ACIT, CC- XII, Kolkata, Kolkata V. Shri Sri Ashok Kumar Agarwal, Kolkata

ITA 1647/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83019 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 09-11-2012
• Court: TRIBUNAL
• Department Lawyers: DAVID Z CHAWNGTHU ACIT
• Keywords: Unexplained expenditure; Business income; Document seized; Documents seized
• Section: 69C; 143(3); 131; 132; 2

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , . . . . ! ! ! ! /AND ' #!' ' #!' ' #!' ' #!' , ) [BEFORE SHRI P. K. BANSAL, AM & SHRI MAHAVIR SINGH, JM] !$ / I.T.A NO.1647/KOL/2012 #% &'/ ASSESSMENT YEAR: 2010-11 ASSISTANT COMMISSIONER OF INCOME-TAX, VS. SHRI AS HOK KUMAR AGARWAL C.C. XII, KOLKATA. (PAN: ACQPA6355G) ()* /APPELLANT ) (+,)*/ RESPONDENT ) DATE OF HEARING: 25.07.2014 DATE OF PRONOUNCEMENT: 01.08.2014 FOR THE APPELLANT: SHRI DAVID Z CHAWNGTHU, ACIT, SR . DR FOR THE RESPONDENT: SHRI SOMNATH GHOSH, ADVOCATE / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A), CENTRAL-II, KOLKATA IN APPEAL NO. 205/CC-XII/CIT(A)C-II/11-12 DATED 27.08.2012. ASSESSMENT WAS FRAMED BY ACIT, CC- XII, KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT, 196 1 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEARS 2010-11 VIDE HIS ORDER DATED 28.12 .2011. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE ADDITION OF RS.29,55,000/-. THE CIT(A) RESTRICTED THE ADDITION AT RS.36.50 LACS AS AGAINST THE ADDITION MADE BY AO AT RS.66,05,000/- U/S. 69C OF T HE ACT IN RESPECT TO UNDISCLOSED CASH PAYMENTS. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. THE AO MADE ADDITION OF RS.66,05,000/- IN RESPECT T O CASH PAYMENT MADE BY THE ASSESSEE. THE FACTS OF THE CASE ARE THAT SEARCH OPERATION U/S. 13 2 OF THE ACT WAS CONDUCTED IN THE CASES OF FORTUNE ISPAT GROUP CASES ON 16.02.2010 AND DURING THE COURSE OF SEARCH AT THE OFFICE PREMISES OF FORTUNE ISPAT PVT. LTD. AT 8C, M. D. ROAD, 6 TH FLOOR, ROOM NO.38, KOLKATA-7, VARIOUS BOOKS OF ACCOUNTS, DOCUMENTS WERE FOUND AND SEIZED APART FROM CASH. DURING THE COURSE OF SEARCH DOCUMENTS MARKED AS F1/OFFICE 6 AND F1/OFFICE 7 WER E SEIZED AND WHEN THESE WERE CONFRONTED TO SHRI SURESH SRIVASTAVA, DIRECTOR OF FORTUNE ISPA T PVT. LTD. ADMITTED THAT THESE DOCUMENTS 2 ITA NO.1647/K/2012 SHRI ASHOK KUMAR AGARWAL AY 10-11 HAVE DETAILS OF CASH FLOW AND OUT FLOW OF RASHMI GR OUP. HE EXPLAINED THESE DOCUMENTS THAT THE JAMA MEANS CASH COLLECTED ON BEHALF OF RASH MI GROUP AND KHARCHA MEANS PAYMENT ON BEHALF OF RASHMI GROUP. THE PAGES F1/OFFICE 6 A ND F1/OFFICE 7 CONTAIN DETAILS OF SALES MADE. IN VIEW OF THE STATEMENT OF SHRI SURESH SRIV ASTAVA A FURTHER STATEMENT OF SHRI ASHOK KR. AGARWAL I.E. THE ASSESSEE, DIRECTOR OF HOOGHLY ALLO YS AND STEEL CO. PVT. LTD. WAS RECORDED ON 19.03.2010. DURING THE COURSE OF STATEMENT SHRI AS HOK KR. AGARWAL ADMITTED OF GIVING A SUM OF RS.66,05,000/- FOR PURCHASE OF PIG IRON IN HIS P ERSONAL CAPACITY. HE FURTHER EXPLAINED THAT THIS PURCHASE OF RS.66,05,000/- WAS ACTUALLY OUT OF THE UNACCOUNTED SALE PROCEEDS ROTATED FOR TRADING IN PIG IRON AND IT IS NOT AT ONE GO. IN TE RM OF ABOVE AND TO BUY PEACE THE ASSESSEE SURRENDERED OR DISCLOSED A SUM OF RS.30 LACS, WHICH HE HAS EARNED BUT NOT REFLECTED IN HIS BOOKS OF ACCOUNT. THEREFORE, HE AGREED TO PAY TAX ON THI S INCOME OF RS.30 LACS IN AY 2010-11 I.E. THE YEAR UNDER CONSIDERATION. THE ASSESSEE DECLARED TH IS INCOME OF RS.30 LACS IN HIS RETURN OF INCOME. THE AO HAS NOT BELIEVED THE THEORY OF ROTAT ION OF CASH AND HE MADE ADDITION OF FURTHER RS.36,05,000/- APART FROM THE AMOUNT DISCLOSED BEFO RE THE DDIT (INV,) AND INCLUDED IN THE RETURNED INCOME AT RS.30 LACS. THEREBY, THE AO ASS ESSED THE ENTIRE AMOUNT FOUND IN THE SEIZED DOCUMENTS AT RS.66,05,000/-. AGGRIEVED, ASSESSEE P REFERRED APPEAL BEFORE CIT(A, WHO AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE DELETED THE ADDITION VIDE PARA 5 AS UNDER: 5. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLA NT AND PERUSED THE ASSESSMENT ORDER. I HAVE ALSO GONE THROUGH THE SEIZED PAPERS UNDER RE FERENCE AS WELL AS THE ASSESSMENT ORDER PASSED BY THE SAME AO IN THE CASE OF SAJJAN K UMAR PATWARI (HUF) FOR A.Y 2010- 11. THE FACTS OF THE CASE HAVE ALREADY BEEN DISCUSS ED ABOVE THAT SEARCH ACTION WAS CONDUCTED IN THE CASE OF FORTUNE ISPAT GROUP AND IN THE COURSE OF SEARCH CERTAIN DOCUMENTS MARKED AS F1/OFFICE-6/OFFICE-7 WERE SEIZE D. THESE PAPERS HAVE NOTING CASH INFLOW AND CASH OUTFLOW. IN THIS REGARD, THE STATE MENT OF THE DIRECTOR OF THE COMPANY, SHRI SURESH SRIVASTAVA WAS RECORDED AND HE STATED T HAT THE PAPERS CONTAIN DETAILS OF SALES MADE BY RASHMI GROUP AND THAT HE HAD COLLECTE D THE AMOUNT ON BEHALF OF RASHMI GROUP. SHRI SAJJAN KUMAR PATWARI OF RASHMI GROUP AC CEPTED THE TRANSACTIONS RECORDED IN THE SAID SEIZED PAPERS AND IT WAS STATED BY HIM THAT THE FIGURES RECORDED ON THE SEIZED PAPERS PERTAIN TO SALES OF METAL SOLD BY THE HIS G ROUP. THE SALES WERE OWNED BY SAJJAN KUMAR PATWARI (HUF) AND ON THOSE SALES HE DISCLOSED PROFIT @ 5% AS HIS UNDISCLOSED INCOME FOR A.Y. 2010-11. IT IS OBSERVED THAT IN THE CASE OF HUF THE AO ACCEPTED THE SALE OF IRON AND ASSESSED THE INCOME @ 5% OF TOTAL SALES . AS PER THESE PAPERS THE APPELLANT HAD ALSO MADE CASH PAYMENT OF RS.66,05,000/- FOR MA KING PURCHASES OF PIG IRON FROM FROM RASHMI GROUP THROUGHSURESH SRIVASTAVA. IN THE STATEMENT RECORDED U/S 131 OF THE ACT, THE APPELLANT STATED THAT HE HAD MADE THE PURC HASES OF RS.66,05,000/- ON WHICH PROFIT WAS EARNED BY HIM. IT WAS ALSO STATED BY THE APPELLANT THAT HE HAD ROTATED THE FUND TO MAKE FURTHER PURCHASES. IN THE RETURN OF INCOME THE APPELLANT DISCLOSED SUM OF RS.30,00,000/- ON ACCOUNT OF PROFIT EARNED ON TRADI NG OF PIG IRON AS WELL AS INITIAL NVESTMENT IN MAKING PURCHASE. IN THE COURSE OF ASS ESSMENT PROCEEDINGS THE APPELLANT INCREASED THE INCOME AT RS.36,50,000/- ON THE BASIS OF PEAK CASH BALANCE. HOWEVER, THE AO TREATED THE ENTIRE AMOUNT OF PURCHASES OF RS.66, 05,000/- AS UNEXPLAINED EXPENDITURE U/S. 69C OF THE ACT FOR THE REASON THAT THE APPELLA NT DID NOT PRODUCED EVIDENCE OF SALES. 3 ITA NO.1647/K/2012 SHRI ASHOK KUMAR AGARWAL AY 10-11 ON CAREFUL CONSIDERATION OF THE FACTS, I AM OF THE OPINION THAT THE AO WAS NOT JUSTIFIED IN TREATING THE ENTIRE AMOUNT OF PURCHASE AS UNEXPL AINED EXPENDITURE FOR THE REASON THAT THE APPELLANT DID NOT PRODUCE THE EVIDENCE OF SALE OR HE DID NOT EXPLAIN THE SOURCE OF PAYMENT. THERE IS NO DISPUTE THAT THE PURCHASES OF RS.66,05,000/- AND PROFIT EARNED ON SALE OF SUCH PURCHASED MATERIAL WAS NOT RECORDED IN THE BOOKS OF ACCOUNT. AS PER SEIZED PAPERS THE SALES WERE ACCEPTED IN THE CASE OF SAJJA N KUMAR PATWARI (HUF) AND HENCE THE CORRESPONDING PURCHASES HAVE TO BE ACCEPTED IN THE HANDS OF APPELLANT. ONCE THE APPELLANT HAS MADE THE PURCHASE OF PIG IRON, THE CO RRESPONDING SALE BY THE APPELLANT IS ATSO TO BE ACCEPTED UNLESS THERE IS ANY EVIDENCE TH AT THE PURCHASED MATERIAL WAS LYING AS STOCK WTH THE APPELLANT. THE APPELLANT HAD DISC LOSED SUM OF RS.30,00,000/- FOR TAXATION WHICH WAS BASICALLY ON ACCOUNT OF GROSS PR OFIT ON TRADING OF PIG IRON AS WELL AS THE INTIAL INVESTMENT TO MAKE SUCH PURCHASES. THE DECLARATION MADE BEFORE THE DDIT (INV) WAS ENHANCED BY THE APPELLANT HIMSELF TO RS.3 6,50,000/- ON THE BASIS OF PEAK CASH BALANCE. ON CAREFUL CONSIDERATION I AM OF THE OPIN ION THAT THE APPELLANT HAS MADE DISCLOSURE SUFFICIENT AND REASONABLE AMOUNT OF INCO ME ON THE TURNOVER OF RS.66,05,000/- . IF THE GROSS PROFIT IS TAKEN @ 5% AS ACCEPTED BY THE AO IN THE CASE OF SAJJAN KUMAR PATWARI (HUF), IN THAT CASE THE PROFIT IN THE HANDS OF APPELLANT WOULD BE A SMALL AMOUNT WHEREAS HE AGREED TO DISCLOSE ADDITIONAL INC OME OF RS.36,50,000/-. SINCE THE SALES WERE MADE BY THE APPELLANT IN CASH THERE COUL D NOT BE ANY EVIDENCE FOR THE SAME. BUT, THE FACT ON RECORD IS THAT THE AO HAS ACCEPTED THE SALES IN THE HANDS OF HUF, HENCE IT PROVES THAT THE APPELLANT HAD MADE THE PURCHASES AS WELL AS SALES. THEREFORE, I AM OF THE OPINION THAT THERE IS NO REASON TO DISBELIEVE T HE CONTENTION OF THE APPELLANT UNLESS THERE IS ANY CONTRARY MATERIAL ON RECORD. THE AO H AS BROUGHT NO SUCH MATERIAL ON RECORD. IN VIEW OF ABOVE, I AM OF THE OPINION THA T THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.66,05,000/- I.E. THE AMOUNT OFFERED BY THE APPELLANT AT THE TIME OF ASSESSMENT PROCEEDINGS. THE GROUND NOS. 1 AND 2 A RE ALLOWED. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE US. 4. WE FIND THAT THE PAYMENTS ON VARIOUS DATES AS FO UND IN F1/OFFICE-6 AND F1/OFFICE-7 IS AS UNDER: DATE PAYMENTS (IN RS.) 12 JAN 10 8,00,000 15 JAN 10 8,50,000 15 JAN _ 10 10,00,000 16 JAN 10 3,25,000 16 JAN 10 2,70,000 19 JAN 10 13,85,000 22 JAN 10 1,25,000 25 JAN 10 9,50,000 29 JAN 10 6,00,000 30 JAN 10 3,00,000 TOTAL: 66,05,000 IT MEANS THAT THESE ARE ONLY THE AMOUNTS ON ANY GIV EN DAY AS UNACCOUNTED PURCHASES, WHICH DOES NOT EXCEED RS.18.50 LACS I.E. ON 15 TH JANUARY, 2010. THE ASSESSEE HAS ALREADY SURRENDER ED A SUM OF RS.30 LACS. IF WE TAKE PEAK AMOUNT THE AD DITION WILL BE ONLY AT RS.18.50 LACS BUT AS THE ASSESSEE HAS ALREADY DECLARED A SUM OF RS.30 LA CS IN THE RETURN OF INCOME, WE FEEL THAT THE 4 ITA NO.1647/K/2012 SHRI ASHOK KUMAR AGARWAL AY 10-11 CIT(A) HAS RIGHTLY RESTRICTED THE ADDITION AT RS.36 ,50,000/- BEING THE DECLARED AMOUNT OF RS.30 LACS PLUS THE PROFIT @ 5%. WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND HENCE, WE CONFIRM THE SAME. THE APPEAL OF REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 6. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- , . . . . , ' #!' ' #!' ' #!' ' #!' , (P. K. BANSAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 ST AUGUST, 2014 -. #/0 #1 JD.(SR.P.S.) 2 +##3 43&5- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT ACIT, CC-XII, KOLKATA 2 +,)* / RESPONDENT SHRI ASHOK KUMAR AGARWAL, 61A, MOIRA S TREET, FLAT- 904, KOLKATA-700 017. 3 . # ( )/ THE CIT(A), KOLKATA 4. 5. # / CIT KOLKATA 3:#; +# / DR, KOLKATA BENCHES, KOLKATA ,3 +#/ TRUE COPY,