ITO, Ward - 2(3), Midnapore, Paschim Medinipur V. Shri Nirmal Kumar Patra, Paschim Medinipur

ITA 610/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54671 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 20-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Assessee Lawyers: V N PUROHIT A R
• Section: 40A(3); 133(6); 131

Judgement Text

, ' , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA ( ) . . , , , , , , ) [BEFORE SRI S.V. MEHROTRA, A.M. & SRI MAHAVIR SING H, J.M.] ! ! ! ! / I.T.A NO. 610/KOL/2011 ASSESSMENT YEAR : 2005-2006 INCOME TAX OFFICER, -VS.- SRI NIRMAL KUMAR PA TRA, PASCHIM MIDNAPORE WARD-2(3), MIDNAPORE (PAN : AHNPP 7965 K) ( '# /APPELLANT ) ( $%'# / RESPONDENT ) FOR THE APPELLANT ( '# ) : SHRI S.K. ROY, D.R. FOR THE RESPONDENT ( $%'# ) : SHRI V.N. PUROHIT, A.R. &' ( ) * &' ( ) * &' ( ) * &' ( ) * /DATE OF HEARING : 01.12.2011 +, ) * +, ) * +, ) * +, ) * /DATE OF PRONOUNCEMENT : 01.12.2011 - / ORDER PER SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER/ . . , :- THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER OF LD. COMMISSIONER OF INCOME- TAX (APPEALS)-XXXVI, KOLKATA DATED 01.02.2011 FOR T HE ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE INDIVIDUAL, A CEMENT DEALER, FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06 ON 13.09.2005 DECLARING TOTAL INCOME F OR RS.99,090/-. THE ASSESSING OFFICER DETERMINED THE TOTAL INCOME AT RS.12,67,009/-, INTE R ALIA, MAKING FOLLOWING ADDITIONS/ DISALLOWANCES :- (1) CASH PURCHASE IN VIOLATION OF SECTION 40A(3) OF THE I.T. ACT RS.3,82,082/- (2) UNSECURED LOAN TREATED AS BOGUS AND ADDED BACK AS I NCOME FROM UNDISCLOSED SOURCES RS.7,00,000/- LD. CIT(APPEALS) DELETED BOTH THE DISALLOWANCES. BE ING AGGRIEVED WITH THE ORDER OF LD. CIT(APPEALS), THE REVENUE IS IN APPEAL BEFORE THE T RIBUNAL AND HAS TAKEN THE FOLLOWING GROUND :- WITHOUT GOING THROUGH THE MATERIAL FACTS AND CIRCU MSTANCES OF THE CASE, THE LD. CIT(A.)-XXXVI, KOLKATA ERRED IN DELETING TH E ADDITION OF ITA NO. 610/KOL./2011 2 RS.10,82,083/- ON TWO HEADS IN STATING THAT AO HAS ERRED IN MAKING THE ADDITION OF CASH PURCHASES OF RS.3,82,083/- AS WELL AS RS.7,00,000/- AS UNSECURED LOAN. 3. BRIEF FACTS APROPOS DISALLOWANCE OF RS.3,82,083/ - UNDER SECTION 40A(3) ON ACCOUNT OF CASH PURCHASE ARE THAT THE ASSESSEE MADE VARIOUS CA SH PURCHASES IN EXCESS OF RS.20,000/- EACH DURING THE YEAR IN VIOLATION OF THE PROVISIONS OF S ECTION 40A(3). THE ASSESSEE EXPLAINED THAT ON ACCOUNT OF NATURE OF BUSINESS, IT HAD TO MAKE PAYME NTS IN CASH. IT WAS FURTHER POINTED OUT THAT DIFFERENT AMOUNTS MENTIONED IN THE SHOW-CAUSE NOTIC E COMPRISED OF MORE THAN ONE TRANSACTION NOT EXCEEDING ANY TRANSACTION OF RS.20,000/-. THE A SSESSING OFFICER DID NOT ACCEPT THE ASSESSEES PLEA OBSERVING THAT FROM BOTH THE PURCHA SE REGISTER AND CASH BOOK, IT WAS FOUND THAT ALL THE PURCHASES AND SUBSEQUENT PAYMENT WAS MADE A GAINST A SINGLE TRANSACTION. HE DISALLOWED 20% OF RS.19,10,410/-, WHICH WAS THE TOT AL CASH PURCHASE IN EXCESS OF RS.20,000/-. THUS, HE MADE A DISALLOWANCE OF RS.3,82,083/-. 4. LD. CIT(APPEALS) DELETED THE DISALLOWANCE OBSERV ING THAT THE RELEVANT SECTION BEFORE AMENDMENT W.E.F. 01.04.2009 WAS RELEVANT WITH RESPE CT TO EACH PAYMENT AND NOT AGGREGATE OF PAYMENTS IN A DAY MADE TO A PERSON. HE POINTED OUT THAT IN THE PRESENT CASE, THOUGH EACH PURCHASE WAS IN EXCESS OF RS.20,000/-, BUT ADMITTED LY EACH PAYMENT AGAINST SAID PURCHASE WAS BELOW RS.20,000/-. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE RECORDS OF THE CASE. THE FINDINGS OF LD. CIT(APPEALS) HAVE NOT BEEN CONTROVE RTED. SINCE EACH PAYMENT WAS BELOW RS.20,000/-, THEREFORE, THE PROVISIONS OF SECTION 4 0A(3) COULD NOT BE ATTRACTED MERELY ON THE BASIS OF TOTAL VALUE OF EACH PURCHASE. THUS, THIS G ROUND OF APPEAL IS DISMISSED. 6. BRIEF FACTS APROPOS ADDITION OF RS.7,00,000/- AR E THAT THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD TAKEN UNSECURED LOANS FROM THE FOLLOWI NG PERSONS :- (1) SMT. KABITA PATRA RS.3,00,000/- (2) SIKHA BISHAL RS.2,50,000/- (3) SUJIT BISHAL RS.1,50,000/- NOTICES UNDER SECTION 133(6) WERE ISSUED TO ALL THE SE PERSONS TO FURNISH FOLLOWING DETAILS :- ITA NO. 610/KOL./2011 3 (A) BANK ACCOUNT NUMBER AND COPY OF BANK STATEMENT / PA SS BOOK (B) SOURCE OF INCOME AND LOAN GIVEN (C) PAN AND WHERE ASSESSED (D) COPY OF I.T. RETURN FILED ALONG WITH COPIES OF ACCO UNTS ANNEXED WITH THE SAID RETURN THE ASSESSING OFFICER NOTICED THAT IN THE IMPUGNED ACCOUNTS OF LOAN LENDERS, CASH WAS DEPOSITED JUST BEFORE 1-2 DAY OF GIVING LOAN. HE, T HEREFORE, REQUESTED THE LOAN CREDITORS TO EXPLAIN THE SOURCE OF CASH DEPOSITED IN THEIR RESPE CTIVE BANK A/C. HE RECORDED THE STATEMENT OF ALL THE LENDERS UNDER SECTION 131 TO VERIFY THE SOU RCE OF DEPOSIT IN THEIR ACCOUNTS. AFTER CONSIDERING THE STATEMENTS FILED BY THE LENDERS, HE TREATED THE LOANS AS BOGUS AND MADE AN ADDITION OF RS.7,00,000/- AS UNDISCLOSED INCOME OF THE ASSESSEE. BEFORE LD. CIT(APPEALS), THE ASSESSEE HAD FILED DETAILED WRITTEN SUBMISSIONS. LD . CIT(APPEALS) HAD CALLED FOR A REMAND REPORT IN WHICH THE ASSESSING OFFICER POINTED OUT T HAT ALL THE THREE LENDERS WERE ASSESSED TO TAX AND ALL OF THEM HAD FILED RETURN FOR THE RELEVANT A SSESSMENT YEAR DISCLOSING THE FACT THAT LOAN WAS INDEED GIVEN TO THE ASSESSEE. HE, THEREFORE, DE LETED THE ADDITION OBSERVING AT PARA 5.3, WHICH READS AS UNDER :- 5.3. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD. AR AND INCLINED TO ACCEPT HIS VERSION THAT THE APPELLANT HAD INDEED DI SCHARGED ALL ONUS CAST ON HIM FOR THE LOANS TAKEN FROM THREE PERSONS. THE LOANS W ERE TAKEN THROUGH ACCOUNT PAYEE CHEQUES, ALL THE LENDERS WERE PRESENTED BEFOR E THE AO FOR EXAMINATION, ALL THE LENDERS HAD CONFIRMED IN THEIR STATEMENTS RECOR DED UNDER OATH HAVING GIVEN LOANS TO THE APPELLANT AND ALL THE LENDERS IN THEIR RESPECTIVE I.T. RETURN HAD ALSO DISCLOSED THE SAID LOAN. I ALSO FIND THAT THE CASH- FLOW STATEMENTS DRAWN BY THE AO TO ESTABLISH THAT TWO LENDERS WERE NOT HAVING SUFFI CIENT CASH BALANCE TO DEPOSIT IN THEIR RESPECTIVE BANK ACCOUNTS BEFORE GIVING LOANS, STANDS ON MANY ASSUMPTION AND PRESUMPTION AND THE APPELLANT HAD NOT BEEN GIVE N OPPORTUNITY FOR REBUTTAL. ONCE THE LENDERS APPEARED AND CONFIRMED ABOUT THE L OANS UNDER OATH AND ALL RELEVANT RECORDS SUPPORTED THE SAME, INVESTIGATIONS AND ADDITIONS (IF ANY) LIED IN THE CASE OF LENDERS (HAD THERE BEEN DOUBT OF THEIR CREDITWORTHINESS). UNDER THE CIRCUMSTANCES, AND IN VIEW OF HOST OF JUDICIAL PRON OUNCEMENTS ON SIMILAR ISSUE, THE ADDITION MADE ON THIS SCORE IS NOT MAINTAINABLE . THE ADDITION OF RS.7,00,000/- IS THEREFORE DELETED. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE RECORDS OF THE CASE. ADMITTEDLY, ALL THE LENDERS APPEARED BEFORE T HE ASSESSING OFFICER AND EXPLAINED THE DEPOSITS IN THEIR BANK ACCOUNTS. THE LENDERS WERE A SSESSED TO TAX. UNDER SUCH CIRCUMSTANCES, THE PRIMARY ONUS THAT LAY UPON THE ASSESESE STOOD D ULY DISCHARGED AND IF THE ASSESSING OFFICER ITA NO. 610/KOL./2011 4 WAS NOT SATISFIED WITH THE EXPLANATION OF LENDERS, THEN THE ADDITION COULD HAVE BEEN MADE IN THEIR RESPECTIVE ASSESSMENT. WE, THEREFORE, DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(APPEALS) AND REJECT THIS GROUND OF APPEAL O F REVENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. . / , 0 1 .0 2 3. ORDER PRONOUNCED IN THE OPEN COURT ON 01/ 12 /2011. & / 5 - 01/12/2011. SD/- SD/- [ MAHAVIR SINGH / ] [S.V. MEHROTRA/ ( . . )] JUDICIAL MEMBER/ ACCOUNTANT MEMBER/ DATED : 01/ 12/ 2011 COPY OF THE ORDER FORWARDED TO: 1. SHRI NIRMAL KUMAR PATRA, DIAMOND CHAMBER, UNIT-II I, SUIT NO. 4G. 4 TH FLOOR, 4, CHOWRINGHEE LANE, KOLKATA-16 2 ITO, WARD-2(3), MIDNAPORE, SAHOO BHAWAN,.KSHUDIRAM NAGAR, PO. MIDNAPORE, DIST. PASCHIM MIDNAPORE 3. COMMISSIONER OF INCOME-TAX (APPEALS)- , KOLKATA 4. CIT- , KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA (TRUE COPY) BY ORDER ASSISTANT REGISTRAR, I.T.A.T., KOLKATA LAHA, SR. P.S.