ITO Wd 35(3), Kolkata, Kolkata V. Shri Kunal P. Desai, Kolkata

ITA 1489/KOL/2012

• Counselvise Citation: [2013] 119 COUNSELVISE.COM (IT) 2958 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2013
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 15-10-2012
• Court: TRIBUNAL
• Department Lawyers: SUSHANTA KR SINHA
• Assessee Lawyers: M SATNALIWALA
• Section: 69C; 40A(3)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B , KOLKATA [ () . .. . . .. . , ,, , , ! ''# $ ''# $ ''# $ ''# $ ] ]] ] [BEFORE HONBLE SRI P.K.BANSAL, AM & HONBLE SRI GEORGE MATHAN, JM] !& !& !& !& /ITA NO.1489/KOL/2012 '( )*/ ASSESSMENT YEAR : 2005-06 ($, / APPELLANT ) - - ( ./$, /RESPONDENT) I.T.O., WARD-35(3), SHRI KUNAL P.DESAI KOLKATA -VERSUS- KOLKATA (PAN:AHDPD 0832 D) $, 0 1 / FOR THE APPELLANT: SHRI SUSHANTA KR.SINHA, JCIT, SR.DR, ./$, 0 1 / FOR THE RESPONDENT: SHRI M.SATNALIWALA, FCA 2 3 0 4 /DATE OF HEARING : 12.03.2013 5) 0 4 /DATE OF PRONOUNCEMENT : 12.03.2013. 6 / ORDER PER BENCH THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-XX, KOLKATA DATED 06.08.2012 FOR A.YEAR 2005-06 BY TAKI NG THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.2,26,783/- ON ACCOUNT O F NON-VERIFICATION OF PURCHASES RELYING MERELY ON THE SUBMISSION OF THE ASSESSEE DI SREGARDING THE FACT NARRATED IN THE REMAND REPORT WHEREBY IT WAS ESTABLISHED THAT THE A SSESSEE HAD NOT MAINTAINED QUANTITATIVE DETAILS, STOCK REGISTER AND NO EVIDENC E WAS THERE TO VERIFY THE BASIS OF SUCH PURCHASES FROM STOCK REGISTER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.8,11,674/- INCLUDING G.P. OF RS. 18,093/- BEING SALES HAVING BEEN MADE OUT OF BOOKS ON ACCOUNT OF OUT OF BOOKS PURCHA SES OF RS.7,93,581/- NOT REFLECTED IN THE REGULAR BOOKS OF THE ASSESSEE DISREGARDING THE REMAND REPORT AND IGNORING THE FACTS. (I) THAT THE ABOVE DISCREPANCY WAS NOTED FROM THE L EDGER COPY OBTAINED FROM ONE SUPPLIER, M/S. ABHINANDAN INTERNATIONAL AT THE TIME OF ASSESSMENT AS WELL AS AT THE TIME OF REMAND PROCEEDINGS. (II) THAT THE ASSESSEE FILED DETAILS OF ACCOUNTS IN MANUAL FORM OF LEDGER, WHICH APPEARED TO HAVE BEEN WRITTEN IN ONE SITTING CONTRARY TO THE REPORT OF AUDITOR WHO CERTIFIED IN AUDIT REPORT THAT BOOKS OF ACCOUNTS WERE MAINTAINED ON COMPUTER. ITA NO. 1489/KOL/2012 2 (III) THAT THE ASSESSEE HAD NOT MAINTAINED QUANTITA TIVE DETAILS, STOCK REGISTER AND NO EVIDENCE WAS PRODUCED BY THE ASSESEE EITHER AT THE ASSESSMENT STAGE OR AT THE APPELLATE STAGE TO VERIFY THE BASIS OF SUCH CLAIM OF ASSESSEE . 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.67,425/- & RS.4,09,6 34/- U/S 40A(3) DISREGARDING THE FACT NARRATED IN ASSESSMENT ORDER AS WELL AS IN THE REMA ND REPORT. 2. GROUND NO.1 IN THIS APPEAL IS RELATING TO THE D ELETION OF ADDITION OF RS.2,26,783/- THE ASSESSING OFFICER DISALLOWED A SU M OF RS.2,26,783/- BEING THE PURCHASES MADE BY THE ASSESEE FROM M/S. SANDESH MAR KETING A DISTRIBUTOR OF M/S.PROTECTOR & GAMLE INDIA LTD. EVEN THOUGH THE AS SESSEE HAS PRODUCED THE BILLS BEFORE THE AO AND THE ADDRESS OF THEIR HEAD OFFICE. WHEN THE MATTER WENT BEFORE THE CIT(A) THE CIT(A) AFTER CONSIDERING THE REMAND REPO RT AND SUBMISSIONS OF THE ASSESSEE STATED THAT M/S. SANDESH MARKETING HAD CLO SED THEIR BUSINESS AND THE DISTRIBUTORSHIP WAS TRANSFERRED TO M/S. S.G.DISTRIB UTOR. THE ASSESSEE PRODUCED ALL THE PURCHASE BILLS AND THE ADDRESS OF THEIR HEAD OFFICE AND ALSO MAINTENANCE OF THE BILLS AND CIT(A) DELETED THE ADDITION. THE LD. DR RELIED ON THE ORDER OF THE AO WHILE THE LD. AR RELIED ON THE ORDER OF THE CIT(A). 3. WE FIND IN THIS CASE THAT THE FACT IS NOT DENIED THAT THE ASSESSEE HAS SOLD THE GOODS PURCHASED BY HIM AND WITHOUT MAKING THE PURCH ASES THE ASSESSEE CANNOT DISPOSE OF THE GOODS. THEREFORE WE DO NOT FIND ANY LEGAL INFIRMITY IN THE ORDER OF CIT(A) FOR DELETING THE ADDITION OF RS.2,26,783/-. THUS GROUND NO.1 OF THE REVENUES APPEAL STAND DISMISSED. 4. GROUND NO.2 IN THIS APPEAL RELATES TO DELETION O F ADDITION OF RS.8,11,674/-. THE AO NOTED THAT AS PER THE BOOKS OF THE ASSESSEE PURC HASES FROM M/S. ABHINANDAN INTERNATIONAL WERE RS.10,37,730/- WHEREAS AS PER TH E SALES BOOK IT WAS RS.18,31,311/-. THE AO TOOK A VIEW THAT THE ASSESSEE HAS SHOWN THE PURCHASE LESS BY RS.7,93,581/- AND ESTIMATED THE GROSS PROFIT @ 2.28% ON THE SAID AMOUNT AT RS.18,093/- AND ADDITION OF RS.8,11,678/- WAS MADE. BEFORE THE CIT( A) THE ASSESSEE CONTENDED THAT IF THE ASSESSEE HAS SHOWN LESS PURCHASE THE ASSESSEE W OULD HAVE SHOWN MORE PROFIT BUT THE ASSESSEE HAD SHOWN PURCHASES FROM M/S. ABHINAND AN INTERNATIONAL UPTO FEBRUARY, 2005 WHILE UPTO 31 ST MARCH, 2005 THE PURCHASES WERE MADE FROM THE SAID PARTY ITA NO. 1489/KOL/2012 3 AMOUNTING TO RS.13,97,612/-. THE BALANCE DIFFERENCE MAY BE DUE TO SALES OF SOME OTHER PARTY WAS WRONGLY POSED IN THE LEDGER ACCOUNT OF THE ASSESSEE. THE CIT(A) AFTER GOING THROUGH THE SUBMISSIONS OF THE ASSESSEE AND I N VIEW OF THE REMAND REPORT DELETED THE ADDITION. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE SAME. WE NOTED THAT THE CIT(A) HAS GIVEN THE FINDING THAT NO ADDIT ION CAN BE MADE FOR LESS PURCHASES IN THIS SITUATION. THE PROFIT WILL BE REDUCED. NO A DDITION WAS ALSO CALLED FOR THE ESTIMATED PROFIT ON SUCH DIFFERENCE IN THE PURCHASE . A PERUSAL OF THE ASSESSMENT ORDER WE NOTED THAT ADDITION HAS BEEN MADE BY THE AO BY W AY OF PURCHASE BUT THE PURCHASES BEING MADE OUT OF THE UNDISCLOSED SOURCES EVEN AO H AS NOT SPECIFICALLY REFERRED TO SECTION 69C OF THE ACT. THE AO HAS ALSO MADE THE AD DITION IN RESPECT OF THE GP ON THE SAID AMOUNT. WE ALSO NOTED THE IN THE REMAND REPORT THE AO HAS SPECIFICALLY MENTIONED THAT EVEN ALL THE PURCHASES MADE BY THE ASSESSEE HAS BEEN SHOWN BY M/S. ABHINANDAN INTERNATIONAL IN CASH AS WELL AS BY CHEQ UE. EVEN THE AO HAS OBSERVED THAT THERE IS A DIFFERENCE IN THE OPENING BALANCE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS WELL AS IN THE BOOKS OF M/S. ABHINANDAN INTERNATION AL. THE CIT(A) ALTHOUGH DELETED THE ADDITION HAS NOT DEALT WITH THE CONTENTION OF T HE AO AND THE COMPARATIVE LEDGER COPIES OF THE ASSESSEE AND OF M/S.ABHINANDAN INTERN ATIONAL TO ASCERTAIN WHAT IS THE BASIC REASON OF THE DIFFERENCE IN THE ACCOUNTS OF T HE ASSESSEE AND THE BOOKS OF M/S. ABHINANDAN INTERNATIONAL. IN OUR OPINION THE DETAIL ED FINDING IS REQUIRED BY THE LD.CIT(A) ON THIS ASPECT. WE, THEREFORE, IN THE INT EREST OF JUSTICE SET ASIDE THIS ISSUE AND RESTORE THE SAME TO THE FILE OF CIT(A) TO DECID E THE ISSUE FRESH AFTER CONSIDERING THE REMAND REPORT AND ASKING FOR THE SUBMISSION OF ASSESSEE ON THE REMAND REPORT TO THE EXTENT OF THE OBSERVATIONS MADE BY US ON THE REMAND REPORT AND DECIDE THE ISSUE AFTER GIVING OPPORTUNITY TO THE ASSESSEE IN A CCORDANCE WITH LAW. THUS GROUND NO.2 IS ALLOWED FOR STATISTICAL PURPOSES. 6. GROUND NO. 3 IN THIS APPEAL IS RELATING TO THE A DDITION MADE BY AO U/S 40A(3) OF THE IT ACT. ITA NO. 1489/KOL/2012 4 7. AFTER HEARING THE RIVAL SUBMISSIONS WE NOTE THAT IN THIS CASE SO FAR AS ADDITION OF RS.67,425/- IS CONCERNED MADE IN RESPECT OF EXTR A BILL SHOWN BY M/S. ABHINANDAN INTERNATIONAL AGAINST WHICH THE AO PRESUMED THAT TH E ASSESSEE HAS MADE THE CASH PAYMENT EXCEEDING RS.20,000/-. THE ONUS, IN OUR OPI NION, IS ONLY ON THE AO TO PROVE THAT THE ASSESSEE HAS MADE THE PAYMENT IN EXCESS OF THE LIMIT. THE DISALLOWANCE CANNOT BE MADE JUST ON THE BASIS OF PRESUMPTION AND ASSUMPTION THAT THE ASSESSEE WOULD HAVE MADE THE PAYMENT IN EXCESS OF RS.20,000/ - IN CASH. IN VIEW OF THIS, IN OUR OPINION, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A) AND WE DELETE THE ADDITION OF RS.67,425/-/ 7.1. NOW COMING TO THE ADDITION OF RS.4,09,634/- W E NOTED THAT THIS ADDITION HAS BEEN MADE BY THE AO ON THE BASIS THAT THE ASSESSEE HAS MADE THE PAYMENT TO THE PARTY IN CASH ON A PARTICULAR DAY IN AGGREGATE EXCEED AMO UNT OF RS.20,000/- EVEN THOUGH THE PAYMENT BEING MADE FOR EACH OF THE TRANSACTION MADE DURING THAT DAY WAS LESS THAN RS.20,000/-. WHEN THE MATTER WENT BEFORE CIT(A) THE CIT(A) DELETED THE ADDITION IN VIEW OF THE DECISION OF SPECIAL BENCH OF KOLKATA TR IBUNAL IN THE CASE OF SHANTARAM MEHTA, 123 TTJ (KOL) TM 12. WE NOTE THAT SECTION 40 A(3) OF THE ACT HAS BEEN AMENDED BY THE FINANCE ACT 2007 W.E.F. 01.04.2008. WHEN THE SECTION REQUIRED THAT THE AGGREGATE OF THE PAYMENT MADE TO A PERSON IN A DAY HAS TO BE TAKEN INTO ACCOUNT FOR THE PURPOSE OF DISALLOWANCE EXCEEDING RS.20,000 /-. THIS PROVISION WAS NOT THERE DURING THE IMPUGNED ASSESSMENT YEAR. IN VIEW OF THI S FACT, IN OUR OPINION, THE CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE OF RS.4,09,634 /-. WE ACCORDINGLY CONFIRM THE DELETION. GROUND NO.3 OF THIS APPEAL STANDS DISMISS ED. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 12.03.2013. SD/- SD/- [ .''# $ , ] [ .., ,, , ] [GEORGE MATHAN ] [P.K.BANSAL] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (4 4 4 4) )) ) DATE: 12.03.2013. R.G.(.P.S.) ITA NO. 1489/KOL/2012 5 6 0 .''7 87)9- COPY OF THE ORDER FORWARDED TO: 1. SRI KUNAL P.DESAI, 71, CANNING STREET, BAGREE MARKE T, ROOM NO.115, KOLKATA- 700001. 2 I.T.O., WARD-35(3), KOLKATA. 3 . CIT KOLKATA 4 . CIT(A)-XX, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. /7 .'/ TRUE COPY, 62/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES