, ""
IN THE INCOME TAX APPELLATE TRIBUNAL" E" BENCH, MUMBAI
BEFORE S/SHRI B.R.BASKARAN (AM) AND AMIT SHUKLA, (JM)
.. , ,
./I.T.A. No.6753/Mum/2013
( / Assessment Year :2007-08)
Shukra Jewellery Ltd, / Income Tax Officer 5(3)(2),
M/s Shukra Jewellery Ltd, Vs. Mumbai.
232, Panchratna,
Opera House,
Mumbai-400004
( /Appellant) .. ( / Respondent)
. / . /PAN/GIR No. :AAACS7962C
/ Assessee by Shri Anuj Kisnadwala
/Revenue by Shri Love Kumar
/ Date of Hearing : 20.4.2015
/Date of Pronouncement : 1. 5.2015
/ O R D E R
PER B.R. BASKARAN (AM)
The assessee has filed this appeal challenging the order dated 11-
09-2013 for assessment year 2007-08 wherein he has confirmed the
following additions made by the AO:
a) Cash deposits found in the Bank account assessed under section 68
of the Income Tax Act, 1961 (the Act);
b) Computing book profit under section 115JB of the Act by adding
Capital loss.
2. We heard the parties and perused the record. The assessee
company is engaged in the business of manufacture and sale of jewellery.
The original assessment for the year under consideration was completed
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under section 143(3) on 30.10.2009 and it was set aside by the
Commissioner of Income Tax under section 263 of the Act. Consequently,
the AO passed the impugned assessment order.
3. The first issue relates to the addition made u/s 68 of the Act
towards unexplained bank deposits. The AO received AIR information
about deposit of Rs.28.53 lakhs made by the assessee in a bank account
maintained with Oriental Bank of Commerce. On examination of the
details of cash deposits made, the AO noticed that the assessee has
deposited aggregate amount of Rs.16.60 lakhs in the bank account. Since
the assessee did not properly explain the sources for making these
deposits, the AO assessed the above said amount of Rs.16.60 lakhs as
income of the assessee under section 68 of the Act. The ld. CIT(A),
however, reduced the same to Rs.16.00 lakhs.
4. The ld.AR submitted that the assessee has maintained proper books
of account and the cash withdrawals and deposits made from/into the
bank account were duly reflected therein. He further submitted that the
assessee had held sufficient cash balance in the cash book and the same
was deposited in the bank account. He further submitted that the assessee
did not have negative balance on any of the dates. Accordingly, he
submitted that the source for making the impugned bank deposits are
available in the cash books itself and hence, the addition made by the AO
and that confirmed by the ld.CIT(A) is liable to be deleted. In this regard,
he placed reliance on the decision of Mumbai Bench of the Tribunal in the
case of ITO V/s Shri Baburao K.Pisal in ITA No.6091/Mum/2012 (AY:2009-
10) dated 22.12.2014.
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5. On the contrary, the ld. DR submitted that the assessee did not
furnish relevant details and hence, the ld.CIT(A) was constrained to
confirm the addition to the extent of Rs.16 lakhs.
6. We heard the parties on this issue and perused the cord. In the
paper book, the assessee has furnished relevant extract of cash book
showing the deposits and withdrawals. According to the said workings,
the assessee was having a cash balance o f Rs.16.45 lakhs as on 1.4.2006
and has carried out an average cash balance of abount Rs.19 lakhs from
1.4.2006 to 21.8.2006. The cash balance available as on 21.8.2006 was
Rs.17.56 lakhs. According to the assessee, a sum of Rs.16 lakhs was
deposited into bank account maintained with Oriental Bank of Commerce
out of the cash balance available with the assessee in its Cash book.
Thus, according to the assessee, the cash book maintained by it
sufficiently explains the source of making impugned deposits into bank
account.
7. An identical issue was considered by the Co-ordinate Bench of the
Mumbai Tribunal in the case of Shri Baburao K.Pisal (supra) and the
Tribunal has held as under :
"4. After hearing both the parties and on perusal of the finding given
in the impugned orders and the material placed on record before us,
we find that the assessee has maintained regular cash book and all
its account are audited. The Ld.CIT(A) has analyzed each and every
deposits made by the assessee in the bank account from the
withdrawals made by the assessee from the bank and the cash
available in the cash book. The assessee has also shown sufficient
cash in hand in the balance sheet of the earlier years and also the
source of cash available with the assessee. Thus, the deposits made
by the assessee has been properly explained by the assessee before
the Ld.CIT(A) and without there being any contrary evidence or
rebuttal by the department, we do not find any reason to deviate
from such a the finding recorded by the Ld.CIT(A). Accordingly, the
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order of the Ld.CIT(A) is affirmed and ground raised by the Revenue
is dismissed".
8. In the case also, the assessee claims to have maintained regular
books and further claimed that sufficient cash balance was available in the
books. However, we notice that the tax authorities have made the
impugned addition without considering the explanation of the assessee as
well as the books of accounts maintained by the assessee, which we
consider to be not proper. Accordingly, we are of the view that this issue
requires consideration de nova by considering the books of accounts and
explanations of the assessee. Accordingly, we set aside the order of ld.
CIT(A) on this issue and restore the same to the file of the AO to examine
this issue afresh in the light of discussions made supra and take
appropriate decision in accordance with the law, after providing necessary
opportunity of being heard to the assessee.
9. The next issue relates to the addition of loss arising on sale of
house property amounting to Rs.2.93 crores while computing the book
profit under section 115JB of the Act. From the assessment order, we
notice that the computation of income initially filed by the assessee was
revised by the assessee on noticing certain mistakes. Since computation
of income was revised, the AO took the view that there are defects in the
books of account and accordingly came to the conclusion that the AO was
entitled to make adjustments to arrive at correct book profit under section
115JB of the Act. Accordingly, the AO proceeded to compute the book
profit under section 115JB of the Act in the following manner:
a) The AO computed the total income under the normal provisions
of the Act, which was NIL after setting off of brought forward
business loss.
(b) The total income computed by the AO before setting off of
brought forward loss was taken as "book profit" of the company.
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Against the same, the AO allowed deduction of unabsorbed
depreciation.
Accordingly, he determined the book profit at Rs.98,68,237. For the sake
of clarity, we extract below the works given by AO.
Income from Business or profession
Net profit as per profit and loss account Rs.39,92,529
Add: Depreciation as company Act
Rs.29,667
Loss on sale of Walkeshwar flat
Rs.2,93,45,467
Rs.3,33,37,996
Less : Depreciation allowable at IT Rs.21,962
Profit on sale of Vasai factory Rs.9,49,377 Rs.971339
Rs.3,23,66,657
Add: Un-explained cash deposited in the Rs.16,60,000
bank account Rs.3,40,26,657
Income from capital gain
Short term capital gain on sale
of Walkeshwar flat Rs.10,47,156
Vasai factory Rs.9,87,853 Rs.20,35,009
Rs.3,60,61,666
Less : Set-off business loss claimed Rs.3,60,61,666
Assessed total income
Rs.NIL
Book profit of the company as per above
working Rs.3,60,61,666
[As per record following unabsorbed depreciation
and carry forward business loss available]
Unabsorbed depreciation Rs.2,61,93,429
Unabsorbed loss Rs.9,17,67,983
Less : The unabsorbed depreciation is lesser:
Rs.2,61,93,429
Book profit Rs.98,68,237
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A careful perusal of the above said workings would show that the
assessing officer has proceeded to compute the Book Profit u/s 115JB of
the Act against the provisions of the Act. It is well settled proposition that
the provision of sec. 115JB is a complete code by itself and hence the
book profit should be computed strictly in accordance with the provisions
contained therein. The net profit disclosed in the Profit and Loss account
prepared in accordance with the Companies Act should be the starting
point to which the additions and deductions prescribed in that provision
are required to be added and deduction. Accordingly the Book Profit
should be arrived. In this connection, we may gainfully refer to the
decision rendered by the Hon'ble Supreme Court in the case of Apollo
Tyres Ltd (255 ITR 273). On the contrary, we notice that the assessing
officer has taken the total income computed before setting off of the
brought forward business under normal provisions of the Act, as the
starting point, which is legally not correct. Accordingly, the Ld CIT(A) was
not justified in confirming the same. Accordingly, we set aside the order
of Ld CIT(A) on this issue also and direct the assessing officer to compute
the book profit strictly in accordance with the provisions of sec. 115JB of
the Act, as discussed above.
10. In the result, the appeal filed by the assessee is treated as allowed
for statistical purposes.
The above order was pronounced in the open court on 1st May, 2015.
1st May, 2015
Sd sd
( / AMIT SHUKLA) (.. / B.R. BASKARAN)
/ JUDICIAL MEMBER / ACCOUNTANT MEMBER
Mumbai: 1st May,2015.
. ../ SRL , Sr. PS
7 I T A N o . 6 7 5 3 / Mu m / 2 0 1 3
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. () / The CIT(A)- concerned
4. / CIT concerned
5. , , /
DR, ITAT, Mumbai concerned
6. / Guard file.
/ BY ORDER,
True copy
(Asstt. Registrar)
, /ITAT, Mumbai
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