MUSLIN , Paschim Medinipur V. ITO, Ward - 39(3) , Midnapore

ITA 2416/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7034 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 19-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RABIN CHOUDHURY
• Assessee Lawyers: GAUTAM GHOSH
• Keywords: Reasonable cause
• Section: 144

Judgement Text

1 ITA NO. 2416/KOL/2018 MUSLIN., AY 2012-13 , C(SMC) , IN THE INCOME TAX APPELLATE TRIBUNAL C(SMC) BENCH : KOLKATA ( ) . . , ) [BEFORE SHRI A. T. VARKEY, JM] I.T.A. NO. 2416/KOL/2018 ASSESSMENT YEAR: 2012-13 MUSLIN (PAN: AAEFM5121G) VS. INCOME-TAX OFFICER, WD-39(3), MIDNAPORE. APPELLANT RESPONDENT DATE OF HEARING 19.03.2019 DATE OF PRONOUNCEMENT 26.04.2019 FOR THE APPELLANT SHRI GAUTAM GHOSH, ADVOCATE FOR THE RESPONDENT SHRI RABIN CHOUDHURY, ADDL. CIT , SR. DR ORDER THIS APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER OF LD. CIT(A) - 11, KOLKATA DATED 28.05.2018 FOR AY 2012-13. 2. THIS APPEAL OF ASSESSEE IS TIME BARRED BY 87 DAY S AND A CONDONATION PETITION HAS BEEN FILED BY THE ASSESSEE EXPLAINING THE REASONS FOR TH E DELAY. THE ASSESSEE IN ITS CONDONATION PETITION SUBMITTED THAT THE ADVOCATE TO WHOM IT HAD ENTRUSTED THE APPEAL TO BE FILED MISPLACED THE PAPERS GIVEN TO HIM INCLUDING THE FIR ST APPELLATE ORDER, DEMAND NOTICE ETC. SO THE DELAY OCCURRED, WHICH WAS BEYOND ASSESSEES CON TROL. SO IT WAS URGED BEFORE THE BENCH TO CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARI NG. AFTER HAVING GONE THROUGH THE CONDONATION APPLICATION, WE NOTE THAT THE DELAY IN FILING APPEAL ON TIME WAS NOT INTENTIONAL AND THERE WAS REASONABLE CAUSE AS DISCUSSED ABOVE. THEREFORE, WE CONDONE THE DELAY AND PROCEED TO HEAR THE APPEAL ON MERITS. 2 ITA NO. 2416/KOL/2018 MUSLIN., AY 2012-13 3. THE ASSESSEES SOLE GROUND OF APPEAL IS AGAINST THE ACTION OF LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.12,09,064/- ON ACCOUN T OF CASH PURCHASE. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM IS A RETAIL TRADER OF COTTON SAREES, SILK SAREES AND ARTIFICIAL SILK SAREES. THE AO OBSERVED DURING THE COURSE OF ASSESS MENT PROCEEDINGS THAT THE ASSESSEE HAS SUBMITTED LIST OF CASH PURCHASES FROM DIFFERENT PAR TIES TOTALING RS.60,45,322/- AND THE ASSESSEE FAILED TO FURNISH DETAILS OF SUCH PURCHASE S SUCH AS BILLS, VOUCHERS, NAME OF THE PARTY, ADDRESS ETC. ACCORDING TO ASSESSEE, THE PUR CHASES WERE MADE IN CASH SINCE THE LOCAL VENDORS DID NOT ACCEPT ANY OTHER MODE OF PAYMENT AN D THE ASSESSEE HAS NOT BREACHED THE THRESHOLD LIMIT OF CASH PAYMENT WHEN PAYMENT IS CON SIDERED ON DAILY BASIS. REASONS GIVEN BY THE ASSESSEE WAS NOT ACCEPTABLE TO THE AO, SO HE ESTIMATED 20% OF SUCH PURCHASES I.E. RS.12,09,064/- AND ADDED BACK THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A), WH O CONFIRMED THE ACTION OF AO. AGGRIEVED, ASSESSEE IS BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. DURING THE COURSE OF HEARING BEFORE US, THE L D. AR DREW OUR ATTENTION TO THE FACT THAT THE ASSESSEE FIRM IS A RETAIL SAREE SHOP. AND IT U NDERTAKES TWO TYPES OF SALES OF SAREES VIZ., SAREES MADE FROM MILL AND THE OTHER FROM WEAVERS O F SAREES WHICH ARE OF LOW COST/RANGE. WE NOTE THAT THE AO HAS MADE AD HOC DISALLOWANCE OF 20% TAKING NOTE OF THE FACT THAT THE EXPENSES FOR PURCHASE OF SAREES WERE MADE IN CASH F ROM THE LOCAL MARKET WHICH ASSEMBLES AT A PRE-DECIDED PLACE ONCE IN A WEEK, AT DIFFERENT PARTS OF KOLKATA AND THESE SALES TAKE PLACE FROM TEMPORARY SHEDS AND THERE WERE NO VOUCHER/BILL , NAME OF THE PARTY, ADDRESS ETC OF VENDORS. BE THAT AS IT MAY BE, WE NOTE THAT IN THIS CASE, SALES HAVE BEEN ACCEPTED BY THE AO, SO PURCHASES CANNOT BE DISBELIEVED. WE ALSO NOTE T HAT THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE HAVE NOT BEEN REJECTED BY THE AO, THER EFORE, ESTIMATION OF INCOME COULD NOT HAVE BEEN VENTURED INTO BY THE AO WITHOUT FOLLOWING SEC. 145(3) AND SEC. 144 OF THE ACT. WE NOTE THAT THE ASSESSEE MAINTAINED BOOKS U/S. 44A B OF THE ACT WHICH WAS DULY AUDITED. IN SUCH A SCENARIO, WITHOUT REJECTING THE BOOKS OF ACCOUNT, THE AD HOC DISALLOWANCE MADE IS 3 ITA NO. 2416/KOL/2018 MUSLIN., AY 2012-13 NOT SUSTAINABLE IN THE EYES OF LAW, WHICH VIEW THE TRIBUNAL HAS BEEN TAKING CONSISTENTLY IN PLETHORA OF DECISIONS. IT SHOULD BE KEPT IN MIND TH AT IF THE AO FINDS THAT ANY SPECIFIC EXPENDITURE IS UNVERIFIABLE OR IS UN-VOUCHED, THEN SUCH SPECIFIC EXPENDITURE IS DISALLOWABLE. IN THE PRESENT CASE NO SPECIFIC ITEM HAS BEEN IDENT IFIED BY THE AO TO MAKE THE DISALLOWANCE, THEREFORE, WE ARE OF THE VIEW THAT ESTIMATED DISALL OWANCE AS CONFIRMED BY THE LD. CIT(A) IS AN ARBITRARY EXERCISE OF POWER AND, THEREFORE, UNSU STAINABLE IN THE EYES OF LAW AND THEREFORE, IT STANDS DELETED. APPEAL OF ASSESSEE IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH APRIL, 2019 SD/- (A. T. VARKEY) JUDICIAL MEMBER DATED: 26TH APRIL, 2019 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT MUSLIN, NTE-150, GOLE BAZAR, KHARAGPUR, PASCHIM MEDINIPUR-721301, WEST BENGAL. 2 RESPONDENT ITO, WARD-39(3), MIDNAPORE. 3 4 5 CIT(A)-11 , KOLKATA. (SENT THROUGH E-MAIL) CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR