M/s. Master Engineering Works, Kolkata V. I. T.O. Wd-2(2), Asansol, Asansol

ITA 1251/KOL/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9359 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2011
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 29-04-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 22-07-2009
• Court: TRIBUNAL
• Department Lawyers: ANURADHA MUKHERJEE
• Assessee Lawyers: V N PUROHIT; S BANDYOPADHYAY
• Keywords: Unexplained cash credit; Opportunity of being heard; Corroborative evidences; Assessment record
• Section: 143(3); 133(6); 194C; 68

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH B, KOLKATA () BEFORE . .. . . .. . , , , , , SHRI B.R.MITTAL, JUDICIAL MEMBER. /AND . .. .!' !'!' !'. .. . , #$ SHRI C.D.RAO, ACCOUNTANT MEMBER % % % % / ITA NO . 1251/KOL/2009 &' ()/ ASSESSMENT YEAR : 2005-06 (+, / APPELLANT ) M/S.MASTER ENGINEERING WORKS (PAN: AAJFM 7585 M) - & - - VERSUS - . (./+,/ RESPONDENT ) I.T.O., WARD-2(2), ASANSOL +, 0 1 #/ FOR THE APPELLANT: SHRI V.N.PUROHIT & S.BANDYOPADHYAY ./+, 0 1 #/ FOR THE RESPONDENT: SMT. ANURADHA MUKHERJEE, CIT #2 / ORDER ( (( ( . .. .!' !'!' !'. .. . ) )) ), , , , #$ PER SHRI C.D.RAO, AM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 09.07.2009 OF THE CIT(A)-ASANSOL PERTAINING TO A.YR. 2005-06. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOL LOWING GROUNDS OF APPEAL :- 1. THAT FOR THE FACTS AND UNDER THE CIRCUMSTANCES A ND IN LAW ORDER PASSED ALLEGEDLY ON 09-07-09 AND SERVED ON 15-07-09. 2. THAT FOR THE FACTS AND UNDER THE CIRCUMSTANCE OF THE CASE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.6,74,040/- OUT OF FRE IGHT CHARGES CLAIMED. 3. THAT THE CIT(A) HAS FURTHER ERRED IN CONFIRMING THE ADDITION OF RS.36,993/- BEING VALUE OF 42521 LITRES OF SHORTAGE OF K.OIL. 4. THAT THE CIT(A) HAS FURTHER ERRED IN CONFIRMING THE ADDITION BEING ESTIMATED DISALLOWANCE @10% OF UNLOADING EXPENSES CLAIMED AT RS/321280/-. 5. THAT THE CIT(A) HAS FURTHER ERRED IN ENHANCING T HE INCOME BY A TOTAL SUM OF RS.2,80,03,719/- AS DETAILS BELOW :- TYPE TRANSFER 46 OF CIT IN ORDER 2 (I) UNEXPLAINED CASH CREDITS AGAINST THE ANNEXURES 1 TO 10 OF THE SHOW CAUSE NOTICE : RS.25737224/- (II) DISALLOWANCE U/S 40(A)(IA)R.W.S. 194C : RS. 1978000/- (III) UNEXPLAINED/NON RECONCILED DIFFERENCE IN CASH BOOK OF INDIAN OIL CORPORATION LTD. ON THE BASIS OF INFORMA TION RECEIVED U/S 133(6) BY A.O. : RS. 138495/- (IV) UNEXPLAINED CAPITAL INTRODUCTION BY THE PARTNER SHRI UJJAWAL PATESARIS : RS. 150000/- TOTAL ENHANCEMENT : RS28003719/- 6. THAT YOUR APPELLANT CRAVES LEAVE TO ADD TO, AMEN D OR WITHDRAW ALL OR ANY OF THE ABOVE GROUNDS ON OR BEFORE THE TIME OF HEARING OF THE APPEAL. 3. AT THE TIME OF HEARING THE LD. COUNSEL APPEARIN G FOR THE ASSESSEE HAS NOT PRESSED GROUND NO.1 AND THE SAME IS DISMISSED AS NO T PRESSED. 4. THE FACTS RELATING TO THE OTHER GROUNDS ARE THA T WHILE DOING THE SCRUTINY ASSESSMENT THE AO MADE ADDITIONS ON ACCOUNT OF FREI GHT, UNLOADING EXPENSES AND SHORTAGE BY OBSERVING AS UNDER :- FREIGHT : IT IS SEEN FROM THE TRADING A/C OF THE ASSESSEE THA T IT DEBITED RS.33,70,200 TOWARDS FREIGHT CHARGES. IN COURSE OF ASSESSMENT PR OCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH COPIES OF BILLS WITH BRANCH-WISE D ETAILS. IN RESPONSE, A/R OF THE ASSESSEE SUBMITTED A STATEMENT MENTIONING BRANC H AND DATE-WISE DETAILS. HOWEVER, HE COULD NOT PRODUCE ANY