Manna Dey, Jalpaiguri V. ITO, Ward - 1(3), Jalpaiguri, Jalpaiguri

ITA 441/KOL/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6652 (ITAT-KOLKATA)
• Duration Of Justice: 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 14-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P KOLHE
• Assessee Lawyers: A K CHAKRABORTYDEBRAJ SAHA
• Keywords: Unexplained cash credit; Principle of natural justice
• Section: 143(3); 133(6); 69

Judgement Text

, SMC(B) , , IN THE INCOME TAX APPELLATE TRIBUNAL SMC(B) BENCH : KOLKATA () , ) [BEFORE HONBLE SRI MAHAVIR SINGH, JM] / I.T.A NO. 441KOL/2011 !' !' !' !'/ // / ASSESSMENT YEAR : 2005-06 MANNA DEY VS INCOME-TAX OFFICER, WD-1(3), JALP AIGURI (PAN-AEXPD 4468 E)) ($% /APPELLANT ) (&'$%/ RESPONDENT ) FOR THE APPELLANT: S/SHRI A. K. CHAKRABORTY/DEBRAJ SAHA FOR THE RESPONDENT: SHRI P. KOLHE () / ORDER THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDER OF CIT(A), JALPAIGURI IN APPEAL NO.569/CIT(A)/JAL/07-08 VIDE DATED 03.12.2000. THE ASSESSMENT WAS FRAMED BY ITO, WARD- 1(3), JALPAIGURI FOR THE ASSESSMENT YEAR 2005-06 VI DE HIS ORDER U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) DA TED 26.12.2007. 2. THE FIRST ISSUE IN THIS APPEAL OF THE ASSESSEE I S AS UNDER: 1. THAT THE CONFIRMATION OF THE LD. ASSESSING OFFI CERS ORDER BY THE LD. CIT(A) IS ARBITRARY, BAD IN LAW AND IS NOT PROPER. 3. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE DID NOT PRESS GROUND NO. 1. HENCE, THE SAME IS DISMISSED BEING NOT PRESSED. 4. THE SECOND ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION MADE BY ASSESSING OFFICER O F RS.97,757/- BEING COMMISSION RECEIVED FROM AMBUJA CEMENT EASTERN LTD. FOR THIS, THE ASSE SSEE HAS RAISED THE FOLLOWING GROUND NO.2: 2. THAT YOUR PETITIONER HAS BEEN CARRYING ON WHOLE SALE BUSINESS OF CEMENT UNDER THE TRADE NAME AND STYLE M. TRADERS, HAVING ITS SHO P CUM OFFICE AT PADAPARA, POST: KALIBARI, DIST: JALPAIGURI. DURING THE PREVIOUS YEA R I.E. 2004-2005 RELEVANT TO THE ASSESSMENT YEAR 2005-2006 UNDER PRESENT APPEAL HE R ECEIVED CREDIT NOTE AGGREGATING RS. 97,759/- FROM AMBUJA CEMENT EASTERN LIMITED ON ACCOUNT OF CEMENT PURCHASED FROM THE SAID COMPANY. THE PETITIONER HAS ALSO PAID COMMISSION / DISCOUNT AMOUNTING TO RS. 1,10,257/- TO HIS CUSTOMERS. HE IN STEAD OF REFLECTING THEM SEPARATELY IN THE CREDIT AND DEBIT SIDE OF THE PROF IT AND LOSS ACCOUNT, DEBITED THE RESULTED FIGURE OF RS. (1,020,250/- - 97-757/-) I.E . 12,500/- IN PROFIT AND LOSS ACCOUNT. THE LD. ASSESSING OFFICER ARBITRARILY ADDE D THE SAID DISCOUNT RECEIVED TO THE INCOME OF YOUR PETITIONER VIOLATING THE ACCOUNT ING PRINCIPLE AND AS WELL AS THE LD. COMMISSIONER OF APPEAL HAD ALSO CONFIRMED THE S AID ADDITION WITHOUT GOING THROUGH THE ACCOUNTING PRINCIPLES AND PRACTICES BY ASSUMING THAT ALL ENTRIES IN BOOKS 2 ITA 441/K/2011 MANNA DEY A.Y 05-06 OF ACCOUNTS (DULY AUDITED BY A QUALIFIED CHARTERED ACCOUNTANT) AS DEVELOPED THE STORY WHICH IS NOTHING AFTER THOUGHT. CONFIRMING T HE A.O.S ORDER IN RESPECT OF THE ABOVE FACTS BY THE LD. C.I.T. (APPEALS) IS NOT PROP ER AND BAD IN LAW. 5. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED FROM THE BOOKS OF ACCOUNTS THAT THE ASSESSEE HAS RECEIVED A SUM OF RS.97,759/- FROM AMBUJA CEMENT EASTERN LTD. (IN SHORT ACEL). THIS INFORMATION WAS OBTAINED BY THE ASSESSING OFFICER U/S. 133(6) OF TH E ACT FROM BANK STATEMENT AND ACEL. THE ASSESSING OFFICER RECORDED IN THE ORDER CREDIT NOTE S RECEIVED FROM THE PARTY DATE WISE FALLING IN THE RELEVANT FY 2004-05. THE ASSESSING OFFICER NOT ED THAT THIS AMOUNT AGGREGATING RS.97,759/- HAS NOT BEEN SHOWN IN THE ACCOUNT OF TH E ASSESSEE. IN REPLY, THE ASSESSEE STATED THAT IT HAS ALLOWED DISCOUNT TO VARIOUS PARTIES AMOUNTIN G TO RS.1,10,257/- ON SALE OF CEMENT AND RS.12,500/- TO CUSTOMERS. THE ASSESSEE ALSO EXPLAI NED THAT ONLY THE NET AMOUNT I.E. EXCESS DISCOUNT WAS DEBITED AT RS.12,500/- TO THE P&L ACCO UNT. ON QUERY FROM THE ASSESSING OFFICER, THE ASSESSEE PRODUCED TWO OF THE PARTIES T O WHOM DISCOUNTS WERE ALLOWED AND BOTH WERE EXAMINED. THE AO REQUIRED THE ASSESSEE TO FURN ISH DATE WISE DETAILS OF THE DISCOUNT AND RELEVANT CASH MEMOS TO VERIFY BOOKS OF ACCOUNT AND SALES WHICH IS EXCLUDING CASH DISCOUNT. ACCORDING TO ASSESSING OFFICER, THE ASSESSEE HAS NO T FURNISHED THE ABOVE PARTICULARS AND EXPLANATION. ACCORDINGLY, HE ADDED THE ENTIRE AMOU NT OF CREDIT NOTES RECEIVED FROM ACEL AT RS.97,559/- TO THE TOTAL INCOME OF THE ASSESSEE. A GGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO CONFIRMED THE ACTION OF THE ASSESSING O FFICER BY GIVING FOLLOWING FINDINGS: I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD A R AND ALSO PERUSED THE ASSESSMENT ORDER. I HAVE ALSO PERUSED THE OTHER DO CUMENTS SUBMITTED BY THE AR OF THE ASSESSEE. SOME OF THE DOCUMENTS FILED BY THE LD. AR IN COURSE OF THE APPELLATE PROCEEDINGS ARE NOT RELIABLE LIKE, THE LEDGER COPY OF CASH DISCOUNT RECEIPTS FROM THE SUPPLIER AND THE LEDGER COPY OF COMMISSION GIVEN BY THE ASSESSEE BECAUSE THESE TWO DOCUMENTS WERE NEVER PRODUCED BEFORE THE AO AND ON EXAMINATION OF THE BOOKS OF ACCOUNTS, THE LD. AO COULD NOT FIND ANY SUCH ACCOUN T MAINTAINED BY THE ASSESSEE. SAME IS APPARENT FROM THE ASSESSMENT ORDER. HE HAS CLEAR LY STATED THAT THE ASSESSEE WAS REQUESTED TO FURNISH THE DATE-WISE DETAILS OF THE D ISCOUNT ALLOWED TO HIS CUSTOMERS ALONG WITH THE CASH MEMOS IN ORDER TO VERIFY THE SA LES WITH DISCOUNT. BUT THE ASSESSEE FAILED TO FURNISH THE SAME. SECONDLY, THE EXPLANATI ON FURNISHED BY THE LD. AR IS ALSO NOT CONVINCING AS THE SAME WAS NOT SUPPORTED BY THE ACC OUNTING PRINCIPLE. THE CREDIT NOTE RECEIVED FROM THE SUPPLIER EITHER SHOULD BE ADJUSTE D WITH THE PURCHASE ACCOUNT OR A SEPARATE ACCOUNT SHOULD BE MAINTAINED AND TRANSFER THE SAME TO THE P & L A/C AS OTHER RECEIPTS. SIMILARLY, TOTAL COMMISSION, IF ANY, ALLO WED TO ANY CUSTOMER, SHOULD HAVE BEEN REFLECTED IN THE COMMISSION PAYMENT ACCOUNT. THE ST ORY OF ALLOWING COMMISSION TO CERTAIN PARTIES ON THE BASIS OF CREDIT NOTE RECEIVE D OR RECEIVABLE IS NOT RELIABLE ONE AS THE ASSESSEE COULD NOT PRESUME WELL IN BEFORE THAT THE SUPPLIER WOULD ISSUE SAME DISCOUNT IN CREDIT NOTES. IT IS ONLY WHEN THE LD. A O HAS DISCOVERED THE RECEIPT OF CREDIT NOTES FROM THE SUPPLIERS, THE ASSESSEE HAS DEVELOPE D THE STORY WHICH IS NOTHING BUT AFTER THOUGHT. THE SAME IS NOT SUPPORTED EITHER BY ANY EVIDENCE OR BY THE ACCOUNTING PRINCIPLE AND PRACTICE. THUS, I FIND NO REASON TO I NTERFERE WITH THE ORDER OF THE LD. AO. HIS ACTION IS CONFIRMED. 3 ITA 441/K/2011 MANNA DEY A.Y 05-06 AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE US. 6. I HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE IS FOLLOWING ACCOUNTING S YSTEM CONSISTENTLY, WHERE HE IS RECORDING ONLY NET OF COMMISSION OUT OF RECEIPTS AND PAYMENTS . IN THE PRESENT CASE, THE FACTS ARE THAT THE ASSESSEE HAS PAID COMMISSION TO VARIOUS SUPPLIERS A T RS.1,10,250/- AS AGAINST THE COMMISSION RECEIVED BY CREDIT NOTE AT RS.97,759/- FROM ACEL. IT MEANS THAT THE ASSESSEE HAS ACCOUNTED FOR NET OF COMMISSION PAID AT RS.12,500/- BY DEBITI NG TO THE P&L ACCOUNT. THE BOOKS OF ACCOUNT AS PRODUCED BEFORE THE AO CLEARLY REVEALED THAT THE ASSESSEE HAS PAID COMMISSION TO VARIOUS PARTIES AT RS.1,10,250/- AND THIS FACT WAS MADE KNOWN TO THE AO. WE FIND NO FAULT IN THE ACCOUNTING SYSTEM OF THE ASSESSEE, WHICH IS CON SISTENTLY FOLLOWED. BUT BEFORE THE AO, THE ASSESSEE HAS PRODUCED TWO PARTIES FOR VERIFICATION OF THE CLAIM OF DISCOUNT PAID AND ALSO FILED DETAILS OF COMMISSION PAID IN RESPECT TO OTHER PART IES. IN RESPECT TO FEW OF DISCOUNTS VOUCHERS THERE ARE CERTAIN DEFECTS AS FAIRLY CONCEDED BY LD. SENIOR COUNSEL FOR THE ASSESSEE SHRI A. K. CHAKRABORTY AND THAT IS RESTRICTED TO THE EXTENT OF RS.12,000/- (APPROX.). THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE OBSERVATION OF THE CIT (A), THAT THE ACCOUNTING STANDARD MAINTAINED BY THE ASSESSEE IS FAULTY, IS WRONG. I AM IN FULL A GREEMENT WITH THE ARGUMENT OF THE LD. SR. COUNSEL THAT THE ACCOUNTS OF THE ASSESSEE MAINTAINE D CONSISTENTLY ARE QUITE FAIR AND REASONABLE AND THERE IS NO FAULT IN THE SAME. ANOTHER ARGUMEN T OF THE LD. SR. COUNSEL FOR THE ASSESSEE THAT IN NORMAL PRACTICE THE DISCOUNT IS ALLOWED TO THE P ARTIES AND IN HIS ALL FAIRNESS HE AGREED THAT A NOMINAL ADDITION ON ACCOUNT OF FEW DEFECTS IN DISCO UNT VOUCHERS CAN BE ESTIMATED. ON THE OTHER HAND, LD. SR. DR STATED THAT THESE DETAILS WE RE NOT VERIFIED BY THE AO, HENCE, THE ISSUE CAN BE REMITTED BACK TO THE FILE OF THE AO FOR FRES H ADJUDICATION. IN VIEW OF THE ABOVE FACTS, I MAKE REASONABLE ESTIMATE OF DISALLOWANCE OF DISCOUN T AT RS.15,000/-, WHICH WILL MEET THE ENDS OF JUSTICE. I DIRECT THE AO ACCORDINGLY. 7. THE THIRD ISSUE IN THIS APPEAL OF THE ASSESSEE I S AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF UNEXPLAINED CASH CREDIT OF RS.4,000 /-. FOR THIS, THE ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.3: THAT YOUR PETITIONER HAS TAKEN LOAN OF RS. 4,000/- FROM HIS MOTHER WHO WAS A RETIRED EMPLOYEE OF U.CO. BANK AND THE SAME WAS RETURNED TH ROUGH DRAWINGS OF YOUR PETITIONER. THE LD. COMMISSIONER OF APPEAL CONFIRME D THE SAID ADDITION AS UNEXPLAINED CASH DEPOSIT INSPITE OF GIVING RELEVANT DOCUMENTS. THERE IS NO JUSTIFICATION OF CONFIRMING SAID ADDITION BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS BEING DENIED FROM THE NATURAL JUSTICE. 8. I HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. I FIND THAT THE AO DURING THE COURSE OF ASSESSMENT PR OCEEDINGS NOTICED THAT THE ASSESSEE HAS 4 ITA 441/K/2011 MANNA DEY A.Y 05-06 DEPOSITED A SUM OF RS.4,000/- ON 8.9.2004 IN HIS BA NK ACCOUNT NO. CC A/C. NO.234 WITH UCO BANK, JALPAIGURI BUT THE SAME IS NOT RECORDED IN TH E BOOKS OF ACCOUNT. AS NO EXPLANATION WAS OFFERED BEFORE THE AO, HE ADDED THIS AMOUNT U/S. 69 A OF THE ACT. THE CIT(A) CONFIRMED THE ADDITION. BEFORE ME IT WAS CONTENDED BY THE ASSESS EE THAT THIS AMOUNT WAS ADVANCED BY ASSESSEES MOTHER THROUGH ACCOUNT PAYEE CHEQUE AND THIS IS A TEMPORARY PERSONAL LOAN AND THIS LOAN WAS ALSO RETURNED OUT OF PERSONAL DRAWINGS OF THE ASSESSEE. I FIND THAT THE ASSESSEES MOTHER HAS GIVEN THIS LOAN OF RS.4,000/- TO THE ASS ESSEE TEMPORARILY OUT OF HER SALARY SAVINGS BY ASSESSEES MOTHER, THE COPY OF SALARY CERTIFICAT E IS ALSO ENCLOSED IN THE ASSESSEES PAPER BOOK. I FIND THAT ASSESSEES MOTHER HAD ADVANCED T HIS AMOUNT BY ACCOUNT PAYEE CHEQUE NO.17561054 DATED 8.9.2004, WHICH IS DULY CREDITED IN ASSESSEES UCO BANK ACCOUNT. IN VIEW OF THE FACTS AND CIRCUMSTANCES, I DELETE THE ADDITI ON. THE ORDERS OF THE LOWER AUTHORITIES ARE REVERSED ON THIS ISSUE. 9. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED. 10. ORDER PRONOUNCED IN OPEN COURT ON 13.5.2011 SD/- , (MAHAVIR SINGH) JUDICIAL MEMBER ( *+ *+ *+ *+) )) ) DATED 13 TH DAY OF MAY, 2011 ,- ./ 0 JD.(SR.P.S.) () 1 &2 3(2!4- COPY OF THE ORDER FORWARDED TO: 1 . $% / APPELLANT SHRI MANNA DEY, PANDA PARA, KALIBARI, J ALPAIGURI. 2 &'$% / RESPONDENT, ITO, WARD-1(3), JALPAIGURI . 3 . ) / THE CIT(A), JALPAIGURI 4. ) ( )/ CIT, JALPAIGURI 5 . ;< & / DR, KOLKATA BENCHES, KOLKATA '2 &/ TRUE COPY, ()=/ BY ORDER, / /ASSTT. REGISTRAR .