ITO, Ward - 46(3), Kolkata, Kolkata V. Shri Navin Kr. Poddar, Howrah

ITA 1145/KOL/2008

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4642 (ITAT-KOLKATA)
• Duration Of Justice: 8 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 03-08-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 19-06-2008
• Court: TRIBUNAL
• Assessee Lawyers: VINOD KUMAR JAIN
• Keywords: Unexplained cash credit; Unexplained investment; Deemed dividend
• Section: 69C; 40A(3); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & DR.ARJUN LAL SAINI, AM] I.T.A NO.1145/KOL/200 8 ASSESSMENT YEAR : 2003-0 4 I.T.O., WARD-46(3) -VS.- SRI NAVIN KUMAR PODDAR KOLKATA KOLKATA [PAN : AJXPP 3613 J] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI ARUP CHATTERJEE, JCIT.S R.DR FOR THE RESPONDENT : SHRI VINOD KUMAR JAIN, FCA DATE OF HEARING : 03.08.2016. DATE OF PRONOUNCEMENT :10.08.2016. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 25.02.2008 OF CIT(A)- XXX, KOLKATA RELATING TO AY 2003-04. 2. THERE IS A DELAY OF 45 DAYS IN FILING THIS AP PEAL BY THE REVENUE. THE SAME HAS BEEN EXPLAINED IN AN AFFIDAVIT FILED BY SHRI S.BHATTACHA RYA, ITO, WARD-46(3),KOLKATA AS OWING TO ADMINISTRATIVE DELAY. THE REASONS GIVEN IN THE AFFIDAVIT WERE PERUSED. WE ARE SATISFIED THAT THE DELAY IN FILING THE APPEAL WAS D UE TO A REASONABLE AND SUFFICIENT CAUSE AND THE SAME IS ACCORDINGLY CONDONED. 3. GROUND NO.1 RAISED BY THE REVENUE READS AS FOLLO WS :- THAT THE ID. CIT(A) ERRED IN DELETING THE ADDITION OF RS 32812090/- . HE SIMPLY TOOK THE REMAND REPORT IN DISTORTED FORM AND ERRONEOUSLY DEL ETED THE ADDITION WITHOUT GOING THROUGH MERIT OF THE CASE. 4. THE ASSESSEE IS AN INDIVIDUAL. HE CARRIES ON BUSINESS ON MANUFACTURE OF JUTE BAGS, HDPE BAGS AND READYMADE GARMENTS. FOR A.Y.2003-04 T HE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.76,400/-. IN TH E COURSE OF ASSESSMENT PROCEEDINGS 2 ITA NO.1145/KOL/2008 SHRI NAVIN KR.PODDAR A.YR.2003-04 2 THE AO NOTICED THAT THE ASSESSEES BALANCE SHEET S HOWED RECEIPT OF CASH ADVANCE OF RS.3,28,12,090/-. ACCORDING TO THE AO, THE ASSESSEE FAILED TO SATISFACTORILY EXPLAIN THE CASH ADVANCES RECEIVED. THE A.O ASSESSED THE CASH A DVANCES U/S.68 OF THE INCOME TAX ACT, 1961 (ACT) AS UNEXPLAINED INCOME. BEFORE CIT( A), THE ASSESSEE CONTENDED THAT THE A.O ERRED IN ASSESSING CASH ADVANCES AS UNEXPLA INED INCOME. IT WAS SUBMITTED THAT THE AMOUNTS REPRESENT ADVANCES RECEIVED AGAINST THE FUTURE SALES. IN THE ABSENCE OF EXPLANATION DURING THE ASSESSMENT PROCEEDINGS, THE A.O CONSIDERED THE CASH ADVANCES AS UNEXPLAINED INCOME. BEFORE CIT(A) THE ASSESSEE F URNISHED DETAILS OF THE CASH ADVANCES. A REMAND REPORT WAS CALLED FOR FROM THE A .O. A REMAND REPORT NO.46(3)/REMAND REPORT/07-08/311 DATED 21.09.2007, WAS FILED BY THE AO IN WHICH THE A.O REPORTED THAT ON VERIFICATION, THE ASSESSEE 'S CONTENTIONS ARE FOUND TO BE CORRECT. THE A.O VERIFIED THE SALE BILLS WITH REFERENCE TO T HE CASH BOOK AND FOUND THE AMOUNTS HAVE TALLIED. FURTHER, THE PARTIES CONFIRMED THE TR ANSACTIONS. TAKING NOTE OF THE REMAND REPORT, THE CIT(A) DELETED THE ADDITION MADE BY THE AO. 5. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE HAS RAISED GROUND NO.1 BEFORE THE TRIBUNAL. 6. THE LD. DR REITERATED THE STAND OF THE REVENU E AS REFLECTED IN THE GROUNDS OF APPEAL. THE LD. AR RELIED ON THE ORDER OF CIT(A) AND FILED BEFORE US A COPY OF THE REMAND REPORT FILED BY THE AO BEFORE CIT(A). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN THE REMAND REPORT ON THIS ISSUE, THE AO HAS STATED AS FOLLOWS :- REGARDING ADDITION UNDER THE HEAD CASH ADVANCE OF RS.3,28,12,090/-, DURING THE COURSE OF ASST. PROCEEDING THE ASSESSEE COULD NOT FURNISH COMPLETE NAME AND ADDRESS OF THE PARTIES FROM WHOM THE ASSESSEE HAD RECEIVED THE MON EY AS ADVANCE AND SUPPORTING BILLS /VOUCHERS ETC. NOW THE ASSESSEE STATED THAT' THESE CASH RECEIPTS WERE NOT CASH ADVANCE BUT ADVANCE AGAINST SALES. IN SUPPORT OF HIS CLAIM. HE PRODUCED ALL SALES BILLS (MORE THAN 450) AND FURNISHED PHOTO COPIES OF THESE BILLS FOR VERIF ICATION. SALE BILLS VERIFIED WITH THE CASH BOOK (COPY OF CASH BOOK NOW PRODUCED AND PHOTO COPY SUBMITTED) AND BANK BOOKS AND LEDGER ACCOUNTS, ON VERIFICATION IT APPEARS THAT RS . 1,36,68.421/- RECEIVED BY THE ASSESSEE FROM VARIOUS PARTIES THROUGH BANKS. OUT OF 30 PARTIES LETTERS WERE SENT TO 6 PARRIES FOR VERIFICATION. OUT OF 6 LETTERS, LETTERS ISSUED TO SHRI SHANKAR PROSAD SINGH (RS. 11,64,277/- ) AND SMT. SHEELA DAS (RS.7,50,251/- HA VE BEEN RECEIVED BACK UNSERVED 3 ITA NO.1145/KOL/2008 SHRI NAVIN KR.PODDAR A.YR.2003-04 3 THOUGH THE SALE BILLS OF THESE TWO PARTIES PRODUCE D AND TALLIED WITH THE CASH BOOK. OTHER PARTIES HAVE CONFIRMED THE TRANSACTIONS. IT IS CLEAR FROM THE AFORESAID REMAND REPORT OF THE AO FILED BEFORE CIT(A) THAT ALL THE PARTIES CONFIRMED THE TRANSACTIONS AS CLAIMED BY TH E ASSESSEE BEFORE THE AO IN THE REMAND PROCEEDINGS. WITH REGARD TO THE TWO PARTIES TO WHOM NOTICE COULD NOT BE SERVED THE TRANSACTIONS WAS EVIDENCED BY SALES BILL WHICH TALLIED WITH THE CASH BOOK. IN SUCH CIRCUMSTANCES WE ARE OF THE VIEW THAT THERE CANNOT BE ANY GRIEVANCE TO THE REVENUE. IT CANNOT BE SAID THAT THE REMAND REPORT WAS IN A DIST ORTED FORM. WE THEREFORE DISMISS GROUND NO.1 RAISED BY THE REVENUE. 8. GROUND NO.2 RAISED BY THE REVENUE READS AS FO LLOWS :- 2) THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITI ON OF 27.80(LACS) IGNORING THE REMAND REPORT WHEREIN NON-EXISTENCE OF THE PARTY HAS BEEN SPECIFICALLY MENTIONED.. 9. THE A.O NOTICED THAT AMOUNTS WERE TRANSFERRED FROM THE FOLLOWING PERSONS TO THE APPELLANT'S BANK ACCOUNT MAINTAINED WITH STANDARD C HARTERED BANK. 1) MOHAN TRADING CO RS.6,20,000/- 2) SUNIL ENTERPRISES RS.2,00,000/- 3) D.R.TIN & IRON STORES RS.19,16,000/- ACCORDING TO THE A.O THE AMOUNTS RECEIVED FROM THES E PARTIES WERE NOT EXPLAINED BY THE. ASSESSEE. THE ASSESSEE SUBMITTED THAT THE SALE S WERE EFFECTED TO CERTAIN PARTIES. IT IS SUBMITTED THAT THE SALE CONSIDERATION WAS PAID BY T HESE PARTIES AND WERE IN TURN SENT TO ASSESSEE'S BANK ACCOUNT. THE DETAILS OF THE SALES A RE MENTIONED IN THE ASSESSMENT ORDER AT PAGE-3. SINCE ACCORDING TO THE AO, THE ASSESSEE HAS NOT GIVEN SATISFACTORY EXPLANATION, THE A.O ADDED A SUM OF RS.27,80,000/- AS UNEXPLAINED CASH CREDIT. BEFORE CIT(A), THE ASSESSEE CONTENDED THAT THE A.O ERRED IN ASSESSING THE AMOUNTS RECEIVED FROM M/S MOHAN TRADING CO., SUNIL ENTERPRI SES AND D.R.TIN & IRON STORES AS UNEXPLAINED CREDIT. IT WAS SUBMITTED THAT THE SALE CONSIDERATION WAS RECEIVED FROM THE SUNDRY DEBTORS BY THESE PARTIES AND IN TURN THESE W ERE TRANSFERRED FROM THEIR BANK A/C TO THE ASSESSEES A/C. THE EVIDENCE TO SUBSTANTIATE T HE ASSESSEES CLAIM WERE FILED BY THE 4 ITA NO.1145/KOL/2008 SHRI NAVIN KR.PODDAR A.YR.2003-04 4 ASSESSEE BEFORE THE CIT(A). EVIDENCE SUBMITTED BY THE ASSESSEE WAS FORWARDED BY THE CIT(A) TO THE A.O FOR REMAND REPORT. THE A.O SUBMIT TED HIS REMAND REPORT NO. 46(3)/REMAND REPORT/07-08/311 DATED 21.09.2007 STAT ING THAT THE TRANSACTIONS CLAIMED BY THE ASSESSEE ARE VERIFIED WITH REFERENCE TO THE ASSESSEES BANK ACCOUNT. SINCE THE ASSESSEEE FILED EVIDENCE IN SUPPORT OF THE SUBMISSI ONS WHICH IS VERIFIED BY THE A.O AND REPORTED IN THE REMAND REPORT, THE ADDITION MADE WA S HELD BY CIT(A) TO BE NOT SUSTAINABLE. THE A.O WAS DIRECTED TO DELETE THE ADD ITION. 10. AGGRIEVED BY THE CIT(A)S ORDER THE REVENUE HAS RAISED GROUND NO.2 BEFORE THE TRIBUNAL. 11. THE LD. DR REITERATED THE STAND OF THE REVE NUE AS REFLECTED IN THE GROUNDS OF APPEAL. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF CIT(A). 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN THE REMAND REPORT THE AO HAS STATED AS FOLLOWS, ON THE ABOVE ISSUE :- REGARDING ADDITION OF RS.6,20,000/- THE ASSESSEE S TATED THAT THE SAID AMOUNTS WERE RECEIVED FROM M/S MOHAN TRADING CO.,PROP. PAWAN K.B ANSAL OF' 114/1A, COTTON STREET; 1 ST FLOOR, KOL-7 THE ASSESSEE . THE SAID PARTY PAID THE CHEQUE (STANDARD CHARTERED BANK) ON INSTRUCTION OF THREE PARTIES. DURING THE COURSE OF ASST. PROCEEDING THE EXISTENCE AND GENUINENESS OF THE PARTY I.E. PAWAN K.BANSAL WAS NO T VERIFIED DUE TO NON-AVAILABILITY OF THE PERSON AT THE GIVEN ADDRESS.. DEPARTMENTAL INSP ECTOR DEPUTED TO VERIFY THE MATTER AND HE SUBMITTED HIS REPORT STATING THAT .AS PER INFORM ATION GIVEN BY ONE SHRI GIRDHARILAL BERIWAL, C/O SUBHAS KHANDELWAL, 114/1A COTTON STREE T, KOL-7 M/S. MOHAN TRADING CO. WAS HIS SUB- TENANT AND NOW HE HAS SHIFTED HIS OFFI CE FROM THERE HE WAS UNABLE TO GIVE ANY INFORMATION ABOUT HIS PRESENT WHERE ABOUTS. A LETTE R WAS ISSUED TO MOHAN TRADING COMPANY. A REPLY DT. 13.04.2007 HAS BEEN RECEIVED I N WHICH HE STATED THAT PAYMENTS WERE MADE IN FAVOUR OF BANSAL ENTERPRISES BY THREE A/C PAYEE CHEQUES, ON INSTRUCTION OF RAKESH KUMAR PRAMANIK, B.M.TRADING CO. AND EXIM RAJ ATHI, DEBTORS OF THE ASSESSEE. HE FURTHER STATED THAT HE HAS CLOSED HIS BUSINESS AND LEFT FOR HIS NATIVE PLACE AT HARIYANA. THE TRANSACTIONS AS REPORTED BY MOHAN TRADING CO. VERIF IED WITH BOOKS OF ASSESSEE. NOTICE U/S 131 WAS ISSUED TO SHRI PAWAN KUMAR BANSAL TO AP PEAR PERSONALLY ON 20.08.2007.BUT THE LETTER RETURN UNSERVED WITH POSTAL REMARKS UNC LAIMED. REGARDING' OTHER TWO PAYMENTS RECEIVED FROM SUNIL ENTERPRISE AND D. R. TIN & IRON STORES, AS ENQUIRED FROM STANDARD CHARTERED BANK BY DEPARTMENT, THE ASSESSEE STATED THAT THE ABOVE TWO PARTIES PAID CHEQUE ON INSTRUCTIONS O F ASSESSEES DEBTORS NAMELY PREM DAS MILLS AND ANUP KUMAR DAS & B.M.TRADING CO. THE ABOV E PAYMENTS WERE NOW VERIFIED FROM THE BOOKS OF ASSESSEE. 5 ITA NO.1145/KOL/2008 SHRI NAVIN KR.PODDAR A.YR.2003-04 5 13. IT IS CLEAR FROM THE READING OF THE REMAND R EPORT THAT M/S. MOHAN TRADING CO. HAD SENT A REPLY DATED 13.04.2007 TO THE AO DURING THE REMAND PROCEEDINGS. IN THAT REPLY THE ADDRESS OF PAWAN KUMAR BANSAL WAS GIVEN WHICH W AS IN THE STATE OF HARYANA WHEREAS THE AO SENT THE NOTICE U/S 131 FOR PERSONAL APPEARANCE TO SHRI PAWAN KUMAR BANSAL ON 20.08.2007 BY THE AO TO THE ADDRESS AT KO LKATA. IN THESE CIRCUMSTANCES, IT CANNOT BE SAID THAT THERE IS A FAILURE ON THE PART OF SHRI PAWAN KUMAR BANSAL, TO APPEAR IN RESPONSE TO THE NOTICE ISSUED U/S 131 OF THE ACT BY THE AO. AS FAR AS THE PAYMENT RECEIVED FROM SUNIL ENTERPRISES AND D.R.TIN & IRON STORES IS CONCERNED THE ABOVE PARTIES MADE THE PAYMENTS TO THE ASSESSEE ON BEHALF OF THE ASSESSEES DEBTORS NAMELY PREM DAL MILLS AND ANUP KUMAR DAS AND B.M.TRADING CO. THE AMOUNTS DUE FROM THESE PARTIES WERE DULY REFLECTED IN THE BOOKS OF A CCOUNTS OF THE ASSESSEE. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE COMPLAINT OF THE REVENUE IN THE GROUNDS OF APPEAL THAT NON EXISTENCE OF THE PARTY IN THE REMAN D REPORT HAS BEEN IGNORED BY THE CIT(A), IS FACTUALLY NOT CORRECT. WE THEREFORE CONF IRM THE ORDER OF CIT(A) AND DISMISS GROUND NO.2 RAISED BY THE REVENUE. 14. GROUND NO.3 RAISED BY THE REVENUE READS AS F OLLOWS :- 3) THAT THE LD. CIT(A) ERRONEOUSLY DELETED THE ADDI TION OF RS. 980779/-. REMAND REPORT CONFIRMED THE PAYMENTS ONLY BUT MODE PAYMENTS WAS N OT CONFIRMED. . 15. THE A.O NOTICED THAT THE ASSESSEE INCURRED CASH EXPENDITURE OF RS.49,03,898/-. THE A.O DISALLOWED 20% OF THE EXPENDITURE U/S.40A(3 ) OF THE ACT. BEFORE CIT(A), THE ASSESSEE SUBMITTED THAT THE PAYMENTS WERE MADE IN L IEU OF DISHONORED CHEQUES. THE A.O REJECTED THIS EXPLANATION SINCE THE ASSESSEE FA ILED TO FILE SATISFACTORY EXPLANATION. THE A.O MADE AN ADDITION OF RS.9,80,779/-. BEFORE C IT(A), THE ASSESSEE FILED EVIDENCE AND SUBMITTED THAT THE PAYMENTS WERE MADE TO THE CO MPANIES, HOOGHLY MILL CO, ADITYA TRANSLINK CO LTD & BIRLA CORPORATION LTD BY CHEQUES AND PAY ORDER. EVIDENCE PRESENTED WAS FORWARDED BY THE CIT(A) TO THE A.O FO R REMAND REPORT. THE A.O SUBMITTED HIS REMAND REPORT NO.46(3)/REMAND REPORT/ 07-08/311 DT.21.9.2007 WHEREIN HE REPORTED THAT THE PAYMENTS WERE MADE BY CHEQUES AND PAY ORDER. IN VIEW OF 6 ITA NO.1145/KOL/2008 SHRI NAVIN KR.PODDAR A.YR.2003-04 6 THE REMAND REPORT, DISALLOWANCE U/S.40A(3) WAS HELD BY THE CIT(A) TO BE NOT SUSTAINABLE. THE A.O WAS DIRECTED TO DELETE THIS AD DITION. 16. AGGRIEVED BY THE CIT(A)S ORDER THE REVENUE H AS RAISED GROUND NO.3 BEFORE THE TRIBUNAL. 17. THE LD. DR REITERATED THE STAND OF THE REVE NUE AS REFLECTED IN THE GROUNDS OF APPEAL. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF CIT(A). 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN THE REMAND REPORT THE AO HAS STATED AS FOLLOWS, ON THIS ISSUE :- REGARDING ADDITION U/S 40A(3) I.E. 20% OF CASH P AYMENTS OF RS.49,03,898/- FOR PURCHASE OF GOODS FROM VARIOUS MILLS AMOUNTING TO R S.9, 80,779/-, FURTHER VERIFICATION LETTERS ISSUED TO THE VARIOUS MILLS FOR CONFIRMATIO N REGARDING MODE OF PAYMENTS ETC. - THREE LETTER WERE ISSUED TO 1. HOOGLY MILLS CO. LTD . 2. ADITYA TRANSLINK PVT, AND 3. BIRLA CORPORATION LTD. ALL THE THREE PARTIES SENT THEIR R EPLIES AND STATED THE PAYMENTS ARE MAD BY CHEQUES AND PAY ORDERS. 19. IT HAS BEEN THE STAND OF THE REVENUE THAT TH E REMAND REPORT IS SILENT WHETHER THE CHEQUES AND PAY ORDERS THROUGH WHICH THE PAYMENTS W ERE RECEIVED FROM THE AFORESAID THREE PARTIES WHICH ARE CROSSED ACCOUNT PAYEE CHEQU ES OR NOT. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THEY WERE CROSSED ACCOUNT P AYEE CHEQUES/PAY ORDERS. WE ARE OF THE VIEW THAT IT WOULD BE JUST AND PROPER TO SET AS IDE THE ORDER OF CIT(A) ON THIS ISSUE AND REMAND TO THE AO TO VERIFY WHETHER PAYMENTS IN QUESTION WAS BY CROSSED ACCOUNT PAYEE CHEQUES/PAY ORDERS AND IF SO NO ADDITION SHOU LD BE MADE U/S 40A(3) OF THE ACT. 20. GROUND NO.4 RAISED BY THE REVENUE READS AS FOLLOWS :- 4) THAT THE LD. CIT (A) ERRED IN DELETING THE ADDIT ION OF RS. 887000/-AT HIS OWN MOTION THOUGH REMAND REPORT DID NOT SUGGEST THE NON- APPLI CABILITY OF SEC 2(22)(E). 21. THE ASSESSEE RECEIVED LOANS FROM THE FOLLOW ING COMPANIES : 1) R.G.P. SPONGE & IRON LTD RS.2,25,000/- 2) R.G.P. COTTONWINES PVT. LTD. RS.6,62,000/- 7 ITA NO.1145/KOL/2008 SHRI NAVIN KR.PODDAR A.YR.2003-04 7 THE AO HELD THAT THE ASSESSEE WAS A DIRECTOR IN THE SE COMPANIES AND HELD MORE THAN 10% SHARES. THE A.O HELD THAT THE LOAN RECEIVED IS ASSESSABLE AS DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT. BEFORE CIT(A), THE ASSESS EE CONTENDED THAT THE ASSESSEE IS NOT HOLDING SUBSTANTIAL INTEREST, IN THE AFORESAID COM PANIES. IT WAS FURTHER SUBMITTED THAT THESE COMPANIES HAVE NO RESERVE AND HENCE THE AMOUN T IS NOT ASSESSABLE AS DEEMED DIVIDEND BECAUSE ONE OF THE CONDITIONS FOR TREATING A LOAN OR ADVANCE AS DEEMED DIVIDEND IS THAT THE COMPANY GIVING LOAN OR ADVANCE SHOULD HAVE SUFFICIENT ACCUMULATED PROFITS. IT WAS PRAYED THAT THE ADDITION BE DELETED . EVIDENCE TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE WAS SUBMITTED BY THE ASSESSEE BEFORE C IT(A) WHO FORWARDED THE SAME TO THE A.O FOR REMAND REPORT. THE A.O STATED IN HIS RE MAND REPORT NO.46(3)/REMAND REPORT/07-08/311 DT.21.9.2007 THAT THE DOCUMENTS WE RE VERIFIED. IT WAS SUBMITTED BY THE AO IN THE REMAND REPORT THAT R.G.P. COTTWINES P VT LTD HAD PROFIT OF RS.6419/- ONLY. THE OTHER COMPANY WAS STATED TO BE HAVING NO PROFIT . IN VIEW OF THE FINDINGS OF THE A.O, IN THE REMAND REPORT, THE CIT(A) HELD THAT THE PROV ISIONS OF SECTION 2(22)(E) WAS NOT APPLICABLE. THE A.O WAS DIRECTED TO DELETE THE ADDI TION. 22. AGGRIEVED BY THE CIT(A)S ORDER THE REVENUE HAS RAISED GROUND NO.4 BEFORE THE TRIBUNAL. 23. THE LD. DR REITERATED THE STAND OF THE REVEN UE AS REFLECTED IN THE GROUNDS OF APPEAL. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF CIT(A). 24. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN THE REMAND REPORT THE AO HAS STATED AS FOLLOWS ON THIS ISSUE :- REGARDING ADDITION U/S 2(22)(E) AMOUNTING TO RS.8, 87,000/- THE ASSESSEE FURNISHED DETAILS/EVIDENCE IN RESPECT OF TWO COMPANIES FROM W HOM THE ASSESSEE HAD TAKEN LOAN. (THE ASSESSEE WAS ONE OF THE DIRECTOR HOLDING MORE THAN 10% OF SHARES) AND CLAIMED THAT THE TWO COMPANIES DERIVED ACCUMULATED LOSS DURING THE F .Y. 200-03 AND HENCE SECTION 2(22)(E) DOES NOT ATTRACT. ONLY M/S RGP COT TWINS P VT. LTD. WAS HAVING ONLY PROFIT OF RS, 6,419/- AS ON 31.03.2003. HOWEVER LETTERS ISSUED T O ABOVE TWO COMPANIES ASKING FOR FURNISHING DETAILS I.E. DATE OF GIVING LOAN, ACCUMU LATED PROFIT/LOSS AS ON THE DATE OF GIVING LOAN TO THE ASSESSEE ETC. .LETTER FROM R G P SPONGE IRON AND STEEL LTD. AND R G P COT WINES PVT, LTD HAVE BEEN RECEIVED WITH NECESSARY D OCUMENTS. 8 ITA NO.1145/KOL/2008 SHRI NAVIN KR.PODDAR A.YR.2003-04 8 25. WE ARE OF THE VIEW THAT IN THE LIGHT OF THE REMAND REPORT AS AFORESAID AT BEST THERE CAN ONLY BE AN ADDITION OF RS.6419/- WHICH IS THE A CCUMULATED PROFIT OF M/S. RGP COT TWINS PVT.LTD., U/S 2(22)(E) OF THE ACT. WE, THEREF ORE ARE OF THE VIEW THAT THE ADDITION TO THE ABOVE EXTENT SHOULD BE SUSTAINED. THUS GROUND N O.4 RAISED BY THE REVENUE IS PARTLY ALLOWED. 26. GROUND NO.5 RAISED BY THE REVENUE READS AS FO LLOWS :- 5) THAT THE LD. CIT(A) ERRED IN DELETING THE ADDIT ION OF CASH PAYMENT OF RS.203234/- IGNORING THE REMAND REPORT . 27. THE A.O NOTICED THAT THE ASSESSEE MADE PURCH ASES BY PAYMENT IN CASH. THE THE FOLLOWING AMOUNTS WERE PURCHASES BY CASH. 1) MODERN ENGINEERING WORKS RS.1,03,170/- 2) R.G.P. COTTWINES PVT LTD RS.L,00,064/- THE A.O HELD THAT THE ASSESSEE INCURRED EXPENDITURE IN CASH FOR WHICH NO SATISFACTORY EXPLANATION WAS NOT FILED AND ACCORDINGLY . THE A.O DISALLOWED THE AMOUNT OF RS.2,03,234/-. BEFORE CIT(A), THE ASSESSEE CONTENDE D THAT THE A.O ERRED IN DISALLOWING CASH PURCHASE OF RS.2,43,234/- IT WAS S UBMITTED THAT THE PAYMENTS ARE NOT CLAIMED AS EXPENDITURE FOR THIS YEAR. IT WAS SUBMIT TED THAT THE PAYMENTS ARE AGAINST THE OPENING BALANCE DUE. IT IS PRAYED THAT THE ADDITION BE DELETED. IN THE COURSE OF APPEAL PROCEEDINGS, THE ASSESSEE FURNISHED EVIDENCE TO SUB STANTIATE ITS CLAIM WHICH WAS FORWARDED TO THE A.O. FOR REMAND REPORT. THE A.O. I N HIS REMAND REPORT NO.46(3)/REMAND REPORT/07-08/311 DATED 21/.09.2007 STATED THAT ASSESSEE HAS MADE PAYMENTS TOWARDS THE OPENING BALANCE DUE. THE EXPEN DITURE WAS NOT INCURRED BY THE ASSESSEE DURING THE RELEVANT ASSESSMENT YEAR. IN VI EW OF THE REMAND REPORT, DISALLOWANCE MADE BY THE A.O. WAS HELD BY THE CIT(A ) TO BE NOT SUSTAINABLE. THE A.O. WAS DIRECTED TO DELETE THIS ADDITION. 28. AGGRIEVED BY THE CIT(A)S ORDER THE REVENUE H AS RAISED GROUND NO.5 BEFORE THE TRIBUNAL. 9 ITA NO.1145/KOL/2008 SHRI NAVIN KR.PODDAR A.YR.2003-04 9 29. THE LD. DR REITERATED THE STAND OF THE REVE NUE AS REFLECTED IN THE GROUNDS OF APPEAL. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF CIT(A). 30. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. I N THE REMAND REPORT THE AO HAS STATED AS FOLLOWS ON THIS ISSUE :- REGARDING ADDITION OF RS.2,03,234/- UNDER THE HEA D CASH PAID TO MODERN ENGINEERING WORKS RS. 1,03,170/- AND R.G.P.. COTTWINES PVT. LT D. RS.1,00,064/- FOR PURCHASE OF RAW MATERIALS AS PER TAX AUDIT REPORT. DURING THE COUR SE OF PROCEEDINGS THE ASSESSEE COULD NOT FURNISH ANY DETAILS EXPENDITURE . THE ASSESSEE STATED IN HIS LETTER DT, 19.02.2007 THAT THE PAYMENTS RELATED TO EARLIER YEAR'S LIABILITIES AND THESE AMOUNT HAVE NOT CLAIMED AS EXPENDITURE DURING THE YEAR. 'THE ASSESSEE FURNISH THE LEDGER COPY AND CASH BOOK WHICH HAVE BEEN VERIFIED AND IT HAS BEEN NOTICED THAT AS PER FORM 3CD PARA 18 PAYMENT MADE TO RGP COTTWINES AMOUNTING RS. 1,60,064/- AND NO MENTI ON OF MODERN ENGINEERING WORKS IN FORM 3 CD BUT AS PER LEDGER COPY OF THE ABOVE TW O PARTIES THE PAYMENTS OF RS. 1,03,170/- TO MODERN ENGINEERING WORKS AND RS. 1,60 ,064/- TO RGP COTTWINES AGAINST THEIR OPENING BALANCE ONLY. 31. THE ASSESSEE FOLLOWS THE MERCANTILE METHOD O F ACCOUNTING AND THESE PAYMENTS MADE TO THE TWO PARTIES WERE NEVER CLAIMED AS DEDUC TION DURING THE PREVIOUS YEAR. IT IS CLEAR FROM THE REMAND REPORT THAT THE LIABILITY DOE S NOT RELATE TO THE PREVIOUS YEAR RELEVANT TO A.Y.2003-04. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE CONCLUSIONS DRAWN BY THE CIT(A) WERE JUST AND PROPER AND CALLS FOR NO INTERFERENCE. ACCORDINGLY GROUND NO.5 RAISED BY THE REVENUE IS DISMISSED. 32. GROUND NO.6 RAISED BY THE REVENUE READS AS FO LLOWS :- 6) THAT THE LD.CIT(A) ERRED IN DELETING THE ADDITI ON OF RS: 1,71,16,073/- IGNORING THE REMAND REPORTS. REMAND REPORT NEVER SUGGESTED CORRE CTNESS OF YIELD FINISHED PRODUCTS. 33. THE A.O COMPARED THE QUANTUM OF BAGS MANUFAC TURED FOR THIS YEAR WITH THE EARLIER YEAR. THE A.O HELD THAT THE PERCENTAGE OF T HE BAGS MANUFACTURED COMPARED TO THE RAW MATERIAL CLOTH WAS 112% FOR THIS YEAR. THE A.O HELD THAT IN THE PREVIOUS YEAR, THE YIELD OF BAGS WAS 127%. THE A.O HELD THAT THE A SSESSEE HAS NOT SATISFACTORILY EXPLAINED THE SHORTAGE OF YIELD. THE A.O MADE AN AD DITION OF RS.1,71,16,073/- TOWARDS 10 ITA NO.1145/KOL/2008 SHRI NAVIN KR.PODDAR A.YR.2003-04 10 THE SHORTAGE OF YIELD. BEFORE CIT(A), THE ASSESSEE CONTENDED THAT THE A.O ERRED IN ESTIMATING SHORTAGE OF YIELD AND MAKING AN ADDITION OF RS.L,71,16,073/- TOWARDS UNACCOUNTED SALES. IT WAS SUBMITTED THAT THE COMPAR ISON IS NOT CORRECT. IT WAS PRAYED THAT THE ADDITION BE DELETED. THE ASSESSEE SUBMITTE D THAT THE A.O ERRED IN COMPARING THE YIELD WITH REFERENCE TO THE RAW MATERIAL CLOTH. IT WAS CONTENDED THAT THE SIZE OF THE BAGS VARIES FOR EACH YEAR. IT WAS CONTENDED THAT THE CLO TH IS MEASURED IN METER WHEREAS THE BAG IS COUNTED AS UNITS. IT WAS CONTENDED THAT THE QUANTIFICATION OF THE SHORTAGE OF YIELD WAS THEREFORE INCORRECT. IT WAS SUBMITTED THAT THE ADDITION IS EXCESSIVE. IN THE REMAND REPORT NO. NO.46(3)/REMAND REPORT/07-08/311 DT.21.9 .2007, THE A.O EXAMINED THE STOCK REGISTER, PRODUCTION REGISTER AND RAW MATERIA L CONSUMPTION. CALCULATION OF THE SHORTAGE WORKED OUT EARLIER WAS REPORTED TO BE INCO RRECT. IN VIEW OF THE REMAND REPORT SUBMITTED BY THE A.O, THE ADDITION WAS HELD BY THE CIT(A) TO BE NOT SUSTAINABLE. THE A.O WAS DIRECTED TO DELETE THE ADDITION. 34. AGGRIEVED BY THE CIT(A)S ORDER THE REVENUE HAS RAISED GROUND NO.6 BEFORE THE TRIBUNAL. 35. THE LD. DR REITERATED THE STAND OF THE REVEN UE AS REFLECTED IN THE GROUNDS OF APPEAL. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF CIT(A). 36. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ON THE ABOVE ISSUE IN THE REMAND REPORT THE AO HAS STATED AS FOLLOWS :- REGARDING ADDITION IN RESPECT OF YIELD OF FINISH PRODUCT AMOUNTING TO RS.1,71, 16,073/- DURING THE COURSE OF PROCEEDINGS THE ASSESEE WAS NO T ABLE TO FURNISH ANY' DOCUMENTARY EVIDENCE I.E. STOCK REGISTER, PRODUCTION REGISTER E TC. REGARDING THE % OF YIELD FOR THIS YEAR 112% COMPARE TO 127% LAST YEAR, BUT THE ASSESSEE HA D RAISED OBJECTION IN. 'THE LETTER 17.03.2007 FOR THE PROPOSED ADDITION STATING THAT T HE CONSUMPTION OF RAW MATERIAL VARY ON THE SIZE OF FINISH PRODUCTS. NOW THE ASSESSEE PRODU CED ORIGINAL STOCK REGISTER, PRODUCTION REGISTER AND S CHART OF RAW MATERIAL CONSUMPTION I. E, HESSIAN CLOTHS OF' DIFFERENT SIZES OF FINISH PRODUCTS I.E. HESSIAN HAGS THEY ALSO POINTE D OUT THAT UNIT OF RAW MATERIAL IS IN METERS AND UNIT OR FINISH PRODUCTS IS IN NUMBER THU S THE CALCULATION THE YIELD OF FINISH PRODUCTS BY HAVING TWO DIFFERENT UNIT OF MEASUREMEN T IS NOT CORRECT. 37. IT IS CLEAR FROM THE REMAND REPORT THAT THE ASSESSEE PROVIDED ORIGINAL STOCK REGISTER, PRODUCTION REGISTER AND CHART OF RAW MATE RIALS CONSUMPTION. THE UNIT OF RAW 11 ITA NO.1145/KOL/2008 SHRI NAVIN KR.PODDAR A.YR.2003-04 11 MATERIAL IS IN METERS AND THE UNIT OF FINISHED PROD UCT IS IN NUMBER AS PER THE CALCULATIONS OF THE AO. THIS WAS RIGHTLY HELD BY TH E CIT(A) TO BE NOT A PROPER CALCULATION FOR ALL THE FINISHED PRODUCTS. THE REMA ND REPORT OF THE AO ALSO ADMITTED THE INCORRECTNESS OF THE COMPUTATION OF YIELD BY THE AO , WHICH COULD NOT BE CONTROVERTED BEFORE US. IN THESE CIRCUMSTANCES WE ARE OF THE VI EW THAT THE CONCLUSION DRAWN BY THE CIT(A) ARE JUST AND PROPER AND CALLS FOR NO INTERFE RENCE AND ACCORDINGLY GROUND NO.6 RAISED BY THE REVENUE IS DISMISSED. 38. GROUND NOS.7 AND 8 RAISED BY THE REVENUE REA DS AS FOLLOWS :- 7 & 8) THAT THE LD. CIT(A) ERRED IN DELETING THE A DDITION OF RS: 408436/- IN THE CASE OF M/S ADITYA TRANSILK (P) LLD AND RS. 2931575/-. IN T HE CASE OF HOOGHLY MILLS LTD IGNORING THE REMAND REPORT. 39. THE A.O COMPARED THE OPENING AND CLOSING BAL ANCE OF M/S ADITYA TRANSLINK PVT LTD WITH THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE A.O NOTICED A DIFFERENCE OF RS.4,08,436/-. ACCORDING TO THE AO THE ASSESSEE FAI LED TO RECONCILE THE DIFFERENCE. HENCE, THE A.O MADE AN ADDITION OF RS.4,08,436/-. BEFORE CIT(A), THE ASSESSEE CONTENDED THAT THE A.O ERRED IN ASSESSING A DIFFER ENCE IN A/CS OF ADITYA TRANSLINK PVT LTD OF RS4,08,436/-. IT WAS SUBMITTED THAT THE A.O ERRED IN IGNORING THE A/CS. IT WAS SUBMITTED THAT THE A.O COMPARED THE OPENING AND CLO SING BALANCE OF ADITYA TRANSLINK PVT LTD WITH THE BOOKS OF THE ASSESSEE. THE RECONC ILIATION OF THE ACCOUNT SUBMITTED BY THE ASSESSEE IS FORWARDED TO THE A.O FOR REMAND REP ORT. THE A.O IN HIS REMAND REPORT NO. 46(3)/REMAND REPORT/07-08/311 DT.21.9.20 07 STATED THAT THE ASSESSEE HAS RECONCILED THE ACCOUNTS AND THERE IS NO DIFFERENCE. THE LEDGER ACCOUNT OF THE CREDITOR WAS COMPARED WITH THE ASSESSEES ACCOUNTS. IN VIEW OF THE REMAND REPORT, THE ADDITION WAS HELD TO BE NOT SUSTAINABLE BY THE CIT(A). THE A.O WAS DIRECTED TO DELETE THE ADDITION . AS FAR AS THE ADDITION MADE ON ACCOUNT OF DIFFERENC E IN ACCOUNTS WITH M/S.HOOGLY MILLS LTD., IS CONCERNED, THE A.O COMPARED THE ACCOUNTS O F THE HOOGHLY MILLS CO LTD WITH THE BOOKS OF THE ASSESSEE. THE AO NOTICED A DIFFERE NCE OF RS.29,31,575/-. SINCE THE 12 ITA NO.1145/KOL/2008 SHRI NAVIN KR.PODDAR A.YR.2003-04 12 ASSESSEE HAS NOT FILED RECONCILIATION, THE A.O ASSE SSED THE DIFFERENCE. BEFORE CIT(A), THE ASSESSEE CONTENDED THAT THE A.O ERRED IN IGNORI NG THE ACCOUNTS AND LEDGER PRODUCED AND ASSESSING THE DIFFERENCE OF RS.29,31,575/-. IT WAS PRAYED THAT THE ADDITION BE DELETED. THE RECONCILIATION FILED WAS REFERRED TO T HE A.O BY THE CIT(A) AND THE REMAND REPORT WAS RECEIVED. IN THE REMAND REPORT NO. 46(3) /REMAND REPORT/07-08/311 DATED 21.09.2007, THE A.O REPORTED THAT THE ASSESSEE'S CL OSING BALANCE REQUIRES TO BE CORRECTLY ADOPTED AT RS.20,03,150/-. AFTER CONSIDERING THE BA LANCE IN THE JUTE MILLS RUN BY HOOGHLY MILLS CO LTD, THE A.O REPORTED THAT SIX CHE QUES AGGREGATED TO RS.17,10,241/- WERE DISHONOURED AND ARE NOT RECEIVED BY THE CREDIT OR. THE A.O VERIFIED THE BANK STATEMENT AND LEDGER COPY OF THE CREDITOR. IN VIEW OF THE REMAND REPORT OF THE A.O THE CLOSING BALANCE DIFFERENCE NOTICED WAS HELD BY THE CIT(A) TO BE PROPERLY EXPLAINED, HENCE, ADDITION OF RS.29,31,575/- WAS HELD BY THE C IT(A) TO BE NOT SUSTAINABLE. THE A.O WAS DIRECTED TO DELETE THE ADDITION. 40. AGGRIEVED BY THE CIT(A)S ORDER THE REVENUE H AS RAISED GROUND NO.7&8 BEFORE THE TRIBUNAL. 41. THE LD. DR REITERATED THE STAND OF THE REVEN UE AS REFLECTED IN THE GROUNDS OF APPEAL. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF CIT(A). 42. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ON THE ABOVE ISSUES IN THE REMAND REPORT THE AO HAS STATED AS FOLLOWS :- 7) REGARDING .ADDITION OF RS.4,08,436/- ON ACCOUNT OF DIFFERENCE IN OPENING BALANCE (RS. 1,64,237/-) AND CLOSING BALANCE ( RS. 2,44,199/-) O F OUTSTANDING OF M/S ADITYA TRANSLINK PVT. LTD. WITH THE AMOUNT SHOWN IN THE BOOKS, OF CR EDITOR DURING THE COURSE OF PROCEEDING THE ASSESSEE COULD NOT EXPLAINED THE SAME. NOW THE ASSESSEE FURNISH THE EXPLANATION THAT THEY HAVE MADE THE PAYMENT' OF' RS. 1,64,237/- ON 0 2.04.2002 WHICH THE CREDITORS HAS ALSO ACKNOWLEDGE AGAINST THE OPENING BALANCE. A SUM OF RS. 2,44,199/- HAVE BEEN PAID SUBSEQUENT TO THE BALANCE SHEET DATE. BUT THE CREDI TOR HAS SHOWN RECEIPT OF CHEQUE WITHIN THE BALANCE SHEET DATE. AS SUCH THERE IS NO DIFFERE NCE BUT ONLY RECONCILIATION OF ACCOUNT. THE ASSSSEE PRODUCE LEDGER COPY OF THE CREDITOR WHI CH HAS BEEN VERIFIED WITH THE LEDGER A/C. OBTAINED FROM CREDITOR BY THE DEPARTMENT. 8) REGARDING ADDITION OF RS. 29,31,575/- ON ACCOUNT OF DIFFERENCE IN THE CLOSING BALANCE OF HOOGHLY MILLS CO. LTD. WITH THE AMOUNT SHOWN IN THE BOOKS OF SAID CREDITORS - DURING THE COURSE OF PROCEEDING THE ASSESSEE COULD NOT EX PLAINED THE SAME.. NOW THE ASSESSEE POINTED OUT THAT THE SAID CREDITOR IS HAVING FOUR JUTE MILLS NAMELY HOOGHLY JUTE, INDIA 13 ITA NO.1145/KOL/2008 SHRI NAVIN KR.PODDAR A.YR.2003-04 13 .JUTE, GONDELPARA, BOWREAH JUTE THE A.O. HAD TAKEN DOSING BALANCE OF INDIA JUTE ONLY LEAVING ASIDE OF .CLOSING BALANCE OF HOOGHLY JUTE WHICH WAS RS. 12,21,332/- THUS THE CLOSING BALANCE AS REPORTED BY THE CREDITOR TO THE DEPARTMENT SHOULD BE RS. 20,03,150/-. FOR THE BALANCE THE ASSESSEE EXPLAIN THAT SIX CHEQ UES AGGREGATING TO RS. 17,10,241/- WERE DISHONOURED DURING THE YEAR, WHICH HAVE NOT BEEN RE VERSED BY THE SAID CREDITORS. IN SUPPORT OF ABOVE THE ASSESSEE FURNISH THE BANK STAT EMENT AND LEDGER COPY OF THE CREDITOR. 43. IT IS CLEAR FROM THE REMAND REPORT OF THE AO FILED BEFORE CIT(A) THAT THE DIFFERENCE IN ACCOUNTS HAVE PROPERLY BEEN RECONCILED BY THE AS SESSEE. IN FACT IN THE REMAND REPORT THE AO HAS NOT RAISED ANY OBJECTION ON THE RECONCIL IATION FILED BY THE ASSESSEE. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THERE IS NO M ERIT IN GROUND NOS. 7 & 8 RAISED BY THE REVENUE AND THE SAME ARE DISMISSED. 44. GROUND NO.9 RAISED BY THE REVENUE READS AS FO LLOWS :- 9(A)( B)( C) THE LD. CIT(A) ERRED IN DELETING THE A DDITION OF RS. 2486790/- IN TOTAL OF A+B+C IGNORING THE REMAND REPORT 45. THE A.O NOTICED THAT THE ON VERIFICATION OF THE ACCOUNTS OF THE HOWRAH MILLS CO WITH THE ASSESSEES BOOKS, THE FOLLOWING PAYMENTS W ERE NOTICED WHICH WERE NOT PROPERLY RECORDED BY THE ASSESSEE IN THE BOOKS OF A CCOUNTS. THE PAYMENTS NOT SATISFACTORILY EXPLAINED BY THE ASSESSEEARE DISCUSS ED AT PARA 9A, 9B AND 9C OF THE ORDER OF ASSESSMENT. A TOTAL AMOUNT OF UNEXPLAINED PAYMEN T IS QUANTIFIED AT RS.24,86,790/-. THIS AMOUNT WAS ADDED TO THE INCOME. BEFORE CIT(A), THE ASSESSEE CONTENDED THAT THE A.O ERRED IN INVOKING PROVISIONS OF SECTION 68 AND ASSESSING PAYMENTS MADE TO THE HOWRAH MILLS CO OF RS.24,86,790/-. IT WAS SUBMITTED THAT THE AMOUNTS ARE NOT ASSESSABLE. IT WAS PRAYED THAT THE ADDITION BE DELE TED. THE SUBMISSIONS MADE BY THE ASSESSEE EXPLAINING THE PAYMENTS MADE TO HOWRAH MIL LS CO WERE FORWARDED TO THE A.O FOR VERIFICATION BY THE CIT(A). IN THE REMAND REPOR T NO. 46(3)/REMAND REPORT/07- 08/311 DT.21.9.2007, THE A.O SUBMITTED HIS REPORT. THE A.O EXAMINED THE AMOUNT OF RS.8,44,828/- DISCUSSED BY THE A.O AT PARA-9A OF TH E ASSESSMENT ORDER. THE A.O REPORTED THAT AN AMOUNT OF RS.3,60,257/- WAS PAID B Y PAY ORDER PURCHASED IN CASH AGAINST DISHONOURED CHEQUES. THREE CHEQUES AMOUNTIN G TO RS.4,84,577/- WERE WRONGLY 14 ITA NO.1145/KOL/2008 SHRI NAVIN KR.PODDAR A.YR.2003-04 14 POSTED IN THE LEDGER OF HOWRAH MILLS CO. THE A.O VE RIFIED BANK STATEMENT OF THE ASSESSEE AND THE BOOKS IN SUPPORT OF THE SUBMISSION S. AN AMOUNT OF RS.6,69,058/- DISCUSSED BY THE A.O AT PARA-9B OF THE ASSESSMENT O RDER WAS FOUND TO BE PAYMENT MADE BY FOUR ACCOUNT PAYEE PAY ORDERS PURCHASED IN CASH AGAINST THE DISHONOURED CHEQUES. THE PAYMENTS WERE REFLECTED IN THE CASH BOOK. AN AM OUNT OF RS.9,72,904/- DISCUSSED AT PARA-9C OF THE ASSESSMENT ORDER WAS FOUND TO BE PAYMENTS MADE BY THIRD PARTIES. THE A.O VERIFIED THE LEDGER OF HOWRAH MILLS CO AND THE ASSESSEES BOOKS. THE TRANSACTIONS WERE CHECKED BY THE A.O, NO DISCREPANCY IS NOTICED. THUS THE A.O EXAMINED THE TRANSACTIONS DISCUSSED BY THE A.O AT PARA-9A, 9B AN D 9C AND WAS SATISFIED WITH THE BOOKS OF ACCOUNTS AND THE SUBMISSIONS OF THE ASSESS EE. IN VIEW OF THE REMAND REPORT, THE CIT(A) HELD THAT THE ADDITION MADE BY THE A.O WAS NOT SUSTAINABLE. THE A.O WAS DIRECTED TO DELETE THE ADDITION OF RS.24,86,790/-. 46. AGGRIEVED BY THE CIT(A)S ORDER THE REVENUE HAS RAISED GROUND NO.9 BEFORE THE TRIBUNAL. 47. HE LD. DR REITERATED THE STAND OF THE REVENU E AS REFLECTED IN THE GROUNDS OF APPEAL. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDE R OF CIT(A). 48. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ON THE ABOVE ISSUE IN THE REMAND REPORT THE AO HAS STATED AS FOLLOWS :- REGARDING ADDITION OF RS.8,44,828/- ON ACCOUNT OF UNEXPLAINED PAYMENT TO HOWRAH MILLS LTD. THE ASSESEE DURING THE COURSE OF PROCEED ING THE ASSESSEE COULD NOT EXPLAIN THE SAME. NOW THE ASSESSEE EXPLAINED THAT HE HAS MADE T HE PAYMENT OF RS.3,60,251/- BY WAY OF AN ACCOUNT PAYEE PAY ORDER, PURCHASED IN CASH TO THE CREDITOR ON 17.04.2002, AGAINST THE DISHONOURED CHEQUE. FOR RS, 4,84,577/- IS STATE D THAT THREE CHEQUES NUMBERS 134520 ( RS.66,550/- ) , NO-134504 ( RS. 2,00,000/-) AND NO. -134529 (RS.2,18,027/-) WERE WRONGLY POSTED IN THE LEDGER OF HOWRAH MILLS LTD. FURTHER H E STATED THAT ALL THREE ABOVE CHEQUES WERE DULY REPORTED IN THE BANK STATEMENT AND IN HIS BOOKS. ANOTHER ADDITION OF RS.6,69,058/- ON ACCOUNTS OF U NEXPLAINED PAYMENT TO HOWRAH MILLS LTD., DURING THE COURSE OF PROCEEDING THE ASSESSEE COULD NOT EXPLAINED THE SAME. ,NOW THE ASSESSEE EXPLAINED THAT HE HAS MADE THE PAYMENTS BY FOUR DIFFERENT ACCOUNT PAYEE PAY ORDER, PURCHASED .IN CASH AGAINST THE DISHONORED CH EQUES. THE SAID PAYMENTS HAVE BEEN REFLECTED IN HIS CASH BOOKS. 15 ITA NO.1145/KOL/2008 SHRI NAVIN KR.PODDAR A.YR.2003-04 15 LASTLY AN ADDITION OF RS. 9,72,904/- ON ACCOUNT OF THIRD PARTY PAYMENT MADE TO HOWRAH MILLS LTD. DURING THE COURSE OF PROCEEDING THE ASS ESSEE COULD NOT EXPLAINED THE COMPLETE DETAILS OF THE PAYEE PARTIES. NOW THE ASSESSEE STA TED THAT THESE PAYMENTS WERE MADE AGAINST THE PURCHASE OF GOODS FROM SUCH PARTY. IN SUPPORT THERE OF THE ASSESSEE HAS NOW FURNISHED THE LEDGER COPY SUCH PARTY. THE TRANSACTI ONS WERE CHECKED WITH THE LEDGER COPY FROM HOWRAH MILLS LTD, OBTAINED, BY THE DEPART MENT. NO DISCREPANCY WAS FOUND. 49. ON A READING OF THE ABOVE REMAND REPORT, IT IS CLEAR THAT THE AO HAS NOT GIVEN ANY ADVERSE COMMENTS ON THE CLAIM MADE BY THE ASSESSEE. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THERE IS NO MERIT IN GROUND NO.9 RAIS ED BY THE REVENUE AND THE SAME IS DISMISSED. 50. GROUND NO.10 RAISED BY THE REVENUE READS AS FOLLOWS :- 10) THAT THE LD. CIT(A) ERRED IN DELETING THE ADDI TION OF RS. 289780/- OF TOTAL DISREGARD TO THE REMAND REPORT. 51. THE A.O EXAMINED THE PAYMENTS MADE BY THE AS SESSEE TO M/S BIRLA CORPORATION. THE A.O NOTICED THAT THE AMOUNT OF RS.2,89,780/- WA S PAID THROUGH PAY ORDERS RECEIVED FROM MR RASH BEHARI BOSE AND BALAJI EXPORTS. SINCE THE ASSESSEE FAILED TO FILE SATISFACTORILY EXPLANATION, THE A.O ADDED THIS AMOU NT. BEFORE CIT(A), THE ASSESSEE CONTENDED THAT THE A.O ERRED IN ASSESSING THE PAY O RDERS RECEIVED OF RS.2,89,780/- AS UNEXPLAINED CASH CREDIT. IT WAS SUBMITTED THAT THE AMOUNT WAS RECEIVED FROM THIRD PARTIES AND PAYMENT WAS MADE TO BIRLA CORPORATION. IT WAS PRAYED THAT THE ADDITION BE DELETED. EVIDENCE SUBMITTED IN SUPPORT OF THIS CONT ENTION WAS FORWARDED BY THE CIT(A) TO THE A.O FOR REMAND REPORT. THE A.O VIDE REMAND R EPORT NO, 46(3)/REMAND REPORT/07-08/311 DT.21.9.2007, REPORTED THAT THE RE CEIPT OF PAY ORDER FROM THE DEBTORS WERE VERIFIED. IN VIEW OF THE VERIFICATION MADE BY THE A.O, THE ADDITION OF THE AMOUNT OF RS.2,89,780/- IS HELD BY THE CIT(A) TO BE NOT CO RRECT. THE A.O WAS DIRECTED TO DELETE THIS ADDITION. 52. AGGRIEVED BY THE CIT(A)S ORDER THE REVENUE HAS RAISED GROUND NO.10 BEFORE THE TRIBUNAL. 53. THE LD. DR REITERATED THE STAND OF THE REVEN UE AS REFLECTED IN THE GROUNDS OF APPEAL. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF CIT(A). 16 ITA NO.1145/KOL/2008 SHRI NAVIN KR.PODDAR A.YR.2003-04 16 54. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ON THE ABOVE ISSUE IN THE REMAND REPORT THE AO HAS STATED AS FOLLOWS :- ADDITION OF RS.2,89,780/- ON ACCOUNT OF UNEXPLAINE D THIRD PARTY PAYMENTS TO BIRLA CORPORATION: LTD THE ASSESSEE COULD NOT FURNISH THE COMPLETE DETAILS DURING THE COURSE OF PROCEEDING. NOW THE ASSESSEE EXPLAINED THAT HIS DEB TOR HAD GIVEN PAY ORDER OF RS.1,99,786/- AGAINST HIS OUTSTANDING TO THE .BIRLA CORPORATION DIRECTLY. ANOTHER DEBTOR NAMELY BALAJI EXPORTS PAID RS.90,000/- TO BIRLA CO RPORATION. THE CLAIM OF ASSESSEE FOR THE PAYMENT OF RS. 90,000/- VERIFIED FROM THE SAID DEBTOR. 55. IT IS CLEAR FROM THE PERUSAL OF THE REMAND R EPORT OF THE AO THAT THERE IS NO ADVERSE COMMENTS GIVEN. IN SUCH CIRCUMSTANCES WE ARE OF THE VIEW THAT THE GRIEVANCES PROJECTED BY THE REVENUE IN GROUND NO.10 IS WITHOUT ANY MERIT AND THE SAME IS HEREBY DISMISSED. 56. GROUND NO.11 RAISED BY THE REVENUE READS AS FOLLOWS :- 11) THAT THE LD. CIT(A) ERRED IN DELETING THE ADDI TION OF RS. 91098/- MADE BY A.O DURING THE COURSE OF ASSESSMENT FOR FAILURE TO SUBM IT ANY SATISFACTORY EXPLANATION. 57. THE A.O NOTICED THAT THE ASSESSEE MADE PAYME NT OF RS.91,098/- TO BIRLA CORPORATION. THE A.O HELD THAT THIS PAYMENT IS NOT REFLECTED IN THE BOOKS OF ACCOUNTS, IN THE ABSENCE OF SATISFACTORY EXPLANATION, THE A.O ASSESSED THIS AMOUNT U/S.69C OF THE ACT. BEFORE CIT(A), THE ASSESSEE CONTENDED THAT TH E A.O ERRED IN MAKING ADDITION OF THE PAY ORDER BEING PAYMENT MADE TO BIRLA CORPORATI ON OF RS.91,098/-. IT WAS SUBMITTED THAT THE PAY ORDER WAS PURCHASED IN CASH AND IS REFLECTED IN CASH BOOK. IT WAS PRAYED THAT THE ADDITION BE DELETED. SUBMISSIO NS MADE BY THE A.O THAT THE PAY ORDER WAS PURCHASED IN CASH AND REFLECTED IN CASH B OOK WAS FORWARDED TO THE A.O FOR VERIFICATION. THE A.O IN THE REMAND REPORT NO. 46(3 )/REMAND REPORT/07-08/311 DATED 21.9.2007, REPORTED THAT THE PURCHASE OF PAY ORDER WAS VERIFIED AND WAS REFLECTED IN THE CASH BOOK. IN VIEW OF THE REPORT, THE ADDITI ON MADE BY THE A.O WAS HELD BY THE CIT(A) TO BE NOT SUSTAINABLE. THE A.O WAS DIRECTED TO DELETE THE ADDITION. 58. AGGRIEVED BY THE CIT(A)S ORDER THE REVENUE H AS RAISED GROUND NO.11 BEFORE THE TRIBUNAL. 17 ITA NO.1145/KOL/2008 SHRI NAVIN KR.PODDAR A.YR.2003-04 17 59. THE LD. DR REITERATED THE STAND OF THE REVENU E AS REFLECTED IN THE GROUNDS OF APPEAL. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDE R OF CIT(A). 60. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ON THE ABOVE ISSUE IN THE REMAND REPORT THE AO HAS STATED AS FOLLOWS :- ANOTHER ADDITION OF .RS.91,098/- WAS ADDED AS UNEX PLAINED INVESTMENT U/S 69C OF THE ACT, FOR THE PAYMENT MADE TO BIRLA CORPORATION. NO W THE ASSESSEE STATED THAT AN A/C. PAYEE PAY ORDER NO. 762441 DT. 22.08.2002 WAS GIVEN TO BIRLA CORPORATION DRAWN ON ABN AMRO BANK WHICH WAS PURCHASER IN CASH . THE SA ID PURCHASE OF PAY ORDER IS REFLECTED IN THE CASH BOOKS. 61. IT IS CLEAR FROM THE REMAND REPORT OF THE A O THAT THERE IS NO UNEXPLAINED INVESTMENT WHICH WARRANTS ANY ADDITION U/S 69C OF T HE ACT. WE THEREFORE DISMISS GROUND NO.11 RAISED BY THE REVENUE. 62. GROUND NO.12 RAISED BY THE REVENUE READS AS F OLLOWS :- 12) THAT THE LD. CIT(A) ERRED IN DELETION THE ADDI TION OF RS: 97965/-MADE BY A.O. AT THE TIME ASSESSMENT IN ABSENCE OF EXPLANATION. 63. THE A.O HELD THAT THE ASSESSEE HAS PAID RS.9 7,965/- TO NADIA MILLS THROUGH CANARA BANK. THE A.O HELD THAT THE ASSESSEE HAS NOT FILED EXPLANATION FOR THE PAYMENT REGARDING THE SOURCE. THE A.O ASSESSED THE AMOUNT U /S.69C OF THE ACT. BEFORE CIT(A), THE ASSESSEE CONTENDED THAT THE A.O ERRED IN ASSESS ING THE AMOUNT. IT WAS SUBMITTED THAT THE PAYMENT WAS MADE THROUGH THE BANK ACCOUNT. IT WAS PRAYED THAT THE ADDITION BE DELETED. THE SUBMISSIONS MADE BY THE ASSESSEE AR E FORWARDED TO THE A.O FOR REMAND REPORT. THE A.O IN THE REMAND REPORT NO. 46(3)/REMA ND REPORT/07-08/311 DT.21.9.2007, REPORTED THAT THE ASSESSEE HAS PRODUC ED THE BANK A/C OF THE CANARA BANK AND LEDGER COPY OF THE NADIA MILLS. THE A.O REPORTE D THAT THE PAYMENT IS REFLECTED IN THE BANK A/C. IN VIEW OF THE REMAND REPORT, THE ADD ITION MADE BY THE A.O WAS HELD BY THE CIT(A) TO BE NOT SUSTAINABLE. THE A.O WAS DIREC TED TO DELETE THIS ADDITION. 64. AGGRIEVED BY THE CIT(A)S ORDER THE REVENUE HAS RAISED GROUND NO.12 BEFORE THE TRIBUNAL. 18 ITA NO.1145/KOL/2008 SHRI NAVIN KR.PODDAR A.YR.2003-04 18 65. THE LD. DR REITERATED THE STAND OF THE REVEN UE AS REFLECTED IN THE GROUNDS OF APPEAL. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF CIT(A). 66. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ON THE ABOVE ISSUE IN THE REMAND REPORT THE AO HAS STATED AS FOLLOWS :- 11. AN ADDITION OF RS.97,965/- WAS ADDED AS UNEXPL AINED INVESTMENT U/S 69C OF THE ACT, FOR THE PAYMENT MADE TO NUDDEA MILLS. THE ASSESSEE PRODUCED BANK STATEMENT OF CANARA BANK AND THE LEDGER COPY OF NUDDEA MILLS. TH E PAYMENT IS REFLECTED IN THE BANK BOOK, WHICH HAS BEEN VERIFIED. 67. IT IS CLEAR FROM THE REMAND REPORT OF THE AO THAT THERE WAS NO UNEXPLAINED INVESTMENT WHICH CALLS FOR AN ADDITION U/S 69C OF T HE ACT. THE PAYMENTS ARE DULY REFLECTED IN THE BANK ACCOUNT. IN THESE CIRCUMSTANC ES WE DO NOT FIND ANY MERIT IN GROUND NO.12 RAISED BY THE REVENUE. CONSEQUENTLY THE SAME IS DISMISSED. 68. IN THE RESULT THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 10.08.2016. SD/- SD/- [DR.ARJUN LAL SAINI] [ N.V.VASUDEVA N ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 10.08.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1SHRI NAVIN KUMAR PODDAR, 115, G.T.ROAD (S), SALKIA , HOWRAH-711106. 2. I.T.O., WARD-46(3), KOLKATA. 3. CIT(A)-XXX, KOLKATA. 4. CIT-XVI, KOLKATA . 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES 19 ITA NO.1145/KOL/2008 SHRI NAVIN KR.PODDAR A.YR.2003-04 19