Smt. Sita Rani Mondal, Purba Medinipur V. ITO, Ward - 2, Haldia, Kolkata

ITA 1963/KOL/2009

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75024 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 19-11-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS SRDR
• Assessee Lawyers: S P CHOUDHURY
• Keywords: Unexplained investment; Loose papers
• Section: 143(3); 133A; 69; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER ITA NO. 1963 / KOL / 2009 ASSESSMENT YEAR :2006-07 SMT. SITA RANI MONDAL, VILL & P.O. NACHINDDA, DIST. PURBA MEDINIPUR PIN 742 444 [ PAN NO.AEPPM 7979 B ] V/S . INCOME TAX OFFICER, WARD-2, HALDIA, 2, GARIAHAT ROAD (SOUTH), KOLKATA 700 068 / APPELLANT .. / RESPONDENT) /BY APPELLANT SHRI SOUMITRA CHOUDHURY, AR & SHRI S.P. CHOUDHURY, AR /BY RESPONDENT SMT. RANU BISWAS, SR-DR /DATE OF HEARING 18-12-2013 /DATE OF PRONOUNCEMENT 27-01-2014 / // / O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-XXXIII, KOLKATA IN APPEAL NO. 298/CIT(A)-XXXIII/WD- 2,HAL/07-08 DATED 28-08-2009. ASSESSMENT FRAMED BY ITO WARD-2, HALDIA U/S. 145 R.W.S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 31-12-2008 FOR ASSE SSMENT YEAR 2006-07. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKI NG ADDITION OF UNEXPLAINED INVESTMENT OF RS.29,48,143/- ON ACCOUNT OF PURCHASE OF PETRO-PRODUCT OUTSIDE ITA NO.1963/KOL/2009 A.Y. 2006-07 SMT. SITA RANI MONDAL V. ITO WD-2 HALDIA PAGE 2 BOOKS OF ACCOUNT. FOR THIS, ASSESSEE HAS RAISED FOL LOWING GROUND NOS.3 AND 4:- 3.FOR THAT AS PER AGREEMENT WITH IOC, THE PURCHASE S ARE RESTRICTED ONLY WITH IOC, THEREFORE, PURCHASE OF PETRO-PRODUCT FROM OUTSIDE BOOKS IS NOT PRACTICABLE IN THIS LINE OF BUSINESS WHICH PROVES A S AGAINST FILLED WITH SBI THE AUTHENTICITY OF STOCK-STATEMENT AS ON 31.3. 2006, AS SUCH THE ESTIMATED ADDITION OF RS.29,48,133/- AS UNEXPLAINED INVESTMENT U/S.69 OF THE I.T. ACT IS COMPLETELY ARBITRARY, UNJUSTIFIE D, UNWARRANTED, VINDICTIVE, MALA-FIDE AND ILLEGAL. 4. FOR THAT THE PURCHASES BEING RESTRICTED BUT THE INFLATED STOCK STATEMENT SUBMITTED TO BANK FOR HIGHER CASH CREDIT FACILITIES TO FINANCE THE BUSINESS FROM ITS CLOSURES AS SUCH THERE WAS N O UNEXPLAINED INVESTMENT OF STOCK, HENCE THE ESTIMATED ADDITION U /S. 69 OF THE I.T. ACT RS.29,48,133/- IS ERRONEOUS, PERVERSE, VINDICTIVE A ND ILLEGAL. 3. THE SECOND INTER-CONNECTED ISSUE IS AS REGARDS T O DIFFERENCE BEING FOUND AS ON THE DATE OF SURVEY I.E., ON 17-1-2005 A ND STOCKS STATEMENT SUBMITTED TO STATE BANK OF INDIA (SBI) AS ON 31-10- 2005 AS UNEXPLAINED INVESTMENT OF RS.23.80 LAKH. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NOS. 5 TO 6:- 5. FOR THAT IN THE COURSE OF SURVEY ON 17.11.2005, LOOSE PAPERS WERE SEIZED BEING STOCK STATEMENT SUBMITTED TO SBI FOR C .C. A/C. AS ON 31.10.2005, BUT NO SUCH STOCK OF 23080 LTRS OF LUBR ICANT WAS FOUND ON SURVEY, EXCEPTING 202 LTRS, WHICH PROVES THAT STOCK WAS INFLATED TO GET HIGHER C.C. A/C. FACILITIES FROM BANK, AS SUCH THER E WAS NO UNEXPLAINED INVESTMENT OF RS.23,80,000/- U/S. 69 OF THE IT ACT. , THEREFORE, THE SAID ADDITION IS COMPLETELY ARBITRARY, UNJUSTIFIED, VIND ICTIVE, MALA-FIDE AND ILLEGAL. 6. FOR THAT ON THE FACTS OF THE CASE, THE ADDITION OF RS.23,80,000/- AS UNEXPLAINED INVESTMENT IN LUBRICANT, BEING INFLATED STOCK-STATEMENT SUBMITTED TO BANK FOR AVAILING HIGHER LOANS FOR BUS INESS EXPEDIENCY, THE LD. CIT(A) HAS MISCONCEIVED THE EXACT NATURE OF BUS INESS RESULTING IN CONFIRMING THE ADDITION WHICH IS COMPLETELY ERRONEO US, PERVERSE AND ILLEGAL. 4. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEF FACTS LEADING TO T HE ABOVE ISSUE ARE THAT THE ASSESSEE HAS TWO BUSINESS PREMISES ONE AT RASULPU R AND OTHER AT NACHINDA BAZAR. THE BUSINESS OF THE ASSESSEE AT RAS ULPUR RUNS UNDER THE ITA NO.1963/KOL/2009 A.Y. 2006-07 SMT. SITA RANI MONDAL V. ITO WD-2 HALDIA PAGE 3 NAME AND STYLE OF M/S. RASULPUR SERVICE STATION BEI NG OUTLET FOR MSD & MS OF INDIAN OIL CORPORATION (IOC). THE BUSINESS AT NACHI NDA BAZAR RUNS UNDER THE NAME AND STYLE OF M/S. SITA RANI MANDAL AND THIS OU TLET IS AUTHORIZED TO SELL KEROSENE OIL (IOC). A SURVEY U/S 133A OF THE ACT WA S CARRIED OUT ON THE BUSINESS PREMISES OF ASSESSEE ON 17-11-2005. ACCORD ING TO ASSESSEE AS WELL AS ASSESSING OFFICER, DURING THE COURSE OF SURVEY O N 17-11-2005 FOLLOWING STOCKS WERE FOUND:- FROM NACHINDA BAZAR ITEM QUANTITY RATE VALUE K.OIL 5400 LTRS 9.10 49,140/- HSD 3400 LTRS 32.63 1,10,942/- LUBRICANTS 202 LTRS FROM RASULPUR SERVICE STATION:- ITEM QUANTITY RATE VALUE MS (PETROL) 4856 LTRS 46.72 2,24,347/- HSD 7097 LTRS 32.63 2,31,575/- LUBRICANTS 167 LTRS THE AO HAS GONE THROUGH THE LOOSE PAPERS FOUND DURI NG THE COURSE OF SURVEY AND IMPOUNDED AS SRM-1 AND SRM-2. HE NOTICED THAT T HE STOCK STATEMENT SUBMITTED TO SBI ARE AS UNDER: ITEM QUANTITY RATE VALUE HSD (NORMAL)L 1,08,000 LTRS 32.97 35,60,760/- MS (UNLEADED) 8,000 LTRS 40.70 3,73,600/- MOBILE & OTHER LUBRICANTS 23,080 LTRS 100.00 23,08,000/- FURTHER, AS PER AUDIT REPORT IN FORM NO.-3CD, THE Q UANTITATIVE STOCK FOR THE YEAR ENDING 31 ST MARCH, 2006, AS PER ASSESSEES STATEMENT AS UNDER: - ITA NO.1963/KOL/2009 A.Y. 2006-07 SMT. SITA RANI MONDAL V. ITO WD-2 HALDIA PAGE 4 RASULPUR SERVICE STATION SITA RANI MONDAL PETROL DIESEL K.OIL OP. STOCK 7,872 LTRS 15,205 LTRS 35,142 LTRS PURCHASE 20,000 LTRS 5,92,600 LTRS 19,950 LTRS SALES 24,842 LTRS 5,95,303 LTRS 55,092 LTRS CL. STOCK 3,030 LTRS 11,717 LTRS THE ASSESSING OFFICER RE-CAST THE TRADING ACCOUNT O F MS (PETROL) AND HSD (DIESEL) AND DETERMINED THE STOCK AS UNDER:- MS (PETROL) HSD (HIGH SPEED DIESEL) CLOSING STOCK AS ON 31/10/2005 (QUANTITATIVE STOCK SUBMITTED TO THE BANK) 8,000 LTRS 1,088,000 LTRS ADD: PURCHASE FROM 01/11/05 TO 31/03/06 8,000 LTRS 16,000 LTRS 1,60,000 LTRS 2,68,000 LTRS LESS: SALES FROM 01/11/05 TO 31/03/06 11,105 LTRS 1,68,204 LTRS STOCK AS ON 31.03.2006 4,895 LTRS 99,796 LTRS. ACCORDINGLY, HE COMPUTED THE EXCESS STOCK AT RS.29, 48,133/- BY FOLLOWING:- SL. NO PRODUCT HSD & MS ((PETROL) QUANTITY AS PER STOCK STATEMENT SUBMITTED TO THE BANK AND AS PER ABOVE CALCULATION QUANTITY AS FURNISHED BY YOU BEFORE THE IT DEPARTMENT AS ON 31.03.06 DIFFERENCE (IN QUANTITY) RATE (IN RS/LTR) DIFFERENCE OF VALUE (IN RS) 1 HSD 99,796 LTRS 11,717 LTRS 88,079 TRS 32.50 28,6 2,567/- 2 MS PETROL) 4,895 LTRS 3,030 LTRS 1,865 TRS 45.88 85,566/- TOTAL 29,48,133/ - HE ALSO MADE ADDITION OF UNEXPLAINED INVESTMENT IN LUBRICANTS BY TAKING A STOCK STATEMENT SUBMITTED TO SBI AT RS.23.80 LAKH. AGGRIEVED AGAINST BOTH THE ADDITIONS, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALSO CONFIRMED THE ACTION OF ASSESSING OFFICER ON BOTH THE ISSUES BY S TATING THAT ASSESSEE COULD ITA NO.1963/KOL/2009 A.Y. 2006-07 SMT. SITA RANI MONDAL V. ITO WD-2 HALDIA PAGE 5 NOT EXPLAIN THE DISCREPANCY. AGGRIEVED, ASSESSEE CA ME IN SECOND APPEAL BEFORE TRIBUNAL. 5. BEFORE US ASSESSEES COUNSEL ARGUED THAT IT IS N OT CLEAR FROM THE ASSESSMENT ORDER AS TO HOW THE AO HAS RE-COMPUTED T HE STOCK AND RE-CAST THE TRADING ACCOUNT. LD. COUNSEL FOR THE ASSESSEE S TATED THAT AS ON THE DATE OF SURVEY ON 17-11-2005 THE EXCESS STOCK INCLUDING THE LUBRICANTS AT RASULPUR AND NACHINDA BAZAR WERE EXCESS TO THE EXTENT OF RS. 6,51,422/-, THE RELEVANT DETAILS ARE AS UNDER:- K.OIL 49,140 LTS HSD 1,10,942 LTS LUBRICANTS 20,200 LTS MS (PETROL) 2,24,347 LTS HSD 2,31,575 LTS LUBRICANTS 15,218 LTS LD. COUNSEL FOR THE ASSESSEE STATED THAT ON THE DAT E OF SURVEY I.E. ON 31-10- 2005 AS WELL AS STOCK STATEMENT IS ALMOST SIMILAR, WHICH IS EVIDENT FROM THE STOCK STATEMENT OF THE ASSESSEE AND NOT THE STOCK S TATEMENT SUBMITTED TO THE BANK. ACCORDING TO LD. COUNSEL FOR THE ASSESSEE, TH ERE IS NO DIFFERENCE IN THE STOCK STATEMENT AND THIS BEING A CONTROLLED ITEM I. E. KEROSENE OIL AND HPD (PETROL) ALL THE ITEMS ARE CONTROLLED AND ONLY ONE SUPPLIER, I.E., INDIAN OIL CORPORATION (IOC). LD. COUNSEL FOR THE ASSESSEE DRE W OUR ATTENTION TO PETROLEUM RULES 1976 (3) WHICH CLEARLY EXTRACTS AS UNDER:- PETROLEUM RULES 1976 EXTRACTS 3. RESTRICTION ON DELIVERY AND DSPATCH OF PERTOLEUM : (1) NO, PERSON SHALL DELIVER OR DISPATCH ANY PETROL EUM TO ANY ONE IN INDIA OTHER THAN THE HOLDER OF A STORAGE LICENCE IS SUED UNDER THESE RULES OR HIS AUTHORIZED AGENT OR A PORT AUTHORITY OR RAIL WAY ADMINISTRATION OR A PERSON WHO IS AUTHORIZED UNDER THE ACT TO STORE PET ROLEUM WITHOUT A LICENCE. (2) THE PETROLEUM DELIVERED OR DESPATCHED UNDER SUB -RULE (1) SHALL BE OF THE CLASS, AND SHALL NOT EXCEED THE QUANTITY, WH ICH THE PERSON TO ITA NO.1963/KOL/2009 A.Y. 2006-07 SMT. SITA RANI MONDAL V. ITO WD-2 HALDIA PAGE 6 WHOM IT IS DELIVERED OR DISPATCHED IS AUTHORISED TO STORE WITH OR WITHOUT A LICENCE UNDER THE ACT. (3) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-RULE (2), PETROLEUM CLASS B NOT EXCEEDING 15,000 LITERS IN QUANTITY PACKED IN SEALED AIRTIGHT APPROVED CONTAINERS MAY BE DISPATCHED TO A PERSON N OT HOLDING A STORAGE LICENCE PROVIDED THAT THE PERSON DISPATCHIN G THE PETROLEUM HAS SATISFIED HIMSELF THAT PRIOR ARRANGEMENTS HAVE BEEN MADE BY THE PERSON TO WHOM THE PETROLEUM IS DISPATCHED FOR THE IMMEDIA TE DISPOSAL IN THE ORIGINAL SEALED PACKAGES OR SUCH QUANTITY AS IS IN EXCESS OF 2,500 LITERS. (4) NOTHING IN SUB-RULES (1) AND (2) SHALL APPLY TO THE DELIVERY OR DISPATCH OF PETROLEUM TO THE DEFENSE FORCES OF THE UNION. LD. COUNSEL FOR THE ASSESSEE ALSO STATED THAT THE D EALER IS NOT ALLOWED TO BUY SELL OR EXCHANGE THE PETROLEUM PRODUCT AND THIS IS EXTRACT GUIDELINES OF THE IOC VIDE 1.5 I.E., OBSERVANCE OF STATUTORY AND OTHE R REGULATIONS AND RELEVANT REGULATION AS UNDER:- III) DEALER WILL NOT BUY, SELL OR EXCHANGE PETROLE UM PRODUCTS WITH ANY OTHER DEALER OR ANYBODY OTHER THAN THE PRINCIPAL OI L COMPANY. EVEN AS PER THE DEPARTMENT OF FOOD AND CIVIL SUPPLI ES OF GOVERNMENT OF WEST BENGAL, THE OIL AND LUBRICANTS IS A LICENCED I TEM WHICH GOVERNED BY WEST BENGAL LUBRICATING OIL LICENSING ORDER, 1967. LD. COUNSEL FOR THE ASSESSEE STATED THAT THE COMPLETE DETAILS OF GODOWNS STORAGE PLACE PREMISES ETC., ARE MENTIONED IN THE LICENCE NOTHING MORE CAN BE ATTRIB UTED TO THE ASSESSEE WHAT IS AVAILABLE WITH HER. LD COUNSEL FOR THE ASSESSEE, IN VIEW OF THE ABOVE, STATED THAT THERE IS NO DIFFERENCE IN THE STOCK AND STOCK STATEMENT AS GIVEN TO THE BANK FOR OBTAINING HIGHER LIMITS AND NOTHING ELSE. 6. WE FIND FROM THE ABOVE FACTS AND CIRCUMSTANCES O F THE CASE THAT AS ON THE DATE OF SURVEY THE STOCK FOUND FROM THE TWO BUS INESS PLACES I.E., AT NACHINDA BAZAR AND FROM RASULPUR SERVICE STATION IS AT RS.6,51,422/- AND THE ITEM-WISE DETAILS OF STOCK FOUND FROM THE BUSINESS PREMISES DURING THE COURSE OF SURVEY, AS ALREADY NARRATED BY US IN ABOVE PARA- 4, AS THERE IS NO STOCK FOUND OF HSD AND LUBRICANTS AT NACHINDA BAZAR AND S TOCK FOUND IN THE ITA NO.1963/KOL/2009 A.Y. 2006-07 SMT. SITA RANI MONDAL V. ITO WD-2 HALDIA PAGE 7 BUSINESS PREMISES, AT BEST CAN BE ADDED. SIMILAR I S THE SITUATION IN RESPECT OF RASULPUR SERVICE STATION. BUT WE HAVE TO COME A REA SONABLE ESTIMATE FOR DECIDING THE ISSUE. WE HAVE TO GO THROUGH THE CLOSI NG STOCK AVAILABLE WITH THE ASSESSEE AS ON 31 ST MARCH, 2006 AS PER FORM-3CD REPORT OF CLOSING STOC K OF PETROL AND DIESEL. IT MEANS THAT THE DIFFERENCES OF CLOSING STOCK AS ON 31 ST MARCH, 2006 AND STOCK FOUND DURING THE COURSE OF SU RVEY ON 17-11-2005, THE DIFFERENCE CAN BE ADDED TO THE RETURNED INCOME OF T HE ASSESSEE. THE CLOSING STOCK OF RASULPUR SERVICE STATION I.E., OF PETROL ( MS) AT 3030 LITERS AND HSD (DIESEL) AT 11,171 LITERS IS AVAILABLE. THE VALUE O F PETROL AT RASULPUR SERVICE STATION I.E, CLOSING STOCK OF 3030 LITERS COMES TO RS.1,41,561/- AND THAT OF HSD (DIESEL) OF 11,171 LITERS @ RS.32.63 COMES TO R S.3,82,325/-.IT MEANS THAT THE ASSESSEE HAS STOCK AVAILABLE TO THE EXTENT OF RS.5,23,886/- AS AGAINST STOCK FOUND DURING THE COURSE OF SURVEY AT RS.6,51, 422/- . SO THE DIFFERENCE BEING AT RS.1,27,536/- AT BEST CAN BE TREATED AS UN EXPLAINED STOCK, WHICH CAN BE ADDED TO THE RETURNED INCOME OF THE ASSESSEE. IN VIEW OF THE ABOVE, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITI ON ON BOTH THE ISSUES AT RS.1,27,035/- AND BALANCE WE DELETE. ACCORDINGLY, T HESE TWO ISSUES OF ASSESSEES APPEAL ARE PARTLY ALLOWED AS INDICATED A BOVE. 7. NEXT ISSUE I.E., UNEXPLAINED INVESTMENT OF RS.17 ,622/- IN SAHARA INDIA UNITS AND US-64 AND ALSO THE CREDIT ENTRY IN THE BA NK ACCOUNT NO.4700 WITH BALAGERIA CENTRAL CO-OPERATIVE BANK LTD., NACHINDA BAZAR BRANCH FOR AN AMOUNT OF RS.1.50 LAKH. FOR THIS, ASSESSEE HAS RAIS ED FOLLOWING GROUND NO. 7 & 8:- 7. FOR THAT ON THE FACTS OF THE CASE, THE ADDITION OF RS.17,662/- BEING INVESTMENT IN SAHARA INDIA, U-64 HAS BEEN ARBITRARI LY BEEN CONFIRMED BY THE LD. CIT(A) WHICH IS WRONG AND ILLEGAL. 8. FOR THAT THE ADD OF RS.1,50,000/- AS UNDISCLOSED INCOME HAS BEEN UPHELD BY THE LD. CIT WITHOUT ANY BASIS BY DISREGAR DING THE SUBMISSIONS OF THE LD. AR AND ALLOWING PROPER OPPOR TUNITY FOR VERIFICATION AS SUCH HIS FINDING AND ACTION IS ARBI TRARY, VINDICTIVE, MALA- FIDE AND ILLEGAL. ITA NO.1963/KOL/2009 A.Y. 2006-07 SMT. SITA RANI MONDAL V. ITO WD-2 HALDIA PAGE 8 8. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE STAT ED THAT ON THESE TWO ISSUES THE ASSESSING OFFICER MADE ADDITION AND CIT( A) ALSO CONFIRMED THE ACTION OF AO AND NO PROPER OPPORTUNITY OF BEING HEA RD WAS PROVIDED TO THE ASSESSEE AND ASSESSEE ALSO FAILS TO EXPLAIN THE SOU RCE OF THIS DEPOSIT. IN SUCH SITUATION, HE REQUESTED THAT FRESH OPPORTUNITY OF B EING HEARD TO BE PROVIDED TO THE ASSESSEE. ACCORDINGLY, LD. COUNSEL FOR THE ASSE SSEE REQUESTED FOR SETTING ASIDE OF THESE TWO ISSUES TO THE FILE OF AO. ON THE OTHER HAND, LD. SR-DR HAS NOT OBJECTED TO SET ASIDE THESE TWO ISSUES TO THE F ILE OF AO. AFTER HEARING RIVAL SUBMISSIONS, WE FEEL, LET THE ASSESSEE PROVED THE S OURCE OF THIS DEPOSIT AND EXPLAIN BEFORE THE AO. ACCORDINGLY, THE SAME IS SET TING ASIDE TO THE FILE OF AO. 9. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES IN TERMS AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT 27 /01/2014 SD/- SD/- (ABRAHAM P GORGE) ( MAHAVIR SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP !- 27/01/2014 , , , , -, -, -, -, / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. 2 / CONCERNED CIT 4. 2- / CIT (A) 5. , , , / DR, ITAT, KOLKATA 6. 9 / GUARD FILE. BY ORDER/ , /TRUE COPY/ / ,