DCIT, CIRCLE-1, SILIGURI, SILIGURI vs. M/S COCETRA TRADE LINK P LTD,, SILIGURI

The only issue is to be decided as to whether the CIT-A is justified in deleting the impugned addition made by the AO u/s. 69 of the Act in the facts and circumstances of the case.

The brief facts of the case are that the assessee is a company and derives its income from letting out of godown. The assessee filed its return declaring a total income of Rs. 16,74,620/- for the A.Y 2009-10 i.e. under consideration, which was accepted u/s. 143(3) of the Act. The AO reopened the said assessment detecting certain income escaped assessment. Notice u/s. 148 of the Act was issued. In response to which, the assessee filed its e-return on 11-11-2014 declaring the same total income i.e at Rs.16,74,620/- as declared in the original return of income.

In the said proceedings, on perusal of balance sheet as on 31- 03-09, the AO found that the assessee made addition in fixed assets under the head’ building’ of Rs. 3,27,76,071/- and claimed expenses of Rs.1,36,94,103/-. The assessee was asked to produce relevant documents regarding the expenses incurred on the building during the assessment proceedings, according to AO, assessee failed to produce the same. In absence of any bills and vouchers, the claim of expenses of Rs.1,36,94,103/- treating the same as unexplained and added the same to the total income of assessee as unexplained expenditure u/s. 69 of the Act.

The assessee challenged the same before the CIT-A and contended before him that during the course of re-assessment proceedings u/s. 147 the assessee filed all ledger copies of building account and item-wise details of purchase and other expenses. The assessee made all payments through bank. The AO examined the same and added the impugned amount as unexplained expenditure only on the objections raised by the Revenue audit and contended that this action of the AO is arbitrary and uncalled for.

The CIT-A considering the above submissions, examining the material on record and particularly considering the observation of JCIT deleted the impugned addition by stating as under:-

Heard ld. DR and perused the material on record. On perusal of impugned order of the CIT-A, we find that the AO wrote a letter to the AAO, Revenue Audit, giving his ‘observation’ to the audit objection. According to AO, the impugned amount of Rs.1,03,81,519/- remains explained and the opinion that the same is unexplained investment u/s. 69A of the Act, by the AAO, Revenue Audit) is uncalled for. We find that the AO though satisfied that the additions to fixed asset (building) were properly explained, but made the said addition for the reason of pending settlement of Audit objection. The JCIT vide his letter dt. 28-05-2015 requested to drop audit para and basing on their replies of AO & JCIT, the AAO (Revenue audit) settled the audit para vide its letter dt. 8-6-15, which was received by the AO on 31-07-2015 i.e. after passing the instant assessment order on 23-07-15 u/s. 143(3)/147 of the Act. We find that the CIT-A considering the submissions of assessee and on an examination of records deleted the said addition and we do not find any reason to interfere with the finding of the CIT-A and it is justified. Therefore, the ground nos. I, II & III raised by the revenue on this issue are dismissed.

In the result, the appeal of the revenue is dismissed. Order pronounced in the open court on 09-04-2018