Shri Binay Poddar, Kolkata V. DCIT, Circle - 33, Kolkata, Kolkata

CO 68/KOL/2011

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1481 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 10 month(s) 8 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 07-12-2011
• Court: TRIBUNAL
• Assessee Lawyers: MANISH TIWARI
• Keywords: Loose papers; Valuation report; Assessment record
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI M. BALAGANES H, AM] I.T.A NO.1549/KOL/2011 ASSESSMENT YEAR: 2008-09 DEPUTY COMMISSIONER OF INCOME-TAX, VS. SHRI BINOY PODDAR CIRCLE-33, KOLKATA. (PAN: AFOPP0372H) ( APPELLANT ) ( RESPONDENT ) & C.O. NO. 68/KOL/2011 IN I.T.A NO.1549/KOL/2011 ASSESSMENT YEAR: 2008-09 SHRI BINOY PODDAR VS. DEPUTY COMMISSIONER OF I NCOME-TAX, CIRCLE-33, KOLKATA. (CROSS OBJECTOR) (RESPONDENT) DATE OF HEARING: 07.10.2015 DATE OF PRONOUNCEMENT: 15.10.2015 FOR THE REVENUE: SHRI SANJAY MUKHERJEE, JCIT FOR THE ASSESSEE: SHRI MANISH TIWARI, FCA ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY REVENUE AND CROSS OBJECTION BY ASSES SEE ARE ARISING OUT OF ORDER OF CIT(A)-XX, KOLKATA IN APPEAL NO. 188/CIT(A)-XX/C IR-33/10-11/KOL DATED 19.08.2011. ASSESSMENT WAS FRAMED BY DCIT, CIRCLE- 33, KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) FOR AY 2008-09 VIDE ITS ORDER DATED 31.12.2010. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS, WH ETHER THE CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY AO ON ACCOUNT OF UNDE R VALUATION OF STOCK UP TO THE DATE OF SURVEY BY DEDUCTING 18.55% FOR GROSS PROFIT. FO R THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.1: 1) (A) UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,52,68,732/- BEING UND ER VALUATION OF STOCK UP TO THE DATE OF SURVEY BY FURTHER DEDUCTING 18.55% FOR GROSS PROFIT FROM THE VALUE OF STOCK COMPUTED BY THE ASSESSING OFFICER AND, THUS, VALUING THE STOCK BELOW THE COST PRICE WHEN IN FACT THE ASSESSING OFFICER HAD ALREADY DEDUCTED 15% FROM THE VALUATION OF THE DEPARTMENTAL VALUER FOR GROSS PROFIT TO ARRIVE AT THE COST PRICE OF THE ASSESSEE. (B) UNDER THE FACT AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.1,52,68,732/- BEING UNDER VALUATION OF STOCK UP TO THE DATE 2 ITA NO.1549/KOL/2011 & CO NO.68/K/2011 BINAY PODDAR AY 2008-09 OF SURVEY BY TAKING THE VALUE OF CLOSING STOCK AT R S.4,30,93,290/- INSTEAD OF RS.3,63,05,575/- AS TAKEN BY THE ASSESSING OFFICER BECAUSE THE ASSESSEE HAD CONSIDERED THE WT. OF DIAMOND AT 2880 CARAT AND GOLD AT 13552. 