ITO, Ward - 1(2), Jalpaiguri, Jalpaiguri V. Shri Kajal Chaki, Jalpaiguri

ITA 59/KOL/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8136 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 12-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K RAKSHIT
• Assessee Lawyers: S M SURANA
• Keywords: Peak credit
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SMT. DIVA SINGH, HONBLE JM & SHRI C.D.RAO, HONBLE AM ] / I.T.A NO.59/KOL/2012 / ASSESSMENT YEAR : 2006-07 I.T.O., WARD-1(2), JALPAIGURI VS - SRI KAJAL CHAKI PROP. CHAKI ENTERPRISE, NANTUN BAZAR, MAYNAGURI, DIST-JALPAIGURI, WEST BENGAL (PAN:ACQPC 9293H) ( /APPELLANT ) ( / RESPONDENT ) DATE OF HEARING: 25.09.2012 DATE OF PRONOUNCEMENT: 25.09.2012 FOR THE APPELLANT : SHRI D.K.RAKSHIT, SR.DR FOR THE DEPARTMENT : SHRI S.M.SURANA, ADVOCATE /ORDER PER SHRI C.D.RAO, A.M . THE ABOVE APPEAL IS FILED BY THE REVENUE AGGRIEVED BY THE ORDER OF LD. CIT(A), JALPAIGURI DATED 13.10.2011 PASSED UNDER SE CTION 250 R.W.S. 143(3) OF THE INCOME-TAX ACT, 1961 FOR THE ASSESSMENT YEAR 20 06-07. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS: I. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A), JALPAIGURI HAS ERRED IN DELETING THE ADDIT ION OF RS.2,54,075/- MADE ON THE GROUND OF UNDISCLOSED PURCHASES. II. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ID. CIT(A), JALPAIGURI HAS ERRED IN DELETING THE ADDIT ION OF RS.9,01,400/- MADE ON THE GROUND OF UNDISCLOSED PAYMENTS. III. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), JCILPAIGURI HAS ERRED IN DELETING THE ADDI TION OF RS.7,622/- AND RS.12,000/- MADE ON GROSS PROFIT ON UNDISCLOSED BU SINESS TRANSACTIONS. 2 ITA 59/KOL/2012 SRI KAJAL CHAKI ASSESSMENT YEAR : 2006-07 IV. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ID. CIT(A), JALPAIGURI ERRED IN TREATING THE UNDISCLOS ED PURCHASES AND UNDISCLOSED RECEIPTS AS PART OF THE UNDISCLOSED PA YMENTS WHEN IN FACT, THE ALL THE UNDISCLOSED TRANSACTIONS HAD BEEN SEPARATE LY AND DISTINCTLY IDENTIFIED FROM DIFFERENT DOCUMENTS. V. THAT, IN VIEW OF THE AFOREMENTIONED GROUNDS OF APPEAL, THE ORDER OF THE LD.CIT(A) MAY BE CANCELLED AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED. V. THAT THE APPELLANT MAY PLEASE BE ALLOWED TO ADD AND/OR ALTER THE GROUNDS OF APPEAL, IF ANY. 2. BRIEF FACTS OF THE ABOVE GROUNDS ARE THAT WHILE DOING THE SCRUTINY ASSESSMENT, THE AO, ON THE LOOSE SHEETS, FOUND DURI NG THE SURVEY VIDE IDENTIFICATION MARK NOS. KC-65, KC-66 AND KC-69, WH ICH CONTAINED PURCHASE BILLS, SALES BILLS, MONEY RECEIPTS AND APPROVAL SLI PS, ETC., ADDED AN AMOUNT OF RS.2,54,075/- AS UNRECORDED PURCHASE AND ALSO ADDED AN AMOUNT OF RS.7,622/- AS THE UNDISCLOSED INCOME AT 3% OF THE UNDISCLOSED INVESTMENT IN THE BUSINESS. IN ADDITION TO THE ABOVE, HE FURTHER ADDED AN AMOUN T OF RS.9,01,400/- AS UNACCOUNTED SALES AT RS.2,70,42/- AND RS.12,000/-BY STATING THAT THE ASSESSEE EARNED 3% OF THE TRANSACTION INVOLVED IN THE MONEY RECEIPT BOOK AMOUNTING TO RS.4 LAKHS. 3. AGGRIEVED BY THIS, THE ASSESSEE WENT IN APPEAL B EFORE THE LD. CIT(A). AFTER CONSIDERING THE VARIOUS SUBMISSIONS OF THE AS SESSEE, THE LD. CIT(A) HAS DELETED THE ADDITION MADE BY THE AO ON ACCOUNT OF T HE ABOVE UNDISCLOSED PURCHASE, SALES AND THE PROFIT ELEMENTS INVOLVED IN IT. HOWEVER, HE CONFIRMED AN AMOUNT OF RS.1,90,000/- AS AGAINST THE ABOVE ADD ITION BY OBSERVING AS UNDER: I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE L D ARS AND ALSO PERUSED THE ASSESSMENT ORDER. IT IS APPARENT FROM THE ASSESSMENT ORDER THAT WHILE EXAMINING THE LIST OF SUCH TRANSACTIONS FROM THE INVENTORISED DOCUMENTS, THE AO GOT IT SIGNED BY THE ASSESSEE AN D HAS GIVEN TWO OPPORTUNITIES TO THE ASSESSEE TO ESTABLISH THAT TH OSE WERE NOT UNRECORDED TRANSACTIONS. BUT, THE ASSESSEE COULD NOT OFFER AN Y EXPLANATION RESULTING IN THE ADDITIONS MADE BY THE AO. HOWEVER, THE SUBM ISSION MADE BY THE ARS IN THIS REGARD IN COURSE OF APPELLATE PROCEEDI NGS HAS MERIT. THE 3 ITA 59/KOL/2012 SRI KAJAL CHAKI ASSESSMENT YEAR : 2006-07 SUBMISSION OF THE ARS THAT THE PAYMENTS OF RS.9,01 ,400/- WERE MADE AGAINST THE CORRESPONDING UNDISCLOSED PURCHASES WH ICH WERE INCLUDED IN THE PURCHASE DOCUMENTS INVENTORISED UNDER MARKED K C-65, 66 AND 69. THE CASH RECEIPT BOOK INVENTORISED UNDER MARKED KC -5 ALSO SHOWN THE CASH RECEIPTS IN RESPECT OF THE SALES MADE AGAINST THOSE UNDISCLOSED PURCHASES. AT THE SAME TIME, SINCE IT WAS UNDISCLO SED PURCHASES WERE MADE OVER A PERIOD OF TIME, THE LD AO WAS WRONG IN TREATING THE WHOLE AMOUNT OF PURCHASE AND PAYMENTS MADE AS UNDISCLOSE D INVESTMENT. THEREFORE, THE ADDITION IN THE FORM OF UNDISCLOSED INVESTMENT MADE IN PURCHASES OF RS.2,54,075/- AND CORRESPONDING GP ON THE SAME AMOUNT OF RS.7,622/- SHOULD BE DELETED. FOR THE SAME REASON, THE ADDITION OF GP OF RS.12,000/- ON SALES OF RS.4,00,000/- WAS ALSO A D OUBLE ADDITION. AS PER THE DOCUMENTS INVENTORISED, THE AO FOUND T HAT THE ASSESSEE MADE UNACCOUNTED TRANSACTIONS AS UNDER: HEADS GP ESTIMATED ADDITIONS MADE PRINCIPAL GP PURCHASE OF RS.2,54,075/- RS.7,622/- RS.2,54,075/ - RS.7,622/- PAYMENTS OFRS.9,01,400/- RS.27,042/- RS.9,01,400/ - RS.27,042/- RECEIPTS OF RS.4,00,000/- RS.12,000/- - RS. 12,000/- IT IS, THUS, APPARENT THAT THE AO HAS ALREADY ALL OWED THE TELESCOPING BENEFIT TO THE ASSESSEE IN RESPECT OF THE CASH RECEIPTS OF RS.4,00,000/- AGAINST THE UNDISCLOSED SALES. AT TH E SAME TIME, THE PAYMENT MADE BY THE ASSESSEE AGAINST THE UNDISCLOS ED PURCHASES OF RS.9,01,400/- IS HIGHER THAN THE UNDISCLOSED PURCH ASES OF RS.2,54,075/-. THEREFORE, IT CAN BE PRESUMED THAT THE UNDISCLOSED PURCHASES OF RS.2,54,075/- WAS INCLUDED IN THE UNDISCLOSED PAYM ENTS OF RS.9,01,400/-. SIMILARLY, SALES OF RS.4,00,000/- AS PER THE CASH RECEIPT BOOK WAS ALSO MADE OUT OF THE SAID PURCHASES. THEREFORE, ADDITIO N IN RESPECT OF THE GP SHOULD HAVE BEEN MADE ON THE AMOUNT OF PURCHASES I PAYMENTS I SALES WHICHEVER IS HIGHER. AS SUCH, IT IS HELD THAT THE ADDITION ON ACCOUNT OF GP TO THE EXTENT OF RS.27,042/- ESTIMATED ON PAYMENTS OF RS.9,OL,4001- IS CONFIRMED AND REMAINING TWO AMOUNTS ARE DELETED. SO FAR AS THE ADDITION ON ACCOUNT OF UNDISCLOSED INVESTMENT IS CONCERNED, CONSIDERING THE FACTS OF THE CASE, THE TOTAL AMOUNT OF UNDISCLOSED PURCHASES OR PAYMENTS CANNOT BE TREATE D AS UNDISCLOSED INVESTMENT. IT IS FOUND FROM THE ASSESSMENT ORDER AS WELL AS THE SUBMISSION OF THE ARS THAT THE PURCHASES AND PAYME NTS WERE MADE OVER A PERIOD OF TIME. NEITHER THE PURCHASES NOR THE PAYM ENTS WERE MADE IN ONE GO. TIME-TO-TIME PURCHASES WERE MADE AND PAYMENTS WERE ALSO MADE IN 4 ITA 59/KOL/2012 SRI KAJAL CHAKI ASSESSMENT YEAR : 2006-07 SAME MANNER. IT IS FOUND THAT ON 23.05.2005, TWO P AYMENTS OF RS.1,00,000/- AND RS.90,000/- WERE MADE AGAINST TH E PURCHASES. THESE WERE THE PEAK AMOUNT PAID ON A SINGLE DAY DURING T HE WHOLE YEAR. CONSIDERING THE SUBMISSION OF THE LD ARS, IT IS HE LD THAT FOR MAKING THE UNDISCLOSED BUSINESS, THE ASSESSEE, OBVIOUSLY, REQ UIRED SOME UNDISCLOSED CAPITAL, AND IN THIS CASE, SAME IS HELD TO BE RS.1 ,90,000/- AND ADDITION TO THAT EXTENT IS CONFIRMED. THE REST OF THE ADDITION S UNDER THE HEAD UNDISCLOSED INVESTMENT IS DELETED. 4. AGGRIEVED BY THIS, NOW THE REVENUE IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING, LD. DR, APPEARING ON BEH ALF OF THE REVENUE, HAS RELIED ON THE ORDERS OF THE AO AND FURTHER CONTENDE D THAT THE ASSESSEE IS NOT IN A POSITION TO RECONCILE THE UNACCOUNTED PURCHASES WIT H THAT OF THE UNACCOUNTED SALES. THEREFORE, THE ADDITION MADE BY THE AO IS JU STIFIABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. HENCE, HE REQUESTED TO S ET ASIDE THE ORDERS OF THE LD.CIT(A) AND RESTORE THAT OF THE AO. 6. ON THE OTHER HAND, THE LD. COUNSEL, APPEARING ON BEHALF OF THE ASSESSEE, HAS SUBMITTED THAT ON SIMILAR FACTS AND CIRCUMSTANC ES IN THE CASE OF MANOJ TEXTILES IN ITA NO.701/KOL/2010, THIS TRIBUNAL HAS CATEGORICALLY MENTIONED THAT WHEN ONCE THE UNACCOUNTED PURCHASES AS WELL AS SALES ARE FOUND AT THE TIME OF SURVEY, THE REVENUE IS TO LOOK INTO THE PROFIT E LEMENTS INVOLVED IN THE SAME BUT IT IS NOT FAIR ON THE PART OF THE REVENUE TO AD D ALL THE PURCHASES, SALES AS WELL AS PROFIT INVOLVED IN THE SAME. THEREFORE, HE REQUE STED TO UPHOLD THE ORDER OF THE LD. CIT(A). 7. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD, WE ARE IN AGREEMENT THAT THE LD. COUNSEL FOR THE ASSESSEE THAT WHEN ONCE THE REVENUE HAS FOUND THAT THE ASSESSEE HAS NOT RECORDED SOME OF THE PURCHASES AS WELL AS SOME OF T HE SALES, THEY MAY NOT CONSTITUTE THE INCOME OF THE ASSESSEE IN THAT PARTI CULAR YEAR BUT THE PROFIT ELEMENT INVOLVED IN THE SAID SALES AND THE INVESTME NTS REQUIRED FOR PROCUREMENT 5 ITA 59/KOL/2012 SRI KAJAL CHAKI ASSESSMENT YEAR : 2006-07 OF SOME OF THE UNACCOUNTED PURCHASES ARE TO BE ADDE D. IN THIS CASE, THE LD. CIT(A), AFTER TAKING INTO CONSIDERATION ALL THE FAC TS OF THE CASE, HAS CONFIRMED THE ADDITION OF RS.1,90,000/- AND DELETED THE OTHER FOUR ADDITIONS. 7.1 IN THE CASE RELIED ON BY THE ASSESSEE, WE CONSI DER IT PROPER TO EXTRACT THE RELEVANT FINDINGS OF THE LD.CIT(A) IN THE CASE OF M ANOJ TEXTILES ( SUPRA ) AND THE FINDINGS OF THE TRIBUNAL ARE AS UNDER: 4.5 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSION OF THE APPELLANT. I HAVE ALSO PERUSED THE CASE LAWS RELIE D UPON BY THE APPELLANT. I FIND FORCE IN THE ARGUMENT THAT, SINC E THE AO HAS TAXED THE PROFIT ON UNACCOUNTED PURCHASES, HE HAS ADMITT ED THAT THE GOODS WERE SOLD. THE UNDISCLOSED PURCHASES WERE NOT MADE ON A SINGLE DAY; IN FACT, THEY WERE MADE IN SMALL SUMS BEGINNING FROM THE ACCOUNTING YEAR. THE PAYMENTS WERE MADE AFTER THE PURCHASES. THE SA LE PROCEEDS WERE AVAILABLE WITH THE APPELLANT FOR MAKING PAYMENTS A GAINST PURCHASES; MOREOVER, THE TOTAL PAYMENTS ARE FAR LOWER THAN TH E PURCHASES. THE AO HAS BROUGHT NO MATERIAL ON RECORD TO SHOW THAT INV ESTMENT REMAINED IN PURCHASES OR THAT ADDITIONAL INVESTMENT WAS REQUIR ED OVER AND ABOVE THE CAPITAL EMPLOYED BY THE APPELLANT FOR SUCH UNA CCOUNTED PURCHASE. I FIND THAT THE CASE OF THE APPELLANT IS DIRECTLY CO VERED BY THE DECISIONS OF THE JURISDICTIONAL ITAT IN ITA NO. 26 35/KOL/2005 AND ITA NO.1825/KOL/2006. I ALSO FIND THAT IN ITA NO. 2635 /KOL/2005, THE HONBLE ITAT HAS RELIED ON THE JUDGMENT OF THE HON BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS S.M. OMER (1993) 201 I TR 608 (CAL). IN VIEW OF THE ABOVE, AND ALSO THE RATIO LAID DOWN BY THE JURISDICTIONAL ITAT, I AM OF THE OPINION THAT THE ADDITION OF RS. 17,36,692/- IS NOT JUSTIFIED AND IS DIRECTED TO BE DELETED. GROUND NO .2 IS ALLOWED. 5. ON THE OTHER HAND, THE LD. COUNSEL APPEARI NG ON BEHALF OF ASSESSEE HAS RELIED ON THE ORDER OF LD. CIT(A) AND FURTHER RELIED ON THIS TRIBUNALS ORDERS IN THE CASE OF BALAJI TIMBER CO. VS ITO.WD-50(4), KOLKATA VIDE ITA NO.43/KOL/2011 AND IN THE CASE OF ITO.WD.KOLKATA VS BALAJI TIMBER CO. VIDE ITA NO.119/KOL/2011 DATED 2 2.07.2011 WHEREIN THE TRIBUNAL HAS DELETED THE PURCHASES IN THE SIMI LAR FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE HE REQUESTED TO UPHELD THE ACTION OF LD. CIT(A). 6. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CARE FUL PERUSAL OF MATERIALS AVAILABLE ON RECORD, KEEPING IN VIEW OF THE FACT THAT THE LD. DR COULD NOT BRING ANY CONTRARY DECISION RELIED ON BY LD. CIT(A) BY DELETING 6 ITA 59/KOL/2012 SRI KAJAL CHAKI ASSESSMENT YEAR : 2006-07 THE ADDITION. WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) TO BE INTERFERED WITH. THEREFORE WE UPHELD THE SAME AND DISMISS THE APPEAL OF REVENUE. 7.2 KEEPING IN VIEW OF THE PRESENT FACTS AND THE FA CTS DECIDED BY THE TRIBUNAL AS RELIED ON BY THE LD. COUNSEL OF THE ASSESSEE, SI NCE IN THIS CASE, THE LD. CIT(A) HAS CONFIRMED THE ADDITION OF RS.1,90,000/- BEING T HE PEAK CREDIT OF THE UNACCOUNTED TRANSACTION WHICH IS MORE THAN G.P. RAT E OF THE PURCHASES AS WELL AS SALES, WE FIND NO INFIRMITY IN THE ORDERS OF THE LD. CIT(A) TO BE INTERFERED WITH. THEREFORE, WE CONFIRM THE ORDER OF THE LD. CI T(A) AND DISMISS THE APPEAL OF THE REVENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE D ATE OF HEARING ITSELF IN PRESENCE OF THE PARTIES. SD/- SD/- (DIVA SINGH) (C.D.RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER ( ) )) ) DATED : 25 TH SEPTEMBER, 2012 ' # $#%- COPY OF THE ORDER FORWARDED TO: 1. / I.T.O., WARD-1(2), JALPAIGURI 2 / SRI KAJAL CHAKI, PROP. CHAKI ENTERPRISE, NANTUN BAZ AR, MAYNAGURI, DIST-JALPAIGURI, WEST BENGAL 3. ' ( )/ THE CIT(A), KOLKATA 4. ' / CIT, KOLKATA 5. ( ) / DR, KOLKATA BENCHES, KOLKATA # / TRUE COPY, * / BY ORDER, + , /ASSTT. REGISTRAR . TALUKDAR/SR.P.S. 7 ITA 59/KOL/2012 SRI KAJAL CHAKI ASSESSMENT YEAR : 2006-07