A.C.I.T.CC - XII,Kol., Kolkata V. M/s Nandadevi Sales Agency., Kolkata

ITA 1836/KOL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3178 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2013
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 10-12-2012
• Court: TRIBUNAL
• Department Lawyers: V N PUROHIT
• Assessee Lawyers: K K DAS JCIT SR DR
• Keywords: Assessment record
• Section: 143(3); 148

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [ () . .. . . .. . , ,, , , !' ##$ %& ##$ %& ##$ %& ##$ %&, ,, , ] ]] ] [BEFORE HONBLE SRI K.K.GUPTA, AM & HONBLE SRI GEORGE MATHAN, JM] '( '( '( '( /ITA NO.1836/KOL/2012 )&* !+,/ ASSESSMENTYEAR : 2006-07 (%. / APPELLANT ) - !& - ( 01%. /RESPONDENT) A.C.I.T., CENTRAL CIRCLE-XII, . M/S.NANDADEVI SAL ES AGENCY KOLKATA -VERSUS- KOLKATA (PAN:AACFN 4015 E) %. 2 3 / FOR THE APPELLANT: SHRI V.N.PUROHIT, FCA 01%. 2 3 / FOR THE RESPONDENT: SHRI K.K.DAS, JCIT, SR.DR &!4 2 5 /DATE OF HEARING : 22.05.2013 6+ 2 5 /DATE OF PRONOUNCEMENT : 22.05.2013. 7 / ORDER PER BENCH `THIS APPEAL BY THE REVENUE IS ON THE SOLITARY ISSU E THAT ON THE FACTS AND CIRCUMSTANCES OF THE LD. CIT(A) ERRED IN DIRECTING THE DELETION OF THE ADDITION AMOUNTING TO RS.47,00,771/- MADE U/S 41(1) OF THE I .T.ACT BY THE AO. 2. THE LD. DR SUBMITTED THE BRIEF FACTS RELATING TO THE ISSUE IN DISPUTE BY SUBMITTING THAT ASSESSMENT WAS COMPLETED IN THE CASE U/S 143(3) ON 27.11.2008. SUBSEQUENTLY, IT WAS SEEN FROM THE 'DETAILS OF PART Y-WISE CREDITORS' OF THE ASSESSEE AVAILABLE IN THE ASSESSMENT RECORDS THAT T HE BALANCE OF THE ASSESSEE WITH CENTURY EXTRUSIONS LTD. AS ON 31.03.2005 WAS RS.13, 28,282/-. HOWEVER, IT WAS SEEN FROM THE DETAILS OF PURCHASE OF THE ASSESSEE FOR TH E YEAR ENDED 31.03.2006 THAT NO SUCH BALANCE (AS ON 31 .03.2005) WAS ACCOUNTED FOR THERE . THUS, THE AMOUNT OF RS.13,28,282/- WAS CONSTRUED AS CESSATION OF LIABIL ITY AND DEEMED TO BE THE INCOME OF THE ASSESSEE DURING THE A.Y. 2006-07 AS PER THE PRO VISIONS OF SECTION 41 (I) OF THE INCOME TAX ACT, 1961. ITA.NO. 1836/KOL/2012 A.C.I.T. CC-XII,KOL VS M/S.NANDADEVI SALES AGENCY, KOLKATA A.YR.: 2006-07 2 IT WAS FURTHER SEEN FROM THE DETAILS OF PURCHASE OF THE ASSESSEE FIRM CENTURY EXTRUSIONS LTD. FOR THE YEAR ENDED 31.03.2006 THAT THERE IS A DISCREPANCY IN THE PURCHASE FIGURE WHICH HAD LED TO UNEXPLAINED PURCHASE AMOUNT ING TO RS.33,72,489/- AS SHOWN BELOW:- NAME OF CLOSING PAYMENT TOTAL OPENING PURCHASE PURCHASE DIFFERENCE THE BALANCE AMOUNT BALANCE (AS SHOULD (AS SHOWN) PARTY (AS (AS SHOWN) BE) SHOWN) CENTURY 5126022 101 15972 15241994 NIL 1 5241994 11869505 3372489 EXTRUSIONS LTD. THE ASSESSING OFFICER, THEREFORE, HAD REASON TO BEL IEVE THAT INCOME OF THE ASSESSEE TO THE TUNE OF RS.47,00,771/- (RS.13,28,28 2/- + RS.33,72,489/- ) AS DISCUSSED ABOVE HAD ESCAPED ASSESSMENT BY REASON OF THE FAILU RE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ASSESSMENT FOR THE A.Y. 2006-07. ACCORDINGLY, NOTICE U/S 148 WAS ISSUED AND SERVED U PON THE ASSESSEE ON 05.04.2010. BEING AGGRIEVED OF THE ABOVE SAID ORDER THE ASSESSE E PREFERRED AN APPEAL BEFORE LD. CIT(A), CENTRAL-II.. HON'BLE CIT (A) HAD ALLOWE D THE ABOVE GROUNDS IN THE ORDER U/S 250 FOR A. Y. 2006-07 AND OPINED THAT 'THERE IS NO REASON TO DISBELIEVE THE PURCHASES IN TERMS OF RUPEES. THE AO ALSO DID NOT REJECT THE BOO KS OF ACCOUNTS. HE DID NOT BRING ANY MATERIAL ON RECORD TO PROVE THAT THE APPELLANT HAD MADE UNEXPLAINED PURCHASES. IN VIEW OF ABOVE, IT IS HELD THAT THERE WAS NEITHER OF CESS ATION OF LIABILITY NOR THE UNEXPLAINED PURCHASES AS OBSERVED AND HELD BY THE AO. THEREFORE , HE IS DIRECTED TO DELETE THE ADDITION OF RS. 47,00,771/- THE EFFECT OF THE ORDER OF THE LD. CIT(A)-II, KOLKA TA DATED 03.09.2012 WAS GIVEN IN THE ORDER U/S 251/154/143(3) ON 16.10.2012 RESUL TING IN AN AMOUNT REFUNDABLE OF RS.4,03,776/- AFTER DELETING THE ADDITION OF RS.47, 00,771/-. 3. THE LD. COUNSEL FOR THE ASSESSEE HAS SUPPORTED T HE ORDERS OF THE LD. CIT(A) FOR HIS PART OF SUBMISSIONS, IN SO FAR AS THE LD. DR AS OF NOW HAS NOT DISPUTED THE FACTS WHICH FACTS LEAN IN FAVOUR OF THE ASSESSEE INDICATI NG THAT THE MIS-INTERPRETATION OF THE FACTS ON THE BASIS OF ACCOUNTING SYSTEM WAS NOT TO BE CONSIDERED FOR COMPUTING THE CORRECT INCOME U/S 145(3) OF THE ACT WHEREAS THE AD DITION AS A UNILATERAL DECISION U/S 41(1) OF THE ACT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIAL AVAILABLE ON RECORD. IT WILL BE WORTHWHILE TO REITE RATE THE ORDER OF THE LD.CIT(A) WHICH DOES NOT SUFFER FROM ANY FLAW, IN SO FAR AS INTERPR ETATION OF THE ACCOUNTS HAS TO BE IN ACCORDANCE WITH THE ACCOUNTING NOT BECAUSE THE ASSE SSEE IS REQUIRED TO RECONCILE OR VERIFY A HYPOTHETICAL FIGURE WHEN THE LIABILITY WHI CH IS NOT EXISTING AND IS SUBJECT TO ITA.NO. 1836/KOL/2012 A.C.I.T. CC-XII,KOL VS M/S.NANDADEVI SALES AGENCY, KOLKATA A.YR.: 2006-07 3 PAYMENT BY THE ASSESSEE WHETHER COULD BE UNILATERAL LY BROUGHT TO TAX IN THE HANDS OF THE AO U/S 41(1) OF THE ACT. THE LD. CIT(A) HELD TH AT ' I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AND PERUSED THE ASSESSMENT ORDER. I HAVE ALSO GONE THROUGH THE ASSESSMENT RECORDS. THE FACTS OF THE CA SE HAVE ALREADY BEEN DISCUSSED ABOVE. THE AO HAS REOPENED THE ASSESSMENT COMPLETED U/S 143(3) OF THE ACT FOR THE REASON THAT ON THE BASIS OF DETAILS AN D DOCUMENTS ALREADY ON THE ASSESSMENT RECORDS, HE WAS OF THE OPINION THAT THE APPELLANT FIRM HAD NOT ACCOUNTED FOR OPENING CREDIT BALANCE OF RS. 13,28,2 82/- AS ON 01.04.2005 IN THE NAME OF CENTURY EXTRUSIONS LTD. AND, THEREFORE, THE SAID AMOUNT WAS LIABLE TO TAX U/S 41 (1) OF THE ACT BEING CESSATIO N OF THE LIABILITY. HE ALSO FOUND THAT IN THE CASE OF CE NTURY EXTRUSION LTD., THE CLOSING CREDIT BALANCE AS ON 31.03.2006 WAS RS. 51,26,022/- AND THE APPELLANT MA DE PAYMENT OF RS. 1,0 1,15,972/DURING THE YEAR TO THE SAID COMPANY AND HENCE TH'E APPELLANT HAD MADE PURCHASES OF RS. 1,52,41,994/FROM CENTURY EXTRUSIONS BUT IT HAD SHOWN THE PURCHASES OF RS.I, 18,69,505/- LEAVING DIFFERENCE OF RS. 33,72,489/-. ACCORDING TO THE AO, THE APPELLANT LIRM HAS MADE UN EXPLAINED PURCHSES OF RS. 33,72,489/. UNDER THE CIRCUMSTANCES, HE MADE ADDITION OF RS.47,00,771/- T O THE INCOME OF THE APPELLANT FIRM. ON CAREFUL CONSIDERATION OF FACTS AND PERUSAL OF ASSESSMENT RE CORDS AS WELL AS DETAILS AND DOCUMENTS SUBMITTED BY THE APPELLANT IN THE COURSE OF ASSESSMENT PROCEEDIN GS AND APPELLATE PROCEEDINGS, I AM UF THE OPINION T HAT THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS. 47,00,771/- AND I FIND FORCE IN THE SUBMISSION OF THE APPELLANT THAT THE AO HAD MADE TOTALLY WRONG AN D MISTAKEN BELIEF WITHOUT VERIFYING AND CORROBORATING ALL THE DETAILS AND DOCUMENTS ALREADY ON RECORD. ON EXAMINATION OF ASSESSMENT RECORDS IT IS OBSERVED THAT DURING THE REASSESSMENT PROCEEDING S THE APPELLANT FIRM FILED ITS SUBMISSION ON THE IS SUES INVOLVED ALONG WITH COPY OF THE LEDGER ACCOUNT OF C ENTURY EXTRUSIONS LTD. FUR THE RELEVANT PERIOD. THE APPELLANT ALSO TILED A STATEMENT SHOWING OPENING CR EDIT BALANCE, PURCHASES DURING THE YEAR, PAYMENT AN D THE CLOSING BALANCE AS ON 31.03.2006. IT IS OBSERVE D THAT THE APPELLANT FIRM ALSO SUBMITTED BEFORE THE AO THAT THE COMPANY CENTURY EXTRUSIONS LTD. IS ALSO ASSESSED TO TAX WITH HIM ONLY HENCE NECESSARY CROSS VERIFICATION MAY BE MADE FROM THE RECORDS OF THE COMPANY. HOWEVER, AS APPARENT FROM THE ASSESSMENT ORDER, THE AO DID NOT DO ANYTHING WITH R EFERENCE TO THE DETAILS, DOCUMENTS AND SUBMISSION MADE BY THE APPELLANT. HE MADE THE ADDIT ION OF RS. 47,00,771/- BY SIMPLY STATING AS UNDER : ';- 'THE SUBMISSION OF THE AIR AS ABOVE ARE, HOWEVER NO T FOUND TO BE SATISFACTORY OR TENABLE IN LAW CONSIDERING THE FACTS OF THE CASE AND MATERIAL AVAI LABLE ON RECORD. J, THEREFORE, PROCEED TO ADD RS. 47,00,7711- TO THE TOTAL INCOME OF /THE ASSESSEE. PROCEEDING UL S 271 (1) (C) ARE INITIATED SEPARATELY FOR THE REASON OF CONCEALMENT AND FURNI SHING OF THE INACCURATE PARTICULARS OF INCOME AS DISCUSSED ABOVE.' FROM ABOVE, IT IS APPARENT THAT THE AO HAS MADE THE ADDITION OF RS. 47,00,771/- IN A VERY CASUAL AND VAGUE MANNER. HE DID NOT DISCUSS THAT AS TO WHY THE SUBMISSION OF THE APPELLANT'S A.R. WAS NOT SATISFACTORY OR TENABLE. HE ALSO DID NOT MENTION TH AT AS TO WHAT DETAILS OR EXPLANATION WERE CALLED FO R BY HIM AND COULD NOT SUBMITTED BY THE APPELLANT FIR M. I AM CONSIDERED OPINION THAT TO MADE AN ADDITION TO THE RETURNED INCOME IT IS NOT ENOUGH TO REJECT THE SUBMISSION AND EXPLANATION OF AN ASSESSEE BY SIMPLY SAYING THAT THE SUBMISSION WAS N OT SATISFACTORY OR TENABLE. COMING TO THE MERITS OF THE ADDITION OF RS. 47,00,77I/~, IT IS OBSERVED THAT ADDITION TO THE EXTENT OF RS. 13,28,282/- WAS MADE BY THE AO FOR CESSATION OF LIABILITY BEING THE AMOUNT OF CLOSING BALANCE AS ON 31.03.2005 IN THE NAME OF CENTURY EXTRUSIONS LTD. ON PERUSAL OF C OPY OF LEDGER OF THE SAID COMPANY IN THE BOOKS OF APPELLANT FIRM AND VICE-VERSA IT IS NOT KNOWN AS TO HOW THE AO ARRIVED ON THE CONCLUSION THAT THE APPELLANT HAD NOT ACCOUNTED FOR THE CLOSING BALANCE IN THE BOOKS OF ACCOUNT. IN FACT, IN THE LEDGER ACCOUNT AS ON 01.04.2005, THE FIRST ENTRY-IS OF RS. 13,28,282/- IN ITS BOOKS OF ACCOUNT AND THERE WAS NO CESSATION OF LIABILITY AS HELD BY THE AO. FURTH ER, IF THE AO WOULD HAVE CAREFULLY EXAMINED THE COPY OF LEDGER ACCOUNT SUBMITTED BY THE APPELLANT F IRM BEFORE, HIM, I AM OF THE OPINION THAT THERE WAS NO REASON TO ARRIVE ON A CONCLUSION THAT THE AP PELLANT HAD MADE UNEXPLAINED PURCHASES OF RS. 33,72,489/-. IN THE COURSE OF APPELLATE PROCEEDINGS THE APPELLAN T SUBMITTED THE BREAK UP OF AMOUNT OF RS.33,72,489/- AS REPRODUCED ABOVE. ALL THE FIGURES OF BREAKUP HAV E BEEN EXTRACTED FROM THE COPY OF LEDGER ACCOUNT ONLY. FROM THE PERUSAL OF SAID DETAI LS IT IS APPARENT THAT THE AO WHILE ARRIVING ON THE DIFFERENCE IN PURCHASES AT RS. 33,72,489/- DID NOT CONSIDERED THE OPENING BALANCE OF RS. 13,38,282/-, VAT ON PURCHASES OF RS. 4,74,981/-, AMOUNT RECEIVED FROM CENTURY EXTRUSIONS OF RS. 12,05,838/-, ITA.NO. 1836/KOL/2012 A.C.I.T. CC-XII,KOL VS M/S.NANDADEVI SALES AGENCY, KOLKATA A.YR.: 2006-07 4 PURCHASE RETURN OF RS. 3,58,3641- AND RATE DIFFERENCE OF RS. 5,028/. THE TOTAL OF ALL THESE AMOUNTS COMES TO RS. 33,72,489/- I.E. THE AMOUNT OF DIFFERENCE ARRIVED BY THE AO AND TREATED AS UNEXPLAINED PURCHASES. FROM THE DETAILS AND DOCUMENTS TILED BY THE APPELLANT IT IS CLEAR THAT THERE WERE NOT UNEXPLAINED PURCHASES AS OBSERVED BY THE AO HAS ACC EPTED THE SALES AND CLOSING STOCK AS PER THE BOOKS OF ACCOUNT AND HENCE THERE IS NO REASON TO DI SBELIEVE THE PURCHASES AS PER THE BOOKS OF ACCOUNT. FURTHER, THE AO HAS ALSO ACCEPTED THE QUAN TATIVE DETAILS OF OPENING STOCK, PURCHASES, SALES AND CLOSING STOCK OF EXTRUSIONS. HENCE ONCE THE QUA NTITATIVE DETAILS ARE ACCEPTED,' I AM OF THE OPINION THAT THERE IS NO REASON TO DISBELIEVE THE P URCHASES IN TERMS OF RUPEES. THE AO ALSO DID NOT REJECT THE BOOKS OF ACCOUNTS. HE DID NOT BRING ANY MATERIAL ON RECORD TO PROVE THAT THE APPELLANT HAD MADE UNEXPLAINED PURCHASES. IN VIEW OF ABOVE, IT IS HELD THAT THERE WAS NEITHER OF CESSATION OF LIABILITY NOR THE UNEXPLAINED PURCHASES AS OBSERVED AND HELD BY THE AO. THEREFORE HE IS DIRECTED TO DELETE THE ADDITION OF RS. 47,00,771/-. THE GROUNDS NOS. I AND 2 ARE ALLOWED. 5. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A)ON THE BASIS OF ANALYZING THE FACTS IN SO FAR AS THE AO IGNORED TH E FIGURES IN THE LEDGER ACCOUNT WHICH EXCLUDED THE FIGURE BROUGHT ON RECORD BY HIM AMOUNT ING TO RS.33,72,489/-. THIS CLEARLY INDICATES THAT THE AMOUNTS SOUGHT TO BE BRO UGHT TO TAX BY HIM UNDER THE PROVISION OF SECTION 41(1) OF THE ACT NEVER EXISTED . 6. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.05.2013. SD/- SD/- [ .##$ %& , ] [ .., ,, , ] [GEORGE MATHAN ] [K.K.GUPTA] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (5 5 5 5) )) ) DATE: 2 2.05.2013. R.G.(.P.S.) 7 2 0))9 :9+;- COPY OF THE ORDER FORWARDED TO: 1. M/S.NANDADEVI SALES AGENCY, 113, PARK STREET, NORTH BLOCK, KOLKATA-700016. 2 A.C.I.T., CENTRAL CIRCLE-XII, KOLKATA. 3 . CIT KOLKATA 4 . CIT(A)-CENTRAL-II, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 19 0)/ TRUE COPY, 7&/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES ITA.NO. 1836/KOL/2012 A.C.I.T. CC-XII,KOL VS M/S.NANDADEVI SALES AGENCY, KOLKATA A.YR.: 2006-07 5