ITO, Ward - 34(3), Kolkata, Kolkata V. Hanuman Prasad Bhaiya, Kolkata

ITA 2080/KOL/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91900 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 28-04-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 18-11-2010
• Court: TRIBUNAL
• Department Lawyers: SANJAY SR DR
• Assessee Lawyers: V N PUROHIT; H V BHARAD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOLKATA [BEFORE HON BLE SHRI MAHAVIR SINGH, JM & HON BLE SHRI B.P.JAIN, AM ] I.T.A NO.2080/KOL/2010 ASSESSMENT YEAR: 2007 - 08 I.T.O., WARD - 34(3) VS. HANUMAN PRASAD BHAIYA KOLKATA KOLKATA (AP PELLANT) ( RESPONDENT) (PAN:AEEPB 4518 E) FOR THE APPELLANT : SHRI SANJAY, SR.DR, ADDL.C.I.T. FOR THE RESPONDENT : SHRI V.N.PUROHIT, FCA & SHRI H.V.BHARADWAJ DATE OF HEARING : 30.03.2015. DATE OF PRONOUNCEMENT: 20.04.2015. ORDER PER SHRI B.P. JAIN, AM : THIS APPEAL OF THE REVENUE ARISES OUT OF THE ORDER OF LD.CIT(A) - XX, KOLKATA DATED 05.08.2010 FOR ASSESSMENT YEAR 2007 - 08. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(APPEALS) ERRED IN FACT AND IN LAW, IN DELETING THE ADDITIONS OF RS.1,18,25,865/ - MADE FOR IT TO BE UNEXPLAINED & UNRECORDED EXPENDITURE IN THE BOOKS OF THE ASSESSEE. 2. THE LEARNED CIT (APPEALS) ERRED IN ACCEPTING THE VIEWS OF THE ASSESSEE IN DEL ETING THE ADDITIONS OF RS.1,18,25,865/ - (FOR UNEXPLAINED & UNRECORDED EXPENDITURE) WITHOUT ANY EVIDENCE PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AT ANY STAGE. 3. THE LEARNED CIT(A PPEALS) ERRED BY NOT ACCEPTING THE FACTS BROUGHT ON THE RECORD THAT I) THE ASSESSEE IS CHANGING HIS EXPLANATION AT EVERY STAGE. II) THERE IS DIFFERENCE IN THE FIGURE OF PAYMENT TO M/S HANUMAN PD.BHAIYA (HUF) ASSESSEE AND AUDITOR GIVEN AT REMAND STAGE. III) THE AUDITOR DID NOT PRODUCE ANY EVIDENCE IN SUPPORT OF HIS L ETTER THAT THERE IS TYPING MISTAKE THE FIGURE OF PAYMENT OT M/S. HANUMAN PD.BHAIYA (HUF). 4. WITH THE LEAVE OF TRIBUNAL, TO ADD, ALTER, CHANGE, WITHDRAW OR MODIFY GROUND (S) OF APPEAL DURING OR BEFORE THE HEARING OF THE CASE. 2. THE BRIEF FACTS OF THE CASE ARISING FROM THE ORDER OF AO AND THE RELEVANT PART OF WHICH IS REPRODUCED HEREIN BELOW : - THE FOLLOWINGS COULD BE OBSERVED FROM THE AUDIT REPORT, PROFIT & LOSS A/C & BALANCE SHEET AS ON 31.03.2007. ITA NO.2080/KOL/2010 HANUMAN PRASAD BHAIYA A.YR. 2007 - 08 2 A ) THAT THE ACCOUNTS OF M/S. KANCHAN TEXTILES WAS AUDIT ED BY SHRI L.B.RATHI, CHARTERED ACCOUNTANT, AND THE AUDIT REPORT IN FORM NO.3CB WAS SIGNED BY HIM TOGETHER WITH PROFIT & LOSS A/C AND BALANCE SHEET ON 19/09/2007. THE ASSESSEE ALSO SIGNED THE ANNEXURES & SCHEDULES AS WELL AS THE PROFIT & LOSS A/C & BALANC E SHEET. B ) IT WAS SEEN THAT THE ASSESSEE HAD DEBITED ITS TRADING & PROFIT & LOSS A/C ACCOUNT BY RS.51,70,712/ - FOR TWISTING CHARGES. IN COLUMN NO - 18 OF THE TAX AUDIT REPORT, WHERE PARTICULARS OF PAYMENT MADE TO PERSONS SPECIFIED U/S 40A(2) (B) IS GIVEN. THE COMMENT OF THE AUDITOR WAS, AS PER STATEMENT NO - 1 . IN THE STATEMENT NO - 1 ENCLOSED WITH THE TAX AUDIT REPORT, THE FOLLOWING RELEVANT POINTS COULD BE SEEN : DETAILS OF PAYMENTS/CREDIT MADE TO RELATIVES SL.NO. NAME PARTICULARS AMOUNT 1 . HANUMAN PRASAD BHA IYA (HUF) TWISTING CHARGES RS.1,60,76,222/ - 2 . JANKILAL JAI GOPAL BHAIYA(HUF) TWISTING CHARGES RS. 9,20,35 5/ - 12. AS SUCH, THE ASSESSEE WAS ASKED TO SHOW CAUSE VIDE LETTER DATED 28/10/2009 AS TO WHY THE UNEXPLAINED AND UNRECORDED EXPENDITURE OF R S.1,18, 25,865/ - (RS.1,69,96,577/ - RS.51,70,712/ - ) SHOULD NOT BE ADDED TO HIS INCOME FOR THE ASSESSMENT YEAR 2007 - 08. THE LEARNED ASSESSEE REPLIED VIDE LETTER DATED 06/11/2009 (COPY ANNEXED) STATING THAT .PLEASE FURTHER NOTE THAT TWISTING CHARGES OF RS.51,70,7 12/ - DEBITED TO P&L A/C IS THAT FOR THE CURRENT YEAR. AND RS.169,96577/ - PAID TO DIFFERENT PARTIES AS PER STATEMENT NO - 1 SHOWN IN THE TAX AUDIT REPORT INCLUDES OLD DUES INCURRED IN EARLIER YEARS. HENCE THE DIFFERENCES. 13. ON GOING THROUGH THE TAX AUDIT RE PORT OF M/S. KANCHAN TEXTILES, FILED WITH THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006 - 07, IT WAS SEEN THAT AS ON 31.03.2006, THE ASSESSEE HAD TOTAL SUNDRY CREDITORS OF RS.42,92,499/ - ONLY. ON GOING THROUGH THE ANNEXURE III OF THE BALANCE SHEET FOR F .Y. 05 - 06, WHERE LIST OF ALL SUNDRY CREDITORS WAS GIVEN, IN THE SUB HEAD, TWISTER, AGAINST JANKILAL JAI GOPA BHAIYA (HUF) AN AMOUNT OF RS.49374/ - ONLY WAS SHOWN. NO AMOUNT AGAINST THE NAME OF HANUMAN PRASAD BHAIYA (HUF) WAS SHOWN. COPY OF PROFIT & LOSS A/C AND BALANCE SHEET OF M/S. KANCHAN TEXTILES AS ON 31.03.2006 (WITH ANNEXURE) IS ANNEXED TO THIS ORDER AND IS MARKED AS ANNEXURE - III AND IS MADE PART OF THIS ORDER. 14. IT WILL NOT BE OUT OF CONTEXT HERE TO MENTION THAT AUDIT OF M/S KANCHAN TEXTILES FOR THE F.Y. 2005 - 06 WAS DONE BY MR.B.S.BAHETI, PROPRIETOR OF M/S. BHAWANI SHANKAR CHARTERED ACCOUNTANTS. BUT THE AUDITOR FOR THE F.Y.2006 - 07 RELEVANT TO ASSESSMENT YEAR 2007 - 08 WAS CHANGED AND MR.L. V.RATHI PROPRIETOR OF M/S. L.V.R ATHI & COMPANY AUDITED THE AC COUNTS. 15. THUS IT IS CLEAR FROM THE PROFIT & LOSS A/C AND BALANCE SHEET AS ON 31.03.2006, THAT THE ASSESSEE DID NOT HAVE SUNDRY CREDITORS OF RS.1,18,25,865/ - AS ON 31.03.2006. HENCE THE ARGUMENT OF THE ASSESSEE THAT THE TWISTING CHARGES OF RS.1,69,96,577 / - PAID TO THE RELATIVES, AS PER THE AUDITOR DURING THE F.Y. 2006 - 07 INCLUDED THE OLD BALANCE PAYABLE TO THESE PERSONS IS NOT TRUE AT ALL & IS NOT ACCEPTABLE . DURING THE HEARING OF THE CASE, ALSO, NO FURTHER SUBMISSIONS/EXPLANATIONS WAS FILED BY THE LEARN ED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. THE BOOKS PRODUCED WAS ALSO NOT COMPLETE. AS SUCH THE SUM OF R S.1,18,25,865/ - PAID FOR TWISTING CHARGES IS CONSIDERED AS UNRECORDED EXPENDITURE OF THE ASSESSEE IN THE BOOKS OF ACCOUNTS AND IS ADDED TO HIS TOTAL INCOME FOR THE ASSESSMENT YEAR 2007 - 08. ITA NO.2080/KOL/2010 HANUMAN PRASAD BHAIYA A.YR. 2007 - 08 3 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THE EXPLANATION ALONG WITH CERTAIN ENCLOSURES IN SUPPORT OF THE EXPLANA TION BEFORE LD. CIT(A) WHICH WERE SENT TO THE AO FOR REPORT WHICH IN FACT WAS SUBMITTED DATED 30.06.2010 BEFORE LD. CIT(A). LD.CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, REMAND REPORT OF AO AND THE ARGUMENTS MADE BY THE LD. COUNSEL FOR ASSESSEE DELETED THE ADDITION MADE BY AO VIDE PARA 7 OF HIS ORDER. 4. THE LD. DR AR GUED THAT THE LD. CIT(A) DELETED THE ADDITION WITHOUT ANY EVIDENCE PRODUCED BY THE ASSESSEE BEFORE AO DURING THE ASSESSMENT PROCEEDINGS OR EVEN IN THE REMAND STAGE. THE ASSESSEE HAS BEEN CHANGING HIS EXPLANATION FROM TIME TO TIME AND THERE WAS A DIFFERENCE OF THE FIGURES AS STATED BY ASSESSEE AND THAT BY THE AUDITOR. THE AUDITOR HAD PRODUCED A LETTER WITHOUT VERIFYING THE BOOKS OF ACCOUNT OR WITHOUT EXAMINING AND IN SUCH CIRCUMSTANCES OF THE FACTS OF THE CASE THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION WITHOUT IN FACT VERIFYING THE FACTS AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE THE LD. CIT(A). ACCORDINGLY THE LD.DR PRAYED TO REVERSE THE ORDER OF LD. CIT(A) AND CONFIRM THE ORDER OF AO. 5. THE LD. COUNSEL FOR THE ASSESSEE, ON THE O THER HAND, RELIED UPON THE SUBMISSIONS MADE BEFORE LD. CIT(A) AND THE ORDER OF THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULLY PERUSED THE MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE THAT THE ASSESSEE HA S DEBITED TWISTING CHARGES AMOUNTING TO RS. 51,70,712/ - IN THE PROFIT AND LOSS ACCOUNT. BUT IN COL.18 OF THE TAX AUDIT REPORT PARTICULARS OF PAYMENT MADE TO THE PERSONS SPECIFIED U/S 40A(2)(B) OF THE ACT IT WAS MENTIONED TWISTING CHARGES OF RS.1,60,76,222/ - WERE PAID TO HANUMAN PRASAD BHAIYA (HUF) AND TWISTING CHARGES OF RS.9,20,355/ - WERE PAID TO JANKILAL JAI GOPAL BHAIYA (HUF). IT WAS EXPLAINED BEFORE THE AO THAT THE TWISTING CHARGES AS MENTIONED IN COL.18 OF THE TAX AUDIT REPORT ARE THE DUES OF THE EARLI ER YEARS. WHEREAS THE AO FOUND FROM THE BALANCE SHEET OF THE EARLIER YEAR THAT THE ASSESSEE DID NOT HAVE SUCH SUNDRY CREDITORS OF RS. 1,18,25,865/ - AS ON 31.03.2006. BEFORE THE LD.CIT(A) THE ASSESSEE SUBMITTED THAT THE ACTUAL TWISTING ITA NO.2080/KOL/2010 HANUMAN PRASAD BHAIYA A.YR. 2007 - 08 4 CHARGES PAID TO HANUMAN PRASAD BHAIYA WERE RS.16,07,622/ - AND IT WAS WRONGLY TYPED AS RS.1,60,76,222/ - . COPY OF THE TAX AUDITOR DULY CERTIFIED WAS ALSO FILED THAT TWISTING CHARGES WERE RS.16,29,720/ - WHEREAS THE AUTHORISED REPRESENTATIVE SUBMITTED THAT TWISTING CHARGES ARE RS.16 ,07,622/ - AS MENTIONED IN PA RA 5 OF THE LD. CIT(A) S APPEAL ORDER. THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE AGAIN CHANGED HIS STAND THAT TWISTING CHARGES TO THE SAID HUF ARE RS.16,29,720/ - AND NOT RS.16,07,622/ - . IT WAS ARGUED BY THE LD. COUNSEL FOR T HE ASSESSEE THAT BEFORE THE LD. CIT(A) AS WELL AS BEFORE US THAT TAX AUDITOR HAS GIVEN A CERTIFICATE MENTIONING OF THE TYPOGRAPHICAL MISTAKE. ONLY ON THAT BASIS THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITIONS SO MADE. THE AO HAS SOLELY RELIED UPON COL.18 OF THE TAX AUDIT REPORT IN THE TAX AUDIT. FROM THE PERUSAL OF THE FACTS ON RECORD, WE ARE OF THE VIEW THAT NEITHER THE LD. CIT(A) NOR THE AO HAS VERIFIED THE BOOKS OF ACCOUNT OF THE ASSESSEE. AS REGARDS THE CHANGE IN THE FIGURES AS CLAIMED IN COL.18 OF TH E TAX AUDIT REPORT AND AS CORRECTED BY THE TAX AUDITOR CLAIMING TO BE THE TYPOGRAPHICAL MISTAKE, A GAIN THE STAND WAS CHANGED THAT THE SAID CHARGES DID NOT BELONG TO THE PRECEDING YEAR BUT ARE THAT OF THE IMPUGNED YEAR AS PER PARA 7 OF THE LD. CIT(A) S ORDE R SINCE THE SAME WAS NOT VERIFIED BY EITHER OF THE AUTHORITIES BELOW. IN CASE THE TWISTING CHARGES ARE RS.1,18,25,865/ - AS CLAIMED BY THE AO AND HAVING INCURRED DURING THE YEAR THEN THERE SHOULD BE CORRESPONDING PURCHASES OF YARN ON ONE SIDE AND SALE OF CL OTH OR CLOSING STOCK ON THE OTHER SIDE AND IF IT PERTAINS TO THE PRECEDING YEAR THEN IT SHOULD REFLECT IN THE PRECEDING YEARS AUDIT ED BALANCE SHEET AS SUNDRY CREDITORS BUT NOTHING HAS BEEN VERIFIED BY EITHER OF THE AUTHORITIES BELOW. IN THE CIRCUMSTANCES A ND FACTS OF THE PRESENT CASE AND IN THE INTEREST OF JUSTICE THE MATTER IS SET ASIDE TO THE FILE OF AO, WHO WILL EXAMINE THE RECORDS/BOOKS OF ACCOUNT IN VIEW OF OUR FINDINGS HEREINABOVE AND DECIDE THE ISSUE DE - NOVO ACCORDINGLY BY AFFORDING ADEQUATE OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. THUS ALL THE GROUNDS OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ITA NO.2080/KOL/2010 HANUMAN PRASAD BHAIYA A.YR. 2007 - 08 5 7. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNCE D IN THE COURT ON 2 0.04.201 5. SD/ - SD/ - [ MAH AVIR SINGH ] [ B.P.JAIN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 20.04.2015. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . HANUMAN PRASAD BHAIYA, 12, AMARTALLA ST., 3 RD FLOOR, KOLKATA - 700001. 2 I.T.O., WARD - 34(3 ), KOLKATA. 3 . CIT(A) - XX , KOLKATA. 4. CIT - KOLKATA CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY, BY ORDER, ASST. REGISTRAR , ITAT, KOLKATA BENCHES