ACIT, MEERUT vs. M/S. GODWIN CONSTRUCTION PVT. LTD., MEERUT

This appeal by the Revenue is preferred against the order of the Commissioner of Income Tax [Appeals] - IV, Kanpur dated 03.03.2016 pertaining to assessment year 2009-10.

The grievances of the assessee read as under:

Briefly stated, the facts of the case are that a search operation was carried out at the premises of the assessee. Notice u/s 153A of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short] was issued and served upon the assessee. Pursuant to the notice, the assessee filed return declaring total income of Rs. 22.18 lakhs. Statutory notices were issued and served upon the assessee.

During the course of scrutiny assessment proceedings and on perusal of the seized material, the Assessing Officer compared the print outs of IBM laptop with closing balance of cash as per balance sheet filed by the assessee and the same is as under:

The Assessing Officer was of the opinion that the closing balance of the company as per balance found in the IBM Laptop for the six years is different from the closing cash balance as per the balance sheet filed by the assessee. The assessee was asked to show cause as to why the under reported cash should not be added to the income of the assessee in the respective A.Ys.

In its reply, the assessee filed a reconciliation statement and claimed that expenses paid in cash have not been deducted from the cash book as per IBM Laptop.

The Assessing Officer simply rubbished the contention of the assessee and was of the firm belief that the assessee failed to give a satisfactory explanation for the difference occurring in the balance sheet produced before the department and the data reflecting in the laptop. Accordingly, the Assessing Officer made an addition of Rs. 4,28,47,279/-.

The assessee agitated the matter before the ld. CIT(A) and vehemently contended that additions on similar facts have been deleted by the ld. CIT(A) in A.Ys 2005-06 to 2008-09.

On perusal of the appellate order, the ld. CIT(A) found that in A.Ys 2005-06 to 2008-09, the first appellate authority has deleted the additions on similar set of facts and following the same, the ld. CIT(A) deleted the addition of Rs. 4,28,47,279/-.

Before us, the ld. DR strongly contended that the facts of earlier years are totally distinguishable from the facts of the case under consideration. It is the say of the ld. DR that provisions of section 292C of the Act squarely apply on the facts of the case in hand. It is the say of the ld. DR that section 292C of the Act specifically provides that where any books of account/other documents are found in the possession or control of any person in the course of search operation, then it may be presumed that such books of account/other documents and contents therein belonged to the person from whose premises it has been found during the course of search operation. The ld. DR further stated that the assessee has failed to explain the contents of the print outs of IBM laptop vis a vis closing cash balance as per the balance sheet filed with the return of income.

Per contra, the ld. counsel for the assessee stated that the impugned issue is fully covered in favour of the assessee as per the consolidated order of the Tribunal dated 08.06.2018 for A.Ys 2005-06 to 2008-09 in assessee’s own case. The ld. counsel for the assessee furnished copy of the order of the Tribunal which is placed at pages 258 to 275 of the paper book.

We have given thoughtful consideration to the orders of the authorities below. It is true that similar additions were made in earlier years and have been deleted by the first appellate authority, which order has been upheld by the co-ordinate bench.

Exhibit 200 is copy of the profit and loss account extracted from the IBM Laptop. A perusal of the same neither shows any opening stock nor any closing stock. Gross loss is shown at Rs. 15.35 crores and net loss is at Rs. 17.02 crores. If the same is compared with the profit and loss Account filed with the return of income which is placed at page 130 of the paper book, we find that there is a opening stock of Rs. 4.59 crores and closing stock of Rs. 2.26 crores and the net profit is at Rs. 69.94 lakhs. As mentioned elsewhere, the assessee has returned net profit of Rs. 22.18 lakhs, which has been accepted by the Assessing Officer.

In our considered opinion, the documents found in IBM Laptop are not complete documents in as much as neither the profit and loss account is complete as mentioned hereinabove nor the balance sheet is complete.

We further find that during the course of scrutiny assessment proceedings itself the assessee has furnished a year-wise reconciliation of balance as per print out of IBM Laptop and as per its books of account. This reply of the assessee is placed at pages 114 to 116 of the paper book. We find that the Assessing Officer has not considered this reply and reconciliation therein.

In our humble opinion, there are several discrepancies found in the print outs of IBM Laptop and the same cannot be considered as complete documents exhibiting true picture of the business of the assessee. Such documents, which give inconclusive information, cannot be relied upon.

Financial statements filed with the return of income are audited and depict true and fair view of the business of the assessee and the Assessing Officer has not pointed out any specific defect in these financial statements.

Surprisingly, the Assessing Officer has concentrated his findings only on one item from the print outs of IBM Laptop i.e. cash balance, but did not make any effort to examine/verify the discrepancies when the assessee has furnished complete reconciliation statement during the assessment proceedings itself. We are of the considered view that the additions based upon such incomplete information cannot be sustained and the ld. CIT(A) has rightly deleted the same, which calls for no interference.

For the sake of completeness and as mentioned elsewhere, additions on same set of facts based upon same documents were deleted by the co-ordinate bench in assessee’s own case in and Ors for A.Ys 2005-06 to 2008-09. Respectfully following the same, we decline to interfere with the findings of the ld. CIT(A). Ground No. 1, accordingly, stands dismissed.

Facts relating to Ground No. 2 show that some document was impounded from the site of Godwin Hotel which contains details of payment received by M/s Ascent Construction Pvt Ltd from M/s Godwin Construction Pvt Ltd. As per details mentioned therein, an amount of Rs. 5,12,92,685/- was received during the period 01.07.2008 to 19.05.2010, details of which are as under:

Since Rs. 15 lakhs pertained to A.Y 2009-10, the assessee was asked to furnish the details of the mode of payment of Rs. 15 lakhs. In its reply, the assessee strongly contended that the said paper does not belong to it and the same is related with M/s Ascent Construction Pvt Ltd. It was explained that no cash transactions have been done with M/s Ascent Construction Pvt Ltd.

The reply of the assessee did not find any favour with the Assessing Officer who was of the firm belief that the assessee has regular business transactions with M/s Ascent Construction Pvt Ltd. The Assessing Officer was of the opinion that once the assessee has accepted the transactions made through cheques, the same is equally true in cash transactions. The Assessing Officer concluded by holding that the assessee has done transactions outside the books of account and these transactions were not shown in the books of account, the same were added u/s 68 of the Act.

The assessee strongly agitated the matter before the ld. CIT(A) and once again the ld. CIT(A) found that similar addition on same set of facts has been deleted in A.Y 2011-12 and following the decision in A.Y 2011-12, the ld. CIT(A) deleted the addition of Rs. 15 lakhs.

Before us, the ld. DR strongly supported the findings of the Assessing Officer, once again stating that if the cheque transactions belonged to the assessee, then in the same document, cash transactions were also belonging to the assessee and the assessee has failed to explain the same.

Per contra, the ld. counsel for the assessee vehemently stated that the documents relied upon by the assessee Assessing Officer is nothing but a dumb document which contains no details relating to the payer and the payee and on the basis of amount mentioned therein, no logical inference can be drawn.

We have given thoughtful consideration to the orders of the authorities below. Exhibit 163 of the paper book contains details of payment received from Godwin Construction Pvt Ltd by Ascent Construction. The transactions mentioned in the sheet have been done through regular banking channel and no adverse inference has been drawn. Exhibit 164 contains a balance of Rs. 48,89,600/- and no adverse inference has been drawn in so far as this amount is concerned.

The bone of contention is the following extract of document:

It can be seen from the above exhibit that only date and amount has been mentioned and it is not known whether the payments have been made by the assessee or the amounts have been received by the assessee. Most importantly, the said document was not found from the premises of the assessee but from the site office of Ascent Construction Pvt Ltd. Though the addition has been made u/s 68 of the Act in the hands of the assessee company, the Assessing Officer did not make any enquiry/investigation from Ascent Construction Pvt. Ltd.

As mentioned elsewhere, it cannot be said that the amounts mentioned in the said documents were received by the assessee.

Be that as it may, in our considered opinion, the said document is nothing but a dumb document and no logical inference can be drawn from the said document and no addition can be sustained made on the basis of a dumb document. We do not find any reason to interfere with the findings of the ld. CIT(A). Accordingly, Ground No. 2 stands dismissed.

In the result, the appeal of the Revenue in is dismissed.