ACIT, Circle-2, Burdwan, Burdwan V. M/s Tulasi Rice Mill, Burdwan

ITA 2188/KOL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2445 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 11-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANKAR HALDER
• Assessee Lawyers: BISWESWAR GHOSH
• Keywords: Gift; Source of fund
• Section: 133A; 133(6)

Judgement Text

ITA NO. 2188/KOL/2016 ASSESSMENT YEAR: 2011-2012 M/S. TULASI RICE MILL 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 2188/KOL/2016 ASSESSMENT YEAR: 2011-2012 ASSISTANT COMMISSIONER OF INCOME TAX,.............. ......................APPELLANT CIRCLE-2, BURDWAN, AAYAKAR BHAWAN, COURT COMPOUND, BURDWAN-713101 -VS.- M/S. TULASI RICE MILL,............................. ...................................RESPONDENT MONDALGRAM, BURDWAN, DIST. BURDWAN-713426 [PAN:AADFT3080G] APPEARANCES BY: SHRI SANKAR HALDER, JCIT, SR. D.R , FOR THE APPELLANT SHRI BISWESWAR GHOSH, ADVOCATE, FOR THE RESPONDEN T DATE OF CONCLUDING THE HEARING : AUGUST 06, 2019 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 04, 2019 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KOLKATA ZONE) :- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), BURDWAN DATED 30.08.2016. 2. THE MAIN ISSUE AS RAISED BY THE REVENUE IN GROUN DS NO. 1 TO 6 RELATES TO THE DELETION BY THE LD. CIT(APPEALS) OF THE ADDITION OF RS.1,86,98,218/- MADE BY THE ASSESSING OFFICER ON A CCOUNT OF EXCESS STOCK OF PADDY ALLEGEDLY FOUND DURING THE COURSE OF SURVE Y. 3. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM, WHICH IS ENGAGED IN THE BUSINESS OF RUNNING A RICE MILL. A S URVEY UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE AT VILL. & P.O. MANDALGRAM , DIST. BURDWAN ON ITA NO. 2188/KOL/2016 ASSESSMENT YEAR: 2011-2012 M/S. TULASI RICE MILL 2 03.02.2011. AFTER THE SURVEY, THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY THE ASSESSEE ON 29.09.20 11 DECLARING TOTAL INCOME OF RS.6,92,511/-. DURING THE COURSE OF SURVE Y, THE STOCK OF PADDY, ETC. WAS PHYSICALLY VERIFIED BY THE SURVEY TEAM AND DISCREPANCIES NOTICED THEREIN WERE REPORTED AS UNDER:- SL. NO. ITEM AS PER STATUTORY REGISTERS STOCK PHYSICALLY FOUND DISCREPANCIES A. PADDY 37,400 QTS. 53,602.80 QTS. 16202.80 QTS. B RICE 512 QTS. 1,000.00 QTS. 488.00 QTS. C. BROKEN RICE NIL 53.00 QTS. 53.00 QTS. D. RICE BRAN NIL 50.00 QTS. 50.00 QTS. E. GUNNY BAG NIL 18960 PCS. 18960 PCS SINCE THE INCOME ON ACCOUNT OF DISCREPANCIES IN STO CK FOUND DURING THE COURSE OF SURVEY REPRESENTING EXCESS STOCK WAS NOT OFFERED BY THE ASSESSEE IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO OFFE R ITS EXPLANATION IN THE MATTER. IN REPLY, THE METHOD ADOPTED BY THE SURVEY TEAM FOR PHYSICAL VERIFICATION OF STOCK WAS CHALLENGED BY THE ASSESSE E BY POINTING OUT VARIOUS DEFICIENCIES AND ANOMALIES. THE AVERAGE WEI GHT OF PADDY BAGS TAKEN BY THE SURVEY TEAM WHILE CALCULATING THE QUAN TITY OF STOCK OF PADDY, AS FOUND DURING THE COURSE OF SURVEY, WAS AL SO DISPUTED BY THE ASSESSEE. THE ASSESSEE ALSO PRODUCED A CERTIFICATE FROM A CHARTERED ENGINEER CLAIMING THAT THE CAPACITY OF ITS GODOWN W AS ONLY LIMITED TO STORE 55,000 BAGS OF 60 KGS. EACH. 4. THE SUBMISSIONS MADE BY THE ASSESSEE WERE NOT FO UND ACCEPTABLE BY THE ASSESSING OFFICER AND REJECTING THE SAME, HE MADE AN ADDITION OF RS.1,86,98,218/- TO THE TOTAL INCOME OF THE ASSESSE E ON ACCOUNT OF EXCESS STOCK FOUND DURING THE COURSE OF SURVEY ON THE BASI S OF THE FOLLOWING FINDINGS/OBSERVATIONS RECORDED BY HIM:- ITA NO. 2188/KOL/2016 ASSESSMENT YEAR: 2011-2012 M/S. TULASI RICE MILL 3 TO SUM UP, ASSESSE'S PLEA COULD NOT BE ACCEPTED AS (I) DURING THE COURSE OF SURVEY THE STOCK OF PADDY HAD BEEN TAKEN IN PRESENCE