Kartick Chandra Dhara, Purba Medinipur V. ITO,Ward-3, Haldia, Purba Medinipur

CO 43/KOL/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7473 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-07-2012
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 11-05-2012
• Court: TRIBUNAL
• Department Lawyers: AMITAVA ROY
• Assessee Lawyers: GAUTAM GHOSH
• Keywords: Bogus purchase

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , /AND ! ' ! ! ' ! ! ' ! ! ' ! , ) [BEFORE SHRI PRAMOD KUMAR, AM & SHRI MAHAVIR SINGH, JM] # # # # / I.T.A NO. 463/KOL/2012 '$% &' '$% &' '$% &' '$% &'/ // / ASSESSMENT YEAR : 2007-08 INCOME-TAX OFFICER, WD-3, HALDIA VS. KARTICK CHA NDRA DHARA (PAN:ACSPD1466D) ()* /APPELLANT ) (+)*/ RESPONDENT ) & C.O. NO.43/K/2012 # # # # / I.T.A NO. 463/KOL/2012 '$% &' '$% &' '$% &' '$% &'/ // / ASSESSMENT YEAR : 2007-08 KARTICK CHANDRA DHARA VS. INCOME-TAX OFFICER, WD -3, HALDIA (CROSS OBJECTOR) (RESPONDENT) FOR THE REVENUE: SHRI AMITAVA ROY FOR THE ASSESSEE: SHRI GAUTAM GHOSH DATE OF HEARING: 26.07.2012 DATE OF PRONOUNCEMENT: 26.07.2012 , / ORDER PER MAHAVIR SINGH, JM ( ! ' ! ! ' ! ! ' ! ! ' !, , , , ) THIS APPEAL BY REVENUE AND CO BY ASSESSEE ARE ARISI NG OUT OF ORDER OF CIT(A)-XXXIII, KOLKATAI IN APPEAL NO. 411/CIT(A)-XXXIII/ITO,WD-3, HAL DATED 31.01.2012. ASSESSMENT WAS FRAMED BY ITO, WARD-3, HALDIA U/S.144/145(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007- 08 VIDE HIS ORDER DATED 30.12.2009. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AS REGARDS TO DELETION OF ADDITION ON ACCOUNT OF BOGUS PURCHASES. FOR THIS, REVENUE HAS RAISED F OLLOWING GROUND NO.1.: 1. THAT THE LD. CIT(A)-XXXIII, KOLKATA ERRED IN DE LETING THE ADDITION OF RS.14,98,096/- , MADE ON ACCOUNT OF BOGUS AND UNDISCLOSED PURCHASE RELYING ON THE BOOKS OF ACCOUNT WHICH WAS NEVER PRODUCED BY THE ASSESSEE BEFORE THE AO FOR EXAMINATION. 3. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO EXAMINED THE P&L ACCOUNT AND TRA DING ACCOUNT AND ALSO EXAMINED AUDIT REPORT AND STATEMENT OF ACCOUNTS OF PURCHASES MADE IN RESPECT OF M/S. KCD WHICH ARE 2 ITA 463/K/2012 & CO 43/K/2012 KARTICK CH. DHARA. A.Y. 07-08 DISCLOSED AT RS.1,22,27,087/-. THE ASSESSEE ALSO F URNISHED THE NAME OF THE PARTIES FROM WHOM PURCHASES WERE MADE DURING THE RELEVANT AY 2007-08, WHICH IS AS UNDER: (I) MARICO LTD. RS.74,97,666/- (II) NOVA TRADING COMOPANY RS.1,62,146/- (III) SUNRISE SPICES LTD. RS.2,21,856/- (IV) CHACHAM TEA RS.94,187/- (V) SUMAN PROTEINS RS.11,55,360/- (AFTER ADJUSTM ENT OF DISCOUNT & BREATE ALLOWED FOR RS.2,153/-) (VI) A M MARKETING LTD. RS.25,10,582/-. SUBSEQUENTLY, THE ASSESSEE ALSO REPLIED VIDE LETTE R DATED 29.12.2009 THAT IT HAS ALSO MADE PURCHASES FROM RUCHI SOYA INDUSTRIES LTD. AND KRISH NA SALES CORPORATION AMOUNTING TO RS.6,77,000/- AND RS.1,89,863/- RESPECTIVELY. BUT THE AO HAS NOT ACCEPTED FOR ONLY THE REASON THAT ASSESSEES LETTER DATED 29.12.2009 CONTRADICTS HIS OWN SIGNED STATEMENT DATED 13.07.2009 AND ACCORDINGLY, HE MADE ADDITION OF UNDISCLOSED PU RCHASE AT RS.5,85,290/-. FURTHER, THE AO NOTICED FROM THE PURCHASE MADE FROM RUCHI SOYA INDU STRIES LTD. AND KRISHNA SALES CORPORATION AND NOTED THAT THERE IS DIFFERENCE IN T HE PURCHASE MADE FROM THE ABOVE AT RS.8,66,863/- I.E. RS.6,77,000/-, WHICH WAS NOT DI SCLOSED FROM DEPARTMENT AS THIS IS CONFESSED VIDE LETTER DATED 29.12.2009. HE MADE FURTHER ADDIT ION OF RS.8,66,863/- AND UNDISCLOSED PROFIT ON THE ABOVE UNDISCLOSED SALE AT RS.45,943/-. ACCO RDING TO AO, THE PURCHASSE FROM RUCHI SOYA INDUSTRIES LTD. AND KRISHNA SALES CORPORATION AMOUNTING TO RS. 8,66,863/- AND THE SALES MADE OUTSIDE THE BOOKS OF ACCOUNT. AGGRIEVED, ASSE SSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE ADDITION OF BOGUS PURCHASES, UNDISCLOSE D PURCHASES AND GP THEREON BY GIVING FOLLOWING FINDING IN PARA 3.2 AS UNDER: 3.2. L HAVE CAREFULLY CNSIDERED FACTS OF THE CASE . IT S TRUE THAT THE ORIGINAL LIST OF THE SUPPLIERS SUBMITTED BY THE APPELLANT CONTAINED NAMES OF ONLY SIX PARTIES AND NAMES OF RUCHI SOYA LND. LTD. AND KRISHNA SALES AGE NCIES WERE INFORMED TO THE ASSESSING OFFICER ONLY LATER ON. HOWEVER, MERELY BE CAUSE OF THS FACTOR, THE EXPLANATION CANNOT BE REJECTED OUTRIGHT. AT MOST, T HIS COULD HAVE BEEN A REASON TO LOOK AT THESE PURCHASES MORE CLOSELY AND TO MAKE FU RTHER INVESTIGATION. BUT UNLESS SUCH INVESTIGATION TEADS TO ANY POSITIVE EVIDENCE, THE SAID PURCHASES CANNOT BE SUMMARILY CALLED AS BOGUS. HERE, THE APPELLANT HAS ADDUCED SUBSTANTIAT MATERIAL TO ESTABLISH GENUINENESS OF THE SAID PURCHASES. THE PURCHASES FROM THE SAID TWO PARTIES HAD BEEN MADE THROUGH PROPER BILLS AND PAYM ENTS WERE MADE BY CHEQUES ISSUED ON THE REGULAR BANK ACCOUNT OF THE APPELLANT . THE FACT OF CORRESPONDING ERITRIES APPEARING IN BANK STATEMENT CLEARLY INDICA TES THAT THE EXPTANATION CANNOT BE AN AFTERTHOUGHT. NO DISCREPANCY OR DEFECT HAS BE EN FOUND BY THE ASSESSING OFFICER TO INDICATE THAT THE PURCHASES FROM THAT TH E TWO PARTIES WERE NOT GENUINE. ALSO, ON ONE HAND THE ASSESSING OFFICER IS NOT BELL EVE THAT PURCHASES WERE MADE FROM M/S. RUCHI SOYA LNDUSTRIES LTD AND M/S. KRISHN A SALES CORPORATION AND ON THE OTHER HAND HE IS TREATING THE PURCASES MADE FRO M THE SAME PARTIES AS UNDISCLOSED PURCHASE. IT MAY BE NOTED THAT THE ENT IRE ADDITION OF UNISCLOSED PURCHASE HAS BEEN MADE NOT ON THE BASIS OF ANY INDE PERIDENT QUERY, BUT IS BASED ON THE DETAILS PROVIDED BY THE APPELLANT FROM HIS R EGULAR BOOKS OF ACCOUNTS AND 3 ITA 463/K/2012 & CO 43/K/2012 KARTICK CH. DHARA. A.Y. 07-08 BANK STATEMENT. PAYMENTS FOR THE SO CALLED UNDISCLO SED PUREHASES HAVE BEEN MADE THROUGH THE REGULAR BANK ACCOUNT OF THE APPELLANT. THE ACTION OF ASSESSING OFFICER IN FIRST TREATING CERTAIN PURCHASES AS BOGUS AND MA KING A FURTHER ADDITION FOR UNDISCLOSED PURCHASES IN RESPECT OF PAYMENTS MADE F OR THE VERY SAME PURCHASES IS SELF-CONTRADICTORY AS WELL AS ILLOGICAL. BY THIS AC TION, WHICH IS QUITE PECULIAR TO SAY THE LEAST, THE ASSESSING OFFICER HAS MANAGED TO MAKE THREE ADDITIONS, WHERE NOT EVEN WAS WARRANTED. THE ASSESSING OFFICER HAS N O WHERE ELABORATED AS TO HOW THERE COULD BE ADDITION OF BOGUS PURCHASE, UNDISCLO SED PURCHASE AND GROSS PROFIT THERE ON, WHEN ALL THE RELEVANT PURCHASES (AND CORR ESPONDING SALES) WERE RECORDED IN BOOKS AND PAID THROUGH CHEQUES ISSUED O N REGULAR BANK ACCOUNT. AS A MATTER OF FECT, ONEE THE PURCHASES MADE FROM ALL TH E SUPPLIERS INCLUDING RUCHI LNDUSTRIES LTD. ARD KRISHNA SALES CORPORATION AND PAYMENTS MADE ARE CONSIDERED, THE PURCHASS AS WELL AS BANK TRANSACTIO NS FOR THE PAYMENTS ARE FULLY RECONCILED. NO DISCREPANCY WHATSOEVER HAS BEEN POIN TED OUT BY THE ASSESSING OFFICER. CONSIDERING THIS, THE ENTIRE ADDITION OF R S. 14,98,096/- CONSISTING OF BOGUS PURCHASE (RS.5,85,290/-),UNDISCLOSED PURCHASE (RS. 8,66,863/-) AND GROSS PROFIT THEREON (RS.45,943/-) IS DELETED. 4. WE FIND THAT THE ONLY PREMISES OF THE AO FOR MA KING ADDITION OF BOGUS PURCHASES AMOUNTING TO RS.5,85,290/- IS THAT THE ASSESSEES L IST OF PURCHASE SUBMITTED ON 13.07.2009 AND REPLY DATED 29.12.2009 CONTRADICTS AND IT IS THE BA SIS OF MAKING ADDITION WHEN THE ASSESSEE HIMSELF HAS EXPLAINED THE PURCHASES LEFT OUT ON ACC OUNT OF RUCHI SOYA INDUSTRIES AND KRISHNA SALES CORPORATION AMOUNTING TO RS.6,77,000/- AND RS .1,89,863/-. IF THESE PURCHASES ARE MADE BY THE ASSESSEE WHICH IS EXPLAINED BY THE ASSESSEE BY WAY OF PURCHASE MADE FROM REGISTERED DEALERS AND PAYMENT MADE THROUGH ACCOUNT PAYEE CHEQ UES. THE ASSESSE HAS PROVIDED COMPLETE BOOKS OF ACCOUNT, MOVEMENT OF GOODS, STOCK REGISTER AND THAT DETAILS OF PURCHASES I.E. PURCHASES MADE BY CHEQUES. THE SAME AMOUNT WAS TRE ATED BY THE AO AS UNDISCLOSED PURCHASES AND UNDISCLOSED SALE AND ACCORDINGLY APPL IED GP EARNED ON THE SAME @ 5.3%. IN OUR VIEW, THIS ADDITION CANNOT BE MADE BY THE AO SI MPLY ON CONJECTURE AND SURMISE AND WITHOUT ANY BASIS PARTICULARLY WHEN THE ASSESSEE HA S EXPLAINED THE ENTIRE PURCHASES POINT BY POINT. HENCE, THERE CANNOT BE ANY BOGUS PURCHASE O R UNDISCLOSED SALES. HENCE, WE HAVE NO HESITATION IN CONFIRMING THE ORDER OF CIT(A) AND TH IS ISSUE OF REVENUES APPEAL IS DISMISSED. 5. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE DELETION OF ADDITION OF RS.1,31,264/- MADE BY AO IN INVESTMENT IN HOUSE BUI LDING BY TREATING THE SAME AS PERSONAL IN NATURE. FOR THIS, REVENUE HAS RAISED FOLLOWING GROU ND NO.2: 2. THAT THE LD. CIT(A)-XXXIII, KOLKATA, ERRED IN R EDUCING THE ADDITION OF RS.1,31,264/- WITHOUT GIVING OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE FACT. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAS MADE 4 ITA 463/K/2012 & CO 43/K/2012 KARTICK CH. DHARA. A.Y. 07-08 INVESTMENT OF RS.12,55,000/- IN CONSTRUCTION OF HOU SE AND WHEN SOURCE WAS EXPLAINED BY THE ASSESSEE REGARDING COST OF CONSTRUCTION, THE AO PRE SUMED THAT THE FUNDS INVESTED ARE OUT OF BUSINESS FUND, THEREFORE, HE DISALLOWED THE PROPORT IONATE INTEREST DEBITED TO THE P&L ACCOUNT AT RS.1,31,264/- BEING INVESTMENT MADE IN HOUSE BUI LDING OUT OF BORROWED FUNDS. THE CIT(A) REDUCED THE ADDITION TO RS.62,756/- BY OBSERVING AS UNDER: 5.2. L HAVE CONSIDERED FACTS OF THA CASE. SO FAR AS THE APPELLANTS CONTENTON, THAT THE AMOUNT INVESTED IN HOUSE CAME FROM HIS CAPITAL, IS CONCERNED, IT IS SEEN THAT DURING THE YEAR UNDER CONSIDERATION THERE WAS NO INCREASE IN THE CAPITAL ACEOUNT. LN FACT, ON COMPARISON OF BALANCE SHEET AS ON 31.03.2007 VISA-V IS AS ON 31.03.2006, IT IS SEEN THAT THE CAPITAL HAS ACTUALLY GONE DOWN FROM RS. 11 ,04,961/- TO RS. 8,85,180/-. HOWEVER, A PART OF DRAWINGS OF RS. 5,00,000/-MADE D URING THE YEAR, WHICH WAS MUCH HIGHER THAN OF RS. 1,60,000/- IN THE PRECEDING YEAR MAY HAVE BEEN UTILZED FOR THE PURPOSE OF BUILDING HOUSE. THERE IS ALSO MERIT IN T HE CONTENTION THAT THERE WAS CASH IN HAND AVAILABLE WTTH THE APPELLANT. LT TS SEEN THAT THE CASH TN HAND AS ON 31.03.2006 WAS OF RS.9,75,352/- WHICH CAME DOWN TO RS. 6,51,30 1/- ON 31.03.2007. THUS, THE APPELLANT MAY HAVE UTILIZED CASH OF RS. 3,24,051/- TOWARDS INVESTMENT IN BULDING THE HOUSE. LF BOTH THESE FAATORS ARE CONSIDERED, INVEST MENT OF ABOUT RS. 6,50,000/- CAN BE REASONABLY EXPLAINED OUT OF THESE SOURCES. SINCE TO TAL INVESTMENT IN HOUSE DURING THE YEAR WAS OF RS. 12,55,000/-, BALANCE OF RS. 6,00,00 0/- MUST HAVE CAME OUT OF CASH CREDIT ACCOUNT. ON SUBSTITUTING THE SAID FIGURE IN THE WORKING MADE FOR, THE ASSESSING OFFICER, THE DISALLOWANCE IS REDUCED TO RS. 62,756/ -. THEREFORE, THE ADDITION IS DIRECTED TO BE REDUCED TO RS.62,756/-. WE FIND THAT THE AO HAS CONSIDERED THE RECONCILIAT ION AND CASH IN HAND AND DRAWINGS MADE DURING THE YEAR AND ALSO UTILIZATION OF FUNDS IN IN VESTMENT IN CONSTRUCTION OF HOUSE. WE FIND THAT THE ASSESSEE COULD NOT EXPLAIN BEFORE THE CIT( A) THAT OUT OF THE INVESTMENT OF RS.12.55 LAKHS RS. 6 LACS MUST HAVE COME OUT OF THE CASH CRE DITS ON WHICH INTEREST IS PAID BY THE ASSESSEE. THIS FACT HAS NOT DISPUTED BY REVENUE OR BY THE ASSESSEE. HENCE, WE HAVE NO HESITATION IN CONFIRMING THE ORDER OF CIT(A). THIS GROUND OF REVENUES APPEAL IS DISMISSED. 7. THE CROSS OBJECTION OF ASSESSEE IS SUPPORTIVE OF THE ORDER OF CIT(A), HENCE REQUIRES NO ADJUDICATION AND IS DISMISSED AS INFRUCTUOUS. 8. IN THE RESULT, APPEAL OF REVENUE AS WELL AS CO O F ASSESSEE ARE DISMISSED. 9. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- , ! ! ! ! ' ! ' ! ' ! ' ! , (PRAMOD KUMAR) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( - - - -) )) ) DATED: 26TH JULY, 2012 ./ '$01 '2 JD.(SR.P.S.) 5 ITA 463/K/2012 & CO 43/K/2012 KARTICK CH. DHARA. A.Y. 07-08 , 3 ''4 54&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT- ITO, WARD-3, HALDIA 2 +)* / RESPONDENT SHRI KARTICK CHANDTRA DHARA, VILL. S ALGECHIA, P.O. TAMLUK, DIST. PURBA MEDINIPUR, PIN-721602. 3 . ',$ ( )/ THE CIT(A), KOLKATA 4. ',$ / CIT, KOLKATA 5 . ='> '$ / DR, KOLKATA BENCHES, KOLKATA +4 '/ TRUE COPY, ,$/ BY ORDER, ! 1 /ASSTT. REGISTRAR .