M/s. Saha Enterprise, Hooghly V. ITO, Ward-2(3), Hooghly, Kolkata

ITA 2141/KOL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87675 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 26-11-2014
• Court: TRIBUNAL
• Department Lawyers: DEBASISH ROY
• Keywords: Unexplained cash credit
• Section: 143(3); 234B; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA, AM ] I.T.A NO. 2 1 41 /KOL/201 4 ASSESSMENT YEAR : 20 1 0 - 11 M/S. SAHA ENTERPRISE V S. INCOME - TAX OFFICER, WD - 2 ( 3 ), HOOGHLY (PAN:A BCFS3760J ) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 0 2 .0 2 .2015 DATE OF PRONOUNCEMENT: 06 .0 2 .2015 FOR THE APPELLANT: SHRI SOUMITRA CHOUDHURY, ADVOCATE FOR THE RESPONDENT: S HRI DEBASISH ROY, JCIT, DR ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT (A) - X XX V I , KOLKATA IN APPEAL NO. 2 52 / CIT(A) - XXXV I/ KOL/WD.2(3),HG/13 - 14 DATED 3 0 . 0 9 .201 4 . ASSESSMENT W AS FRAMED BY ITO, WARD - 2 ( 3 ) , HOOGHLY U/S. 143(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR AY 20 1 0 - 11 VIDE HIS ORDER DATED 30 . 03 .20 1 3 . 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF AO IN MAKING ADDITION OF RS.31,86,500/ - BEING UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NOS. 2, 3 AND 4: 2. FOR THAT ON THE FACTS OF THE CASE THE LD. CIT(A) WAS WRONG IN DITTOING THE ORDER OF THE A.O. AND CONFIRMING THE ADDITION OF RS.31,86,500/ - AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE I. T. ACT WHICH IS COMPLETELY ARBITRARY UNJUSTIFIED AND ILLEGAL AND SHOULD BE DELETED. 3.FOR THAT ON THE FACTS OF THE CASE THE LD. CIT(A) WAS WRONG IN NOT CONSIDERING THE FACT THAT ALL ENTRIES IN CASH BOOK & THEIR RESPECTIVE LEDGER PRODUCED ARE SUPPORTED BY C ONFIRMATION OF PARTIES AND THEIR IDENTITIES, THEREFORE, THE ADDITION OF RS. 31,86,500/ - AS UNEXPLAINED CASH CREDIT ON ACCOUNT OF ADVANCE MADE BY VARIOUS CUSTOMERS (FARMERS) WHICH IS COMPLETELY ARBITRARY UNJUSTIFIED AND BASELESS. 4.FOR THAT ON THE FACTS OF THE CASE THE LD. CIT(A) WAS WRONG IN NOT CONSIDERING THE FACT THAT THE ADVANCE MADE BY THE FARMERS FOR BOOKING OF POTATO SEEDS AND ALL THOSE PERSONS HAVE TAKEN DELIVERY OF POTATO SEEDS LATER ON AGAINST SALES BILLS, AS SUCH HIS FINDING IS COMPLETELY ARBI TRARY UNJUSTIFIED AND BASELESS. 2 ITA NO. 2141 /K/201 4 SAHA ENTERPRISE , AY 20 1 0 - 11 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE DERIVES INCOME FROM TRADING OF POTATOES AND POTATO SEEDS. IN THE FY 2009 - 10 RELEVANT TO AY 2010 - 11 THE ASSESSEE S CASE WAS ASSESSED U/S. 143(3) OF THE ACT. DURING THE COURSE OF HEARING, ASSESSEE PRODUCED THE BANK ACCOUNT NO.542701010050054 MAINTAINED WITH UNION BANK OF INDIA, DHANIAKHALI. FROM THIS BANK ACCOUNT STATEMENT, THE AO NOTICED THAT THERE ARE TOTAL DEPOSITS TO THE TUNE OF RS.44,56,300/ - DURING THE YEAR FROM 04.04.200 9 TO 31.07.2009. THE AO AFTER GIVING BENEFIT OF CLOSING STOCK OF POTATOES VALUED AT RS.6,20,760/ - , SUNDRY RECEIVABLE AT RS.3,82,884/ - AND CASH IN HAND RS.4,57,699/ - , WHICH COULD BE REALIZED INTO CASH, REQUIRED THE ASSESSEE TO EXPLAIN THE BALANCE CASH DEPO SITS OF RS.31,86,500/ - . THE ASSESSEE EXPLAINED THAT THESE ARE ADVANCE RECEIVED FROM THE CUSTOMERS, WHO ARE MAINLY FARMERS IN RESPECT TO PURCHASE OF POTATOES AND POTATO SEEDS. ACCORDING TO ASSESSEE, THESE ARE NOT CASH CREDIT BUT THESE ARE TRADE ADVANCE RE CEIVED FROM VARIOUS FARMERS. AS THE ASSESSEE COULD NOT PROVIDE DETAILS IN RESPECT TO TRADE CREDITORS HE MADE ADDITION OF UNEXPLAINED CASH CREDIT IN THE FORM OF BOGUS ADVANCE AT RS.31,86,500/ - . AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO CONFI RMED THE ADDITION BY OBSERVING IN PARA 7.1 AS UNDER: 7.1. ON ANALYZING THE ABOVE DECISIONS IN THE CONTEXT OF APPELLANTS CASE THE FOLLOWING CONCLUSION IS ARRIVED. (I) AS PER SECTION 68 OF THE I. T. ACT THE BURDEN IS CAST ON THE ASSESSEE TO PROVE THE CREDITS SHOWN IN THE BOOKS OF ACCOUNT. THE CREDITORS ALSO INCLUDE THE SO CALLED SUNDRY CREDITORS. IN THIS CASE BY MERELY GIVING THEIR NAME, WITHOUT ADDRESS OR OTHER DETAILS, WHICH WOULD HAVE ENABLED A.O., TO CROSS - VERIFY ASSESSEE'S CLAIM DOES NOT DISCHARGE HIS ONUS. THE ISSUE WAS OF CASH CREDIT. THE ONUS CAN BE DISCHARGED BY FURNISHING IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION. THE IDENTITY HAS NOT BEEN PROVE D IN ALL THE CASES. THE CREDITWORTHINESS HAS NOT BEEN PROVED IN ANY OF THE CASES, AS NO EVIDENCE OF THE SOURCES OF THE INCOME OF THE PERSONS OR CONFIRMATION FROM THE CREDITORS HAS BEEN FILED. GENUINENESS OF TRANSACTION HAS ALSO NOT BEEN PROVED IN ANY OF TH E CASES AS ALL THE TRANSACTIONS WERE ALLEGEDLY DONE IN CASH, THUS LEAVING NO AUDIT TRAIL AND NO CONFIRMATION FROM ANY OF THE PERSONS HAVE BEEN FILED. IN THE RESULT THE ENTIRE AMOUNT OF RS.31 ,86,500/ - SHOWN AS ADVANCE RECEIPT OF CASH FROM FARMERS AS DEPOSITED IN CASH BOOK IS CORRECTLY ADDED U/S 68 OF THE I. T. ACT. THE APPEAL ON THIS GROUND IS DISMISSED. AGGRIEVED, ASSESSEE CAME IN SECOND APPEAL BEFORE TRIBUNAL. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. ADMITTEDLY, ASSESSEE IS A TRADER IN POTATOES AND POTATO SEEDS. IT IS ALSO AN ADMITTED FACT THAT THE ASSESSEE IS MAKING SALES OF POTATOES AND POTATO SEEDS TO FARMERS OF 3 ITA NO. 2141 /K/201 4 SAHA ENTERPRISE , AY 20 1 0 - 11 THE AREA. THE ASSESSEE MADE CLAIM BEFORE AO AS WELL AS BEFORE CIT(A) THAT THE AMOUNT WAS RECEIVED BEING ADVANCE ON ACCOUNT OF SALE OF POTATO SEEDS TO THE FARMERS AND LATER ADJUSTED THE SAME WITH THE SALES WITHIN THE SAME YEAR AND THERE IS NO CARRY FORWARD CREDIT. ACCORDING TO ASSESSEE, TH ESE ARE MERELY A TRADE CREDITOR . ACCORDING TO ASSESSEE, IT IS CARRYING OUT ITS BUSINESS ACTIVITY FOR THE PARTICULAR ITEM DEALT IN FOR CARRYING OUT TRADING ACTIVITY. ACCORDING TO ASSESSEE, SOURCE OF SUPPLIES OF ITEMS, CATEGORY OF CUSTOMERS AND ACTIVITY OF BUSINESS INCLUDES PARTLY OUT OF POTATO SALE AND PARTLY OUT OF POTATO SEEDS BEING THE AMOUNTS RECEIVED AS ADVANCE FROM CUSTOMERS OF THE POTATO SEEDS AND SUCH DEPOSIT OF CASH INTO THE BANK ACCOUNT OF THE ASSESSEE HAS BEEN USED FOR MAKING ADVANCE PAYMENT TO THE SUPPLIERS OF POTATO SEEDS VARIOUS FARMERS FROM PUNJAB. THE ASSESSEE S BOOKS OF ACCOUNT ARE COMPLETE IN ALL RESPECT INCLUDING THE BILLS AND VOUCHERS FOR PURCHASE AND SALES. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS COULD NOT POINT OUT ANY DEF ECT IN THE SAME AND THIS PARTICULAR ADVANCE OF RS.31,86,500/ - IS ADJUSTED AGAINST THE SALES MADE BY THE ASSESSEE TO VARIOUS PARTIES AND FROM THE BANK ACCOUNT IT CAN ALSO BE VERIFIED THAT THE SAME IS USED FOR PURCHASE OF POTATOES AND POTATO SEEDS FROM PUNJ AB. LD. COUNSEL FOR THE ASSESSEE STATED THAT COMPLETE DETAILS WERE PRODUCED AND THIS BEING TRADE ADVANCE, CANNOT BE ADDED BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. WE FIND THAT THE PLEA OF ASSESSEE IS QUITE REASONABLE THAT THIS BEING TRADE ADV ANCE BY VERY NATURE OF ACTIVITY OF THE ASSESSEE AND THE SAME HAS BEEN ADJUSTED AGAINST THE SALES MADE TO VARIOUS PARTIES AND THE AREA PARTICULARLY FARMER COMMUNITY. THIS BEING THE NATURE, THESE ADVANCES ARE SURELY TRADE ADVANCES AND NOT CASH CREDIT AS ASS UMED BY AO AND UPHELD BY CIT(A). IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT TRADE ADVANCES CANNOT BE TREATED AS CASH CREDIT U/S. 68 OF THE ACT AND ADDITION MADE AND CONFIRMED BY LOWER AUTHORITIES IS DELETED. THIS GROUND OF APPE AL OF ASSESSEE IS ALLOWED. 5. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF RS.4,084/ - BEING ADVANCE ON ACCOUNT OF AMUSEMENT TAX. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO. 5: 5. FOR THAT ON THE FACTS OF THE CASE THE LD. CIT(A) WAS WRONG IN DITTOING THE ORDER OF THE AO AND CONFIRMING THE ADDITION OF RS.4,084/ - ON ACCOUNT OF ADVANCE AMUSEMENT OF TAX OF THE I. T. ACT WHICH IS COMPLETELY ARBITRARY UNJUSTIFIED AND ILLEGAL AND SHOULD BE DELETED. 4 ITA NO. 2141 /K/201 4 SAHA ENTERPRISE , AY 20 1 0 - 11 6. AT THE OUTSET, IT IS TO BE STATED THAT LD. COUNSEL FOR THE ASSESSEE MADE NO ARGUMENT QUA THIS ADDITION AND EVEN OTHERWISE THE ASSESSEE BEFORE CIT(A) ALSO DID NOT ARGUE ON THIS. THE ASSESSEE HAS DISCLOSED THIS AMOUNT OF RS.4,084/ - AS LOANS AND ADVANC E UNDER THE HEAD LOANS WITH REVENUE AUTHORITIES UNDER THE SUB HEAD ADVANCE OF AMUSEMENT TAX . IT IS NOT CLEAR FROM THE RECORDS THAT WHETHER THIS IS PAID OR NOT. ONCE THIS IS NOT PAID IT WILL NOT BE CLAIMED AS DEDUCTION AND THE ASSESSEE IS UNABLE TO PR OVE THAT THIS IS ADVANCE ON ACCOUNT OF AMUSEMENT TAX. AS THE ASSESSEE COULD NOT EXPLAIN NEITHER BEFORE LOWER AUTHORITIES NOR BEFORE US, WE CONFIRM THIS ADDITION. THIS GROUND OF APPEAL OF ASSESSEE IS DISMISSED. 7. THE NEXT GROUND IN RESPECT OF CHARGING OF INTEREST U/S. 234B AND 234C OF THE ACT. AS THIS IS CONSEQUENTIAL IN NATURE AO WILL RECALCULATE THE SAME ACCORDINGLY. 8 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED IN PART. 9 . ORDER IS PRONOUNCED IN THE OPEN COURT ON 06.02.2015 SD/ - SD / - ( SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED : 6TH FEBRUARY , 201 5 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . A PPELLANT SAHA ENTERPRISE, G. T. ROAD, CHINSURAH, HOOGHLY - 712101 . 2 RESPONDENT ITO, WARD - 2 ( 3 ) , HOOGHLY . 3 . THE CIT (A), KOLKATA 4. 5. CIT KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .