The
Assessee, in order to make its offer an honest attempt, apart from declaring
the discrepancy had offered an additional sum to its return of income and also
if AO disallowed any sum which shall not exceed the excess amount offered to
tax by the assessee. Then such disallowance can be withdrawn.
ACIT Vs. AKME Projects Ltd.
ORDER
PER
I.P. BANSAL, JUDICIAL MEMBER
This is an appeal filed by the revenue. It is directed against the order passed by
the CIT (A) dated 6th April, 2011 for Assessment Year 2008-09. The
grounds of appeal read as under:-
1. On the facts and in the
circumstances of the case, learned CIT (A) has erred in deleting the addition
of Rs.39,52,293/- made on account of setting off the loss from reading in
commodities against business income.
2. On the facts and in the
circumstances of the case, learned CIT (A) has erred in ignoring the fact that
the loss being speculative in nature can only be set off against the profit of
the speculative business income.
3. (a) The order of the CIT (A) is
erroneous and not tenable in law and on facts.
(b) The
appellant craves leave to add, alter or amend any/all of the grounds of appeal
before or during the course of the hearing of the appeal.”
2.
A
search operation was carried out at the premises of the assessee including the
group concerns. A survey was also
conducted on 19-20th February, 2008 on various premises and group concerns of the
assessee. During the course of survey,
on the basis of various documents/papers/soft copies of the data, the assessee
declared a sum of Rs.15 crore as additional business income in the hands of
various business concerns of the assessee group vide letter dated 10th March, 2008
the copy of which has been placed at page 59 of the paper book. On the basis of
the declaration, it is the case of the assessee that the entire Rs.15 crore was
declared in its hands and accordingly the return of income was filed at Rs.18,37,88,691/-. However, while assessing the income of the
assessee, the Assessing Officer found that the assessee had claimed set off of
loss from trading in commodities amounting to Rs.39,52,293/- against business
income. The Assessing Officer treated that such loss is of speculative nature,
hence could not be set off against business income. He therefore, added the
said sum to the income of the assessee and has assessed the income of the
assessee at Rs.18,77,40,980/-. The
addition was challenged by the assessee before the CIT(A). It was contended
that the assessee had transferred 58 flats having mutually agreed value at Rs.18,08,31,794/-
in favour of M/s BLK Reality Pvt. Ltd. against which claim of having incurred
Rs.17 crore on various projects of the assessee company. The assessee company recognized total value
of sales of such flats in its profits and loss account at Rs.18,08,31,794/- as
against the earlier sale value shown at Rs. 4,50,00,000/- thereby offering an
additional income to the extent of Rs.13,58,31,794/-. The said accretion formed part of the overall
agreed income of Rs.15 crore as offered voluntarily by the assessee after the survey. The balance amount of Rs. 1,41,68,206/- was
offered directly in the computation of income to cover any deficiency or discrepancies or other
investments/expenditure, etc. Thus, it
was pleaded by the assessee that further disallowance of Rs.39,52,293/- being
less than the amount additionally offered for tax of Rs.1,41,68,206 on account
of there being no other discrepancy, should have been considered to be covered
by the said additional addition and, therefore, the addition of Rs.39,52,293/-
was not called for. Such submissions of
the assessee were forwarded by the CIT (A) to the Assessing Officer vide letter
dated 20th January, 2011 for his comments within ten days, but, no comments
were received from the Assessing Officer.
It is observed by CIT (A) that the written submissions of the assessee
do not contain any additional evidence.
Therefore, he proceeded to decide the appeal filed by the assessee on
the basis of the material available on record.
Learned CIT (A) after reproducing the submissions of the assessee in
letter dated 10th March, 2008 vide which the assessee had offered additional
income of Rs.15 crore has come to the conclusion that in view of the additional
amount taken by the assessee of Rs.1,41,68,206/- which did not exceed the
disallowance made by the Assessing Officer of Rs.39,52,293/-, the addition made
by the Assessing Officer was not called for. It is against these findings recorded
by the CIT (A), the department has filed the aforementioned grounds of appeal.
3.
After
narrating the facts, relying upon the observations of the Assessing Officer in
the assessment order, it was pleaded by the learned DR that the addition was
rightly made by the Assessing Officer and it has wrongly been deleted by the
CIT (A).
4.
On
the other hand, taking us through the relevant pages filed in the paper book,
it is the case of the learned AR that learned CIT (A) has rightly deleted the
addition as the additional income offered by the assessee of Rs.1,41,68,206/-
was sufficient to cover the discrepancy, hence, no addition could be made to
the income of the assessee.
5.
We
have carefully considered the rival submissions in the light of the material
placed before us. Copy of the computation of income has been filed by the
assessee at page 55 of the paper book in which the assessee has declared
“additional business income” of Rs.1,41,68,206/-. We have also carefully gone through the
letter filed by the assessee dated 3rd March, 2008 vide which the offer for
additional income of Rs.15 crore was made.
We have also carefully gone through the assessment order. The Assessing Officer has not pointed out any
other discrepancy in any of the documents found at the time of survey. The assessee, in order to make its offer an
honest attempt, apart from declaring the discrepancy had offered an additional sum
of Rs.1,41,68,206/- just to complete the figure of Rs.15 crore. The amount added by the Assessing Officer of Rs.39,52,293/-
does not exceed that amount. Therefore,
in our opinion, learned CIT (A) has taken a right view that the aforementioned
amount should have been considered to be embedded in the additional income
offered by the assessee. We find no
infirmity in the view taken by the CIT (A) and, therefore, we decline to
interfere in the order of CIT (A).
6.
In
the result, the appeal filed by the revenue is dismissed.
The order pronounced in the
open court on 28.12.2011.
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