Smt Gulab Devi Sethia, Howrah V. I.T.O Wd - 48(2),kolkata, Kolkata

ITA 2076/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5002 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 08-07-2013
• Court: TRIBUNAL
• Assessee Lawyers: S M SURANA LD
• Keywords: Unexplained cash credit; Rejection of books of accounts; Business income; Additional evidence; Corroborative evidences
• Section: 131; 68

Judgement Text

ITA NO. 2076/KOL/2013-B-AM SMT. GULAB DEVI SETHIA 1 IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, K OLKATA BEFORE : SHRI N.V. VASUDEVAN, JUDICIAL MEMBER , AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 2076/KOL/2013 A.Y : 2007-08 SMT. GULAB DEVI SETHIA VS. I.T.O WARD 48(2), K OLKATA PAN: AMQPS 8031D (APPELLANT) (RE SPONDENT) FOR THE APPELLANT/ASSESSEE: SH RI S.M SURANA, ADVOCATE, LD.AR FOR THE RESPONDENT/DEPARTMENT: S HRI ARUN KANTI SINHA, JCIT, LD.SR.DR DATE OF HEARING: 07-04-2016 DATE OF PRONOUNCEMENT: 13- 4 - 2016 ORDER SHRI M.BALAGANESH, AM THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE O RDER OF THE LEARNED CIT(A), XXX, KOLKATA IN APPEAL NO. 48/CIT(A)-XXX/WD-48(2)/ 2010-11 DATED 31-01-2013 AGAINST THE ORDER OF ASSESSMENT FRAMED BY THE LEARN ED AO FOR THE ASST YEAR 2007-08 U/S. 144/145(3) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. THE GROUND NO.1 RAISED BY THE ASSESSEE IS GENE RAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 3. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL I S AS TO WHETHER THE LEARNED CIT(A) IS JUSTIFIED IN UPHOLDING THE ESTIMATION OF NET PROFIT AT 5% OF TURNOVER IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO. 2076/KOL/2013-B-AM SMT. GULAB DEVI SETHIA 2 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSE SSEE IS AN INDIVIDUAL ENGAGED IN THE WHOLESALE TRADING OF CLOTH BUSINESS UNDER THE NAME AND STYLE OF M/S SETHIA FASHION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LE ARNED AO OBSERVED THAT THE ASSESSEE COULD NOT PRODUCE THE BOOKS OF ACCOUNTS AN D BILLS AND VOUCHERS. HENCE HE REJECTED THE BOOKS OF ACCOUNTS IN TERMS OF SECTION 145(3) OF THE ACT AND RESORTED TO MAKE AN ESTIMATE OF NET PROFIT @ 5% OF TURNOVER AND MADE AN ADDITION OF RS. 8,39,188/- IN THE ASSESSMENT. ON FIRST APPEAL, THE ASSESSEE STATED THAT THE ASSESSEE IS ONLY A WHOLESALER IN SAREE BUSINESS WHERE THE MARGI N IS GENERALLY 1 2% OF GROSS TURNOVER. THE ASSESSEE ARGUED THAT THE LEARNED AO OUGHT TO HAVE BROUGHT ON RECORD COMPARABLE CASES BEFORE RESORTING TO MAKE AN ESTIMA TE OF NET PROFIT @ 5% OF TURNOVER. IT WAS FURTHER PLEADED THAT IN THE CSAE OF SIDDHIVI NYAK SAREES ASSESSED BY LEARNED AO IN WARD 43(4), KOLKATA, THE NET PROFIT RATE WAS ONL Y 0.6%. MOREOVER, THE LEARNED AO HAVING REJECTED THE BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT AND RESORTING TO MAKE ESTIMATE OF NET PROFIT @ 5% OF TURNOVER, OUGHT TO H AVE REDUCED THE NET PROFIT RETURNED BY THE ASSESSEE TOWARDS THE SAME BUSINESS INCOME IN THE SUM OF RS. 1,79,021/- IN ORDER TO AVOID DOUBLE ADDITION. THE ASSESSEE HAD D ECLARED 1.06% AS NET PROFIT ON TURNOVER. THE LEARNED CIT(A) HOWEVER, UPHELD THE ORDER OF THE LEARNED AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON T HE FOLLOWING GROUND:- 2. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ESTIMATE OF THE NET PROFIT AT 5% IN THE WHOLESALE CLOTH BUSINESS WHEN T HE PROFIT DECLARED BY THE ASSESSEE WAS QUITE FAIR AND REASONABLE. 3.2. THE LEARNED AR ARGUED THAT THE LEARNED CIT(A) DID NOT GIVE ANY INDEPENDENT FINDING WITH REGARD TO THE COMPARABLE CASE QUOTED B Y THE ASSESSEE BEFORE HIM INSPITE OF MAKING A PASSIVE REFERENCE TO THE SAME IN HIS AP PELLATE ORDER. HE PRAYED FOR SETTING ASIDE OF THIS ISSUE TO THE FILE OF THE LEARNED AO W ITH A DIRECTION TO VERIFY THE COMPARABLE CASES WHO ARE IN SIMILAR LINE OF BUSINES SES AND THEN DETERMINE THE NET PROFIT OF THE ASSESSEE FROM HER WHOLESALE CLOTH BUS INESS. IN RESPONSE TO THIS, THE LEARNED DR FAIRLY CONCEDED TO THE SAME. ITA NO. 2076/KOL/2013-B-AM SMT. GULAB DEVI SETHIA 3 3.3. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT IN THE AFORESAID FACTS AND CIRCUMSTANCES, WE DEEM IT FIT AND APPROPRIATE, IN T HE INTEREST OF JUSTICE AND FAIR PLAY, TO SET ASIDE THIS ISSUE TO THE FILE OF THE LEARNED AO, TO VERIFY THE COMPARABLE CASES AND DETERMINE THE NET PROFIT OF THE ASSESSEE AS THERE I S NO PAST HISTORY OF THE ASSESSEE, AS IT WAS CLAIMED BY THE ASSESSEE THAT THIS ASST YEAR BEI NG THE FIRST YEAR OF BUSINESS EXISTENCE OF ASSESSEE. THE ASSESSEE IS DIRECTED TO FILE COMPARABLE CASES BEFORE THE LEARNED AO TO ENABLE HIM TO MAKE A FAIR ESTIMATE OF THE NET PROFIT OF THE BUSINESS OF THE ASSESSEE. ACCORDINGLY, THE GROUND NO.2 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 4. THE NEXT GROUND TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER A SUM OF RS. 20,54,709/- TOWARDS UNSECURED LOANS COULD BE ADDED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASS ESSEE HAD DECLARED UNSECURED LOANS OF RS. 20,54,709/- IN HIS BALANCE SHEET AS RECEIVED FR OM THE FOLLOWING SIX PARTIES :- ( IN RS.) KAILASH DEVI SINGHI (KOL) 5,02,465 PADAM CHAND JAIN 1,50,986 PRIYANKA SETHIA 2,07,000 SHANTI LAL BHANTIA (KOL) 2,50,822 VARUN BARLOTA 4,71,718 VINAY BARLOTA 4,71,718 ------------- 20,54,709 THE ASSESSEE FILED LOAN CONFIRMATION LETTERS FROM A LL THE SIX PARTIES BEFORE THE LEARNED AO. THE LEARNED AO ISSUED SUMMONS U/S 131 OF THE ACT ON ALL THE SIX PERSONS AND OUT OF THEM, SUMMONS COULD BE SERVED ONLY ON TWO PE RSONS VIZ MS.PRIANKA SETHIA AND ITA NO. 2076/KOL/2013-B-AM SMT. GULAB DEVI SETHIA 4 MS.SHANTI LAL BHANTIA. WITH REGARD TO FOUR PARTIES , THE SUMMONS HAD RETURNED UNSERVED. THE LEARNED AO ASKED THE ASSESSEE TO PR ODUCE THE LOAN PARTIES BEFORE HIM WHICH THE ASSESSEE FAILED TO DO. HENCE THE LEARNED AO TREATED THE UNSECURED LOANS OF RS. 20,54,709/- AS UNEXPLAINED CASH CREDIT U/S 68 O F THE ACT. ON FIRST APPEAL, THE LEARNED CITA, ON VERIFICATION OF THE ASSESSMENT REC ORDS, FOUND THAT THE ASSESSEE HAD MERELY FILED ONLY LOAN CONFIRMATIONS BEFORE THE LEA RNED AO WITHOUT MENTIONING THE PAN, INCOME TAX ASSESSMENT JURISDICTION , BANK STAT EMENTS , INCOME TAX RETURNS AND BALANCE SHEET OF SIX PARTIES TO VERIFY THE GENUINEN ESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE CREDITORS. THE ASSESSEE FI LED THE INCOME TAX RETURNS AND BALANCE SHEETS OF VINAY BARLOTA, VARUN BARLOTA, SHA NTI LAL BHANTIA AND PRIYANKA SETHIA ALONG WITH LOAN CONFIRMATIONS FROM ALL THE P ARTIES BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) CALLED FOR THE REMAND REPORT FRO M THE LEARNED AO. THE REMAND REPORT WAS OBTAINED FROM THE LEARNED AO BY THE LEAR NED CIT(A). LATER THE LEARNED CIT(A) HELD THAT THESE DOCUMENTS FILED BEFORE HIM A RE ADDITIONAL EVIDENCES AND HENCE THE SAME ARE NOT ADMITTED FOR ADJUDICATION. ACCOR DINGLY, HE UPHELD THE ADDITION MADE BY THE LEARNED AO. AGGRIEVED, THE ASSESSEE IS IN A PPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 3. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 20,54,789/- BEING CASH CREDITS BY NOT ADMITTING THE EVIDENCES FILED BY THE APPELLANT WHEN THE CREDITS WERE GENUINE, APPELLANT STARTED NEW BUSINESS DURING THE YEAR, THE DETAILS OF THE CASH CREDITS IN CLUDING THE PAN OF THE CREDITORS WAS AVAILABLE IN THE AUDITED ACCOUNTS AND THE SUBSEQUENT EVIDENCES WERE ONLY SUPPORTING EVIDENCES. 4. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. CIT (A) SHOULD HAVE ADMITTED THE EVIDENCES OF THE CASH CRED ITS AND SHOULD HAVE DECIDED THE ISSUE ON MERITS OF THE CASE. 4.2. THE LEARNED AR ARGUED THAT THE LEARNED CIT(A) HAVING ADMITTED THE ADDITIONAL EVIDENCES FILED BEFORE HIM ORIGINALLY HAD CALLED FO R A REMAND REPORT AND OBTAINED THE SAME FROM THE LEARNED AO. HE ARGUED THAT THEREAFTE R, IT WOULD BE UNFAIR ON THE PART OF THE LEARNED CIT(A) TO STATE THAT THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE ARE ITA NO. 2076/KOL/2013-B-AM SMT. GULAB DEVI SETHIA 5 NOT ADMITTED. TO MEET THE ENDS OF JUSTICE, HE PRA YED FOR SET ASIDE OF THIS ISSUE TO THE FILE OF THE LEARNED AO , WHEREIN HE UNDERTOOK TO PR ODUCE THE PARTIES BEFORE THE LEARNED AO FOR EXAMINATION. IN RESPONSE TO THIS, T HE LEARNED DR ARGUED THAT THE LEARNED CIT(A) HAD CATEGORICALLY GIVEN A FINDING TH AT THE ASSESSEE HAD NOT DISCHARGED HER ONUS IN TERMS OF SECTION 68 OF THE ACT AND HENC E ARGUED THAT THE ORDER PASSED BY THE LOWER AUTHORITIES DOES NOT CALL FOR ANY INTERFE RENCE. 4.3. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE LEARNED CIT(A) HAD ORIGINALLY ADMITTED THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE AND HAD CALLED FOR A REMAND REPORT FROM THE LEARNED AO. HAVING DONE SO, HE OUGHT NOT TO HAVE CONCLUDED IN HIS APPELLATE ORDER THAT THE ADDITIONAL EVIDENCE S FILED DOES NOT DESERVE TO BE ADMITTED. THE LEARNED AR PRAYED FOR ONE MORE OPPO RTUNITY TO BE GRANTED TO THE ASSESSEE FOR PRODUCTION OF LOAN PARTIES BEFORE TH E LEARNED AO. WE FIND FROM THE FACTS AND CIRCUMSTANCES OF THE CASE, DEEM IT FIT AN D APPROPRIATE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, TO SET ASIDE THIS ISSUE TO T HE FILE OF THE LEARNED AO, TO DECIDE THIS ISSUE AFRESH, IN ACCORDANCE WITH LAW. THE ASSESSEE IS ALSO DIRECTED TO PRODUCE THE PARTIES BEFORE THE LEARNED AO FOR HIS/ HER EXAMINAT ION. ACCORDINGLY, THE GROUNDS 3 & 4 RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICA L PURPOSES. 5. THE LAST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER AN ADDITION OF RS. 10,71,021/- COULD BE MADE IN THE FACTS AND CIRCUMST ANCES OF THE CASE. 5.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE LEA RNED AO OBSERVED THAT THE ASSESSEE HAD INTRODUCED A SUM FO RS. 21,71,021/- IN HER BALANCES HEET TOWARDS CAPITAL ACCOUNT. THE LEARNED AO CALLED FOR THE SOURCES OF THE SAME AND A LSO REQUESTED THE ASSESSEE TO PRODUCE THE BANK STATEMENTS OF THE ASSESSEE TOGETHE R WITH THE BALANCE SHEET FOR THE FINANCIAL YEAR 2005-06. THE LEARNED AO OBSERVED TH AT THE ASSESSEE COULD NOT PRODUCE ANY DOCUMENTS. ACCORDINGLY, HE ADDED THE CAPITAL I NTRODUCTION FIGURE OF RS. 21,71,021/- AS UNEXPLAINED CASH CREDIT U/S 68 OF TH E ACT. ON FIRST APPEAL, THE ASSESSEE STATED THAT THE ASSESSEE HAD INVESTED A SUM OF RS. 21,00,000/- INTO THE PROPRIETORSHIP ITA NO. 2076/KOL/2013-B-AM SMT. GULAB DEVI SETHIA 6 CONCERN OUT OF HER OWN FUNDS WHICH IS EVIDENT FROM THE AUDITED BALANCE SHEET OF M/S SETHIA FASHION AND INDIVIDUAL BALANCE SHEET OF THE ASSESSEE FOR THE YEAR ENDING 31.3.2007 RELEVANT TO THE ASSESSMENT YEAR UNDER APP EAL. FURTHER IT WAS ARGUED THAT THE CAPITAL INTRODUCED IS MUCH LESS THAN THE OPENING BA LANCE OF HER OWN CAPITAL OF RS. 26,34,893/-. THESE SUBMISSIONS WERE FORWARDED BY T HE LEARNED CITA TO THE LEARNED AO CALLING FOR A REMAND REPORT. IN THE REMAND REPO RT, THE LEARNED AO STATED THAT FROM THE PERUSAL OF THE BALANCE SHEETS OF THE ASSESSEE A S ON 31.3.2006 AND 31.3.2007, IT WAS FOUND THAT THE ASSESSEE HAD GOT OPENING CAPITAL BAL ANCE AS ON 1.4.2006 AT RS. 16,34,893/-. AFTER GOING THROUGH THE REJOINDER FRO M THE ASSESSEE TO THE REMAND REPORT SUBMITTED BY THE LEARNED AO, THE LEARNED CIT(A) HEL D THAT THE ASSESSEE WAS ABLE TO PROVE THE SOURCE ONLY FOR RS. 11,00,000/- WHICH WER E RECEIVED BY CHEQUES FROM ANOTHER PROPRIETARY CONCERN ON FOUR DIFFERENT DATES AND SUSTAINED THE BALANCE ADDITION OF RS. 10,71,021/- ( 21,71,021-11,00,000/-) . AGGR IEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 5. FOR THAT THE LD. CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS. 10,71,721/- BEING CAPITAL INTRODUCED AS UNDISCLOSED INCOME IGNORING THE EXPLANATION OF APPELLANT. 5.2. THE LEARNED AR ARGUED THAT THE BENEFIT OF TELE SCOPING WITH THE TRADING ADDITION SUSTAINED IN GROUND NO. 2 MAY BE GIVEN TO THE ASSES SEE WITH THE ADDITION MADE TOWARDS INTRODUCTION OF CAPITAL. IN RESPONSE TO THIS, TH E LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A). 5.3. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND LOT OF FORCE IN THE ARGUMENTS OF THE LEARNED AR REQUESTING FOR TELESCOPING OF THE TRADIN G ADDITION TO BE DECIDED BY THE LEARNED AO AS PER OUR DIRECTIONS IN PARA 3.3 ABOVE. WE DIRECT THE LEARNED AO TO GIVE RELIEF TO THE EXTENT OF TRADING ADDITION SUSTAINED VIDE PARA 3.3 ABOVE AND MAKE AN ADDITION FOR THE BALANCE AMOUNT. ACCORDINGLY, THE GROUND NO. 5 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 2076/KOL/2013-B-AM SMT. GULAB DEVI SETHIA 7 6. THE OTHER GROUNDS RAISED BY THE ASSESSEE ARE ON LY GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13 -4- 2016 SD/- SD/- ( N.V. VASUDEVAN, JUDICIAL MEMBER ) (M. BALAGANESH , ACCOUNTANT MEMBER) DATE 13 -4 -2016 COPY OF THE ORDER FORWARDED TO:- 1.. THE APPELLANT/ASSESSEE: SMT. GULAB DEVI SETHIA 43 DOBSON ROAD, HOWRAH 711101. 2 THE RESPONDENT/DEPARTMENT: INCOME TAX OFFICER, WA RD 48(2) 3 GOVT PLACE, KOLKATA-700001. 3 /THE CIT, 4.THE CIT(A ) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP SPS