DCIT, Circle - 5, Kolkata, Kolkata V. M/s. Rungta Sons (P) Ltd., Kolkata

ITA 1482/KOL/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4930 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 20-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 03-11-2011
• Court: TRIBUNAL
• Department Lawyers: RAJAT KR KUREEL
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

I.T.A. NO. 1482/KOL./2011 ASSESSMENT YEAR: 2007-2008 & C.O. NO. 35/KOL/2012 (IN ITA NO. 1482/KOL/2011) ASSESSMENT YEAR: 2007-2008 PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 1482/KOL/ 2011 ASSESSMENT YEAR : 2007-2008 DEPUTY COMMISSIONER OF INCOME TAX,................. ....................APPELLANT CIRCLE-5, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- M/S. RUNGTA SONS (P) LIMITED,...................... ..........................RESPONDENT 42A, SHAKESPEARE SARANI, KOLKATA-700 017 [PAN : AABCR 2356 N] & C.O. NO. 35/KOL/2012 (ARSING OUT OF I.T.A. NO. 1482/KOL/ 2011) ASSESSMENT YEAR : 2007-2008 M/S. RUNGTA SONS PVT. LIMITED,..................... .....................CROSS OBJECTOR 42A, SHAKESPEARE SARANI, KOLKATA-700 017 [PAN : AABCR 2356 N] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. .............RESPONDENT CIRCLE-5, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 APPEARANCES BY: SHRI RAJAT KR. KUREEL, JCIT, SR. D.R., FOR THE DEPARTMENT SHRI SUBASH AGARWAL, ADVOCATE , FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : MARCH 14, 2016 DATE OF PRONOUNCING THE ORDER : MAY 13, 2016 I.T.A. NO. 1482/KOL./2011 ASSESSMENT YEAR: 2007-2008 & C.O. NO. 35/KOL/2012 (IN ITA NO. 1482/KOL/2011) ASSESSMENT YEAR: 2007-2008 PAGE 2 OF 12 O R D E R PER SHRI P.M. JAGTAP :- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX-(APPEALS)-VI, KOLKATA DA TED 30.08.2011 FOR THE ASSESSMENT YEAR 2007-08 AND THE SAME IS BEING D ISPOSED OF ALONG WITH THE CROSS OBJECTION FILED BY THE ASSESSEE BEIN G C.O. NO. 35/KOL/2012. 2. IN THE SOLITARY GROUND IN ITS APPEAL, THE REVENU E HAS CHALLENGED THE ACTION OF THE LD. CIT(APPEALS) IN RESTRICTING THE A DDITION OF RS.4,68,02,738/- MADE BY THE ASSESSING OFFICER ON A CCOUNT OF UNEXPLAINED CASH CREDITS TO RS.2,00,93,034/-. 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF MINING. THE RETURN OF INCOME FOR TH E YEAR UNDER CONSIDERATION WAS FILED BY IT ON 27.10.2007 DECLARI NG TOTAL INCOME OF RS.1,40,92,62,755/-. ON THE BASIS OF INFORMATION RE CEIVED FROM THE INVESTIGATION WING THAT SOME MONEY HAS BEEN TRANSFE RRED DURING THE YEAR UNDER CONSIDERATION TO THE BANK ACCOUNT OF THE ASSE SSEE FROM THE BANK ACCOUNTS OF M/S. LANXESS ENTERPRISE AND M/S. TOPAZ SALES CORPORATION, ENQUIRY WAS MADE BY THE ASSESSING OFFICER, WHICH RE VEALED THAT THE SAID TWO CONCERNS WERE NOT IN EXISTENCE AT THE ADDRESS G IVEN. HE, THEREFORE, CALLED UPON THE ASSESSEE TO EXPLAIN AS TO HOW THE M ONEY WAS TRANSFERRED TO ITS BANK ACCOUNT FROM THE BANK ACCOUNTS OF NON-E XISTENT CONCERNS. IN REPLY, THE ASSESSEE SUBMITTED THAT IT HAD NO TRANSA CTIONS WITH THE SAID TWO CONCERNS AND WHATEVER MONEY WAS RECEIVED THROUG H CHEQUES FROM THE SAID TWO CONCERNS WAS ON ACCOUNT OF SALES MADE TO OTHER TWO CONCERNS, NAMELY M/S. SAHARA MINERALS AND M/S. V.K. MINERALS. IT WAS ALSO STATED BY THE ASSESSEE THAT THE SALES MADE TO M/S. SAHARA MINERALS AND I.T.A. NO. 1482/KOL./2011 ASSESSMENT YEAR: 2007-2008 & C.O. NO. 35/KOL/2012 (IN ITA NO. 1482/KOL/2011) ASSESSMENT YEAR: 2007-2008 PAGE 3 OF 12 M/S. V.K. MINERALS WERE OF IRON ORE AND EVIDENCE IN THE FORM OF COPIES OF THE CONCERNED RAILWAY RECEIPTS AND THE COPIES OF LE DGER ACCOUNTS OF THE SAID TWO PARTIES WERE ALSO FILED BY THE ASSESSEE. I N ORDER TO VERIFY THIS STAND OF THE ASSESSEE, ENQUIRIES WERE MADE BY THE A SSESSING OFFICER, WHICH REVEALED THAT EVEN M/S. SAHARA MINERALS AND M /S. V.K. MINERALS WERE NOT AVAILABLE AT THE ADDRESS GIVEN. THE ASSESS ING OFFICER, THEREFORE, TREATED THE ENTIRE AMOUNT OF RS.2.5 CRORES AND RS.2 .18 CRORES CLAIMED TO BE RECEIVED BY THE ASSESSEE FROM THE NON-EXISTENT C ONCERNS AS UNEXPLAINED CASH CREDITS AND THE SAID AMOUNT AGGREG ATING TO RS.4,68,02,738/- WAS ADDED BY HIM TO THE TOTAL INC OME OF THE ASSESSEE UNDER SECTION 68. 4. THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFO RE THE LD. CIT(APPEALS) AND THE FOLLOWING SUBMISSIONS IN WRITING WERE FILED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) IN SUPPORT OF ITS CASE ON THIS ISSUE:- THIS IS IN RESPECT OF OUR GROUND NOS. 4 &,5 IN OUR GROUNDS OF APPEAL BEING ADDITION OF AN AMOUNT OF RS.2,50,00,00 0/- RECEIVED FROM M/S. SAHARA MINERALS AND RS.2,18,00,0 00/- RECEIVED FROM M/S. V.K. MINERALS ON ACCOUNT OF SALE S MADE TO THEM. IN THIS RESPECT IT IS SUBMITTED THAT THESE AD DITIONS HAVE BEEN MADE BY THE A.O. ON THE ALLEGED GROUND THAT TH E ABOVE- MENTIONED PARTIES WERE NOT FOUND AT THE ADDRESSES P ROVIDED BY THE ASSESSEE. THE A.O. IN THE COURSE OF ASSESSME NT HAD DEPUTED AN INSPECTOR AT ASSANSOL AND AN INSPECTOR A T KOLKATA TO MAKE ENQUIRY IN RESPECT OF THE SAID PARTIES. IT IS STATED IN THE ASSESSMENT ORDER THAT ON SUCH ENQUIRY, THE ABOV E-NAMED PARTIES WERE NOT FOUND AT THE ADDRESSES AS AVAILABL E AND PROVIDED BY THE ASSESSEE. DURING THE COURSE OF ASSE SSMENT IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY THE A.O ., THE ASSESSEE FURNISHED COPIES OF THE PARTY'S LEDGER ACC OUNT, COPIES OF FORWARDING LETTERS ISSUED BY THE SAID PAR TY AND COPIES OF THE 'C' FORMS ISSUED BY THE SAID PARTIES IN RESPECT OF THE SALES MADE TO THEM, THE A.O. IN RESPECT OF SAHA RA MINERALS SIMPLY DISMISSED THE COPIES OF 'C' FORMS SUBMITTED BY THE ASSESSEE WHICH SHOW THAT THE SAID CONCERN WAS REGIS TERED UNDER VAT AND CST. HE GAVE NO REASON-FOR COMING TO THE SAID I.T.A. NO. 1482/KOL./2011 ASSESSMENT YEAR: 2007-2008 & C.O. NO. 35/KOL/2012 (IN ITA NO. 1482/KOL/2011) ASSESSMENT YEAR: 2007-2008 PAGE 4 OF 12 CONCLUSION THAT THE SAID PARTY WAS NON-EXISTENT, EV EN THOUGH THE ASSESSEE HAD CLEARLY SHOWN THAT THE SAID CONCER N WAS REGISTERED WITH VARIOUS GOVT. AUTHORITIES. IT IS FURTHERMORE SUBMITTED THAT IT SHALL BE APPARE NT FROM THE LEDGER ACCOUNT OF M/S. SAHARA MINERALS, AS FURNISHED, THAT THE ASSESSEE HAD SHOWN SALES OF RS.1,49,06,966 /- FROM THE SAID CONCERN DURING THE PRESENT FINANCIAL YEAR. THI S IMPLIED THAT THE SAID AMOUNT OF RS.1,49,06,966/- ALREADY ST OOD CREDITED IN THE PROFIT AND LOSS ACCOUNT OF THE ASSE SESE AS THE INCOME OF THE ASSESSEE. THE A.O. BY ADDING THE SAME AMOUNT OF RS.1,49,06,966/- BEING PART OF THE RECEIPTS OF RS.. 2,50,00,000/- HAS IN EFFECT MADE A DOUBLE ADDITION FIRSTLY BY WAY OF SALES AND AGAIN AS AN ADDITION U/S.68 OF THE I T ACT. IF THE A.O. WAS OF THE OPINION THAT THE SAID AMOUNT OF RS.1,49,06,9 66/- WAS TO BE ADDED U/S.68 OF THE IT ACT THEN HE COULD HAVE FI RSTLY REDUCED THE SALES OF THE ASSESSEE I.E. INCOME OF TH E ASSESSEE BY THE SAID AMOUNT AND THEN ADDED THE SAID AMOUNT U/S. 68 OF THE I.T ACT. THIS WOULD IN EFFECT HAVE BEEN REVENUE NEU TRAL SINCE NO ADDITION IN EFFECT WOULD HAVE BEEN MADE IN THE H ANDS OF THE ASSESSEE. SIMILARLY, IN THE CASE OF M/S. V. K MINERALS, THE A SSESSEE HAD ACTUALLY RECEIVED AN AMOUNT OF RS. RS.1,18,02,2 15/- FROM M/S. V.K. MINERALS DURING THE YEAR. AGAINST THE SAI D RECEIPT OF RS.1,18,02,215/-, THE ASSESSEE HAD MADE SALES OF RS.1,18,02,738/- TO THE SAID PARTY IMPLYING THAT TH E SAID AMOUNT OF RS.1,18,02,738/- ALREADY STOOD INCLUDED O N THE CREDIT SIDE OF THE PROFIT & LOSS ACCOUNT AND THE A. O. BY ADDING THE SAID AMOUNT U/S.68 HAS MADE A DOUBLE ADDITION O F THE SAME AMOUNT IN THE HANDS OF THE ASSESSEE. THE A.O. SHOULD HAVE FIRSTLY REDUCED THE SAID AMOUNT OF RS.1,18,02, 738/- FROM THE SALES OF THE ASSESSEE I.E. REDUCED THE INCOME O F THE ASSESSEE AND THEN ADDED THE AMOUNT U/S.68 OF THE I T ACT LEADING TO NO ACTUAL ADDITION IN THE HANDS OF THE A SSESSEE. IT IS ALSO POINTED OUT THAT IF THE LEDGER ACCOUNT OF M/S. V. K MINERALS BE EXAMINED THEN IT SHALL BE SEEN THAT AN AMOUNT OF RS.1,00,00,523/- HAS NOT ACTUALLY BEEN RECEIVED BY THE ASSESSEE IN ITS BANK ACCOUNT DURING THE YEAR BUT TH E SAID ENTRY IN THE LEDGER ACCOUNT IS SIMPLY A JOURNAL ENTRY IN THE NAME OF M/S. BONAI INDUSTRIAL CO. LTD SIMILARLY, IT SHALL B E OBSERVED THAT AN AMOUNT OF RS.1.00 CRORE HAS ALSO BEEN DEBIT ED BY WAY OF JOURNAL ENTRY IN THE NAME OF M/S. FEEGRADE & CO. PVT. LTD. THIS CLEARLY IMPLIES THAT NEITHER THE AMOUNT OF RS.1,00,00,523/- HAS BEEN RECEIVED BY THE ASSESSEE NOR THE AMOUNT OF RS.1.00 CRORE AS ACTUALLY BEEN PAID BY TH E ASSESSEE, BUT THESE ARE SIMPLY BOOK ENTRIES WITHOUT ACTUAL MO VEMENT OF MONEY IN THE HANDS OF THE ASSESSEE. IT IS CLEARLY A PPARENT FROM THE SAME THAT THE SAID AMOUNT OF RS.1,00,00,523/- C ANNOT BE TREATED AS CASH CREDIT IN THE HANDS OF THE ASSESSEE U/S.68 OF I.T.A. NO. 1482/KOL./2011 ASSESSMENT YEAR: 2007-2008 & C.O. NO. 35/KOL/2012 (IN ITA NO. 1482/KOL/2011) ASSESSMENT YEAR: 2007-2008 PAGE 5 OF 12 THE ACT SINCE NO AMOUNT HAS BEEN ACTUALLY RECEIVED BY THE ASSESSEE DURING THE YEAR. THEREFORE, IT IS CLEAR THAT EVEN IF THE CONTENTION OF THE A.O. FOR THE SAKE OF ARGUMENT BE ACCEPTED AS TRUE, THEN THE MAXIMUM AMOUNT WHICH COULD HAVE BEEN ADDED IN THE H ANDS OF THE ASSESSEE WAS ONLY RS.1,00,93,034/- AND NOT T HE AMOUNT OF RS.4,68,02,738/- AS ADDED BY THE A.O. U/S.68 OF THE IT ACT. THEREFORE, THE BALANCE AMOUNT OF RS. 3,67,09,704/- HAS BEEN ADDED WRONGLY IN THE HANDS OF THE ASSESSEE AND IS R EQUIRED TO BE DELETED. THEREFORE, IT IS REQUESTED THAT ON FACTS AS WELL AS ON LAW, THE ENTIRE ADDITION OF RS.4,68,02,738/- CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE AND YOUR GOODSELF IS K INDLY REQUESTED TO ALLOW FULL RELIEF TO THE ASSESSEE. 5. THE ABOVE SUBMISSIONS MADE BY THE ASSESSEE WERE FORWARDED BY THE LD. CIT(APPEALS) TO THE ASSESSING OFFICER FOR THE L ATERS COMMENTS. IN THE REMAND REPORT SUBMITTED TO THE LD. CIT(APPEALS) ON 06.07.2011, THE FOLLOWING COMMENTS WERE OFFERED BY THE ASSESSING OF FICER:- AT THE TIME OF ASSESSMENT PROCEEDINGS IT WAS FOUND THAT THE CREDIT ENTRIES OF RS.2,50,00,000/- AND RS.2,18, 02,738/- WHICH WERE SHOWN TO HAVE RECEIVED FROM M/S. SAHARA MINERALS AND M/S. V.K. MINERALS WERE NOT FOUND AND THE AMOUNT RECEIVED WAS TREATED AS CASH CREDIT IN THE H ANDS OF THE ASSESSEE. FROM THE SUBMISSION MADE BY THE ASSESSEE IT APPEARS THAT EXCEPT RS.1,00,93,034/-, BALANCE AMOUNT OF RS.3,67,09,704/- HAS BEEN ALREADY CREDITED IN THE P ROFIT AND LOSS ACCOUNT, SO IT CANNOT BE ADDED TWICE. THE CONTENTION OF THE ASSESSEE SEEMS TO BE JUSTIFIED, W HICH IS A MATTER OF VERIFICATION. 6. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE AS SESSEE, THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER AN D THE OTHER MATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) PROCEEDED TO DECIDE THE ISSUE I.T.A. NO. 1482/KOL./2011 ASSESSMENT YEAR: 2007-2008 & C.O. NO. 35/KOL/2012 (IN ITA NO. 1482/KOL/2011) ASSESSMENT YEAR: 2007-2008 PAGE 6 OF 12 VIDE PARAGRAPH NOS. 15 TO 23 OF HIS IMPUGNED ORDER, WHICH READ AS UNDER:- 15. I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS O F THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, REMAND REPORT AND SUBMISSIONS OF THE ASSESSEE DURING THE APPELLATE PROCEEDINGS. THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS RECEIVED INFORMAT ION FROM THE INVESTIGATION WING THAT DURING THE PREVIOUS YEAR RE LEVANT TO THE ASSESSMENT YEAR 2007-08, SOME MONEY FROM THE BANK A CCOUNT. OF M/S. LANXESS ENTERPRISES AND M/S. TOPAZ SALES CORPO RATION MAINTAINED IN THE ICICI BANK WERE TRANSFERRED TO TH E ASSESSEE. THE INQUIRY WAS CONDUCTED BUT THE CONCERNS COULD NOT BE TRACED. ON ENQUIRY FROM THE ASSESSEE REGARDING RECEIPT OF MONE Y/CHEQUES OF M/S LANXESS ENTERPRISES AND M/S. TOPAZ SALES CORPOR ATION (MAINTAINED IN THE ICICI BANK), IT SUBMITTED THAT I T HAD NO TRANSACTIONS WITH THE SAID BOTH CONCERNS. HOWEVER, THE CHEQUES HAVE BEEN RECEIVED FROM BOTH THE CONCERNS ON ACCOUNT OF SALES MADE TO M/S SAHARA MINERALS, KALYANESHWARI ROAD, KALYANESHW ARI AND M/S V.K. MINERALS, CAMAC STREET, KOLKATA. THE ASSESSEE SUBMITTED THE COPY OF FORWARDING LETTERS OF M/S. SAHARA MINERALS AND M/S. V.K. MINERALS VIDE WHICH THE CHEQUES FROM M/S. LANXESS E NTERPRISES AND M/S TOPAZ SALES CORPORATION WERE RECEIVED. THE LEDG ER ACCOUNTS HAVE BEEN DULY MAINTAINED IN THE NAME OF BOTH THE C ONCERNS I.E., M/S. SAHARA MINERALS AND M/S V.K. MINERALS. THE ASS ESSEE RECEIVED RS.2,50,00,000/- FROM M/S. SAHARA MINERALS AND RS.2 ,18,02,738/- FROM M/S. V.K. MINERALS ON DIFFERENT DATES DURING T HE FINANCIAL YEAR 2006-07 RELEVANT TO THE ASSESSMENT YEAR 2007-08. TH E ASSESSEE CLAIMED THAT THE AMOUNT OF RS.2.5 CRORES AND RS.2.1 8 CRORES WERE RECEIVED ON ACCOUNT OF SALES OF IRON ORE MADE TO TH ESE CONCERNS. THE ASSESSEE PRODUCED THE COPIES OF SOME RAILWAY RECEIP TS WHICH SHOWS BOOKING OF RAILWAY WAGON AND DISPATCH OF IRON ORE I N THE NAME OF MLS SAHARA MINERALS AND M/S V.K, MINERALS. HOWEVER, THE ASSESSING OFFICER FOUND THAT M/S. SAHARA MINERALS AND M/S. V. K. MINERALS WERE NON-EXISTENT ON THE SAID ADDRESSES WHICH WERE MAINT AINED IN THE RECORDS OF THE ASSESSEE. 16. DURING THE APPELLATE PROCEEDING ON ENQUIRY THE A.R. SUBMITTED THAT RAILWAY RECEIPTS WERE NOT SENT BY PO ST OR DAK BUT WERE SENT BY HAND/THROUGH PERSON. IT DID NOT GIVE F URTHER DETAILS OF THE PERSONS. THE ASSESSEE WAS GIVEN TWO OPPORTUNITI ES BY THE ASSESSING OFFICER TO PRODUCE BOTH THE PERSONS BUT D ID NOT PRODUCE THE SAME. EVEN DURING APPELLATE PROCEEDINGS HE SHOW ED HIS INABILITY TO PRODUCE THE SAID PERSONS. HOWEVER, THE ASSESSEE SUBMITTED THAT M/S. SAHARA MINERALS WAS A GENUINE CONCERN HAVING V AT NUMBER AND CST NUMBER AND PRODUCED THE COPY OF CST FORM AL SO BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER OBSERVED T HAT CHEQUES WERE RECEIVED FROM NON-EXISTENT CONCERNS I.E., LANXESS E NTERPRISES AND TOPAZ SALES CORPORATION BY THE ASSESSEE THROUGH CON CERNS M/S. SAHARA MINERALS AND M/S. V.K. MINERALS WHICH ALSO W ERE NON- I.T.A. NO. 1482/KOL./2011 ASSESSMENT YEAR: 2007-2008 & C.O. NO. 35/KOL/2012 (IN ITA NO. 1482/KOL/2011) ASSESSMENT YEAR: 2007-2008 PAGE 7 OF 12 EXISTENT. THE ASSESSING OFFICER WAS NOT SATISFIED R EGARDING THE FACT THAT MONEY WAS RECEIVED ON ACCOUNT OF SALES. THEREF ORE, HE ADDED THE ENTIRE SUM OF RS.2,50,00,000/- AND RS. 21802073 8/- TOTALING OF RS.46802738 AS UNEXPLAINED CASH CREDIT U/S 68 OF TH E INCOME-TAX ACT, 1961. THE ASSESSEE HAD SUBMITTED THAT OUT OF R ECEIPT OF RS.2.5CRORES A SALE OF RS.1,49,07,966/- WAS MADE TO M/S. SAHARA MINERALS AND THE ASSESSING OFFICER WAS REQUIRED TO REDUCE HE SAID SUM OUT OF CASH CREDIT BECAUSE IT HAS ALREADY BEEN SHOWN AS INCOME IN THE FORM OF SALES. THERE CANNOT BE DOUBLE ADDITI ON ON THE SAME ACCOUNT. THE CLOSING BALANCE WAS RS.1,,00,93,034/- ONLY. 17. SIMILARLY IN THE CASE OF M/S. V.K. MINERALS, HE SUBMITTED THAT OUT OF RS.2,18,02,738/-, THE ASSESSEE HAS SHOWN SALES O F RS.1,18,02,000/- AND, THEREFORE, THE SAID ADDITION OF RS.1,18,02,738 /- IS A DOUBLE ADDITION I.E., ON ACCOUNT OF SALES AND AS CASH CRED IT. HE FURTHER SUBMITTED THAT AN AMOUNT OF RS.1,00,00,523/- IS JUS T A JOURNAL ENTRY IN THE LEDGER ACCOUNT IN THE NAME OF M/S BONAI INDU STRIES CO. LTD AND FURTHER AN AMOUNT OF RS. 1 CRORE HAS BEEN DEBIT ED BY WAY OF JOURNAL ENTRY IN THE NAME OF FREE GRADE & COMPANY ( P) LTD. HE SUBMITTED THAT THE AMOUNT OF RS.100,00,523/- HAS NE ITHER BEEN RECEIVED BY THE ASSESSEE NOR HAS BEEN ACTUALLY PAID BY THE ASSESSEE. BUT, THIS IS A SIMPLE BOOK ENTRY WITHOUT ACTUAL MOV EMENT OF MONEY IN THE HANDS OF THE ASSESSEE. THEREFORE, HE PLEADED THAT THE AMOUNT OF RS.1,00,00,523/- SHOULD NOT BE TREATED AS CASH C REDIT IN THE HANDS OF THE ASSESSEE U/S 68 OF THE INCOME-TAX ACT, 1961. 18. THE PERUSAL OF THE LEDGER ACCOUNTS SHOWS THAT ASSESSEE WAS VERY CONSCIOUS ABOUT THE CREDITWORTHINESS OF BOTH T HE PARTIES. THE MONEY HAS BEEN RECEIVED IN ADVANCE THROUGH LARGE NU MBER OF CHEQUES WELL BEFORE DISPATCH OF GOODS. THE PAYMENTS ARE RECEIVED IN SMALL AMOUNTS AND THE SALE IS IN BULK. THERE ARE ON LY TWO SALES INSTANCES IN THE CASE OF M/S. SAHARA MINERALS AND O NE SALE INSTANCE IN THE CASE OF M/S. V.K. MINERALS WHILE THERE ARE 4 5 CHEQUES (APPOX) AND 21 CHEQUES/DDS RECEIVED FOR THE SAID SALES RESP ECTIVELY. 19. IN THESE FACTS AND CIRCUMSTANCES THERE IS A DO UBLE ADDITION I.E ON ACCOUNT OF SALES AND ALSO ON ACCOUNT OF CASH CREDIT U/S 68 OF I.T. ACT, 1961. THE CONDITIONS FOR ADDITION UNDER S ECTION ARE FULFILLED. THE IDENTITY OF THE CREDITORS EITHER WHO HAS ISSUED CHEQUES OR WHO HAD DEPOSITED CHEQUES/MONEY HAS NOT BEEN EST ABLISHED. SIMILARLY, THE GENUINENESS OF THE TRANSACTIONS HAS ALSO NOT BEEN ESTABLISHED SINCE IT IS A SALE TO FICTITIOUS PERSON S W OSE BUSINESS PARTICULARS AND RECEIPT/DISPATCH OF GOODS COULD NOT BE ESTABLISHED. THE CREDITWORTHINESS COULD ALSO NOT BE ESTABLISHED AS THE SOURCE OF DEPOSIT OF MONEY IN THE ACCOUNT OF M/S. LANXESS ENT ERPRISE AND M/S. TOPAZ SALES CORPORATION MAINTAINED WITH ICICI BANK COULD NOT BE VERIFIED SINCE THE CONCERNS ARE NON-EXISTENT AND FI CTITIOUSLY CREATED TO DEFRAUD THE REVENUE BY DEPOSITING UNVERIFIABLE D EPOSITS. EVEN THE IDENTITY OF BUYERS COULD NOT BE ESTABLISHED AND ASS ESSEE COULD NOT PRODUCE THEM BEFORE ASSESSING OFFICER WHO HAD PURCH ASED SUCH HUGE I.T.A. NO. 1482/KOL./2011 ASSESSMENT YEAR: 2007-2008 & C.O. NO. 35/KOL/2012 (IN ITA NO. 1482/KOL/2011) ASSESSMENT YEAR: 2007-2008 PAGE 8 OF 12 QUANTITIES OF IRON ORE FROM THE ASSESSEE. THEREFORE , THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE ADDITION. THE A SSESSEE HAS ALSO ACCEPTED CONDITIONALLY THE SAME BEFORE THE ASSESSIN G OFFICER. 20. THE ASSESSEE, HOWEVER, HAS SUBMITTED THAT THE A DDITION SHOULD NOT BE DOUBLE SINCE ONE PART OF IT HAS ALREADY COME AS SALES IN THE PROFIT AND LOSS ACCOUNT AS INCOME/SALE. IF THE PART IES ARE NON- EXISTENT THEN SALES ALTHOUGH MAY BE IN THE FICTITIO US NAME HAVE BEEN ACCOUNTED IN THE ACCOUNTS AND AGAINST THAT NO MONEY RECEIVED EXCEPT THESE CASH CREDITS /CHEQUES. THE UNDERSIGNED AGREES WITH THE ASSESSEE ON THIS ISSUE AND HOLDS THAT DOUBLE ADDITI ON CANNOT BE MADE OF THE SAME AMOUNT. THE DISCRETION WAS WITH TH E ASSESSING OFFICER, HE COULD HAVE TREATED THE WHOLE AS UNEXPLA INED CASH CREDIT BUT SET-OFF OF THE SALES WAS REQUIRED TO BE GIVEN O UT OF PROFIT & LOSS ACCOUNT. IT DOES NOT MATTER DURING ASSESSMENT FOR T AXATION PURPOSES WHETHER THE WHOLE ADDITION IS AS UNEXPLAINED CASH C REDIT OR PART OF IT IS UNEXPLAINED CASH CREDIT AND PART OF IT HAS CO ME IN THE PROFIT AND LOSS ACCOUNT AS SALES SINCE TAX AMOUNT WILL BE THE SAME. 21. THE ASSESSEE HAS FILED THE COPY OF ACCOUNT OF M /S. BONAI INDUSTRIAL COMPANY LTD.; BARBIL, KEONJHAR, WHICH SH OWS THAT AN AMOUNT OF RS.1,00,00,523/- HAS BEEN TRANSFERRED FRO M THE ACCOUNT IN THE NAME OF M/S. V.K. MINERALS ON BEING A LETTER DATED NIL ON 31ST MARCH, 2007. THE ASSESSEE COULD NOT EXPLAIN THE SOU RCE OF THIS AMOUNT IN THE ACCOUNTS AS M/S. V.K. MINERALS IS A N ON-EXISTENT CONCERN AND THE SAID AMOUNT HAS BEEN TRANSFERRED IN THE NAME OF FEEGRADE & CO. PVT. LTD WHICH CAN ESTABLISH ITS SOU RCE AS RECEIVED FROM/THROUGH M/S. RUNGTA SONS. ULTIMATELY THE SOURC ES OF M/S. V.K. MINERALS ARE NON-EXPLAINABLE AS HELD SUPRA AND IT M AY COME FROM ANYWHERE. THEREFORE, THIS CREDIT IN THE NAME OF M/S . V.K. MINERALS THROUGH JOURNAL ENTRY FROM ACCOUNT OF M/S. BONAI IN DUSTRIAL COMPANY LTD., BARBIL, KEONJHAR IS ALSO HELD A CASH CREDIT AND IS HELD TO BE RIGHTLY ADDED BY THE ASSESSING OFFICER. THE O NLY DOUBLE ADDITION TO THE EXTENT OF SALES IS CONSIDERED AND H ELD AS ELIGIBLE FOR SET-OFF VIS A VIS CASH CREDITS. THE TOTAL DEBITS AND CREDITS IN THE ACCOUNT OF M/S. SAHARA MINERALS ARE AS FOLLOWS:- DEBIT CREDITS 1,49,06,966 2,50,00,000 CLOSING BALANCE 1,,00,93,034/- THE TOTAL DEBITS AND CREDITS IN THE ACCOUNT OF M/S. V.K. MINERALS EXCEPT JOURNAL ENTRY ARE AS FOLLOWS:- DEBIT CREDITS 1,18,02,738 2,18,02,738 I.T.A. NO. 1482/KOL./2011 ASSESSMENT YEAR: 2007-2008 & C.O. NO. 35/KOL/2012 (IN ITA NO. 1482/KOL/2011) ASSESSMENT YEAR: 2007-2008 PAGE 9 OF 12 CLOSING BALANCE: 1,00,00,000/- JOURNAL ENTRY: CREDIT FEEGRADE & CO. PVT. LTD. 1,00 ,00,000/- 22. THE EXISTENCE OF M/S. V.K. MINERALS IS UNKNOWN AND NO EVIDENCE HAS BEEN PRODUCED TO ESTABLISH ITS IDENTITY. THEREF ORE, ALL THE MONEY COMING AS CREDIT IN THE NON-EXISTING ENTITY IS AN U NEXPLAINED CASH CREDIT. THE REPAYMENT OUT OF UNEXPLAINED CASH CREDI T IS NOT A SET-OFF SINCE THAT AMOUNT (PAYMENT) HAS NOT COME AS INCOME IN THE ACCOUNTS OF THE ASSESSEE, WHILE THE SALES HAVE BEEN TREATED AS INCOME. THE CASH CREDITS ARE TAXED UNDER SPECIAL PR OVISION U/S 68 IN WHICH THE ADDITION IS ON CREDITED AMOUNT AND NOT ON THE BALANCE AMOUNT IN THE ACCOUNT. SECTION 68 PROVIDES AS FOLLO WS:- 68. CASH CREDITS. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED 'BY HIM IS NOT, IN THE OPINION OF THE ASSES SING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. 23. THERE ARE HELD TO BE TOTAL CASH CREDITS AS PER BOOKS OF ACCOUNTS AMOUNTING TO RS.4,68,02,738/- AND THERE IS REFLECTION OF INCOME IN THE FORM OF SALES AGAINST THESE CREDITS, THEREFORE THE NET ADDITION OF RS.2,00,93,034/- CAN BE DONE AFTER GIVI NG BENEFIT OF SET- OFF OF SALES AMOUNTING TO RS.2,67,09,704/-.(TOTAL O F SALES INCOME AND ADDITION OF UNEXPLAINED CASH CREDIT AMOUNTS TO RS.4,68,02,738/- THEREFORE, THE NET ADDITION OF RS.2,00,93,034/- IS UPHELD OUT OF UNEXPLAINED CASH CREDITS (AMOUNTING TO RS. 4,68,02, 738/-) IN THE BOOKS OF THE ASSESSEE. THIS GROUND OF APPEAL IS PAR TLY ALLOWED. THE LD. CIT(APPEALS) THUS SUSTAINED THE ADDITION OF RS.4,68,02,738/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLA INED CASH CREDIT UNDER SECTION 68 TO THE EXTENT OF RS.2,00,93,034/- THEREBY GIVING RELIEF OF RS.2,67,09,704/- TO THE ASSESSEE. AGGRIEVED BY THE SAME, THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ALTHOUGH THE LD. D.R. HAS CONTENDED BEFORE US THAT IN THE ABSENCE OF ANY NEXUS BETWEEN THE CORRESPONDING I.T.A. NO. 1482/KOL./2011 ASSESSMENT YEAR: 2007-2008 & C.O. NO. 35/KOL/2012 (IN ITA NO. 1482/KOL/2011) ASSESSMENT YEAR: 2007-2008 PAGE 10 OF 12 SALES AND THE AMOUNTS IN QUESTION, THERE WAS NO CAS E OF DOUBLE ADDITION AND THE LD. CIT(APPEALS) WAS NOT JUSTIFIED IN GIVIN G SET OFF OF RS.2,67,09,704/- ON ACCOUNT OF INCOME STATED TO BE DECLARED BY THE ASSESSEE ON ACCOUNT OF CORRESPONDING SALES, IT IS O BSERVED THAT THE ASSESSING OFFICER HIMSELF IN THE REMAND REPORT SUBM ITTED TO THE LD. CIT(APPEALS) HAD ACCEPTED THAT THE CORRESPONDING SA LES HAVING BEEN ALREADY CREDITED TO THE PROFIT & LOSS ACCOUNT, THE AMOUNT OF SUCH SALES COULD NOT BE ADDED TWICE AS UNEXPLAINED CASH CREDIT UNDER SECTION 68. THIS COMMENT WAS OFFERED BY THE ASSESSING OFFICER I N HIS REMAND REPORT WHEN THE SUBMISSIONS FILED BY THE ASSESSEE IN WRITI NG BEFORE HIM WERE FORWARDED BY THE LD. CIT(APPEALS) TO THE ASSESSING OFFICER FOR HIS VERIFICATION AND COMMENTS. IN THE WRITTEN SUBMISSIO NS FILED BEFORE THE LD. CIT(APPEALS), GENUINENESS OF THE CORRESPONDING SALE S OF IRON ORE CLAIMED TO BE MADE TO M/S. SAHARA MINERALS AND M/S. V.K. MI NERALS WAS ESTABLISHED BY THE ASSESESE BY PRODUCING THE RELEVA NT RAILWAYS RECEIPTS AND THE FACT THAT THE SAID SALES WERE DULY OFFERED BY THE ASSESSEE AS INCOME BY CREDITING THE SAME TO THE PROFIT & LOSS A CCOUNT, WAS VERIFIABLE FROM THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE. ON VERIFICATION OF THE LEDGER ACCOUNTS OF M/S. SAHARA MINERALS (COPY PLACE D AT PAGES 31 & 32 OF THE PAPER BOOK) AND OF M/S. V.K. MINERALS (COPY PLA CED AT PAGES 33 & 34 OF THE PAPER BOOK), THE LD. CIT(APPEALS) FOUND THAT SALES MADE TO THE SAID TWO PARTIES AMOUNTING TO RS.1,49,06,966/- AND RS.1, 18,02,738/- WERE DULY ACCOUNTED FOR AND OFFERED BY THE ASSESSEE AS I TS INCOME AND SINCE THE AMOUNTS IN QUESTION TREATED TO BE UNEXPLAINED CASH CREDITS BY THE ASSESSING OFFICER WERE CLAIMED TO BE RECEIVED AGAIN ST THE SAID SALES, THE LD. CIT(APPEALS) HELD THAT SUCH ADDITION UNDER SECT ION 68 TO THE EXTENT OF CORRESPONDING SALES ALREADY DECLARED BY THE ASSESSE E AS INCOME WOULD RESULT IN DOUBLE ADDITION. AS ALREADY NOTED BY US, THIS POSITION WAS ACCEPTED EVEN BY THE ASSESSING OFFICER ALSO IN THE REMAND REPORT SUBMITTED TO THE LD. CIT(APPEALS). THE LD. CIT(APPE ALS) THUS ALLOWED A RELIEF TO THE ASSESSEE TO THE EXTENT OF RS.2,67,09, 704/- BEING THE AMOUNT I.T.A. NO. 1482/KOL./2011 ASSESSMENT YEAR: 2007-2008 & C.O. NO. 35/KOL/2012 (IN ITA NO. 1482/KOL/2011) ASSESSMENT YEAR: 2007-2008 PAGE 11 OF 12 ALREADY OFFERED AS INCOME BY THE ASSESSEE IN THE FO RM OF SALES AND RESTRICTED THE ADDITION OF RS.4,68,02,738/- MADE BY THE ASSESSING OFFICER UNDER SECTION 68 TO THE EXTENT OF RS.2,93,00,034/-. HAVING REGARD TO ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) GIVING THIS RELIEF TO THE ASSESSEE AND UPHOLDING HIS IMPUGNED ORDER ON THIS ISSUE, WE DISMISS THE APPEAL FILED BY THE REVENUE. 8. AS REGARDS THE CROSS OBJECTION FILED BY THE ASSE SSEE, IT IS NOTED THAT THERE IS A DELAY OF 110 DAYS ON THE PART OF THE ASS ESSEE IN FILING THE SAME. IN THIS REGARD, THE ASSESSEE HAS FILED AN APPLICATI ON SEEKING CONDONATION OF THE SAID DELAY AND KEEPING IN VIEW THE REASONS GIVEN THEREIN, WE ARE SATISFIED THAT THERE WAS A SUFFICIENT CAUSE FOR THE DELAY OCCURRED ON THE PART OF THE ASSESSEE IN FILING ITS CROSS OBJECTION. EVEN THE LD. D.R. HAS NOT RAISED ANY SERIOUS OBJECTION IN THIS REGARD. THE SA ID DELAY IS, THEREFORE, CONDONED AND THE CROSS OBJECTION FILED BY THE ASSES SEE IS BEING DISPOSED OF ON MERIT. 9. THE ONLY ISSUE RAISED BY THE ASSESSEE-COMPANY IN ITS CROSS OBJECTION IS THAT OUT OF THE TOTAL AMOUNT OF RS.4,6 8,02,738/- ADDED BY THE ASSESSING OFFICER AS UNEXPLAINED CASH CREDIT UNDER SECTION 68, A SUM OF RS.1,00,00,523/- CREDITED TO THE ACCOUNT OF M/S. V. K. MINERALS ON 31.03.2007 REPRESENTED A TRANSFER ENTRY AND THE SAM E NOT BEING IN THE NATURE OF CASH CREDIT AS ENVISAGED IN SECTION 68, T HE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(APPE ALS) TO THAT EXTENT IS LIABLE TO BE DELETED. IN THIS REGARD, THE LD. COUNS EL FOR THE ASSESESE HAS INVITED OUR ATTENTION TO THE RELEVANT ENTRY APPEARI NG IN THE LEDGER ACCOUNT OF M/S. V.K. MINERALS AT PAGE NO. 33 OF HIS PAPER BOOK TO POINT OUT THAT THE AMOUNT OF RS.1,00,00,523/- DID NOT REPRESE NT CASH CREDIT AS THE I.T.A. NO. 1482/KOL./2011 ASSESSMENT YEAR: 2007-2008 & C.O. NO. 35/KOL/2012 (IN ITA NO. 1482/KOL/2011) ASSESSMENT YEAR: 2007-2008 PAGE 12 OF 12 SAID AMOUNT WAS CREDITED ON ACCOUNT OF TRANSFER ENT RY. THE LD. D.R., ON THE OTHER HAND, SUBMITTED THAT THIS CLAIM OF THE AS SESSEE RAISED SPECIFICALLY FOR THE FIRST TIME BEFORE THE TRIBUNAL REQUIRES VERIFICATION AND THE MATTER, THEREFORE, MAY BE SENT BACK TO THE ASSESSING OFFICER FOR SUCH VERIFICATION. WE FIND MERIT IN THIS CONTENTION OF THE LD. D.R. AND SINCE THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO NOT RAISE D ANY OBJECTION IN THIS REGARD, WE RESTORE THIS ISSUE TO THE FILE OF THE AS SESSING OFFICER FOR DECIDING THE SAME AFRESH ON MERIT AFTER NECESSARY V ERIFICATION AND AFTER GIVING THE ASSESSEE PROPER AND SUFFICIENT OPPORTUNI TY OF BEING HEARD. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON MAY 13, 2016 . SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 13 TH DAY OF MAY, 2016 COPIES TO : (1) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-5, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (2) M/S. RUNGTA SONS (P) LIMITED, 42A, SHAKESPEARE SARANI, KOLKATA-700 017 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-VI, KOLKA TA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.