OF SRI ACHINTYA KESH, ONE OF THE PARTNERS OF THE FIRM WITH THE HELP OF HIS STAFF. (II) DURING TH E COURSE OF SURVEY AS WELL AS AT THE TIME OF DEPOSITION THEY NE VER PUT ANY OBJECTION REGARDING THE NUMBER OF PADDY BAGS STACKE D. (III) THE PURCHASE MEMO IMPOUNDED DURING THE COURSE OF SU RVEY VIDE TRM-L TO TRM- 49 SIMPLY STATES PURCHASE OF PAD DY OF 120 QNTLS, 90 QNTLS. ETC ALL IN ROUNDED OFF NUMERIC I.E. WITHOUT ANY FRACTION. SO QUESTION OF PADDY BAGS OF FIGURES LIKE 42KG, 45KG ETC ARE ASSESSE'S COOKED UP STORY A ND NOT SUPPORTED BY THE PURCHASE MEMOS. (IV) DURING THE CO URSE OF SURVEY NO SUCH DOCUMENT WERE FOUND IN THE MILL PREM ISES FROM WHERE IT COULD BE ASCERTAIN THAT PADDY BAGS OF VARIOUS WEIGHT HAVE BEEN PURCHASED. (V)ASSESSE'S SUBMISSION ON TAKING THE WEIGHT OF THE BAGS OF 42 KG, 45 KG. & 50 KG. IS BEREFT OF EVIDENCE WHICH ARE NOTHING BUT SURMISE WH EN CAUGHT UP IN THE HAND OF THE REVENUE AT SURVEY. (VI ) DURING THE SURVEY WHEN AUTHORISED OFFICER ASKED TO MAKE NE W STACKS OF PADDY OF VARIOUS WEIGHTS SERIALLY SRI ACHINTYA K ESH HAD DENIED WITH REMARK 'I DON'T THINK IT IS A FEASIBLE SOLUTION'(VII) FROM THE REGISTERS (I, II, III, IV) IMPOUNDED NO FRACTIONAL FIGURE OF EITHER PURCHASE OF PADDY OR MI LLING OF THE SAME COULD BE FOUND. (VIII) ASSESSEE ALSO FAILE D TO STATE HOW THEY HAVE ACCOUNTED THE FRACTIONAL WEIGHT OF PADDY(APART FROM 60 KG BAGS) AT THE TIME OF PURCHAS E AS WELL AS AT THE TIME OF MILLING NO SUCH EVIDENCE OF FRACTIONAL COUNTING WERE DETECTED AT THE TIME OF SURVEY NOR PR ODUCED BY THE ASSESSEE DURING THE COURSE OF HEARING. (IX) DURING THE COURSE OF SURVEY ASSESSEE HAS STATED THAT THERE WER E 50KGS & 60KGS BAG BUT AT THE TIME OF SCRUTINY PROCEEDINGS A SSESSEE HAS STATED THAT THE BAGS WERE 42 KG, 45 KG & 50 KG WHICH ARE THE OUTCOME OF THE AFTER-THOUGHT REALISING THE CONSEQUENCE OF THE REVENUE. ASSESSEE'S STATEMENT WE RE SELF- CONTRADICTORY DENYING THE ACTUAL FIGURE OF THE CLOS ING STOCK. EVERY TIME HE WAS MAKING A FLIP-FLOP STATEMENT WITH OUT ANY PROPER DOCUMENTATION. ASSESSEE HAD SUBMITTED A CERT IFICATE FROM MR. TARAK NATH GHOSH, CHARTERED ENGINEER WHO H AD SIGNED ON CERTIFICATE ON 18.03.2014 CERTIFYING THE CAPACITY OF THE GODOWN AT ONLY 55,000 BAGS EACH OF WEIGHT 60 KG . THE REPORT DOES NOT REFLECT THE ADDITIONAL SPACE BETWEE N TWO GODOWNS & THE MILLING LAWN. IF WE TAKE AS PER ASSES SEE'S CONTENTION OF 45 KG AVERAGE WEIGHT OF EACH PADDY BA G THE TOTAL WEIGHT BECOMES 55,000 X 45 KG I.E. 24,750 QNT LS. BUT AS PER ASSESSEE'S SUBMISSION DATED 18.03.2014 THE RICE MILL HAS 36,000 QNTLS OF RICE (I.E.8,000 BAG X 45KG + 54,000 BAG X 60KG.) SO THEREFORE CAPACITY OF 55,000 BAGS OF RICE OF 60KGS IS AGAIN ANOTHER FABRICATION. MOREOVER, THE REPORT OF THE CHARTERED ENGINEER SIGNED ON 18.03.2014 WHICH IS AL MOST 3 YEARS 1 MONTH LATER FROM THE DATE OF SURVEY AND DUR ING THE PERIOD WHO ASCERTAIN THAT THERE WAS NO ALTERATION O F THE SIZE OF GODOWNS. THEREFORE, I DECLINE TO ACCEPT THE ABOV E REPORT ITA NO. 2188/KOL/2016 ASSESSMENT YEAR: 2011-2012 M/S. TULASI RICE MILL 4 AS AN EVIDENCE. DURING THE COURSE OF SURVEY THE STO CK POSITION OF THE RICE MILL AS PER STATUTORY REGISTER AND AS PER PHYSICAL COUNTING ARE AS UNDER: SL. NO. ITEM AS PER STATUTORY REGISTERS STOCK PHYSICALLY FOUND DISCREPANCIES A. PADDY 37,400 QTS. 53,602.80 QTS. 16202.80 QTS. B RICE 512 QTS. 1,000.00 QTS. 488.00 QTS . C. BROKEN RICE NIL 53.00 QTS. 53. 00 QTS. D. RICE BRAN NIL 50.00 QTS. 50.00 QTS. E. GUNNY BAG NIL 18960 PCS. 18960 PCS THE EXCESS STOCK OF RICE AND BRAN SUPPORTS THE PURC HASE OF PADDY OUT OF BOOKS. THE CORRESPONDING YIELD OF PADD Y TO PRODUCE UNRECORDED PRODUCTION OF RICE AND BRAN CAN BE COMPUTED AS UNDER: THE EXCESS STOCK OF RICE AND BROKEN RICE OF 488 QUI NTAL AND 53 RESPECTIVELY TOTALLING TO 541 QUINTAL. YIELD OF PRODUCTION OF RICE AS SHOWN BY YOU IS 68%. THUS THEREFORE, EXC ESS STOCK OF RICE OF 541 QUINTAL REVEALS THE FACT THAT THE EX CESS STOCK OF RICE OF 541 QUINTAL WAS PRODUCED FROM MILLING OF 54 1 X 100/68 = 795.58 QUINTAL OF PADDY. EXCESS STOCK OF RICE BRAN FOUND = 50 QUINTAL RATE OF PRODUCTION OF RICE BRAN = 5%. THUS THE EXCE SS STOCK OF RICE BRAN WAS YIELDED BY MILLING PADDY OF 50 X 1 00/5 = 1000 QUINTAL OF PADDY. THEREFORE, UNDISCLOSED MILLING OF PADDY FOR YIELDIN G RICE AND BRAN ARE 795.58 QTS. AND 1000 QUINTAL RESPECTIVELY. CONSIDERING THE VALUE OF RICE AND BRAN, THE CASE LO WER OF THE TWO I.E. 795.58 QUINTAL OF PADDY IS TAKEN AS UNDISC LOSED PURCHASE FOR PRODUCTION OF UNDISCLOSED RICE. THEREF ORE, TOTAL UNDISCLOSED PADDY BECOMES 16998.38 QUINTAL (16202.80QUINTAL + 795.58 QUINTAL). THE VALUE OF UN DISCLOSED PADDY @ 1100/- PER QUINTAL BECOMES RS.L,86,98,218/- IS THE ASSESSEE'S UNDISCLOSED INCOME BY WAY OF INVESTMENTS TOWARDS UNDISCLOSED PURCHASE OF PADDY. 5. THE ADDITION MADE BY THE ASSESSING OFFICER ON AC COUNT OF THE ALLEGED EXCESS STOCK FOUND DURING THE COURSE OF SUR VEY WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT (APPEALS) AND THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER WERE REITERATED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(APPEALS). THE LD . CIT(APPEALS) FOUND MERIT IN THE SAID SUBMISSIONS OF THE ASSESSEE AND A FTER DISCUSSING THE SAME IN DETAIL IN HIS IMPUGNED ORDER, HE DELETED TH E ADDITION MADE BY THE ITA NO. 2188/KOL/2016 ASSESSMENT YEAR: 2011-2012 M/S. TULASI RICE MILL 5 ASSESSING OFFICER ON ACCOUNT OF EXCESS STOCK ALLEGE DLY FOUND DURING THE COURSE OF SURVEY FOR THE FOLLOWING REASONS:- FIRSTLY, THAT THE STOCK TAKING PROCEDURE, THOUGH N OT OUTLINED OR EXPLAINED BY THE AO, APPEARS TO BE UNRELIABLE AN D HAS NOT BEEN VALIDATED BY THE AO; AND SECONDLY, THE CERTIFI CATE PROVIDED BY THE APPELLANT TO ESTABLISH THE MAXIMUM STORAGE CAPACITY OF THE WAREHOUSES IN QUESTION HAS NOT BEEN REBUTTED BY THE AO AND THEREFORE DOES ESTABLISH CONCLUSIVELY THE MAXIMUM NUMBER OF BAGS, EACH OF 60KG THAT CAN BE ST ORED WITHIN THE SAID WAREHOUSES. THUS, THE FIGURE SUGGES TED BY THE SURVEY TEAM SEEMS TO BE COMPLETELY UNRELIABLE A ND THEREFORE TO ASSESS THE TRUE NUMBER OF BAGS, WITHIN THE PREMISES AT THE TIME OF SURVEY, SOME OTHER PROCEDUR E HAS TO BE EMPLOYED - DISCARDING THE RESULTS OF THE SURVEY. THE ONLY OTHER SOURCE THAT WE FIND BEFORE US IS LIES IN THE BOOKS AND PAPERS IMPOUNDED BY THE AO AS WELL AS THOSE AVAILAB LE WITH THE APPELLANT. DURING THE APPEAL PROCEEDINGS, THE APPELLANT HAS PR ODUCED COPIES OF THE SAID REGISTERS TO SHOW THE PROCUREMEN T OF PADDY. THE PROCUREMENT SEASON OF PADDY HAS BEEN SHO WN TO BE FROM NOVEMBER TO NOVEMBER AND THE REGISTERS REFL ECT THE PROCUREMENT OF PADDY DURING THE YEAR. HE HAS SUBMITTED THE MONTH-WISE PROCUREMENT OF PADDY FIGUR ES ALONG WITH FIGURES SHOWING THE PROCESSING OF SUCH P ADDY, THEREBY ARRIVING AT THE STOCK- FIGURE OF PADDY AS O N THE DATE OF SURVEY. THEREAFTER HE HAS GONE TO SHOW THE FIGURES OF PROCUREMENT AND PROCESSING RIGHT UP TO THE END O F THE FINANCIAL YEAR. THESE FIGURES AS WELL AS THE APPELL ANT'S SUBMISSIONS ARE AS UNDER: 'MAY WE PLEASE BRING TO YOUR KIND ATTENTION TO NOTE THE BELOW GIVEN TABLE REGARDING THE MONTH WISE STOCK DETAILS OF PADDY FROM THE PERIOD 0110412010 TILL 31103/2011 M/S. TULASI RICE MILL (A/Y 2011-12) QUANTITATIVE DETAILS STOCK OF PADDY FOR THE FINANCI AL YEAR 2010-11 MONTH OPENING STOCK PURCHASED TOTAL PROCESSED CLOSING STOCK APRIL 30060 19800 49860 13320 36540 MAY 36540 21420 57960 17100 40860 JUNE 40860 9180 50040 9540 40500 JULY 40500 11160 51660 11160 40500 AUG. 40500 9000 49500 13320 36180 SEPT. 36180 13500 49680 11520 38160 OCT. 38160 9400 47560 17760 29800 NOV. 29800 18000 47800 18000 29800 DEC. 29800 23000 52800 20000 32800 JAN. 32800 24600 57400 20000 37400 ITA NO. 2188/KOL/2016 ASSESSMENT YEAR: 2011-2012 M/S. TULASI RICE MILL 6 FEB. 37400 17600 55000 17600 37400 MARCH 37400 14400 51800 19400 32400 191060 188720 PLEASE NOTE THAT ON 31/01//2011, THE CLOSING STOCK OF PADDY WAS 37400 QUINTALS. THEN ON 01/02/2011 AND 02/02/2011, THERE WAS NEITHER ANY PURCHASE, NOR ANY PROCESSING AS CORROBORATED BY THE REGISTER, SO THE OPENING STOCK ON 03/02/2011, THAT IS ON THE DATE OF SURVEY, WAS 37400 QUINTALS AND ON THAT VERY DATE, 800 QUINTALS OF PADDY WAS PURCHASED AND PROCESSED AS WELL, THUS LEAVING T HE SAME 37400 QUINTALS AS THE CLOSING STACK ON 03/02/2011.' THE AO, IN IS ORDER HAS NOT DOUBTED ANY OF THESE FI GURES NOR HAS HE SHOWN ANY DEFECT IN THE BOOKS OF THE APPELLANT. IN THE ABSENCE OF ANY SUCH DEFECT AND WITHOUT REJECTING THE BOOK RESULTS OF THE APPELLANT, IT IS DIFFICULT TO SUSTAIN AN ADDITION BASED SOLELY ON TH E SURVEY RESULTS THAT APPEAR TO BE VERY UNRELIABLE AS DISCUSSED ABOVE. TH E POSITION OF PADDY STOCKS AS PER BOOKS HAS BEEN SHOWN TO BE AS DISCUSS ED EARLIER IN THIS ORDER. I CAN FIND NO INFIRMITY WITH THE POSITION OF PROCUREMENT OF PADDY FROM THE REGISTERS SHOWN. IT IS AMPLY CLEAR THAT TH E MATERIAL PRODUCED BY THE APPELLANT SHOWS THAT THE POSITION OF STOCK A S ON THE DATE OF SURVEY WAS CORRECTLY REFLECTED IN THE BOOKS AND NO DEFECT WAS FOUND IN THE REGISTERS OR BOOKS OF THE APPELLANT, MAKING THE DIFFERENCE ON ACCOUNT OF THE SURVEY UNSUSTAINABLE FOR THE REASONS DISCUSSED ABOVE. THE ADDITION, THEREFORE, ON ACCOUNT OF DIFFERENCE I N STOCK IS UNSUSTAINABLE AND IS ACCORDINGLY DELETED. 6. THE LD. D.R. SUBMITTED THAT THE STOCKS LYING IN THE GODOWN OF THE ASSESSEE WERE PHYSICALLY VERIFIED BY THE SURVEY TEA M IN THE PRESENCE OF ONE OF THE PARTNERS OF THE ASSESSEE-FIRM AND THERE WAS NO MATERIAL OBJECTION RAISED ON BEHALF OF THE ASSESSEE IN RESPE CT OF THE METHOD FOLLOWED BY THE SURVEY TEAM FOR PHYSICAL VERIFICATI ON THE STOCK. HE CONTENDED THAT THE STOCK ON SUCH PHYSICAL VERIFICAT ION WAS FOUND TO BE EXCESS AS REPORTED BY THE SURVEY TEAM AND THE EXPLA NATION OFFERED BY THE ASSESSEE IN RESPECT OF SUCH EXCESS STOCK WAS NOT AC CEPTED BY THE ASSESSING OFFICER GIVING COGENT REASONS. HE CONTEND ED THAT THE LD. CIT(APPEALS), HOWEVER, DID NOT APPRECIATE THE FINDI NGS AND OBSERVATIONS RECORDED BY THE ASSESSING OFFICER AND DELETED THE A DDITION MADE ON ACCOUNT OF EXCESS STOCK FOUND DURING THE COURSE OF SURVEY BY SIMPLY ACCEPTING THE SUBMISSIONS MADE ON BEHALF OF THE ASS ESSEE. ITA NO. 2188/KOL/2016 ASSESSMENT YEAR: 2011-2012 M/S. TULASI RICE MILL 7 7. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, SUBMITTED THAT A LETTER WAS FILED BY THE ASSESSEE WITH THE ASSESSI NG OFFICER IMMEDIATELY AFTER SURVEY ON 04.02.2011 POINTING OUT SPECIFICALL Y THE INFIRMITY IN THE STOCK VERIFICATION DONE BY THE SURVEY TEAM DURING T HE COURSE OF SURVEY. HE SUBMITTED THAT THE STOCK OF PADDY, ETC. WAS ENTI RELY STORED IN THE GODOWN OF THE ASSESSEE AND AS CERTIFIED BY THE CHAR TERED ACCOUNTANT, THE GODOWN OF THE ASSESSEE HAD A CAPACITY OF STORING ON LY 55,000 BAGS. HE CONTENDED THAT THE DISCREPANCIES POINTED OUT BY THE ASSESSEE VIDE LETTER DATED 04.02.2011 AS WELL AS DURING THE COURSE OF AS SESSMENT PROCEEDINGS IN THE STOCK VERIFIED DURING THE COURSE OF SURVEY, HOWEVER, WERE NOT CONSIDERED BY THE ASSESSING OFFICER WHILE MAKING TH E ADDITION ON ACCOUNT OF EXCESS STOCK. HE CONTENDED THAT THE LD. CIT(APPE ALS), ON THE OTHER HAND, CONSIDERED THE SAID DISCREPANCIES AS WELL AS THE OTHER SUBMISSIONS MADE BY THE ASSESSEE INCLUDING THE CERTIFICATE OF C HARTERED ENGINEER GIVING THE CAPACITY OF THE GODOWN IN THE RIGHT PERS PECTIVE AND ON APPRECIATION OF THE SAME, ALLOWED A RELIEF TO THE A SSESSEE ON THIS ISSUE, WHICH IS FULLY JUSTIFIED. HE ALSO INVITED OUR ATTEN TION TO THE DETAILED QUANTITATIVE ANALYSIS MADE BY THE LD. CIT(APPEALS) IN HIS IMPUGNED ORDER AND SUBMITTED THAT THERE BEING NO INFIRMITY POINTED OUT BY THE LD. D.R. IN THE SAID ANALYSIS, RELIEF GIVEN BY THE LD. CIT(APPE ALS) TO THE ASSESSEE ON THIS ISSUE DESERVES TO BE CONFIRMED. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT SPECIFIC DISCREPANCIES IN THE PROCEDURE FOLLOWED BY THE SURV EY TEAM FOR THE PHYSICAL VERIFICATION OF STOCK WERE POINTED OUT BY THE ASSESSEE IMMEDIATELY AFTER THE SURVEY VIDE LETTER DATED 04.0 2.2011 BUT THE SAME WERE NOT PROPERLY APPRECIATED BY THE ASSESSING OFFI CER. THE LD. CIT(APPEALS), HOWEVER, APPRECIATED THE SAME IN THE RIGHT PERSPECTIVE AND KEEPING IN VIEW THAT THE CASE OF THE ASSESSEE WAS D ULY SUPPORTED BY A CERTIFICATE GIVEN BY THE CHARTERED ENGINEER TO ESTA BLISH THE MAXIMUM STORAGE CAPACITY OF THE GODOWN OF THE ASSESSEE, HE RIGHTLY HELD THAT THE ITA NO. 2188/KOL/2016 ASSESSMENT YEAR: 2011-2012 M/S. TULASI RICE MILL 8 PROCEDURE ADOPTED BY THE SURVEY TEAM FOR PHYSICAL V ERIFICATION OF STOCK WAS UNRELIABLE. MOREOVER, THE LD. CIT(APPEALS) ALSO ANALYSED THE QUANTITATIVE DETAILS OF PADDY FURNISHED BY THE ASSE SSEE AND FOUND ON SUCH ANALYSIS THAT THE POSITION OF STOCK AS ON THE DATE OF SURVEY WAS CORRECTLY REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. HE ALSO NOTED THAT NO MATERIAL DEFECT WAS POINTED OUT BY THE ASSESSING OF FICER EITHER IN THE BOOKS OF ACCOUNT OF THE ASSESSEE OR THE STOCK REGIS TER REGULARLY MAINTAINED BY THE ASSESSEE AND HELD THAT IN THE ABS ENCE OF ANY SUCH DEFECT AND WITHOUT REJECTING THE BOOK RESULT OF THE ASSESSEE, THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE ALL EGED EXCESS STOCK FOUND DURING THE COURSE OF SURVEY WAS NOT SUSTAINAB LE. KEEPING IN VIEW ALL THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE D O NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) GIVIN G RELIEF TO THE ASSESSEE ON THIS ISSUE AND UPHOLDING THE SAME, WE DISMISS GR OUNDS NO. 1 TO 6 OF THE REVENUES APPEAL. 9. IN GROUND NO. 7, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(APPEALS) IN RESTRICTING THE ADDITION OF RS.1,89 ,600/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXCESS STOCK OF GUN NY BAGS TO RS.97,400/-. 10. DURING THE COURSE OF SURVEY, 18,960 GUNNY BAGS WERE FOUND ON PHYSICAL VERIFICATION. SINCE NO STOCK RECORD FOR TH E GUNNY BAGS WAS MAINTAINED BY THE ASSESSEE, THE ASSESSING OFFICER T REATED THE SAID GUNNY BAGS AS UNDISCLOSED INVESTMENT OF THE ASSESSEE AND VALUE THEREOF AMOUNTING TO RS.1,89,600/- CALCULATED AT THE RATE O F RS.10/- PER BAG WAS ADDED BY HIM TO THE TOTAL INCOME OF THE ASSESSEE. O N APPEAL, THE LD. CIT(APPEALS) RESTRICTED THE ADDITION MADE BY THE AS SESSING OFFICER ON THIS ISSUE TO RS.97,412/- FOR THE FOLLOWING REASONS GIVEN IN HIS IMPUGNED ORDER:- I HAVE EXAMINED THE MATTER CAREFULLY AND FIND THAT THE APPELLANT HAS NOT CONTESTED THE COUNTING OF THE GUN NY BAGS ON ANY TANGIBLE GROUNDS. HE HAS STATED THAT THE COUNTI NG IS WRONG; BUT WHY THIS IS SO, HAS NOT BEEN ELABORATED UPON. THE COUNTING OF GUNNY BAGS IS A STRAIGHT FORWARD EXERCI SE, NOT ITA NO. 2188/KOL/2016 ASSESSMENT YEAR: 2011-2012 M/S. TULASI RICE MILL 9 INVOLVING ANY INTRICACIES OF MAKING ESTIMATES ETC. THE APPELLANT, SAYS THAT HE DOES NOT MAINTAIN A REGISTE R FOR THE INVENTORY OF THESE GUNNY BAGS AND THAT THE OPENING STOCK OF THESE BAGS ON 1.4.2010 WAS 6281. THEREAFTER, HE TAL KS OF A PURCHASE FIGURE, DURING THE YEAR, OF 15,600 OF THE VERY SAME GUNNY BAGS. AFTER THIS, THERE IS A SALE FIGURE ALSO MENTIONED WHICH IS SUPPORTED BY THE BILLS FOR THE SUPPLY OF L EVY RICE IN WHICH THE SAID GUNNY BAGS ARE USED. IT APPEARS THAT THE APPELLANT HAS ACCOUNTED FOR 15481 GUNNY BAGS. THE A O HAS MADE NO COMMENT ON THIS. THEREFORE, WHILE UPHOLDING THE FIGURE OF GUNNY BAGS FOUND DURING THE SURVEY, I FIN D THAT OUT OF THESE, 15,481 HAVE BEEN ACCOUNTED FOR. THE REST, THAT IS, THE DIFFERENCE BETWEEN 18,960 BAGS FOUND DURING THE SUR VEY, AND THE CLOSING STOCK OF 15,481 BAGS AS PER BOOKS, REPR ESENTS THE UNACCOUNTED PURCHASE. THIS PURCHASE, OF COURSE HAS ADMITTEDLY BEEN MADE AT THE PRICE OF RS 28 PER GUNN Y BAG. THEREFORE, THE UNACCOUNTED PURCHASES WOULD AMOUNT T O RS.[(18960-15,481) X 28]. IT IS THIS AMOUNT THAT ST ANDS CONFIRMED, THE REST BEING DELETED. 11. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES O N THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. IT IS OBSERVED THAT EVEN THOUGH NO SEPARATE REGISTER WAS MAINTAINED BY THE ASSESSEE FOR THE INVENTORY OF GUNNY BAGS, THE OPENING STOCK OF THESE BAGS AS DECLARED BY THE ASSESSEE AS ON 01.04.2010 WAS 6,281. AFTER TAKI NG INTO CONSIDERATION THE SAID OPENING STOCK, THE PURCHASES MADE BY THE A SSESSEE AND THE QUANTITY OF GUNNY BAGS USED DURING THE YEAR UNDER C ONSIDERATION, THE STOCK OF GUNNY BAGS AVAILABLE WITH THE ASSESSEE WAS FOUND TO BE 15,481 BY THE LD. CIT(APPEALS). ON THE BASIS OF THIS WORKING, THE DIFFERENCE IN GUNNY BAGS FOUND DURING THE COURSE OF SURVEY WAS DETERMIN ED AT 3,479 BY THE LD. CIT(APPEALS) AND THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS ISSUE WAS RESTRICTED BY THE LD. CIT(APPEALS) TO RS.97,412 /- CALCULATED AT THE RATE OF RS.28/- PER GUNNY BAG. KEEPING IN VIEW ALL THESE FACTS AND FIGURES GIVEN BY THE LD. CIT(APPEALS), WHICH HAVE REMAINED UNDISPUTED BY THE LD. D.R., WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND UPHOLDING THE SAME, WE DISMISS GR OUND NO. 7 OF THE REVENUES APPEAL. ITA NO. 2188/KOL/2016 ASSESSMENT YEAR: 2011-2012 M/S. TULASI RICE MILL 10 12. IN GROUND NO. 8, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(APPEALS) IN RESTRICTING THE ADDITION OF RS.23,8 9,500/- TO RS.2,21,756/- ON ACCOUNT OF CAPITAL INTRODUCTION BY THE PARTNERS OF THE ASSESSEE-FIRM. 13. DURING THE YEAR UNDER CONSIDERATION, THE CAPITAL INTRODUCED BY THE PARTNERS OF THE ASSESSEE-FIRM WAS EXPLAINED AS GIFTS RECEIVED BY THE PARTNERS FROM THEIR RESPECTIVE MOTHERS. THE DETAILS OF SUCH GIFTS WERE FURNISHED AS UNDER:- (I) SMT. SIPRA KESH (A) FROM MOTHER RS.5,79,500/- (SALE OF OLD ORNAMENTS) (II) SMT. BABLI KESH (A) FROM MOTHER RS.5,91,000/- (SALE OF OLD ORNAMENTS (III) SMT. JAYASRI KESH (A) FROM MOTHER RS.5,93,000/ - (IV) SMT. RATNA KESH (A) FROM MOTHER RS.6,26,000/ - TOTAL RS.23,89,500/ - THE SOURCES OF FUNDS FOR GIVING GIFTS TO THE PARTNE RS IN THE HANDS OF THE MOTHERS WERE EXPLAINED AS SALE OF THEIR OLD ORNAMEN TS. THE COPIES OF SUPPORTING BILLS IN THIS REGARD WERE ALSO FURNISHED BY THE ASSESSEE. IN ORDER TO VERIFY THE SAID CLAIM OF SALE OF OLD ORNAM ENTS, AN INSPECTOR WAS DEPUTED BY THE ASSESSING OFFICER AND LETTERS UNDER SECTION 133(6) OF THE ACT WERE ALSO ISSUED TO THE CONCERNED PARTIES. FROM THE REPORT SUBMITTED BY THE ASSESSING OFFICER AS WELL AS THE SUBMISSION MADE BY THE ASSESSEE, THE ASSESSING OFFICER FOUND THAT ALL THE DONORS HAD SOLD GOLD ORNAMENTS TO VARIOUS PARTIES AT KOLKATA AND RECEIVED THE SALE PR OCEEDS ENTIRELY IN CASH IN THE FORM OF SMALL AMOUNTS. THE SAID DONORS ALSO FAILED TO APPEAR BEFORE THE ASSESSING OFFICER FOR EXAMINATION IN RESPONSE T O THE SUMMONS ISSUED UNDER SECTION 131. THEY, HOWEVER, SUBMITTED THE LET TERS STATING THE REASONS FOR THEIR NON-APPEARANCE AND CONFIRMED THE GIFTS GIVEN BY THEM TO THE RESPECTIVE PARTNERS. KEEPING IN VIEW ALL THE FACTS OF THE CASE, THE ITA NO. 2188/KOL/2016 ASSESSMENT YEAR: 2011-2012 M/S. TULASI RICE MILL 11 ASSESSING OFFICER HELD THAT THE GIFTS CLAIMED TO BE GIVEN BY THE SAID DONORS WERE NOT GENUINE AND THE AMOUNT OF SUCH GIFT S AGGREGATING TO RS.23,89,500/- WAS ADDED BY HIM TO THE TOTAL INCOME OF THE ASSESSEE. 14. THE ADDITION OF RS.23,89,500/- MADE BY THE ASSE SSING OFFICER ON ACCOUNT OF UNEXPLAINED CAPITAL CONTRIBUTION BY THE PARTNERS WAS CHALLENGED BY THE ASSESSEE-FIRM IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE, THE REMAND REPORT SUBMITTED BY THE ASSESS ING OFFICER AS WELL AS THE OTHER MATERIAL AVAILABLE ON RECORD, THE LD. CIT (APPEALS) RESTRICTED THE ADDITION OF RS.23,89,500/- MADE BY THE ASSESSEE ON THIS ISSUE TO RS.2,21,756/- FOR THE FOLLOWING REASONS GIVEN IN HI S IMPUGNED ORDER:- I HAVE EXAMINED THE ENTIRE ISSUE ALONG WITH THE MA TERIAL ON RECORD THE ISSUE HERE IS THAT OF THE SOURCE OF THE FUNDS THAT HAVE BEEN MADE AVAILABLE TO THE PARTNERS OF THE APP ELLANT FIRM THESE HAVE BEEN CLAIMED TO BE FROM GIFTS PROVIDED B Y THE MOTHERS OF THE PARTNERS, WHO IN TURN CLAIMED TO HAV E PROVIDED THE FUNDS THROUGH THE SALE OF OLD ORNAMENTS PRESENT WITH THEM. SINCE THERE ARE AFFIDAVITS FROM THE DONORS AND THER E IS A CLOSE RELATIONSHIP BETWEEN THE DONORS AND THE DONEES, THE TESTING OF THE BONA FIDES OF THESE TRANSACTIONS BOILS DOWN TO THE VERIFICATION OF THE FACT THAT THE DONORS ACTUALLY D ID SELL THE SAID GOLD. THIS WOULD PROVE THE CREDITWORTHINESS OF THE DONORS AT THE TIME OF MAKING THE GIFT. THEREAFTER, SINCE THER E IS A CLOSE RELATIONSHIP BETWEEN THE DONOR AND THE DONE, THE OT HER ASPECTS WOULD BE SATISFIED. IT IS WITH THIS OBJECT THAT THE INQUIRIES BY THE AO DURING ASSESSMENT PROCEEDINGS AND UNDER REMA ND WERE CONDUCTED. AFTER THE INQUIRIES, TILE REMAND REPORT SUBMITTED CONFIRMS THE IMPUGNED TRANSACTIONS IN ALL THE CASES , EXCEPT IN THE CASES OF SALES TO: A. NRIPENDRA JEWELERS - WHERE THE SHOP WAS FOUND TO BE CLOSED; B. PARAS JEWELERS: IN THIS CASE, EVEN THOUGH THE SH OP WAS LOCATED, NO ONE KNEW WHEN IT WOULD OPEN; C. HIRALAL AND SONS: HERE THE OWNERSHIP OF THE SHOP HAD CHANGED SOME TWO YEARS BACK. D. AK ENTERPRISES: NO REPLY HAD BEEN RECEIVED AT TH E TIME OF SENDING THE REPORT, THOUGH THE MANAGER HAD PROMISED TO SEND THE REPLY AS SOON AS POSSIBLE. E. S, JEWELERS: SAME AS ABOVE. ITA NO. 2188/KOL/2016 ASSESSMENT YEAR: 2011-2012 M/S. TULASI RICE MILL 12 THE APPELLANT, IN HIS REBUTTAL HAS STATED AS UNDER: A. IN THE CASE OF NRIPENDRA JEWELERS, EVEN THOUGH T HE SHOP WAS CLOSED ON THAT PARTICULAR DAY SINCE IT WAS THE SHOP CLOSING DAY ON WHICH THE ITI HAD REACHED THE SHOP, THE PURCHASE R, ON LEARNING FROM THE LOCALITY AND THE APPELLANT, OF TH IS ISSUE, SENT A REPLY TO THE AO. A COPY OF THE CONFIRMATION SENT TO THE AO WAS PRODUCED DURING APPEAL PROCEEDINGS. THE SAID CONFIR MATION SHOWS THE OFFICIAL RECEIPT SEAL OF THE AO, WHO ALSO ACCEPTED THE CONFIRMATION LETTER. THIS TRANSACTION, THEREFORE ST ANDS CONFIRMED. B. HIRALAL AND SONS: THE ONUS LAY UPON THE APPELLAN T TO PROVE THIS TRANSACTION. THIS AS NOT BEEN DONE BY HIM, AND THEREFORE THIS TRANSACTION CANNOT BE HELD TO BE CONFIRMED BY THE APPELLANT. C. AK ENTERPRISES: IN THIS CASE, THE MANAGERS HAD R ECEIVED THE 133(6) NOTICES AND PROMISED TO CONFIRM THE TRANSACT IONS. THIS CONFIRMATION WAS PROVIDED ON 27.5.2016 BY THE OFFIC E OF THE OFFICER CONDUCTING REMAND PROCEEDINGS. COPIES OF TH E CONFIRMATION LETTERS WERE ALSO FURNISHED DURING APP EAL PROCEEDINGS. THESE HAVE NOT BEEN OBJECTED TC' BY TH E AO AND CAN ACCORDINGLY BE ACCEPTED. D. S. JEWELERS: N THIS CASE ALSO, THE MANAGERS HAD RECEIVED THE 133(6) NOTICES AND PROMISED TO CONFIRM THE TRANSACT IONS. THIS CONFIRMATION WAS PROVIDED ON 27.5.2016 BY THE OFFIC E OF THE OFFICER CONDUCTING REMAND PROCEEDINGS. COPIES OF TH E CONFIRMATION LETTERS WERE ALSO FURNISHED DURING APP EAL PROCEEDINGS. THESE HAVE NOT BEEN OBJECTED TO BY THE AO AND CAN ACCORDINGLY BE ACCEPTED. E. AS REGARDS, THE PURCHASER OF GOLD NAMED, AKHOY K UMAR DUTTA AND SONS, THE AO DURING REMAND PROCEEDINGS, HAS NOT FOUND IT NECESSARY TO CONDUCT INQUIRIES AFTER THE CONFIRMATI ON LETTERS FURNISHED IN THIS CASE TO HIM, FROM THE SAID PARTY. SINCE NOTHING ADVERSE HAS BEEN FOUND ON RECORD EVEN AFTER THE CON DUCTING OF REMAND PROCEEDINGS, THE BONA FIDES OF THE TRANSACTI ON CAN HARDLY BE DOUBTED. THE SAME IS THEREFORE ACCEPTED. IN CONCLUSION, IT IS FOUND THAT THE ONLY TRANSACTIO N THAT DOES NOT STAND PROVED BY THE APPELLANT IS THAT OF THE SA LE OF GOLD TO HIRALAL AND SONS. THIS TRANSACTION HAS NOT BEEN PRO VED BY THE APPELLANT AND ADDITION IN THIS REGARD IS UPHELD. TH E REST OF THE TRANSACTIONS STAND PROVED AND BEING GENUINE AND THE ADDITIONS IN THEIR RESPECT STAND DELETED. 15. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES O N THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. IT IS OBSERVED THAT THE GIFTS IN QUESTION GIVEN TO THE PARTNERS WERE CO NFIRMED BY THE ITA NO. 2188/KOL/2016 ASSESSMENT YEAR: 2011-2012 M/S. TULASI RICE MILL 13 RESPECTIVE DONORS AND AFFIDAVITS TO THAT EFFECT WER E ALSO FILED BY THEM. THE SOURCE OF FUNDS UTILIZED FOR GIVING SUCH GIFTS WAS EXPLAINED AS THE SALE PROCEEDS OF GOLD ORNAMENTS BY THE CONCERNED DO NORS. KEEPING IN VIEW THE RELATIONSHIP BETWEEN THE DONORS AND THE DO NEES, THE LD. CIT(APPEALS) HELD THAT THE GIFTS COULD BE ACCEPTED AS GENUINE IF THE SOURCE EXPLAINED BY THE DONORS AS SALE OF GOLD ORNA MENTS WAS ESTABLISHED. HE, THEREFORE, REQUIRED THE ASSESSING OFFICER TO MAKE NECESSARY ENQUIRIES WITH THE CONCERNED PARTIES, WHO HAD CLAIMED TO HAVE PURCHASED THE GOLD ORNAMENTS FROM THE DONORS. AFTER TAKING INTO CONSIDERATION THE REMAND REPORT SUBMITTED BY THE AS SESSING OFFICER AFTER MAKING SUCH ENQUIRY AS WELL AS THE REJOINDER FILED BY THE ASSESSEE ON SUCH REMAND REPORT, THE LD. CIT(APPEALS) FOUND THAT THE ONLY TRANSACTION THAT DID NOT STAND PROVE WAS THAT OF THE SALE OF GOLD OR NAMENTS TO HIRALAL & SONS. HE ACCORDINGLY RESTRICTED THE ADDITION OF RS. 23,89,500/- MADE BY THE ASSESSING OFFICER ON THIS ISSUE TO RS.2,21,756/ -. KEEPING IN VIEW ALL THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE OUT COME OF THE ENQUIRY MADE WITH THE CONCERNED PARTIES, WE FIND NO INFIRMI TY IN THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ALLOWING A RELIEF OF RS.21,67,744/- TO THE ASSESSEE ON THIS ISSUE SINCE THE SOURCE OF FUNDS FO R GIVING THE GIFTS IN THE HANDS OF THE DONORS TO THAT EXTENT WAS DULY ESTABLI SHED. WE ACCORDINGLY UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) O N THIS ISSUE AND DISMISS GROUND NO. 8 OF THE REVENUES APPEAL. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 04 , 2019. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP ) JUDICIAL MEMBER V ICE-PRESIDENT (KZ) KOLKATA, THE 4 TH DAY OF SEPTEMBER, 2019 COPIES TO : (1) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, BURDWAN, AAYAKAR BHAWAN, COURT COMPOUND, BURDWAN-713101 ITA NO. 2188/KOL/2016 ASSESSMENT YEAR: 2011-2012 M/S. TULASI RICE MILL 14 (2) M/S. TULASI RICE MILL, MONDALGRAM, BURDWAN, DIST. BURDWAN-713426 (3) COMMISSIONER OF INCOME TAX (APPEALS), BURDWAN (4) COMMISSIONER OF INCOME TAX, KOLKATA- , KOLKATA; (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.