M/s Kothari Enterprises, Kolkata V. ITO, Wd-32(2), Kolkata, Kolkata

ITA 109/KOL/2014

• Counselvise Citation: 10923514 RSA 2014
• Duration Of Justice: 1 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 20-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V N PUROHIT
• Keywords: Opportunity of being heard

Judgement Text

I.T.A. NO . 109 / KOL ./20 1 4 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SMC BENCH, KOLKATA BEFORE SHRI P. M . JAGTAP , ACCOUNTANT MEMBER I.T.A. NO. 109 / KOL / 20 1 4 ASSESSMENT YEAR : 200 9 - 20 10 M/S. KOTHARI ENTERPRISES,.................. ........... ...... ............... ....APPELLAN T AZIMGANJ HOUSE, 7, CAMAC STREET, KOLKATA - 700 017 [PAN : A ADFK 0738 N ] - VS. - I NCOME TAX OFFICER , ............................ .......... . ......... .......... .RESPONDENT WARD - 3 2 ( 2 ) , KOLKATA, 10, MIDDLETON ROW, KOLKATA - 700 07 1 APPEARANCES BY: SHR I V.N. PUROHIT, FCA , FOR THE ASSESSEE S MT. RANU BISWAS , JCIT, SR. D.R. , FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : SEPTEMBER 0 9 , 2 01 5 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 11 , 201 5 O R D E R TH IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - X I X , KOLKATA D ATED 25 . 11 .20 1 3 FOR THE ASSESSMENT YEAR 200 9 - 10 AND THE SOLITARY ISSUE INVOLVED THEREIN AS PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE ME RELATES TO THE ADDITION OF RS.9,62,730/ - MADE BY THE ASSESSING OFFICER UNDER SECTION 40A(2) OF THE ACT AND CONFIRMED BY THE LD. CIT(APPEALS). 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHIP FIRM, WHICH IS ENGAGED IN THE BUSINESS OF TRADI N G OF PULSES. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 22.03.2010 DECLARING TOTAL INCOME OF RS.9,800/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE - FIRM HAS PURCHASED I.T.A. NO . 109 / KOL ./20 1 4 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 2 OF 4 YELLOW PEAS ON 26.02.2 009 AND 03.03.2009 FROM FOUR DIFFERENT PARTIES AT DIFFERENT RATES. ACCORDING TO HIM, THESE PURCHASES HAVING BEEN MADE BY THE ASSESSEE FROM THE PERSONS SPECIFIED IN CLAUSE (B) OF SUB - SECTION (2) OF SECTION 40A OF THE ACT, THE DISALLOWANCE UNDER SECTION 40A( 2) WAS CALLED FOR. HE, THEREFORE, REQUIRED THE ASSESSEE TO OFFER ITS EXPLANATION IN THE MATTER AND SINCE THE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY HIM, HE PROCEEDED TO MAKE A DISALLOWANCE OF RS.9,62,730/ - IN RESPECT OF PURCHASES M ADE BY THE ASSESESE ON A SINGLE DATE AT DIFFERENT RATES FROM THE VARIOUS PARTIES BY INVOKING THE PROVISIONS OF SECTION 40A(2). 3. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 40A(2) WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, LD. CIT(APPEALS) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 40A(2) FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH 9.1 OF HIS IMPUGNED ORDER: - 9.1. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER PASSED BY THE AO AND THE SUBMISSIONS OF THE APPELLANT ALONG WITH THE P&L A/C, BALANCE SHEET, COMPUTATION OF INCOME AND THE RELEVANT DETAILS FOR THE FINANCIAL YEAR UNDER CONSIDERATION, I FIND THAT THE APPELLANT PURCHASED YELLOW PEAS ON 26.02.2009 AND ON 03.03.2009 FROM RELATED AND UNRELATED PARTIES. I FIND THAT IN ANNEXURE A TO THE ASSESSMENT ORDER THE AO HAS DEMONSTRATED THAT ON 26.02.2009 THE RATE AT WHICH YELLOW P EAS WAS PURCHASED FROM REGAL NIRMAN (P) LTD. (UNRELATED PARTY) WAS RS.15,910/ - PER MT WHILE THE RATE AT WHICH PURCHASE WAS MADE FROM RELATED PARTY WAS BETWEEN RS.15,923/ - PER MT TO RS.16,210/ - PER MT. SIMILARLY ON 03.03.2009, THE RATE AT WHICH YELLOW PEAS WAS PURCHASED FROM PRIME GLOBAL (P) LTD. (UNRELATED PARTY) WAS RS.15,890/ - PER MT WHILE THE RATE AT WHICH PURCHASE WAS MADE FROM RELATED PARTY WAS BETWEEN RS.16,000/ - PER MT TO RS.16,180/ - PER MT. THE AO ISSUED A SHOW CAUSE NOTICE TO THE APPELLANT ON 14.12 .2011 TO JUSTIFY WHY THE DIFFERENCE OF RS.9,62,730/ - SHOULD NOT BE DISALLOWED U/S 40A(2). IN REPLY THE APPELLANT MERELY SUBMITTED THAT THERE WAS PRICE FLUCTUATION. THE APPELLANT FAILED TO BRING ON RECORD ANY MATERIAL TO PROVE THAT THE QUALITY WAS DIFFERENT OR THERE WERE ANY OTHER REASONS FOR DIFFERENCE IN RATE. I FIND I.T.A. NO . 109 / KOL ./20 1 4 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 3 OF 4 THAT THE AO HAS CONDUCTED DETAILED INQUIRY AND ALSO GIVEN DETAILED REASON FOR MAKING THE DISALLOWANCE. IT IS APPARENT FROM THE ANNEXURE A TO THE ASSESSMENT ORDER, THAT THE AO HAS BROUGHT ON RECORD ALL EVIDENCES REQUIRED TO MAKE THE DISALLOWANCE U/S 40A(2) OF THE ACT. IN THE RESULT, THE DISALLOWANCE OF RS.9,62,730/ - MADE BY THE AO IS HEREBY CONFIRMED . AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFO RE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, ALL THE FOUR PARTIES FROM WHOM THE YELLOW PEAS PURCHASES WERE MADE BY THE ASSES SEE DURING THE YEAR UNDER CONSIDERATION ARE RELATED PARTIES, AND THIS POSITION CLEARLY EVIDENT FROM THE RELEVANT OBSERVATION MADE BY THE ASSESSING OFFICER HIMSELF IN THE ASSESSMENT ORDER HAS NOT BEEN DISPUTED EVEN BY THE LD. D.R. IN HIS IMPUGNED ORDER, THE LD. CIT(APPEALS), HOWEVER, HAS ASSUMED THAT TWO PARTIES, NAMELY M/S. REGAL NIRMAN (P) LTD. AND M/S. PRIME GLOBAL (P) LTD. ARE UNRELATED PARTIES AND IT APPEARS THAT ON THIS WRONG ASSUMPTION , HE HAS PROCEEDED TO CONFIRM THE DISALLOWANCE MADE BY THE ASSESSIN G OFFICER UNDER SECTION 40A(2). IN THIS REGARD, LIMITED RELIEF THAT HAS BEEN SOUGHT BY THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE ME IS THAT THE MATTER MAY BE SENT BACK TO THE LD. CIT(APPEALS) IN ORDER TO GIVE THE ASSESSEE AN OPPORTUNIT Y TO ESTABLISH THAT M/S. REGAL NIRMAN (P) LTD. AND M/S. PRIME GLOBAL (P) LTD. ARE ALSO THE PARTIES RELATED TO THE ASSESSEE AND TO DECIDE THE ISSUE AFRESH RELATING TO THE DISALLOWANCE UNDER SECTION 40A(2) AFTER VERIFYING THIS POSITION. LD. D.R. HAS ALSO NOT RAISED ANY OBJECTION IN THIS REGARD AND HAS SUBMITTED THAT KEEPING IN VIEW THE CONTRADICTORY FINDING GIVEN BY THE ASSESSING OFFICER AND THE LD. CIT(APPEALS) ON THE ASPECT OF RELATED/ UNRELATED PARTIES , WHICH GO THE ROOT OF THE MATTER, THE MATTER MAY BE SE NT BACK TO THE LD. CIT(APPEALS) FOR FRESH CONSIDERATION. I, ACCORDINGLY, SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND REMIT THE MATTER BACK TO THE LD. I.T.A. NO . 109 / KOL ./20 1 4 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 4 OF 4 CIT(APPEALS) FOR DECIDING THE SAME AFRESH AFTER GIVING THE ASSESSEE PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD. 5 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED A S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 11 , 2015. SD/ - (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA , THE 11 TH D AY OF SEPTEMBER , 201 5 COPIES TO : (1) M/S. KOTHARI ENTERPRISES, C/O. V.N. PUROHIT & CO., CHARTERED ACCOUNTANTS, DIAMOND CHAMBERS, UNIT - III, 4 TH FLOOR, SUIT NO. 4G, 4, CHOWRINGHEE LANE, KOLKATA - 700 016 (2) INCOME TAX OFFICER, WARD - 32(2), KOLKATA, 10, MIDDLETON ROW, KOLKATA - 700 071 (3) COMMISSIONER OF INCOME - TAX (APPEALS) - X I X, KOLKATA (4) COMMISSIONER OF INCOME TAX , KOLKATA ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR , INCOME TAX APPELLATE TRIBUNAL , KOLKATA B ENCHES, KOLKATA LAHA/SR. P.S .