M/s. National Industries, Siliguri V. DCIT, C ircle- 1, Siliguri, Siliguri

ITA 1836/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54553 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-02-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 27-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K R MONDAL
• Keywords: Unexplained expenditure
• Section: 143(3); 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , ! . '# . ) [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE SHR I C. D. RAO, AM] $ $ $ $ / I.T.A NO. 1836/KOL/2010 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR : 2005-06 M/S. NATIONAL INDUSTRIES VS. DEPUTY COMMISSIONER OF INCOME-TAX, (PAN-AAEFN 3825 A) CIRCLE-1, SILIGURI (*+ /APPELLANT ) (,-*+/ RESPONDENT ) FOR THE APPELLANT: SHRI SUBASH AGARWAL FOR THE RESPONDENT: SHRI K. R. MONDAL . / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A), SILIGURI, KOLKATA PASSED IN APPEAL NO. 106/CIT(A)/SLG/07-08 DATED 06.07.2010. A SSESSMENT WAS FRAMED BY DCIT, CIR- 1, SILIGURI, U/S. 143(3) OF THE INCOME TAX ACT, 196 1 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2005-06 VIDE HIS ORDER DATED 17.12. 2007. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) IN CONFIRMING THE ACTION OF ASSESSING OFFICER MAKING ADDITION BEI NG DIFFERENCE OF CASH IN OPENING CASH BALANCE AND CASH BOOK, TREATING THE SAME AS UNEXPLA INED EXPENDITURE. FOR THIS, THE ASSESSEE HAS RAISED FOLLOWING GROUND NO.1: 1. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS,.2,28,755/- MADE B Y THE A.O. IN THE HANDS OF THE ASSESSEE ON THE GROUND OF ALLEGED CASH DIFFERENCE I N THE OPENING BALANCE OF THE CASH BOOK TREATING THE SAME AS UNEXPLAINED EXPENDITURE. 3. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT ASSESSEE IS A WHOLESALER-CUM-RETAILER IN FERTILIZERS AND PESTICIDES. A SURVEY U/S. 133A OF THE ACT WAS CARRIED OUT IN THE BUSINESS PRE MISES OF ASSESSEE ON 4.3. 2003 AND DURING THE COURSE OF SURVEY ASSESSEE WAS FOUND TO BE MAINT AINING TWO SETS OF CASH BOOK I.E. CASH BOOK FOUND AND SEIZED AS NI-39 AND ANOTHER COMPUTER GENERATED CASH BOOK FOUND AND SEIZED AS NI-28. FROM THE ABOVE CASH BOOK, SURVEY TEAM FO UND THAT THERE IS OPENING CASH BALANCE AS ON 1.4.2004 AS AT RS.92,285/- WHEREAS AS PER BALANC E SHEET CLOSING BALANCE AS ON 31.3.2004 WAS RS.12,68,217/- I.E. THE AUDITED BALANCE SHEET. WHEN, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSING OFFICER POINTED OUT TO THE A SSESSEE TO EXPLAIN THE DIFFERENCE, ONE OF THE PARTNERS OF THE FIRM SHRI O. P. AGARWAL EXPLAIN ED THAT OPENING BALANCE WAS WRONGLY 2 ITA 1836/K/2010 NATIONAL INDUSTRIES A.Y.05-06 WRITTEN BY THEIR ACCOUNTANT WITH PENCIL AND HE STAT ED THAT COMPUTER GENERATED CASH BOOK IS AT RS.10,39,462/- AS ON 1.4.2004 AND NOT RS.92,285/-. BUT HE COULD NOT EXPLAIN THE DIFFERENCE OF THIS AMOUNT OF RS.2,28,655/-, AND LATER ON IT WAS C LAIMED BEFORE AO THAT THE SAME WAS AS IMPREST ACCOUNT WITH SHRI SUSHIL AGARWAL BUT BOTH T HE AUTHORITIES BELOW HAVE NOT ACCEPTED THE EXPLANATION WITHOUT ANY EVIDENCE AND THE A0 MAD E THE ADDITION BEING THE DIFFERENCE OF RS.2,28,755/- AS UNEXPLAINED EXPENDITURE AND CIT(A) CONFIRMED THE SAME. BEFORE US ALSO, SAME PLEA WAS REITERATED THAT THIS CASH OF RS.2,28, 755/- WAS WITH SHRI SUSHIL AGARWAL AS IMPREST ACCOUNT, BUT THE ASSESSEE COULD NOT SUBSTAN TIATE ANYTHING THAT THIS PROFITS AND LOSS ACCOUNT WAS RECORDED IN REGULAR BOOKS OF ACCOUNT. HOWEVER, HE STATED THAT THIS IMPREST ACCOUNT WAS PART OF COMPUTERIZED BOOKS OF ACCOUNT. ONCE IT IS NOT PART OF REGULAR BOOKS OF ACCOUNT I.E. THE IMPREST ACCOUNT OF SHRI SUSHIL AGR AWAL, WE CANNOT ACCEPT THE PLEA OF THE ASSESSEE AND WE CONFIRM THE ORDERS OF LOWER AUTHORI TIES ON THIS ISSUE. 4. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF RS.3,20 LACS AS UNEXPLAINED CASH RE CEIPT. FOR THIS, THE ASSESSEE RAISED THE FOLLOWING GROUND NO.2: FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION TO THE TUNE OF RS.3,20,000/ - MADE BY THE A.O. TREATING THE SAME AS UNEXPLAINED CASH RECEIPT. 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT AS PER CASH BOOK MARKED NI-1 AND LEDGE R ACCOUNT MARKED NI-40 IS RECEIPT OF CASH OF RS.1,50,000/- AND RS.1,70,000/- FROM SHRI R ABIRN BISWAS AND BINOD MASKARA BUT SAME WERE NOT RECORDED IN COMPUTER GENERATED CASH B OOK. THE ASSESSING OFFICER REQUIRED ASSESSEE TO EXPLAIN THESE TWO AMOUNTS AND ASSESSEE BEFORE ASSESSING OFFICER EXPLAINED THAT THESE TWO PERSONS MR. RABIN BOSE AND MR. BINOD MASK ARA ARE THE SUNDRY DEBTORS AND THIS AMOUNT OF RS.1,50,000/- AND RS.1,70,000/- RESPECTIV ELY WERE RECEIVED FROM THEM ON 31.3.2004, BUT DUE TO MISTAKE OF STAFF, THIS WAS RE CORDED IN THE BOOKS AS ON 1.4.2004. IT WAS CLAIMED THAT DUE TO INEXPERIENCE OF COMPUTER KNOWLE DGE AND INCOMPETENT ACCOUNTING STAFF, THIS MISTAKE HAS OCCURRED. WE FIND THAT THE BOOKS OF ACCOUNT FOR ASSESSMENT YEAR 2004-05 ARE AUDITED ACCOUNTS AND MATCHED ENTRY BY ENTRY AND THESE PARTICULAR DEBTORS, WHICH WERE PART OF ASSESSEES SALE PROCEEDS, HAVE NOT BEEN RECORDED . HOW THE MATCHING ENTRIES TALLIED WITH THE BOOKS OF ACCOUNT, WE ARE UNABLE TO UNDERSTAND T HIS. EVEN THE ASSESSEE BEFORE US COULD NOT SUBSTANTIATE HOW THE ENTRIES IN THE BOOKS OF ACCOUN T I.E. AUDITED ACCOUNTS MATCHED WITHOUT INCLUDING THESE SUNDRY DEBTORS. HENCE, WE FIND NO INFIRMITY IN THE ORDER OF THE LOWER AUTHORITIES AND WE CONFIRM THE SAME. 6. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF RS.40,000/- OUT OF TOTAL ADDITION O F RS.50,816/- MADE BY ASSESSING OFFICER ON 3 ITA 1836/K/2010 NATIONAL INDUSTRIES A.Y.05-06 ESTIMATE BASIS UNDER THE HEAD TRAVELLING AND TOUR A ND MISCELLANEOUS EXPENSES. FOR THIS, ASSESSEE RAISED FOLLOWING GROUND NO.3: 3. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION TO THE TUNE OF RS.40,000/- OUT OF THE TOTAL DISALLOWANCE OF RS.50,816/- MADE BY THE A.O. ON EST IMATE BASIS UNDER THE HEADS TRAVELLING AND TOUR AND MISC. EXPENSES. 7. WE FIND THAT THE ASSESSING OFFICER HAS MADE DISA LLOWANCE ON ESTIMATE BASIS AND CIT(A) ALSO CONFIRMED THE DISALLOWANCE ON PURE ESTI MATES. THE ASSESSEE BEFORE US SHOWN COMPARATIVE TURNOVER AND TOUR EXPENSES AS UNDER: COMPARATIVE CHART OF TRAVELLING & TOUR AND MISC EXPS FOR A.Y.2003-04 TO 2006-07 A.Y TURNOVER (RS.) TOUR EXPS. (RS.) MISC. EXPS (RS.). % OF TOUR OVER TURNOVER % OF MISC. EXPNS. OVER TURNOVER 2003-04 2004-05 2005-06 2006-07 200,334,684.25 232,469,016.72 275,307,076.60 60,275,837.45 337,240.00 343,002.00 364,213.00 93,799.00 1,441,105.25 1,716,504.43 1,668,459.52 563,997.22 0.17 0.15 0.13 0.16 0.72 0.74 0.61 0.94 WE FIND THAT THE ADDITION IS NOT BASED ON ANY REASO N OR RHYME AND JUST ON ESTIMATE BASIS. EVEN THE ASSESSEE BEFORE US COULD SUBSTANTIATE THE CLAIM. HENCE, WE REVERSE THE ORDERS OF THE LOWER AUTHORITIES AND THIS ISSUE OF ASSESSEES APPE AL IS PARTLY ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 9. ORDER IS PRONOUNCED IN OPEN COURT ON 09.09.2011. SD/- SD/- . '# '#'# '# . ! , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( #! #! #! #!) )) ) DATED 9 TH SEPTEMBER, 2011 /0 %12 3 JD.(SR.P.S.) . 4 ,5 6 5'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT M/S. NATIONAL INDUSTRIES, BURDWAN ROAD, SILIGURI . 2 ,-*+ / RESPONDENT, DCIT, CIRCLE-1, SILIGURI 3 . .% ( )/ THE CIT(A), SILIGURI 4. .% / CIT, SILIGURI 5 . >? ,% / DR, KOLKATA BENCHES, KOLKATA -5 ,/ TRUE COPY, .%@/ BY ORDER, 2 /ASSTT. REGISTRAR .