Manish Agarwal, Hooghly V. ITO, Ward-1(2), Hooghly, Hooghly

ITA 1721/KOL/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6413 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 29-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S K TULSIYAN
• Keywords: Unexplained cash credit; Unexplained expenditure; Gift; Business income
• Section: 69C; 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A, KOLKATA [BEFORE SHRI P.M. JAGTAP, AM AND SHRI S.S. VISWANETHRA RAVI, JM] I.T.A. NO. 1721/KOL/2016 ASSESSMENT YEAR: 2011-12 MANISH AGARWAL..............................................................................APPELLANT VILL. KUSHAIGACHI, PO. DCC, HOOGHLY 712 310 [PAN : AFUPA 0340 L] ITO, WARD 1(2)......................................RESPONDENT AAYAKAR BHAWAN, KHADINAMORE, CHINSURAH, HOOGHLY 712 101 APPEARANCES BY: SHRI S.K. TULSIYAN, ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE. SHRI SALLONG YADEN, ADDL. CIT APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : MARCH 14, 2018 DATE OF PRONOUNCING THE ORDER : MAY 18, 2018 ORDER PER P.M. JAGTAP, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) 6, KOLKATA DATED 28.07.2016. 2. GROUND NOS. 1, 3B, 3C AND 4B RAISED BY THE ASSESSEE IN THIS APPEAL ARE NOT PRESSED BY THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE US. THE SAME ARE ACCORDINGLY DISMISSED AS NOT PRESSED. 3. THE ISSUE INVOLVED IN GROUND NO 2 RELATES TO THE ADDITION OF RS. 12,00,000/- MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF DIFFERENCE IN THE BALANCE OF M/S. THREE STEEL MEN BY TREATING THE SAME AS UNEXPLAINED PURCHASES. 2 I.T.A. NO. 1721/KOL/2016 ASSESSMENT YEAR: 2011-12 MANISH AGARWAL 4. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL WHO IS ENGAGED IN THE BUSINESS OF DEALING IN SAREES ON WHOLESALE BASIS AND FABRICATION JOB. THE RETURN OF INCOME OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM ON 05.01.2012 DECLARING A TOTAL INCOME OF RS. 12,13,644/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, INFORMATION WAS SOUGHT BY THE A.O. BY ISSUING NOTICES UNDER SECTION 133(6) OF THE ACT FROM THE CONCERNED PARTIES TO CONFIRM THE BALANCES OF SUNDRY DEBTORS AND SUNDRY CREDITORS SHOWN BY THE ASSESSEE. FROM THE REPLY RECEIVED FROM ONE PARTY VIZ. M/S. THREE STEEL MEN TO THE SAID NOTICE, THE A.O. FOUND THAT THE CLOSING BALANCE OF THE ASSESSEE BY THE SAID PARTY WAS SHOWN AT RS. 1,19,14,654/- WHILE BALANCE OF THE SAID PARTY AS SHOWN IN THE BOOKS OF ACCOUNT OF THE ASSESSEE WAS RS. 1,07,14,644/-. THIS DIFFERENCE WAS EXPLAINED BY THE ASSESSEE BEFORE THE A.O. AS PURCHASES NOT INCLUDED. THIS EXPLANATION OF THE ASSESSEE WAS FOUND TO BE VAGUE BY THE A.O. HE ALSO FOUND THAT THE SAME WAS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE. HE, THEREFORE, TREATED THE DIFFERENCE OF RS. 12,00,000/- AS NOTHING BUT UNDISCLOSED SALE AND ADDED THE SAME TO HIS TOTAL INCOME. 5. THE ADDITION OF RS. 12,00,000/- MADE BY THE A.O. ON ACCOUNT OF ALLEGED UNDISCLOSED SALES WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT CERTAIN PURCHASES WERE MADE FROM M/S. THREE STEEL MEN ON APPROVAL BASIS AND ALTHOUGH THE ASSESSEE ACCOUNTED FOR THE SAID PURCHASES, THE TRANSACTIONS ULTIMATELY GOT CANCELLED AS A RESULT OF WHICH M/S. THREE STEEL MEN DID NOT PASS ANY ENTRY IN ITS BOOKS OF ACCOUNT. ON THE BASIS OF THIS SUBMISSION OF THE ASSESSEE, THE LD. CIT(A) HELD THAT EXCESS CLAIM FOR DEDUCTION OF RS. 3 I.T.A. NO. 1721/KOL/2016 ASSESSMENT YEAR: 2011-12 MANISH AGARWAL 12,00,000/- WAS CLAIMED BY THE ASSESSEE ON ACCOUNT OF PURCHASES WHICH FINALLY DID NOT MATERIALISE. HE, THEREFORE, CONFIRMED THE ADDITION OF RS. 12,00,000/- MADE BY THE A.O. BY TREATING THE SAME AS EXCESS DEDUCTION CLAIMED BY THE ASSESSEE ON ACCOUNT OF PURCHASES. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE DIFFERENCE OF RS. 12,00,000/- IN THE BALANCE OF M/S. THREE STEEL MEN AS POINTED OUT BY THE A.O. WAS ACTUALLY ON ACCOUNT OF CHEQUE ISSUED BUT NOT ENTERED IN THE PARTYS LEDGER. IN THIS REGARD, HE HAS INVITED OUR ATTENTION TO THE COPY OF LEDGER ACCOUNT OF M/S. THREE STEEL MEN GIVEN ON PAGE 1 AND 2 OF THE PAPER BOOK TO POINT OUT THAT THE CHEQUE FOR RS. 12,00,000/- CREDITED IN THE ACCOUNT OF M/S. THREE STEEL MEN AS ON 31.03.2011 WAS KEPT IN SUSPENSE. THE LEARNED DR, ON THE OTHER HAND, HAS CONTENDED THAT THIS EXPLANATION IN RESPECT OF DIFFERENCE OF RS. 12,00,0000/- IN THE BALANCE OF M/S. THREE STEEL MEN AS POINTED OUT BY THE A.O. IS SPECIFICALLY OFFERED ON BEHALF OF THE ASSESSEE FOR THE FIRST TIME BEFORE THE TRIBUNAL. HE HAS URGED THAT AN OPPORTUNITY SHOULD THEREFORE BE GIVEN TO THE A.O. TO VERIFY THE SAME. WE FIND MERIT IN THE CONTENTION OF THE LEARNED DR. THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE IS ACCORDINGLY SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE A.O. FOR DECIDING THE SAME AFRESH AFTER VERIFYING THE EXPLANATION OF THE ASSESSEE AS REGARDS THE DIFFERENCE OF RS. 12,00,000/- IN THE BALANCE OF M/S. THREE STILL MEN. GROUND NO. 2 IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 4 I.T.A. NO. 1721/KOL/2016 ASSESSMENT YEAR: 2011-12 MANISH AGARWAL 7. THE ISSUE INVOLVED IN GROUND NO 3A RELATES TO THE ADDITION OF RS. 29,89,570/- MADE BY THE A.O. AND SUSTAINED BY THE LD. CIT(A) ON ACCOUNT OF UNEXPLAINED PURCHASES. 8. AS PER THE INFORMATION RECEIVED BY THE A.O. FROM M/S. URANUS MERCHANTS PVT. LTD. IN RESPONSE TO NOTICE UNDER SECTION 133(6), THE SAID PARTY HAD MADE TOTAL SALES OF RS. 2,39,78,118/- TO THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WHEREAS THE TOTAL PURCHASES CLAIMED TO BE MADE BY THE ASSESSEE FROM THE SAID PARTY AMOUNTED TO RS. 2,69,67,688/-. THE A.O. ALSO FOUND THAT A JOURNAL ENTRY WAS PASSED BY THE ASSESSEE FOR RS. 30,00,000/- AS ON 31.03.2011 SHOWING CASH PAYMENT. SINCE NO SATISFACTORY EXPLANATION COULD BE OFFERED BY THE ASSESSEE IN THIS REGARD, A SUM OF RS. 30,00,000/- WAS TREATED BY THE A.O. AS UNEXPLAINED EXPENDITURE UNDER SECTION 69C AND ADDITION TO THAT EXTENT WAS MADE BY HIM TO THE TOTAL INCOME OF THE ASSESSEE. 9. THE ADDITION OF RS. 30,00,000/- MADE BY THE A.O. ON THIS ISSUE WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT GOODS WORTH RS. 29,89,750/- SUPPLIED BY M/S. URANUS MERCHANT PVT. LTD. WERE FOUND TO BE DEFECTIVE BY HIM, BUT THE REJECTION OF THE SAME WAS NOT ACCEPTED BY THE SAID PARTY. THIS EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE LD. CIT(A). ACCORDING TO HIM, EXCESS PURCHASES OF RS. 29,89,570/- WERE CLAIMED BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT AND THE SAME WERE LIABLE TO BE DISALLOWED. HE ACCORDINGLY SUSTAINED THE ADDITION MADE BY THE A.O. TO THE EXTENT OF RS. 29,89,570/- ON ACCOUNT OF EXCESS PURCHASES. 5 I.T.A. NO. 1721/KOL/2016 ASSESSMENT YEAR: 2011-12 MANISH AGARWAL 10. WE HAVE HEARD THE ARGUMENTS OF BOTH THIS SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT SOME OF THE GOODS REJECTED BY THE ASSESSEE WERE DULY RECORDED IN HIS BOOKS OF ACCOUNT BUT THE OTHER PARTY DID NOT ACCEPT THE SAME AND MAKE ANY ENTRY IN THE BOOKS WHICH RESULTED IN THE DIFFERENCE. HE HAS INVITED OUR ATTENTION TO THE COPIES OF RELEVANT LEDGER ACCOUNT PLACED IN HIS PAPER BOOK IN ORDER TO SUPPORT AND SUBSTANTIATE HIS CONTENTION. THE LEARNED DR, ON THE OTHER HAND, HAS CONTENDED THAT THIS SUBMISSION MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE TO EXPLAIN THE DIFFERENCE IN QUESTION WAS NOT SPECIFICALLY MADE BEFORE THE AUTHORITIES BELOW. HE HAS CONTENDED THAT AN OPPORTUNITY SHOULD THEREFORE BE GIVEN TO THE A.O. TO VERIFY THE SAME. WE FIND MERIT IN THIS CONTENTION OF THE LEARNED DR. THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE IS ACCORDINGLY SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE A.O. FOR DECIDING THE SAME AFRESH AFTER VERIFYING THE EXPLANATION OF THE ASSESSEE AS REGARDS THE DIFFERENCE OF RS. 29,89,570/- IN QUESTION. GROUND NO. 3A IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 11. THE ISSUE INVOLVED IN GROUND NO 4A RELATES TO THE ADDITION OF RS. 5,00,000/- MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF GIFT CLAIMED TO BE RECEIVED BY THE ASSESSEE BY TREATING THE SAME AS UNEXPLAINED CASH CREDIT UNDER SECTION 68. 12. DURING THE YEAR UNDER CONSIDERATION, CAPITAL OF RS. 5,00,000/- WAS INTRODUCED BY THE ASSESSEE. WHILE EXPLAINING THE SOURCE OF THE SAID CAPITAL, IT WAS SUBMITTED BY THE ASSESSEE THAT A GIFT OF RS. 6 I.T.A. NO. 1721/KOL/2016 ASSESSMENT YEAR: 2011-12 MANISH AGARWAL 5,00,000/- WAS RECEIVED BY HIM FROM ONE SMT GAYATRI DEVI. AN AFFIDAVIT OF THE SAID LADY WAS ALSO FILED BY THE ASSESSEE IN SUPPORT. THE ASSESSING OFFICER HOWEVER FOUND THAT THE CAPACITY OF THE SAID DONOR TO GIVE THE AMOUNT IN QUESTION AS GIFT TO THE ASSESSEE WAS NOT ESTABLISHED. HE ALSO HELD THAT THE GENUINENESS OF THE TRANSACTIONS INVOLVING GIFT WAS NOT PROVED. HE, THEREFORE, TREATED THE AMOUNT OF RS. 5,00,000/- AS UNEXPLAINED CASH CREDIT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 68. 13. THE ADDITION MADE BY THE A.O. UNDER SECTION 68 WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(A) AND AFTER CONSIDERING THE SUBMISSION MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(A) CONFIRMED THE ADDITION OF RS. 5,00,000/- MADE BY THE A.O. UNDER SECTION 68 BY HOLDING THAT THE CREDITWORTHINESS OF THE DONOR AND THE GENUINENESS OF THE TRANSACTION WAS NOT ESTABLISHED. 14. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN SUPPORT OF THE ASSESSEES CASE ON THIS ISSUE, THE LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED ON THE AFFIDAVIT FILED BY THE DONOR SMT. GAYATRI DEVI, A COPY OF WHICH IS PLACED AT PAGE NO 13 OF THE PAPER BOOK. A PERUSAL OF THE SAID AFFIDAVIT HOWEVER SHOWS THAT THERE IS NOTHING TO ESTABLISH THE CREDITWORTHINESS OF THE SAID DONOR FOR GIVING THE AMOUNT OF RS. 5,00,000/- AS GIFT TO THE ASSESSEE. THERE IS NO MENTION ABOUT SOURCE OF INCOME AVAILABLE TO THE SAID DONOR NOR THE SOURCE OF CASH CLAIMED TO BE UTILISED FOR GIVING GIFT TO THE ASSESSEE IS EXPLAINED. WE, THEREFORE, FIND OURSELVES IN AGREEMENT WITH THE AUTHORITIES BELOW THAT THE 7 I.T.A. NO. 1721/KOL/2016 ASSESSMENT YEAR: 2011-12 MANISH AGARWAL ASSESSEE HAS FAILED TO DISCHARGE THE PRIMARY ONUS OF ESTABLISHING THE CREDITWORTHINESS OF THE DONOR AS WELL AS THE GENUINENESS OF THE GIFT TRANSACTIONS. IN OUR OPINION, THERE IS THUS NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(A) CONFIRMING THE ADDITION MADE BY THE A.O. UNDER SECTION 68 BY TREATING THE GIFT AS UNEXPLAINED CASH CREDIT AND UPHOLDING THE SAME, WE DISMISS GROUND NO 4A OF THE ASSESSEES APPEAL. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MAY, 2018. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 18/05/2018 BISWAJIT, SR. PS COPY OF ORDER FORWARDED TO: 1. MANISH AGARWAL, KUSHAIGACHI, P.O. DCC, HOOGHLY 712 310. 2. ITO, WD 1(2), AAYAKAR BHAWAN, KHADINAMORE, CHINSURAH, HOOGHLY 712 101. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, SR. P.S. / H.O.O. ITAT, KOLKATA