Associated Trading, Hooghly V. ITO, WD-1(1), DGP, Burdwan

ITA 451/KOL/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4487 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 21-04-2015
• Court: TRIBUNAL
• Department Lawyers: ASOKE NAG
• Keywords: Additional evidence
• Section: 131; 69

Judgement Text

I.T.A. NO. 451/KOL./2015 ASSESSMENT YEAR: 2010-2011 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 451 /KOL/ 2015 ASSESSMENT YEAR: 2010-2011 ASSOCIATED TRADING,................................ ...........................APPELLANT MAMRA SABJI BAZAR, P.O. DURGAPUR, DIST. BURDWAN-713 206 [PAN : AAJFA 7789 Q] -VS.- INCOME TAX OFFICER,................................ .........................RESPONDENT WARD-1(1), DURGAPUR, AAYAKAR BHAWAN, AAYAKAR BITHI, P.O. CITY CENTRE, P.S. DURGAPUR, DIST. BURDWAN-713 216 APPEARANCES BY: SHRI SOMNATH GHOSH, ADVOCATE, FOR THE ASSESSEE SHRI ASOKE NAG, JCIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JULY 18, 2016 DATE OF PRONOUNCING THE ORDER : JULY 20, 2016 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), DURGAPUR DATE D 25.03.2015 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE ADDITION OF RS.11,03,666/- MADE BY THE ASSESSING OFFICER AND CO NFIRMED BY THE LD. CIT(APPEALS) TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF DIFFERENCES/DISCREPANCY IN THE ACCOUNT OF SUNDRY CR EDITORS. 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM, WHICH IS ENGAGED IN THE BUSINESS OF DEALING IN M.S. RODS. TH E RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 04. 10.2010 DECLARING TOTAL INCOME OF RS.2,55,775/-. IN THE ASSESSMENT COMPLETE D UNDER SECTION I.T.A. NO. 451/KOL./2015 ASSESSMENT YEAR: 2010-2011 PAGE 2 OF 6 143(3), THE ADDITIONS OF RS.1,12,456/-, RS.1,51,838 /- AND RS.4,39,372/-, INTER ALIA, WERE MADE BY THE ASSESSING OFFICER TO T HE TOTAL INCOME OF THE ASSESSEE FOR THE FOLLOWING REASONS:- DISCREPANCY IN PURCHASE A/C.- THE ASSESSEE FURNISH ED A LEDGER COPY OF SHRIRAM MULTICOM IN ITS BOOKS OF ACCOUNT. T O VERIFY THE PURCHASE TRANSACTION A REFERENCE WAS MADE TO THE SA ID CONCERN AND A LEDGER COPY OF THE ASSESSEE IN THE BOOKS OF T HE SELLER, SHRIRAM MULTICOM, WAS OBTAINED. ON EXAMINING THE TW O SETS OF LEDGER COPY OBTAINED FROM THE SELLER, SHRIRAM MULTI COM, AND FROM THE ASSESSEE IN RESPECT OF TOTAL PURCHASE TRAN SACTION MADE BY THE ASSERSSEE, THE FOLLOWING DISCREPANCIES WERE NOTED: PURCHASE AS PER ASSESSEE'S BOOKS SALES AS PER PARTY A/C. RS.3,72,14,767/- RS.3,73,27,233/- SO, IT APPEARS THAT THE ASSESSEE HAD UNDERSTATED TH E PURCHASE TO THE EXTENT OF RS.1,12,456/-. ON THE ISSUE OF UNDERSTATEMENT OF PURCHASE OF RS.1, 12,456/- THE ASSESSEE REMAINED SILENT. THEREFORE, IT IS CONCLUDE D THAT THE ASSESSEE HAD ADMITTED THE UNDERSTATEMENT OF THE PUR CHASE A/C. WHICH HAS GOT AN EFFECT OF ENHANCEMENT OF INCOME TO THE TUNE OF RS.1,12,456/-. HERE IT MAY BE MENTIONED THAT THE AS SESSEE DID NOT MAINTAIN ANY STOCK BOOK (AUDITOR IN FORM NO.3CD IN COLUMN NO.28 (A) WRITTEN AS NOT APPLICABLE ALSO) AN D THE VALUE OF OPENING AND CLOSING STOCK CANNOT BE RELIED UPON. I, THEREFORE, MAKE AN ADDITION OF RS.1,12,456/- IN THE TRADING AC COUNT. AS PER ASSESSEE'S BOOKS OF ACCOUNT SUNDRY CREDITOR BALANCE OF RS.4,55,992/- IN THE NAME OF THE SAID SHRI RAM MULT ICOM IS APPEARING IN THE BALANCE SHEET AS AT 31.3.2010. BUT THE CLOSING BALANCE AS PER THE CREDITOR'S BOOKS OF ACCOUNT WAS FOUND TO BE RS.16,620/-. SO, IT APPEARS THAT THE ASSESSEE HAS I NFLATED THE LIABILITY TO THE EXTENT OF RS.4,39,372/- (RS.4,55,9 92/- LESS RS.16,620/-) IN THE BALANCE SHEET BY SHOWING FICTIT IOUS AND INFLATED FIGURE AGAINST THE SUNDRY CREDITOR, SHRI R AM MULTICOM, TO MAKE THE BOTH SIDES OF THE BALANCE SHEET TALLY. THE ASSESSEE BY A LETTER DT. 27.8.2012 WAS GIVEN AN OPPORTUNITY TO EXPLAIN THE DISCREPANCY AS NOTED. ON THE ISSUE OF DISCREPAN CY IN SUNDRY CREDITOR ACCOUNT TO THE TUNE OF RS.4,39,372/- THE A SSESSEE REMAINED SILENT. AS SUCH, IT IS HELD THAT THE ASSES SEE IN ALL POSSIBILITY UNDERSTATED THE INCOME TO THE EXTENT OF RS.4,39,372/- AND BY SHOWING FICTITIOUS LIABILITY I N THE NAME OF SHRI RAM MULTICOM, THE ASSESSEE HAD MADE AN ATTEMPT TO MAKE THE BOTH SIDES OF THE BALANCE SHEET TALLY. ACCORDIN GLY, THE SAID SUM OF RS.4,39,372/- IS TREATED AS ASSESSEE'S INCOM E FROM SOME I.T.A. NO. 451/KOL./2015 ASSESSMENT YEAR: 2010-2011 PAGE 3 OF 6 UNDISCLOSED SOURCES AND ADDED TO THE TOTAL INCOME O F THE ASSESSEE. FURTHER, ON EXAMINING THE LEDGER COPY OF THE ASSESS EE'S ACCOUNT IN THE BOOKS OF SELLER CO., SHRIRAM MULTICOM, IT WA S NOTED THAT DISCOUNT/INCENTIVE/CREDIT NOTE/CONSUMER CASH BACK D ISCOUNT AGAINST PURCHASES MADE BY THE ASSESSEE WAS ALLOWED DURING THE YEAR. THE TOTAL OF SUCH CASH BENEFITS ALLOWED BY SH RI RAM MULTICOM TO THE ASSESSEE AMOUNTED TO RS.5,51,838/-. BUT THE ASSESSEE IN ITS BOOKS OF ACCOUNT DID NOT DISCLOSE S UCH INCOME EARNED IN THE SHAPE OF DISCOUNT/INCENTIVE/CREDIT NOTE/CONSUMER CASH BACK DISCOUNT. SO, THERE WAS AN UNDERSTATEMENT OF RECEIPT OR INCOME IN THE BOOKS OF ACCOUNT OF THE ASSESSEE TO THE EXTENT OF RS.5,51,838/-. THE AS SESSEE BY A LETTER DT. 27.8.2012 WAS ASKED TO EXPLAIN OF SUCH D ISCREPANCY OR UNDERSTATEMENT OF INCOME IN THE YEAR UNDER ASSESSME NT. A STATEMENT SHOWING DATE WISE DETAILS OF DISCOUNT/INCENTIVE/CREDIT NOTE/CASH BACK DISCOUNT W AS ANNEXED TO THE SAID LETTER FOR ASSESSEE'S READY REF ERENCE. THE EXPLANATION GIVEN BY THE ASSESSEE IS VAGUE ON T HE ISSUE OF DISCOUNT/CREDIT NOTE/ ETC. TO THE TUNE OF RS.5,51,8 38/-. IN OTHER WORDS, IT CAN BE CONCLUDED THAT THE ASSESSEE HAD TA CITLY ADMITTED THE OMISSION MADE TO ACCOUNT FOR THE SAID RECEIPT OF RS.5,51,838/- DURING THE YEAR. THE UNACCOUNTED INCO ME IN THE SHAPE OF DISCOUNT/CREDIT NOTES/INCENTIVE/CONSUMER C ASH DISCOUNT, AMOUNTING TO RS.5,51,838/- IS ADDED TO TH E TOTAL INCOME OF THE ASSESSEE. 3. THE ABOVE ADDITIONS MADE BY THE ASSESSING OFFICE R TO ITS TOTAL INCOME WERE DISPUTED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS). DURING THE COURSE OF APPELLATE PROCEE DINGS BEFORE THE LD. CIT(APPEALS), RECONCILIATION STATEMENT WAS PREPARED AND FURNISHED BY THE ASSESSEE DULY SUPPORTED BY THE FOLLOWING SUBMIS SION:- HOWEVER, THE ENTIRE ISSUE BOILS DOWN TO A QUESTION OF RECONCILIATION BETWEEN THE ACCOUNTS OF SHRIRAM MULTICOM IN THE BOO KS OF THE APPELLANT AND VICE VERSA. THE SUNDRY CREDITOR BALANCE IN THE BOOKS OF THE APPELLANT IN THE NAME OF SHRIRAM MULTICOM WAS RS.4,55,992/-. AS THE NON-EXISTENT PURCHASE SHOWN BY SHRIRAM MULACOM IN THE AMOUNT OF RS.1,12,466/- IN ITS BOOKS HAS TO BE ADJUSTED THE AMOUNT BECOMES RS.5,68 ,458/- (RS.4,55,992/- + RS.1,12,466/-). FROM THIS FIGURE THE AMOUNT OF DI SCOUNT/CREDIT NOTE/INCENTIVE/CONSUMER CASH BACK DISCOUNT OF RS.5, 51,838/-, AS MENTIONED BY THE LD. ASSESSING OFFICER HIMSELF, IS TO BE DEDUCTED AND SUCH EXERCISE YIELDS A FIGURE OF RS.16,620/- [RS.5,68,45 8/- - RS.5,51,838/-] WHICH IS THE EXACT CLOSING BALANCE IN THE ACCOUNT O F SHRIRAM MULTICOM. THE I.T.A. NO. 451/KOL./2015 ASSESSMENT YEAR: 2010-2011 PAGE 4 OF 6 RECONCILIATION STATEMENT WITH SHRIRAM MULTICOM WITH THAT THE APPELLANT IS AS UNDER: CLOSING BALANCE IN THE BOOKS OF THE APPELLANT ..... RS.4,55,992.00(CR.) ADD: DIFFERENCE IN PURCHASE........................ ............RS.1,12,466.00(CR.) _______________________ RS.5,68,458.00(CR.) LESS: DISCOUNT/CREDIT NOTE/INCENTIVE .............. .. RS.5,51,838.00(DR.) _______________________ CLOSING BALANCE IN THE BOOKS OF SHRIRAM MULTICOM.. RS.16,620.00 _______________________ THUS COMPLETE RECONCILIATION BETWEEN THE ACCOUNTS O F THE APPELLANT AND THAT OF SHRIRAM MULTICOM IS ESTABLISHED. ACCORDINGL Y, THE ADDITIONS IN THE AMOUNTS OF RS. 1,12,456/-, RS. 5,51,838/- AND RS. 4 ,39,372/- ARE TOTALLY MISCONCEIVED AND BEING BASED ON PREMISES NOT AMENAB LE TO REASON ARE THEREFORE LIABLE TO BE DELETED. 4. THE LD. CIT(APPEALS) DID NOT FIND MERIT IN THE S UBMISSION MADE BY THE ASSESSEE. ACCORDING TO HIM, THE RECONCILIATION STATEMENT FURNISHED BY THE ASSESSEE CONSTITUTED ADDITIONAL EVIDENCE AND SI NCE THE SAME WAS NOT PRODUCED BY THE ASSESSEE AT THE ASSESSMENT STAGE, I T COULD NOT BE ADMITTED. HE, THEREFORE, DECLINED TO ADMIT THE RECO NCILIATION STATEMENT FILED BY THE ASSESSEE AND PROCEEDED TO CONFIRM ALL THE THREE ADDITIONS IN QUESTION MADE BY THE ASSESSEE FOR THE FOLLOWING REA SONS GIVEN IN PARAGRAPH NO. 6 OF HIS IMPUGNED ORDER:- 6. I HAVE CONSIDERED THE ISSUE IN THE ASSESSMENT O RDER FRAMED BY THE AO IN LIGHT OF THE ARGUMENTS MADE BY THE A/R OF THE APPELLANT. THE CRUX OF THE ISSUE FOR MY CONSIDERATION IS WHETHER T HE ADDITIONS MADE BY THE AO IN RELATION TO THE DISCREPANCIES IN THE TRAD ING ACCOUNT WITH ITS SUPPLIER, SHRIRAM MULTICOM, WAS CORRECT OF NOT. IT WAS ARGUED BY THE A/R THAT NO OPPORTUNITY WAS PROVIDED TO THE APPELLA NT TO MEET THE ACTION CONCEIVED BY THE A.O IN THIS RESPECT. ADMITT EDLY, THE PROCEDURE ENUMERATED BY THE A/R IN HIS SUBMISSIONS IN RESPECT OF ISSUANCE OF SUMMONS U/S. 131 OF THE ACT TO THE PARTY AND PUT IT FOR CROSS EXAMINATION WAS NOT DONE; HOWEVER, THE AO HAD CATEG ORICALLY ISSUED A SHOW CAUSE NOTICE CITING THE DISCREPANCIES IN THE A CCOUNTS OF THE APPELLANT VIS-A-VIS THAT OF SHRIRAM MULTICOM. HOWEV ER, IN ITS REPLY NO EFFORT WAS MADE ON AND BEHALF OF THE APPELLANT TO R ECONCILE THE DISCREPANCY HAVING REGARD TO THE INFORMATION U/S. 1 33(6) OF THE ACT GATHERED BY THE A.O FROM SHRIRAM MULTICOM. THE APPE LLANT WAS GIVEN AN OPPORTUNITY WITHIN THE PROVINCE OF SEC. 142(3) O F THE ACT BY ISSUING A SHOW CAUSE NOTICE ON 27.08.2012 WHICH WAS NOT AVA ILED OF BY THE APPELLANT. THEREFORE, THE ARGUMENT OF THE A/R ON TH IS ACCOUNTS FALLS FLAT AND IS REJECTED AS UNFOUNDED. I.T.A. NO. 451/KOL./2015 ASSESSMENT YEAR: 2010-2011 PAGE 5 OF 6 IT WAS FOUND THAT THE APPELLANT HAD PRODUCED BEFORE ME A RECONCILIATION STATEMENT OF ITS ACCOUNTS OF WITH TH AT OF SHRIRAM MULTICOM. IT WAS ALSO FOUND THAT THIS RECONCILIATIO N WAS NOT PRODUCED BEFORE THE AO AT THE ASSESSMENT STAGE. THE RULE 46A OF THE I.T. RULES, 1962 SPECIFICALLY PROVIDES FOR THE AMBIT FOR ADMISS ION OF ADDITIONAL EVIDENCE. IT IS OBSERVED THAT ADOPTION OF PROCEDURE UNDER RULE 46A IS MANDATORY IN CASE OF ADDITIONAL EVIDENCE. WHEN ADDI TIONAL EVIDENCE IS SOUGHT TO BE ADDUCED ON RECORD, I AM BOUND TO ADOPT THE PROCEDURE AS LAID DOWN UNDER RULE 46A, AND THAT IS WHAT IS IMPLI ED AND MEANT WHEN IT IS STATED THAT THE SAID RULE IS MANDATORY IN NAT URE. IT IS ONLY UNDER SUCH CIRCUMSTANCES MENTIONED IN THE SAID RULE, WHER E THE ADDITIONAL EVIDENCE ADDUCED BY THE APPELLANT IS TO BE ADMITTED AND SOUGHT TO BE RELIED UPON BY HIM, OR AS OTHERWISE, THE MANDATE OF RULE 46A SHALL HAVE NO APPLICATION. AT THIS STAGE, IT IS OBSERVED THAT THE PRODUCTION OF THE ADDITIONAL EVIDENCE BY THE APPELLANT IS NOT IN ACCO RDANCE WITH LAW AND AS SUCH, THE SAME IS NOT ADMITTED FOR ADJUDICATION OF THE ISSUE. THEREFORE, THERE BEING NO EVIDENCE ADDUCED ON RECOR D BY THE APPELLANT TO CONTRADICT THE FINDINGS OF THE AO ON THE ISSUE, I HAVE NO ALTERNATIVE BUT TO CONCUR WITH THE AO IN SUSTAINING THE ADDITIO NS OF RS. 1,12,456/-, RS. 5,51,838/- AND RS.4,39,372/- MADE BY HIM UNDER THE IMPLIED APPLICATION OF S. 69 OF THE I.T. ACT. THE GROUND NO S. 1 TO 3 OF THE APPEAL ARE, THEREFORE, DISMISSED. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY C ONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE, THE RECONCILIATION STATEM ENT PREPARED AND FURNISHED BY THE ASSESSEE BEFORE THE LD. CIT(APPEAL S) TO EXPLAIN THE DIFFERENCE/DISCREPANCY IN THE BALANCES OF CONCERNED CREDITORS CANNOT BE TREATED AS ADDITIONAL EVIDENCE FILED BY THE ASSESSE E FOR THE FIRST TIME BEFORE THE LD. CIT(APPEALS) AND EVEN IF THE SAME WA S FURNISHED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) FOR THE FIRST TIME, THE LD. CIT(APPEALS) OUGHT TO HAVE GOT IT VERIFIED BY THE A SSESSING OFFICER INSTEAD OF DECLINING TO ENTERTAIN THE SAME. EVEN THE LD. D. R. HAS NOT BEEN ABLE TO DISPUTE OR CONTROVERT THIS POSITION, WHICH IS CLEAR LY APPARENT FROM THE IMPUGNED ORDER OF THE LD. CIT(APPEALS). I, THEREFOR E, SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSU E AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY THE I.T.A. NO. 451/KOL./2015 ASSESSMENT YEAR: 2010-2011 PAGE 6 OF 6 RECONCILIATION STATEMENT FURNISHED BY THE ASSESSEE AND TO DECIDE THE ISSUES RELATING TO THREE ADDITIONS IN QUESTION AFRE SH ON SUCH VERIFICATION. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 20, 2016 . SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 20 TH DAY OF JULY, 2016 COPIES TO : (1) ASSOCIATED TRADING, C/O. S.N. GHOSH & ASSOCIATES, ADVOCATES, SEVEN BROTHERS LODGE, P.O. BUROSHIBTALA, P.S. CHINSURAH, DIST. HOOGHLY-712 105 (2) INCOME TAX OFFICER, WARD-1(1), DURGAPUR, AAYAKAR BHAWAN, AAYAKAR BITHI, P.O. CITY CENTRE, P.S. DURGAPUR, DIST. BURDWAN-713 216 (3) COMMISSIONER OF INCOME TAX (APPEALS), DURGAPUR , (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.