367 GMS. WHEREAS THE DIAMONDS INCLUDING LOOSE DIAMONDS FOUND DURING THE COURSE OF SURVEY AS PER VALUATION REPORT OF DEPARTMENTAL VALUER DATED 1/2/2008 WAS 2269.85 CARA T AND TOTAL NET WT. OF GOLD AT 13122.47 GMS. AND THE ASSESSEE ADMITTED DURING THE COURSE OF SURVEY THAT NO STOCK OF HIS WAS LYING ANY WHERE WITH ANY OTHER PARTY, OR THE KA RIGARS. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A MANUFACTURER/DEALER OF GOLD AND DIAMOND JEWELLERIES AND ORNAMENTS. HE IS PROPRIETOR OF M/S. MUKUT JEWELLERS AND M/S. MOH. A SURVEY U/S. 133A OF THE ACT WAS CONDUC TED ON THE BUSINESS PREMISES OF THE ASSESSEE ON 31.01.2008 I.E. RELEVANT TO AY 2008 -09 AND DURING THE COURSE OF SURVEY, CASH BOOK, LEDGER BOOK, BANK BOOK AND STOCK BOOK WERE INVENTORISED AND BOOKS OF ACCOUNT BEARING IDENTIFICATION MARK MJ-1 T O MJ-4 WERE IMPOUNDED AND ALSO MJ-5 TO MJ-18 WERE FOUND BUT NOT IMPOUNDED. DURING THE COURSE OF SURVEY, STOCK OF GOLD ORNAMENTS, DIAMONDS AND PRECIOUS STONES ETC. W ERE FOUND, WHICH WERE VALUED BY THE DEPARTMENTAL VALUER AT RS.6,06,75,656/- AND AO AFTER GIVING DEDUCTION OF 15% ON ACCOUNT OF STOCK VALUED BY VALUER ON HIGHER SIDE AT RS.91,01,348/- TREATED THE VALUE AT RS.5,15,74,306/- THE ASSESSEE AS PER BOOKS OF ACCO UNT MAINTAINED STOCK AS ON 31.01.2008 (THE DATE OF SURVEY) WHICH WAS AT (CORRE CT STOCK WAS AT RS. 4,30,93,230/-) RS.3,63,05,575/-. THE AO ACCORDINGLY DETERMINED TH E DIFFERENCE BETWEEN THE STOCK FOUND DURING THE COURSE OF SURVEY AND WHICH WAS VAL UED AT RS.5,15,74,306/- - RS.3,63,05,575/- BEING STOCK RECORDED IN THE BOOKS OF ACCOUNT AT RS.1,52,68,732/-. ACCORDINGLY, THE AO ADDED THE UNDER VALUATION OF ST OCK TO THE EXTENT OF RS.1,52,68,732/-. AGGRIEVED, ASSESSEE PREFERRED AP PEAL BEFORE CIT(A), WHO DELETED THE ADDITION BY OBSERVING IN PARA 6 AS UNDER: 6. I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE MATERIAL ON RECORD. I HAVE ALSO PERUSED THE ASSESSMENT RECORD AND THE SURVEY FOLDER . IT IS AN UNDISPUTED FACT THAT NO EXCESS STOCK WAS FOUND IN COURSE OF THE SURVEY. TH E ONLY DISPUTE RELATES TO THE VALUATION OF THE STOCK OF GOLD JEWELLERY AND DIAMON D WHICH WAS MADE AT RS.6,06,75,656/- ON THE DATE OF THE SURVEY. THE AO ALLOWED REDUCTION @ 15% ON ACCOUNT OF HIGHER VALUATION (WHICH WAS OBJECTED BY THE APPELLANT AT THE TIME OF THE SURVEY); AND, DETERMINED THE VALUE OF THE STOCK AT RS.5,15,74,306/-. I FIND MERIT IN THE ARGUMENT THAT, SINCE THE VALUATION WAS MADE AT CUR RENT MARKET PRICE, THE ELEMENT OF GROSS PROFIT WAS ALSO EMBEDDED IN THE VALUE OF THE STOCK SO DETERMINED; AND CONSEQUENTLY, SUCH GROSS PROFIT HAS TO BE REDUCED I N ORDER TO ARRIVE AT THE FINAL VALUATION. AND, SINCE THE APPELLANT HAS SHOWN GROSS PROFIT RATE OF 18.55% IN THE PRE- SURVEY PERIOD, REDUCTION OF RS.95,67,034/- HAS TO B E ALLOWED; AND CONSEQUENTLY, THE VALUE OF STOCK AS ON THE DATE OF SURVEY SHOULD BE R S.4,20,07,272/- (RS.5,15,74,306/- MINUS RS.95,67,034/-). ON THE OTHER HAND, THE APPEL LANT HAS RECORDED IN ITS BOOKS OF ACCOUNT, THE VALUE OF STOCK AS ON THE DATE OF THE S URVEY AT RS.4,30,93,290/- (IN ADDITION TO THE STOCK OF RS.17,62,820/- LYING WITH THE KARIG ARS). THE AO HAS TAKEN THE VALUE OF 3 ITA NO.1549/KOL/2011 & CO NO.68/K/2011 BINAY PODDAR AY 2008-09 THE STOCK AS PER THE BOOKS OF ACCOUNT AT RS.3,63,05 ,575/- WHICH IS FACTUALLY INCORRECT. I FIND THAT THE RELEVANT DETAILS OF STOCK AS ON 31.01 .2008 WERE FILED IN COURSE OF THE ASSESSMENT PROCEEDINGS (AVAILABLE AT PAGE 485 OF TH E ASSESSMENT RECORD) SHOWING THE VALUE OF STOCK AT RS.4,30,93,290/- (COMPRISING GOLD JEWELLERY OF RS.3,63,05,575/- AND DIAMONDS OF RS.67,87,715/- IN ADDITION TO THE STOCK OF RS.17,62,820/- LYING WITH THE KARIGARS. IN THIS FACTUAL BACKGROUND, THERE WAS ACT UALLY NO UNDER VALUATION OF STOCK AS ON 31.01.2008; AND CONSEQUENTLY, NO ADDITION ON THI S ACCOUNT WAS JUSTIFIED. THE ADDITION OF RS.1,52,68,732/- IS DELETED. GROUND NO. 1 IS ALLOWED. AGGRIEVED, REVENUE IS IN SECOND APPEAL BEFORE TRIBU NAL. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ONLY DISPUTE RELATES TO VALUATION OF STOCK AS ON THE DATE OF SURVEY AND NO EXCESS STOCK PHYSICALLY WAS FOUND BY THE INCOME-TAX DEPARTMENT FROM THE BUSINESS PREMISES OF THE ASSESSEE. AS ARGUED BY LD. COUNSEL FOR THE ASSESSEE BEFORE US THAT THE VALUATION IN THE COURSE OF SURVE Y WAS MADE AT CURRENT MARKET RATE PREVAILING AS ON 31.08.2008 AT THE RATE OF PURITY O F 24 CARATS. ACCORDING TO HIM, EVEN THE DIAMONDS AND OTHER PRECIOUS STONES EMBEDDED IN JEWELLERY WERE VALUED ON ESTIMATE AND NO ACTUAL VALUE WAS DETERMINED BY THE VALUER. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT ASSESSEE HAS CONSISTENTLY VALU ED STOCK AT COST PRICE OR MARKET PRICE WHICHEVER IS LOWER. ACCORDING TO HIM, THE RATE OF GOLD AS ON THE DATE OF SURVEY I.E. 31.01.2008 WAS TAKEN AT RS.11,965/- PER 10 GRAMS WH EREAS IT WAS ONLY AT RS.9,395/- THEREBY DIFFERENCE BEING RS.2,570/- PER 10 GRAMS. T HIS DIFFERENCE IS MORE THAN 28%. LD. COUNSEL FOR THE ASSESSEE ALSO STATED THAT THE A O DURING THE ASSESSMENT PROCEEDINGS HAS ALLOWED THE REBATE OF 15% ON ACCOUNT OF HIGHER VALUATION BUT HAS NOT ALLOWED DEDUCTION ON ACCOUNT OF RATE OF STOCK PREVAILING AS ON THE DATE OF SURVEY I.E. 31.01.2008. EVEN THE AO HAS NOT REDUCED THE GROSS P ROFIT FROM THE VALUE OF THE STOCK FOR DETERMINING THE CORRECT VALUATION OF STOCK. LD . COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THAT EVEN THE SURVEY PARTY HAS ALLOWED D EDUCTION OF 12% FOR THE VALUATION OF CLOSING STOCK IN REGARD TO PRE-SURVEY PERIOD. HE ALSO STATED THAT THE ASSESSEES GROSS PROFIT FROM LAST MANY YEARS IS ALMOST AT 18% AND AC CORDING TO HIM, THIS GROSS PROFIT RATE, THE STOCK SHOULD HAVE BEEN VALUED AFTER REDUC ING THIS FROM THE TOTAL VALUE. WE FIND THAT THE ASSESSEE HAS RECORDED IN THE BOOKS OF ACCOUNT THE VALUE OF STOCK AS ON THE DATE OF SURVEY AT RS.4,30,93,290/- AND AO HAS WRONG LY STATED THAT THE VALUE OF STOCK HAS BEEN RECORDED BY THE ASSESSEE AT RS.3,63,05,575 /-. LD. COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THE DETAILS OF THE VALUE OF S TOCK THAT COMPRISES OF GOLD JEWELLERIES AT RS.3,63,05,575/- AND DIAMONDS OF RS. 57,87,715/- WHICH COMES TO 4 ITA NO.1549/KOL/2011 & CO NO.68/K/2011 BINAY PODDAR AY 2008-09 RS.4,30,93,290/-. WE FIND FROM THE ABOVE FACTS IN TOTALITY THAT THE ASSESSEE HAS PREPARED SEPARATE TRADING ACCOUNT FOR PRE-SURVEY PE RIOD AND POST SURVEY PERIOD. THE ASSESSEE HAS ALSO GIVEN GROSS PROFIT RATE AND NET P ROFIT RATE IN POST SURVEY PERIOD QUA SURVEY PERIOD AS COMPARED TO PRE-SURVEY PERIOD. LD . COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE GROSS PROFIT RATE CALCULATION MADE BY THE SURVEY PARTY AND VALUED THE STOCK AFTER REDUCING APPROXIMATELY 10%. IN VIE W OF THE ABOVE EXPLANATION GIVEN BY ASSESSEES COUNSEL, WHICH WAS NEVER NEGATED BY L D. SR. DR, WE FIND THAT THE REDUCTION MADE BY CIT(A) AT 18.5% OF G.P. RATE FROM THE DATE OF SURVEY IN CONSONANCE WITH THE FACTS OF THE CASE. ACTUALLY, THE VALUE OF STOCK ON THE DATE OF SURVEY AS PER BOOKS OF ACCOUNT RS.4,30,93,290/- AND IN ADDITION T O THE STOCK OF RS. 17,62,820/- WAS LYING WITH THE KARIGARS. THIS STOCK AS PER BOOKS O F ACCOUNT OF THE ASSESSEE AT RS.4,30,93,290/- COMPRISES OF GOLD JEWELLERY OF RS. 3,63,05,575/- AND SEPARATE DIAMOND STOCK OF RS.67,87,715/-. EVEN OTHERWISE, I F WE GO BY RATE OF GOLD ON THE DATE OF SURVEY TAKEN BY VALUATION OFFICER AT RS.11,965/- AS AGAINST THE RATE OF RS.9395/- THE INCREASE IS ALMOST 28%. IN TERM OF THE ABOVE FACTS , WE FIND THAT THE CIT(A) HAS RIGHTLY APPLIED THE GROSS PROFIT RATE OF 18.55% FOR REDUCTI ON OF THE VALUE OF STOCK AND WE CONFIRM THE SAME. THIS GROUND OF REVENUES APPEAL IS DISMISSED. 5. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE ADDITION BEING DIFFERENCE BETWEEN THE UNDISCLOS ED INCOME RECORDED IN THE IMPOUNDED DOCUMENTS MJ-4 AND UNDISCLOSED INCOME DEC LARED BY ASSESSEE DURING THE COURSE OF SURVEY AT RS.13.50 LACS TREATING THE RECE IPTS NOTED IN MJ-4 AS SALES AND PURCHASES. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.2: 2. UNDER THE FACT AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.25,07,105/-, BEING DIFFERENCE BE TWEEN THE UNDISCLOSED INCOME RECORDED IN THE IMPOUNDED DOCUMENT MJ/4 AND UNDISCL OSED INCOME OF RS.13,50,000/- SHOWN BY THE ASSESSEE, TREATING THE RECEIPTS NOTED IN MJ/4, AS SALES & PURCHASES, WHEN IN FACT, THE RECEIPTS ALSO INCLUDE EARNINGS FROM CO MMISSION & BROKERAGE AS PER THE DETAILS FILED BY THE ASSESSEE. 6. BRIEFLY STATED FACTS ARE THAT DURING THE COURSE OF SURVEY U/S. 133A OF THE ACT, A DOCUMENT I.E. BUNCH OF LOOSE PAPERS BEARING IDENTIF ICATION MARK MJ-4 CONTAINING PAGES 1 TO 54 WAS FOUND AND IMPOUNDED. FROM THESE PAPERS, THE ASSESSEE WAS ASKED TO EXPLAIN THE DOCUMENTS BUT THE ASSESSEE FILED EXPLAN ATION WHICH IS REPRODUCED IN THE ASSESSMENT ORDER, WHICH READS AS UNDER: 5 ITA NO.1549/KOL/2011 & CO NO.68/K/2011 BINAY PODDAR AY 2008-09 PAGES 1-54 OF MJ/4 CONTAINS CERTAIN PURCHASE & SA LE TRANSACTION NOT RECORDED IN THE BOOKS OF ACCOUNTS. THE BUNCH ALSO INCLUDES FEW PAPE RS FOR ESTIMATE/APPROVAL/ALTERATION OF JEWELLERIES. COMPL ETE DETAILS & OTHER EVIDENCES IN RESPECT OF THE SAME ARE NOT AVAILABLE WITH THE ASSE SSEE. HOWEVER, IT IS REITERATED THAT INCOME FROM UNACCOUNTED TRANSACTION OF RS.13,50,000 /- AS PER RETURN INCLUDES INCOME DERIVED FROM SUCH UNACCOUNTED PURCHASE & SALE TRANS ACTION. THE AO WAS NOT CONVINCED BY THE REPLY OF THE ASSESS EE AND HE TABULATED PAGES 1 TO 54 OF MJ/4 AND NOTED THAT THE TOTAL TRANSACTIONS RECOR DED IN THOSE DOCUMENTS ARE AT RS.34,12,449/- EXCLUDING TRANSACTIONS RECORDED AT P AGES 6, 7, 11 AND 13 WHICH ARE AT RS.4,44,656/-. ACCORDINGLY, AO TREATED THE TOTAL T RANSACTION OF RS.38,57,105/- AS INCOME OF THE ASSESSEE EXCLUDING THE INCOME DECLARE D BY ASSESSEE AT RS.13.50 LACS TREATED THE BALANCE INCOME OF RS.25,07,105/- AS INC OME FROM OTHER SOURCES BEING UNDISCLOSED TRANSACTION. AGGRIEVED, ASSESSEE PREFE RRED APPEAL BEFORE CIT(A), WHO DELETED THE ADDITION BY OBSERVING AT PAGE 7 PARA 10 AND THE RELEVANT PORTION OF THE PARA READS AS UNDER: . I HAVE CONSIDERED THE SUBMISSION. I FIND FROM THE ASSESSMENT ORDER THAT THE APPELLANT HAD EXPLAINED AT THE ASSESSMENT STAGE THA T UNDISCLOSED SALES WERE RECORDED IN MJ/4 WHICH HAS NOT BEEN DISPUTED OR DISPROVED BY TH E AO. I FIND MERIT IN THE ARGUMENT THAT THE ENTIRE SALES CANNOT BE TREATED AS UNDISCLO SED INCOME OF THE APPELLANT. EVEN IF THE TRANSACTIONS RECORDED ON PAGES 6, 7, 11 AND 13 ARE INCLUDED, THEN ALL THE TRANSACTIONS RECORDED IN MJ/4 TOTAL TO RS.38,57,105 /- AS ALSO MENTIONED BY THE AO. IF GROSS PROFIT RATE OF 