ITO,Ward-40(1), Kolkata, Kolkata V. Smt Laxmi Devi Banka, Kolkata

ITA 1244/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78377 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2014
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 27-08-2012
• Court: TRIBUNAL
• Assessee Lawyers: A K TIBREWAL
• Keywords: Unexplained expenditure; Opportunity of being heard; Corroborative evidences
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , KOLKATA [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE S RI SHAMIM YAHYA, AM ] ITA NO.1244/KOL/2012 ASSESSMENT YEAR : 2009-10 ( APPELLANT ) (RESPONDENT) I.T.O., WARD-40(1) . -VS- SMT.LAXMI BANKA KOLKATA KOLKATA (PAN:AEFPB 4160 F) ITA NO.1216/KOL/2012 ASSESSMENT YEAR : 2009-10 ( APPELLANT ) (RESPONDENT) SMT.LAXMVI BANKA -VS- I.T.O., WARD-40(1), KOLKATA KOLKATA (PAN:AEFPB 4160 F) FOR THE DEPARTMENT SHRI GAYASUDDIN ANSARI, JCIT, SR.DR FOR THE ASSESSEE SHRI A.K.TIBREWAL, FCA DATE OF HEARING : 02.07.2014 DATE OF PRONOUNCEMENT : 08. 07.2014. ORDER PER SHRI SHAMIM YAHYA, AM THESE CROSS APPEALS FILED BY THE REVENUE AND THE AS SESSEE EMANATE OUT OF ORDER OF LD. CIT(A)-XII, KOLKATA DATED 21.05.2012 A ND PERTAIN TO ASSESSMENT YEAR 2009-10. ITA NO.1244/KOL/2012 (REVENUES APPEAL): 2. THE GROUND OF APPEAL IN THIS APPEAL READS AS UN DER :- 1. LD.CIT(A) HAS ERRED IN LAW AS WELL AS ON FACT I N DELETING THE ADDITION OF RS.27,65,707/- ON ACCOUNT OF PURCHASE MADE BY THE A SSESSEE BY ADMITTING FRESH EVIDENCE IN VIOLATION OF RULE 46A. 2. LD.CIT(A) HAS ERRED IN LAW AS WELL AS ON FACT IN REDUCING THE ADDITION OF RS.8,57,618/- ON ACCOUNT OF PURCHASE, EXPENSES AND LOCAL TRANSPORTATION TO 10% OF PURCHASE, EXPENSES AND LOCAL TRANSPORTATION FROM 20 % OF PURCHASE, EXPENSES AND LOCAL TRANSPORTATION. 3. LD.CIT(A) HAS ERRED IN LAW AS WELL AS ON FACT IN DELETING THE ADDITION OF RS.20,27,016/-, ON ACCOUNT OF SUNDRY CREDITORS. ITA.NO.1244/KOL/2012 & 1216/KOL/2012 SMT.LAXMI BANKA A.YR.2009-10 2 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, DELETE, ALTER OR MODIFY THE GROUNDS OF APPEAL ANY DURING THE APPEAL PROCEEDINGS. 3. APROPOS GROUND NO.1 : THE ASSESSEE IS ENGAGED I N THE BUSINESS OF VENDING OF TURMERIC IN THE STATE OF ANDHRA PRADESH AS GENERAL MERCHANT AND COMMISSION AGENT. WHILE SCRUTINIZING THE BOOKS OF ACCOUNTS THE AO OBS ERVED THAT THE ASSESSEE HAD MADE PAYMENT IN CASH IN EXCESS OF RS.20,000/- FOR PURCHA SE OF TURMERIC FROM PRIVATE PARTIES. THE AO NOTED THAT THIS FACT WAS NOT MENTIONED IN TH E TAX AUDIT REPORT. HE FURTHER NOTED THAT THE ASSESSEE TOOK THE STAND THAT THE CAS H PAYMENT WAS MADE TO FARMERS DIRECTLY AND HENCE CLAIMED EXEMPTION FROM THE PROVI SION OF SECTION 40A(3) OF THE I.T.ACT. THE ASSESEE WAS ASKED TO FURNISH THE NAMES AND ADDRESSES OF THE FARMERS AND A STATEMENT OF CASH PAYMENT TO THEM DATEWISE WITH C ORROBORATED EVIDENCE OF CASH WITHDRAWAL FROM THE BANK. THE AO ASKED THE ASSESSEE TO SUBMIT THE FOLLOWING DETAILS :- 1) THE IDENTITY OF THE FARMERS FROM WHOM HE PROCURE D TURMERIC; 2) WHETHER THE PAYMENTS WERE MADE ON THE SAME DAY O R 6-7 DAYS AFTER TRANSACTIONS 3) WHETHER ANY CERTIFICATE FROM PARTIES INSISTING F OR CASH PAYMENT; 4) WHETHER THE FARMERS MAINTAINED BANK ACCOUNTS OR NOT 5) CASH FLOW STATEMENT; IN THE ABSENCE OF DETAILED INFORMATION HE HELD THAT HE DISALLOWED 5% ON NET CASH PURCHASE OF RS.5,53,14,144/- DETERMINING THE UNACCO UNTED MONEY INVOLVED IN CASH PURCHASE. HENCE HE ADDED BACK RS.27,65,707/-. 4. BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED THA T AO HAS NOT GIVEN A SINGLE INSTANCE WHERE THE PAYMENT ABOVE RS.20,000/- WAS MA DE IN CASH TO ANY PARTY. THAT EVEN THE AUDITOR OF THE ASSESSEE HAS NOT POINTED OU T ANY SUCH FINDING. THE ASSESSEE PRODUCED A CERTIFICATE FROM THE AGRICULTURAL MARKET COMMITTEE WHEREIN IT HAS BEEN CERTIFIED THAT THE PURCHASES WERE MADE BY THE ASSES SEE IN THE AGRICULTURAL MARKETING YARD FROM DIFFERENT FARMERS. THE LD. CIT(A) NOTED THAT THE ASSESSEE ALSO PRODUCED A COPY OF THE CERTIFICATE SHOWING THE PAYMENT MADE TO AGRICULTURAL MARKETING COMMITTEE FOR PURCHASING TURMERIC FROM FARMERS. THE LD. CIT(A) HELD THAT THE AO ITA.NO.1244/KOL/2012 & 1216/KOL/2012 SMT.LAXMI BANKA A.YR.2009-10 3 HAD DISALLOWED 10% OF THE TOTAL PURCHASES MADE ON E STIMATE BASIS WITHOUT BRINGING ANY EVIDENCE OR SUPPORTING INCIDENCE FOR HIS FINDIN GS ON RECORD.. ACCORDINGLY THE LD. CIT(A) DELETED THE ADDITION. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BE FORE US. 5. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. WE FIND THAT THE AO HAS NOT BROUGHT ON RECORD ANY INSTANCE OF PAYMENT A BOVE RS.20,000/- IN CASH. HOWEVER, THE AO HAS NOTED THAT THERE ARE MANY SUCH INSTANCES. FURTHERMORE THE AO HAS ALSO ASKED THE ASSESSEE TO PRODUCE THE EVIDENCE IN SUPPORT OF THE PURCHASES. THE LD CIT(A), ON THE OTHER HAND, NOTED THAT THE ASSESSEE HAS PRODUCED CERTIFICATE FROM THE AGRICULTURAL MARKET COMMITTEE WHEREIN IT HAS BEEN C ERTIFIED THAT THE ASSESSEE HAS MADE PURCHASES FROM DIFFERENT FARMERS. IN THIS RESP ECT THE REVENUE IS AGGRIEVED THAT THE LD. CIT(A) HAS RELIED UPON THE ADDITIONAL EVIDE NCE IN VIOLATION OF RULE 46A. WE FIND THAT THIS APPEARS CORRECT THAT THE ASSESEE HAS PRODUCED EVIDENCE BEFORE THE LD. CIT(A) WHICH WAS NOT BEFORE AO. IN THIS REGARD WE F URTHER NOTE THAT CERTIFICATE FROM AGRICULTURAL MARKET COMMITTEE ALONE CANNOT ABSOLVE THE ASSESSEE FROM THE REQUIREMENT TO PRODUCE NECESSARY DOCUMENTS SUPPORTI NG THE EVIDENCE FOR JUSTIFYING THE PURCHASES. IN THESE CIRCUMSTANCES IT IS PROPER TO REMIT THIS ISSUE TO THE FILE OF AO. THE AO IS DIRECTED TO EXAMINE AFRESH AND TO PROVIDE ADEQUATE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. 6. APROPOS GROUND NO.2 : THE ASSESSEE HAS SHOWN EX PENSES OF RS.24,47,380/- AND RS.18,40,712/-ON ACCOUNT OF LORRY FREIGHT AND P URCHASE EXPENSES AND TRANSPORTATION RESPECTIVELY. THE AO ASKED THE ASSES SEE TO PRODUCE EVIDENCE IN SUPPORT OF THE EXPENDITURE. THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE. THE AO OPINED THAT EXPENSES ARE ON THE HIGHER SIDE. ON ESTIMATED BASIS , HE DISALLOWED 20% OF THE SAME AND ACCORDINGLY ADDED RS.8,57,618/-. 7. UPON ASSESSEES APPEAL THE LD. CIT(A) NOTED THAT THE ASSESSEE HAS SUBMITTED THE DETAILS OF LORRIES USED IN TRANSPORTATION OF TURMER IC AND FREIGHT RELATED PAPERS WERE ITA.NO.1244/KOL/2012 & 1216/KOL/2012 SMT.LAXMI BANKA A.YR.2009-10 4 SHOWN TO THE AO. COPIES OF THE SAME WERE PRODUCED B EFORE THE LD. CIT(A) ALSO. THE LD. CIT(A) FOUND THAT THAT MANY PAYMENTS WERE MADE ON SELF MADE VOUCHERS AND GENUINENESS OF THE EXPENDITURE COULD NOT BE ESTABLI SHED. THE LD. CIT(A) FOUND THAT 20% OF THE DISALLOWANCE OF LORRY FREIGHT AND TRANSP ORTATION CHARGES WAS ON THE HIGHER SIDE. HE RESTRICTED THE DISALLOWANCES TO 10% I.E. RS.4,28,800/-. AGAINST THE ABOVE ORDER THE ASSESSEE AND THE REVENU E ARE IN CROSS APPEALS BEFORE US. 8. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. WE FIND THAT THE AO IN THIS CASE HAS NOTED THAT SUPPORTING EVIDENCES WE RE NOT PRODUCED BY THE ASSESSEE BEFORE THE AO. THE LD. CIT(A) HAS NOTED THAT SUPPOR TING EVIDENCES WERE FILED BEFORE HIM. HOWEVER, HE FOUND THAT MANY OF THE VOUCHERS WE RE SELF MADE VOUCHERS AND VERACITY OF THE SAME COULD NOT BE FULLY ESTABLISHED . IN THESE CIRCUMSTANCES THE LD. CIT(A) RESTRICTED THE DISALLOWANCE TO 10% OF THE EX PENSES. IN OUR CONSIDERED OPINION, THERE IS NO INFIRMITY IN THE ORDER OF THE LD. CIT(A ) AND ACCORDINGLY WE UPHOLD THE SAME. 9. APROPOS GROUND NO.3 : ON THIS ISSUE THE AO NOTED THAT SUNDRY CREDITORS ON FARMERS ACCOUNT WAS SHOWN AT RS.2,02,70,163/-. THE ASSESSEE WAS ASKED TO SUBMIT THE LIST OF THE FARMERS WITH THEIR NAMES AND ADDRESS FO R VERIFICATION OF THE GENUINENESS OF THE SUNDRY CREDITORS. THE ASSESEE FAILED TO PRODUCE ANY AUTHENTIC EVIDENCE SUCH AS RATION CARD, VOTER CARD ETC. HENCE, THE AO DOUBTED THE GENUINENESS OF SUNDRY CREDITORS SINCE THE IDENTITY OF THE PARTY WAS NOT E STABLISHED AND BEING DISSATISFIED WITH ASSESSEES VERBAL EXPLANATION, HE ADDED BACK 10% OF THE ABOVE AMOUNT OF RS.20,27,016/- AS UNEXPLAINED EXPENDITURE. 10. UPON ASSESSEES APPEAL THE LD. CIT(A) NOTED THE ASSESSEES SUBMISSION THAT AO HAS ACCEPTED THE PURCHASE FROM THE FARMERS. THAT TH E AO HAS ALSO ACCEPTED THE PAYMENTS TO THE FARMERS. IN THIS CIRCUMSTANCES THE LD. CIT(A) HELD THAT WITHOUT REJECTING THE PURCHASES AND PAYMENTS THEREOF SUNDRY CREDITORS RELATED TO SUCH ITA.NO.1244/KOL/2012 & 1216/KOL/2012 SMT.LAXMI BANKA A.YR.2009-10 5 PURCHASES AND PAYMENT CANNOT BE DOUBTED AND DISALLO WED. HENCE HE DELETED THE ADDITION. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BE FORE US. 11. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT THE AO HAS OBSERVED THAT SUNDRY CREDITORS ON FARMERS ACCOU NT WAS AT RS.2,02,70,163 THE AO WANTED TO MAKE VERIFICATION OF THE SUNDRY CREDITORS REGARDING THE VERACITY. THE ASSESEE FAILED TO PRODUCE THE NECESSARY DETAILS IN THIS REGARD. IN THIS REGARD THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAS SUBMITTED N ECESSARY DETAILS BEFORE THE AO. WE FIND THAT THE SAID DETAIL CONTAINS NAMES OF THE FARMERS WITHOUT THEIR COMPLETE ADDRESS. IN SUCH CIRCUMSTANCES, IN OUR CONSIDERED O PINION, PROPER VERIFICATION OF THE SUNDRY CREDITORS IS NOT POSSIBLE. THE LD. CIT(A) HA S ERRED IN ACCEPTING THE SUBMISSIONS THAT WHEN THE PURCHASES HAVE BEEN ACCEPTED THERE IS NO NEED TO VERIFY THE SUNDRY CREDITORS. WE FIND THAT EVEN WHEN PURCHASES VOUCHER S ARE ACCEPTED VERIFICATION OF SUNDRY CREDITORS CANNOT BE DISPENSED WITH. NEVERTHE LESS WE ALSO NOTE THAT THE AO HAS NOT ACCEPTED THE PAYMENTS TO THE FARMERS AS GENUIN E AS HE HAS MADE A DISALLOWANCE OF 5% OF THE PURCHASES. WE NOTE THAT HONBLE APEX COUR T IN THE CASE OF KAPOORCHAND SHRIMAL VS CIT 131 ITR 451 HAS HELD THAT IT IS THE DUTY OF THE APPELLATE AUTHORITY TO CORRECT THE LACUNAE IN THE ORDERS OF THE AUTHORITIE S BELOW AND IF IT IS REQUIRED TO REMIT THE ISSUE TO THEM. IN OUR CONSIDERED OPINION IN THI S CASE THIS ISSUE NEEDS TO BE REMITTED TO THE FILE OF THE AO. THE AO IS DIRECTED TO EXAMIN E THIS ISSUE AFRESH AFTER GIVING THE ASSESSEE PROPER OPPORTUNITY OF BEING HEARD. 12. IN THE RESULT THE APPEAL OF THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.1216/KOL/2012 (ASSESSEES APPEAL) 13. THE GROUNDS OF APPEAL IN THIS APPEAL READ AS U NDER :- 1. THAT THE LEARNED COMMISSIONER INCOME TAX (APPEA LS) ERRED IN CONFIRMING THE ESTIMATED DISALLOWANCE TO THE EXTENT OF 10% OUT OF THE AGGREGATE EXPENSES INCURRED ON ACCOUNT OF LORRY FREIGHT, PURCHASE EXPENSES & LOCAL TRANSPORTATION COLLECTIVELY. ITA.NO.1244/KOL/2012 & 1216/KOL/2012 SMT.LAXMI BANKA A.YR.2009-10 6 14. WE HAVE ALREADY DEALT WITH THE ABOVE ISSUE IN G ROUND NO.2 ABOVE WHILE DECIDING THE REVENUES APPEAL. WE HAVE ALSO UPHELD THE ORDER OF LD. CIT(A) ON THIS ISSUE. HENCE THE APPEAL FILED BY THE ASSESSEE IS LI ABLE TO BE DISMISSED AND ACCORDINGLY THE SAME IS DISMISSED. 15. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. .. 16. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL FILED BY THE ASSESSEE STAND S DISMISSED. ORDER PRONOUNCED IN THE COURT ON 8.7.2014. SD/- SD/- [ MAHAVIR SINGH ] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 8.7.2014. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1. SMT.LAXMI BANKA, 194A, MANICKTALA MAIN ROAD, KOLKAT A-700054. 2 I.T.O., WARD-40(1), KOLKATA 3 . CIT(A)-XII, KOLKATA 4. CIT - KOLKATA. 5. CIT-DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES