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TMI Blog2012 (12) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... 33/- . During the pendency of regular assessment proceeding, a search u/s 132 of the Income Tax Act was carried out at the business premises of the assessee and residential premises of the Directors on 20.3.1996. The AO while framing the asstt. order u/s 143(3) has noticed that assessee is required to explain the unexplained credits of Rs. 19,90,000/-, Rs. 21,60,000/-, Rs. 27,40,000/-. He also observed that depreciation claim of assessee amounting to Rs. 51,24,939/- also deserves to be disallowed. However, while arriving at a conclusion, Ld. AO did not make any addition of these amounts on the ground that asstt. year 1995- 96 is covered in the block asstt. u/s 158BC and the amounts have already been added in the income for the block period. Therefore, no further addition is being considered on these grounds in asstt. year 1995-96. The block asstt. order u/s 158BC was also passed on 30.6.1997 i.e. prior to passing of the regular asstt. order u/s 143(3) 3. Dissatisfied with the block asstt. order, assessee carried the matter in appeal before the ITAT, vide ITSS No. 141/D/97. Tribunal has allowed the appeal of the assessee on the ground that block asstt. order has been passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not given any direction which can enable the AO to assessee the income with the help of explanation 2 and 3 appended with section 153 of the Income Tax Act. In his next fold of submission, he submitted that an assessment can not be reopened on the direction of any appellate authority. For buttressing his contention, he relied upon the order of the ITAT Nagpur Bench in the case of M.B.Traders vs. ACIT reported in (2011) 9 ITR (Trib) 453. 6. On the other hand, Ld. DR submitted that vide letter dated 4th December 1997 assessee has submitted to the AO during the regular assessment proceeding that the income of this asstt. year has already been assessed in the block assessment. Therefore, no further assessment is needed. The assessee has relied upon the decision of Hon'ble Punjab & Haryana High Court in the High Court in the case of Rajaram Kulwant Rai Vs. ACIT reported in 227 ITR 187 which was operating in field at that point of time. On account of this reason, Ld. AO has not considered these issues on merit. The assessee has claimed receipt of share application money representing credits on account of stock investment, credits taken from common address and credits on account of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding or direction contained in the appellate order etc. In this regard, it would be relevant to reproduce explanation 2 and explanation 3 to section 153(3) as under : "Explanation 2. - Where, by an order referred to in clause (ii) of sub section (3), any income is excluded from the total income of the assessee for an assessment year, then, an assessment of such income for another assessment year shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order. Explanation 3.-Where, by an order referred to in clause (ii) of sub- section (3), any income is excluded from the total income of one person and held to be the income of another person, then, an assessment of such income on such other person shall, for the purposes of section 150 and this section, be deemed tobe one made in consequence of or to give effect to any finding or direction contained in the said order, provided such other person was given an opportunity of being heard before the said order was passed." The effect of the Supreme Court ruling in the case of Murlidhar Bhagwan Das, cited by the ld. AR was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing able to tax it in another assessment year because of the limitation of time for taking action u/s 147 or for completing assessment. The intention of the legislature cannot be that any income cannot be taxed in any assessment year. Similarly, the intention of explanation 3 is that if by an order of appellate authority a particular income is held to be non-taxable in the hands of a person, itmust be taxed in the hands of another person in whose case it is liable to be assessed as an income. The underlying principle is that the income chargeable to tax must be brought to tax in the hands of a correct person and in the correct assessment year. That is why the shackles of time limits provided in section 148, 149, 153(1) and 153(2) have been removed in such cases by inserting explanation 2 & 3 below section 153(3). Extending the same logic and keeping in view the intention of the legislature if an income is held to be not taxable under chapter XIVB it cannot be the intention of the legislature that it should not be taxable in chapter XIV also. Therefore, I am of the considered view that since as a result of the order of the ITAT the income is excluded from block assessment period u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der :- 2) "That the learned CIT(A) has erred both on facts and in law in holding that the Assessing Officer has validly made the following additions :- a) Rs. 19,90,000/- on account of purported unexplained cash credit on account of stock invests. b) Rs. 21,60,000/- on account of purported unexplained cash credits. c) Rs. 27,40,000/- on account of share application money and purportedly held to be the unexplained cash credits." 11. The brief facts of the case are that during the course of search operation, some share certificate / application forms of private placement and few cancelled stock invests were found and seized. The AO noticed that assessee company had come out with a public issue on 20th March, 1995. During the course of search as well as post search inquiry, it revealed to the department that large number of stock invests applications were submitted at the behest of assessee by giving address of Shri J.B. Aggarwal, Director of the assessee company. Different persons had made application in the public issue of the assessee company by giving address of the company or its connected persons. A sum of Rs. 19.90 lac was noticed by the AO representing stock invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these entire transactions were not genuine and he had rightly invoked the provisions of section 68 of the I.T. Act, 1961. Therefore, the additions of Rs. 19.90 lacs, 21.60 lacs and 27.40 lacs aggregating to Rs. 68.90 lacs u/s 68 made by the AO are upheld." 13. With the assistance of Ld. Representative, we have gone through the record carefully. Ld. Counsel for the assessee was unable to advance any arguments contrary to the finding of facts recorded by the Ld. CIT(A). He was unable to discharge the onus contemplated by section 68 of the Income Tax Act. The assessee could not give the identity of the persons who made application for stock-invest share application etc. After going through the well reasoned order of the Ld. CIT(A), we do not find any ground to interfere in it. This ground of appeal is rejected. 14. The next grievance of the assessee relates to charging of interest u/s 234A and 234B of the Income Tax Act. It is consequential in nature hence this ground of appeal is rejected. 15. In the next ground of appeal, assessee has pleaded that Ld. Commissioner has failed to appreciate that request made by the authorized representative the assessee to the AO to treat the ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een made by the AO mainly on the ground that during the course of search operation at the factory premises of the assessee company, statement of Shri Sanjay Srivastava, Works Manager was recorded u/s 132 (4) of the Act. He made reference to the question and the reply given by Shri Sanjay Srivastava. According to the AO, the new plant and machinery could be run by a power load of more than 500 KVA. The assessee was not having this much of power load before 31st March and, therefore, it cannot be concluded that assessee was able to put the machinery on use before 31st March. The Ld. First Appellate Authority has made an elaborate discussion about the evidence produced by the assessee as well as the reasons assigned by the AO. We deem it appropriate to make reference of the order of Ld. CIT (A) which read as under :- 3.6 "Coming to the merits of the addition, the main plank of AO's argument for disallowing the depreciation is the statement of Shri Sanjay Srivastava, Works Manager, recorded during the course of search operations. However, the issue regarding allowability of depreciation has to be decided not only on the basis of the statement of Shri Srivastava but on the totality o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired power capacity to run the machinery was 500KVA whereas the power connection was for a capacity of 350KVA, the production could not have taken place. In this regard, it may be mentioned that the assessee's contention that it had drawn in excess of sanctioned load which attracted penalty in the shape of additional charges for the period of March, 1995 to December, 1995 stands proved by the copies of the bills of UPSEB placed on record by the assessee vide its letter dated 13.3.2003. In the bills from September to December, 1995, it has been clearly mentioned that the additional charges for excess demand exceeding the contracted demand @ Rs. 185 per KVA on 106 KVA. However, for the period 27.3.1995 to August 1995 there is a consolidated bill issued by the UPSEB which has not spelt out the actual maximum demand and excess demand in KVA but has charged additional charges of Rs. 2,38,897.86 @25% on estimated basis on account of excess drawal of power by the assessee from the period 27.03.1995 to August, 1995. These bills indicate that the assessee had drawn excess power load than the sanctioned power load from 27.3.1995 onwards. Therefore, the AO's contention that with sanctioned po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any evidence on record to prove that the sales made to this party were not genuine. He has simply stated that the confirmation from this party was not filed. The assessee had filed a copy of the sale bill in respect of sales to this party. The payment against this sale was received by cheque. There is nothing on record to prove that the sales made to this party were not genuine. The AO has further mentioned in the impugned order that the assessee had only filed circumstantial evidence for claim of depreciation. This observation of the AO is not correct in view of the evidence like letter of the Addl. Director of Industries, UP government and the certificate of the Central Excise authorities regard production in the factory before 31.3.95 which has been discussed in the earlier paras. 3.9 In view of the discussions in the foregoing paragraphs and the evidence on record the AO's observations that the machinery was not put to use before 31.3.1995 in my view is not correct. The independent evidence of several government departments indicating the use of machinery before 31.3.1995 justifies the assessee's stand that the plant and machinery was put to use before 31.3.1995. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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