Laxmi Saini, Alwar vs Department Of Income Tax

Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM

vk;dj vihy la-@ITA No. 433/JP/2012 fu/kZkj.k o"kZ@Assessment Year : 2006-07

The A.C.I.T. cuke Smt. Laxmi Saini, Circle-2, Alwar Vs. Prop- M/s Pankaj Bottle Manufacturing Co., F-296(B) I.A. Bhiwadi, Alwar.

LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AXPPS 6735 G vihykFkhZ@Appellant izR;FkhZ@Respondent

jktLo dh vksj ls@ Revenue by : Shri Kailash Mangal (JCIT) fu/kZkfjrh dh vksj ls@ Assessee by : Shri P.C. Parwal (CA)

lquokbZ dh rkjh[k@ Date of Hearing : 09/12/2014 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 27/02/2015

vkns'k@ ORDER

PER: T.R. MEENA, A.M.

1. This is an appeal filed by the Revenue against the order dt.

21.02.2012 passed by the Ld. CIT(A), Alwar for A.Y. 2006-07. The sole

ground of appeal is as under:-

"That the learned Commissioner of Income-tax (A) has erred in law as well as on the facts and circumstances of 2 ITA 433/JP/2012_ ACIT Vs. Smt. Laxmi Saini

the case in restricting the addition to Rs. 7,10,486/- out of total addition of Rs. 25,00,000/- on account of construction of factory building admitted by the assessee during the course of survey."

2. The ld A.O. observed that the assessee is engaged in the

business of manufacturing of bottles in the name of M/s Pankaj Bottle

Manufacturing Company. A survey u/s 133A was carried out at the

business premises of the assessee on 29.08.2007. In survey, statement

of husband of the assessee Sh. Ramanand Saini was recorded on oath

which was endorsed by assessee also. In the statement in reply to

question no. 3, it was deposed that a plot was purchased in the name

of M/s Pankaj Bottle Manufacturing Company in May, 2005 for Rs.

5,38,000/- and has invested Rs. 40,00,000/- on construction of the plot.

The construction is stated to be done between in November, 2005 to

March, 2006 but in the balance sheet as on 31.03.2006 investment in

construction was shown at Rs. 15,62,433/- only. When assessee was

asked to explain the discrepancy, he admitted the discrepancy and

surrendered Rs. 25,00,000/- on account unrecorded investment.

However the assessee vide her letter dt. Nil addressed to the ITO,

Ward-2(2), Alwar submitted as under:-

3 ITA 433/JP/2012_ ACIT Vs. Smt. Laxmi Saini

"At the time of survey at our premises the amount of Rs. 23,00,000/- was surrendered on account of unaccounted investment in building. The investment in building s on 31.03.2006 was Rs. 15.62 lacs. It was estimated that the total investment in building seems to Rs. 38-39 lacs. Therefore during the survey due to depression and just to gain the sympathy of the department, out of total estimated value by reducing the amount accounted for up to 31.03.2006 as investment in building balance amount was surrendered for tax. Later on when we gone through the books of accounts for the period 01.04.2006 to 31.03.2007, we found that a sum of Rs. 17.28 lacs has been accounted for in the books of accounts in connection with investment in building. In this way the real amount of surrender comes to Rs. 7.00 lacs (Approx), therefore we humbly request to make the amendment in the statement looking into the facts of the case. Apart from it we also found that we had given an advance of Rs. 16 lacs to purchase land, which was not considered in our books of accounts and the same is surrendered".

3. The AO in the assessment proceedings observed that in survey

operation the balance sheet taken from the computer at the time of

survey shows investment in building at Rs. 15,45,886/-. The assessee in

the statement stated that the construction was started in the month of 4 ITA 433/JP/2012_ ACIT Vs. Smt. Laxmi Saini

November,2005 and completed in March, 2006. Therefore the claim of

the assessee in the letter that the same continued till the next year

cannot be accepted more particularly when no further construction was

found in the print of balance sheet from 01.04.2007 to 27.08.2007

taken from the computer of the assessee. The AO therefore held that as

the admission of unaccounted income in respect of construction was

specific for the specific period, the disclosure of Rs. 7 lacs made by the

assessee on this account has no merit and thus assessed the income on

account of unexplained investment in construction at Rs. 25 lacs as

against Rs. 7 lacs offered by the assessee.

