Mayank Kumar Jain, Siliguri V. D.C.I.T.,Circle-2, Siliguri

ITA 220/KOL/2020

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0882 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 20-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Set aside
• Section: 143(3); 133(6)

Judgement Text

ITA NO. 220/KOL/2020 ASSESSMENT YEAR: 2015-2016 MAYANK KUMAR JAIN 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA D BENCH, KOLKATA [VIRTUAL COURT HEARING] BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT & SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER I.T.A. NO. 220/KOL/2020 ASSESSMENT YEAR: 2015-2016 MAYANK KUMAR JAIN,................................. .............................APPELLANT NEELKAMAL APARTMENT, PRANAMI MANDIR ROAD, SILIGURI-734001 [PAN: AAPPJ3410Q] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. .................RESPONDENT CIRCLE-2, SILIGURI, MATIGARA, AAYAKAR BHAWAN, PARIBAHAN NAGAR, SILIGURI-734101 APPEARANCES BY: SHRI S.M. SURANA, ADVOCATE, FOR THE APPELLANT SHRI JAYANTA KHANRA, JCIT, D.R., FOR THE RESPONDEN T DATE OF CONCLUDING THE HEARING : JUNE 09, 2020 DATE OF PRONOUNCING THE ORDER : JUNE 09, 2020 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), SILIGURI DATE D 23.08.2019, WHEREBY HE DISMISSED THE APPEAL OF THE ASSESSEE. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO WAS CARRYING ON THE BUSINESS AS A CIVIL CONTRACTOR DURING THE YE AR UNDER CONSIDERATION UNDER THE NAME OF HIS PROPRIETARY CONCERN M/S. BUIL DERS INDIA UPTO 15.02.2015. THE SAID PROPRIETARY CONCERN WAS STATED TO BE CONVERTED INTO A PARTNERSHIP FIRM W.E.F. 16.02.2015 AND THE RETURN OF INCOME OF THE SAID FIRM FOR THE YEAR UNDER CONSIDERATION WAS CLAIMED T O BE SEPARATELY FILED. IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CO NSIDERATION ON ITA NO. 220/KOL/2020 ASSESSMENT YEAR: 2015-2016 MAYANK KUMAR JAIN 2 31.03.2016 DECLARING TOTAL INCOME OF RS.16,63,850/- , THE ASSESSEE HAD DECLARED THE PROFIT OF HIS PROPRIETARY BUSINESS OF CONTRACTING FOR THE PERIOD FROM 01.04.2014 TO 15.02.2015. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE, HOWEVER, FAILED TO PRODU CE ANY EVIDENCE TO SHOW THE CONVERSION OF HIS PROPRIETARY CONCERN INTO PARTNERSHIP FIRM W.E.F. 16.02.2015 AS CLAIMED. IN ORDER TO VERIFY TH E BALANCES OF CERTAIN CREDITORS APPEARING IN THE BALANCE-SHEET OF THE ASS ESSEE, NOTICES UNDER SECTION 133(6) OF THE INCOME TAX ACT, 1961 WERE ISS UED BY THE ASSESSING OFFICER. AS NOTED BY THE ASSESSING OFFICER IN THE A SSESSMENT ORDER, SOME OF THE SAID NOTICES WERE RETURNED UN-SERVED WHILE T HE REPLY RECEIVED FROM TWO PARTIES REVEALED SOME DIFFERENCES AS UNDER:- NAME OF THE CREDITORS BALANCE AS PER BOOKS BALANCE AS PER PARTY DIFFERENCE M/S. SHREE BALAJI BRICKS FIELD RS.12,78,169/ - NOTICE RETURNED RS.12,78,169/ - M/S. RAMSARUP UTPADAK RS. 5,15,631/ - NOTICE RETURNED RS. 5,15,631/ - M/S. NEW SILIGURI BUILDERS RS. 3,07,800/ - NOTICE RETURNED RS. 3,07,800/ - M/S. SHIV STEELS RS. 4,05,644/ - NIL RS. 4,05,644/ - M/S. JINDAL TRADERS RS.29,18,218/ - RS.27,40,968/ - RS. 1,77,250/ - TOTAL RS.26,84,494/ - THE AFORESAID ADVERSE FINDINGS OF HIS ENQUIRY CONDU CTED BY THE ASSESSING OFFICER WERE CONFRONTED TO THE ASSESSEE AND AN OPPO RTUNITY WAS GIVEN TO THE ASSESSEE TO EXPLAIN/RECONCILE THE SAME. THE ASS ESSEE, HOWEVER, FAILED TO OFFER ANY EXPLANATION IN ORDER TO RECONCILE THE DIFFERENCE POINTED OUT BY THE ASSESSING OFFICER. THE SAID DIFFERENCE AMOUN TING TO RS.26,84,494/- WAS