ITO, Ward 2(2), Paschim Medinipur V. M/s. Krishna Trading, Paschim Medinipur

ITA 2019/KOL/2007

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4898 (ITAT-KOLKATA)
• Duration Of Justice: 8 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-08-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 12-09-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TANUJ NEOGI JCITSRDR
• Assessee Lawyers: MANSS ROY
• Keywords: Unexplained cash credit; Unexplained investment; Gift; Opportunity of cross examination; Third party statement
• Section: 143(3); 133(6); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI N.V.VASUSDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 2019 / KOL / 2007 ASSESSMENT YEAR :2003-04 ITO WARD-2(2), SAHOO BHAWAN, KSHUDIRAM NAGAR, P.O. MIDNAPORE, DIST. PASCHIM MEDINIPUR V/S . M/S KRISHNA TRADING AT & P.O. BALICHAK, DIST. PASCHM MEDINIPUR-721124 [ PAN NO. AABHG 5869 D ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI TANUJ NEOGI, JCIT-SR-DR /BY RESPONDENT SHRI MANSS ROY, ADVOCATE /DATE OF HEARING 11-02-2016 /DATE OF PRONOUNCEMENT 23-03-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XXXV, KOLKATA DATED 14.06.2007 . ASSESSMENT WAS FRAMED BY ITO WARD-2(2), KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER DATED 27.03.2006 FOR ASSESSMENT YEAR 2003-04. GROUNDS RAISED BY REVENUE AS UNDER:- 1) FOR THAT THE LD. CIT(A) ERRED IN FACTS AND IN L AW IN DELETING THE ADDITION MADE BY AO U/S 68 OF THE IT ACT AS UNEXPL AINED CASH CREDIT AMOUNTING TO RS.60 LAKHS BY ADMITTING ADDITIONAL EV IDENCE IN CONTRAVENTION OF RULE 46 OF THE IT RULES. ITA NO.2019/KOL/2007 A.Y.2003-04 ITO WD-2(2) MID V. M/S KRISHNA TRADING PAGE 2 2) THAT THE LD. CIT(A) ERRED IN FACT AND IN LAW IN DELETING THE ADDITION OF RS.2,889/- UNDER THE HEAD BANK COMMISSION. 3) THAT THE LD. CIT(A) ERRED IN FACT AND IN LAW IN DELETING THE ADDITION OF RS.9,960/- BEING COMMISSION RECEIVED ON SALE OF CEM ENT. 4) THAT THE LD. CIT(A) ERRED IN FACT AND IN LAW IN DELETING THE ADDITION OF RS.82,582/- BEING REIMBURSEMENT OF FREIGHT BILLS NO T SHOWN AS INCOME DURING THE ACCOUNTING YEAR. 5) THAT THE LD. CIT(A) ERRED IN FACT AND IN LAW IN DELETING THE ADDITION OF RS.1,50,000/- BEING SECURITY DEPOSIT WITH M/S SHIVA CEMENT LTD NOT SHOWN IN THE BALANCE SHEET UNDER UNDISCLOSED INVEST MENT. 6) THAT THE LD. CIT(A) ERRED IN FACT AND IN LAW IN DELETING THE ADDITION OF RS.10,87,817/- BEING UNRECORDED PURCHASE AND SALE O F CEMENT. 7) THAT THE LD. CIT(A) ERRED IN FACT AND IN LAW IN DELETING THE ADDITION OF RS.1,60,816/- BEING CARRIAGE INWARD EXPENSES ON ACC OUNT OF UNDISCLOSED PURCHASES. 8) THAT THE LD. CIT(A) ERRED IN FACT AND IN LAW IN DELETING THE ADDITION OF RS.1,62,608/- BEING PROPORTIONATE GP ON UNDISCLOSED SALE. 9) THAT THE LD. CIT(A) ERRED IN FACT AND IN LAW IN DELETING THE ADDITION OF RS.14,60,312/- BEING DEBIT ENTRY NOT SHOWN IN THE B OOKS OF ACCOUNT. 2. THE FACTS IN BRIEF ARE THAT KRISHNA TRADING IS A PARTNERSHIP FIRM AND ENGAGED IN THE BUSINESS OF TRADING OF ASBESTOS, CEM ENT ETC. ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003-04 ON 13/11/2003 DECLARING AN INCOME OF RS.28,536.00. THE CASE WAS SELECTED FOR S CRUTINY AND NOTICE U/S 143(2) WAS ISSUED ON 19/11/2004. DURING THE ASSESSM ENT PROCEEDINGS IT WAS OBSERVED BY THE A.O. THAT IN THE ASSESSMENT YEAR UN DER CONSIDERATION THE ASSESSEE HAS TAKEN UNSECURED LOAN AMOUNTING TO RS.6 0 LACS AND THE SAME WAS REPAID IN THE YEAR UNDER CONSIDERATION. THE A.O . ASKED THE ASSESSEE TO PROVIDE THE DETAILS OF UNSECURED LOAN IN THE FORMAT S MENTIONING THE NAME OF THE PERSON FROM WHOM LOAN WAS TAKEN, AMOUNT, DATE A ND MODE OF TAKING. SIMILARLY FOR THE REPAYMENT OF UNSECURED LOAN SUCH DETAILS WERE ASKED FOR. ASSESSEE SUBMITTED THE ABOVE DETAILS REQUIRED BY TH E ASSESSEE FOR THE ITA NO.2019/KOL/2007 A.Y.2003-04 ITO WD-2(2) MID V. M/S KRISHNA TRADING PAGE 3 UNSECURED LOAN ON DATED 23/01/2006. THE AO ACCORDIN GLY ISSUED SUMMONS U/S 131 OF THE ACT TO THE PARTIES OF THE UNSECURED LOAN FOR THE PERSONAL APPEARANCE ON DATED 10/02/2006 WITH THE DOCUMENTAR Y EVIDENCE OF ADVANCEMENT OF LOAN TO M/S KRISHNA TRADING WITH A V IEW TO VERIFY THE GENUINENESS OF THE LOAN TRANSACTION, CREDIT WORTHIN ESS OF THE LOAN CREDITORS ETC. BUT NONE APPEARED BEFORE THE A.O ON THE SCHEDU LED DATE. THEREFORE THE AO WAS NOT SATISFIED WITH THE REPLY GIVEN BY THE PA RTNER OF M/S KRISHNA TRADING, SHRI SMRITIKONA DEY IN RESPONSE TO THE SHO W CAUSE LETTER VIDE NO. MID/WD2(2)/ SHOW CAUSE/05-06/454 AND THIS INVOKED H IM TO ADD BACK THE SUM OF RS. 60 LACS AS THE UNEXPLAINED CASH U/S 68 OF TH E ACT. 2.1 THE ASSESSEE WENT TO THE LD. CIT (A) FOR THE JU STICE. THE LD. AR SUBMITTED THAT THE ASSESSEE AND ITS SISTER CONCERN HAS TEN EMPLOYEES WHO COLLECT THE MONEY FROM THE MARKET ON BEHALF OF THEM . THIS MONEY WAS HANDED OVER TO THE ACCOUNTANT IN A COMMON POOL FOR RECORDI NG THE TRANSACTIONS. LATER THE COLLECTION WAS IDENTIFIED AND RECORDED TO THE R ESPECTIVE CONCERN IN THEIR BOOKS OF ACCOUNTS. THE UNSECURED LOAN WAS BASICALLY AN INTER-FIRM TRANSFER FROM SUMAN TRADING COMPANY ASSESSED IN WARD-1, AT M IDNAPUR WITH GIR NO. M-635/S. THIS WAS A MISTAKE BY THE NEWLY APPOINTED ACCOUNTANT WHICH WAS LATER IDENTIFIED AT THE TIME OF AUDITING AND REPORT ED IN FORM 3 CD. THE ACCOUNTANT INADVERTENTLY WROTE THE SAID TRANSFER IN THE APPELLANT CASH BOOK AS UNSECURED LOAN RECEIPT AND PAYMENT. THE LD AR SUBMI TTED COPIES OF THE STATEMENTS OF SEVEN PERSONS AS WELL AS CASH BOOK AN D THE LEDGER OF ITS SISTER CONCERN M/S SUMAN TRADING CO. THE RECORDS WERE SHOW ING THE IMPUGNED TRANSACTIONS AS PAYMENTS/ RECEIPTS TO/ FROM THE APP ELLANTS FIRM. ACCORDINGLY THE CIT (A) HAS DISREGARDED THE ADDITIONS MADE BY T HE A.O OF RS.60 LAKHS AS UNEXPLAINED CASH U/S 68 BECAUSE IT HAS DULY VERIFIE D AND EXPLAINED BY THE ASSESSEE. THE LD. CIT(A) RELIED ON THE STATEMENT OF SUMAN TRADING CO. FURNISHED BY THE ASSESSEE IN SUPPORT OF HIS CLAIM W HERE THE TRANSACTIONS OF RS. 60 LAKHS WAS DULY RECORDED IN THE BOOKS OF ACCO UNTS. ITA NO.2019/KOL/2007 A.Y.2003-04 ITO WD-2(2) MID V. M/S KRISHNA TRADING PAGE 4 NOW, REVENUE IS IN APPEAL BEFORE US. 3. THE LD. DR VEHEMENTLY RELIED ON THE ORDER OF AO WHEREAS LD. AR RELIED ON THE ORDER OF LD. CIT(A). THE LD. AR HAS SUBMITTE D INDEX WHICH IS RUNNING PAGES 1 TO 44. WE HAVE HEARD THE RIVAL CONTENTION O F BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT WAS O BSERVED THAT DISALLOWANCE OF RS. 60 LAKHS WAS ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68. BUT THE ASSESSEE HAS PRODUCED AND EXPLAINED THE CASH BOOK O F SISTER CONCERN SUMAN TRADING CO WHERE THE TRANSACTIONS WITH THE ASSESSEE HAS BEEN DULY RECORDED AND MATCHED WITH THE CASH BOOK. THE LD. DR FAILED T O BRING ANYTHING CONTRARY TO THE FINDINGS OF LD. CIT(A). SO WE DO NOT FIND AN Y REASON TO SAY THAT RS. 60 LAKHS IS UNEXPLAINED CASH. SO WE UPHELD THE DECISIO N OF LD. CIT(A). 4. THE ISSUES RAISED IN GROUND NO. 2 TO 9 BY THE AS SESSEE ARE ARISING ON ACCOUNT OF THE RECONCILIATION BETWEEN THE BOOKS OF THE ASSESSEE AND M/S SHIVA CEMENT LTD.(SCL FOR SHORT). THE ADDITIONS MAD E BY THE AO WERE DELETED IN THE APPEAL BY THE LD. CIT(A). 4.1 THE ASSESSEE DURING THE YEAR WAS HOLDING THE AG ENCY FOR THE CEMENT BUSINESS OF SCL. AS PER THE AGENCY AGREEMENT THE AS SESSEE WAS ENTITLED FOR COMMISSION ON SALE @ 80.00 RS. PER MT. DURING THE C OURSE OF ASSESSMENT THE AO SOUGHT CLARIFICATION FROM SCL BY ISSUING NOT ICE UNDER SECTION 133(6) FOR THE BUSINESS TRANSACTIONS WITH THE ASSESSEE. AS A RESULT THE AO NOTICED THE FOLLOWING DISCREPANCIES. A) SIVA CEMENT LTD., HAD GIVEN A TOTAL CREDIT OF RS .2889/- ON VARIOUS DATES TOWARDS BANK COMMISSION. BUT THE ASSESSEE-FIR M HAS NOT SHOWN THE SAME. THEREFORE, YOU ARE ASKED TO EXPLAIN WHY THE AMOUNT OF RS.2889/- WILL NOT BE ADDED BACK TO THE T OTAL INCOME OF THE ASSESSEE-FIRM AS UNDISCLOSED INCOME. B) THE ASSESSEE-FIRM HAD SHOWN COMMISSION RECEIVED FROM SHIVA CEMENT LTD., AMOUNTING TO RS.94,996/-. BUT THE SHIV A CEMENT LTD., HAD PAID TO THE ASSESSEE-FIRM DURING THE FINANCIAL YEAR 2002-03 ITA NO.2019/KOL/2007 A.Y.2003-04 ITO WD-2(2) MID V. M/S KRISHNA TRADING PAGE 5 AMOUNTING TO RS.1,04,956/- WILL NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE-FIRM. C) SHIVA CEMENT LTD., HAD GIVEN REIMBURSEMENT OF FR EIGHT BILL AMOUNTING TO RS.82,582/- AND ON WHICH TDS AMOUNTING TO RS.1734/- HAS BEEN DEDUCTED. BUT THE ASSESSEE-FIRM HAD NOT SH OWN THE FREIGHT RECEIPT AMOUNTING TO RS.82,582/-. THUS, YOU ARE ASK ED TO EXPLAIN WHY THE AMOUNT OF RS.82,582/- WILL NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE-FIRM AS UNDISCLOSED INCOME. D) SHIVA CEMENT LTD. HAS CLEARLY STATED THAT THEY H AVE RECEIVED SECURITY DEPOSIT OF RS.1,50,000/- FROM THE ASSESSEE -FIRM VIDE CHEQUE NO.934491 DATED 25/06/02 VIDE MR NO.5753 WHI CH HAS BEEN ADJUSTED WITH THE DEBTORS A/C IN RESPECT OF SA LES MADE TO THE ASSESSEE-FIRM AS ON 13/03/03. SHIVA CEMENT LTD ALSO CONFIRMED THAT NO INTEREST WAS PAID ON SECURITY DEPOSIT DURING THE FINANCIAL YEAR 2002-03. BUT THE ASSESSEE-FIRM HAD NOT SHOWN SECURI TY DEPOSIT AMOUNTING TO RS.1,50,000/- IN THE BOOKS OF A/CS. TH EREFORE, YOU ARE ASKED TO EXPLAIN WHY THE AMOUNT OF RS.1,50,000/- WI LL NOT BE ADDED TO THE TOTAL INCOME OF THE SE-FIRM AS UNDISCLOSED I NVESTMENT U/S 69B. E) SHIVA CEMENT LTD HAS CLEARLY STATED THAT THE ASS ESSEE-FIRM DID NOT RECORD THE PURCHASES AMOUNTING TO RS.10,87,817=71 I N RESPECT OF WHICH THE COMPANY HAS SENT THE DETAILS OF THE BILLS ALONG WITH THE COPY OF BILLS, CHALLANS WHICH ARE ENCLOSED AS PER A NNEXURE-A BY THE SHIVA CEMENT LTD., THEREFORE, YOU ARE ASKED TO EXPL AIN WHY THE AMOUNT OF RS.10,87,817=71 WILL NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE-FIRM U/S 69B AND AT THE SAME TIME PROP ORTIONATE CARRIAGE INWARD U/S. 69C. FURTHER YOU ARE REQUESTED TO EXPLAIN WHY A SUM CALCULATED THEREON AT GP RATE DISCLOSED BY YOU SHOULD NOT BE TAKEN AND INCLUDED IN YOUR TAXABLE INCOME AS DEEMED PROFIT. APART FROM THE ABOVE THE SHIVA CEMENT LTD HAS SENT STATEMENT OF CONFIRMATION MADE BY AUTHORIZED REPRESENTATIVE OF T HE ASSESSEE- FIRM AS ON 4/9/03 ALONG WITH ASSESSEE-FIRMS AUTHORI ZATION LETTER FOR FINALIZATION OF ACCOUNTS. SCL MADE THE ACCOUNT OF THE ASSESSEE DEBITED ON VAR IOUS DATES FOR THE DIFFERENT TRANSACTIONS FOR A TOTAL AMOUNT OF RS. 14 ,60,312.00 AS PER THE DETAILS RECORDED ON PAGE 12 OF THE AO ORDER BUT NO SUCH TRA NSACTION WAS REFLECTED IN THE ASSESSEE BOOKS OF ACCOUNTS. THE AO ACCORDINGLY MADE THE ADDITION OF THE ABOVE AMOUNTS AS DISCOVERED FROM THE DISCREPANCIES WITH THE ACCOUNTS OF THE SCL. HENCE THE AO HAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO.2019/KOL/2007 A.Y.2003-04 ITO WD-2(2) MID V. M/S KRISHNA TRADING PAGE 6 5. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LD . CIT(A) WHO OBSERVED DURING THE APPELLANT PROCEEDINGS THAT ALL THE ADDIT IONS MADE BY THE AO ON ACCOUNT OF THE MISMATCH OF RECORDS BETWEEN M/S SHIV A CEMENT LTD AND THE ASSESSEE. THE AO HAS RELIED TOTALLY ON THE INFORMAT ION PROVIDED BY SHIVA LTD. THE ACCOUNTS AND THE STATEMENT PROVIDED BY SCL ARE NOT FIRM AND CONSISTENT. THE AO HAS MADE ALL THE ABOVE MENTIONED ADDITIONS O NLY ON THE BASIS OF RELYING ON UNILATERAL RECORDS. THUS THESE IMPUGNED ADDITIONS WERE DELETED BY THE CIT(A) BY OBSERVING AS UNDER : 4.6 I HAVE GIVEN DUE CONSIDERATION TO THE WHOLE IS SUE AND VARIOUS CLAIMS AND COUNTERCLAIMS MADE DURING THE ASSESSMENT PROCEEDINGS AND DURING THE PRESENT PROCEEDINGS. AS DISCUSSED AB OVE THE WHOLE DISPUTE RELATING TO TRANSACTIONS ENTERED INTO WITH SHIVA CEMENTS LTD AROSE WHEN THE ASSESSING OFFICER OBTAINED INFORMATI ON FROM THAT SHIVA CEMENT LTD HAD MADE SALES TO THE EXTENT OF RS.10,87 ,818/- WHICH HAD NOT BEEN RECORDED BY THE APPELLANT FIRM AND IT HAD DEBIT BALANCE OF RS.1,38,628/- IN THE ACCOUNTS THE APPELLANT ALSO NO T DISCLOSED. ON FURTHER ENQUIRY SHIVA CEMENTS LTD FURNISHED TO THE ASSESSING OFFICER THE STATEMENT OF ACCOUNTS AS ON 04.9.2003 SAID TO H AVE ACCEPTED BY THE REPRESENTATIVES OF THE APPELLANT-FIRM. THIS STATEME NT OF ACCOUNTS SHOWS THE DEBIT BALANCE IN THE ACCOUNT OF THE APPELLANT O F RS.1,38,628/- AS ON 5.4.2003 AFTER GIVING CREDIT FOR CHEQUE OF RS.27,00 0/- ON THAT DATE. THE EARLIER INTIMATION OF SHIVA CEMENTS LTD THAT THERE WAS A DEBIT BALANCE OF THE MATCHING AMOUNT ON 3.1.3.2003 (SUPRA) TO CLOSE BUSINESS AND SETTLE THE ACCOUNTS WITH THE APPELLANT. AS PER THE SAID LE TTER THE APPELLANTS ACCOUNT SHOWED BALANCE PAYABLE AT RS.245,049/- AS O N 13.3.2003 WHICH SHIVA CEMENTS LTD DEMANDED FOR IMMEDIATE REMI TTANCE. THE STATEMENT OF ACCOUNTS SAID TO BE CONFIRMED BY APPEL LANTS REPRESENTATIVE SHOWS THIS DEBIT BALANCE AT RS.2,45, 049/- AS ON 17.3.03. 4.7 IN COURSE OF THE REMAND PROCEEDINGS THE ASSESSI NG OFFICER HAS SENT COPIES OF THREE LETTERS SUBMITTED BY THE AR OF THE APPELLANT FIRM WHICH ARE LETTERS 29.11.03, 103.06 AND 19.8.06 OF SHIVA C EMENTS LTD ADDRESSED TO THE APPELLANT FIRM. THE LETTER DATED 2 9.11.03 REFERS TO THE MINUTES OF MEETING HELD ON 04.9.2003 DURING THE VIS IT OF THE REPRESENTATIVES OF THE APPELLANT FIRM DURING WHICH THE AFORESAID STATEMENT OF ACCOUNT AS ON 04.9.2003 WAS SAID TO HA VE BEEN CONFIRMED BY THEM. THE STATEMENT OF ACCOUNT SHOWS THAT THERE WAS A DEBIT BALANCE OF RS.59,405/- AS ON 04.9.03 WHEREAS THE LE TTER DATED 29.11.03 REFERS TO A CREDIT BALANCE OF RS.2,40,999/- AS ON T HE SAID DATE. THE LETTER REFERS TO THE MINUTE OF THE MEETING DATED 4.9.2003 AND STATES THAT THERE WAS MISTAKE IN THE ACCOUNT AS THE DEBIT NOTES FOR R S.25,000/- AND RS.60,000/- WERE REVERSED TWICE IN THE SAID ACCOUNT AND THE CORRECT ITA NO.2019/KOL/2007 A.Y.2003-04 ITO WD-2(2) MID V. M/S KRISHNA TRADING PAGE 7 CREDIT BALANCE SHOULD, THEREFORE, BE READ ONLY AS R S.1,55,999/-. THE LETTER FURTHER STATES AS PER THE REQUEST OF THE APP ELLANT FIRM THAT SHIVA CEMENT LTD WAS REMITTING THE BALANCE THROUGH A CHEQ UE FOR RS.55,999/- AND THE REMAINING AMOUNT RS.1 LAKH BY SELLING CEMEN T OF THE EQUIVALENT VALUE TO THE APPELLANT. IT, HOWEVER, APPEARS THAT I NSTEAD OF THE PROPOSED SALE OF CEMENT, SHIVA CEMENT REMITTED RS.30,000 EAC H BY CHEQUES AS INTIMATED IN ITS OTHER TWO LETTERS DATED 28.02.2006 AND 10.3.2006 WHICH ALSO REFER TO THE AFORESAID MINUTES OF THE MEETING DATED 4.9.2003. 4.8 IT IS THUS SEEN THAT INITIALLY SHIVA CEMENTS LT D DEMANDED ON 13.3.03 A SUM OF RS.2,45,049/- PAYABLE BY THE APPELLANT FIR M. THIS DEBIT BALANCE WAS ADJUSTED TO RS.1,65,628/- AS ON 31.3.2003. IT W AS FURTHER ADJUSTED ON 05.4.2003 TO RS.1,38,628/-. THE STATEMENT OF ACC OUNT DATED 4.9.03 REFERRED EARLIER SHOW VARIOUS OTHER CREDITS LEADING TO FURTHER ADJUSTMENT OF DEBIT BALANCE TO RS.59,405/- CONTRARY TO ALL THI S THE LETTER DATED 29.11.03 OF SHIVA CEMENTS LTD ADDRESSED TO THE APPE LLANT AND PRODUCED IN COURSE OF REMAND MENTIONS THAT THERE WA S ACTUALLY A CREDIT BALANCE IN THE ACCOUNT AND THE APPELLANT WAS DUE TO RECEIVE RS.1,55,999/- FROM SHIVA CEMENTS LTD AS PER AGREEME NT DATED 4.9.03. IT IS THUS VERY MUCH IN DOUBT WHETHER THE STATEMENT OF ACCOUNT DATED 4.9.03 PURPORTEDLY CONFIRMED BY THE REPRESENTATIVES OF THE APPELLANT FIRM REFLECTS THE TRUE STATE OF AFFAIRS. 4.9 THE APPELLANT HAD CLAIMED BEFORE THE ASSESSING OFFICER THAT THE INITIAL DEBIT BALANCE OF RS.1,38,628/- AROSE AS IT HAD NOT BEEN GIVEN CREDIT FOR PAYMENTS MADE OF THE MATCHING AMOUNT BY WAY OF CHEQUES/CASH ON BEHALF THE 6 DEALERS LISTED EARLIER . THIS WAS DENIED BY SHIVA CEMENTS LTD IN ITS LETTER DATED 27.8.05 (SUPR A) STATING THAT IT DID NOT HAVE ANY TRANSACTIONS WITH THE AFORESAID DEALER S. WHILE DENYING SO IT ALSO ENCLOSED A COPY OF ITS LETTER DATED 13.3.03 ADDRESSED TO THE APPELLANT (SUPRA) WHEREIN IT HAS ACKNOWLEDGED RECEI PT OF CHEQUES WORTH RS.67,000/- FROM TWO OF SUCH DEALERS, NAMELY MAA EN TERPRISE AND MANOJ GOSWAMI STATING THAT THEY WERE NOT CREDITED T O THE APPELLANTS ACCOUNT PENDING CLEARANCE. THE CONTRADICTION ONLY S HOWS THAT VARIOUS VERSIONS OF SHIVA CEMENT LTD LACK CREDIBILITY. THE INFIRMITIES AND INCONSISTENCIES IN ACCOUNTS MAINTAINED BY SHSIVA CE MENT LTD AS POINTED OUT EARLIER ALSO QUESTION THE CREDIBILITY O F THE DISPUTED DEBITS AND CREDITS MADE IN THE ACCOUNT WHICH LED TO THE IM PUGNED ADDITIONS. THESE ENTRIES CANNOT, THEREFORE, BE RELIED UPON AND UTMOST THEY CAN BE TREATED AS ONLY UNILATERAL ACTIONS ON THE PART OF T HE SHIVA CEMENTS LTD WITHOUT THEIR CONFIRMATION BY THE APPELLANT FIRM. T HE CONTRADICTION IN VERSIONS OF SHIVA CEMENT LTD AND THE INFIRMITIES AN D INCONSISTENCE IS ACCOUNTS MAINTAINED BY THEM ONLY SUPPORT THE CASE O F THE APPELLANT. 4.10 IT IS SETTLED THAT THE BURDEN OF SHOWING THAT A RECEIPT OR ITEM IS INCOME OF THE ASSESSEE IS SON THE ASSESSING OFFICER . RELIANCE IS PLACED ITA NO.2019/KOL/2007 A.Y.2003-04 ITO WD-2(2) MID V. M/S KRISHNA TRADING PAGE 8 ON PARIMISETTI SEETHARAMANNMANI VS. CIT 57 ITR 532 (SC). THE ASSESSING OFFICER HAS FAILED TO ESTABLISH THAT THE IMPUGNED ADDITIONS MADE LISTED EARLIER ARE INCOME OF THE ASSESSEE. IT IS SEEN THAT THE ADDITION MADE OF RS.14,63,312/- ON ACCOUNT OF VARI OUS DEBITS (DETAILS GIVEN ON PAGE 12 OF THE ASSESSMENT ORDER). SHIVA CE MENT LTD FURNISHED COPIES OF DEBIT NOTES AND TRANSFER VOUCHERS WHICH A RE NOT FOUND ACKNOWLEDGED BY THE APPELLANT. AS REGARDS THE ADDIT ION OF RS.10,87,818/- ON ACCOUNT OF UNRECORDED SALES SHIVA CEMENT LTD HAS FURNISHED THE COPIES 12 SALE BILLS PERTAINING TO TH E PERIOD FROM 11.12.02 TO 27.12.02 ALONG WITH COPIES OF THE DELIVERY CHALL ANS. IT IS SEEN THAT NONE OF THE SALE BILLS OR THE DELIVERY CHALLANS HAS BEEN ACKNOWLEDGED BY THE APPELLANT FIRM. THE ADDITION MADE OF RS.1,50 ,000/- AS UNEXPLAINED INVESTMENT HAS BEEN MADE IN SPITE OF TH E FACT THAT PAYMENT IN THIS REGARD WAS MADE FROM THE BANK ACCOUNT WHICH IS DISCLOSED AND SHIVA CEMENT LTD CONFIRMED THAT THE AMOUNT WAS ADJU STED AGAINST A SALE BILL IN THE MONTH OF MARCH. UNDER THE CIRCUMST ANCES NO QUESTION ARISES FOR THE AMOUNT APPEARING AS AN ASSET IN THE BALANCE SHEET. THE ADDITION MADE ON ACCOUNT OF BANK COMMISSION ARE ALS O BASED ON THE CREDIT ENTRIES MADE IN THE ACCOUNT OF THE APPELLANT WHICH HAVE NOT BEEN ESTABLISHED TO BE GENUINE. THE ADDITION MADE OF RS. 82,582 ON ACCOUNT OF UNRECORDED FREIGHT EXPENSES IS FOUND TO BE BASED ON A BILL RAISED BY THE APPELLANT ON SHIVA CEMENT LTD WHICH IS SHOWN TO BE AMOUNT REIMBURSED TO M/S SUKUMAR DEY & BROS TOWARDS HANDLI NG, LOADING, ETC., AS EVIDENT FROM ANOTHER BILL OF THE MATCHING AMOUNT RAISED BY THE LAST NAMED CONCERN ON THE APPELLANT. ALL THESE BILLS HAV E BEEN FURNISHED BY SHIVA CEMENT LTD TO THE ASSESSING OFFICER. THE ADDI TION WAS MADE REJECTING THE CONTENTION OF THE APPELLANT THAT IT W AS ONLY REIMBURSEMENT OF EXPENSES INCURRED ON BEHALF OF SHIVA CEMENTS LTD WHICH WAS NO CHARGED TO THE PROFIT AND LOSS ACCOUNT. THE ASSESSI NG OFFICER HAS NO SHOWN THAT THE IMPUGNED AMOUNT WAS DEBITED TO THE P ROFIT AND LOSS ACCOUNT. 4.11 THE DISCUSSION MADE ABOVE CLEARLY SHOW THAT TH E IMPUGNED ADDITIONS IN RELATION TO VARIOUS TRANSACTIONS ALLEG ED TO HAVE BEEN ENTERED INTO WITH SHIVA CEMENTS LTD ARE NOT BASED O N RELIABLE MATERIALS OR EVIDENCE. THEY ARE SOLELY BASED ON UNILATERAL AC TION ON THE PART OF SHIVA CEMENT LTD OF MAKING DISPUTED DEBTS AND CREDI TS MADE TO THE LEDGER ACCOUNTS OF THE APPELLANT. THE TRANSACTIONS ENTERED INTO BY A PERSON SHOULD BE AN ACT WHICH IS BILATERAL OR MULTI LATERAL IN CHARACTER AND NOT A MERE UNILATERAL ACTION WHICH IS ALL THAT OCCURS WHEN A CO- PERSON THROWS HIS SELF-ACQUISITION IN HOTCHPOT OF T HE JOINT FAMILY. RELIANCE IS PLACED ON SUBRAMANIAM IYER VS. COMMISSIONER OF GIFT TAX , 67 ITR 612 (KERALA). THE ACTS BROUGHT OUT ABOVE CLE ARLY SHOW THAT THE ASSESSING OFFICER HAS NOT BEEN ABLE TO DISCHARGE HI S ONUS OF ESTABLISH THESE TRANSACTIONS WITH COGENT AND RELIABLE MATERIA LS. UNDER THE CIRCUMSTANCES ADDITIONS MADE OF VARIU9S AMOUNTS LIS TED IN PARA-1 ITA NO.2019/KOL/2007 A.Y.2003-04 ITO WD-2(2) MID V. M/S KRISHNA TRADING PAGE 9 ABOVE IN RELATION TO TRANSACTIONS WITH SHIVA CEMENT S LTD DO NOT STAND. THEY ARE, THEREFORE, DELETED . BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 6. THE LD. DR BEFORE US RELIED ON THE ORDER OF AO W HEREAS LD. AR RELIED ON THE ORDER OF LD. CIT(A). WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE BEFORE US. WE FIND FROM ABOVE DISCUSSION THAT THE AO HAS MADE THE SEVERAL ADDITIO NS ON THE INFORMATION COLLECTED UNDER SECTION 133(6) OF THE ACT FROM SCL. AS PER THE INFORMATION RECEIVED THE AO OBSERVED SEVERAL DISCREPANCIES WHIC H INVOKED HIM TO MAKE THE ADDITIONS TO THE TOTAL INCOME OF THE ASSESSEE. HOWEVER THE LD. CITA DELETED ALL OF THEM BY TREATING THE ACTION OF AO UN ILATERAL. IT IS BEYOND DOUBT THAT THE DISCREPANCIES WERE OBSERVED BUT THE QUESTI ON ARISES WHETHER THESE DISCREPANCIES AMOUNT TO THE UNDISCLOSED INCOME OF T HE ASSESSEE. THE LD. DR HAS ALSO NOT BROUGHT ON RECORD ANYTHING CONTRARY TO THE FINDINGS OF THE LD. CIT(A). WE FIND PERTINENT TO REFER THE DECISION OF THE HONBLE SUPREME COURT AT THIS JUNCTURE IN THE CASE OF ([1965] 56 ITR (SH. N.)31.) WHERE IT WAS HELD AS UNDER : BY SECTIONS 3 AND 4, THE INDIAN INCOME-TAX ACT, 19 22, IMPOSES A GENERAL LIABILITY TO TAX UPON ALL INCOME. BUT THE A CT DOES NOT PROVIDE THAT WHATEVER IS RECEIVED BY A PERSON MUST BE REGARDED A S INCOME LIABLE TO TAX. IN ALL CASES IN WHICH A RECEIPT IS SOUGHT TO B E TAXED AN INCOME, THE BURDEN LIES UPON THE DEPARTMENT TO PROVE THAT IT IS WITHIN THE TAXING PROVISION. WHERE HOWEVER A RECEIPT IS OF THE NATURE OF INCOME, THE BURDEN OF PROVING THAT IT IS NOT TAXABLE, BECAUSE I T FALLS WITHIN AN EXEMPTION PROVIDED BY THE ACT, LIES UPON THE ASSESS EE. WHERE THE CASE OF THE ASSESSEE IS THAT A RECEIPT DI D NOT FALL WITHIN THE TAXING PROVISION, THE SOURCE OF THE RECEIPT IS DISC LOSED BY THE SE AND THERE IS NO DISPUTE ABOUT THE TRUTH OF THAT DISCLOS URE, THE INCOME-TAX AUTHORITIES ARE NOT ENTITLED TO RAISE AN INFERENCE THAT THE RECEIPT IS ASSESSABLE TO INCOME-TAX ON THE GROUND THAT THE ASS ESSEE HAS FAILED TO LEAD ALL THE EVIDENCE IN SUPPORT OF HIS CONTENTION THAT IT IS NOT WITHIN THE TAXING PROVISION. ITA NO.2019/KOL/2007 A.Y.2003-04 ITO WD-2(2) MID V. M/S KRISHNA TRADING PAGE 10 FROM THE ABOVE DECISION, WE UNDERSTAND THAT THE DIS CREPANCIES NOTED FROM THE THIRD PARTY STATEMENT ARE NOT NECESSARILY UNDIS CLOSED INCOME OF THE ASSESSEE. THEREFORE WE CONCLUDE THAT THE ADDITIONS CANNOT BE MERELY MADE ON THE EVIDENCE COLLECTED FROM THIRD PARTIES. IN OU R CONSIDERED VIEW WE ARE INCLINED NOT TO INTERFERE IN THE ORDER OF LD. CIT(A ). REVENUE APPEAL IS DISMISSED. 7. IN THE RESULT, REVENUE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 23 /03/2016 SD/- SD/- (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 23 / 03 /201 6 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ITO, WARD-2(2) SAHOO BHAWAN, KSHUDIRAM N AGAR, P.O. MIDNAPORE, DIST . PASCHIM MEDINIPUR 2. /RESPONDENT-M/S KRISHNA TRADING, AT&PO BALICHAK, DI ST.PASCHIM MEDINIPUR721124 3. ) *+ , , - / CONCERNED CIT KOLKATA 4. , , -- / CIT (A) KOLKATA 5. 012 33*+, , *+ , / DR, ITAT, KOLKATA 6. 267 89 / GUARD FILE. BY ORDER/ , , /TRUE COPY/ / , *+ ,