Kaycee Trading Co, Kolkata V. I.T.O Wd - 32(1),kolkata, Kolkata

ITA 1064/KOL/2013

• Counselvise Citation: 106423514 RSA 2013
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 03-05-2013
• Court: TRIBUNAL
• Department Lawyers: SANJAY SR DR
• Assessee Lawyers: D S DAMLEY
• Keywords: Unexplained cash credit; Income from undisclosed sources; Opportunity of being heard; Additional evidence; Bogus loan
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: KOLKATA [BEFORE HON BLE SHRI B.P.JAIN, AM] I.T.A NO.1064 /KOL/2013 ASSESSMENT YEAR: 2009 - 10 KAYCEE TRADING CO. VS I.T.O., WARD - 32(1 ) KOLKATA KOLKATA (APPELLANT) ( RESPONDENT) (PAN: AADFK 1092 P) FOR THE APPELLANT : SHRI D.S.DAMLEY, FCA FOR THE RESPONDENT : SHRI SANJAY, SR.DR, ADDL. C.I.T. DATE OF HEARING : 03 .06 .2015. DATE OF PRONOUNCEMENT: 03 .06 .2015. ORDER THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF LD.CIT(A) - X I X, KOLKATA DATED 14.02.2013 FOR ASSESSMENT YEAR 2009 - 10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN LAW AND ON FACTS IN UPHOLDING THE ADDITION OF RS.3,45,000/ - IN RESPECT OF UNSECURED LOAN WITHOUT PROPERLY APPRECIATING THE FACTS, EXPLANATIONS AND THE EVIDENCES FURNISHED. 2. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE AO BE DIRECTED TO DELETE THE ADDITIO N OF RS.3,45,000/ - MADE U/S 68 OF THE INCOME TAX ACT EVEN THOUGH THERE WAS UNEXPLAINED CASH CREDIT. 3. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE AUTHORITIES BELOW ERRED IN MAKING ADDITION U/S 68 AMOUNTING TO RS.3,45,000/ - MERELY ON TH E BASIS OF INCORRECT ACCOUNTING ENTRIES PASSED BY THE ACCOUNTANT OF THE APPELLANT AND THERE BEING NO ACTUAL RECEIPT OF ANY, REPRESENTING THE CREDIT & THEREFORE THE ADDITION OF RS.3,45,000/ - BE DELETED. 4. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE AUTHORITIES BELOW ERRED IN UPHOLDING THE ADDITION OF RS.43,331/ - IN RESPECT OF LOAN LIABILITY BROUGHT FORWARD FROM THE EARLIER YEARS EVEN THOUGH PROVISIONS OF SEC.68 WERE NOT APPLICABLE. 5. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THERE BEING NO CESSATION OR REMISSION OF ANY TRADING LIABILITY IN RESPECT OF THE AFORESAID SUM OF RS.43,331/ - AND FURTHER THE APPELLANT HAVING NOT UNILATERALLY WRITTEN BACK THE SAID AMOUNT IN ITS BOOKS OF ACCOUNT, THE CIT(A) WAS GROSSLY UNJUSTIFIE D IN UPHOLDING THE ADDITION BY INVOKING PROVISIONS OF SEC.41(1) OF THE INCOME TAX ACT. ITA NO. 1064/KOL/2013 KAYCEE TRADING CO. A.YR. 2009 - 10 2 6. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ADDITION OF RS.43,331/ - MADE BY THE AO U/S 68 AND CONFIRMATION BY THE CIT(A) U/S 41(1) BE DIRECTED TO BE DELETED. 7. FOR THAT THE APPELLANT CRAVES LEAVE TO SUBMIT ADDITIONAL GROUND AND/OR AMEND OR ALTER THE GROUNDS ALREADY TAKEN EITHER AT THE TIME OF HEARING OF THE APPEAL OR BEFORE. 3. AS REGARDS GROUND NOS.1, 2 AND 3 THE BRIEF FACTS OF THE CASE AS EMA NATING FROM THE ORDER OF AO ARE REPRODUCED HEREIN BELOW FOR THE SAKE OF CONVENIENCE : IT IS OBSERVED FROM THE BALANCE SHEET AS AT 31/03/2009 THAT THE ASSESSEE HAVE SHOWN UNSECURED LOAN OF RS.1148242/ - FROM KULNATH KAPUR FAMILY TRUST BUT IN RESPONSE TO NOT ICE U/S 133(6) OF THE INCOME TAX ACT SHRI KULNATH KAPUR INFORMED THAT CLOSING BALANCE OF LOAN AS ON 31/03/2009 IS 1103242/ - . SO THE ASSESSEE SHOWED EXCESS LOAN TO THE TUNE OF RS.45000/ - . HE WAS DIRECTED TO SHOW CAUSE WHY THE EXCESS AMOUNT OF RS.45,000/ - WO ULD NOT BE TREATED AS BOGUS LOAN AND ADDED BACK TO HIS TOTAL INCOME. IN REPLY THE ASSESSEE STATED THAT UNSECURED LOAN AMOUNT OF RS.45000/ - WRONGLY DOUBLE ENTERED FROM KULNATH KAPUR FAMILY TRUST IN BANK BOOK. THE BOOKS OF ACCOUNT OF THE ASSESSEE WAS AUDITED U/S 44AB OF THE IT ACT. IN THE AUDITED BALANCE SHEET THE ASSESSEE SHOWED UNSECURED LOAN OF RS.1148242/ - FROM KULNATH KAPUR FAMILY TRUST. OUT OF THIS AN AMOUNT OF RS.45000/ - IS BOGUS LIABILITY ACCORDING TO REPLY U/S 133(6) . WE NOW COME TO THE TREATM ENT OF THIS BOGUS LIABILITY. IT IS CONCLUDED THAT THE ASSESSEE HAS ALREADY CREATED AN ASSET OF SAME AMOUNT FROM HIS UNDISCLOSED SOURCE OF INCOME. NOW TO MATCH UP BOTH SIDES OF HIS BALANCE SHEET HE INTRODUCED BOGUS LIABILITY OF RS.45000/ - . THIS WILL RESULT IN AN ADDITION OF RS.45000/ - AS THE ASSESSEE S INCOME FROM UNDISCLOSED SOURCES. IT IS OBSERVED FROM THE BALANCE SHEET AS AT 31/03/2009 THAT THE ASSESSEE SHOWED UNSECURED LOAN OF RS.4955291/ - FROM SIMPLE (INDIA) PVT. LTD. BUT IN RESPONSE TO NOTICE U/S 133(6) OF THE INCOME TAX ACT SHRI KULNATH KAPUR, DIRECTOR OF SIMPLE (INDIA) PVT. LTD INFORMED THAT CLOSING BALANCE OF LOAN AS ON 31/03/2009 IS 4655291/ - . SO THE ASSESSEE SHOWED EXCESS LOAN TO THE TUNE OF RS.300000/ - . HE WAS DIRECTED TO SHOW CAUSE WHY T HE EXCESS AMOUNT OF RS.300000/ - WOULD NOT BE TREATED AS BOGUS LOAN AND ADDED BACK TO HIS TOTAL INCOME. IN REPLY THE ASSESSEE PUT FORWARD THE SAME ARGUMENT AS IN THE CASE OF KULNATH KAPUR FAMILY TRUST. BUT HE FAILED TO EXPLAIN THE BOGUS LIABILITY OF RS.300000/ - ON THE LIABILITY SIDE OF BALANCE SHEET. IT IS CONCLUDED THAT THE ASSESSEE HAS ALREADY CREATED AN ASSET OF SAME AMOUNT FROM HIS UNDISCLOSED SOURCE OF INCOME. NOW TO MATCH UP BOTH SIDES OF HIS BALANCE SHEET HE INTRODUCED BOGUS LIABILITY OF RS. 300000/ - THIS WILL RESULT IN AN ADDITION OF RS.300000/ - AS THE ASSESSEE S INCOME FROM UNDISCLOSED SOURCES. THE LD. CIT(A) CONFIRMED THE ACTION OF AO. 4. THE LD. COUNSEL FOR THE ASSESSEE SHRI D.S.DAMLEY, FCA ARGUED THAT THE ACCOUNTANT HAD MADE A DUPLICA TE ENTRY IN THE BOOKS OF ACCOUNT WHICH FACT WAS BROUGHT TO THE NOTICE OF AO AS WELL AS CIT(A) AND THE BANK STATEMENT WAS VERIFIED BY THE AO WHICH IS EVIDENT FROM THE ORDER OF AO AT PAGE 1. HE INVITED OUR ATTENTION TO THE PAPER ITA NO. 1064/KOL/2013 KAYCEE TRADING CO. A.YR. 2009 - 10 3 BOOK AT PAGES 9 TO 12 WHICH A RE COPIES OF THE LEDGER BANK ACCOUNT, PAGES 13 TO 16 COPIES OF THE BANK STATEMENTS, PAGE 17 CERTIFICATE OF THE BANK AND PAGE 8 CERTIFICATE OF THE AUDITOR CONFIRMING THAT IT WAS ONLY DOUBLE ENTRY IN THE BANK BOOK BUT THE SAME WAS REFLECTED IN THE BANK REC ONCILIATION STATEMENT. THE SAID DUPLICATE ENTRIES HAD BEEN RECTIFIED IN THE FOLLOWING YEAR. THE ENTRIES IN THE BANK ACCOUNT HAD NO EFFECT ON REVENUE AND THEREFORE THERE IS NO CONCEALMENT OF PARTICULARS OF INCOME AND THE ASSESSEE HAS SUBMITTED DUE EXPLANATI ON BEFORE BOTH THE AUTHORITIES BELOW. ACCORDINGLY SHRI DAMLE PRAYED TO DELETED THE ADDITION MADE BY THE AO AND REVERSE THE ORDER OF LD. CIT(A). 5. THE LD.DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. I HAVE HEARD THE RIVAL CO NTENTIONS AND GONE THROUGH THE FACTS OF THE CASE. I AM CONVINCED WITH THE ARGUMENTS MADE BY MR.DAMLE, FCA THAT THE ENTRIES ARE MADE DOUBLE BY MISTAKE BY THE ACCOUNTANT. ON PERUSAL OF THE LEDGER ACCOUNT, BANK STATEMENT, CERTIFICATES FROM THE BANK AND AUDITO RS CERTIFICATE I AM FULLY CONVINCED THAT THE ENTRIES WERE MADE IN DUPLICATE AMOUNTING TO RS.40,000/ - AND RS.3,00,000/ - AND THERE IS NO QUESTION OF UNEXPLAINED CASH CREDIT AND IN THE CIRCUMSTANCES AND FACTS OF THE CASE AND THE AO IS NOT JUSTIFIED IN TREATIN G THE SAME AS UNEXPLAINED CASH CREDIT AND NO ADDITION U/S 68 OF THE ACT IS CALLED FOR. ACCORDINGLY ORDER OF LD. CIT(A) IS REVERSED. THUS GROUND NOS. 1,2 AND 3 OF THE ASSESSEE ARE ALLOWED. 7. AS REGARDS GROUND NOS. 4,5 AND 6 OF THE ASSESSEE THE BRIEF FACTS OF THE CASE AS PER AO S ORDER AT PAGE 1 ARE REPRODUCED HEREIN BELOW FOR THE SAKE OF CONVENIENCE : - IT IS OBSERVED FROM THE DETAILS OF UNSECURED LOAN SUBMITTED BY THE ASSESSEE THAT HE HAS RECEIVED UNSECURED LOAN OF RS.43331/ - SHRI HUKUMAT RAI DHWAN. BUT H E FAILED TO SUBMIT ANY LOAN CONFIRMATION DURING THE COURSE OF HEARING. HE WAS DIRECTED TO SHOW CAUSE WHY THE AMOUNT OF RS.4331/ - WOULD NOT BE TREATED AS BOGUS LOAN AND ADDED BACK TO HIS TOTAL INCOME FOR THE FINANCIAL YEAR 2008 - 09. IN REPLY THE ASSESSEE STA TED THAT HE COULD NOT TRACE OUT SHRI HUKUMAT RAI DHAWAN AND HIS ADDRESS. THE SUBMISSION OF THE ASSESSEE IS NOT TENABLE AS IT IS HIS DUTY TO PRODUCE EVIDENCE REGARDING THE EXISTENCE OF LOAN CREDITOR. HENCE THE LOAN OF RS.43331/ - IS TREATED AS BOGUS LIABILI TY AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO. 1064/KOL/2013 KAYCEE TRADING CO. A.YR. 2009 - 10 4 8. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE UNDISPUTED FACT IN THE PRESENT CASE ARE THAT THE ASSESSEE HAS NOT SUBMITTED THE CONFIRMATION OF LOAN RECEIPT FROM SHRI HUK UMAT RAI DHAWAN BEFORE ANY OF THE AUTHORITIES BELOW, BECAUSE THE SAME COULD NOT BE PROCURED. NOW THE ASSESSEE HAS PROCURED THE SAME AND SUBMITTED BEFORE ME AS AN ADDITIONAL EVIDENCE WHICH IS ADMITTED BECAUSE WHICH GOES DEEP INTO THE ROOT OF THE MATTER. IN THE CIRCUMSTANCES AND FACTS OF THE CASE, I SET ASIDE THE MATTER TO THE FILE OF AO, WHO WILL EXAMINE THE ISSUE DENOVO BUT BY AFFORDING SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS GROUND NOS. 4,5 AND 6 OF THE ASSESSEE ARE ALLOWED FOR STATIST ICAL PURPOSES. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDE R PRONOUNCED IN THE OPEN COURT ON 03 .06 .2015. SD/ - [ B.P.JAIN ] ACCOUNTANT MEMBER DATE: 03 .06 .2015. R.G.(.P.S.) C OPY OF THE ORDER FORWARDED TO: 1 . KAYCEE TRADING CO., 31, KOHINOOR BLDG., 105, PARK STREET, KOLKATA - 700016. 2 I.T.O., WARD - 32(1 ), KOLKATA 3 . CIT(A) - X I X, KOLKATA 4. CIT - KOLKATA. 5. CIT - DR, KOLKATA BENCHES, K OLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES