Anita Fogla, Dakshin Dinajpur V. ITO, Ward - 1, Balurghat, Dakshin Dinajpur

ITA 531/KOL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78304 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2014
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 04-04-2011
• Court: TRIBUNAL
• Department Lawyers: SNEHANGSHU BISWAS
• Assessee Lawyers: N M BHANSALI
• Keywords: Business income
• Section: 40A(3); 143(3); 133A

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , ! ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA, AM] ' / I.T.A NO.531/KOL/2011 #$ %&/ ASSESSMENT YEAR: 2005-06 ANITA FOGLA VS. INCOME-TAX OFFICER, WD-1, BALU RGHAT. (PAN: AACPF9700A) (() /APPELLANT ) (*+()/ RESPONDENT ) DATE OF HEARING: 08.05.2014 DATE OF PRONOUNCEMENT: 08.05.2014 FOR THE APPELLANT: SHRI N. M. BHANSALI, ADVOCATE FOR THE RESPONDENT: SHRI SNEHANGSHU BISWAS, JCIT , SR. DR / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A), JALPAIGURI IN APPEAL NO. 36/BLG/CIT(A)/JAL/07-08 DATED 16.12.2010. ASSESSME NT WAS FRAMED BY ITO, WARD-1, BALURGHAT U/S. 143(3) OF THE INCOME-TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2005-06 VIDE HIS ORDER DATED 14.12. 2007. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF PAYMENT MADE BY ASSESSEE IN CASH EX CEEDING RS.20,000/- BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. 3 . BRIEFLY STATED FACTS ARE THAT THE ASSESSEE MADE FOL LOWING PAYMENTS IN CASH: NAME OF THE PARTIES DATE TIME AMOUNT (RS.) M/S. JHAWAR TUBE CO. 30.09.2004 29.06.2001 30.6.2004 10.40 A.M. 1.00 P.M. 5.40 P.M. 11.40 A.M. 6.20 P.M. 11.00 A.M. 6.40 P.M. 18,000/- 17,000/- 13,870/- 10,000/- 16,127/- 19,240/- 2,501/- M/S. JAI MATADI ENTRPRISE 14.06.2004 11.30 A.M. 4.45 P.M. 15,000/- 10,628/- M/S. TAHER BROTHERS 13.08.2004 11.00 A.M. 10,000/- 2 ITA NO. 531/K/2011 ANITA FOGLA. AY 2005-06 20.04.2004 6.25 P.M. 10.30 A.M. 5.00 P.M. 11,279/- 15,000/- 9,530/- M/S. PREKRITJE STORE UDYOG 26.05.2004 11.00 A.M. 5.00 P.M. 16,000/- 8,000/- THE AO REQUIRED THE ASSESSEE TO EXPLAIN WHY THE ABO VE PAYMENTS EXCEEDING RS.20,000/- IN CASH BE NOT DISALLOWED. THE ASSESSEE STATED THAT T HESE PAYMENTS EXCEEDING RS.20,000/- WERE MADE TO NEW PARTIES. HE FURTHER ELABORATED THAT WI TH NEW PARTIES ONLY DEALING IS MADE IN CASH. AS THERE WAS NO REASON, AO MADE ADDITION. AGGRIEVE D, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). BEFORE CIT(A) ASSESSEE CONTENDED THAT ON A PARTICULAR DATE THE PAYMENT WAS MADE AT DIFFERENT TIMES AS NOTED ABOVE IN THE ORDER OF CIT( A). BUT IN THE LEDGER THE PAYMENTS MADE ARE SHOWN ON THE SAME DAY LIKE M/S. JHAWAR TUBE CO. AS ON 30.09.2004 THE PAYMENT MADE AT RS.48,870/- AND SIMILARLY TO ALL PARTIES. THE CIT( A) GOING BY ENTRIES MADE IN CASH BOOK AND LEDGER NOTED THAT ONE PAYMENT WAS MADE AND NOT THE SPLITTED PAYMENT AS SHOWN BEFORE CIT(A) FOR THE FIRST TIME. HE CONFIRMED THE DISALLOWANCE. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT NOW ASSESSEES COUNSEL BEFORE US CLEAR LY STATED THAT NO DOUBT IN THE LEDGER THE PAYMENT WAS MADE AT ONE GO WHICH EXCEEDS RS.20,000/ - BUT ACTUALLY THE PAYMENTS WERE MADE ON DIFFERENT TIMES. WE FAIL TO UNDERSTAND HOW THIS IS POSSIBLE THAT THE PAYMENT TO ONE PARTY WAS MADE AT 10.40 A.M. THEN AT 1.00 P.M. AND THEN AT 5. 45 P.M., IT IS NOT POSSIBLE. AS THE ASSESSEE NOW IS CHANGING HIS STAND FROM WHAT IS WRITTEN IN T HE LEDGER AS WELL AS CASH BOOK IN SUCH CIRCUMSTANCES, WE FEEL THAT THE LOWER AUTHORITIES H AVE RIGHTLY MADE DISALLOWANCE AND WE CONFIRM THE SAME. THIS ISSUE OF ASSESSEES APPEAL IS DISMISSED. 5. THE NEXT COMMON ISSUES RAISED BY WAY OF GROUND NOS. 2 AND 3 IS AS REGARDS TO THE ORDER OF CIT(A) UPHOLDING THE ADDITION OF RS.16,593/- AND UNACCOUNTED SALE OF RS.4,05,131/- AND CONSEQUENTIAL GROSS PROFIT OF ALLEGED UNACCOUNTED S ALES AT RS.23,173/-. 6. BRIEFLY STATED FACTS ARE THAT A SURVEY U/S. 133A OF THE ACT WAS CONDUCTED ON THE BUSINESS PREMISES OF THE ASSESSEE ON 14.10.2004 AND DURING T HE COURSE OF SURVEY, THE AO IMPOUNDED TWO CASH MEMOS I.E. RE-14 AND RE-15. ACCORDING TO THESE CASH MEMOS, THE TOTAL SALES IS AT RS.2,90,091/-. THE AO REQUIRED THE ASSESSEE TO EXP LAIN THESE TWO CASH MEMOS. ACCORDING TO AO, THE ASSESSEE COULD NOT EXPLAIN THESE TWO CASH M EMOS, HENCE THE SAME WAS TREATED AS 3 ITA NO. 531/K/2011 ANITA FOGLA. AY 2005-06 UNACCOUNTED SALES AND GP RATE @ 5.72% WAS ADDED BAC K TO THE TOTAL INCOME OF THE ASSESSEE BY AN AMOUNT OF RS.16,593/-. SIMILARLY, DURING THE CO URSE OF SURVEY, EXACT STOCK FOUND WAS TO THE TUNE OF RS.26,91,963/- BUT THE AO RECAST THE TRADIN G ACCOUNT FOR THE PERIOD 01.04.2004 TO 14.10.2004 AND AS PER THE RECAST TRADING ACCOUNT TH E CLOSING STOCK BY TAKING A BALANCING FIGURE WAS AT RS.30,97,094/-. AS THERE IS A DIFFERENCE BE TWEEN THESE TWO FIGURES TO THE EXTENT OF RS.4,05,131/- THE AO REQUIRED THE ASSESSEE TO EXPLA IN THE DIFFERENCE. ACCORDING TO AO, THE ASSESSEE FAILED TO EXPLAIN THE DIFFERENCE, THEREFOR E, THE SHORTFALL IN STOCK IS NOTHING BUT SALES OUTSIDE THE BOOKS OF ACCOUNT THEREBY HE APPLIED GP RATE @ 5.72% ON THE ABOVE UNACCOUNTED SALE OF RS.4,05,131/- AND THEREBY COMPUTED THE PROF IT AT RS.23,173/- AND ADDED BACK TO THE RETURNED INCOME OF THE ASSESSEE. SIMILARLY, HE ALS O MADE ADDITION OF UNACCOUNTED STOCK OF SALE OF RS.4,05,132/-. AGGRIEVED, ASSESSEE PREFERRED AP PEAL BEFORE CIT(A), WHO ALSO CONFIRMED THE ACTION OF AO. AGGRIEVED, ASSESSEE CAME IN APPEAL B EFORE US AGAINST ALL THE THREE ADDITIONS. 7. WE FIND THAT THERE IS A DISCREPANCY IN THE ACCOU NTS OF THE ASSESSEE AS THE ASSESSEE COULD NOT RECONCILE THE SALE FIGURE OF CASH MEMO TO THE T UNE OF RS.2,90,091/- AND ALSO UNACCOUNTED SALES TO THE TUNE OF RS.4,05,131/-. THAT MEANS THE ASSESSEE COULD NOT RECONCILE THE TOTAL UNACCOUNTED SALE TO THE TUNE OF RS.6,95,222/-. IT MEANS THAT THE ASSESSEE HAS SUPPRESSED THE SALE TO THE TUNE OF RS.6,95,222/- BUT THE AO HAS NO T DISBELIEVED THE PURCHASES. ONCE THE PURCHASES ARE ACCEPTED AND NO DOUBT IS CREATED ON T HE SAME, THE AO HAS ONLY ONE ALTERNATIVE JUST TO ESTIMATE THE GROSS PROFIT ON UNACCOUNTED SA LE. IN SUCH CIRCUMSTANCES, WE FEEL THAT THE AO CAN APPLY GROSS PROFIT RATE ON THE UNACCOUNTED S ALES AND NOT THE ENTIRE SALES ARE TO BE ADDED. ACCORDINGLY, WE DIRECT THE AO TO APPLY GP R ATE @ 5.72% AS APPLIED BY HIM ON THE UNACCOUNTED SALE OF RS.6,95,222/- AND MAKE ADDITION TO THE RETURNED INCOME. WE DIRECT THE AO ACCORDINGLY. THESE THREE COMMON ISSUES ARE ALLOWED IN PART. 8. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE ADDITION MADE BY AO ON ACCOUNT OF EXCESS CASH FOUND AT THE TIME OF SURVEY AMOUNTING TO RS.13,987/-. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT DURING THE COURSE OF SURVEY AS PER CAS H BOOK, CASH IN HAND WAS AT RS.46,562/- AS AGAINST THE CASH AVAILABLE IN HAND AT RS.60,555/- ( WHICH IS PHYSICAL CASH). AS THE ASSESSEE WAS REQUIRED TO EXPLAIN AND HE FAILED TO DO SO, THE AO MADE ADDITION. AGGRIEVED, ASSESSEE 4 ITA NO. 531/K/2011 ANITA FOGLA. AY 2005-06 PREFERRED APPEAL BEFORE CIT(A), WHO ALSO CONFIRMED THE ACTION OF AO. AGGRIEVED, ASSESSEE PREFERRED APPEA BEFORE US. 10. WE FIND THAT THE CASH BOOK WAS FOUND TO BE WRIT TEN ONLY UPTO 26.09.2004 AND THEREBY CASH BALANCE WAS DRAWN ON THE BASIS OF SALES, PURCH ASES AND EXPENSES OF THE ASSESSEE. THE EXPLANATION OF THE ASSESSEE WAS THAT IT RECEIVED PA YMENT FROM ONE CUSTOMER, WHO PURCHASED GOODS WORTH RS.13,987/- AND CASH WAS GIVEN TO THE M ANAGER AND SUDDENTLY, THE SURVEY PARTY ARRIVED AND DIRECTED THE MANAGER TO DELIVER THESE G OODS ON THE NEXT DAY. THE MANAGER WAS ALSO DIRECTED TO RECORD THE SALES ON THE NEXT DAY. NONE OF THE AUTHORITIES BELOW HAVE BELIEVED THIS DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR THE FIRST APPELLATE STAGE. WE FEEL THAT THIS ISSUE THE AO SHOULD HAVE EXAMINED FROM THE BILL OF THE PARTY WHETHER THE BILL OF THE SAME AMOUNT WAS DRAWN ON THAT VERY DATE OR NOT. IT HAS NOT BEEN DONE AND THIS BEING A VERY PETTY AMOUNT, WE FEEL THAT THIS SHOULD BE DELETED. WE DE LETE THE SAME ACCORDINGLY. 11. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED IN PART. 12. ORDER IS PRONOUNCED IN THE OPEN COURT ON 08.05. 2014 SD/- SD/- , ! , (SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 08TH MAY, 2014 -. #/0 1 JD.(SR.P.S.) 2 *3 4 3%5- COPY OF THE ORDER FORWARDED TO: 1 . () / APPELLANT SMT. ANITA FOGLA, C/O RAMLAL ENTERPRISE S, GANGARAMPUR, DAKSHIN DINAJPUR. 2 *+() / RESPONDENT ITO, WARD-1, BALURGHAT. 3 . # ( )/ THE CIT(A), JALPAIGURI 4. 5. # / CIT JALPAIGURI 3:; *# / DR, KOLKATA BENCHES, KOLKATA +3 */ TRUE COPY, #