M/s Sanjay Enterprises, Kolkata V. ITO., Ward-44(2), Kolkata

ITA 1900/KOL/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4778 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 25-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: MANISH TIWARI
• Keywords: Unexplained cash credit; Set aside
• Section: 40A(3); 201; 68

Judgement Text

ITA NO. 1900/KOL/2017 ASSESSMENT YEAR: 2007-2008 M/S. SANJAY ENTERPRISES 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT AND SHRI A.T. VARKEY, JUDICIAL MEMBER I.T.A. NO. 1900/KOL/2017 ASSESSMENT YEAR: 2007-2008 M/S. SANJAY ENTERPRISES,........................... ...............................APPELLANT 46C, RAFI AHMED KIDWAI ROAD, 4 TH FLOOR, KOLKATA-700016 [PAN: AANFS9068H] -VS.- INCOME TAX OFFICER,................................ .................................RESPONDENT WARD-44(2), KOLKATA, 3, GOVERNMENT PLACE (WEST), KOLKATA-700001 APPEARANCES BY: SHRI MANISH TIWARI, FCA, FOR THE APPELLANT SHRI SANKAR HALDER, JCIT, SR. D.R., FOR THE RESPOND EN T DATE OF CONCLUDING THE HEARING : SEPTEMBER 09, 201 9 DATE OF PRONOUNCING THE ORDER : NOVEMBER 06, 2019 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-13, KOLKATA DA TED 04.01.2016. 2. THE ISSUE INVOLVED IN GROUND NO. 1 RELATES TO TH E DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 40A(3) OF THE INCOME TAX ACT, 1961, WHICH IS SUSTAINED BY THE LD. CIT(APPEAL S) TO THE EXTENT OF RS.25,01,156/-. 3. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM, WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN TILL OIL. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 31.10.2 007 DECLARING TOTAL ITA NO. 1900/KOL/2017 ASSESSMENT YEAR: 2007-2008 M/S. SANJAY ENTERPRISES 2 INCOME OF RS.1,91,200/-. DURING THE COURSE OF ASSES SMENT PROCEEDINGS, THE PURCHASES CLAIMED BY THE ASSESSEE WERE VERIFIED BY THE ASSESSING OFFICER. ON SUCH VERIFICATION, HE FOUND THE PURCHAS ES CLAIMED BY THE ASSESSEE TO BE UNVERIFIABLE IN THE ABSENCE OF RELEV ANT DETAILS. HE ALSO FOUND THAT CASH PAYMENTS WERE MADE BY THE ASSESSEE AGAINST PURCHASES OF RS.1,25,05,785/-, WHICH WERE IN VIOLATION OF SECTIO N 40A(3). ALTHOUGH IT WAS EXPLAINED BY THE ASSESSEE THAT THE SAID PURCHAS ES WERE DIRECTLY MADE FROM THE FARMERS, THE ASSESSING OFFICER FOUND THAT NO EVIDENCE WAS PLACED BY THE ASSESSEE TO PROVE THAT THE SAID PURCHASES WE RE DIRECTLY MADE FROM THE FARMERS AND NOT FROM THE MIDDLEMAN. HE, THEREFO RE, INVOKED THE PROVISIONS OF SECTION 40A(3) AND MADE A DISALLOWANC E OF RS.1,25,05,785/- . ON APPEAL, THE LD. CIT(APPEALS) RESTRICTED THE SA ME TO 20% IN VIEW OF THE AMENDED PROVISIONS OF SECTION 40A(3) APPLICABLE TO THE YEAR UNDER CONSIDERATION. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE C OPY OF THE CASH BOOK OF THE ASSESSEE PLACED AT PAGES NO. 46 TO 78 OF THE PA PER BOOK TO SHOW THAT NONE OF THE PAYMENTS MADE BY THE ASSESSEE IN CASH E XCEEDED RS.20,000/- TO A SINGLE PERSON ON A SINGLE DAY. HE HAS CONTENDE D THAT THE PROVISION OF SECTION 40A(3) IS, THEREFORE, NOT APPLICABLE TO THE SAID PAYMENTS AND THE DISALLOWANCE MADE BY THE ASSESSING OFFICER, WHICH I S PARTLY SUSTAINED BY THE LD. CIT(APPEALS), IS LIABLE TO BE DELETED. THE LD. D.R., ON THE OTHER HAND, HAS SUBMITTED THAT THIS STAND NOW BEING TAKEN BY THE LD. COUNSEL FOR THE ASSESSEE WAS NEVER SPECIFICALLY TAKEN EITHE R BEFORE THE ASSESSING OFFICER OR BEFORE THE LD. CIT(APPEALS) AND IN THE A BSENCE ANY SPECIFIC FINDING GIVEN BY THEM IS THE RESPECTIVE ORDER, THE STAND TAKEN BY THE ASSESSEE REQUIRES VERIFICATION. HE HAS URGED THAT T HIS MATTER, THEREFORE, BE SENT BACK TO THE ASSESSING OFFICER FOR SUCH VERI FICATION. WE FIND MERIT IN THIS CONTENTION OF THE LD. D.R. AND SINCE THE LD . COUNSEL FOR THE ASSESSEE HAS ALSO NOT RAISED ANY OBJECTION IN THIS REGARD, W E SET ASIDE THE ITA NO. 1900/KOL/2017 ASSESSMENT YEAR: 2007-2008 M/S. SANJAY ENTERPRISES 3 IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSU E AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR DEC IDING THE SAME AFRESH AFTER VERIFYING THE STAND OF THE ASSESSEE FROM THE RELEVANT RECORD. GROUND NO. 1 OF THE ASSESSEES APPEAL IS ACCORDINGLY TREAT ED AS ALLOWED FOR STATISTICAL PURPOSES. 5. THE ISSUE RAISED IN GROUND NO. 2 RELATES TO THE ADDITION OF RS.2,74,500/- MADE BY THE ASSESSING OFFICER AND CON FIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF UNEXPLAINED CASH CREDIT UNDER SECTION 68. 6. THE CREDIT BALANCE APPEARING IN THE NAME OF THRE E CREDITORS AGGREGATING TO RS.2,74,500/- WAS TREATED BY THE ASS ESSING OFFICER AS UNEXPLAINED AS THE ASSESSEE FAILED TO ESTABLISH ON EVIDENCE THE CREDITWORTHINESS OF THE CONCERNED CREDITORS AS WELL AS THE GENUINENESS OF THE RELEVANT TRANSACTIONS. ON APPEAL, THE LD. CIT(A PPEALS) UPHELD THE ACTION OF THE ASSESSING OFFICER ON THIS ISSUE AND C ONFIRMED THE ADDITION OF RS.2,74,500/- MADE BY THE ASSESSING OFFICER BY INVO KING THE PROVISIONS OF SECTION 68. 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT ALL THE THREE A MOUNTS IN QUESTION AGGREGATING TO RS.2,74,500/- WERE RECEIVED BY THE A SSESSEE FROM THE CONCERNED CREDITORS IN THE EARLIER YEARS AND THE SA ME, THEREFORE, CANNOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATION BY TREATING THE SAME AS UNEXPLAINED C ASH CREDIT UNDER SECTION 68. THE LD. D.R. AGREED THAT IF THE AMOUNTS IN QUESTION WERE RECEIVED BY THE ASSESSEE IN THE EARLIER YEARS, THE SAME CANNOT BE ADDED AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 IN THE YEA R UNDER CONSIDERATION. HE, HOWEVER, HAS CONTENDED THAT THIS MATTER ALSO RE QUIRES VERIFICATION BY THE ASSESSING OFFICER AS THERE IS NO FINDING RECORD ED BY HIM ON THIS ASPECT. WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDER OF THE LD. ITA NO. 1900/KOL/2017 ASSESSMENT YEAR: 2007-2008 M/S. SANJAY ENTERPRISES 4 CIT(APPEALS) ON THIS ISSUE AND RESTORE THE MATTER T O THE FILE OF THE ASSESSING OFFICER FOR VERIFYING THE STAND OF THE AS SESSEE THAT THE AMOUNTS IN QUESTION WERE RECEIVED IN THE EARLIER YEARS AND NOT IN THE YEAR UNDER CONSIDERATION. IF THE STAND OF THE ASSESSEE IS FOUN D TO BE CORRECT, THE ASSESSING OFFICER SHALL DELETE THE ADDITION MADE TO THE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 68. GROUND NO. 2 OF THE ASSE SSEES APPEAL IS ACCORDINGLY TREATED AS ALLOWED. 8. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 3 RE LATING TO THE ADDITION OF RS.63,49,000/- MADE TO THE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 68 ON PROTECTIVE BASIS, THE LD. REPRESENTAT IVES OF BOTH THE SIDES HAVE AGREED THAT THE LD. CIT(APPEALS) VIDE HIS IMPU GNED ORDER HAS ALREADY GIVEN A DIRECTION TO THE ASSESSING OFFICER TO ASCERTAIN AS TO WHOM THE RELEVANT TRANSACTIONS BELONG AND TO ALLOW APPRO PRIATE RELIEF TO THE ASSESSEE AFTER IDENTIFYING THE REAL BENEFICIARY. KE EPING IN VIEW THIS DIRECTION GIVEN BY THE LD. CIT(APPEALS), WE ARE OF THE VIEW THAT THE ASSESSEE CANNOT BE SAID TO HAVE ANY GRIEVANCE ON TH IS ISSUE AND EVEN THE LD. COUNSEL FOR THE ASSESSEE HAS ACCEPTED THIS POSI TION. WE, THEREFORE, FIND NO MERIT IN GROUND NO. 3 OF THE ASSESSEES APPEAL A ND DISMISS THE SAME. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON NOVEMBER 06, 2019. SD/- SD/- (A.T. VARKEY) (P. M. JAGTAP) JUDICIAL MEMBER VICE-PRESIDENT) KOLKATA, THE 6 TH DAY OF NOVEMBER, 2019 COPIES TO : (1) M/S. SANJAY ENTERPRISES, 46C, RAFI AHMED KIDWAI ROAD, 4 TH FLOOR, KOLKATA-700016 (2) INCOME TAX OFFICER, WARD-44(2), KOLKATA, 3, GOVERNMENT PLACE (WEST), KOLKATA-700001 (3) COMMISSIONER OF INCOME TAX (APPEALS)-13, KOLKA TA, ITA NO. 1900/KOL/2017 ASSESSMENT YEAR: 2007-2008 M/S. SANJAY ENTERPRISES 5 (4) COMMISSIONER OF INCOME TAX, KOLKATA- , KOLKATA; (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.