Smt. Alka Gupta, Kolkata V. ITO, Ward -44(2), Kolkata, Kolkata

ITA 1539/KOL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1234 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 25-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SOUMITRA CHOUDHARY
• Keywords: Rejection of books of accounts
• Section: 143(3); 234B; 133(6); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B, KOLKATA BEFORE SH. A.T.VARKEY, JUDICIAL MEMBER AND DR. A.L.SAINI, ACCOUNTANT MEMBER ./ ITA NO.1539/KOL/2016 [ / ASSESSMENT YEAR: 2010-11] SMT. ALKA GUPTA, M/S. ABHISHEK ENTERPRISES, T/2A/1, GURUDAS DUTTA GARDEN LANE, KOLKATA-700067. PAN-ACZPG9407A VS ITO, WARD-44(2), 3, GOVT. PLACE (WEST), KOLKATA-700007. (APPELLANT) (RESPONDENT) APPELLANT BY SOUMITRA CHOUDHARY, ADVOCATE RESPONDENT BY KAPIL MONDAL, JCIT SR DR /DATE OF HEARING 19.09.2018 /DATE OF PRONOUNCEMENT 28.11.2018 / O R D E R PER DR.A.L.SAINI, AM THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAINING TO AY 2010-11, IS DIRECTED AGAINST AN ORDER DATED 28.03.2016 PASSED BY CIT(A)-13, KOLKATA IN APPEAL NO.-25/CIT(A)-13/W-44(2)/KOL/2014-15 WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) DATED 28.03.2013. 2. THE GRIEVANCES RAISED BY THE ASSESSEE ARE AS FOLLOWS:- 1. FOR THAT ON THE FACTS OF THE CASE, THE ORDER PASSED BY THE LD.CIT(A) IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 2. FOR THAT ON THE FACTS OF THE CASE, THE LD.CIT(A) WAS WRONG IN 1 DITTOING THE ORDER OF THE AO AND CONFIRMING THE ADDITION OF GROSS PROFIT RATE @ 1.33% ON SALES AMOUNTING TO RS.108,576/- AS INCOME WHICH IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 3. FOR THAT ON THE FACTS OF THE CASE, THE LD.CIT(A) WAS WRONG IN NOT CONSIDERING THE FACTS THAT WITHOUT REJECTING THE BOOKS OF ACCOUNTS AND WITHOUT APPLYING SECTION U/S 145(3) OF THE I.T.ACT HAS ESTIMATED THE GROSS PROFIT RATE ON SALE AT RS.108,576/- WHICH IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 4. FOR THAT ON THE FACTS OF THE CASE, THE LD.CIT(A) WAS WRONG IN DITTOING THE ORDER OF THE A.O. AND CONFIRMING THE ADDITION OF RS.21,91,477/- AS UNEXPLAINED PURCHASE WHICH IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 5. FOR THAT ON THE FACTS OF THE CASE, THE LD. CIT(A) WAS WRONG IN DITTOING THE ORDER OF THE AO AND CONFIRMING THE ADDITION OF BANK INTEREST AMOUNTING TO RS.50,657/- AS INCOME WHICH IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 6. FOR THAT ON THE FACTS O THE CASE, THE LD.CIT(A) WAS WRONG IN DITTOING THE ORDER OF THE A.O. AND CONFIRMING THE ADDITION OF SUNDRY DEBTORS AMOUNTING TO RS.15,06,742/- WHICH IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 7. FOR THAT ON THE FACTS OF THE CASE, THE LD.CIT(A) WAS WRONG IN DITTOING THE ORDER OF THE AO AND CONFIRMING THE ADDITION OF RS.7,60,070/- AS UNEXPLAINED PURCHASE WHICH IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 2 8. FOR THAT ON THE FACTS OF THE CASE, THE LD.CIT(A) WAS WRONG IN DITTOING THE ORDER OF THE AO AND CONFIRMING THE ADDITION OF CASH PURCHASE AMOUNTING TO RS.188,604/- FOR NON-PRODUCTION OF BOOKS OF ACCOUNTS, ALTHOUGH THE BOOKS WERE PRODUCED, THEREFORE, THE WHOLE ADDITION IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 9. FOR THAT ON THE FACTS OF THE CASE, THE LD.CIT(A) WAS WRONG IN UPHOLDING MAKING ADHOC DISALLOWANCE OF 20% FROM VARIOUS EXPENSES ON ESTIMATE BASIS AMOUNTING TO RS.32,127/- WHICH IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 10. FOR THAT THE CHARGING INTEREST U/S 234B AND 234D IS MECHANICALLY WRONG AND ILLEGAL. 11. FOR THAT THE APPELLANT RESERVES THE RIGHT TO ADDUCE ANY FURTHER GROUND OR GROUNDS, IF NECESSARY, ON OR BEFORE THE HEARING OF THE APPEAL. 3. GROUND NO.1 IS GENERAL IN NATURE, IS NOT PRESSED AND DISMISSED. GROUND NOS. 2 & 3 ARE AGAINST THE ACTION OF CIT(A) IN CONFIRMING THE AOS ORDER WHEREIN THE AO HAS CALCULATED THE GROSS PROFIT ON ESTIMATE BASIS @ 1.33 % ON SALE DIFFERENCE FROM THE BANK STATEMENTS, THAT IS RS.1,08,576/- (RS.81,63,607/- X 1.33% G.P.). 4. BRIEF FACTS OF THE ISSUE, WHICH CAN BE STATED QUITE SHORTLY ARE AS FOLLOWS:-THE ASSESSEE MAINTAINS AN OD (OVERDRAFT FACILITY) IN ORIENTAL BANK OF COMMERCE, FOR WHICH ASSESSEE SUBMITTED, STOCK STATEMENT, PROFIT & LOSS ACCOUNT, BALANCE SHEET BEFORE THE BANK. THESE STOCK STATEMENTS, PROFIT & LOSS ACCOUNT AND BALANCE SHEET WERE REQUISITIONED FROM BANKING AUTHORITIES 3 AND VERIFIED BY LD.AO DURING THE ASSESSMENT PROCEEDINGS. DURING VERIFICATION OF STOCK STATEMENT, SOME DISCREPANCIES WERE DETECTED AND NOTED BY LD.AO, WHICH ARE AS FOLLOWS:_ (I) SALES DIFFERENCE DURING THE MONTH OF MARCH, 2010 RS.81,63,607/-; (II) PURCHASE DIFFERENCE DURING THE MONTH OF MARCH, 2010 RS.21,91,477/- SINCE THE ASSESSEE DID NOT EXPLAIN THE DIFFERENCE OF PURCHASES OF RS.21,91,477/-, THEREFORE, LD.AO MADE ADDITION, TREATING AS UNEXPLAINED PURCHASE OF RS.21,91,477/- TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE HAS RAISED SEPARATE GROUND NO.4 AGAINST UNEXPLAINED PURCHASES OF RS.21,91,477/-. THE ASSESSEE ALSO DID NOT EXPLAIN THE SALE DIFFERENCE OF RS.81,63,607/- , THEREFORE, LD. AO APPLYING THE G.P. RATE @ 1.33% MADE ADDITION TO THE TUNE OF RS.1,08,576 (I.E. 1.33% OF RS.81,63,607/-). AGGRIEVED BY THE ORDER OF LD.AO, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD.CIT(A) WHO HAS CONFIRMED THE ADDITION MADE BY AO, HOLDING THAT ADDITION ON UNACCOUNTED SALES CAN BE MADE WITHOUT REJECTING BOOKS OF ACCOUNTS. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEE IS ENGAGED IN TRADING BUSINESS UNDER THE NAME AND STYLE OF M/S. ABHISHEK ENTERPRISES. THE AO HIMSELF HAS ACKNOWLEDGED THE FACT THAT THE ASSESSEE HAS PRODUCED THE DETAILS OF OPENING/CLOSING STOCK, PURCHASES, SUNDRY DEBTORS & CREDITORS, COPY OF LEDGER ACCOUNT, EVIDENCE OF PAYMENT MADE TO SUNDRY CREDITORS IN 4 SUBSEQUENT PERIOD ETC. THE ASSESSEE ALSO PRODUCED THE STATEMENT OF ORIENTAL BANK OF COMMERCE, SALT LAKE BRANCH, KOLKATA (IN SHORT OBC) WHEREIN THE ASSESSEE HAD AN ACCOUNT. AFTER PERUSING THE SAME, THE AO ISSUED NOTICE U/S 133(6) TO THE SUNDRY CREDITORS, SUNDRY DEBTORS. THE AO HIMSELF ACKNOWLEDGES THAT CONFIRMATIONS HAVE NOT BEEN RECEIVED FROM MANY PARTIES. HOWEVER, IT HAS BEEN STATED BY THE AO THAT THERE WERE CERTAIN DISCREPANCIES WHICH THE ASSESSEE WAS ASKED TO RECONCILE. THEREAFTER, THE AO HAS TAKEN NOTE OF THE OD ACCOUNT MAINTAINED BY THE ASSESSEE IN OBC FROM WHERE THE AO NOTED THAT THERE WAS A SALES DIFFERENCE DURING THE MONTH OF MARCH 2010 OF RS.81,63,607/- AND PURCHASE DIFFERENCE DURING THE MONTH OF MARCH 2010 OF RS.21,91,477/- TAKING NOTE OF THIS DISCREPANCY, THE AO ADDED THE ENTIRE DIFFERENCE OF PURCHASE AS UNEXPLAINED PURCHASES (WHICH THE ASSESSEE HAS CHALLENGED SEPARATELY BY GROUND NO.4) AND THE SALE DIFFERENCE WAS TAKEN NOTE AT RS.81,63,607/- FOR WHICH HE APPLIED A G.P. RATE MENTIONED IN 3CB FORM @ 1.33 % AND ADDED AN AMOUNT OF RS.1,08,576/- (1.33% OF RS.81,63,607/-). ON APPEAL, CIT(A) HAS CONFIRMED IT. LD. AR DREW OUR ATTENTION TO PAGE 25 OF THE PAPER BOOK WHEREIN WE NOTE THAT THE ASSESSEE HAD SHOWN A SALE OF RS.10.75 CRORES AND ON PERUSAL OF THE PAGE 27 WHICH IS OBCS, OD ACCOUNT DETAILS HAVE BEEN GIVEN. ON PERUSAL OF THE SAME, IT IS NOTED THAT GROSS SALES IS NOTED AS RS.1.39 CRORES. TAKING NOTE OF THE DIFFERENCE IN THE OD ACCOUNT, THE AO HAS MADE ADDITION OF G.P RATE OF 1.33%. WE FURTHER NOTE THAT THE AO HAS NOT BOTHER TO VERIFY THE VERACITY OF THE DOCUMENT PLACED AT PAGE 27 AS TO WHETHER THE SALES SHOWN IN THE OD ACCOUNT IS SACROSANCT OR NOT. THE ASSESSEE HAS BEEN MAINTAINING BOOKS OF ACCOUNTS AND ITS ACCOUNTS ARE AUDITED. NO DEFECTS HAVE BEEN POINTED OUT IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNTS WHICH CAN BE DONE AS PER SECTION 145(3) OF THE ACT 5 AND RESORTED TO BEST JUDGEMENT ASSESSMENT U/S 144 OF THE ACT. THE AO COULD NOT HAVE RESORTED TO ESTIMATION WITHOUT RESORTING TO THE PROCEDURE STIPULATED U/S 145(3) OF THE ACT. THEREFORE, GIVING WEIGHTAGE TO THE OD ACCOUNT FIGURES, THE AO COULD NOT HAVE MADE THE ADDITION. THEREFORE, WE FIND FORCE IN THE GROUNDS RAISED ON BEHALF OF THE ASSESSEE AND WE DELETE THE ADDITION OF RS.1,08,576/-. 6. GROUND NO.4 IS AGAINST THE ACTION OF CIT(A) IN CONFIRMING THE ACTION OF THE AO IN RESPECT TO THE ADDITION MADE OF RS.21,91,477/- AS UNEXPLAINED PURCHASES. 7. BRIEF FACTS HAVE ALREADY BEEN MENTIONED BY US IN PARA NO.4 OF THIS ORDER, ABOUT THIS IMPUGNED ADDITION. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORISES BELOW, WHEREAS LD.DR RELIED ON THE ORDER OF LD.AO. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS LEADING TO THIS CASE IS SIMILAR TO THE ONE WHICH IS STATED IN GROUND NOS. 2 & 3 AND IS NOT REPEATED FOR THE SAKE OF BREVITY. TAKING NOTE OF THE MIS-MATCH BETWEEN THE OD ACCOUNT PLACED AT PAGE 27 OF THE P.B AND BOOKS MAINTAINED BY THE ASSESSEE, THE AO TAKING NOTE OF THE DIFFERENCE IN PURCHASES SHOWN BY THE ASSESSEE HAS COME TO THE CONCLUSION THAT THE DIFFERENCE IN PURCHASES SHOWN IN THE OD ACCOUNT IS FROM THE UNDISCLOSED INCOME AND MADE THE ADDITION. WE NOTE THAT THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNTS AND HAS ACCEPTED THE BOOKS AND THE AO HAD INQUIRED FROM THE SUNDRY CREDITORS AND HAS NOT FOUND ANY DEFECTS IN THE BOOKS OF THE ACCOUNTS. WITHOUT DOING SO, THE AO OUGHT NOT TO HAVE ADDED THE PURCHASES ON THE DIFFERENCE BETWEEN THE OD ACCOUNT AND THE BOOKS MAINTAINED BY THE ASSESSEE. THE AO HAS NOT MADE ANY VERIFICATION 6 FROM THE BANK AS TO THE VERACITY OF THE FIGURES REFLECTED IN THE OD ACCOUNT AND WITHOUT REJECTING THE BOOKS COULD NOT HAVE MADE THE ADDITION, THEREFORE, WE DIRECT THE LD.AO TO DELETE THE ADDITION OF RS.21,91,477/-. 9. GROUND NO.5 IS NOT PRESSED BY THE ASSESSEE, THEREFORE, WE DISMISS GROUND NO.5 AS NOT PRESSED. 10. GROUND NO.6 IS AGAINST THE ACTION OF CIT(A) CONFIRMING THE ADDITION MADE BY THE AO IN RESPECT TO THE ADDITION OF RS.15,06,742/- ON ACCOUNT OF SUNDRY DEBTORS, SINCE THE CONFIRMATION DID NOT COME FROM THE SUNDRY DEBTORS. 11. BRIEF FACTS QUA THE ISSUE IS THAT DURING THE ASSESSMENT PROCEEDINGS, LD.AO SENT NOTICES U/S 133(6) OF THE ACT TO SUNDRY DEBTORS ON TEST CHECK BASIS. ONE OF THE SUNDRY DEBTORS, NAMELY M/S. NORTH WEST ENGG. CO. DID NOT REPLY THE NOTICE U/S 133(6) OF THE ACT, THEREFORE, LD.AO MADE ADDITION TO THE TUNE OF RS.15,06,742/-. ON APPEAL, LD.CIT(A) HAS CONFIRMED THE ADDITION. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AO HAS MADE THE ADDITION ON THE REASONING THAT THE SUNDRY DEBTORS HAS NOT CONFIRMED THE SAID AMOUNT IN RESPONSE TO THE NOTICE U/S 133(6) OF THE ACT. LD. COUNSEL DREW OUR ATTENTION AT PAGE 13 OF THE PAPER BOOK, WHEREIN WE NOTE THAT THE SUNDRY DEBTORS NORTH EAST ENGINEERING CO. P.LTD. HAS CONFIRMED THE AMOUNT OF RS.15,06,742/- AS OWED TO THE ASSESSEE. IN SUCH A SCENARIO, THE ADDITION CANNOT BE SUSTAINED AND WE DIRECT THE AO, TO DELETE THE ADDITION OF RS.15,06,742/-. 13. GROUND NO.7 IS AGAINST THE ACTION OF CIT(A) CONFIRMING THE AOS ACTION OF RS.7,60,070/- AS UNEXPLAINED PURCHASE. 7 14. THE BRIEF FATS QUA THE ISSUE ARE THAT, DURING THE ASSESSMENT PROCEEDINGS, THE LD.AO SENT NOTICES U/S 133(6) OF THE ACT, ON TEST CHECK BASIS, TO VERIFY THE GENUINENESS OF PURCHASES. THE FOLLOWING PARTIES DID NOT RESPOND TO THE NOTICES U/S 133(6) OF THE ACT:- (I) M.B. ENTERPRISES RS.3,32,046/- (II) RAHUL JAIN RS.4,25,024/- TOTAL RS.7,57,070/- WE NOTE THAT IN GROUND NO.7, THE ASSESSEE HAS INADVERTENTLY MENTIONED AMOUNT AT RS.7,60,070/-, IT SHOULD BE READ AS RS.7,57,070/-. THE LD.AO MADE ADDITION OF RS.7,57,070/- AS THE ABOVE-MENTIONED PARTIES DID NOT RESPOND NOTICES U/S 133(6) OF THE ACT. ON APPEAL, LD.CIT(A) CONFIRMED THE ADDITION. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE LD. COUNSEL HAS DREW OUR ATTENTION TO PAGE 14 & 15 OF THE PAPER BOOK WHEREIN WE NOTE THAT THE M.B. ENTERPRISES HAS CONFIRMED AN AMOUNT OF RS.3,32,046/- AND M/S RAHUL JAIN HAS CONFIRMED AN AMOUNT OF RS.4,25,024.60. HENCE, CONFIRMATION FROM THE PARTIES WERE ON RECORD; THEREFORE, THERE SHOULD NOT BE ADDITION. LD.AO IS DIRECTED TO DELETE THE ADDITION OF RS.7,57,070/-. 16. GROUND NO.8 IS AGAINST THE ACTION OF CIT(A) IN CONFIRMING THE ORDER OF THE AO IN RESPECT OF THE ADDITION MADE ON CASH PURCHASE OF RS.1,88,604/-. 17. BRIEF FACTS QUA THE ISSUE IS THAT LD.AO MADE ADDITION OF RS.1,88,604/- ON ACCOUNT OF CASH PURCHASES, AS THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNTS DURING THE ASSESSMENT PROCEEDINGS. ON APPEAL, LD.CIT(A) CONFIRMED THE ADDITION SO MADE BY LD.AO. AGGRIEVED, THE ASSESSEE 8 IS IN APPEAL BEFORE US. 18. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE LD. AO MISUNDERSTOOD THE FACTS AND MADE THE ADDITION ON ACCOUNT OF CASH PURCHASE OF RS.1,88,604/-. SINCE THE ASSESSEE HAS PRODUCED ALL THE BOOKS OF ACCOUNTS AND ALL OTHER DETAILS BEFORE THE AO WHICH HAVE BEEN ACKNOWLEDGED BY THE AO IN PAGE NO.1 OF HIS ASSESSMENT ORDER. THIS ADDITION WHICH HE HAS MADE ON THE BASIS THAT THE ASSESSEE HAS FAILED TO PRODUCE BOOKS OF ACCOUNTS, IS ARBITRARY AND THE ADDITION SO MADE OUGHT TO BE DELETED. ACCORDINGLY, WE DELETE THE ADDITION OF RS.188,604/-. 19. GROUND NOS.9 AND 10 ARE IN RESPECT OF ADHOC DISALLOWANCE OF 20% FROM VARIOUS EXPENSES CLAIMED BY THE ASSESSEE. 20. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEE HAD CLAIMED CERTAIN EXPENSES WHICH THE AO HAS DISALLOWED 20% OF IT ON THE REASONING THAT THE ASSESSEE HAS PRODUCED ONLY SELF-MADE VOUCHERS. WE CANNOT COUNTENANCE SUCH ACTION OF THE AO. THE ASSESSEE HAS PRODUCED BOOKS AND ALL OTHER DOCUMENTS AS HE HAS ACKNOWLEDGED THE SAME IN THE ASSESSMENT ORDER WITHOUT REJECTING THE BOOKS OF ACCOUNTS. THE AO CANNOT MAKE ADHOC DISALLOWANCE WITHOUT REJECTING BOOKS OF ACCOUNTS. IT IS TRUE THAT AO HAS POWER TO DISALLOW EXPENDITURE CLAIMED ITEMS-WISE BUT HE CANNOT MAKE ADHOC DISALLOWANCE WHICH IS ARBITRARILY IN NATURE AND THEREFORE, WE DIRECT TO DELETE THE ADDITION MADE ON THIS COUNT. 21. GROUND NO.11 RAISED BY THE ASSESSEE IS CONSEQUENTIAL IN NATURE AND DOES NOT REQUIRE ADJUDICATION. 9 22. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.11.2018. SD/- SD/- (A.T.VARKEY ) (A.L.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 28/11/2018 *AMIT KUMAR* COPY OF THE ORDER FORWARDED TO : 1. /THE APPELLANT- SMT. ALKA GUPTA, M/S. ABHISHEK ENTERPRISES, T/2A/1, GURUDAS DUTTA GARDEN LANE, KOLKATA-700067. 2. / THE RESPONDENT-ITO, WARD-44(2), 3, GOVT. PLACE (WEST), KOLKATA-700007. 3. ( ) / THE CIT(A) 4. / CIT 5. , / DR, ITAT, KOLKATA 6. / GUARD FILE. AR/H.O.O ITAT, KOLKATA 10