M/s. Lokesh Kakkar, Burdwan V. ITO, Ward - 2(2), Durgapur, Burdwan

ITA 1120/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54601 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 29-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 03-06-2010
• Court: TRIBUNAL
• Department Lawyers: P P SARKAR
• Assessee Lawyers: T P KAR
• Keywords: Unexplained cash credit

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE . . , !' # # # # /AND $# , !' ) [BEFORE SHRI S. V. MEHROTRA, AM & SRI MAHAVIR SINGH , JM] #% #% #% #% / I.T.A NO. 1120/KOL/2010 $&' () $&' () $&' () $&' ()/ // / ASSESSMENT YEAR: 2006-07 M/S. LOKESH KAKKAR VS. INCOME-TAX OFFICER, WD-2 (2), DURGAPUR (PAN-AACFL 0589 K) (+, /APPELLANT ) (-.+,/ RESPONDENT ) & #% #% #% #% / I.T.A NO. 1117/KOL/2010 $&' () $&' () $&' () $&' ()/ // / ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER, WD-2(2), DURGAPUR VS. M/S. LOK ESH KAKKAR (+, /APPELLANT ) (-.+,/ RESPONDENT ) DATE OF HEARING: 15.09.2011 DATE OF PRONOUNCEMENT: 21.10.2011 FOR THE ASSESSEE: SHRI T. P. KAR FOR THE REVENUE: SHRI P. P. SARKAR !/ / ORDER PER MAHAVIR SINGH, JM ( $# $# $# $#, , , , !' !' !' !' ) THESE CROSS APPEALS BY ASSESSEE AND REVENUE ARE ARI SING OUT OF ORDER OF CIT(A), DURGAPUR IN APPEAL NO12/CIT(A)/DGP/2009-10 DATED 23 .03.2010. ASSESSMENT WAS FRAMED BY ITO, WARD 2(2), DURGAPUR U/S.144 OF THE INCOME T AX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2006-07 VIDE HIS ORD ER DATED 30.12.2008. 2. THE FIRST COMMON ISSUE IN BOTH APPEALS IS AS REG ARDS TO THE ORDER OF CIT(A) RESTRICTING THE ADDITION OF RS.5,87,500/- AS AGAINST ADDITION M ADE BY ASSESSING OFFICER AT RS.50,97,986/- ON ACCOUNT OF UNEXPLAINED CASH CREDITS. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO. 1: 2. THAT IN THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE HOW FAR THE CIT(A) IS CORRECT IN CONFIRMING THE ADDITIONS OF RS.5,87,500/- REPRES ENTED BY THE EXPENDITURE CONVERTED INTO LOAN BY WAY OF JOURNAL ENTRY AND RECONCILED WI TH THE LENDER AND THE BORROWER- ASSESSEE. THE REVENUE HAS ALSO RAISED FOLLOWING GROUND NO. 1: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE HONBLE CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.45,10,486/- OUT OF R S.50,97,986/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED CASH CREDIT INSPITE OF THE F ACT THAT SUFFICIENT EVIDENCE WAS BROUGHT ON RECORDS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 2 ITA 1120 & 1117/K/2010 M/S. LOKESH KAKKAR, A.Y.06- 07 3. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAS EXPLAINED DIFFERENCES IN BALANCE SHEET IN THE ACCOUNT OF UTTAM KESH AT RS.8 LACS, WHICH WERE DUE TO INADVERTENT MI STAKE IN POSTING IN BOOKS OF ACCOUNT OF THE ASSESSEE. IN THE BOOKS OF ACCOUNT OF UTTAM KESH IT WAS RS.15,31,747/- WHEREAS IN THE BOOKS OF ACCOUNT OF ASSESSEE IT WAS AT RS.23,28,985/-. IT W AS EXPLAINED BEFORE CIT(A) BY ASSESSEE THAT THIS AMOUNT OF RS.8 LACS WAS RECEIVED FROM RANGAMAT I MULTIPURPOSE COLD STORAGE EXPORT UNIT PVT. LTD. ON 13.3.2007 BY ACCOUNT PAYEE DEMAND DRAF T BUT IT WAS WRONGLY POSTED IN THE LEDGER ACCOUNT OF UTTAM KESH IN THE ASSESSEES BOOKS. THI S WAS REFERRED BY CIT(A) TO THE ASSESSING OFFICER FOR REMAND REPORT, WHO ACCEPTED THE CONTENT ION OF THE ASSESSEE AFTER VERIFYING THE DOCUMENTS. THE RELEVANT ENTRIES REGARDING RECONCIL IATION ARE AS UNDER: BALANCE OF M/S. LOKESH KAKKAR IN THE BOOK OF M/S. U TTAM KESH RS.15,31,747.00 LESS: BILL FOR PRINTING & STATIONERY NOT ACCOUNTED FOR BY RS. 2,762.00 M/S. LOKESH KAKKAR _____________ BALANCE RS.15,28,985.00 ADD: LOAN RECEIVED BY M/S. LOKESH KAKKAR FROM RANGA MATI MULTIPURPOSE COLD STORAGE EXPORT UNIT (P) LTD. HAS BEEN SHOWN IN THE NAME OF M/S. UTTAM KESH RS. 8, 00,000.00 BALANCE OF M/S. UTTAM KESH IN THE BOOK OF M/S. LOKE SH KAKKAR RS.23,28,985.00 IN RESPECT TO SUM OF RS.2,762/- IT WAS PAID BY UTTA M KESH FOR PRINTING AND STATIONERY ON BEHALF OF THE ASSESSEE AND HAS NOT BEEN ACCOUNTED FOR IN T HE BOOKS OF THE ASSESSEE, HENCE THERE WAS DIFFERENCE. IN RESPECT TO DIFFERENCE OF UNSECURED LOAN FROM M/S. PLUG MINING SERVICES AND THAT OF THE ASSESSEE, IT WAS EXPLAINED ALONG WITH BANK S TATEMENTS IN SUPPORT OF THEIR CONTENTION THAT THESE AMOUNTS ARE REFLECTED IN THE ENTRIES OF THE J OURNAL AND ACCOUNTS AND BANK STATEMENT AND THIS LOAN WAS GENUINE. ASSESSING OFFICER DURING RE MAND PROCEEDINGS VIDE LETTER DATED 15.3.2010 ADMITTED AND VERIFIED THAT ALL THESE ENTR IES RELATING TO SUM OF RS.27,69,001/- ARE REFLECTED IN ASSESSEES BALANCE SHEET AS WELL AS M/ S. PLUG MINING SERVICES AND IN THEIR RESPECTIVE BANK ACCOUNTS EXCEPT FOLLOWING ENTRIES: (A) 05.05.2005 RS.1,00,000/- (BY CASH) (B) 01.03.2006 RS.1,25,000/- (BY CASH) (C) 31.03.2006 RS.5,87,500/- (BY JOURNAL ENTRY ) IT WAS NOTED BY CIT(A) AND VERIFIED BY ASSESSING OF FICER THAT THE AMOUNT OF RS.1,00,000/- AND RS.1,25,500/- HAS ROUTED THROUGH RESPECTIVE BANK AC COUNTS OF THE ASSESSEE AND THE LOAN CREDITOR BUT IN CASH. AS REGARDS THE JOURNAL ENTRY AMOUNTIN G TO RS.5,87,500/-, THE CIT(A) CONFIRMED ONLY ON THE PREMISE THAT THIS REPRESENTS EXPENSES I NCURRED BY CREDITORS ON BEHALF OF ASSESSEE BUT THESE ARE HELD NOT TO BE SUPPORTED BY ANY VOUCHERS. IN VIEW OF THIS, THE CIT(A) UPHELD THE ADDITION MADE BY ASSESSING OFFICER ONLY TO THE EXTE NT OF RS.5,87,500/-. WE FIND THAT THE ASSESSING OFFICER HAS VERIFIED DURING REMAND PROCEE DINGS THAT THERE IS DEPOSIT OF RS. 8,00,000/- 3 ITA 1120 & 1117/K/2010 M/S. LOKESH KAKKAR, A.Y.06- 07 ON 13.3.2006 BY WAY OF ACCOUNT PAYEE DEMAND DRAFT I N ASSESSEES BOOKS OF ACCOUNT AS WELL AS CROSS VERIFIED FROM THE BALANCE SHEET OF RANGAMATI MULTIPURPOSE COLD STORAGE EXPORT UNIT PVT. LTD., WHICH SHOWED THAT THIS COMPANY HAS ADVAN CED THIS AMOUNT AND ALSO CONFIRMED THE LOAN. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDER ED VIEW THAT CIT(A) IN VIEW OF REMAND REPORT OF ASSESSING OFFICER HAS ACCEPTED THESE ENTRIES APA RT FROM BALANCE LOAN AMOUNT OF RS.15,28,985/- THAT M/S. UTTAM KESH HAS PAID A SUM OF RS.16,00,000/- ON BEHALF OF M/S. TRADER ENTERPRISES BY WAY OF THREE ACCOUNT PAYEE CHEQUES O F RS.5 LACS, RS.1 LAC AND RS.10 LACS AND THESE TRANSACTIONS ARE ALSO CONFIRMED BY M/S. TRADE RS ENTERPRISES. SINCE THE ASSESSING OFFICER HAS CONFIRMED ALL THESE TRANSACTIONS EXCEPT THE TRA NSACTION OF RS. 5,87,500/-, WE CONFIRM THE ORDER OF CIT(A) ON THIS ISSUE AND THIS ISSUE OF REV ENUES APPEAL IS DISMISSED. 4. AS FAR AS ASSESSEES CONTENTION THAT HE HAS SUP PORTED THESE EXPENSES WITH VOUCHERS AND REGARDING EXPENSES INCURRED BY CREDITOR AMOUNTING T O RS.5,87,500/-, THIS ISSUE NEEDS VERIFICATION AT THE LEVEL OF ASSESSING OFFICER AND IN CASE, THIS LOAN IS GENUINE AND REPRESENTS EXPENSES INCURRED BY CREDITORS ON BEHALF OF ASSESSE E, ASSESSING OFFICER CAN EXAMINE THE SAME AND DECIDE THE ISSUE ACCORDING TO LAW. HENCE, THIS ISSUE OF ASSESSEES APPEAL IS SET ASIDE TO THE FILE OF ASSESSING OFFICER. ACCORDINGLY, THIS ISSUE OF REVENUES APPEAL IS DISMISSED THAT OF THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOS ES. 5. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) IN DIRECTING THE ASSESSING OFFICER TO DECIDE THE CLAIM OF PARTNERS REMUNERATION AND INTEREST ON PARTNERS CAPITAL AS PER LAW. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.2: 2. THAT IN THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE HOW FAR THE A.O. IS CORRECT IN DISALLOWING THE PARTNERS REMUNERATION RS.1,36,140/- AND THE INTEREST ON PARTNERS CAPITAL RS.95,620/- CLAIMED BY THE APPELLANT WHICH ARE ALLO WABLE U/S. 184(5) OF THE INCOME TAX ACT, 1961 AND SUPPORTED BY THE PARTNERSHIP DEED OF THE APPELLANT. 6. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT CIT(A) HAS ONLY DIRECTED THE ASSESSING OFFICER TO DECIDE AFTER VERIFICATION OF FACTS. RELEVANT PARA 11 OF CIT(A)S ORDER READS AS UNDER: 11. GROUND NO. 4 IS WITH REGARD TO DISALLOWANCE OF RS.1,36,140/- BEING REMUNERATION TO PARTNERS AND RS.95,620/- AS INTEREST ON CAPITAL. THE GROUND STATES THAT THE ASSESSEE COULD NOT GET ADEQUATE OPPORTUNITY TO PRODUCE ITS B OOKS OF ACCOUNTS AND SUPPORTING PAPERS DURING COURSE OF SCRUTINY PROCEEDINGS AS THE A.O. WAS BUSY DUE TO THE SERIOUS ILLNESS OF HIS WIFE. IT IS STATED THAT THE CLAIM WA S GENUINE AS WOULD BE APPARENT FROM THE CASH BOOK AND RESPECTIVE LEDGER ACCOUNTS. I HAVE C ONSIDERED THE MATTER. THE ASSESEE IS DIRECTED TO SUBMIT BEFORE THE A.O. THE BOOKS AND O THER SUPPORTING PAPERS AT THE TIME OF GIVING OF APPEAL EFFECT AND IF ON VERIFICATION, IT IS FOUND THAT PARTNERS REMUNERATION AND INTEREST ON CAPITAL WAS PAID AS PER LAW, THE SAME I S TO BE ALLOWED. 4 ITA 1120 & 1117/K/2010 M/S. LOKESH KAKKAR, A.Y.06- 07 WE FIND THAT CIT(A) HAS ONLY SET ASIDE THE ISSUE B Y DIRECTING THE AO TO VERIFY THE CLAIM OF INTEREST TO PARTNERS ON CAPITAL AND REMUNERATION S, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND THIS ISSUE OF ASSESSEES APPEAL IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED AND THAT OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8. ORDER IS PRONOUNCED IN OPEN COURT ON 21.10.2011. SD/- SD/- . . !' $# $# $# $# , !' (S. V. MEHROTRA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( 0 0 0 0 ) )) ) DATED : 21 ST OCTOBER, 2011 12 $&34 $5 JD.(SR.P.S.) !/ 6 -$$ 7(8- COPY OF THE ORDER FORWARDED TO: 1 . +, / APPELLANT M/S. LOKESH KAKKAR, KANKSHA ROAD, P.O. PANAGARH, DIST. BURDWAN. 2 -.+, / RESPONDENT, ITO, WARD-2(2), DURGAPUR 3 . $/& ( )/ THE CIT(A), DURGAPUR 4. $/& / CIT, DURGAPUR 5 . $> -$& / DR, KOLKATA BENCHES, KOLKATA . -$/ TRUE COPY, !/&?/ BY ORDER, #4 /ASSTT. REGISTRAR .