ITO, Ward - 36(2), Kolkata V. M/s. Shree Nursing Timber & Electric Stores, Kolkata

ITA 1784/KOL/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 5572 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2010
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 07-07-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 23-10-2009
• Court: TRIBUNAL
• Department Lawyers: PIYUSH KOLHE
• Assessee Lawyers: D K PATNI
• Keywords: Opportunity of being heard
• Section: 133(6)

Judgement Text

1 , , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH A, KOLKATA () BEFORE . . . . . . . . , ,, , SHRI B.R.MITTAL, JUDICIAL MEMBER. ! ! ! ! /AND . .. .'# '#'# '#. .. . , $% SHRI C.D. RAO, ACCOUNTANT MEMBER !& !& !& !& / ITA NO. 1784/KOL/2009 '( )* / ASSESSMENT YEAR : 2005-06 (,- / APPELLANT ) I.T.O., WARD-36(2), KOLKATA - ' - - VERSUS - (/0,-/ RESPONDENT ) M/S. SHREE NURSING TIMBER & ELECTRIC STORES (PAN:AAMFS 0831M) ,- 1 2 $/ FOR THE APPELLANT: SHRI PIYUSH KOLHE /0,- 1 2 $ / FOR THE RESPONDENT : SHRI D.K.PATNI $3 / ORDER ( . .. .'# '#'# '#. .. . ) $% PER SHRI C.D.RAO, A.M . THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE C.I.T.(A)-XX, KOLKATA DATED 24.08.2009 FOR THE ASSESSMENT YEAR 20 05-06. 2. IN THIS APPEAL, THE REVENUE HAS TAKEN THE FOLLOW ING GROUNDS: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.7,40,625.59 ON ACCOU NT OF UNDISCLOSED PURCHASE. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.88,208/- ON ACCOUNT OF PROFIT ON SALE OF UNDISCLOSED PURCHASE/GOODS. 3. THE LD. CIT(A) HAS ERRED IN THE FACTS AND CIRCU MSTANCES OF THE CASE IN DELETING ADDITION OF RS.1,59,041/- MADE ON ACCOU NT OF UNEXPLAINED PAYMENTS. 4. THE LD. CIT(A) HAS ALSO ERRED IN THE FACTS AND CIRCUMSTANCES IN DIRECTING TO DELETE THE ADDITION OF RS.21,17,758.29 ON THE GROUND OF BOGUS AND CEASED LIABILITIES OF SUNDRY CREDITORS. 2 3. AT THE TIME OF HEARING BEFORE US, THE LD. D.R., APPEARING ON BEHALF OF THE REVENUE, HAS RELIED ON THE ORDERS OF THE AO IN RESP ECT OF THE FIRST THREE GROUNDS. 4. ON THE OTHER HAND, THE LD. COUNSEL, APPEARING ON BEHALF OF THE ASSESSEE, HAS RELIED ON THE ORDERS OF THE LD. CIT(A). 5. AFTER HEARING THE SUBMISSIONS OF BOTH THE REPRES ENTATIVES OF THE PARTIES, IT IS OBSERVED THAT THE AO AND THE LD. CIT(A) HAVE OBSERV ED IN THE ASSESSMENT ORDER AND IN THE FIRST APPELLATE ORDER RESPECTIVELY AS UNDER: THE OBSERVATIONS OF THE AO AS SUCH YOU ARE ONCE AGAIN REQUESTED TO EXPLAIN. (1) ON ACCOUNT OF M/S. CABLE CORPORATION OF INDIA L TD. WHY IT SHOULD NOT HE CONSIDERED THAT YOU HAVE MADE UNDISCLOSED PURCHASE AMOUNTING TO RS.7,40,625.59 DURING THE RELEVANT PRE VIOUS YEAR, FROM M/S. CABLE CORPORATION OF INDIA LTD. AND MADE UNDISCLOSE D SALES OF SUCH GOODS. AS SUCH WHY THE ENTIRE AMOUNT OF RS.7,40,625.59 SHOULD NOT BE ADDED BACK TO YOUR TOTAL INCOME ON ACCOUNT OF UNDISCLOSED PURCHASES OF SUCH GOODS ALONG WITH PROPORTIONATE PROFIT ON SALE OF SUCH GOODS AMOUNTIN G TO RS.88,208/- (ESTIMATED @ 11.91% G.P. AS SHOWN BY YOU). (2) WHY THE PAYMENT OF RS.1,59,041/- MADE TO M/ R.K TRADERS DURING THE YEAR WHICH IS NOT REFLECTED IN YOUR BOOKS OF ACCOUNT SHO ULD NOT HE ADDED BACK TO YOUR TOTAL INCOME ON ACCOUNT OF UNDISCLOSED & UNEXP LAINED PAYMENT MADE BY YOU. (6)(I) THE A.R. OF THE ASSESSEE APPEARED ON 20.12.2 007 BUT DID NOT PRODUCE OR FILE ANY SUBMISSION OR EXPLANATION TO THE QUERIES A ND ISSUES RAISED IN THE ABOVE MENTIONED LETTER DATED 14.12.2007. HENCE, IT IS CON SIDERED THAT THE ASSESSEE HAS NO EXPLANATION TO OFFER. (II) AS SUCH, THE PURCHASES OF RS.7,40,625.59 MADE BY THE ASSESSEE FROM M1S CABLE CORPORATION OF INDIA LTD. DURING THE YEAR IS TREATED TO BE UNDISCLOSED PURCHASE OF THE ASSESSEE WHICH HAS BEEN SOLD BY THE ASSESSEE OUT OF HIS BOOKS AND ACCORDINGLY ADDED BACK TO HIS TOTAL INCOME ON A CCOUNT OF UNDISCLOSED PURCHASE. FURTHER, THE PROFIT EARNED FROM SALE OF S UCH, UNDISCLOSED PURCHASE OF, GOODS IS CALCULATED ON ESTIMATE @ 10.91%, WHICH IS SAME AS THE RATE OF GROSS PROFIT SHOWN BY THE ASSESSEE DURING THE RELEV ANT PREVIOUS YEAR, AMOUNTING TO RS.88,208/- I.E. (10.91% OF RS.7.40,62 5.59) AND ADDED BACK TO HIS TOTAL INCOME. (III) AS SUCH, THE UNDISCLOSED PAYMENT OF RS.1,59,0 41/- MADE BY THE ASSESSEE TO M/S R.K. TRADERS, DURING THE YEAR, IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF UNEXPLAINED PAYMENTS . 3 OBSERVATIONS OF THE LD. CIT(A) 3.4 I HAVE PERUSED THE ASSESSMENT ORDER AND THE RE MAND REPORT: I HAVE ALSO CONSIDERED THE SUBMISSION OF THE APPELLANT AND THE MATERIAL ON RECORD. THE APPELLANT DENIED PURCHASE OF. RS.7,40,625.59 BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. M/S CABLE CORPORATION OF INDIA LTD HAS SUBSEQUENTLY CONFIRMED TO THE AO THAT THE TRANSACTI ON REGARDING PURCHASE OF RS.7,40,625.59 DOES NOT ACTUALLY PERTAIN TO THE APP ELLANT. THE AO HAS NOT REBUTTED THE CLAIM OF THE APPELLANT IN THE REMAND P ROCEEDINGS. THE AO HAS BROUGHT NO POSITIVE MATERIAL ON RECORD TO DISPROVE THE CLAIM MADE BY THE APPELLANT OR TO NEGATE THE EVIDENCE FILED. THE MATE RIAL ON RECORD ONLY SUGGESTS THAT THE SAID TRANSACTION CANNOT BE HELD TO BE PERT AINING TO THE APPELLANT. THE ADDITION OF RS.7,40,625.59 ON ACCOUNT OF UNDISCLOSE D PURCHASE IS NOT JUSTIFIED AND IS DIRECTED TO BE DELETED. THE CONSEQUENT ADDIT ION OF RS.88,208/- ON ACCOUNT OF PROFIT ON CORRESPONDING SALES IS ALSO DE LETED. GROUND NO. 1 & 2 ARE ALLOWED. 4.4 I HAVE CONSIDERED RIVAL SUBMISSIONS AND ALSO T HE MATERIAL ON RECORD. I HAVE PERUSED THE LEDGER COPY OF M/S R.K. TRADERS AN D ALSO THE BANK STATEMENT PRODUCED. THE CONTENTION OF THE APPELLANT THAT THE PAYMENTS WERE MACE BY CHEQUES AND THAT THEY ARE REFLECTED IN THE BANK STA TEMENT IS FACTUALLY CORRECT. THE PAYMENTS ARE DULY RECORDED IN THE BOOKS OF THE APPELLANT. THE ADDITION OF RS.1,59,041/- IS NOT JUSTIFIED AND IS DIRECTED TO B E DELETED. GROUND NO.3 IS ALLOWED . 5.1 ON CAREFUL PERUSAL OF THE OBSERVATIONS OF THE A O AS WELL AS THE LD. CIT(A), KEEPING IN VIEW OF THE FACT THAT THE LD. D.R. COULD NOT BRING ANY CONTRARY MATERIALS TO CONTROVERT THE OBSERVATIONS OF THE LD. CIT(A), WE FIND NO INFIRMITY IN THE ORDERS OF THE LD. CIT(A) TO BE INTERFERED WITH. THEREFORE, TH E GROUND NOS.1 TO 3 OF THE REVENUE ARE DISMISSED. 6. AS REGARDING THE GROUND NO.4, BRIEF FACTS ARE TH AT THE AO HAS ADDED AN AMOUNT OF RS.21,17,758.29 ON ACCOUNT OF OUTSTANDING SUNDRY CREDITORS OUT OF RS.47,92,705.72 SHOWN BY THE ASSESSEE AS OUTSTANDING SUNDRY CREDITO RS BY OBSERVING THAT IN RESPECT OF 18 SUNDRY CREDITORS, THOUGH THE NOTICE UNDER SECTIO N 133(6) ARE ISSUED ON TEST-CHECK BASIS, SINCE THERE IS NO RESPONSE FROM THE SUNDRY C REDITORS AND THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE OR DETAILS TO PROVE THE AUT HENTICITY OF THE EXISTENCE OF THE OUTSTANDING LIABILITIES AMOUNTING TO RS.21,17,758.2 9 CONSIDERING THE SAME AS BOGUS LIABILITY AND ALSO CEASED TO EXIST. HOWEVER, ON APP EAL, THE LD. CIT(A) HAS DELETED THE SAME BY OBSERVING AS UNDER: 4 5.4 I HAVE PERUSED THE ASSESSMENT ORDER AND THE RE MAND REPORT. I HAVE CONSIDERED THE MATERIAL ON RECORD AND HEARD THE LD. AR. THE APPELLANT HAS FULLY PAID OFF, IN SUBSEQUENT YEARS, LIABILITIES IN THE CASE OF M/S AJANTA ROADWAYS AND M/S BHARAT ELECTRICAL INDUSTRIES. THE LIABILITY IN THE CASE OF M/S JAIPUR METALS & ELECTRICALS LTD. HAS BEEN PARTLY PA ID OFF. THE AO HAS NOTED THAT IN RESPONSE TO NOTICES U/S 13 3(6), M/S CRYSTAL CABLES INDUSTRIES LTD AND M/S SUNIL & CO REPLIED TH AT THERE WAS NO OUTSTANDING LIABILITY IN THEIR BOOKS IN THE NAME OF THE APPELLANT. IT WAS CONTENDED BEFORE ME THAT THE SAID PARTIES WERE PAID OFF BY M/S PURBANCHAL UDYOG ON BEHALF OF THE APPELLANT BUT THE CORRESPOND ING ENTRIES COULD NOT BE MADE IN THE BOOKS OF THE APPELLANT AND THAT THE LIA BILITIES TO THE SAID PARTIES WERE NOT REPLACED BY LIABILITY TO M/S PURBANCHAL UD YOG. CONFIRMATION FROM M/S PURBANCHAL UDYOG WAS FILED. THE PAYMENTS WERE M ADE BY ACCOUNT PAYEE CHEQUES. THE AO HAS BROUGHT NO MATERIAL ON RECORD, DURING THE COURSE OF REMAND PROCEEDINGS, TO REBUT THE CLAIM OF THE APPEL LANT. IN HIS REMAND REPORT, THE AO HAS ONLY MENTIONED THAT THE NAME OF M/S PURB ANCHAL UDYOG DOES NOT APPEAR AS LOAN CREDITOR IN THE BALANCE SHEET OF THE APPELLANT. ADMITTEDLY, THERE IS AN ACCOUNTING MISTAKE BUT THERE IS NO MATERIAL O N RECORD TO SUGGEST ANY CESSATION OF) LIABILITY. IN CASE OF M/S BHAIA ELECTRONICS & ELECTRICALS, IT WAS SUBMITTED THAT THE PARTY HAS SHIFTED ITS OFFICE FROM P-38, INDIA EXCHA NGE PLACE, KOLKATA TO 4A, POLLOCK STREET, KOLKATA. CONFIRMATION FROM M/S BHAI A ELECTRONICS & ELECTRICALS WAS ALSO FILED. IT WAS SENT TO THE AO B UT, IN THE REMAND REPORT, THE AO HAS OFFERED NO COMMENTS. THE ADDRESS OF M/S H.V. TRADERS AT JAIL ROAD, FANCY BAZAR, GAUHATI WAS FURNISHED BEFORE THE AO. BUT, THE AO HAS BROUGH T NO MATERIAL ON RECORD TO SHOW THAT THE LIABILITY IS BOGUS AND HAS CEASED TO EXIST. M/S GEC OF INDIA LTD AND M/S GENLEC LTD ARE WELL-KN OWN LIMITED COMPANIES AND SIMPLY BECAUSE NOTICE U/S 133(6) COUL D NOT BE SERVED AT THE GIVEN ADDRESS CAN BE NO JUSTIFICATION FOR THE AO TO HOLD THAT THE LIABILITIES ARE BOGUS OR HAVE CEASED TO EXIST. NO FURTHER EFFORTS W ERE MADE BY THE AO TO ASCERTAIN THE FACTS J AND TO VERIFY THE GENUINENESS OF THE LIABILITIES. THE AO HAS FAILED TO BRING POSITIVE MATERIAL ON RECORD TO ESTA BLISH THAT THE LIABILITIES HAVE ACTUALLY CEASED TO EXIST . 7. AGGRIEVED BY THIS, NOW THE REVENUE IS IN APPEAL WITH THE ABOVE ISSUE BEFORE US. 8. AT THE TIME OF HEARING BEFORE US, THE LD. D.R., APPEARING ON BEHALF OF THE REVENUE, HAS CONTENDED THAT THE FINDINGS OF THE LD. CIT(A) THAT NO FURTHER EFFORTS HAVE BEEN MADE BY THE AO TO ASCERTAIN THE FACTS AND TO VERIFY THE GENUINENESS OF THE LIABILITIES IS NOT ACCEPTABLE, SINCE THERE IS NO CO OPERATION FROM THE ASSESSEES POINT OF VIEW AND IN RESPONSE TO THE NOTICE ISSUED UNDER SEC TION 133(6). THE AO COULD NOT GET 5 ANY RESPONSE AND SINCE THE ONUS IS WITH THE ASSESSE E TO ESTABLISH WHETHER THE LIABILITIES ARE EXISTED OR CEASED TO EXIST, IT IS NOT FAIR ON T HE PART OF THE LD. CIT(A) TO SIMPLY DELETE THE SAME BY OBSERVING THAT M/S.GEC OF INDIA LTD. AND M/S. GENLEC LTD. ARE WELL-KNOWN LIMITED COMPANIES AND SIMPLY BECAUSE NOT ICE UNDER SECTION 133(6) COULD NOT BE SERVED AT THE GIVEN ADDRESS, THE AO IS NOT J USTIFIED TO ADD THE SAME BY TREATING THE SAID LIABILITIES AS BOGUS OR HAVE CEASED TO EXI ST. THEREFORE, HE REQUESTED TO SET ASIDE THE MATTER TO THE FILE OF THE AO FOR FRESH VE RIFICATION. 9. ON THE OTHER HAND, THE LD. COUNSEL, APPEARING ON BEHALF OF THE ASSESSEE, HAS HEAVILY RELIED ON THE ORDERS OF THE LD. CIT(A) AND FURTHER CONTENDED THAT IN THE CASE OF SUNDRY CREDITORS, THE ASSESSEE ALSO HAS DISCHARGED THE LIABILITIES IN THE SUBSEQUENT ASSESSMENT YEARS. THEREFORE, HE REQUESTED TO UPHOLD THE ORDERS OF THE LD. CIT(A). 10. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CARE FUL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD, IT IS OBSERVED THAT EVEN THOUG H THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT SOME OF THE LIABILITIES HAVE BEE N DISCHARGED BY THE ASSESSEE IN THE SUBSEQUENT ASSESSMENT YEARS, HE HAS NOT FILED ANY E VIDENCE IN SUPPORT OF THIS SUBMISSION. IT IS FURTHER OBSERVED THAT IT IS NOT F AIR ON THE PART OF THE LD. CIT(A) TO STATE THAT M/S.GEC OF INDIA LTD. AND M/S. GENLEC LT D. ARE WELL-KNOWN LIMITED COMPANIES AND SIMPLY BECAUSE NOTICE UNDER SECTION 1 33(6) COULD NOT BE SERVED AT THE GIVEN ADDRESS, THE AO IS NOT JUSTIFIED TO ADD THE S AME BY TREATING THE SAID LIABILITIES AS BOGUS OR HAVE CEASED TO EXIST. SINCE THE ONUS IS ON THE ASSESSEE, IT IS THE DUTY ON THE PART OF THE ASSESSEE TO GIVE SATISFACTORY EXPLANATI ON TO THE AO. EVEN BEFORE US ALSO, THE LD. COUNSEL, APPEARING ON BEHALF OF THE ASSESSE E, HAS NOT GIVEN ANY DETAILS IN RESPECT OF SUNDRY CREDITORS EXCEPT BY PLACING SOME RELIANCE ON SOME JUDICIAL PRONOUNCEMENTS. THEREFORE, WE SET ASIDE THE ORDERS OF THE LD. CIT(A) ON THIS ISSUE AND REMIT BACK THE ISSUE TO THE FILE OF THE AO TO R E-DECIDE THE SAME, AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THE ASSESSEE WILL BE AT LIBERTY TO ESTABLISH THAT THE SUNDRY CREDITORS ARE REALLY I N EXISTENCE AND THE SAME HAS BEEN DISCHARGED IN THE SUBSEQUENT ASSESSMENT YEARS BY PR OVIDING THE EVIDENCE IN SUPPORT OF 6 THIS SUBMISSION. AS A RESULT, THIS GROUND OF THE RE VENUE IS ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED IN PART FOR STATISTICAL PURPOSES. 4 $3 5 6' 7 48 THIS ORDER IS PRONOUNCED IN THE COURT ON 22.10.201 0 SD/- SD/- . . . . . . . . , ,, , B.R.MITTAL, JUDICIAL MEMBER . .. .'# '#'# '#. .. . , $% C.D. RAO, ACCOUNTANT MEMBER ( (( (#% #% #% #%) )) ) DATE: 22.10.2010 MST(SR.P.S.) $3 1 /9 :$9);- COPY OF THE ORDER FORWARDED TO: 1. M/S. SHREE NURSING TIMBER & ELECTRIC STORES, 55, EZ RA STREET, KOLKATA-700 001. 2. I.T.O., WARD-36(2), KOLKATA 3. THE CIT(A) 4. THE CIT 5 . DR, KOLKATA BENCHES, KOLKATA 09 // TRUE COPY, $3'6/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES