Suprakash Das., Purba Medinipur V. I.T.O Wd - I ,Haldia, Purba Medinipur

ITA 164/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5045 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 21-01-2013
• Court: TRIBUNAL
• Department Lawyers: SALLONG YADEN JCIT LD
• Assessee Lawyers: K L BHOWMICK LD
• Keywords: Rejection of books of accounts; Unexplained investment; Unexplained expenditure; Business income
• Section: 44AD; 40A(3); 143(3); 133(6); 145; 144

Judgement Text

ITA NO. 164/KOL/2013-A-AM SUPRAKASH DAS 1 IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, K OLKATA BEFORE : SHRI N.V. VASUDEVAN, JUDICIAL MEMBER, AND SHRI M. BALAGANESH, ACCOUNTAN T MEMBER ITA NO. 164/KOL/2013 A.Y 2006-07 SUPRAKASH DAS VS. I.T.O WARD-I, HALDIA PAN:AHVPD 5252F (APPELLANT) (RESPONDENT) FOR THE APPELLANT/ASSESSEE: SHRI K.L . BHOWMICK, ADVOCATE, LD.AR FOR THE RESPONDENT/DEPARTMENT: S HRI SALLONG YADEN, JCIT, LD.SR.DR DATE OF HEARING: 16-02-2016 DATE OF PRONOUNCEMENT: 6-4 -201 6 ORDER SHRI M.BALAGANESH, AM THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE OR DER OF THE LEARNED CIT(A)- XXXIII, KOLKATA IN APPEAL NO. 110/CIT(A)-XXXIII/ITO , WARD 1, HA/08-09 DATED 12-11-2012 AGAINST THE ORDER OF ASSESSMENT FRAMED F OR THE ASSESSMENT YEAR 2006-07 U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS THE ACT). 2. AT THE OUTSET, THE ASSESSEE HAS RAISED THE FOLL OWING ADDITIONAL GROUND:- THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE TH E ASSESSMENT ORDER MADE AFTER THE COMPUTATION OF INCOME BY MAKIN G ADDITIONS TO THE BOOK PROFIT AND DISALLOWANCES IN THE MANNER DONE BY THE ASSESSING OFFICER AFTER REJECTION OF BOOKS OF ACCOUNTS UNDER SECTION 145(3) OF THE ACT IS NOT IN CONSONANCE WITH THE PROVISIONS OF LA W AND THE JUDICIAL VIEW AND IS THEREFORE LIABLE TO BE QUASHED. 3. WE FIND THAT THE ADMISSION OF SAID ADDITIONAL GROUND WOULD BE OF PARAMOUNT IMPORTANCE AS IT GOES TO THE ROOT OF THE MATTER AND WOULD ALSO BE RELEVANT FOR ADJUDICATION OF OTHER REGULAR GROUNDS OF APPEAL AS RAISED BY THE ASSESSEE BEFORE US. WE ITA NO. 164/KOL/2013-A-AM SUPRAKASH DAS 2 ALSO FIND THAT FOR ADMISSION OF SAID ADDITIONAL GRO UND DOES NOT REQUIRE ANY FRESH INVESTIGATION OF FACTS. HENCE, IN THE LIGHT OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF NTPC LTD VS. CIT REPORTED IN 2 29 ITR 383(SC), WE ADMIT THE ADDITIONAL GROUND AS RAISED BY THE ASSESSEE BEFORE US. 4. THE ASSESSEE HAS RAISED THE FOLLOWING REGULAR G ROUNDS OF APPEAL :- I. THE LD. CIT(A) XXXIII KOLKATA IS WHOLLY WRONG TO ACT AND DECIDE THE ISSUE BEING DIFFERENCE IN RUNNING ACCOUNTS OF R EGULAR SUPPLIER WITHOUT CONFRONTING BOTH THE PARTIES AS TO THE COR RECTNESS OF THE RESPECTIVE FIGURES IN ACCOUNTS AS PER PROVISION OF SECTION 1432(3) OF THE ACT; II. THE LD. CIT(A) IS WRONG TO UPHOLD THE PRESUMPTI ON THAT THE FIGURES IN QUESTION CONSTITUTED UNEXPLAINED EXPENDITURE MAD E AND PAID TO THE REGULAR SUPPLIER OF GOODS WITHOUT IDENTIFYING THE S AME WITH EVIDENCES; III. THE LD. CIT(A) IS NOT JUSTIFIED TO CONFIRM THE ADDITION OF 225,627 WHICH THE SUPPLIER M/S. UNITED ENTERPRISE RECEIVED RELATING TO THE EARLIER YEAR AND WHICH THE SAID PARTY FAILED TO INFORM THE A.O ACCORDINGLY; IV. THE LD. CIT(A) IS NOT JUSTIFIED TO CONFIRM THE ADDITION OF RS.30,775/- WHAT RELATED TO THE OUTSTANDING BALANCE OF THE EARL IER YEAR BUT RECEIVED THIS YEAR AND WHICH THE SUPPLYING PARTY BEING M/S. VTR MARKETING DID NOT MENTION ACCORDING TO THE A.O; V. THE LD. CIT(A) IS WRONG IN NOT APPLYING THE RATI O OBTAINABLE FROM THE ORISSA HIGH COURT DECISION RELIED UPON I.E. AUR OBINDO SANITARY STORES 276 ITR 549; VI. THE LD. CIT(A) IS WRONG TO CONFIRM THE ADDITION OF RS.87,000/- IN REGARD TO THE INVESTMENT IN LAND MADE OUT OF FULLY EXPLAINED SOURCES. VII. THE LD. CIT(A) IS WHOLLY WRONG TO DISREGARD TH E EVIDENCES FURNISHED IN REGARD TO THE ABSENCE OF BANKING FACIL ITIES AND THE CONNECTED DIFFICULTIES IN MAINTAINING A BANK A/C B EYOND 10 KM AWAY FROM HIS BUSINESS AND FOR THAT THE APPLICATION OF T HE RELEVANT RULE HAS BEEN WRONGLY DENIED TO THE APPELLANT; VIII. THE LD. CIT(A) IS THUS WHOLLY UNJUSTIFIED TO CONFIRM THE DISALLOWANCE MADE U/S. 40A(3) IN VIOLATION OF THE R ELEVANT RULES AND THE CIRCUMSTANCES JUSTIFYING CASH PAYMENTS FOR THE GENU INE PURCHASES; 5. THE LD.AO HAD MADE THE ADDITIONS IN THE SUM OF R S.2,25,633/- AND RS.30,775/- TOWARDS UNEXPLAINED EXPENDITURE IN RESPECT OF PAYME NTS MADE TO 1) M/S. UNITED ENTERPRISE, AND 2) M/S. VTR MARKETING RESPECTIVELY ITA NO. 164/KOL/2013-A-AM SUPRAKASH DAS 3 6. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE LD.AO OBTAINED INFORMATION U/S. 133(6) OF THE ACT FROM THE SUNDRY CREDITORS OF THE ASSESSE E NAMELY 1) M/S. UNITED ENTERPRISE AND 2) M/S. VTR MARKETING AND FOUND THAT THE ASSESS EE HAD MADE THE PAYMENTS OF RS.25,84, 820/- AND RS.9,94,080/- RESPECTIVELY. THI S WAS COMPARED WITH THE BOOKS OF ACCOUNT OF THE ASSESSEE, WHEREIN THE ASSESSEE HAD S HOWN THE PAYMENT OF RS.23,59,187/- AND RS.9,63,325/- AS PAYMENTS MADE TO 1) M/S. UNITED ENTERPRISE AND 2) M/S. VTR MARKETING RESPECTIVELY. AS NO DETAILS WERE FILED BY THE ASSESSEE WITH REGARD TO SAID DISCREPANCY IN PAYMENTS, WHEN POINTE D OUT BY THE LD.AO, HE ADDED THE SAME AS UNEXPLAINED EXPENDITURE IN THE ASSESSMENT P ROCEEDINGS. 7. THE LD.AO HAD REJECTED THE BOOKS OF ACCOUNT OF T HE ASSESSEE BY FURNISHING ELABORATE REASONS, WHICH ARE REPRODUCED HEREIN BELO W FOR THE SAKE OF CONVENIENCE:- 3. REJECTION OF ACCOUNTS U/ S 145(3) : 3.1 IN COURSE OF ASSESSMENT PROCEEDINGS THE FOLLO WING DISCREPANCIES IN ACCOUNTS OF THE ASSESSEE WERE OBSERVED:- I) IT WAS OBSERVED THAT THERE WAS DIFFERENCE IN LE DGER ACCOUNTS RECEIVED UNDER SECTION 133(6) FROM M/S. V.T.R. MARK ETING LTD AND M/S. UNITED ENTERPRISES, (CREDITORS OF ASSESSEE) ABOUT T HE TRANSACTION WITH ASSESSEE AND THE LEDGER ACCOUNTS SUBMITTED BY THE A SSESSEE ABOUT TRANSACTION WITH THE SAID PARTIES. II) FURTHER THERE WAS DIFFERENCE IN OPENING BALANC E AS ON 01.04.05 AS PER BANK STATEMENT AND THE ASSESSEE'S ACCOUNTS. THE ASSESSEE WAS UNABLE TO RECONCILE THE SAID DIFFERENCE IN THE COURSE OF A SSESSMENT PROCEEDINGS. III) FIXED DEPOSITS WITH UNITED BANK OF INDIA, GAR KAMALPUR BRANCH, WERE NOT DISCLOSED IN BOOKS OF ACCOUNTS. IV) THERE WAS DIFFERENCE IN INTEREST ACTUALLY PAID TO THE SAID BANK AND INTEREST CLAIMED TO BE PAID IN BOOKS OF ACCOUNTS. V) THE CASH PAYMENTS MADE TO DIFFERENT PER-TIES F OR PURCHASE WERE NOT RECORDED IN BOOKS OF ACCOUNTS CORRECTLY. ITA NO. 164/KOL/2013-A-AM SUPRAKASH DAS 4 8. THIS ADDITION WAS ALSO UPHELD BY THE LD. CIT(A) ON 1 ST APPEAL. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 9. THE LD.AR ARGUED THAT NO ADDITION OUGHT TO HAVE BEEN MADE BY THE LD.AO TOWARDS DIFFERENCE IN BALANCES OF SUNDRY CREDITORS AFTER REJECTING THE BOOKS OF ACCOUNT U/S. 145(3) OF THE ACT. IN RESPONSE TO THIS, THE LD .DR VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE BOOKS OF ACCO UNT HAVING BEEN REJECTED BY THE LD.AO BY RECORDING ELABORATE REASONS AS STATED HEREIN ABO VE, HAVE NOT BEEN CONTESTED BY THE ASSESSEE. WE FIND THAT ONCE THE BOOKS OF ACCOUNT AR E REJECTED BY THE LD.AO, THE LD.AO OUGHT NOT TO HAVE MADE ANY SEPARATE ADDITION TOWARD S DIFFERENCE FOUND IN PAYMENTS MADE TO THE SUNDRY CREDITORS BY PLACING RELIANCE O N THE SAME REJECTED BOOKS OF ACCOUNT. IN THIS REGARD, WE PLACE RELIANCE ON TH E CO-ORDINATE BENCH DECISION OF THIS TRIBUNAL IN THE CASE OF PRAFULLA KUMAR GHOSH VS. I TO, W-2, MALDA IN ITA NO. 686/KOL/2012 FOR THE A.Y 2006-07 DATED 18.9.2015 , WHEREIN IT HAS BEEN HELD AS UNDER:- 3.3 WE HOLD THAT ONCE THE BUSINESS INCOME IS DETERMINED ON ESTIMATED BASIS, ANY FURTHER ADDITION TOWARDS BUSINESS INCOME WOULD ONLY GET TELESCOPED WITH THE NET PROFI T ALREADY DETERMINED ON ESTIMATED BASIS. THE ASSESSMENT OF INCOME UNDER PRESUMPTIVE BASIS U/ S 44AD IS SIMILAR TO THE INCOME DETERMINED ON AN ESTIMATED BASIS BY THE AO AFTER REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE. ONCE THE BOOK S ARE REJECTED THE DOORS OF THE AO ARE CLOSED FOR LOOKING AFTER OTHER PROVISIONS OF THE ACT WHICH ARE RELEVANT FOR DETERMINING THE BUSINESS INC OME OF THE ASSESSEE, UNLESS OR OTHERWISE SPECIFICALLY PROVIDED IN THE PR OVISIONS OF SECTION 44AD OF THE ACT ITSELF SUCH AS ALLOWANCE OF INTERES T AND REMUNERATION TO PARTNERS IN 'THE CASE OF A PARTNERSHIP FIRM. RELIAN CE IS PLACED IN THIS REGARD ON THE DECISION OF HON'BLE ANDHRA PRADESH HI GH COURT IN THE ITA NO. 164/KOL/2013-A-AM