Smt Sikha Mallick, North 24 Parganas V. ITO,Ward-53(1), Kolkata, Kolkata

CO 63/KOL/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 8010 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 25-06-2012
• Court: TRIBUNAL
• Department Lawyers: D J MEHTA
• Assessee Lawyers: V N DUTTA
• Keywords: Unexplained cash credit; Unexplained investment
• Section: 133A; 131

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , ! /AND ' #!' , ) [BEFORE SHRI PRAMOD KUMAR, AM & SHRI MAHAVIR SINGH, JM] !$ !$ !$ !$ / I.T.A NO. 758/KOL/2012 #%& '( #%& '( #%& '( #%& '(/ // / ASSESSMENT YEAR: 2006-07 INCOME TAX OFFICER, WD-53(1), KOLKATA. VS. SMT. S IKHA MALLICK (PAN: AISPM1059P) (*+ /APPELLANT ) (,*+/ RESPONDENT ) & C.O. NO.63/KOL/2012 IN !$ !$ !$ !$ / I.T.A NO. 758/KOL/2012 #%& '( #%& '( #%& '( #%& '(/ // / ASSESSMENT YEAR: 2006-07 SMT. SIKHA MALLICK VS. INCOME TAX OFFICER, WD- 53(1), KOLKATA (CROSS OBJECTOR) (,*+/ RESPONDENT ) DATE OF HEARING: 17.10.2012 DATE OF PRONOUNCEMENT: 19.10.2012 FOR THE REVENUE: SHRI D. J. MEHTA, JCIT (SR. DR) FOR THE ASSESSEE: SHRI V. N. DUTTA, ADVOCATE - / ORDER PER MAHAVIR SINGH, JM ( ' #!' ' #!' ' #!' ' #!', , , , ) THIS APPEAL BY REVENUE AND THE CROSS OBJECTION BY A SSESSEE ARE ARISING OUT OF ORDER OF CIT(A)-XXXIII, KOLKATA IN APPEAL NO.221/CIT(A)-XXXI II/KOL/WD-53(1)/08-09 DATED 15.02.2012. ASSESSMENT WAS FRAMED BY ITO, WD-53(1) , KOLKATA U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FO R ASSESSMENT YEAR 2006-07 VIDE HIS ORDER DATED 24.12.2008. 2. THE ISSUE IN REVENUES APPEAL IS AS REGARDS TO DELETION OF ADDITION OF UNEXPLAINED CASH CREDITS AT RS.19,55,918/-. FOR THIS, REVENUE HAS R AISED FOLLOWING GROUND: 1. THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS.19,55,918/- RELYING ON THE DOUBTFUL EVIDENCE LIKE CASH MEMOS HAVING UNMATCHED NUMBERS, PRODUCED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS, IN SUPPORT OF HIS CLAIM. 3. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT A SURVEY U/S. 133A OF THE ACT WAS CARRIED OUT ON THE BUSINESS PREMISES OF THE ASSESSEE ON 23. 01.2006. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF IRON RODS, ASBESTOS, STEEL ETC. DURING THE COURSE OF SURVEY SOME BOOKS OF ACCOUNT 2 ITA 758/K/2012 & C.O.63/K/2012 SMT.SIKHA MALLICK. A.Y.06-07 AND OTHER DOCUMENTS WERE IMPOUNDED VIDE IDENTIFICAT ION NO. SM-1 TO SM-5. DURING THE COURSE OF SURVEY, SURVEY PARTY MADE AN INVENTORY OF STOCK, BANK ACCOUNTS AND CASH FOUND. FROM THESE IMPOUNDED DOCUMENTS, AO NOTED THAT THE ASSESSEE HAS MADE ADDITIONAL SALES AND ACCORDING TO HIM, THE ADDITIONAL SALE IS NOTHING BUT UNEXPLAINED CASH CREDITS SHOWN IN THE GUISE OF ADVANCE FROM CUSTOMERS AND CASH FOUND DURING THE COURSE OF SURVEY AT RS.19,55,918/-. THE AO WHILE EXAMINING CASH BOOK ALSO OBSERVED THAT ASSESSEE HA S RECEIVED ADVANCE OF RS.11,70,000/- FROM CUSTOMERS AND OUT OF WHICH A SUM OF RS.9.20 LACS WA S ADJUSTED BY WAY OF SALE AS ON 31.03.2006 AND REMAINING WAS THE LIABILITY UNDER THE HEAD ADVA NCE FROM CUSTOMERS. BUT WHEN THIS FACT WAS CONTRADICTED BY IMPOUNDED BOOK SM-2, WHICH IS A SAL E REGISTER AND WHICH RECORDED SALES UPTO DECEMBER, 2005 SHOWN SALES AT RS.1,17,19,833/- AS A GAINST THE SALE DISCLOSED BY ASSESSEES BOOKS OF ACCOUNT UP TO DECEMBER, 2005 AT RS.1,36,75 ,571/-. WHEN THE AR WAS ASKED BY THE AO TO EXPLAIN THE DIFFERENCE, HE PRODUCED CASH MEMO S IN RESPECT OF THIS ADDITIONAL SALE. WHEN THE AO VERIFIED THESE CASH MEMOS OF ADDITIONAL SALE S, HE FOUND THAT THE SAME IS OF NEW SERIES, PARTICULARS OF WHICH MATCHED WITH THE OTHER SERIES AND CASH MEMOS USED BY THE ASSESSEE DURING SAME PERIOD AND EVEN THIS FACT WAS NOT BROUGHT TO T HE NOTICE OF SURVEY PARTY AND AO ACCORDINGLY, MADE ADDITION OF UNEXPLAINED CASH CRED ITS AT RS.19,55,918/-. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE ADD ITION BY GIVING FOLLOWING FINDING IN PARA 6.2 AS UNDER: 6.2. I HAVE CONSIDERED FACTS OF THE CASE. THE ASSE SSING OFFICER HAS CONSIDERED SALE OF RS.19,55,918/- AS UNEXPLAINED CASH CREDIT WHICH WAS RECORDED IN THE BOOKS OF ACCOUNT IN ORDER TO ADJUST THE CASH BOOK AND TO EXPLAIN THE CA SH FOUND. HIS CONCLUSION IS BASED ON TWO OBSERVATIONS, FIRST THAT THERE WAS DIFFERENCE I N THE SALE AS PER AS IMPOUNDED SALE REGISTER VIS--VIS REGULAR BOOKS AND SECOND THAT SO ME CASH MEMOS WERE OF DIFFERENT SERIES. HOWEVER, WHILE SUCH OBSERVATIONS DO GIVE RI SE TO SOME DOUBT CALLING FOR DEEPER INVESTIGATION INTO THE MATTER, THEY DO NOT, BY THEM SELVES, ESTABLISH THAT THE RELEVANT SALES WERE BOGUS. THE APPELLANT IS A TRADER AND THE SALES SHOWN IN THE TRADING ACCOUNT WAS ALSO SHOWN IN VAT RETURN AND AUDIT REPORT. THE ASSE SSING OFFICER HAS ALSO NOT FOUND ANY DEFECT IN THE CORRESPONDING PURCHASES. IT IS UNDISP UTED THAT THE APPELLANT HAS ALREADY SHOWN THE SALE UNDER CONSIDERATION AND OFFERED INCO ME THEREON IN THE RETURN. UNLESS SOME CLEAR EVIDENCE IS BROUGHT ON RECORD THAT THE C ONCERNED SALE TRANSACTIONS WERE BOGUS, THE SALE CANNOT BE TREATED AS UNEXPLAINED CA SH CREDIT. IT MAY ALSO BE MENTIONED THAT CASH FOUND AT THE TIME OF SURVEY WAS RS.L,79,2 22/- ONLY AND PRIMA FACIE DID NOT REQUIRE ADJUSTMENT ENTRIES FOR AMOUNT AS LARGE AS R S.19,55,918/-. IN ANY CASE, IF IT IS TO BE HELD THAT SUCH ADJUSTMENT ENTRIES OF BOGUS SALES WERE MADE, EVIDENCE FOR THE SAME HAS TO BE BROUGHT ON RECORD. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, AM OF THE OPINION THAT SALE OF RS.19,55,918/- CANNOT BE TREAT ED AS UNEXPLAINED CASH CREDIT . THE ADDITION IS ACCORDINGLY DELETED. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE CIT(A) HIMSELF HAS GIVEN A FINDING THAT THE APPELLANT IS A TRADER AND THE SALES 3 ITA 758/K/2012 & C.O.63/K/2012 SMT.SIKHA MALLICK. A.Y.06-07 SHOWN IN THE TRADING ACCOUNT WAS ALSO SHOWN IN VAT RETURN AND AUDIT REPORT. THE ASSESSING OFFICER HAS ALSO NOT FOUND ANY DEFECT IN THE CORRESPONDING PURC HASES. IT IS UNDISPUTED THAT THE APPELLANT HAS ALRE ADY SHOWN THE SALE UNDER CONSIDERATION AND OFFERED INCO ME THEREON IN THE RETURN. WHEN THIS IS A FACT THAT THIS CASE REQUIRES DEEPER INVESTIGATION AND CIT(A) WAS HAVING COTERMINOUS POWER WITH THAT OF AO AND HE CAN DO WHAT THE AO COULD DO AND CAN ALSO DIRECT THE LATTER TO DO WHAT THE LATTER FAILED TO DO SO. THE CIT(A) NEED NOT TO CONFINE IT SELF ONLY TO THE MATERIAL ON RECORD AT THE TIME OF ASSESSMENT AND HE CAN MAKE SUCH ENQUIRIES AS IT THINKS FIT BUT HE CANNOT TRAVEL OUTSIDE THE RECORDS I.E. TO SAY THE RETURN MADE BY THE ASSESSEE AND THE ASSESSMENT ORDER PASSED BY THE OFFICER. HENCE, WE ARE OF THE VIEW THAT THIS ISSUE NEEDS RE-VERIFICATION AT THE LEVEL OF CIT(A) AFRESH AND CIT(A), IF REQUIRES, HE CAN ASK FOR REMA ND REPORT FROM THE AO ON THIS ASPECT AND DECIDE ACCORDINGLY. THIS ISSUE OF REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 5. NOW, COMING TO ASSESSEES CROSS OBJECTION. THE ONLY ISSUE IS AGAINST THE ORDER OF CIT(A) UPHOLDING THE ADDITION OF UNEXPLAINED STOCK OF RS.4,09,430/-. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND: 1. FOR THAT THE LD. CIT(A) ERRED IN DECIDING THE I SSUE OF RS.4,09,430/- ON ACCOUNT OF UNACCOUNTED STOCK. 6. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT DURING THE COURSE OF SURVEY U/S. 133 OF THE ACT, THE DEPARTMENT INVENTORISED PHYSICAL STOCK WHI CH WAS AT RS.39,87,455/-. AS PER STOCK REGISTER THE STOCK IN HAND WAS AT RS.34,57,000/-. THE AO AND EVEN THE SURVEY PARTY DURING THE COURSE OF SURVEY REQUIRED THE ASSESSEE TO EXPLAIN A ND RECONCILE THE DIFFERENCE. DURING THE COURSE OF SURVEY, ASSESSEE CATEGORICALLY ADMITTED T HAT THERE IS NO EXPLANATION FOR THE DIFFERENCE. ONLY ARGUMENT OF ASSESSEE BEFORE AO AND CIT(A) WAS THAT STOCK IS A PART OF TRADING ACCOUNT AND ONCE OTHER FIGURES OF TRADING ACCOUNT HAVE BEEN ACCEPTED BY THE AO, HE CANNOT ENHANCE THE STOCK. THE CIT(A) CONFIRMED THE ADDITION VIDE PARA 5.2 AS UNDER: 5.2. SO FAR AS THE APPELLANTS OBJECTION TO THE VA LUATION OF PHYSICAL STOCK IS CONCERNED, IT IS SEEN THAT THE SAME WAS PREPARED AT THE TIME TO S URVEY IN PRESENCE OF HER STAFF. NO OBJECTION WAS RAISED AT THAT POINT OF TIME. ALSO IN RESPONSE TO SHOW CAUSE NOTICE OF ASSESSING OFFICER, THE APPELLANT HAS GIVEN CERTAIN EXPLANATION IN RESPECT OF SPECIFIC ITEMS IN STOCK WHICH HAS BEEN DULY CONSIDERED BY THE ASSE SSING OFFICER. THEREFORE, IN MY OPINION, NO FURTHER ADJUSTMENT IS REQUIRED TO BE MA DE TO VALUE OF PHYSICAL STOCK. THE OBJECTION REGARDING OTHER ITEMS IN TRADING ACCOUNT BEING ACCEPTED IS ALSO NOT TENABLE. WHEN SURVEY ACTION HAS BEEN CARRIED OUT AND ACTUAL STOCK HAS BEEN INVENTORISED, THE SAME HAS TO BE ACCEPTED AS CORRECT AND NOT THE FIGU RE OF TRADING ACCOUNT. ON THE CONTRARY, SUCH DISCREPANCY MAKES CREDITABILITY OF T RADING ACCOUNT ITSELF SUSPECT. THE APPELLANTS CONTENTION THAT ONLY GROSS PROFIT CAN B E TAXED AS INCOME IS ALSO WITHOUT MERIT. ESTIMATION OF GROSS PROFIT IS REQUIRED TO BE MADE I F UNACCOUNTED SALE TRANSACTIONS ARE DETECTED. LN CASE OF UNACCOUNTED STOCK NO SALE HAS TAKEN PLACE TILL THE DATE OF SURVEY AND, THEREFORE, QUESTION OF GROSS PROFIT DOES NOT ARISE. WHAT IS BEING ADDED IS ACTUALLY THE UNEXPLAINED INVESTMENT IN THE PURCHASE WHICH HAS RE SULTED IN SURPLUS STOCK OVER AND 4 ITA 758/K/2012 & C.O.63/K/2012 SMT.SIKHA MALLICK. A.Y.06-07 ABOVE THE BOOK STOCK. PROVISIONS OF SEC. 69, 69A AN D 69B ALSO PRESCRIBE THAT WHERE IN ANY FINANCIAL YEAR ANY INVESTMENT OR ASSET IS NOT R ECORDED (FULLY OR PARTIALLY ) IN THE BOOKS OF ACCOUNT AND NO EXPLANATION IS FURNISHED AB OUT SOURCE OF INVESTMENT, VALUE OF SUCH INVESTMENT IS DEEMED TO BE INCOME OF THE ASSES SEE. SO FAR AS APPELLANTS CONTENTION REGARDING STOCK BEING ROLLING ITEM AND CREDIT FOR H IGHER OPENING STOCK IN THE SUBSEQUENT PERIOD IS CONCERNED, THE ISSUE IS RELATED TO THE AS SESSMENT OF SUBSEQUENT YEAR AND IS NOT RELEVANT TO THE YEAR UNDER APPEAL. IT IS AN ADMITTED FACT THAT THE ASSESSEE DURING THE COURSE OF SURVEY PROCEEDING WAS ALLOWED OPPORTUNITY TO RECONCILE THE DIFFERENCE IN PHYSICAL STOCK WHICH WAS FOUND AT RS.39,87,455/- AND STOCK AS PER STOCK REGISTER AT RS.34,57,000/-, WHIC H THE ASSESSEE ALMOST REFUSED TO RECONCILE. HE FAIRLY ADMITTED THAT HE HAS NO EXPLANATION FOR T HE SAME WHILE DEPOSING U/S. 131 OF THE ACT. EVEN NOW BEFORE US, THE ASSESSEES COUNSEL COULD NO T EXPLAIN ANYTHING WHICH PROVES THAT THE EXCESS STOCK WAS ON ONE CONSIDERATION OR THE OTHER OR THE STOCK WAS THE SAME AS PER STOCK REGISTER. SINCE THE ASSESSEE COULD NOT RECONCILE T HE SAME, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY TREATED THE STOCK AS UNDISCLOSED AND WE UPHOLD THE SAME. THIS ISSUE OF ASSESSEES CROSS OBJECTION IS DISMISSED. 7. IN THE RESULT, APPEAL OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES AND CROSS OBJECTION OF ASSESSEE IS DISMISSED. 8. ORDER PRONOUNCED IN OPEN COURT ON 19 TH OCT., 2012. SD/- SD/- , ' #!' ' #!' ' #!' ' #!' , (PRAMOD KUMAR) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( . . . .) )) ) DATED : 19TH OCTOBER, 2012 /0 #%12 #3 JD.(SR.P.S.) 5 ITA 758/K/2012 & C.O.63/K/2012 SMT.SIKHA MALLICK. A.Y.06-07 - 4 ##5 65'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT ITO, WARD-53(1), KOLKATA. 2 ,*+ / RESPONDENT SMT. SIKHA MALLICK, PROP. MALLICK I RON SYNDICATE, DAKGHAR, MAHESHTALA, 24 PGS (S)-713149. 3 . #-% ( )/ THE CIT(A), KOLKATA 4. #-% / CIT, KOLKATA 5 . >#? #% / DR, KOLKATA BENCHES, KOLKATA ,5 #/ TRUE COPY, -%/ BY ORDER, ' !2 /ASSTT. REGISTRAR .