ITO, Ward - 10(4), Kolkata, Kolkata V. M/s. TCJ Mercantile Pvt. Ltd., Kolkata

ITA 381/KOL/2012

• Counselvise Citation: 38123514 RSA 2012
• Duration Of Justice: 3 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 09-03-2012
• Court: TRIBUNAL
• Department Lawyers: SANJAY M UKHERJEE JCITLD
• Assessee Lawyers: SOUMITRA CHOUDHURY ADVO
• Keywords: Bogus purchase; Business income
• Section: 131; 143(3)

Judgement Text

ITA NO. 381/KOL/2012 C-AM M/S. T C J MERCANTILE P.LTD 1 IN THE INCME TAX APPELLATE TRIBUNAL, C BENCH, KO LKATA BEFORE : SHRI MAHAVIR SINGH,JUDICIAL MEMBER, AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER I.T.A NO. 381/KOL/2012 A.Y. 2006-07 I.T.O WARD 10(4), KOLKATA VS. M/S. T C J MERCA NTILE PVT. LTD PAN: AABCT9399P (APPELLANT) (RESPONDENT) FOR THE APPELLANT/DEPARTMENT: SHRI SANJAY MUKHERJ EE, JCIT, LD.DR FOR THE RESPONDENT/ASSESSEE : SHRI SOUMITRA CHOUDHURY, ADVOCATE, LD.AR DATE OF HEARING: 24-09-2015 DATE OF PRONOUNCEMENT: 7 -10-2 015 ORDER SHRI M.BALAGANESH, AM THIS APPEAL OF THE REVENUE ARISES OUT OF THE ORDER OF THE LEARNED CITA IN APPEAL NO.562/XII/10(4)/10-11 DATED 20-12-2011 F OR THE ASST YEAR 2006-07 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.SANJAY MUKHERJEE, JCIT, THE LEARNED DR ARG UED ON BEHALF OF THE REVENUE AND SHRI.SOUMITRA CHOUDHURY, ADVOCATE, THE LEARNED AR ARGUED ON BEHALF OF THE ASSESSEE. 3. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LEARNED CITA IS JUSTIFIED IN DELETING THE ADDITION MADE TOWARDS UNA CCOUNTED RECEIPT OF RS. 21,44,400/- 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE AS SESSEE IS A CONTRACTOR AND ENGAGED IN TRADING OF SULPHUR AND SAREES. THE ASSESSEE IS FO LLOWING MERCANTILE SYSTEM OF ACCOUNTING. THE ASSESSEE HAD RAISED A BILL ON 3.4. 2006 FALLING IN ASST YEAR 2007-08 ITA NO. 381/KOL/2012 C-AM M/S. T C J MERCANTILE P.LTD 2 FOR RS. 21,44,400/- AND HAD ACCOUNTED THE SAME AS I TS BUSINESS RECEIPTS IN ASST YEAR 2007-08 AND CLAIMED THE TDS . THE SAID CONTRACT RE CEIPT OF RS. 21,44,400/- WAS DULY SUBJECTED TO DEDUCTION OF TAX AT SOURCE BY M/S ARVI ND CONSTRUCTION CO PVT LTD. THE LEARNED AO FORMED AN OPINION THAT THE ASSESSEE HAD CLAIMED TDS ON THE SUBJECT MENTIONED RECEIPT IN ASST YEAR 2006-07 AND ACCORDIN GLY BROUGHT TO TAX THE CORRESPONDING RECEIPT OF RS. 21,44,400/- AS INCOME IN ASST YEAR 2006-07 AS AGAINST THE INCOME OFFERED IN ASST YEAR 2007-08 BY THE ASSE SSEE. ON FIRST APPEAL, THE LEARNED CITA DELETED THE SAID ADDITION. AGGRIEVED, THE REV ENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 1. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD.CIT(A) IS CORRECT IN DELETING THE UNACCOUNTED RE CEIPT WHERE THE ASSESSEE CLAIMED TDS WITHOUT OFFERING CORRESPONDING INCOME FOR TAXATION. 2. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD.CIT(A) IS CORRECT IN DELETING THE ADDITION OF UN ACCOUNTED ACCRUED INCOME ON WHICH TDS WAS CLAIMED BY THE ASSESSEE IN SPITE OF FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. 3.2. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDE R OF THE LEARNED AO. IN RESPONSE TO THIS, THE LEARNED AR REFERRED TO VARIOU S RELEVANT PAGES OF THE PAPER BOOK FILED BY HIM. THE LEARNED AR ARGUED THAT THE ASSE SSEE HAD RAISED A BILL ONLY ON 3.4.2006 ON M/S ARVIND CONSTRUCTION CO. PVT LTD AND THE SAID PARTY HAD ALSO RECEIVED THE INVOICE OF THE ASSESSEE ONLY IN APRIL 2006 AND THE PAYMENT HAS BEEN MADE BY THE PARTY TO THE ASSESSEE ONLY IN APRIL 2006 AFTER DULY SUBJECTING THE SAME TO DEDUCTION OF TAX AT SOURCE IN APRIL 2006 ONLY. THESE FACTS ARE QUITE EVIDENT FROM THE TDS CERTIFICATE ISSUED BY THE PARTY WHICH IS FORMING PA RT OF THE PAPER BOOK FILED FOR ASST YEAR 2007-08. THE LEARNED AR ARGUED THAT THE ASSUM PTION BASED ON WHICH THE LEARNED AO PROCEEDED TO MAKE THIS ADDITION THAT THE TDS HAS BEEN MADE BY THE PARTY IN ASST YEAR 2006-07 AND CLAIMED BY THE ASSESSEE WI THOUT OFFERING THE CORRESPONDING INCOME IN ASST YEAR 2006-07 IS FACTUALLY INCORRECT. HE FURTHER ARGUED THAT THE ASSESSEE HAD DULY OFFERED THE SUBJECT MENTIONED REC EIPT OF RS. 21,44,400/- AND CLAIMED TDS THEREON ONLY IN ASST YEAR 2007-08. ITA NO. 381/KOL/2012 C-AM M/S. T C J MERCANTILE P.LTD 3 3.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIALS AVAILABLE ON RECORD. WE FIND FROM THE PAPER BOOK CONTAINING PAG ES 1-41 FILED BY THE LEARNED AR THAT M/S ARVIND CONSTRUCTION CO. PVT LTD HAD DULY R ECEIVED IN APRIL 2006 THE INVOICE DATED 3.4.2006 RAISED BY THE ASSESSEE . WE ALSO FIN D THAT THE PAYMENT FOR THE SAME HAD BEEN RECEIVED BY THE ASSESSEE AFTER TDS IN APRIL 20 06. WE FIND THAT THE ASSESSEE HAS DULY ACCOUNTED FOR T HIS RECEIPT IN ITS PROFIT AND LOSS ACCOUNT IN CONSONANCE WITH THE MERCANTILE SYSTEM OF ACCOUNTING REGULARLY EMPLOYED BY IT. WE ALSO HOLD THAT THE ASSESSEE HAD NOT CLAIMED THE TDS ON THE SUBJECT MEN TIONED RECEIPT IN ASST YEAR 2006- 07 AS STATED BY THE LEARNED AO AND INSTEAD CLAIMED THE SAME WITH OFFER OF CORRESPONDING INCOME IN ASST YEAR 2007-08. HENCE W E FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CITA IN THIS REGARD. ACCORDINGLY, T HE GROUNDS 1 & 2 RAISED BY THE REVENUE ARE DISMISSED. 4. THE LAST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LEARNED CITA IS JUSTIFIED IN DELETING THE ADDITION MADE TOWARDS BOG US PURCHASE OF SULPHUR AMOUNTING TO RS. 1,57,38,279/- AND CEMENT AMOUNTING TO RS. 32 ,05,795/-. 4.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE AS SESSEE HAD MADE PURCHASES OF E.SULPHUR FROM MAHANAGAR UDYOG AND OTHER PARTIES FO R RS. 1,57,38,279/- AND PURCHASE OF CEMENT FROM SYAM KUMAR & SONS AND M/S B RAHMAPUTRA SALES AGENCY FOR RS. 32,05,795/-. THE LEARNED AO DISBELIEVED THE C ONTENTIONS OF THE ASSESSEE AND DISALLOWED THE SAME BY TREATING THE SAME AS BOGUS P URCHASES. ON FIRST APPEAL, THE LEARNED CITA DELETED THE ENTIRE ADDITION ON THE GRO UND THAT FROM THE DETAILED PAPER BOOK FILED BY THE ASSESSEEE, IT IS FOUND THAT THE A LL THE PAYMENTS FOR PURCHASES HAVE BEEN MADE BY THE ASSESSEE BY WAY OF ACCOUNT PAYEE C HEQUES AND THE ASSESSEE HAD ALSO DERIVED INCOME IN THE FORM OF SALES OF THOSE SULPHU R AND CEMENT. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GRO UND:- 3. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD.CIT(A) IS CORRECT IN DELETING THE ADDITION TOWAR DS BOGUS PURCHASE ITA NO. 381/KOL/2012 C-AM M/S. T C J MERCANTILE P.LTD 4 OF SULPHUR AND CEMENT DESPITE THE FAILURE ON THE PA RT OF THE ASSESSEE TO PROVE THAT THE SAME WERE PURCHASED AND UTILIZED FOR REPAIRING OF ROAD. 4.2. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDE R OF THE LEARNED AO. IN RESPONSE TO THIS, THE LEARNED AR TOOK US TO THE REL EVANT PAGES OF THE PAPER BOOK SUBMITTED BY HIM BEFORE US CONTAINING PAGES 1 TO 41 AND PLEADED THAT NO INTERFERENCE IS CALLED FOR IN THE LEARNED CITA ORDER. 4.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE PAPER BOOK FILED BY THE A SSESSEE CONTAINED COMPLETE DETAILS OF PURCHASES MADE BY THE ASSESSEE FROM DIFFERENT PARTI ES TOGETHER WITH THE DETAILS OF SALES MADE OUT OF SUCH PURCHASES. THE SAID PAPER BOOK AL SO CONTAINED THE DETAILS OF PAYMENTS MADE TO THOSE SUPPLIERS FOR PURCHASES MADE BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUES. WE HAVE PERUSED THE ENTIRE PAPER BO OK FILED BY THE ASSESSEE IN THIS REGARD. WE ALSO OBSERVE THAT THE LEARNED CITA HAD CALLED FOR A REMAND REPORT FROM THE LEARNED AO WITH REGARD TO THE PRODUCTION OF THE SE DOCUMENTS AND THE LEARNED AO DID NOT OFFER ANY COMMENTS ON THE SAME. WE AL SO FIND THAT THE SUPPLIERS HAVE BEEN PRODUCED BEFORE THE LEARNED AO UNDER SUMMONS P ROCEEDINGS U/S 131 OF THE ACT. JUST BECAUSE THE SUPPLIERS HAD NOT BROUGHT THEIR BO OKS OF ACCOUNTS DURING THE COURSE OF SUMMONS PROCEEDING, WE HOLD THAT THE ASSESSEE COULD NOT BE FAULTED WITH. HENCE WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CITA AND ACCORDINGLY THE GROUND NO. 3 RAISED BY THE REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 7 /10/ 2015 SD/- ( MAHAVIR SINGH, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE 7 /10 /2015 ITA NO. 381/KOL/2012 C-AM M/S. T C J MERCANTILE P.LTD 5 COPY OF THE ORDER FORWARDED TO: 1.. THE APPELLANT : I T O WARD 10(4), 3 RD FL.P-7 CHOWRINGHEE SQ, KOL-69. 2 THE RESPONDENT- M/S.TCJ MERCANTILE PVT. LTD 139 DAKSHINDARI ROAD, KOL-48. 3 4. . THE CIT, THE CIT(A) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR ** PRADIP SPS