Sibnath Dawn, Burdwan V. ITO, Ward 1(3),Burdwan, Burdwan

ITA 307/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1734 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 15-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARYA
• Assessee Lawyers: R K KANKARIA
• Keywords: Unexplained expenditure; Business income
• Section: 69C; 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENCH KOLKATA BEFORE SHRI A.T. VARKEY, JM & DR. A.L.SAINI, AM ./ ITA NO.307/KOL/2017 ( / ASSESSMENT YEAR : 2008-09 SIBNATH DAWN VILLAGE & P.O.- JAMALPUR, DISTRICT- BURDWAN, PIN-713408 VS. ITO, WARD-1(3), BURDWAN, AAYAKAR BHAWAN, COURT COMPOUND, P.O & DIST.- BURDWAN-713101. ./ ./PAN/GIR NO. : ACTPD 5358 B ( /ASSESSEE ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI R.K. KANKARIA, CA /REVENUE BY : SHRI ARINDAM BHATTACHARYA, ADDL. CIT SR. DR. / DATE OF HEARING : 16/06/2017 /DATE OF PRONOUNCEMENT 09/08/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEAR 2008-09, IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), BURDWAN, IN APPEAL NO. 210/CIT(A)/ASL/W-1(3)/BWN/2012-13, DATED 29.11.2016, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3)/251 OF THE INCOME TAX ACT 1961, (HEREINAFTER REFERRED TO AS THE ACT), DATED 04.01.2013. 2. BRIEF FACTS OF THE CASE QUA THE ASSESSEE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09 ON 30.09.2008, DECLARING THE TOTAL INCOME OF RS. 2,83,313/-. THE INCOME TAX RETURN FILED ITA NO.307/17 SIBNATH DAWN 2 BY THE ASSESSEE WAS DULY PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY U/S 143(3) OF THE ACT AND THE ASSESSING OFFICER MADE THE ASSESSMENT BY MAKING VARIOUS ADDITIONS. ONE OF THE ADDITIONS MADE BY THE ASSESSING OFFICER RELATES TO ADDITION U/S 69C OF THE I.T.ACT, 1961 AT RS. 17,22,132/-, FOR WHICH THE ASSESSEE IS AN APPEAL BEFORE US. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. FOR THAT THE ORDER OF THE LD. CIT(A) IS ARBITRARY AND BAD IN LAW AND ON FACTS. 2. FOR THAT THE LD. CIT(A) IS BAD IN LAW IN MAKING THE ADDITION OF RS. 17,22,132/- U/S 69C OF THE INCOME-TAX ACT, 1961. 3.1 THE BRIEF FACTS QUA THE ASSESSEE ARE THAT THE ASSESSEE PURCHASED TOTAL AMOUNT OF GOODS FROM M/S. PARADEEP PHOSPHATES LTD. TO THE TUNE OF RS.1,88,62,363.56/- BUT HE HAS SHOWN IN HIS ACCOUNTS THE PURCHASE FIGURE FROM M/S. PARADEEP PHOSPHATES LTD AT RS.1,71,40,231/-. THUS HE HAS UNDER SHOWN THE PURCHASE TO THE TUNE OF RS.17,22,132/- WHICH TALLIES QUANTITY WISE AND VALUE WISE THE SAID TRANSACTION RELATING TO THE PERIOD FROM 04.2.2008 TO 31.03.2008. IT IS ALSO REVEALED FROM THE RECORD THAT THE SAID TRANSACTIONS NOT ONLY HAS BEEN KEPT OUTSIDE OF THE PURCHASE REGISTER IT WAS FOUND TO BE NOT RECORDED IN THE STOCK REGISTER AND PARTY LEDGER AS IT IS FOUND TO A CREDIT PURCHASE AS REFLECTED IN THE SUPPLIERS BOOKS DULY ADMITTED BY THE ASSESSEE. IT IS FURTHER REVEALED FROM HIS ACCOUNTS THAT THERE WAS NO OUTSTANDING AMOUNT IN THE NAME OF M/S PARADEEP PHOSPHATES LTD AGAINST THE PURCHASE, AS WELL AS, PAYMENT RELATING TO SAID PURCHASE HAS NOT BEEN REFLECTED IN THE CASH BOOK OF THE ASSESSEE. IT, THEREFORE, TRANSPIRES THAT THE SAID DIFFERENCE IN EXPENDITURE AMOUNTING TO RS.17,22,132/- IS NOTHING BUT AN EXPENDITURE WHICH HAS BEEN INCURRED WITHOUT REFLECTING IN HIS BOOKS OF ACCOUNTS. THE ASSESSEE, VIDE HIS LETTER DATED 01.10.2010, HAS ADMITTED THE SAID PURCHASE TO BE UNDISCLOSED AND COULD NOT OFFER ANY EXPLANATION IN THE MATTER OF RELATED PAYMENT. AS SUCH, ITA NO.307/17 SIBNATH DAWN 3 THE SOURCE OF THE SAID EXPENDITURE WHICH HAS BEEN INCURRED WITHOUT REFLECTING IN HIS BOOKS OF ACCOUNTS AMOUNTING TO RS.17,22,132/- REMAINED UNEXPLAINED AND HENCE IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED EXPENDITURE U/S.69C OF THE IT ACT, 1961. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEAL) WHO HAS DISMISSED THE APPEAL OF THE ASSESSEE. BEFORE THE LD. CIT(A), THE ASSESSEE STATED THAT THE IMPUGNED PAYMENT HAD ARISEN OUT OF THE BOOKS OF THE ASSESSEE SINCE THEY WERE REFLECTED IN THE LEDGER BOOKS OF THE ASSESSEE. THE ONLY THING WAS THAT NEITHER THE PAYMENTS FOR PURCHASES, NOR THE RECEIPT OF SALES PROCEEDS WERE REFLECTED IN THE BANK. THEREFORE, IT WAS NOT LOGICAL FOR THE ASSESSING OFFICER TO TREAT THIS AS A MATTER OF UNDISCLOSED SOURCE PURCHASES. THE LD. CIT(A) OBSERVED THAT IT WAS ONLY THE VERSION OF THE ASSESSEE THAT THE PURCHASES WERE MADE OUT OF SALE PROCEEDS OBTAINED IN CASH, WITHOUT REFLECTING THE SAID SALE PROCEEDS EITHER IN THE CASH BOOK OR IN THE BANK BOOKS. THERE IS NOTHING TO SUBSTANTIATE THIS CLAIM. THEREFORE, THE LD. CIT(A) HELD THAT IT BECAME IMPOSSIBLE TO DRAW A NEXUS BETWEEN THE CLAIMED CASH RECEIVED FROM SALES AND THE CLAIMED CASH PAYMENTS FOR THE PURCHASES. SUCH CASH TRANSACTIONS, IF ACTUALLY MADE, AS IT IS, ARE SEVERELY RESTRICTED BY LAW, PRECISELY FOR THE REASON, THAT THE ASSESSEE CAN CONTINUE TO MAKE CLAIMS AND TRY AND SHIFT THE ONUS TO THE DEPARTMENT TO PROVE OTHERWISE. IT IS A FACT THAT THE PURCHASES HAVE BEEN MADE. THE ASSESSING OFFICER HAS PROVED BEYOND DOUBT THAT PURCHASES HAVE INDEED BEEN MADE BY THE ASSESSEE. IT IS ALSO NOT DENIED BY THE ASSESSEE HIMSELF. THE FACT THAT THESE PURCHASES ARE BONA FIDE, IN THAT, THEY HAVE BEEN REFLECTED WITHIN THE KNOWN SOURCES OF THE ASSESSEE, IS A FACT THAT HAS TO BE ESTABLISHED, THEREFORE, THE ONUS FOR ESTABLISHING THIS LIES WITH THE ASSESSEE AND NOT UPON THE ASSESSING OFFICER. THEREFORE, THE LD. CIT(A) HELD THAT THE ASSESSEE HAS NOT BEEN ABLE TO DISCHARGE HIS ONUS WITH RESPECT TO THESE TRANSACTIONS THEREFORE, HE HAS NOT BEEN ABLE TO CREATE A CAUSE FOR INTERFERENCE WITH THE ORDER OF THE ASSESSING OFFICER AND THEREFORE, THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. ITA NO.307/17 SIBNATH DAWN 4 3.2. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED BEFORE US THAT THE ASSESSEE HAS MADE A TOTAL PURCHASE OF RS.1,88,62,363/- FROM PARADEEP PHOSPHATES LIMITED (HEREINAFTER REFERRED TO AS 'PPL') DURING THE FINANCIAL YEAR ENDED 31 MARCH, 2008. HOWEVER IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE PURCHASES AMOUNTING TO INR 1,71,40,231/- IS REFLECTED. THE ABOVE DIFFERENCE OF INR 17,22,132/- IS ON ACCOUNT OF NON RECORDING OF TRANSACTIONS RELATING TO PURCHASE MADE FROM PPL DURING THE PERIOD FROM 4THE FEBRUARY, 2008 TO 31 ST MARCH, 2008. IN THE ORIGINAL ASSESSMENT ORDER U/S 143(3) DATED 22.10.2010 (PAGE NO 20-26). THE AO ERRED IN MENTIONING THAT THE SOURCE OF THE ABOVE EXPENDITURE (I.E. UNRECORDED PURCHASE OF RS.17,22,132/-) REMAINED UNEXPLAINED AND HENCE IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE ACT. AGGRIEVED OF THE ABOVE, THE ASSESSEE SUBMITTED THE FOLLOWING TO THE LD. CIT(A): SOURCE OF PURCHASES - AMOUNTS RECEIVED BY THE ASSESSEE AGAINST THE SALES MADE DURING THE YEAR HAS BEEN USED FOR MAKING PAYMENTS FOR THE ABOVE PURCHASES. PAYMENTS ARE MADE THROUGH BANK ACCOUNTS - THE PAYMENTS FOR THE ABOVE PURCHASES ARE MADE THROUGH REGULAR BANK ACCOUNTS MAINTAINED BY THE ASSESSEE DURING THE FINANCIAL YEAR ENDED 31 MARCH 2008 AND DULY DISCLOSED IN THE BALANCE SHEET AS ON THE SAME DATE. COPY OF THE BANK STATEMENT HIGHLIGHTING THE PAYMENTS MADE TO PPL (PAGE NO 27-56) ALONG WITH THE LEDGER OF PPL (PAGE NO 57-58) FOR THE PERIOD CONCERNED WAS ALSO SUBMITTED TO LD. CIT (A). THE ABOVE TRANSACTION CLEARLY REFLECTED THAT THERE WERE PURCHASES FROM PPL WHICH ESCAPED IN INCLUSION OF TOTAL PURCHASES AS WELL AS TOTAL SALES OF THE ASSESSEE. THE SAME HAD BEEN ACCEPTED BY THE AO IN PAGE 6 PARA NO. 9 OF THE ORIGINAL ASSESSMENT ORDER U/S 143(3) DATED 22.10.2010 - 'IT IS CLEAR THAT THE ASSESSEE HAS NOT TAKEN INTO ACCOUNT SALES OF RS. 17,22,132/- ARISING ON A/C OF UNACCOUNTED PURCHASES.' THE AO HAD ALSO DRAWN A LOGICAL CONCLUSION THAT SINCE THE PURCHASES AND SALES ARE KEPT OUTSIDE THE BOOKS OF A/C'S. THE GROSS PROFIT ITA NO.307/17 SIBNATH DAWN 5 OF THE SALE SHOULD BE ADDED. THE ASSESSEE HAD ALSO ACCEPTED THE ADDITION OF THIS GP OF RS. 6,222/- AS PER THE ORIGINAL ASSESSMENT ORDER U/S 143(3) DATED 22.10.2010 AND DID NOT APPEAL AGAINST THE SAME. HOWEVER LD. CIT(A) WHILE DISPOSING THE APPEAL VIDE HIS ORDER DATED 23.11.2012 (PAGE NO 59-63) GAVE THE FOLLOWING DIRECTION - 'IF SUCH PAYMENTS ARE SEEN TO BE FROM DISCLOSED SOURCES OR NOT AT ALL MADE DURING THE CURRENT ASSESSMENT YEAR THEN NO CASE EXISTS FOR AN ADDITION OF THE TYPE THE A.O HAS MADE. THE APPELLANT IN THAT CASE WILL GET CONSEQUENTIAL RELICT. THE GROUND OF APPEAL IS ALLOWED SUBJECT TO THE DIRECTIONS GIVEN ABOVE. ' THE ABOVE DIRECTIONS BY THE LD. CIT(A) WAS IN ITSELF UNLAWFUL AS IT RESULTED IN REFERRING BACK THE CASE TO THE ASSESSING OFFICER WHICH IS AGAINST THE POWERS OF THE LD. CIT(A) UNDER SECTION 251 OF THE INCOME TAX ACT. 1961. AS PER SECTION 251, IN CASE OF AN APPEAL AGAINST AN ORDER OF ASSESSMENT THE LD. CIT(A) CAN EITHER CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT BUT CAN NEVER REFER IT BACK TO THE AO. HOWEVER THE ASSESSEE. BEING A SMALL BUSINESSMAN BASED IN A SMALL TOWN OF BURDWAN, DIDN'T PREFER AN APPEAL AGAINST THE SAME IN THE ANTICIPATION THAT THE SUBSEQUENT PROCEEDING ON THE DIRECTION OF THE LD. CIT(A), WITH THE AO WILL RESULT IN CORRECT ASSESSMENT. THUS ON THE BASIS OF THE ABOVE DIRECTION THE ASSESSING OFFICER CALLED ON THE ASSESSEE TO SUBSTANTIATE THAT THE PAYMENTS ARE FROM DISCLOSED SOURCES. THE ASSESSEE IN HIS REPLY SUBMITTED THAT ALL THE PAYMENTS WERE FROM REGULAR BANK ACCOUNTS AND THE SOURCE OF THE PAYMENT WAS THE SALE PROCEEDS OF THESE UNACCOUNTED PURCHASES ONLY. THE SALE PROCEEDS BEING RECEIVED IN CASH HAS BEEN ROUTED THROUGH THE REGULAR BANK ACCOUNT OF THE ASSESSEE AND USED TO PAY FOR THE PURCHASES. IN SPITE OF THE ABOVE THE ASSESSING OFFICER, WHILE PASSING THE SUBSEQUENT ORDER U/S 143(3)/251 DATED 04.01.2013 (PAGE NO 64-66), RETAINED THE ENTIRE ADDITION OF RS. 17,22,132/- MADE U/S. 69C OF THE INCOME TAX ACT 1961 AS PER THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) DATED 22.10.2010. BEING AGGRIEVED BY THE ORDER DATED 04.01.2013 THE ASSESSEE ONCE AGAIN PREFERRED AN APPEAL WITH THE LD. CIT (A), BURDWAN. MOREOVER ITA NO.307/17 SIBNATH DAWN 6 IN PAGE NO. 2 OF THE SUBSEQUENT ORDER U/S 143(3)/251 DATED 04.01.2013, THE ASSESSING OFFICER WHILE EMANATING THE SUBMISSION OF THE ASSESSEE STATED THAT - 'THE FACT THAT THE IMPUGNED PAYMENTS WERE ROUTED THROUGH THE ASSESSEES REGULAR BANK A/C LEADS TO THE REASONED INFERENCE THAT THE ASSESSEE HAS DELIBERATELY DONE SO AS TO AVOID DETECTION BY THE TAX AUTHORITIES. IN RESPONSE TO THIS THE ASSESSEE SUBMITTED TO THE LD. CIT(A) THAT THERE WAS NO DELIBERATION ON PART OF THE ASSESSEE TO UNDERSTATE THE PURCHASE. THE ASSESSEE ONLY MISTAKENLY FAILED TO RECORD PURCHASE MADE FROM PPL AMOUNTING TO RS. 17,22,132/- AND ITS SALE WHICH DID NOT LED TO ANY LOSS OF REVENUE TO THE INCOME TAX AUTHORITIES. IF THE INTENSION OF THE ASSESSEE WAS TO EVADE TAX HE WOULD NOT HAVE UNDERSTATED PURCHASE. ALSO IN RESPECT OF SUCH UNDERSTATED PURCHASE AND SALE THE ASSESSEE HAS ACCEPTED THE ADDITION AS PER THE G. P. RATIO MADE BY THE ASSESSING OFFICER IN THE ORIGINAL ORDER U/S 143(3) DATED 22.10 .2010 AGAINST WHICH NO APPEAL WAS FILED. TO MAKE THE POSITION MORE CLEAR, A CASH LEDGER SUMMARY OF THE ASSESSEE- ONE AS PER THE AUDITED BOOKS OF ACCOUNTS AS FILED WITH THE RETURN OF INCOME WHEREIN MISTAKENLY THE PURCHASES OF RS. 17,22,131/- AND ITS RELATED SALES AMOUNTING TO RS. 17,28,353/- (INCLUDING GP OF RS. 6,222/- CALCULATED @ 0.36% AS PER THE ORIGINAL ASSESSMENT ORDER U/S 143(3) DATED 22.10.2010) WAS NOT INCLUDED AND THE OTHER ONE INCLUDING THE UNRECORDED SALES AND PURCHASES (PAGE NO 67-68) WAS SUBMITTED TO LD. CIT(A). ALONG WITH THE ABOVE AND ON DEMAND OF THE LD. CIT(A ) AN ANALYSIS OF THE PURCHASE MADE FROM PPL FROM 01.02.2008 TO 31.03.2008 AND ITS RELATED SALES, EXTRACT OF STOCK AND SALES REGISTER, SALE BILLS, LEDGER OF PPL FROM 01.02.2008 TO 31.03.2008, INVOICES ISSUED BY PPL FROM 01.02.2008 TO 31.03.2008 AND DETAILS OF CASH DEPOSITED IN BANK ACCOUNTS FOR THE PERIOD 01.04.2007 TO 31.03.2008, WERE ALSO SUBMITTED DURING THE PROCEEDINGS TO VERIFY THE SALES MADE WHICH WERE MISTAKENLY EXCLUDED FROM THE SALES REFLECTED IN THE AUDIT REPORT. THE PURCHASE FROM PPL DURING 01.02.2008 TO 31.03.2008 HAS BEEN DULY SOLD AND THE RELEVANT ITA NO.307/17 SIBNATH DAWN 7 ENTRIES HAD ALSO BEEN DULY MADE IN STOCK REGISTER AS WELL AS SALES REGISTER AND IT IS THESE SALE PROCEEDS WHICH HAVE BEEN DEPOSITED IN BANK ACCOUNTS FROM WHERE PAYMENT HAS BEEN MADE TO PPL. THUS IT WOULD BE GRAVE INJUSTICE TO THE ASSESSEE AND ALSO ERRONEOUS IF THE TRANSACTION OF PURCHASE IS CONSIDERED IN ISOLATION WITHOUT CONSIDERING THE RELATED SALES. A LOGICAL CONCLUSION WOULD HAVE BEEN TO CONSIDER THE GROSS PROFIT MADE ON THE TRANSACTIONS AS A WHOLE. HOWEVER THE LD. CIT (A) DISMISSED THE APPEAL VIDE ITS ORDER DATED 29.11.2016 IN AN ARBITRAL MANNER WITHOUT EVEN APPRECIATING THE MATERIALS ON RECORD. THE LD. CIT (A) WHILE DISPOSING THE MATTER HAS STATED THE FOLLOWING IN THE ORDER- 'THE APPELLANT IS TRYING TO SUGGEST A SCHEME, AS PER WHICH HE HAS INDULGED IN SALES AND PURCHASES IN CASH - PROHIBITED BY LAW - WHILE KEEPING THE ENTIRE TRANSACTION OUT OF THE BANK AND ENSURING THAT THERE IS NO CORROBORATION OF THESE TRANSACTIONS. IF THE APPELLANT STATES THAT THE TRANSACTIONS OF SALES AND PURCHASES ARE RELATED IN THAT, THE CASH OBTAINED FROM ONE WAS USED IN THE OTHER, THEN HE HAS ALSO TO SHOW A NEXUS BETWEEN THE TWO TRANSACTIONS AS WELL AS POINT OUT THE CIRCUMSTANCES IN WHICH THESE CASH TRANSACTIONS TOOK PLACE. THAT IS, THE SALE AND PURCHASE, BOTH, TAKING PLACE IN CASH SOMETHING THAT WOULD AUTOMATICALLY BE STRUCK BY SECTION 40A(3). ' TO THIS IT WOULD BE APPROPRIATE TO REITERATE THE FACT THAT THE TRANSACTION FOR PURCHASE FROM PPL WERE NEVER MADE IN CASH AND THUS IN NO MANNER WHATSOEVER SECTION 40A(3) COULD HAVE BEEN INVOKED. THE PAYMENTS TO PPL WERE MADE THROUGH REGULAR BANK ACCOUNT OF THE ASSESSEE AND THE ONLY QUESTION RAISED BY THE DEPARTMENT WAS REGARDING ITS SOURCE. TO THIS THE ASSESSEE HAS CONTENDED FROM THE BEGINNING THAT THE SOURCE OF THE PAYMENT WAS THE SALE PROCEEDS OF THESE UNRECORDED PURCHASES ONLY WHICH HAS BEEN DEPOSITED IN THE BANK ACCOUNT AND THUS NO ADDITION IS CALLED FOR THE UNRECORDED PURCHASES AS THE GP ON THIS UNRECORDED PURCHASE HAS ALREADY BEEN TAXED IN THE ORIGINAL SCRUTINY ASSESSMENT ORDER U/S 143(3). THE LD. CIT( A) IN ITS ORDER DATED 29.11.2016 HAS FAILED TO APPRECIATE THE MATERIALS PLACED ON RECORD BY THE ASSESSEE AND THE SAME IS EVIDENT FROM ITA NO.307/17 SIBNATH DAWN 8 THE ORDER WHERE THE LD. CIT(A) HAS NOT EVEN DISCUSSED THE VARIOUS MATERIALS LIKE CASH SUMMARY, STOCK REGISTER, SALE BILLS. ETC. THESE MATERIALS WERE PRODUCED ALONG WITH THE PAPER BOOK AND DURING THE COURSE OF PROCEEDINGS. ALSO WORTH NOTING WOULD BE THE FACT THAT THE LAST HEARING TAKEN BY LD. CIT(A) IN OUR CASE WAS ON 19.01.2016 WHEREAS THE ORDER WAS PASSED ON 29.11.2016 AND SERVED ON US ON 22.12.2016. THIS SUBSTANTIAL GAP IN TIME OF AROUND 11 MONTHS, BETWEEN DATE OF HEARING AND SERVING OF ORDER SHOWS THAT LD. CIT(A) FAILED TO REMEMBER THE ACTUAL HAPPENINGS OF THE PROCEEDINGS AND THE MATERIALS PRODUCED AND HENCE WAS NOT ABLE TO DISCUSS THE SAME WHILE DISPOSING THE APPEAL. 3.3. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE CIT(A), WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 3.4. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD, WE NOTICE THAT THE ASSESSEE SUBMITTED BEFORE US THE COPY OF BANK STATEMENT (VIDE PB 46, 47) WHEREIN IT IS VERY MUCH CLEAR THAT THE ASSESSEE HAS PURCHASED THROUGH ACCOUNT PAYEE CHEQUES. THE COUNSEL SUBMITTED BEFORE US THAT THE TRANSACTION FOR PURCHASE FROM PPL WERE NEVER MADE IN CASH AND THUS IN NO MANNER WHATSOEVER SECTION 40A(3) COULD HAVE BEEN INVOKED. THE PAYMENTS TO PPL WERE MADE THROUGH REGULAR BANK ACCOUNT OF THE ASSESSEE AND THE ONLY QUESTION RAISED BY THE DEPARTMENT WAS REGARDING ITS SOURCE. TO THIS THE ASSESSEE HAS CONTENDED FROM THE BEGINNING THAT THE SOURCE OF THE PAYMENT WAS THE SALE PROCEEDS OF THESE UNRECORDED PURCHASES ONLY WHICH HAS BEEN DEPOSITED IN THE BANK ACCOUNT AND THUS NO ADDITION IS CALLED FOR THE UNRECORDED PURCHASES AS THE GP ON THIS UNRECORDED PURCHASE HAS ALREADY BEEN TAXED IN THE ORIGINAL SCRUTINY ASSESSMENT ORDER U/S 143(3). WE ARE OF THE VIEW THAT THE LD. CIT(A) IN HIS ORDER DATED 29 TH NOVEMBER, 2016 HAS FAILED TO APPRECIATE THE DOCUMENTS SUBMITTED BY THE ASSESSEE AND THE SAME IS EVIDENT FROM THE ORDER WHERE THE LD. CIT(A) HAS NOT EVEN ITA NO.307/17 SIBNATH DAWN 9 DISCUSSED THE VARIOUS MATERIALS LIKE CASH SUMMERY, STOCK REGISTER, SALES BILL ETC. THESE MATERIALS WERE PRODUCED ALONG WITH PAPER BOOK DURING THE COURSE OF PROCEEDINGS BEFORE THE LD. CIT(A). AT THIS JUNCTURE IT IS WORTHWHILE TO QUOTE SECTION 69C OF THE INCOME-TAX ACT, 1961: WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OF PART THEREOF, OR THE EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORILY, THE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MAY BE, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. PROVIDED THAT, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, SUCH UNEXPLAINED EXPENDITURE WHICH IS DEEMED TO BE THE INCOME OF THE ASSESSEE SHALL NOT BE ALLOWED AS A DEDUCTION UNDER ANY HEAD OF INCOME. THEREFORE, CONSIDERING THE FACTUAL POSITION AND THE PROVISION OF SECTION 69C OF THE ACT, WHERE IN IT HAS BEEN EXPLAINED THAT IN ANY FINANCIAL YEAR, AN ASSESSEE HAS INCURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE THEN THE ASSESSING OFFICER MAY MAKE THE ADDITION. BUT IN THIS CASE, THE ASSESSEE HAS PRODUCED THE BANK STATEMENT, SALES REGISTER, PURCHASE REGISTER ETC; BEFORE THE LD. CIT(A). THE BANK STATEMENT CLEARLY SHOWS THAT THE PURCHASES WERE MADE THROUGH ACCOUNT PAYEE CHEQUE. IN ADDITION TO THIS, THE ASSESSEE HAS CONTENDED FROM THE BEGINNING THAT THE SOURCE OF THE PAYMENT WAS THE SALE PROCEEDS OF THESE UNRECORDED PURCHASES ONLY WHICH HAS BEEN DEPOSITED IN THE BANK ACCOUNT AND THUS, NO ADDITION IS CALLED FOR THE UNRECORDED PURCHASES AS THE GP ON THIS UNRECORDED PURCHASE HAS ALREADY BEEN TAXED IN THE ORIGINAL SCRUTINY ASSESSMENT ORDER U/S 143(3) OF THE ACT, THE LD. CIT(A) FAILED TO CONTROVERT THE SAME. THE ASSESSEE HAS EXPLAINED THE RECONCILIATION OF PURCHASES AND SALES WHICH WERE NOT RECORDED AND THE LD. CIT(A) HAS FAILED TO FIND OUT ANY MISTAKE. THEREFORE, SOURCES OF THE PURCHASES WERE EXPLAINED BY THE ASSESSEE AND HENCE, IT IS NOT A FIT CASE TO MAKE THE ADDITION U/S 69C OF THE INCOME-TAX ACT, 1961. THEREFORE, WE ARE OF THE VIEW, THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND ITA NO.307/17 SIBNATH DAWN 10 CONFIRMED BY THE LD. CIT(A) NEEDS TO BE DELETED. ACCORDINGLY, WE DELETE THE ADDITION MADE U/S 69C AT RS. 17,22,132/- 3.5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE, IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 09/08/2017. SD/ - (A.T. VARKEY) SD/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; DATED 09/08/2017 SB , SR.PS. / COPY OF THE ORDER FORWARDED TO : SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, I.T.A.T., KOLKATA BENCHES, KOLKATA 1. / THE ASSESSEE- SIBNATH DAWN 2. / THE RESPONDENT.- ITO, WARD-1(3), BURDWAN 3. ( ) / THE CIT(A), :BURDWAN. 4. / CIT 5. , , / DR, ITAT, KOLKATA 6. / GUARD FILE. //TRUE COPY// BY ORDER