Chandan Chatterjee, Bankura V. ITO, Ward - 3(1), Bankura, Bankura

ITA 2009/KOL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4773 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 17-12-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 08-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Keywords: Peak credit
• Section: 143(3); 133(6); 201; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI S.S.GODARA, JM &DR. A.L.SAINI, AM ./ITA NO.2009/KOL/2017 ( / ASSESSMENT YEAR:2013-14) CHANDAN CHATTERJEE VIDYASAGAR PALLY, KENDUADIHI, KATJURIDANGA, BANKURA-722102 VS. ITO, WARD-3(1), BANKURA ./ ./PAN/GIR NO.: AGJPC 4016 D (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI SUBASH AGARWAL, ADVOCATE RESPONDENT BY :SMT. RANU BISWAS, ADDL. CIT / DATE OF HEARING : 17/12/2019 /DATE OF PRONOUNCEMENT : 21/02/2020 / O R D E R PER DR. A.L. SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERT AINING TO ASSESSMENT YEAR 2013-14, IS DIRECTED AGAINST THE ORDER PASSED BY TH E COMMISSIONER OF INCOME TAX (APPEAL)-DURGAPUR, IN APPEAL NO. 33/CIT(A)/DGP/2016 -17, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 18/ 03/2016. 2. GROUND NO. 1 RELATES TO ADDITION OF RS. 1,17,44 5/- MADE BY THE A.O. ON ACCOUNT OF ALLEGED DIFFERENCE IN THE CLOSING BALANCE OF SUN DRY DEBTORS. 3. THE FACTS OF THE CASE WHICH CAN BE STATED QUITE SHORTLY ARE AS FOLLOWS: THE A.O. (REFER PG. 3 OF ASSESSMENT ORDER), ON PERUSAL OF ST ATEMENT RECEIVED FROM M/S ELECTROSTEEL CASTINGS LTD.(ESCL) AS CALLED FOR U/S 133(6) OF THE ACT, IT WAS CHANDAN CHATTERJEE ITA NO.2009/KOL/2017 ASSESSMENT YEAR:2013-14 P PP PA AA AG GG GE EE E | || | 2 22 2 OBSERVED THAT THE CLOSING BALANCE AS ON 31.3.2013 I N THE BOOKS OF THE SAID COMPANY IN RESPECT OF THE ASSESSEE WAS RS.8,48,755/ - (CR.) WHEREAS THE ASSESSEE HAD SHOWN THE AMOUNT RECEIVABLE AS RS.7,31,310/- (D R.). ACCORDINGLY, THE A.O. ADDED THE DIFFERENCE OF RS. 1,17,445/- (RS. 848,755 RS. 731,210). 4. ON APPEAL, LD. CIT(A) CONFIRMED THE ADDITION. AG GRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GON E THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCU MENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLUDING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS AVAILABLE ON RECORD. WE NOTE THAT CIT(A) HAS DEALT WITH THE ISSUE AT PG. 19 OF HIS ORDER. BEFORE THE C IT(A), THE ASSESEE HAD FILED A CORRIGENDUM AUDIT REPORT. THE SAID REPORT IS PLACED AT PG. 27 OF PAPER BOOK. IN THE SAID CORRIGENDUM AUDIT REPORT, THE AUDITOR HAS CERT IFIED THAT THERE WAS SOME COMPENSATING ERROR WHILE PREPARING THE BALANCE SHEE T. ACCORDINGLY, HE RECTIFIED THE SUNDRY DEBTORS BALANCE AND CASH IN HAND FIGURE AS ON 31.03.2013 AS RS.8,48,755/- AND RS.5,57,055/- RESPECTIVELY. THE C IT(A) REJECTED THE REVISED FIGURES AFTER CALLING FOR THE REMAND REPORT (COPY P LACED AT PG. 15 OF PB). THE CIT(A) HAS HELD THAT IT IS A KIND OF UNILATERAL ACT ION OF THE ASSESSEE AND THE SAME IS WITHOUT ANY EVIDENCE. WE NOTE THAT IN THE ACCOUNTIN G PROCESS IT IS QUITE COMMON TO HAVE COMPENSATING ERRORS AND THE ACTION OF THE A SSESSEE IS NOT UNILATERAL SINCE THE REVISED BALANCE SHEET IS BACKED BY A CERTIFICAT E ISSUED BY AN AUDITOR WHO IS A QUALIFIED CHARTERED ACCOUNTANT. THE AUDITOR HAS CER TIFIED THAT THERE WAS COMPENSATORY ERROR WHICH HAS RESULTED INTO DIFFEREN CE OF RS. 1,17,445/-. THE LD. CIT(A)HAS FAILED TO BRING ON RECORD ANY COGENT EVID ENCE WHICH SHOWS THAT REVISED BALANCE SHEET FILED BY THE ASSESSEE IS WRONG. THE L D CIT(A) ALSO FAILED TO EXAMINE THE COMPENSATING ERRORS IN ASSESSEE`S BOOKS OF ACCO UNTS. THEREFORE, WE ARE OF THE VIEW THAT ONE MORE OPPORTUNITY SHOULD BE GIVEN TO T HE ASSESSEE TO EXPLAIN THE COMPENSATING ERRORS. HENCE WE REMIT THIS ISSUE BACK TO THE FILE OF THE AO TO EXAMINE THE COMPENSATING ERRORS AND ALLOW THE CLAIM OF THE ASSESSEE IN ACCORDANCE TO LAW. FOR STATISTICAL PURPOSES, THE GR OUND RAISED BY THE ASSESSEE IS ALLOWED. CHANDAN CHATTERJEE ITA NO.2009/KOL/2017 ASSESSMENT YEAR:2013-14 P PP PA AA AG GG GE EE E | || | 3 33 3 6. GROUND NOS. (2A &2B) - WERE NOT PRESSED BY THE A SSESSEE THEREFORE WE DISMISS THEM AS NOT PRESSED. 7. GROUND NO. 3 RELATES TO ADDITION OF RS. 3,99,24 0/- (RS. 8,25,094/- - RS. 4,25,854/-) BEING DIFFERENCE BETWEEN PURCHASED MOTO R CAR VALUED AND VALUE OF MOTOR CAR SHOWN BY THE ASSESSEE. 8. THE FACTS OF THE CASE WHICH CAN BE STATED QUITE SHORTLY AS FOLLOWS: THE A.O. HAS DEALT WITH THE ISSUE AT PG.5 OF THE ASSESSMENT ORDE R. ACCORDING TO THE A.O. AS PER ITS DETAILS, ASSESSEE PURCHASED MOTOR CAR VALUED AT RS.8,25,094/-WHILE THE ASSESSEE HADSHOWN THE VALUE OF MOTOR CAR AT RS. 4,2 5,854/- IN THE ASSET SIDE OF THE BALANCE SHEET. THE DIFFERENCE OF RS.3,99,240/-(8,25 ,094 4,25,854) WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNDISCLOSED INV ESTMENTS. 9. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 10. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED BEFORE US THAT THE MOTOR CAR IN QUESTION WAS PURCHASED IN THE NAME OF THE ASSESSEE, IN HIS PERSONAL ACCOUNT WHILE THE A.O. HAS COMPARED THE NEW PURCHASED CAR WITH TH E BALANCE SHEET OF THE ASSESSEES PROPRIETARY CONCERN VIZ. SHRI GANESH ENT ERPRISE. HENCE, THIS DIFFERENCE IS BECAUSE OF PRESENTATION IN THE DIFFERENT BALANCE SHEETS OF DIFFERENT MOTOR CAR THEREFORE ADDITION MADE BY AO NEEDS TO BE DELETED.O N THE OTHER HAND, THE LD. DR HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASS ESSING OFFICER WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND THE SAME IS N OT BEING REPEATED FOR THE SAKE OF BREVITY. 11. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY G ONE THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCU MENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLUDING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS AVAILABLE ON RECORD. WE NOTE THAT THE CIT(A) HAS DEALT WITH THE ISSUE AT PG. 24 OF HIS ORDER. BEFORE THE L D. CIT(A), THE ASSESSEE SUBMITTED THAT THE MOTOR CAR IN QUESTION WAS PURCHASED IN THE NAME OF THE ASSESSEE, IN HIS PERSONAL ACCOUNT WHILE THE A.O. HAS COMPARED THE NE W PURCHASED CAR WITH THE CHANDAN CHATTERJEE ITA NO.2009/KOL/2017 ASSESSMENT YEAR:2013-14 P PP PA AA AG GG GE EE E | || | 4 44 4 BALANCE SHEET OF THE ASSESSEES PROPRIETARY CONCERN VIZ. SHRI GANESH ENTERPRISE. THE SAID PURCHASE IS DULY REFLECTED IN THE PERSONAL BALANCE SHEET OF THE ASSESSEE AS ON 31.03.2013 (PAPER BOOK PG.32). THE SCHEDULE OF M OTOR CAR IS PLACED AT PG. 31 OF PAPER BOOK,FROM WHERE IT CAN BE SEEN THAT THE PU RCHASE OF MOTOR CAR DURING F.Y. 12-13 IS SHOWN AT RS.8,43,559 - (INCLUSIVE OF INCID ENTAL EXPENSES). THE SAME WAS FINANCED PARTLY BY M & M FINANCIAL SERVICES TO THE TUNE OF RS.4,00,000/- (COPY OF STATEMENT OF ACCOUNT OF THE SAID COMPANY IS PLACED AT PAPER BOOK PG. 38) AND THROUGH INTERNAL ACCRUALS. ALL THESE DOCUMENTS WERE SUBMITTED BEFORE CIT(A) WHO CALLED FOR A REMAND REPORT (COPY OF REMAND REPORT I S PLACED AT PAPER BOOK PG. 15). THE A.O. IN THE REMAND REPORT HAS REJECTED THE ASSE SSEES CONTENTION WITHOUT GIVING ANY PLAUSIBLE REASONING. THE LD CIT(A) HAS A LSO DISMISSED THIS GROUND (FINDING IS GIVEN AT PG. 24) ON IRRELEVANT CONSIDER ATIONS. IT IS SUBMITTED THAT BOTH THE AUTHORITIES BELOW HAVE NOT DENIED THE GENUINENE SS OF DOCUMENTS SUBMITTED BEFORE THEM. WE NOTE THAT ASSESSEE HAS EXPLAINED TH AT THE MOTOR CAR IN QUESTIONS WAS PURCHASED IN THE NAME OF ASSESSEE IN HIS PERSON AL ACCOUNT WHEREAS ASSESSING OFFICER HAS COMPARED THE NEW PURCHASED CAR WITH THE BALANCE SHEET OF THE ASSESSEES PROPRIETARY CONCERN. THAT IS, CAR HAS BE EN PURCHASED IN PERSONAL ACCOUNT AND NOT IN THE NAME OF PROPRIETARY CONCERN, AND THI S FACT HAS NOT BEEN DISPUTED BY THE ASSESSING OFFICER. THE ASSESSEE HAS ALSO EXPLAI NED THE SOURCE FROM WHICH THE NEW CAR WAS PURCHASED; STATING THAT PARTLY IT WAS F INANCED BY M&M FINANCIAL SERVICES AND PARTLY BY INTERNAL ACCRUALS. BEFORE US LD. D.R. FOR THE REVENUE HAS FAILED TO BRING ANY COGENT EVIDENCE ON RECORD TO SH OW THAT THE FACTS NARRATED BY THE ASSESSEE AND EXPLANATION GIVEN BY ASSESSEE ABOUT SO URCE OF FUNDS WERE FALSE. CONSIDERING THE FACTUAL POSITION NARRATED ABOVE, WE DELETE THE ADDITION OF RS. 3,99,240/-. 12. GROUND NO. 4 RAISED BY THE ASSESSEE RELATES TO ADDITION OF RS. 15,82,470/- ON ACCOUNT OF PEAK CREDIT. 13. FACTS OF THE CASE WHICH CAN BE STATED QUITE SHO RTLY ARE AS FOLLOWS: DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT ASSESSEE HAS SEVEN UNDISCLOSED BANK ACCOUNTS. THE A.O PROCEEDED TO ADD THE PEAK BALANCE OF THE INDIVIDUAL BANK ACCOUNTAND MADE ADDITION OFRS. 15,8 2,470/-. CHANDAN CHATTERJEE ITA NO.2009/KOL/2017 ASSESSMENT YEAR:2013-14 P PP PA AA AG GG GE EE E | || | 5 55 5 14. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ADDITIO N MADE BY THE ASSESSING OFFICER. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E US. 15. THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE SUBMISSIONS MADE BEFORE LD. CIT(A) AND ON THE OTHER HAND, THE LD. DR HAS PRIMAR ILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTE D IN OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 16. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GO NE THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCU MENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLUDING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIAL AVAILABLE ON RECORD. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT INSTEAD OF TAKING THE PEAK CREDIT OF INDIVIDUAL BANK ACCOUNT, THE A.O. OUGHT TO HAVE TAKEN THE COMBINED PEAK CREDIT. THE STATEMENT OF COMBINED PEAK CREDIT IS ENCLOSED AT PG.41 OF PAPER BOOK. HOWEVER, LD. D.R. FOR THE REVENUE SUBMITTED BEFORE US THAT PEAK CREDIT OF INDIVIDUAL BANK ACCOUNT SHOULD BE CONSIDERED. WE ARE OF THE VIEW THAT IT WOULD BE FAIR AND IN THE INTEREST OF JUSTICE IF THE COMBINED PEAK CREDIT IS ADDED TO THE TOTAL I NCOME OF THE ASSESSEE. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO EXAMINE THE COMB INED PEAL CREDIT STATEMENT OF THE ASSESSEE AND MAKE ADDITION BASED ON COMBINED PE AK CREDITS. THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . 17. GROUND NO. 5 RELATES TO ADDITION ON ACCOUNT OF DONATION & SUBSCRIPTION OF RS.65,316/-. ACCORDING TO A.O. (REFER PG.7 OF THE A SSESSMENT ORDER), THE SAID EXPENDITURE WAS NOT FULLY AND EXCLUSIVELY FOR THE P URPOSE OF BUSINESS,THEREFORE, AO DISALLOWED THE SAME. 18. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ADDITIO N MADE BY ASSESSING OFFICER. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 19. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GO NE THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCU MENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLUDING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIAL AVAILABLE ON RECORD. THE LD. COUNSEL FOR THE ASSESSEE CHANDAN CHATTERJEE ITA NO.2009/KOL/2017 ASSESSMENT YEAR:2013-14 P PP PA AA AG GG GE EE E | || | 6 66 6 SUBMITTED BEFORE US THAT THIS PAYMENT RELATES TO LO CAL CLUB AND TRADE ASSOCIATION. THIS IS THE PAYMENT MADE BY THE ASSESSEE TO MAINTAI N SMOOTH RELATIONSHIP WITH TRADE ASSOCIATION THEREFORE, IT IS FOR THE PURPOSE OF BUSINESS. WE NOTE THAT HONBLE CALCUTTA HIGH COURT IN THE CASE OF BATA INDIA REPOR TED IN 201 ITR 884 (CAL) HELD THAT SUCH PAYMENTS ARE ALLOWABLE EXPENDITURE; THERE FORE WE DELETE THE ADDITION OF RS. 65,316/-. 20. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 21.02.2020 SD/- ( S.S.GODARA ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; / DATE: 21/02/2020 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. CHANDAN CHATTERJEE 2. ITO, WARD-3(1), BANKURA 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATABENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES