M/s Panchanan Mallick & Brothers, Kolkata V. ITO, WD-3, Bankura, Bankura

ITA 1386/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9373 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 14-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 24-06-2016
• Court: TRIBUNAL
• Keywords: Reasonable cause; Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENC H KOLKATA BEFORE SHRI S.S.VISWANETHRA RAVI, JM & DR. A.L.SAI NI, AM ./ ITA NO.1386/KOL/2016 ( / ASSESSMENT YEAR:2010-2011) M/S PANCHANAN MALLICK & BROTHERS, PO-KOTULPUR, DISTRICT-BANKURA VS. ITO WARD-3, BANKURA ./ ./PAN/GIR NO.: AAGFP 7708 L ( /APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : SHRI SUMIT GHOSH, ADVOCATE REVENUE BY : SRI NICHOLAS MURMU, JCIT / DATE OF HEARING : 14/02/2017 /DATE OF PRONOUNCEMENT 22/02/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAINI NG TO ASSESSMENT YEAR 2010-2011, IS DIRECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-DURGAPUR, IN APPEAL NO.143/CIT(A)/DGP/2012-1 3, DATED 03.02.2016, WHICH IN TURN ARISES OUT OF AN ORDER PA SSED BY THE ASSESSING OFFICER (AO) UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961, (HEREINAFTER REFERRED TO AS THE ACT), DATED 17.01 .2013. 2. FIRST OF ALL WE NOTICED THAT THIS APPEAL IS TIME BARRED FOR 51 DAYS. THE ASSESSE FILED AN APPLICATION FOR CONDONATION OF DEL AY. AFTER HEARING THE LD AR FOR THE ASSESSE AND LD DR FOR THE REVENUE IN RES PECT OF SUCH DELAY, WE FIND A REASONABLE CAUSE TO CONDONE THE DELAY AND ACCORDINGLY WE CONDONE THE DELAY. ITA NO.1386/KOL/2016 M/S PANCHANAN MALLICK & BROTHERS 2 3.BRIEF FACTS OF THE CASE QUA THE ASSESSEE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE RELEVANT A.Y.2010-2011 ON 23.09.2010 DECLARING TOTAL INCOME OF RS.94,740/-. THE CASE OF THE ASSESS EE WAS SELECTED FOR SCRUTINY AND THE AO FRAMED THE ASSESSMENT U/S.143(3 ) OF THE ACT, MAKING VARIOUS ADDITIONS. 4. AGGRIEVED FROM THE ORDER OF AO, THE ASSESSEE FIL ED AN APPEAL BEFORE THE LD. CIT(A), WHO HAS PARTLY ALLOWED THE A PPEAL FILED BY THE ASSESSEE OBSERVING THE FOLLOWINGS :- I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELL ANT. THOUGH THE APPELLANT HAS CLAIMED THAT THE SAME HAS BEEN SH OWN AS INCOME IN THE SUBSEQUENT YEAR. BUT INSPITE OF GIVING SEVER AL OPPORTUNITIES HE COULD NOT SHOW AS IN WHICH YEAR THE SAME HAS BEE N SHOWN. THEREFORE HIS ARGUMENT THAT IT HAS BEEN SHOWN IN TH E SUBSEQUENT YEAR IS WITHOUT ANY SUPPORTING EVIDENCE. NOW COMING TO THE FIRST PART OF THE OBSERVATION OF THE A.O. WHERE THE A.O H AS OBSERVED THAT THE ASSESSEE WAS MAINTAINING HIS ACCOUNTS ON MERCAN TILE BASIS ONCE THE RECEIPT WERE ACCRUED THE SAME SHOULD HAVE BEEN SHOWN IN THE SAME YEAR, THE APPELLANT HAS STATED THAT THE CREDIT ENTRIES WERE MADE TO THE EXTENT OF THE SUBSIDY RECEIVED IN THE SAME YEAR AND FOR BALANCE THE SAME WERE ADDED IN THE PURCHASE WHICH RAISED THE COST OF PURCHASE, WHICH CLEARLY SHOWS THAT THE APPELLANT WAS NOT ANTICIPATING 'ANY PAYMENT FROM GOVT. OF WEST BENGAL , FOOD & SUPPLY DEPARTMENT. ONCE THE APPELLANT ACCEPTS THAT HE WAS ANTICIPATING THE SAME FROM GOVT. OF WEST BENGAL, FO OD & SUPPLY DEPARTMENT, THEN THE APPELLANT CONTRADICT HIMSELF B Y NOT SHOWING THE RECEIVABLES. AS IT GOT CRYSTALIZED IN THE YEAR ITSELF WHICH IS IN APPEAL, IT SHOULD HAVE BEEN SHOWN BY THE APPELLANT IN THIS YEAR ONLY. THEREFORE IN THE LIGHT OF THE ABOVE IT IS CON CLUDED THAT THE APPELLANT SHOULD HAVE SHOWN ITS INCOME IN THIS YEAR ONLY IN WHICH THE A.O. HAS MADE ADDITION OF REMAINING AMOUNT AS A BOVE. SECONDLY HIS ARGUMENT THAT IT HAS SHOWN IN THE SUBS EQUENT YEAR COULD NOT BE PROVED BY ANY EVIDENCE INSPITE OF GIVI NG SO MANY OPPORTUNITIES. THE LEDGER SUBMITTED DURING THE APPE LLATE PROCEEDINGS DOES NOT REVEAL WHETHER THE INCOME HAS BEEN SHOWN IN THE SUBSEQUENT YEAR, OR NOT, AND WHAT IS THE BAS IS OF THE SAME. IT IS FURTHER TO POINTED OUT THAT THE CONSISTENCY OF M ETHOD OF ACCOUNTING SHOULD BE FOLLOWED BY THE APPELLANT. ONC E THE APPELLANT ADMITTED THAT THE SAME WERE RECEIVABLE IT SHOULD HA VE BEEN SHOWN AS INCOME IN THE HANDS OF THE APPELLANT FOR THIS YE AR ITSELF ONLY. IN VIEW OF THE ABOVE I AGREE THAT THE ADDITION MADE BY THE A.O. IS CORRECT AND THE APPEAL FILED BY THE APPELLANT ON TH IS ISSUE IS DISMISSED. ITA NO.1386/KOL/2016 M/S PANCHANAN MALLICK & BROTHERS 3 5. NOT BEING SATISFIED WITH THE ORDER OF LD. CIT(A) , THE ASSESSEE IS IN FURTHER APPEAL BEFORE US AND HAS TAKEN THE FOLLOWIN G GROUNDS OF APPEAL :- 1. FOR THAT THE ORDERS PASSED BY THE AUTHORITIES BE LOW ARE ARBITRARY AND CAPRICIOUS IN NATURE. 2. FOR THAT SOLE ISSUE INVOLVED IN THIS INSTANT AP PEAL IS THE ADDITION OF RS.4,14,247.60 WITH THE DECLARED TOTAL INCOME, BEING ERRONEOUSLY TREATED AS UNDISCLOSED RECEIVABLE AMOUN T ON ACCOUNT OF TRANSPORTATION, THOUGH ADDITIONS OF RS. 3,76, 174/ -, BEING THE ACTUAL EXPENDITURE INCURRED TOWARDS TRANS PORTATION ON PURCHASES OF WHEAT AND RICE AND RS.1,47,222/-, BEIN G SHOWN AS EXCESS INCOME FROM TRANSPORT AND COMMISSION, SHOULD HAVE BEEN REPLACED BY RS.1,09,148.40, BEING TRANSPORT RE BATE REIMBURSED TO THE SAID EXTENT AS PER GOVERNMENT NOR MS, TO BRING THE RECEIVABLE AMOUNT, AS RIGHTLY SHOWN AT RS.1,44, 660.10, INSTEAD OF THE ADDITION OF RS.4,14,247.60 SO MADE, MAY THE SAME KINDLY BE ADJUDICATED ACCORDINGLY. 3. FOR THAT THE AUTHORITIES BELOW FAILED TO APPRECI ATE THAT THE ABOVE ACTUAL EXPENDITURE OF RS.3,76,174/- INCURRED TOWARDS TRANSPORTATION ON PURCHASES OF AAY (ANTYADAY ANNA Y OJANA) WHEAT AND RICE IS NOT FULLY REIMBURSABLE BUT TO A L IMITED EXTENT IN THE FORM OF TRANSPORT REBATE AS PER RATE PRESCRIBED BY THE GOVT.OF WEST BENGAL, FOOD AND SUPPLY DEPARTMENT, BEING IN T HE INSTANT CASE REIMBURSED ONLY TO THE TUNE OFRS.1,09,148.40, MAY THE ADDITION, SO MADE ON THIS COUNT BE DELETED. 4. FOR THAT THE AUTHORITIES BELOW FAILED TO APPRECI ATE THAT AN AMOUNT OF RS.1,47,222/-SHOWN AS RECEIPT ON ACCOUNT OF 'EXCESS INCOME FROM TRANSPORT & COMMISSION' BEING ARREAR OF TRANSPORT CHARGES AND COMMISSION WHICH IS EXTRA, APART FROM A PPELLANT'S EARLIER CLAIM, AS SUCH AN 'AMOUNT WHICH HAS BEEN AL READY RECEIVED AND SHOWN AS INCOME, CANNOT BE AGAIN SHOWN AS RECEIVABLE. OTHER GROUNDS MAY BE URGED AT THE TIME OF HEARING. 6. ALTHOUGH IN THIS APPEAL, THE ASSESSEE HAS RAISED FOUR GROUNDS OF APPEAL BUT AT THE TIME OF HEARING THE SOLITARY GRIE VANCE OF THE ASSESSEE HAS BEEN CONFINED TO ADDITION OF RS.4,14, 247.60 TREATING AS UNDISCLOSED RECEIVABLE AMOUNT ON ACCOUNT OF TRANSPO RTATION CHARGES. ITA NO.1386/KOL/2016 M/S PANCHANAN MALLICK & BROTHERS 4 6.1 LD. AR FOR THE ASSESSEE SUBMITTED BEFORE US THA T THE ASSESSEE UNDER CONSIDERATION IS A MODIFIED RATION DISTRIBUTO R AND ALSO DEALS IN CEMENT. LD. AR FOR THE ASSESSEE SUBMITTED THAT TRAN SPORTATION CHARGES OF RS.3,76,174/- WAS ALREADY INCURRED BY THE ASSESSEE AND DEBITED TO PROFIT AND LOSS ACCOUNT, THE EXPENSES WHICH HAS ALREADY BE EN INCURRED AND DEBITED TO PROFIT AND LOSS ACCOUNT CANNOT BE RECEI VABLE. IN ORDER TO SUPPORT HIS ARGUMENTS, THE AR HAS SUBMITTED BEFORE US A COMPLETE RECONCILIATION OF THE AMOUNT WHICH IS IN DISPUTE, W HICH IS AS UNDER :- TRANSPORT CHARGES RECEIVABLE AS ON 31.03.2010 [ONLY DISTRIBUTOR AMOUNT IN RESPECT OF ANTYADAY ANN A YOJANA (AAY) RICE AND WHEAT ARE TAKEN INTO CONSIDERATION] PARTICULARS AS ASSESSED BY AO AS PER OUR BOOKS (AS PER PAGE-4 ASSESSMENT ORDER OPENING BALANCE AS ON 31.03.2009 5,43,679.15 5,43,67 9.15 ADD: DURING THE RELEVANT PERIOD (EXPENSES INCURRED ON ACCOUNT OF TRANSPORTATION) 3,76,174.00 RECEIVABLE NIL ADD: ARREAR TRANSPORT REBATE FOR 2008-09 (ALREADY SHOWN AS RECEIPT IN P/L A/C) 1,47,222.00 RECEIVABLE NIL ADD:TRANSPORT REBATE REIMBURSE AS PER RATE PRESCRIBED BY FOOD & SUPPLY DEPT. GOVT. OF WB X 1,09,148.40 TOTAL 10,67,075.15 6,52,827.55 LESS: RECEIVED DURING THE YEAR (DETAIL SHOWN IN PAGE-3 OF ASSESSMENT ORDER) 5,08,167.45 5,08,167.45 CLOSING BALANCE AS ON 31.03.2010 5,58,907.70 1,44,660.10 ONLY THE DIFFERENCE BEING RS.4,14,247.60 I.E. (RS.5 ,58,907.70- RS.1,44,660.10) WAS ERRONEOUSLY TREATED BY THE AO A S UNDISCLOSED RECEIVABLE AMOUNT ON ACCOUNT OF TRANSPORTATION. THE AREA OF DIFFERENCE IN THE ABOVE STATEMENT ARE [ (RS.3,76,174.00 + RS.1,47,222.00)-RS.1,09,148.40=RS.4,14,247.60] EXPLANATION : (I) RS.3,76,174.00: TRANSPORTATION CHARGES ALREADY INCURRED, CANNOT BE RECEIVABLE. (II) RS.1,47,222.00: RECEIPTS SHOWN IN P/L A/C, AL READY CHARGED TO TAX, CANNOT BE AGAIN TREATED AS INCOME. (III) RS.1,09,148.40: ACTUAL CALCULATION MADE BY F OOD & SUPPLY DEPTT. GOVT. OF WB ON THE PRESCRIBED RATE ON AAY RICE IS 10,914.84 QNT. X RS.10/-. ITA NO.1386/KOL/2016 M/S PANCHANAN MALLICK & BROTHERS 5 THE ABOVE CHART CLEARLY SHOWS THAT THE AO MADE ADDI TION OF RS.3,76,174/- FOR THE EXPENSES ALREADY INCURRED ON ACCOUNT OF TRA NSPORTATION. BESIDES, THE AO ALSO WRONGLY ADDED ARREAR TRANSPORT REBATE F OR THE PERIOD 2008-09 AT RS.1,47,222/-. THIS ARREAR TRANSPORT REBATE OF 2 008-09 HAS ALREADY BEEN SHOWN IN THE PROFIT AND LOSS ACCOUNT BY THE AS SESSEE. THE AO ALSO FORGOT TO ADD IN THIS COMPUTATION THE TRANSPORT REB ATE REIMBURSEMENT AS PER RATE PRESCRIBED BY THE FOOD AND SUPPLY DEPTT. G OVT OF INDIA AT RS.1,09,148.40. THEREFORE, RECONCILIATION MADE BY T HE AO TO ARRIVE AT CLOSING BALANCE AS ON 31.03.2010 AT RS.5,58,907.70 IS WRONG. THE ASSESSEE GETS REIMBURSEMENT FROM THE GOVERNMENT OF WEST BENGAL @10 PER QUINTAL ON ACCOUNT OF TRANSPORTATION CHARGES. O VER AND ABOVE, RS.10 PER QUINTAL IF THE ASSESSEE INCURS TRANSPORTATION C HARGE, THE SAME WOULD BE ON HIS OWN ACCOUNT AND HE CANNOT CLAIM THE SAME FROM THE WEST BENGAL GOVT. ON THE PRESCRIBED RATE OF AAY RICE @ RS.10/- PER QUINTAL. THAT IS, TO SAY, IF THE ASSESSEE INCREASES RS.15/- PER QUINTAL, EXPENDITURE OF TRANSPORTATION CHARGES, THEN (RS.15-10) =RS.5/- PER QUINTAL TRANSPORTATION CHARGES WOULD BE BORNE BY THE ASSESS EE HIMSELF AND THE GOVERNMENT DOES NOT REIMBURSE THIS AMOUNT IN FUTURE ALSO. THE RECONCILIATION MADE BY THE AO IS DEFECTIVE BECAUSE OF THE THREE REASONS I.E. (I) THE EXPENDITURE INCURRED ON ACCOUNT OF TRA NSPORTATION RS.3.76,174/- DURING THE PERIOD WHICH HAS BEEN INCURRED BY THE AS SESSEE AND PAID BY THE ASSESSEE DURING THE PERIOD APRIL 2008 TO 31 ST MARCH, 2009, WOULD NOT BECOME PART OF RECOVERABLE, BECAUSE THIS AMOUNT HAS ALREADY BEEN ITA NO.1386/KOL/2016 M/S PANCHANAN MALLICK & BROTHERS 6 EXPENSED OUT (II) ARREAR TRANSPORTATION REBATE FOR THE PERIOD 2008-09 RS.1,47,220/- WHICH WAS ALREADY SHOWN BY THE ASSESS EE IN THE P&L A/C WOULD NOT FORM PART OF RECONCILIATION, THAT IS THE ASSESSE HAS ALREADY SHOWN AS INCOME. (III) AO FORGOT TO ADD IN HIS RECO NCILIATION RS. 1,09,148.40 TRANSPORT REBATE REIMBURSABLE. THEREFOR E, CLOSING BALANCE ARRIVED AT BY THE AO IS WRONG AND NOT ACCEPTABLE. 6.2. ON THE OTHER HAND, LD. DR FOR THE REVENUE BEFO RE US HAS PRIMARILY RELIED ON THE FINDINGS OF AUTHORITIES BELOW, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 6.3. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL ON RECORD, WE ARE OF THE VIEW THAT THERE IS MERIT IN THE SUBMI SSIONS OF THE ASSESSE, AS THE PROPOSITION CANVASSED BY LD. AR FOR THE ASSE SSEE ARE SUPPORTED BY THE FACTS NARRATED BY HIM ABOVE. AS LD. AR FOR THE ASSESSEE HAS POINTED OUT THAT THE TRANSPORTATION CHARGES RECEIVED DURING THE PERIOD 31 ST MARCH, 2010 AND INCURRED DURING THAT PERIOD AND HAS BEE N DEBITED TO THE PROFIT AND LOSS ACCOUNT AT RS.3,76,174/- WOULD NOT FORM PA RT OF RECEIVABLE TRANSPORTATION CHARGES. BESIDES, THE TRANSPORT REBA TE FOR A.Y 2008-09 SHOWN BY THE ASSESSEE IN PROFIT AND LOSS ACCOUNT WO ULD NOT BE ADDED BECAUSE ASSESSE HAS ALREADY SHOWN AS RECEIPT IN TH E PROFIT AND LOSS ACCOUNT. IN ADDITION TO THIS, THE AO FORGOT TO ADD TRANSPORT REBATE REIMBURSABLE AT RS. 1,09,148.40. THEREFORE, RECONCI LIATION MADE BY THE AO TO WORK OUT THE TRANSPORTATION CHARGES RECEIVABL E IS ENTIRELY WRONG AND DOES NOT BASE ON ACCOUNTING PRINCIPLES. THEREFO RE, ADDITION MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) NEEDS TO BE DELETED. ITA NO.1386/KOL/2016 M/S PANCHANAN MALLICK & BROTHERS 7 6.4. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22/02/ 2017. SD/ - (S.S.VISWANETHRA RAVI) SD/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; ! DATED 22/02/2017 ' $%& /PRAKASH MISHRA , SR.PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) % & , / ITAT, 1. / THE APPELLANT-M/S PANCHANAN MALLICK & BROTHERS 2. / THE RESPONDENT.- ITO WARD-3, BANKURA 3. 0 ( ) / THE CIT(A), KOLKATA. 4. 0 / CIT 5. 12 3 4456 , 56 , / DR, ITAT, KOLKATA 6. 3 78 / GUARD FILE. 1 4 //TRUE COPY//