Sri Suprakash Samanta, Purba Medinipur V. I.T.O Wd - 1,Haldia, Purba Medinipur

ITA 1242/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4584 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 02-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 14-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR J
• Keywords: Unexplained investment
• Section: 143(3); 142(1); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.1242/KOL/2013 ASSESSMENT YEAR:2008-09 SRI SUPRAKASH SAMANTA VILL & P.O. MAHISHADAL, PURBA MEDINIPUR-721628 [ PAN NO.AAJJPS 7623 R ] / V/S . ITO WARD-1, HALDIA DIT. PURBA MEDINIPUR, WEST BENGAL /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI SUNIL SURANA, FCA /BY RESPONDENT SHRI SAURABH KUMAR, JCIT-DR /DATE OF HEARING 02-05-2016 /DATE OF PRONOUNCEMENT 01-07-2016 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER O F COMMISSIONER OF INCOME TAX (APPEALS)-XXXIII, KOLKATA DATED 14.02.20 13. ASSESSMENT WAS FRAMED BY ITO WARD-1, HALDIA U/S 143(3) OF THE INCO ME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER DATED 30.12.2010 FOR ASSESSMENT YEAR 2008-09. THE GROUND RAISED BY ASSES SEE PER HIS APPEAL AS UNDER:- 1. FOR THAT THE ORDER OF THE LD. CIT(A) IS ARBITRA RY, ILLEGAL AND BAD IN LAW. 2. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS.1,33,287/- IGNORING THE RECONCILIATION AND TH E EXPLANATION FILED BY THE APPELLANT. ITA NO.1242/KOL/2013 A.Y.2008-09 SH S. SAMANTA V. ITO WD-1, HAL PAGE 2 3. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.28503/- AS UNDISCLOSED INVESTMENT WHEN NO SUCH INVESTMENT W AS MADE AND EXPLANATION THERE DULY FILED. 4. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS.193,750/- IGNORING HER RECONCILIATION AND EXP LANATION FILED IN SUPPORT OF THE ARGUMENTS MADE. 5. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ORDER OF THE CIT(A) BE MODIFIED AND THE ASSESSEE BE GIVEN THE RE LIEF PRAYED FOR. SHRI SUNIL SURANA, LD AUTHORIZED REPRESENTATIVE AP PEARED ON BEHALF OF ASSESSEE AND SHRI SAURABH KUMAR, LD DEPARTMENTAL R EPRESENTATIVE APPEARED ON BEHALF OF REVENUE. 2. FIRST ISSUE IS GENERAL IN NATURE AND DOES NOT RE QUIRE ANY ADJUDICATION. 3. SECOND ISSUE IS THAT LD. CIT(A) ERRED IN CONFIRM ING THE ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF IGNORING THE REC ONCILIATION AMOUNT OF 1,33,287/-. 4. FACTS IN BRIEF ARE THAT ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL AND ENGAGED IN BUSINESS OF CEMENT. A SURVEY WAS CONDUCT ED AT THE BUSINESS PREMISES OF ASSESSEE ON 30.01.2008. AS A RESULT OF SURVEY, CERTAIN BOOKS OF ACCOUNTS INCLUDING SALE REGISTERS WERE IMPOUNDED. T HE CASE WAS SELECTED FOR A COMPULSORY SCRUTINY AND ACCORDINGLY NOTICE U/S 14 3(2) OF THE ACT WAS ISSUED ON 31.08.2009. THEREAFTER ANOTHER NOTICE WAS ISSUED U/S. 142(1) OF THE ACT AGAIN ON 18.05.2010 TO PRODUCE THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH WERE EXAMINED BY ASSESSING OFFICER. THE AO DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, OBSERVED THAT SALE UPTO DAT E OF SURVEY I.E., 30.01.2008 SHOULD BE OF 2,82,36,651/- ON THE BASIS OF IMPOUNDED DOCUMENTS. HOWEVER THE SALES DECLARED BY ASSESSEE F OR THE PERIOD BEGINNING FROM 01.04.2007 TO 30.01.2008 WAS AT 2,04,59,660/-. ACCORDINGLY THE SUPPRESSED SALE OF 77,76,991/- WAS WORKED OUT BY AO WHICH WAS TAXED BY ITA NO.1242/KOL/2013 A.Y.2008-09 SH S. SAMANTA V. ITO WD-1, HAL PAGE 3 APPLYING GROSS PROFIT (GP) RATE OF 2.61% OF THE SUP PRESSED SALE. THE AO HAS, ACCORDINGLY ADDED A SUM OF 1,84,710/- TO THE TOTAL INCOME OF ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A), WHERE ASSESSEE PLEADED THAT BOOKS OF ACCOUNTS WERE MAINTA INED ON THE BASIS OF CALENDAR YEAR I.E. 1 ST JANUARY TO 31 ST DECEMBER. IN THE AFORESAID FIGURE OF SALE AS WORKED OUT BY THE AO ON THE BASIS OF IMPOUNDED D OCUMENTS, THE SALE PERTAINING TO JAN. 07 TO MAR. 07 FOR AN AMOUNT OF 60,54,723/- WAS INCLUDED WHICH IS NOT THE SALE FOR THE YEAR UNDER CONSIDERAT ION, SO IT SHOULD BE EXCLUDED. BESIDES THE ABOVE, SALES WHICH WERE RECOR DED AT THE TIME OF SURVEY BY THE AO WAS INCLUSIVE OF VALUE ADDED TAX (VAT) OF 25,57,459/- AND THE ASSESSEE WAS ACCOUNTING THE SALES ON THE BASIS OF N ET FIGURE. ACCORDINGLY THE SALES IN THE INCOME TAX RETURN WERE REPORTED WITHOU T THE AMOUNT OF VAT. IF THESE TWO FIGURES ARE EXCLUDED FROM THE SALES AMOUN T RECORDED AT THE TIME OF SURVEY, THERE WILL NOT BE ANY DISCREPANCY RATHER TH E SALES DECLARED BY THE ASSESSEE WILL BE HIGHER. ASSESSEE ACCORDINGLY SUBMI TTED BEFORE LD. CIT(A) THAT SALE DECLARED BY ASSESSEE IN HIS RETURNED INCO ME IS HIGHER THAN SALE SHOWN IN THE IMPOUNDED MATERIAL. IT WAS ALSO SUBMIT TED THAT ASSESSEE IS DEALING ONLY ACC CEMENT PRODUCTS AND THE PURCHASE H AS BEEN DULY VERIFIED BY ACC LTD. AND NO UNACCOUNTED PURCHASE WAS FOUND. CONSEQUENTLY, THERE IS NO QUESTION OF ANY UNACCOUNTED SALE WITHOUT BRINGIN G ANY DEFECT IN THE POSITION OF THE CLOSING. HENCE THERE IS NO NEED TO MAKE ANY ADJUSTMENT WITH REGARD TO UNACCOUNTED SALE OF ASSESSEE. CONSIDERING THE SUBMISSION PLACED BEFORE LD. CIT(A), HE CALLED FOR REMAND REPORT FROM AO TO JUSTIFY THE ADDITION OF UNDISCLOSED SALE MADE BY AO IN THE ORIGINAL ASSE SSMENT PROCEEDINGS. AFTER CONSIDERING THE REMAND REPORT THE LD. CIT(A) HAS RE DUCED THE AMOUNT OF VAT OF RS. 25,57,459.00 AND THE AMOUNT OF SALE WHICH IS AT 1,12,746/- FROM THE SALE WORKED OUT ON THE BASIS OF IMPOUNDED DOCUMENTS . LD. CIT(A) FINALLY REDUCED THE ADDITION MADE BY AO FROM 77,76,991/- TO 51,06,786/- AND APPLIED THE GP RATIO @ 2.61% AND CONFIRMED THE ADDI TION OF 1,33,287/-. ITA NO.1242/KOL/2013 A.Y.2008-09 SH S. SAMANTA V. ITO WD-1, HAL PAGE 4 BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 6. BEFORE US, LD AR FILED COPY OF BALANCE SHEET FOR THE YEAR ENDED 31.03.2008 AND SUBMITTED THAT NET PROFIT RATIO WHIC H IS 1.16% OF THE TURNOVER SHOULD HAVE APPLIED ON THE UNDISCLOSED SALE. IN SUP PORT OF ITS CLAIM, LD. AR HAS RELIED IN THE JUDGMENT OF HON'BLE BOMBAY HIGH C OURT IN APPEAL NO. 313 OF 2013 DATED 04.02.2015 IN THE CASE OF CIT V. SHRI HARIRAM BHAMBHANI . ON THE OTHER HAND, LD DR OPPOSED THE ARGUMENT RAIS ED BY LD AR BEFORE US AND SUBMITTED THAT ALL THE INDIRECT EXPENSES HAVE B EEN DULY BOOKED BY THE ASSESSEE IN ITS PROFIT AND LOSS A/C AND THEREFORE, THE QUESTION OF APPLYING THE NET PROFIT RATIO DOES NOT APPLY IN THE INSTANT CASE . LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD AND CASE LAW CITED BY LD. AR. F ORM THE FOREGOING DISCUSSION, WE FIND THAT AUTHORITIES BELOW HAVE FOU ND THE UNDISCLOSED SALES AND HAVE APPLIED GROSS PROFIT RATIO TO WORK OUT THE SUPPRESSED PROFIT EMBODIED IN THE UNACCOUNTED SALE. BEFORE US LD. AR SUBMITTED THAT VARIOUS COURTS HAVE HELD THAT NET PROFIT RATIO SHOULD BE APPLIED ON THE UNDISCLOSED SALE IN THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE. NOW, THE ISSUE BEFORE US ARISE SO AS TO WHETHER THE GP RATIO OR NET PROFIT RATIO S HOULD BE APPLIED ON THE UNACCOUNTED SALE OF ASSESSEE. WE FIND THAT THE CASE LAW CITED BY LD. AR IS BASED ON DIFFERENT FACTS AND DISTINGUISHABLE FROM T HE FACTS IN HAND. THE ISSUE WAS FORMULATED FOR THE CONSIDERATION OF HON'BLE BOM BAY HIGH COURT IN THE CASE OF SHRI HARIRAM BHAMBHANI (SUPRA) IS REPRODUCED BELOW:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN UPHOLDING THE ORDER O F THE CIT(A) IN WHICH HE HAD DIRECTED THE ASSESSING OFFICER TO TAX 4% NET PROFIT ON UNACCOUNTED SALES OF RS.35 LAKHS EVEN THOUGH NO EVI DENCE OF UNACCOUNTED PURCHASE/EXPENSES AGAINST SUCH UNACCOUN TED SALES WAS DETECTED AT THE TIME OF SURVEY? ITA NO.1242/KOL/2013 A.Y.2008-09 SH S. SAMANTA V. ITO WD-1, HAL PAGE 5 NOW FROM THE AFORESAID ISSUE, WE FIND THAT THE QUES TION WHETHER NET PROFIT RATIO OR GROSS PROFIT RATIO SHOULD BE APPLIED ON THE UNAC COUNTED SALE OF ASSESSEE WAS NOT THERE. THEREFORE, THE RATIO LAID DOWN IN TH E AFORESAID JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF SHRI HARIRAM BHAMBHANI (SUPRA) CANNOT BE APPLIED IN THE PRESENT CASE. WE ALSO FIND THAT ASSESSEE HAS CLAIMED ALL THE INDIRECT EXPENSE IN ITS PROFIT AND LOSS A/C. THEREFORE, IT IS ONLY GP RATIO WHICH IS TO BE APPLIED ON THE UNACCOUNTED SALE OF ASSESSEE. HENCE, WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD. CIT(A), GROUND RAISED BY ASSESSEE IS DISMISSED. 8. NEXT INTER-CONNECTED ISSUE RAISED BY ASSESSEE IN GROUND NO. 3 & 4 IS WITH REGARD TO THE ADDITION MADE BY AO ON ACCOUNT O F UNDISCLOSED INVESTMENT OF 28,503/- AND 1,93,750/-ON ACCOUNT OF UNDISCLOSED PURCHASE RESPE CTIVELY. WE FIND THAT COMMON INTERCONNECTED ISSUE ARISING FR OM BOTH THE GROUNDS OF APPEAL OF THE ASSESSEE THEREFORE WE HAVE CLUBBED TH EM FOR THE PURPOSE OF ADJUDICATION AND CONVENIENCE. 9. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT THE DIFFERENCE BETWEEN THE AMOUNTS RECORDED AS SECURITY DEPOSIT WITH ACC LTD. AND THE AMOUNT SHOWN BY THE ACC LTD. IN ITS BOOKS O F ACCOUNT FOR AN AMOUNT OF 28,503/- WHICH WAS ADDED TO THE TOTAL INCOME OF ASS ESSEE. SIMILARLY, AO MADE THE ADDITION OF UNACCOUNTED PURCHASE OF 3,70,636/- WHICH WAS REDUCED BY LD. CIT(A) TO RS.1,93,750/-. THESE DISCREPANCIES WERE NOTED BY AO AFTER HAVING CONFIRMATION U/S 133(6) OF THE ACT FROM ACC LTD. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. ITA NO.1242/KOL/2013 A.Y.2008-09 SH S. SAMANTA V. ITO WD-1, HAL PAGE 6 10. BEFORE US LD AR SUBMITTED THAT THE TELESCOPING EFFECT CAN BE GIVEN TO THE ABOVE ADDITION MADE BY THE LOWER AUTHORITIES ON ACCOUNT OF UNACCOUNTED INVESTMENT AND PURCHASES AS WORKED OUT ABOVE. ON THE OTHER HAND, LD DR VEHEMENTLY RELIED ON THE ORDERS OF AUTHORITIES BELOW. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION, WE FIND THAT LOWER AUTHORITIES HAVE MADE THE ADDITION ON ACCOUNT OF DI SCREPANCIES OBSERVED IN THE BOOKS OF ACCOUNT OF ASSESSEE AND THE INFORMATIO N OBTAINED U/S. 133(6) OF THE ACT. THE ADDITION WAS MADE BY LOWER AUTHORITIES ON ACCOUNT OF UNDISCLOSED INVESTMENT OF 28,509/- AND UNACCOUNTED PURCHASE OF 1,93,750/- RESPECTIVELY. LD. AR BEFORE US SUBMITTED THAT ADDITIONS HAVE ALREADY BEEN MADE BY THE LOWER AUTHORITIES ON ACCOU NT OF UNDISCLOSED SALE AFTER OFFERING GP RATIO ON SUCH SALE WHICH WAS ALSO CONFIRMED BY US. WE FIND FORCE IN THE ARGUMENT ADVANCED BY LD. AR BEFORE US THAT THE ADDITIONS ON ACCOUNT OF UNDISCLOSED INVESTMENT AND UNACCOUNTED P URCHASE ARE ARISING OUT OF THE PROFIT ON UNACCOUNTED SALE OF 51,06,786/-. WE FIND IN THE SIMILAR FACTS AND CIRCUMSTANCES THE COORDINATE BENCH OF THIS TRIB UNAL HAS DECIDED SIMILAR ISSUE IN FAVOUR OF ASSESSEE IN ITA NO.995/KOL/2011 IN THE CASE OF ACIT V. SMT. MAYA SIRKAR DATED 15.10.2015 FOR AY 2007-08, THE RELEVANT EXTR ACT OF THE ORDER IS REPRODUCED BELOW:- 11. . THE ASSESSEE HAS ALREADY ADMITTED THE SALE OF JEWELLERY AMOUNTING TO RS.16,89,700/- OUTSIDE THE BOOKS AND O N THE SAID UNDISCLOSED SALE THE AO HAS ALREADY ESTIMATED NET P ROFIT AT 14.68%. WE FIND FROM RECORDS THAT IN COURSE OF SURVEY THE AO F OUND THAT SOME OF THE PURCHASED JEWELLERY AS WELL AS THE LABOR CHARGES WE RE NOT ACCOUNTED FOR, AS MENTIONED ABOVE, WHICH IS NOT ACCOUNTED FOR . AO HIMSELF HAS PRESUMED OUTGOINGS FOR SUCH SALE (RS.16,89,700/- - RS.2,40,048/-) AT 14,41,652/-. THE AO HAS FOUND IN THE IMPOUNDED PAPE RS THE PAYMENT AMOUNTING TO RS.10,57,336/-,WHICH IS MUCH LESS THAN THE OUTGOING ESTIMATED BY THE AO ON SUCH SALES. THEREFORE THESE OUTGOINGS CAN BE TELESCOPED WITH THE ACTUAL EXPENSES ACCEPTED BY DEP ARTMENT TO HAVE BEEN INCURRED FOR ACHIEVING THE UNDISCLOSED SALES O F RS16,89,700/- ITA NO.1242/KOL/2013 A.Y.2008-09 SH S. SAMANTA V. ITO WD-1, HAL PAGE 7 WE FIND IN THE INSTANT CASE THAT THE UNDISCLOSED SA LE OF 51,06,786/- HAS BEEN TAXED @ 2.61%. AS A RESULT OF UNDISCLOSED SALE THE RE WAS INFLOW OF RS. 51,06,786.00 AND OUT FLOW ON ACCOUNT OF UNDISCLOSED PURCHASES AND SECURITY DEPOSITS FOR RS. 28,503/- AND 1,93,750/-. WE FIND THAT THE PAYMENT AMOUNTING TO 2,22,253/- (28503 PLUS 193750) WHICH IS MUCH LESS T HAN THE AMOUNT OF UNDISCLOSED SALES. THEREFORE, IN OUR CONS IDERED VIEW, THE OUTGOING CAN BE TELESCOPED WITH THE AMOUNT OF UNDISCLOSED SA LE WHICH HAVE BEEN DULY ACCEPTED BY ASSESSEE. CONSIDERING THE FACTS AND TOT ALITY OF THE CASE, WE REVERSE THE ORDERS OF AUTHORITIES BELOW AND GROUND OF ASSESSEE IS ALLOWED. AO IS DIRECTED ACCORDINGLY. 12. IN THE RESULT, ASSESSEES APPEAL STANDS PARTLY ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON 01/07/2016 SD/- SD/- (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP ! - 01/07/2016 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-SRI SUPRAKASH SAMANTA, VILL & P.O.MAHISH ADAL, PURBA MEDINIPUR- 721628 2. /RESPONDENT-ITO, WARD-1, HALDIA, DIST. PURBA MEDINI PUR, W.B. 3. '# % / CONCERNED CIT 4. % - / CIT (A) 5. &'( ))'# , '# / DR, ITAT, KOLKATA 6. (*+ / GUARD FILE. BY ORD ER/ , / '#,