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TMI Blog2016 (6) TMI 1006X X X X Extracts X X X X X X X X Extracts X X X X ..... at whether those two additions are made by the assessee itself in the computation of income, is a matter of verification and, therefore, in the interest of justice, we restore the matter to the file of the Assessing Officer with the direction to verify whether the same was already added by the assessee in the computation of income, and if so, then the additions made by the AO are justified. - ITA Nos. 2808 & 2809/Del/2013 - - - Dated:- 2-6-2016 - SH. I.C. SUDHIR, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER For The Appellant : Smt. Anima Barnwal, Sr. DR For The Respondent : Sh. Anil Jain, Adv. ORDER PER O.P. KANT, A.M.: These appeals of the Revenue are directed against two separate orders, both dated 21/02/2013 of learned Commissioner of Income-tax (Appeals), Dehradun, for assessment years 2003-04 and 2008-09. The grounds of appeal raised in the both the appeals are common and, therefore, the appeals are heard together and disposed of by this consolidated order. ITA No. 2808/Del/2013 for AY : 2003-04 2. Now we take up the appeal in ITA No. 2808/Del/2013. The grounds raised in the appeal are reproduced as under: 1. The learned Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68 cannot be set off against business loss . On appeal by the assessee, the learned Commissioner of Income-tax(Appeals) upheld the addition under section 68 of the Act, however, held the unexplained income under section 68 of the Act is to be computed under the head income from other sources and directed the AO to allow setoff of business loss against the income under the head income from other sources as per the provisions of the Act. Aggrieved, with the action of the learned Commissioner of Incometax( Appeals) in allowing set off of the business loss against the undisclosed income added by the Assessing Officer under section 68 of the Act, the Revenue is in appeal before the Tribunal. 4. In all the three grounds raised, the Revenue has challenged including the income under the deeming provisions of section 68 under the head income from other sources and consequent allowing of set off of business loss against the income under the head income from other sources . 5. The Assessing Officer held the share trading receipt of ₹ 1,68,29,316/- as unexplained credit as per the provisions of section 68 of the Act and she reduced the sum of ₹ 1,68,29,316/- out of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of the Fakir Mohamad Haji Hasan reported in 247 ITR 290 (Guj). 7. On the other hand, the learned Authorized Representative (AR) of the assessee relying on the order of the learned Commissioner of Incometax( Appeals) submitted that even the income from undisclosed sources would fall within the scope of the total income and belongs to the category of income from other sources and eligible for setoff against business loss. In support of his contention, the learned AR also relied on the judgment of the Hon ble Supreme Court in the case of Commissioner of Income Tax Vs. DP Sandu Brothers Chamber (P) Ltd. reported in (2005) 273 ITR 1 (SC), decision of the Tribunal, Ahmedabad Bench in ITA No. 256/AHD/2011 dated 12/09/2014 in the case of ACIT, circle 4, Surat Vs. M/s Shree Raghupati Fibers Private Limited , judgement of the Hon ble Gujarat High Court in the case of DCIT versus Radhe developers India Ltd (2010) 329 ITR 01 (Guj) and judgment of the Hon ble Gujarat High Court in the case of CIT Vs. Shilpa dying and printing mills private limited reported in (2013) taxmann.com 3 (Gujarat). 8. We have heard the rival submissions and perused the material on record. The issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under the head income from other sources , relied on the judgment of the Hon ble Supreme Court in the case of CIT Vs. DP Sandu Bros. Chambur (P) Ltd (supra). The fact of the said case are that the assessee entered into a lease agreement with the lessor in 1959 for 50 years, under which rent was paid by the assessee to the lessor. During the relevant assessment year, the assessee surrendered the tenancy rights premeasured and in consideration for such premature termination of lease, the assessee was paid ₹ 35 Lacs. In the return of income filed, the assessee credited the sum of ₹ 35 lakh under the reserve and surplus account of the Balance sheet. The Assessing Officer held this amount was taxable under the head income from other sources under section 10(3)/ r.w.s 56 as casual and non-recurring receipt. The CIT-A, however held that the sum received was liable to tax as capital gain after deducting an amount of ₹ 7 lakhs as the cost of acquisition. The CIT-A decided the cost of acquisition on the basis of market value as on 1-4-1974. The Tribunal, however held that the assessee did not incur any cost for acquisition of the leasehold rights and that if at all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s with reference to known sources of the income and there was no reference of the incomes in the nature of section 68/69 of the Act. 11. Further, the ld AR also relied on the decision of Tribunal, Ahmedabad Bench on 12/09/2014 in the case of M/s Shree Raghupati Fibres Private Limited (supra) , wherein the Tribunal has relied on the judgment of the Hon ble Supreme Court in the case of ITO versus Sandhu Brotrhers(supra). 12. As regard to above decision of the ITAT relying on the decision of the Hon ble Supreme Court in ITO Vs. Sandhu Brothers (supra), with due respect, we find that that the observation of the Hon ble Supreme Court Court in the said decision were in different context. In the said decision the primary question was whether the amount received on surrender of tenancy right was liable to be taxed as capital gain or income from other sources. In that contexts the Hon ble Supreme Court held that section 56 prescribed for chargeability of income of every kind which is not to be excluded from the total income under the Act, only if it is not chargeable to income tax under any of the heads specified in section 14, items A to E. Thus, in the said decision the source of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of which the income can be classified under one of the heads of income under s. 14 of the Act, it would not be possible to classify such deemed income under any of these heads including income from other sources which have to be sources known or explained. When the income cannot be so classified under any one of the heads of income under s. 14, it follows that the question of giving any deductions under the provisions which correspond to such heads of income will not arise. If it is possible to peg the income under any one of those heads by virtue of a satisfactory explanation being given, then these provisions of s. 69, 69A, 69B and 69C will not apply, in which event, the provisions regarding deductions, etc. applicable to the relevant head of income under which such income falls will automatically be attracted. 6.2. The opening words of s. 14 Save as otherwise provided by this Act clearly leave scope for deemed income of the nature covered under the scheme of ss. 69, 69A, 69B and 69C being treated separately, because such deemed income is not income from salary, house property, profits and gains of business or profession, or capital gains, nor is it income from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Fakir Mohmed Haji Hasan (supra) was not applicable to the case before them. In our opinion, observations of the Hon ble High Court are with reference to known sources of income as in the case of D.P. Sandhu Brother Chambur Private Limited (supra). 17. Further, the Authorized Representative of the assessee has also relied on the judgment of Gujarat High Court in the case of CIT Vs. Shilpa Dyeing and Printing Millls Ltd, (supra) following the judgment of the DCIT Vs. Radhe Developers India Ltd, (2010) 329 ITR 01 (Gujrat). However, we find that in the case of Shilpa Dyeing and Printing Mills Ltd (supra) the assessee disclosed the unaccounted stock under the head other income as miscellaneous income and Tribunal, thus, allowed that adjustment of the income declared on unaccounted stock for set-off against the business loss as evident from questions of law raised by the revenue as under: 1. . 2. Whether on facts and circumstances of the case and in law the Hon ble ITA T in justified in not treating the income of ₹ 1, 00, 98, 672/-as deemed income as provided in this the scheme of section 69 of the Act 3. Whether in the facts and circumstances of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tock represents unexplained expenditure in these purchases. In this context, the ld. CIT(A) referred to the observations of the Hon'ble Gujarat High Court in the case Fakir Mohammed (supra). As observed by the Hon'ble jurisdictional High Court in the aforesaid decision the scheme ofsections 69, 69A, 69B and 69C would show that in cases where the nature and source of investments made by the assessee or the nature and source of acquisition of money, bullion etc. owned by the assessee or the source of expenditure incurred by the assessee are not explained at all or not satisfactorily explained, then the value of such investments and money, or value of articles not recorded in the books of account or the unexplained expenditure may be deemed to be the income of the assessee. It follows that the moment a satisfactory explanation is given about such nature and source by the assessee, then the source would stand disclosed and will therefore be known and the income would be treated under the appropriate head of income for assessment as per the provisions of the Act. However, when these provisions apply because no source is disclosed at all on the basis of which the income can be cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of assessee. The Assessing Officer observed that certain drafts allegedly sent to GMDC by the assessee totalling to ₹ 1,92,161 had not been accounted for in the books of the assessee but the entries in respect thereof appeared in the account of the assessee in the books of GMDC The assessee replied that the accounts of GMDC could not be reliable and the assessee had not sent the above drafts. The Assessing Officer was not satisfied with the explanation furnished by the assessee and he made the impugned addition of ₹ 1,92,161. In the light of these facts, Hon'ble High Court observed that since there is an admitted position that the assessee was carrying on the business of coal and lignite and purchases were made from time to time from GMDC, in that case, even if any addition is required to be made under section 69C, the entire expenditure towards it has to be allowed as a deduction undersection 37(1) of the Act. The assessment year under consideration is admittedly 1987-88 to which the effect of this amendment will not be applicable. Apparently, such are not the facts in the case under consideration. 10.3 As regards decision of the ITAT ,relying upon the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erent fact may make a world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper. 9. The following words of Lord Denning in the matter of applying precedents have become locus classicus: Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive. *** *** *** Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it. 10.5 In the light of aforesaid observations of the Hon'ble Apex Court, we are of the opinion that the reliance by the assessee on the decisions in the case of Krishna T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The learned Commissioner of Income Tax(Appeals) has erred in law and on facts by upholding the submission of the assessee ignoring the provisions of section 14, 68, 70 and 71 of IT Act. 3. That the learned Commissioner of Income Tax(Appeals) has erred in law and on facts in deleting the other two additions of ₹ 8,14,965/- and ₹ 37,621/- made by the Assessing Officer as these were added by the assessee himself in his computation of income. 25. We find that the grounds No. 1 and 2 of the appeal are identical to the grounds No. 1 and 2 of the appeal in ITA No. 2808/Del/2013, thus, following our finding in para numbers 4 to 21, we allow these grounds of the Revenue. 26. In ground No. 3, the Revenue has raised that the addition of ₹ 8,14,965/- and ₹ 37,621/- were made by the AO as those were added by the assessee itself in the computation of income. The ld. Commissioner of Income Tax(Appeals) has deleted these two additions on the ground that same were not discussed in the body of the assessment order. We find that whether those two additions are made by the assessee itself in the computation of income, is a matter of verification and, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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