ITO, Ward - 36(2), Kolkata, Kolkata V. M/s. Shree Vishnu Rolling Mills, Kolkata

ITA 1063/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54748 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 03-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K PARAMANIK
• Assessee Lawyers: S L KOCHAR
• Keywords: Capital asset; Business income; Source of fund
• Section: 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE . . , ! '# '# '# '# /AND ' # , ! ) [BEFORE SHRI S. V. MEHROTRA, AM & SRI MAHAVIR SINGH , JM] #$ #$ #$ #$ / I.T.A NO. 1063/KOL/2011 %& ''( %& ''( %& ''( %& ''(/ // / ASSESSMENT YEAR: 2008-09 INCOME-TAX OFFICER, WD-36(2), KOLKATA VS. M/S. SHR EE VISHNU ROLLING MILLS (PAN: ABAFS 9710 L) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) DATE OF HEARING: 26.12.2011 DATE OF PRONOUNCEMENT: 29.12.2011 FOR THE APPELLANT: SHRI A. K. PARAMANIK FOR THE RESPONDENT: SHRI S. L. KOCHAR . / ORDER PER MAHAVIR SINGH, JM ( ' # ' # ' # ' #, , , , ! ! ! ! ) THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-XX, KOLKATA IN APPEAL NO.153/CIT(A)-XX//WD.36(2)/10-11/KOL DATED 31.05.20 11. ASSESSMENT WAS FRAMED BY ITO, WD-36(2), KOLKATA U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2008-09 VIDE HIS ORDER DA TED 30.12.2010. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) IGNORING THE FACT THAT OLD MACHINERY SOLD, AS A CAPITAL ASSET, SO AS TO ATTRACT GAINS, HENCE EXCESS CASH FOUND DURING THE COURSE OF SURVEY IS UNDISCLOSED CASH OF THE ASS ESSEE AND NOT EXPLAINED. FOR THIS REVENUE HAS RAISED FOLLOWING GROUND NO.1: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT OLD MACHINERY WAS NOT THE TRADING ITEM OF THE ASSESSEE, BUT CAPITAL ASSET THE DISPOSAL OF WHICH ATTRACTS CAPITAL GAIN, SO THE EXC ESS CASH FOUND DURING THE COURSE OF SURVEY OPERATION WERE UNDISCLOSED CASH OF THE ASSES SEE. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEF FACTS ARE THAT A SURVEY U/S. 133A OF THE ACT WAS CONDUCTED ON THE BUSINESS PREMISES OF THE ASSESSEE ON 21.09.2007. DURING THE COURSE OF SURVE Y, ON EXAMINATION OF PAPERS AND DOCUMENTS THE SURVEY PARTY NOTED THAT THE CASH BALANCE FOUND AT THE OFFICE AS WELL AS FACTORY, THERE WAS EXCESS CASH COMPARED TO BOOKS OF ACCOUNTS. SHRI RO SHAN BANKA, PARTNER OF THE ASSESSEES, IN HIS DEPOSITION, RECORDED U/S. 131 OF THE ACT VIDE STATE MENT DATED 24.09.2007 ADMITTED THE 2 ITA 1063/K/2011 M/S. SHREE VISHNU ROLLING MILLS. A.Y.08-09 DISCREPANCY IN CASH AND COULD NOT EXPLAIN HOW IT OC CURRED. ASSESSING OFFICER NOTED DETAILS OF CASH FOUND AS UNDER: CASH FOUND IN THE OFFICE PREMISES AND INVENTORISE D RS.19,02,000/- CASH FOUND IN THE FACTORY PREMISES AND INVENTORISE D RS. 3,00,300/- TOTAL : RS.22,02,300/- THE ASSESSING OFFICER ALSO NOTED THE CASH BALANCE AS PER BOOKS OF ACCOUNT AND COMPUTED THE AVAILABLE CASH AS UNDER: CASH BALANCE AS PER BOOKS OF ACCOUNTS RS. 4,11 ,030/- LESS: CASH VOUCHER OF RS.1,757/- NOT ENTERED RS . 