ACIT, Circle - 56, Kolkata, Kolkata V. Bimal Sikaria, Kolkata

ITA 1974/KOL/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91933 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 27-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Document seized; Documents seized
• Section: 69C; 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA [BEFORE SHRI P. K. BANSAL, AM & SHRI MAHAVIR SINGH, JM ] I.T.A NO. 1 649 /KOL/201 2 ASSESSMENT YEAR : 20 1 0 - 11 ACIT, CC - XII, KOL VS. SRI SANJAY KUMAR AGARWAL AAYAKAR BHAWAN PURBA, 110 BF - 34, SALT LAKE KOLKATA 700 064 SHANTIPALLY, KOL - 07 (PAN: ADCPA 8997 K) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 22 .0 5 .2015 DATE OF PRONOUNCEMENT: 27 . 0 5 . 2015 FOR THE APPELLANT: SHRI KANHIYA LAL KANAK, SR - DR FOR THE RESPONDENT: SHRI SUBASH AGARWAL, ADVOCATE ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY REVENU E IS ARISING OUT OF ORDER OF CIT (A) - I I , KOLKATA VIDE APPEAL NO 186/CC - XII/CIT(A)C - II/11 - 12 DATED 13 . 0 8 .201 2 . ASSESSMENT WAS FRAMED BY ACIT, CC - XII, KOLKATA U/S. 14 3(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR ASSESSMENT YEAR 20 1 0 - 11 VIDE HIS ORDER DATED 2 8 . 12 .20 1 1 . 2. THE ONLY ISSU E IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY ASSESSING OFFICER OF MISCELLANEOUS RECEIPTS OF RS.47,18,662/ - BY INVOKING THE PROVISION OF SECTION 69C OF THE ACT. FOR THIS, REVENUE HAS RAISED THE FOLLOWING GROUND : THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY AO OF RS.47,18,662/ - U/S 69C OF IT ACT IN THE COURSE OF HEARING THE A/R WAS ASKED TO PROVIDE THE SOURCE OF THE MISCELLANEOUS RECEIPT OF RS.47,18,662/ - HOWEVER, INSPITE OF HAVING SUFFICIENT OPPORTUNITI ES, THE A/R OF THE ASSESSEE COULD NOT PRODUCE ANY SUPPORTING DOCUMENT OR BOOKS OF ACCOUNTS. HE HAD SIMPLY STATED THAT AMOUNT RECEIVED FROM SALE WAS UTILIZED FOR SUCH PURCHASE. MOREOVER, THESE ALES WERE NEITHER RECORDED IN THE SEIZED DOCUMENTS NOR ANY BUYER S DETAILS, SALES REGISTER OR STOCK REGISTER PRODUCED BY THE ASSESSEE AT THE TIME OF ASSESSMENT PROCEEDINGS FOR VERIFICATION. IN THE ABSENCE OF SATISFACTORY EXPLANATION AS LAID DOWN U/S. 69C OF THE IT ACT THE AO HAD MADE THE ADDITION AS CONCEALED INCOME. 2 ITA NO .1649 /K/201 2 SRI SANJAY KR. AGARWAL. AY 20 1 0 - 11 THEREFORE, THE SALES AS ACCEPTED BY THE LD. CIT(A) WAS NOT ESTABLISHED BY ANY MEANS. 3 . BRIEFLY STATED FACTS ARE THAT AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS MADE ADDI TION OF UNDISCLOSED INCOME OF RS.47,18,552/ - BEING CASH PAYMENT OF RS.57,18,662/ - TO SHRI SURESH SRIVASTAVA FOR PURCHASE OF MS INGOT DURING THE MONTH OF JANUARY 2010. THIS FACT CAME TO LIGHT, DURING THE COURSE OF SEARCH U/S 132 OF THE ACT IN THE CASE OF FO RTUNE ISPAT GR OUP OF CASES ON 16.02.2010. THE ASSESSEE HAS DISCLOSED A SUM OF RS.10 LAKH AND AGREED FOR ADDITION. THE ASSESSEE HAS DISCLOSED A SUM OF RS. 10 LAKH AS MISCELLANEOUS RECEIPTS IN THE RETURN OF INCOME FOR AY 2010 - 11 I.E. THE RELEVANT AY . ACCORDI NGLY, AO ASSESSED THE UNDISCLOSED INCOME OF BALANCE OF RS.47,18,552/ - . AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). 4. THE CIT(A) DELETED THE ADDITION BY OBSERVING IN PARA - 5 WHICH READS AS UNDER: - 5. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLA NT AND PERUSED THE ASSESSMENT ORDER. I HAVE ALSO GONE THROUGH THE SEIZED PAPERS UNDE R REFERENCE AS WELL AS THE ASSESSMENT ORDER PASSED BY THE SAME AO IN THE CASE OF SAJJAN KUMAR PATWARI (HUF) FOR AY 2010 - 11. THE FAC T S OF THE CASE HAVE ALREADY BEEN DISCUSSE D ABOVE THAT SEARCH ACTION WAS CONDUCTED IN THE CASE OF FORTUNE ISPAT GROUP AND IN THE COURSE OF SEARCH CERTAIN DOCUMENTS MARKED AS F1/OFFICE - 6 AND F1/OFFICE - 7 WERE SEIZED. THESE PAPERS HAVE NOTING OF CASH INFLOW AND CASH OUTFLOW. IN THIS REGARD, THE STATE MENT OF THE DIRECTOR OF THE COMPANY, SHRI SURESH SRIVASTAVA WAS RECORDED AND HE STATED THA T THE PAPERS CONTAIN DETAILS OF SALES MADE BY RASHMI GROUP AND THAT HE HAD COLLECTED THE AMOUNT ON BEHALF OF RASHMI GROUP. SHRI SAJJAN KUMAR PATWARI OF RASHMI GROUP A CCEPTED THE TRANSACTIONS RECODED IN THE SALE SEIZED PAPERS AND IT WAS STATED BY HIM THAT THE FIGURES RECORDED ON THE SEIZED PAPERS PERTAIN TO SALES OF METAL \ MADE BY HIS GROUP. THE SALES WERE OWNED BY SAJJAN KUMAR PATWARI (HUF) AND ON THOSE SALES HE DISCLO SED PROFIT @ 5% AS HIS UNDISCLOSED INCOME FOR AY 2010 - 11. IT IS OBSERVED THAT IN THE CASE OF HUF THE AO ACCEPTED THE SALE OF MS INGOT AND ASSESSED THE INCOME @ 5% OF TOTAL SALES. AS PER THESE PAPERS THE APPELLANT HAD ALSO MADE CASH PAYMENT OF RS.57,18,662/ - FOR MAKING PURCHASES OF INGOTS FROM RASHMI GROUP THROUGH SURESH SRIVASTAVA. IN THE STATEMENT RECORDED U/S. 131 OF THE ACT, THE APPELLANT STATED THAT HE HAD MADE THE PURCHASES OF RS.57,18,662/ - ON WHICH PROFIT WAS EARNED @ 5%. IT WAS ALSO STATED BY THE AP PELLANT THAT HE HAD ROTATED THE FUND TO MAKE FURTHER PURCHASES. IN THE RETURN OF INCOME THE APPELLANT DISCLOSED THE PROFIT EARNED ON TRADING OF INGOTS AND ALSO DECLARED SUM OF RS.10,00,000/ - ON ACCOUNT OF INITIAL INVESTMENT IN MAKING PURCHASE. THE SAID SEE D CAPITAL WAS SHOWN UNDER THE HEAD MISCELLANEOUS INCOME./ HOWEVER, THE O TREATED THE ENTIRE AMOUNT OF PURCHASES OF RS.57,18,662/ - AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT FOR THE REASON THAT THE APPELLANT NEITHER EXPLAINED THE SOURCE OF MISCELLANEOUS RECEIPT NOR PRODUCED EVIDENCE OF SALES. ON CAREFUL CONSIDERATION OF THE FACTS, I AM OF THE OPINION THAT THE AO WAS NOT JUSTIFIED IN TREATING THE ENTIRE AMOUNT OF PURCHASE AS UNEXPLAINED EXPENDITURE FOR THE REASON THAT THE APPELLANT DID NOT PRODUCE THE EVID ENCE OF SALE OR 3 ITA NO .1649 /K/201 2 SRI SANJAY KR. AGARWAL. AY 20 1 0 - 11 HE DID NOT EXPLAIN THE SOURCE OF MISCELLANEOUS RECEIPT. THERE IS NO DISPUTE THAT THE PURCHASES OF RS.57,18,662/ - AND THE PROFIT EARNED ON SALE OF SUCH PURCHASED MATERIAL WAS NOT RECORDED IN THE BOOKS OF ACCOUNT. AS PER SEIZED PAPERS THE SAL ES WERE ACCEPTED IN THE CASE OF SAJJAN KUMAR PATWWARI (HUF) AND HENCE THE CORRESPONDING PURCHASES HAVE TO BE ACCEPTED IN THE HANDS OF APPELLANT. ONCE, THE APPELLANT HAS MADE THE PURCHASE OF INGOTS, THE CORRESPONDING SALE BY THE APPELLANT ARE ALSO TO BE ACC EPTED UNLESS THERE IS ANY EVIDENCE THAT THE PURCHASED MATERIAL WAS LYING AS STOCK WITH THE APPELLANT. MOREOVER, THE AO HIMSELF HAS ASSESSED THE PROFIT ON TRADING OF INGOTS AS DECLARED BY THE APPELLANT. FURTHER, THE APPELLANT HAS DISCLOSED THE SUM OF RS.10, 00,000/ - ON ACCOUNT OF INITIAL INVESTMENT TO MAKE THE PURCHASE OF INGOTS AND, THEREFORE, THERE IS NO QUESTION OF EXPLAINING THE SOURCE OF THAT AMOUNT AS DESIRED BY THE AO. AGAIN, SINCE THE SALES WERE MADE BY THE APPELLANT IN CASH THERE COULD NOT BE ANY EVI DENCE FOR THE SAME. BUT, THE FACT ON RECORD IS THAT THE AO HAS ACCEPTED THE SALES IN THE HANDS OF HUF, HENCE IT PROVES THAT THE APPELLANT HAD MADE THE PURCHASES AS WELL AS SALES. THEREFORE, I AM OF THE OPINION THAT THERE IS NO REASON TO DISBELIEVE THE CONT ENTION OF THE APPELLANT UNLESS THERE IS ANY CONTRARY MATERIAL ON RECORD. THE AO HAS BROUGHT ON SUCH MATERIAL ON RECORD. IN VIEW OF ABOVE, I AM OF THE OPINION THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.47,18,662/ - U/S 69C OF THE ACT. HE IS DIREC TED TO DELETE THE SAME. THE GROUND NO.2 IS ALLOWED . AGGRIEVED, REVENUE CAME IN SECOND APPEAL BEFORE TRIBUNAL. 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE IS AN INVIDUAL AND DIRECTOR OF MANKASIA STEEL PVT. LTD. DURING THE COURSE OF SEARCH IN THE CASE OF SHRI SURESH SRIVSTAVE CERTAIN DOCUMENTS WERE SEIZED FROM HIS POSSESSION WHICH REVEALED THAT THE ASSESSEE HAD MADE PAYMENT OF CASH AMOUNTING TO RS.57,18,662/ - ON VARIOUS DATES AND PAYMENT OF RS.30,00,000/ - BY CHEQUES. IN PURSUANCE TO SEARCH OPERATION , THE STATEMENT OF THE A SSESSEE WAS RECORDED BY TH E DDIT(INV) U/S 131 OF THE ACT, WHEREIN IT WAS STATED THAT HE HAD MADE PAYMENT OF RS.30,00,000/ - ON BEHALF OF MANK ASIA STEEL PVT. LTD., AND PAYMENT OF RS.57,18,662/ - IN HIS PERSONAL CAPACITY TO SURESH SRIVASTAVA TO PURCHASE MS INGOTS FROM RASHMI METALLICS THROUGH HIM. IT WAS ALSO EXPLAINED BEFORE THE AO THAT THE PAYMENT OF RS.30,00,0000/ - WAS MADE BY THE COMPANY BY CH EQUES AND DULY RECORDED IN ITS BOOKS OF ACCOUNT. IT WAS FURTHER STATED BEFORE THE AO THAT THE A SSESSEE HAD EARNED GROSS PROFIT @ 5% ON PURCHASES OF RS.57,18,662/ - WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT. THEREFORE, HE DECLARED PROFIT OF RS.2,85,933/ - ON INGOT TRADING. IT IS CONTENDED BY THE ASSESSEE THAT AT THE TIME OF STATEMENT U/S. 131 OF THE A C T AS WELL AS BEFORE THE AO , THAT PAYMENT 4 ITA NO .1649 /K/201 2 SRI SANJAY KR. AGARWAL. AY 20 1 0 - 11 OF RS.57,18,662/ - WERE MADE ON DIFFERENT DATES AND THE INITIAL AMOUNT ON SALE OF INGOTS WAS ROTATE. HENCE, THE ASSE SSEE DECLARED SUM OF RS.10,00,0000/ - ON ACCOUNT OF INITIAL INVESTMENT AND SHOWN UNDER THE HEAD MISCELLANEOUS RECEIPT IN THE RETURN OF INCOME. A S FAR AS PAYMENT OF RS.30,00,000/ - IS CONCERNED, THE AO DID NOT DISPUTE THE SAME. THE AO REFUS ED TO ACCEPT THE CONTENTION OF THE ASSESSEE WITH RESPECT TO BALANCE CASH PAYMENT AGGREGATING OF RS.57,18,662/ - FOR THE REASON THAT THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF MISCELLANEOUS RECEIPT OF RS.10,00.000/ - AND FAILED TO PRODUCE THE EVIDENCE OF SALE OF INGOTS. HEN CE, THE AO MADE ADDITION OF ENTIRE AMOUNT OF PURCHASES OF RS.57,18,662/ - U/S 69C OF THE ACT. WE ARE OF THE VIEW THAT THERE IS PRESUMPTION THAT AGA I NST EVERY PURCHASE OF TRADING MATERIAL, THERE BOUND TO BE CORRESPONDING SALE AND VICE - VERSA IN CASE THE STOCK IS NOT FOUND OR REVENUE CO ULD NOT ESTABLISH THAT THERE IS NO SALE . IF THE ASSESSEE HAD MADE PURCHASE OF INGOTS, THE SAME ARE ALSO SOLD AND THAT PROCEED WAS A G AIN INVESTED TO MAKE FURTHER PURCHASE AND THEREFORE IN NO CASE THE ENTIRE PURCHASE COULD BE ADDED TO THE INCOME OF THE ASSESSEE. FURTHER, THE AO HAD ASKED FOR THE SOURCE OF MISCELLANEOUS RECEIPT OF RS.10,00,000/ - WHICH WAS DISCLOSED BY THE ASSESSEE ON ACCOUNT OF INITIAL INVESTMENT TO MAKE PURCHASE OF INGOTS. UNDOUBTEDLY, THE RECEIPT OF RS.10,00,000/ - WAS NOT RECORDED IN THE BOOKS OF ACCOUNT AND, THEREFORE, FOR THE SAID REASONS THE SUM WAS OFFERED FOR TAXATION. UNDER THE CIRCUMSTANCES, THERE IS NO REASON TO EXPLAIN THE SOURCE OF SAID SUM OF RS.10,00,000/ - . FURTHER, THE AO HAD ASKED FOR EVIDENCE OF SALE OF INGOT MADE BY THE ASSESSEE. THE ASSESSEE ALWAYS CLAIMED THAT THE SALE WAS MADE IN CASH AND THERE COULD NOT BE ANY EVIDENCE FOR THE SAME. BUT, THE FACT REMAIN THAT THE ASSESSEE HAD MADE PURCHASE OF INGOTS FROM RASHMI METALLICS THROUGH SURESH SRIVASTAVA. THE INGOTS PURCHASED BY THE ASSESSEE WERE SOLD AND EARNED THE PROFIT. THE SALE PROCEED WERE AGAIN INVESTED TO MAKE FURTHER PURCHASE. WE FIND THAT IN THE ASSESSMENT ORDER THE AO HIMSELF HAS MENTIONED THAT THE SEIZED PAPER CONTAIN THE DETAILS OF SALES OWNED BY SAJJAN KUMAR PATWARI (HUF) OF RASHMI G R OU P . THE SAME AO IN THE CASE OF SAJJAN KUMAR PATWARI (HUF) CONSIDERED THE SALES IN THE HANDS OF HUF AS DETAILED IN THE SEIZED DOCUMENTS AND ASSESSED THE PROFIT @ 5%. IN VIEW OF THIS FACT THAT ONCE IN THE CASE OF HUF OF SAJJAN KUAMR PATWARI, THE AO HAS 5 ITA NO .1649 /K/201 2 SRI SANJAY KR. AGARWAL. AY 20 1 0 - 11 ACCEPTED THE SALES, HE SHOULD HAVE ACCEPTED THE CORRESPONDING PURCHASES IN THE HANDS OF ASSESSEE AND IF THE ASSESSEE HAD MADE THE PURCHASE OF INGOTS, THE AO SHOULD HAVE ALSO ACCEPTED THE SALES MA DE BY THE ASSESSEE. UNDER THE CIRCUMSTANCES THERE COULD NOT BE ANY REASON TO MAKE ADDITION OF ENTIRE PURCHASES BY INVOKING PROVISION OF SECTION 69C OF THE ACT. IN VIEW OF ABOVE, WE ARE OFV THE VIEW THAT CIT(A) HAS RIGHTLY DIRECT ED THE AO TO DELETE THE AD D I TION . HENCE WE CONFIRM THE ORDER OF CIT(A). THIS ISSUE OF REVENUE S APPEAL IS DISMISSED. 6 . IN THE RESULT, REVENUE S APPEAL IS DISMISSED . 7 . ORDER IS PRONOUNCED IN THE OPEN COURT ON 2 7 .05.2015 . S D / - S D / - ( P. K. BANSAL ) (MAHAVIR SINGH) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED : 2 7 T H MAY , 201 5 *DKP/ P.S. COPY OF THE ORDER FORWARDED TO: 1 . A PPELLANT ACIT, CC - XII,KOL, AAYAKAR BHAWAN PURBA, 110 - SHANTIPALLY, KOL - 700107 . 2 RESPONDENT SRI SANJAY KUMAR AGARWAL, BF - 34, SALT LAKE, KOL - 64 3 . THE CIT (A), KOLKATA 4. 5. THE CIT, KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .