Shri Shyamal Banerjee, Kolkata V. DCIT, C ircle- 41, Kolkata, Kolkata

ITA 1261/KOL/2010

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5628 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 02-08-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 18-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: TARUN KUMAR DAS
• Keywords: Bogus purchase; Loose papers

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI P.K.BANSAL, A.M. & SHRI GEORGE MATHAN, J.M. ] I.T.A. NO.1261/KOL/2010 ASSESSMENT YEAR : 2001-02 SHYAMAL BANERJEE, KOLKATA -VS- DCIT, CIRCLE-41, KOLKATA ( APPELLANT ) PAN : AENPB 8020L RESPONDENT ) DATE OF CONCLUDING THE HEARING : 09.01.2014 DATE OF PRONOUNCING THE ORDER : 15.01.2014 APPEARANCES : FOR THE APPELLANT : SHRI TARUN KUMAR DAS, C.A. : FOR THE RESPONDENT : SHRI RAJENDRA PRAS AD, JCIT, SR.DR O R D E R PER SHRI P.K.BANSAL, A.M. : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), KOLKATA DATED 26.02.2010 FOR THE ASSESSMENT YEAR 20 01-02. 2. GROUND 1(I), SINCE NOT PRESSED, IS DISMISSED AS NOT BEING PRESSED. GROUND NOS. 1(II) AND 1(III) RELATES TO THE SUSTENANCE OF THE NET ADDITION OF RS.2,63,874/-. 3. BRIEF FACTS RELATING TO BOTH THESE GROUNDS ARE T HAT THE AO DISALLOWED THE PURCHASE TO THE EXTENT OF RS.3,11,499/- AND SUNDRY CREDITORS TO THE EXTENT OF RS.5,75,573/-. WHEN THE MATTER WENT BEFORE THE CIT( A), THE CIT(A) OBSERVED THAT THIS IS A FACT THAT THE ASSESSEE HAS NOT MAINTAINED REGULAR BOOKS OF ACCOUNTS EXCEPT SOME DIARIES AND LOOSE PAPERS. THE TOTAL PURCHASE M ADE WERE RS.13,36,780/- AND THE SUNDRY CREDITORS RS.9,95,685/-. THERE ARE NO CO MPLETE ADDRESSES AND PURCHASE BILLS ALSO DID NOT CONTAIN PROPER ADDRESS. IN THE A BSENCE OF NATURE OF PAYMENTS DETAILS BEING FURNISHED, THE CIT(A) REDUCED THE DIS ALLOWANCE TO THE DIFFERENCE BETWEEN THE PURCHASES AMOUNTING TO RS.3,11,499/- AN D DISALLOWANCE OF CREDITORS AMOUNTING TO RS.5,75,573/-. 2 I.T.A. NO.1261 /KOL/2010 SHYAMAL BANERJEE A.Y. 2001-02 4. BEFORE US, THE LD. A.R. VEHEMENTLY CONTENDED THA T THIS IS NOT A CASE WHERE THE DETAILS ARE NOT AVAILABLE. THE CIT(A) HAS GIVEN A CLEAR-CUT FINDING THAT PURCHASE BILLS ARE THERE BUT THEY DO NOT CONTAIN TH E PROPER ADDRESS. THE ASSESSEE HAS MADE THE PURCHASES FOR THE PURPOSE OF THE SALES . THE SALES MADE BY THE ASSESSEE HAVE NOT BEEN DISPUTED. OUR ATTENTION WAS DRAWN TOWARDS THE COPY OF THE PURCHASE BILLS WHICH ARE AVAILABLE FROM PAGES 7 TO 15. THUS, IT WAS CONTENDED THAT THE PURCHASES MADE CANNOT BE REGARDED TO BE THE BOG US ONE. IN RESPECT OF SUNDRY CREDITORS, IT IS SUBMITTED THAT THE PAYMENTS WERE M ADE IN THE SUBSEQUENT YEAR. THE ASSESSEE IS A SMALL BUSINESSMAN AND IS NOT AWARE AB OUT THE INTRICACIES OF THE BOOKS OF ACCOUNTS. IT IS ONLY THE FIRST YEAR WHEN THE ADD ITIONS WERE MADE. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF THE AUTHORI TIES BELOW. 5. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CON SIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES AND THE COPY OF THE PURCHASE BILLS AS WELL AS THE PROFIT & LOSS A/C. AS WELL AS THE BALANCE-SHEET , THE COPIES OF WHICH ARE FILED BEFORE US. WE NOTED THAT TOTAL RECEIPTS OF THE ASSE SSEE SHOWN IN THE INCOME & EXPENDITURE A/C. ARE ONLY RS.7,73,343/-. UNDER THE PROVISIONS OF SECTION 44AA, THE ASSESSEES BUSINESS HAS NOT BEEN NOTIFIED FOR THE C OMPULSORY MAINTENANCE OF THE BOOKS OF ACCOUNTS. EVEN UNDER SECTION 44AA, THE CBD T HAS NOT PRESCRIBED THE BOOKS OF ACCOUNTS AND THE DOCUMENTS TO BE MAINTAINE D IN THE CASE OF THE ASSESSEE. THE ASSESSEE HAS PRODUCED ALL THE PURCHASE BILLS IN RESPECT OF WHICH PURCHASE WAS MADE BY THE ASSESSEE. THE COPIES OF THE PURCHASE BI LLS WERE ALSO FILED BEFORE US. THE BILLS CONTAIN THE NAME OF THE PARTIES, BILL NUM BERS WITH DATE AND ALSO ADDRESSES. IT IS NOT A CASE WHERE THE ASSESSEE HAS MADE THE PURCHASE WITHOUT THE BILLS. THE SALES MADE BY THE ASSESSEE, IN RESPECT O F THESE ITEMS FOR WHICH THE PURCHASE HAS BEEN MADE, HAVE DULY BEEN ACCEPTED BY THE AO. UNDER THESE FACTS, IN OUR OPINION, THE AO CANNOT TREAT THE PURCHASES MADE BY THE ASSESSEE TO BE THE BOGUS PURCHASE. IN VIEW OF THIS, WE DELETE THE ADDI TION AS SUSTAINED BY THE CIT(A). THUS, THE GROUND NOS. 1(I) AND 1(II) ARE ALLOWED. 3 I.T.A. NO.1261 /KOL/2010 SHYAMAL BANERJEE A.Y. 2001-02 6. GROUND NO.1(IV) RELATES TO THE FOLLOWING DISALLO WANCES: COMMISSION ON SALES TO STAFF RS.10,153/- SALES PROMOTION EXPENSES RS.12,260/- DAILY WAGES (50% DISALLOWED) RS.16,130/- SHOP EXPENSES (50% DISALLOWED) RS. 8,695/- RS.47,238/- THE AO MADE THE AFORESAID DISALLOWANCES, AS THE ASS ESSEE COULD NOT PRODUCE THE EVIDENCES ABOUT THE ENTRIES OF THESE EXPENSES. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) ALSO CONFIRMED THE DISALLOWANCES . 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. WE NOTED THAT THE ASSESSEE HAS GIVEN THE EXPLANATIOIN IN RESPECT OF COMMISSION ON SALES TO STAFF THAT THE COMMISSION IS BEING PAID TO THE STAFF TO PUSH SALES DURING THE PUJA SALES. SIMILARLY, SALES PROMOTION EXPENDITURE RELATES TO VARIOUS EXPENSES INCURRED FOR ORGANIZING THE SALES DURING PUJA IN RE SPECT OF THE DAILY WAGES EXPENSES. IT WAS ALSO SUBMITTED THAT CASUAL LABOURE RS ARE APPOINTED DURING PEAK HOURS OF DURGA PUJA AND SHOP EXPENSES ARE DAY TO DA Y EXPENSES FOR RUNNING OF THE SHOP. THE EXPLANATION GIVEN BY THE ASSESSEE, IN OUR OPINION, IS A PLAUSIBLE ONE. IT IS A TRADE PRACTICE THAT THE RETAILERS ENGAGED IN THE BUSINESS OF SAREES AND THE GARMENTS ORGANIZE THE SAME DURING PUJA AND THE FEST IVALS AND THE STALLS/SHOPS ON WHICH THE SALES ARE ORGANIZED ARE OPEN BEYOND NORMA L TIME. IN VIEW OF THIS, IN OUR OPINION, EXPENSES ARE TO BE INCURRED. SINCE THE ASS ESSEE IS A PETTY SHOP-KEEPER, THE ASSESSEE MIGHT HAVE NOT RECEIVED THE CASH MEMO, ETC . FOR THE PETTY EXPENSES. KEEPING IN VIEW THE QUANTUM OF THE EXPENDITURE, WE DELETE THE DISALLOWANCE. 8. GROUND NO.2, SINCE NOT PRESSED, STANDS DISMISSED AS NOT BEING PRESSES. GROUND NO.3 RELATES TO THE SUSTENANCE OF THE ADDITI ON BY THE CIT(A) TO THE EXTENT OF RS.5,42,584/- WITH REGARD TO DEPOSITS FOR BANI B HAWAN AS UNEXPLAINED INCOME RECEIVED BY THE ASSESSEE. 9. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CON SIDERED THE SAME. IN OUR OPINION, ONUS IS ON THE ASSESSEE TO FILE THE DETAIL S FROM WHOM THE ASSESSEE HAS 4 I.T.A. NO.1261 /KOL/2010 SHYAMAL BANERJEE A.Y. 2001-02 RECEIVED THE DEPOSITS AND ALSO EXPLAIN HOW THE DEPO SIT HAS BEEN RECEIVED ALONG WITH THE CONFIRMATION OF THE PARTIES. THE ASSESSEE HAS TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION . WE, THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH THE PARTIES, RESTO RE THIS ISSUE IN RESPECT OF SUM OF RS.5,42,584/- I.E. THE ADDITION SUSTAINED BY THE CI T(A) TO THE FILE OF THE AO WITH THE DIRECTION THAT THE ASSESSEE SHALL ADDUCE THE NE CESSARY EVIDENCE FOR DISCHARGING HIS ONUS IN THIS REGARD BEFORE THE AO. THE AO WILL READJUDICATE THIS ISSUE RELATING TO THE ADDITION OF RS.5,42,584/- AFRESH, AFTER GIVI NG PROPER AND SUFFICIENT OPPORTUNITY TO THE ASSESSEE. THUS, THIS GROUND IS A LLOWED FOR STATISTICAL PURPOSES. 10. GROUND NO.4 RELATES TO THE SUSTENANCE OF THE D ISALLOWANCE OF RS.31,370/- ON ACCOUNT OF CASUAL WORKERS SALARY PAID TO TEXTILE CO NSUMER SOCIETY. 11. THE FACTS RELATING TO THIS DISALLOWANCE ARE THA T THE AO NOTED THAT THE ASSESSEE HAS SHOWN RS.31,945/- AS NET PROFIT, AFTER DEBITING A SUM OF RS.55,200/- ON RENT PAID AND RS.37,685/- AS COMMISSION ON SALES . THE AO ALSO NOTED THAT THE ASSESSEE HAS PAID THE SALARY TO CASUAL STAFF AMOUNT ING TO RS.62,740/- . IN THE ABSENCE OF ANY EVIDENCE BEING PRODUCED, THE AO DISA LLOWED 50% OF THE SAID AMOUNT. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) CONFIRMED THE DISALLOWANCE. 12. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CO NSIDERED THE SAME. WE NOTED THAT THE ASSESSEE HAS SHOWN NET INCOME FROM T EXTILE CONSUMER SOCIETY. EVEN, IN OUR OPINION, WITHOUT THE EMPLOYMENT OF THE CASUAL STAFF, THE ASSESSEE WOULD NOT HAVE CARRIED OUT THE BUSINESS THAT THE AS SESSEE HAS DEBITED A SUM OF RS.62,740/- BEING SALARY PAID TO CASUAL STAFF. EVEN THERE HAS BEEN ONE EMPLOYEE, THE SALARY WILL BE AROUND RS.5,000/- PER MONTH, WHI CH IS VERY REASONABLE. THE AO, BY DISALLOWING 50% OF THE SALARY, ACCEPTED THE FACT THAT THE ASSESSEE HAS INCURRED THE EXPENDITURE ON SALARY TO CASUAL STAFF. THERE IS NO ALLEGATION ON THE PART OF THE REVENUE THAT THE EXPENDITURE INCURRED IN RESPECT OF SALARY TO STAFF HAS BEEN DISALLOWED BY APPLYING THE PROVISIONS OF SECTION 48 (2). UNTIL AND UNLESS THE CASE 5 I.T.A. NO.1261 /KOL/2010 SHYAMAL BANERJEE A.Y. 2001-02 FALLS WITHIN THE PURVIEW OF SECTION 40A(2), IN OUR OPINION, THE AO CANNOT DECIDE THE QUANTUM OF THE EXPENDITURE TO BE INCURRED BY TH E ASSESSEE AND CANNOT PLACE HIMSELF INTO THE SHOES OF A BUSINESSMAN. WE, ACCORD INGLY, SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE FOR ALLOWING THIS GROUND. THUS, THE DISALLOWANCE SO MADE IS DELETED. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER IS PRONOUNCED IN THE COURT ON 15 TH JANUARY, 2014. SD/- SD/- (GEORGE MATHAN) (P. K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 15 TH JANUARY, 2014 COPY OF THE ORDER FORWARDED TO: 1. SHRI SHYAMAL BANERJEE, 128A, BIDHAN SARANI, KOLKATA 700 004 2. DCIT, CIRCLE-41, KOLKATA 3. THE CIT(A), KOLKATA 4. CIT, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT, KOLKATA TALUKDAR(SR.P.S.) 6 I.T.A. NO.1261 /KOL/2010 SHYAMAL BANERJEE A.Y. 2001-02