I. T.O. Wd- 35(4), Kolkata, Kolkata V. Manish Enterprises, Kolkata

ITA 1209/KOL/2009

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4959 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 16-07-2009
• Court: TRIBUNAL
• Department Lawyers: AMIT KR MAITRA LD JCITSR DR
• Assessee Lawyers: V N PUROHIT CA LD
• Section: 143(3); 133(6)

Judgement Text

, C , , INCOME TAX APPELLATE TRIBUNAL, BENCH- C KOL KATA ( ) BEFORE . , SHRI R.C. SHARMA, ACCOUNTANT MEMBER !' /AND #$# 1 & ' , ) SHRI GEORGE MATHAN, JUDICIAL MEMBER '( / ITA NO. 1209/KOL/09 A.Y 2005-06 I.T.O W 35(4), KOLKATA-1 - !' - - VERSUS - . M/S. MANISH ENTERPRISES PAN: AAFFM9797H ( &* / APPELLANT ) ( +,&* / RESPONDENT ) &* /FOR THE APPELLANT //SHRI AMIT KR. MAITRA, LD. JCIT/SR.DR +,&* / FOR THE RESPONDENT: / SHRI V.N. PUROHIT, CA, LD.AR .'!/ 0 1 /DATE OF HEARING : 04-12--2013 23 0 1 /DATE OF PRONOUNCEMENT:13-12-2013 / ORDER . , SHRI R.C. SHARMA, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST T HE ORDER PASSED BY THE LD. CIT(A), DATED 27/04/2009 FOR THE ASSESSMENT YEAR 2005-06, IN THE MATTER OF ORDER PASSED U/S. 143(3) OF THE I.T ACT 1961. 2. FOLLOWING GROUND HAS BEEN TAKEN BY THE REVENUE:- 1. FOR THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.30,93,325/- MADE BY THE ITO AS UNDISCLOSED CASH MONEY REFLECTED IN THE FORM OF SUNDRY CREDITORS. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND PERUSE D THE RECORD. FACTS IN BRIEF ARE THAT THE ASSESSEE WAS ENGAGED IN TRADING BALL BEARING A ND HARDWARE ITEMS. AT THE HEARING STAGE THE AO FOUND THAT THE ASSESSEE, AMONGST OTHE R PURCHASES, SHOWN TO HAVE MADE PURCHASES FROM THE FOLLOWING EIGHT (08) PARTIES TO THE EXTENT OF RS.30,03,325/- AND SHOWN OUTSTANDING AS ON 31-3-2205 AS UNDER:- ITA NO.1209/KOL/09 ITO W 35(4) KOL VS. M/S.MANISH E NTERPRISES 2 2 S.NO . NAME OF THE PARTY PURCHASE AMOUNT OUTSTANDING AS ON 31-3-05 1. M/S. EASTERN TRADING COMPANY RS.7,55,550/- RS.7,55,550/- 2. M/S. EAST INDIA TRADING COMPANY RS.3,51,030/- RS.4,06,230/- 3. M/S. NEW INDIA TRADING COMPANY RS.5,89,303/- RS.5,89,303/- 4. M/S. UNIVERSAL ENTERPRISES RS.3,12 ,600/- RS.3,12,600/- 5. M/S. BEEKAY SUPPLY AGENCY RS.5,29,982/- RS .5,29,982/- 6. M/S. S.V TRADERS RS.2,00,000/- RS. 2,00,000/- 7. M/S. OVERSEAS IMPEX CORPN RS.1,50,090/- RS. 2,57,690/- 8. M/S. R.J ENTERPRISES RS. 2,04,770/- RS.2,04,770/- TOTAL: RS.30,03,325/- RS.33,56,125/ - 3.1 TO VERIFY THE GENUINENESS OF THE SUNDRY CREDITO RS BALANCE OUT OF ALLEGED PURCHASE FROM THE SAID EIGHT PARTIES, INFORMATION WAS SOUGHT . AO OBSERVED THAT ALL THE BANK ACCOUNTS WERE MAINTAINED IN THE DHANALAKSHMI BANK LIMITED OF 11/1 SARAT BOSE ROAD, KOLKATA-700 020 AND THE MOSTLY ACCOUNTS OF THE SA ID EIGHT PARTIES WERE OPERATED BY TWO INDIVIDUALS VIZ (1) SRI ANAND SHAH AND (2) D.M VYAS . THE AO FURTHER OBSERVED THAT THE SAID EIGHT CONCERNS, FROM WHOM PURPORTED PURCHASES WERE SHOWN, WERE RUN BY THE SAID TWO INDIVIDUALS. 3.2 IN VIEW OF THE ABOVE OBSERVATIONS AN ADDITION O F RS.30,93,325/- WAS MADE BY THE AO IN RESPECT OF PURCHASES.. 4. VIDE THE IMPUGNED ORDER, THE LD.CIT(A) HAS DELET ED THE SAME, AFTER HAVING FOLLOWING OBSERVATIONS. 4.3 I HAVE PERUSED THE ASSESSMENT ORDER AND ALSO CONSIDERED THE SUBMISSIONS OF THE APPELLANT. THE APPELLANT HAS, D URING THE RELEVANT YEAR, SHOWN PURCHASES OF RS.30,93,325/- FROM 8 DIFF ERENT PARTIES. ON ENQUIRY BY THE ASSESSING OFFICER, THESE PARTIES COU LD NOT BE LOCATED AT THE GIVEN ADDRESSES. THE APPELLANT ALSO COULD NOT, BEFORE THE ASSESSING OFFICER, FURNISH THEIR NEW OR CHANGED ADDRESSES FOR THE REASON THAT SUBSTANTIAL TIME HAD PASSED SINCE PURCHASES WERE MA DE FROM THEM. THE ASSESSING OFFICER THEREFORE CONCLUDED THAT THESE P ARTIES DID NOT EXIST AND THAT THE APPELLANT HAD MADE PURCHASES IN CASH A ND LATER ARRANGED BILLS FROM THE SAID PARTIES AND SHOWN THEM AS SUNDR Y CREDITORS. THE ASSESSING OFFICER THUS MADE AN ADDITION OF RS.30,9 3,325/- TO THE INCOME OF THE APPELLANT. ON THE OTHER HAND, IT WAS CONTENDED BEFORE ME THA T THE APPELLANT HAD MADE ACTUAL PURCHASES FROM THE 8 PARTIES, WHOSE EXISTENCE WAS DOUBTED BY THE ASSESSING OFFICER WITHOUT ANY BASIS AND CONTRARY TO THE MATERIAL AND EVIDENCE AVAILABLE ON RECORD. THE APP ELLANT HAD SUBMITTED BEFORE THE ASSESSING OFFICER, COPIES OF L EDGER ACCOUNTS AND ITA NO.1209/KOL/09 ITO W 35(4) KOL VS. M/S.MANISH E NTERPRISES 3 3 PURCHASE BILLS AND ALSO ITS BANK STATEMENT, WHICH C LEARLY ESTABLISHED THAT PURCHASES WERE ACTUALLY MADE FROM THE SAID PAR TIES. THE PAYMENTS AGAINST SUCH PURCHASES WERE MADE BY ACCOUNT PAYEE C HEQUES. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER DID NO T DISPUTE THE ACTUAL PURCHASES AS THE APPELLANT HAD MADE SALES AGAINST S UCH PURCHASES. THE ASSESSING OFFICER HAS INFERRED THAT THE APPELLANT H AD MADE PURCHASES IN CASH SIMPLY BECAUSE NOTICES U/S.133(6) COULD NOT BE SERVED UPON BY THE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO ESTABLISH THAT THE APPELLANT HAD MADE PURCHASES IN CASH. THE ASSESSING OFFICER HAS TOTALLY IGNORED , WITHOUT ANY REASON, THAT THE APPELLANT HAD MADE PAYMENTS AGAINST PURCH ASES BY ACCOUNT PAYEE CHEQUES, WHICH WERE DEBITED IN THE APPELLANT S BANK ACCOUNT. THE ASSESSING OFFICER HIMSELF VERIFIED, DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, THAT THE PAYMENTS WERE MADE BY THE APP ELLANT AND THAT SUCH PAYMENTS WERE DULY CREDITED IN THE BANK ACCOU NTS OF THE RESPECTIVE PARTIES. THE ASSESSING OFFICER WAS THEREFORE NOT JUSTIFIED IN INFERRING THAT THE PURCHASES WERE MADE IN CASH MERELY FOR TH E REASON THAT NOTICES U/S. 133(6) COULD NOT BE SERVED ON THE SAID PARTIES . THE ASSESSING OFFICER MADE THE ADDITION ONLY ON PRESUMPTION AND W ITHOUT PROVING THAT THE APPELLANT HAD ACTUALLY MADE PURCHASES IN CASH . IT WAS CONTENDED BY THE APPELLANT THAT AS PER THE NORMAL TRADE PRAC TICE, THE SUPPLIERS COME TO THE APPELLANTS OFFICE AND DELIVER THE GOO DS AND PAYMENTS ARE ALSO MADE AT THE APPELLANTS OFFICE. THERE ARE RAR E OCCASIONS OF THE APPELLANT VISITING THE SUPPLIERS. THE ASSESSING OF FICER HAS NOT FOUND ANY DISCREPANCIES IN THE BOOKS OF ACCOUNT AND THE S AME HAVE NOT BEEN REJECTED BY THE ASSESSING OFFICER AND THEREFORE, TH E PROFIT RESULTS SHOWN IN THE BOOKS OF ACCOUNT ARE CORRECT AND RELIABLE. IT IS ARGUED BY THE APPELLANT THAT THE PAYMENTS WERE MADE BY ACCOUNT P AYEE CHEQUES. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE MONE Y HAS GONE TO SOME OTHER PARTY OR THAT THE MONEY HAS COME BACK TO THE APPELLANT, AND THEREFORE, THERE IS NO QUESTION OF PURCHASES MADE I N CASH AND OBTAINING BILLS TO COVER ALLEGED CASH PURCHASES. THE APPELLA NT HAS ALSO ARGUED THAT THE ASSESSING OFFICERS OBSERVATION THAT MONEY RECEIVED FROM THE APPELLANT BY ACCOUNT PAYEE CHEQUES WAS TRANSFERRED TO SOME OTHER BANK ACCOUNT OR WAS WITHDRAWN BY THE SUPPLIERS IS TOTALL Y IRRELEVANT, AS THE APPELLANT WAS NOT CONCERNED WITH WHAT THE SUPPLIERS DO WITH THE MONEY RECEIVED BY THEM FROM THE APPELLANT. I HAVE CONSIDERED THE FACTS OF THE CASE AND ALSO PE RUSED THE MATERIAL AND EVIDENCES AVAILABLE ON RECORD. I HAVE ALSO CONSIDERED THE SUBMISSIONS OF, AND THE CASE LAWS RELIED UPON BY, T HE APPELLANT. AND, I AM OF THE OPINION THAT ASSESSING OFFICER WAS NOT JU STIFIED IN CONCLUDING THAT THE APPELLANT HAD MADE PURCHASES IN CASH AND T HEN ARRANGED BILLS FROM DIFFERENT PARTIES AND SHOWN THEM AS SUNDRY CRE DITORS. THE ITA NO.1209/KOL/09 ITO W 35(4) KOL VS. M/S.MANISH E NTERPRISES 4 4 APPELLANT HAS PRODUCED COPIES OF LEDGER ACCOUNTS OF THE SAID PARTIES FOR FINANCIAL YEARS 2OO3-O4, 2OO4O5AND 2005-06. A PERU SAL OF THESE ACCOUNTS REVEAL THAT THE APPELLANT HAD MADE PURCHAS ES FROM THESE PARTIES AND ALSO MADE PAYMENTS THROUGH CHEQUES, WHI CH WERE DULY DEBITED IN THE BANK ACCOUNT OF THE APPELLANT. AS PE R ASSESSING OFFICERS OWN ADMISSION, THE CHEQUES ISSUED BY THE APPELLANT WERE CREDITED IN THE BANK ACCOUNTS OF THE RESPECTIVE PARTIES. FURTHER, T HE ASSESSING OFFICER HAS ALSO ADMITTED THAT THE APPELLANT HAS MADE ACTU AL PURCHASES OF GOODS AS SALES OF SUCH GOODS HAVE BEEN CREDITED BY THE APPELLANT IN ITS BOOKS OF ACCOUNT. THUS, MERELY FOR THE REASON OF NO N-SERVICE OF NOTICES U/S 133(6), THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INFERRING THAT THE APPELLANT HAD MADE PURCHASES IN CASH. THE ASSESSING OFFICER HAS BROUGHT NOTHING ON RECORD TO PROVE THAT THE PURCHAS ES MADE WERE IN CASH, WHILE THE APPELLANT HAS ESTABLISHED THAT THE PAYMENTS AGAINST PURCHASES WERE MADE BY ACCOUNT PAYEE CHEQUES. AND S O, UNDER THE GIVEN CIRCUMSTANCES, THE ADDITION CANNOT BE MADE ON LY ON PRESUMPTION. WHILE PRESUMING THAT THE APPELLANT HAD MADE PURCHAS ES IN CASH, THE ASSESSING OFFICER FAILED TO INDICATE THE SOURCE OF SUCH CASH, WHICH WAS AS HUGE AS RS.30,93,325/-. THE ASSESSING OFFICER AL SO FAILED TO INDICATE THE PARTIES FROM WHOM SUCH CASH PURCHASES WERE MADE . THE ASSESSING OFFICER COULD BRING NO POSITIVE MATER IAL ON RECORD TO ESTABLISH THAT THE APPELLANT MADE PURCHASES IN CASH. HE HAS FAILED TO PROPERLY ANALYZE THE FACTS AND THE MATERIAL ON RECO RD. AN ASSESSMENT HAS TO BE COMPLETED ON THE BASIS OF RECORD AND MATE RIAL AND EVIDENCE AVAILABLE BEFORE THE ASSESSING OFFICER. BUT, THE EX PLANATIONS GIVEN BY THE APPELLANT SEEMS TO HAVE BEEN REJECTED BY THE ASSESS ING OFFICER MORE ON THE GROUND OF PRESUMPTION THAN ON FACTUAL GROUNDS. PRESUMPTION SHOULD NOT LEAD THE ASSESSING OFFICER TO A STATE OF AFFAIR S WHERE SALIENT EVIDENCES ARE OVERLOOKED. IN THE PRESENT CASE, EVER Y TRANSACTION OF THE APPELLANT HAS BEEN ACCOUNTED, DOCUMENTED AND SUPPOR TED. THE ADDITION MADE BY ASSESSING OFFICER IS ARBITRARY AND WITHOUT ANY BASIS AND IS NOT BASED ON EVIDENCE AND MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER HAS FAILED TO EVEN MENTION THE SPECIFIC PRO VISIONS OF LAW UNDER WHICH HE HAS MADE THE ADDITION OF RS 30,93,325/- TO THE INCOME OF THE APPELLANT. SUCH ADDITION IS NOT SUSTAINABLE IN LAW. THE CASE LAWS RELIED UPON BY THE APPELLANT ALSO SUPPORT THE CONTENTIONS OF THE APPELLANT. THE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. THE APPELLANT GETS RELIEF OF RS.3O,93,32J/-. 5 AGAINST THE ABOVE ORDER OF THE LD.CIT(A), THE REV ENUE IS IN FURTHER APPEAL BEFORE US. ITA NO.1209/KOL/09 ITO W 35(4) KOL VS. M/S.MANISH E NTERPRISES 5 5 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND FROM RECORD THAT THE AO HAS MADE THE ADDITION OF RS.30,93,325/- IN RESPECT OF PURCHASES MADE FROM EI GHT (8) DIFFERENT PARTIES. THE RELEVANT PORTION OF THE ASSESSMENT ORDER IS REPRODUCED HEREU NDER:- THE PURCHASE PARTIES WERE VERIFIED AND IT WAS FOUN D THAT THE ASSESSEE HAD NOT PURCHASED FROM THE SAID PARTIES SI NCE THEY DID NOT EXIST AT ALL IN THE GIVEN ADDRESS. THE ASSESSEE HA S SHOWN THESE PARTIES AS SUNDRY CREDITORS FOR OUTSTANDING PAYMENTS OF THE PURCHASES. THE SALES HAVE TAKEN PLACE AGAINST PURCHASES OF MATERI ALS DISCLOSED BY THE ASSESSEE TO HAVE BROUGHT FROM THESE SUNDRY CREDITO RS. IT IS VERY CLEAR THAT PURCHASES HAVE BEEN MADE ON CASH BASIS AND THE N AFTER BILLS HAVE BEEN TAKEN FROM THESE SUNDRY CREDITORS. AS SUCH TH E ASSESSEE HAS USED HIS UNDISCLOSED CASH MONEY TO TAKE SUCH PURCHASES AND SUCH UNDISCLOSED INCOME OF THE ASSESSEE IS ALSO REFLECTE D IN THE FORM OF SUNDRY CREDITOR IN THE BALANCE SHEET AS ON 31.03.20 05. SUBJECT TO THE ABOVE DISCUSSION THE ENTIRE AMOUNT OF RS.30,93,325 /- IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 6.1 IT IS CLEAR FROM THE AOS OBSERVATION THAT THE ADDITION WAS MADE BY HIM BY DOUBTING THE PURCHASES HAVING BEEN MADE BY PAYING CASH. AS PER THE DISCUSSIONS MADE BY THE LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS , WE FIND THAT THE ASSESSEE HAS FILED COPIES OF RESPECTIVE PURCHASE BILLS/CHALLANS AND T HE DETAILS OF PAYMENT MADE BY ACCOUNT PAYEE CHEQUES DRAWN IN FAVOUR OF RESPECTIVE CREDIT ORS AND COPIES OF BANK STATEMENT OF RESPECTIVE PARTIES HAVE ALSO BEEN FILED. 6.2 IN RESPECT OF SOME OF THE PARTIES THE OPENING BALANCES ARE ALSO CARRIED FORWARD FROM THE EARLIER YEARS, TO WHOM THE PAYMENTS WERE M ADE DURING THE YEAR BY ACCOUNT PAYEE CHEQUES. DETAILS OF LEDGER ACCOUNT AND COPIE S OF BILL CLEARLY INDICATE THAT THE PURCHASES WERE MADE FROM THESE PARTIES AND PAYMENTS WERE MADE THROUGH BANK IN FAVOUR OF THESE PARTIES. MERELY BECAUSE AFTER 2-3 YEARS, THE PARTIES WERE NOT AVAILABLE AT THE GIVEN ADDRESSES, THE AO PRESUMED AND MADE THE ADDI TION BY OBSERVING THAT THE ASSESSEE HAS PURCHASED GOODS BY MAKING CASH PAYMENTS. ONCE T HE GOODS ORDERED HAD BEEN SUPPLIED SATISFACTORILY AND PAYMENTS HAD BEEN MADE BY ACCOUNT PAYEE CHEQUES, THE ASSESSEE IS NOT SUPPOSED TO KEEP TRACK OF THE ADDRE SSES OF SUPPLIERS. HOWEVER, NO DEFECT WAS POINTED OUT BY THE AO IN THE BOOKS OF ACCOUNT SO AS TO ALLEGE AVAILABILITY OF CASH OR TO DISLODGE THE REPLY OF THE ASSESSEE THAT THE PA YMENTS WERE MADE BY ACCOUNT PAYEE ITA NO.1209/KOL/09 ITO W 35(4) KOL VS. M/S.MANISH E NTERPRISES 6 6 CHEQUES. THESE CREDITORS ARE NOT OLD CREDITORS AN D ALSO PAID BY ACCOUNT PAYEE CHEQUES AFTER THE PURCHASES WERE MATERIALISED SO AS TO PRE SUME THAT THERE WAS CESSATION OF LIABILITY. 6.3 THE CREDITORS WERE PAID BY ACCOUNT PAYEE CHEQUE S AFTER PURCHASES, THUS, THE LIABILITY IS SQUARED UP BY MAKING ACTUAL PAYMENT. AFTER RECORDING DETAILED FINDINGS AT PARA 4.3, THE LD.CIT(A) HAS DELETED THE ADDITION BY OBSERVING THAT THE ASSESSEE HAS MADE ACTUAL PURCHASES FROM 8 PARTIES, WHO HAVE BEEN PAID BY ACCOUNT PAYEE CHEQUES. RELEVANT COPIES OF LEDGER ACCOUNT, PURCHASE BILLS/CHALLANS AND BANK STATEMENTS WERE ALSO FILED BEFORE THE AO, WHICH CLEARLY ESTABLISHED THAT PURC HASES WERE ACTUALLY MADE FROM SAID 8 PARTIES. THE AO HAS NOT BROUGHT ANY MATERIAL TO E STABLISH THAT THE ASSESSEE HAS MADE PURCHASES IN CASH. ON THE OTHER HAND, MATERIAL ON R ECORD PROVED THAT THE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES, WHICH WERE DULY DEBI TED IN THE ASSESSEES BANK ACCOUNT AND CREDITED IN THE BANK ACCOUNTS OF THE SUPPLIERS. AO HIMSELF VERIFIED THE PAYMENTS MADE BY THE ASSESSEE AND SUCH PAYMENTS WERE DULY CR EDITED IN THE BANK ACCOUNT OF THE RESPECTIVE PARTIES. THE DETAILED FINDING RECORDED B Y THE LD.CIT(A) AS REPRODUCED ABOVE HAS NOT BEEN CONTROVERTED BY BRINGING ANY POSITIVE MATERIAL BY THE REVENUE. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDI NGS OF THE LD.CIT(A) RESULTING IN DELETION OF ADDITION MADE ON ACCOUNT OF PURCHASES. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AS STATED ABOVE. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 13.1 2.2013 SD/- SD/- ** PRADIP SPS ( #$# 1 & ' , ) ( GEORGE MATHAN, JUDICIAL MEMBER ( . , ) ( R.C. SHARMA, ACCOUNTANT MEMBER ( (( ( 1 1 1 1 ) )) ) DATE 13.12.2013 ITA NO.1209/KOL/09 ITO W 35(4) KOL VS. M/S.MANISH E NTERPRISES 7 7 0 +4 5436 / COPY OF THE ORDER FORWARDED TO: 1. . &* / THE APPELLANT : I.T.O W 35(4), PODDAR COURT, 18 RABINDRA SARANI, 3 RD FL., KOL-1. 2 +,&* / THE RESPONDENT- M/S. MANISH ENTERPRISES 20 N.S ROAD, GR. FL, KOL-1. 3 4. . ' / THE CIT, ' ( )/ THE CIT(A) 5 . !78 +' / DR, KOLKATA BENCH 6 . GUARD FILE . ,4 +/ TRUE COPY, './ BY ORDER, 9 '# /ASSTT REGISTRAR