18.55% IS APPLIED ON TOTAL SAL ES OF RS.38,57,105/-, THEN THE GROSS PROFIT SHOULD WORK OUT AT RS.7,15,493/- WHEREAS THE APPELLANT HAS ALREADY DECLARED UNDISCLOSED INCOME OF RS.13,50,000/- IN THE RETURN. IN VIEW OF THE ABOVE, NO ADDITION ON ACCOUNT OF TRANSACTIONS RECORDED IN MJ/4 IS CALLED FOR. THE ADDITION OF RS.25,07,105/- IS DELETED. GROUND NO. 3 IS ALLOWED. AGGRIEVED, REVENUE CAME IN SECOND APPEAL BEFORE TRI BUNAL. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAS ANALYSED PA GES 1 TO 54 BEING IMPOUNDED PAPERS MARKED AS MJ-4 FOUND DURING THE COURSE OF SURVEY AN D THE ASSESSEES PROPRIETARY CONCERN M/S. MUKUT JEWELLERS. ACCORDING TO LD. COU NSEL, THE TRANSACTIONS RECORDED IN THESE PAPERS INVOLVING MONETARY VALUE ARE THE SALES AND PURCHASES, WHICH WERE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT, CONSISTS OF SALE VALUE AMOUNTING TO RS.34,12,449/-. LD. COUNSEL FOR THE ASSESSEE REFER RED TO PAGE 23 WHEREIN EACH PAGE IS DESCRIBED AND THE VALUE OF TRANSACTION AND THE TOTA L AMOUNT OF SALE IS CONSIDERED AT RS.34,12,449/-. EVEN THE ASSESSEE HAS BROUGHT OUT E STIMATED INCOME OUT OF SALES AT RS.2,31,700/-. BUT IN A NUTSHELL, THE ASSESSEE HAS OFFERED AN INCOME OF RS.13,50,000/- BEING UNDISCLOSED INCOME OUT OF THE ABOVE UNDISCLOS ED TRANSACTION OF SALES AND 6 ITA NO.1549/KOL/2011 & CO NO.68/K/2011 BINAY PODDAR AY 2008-09 PURCHASES. WHEN A QUERY WAS PUT TO LD. SR. DR FROM THE BENCH, HE COULD NOT ANSWER WHETHER THERE IS ONLY SALES OR PURCHASE ELEMENT IS ALSO THERE, IF WE TAKE THE TRANSACTIONS OF SALE AS WELL AS PURCHASE THEN NET PROFIT IS TO B E ESTIMATED AND ALSO SOME INVESTMENTS. IF WE APPLY NET PROFIT RATE OF 19.55% AS DECLARED B Y ASSESSEE TO THE SALE OF UNDISCLOSED TRANSACTION AT RS.38,57,105/- THE PROFIT WILL COME TO RS.7,15,493/- AND FURTHER WE ESTIMATE SOME INVESTMENTS OF RS.2 TO 3 LACS THE TOT AL WILL COME AT RS.10,15,943/-. IN ANY CASE, THE ASSESSEE HAS MADE DISCLOSURE OF RS.13 .50 LACS ON THIS ACCOUNT, WHICH IS HIGHER THAN THE INCOME IS TO BE ESTIMATED OUT OF TH E UNDISCLOSED TRANSACTIONS OF SALES AND PURCHASES. ACCORDINGLY, WE HAVE NO HESITATION IN CONFIRMING THE ACTION OF CIT(A) IN DELETING THE ADDITION. HENCE, THIS GROUND OF RE VENUES APPEAL IS DISMISSED. 8. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE DISALLOWANCE OF EXPENSES MADE BY AO BEING INTER EST PAYMENT WITHOUT DEDUCTION OF TDS BY INVOKING THE PROVISIONS OF SECTION 194 OF THE ACT. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.3: 3. UNDER THE FACT AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.1,62,612/- U/S. 40(A )(IA) OF THE INCOME-TAX ACT, 1961 BEING INTEREST OF RS.1,62,612/- PAID TO MRS. NARAYANI DEV I AGARWAL WITHOUT DEDUCTING TAX U/S 194A ON THE GROUND THAT THE PAYEE HAD SUBMITTED FOR M NO. 15G WHEN NO SUCH EVIDENCE OF SUBMISSION OF FORM NO. 15G WAS PRODUCED BY THE A SSESSEE TO THE ASSESSING OFFICER DURING THE COURSE OF SCRUTINY PROCEEDING. THE MATT ER MAY, THEREFORE, BE RESTORED TO THE AO FOR VERIFICATION. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE ARGUMENT OF LD. COUNSEL FOR THE ASSESSEE WHO HAS TAKEN US TO REPLY FILED BY HIM BEFORE THE AO WHEREIN HE HAS REPLIED THAT THE TDS WAS NOT DEDUCTED AS REQUISITE FORM NO. 15G WAS SUBMITTED BY THE SAID PARTY BEFORE HIM. THIS REPLY IS IN RESPONSE TO NOTICE DATED 03.12.2010. T HE LETTER IS ENCLOSED AT PAGES 41 AND 42 OF ASSESSEES PAPER BOOK. LD. COUNSEL FOR THE A SSESSEE NOW BEFORE US STATED THAT FORM NO. 15G FROM ONE MRS. NARAYANI DEVI AGARWAL IS RECEIVED THAT NO TDS IS TO BE DEDUCTED U/S. 194A OF THE ACT BEING INTEREST PAYMEN T OF RS.1,62,612/-. AS THE ASSESSEE HAS RECEIVED FORM NO. 15G HE WAS PREVENTED FROM DEDUCTING THE TDS. THE CIT(A) ALSO DELETED THE DISALLOWANCE ONLY ON THE PR EMISE AND THE RELEVANT FINDING OF CIT(A) HAS GIVEN IN PARA 14, WHICH READS AS UNDER: .. I FIND MERIT IN THE SUBMISSIONS. AS THE PERS ON TO WHOM INTEREST WAS PAID HAD SUBMITTED A DECLARATION IN FORM NO. 15G IN ACCORDA NCE WITH THE PROVISIONS OF SECTION 197A, THE APPELLANT WAS NOT LIABLE TO DEDUCT TAX U/ S. 194A; AND CONSEQUENTLY, THE 7 ITA NO.1549/KOL/2011 & CO NO.68/K/2011 BINAY PODDAR AY 2008-09 PROVISIONS OF SECTION 40(A)(IA) HAVE NO APPLICATION . THE ADDITION OF RS.1,62,612/- IS DELETED. GROUND NO. 7 IS ALLOWED. 10. WE FIND THAT THE ASSESSEE HAS RECEIVED DECLARA TION IN FORM NO. 15G FROM THE PAYEE OF THE INTEREST I.E. SMT. NARAYANI DEVI AGARW AL AND ONCE THE ASSESSEE RECEIVED FORM NO. 15G HE IS NOT LIABLE TO DEDUCT TDS AND HEN CE, NO DISALLOWANCE CAN BE MADE U/S. 40(A)(IA) OF THE ACT. THIS GROUND OF APPEAL O F REVENUE IS DISMISSED. 11. SINCE THE CROSS OBJECTION OF THE ASSESSEE IS SU PPORTIVE OF THE ORDER OF CIT(A) THE SAME IS DISMISSED AS INFRUCTUOUS. 12. IN THE RESULT, BOTH THE APPEAL OF REVENUE AS WE LL AS CROSS OBJECTION OF ASSESSEE ARE DISMISSED. 13. ORDER IS PRONOUNCED IN THE OPEN COURT ON 15.10. 2015 SD/- SD/- (M. BALAGANESH) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 15TH OCTOBER, 2015 JD. SR. P.S COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT DCIT, CIRCLE-33, KOLKATA. 2 RESPONDENT SHRI BINOY PODDAR, 4, SHAKESPEARE SARA NI, KOLKATA-700 071. 3 . THE CIT(A), KOLKATA 4. 5. CIT KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .