Sri Chitta Ranjan Das, Purba Medinipur V. I.T.O Wd - 1,Haldia, Purba Medinipur

ITA 671/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4879 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 29-04-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 26-03-2013
• Court: TRIBUNAL
• Department Lawyers: A K
• Assessee Lawyers: MANISH TIWARI
• Section: 40A(3); 133A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI M. BALAGANES H, AM] I.T.A NOS.670 TO 672/KOL/2013 ASSESSMENT YEARS: 2003-04, 2007-08 & 2008-09 SHRI CHITTA RANJAN DAS VS. INCOME-TAX OFFICER, W D-1, HALDIA (PAN: AFNPD4830R) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 29.04.2016 DATE OF PRONOUNCEMENT: 04.05.2016 FOR THE APPELLANT: SHRI MANISH TIWARI, AR FOR THE RESPONDENT: SHRI A. K. PANDE, JCIT, SR. DR ORDER PER SHRI MAHAVIR SINGH, JM: ALL THESE APPEALS BY ASSESSEE ARE ARISING OUT OF SE PARATE ORDERS OF CIT(A)-XXXIII, KOLKATA VIDE APPEAL NOS. 250, 254 & 253/CIT(A)-XXXI II/ITO ALL DATED 07.12.2012. ASSESSMENTS WERE FRAMED BY ITO, WARD-1, HALDIA U/S. 143(3)/147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSME NT YEARS 2003-04, 2007-08 AND 2008-09 VIDE HIS SEPARATE ORDERS, ALL DATED 30.12.2010. 2. THE FIRST COMMON ISSUE IN THESE THREE APPEALS O F ASSESSEE IS AS REGARDS TO THE ORDER OF CIT(A) CONFIRMING THE ACTION OF AO IN MAKING ADDITI ON OF UNDISCLOSED PURCHASE WITHOUT ALLOWING DIRECT AND INDIRECT EXPENSES RELATABLE TO UNDISCLOSED PURCHASE AT RS.18,170/- IN AY 2003-04, RS.1,81,381/- IN AY 2007-08 AND RS.3,50,57 4/- IN AY 2008-09. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS EN GAGED IN THE BUSINESS OF FERTILIZERS AND PESTICIDES. A SURVEY OPERATION U/S. 133A OF THE AC T WAS CONDUCTED ON THE BUSINESS PREMISES OF THE ASSESSEE ON 27.03.2010. DURING THE COURSE OF S URVEY PROCEEDINGS, IT IS NOTICED THAT THE ASSESSEE HAS DISCLOSED TAXABLE INCOME FROM HIS CONT RACT BUSINESS AS WELL AS TRADING IN FERTILIZERS AND PESTICIDES. BUT ACTUALLY THE ASSESSEE HAS NOT D ISCLOSED INCOME FROM TRADING IN FERTILIZERS AND PESTICIDES IN THESE THREE YEARS IN THE RETURN OF IN COMES FILED BY HIM. THE ASSESSEE ADMITTED THIS FACT IN HIS STATEMENT RECORDED DURING THE COURSE OF SURVEY. DURING THE COURSE OF SURVEY SEVERAL DOCUMENTS WERE FOUND AND IMPOUNDED. THE ASSESSEE I N RESPONSE TO NOTICE U/S 148 OF THE ACT FILED RETURN OF INCOME DISCLOSING INCOME FROM TRADI NG IN FERTILIZERS AND PESTICIDES AT RS.52,178/- 2 ITA NOS.670-672/KOL/2013 CHITTA RANJAN DAS, AYS 2003-04, 2007-08 & 2008-09 ON SALES OF RS.18,52,684/-. THE AO FROM THE IMPOUND ED BOOKS, MARKED AS CRD-20, NOTED THAT ASSESSEE HAS PURCHASED GOODS WORTH RS.11,66,760/- F ROM FEED AND SEED. THE AO CONDUCTED ENQUIRY FROM VARIOUS CONCERNS AND THEY INFORMED THA T SALES MADE BY ASSESSEE TO THEM WERE RS.8,90,565/- AS AGAINST THE SAME PURCHASE MADE BY ASSESSEE ARE AT RS.21,05,726/-. BUT THE ASSESSEE HAS DISCLOSED PURCHASE IN THE RETURN OF IN COME AT RS.18,15,223/-. THE AO RECAST THE TRADING ACCOUNT BASED ON GP DISCLOSED BY THE ASSESS EE AND FROM THE RECAST TRADING ACCOUNT THE GP DERIVED WAS AT RS.1,09,989/-. THE ASSESSEE DISC LOSED GP WAS RS.91,819/- AND, THEREFORE, DIFFERENCE WAS ADDED AS INCOME AMOUNTING TO RS.18,1 70/-. BEFORE THE CIT(A) ASSESSEE CLAIMED THAT THE BOOKS OF ACCOUNT WERE STOLEN AND QUA THAT POLICE REPORT I.E. AN FIR WAS REGISTERED AND