DCIT, Circle -8, Kolkata, Kolkata V. M/s. West Bengal Lottery Stockists Syndicate(P)Ltd, Kolkata

ITA 1163/KOL/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4634 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-04-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 09-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SNEHOTPAL DATTA
• Assessee Lawyers: D K DE SARKAR
• Keywords: Unexplained investment; Business income; Cost of acquisition
• Section: 143(3); 142(1); 56(2); 131; 69; 12

Judgement Text

ITA NO.1163/KOL/2012 M/S. W.B.LOTTERY STOCKISTS SYNDICATE PVT. LTD. 1 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C, KOLKATA (BEFORE SHRI WASEEM AHMED, A.M. & SHRI S.S.VISWANET HRA RAVI, J.M.) ITA NO. 1163/KOL/2012 : ASSTT. YEAR : 2004-2005 DCIT, CIRCLE-8, KOLKATA VS M/S W.B.LOTTERY STOCKISTS SYNDICATE PVT.LTD. PAN: AAACW 5102G (APPELLANT) (RESPONDENT) C.O. NO. 89/KOL/2012 : ASSTT. YEAR : 2004-2005 (ARISING OUT OF ITA NO. 1163/KOL/2012) M/S W.B.LOTTERY STOCKISTS SYNDICATE PVT.LTD. PAN: AAACW 5102G VS DCIT, CIRCLE-8, KOLKATA (CROSS OBJECTOR) ( RESPONDENT ) DEPARTMENT BY : SHRI SNEHOTPAL DATTA, JCIT, SR .DR ASSESSEE BY : SHRI D.K.D E SARKAR, FCA DATE OF HEARING : 08.04.2016 DATE OF PRONOUNCEMENT : 22-06-2016 ORDER PER SHRI S.S.VISWANETHRA RAVI, J.M . THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE ARISING OUT OF COMMON ORDER DATED 17.05.2012 PASSED BY THE CIT(A)-VIII, KOLKATA FOR THE ASSESSMENT YEAR 2004-05 FRAMED UNDER SECTIO N 143(3) OF THE ACT. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS IN ITS APPEAL: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT RS.69,59,120/- PRI ZE MONEY WINNING OUT OF LOTTERY TICKETS WAS BUSINESS INCOME NOT INCO ME FROM OTHER SOURCES. ITA NO.1163/KOL/2012 M/S. W.B.LOTTERY STOCKISTS SYNDICATE PVT. LTD. 2 2. THAT THE APPELLANT RESERVES THE RIGHT TO AMEND , ALTER OR ADD TO ANY GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING O F THE APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A COMPANY AND IS A WHOLE SALE DEALER IN LOTTERY TICKETS AND FILED ITS RETURN OF INCOME ON 29.10.2004 DECLARING A TOTAL LOSS OF RS.2,08,32,311/- AND ON SCRUTINY NO TICES UNDER SECTION 143(2)(II) WAS ISSUED AND THEREAFTER, NOTICE UNDER SECTION 142(1) OF THE ACT WAS ISSUED WITH DETAILED QUESTIONNAIRE. 4. GROUND NO-1 RELATING TO ADDITION OF RS.69,59,120 /- MADE BY THE AO CONSIDERING THE INCOME DETERMINED FROM UNSOLD LOTTE RY WINING (PRIZE) MONEY. 5. THE ASSESSEE IS A DEALER OF LOTTERY TICKETS AND WON SOME PRIZE MONEY ON THE UNSOLD STOCK OF LOTTERY TICKET. THE AO OBSERVED THA T THE STATUTORY AUDITOR OR TAX AUDITOR OF ASSESSEE HAS NOT FURNISHED THE REQUIRED INFORMATION IN RESPECT OF STOCK AS PER THE INCOME TAX ACT. THE TAX AUDIT REPORT OF ASSESSEE SHOWS THE CLOSING STOCK OF UNSOLD TICKETS NIL, BUT AS PER THE BALANCE SHEET SUBMITTED WITH THE RETURN OF INCOME THE CLOSING STOCK OF LOTTERY TICKETS HAS BEEN SHOWN. FURTHER, THE AO OBSERVED THAT THE AUDITORS OF ASSESSEE DID NOT EXAM INE THE TRADING ACTIVITY OF THE ASSESSEE AND ITS STOCK POSITION THOROUGHLY WHILE CO NDUCTING THE AUDIT REQUIRED AS PER COMPANIES ACT AND U/S. 44AB OF THE INCOME TAX A CT, 1961. AS THE ASSESSEE FAILED TO ESTABLISH THAT THE PRIZE-WINNING MONEY ON WHICH TAX WAS TO BE DEDUCTED AT SOURCE AND AS NO TAX WAS DEDUCTED BY THE STATE LOTT ERIES ON PRIZE-WINNING AS SHOWN ON PRIZE WINNING TICKET AND ON BULK TICKETS O F ABOUT RS.26 CRORES AND @30% BEING RS.69,59,120/- OF LOTTERY PRIZE MONEY U /S. 56(2) AND THE A.O. TREATED THIS INCOME SEPARATELY AND ASSESSED THE INC OME AS INCOME FROM OTHER ITA NO.1163/KOL/2012 M/S. W.B.LOTTERY STOCKISTS SYNDICATE PVT. LTD. 3 SOURCES AND ASSESSED TAX ACCORDINGLY AFTER DETAILED DISCUSSION IN THE ASSESSMENT ORDER AS UNDER: AS PER THE INCOME TAX ACT, 1961, WINNINGS FROM LOT TERY IS INCOME FROM OTHER SOURCES AND IS LIABLE TO TAX @ 30% U/S. 56(2) (IB) OF THE ACT. HOWEVER, INCOME ARISING TO AN AGENT-TRADER IN RESPE CT OF PRIZES ON UNSOLD/UNCLAIMED LOTTERY TICKETS IN POSSESSION OF A N AGENT IS BUSINESS INCOME. IN THIS CASE, THE PRIMARY ONUS IS ON THE AS SESSEE TO PROVE THAT THE PRIZES WERE WON ON SUCH UNSOLD TICKETS (UNSOLD STOC K REMAINING AFTER SALES- RETURN TO THE STATE LOTTERY COMMISSION). 6. THE ASSESSEE CHALLENGED THE ADDITION MADE BY THE AO IN FIRST APPEAL BEFORE THE CIT-A CONTENDING THAT THE ASSESSEE IS ENGAGED I N THE BUSINESS OF LOTTERY TICKET BUSINESS WITH DIRECTOR OF STATE LOTTERY, GOVERNMENT OF WEST BENGAL. AS PER THE SOLE SELLING AGREEMENT WITH DIRECTOR OF STATE LOTTE RY, THE ASSESSEE WAS DUTY BOUND TO SELL 90% OF THE TICKET PURCHASED AND THE BALANCE 10% MAY BE TREATED AS PURCHASE RETURN. IN THE EVENT THE ASSESSEE WAS UNABLE TO SEL L 90% OF THE TOTAL PURCHASE THEN THE SAID LOSS TO BE BORNE BY THE ASSESSEE. THE UNIQ UE FEATURES OF LOTTERY TICKET BUSINESS AS SUBMITTED AS BELOW: 1. A LOTTERY TICKET DEALER'S DUTY IS NOT ENDED WITH SALE AND PURCHASE BUT HE IS ALSO RESPONSIBLE TO PAY FOR BULK TICKET, PRIZ E WINNING MONEY (BELOW RS.5,000.00 AND GET REIMBURSEMENT FROM THE UPPER TI RE SELLER . 2. BULK TICKET- BALANCE SHEET ITEM (COUNTERPART OR PWT PAID TO ACTUAL SELLER (RETAILERS) AND TO BE REIMBURSED FROM WBSL). AT THE END OF THE YEAR THE PAYMENT ON BULK TICKETS BUT NOT REIMBURSED BY W BSL 3. PRIZE WINNING TICKETT (PWT)- BALANCE SHEET ITEM (PRIZE AMOUNT PAID TO ACTUAL WINNER AND TO BE REIMBURSED FROM WBSL- PR IZE MONEY BELOW RS.5.000/-). AT THE END OF THE YEAR THE PAYMENT ON PWT BUT NOT REIMBURSED BY WBSL. 4. UNSOLD MEANS THE LOTTERY TICKET REMAIN IN STOCK AFTER THE DRAW DATE. UNLIKE OTHER STOCK, LOTTERY TICKETS BECOME SCRAP AN D VALUE LESS AFTER THE DRAW DATE. A SIMILARITY MAY BE DRAWN WITH THE DATE EXPIR ED MEDICINE SUBJECT TO ITA NO.1163/KOL/2012 M/S. W.B.LOTTERY STOCKISTS SYNDICATE PVT. LTD. 4 EXCEPTION THAT THE UNSOLD TICKET, IF NOT RETURNED O R NOT ABLE TO RETURN TO WBSL, THERE IS A POSSIBILITY TO WIN PRIZE MONEY. 7. THE CIT-A AFTER CONSIDERING THE ABOVE SUBMISSION S AND GAVE RELIEF TO THE ASSESSEE AND HAS OPINED AS UNDER: SO, FROM THE FACT OF THE CASE IT IS APPARENT THAT T HE PRIZES WERE WON OUT OF SUCH UNSOLD TICKETS. DEFINITELY THE ASSESSEE DID NOT PURCHASE ANY TICKET OVER AND ABOVE THE PURCHASE SHOWN IN THE PROFIT AND LOSS ACCOUNT. THE ASSESSEE ALSO RETURNED THE UNSOLD TICKET TO THE EXT ENT OF 10%, AS STIPULATED IN THE SOLE SELLING AGREEMENT. THE ASSESSEE, BEING A B USINESS UNIT OF LOTTERY TICKET QUITE UNDERSTANDS THAT PURCHASE COST OR LOTT ERY TICKET WOULD BE MUST MORE THAN THE PRIZE MONEY, IF ANY. LOTTERY WINNING IS A CONTINGENT FACTOR AND NO BUSINESS MERIT WOULD INVEST THEIR MONEY TO SUCH CHANCE FACTOR. THE ASSESSING OFFICER DID NOT POINT OUT ANY OTHER EVENT UALITY FOR SUCH WINNING TICKET. THEREFORE, THE WINNING TICKETS ARC DEFINITE LY OUT OF UNSOLD STOCK WHICH IS AN INCIDENTAL ACTIVITY OF THE BUSINESS. THE ASSESSING OFFICER MENTIONED IN HIS ORDER THAT ' FROM THE FACTS ON RECORD, IT IS NOTICED THAT THE ASSESSEE COMPANY HAS ENTERED INTO AN AGREEMENT WITH DIRECTOR OF WEST BENGAL STATE LOTTER Y. AS PER THE AGREEMENT, THE MINIMUM GUARANTEED MARKETING OF LOTTERY TICKETS BY THE ASSESSEE COMPANY SHALL BE 90% OF TOTAL TICKET PRINTED BY THE STATE LOTTERY. AS PER THE AGREEMENT THE REMAINING UNSOLD TICKETS HAVE TO BE S UBMITTED TO THE DIRECTORATE. FROM THE ABOVE, IT IS CLEAR THAT UNSOLD TICKETS, MO RE THAN 10% OF THE BOUGHT TICKETS HAVE TO BE CONSUMED BY THE COMPANY. IT IS ALSO CLEAR THAT THE COMPANY DOING THE BUSINESS OF LOTTERY TICKET BY VIR TUE OF' AN AGREEMENT WITH DIRECTOR OF SLATE LOTTERY, GOVT. OF WEST BENGAL. FR OM THE AUDITED PROFIT & LOSS A/C., IT IS CLEAR THAT THE COMPANY PURCHASED A ND SOLD LOTTERY TICKETS ONLY AND DID NOT DO ANY OTHER BUSINESS. THUS, IT IS OBVI OUS THAT IF THE ASSESSEE COMPANY FAILED TO SALE 90% OF ITS PURCHASE, THEN TH E ASSESSEE HAVE TO BEAR THE COST OF THOSE TICKETS AND SUBSEQUENTLY PRIZE MO NEY, IF ANY, AROSE OUT OF THOSE TICKETS, THE ASSESSEE ENJOYED THE SAME. THE A RGUMENT OF THE AR SEEMS TO BE IN THE LINE OF THE AO ASKED FOR TO ESTABLISH THAT THE PRIZE WINNING TICKETS WERE PART OF UNSOLD STOCK AND NO SEPARATE P URCHASE WAS MADE FOR THE PURPOSE OF LOTTERY WINING . ITA NO.1163/KOL/2012 M/S. W.B.LOTTERY STOCKISTS SYNDICATE PVT. LTD. 5 IN THE LIGHT OF THE ABOVE OBSERVATION AND DISCUSSIO N AND CAREFULLY CONSIDERING THE SUBMISSION OF THE ASSESSEE, PERUSIN G THE FACTS OR THE CASE INCLUDING THE OBSERVATION OF THE AO AND OTHER MATER IALS ON RECORD, I AM OF THE CONSIDERED VIEW THAT THE LOTTERY WINNING INCOME OF THE ASSESSEE IS ASSESSABLE AS BUSINESS INCOME. THE A.O. IS, THEREFO RE, DIRECTED NOT TO TREAT THE LOTTERY WINNING INCOME SEPARATELY U/S 56(2)(IB) AND TREAT THE LOTTERY WINNING INCOME OF RS.69,59,120/- AS BUSINESS INCOME . AS A RESULT, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED 8. HAVING AGGRIEVED BY THE ORDER OF CIT-A, THE REVE NUE CHALLENGES THE SAME ON THE GROUND THAT THE CIT-A ERRED IN HOLDING THAT RS.69,59,120/- PRIZE MONEY WON OUT OF UNSOLD LOTTERY TICKETS WAS BUSINESS INCO ME NOT INCOME FROM OTHER SOURCES AND LD DR RELIED ON ORDER OF AO. THE LD. AR REITERATED THE SAME SUBMISSIONS AS SUBMITTED BEFORE THE CIT-A AND RELIE D ON THE ORDER OF CIT-A. 9. HEARD RIVAL SUBMISSIONS AND PERUSED THE RELEVAN T MATERIAL ON RECORD. THE MAIN CONTENTION OF THE LD. AR IS THAT THE PRIZE MON EY WON IN LOTTERY IS A BUSINESS INCOME AND IT CANNOT BE TREATED AS SEPARATE INCOME U/S 56(2)(IB) OF THE ACT FOR THE REASON THAT THE ASSESSEE HAS PAID TOTAL COST FOR TH E 90% OF THE TICKETS FOR EACH DRAW AND THE ASSESSEE IS ELIGIBLE TO RETURN 10% OF TICKE TS OF EACH DRAW OF REMAINED UNSOLD. LD.AR ARGUES THAT THE ASSESSEE HAS TO BEAR THE COST OF 90% IF THE TICKET SALES WERE NOT ACHIEVED TO THAT EXTENT. THE ASSESSE E ONLY ENJOYS THE FRUITS OF LOTTERY BUSINESS, IF ANY, IN THE FORM OF PRIZE MONEY FROM T HE LOTTERY BY TAKING PART IN SUCH LOTTERY DRAWS ON UNSOLD LOTTERY TICKETS, IT IS ONLY , BUT DUE TO BUSINESS OBLIGATION. HE FURTHER POINTED OUT THAT REGARDING THREE TYPES OF C REDIT ITEMS VIZ. I) SALES II) CLOSING STOCK AND III) PRIZE WINNING TICKET (EX-STOCK) WHER E IT IS CLEARLY EVIDENT FROM THE AUDITED FINAL ACCOUNTS FORM PROFIT & LOSS ACCOUNT. IT IS ALSO CLEAR FROM AGREEMENT WITH THE DIRECTOR OF STATE LOTTERIES THAT THE ASSES SEE DOES NOT HAVE ANY INTEREST IN OTHER BUSINESS EXCEPT LOTTERY BUSINESS AS SOLE SELL ING AGENT OF DIRECTOR OF STATE LOTTERY, GOVT. OF WEST BENGAL. WE FIND FROM THE REC ORD THAT THE ASSESSEE COMPANY ITA NO.1163/KOL/2012 M/S. W.B.LOTTERY STOCKISTS SYNDICATE PVT. LTD. 6 HAS ENTERED INTO AN AGREEMENT WITH DIRECTORATE OF W EST BENGAL OF STATE LOTTERIES. AS PER THE AGREEMENT THE ASSESSEE SHALL SELL 90% OF TOTAL TICKETS AS MINIMUM GUARANTEE AND THE REMAINING UNSOLD TICKETS HAVE TO BE RETURNED TO THE DIRECTORATE AND DRAW IS HELD ON SOLD TICKETS. THE ASSESSEE PROD UCED A STATEMENT OF SUCH TICKETS PURCHASED FROM WB STATE LOTTERIES TO SHOW THAT SUCH TICKETS COULD NOT BE MARKETED WITHIN SUCH TIME I.E ON THE DATE OF DRAW AS SPECIFI ED BY THE DIRECTOR OF STATE LOTTERIES WHICH WAS EXAMINED BY THE CIT-A. IT IS CL EAR FROM THE AGREEMENT THAT THE ASSESSEE HAS TO ENSURE MINIMUM GUARANTEE PURCHASE O F PRINTED TICKETS FROM STATE LOTTERIES, AMOUNTING TO 90% WITH A CONDITION THAT T HE PRIZE MONEY PAYMENT IS TO BE SUBJECT TO THE INCOME TAX IF THE PRIZE MONEY INV OLVES PAYMENTS ABOVE RS.5,000/- AND ARE TO BE PAID DIRECTLY BY THE DIREC TORATE OF STATE LOTTERY, WEST BENGAL ON RECEIPT OF THE CLAIM IN THE PRESCRIBED FO RMAT. THE LD. AR ARGUED THAT THE AO DID NOT RAISE ANY OBJECTION TO THE DIFFERENT HEA DS OF ACCOUNTS AND CORRESPONDING FIGURES AND THE DEBIT ITEMS ALONG WIT H THEIR CORRESPONDING FIGURES INCLUDING THE AMOUNTS INVOLVING PURCHASE OF LOTTERY TICKETS. 10. WE FIND THAT IN THE OTHER YEARS THE REVENUE HA S NOT DISPUTED THE WINNING FROM THE LOTTERY WHICH WAS SUBJECT TO TDS AS INCOME FROM OTHER SOURCES. WE ALSO FIND THAT THERE IS A CLEAR FINDING OF AO WITH REGAR D TO THE INCOME ARISING TO AN AGENT IN RESPECT OF PRIZE ON UNSOLD/UNCLAIMED LOTTE RY TICKETS IS BUSINESS INCOME. THERE IS NO DOUBT THAT THE ASSESSEE IS AN AUTHORIZE D AGENT OF GOVERNMENT OF WEST BENGAL. FURTHER, WE ALSO FIND THAT THE TICKETS WHIC H HAVE NOT BE SOLD DURING THE YEAR, THERE IS NO NEED TO MENTION THE STOCK OF THES E TICKETS AS IT HAS NO VALUE AT ALL. SO THE REASON FOR NOT ALLOWING THE CLAIM OF THE ASS ESSEE THAT THE TICKETS WHICH WON THE PRIZE ARE NOT REFLECTING IN THE CLOSING STOCK A UDITED FINANCIAL STATEMENT IS NOT TENABLE. IT IS PERTINENT TO NOTE THAT THE AO ACCEPTED A BUSINESS LOSS AT 2,56,31,331.00 AS CLAIMED BY THE ASSESSEE FOR THE A SSESSMENT YEAR UNDER ITA NO.1163/KOL/2012 M/S. W.B.LOTTERY STOCKISTS SYNDICATE PVT. LTD. 7 CONSIDERATION AS AGAINST THE BUSINESS LOSS SUSTAINE D BY THE ASSESSEE OF RS.2,08,32,311.00 VIDE PROFIT AND LOSS ACCOUNT AND SUCH LOSS CAN BE ATTRIBUTED WAS MAINLY DUE TO UNSOLD TICKETS. IN VIEW OF THE ABOVE DISCUSSION, THAT THE PRIZE MONEY ON UNSOLD TICKETS IS A BUSINESS INCOME AND NOT THE INCOME FROM OTHER SOURCES AS HELD BY THE AO. THEREFORE, THE ORDER OF CIT-A IS JU STIFIED IN DELETING THE ADDITION MADE BY THE AO, ACCORDINGLY SOLE GROUND RAISED BY T HE REVENUE IS DISMISSED. C.O. NO. 89/KOL/2012 OF ASSESSEE 11. IN THIS CROSS OBJECTION, THE ASSESSEE IS CHALLE NGING THE ACTION OF THE AO IN TREATING THE CASH DEPOSITS FOUND IN BANK ACCOUNT AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT. THE FACTS RELATING TO THE IS SUE, THE AO FOUND THAT THE ASSESSEE DEPOSITED RS.21,00,000/- INTO ITS BANK AND ASSESSEE EXPLAINED THAT THE AMOUNT WAS RECEIVED FROM DEBTORS AS SECURITY DEPOSIT AND THE A O DID NOT ACCEPT THE EXPLANATION AND TREATED THE SAME AS UNEXPLAINED INV ESTMENT UNDER SECTION 69 OF THE ACT. 12. IN FIRST APPEAL, THE CIT-A FOUND THAT THE FINDI NG OF THE AO THAT THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF CASH DE POSITED INTO BANK ACCOUNT BUT NO EXPLANATION HAS BEEN OFFERED BY THE ASSESSEE. FO R WHICH THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF APPELLATE PROCEEDINGS THA T ALL THE CONFIRMATIONS WERE FILED BEFORE THE, BUT, AO DID NOT VERIFY THE SAME. BASING ON SUCH SUBMISSIONS, CIT-A SOUGHT REMAND REPORT FROM THE AO AND AS THE AO DID NOT GIVE CLEAR FINDING IN THE FIRST REMAND REPORT AND CIT-A SOUGHT SECOND REMAND REPORT FROM THE AO. THE A.O. AFTER MAKING THE ENQUIRIES ON THE ISSUE SUBMIT TED AS UNDER: 'IN THE INSTANT CASE, ONE REMAND REPORT DATED 17.02 .2010 WAS MADE BY THE A.O. WHERE THE IDENTITY. GENUINENESS AND CRE DITWORTHINESS OF THE CASH DEPOSITORS WERE DOUBTED. SUBSEQUENTLY, YOUR HONOUR HAS CALLED FOR ANOTHER REMAND REPORT VIDE YOUR LETTER DATED 01.08.2011 AFT ER VERIFICATION OF THE 7 ITA NO.1163/KOL/2012 M/S. W.B.LOTTERY STOCKISTS SYNDICATE PVT. LTD. 8 CASH DEPOSITORS. PURSUANT TO YOUR DIRECTIONS, SUMMO NS U/S 131 WERE ISSUED TO THE FOLLOWING 7 PARTIES REQUIRING THEIR PERSONAL ATTENDANCE ON 23.08.2011 ALONG WITH (I) COPY OF THE RETURN FOR A. Y. 2004-0 5 AND (II) INCOME & EXPENDITURE A/C OR P&L A/C AND BALANCE SHEET AS ON 31.03.2004 : (I) SHRI JAHAR SAHA (PROP. SHREE GURU LOTTERY CENTR E): (II) SHRI MAHADEB MAJUMDER (PROP. M. MAJUMDER): (JII) SRNT. ARCHANA NANDI (PROP. NIRALA): (IV) SMT. A. DUTTA: (V) SHRI DHIREN SAHA (PROP. SHREE GURU LOTTERY CEN TRE): (VI) SHRI BISWANATH BID; AND (VII) M/S. NEW KULPATARU AGENCY. IT MAY KINDLY BE NOTED THAT ONLY 4 PARTIES, NAMELY SHRI JAHAR SAHA, SMT. ARCHANA NANDI, SMT. APARNA SAHA AND M/S. NEW K ALPATARU AGENCY FILED THE COPY OF RETURNS AND ACCOUNTS DETAILS AS P ER REQUISITION. SHRI TUSHAR KANTI GHOSH, PARTNER OF M/S. KALPATARU AGENCY APPEA RED IN PERSON AND IN RESPECT OF OTHER PARTIES NONE APPEARED IN PERSON. S HRI TUSHAR KANTI GHOSH COULD NOT RECOLLECT IF ANY SECURITY DEPOSIT WAS GIV EN BY HIS FIRM TO M/S.WEST BENGAL LOTTERY SYNDICATE PVT. LTD. IN THE YEAR 2003 -04. HE ALSO FUMBLED TO SAY THAT THERE COULD BE A SECURITY DEPOSIT OF RS. 1 LAKH MADE BY HIS FIRM, WHEREAS IN THE LETTER OF CONFIRMATION FILED BEFORE THE LD. CIT(A), THE SAID DEPOSIT IS SHOWN TO BE OF' RS.2.5 LAKH . IN THE CONFIRMATION OF A. DUTTA SUBMITTED BEFORE LD .CIT(A) THAT SECURITY DEPOSIT IS SHOWN TO BE OF RS.2,60,000/-. B UT BALANCE SHEET OF A. DUTTA REFLECTS SECURITY DEPOSIT OF 2,10,000/- ONLY AND THAT TOO, NO PARTY NAME IS SPECIFIED THEREIN. THE BALANCE SHEET OF JAHAR SA HA SHOWS SECURITY DEPOSIT OF RS. 2,00,000/-. NO SECURITY DEPOSIT IS REFLECTED IN THE BALANCE SHEET OF ARCHUNA NANDI AND NEW KALPATARU AGENCY. OTHER THRE E PARTIES HAVE NOT EVEN RESPONDED TO THE SUMMONS (SENT TO THEM BY POST ). MOREOVER SHRI JAHAR SAHA AND SHRI DHIREN SAHA HAVE BOTH BEEN SHOWN BEFO RE THE LD. CIT(A) AS PROPRIETOR OF SOME SHREE GURU LOTTERY CENTRE, WHICH IS QUITE UNUSUAL AS THERE CANNOT BE MORE THAN ONE PROPRIETOR FOR A SING LE PROPRIETARY CONCERN. IN VIEW OF THE ABOVE, IT APPEARS THAT THE ASSESSEE HAS NOT DISCLOSED ITS PARTICULARS TRULY AND FULLY. THE GENUINENESS OF THE IMPUGNED CASH DEPOSITS IS NOT PROVED BY THE ASSESSEE. THE ASSESSEES APPEAL M AY KINDLY BE DISMISSED ON THIS GROUND.' ITA NO.1163/KOL/2012 M/S. W.B.LOTTERY STOCKISTS SYNDICATE PVT. LTD. 9 13. ON CONFRONTATION, THE ASSESSEE FILED ITS REJOIN DER TO THE REMAND REPORT AS UNDER: 'THE MATTER WAS IN RESPECT OF RECEIPTS OF DEPOSITS FROM SEVEN PARTIES. IN THE ORIGINAL ORDER THE ISSUE WAS SUMMARILY DISCU SSED AND WITHOUT VERIFICATION OF DEBTORS, RS.21,00,000/- WAS ADDED B ACK . IN THE FIRST REMAND REPORT (BEFORE THE CURRENT REPO RT DATED 25.08 11) THE LD. ASSESSING OFFICER DID NOT DO MUCH AND FOR T HIS REASON, THE ASSESSEE PRESUMES THAT A SECOND REMAND REPORT, WAS ASKED FOR . IN THE SECOND REMAND REPORT IT IS UNDERSTOOD THAT T HE ASSESSING OFFICER TOOK THE TROUBLE TO SEND SUMMONS U/S 131 TO ALL THE SEVEN PARTIES BUT FOUR PARTIES WERE APPEARED BEFORE THE ASSESSING OFF ICER. KINDLY NOTE THAT THE MATTER WAS IN RESPECT OF F.Y. 2003-04 WHEN LOTTERY TICKET BUSINESS WAS IN BOOM AND THE SUMMONS WERE SENT IN 2012 WHEN LOTTERY TICKET BUSINESS IS AT THE LOWEST POSSI BLE STREAM DUE TO BAN IMPOSED BY MANY STATES ON LOTTERY TICKET. MOST OF T HE LOTTERY TICKET BUSINESS FIRM EITHER CLOSE THE BUSINESS OR CHANGE TO OTHER B USINESS. MOREOVER, MOST OF THE PARTIES IN THE LOTTERY TICKET BUSINESS IS ILLITERATE AND DOING THEIR BUSINESS IN VILLAGES IN UNORGANIZED MANNER. UNDER THIS FACTS AND CIRCUMSTANCES, THE LD. ASSESSI NG OFFICER WAS ABLE TO COLLECT PARTIAL FACT OF THE CASE AS OUT OF SEVEN PERSONS, FOUR PERSONS WERE APPEARED AND CONFIRMED THE BALANCE . IF THE LD. ASSESSING OFFICER COULD SEND THE SUMMONS AT THE TIME OF HEARING THEN ALL THE TRANSACTIONS COULD BE VERIFIED WITHOUT MUCH TROUBLE AND THE ASSESSEE COULD AVOID THE BOTHERATION. SINCE THE TRANSACTIONS ARC CONFIRMED NOW AND NO PAR TY DENIED THE FACT OF TRANSACTIONS, THE LD. CIT(A) IS REQUESTED TO KIN DLY DELETE THE ADDITION. 14. THE CIT-A CONSIDERED THE REMAND REPORT AND REJO INDER FILED BY THE ASSESSEE AND DELETED THE ADDITIONS MADE ON ACCOUNT OF SMT. A RCHANA NANDI, SMT. APARNA ITA NO.1163/KOL/2012 M/S. W.B.LOTTERY STOCKISTS SYNDICATE PVT. LTD. 10 SAHA AND M/S. NEW KALPATARU AGENCY, THE OBSERVATION S OF WHICH REPRODUCED HERE UNDER: AFTER CAREFULLY GOING THROUGH THE AO' S REMAND REP ORT AND THE REPLY OF THE ASSESSEE AND PERUSING THE FACTS OF THE CASE, I AM OF THE VIEW THAT AS OUT OF THE TOTAL 7 DEPOSITORS, 4 PARTIES, NAMELY SH RI JAHAR SAHA, SMT. ARCHANA NANDI, SMT. APARNA SAHA AND M/S. NEW KALPAT ARU AGENCY HAVE FILED THEIR COPIES OF RETURNS AND ACCOUNTS DETAILS AS PER REQUISITION OF THE AO, THE GENUINENESS OF THE CREDITORS SHOULD NOT BE DOUBTED SUBJECT TO THE AMOUNT OF SECURITY DEPOSITS SHOWN IN THEIR RESPECTI VE I.T. RETURNS. THUS, IN RESPECT OF SHRI TUSHAR KANTI GHOSH. PARTNER OF M/S NEW KALPATARU AGENCY WHO APPEARED AND CONFIRMED THE SECURITY DEPOSIT OF RS. 1,00,000/- AS AGAINST RS.2,50,000/- CLAIMED TO HAVE DEPOSITED SHO ULD BE CONSIDERED US GENUINE AND THE AO IS DIRECTED TO ACCEPT IT. SIMILA RLY, IN THE CASE OF A. DUTTA, DEPOSIT OF RS.2,10,000/- AS AGAINST THE CLAI M OF RS.2,60,000/- TO BE CONSIDERED AS GENUINE BEING REFLECTED IN THE BALANC E SHEET. AS PER REPORT OF THE A.O., NO SECURITY DEPOSIT IS R EFLECTED IN THE BALANCE SHEET OF ARCHANA NANDI AND NEW KALPATARU AG ENCY AND THEREFORE THE DEPOSIT IN THEIR NAMES CANNOT HE ACCEPTED AS GE NUINE AND HENCE ADDITION MADE AGAINST THE DEPOSIT IN THEIR NAMES IS SUSTAINE D. SINCE, OTHER THREE PARTIES HAVE NOT EVEN RESPONDED TO THE SUMMONS (SEN T TO THEM BY POST) BY THE A.O. AND AS BOTH SHRI JAHAR SAHA AND SHRI DHIRE N SHOWN TO BE UNUSUALLY THE PROPRIETOR OF SAME CONCERN NAMELY, SH REE GURU LOTTERY CENTRE, THE SECURITY DEPOSIT CLAIMED TO HAVE BEEN M ADE BY THEM CANNOT HE CONSIDERED AS GENUINE SINCE THE GENUINENESS OF THE TRANSACTIONS COULD NOT BE PROVED EVEN AT THE REMAND STAGE ALSO AFTER PROVIDIN G ENOUGH OPPORTUNITY TO THE ASSESSEE. THUS, THE ADDITION MADE IN RESPECT OF THESE PERSONS ARC CONFIRMED. ACCORDINGLY, THE A.O. IS DIRECTED TO SUI TABLY MODIFY THE EXTENT OF ADDITION MADE U/S.69 OF THE ACT KEEPING IN VIEW MY ABOVE OBSERVATION. THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. 15. THE CIT-A DID NOT ACCEPT THE COPIES OF RETURNS AND ACCOUNTS DETAILS AS PER REQUIRED BY THE AO IN REMAND PROCEEDINGS OF BOTH SH RI JAHAR SAHA AND SHRI DHIREN AS THEY HAVE BEEN SHOWN AS PROPRIETOR OF ONE CONCER N NAMELY SHREE GURU LOTTERY CENTRE THOUGH THEY HAVE RESPONDED TO THE SUMMONS IS SUED BY THE AO. IN THIS REGARD WE MAY REFER TO THE PROVISION OF SECTION 69 OF THE ACT AND IT IS REPRODUCED HEREUNDER: ITA NO.1163/KOL/2012 M/S. W.B.LOTTERY STOCKISTS SYNDICATE PVT. LTD. 11 UNEXPLAINED INVESTMENTS 69. WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDING T HE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT REC ORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE O F INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANATION OFFERED BY HIM IS NO T, IN THE OPINION OF THE 59 [ASSESSING] OFFICER, SATISFACTORY, THE VALUE OF TH E INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FIN ANCIAL YEAR. 16. A READING OF THE ABOVE PROVISION EXPLAINS THAT THE VALUE OF INVESTMENTS WOULD BE TREATED AS UNEXPLAINED INVESTMENTS WHEN TH E ASSESSEE FAILS TO RECORD SUCH INVESTMENTS IN THE BOOKS OF ACCOUNT AND OFFERS NO E XPLANATION ABOUT THE NATURE AND SOURCE OF SUCH INVESTMENTS. IN THE PRESENT CASE, AS SESSEE SUBMITTED ALL THE DETAILS WERE FILED BEFORE THE AO REGARDING THE CASH DEPOSIT S IN THE BANK ACCOUNT, BUT, AO DID NOT VERIFY THE SAME IN ASSESSMENT PROCEEDINGS A ND DURING THE REMAND PROCEEDINGS THE ASSESSEE FILED SUCH DETAILS AGAIN B EFORE THE CIT-A, AS DISCUSSED ABOVE UNDER REMAND PROCEEDINGS THAT FOUR PARTIES OU T OF SEVEN PARTIES RESPONDED TO THE SUMMONS ISSUED BY THE AO WHERE ALL THE COPIES O F RETURNS AND ACCOUNTS DETAILS. BUT THE CIT-A HAS GIVEN RELIEF IN RESPECT OF THREE PARTIES. IN OUR CONSIDERED OPINION, THE ASSESSEE DISCHARGED ITS DUTY IN GIVING DETAILS REGARDING THE IDENTITY OF ALL THE PARTIES BEFORE THE AUTHORITIES, NOW ONUS SH IFTS TO REVENUE AUTHORITIES TO BRING EVIDENCE CONTRARY TO SUBMISSIONS OF THE ASSESSEE. W E ALSO CONSCIOUS OF THE FACT THAT THE CONCERNED FINANCIAL YEAR IS 2003-04 AND TH E SUMMONS WERE SENT IN THE YEAR 2012 AND ALL THE THREE PARTIES EITHER CLOSED THE BU SINESS OR CHANGED TO OTHER BUSINESS AND WE ALSO FIND FORCE IN THE ARGUMENTS OF THE LD.AR THAT THE PARTIES IN THE LOTTERY TICKET BUSINESS ARE ILLITERATE AND DOIN G THEIR BUSINESS IN VILLAGES IN UNORGANIZED MANNER. THEREFORE, WE ARE OF THE VIEW T HAT THE ASSESSEE SUBMITTED ALL THE DETAILS OF THE SEVEN PARTIES AND OFFERED ITS EX PLANATION THAT THE SAID AMOUNTS WERE RECEIVED FROM DEBTORS AS SECURITY DEPOSIT BEFO RE THE AO AS REQUIRED UNDER ITA NO.1163/KOL/2012 M/S. W.B.LOTTERY STOCKISTS SYNDICATE PVT. LTD. 12 SECTION 69 OF THE ACT AND THERE WAS NO EVIDENCE CON TRARY TO ASSESSEE EXCEPT THE SUMMONS WERE NOT SERVED AND IN OUR VIEW IT IS NOT S UFFICIENT TO ATTRACT THE PROVISION UNDER SECTION 69 OF THE ACT, THUS, THE OR DER OF CIT-A IS NOT JUSTIFIED WITH REGARD TO THREE PARTIES I.E ARCHANA NANDI, NEW KAL PATARU AGENCY, SHRI JAHAR SAHA AND SHRI DHIREN AND ADDITION MADE BY THE AO TO AN E XTENT OF RS.21,00,000/-IS DELETED AND SOLE GROUND RAISED BY THE ASSESSEE IN CROSS OBJECTION IS ALLOWED. 17. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22-06-2016. SD/- SD/- (WASEEM AHMED) (S. S.VISWANETHRA RAVI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22 /06/2016 TALUKDAR (SR.PS) COPY OF THE ORDER FORWARDED TO: 1. M/S. W.B. LOTTERY STOCKISTS SYNDICATE PRIVATE LT D., 25B, CAMAC STREET, KOLKATA 700 016 2 DCIT, CIRCLE-8, KOLKATA 3. THE CIT-I, 4. THE CIT(A)-I, 5. DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, ASST. REGISTRAR , ITAT, KOLKATA BENCHES