DCIT, Circle - 11, Kolkata, Kolkata V. M/s. Damodar Developers Pvt. Ltd., Kolkata

ITA 1599/KOL/2011

• Counselvise Citation: 159923514 RSA 2011
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 23-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A P ROY
• Assessee Lawyers: T K CHAKRABORTY; S CHOUDHURY
• Keywords: Unexplained cash credit
• Section: 68; 143(3); 133A

Judgement Text

I.T.A. NO.: 1599/KOL./2011 ASSESSMENT YEAR : 2008-09 PAGE 1 TO 6 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA CORAM : SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI ABRAHAM P. GEORGE (ACCOUNTA NT MEMBER) I.T.A. NO.: 1599/KOL./ 2011 ASSESSMENT YEAR : 2008-2009 DEPUTY COMMISSIONER OF INCOME TAX,......... APPELLANT CIRCLE-11, KOLKATA, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- M/S. DAMODAR DEVELOPERS PVT. LTD.,................. ..........RESPONDENT 84/3, NARESH MITRA SARANI, KOLKATA-700 026 [PAN : AABCD 8985 B] APPEARANCES BY: SHRI A.P. ROY, SR. D.R., FOR THE DEPARTMENT SHRI S. CHOUDHURY AND SHRI T.K. CHAKRABORTY, A.R., FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : DECEMBER 10, 2013 DATE OF PRONOUNCING THE ORDER : DECEMBER 19, 2013 O R D E R PER ABRAHAM P. GEORGE : 1. THIS APPEAL FILED BY THE REVENUE IS AGAINST AN O RDER DATED 5 TH SEPTEMBER, 2011 OF COMMISSIONER OF INCOME TAX (APPE ALS)-XII, KOLKATA FOR ASSESSMENT YEAR 2008-09. 2. GRIEVANCE OF REVENUE IS THAT LD. CIT(APPEALS) ER RED IN DELETING THE ADDITION FOR UNEXPLAINED CASH CREDIT. 3. FACTS APROPOS ARE THAT ASSESSEE, A DEALER IN IND IAN MADE FOREIGN LIQUOR, HAD FILED RETURN FOR THE IMPUGNED ASSESSMEN ET YEAR DECLARING AN INCOME OF RS.97,95,030/-. THERE WAS A SURVEY UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) CARRIED O UT IN THE SHOP AND GODOWN PREMISES OF THE ASSESSEE ON 04.03.2008 AND D URING SURVEY NO PHYSICAL CASH WHATSOEVER WAS FOUND. ONE SHRI PARTHA SARTHI GHOSH, THE DIRECTOR OF THE ASSESSEE-COMPANY STATED THAT NO PHY SICAL CASH AVAILABLE I.T.A. NO.: 1599/KOL./2011 ASSESSMENT YEAR : 2008-09 PAGE 1 TO 6 2 ON 04.03.2008. HOWEVER, FROM THE EXTRACT OF COMPUTE R PRINTOUT, IT WAS NOTED BY THE ASSESSING OFFICER THAT THE TRIAL BALAN CE AND CASH BOOK REFLECTED CASH BALANCE OF RS.3,79,85,384.91 ON 04.0 3.2008. EXPLANATION WAS SOUGHT FROM THE ASSESSEE. AS PER THE ASSESSEE, A LARGE NUMBER OF CASH PAYMENTS WERE MADE FOR EXCISE DUTY, WHICH WERE NOT ENTERED IN THE ACCOUNTS MAINTAINED UNDER TALLY PACKAGE, RESULTING IN EXCESS CASH AS PER CASH BOOK. AS PER THE ASSESSEE, THERE WAS ALWAYS A TIME LAG BETWEEN RECEIPT OF VOUCHERS FOR EXPENSES AND UPLOADING THE RELEVANT ENTRIES. ASSESSEE ALSO PRODUCED A CASH BOOK, IN WHICH THE CA SH BALANCE ON 04.03.2008 WAS RS.75,445/- ONLY. HOWEVER, THE ASSES SING OFFICER REFUSED TO ACCEPT IT CONSIDERING IT TO BE PREPARED AS AN AF TER-THOUGHT. ACCORDING TO HIM, ASSESSEE COULD NOT EXPLAIN THE BALANCE OF R S.3,79,65,399/- AS ON 01.03.2008, APPEARING IN THE CASH BOOK MAINTAINED I N TALLY PACKAGE. HE, THEREFORE, TREATED THE ENTIRE CASH BALANCE AS UNEXP LAINED CASH CREDIT AND MADE AN ADDITION UNDER SECTION 68 OF THE ACT. 4. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE LD. C IT(APPEALS). AS PER THE ASSESSEE, CASH RECEIVED FROM PARTIES, CASH WITH DRAWALS AND CASH DEPOSITS IN BANK ALONGWITH EXCISE DUTY PAYMENTS WOU LD CLEARLY SHOW THAT MANY OF THE ENTRIES FOR PAYMENTS WERE NOT RECORDED IN THE PRINT-OUT, WHICH WAS TAKEN ON 04.03.2008. AS PER THE ASSESSEE, THE PAYMENTS WERE NOT PROPERLY RECORDED AND EVEN DEPOSITS IN THE BANK WERE NOT SHOWN. ASSESSEE STATED THAT A PROPER RECONCILIATION WAS SU BMITTED BEFORE THE ASSESSING OFFICER, BUT HE HAD NOT CONSIDERED IT. AS PER ASSESSEE, CASH WITHDRAWALS FROM BANK AND DEPOSITS WERE COMPLETELY MATCHED AND SECTION 68 COULD NOT HAVE BEEN APPLIED. LD. CIT(APP EALS) SENT THE DOCUMENTS FURNISHED BY THE ASSESSEE RUNNING UPTO 25 0 PAGES ALONGWITH THE RECONCILIATION TO THE ASSESSING OFFICER FOR A R EMAND REPORT. IN THE REMAND REPORT DATED 18.08.2011, THE ASSESSING OFFIC ER STATED THAT LD. A.R. OF THE ASSESSEE HAD APPEARED BEFORE HIM AND HE HAD NO COMMENTS TO OFFER. I.T.A. NO.: 1599/KOL./2011 ASSESSMENT YEAR : 2008-09 PAGE 1 TO 6 3 5. LD. CIT(APPEALS) AFTER EXAMINING THE FOUND THAT THE ASSESSEE HAD PAID EXCISE DUTY OF RS.4,30,42,000/- DURING THE PER IOD 23.10.2007 TO 03.03.2008. CREDIT ENTRIES IN THE CASH BOOK FOR REM ITTANCES ON EXCISE DUTY THOUGH MADE PRIOR TO 04.03.2008 WERE NOT ACCOUNTED ON 04.03.2008, RESULTING IN THE INFLATED CASH BALANCE. AS PER LD. CIT(APPEALS), THERE WAS NO CASE FOR ANY ADDITION UNDER SECTION 68 OF THE AC T, SINCE ASSESSEE HAD DISCHARGED ITS ONUS BY PRODUCING ALL MATERIAL FACTS RELEVANT. HE THUS DELETED THE ADDITION. 6. NOW BEFORE US, LD. DR STRONGLY ASSAILING THE ORD ER OF LD. CIT(APPEALS) SUBMITTED THAT CASH BOOK PRINTOUT TAKE N FROM THE COMPUTER AT THE TIME OF SURVEY ON 04.03.2008 REFLECTED HUGE CASH BALANCE OF RS.3,79,85,384/-. HOWEVER, NO PHYSICAL CASH WHATSOE VER WAS FOUND. THOUGH THE ASSESSEE SUBMITTED VARIOUS RECORDS BEFOR E THE LD. CIT(APPEALS), ASSESSEE COULD NOT SHOW HOW SUCH SUBS TANTIAL CASH BALANCE WAS AVAILABLE IN THE BOOKS AS ON 04.03.2008. THERE WAS NO PROPER RECONCILIATION GIVEN BY THE ASSESSEE. CASH REFLECTE D IN THE CASH BOOK COULD ONLY BE CONSIDERED AS UNEXPLAINED INCOME OR I NCOME FROM UNEXPLAINED SOURCES. IT WAS NOT DISCLOSED TO THE DE PARTMENT. THEREFORE, ACCORDING TO LD. DR, LD. CIT(APPEALS) FELL IN ERROR IN DELETING THE ADDITION. 7. PER CONTRA, LD. AR SUBMITTED THAT THE ASSESSEE HAD INDEED FILED THE SUMMARY AS WELL AS ALL THE DETAILS BOTH BEFORE THE ASSESSING OFFICER AND CIT(APPEALS). ASSESSING OFFICER IN THE REMAND REPOR T HAD NOT BROUGHT OUT ANY INFIRMITY IN THE RECONCILIATION FILED. THEREFOR E, ACCORDING TO HIM, LD. CIT(APPEALS) WAS JUSTIFIED IN DELETING THE ADDITION . 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND FROM THE RECORD THAT PRINTOUT TAKEN FROM THE COMPUTER ON THE DATE OF SURVEY, VIZ. 04.08.2008 REFLECTED A CAS H BALANCE OF RS.3,79,85,384/-. THERE IS NO DISPUTE THAT THE SAID ACCOUNTS WERE MAINTAINED UNDER TALLY SOFTWARE. HOWEVER, THERE WAS NO PHYSICAL CASH AVAILABLE WITH THE ASSESSEE ON THAT DATE. CASE OF T HE ASSESSEE IS THAT A I.T.A. NO.: 1599/KOL./2011 ASSESSMENT YEAR : 2008-09 PAGE 1 TO 6 4 NUMBER OF PAYMENTS AND REMITTANCES, INCLUDING BANK DEPOSITS WERE NOT INCORPORATED IN SUCH BOOKS, RESULTING IN THE ABNORM AL CASH BALANCE. IN SUPPORT OF THIS, ASSESSEE HAD FILED RECONCILIATION AND DOCUMENTS NUMBERING 250 PAGES BEFORE THE LD. CIT(APPEALS). TH IS WAS SENT BY THE LD. CIT(APPEALS) TO THE ASSESSING OFFICER FOR A REMAND REPORT. IN THE REMAND REPORT, THE ASSESSING OFFICER STATED AS UNDER :- IN THIS REGARD, ASSESSEE WAS ASKED TO APPEAR BEFORE THE UNDERSIGNED ON 25.07.2011 AT 11.30 A.M. IN RESPONSE , SHRI BABUL BISWAS, AR OF THE ASSESSEE COMPANY APPEARED A ND STATED THAT ALL DOCUMENTS WHICH WERE SUBMITTED BEFORE THE LD. CIT(A)- XII, KOLKATA, HAD ALREADY BEEN SUBMITTED BEFORE THE AO IN COURSE OF THE ASSESSMENT PROCEEDING. IT IS CLEAR THAT NO NEW DOCUMENTS OR EVIDENCES HAV E BEEN PRODUCED AT THE APPELLATE STAGE AND THE ASSESSING O FFICER HAD PASSED THE ORDER U/S. 143(3) OF THE I.T. ACT. AFTER DULY CONSIDERING ALL THE MATERIAL/EVIDENCES/DOCUMENTS AV AILABLE ON RECORD OR FURNISHED BEFORE HIS BY THE AR OF THE ASS ESSEE COMPANY DURING THE ASSESSMENT PROCEEDING. THEREFORE , I DO NOT HAVE ANY COMMENT TO OFFER IN THIS CASE. THE RECONCILIATION FOR THE DIFFERENCE GIVEN BY THE ASSESSEE READS AS UNDER:- OPENING BALANCE AS ON 23.10.2007......2769362.72 ADD. CASH RECEIPT FROM PARTY(A)........15654860.0 0 ADD. CASH WITHDRAWN FROM BANK(B)..41984670.00 __________________ 60408892.72 LESS: CASH DEPOSITED IN BANK (C)... 15557585.00 LESS: EXCISE DUTY (D+E+F)...............43042000. 00 LESS: OTHER EXPENSES (G).................1733862. 32 ____________________ 60333447.32 CASH BALANCE AS ON 04.03.2008... 75445 .40 ASSESSING OFFICER HAD OFFERED NO COMMENTS ON THE RE CONCILIATION GIVEN BY THE ASSESSEE. IT IS AN ADMITTED FACT THAT THERE WAS NO PHYSICAL CASH FOUND FROM THE ASSESSEES PREMISES ON 04.03.2008. AT THIS JUNCTURE, IT IS NECESSARY TO HAVE A LOOK AT SECTION 68 OF THE ACT, WHICH WAS RELIED UPON BY THE ASSESSING OFFICE FOR MAKING THE ADDITION. TH E SAID SECTION 68 IS REPRODUCED HEREUNDER:- WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO I.T.A. NO.: 1599/KOL./2011 ASSESSMENT YEAR : 2008-09 PAGE 1 TO 6 5 EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION O F THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITE D MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR : PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY (NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTER ESTED), AND THE SUM SO CREDITED CONSISTS OF SHARE APPLICATION M ONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEV ER NAME CALLED, ANY EXPLANATION OFFERED BY SUCH ASSESSEE-CO MPANY SHALL BE DEEMED TO BE NOT SATISFACTORY, UNLESS (A) THE PERSON, BEING A RESIDENT IN WHOSE NAME SUCH CRE DIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS A N EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED, AND (B) SUCH EXPLANATION IN THE OPINION OF THE ASSESSING OF FICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRS T PROVISO SHALL APPLY IF THE PERSON, IN WHOSE NAME THE SUM RE FERRED TO THEREIN IS RECORDED, IS A VENTURE CAPITAL FUND OR A VENTURE CAPITAL COMPANY AS REFERRED TO IN CLAUSE 23FB OF SE CTION10. SECTION 68 CAN BE ROPED IN TO FASTEN A TAX LIABILIT Y ON AN ASSESSEE, ONLY WHEN NO EXPLANATION REGARDING SOURCE OF THE CREDITS HAS BEEN OFFERED. EVEN IF WE PRESUME THAT CASH BALANCE OF RS.3,79,65, 399/- WAS INDEED THERE ON 04.03.2008 THERE IS NO CASE FOR THE REVENU E THAT THE SAID AMOUNT, APPEARING IN THE BOOKS WAS NOT EXPLAINED. T HAT THE BALANCE CASH WAS APPEARING IN THE BOOKS, ITSELF IS SUFFICIENT EV IDENCE TO SHOW THAT IT STOOD EXPLAINED. ASSESSING OFFICER HAS NOT BEEN ABL E TO POINT OUT WHY ANY OF THE ENTRIES IN SUCH CASH BOOK RESULTING IN SUCH CASH BALANCE COULD NOT HAVE BEEN BELIEVED. IN SUCH CIRCUMSTANCES, IN OUR C ONSIDERED OPINION SECTION 68 WAS NOT AT ALL ATTRACTED. WE ARE, THEREF ORE, OF THE OPINION THAT LD. CIT(APPEALS) WAS JUSTIFIED IN DELETING THE ADDI TION. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DAY OF DECEMBER, 2013. SD/- SD/- MAHAVIR SINGH ABRAHAM P. GEORGE (JUDICIAL MEMBER) (ACC OUNTANT MEMBER) KOLKATA, THE 19 TH DAY OF DECEMBER, 2013 I.T.A. NO.: 1599/KOL./2011 ASSESSMENT YEAR : 2008-09 PAGE 1 TO 6 6 COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.