Shri Bharat Naskar, Kolkata V. ITO, Wd-26(1), Kolkata, Kolkata

ITA 504/KOL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4215 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 03-11-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 29-04-2015
• Court: TRIBUNAL
• Department Lawyers: P B PRAMANIK
• Assessee Lawyers: B B PAYRA
• Keywords: Unexplained cash credit; Unexplained expenditure; Additional evidence
• Section: 69C; 133(6); 131; 68; 144

Judgement Text

1 ITA NO.504/KOL/2015 SHRI BHARAT NASKAR , AY 2006-07 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA [BEFORE SHRI M. BALAGANESH, AM & SHRI S. S. VISWAN ETHRA RAVI, JM] I.T.A NO. 504/KOL/2015 ASSESSMENT YEAR: 2006-07 SHRI BHARAT NASKAR VS. INCOME-TAX OFFICER, WD-2 6(1), KOLKATA (PAN: ACGPN9560L) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 03.11.2016 DATE OF PRONOUNCEMENT: 18.11.2016 FOR THE APPELLANT: SHRI B. B. PAYRA, ADVOCATE FOR THE RESPONDENT: SHRI P. B. PRAMANIK, JCIT ORDER PER SHRI M. BALAGANESH, AM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-7, KOLKATA VIDE APPEAL NO. 69/CIT(A)-7/W-26(1)/14-15 DATED 14.01.2015. ASSESSM ENT WAS FRAMED BY ITO, WARD- 53(1), KOLKATA U/S. 144 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2006-07 VIDE HIS ORDER DATED 15.12.2008. 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE ADDITION U/S. 68 OF THE ACT COULD BE MADE IN THE SUM OF RS.13,94,925/- IN T HE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSE SSEE IS A DEVELOPER ENGAGED IN PURCHASING OF LAND, DEVELOPING IT AND SELLING TO CUSTOMERS. T HE ASSESSEE RECEIVED ADVANCE FOR SALE OF LANDS TO THE TUNE OF RS.18,16,925/- WHICH WERE REMA INING OUTSTANDING AS ON 31.03.2006 AND THE SAME WAS DULY REFLECTED IN THE BALANCE SHEET OF THE ASSESSEE AS PENDING LIABILITY AND OUT OF THAT THE AO ACCEPTED RS.3,50,000/- AS GENUINE AN D THE REMAINING SUM OF RS.14,66,925/- WAS ADDED AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT AS THERE WAS NO COMPLIANCE BY THE ASSESSEE IN FURNISHING THE REQUISITE DETAILS. BEFO RE THE LD. CIT(A), THE ASSESSEE FILED THE DETAILS I.E. NAMES AND ADDRESSES OF PERSONS FROM WH OM ADVANCES WERE RECEIVED TOGETHER WITH THEIR MODE OF RECEIPT TO THE TUNE OF RS.14,66, 925/- AS UNDER: 2 ITA NO.504/KOL/2015 SHRI BHARAT NASKAR , AY 2006-07 3 ITA NO.504/KOL/2015 SHRI BHARAT NASKAR , AY 2006-07 4 ITA NO.504/KOL/2015 SHRI BHARAT NASKAR , AY 2006-07 4. THE ASSESSEE ALSO FILED CONFIRMATIONS FROM VARIO US PARTIES. THE ASSESSEE ALSO FILED CONFIRMATION FROM ONE PARTY VIZ., M/S. DESIRE AGRO RESORT DEVELOPMENT PVT. LTD. FROM WHOM ASSESSEE HAD RECEIVED RS. 10 LACS BY CHEQUE WH ICH WAS ALSO SUPPORTED BY A MEMORANDUM OF UNDERSTANDING DATED 07.03.2006 ENTERE D INTO WITH THAT PARTY. SINCE THIS IS AN ADDITIONAL EVIDENCE THE LD. CIT(A) RIGHTLY CALLE D FOR REMAND REPORT FROM THE AO. THE LD. CIT(A) ON OBTAINING REMAND REPORT CONFIRMED THE ADDITION TO THE TUNE OF RS.13,94,925/- MADE BY THE AO AFTER GIVING RELIEF O F RS.72,000/- IN RESPECT OF TWO PARTIES WHICH WERE ACCEPTED BY THE AO IN THE REMAND PROCEED INGS. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND NO.1: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A), KOLKATA ERRED IN CONFIRMING THE ADDITION OF RS.13,94,925/- U/S. 68 O F THE ACT, BEING THE AMOUNT OF ADVANCE RECEIVED FROM ELEVEN PARTIES AGAINST HIS PROJECT AT JANAPRIYA PARK ABASAN. 5. THE LD AR ARGUED THAT THE AO CALLED FOR INFORMA TION U/S. 133(6) OF THE ACT FROM NINE PARTIES. OUT OF THAT THE NOTICE U/S. 133(6) OF THE ACT COULD NOT BE SERVED ON TWO PARTIES I.E. MONORANJAN NASKAR AND SHYAMAL KAYAL. WITH REGARD T O THE REMAINING SEVEN PARTIES, NO REPLIES WERE RECEIVED FROM THEM IN RESPONSE TO SECT ION 133(6) OF THE ACT. THE LD. CIT(A) OBSERVED THAT THE ADDRESSES GIVEN BY THE ASSESSEE, THE POSTMAN WHO IS AN INDEPENDENT AUTHORITY COULD NOT SERVE THE NOTICE U/S. 133(6) OF THE ACT. HE ARGUED THAT THE AO COULD HAVE INVOKED PROCEDURE OF ISSUING SUMMONS U/S. 131 OF THE ACT OR DEPUTED INSPECTOR TO ASCERTAIN THE PRESENT ADDRESSES OF THE PARTIES AS D UE TO EFFLUXION OF TIME THE ASSESSEE HAD LOST TOUCH WITH THOSE PARTIES. WITH REGARD TO AMOUNT RE CEIVED IN THE SUM OF RS.10 LACS FROM DESIRE AGRO RESORT PVT. LTD., THE LD. AR PLACED REL IANCE ON THE COPY OF MOU DATED 07.03.2006, WHICH IS ENCLOSED IN THE PAPER BOOK PAG ES 28 TO 40. HE ALSO STATED THAT THE ASSESSEE RECEIVED ANOTHER CHEQUE OF RS.10 LACS AS S TATED IN THE MOU VIDE CHEQUE NO.464611 DATED 21.03.2006 DRAWN ON HDFC BANK, GOLP ARK BRANCH BUT THE SAID CHEQUE GOT DISHONOURED DUE TO INSUFFICIENT FUNDS AND THE S AME GOT FINALLY CLEARED ON 05.04.2006 WHICH FALLS IN NEXT AY 2007-08. THESE FACTS ARE VE RY MUCH EVIDENT FROM THE BANK STATEMENT ENCLOSED IN ASSESSEES PAPER BOOK PAGES 59. THE LD . AR ALSO STATED THAT CONFIRMATIONS WERE FILED BY THESE NINE PARTIES BEFORE THE LD. CIT(A) T OGETHER WITH THEIR MODE OF PAYMENT TO THE ASSESSEE. HE FURTHER STATED THAT SOME PARTIES LIKE MONORANJAN HALDER AND TAMALI MUKHERJEE HAD OBTAINED REFUND OF THEIR AMOUNTS DUE TO THEIR U RGENT FINANCIAL COMMITMENT WHICH WERE ALSO REFUNDED BACK BY THE ASSESSEE. THESE FACTS WE RE ALSO STATED IN THE CONFIRMATION AND IN 5 ITA NO.504/KOL/2015 SHRI BHARAT NASKAR , AY 2006-07 THE REPLIES FILED BY THE ASSESSEE BEFORE THE AO IN THE REMAND PROCEEDINGS. HE STATED THAT THE PARTIES HAD FILED THEIR CONFIRMATION TOGETHER WITH THEIR RESPECTIVE IDENTITY AND HENCE, THE VERACITY OF THEIR PAYMENT TO THE ASSESSEE COULD NOT BE DOUBTED OR QUESTIONED. ALL THE PAYMENTS MADE WERE SMALL AMOUNTS IN INSTALLMENTS WH ICH GOT CONVERTED INTO SALE PROCEEDS IN FUTURE AND ACCORDINGLY, PRAYED FOR DELETION OF THE ADDITION U/S. 68 OF THE ACT. 6. IN RESPONSE TO THIS, THE LD. DR ARGUED THAT THE ASSESSEE EXTENDED NO COOPERATION EITHER IN THE ORIGINAL ASSESSMENT PROCEEDINGS OR IN THE REMAND PROCEEDINGS. ALL THE CONFIRMATIONS FILED FROM TEN PARTIES COULD NOT BE R ELIED ON AS THEY WERE ALL IN THE SAME FORMAT. WITH REGARD TO THE SUM RECEIVED FROM DESIR E AGRO RESORT DEVELOPMENT PVT. LTD. TO THE TUNE OF RS. 10 LACS THE ASSESSEE HAD NEVER PROV ED THE EXISTENCE OF THIS COMPANY. HE VEHEMENTLY RELIED ON THE ORDER OF THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAD GIVEN COMPLETE LIST O F NAMES AND ADDRESSES OF THE PARTIES FROM WHOM ADVANCES WERE RECEIVED FOR SALE OF LAND, MODE OF RECEIPT, CONFIRMATION OF PARTIES TOGETHER WITH THEIR VOTER IDENTITY OR OTHER IDENTIT Y PROOF AND MOU FOR RECEIPT OF RS.10 LACS FROM DESIRE AGRO RESORT DEVELOPMENT PVT. LTD. WE F IND THAT SOME PARTIES HAD BEEN REFUNDED THEIR ADVANCES BY ASSESSEE IN SUBSEQUENT Y EARS IN ORDER TO MEET THEIR FINANCIAL EXIGENCIES AND THESE HAVE BEEN DULY CONFIRMED BY TH OSE PARTIES. FOR OTHERS, THE ADVANCES WERE CONVERTED INTO SALES IN SUBSEQUENT YEARS AND T HESE FACTS WERE NOT CONTROVERTED BY THE REVENUE BEFORE US. HENCE, WE HOLD THAT THERE IS NO CASE MADE OUT FOR MAKING AN ADDITION U/S. 68 OF THE ACT AND IS ACCORDINGLY DELETED. THIS GROU ND OF APPEAL OF ASSESSEE IS ALLOWED. 8. THE SECOND ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) IS JUSTIFIED IN UPHOLDING THE ADDITION OF RS.1,24,205/ - MADE TOWARDS UNEXPLAINED EXPENDITURE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 9. THE LD. AO FOUND FROM THE CASH BOOK THAT CERTAIN PAYMENTS WERE MADE ON THE FOLLOWING DATES: DATES EXPENDITURE AMOUNT 1. 03.02.06 RS. 16,270/- 2. 10.03.06 RS. 25,963/- 3. 11.03.06 RS. 30,660/- 4. 16.03.06 RS. 30,000/- 5. 17.03.06 RS. 19,209/- 6 ITA NO.504/KOL/2015 SHRI BHARAT NASKAR , AY 2006-07 6. 18.03.06 RS. 2,200/- RS.1,24,205/- 10. THE LD. AO OBSERVED THAT ON THESE DATES, THE ASSESSEE DID NOT POSSESS THE REQUISITE CASH BALANCE AND IN THE BACK OF THOSE VOU CHERS THE RECIPIENTS HAVE DULY SIGNED AND HAD PUT A DIFFERENT DATE THAN THE DATE M ENTIONED IN THE VOUCHER ON THE FRONT SIDE. ON THE SECOND DATE I.E. THE DATE MENTIONED I N THE BACK OF VOUCHER, THE LD. AO OBSERVED THAT THE CASH BALANCE WAS AVAILABLE WITH T HE ASSESSEE. IT WAS EXPLAINED THAT ASSESSEE ONLY HAD PART TIME ACCOUNTANT WHO USED TO COME ONCE IN A WEEK AND PREPARE THE ACCOUNTS AND ALL THE VOUCHERS INCLUDING THE VOU CHERS FOR PAYMENT TO BE MADE IN FUTURE ON A DIRECTION TO SOME OFFICIALS OF ASSESSEE TO GET SIGNATURE FROM THE RESPECTIVE PAYEES AT THE BACK OF THE VOUCHERS WITH DATES MENTI ONED THEREON. WHILE ENTERING IN CASH BOOK, INSTEAD OF RECORDING THE PAYMENTS ON THE SECOND DATE I.E. THE DATE MENTIONED IN THE BACK OF VOUCHERS, THE ACCOUNTANT H AD ERRONEOUSLY ENTERED THE DATE OF VOUCHER I.E. THE DATE MENTIONED IN THE FRONT SIDE O F THE VOUCHER, THEREBY LEADING TO DEFICIT IN CASH BALANCE. THE AO DID NOT AGREE WITH THIS EXPLANATION AND FOUND THAT IT IS ONLY AN AFTERTHOUGHT. ACCORDINGLY, HE MADE ADDITIO N U/S. 69C OF THE ACT AS UNEXPLAINED EXPENDITURE IN RESPECT OF THE SAID PAYM ENTS IN THE SUM OF RS.1,24,205/-. BEFORE THE LD. CIT(A), THE ASSESSEE EXPLAINED AS FO LLOWS: VOUCHER DT. NAME OF THE PARTIES AMOUNT DATE OF PAY MENT 03.02.2009 -DO- 07.03.2006 -DO- -DO- 11.03.2006 -DO- 15.03.2006 -DO- 17.03.2006 -DO- -DO- SK. JAHUR ANIL KRISHNA NASKAR SAHADEB PANDIT KALIPADA SANTRA SADHAN SAHA MONORANJAN HALDER SADHAN SAHA DEBASISH NASKAR SAHDAN SAHA ABUL KASEM MONDAL MANORANJAN HALDER SADHAN SAHA RS. 15,000/- RS. 15,000/- RS. 20,000/- RS. 10,000/- RS. 15,000/- RS. 15,000/- RS. 15,000/- RS. 10,000/- RS. 15,000/- RS. 10,000/- RS. 15,000/- RS. 15,000/- 04.02.2006 -DO- 18.03.2006 -DO- 20.03.2006 -DO- 21.03.2006 18.03.2006 25.03.2006 20.03.2006 21.03.2006 27.03.2006 11. THE LD. CIT(A), HOWEVER, IGNORED THE AFORESAID EXPLANATION AND CONFIRMED THE ADDITION MADE BY THE AO. AGGRIEVED, THE ASSESSEE I S IN APPEAL BEFORE US ON THE FOLLOWING GROUND NO. 2: 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A), KOLKATA ERRED IN CONFIRMING THE ADDITION OF RS.1,24,205/- U/S. 69C O F THE ACT, BEING THE AMOUNT OF ADVANCE PAID TO LAND OWNERS AGAINST TAKING OVER THE POSSESSION OF THEIR LAND BY THE APPELLANT FOR THE PURPOSE OF HIS BUSINESS. 7 ITA NO.504/KOL/2015 SHRI BHARAT NASKAR , AY 2006-07 12. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. IT IS NOT IN DISPUTE BEFORE US THAT THE ASSESSEE WAS NOT CONVERSANT WITH ACCOUNTING AND TAX MATTERS. IT IS NOT IN DISPUTE B EFORE US THAT THE ASSESSEE HAD ENGAGED A PART TIME ACCOUNTANT FOR RECORDING HIS VOUCHERS A ND ENTERING THE ACCOUNTS. IT IS NOT IN DISPUTE BEFORE US THAT THE ASSESSEE INDEED HAS B EEN MAINTAINING BOOKS OF ACCOUNT REGULARLY AND THE SAME WERE ALSO FURNISHED BEFORE T HE AO. THE INSTANT ADDITION IS MADE ONLY BASED ON MIS-MATCH OF DATES. THE EXPLANA TION OFFERED BY THE ASSESSEE THAT THE PART TIME ACCOUNTANT WHO COMES ONCE IN A WEEK P REPARES THE VOUCHERS FOR THE TRANSACTIONS ALREADY ENTERED DURING THE WEEK AND AL SO FOR TRANSACTIONS TO BE ENTERED IN THE NEXT WEEK AND ALSO DIRECTING THE CONCERNED OFFI CIAL OF THE ASSESSEE TO OBTAIN THE SIGNATURE OF THE PAYEES IN THE BACK SIDE OF THE VOU CHERS TOGETHER WITH THE RESPECTIVE DATES, IS SATISFACTORY. IT IS NOT IN DISPUTE THAT T HE ASSESSEE INDEED HAD SUFFICIENT CASH BALANCE ON THE SECOND DATE MENTIONED IN THE VOUCHER I.E. THE DATE AT THE BACK OF THE VOUCHERS. HENCE, THE SAME CANNOT BE CONSIDERED AS AN AFTERTHOUGHT AND ACCORDINGLY THE ADDITION MADE U/S. 69C OF THE ACT IS HEREBY DEL ETED. THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 18.11.2016 . SD/- SD/- (S.S. VISWANETHRA RAVI) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED : 18 TH NOVEMBER, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT SHRI BHARAT NASKAR, VILLAGE-KRISHNA RAMPUR, P.O. AMGACHIA, BISHNUPUR, DIST. 24 PGS (S), 2 RESPONDENT ITO, WARD-26(1), KOLKATA 3. THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .