Piyush Ghana, Paschim Medinipur V. I.T.O. Wd-1(2), Midnapore, Midnapore

ITA 1646/KOL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2588 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2010
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 30-04-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 22-09-2009
• Court: TRIBUNAL
• Department Lawyers: O P AGARWAL
• Assessee Lawyers: S M SURANA
• Keywords: Unexplained expenditure
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SRI D. K. TYAGI, JM & HONBLE SRI B . C. MEENA , AM] I.T.A. NO.1646/KOL/2009 ASSESSMENT YEAR: 2006-07 PIJUSH GHANA -VS- INCOME-TAX OFFICER, WD-1(2), MIDNAPUR (PA NO.AJVPG 6867 F) (APPELLANT) (RESPONDENT) APPELLANT BY : SRI S. M. SURANA RESPONDENT BY : SRI O. P. AGARWAL O R D E R PER D. K. TYAGI, JM: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE LD. CIT(A), KOLKATA DATED 12.12.2008 FOR ASSESSMENT YEA R 2006-07 ON THE FOLLOWING GROUNDS : 1. FOR THAT THE ORDER OF THE LD. CIT(A) IS ARBITRA RY, ILLEGAL AND BAD IN LAW. 2. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF THE ENTIRE PURCHASE PRICE OF RS.2,71,050/- ON ACCOUNT OF CASH PURCHASES MADE BY THE ASSESSEE WHICH WAS NOT DISCLOSED IN THE BOOKS OF ACCOUNTS WHEN SUCH PURCHA SES WERE MADE BY CASH DURING THE WHOLE YEAR AND THE AO ALREADY ASSESSED THE INCOME F ROM SUCH UNDISCLOSED PURCHASES AT RS.16,680/-. 3. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ADDITION OF RS.2,71,050/- WAS NOT JUSTIFIED. 4. FOR THAT THE LD. AO ERRED IN ADDING BACK THIS SU M OFRS.16,680/- AS PROFIT ON UNDISCLOSED PURCHASES WHEN NET PROFIT IN THIS LINE OF BUSINESS AND AS PER ASSESSEES ACCOUNT WAS ONLY 4%. 5. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER OF THE CIT(A) BE MODIFIED AND THE ASSESSEE BE GIVEN THE RELIEF PRAYE D FOR. 2. GROUND NOS.1 AND 5 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DE ALS IN WHOLESALE MEDICINE BUSINESS IN THE NAME AND STYLE M/S. S. S. MEDICINE IN MIDNAP UR TOWN. THE AO CALLED FOR DETAILS OF PURCHASES MADE BY THE ASSESSEE FROM VARIOUS PART IES BY ISSUING NOTICE U/S. 133(6). THE DETAILS OF PURCHASE AS PER BOOKS OF THE ASSESSE E AND BOOKS OF THOSE PARTIES WERE EXAMINED. THE AO NOTICED THAT THE PURCHASE AS PER THE BOOKS OF THOSE PARTIES WERE HIGH THAN THE PURCHASES SHOWN BY THE ASSESSEE IN THE BOO KS OF ACCOUNT. THE AO NOTICED THAT THE APPELLANT HAS NOT RECORDED PURCHASES IN RESPECT OF R & D ENTERPRISES RS.1,62,464/- 2 AND MAITY MEDICAL STORES RS.1,08,586/- TOTALING RS. 2,71,050/- IN HIS BOOKS OF ACCOUNT. THE AO CALLED FOR THE ASSESSEES EXPLANATION REGAR DING UNDISCLOSED PURCHASE NOTICED. SINCE THE ASSESSEE FAILED TO OFFER SATISFACTORY EXP LANATION FOR NOT RECORDING THE PURCHASE, THE AO HELD THAT THE UNDISCLOSED PURCHASE IS ASSES SABLE AND MADE AN ADDITION OF RS.2,71,050/- . THE AO ALSO ESTIMATED THE GROSS PR OFIT RELATABLE TO THIS UNDISCLOSED PURCHASE AND MADE AN ADDITION OF RS.16,680/-. AGGR IEVED BY THE SAID ORDER, NOW THE ASSESSEE IS IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE WHILE REITERATING HIS SAME SUBMISSIONS AS SUBMITTED BEFOR E THE LOWER AUTHORITIES FURTHER PLACED RELIANCE ON THE FOLLOWING CASE LAWS : I) EAGLE SEEDS & BIOTECH LTD. VS. ACIT (2006) 100 I TD 0301, II) P. P. JEWELLERS (P) LTD. VS. ACIT (2007) 111 TT J 0187, III) CIT VS. BALCHAND AJIT KUMAR (2003) 263 ITR 06 10, IV) ITAT C BENCH, KOLKATA, ITA NO.2635/K/2005 THE VARIETY STORES VS. ITO DATED 26.05.2006, V) ITAT, A BENCH, KOLKATA, ITA NO. 1622/K/2005, K. D. MAHANTA & CO. VS. ITO, DATED 25.1.2007., AND VI) CIT VS- PRESIDENT INDUSTRIES, IT APPLICATION N O. 53 OF 1999 DATED 20.4.1999 (GUJ.). CONCLUDING HIS ARGUMENT HE SUBMITTED THAT SINCE THE AO HAS ESTIMATED THE GROSS PROFIT TO RS.16,680/- ON THE UNDISCLOSED PURCHASES OF RS.2 ,71,050/- THERE IS NO JUSTIFICATION FOR SEPARATE ADDITION OF RS.2,71,050/- OF UNDISCLOSED P URCHASES TREATING IT AS UNEXPLAINED EXPENDITURE OF THE ASSESSEE U/S. 69C OF THE I. T. A CT. 5. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE RS OF THE LOWER AUTHORITIES. 6. AFTER HEARING THE RIVAL SUBMISSIONS, CAREFULLY P ERUSING THE MATERIAL AVAILABLE ON RECORD AND THE CASE LAWS CITED BY THE LD. COUNSEL F OR THE ASSESSEE, WE FIND THAT ON SIMILAR ISSUE AND ON IDENTICAL FACTS THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF THE VARIETY STORES VS- ITO IN ITA NO. 2635/KOL/200 5, AY 2002-03 DATED 26.5.2006 HAS HELD AS UNDER : CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND CONSIDERING THE FACT THAT THE AO HAS ALREADY TAXED THE PROFIT ON SUCH UNDISCLOSED P URCHASES AND CONSIDERING THE FACT THAT THE REVENUE HAS NOT BROUGHT ON RECORD THAT INV ESTMENT REMAINED IN PURCHASES OR THE ADDITIONAL INVESTMENT IS REQUIRED OVER AND ABO VE THE CAPITAL EMPLOYED BY THE ASSESSEE FOR SUCH UNACCOUNTED PURCHASE THE ADDITIO N MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) IS NOT JUSTIFIED AND ACCORDINGLY THE SAME IS DIRECTED TO BE DELETED. 3 THE VIEW OF THE COORDINATE BENCH IS IN CONFORMITY W ITH THE RATIO LAID DOWN IN THE CASE LAWS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE , THEREFORE, THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) AMOUNTING TO RS. 2,71,050/- IS HEREBY DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 7. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 18. 5.10 SD/- SD/- (B. C. MEENA) (D. K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18TH MAY, 2010 COPY TO : 1. SHRI PIJUSH GHANA, C/O, S. S. MEDICINE, BATLA CHAK, MIDNAPORE. DIST PASCHIM MIDNAPORE. 2. ITO, WARD-1(2), MIDNAPORE 3. CIT(A), KOLKATA. 4. CIT, KOLKATA. 5. D.R., ITAT, KOLKATA. TRUE COPY BY ORDER DEPUTY REGISTRAR JD.(SR.P.S.) I.T.AT., KOLKATA