Mohan Cloth Stores, Kolkata V. A.C.I.T., Cir -2, Asansol, Asansol

ITA 1554/KOL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2559 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 06-05-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 03-09-2009
• Court: TRIBUNAL
• Department Lawyers: SANJAY BARADR
• Assessee Lawyers: ARVIND AGRAWAL
• Keywords: Corroborative evidences; TDS; Set aside

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH - C , KOLKATA ( ) BEFORE . . , , SHRI D.K.TYAGI, JUDICIAL MEMBER. /AND . . , , SHRI C.D. RAO, ACCOUNTANT MEMB ER . / I.T.A.NO. 1554/KOL/2009 / ASSESSMENT YEAR 2005 - 06 MOHAN CLOTH STORES, C/O. ARVIND AGRAWAL,ADVOCATE, 7A, KIRAN SHANKAR ROY ROAD, 2 ND FLOOR, KOLKATA 700 001. PAN - AAEFM 4291 K - - - VERSUS - . ACIT, CIRCLE 2, PARMAR BUILDIN G, G.T.ROAD (WEST) ASANSOL 713304 ( / A PPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI ARVIND AGRAWAL, AR / FOR THE RESPONDENT : / SHRI SANJAY BARA,DR / ORDER . . , , SHRI C.D. RAO, ACCOUNTANT MEMBER . THE ASSESSEE HAS FILED THIS APPEAL AGAINST ORDER DT.10.7.2009 OF THE COMMISSIONER OF INCOME - TAX (APPEALS), ASANSOL FOR THE ASSESSMENT YEAR 2005 - 06. 2. THE ASSESSEE HAS TAKEN AS MANY AS 12 GROUNDS OF APPEAL IN THE GR OUNDS APPEAL APPENDED TO THE MEMORANDUM OF APPEAL, MOST OF WHICH ARE NARRATIVE AND GENERAL IN NATURE. HOWEVER, AT THE TIME OF HEARING, THE LEARNED AR OF THE ASSESSEE DID NOT PRESS GROUND NO.9 DISPUTING THE DISALLOWANCE TO THE EXTENT OF 10% OUT OF CLAIM UND ER THE HEADS - SHOP EXPENSES, TRAVELLING EXPENSES, TELEPHONE EXPENSES AND MOTOR CAR EXPENSES. THEREFORE, WE DISMISS GROUND NO.9 AS NOT PRESSED. 3. THE ONLY ISSUE IN REMAINING GROUNDS OF APPEAL , WHICH IS DISPUTED BY THE ASSESSEE IN THE PRESENT APPEAL IS AG AINST ENHANCEMENT OF RS.40,55,790 TO THE INCOME AS MADE BY THE LEARNED CIT(A) (I.E., RS.18,54,925 MADE ON ACCOUNT OF ESTIMATION OF NET PROFIT + RS.5,15,000 UNSECURED LOAN CREDITS + RS.16,85,864 FOR WANT OF SOURCE OF REPAYMENT OF THE UNSECURED LOANS) . / I.T.A.NO.1554/KOL/2009 2 4 . TH E ASSESSEE WAS A CLOTH MERCHANT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION . IN THIS CASE, A SURVEY U/S.133A OF THE I.T.ACT,1961 WAS CONDUCTED ON 18.11.2005 AT THE BUSINESS PREMISES OF THE ASSESSEE AND BOOKS OF ACCOUNT AND OTHER RELEVANT PAPERS WERE FOU ND AND IMPOUNDED. THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.10.2005 DECLARING TAXABLE INCOME FOR RS.1,12,870. ASSESSMENT U/S.143(3) WAS COMPLETED ON A TOTAL INCOME OF RS.1,79,700 AFTER DISALLOWANCE TOTALING TO RS.66,830.00 TOWARDS THE CLAIM OF SHOP EXP ENSES, TRAVELLING EXPENSES, TELEPHONE CHARGES AND MOTOR CAR EXPENSES. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL, THE LEARNED CIT(A) REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED NET PROFIT @5% AS AGAINST THE DISCLOSED NET PROFIT @ 1.26% (BEFORE INTEREST AND R EMUNERATION TO PARTNERS), WHICH RESULTED IN ENHANCEMENT TO THE INCOME BY RS.18,54,297. THE LEARNED CIT(A) OBSERVED THAT THE ASSESSEE FAILED TO PRODUCE ANY SOURCE OF ADDITION IN UNSECURED LOAN OF RS.5,15,000 AND SOURCE OF REPAYMENT OF UNSECURED LOAN OF RS.1 6,85,864. ON THE GROUND THAT THE ASSESSEE FURNISHED A REPLY BEFORE HIM WHICH IS GENERAL IN NATURE AND NOT SPECIFIC AND THE ASSESSEE FAILED TO PRODUCE THE DATE - WISE AND AMOUNT - WISE DETAILS OF THE REPAYMENT ALONGWITH THEIR SOURCES, THE LEARNED CIT(A) ADDED T HE AMOUNT OF RS.22,00,864 (I.E, RS.5,15,000 + 16,85,864) TO THE TOTAL INCOME U/S.68 OF THE INCOME - TAX ACT,1961. AGGRIEVED, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 5. THE LEARNED AR OF THE ASSESSEE CONTENDED BEFORE US THAT THE ASSESSEE FILED AP PEAL BEFORE THE CIT(A) ON 29.1.2008. HEARING OF THE APPEAL WAS COMPLETED ON 13.10.2008 AND NO QUERIES REMAINED TO BE ANSWERED. BUT SUDDENLY IN FIRST WEEK OF APRIL,2009 ASSESSEE RECEIVED A NOTICE OF ENQUIRY CUM SHOW CAUSE NOTICE FOR ENHANCEMENT OF INCOME U/ S.251(2) OF THE ACT. THE ASSESSEE FILED DETAILED REPLIES TO THE VARIOUS QUERIES RAISED IN THE SAID NOTICE ON 11.5.2009. ON 18.6.2009 THE ASSESSEE SUBMITTED AVAILABLE DOCUMENTS ALONGWITH SUBMISSION IN RECEIVING COUNTER. A LETTER WAS ALSO FILED ON23.6.2009 F OR FIXING ANOTHER DATE OF HEARING BUT NO OTHER PERSONAL HEARING WAS ALLOWED AND APPELLATE ORDER WAS PASSED ON 10.7.2009 ENHANCING TOTAL INCOME OF RS.40,55,790 , WHICH IS NOT JUSTIFIED. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE BOOKS OF ACCOUNT HAVE BEEN REJECTED BY THE LEARNED CIT(A) MERELY ON PRESUMPTION AND ASSUMPTION. AS REGARDS THE / I.T.A.NO.1554/KOL/2009 3 ADDITION OF RS.5,15,000 ON ACCOUNT OF FRESH UNSECURED LOANS, THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT AFFIDAVITS FROM ALL THE SIX LOAN CREDITORS, WHO ARE ASSESSED TO INCOME - TAX, ALONGWITH XEROX COPIES OF THEIR BALANCE SHEETS AS ON 31.3.04 AND 31.3.2005, CONFIRMATIONS OF LOAN, COMPUTATION OF INCOME AND ACKNOWLEDGEMENT FOR FILING OF RETURN OF INCOME WERE FILED BEFORE THE LEARNED CIT(A). ALL SUCH DETAILS EXCEPT AFFIDA VITS FROM LOAN CREDITORS WERE ALSO FILED BEFORE THE ASSESSING OFFICER. FURTHER, HE CONTENDED THAT THE LEARNED CIT(A) DID NOT DISCUSS THE REASON FOR NON - ACCEPTANCE OF SOURCE FOR EACH LOAN CREDITOR, BUT HAS MADE THE ADDITION MERELY GIVING GENERAL OBSERVATIO N. IN RESPECT OF ADDITION OF RS.16,85,864 THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE SAID SUM WAS REPAID TO EXISTING LOAN CREDITORS THROUGH ACCOUNT PAYEE CHEQUES, WHICH ARE DULY REFLECTED IN THE BOOKS OF ACCOUNTS. SOURCE OF DEPOSITS IN BANKS WERE DU LY EXPLAINED. COPIES OF BANK STATEMENTS AND BOOKS OF ACCOUNTS WERE AVAILABLE BE FORE THE LEARNED CIT(A) . WITHOUT EXAMINING THE SAME, THE ADDITION MADE BY THE LEARNED CIT(A) IS NOT JUSTIFIED. BEFORE US, THE LEARNED AR OF THE ASSESSEE SUBMITTED COPIES OF ORDE R SHEET NOTING BY CIT(A) DURING APPEAL PROCEEDINGS, EXPLANATION FILED BEFORE THE CIT(A), AUDITED ACCOUNTS AND TAX AUDIT REPORT, AFFIDAVITS, LOAN CONFIRMATION, PERSONAL BALANCE SHEET AS ON 31.3.2004 AND 31.3.2005, PHOTO COPY OF ACKNOWLEDGEMENT FOR FILING RE TURN OF INCOME FOR ASSESSMENT YEAR 2005 - 06 AND COMPUTATION OF INCOME, STATEMENT SHOWING DEPOSITS & WITHDRAWAL ALONGWITH SOURCES OF DEPOSIT AND APPLICATION OF WITHDRAWALS IN DIFFERENT BANKS, DETAILS OF REPAYMENT OF LOAN BANK - WISE, COPY OF CHALLANS IN EVIDEN CE OF PAYMENT OF TDS ON INTEREST PAYMENT TO LOAN CREDITORS, COPY OF PROFIT & LOSS ACCOUNT AND BALANCE SHEET AS ON 31.3.2005 OF BISHESHAWARLA MIHARIA, COPY OF PETITION FOR ADJOURNMENT AND RE - FIXATION OF HEARING FILED BEFORE THE LEARNED CIT(A) ON 23.6.2009. 6. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE IMPUGNED ORDER OF THE LEARNED CIT(A). 7. WE HAVE HEARD BOTH PARTIES AND PERUSED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND ALSO THE PAPERS SUBMITTED BY THE ASSESSEE IN SHAPE OF PAPER BOOK. WE FIND THAT THE LEARNED CIT(A) HAS RAISED PRESUMPTION AND ASSUMPTION IN / I.T.A.NO.1554/KOL/2009 4 RESPECT OF HIS OBSERVATION THAT (I) STOCK WAS NEITHER VERIFIED BY THE AUDITOR NOR BY THE ASSESSING OFFICER, (II) CASH IN HAND WAS ALSO NOT AUDITED BY AUDITOR, (III) REPLIES TO NOTICE U/S.13 3(6) OF THE ACT WERE NOT RECEIVED BY HIM DIRECTLY FROM THE SELLERS BUT THROUGH THE ASSESSEE, (IV) PURCHASES WERE ALSO FROM SISTER CONCERNS AND IMPOUNDED MATERIALS WERE NOT VERIFIED. AS IT APPEARS, THE LEARNED CIT(A) HAS NOT EXAMINED THE DETAILS AS FURNISHE D BY THE ASSESSEE BEFORE HIM IN THIS REGARD. FURTHER, WE FIND THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS BEFORE THE LEARNED CIT(A) EXPLAINING THE ALLEGED FRESH LOAN OF RS.5,15,000 FROM EXISTING LOAN CREDITORS AND REPAYMENT OF RS.16,85,864 OUT OF UNSEC URED LOAN. BUT, AS IT APPEARS THE LEARNED CIT(A) HAS NOT CONSIDERED THE SAME AND EVEN HE HAS NOT CONSIDERED THE AFFIDAVITS OF THE LOAN CREDITORS FILED BEFORE HIM. THE LEARNED CIT(A) HAS ALSO NOT CALLED FOR ANY REMAND REPORT FROM THE ASSESSING OFFICER. THER EFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IN ENTIRETY, WE ARE OF THE CONSIDERED OPINION THAT THE BOOKS OF ACCOUNTS NEED A THOROUGH EXAMINATION BY THE ASSESSING OFFICER IN THE LIGHT OF EVIDENCES AS MAY BE PRODUCED BY THE ASSESSEE IN REGARD TO THE ABOVE DISPUTES. THEREFORE, WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE BOOKS OF ACCOUNT IN THE LIGHT OF THE SUPPORTING EVIDENCES AS MAY BE PRO DUCED BY THE ASSESSEE AND TO PASS A SPEAKING ASSESSMENT ORDER ON THE ABOVE ISSUES INDEPENDENTLY AND FAIRLY AFTER GIVING THE ASSESSEE PROPER OPPORTUNITY. 8. IN THE RESULT, THE APPEAL OF THE ASSESEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 11.06,.2010 SD/ - SD/ - ( . . ) , (D.K.TYAGI), JUDICIAL MEMBER. ( . . ) (C.D. RAO), ACCOUNTANT MEMBER. ( ) DATE : 11.6.2010 ( /) H.K.PADHEE / SNR.PRIVATE SECRETARY. / I.T.A.NO.1554/KOL/2009 5 - COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT : MOHAN CLOTH STORES, C/O. ARVIND AGRAWAL,ADVOCATE, 7A, KIRAN SHANKAR ROY R OAD, 2 ND FLOOR, KOLKATA 700 001. 2 / THE RESPONDENT - ACIT, CIRCLE 2, PARMAR BUILDING, G.T.ROAD (WEST) ASANSOL 713304 3. / THE CIT, 4. ( )/ THE CIT(A), 5. / DR, KOLKATA BENCH 6. GUARD FILE . / TRUE COPY , / BY ORDER , / DEPUTY REGISTRAR .