I.T.O Wd - 2(2),kolkata., Durgapur V. Nirmal Kr Ghosh, Durgapur

ITA 235/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99749 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 04-02-2013
• Court: TRIBUNAL
• Department Lawyers: S M SARFARAZUT TAUHEED
• Assessee Lawyers: T P KAR
• Keywords: Bonafide mistake
• Section: 143(3); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA [BEFORE SHRI S. V. MEHROTRA, AM & SHRI MAHAVIR SINGH, JM ] I.T.A NO. 235 /KOL/201 3 ASSESSMENT YEAR : 200 9 - 1 0 INCOME - TAX OFFICER, WD - 2(2), DURGAPUR VS. NIRMAL KR. GLHOSH (PAN: ADFPG4128B) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 1 0 .0 8 .2015 DATE OF PRONOUNCEMENT: 07 . 0 9 . 2015 FOR THE APPELLANT: S HRI S. M. SARFARAZUT TAUHEED, SR. DR FOR THE RESPONDENT: S HRI T. P. KAR , FCA ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF CIT(A) , DURGAPUR IN APPEAL NO. 184 / CIT(A) /DGP/2011 - 12 DATED 02 . 1 1.2012 . ASSESSMENT WAS FRAMED BY ITO, WARD - 1(2), DURGAPUR U/S. 143(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR AY 2009 - 10 VIDE ITS ORDER DATED 29 .1 2 .20 11. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION MADE ON THE GROUND OF UNDISCLOSED INVESTMENT U/S. 69 OF THE ACT. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.1: 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) - DURGAPUR ERRED IN DELETING ADDITION MADE ON THE GROUND OF UNDISCLOSED INVESTMENT U/S. 69 FOR AN AMOUNT OF RS.1,00,000/ - . 3. BRIEFLY STATED FACTS ARE THAT THE AO OBSERVED FROM TH E BALANCE SHEET AS ON 31.03.2009 THAT THE ASSESSEE HAD SHOWN RS.700/ - ONLY AS SECURITY DEPOSIT TO THE FRANCHISER M/S. SENCO GOLD, KOLKATA. THE FRANCHISER CONFIRMED THAT RS.1,00,000/ - WAS THE BALANCE UNDER THE HEAD SECURITY DEPOSIT WITH THEM AS ON 31.03.200 9. HENCE, THE BALANCE AMOUNT OF RS.99,300/ - WAS TREATED AS UNDISCLOSED INVESTMENT IN PURSUANCE OF SEC. 69 OF THE ACT. BEFORE THE AO , ASSESSEE PLEADED THAT THE SAID SECURITY DEPOSIT HAD BEEN MADE TEN YEARS BACK AND HENCE, IT CANNOT BE TREATED AS 2 ITA NO. 235 /K/201 3 NIRMAL KR. GHOSH AY 200 9 - 1 0 UNDISCLOSE D INCOME IN THE CURRENT YEAR. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE ADDITION AS MADE BY AO BY OBSERVING THAT THE AO HAS NOT DISPUTED THE ASSESSEE S CONTENTION THAT THE SAID SECURITY DEPOSIT WAS MADE TEN YEARS BACK . HE ALSO OBSERVED THAT NO FACTS TO THE CONTRARY HAVE BEEN BROUGHT ON RECORD. IT IS ALSO NOTED THAT THE AO HAD MADE CORRESPONDENCE WITH THE FRANCHISER IN SPITE OF THAT NO ADVERSE FINDING ON THE ASSESSEE S CLAIM HAS BEEN GIVEN BY THE AO. IN VIEW OF THIS , THE CIT(A ) ACCEPTED THE CONTENTION OF ASSESSEE AND DELETED THE ADDITION AS MADE BY AO. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 4 . WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THIS DEPOSIT OF SECURITY WAS MADE BY ASSESSEE TEN YEARS BACK AND THIS FACT HAS BEEN ADMITTED BY AO AS WELL AS CIT(A). ONCE THE DEPOSIT IS NOT MADE IN THE RELEVANT ASSESSMENT YEAR, THE SAME CANNOT BE ADDED. THE DEPOSIT CAN BE ADDED ONLY IN TH E YEAR WHEN IT FIRST TIME INTRODUCED. ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) DELETING THE ADDITION. THIS GROUND OF APPEAL OF REVENUE IS DISMISSED. 5. THE SECOND ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION MA DE ON THE GROUND OF UNDISCLOSED PURCHASE FOR AN AMOUNT OF RS.9,49,463/ - . FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.2: 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) - DURGAPUR ERRED IN DELETING ADDITION MADE ON THE GROUND OF UNDISCLOS ED PURCHASE FOR AN AMOUNT OF RS.9,49,463/ - . 6. BRIEFLY STATED FACTS ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE S PURCHASES WERE ADJUSTED AGAINST STANDARD GOLD BAR TENDERED BY FRANCHISEE, WHICH WAS AS UNDER: SL. NO. DATES DESCRIPTION & PURITY OF ITEM ADJUSTED AS EVIDENT FROM THE ANNEXURE FURNISHED WITH LETTER DATED 18.12.2011 WORTH THEREOF INCLUDING INPUT TAX RS. NARRATION AS APPEARING IN THE FRANCHISER S STATEMENT DERIVED IN COURSE OF VERIFICATION. 1. 20.03.09 STD GOLD 24 KT. 187422 AMOUNT ADJUSTED WITH OLD GOLD PURCHASE 2. 20.02.2009 STD BAR PURCHASE FROMF - 11 570689 STD BAR PURCHASE 3 ITA NO. 235 /K/201 3 NIRMAL KR. GHOSH AY 200 9 - 1 0 3. 02.02.2009 STD GOLD TOTAL: 200847 958958 AMOUNT ADJUSTED WITH STD GOLD PURCHASE IN VIEW OF THE ABOVE, THE AO REQUIRED THE ASSESSEE TO EXPLAIN THE AFORESAID PURCHASES ADJUSTED BECAUSE THE CASH BOOK DOES NOT REFLECT ANY TRANSACTION IN THIS REGARD. THE ASSESSEE EXPLAINED BEFORE THE AO THAT FRANCHISE NEVER SUPPLIED ANY GOLD BAR TO THE ASSES SEE BUT THEY ACCEPTED 24 KT. GOLD BAR IN LIEU OF CASH TENDERED TOWARDS ADJUSTMENT OF THEIR SALES. THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND MADE ADDITION ON ACCOUNT OF UNDISCLOSED PURCHASES AMOUNTING TO RS.9,49,463/ - . AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE ADDITION BY OBSERVING AS UNDER: SEVERAL ISSUES ARISE HERE WHICH IN MY OPINION, THE A.O. SHOULD HAVE DELIBERATED UPON. ONCE IT IS EVIDENT THAT THE ENTIRE AMOUNT IS A PURCHASE RETURN INCREASING THE APPELLANT 'S FIGURE OF PURCHASES ON ACCOUNT OF THIS BY ASSUMING THAT SUCH RETURNS HAVE BEEN MADE OUT OF UNDISCLOSED PURCHASES, WILL LOWER HIS NET PROFIT, SINCE IT CANNOT BE THE A.O'S CASE THAT SUCH UNDISCLOSED PURCHASES HAS RESULTED IN UNDISCLOSED SALES ALSO. FURT HER, THERE IS NO FINDING IN THE ASSESSMENT ORDER THAT THE APPELLANT HAS INVESTED MONEY FOR THIS ALLEGED PURCHASE OUT OF UNDISCLOSED SOURCES. THEREFORE, THERE