TaxTMI 
TaxTMI 
2021 (10) TMI 1487
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....fter recording reason to believe that income of assessee has escaped assessment. A survey action under section 133A of the Act was conducted on the various business premises at various places on 02.01.2015 by DDIT (Inv.), Unit-2(1), Mumbai and the said reopening of the case as stated above was done on the basis of survey conducted as stated above. During the course of survey the a physical inventory of plants and machineries of two manufacturing units namely Pantnagar Unit 1 & 2 was taken and it was found that value of per-used plant and machinery was more than 20% of the total value of plant and machinery and consequently the assessment was re-opened u/s 147 of the Act. Similar discrepancies were also found in respect of Pantnagar Unit 2 where the plant and machinery was found short. The unit at Pantnagar Unit No.1 was started in A.Y. 2007-08 and Pantnagar Unit No. 2 was started in A.Y. 2009-10. The assesse claimed the deduction under section 80IB/80IC of the Act which was allowed in the first year of operation in the assessment framed under section 143(3) of the Act. In this brief backround the case of the assessee is being adjudicated ground wise in the following paras and first....
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....he CIT (A) on the above grounds be set aside and that of the A.O. be restored." 4. The issue raised in ground No.1 is against the order of Ld. CIT(A) in allowing the depreciation of Rs. 2,10,48,677/- which was not available physically at the unit no. 1 and also deleting the addition in respect of unexplained excess machinery of Rs. 1,93,23,298/- found at the unit no.2 vis a vis form 10CCB which could not be explained by the assessee. 5. The facts in brief are that during the course of survey, the survey team found excess machinery of Rs. 1,93,23,298/- at the assessee's business premises upon physical stock taking of plant and machinery and the assessee was accordingly asked to explain as to why the same should not be added to the income of the assessee which was replied by the assessee by submitting that during the course of survey, the survey team found some discrepancies in the value of machinery at the premises of the assessee on Pantnagar Unit No.1 & Pantnagar Unit No.2 vis a vis the value of plant and machinery reported in form 10CCB. The assessee submitted that the value of plant & machinery was correctly reported in form 10CCB and is as per the audited books accoun....
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....detailed break up of fixed assets were also filed by it in the form of Tax audit reports. The AO has not doubted the genuineness of the books of accounts of the appellant and he has not rejected the books of accounts by passing an order u/s. 145 of the Act. Further, he has also not doubted the quantitative details of the plant and machinery. The books of accounts of assessee were impounded by the department during course of survey proceedings wherein details of purchase of plant and machinery alongwith detail of parties and payment thereof were available. In my opinion, the AO has not taken any efforts to examine the authenticity of the same and has not even rejected the books of accounts of the assessee. Further, reliance placed by the AO on the statement of the director, I am inclined to agree with the submission of the appellant that there are serious lacunas in the statement and the same is not backed up by any corroborative evidence. It is a well decided judicial principle that no addition can be made by the AO merely on basis of a statement, in the absence of any corroborative evidence to substantiate the same. Hence, the reliance on the statement is misplaced. In such circum....
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....ained investment in the plant & machinery without appreciating the facts in correct perspective specially when glaring discrepancies were found during the course of survey action on the business premises of the assessee at various places especially Pantnagar Unit 1 & 2. As regards the findings of the survey team during the course of survey on Panth Nagar Unit No. 1 & Panth Nagar Unit No. 2, the Ld. D.R. while referring to the audit report in form 10CCB submitted that a difference of Rs. 6,01,39,077/- was found between the value of plant & machinery as per form 10CCB and total value of plant & machinery found at the time of survey upon physical inventory being taken. The Ld. D.R. submitted that in A.Y. 2008-09 the total value of plant and machinery as per form 10CCB report was Rs. 8,64,16,518/- whereas the total plant & machinery found on physical taking at the time of survey (WDV after allowing depreciation @ 20%) was Rs. 2,62,77,441/- resulting into excess plant & machinery on which the assessee has claimed depreciation of Rs. 2,10,48,677/-. The Ld. D.R. submitted that practically the machinery was not operational at the sight of Pantnagar Unit No.1 and therefore assessee has clai....
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....ess depreciation as noted by the AO in para 6. The Ld. A.R. submitted that there is bound to be some difference in the value of machinery as per form 10CCB report and machinery found at the time of survey which is written down value of the plant & machinery after adding the additions and deleting the sales/written off machinery beside reducing the transfer to other units. The Ld. A.R. referred to page No.46 & 47 of the paper book giving the yearwise details of machinery such as opening balance, addition/deletion, depreciation claimed, additional depreciation and closing WDV. The Ld. Counsel submitted that the survey team has failed to consider all these factors/reasons due to which there was difference between the value of plant & machinery as per form 10CCB and value as found at the time of survey (after allowing 20% depreciation). The Ld. A.R. also submitted that Ld. CIT(A) has taken into account all these facts and also the reasoning given by the assessee to explain the amount of difference which was in fact not there at all. The Ld. A.R. submitted that it is not possible to compare the plant & machinery which was commissioned in the assessment year 2008-09 when the unit was com....
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....was commissioned in A.Y. 2008-09, the total value of machinery reported therein and found at the time of survey that too in 2015 after approximately seven years can not match with value reported in form 10CCB. Considering all these facts,we earnestly hold that the addition was rightly deleted by Ld. CIT(A). Similarly, in respect of unit No.2 the machinery as per form 10CCB was found as nil whereas physical inventory during survey showed value of machinery of Rs.1,93,23,298/- which was treated as unexplained by the AO. We find reasoning in the contentions of the assessee that form 10CCB is filed in respect of those units for which the profit is claimed under section 80IC/section 80IB of the Act and not the other units where no such claim was made. In unit No.2 the assessee has not claimed any deduction under section 80IC/section 80IB and therefore value of machinery was reported as nil in Form 10CCB. However, the unit was functional and operational and there was plant & machinery. So upon the physical inventory being taken by the survey team, the plant & machinery was bound to be there which was used in the manufacturing process of the unit. The Ld. CIT(A) has given a correct findin....
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.... to show cause as to why these purchases should not be treated as sham expenditure and added to the income of the assessee. In compliance, the assessee furnished copies of ledger accounts, invoices, bank statements etc. in support of its claim. The assessee submitted before the AO that these purchases were genuine and not bogus as the assesse actually received the materials purchased and made the payments through banking channels. The AO also issued notices under section 133(6) of the Act which were returned unserved. Finally, the AO treated the purchases as bogus and added the entire amount to the income of the assessee. 14. In the appellate proceedings, the Ld. CIT(A) partly allowed the appeal of the assessee by relying on the decision of Hon'ble Gujarat High Court in the case of CIT Vs Simit P. Sheth(2013)356ITR451(Guj) and CIT Vs Bholanath Palyfab Ltd. (2013) 355 ITR 290 (Guj) and came to the conclusion that undoubtedly the purchases were bogus but the entire purchases can not be added to the income of the assesse. The ld CIT(A) concluded on the basis of above decisions that only the profit element could be added and accordingly directed the AO to apply profit rate of 12....
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....saged in section 80IB/section 80IC of the Act. 17. The facts in brief are that during the course of survey on the Pantnagar Unit No.1 it was found by the survey team that the preconditions as envisaged under section 80IB/section 80IC of the Act were not satisfied. During the course of survey on 02.01.2015 a physical inventory of plant & machinery installed at the unit was taken and it was found that there were inter unit purchases/transfers pre-used plant & machinery in the unit No. 1 which accounted for more than 20% of the total value of plant & machinery. According to survey team the plant & machinery found at the time of survey after allowing depreciation of 20% was Rs. 2,62,77,441/- whereas the total value of pre-used interunit transferred machinery after depreciation was Rs. 1,61,84,487/- and thus the pre-used machinery accounted for 61.59% of the total value of machinery in Pantnagar Unit No.1 as given by the AO in para 5.1 of the assessment order. 18. The AO also noted that during the course of survey the issue of contravention of explanation to section 80IB(2)(iii)(c) of the Act was confronted to Shri Anil Jain, Director who in his statement recorded dated 03.01.2015....
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....total inter unit transfers of pre used plant anbTrnachinery was less than 20%. The AO failed to bring any material on record to prove that the assessee was not eligible to claim the benefits of deduction u/s. 80IC of the Act. He has failed to point out any defects in the details filed with him by the assessee. He has merely relied on a statement recorded u/s. 133(A) of the Act which itself was not incriminating in the first place. Thus, in view of the facts of the case, I hold that the AO has erred in disallowing the deduction u/s. 80IC of the Act. Hence, the addition made by the AO on this ground is hereby deleted and the appeal on this ground is allowed. In view of the above mentioned Para, I hold that since the facts of the case are identical to the assessment year 2012-13, I hereby delete the addition made in the hands of the appellant." 20. After hearing the rival contentions of both the parties and perusing the material on record, we find that the first year of claim and allowance of deduction under section 80IB/section 80IC of the Act was A.Y. 2007-08. The claim of deduction was allowed by the AO under section 80IB/section 80IC of the Act in the first year of ope....
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....he Revenue is dismissed. ITA No. 6208,6209,6210,6211,6212,6213/Mum2017 AY2009-10 to AY 2014-15: 22. The issues raised in these appeal i.e. ITA No. 6208 to 6211/Mum/2017 are identical to ones as decided by us in ITA No. 6207/Mum/2017 A.Y. 2008-09. Similarly issues raised in ITA No. 6212 and 6213/Mum/2017 are also same as decided by us in ITA No. 6207/Mum/2017 A.Y. 2008-09 except issue of deletion of disallowance u/s 14A of the Act which is decided separately. Therefore our decision in ITA No. 6207/Mum/2017 A.Y.2008-09 would,mutatis mutandis, apply to these as well. 23. The issue raised in ground No.6 in ITA No. 6212/M/2017 A.Y. 2013-14 is against the deletion of disallowance of Rs. 2,89,83,197/- by Ld. CIT(A) as made by the AO under section 14A of the Act read with Rule 8D of IT Rules. 24. The facts in brief are that the AO during the course of assessment proceedings that assessee has made investments in shares and securities. During the year the assessee received dividend on these investments and claimed the same as exempt without attributing any expenses to earning of such exempt income exempt income yielding securities. The AO invoked the provision of section 14A and ....