M/s Bishanu Kumar Khemka, Kolkata V. DCIT- Cir-45, Kolkata, Kolkata

ITA 2329/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1565 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 09-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PROVASH ROY
• Assessee Lawyers: S M SURANA
• Keywords: Unexplained investment; Depreciation; Tangible material
• Section: 143(3); 133A; 14A

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.2329/KOL/2016 ASSESSMENT YEAR:2012-13 M/S BISHANU KUMAR KHEMKA, PROP. B.K. STEEL ENTERPRISE, 20, MAHARSHI DEVENDRA ROAD, KOLKATA-007 [ PAN NO.AFVPK 1062 J ] / V/S . DCIT, CIRCLE-45, 3, GOVT. PLACE, WEST, KOLKATA-001 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI S.M. SURANA, ADVOCATE /BY RESPONDENT SHRI PROVASH ROY, ADDL. CIT-DR ! /DATE OF HEARING 08-06-2017 ! /DATE OF PRONOUNCEMENT 11-07-2017 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-13, KOLKATA DATED 01.08.2016. ASSESSMENT WAS FRAMED BY ITO WARD-44(4), KOLKATA U/S 143(3) OF THE INCOME TAX AC T, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 02.02.2015 FOR A SSESSMENT YEAR 2012-13. THE GROUNDS RAISED BY THE ASSESSEE PER ITS APPEAL ARE A S UNDER:- 1. FOR THAT THE ORDER OF THE LD. CIT(A) IS ARBITRAR Y, ILLEGAL AND BAD IN LAW. 2. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.2,95,22,803/- MADE ON ASSUMPTION WHEN THERE WAS NO EVIDENCE TO PROVE A NY PURCHASE, THE PURCHASES AND SALES WERE FULLY VOUCHED AND VERIFIED, NO DISCREPAN CY WAS FOUND NOR ANY ADDITIONAL PURCHASE WAS FOUND IN SPITE OF THE ENQUIRIES MADE. ITA NO.2329/KOL/2016 A.Y. 2012-13 M/S BISHANU KR. KHEMKA VS. DCIT, CIR-4 5, KOL. PAGE 2 3. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.2,95,22,803/- WHEN THE BOOKS OF ACCOUNT WERE FULLY VERIFIED AND WERE N OT REJECTED NOR THERE WAS ANY EVIDENCE OF SALE OUTSIDE THE BOOKS, THE ADDITION BE ING BASED SIMPLY ON THE BASIS OF THE STATEMENT RECORDED U/S.133A WHICH HAS NOT EVIDENTIA RY VALUE NOR SUPPORTED BY ANY EVIDENCE OR MATERIAL. 4. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.2,95,22,803/- ON THE BASIS OF THE STATEMENT WHICH WERE PARTLY ACCEPTED A ND PARTLY REJECTED WHICH IS NOT PERMISSIBLE IN LAW. 5. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE ADDITION OF RS.2,95,22,803/- WAS NOT JUSTIFIED. 6. FOR THAT THE CIT(A) ERRED IN CONFIRMING THE ADDI TION OF RS.14,051/- UNDER SEC. 14A WHEN THE ASSESSEES CAPITAL WAS SUFFICIENT TO MAKE POULTRY INVESTMENT IN SHARE, NO EXPENSES WERE INCURRED SINCE THERE WAS NO MOVEMENT IN SHARES NOR ANY DIVIDEND INCOME WAS EARNED. 7. FOR THAT THE CIT(A) ERRED IN CONFIRMING THE ADDI TION OF RS.65,505/- WHEN THE MOTOR CAR WAS FULLY USED FOR BUSINESS PURPOSE. 8. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ORDER OF THE CIT(A) BE MODIFIED AND THE ASSESSEE BE GIVEN THE RELIEF PRAYE D FOR. 9. FOR THAT THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND ANY GROUND BEFORE OR AT THE TIME OF HEARING. SHRI S.M. SURANA, LD. ADVOCATE APPEARED ON BEHALF O F ASSESSEE AND SHRI PROVASH ROY, LD. DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHA LF OF REVENUE. 2. GROUND NO.1, 8 AND 9 ARE GENERAL IN NATURE AND D O NOT REQUIRE ANY SEPARATE ADJUDICATION. 3. GROUNDS NO. 2 TO 5 ARE INTER-RELATED AND THEREF ORE BEING TAKEN UP TOGETHER. THE ISSUE RAISED IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF ASSESSING OFFICER BY SUSTAINING THE ADDITION OF 2,95,22,803/- ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCE. 4. BRIEFLY STATED FACTS ARE THAT ASSESSEE IN THE PR ESENT CASE IS AN INDIVIDUAL AND CARRIES ON ITS BUSINESS AS SOLE PROPRIETOR UNDER TH E TRADE NAME OF B.K. STEEL ENTERPRISES. THE ASSESSEE IS A STOCKIEST OF STEEL A UTHORITY OF INDIA (SAIL FOR SHORT) AND M/S TATA STEELS FOR H.R. COILS. A SURVEY U/S 13 3A OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF ASSESSEE DATED 21.10.2011.AT T HE TIME OF SURVEY, IT WAS FOUND THAT ASSESSEE HAS CLOSING STOCK WORTH OF 2,97,37,075/- AS PER STOCK REGISTER. BUT THERE WAS NO STOCK IN THE GO-DOWNS OF THE ASSESSEE. ON QU ESTION BY THE AO ABOUT THE MISMATCH OF STOCK, ASSESSEE SUBMITTED THAT ALL THE STOCK HAS BEEN SOLD OUT BUT THE ENTRY FOR THE SALE HAS NOT BEEN MADE IN THE BOOKS OF ACCO UNT. THEREFORE ON THE DATE OF SURVEY I.E. ON 21.10.2011 A TRADING ACCOUNT WAS REC ASTED AS DETAILED UNDER:- ITA NO.2329/KOL/2016 A.Y. 2012-13 M/S BISHANU KR. KHEMKA VS. DCIT, CIR-4 5, KOL. PAGE 3 DR. CR. PARTICULARS AMOUNT PARTICULARS AMOUNT OPENING BALANCE RS.2,40,68,981 BY ADDL. REBATE RS.29,22,144 TO PURCHASE RS.27,45,07,931 BY INCENTIVE TATA RS 7,342 TO GROSS PROFIT RS. 50,37,416 BY INCENTIVE SAIL RS.12,43,557 BY SALES RS.26,97,02,210 BY UNDISCLOSED SALE AS DETECTED DURING THE CURSE OF SURVEY RS. 2,97,39,075/- RS.30,36,14,328/- RS.30,36,14,328/- FROM THE ABOVE A GROSS PROFIT AS ON 21.10.2011 WAS WORKED OUT WHICH WAS ALSO AGREED BY THE ASSESSEE. HOWEVER, ASSESSEE IN ITS INCOME TAX RETURN DATED 26 .09.2012 DECLARED TOTAL INCOME OF 19,52,716/- ONLY. THUS, AO FOUND DIFFERENCE IN THE AMOUNT OF GROSS PROFIT ON THE DATE OF SURVEY AND THE TAXABLE INCOME DECLARED IN T HE INCOME TAX RETURN. ACCORDINGLY, AO CALLED UPON THE ASSESSEE TO EXPLAIN THE DIFFEREN CE IN THE AMOUNT OF PROFIT AS DISCUSSED ABOVE. IN COMPLIANCE, THERETO, ASSESSEE S UBMITTED STOCK OF 2,95,22,803/- ON THE DATE OF SURVEY WHICH WAS VERY MUCH REFLECTIN G THE BOOKS OF ACCOUNT AS WELL AS THE SAME WAS LYING WITH THE JOB WORKERS. THE ASSESS EE USED TO PURCHASE STEEL IN COIL FORM FROM BIG STEEL PLANTS AND THEREAFTER USED TO S ENT IT TO THE CUTTERS FOR CONVERTING COIL INTO FLAT SHEETS. AS SUCH, ON THE DATE OF SURV EY ALL THE CLOSING STOCK WAS LYING WITH THE CUTTERS AND IT IS NORMAL BUSINESS PRACTICE THAT HUGE QUANTITY OF GOODS REMAINS WITH THE CUTTERS THROUGHOUT THE YEAR. THE ASSESSEE IN SU PPORT OF ITS CLAIM HAS SUBMITTED THE LIST OF CUTTER WHERE THE CLOSING STOCK WAS LYING ON THE DATE OF SURVEY. THE ASSESSEE ALSO PRODUCED THE EVIDENCE FOR SENDING THE COILS TO THE CUTTERS ALONG WITH THE ACKNOWLEDGEMENT FROM THEM. 4.1 THE ASSESSEE ALSO SUBMITTED THAT NO ADVERSE MAT ERIAL HAS BEEN FOUND AT THE TIME OF SURVEY. THE ASSESSEE AGREED TO PAY A SUM OF 15 LACS TOWARDS THE TAX UNDER PRESSURE / COERCION. THE AO DISREGARDED THE CONTENT ION OF ASSESSEE BY OBSERVING AS UNDER:- ITA NO.2329/KOL/2016 A.Y. 2012-13 M/S BISHANU KR. KHEMKA VS. DCIT, CIR-4 5, KOL. PAGE 4 A) THE ASSESSEE HAS DECLARED IN THE STATEMENT THAT DECLARATION HAS BEEN GIVEN WITHOUT ANY FEAR THREAT OR COERCION; B) THE ASSESSEE AGREED TO PAY OF 15 LACS WHICH SHOWED THAT ASSESSEE HAS CONCEALED ITS INCOME; IN VIEW OF THE ABOVE, AO MADE THE ADDITION OF 2,95,22,803/- AS INCOME FROM UNDISCLOSED SOURCE AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE STOCK ON THE D ATE OF SURVEY WAS LYING WITH THE CUTTERS FOR THE JOB WORK. THE ASSESSEE IN SUPPORT O F HIS CLAIM HAS SUBMITTED THE GOODS MOVEMENT REGISTER. THE ASSESSEE ALSO RELIED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. S. KHADER KHAN SON (2013) 352 ITR 480 (SC). HOWEVER, LD. CIT(A) DISREGARDED THE CONTENTION OF THE ASSESS EE AND CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER:- I HAVE PERUSED THE FACTS OF THE CASE AND GROUND OF THE APPELLANT. IN THIS CASE THE FACT OF THE CASE ARE THAT (I) NO PHYSICAL STOCK WAS FOUN D AT THE PREMISES OF THE APPELLANT WHEREAS AS PER BOOKS OF ACCOUNTS STOCK COULD HAVE B EEN FOUND TO THE EXTENT OF RS.2,97,39,075/-. THE AFORESAID FACTS WERE CONFRONT ED TO THE APPELLANT DURING THE COURSE OF SURVEY AND IN TURN THE APPELLANT INFORMED THAT HE SOLD ALL THE STOCKS OUT OF BOOKS AND HE OFFERED GROSS PROFIT OVER THE UNACCOUN TED SALE. IT IS PERTINENT TO MENTION HERE THAT THE GROUND TAKEN BY THE APPELLANT THAT HE WAS NOT AWARE OF HIS STATEMENT HAS BEEN TREATED AS FALSE AND FULL WITH MISCHIEF BECAUS E AT LEAST APPELLANT WAS QUESTIONED ABOUT THE PHYSICAL EXISTENCE OF STOCK BUT FAILED TO EXPLAIN. RATHER THAN EXPLAINING, HE FINDS IT CONVENIENT TO OFFER GROSS PROFIT FOR TAXAT ION AND PAYING TWO CHEQUES AS ADVANCE TAX. THIS VERY FACTS OF HANDING OVER POST D ATED CHEQUES, NOT EXPLAINING THE SHORTAGE OF STOCK AND BECOMING AWARE ABOUT THE NON- EXISTENCE OF STOCK, WHICH SHOULD HAVE BEEN AS PER BOOKS AND AGAIN STATING THAT ' IT WAS SOLD OUT OF BOOKS CLEARLY SHOWS THE AWARENESS OF THE APPELLANT, SRI BISHANU K UMAR KHEMKA ABOUT DAY TO DAY BUSINESS. IT IS ALSO PERTINENT TO MENTION HERE THAT IT WAS NOT A FIRM WHERE THERE ARE VARIOUS WORKING PARTNERS. IT WAS ONLY THE PROPRIETA RY CONCERN OF MR. KHEMKA, WHO WAS SOLELY RUNNING HIS BUSINESS OF AFORESAID STEEL TRADING. THE APPELLANT ALSO KEPT QUIET OVER MORE THAN 2 YEAR S FOR FINDING OUT SUCH EXPLANATION BEFORE THE AO. HAD IT BEEN TRUE THEN WHAT PREVENTED THE APPELLANT TO SUBMIT A CLARIFICATORY LETTER BEFORE THE AO ON THE VERY NEXT DAY OF SURVEY WHEN HE BECAME AWARE OF THE FACT? THE PLEA OF NOT KNOWING GOOD ENG LISH AND NOT BEING AWARE ABOUT THE FACT STATED DURING THE COURSE OF SURVEY IS BASI CALLY A PRETENCE OF THE APPELLANT. IN FACT IT IS A CLEAR FACT THAT THE APPELLANT TRIED TO ENCASH THE SITUATION OF HIS BOOK ENTRY OF HIS CLOSING STOCK AND PUMPED OF ITS UNACCOUNTED MONEY TO BUY THE STEEL FROM OWN REGISTERED DEALERS AND MADE DOCUMENTATION OF THE AF ORESAID BILLS AND CONFIRMATIONS WERE ARRANGED. EVEN AT ASSESSMENT STAGE, NO SUCH DE TAILS WERE SUBMITTED. IT IS FURTHER TO POINT OUT THAT THERE WAS NO SUCH DETAILS GOODS M OVEMENT REGISTER FOUND DURING THE COURSE OF SURVEY. KEEPING IN VIEW OF THE AFORESAID FACT, IT HAS BEEN RIGHTLY CONCLUDED ITA NO.2329/KOL/2016 A.Y. 2012-13 M/S BISHANU KR. KHEMKA VS. DCIT, CIR-4 5, KOL. PAGE 5 BY THE AO THAT THE APPELLANT CREATED A STORY JUST T O TAKE THE BENEFIT OF HIS RECORDED STOCK WHICH WERE SOLD OUT OF BOOKS AND DEPLOYED THE UNACCOUNTED MONEY IN ORDER TO MATCH THE STOCK. THE APPELLANT HAS FAILED TO PROVE THAT THE STATEMENT WAS NOT VOLUNTARY, ONUS WAS ON THE APPELLANT TO PROOF THAT SUCH STATEMENT WAS MADE UNDER ANY RUTS-CONCEPTION OF FACT. SINCE THE APPELLANT HA D NOT TAKEN ANY STEP TO RECTIFY ITS DECLARATION BEFORE THE AUTHORITIES OR BEFORE WHOM T HE DECLARATION WAS MADE, THERE WAS NO VALID REASON FOR RETRACTING OF THE SAME AFTE R A GAP OF ABOUT ONE YEAR. AFORESAID VIEW IS DULY SUPPORTED BY THE DECISION OF ITAT (BOM) 108 ITD 142 IN THE CASE OF CARPENTERS CLASSICS (EXIM) (P)(LTD.) VS. DC IT. THE CASE LAW RELIED BY THE APPELLANT IS OF NO HELP BECAUSE THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. S. KHADER KHAN SON, 300 ITR 157(MAD) (2008) THE FACT OF THE CASE IS THAT, THE AO HAS REL IED ON THE STATEMENT ONLY FOR MAKING ADDITION WHEREAS IN THE PRESENT CASE, THE AO HAS RE LIED UPON THE PHYSICAL VERIFICATION OF STOCK AND THE BOOKS OF ACCOUNTS OF THE APPELLANT APART FROM STATEMENT RECORDED. IN THIS CASE, AS PER PHYSICAL VERIFICATION OF STOCK, N O STOCK WAS FOUND TO THE EXTENT MENTIONED IN THE BOOKS OF ACCOUNTS. NO BOOKS OF ACC OUNTS WERE FOUND WHICH CAN DENOTE THAT THE STOCK WAS LYING AT SOME OTHER PREMI SES. NO BOOK FOR GOODS MOVEMENT REGISTER WAS ALSO FOUND. THE APPELLANT KEPT QUIET F OR MORE THAN ONE YEAR AND IT WAS ONLY AT THAT TIME CLAIM WAS MADE WHEN THE AO STARTE D SCRUTINISING THE DETAILS. IT IS ALSO FACT THAT STATEMENT GIVEN BY THE PROPRIETOR TH AT SALES ARE MADE OUT OF BOOKS SHOWS ACTUAL POSITION. KEEPING IN VIEW ALL THE AFOR ESAID FACTS, THE ADDITION MADE ON ACCOUNT OF GP WORKED OUT DURING THE COURSE OF SURVE Y AND UNACCOUNTED INVESTMENT IN PURCHASE ARE CONFIRMED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 6. LD. AR FOR THE ASSESSEE BEFORE US FILED PAPER BO OK WHICH IS RUNNING FROM PAGES 1 TO 334 AND SUBMITTED THAT ALL THE DETAILS OF PURC HASE OF SALES WERE DULY FURNISHED TO THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS AND NO DEFECT OF WHATSOEVER HAS BEEN REPORTED. LD. AR SUBMITTED THAT ASSESSEE HAS FILED A STATEMENT SHOWING THE GOODS RECEIVED FROM THE CUTTERS AFTER THE DATE OF SURVEY ALONG WITH THE DETAILS OF THE SALES MADE TO THE PARTIES. SUCH DETAILS ARE COMPILED IN E XCESS SHEETS AND ARE PLACED ON PAGES 20 & 21 OF THE PAPER BOOK. LD. AR HAS ALSO FI LED THE DETAILS OF THE GOODS LYING WITH THE CUTTERS ALONG WITH THE PURCHASE INVOICE NO . NAME OF THE PARTY FROM WHOM THE GOODS WERE PURCHASED THE TRUCK NUMBER WHICH LIFTED THE GOODS AND CARRIED SAME TO THE CUTTERS, AFTER THE JOB WORK THE GOODS WERE LIFTED B ACK FROM THE CUTTERS AND DELIVERED TO THE PURCHASERS ALONG WITH THE TRUCK NUMBER ROAD CHA LLAN ETC. ALL THE DETAILS ARE PLACED ON PAGES 22 TO 63 OF THE PAPER BOOK. ITA NO.2329/KOL/2016 A.Y. 2012-13 M/S BISHANU KR. KHEMKA VS. DCIT, CIR-4 5, KOL. PAGE 6 ALL THE DETAILS AS DISCUSSED ABOVE WERE SUPPLIED TO THE AUTHORITIES BELOW WHICH WERE ALSO ACCEPTED BY THEM WITHOUT POINTING OUT ANY DEFE CTS. AT THE TIME OF SURVEY, THE PROFIT ON THE CLOSING STOCK WAS DETERMINED BUT AT T HE TIME OF ASSESSMENT, THE AO HAS TREATED THE INVENTORY FROM THE UNDISCLOSED SOURCE. ALL THE LORRIES CHARGES IN CONNECTION WITH THE PURC HASE AND SALE OF THE GOODS WERE PAID THROUGH BANKING CHANNEL AND THEREFORE GENUINENESS O F THE TRANSPORT CHARGES CANNOT BE DOUBTED. ALL THE DETAILS OF THE CLOSING STOCK LYING WITH THE CUTTERS WERE DULY FURNISHED AT THE TIME OF ASSESSMENT PROCEEDINGS AS EVIDENT FROM THE SUBMISSION MADE BY THE ASSESSEE WHICH IS PLACED ON PAGED 315 AND 316 OF THE PAPER B OOK. ON THE OTHER HAND, LD. DR SUBMITTED THAT THE DIFFER ENCE WAS OBSERVED AT THE TIME OF SURVEY WHICH WAS DULY ACCEPTED BY THE ASSESSEE IN T HE STATEMENT FURNISHED U/S 133A OF THE ACT. HE VEHEMENTLY RELIED ON THE ORDER OF AU THORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND THE CASE LAWS RELI ED UPON BY THE ASSESSEE. THE ISSUE IN THE INSTANT CASE RELATES TO THE DIFFERENCE IN TH E STOCK AS OBSERVED AT THE TIME OF SURVEY BETWEEN BOOKS OF ACCOUNT AND PHYSICAL STOCKS . AT THE TIME OF SURVEY, ASSESSEE DECLARED IN THE STATEMENT THAT THE STOCK HAS BEEN S OLD OUT THEREFORE THE MISMATCH HAS ARISEN. HOWEVER, AT THE TIME OF ASSESSMENT PROCEEDI NGS, ASSESSEE CLAIMED THAT THE STOCK WAS NOT SOLD BUT IT WAS LYING WITH THE CUTTER S WHO ARE WORKING AS JOB WORKERS. HOWEVER, THE AO DISREGARDED THE CONTENTION OF THE A SSESSEE AND TREATED THE DIFFERENCE OF THE STOCK FOR 2.95 CORES AS INCOME OF THE ASSESSEE FROM THE UNDIS CLOSED SOURCE. THE VIEW OF THE AO WAS SUBSEQUENTLY CONFIRMED BY LD . CIT(A). 7.1 NOW THE ISSUE BEFORE US ARISES SO AS TO WHETHER THE DIFFERENCE OF CLOSING STOCK IS CONCEALED INCOME OF THE ASSESSEE UNDER THE GIVEN FACTS AND CIRCUMSTANCES. IT IS ALSO UNDISPUTED FACT THAT THE LOWER AUTHORITIES HAVE NOT BROUGHT ANY DEFECT ON RECORD IN THE DOCUMENTS SUBMITTED BY THE ASSESSEE TO DISPROVE THE GENUINENESS OF THE TRANSACTIONS. THE ADDITION WAS SOLELY MADE ON THE BASIS OF THE ST ATEMENT FURNISHED BY THE ASSESSEE AT THE TIME OF SURVEY. THE LOWER AUTHORITIES HAVE N OT BROUGHT ANY IOTA OF EVIDENCE SUGGESTING THAT THE ASSESSEE HAS MADE INVESTMENT IN THE STOCK FROM UNDISCLOSED ITA NO.2329/KOL/2016 A.Y. 2012-13 M/S BISHANU KR. KHEMKA VS. DCIT, CIR-4 5, KOL. PAGE 7 SOURCES. HERE IT IS PERTINENT TO NOTE THAT THE CBDT HAS DISCOURAGED TO ITS OFFICERS TO MAKE THE ADDITION ON THE BASIS OF THE STATEMENTS AN D WITHOUT BRINGING ANY TANGIBLE MATERIALS FOR ANY ADDITION/DISALLOWANCE. THE RELEVA NT EXTRACT OF CBDT INSTRUCTIONS ISSUED VIDE F. NO. 286/98/2013-IT(INV.II) DATED 18 TH OF DECEMBER 2014 READS AS UNDER:- INSTANCES/COMPLAINTS OF UNDUE INFLUENCE/COERCION HA VE COME TO NOTICE OF THE CBDT THAT SOME ASSESSEES WERE COERCED TO ADMIT UNDISCLOS ED INCOME DURING SEARCHES/SURVEYS CONDUCTED BY THE DEPARTMENT. IT IS ALSO SEEN THAT MANY SUCH ADMISSIONS ARE RETRACTED IN THE SUBSEQUENT PROCEEDI NGS SINCE THE SAME ARE NOT BACKED BY CREDIBLE EVIDENCE. SUCH ACTIONS DEFEAT THE VERY PURPOSE OF SEARCH/SURVEY OPERATIONS AS THEY FAIL TO BRING THE UNDISCLOSED IN COME TO TAX IN A SUSTAINABLE MANNER LEAVE ALONE LEVY OF PENALTY OR LAUNCHING OF PROSECU TION. FURTHER, SUCH ACTIONS SHOW THE DEPARTMENT AS A WHOLE AND OFFICERS CONCERNED IN POOR LIGHT. 2. I AM FURTHER DIRECTED TO INVITE YOUR ATTENTION T O THE INSTRUCTIONS/GUIDELINES ISSUED BY CBDT FROM TIME TO TIME, AS REFERRED ABOVE, THROU GH WHICH THE BOARDS HAS EMPHASIZED UPON THE NEED TO FOCUS ON GATHERING EVID ENCES DURING SEARCH/SURVEY AND TO STRICTLY AVOID OBTAINING ADMISSION OF UNDISCLOSED INCOME UNDER COERCION/UNDUE INFLUENCE. 3. IN VIEW OF THE ABOVE, WHILE REITERATING THE AFOR ESAID GUIDELINES OF THE BOARD, I AM DIRECTED TO CONVEY THAT ANY INSTANCE OF UNDUE INFLU ENCE/COERCION IN THE RECORDING OF THE STATEMENT DURING SEARCH/SURVEY/OTHER PROCEEDING UNDER THE IT ACT, 1961 AND/OR RECORDING A DISCLOSURE OF UNDISCLOSED INCOME UNDER UNDUE PRESSURE/COERCION SHALL BE VIEWED BY THE BOARD ADVERSELY. FROM THE ABOVE CIRCULAR IT IS CRYSTAL CLEAR THAT TH E CBDT HAS EMPHASIZED TO ITS OFFICERS TO FOCUS ON GATHERING EVIDENCES DURING SEARCH/SURVE Y OPERATIONS AND STRICTLY DIRECTED TO AVOID OBTAINING ADMISSION OF UNDISCLOSED INCOME UNDER COERCION/ UNDUE INFLUENCE. KEEPING IN VIEW THE GUIDELINES ISSUED BY THE CBDT F ROM TIME TO TIME REGARDING THE STATEMENTS OBTAINED DURING SEARCH AND SURVEY OPERAT ION, IT IS UNDISPUTEDLY CLEAR THAT THE LOWER AUTHORITIES HAVE NOT COLLECTED ANY OTHER EVIDENCE TO PROVE THE IMPUGNED TRANSACTION AS BOGUS OTHER THAN THE STATEMENT. THER EFORE UNDER SUCH FACTS & CIRCUMSTANCES WE ARE INCLINED TO REVERSE THE ORDER OF AUTHORITIES BELOW. IN THIS REGARD THE AO IS DIRECTED TO DELETE THE ADDITION. HENCE T HE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 8. NEXT ISSUE RAISED BY ASSESSEE IN GROUND NO.6 IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF AO BY SUSTAINING THE DISALL OWANCE OF 14,051/- ON ACCOUNT OF DIVIDEND INCOME U/S 14A OF THE ACT. ITA NO.2329/KOL/2016 A.Y. 2012-13 M/S BISHANU KR. KHEMKA VS. DCIT, CIR-4 5, KOL. PAGE 8 9. THE ASSESSEE, DURING THE YEAR HAS EARNED DIVIDEN D INCOME OF 4,434/- ON ITS INVESTMENT. THE DIVIDEND INCOME WAS CLAIMED TO BE E XEMPTED FROM TAX U/S. 10(34) OF THE ACT. THE ASSESSEE HAS MADE INVESTMENT IN SHARES AND DEBENTURES OF 2,17,353.71 ONLY. IT WAS OBSERVED BY THE AO THAT ASSESSEE HAS C LAIMED INTEREST EXPENSE ON 8,29,346/-. BUT THE ASSESSEE HAS NOT MADE ANY DISAL LOWANCE UNDER THE PROVISION OF SEC. 14A R.WS. RULE 8D OF THE INCOME TAX RULE, 1962 (HEREINAFTER REFERRED TO AS THE RULE). ON QUESTION BY THE AO ABOUT THE DISALLOWANCE OF EXP ENSE U/S. 14A OF THE ACT, THE ASSESSEE SUBMITTED THAT NO EXPENDITURE OF WHATSOEVE R HAD BEEN INCURRED AGAINST THE DIVIDEND INCOME AND THEREFORE NO DISALLOWANCE WAS W ARRANTED U/S. 14A OF THE ACT. HOWEVER, AO DISREGARDED THE CONTENTION OF THE ASSES SEE AFTER HAVING RELIANCE ON CBDT CIRCULAR NO.5/2014 DATED 11.02.2014 AND ACCORD INGLY INVOKED THE PROVISION OF RULE 8D OF THE RULES AND MADE THE DISALLOWANCE OF T HE INTEREST EXPENSE OF 14,051/- AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 10. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHO CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER:- AS REGARDS, THE DISALLOWANCE U/S. 14A IS CONCERNED, THE AO HAS FOUND THAT THE APPELLANT HAS RECEIVED DIVIDEND OF RS.4,434/- AND I NVESTMENT DURING THE YEAR HAS BEEN MADE AT RS.2,17,353/- WHEREAS INTEREST IS PAID OF R S.8,29,346/- AND DIRECT EXPENSES IS CLAIMED AT NIL AGAINST HIS INVESTMENT. THEREFORE, THE AO HAS APP LIED RULE 8D OF THE INCOME TAX RULES, 1962. AS THE APPELLANT HAS FAILED TO PROVE THAT ANY DIRECT EXPENSES HAS BEEN DEBITED OR WORKED OUT AGAINST THE INVESTME NT, IS UPHELD. THIS GROUND OF APPEAL IS DISMISSED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 11. LD. AR BEFORE US SUBMITTED THAT NO EXPENDITURE HAD BEEN INCURRED IN RELATION TO DIVIDEND INCOME EARNED BY ASSESSEE. LD. AR ALSO SUB MITTED THAT THERE WAS SUFFICIENT CAPITAL AVAILABLE WITH THE ASSESSEE AND THE INVESTM ENT WAS MADE OUT OF ITS OWN FUND. IT WAS THE SUBMISSION THAT THE DISALLOWANCE WAS REASON ABLE AND SHOULD NOT BE DELETED. ON THE OTHER HAND, LD. DR VEHEMENTLY RELIED ON THE ORDER OF AUTHORITIES BELOW. 12. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE IN THE INST ANT CASE RELATES TO THE DISALLOWANCE MADE BY THE AUTHORITIES BELOW U/S 14A OF THE ACT. T HE AO MADE THE DISALLOWANCE AS ITA NO.2329/KOL/2016 A.Y. 2012-13 M/S BISHANU KR. KHEMKA VS. DCIT, CIR-4 5, KOL. PAGE 9 PER SECTION 14A R.W.S 8D OF THE RULES ON THE GROUND THAT ASSESSEE HAS NOT FURNISHED ANY NECESSARY DETAILS OF THE EXPENDITURE INCURRED I N RELATION TO DIVIDEND INCOME. THE VIEW OF THE AO WAS SUBSEQUENTLY CONFIRMED BY LD. CI T(A). WE FIND THAT LD. AR EVEN BEFORE US HAS NOT BROUGHT ON RECORD SUGGESTING THAT NO EXPENDITURE HAS BEEN INCURRED BY ASSESSEE ON SUCH DIVIDEND INCOME. IN TH E ABSENCE OF ANY DOCUMENTARY EVIDENCE, WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) AND ACCORDINGLY WE UPHOLD THE SAME. HENCE, THIS GROUND OF ASSESSEES APPEAL I S DISMISSED. 13. LAST ISSUE RAISED BY ASSESSEE IN GROUND NO.7 IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY AO FOR 65,505/- ON ACCOUNT OF MOTOR CAR EXPENSE AND DEPRECIATION THEREON. 14. THE ASSESSEE, DURING THE YEAR HAS CLAIMED MOTOR CAR EXPENSE AND DEPRECIATION ON MOTOR CAR FOR 1,51,341/- AND 1,66,121/- RESPECTIVELY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE FAILED TO FURNISH ANY LOG BOOK FOR THE DAY-TO-DAY RUNNING OF SAID VEHICLE. THEREFORE, THE AO WAS OF T HE VIEW THE ELEMENT OF PERSONAL USE OF THE CAR CANNOT BE IGNORED. ACCORDINGLY, HE M ADE THE DISALLOWANCE TO THE TUNE OF 1/5THOF THE MOTOR CAR EXPENSE AND DEPRECIATION WHIC H COMES FOR 65,505/- ONLY. THE DISALLOWANCE MADE BY THE AO WAS ADDED TO THE TOTAL INCOME OF ASSESSEE. 15. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHO CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER:- . .. AT APPELLANT STAGE ALSO, THE APPELLANT HAS N OT FURNISHED ANY SUCH LOG BOOK AND NO CLAIM HAS BEEN MADE THAT FOR PERSONAL U SE, SEPARATE CAR IS MAINTAINED. HENCE, THE DISALLOWANCE OF RS.65,505/- ON ACCOUNT OF PERSONAL USE OF MOTOR CAR IS HEREBY CONFIRMED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 16. LD. AR BEFORE US HAS NOT ADVANCED ANY ARGUMENT REGARDING MOTOR CAR EXPENSE AND DEPRECIATION ALLOWANCE. HE FRANKLY LEFT THE ISS UE AT THE DISCRETION OF THE BENCH. ON THE OTHER HAND, LD. DR VEHEMENTLY RELIED ON THE ORDER OF AUTHORITIES BELOW. 17. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE US LD. AR FOR THE ASSESSEE HAS NOT BROUGHT ANYTHING ON RECORD CONTRARY TO THE FINDING OF LD. C IT(A). HOWEVER THE LOWER ITA NO.2329/KOL/2016 A.Y. 2012-13 M/S BISHANU KR. KHEMKA VS. DCIT, CIR-4 5, KOL. PAGE 10 AUTHORITIES BEFORE MAKING ANY DISALLOWANCE FOR THE ABOVE EXPENSE SHOULD HAVE REFERRED THE FACTS WITH REGARD TO THE SIMILAR EXPEN SES OF THE EARLIER YEARS BUT THE AO HAS FAILED TO DO SO, RATHER, THE AO HAS MADE THE DI SALLOWANCE ON AD HOC BASIS ON THE GROUND THAT NO LOG BOOK WAS MAINTAINED BY ASSESSEE. INDEED, THE ASSESSEE IS AN INDIVIDUAL AND THE ELEMENT OF PERSONAL USE OF MOTOR CAR CANNOT BE DISCARDED WITHOUT ANY EVIDENCE. THUS, IN THE ABSENCE OF ANY CORROBORA TIVE EVIDENCE AND IN THE BACKGROUND OF THE ABOVE DISCUSSION AND PRECEDENT WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) AND ACCORDINGLY WE UPHOLD THE SAME. HENCE, THIS GROUND OF ASSESSEES APPEAL IS DISMISSED. 18. IN THE RESULT, ASSESSEES APPEAL STANDS PARTLY ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON 11/08/2017 SD/- SD/- (%&') (!&') (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP-SR.PS )&*+ - 11/08/2017 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S BISHANU KR. KHEMKA, PROOP. B.K. STEE L, ENTERPRISE, 20, MAHARSHI DEVENDRA ROAD, KOLKATA-700007 2. /RESPONDENT-DCIT, CIRCLE-45, 3 GOVT. PLACE, WEST, K OLKATA-700001 3. **, - / CONCERNED CIT 4. - - / CIT (A) 5. ./0 %%, , , / DR, ITAT, KOLKATA 6. 012 / GUARD FILE. BY ORD ER/ & , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO , ,