D.C.I.T., Circle-5, Kolkata, Kolkata V. M/s East India Holdings Pvt. Ltd., Kolkata

ITA 2585/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4463 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 12-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S M SURANA
• Assessee Lawyers: NIRAJ KUMAR
• Keywords: Unexplained investment; Document seized; Tax effect; Documents seized
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI K.NARSIMHA CHARY, JUDICIAL MEMBER ITA NO.2432 & 2585/KOL/2013 ASSESSMENT YEARS:2010-11 M/S EAST INDIA HOLDINGS PVT. LTD., 501A, DIAMOND PRESTIGE, 41A, AJC BOSE ROAD, KOLKATA-700 017 [ PAN NO.AAACE 6994 Q ] DCIT, CIRCLE-5 KOLKATA / V/S . / V/S . DCIT, CIRCLE-5, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, KOLKATA-69 M/S EAST INDIA HOLDINGS PVT. LTD. /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI S.M.SURANA, ADVOCATE /BY RESPONDENT SHRI NIRAJ KUMAR, CIT-DR /DATE OF HEARING 24-08-2016 /DATE OF PRONOUNCEMENT 23-09-2016 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THESE ARE CROSS-APPEALS BY THE ASSESSEE AND REVENUE AGAINST THE COMMON ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-VI, KOLKATA DATED 30.08.2013. ASSESSMENT WAS FRAMED BY DCIT, CIRCLE-5, KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER DATED 25.03.2013 FOR ASSESSMENT YEAR 2010-11. 2. SINCE BOTH THE CROSS APPEALS RELATE TO THE SAME YEAR AND INVOLVE COMMON ISSUE SO WE DECIDED TO ADJUDICATE BOTH THE APPEALS TOGETH ER BY PASSING A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. SHRI S.M. SURANA, LD. AUTHORIZED REPRESENTATIVE APP EARED ON BEHALF OF ASSESSEE AND SHRI NIRAJ KUMAR, LD. DEPARTMENTAL REPRESENTATIVE A PPEARED ON BEHALF OF REVENUE. ITA NO.2432 & 2585/KOL/2013 A.Y. 2010-11 M/S EAST INDIA HOLDINGS PVT. LTD. VS. DCIT, CIR-5, KOL. PAGE 2 3. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE R ECORDS ARE THAT THE ASSESSEE IN THE PRESENT CASE IS LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF MANUFACTURING AND COMMISSION AGENT. THE ASSESSEE FILED ITS RETURN OF INCOME AS ON 09.10.2011 SHOWING A LOSS OF RS.1,03,17,888/-.THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES U/S 143(3) AND 142(1) WAS DULY SERVED UPON THE ASSESSEE. THE ASSES SMENT WAS FRAMED U/S 143(3) OF THE ACT AT A TOTAL INCOME OF RS. 7,25,03,870/- ONLY . 4. THE PREDOMINANT ISSUE RAISED IN GROUND NO. 1 TO 6 OF ASSESSEES APPEAL IS THE ADDITION OF UNACCOUNTED PURCHASES AND CORRESPONDING SALES FOR RS.35,16,544/- SUSTAINED BY THE LD. CIT(A) OUT OF TOTAL UNACCOUNTE D PURCHASE OF RS. 6,18,42,251/- ADDED BY THE AO. THE BASIC PREMISE FOR SUSTAINING T HE ADDITION BY THE LD. CIT(A) IS THAT THERE WAS UNACCOUNTED INVESTMENT IN THE UNACCO UNTED PURCHASE AND SALE OF THE GOODS. 4.1 THE ASSESSEE WAS MANUFACTURING MS INGOT. A SEAR CH AND SEIZURE WAS CONDUCTED AT THE FACTORY AND OTHER PREMISES RELATED TO IT BY THE DGCEI AS ON 03.07.2009. THE DGCEI FOUND FROM THE SEIZED DOCUMEN TS THAT THE FINISHED GOODS HAVE BEEN DISPATCHED FROM THE FACTORY WITHOUT THE P AYMENT OF EXCISE DUTY WHICH WAS ALSO ADMITTED BY ONE OF THE DIRECTOR MR. RAJEEV AGA RWAL OF THE ASSESSEE COMPANY IN HIS STATEMENT BEFORE THE DGCEI. FURTHER, IT WAS OBS ERVED THE ASSESSEE DID NOT SHOW THE UNACCOUNTED PURCHASE, PRODUCTION OF MS INGOTS A ND REMOVAL OF THE GOODS. THE FACT OF UNACCOUNTED PURCHASE OF GOODS/ PRODUCTION A ND REMOVAL OF GOODS WAS DETECTED FROM THE VARIOUS SEIZED DOCUMENTS AND THE SAME FACT WAS ADMITTED BY THE DIRECTORS OF THE ASSESSEE COMPANY IN THEIR DEPOSITION. IT WAS AL SO FOUND THAT THE ASSESSEE HAS MADE A PAYMENT OF RS50 CRORES BY WAY OF SIX POST DATED C HEQUES TO THE CENTRAL EXCISE DEPARTMENT AND ACCEPTED THE CLANDESTINE REMOVAL OF FINISHED GOODS. THE AO DETERMINED THE VALUE OF UNACCOUNTED MANUFACTURED OF GOODS AND ITS REMOVAL OF FINISHED GOODS 2925.808 M.T. FROM THE FACTORY AMOUN TING TO RS. 6,18,42,251/- ONLY. THE AO CALLED UPON THE ASSESSEE FOR THE CLARIFICATI ON OF THE ABOVE FACTS. IN COMPLIANCE TO THE ABOVE, THE ASSESSEE SUBMITTED THAT IT WAS EN GAGED IN THE JOB WORK ACTIVITIES. THE RAW MATERIAL RECEIVED FOR THE JOB WORK AND ITS PROD UCTION AND ITS REMOVAL WAS NOT RECORDED IN ITS REGULAR BOOKS OF ACCOUNTS INCLUDING RAW MATERIAL STOCK/PRODUCTION/ ITA NO.2432 & 2585/KOL/2013 A.Y. 2010-11 M/S EAST INDIA HOLDINGS PVT. LTD. VS. DCIT, CIR-5, KOL. PAGE 3 FINISHED GOODS REGISTERS. THIS JOB WORK WAS DONE TO UTILISE THE CAPACITY OF THE FACTORY AND JOB WORK CHARGES WAS RECEIVED FOR RS.3,170/- PE R M.T. WHICH WAS OFFERED TO INCOME TAX. HOWEVER THE AO DISREGARDED THE EXPLANAT ION OF THE ASSESSEE AND ADDED TOTAL UNACCOUNTED PURCHASES AND SALES TO THE INCOME OF THE ASSESSEE. 5. AGGRIEVED, ASSESSEE CARRIED THE MATTER BEFORE LD .CIT(A) WHEREAS ASSESSEE SUBMITTED THAT THERE WAS NO ANY UNACCOUNTED SALES A ND PURCHASES OF THE GOODS BUT THE GOODS WERE RECEIVED FROM SEVERAL PARTIES ON JOB WOR K BASIS. THE ASSESSEE ON SUCH JOB WORK CHARGED RS 3170 PER M.T. AND IT HAS BEEN SHOWN IN ITS BOOKS OF ACCOUNTS AS JOB WORK AMOUNTING TO RS.77,17,440/-. INCOME FROM THE J OB WORK DONE HAS BEEN PROPERLY DISCLOSED IT ITS BOOKS OF ACCOUNT. THE AO FAILED TO BRING ANY DEFECT IN THE BOOKS OF ACCOUNTS AND THEREFORE THE AO HAS NOT REJECTED SAME . AO HAS ADDED BACK THE ENTIRE GOODS REMOVED FROM THE FACTORY WITHOUT THE INVOICE COVER. EVEN IF THE ASSESSEE HAS NOT SUBSTANTIATED THE TRANSACTION THEN ALSO ONLY PR OFIT ELEMENT SHOULD HAVE BEEN ADDED TO THE INCOME AND NOT THE ENTIRE SALE PROCEEDS. THE ASSESSEE ALSO SUBMITTED THAT THE DETAILS OF THE JOB WORK CHARGES WERE FILED BEFORE T HE AO AT THE TIME OF ASSESSMENT DEPICTING THE TRUCK NUMBER USED FOR THE DELIVERY OF THE JOB WORK GOODS, THE DATE OF LOADING, RATE, WEIGHT AND NAME OF THE PARTY FROM TH E JOB WORK WAS RECEIVED. SIMILAR DETAILS WERE ALSO PREPARED BY THE DGCEI FOR FINDING OUT THE UNACCOUNTED MANUFACTURED GOODS WHICH IS EXACTLY MATCHING WITH T HE DETAILS PREPARED BY THE ASSESSEE FOR THE JOB WORK CHARGES. IT WAS ALSO SUBM ITTED THAT THE ASSESSEE WAS NOT LIABLE FOR THE PAYMENT OF EXCISE DUTY ON THE JOB CH ARGES BY VIRTUE OF THE GENERAL EXEMPTIONS 4 UNDER THE CENTRAL EXCISE LAWS. THE LIA BILITY FOR THE PAYMENT OF EXCISE DUTY WAS FASTEN ON THE ASSESSEE AS IT FAILED TO FUR NISH THE DETAILS OF THE PARTIES FOR WHOM IT MANUFACTURED THE GOODS ON JOB WORK BASIS. LD.CIT(A) DISREGARDED THE PLEA OF THE ASSESSEE BY O BSERVING THAT THE SETTLEMENT COMMISSION OF THE EXCISE HAS ALSO UPHELD THE FINDIN GS OF THE EXCISE AUTHORITY SO CONTENTION THAT THE GOODS WERE RECEIVED BY THE ASSE SSEE FOR JOB WORK AND SAME HAS ALREADY BEEN DISCLOSED AS THE INCOME IN THE BOOKS O F ACCOUNTS WAS NOT TENABLE. AS SUCH THE ASSESSEE DID NOT MAKE ANY CLAIM BEFORE THE EXCISE AUTHORITIES THAT THE GOODS WERE RECEIVED FOR THE JOB WORK. EVEN THE DEPOSITION OF DIRECTOR MR. RAHUL AGARWAL ITA NO.2432 & 2585/KOL/2013 A.Y. 2010-11 M/S EAST INDIA HOLDINGS PVT. LTD. VS. DCIT, CIR-5, KOL. PAGE 4 TOOK ON 29.01.2010 AND CONFIRMED THE CLANDESTINE PU RCHASES OF GOODS. ASSESSEE WAS ALSO NOT ABLE TO PRODUCE ANY DETAILS OF THE PARTIES FOR WHOM JOB WORK HAS BEEN DONE. MERE PRESENTATION OF FEW NAMES WITHOUT ANY ADDRESS AND OTHER SUPPORTING DOCUMENTS DOES NOT DISCHARGE THE ASSESSEE FROM THE ONUS OF PR ODUCING THE EVIDENCE. HOWEVER THE LD. CIT(A) ACCEPTED THE PLEA OF THE ASS ESSEE WITH REGARD TO THE QUANTUM OF ADDITION. THE ADDITION MADE BY THE AO CONSISTS O F TWO PARTS ONE PROFIT ELEMENT AND SECOND UNACCOUNTED INVESTMENT IN UNACCOUNTED PURCHA SES. LD. CIT(A) OBSERVED THAT THE JOB CHARGES CLAIMED BY THE ASSESSEE SHOWS A HIG HER GROSS PROFIT THAN THE PRODUCTION OF THE GOODS. ASSESSEE HAS ALREADY DISCL OSED THE JOB WORK INCOME SO NO OTHER ADDITION SHALL BE MADE ON THIS COUNT. NOW THE ADDITION HAS TO BE MADE ON ACCOUNT OF UNACC OUNTED INVESTMENT MADE THROUGH UNACCOUNTED PURCHASES. THE PURCHASES HAS NOT BEEN M ADE IN ONE GO RATHER IT IS A ROTATION OF FUNDS THROUGHOUT THE YEAR. LD CIT(A) HA S MADE A REASONABLE BASIS FOR DETERMINATION OF ESTIMATED INVESTMENT. AVERAGE OF T HE OPENING AND CLOSING INVENTORY WAS 5.68% OF THE ASSESSEES TOTAL SALE (7,02,81,200 + 11,91,26,248.00/2 * 1,66,54,68001). SAME RATIO WAS APPLIES TO THE UNACC OUNTED SALE I.E. 6,18,42,251* 5.68% I.E. RS 35,16,544.00. ACCORDINGLY LD. CIT(A) HAS CONFIRMED THE ADDITION OF RS 35,16,544.00 ON ACCOUNT OF UNACCOUNTED PURCHASES AND SALES. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) BOTH ASSESSEE AND REVENUE ARE IN APPEAL BEFORE US. 6. THE ASSESSEE FILED APPEAL FOR THE ADDITION SUSTA INED BY THE LD. CIT(A) ON ACCOUNT OF INVESTMENT IN UNACCOUNTED PURCHASES, MAN UFACTURING AND SALES AMOUNTING TO RS 35,16,544.00. WHILE THE REVENUE IS IN APPEAL BEFORE US FOR THE DELETION MADE BY THE LD. CIT(A). FIRST WE TAKE UP ASSESSEE APPEAL ITA 2432/KOL/2013. 7. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER:- 1. FOR THAT THE ORDER OF THE LD. CIT(A) IS ARBITRA RY, ILLEGAL AND BAD IN LAW. 2. FOR THAT THE LD. CIT(A) ERRED IN HOLDING THE VIE W THAT THE CLEARANCE OF THE GOODS WITHOUT PAYMENT F EXCISE DUTY WAS UNACCOUNTED TRANSACTIONS OF THE APPELLANT IGNORING THE FACT THAT ON THE SAME TRANSA CTIONS JOB CHARGES WERE DISCLOSED WHICH WAS DULY ACCEPTED BY THE DEPARTMENT AND EVEN BY THE LD. CIT(A) AND THEREFORE SIMPLY BECAUSE THE EXCISE AUTH ORITIES LEVIED EXCISE DUTY ITA NO.2432 & 2585/KOL/2013 A.Y. 2010-11 M/S EAST INDIA HOLDINGS PVT. LTD. VS. DCIT, CIR-5, KOL. PAGE 5 ON SUCH CLEARANCE OF GOODS THE SAME CANNOT BE TREAT ED AS UNDISCLOSED TRANSACTIONS OF THE APPELLANT. 3. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) ERRED IN TREATING THE CLEARANCE OF GOODS WITHOUT PAYMENT OF EXCISE DUTY AS ASSESSEES UNACCOUNTED TRANSACTIONS. 4. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING AN A DDITION OF RS.35,16,544/- AS AVERAGE INVENTORY LEVEL WHEN NO CAPITAL WAS REQUIRE D FOR THE JOB WORKING CHARGES AND EVEN OTHERWISE NO EVIDENCE TO SUGGEST T HAT THE ASSESSEE MADE ANY INVESTMENT IN THE TRANSACTIONS. 5. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ADDITION OF RS.35,16,544/- WAS NOT JUSTIFIED. 6. 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 PR AYED FOR. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EALS:- 1. THAT THE CIT(A) ERRED IN UPHOLDING ONLY THE ADD ITION TO THE EXTENT OF PROFIT ELEMENT ON UNACCOUNTED SALE, WHEN THE AO HAD RIGHTL Y ADDED THE ENTIRE SUPPRESSED PRODUCTION AND RELATED EXPENSES AS THEY WERE ENTIRELY OUT OF BOOKS. 8. THE LD. AR BEFORE US FILED A PAPER BOOK WHICH IS RUNNING FROM PAGES 1 TO 68 AND SUBMITTED THAT THE GOODS ON WHICH JOB WORK WAS DONE WERE NOT INCLUDED IN THE STOCK REGISTER. BUT THE JOB CHARGES WERE DULY REFLE CTED IN THE AUDITED FINANCIAL STATEMENTS. AS SUCH THERE WAS NO EVASION OF INCOME TAX. THEREFORE THERE WAS NO INVESTMENT IN THE FORM OF UNACCOUNTED PURCHASE AND SALE OF THE GOODS. THE LD. AR DREW OUR ATTENTION ON PAGES 1 TO 16 OF THE PAPER BO OK WHERE THE DETAILS OF THE JOB CHARGES RECEIVED AND DETAILS PREPARED BY THE EXCISE DEPARTMENT ARE PLACED AND FURTHER SUBMITTED THAT IT IS COMPLETELY MATCHING. THE AO HA S NOT BROUGHT ANY DEFECTS IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE INCLUDING THE STO CK REGISTER. ON THE OTHER HAND THE LD. DR SUBMITTED THAT THE ASS ESSEE HAS NOT FURNISHED THE DETAILS OF THE JOB WORK DETAILS. THE LD CIT(A) HAS PRESUMED THE ROTATION OF FUND INVOLVED IN THE UNACCOUNTED PURCHASE AND SALE OF THE GOODS. THE LD CIT(A) HAS NOT TAKEN ANY REMAND REPORT FROM THE AO AND THEREFORE THE ORDER O F LD CIT(A) IS A NON-SPEAKING ORDER. THE LD DR BEFORE US REQUESTED TO RESTORE TH E MATTER TO THE AO FOR FURTHER ADJUDICATION. BOTH THE LD. AR AND DR RELIED ON THE ORDERS OF AUTHORITIES BELOW AS FAVOURABLE TO THEM. ITA NO.2432 & 2585/KOL/2013 A.Y. 2010-11 M/S EAST INDIA HOLDINGS PVT. LTD. VS. DCIT, CIR-5, KOL. PAGE 6 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION WE FIND THAT THE AO HAS MADE THE ADDITION FOR THE ENTIRE VALUE OF THE GOODS WHICH WAS REMOVED FRO M FACTORY OF THE ASSESSEE WITHOUT MAKING ANY ACCOUNTING ENTRY IN THE BOOKS OF ACCOUNT S. THE FACT OF NON-ACCOUNTING FOR THE PURCHASE, MANUFACTURING AND SALES OF THE GOODS WAS DETECTED BY THE AO ON THE BASIS OF SEARCH DOCUMENTS WHICH WAS CONDUCTED BY DG CEI ON THE ASSESSEE. HOWEVER, THE LD CIT(A) SUSTAINED THE ADDITION ONLY TO THE EX TENT OF UNACCOUNTED INVESTMENT IN THE AFORESAID TRANSACTION BY OBSERVING THAT THE ENT IRE VALUE CANNOT BE BROUGHT TO TAX BUT THE PROFIT ELEMENT ON SUCH UNACCOUNTED TRANSACT IONS ALONG WITH UNACCOUNTED INVESTMENT ARE SUBJECT TO TAX. NOW THE QUESTIONS BE FORE US ARISE SO AS TO WHETHER THE ADDITION MADE BY THE AO IN THE AFORESAID FACTS AND CIRCUMSTANCES IS JUSTIFIED. IT IS CLEAR FROM THE FACTS THAT THE ASSESSEE HAS NOT ACCO UNTED THE PURCHASE, MANUFACTURING AND SALES OF THE GOODS WORTH OF RS. 6,18,42,251/-. BUT IN OUR CONSIDERED VIEW THE ENTIRE ADDITION OF THE AMOUNT BY THE AO IS NOT AS P ER WELL SETTLED INCOME TAX LAWS. IT IS BECAUSE THE AMOUNT OF PROFIT AND UNDISCLOSED FUND I NVESTED IN SUCH ACTIVITY CAN ALONE BE BROUGHT TO TAX. IN VIEW OF ABOVE, WE CONCUR WITH THE VIEW OF THE LD. CIT(A). THEREFORE THE APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. NOW COMING TO ASSESSEES APPEAL IN ITA NO. 2432/KOL /2013 . 10. WE FIND THAT THE ASSESSEE IN THE INSTANT CASE H AS DULY ACCOUNTED THE INCOME ARISING FROM THE JOB CHARGES WHICH IS REFLECTING IN THE AUDITED FINANCIAL STATEMENT. HOWEVER, THE LD CIT(A) FOUND THAT THE ASSESSEE HAS FAILED TO FURNISH THE DETAILS OF THE PARTIES FOR WHOM THE ASSESSEE HAS DONE THE JOB WORK DURING THE YEAR UNDER CONSIDERATION. THE LD CIT(A) ALSO OBSERVED THAT THE DIRECTOR OF THE COMPANY IN HIS STATEMENT HAS ADMITTED THE FACT THAT UNACCOUNTED PU RCHASES AND SALES WERE NOT ACCOUNTED FOR. HOWEVER, FROM FACTS WE FIND THAT THE LD CIT(A) HAS NOT BROUGHT ANY DOCUMENTARY EVIDENCE SHOWING THAT THE ASSESSEE HAS MADE ANY UNACCOUNTED PURCHASE AND SALES. THE LD CIT(A) HAS HEAVILY RELIED ON THE STATEMENT GIVEN BY THE DIRECTOR OF THE ASSESSEE COMPANY, EXCISE DOCUMENTS AND THE FAIL URE ON THE PART OF THE ASSESSEE TO FURNISH THE DETAILS OF THE PARTIES WHO GOT THE JOB WORK DONE BY THE ASSESSEE. THE LD CIT(A) HAS NOT TAKEN ANY REMAND REPORT FROM AO BEFO RE MAKING ANY ADDITION. THE ASSESSEE HAS UNDOUBTEDLY SHOWN THE INCOME FROM THE JOB CHARGES WHICH HAS BEEN ITA NO.2432 & 2585/KOL/2013 A.Y. 2010-11 M/S EAST INDIA HOLDINGS PVT. LTD. VS. DCIT, CIR-5, KOL. PAGE 7 ACCEPTED BY THE LD CIT(A). THIS FACT REVEALS THAT T HE ASSESSEE HAS NOT MADE ANY TRANSACTION OF PURCHASE AND SALE WITHOUT RECORDING IN THE BOOKS OF ACCOUNTS. THEREFORE IN OUR CONSIDERED VIEW THE QUESTION OF MAKING THE A DDITION FOR THE MONEY INVESTED IN THE UNACCOUNTED PURCHASE AND SALE OF THE GOODS DOES NOT ARISE. THE LOWER AUTHORITIES HAD NOT BROUGHT ANY DEFECT IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IN OUR CONSIDERED VIEW ANY INCOME CAN BE BROUGHT TO TAX EFFECT IF BAS ED ON SOME COGENT MATERIALS AND EVIDENCE. ACCORDINGLY WE DISAGREE WITH THE ORDER OF THE LD CIT(A) HOLDING THAT THE ASSESSEE HAS EXPLAINED THE JOB CHARGES IN THE INCOM E TAX RETURN BUT THE UNACCOUNTED MONEY IN INVOLVED THE PURCHASE AND SALE OF THE GOOD S IN RELATION TO THE JOB CHARGES HAS REMAINED UNEXPLAINED. IN OUR CONSIDERED VIEW THE LD CIT(A) HAS GIVEN CONTRARY FINDING WITH REGARD TO THE JOB CHARGES, UNACCOUNTED PURCHASE AND SALE OF THE GOODS. IN THIS CONNECTION, WE RELY IN THE CASE OF GEORGE OOMMEN VS. COMMISSIONER OF AGRICULTURAL INCOME TAX 52 ITR 977, WHERE THE HONBLE HIGH COURT OF KERALA HAS HELD AS UNDER :- THE ACCOUNTS OF THE ASSESSEE CANNOT BE REJECTED ON MERE SUSPICIONS, BUT ONLY ON POSITIVE EVIDENCE OF THEIR UNRELIABILITY. THE LA W DOES NOT PERMIT THE IT AUTHORITIES TO REJECT THE ACCOUNTS PRODUCED BY AN A SSESSEE AS INCORRECT OR UNRELIABLE UNLESS THERE IS SOME POSITIVE MATERIAL T O HOLD SO. ACCEPTANCE OF ACCOUNTS KEPT IN THE USUAL COURSE OF BUSINESS IS TH E RULE, AND THEIR REJECTION MUST BE THE EXCEPTION FOR PROPER REASONS ONLY. IF T HE AUTHORITY SEES ANY REASON TO SUSPECT THE ACCOUNTS, HE IS TO REQUIRE PROOF FRO M THE ASSESSEE ON ' SPECIFIED POINTS ' AND THE ASSESSEE IS BOUND TO GIVE CONVINCING PROO F THEREON. THE ITO HAS STATED THE ACCOUNTS TO BE SUPPORTED BY CHECK-RO LL, WAGES-BOOK AND BILLS FOR PURCHASES OF MANURE AND LIKE VOUCHERS. IT WAS THEN A MATTER FOR VERIFICATION OF THE ACCOUNTS WITH THE RELATIVE VOUCHERS, AND NOT FO R SPECULATION OR SUSPICION. THE PROPOSITION ' THE HIGHER THE INCOME DERIVED THE LOWER WOULD BE TH E EXPENSES ' APPEARS NOVEL. NORMALLY, IT IS HIGHER EXPENDITURE THAT BRINGS HIGHER INCOME. THE OBSERVATION THAT THE ITO HAS 'ESTIMATED AND REDUCED THE YIELD FOR THE TWO YEARS LOWER THAN THAT DETERMINED FOR THE PR EVIOUS YEAR' IS ALSO AGAINST THE EVIDENCE ON RECORD. THE YIELD FOR THE PREVIOUS YEAR DETERMINED BY THE ASSTT. COMMISSIONER WAS 375 1BS. PER ACRE, WHILE THAT DETE RMINED BY THE AGRL. ITO FOR THE YEARS CONCERNED WAS ABOVE 435 1BS. PER ACRE . IT IS THEN CLEAR THAT THE COMMISSIONER HAS OVERLOOKED MATERIAL FACTS FOUND BY THE AGRL. ITO AND HAS SET ASIDE THE ORDERS OF ASSESSMENT WITHOUT PROPER J USTIFICATION. THE COMMISSIONER'S ORDER DOES NOT DISCLOSE ANY MATERIAL FOR DISBELIEVING THE ASSESSEE'S ACCOUNTS AND VOUCHERS. THEREFORE, THE CO MMISSIONER HAD NO JUSTIFICATION TO REJECT THE ASSESSEE'S ACCOUNTS OR TO SET ASIDE THE ASSESSMENT MADE BY THE AGRL. ITO. ACCOUNTS OF ASSESSEE CANNOT BE REJECTED ON MERE SUSPICIOUS, BUT ONLY ON POSITIVE EVIDENCE OF THEIR UNRELIABILITY ITA NO.2432 & 2585/KOL/2013 A.Y. 2010-11 M/S EAST INDIA HOLDINGS PVT. LTD. VS. DCIT, CIR-5, KOL. PAGE 8 SIMILARLY WE ALSO RELY IN THE CASE OF CIT VS. AMITABH GUNVANTBHAI 129 ITR 573 WHERE THE HONBLE HIGH COURT OF GUJARAT HAS HELD AS UNDER:- IT IS A BASIC PRINCIPLE OF CIVIL LAW THAT IF THERE IS NO CHALLENGE TO THE TRANSACTION REPRESENTED BY THE ENTRIES OR THE GENUI NENESS OF THE ENTRIES, THEN IT IS NOT OPEN TO THE OTHER SIDE - IN THIS CASE THE RE VENUE - TO CONTEND THAT THAT WHICH IS SHOWN BY THE ENTRIES IS NOT THE REAL STATE OF AFFAIRS. THE TRIBUNAL, IN THE INSTANT CASE, HAS OVERLOOKED ONE IMPORTANT FACT , NAMELY, THAT THE ENTRIES IN THE BOOKS OF ACCOUNT OF G (HUF) WERE NOT CHALLENGED BY THE DEPARTMENT AS A DEVICE OR AS A CLOAK TO EVADE THE TAX. NOWHERE ON T HE RECORD THE DEPARTMENT CHALLENGED THAT THE ENTRIES DID NOT REFLECT THE REA L TRANSACTION BETWEEN THE PARTIES. IN THE ABSENCE OF ANY SUCH CHALLENGE, IT W AS NOT OPEN TO THE TRIBUNAL TO COME TO THE CONCLUSION THAT THE MONEY WAS NOT RECEI VED BY G IN HIS CAPACITY OF HUF BUT WAS RECEIVED BY HIM IN HIS CAPACITY AS THE GUARDIAN OF A. THIS IS PARTICULARLY SO IN VIEW OF THE FACT THAT NO FURTHER ATTEMPT WAS EVER MADE BY THE DEPARTMENT TO SHOW THAT, IN FACT, THOUGH THE ENTRIE S WERE MADE IN THE BOOKS OF ACCOUNT OF THE HUF, THE MONEYS WERE RECEIVED OR PAS SED ON TO A OR THAT THE MONEYS WERE RECEIVED BY G IN HIS CAPACITY AS THE GU ARDIAN OF A. THAT APART AS IS OPEN TO THE DEPARTMENT IN A CASE WHERE A MINOR I S THE ASSESSEE, EITHER TO TREAT THE GUARDIAN OF THE MINOR AS REPRESENTATIVE A SSESSEE OR TO TREAT THE MINOR HIMSELF AS THE ASSESSEE, IN THE INSTANT CASE, ALL T HROUGHOUT THE ASSESSEE IS THE MINOR, A, THOUGH HE MAY BE REPRESENTED BY HIS NATUR AL GUARDIAN G, BUT G WAS NOT BEING ASSESSED IN HIS OWN NAME AS REPRESENTATIV E ASSESSEE ON BEHALF OF A. THEREFORE, TO SAY THAT G WAS REPRESENTATIVE ASSESSE E OR THAT THE AMOUNT DID REACH THE REPRESENTATIVE ASSESSEE IN HIS CAPACITY A S GUARDIAN OF A, IS NOT CORRECT SO FAR AS THE RECORD OF THIS CASE IS CONCER NED. AS IT WAS NOT OPEN TO THE TRIBUNAL IN LAW TO DRAW T HE INFERENCE WHEN THE ENTRIES IN THE BOOKS OF ACCOUNT OF G (HUF) WERE NOT CHALLENGED AS A DEVICE OR AS A CLOAK TO EVADE TAX, THE TRIBUNALS C ONCLUSION THAT THE MONEY HAD IN FACT REACHED THE HANDS OF THE NATURAL GUARDIAN OF A AND HENCE THE ASSESSEE, IS NOT BASED ON ANY EVIDENCE ON RECORD. IF THE BENEFIT OF THE SUPPLEMENTARY AWARD IN THE SH APE OF REDUCTION IN THE PRICE FROM RS. 80 PER SHARE TO RS. 50 PER SHARE HAD NOT BEEN PASSED TO THE ASSESSEE A AND HAS NOT IN FACT REACHED HIM, THE ITO WAS NOT JUSTIFIED IN ASSESSING THE ASSESSEE ON THE ADDITION AL AMOUNT OF CAPITAL GAINS OF RS. 36,000. THERE BEING NO EVIDENCE TO SHOW THAT THE AMOUNT OF DIFFERENCE IN THE PRICE OF SHARE ACTUALLY REACHED THE ASSESSEE, THE A SSESSEE CANNOT BE CHARGED FOR CAPITAL GAINS. ACCOUNTSREJECTIONIT IS NOT OPEN TO REVENUE TO SAY THAT WHAT IS SHOWN BY THE ENTRY IS N OT REAL STATE OF AFFAIRS IF THERE IS NO CHALLENGE TO TRANSACTION REPRESENTED BY THE ENTRY OR TO GENUINESS OF THE SAME. ITA NO.2432 & 2585/KOL/2013 A.Y. 2010-11 M/S EAST INDIA HOLDINGS PVT. LTD. VS. DCIT, CIR-5, KOL. PAGE 9 IN VIEW OF ABOVE, WE ARE OF THE VIEW THAT THE LD. C IT(A) FAILED TO BRING ANY COGENT EVIDENCE BASED ON THE DOCUMENTS THAT THE ASSESSEE I S IN THE PRACTICE OF THE MAKING UNACCOUNTED TRANSACTIONS FOR PURCHASE & SALE OF THE GOODS. ANY DEFAULT COMMITTED BY THE ASSESSEE UNDER THE EXCISE LAW CANNOT BE IMPORTE D UNDER INCOME TAX PROCEEDINGS UNTIL AND UNLESS THERE ARE SUFFICIENT EVIDENCE TO E STABLISH THE LIVE LINK WITH THE INCOME TAX PROCEEDINGS. ACCORDINGLY, WE REVERSE THE ORDER OF AUTHORITIES BELOW AND GROUND RAISED BY THE ASSESSEE IS ALLOWED. AO IS DIRECTED A CCORDINGLY. 11. IN THE RESULT, APPEAL OF REVENUE STANDS DISMISSED A ND THAT OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 23/09/2016 SD/- SD/- (K.NARSIMHA CHARY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP ! - 23/09/2016 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S EAST INDIA HOLDINGS PVT. LTD., 501A, DIAMOND PRESTIGE, 40 A, AJC BOSE ROAD, KOLKATA-700 017 2. /RESPONDENT-DCIT, CIRCLE-5, P-7, CHOWRINGHEE SQUARE , AAYAKAR BHAWAN, KOLKATA -69 3. '# % / CONCERNED CIT 4. % - / CIT (A) 5. &'( ))'# , '# / DR, ITAT, KOLKATA 6. (*+ / GUARD FILE. BY ORDER/ , /TRUE COPY/ / '#,