4. Being aggrieved by the order of the AO, the assessee carried the

matter before the Ld. CIT(A), Alwar. The Ld. CIT(A) by referring to Q.

No. 9 of the statement of Sh. Ramanand Saini recorded on 28.09.2007

observed that disclosure on account of building construction was made

at Rs. 23 lacs and Rs. 2 lacs was on account of loose papers found

during the course of survey. The assessee has accordingly correctly

surrendered Rs. 23 lacs in the revised return and the AO was not

correct in taking the income admitted during the survey at Rs. 25 lacs.

5 ITA 433/JP/2012_ ACIT Vs. Smt. Laxmi Saini

In respect of the observation of the AO that undisclosed investment in

building is Rs. 25 lacs, he gave the following findings:-

"Secondly, it is observed that the AO has assessed the undisclosed investment in building at Rs. 25 lacs, solely on the basis of the statements recorded in the course of survey and print out of the balance sheet as on the date of survey, without linking the same to the corroborative evidence found in the course of survey or available at the time of assessment by way of bills and vouchers and books of accounts for the AY 2006-07 and AY 2007-08. I am inclined to agree with the contention of the AR, in view of the case laws cited, that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect. The assessee, in its revised statement by way of the letter has offered Rs. 7 lacs on account of investment in building and Rs. 16 lacs on account of advance given to purchase land not recorded in the books of accounts. The assessee has submitted that a sum of Rs. 17.28 lacs had been accounted for in the books of accounts for the period 01.04.2006 to 31.03.2007 and therefore, the surrender of Rs. 23 lacs made in the course of survey was to be restricted to Rs. 7 lacs. The AO has found no merit in this submission of the assessee on the ground

6 ITA 433/JP/2012_ ACIT Vs. Smt. Laxmi Saini

that investment shown in the computer print out of the balance sheet as on the date of survey was Rs.

15,45,886/-. From the balance sheet filed with the original return for AY 2006-07 it is seen that the investment in the building has been shown at Rs. 15,62,443/-. The assessee has supported its contention of investment having been made during the FY 2006-07 of Rs. 17.28 lacs with copy of ledger account, audited balance sheet and schedule of fixed assets and copy of bill vouchers for building construction made before survey. Total investment as on 31.03.2007 have been reflected at Rs. 40 lacs in the building construction ledger account in which opening balance is Rs. 15,62,443/-, journal entries totalling Rs. 17,27,071/- and cash payments of Rs. 7,10,486/-. It has been submitted that surrender amount was worked out at approximate figure of Rs. 7 lacs which has been reflected in the ledger account by way of cash payments. Considering the above facts and the case laws relied upon by the assessee the addition on account of unexplained investment in construction of factory building is restricted to Rs. 7,10,486/-. The appellant accordingly gets relief of Rs. 17,89,514/-."

5. Now the revenue is in appeal. The Ld. DR vehemently supported

the order of the AO and argued that when the assessee has 7 ITA 433/JP/2012_ ACIT Vs. Smt. Laxmi Saini

surrendered Rs. 25 ,00,000/- in the statement recorded in survey after

specifically stating the period of construction as November, 2005 to

March, 2006 and the cost of construction at Rs. 40 lacs whereas the

investment recorded in the books is only Rs. 15.62 lacs, the addition of

Rs. 25 lacs made on account of unexplained investment in construction

is rightly made by the AO and therefore it was prayed to reverse the

order of the Ld. CIT(A).

6. At the outset, the Ld. AR of the assessee submitted that in survey

assessee's husband has stated that unexplained investment in the

building is Rs. 23 lacs and not Rs. 25 lacs as taken by the AO. Further

while making this surrender, he has not considered that Rs. 17.28 lacs

has been accounted for in the books of account for the period

01.04.2006 to 31.03.2007. Therefore immediately after survey assessee

filed the letter clarifying this position and offered Rs. 7 lacs on this

account and further offered Rs. 16 lacs on account of unexplained

advances to make the total surrender at Rs. 23 lacs as admitted by her

husband. So far as investment in building construction is concerned, the

assessee has placed on record that for the subsequent period there is

an investment of Rs. 17.28 lacs which is recorded in the books of 8 ITA 433/JP/2012_ ACIT Vs. Smt. Laxmi Saini

account. The fact that the construction of building was not completed

up to 31.03.2006 is evident from the depreciation chart where the

building is shown under work in progress and no depreciation is

claimed. This fact is not denied by the AO also. Further in course of

assessment proceedings, the assessee has filed the bills of construction

for the subsequent period and the copy of ledger account of the

construction. The expenditure on construction incurred by the assessee

at Rs. 17,27,071/- as per these bills has not been doubted/denied by

the AO. The print out the balance sheet as on 27.08.2007 (i.e. after 1½

year of the year end), referred by the AO is apparently not correct in as

much as the amount of building construction as per this balance sheet

is Rs. 15,45,886/- which is lower than the amount of Rs. 15,62,443/- as

on 31.03.2006. Hence on the basis of this computer generated balance

sheet no adverse inference can be drawn. It is therefore prayed to

confirm the order of the Ld. CIT(A).

7. We have heard the rival contention of both the parties and

perused the material on record. The husband of the assessee in his

statement dt. 29.08.2007 has surrendered Rs. 25 lacs on account of

unexplained investment in construction but after survey he filed a letter 9 ITA 433/JP/2012_ ACIT Vs. Smt. Laxmi Saini

to the AO explaining that for the period 01.04.2006 to 31.03.2007 it has

recorded further investment of Rs. 17.28 lacs in the books of accounts

and thus the total investment as per books of accounts is Rs. 32.90 lacs

as against Rs. 40 lacs admitted in survey and thus requested to amend

the statement and to consider the surrender against investment in the

construction at Rs. 7 lacs as against Rs. 25 lacs made in the statement.

The assessee in this letter additionally surrendered Rs. 16 lacs on

account of advance given to purchase the land which was not offered in

the statement recorded in survey and for which there is no material

with the revenue also. This shows the bonafide of the assessee. The

assessee has also explained the discrepancy in the print out of the

balance sheet from 01.04.2007 to 27.09.2007 which is after a period of

1½ year of the end of the relevant assessment year. This apart, the

assessee has furnished the bills for construction for the subsequent

period in course of the assessment proceedings which is not disputed

by the AO. Therefore, we uphold the order of the CIT(A) where he has

considered the unexplained income in construction of building at Rs.

7,10,486/- as against Rs. 25 lacs added by the AO.

10 ITA 433/JP/2012_ ACIT Vs. Smt. Laxmi Saini

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

Order pronounced in the open court on 27/02/2015.

Sd/- Sd/- ¼vkj-ih-rksykuh½ ¼Vh-vkj-ehuk½ (R.P.Tolani) (T.R. Meena) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Tk;iqj@Jaipur fnukad@Dated:- 27th February, 2015

*Ranjan

vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:

1. vihykFkhZ@The Appellant- The A.C.I.T., Circle-2, Alwar

2. izR;FkhZ@ The Respondent- Smt. Laxmi Saini, Bhiwadi, Alwar.

3. vk;dj vk;qDr@ CIT

4. vk;dj vk;qDr¼vihy½@The CIT(A)

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (ITA No. 433/JP/2012)

vkns'kkuqlkj@ By order,

lgk;d iathdkj@Asst. Registrar