Shri Diwakar Singh, Kolkata V. ITO, Ward - 45(2), Kolkata, Kolkata

ITA 2139/KOL/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3067 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2013
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 29-11-2010
• Court: TRIBUNAL
• Department Lawyers: SNEHOTPAL DATTA
• Keywords: Bogus purchase; Unexplained investment; Unexplained expenditure; Depreciation; Peak credit

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE . . . . . . . . , !' /AND #! $'# , ) [BEFORE SHRI K. K. GUPTA, AM & SHRI MAHAVIR SINGH, JM] '% '% '% '% / I.T.A NO. 2139/KOL/2010 $&' !() $&' !() $&' !() $&' !()/ // / ASSESSMENT YEAR: 200 5- 0 6 SHRI DIWAKAR SINGH VS. INCOME-TAX OFFICER, WD-4 5(2), KOLKATA (PAN: AKTPS7391H) (+, /APPELLANT ) (-.+,/ RESPONDENT ) DATE OF HEARING: 12.04.2013 DATE OF PRONOUNCEMENT: 19.04.2013 FOR THE APPELLANT: SHRI SUBASH AGARWAL, ADVO CATE FOR THE RESPONDENT : SHRI SNEHOTPAL DATTA, SR. DR / / ORDER PER MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A) - XXX, KOLKATA IN APPEAL NO. 32/CIT(A)-XXX/WARD-45(2)/2007-08 DATED 09.04.2010. ASSESSMENT WAS FRAMED BY ITO, WARD-45(2), KOLKATA U/S. 143(3)(II) OF THE INCOME-T AX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2005-06 VIDE HIS ORDER DA TED 26.10.2007. 2. THE FIRST THREE ISSUES IN THIS APPEAL OF ASSESS EE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF RS.7,51,641/- ON ACCOUNT OF BOGUS PURCHASES, ADDITION OF RS.3,62,950/- ON ACCOUNT UNEXPLAINED EXPENDITURE AN D ADDITION OF RS.1,29,900/- ON ACCOUNT OF UNEXPLAINED INVESTMENT. FOR THIS, ASSESSEE HAS RAI SED FOLLOWING THREE GROUNDS I.E. GROUND NOS. 1 TO 3: 1. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.7,51,641 /- MADE BY THE AO ON ACCOUNT OF ALLEGED BOGUS PURCHASE. 2. FOR THAT ON THE FACT AND IN THE CICUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.3,62,950/- MADE BY TH E AO ON ACCOUNT OF ALLEGED UNEXPLAINED EXPENDITURE. 3. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.1,29,900 /- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED INVESTMENT. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS PR OPRIETOR OF M/S. KAMALA SINGH & ORS. HAVING SOURCE OF INCOME FROM TRADING OF CHARCOL AND INTEREST INCOME. FOR THE RELEVANT 2 ITA NO.2139/K/2010 SROI DIWAKAR SINGH, AY. 2005-06 ASSESSMENT YEAR, ASSESSEE FILED HIS RETURN OF INCOM E DECLARING TOTAL INCOME AT RS.1,04,510/- AND ASSESSMENT WAS COMPLETED BY AO AT RS.15,27,566/ -. THIS IS SECOND ROUND OF LITIGATION BEFORE ITAT AND CIT(A). THE FIRST THREE ADDITIONS ARE