Subrata Banik, Kolkata V. DCIT, CEN. CIR-II, KOLKATA, Kolkata

CO 31/KOL/2014

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3088 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-06-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-05-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 22-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R S BISWAS
• Assessee Lawyers: S JHAJHARIA; S SEN ITSS NO
• Keywords: Unexplained expenditure; Search and seizure; Document seized; Documents seized; Revenue expenditure
• Section: 153A; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA (BEFORE SHRI P. M. JAGTAP, A.M. & SHRI S.S. VISWANETHRA RAVI, J.M.) IT(SS)A NO. 26/KOL/2014 ASSESSMENT YEAR : 2006-07 D.C.I.T. CC-II, KOLKATA PAN NO. AECPB8509B VS SRI SUBRATA BANIK (PROP. OF M/S. BANIK RUBBER INDUSTRIES), KOLKATA (APPELLANT) (RESPONDENT) C.O. NO. 31/KOL/2014 (ARISING OUT OF IT(SS)A NO. 26/KOL/2014) ASSESSMENT YEAR : 2006-07 SRI SUBRATA BANIK (PROP. OF M/S. BANIK RUBBER INDUSTRIES), KOLKATA VS D.C.I.T. CC-II, KOLKATA PAN NO. AECPB8509B (CROSS OBJECTOR) (RESPONDENT) IT(SS)A NO. 27/KOL/2014 ASSESSMENT YEAR : 2007-08 D.C.I.T. CC-II, KOLKATA PAN NO. AECPB8509B VS SRI SUBRATA BANIK (PROP. OF M/S. BANIK RUBBER INDUSTRIES), KOLKATA (APPELLANT) (RESPONDENT) C.O. NO. 32/KOL/2014 (ARISING OUT OF IT(SS)A NO. 27/KOL/2014) ASSESSMENT YEAR : 2007-08 SRI SUBRATA BANIK (PROP. OF M/S. BANIK RUBBER INDUSTRIES), KOLKATA VS D.C.I.T. CC-II, KOLKATA PAN NO. AECPB8509B (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY : SHRI R.S. BISWAS, CIT ASSESSEE BY : SHRI S. JHAJHARIA, FCA & SHRI S. SEN, ADVOCATE ITSS NO. 26 & 27 / C.O. NO. 31 & 32/KOL/2014 2 DATE OF HEARING : 10.05.2017 DATE OF PRONOUNCEMENT : 16/06/2017 ORDER SHRI P.M.JAGTAP, A.M. THESE TWO APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE COMMON ORDER OF LD. CIT(A) CENTRAL 3 KOLKATA DATED 25.11.2013 FOR A.Y. 2006-07 AND 2007-08 AND SINCE THE ISSUES INVOLVED THEREIN ARE COMMON, THE SAME HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY A SINGLE CONSOLIDATED ORDER ALONG WITH THE CROSS OBJECTIONS FILED BY THE ASSESSEE FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP THE REVENUES APPEAL FOR A.Y. 2006-07. THE COMMON ISSUE INVOLVED IN GROUND NO. 1 TO 4 OF THIS APPEAL RELATES TO THE DELETION OF THE LD. CIT(A) OF THE ADDITION MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF DEFERRED REVENUE EXPENDITURE. 3. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL WHO IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF HAWAI CHAPPAL, LEATHER FOOTWEAR, PVC FOOTWEAR ETC. UNDER THE NAME AND STYLE OF HIS PROPRIETOR CONCERN M/S. BANIK RUBBER INDUSTRIES. THE SAID CONCERN SALES ITS PRODUCTS WITHIN AND OUTSIDE WEST BENGAL UNDER THE BRAND NAME AJANTA. IT HAS FACTORIES AT MADHYAMGRAM, BORALIGHAT, TANGRA, KUSTIA ETC. AND OFFICE AT 79/2, AJC BOSE ROAD, KOLKATA. THE SAID OFFICE BUILDING IS OWNED BY SEVEN DIFFERENT COMPANIES WHERE THE ASSESSEE AND HIS WIFE ARE THE DIRECTORS. THE ASSESSEE IS ALSO ITSS NO. 26 & 27 / C.O. NO. 31 & 32/KOL/2014 3 THE PROPRIETOR OF ONE MORE CONCERN M/S. INDIA SHOW COMPANY, WHICH DEALS IN HAWAI AND FOOTWEAR AND HAS SHOW- ROOM AT 1, BIDHAN SARANI, KOLKATA. THE SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 WAS CONDUCTED IN THE CASE BELONGING TO AJANTA GROUP INCLUDING THE CASE OF THE ASSESSEE ON 06.11.2006 AS WELL AS ON SUBSEQUENT DATES. CONSEQUENT TO THE SAID ACTION, THE NOTICE UNDER SECTION 153A WAS ISSUED BY THE AO ON 24.08.2007 IN RESPONSE TO WHICH THE RETURN OF INCOME WAS FILED BY THE ASSESSEE FOR A.Y. 2006-07 ON 21.01.2008 DECLARING A TOTAL INCOME OF RS. 13,11,49,330/-. IN THE PROFIT & LOSS ACCOUNT FILED ALONG WITH THE SAID RETURN, A SUM OF RS. 1,57,73,958/- WAS DEBITED BY THE ASSESSEE WHICH WAS INCLUSIVE OF A SUM OF RS. 30,59,272/- REPRESENTING 1/3 OF THE DEFERRED REVENUE EXPENDITURE INCURRED BY THE ASSESSEE. SINCE THE SAID EXPENDITURE INCURRED ON GLOW-SIGN BOARDS, HOARDINGS ETC., ACCORDING TO THE AO, WAS OF CAPITAL NATURE, HE DISALLOWED THE SAME. HE ALSO OBSERVED THAT THERE WAS NO PROVISION IN THE INCOME TAX ACT TO ALLOW DEDUCTION ON ACCOUNT OF DEFERRED REVENUE EXPENDITURE. 4. THE DISALLOWANCE MADE BY THE A.O. ON ACCOUNT OF DEFERRED REVENUE EXPENDITURE WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(A) AND FOLLOWING THE DECISION RENDERED BY HIS PREDECESSOR IN ASSESSEES OWN CASE ON A SIMILAR ISSUE FOR THE IMMEDIATELY PRECEDING FOUR YEARS FOR A.Y. 2002-03, 2003-04, 2004-05 AND 2005-06, THE LD. CIT(A) DELETED THE DISALLOWANCE MADE BY THE A.O. ON ACCOUNT OF DEFERRED REVENUE EXPENDITURE. ITSS NO. 26 & 27 / C.O. NO. 31 & 32/KOL/2014 4 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS AGREED BY THE LEARNED REPRESENTATIVE OF BOTH THE SIDES, THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING FOUR YEARS RENDERED VIDE ITS ORDER DATED NOVEMBER 18, 2016 PASSED IN ITSS NO. 83, 84,85 AND 89 WHEREIN A SIMILAR ISSUE WAS DECIDED IN PARAGRAPH NO. 6 OF ITS ORDER WHICH READS AS UNDER: WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT THE SOLITARY COMMON ISSUE INVOLVED IN THESE APPEALS OF THE REVENUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE, INTER ALIA, BY THE VARIOUS JUDICIAL PRONOUNCEMENTS REFERRED TO AND RELIED UPON BY THE VARIOUS JUDICIAL PRONOUNCEMENTS REFERRED TO AND RELIED UPON BY THE LD. CIT(A) IN HIS IMPUGNED ORDERS WHILE GIVING RELIEF TO THE ASSESSEE. IN ONE OF SUCH CASES RELIED UPON BY THE LD. CIT(A), NAMELY LIBERTY GROUP MARKETING DIVISION (SUPRA), IT WAS HELD BY THE HONBLE PUNJAB & HARYANA HIGH COURT THAT THE EXPENDITURE INCURRED BY ASSESSEE ON GLOW-SIGN BOARDS DOES NOT BRING INTO EXISTENCE AN ASSET OR ADVANTAGE FOR THE ENDURING BENEFIT OF THE BUSINESS, WHICH IS ATTRIBUTABLE TO THE CAPITAL. IT WAS HELD THAT THE GLOW-SIGN BOARD IS NOT AN ASSET OF PERMANENT NATURE SINCE IT HAS A SHORT LIFE. THE MATERIAL USED IN THE GLOW-SIGN BOARDS DECAY WITH THE EFFECT OF WEATHER AND IT REQUIRES FREQUENT REPLACEMENT. THEIR LORDSHIPS ALSO TOOK NOTE OF THE FINDING RECORDED BY THE TRIBUNAL THAT THE ASSESSEE HAD TO INCUR EXPENDITURE ON GLOW-SIGN BOARDS REGULARLY IN ALMOST EACH YEAR AND HELD THAT THIS FACT ITSELF WAS SUFFICIENT TO SHOW THAT THE ADVANTAGE ACCRUED FROM THE USE OF THE GLOW-SIGN BOARDS IS NOT OF ENDURING NATURE. IT WAS HELD THAT THE EXPENDITURE INCURRED BY THE ASSESSEE ON THESE GLOW-SIGN BOARDS WAS WITH AN OBJECT TO FACILITATE THE BUSINESS OPERATION AND THE SAME HAVING NOT BEEN INCURRED WITH AN OBJECT TO ACQUIRE ASSET OF ENDURING NATURE, IT WAS REVENUE IN NATURE AND NOT CAPITAL. IN OUR OPINION, THE RATIO OF THE DECISION RENDERED BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF LIBERTY GROUP MARKETING DIVISION (SUPRA) AS WELL AS THE OTHER JUDICIAL PRONOUNCEMENTS REFERRED TO AND RELIED ON BY THE LD. CIT(APPEALS) IN HIS IMPUGNED ORDERS IS SQUARELY APPLICABLE TO THE FACTS INVOLVED IN THE PRESENT CASE AND IN THE ABSENCE OF ANY JUDICIAL PRONOUNCEMENT BROUGHT TO THE OUR NOTICE BY THE LD. DR TAKING A CONTRARY VIEW IN FAVOUR OF THE REVENUE, WE RESPECTFULLY FOLLOW THE SAME AND UPHOLD THE IMPUGNED ORDERS OF THE LD. CIT(APPEALS) DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEFERRED REVENUE EXPENDITURE FOR ALL THE FOUR YEARS UNDER ITSS NO. 26 & 27 / C.O. NO. 31 & 32/KOL/2014 5 CONSIDERATION. ALL THE RESULT, ALL THE FOUR APPEALS FILED BY THE REVENUE ARE ACCORDINGLY DISMISSED. 6. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDERATION I.E. A.Y. 2006-07 AS WELL AS ALL THE MATERIAL FACT RELEVANT THERETO ARE SIMILAR TO THAT OF A.Y. 2002-03 TO 2005-06, WE RESPECTFULLY FOLLOW THE ORDER OF THE TRIBUNAL FOR THE SAID YEARS AND DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE IN PRINCIPLE. AS REGARDS THE ISSUE RAISED BY THE REVENUE SPECIFICALLY GROUND NO 1 THAT THE RELEVANT DEFERRED REVENUE EXPENDITURE HAVING BEEN ENTIRELY ALLOWED BY THE TRIBUNAL IN A.Y. 2004-05 AND 2005-06, THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF 1/3 OF THE SAID EXPENDITURE IN THE YEAR UNDER CONSIDERATION IS RESULTING IN DOUBLE DEDUCTION, WE DIRECT THE A.O. TO VERIFY THIS ASPECT IN ORDER TO ENSURE THAT THERE IS NO DOUBLE DEDUCTION ALLOWED TO ASSESSEE FOR THE SAME EXPENDITURE. SUBJECT TO THE SAID DIRECTION, THE IMPUGNED ORDER OF THE LD. CIT(A) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE IS UPHELD AND GROUND NO 1 TO 4 OF THE REVENUES APPEAL ARE TREATED AS DISMISSED. 7. THE ISSUE INVOLVED IN GROUND NO. 5 OF THE REVENUES APPEAL FOR A.Y. 2006-07 RELATES TO THE DEDUCTION BY THE LD. CIT(A) OF THE ADDITION OF RS. 3,67,550/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED EXPENDITURE INCURRED FOR RENOVATION OF BUILDING. 8. IN HIS STATEMENT RECORDED UNDER SECTION 132(4), THE ENTRIES APPEARING ON PAGES 15 AND 16 ON LOOSE BUNCH FOUND DURING THE COURSE OF SEARCH AND IDENTIFIED AS SB/1, WERE EXPLAINED BY THE ASSESSEE AS THE ESTIMATE OF RENOVATION / MODIFICATION OF THE FAMILY HOUSE AT BALLYGUNJ PARK. DURING THE COURSE OF ASSESSMENT PROCEEDING, THE SAME STAND WAS ITSS NO. 26 & 27 / C.O. NO. 31 & 32/KOL/2014 6 REPEATED ON BEHALF OF THE ASSESSEE. HOWEVER, KEEPING IN VIEW THE EXPENDITURE INCURRED BY THE ASSESSEE ON PURCHASE OF SOME MATERIAL, A.O. DID NOT ACCEPT THE STAND OF THE ASSESSEE. ACCORDING TO HIM, THE ENTRIES APPEARING IN THE RELEVANT SEIZED DOCUMENTS REPRESENTED ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE ON RENOVATION OF HIS HOUSE AND THE AMOUNT OF SUCH EXPENDITURE AT RS. 3,04,098/- WAS ADDED BY HIM TO THE TOTAL INCOME OF THE ASSESSEE BY TREATING THE SAME AS UNEXPLAINED. THE LD. CIT(A) HOWEVER, ACCEPTED THE STAND OF THE ASSESSEE THAT THE NOTINGS APPEARING ON THE RELEVANT SEIZED DOCUMENT WERE MIX OF ESTIMATES, PROJECTIONS AS ALSO BILLS. HE ALSO NOTED THAT PART OF THE RELEVANT BUILDING DID NOT BELONG TO THE ASSESSEE. KEEPING IN VIEW THE SAME AS WELL AS THE DRAWINGS SHOWN BY THE FAMILY MEMBERS, THE ADDITION MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED EXPENDITURE ON RENOVATION OF HOUSE WAS DELETED BY THE LD. CIT(A). 9. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. DR HAS SIMPLY RELIED ON THE ORDER OF THE ASSESSING OFFICER IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE WHILE THE LEARNED COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE COPIES OF RELEVANT SEIZED DOCUMENTS PLACED AT PAGE 46 AND 47 OF THE PAPER BOOK TO SHOW THAT THE AMOUNTS OF RS. 3,04,098/- AND RS. 3,09,474/- WERE CLEARLY OF ESTIMATES OF THE JOB AND THEY DID NOT REPRESENT ANY ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE. AS FURTHER DEMONSTRATED BY HIM, THE RELEVANT SEIZED DOCUMENTS PLACED AT PAGE NO. 10, 11, 14, 17, 18 AND 19 REPRESENTED THE ACTUAL EXPENDITURE INCURRED ON RENOVATION OF HOUSE WHICH WAS DULY COVERED BY THE DRAWINGS SHOWN BY THE FAMILY MEMBERS OF THE ASSESSEE. MOREOVER, AS NOTED BY THE LD. CIT(A), RELEVANT PORTION OF THE HOUSE WAS NOT IN THE NAME OF THE ITSS NO. 26 & 27 / C.O. NO. 31 & 32/KOL/2014 7 ASSESSEE. KEEPING IN VIEW ALL THESE FACTS OF THE CASE, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(A) DELETING THE ADDITION OF RS. 3,57,550/- MADE BY THE A.O. ON ACCOUNT OF THE ALLEGED UNEXPLAINED EXPENDITURE INCURRED ON THE RENOVATION OF HOUSE. GROUND NO. 5 OF THE REVENUES APPEAL IS ACCORDINGLY DISMISSED. 10. THE NEXT ISSUE RAISED IN GROUND NO. 6 OF THE REVENUES APPEAL RELATES TO THE DELETION BY THE LD. CIT(A) OF THE ADDITION OF RS. 12,51,940/- MADE BY THE A.O. ON ACCOUNT OF ALLEGED UNEXPLAINED PAYMENT MADE TO M/S. AJANTA SHOE PVT. LTD. 11. PAGE 56 OF THE SEIZED DOCUMENT IDENTIFIED AS BRI/18 WAS THE LETTER PAD OF BITHIKA BARIK AND THERE WAS A MENTION THEREIN OF THE FUNDS TRANSFERRED TO AJANTA SHOE PVT. LTD. OF RS. 1,75,000/- AND MAJUMDER TRADING OF RS. 10,76,940/-. DURING THE COURSE OF ASSESSMENT PROCEEDING, IT WAS EXPLAINED BY THE ASSESSEE THAT THE RELEVANT NOTING WAS MADE BY ONE STAFF MEMBER FOR MAKING PAYMENT TO ONE M/S. MAJUMDER TRADING, A SUPPLIER AND SINCE FUNDS WERE NOT FULLY AVAILABLE, THERE WAS A MENTION MADE THAT THE REQUIRED FUNDS SHOULD BE TRANSFERRED FROM THE ACCOUNT OF AJANTA SHOE PVT. LTD. HOWEVER, IN THE ABSENCE OF ANY BOOKS OF ACCOUNT PRODUCED BY THE ASSESSEE TO SUPPORT AND SUBSTANTIATE THE SAID EXPLANATION, THE A.O. DID NOT ACCEPT THE SAME. HE TREATED BOTH THESE PAYMENTS AGGREGATING RS. 12,51,940/- AS UNEXPLAINED AND ADDED THE SAID AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) DELETED THE SAID ADDITION MADE BY THE A.O. BY HOLDING THAT THE RELEVANT SEIZED DOCUMENT IN THE ABSENCE OF ANY MATERIAL PARTICULAR SUCH AS DATE ETC. WAS NOTHING BUT A DUMP DOCUMENT. HE ALSO NOTED THAT AN ADDITION OF RS. 1,75,000/- WAS ALSO MADE IN THE CASE OF M/S. AJANTA SHOE PVT. LTD. ITSS NO. 26 & 27 / C.O. NO. 31 & 32/KOL/2014 8 ON THE BASIS OF THE SAME SEIZED DOCUMENT FOR A.Y. 2006-07 BUT THE SAME WAS DELETED IN THE FIRST APPEAL. 12. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES OF THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. THE LD. DR HAS SIMPLY RELIED ON THE ORDER OF THE AO IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE WHILE THE LEARNED COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE COPY OF RELEVANT SEIZED DOCUMENT PLACED AT PAGE NO. 52 OF THE PAPER BOOK TO SHOW THAT THERE BEING NO DATE OR ANY OTHER MATERIAL PARTICULARS GIVEN THEREIN, THE SAID DOCUMENT WAS NOTHING BUT A DUMP DOCUMENT AS HELD BY THE LD. CIT(A) IN THE CASE OF AJANTA SHOE PVT. LTD. HE HAS SUBMITTED THAT THE REVENUE HAS NOT EVEN FILED AN APPEAL BEFORE THE TRIBUNAL AGAINST THE SAID ORDER OF THE LD. CIT(A). KEEPING IN VIEW THE SUBMISSIONS MADE BY THE LEARNED COUNSEL OF THE ASSESSEE AS WELL AS HAVING REGARD TO THE CONTENTS OF THE RELEVANT SEIZED DOCUMENT, WE ARE OF THE VIEW THAT NO INFERENCE CAN BE DRAWN ON THE BASIS OF THE SAID DOCUMENT REGARDING TRANSFER OF FUNDS BY THE ASSESSEE AS ALLEGED BY THE AO AND IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE BROUGHT ON RECORD BY THE AO TO SUPPORT HIS CASE ON THIS ISSUE, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(A) DELETING THE ADDITION MADE BY THE AO ON THIS ISSUE. WE ACCORDINGLY HAD NO MERIT IN GROUND NO. 6 OF THE APPEAL AND DISMISS THE APPEAL. 13. THE ISSUE RAISED IN GROUND NO. 7 OF THE REVENUES APPEAL FOR A.Y. 2006-07 RELATES TO THE DELETION BY THE LD. CIT(A) OF THE ADDITION OF RS. 7,75,000/- MADE BY THE AO ON ACCOUNT OF THE ALLEGED UNEXPLAINED PAYMENT MADE BY M/S. BANIK RUBBER INDUSTRIES. ITSS NO. 26 & 27 / C.O. NO. 31 & 32/KOL/2014 9 14. PAGE 49 OF THE RELEVANT SEIZED DOCUMENT IDENTIFIED AS BRI/20 CONTAINED PHOTOCOPY OF THREE VOUCHERS ISSUED BY M/S. BANIK RUBBER INDUSTRIES, A PROPRIETORY CONCERN OF THE ASSESSEE. THE SAID VOUCHERS WERE IN RELATION TO THE PAYMENT MADE IN CASH FOR THE NEW CONSTRUCTION AT 79/2, AJC BOSE ROAD, KOLKATA. DURING THE COURSE OF ASSESSMENT PROCEEDING, IT WAS EXPLAINED BY THE ASSESSEE THAT THE SAID PAYMENTS WERE MADE IN RELATION TO THE PROPOSAL OF FURTHER CONSTRUCTION AT 79/2, AJC BOSE ROAD, KOLKATA. IT WAS SUBMITTED THAT THE SAID PROPOSAL HOWEVER WAS SUBSEQUENTLY CANCELLED. ACCORDING TO THE AO, THE RELEVANT SEIZED DOCUMENT HOWEVER CLEARLY PROVED THAT THE RELEVANT PAYMENTS WERE ACTUALLY MADE IN CASH AND SINCE THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF THE SAID PAYMENT, HE TREATED THE SAME AS UNEXPLAINED AND MADE ADDITION TO THAT EXTENT TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION MADE BY THE AO ON THIS ISSUE BY ACCEPTING THE STAND OF THE ASSESSEE THAT THE PROPERTY IN QUESTION HAVING BEEN OWNED BY M/S. MAKSONS DEVELOPERS PVT. LTD. AND OTHER COMPANIES, NO ADDITION COULD BE MADE TO THE TOTAL INCOME OF THE ASSESSEE ON THIS ISSUE. HE ALSO OBSERVED THAT THE RELEVANT PAYMENT HAVING BEEN MADE ON DEBIT VOUCHERS OF M/S. BANIK RUBBER INDUSTRIES, THEY SHOULD HAVE BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. HE ALSO NOTED THAT AN AMOUNT OF RS. 2,75,000/- WAS ADDED EVEN IN THE CASE OF M/S. MAKSONS DEVELOPERS PVT. LTD. WHICH CREATED A DOUBTFUL POSITION. 15. THE LEARNED DR HAS SIMPLY RELIED ON THE ORDER OF THE AO IN SUPPORT OF THE REVENUES CASE TO THIS ISSUE WHILE THE LEARNED COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE COPIES OF THE RELEVANT SEIZED DOCUMENT PLACED AT PAGE NO. 53 TO 70 OF THE PAPER BOOK. A PERUSAL OF THE SAID DOCUMENT CLEARLY SHOWS THAT THE RELEVANT PAYMENTS WERE MADE ITSS NO. 26 & 27 / C.O. NO. 31 & 32/KOL/2014 10 IN CASH THROUGH THE DEBIT VOUCHERS OF M/S. BANIK RUBBER INDUSTRIES, A PROPRIETY CONCERN OF THE ASSESSEE IN CONNECTION WITH THE NEW CONSTRUCTION AT 79/2, AJC BOSE ROAD, KOLKATA. EVEN THOUGH THE SAID PROPERTY DID NOT BELONG TO THE ASSESSEE AND BELONGED TO OTHER COMPANIES, WE ARE OF THE VIEW THAT ONUS WAS ON THE ASSESSEE TO EXPLAIN THE SOURCE OF THE RELEVANT PAYMENT MADE IN CASH WHICH WERE ADMITTEDLY MADE THROUGH THE VOUCHER OF HIS PROPRIETY CONCERN. AS NOTED BY THE AO IN THE ASSESSMENT ORDER, THE ASSESSEE COULD NOT PRODUCE THE RELEVANT BOOKS OF ACCOUNTS TO SHOW THAT THE SAID PAYMENTS WERE DULY REFLECTED THEREIN. THE LD. CIT(A) ON THE OTHER HAND HAS PRESUMED THAT THE RELEVANT PAYMENTS HAVING BEEN MADE THROUGH VOUCHERS MUST HAVE BEEN REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. KEEPING IN VIEW ALL THESE FACTS AND CIRCUMSTANCES OF THIS CASE, WE ARE OF THE VIEW THAT THE MATTER SHOULD GO BACK TO THE ASSESSING OFFICER FOR GIVING ONE MORE OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE SOURCE OF CASH PAYMENTS ADMITTEDLY MADE THROUGH THE VOUCHERS OF HIS PROPRIETY CONCERN. EVEN IF SOME PAYMENTS ARE ALSO CONSIDERED IN THE CASE OF M/S. MAKSONS DEVELOPERS PVT. LTD., THE ASSESSEE CAN POINT OUT THE SAME TO THE ASSESSING OFFICER SO AS TO AVOID DOUBLE ADDITION. WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDER OF THE CIT(A) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE AO FOR DECIDING THE SAME AFRESH. GROUND NO. 7 OF THE REVENUES APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 16. IN GROUND NO. 8 OF THE ITS APPEAL FOR A.Y. 2006-07, THE REVENUE HAS CHALLENGED THE ACTION OF THE CIT(A) IN DIRECTING THE AO TO TREAT THE INCOME DECLARED BY THE ASSESSEE IN ORIGINAL RETURN OF INCOME FILED UNDER SECTION 139(1) AS DISCLOSED INCOME. ITSS NO. 26 & 27 / C.O. NO. 31 & 32/KOL/2014 11 17. IN THE RETURN OF INCOME ORIGINALLY FILED UNDER SECTION 139 ON 30.10.2006, INCOME OF RS. 12,11,82,168/- WAS DECLARED BY THE ASSESSEE. SINCE MANY COLUMNS OF THE SAID RETURN REQUIRING INFORMATION ABOUT THE BALANCE SHEET AND PROFIT & LOSS ACCOUNT ITEMS WERE NOT FILLED UP BY THE ASSESSEE, A DEFECT NOTICE UNDER SECTION 139(9) WAS ISSUED BY THE AO ON 11.09.2007 REQUIRING THE ASSESSEE TO RECTIFY THE SAID DEFECTS WITHIN 15 DAYS. THE ASSESSEE HOWEVER FAILED TO RECTIFY THE SAID DEFECTS WITHIN THE TIME ALLOWED. CONSEQUENTLY A NOTICE WAS ISSUED BY THE AO ON 05.11.2007 INFORMING THE ASSESSEE THAT RETURN FILED BY HIM WAS TREATED AS INVALID. KEEPING IN VIEW THAT THE RETURN FILED BY THE ASSESSEE UNDER SECTION 139 WAS TREATED BY HIM AS INVALID, THE AO TREATED THE INCOME DECLARED THEREIN AS UNDISCLOSED INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) DIRECTED THE AO TO TREAT THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN FILED UNDER SECTION 139 AS THE DISCLOSED INCOME OF THE ASSESSEE. HE HELD THAT THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FILED VOLUNTARILY UNDER SECTION 139(1) COULD NOT BE TREATED AS UNDISCLOSED INCOME MERELY BECAUSE OF SOME MINOR TECHNICAL DEFECTS. HE HELD THAT WHEN ALL THE INFORMATION AND PARTICULARS HAD BEEN FILLED UP / FURNISHED, THE TAX AUDIT REPORT WAS FILED AND ALL TAXES DUE HAD BEEN PAID, THERE WAS NO JUSTIFICATION ON THE PART OF THE AO TO TREAT THE INCOME VOLUNTARILY DECLARED BY THE ASSESSEE IN THE RETURN FILED UNDER SECTION 139(1) AS UNDISCLOSED INCOME. 18. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES OF THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE AMOUNT IN QUESTION WAS DULY DECLARED BY THE ASSESSEE AS HIS INCOME IN THE RETURN VOLUNTARILY FILED UNDER SECTION 139(1) AND EVEN THE TAX DUE THEREON WAS DULY PAID BY THE ASSESSEE IN ADVANCE. ALONG WITH THE SAID ITSS NO. 26 & 27 / C.O. NO. 31 & 32/KOL/2014 12 RETURN, AUDITED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT WERE FILED BY THE ASSESSEE AND EVEN THE TAX AUDIT REPORT WAS ALSO FURNISHED. KEEPING IN VIEW ALL THESE FACTS OF THE CASE, WHICH HAVE REMAINED REBUTTED OR UNCONTROVERTED BY THE LD. DR, WE FIND OURSELVES IN AGREEMENT WITH THE LD. CIT(A) THAT THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN FILED VOLUNTARILY UNDER SECTION 139(1) CANNOT BE TERMED AS UNDISCLOSED INCOME MERELY FOR THE LACK OF SOME INFORMATION GIVEN IN THE SAID RETURN WHICH WAS OTHERWISE AVAILABLE IN THE AUDITED BALANCE SHEET AND PROFIT & LOSS ACCOUNT FILED BY THE ASSESSEE. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS AND DISMISS GROUND NO. 8 OF THE REVENUES APPEAL FOR A.Y. 2006-07. 19. IN THE RESULT, THE APPEAL OF THE REVENUE FOR A.Y. 2006-07 IS TREATED AS PARTLY ALLOWED. 20. NOW WE SHALL TAKE UP THE APPEAL OF THE REVENUE FOR A.Y. 2007-08 BEING IT(SS) NO. 27/K/2014. AS AGREED BY THE LEARNED REPRESENTATIVE OF BOTH THE SIDES, THE COMMON ISSUE INVOLVED IN THE APPEAL OF THE REVENUE FOR A.Y. 2007-08 RELATING TO THE DELETION BY THE LD. CIT(A) OF THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF DEFERRED REVENUE EXPENDITURE IS SIMILAR TO THE ONE INVOLVED IN GROUND NO. 1 TO 4 OF THE REVENUES APPEAL FOR A.Y. 2006-07 WHICH HAS ALREADY BEEN DECIDED BY US IN FOREGOING PORTION OF THIS ORDER. FOLLOWING OUR CONCLUSION DRAWN FOR A.Y. 2006-07, WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE SUBJECT TO CERTAIN VERIFICATION BY THE AO AS DIRECTED IN A.Y. 2006-07. 21. AS AGREED BY THE LEARNED REPRESENTATIVE OF BOTH THE SIDE, THE ISSUE INVOLVED IN GROUND NO. 5 OF THE REVENUES APPEAL FOR A.Y. 2007-08 ITSS NO. 26 & 27 / C.O. NO. 31 & 32/KOL/2014 13 RELATING TO THE DELETION BY THE LD. CIT(A) OF THE ADDITION MADE BY THE AO ON ACCOUNT OF ALLEGED UNEXPLAINED EXPENDITURE INCURRED ON BUILDING RENOVATION IS SIMILAR TO THE ONE INVOLVED IN GROUND NO. 5 OF THE REVENUES APPEAL FOR A.Y. 2006-07 WHICH HAS ALREADY BEEN DECIDED BY US IN THE FOREGOING PORTION OF THIS ORDER. FOLLOWING OR CONCLUSION DRAWN IN A.Y. 2006-07, WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE. GROUND NO. 5 IS ACCORDINGLY DISMISSED. 22. AS REGARDS GROUND NO. 6 OF THE REVENUES APPEAL FOR A.Y. 2007-08, THE LEARNED REPRESENTATIVE OF BOTH THE SIDES HAVE AGREED THAT THE ISSUE INVOLVED THEREIN RELATING TO THE DELETION BY THE LD. CIT(A) OF THE ADDITION MADE BY THE AO ON ACCOUNT OF UNEXPLAINED PAYMENT MADE TOWARDS ADVANCE FOR CONSTRUCTION IS SIMILAR TO THE ONE INVOLVED IN GROUND NO. 7 OF THE REVENUES APPEAL FOR A.Y. 2006-07 WHICH HAS ALREADY BEEN DECIDED BY US IN THE FOREGOING PORTION OF THIS ORDER. FOLLOWING OR CONCLUSION DRAWN IN A.Y. 2006-07, WE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE AO FOR DECIDING THE SAME AFRESH AS PER THE SAME DIRECTION AS GIVEN IN A.Y. 2006-07. GROUND NO. 6 OF REVENUES APPEAL FOR A.Y. 2007-08 IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 23. AT TIME OF HEARING BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE HAS NOT PRESSED THE ISSUES RAISED IN THE CROSS OBJECTIONS FILED BY THE ASSESSEE FOR BOTH THE YEARS UNDER CONSIDERATION. THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE ACCORDINGLY DISMISSED AS NOT PRESSED. ITSS NO. 26 & 27 / C.O. NO. 31 & 32/KOL/2014 14 24. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE WHILE BOTH THE CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JUNE, 2017. SD/- SD/- (S.S. VISWANETHRA RAVI) ( P.M.JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 16/06/2017 BISWAJIT COPY OF ORDER FORWARDED TO: 1 M/S. BANIK RUBBER INDUSTRIES, KOLKATA 2 D.C.I.T., CC - II, KOLKATA 3 THE CIT(A), 4 THE CIT 5 DR TRUE COPY, BY ORDER, SR. P.S. / H.O.O. ITAT, KOLKATA