE FIGURES OF SO CALLED ADJUSTMENT SHEET WAS INCORPORA TED. THIS SHEET WAS PREPARED TO CONSIDER THE PROJECTED EXPENDITURE TO BE INCURRED D URING FINANCIAL YEAR 2007-08 AFTER CONSIDERING THE EXPENDITURE TO BE INCURRED DU RING FINANCIAL YEAR 2007-08 AFTER CONSIDERING THE EXPENDITURE ALREADY INCURRED. A DE TAIL COMPARISON OF ACTUAL EXPENDITURE INCURRED AS WELL AS THESE PROJECTED FIG URES WAS FILED BEFORE LD. CIT(A) TO SUGGEST THAT THERE WAS A DIFFERENCE OF AROUND RS .11,00,000/-APPROX BETWEEN THE FIGURES ALREADY INCURRED AS EXPENDITURE IN THE BOOK S OF ACCOUNT AND ADJUSTED FIGURE AS PER SHEET. 4. FOR THAT THE TOTAL INCOME ASSESSED WILL GIVE 36% MARGIN OF PROFIT FROM CONTRACT BEING EXECUTED WITH RAILWAYS FOLLOWING THE STRICT N ORMS, QUALITY AND SPECIFICATION. THE RAILWAY PROVIDES MAXIMUM OF 10% OF THE GROSS P ROFIT AND APPELLANT HAS SHOWN NET PROFIT OF 4-6% IN LAST MANY YEARS AND IN SUBSE QUENT YEARS. 5. FOR THAT APPELLANT RECEIPT WAS LIABLE TO TDS, AS SUCH, APPELLANT WAS NOT LIABLE TO PAY ADVANCE TAX, THEREFORE, NO INTEREST U/S. 234B C AN BE CHARGED. IN ANY CASE, INTEREST CAN ONLY BE CHARGED ON THE RETURNED INCOME U/S. 234A AND 234B, NOT ON THE ASSESSED INCOME FOLLOWING THE DECISION OF HONBLE J HARKHAND HIGH COURT. 3. THE LD AR AT THE OUTSET ARGUED THAT THE COMPARA TIVE CHART OF PROFITABILITY FROM AY 2006-07 TO AY 2009-10 WOULD PROVE THAT THE ASSES SEE HAD DECLARED SUBSTANTIALLY HIGHER PROFIT FOR AY 2009-10 @ 7.79% (PROFIT AFTER DEPRECIATION) COMPARED TO EARLIER YEARS. THIS WAS POSSIBLE ONLY DUE TO WRITE BACK OF UNVERIFIABLE / UNPROVABLE SUNDRY CREDITORS WHO ARE SITUATED IN R EMOTE LOCATIONS WHICH ASSESSEE 4 IT(SS)A NO. 07/RAN/2015, AY 2008-09 MODI PROJECTS LTD. HAD ORIGINALLY STATED BEFORE THE INVESTIGATION WING AND FOLLOWED BY DISCLOSURE STATEMENT U/S 132(4) OF THE ACT, FOR WHICH EFFECT W AS DULY GIVEN IN THE BOOKS BY SHOWING IT AS INCOME IN THE REGULAR RETURN FILED FO R AY 2009-10. ADMITTEDLY, AY 2009-10 IS THE YEAR IN WHICH THE SEARCH TOOK PLACE AND HENCE THE UNDISCLOSED INCOME IS ALSO TO BE ASSESSED IN THE REGULAR ASSESS MENT U/S 143(3) OF THE ACT PURSUANT TO THE SEARCH. THE LD AR ARGUED THAT TH E EFFECT OF THE SUNDRY CREDITORS WRITE BACK TO INCOME HAS BEEN GIVEN IN THE BOOKS OF ACCOUNTS FOR THE AY 2009-10 AND REGULAR RETURNS FILED U/S 139(1) OF THE ACT FOR THE SAME, DISCLOSING HIGHER NET PROFIT. 3.1. WITH REGARD TO THE SEIZED DOCUMENT SKM-11, HE EXPLAINED THAT THE ENTIRE DOCUMENT ONLY REPRESENT PROJECTIONS MADE BY THE ASS ESSEE FOR BETTER FINANCIAL MANAGEMENT AND IT IS MORE LIKE AN MANAGEMENT INFORM ATION SYSTEMS (MIS) DATA SUBMITTED TO THE TOP MANAGEMENT AT FREQUENT INTERVA LS. MOREOVER, ALL THOSE EXPENDITURES HAVE BEEN DULY CONSIDERED IN THE REGUL AR RETURNS FILED FOR THE AY 2008-09 PRIOR TO THE DATE OF SEARCH. HENCE HE ARGU ED THAT THERE IS NO NEED TO MAKE ANY ADDITION FOR THE AY 2008-09 TOWARDS THE ALLEGED DISCREPANCIES. 