Swapan Kumar Maji, Bankura V. D.C.I.T Cir - Bankura, Bankura

ITA 1862/KOL/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3373 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 18-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DAVID Z CHOWNGTHO CITSRDR
• Assessee Lawyers: S M SURANA; D K SEN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 1862 / KOL / 2012 ASSESSMENT YEAR :2005-06 SWAPAN KUMAR MAJI VILL & P.O. SIMLAPAL, DIST. BANKURA, WEST BENGAL [ PAN NO. AEOPM 2532 F ] V/S . DCIT, CIRCLE-BANKURA, P.O. & DIST. BANKURA /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI S.M. SURANA, ADVOCATE & SHRI D.K.SEN, ADVOCATE /BY RESPONDENT SHRI DAVID Z. CHOWNGTHO, ADDL.CIT-SR-DR /DATE OF HEARING 08-12-2015 /DATE OF PRONOUNCEMENT 20-01-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-DURGAPUR IN APPEAL NO.158/CIT( A)/DGP/2011-12 DATED 31.10.2012. ASSESSMENT WAS FRAMED BY DCIT, BA NKURA, U/S 147/43(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED T O AS THE ACT) VIDE HIS ORDER DATED 26.12.2011 FOR ASSESSMENT YEAR 2005-06. ASSES SEE HAS RAISED FOLLOWING GROUNDS:- 1) FOR THAT THE ORDER OF THE LD. C.I.T.(A), DURGAP UR, IS ARBITRARY, ILLEGAL AND BAD IN LAW. 2) FOR THAT THE LD. CIT(A) DURGAPUR, HAVING AGREED THAT THE FAULT IN THE APPELLANTS ACCOUNT IS BEYOND HIS CONTROL SHOULD HA VE DISPOSED OFF THE ITA NO.1862/KOL/2012 A.Y. 2005-06 SWAPA KR. MAJI V. DCIT, CIR-BNK. PAGE 2 MATTER ON MERIT AS THE EXCESS CASH IN HAND IS DUE T O SUPPRESSION SECURED BANK LOAN OF RS.23,62,629.00. 3) FOR THAT LD. CIT(A), DURGAPUR IS NOT JUSTIFIED I N SENDING BACK THE ISSUE OF CONSTRUCTION OF GODOWN FOR RS.5,35,050/- T O THE AO FOR VERIFICATION WHEN NEVER DID THE AO CONFRONT WITH T HE APPELLANT WITH THE ISSUE OF CONSTRUCTION OF GODOWN. 4) FOR THAT THE LD. CIT(A), DURGAPUR EXCEEDED HIS J URISDICTION IN REMITTING THE ISSUES STATED IN GROUND NO: 2 AND 3 A BOVE TO THE FILE OF THE A.O WHICH IS TANTAMOUNT TO SET ASIDE THE ORDER WHEN THE APPEAL SHOULD HAVE BEEN DECIDED ON MERIT. 5) FOR THAT THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER OF THE LD. CIT(A), DURGAPUR, BE MODIFIED AND THE APPELLANT BE GIVEN THE RELIEF AS PRAYED FOR. 2. FIRST ISSUE RAISED BY ASSESSEE IN HIS APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF ASSESSING OFFICER BY SUSTAI NING AN ADDITION OF 23,62,629/- ON ACCOUNT OF DIFFERENCE BETWEEN THE BA NK LOAN SHOWN IN HIS BOOKS OF ACCOUNT AND ACTUAL LOAN TAKEN FROM BANK. 2.1 FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN I NDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF TRADING OF FERTILIZERS AND PESTI CIDES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO FOUND THAT ASSESSEE HAS S HOWN UNSECURED LOAN OF RS.7,71,895/- FROM UNITED BANK OF INDIA IN HIS B ALANCE-SHEET AS ON 31 ST MARCH, 2005. HOWEVER, AO FOUND THAT THE OUTSTANDING LOAN AT THE END OF YEAR I.E. ON 31-03-2005 FROM THE SAID BANK IS AT RS.30,9 5,524/-. SO THERE WAS A DIFFERENCE OF RS.23,23,629/- BETWEEN THE AMOUNT OF LOAN SHOWN FROM THE BANK AND SHOWN IN THE BALANCE SHEET OF ASSESSEE. THE AO SOUGHT CLARIFICATION FROM ASSESSEE FOR THE ABOVE DIFFERENCE. IN REPLY, THE AS SESSEE EXPLAINED THE DIFFERENCE BY STATING THAT BANK DRAFTS WERE ISSUED TO THE PARTIES FOR THE PURCHASE BUT THE GOODS WERE NOT DELIVERED TILL THE END OF YEAR. SO NEITHER THE GOODS WERE TAKEN INTO THE STOCK REGISTER NOR THE DR AFT PAYMENT S WERE CONSIDERED IN THE BOOKS OF ACCOUNT OF ASSESSEE AT THE END OF THE YEAR. HOWEVER, AO DURING THE COURSE OF ASSESSMENT PROCEED INGS OBSERVED THAT NO DRAFT IN HAND WAS SHOWN IN THE BOOKS OF ACCOUNT TIL L THE YEAR END. MOREOVER, ITA NO.1862/KOL/2012 A.Y. 2005-06 SWAPA KR. MAJI V. DCIT, CIR-BNK. PAGE 3 ASSESSEE HAS MADE TOTAL WITHDRAWAL FROM THE BANK OF RS.5,09,12,428/- AND PURCHASE SHOWN IN THE RELEVANT YEAR IS AT RS.5,07,2 3,995/-. THEREFORE, THE PLEA TAKEN BY ASSESSEE IS NOT TENABLE REGARDING PUR CHASE AND DRAFTS ISSUED FROM THE BANK. SO AO DISREGARDED THE CLAIM OF ASSES SEE BY TREATING THE DIFFERENCE IN AMOUNTING OF RS.23,23,629/- AS EXCESS CASH IN HAND WHICH ACCUMULATED FROM THE UNDISCLOSED SALE OF ASSESSEE A ND ALL THE PURCHASE MADE FOR THE YEAR HAS BEEN DULY ACCOUNTED IN HIS BO OKS OF ACCOUNT. HENCE, AO ADDED THE SAME TO THE TOTAL INCOME OF ASSESSEE. 3. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHO CONFIRMED THE ACTION OF ASSESSEE BY OBSERVING AS UN DER:- I FIND THAT THE AO HAS HELD THAT PURCHASES HAVE BEEN CORRECTLY ACCOUNTED FOR. THE ENTIRE SITUATION IS PARADOXICAL. THE APPELLANT HAS GIVEN AN EXPLANATION BEFORE THE AO WHICH IS NOT BOR NE OUT BY THE EVIDENCE ON RECORD. AT THE SAME TIME, THE FAULT IN THE APPS ACCOUNTS APPEARS TO BE FOR REASONS BEYOND HIS CONTROL, AS PE R THE EVIDENCE CONTAINED IN THE BANKS LETTER DATED 24.07.2010. IN THAT EVENT, THE QUESTION ARISES AS TO IN WHAT FORM THE EXCESS AMOUN T OF THE LOAN IS AVAILABLE IN THE BUSINESS. THE AO HAS CONCLUDED THA T THIS AMOUNT IS HELD IN CASH, WHICH HAS BEEN GENERATED OUT OF SUPPR ESSED SALES. HOWEVER, THE AO HAS NOT PLACED FORWARD ANY EVIDENCE TO JUSTIFY HIS CONCLUSION THAT THE APPELLANT HAS SUPPRESSED ITS SA LES. THE SAID DIFFERENCE COULD HAVE ALSO BEEN LYING AS CLOSING ST OCK OR AS DEBTORS OR AS ADVANCES. IN MY OPINION, THE CONCLUSION ARRIVED AT BY THE AO IS NOT JUSTIFIED WITHOUT AN ENQUIRY ESPECIALLY IN VIEW OF THE FACT THAT PURCHASES HAVE BEEN FULLY ACCOUNTED FOR AND NO DISCREPANCY IN THE APPELLANTS SALES HAVE BEEN POINTED OUT BY THE AO .UNDER THE CI RCUMSTANCES, THE AO IS DIRECTED WHILE GIVING EFFECT TO THIS ORDER, T O ENQUIRE INTO THE MATTER AND, ASCERTAIN WHERE THE EXCESS OBSERVE IN T HE LOAN ACCOUNT IS ACTUALLY LYING. IF THE APPELLANTS SUBMISSION REGAR DING THIS DIFFERENCE IS CORRECT THEN HE WILL GET CONSEQUENTIAL RELIEF. THIS GROUND IS ALLOWED SUBJECT TO THE DIRECTIONS GIVEN ABOVE. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E PREFERRED SECOND APPEAL BEFORE US. ITA NO.1862/KOL/2012 A.Y. 2005-06 SWAPA KR. MAJI V. DCIT, CIR-BNK. PAGE 4 SHRI S.M.SURANA, LD. AUTHORIZED REPRESENTATIVE APPE ARING ON BEHALF OF ASSESSEE AND SHRI DAVID Z CHOWNGTHO, LD. DEPARTMENT AL REPRESENTATIVE APPEARING ON BEHALF OF REVENUE. 4. WE HAVE HEARD RIVAL SUBMISSIONS OF BOTH THE PART IES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. BEFORE US THE LD. AR SUBMITTED THAT THE AO HAS TREATED THE DIFFERENCE BETWEEN THE BANK LOAN AMOUNT SHOWN IN THE BOOKS AND AS PER BANK STATEMENT AS ACCUMULATED CASH GENERATED FROM THE UNACCOUNTED SALE. THE AO HAS MADE THE ADDITION ON SURMISE AND W ITHOUT APPLYING HIS MIND. ACCORDINGLY THE LD. AR PLEADED FOR THE DELETI ON OF THE SAME. ON THE OTHER HAND THE LD. DR RELIED ON THE ORDER OF AUTHOR ITIES BELOW. FROM THE AFORESAID DISCUSSION WE FIND THAT THE AO A T THE TIME OF ASSESSMENT FOUND THAT THERE IS A DIFFERENCE BETWEEN THE AMOUNT OF LOAN SHOWN IN THE BOOKS AND THE ACTUAL AMOUNT SHOWN AS PER THE BANK. THERE WAS A LOAN LIABILITY FROM THE BANK FOR AN AMOUNT OF RS. 30,95,524.00 AT THE YEAR END. HOWEVER THE ASSESSEE HAS SHOWN THE LOAN LIABILITY FOR AN AMOUNT OF RS. 7,71,895.00. IN THE INSTANT CASE THE LOAN SHOWN IN THE BOOKS BY THE ASS ESSEE WAS LESS THAN THE ACTUAL LOAN AVAILED FROM THE BANK AT THE YEAR END. ACCORDINGLY THE DIFFERENCE OF RS. 23,23,629.00 WAS ARISEN. THE AO IN HIS ORDER TREATED SUCH DIFFERENCE AS CASH IN HAND ACCUMULATED FROM THE UNACCOUNTED SA LE OF THE ASSESSEE. BUT THE LD. CIT(A) RIGHTLY OBSERVED IN HIS ORDER THAT T HE AO COULD NOT SUBSTANTIATE THAT THE DIFFERENCE IS REALLY ON ACCOUNT OF SUPPRES SED SALE. WE ALSO FIND THAT THE AO FAILED TO BRING ANYTHING ON RECORD WHICH SHO WS THAT THE ASSESSEE HAS SUPPRESSED HIS INCOME BY SHOWING INACCURATE FIGURES OF THE BANK LOAN LIABILITY IN THE BOOKS. THE AO IS SUPPOSED TO BRING SOME CONC RETE EVIDENCE TO JUSTIFY THAT THE ASSESSEE HAS SUPPRESSED THE SALES. WE ALSO NOTED THAT THE LD. DR ALSO HAS NOTHING ON RECORD TO JUSTIFY THE VIEW OF T HE AO. SO IN THE ABSENCE OF ANY MATERIAL INFORMATION, WE ARE INCLINED TO DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. ITA NO.1862/KOL/2012 A.Y. 2005-06 SWAPA KR. MAJI V. DCIT, CIR-BNK. PAGE 5 5. AT THE TIME OF HEARING LD AR HAS NOT PRESSED GRO UND NO.2, HENCE, SAME IS DISMISSED AS NOT PRESSED. 6. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 20/ 01/2016 SD/- SD/- (MAHAVIR SINGH) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 20 / 0 1/201 6 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-SWAPAN KR. MAJI, VIL & P.O. SIMLAPAL, DI ST. BANKURA, W.B. 2. /RESPONDENT-DCIT, CIRCLE BANKURA, P.O & DIST. BANKU RA 3. ) *+ , , - / CONCERNED CIT DURGAPUR 4. , , -- / CIT (A) DURGAPUR 5. 012 33*+, , *+ , / DR, ITAT, KOLKATA 6. 267 89 / GUARD FILE. BY ORDER/ , , /TRUE COPY/ / , *+ ,