1,757/- RS. 4,09,273/- ADD: CASH BALANCE AT FACTORY PREMISES I.E. MILL RS. 44,223/- ACTUAL CASH BALANCE ACCOUNTED FOR IN THE BOOKS SHOU LD BE RS. 4,53,496/- SHRI ROSHAN BANKA VIDE HIS DEPOSITION ON 24.09.2007 U/S. 131 OF THE ACT, VIDE QUESTION NO. 13, CATEGORICALLY ADMITTED THAT HE COULD NOT EXPLAIN E XCESS CASH FOUND IN THE OFFICE AND FACTORY PREMISES AND OFFERED IT FOR TAXATION. SUBSEQUENTLY , VIDE AFFIDAVIT DATED 15.10.2007 WITHIN 15/20 DAYS, HE AFTER CONSULTING OTHER PARTNER SHRI SANDIP BANKA RETRACTED THE STATEMENT, EXPLAINING THE CASH BY STATING THAT THE SALE PROCEEDS OF MOTOR AN D MACHINE AMOUNTING TO RS.17.48 LACS, WHICH WAS IN THE KNOWLEDGE OF SHRI SANDIP BANKA WAS NOT K NOWN TO HIM. THE RELEVANT TEXT OF AFFIDAVIT DATED 15.10.2007 I.E. PARA 6 AT PAGE 3 RE ADS AS UNDER: 6. THAT THE FIRM HAD PURCHASED A NEW MOTOR (MACHIN E) ON 30TH MAY, 2007 FOR RS.17,00,000/- (RUPEES SEVENTEEN LACS) ONLY AND AS A RESULT OLD EXISTING MOTOR (MACHINE) WAS NOT PUT TO USE AND HAD TO BE DISCARDE D AND THERE AFTER IT WAS SOLD ON 19.09.2007 ALONG WITH SOME OTHER OLD & UNUSABLE MAC HINES AS I CAME TO LEARN AFTER SURVEY. THE TOTAL SALE PROCEEDS OF MOTOR & MACHINE S CAME TO RS.17,48,804/- WHICH WAS IN THE KNOWLEDGE OF OUR PARTNER SRI SANDEEP KR. BAN KA WHO WAS ENTRUSTED WITH THE DISPOSAL OF THE SAME AND HE KEPT THE AMOUNT IN SAFE IN THE OFFICE AND HENCE NOT DULY ENTERED IN THE CASH BOOK AS STATED ABOVE. 4. THE AFFIDAVIT AS WELL AS EXPLANATIONS IN RESPECT OF SALE OF MACHINERY WAS EXPLAINED BEFORE ASSESSING OFFICER. THE ASSESSEE VIDE LETTER DATED 06.12.2010, SRI ROSHAN BANKA, PARTNER OF THE FIRM SUBMITTED A NOTARIZED DECLARATION START ING THAT RS.17,48,804/- I.E. EXCESS CASH FOUND DURING THE SURVEY IS THE RESULT OF SALE OF MOTOR AN D SOME OLD MACHINERY BY ONE OF THE PARTNER SRI SANDEEP BANKA AND THE RECEIPTS WERE KEPT IN SAFE AT THE OFFICE, SINCE THE CASHIER WAS NOT AVAILABLE, IT COULD NOT BE ENTERED IN THE CASH BOOK . THE ASSESSING OFFICER HAS NOT BELIEVED THIS EXPLANATION OF THE ASSESSEE. EVEN THE ASSESSING OF FICER HAS NOT REJECTED THE EXPLANATION BY ANY COGENT EVIDENCE BUT MADE ADDITION OF UNEXPLAINED CA SH AT RS.17,48,804/- BEING EXCESS CASH FOUND DURING THE COURSE OF SURVEY. AGGRIEVED, ASSE SSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE ADDITION AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE VIDE PARA 7 OF HIS APPELLATE ORDER AS UNDER: 3 ITA 1063/K/2011 M/S. SHREE VISHNU ROLLING MILLS. A.Y.08-09 7. I HAVE PERUSED THE ASSESSMENT ORDER AND CONSIDE RED THE MATERIAL ON RECORD. I FIND FORCE AND SUBSTANCE IN THE SUBMISSIONS OF THE APPEL LANT. IT WAS EXPLAINED AT THE ASSESSMENT STAGE THAT THE CASH FOUND IN THE OFFICE PREMISE WAS ACTUALLY THE SALE PROCEEDS OF OLD MOTOR AND MACHINERY. COPY OF SALE B ILLS WERE ALSO PRODUCED IN SUPPORT OF THE CONTENTION. HOWEVER, THE AO HAS BROU GHT NO MATERIAL ON RECORD WHICH COULD CAST DOUBT OR SUSPICION ABOUT THE GENUINENESS OF THE TRANSACTIONS. IN COURSE OF THE APPELLATE PROCEEDINGS ALSO, THE APPELLANT FILED COPY OF BILLS DATED 19.09.2007 SHOWING SALE OF OLD MOTOR FOR RS.7,95,000/- TO VIKR AM JAISWAL, 135, GIRISH GHOSH ROAD, GHUSURI, HOWRAH; AND, THAT OF MISCELLANEOUS M ACHINERY FOR RS.9,53,804/- TO AMIT AGARWAL C/O A. K. STEEL, 90, MANICKTOLLA MAIN ROAD, KOLKATA. IF THE AO STILL HAD DOUBTS ABOUT THE GENUINENESS OF THE TRANSACTIONS, T HE ONUS WAS ON HIM TO BRING POSITIVE MATERIAL ON RECORD TO SHOW THAT THE BILLS WERE FAKE OR NOT GENUINE. BUT, THE AO HAS SUMMARILY REJECTED THE EXPLANATION SUBMITTED BEFORE HIM IN COURSE OF THE ASSESSMENT PROCEEDINGS. THE DECISION OF THE AO IS B ASED MORE ON SUSPICION AND PRESUMPTION THAN ON FACTUAL GROUND. AN ASSESSMENT H AS TO BE COMPLETED ON THE BASIS OF THE MATERIAL AND EVIDENCE ON RECORD; AND, SUSPIC ION OR PRESUMPTION SHOULD NOT LEAD THE ASSESSING OFFICER TO A STATE OF AFFAIRS WHERE S ALIENT EVIDENCES ARE OVERLOOKED. THE EVIDENCES PRODUCED BY THE APPELLANT AT THE ASSESSME NT STAGE REMAIN UNCONTROVERTED BY THE A.O. I ALSO FIND SUBSTANCE IN THE ARGUMENT T HAT ONCE THE SALE PROCEEDS WERE ALREADY CREDITED TO THE P&L A/C, THE ADDITION ON AC COUNT OF EXCESS CASH WOULD TANTAMOUNT TO DOUBLE TAXATION. IN VIEW OF THE ABOVE , I FIND NO BASIS OR JUSTIFICATION FOR THE A.O. TO MAKE THE ADDITION BY APPLYING THE PROVI SIONS OF SECTION 69A. THE ADDITION OF RS.17,48,804/- IS DELETED. GROUND NO. 6&7 ARE A LLOWED. 5. WE FIND THAT THE ASSESSEE IMMEDIATELY AFTER SURV EY I.E. WITHIN 15 DAYS RETRACTED THE ADMISSION MADE BY ITS PARTNER SHRI ROSHAN BANKA BY FILING AN AFFIDAVIT WHEREIN IT WAS STATED THAT THIS EXCESS CASH IS A RESULT OF SALE OF ELECTR IC MOTOR AND OTHER ITEMS OF PLANT AND MACHINERY IN THE FACTORY WHICH BECAME OLD AND OBSOLETE AND WA S GIVING INSUFFICIENT SERVICE AND WORK. IT WAS POINTED OUT BEFORE THE ASSESSING OFFICER AS WEL L AS CIT(A) BY THE ASSESSEE THAT OLD MOTORS AND OTHER ITEMS WERE DISPOSED OF BY SHRI SANDEEP BA NKA ONE OF THE PARTNERS ON 19.09.2007 AND SALE PROCEEDS IN TERMS OF RS.7.95 LACS AND RS.9,53, 804/- WERE KEPT BY HIM IN THE OFFICE IN SAFE FOR THE PURPOSE OF INSTRUCTING THE CASHIER TO MAKE ENTRY IN THE ACCOUNTS. SINCE