I.T.O Wd - 9(4),kolkata, Kolkata V. M/S K.N.Wire Pvt Ltd., Kolkata

ITA 393/KOL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9384 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T VARKEY JUDIC IA L M EMBER
• Keywords: Unexplained cash credit; Business expenditure; Additional evidence
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI ABY.T VARKEY, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 393 / KOL / 2013 ASSESSMENT YEAR :2009-10 INCOME TAX OFFICER, WARD-9(4),P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, 5 TH FLOOR, ROOM 14, KOLKATA-69 V/S . M/S K.N. WIRE PVT. LTD., 64, SAMBHU NATH PANDIT STREET, KOLKATA-700 025 [ PAN NO.AACCK 7337 D ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI DEBASISH BANERJEE, JCIT-SR-DR /BY RESPONDENT NONE /DATE OF HEARING 07-02-2017 /DATE OF PRONOUNCEMENT 22-02-2017 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-VIII, KOLKATA DATED 18.12.2012. ASSESSMENT WAS FRAMED BY ITO WARD-9(4), KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) VIDE HIS ORDER DATED 30.12.2011 FOR ASSESSMENT YEAR 2009-10. 2. AT THE TIME OF HEARING NONE APPEARED ON BEHALF O F ASSESSEE THOUGH NOTICE OF HEARING WAS SENT TO ASSESSEE. HOWEVER WE DECIDED TO HEAR THE PRESENT APPEAL AS WE FIND THAT THE HEARING IS POSSI BLE WITHOUT APPEARANCE OF ASSESSEE OR BY LD. AR FOR THE ASSESSEE. SHRI DEBASI SH BANERJEE, LD. SENIOR DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHALF O F REVENUE. ITA NO.393/KOL/2013 A.Y. 2009-10 ITO WD-9(4), KOL. VS. M/S K.N. WIRE PVT. LTD . PAGE 2 3. BRIEF FACTS IN THIS APPEAL ARE THAT ASSESSEE IN THE PRESENT CASE IS A PRIVATE LIMITED COMPANY AND ENGAGED IN IRON ORE BUS INESS. THE ASSESSEE, FOR THE YEAR UNDER CONSIDERATION FILED ITS RETURN O F INCOME DATED 15.09.2009 DECLARING TOTAL INCOME OF 1,43,370/- WHICH IS COMPRISING OF INCOME FROM BUSINESS AND HOUSE PROPERTY. SUBSEQUENTLY CASE WAS SELECTED UNDER SCRUTINY AND ACCORDINGLY NOTICE U/S 143(2)/142(1) OF THE ACT WAS ISSUED UPON ASSESSEE. ASSESSMENT WAS FRAMED U/S 143(3) OF THE A CT AT A TOTAL INCOME OF 34,88,490/- AFTER MAKING CERTAIN ADDITIONS / DISALL OWANCES WHICH HAVE BEEN DISCUSSED IN SUBSEQUENT PARAGRAPH. 4. FIRST ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY ASSESSING OFFICER FOR 14.38 LACS ON THE BASIS OF ADDITIONAL EVIDENCES WHICH WERE ACCEPTED IN VIOL ATION OF THE PROVISION OF RULE 46A OF THE INCOME TAX RULES, 1962 (HEREINAFTER REFERRED TO AS THE RULE). 4.1 THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HA S DEPOSITED CASH OF RS.24,12,090/- AND SIMULTANEOUSLY WITHDRAWN THE SAM E FOR RS.9,74,090/-. AS A COROLLARY THERE WAS NET CASH DEPOSIT OF 14.38 LACS BY ASSESSEE IN ITS BANK ACCOUNT IN THE YEAR UNDER CONSIDERATION. ON QUESTIO N BY AO ABOUT THE SOURCE OF SUCH CASH DEPOSIT IN ITS BANK ACCOUNT, THE ASSES SEE FAILED TO FURNISH NECESSARY DETAILS IN SPITE OF SEVERAL OPPORTUNITIES PROVIDED TO HIM. THEREFORE, AO HAS TREATED THE SAME AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHEREAS ASSESSEE SUBMITTED THAT THERE WAS CASH WITHDRAWAL F ROM BANK FOR 24,12,090/- WHICH NEEDS TO BE ADJUSTED WITH THE TOT AL CASH DEPOSIT DURING THE YEAR. ACCORDINGLY, LD. CIT(A) DELETED THE ADDITION MADE BY AO. AGGRIEVED BY THIS, REVENUE HAS COME UP IN APPEAL BE FORE US. 6. BEFORE US LD. DR SUBMITTED THAT RELIEF WAS GRANT ED BY THE LD. CIT(A) ON THE BASIS OF ADDITIONAL EVIDENCE SUBMITTED BY ASSES SEE WHICH WERE ADMITTED ITA NO.393/KOL/2013 A.Y. 2009-10 ITO WD-9(4), KOL. VS. M/S K.N. WIRE PVT. LTD . PAGE 3 WITHOUT GIVING OPPORTUNITY TO AO AS REQUIRED UNDER RULE-46A OF THE INCOME TAX RULE. HE ACCORDINGLY PRAYED BEFORE BENCH TO RESTORE THIS ISSUE TO THE FILE OF AO FOR FRESH ADJUDICATION. 7. WE HAVE HEARD LD. DR AND PERUSED THE MATERIALS A VAILABLE ON RECORD. THE ISSUE IN THE INSTANT CASE RELATES TO DISALLOWAN CE MADE BY AO ON ACCOUNT OF CASH DEPOSITED BY ASSESSEE IN ITS BANK ACCOUNT W HICH WAS NOT EXPLAINED AT THE TIME OF ASSESSMENT PROCEEDINGS. HOWEVER, LD. CI T(A) HAS GRANTED RELIEF TO ASSESSEE BY OBSERVING THAT THERE WAS CASH DEPOSI T AND CASH WITHDRAWAL SIMULTANEOUSLY WHICH WAS NOT LOOKED BY AO AT THE TI ME OF ASSESSMENT PROCEEDINGS. HOWEVER, ON PERUSAL OF APPELLATE ORDER , WE FIND THAT ADDITIONAL EVIDENCE WERE SUBMITTED BY ASSESSEE BEFORE LD. CIT( A) AND NO REMAND REPORT WAS CALLED FOR ON SUCH ADDITIONAL EVIDENCE. THE SAME FACT CAN BE POINTED FROM THE RELEVANT EXTRACT OF THE ORDER OF L D. CIT(A) WHICH IS REPRODUCED BELOW FOR THE SAKE OF BETTER UNDERSTANDI NG : THE A/R OF THE APPELLANT FURTHER SUBMITTED AN ADDIT IONAL WRITTEN STATEMENT TOWARDS CASH SUMMARY FOR THE PERIOD 01.04.2008 TO 3 1.03.2009 MENTIONING THE DETAILS OF DATE WISE CASH DEPOSIT, CASH WITHDRA WAL, OPENING BALANCE AND CLOSING CASH BALANCE AND ALSO SHOWING THE RELEVANT DATE WISE CASH BOOK ENTRIES FOR THE PERIOD. ON GOING THROUGH THE DETAIL S OF STATEMENT FURNISHED BY THE APPELLANT, I FIND THAT EACH AND EVERY ENTRY OF THE DEPOSIT IN THE BANK A/CS IS EITHER OUT OF THE WITHDRAWAL AMOUNT OF THE BANK A/CS OR OUT OF CASH BALANCE AVAILABLE IN THE CASH BOOK ON THE DATE OF DEPOSIT. FROM THE ABOVE, WE FIND THAT SOME ADDITIONAL WRITTE N STATEMENT EXPLAINING THE ENTRIES OF CASH DEPOSITED AND WITHDRAWN WAS SUBMITT ED AND ACCORDINGLY THE LD. CIT-A GRANTED RELIEF TO ASSESSEE. WE ALSO FIND THAT SUCH ADDITIONAL WRITTEN STATEMENT WAS NOT PROVIDED TO AO FOR CROSS-EXAMINAT ION. THEREFORE, IN OUR VIEW THE PROVISION OF RULE 46A HAS BEEN CONTRAVENED BY LD. CIT(A). AT THIS JUNCTURE, WE FIND IMPORTANT TO REPRODUCE SAME:- [ PRODUCTION OF ADDITIONAL EVIDENCE BEFORE THE [DEPUT Y COMMISSIONER (APPEALS) [AND COMMISSIONER (APPEALS) ]. 46A. (1) . (2) (3) THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)] SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED ITA NO.393/KOL/2013 A.Y. 2009-10 ITO WD-9(4), KOL. VS. M/S K.N. WIRE PVT. LTD . PAGE 4 UNDER SUB-RULE (1) UNLESS THE [ASSESSING OFFICER] H AS BEEN ALLOWED A REASONABLE OPPORTUNITY- FROM A PLAIN READING OF THE ABOVE PROVISION, WE FIN D THAT ASSESSING OFFICER WAS TO BE GIVEN A REASONABLE OPPORTUNITY TO EXAMINE THE ADDITIONAL DOCUMENTS WHICH WAS PRODUCED BEFORE LD. CIT(A) FIRS T TIME. HENCE, IN VIEW OF ABOVE, WE FIND THAT THE PROVISION OF RULE 46A OF TH E IT RULES, HAS BEEN CONTRAVENED. THEREFORE, WE ARE OF THE VIEW THAT THI S ISSUE NEEDS TO BE RE- EXAMINED AT THE LEVEL OF ASSESSING OFFICER. HENCE, THIS GROUND OF REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 8. NEXT ISSUE RAISED BY REVENUE IN GROUND NO. 3 AND 4 IS THAT LD. CIT(A) ERRED IN DELETING THE INTEREST EXPENSE CLAIMED BY A SSESSEE FOR 9.87 LAKH ON THE BASIS OF ADDITIONAL EVIDENCE WHICH WERE ACCEPTE D IN VIOLATION OF THE PROVISION OF RULE 46A OF THE INCOME TAX RULES, 1962 . 9. THE ASSESSEE HAS SHOWN IN ITS BALANCE-SHEET LOAN FROM M/S RELIANCE CAPITAL LTD. (MRCL FOR SHORT) AND FROM ICICI BANK F OR 75 LAKH AND 10 LAKH RESPECTIVELY. THE ASSESSEE ON SUCH LOAN HAS INCURRE D INTEREST EXPENSE FOR A SUM OF 9.87 LAKH WHICH WAS CLAIMED AS DEDUCTION IN THE BOO KS OF ACCOUNT. ON QUESTION BY AO ABOUT THE UTILIZATION OF SUCH LOA N, ASSESSEE FAILED TO FURNISH NECESSARY DETAILS AT THE TIME OF ASSESSMENT PROCEEDINGS. THEREFORE THE AO HAS DISALLOWED THE INTEREST EXPENSES OF 9.87 LAKH AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 10. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHO DELETED THE ADDITION MADE BY AO. AGGRIEVED BY THIS, REVENUE HAS COME UP IN APPEAL BE FORE US. 11. BEFORE US LD. DR SUBMITTED THAT RELIEF WAS GRAN TED BY LD CIT(A) ON THE BASIS OF ADDITIONAL EVIDENCE WHICH WERE ADMITTED IN CONTRAVENTION TO THE PROVISION OF RULE 46A OF THE IT RULES. HE PRAYED BE FORE BENCH TO RESTORE THIS ISSUE TO THE FILE OF AO FOR FRESH ADJUDICATION. 12. WE HAVE HEARD LD. DR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET WE FIND THAT LD. CIT(A) HAS CONSIDERE D THE ADDITIONAL EVIDENCE FOR GIVING RELIEF TO ASSESSEE. THE ADDITIONAL EVIDE NCES ARE THE SANCTION LETTERS ITA NO.393/KOL/2013 A.Y. 2009-10 ITO WD-9(4), KOL. VS. M/S K.N. WIRE PVT. LTD . PAGE 5 OF LOAN FROM MRCL AND ICICI BANK ALONG WITH THEIR R EPAYMENT SCHEDULE. ON THE BASIS OF REPAYMENT SCHEDULE, THE PAYMENT OF INT EREST WAS CONFIRMED. ON PERUSAL OF THE ORDER OF AUTHORITIES BELOW, WE FIND THAT NO REMAND REPORT HAS BEEN CALLED FOR FROM AO BY LD. CIT(A) IN PURSUANCE TO THE PROVISION OF RULE 46A OF THE IT RULES. THEREFORE, WE ARE INCLINED TO RESTORE THIS ISSUE BACK TO THE FILE OF AO FOR FRESH ADJUDICATION AS PER LAW. H ENCE, THIS GROUND OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 13. LAST ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY AO FOR 8.59 LAKH ON THE BASIS OF ADDITIONAL EVIDENCE WHICH WERE ACCEPTED IN VIOLATION OF THE PR OVISION OF RULE 46A OF THE INCOME TAX RULES, 1962. 14. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HA S CLAIMED BANK CHARGES AND COMMISSION EXPENSE OF 8.59 LAKH IN ITS PROFIT AND LOSS ACCOUNT. ON QUESTION BY AO FOR DETAILS FOR SUCH EXPENSE, ASS ESSEE FAILED TO FURNISH THE SUPPORTING DETAILS. THEREFORE, AO DISALLOWED THE SA ME AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 15. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHO DELETED THE ADDITION MADE BY AO. AGGRIEVED BY THIS, REVENUE HAS COME UP IN APPEAL BE FORE US. 16. LD. DR BEFORE US SUBMITTED THAT RELIEF WAS GRAN TED BY LD. CIT(A) ON THE BASIS OF ADDITIONAL EVIDENCE WHICH WERE ADMITTED IN CONTRAVENTION TO THE PROVISION OF RULE 46A OF THE IT RULES. HE PRAYED BE FORE BENCH TO RESTORE THIS ISSUE TO THE FILE OF AO FOR FRESH ADJUDICATION. 17. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE FIND THAT ADDITIONAL EVID ENCE WAS SUBMITTED BY ASSESSEE AS RECORDED IN THE APPELLATE ORDER. THE RE LEVANT EXTRACT FROM THE ORDER OF LD CIT(A) IS REPRODUCED BELOW FOR THE SAKE OF BETTER UNDERSTANDING OF THE CASE:- .. WITH REGARD TO BANK CHARGE & COMMISSION OF RS.8, 58,551/, THE A/R SUBMITTED THAT THE APPELLANTS TOTAL TURNOVER IN TH E IRON ORE BUSINESS IN THIS YEAR WAS MORE THAN RS.225.44 LACS AND THE APPELLANT BEING TOTALLY NEW IN THIS LINE OF TRADING BUSINESS HAS TO PAY COMMISSION TO D IFFERENT PARTIES FOR ITA NO.393/KOL/2013 A.Y. 2009-10 ITO WD-9(4), KOL. VS. M/S K.N. WIRE PVT. LTD . PAGE 6 PROCURING THE ORDER AND FOR MAKING PAYMENT THROUGH DEMAND DRAFT, TRGS, NEFT AND THEREFORE IT HAD TO INCUR HUGE AMOUNT OF B ANK CHARGES. IT IS FURTHER SUBMITTED THAT ALL SUCH AMOUNT PAID THROUGH BANK AN D IN SUPPORT OF THIS CONTENTION, THE APPELLANT FURNISHED THE LEDGER COPY OF BANK CHARGES AND COMMISSION MARKED AS ANNEXURE E AND URGED TO ALLO W THE SAME AS BUSINESS EXPENSES AS THESE EXPENSES WERE WHOLLY AND EXCLUSIV ELY INCURRED FROM THE BUSINESS PURPOSES. ON PERUSAL OF APPELLANT ORDER, WE FIND THAT THE COP IES OF LEDGER OF BANK CHARGES AND COMMISSION WERE NOT SUBMITTED BEFORE AO AT THE TIME OF ASSESSMENT PROCEEDINGS AND SUCH DOCUMENTS WERE REQU IRED TO BE VERIFIED BY AO IN ITS REMAND REPORT. HENCE, IN OUR CONSIDERED V IEW, PROVISION OF RULE 46A OF THE IT RULES, IN THE INSTANT CASE HAS BEEN CONTR AVENED. THEREFORE IN THE INTEREST OF JUSTICE AND FAIR PLAY WE ARE INCLINED T O REMIT BACK THIS ISSUE TO THE FILE OF AO FOR FRESH ADJUDICATION AS PER LAW. THIS GROUND OF REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 18. IN THE RESULT, REVENUES APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT 22/ 02/2017 SD/- SD/- (ABY. T. VARKEY) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 22 / 02 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ITO WARD-9(4), P-7, CHOWRNGHEESQ., AAYAK AR BHAWAN, 5 TH FL, KOL-69 2. /RESPONDENT-M/S K.N. WIRE PVT. LTD., 64, SAMBHU NAT H PANDIT ST., KOL-25 3. ) *+ , , - / CONCERNED CIT KOLKATA 4. , , -- / CIT (A) KOLKATA 5. 012 33*+, , *+ , / DR, ITAT, KOLKATA 6. 267 89 / GUARD FILE. BY ORDER/ , , /TRUE COPY/ / , *+ ,