Smt Kanak Chakraborty, Nadia V. ACIT, Circle-43, Kolkata, Kolkata

ITA 1825/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1188 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 15-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURAV KUMAR
• Section: 44AD

Judgement Text

ITA NO.1825/KOL/2016 SMT KANAK CHAKRABORY A.Y.2006- 07 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH SMC K OLKATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM] ITA NO.1825/KOL/2016 ASSESSMENT YEAR : 2006-07 SMT.KANAK CHAKRABORTY -VERSUS- A.C.I.T., CIR CLE-43, KOLKATA KOLKATA (PAN: ACOPC 6573 E) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI RIP DAS, FCA FOR THE RESPONDENT: SHRI SAURAV KUMAR, ADDL. CIT DATE OF HEARING : 28.07.2017. DATE OF PRONOUNCEMENT : 31.10.2017. ORDER PER J.SUDHAKAR REDDY, AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX-(A)-13, KOLKATA RELATING TO A.Y. 2006-07. 2. THE ASSESSEE HAS TWO PROPRIETORY BUSINESS U NDER THE NAME AND STYLE OF M/S. NB INTERNATIONAL AND M/S. NIM CHAN TEXTILE. 3. THE ADDITIONS AS CONFIRMED BY THE LD. CIT (A), WHICH ARE IN DISPUTE BEFORE ME ARE DEALT WITH ITEM-WISE. 4. AFTER HEARING THE RIVAL CONTENTIONS AND CONSI DERING THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW I HOLD AS FOLLOWS : A)DISALLOWANCE OF RS.1,36,773 THE AO DISALLOWED T HESE EXPENSES ON ADHOC BASIS. THE ASSESSEES CASE IS THAT THERE IS NO INCREASE IN THE EXPENDITURE AS COMPARED TO EARLIER YEARS AND NO ADHOC DISALLOWANCE CAN BE MADE WITHOUT BRINGING ON RECORD ANY EVIDENCE. I AGREE WITH THIS SUBMISSION. I HAVE GONE THROUGH THE TABULAR CHART OF ITA NO.1825/KOL/2016 SMT KANAK CHAKRABORY A.Y.2006- 07 2 EXPENDITURE GIVEN BY THE ASSESSEE FOR THE CURRENT A ND PREVIOUS THREE FINANCIAL YEARS. HENCE I DELETE THIS ADDITION AND ALLOW THE GROUND. B)ADDITION OF UNDISCLOSED NET PROFIT OF RS.1,26,240 /- - THE AO APPLIED THE PROVISION OF SECTION 44AD TO THE TURN OVER OF M/S. NIM CHAN T EXTILE AND MADE AN ADDITION OF RS.1,26,240/-. THE ASSESSEE SUBMITS THAT THE BOOKS WERE MAINTAINED IN THE REGULAR COURSE OF BUSINESS. THE FACT REMAINS THAT THE ASSES EE HAS NOT PRODUCED THE BOOKS OF ACCOUNT. THE ASSESSEES CONTENTION IS THAT THE ASSE SSEE HAS CARRIED OUT THE BUSINESS DURING THE YEAR AND THE GROSS RECEIPT ARE RS.29,35 ,120/-. THIS FIGURE HAS BEEN ACCEPTED BY THE AO. ON THE FACTS AND CIRCUMSTANCES OF THE CASE I UPHOLD THE ADDITION OF RS.1,26,240/- AND DISMISS THIS GROUND OF THE ASS ESSEE AS BOOKS OF ACCOUNT WERE NOT PRODUCED AND HENCE THE APPLICATION OF SECTION 44AD IS CORRECT. C)THE NEXT ADDITION IS DISALLOWANCE OF CLAIM OF INT EREST PAID OF RS.8,00,082/-. THE INTEREST WAS PAID ON LOANS TAKEN FROM THE BANK. THE DISALLOWANCE WAS MADE ON THE GROUND THAT THE ASSESSEE HAS SUFFICIENT CASH AND BA NK BALANCES AND HENCE THERE WAS NO NECESSITY OF BORROWING THIS AMOUNT. ADMITTEDLY, TH E BANK LOANS WAS SANCTIONED AS, OVER DRAFT LIMIT (OD) OF RS.200 LAKHS, RS.100 LAKHS FOR FOREIGN BILL PURCHASE (FBW)AND RS.50 LAKHS FOR PACKING CREDIT (PCL) . TH E VERY FACT THAT THE BANK HAS GRANTED SUCH FACILITIES DEMONSTRATED THAT THESE WER E FOR THE PURPOSE OF BUSINESS. THE BANK ALSO INSISTED ON MARGIN MONEY BY WAY OF FIXED DEPOSITS. IT IS NOT FOR THE AO TO DECIDE BUSINESS NECESSITY. THESE LIMITS GRANTED BY THE BANK ARE NOT FOR PERSONAL PURPOSES. HENCE THIS DISALLOWANCE IS DELETED AND T HE GROUND OF THE ASSESSEE IS ALLOWED. D)THE LAST ADDITION IS OF AN AMOUNT OF RS.9,85,175/ - ON THE GROUND THAT CLOSING STOCK WAS UNDERVALUED. THE AO AS WELL AS CIT(A) WERE OF T HE VIEW THAT THE COST PRICE OF THE CLOSING STOCK SHOULD BE TAKEN. THE ASSESSEE CLAIMS THAT HE REGULARLY FOLLOWS THE METHOD OF VALUING THE STOCK AT REALISABLE VALUE CO ST OR NET VALUE WHICHEVER IS LESS. THE AO HAS TAKEN THE AVERAGE VALUE OF OPENING STOCK AND THE AVERAGE VALUE OF CLOSING STOCK AND AS MULTIPLIED THIS VALUE WITH THE CLOSIN G INVENTORY OF 1,19,4125.25 KGS TO ARRIVE AT AN ADDITION OF RS.9,85,175/-. THE ASSESSE ES CASE IS THAT, THE REALISABLE VALUE ITA NO.1825/KOL/2016 SMT KANAK CHAKRABORY A.Y.2006- 07 3 HAS FALLEN AS THE ASSESSEE WAS HOLDING THIS ITEM O F STOCK FOR THE PAST SEVERAL YEARS. IT WAS SUBMITTED THAT DUE TO PASSAGE OF TIME THE QUALI TY DETERIORATE AND ULTIMATELY THE ASSESSE COULD STOCK AT A MARKET PRICE OF RS.200 PER KG AS AGAINST THE COST PRICE OF RS.450/- PER KG. THE SALE INVOICE OF THE NEXT YEARS WAS PRODUCED AS EVIDENCE OF FALL OFF THE MARKET PRICE. THIS SALE OF STOCK PROVES THE CASE OF THE ASSESSEE. NO CONTRARY EVIDENCE IS PUT BEFORE ME BY THE REVENUE. UNDER THE CIRCUMSTANCES THE EVIDENCE FURNISHED BY THE ASSESSEE SHOULD HAVE BEEN ACCEPTED . THUS I DELETE THIS ADDITION ON ACCOUNT OF UNDER VALUATION OF STOCK AND ALLOW THIS GROUND OF THE ASSESSEE. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART. O RDER PRONOUNCED IN THE COURT ON 31.10.2017. SD/- [ J.SUDHAKAR REDDY ] ACCOUNTANT MEMBER DATED :.31.10.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.SMT.KANAK CHAKRABORTY, C/O P.S.GUPTA (ADVOCATE), 100, BANK LANE, HATAR PARA, P.O.KRISHNAGAR, DIST. NADIA. PIN-741101. 2. A.C.I.T., CIRCLE-43, KOLKATA. 3. C.I.T.(A)-13, KOLKATA 4.C.I.T-15, KOLKATA . 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, ITAT KOLKATA BENCHES