IS NO CASE MADE OUT BY THE A.O. FOR AN ADDITION U/S.69 OF THE I.T.ACT. IT IS ALSO TO BE NOTED THA T 24 CARAT STANDARD GOLD BARS ARE NOT A COMMODITY WHICH CAN BE PURCHASED AND SOLD LIKE ANY OTHER. IN MY OPINION, THE A.O. SHOULD HAVE LOOKED INTO THIS ISSUE WHICH HE CLEARLY HAS NOT. BESIDES, I FAIL TO SEE HOW ANY FRANCHISEE WOULD RETURN GOODS WHICH IT HAD NOT RECEIVED. AS PER THE ASSESSMENT ORDER, NO 24 CARAT STANDARD GOLD BAR WAS SUPPLIED TO THE APPELLANT BY THE FRANCHISER. THERE DOES NOT APPEAR TO BE ANY DISPUTE ON THIS ISSUE. THEREFORE, IT WOULD NOT BE LOGICAL FOR THE APPELLANT TO RETURN THE GOODS IN TH E FORM OF 24 CARAT GOLD BARS BY PURCHASING THEM FROM THE MARKET. I, THEREFORE, FIND THE APPELLANT'S EXPLANATION TO BE QUITE LOGICAL. THE SAME IS THEREFORE ACCEPTED. THIS GROUND OF APPEAL IS ALLOWED. AGGRIEVED, REVENUE IS IN APPEAL BEFORE TRIBUNAL. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE US AND ALSO BEFORE LOWER AUTHORITIES THE ASSESSEE PRODUCED TRANSACTION STATEMENTS FOR FY 2008 - 09 GIVEN BY SENCO GOLD, KOLKATA FROM WHERE IT IS NOTED THAT THERE AR E SOME TRANSACTIONS WHICH REPRESENTS RETURN OF GOLD ORNAMENTS OR ITS EQUIVALENT. THE DETAILS ARE AS UNDER: DATE AMOUNT VAT TOTAL 02.05.2008 16.09.2008 43,895.55 4,25,903.00 437.45 4,259.00 44,333.00 4,30,162.00 4 ITA NO. 235 /K/201 3 NIRMAL KR. GHOSH AY 200 9 - 1 0 03.01.2009 02.02.2009 20.02.2009 20.03.2009 20.03.2009 TOTAL 22,44,929.00 1,98,858.00 5,65,039.00 1,85,566.00 5,05,920.00 41,70110.55 22,449.00 1,989.00 5,650.00 1,856.00 5,059.00 41,669.45 22,67,278.00 2,00,847.00 5,70,689.00 1,87,422.00 5,10,979.00 42,11, 810.00 THE ASSESSEE EXPLAINED THAT ADJUSTMENT OF RS.2,00,847/ - ON 02.02.2009, RS.5,70,689/ - ON 20.02.2009 AND RS.1,87,422/ - ON 20.03.2009 REPRESENTS AMOUNT DUE ON ACCOUNT OF STANDARD GOLD BAR PURCHASE OF 24 KT. FROM ASSESSEE BY SENCO GOLD. THE AO MADE ADDITION ONLY FOR THE REASON THAT IN THE P&L ACCOUNT PURCHASES OF GOLD BAR OF 24 KT. IS NOT REFLECTED AND IN THE ABSENCE OF SUCH PURCHASES OF GOLD BAR FROM SENCO GOLD , GOLD BAR OF 24 KT. IN STOCK IS NOT FEASIBLE. WE ARE OF THE VIEW THAT THE AO COULD NOT U NDERSTAND THE ACTUAL OPERATION OF THE BUSINESS OF THE ASSESSEE. THE ASSESSEE PURCHASED GOLD FROM CUSTOMERS MAINLY BY CHEQUE PAYMENT AND SUCH PURCHASES DURING THE YEAR IS VERY SMALL AMOUNTING TO RS.3,57,862/ - . THIS COPY OF LEDGER IS ALREADY SUBMITTED BEFO RE THE LOWER AUTHORITIES. CONSEQUENTLY, THE ASSESSEE ACCEPTS OLD GOLD ORNAMENTS FROM CUSTOMERS AND ADJUSTED THE SAME WITH PURCHASE BILLS. ACTUALLY BILLS ARE RAISED ONLY IN THE NET QUANTITY OF GOLD ITEMS SOLD TO CUSTOMERS. HENCE, STOCK OF GOLD ORNAMENTS IS AUTOMATICALLY ADJUSTED WITH RESPECT TO QUANTITY OF GOLD LYING WITH THE ASSESSEE, AND HENCE, ENTIRE STOCK IS NOT READILY SELLABLE TO CUSTOMERS AS IT INCLUDES OLD GOLD ORNAMENTS. THIS STOCK OF OLD GOLD ORNAMENTS WAS GIVEN TO SENCO GOLD, KOLKATA FOR ADJUS TMENT WITH PURCHASES OF FRESH ORNAMENTS FROM SENCO GOLD MAKE. IN THIS WAY, SENCO GOLD, KOLKATA ACCEPT ED OLD GOLD ORNAMENTS FROM ASSESSEE BUT CUSTOMERS WHILE ADJUSTING OLD GOLD ORNAMENTS WITH THEIR NEW PURCHASES WOULD NOT ONLY GIVE THE ORNAMENTS OF SENCO G OLD BUT ALSO OF OTHER PARTIES. FINALLY, ASSESSEE HAS TO CONVERT THIS OLD GOLD ORNAMENTS OF OTHER MAKE INTO 24 KT. GOLD OF SENCO GOLD EXCEPT THE SAME IS CONVERTING TO 22 KT. OF GOLD ORNAMENTS TO 24 KT. OF GOLD HAS NO FINANCIAL IMPLICATION AND THE SAME IS S HOWN AS PURCHASES. ACCORDINGLY, THE ENTIRE UNDISCLOSED PURCHASES ARE NOT H ING BUT RETURN OF GOODS WHICH WAS CONVERTED INTO 24 KT. STANDARD GOLD BARS SUPPLIED TO THE ASSESSEE BY THE FRANCHISER. IN VIEW OF THE ABOVE DISCUSSION AND FACTS OF THE CASE, WE ARE INCLINED TO ACCEPT THE CONTENTION OF 5 ITA NO. 235 /K/201 3 NIRMAL KR. GHOSH AY 200 9 - 1 0 THE ASSESSEE AND HENCE, THE ORDER OF CIT(A) ON THIS ISSUE IS CONFIRMED. THIS ISSUE OF REVENUE S APPEAL IS DISMISSED. 8. THE THIRD ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION MADE ON THE GROUND OF INCOME FROM OTHER SOURCES. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.3: 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A), DURGAPUR ERRED IN DELETING ADDITION MADE ON THE GROUND OF INCOME FROM OTHER SOURCES FOR AN AMOUNT OF RS.22,86,958/ - . 9. BRIEFLY STATED FACTS ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS REQUIRED THE ASSESSEE TO EXPLAIN THE ADVANCES RECEIVED FROM CUSTOMERS AS RECORDED IN NEW LEDGER. ACCORDING TO AO, THE ADVANCES RECEIVED FROM C USTOMERS TO THE EXTENT OF RS.22,86,958/ - DOES NOT APPEAR IN THE REVISED NEW LEDGER, HENCE, HE ADDED THE SAME. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE ADDITION BY OBSERVING AS UNDER: . PERUSAL OF THE ISSUES REVEAL THAT THE AP PELLANT INITIALLY SUBMITTED INACCURATE DATA IN RESPONSE TO THE AO S QUERY. SUBSEQUENTLY, HE HAD CORRECTED THE SAME AND, STATED BY WAY OF EXPLANATION THAT THE ERROR HAD OCCURRED AS A RESULT OF WRONG COPY PASTE. IN MY OPINION, THE A.O. WHILE DISPOSING OF TH E ISSUE HAS NOT CONSIDERED EITHER THE EXPLANATION OR THE NEW SET OF FIGURES GIVEN TO HIM. BEFORE REJECTING THE NEW FIGURE THE A.O. HAS NOT BROUGHT ANY MATERIAL ON RECORD TO INDICATE THAT THE CONTENTION OF THE APPELLANT THAT THESE WERE BONA FIDE ADVANCES WA S NOT CORRECT. I FIND THAT THE A.O. HAS SUMMARILY REJECTED THE NEW SET OF FIGURES. IN MY OPINION, THIS IS NOT CORRECT. A MISTAKE IN PRESENTATION OF DATA CANNOT LEAD TO A UNILATERAL FINDING THAT THE APPELLANT'S CONTENTION IS NOT CORRECT. ALSO, THE APPELLANT 'S CONTENTION THAT MOST OF THE ADVANCES WERE RECEIVED BY CHEQUE APPEARS TO BE BORNE OUT BY THE A.O'S COMMENT IN THE ASSESSMENT ORDER THAT ON RECEIPT OF FINAL SHOW CAUSE AT THE FAG END OF THE PROCEEDING SESSION THE ASSESSEE PREFERRED TO FURNISH A NEW LEDGE R IN LIEU OF THE EARLIER ONE WHICH INVOLVES VIVID ENQUIRY IN THE BANKS. I DO NOT UNDERSTAND THE AO S ACTION IN TEST CHECKING FIGURES FROM THE OLD LIST WHICH ADMITTEDLY ARE NOT CORRECT. UNDER THE CIRCUMSTANCES, I DO NOT AGREE WITH THE AO S ACTION IN SUMMA RILY REJECTING THE APPELLANT S CONTENTION. THE ADDITION MADE IS DIRECTED TO BE DELETED. THIS GROUND OF APPEAL IS ALLOWED. AGGRIEVED, REVENUE IS NOW IN APPEAL BEFORE US. 10. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF TH E CASE. WE FIND THAT AS PER LEDGER COPY AND ADVANCES FROM CUSTOMERS THE TOTAL ADVANCES DECLARED IS AT RS.91,23,910/ - OUT OF WHICH A SUM OF RS.8,42,064/ - IS RECEIVED BY CASH AND BALANCE AMOUNT OF RS.82,81,864/ - IS THROUGH CHEQUE. 6 ITA NO. 235 /K/201 3 NIRMAL KR. GHOSH AY 200 9 - 1 0 ORIGINALLY, THE ASSESSEE D ECLARED THESE AMOUNTS TO BE RECEIVED IN CASH AS PER OLD LEDGER REGISTER. SUBSEQUENTLY, THE ASSESSEE FILED NEW LEDGER ACCOUNT AND EXPLAINED THAT THE ADVANCE NEARLY 90% ARE RECEIVED THROUGH ACCOUNT PAYEE CHEQUES AND OTHER ARE IN CASH. LD. COUNSEL FOR THE A SSESSEE ADMITTED THAT THIS IS UNINTENTIONAL MISTAKE IN SHOWING ALL THE TRANSACTIONS IN CASH AND THIS MISTAKE HAS OCCURRED DUE TO COPY PASTE IN COMPUTER. THE ASSESSEE BEFORE THE AO OFFERED THAT THE ADVANCES RECEIVED THROUGH BANK CAN BE EXAMINED FROM BANK S TATEMENT AND OTHER DETAILS. HE FILED COMPLETE DETAILS BEFORE THE AO BUT THE AO HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND ADDED ENTIRE ADVANCE OF RS.22,86,958/ - WHICH WERE OUTSTANDING AS ON 31.03.2009. WE FIND THAT THE ASSESSEE BEFORE THE LOWER AUTHORITIES FILED COMPLETE DETAILS IN RESPECT OF ADVANCES RECEIVED BY CHEQUES AND CASH. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE FIND THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION AND WE CONFIRM THE SAME. THIS GROUND OF APPEAL OF REVENUE IS D ISMISSED. 11. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. 12 . ORDER IS PRONOUNCED IN THE OPEN COURT ON 07.09.2015 . SD/ - SD/ - ( S. V. MEHROTRA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED : 7 TH SEPTEMBER , 201 5 PRONOUNCED BY SD/ - (M.B) SD/ - (M.S) AM JM JD. SR. P.S COPY OF THE ORDER FORWARDED TO: 1 . A PPELLANT ITO, WARD - 2(2), DURGAPUR . 2 RESPONDENT SHRI NIRMAL KR. GHOSH, PROP GUINEA GOLD JEWELLERS, NACHAN ROAD, BENACHITY, DURGAPUR - 713213 3 . THE CIT (A), KOLKATA 4. 5. CIT KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .