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TMI Blog2022 (3) TMI 838X X X X Extracts X X X X X X X X Extracts X X X X ..... alance of WDV but no addition u/s 69 could have been made. We, therefore, set-aside the order of the ld. CIT(A) and direct the AO to delete the addition made u/s 69. AO may re-compute the depreciation on account of difference in the opening and closing balance of the WDV of the fixed assets. The ground raised by the assessee is accordingly partly allowed. - ITA No1555/DEL/2019 - - - Dated:- 8-3-2022 - Shri R.K. Panda, Accountant Member And Shri N. K. Choudhry, Judicial Member For the Assessee : Sh. Piyush Kuchhal, FCA For the Revenue : Ms. Poonam Sharma CIT-DR ORDER PER R.K. PANDA, AM, This appeal filed by the assessee is directed against the order dated 24.01.2019 of the learned CIT(A), Dehradun, relating to Assessment Year 2009-10. 2. The grounds raised by the assessee are as under:- 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad, both in the eye of law and on the facts. 2. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the initiation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in law, in rejecting the contention of the assessee that the reassessment proceedings initiated by the Ld AO are bad in law as the same are based on reasons which are vague. 9. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in making an addition of ₹ 1,00,02,137/- by making the various additions: i. Unexplained investment in fixed assets 86,47,500/- ii. Depreciation on building 1,80,873/- iii. Excess depreciation11,73,764/- 10. That the above-said additions have been made by indulging in surmises conjecture and without bringing any adverse material on record. 3. Although, the assessee has raised a number of ground as mentioned above, however the ld. counsel for the assessee restricted his argument to the ground no.9(i) only relating to unexplained investment in fixed assets to the tune of ₹ 86,47,500/-. Therefore the other grounds raised by the assessee are dismissed as not pressed and only the ground of appeal no.9(i) is only being taken up for adjudication. 4. Fact of the case, in brief, are that the assessee is a company and filed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dep for the Year WDV as on 31.03.2008 More than 180 Days Less than 180 Days Computer 60% 20,860/- 0 0 0 20,860/- 12,516/- 8,344/- Machinery 15% 1,27,04,223/ 44,700/- 11,20,664/- 0 1,38,69,587/- 19,96,389/- 1,18,73,198/- Office Equipments 10% 90,97,325/- 1,24,163/- 18,85,296/- 0 1,11,06,784/- 10,16,413/- 1,00,90,371/- Others 51,24,453/- 0 27,63,811 /- 27,76,846/ 65,76,110/- 0 65,76,110/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.2008 has been shown at ₹ 1,00,90,371/- but WDV of office equipments as on 01.04.2008 has been shown at ₹ 1,25,57,597/-. Thus the assessee has inflated the value of office equipment by an amount of ₹ 24,67,226/- (₹ 1,25,57,597/- ₹ 1,00,90,371/-). Thus the effect of the above exercise is that the value of relevant assets (machinery and office equipments) has been inflated by the assessee by a sum of ₹ 86,47,500/- (61,80,274/- + 24,67,226/-). This is nothing but unexplained investment in various assets by the assessee u/s 69 of the IT Act. The assessee claimed that the subsidy received by the assessee in AY 2007-08 was deducted from the value of assets first in AY 2007-08 and secondly AY 2008- 09 and that when this mistake was noticed by the assessee, he enhanced the value of assets as on 01.04.2008 with the result that the effect of reducing the value of subsidy two times was nullified and the enhanced value of assets as on 01.04.2008 was result of that exercise. The reply of the assessee is not acceptable. The assessee was under legal obligation to have carried forward the correct value of WVD of relevant assets as on 01.04.2008. The right cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 and therefore the opening WDV as per Income Tax. Soles for A.Y. 09-10 fee; amount of subsidy reintroduced and was taken at revised enhanced value by rectifying the impact of double deduction of amount of subsidy. Admittedly, the mistake on the part of the appellant has occurred in the very first year of 2007-08 wherein he has claimed a double deduction, of subsidy by first actually reducing it in the books of account which w evident from the perusal of the ledger of the building and machinery that has ten filed and then again while drawing out the depreciation chart for A.Y. 07-08 the same amount of subsidy has been claimed again. Now apparently, as stated by the ld. Counsel the mistake has been discovered and this was reintroduced in the year under consideration. It is therefore not surprising that the AO prima facie took it as unexplained investment. The Ld. AR has argued that 11 is obvious from the perusal Of fee records and the facts which are undisputed that there is a mistake apparent from record it is occurring in the first year of business F.Y. 2006-07 relevant to A.Y. 2007-08. However, after considering the facts carefully and going through the depreciatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has not made any investment during the impugned assessment year and the error was rectified during the year, therefore, in absence of any unexplained investment made during the year, the provisions of section 69 of the Act are not attracted. He accordingly, submitted that the order of the Ld. CIT(A) be set-aside and the ground raised by the assessee be allowed. 8. The Ld. DR on the other hand, heavily relied on the order of the AO and the Ld. CIT(A). 9. We have heard the rival arguments made by both the sides, perused the orders of the A.O. and the Ld. CIT(A) and the paper book filed on behalf of the assessee. We find the AO in the instant case made addition of ₹ 86,47,500/- to the total income of the assessee u/s 69 of the Act on the ground that the WDV of plant machinery as on 31.03.2008 was ₹ 1,18,73,198/- but the WDV of machinery plant as on 01.04.2008 has been shown by the assessee at ₹ 1,80,53,472/-, meaning thereby the assessee has inflated the value of machinery by an amount of ₹ 61,80,274/-. Similarly, the WDV of office equipment as on 31.03.2008 has been shown at ₹ 1,00,90,371/-, whereas WDV of office equipments as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have revised the ITR for AY 2007-08 and AY 2008-09 by revising the correct figure of WDV on these assets and thereafter that corrected figures should have been carried forward as on 01.04.2008. But the assessee has not done the same. By not revising the returns for AY 2007-08 and AY 2008-09 and thereafter carrying forward the higher value of WDV of assets, the assessee has committed an accounting fault. 13. Similarly, we find the Ld. CIT(A) while deciding the issue against the assessee has observed as under:- However, after considering the facts carefully and going through the depreciation for the current year and the first year i.e. AY 2007-08, it is clear and undisputed that the mistake occurred in the very first year. 14. We, therefore, find merit in the submission of the ld. counsel that when the there is no actual investment of any kind by the assessee during the assessment year especially in absence of any receipt voucher, payment voucher, bills, vouchers payment proof, etc. provisions of section 69 are not applicable and the error is an accounting/clerical error which occurred in the very first year. Therefore, we are of the considered opinion that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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