Seema Chatterjee, Hooghly V. ITO, Ward - 1(2), Hooghly, Hooghly

ITA 2174/KOL/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78421 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2014
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 07-12-2010
• Court: TRIBUNAL
• Department Lawyers: MD GIYASUDDIN ANSARI
• Assessee Lawyers: SOUMITRA CHOW DHURY
• Keywords: Bogus purchase; Business income
• Section: 40A(3); 143(3); 194C

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , /AND , ! ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA, AM] ' / I.T.A NO.2174/KOL/2010 #$ %&/ ASSESSMENT YEAR: 2005-06 SEEMA CHATTERJEE V INCOME-TAX OFFICER, WD-1(2 ), HOOGHLY (PAN: ACEPC7775L) (() /APPELLANT ) (*+()/ RESPONDENT ) DATE OF HEARING: 02.07.2014 DATE OF PRONOUNCEMENT: 17.07.2014 FOR THE APPELLANT: SHRI SOUMITRA CHOWDHURY FOR THE RESPONDENT: MD. GIYASUDDIN ANSARI, JCIT, SR. DR / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXXVI, KOLKATA IN APPEAL NO. 233/CIT(A)-XXXVI/KOL/37/07-08 DATED 18.10.2010. ASSESSMENT WAS FRAMED BY ITO, WARD-1(2), HOOGHLY U/S. 143(3) OF THE INCOME-TAX AC T, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2005-06 VIDE HIS ORDER DA TED 31.12.2007. 2. THE FIRST COMMON ISSUE IN THIS APPEAL OF ASSESSE E IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF AO BY MAKING THE DISALLOWA NCE OF CONSTRUCTION CHARGES FOR NON- DEDUCTION OF TDS U/S. 194C OF THE ACT BY INVOKING T HE PROVISIONS OF SECTION 40A(IA) OF THE ACT. FOR THIS, ASSESSEE HAS RAISED GROUND NOS. 1 A ND 5, WHICH READ AS UNDER: 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.13,11,21 2/- MADE BY THE AO BY WRONGLY INVOKING THE PROVISIONS OF SECTION 40(A)(IA). 5. 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.11,73,49 5/- MADE BY THE AO BY WRONGLY INVOKING THE PROVISIONS OF SECTION 40(A)(IA). 3 . WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FA CTS AND CIRCUMSTANCES OF THE CASE. IN RESPECT TO FIRST GROUND, THE ASSESSEE RECEIVED C ONTRACT WORK FROM MACKINTOSH BURN LTD. FOR CONSTRUCTION OF RCC BRIDGE OVER DRAINAGE CANAL AT M UKUNDPUR. THE ASSESSEE MADE PAYMENT OF RS.13,11,202/- FOR THIS CONTRACTUAL PAYMENTS BUT WI THOUT DEDUCTION OF TDS. CIT(A) CONFIRMED THE DISALLOWANCE BY OBSERVING AS UNDER: CONSIDERING THE ABOVE, I AM OF THE VIEW THAT THE A MOUNT OF RS.13,11,212/- PAID/PAYABLE TO M/S. SAILAJA SUPPLIERS WERE CONTRAC TUAL PAYMENTS AS REFERRED TO IN 2 ITA NO.2174/K/2010 SEEMA CHATTERJEE AY 2005-06 SECTION 40(A)(IA) R.W.S. 194C OF THE I. T. ACT. TH EREFORE, THE APPELLANT WAS REQUIRED TO DEDUCT TAX AT SOURCE FOR THE ABOVE PAYMENTS. SINCE ADMITTEDLY TDS WAS NOT MADE, AO WAS CORRECT IN DISALLOWING THE SAID EXPENDITURES/PA YMENTS AS PER PROVISIONS OF SECTIONS 40(A)(IA) R.W.S. 194C OF THE I. T. ACT. ACCORDINGL Y, THE DISALLOWANCE OF RS.13,11,212/- MADE BY THE ASSESSING OFFICER IS CONFIRMED. 4. AT THE TIME OF HEARING BEFORE US, LD. COUNSEL FO R THE ASSESSEE STATED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE FOR THE REASON THAT THE ASSESSEE IS AN INDIVIDUAL NAMELY, SMT. SEEMA CHATTERJEE AND ASSESS MENT YEAR INVOLVED IS 2005-06 AND HEREIN THE DISPUTE IS CONTRACTUAL PAYMENT MADE WITHOUT DED UCTION OF TDS U/S. 194C OF THE ACT. ACCORDING TO HIM, THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF COORDINATE BENCH IN ITA NO. 161/KOL/2010 FOR AY 2006-07 IN SHRI KISHAN MADH OGARIA VS. ADDL. COMMISSIONER OF INCOME-TAX, DATED 27.01.2014, WHEREIN THE HONBLE C ALCUTTA HIGH COURT DECISION IN THE CASE OF CIT VS. SHRI RINKU MALLICK, ITAT NO. 96 OF 2012 IN G.A. NO. 1368 OF 2012 DATED 15.06.2012 HAS BEEN CONSIDERED. COORDINATE BENCH IN ITA NO. 1 61/K/2010 VIDE PARA 6 HAS HELD AS UNDER: 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE IS AN INDIVIDU AL NAMELY SHRI KISHAN MADHOGARIA AND ASSESSMENT YEAR INVOLVED IS 2006-07. AT THE OU TSET, LD. COUNSEL FOR THE ASSESSEE FILED COPY OF THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. SHRI RINKU MALLICK, ITAT NO. 96 OF 2012 IN G.A. NO. 1368 OF 2012 DATED 15.06.2012 AND STATED THAT THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW WERE PLACED BEFORE THE HONBLE COURT: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE TRIBUNAL WAS JUSTIFIED IN LAW IN DELETING THE DISALLOWANCE UNDER SECTION 40(A)(IA) READ WITH SECTION 194C(2) ON THE GROUND THAT THE ASSESSEE IS AN INDIVIDUAL. II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THE ASSESSEE IS AN INDI VIDUAL DESPITE THE FACT THAT THE PROVISION OF SECTION 194C(1) IS APPLICABLE TO AN IN DIVIDUAL WITH EFFECT FROM 1.6.2007 WHICH IS CONTRARY TO THE ASSESSMENT YEAR I NVOLVED IN THE INSTANT CASE. AND THE HONBLE HIGH COURT DISMISSED THE REVENUES APPEAL BY OBSERVING AS UNDER: WE HAVE HEARD THE LD. COUNSEL SMT. SINHA (DAS DE), APPEARING FOR THE APPELLANT, AND WE HAVE GONE THROUGH THE IMPUGNED JU DGMENT AND ORDER. WE ARE OF THE VIEW THAT THIS APPEAL DOES NOT REQUIRE A DMISSION FOR HEARING AS THE APPLICABILITY OF LAW INVOLVED HEREIN IS ADMITTEDLY SETTLED. IT IS ADMITTED POSITION THAT THE MATTER RELATES TO THE ASSESSMENT YEAR 2006-07, WHEREAS SECTION 194C(1) HAS BEEN MADE APPLICABLE TO THE IND IVIDUAL ASSESSEE WITH EFFECT FROM 1.6.2007. THERE IS NO DISPUTE THAT THE RESPONDENT IS AN INDIVIDUAL ASSESSEE. CONSIDERING THE POSITION OF THE LAW, THE LEARNED TR IBUNAL HAS CONSISTENTLY HELD THAT SECTION 194C(1) CANNOT BE MADE APPLICABLE FOR THE ASSESSMENT YEAR 2006- 07. IN VIEW OF THE ABOVE PRINCIPLE LAID DOWN BY HONBLE JURISDICTIONAL HIGH COURT THAT THE PROVISIONS OF SECTION 194C(1) OF THE ACT HAS BEEN M ADE APPLICABLE TO THE INDIVIDUALS W.E.F. 01.06.2007, THIS PROVISIONS WILL NOT APPLY T O THE FACTS OF THE PRESENT CASE. 3 ITA NO.2174/K/2010 SEEMA CHATTERJEE AY 2005-06 RESPECTFULLY FOLLOWING THE DECISION CITED SUPRA, WE DISMISS THIS GROUND OF APPEAL OF REVENUE. AS THE ISSUE IS COVERED, WE DELETE THE DISALLOWANCE AND THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. 5. SIMILARLY, ISSUE IS EXACTLY IDENTICAL TO THE ABO VE ISSUE I.E. THE ASSESSEE MADE CONTRACTUAL PAYMENT AGGREGATING TO RS.11,73,495/- TO M/S. DEB E NGINEERING WITHOUT DEDUCTION OF TAX. ACCORDING TO AO, THE ASSESSEE HAS VIOLATED THE PROV ISION OF SECTION 194C OF THE ACT, THEREFORE, HE DISALLOWED THE CONTRACTUAL PAYMENT OF RS.11,73,4 95/- BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. ACCORDING TO AO, THE PAYMENT S ARE FALLING U/S. 194C OF THE ACT. THE CIT(A) ALSO CONFIRMED THE ACTION OF THE AO VIDE PAR A 10.1 PAGE 12, WHICH READS AS UNDER: 10.1. THE ISSUES INVOLVED HERE ARE OF SIMILAR NATU RE AS IN THE CASE OF M/S. SAILAJA SUPPLIERS, WHERE AOS FINDINGS, APPELLANTS VERSION , AOS REMAND REPORT AND APPELLANTS REPLY TO THE SAME HAS BEEN DISCUSSED I N THE PRECEDING PARAGRAPHS NO. 3.1, 4, 5 AND 6. THEREFORE, THE SAME IS NOT REPEATED. THIS ISSUE HAS BEEN DEALT BY ME AT PARAGRAPH 7.1 OF THIS ORDER. FOR THE SAME REASONS, I AM OF THE VIEW THAT THE AMOUNT OF RS.11,73,495/- PAID/PAYABLE TO M/S. DEV ENGINEERING WERE CONTRACTUAL PAYMENTS AS REFERRED TO IN SECTION 40(A)(IA) R.W.S. 194C OF THE I. T. ACT. THEREFORE, THE APPELLANT WAS REQUIRED TO DEDUCT TAX AT SOURCE FOR THE ABOVE PAYM ENTS. SINCE ADMITTEDLY TDS WAS NOT MADE, AO WAS CORRECT IN DISALLOWING THE SAID EXPEND ITURES/PAYMENTS AS PER PROVISIONS OF SECTIONS 40(A)(IA) R.W.S. 194C OF THE I. T. ACT. ACCORDINGLY, THE DISALLOWANCE OF RS.11,73,495/- MADE BY THE ASSESSING OFFICER IS CON FIRMED. AS WE HAVE ALREADY DISCUSSED THE FACTS IN THE ABOVE ISSUE AND FACTS BEING SIMILAR AND ISSUE BEING COVERED BY THE DECISION OF HONBLE JURISDICTI ONAL HIGH COURT IN THE CASE OF RINKU MALLICK, SUPRA, RESPECTFULLY FOLLOWING THE SAME, WE DELETE THE DISALLOWANCE AND THIS ISSUE OF ASSESSEES APPEAL IS ALSO ALLOWED. 6. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF AO IN MAKING ADDITION ON ACCOUNT OF BOGUS PURCHASES. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.2: 2. 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.10,59,19 2/- MADE ON ACCOUNT OF BOGUS PURCHASE. 7. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE HAS D EBITED PURCHASES OF RS.13,39,480/- IN THE BOOKS OF ACCOUNT AS PURCHASE FROM ONE SHRI DEBANGSH U BANERJEE, PROPRIETOR OF M/S. SAILAJA SUPPLIERS. HOWEVER, SHRI DEBANGSHU BANERJEE DENIED THE SALES MADE EXCEPT FOR THE SUM OF RS.3 LACS. THE CIT(A) AS WELL AS THE AO HAS NOTED THIS FACT THAT EVEN THE BOOKS OF ACCOUNT OF M/S. SHAILAJA SUPPLIERS WAS EXAMINED, WHICH SHOWS T HAT QUANTITATIVE DETAILS OF PURCHASES, SALES AND CONSUMPTION OF RAW MATERIAL BY THE ASSESSEE FRO M THIS PARTY IS AT RS.3 LACS ONLY. IN VIEW OF THESE FACTS THE CIT(A) CONFIRMED THE ACTION OF AO B Y OBSERVING AS UNDER: 4 ITA NO.2174/K/2010 SEEMA CHATTERJEE AY 2005-06 THE CLAIM OF THE AR OF THE APPELLANT THAT THE APPE LLANT WAS NOT GIVEN OPPORTUNITY TO CROSS EXAMINE SHRI BANERJEE IS ALSO NOT CORRECT AS THE AP PELLANT WAS SHOW CAUSED BY THE AO IN THIS REGARD AND SHE DID NOT AVAIL THE OPPORTUNITY O F CROSS EXAMINATION. FURTHER, IN REPLY TO AOS COMMENTS IN THE REMAND REPORT, THE AR SIMPL Y STATED THAT IT WAS QUITE POSSIBLE THAT THE VALUE OF PURCHASES AS MENTIONED B Y THE SUPPLIER MAY RELATE TO SOME OTHER PERIOD. IF THAT WAS THE CASE, IT WAS FOR HIM TO SU BMIT NECESSARY EVIDENCES SHOWING RECONCILIATION OF PURCHASES BOOKED BY THE APPELLANT IN THE BOOKS OF ACCOUNT. BUT EXPECTING A TYPED STATEMENT AND LEDGER EXTRACTS, NO SUCH DETAILS/EVIDENCES HAVE BEEN SUBMITTED. WITHOUT EVIDENCES, APPELLANTS SUBMISSI ON CANNOT BE RELIED UPON SPECIALLY WHEN THE SUPPLIER HAS CATEGORICALLY STATED THAT HE MADE TOTAL SALES TO THE APPELLANT FOR ABOUT RS.3,00,000/-. AFTER CONSIDERING THE FACTS A ND CIRCUMSTANCES, I AM OF THE OPINION THAT THE APPELLANT HAD INFLATED HER PURCHASES TO TH E TUNE OF RS.10,59,192/-. ACCORDINGLY, THE ADDITION OF RS.10,59,192/- IS CONFIRMED. AGGRIEVED, ASSESSEE CAME IN APPEAL BEFORE US. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE STATED THAT EVEN THOUGH THE PURCHASES ARE BOGUS THE ENTIRE PURCHASES CANNOT BE ADDED BECAUSE CORRESPOND ING SALES IS ALSO THERE. HE ACCORDINGLY, AGREED THAT A NET PROFIT RATE CAN BE APPLIED. ON Q UERY FROM THE BENCH, THE LD. SR. DR ALSO STATED THAT A REASONABLE RATE CAN BE APPLIED THAT W ILL SUFFICE THE MATTER. WE FIND THAT THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE IS REASONABLE THAT THE ENTIRE PURCHASES CANNOT BE ADDED BECAUSE CORRESPONDING SALE IS ALSO THERE. ACCORDINGLY, WE DIRECT THE AO TO COMPUTE THE NET PROFIT @ 10% ON THESE BOGUS PURCHASES. WE DIRECT ACCORDINGL Y. THIS ISSUE OF ASSESSEES APPEAL IS PARTLY ALLOWED. 9. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF RS.4,15,242/- MADE BY AO BY INVOKING TH E PROVISIONS OF SECTION 40A(3) OF THE ACT. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NOS. 3 AND 4: 3.FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN GIVING A PART RELIEF OF RS.22,000/- OU T OF THE TOTAL ADDITION OF RS.4,37,242/- MADE BY THE AO BY WRONGLY INVOKING THE PROVISIONS O F SECTION 40(A)(3). 4. THAT THE LD. CIT(A) OUGHT TO HAVE DELETED THE EN TIRE ADDITION RS.4,38,242/- MADE BY THE AO BY WRONGLY INVOKING THE PROVISIONS OF SECTI ON 40(A)(3). 10. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE HAD MADE PURCHASES TO THE TUNE OF RS.1,81,758/- FROM M/S. I. D. ENTERPRISES, A PROPRIETARY CONCERN OF SHRI RATAN DEY. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS EXAMINED ASSESSEES LEDGER A ND BANK ACCOUNT NO. CC-25990 WITH UBI, UTTARPARA BRANCH AND NOTED THAT THE ASSESSEE HAS MA DE TOTAL PAYMENT OF RS.6,19,000/- TO SHRI RATAN DEY BY WAY OF BEARER CHEQUE IN THE PREVIOUS YEAR. THE AO DISALLOWED A SUM OF RS.36,351/- BY INVOKING THE PROVISIONS OF SECTION 4 0A(3) OF THE ACT AND THE BALANCE PAYMENT WAS ADDED AS UNDISCLOSED CASH LOAN TO SHRI RATAN DE Y FOR AN AMOUNT OF RS.4,37,242/-. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO CONFIRMED THE ADDITION OF RS.4,15,242/- BY OBSERVING IN PARA 8.2 AS UNDER: 5 ITA NO.2174/K/2010 SEEMA CHATTERJEE AY 2005-06 8.2. SO THE APPELLANT HAS FURNISHED TWO ALTOGETHER DIFFERENT VERSIONS. THE EXCESS PAYMENT OF RS.4,15,242/- (AFTER RECONCILIATION) WAS FIRST CLAIMED AS PAYMENTS TOWARDS OUTSTANDING LABILITY EXPENSES AND SUBSEQUENTLY CLA IMED AS CASH WITHDRAWALS THROUGH SRI RATAN DEY, WITH WHOM APPELLANT WAS HAVING A CORDIAL RELATIONSHIP FOR THE PURPOSE OF CASH WITHDRAWALS. THE AR FURTHER SUBMITTED THAT A O HAD NOT OBTAINED ANY CONFIRMATION / EVIDENCE FROM SRI DEY IN THIS REGARD AND THE CASH WITHDRAWALS WERE DULY RECORDED IN THE CASH BOOK. HOWEVER, THE SAID CLAIM WAS NEVER MA DE BEFORE THE AO. ON THIS ISSUE, AO IN HIS REMAND REPORT HAS COMMENTED THAT CASH BOOK A ND RELEVANT LEDGER ACCOUNT HAVE BEEN VERIFIED AND IT IS SEEN THAT A SUM OF RS.20,00 0/- WAS CONSIDERED TWICE. THEREFORE, THE AMOUNT OF ADDITION ON THIS HEAD SHOULD BE RS.4,15,2 42/- INSTEAD OF RS.4,37,242/-. THE AR HAS RESPONDED TO THE REMAND REPORT STATING IN RESP ECT OF THESE GROUNDS, THE LD. AO IN HIS REMAND REPORT HAS ACCEPTED THE PLEA OF THE ASSE SSEE THAT CERTAIN FIGURES HAVE BEEN TAKEN TWICE. HOWEVER, AT PARAGRAPH 4 OF THE REMAND REPORT, THE LD. AO HAS WRONGLY TAKEN THE FIGURE CONSIDERED TWICE AS RS.20,000/- IN PLACE OF THE ACTUAL FIGURE OF RS.22,000/-. THUS IT IS QUITE CLEAR THAT THE APPELLANT HAS FAILE D TO DEFEND HER CLAIM. THE AR HAS NOT ADDUCED ANY EVIDENCE, EVEN AT THE TIME OF REMAND, T O SUBSTANTIATE EITHER OF THE CLAIMS. IN RESPONSE TO AOS OBSERVATION IN THE REMAND REPORT, HE COULD ONLY POINT OUT THAT A FIGURE OF RS.22,000/- WAS TAKEN TWICE BY THE AO TO ARRIVE AT THE TOTAL FIGURE OF RS.4,37,242/- (WHICH IS FOUND TO BE CORRECT). THEREFORE, ADDITIO N MADE ON THIS COUNT IS CONFIRMED TO THE EXTENT OF RS.4,15,242/-. AGGRIEVED, ASSESSEE CAME IN APPEAL BEFORE US. 11. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SHRI SOUMIT RA CHOWDHURY DREW OUR ATTENTION TO ASSESSEES PAPER BOOK PAGES 30 AND 31 WHEREBY AT PA GE 30 OF THE LEDGER COPY OF I. D. ENTERPRISES ACCOUNT IN ASSESSEES BOOKS IS GIVEN. AS PER THIS, THE TOTAL PURCHASES IS AT RS.1,81,758/-. HE ALSO DREW OUR ATTENTION TO PAGE 31 OF ASSESSEES PAPER BOOK BY VIRTUE OF WHICH THERE ARE BANK WITHDRAWAL TO THE EXTENT OF RS .5,97,000/-. ACCORDING TO HIM, THESE BANK WITHDRAWALS ARE MADE BY SHRI RATAN DEY AND HANDED O VER THE CASH TO THE ASSESSEE. ACCORDING TO LD. COUNSEL, SHRI RATAN DEY IS CLOSE ASSOCIATE O F THE ASSESSEE APART FROM RUNNING HIS OWN PROPRIETORSHIP CONCERN I.E. M/S. I. D. ENTERPRISES. WE HAVE GONE THROUGH PAGE 31 OF ASSESSEES PAPER BOOK AND THE TABLE SHOWING ANALYSING THE TRAN SACTIONS REFLECTED IN THE CASH BOOK RELATING TO SHRI RATAN DEY, PROPRIETOR OF M/S. I. D. ENTERPR ISES, WHO WITHDREW THIS AMOUNT AND THERE ARE DEPOSITS ALSO. AT THE BEST, THIS CAN BE TREATED AS PURCHASES AND A REASONABLE PROFIT CAN BE ESTIMATED @ 10%. WE ARE OF THE VIEW THAT THE SUM O F RS.37,241/- CAN ALSO BE TREATED AS PURCHASES OUT OF THE BOOKS OF ACCOUNT, WHICH IS SAL E OUT OF BOOKS OF ACCOUNT. A REASONABLE NET PROFIT @ 10% SHOULD BE ESTIMATED. WE DIRECT THE AO ACCORDINGLY. THIS ISSUE OF ASSESSEES APPEAL IS PARTLY ALLOWED. 12. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) CONFIRMING THE ESTIMATED ADDITION OF RS.2,58,300/- @ 25% OF THE PU RCHASES FOR A SUM OF RS.10,33,198/- FROM M/S. DEV ENGINEERS. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO. 6: 6 ITA NO.2174/K/2010 SEEMA CHATTERJEE AY 2005-06 6. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN GIVING A PART RELIEF OF RS.51,660/- OU T OF THE TOTAL ESTIMATED ADDITION OF RS.2,58,300/-, BEING 25% OF RS.10,33,198/- ON ACCOU NT OF PURCHASES FROM M/S. DEV ENGINEERS. 13. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO MADE ADDITION OF RS.2,58,300/- BEING 25% OF PURCHASES MADE FROM M/S. DEV ENGINEERS AS THE ASSESSEE FAILED TO PRODUCE PUR CHASE BILLS. WE FIND THAT THE AO ESTIMATED ON THE BASIS OF 25% OF DISALLOWANCE AND CIT(A) ALSO RESTRICTED THE DISALLOWANCE AT 20% BY ESTIMATING ON ASSUMPTIONS AND PRESUMPTIONS BY OBSER VING IN PARA 11.3 OF HIS APPELLATE ORDER AS UNDER: 11.3. IT IS APPARENT FROM THE ASSESSMENT ORDER THA T THE AO MADE THE ESTIMATION OF DISALLOWANCE IN A ROUTINE MANNER. HE DID NOT DISCU SS ABOUT THE NATURE AND AMOUNT OF THE PURCHASE BILLS WHICH WERE NOT PRODUCED BEFORE HIM. NON-EXISTENCE OF THE SUPPLIER IN THE GIVEN ADDRESS MAY PROMPT THE AO FOR DISALLOWANCE ON ESTIMATED BASIS BUT THAT ALONE CANNOT BE THE YARDSTICK. THE AO DID NOT MAKE QUANT ITATIVE STUDY OF PURCHASE AND CONSUMPTION OF MATERIALS TO ARRIVE AT ESTIMATED DIS ALLOWANCE OF 25% OF PURCHASES. AT THE SAME TIME, THE APPELLANT COULD NOT PRODUCE ANY NEW EVIDENCE, EXCEPT CLAIMING THAT THE DISALLOWANCE WAS EXCESSIVE. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE ISSUE, I AM OF THE OPINION THAT IT COULD MEET THE E ND OF JUSTICE IF THE ESTIMATION OF DISALLOWANCE IS RESTRICTED TO 20%. THE AO IS DIREC TED ACCORDINGLY. THE APPELLANT GETS RELIEF OF RS.51,660/-. WE FIND THAT THERE IS NO BASIS FOR MAKING SUCH DISA LLOWANCE BECAUSE THE AO HAS ACCEPTED THE PURCHASES AND PART PURCHASE CANNOT BE DISALLOWED WI THOUT ANY BASIS. AS THERE IS NO BASIS FOR THIS ADDITION, WE DELETE THE ADDITION AND THIS ISSU E IN ASSESSEES APPEAL IS ALLOWED. 14. IN THE RESULT APPEAL OF ASSESSEE IS PARTLY ALLO WED AS INDICATED ABOVE. 15. ORDER IS PRONOUNCED IN THE OPEN COURT ON 17.07. 2014. SD/- SD/- , ! , (SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 17TH JULY, 2014 -. #/0 1 JD.(SR.P.S.) 2 *3 4 3%5- COPY OF THE ORDER FORWARDED TO: 1 . () / APPELLANT MS. SEEMA CHATTERJEE, 91/1, J. K. STREE T, UTTARPARA, HOOGHLY-712258. 2 *+() / RESPONDENT ITO, WARD-1(2), HOOGHLY. 3 . # ( )/ THE CIT(A), KOLKATA 4. 5. # / CIT KOLKATA 3:; *# / DR, KOLKATA BENCHES, KOLKATA +3 */ TRUE COPY, #