MH Commotrade Pvt. Ltd., Kolkata V. ITO, Ward 4(2), Kolkata, Kolkata

ITA 444/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1264 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 06-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KALYAN NATH CIT LD
• Assessee Lawyers: MIRAJ D SHAH LD
• Keywords: Unexplained cash credit
• Section: 69C; 68

Judgement Text

1 ITA NO. 444/KOL/2017 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICI AL MEMBER I.T.A NO. 444/KOL/ 2017 ASSESSMENT YEAR: 20 12-13 MH COMMOTRADE PVT. LTD. PAN: AAGCM9000M. APPELLANT VS INCOME TAX OFFICER, WARD 4(2), KOLKATA. RESPONDEN T FOR THE APPELLANT : SHRI MIRAJ D.SHAH, LD.AR FOR THE RESPONDENT : SHRI KALYAN NATH, ADDL.CIT, LD.SR.DR DATE OF HEARING : 02-08-2017 DATE OF PRONOUNCEMENT : 13-10-2017 ORDER SHRI S.S.VISWANETHRA RAVI, JM: THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE LD. CIT(A),2, KOLKATA FOR THE ASSESSME NT YEAR 2012-13. 2. THE ASSESSEE IS A COMPANY. IT FILED ITS E- RETUR N OF INCOME FOR THE IMPUGNED A.Y UNDER CONSIDERATION ON 29-09-2012 DECLARING TOTAL NIL INCOME. THE AO COMPLETED THE ASSESSMENT U/S. 14 3(3) OF THE ACT DETERMINING THE TOTAL INCOME AT RS.97,45,818/-. HE MADE THREE ADDITIONS. THESE ARE I) UNEXPLAINED CASH CREDIT OF RS.45,52,319/- II) UNDISCLOSED EXPENDITURE OF RS.55,37,418/-; AND III) UNEXPLAINED INCOME OF RS. 1,00,000/-. 2 ITA NO. 444/KOL/2017 3. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN A PPEAL BEFORE THE LD.CIT(A). THE FIRST APPELLATE AUTHORITY UPHELD THE SAID THREE ADDITIONS MADE BY THE AO. 4. FURTHER AGGRIEVED, THE ASSESSEE IS IN APPEAL BEF ORE US. 5. AFTER HEARING THE RIVAL CONTENTIONS AND PERUSING THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT GROUND NO. 1 RELATES TO ADDITION OF RS. 55,37,418/- AS UND ISCLOSED EXPENDITURE, GROUND NO. 2 RELATES TO ADDITION OF RS . 45,52,319/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT AND GROUND NO. 3 RELATES TO ADDITION OF RS. 1 LAKH MADE ON ACCOUNT OF UNEXPLAIN ED CASH CREDIT. 6. GROUND NO. 1 RELATES TO ADDITION OF RS.55,37,418 /- MADE ON ACCOUNT OF UNDISCLOSED EXPENDITURE. 7. DURING THE COURSE OF ASSESSMENT THE AO FOUND THA T THE ASSESSEE COMPANY HAS BOOKED AS SPECIAL CVD RECEIVA BLE AS ON 31- 03-2012. WHEN QUESTIONED, THE ASSESSEE COMPANY FURN ISHED A DOCUMENT IN THE FORM OF BILL OF ENTRY FOR HOME CON SUMPTION. THE AO FOUND THAT THE ASSESSEE MADE A PURCHASE OF SMOKED R UBBER SHEET FROM BANGALADESH FOR THE VALUE OF RS.55,37,418/-. THIS WAS NOT RECORDED AS PURCHASES DURING THE YEAR. AS THE ASSE SSEE FAILED TO FURNISH ANY EXPLANATION, THE AO MADE THE ADDITION. THE LD. CIT-A REJECTED EXPLANATION OF THE ASSESSEE THAT GOODS WER E PURCHASED BY WAY OF IMPORT AND WERE LYING IN STOCK AS ON 31.03.1 2. THE ASSESSEES CLAIM THAT IT HAD MADE ACTUAL PAYMENT OF CUSTOM DUT Y IN RESPECT OF GOODS AND THE SAME WAS DISCLOSED AS AN ITEM OF AS SET AS SPECIAL CVD RECEIVABLE WAS REJECTED BY THE LD. CIT-A. 8. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT S AID PURCHASES WERE MADE ON CREDIT FROM M/S. MH INTERNATIONAL, BAN GLADESH AND IT WAS BASED ON THE PURCHASE CONTRACT DT. 11-01-2012, WHICH WAS A RATE CONTRACT FOR A BIGGER QUANTITY. HE SUBMITTED T HAT THE ASSESSEE 3 ITA NO. 444/KOL/2017 HAD NOT RECORDED THE ABOVE PURCHASE IN THE BOOKS OF ACCOUNT FOR THE REASON THAT THE PAYMENT WAS YET TO BE MADE TO THE F OREIGN SELLER AND THE GOODS WERE PHYSICALLY WERE LYING IN THE CUSTO DY OF THE LOCAL AGENT OF THE SELLER. AS THE ASSESSEE HAD NOT RECEIV ED THE POSSESSION OF THE GOODS, NOR DID IT MAKE ANY PAYMENT TO THE SE LLER, IT DID NOT RECORD THE SAME AS PURCHASES. IT WAS FURTHER SUBMIT TED THAT THE PAYMENT WAS MADE ON 10-04-2012 AND THEREAFTER, THE STOCK WAS RECEIVED. IT WAS ONLY ON THE REJECTING THAT THE PUR CHASE WAS REFLECTED IN THE BOOKS OF ACCOUNT. HE ARGUED THAT THE ADDITIO N MADE IS BAD IN LAW. 9. WE FIND FORCE IN THIS ARGUMENT OF THE ASSESSEE. IF THE PAYMENT FOR THE PURCHASES WAS MADE ON 10-04-2012 THROUGH UN ION BANK AND IF THE GOODS WERE NOT RECEIVED DURING THE YEAR, THE ASSESSEE IS JUSTIFIED IN NOT INCLUDING THIS CONSIGNMENT IN THE PURCHASE/STOCK FOR THE AY 2012-13. NO ADDITION WHATSOEVER CAN BE MADE UNDER THE HEAD UNDISCLOSED EXPENDITURE. AN ADDITION ON UNDISCLOS ED EXPENDITURE U/S. 69C CAN BE MADE, IF THE ASSESSEE OFFERS NO EXP LANATION ABOUT THE SOURCE OF SUCH EXPENDITURE. AS THE ASSESSEE HAS NO T PAID THE AMOUNT IN QUESTION DURING THE IMPUGNED FY, THE QUESTION OF EXPLAINING THE SOURCE DOES NOT ARISE. HENCE, THE QUESTION OF SUSTE NANCE OF ADDITION U/SEC. 69C OF THE ACT DOES NOT ARISE. HENCE, WE DE LETE THE ADDITION AND ALLOW THIS GROUND OF THE ASSESSEE. GROUND NO. 1 IS ALLOWED. 10. GROUND NO. 2 RELATES TO ADDITION OF RS.45,52,31 9/- MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT. 11. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THERE WAS SEVERAL CASH DEPOSITS IN THE BANK AC COUNTS OF THE ASSESSEE WITH TWO BANK ACCOUNTS ( NO.49560101003338 3 AND 1152020200000596 ). THE TOTAL AMOUNT OF SUCH DEPOSI TS WAS RS.45,52,319/-. ON A QUERY FROM THE AO, THE ASSESSE E EXPLAINED THAT THE ENTIRE MONEY BELONGS TO MM INTERNATIONAL. IT WA S EXPLAINED THAT 4 ITA NO. 444/KOL/2017 MONEY WAS RECEIVED BY THE ASSESSEE COMPANY ON BEHAL F OF SAID MM INTERNATIONAL AND THE SAME WAS SUBSEQUENTLY TRANSFE RRED TO MM INTERNATIONAL BY RTGS. AS THE ASSESSEE COULD NOT PR ODUCE ANY DOCUMENTARY EVIDENCE IN SUPPORT OF THIS CONTENTION, THE AO MADE THE ADDITION. THE CIT-A UPHELD THE SAME. 12. BEFORE US THE ASSESSEE SUBMITS ON THE AMOUNT O F RS. 45,52,319/- REFERS TO THE STATEMENTS FROM SAID BANK ACCOUNTS AND EXPLAINED EACH TRANSACTION BY WAY OF REMARKS IN A TABULAR FORM. THE LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT THE A SSESSEE DEPOSITED CASH OF AN AMOUNT OF RS.34,02,319/- IN THE BANK OF BARODA AND RS.9,50,000/- IN THE UNION BANK OF INDIA TOTALING T O RS.43,52,319/-. HE ALSO EXPLAINED THAT THESE CASH DEPOSITS WERE FRO M THREE SOURCES:- I) CASH IN HAND DEPOSITED IN BANK RS.1,28,000/-, II) CASH COLLECTED ON BEHALF OF M/S. MM INTERNATION AL RS. 32,74,319/-, AND III) ADVANCE FROM CUSTOMERS RS.9,50,000/-. 13. BEFORE US THE ASSESSEE ALSO FILED DOCUMENTS IN SUPPORT OF THESE CLAIM. ON AN AMOUNT COLLECTED ON BEHALF OF M/S. M M INTERNATIONAL OF SOVAPUR, PO RABINDRANAGAR, SONAMURA, WEST TRIPURA, IT WAS SUBMITTED THAT THE MANAGEMENT OF THAT ORGANIZATION IS CLOSELY KNOWN TO THE MANAGEMENT OF THE ASSESSEE COMPANY AND AS M/ S. MM INTERNATIONAL FOUND IT DIFFICULT TO RECOVER THE DUE S FROM CUSTOMER IN KOLKATA, A REQUEST WAS MADE TO THE ASSESSEE TO COLL ECT THE SAID AMOUNTS. THE ASSESSEE DEPUTED ITS STAFF TO COLLECT THE PAYMENT FROM THESE VARIOUS PERSONS AND MADE DEPOSITS IN ITS BANK ACCOUNTS AND THEREAFTER, REMITTED THE SAME TO M/S. MM INTERNATIO NAL. THE ASSESSEE FILED THE FOLLOWING DOCUMENTS IN SUPPORT OF THE ABO VE A) LETTER DT. 12-04-2011 FROM M/S. MM INTERNATIONAL REQUESTING TH E ASSESSEE COMPANY TO COLLECT ITS DUES, B) NAMES & ADDRESSES O F THE PARTIES 5 ITA NO. 444/KOL/2017 FROM WHOM CASH COLLECTION HAS BEEN MADE, C) BILLS I SSUED BY M/S. M.M INTERNATIONAL WITH DETAILS AND D) DETAILS OF RE MITTANCES MADE BY THE ASSESSEE TO M/S. M.M INTERNATIONAL. 14. THE LD.DR DISPUTES THE SUBMISSIONS OF THE ASSES SEE AND ARGUES THAT THE ABOVE DETAILS WERE NOT FILED BEFORE THE AO . HE RELIED ON THE ORDER OF THE AO AS WELL AS THE LD. CIT(A) AND SUBMI TTED THAT THE SAME SHOULD BE UPHELD. 15. WE FIND THAT THE ASSESSEE FILED THE DETAILS LIS TED ABOVE BEFORE THE AUTHORITIES. THESE DOCUMENTS WERE NOT CONSIDERE D AT ALL. HENCE, THESE REQUIRE VERIFICATION. IN THE INTEREST OF JUST ICE, WE SET ASIDE THIS ISSUE TO THE FILE OF THE AO WITH THE DIRECTION TO E XAM/VERIFY THE SAID EVIDENCES PRODUCED BY THE ASSESSEE AND THEREAFTER DENOVO ADJUDICATE THE MATTER IN ACCORDANCE WITH LAW. GROUN D NO. 2 OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 16. GROUND NO. 3 RELATES TO ADDITION OF RS.1,00,000 /- AS UNDISCLOSED CASH CREDIT U/S. 68 OF THE ACT. 17. THE AO FOUND THAT THE ASSESSEE HAS TAKEN UNSECU RED LOAN OF RS. 11,00,000/- FROM SRI KALPATARU CHOWDHURY. ON AN ENQUIRY, IT WAS REVEALED THAT THE LOAN AMOUNT WAS ONLY RS. 10,00,00 0/-. THE DISCREPANCY OF RS.1,00,000/- WAS ADDED BY THE AO. T HE ASSESSEE STATED THAT THIS ADVANCE OF RS. 1 LAKH WAS TAKEN F ROM MRS. JYOTI CHOWDHURY ON 23-11-2011. SHE EXPIRED ON 09-03-2013 AND CONSEQUENTLY, THIS AMOUNT OF RS. 1 LAKH WAS TRANSFE RRED TO ACCOUNT OF SRI KALPATARU CHOWDHURY. IT WAS FURTHER SUBMITTED T HAT SRI KALPATARU CHOWDHURY EXPIRED ON 03-02-2016. HENCE, PROPER EXPL ANATION COULD NOT BE PROVIDED BY HIM. AFFIDAVIT AND OTHER EVIDENC ES WERE FILED FROM THE LEGAL HEIR [SRI PRITAM CHOWDHURY] OF SRI KALPAT ARU CHOWDHURY AND JYOTI CHOWDHURY EXPLAINING THE ABOVE TRANSACTIO N. IN OUR VIEW, THE ADDITION CANNOT BE SUSTAINED FOR THE REASON THA T THE CREDIT DID NOT 6 ITA NO. 444/KOL/2017 ARISE DURING THE YEAR. THEREFORE, WE DELETE THIS AD DITION. GROUND NO.3 RAISED BY THE ASSESSEE IS ALLOWED. 18. GROUND NO. 4 IS CONSEQUENTIAL IN NATURE, WHICH REQUIRES NO ADJUDICATION. THE SAME IS DISMISSED. 19. GROUND NO. 5 IS GENERAL IN NATURE, WHICH REQUIR ES NO ADJUDICATION. THE SAME IS ALSO DISMISSED. 20. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED IN PART, ORDER PRONOUNCED IN THE OPEN COURT ON 13-10-2017 SD/- SD/- J. SUDHAKAR REDDY S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13-10-2017 PP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT M/S. MH COMMOTRADE PVT. LTD C/O D.J.SHAH & CO. KALYAN BHAVAN, 2 ELGIN ROAD, KOLKATA-20. 2 RESPONDENT THE ITO, WARD 4(2), AAYKAR BHAWAN, P-7 CHOWRINGHEE SQUARE, KOLKATA-69. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR.PS/H.O.O ITAT, KOLKATA