2018 (8) TMI 1207

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....ingh the learned counsel appearing for the Revenue urges only the following question of law for our consideration: "(a) Whether the Tribunal was justified in law in holding that the discrepancy between book value and physical value cannot be taxed u/s 69C of the Income Tax Act, but it can be taxed u/s 69 to 69B only ?" 3 The Respondent-Assessee is a company engaged in the business of civil construction. On 18.12.2008 there was search and seizure operation conducted in the Respondent's premises. During the course of search, valuation report of the site engineers of the projects regarding work in progress (WIP) as on 30.11.2008 were found. It was noticed the figures indicated in the valuation report of the site engineers were ....

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....d incur expenses out of unexplained source of income. The section cannot apply if the source of income for making expenses is explained. This section refers to the source of expenditure and not to the expenditure itself. No evidence of any unexplained expenditure has been brought on record either by search party or by the AO. None of the seized material or document indicates that the appellant has incurred any unexplained expenditure out of books. Section 69C is a deeming provision. Therefore, it has to be interpreted strictly. Onus was on the AO to prove that the appellant had incurred expenses out of books of accounts. The AO has not brought on record any material to show that the appellant incurred expenses out of books of accounts. The ....

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.... been arrived on actual verification. There is also no disallowance of any expenditure or suppression of income detected by the Revenue. In the aforesaid facts, the Tribunal held that in the absence of any material being brought on record to show that the valuation done as on 31.3.2009 is incorrect, no occasion to apply Section 69C of the Act can arise. The Tribunal further holds that Section 69C of the Act would not be applicable to the facts of the present case as there is no evidence of any unaccounted expenditure. The difference was only on account of estimation of the value of Work in Progress by the site engineers in November, 2008 and actually arriving at the value on physical verification which is reflected in the return of income a....

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....s taken into consideration while determining the Work in Progress as on 31.3.2009. The proposed question that the Tribunal held that there is a difference in the book value and the physical value of the Work in Progress is factually not correct. We did point out this to the counsel for the Revenue but he insisted to pressing this question. However, during the course of his submission, he was not able to substantiate the above presumption in the question as framed. 8 In the above view, in the facts of this case, question as proposed is academic, unless the Revenue first challenges finding of fact arrived at by the Tribunal. The finding of fact is that, there is no excess work in progress than that declared by the RespondentAssessee as on ....