BILLS. LATER HE S UBMITTED SOME SELF-MADE VOUCHERS AGAINST FREIGHT. IN ANNEXURE-D OF AUDITE D ACCOUNTS, A LIST OF PAYMENT MADE U/S 40A(2)(B ) FOR THE YEAR ENDED 31.0 3.2005 IS ATTACHED AND MENTIONED THERE THAT RS.5,67,000 PAID TO SMT. SUDHA PATESARIA, WIFE OF A PARTNER, AS FREIGHT AND RS.4,41,000 PAID (AS FREIGH T) TO SAMRIDH PATESARIA (HUF), WHOSE KARTA IS SON OF A PARTNER. BUT IN COUR SE OF ASSESSMENT PROCEEDINGS, A NEW LIST OF FREIGHT WAS FURNISHED. W HEREIN IT IS STATED THAT FREIGHT CHARGES PAID AS FOLLOWS : NEELAM PATESARIA : RS. 2,63.350 SITA DEVI PATESARIA : RS.10,83,850 UJJAWAL KR.PATESARIA RS. 3,17,300 OTHERS : RS. 1,33,000 TANK : RS. 1,22,200 LORRY : RS. 68,300 : RS. 26,500 TOTAL RS.20,04,500 IN A SHOW CAUSE LETTER DTD. 29.11.07, ASSESSEE WAS ASKED TO EXPLAIN THE MATTER WITH SUFFICIENT MATERIAL EVIDENCE. IN RESPON SE, A/R OF THE ASSESSEE 3 SUBMITTED A WRITTEN COMPLIANCE. HE EXPLAINED THE MA TTER IN THIS WAY DETAILS OF FREIGHT PAID TO SMT. NEELAM PATESARIA, SMT. SITA DEVI PATESARIA AND SRI UJJWAL PATESARIA HAVE ALREADY BEEN FURNISHED WITH Y OUR GOODSELF DURING LAST HEARING.OTHER TANK, LORRY IS A ONE WORD OTHER TA NK LORRY. THE AMOUNT REFLECTS AGAINST EACH WORD IS THE AMOUNT OF DIFFERE NT BRANCHES. THE STATEMENT IS CONFUSING AND DOES NOT ADDRESS THE POINT OF REQUISI TION. AS A MATTER OF FACT, HE COULD NOT EXPLAIN THE CHANGE MADE WITH REGARD TO ST ATEMENT MADE IN ANNEXURE- D OF THE AUDITED ACCOUNTS. FROM THE BRANCH-WISE STA TEMENT OF FREIGHT, IT IS ALSO NOTED THAT FREIGHT PAID PER TRIP AS FOLLOWS :- RANIGANJ RS.2,600 PER TRIP X 73 TRIPS : RS.1,89,8 00 PANAGARH RS.2,300 PER TRIP X 73 TRIPS : RS.1,67,9 00 KHARAGPUR RS.4,700 PER TRIP X 96 TRIPS : RS.4,51, 200 MIDNAPUR RS.5,350 PER TRIP X `106 TRIPS: RS.5,67, 100 KHIRPAI RS.4,750 PER TRIP X 86 TRIPS : RS.4,08,50 0 JHARGRAM RS.5,300 PER TRIP X 115 TRIPS : RS.6,09, 500 C.K.ROAD RS.5,300 PER TRIP X 101 TRIPS : RS.5,35, 300 EGRA RS.480X66 TRIPS + RS.2799X46 TRIPS: RS.4,41, 000 TOTAL : RS.33,7,300 IT IS SEEN FROM THE ABOVE ANALYSIS THAT THE ASSESSE E FIRM CHARGED FREIGHT FOR EGRA BRANCH IN TWO RATES, WHEREAS OTHER BRANCHES CH ARGED HIGHER RATE THAN MARKET PRICE. ON VERIFICATION, IT IS FOUND THAT FRO M THE DELIVERY POINT RAJBANDH TERMINAL TO PANAGARH ACTUAL DISTANCE IS 10-12 KILOM ETERS TAKING UP AND DOWN JOURNEY TOTAL TRAVELING DISTANCE IS MAXIMUM 30 KILO METERS. FOR THIS SHORT DISTANCE, FREIGHT SHOULD NOT BE RS.2,300 IN THE REL EVANT PREVIOUS YEAR. IN ALL CASES, IT IS VERIFIED AND FOUND THAT HIGHER FREIGHT THAN ACTUAL MARKET WAS DEBITED. MOREOVER, MOST OF THE FREIGHT CHARGES PAID TO THE RELATIVES OF THE PARTNERS OF THE FIRM. NO BILL AGAINST THESE EXPENSE S WAS PRODUCED AT THE TIME OF HEARING. ONLY SOME SELF-MADE VOUCHERS HAVE BEEN PRO DUCED WITHOUT SIGNATURE OF THE RECIPIENT. IN VIEW OF THE ABOVE, THE AMOUNT CLAIMED UNDER THIS HEAD IS CONSIDERED HIGHER THAN THE MARKET RATE AND THEREFOR E, NOT TO BE ALLOWED ENTIRELY. 20% OF THIS EXPENSE IS DISALLOWED AS CHARGED OVER T HE MARKET RATE AND PAID TO THE RELATIVES OF THE PARTNERS. HENCE, RS.6,74,040 B EING 20% OF FREIGHT IS ADDED BACK TO THE INCOME OF THE ASSESSEE. UNLOADING EXPENSES : ASSESSEE FIRM DEBITED RS.3,21,280 FROM ITS TRADING A/C. AS UNLOADING CHARGES. KEROSIN CARRIED BY THE TANKER AND POURED INTO THE U NDERGROUND RESERVOIR THROUGH PIPE. THEREFORE, THERE IS NO REQUIREMENT OF PORTER OR OTHER HELP. ASSESSEE WAS ASKED TO EXPLAIN THE MATTER. AT THE HE ARING, THE A/R OF THE ASSESSEE STATED THAT IN SOME BRANCH THEY HAVE NO UN DERGROUND RESERVOIR THEREFORE THEY HAVE TO TAKE DELIVERY IN DRUMS. HOWE VER, HE COULD NOT PRODUCE ANY SUPPORTING EVIDENCE. IT IS CONSIDERED THAT A PA RT OF THIS EXPENSE SHOULD NOT BE ADMISSIBLE AS NOT PROPERLY VOUCHED. HENCE, RS.32 ,128 BEING 10% OF TOTAL EXPENSE UNDER THIS HEAD IS ADDED BACK TO THE INCOME OF THE ASSESSEE. SHORTAGE : IT IS SEEN FROM QUANTITATIVE DETAILS OF SALE AND PU RCHASE IN THE AUDITED ACCOUNTS THAT A SHORTAGE OF 42,521 LITRES (VALUE OF WHICH RS .3,69,932.70) OF S.K.OIL IS 4 SHOWN. BUT THE SAID LOSS IS NOT CLAIMED IN PROFIT A ND LOSS A/C. EVEN NO PROOF HAS BEEN PRODUCED AT THE HEARING STAGE. ASSESSEE WA S ASKED TO SHOW CAUSE IN THIS REGARD. IN RESPONSE, A/R OF THE ASSESSEE EXPLA INED THE MATTER IN HIS WRITTEN SUBMISSION IN THIS WAY. THAT SHORTAGE IS A INHEREN T FEATURE OF S.K.O. BUSINESS. S.K.O. IS A CONTROLLED ITEM. STOCK RECORD & SHORTAG E ARE REGULARLY VERIFIED BY THE INSPECTORS OF CONTROLLER OF FOOD AND SUPPLY OF RESPECTIVE AREA. WE MAINTAIN DAY TO DAY STOCK REGISTER OF S.K.O. IT IS SUBMITTED THAT STOCK REGISTER SO MAINTAINED ARE REGULARLY CHECKED BY INSPECTORS O F FOOD & SUPPLY AND DULY SIGNED. SHORTAGE OF 42,521 LTS CLAIMED BY YOUR PETI TIONER IS CORRECT AND FULLY VERIFIABLE. IF THIS IS A LOSS OCCURRED DUE TO THE NATURE OF MERCHANDISE, IT SHOULD BE CLAIMED IN TRADING A/C. THEREFORE, 10% OF SHORTA GE WHICH IS CALCULATED AT RS.36,993 IS DISALLOWED AND INCLUDED TO THE INCOME OF THE ASSESSEE. IN VIEW OF THE ABOVE DISCUSSION, THE TOTAL INCOME O F THE ASSESSEE IS COMPUTED AS UNDER :- INCOME AS PER RETURN OF THE ASSESSEE : RS.31,132.5 4 R/O : RS.31,130 ADD : (I) FREIGHT (AS DISCUSSED) : RS.6,74,040 (II) UNLOADING EXPENSES : RS. 32,128 (III) SHORTAGE : RS. 36,993 4.1. ON APPEAL THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO BY OBSERVING AS UNDER :- FREIGHT : THE AO FURTHER NOTICED THAT IN ALL CASES, IT IS VER IFIED BY HIM AND FOUND THAT HIGHER FREIGHT THAN ACTUAL MARKET WAS DEBITED AND MOST OF THE FREIGHT CHARGES PAID TO THE RELATIVES OF THE PARTNERS OF TH E FIRM AND NO BILL AGAINST THESE EXPENSES WERE PRODUCED AT THE TIME OF HEARING BEFOR E THE AO AND ONLY SOME SELF MADE VOUCHERS WERE PRODUCED WITHOUT SIGNATURES OF THE RELATIVES. IN THE LIGHT OF THE ABOVE REFERRED DISCREPANCY NOT ICED BY THE AO THE AMOUNT CLAIMED UNDER THE HEAD CONSIDERED HIGHER THA N THE MARKET RATE AND THEREFORE THE AO HAS DISALLOWED 20% OF THE EXPENSES AS CHARGED OVER THE MARKET RATE AND PAID TO THE RELATIVES OF THE PARTNE R WHICH WORKED OUT AT RS.6,74,040/-. IN THIS WAY, THE AO HAS PROVED HIS CASE, WHEREAS T HE APPELLANT HAS FAILED TO SUBMIT ANY CONVINCING AND RELIABLE MATERIAL ON R ECORD BEFORE ME TO REBUT THE FINDINGS OF THE AO, HENCE AOS ACTION DOES NOT WARR ANT ANY INTERFERENCE. THIS GROUND OF APPEAL IS REJECTED. SHORTAGE : I AM NOT AGREEABLE TO THE APPELLANT THAT SHORTAGE W AS INDIRECTLY CLAIMED IN TRADING AND PROFIT AND LOSS ACCOUNT AND THUS THE APPREHENSION OR DOUBT OF A.O. THAT CLAIM OF SHORTAGE HAS NOT BEEN MADE IN TR ADING AND P&L A/C DOES NOT HOLD GOOD. HENCE THE AO WAS JUSTIFIED IN DISALL OWING THE AMOUNT ON ACCOUNT OF THE SHORTAGE. THIS GROUND OF APPEAL IS R EJECTED. UNLOADING EXPENSES : 5 THE A.R. HAS CLAIMED THAT PAYMENT TO LABOURER IS MA DE THROUGH VOUCHERS AND BEARS THE SIGNATURE OF RECIPIENTS AND EXPENSES HAVE BEEN RECORDED IN BOOKS OF ACCOUNTS AND INCURRED FOR GENUINE CAUSE OF BUSINESS AND HENCE FULLY VERIFIABLE. THE APPELLANT FAILED TO PROVE THE GENUINENESS OF THE EXPENDITURE EVEN BEFORE ME, HENCE I AM NOT A POSITI ON TO ALLOW ANY RELIEF TO THE APPELLANT. THIS GROUND OF APPEAL IS REJECTED. 4.2.. IN ADDITION TO THE ABOVE, HE FURTHER DISCUSSE D REGARDING ENHANCING THE POWERS OF THE CIT(A) AT PAGES 4 TO 8 AND FINALLY ENHANCED THE INCOME OF THE ASSESSEE TO THE EXTRENT OF RS.2,80,03,719/- UNDER THE FOLLOWING HEA DS :- (I) UNEXPLAINED CASH CREDITS AGAINST THE ANNEXURES 1 TO 10 OF THE SHOW CAUSE NOTICE : RS.2,57,37,224/- (II) DISALLOWANCE U/S 40(A)(IA)R.W.S.194C : RS. 19,78,000/- (II) UNEXPLAINED/NON RECONCILED DIFFERENCE IN CASH BOOK OF INDIAN OIL CORPORATION LTD. ON THE BASIS OF INFORMATION RECEIVED U/S 133(6) BY THE AO : RS. 1,38,495/- (V) UNEXPLAINED CAPITAL INTRODUCTION BY THE PARTNER SHRI UJJAWAL PATESARIA : RS. 1,50,000 /- TOTAL ENHANCEMENT RS.2,80,03,719/- BY OBSERVING THAT A) IN RESPECT OF UNEXPLAINED CASH CREDITS AS MENTIONED IN ANNEXURES 1 TO 10 BY TAKING INTO CONSIDERATION THE FOLLOWING : (I) THE ANNEUXRES WERE PREPARED BY BOTH THE ACCOUNTANTS UNDER THE GUIDANCE AND SUPERVISION OF THEIR ADVOCATE AND A/R. (II) THE ACCOUNTANTS HAVE PREPARED THE ANNEXURES WITH TH E DETAILS OF DATE WISE AND AMOUNT WISE IN THEIR OWN HANDWRITING, TOTALED A ND SIGNED EACH ANNEXURES AND CERTIFIED THE ANNEXURES TO THE EFFECT THAT THE SOURCES OF CASH DEPOSITS/CREDITS/DDS IN BANKS WERE UNEXPLAINED. (III) THE ANNEXURES WERE PARED AFTER 15 HEARINGS WITH ALL OF 3 PERSONS (A/R & ACCOUNTANTS) (IV) THE ANNEXURES WERE PREPARED DATE WISE AND AMOUNT WI SE. (V) IT IS AN ADMITTED FACT THAT THE DAILY OPENING & CLO SING CASH BALANCES IN CASH BOOKS IN 4 BRANCHES (RANIGANJ, MIDNAPUR, PANAGARH & EGRA) NOT FOUND DRAWN. 6 (VI) HOW SUCH BOOKS OF 4 BRANCHES WERE AUDITED WITHOUT D RAWING THE DAILY CASH BALANCES- SUCH INCOMPLETE, IRREGULAR AND ERRONEOUS AUDITED BOOKS ARE NOT RELIABLE. (VII) THE ACCOUNTANTS THEMSELVES HAD PREPARED AND ENCLOSE D THE RELEVANT COPIES OF THE CASH BOOK AND BANK STATEMENTS (VIII) APPELLANTS THIS PLEA IS NOT TENABLE THAT NO QUESTI ON CAN BE ASKED ABOUT THE INFLOW AND OUTFLOW IN CORRECTLY MAINTAINED CASH BOO K WHERE DAILY CASH BALANCES HAVE BEEN DRAWN (IX) THE BOOKS ARE NOT PREPARED AS PER GUIDELINES OF THE INSTITUTE OF C.A., HENCE NOT RELIABLE. (X) THIS PLEA IS REJECTED THAT THERE WAS NO NEED TO ASK ANY QUESTION ABOUT INFLOW AND OUTFLOW OF CASH BOOKS (XI) THIS PLEA IS ALSO NOT TENABLE THAT THE OPENING AND CLOSING CASH BALANCE ON FIRST AND LAST DATE OF THE YEAR AND INFLOW AND OUTF LOW WRITTEN CASH BOOK IS RELIABLE CASH BOOK (XII) THIS PLEA IS NOT TENABLE THAT SUCH CASH BOOKS CANNO T BE HELD UNBELIEVABLE, UNSUPPORTED AND UNACCEPTABLE. (XIII) THE CASH BOOKS THAT OF THE APPELLANT ARE NOT RELIAB LE AND ACCEPTABLE. (XIV) THIS PLEA IS FACTUALLY INCORRECT THAT THE CASH CRED ITS/DEPOSITS, DDS WERE MADE FROM EXPLAINED SOURCES. (XV) BIRDS EYE VIEW OF RANIGANJ BRANCH AND OTHER AS CLA IMED TO UNDER PREPARATION AS STATED IN REPLY DATED 15.06.2009. B) ON ACCOUNT OF DISALLOWANCE U/S 40(A)(IA) BY OBSERVING THAT (I) NO PAYMENTS WERE MADE TO THE DRIVERS AS CLAIMED BY THE APPELLANT. (II) THE APPELLANT NEVER STATED BEFORE A.O. OR FURNISHED ANY EVIDENCE THAT THE PAYMENTS WERE MADE TO DRIVERS. (III) NO ORIGINAL VOUCHERS IMPOUNDED BY ME AS CLAIMED BY THE APPELLANT. (IV) THE APPELLANT HAS BEEN CHANGING ITS STANDS/SUBMISSI ON FROM TIME TO TIME AND AUTHORITY WHICH IS NOT TENABLE ON FACTS AND IN LAW 7 (V) AS PER PARA-6 OF APPELLANT S SUBMISSION DATED 24.1 2.2007 THE PAYMENTS WERE MADE TO THE TANKER OWNERS AND NOT TO THE DRIVE RS AS CLAIMED BY THE APPELLANT. (VI) COMPUTERISED STATEMENT OF TRANSPORTATION PAYMENT IN RESPECT OF 4 BRANCHES FURTHER PROVES THAT THE PAYMENTS WERE MADE TOT TANK ER OWNERS AND NOT TO DRIVERS . (VII) NO PROOF IN ASSESSMENT RECORD OR FURNISHED BEFORE M E TO PROVE THAT TANKERS WERE GIVEN ON FIXED MONTHLY RENTAL TO DRIVERS. (VIII) NO PROOF OF MONTHLY FIXED RENTAL FROM THE DRIVERS (IX) NO SUCH CONTRACTS BETWEEN TANK OWNERS AND THE DRIVE RS PRODUCED (X) NO PROOF OF MONTHLY FIXED RENT RECEIVED BY THE OWNE R. (XI) APPELLANT FAILED TO PRODUCE EVIDENCE THAT THE FIXED RENTAL WERE SHOWN BY THREE OWNERS : (XII) NOT A SINGLE EVIDENCE PRODUCED TO SUBSTANTIATE THE CLAIM. (C) ON ACCOUNT OF NON-RECONCILED DIFFERENCE IN CLOSING BALANCE WITH INDIAN OIL CORPORATION LTD. BY OBSERVING THAT THE APPELLANT HAS SHOWN CLOSING BALANCE IN RESPECT OF INDIAN OIL CORPORATION LTD. AT RS.6,640/- WHEREAS THE INFORMATION RECEIVED FROM INDIAN OIL CORPORATION LTD. IN RESPONSE TO LETTER ISSUED BY TH E AO U/S 133(6) HAS SHOWN THE CLOSING BALANCE OF RS.1,38,495/- IN THERE ACCOU NT. HENCE, THERE WAS A DIFFERENCE AT RS.1,31,855/- WHICH HAS NOT BEEN RECO NCILED WHICH IS CLEAR FROM THE DETAILS FURNISH BY THE APPELLANT BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. ACCORDINGLY THE ASSESSEE WAS SHOW CAUS ED AS TO WHY THIS AMOUNT SHOULD NOT BE ADDED TO THEIR ASSESSED INCOME BY ENH ANCING THEIR ASSESSED INCOME U/S 251(1)(A). THE APPELLANT HAS SUBMITTED T HAT IN ABSENCE OF REPLY RECEIVED FROM IOC AND THEIR BEING 8 DIFFERENT A/C C ODES FOR EACH BRANCH, THE DIFFERENCE CANNOT BE RECONCILED. FIRST THE APPELLAN T HAS FAILED TO RECONCILE THE DIFFERENCE OF RS.1,38,495/- SECOND, THE INFORMATION RECEIVED FROM THE INDIAN OIL CORPORATION LTD., CANNOT BE TURNED DOWN OR BRUS HED ASIDE SIMPLE FOR THE ABOVE SUBMISSION OF THE APPELLANT. FURTHER, THE APP ELLANT HAS CLAIMED THAT THEY HAD SENT ONE LETTER TO ME IN THIS REGARD, HOWEVER N O SUCH LETTER HAS BEEN RECEIVED BY THIS OFFICE, HENCE, THE INCOME OF THE A PPELLANT IS ENHANCED U/S 251(1)(C) TO THE EXTENT OF RS.1,38,495/-. D) UNEXPLAINED CAPITAL INTRODUCTION OF RS.1,50,000/- B Y THE PARTNER SHRI UJJAWAL KR. PATESARIA OBSERVING AS UNDER : 8 THE ASSESSMENT RECORDS REVEALED THAT NO SOURCE OF CAPITAL INTRODUCTION OF RS.1,50,000/- BY THE ABOVE REFERRED PARTNER WAS FUR NISHED BEFORE THE AO OR BEFORE ME. ACCORDINGLY THE APPELLANT WAS SHOW CAUSE D BY THE UNDERSIGNED AS TO WHY THE CAPITAL INTRODUCTION OF RS.1,50,000/- SH OULD NOT B TREATED AS THEIR UNEXPLAINED INCOME AND ACCORDINGLY WHY THEIR ASSESS ED INCOME SHOULD NOT BE ENHANCED BY THIS AMOUNT U/S 251(1)(A). THE APPELLAN T HAS FURNISHED HIS SUBMISSION ALONG WITH ITS ANNEXURES MARKED AS G. HOWEVER, THERE IS NOTHING IN THE SUBMISSION AS WELL AS IN THE ANNEXURE TO PRO VE THAT THE CAPITAL INTRODUCTION BY SHRI UJJAWAL KR.PATHESARIA WAS FROM HIS EXPLAINED SOURCE, HENCE, I AM LEFT WITH NO ALTERNATIVE BUT TO TREAT T HE SAME AS UNEXPLAINED CASH CREDIT U/S 68 AND HENCE THE ASSESSED INCOME OF THE APPELLANT IS ENHANCED U/S 251(1)(A) BY RS.1,50,000/-. 4.3. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BE FORE US. 5. AT THE TIME OF HEARING BEFORE US, THE LD. COUNS EL APPEARING ON BEHALF OF THE ASSESSEE HAS SUBMITTED THE FOLLOWING : GROUND NO. 2 - (ASST. ORDER - PAGES 2 & 3) [CIT(A) ORDER PAGE S 2 & 3] (I) A.O. MADE ADDITION ON GROUND THAT - (A) THERE ARE ONLY SELF MADE VOUCHERS IN SUPPORT OF PAYMENT. (B) DETAILS OF FREIGHT SUBMITTED TO A.O. FOR RS. 20 ,04,500/- DOES NOT INCLUDED TWO NAMES AS GIVEN IN ANNEXURE-D TO TAX AUDIT REP ORT RS. 5,67,0001- TO SMT. SUDHA PATESARIA AND RS. 4,41,000/- TO SAMRIDH PATESARIA (HUF). (C) THERE WAS HIGH RATE DIFFERENCE IN TRANSPORTATIO N. DUE TO ABOVE A.O. ADDED 20% (RS.6,74,040/-) OF TOTA L CLAIM OF RS. 33,70,300/-. (II) C.L.T.(A) OBSERVED THAT A.O. HAS SUFFICIENT RE ASONS AND ASSESSEE HAS NO CONVINCING REPLY AND CONFIRMED THE ADDITION. CIT(A) AS WELL AS A.O. COMPLETELY IGNORED FOLLOWING DOCUMENTS IN SUPPORT O F ASSESSEES CONTENTION THAT KEROSENE OIL BEING ESSENTIAL COMMODITY EVEN FR EIGHT CHARGES ARE FIXED BY GOVT . AND ASSESSEE HAS, IN TOTAL, CLAIMED LESS EXPENSES T HEN THE RATES FIXED BY GOVT. PAGE NO. OF LIND PAPER BOOK 1. COMPARATIVE CHART OF FREIGHT CHARGEABLE AT GOVT. RATE AND 1 ACTUAL FREIGHT CLAIMED BY ASSESSEE 2 GOVT. NOTIFICATION DT. 31-01-2003 FIXING FREIGHT CHARGES 2 TO 4 BASED ON MILEAGE WITH FINAL CHART 3. DISTANCE MAPS SUBMITTED TO A.O. 5 TO 8 4. SUMMARY WITH LORRY HIRE FREIGHT PAYMENT DETAILS 9 TO 36 5. COPIES OF SPECIMEN VOUCHERS OF FREIGHT PAYMENT 37 TO 40 (III) IT IS DENIED THAT ANY FREIGHT WAS PAID TO SRI UJIWA L PATESARIA OR SMT. NEELAM PATESARIA OR SMT. SITA DEVI PATESARIA . THEY ARE OWNERS OF TANKERS WHICH ARE LEASED OUT TO DRIVERS ON FIXED MONTHLY RE NTALS, WHO ARE SAME PERSONS OVER YEARS. LEASE RENTAL RECEIVED FROM DRIVERS (LESSEES) TO WHO M TANKERS WERE LEASED OUT IS SPECIFICALLY DISCLOSED IN THEIR RESPECTIVE ACCOUNTS OVER 9 YEARS AND ASSESSED. UNDER SOME MISUNDERSTANDING OF FACTS THESE NAMES WERE WRONGLY INCLUDED BY A.R. WHO PREPARED LIST. THIS IS EVIDENT FROM THE FACT THAT IN ANNEXURE-D TO TAR THESE NAMES FOR PAYMENT OF F REIGHT HAS NOT BEEN GIVEN. COPY OF TAR IS ENCLOSED. KIND REFERENCE IS DRAWN TO THEIR RESPECTIVE BALANCE SHEET AT PAGE NOS. 64 TO 66 OF LIND PAPER BOOK. (IV) COMING TO FREIGHT PAID RS.5,67,000/- AND RS.4, 41,000/- TO SMT. SUDHA PATESARIA AND M/S. SMRIDH PATESARIA (HUF) THE DETAI LS SUBMITTED TO A.O. AND ADMITTED ON PAGE-2 OF ASST. ORDER MAY KINDLY BE REF ERRED. IN SAID DETAILS LORRY NOS. ARE GIVEN (NOT NAMES) AND LORRIES OWNED BY THE SE TWO PARTIES HAVE BEEN SPECIFICALLY MARKED. IN FACT THE NAMES OF UJWAL PAT ESARIA, NEELAM PATESARIA AND SITA DEVI PATESARIA WAS INCLUDED WRONGLY AS THE Y ARE OWNERS OF THOSE LORRIES BUT FREIGHT WAS NEVER PAID TO THEM BUT TO L ESSEES TO WHOM THEIR LORRIES WERE LEASED OUT AS STATED. GROUND NO. 3 (A) ASSESSEE CLAIMED SHORTAGE OF 42521 LTRS. WHICH WAS NOT ACCEPTED AND A SUM OF RS.36,993/- WAS ADDED TO TOTAL INCOME BY A.O . AND CONFIRMED BY THE CIT(A). (B) KEROSENE BEING ESSENTIAL COMMODITY, ALLOWABLE S HORTAGE DUE TO HANDLING AND EVAPORATION IS ALSO FIXED BY GOVT. (C) ASSESSEE IS AN AGENT AND SHORTAGE FIXED BY GOVT . IS 0.5% ( PAGE NO. 41 OF LIND PAPER BOOK). (D) AT PAGE NO. 43 OF IIND PAPER BOOK QUANTITATIVE DETA ILS ARE GIVEN . ASSESSEE SOLD 89,76,947 LTRS. AND 0.5% THEREOF COME S TO 44884.8 LTRS. AGAINST WHICH ASSESSEES CLAIM FOR SHORTAGE IS ONLY 42521 L TRS. (E) A.O. AND CIT(A) HAS COMPLETELY IGNORED GOVT. ORDER (PAGE-41 REFERRED ABOVE) AND BLINDFOLDEDLY CONFIRMED ADDITION. (F) BEING ESSENTIAL COMMODITY, ASSESSEE HAS TO MAINTAIN STOCK RECORDS WHICH ARE CHECKED BY DEPARTMENTAL INSPECTOR (PAGES-44 TO 42 OF LLND PAPER BOOK). GROUND NO.4 (RS.32,128/- OUT OF CHARGES FOR STORAGE & DISTRIB UTION) (A) AFTER RECEIVING KEROSENE TANKERS, OIL IS TO BE STORED IN DRUMS/BARRELS AND THESE ARE TO BE KEPT AT SAFE PLACE. FOR UNLOADING K EROSENE IN DRUMS ETC. AND THEN SHIFTING THEM TO SECURED PLACE (AWAY FROM FIRE ) ASSESSEE INCURRED RS.3,21,280/- OUT OF WHICH RS.32,128/- HAS BEEN DIS ALLOWED BEING ESTIMATE AT 10%. (B) ASSESSEE HAS HANDLED 9077850 LTRS. BY WAY OF PU RCHASES AND 8976947 LTRS. BY WAY OF SALES. WHY A CLAIM OF FS. 321,280/- IS EX CESSIVE AGAINST PURCHASE WORTH RS.772818/- AND SALES WORTH RS. 8,13.02.666/- HAS NOT BEEN STATED BY A.O. SELF MADE VOUCHERS FOR SUCH LABOUR CHARGES CAN NOT BE AVOIDED AS NO LABOURER KEEPS BILLS. (C) THE ESTIMATE HAS NO BASIS OR MATERIAL ON RECOR D AND IS A MERE GUESS WORK OF A.O. WHEN NO FAULT IS FIND IN BOOKS MAINTAINED, NO FALSE ENTRY NOTICED AND NO MATERIAL IS BROUGHT ON RECORD, SUCH BASELESS ESTIMA TE IS PRAYED TO BE DELETED. GROUND NO. 5 (A)(I) ALL THE FOUR SUB-GROUNDS OF THIS GROUND RELA TE TO ENHANCEMENT DONE BY CIT(A). THOUGH ALL SUB-GROUNDS WILL BE DEALT WITH O NLY ONE EXAMPLE IS 10 SUFFICIENT TO PROVE HOW CASUALLY AND WITH NOT OPEN MIND, CIT(A) DEALT WITH MATERIAL PLACED ON RECORD. AS PER STATEMENT COLLECT ED BY A.Q. FROM L.O.C. RS. 200/- IS SHOWN AS BALANCE ON 31-03-2005. IN SAID ST ATEMENT ASSESSEES CUSTOMER NO. 138495 IS GIVEN AND CIT(A) HAS TREATED THIS AS CLOSING BALANCE.. THIS SINGLE ITEM SPEAKS MUCH AS TO MANNER THE APPEA L WAS DEALT WITH AND DISPOSED OF. (II) SIMILARLY VIDE PAGE NO. 32 OF HIS ORDER, CIT( A) HAS GIVEN A LIST STATING THAT SURPRISINGLY FOLLOWING CHEQUES WERE REFLECTED IN CA SH BOOK BUT NOT REFLECTED IN BANK STATEMENT AND HAS BEEN GIVEN SO CALLED CHEQUE NO. IN 9 DIGITS. LD. CIT(A) PERHAPS NOT AWARE THAT CHEQUE NOS. WILL ALWAYS BE O NLY OF 6 DIGITS. THE 9 DIGIT NUMBERS GIVEN BY HIM AND STATED AS REFLECTED IN CAS H BOOK ARE .D.D. NOS. PURCHASED FROM BANK AND THESE NUMBERS HOW ONE CAN F IND IN BANK STATEMENT WHEN D.D.S WERE PURCHASED BY PAVING CASH. (B) ASSESSMENT WAS MADE U/S. 143(3) WITH APPROVAL OF C. C.I.T. DURGAPUR AND HENCE IT IS A CASE OF DEEP SCRUTINY. ON PAGE TO A.O . SPECIFICALLY ADMIT THAT HE (A.R.) PRODUCED ALL BOOKS OF ACCOUNTS OF THE AS SESSEE LIKE CASH BOOK, LEDGER AND SUPPORTING MATERIALS LIKE BILLS, VOUCHER S ETC. AND FURNISHED OTHER PARTICULARS/DETAILS AS WELL WHEN REQUIRED TO DO SO . A.O. HAS ACCEPTED BOOKS AND FOUND NO FAULT. ASSESSMENT WAS COMPLETED AFTER CONSIDERING MATERIALS A.O. GATHERED U/S. 133(6). UNDER THESE FACTS THE VERY BA SIS OF CIT(A)S ACTION OF ENHANCEMENT IS ONLY KNOWN TO HIM. CIT(A)S ACTION I S, IF I AM PERMITTED TO SAY SO, IS NOTHING BUT VINDICTIVE, WITHOUT JURISDICTION AND PROOF THEREOF IS REFERRED IN (I) ABOVE AND ADDITION AGITATED IN SUB-GROUND (I II). (C) AT THE OUTSET IT IS HUMBLY SUBMITTED THAT ALL T HE ADDITIONS AS MADE BY A.O. AND CONFIRMED BY CIT(A) AND ALL ENHANCEMENTS TO ASS ESSED INCOME AS DONE BY CITIA) ARE BASED ON BOOKS OF ACCOUNTS MADE IN REGUL AR COURSE OF BUSINESS. CIT(A)S MAIN CONTENTION IN PAGES NO. 14 TO 37 AND IN PARTICULAR IN ITEMS NO. (VI) ON PAQE-15, (IX) ON PAGE-16, AND (XII) & (XIII ) ON PAGE-17 OF HIS ORDER THAT BOOKS ARE NOT RELIABLE AND ACCEPTABLE. IF THIS IS S O HOW SUCH BOOKS ARE MADE BASIS OF ADDITION OUT OF ENTRIES IN THOSE BOOKS OR BANK STATEMENTS WHICH CANNOT BE CALLED AS BOOK OF ASSESSEE WHEN SECTION-68 APP LIES ONLY TO ENTRIES IN BOOKS OF AN ASSESSEE. THUS CIT(A) HAS BLOOM HOT AND COLD AT THE SAME TIME. 5.1. IN ADDITION TO THIS HE FURTHER ARGUED EACH PO INT OF ADDITION MENTIONED BY THE LD. CIT(A) IN THE APPELLATE ORDER WHICH WAS NARRATED IN THE PRECEDING PARAGRAPH 4.2. BASED ON THESE SUBMISSIONS HE REQUESTED TO DELETE T HE ENHANCEMENT MADE BY THE LD.CIT(A). 6. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORD ERS OF THE REVENUE AUTHORITIES. 7. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CARE FUL CONSIDERATION OF THE MATERIALS AVAILABLE ON RECORD, AS REGARDING GROUND NO.2, KEEPING IN VIEW OF THE FACT 11 THAT THE ASSESSEE HAS CONTESTED THAT NEITHER THE AO NOR THE LD. CIT(A) HAS IGNORED THE DOCUMENTS IN SUPPORT OF THE ASSESSEES CONTENTION W E CONSIDER IT FIT TO SET ASIDE THE ISSUE TO THE FILE OF A.O. FOR RECONSIDERATION AND T O DECIDE THE SAME AFTER TAKING INTO CONSIDERATION THE SUBMISSIONS OF THE ASSESSEE. IN T HE RESULT GROUND NO.2 OF THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 7.1. AS REGARDING GROUND NO.3 KEEPING IN VIEW OF T HE FACT THAT SINCE THE ASSESSEE HAS TAKEN THE CLOSING STOCK OF KEROSENE OIL AS PER THE STOCK REGISTER WHICH IS DRAWN AFTER TAKING INTO CONSIDERATION THE EVAPORATION LOSSES WH ICH IS MUCH LESS THAN 05% AND THE REVENUE HAS NOT POINTED OUT ANY DISCREPANCY IN THE STOCK REGISTER. IN OUR CONSIDERED OPINION, NO ADDITION IS REQUIRED ON THIS ACCOUNT. G ROUND NO.3 OF THE ASSESSEE IS ALLOWED. 7.2. AS REGARDING GROUND NO.4 ON ACCOUNT OF UNLOAD ING EXPENSES, IN OUR CONSIDERED OPINION THIS REQUIRES FURTHER VERIFICATION. SINCE W E HAVE ALREADY SET ASIDE THE ISSUE ON ACCOUNT OF FREIGHT WE CONSIDER IT FIT TO SET ASIDE THIS ISSUE ALSO TO THE FILE OF THE AO WITH THE SAME OBSERVATIONS. IN THE RESULT GROUND NO .4 IS ALLOWED FOR STATISTICAL PURPOSES. 7.3. AS REGARDING GROUND NO.5 ON ACCOUNT OF ENHANC EMENT UNDER VARIOUS HEADS ON CAREFUL PERUSAL OF THE MATERIAL ALONG WITH THE WRIT TEN SUBMISSIONS AND THE DOCUMENTS FILED IN THE PAPER BOOK WE ARE OF THE VIEW THAT PRI MA FACIE THERE ARE SOME FACTUAL MISTAKES IN THE ORDERS OF THE LD. CIT(A) AND IN OUR CONSIDERED OPINION THERE ARE SOME DOUBLE ADDITIONS ALSO ON VARIOUS ACCOUNTS. THEREFOR E WE ARE OF THE VIEW THAT THIS REQUIRES FRESH VERIFICATION. THEREFORE, WE SET ASID E THE ORDERS OF THE LD. CIT(A) ON THIS ISSUE AND REMIT BACK TO THE FILE OF THE AO TO RE-DE CIDE THE SAME AS PER LAW FOR TAKING INTO CONSIDERATION THE SUBMISSIONS MADE BY THE ASSE SSEE AND AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NO.5 IS ALLOWED FOR STATISTICAL PURPOSES. 12 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED IN PART FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 04.02.2011. SD/- SD/- . .. . . .. . , , , , B.R.MITTAL, JUDICIAL MEMBER . .. .!' !'!' !'. .. . , ,, , #$ #$ #$ #$ , C.D.RAO, ACCOUNTANT MEMBER. ( (( ('$ '$ '$ '$) )) ) DATE: 04.02.2011. #2 0 .3 4#3(5- COPY OF THE ORDER FORWARDED TO: 1. M/S.MASTER ENGINEERING WORKS, V.N.PUROHIT & CO., CH ARTERED ACCOUNTANTS, 32B, GANESH CHANDRA AVENUE, 2 ND FLOOR, KOLKATA-700013. 2 THE I.T.O., WARD-2(2), ASANSOL 3. THE CIT, 4. THE CIT(A)-ASANSOL 5. DR, KOLKATA BENCHES, KOLKATA /3 ./ TRUE COPY, #2&:/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES R.G.(.P.S.)