M/s. BDB Exports Pvt. Ltd., Kolkata V. ITO,Ward-5(3), Kolkata, Kolkata

ITA 1923/KOL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4554 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 15-10-2014
• Court: TRIBUNAL
• Department Lawyers: KALYAN NATH
• Assessee Lawyers: K L BOTHRA
• Keywords: Corroborative evidences

Judgement Text

I.T.A. NO. 1923/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 1923 /KOL/ 2014 ASSESSMENT YEAR: 2010-2011 M/S. BDB EXPORTS PVT. LIMITED,..................... ..................APPELLANT 2, CLIVE GHAT STREET, 3 RD FLOOR, KOLKATA-700 001 [PAN : AABCB 9310 N] -VS.- INCOME TAX OFFICER,................................ ............................RESPONDENT WARD-5(3), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 APPEARANCES BY: SHRI K.L. BOTHRA, ADVOCATE, FOR THE ASSESSEE SHRI KALYAN NATH, JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JUNE 07, 2016 DATE OF PRONOUNCING THE ORDER : JULY 8, 2016 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-VI, KOLKATA DA TED 17.09.2014 FOR THE ASSESSMENT YEAR 2010-11 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE DISALLOWANCE OF RS.14,25,707/- MADE BY THE ASSESSING OFFICER OUT OF PURCHASES, WHICH IS SUSTAINED BY THE LD. CIT(APPEALS) TO THE EXTENT OF RS.5,70,283/-. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF TRADING OF VARIOUS ITEMS INCLUDING IMPORT AND EXPORT. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION W AS FILED BY IT ON 09.09.2010 DECLARING TOTAL INCOME OF RS.7,08,840/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE CLAIM OF THE ASSESSEE, INTER ALIA, FOR PURCHASES WAS EXAMINED BY THE ASSESSING OFFICER AND ON SUCH I.T.A. NO. 1923/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 2 OF 5 EXAMINATION HE MADE A DISALLOWANCE OF RS.14,25,707/ - OUT OF PURCHASES FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO. 5. 1 OF THE ASSESSMENT ORDER:- THE ASSESSEE DEBITED RS.29,71,34,067.67 UNDER HEAD PURCHASE. ON BEING ASKED, THE ASSESSEE FILED A LIST OF FIFTY (50) CREDITORS. IN THE SAID LIST, THE ASSESSEE HAS SHOWN RS.76,09,619.16 UNDER HEAD 'SUNDRY PARTIES'. NO ADD RESS FILED AGAINST THIRTEEN PARTIES. ON BEING ASKED EXPLANATIO N THE ASSESSEE FILED THE LIST OF PARTIES AGAIN WITH ADDRE SS LEAVING TWO CREDITORS WITHOUT ANY ADDRESS. BUT THE ASSESSEE FAILED TO FURNISH ANY DETAILS OF 'SUNDRY PARTIES' OF RS.76,09 ,619.16. ON BEING ASKED IN FURTHER, THE A/R OF THE ASSESSEE SUB MITTED THAT THOSE PURCHASE WERE MADE BY CASH FROM FARMERS COMIN G IN THE LOCAL 'HAAT' (MARKET). HE ALSO CLAIMED THAT THEY HA VE NO BILLS OR VOUCHERS. THE ASSESSEE OR ITS A/R FAILED TO FURN ISH ANY SUPPORTING EVIDENCE. FURTHER EXPLANATION WAS CALLED FOR. AT THE SAME TIME, IT APPEARS FROM THE RECORD THAT ALTH OUGH THE SALES OF THE ASSESSEE DECREASED BY ABOUT 18.92% DUR ING ASST. YEAR 2010-11 THAN ASST. YEAR 2009-10, PURCHASE DURI NG ASST. YEAR 2010-11 INCREASED BY 32.36%. THE ASSESSEE WAS REQUESTED TO FURNISH EXPLANATION ON THIS CONTRADICT ORY EFFECT. NO EXPLANATION FILED IN THIS REGARD. THE A/R OF THE ASSESSEE HOWEVER STATED DURING THE COURSE OF HEARING THAT TH E INCREASE IN PURCHASE PRICE IS DUE TO PRICE INCREASE, HOWEVER , THERE IS NO EXPLANATION AS TO WHY THE SAID PRICE INCREASE WI LL NOT AFFECT ITS SALES PRICE, WHICH THE PURCHASE PRICE OF ITS DEBTORS. ON THE OTHER HAND, THE A/R OF THE ASSESSEE FILED A 3RD LIST OF PURCHASE JUST BEFORE FEW DAYS THE CASE GETS TIME BA RRED. IN THIS 3RD LIST, THE ASSESSEE HAS SHOWN FIFTY FOUR (5 4) PARTIES, INCORPORATING THE NAMES OF FOUR MORE CREDITORS AND REDUCED THE VALUE OF CASH PURCHASE AT RS.57,02,829/- INSTEA D OF RS.76,09,619.16. OUT OF THE NEW FOUR PARTIES, THE A SSESSEE DID NOT ABLE TO FURNISH THE ADDRESS OF TWO CREDITORS. I T IS THEREFORE CLEAR FROM THE SUBMISSION OF THE ASSESSEE THAT, IT HAD FILED INCORRECT LIST OF CREDITORS IN EARLIER TWO OCCASION S IN COMPARISON TO THIRD LIST. THEREFORE, IT MAY NOT BE SAID THAT THE THIRD LIST IS ALSO CORRECT. THE ASSESSEE ITSELF RED UCED THIS CASH PURCHASE FIGURE BY ABOUT 25%, WHICH ACCORDING TO IT IS NOT VERIFIABLE. THEREFORE, THE CLAIM OF THE ASSESSEE IN THE FIRST TWO (2) LISTS IS INFLATED BY 25%. DURING THE COURSE OF VERIFICATION OF BOOKS OF ACCOUNTS & DOCUMENTS, RESPECTIVE BILLS OR VOUCHERS EVEN NOT PRODUCED FOR VERIFICATION. THEREFORE, THE CLAIM OF CASH PURCHASE IS NOT ESTABLISHED. IN VIEW OF THE AB OVE SITUATION, 1/4TH OF RS.57,02,829/- IS DISALLOWED WH ICH COMES TO RS.14,25,707/-. HENCE, RS.14,25,707/- IS ADDED B ACK TO THE TOTAL INCOME OF THE ASSESSEE FOR THE ASST. YEAR 201 0-11 . I.T.A. NO. 1923/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 3 OF 5 3. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER O UT OF PURCHASES WAS DISPUTED BY THE ASSESSEE IN THE APPEAL FILED BE FORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD . CIT(APPEALS) REDUCED THE DISALLOWANCE OF RS.14,25,707/- MADE BY THE ASSE SSING OFFICER TO RS.5,70,283/- FOR THE FOLLOWING REASONS GIVEN IN PA RAGRAPH NO. 4.2 OF HIS IMPUGNED ORDER:- 4.2. I HAVE CONSIDERED THE FACTS OF THE CASE. THE APPELLANT HAD, IN ALL, MADE PURCHASES OF RS.29.71 CRORES, OUT OF W HICH AN AMOUNT OF RS.57.02 LAKHS WAS MADE IN CASH FROM LOCA L MARKETS (HAAT). THIS COMES TO ROUGHLY 2% OF TOTAL PURCHASE. AS EXPLAINED BY THE APPELLANT, SOME COTTON HAD TO BE P URCHASED FROM HAAT FROM THE FARMERS AND PAYMENTS FOR THE SAM E WERE REQUIRED TO BE MADE IN CASH. CONSIDERING THE NATURE OF BUSINESS OF THE APPELLANT, IT IS REASONABLE TO EXPECT THAT S OME AMOUNT OF CASH PURCHASE WOULD BE INVOLVED. IT IS ALSO QUITE UNDERSTANDABLE THAT PURCHASES AT HAAT WOULD BE NECE SSARILY IN CASH. PROPER BILLS AND VOUCHERS CAN ALSO NOT BE EXP ECTED IN THE PURCHASE FROM FARMERS AT HAAT. HOWEVER, IT IS EQUAL LY TRUE, THAT THE ABSENCE OF BILLS AND VOUCHERS AND PAYMENT BEING MADE IN CASH DOES INVOLVE SOME ELEMENT OF NON-VERIFIABILITY . THEREFORE, IN PRINCIPLE, THE ACTION OF THE ASSESSING OFFICER I N MAKING PARTIAL DISALLOWANCE CANNOT BE FOUND FAULT WITH. HO WEVER, DISALLOWANCE OF 25% APPEARS TO BE EXCESSIVE, CONSID ERING THE NATURE OF BUSINESS AND OTHER RELEVANT FACTORS. IN M Y OPINION, AFTER CONSIDERING FACTS AND CIRCUMSTANCES OF THE CA SE, DISALLOWANCE OF 10% WOULD BE REASONABLE TO TAKE CAR E OF NON- VERIFIABLE ELEMENT. THE DISALLOWANCE IS ACCORDINGLY REDUCED TO RS.5,70,283/-. STILL AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS ), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ALTHOUGH THE LD. COUNSEL FOR THE ASSESSEE HAS REITERATED BEFORE ME THE SUBMISSIONS M ADE BEFORE THE LD. CIT(APPEALS) IN SUPPORT OF THE ASSESSEES CASE THAT THE DISALLOWANCE OF RS.5,70,283/- SUSTAINED BY THE LD. CIT(APPEALS) OUT OF PURCHASES IS STILL EXCESSIVE AND UNREASONABLE, I FIND THAT ALL THESE A RGUMENTS OF THE ASSESSEE HAVE ALREADY BEEN TAKEN INTO CONSIDERATION BY THE LD. CIT(APPEALS) AND THE DISALLOWANCE OF RS.14,25,707/- MADE BY THE I.T.A. NO. 1923/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 4 OF 5 ASSESSING OFFICER OUT OF PURCHASES HAS BEEN RESTRIC TED BY HIM TO RS.5,70,283/- ON SUCH CONSIDERATION AS WELL AS AFTE R TAKING INTO ACCOUNT THE VARIOUS DEFECTS POINTED OUT BY THE ASSESSING OF FICER IN THE ASSESSMENT ORDER. AS NOTED BY THE ASSESSING OFFICER IN THE ASS ESSMENT ORDER, SUPPORTING BILLS AND VOUCHERS IN CASE OF MANY PURCH ASES MADE IN CASH WERE NOT ONLY AVAILABLE BUT EVEN THE ADDRESS OF SOM E OF THE SUPPLIERS WERE NOT AVAILABLE WITH THE ASSESSEE IN CASE OF CAS H PURCHASES MAKING THE SAME UNVERIFIABLE. AS FURTHER NOTED BY THE ASSESSIN G OFFICER, PURCHASES DURING THE YEAR UNDER CONSIDERATION HAD INCREASED B Y 32.36% INSPITE OF DECREASE IN SALES BY ABOUT 18.92% AND NO SATISFACTO RY EXPLANATION WAS OFFERED BY THE ASSESSEE AS REGARDS THIS CONTRADICTO RY SITUATION. KEEPING IN VIEW THIS SPECIFIC AND MATERIAL DEFECTS POINTED OUT BY THE ASSESSING OFFICER I AM OF THE VIEW THAT SOME DISALLOWANCE OUT OF CASH PURCHASES CLAIMED BY THE ASSESSEE WAS FULLY WARRANTED AS RIGH TLY HELD BY THE LD. CIT(APPEALS) AND KEEPING IN VIEW ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT THE DISALLOWANCE OF RS.5,70,283/- BEING 10% OF THE RELEVANT CASH PURCHASES AS SUSTAINED BY THE LD. CIT (APPALS) IS QUITE FAIR AND REASONABLE. I, THEREFORE, FIND NO JUSTIFIABLE R EASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND UPHOLDING THE SAME, I DISMISS THIS APPEAL FILED BY THE ASSESS EE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 8, 2016. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 8 TH DAY OF JULY, 2016 COPIES TO : (1) M/S. BDB EXPORTS PVT. LIMITED, 2, CLIVE GHAT STREET, 3 RD FLOOR, KOLKATA-700 001 (2) INCOME TAX OFFICER, WARD-5(3), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 I.T.A. NO. 1923/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 5 OF 5 (3) COMMISSIONER OF INCOME TAX (APPEALS)-VI, KOLKA TA (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.