ITO, Ward - 53(3), Kolkata, Kolkata V. Kunal Ganeriwala, Kolkata

ITA 1538/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54474 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 04-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S DUTTA
• Assessee Lawyers: MANOJ KATARUKA
• Keywords: Unexplained cash credit
• Section: 133(6); 68

Judgement Text

, , , , , , ,, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [ . . . . . . . . , ,, , , ,, , . . . . . .. . ! ! ! ! , ' ' ' ' ] [BEFORE HONBLE SHRI B. R. MITTAL, JM & HONBLE SHRI S.V. MEHROTRA, AM] #$ #$ #$ #$ / I.T.A NO. 1538/KOL/2010 %& '() %& '() %& '() %& '()/ // / ASSESSMENT YEAR : 2007-08 INCOME TAX OFFICER/WARD-53(3) -VS.- KUNAL GANERIWALA KOLKATA. KOLKATA. [PAN : AGGP G 0968 D] [ +, +, +, +, /APPELLANT ] ]] ] [ ./+, ./+, ./+, ./+,/ // / RESPONDENT ] ]] ] +, +, +, +, / FOR THE APPELLANT : SHRI P. S. DUTTA ./+, ./+, ./+, ./+, / FOR THE RESPONDENT : SHRI MANOJ KATARUKA 0 /ORDER . . . . . .. . ! ! ! ! , ' ' ' ' PER S. V. MEHROTRA, A. M. THE DEPARTMENT HIS PREFERRED THIS APPEAL FOR ASSES SMENT YEAR 2007-08 AGAINST ORDER OF LD. CIT(A)-XXXIII DATED 26.05.2010. 2. THE ASSESSEE FILED HERE RETURN OF INCOME DECLARI NG TOTAL INCOME OF RS.1,94.780/-. THE ASSESSEE DERIVED INCOME FROM PROPRIETORSHIP CONCERN VIZ. M/S. BALAJI MARBLES DEALING IN TRADING OF MARBLES AND STONES. BESIDES INCOME FROM PROPRIET ORSHIP CONCERN, ASSESSEE DERIVED INCOME FROM OTHER SOURCES CONSISTING OF INTEREST FROM BANK S AND OTHER INTEREST INCOME. THE ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS.34,32,101/- A FTER MAKING FOLLOWING ADDITIONS :- I) UNEXPLAINED CASH CREDIT [TEMPORARY OVERDRAWN] : RS.26,83,452/- II) UNEXPLAINED CASH CREDIT (DALTA GANAPATI] : RS . 1,26,880/- III) UNEXPLAINED CASH CREDIT [A.N. MARBLE] : RS. 1,37,904/- IV) UNEXPLAINED CASH CREDIT [PRIYANKA MARBLE] : R S. 1,37,904/- V) UNEXPLAINED CASH CREDIT [ANGIL MARBLE] : RS. 1,51,182/- ITA NO. 1538/KOL/2010 2 LD. CIT(A) ALLOWED THE ASSESSEES APPEAL. 3. BEING AGGRIEVED WITH THE ORDER OF LD. CIT(A), DE PARTMENT IS IN APPEAL BEFORE US. 4. THE FIRST GROUND TAKEN BY THE DEPARTMENT IS AS U NDER :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN FACT AND IN LAW IN DELETING THE ADDITION O F RS.26,83,452/- ON ACCOUNT OF UNSUBSTANTIATED CLAIM OF THE ASSESSEE IN HIS ACCOUN T UNDER THE HEAD TEMPORARY OVERDRAWN FROM PROPRIETORSHIP FIRM. 5. BRIEF FACTS APROPOS THIS ISSUE ARE THAT ON VERIF ICATION OF PERSONAL BALANCE SHEET OF ASSESSEE, ASSESSING OFFICER FOUND THAT UNDER THE HE AD CURRENT LIABILITIES, TEMPORARY OVERDRAWN FROM PROPRIETORSHIP FIRM M/S. BALAJI MARBLES AMOUNT ING TO RS.26,83,452.80 WAS APPEARING. BUT IN THE BALANCE SHEET OF THE PROPRIETORSHIP CONCERN M/S. BALAJI MARBLES, THERE WAS NO CONTRA ENTRY. HE NOTED THAT IN THE BALANCE SHEET OF THE PROPRIETO RSHIP FIRM M/S. BALAJI MARBLES, PROPRIETORS CAPITAL ACCOUNT WAS SHOWN AS UNDER :- PROPRIETORS CAPITAL ACCOUNT : SHRI KUNAL GANERIWAL OPENING BALANCE : RS. (14,72,936.08) ADD : NET PROFIT/LOSS : RS. ( 5,25,004.72 ) RS. (19,97,940.80) LESS : WITHDRAWAN : RS. 6,85,512.00 ASSESSEES EXPLANATION HAS BEEN REPRODUCED AT PAGE 1 & 2 OF THE ASSESSMENT ORDER IN WHICH, INTER ALIA, IT WAS POINTED OUT THAT SINCE ASSESSEE WAS ALSO PROPRIETOR OF M/S. BALAJI MARBLES, THEREFORE, THERE WAS NO DIFFERENCE BETWEEN CAPITAL OF THE INDIVIDUAL AND ITS PROPRIETORSHIP CONCERN. ASSESSING OFFICER DID NOT ACCEPT THE ASSES SEES CONTENTION OBSERVING AS UNDER :- FROM THE PROPRIETORS CAPITAL ACCOUNT AS REPRODUCE D ABOVE, IT IS FOUND THAT THE LOSS OF THE FIRM WHICH IS INCURRED BY THE PROPRIETO RSHIP CONCERN M/S. BALAJI MARBLES SHOWN IN THE LIABILITY OF INDIVIDUAL BALANC E SHEET AS TEMPORARY OVERDRAWN FROM PROPRIETORSHIP FIRM M/S. BALAJI MARB LES. WHEN THE PROPRIETORSHIP FIRM INCURRING LOSS, THE CAPITAL SHO ULD HAVE BEEN DECREASED BUT IN THIS CASE ON THE CONTRARY CAPITAL HAVE BEEN INCREAS E. HE, THEREFORE, MADE AN ADDITION OF RS.26,83,452/- U NDER SECTION 68 OF THE ACT. ITA NO. 1538/KOL/2010 3 6. BEFORE LD. CIT(A), ASSESSEE FILED DETAILED EXPLA NATION WHICH HAS BEEN REPRODUCED IN PARA 2 OF HIS ORDER. IN THIS EXPLANATION ASSESSEE, INTER ALIA, POINTED OUT THAT ASSESSEE WAS HAVING OWN CAPITAL OF RS.1,17,30,688/- AND IN HIS PROPRIE TORSHIP CONCERN ASSESSEE WAS HAVING CAPITAL OVERDRAWN OF RS.26,83,452/-. THIS HAS BEEN REFLECTE D AS A CURRENT LIABILITY IN ASSESSEES INDIVIDUAL BALANCE SHEET. IT WAS FURTHER POINTED OU T THAT CONSOLIDATED BALANCE SHEET WOULD GIVE EXACTLY THIS PICTURE AND THERE WOULD BE NO CONFUSIO N OR ANOMALY. LD. CIT(A) AFTER CONSIDERING DETAILED SUBMISSIONS OF THE ASSESSEE DELETED THE AD DITION, INTER ALIA, OBSERVING THAT ASSESSING OFFICER FAILED TO OBSERVE THAT THE OPENING CAPITAL IN THE ACCOUNT WAS NEGATIVE AND ANY FURTHER LOSS BEING INCURRED BY THE PROPRIETORSHIP WOULD INCREASE THE NEGATIVE BALANCE. HE POINTED OUT THAT IT WAS NOT THAT THE POSITIVE BALANCE HAD INCREASED BUT RATHER THAN THE NEGATIVE BALANCE OF CAPITAL BALANCE HAD INCREASED DUE TO LOSS AND OVERDRAWN. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORDS OF THE APPEAL. THE ASSESSEE WAS PROPRIETORSHIP OF M/S. BALAJI MARBLES AND THE ACCOUNTS OF THIS CONCERN WERE MAINTAINED SEPARATELY IN ORDER TO KEEP THE BUSINESS TRANSACTIONS SEPARATE FROM THE PERSONAL ACCOUNT. BUT ESSENTIALITY THERE WAS NO DIS TINCTION BETWEEN THE CAPITAL ACCOUNT OF THE PROPRIETORSHIP CONCERN AND THAT OF THE ASSESSEE. TH E COMBINED EFFECT OF BOTH THE CAPITAL ACCOUNTS HAD TO BE TAKEN INTO CONSIDERATION AND IT WAS TO BE FOUND OUT WHETHER ANY AMOUNT WAS TAKEN BY THE ASSESSEE FROM OUTSIDE OR NOT. THE ASSESSEE HAD INCURRED LOSS OF RS.5,25,004/- IN THE PROPRIETORSHIP CONCERN AS PER PROFIT & LOSS ACCOUNT CONTAINED AT PAGE 17 OF THE PAPER BOOK. THIS LOSS WAS TRANSFERRED TO PROPRIETORS CAPITAL ACCOUN T IN THE BALANCE SHEET OF M/S. BALAJI MARBLES MAINTAINED SEPARATELY CONTAINED AT PAGE 16 OF THE P APER BOOK. THIS CAPITAL ACCOUNT HAD BEEN REPRODUCED EARLIER. THE ASSESSEE HAS SUBMITTED HIS INDIVIDUAL BALANCE SHEET AT PAGE 3 OF THE PAPER BOOK IN WHICH IN THE CURRENT LIABILITY THE BALANCE OVERDRAWN IN M/S. BALAJI MARBLES IS SHOWN AT RS.26,83,452.80. THE ASSESSEE HAS FURNISHED A CONSO LIDATED BALANCE SHEET AT PAGE 19 OF THE PAPER BOOK. AS NOTED ABOVE, THERE WAS DEBIT BALANCE IN TH E PROPRIETORS CAPITAL ACCOUNT IN M/S. BALAJI MARBLES AND CORRESPONDING CREDIT BALANCE IN THE PER SONAL BALANCE SHEET. CONSEQUENTLY, THIS AMOUNT GOT NEUTRALIZED ON CONSIDERATION OF BOTH THE BALANCE SHEETS AND ONLY NET BALANCE IN THE CAPITAL ACCOUNT APPEARED IN THE CONSOLIDATON BALANC E SHEET CONTAINED AT PAGE 19 OF THE PAPER BOOK WHEREIN IN THE CAPITAL ACCOUNT THE BALANCE IS RS.1,17,30,688.77. THE ASSESSEES BALANCE SHEET CAN NOT BE CONSIDERED IN ISOLATION. IT HAS TO BE READ ALONGWITH BALANCE SHEET OF M/S. BALAJI ITA NO. 1538/KOL/2010 4 MARBLES. THE EFFECT OF BOTH IS IN CONSOLIDATED BALA NCE SHEET. WHEN ALL THE ASSETS AND LIABILITIES ARE SEPARATELY INCORPORATED IN THE CONSOLIDATED BAL ANCE SHEET, THE SAID BALANCE IS NOT APPEARING. THE ASSESSING OFFICER HAD MADE THE ADDITION ONLY ON THE BASIS OF CREDIT BALANCE APPEARING IN THE PERSONAL BALANCE SHEET. THEREFORE, WE DO NOT FIND A NY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). 7.1 HOWEVER, BEFORE PARTING WITH THIS GROUND OF APP EAL, WE MAY STATE THAT WHILE GIVING EFFECT TO THIS ORDER, THE ASSESSING OFFICER WILL EXAMINE T HE INVESTMENTS APPEARING IN CONSOLIDATED BALANCE SHEET VIS--VIS INVESTMENTS APPEARING IN EA RLIER YEARS CONSOLIDATED BALANCE SHEET. THEREFORE, THIS GROUND IS DISMISSED SUBJECT TO ABOV E OBSERVATIONS. 8. GROUND NO.2 OF THE APPEAL READS AS UNDER :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS U/S. 68 AN AMOUNT T OTALING TO RS.5,53,870/- ON ACCOUNT OF SUNDRY CREDITORS. 9. BRIEF FACTS APROPOS THIS ISSUE ARE THAT ASSESSEE HAD CLAIMED FOLLOWING CREDIT BALANCES IN ITS BOOKS OF ACCOUNT :- (I) DALTA GANAPATI : RS.1,26,880/- (II) A. N. MARBLE : RS.1,37,904/- (III) PRIYANKA MARBLES : RS.1,37,904/- (IV) ANGIL MARBLES : RS.1,51,182/- TOTAL : RS.5,53,870/- ASSESSING OFFICER ISSUED NOTICES UNDER SECTION 133( 6) TO ALL THE AFOREMENTIONED PARTIES WHICH WERE RETURNED BACK BY THE POSTAL AUTHORITY. AS THE ASSESSEE FAILED TO OFFER ANY EXPLANATION, ASSESSING OFFICER MADE AN ADDITION OF RS.5,53,870/- . BEFORE LD. CIT(A), ASSESSEE HAD FILED DETAILED EXPLANATION AND HAD SUBMITTED BILL COPY, W AY BILL, CHALLAN, VAT DECLARATION ETC, IN RESPECT OF PURCHASES FROM SHRI DALTA GANAPATI GRANI TES FOR RS.1,26,880/-. LD. CIT(A) OBSERVED IN PARA 3.2 AS UNDER :- I HAVE GONE THROUGH THE FACTS OF THE CASE, OBSERVA TIONS OF THE A.O., SUBMISSION OF THE A/R AND SUPPORTING DOCUMENTS. IT IS NOT A CA SE WHERE THE A.O. RECEIVED A REPLY U/S. 133(6) WHICH WAS NOT IN CONFORMITY WITH THE CLAIM MADE BY THE APPELLANT. IN THIS CASE NOTICE U/S.133(6) WAS RETUR NED BACK. THE REASON FOR THIS ITA NO. 1538/KOL/2010 5 COULD BE THAT THE A.O. ISSUED NOTICE TO DALTA GANAP TI GRANITES WHEREAS THE ACTUAL PERSON WAS SRI DATTA GANAPTI GRANITES. THIS WAS POINTED OUT TO THE A.O. THE EXPLANATION SUBMITTED TO HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS THOUGH NOT EXPLICITLY. THE APPELLANT HAS FURTHER SU BMITTED THAT THE PURCHASES FROM SRI DATTA GANAPTI GRANITES PERTAINS TO PRECEED ING PREVIOUS YEAR WHEN ALSO SCRUTINY ASSESSMENT WAS CARRIED OUT AND DETAILS OF THIS TRANSACTION SUBMITTED TO AND ACCEPTED BY THE DEPARTMENT. IN MY OPINION ONCE PURCHASES HAVE BEEN ACCEPTED, ADDITION ON ACCOUNT OF SUNDRY CREDITOR CA N BE MADE ONLY IF THERE IS POSITIVE EVIDENCE THAT CREDITOR HAS BEEN PAID BUT S UCH PAYMENT IS NOT RECORDED IN THE BOOKS. THE ENQUIRIES MADE BY THE A.O. HAVE N OT BROUGHT ANYTHING ON RECORD THAT PAYMENT HAS ALREADY BEEN MADE BUT SUNDR Y CREDITOR WAS PERSISTED WITH IN THE ACCOUNTS. IDENTITY OF THE TRANSACTING P ARTY IS ESTABLISHED DUE TO SALE TAX REGISTRATION AND GENUINENESS OF PURCHASES HAS T O BE ACCEPTED IN VIEW OF STAMP BILL COPY ISSUED BY RAJASTHAN SALES TAX OFFIC E. THE TRANSACTIONS WERE RECORDED BOTH BY THE RAJASTHAN SALES TAX AUTHORITY AND BY THE WEST BENGAL SALES TAX AUTHORITY. IN VIEW OF THE EVIDENCES SUBMI TTED IT IS HELD THAT THE ACTION OF THE A.O. WAS NOT PROPER. THE ADDITION MAD E IS THEREFORE DELETED. THESE GROUNDS OF THE APPELLANT ARE ALLOWED. 9.1 SIMILAR DETAILS WERE FURNISHED IN RESPECT OF OT HER THREE PARTIES AND IN THAT REGARD LD. CIT(A) HAS OBSERVED IN PARA 4.3 AS UNDER :- 4.3. I HAVE GONE THROUGH THE FACTS OF THE CASE, OB SERVATION OF THE A.O. AND SUBMISSION OF THE A/R. THE FACTS IN THIS CASE ARE I DENTICAL TO THE FACTS FOR GR. NO. 3 & 4, EXCEPT THAT THIS TRANSACTION PERTAINS TO THE CURRENT YEAR. FOR THE REASONS MENTIONED IN MY DECISION FOR GR. NO. 3 & 4, WHICH ARE EQUALLY APPLICABLE TO THESE GROUNDS I.E. 5 & 6, 7 & 8, 9 & 10, THE ADDITION MADE BY THE A.O. TREATING SUNDRY CREDITORS IN RESPECT OF M/S. A.N. MARBLES (RS.1,37,904/-), M/S. PRIYANKA MARBLES (RS.1,37,904/-) & M/S. ANGIL MARBLES (RS.1,51,182/-) IS DELETED. THESE GROUNDS OF THE APPELLANT ARE ALLOWED . 10. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT LD. CIT(A) SHOULD HAVE REMITTED THE ISSUE TO ASSESSING OFFICER AS FRESH DETAILS ARE FIL ED BY ASSESSEE. 11. LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT PURCHASES HAVE BEEN ACCEPTED BY THE DEPARTMENT, PART PAYMENT WAS MADE I N THE YEAR OF PURCHASE ITSELF. LD. COUNSEL FURTHER SUBMITTED THAT THE DETAILS OF PURCHASES MAD E BY THE ASSESSEE ARE AT PAGES 23 & 24 OF THE PAPER BOOK. PAYMENTS BEEN MADE IN THE VERY YEAR OF PURCHASE. LD. COUNSEL FURTHER REFERRED TO PAGES 81 TO 83 OF THE PAPER BOOK WHEREIN ASSESSMENT ORDER FOR 2006-07 IS CONTAINED TO DEMONSTRATE THAT NO ADDITION HAD BEEN MADE IN THE P AST UNDER SIMILAR CIRCUMSTANCES IN RESPECT OF SUNDRY CREDITORS. 12. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORDS OF THE CASE. THE ASSESSEE WAS CARRYING ON THE BUSINESS OF DEALING IN MARBLE. ALL THE IMPUGNED ITA NO. 1538/KOL/2010 6 SUNDRY CREDITORS WERE IN RESPECT OF SUPPLY MADE BY THE RESPECTIVE PARTIES OF MARBLE. THE ASSESSEE PRODUCED ALL THE NECESSARY DETAILS TO SUBSTANTIATE THE TRANSACTIONS AS NOTICED IN LD. CIT(A)S ORDER. NONE OF THE DETAILS HAVE BEEN CONTROVERTED B Y THE DEPARTMENT. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A ). THIS GROUND IS DISMISSED. 13. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISM ISSED SUBJECT TO ABOVE OBSERVATIONS. 0 0 0 0 '1 '1 '1 '1 2 1% 3 4 2 1% 3 4 2 1% 3 4 2 1% 3 4 5' 5' 5' 5' ORDER PRONOUNCED IN THE COURT ON 19. 08. 2011. SD/- SD/- [ . . . . . . . . , ,, , ] [ . . . . . .. . ! ! ! ! , ' ' ' ' ] [ B. R. MITTAL ] [ S.V. MEHROTRA ] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (5' 5' 5' 5') )) ) DATED : 19TH AUGUST, 2011. 0 8 .9 :9(/ COPY OF THE ORDER FORWARDED TO: 1. +, /APPELLANT : INCOME TAX OFFICER/WARD-53(3), AAYAKA R BHAWAN, (DAKSHIN), 2, GARIAHAT ROAD (SOUTH), KOLKATA-700 068. 2 ./+, / RESPONDENT : KUNAL GANERIWALA, PROP. OF BALAJI M ARBLES, P-30, TARATALA ROAD, KOLKATA-70 0 088. 3. 0% / CIT, 4. 0% ()/ CIT(A), KOLKATA. 5. '3 .%/ DR, KOLKATA BENCHES, KOLKATA [/9 ./ TRUE COPY] 0%1/ BY ORDER, #A /ASSTT REGISTRAR [KKC 'BC %DA E' /SR.PS]