M/S ALFA MECHANICAL & ELECTRICALS ENGINEERING WORKS,SRINAGAR vs. INCOME TAX OFFICER, WARD 3(1), SRINAGAR

Per Anikesh Banerjee, J.M.:

The instant appeals of the assessee are directed against the order of the ld.

Commissioner of Income-tax (Appeals)-I, Amritsar (in brevity CIT(A)), order passed u/s. 250(6) of the Income Tax Act, 1961 (in brevity of the Act), for assessment year 2008-09. Impugned orders are originated from the order of the ld.

2 ITA Nos. 99 & 137/Asr/2018 Alfa Mechanical & Elect. Engg. Works. v. ITO Income Tax Officer, Ward 3(1), Srinagar, order passed u/s143(3) and 271(1)(c) of

the Act.

quantum appeal of the assessee. The ITA no. 99/ASR/2018 is related to penalty

u/s. 271(1)(c) for assessment year 2008-09. The appeal against the penalty was

filed with delay of 149 days. The assessee filed a condonation petition before the

bench. The delay was explained by the assessee. Due to wrong advise of

consultant, the assessee filed appeal in delay against the order section 271(1)(c)

before the ITAT. The ld, CIT(A) first served the order related to penalty. The

assessee was waiting for quantum appeal as per advice of consultant. The wrong

advice of the consultant may cause the delay for filing the appeal. The Revenue has

not made any objection related to condonation of delay for 149 days. Accordingly,

the delay is condoned. We take the appeal for hearing.

137/ASR/2018:

GROUNDS OF APPEAL

“1. The ld. Commissioner of Income-tax (Appeals) -I, Amritsar has erred in law and in facts in confirming the addition made by the Assessing Officer at Rs.7,76,128/- u/s. 69 of Income-tax Act, 1961.

3 ITA Nos. 99 & 137/Asr/2018 Alfa Mechanical & Elect. Engg. Works. v. ITO 2. That the ld. Commissioner of Income-tax (Appeals) -I, Amritsar has erred in law and on facts in confirming the addition made by the Assessing Officer at Rs. 69,447,/- on account of disallowance of depreciation.”

made amount to Rs.7.76,128/- u/s. 69 for unreconciled amount of turnover with the

bank deposit. The assessee-firm was maintaining two bank accounts one is with

SBI and secondly with Jammu & Kashmir Bank. The total deposit appearing in

two accounts amount to Rs.1,18,47,526/- which is higher than the gross contract

receipts amount of Rs.71,27,340/-. During assessment assessee was unable to

reconcile the difference amount of Rs.7.76,128/-. Also, assessee was unable to

supply the list of fixed assets before the ld. AO. So, the depreciation amount to

Rs.69,447/- was disallowed and added back with the total income of the assessee.

Aggrieved the assessee filed an appeal before the CIT(A). But the assessee was

remained unsuccessful. Being aggrieved assessee filed an appeal before us by

challenging the order of the CIT(A).

submission before the Bench. Also pointed out the reconciliation related to deposit

in bank.

record. The addition was made amount to Rs.7,76,128/- u/s. 69 of the Act. The

4 ITA Nos. 99 & 137/Asr/2018 Alfa Mechanical & Elect. Engg. Works. v. ITO assessee has filed the reconciliation and placed that Rs, 7,50,000/- was borrowed

from Mr. Mohammad Amin Khan. The assessee placed bank account of the party

and own bank account to prove the connecting entry in bank. The corresponding

entries in both the accounts are reflected, APB page 6 & 7. The relevant affidavit

of the party testifying the acknowledgement of credit to the appellant is also

enclosed in APB page 8. The banker, J & K Bank also placed the certificate dated

13.11.2018 about confirmation of the payment received from Mr. M. Amin Khan

Rs.7,50,000/-. The copy of the certificate from banker is enclosed at APB page 9.

6.1. In argument the Counsel for assessee placed that relevant documents are

submitted before the CIT(A). But that ignoring the submissions of the assessee, the

appeal was adjudicated. Relating to claim of depreciation Rs.69,447/-, the assessee

further placed that the list of fixed assets was duly placed before the CIT(A). The

said affidavit of the party is first time produced before the ITAT.

6.2. The Sr. DR vehemently argued and invited our attention in respective

paragraph of the appeal order which is reproduced das below:-

“The appellant had not claimed before the AO that an amount of Rs.7,50,000/- was borrowed by assessee from Mohammad Amin Khan as nothing in this regards funds mention in the assessment order. Besides as stated by the AO, the amount of unexplained difference of Rs.7,76,128/- in the reconciliation statement of filed by assessee was not recorded in the books of account. The appellant has filed to plain the source of unexplained deposit of Rs.7,76,128/- before AO or in appeal proceedings. Hence, this addition of Rs. 7,76,128/- is hereby upheld. These grounds are dismissed. Ground no.2.

5 ITA Nos. 99 & 137/Asr/2018 Alfa Mechanical & Elect. Engg. Works. v. ITO The AO disallowed the amount of depreciation of Rs. 69,447/- on the reason that the assessee has filed to provide proof in this regard. But again during appellate proceedings the appellant has filed to provide any proof / evidence of assets against which depreciation was claimed. Hence this ground is dismissed.”

fund which is submitted before the Bench. But issue was not verified by the lower

authority. There was no examination of this party who has paid this amount to the

assessee and also there is no verification of the credit worthiness of the party with

reference to this amount. In our opinion, it is appropriate to remit the issue in

dispute to the file of CIT(A) to carry out necessary enquiry and to reconsider the

issue also to verify the claim of depreciation accordingly. Needless to say, that the

ld. CIT(A) shall provide proper and adequate opportunity of being heard to the

assessee in set aside proceedings. The evidence/explanation submitted by assessee

in its defence shall be admitted by the ld. CIT(A) and adjudicated on merits in

accordance with law. We order accordingly.

ITA NO. 99/ASR/2018:

levying of penalty is consequential in nature& related with ITA No. 137/Asr/2018.

So, the appeal is setting aside with the quantum appeal and remit back to CIT(A)

for further adjudication after considering the quantum appeal. Needless to say, the

assessee should get reasonable opportunity for hearing in the set aside proceedings.

6 ITA Nos. 99 & 137/Asr/2018 Alfa Mechanical & Elect. Engg. Works. v. ITO 9. In the result ITA No. 137/ASR/2018 and ITA No. 99/ASR/2018 are

allowed for statistical purposes.

Order pronounced in the open court on 15.02.2023

Sd/- Sd/- (Dr. M. L. Meena) (Anikesh Banerjee) Accountant Member Judicial Member *doc* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(A), (4) The CIT concerned (5) The Sr. DR, I.T.A.T (6) The Guard File True Copy By Order