UTPAL BOSE, Howrah V. I.T.O.Wd - 48(1)/Kol., Kolkata

ITA 1795/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78439 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2014
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 07-12-2012
• Court: TRIBUNAL
• Department Lawyers: SANJAY MUKHERJEE JDIT
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Unexplained investment
• Section: 40A(3); 143(3); 69

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.1795/KOL/2012 #% &'/ ASSESSMENT YEAR: 2008-09 UTPAL BOSE VS. INCOME-TAX OFFICER, WD-48(1), KOLKATA. (PAN: AEEPB9411L) ()* /APPELLANT ) (+,)*/ RESPONDENT ) DATE OF HEARING: 31.07.2014 DATE OF PRONOUNCEMENT: 31.07.2014 FOR THE APPELLANT: SHRI MIRAJ D. SHAH FOR THE RESPONDENT: SHRI SANJAY MUKHERJEE, JDIT, SR. DR / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXX, KOLKATA IN APPEAL NO. 263/CIT(A)-XXX/WD-48(1)/2010-11 DATED 30.08.2012. ASSESSMENT WAS FRAMED BY ITO, WARD-48(1), KOLKATA U/S. 143(3) OF THE INCOME-TAX A CT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEARS 2008-09 VIDE HIS ORDER D ATED 24.12.2010. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF UNEXPLAINED CAPITAL INVESTMENT OF RS.5 LACS. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A DISTRIBUTOR OF RELIANCE COMMUNICATION INFRASTRUCTURE LTD. (RCIL) FOR ITS RECHARGE COUPON DIVISION. RCIL IS A CELLULAR SERVICE PROVID ER PROVIDING CELLULAR MOBILE TELEPHONY SERVICE IN THE COUNTRY. ITS BUSINESS MODEL LIKE OT HER CELLULAR OPERATORS INVOLVED APPOINTMENT OF DISTRIBUTORS OF VARIOUS SERVICE PRODUCTS LIKE RECHA RGE COUPONS, SIM CARDS ETC. WHICH WERE CHANELLED TO RETAIL CUSTOMERS OPTING FOR TELEPHONY SERVICES OF THE SERVICE PROVIDER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ADDED A SU M OF RS.51,19,400/- AS UNDISCLOSED PURCHASES MADE FROM RCIL IN VIOLATION OF THE PROVIS IONS OF SECTION 40A(3) OF THE ACT. FURTHER, THE AO ADDED BACK A SUM OF RS. 1,09,080/- ON ACCOU NT OF GROSS PROFIT ON THE ABOVE UNDISCLOSED PURCHASE SOLD OUT. FURTHER, THE AO ALS O ADDED A SUM OF RS. 5 LACS AS CAPITAL INVESTMENT FOR THESE TRANSACTIONS. FOR MAKING THIS ADDITION, THE AO OBSERVED IN THE ASSESSMENT ORDER AS UNDER: 2 ITA NO.1795/K/2012 UTPAL BOSE AY 08-09 IN VIEW OF THE DETAILED DISCUSSIONS MADE ABOVE, IT IS LOGICALLY HELD THAT THE ASSESSEE MADE PURCHASE OUT OF BOOKS TO THE TUNE OF RS.455726 6. CONSIDERING MERIT OF THE CASE AND FUND FLOW NATURE OF THE BUSINESS, IT IS LOGICAL LY HELD THAT APPROXIMATELY RS. 5 LAKHS WERE UTILIZED FROM UNDISCLOSED SOURCE BY THE ASSESS EE TO CONDUCT THE BUSINESS MADE OUT OF BOOKS. ACCORDINGLY, A SUM OF RS.5,00,000/- IS A DDED BACK TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE INCOME TAX ACT 1961. PENALTY PROCEEDING UNDER SECTION 271(1) IS INITIA TED SEPARATELY. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALSO CONFIRMED THE ACTION OF AO BY OBSERVING AS UNDER: APART FROM THE ABOVE, THE A.O. HAS ALSO MADE ADDIT ION OF RS.5,00,000/- U/S. 69 AS UNEXPLAINED INVESTMENT IN THE BUSINESS ON ACCOUNT O F THE UNDISCLOSED PURCHASES FROM RICL. AS DISCUSSED ABOVE, THE SAME IS FOUND TO BE J USTIFIED AND REASONABLE, CONSIDERING THE TURNOVER AND THE FACT THAT AN INITI AL UNDISCLOSED AMOUNT WOULD HAVE TO BE INVESTED TO CARRY THE TRANSACTIONS WHICH IS OBVI OUSLY NOT DISCLOSED IN THE APPELLANTS ACCOUNT THIS ADDITION OF RS.5,00,000/- IS THEREFORE ALSO CONFIRMED. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE US. 3. WE FIND THAT THERE IS UNDISCLOSED PURCHASES TO T HE TUNE OF RS.45,57,266/- AND THERE IS SOME ELEMENTS OF INVESTMENT IN THE SAME. AS AGUED BY LD. COUNSEL FOR THE ASSESSEE AS WELL AS LD. SR. DR THAT A REASONABLE ESTIMATE OF UNEXPLAINE D INVESTMENT CAN BE MADE FOR THE REASON THAT THE NATURE OF BUSINESS OF ASSESSEE IS CLEAR TH AT IT DOES NOT REQUIRE MUCH OF THE INVESTMENT, ASSESSEE BEING A DISTRIBUTOR OF RCIL FOR ITS RECHAR GE COUPON DIVISION. THE ASSESSEE BEING A DISTRIBUTOR PROVIDING TELEPHONY SERVICES TO RETAIL CUSTOMERS I.E. RECHARGE COUPON, SIM CARDS ETC. THIS TYPE OF NATURE OF BUSINESS DOES NOT REQUIRE MU CH OF THE INVESTMENT AND FOR WHOLE OF THE YEAR THE UNACCOUNTED PURCHASES AT RS.45 LACS IS TAK EN THAN THE ROTATION WILL COME AT LEAST 20 TIMES. IT MEANS THAT THE ASSESSEES UNACCOUNTED IN VESTMENT CAN ONLY BE CONSIDERED AT RS. 2 LACS. TO THIS PROPOSITION, BOTH LD. COUNSEL FOR TH E ASSESSEE AS WELL AS LD. SR. DR FAIRLY AGREED. IN SUCH TERMS, WE ARE OF THE VIEW THAT THE ADDITION SHOULD BE RESTRICTED AT RS. 2 LACS INSTEAD OF RS.5 LACS. WE DIRECT ACCORDINGLY. APPEAL OF ASSES SEE IS ALLOWED IN PART. 4. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED IN PART. 5. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- , . . . . , ' #!' ' #!' ' #!' ' #!' , (P. K. BANSAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 31 ST JULY, 2014 -. #/0 #1 JD.(SR.P.S.) 3 ITA NO.1795/K/2012 UTPAL BOSE AY 08-09 2 +##3 43&5- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT SHRI UTPAL BOSE, AMTA ROAD, HOWRAH-7114 01 2 +,)* / RESPONDENT ITO, WARD-48(1), KOLKATA. 3 . # ( )/ THE CIT(A), KOLKATA 4. 5. # / CIT KOLKATA 3:#; +# / DR, KOLKATA BENCHES, KOLKATA ,3 +#/ TRUE COPY,