SUPRAKASH DAS 5 CASE OF INDWELL CONSTRUCTIONS VS CIT REPORTED IN 21 2 ITR 776 (AP) , WHEREIN LORDSHIPS HAD HELD AS UNDER :- 'THE PATTERN OF ASSESSMENT UNDER THE INCOME-TAX ACT , 1961, IS GIVEN BY SECTION 29 WHICH STATES THAT THE INCOME FR OM PROFITS AND GAINS OF BUSINESS SHALL BE COMPUTED IN ACCORDANCE W ITH THE PROVISIONS CONTAINED IN SECTIONS 30 TO 43D OF THE A CT. SECTION 40 PROVIDES FOR CERTAIN DISALLOWANCES IN CERTAIN CASES NOTWITHSTANDING THAT THOSE AMOUNTS ARE ALLOWED GENERALLY UNDER OTHE R SECTIONS. THE COMPUTATION UNDER SECTION 29 IS TO BE MADE UNDER SE CTION 145 ON THE BASIS OF THE BOOKS REGULARLY MAINTAINED BY THE ASSE SSEE. IF THOSE BOOKS ARE NOT CORRECT OR COMPLETE, THE INCOME-TAX O FFICER MAY REJECT THOSE BOOKS AND ESTIMATE THE INCOME TO THE BEST OF HIS JUDGMENT. WHEN SUCH AN ESTIMATE IS MADE, IT IS IN SUBSTITUTIO N OF THE INCOME THAT IS TO BE COMPUTED UNDER SECTION 29. IN OTHER W ORDS ALL THE DEDUCTIONS WHICH ARE REFERRED TO UNDER SECTION 29 A RE DEEMED TO HAVE BEEN TAKEN INTO ACCOUNT WHILE MAKING SUCH AN E STIMATE. THIS WILL ALSO MEAN THAT THE EMBARGO PLACED IN SECTION 4 0 IS ALSO TAKEN INTO ACCOUNT. ' 11. WE ALSO FIND THAT THE LD.AO HAS MADE SEPARATE A DDITION U/S. 40A(3) OF THE ACT AMOUNTING TO RS.5,18,163/-. 12. BRIEF FACTS OF THIS ISSUE ARE THAT THE LD.AO OB SERVED THAT THE ASSESSEE HAS MADE PAYMENT IN EXCESS OF RS. 20,000/- OTHERWISE THAN BY WAY OF ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT TO THE FOLLOWING PARTIES;- 1) M/S UNITED ENTERPRISE RS.19,73,812/- 2) M/SVTR MARKETING RS. 1,67,000/- 3) M/S. CONTAI F.L TRADE RS. 4,10,000/- 4) M/S JHARKHAND LIQUOR.(P) LTD RS. 40,000/- TOTAL : RS.25,90,812/- 13. THE LD.AO DISALLOWED @ 20% OF THE AFORESAID SUM OF RS. 25,90,812/- U/S. 40A(3) OF THE ACT AND MADE THE ADDITION OF RS. 5,18 ,163/-, WHICH WAS UPHELD BY THE LD.CIT(A) ON 1 ST APPEAL. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E US. ITA NO. 164/KOL/2013-A-AM SUPRAKASH DAS 6 14. THE LD.AR ARGUED THAT THESE PARTIES ARE LOCATE D IN A VILLAGE, WHERE NO BANKING FACILITIES WERE AVAILABLE AND DISTANCE BETWEEN THE SAID VILLAGE AND PLACE IN WHICH THE ASSESSEE IS CONDUCTING HIS BUSINESS IS BEYOND 10 KM S. ACCORDINGLY, HE SAID IT WOULD BE HIGHLY RISKY FROM THE ASPECT OF SECURITY TO CARR Y CASH AND DEPOSIT THE SAME IN THE BANK ACCOUNT OF THE ASSESSEE MAINTAINED WITH U.B.I. TO MITIGATE THIS RISK, THE EMPLOYEES OF THE SUPPLIERS OFTEN VISITED THE PREMIS ES OF THE ASSESSEE TO COLLECT THE CASH OUT OF DAILY SALES FROM TIME TO TIME. HE ALSO PLEA DED BEFORE US THAT THE ASSESSEES CASE FALLS WITHIN THE EXCEPTION AS PROVIDED IN RULE 6DD(G) OF THE I.T RULES 1962. IN RESPONSE TO THIS, THE LD.SR.DR VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RETAIL TRADING OF FOREIGN LIQUOR AND IN THE NORMAL COURSE OF BUSINESS HE HAD TO MAKE THE PAYMENTS TO THE ABOVE MENTIONED FOUR (4) PARTIES FOR THE PURPOSE OF BUSIN ESS. WE ALSO FIND THAT THE ASSESSEE HAS ALSO PRODUCED THE TRANSLATED VERSION OF THE CER TIFICATE ISSUED BY THE ITAMGARA- 2 GRAM PANCHAYAT, MAHISADAL, DIST: PURBA MEDINAPORE V IDE DATED 22-08-2012, CONFIRMING THE DISTANCE BETWEEN THE ASSESSEES SHO P AND THE UBI IS 10 KMS. WE FIND LOT OF FORCE IN THE ARGUMENTS OF THE LD.AR THAT THE LD.AO HAVING REJECTED THE BOOKS OF ACCOUNT OUGHT NOT TO HAVE MADE SEPARATE ADDITION U/ S. 40A(3) OF THE ACT. WE FIND THAT THIS ASPECT HAS BEEN DULY CONSIDERED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT, CIRCLE, HALDIA VS. SHRI JIT SINGH IN ITA NO.1961/KOL/2007 FOR THE A.Y 2004-05 VIDE ORDER DATED 27-11-2007 , WHEREIN IT HAS BEEN HELD AS UNDER:- 5.2 THE AO APPLIED 8% NET PROFIT RATE FOR COMPUTING THE INCOME OF NATIONAL TRANSPORT SERVICE, NATIONAL ENGG CO AND GOVIND CHEMICALS. THE HONBLE MP HIGH COURT IN THE CASE OF PUROSHOTTAM LAI TAMRAKAR (SUPRA) AS WELL AS HONBL E ALLAHABAD HIGH COURT IN THE CASE OF BANWARILAL BANSIDHAR ( SUPRA) HAVE HELD THAT WHERE THE AO APPLIED NET PROFIT IN COMPUTING INCOME, SECT ION 40A(3) HAS NO APPLICATION AND NO DISALLOWANCE CAN BE MADE. THE AL LAHABAD HIGH COURT HAS ALSO HELD THAT WHEN THE GROSS PROFIT RATE IS APPLIED THAT WOULD TAKE CARE OF EVERYTHING AND THERE WAS NO NEED FOR THE AO TO MAKE SCRUTINY OF THE AMOUNT INCURRED ON THE PURCHASES BY THE ASSESSEE. ITA NO. 164/KOL/2013-A-AM SUPRAKASH DAS 7 FURTHER THE LD. ITAT, KOLKATA HAS HELD IN THE CASE OF M/S. KOH SINN TANNERY AND M/S. CHIEN HSING TANNERY (SUPRA) THAT N O DISALLOWANCE U/S.40A(3) CAN BE MADE IN A CASE WHERE THE BOOKS OF ACCOUNTS ARE REJECTED AND THE ASSESSMENT IS MADE EX-PARTE BY ES TIMATING THE PROFIT. THE LD. TRIBUNAL HAS ALSO RELIED UPON THE DECISIONS OF ALLAHABAD HIGH COURT IN THE CASE OF BANWARILAL BANSIDHAR ( SUPRA) AND A.P HIGH COURT IN THE CASE OF INDWELL CONSTRUCTION VS- CIT (232 I TR 776) IN THIS REGARD. THE REASON AS GIVEN BY THE LD. ITAT IN TH E CASE OF M/S. CHIEN HSING TANNERY IS REPRODUCED BELOW: IN OUR OPINION, WHILE EXERCISING ONE OPTION I. E. ESTIMATING THE IDEAL PROFIT BY THE ASSESSING OFFICER AND REJECTING THE BOOKS OF ACCOUNTS, THE ASSESSING OFFICER, IPSO FACTOR RENOUNCES THE OT HER ALTERNATIVE OF MODIFYING THE BOOK RESULTS SO ACCEPTED IN THE LIGH T OF VARIOUS PROVISIONS. WITH REJECTION OF BOOKS OF ACCOUNT AND WITH THE CONSEQUENTIAL DETERMINATION OF COMPLETELY NEW PROFITABILITY, THE ENTIRE COST STRUCTURE GETS REDEFINED AND AS SUCH THERE REMAINS NO SCOPE F OR THE SPECIFIC ALLOWABILITY OR OTHERWISE OF THE INDIVIDUAL ELEMENT S OF COST, LET ALONE THE INVOKING OF SECTION 40A(3) THERETO. WITH THE REJEC TION OF BOOKS, THE ASSESSING OFFICER HAS DISTANCED HIMSELF FROM THE O PTION TO TEST THE MERIT OF THE INDIVIDUAL EXPENSES FROM ALL PERSPECT IVES. ACCORDINGLY, THE DECISION OF THE ASSESSING OFFICER FOR INVOKING SECT ION 40A(3) AND CONSEQUENTIAL ADDITION OF RS.23,12,497/- CANNOT BE SUSTAINED. ACCORDINGLY, THE SAME IS DELETED. 5. IN THE INSTANT CASE ALSO THE BOOKS OF ACCOUNTS W ERE REJECTED AND THE AO HAD ESTIMATED THE INCOME BY APPLYING THE NET PRO FIT RATE OF 8%. THOUGH THE APPELLANT HAS CHALLENGED THE NET PROFIT RATE AS APPLIED BY THE AO, THE MATTER REGARDING REJECTION OF BOOKS OF ACCO UNTS AND COMPLETION OF ASSESSMENT EX-PARTE U/S. 144 OF THE ACT HAS NOT BEEN CHALLENGED BY THE APPELLANT. UNDER THE CIRCUMSTANCES, RESPECTFULLY FO LLOWING THE DECISION OF LD. ITAT AS MENTIONED ABOVE, IT IS HELD THAT DIS ALLOWANCE MADE U/S. 40A(3) OF THE ACT WAS NOT PROPER UNDER SUCH CIRCUMS TANCES. HENCE, THE ADDITION OF RS.25,02,960/- MADE U/S. 40A(3) TO THE INCOME OF NATIONAL TRANSPORT SERVICE & NATIONAL ENGG. CO IS DELETED. A S ALREADY MENTIONED EARLIER THE ADDITION OF RS.4,86,080/- U/S. 40A(3) O F THE ACT IN THE CASE OF GOVIND CHEMICALS WAS WRONGLY MADE, HENCE, THE SAME IS ALSO DELETED. 16. WE FIND THAT THE LD.AO ON ONE HAND HAD REJECTED THE BOOKS OF ACCOUNT AND ON THE OTHER HAND RESORTED TO MAKE VARIOUS ADDITIONS B Y RELYING ON THE SAME REJECTED BOOKS OF ACCOUNT U/S. 145(3) OF THE ACT. IN THESE C IRCUMSTANCES, THE LD.AO OUGHT TO HAVE RESORTED TO ESTIMATE THE BUSINESS PROFIT IN A RATIONAL MANNER. TO MEET THE ENDS OF ITA NO. 164/KOL/2013-A-AM SUPRAKASH DAS 8 JUSTICE, WE DEEM IT FIT AND APPROPRIATE , TO DIREC T THE LD.AO TO ADOPT 8% OF THE TURNOVER OF THE ASSESSEES BUSINESS AS TAXABLE BUSI NESS PROFITS . ACCORDINGLY, THE ADDITIONAL GROUND AS RAISED BY THE ASSESSEE BEFORE US IS ALLOWED AND REGULAR GROUND NOS.1 TO 5, 7 & 8 OF THE ASSESSEES APPEAL ARE ALLO WED FOR STATISTICAL PURPOSES. 17. THE LAST GROUND TO BE DECIDED IN THIS APPEAL OF THE ASSESSEE IS AS TO WHETHER AN ADDITION OF RS.87,000/- COULD BE MADE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 18. BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESSEE MADE INVESTMENT IN LAND AND BUILDING FOR RS.5,25,000/-. THE LD.AO OBSERVED THAT THE ASSESSEE HAS INCURRED A SUM OF RS.31,500/- TOWARDS STAMP DUTY AND RS.2,500/- TOWAR DS OTHER INCIDENTAL EXPENDITURE FOR REGISTRATION OF THE SAID PROPERTY. THESE TWO P AYMENTS WERE ADMITTEDLY NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AN D THE LD. AO BROUGHT THE SAME TO TAX AS UNEXPLAINED INVESTMENT. 19. SIMILARLY, THE LD.AO FOUND THAT THE ASSESSEE HA S MADE INVESTMENT IN RE- INVESTMENT DEPOSITS AND RECURRING DEPOSITS WITH THE BANK FOR A SUM OF RS.53,000/-, WHICH WAS ALSO BROUGHT TO TAX AS UNEXPLAINED INVEST MENT BY THE LD.AO. ON 1 ST APPEAL, THE ASSESSEE ARGUED THAT THESE PAYMENTS WERE MADE O UT OF WITHDRAWALS FROM THE BANK AND INVESTMENT IN DEPOSITS WERE MADE OUT OF CASH CR EDIT FACILITY AVAILED FROM THE BANK, WHICH WERE EVEN RETAINED AS SECURITY BY THE B ANK FOR GRANTING THE LOAN. HE FURTHER ARGUED THAT AFTER REJECTING THE BOOKS OF AC COUNT THE LD.AO CANNOT MAKE SEPARATE ADDITION TOWARDS TRANSACTIONS THAT ARE NOT RECORDED IN THE REJECTED BOOKS OF ACCOUNT. THE LD. CIT(A) NOT BEING CONVINCED WITH THE ARGUMEN TS OF THE LD.AR UPHELD THE ORDER OF THE LD.AO ON THIS ISSUE. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US BY RAISING GROUND NO.6. ITA NO. 164/KOL/2013-A-AM SUPRAKASH DAS 9 20. THE LD.AR REITERATED THE SAME SUBMISSIONS AS MA DE BEFORE THE LOWER AUTHORITIES. IN RESPONSE TO THIS, THE LD.DR VEHEMEN TLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 21. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND TH AT THE ISSUE IN HAND REQUIRES TO BE SET ASIDE TO THE FILE OF THE LD.AO FOR VERIFICAT ION OF THE SAME AS TO WHETHER THE ASSESSEE HAS MADE NECESSARY WITHDRAWALS FOR MEETING THE AFORESAID PAYMENTS AND ALSO TO PROVE WHETHER THE INVESTMENT IN DEPOSITS WE RE MADE OUT OF CASH CREDIT FACILITY AS CLAIMED BY THE ASSESSEE. ACCORDINGLY, THIS ISSUE IS SET ASIDE TO THE FILE OF THE LD.AO TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW. T HE ASSESSEE IS AT LIBERTY TO PRODUCE/FILE NECESSARY EVIDENCES/ DOCUMENTS IN SUP PORT OF THIS CONTENTION. WE WOULD LIKE TO REJECT THE ASSESSEES ALTERNATIVE ARGUMENT THAT ONCE THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE REJECTED, NO ADDITION ON THIS ISSUE COULD BE MADE TOWARDS UNEXPLAINED INVESTMENT BASED ON RELIANCE PLACED ON REJECTED BOO KS OF ACCOUNT BY THE LD.AO. WE FIND THAT LD.AO NO DOUBT HAS REJECTED THE BOOKS OF ACCOUNT AND THE ASSESSEE HAS NOT DISPUTED THE SAME. WE HAVE ALREADY GIVEN DIRECTION TO THE LD.AO TO RESORT THE ESTIMATION OF BUSINESS PROFIT OF THE ASSESSEE AT 8% OF THE TURNOVER WHILE DISPOSING OF OTHER GROUNDS AS RAISED BY THE ASSESSEE HEREINABOVE . HOWEVER, THIS DOES NOT BAR THE LD.AO FROM MAKING ANY SEPARATE ADDITION TOWARDS UN EXPLAINED INVESTMENTS, WHICH ARE NOT CONNECTED WITH THE ASSESSEES BUSINESS, IF FOUND NECESSARY AND APPROPRIATE. ACCORDINGLY, THIS GROUND OF ASSESSEES APPEAL IS AL LOWED FOR STATISTICAL PURPOSES. 22. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE AS STATED ABOVE. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 6-4 - 2016 SD/- ( N.V.VASUDEVAN, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE: DATE 6-4 -2016 ITA NO. 164/KOL/2013-A-AM SUPRAKASH DAS 10 1.. THE APPELLANT/ASSESSEE: SHRI SUPRAKASH DAS PRO P: VILL & P.O: KAPASARIA P.O MAHISHADAL DIST: PURBA MEDINIPORE PIN 721628. 2 THE RESPONDENT/DEPARTMENT: INCOME TAX OFFICER WAR D I, HALDIA, PURBA MEDINIPORE. 3 /THE CIT, 4.THE CIT(A ) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP SPS COPY OF THE ORDER FORWARDED TO:-