ITO, Ward - 50(4), Kolkata, Kolkata V. Shri Sandeep Kr. Banka, Kolkata

ITA 1052/KOL/2010

• Counselvise Citation: 105223514 RSA 2010
• Duration Of Justice: 4 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-07-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 21-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK KR GUPTA
• Assessee Lawyers: MANOJ KATARUKA
• Keywords: Unexplained expenditure
• Section: 145

Judgement Text

I.T.A. NO . 1052 /KOL./201 0 ASSESSMENT YEAR: 200 6 - 20 0 7 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI SHAMIM YAHYA (ACCOUNTANT MEMBER) , AND SHRI GEORGE MATHAN (JUDICIAL MEMBER) I.T.A. NO. 1052 /KOL . / 20 1 0 ASSESSMENT YEAR : 200 6 - 20 0 7 INCOME TAX OFFICER,................... ..... ............. .................. .. .APP ELL ANT WARD - 50(4), KOLKATA, 9 TH FLOOR, BAMBOOVILLA, 169, A.J.C. BOSE ROAD, KOLKATA - 700 014 - VS. - SRI SANDEEP KR. BANKA,........ ............... , ..... .... ........ . RESPONDENT 10, SWAMI VIVEKANANDA ROAD, KOLK ATA - 700 074 [PAN : AGQPN 7489 Q] APPEARANCES BY: SHRI VIVEK KR. GUPTA, JCIT , FOR THE DEPARTMENT SHRI MANOJ KATARUKA , ADVOCATE , FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : NOVEM BER 1 4 , 2 01 4 DATE OF PRONOUNCING THE ORDER : NOVEM BER 14 , 201 4 O R D E R PER GEORGE MATHAN : THIS IS AN APPEAL FILED BY THE REVENU E AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) - X XXII , KOLKATA IN APPEAL NO. 3 09/ X XXII /08 - 09 /WD - 50(4)/KOL DATED 18 . 0 2 .20 1 0 FOR THE ASSESSMENT YEAR 200 6 - 0 7. 2 . SHR I VIVEK KR. GUPTA, JCIT, SR. D.R. REPRESENTED ON BEHALF OF THE REVENUE AND SHRI MANOJ KATARUKA , ADVOCATE, REPRESENTED ON BEHALF OF THE ASSESSE E. I.T.A. NO . 1052 /KOL./201 0 ASSESSMENT YEAR: 200 6 - 20 0 7 PAGE 2 OF 5 3. IN THE REVENUE S APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - (1) LD. CIT(A) ERRED IN LAW AND FAC TS BY DELETING ADDITIONS MADE FOR UNDER VALUATION OF CLOSING STOCK OF RS.9,50,079/ - . (2) LD. CIT(A) ERRED ON LAW AND FACTS BY DELETING ADDITION OF RS.16,77,910/ - AS UNEXPLAINED EXPENDITURE. (3) LD. CIT(A) ERRED IN LAW BY NOT FOLLOWING THE RULE 46A BY ADM ITTING THE EVIDENCE SUBMITTED BY ASSESSEE WITHOUT FULFILMENT OF EVEN ONE OF THE CONDITIONS GIVEN THE SAID RULE. 4 . AT THE TIME OF HEARING, IT WAS SUBMITTED BY THE LD. D .R. THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAD NOTICED THA T THERE WAS UNDER - VALUATION OF CLOSING STOCK. IT WAS THE SUBMISSION THAT THE ASSESSEE IS TRADING IN SALT. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD NOT INCLUDED THE TRANSPORTATION COST IN RESPECT OF THE SALT TRANSPORTED. CONSEQUENTLY THE ASSESSING OFFICE R HAD REJECTED THE METHOD OF VALUATION OF STOCK. CONSEQUENTLY HE INCREASED THE PROFIT BY THE QUANTUM OF THE SUPPRESSION OF THE VALUATION OF CLOSING STOCK, WHICH WAS COMPUTED BY MULTIPLYING TOTAL TRANSPORTATION COST WITH THE CLOSING STOCK AND DIVIDING THE S AME BY THE TOTAL PURCHASES. IT WAS THE SUBMISSION THAT THE LD. CIT(APPEALS) HAD WRONGLY DELETED THE ADDITION BY RELYING UPON THE SUBMISSIONS MADE BY THE LD. A.R. OF THE ASSESSEE. HE VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING O FFICER. 5. IN REPLY, LD. A.R. VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(APPEALS). IT WAS THE SUBMISSION THAT THE ASSESSEE HAD TAKEN INTO CONSIDERATION THE COST OF TRANSPORTATION WHILE VALUING HI S CLOSING STOCK AND AS THE NET REALISABLE VALUE WAS LOWER THAN THE COST, THE CLOSI NG STOCK WAS VALUED AT NET REALISABLE VALUE. IT WAS THE SUBMISSION THAT BEFORE THE LD. CIT(APPEALS) THE ASSESSEE HAD ALSO SUBMITTED HIS CLAIM AND CONSEQUENTLY THE LD. CIT(APPEALS) HAD REDUCED THE ADDITION AND CONFIRMED ONLY RS.1,61,912/ - IN RESPECT OF THE I ODI Z ED S AL T AND HAD I.T.A. NO . 1052 /KOL./201 0 ASSESSMENT YEAR: 200 6 - 20 0 7 PAGE 3 OF 5 DELETED THE ADDITION IN RESPECT OF ALL OTHER SALTS. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD. CIT(APPEALS) WAS LIABLE TO BE UPHELD. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS TH AT THE ASSESSING OFFICER HAS INVOKED HIS POWER UNDER SECTION 145(3) OF THE ACT FOR REJECTING THE METHOD OF VALUATION OF STOCK. ADMITTEDLY THERE CANNOT BE A METHOD FOR REJECTION OF ONLY THE VALUATION OF STOCK. ONCE THE PROVISIONS OF SECTION 145 ARE INVOKED THEN THE BOOKS OF ACCOUNT ITSELF GETS REJECTED. THE BOOKS CANNOT BE REJECTED IN PART IN ANY CASE. THE ASSESSEE HAS CATEGORICALLY PROVED THAT THE ASSESSEE HAS INCLUDED THE COST OF TRANSPORTATION WHEN COMPUTING THE VALUE OF CLOSING STOCK. WHEN HE R EALIZED TH AT THE NET REALISABLE VALUE OF THE STOCK I S LOWER THAN THE COST AS PER THE ACCEPTED PRINCIPLES OF VALUATION OF CLOSING STOCK, HE HAS VALUED THE CLOSING STOCK AT THE NET REALISABLE VALUE. FURTHER A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE ASSE SSING OFFICER HAS ONLY DONE THE ADJUSTMENT TO THE CLOSING STOCK. HE MENTIONED THAT WHEN THE METHOD OF VALUATION OF STOCK HAS BEEN REJECTED THEN THE OPENING STOCK SHOULD ALSO BE ADJUSTED BY APPLYING THE SAME PRINCIPLE. THIS ADMITTEDLY HAS NOT BEEN DONE BY T HE ASSESSING OFFICER. FURTHER A PERUSAL OF THE ORDER OF THE LD. CIT(APPEALS) CLEARLY SHOWS THAT HE HAS CALLED FOR DETAILED REMAND REPORT FROM THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS ALSO RESPONDED IN THE REMAND REPORT AND SUCH REMAND REPORT WAS TO PUT TO THE ASSESSEE WHO HAS POINTED OUT SPECIFIC DEFECTS IN THE COMPARISON ADOPTED BY THE ASSESSING OFFICER. IT IS ONLY AFTER CONSIDERING ALL THESE ASPECTS THAT THE LD. CIT(APPEALS) HAS REDUCED THE DISALLOWANCE. FURTHER THE REVENUE HAS NOT BEEN ABLE TO DISLODGE THE DETAILED FINDING AS HAS BEEN ARRIVED BY THE LD. CIT(APPEALS) IN PARAS 15 & 16 OF HIS ORDER WHEN HE REDUCED THE ADDITION MADE BY THE ASSESSING OFFICER. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE LD. CIT(APPEALS) HAS NOT BEEN SHOWN TO BE ERRONEOUS AND CONSEQUENTLY THE SAME STANDS UPHELD. I.T.A. NO . 1052 /KOL./201 0 ASSESSMENT YEAR: 200 6 - 20 0 7 PAGE 4 OF 5 7. IN THE RESULT, GROUND NO. 1 OF THE REVENUE S APPEAL STANDS DISMISSED. 8. IN RESPECT OF GROUND NO. 2, IT WAS SUBMITTED BY THE LD. D.R. THAT IN THE COURSE OF ASSESSMENT IT WAS NOTICED B Y THE ASSESSING OFFICER THAT THE ASSESSEE HAS BEEN PURCHASING SALT FROM BHAG W ATI SALT COMPANY. THE ASSESSEE HAD SHOWN PURCHASE S OF NEARLY RS.27.68 LAKHS. HOWEVER, WHEN THE ACCOUNTS WERE TALLIED WITH THE LEDGER OF M/S. BHAG W ATI SALT COMPANY, IT WAS NOTICED THAT THE ASSESSEE HAS NOT REFLECTED PAYMENT OF RS.16,77,910/ - . CONSEQUENTLY THE ASSESSING OFFICER HAD TREATED THE SAME AS UNEXPLAINED PURCHASES OF STOCK WERE MADE OUT OF CASH FROM UNDISCLOSED INCOME. IT WAS THE SUBMISSION THAT THE LD. CIT(APPEALS) HAD WRON GLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. LD. D.R. VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 9. IN REPLY, LD. A.R. SUBMITTED THAT THE PAYMENTS HAD BEEN MADE THROUGH SBI, BHAG W ATIPUR BRANCH. IT WAS THE SUBMISSION THAT EVEN THE CERTIFICATE OF THE SAID BANK HAD BEEN PRODUCED. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD. CIT(APPEALS) WAS LIABLE TO BE UPHELD. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT IT WAS ON ACCOUNT OF THE PAYME NT BY CASH THAT THE ASSESSING OFFICER HAS TREATED THE SAID AMOUNT OF RS.16,77,910/ - AS UNEXPLAINED EXPENDITURE. A PERUSAL OF THE ORDER OF THE LD. CIT(APPEALS) MORE SPECIFICALLY AT PARAS 23 & 24 OF HIS ORDER SHOWS THAT THE CERTIFICATE FROM THE SBI, BHAG W ATI PUR BRANCH WAS ALSO SUBMITTED BEFORE THE ASSESSING OFFICER AND A REMAND REPORT WAS ALSO CALLED FOR FROM HIM AND THE PAYMENTS HAD BEEN MADE BY DEMAND DRAFT S DRAWN FROM THE FUNDS OF THE BANK ACCOUNT OF THE SAID BRANCH. IT IS ONLY AFTER VERIFYING THAT THE LD. CIT(APPEALS) HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. THIS FINDING OF THE LD. CIT(APPEALS) HAS NOT BEEN DISLODGED BY THE REVENUE. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ORDER OF THE LD. I.T.A. NO . 1052 /KOL./201 0 ASSESSMENT YEAR: 200 6 - 20 0 7 PAGE 5 OF 5 CIT(APPEALS) DOES NOT CALL FOR ANY INTERF ERENCE ON THIS ISSUE. CONSEQUENTLY GROUND NO. 2 OF THE REVENUE S APPEAL STANDS DISMISSED. 11 . IN THE RESULT, THE APPEAL OF THE REVENUE S TANDS DISMISS ED . ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH NOVEM BER, 2014. SD/ - SD/ - SHAMIM YAHYA G EORGE MATHAN ( ACCOUNTANT MEMBER) ( JUDICIAL MEMBER) KOLKATA, THE 14 TH D AY OF NOVEM B ER , 201 4 COPIES TO : (1) INCOME TAX OFFICER, WARD - 50(4), KOLKATA, 9 TH FLOOR, BAMBOOVILLA, 169, A.J.C. BOSE ROAD, KOLKATA - 700 014 (2) SRI SANDEEP KR. BANKA, 10, SWAMI VIVEKANANDA ROAD, KOLKATA - 700 074 (3) COMMISSIONER OF INCOME - TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.