Sagar Chandra Santra., Hooghly V. I.T.O Wd - 1(4),Hooghly., Kolkata

ITA 1926/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78245 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2014
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 31-12-2012
• Court: TRIBUNAL
• Department Lawyers: MAKHANLAL SARDAR
• Assessee Lawyers: SOUMITRA CHOW DHURY
• Keywords: Extension of stay; Assessment record
• Section: 40A(3); 143(3); 142(1)

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , /AND , ! ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA, AM] ' / I.T.A NO.1926/KOL/2012 #$ %&/ ASSESSMENT YEAR: 2009-10 SAGAR CHANDRA SANTRA VS. INCOME-TAX OFFICER, W ARD-1(4), HOOGHLY (PAN: AZRPS3474L) (() /APPELLANT ) (*+()/ RESPONDENT ) & S.P. NO. 11/KOL/2014 IN ' / I.T.A NO.1926/KOL/2012 #$ %&/ ASSESSMENT YEAR: 2009-10 SAGAR CHANDRA SANTRA VS. INCOME-TAX OFFICER, W ARD-1(4), HOOGHLY (PAN: AZRPS3474L) ( /APPLICANT ) (*+()/ RESPONDENT ) DATE OF HEARING: 03.04.2014 DATE OF PRONOUNCEMENT: 03.04.2014 FOR THE ASSESSEE: SHRI SOUMITRA CHOWDHURY, ADVOCATE FOR THE REVENUE : SHRI MAKHANLAL SARDAR, JCIT, S R. DR / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXXVI, KOLKATA IN APPEAL NO. 536/CIT(A)-XXXVI/KOL/WD.-1(4),HGL/11-12/1615 DA TED 16.11.2012. ASSESSMENT WAS FRAMED BY ITO, WARD-1(4), HOOGHLY U/S. 143(3) OF TH E INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2009- 10 VIDE HIS ORDER DATED 29.12.2011. THE ASSESSEE ALSO FILED STAY PETITION DATED 17.01.2014 FOR EXTENSION OF STAY GRANTED ON 19.06.2013. 2. SINCE WE TAKE UP THE ITA NO. 1926/K/2012 FOR HEA RING TODAY, THE STAY PETITION FILED BY ASSESSEE IS INFRUCTUOUS AND THE SAME IS DISMISSED B EING INFRUCTUOUS. 3. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINS T THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE MADE BY AO U/S. 40A(3) OF THE ACT FOR AN AMOUNT OF RS.24,16,200/- AND FURTHER ENHANCING THE ASSESSMENT BY RS.10.60 LACS. FOR THI S, ASSESSEE HAS RAISED FOLLOWING GROUND NOS. 2 AND 3: 2 ITA NO. 1926/K/2012 SAGAR CHANDRA SANTRA AY 2009-10 2. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE CIT (A) HAS ERRED IN DISMISS THE APPEAL AND THUS SUSTAIN THE DISALLOWANCE OF RS.24,1 6,200/- U/S. 40A(3) AS MADE BY LD. AO. 3. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN ENHANCEMENT OF INCOME FURTHER BY RS.10,60,000/- ON THE ALLEGED VIO LENCE OF SEC. 40A(3) OF THE INCOME TAX ACT. 4. BRIEFLY STATED FACTS ARE THAT FOR THE RELEVANT A SSESSMENT YEAR 2009-10 ASSESSEE FILED HIS RETURN OF INCOME ON 30.09.2009 AND ACCORDINGLY, NOT ICES U/S. 143(2) AND 142(1) OF THE ACT WERE ISSUED. THE ASSESSEE IS A TRADER IN POTATOES. THE ASSESSEE PURCHASED POTATOES FROM DIFFERENT PARTIES OF WEST BENGAL AND SOLD THESE POTATOES TO D IFFERENT PARTIES OF ORISSA AND ANDHRA PRADESH. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE AO NOTICED IN THE LEDGER ACCOUNT THAT SOME OF THE PARTIES PURCHASES ARE MADE THROUGH CASH PAYMENTS. ACCORDINGLY, AO MADE ADDITION FOR VIOLATION OF PROVISIONS OF SECTION 40A (3) OF THE ACT FOR AN AMOUNT OF RS.24,16,200/- BY OBSERVING AS UNDER: AS SUCH THE ASSESSEE HAD VIOLATED THE PROVISION OF SECTION 40A(3) OF THE I T. ACT FOR A TOTAL SUM OF RS.24,16,200/- FOR THE PAYMENT O F EXPENDITURE MADE OTHERWISE THAN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUN T PAYEE BANK DRAFT. THE EXPENSES FOR AN AMOUNT OF RS.24,16,200/- IS, THEREF ORE, DISALLOWED AND ADDED TO THE ASSESSEES TOTAL INCOME. 5. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT( A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CONFIRMED THE ADDITION MADE BY AO AND ALSO DIRECTED THE AO TO ENHANCE THE ADDITION BY AN AMOUNT OF RS.10.60 LACS. FOR THIS, HE OBSERVED IN PARA 3 AS UNDER: 3. SUBMISSION OF A/R, GROUNDS OF APPEAL AND ASSESS MENT ORDER WERE DULY CONSIDERED. THE ONLY GROUND OF APPEAL IS DISALLOWANCE OF PURCHA SES MORE THAN RS.20000/- IN CASH U/S 40A(3) OF INCOME TAX ACT. ASSESSING OFFICER DIS ALLOWED SUCH SUM OF RS.24,16,200/- U/S. 40A(3) IN RESPECT OF PARTIES MENTIONED IN PAGE THREE OF ASSESSMENT ORDER. THOUGH THE APPELLANT HAS CLAIMED THAT PAYMENTS RECEIVED TH ROUGH BEARER/SELF CHEQUES HAVE BEEN ENTERED IN THE CASH BOOK AND THEN SUBSEQUENT PAYMEN TS OF RS.20000/- OR LESS HAVE BEEN MADE SUBSEQUENTLY. BUT AO HAS AGAIN AND AGAIN MENTI ONED THAT BEARER/SELF CHEQUES WERE ISSUED IN THE NAME OF SUPPLIERS. THEY EITHER H AVE TAKEN PAYMENT THEMSELVES OR THROUGH REPRESENTATIVE. BEARER CHEQUES ARE HAVING T HE NAMES OF SUPPLERS. THOSE FACTS WERE VERIFIED FROM THE ASSESSMENT RECORDS, LIST OF PURCHASES SPPLIERS, PHOTOCOPY OF BEARER CHEQUES. THESE SUPPLIERS ARE MAINLY TAPAN DE Y/TAPAN KUMAR DEY. SAHIR KAZI. PINTU MALLICK ETC. SIMILAR CASH PURCHASES THROUGH B EARER CHEQUES HAVE BEEN MADE BY APPELLANT FROM TAPAN DEY, KRISHNA GOPAL JANA ETC. I N EARLIER YEARS ALSO. FROM THE ABOVE DISCUSSION IT IS CLEAR THAT APPELLAN T IS INDULGED IN THE CASH PURCHASES EXCEEDING RS.20,000/- BY WAY OF PAYMENT THROUGH BEA RER/SELF CHEQUES. AS ALL PURCHASES HAVE BEEN MADE THROUGH REGULAR SUPPLIER AND NOT FRO M AGRICULTURIST APPELLANT CASE IS NOT FALLING UNDER EXCEPTIONS U/S 40A(3). HENCE, THE DISALLOWANCE MADE BY AO OF RS.2416200/- U/S 40A(3) S SUSTAINED. APPEAL IS DIS MISSED ON THIS GROUND. ENHANCEMENT OF INCOME U/S. 251(1) & 251(2) DURING THE APPELLATE PROCEEDING IT WAS NOTED THAT A PART FROM RS.24,16,200/- AS DISALLOWED BY AO, APPELLANT HAS PAID A SUM OF RS.10 ,60,000/ TO VARIOUS SUPPLIERS IN 3 ITA NO. 1926/K/2012 SAGAR CHANDRA SANTRA AY 2009-10 CASH IN EXCESS OF RS.20,000/-. APPELLANT WAS ASKED TO EXPLAIN WHY THESE PAYMENTS THROUGH BEARER CHEQUES AND IN EXCESS OF RS.20000/- BE DISALLOWED U/S 40A(3) OF INCOME TAX ACT. APPELLANT REPEATED THE SAME ARGUMENTS. HEN CE, INCOME OF THE APPELLANT IS ENHANCED BY A SUM OF RS. 10,60,000/- BY DISALLOWING THE PAYMENT IN CASH IN EXCESS OF RS.20,000/- U/S 40A(3) READ WITH SEC. 251(1) & 251( 2) OF INCOME TAX ACT. AGGRIEVED, NOW ASSESSEE IS IN APPEAL ON BOTH THE CO UNTS. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE US LD. COUNSEL FOR THE ASSESSEE FIRST OF ALL STATED THAT THERE IS NO CASH PAYMENT EXCEEDING RS.20000/- TO ANY OF THE PARTIES TO WHOM PURCHASES ARE MADE. LD. COUNSEL FOR THE ASSESSEE STATED THAT THERE IS NO WHISPER IN THE ASSESSMENT O RDER ABOUT THIS RATHER LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE FIRST PAGE OF TH E ASSESSMENT ORDER IN THIRD PARA, THERE IS A CLEAR CUT FINDING OF FACT BY THE AO THAT AS PER BOOKS PRODUCED ALL PAYMENTS IN CASH ARE NOT MORE THAN RS.20000/- IN A DAY. LD. COUNSEL FOR THE ASSESSEE STATED THAT ONLY CHAR GE OF THE AO IS THAT THERE ARE DEBIT ENTRIES IN THE ACCOUNT ON V ARIOUS DATES AND HE HAS NARRATED THIS TRANSACTION WHEREBY CHEQUES WERE ISSUED AND AMOUNTS WERE WITHDR AWN BY SHRI TAPAN DEY, SHRI DIPAK MEDDA, SHRI KRISHNA GOPAL JANA, SHRI KARTIK SANTRA, SHRI SABIR KAZI, SHRI PINTU MALLICK AND SHRI SRIDAM DEY. LD. COUNSEL FOR THE ASSESSEE STAT ED THAT THESE PARTIES ARE NOT AT ALL PURCHASER OF THE ASSESSEE. LD. COUNSEL FOR THE ASSESSEE STAT ED THAT THE ISSUE WAS EXPLAINED BEFORE AO AS WELL AS BEFORE CIT(A) THAT THE NATURE OF TRANSACTIO NS IN THE BANK IS CASH WITHDRAWAL FROM BANK AND ASSESSEE HAS PRODUCED COMPLETE BOOKS OF ACCOUNT AND SHOWN ALL TRANSACTIONS SUCH AS CASH WITHDRAWAL FROM BANK BY PASSING A CONTRA ENTRY. LD . COUNSEL FOR THE ASSESSEE PRODUCED BEFORE US CASH BOOK IN THE SHAPE OF PAPER BOOK AND SHOWN U S ENTIRE CASH BOOK AND STATED THAT THE IMPUGNED TRANSACTION HAS NOT BEEN DEBITED AS PAYMEN T FOR ANY EXPENDITURE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE NOR ANY DEDUCTION CLAIMED B Y THE ASSESSEE. LD. COUNSEL FOR THE ASSESSEE FURTHER DREW OUR ATTENTION TO THE ASSESSMENT ORDER AND RELEVANT FINDING AT PAGE 3 THAT THE MERE ENTRY OF THE DEBITS FROM BANK IN THE ASSESSEES CAS H BOOK DOES NOT PROVE THAT THE DESTINATION OF THE CASH PASSED TO ASSESSEES CASH ACCOUNT. IN VIEW OF THE ABOVE, LD. COUNSEL FOR THE ASSESSEE STATED THAT NONE OF THE WITHDRAWAL WAS USE D FOR THE PURCHASES MADE AS DISALLOWED BY AO AND CONFIRMED BY CIT(A). 7. WE FIND FROM THE FACTS OF THE CASE THAT THE CASH WITHDRAWALS FROM BANK BY SELF CHEQUES OR CASH WITHDRAWAL IN THE NAME OF PERSONS HAVE BEEN ENTERED INTO THE BOOKS OF ACCOUNT OF THE ASSESSEE AS, CASH WITHDRAWALS FROM BANK TO MEET T HE DAY TO DAY REQUIREMENT OF THE ASSESSEE AS NOTED BY AO IN THE ASSESSMENT ORDER. WE HAVE GO NE THROUGH THE ASSESSMENT ORDER AS WELL AS THE ORDER OF CIT(A) AND FOUND THAT THE AO COULD NOT CORRELATE THE CASH WITHDRAWAL WITH THAT OF THE PURCHASES. EVEN THE WRITTEN SUBMISSION BY THE REVENUE DATED 01.04.2014 IS JUST BASED ON 4 ITA NO. 1926/K/2012 SAGAR CHANDRA SANTRA AY 2009-10 CONJECTURES AND SURMISES AS THESE NOWHERE STATES TH AT CASH WITHDRAWALS WERE UTILISED FOR THE PURCHASES. IT ONLY CREATES HYPOTHESIS BY USING THE TERM, FROM THE CIRCUMSTANTIAL EVIDENCE AS STATED ABOVE IT IS EVIDENT THAT THE EXTRA AMOUNT MU ST HAVE THE ASSESSEES UNACCOUNTED PURCHASE WHICH HE DID NOT DISCLOSE IN HIS ACCOUNTS (TAKEN FROM THE WRITTEN SUBMISSIONS). SIMILAR ASSUMPTION IS ALSO EXPRESSED IN THE WRITTEN SUBMISS IONS OF THE REVENUE BUT PROOF ENCLOSED I.E. LEDGER COPY OF TAPAN DEY IN THE BOOKS OF THE ASSESS EE CLEARLY REVEALS A DIFFERENT PICTURE. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE REV ENUE COULD NOT SHOW ANY VIOLATION OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT AS REVENUE COULD NOT CORRELATE PURCHASES WITH CASH WITHDRAWAL OR COULD NOT PROVE THAT PAYMENT FOR PURC HASES WERE MADE BY CASH. IN SUCH CIRCUMSTANCES, WE HAVE NO HESITATION IN DELETING TH E ADDITION CONFIRMED BY LOWER AUTHORITIES. WE ORDER ACCORDINGLY. THE APPEAL OF ASSESSEE IS AL LOWED. 8. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. 9. ORDER IS PRONOUNCED IN THE OPEN COURT. SD/- SD/- , ! , (SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 3RD APRIL, 2014 ./ #01 2 JD.(SR.P.S. ) 3 *4 5 4%6- COPY OF THE ORDER FORWARDED TO: 1 . () / APPELLANT SAGAR CHANDRA SANTRA, VILL & P.O. BAIKU NTHAPUR, PS- PURSURAH, HOOGHLY-712414 2 *+() / RESPONDENT ITO, WARD-1(4), HOOGHLY 3 . # ( )/ THE CIT(A), KOLKATA 4. 5. # / CIT KOLKATA 4:; *# / DR, KOLKATA BENCHES, KOLKATA +4 */ TRUE COPY, #