ACIT, Circle - 40, Kolkata, Kolkata V. Smt. Sushila Bansal, Kolkata

ITA 1613/KOL/2010

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7880 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 20-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 12-08-2010
• Court: TRIBUNAL
• Department Lawyers: DAVID Z CHAWNGTHU ACIT
• Assessee Lawyers: KUNTAL KR GOSWAMI
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [BEFORE HONBLE SRI SHAMIM YAHYA, AM & HONBLE SR I GEORGE MATHAN, JM] ITA NO.1613/KOL/2010 ASSESSMENT YEAR : 2006-07 ( APPELLANT ) (RESPONDENT) A.C.I.T., CIRCLE-40, .. -VS- SMT.SUSHILA BANSAL KOLKATA KOLKATA (PAN:AIAPB 6012 H) FOR THE APPELLANT SHRI DAVID Z.CHAWNGTHU, ACIT, SR.DR FOR THE RESPONDENT SHRI KUNTAL KR.GOSWAMI, ADVOCATE DATE OF HEARING : 04.08.2014 DATE OF PRONOUNCEMENT : 04. 08.2014. ORDER PER SHRI SHAMIM YAHYA, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST ORD ER OF LD. C.I.T.(A)- XII, KOLKATA DT. 03.05.2010 AND PERTAINS TO ASSESSMENT Y EAR 2006-07. 2. THE GROUNDS OF APPEAL READ AS UNDER :- 1.FOR THAT THE LD. CIT(A), KOL-XII HAS ERRED IN DE LETING THE ADDITIONS OF RS.59,43,174/- ON A/C OF DIFFERENCE IN CLOSING BALA NCE OF SUNDRY CREDITORS WITHOUT GOING THROUGH THE MERITS OF THE CASE SINCE THE ASSESEE MA INTAINS MERCANTILE SYSTEM OF ACCOUNTING. 2. FOR THAT THE LD. CIT(A), KOL-XII HAS ERRED IN DE LETING THE ADDITIONS OF RS.6,35,763/- ON A/C OF SECURITY DEPOSIT WITHOUT GO ING THROUGH THE MERITS OF THE CASE SINCE DENIAL FROM THE SUNDRY CREDITORS OF RECEIVING ANY SECURITY DEPOSIT IN AS MUCH AS THE ASSESSEE DISCLOSED THE SAID SECURITY DEPOSIT IN THE BALANCE SHEET SEPARATELY AS ASSETS. 3. FOR THAT THE LD. CIT(A), KOL-XII HAS ERRED IN DE LETING THE ADDITIONS OF RS.1,31,175/ ON A/C OF L.I.P. PREMIUM WITHOUT GOING THROUGH THE MERITS OF THE CASE AND/OR BALANCE SHEET OF THE ASSESSEE SUBMISSIONS MA DE BY THE ASSESSEE. 4. FOR THAT YOUR PETITIONER CRAVES LEAVE TO ADDUCE SUCH OTHER GROUND OR GROUNDS AT THE TIME OF HEARING. 3. IN THIS CASE THE AO NOTED THAT IN BALANCE SHEET UNDER THE HEAD SUNDRY CREDITORS AN AMOUNT OF RS.59,67,644/- WAS SHOWN AG AINST THE CREDITOR PARTY NAMED ITA.NO.1613/KOL/2010 SMT.SUSHILA BANSAL,.KOLK ATA A .YR.2006-07 2 M/S.TIGER ASSOCIATES. AGAIN AN AMOUNT OF RS.6,35,76 3/- WAS DISCLOSED UNDER THE HEAD SECURITY DEPOSIT PAID TO THE SAME PARTY M/S.TIGER ASSOCIATES. THE SAID TWO ENTRIES WERE VERIFIED U/S 133(6) OF THE I.T.ACT, 1961. IN C ONFIRMATION THE SAID CREDITOR PARTY INFORMED THE CLOSING BALANCE AS ON 31.3.06 UNDER H EADS SUNDRY CREDITORS RS.24470/-. IN RESPECT OF SECURITY DEPOSIT THEY HAD CONFIRMED T HAT NO SUCH SECURITY DEPOSITS WAS RECEIVED BY THEM FROM THE ASSESSEE. ATTENTION OF TH E ASSESSEE WAS DRAWN TOWARDS THOSE DISCREPANCIES BY THE AO. THE ASSESSEE HAD FUR NISHED AN EXPLANATION WHICH WAS FILED ON 31.12.08 TRYING TO RECONCILE THE DIFFERENC ES. FROM THEIR RECONCILIATION STATEMENT FOLLOWING TABLE WAS MADE. M/S. TIGER ASSOCIATES EXPLANATION FILED ON 31.12.06 LEDGER COPY FILED ON 31.12.06 1. PURCHASE 45,30,528/- 2. PRIZE WINNING TICKETS 12,31,397/- 57,61, 925/- 3. ADD SECURITY DEPOSIT 6,35,763/- 63,97, 688/- ADD-CLOSING BALANCE SHOWN BY TIGER ASSOCIATES AS ON 31.03.06 24,470/- 64,22,1 58/- LESS-PAID ON 31/03/06 4,29,745 /- 59,92,41 3/- LESS-TDS ON COMMISSION DEDUCTED BY THE PARTY 24,769/ - RS.59,67,644/ - PURCHASE FROM 19.03.06 TO 22/003/06 43,61,550/- PRIZE WINNING TICKETS FROM 11/03/06 TO 15/03/06 12,03,500/- RS.55,6 5,050/- AO WAS NOT SATISFIED WITH THE ABOVE RECONCILIATION. HE HELD THAT THE EXPLANATION MADE BY THE ASSESSEE WAS NOT GENUINE. AS SUCH RS.59,67,6 44/- MINUS RS.24470/- = RS.59,43,174/- ON ACCOUNT OF SUNDRY CREDITORS AND R S.6,35,763/- ON ACCOUNT OF SECURITY DEPOSIT WERE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3.1. FURTHERMORE THE AO NOTED THAT IN THE BALANCE S HEET UNDER THE HEAD DRAWING RS.25384/- WAS MADE TOWARDS LIFE INSURANCE PREMIUM. ON EXAMINATION OF ASSESSEES BANK ACCOUNT IN THIS REGARD AO NOTED THAT PAYMENTS TOWARDS LIFE INSURANCE PREMIUM ITA.NO.1613/KOL/2010 SMT.SUSHILA BANSAL,.KOLK ATA A .YR.2006-07 3 WERE RS.156559/-. HENCE HE ADDED THE DIFFERENCE OF RS.1,31,175/- TO THE ASSESSEES INCOME. AGAINST THE ABOVE ORDER ASSESSEE WENT IN APPEAL BEF ORE THE LD. CIT(A). 4. APROPOS ADDITION ON ACCOUNT OF SUNDRY CREDITORS RS.59,43,174/- : ASSESSEE MADE ELABORATE SUBMISSIONS BEFORE THE LD. CIT(A) EX PLAINING THE RECONCILIATION STATEMENTS IN THIS REGARD. THE LD. CIT(A) ALSO OBTA INED REMAND REPORT FROM AO AND HE RECEIVED THE REJOINDER REPORT FROM THE ASSESSEE. CONSIDERING THE ADDITION THE LD. CIT(A) HAS OBSERVED AS UNDER :- THE APPELLANT HAS GIVEN A BREAK-UP DETAIL OF THE S AID DIFFERENCE AMOUNT OF RS.59,43,174/- AS UNDER :- (A) ON ACCOUNT OF PURCHASES : RS.45,30,528/- (B) ON ACCOUNT OF PRIZE WINNING TICKETS :RS.12,31,3 97/- (C) ON ACCOUNT OF SECURITY DEPOSIT : RS. 6,35,763/ - (D) ON ACCOUNT OF TDS : RS. 24,769/- (E) ON ACCOUNT OF PAYMENT :RS. 4,29,745/- TOTAL : RS.59,43,174 /- IN THE REMAND REPORT ALSO, THE A.O. SU PPORTED THE ADDITION MADE ON THIS COUNT, IT IS ALSO MENTIONED IN THE REMAND REPORT THAT UNDE R THE MERCANTILE SYSTEM OF ACCOUNTING, BOTH THE PURCHASE (PARTY SIDE) AS WELL AS THE SALE ENTRIES (APPELLANT SIDE) IS REQUIRED TO BE PASSED IN THE SAME FINANCIAL YEAR. IT FURTHER SAYS THAT THE SUBMISSION OF THE APPELLANT IS NOT VERIFIABLE AS IT CANT BE TALLIED ONE TO ONE ON THE BASIS OF GIVEN DOCUMENTS. I HAVE GONE THROUGH THE A.O.S ORDER, T HE REMAND REPORT AS WELL AS THE APPELLANTS SUBMISSIONS. AS FAR AS THE BOOKING OF P URCHASES AND SALES IN THE SAME ACCOUNTING YEAR IS CONCERNED, THE APPELLANT CANNOT ENFORCE HIS CREDITOR TO BOOK THE SALE IMMEDIATELY ON DISPATCH OF THE LOTTERY TICKETS AND HENCE THE A.O.S OBSERVATION IS NOT LOGICAL. FURTHER, IT ALSO APPEARS THAT THE AO HAS N OT VERIFIED THE COPIES OF LEDGER ACCOUNTS. IN SUPPORT OF HER CLAIM, THE APPELLANT FI LED THE COPY OF CREDITORS LEDGER IN HER BOOKS, COPY OF HER LEDGER IN CREDITORS BOOKS, COPI ES OF RELEVANT RECEIPTED CHALLANS AND COPY OF CONFIRMATION LETTER FROM THE CREDITOR. FROM THE COPIES OF LEDGER ACCOUNTS, AS SUBMITTED BY THE APPELLANT, IT IS FOUND THAT THE APPELLANT IS BOOKING HER PURCHASES IMMEDIA TELY ON RECEIPT OF THE LOTTERY TICKETS. ON VERIFICATION OF THE COPY OF LEDGER ACCOUNT OF CR EDITOR IN THE APPELLANT BOOKS AND THE COPY OF LEDGER ACCOUNT OF THE APPELLANT IN THE CRED ITORS BOOKS, IT IS FOUND THAT THE APPELLANT IS BOOKING HER PURCHASES IMMEDIATELY ON R ECEIPT OF THE LOTTERY TICKETS WHEREAS THE CREDITOR IS BOOKING HIS SALES ONLY AFTER THE DR AW. FROM THE 1 ST SALE ENTRY OF THE RELEVANT FINANCIAL YEAR IN THE BOOKS OF THE CREDITO R IT IS FOUND THAT THE CREDITOR HAS RECORDED THE SAME ON 03.04.2005 OF RS.11,48,400/- W HEREAS THE SAME IS NOT REFLECTED IN THE APPELLANT BOOKS. IT IS CLEAR THAT THE SAME WAS RECORDED BY THE APPELLANT IN THE PREVIOUS FINANCIAL YEAR I.E. F/Y:2004-05 AS SHE HAD RECEIVED THE LOTTERY TICKETS IN THE PREVIOUS FINANCIAL YEAR. ACCORDINGLY, FROM THE RELEVANT DOCUM ENTS, AS SUBMITTED BY THE APPELLANT, IT IS FOUND THE PURCHASE OF 43,61,550 TICKETS AMOUNTING T O RS.35,49,268/- (DRAW DATES 3.4.06 ITA.NO.1613/KOL/2010 SMT.SUSHILA BANSAL,.KOLK ATA A .YR.2006-07 4 TO 9.4.06) WAS RECORDED BY THE APPELLANT ON 27.03.0 6 (ON THE DATE OF RECEIPT) WHEREAS THE CORRESPONDING SALES WAS RECORDED BY THE CREDITOR ON 09.04.06 (IN THE NEXT FINANCIAL YEAR AFTER THE DRAW). AGAIN, THE ANOTHER PURCHASE OF 12, 03,500 TICKETS AMOUNTING TO RS.9,81,260/- (DRAW DATES 01.04.06 TO 02.04.06) WHE REAS THE CORRESPONDING SALE WAS RECORDED BY THE CREDITOR ON 02.04.06 (IN THE NEXT F INANCIAL YEAR AFTER THE DRAW). THE A.O. HAS MADE THE ADDITIONS BY MISINTE RPRETING THE NUMBER OF TICKETS. IN HIS REMAND REPORT HE HAS MENTIONED THAT APPELLANT WAS N OT FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THOUGH THE APPELLANT WAS FOLLOWING MERC ANTILE SYSTEM OF ACCOUNTING. AS PER MERCANTILE SYSTEM IN CASE OF PURCHASES, MATERIAL RE CEIVED BY THE BUYER BEFORE THE YEAR END MUST BE INCLUDED AS PURCHASES AND IN THIS CASE THE APPELLANT CORRECTLY ENTERED PURCHASE VALUE OF RS.45,30,528/- AGAINST COST OF LO TTERY TICKETS (4361550 + 1203500). CONSEQUENTLY SUNDRY CREDITOR BALANCE INCREASES TO T HE TUNE OF RS.43,30,528/- HENCE THE APPELLANTS CLAIM IN RESPECT OF THE TREAT MENT OF THE SAID PURCHASES OF RS.45,30,528/- (549268+981260) IS GENUINE. AS FAR AS RS.12,31,397/- ON ACCOUNT OF PRIZ E WINNING TICKETS IS CONCERNED, THE SAME HAS BEEN RECORDED BY THE CREDITOR ON 31.03.06 WHERE AS THE APPELLANT HAS RECORDED THE SAME ON 7.4.06. FURTHER, THE PROFITABILITY OF THE A PPELLANT IS NOT AFFECTED BY THE SAID AMOUNT. THE APPELLANT HAS ALSO SUBMITTED THE RELEVA NT DOCUMENTS IN SUPPORT OF HER CLAIM INCLUDING CONFIRMATION FROM THE CREDITOR. HENCE, TH E APPELLANTS CLAIM IN RESPECT OF THE TREATMENT OF SAID AMOUNT OF RS.12,31,397/- ON ACCOU NT OF PRIZE WINNING TICKETS IS GENUINE. AS FAR AS SECURITY OF DEPOSIT OF RS.6,35, 763/- IS CONCERNED FOR THE DECISION TAKEN AT PARA 4.4. THIS AMOUNT IS ALSO RECONCILED AND HENCE NO ADDITION REQUIRED ON THIS COUNT ALSO. AS REGARDS RS.4,29,745/- THE APPELLANT PAID T HIS AMOUNT TO TIGER ASSOCIATES AND DULY RECORDED IN THE BOOKS BEFORE 31-03-2006. HOWEV ER, THE PARTY (TIGER ASSOCIATED) PASSED THE CREDIT ENTRY IN ITS BOOKS AFTER 01-04-20 06. THIS FACT IS EVIDENT FROM THE BANK STATEMENT AND LEDGER ACCOUNTS OF BOTH THE APPELLANT AND THE PARTY. HENCE THIS AMOUNT IS ALSO TREATED AS RECONCILED. AS REGARDS DIFFERENCE O F RS.24,769/- TOWARDS TDS, THE A.O. IN HIS REMAND REPORT CONSIDERED THIS ADJUSTMENT AS GENUINE AND HENCE THIS AMOUNT IS ALSO RECONCILED. IN VIEW OF THE ABOVE THE ADDITION OF RS .59,43,174/- IS THEREFORE DELETED. THE APPELLANTS GROUND IS ALLOWED. 4.1. APROPOS DIFFERENCE IN BALANCE OF SECURITY DEPO SIT OF RS.6,35,763/- : IN THIS REGARD THE LD. CIT(A) HAS HELD AS UNDER :- THOUGH NOT CLEAR FROM THE ORDER OF THE A.O., IT AP PEARS THAT, THE SECURITY DEPOSIT IS ADDED BACK TO THE TOTAL INCOME OF THE APPELLANT ON THE GROUND THAT M/S.TIGER ASSOCIATES HAS DENIED ANY RECEIPT OF SUCH DEPOSIT WHICH IS REF LECTED ON THE ASSETS SIDE OF THE BALANCE SHEET OF THE APPELLANT UNDER THE HEADING D EPOSITS. IN HIS REMAND REPORT, THE AO HAS POINTED OUT THAT THIS POINT NEEDS FURTHER IN VESTIGATION AS THE APPELLANT HERSELF STATED THAT M/S.TIGER ASSOCIATES IS MAINTAINING ONL Y ONE LEDGER ACCOUNT OF THE APPELLANT. THE APPELLANT HAS CONFIRMED THAT SHE IS MAINTAINING TWO ACCOUNTS IN RESPECT OF TIGER ASSOCIATES, ONE IS TRADE ACCOUNT AND ANOTHER IS SECURITY DEPOSIT ACCOUNT. SHE FURTHER CONFIRMED THAT TIGER ASSOCIATES IS MAINTAIN ING ONLY ONE ACCOUNT I.E. TRADE ACCOUNT AND THE SAID SECURITY DEPOSIT OF RS.6,35,76 3/- HAS BEEN ADJUSTED BY THE CREDITOR WITH THE SALES. THE DENIAL OF THE RECEIPT OF SUCH SUM BY THE CREDITOR, DOES NOT ALLOW THE A.O. TO ADD THE SAME TO THE TOTAL INCOME OF THE APPELLANT S INCE SUCH SUM WAS NEVER DEBITED TO ITA.NO.1613/KOL/2010 SMT.SUSHILA BANSAL,.KOLK ATA A .YR.2006-07 5 THE PROFIT & LOSS ACCOUNT OF THE APPELLANT BUT WAS KEPT ON THE DEBIT SIDE OF THE BALANCE SHEET. HENCE THE ADDITION OF RS.6,35,763/- IS DELET ED.. 4.2. APROPOS UNDISCLOSED PAYMENTS OF LIC OF RS.1,31 ,175/- : IN THIS REGARD THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THAT DURING THE PERIOD UNDER REVIEW THE APPELLANT HAS P AID A SUM OF RS.25384.10 FOR LIC PREMIUM, AND SHE HAS MADE PAYMENTS TO LIC ON BEHALF OF THE MR.SHREE CHAND BANSAL (HUSBAND) AMOUNTING TO RS.25866.50, MR.PANKAJ BANSA L(SON) AMOUNTING TO RS.73045.70 & MR.SANJAY BANSAL (SON) AMOUNTING TO RS.32265/-. WE ARE ENCLOSING HEREWITH THE COPY OF LIC RECEIPT OF PAYMENTS MADE T O LIC FOR READY REFERENCE. IN VIEW OF THE ABOVE THAT THERE IS NO SUCH PAYMENTS WERE MADE TO THE LIC OF INDIA WHICH WERE NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. HENCE THE ADDITION MADE BY THE AO WAS WRONG AND UNJUSTIFIED. HENCE YOUR HON OUR IS REQUESTED TO KINDLY DELETE THE ABOVE ADDITION. 4.3. CONSIDERING THE ABOVE THE LD. CIT(A) HAS HELD AS UNDER :- I AM OF THE VIEW THAT THE A.O. WAS NOT JUSTIFIED I N ADDING A SUM OF RS.1,31,175/- AS INCOME OF THE APPELLANT BECAUSE THE AMOUNT WAS PAID ON BEHALF OF THE FAMILY MEMBERS AND REALIZED SUBSEQUENTLY AS SEEN FROM THE LEDGER A CCOUNT. HENCE, I DIRECT THE AO TO DELETE THIS ADDITION. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BE FORE US. 5. WE HAVE HEARD BOTH THE COUNSEL AND CAREFULLY PER USED THE RECORDS. WE FIND THAT AS REGARDS OUTSTANDING WITH M/S.TIGER ASSOCIATES IN THE CASE OF SUNDRY CREDITORS AND SUNDRY DEPOSITS WE FIND THAT ASSESSEE HAS DULY SUBM ITTED THE RECONCILIATION BEFORE AO. THE LD. CIT(A), ON THE OTHER HAND, IN HIS APPEL LATE ORDER HAS ELABORATELY CONSIDERED THE RECONCILIATION STATEMENT AND HE HAS GIVEN HIS FINDING ON EACH AND EVERY ITEM IN THE RECONCILIATION. WE HAVE ASKED THE LD. D R TO POINT OUT ANY DEFICIENCY IN THE RECONCILIATION. THE LD. DR FAILED TO PROVIDE OR POI NT OUT ANY SUCH DEFICIENCY. SIMILARLY AS REGARDS SUNDRY DEPOSIT ALSO THE ASSESSEES EXPLA NATION HAS BEEN ACCEPTED BY THE LD. CIT(A). THE DIFFERENCE AROSE BECAUSE M/S.TIGER ASSO CIATES WAS MAINTAINING ONLY ONE ACCOUNT I.E. TRADING ACCOUNT AND THE SAID SECURITY DEPOSIT OF RS.6,35,763/- WAS ADJUSTED BY THE CREDITOR IN THE SALES. SIMILARLY AS REGARDS PAYMENT TO LIC IT HAS BEEN FOUND THAT A SUM OF RS.1,31,175/- WAS PAID ON BEHA LF OF FAMILY MEMBERS AND REALIZED SUBSEQUENTLY FOR WHICH THE LD. CIT(A) HAS GIVEN A F INDING REGARDING THE EXAMINATION OF THE LEDGER ACCOUNT. IN THE BACKGROUND OF THE AFO RESAID DISCUSSION WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A). ACCORD INGLY WE UPHOLD THE SAME. ITA.NO.1613/KOL/2010 SMT.SUSHILA BANSAL,.KOLK ATA A .YR.2006-07 6 6. IN THE RESULT THE APPEAL OF THE REVENUE STANDS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04.08.2014. SD/- SD/- [ GEORGE MATHAN ] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 04.08.2014. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1. SMT.SUSHILA BANSAL,P-28, C.I.T. ROAD, WARD-33, SCHE ME-XM, KOLKATA-700010. 2 A.C.I.T., CIRCLE-40, KOLKATA. 3 . CIT(A)-XII, KOLKATA 4. CIT KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY, BY ORDER, ASST. REGISTRAR , ITAT, KOLKATA BENCHES