ACCORDINGLY TREATED BY THE ASSESSING OFFICER AS UNEXPLAINED AND AN ADDITION TO THAT EXTENT WAS MADE BY HIM TO THE TOTA L INCOME OF THE ASSESSEE. THE ENQUIRY CONDUCTED BY THE ASSESSING OF FICER DIRECTLY FROM M/S. SHYAM STEEL INDUSTRIES LIMITED REVEALED THAT T HE ASSESSEE HAD SHOWN TOTAL PURCHASES OF RS.62,91,755/- AS MADE FRO M THE SAID PARTY, WHILE THE SALES TO THE ASSESSEE AS SHOWN BY THE SAI D PARTY WERE TO THE TUNE OF RS.1,96,36,982/-. IN THE ABSENCE OF ANY SAT ISFACTORY EXPLANATION ITA NO. 220/KOL/2020 ASSESSMENT YEAR: 2015-2016 MAYANK KUMAR JAIN 3 FORTHCOMING FROM THE ASSESSEE REGARDING THE SAID DI FFERENCE OF RS.1,33,45,227/-, THE ASSESSING OFFICER TREATED THE SAME AS UNACCOUNTED PURCHASES AND NET PROFIT OF RS.4,11,032/- CALCULATE D @ 3.08% WAS ADDED BY HIM TO THE TOTAL INCOME OF THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FAILED TO PROV E THE CREDITWORTHINESS OF THE TWO CREDITORS NAMELY SMT. B ELA AGARWAL AND SHRI PRAMOD KUMAR FROM WHOM LOANS OF RS.13,25,000/- AND RS.3,00,000/- RESPECTIVELY WERE TAKEN DURING THE YEAR UNDER CONSI DERATION. THE ASSESSING OFFICER, THEREFORE, TREATED THE SAID AMOU NTS AS UNEXPLAINED CASH CREDIT AND AN ADDITION OF RS.16,25,000/- MADE BY HIM TO THE TOTAL INCOME OF THE ASSESSEE. AS NOTICED BY THE ASSESSING OFFICER FROM THE RELEVANT FORM NO. 26AS, THE ASSESSEE HAD NOT ACCOUN TED FOR THE CONTRACT RECEIPTS OF RS.23,25,460/-, INTEREST OF RS.4,46,675 /- AND RENT OF RS.1,79,955/-. THE SAID AMOUNT AGGREGATING TO RS.29 ,52,090/- ACCORDINGLY WAS TREATED BY THE ASSESSING OFFICER AS UNDISCLOSED INCOME OF THE ASSESSEE AND AN ADDITION TO THAT EXTENT WAS ALSO MA DE BY HIM TO THE TOTAL INCOME OF THE ASSESSEE. THE TOTAL INCOME OF THE ASS ESSEE FOR THE YEAR UNDER CONSIDERATION ACCORDINGLY WAS DETERMINED BY T HE ASSESSING OFFICER AT RS.93,36,466/- IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 29.12.2017. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE LD. CIT(APPEALS) CHALLENGING ALL THE FOUR ADDITIONS MAD E BY THE ASSESSING OFFICER TO HIS TOTAL INCOME AND IN THE ABSENCE OF S ATISFACTORY COMPLIANCE ON THE PART OF THE ASSESSEE, THE LD. CIT(APPEALS) D ISMISSED THE APPEAL OF THE ASSESESE VIDE HIS APPELLATE ORDER DATED 23.08.2 019 PASSED EX-PARTE THEREBY CONFIRMING ALL THE FOUR ADDITIONS MADE BY T HE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE BY OBSERVING THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO RECONCILE/EXPLAIN THE D IFFERENCE AND ANOMALIES POINTED OUT BY THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEA L BEFORE THE TRIBUNAL. ITA NO. 220/KOL/2020 ASSESSMENT YEAR: 2015-2016 MAYANK KUMAR JAIN 4 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS SUBMI TTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE PROPRIETARY CONCERN OF THE AS SESSEE WAS CONVERTED INTO A PARTNERSHIP FIRM W.E.F. 16.02.2015 AND THE P ROFIT EARNED BY THE SAID FIRM FROM THE BUSINESS OF CONTRACTING FOR THE PERIO D 16.02.2015 TO 31.03.2015 WAS SEPARATELY DECLARED IN THE RETURN OF INCOME FILED BY THE SAID PARTNERSHIP FIRM FOR THE YEAR UNDER CONSIDERAT ION I.E. A.Y. 2015-16. INSOFAR AS THE PROFIT OF THE CONTRACTING BUSINESS C ARRIED ON BY THE PROPRIETARY CONCERN OF THE ASSESSEE FOR THE PERIOD 01.04.2014 TO 15.02.2015, THE SAME WAS DECLARED BY THE ASSESSEE I N HIS RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION IN TH E INDIVIDUAL CAPACITY AND THE INCOME SO DECLARED WAS TAKEN AS THE STARTIN G POINT BY THE ASSESSING OFFICER FOR