Asit Baran Utthasanee, Purba Medinipur V. ITO, Ward - 4, Haldia, Purba Medinipur

ITA 1327/KOL/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2630 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2010
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 26-04-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 07-07-2008
• Court: TRIBUNAL
• Department Lawyers: P C NAYAK
• Assessee Lawyers: S L KOCHAR
• Keywords: Unexplained cash credit
• Section: 40A(3)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH - B , KOLKATA ( ) BEFORE . . , SHRI B.R.MITTAL, JUDICIAL MEMBER. /AND . . , , SHRI C.D. RAO, ACCOUNTANT M EMBER . /ITA NO. 1327KOL/2008 / ASSESSMENT YEAR 2004 - 05 ASIT BARAN UTTHASANEE, A.B.MOTORS, PURUSATTAMPUR, P.O. EGRA, PURBA MEDINIPORE, PIN 721429 AAJPU 9711 D - - - VERSUS - . INCOME - TAX OFFICER, WARD 4 , HALDIA. ( / A P PELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT: / SHRI S.L.KOCHAR, AR / FOR THE RESPONDENT : / SHRI P.C.NAYAK, DR / ORDER . . , SHRI B.R.MITTAL, JUDICIAL MEMBER. THE A SSESSEE HAS FILED THIS APPEAL FOR THE ASSESSMENT YEAR 2001 - 02 AGAINST ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) DT.28.4.2009. 2. THE ASSESSEE HAS TAKEN AS MANY AS 18 GROUNDS OF APPEAL IN THE GROUNDS OF APPEAL SUBMITTED ALONGWITH THE MEMORA NDUM OF APPEAL BUT SUBMITTED A REVISED GROUNDS VIDE LETTER DT.22.4.2010, TAKING THE FOLLOWING GROUNDS OF APPEAL, WHICH READ AS UNDER : 1. FOR THAT THE LD. CIT (A) ERRED IN DISMISSING THE APPEAL OF THE APPELLANT ON THE ALLEGED GROUNDS. 2. FOR THAT THE L D. CIT (A) HAVING CONFIRMED THE REJECTION OF ACCOUNTS, ADDITIONS U/S 40A (3) AND 68 COULD NOT BE VALIDLY MADE AND IN THE RESULT THE ADDITIONS OF RS.14,98,573/ - & RS.11,80,151/ - DESERVE TO BE DELETED. 3. FOR THAT WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT (A) ERRED IN CONFIRMING ADDITION OF RS.14,98,573/ - MADE BY THE A.O. U/S 40A (3) OF THE INCOME TAX ACT, 1961 ON THE ALLEGED GROUNDS. 2 /ITA NO. 1327KOL/2008 4. FOR THAT WITHOUT PREJUDICE TO THE ABOVE, THE ADDITION OF RS.11,80,151/ - U/S 68 OF THE INCOME TAX ACT, 1961 IS WRONG AND UNCALLED FOR. 5. FOR THAT FURTHER GROUNDS OF APPEAL MAY KINDLY BE ALLOWED TO BE TAKEN AT THE TIME OF HEARING OF THE APPEAL. 3. IN THE ABOVE GROUNDS, THE ASSESSEE HAS DISPUTED CONFIRMATION OF TWO ADDITIONS I.E., RS.14,98,573 U/S.40A(3) AND RS.11,80,151 U/S.68 OF THE INCOME - TAX ACT,1961. 4. AS REGARDS THE ADDITION OF RS.1 4,98,573 U/S.40A(3), THE RELEVANT FACTS ARE THAT DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER NOTICED THE ASSESSEE TO HAVE EFFECTED PURCHASES AND MADE PAYMENT OF RS. 81,03,073 I N CASH IN VIOLATION OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT. THE ASSESSING OFFICER, HOWEVER, OBSERVED THAT THE PAYMENTS ONLY TO THE EXTENT OF RS.6,12,500 IS COVERED UNDER EXCEPTIONAL CLAUSE (K) OF RULE 6DD OF THE INCOME - TAX RULES,1962. THEREFORE, TH E ASSESSING OFFICER DISALLOWED 20% OF THE BALANCE PAYMENTS OF RS.74,90,573, WHICH COMES TO RS.14,98,114 AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. IN APPEAL, THE LEARNED CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER ON THE OBSERVATION T HAT THE PAYMENTS WERE NOT COVERED BY THE EXCEPTIONAL CIRCUMSTANCES IN THE RULE 6DD OF THE INCOME - TAX RUILES,1962. 5. BEFORE US, THE LEARNED AR OF THE ASSESSEE DID NOT DISPUTE THAT THE PAYMENTS WERE MADE IN CASH IN EXCESS OF RS.20,000. FURTHER HE COULD NOT ESTABLISH ON FACTS THAT THE SAID PAYMENTS FALL UNDER EXCEPTION OF RULE 6DD OF THE INCOME - TAX RULES,1962. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE DISALLOWANCE MADE OF RS.14,98,114 (WRONGLY MENTIONED BY THE LEARNED CIT(A) IN HIS ORDER AS RS.1,49,81 4) U/S.40A(3) IS JUSTIFIED. WE, THEREFORE, UPHOLD THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND DISMISS THE GROUND TAKEN BY THE ASSESSEE IN THIS REGARD. 6. AS REGARDS THE ADDITION OF 11,80,151 MADE BY THE ASSESSING OFFICER U/S.68 OF THE ACT AND CONFIRME D BY THE LEARNED CIT(A) , THE RELEVANT FACTS ARE THAT ON EXAMINATION OF CASH BOOK AND SALES INVOICES VIS - A - VIS CONFIRMATION OF TRANSACTION RECEIVED FROM PALCO AUTOMOBILES, THE ASSESSING OFFICER NOTICED THAT DATE AND 3 /ITA NO. 1327KOL/2008 AMOUNT OF PAYMENTS MADE TO IT AS WELL AS DATE AND PROCEEDS OF SALES AS MENTIONED IN THE BOOKS WERE NOT TALLYING FULLY WITH THOSE MENTIONED IN THE SALES INVOICES. ON RECASTING THE CASH BOOK, THE ASSESSING OFFICER FOUND THAT ON VARIOUS DATE CASH DISBURSED EXCEEDED AVAILABLE CASH IN THE CASH BOOK T HEREBY RESULTING IN NEGATIVE CASH BALANCE IN THE CASH BOOK AND CLOSING CASH BALANCE SHOWN IN THE CASE BOOK WAS NOT CORRECT. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE, IN FACT, RECORDED SALES AND PAYMENTS AT HIS WILL IN THE BOOK IN ORDER TO CAMOUFLA GE INTRODUCTION OF SECRET FUND IN THE BUSINESS. HE WORKED OUT FROM NEGATIVE CASH BALANCE THE QUANTUM OF FUND UTILIZED FROM UNKNOWN SOURCE AT RS.11,80,150.52, THE DETAILS OF WHICH HAS BEEN MENTIONED ON PAGES 3 AND 4 IN THE ASSESSMENT ORDER AND IN ABSENCE OF ANY EXPLANATION THEREOF, THE ASSESSING OFFICER ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE U/S.68 OF THE INCOME - TAX ACT,1961. IN APPEAL, THE LEARNED CIT(A) HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 7. THE LEARNED AR OF THE ASSESSEE SUBMI TTED THAT THE ASSESSEE HAD RECEIVED IN CASH THE AMOUNT FROM CUSTOMERS ON ACCOUNT OF ROAD - TAX, INSURANCE PREMIUM AND REGISTRATION CHARGES AND THE SAME WERE NOT RECORDED IN THE BOOK OF ACCOUNT. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT IF THE SAME ARE TA KEN INTO ACCOUNT, THERE IS NO NEGATIVE CASH BALANCE. HOWEVER, THE LEARNED DR SUBMITTED THAT THERE IS NO EVIDENCE THAT SUCH AMOUNT WAS RECEIVED BY THE ASSESEE. HE SUBMITTED THAT THE AUTHORITIES BELOW BE CONFIRMED. 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISS IONS OF THE LEARNED REPRESENTATIVES OF THE PARTIES AND THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HA S NOT BEEN ABLE TO EXPLAIN THE NEGATIVE CASH BALANCE AS OBSERVED BY THE ASSESSING OFFICER AND THE DETAILS OF WHI CH ARE GIVEN ON PAGES 3 AND 4 OF THE ASSESSMENT ORDER. HOWEVER, WE ARE OF THE CONSIDERED VIEW THAT THE ADDITION OF THE AMOUNT OF NEGATIVE BALANCE MADE BY THE ASSESSING OFFICER AGGREGATING RS.11,80,150.52 U/S.68 OF THE ACT IS NOT JUSTIFIED. CONSIDERING THE FACTS, WE ARE OF THE CONSIDERED VIEW THAT IT WILL BE JUSTIFIABLE TO TAKE THE PEAK OF THE NEGATIVE BALANCE AS UNEXPLAINED CASH CREDIT. ON PERUSAL OF THE DETAILS AS GIVEN BY THE ASSESSING OFFICER ON PAGES 3 AND 4 OF THE ASSESSMENT ORDER, THE PEAK OF NEGATIVE BALANCE OF 14.3.2004 IS RS.1,54,475. WE HOLD THAT THE SAID AMOUNT OF 4 /ITA NO. 1327KOL/2008 RS.1,54,475 SHOULD BE TREATED AS UNEXPLAINED CASH CREDIT AS PER SECTION 68 OF THE ACT AND THE SAME SHOULD BE ADDED TO THE INCOME OF THE ASSESSEE. THEREFORE, WE RESTRICT THE ADDITION U/S. 68 TO RS.1,54,475 AS AGAINST RS.11,80,155.52 MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LEARNED CIT(A). WE ORDER ACCORDINGLY. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER IS PRO NOUNCED IN OPEN COURT ON DT. 30.04.2010 SD/ - SD/ - ( . . ) (C.D. RAO), ACCOUNTANT MEMBER . ( . . ), B.R.MITTAL, JUDICIAL MEMBER ( ) DATE: 30.04.2010 - COPY OF THE ORDER FORWARDED TO: 1. / THE APPELLANT : ASIT BARAN UTTHASANEE, A.B.MOTORS, PURUSATTAMPUR, P.O. EGRA, PURBA MEDINIPORE, PIN 721429 2 / THE RESPONDENT : INCOME - TAX OFFICER, WARD 4 , HAL DIA. 3. / THE CIT, 4. ( ) / THE CIT(A), 5. / DR, KOLKATA BENCHES, KOLKATA 6. GUARD FILE . / TRUE COPY , / BY ORDER , / DEPUTY REGISTRAR . ( /H.K.PADHEE) / SNR.PRIVATE SECRETARY.