ON THOSE 2/3 DAYS CASHIER WAS NOT AVAILABLE, THE RELEVANT ENTRY COULD NOT BE POSTED IN ACCOUNTS AS ON THAT DATE. ACCORDING TO ASSESSEE, THE PARTNER HAVING GONE OUT OF KOLKATA ON THE DATE OF SURVEY, THE CASH REMAINED IN THE OFFICE IN THE SAFE AND AS SUCH WAS NOTED BY SURVEY PARTY AND IT WAS PRESUMED THAT THIS UNEXPLAINED CASH AND EVEN ADMITTED BY ONE OF THE PARTNERS OF THE FIRM WHO DEPOSED DURING SURVEY. EVEN NOW BEFORE US ASSESSEE PRODUCE D THE P&L ACCOUNT AND TRADING ACCOUNT, WHEREIN HE HAS RECORDED THE SALES AND SALES STATEME NT SUBMITTED TO THE SALES TAX DEPARTMENT WAS ALSO FURNISHED BEFORE US. THE ASSESSEE HAS NOT ED THESE RECEIPTS OF SALE OF PLANT AND MACHINERY UNDER THE HEAD OTHER MISCELLANEOUS SALES AND CREDITED THIS AMOUNT OF RS.16,18,542/- AND CREDITED IN THE ACCOUNTS AND OFF ERED FOR TAXATION EXCLUDING SALES TAX ELEMENT. WE FIND THAT NOW REVENUE IS ALTOGETHER RAISING A NE W ISSUE THAT THIS RECEIPT IS TO BE ASSESSED AS CAPITAL GAINS, WHEREAS ASSESSING OFFICER HAS NOT RA ISED THIS ISSUE AND MADE ADDITION OF EXCESS CASH AS UNDISCLOSED INCOME OF THE ASSESSEE. WE ARE OF THE VIEW THAT THE ASSESSEE HAS SOLD OLD 4 ITA 1063/K/2011 M/S. SHREE VISHNU ROLLING MILLS. A.Y.08-09 MOTORS AND RECORDED THE SALE PROCEEDS IN ITS BOOKS OF ACCOUNT, WHICH WERE NOT RECORDED AS ON THE DATE OF SURVEY, AND CASH IS GENERATED OUT OF TH E SAME. REVENUE HAS NOT DISPUTED THAT THERE IS NO SALE OF THESE ITEMS BUT IN VIEW OF THE ABOVE GRO UND RATHER THEY HAVE REQUESTED FOR TAKING THE SAME UNDER THE HEAD CAPITAL GAINS. SINCE THE REVEN UE I.E. ASSESSING OFFICER HAS NOT TAXED THE SAME UNDER THE HEAD CAPITAL GAINS, NOW WE HAVE NO P OWER TO EXCEED OUR JURISDICTION. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE VI EW THAT THE CIT(A)S ORDER NEEDS NO INTERFERENCE. HENCE, WE UPHOLD THE SAME. THIS ISS UE OF REVENUES APPEAL IS DISMISSED. 6. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) AGAINST THE DELETION OF ADDITION MADE BY ASSESSING OFFICER ON U NEXPLAINED LOANS. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.2: 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN OVERLOOKING THAT LOANS WERE ORCHESTRATED BY THE ASSESSEE FROM T HE LOAN CREDITORS WHO HAVE VERY LITTLE MEANS TO ADVANCE THESE LOANS AND THE PROBABILITY OF ADVANCING THESE LOANS ARE NON- EXISTENT. 7. WE HAVE HEARD RIVAL PARTIES AND GONE THROUGH FAC TS AND CIRCUMSTANCES OF THE CASE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESS ING OFFICER NOTED THAT THE ASSESSEE HAS TAKEN UNSECURED LOANS FROM FAMILY MEMBERS AND BONAF IDE INVESTMENT & TRADING CO. LTD. ASSESSING OFFICER ALSO NOTED THAT THE BANK PASS BOO KS OF FAMILY MEMBERS AND THAT OF BONAFIDE INVESTMENT & TRADING CO. LTD WERE FOUND FROM THE BU SINESS PREMISES OF THE ASSESSEE DURING THE COURSE OF SURVEY. ASSESSING OFFICER AFTER GOING TH ROUGH SUBMISSIONS OF THE ASSESSEE NOTED THAT THERE WERE DEPOSITS IN THE BANK ACCOUNT OF THE LOAN CREDITORS BEFORE CHEQUES WERE ISSUED TO THE ASSESSEE. HENCE, HE CONCLUDED THAT ASSESSEE HAD OP ENED THESE BANK ACCOUNTS AND INTRODUCED ITS OWN UNACCOUNTED MONEY, WHICH EVENTUALLY FLEW BACK T O THE ASSESSEE IN THE FORM OF LOANS. ACCORDINGLY, HE ADDED UNEXPLAINED LOANS OF RS.25,39 ,342/-. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE ADDITION AFTE R CONSIDERING FOLLOWING FACTS: IN THE COURSE OF HEARING BEFORE THE A.O. THE IDENT ITY OF ALL THESE PERSONS WERE DULY ESTABLISHED BY THE APPELLANT AS THEY ARE INCOME TAX ASSESSEES AND IT WAS ALSO POINTED OUT THAT THEY HAD ADVANCED FUNDS TO THE APPELLANT BY CH EQUES DRAWN ON THEIR PERSONAL BANK ACCOUNTS WHICH ARE DULY EVIDENCED BY CONFIRMATIONS AND THAT ALL THE PERSONS WERE HAVING THEIR INDIVIDUAL STATEMENTS OF ACCOUNTS SUBMITTED W ITH RETURNS WHERE LOANS GIVEN TO THE APPELLANT WERE PROPERLY APPEARING. THE A.O., HOWEVE R, PROCEEDED ON THE BASIS THAT EVEN THOUGH CHEQUES WERE ISSUED TO THE APPELLANT BY THES E PERSONS TOWARDS LOAN BUT THE CREDITS APPEARING IN THE BANK ACCOUNT OF THE LOAN CREDITORS WERE NOT PROPERLY EXPLAINED . THE A.O. PROCEEDED THEREFORE TO ASSUME THAT IT WAS THE APPEL LANT WHO WAS OPERATING THE BANK ACCOUNT OF THE PERSONS AND THAT IT WAS THE APPELLAN T WHO OPENED BATIK ACCOUNTS IN THE NAME OF DIFFERENT RELATIVES OF THE PARTNERS AND THA T INCOME EARNED BY IT FROM UNDISCLOSED BUSINESS WAS ENTERED IN THE FORM OF LOANS. BEFORE PROCEEDING TO EXPLAIN EACH & EVERY CASH CREDIT, IT IS TO STATE THAT THERE ARE PERVERSE OBSE RVATIONS MADE BY THE A.O. WHICH HAVE NO LEGS TO STAND UPON. ASSUMPTIONS/PRESUMPTIONS MADE B Y THE A.O. HAVE NO BASIS AT ALL. THE FACTS THAT ARE APPARENT FROM THE RECORDS OF THE LOA N CREDITORS MAY KINDLY BE TAKEN NOTE OF AS UNDER: - 5 ITA 1063/K/2011 M/S. SHREE VISHNU ROLLING MILLS. A.Y.08-09 SATISH KUMAR BANKA, HUF : THIS HUF IS ASSESSED TO T AX UNDER PAN: AAPHS 2878 M. BALANCE SHEET WOULD SHOW THAT THERE IS AN AMOUNT OF RS.75,258/- WHICH IS RECEIVABLE BY THIS HUF FROM THE APPELLANT AS ON 31.03.2008. A RE FERENCE TO THE BANK STATEMENT OF THE LOAN CREDITOR WOULD SHOW THAT AN AMOUNT OF RS.75,00 0/- WAS LENT BY THIS HUF TO THE APPELLANT AND AS WILL BE SEEN FROM THE COPY OF THE BANK STATEMENT ENCLOSED THIS WAS OUT OF THE BANK BALANCE AVAILABLE ON THE DATE OF DEPOSIT W ITH REFERENCE TO A CHEQUE OF AN AMOUNT OF RS.75,4L4.8L CREDITED IN THE BANK ACCOUNT WHICH RELATED TO THE INCOME OF THE SAID HUF AND WHICH IS DULY APPEARING IN THE P/L A/C SUBMITTE D WITH INCOME TAX RETURN. SURANGI BANKA : SHE IS ASSESSED TO TAX UNDER PAN: A MTPB 2362 H. SHE ADVANCED AN AMOUNT OF RS.1,10,000/- BY CHEQUE TO THE APPELLANT AND IT WILL BE SEEN FROM THE STATEMENT OF HER BANK ACCOUNT THAT SHE HAS ISSUED THIS CHEQUE AG AINST THE INCOME OF RS.1,10,545/- EARNED BY HER AND RECEIVED BY CHEQUE WHICH IS APPEA RING AS INCOME IN HER P/L A/C SUBMITTED, WITH INCOME TAX RETURN. ANITA BANKA : SHE IS ASSESSED TO TAX UNDER PAN: AG YPB 9565 H. SHE ADVANCED LOAN OF RS.65,000/- TO THE APPELLANT FIRM AND IT WILL BE SE EN FROM HER BANK STATEMENT THAT THIS LOAN WAS ADVANCED BY HER ON 18.03.2008 AGAINST THE BANK BALANCE WHICH CONSIST OF AN INCOME OF RS.75,615/- EARNED BY HER WHICH IS APPEARING IN THE P/L A/C. THERE APPEARS A MISTAKE IN NOTING THE AMOUNT OF LOAN WHICH IS RS.65,000/- & N OT RS.1,85,230/- AS STATED BY THE A.O. IN THE ORDER OF ASSESSMENT. RICHA BANKA : SHE IS ASSESSED TO TAX AND HER PAN I S AMTPB 2361 E. SHE ADVANCED AN AMOUNT OF RS.L,10,000/- TO THE APPELLANT BY CHEQUE OUT OF HER BANK BALANCE WHICH INCLUDES HER INCOME OF RS.1,10,944/- WHICH IS APPEARING IN H ER P/L A/C SUBMITTED WITH THE INCOME TAX RETURN. EKTA BANKA : SHE IS ASSESSED TO TAX. HER PAN IS AMT PB 2363 G. SHE HAS LENT AN AMOUNT OF RS.1,10,000/- BY CHEQUE AGAINST HER BANK BALANCE WH ICH INCLUDES AN AMOUNT OF RS. 1,10,449/- WHICH IS APPEARING AS INCOME IN HER P/L A/C SUBMITTED WITH THE RETURN OF INCOME. SANGITA GUPTA : SHE IS ASSESESSED TO TAX. HER PAN I S AAGPB 5269 Q. SHE ADVANCED RS.67,000/- TO THE APPELLANT OUT OF HER BANK BALANC E WHICH INCLUDES THE AMOUNT OF RS.75,163/- WHICH IS APPEARING IN HER STATEMENT OF ACCOUNT AS HER INCOME. THIS STATEMENT FORMS PART OF HER INCOME TAX RETURN FOR AY 2008-09. BONAFIDE INVESTMENT &TRADING CO LTD : THIS COMPANY IS ASSESSED TO TAX WITH PAN: AABCB 3348 L AND A REFERENCE TO THE AUDITED STATEMENTS OF ACCOUNTS IS INVITED. THIS COMPANY HAS ADVANCED AMOUNT TO THE APPELLANT WHICH IS DULY APPE ARING IN THE STATEMENTS OF ACCOUNTS. A COPY OF THE LOAN CONFIRMATION IS ENCLOSED. IT IS THE SUBMISSION OF THE APPELLANT THAT ALL THE SE LOAN CREDITORS ARE ASSESSED TO TAX SINCE LONG AND HAVE BANK A/C. THE PUBLIC LIMITED COMPANY ABOVE REFERRED IS ALSO HAVING DIRECTORS FROM BANKA FAMILY. THERE IS NOTHING WRONG IF FOR THE FACILITY IN THE OPERATION OF BANK ACCOUNTS AND FOR PREPARATION OF RETURN AND SUB MISSION OF THE SAME WITH INCOME TAX DETT. SUCH NECESSARY PAPERS AND DOCUMENTS ARE KEPT AT THE BUSINESS PREMISES OF THE APPELLANT. WHEN THE ASSESSING OFFICER HAS BEEN GIVE N ALL NECESSARY EVIDENCES IN THIS REGARD, THE AO OUGHT TO HAVE REFERRED TO THE BANK S TATEMENTS IN A PROPER MANNER WHICH WOULD SHOW THAT IT IS NOT A CASE WHERE THE CREDITOR S HAVE PLACED CASH IN THEIR BANK ACCOUNT AND ISSUED CHEQUES TO THE APPELLANT. ALL THE CREDIT ORS HAVE THEIR SOURCES OF INCOME WHICH ARE DULY APPEARING IN THEIR STATEMENT OF ACCOUNTS A ND THE LOAN TRANSACTIONS WERE REFLECTED IN THEIR BALANCE SHEET. IT IS, THEREFORE, THE SUBMI SSION OF THE APPELLANT THAT THE A.O. ERRED IN ADDING RS.25,39,342/- AS THE INCOME OF THE APPELLAN T BY TREATING THE LOAN AMOUNTS AS NOT EXPLAINED AND ADDING THE SAME U/S 68. FURTHER, THE A.O. HAS NOT ASSAILED AND/OR 6 ITA 1063/K/2011 M/S. SHREE VISHNU ROLLING MILLS. A.Y.08-09 CONTROVERTED THE DOCUMENTARY EVIDENCES ADDUCED. THE ADDITION OF RS.25,39,342/- IS TOTALLY WRONG AND UNCALLED FOR. 8. WE FIND FROM THE ABOVE UNSECURED LOANS RECEIVED FROM SATISH KUMAR BANKA, HUF, SURANGI BANKA, ANITA BANKA, RICHA BANKA, EKTA BANKA , SANGITA BANKA, BONAFIDE INVESTMENT & TRADING CO. LTD. THAT THESE CASH CREDITORS ARE REGU LARLY ASSESSED TO TAX AND THEIR ASSESSMENT PARTICULARS ARE AVAILABLE WITH THE AO. IT IS ALSO A FACT THAT THERE WERE DEPOSITS IN THE BANK ACCOUNT OF THESE CREDITORS BEFORE ISSUANCE OF CHEQU ES BY THE RESPECTIVE CREDITORS BUT OUT OF THE INCOME DISCLOSED IN THE RETURN OF INCOME OF THE RES PECTIVE CREDITORS. IT IS NOT THE CASE OF THE REVENUE THAT THESE DEPOSITS ARE NOT EXPLAINED IN TH E HANDS OF UNSECURED LOANS/CASH CREDITORS. EVEN THESE LOANS ARE DULY REFLECTED IN THE ACCOUNTS OF THESE CREDITORS/UNSECURED LOANS. IN VIEW OF THE ABOVE FACTS IT IS CLEAR THAT THE ASSESSEE HA S ESTABLISHED THE IDENTITY, GENUINENESS OF TRANSACTION AND SOURCE OF IMMEDIATE TRANSACTION AND IN THAT EVENTUALITY, THESE UNSECURED LOANS CANNOT BE HELD TO BE UNEXPLAINED. WE FIND NO INFIR MITY IN THE ORDER OF CIT(A) AND WE CONFIRM THE SAME. THIS ISSUE OF REVENUES APPEAL IS DISMIS SED. 9. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE PROFIT ESTIMATED ON SALES. FOR THIS, REVENUE HAS RAISED F OLLOWING GROUND NO.3: 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN IGNORING THE ACCOUNTING FACT THAT THE SUM RECEIVED FROM THE DEBT ORS ON ACCOUNT OF SALES MADE TO THEM DOES NOT AFFECT THE TOTAL SALES OF THE YEAR. 10. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE ASSESSMENT ORDER THAT THE ASSESSIN G OFFICER NOTED THE DIFFERENCE BY RECOMPUTING THIS SALES SUMMARY AS UNDER: SUM TOTAL OF DEBIT SIDE OF SUNDRY DEBTORS RS. 18,63,54,598/- LESS : VAT AS PER VAT ORDER RS.71,37,092/- CST RS. 6,619/- RS. 71,43,711/- RS.17,92,10,887/- ADD : CASH SALE RS. 17,48,804/- TOTAL SALES AS PER BOOKS OF ACCOUNTS RS.18,0 9,59,691.00 SALES DISCLOSED IN THE RETURN RS.17,69,66,4 05.27 DIFFERENCE IN SALES RS. 39,93,285.73 THE ASSESSING OFFICER NOTED THAT THIS AMOUNT OF SA LE OF RS.39,93,285/- IS NOT DISCLOSED BY ASSESSEE. HENCE, HE COMPUTED UNDISCLOSED GP @ 3. 94% ON THE ABOVE SALES AND COMPUTED GROSS PROFIT AT RS.1,57,335/- AND ADDED AS UNDISCLO SED INCOME OF THE ASSESSEE. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE ASSES SEE FILED COPY OF BANK STATEMENT AND ALSO RECONCILIATION OF SALES AS UNDER: 7 ITA 1063/K/2011 M/S. SHREE VISHNU ROLLING MILLS. A.Y.08-09 TOTAL OF THE DR. SIDE OF THE SUNDRY DEBTORS DETA IL RS.18,63,54,598.00 LESS: VAT AS PER THE VAT ORDER RS. 71,37 ,092.00 RS.17,92,17,506.00 LESS: CST AS PER CST ORDER RS. 6, 619.00 RS.17,92,10,887.00 LESS: CHQ DISHONOURED AND RETURNED HENCE ENTERED IN THE DR. SIDE OF S. DEBTORS 31.12.2007 LANCING TUBE 11,38,623.00 05.02.2008 DO 11,48,492.00 CHQ PAID TO PARTY AS EXCESS PAYMENT RECD ENTERED IN THE DR SIDE 25.09.2007 P ENGG. 18,024.00 RS. 23,06,139. 00 RS,17,69,04,748.00 ADD: CASH SALE NOT INCLUDED IN SUNDRY DR. (1681542.20+67261.80 VAT) RS. 17,48,804.00 RS.17,86,53,552.00 LESS: SUNDRY BALANCE WRITTEN OF IN IPJ RS. 5,000.00 RS.17,86,48,552.00 BALANCE AS PER SALE IN P&L ACCOUNT RS.17,86,47, 947.47 DIFFERENCE RS. 604.53 CIT(A) DELETED THE ADDITION AFTER CONSIDERING THE RECONCILIATION. AGGRIEVED, NOW REVENUE IS IN APPEAL BEFORE US. WE FIND THAT THE A SSESSEE HAS GIVEN COMPLETE RECONCILIATION OF SALES AND THE SAME IS ADMITTED AS SALES OF MACHINER IES AT RS.17,48,804/-, WHICH IS ACCEPTED BY THE REVENUE IN THE VERY FIRST GROUND OF THIS APPEAL . FURTHER, THE PLEA OF THE REVENUE IS THAT CHEQUE DISHONOURED AND RETURNED CANNOT BE ENTERED I N THE DEBIT SIDE OF SUNDRY DEBTORS, WE ARE OF THE VIEW THAT THE ASSESSEE HAS RECOMPUTED THE SA LES BY ENTERING THE CHEQUE DISHONOURED AND AFTER FILING RECONCILIATION, THE DIFFERENCE IS ONLY RS.604/-, WHICH IS NEGLIGIBLE. WE FIND THAT THE CIT(A) AFTER ACCEPTING RECONCILIATION STATEMENT OF SALES RIGHTLY ACCEPTED THE CLAIM OF ASSESSEE AND WE UPHOLD THE SAME. THIS GROUND OF REVENUES A PPEAL IS DISMISSED. 11. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED 12. ORDER PRONOUNCED IN OPEN COURT ON 29.12.2011 . SD/- SD/- . . ! ' '' ' # # # # , ! (S. V. MEHROTRA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( / / / /) )) ) DATED : 29 TH DECEMBER, 2011 '01 %23 4' JD.(SR.P.S.) 8 ITA 1063/K/2011 M/S. SHREE VISHNU ROLLING MILLS. A.Y.08-09 . 5 ,6 76'8- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT ITO, WD-36(2), KOLKATA 2 ,-*+ / RESPONDENT, M/S. SHREE VISHNU ROLLING MILLS, 14, N. S. ROAD, KOLKATA-700 001. 3 . .% ( )/ THE CIT(A), KOLKATA 4. .% / CIT, KOLKATA 5 . '> ,% / DR, KOLKATA BENCHES, KOLKATA -6 ,/ TRUE COPY, .%?/ BY ORDER, #3 /ASSTT. REGISTRAR .