ITO, Ward - 5(2), Kolkata, Kolkata V. M/s. T & T Metals Pvt. Ltd., Kolkata

ITA 1700/KOL/2010

• Counselvise Citation: 170023514 RSA 2010
• Duration Of Justice: 1 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 31-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSANTA SINHA
• Assessee Lawyers: S K TULSIYAN
• Keywords: Business income
• Section: 68

Judgement Text

I.T.A. NO.: 1700/ KOL. / 2010 ASSESSMENT YEAR : 2005-06 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI C.D. RAO, ACCOUNTANT MEMBER I.T.A. NO.: 1700/ KOL. / 2010 ASSESSMENT YEAR : 2005-2006 INCOME TAX OFFICER......APPELLANT WARD-5(2), KOLKATA, -VS.- M/S. T & T METALS PVT. LTD.,...RESPONDEN T P-45, KHAIRU PLACE, KOLKATA-700 072 [PAN : AADCS 9030 J] APPEARANCES BY: SHRI SUSANTA SINHA, SR. D.R., FOR THE APPELLANT SHRI S.K. TULSIYAN, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JUNE 18, 2012 DATE OF PRONOUNCING THE ORDER : JUNE 29 TH , 2012 O R D E R PER SHRI MAHAVIR SINGH, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS ARISING OUT OF THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-VI, KOLKATA IN APPEAL NO. 1079/CIT(A)-VI/09-10/WARD-5(2) DATED 29.06.2010 FOR THE ASSESSMENT YEAR 2005-06. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF LD. CIT(APPEALS) DELETING THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE ACT AT RS.78,77,281/-. FOR THIS, REVENUE HAS RAISED THE FOLLOWING TWO GROUNDS :- I.T.A. NO.: 1700/ KOL. / 2010 ASSESSMENT YEAR : 2005-06 PAGE 2 OF 5 (1) THAT THE LD. CIT(A)-VI, KOLKATA HAS ERRED IN LA W AS WELL AS ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS .78,77,281/- MADE U/S. 68 OF THE I.T. ACT WHEREAS IT IS CLEAR FR OM THE FACTS AND CIRCUMSTANCES AND THE EXISTING LEGAL POSITION THAT THE ASSESSEE FAILED TO EXPLAIN BEYOND REASONABLE DOUBT THE NATUR E OF CASH CREDIT IN ITS ACCOUNT. (2) THAT THE LD. CIT(A)-VI, KOLKATA HAS ERRED IN LA W AS WELL AS ON FACTS IN FAILING TO GIVE OPPORTUNITY TO THE A.O. TO VERIFY THE ADDITIONAL DOCUMENTS/ EVIDENCE (PHOTOCOPIES OF NEWS PAPER ADVERTISEMENT BY OFFICIAL LIQUIDATOR AND THE HONBL E HIGH COURTS ORDER NO. 32) PRODUCED BEFORE HIM AND THER EBY VIOLATING THE PROVISIONS OF RULE 46A OF THE I.T. RULES, 1962. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASS ESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF SCRAP TRADING. THE ASSES SING OFFICER NOTICED FROM THE PROFIT & LOSS A/C. THAT THE ASSESSEE HAS C REDITED THE SALES OF RS.78,77,282/- AND DECLARED PURCHASES AT RS.1,57,57 ,619/-. THE ASSESSING OFFICER OBSERVED THAT THE PURCHASES WERE MADE FROM OFFICIAL LIQUIDATOR, JHARKHAND ON VARIOUS DATES AND EVEN THE BILLS OF OFFICIAL LIQUIDATOR WERE ALSO ENCLOSED BY THE ASSESSEE. THE ASSESSEE SUBMITTED LIST OF PARTIES TO WHOM SALES WERE MADE, WHICH CONS ISTS OF FORTY PARTIES AGGREGATING TOTAL SALES OF RS.78,77,282/-. THE ASSE SSING OFFICER ASKED THE ASSESSEE TO PRODUCE COMPLETE BOOKS OF ACCOUNTS, SALE BILLS, BILLS AND VOUCHERS AND REGISTERS. THE ASSESSING OFFICER OBSER VED THAT THE ASSESESE FAILED TO PRODUCE CASH SALES MADE TO PARTI ES BY WAY OF DOCUMENTARY EVIDENCE TO PROVE CASH SALES. THE ASSES SING OFFICER, THEREFORE, TREATED THE SALES AS UNEXPLAINED UNDER S ECTION 68 OF THE ACT AND MADE THE ADDITION OF RS.78,77,281. BEING AGGRIE VED, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(APPEALS). I.T.A. NO.: 1700/ KOL. / 2010 ASSESSMENT YEAR : 2005-06 PAGE 3 OF 5 4. LD. CIT(APPEALS) ALLOWED THE CLAIM OF THE ASSESS EE BY OBSERVING AS UNDER :- THE APPELLANT SUBMITTED THAT THE D.D. TO THE OFFIC IAL LIQUIDATOR WAS PAID ON 09.12.2004 CONFIRMING THE PURCHASES. THE APPELLANT ALSO SUBMITTED THAT CASH W AS COLLECTED FROM THE PARTIES INTERESTED IN PURCHASING THE MATERIALS. THE LD. AR ARGUED THAT THE PURCHASERS WE RE ALL UNORGANISED MARKET OPERATORS AND THE APPELLANT DID NOT HAVE ANY CONTACTS WITH THEM TO PROVE THEIR GENIUSES . THE LD. A.R. ARGUED THAT THE AMOUNTS COLLECTED ON SALE WERE ADVANCE AMOUNTS COLLECTED AND THE DELIVERY OF THE M ATERIAL WAS GIVEN IN THE MONTH OF MARCH ONLY AND THAT TOO A FTER THE CHALLANS WERE MADE BY THE OFFICIAL LIQUIDATOR. THIS CAN BE SUPPORTED FROM THE CONFIRMATIONS GIVEN BY THE PURCHASERS AND ALSO THE BILL/ CHALLAN/INVOICE RAISE D BY THE OFFICIAL LIQUIDATOR. THE DETAILS OF THE MATERIALS A ND THE VEHICLE NUMBER WRITTEN ON THE BILLS OF THE OFFICIAL LIQUIDATOR CLEARLY PROVE THAT THE MATERIAL WAS LIFT ED BY THE APPELLANT. IN OTHER WORDS, THE MATERIAL WAS LIFTED BY THE PURCHASERS ON BEHALF OF THE APPELLANT. TAKING ALL T HE FACTS INTO CONSIDERATION THE OBSERVATIONS OF THE AO ON WH ICH HE MADE ADDITION U/S. 68 ARE NOT TENABLE. THEN IF THER E IS NO SALE, THE ENTIRE AMOUNT OF PURCHASES WOULD HAVE REM AINED IN THE CLOSING STOCK AS PURCHASE WAS NEVER DISPUTED . IT IS ILLOGICAL TO SUSTAIN THE BELIEF THAT THE CASH RECEI PTS WERE NOT OUT OF SALE PROCEEDS RECORDED AS INCOME FOR THE SECOND TIME U/S. 68 OF THE ACT, AFTER HAVING CONSIDERED TH E SAME ONCE IN THE PROFIT AND LOSS ACCOUNT IN THE FORM OF INCOME FROM SALES. AFTER GOING THROUGH THE SUBMISSIONS OF THE APPELLANT, I FIND MERIT IN THE SUBMISSIONS TAKING A LL THE FACTS INTO CONSIDERATION. IN VIEW OF THE ABOVE DISC USSIONS, I DIRECT THE AO TO DELETE THE ADDITION MADE U/S. 68 OF THE I.T. ACT. THIS GROUND OF APPEAL IS ALLOWED. AGGRIEVED, NOW REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT ONLY OB JECTION OF THE I.T.A. NO.: 1700/ KOL. / 2010 ASSESSMENT YEAR : 2005-06 PAGE 4 OF 5 REVENUE IS THAT THE LD. CIT(APPEALS) HAS ADMITTED T HE ADDUCING EVIDENCES WITHOUT PROVIDING OPPORTUNITY OF BEING HE ARD TO THE A.O, I.E. THE DOCUMENTS IN THE SHAPE OF PHOTOCOPIES OF NEWSPA PER ADVERTISEMENT BY OFFICIAL LIQUIDATOR AND THE ORDER OF THE HONBLE HIGH COURT, I.E. ORDER NO. 32 OF JHARKHAND HIGH COURT. W E FIND THAT THE ASSESSING OFFICER HIMSELF HAS RECORDED THE FACT THA T THESE PURCHASES WERE MADE AS PER THE ORDER OF HONBLE JHARKHAND HIG H COURT VIDE ORDER NO. 32 DATED 03.12.2004, WHICH WAS MADE ON 09 .12.2004 BY WAY OF DEMAND DRAFT DRAWN IN FAVOUR OF OFFICIAL LIQUIDA TOR AMOUNTING TO RS.85,05,500/-. WE FIND THAT THE ASSESSEE HAS MADE PURCHASES FROM OFFICIAL LIQUIDATOR UNDER THE ORDER OF HONBLE JHAR KHAND HIGH COURT AND THE PAYMENT WAS MADE BY DEMAND DRAFT CONFIRMING THE PURCHASES. ONCE IT IS A FACT THAT THE PURCHASES ARE MADE, THE ASSESSEE HAS PRODUCED COMPLETE BOOKS OF ACCOUNTS INCLUDING SALES BILLS, P URCHASE BILLS AND VOUCHERS OF EXPENDITURE. THE ASSESSING OFFICER COUL D NOT FIND OUT ANY FAULT IN THE BOOKS OF ACCOUNTS AND WITHOUT FINDING ANY FAULT IN THE BOOKS OF ACCOUNTS, HE MADE THE ADDITION OF SALES. WHETHER THE ASSESSING OFFICER IS EMPOWERED TO DO SO WITHOUT REJ ECTING THE BOOKS OF ACCOUNTS WHERE RETURN OF INCOME IS FURNISHED AND IN SUPPORT OF THAT RETURN, THE ACCOUNTS SHOULD BE TAKEN AS THE BASIS F OR ASSESSMENT. ORDINARILY CASH SALES MUST BE VOUCHED BY CASH MEMO OR BY ENTRY IN THE CASH BOOK TO SHOW THAT SALES CAN BE VERIFIED EASILY BUT IN THE CASE OF PETTY DEALERS, THIS SYSTEM MAY NOT BE PRACTICABLE A ND THE ONLY METHOD ADOPTED REGARDING SALES IS SALE PROCEEDS IN CASH ON DAILY BASIS, I.E. AT THE END OF THE DAY AND TO FIND OUT THE SALES AFTER MAKING NECESSARY ADJUSTMENTS FOR EXPENSES AND OUTGOINGS. BUT IN THE PRESENT CASE BEFORE US, THE ASSESSING OFFICER HAS NOWHERE POINTED OUT A NY DEFECT IN THE BOOKS OF ACCOUNTS AND WITHOUT REJECTION OF BOOK RES ULTS, THE ASSESSING I.T.A. NO.: 1700/ KOL. / 2010 ASSESSMENT YEAR : 2005-06 PAGE 5 OF 5 OFFICER CANNOT TREAT THE SALES AS CASH CREDITS BECA USE SALES ARE NEVER CASH CREDIT AND THESE ARE TRADING ADDITION. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT LD. CIT(APPEALS) HAS RIGHTLY D ELETED THE ADDITION AND WE CONFIRM THE SAME. THIS ISSUE OF REVENUES AP PEAL IS DISMISSED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVEN UE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DAY OF JUNE, 2012. SD/- SD/- C.D. RAO MAHAVIR SINGH (ACCOUNTANT MEMBER) (JUDICIAL M EMBER) KOLKATA, THE29TH DAY OF JUNE, 2012 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.