DCIT, BANGALORE vs. M/S VIVEK BUILDERS & DEVELOPERS, BANGALORE

The present appeal is filed by the Revenue against the order of the CIT (A)-II, Bengaluru, dt.03.10.2013, for the assessment year 2009-10, raising therein the following grounds :

Facts apropos are, the assessee filed return of income declaring total income of Rs.79,63,570/-. Case of the assessee was selected for scrutiny. During the course of hearing it was noticed that the assessee in the P & L account had shown the amount of Rs.54,42,024/- on account of purchases made from eight parties. Notices u/s.133(6) of the Act was issued. During the course of assessment, the AO recorded that there is a discrepancy of Rs.52,63,098/-. Accordingly, the AO has brought to the notice of the Ld. AR. The Ld. AR agreed to the addition and thus the amount of Rs.52,63,098/- was added back to the income of the assessee. Aggrieved the assessee filed appeal before the CIT (A).

Before the CIT (A), the assessee has raised the following grounds of appeal :

Before the CIT (A), the assessee had made a submission that the telescoping of an amount of Rs.52,63,098/- is required to be done as the amount which was agreed of Rs.44,50,000/- was forming a part and parcel of Rs.52,63,098/-. The CIT (A) had also taken on record an affidavit filed by the Ld. AR on 16.09.2013, which was duly attested by the Notary Public ITA.32/Bang/2014 Page - 4 and has deleted the addition of Rs.44,50,000/-. The Revenue is thus in appeal before us.

Before us the Ld. DR submitted that the order passed by the CIT (A) is without any basis as the sum agreed during the course of survey was on account of investment in the form of advance made for purchase of land at Yelahanka for the new project, whereas the addition made by the AO was on account of the discrepancy noticed in the purchases shown by the assessee as mentioned in the table reproduced in AO order .

On the other hand the Ld. AR has supported the order passed by the CIT (A) on the strength that the amount agreed to be shown in the return of income was nothing but the same amount which was shown as discrepancy by the AO.

We have heard the rival contentions and perused the material. The letter dt.08.12.2009 and other letters filed by the assessee before the AO clearly shown that the amount agreed to be declared at the time of survey was towards the investment in advances for the purchase of Yehalanka property, whereas the amount debited in the P & L account towards eight persons were with respect of plywood, glass work, timber etc., For ready reference, we are reproducing herein below the table as given in page 3 of the assessment order :

The discrepancies pointed out by the AO are not relatable to any advances / investment made by the assessee in the Yelahanka project, but they are in respect of the construction activity. Therefore both the sums operate in different fields and are not overlapping with each other. In view of the above, the justification given by the CIT (A) is not in accordance with law. Further in our opinion the finding of the AO cannot be disputed merely on the basis of the affidavit filed by the Ld. AR, after a period of two years. Admittedly the assessment order was passed on 23.12.2011 and the affidavit was filed on 16.09.2013. Further there is no ground before the CIT (A) to the effect that the admission recorded by the AO was not in accordance with law or the assessee/ Ld. AR had ever agreed for such addition. Beside the above the CIT (A) cannot give a finding on the basis of the affidavit filed by AR, at the back of the AO, contradicting the ITA.32/Bang/2014 Page - 6 proceeding taken place before AO, without seeking report/ response from the AO.

In view of the above, we are of the considered opinion that the order passed by the CIT (A) is required to be cancelled and the addition made by the AO is confirmed.

In the result, appeal of the Revenue is allowed.