COMPUTING THE TOTAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IN THE ORDER PASSED UNDER SECTION 143(3). AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE CONTRACTING BUSINESS CARRIED ON BY THE ASSESSEE IN THE NAME OF HIS PROPR IETARY CONCERN THUS WAS CLOSED ON 15.02.2015 AND THE SAME WAS TAKEN OVE R AND CONTINUED BY THE PARTNERSHIP FIRM. ON THE BASIS OF THE BOOKS OF ACCOUNT SEPARATELY MAINTAINED FOR HIS PROPRIETARY CONCERN, PROFIT & LO SS ACCOUNT AND BALANCE-SHEET WERE PREPARED BY THE ASSESSEE FOR THE PERIOD 01.04.2014 TO 15.02.2015 AND THE SAME WERE DULY FURNISHED ALONG W ITH THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION. AS R IGHTLY POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, THE BALANCES REFL ECTED IN THE SAID BALANCE-SHEET BELONGING TO THE PROPRIETARY CONCERN AS ON 15.02.2015 WERE ATTEMPTED TO BE CONFIRMED/VERIFIED BY THE ASSE SSING OFFICER WITH THE CORRESPONDING BALANCES OF THE CONCERNED PARTIES AS ON 31.03.2015. SIMILARLY HE MADE A MISTAKE OF COMPARING THE FIGURE S REFLECTED IN THE PROFIT & LOSS ACCOUNT OF THE PROPRIETARY CONCERN FO R THE PERIOD 01.04.2015 TO 15.02.2015 WITH THE FIGURES REFLECTED IN THE FORM NO. 26AS FOR THE ENTIRE YEAR WHICH INCLUDED THE FIGURES RELA TED TO PROPRIETARY CONCERN AS WELL AS THE PARTNERSHIP FIRM. THE LD. CO UNSEL FOR THE ASSESSEE ITA NO. 220/KOL/2020 ASSESSMENT YEAR: 2015-2016 MAYANK KUMAR JAIN 5 HAS CONTENDED THAT THERE IS THUS A FALLACY IN THE V ERY BASIS ADOPTED BY THE ASSESSING OFFICER WHILE MAKING ALL THE FOUR ADDITIO NS ON ACCOUNT OF UNEXPLAINED OR UN-RECONCILED DIFFERENCES AND URGED THAT THE MATTER MAY BE SENT BACK TO THE ASSESSING OFFICER SO AS TO GIVE THE ASSESSEE AN OPPORTUNITY TO EXPLAIN/RECONCILE THE RELEVANT FIGUR ES RELATING TO THE PROPRIETARY CONCERN AS ON 15.02.2015 WITH THAT OF T HE BALANCES APPEARING IN THE BOOKS OF THE CONCERNED PARTIES. KEEPING IN V IEW THE SUBMISSION MADE BY THE LD. COUNSEL FOR THE ASSESSEE IN THE LIG HT OF THE FACTS AND CIRCUMSTANCES OF THE CASE, EVEN THE LD. D.R. HAS AG REED THAT THE MATTER CAN APPROPRIATELY GO BACK TO THE ASSESSING OFFICER FOR PROPER VERIFICATION. AS REGARDS THE IMPUGNED ORDER PASSED BY THE LD. CIT(AP PEALS) EX-PARTE, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT NO NOTICE OF HEARING WHATSOEVER WAS RECEIVED BY THE ASSESSEE FROM THE LD . CIT(APPEALS), WHICH RESULTED IN NON-COMPLIANCE ON THE PART OF THE ASSES SEE BEFORE THE LD. CIT(APPEALS). WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT(APPEALS) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR MAKING THE ASSESSMENT AFRESH PROPERLY ON THE BA SIS OF FACTS AND FIGURES RELATING TO THE PROPRIETARY CONCERN OF THE ASSESSEE AFTER GIVING THE ASSESSEE PROPER AND SUFFICIENT OPPORTUNITY OF RECON CILING/EXPLAINING THE DIFFERENCES, IF ANY, WITH THE BALANCES OF THE CONCE RNED PARTIES. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 09, 2020 . SD/- SD/- (SATBEER SINGH GODARA) (P.M. JAGTAP) JUDICIAL MEMBER VIC E-PRESIDENT) KOLKATA, THE 9 TH DAY OF JUNE, 2020 COPIES TO : (1) SHRI MAYANK KUMAR JAIN, NEELKAMAL APARTMENT, PRANAMI MANDIR ROAD, SILIGURI-734001 ITA NO. 220/KOL/2020 ASSESSMENT YEAR: 2015-2016 MAYANK KUMAR JAIN 6 (2) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, SILIGURI, MATIGARA, AAYAKAR BHAWAN, PARIBAHAN NAGAR, SILIGURI-734101 (3) COMMISSIONER OF INCOME TAX (APPEALS), SIL IGURI; (4) COMMISSIONER OF INCOME TAX- , KOLKATA 5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.