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TMI Blog2016 (8) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... is, we find no reason for such disallowance and, therefore, we delete the same. Addition made u/s 69 for unexplained investment - Held that:- As the assessee’s financial statements have been accepted by the Revenue for Asst. Year 2007- 08 and addition made during the year under appeal emanates out of the opening balance of the capital account only and there is no evidence of any unrecorded investment in the case of assessee and, therefore, no addition was called for u/s 69 Credit for TDS - reopening of assessment - Held that:- From going through the above provisions, we observe that when the assessee receives notice u/s 148 and is required to file return of income then as per the provisions of section 148 such return is treated at par as if same were required to be furnished u/s 139. Further when we move to the Rule 41 sub-rule(2) provides that the claim of TDS shall be accompanied by return in the form prescribed u/s 139 of the Act. Moving further when we go through the Rule 37BA(4) we find that credit for tax deducted at source and paid to the account of Central Government shall be granted on the basis of information relating to deduction of tax furnished by the deductor t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal. Grounds in ITA No.1712/Ahd/2012 (Revenue s appeal) :- (I) The CIT(A) has erred in taw and on facts in accepting the explanation of the Assessee that the opening capital appearing in the balance sheet was brought forward from the closing balance appearing in the balance sheet for the immediately preceding F.Y, particularly when the Assessee had not maintained regular books of accounts for the preceding year and had merely submitted copies of unaudited P L A/c and balance sheet. (II) The CIT(A) has erred in law and on facts in holding that the bookresult of the Assessee were acceptable and the addition made on account of suppressed gross profit was not tenable. (III) The CIT(A) has erred in law and on facts in directing to allow credit for TDS to the Assessee ignoring the provisions of Rule 37BA(4) of the I T Rules, and also ignoring the fact that the Assessee had not filed a valid return of income. (IV) On the facts and circumstances of the case, the Ld. Commissioner of Income tax (A) ought to have upheld the order of the Assessing Officer. (V) It is, therefore, prayed that the order of the Ld. Commissioner of Income tax (A) may be set-aside and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of G.P. at 20% of alleged unverified purchases of ₹ 7,74,687/- as against estimation of G.P. @ 20% of total turnover as made by the AO. In view of facts of the case and more particularly the nature of business of the appellant, the entire addition ought to have been deleted. The appellant craves leave to add, amend, alter, modify or delete any of the above grounds as well as to submit additional grounds at the time of hearing of the appeal. Revenue s ground (II) The CIT(A) has erred in law and on facts in holding that the bookresult of the Assessee were acceptable and the addition made on account of suppressed gross profit was not tenable. 5. As two grounds raised by assessee are inter-connected and ground no.(II) of Revenue s appeal relate to the same issue, therefore, they are dealt together. Ld. AR submitted that during the course of assessment proceedings it was observed by ld. Assessing Officer that no proper supporting was available with the assessee in relation to expenditure of ₹ 7,74,687/- relating to purchase of milk, curd, vegetables, fruits, etc. purchased in cash and similarly, expenditure on consumption of cooking gas was not veri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is not tenable. 9. We observe that return of income was filed by assessee on 19/10/2011 in compliance to notice u/s 148 of the Act dated 21.10.2010 because even when TDS was deducted on contract payment of ₹ 1,66,54,360/-, assessee did not file return of income in the regular course u/s 139 of the Act. Along with return of income audit report u/s 44AB of the Act was also attached and TDS certificate from Gujarat State Petroleum Corporation, Cadila Health Care Ltd. and Erhardt + Leimer (India) Pvt. Ltd., copy of agreement with Cadila Health Care Ltd. and copy of bank statement, were filed before ld. Assessing Officer. We further observe that no major defect was pointed out by ld. Assessing Officer except for the unverifiable purchases of ₹ 7,74,687/- for purchase of material like milk, curd, vegetables, cooking gas etc. Apart from this observation all other book results except some part of opening capital at ₹ 49,66,695/- as furnished in the audited financial statement were accepted by Assessing Officer. Issue regarding non-acceptance of the opening capital of ₹ 49,66,695/- will be dealt with other ground of the appeal raised by Revenue. 9.1 We furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Ground No.(I) of Revenue The CIT(A) has erred in taw and on facts in accepting the explanation of the Assessee that the opening capital appearing in the balance sheet was brought forward from the closing balance appearing in the balance sheet for the immediately preceding F.Y, particularly when the Assessee had not maintained regular books of accounts for the preceding year and had merely submitted copies of unaudited P L A/c and balance sheet. 12. Ld. DR supported the order of ld. Assessing Officer. 13. On the other hand, ld. AR submitted that during the course of assessment proceedings, audited financial statements were submitted before ld. Assessing Officer and while examining the same, ld. Assessing Officer observed that brought forward opening balance of capital account of proprietary concern was shown at ₹ 60,85,758. Ld. Assessing Officer also observed that assessee has not filed return of income as well as financial statement for Asst. Year 2006-07 and 2007-08 and, therefore, accepted the opening w.d.v. of assets motor car at ₹ 3,63,313/- and opening bank balance of ₹ 7,55,750/- and treated the remaining amount of ₹ 49,66,695/- (Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y him is not, in the opinion of the A.O. satisfactory. The fulfillment or satisfaction of these conditions in the case of appellant is discussed in the following paras. (i) it is seen that A.O. had made addition against opening capital of the appellant. This makes it very clear that the A.O. has not detected any investment made by the appellant during the year under consideration. Accordingly, the first eligibility criterion of section 69 as mentioned above is not fulfilled. (ii) It is also a matter of fact that the appellant is maintaining the books of accounts and opening capital amount of ₹ 60,85,758/- has been recorded by the appellant in his books of accounts. In fact the figure of opening capital account of ₹ 60,85,785/- has been taken by the A.O. from the books of accounts and balance sheet of the appellant. It is clearly mentioned by the A.O. in para 5 of the assessment order that books of accounts and bills and vouchers were furnished and the same were verified on test check basis. These books of accounts were duly audited and the appellant has drawn a balance sheet and profit and loss account based ofPsthese books of accounts. The balance she ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment proceedings. In this balance sheet, appellant has declared balance in capital account of ₹ 17,62,694/- and the fixed assets of ₹ 9,01,173/-. There is nothing on record to disbelieve this balance sheet. In view of these facts, I am of the considered, view that A.Q. should have given benefit of capital account of ₹ 17I62,694/-and w.d.v. of fixed assets of ₹ 9,01,173/-. 3.6 The A.O. had also made reference to debtors of ₹ 44,05,856/-. This figure is also disclosed in the balance sheet of the current year. This is the opening balance under the head sundry debtors for the current A.Y. This corresponds to closing balance of sundry debtors of ₹ 44,05,856/- as on 31-03-2007. This figure is also declared in in the balance sheet for A.Y. 2007-08. Since sundry debtors also corresponds to earlier year, accordingly, in my considered view, no adverse inference can be drawn in the current A.Y. 3.7 1 further place reliance on the case of Mohanlal Pukhraj v/s. DCIT (2005) 1(11) 1 TCL 160 (Ahd.Tri.) wherein it is held that income during various years cannot be taxed in one year brushing aside of the evidences to be verified by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... takes its source from previous financial year and ld. Assessing Officer has taken the basis of opening capital of ₹ 60,85,758/- from the audited financial statement of assessee shown at Schedule-A of the audited balance sheet and has partly considered the opening capital explained to the extent of opening w. d. v. of motor car of ₹ 3,63,313/- and opening bank balance of ₹ 7,55,750/-. There is no mention of any other investment which is not recorded in the books of account. 17. We further observe that assessment u/s 143(3) r.w.s. 148 of the Act in the case of assessee for Asst. Year 2006-07 2007-08 were completed on 28.2.2013 which was after the assessment under section 143(3) r. w. s. 148 of the Act for Asst. Year 2008-09 completed on 27.12.2011. From going through the assessment order for asst. year 2007-08 we find that ld. Assessing Officer has accepted the audited financial statement as well as the opening and closing balance of capital account and the only addition made for asst. year 2007-08 relates to unverifiable purchases. Had there been any unexplained investment in the previous year i.e. asst. year 2007-08 then ld. Assessing Officer might have extr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority. (2) [( i ) Where under any provisions of the Act, the whole or any part of the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for the whole or any part of the tax deducted at source, as the case may be, shall be given to the other person and not to the deductee : Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1).] ( ii ) The declaration filed by the deductee under clause ( i ) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person. ( iii ) The deductor shall issue the certificate for deduction of tax at source in the name of the person in whose name credit is shown in the information relating to deduction of tax r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 :] [ Provided that in a case- ( a ) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005 in response to a notice served under this section, and ( b ) subsequently a notice has been served under sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to sub-section (2) of section 143, as it stood immediately before the amendment of said sub-section by the Finance Act, 2002 (20 of 2002) but before the expiry of the time limit for making the assessment, re-assessment or recomputation as specified in sub-section (2) of section 153, every such notice referred to in this clause shall be deemed to be a valid notice: Provided further that in a case- ( a ) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005, in response to a notice served under this section, and ( b ) subsequ ..... 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