4. IN RESPONSE TO THIS, THE LD DR READ THE RELEVANT FINDING PORTION FROM THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT ALL THE ARGUMENTS OF THE ASSESSEE WERE DULY MET BY THE LD. CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK FILED BY THE ASSESS EE COMPRISING OF PAGES 1 TO 32. WE FIND THAT THE SEARCH TOOK PLACE ON 20.3.2009 AND BEFORE THAT DATE, THE REGULAR RETURN FOR THE ASST YEAR 2008-09 HAD ALREADY BEEN F ILED BY THE ASSESSEE ON DUE DATE. THE MAIN DOCUMENT THAT TRIGGERED THE ADDITION OF RS . 8,37,94,116/- WAS ONLY THE SEIZED DOCUMENT REFERENCE SKM-11 (PAGES 74 TO 76) W HICH CONTAINED THE DETAILS OF PROJECTIONS OF CERTAIN REGULAR EXPENDITURE OF THE A SSESSEE FOR THE ASST YEAR 2008-09 TOGETHER WITH THE CASH FLOW REQUIREMENT. THIS DOCU MENT IS MORE LIKE MANAGEMENT INFORMATION SYSTEMS (MIS) DATA MAINTAINED BY THE DI RECTOR OF THE ASSESSEE COMPANY AS TO WHICH OF THE EXPENDITURE REQUIRE IMME DIATE PAYMENT , WHICH OF THE 5 IT(SS)A NO. 07/RAN/2015, AY 2008-09 MODI PROJECTS LTD. EXPENDITURE COULD BE INCURRED ON CREDIT SO THAT ACC ORDINGLY THE CASH FLOW REQUIREMENT COULD BE MATCHED AND PLANNED BY THE ASS ESSEE. FROM THE LIST OF COMPARATIVE EXPENDITURE TABULATED BY THE ASSESSEE E XPLAINING THE SAID SEIZED DOCUMENT, WE FIND THAT THE PROJECTED FIGURES AND TH E ACTUALS FOR THE ASST YEAR 2008- 09 BASED ON WHICH RETURN OF INCOME FOR AY 2008-09 H AD BEEN FILED BY THE ASSESSEE MUCH EARLIER TO THE SEARCH U/S. 132 OF THE ACT, HAD ACTUALLY MATCHED IN ALMOST 70% OF THE ITEMS AS BELOW:- SL. NO. EXPENSES HEAD AS PER P/L &BS OF AY2008-09 AS PER PAGE 74 OF SKM-11 DIFFERENCE 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. LABOUR CHARGES MATERIAL CONSUMED R/M EXCAVATORS R/M MACHINERY R/M TRUCK & DUMPERS TOOLS & IMPLEMENT SALARY & BONUS STAFF WELFARE TENDER EXPENSES ELECTRICITY CHARGES FOODING & LODGING MISC. EXPENSES OFFICE EXPENSES PRINTING& STATIONERY R/M CAR SCOOTER & M/CY SITE EXPENSES TELEPHONE CHARGES TRAVELLING & CONVEYANCE 55,796,512 210,128,997 49,464,669 10,620,986 39,234,852 2,891,459 33,496,576 2,026,768 1,360,484 346,234 1,183,247 1,503,045 2,019,542 1,020,827 2,838,451 14,903,791 1,676,434 8,095,790 55,682,181 210,127,629 49,915,558 10,620,986 39,234,852 2,891,459 33,496,576 2,026,768 807,484 346,234 1,183,247 1,503,045 2,019,542 1,020,827 4,520,695 14,903,791 1,676,434 8,095,790 114,331 1,368 (450,889) - - - - - 553,000 - - - - - (1,682,244) - - - THEREFORE, IT CANNOT BE SAID THAT THE FIGURES MENTI ONED IN THE SEIZED DOCUMENTS WERE NOT PROJECTION AND WERE NOT ACTUAL EXPENDITURE INCU RRED WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. 5.1. WE FIND THAT THE REASON FOR DRAWING ADVERSE IN FERENCE ON THE SEIZED DOCUMENT IS DUE TO THE USAGE OF THE EXPRESSION ADJUSTMENT IN THE SEIZED DOCUMENT WHICH IS DIVIDED INTO CASH COLUMN , CREDIT COLUMN AND O THER HEADS COLUMN. THE LD AO HAD COME TO THE CONCLUSION BASED ON THE EXPRESSION ADJUSTMENT THAT THE SAME IS FICTITIOUS IN NATURE AND INCORPORATED IN ORDER TO I NFLATE THE EXPENDITURE TO THAT EXTENT THEREBY BRING DOWN THE NET PROFIT OF THE ASSESSEE. ON THE DATE OF SEARCH, THE ASSESSEE COULD NOT EXPLAIN THE CONTENTS OF THESE SE IZED DOCUMENTS BEFORE THE SEARCH 6 IT(SS)A NO. 07/RAN/2015, AY 2008-09 MODI PROJECTS LTD. PARTY. THE ASSESSEE LATER EXPLAINED THAT THE EXPRE SSION EXPENSES TO BE RAISED IN THE SEIZED DOCUMENT DOES NOT MEAN EXPENSES TO BE INFLAT ED TO REDUCE THE PROFIT , BUT INSTEAD DENOTES THAT EXPENSES WHICH WERE NOT INCLUD ED TILL THAT TIME SINCE ACCOUNTS WERE NOT RECEIVED FROM DIFFERENT SITES. IT WAS ALSO SUBMITTED THAT IF THE EXPRESSION EXPENSES TO BE RAISED ARE GIVEN A LITERAL MEANING , IT WOULD RESULT IN EARNING OF UNREASONABLE PROFIT OF APPROXIMATELY 35% FOR THE AS SESSEE. 5.2. THE EXCRUCIATING FACTOR WHICH EXPLAINS THE SEI ZED DOCUMENT SKM-11 IS THE ASSESSEE INCLUDING ALL THOSE EXPENDITURES IN THE RE GULAR RETURN OF INCOME FOR THE ASST YEAR 2008-09 FILED PRIOR TO THE DATE OF SEARCH. W E HAVE GONE THROUGH THE AUDITED BALANCE SHEET AS ON 31.3.2008 RELEVANT TO ASST YEAR 2008-09 WHICH IS PART OF THE PAPER BOOK OF THE ASSESSEE AND ALSO THE COMPARATIVE CHART AS STATED ABOVE, WHEREIN, THE MINOR VARIANCES IN THE EXPENDITURES ARE FOUND O NLY IN RESPECT OF 5 ITEMS AS AGAINST THE TOTAL 18 ITEMS OF EXPENDITURE. MOREOVER , WE FIND THAT IN RESPECT OF DISCREPANCY ON ACCOUNT OF LABOUR CHARGES AND MATERI ALS CONSUMED TO THE TUNE OF RS. 1,14,331/- AND RS. 1,368/- RESPECTIVELY BETWEEN TH E ACTUALS AND PROJECTIONS, THE SAME IS VERY MEAGER REPRESENTING SHORT PROJECTIONS. WITH REGARD TO DISCREPANCY ON ACCOUNT OF REPAIRS & MAINTENANCE-EXCAVATORS AND VEH ICLES TO THE TUNE OF RS. 4,50,889/- AND RS. 16,82,244/- RESPECTIVELY, WE FIN D THAT THERE WERE EXCESS PROJECTIONS MADE BY THE ASSESSEE COMPARED TO ACTUAL FIGURES AND THESE DIFFERENCES WERE NEVER CLAIMED BY THE ASSESSEE AS A DEDUCTION I N ITS RETURNS. WITH REGARD TO DISCREPANCY IN THE TENDER EXPENSES TO THE TUNE OF R S. 5,53,000/- REPRESENTING SHORT PROJECTIONS COMPARED TO ACTUALS, THE LD AR EXPLAINE D THAT THE ASSESSEE HAD FURTHER TO PREPARATION OF THIS PROJECTIONS DATA , HAD PARTI CIPATED IN TWO MORE TENDERS OF RAILWAYS WHICH HAD INCREASED THE ACTUAL COST OF TE NDERS. THIS CLEARLY PROVES THAT WHAT WAS MENTIONED IN THE SEIZED DOCUMENTS WERE MER E PROJECTIONS / MIS DATA MEANT FOR BETTER FINANCIAL MANAGEMENT OF THE ASSESS EE COMPANY AND THE SAME HAD ALREADY FOUND ACCOUNTED IN THE REGULAR RETURNS FOR ASST YEAR 2008-09 FILED BEFORE THE DATE OF SEARCH. HENCE THERE IS NO QUESTION OF CONSIDERING THE SAME IN THE SEARCH ASSESSMENT BY DRAWING ANY ADVERSE INFERENCE. IT IS ALSO TRUE THAT IF THE SAID EXPENDITURE ARE TO BE CONSIDERED FOR INFLATION OF E XPENSES TO REDUCE THE NET PROFIT, 7 IT(SS)A NO. 07/RAN/2015, AY 2008-09 MODI PROJECTS LTD. THEN IT RESULTS IN ABNORMAL PROFIT OF APPROXIMATELY 35% WHICH IS NOT POSSIBLE IN THE FACTS OF THE INSTANT CASE , AS ADMITTEDLY, THE ASSE SSEE IS DERIVING ITS RECEIPTS ONLY FROM RAILWAYS THROUGH CONTRACT JOB AND THE RAILWAYS HAD SPECIFICALLY IMPOSED A CONDITION THAT THE CONTRACTOR ASSESSEE SHALL NOT BE ENTITLED FOR ABNORMAL PROFIT. WE FIND FROM THE CONTRACT ENTERED INTO WITH RAILWAYS F OR EXECUTING THE PROJECT, THE SAME PROVIDES FOR 12.5% FOR CONTRACTORS OVERHEAD AN D PROFIT. THE OVERHEADS INCLUDE ADMINISTRATIVE EXPENSES, FINANCIAL CHARGES AND MISCELLANEOUS EXPENSES FOR MAINTENANCE OF DIFFERENT SITES, CONVEYANCE, TRANSPO RTATION ETC. WE ALSO FIND THAT THE ASSESSEE HAD SUBMITTED THE COMPARATIVE PROFIT C HART SHOWING THE NET PROFIT DERIVED IN THE PAST AS WELL AS IN THE FUTURE AS BEL OW:- COMPARATIVE STATEMENT OF PROFIT & LOSS ACCOUNT PARTICULARS AY 2006-07 (RS.) AY 2007-08 (RS.) AY 2008-09 (RS.) AY 2009-10 (RS.) AY 2010-11 (RS.) INCOME 43,67,37,130/- 43,59,79,427/- 56,02,16,924/- 59,51,00,695/- 64,20,45,501/- PROFIT BEFORE DEPRECIATION 3,41,86,464/- (7.83%) 2,91,17,164/- (6.68%) 3,95,78,463/- (7.06%) 6,11,17,303/- (10.27%) 5,69,05,958/- (8.86%) DEPRECIATION 1,49,28,988/- 1,62,03,171/- 1,51,94,293/- 1,47,82,786/- 1,40,91,918/- NET PROFIT AFTER DEPRECIATION 1,92,57,475/- (4.41%) 1,29,13,993/- (2.96%) 2,43,84,170/- (4.35%) 4,63,34,518/- (7.79%) 4,28,14,010/- (6.67%) 5.3. FROM THE AFORESAID COMPARATIVE PROFIT CHART, I T COULD BE SAFELY CONCLUDED THAT THE ASSESSEE HAD EARNED 4.35% NET PROFIT AFTER DEPR ECIATION IN THE YEAR UNDER APPEAL. INFACT THE PROFIT FOR THE YEAR UNDER APPEAL HAD ACT UALLY INCREASED FROM 2.96% (AY 2007-08) TO 4.35% DUE TO INCREASED CONTRACT RECEIPT S OF THE ASSESSEE. WE FIND THAT THE REVENUE HAD SOUGHT TO COMPARE THE NET PROFIT SH OWN FOR AY 2009-10 AT A HIGHER PERCENTAGE IN ORDER TO JUSTIFY THE ADDITION FOR AY 2008-09. THE INCREASE IN NET PROFIT FOR THE AY 2009-10 