ACIT, Circle-40, Kolkata, Kolkata V. Shri Panchanan Seth, Kolkata

ITA 2104/KOL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1780 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 04-07-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 17-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S M S T AUHEED
• Assessee Lawyers: T P KAR
• Keywords: Unexplained cash credit; Business income
• Section: 143(3); 6; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM & HONB LE SHRI A.T. VARKEY, JM ] I.T.A NO. 2104/KOL/20 14 ASSESSMENT YEAR : 2010-1 1 ACIT, CIRCLE-40, KOLKATA -VS- SHRI PANCHANAN S ETH [PAN: AZVPS 8165 J] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI S.M.S. TAUH EED, ADDL. CIT SR. DR FOR THE REVENUE : SHRI T.P. KAR, AR DATE OF HEARING : 11.12.2017 DATE OF PRONOUNCEMENT : 12.01.2018 ORDER PER J.SUDHAKAR REDDY, AM THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XII, KOLKATA [ IN SHORT THE LD CITA] DATED 16.09.2014 AGAINST THE ORDER PASSED BY THE ACIT, CIRCLE-40, KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT) DATED 22.02.2013 FOR THE ASSESSMENT YEAR 2010-11. 2. THE ASSESSEE IS AN INDIVIDUAL AND IS IN THE BUSI NESS OF TRADING. HE FILED HIS RETURN OF INCOME ON 19.09.2010 DECLARING TOTAL INCOME OF RS. 7,53,931/-. THE AO COMPLETED THE ASSESSMENT U/S 143(3) DETERMINING THE TOTAL INCOME AT RS. 1,04,41,103/-, INTER ALIA, MAKING AN ADDITION OF RS. 93,05,687/- U/S 68 AND DI SALLOWING THE CLAIM OF EXPENDITURE OF RS. 3,81,485/-. AGGRIEVED THE ASSESSEE CARRIED T HE MATTER IN APPEAL. 2 ITA NO.2104/KOL/2014 SHRI PANCHANAN SETH A.YR .2010-11 2 3. THE FIRST APPELLATE AUTHORITY ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GRO UNDS: 1. THAT THE LD. CIT(A)-XII, KOLKATA ERRED IN LAW AN D IN FACTS IN DELETING THE ADDITION OF RS. 93,05,687/- CREDITORS FOUND ASSESSE ES OWN MONEY IN THE BOOKS IN THE GARB OF CREDITORS BY REJECTING THE ACCOUNTS AND ALSO U/S 68 WHEN AMOUNT FOUND NOT GENUINE AND UNEXPLAINED AND UNPROVED. 2. THAT LD. CIT(A)-XII, KOLKATA ERRED IN LAW AND IN FACTS IN DELETING THE ADDITION OF RS. 3,05,189/- MADE ON ACCOUNT OF DISALLOWANCE O F EXPENSES FOUND BEING NOT REASONABLE AND WITHOUT ANY VOUCHER/SUPPORTING BILL. 3. THAT THE APPELLANT CRAVES THE LEAVES TO ADD, ALT ER, MODIFY, INCLUDE OR DELETE ANY GROUNDS OF APPEAL. 4. WE HAVE HEARD SHRI S.M.S. TAUHEER, ADDL. CIT SR. DR ON BEHALF OF REVENUE AND SHRI T.P. KAR, AR ON BEHALF OF THE ASSESSEE. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND PERUSAL OF THE PAPERS ON RECORD AND THE ORDER OF THE AUTHORITIES BELOW AS WELL AS THE CASE LAWS CITED, W E HOLD AS FOLLOWS: THE FIRST ADDITION THAT HAS BEEN DELETED BY THE LD. CIT(A) IS RS. 93,05,687/- WAS MADE U/S 68 OF THE ACT. THE ASSESSEE HAD RECEIVED ADVAN CED FROM THE FOLLOWING PERSONS: NAME OF THE PERSONS OPENING BALANCE ADVANCE RECEIVED TOTAL SALES MADE BALANCE AMOUNT CREDITOR SH BANI MUKHERJEE 1535730 2243150 3778880 74993 3703887 AKASH AROMA ESSENTIAL OIL CO 50000 50000 50000 CHANCHAL MUKHERJEE 151655 151655 151655 RAJ AND TRADERS COMPANY 1338351 1338351 1338351 J.P. ENTEREPRISE 4403814 5853972 10257786 6196292 4 061494 TOTAL UNVERIFIED CREDITORS 9305687 5. THE AO HAD GIVEN A REPEATED OPPORTUNITIES TO THE ASSESSEE TO FURNISH EXPLANATION AND ALSO TO PRODUCE THE CREDITORS BEFORE HIM ALONG WITH BANK STATEMENTS, RETURN OF INCOME ETC. NOTICES WERE SENT TO THESE PARTIES BY THE ASSE SSING OFFICER BUT THESE WERE RETURNED BACK BY THE POSTAL AUTHORITIES ON THE GROUNDS THAT THE ADDRESS OF THE ASSESSEE IS NOT 3 ITA NO.2104/KOL/2014 SHRI PANCHANAN SETH A.YR .2010-11 3 KNOWN OR INSUFFICIENT ADDRESS. IN SOME CASES, THE RE WAS NO RESPONSE. WHEN THE ASSESSEE WAS CONFRONTED WITH THE SAME, CERTAIN INFO RMATION WAS FURNISHED BY HIM. THE LD AO FOUND THAT THE INFORMATION RECEIVED CONSTITUT ED UNVERIFIED AND UNSIGNED COPY OF ACCOUNTS, REASONS FOR NON-RECEIPT OF GOODS, BANK ST ATEMENT ETC. HE ALSO FOUND THAT THE DATA AS REQUIRED AS PER THE RELEVANT COLUMNS OF THE RETURNS/ AUDITED REPORT WERE NOT FURNISHED. THE CONCLUSION OF THE AO IS BROUGHT OUT BY THE LD. CIT(A) AS FOLLOWS: IT WAS STATED BY THE ASSESSEE THAT ABOVE COMPANY M/S AKASH AROMA ESSENTIAL OIL CO IS CLOSED AND RS. 50000 IS OUTSTANDING TILL DATE AN D SH CHANCHAL MUKHERJEE CANNOT BE PRODUCED FOR VERIFICATION. LETTER SENT TO SH CHANCH AL MUKHERJEE ALSO RECEIVED BACK WITH THE SAME COMMENTS AS IN THE CASE OF SH BANI MU KHERJEE NOT KNOWN. THE ASSESSING OFFICER ALSO NOTED THAT SUMMONS WAS ISSUE D TO SH PALASH SAHA ROY TO FURNISH THE RELEVANT INFORMATION/DOCUMENTS AS ABOVE ON 01.0 2.2013 AND COMPLIANCE WAS NOT MADE. ON THESE FACTS, THE ASSESSING OFFICER OBSERVE D THAT SALES IS NOT MADE AGAINST ADVANCES AS EXPLAINED AND THERE WERE NO REASONS FOR OUTSTANDING CREDITORS AND THAT IN RESPECT OF J P ENTERPRISES ALTHOUGH SALE IS MADE BU T GENUINENESS OF THE AMOUNT HAS NOT BEEN CONFIRMED BY PRODUCING THE PERSON OR EVEN FURN ISHING THE CREDITORS/DEBTORS LIST AS PER AUDIT REPORT/RETURN OF INCOME. THE ASSESSING OF FICER FURTHER OBSERVED THAT OPENING STOCK IS AT RS. 37,88,505/- AND CLOSING STOCK IS AT RS. 13,40,836/- AND EXPLANATION OF THE ASSESSEE THAT SOMETIMES UNFORTUNATELY ASSESSEE IS NOT IN A POSITION TO DELIVER THE MATERIAL TO CUSTOMERS BECAUSE OF NON-AVAILABILITY O F MATERIAL IS NOT REASONABLE WHEN MATERIAL IS NOT DELIVERED IN SPITE OF STOCK IN HAND AS ABOVE OUT OF OPENING AND CLOSING STOCK. IN THIS BACKGROUND, THE ASSESSING OFFICER HE LD THAT THE CREDITORS AS SHOWN ABOVE WERE NOT GENUINE AND REASONABLE AND IT IS ASSESSEE S OWN MONEY IN THE INTRODUCED IN THE BOOKS IN THE GARB OF CREDITORS. THE ASSESSING O FFICER REJECTED THE BOOKS AS PER PROVISIONS U/S 145(3) AND ADDED BACK THE CREDITORS AS OWN MONEY IN THE GARB OF ADVANCE AGAINST SALES AMOUNTING TO RS. 93,05,687/-. 6. ON APPEAL THE LD. CIT(A) CALLED FOR THE REMAND R EPORT AND THEREAFTER DELETED THE ADDITION. WE FIND THAT THE CONCLUSION OF THE LD. CI T(A) ON THIS ISSUE IS ERRONEOUS AND CONTRARY TO FACTS. 7. IN THE CASE OF J.P.ENTERPRISES GROUP, THE PROPR IETOR OF SHRI PALASH SAHA ROY, THE LD. CIT(A) RECORDS THAT SHRI PALASH ROY IS A SMALL DIST RIBUTOR AND THE TOTAL TRANSACTION ENTERED INTO BY HIM WAS OF ONLY RS. 5 LACS., WITH T HE M/S GAURI TRADING COMPANY. ON THE ISSUE OF TRANSACTION THROUGH BANKING CHANNELS, THE DEPOSITION OF MR. SAHA ROY WAS THAT HIS BANK ACCOUNT WAS OPERATED BY SHRI PANCHANA N SETH, PROPRIETOR OF M/S GAURI 4 ITA NO.2104/KOL/2014 SHRI PANCHANAN SETH A.YR .2010-11 4 TRADING COMPANY AS HIS CHEQUE BOOK ETC. WAS KEPT WI TH PANCHANAN SETH AND THAT HE WAS NOT AWARE OF THE RECEIPT AND PAYMENTS OF ALL TH E TRANSACTIONS, EXCEPT TRANSACTION TO THE EXTENT OF RS. 5 LACS. 8. UNDER THE CIRCUMSTANCES, IN OUR VIEW, THE LD. CI T(A) WAS WRONG IN HOLDING THAT THE ADDITION WAS WRONGLY MADE BY THE ASSESSING OFFICER. MERELY BECAUSE, THE PURCHASE AND SALES HAVE NOT BEEN DISTRIBUTED IT CANNOT BE HELD THAT THE FRESH CREDIT OF RS. 58,53,972/- DURING THE YEAR HAVE BEEN EXPLAINED BY THE ASSE SSEE. IT IS TRUE THAT THE OPENING STOCK IN THIS ACCOUNT WAS RS. 44,03,814/- AND THE SALES D URING THE YEAR WAS RS. 61,96,292/- OF OPENING BALANCE SHOULD BE ADJUSTED AGAINST THE SALE S. THE RECEIPT OF RS. 58,53,972/- DURING THE YEAR CANNOT BE SAID TO HAVE BEEN EXPLAIN ED. EVEN IF, THE BENEFIT OF NETTING IS GIVEN TO THE ASSESSEE THEN 61,96,292 44,03,814= 1 7,92,478/- MAY BE ADJUSTED AGAINST THE CURRENT YEAR AS ADVANCES RECEIPT OUT OF RS. 58, 53,972/-. THE NET CASH IN FLOW DURING THE YEAR I.E. RS. 40,61,494/- SHOULD BE ADDED U/S 6 8 OF THE ACT AS UNEXPLAINED CASH CREDIT. WE DO NOT UNDERSTAND HOW THE LD. CIT(A) AFT ER RECORDING THE FACTS COMES TO CONCLUSION THAT THE ASSESSEE HAS DISCHARGED THE BUR DEN OF PROOF. THUS, ON THE FACTS OF THIS CASE, THIS ADDITION IN QUESTION U/S 68 IS REST ORED TO THE EXTENT OF RS. 40,61,494/-. 9. IN THE CASE OF BANI MUKHERJEE THE ASSESSING OFFI CER RECORDS THAT NO SUCH PERSON WAS AVAILABLE AT THE GIVEN ADDRESS. HERE ALSO EXCEPT F URNISHING OF PAN LEDGER ACCOUNTS ETC, NO CONFIRMATION OF THE TRANSACTION FROM THE PARTY I S FILED. DURING THE YEAR, THE ADVANCE RECEIPT IS RS. 22,43,150/-. THE SALES DISCLOSES IS RS. 37,78,880/-. AS NO DETAILS WHATSOEVER WAS FURNISHED BY THE ASSESSEE EXCEPT CO PY OF THE ACCOUNTS AND PAN NO., WE ARE OF THE OPINION THAT THE NET BALANCE IN THE ACCO UNT SHOULD BE TREATED AS UNEXPLAINED CASH CREDIT U/S 68. OPENING BALANCE OF RS. 15,35,73 0/- SHOULD BE ADJUSTED AGAINST THE CURRENT YEARS SALE OF RS. 74,993/-. AS REGARDS THE RECEIPT OF RS. 22,43,150/- BEING A CREDIT DURING THE YEAR, NO EXPLANATION WAS GIVEN B Y THE ASSESSEE. HENCE, THIS ADDITION U/S 68 IS HEREBY CONFIRMED. 5 ITA NO.2104/KOL/2014 SHRI PANCHANAN SETH A.YR .2010-11 5 10. AS REGARDS AKASH AROMA ESSENTIAL OIL COMPANY, R AJ & TRADING COMPANY, AS THERE NO CASH RECEIPTS DURING THE YEAR, NO ADDITION WAS W ARRANTED. IN VIEW OF THE ABOVE DISCUSSION, WE CONFIRM THE ADDITION TO THE TUNE OF RS. 40,61,494/- + RS. 22,43,150/- = TOTALING TO RS. 63,04,644/-, ON THE GROUND THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE CREDIT U/S 68 OF THE ACT. 11. GROUND NO. 2 IS AGAINST THE DELETION OF DISALLO WANCE OF EXPENSES OF RS. 3,05,900/-. THE LD. CIT(A) AS RESTRICTED THE DISALLOWANCE 20% O F THE EXPENSES. WE FIND THAT NO INFIRMITY IN THE SAME. THIS GROUND OF THE REVENUE I S DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED IN PART. ORDER PRONOUNCED IN THE COURT ON 12.01.2018 SD/- SD/- [A.T.VARKEY] [ J.SUDHAKA R REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 12.01.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ACIT, CIRCLE-40, KOLKATA, 18, RABINDRA SARANI, P ODDER COURT, 4 TH FLOOR, KOLKATA-700001. 2. SHRI PANCHANAN SETH, 25/4/1A, ANATH NATH DEB LAN E, KOLKATA-700037. 3..C.I.T.(A)- , KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S