I.T.O. Ward-34(1), Kol, Kolkata V. Balkishan Chowdhury, Kolkata

ITA 1179/KOL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2665 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2010
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 31-03-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 09-07-2009
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Assessee Lawyers: P K LILHA
• Keywords: Income from undisclosed sources

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SRI D. K. TYAGI, JM & HONBLE SRI C . D. RAO, AM] I.T.A. NO. 1179/KOL/2009 ASSESSMENT YEAR : 2006-07 INCOME-TAX OFFICER, WD-34(1), KOLKATA -VS- BALKI SHAN CHOWDHURY (PA NO. ACBPC 8395 H) (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. JYOTI KUMARI RESPONDENT BY : SRI P. K. LILHA O R D E R PER D. K. TYAGI, JM : THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AG AINST THE ORDER OF THE LD. CIT(A), KOLKATA DATED 27.05.2009 IN DELETING THE AD DITION OF RS.50,00,000/- ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES. . 2. THE FACTS OF THE CASE AS REVEALED FROM THE ASSES SMENT ORDER IN BRIEF ARE THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. HAS DETE CTED FROM THE BALANCE SHEET AS ON 31-03-2006 THAT AN AMOUNT OF RS. 50,00,000/- WAS WI THDRAWN FROM THE CAPITAL A/C OF PROPRIETORSHIP CONCERN M/S AMBAREE ENTERPRISES. ON BEING ASKED THE ASSESSEE REPLIED THAT RS. 50,00,000/- WAS PAID DURING THE F.Y. TO M/ S R.A.V. DRAVYA PVT. LTD. IT WAS ALSO DETECTED FROM THE BANK RECONCILIATION STATEMENT IN RESPECT OF ICICI BANK FIVE CHEQUES DATED 31-03-06 WERE PRESENTED BY THE PARTIES AMOUNT ING TO RS.40400000/- AND ON THE OTHER HAND FOUR CHEQUES EACH DATED 31-03-2006 AMOUN TING TO RS.40400109 WERE RECEIVED IN HAND. AS AN EXPLANATION, THE A/R STATED VIDE LETTER DATED 08-09-2008 THAT AMBAREE ENTERPRISES HAD BUSINESS DEALING WITH M/S. R.A.V. DRAVYA (P) LTD. THE SAID PARTY HAD GIVEN TRADE ADVANCE OUT OF THIS 50,00,000 /- IN THE NAME OF BALKISHAN CHOUDHURY, THE PROPRIETOR OF AMBAREE ENTERPRISES IN EARLIER YEAR. THE SAID AMOUNT OF RS. 50,00,000/- WAS SHOWN AS CURRENT LIABILITIES IN THE BALANCE SHEET OF BALKISHAN CHOUDHURY. IT WAS STATED THAT DURING THE CURRENT YE AR, THE ENTIRE LIABILITIES OF RS. 50 LAKHS WAS REPAID BY CHEQUE NO.575955 OF 31-03-2006. ISSUED FROM AMBAREE ENTERPRISES AND THE SAID LIABILITIES OF RS. 50 LAKH S IN THE BALANCE SHEET OF SHRI BALKISHAN CHOUDHURY ON 31-03-2006, WAS ACCORDINGLY REDUCED TO NIL. FOR THIS REASON, THE VERY LIABILITY WAS NOT SHOWN IN BALANCE SHEET AS ON 31-0 3-2006. AS AN EXPLANATION, THE A/R STATED THAT THE CHEQUE NO. 575955 DRAWN ON ICICI BA NK WAS NOT PRESENTED BEFORE THE 2 BANK FOR SOME REASON. HOWEVER, THE ASSESSEE HAS CLA IMED THAT THE FOLLOWING PAYMENTS WERE MADE FROM THE VIJAYA BANK. CHEQUE NO. DATE AMOUNT 764124 07-02-2007 15,00,000/- 764125 10-02-2007 9,00,000/- 764134 31-03-2007 26,00,000/- TOTAL 50,00,000/- THE A.O. HAD REQUESTED THE ASSESSEE AS TO WHY RS. 5 0,00,000/- WILL NOT BE ADDED TO THE TOTAL INCOME FOR THE FOLLOWING REASONS. I) THE LIABILITY OF F,Y. 2005-06 COULD NOT BE SQUAR ED UP BY PAYING IN THE MONTH OF MAR07 RELATING TO THE F.Y. 2006-07. II) THE PAYMENTS IN THE MONTH OF FEB07 AND MAR07 WERE AGAINST THE PURCHASE DURING F.Y, 2006-07. THE LIABILITY FOR THE F.Y. 200 5-06 WAS SQUARED UP BY THE VERY PAYMENT IN MAR07 IS QUITE IMPOSSIBLE IN THE A CCOUNTANCY PRINCIPLE. BUT THE PAYMENT WAS MADE AS REFLECTED IN THE BALANCE SHEET AS ON 3 1-03-2006 FROM UN- DISCLOSED SOURCE. IN REPLY TO THE ABOVE, THE ASSESSEE VIDE HIS LETTER DATED 15-10-2008 ADVOCATED THAT THE PAYMENT WAS NOT AN EXPENDITURE OR INVESTMENT BUT IS MERE REFUND OF TRADE ADVANCE THROUGH A/C PAYEE CHEQUE. SO THERE IS NO REVENUE EF FECT FROM THE TRANSACTION. IN SUPPORT OF HIS REPLY THE ASSESSEE SUBMITTED A CERTIFICATE C UM LEDGER FROM M/S R.A.V. DRAVYA PVT. LTD SHOWING THAT ADVANCE /LIABILITY WAS PAID U P IN THE F.Y. 2006-07. AS CONCLUSION, THE A.0. STATED THAT THE LIABILITY O F THE F,Y 2005-06 WAS SQUARED UP BY THE VERY PAYMENT IN THE MONTHS OF FEB07 AND MARCH 07, WHICH IS QUITE IMPOSSIBLE IN THE PRINCIPLE OF ACCOUNTANCY. AGAIN H E OBSERVED THE PAYMENT MADE IN THE MONTH OF FEB07 AND MAR 07 I.E., AT THE END OF F.Y . 2006-07 RELATING TO THE A.Y.2007- 08 WAS NOT AGAINST THE LIABILITY OF THE F.Y. 2005-0 6, BUT OTHERWISE. HOWEVER THE LOGIC OF THE ASSESSEE IN REPLY TO THE SHOW CAUSE NOTICE IS T HAT THE TRANSACTION DOES NOT HAVE ANY REVENUE EFFECT IS NOT TENABLE AS M/S R.A.V. DRAVYA PVT. LTD, IN ITS ACCOUNT MADE A JOURNAL ENTRY BY CREDITING THE ASSESSEES ACCOUNT F OR RS. 50,00,000/- AND DEBITING THE A/C OF BALKISHAN CHOUDHURY. AFTER CREDITING RS. 50, 00,000/- M/S R.A.V. DRAVYA PVT. LTD., SOLD MATERIALS EQUIVALENT TO RS. 50,00,000/- WHICH WAS SHOWN AS PAID IN THE RELEVANT PREVIOUS YEAR BY WITHDRAWAL FROM CAPITAL A /CS. SO THE LIABILITY HAS DEFINITELY REVENUE EFFECT AS IT IS THE LIABILITY PAID IN THE F ORM OF DRAWINGS. FINALLY THE A.O. CONCLUDED THAT THE ASSESSEE COULD NOT EXPLAIN SOURC E OF THE PAYMENT THERE BY MAKING THE ADDITION OF RS. 50,00,000/- TO THE TOTAL INCOME AS INCOME FROM UNDISCLOSED SOURCES. IN 3 APPEAL, THE LD. CIT(A) DELETED THE ADDITION. AGGRI EVED BY THE SAID ORDER, NOW THE REVENUE IS IN APPEAL BEFORE US. 3. THE LD. DR AT THE TIME OF HEARING BEFORE US, REL IED ON THE ORDER OF THE AO AND SUBMITTED THAT THE LD. CIT(A) HAS NOT CONSIDERED TH E FACTS AND CIRCUMSTANCES OF THE CASE PROPERLY WHILE DELETING THE ADDITION OF RS.50, 00,000/- UNDER THE HEAD INCOME FROM UNDISCLOSED SOURCES. HE ALSO CONTENDED THAT IN APP EAL THE A/R OF THE ASSESSEE HAS STATED THAT FROM THE PERSONAL BALANCE SHEET OF BALK ISHAN CHOUDHURY FOR THE YEAR ENDED 31-03-2005, SHOWS A LIABILITY OF RS. 50,00,000/- AS PAYABLE TO M/S R.A.V. DRAVYA PVT. LTD. THIS AMOUNT WAS SHOWN TO HAVE BEEN REPAID TO T HEM DURING THE RELEVANT A.Y. A CHEQUE NO, 575955 OF 3 1-03-2006 DRAWN ON ICICI BAN K OF RS. 50,00,000/- WAS ISSUED TO THEM FOR REPAYMENT, WHICH COULD NOT BE CLEARED D URING THE YEAR ENDED 31-03-2006 AND SAME CHEQUE REMAIN OUTSTANDING BEING AN ITEM IN THE BANK RECONCILIATION STATEMENT AS ON THAT DATE. SUBSEQUENTLY, THE SAID CHEQUE WAS CANCELLED AND IN LIEU OF THAT THREE CHEQUES DATED 07-02-2007 10-02-2007 AND 31-03-2007 RESPECTIVELY FOR RS. 15,00,000/-, 9,00,000/- AND RS. 26,00,000/- WERE ISSUED DRAWN ON VIJAYA BANK. AND THE SAID CHEQUES WERE CLEARED BY BANK ON 07-02-2007, 10-02-2 007 AND 23-04-2007 RESPECTIVELY. THE SOURCES OF THE ABOVE FUNDS WERE FROM M/S SATI E NTERPRISES HAVING PAN ADLPT664OH. IN REPLY TO A QUERY MADE BY THE A.0., IT WAS STATED IN THE APPELLATE ORDER THAT THE LIABILITY FOR PAYMENT FOR F.Y. 2005- 06, WHICH WAS BROUGHT FORWARD FROM F.Y. 2004- 05, HAS BEEN SQUARED UP PARTLY IN THE F. Y. ENDING ON 3 1-03-2007 AND PARTLY ON ENDING ON 31-03-2008, WHICH IS QUITE POSSIBLE AN D HAS BEEN SQUARED UP ACCORDINGLY. IT WAS FURTHER STATED THAT THE CLAIM OF THE ITO REG ARDING THE PAYMENT IN THE MONTH OF FEB 07 AT THE END OF F,Y. 2006-07 RELATING TO A.Y. IS NOT AGAINST THE LIABILITY OF F.Y. 2005-06 BUT OTHERWISE IS NOT SUPPORTED BY ANY EVIDE NCE OR PROOF. IN REPLY TO THE ITOS OBSERVATION IN THE ASSESSMENT ORDER THE LOGIC OF TH E ASSESSEE AS EXPRESSED IN THE REPLY TO THE SHOW CAUSE NOTICE THAT TRANSACTION DOES NOT HAV E ANY REVENUE EFFECT IS NOT TENABLE. BUT BEFORE THE LD. CIT(A) IT WAS STATED BY THE ASSE SSEE THAT THE ITO HAS STATED IN HIS ORDER THAT A/C AFTER CREDITING RS. 50,00,000/- M/S R.A.V. DRAVYA (P) LTD., SOLD MATERIALS EQUIVALENT TO THAT AMOUNT WHICH WAS SHOWN AS PAID I N THE RELEVANT PREVIOUS YEAR BY DRAWINGS FORM CAPITAL A/C. THEREFORE, THE LIABILITY HAS DEFINITELY REVENUE EFFECT AS IT IS THE LIABILITY PAID IN THE FORM OF DRAWING. HE LASTL Y CONCLUDED THAT HOWEVER, ON GOING THROUGH THE RECORDS IT IS PRESUMED THAT THE LD. CIT (A) HAS NOT CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE PROPERLY WHILE DELETING T HE ADDITION OF RS.50 LAKHS UNDER THE 4 HEAD INCOME FROM UNDISCLOSED SOURCES. HE, THEREFOR E, URGED BEFORE THE BENCH TO RESTORE THE ORDER OF THE AO. 4. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE RELIED ON THE ORDER OF THE LD. CIT(A) AND URGED BEFORE THE BENCH TO CONFIRM THE SA ME. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE FIND THAT WHILE DELETING THE ADDITION OF RS. 50,000 /- THE LD. CIT(A) HAS PASSED A VERY REASONED ORDER. FOR THE SAKE OF BREVITY, WE REPROD UCE THE RELEVANT PORTION OF HIS ORDER AS UNDER : 3.4 1 HAVE PERUSED THE ASSESSMENT ORDER AND CONSID ERED THE SUBMISSION OF THE APPELLANT. THE ADDITION MADE BY THE ASSESSING OFFIC ER IS BASED MAINLY ON THE FOLLOWING CONCLUSIONS FIRST, THAT PAYMENT OF RS.50 LAKHS WA S MADE BY THE APPELLANT TO M/S. R.A.V. DRAVYA PVT. LTD., IN THE RELEVANT YEAR, AND THAT SUCH PAYMENT WAS MADE FROM UNDISCLOSED SOURCES; AND, SECONDLY, THAT, IN LIEU O F THE SAID PAYMENT, M/S. RAV. DRAVYA PVT. LTD. SUPPLIED MATERIALS OF RS.50 LAKHS TO THE APPELLANT. IT WAS CONTENDED BEFORE ME THAT THE ABOVE CONCLUSIO NS OF THE ASSESSING OFFICER ARE BASED PURELY ON PRESUMPTIONS, THAT THEY ARE WITHOUT ANY BASIS AND THAT THEY ARE.CONTRARY TO THE FACTS AND ALSO THE MATERIAL ON RECORD. IT WAS ALSO CONTENDED THAT THE ASSESSING OFFICER HAS BROUGHT NOTHING ON RECORD TO SHOW THAT PAYMENT OF RS.50 LAKHS WAS MADE BY THE APPELLANT OR THAT MATERIALS OF RS.5 0 LAKHS WERE SUPPLIED TO THE APPELLANT. IT WAS EXPLAINED THAT IN THE RELEVANT YE AR, A CHEQUE NO. 575955 DATED 31.03.2006 WAS ISSUED ON THE ICICI BANK BY M/S. AMB AREE ENTERPRISES IN FAVOUR OF M/S. R.A.V. DRAVYA PVT. LTD.; BUT, IT COULD NOT BE PRESENTED TO THE BANK. THE ENTRY WAS REVERSED ON 01-04-2006 AND THE SAID LIABILITY OF RS .50 LAKHS WAS BACK IN THE BOOKS OF M/S. AMBAREE ENTERPRISES, WHICH WAS EVENTUALLY PAID IN FINANCIAL YEARS 2006-07 AND 2007-08. 3.5 I HAVE PERUSED THE ASSESSMENT ORDER. THE ASSESS ING OFFICER HAS MENTIONED THAT THE BOOKS OF ACCOUNT, ALONG WITH SUPPORTING DOCUMENTS, AND THE BANK STATEMENT WAS PRODUCED BEFORE HIM AND THE SAME WAS ALSO VERIFIED BY HIM. THE ASSESSING OFFICER HAS FOUND NO DEFECTS IN THE BOOKS OF THE APPELLANT. HE HAS ALSO ACCEPTED THE PURCHASES AND SALES SHOWN BY THE APPELLANT IN HIS BOOKS OF ACCOUN T. THE CONCLUSION MADE BY THE ASSESSING OFFICER THAT MATERIALS OF RS.50 LAKHS WAS SUPPLIED TO THE APPELLANT, OUTSIDE THE BOOKS OF ACCOUNT, IS WITHOUT ANY BASIS. THE ASS ESSING OFFICER HAS BROUGHT NO POSITIVE MATERIAL ON RECORD TO SHOW THAT MATERIALS OF RS.50 LAKHS WERE SUPPLIED TO THE APPELLANT, BUT THE SAME WAS NOT RECORDED IN THE BOO KS OF THE APPELLANT. FURTHER, THE CONCLUSION OF THE ASSESSING OFFICER THAT PAYMENT OF RS.50 LAKHS WAS MADE BY THE APPELLANT, OUTSIDE HIS BOOKS OF ACCOUNT, IS ALSO BA SED ON PRESUMPTIONS AND IS NOT SUPPORTED BY ANY MATERIAL ON RECORD. I HAVE PERUSED THE MATERIAL ON RECORD AND CONSIDERE D THE SUBMISSION OF THE APPELLANT. I AM INCLINED TO AGREE WITH THE APPELLANT THAT THE AS SESSING OFFICER HAS BROUGHT NOTHING ON RECORD TO SHOW THAT PAYMENT OF RS. 50 LAKHS WAS MADE FROM UNDISCLOSED SOURCES OR THAT MATERIALS OF RS.50 LAKHS WAS SUPPLIED TO THE A PPELLANT. ON THE OTHER HAND, THE CONTENTIONS OF THE APPELLANT ARE DULY SUPPORTED BY EVIDENCE. THE DECISION OF THE ASSESSING OFFICER IS NOT BASED ON PROPER FINDINGS. THE ASSESSING OFFICER HAS FAILED TO PROPERLY ANALYZE THE FACTS AND THE EVIDENCES AVAILA BLE BEFORE HIM. THE CONCLUSIONS OF THE ASSESSING OFFICER ARE ARBITRARY AND WITHOUT ANY BASIS AND ARE ALSO CONTRARY TO THE 5 MATERIAL AND EVIDENCE ON RECORD. THE EXPLANATIONS G IVEN BY THE APPELLANT SEEMS TO HAVE BEEN SUMMARILY REJECTED BY THE ASSESSING OFFICER MO RE ON THE GROUND OF PRESUMPTION THAN ON FACTUAL GROUND. THE ASSESSING OFFICER HAS T O COMPLETE THE ASSESSMENT ON THE BASIS OF RECORD AND THE MATERIAL AND EVIDENCE AVAIL ABLE BEFORE HIM. BUT, PRESUMPTIONS HAVE LED THE ASSESSING OFFICER TO A STATE OF AFFAIR S WHERE HE HAS OVERLOOKED THE SALIENT EVIDENCES AVAILABLE BEFORE HIM. THE ADDITION MADE B Y THE ASSESSING OFFICER IS NOT JUSTIFIED AS IT IS ARBITRARY, WITHOUT ANY BASIS AND CONTRARY TO THE MATERIAL AND EVIDENCE AVAILABLE ON RECORD. SUCH ADDITION IS NOT SUSTAINAB LE IN THE EYES OF LAW. GROUND NO.1 IS ALLOWED. THE APPELLANT GETS RELIEF OF RS.50 LAKHS. IN VIEW OF THE ABOVE AND FINDING NO CONTRARY MATERI AL BROUGHT ON RECORD BY THE REVENUE AT THE TIME OF HEARING BEFORE US, WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH IS HEREBY UPHELD. THEREFORE, THE APPE AL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9.4.2010 SD/- SD/- (C. D. RAO) ( D. K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 9TH APRIL, 2010 COPY FORWARDED TO THE :- 1) ITO, WARD-34(1), KOLKATA. 2) SRI BALKISHAN CHOWDHURY, 9, OLD CHINA BAZAR STRE ET, KOLKATA-700 001. 3) CIT(A), KOLKATA. 4) CIT, KOLKATA. 5) D. R. ITAT, KOLKATA. (TRUE COPY) BY ORDER DEPUTY REGISTRAR JD. (SR. P.S.) I.T.A.T., KOLKATA