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Income Tax Appellate Tribunal, DELHI BENCH “D” NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI
PER AMIT SHUKLA, J.M.: The aforesaid appeal has been filed by the Revenue against the impugned order dated 26.02.2014 passed by the CIT(A)-XXXIII, New Delhi for the quantum of assessment passed u/s.143(3) for the Assessment Year 2009-10. In the grounds of appeal, the Revenue has raised the following grounds:- “On the facts and in the circumstances of the case, the ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.2,68,68,814/- on account of unaccounted fixed assets u/s.69B, as there is major discrepancy in the observation of the ld. CIT(A) to the tune of Rs.1,09,81,726/- that the loss on the sale of fixed assets as per books of accounts is reflected in the increase of figure of P&L a/c (loss on sale of fixed assets).”
The brief facts are that, a search and seizure action u/s.132 was carried out on 19.01.2009 in the Kurele Group and also at the business premises of the assessee. During the course of search and seizure action, a balance sheet was seized as on 9.01.2009 which was a trial balance, reflected value of fixed assets of Rs.3,43,89,576/-. During the course of the assessment proceedings, the assessee filed audited balance sheet as on 31.03.2009, wherein the value of the fixed assets was shown at Rs.75,37,792. As per the Assessing Officer no explanation was filed by the assessee with respect to the seized material and accordingly, he held that he has no alternative but to complete the assessment on the basis of the record. Accordingly, he added the difference between trial balance sheet as on 9.01.2009 and value of asset shown in the audited balance sheet as on 31.03.2009 in the following manner:-
(i) Due to difference in value of fixed assets -As shown in seized Balance sheet as on 09.01.2009 3,43,89,576 - As shown in Audited Balance sheet as on 31.03.2009 75,37,792 2,68,51,784 (ii) Due to difference in value of investment -As shown in seized Balance sheet as on 09.01.2009 17,030 - As shown in Audited Balance sheet as on 31.03.2009 Nil 17,030 Addition u/s.69B Rs.2,68,68,814
Before the ld. CIT (A), the assessee made a detailed submission and pointed out that during the course of search it was explained that assessee was in the process of sale of its assets and there was in the process of closure of its manufacturing activities and same was also sold and that is the reason why in the final audited balance sheet, the value of fixed assets has been reduced. It was further pointed out that there were certain mistake in entering the opening balance and closing entries in the trial balance and such a mistake was explained and the effect of such mistake in the seized trial balance was pointed out. In the same manner, the effect of various closing entries relating to profit and loss on sale of assets and depreciation passed in the year ending 31st March, 2008 was explained in the following manner:-
Particulars Balance as Balance as Balance as Remarks per Balance per Seized per Balance Sl. No. Sheet as on Trial (1.4.09 Sheet as on 31.03.2007 to 5.1.09) 31.3.2009 (i) Land 22,22,853 22,22,853 22,22,853 No difference (ii) Flat 5,84,819 (1515,180) - Due to sale of 21 lacks in 31.3.2009 only (iii) Factory 23,86,139 23,86,139 23,86,139 No Building difference (iv) Plant and 3,07,48,355 2,26,14,319 Nil Due to sale Machinery in 31.3.2008 and 31.3.2009 and loss thereon only (v) Fire 46,584 46,584 Nil Due to sale Equipment in 31.3.2008 only. (vi) Genset 35,38,447 30,63,447 Nil Due to depreciation in 31.3.2008 and sale in 31.3.2008 and 31.3.2009 and loss thereon (vii) Laboratory 1,80,852 1,80,852 Nil Due to sale Equipment in 31.3.2008 only (viii) Furniture & 7,43,353 7,43,353 1,64,929 Due to Fixture depreciation and sale in 31.3.2008 loss thereon (ix) Computer 3,91,494.51 3,91,494.51 1,80,093 Due to depreciation in 31.3.2008 and 31.3.2009 33,40,375.77 (x) Vehicles 33,40,375.77 25,83,776. Due to sale in 55 31.3.2008 and loss thereon Nil (xi) Electrical 15,44,189.59 Nil Due to sale in equipment 31.3.2008 and loss thereon 4,57,27,464.62 4,57,27,464.62 75,37,792.27 Total Rs.
Ld. CIT (A) after considering the entire facts and material on record observed that the entire addition made by the Assessing Officer on account of unexplained investment in the fixed assets is based on trial balance seized during the course of search and seizure operation from 01.04.2008 till 09.01.2009 when compared to the final balance sheet as on 31st March, 2008 filed along with return of income. In examining the entire arguments and the material placed on record. He first of all listed the major discrepancy in the seized trial and balance sheet in the figure on 31st March, 2009 in the following manner:-
S.No. Name of the asset Figure in Rs. As per Figure in Rs. As seized trial and on 31.3.2009 as balance as on per balance sheet 9.1.2009 filed alongwith RETURN OF INCOME. 1. Plant and Machinery 2,26,14,319.01 NIL 2. Generator Set 30,63,447.09 Nil 3. Furniture & fixture 7,43,353 1,64,929 4. Loss as P & L a/c 26,97,476 28,80,14,095 (asset)
He further noted that liability of seized trial balance and final balance sheet were almost tallied which were as under:-
Sl. No. Name of the liability Figure in Rs. As per Figure in Rs. as seized trial and per balance sheet balance as on 9.1.2009 as on 31.3.2009 1. Share Capital 4,07,05,000 4,07,05,000 2. Unsecured Loan 2,20,27,016 2,21,27,016 3. Current Liability 29,13,822 24,15,577
Accordingly, Ld. CIT (A) agreed with the contention of the assessee that under the head ‘fixed assets’, the seized trial balance does not take into account sale of assets/discrepancy as pointed out by the assessee as there is increase in the cumulative loss in balance sheet; thus, he held that addition made by the Assessing Officer as unexplained investment u/s.69B amounting to Rs.2,68,68,814/- should be deleted.
After hearing both the parties and on perusal of the relevant findings given in the impugned order as well as the documents referred to before us, we find that the addition which has been made by the Assessing Officer is solely based on the difference in the value of fixed assets shown in the seized trial balance as on 09.01.2009 and the audited balance sheet as on 31st March, 2009. Nowhere from the records, it is borne out that any unaccounted fixed assets or investments was found during the course of search and the entire variation in the figures in the balance sheet as on 09.01.2009 was fully explained by brining on record that fixed assets were sold during the year for which certain computation for Long Term Capital Gain has been shown by the assessee. The difference in the figure of asset mainly relates to plant & machinery, fire equipment, genset, laboratory equipments, furniture and fixture, computer, etc and the difference is purely on account of sale of assets and claim of depreciation made under various heads which has not been considered in the trial balance. Such a difference has been again sought to be explained that it was due to mistake in the presentation of assets in the accounts without taking into account the sale or adjustment by way of depreciation. The asset side decrease in the Plant & Machinery in final audited balance sheet is compensated by increase in loss as per P&L account and had there been any unexplained investment in assets, then there should have been unaccounted liability also in the trial balance. In absence of any bogus liability in the trial balance, there could not be any unaccounted investment and otherwise the trial balance tallies with the total debit and credit of the plant & machinery which are otherwise reflected not only in their earlier year’s balance sheet, but also same has been sold during the year which has led to reduction in the final value of asset. Thus, the finding of the Assessing Officer for making the addition simply on the basis of difference in the trial balance sheet as on 09.01.2009 and final audited balance sheet as on 31.03.2009 is completely misplaced and the addition made on account of such a difference cannot be sustained on facts. Accordingly, the order of the ld. CIT (A) is confirmed and the grounds raised
by the Revenue are dismissed. 7. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on 25th July, 2018.