HAS ALREADY BEEN EXPLAINE D SUPRA. HENCE WE FIND THAT THE REVENUE HAD NOT MADE OUT A CASE FOR DRAWING ADVERSE INFERENCE OF THE SEIZED DOCUMENT AND MAKE AN ADDITION OF RS. 8,37,94,116/- IN THE SEARCH ASSESSMENT FOR THE ASST YEAR 2008-09 IN THE HANDS OF THE ASSESSEE, AS ADMITTEDLY THE NET PROFIT DISCLOSED BY THE ASSESSEE AS PER REGULAR BOOKS OF A CCOUNTS WAS AFTER CONSIDERING THE TOTAL EXPENSES INCURRED DURING THE YEAR WHICH WAS C OVERED BY THE ADJUSTMENT OF EXPENSES. IT IS ALSO NOT IN DISPUTE THAT THE PR OFIT DISCLOSED BY THE ASSESSEE FOR THE 8 IT(SS)A NO. 07/RAN/2015, AY 2008-09 MODI PROJECTS LTD. AY 2008-09 IN THE REGULAR RETURN WAS NOT DISPUTED B Y THE REVENUE EXCEPT MAKING AN ADDITION BASED ON SEIZED DOCUMENT SKM -11. IT IS NOT IN DISPUTE THAT THE DISCLOSURE MADE BY THE ASSESSEE IN THE SUM OF RS 10 CRORES WAS TOWARDS THE UNVERIFIABLE / UN PROVABLE SUNDRY CREDITORS WHO ARE LOCATED AT DISTAN T LOCATIONS. THESE SUNDRY CREDITORS WERE OFFERED IN THE RETURNS FILED U/S 153 A OF THE ACT UPTO AY 2008-09 AND FOR THE AY 2009-10, THE IMPACT OF WRITE BACK OF SUN DRY CREDITORS TO CREDIT OF PROFIT AND LOSS ACCOUNT HAVE BEEN GIVEN IN THE REGULAR BOO KS OF ACCOUNTS THEREBY LEADING TO INCREASED PROFITABILITY IN AY 2009-10. HENCE WE FIND THAT THE DISCLOSURE MADE AT THE TIME OF SEARCH HAVE BEEN DULY OFFERED IN THE RE TURNS FILED BY THE ASSESSEE , BE IT U/S 153A OR U/S 139(1) OF THE ACT, AS THE CASE MAY BE. 5.4. BASED ON THE AFORESAID FINDINGS, WE HOLD THAT THE FIGURES OF SO CALLED ADJUSTMENT WERE ALREADY INCORPORATED IN THE REGULAR BOOKS OF THE ASSESSEE FOR THE ASST YEAR 2008-09 WHICH WERE ACCEPTED BY THE REVENU E AND ACCORDINGLY THE ADDITION MADE BY THE LD AO IS DIRECTED TO BE DELETE D. 6. THE GROUND NO. 5 RAISED BY THE ASSESSEE IS WITH REGARD TO THE DISPUTE OF CHARGEABILITY OF INTEREST U/S 234A AND 234B OF THE ACT ON THE RETURNED INCOME OR ON THE ASSESSED INCOME. WE FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE JHARKHAND H IGH COURT IN THE CASE OF IN TA NO. 38 OF 2010 DATED 25.07.2012 IN THE CASE OF AJAY PRAKASH VERMA VS. ITO WHEREIN IT WAS HELD THAT INTEREST U/S 234 A AND 234 B OF THE ACT IS CHARGEABLE ONLY ON THE RETURNED INCOME. RESPECTFULLY FOLLOWING THE SAME, WE ALLOW THIS GROUND OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.09.2016 SD/- SD/- (N. V. VASUDEVAN) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED : 12 TH SEPTEMBER, 2016 JD.(SR.P.S.) 9 IT(SS)A NO. 07/RAN/2015, AY 2008-09 MODI PROJECTS LTD. COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT 2 RESPONDENT 3 . THE CIT(A), 4. 5. CIT DR, ITAT, RANCHI / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .