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2017 (2) TMI 851 - ITAT MUMBAIBogus capitalization addition - denial of claim on the basis of statement of Shri Soumil M Parik recorded under section 131 by the department - Held that:- The assessee has produced ledger extracts of the parties, confirmations from these parties, bank statements and also certificate from the register valuer to prove the construction of building, which ultimately proves procurement of steel. Recording of statement of Shri Soumil M Parik recorded under section 131 has already been negated by the coordinate Bench of Tribunal in the group concerns case i.e. Shri Nitin M Shah [2015 (7) TMI 290 - ITAT MUMBAI ] The assessee has produced copies of invoice for purchases and also the details of opening stock, purchases, sales and closing stock. Even the assessee has proved the raw material used in construction of building, which is supported by valuation report. Merely on a statement, which was never confronted or no opportunity to cross examine the party was allowed, in that eventuality the capitalization cannot be denied to the assessee. We agree with the Revenue that the statement recorded by Revenue is a good starting point for making further investigation but it is not conclusive. The Revenue should have made further investigation and take it to logical conclusion but the AO left the job at the initial point itself, which is clear from the assessment order. Even the CIT(A) has not carried this matter further. We are of the view that suspicion however high, cannot take place of evidence. In such circumstances we allowed to these interconnected issues in assessee’s appeal directing the AO to allowed capitalization on both the counts. - Decided in favour of assessee
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