RINA DAS, Kolkata V. I.T.O Wd - 1(1) ,Midnapore., Midnapore

ITA 261/KOL/2013

• Counselvise Citation: 26123514 RSA 2013
• Duration Of Justice: 2 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 07-02-2013
• Court: TRIBUNAL
• Department Lawyers: MD G HYAS UDDIN
• Assessee Lawyers: MIRAJ D SHAH LD
• Keywords: Opportunity of cross examination
• Section: 40A(3); 143(3); 133(6)

Judgement Text

ITA NO.261/KOL/2013-B-JM RINA DAS 1 IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, K OLKATA BEFORE : SHRI M. BALAGANESH, ACCOUNTANT MEMBER, AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A NO. 261/KOL/2013 A.Y 2009-10 RINA DAS VS. INCOME TAX OFFICER PAN: ACUPD-8664P WARD 1(1), MIDNAPORE (APPELLANT) (RESPONDEN T) FOR THE APPELLANT/ASS ESSEE: SHRI MIRAJ D SHAH, ADVOCATE, LD.AR FOR THE RESPONDENT/ DEPARTMENT: MD. G HYAS UDDIN, JCIT, SR. LD.DR DATE OF HEARING: 26-10-2015 DATE OF PRONOUNCEMENT: 30-10-201 5 ORDER SHRI S.S. VISWANETHRA RAVI, JM THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE ORDE R OF THE LEARNED CITA IN APPEAL NO. 346/CIT(A)-XXXVI/KOL/WD.-1(1), MID,/09-1 0 DATED 06/12/2012 PASSED AGAINST THE ORDER OF ASSESSMENT FRAMED BY THE LEARN ED AO U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). 2. SHRI.MIRAJ SHAH, ADVOCATE, THE LEARNED AR ARGUE D ON BEHALF OF THE ASSESSEE AND SHRI.MD.GHIYASUDDIN, JCIT, THE LEARNED DR ARGU ED ON BEHALF OF THE REVENUE. 3. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE DISALLOWANCE U/S 40A(3) OF THE ACT IN THE SUM OF RS. 25,45,380/- COU LD BE MADE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.261/KOL/2013-B-JM RINA DAS 2 4. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSES SEE IS A JEWELER ENGAGED IN THE BUSINESS OF BUYING AND SELLING OF GOLD ORNAMENTS BA SED AT MIDNAPORE. THE RETURN OF INCOME WAS FILED ON 29.9.2009 DECLARING TAXABLE INC OME OF RS. 1,44,780/- FOR THE ASST YEAR 2009-10. DURING THE SCRUTINY PROCEEDINGS, THE LEARNED AO FOUND THAT THE ASSESSEE HAD MADE CERTAIN CASH PAYMENTS IN EXCESS O F RS. 20,000/- TO M/S BSK GEM & JEWELLERY (BULLION MERCHANT) FOR PURCHASE OF BULLIO N IN VIOLATION OF SECTION 40A(3) OF THE ACT. A SHOW CAUSE NOTICE WAS ISSUED BY THE LEA RNED AO TO THE ASSESSEE ON THIS SUBJECT. IN RESPONSE THERETO, THE ASSESSEE SUBMITT ED A REPLY DATED 26.9.2011 CONTENDING THAT EVERY PURCHASE WAS MADE BY PART BY PART THROU GH CASH, NOT EXCEEDING RS.20,000/-. THE PAYMENT WAS MADE THROUGH MESSENGER TO WHOM CASH OF RS.19,500/- OR RS.20,000/- WAS PAID BY THE ASSESSEE. THE MESSENGER DEPOSITED THE SAME TO THE SELLER. BUT THE SELLER USED TO ISSUE ONE MONEY RECEIPT CUM INVOICE AMOUNTING TO MORE THAN RS.20,000/-. THE ASSESSEE SUBMITTED A BREAK UP OF P AYMENT DAY TO DAY FROM WHICH IT IS SHOWN CASH PAYMENT WAS MADE ON A SINGLE DAY WHICH D OES NOT EXCEED RS.20,000/-. 4.1. NOT SATISFIED WITH THE CONTENTIONS ADVANCED BY THE ASSESSEE, THE LEARNED AO PROCEEDED TO MAKE DISALLOWANCE U/S 40A(3) OF THE AC T TO THE TUNE OF RS. 25,45,380/-. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CITA. DURING THE COURSE OF FIRST APPELLATE PROCEEDINGS, THE LEARNED CITA OBSERVED IN PARA 2 AND 3 AS UNDER :- PARA 2 & 3 OF LD.CIT(A)S ORDER: 2. THE APPEAL WAS FIXED FOR HEARING ON 12.4.2012 BUT NO ONE ATTENDED. AGAIN THE MATTER WAS FIXED FOR HEARING ON 11.5.2012 BUT A.R REQUESTED FOR ADJOURNMENT WHICH WAS GRANTED FOR 03. 8.2012 ON ADJOURNED DATE I.E 03.8.2012 NO ONE ATTENDED. AGAIN THE CASE WAS POSTED FOR HEARING FOR 05.12.2012 AND NO ONE ATTENDED. ONE LETTER WAS RECEIVED FROM APPELLANT ON THIS DATE SEEKING ADJOURNMENT FOR THRE E MONTHS. KEEPING IN VIEW OF NON-COMPLIANCE ATTITUDES OF APPELLANT FURTH ER ADJOURNMENT WAS REFUSED. 3. STATEMENT OF FACTS AND GROUND OF APPEAL WERE DU LY CONSIDERED. THE ONLY GROUND OF APPEAL TO BE ADJUDICATED IS DISALLOW ANCE U/S. 40A(3). OTHER GROUNDS ARE EITHER CONSEQUENTIAL OR GENERAL I N NATURE. ASSESSING ITA NO.261/KOL/2013-B-JM RINA DAS 3 OFFICER DISALLOWED A SUM OF RS.25,45,380/- ON ACCO UNT OF CASH PURCHASE OF GOLD BARS U/S. 40A(3) FROM M/S. BSK GEM & JEWELL ERY IN EXCESS OF RS.20,000/-. AS PER ACCOUNTS SUBMITTED BY THE SUPPL IER ALL PAYMENTS HAVE BEEN MADE IN CASH AND IN EXCESS OF RS.20,000/-. NO CROSS VERIFICATION AND CONFIRMATION WAS SUBMITTED BY THE APPELLANT BEFORE THE AO THAT EACH PAYMENT IS BELOW RS.20,000/-. NO EXCEPTIONAL CIRCUM STANCES WHICH FORCED APPELLANT TO MARE PAYMENT IN CASH AND ABOVE RS.20,0 00/- WERE CLAIMED BEFORE AO. EVEN IN APPELLATE PROCEEDING, APPELLANT DID NOT SUBMIT ANY SUCH DETAILS. HENCE, AO WAS RIGHT IN DISALLOWING CA SH PURCHASES IN EXCESS RS.20,000/-TO THE TUNE OF RS.25,45,380/- U/S. 40A( 3) OF INCOME TAX ACT. ACCORDINGLY, THE LEARNED CITA CONFIRMED THE ORDER O F THE LEARNED AO. 4.2. THE ASSESSEE CHALLENGED THE ORDER OF THE LEA RNED CITA BEFORE US. GROUNDS OF APPEAL: 1. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSMENT ORDER PASSED WAS IN VIOLATION OF PRINCIPLES OF NATU RAL JUSTICE HENCE IS BAD IN LAW AND BE QUASHED. 2. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX APPEALS ERRED IN NON GRA NTING PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE AND THUS THE ORDER BE SET ASIDE. 3. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX APPEALS ERRED IN CONFIRM ING THE ADDITION OF RS.25,45,380/- US 40A(3) OF THE INCOME TAX ACT 1 961. THE ADDITION IS UNCALLED FOR, UNJUSTIFIED AND HENCE THE SAME BE DELETED. 4. THE APPELLANT CRAVES LEAVE TO PRESS NEW, ADDITIONAL GROUNDS OF APPEAL OR MODIFY, WITHDRAW ANY OF THE ABOVE GROUNDS AT THE TIME OF HEARING OF THE APPEAL . 4.3. DURING THE COURSE OF HEARING, THE LEARNED AR DREW OUR ATTENTION TO PAGE 3 OF THE ORDER OF THE LEARNED AO THAT THE ASSESSEE FILED WRI TTEN SUBMISSIONS ON 26.9.2011 ALONG WITH A BREAK UP OF PAYMENTS DAY BY DAY WHICH PROVES THAT NO PAYMENT EXCEEDED RS 20,000/- WARRANTING ANY DISALLOWANCE U/S 40A(3) OF THE ACT. THE LEARNED AR ARGUED THAT THE LEARNED AO FAILED TO LOOK INTO THE STATEME NT SHOWING THE BREAK UP OF PAYMENTS MADE BY THE ASSESSEE TO BULLION MERCHANT I N PROPER PERSPECTIVE. FURTHER THE ITA NO.261/KOL/2013-B-JM RINA DAS 4 LEARNED CITA ALSO FAILED TO CONSIDER THE ADJOURNMEN T LETTER SUBMITTED BY THE ASSESSEE. THEREFORE, BOTH THE AUTHORITIES FAILED TO AFFORD PR OPER OPPORTUNITY TO THE ASSESSEE TO PROSECUTE HER CASE. FURTHER THE LEARNED AR SUBMITT ED A PAPER BOOK CONTAINING THE STATEMENT OF BREAK UP OF PAYMENTS AND CASE LAWS IN SUPPORT OF HIS CONTENTIONS. THE LEARNED AR FURTHER ARGUED THAT FACTUALLY THE BULLIO N WAS PURCHASED BY THE ASSESSEE ON CREDIT AND THAT THE STAFF OF THE BULLION MERCHANT U SED TO VISIT THE ASSESSEE AND COLLECT THE SALE PROCEEDS OF THE ASSESSEE AT FREQUENT INTERVALS FOR ONWARD TRANSMISSION TO THE BULLION MERCHANT. HE FURTHER STATED THAT NO PAYMEN TS MADE TO THE STAFF OF THE BULLION MERCHANT EXCEEDED RS. 20,000/- ON A SINGLE DAY WHIC H IS ALSO EVIDENT FROM THE PAPER BOOK FILED BY HIM BEFORE THE LOWER AUTHORITIES AND BEFORE US. HE FURTHER ARGUED THAT THE ASSESSEE IS NOT AWARE WHEN THE CONCERNED COLLEC TING STAFF HAD HANDED OVER THE CASH COLLECTIONS TO THE BULLION MERCHANT AND JUST BECAUS E THE BULLION MERCHANT HAD RECORDED THE SALE RECEIPTS IN HIS BOOKS ON A SINGLE DAY EXCE EDING RS. 20,000/- , THE ASSESSSEE CANNOT BE INVITED WITH THE PLENARY PROVISIONS OF SE CTION 40A(3) OF THE ACT. IN RESPONSE TO THIS, THE LEARNED DR DISPUTED THE SUBMI SSIONS OF THE LEARNED AR THAT THE STAFF OF BULLION MERCHANT COLLECTING PAYMENTS ON DA ILY BASIS FROM ASSESSEE IS FAR FROM TRUTH FOR THE REASON THAT THE ASSESSEE IS DOING HER BUSINESS IN MIDNAPORE AND WHEREAS THE BULLION MERCHANTS OFFICE IS SITUATED AT BURRA BAZAAR, KOLKATA. 4.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE LEARNED AO HAD MADE THIS ADDITION ON THE BASIS OF LEDGER ACCOUNT OBTAINED BY HIM DIRECTLY FROM THE BULLION M ERCHANT U/S 133(6) OF THE ACT WHICH CONTAINED CASH PAYMENTS MADE BY ASSESSEE IN E XCESS OF RS. 20,000/- TO THE BULLION MERCHANT ON A SINGLE DAY. THE ASSESSEE WHE N CONFRONTED WITH THE SAID DETAILS, CHOSE NOT TO FILE ANY REPLY BEFORE THE LEARNED AO I N RESPONSE TO SHOW CAUSE NOTICE DATED 21.11.2011. FURTHER THE ASSESSEE COULD NOT P LEAD HIS CASE BEFORE THE LEARNED CITA AS HER ADJOURNMENT REQUEST WAS REJECTED BY THE LEARNED CITA AND ORDER PASSED EXPARTE BY THE LEARNED CITA. IT IS PERTINENT TO NO TE THAT THE GENUINENESS OF THE PAYMENTS MADE BY THE ASSESSEE TO THE BULLION MERCHA NT IS NOT IN DISPUTE. THIS IS QUITE ITA NO.261/KOL/2013-B-JM RINA DAS 5 EVIDENT FROM THE LEDGER ACCOUNT OBTAINED BY THE LEA RNED AO FROM THE BULLION MERCHANT U/S 133(6) OF THE ACT. FROM THE DETAILS FILED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES AND BEFORE US, IT COULD BE SEEN THAT NO PAYMENTS WERE MADE TO BULLION MERCHANT EXCEEDING RS. 20,000/- ON A SINGLE DAY. F OR INSTANCE, THE LEARNED AR TOOK US TO THE PAGE 1 OF THE PAPER BOOK IN SERIAL NUMBER S 1-12 WHEREIN A TOTAL SUM OF RS. 2,39,289/- WAS PAID ON 12 DIFFERENT DATES BY THE AS SESSEE WHICH HAS BEEN RECORDED ON A SINGLE DATE BY THE BULLION MERCHANT ON 24.4.2008. WE FIND THAT THIS ASPECT IS NOT VERIFIED IN DETAIL BY THE LOWER AUTHORITIES. WE AL SO FIND IN VIEW OF THE NON-COMPLIANCE TO THE SHOW CAUSE NOTICE ISSUED BY THE LEARNED AO, THE ASSESSEE WAS DEPRIVED OF THE BENEFIT OF CROSS-EXAMINATION OF THE BULLION MERCHAN T AND THE STAFF OF THE BULLION MERCHANT FOR DELAYED ACCOUNTING OF RECEIPTS IN THEI R BOOKS, WHICH WOULD PROVE THE CONTENTIONS OF THE ASSESSEE BEYOND DOUBT. HENCE IN THESE FACTS AND CIRCUMSTANCES, WE DEEM IT FIT AND APPROPRIATE, IN THE INTEREST OF JUS TICE AND FAIR PLAY, TO SET ASIDE THIS ISSUE TO THE FILE OF THE LEARNED AO TO DECIDE THIS AFRESH BY TAKING INTO ACCOUNT ALL THE SUBMISSIONS FILED BY THE ASSESSEE AND IF NECESSARY, THE ASSESSEE BE PROVIDED AN OPPORTUNITY OF CROSS EXAMINATION OF THE BULLION MER CHANT AND HIS STAFF AND SUCH OTHER PERSONS FOR BETTER DISPOSAL OF THIS ISSUE. ACCORDI NGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 30 1 0/2015 SD/- ( M. BALAGANESH, ACCOUNTANT MEMBER ) SD/- (S.S.VISWANETHRA RAVI, JUDICIAL MEMBER) DATE 30 /10/2015 ITA NO.261/KOL/2013-B-JM RINA DAS 6 1.. THE APPELLANT/ RINA DAS C/O D.J SHAH & CO KALY AN BHAVAN 2 ELGIN ROAD, KOL-20. 2 THE RESPONDENT ITO W 1(1), MIDNAPORE AMRAVATI, 1 ST FL, KERANITOLA P.O MIDNAPORE, DIST MEDINIPORE. KOL-6 3 4.. /THE CIT, / THE CIT(A) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR ** PRADIP SPS COPY OF THE ORDER FORWARDED TO: