Sri Nabarun Kundu, Burdwan V. ITO, Ward 1(2), Burdwan, Burdwan

ITA 500/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1060 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 15-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALLONG YADEN ACIT
• Keywords: Unexplained expenditure; Principle of natural justice; Corroborative evidences
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENCH KOLKATA BEFORE SHRI A. T. VARKEY, JM &DR. A.L.SAINI, AM ./ ITA NO.500/KOL/2017 ( / ASSESSMENT YEAR: 2011-12 SRI NABARUN KUNDU C/O SITANSHU SHEKHAR KUNDU BHATCHALA SOUTH, MASZIDTALA, SRIPALLY, BURDWAN-713103. VS. I.T.O, WARD-1(2),BURDWAN AAYKAR BHAWAN, ANNEX, 2 ND FLOOR, COURT COMPOUND, BURDWAN-713101. ./ ./PAN/GIR NO. : ARIPK 7042 D (APPELLANT) .. (RESPONDENT) APPELLANTBY :SHRI SUVO CHAKRABORTY,ADVOCATE RESPONDENT BY :SHRI SALLONG YADEN, ACIT / DATE OF HEARING : 01/09/2017 /DATE OF PRONOUNCEMENT : 22/11/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEAR 2011-12, IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)- BURDWAN IN APPEAL NO.114/CIT(A)/ASL/WD.1(2)/BWN/2014-15, DATED 13.12.2016, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE AO U/S.143(3) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT), DATED 25.03.2014. 2.THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1.FOR THAT THE LD. APPELLATE ERRED ON FACT AND LAWS BY CONFIRMING THE ESTIMATION OF RS.95,654/- WHICH IS BASELESS AND ON SURMISE. 2.FOR THAT METHOD OF DETERMINATION OF UNDISCLOSED PURCHASE BY LD. A.O. BY APPLYING DISCLOSED G.P. RATE OF APPELLANT IS INCORRECT AND WRONG. 3.FOR THAT CONFIRMATION OF ADDITION OF RS.30,75,702/- BY THE APPELLATE AUTHORITY IS UNJUST AND CRYPTIC SINCE THE APPELLANT RECONCILED THE PURCHASE SRI NABARUN KUNDU ITA NO.500/KOL/2017 ASSESSMENT YEAR: 2011-12 PAGE | 2 DIFFERENCES IN THE PROPER MANNER BOTH IN ASSESSMENT AS WELL AS IN REMAND STAGE WHICH IS MAINLY NON-INCLUSION OF INPUT VAT AND ALLIED ITEMS. 4.FOR THAT NON CONSIDERATION OF POSITIVE REMAND REPORT BEFORE CONFIRMING ADDITION AND SPENT NO WORD ON REMAND REPORT IN APPELLATE ORDER IS UNJUST. 5.FOR THAT ADDITION ON SUNDRY CREDITORS IS BAD IN LAW SINCE ALL PAYMENTS WERE MADE THROUGH A/C PAYEE CHEQUES. 6.FOR THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ALL OR ANY OF THE GROUNDS OF APPEAL. 3. GROUND NO. 1 AND 2 RAISED BY THE ASSESSEE RELATE TO SAME ISSUE THAT AO MADE ADDITION OF UNDISCLOSED PURCHASES BY APPLYING GP RATE AT RS.95,654/-, (@ 3.11% OF RS.30,75,702), BESIDES, AO ALSO ADDED RS. 30,75,702/- UNDER SECTION 69C AS UNEXPLAINED EXPENDITURE WHICH RELATE TO GROUND NO. 3 TO 5 RAISED BY THE ASSESSEE. THAT IS, AO APPLIED GP RATE 3.11% ON UNDISCLOSED PURCHASES AT RS.30,75,702/- AND THE SAME AMOUNT ALSO TREATED AS UNEXPLAINED EXPENDITURE U/S 69C, HENCE ALL THE GROUNDS RAISED BY THE ASSESSEE ARE RELATED TO EACH OTHER AND ARE BEING ADJUDICATED TOGETHER. THE MAIN GRIEVANCE OF THE ASSESSEE, IN THIS APPEAL IS THAT THE ADDITION BASED ON GP RATE AND ADDITION ON ACCOUNT OF UNEXPLAINED EXPENDITURE ARE BAD IN LAW, AND SHOULD BE DELETED. 3.1. THE BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEE HAD FURNISHED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 DECLARING A TAXABLE INCOME OF RS.1,45,190/- ON 30.01.2012. THE ASSESSEE HAD DECLARED INCOME UNDER THE HEAD OF INCOME FROM PROFIT & GAINS FROM BUSINESS. THE OBSERVATIONS AND ADDITIONS MADE BY AO ARE BRIEFLY NARRATED BELOW: (I).DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTED THAT THE ASSESSEE IN HIS ACCOUNTS INPUT VAT AND OUTPUT VAT HAD NOT ENTERED. ONLY ON ENTRY AS 'LNPUT CREDIT FOR THE F.Y.10-11' OF RS.36,853.04 WAS ENTERED IN BALANCE SHEET. FROM THAT ENTRY IN BALANCE SHEET, IT WAS NOT CLEAR ABOUT THE TOTAL AMOUNT OF LNPUT AND OUTPUT VAT AND ALSO THE ASSESSEE HAS NOT FURNISHED ANY OTHER DOCUMENTARY EVIDENCES, I.E., SALES TAX RETURN OR ANY OTHER DOCUMENTS, WHICH CAN PROVE TOTAL INPUT AND OUTPUT VAT. THE TOTAL AMOUNT OF RS.30,17,341/- WAS TREATED BY AO AS DIFFERENCE FROM M/S BENGAL BEVERAGE PVT. LTD. SRI NABARUN KUNDU ITA NO.500/KOL/2017 ASSESSMENT YEAR: 2011-12 PAGE | 3 (II) M/S GLOBAL AQUA PVT. LTD.: TOTAL AMOUNT OF NET PURCHASE CONFIRMED BY THE COMPANY OF RS 4,02,478/-, BUT NET PURCHASE IN RESPECT OFM/S GLOBAL AQUA PVT. LTD. WAS SHOWN OF RS.3,59,820/-. HENCE, THE DIFFERENCE COMES TO RS.42,658/-(RS. 4,02,478/- - RS. 3,59,820/-), THE SAME WAS TREATED AS UNDISCLOSED PURCHASES. (III) M/S DANKUNI FOOD PRODUCTS : NET PURCHASE CONFIRMED BY THE COMPANY IS RS.2,76,849/-, BUT NET PURCHASE IN RESPECT OF M/S DANKUNI FOOD PRODUCTS WAS SHOWN OF RS.2,62,006/-. HENCE, THE DIFFERENCE COMES TO RS.14,843/-(RS. 2,76,849/- - RS. 2,62,006/-), THE SAME WAS TREATED AS UNDISCLOSED PURCHASES. (IV) M/S GUJARAT CO-OPERATIVE MILK MARKETING FEDERATION COMPANY LTD. NET PURCHASE CONFIRMED BY THE COMPANY IS RS. 36,72,958/-, BUT NET PURCHASE WAS SHOWN IN RESPECT OF M/S GUJARAT CO-OPERATIVE MILK MARKETING FEDERATION COMPANY LTD OF RS.36,42,098/-. HENCE, THE DIFFERENCE COMES TO RS.860/-(RS. 36,72,958/-- RS. 36,42,098/- - RS.30000 OTHER ADJUSTMENT NOTED BY AO), THE SAME WAS TREATED AS UNDISCLOSED PURCHASES. THE AO AGGREGATED THE TOTAL DIFFERENCES AS (I) + (II) +(III)+ (IV), THAT IS, RS.30,17,341/- + RS.42,658/- + RS.14,843/- + RS.860/- = RS.30,75,702/- AND APPLIED GP RATE @3.11% AND MADE ADDITION OF RS. 95,645/- ( RS.30,75,702/- X @ 3.11%). THE ASSESSING OFFICER ALSO MADE THE ADDITION U/S 69-C OF THE ACT AT RS.30,75,702/- OBSERVING THAT TOTAL DIFFERENCES IN PURCHASE HAS NOT BEEN PROVED BY THE ASSESSEE DUE TO INPUT VAT, AS CLAIMED BY THE ASSESSEE. 3.2. AGGRIEVED BY THE ADDITION RS. 95,645/-, BASED ON GP RATE AND ADDITION OF RS.30,75,702/- UNDER SECTION 69-C, MADE BY AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A) WHO HAS CONFIRMED THE ADDITION MADE BY ASSESSING OFFICER. THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAS STATED NOTHING MORE THAN TO ASSERT THAT HE HAD EXPLAINED ALL THE DIFFERENCES OF ACCOUNTS BETWEEN THE VARIOUS PARTIES. THE CIT(A) ALSO NOTED THAT THE FACT OF THE MATTER WAS THAT DESPITE SEVERAL OPPORTUNITIES, THE APPELLANT DID NOT PROVIDE SUPPORTING MATERIAL FOR HIS CONTENTIONS ON VAT. THERE WERE NO DETAILS OF SALES TAX PROVIDED WHICH WOULD HAVE SERVED AS AN INDEPENDENT CORROBORATIVE PIECE OF EVIDENCE TO SUPPORT THE CONTENTIONS OF THE ASSESSEE. IT MAY BE OBSERVED THAT THE APPELLANT HAS NOWHERE TRIED TO EXPLAIN THE SRI NABARUN KUNDU ITA NO.500/KOL/2017 ASSESSMENT YEAR: 2011-12 PAGE | 4 CIRCUMSTANCES OR CONDITIONS DUE TO WHICH HE COULD NOT PRODUCE THE SUPPORTING EVIDENCE. THE ONLY THING THAT HAS TO BE RELIED UPON TO EXPLAIN THE DIFFERENCE FOUND BY THE AO THROUGH HIS INDEPENDENT INQUIRY WAS THE APPELLANT'S OWN BOOKS AND NOTHING ELSE. THE CIT(A) ALSO NOTED THAT DURING APPELLATE PROCEEDINGS ALSO THE ASSESSEE HAD NOT PRODUCED ANY MATERIAL THAT MIGHT EXPLAIN THE IMPUGNED DIFFERENCE. BASED ON THESE CIRCUMSTANCES THE CIT(A) CONFIRMED THE ADDITION MADE BY ASSESSING OFFICER. 3.3 NOT BEING SATISFIED WITH THE ORDER OF LD CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. THE LD COUNSEL FOR THE ASSESSEE HAD SUBMITTED BEFORE US THAT DURING THE APPELLATE PROCEEDINGS THE CIT(A) CALLED A REMAND REPORT FROM AO AND THE SAID REMAND REPORT HAS NOT BEEN CONSIDERED BY THE CIT(A) AT ALL, THEREFORE IT IS GROSS NEGLIGENCE ON THE PART OF CIT(A). THAT IS, CIT(A) HAD ADJUDICATED THE ASSESSEE`S APPEAL WITHOUT CONSIDERING THE REMAND REPORT, WHICH IS VIOLATION OF NATURAL JUSTICE. THE INCOME TAX OFFICER, WARD-1 (2) SUBMITTED THE REMAND REPORT TO THE COMMISSIONER OF INCOME TAX (APPEALS) ON DATED 05.05.2016 WHEREIN HE STATED THAT: THE TOTAL DIFFERENCE IN PURCHASE FIGURE AS FOUND BY THE AO TO THE TUNE OF RS. 30,75,702/- WAS ADDED AS UNEXPLAINED EXPENDITURE AS THE SAME WAS CONSIDERED TO BE ORIGINATED FROM SOME UNDISCLOSED SOURCE. NOW, AS STATED ABOVE IN THE EARLIER POINT, THE PURCHASE FIGURE AS DISCLOSED BY THE ASSESSEE AND DIFFERENT PARTIES HAVE BEEN VERIFIED AND THE SAME HAS BEEN EXPLAINED BY THE A/R OF THE ASSESSEE WITH RECONCILIATION STATEMENT ON PRODUCTION OF DIFFERENT LEDGERS, VAT RETURNS ETC. SO, THERE IS NO QUESTION OF TREATING THE AMOUNT AS UNEXPLAINED EXPENDITURE. 3.4 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 3.5 HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT IN THE REMAND REPORT OF THE ASSESSING OFFICER IT IS CLEARLY MENTIONED THAT ASSESSEE HAS EXPLAINED THE DIFFERENCE WITH RECONCILIATION STATEMENT ON PRODUCTION OF DIFFERENT LEDGERS, VAT RETURNS ETC. THEREFORE, THERE IS NO QUESTION OF TREATING THE AMOUNT AS UNEXPLAINED EXPENDITURE. WE NOTE THAT CIT(A) DID NOT CONSIDERED THE REMAND REPORT AT ALL THEREFORE, IT IS AGAINST THE SRI NABARUN KUNDU ITA NO.500/KOL/2017 ASSESSMENT YEAR: 2011-12 PAGE | 5 PRINCIPLE OF NATURAL JUSTICE. THEREFORE, BASED ON THE FACTUAL POSITION, WE DELETE BOTH THE ADDITIONS MADE BY AO, [THAT IS, WE DELETE ADDITION BASED ON UNDISCLOSED PURCHASES BY APPLYING GP RATE AT RS.95,654/-, (@ 3.11% OF RS.30,75,702), AND UNDER SECTION 69C AS UNEXPLAINED EXPENDITURE RS. 30,75,702/-]. 3.6 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE, IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22/11/2017. SD/- (A. T. VARKEY) SD/- (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; DATED 22/11/2017 RS, SPS . / COPY OF THE ORDER FORWARDED TO : TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/D.D.O, I.T.A.T, KOLKATA BENCHES, KOLKATA . 1. THE APPELLANT SRI NABARUN KUNDU 2. / THE RESPONDENT- I.T.O, WARD-1(2), BURDWAN 3. ( ) / THE CIT(A), :KOLKATA. 4. / CIT 5. , , / DR, ITAT, KOLKATA 6. / GUARD FILE.