INTER-RELATED AND INTER-CONNECTED I.E. ADDITION OF RS.7,51,641/- ON ACCOUNT OF BOGUS PURCH ASES, ADDITION OF RS.3,62,950/- ON ACCOUNT UNEXPLAINED EXPENDITURE AND ADDITION OF RS.1,29,900 /- ON ACCOUNT OF UNEXPLAINED INVESTMENT. THE AO WHILE MAKING ADDITION OBSERVED THAT THE ASSE SSEE CLAIMED TO HAVE BEEN MADE PURCHASES OF RS.12,31,866/- FROM M/S. UMA CHARCOL BUT ON VERIFICATION IT IS FOUND THAT UMA CHARCOL HAS MADE SALE TO THE EXTENT OF RS.4,80,225/ - AND THEREBY DIFFERENCE OF RS.7,51,641/- WAS TREATED AS BOGUS PURCHASES. SIMILARLY, ACCORDI NG TO UMA CHARCOL, IT HAS RECEIVED PAYMENT OF RS.3,62,950/-, WHICH WAS NOT REFLECTED IN ASSESS EES BOOKS OF ACCOUNT AND THE SAME WAS ADDED AS UNEXPLAINED EXPENDITURE OF THE APPELLANT. FURTHER, THE AO ALSO DISALLOWED UNEXPLAINED DEPOSIT IN THE BANK ACCOUNT AT RS.1,29, 900/- MAINTAINED WITH ORIENTAL BANK OF COMMERCE, BARRABAZAR BRANCH, KOLKATA. THE CIT(A) A LSO CONFIRMED THE ACTION OF AO ON ALL THE THREE COUNTS. AGGRIEVED ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THERE IS DEFINITELY DIFFERENCE IN PURC HASES I.E. PURCHASES MADE FROM UMA CHARCOL AT RS.7,51,641/-. IT IS ALSO AN ADMITTED POSITION THAT THE ASSESSEE HAS NOT DISCLOSED PAYMENT MADE TO UMA CHARCOL AT RS.3,62,950/- AND DEPOSIT MA DE IN BANK ACCOUNT I.E. ORIENTAL BANK OF COMMERCE, BURRABAZAR BRANCH, KOLKATA AT RS.1,29,900 /-. LD. COUNSEL FOR THE ASSESSEE EXPLAINED THAT ASSESSEE USED TO PURCHASSE UNACCOUNT ED PURCHASES OUTSIDE THE BOOKS OF ACCOUNT ALSO AND THERE IS NO DISPUTE THAT IN THE STOCK REGI STER THERE IS DIFFERENCE OR IN THE BOOKS OF ACCOUNT THERE IS DIFFERENCE. IT MEANS THAT THE ASS ESSEE HAD MADE PURCHSASES WHETHER AT THE RATE DISCLOSED IN THE BOOKS OF ACCOUNT OR NOT I.E A VITA L QUESTION. THE ASSESSEE MIGHT HAVE GAINED MORE PROFITS FROM THE TRANSACTION CARRIED OUT FROM UNDISCLOSED PURCHASES MADE AT RS.7,51,641/- AND THE PROFIT MADE OUT OF THESE TRANSACTIONS THE A SSESSEE MIGHT HAVE DEPOSITED MONEY WITH UMA CHARCOL AT RS.3,62,950/- AND OUT OF THIS PROFIT ONLY THE ASSESSEE MIGHT HAVE DEPOSITED THE UNEXPLAINED DEPOSIT MADE IN THE BANK ACCOUNT OF ORI ENTAL BNK OF COMMERCE, BURRABAZAR BRANCH, KOLKATA AT RS.1,29,900/-. IT MEANS THAT SO ME CREDIT IS TO BE GIVEN TO THE ASSESSEE FOR MAKING UNACCOUNTED PURCHASE AND THERE IS NO DOUBT I N OUR MIND THAT THERE IS SOME EXPENDITURE RELATABLE TO THESE PURCHASES. IN ENTIRETY OF THE F ACTS, WE ARE OF THE VIEW THAT BOTH UNACCOUNTED PURCHASSES, WHICH MIGHT HAVE BEEN SOLD BY THE ASSES SEE IN CASE THERE IS UNEXPLAINED EXPENDITURE OF PAYMENT AS WELL AS UNEXPLAINED DEPOS IT IN THE BANK ACCOUNT. IT MEANS THAT IF WE TAKE BOTH THE SIDES OF BALANCE SHEET A PEAK CREDIT IS TO BE ADDED AT THE BEST. IN SUCH CIRCUMSTANCES, WE HAVE TO ESTIMATE THE PROFIT EARNE D FROM BOGUS PURCHASES WHICH WAS CONSEQUENTLY INVESTED IN MAKING PAYMENT TO UMA CHAR COL AS WELL AS FOR MAKING DEPOSIT IN THE 3 ITA NO.2139/K/2010 SROI DIWAKAR SINGH, AY. 2005-06 BANK ACCOUNT, WHICH WAS TREATED AS UNEXPLAINED DEPO SIT. IN ENTIRETY OF THE FACTS, WE ARE OF THE VIEW THAT A REASONABLE ESTIMATION OF RS.5 LAKH INCL UDING THE PROFIT EARNED FROM BOGUS PURCHASES AS WELL AS TO MEET OUT THE UNEXPLAINED EXPENDITURE AND UNEXPLAINED DEPOSIT IN BANK WILL MEET THE END OF JUSTICE. HENCE, WE DIRECT AO TO RECOMPU TE THE INCOME BY TAKING THE ADDITION OF THESE THREE ISSUES AT RS. 5 LAKH. THESE THREE ISSU ES OF THE ASSESSEE ARE PARTLY ALLOWED AS INDICATED ABOVE. 5. NEXT INTER-LINKED ISSUES RAISED BY WAY OF GROUND NOS. 4, 5 AND 6 ARE AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF RS. 25,000/- OUT OF ADDITION MADE BY AO AT RS.44,952/- UNDER THE HEAD MOTOR CAR EXPENSES, ADDITION OF R S.70,547/- UNDER THE HEAD CARRIAGE INWARD AND ALSO ADDITION OF RS.18,855/- UNDER THE HEAD CA RRIAGE OUTWARD. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO DISALLOWED 50% OF THE EXPENSES ON MOTOR CAR AND DEPRECIATION AT RS.44,952/- AND CIT(A) DISALLOWED AT RS.25,000/- TH EREBY ALLOWING RELIEF OF RS.19,952/-. IN RESPECT TO CARRIAGE OUTWARD EXPENSES AND CARRIAGE I NWARD EXPENSES THE AO HAS DISALLOWED 20% AND 10% RESPECTIVELY. IN RESPECT TO CARRIAGE INWAR D EXPENSES, WE ARE OF THE VIEW THAT THE CIT(A) HAS JUST RIGHTLY CONFIRMED THE ADDITION AT 1 0%. IN RESPECT TO CARRIAGE OUTWARD EXPENSES AND MOTOR CAR EXPENSES, THE DISALLOWANCE SHOULD NOT BE MORE THAN 10%. WE DIRECT ACCORDINGLY. APPEAL OF ASSESSEE IS PARTLY ALLOWED. 7. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLO WED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 19.04.2013 SD/- SD/- . . . . . . . . , #! $'# #! $'# #! $'# #! $'# , (K. K. GUPTA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( 0 0 0 0) )) ) DATED : 19TH APRIL, 2013 !12 $&34 $5! JD.(SR.P.S.) 4 ITA NO.2139/K/2010 SROI DIWAKAR SINGH, AY. 2005-06 / 6 -$$7 87(9- COPY OF THE ORDER FORWARDED TO: 1 . +, / APPELLANT SHRI DIWAKAR SINGH, PROP. KAMALA SINGH & ORS. 51, NALINI SETH ROAD, KOLKATA-7. 2 -.+, / RESPONDENT- ITO, WARD-45(2), KOLKATA. . 3 . $/& ( )/ THE CIT(A), KOLKATA 4. 5. $/& / CIT KOLKATA 7!>$ -$& / DR, KOLKATA BENCHES, KOLKATA .7 -$/ TRUE COPY, /&?/ BY ORDER, # '4 /ASSTT. REGISTRAR .