ITO, Wd-36(1), Kolkata, Kolkata V. Sri Ravi Sharma, Kolkata

ITA 331/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9498 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 21-02-2014
• Court: TRIBUNAL
• Department Lawyers: MD GHAYAS UDDIN JCITSRDR
• Assessee Lawyers: MANOJ KATARUKA
• Keywords: Unexplained cash credit; Rectification of order; Assessment record; Reassessment proceedings
• Section: 143(3); 142(1); 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI S.S.VISWANETHRA RAVI, JM & DR. A.L.SAI NI, AM ./ ITA NO.331/KOL/2014 ( / ASSESSMENT YEAR:2009-2010) ITO, WARD-36(1) AAYAKAR BHAWAN(POORVA), 8 TH FLOOR, 110, SHANTIPALLY, KOLKATA-700107 VS. SRI RAVI SHARMA, 8R, JAGODYAN LANE, 3 RD FLOOR, KOLKATA-700054 ./ ./PAN/GIR NO.:AZKPS3079G ( /APPELLANT ) .. ( / RESPONDENT ) REVENUE BY : MD. GHAYAS UDDIN, JCIT, SR-DR ASSESSEE BY : SHRI MANOJ KATARUKA, ADVOCATE / DATE OF HEARING : 12/01/2017 /DATE OF PRONOUNCEMENT 31/01/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAINI NG TO THE ASSESSMENT YEAR 2009-10, IS DIRECTED AGAINST THE OR DER PASSED BY THE LD. CIT(A), XX, KOLKATA IN APPEAL NO.358/CIT(A)-XX/WD-3 6(1)/2011-12/KOL, DATED 07.11.2013, WHICH IN TURN ARISES OUT OF AN OR DER PASSED BY THE ASSESSING OFFICER (AO) UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961, (HEREINAFTER REFERRED TO AS THE ACT), DATED 29.12 .2011. 2. BRIEF FACTS OF THE CASE QUA THE ASSESSEE ARE THA T THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2009-2010 ON 10-09-2009 DECLARING TOTAL INCOME OF RS.5,28,750/- AND THE SAM E WAS PROCESSED U/S.143(1) OF THE ACT. LATER ON, ASSESSEES CASE WA S SELECTED FOR SCRUTINY U/S.143(3) OF THE ACT AND THE AO HAS COMPLETED THE ASSESSMENT BY MAKING THE DISALLOWANCE OF UNEXPLAINED CASH CREDIT U/S.68 AT RS.48 LAKHS. ITA NO.331/14 SRI RAVI SHARMA 2 4. AGGRIEVED FROM THE ORDER OF AO, THE ASSESSEE FIL ED AN APPEAL BEFORE THE LD. CIT(A), WHO HAS DELETED THE ADDITION MADE BY THE AO OBSERVING THE FOLLOWINGS :- THE FACT OF THE CASE IS THAT THE APPELLANT CLAIMED TO HAVE RECEIVED AN ADVANCE OF RS.48,00,000/- FROM M/S. ADBUNIK CORP ORATION LTD. DURING THE F.Y. 2006-07 AND BROUGHT FORWARD THE SAM E TO THE AY. 2009-10 WHICH WAS VERIFIED BY THE A.O. FROM HIS BAN K ACCOUNT. THE A.O. CONCLUDED THAT THE PAYMENT FROM THE AFORESAID CO. WAS RECEIVED AGAINST SALES CLAIMED TO HAVE BEEN MADE TO THEM. HOWEVER, THERE WAS NO BUSINESS ACTIVITY DURING THE F.Y. 2006-07 OF THE APPELLANT. THE INCOME IN THAT A.Y. WAS SHOWN O NLY AS INCOME FROM OTHER SOURCES. THE SOURCE OF THE AMOUNT OF ADV ANCE BY THE SAID COMPANY TO THE APPELLANT WAS ALSO NOT EXPLAINE D PROPERLY. THEREFORE, IT WAS CONCLUDED THAT IT WAS NOTHING BUT UNEXPLAINED CASH CREDITS OF THE APPELLANT IN GUISE OF BOGUS CR EDITOR BEING ADHUNIK CORPORATION LTD., THEREFORE, THE SAME WAS A SSESSED U/S.68 OF THE I.T. ACT. HOWEVER, THE APPELLANT ARGU ED THAT HIS ASSESSMENT FOR A.Y. 2007-08 WAS REOPENED BY THE AO IN WHICH THE RECEIPTS OF RS.48,00,000/-WAS TAKEN INTO ACCOUNT AS RECEIPTS TOWARDS SALE OF GOODS AND ACCORDINGLY ASSESSMENT OR DER WAS PASSED. THOUGH IT IS NOT CLEAR FROM THE ASSESSMENT ORDER PASSED BY THE A.O. FOR THE A.Y. 2007-08 THAT THERE WAS ANY BU SINESS ACTIVITY OF THE APPELLANT DURING THAT YEAR FOR WHICH GOODS WERE SOLD AND ACCORDINGLY SALE PROCEED WAS RECEIVED. THERE IS NO DISCUSSION IN THE ASSESSMENT ORDER WITH REGARD TO BUSINESS ACTIVI TY OF THE APPELLANT DURING THE AY 2007-08. HOWEVER, SINCE THE AMOUNT WAS SHOWN TO HAVE BEEN RECEIVED DURING THE A.Y.2007-08, THE ADDITION MADE IN THE A.Y.2009-10 IS DIRECTED TO BE DELETED. 5. NOT BEING SATISFIED WITH THE ORDER OF LD. CIT(A) , THE REVENUE IS IN APPEAL BEFORE US AND HAS TAKEN THE FOLLOWING GROUND S OF APPEAL :- 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.48,00,0 00/- MADE BY THE AO ON ACCOUNT OF BOGUS CREDITORS. 2. ON THE FACTS & CIRCUMSTANCES OF THE CASE, THE L D. CIT(A) IGNORED THE REPLY OF THE ALLEGED ADVANCE CREDITOR WHILE DEC IDING THE ISSUE. 5.1 LD. DR FOR THE REVENUE HAS SUBMITTED THAT RS.40 LAKHS HAD BEEN INTRODUCED BY THE ASSESSEE IN THE BOOKS OF ACCOUNT AS BOGUS CREDITORS. THEREFORE, IT IS BOGUS ENTRY MADE BY THE ASSESSEE I N THE BOOKS OF ITA NO.331/14 SRI RAVI SHARMA 3 ACCOUNT. IN ADDITION TO THIS, LD. DR FOR THE REVENU E HAS ALSO PRIMARILY RELIED ON THE FINDINGS OF THE AO WHICH WE HAVE ALREADY NOT ED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 5.2. ON THE OTHER HAND, LD. AR FOR THE ASSESSEE HAS VEHEMENTLY SUBMITTED THAT THE ASSESSEE HAD TRADING BUSINESS DU RING THE FINANCIAL YEAR 2006-07 RELEVANT TO A.Y. 2007-08, AND SOLD GOO DS WORTH OF RS.50,13,164/- TO M/S ADHUNIK CORPORATION LTD. AS T HE ASSESSEE DID NOT REVEAL ANY INCOME OR LOSS FROM BUSINESS DURING THE F.Y. 2006-07 AND THE ASSESSMENT FOR A.Y. 2007-08 WAS ACCORDINGLY RE-OPEN ED U/S 147(C) OF THE I. T. ACT, 1961. IN SUCH REASSESSMENT PROCEEDINGS, THE ASSESSEE ADMITTED THAT HE PURCHASED GOODS WORTH OF RS.48 LAKHS ON CRE DIT AND MADE THE PAYMENTS RS.18,00,000/- ON 28/02/2007 AND RS.30,00, 000/- ON 26/03/2007 AGAINST THE PURCHASES THROUGH HIS BANK A CCOUNT BEING NO.CA/6343 WITH THE FEDERAL BANK LIMITED, BURRA BAZ AR, KOLKATA AFTER RECEIVING THE SALES PROCEEDS FROM M/S ADHUNIK CORPO RATION LTD. ACCORDINGLY, THE ASSESSMENT FRAMED EARLIER U/S.143( 3) OF THE ACT, PERTAINING TO ASSESMENT YEAR 2007-08, DATED 12.03.2 013 HAS BEEN RECTIFIED BY THE AO U/S.147 OF THE ACT. WHILE PASSI NG THE RECTIFICATION ORDER U/S.147 OF THE ACT, THE AO HAS OBSERVED AS UNDER :- THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE AS SESSMENT YEAR 2007-08 ON 26/03/2008 DECLARING TOTAL INCOME AT RS. 1,10,510/-. THE SAME WAS PROCESSED U/S 143(1) OF THE I-TAX ACT, 196 1 ON 05/03/2009 RAISING A REFUND OF RS.15,040/-, WHICH W AS DULY ISSUED TO THE ASSESSEE. DURING THE COURSE OF SCRUTINY PROC EEDINGS OF THIS CASE FOR THE ASSESSMENT YEAR 2009-10 IT CAME TO THE NOTICE THAT THE ASSESSEE HAD TRADING BUSINESS DURING THE F.Y. 2006- 07 AND SOLD GOODS WORTH- RS.50,13,164/- -TO -M/S ADHUNIK CORPOR ATION LTD. BUT THE RELEVANT ASSESSMENT RECORDS OF THE ASSESSEE DID NOT REVEAL ANY INCOME OR LOSS FROM BUSINESS DURING THE F.Y. 2006-0 7. THE CASE OF ITA NO.331/14 SRI RAVI SHARMA 4 THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08 WAS AC CORDINGLY RE- OPENED U/S 147(C) OF THE I. T. ACT, 1961 AND A NOTI CE U/S 148 OF THE I. T. ACT, 1961 WAS ISSUED ON 15/03/2012 AND SERVED UPON THE ASSESSEE ON 19/03/2012. IN COMPLIANCE TO THE NOTICE U/S 148, THE ASSESSEE SUBMITTED A LETTER DATED 08/08/2012, TO TH IS OFFICE ON 13/08/2012, STATING THAT HIS RETURN OF INCOME FOR T HE ASSESSMENT YEAR 2007-08, SUBMITTED U/S 139 ON 26/03/2008 SHOUL D BE TREATED AS HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 200 7-08 HAVING BEEN FILED U/S 148. FURTHER THE ASSESSEE WAS ALSO S ERVED WITH THE REASON FOR RE-OPENING U/S 147 OF THE CASE FOR THE A SSESSMENT YEAR 2007-08. NOTICES U/S 143(2) AND 142(1) WERE ALSO IS SUED AND SERVED UPON THE ASSESSEE. 2. THE ASSESSEE, VIDE HIS LETTER DATED -NIL--, (SUB MITTED TO THIS OFFICE ON 10/01/2013) ADMITTED THAT HE PURCHASED GOODS WOR TH RS.48,00,000/- ON CREDIT AND MADE THE PAYMENTS RS.1 8,00,000/- ON 28/02/2007 AND RS.30,00,000/- ON 26/03/2007 AGAINST THE PURCHASES THROUGH HIS BANK ACCOUNT BEING NO.CA/6343 WITH THE FEDERAL BANK LIMITED, BURRA BAZAR, KOLKATA AFTER RE CEIVING THE SALES PROCEEDS FROM M/S ADHUNIK CORPORATION LTD. HE HOWEV ER, VIDE HIS LETTER DATED -NIL-, (SUBMITTED ON 10/01/2013) ADMIT TED THAT HE HAD EARNED A PROFIT OF RS.2,13,164/-, ON THE SALES OF R S.50,13,164/-, AND-OFFERED THE INCOME FOR TAXATION FOR THE ASSESSM ENT YEAR 2007- 08. IN VIEW OF THE FACTS MENTIONED ABOVE THE SUM OF RS. 213164/- IS TREATED AS UNDISCLOSED INCOME IN THE HANDS OF THE A SSESSEE AND ACCORDINGLY ADDED TO HIS TOTAL INCOME FOR THE ASSES SMENT YEAR 2007-08. THE PENALTY PROCEEDING U/S 271(1)(C) HAS BEEN INITI ATED SEPARATELY AGAINST THE ADDITION. THEREFORE, AS PER REASSESSMENT ORDER U/S 147, ( PER TAINING TO A.Y. 2007- 08), THE ASSESSEE ADMITTED THAT HE HAD EARNED A PRO FIT OF RS.2,13,164/-, ON THE SALES OF RS.50,13,164/-, AND OFFERED THE INC OME FOR TAXATION FOR THE ASSESSMENT YEAR 2007-08. THE LD. AR FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ENTIRE SUM OF RS.50,13,164/- HAS BEEN TAXED IN THE ASSESSMENT YEA R 2007-08, THEREFORE, THERE IS NO ANY LIABILITY ON THE ASSESSE E TO TAX THIS AMOUNT IN ITA NO.331/14 SRI RAVI SHARMA 5 THE SUBSEQUENT ASSESSMENT YEAR 2009-2010, I.E.UNDER YEAR CONSIDERATION. ABOUT RS.48 LAKHS, IT IS COMING IN B OOKS OF ACCOUNTS OF THE ASSESSEE, AS AN OPENING BALANCE IN THE BALANCE SHEE T FOR THE ASSESSMENT YEAR 2009-2010 RELATES TO ANOTHER TRANSACTION. THE LD. AR HAS POINTED OUT THAT FROM THE BANK STATEMENT OF THE ASSESSEES ACCOUNT NO.6343 WITH FEDERAL BANK LTD., BURRA BAZAR, KOLKATA FOR THE PER IOD 24.02.2007 TO 10.04.2007, SUBMITTED BY THE ASSESSEE, ALSO REVEALS THAT THE SAID CHEQUES OF RS.18 LAKHS AND RS.30 LAKHS WERE CREDITE D TO THE SALE ACCOUNT ON 28.02.2007 AND 26.03.2007 AND FURTHER THE SAID S UMS WERE TRANSFERRED TO THE BANK ACCOUNT OF M/S SENDOZ IMPEX ON 28.02.20 07 AND 27.03.2007, RESPECTIVELY. THIS WAY, THE MISTAKE WAS RECTIFIED B Y THE AO IN HIS ORDER U/S 147 OF THE ACT, HENCE THERE IS NO BOGUS CREDITO RS IN THE BOOKS OF THE ASSESSEE. THE LD AR FOR THE ASSESSEE FURTHER ARGUED THAT HIS ASSESSMENT FOR A.Y. 2007-08 WAS REOPENED BY THE AO IN WHICH THE RECEIPTS OF RS. 48,00,000/-WAS TAKEN INTO ACCOUNT AS RECEIPTS TOWARDS SALE OF GOODS AND ACCOR DINGLY ASSESSMENT ORDER WAS PASSED. THOUGH IT IS NOT CLEAR FROM THE ORIGINA L ASSESSMENT ORDER PASSED BY THE A.O. FOR THE A.Y. 2007-08 THAT THERE WAS ANY BUSINESS ACTIVITY OF THE APPELLANT DURING THAT YEAR FOR WHICH GOODS WERE SOL D AND ACCORDINGLY SALE PROCEED WAS RECEIVED. THERE IS NO DISCUSSION IN THE ASSESSMENT ORDER WITH REGARD TO BUSINESS ACTIVITY OF THE APPELLANT DURING THE AY 2007-08. HOWEVER, SINCE THE AMOUNT WAS SHOWN TO HAVE BEEN RECEIVED DU RING THE A.Y.2007-08, THE ADDITION MADE IN THE A.Y.2009-10 SHOULD BE DELETED . ITA NO.331/14 SRI RAVI SHARMA 6 5.3. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL ON RECORD, WE ARE OF THE VIEW THAT THERE IS MERIT IN THE SUBMI SSIONS OF THE ASSESSEE, AS THE PROPOSITION CANVASSED BY LD. AR FOR THE ASSE SSEE ARE SUPPORTED BY THE FACTS NARRATED BY HIM ABOVE. THE LD. AR FOR THE ASSESSEE HAS POINTED OUT THAT RS.50,13,164/- HAS BEEN TAXED BY THE AO IN RECTIFICATION ORDER U/S.147 RELATING TO A.Y.2007-08, ONCE TAXED INCOME IN THE PREVIOUS YEAR CANNOT BE TAXED IN THE SUBSEQUENT ASSESSMENT YEAR, THAT IS YEAR UNDER CONSIDERATION. AS LD AR FOR THE ASSESSEE, SUBMITTED BEFORE US THAT ASSESSEE`S ASSESSMENT FOR A.Y. 2007-08 WAS REOPENED BY THE AO IN WHICH THE RECEIPTS OF RS.48,00,000/-WAS TAKEN INTO ACCOUNT AS RECEIPTS TO WARDS SALE OF GOODS AND ACCORDINGLY ASSESSMENT ORDER WAS PASSED. HOWEVER, S INCE THE AMOUNT WAS SHOWN TO HAVE BEEN RECEIVED DURING THE A.Y.2007-08 BY THE ASSESSEE AND ASSESSED THEREON IN REOPENING PROCEEDINGS, THE ADDI TION MADE IN THE A.Y.2009- 10 SHOULD BE DELETED. THEREFORE, CONSIDERING THE FACTUAL POSITION, WE ARE OF THE VIEW THAT THE ORDER PASSED BY LD. CIT(A) IS A REASONED ORDER AND DOES NOT REQUIRE ANY INTERFERENCE. ACCORDINGLY, WE CONFIRM THE ORDER PAS SED BY LD. CIT(A). 5.4. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31/ 01/2017. SD/ - (S.S.VISWANETHRA RAVI) SD/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; ! DATED 31/01/2017 ' $%& /PRAKASH MISHRA , 0 . / PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT-ITO WARD-36(1), KOLKATA 2. / THE RESPONDENT.- SRI RAVI SHARMA ITA NO.331/14 SRI RAVI SHARMA 7 / BY ORDER, / ( ASSTT. REGISTRAR) % & , / ITAT, 3. 1 ( ) / THE CIT(A), KOLKATA. 4. 1 / CIT 5. 23 4 0056 , 56 , / DR, ITAT, KOLKATA 6. 4 78 / GUARD FILE. 2 0 //TRUE COPY//