M/s. Akash Enterprise, Howrah V. ITO, Ward - 46(1), Kolkata, Kolkata

ITA 645/KOL/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8099 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2012
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 01-04-2010
• Court: TRIBUNAL
• Department Lawyers: K N JANA JCIT LD
• Assessee Lawyers: A C GANARIWALA S LD ARS; T K NAG
• Keywords: Unexplained cash credit

Judgement Text

, C , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- C , CALCUTTA () BEFORE . , , , , SHRI C.D RAO, ACCOUNTANT MEMBER. !' /AND #$#% 1'(, ) SHRI GEORGE MATHAN, JUDICIAL MEMBER ') / ITA NO. 645/KOL/2010 ($ *+/ ASSESSMENT YEAR: 2006-07 M/S. AKASH ENTERPRISE PAN: AAJFA 1973N I.T.O WARD 46(1), KOLKATA ('- / APPELLANT ) - ( - - VERSUS -. (/0'-/ RESPONDENT ) '- 1 2 / FOR THE APPELLANT: / S/SHRI T.K NAG & A.C GANARIWALA, ADVOCATES, LD.ARS /0'- 1 2 / FOR THE RESPONDENT: / SHRI K.N. JANA, JCIT/, LD. SR. DR 3(4 1 /DATE OF HEARING : 18-10-2012 5* 1 /DATE OF PRONOUNCEMENT: 18-10-2012 6 / ORDER #$#% 1'(, ) SHRI GEORGE MATHAN, JUDICIAL MEMBER.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST ORD ER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XXX, KOLKATA DATED 19.01.2010 FOR THE AS SESSMENT YEAR 2006-07.. 2. S/SHRI T.K NAG & A.C GANARIWALA, ADVOCATES, LEAR NED ARS REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI K.N. JANA, JCIT/ LEARNED SR. DR REPRESENTED ON BEHALF OF THE REVENUE 3. IN THE ASSESSEES APPEAL, THE ASSESSEE HAS RAISE D FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE LD C.I.T (A) IS ERRED IN SUSTAINING THE ADDITION OF RS- 3175,000/- AS UNEXPLAINED CASH CREDIT AND DISALLOWANCE OF INTERES T THEREON OF RS- 374,681/- ON THE BASIS OF ALLEGED OBSERVATION OF THE A.O. MADE I GNORING VITAL FACTS AND EVIDENCES ON RECORD WITHOUT APPLYING PRAGMATICALLY AND JUDICIALLY HIS OWN MIND ESTABLISHING THE IDENTITY OF THE CREDITORS THEIR CR EDITWORTHINESS IN POSSESSION AND ACTIVITIES OF FUND ADVANCE, GENUINENESS OF THE LOAN TRANSACTIONS CONSISTENTLY HAPPENED IN EARLIER AND SUBSEQUENT YEARS. 2. THAT THE LD C.I.T.(A) MAY BE DIRECTED TO CONSIDE R THE FACTS, EVIDENCES AND THEIR MATERIALS ON RECORD APPLYING HIS MIND JUDICIALLY AN D DELETE THE ADDITION AND DISALLOWANCE. 3. THAT THE LD C.I.T. (A) ERRED IN SUSTAINING DISAL LOWING OF AD HOC ESTIMATED ADDITION OF RS- 51,390/- OUT OF LABOUR CHARGES HAVI NG DIRECTLY NEXUS WITH THE GOODS FOR AND ON FULLY VERIFIABLE AND INCURRED ACTU ALLY, WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSE. 4. THAT THE LD C.I.T (A) ERRED IN NOT ALLOWING DEDU CTION OF REMUNERATION TO THE PARTNER U/S- 40 (B) (V) RS- 150,000/- ALTHOUGH DULY SPECIFIED, QUANTIFIED AND ACTED UPON IN THE PROFIT AND LOSS ACCOUNT FOR THE RELEVAN T YEAR. ITA NO. 645/KOL/2010-C GM 2 5. THAT THE ASSESSEE CRAVE LEAVES TO ADD /TO ALTER ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE APPEAL HEARING. . 4. IT WAS SUBMITTED BY THE LEARNED AR FOR THE ASSESSEE THAT THE ISSUES IN GROUND NOS. 1 & 2 IN THE APPEAL WERE AGAINST THE ACTIONS OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFF ICER AS UNEXPLAINED CASH CREDIT AND THE DISALLOWANCE OF INTEREST THEREON . IT WAS SUBMITTED THAT THE ASSESSEE HAD TAKEN LOAN FROM 16 PERSONS F OR AN AMOUNT OF RS.31.75 LAKH AND ALSO PAID INTEREST O N THE SAID LOAN TO THE EXTENT OF RS.3,74,681/-. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD S UMMONED THE CREDITORS. SOME OF THE CREDITORS HAD APPEARED BEFORE THE ASSESSING OFFICER AND THEIR STA TEMENTS WERE RECORDED SOME OF THE CREDITORS WERE NOT APPEARED, BUT EVIDENCES HAVE BEEN PRODUCED BEFO RE THE ASSESSING OFFICER. IT WAS SUBMITTED THAT THE ASSESSING OFFICER DISBELIEVED THE CREDITORS AN D HELD THAT THE ASSESSEES OWN UNDISCLOSED INCOME WAS CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSE SSEE FIRM IN THE GUISE OF THE UNSECURED LOAN. IT WAS SUBMITTED BY HIM THAT THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) CONFIRMED THE ORDER OF THE ASSESSING OFFICER WITHOUT ACCEPTING THE CONTENTIONS OF THE ASSESSEE. IT WAS THE FURTHER SUBMISSION TH AT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HA D HELD THAT THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS REGARDING THE IDENTITY OF THE CREDITORS, THE CREDITWORTHINESS OF THE CREDITORS AND THE GENUINENESS OF THE TRANSACTIONS. IT WAS SUBMITTED THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAD CONSEQUENTLY CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN ADDING THE CREDITS AS ALSO THE DISALLOWANCE OF INTEREST PAYMENT. IT WAS THE FURTHER SUBMISSION THAT THE CREDITORS HAVE APPEARED AND SUBSTANTIAL EVIDENCES HAVING BEEN PRO DUCED BEFORE THE ASSESSING OFFICER. IT WAS THE SUBMISSION THAT HE HAD NO OBJECTION IF THE ISSUE WA S RESTORED TO THE FILE OF THE ASSESSING OFFICER FO R RE- ADJUDICATION WITH THE LIBERTY THE ASSESSEE TO PRO DUCE FURTHER EVIDENCES TO PROVE THE CLAIM. 4.1 IN REGARD TO GROUND NOS.3 & 4, IT WAS SUBMITTE D BY HIM THAT THE ISSUE IN REGARD TO THE ADHOC ESTIMATED ADDITION OF LABOUR CHARGES AS ALSO THE ISSUE IN RESPECT OF REMUNERATION TO THE PARTNERS U/S. 40(B)(V) OF THE I.T ACT 1961.COULD BE RESTORED TO T HE FILE OF THE ASSESSING OFFICER FOR RE-ADJUDICATIO N. 5. IN REPLY, SHRI K.N. JANA, JCIT/ LEARNED SR. DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS. IT WAS THE SUBMISSION THAT IN THE EVENT THE ISSUES ARE RESTORED TO THE FILE OF THE ASSESSING OFFICER, THE N DUTY MUST BE CAST ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE CREDITORS AND THE LABOUR CHARGES INCURRED. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT SOME OF THE CREDITORS HAVE APPEARED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS DISBELIEVED THE CREDITORS WITHOUT GIVING ANY FURTHE R OPPORTUNITY TO THE ASSESSEE TO REBUT THE ADVERSE CONCLUSION AS ARRIVED AT BY THE ASSESSING OFFICER. IN THE CIRCUMSTANCES, THE ISSUE OF PROVING THE ITA NO. 645/KOL/2010-C GM 3 SUNDRY CREDITORS CLAIM AS ALSO THE CLAIM OF INTERE ST PAID TO THE SUNDRY CREDITORS ARE RESTORED TO TH E FILE OF THE ASSESSING OFFICER FOR RE-ADJUDICATION. HE SHALL GRANT THE ASSESSEE ADEQUATE OPPORTUNITY TO PROVE THE CLAIM OF THE SUNDRY CREDITORS. 6.1 IN REGARD TO THE ISSUE OF THE ADHOC DISALLOWAN CE OUT OF THE LABOUR CHARGES, THIS ISSUE IS RESTOR ED TO THE FILE OF THE ASSESSING OFFICER FOR RE-ADJUD ICATION. HERE IT MAY BE SPECIFICALLY MENTIONED THAT AN ADHOC DISALLOWANCE IS NOT PERMISSIBLE UNDER THE I. T ACT 1961. IF ANY SPECIFIC EXPENDITURE IS UNVERIFIABLE, THEN THE DISALLOWANCE MUST BE RESTR ICTED TO SUCH UNVERIFIABLE EXPENSES. IN THE CIRCUMSTANCES, THIS ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE-ADJUDICATION AFTE R GRANTING THE ASSESSEE ADEQUATE OPPORTUNITY TO SUBST ANTIATE ITS CLAIM. 6.2 IN REGARD TO THE DISALLOWANCE OF REMUNERATION TO PARTNERS, THIS ISSUE IS ALSO RESTORED TO THE FIL E OF THE ASSESSING OFFICER FOR RE-ADJUDICATION IN TH E LINE WITH THE PROVISIONS OF SECTION 40(B)(V) OF T HE ACT. IN THIS CONNECTION, IT IS SPECIFICALLY DIRECTE D THAT THE QUANTIFICATION OF REMUNERATION NOT REQUI RED TO BE FIXED IN THE PARTNERSHIP DEED AND THE REMUNERATI ONS SHALL BE COMPUTED IN LINE WITH THE PROVISIONS OF SECTION 40(B)(V) OF THE I.T ACT 1961. IN THE CIRCUM STANCES, THE APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. 7 6 3 8 3( 9 7: THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT 18-10 -2012 *PP/SPS 6 1 /; <;*= / COPY OF THE ORDER FORWARDED TO: 1. . '- / THE APPELLANT : M/S. AKASH ENTERPRISE C/O RADHA SHYAM LOHIA 4/5 PITAMBAR BANERJEE LANE, HOWRAH-711 101. 2 /0'- / THE RESPONDENT- I.T.O WARD 46(1) 3 GOVT PL, KOL -700 001. 3 4. . . 6( / THE CIT, 6( ( )/ THE CIT(A) 5 . >9 /( / DR, KOLKATA BENCH 6 . GUARD FILE . 0; // TRUE COPY, 6(3/ BY ORDER, 7 '# /ASSTT REGISTRAR SD/ - SD/- ( .? , ) ( C.D RAO, ACCOUNTANT MEMBER ) ( #$#% 1'( , ) (GEORGE MATHAN, JUDICIAL MEMBER) ( (( ( ) )) ) DATE: 18-10-2012