DCIT, CIR-3(1), SILIGURI, DARJEELING vs. SRI NANU SHOME, SILIGURI

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ITA 649/KOL/2015Status: DisposedITAT Kolkata10 July 2018AY 2011-20123 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal confirmed the deletion of the addition of Rs. 47,19,082/-. It was held that since the investment in gold was already reflected in the assessee's balance sheet for the preceding year (AY 2010-11) and was on record with the department, no addition could be made for the assessment year 2011-12.

What were the facts?

The assessee, a contractor, had an addition of Rs. 47,19,082/- made to his income for AY 2011-12. The CIT(A) initially directed the AO to verify if this investment was disclosed in earlier years' balance sheets. Upon verification, the CIT(A) found the investment was indeed reflected in the balance sheet for AY 2010-11.

What were the issues?

Whether an investment disclosed in the balance sheet of an earlier assessment year can be added as income in the subsequent assessment year. The validity of an addition made without proper verification of prior year disclosures.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 154,Section 251

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH: KOLKATA

Hearing: 16.04.2018Pronounced: 10.07.2018

Per Shri A.T.Varkey, JM

1.

The appeal preferred by the revenue is against the order of the Ld. CIT(A). Siliguri dated 25.03.2015 for AY 2011-12.

2.

The only ground of revenue is against the action of Ld. CIT(A) in deleting the addition of Rs.47,19,082/-.

3.

Briefly stated facts are that the assessee is a contractor by profession. The income-tax return for the A.Y. 2011- 12 was filed by the assessee on 31.03.2013 disclosing therein total income of Rs. 59,18,980/-. The income was assessed u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) at Rs. 1,24,93,540/-. In appeal, the Ld. CIT(A) has confirmed disallowance of Rs. 13,08,285/- and deleted disallowance of Rs. 4,63,549/-. Regarding addition of Rs.47,19,082/- the Ld. CIT(A) directed the A.O. to verify from the returns of earlier years whether this investment was disclosed in the balance sheet of earlier

2 Nanu Shome, AY 2011-12 years and if disclosed, to delete the addition. After verification the A.O. passed an order u/s. 154 of the Act denying relief to the assessee. However, on appeal against the order u/s. 154 of the Act the Ld. CIT(A) had deleted this addition by observing as under: “During the course of appellate proceedings, the assessee has submitted that, the AO did not call for any detail before giving effect to the CIT(A) order dated 28.08.2014. The assessee filed the copy of balance sheet for AY 2010-11 & 2011-12 wherein the investment of Rs.47,19,082/- in gold is reflected. The assessee submitted that the gold was purchased from Axis Bank and is duly reflected in the books of account and balance sheet filed with the return of income of the relevant year. Conclusion – It is seen that the investment of Rs.47,19,082/- in gold is duly reflected in the returns of income of earlier years filed with the Income Tax Department. Therefore, this addition cannot be made in the AY 2011-12. The order u/s. 251/154 dated 29.01.2015 is cancelled. The AO is directed to delete the addition of Rs.47,19,082/-. Appeal of the assessee is allowed.”

Aggrieved, revenue is before us.

4.

We have heard rival submissions and gone through the facts and circumstances of the case. We note that this was the second round before the Ld. CIT(A). In the first round of appeal before the Ld. CIT(A), the Ld. CIT(A) on 28.08.2014 directed the AO as under:

“Regarding the addition of Rs.47,19,082 being the investment in gold out of undisclosed income, the AO is directed to verify from the returns of earlier years whether this investment was disclosed in the balance sheet of earlier years, If it is disclosed in the balance sheet then the AO is directed to delete this addition.” The AO while giving effect to the order of Ld. CIT(A) held as under:

“Before passing the order u/s 251 dated 14/10/2014, the direction of the Ld. CIT(Appeals) were duly carried out and verifications were made with reference to the earlier returns. However, claim of the assessee that the investment in gold in earlier years' returns were disclosed, was not supported by the relevant documents. Hence, it was considered decision not to delete the additions of Rs.47,19,082/- made in the order u/s. 143(3) dated 30/03/2014. Accordingly, relief was not allowed in the order u/s 251 dated 14/10/2014”

5.

On appeal against the action of the AO, the Ld. CIT(A) taking note that the investment of Rs.47,19,082/- in gold is duly reflected in the Return of Income of earlier years filed with Department, ordered deletion of addition. Our attention was drawn to page 13 of paper book where investment in gold of Rs.47,19,082/- is reflected in the Balance Sheet as on 31.03.2010. It was pointed out that wrong heading “Claim Receivable from Axis Bank” was erroneously typed. The purchase of gold from Axis Bank is reflected for 3 Nanu Shome, AY 2011-12 AY 2010-11 and is in the records of department. So, no addition can be made for this year 2011-12 and rightly deleted by Ld. CIT(A). Therefore, no interference is called for against the order of Ld. CIT(A) and the same is hereby confirmed. Appeal of revenue is dismissed.

9 In the result, the appeal of revenue is dismissed.

Order is pronounced in the open court on 10/07/2018

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