ACCORDINGLY THERE IS NO PROCEDURE TO ASCERTAIN THE UNDISCLOSED PURCHASES MADE FROM THE PARTIES FROM WHOM PURCHASES WERE SHOWN IN THE IMPOUNDED DOC UMENTS OR FROM WHOM ENQUIRIES WAS CONDUCTED. THE ASSESSEE DISPUTED THE FIGURES OF SAL ES AND PURCHASES AS PER RECAST TRADING ACCOUNT OF THE AO. BUT THE CIT(A) HAS NOT ACCEPTED THE EXP LANATION OF THE ASSESSEE AND CONFIRMED THE ACTION OF THE AO. SIMILAR ARE THE FACTS IN AY 2007 -08 AND 2008-09 AND HENCE, WE NEED NOT TO DISCUSS THE FACTS OF THOSE YEARS. 4. THE SECOND INTERCONNECTED ISSUE IS AS REGARDS TO THE ADDITION OF WORKING CAPITAL IN THE UNDISCLOSED PURCHASES OF PESTICIDES AND FERTILIZERS BUSINESS AT RS.54,536/- IN AY 2003-04, RS.69,749/- IN AY 2007-08 AND RS.2,66,529/- IN AY 2 008-09. THE FACTS AND CIRCUMSTANCES ARE EXACTLY IDENTICAL IN ALL THE THREE YEARS AND HENCE, WE WILL DISCUSS THE FACTS OF AY 2003-04 AND APPLY THE DECISION IN ALL THE YEARS. ACCORDING TO A O AND CIT(A), THE UNACCOUNTED PURCHASES WORKED OUT BY AO WERE MORE THAN 50% OF THE DISCLOSE D PURCHASES AND IT IS REASONABLE TO STATE THAT SUCH INCREASE IN PURCHASES WOULD INVOLVE INVES TMENT AND THE AO HAS RIGHTLY ESTIMATED THE CAPITAL REQUIREMENT AT RS.54,537/-. WE FIND THAT N OW BEFORE US LD. COUNSEL FOR THE ASSESSEE HAS NOT SERIOUSLY CONTESTED THESE TWO ADDITIONS. HE RE ITERATED WHAT WAS ARGUED BEFORE THE LOWER AUTHORITIES AND HE MAINLY CONTESTED ON THE ISSUE OF RECAST TRADING ACCOUNT. WE FIND THAT BOTH THE AUTHORITIES BELOW HAVE RIGHTLY MADE DIFFERENTIAL AD DITIONS AND ALSO ESTIMATED THE WORKING CAPITAL REQUIREMENT. ACCORDINGLY, WE CONFIRM BOTH THE ADDI TIONS AND THESE TWO ISSUES OF ASSESSEES APPEALS ARE DISMISSED. HOWEVER, WE ALLOW THE SET OF F OF AVAILABILITY OF FUNDS IN RESPECT TO ADDITIONS MADE ON ACCOUNT OF APPLICATION OF PROFIT ON UNACCOUNTED PURCHASES AND ALSO THE WORKING CAPITAL ESTIMATED IN FIRST YEAR, WITH THAT OF THE OTHER YEARS. THE AO WILL COMPUTE THE WORKING OF SET OFF AND ALLOW THE CLAIM OF THE ASSES SEE ACCORDINGLY. 3 ITA NOS.670-672/KOL/2013 CHITTA RANJAN DAS, AYS 2003-04, 2007-08 & 2008-09 5. THE NEXT COMMON ISSUE IN THESE APPEALS OF ASSESS EE IS AGAINST THE ORDER OF CIT(A) MAKING DISALLOWANCE OF RS.3,35,896/- IN AY 2003-04, AMOUNT OF RS.2,37,587/- IN AY 2007-08 AND RS.17,33,858/- IN AY 2008-09 BY INVOKING THE PR OVISIONS OF SECTION 40A(3) OF THE ACT FOR MAKING CASH PURCHASES. 6. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE STAT ED THAT ONCE THE BOOKS OF ACCOUNT ARE REJECTED AND ESTIMATED ADDITIONS ARE MADE ON ACCOUN T OF GP AND WORKING CAPITAL NO FURTHER DISALLOWANCE U/S. 40A(3) OF THE ACT CAN BE MADE. F OR THIS, LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. BANWARI LAL BANSIDHAR (1998) 229 ITR 229 (ALL) WHEREIN THE HONBLE ALLAHA BAD HIGH COURT HAS AFFIRMED THE DECISION OF THE TRIBUNAL, THAT NO DISALLOWANCE COULD BE MADE IN VIEW OF THE PROVISIONS OF SECTION 40A(3) READ WITH RULE 6DD(J) OF THE INCOME-TAX RULES, 1962 , AS NO DEDUCTION WAS ALLOWED TO AND CLAIMED BY THE ASSESSEE. WHEN THE GROSS PROFIT RATE WAS APPLIED, THAT WOULD TAKE CARE OF EVERYTHING ELSE AND THERE WAS NO NEED FOR THE AO TO MAKE SCRUTINY OF THE AMOUNT INCURRED ON THE PURCHASES MADE BY THE ASSESSEE. THE HONBLE PUN JAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SMT. SANTOSH JAIN (2008) 296 ITR 324 (P&H) HAS HELD THAT WHERE THE INCOME OF THE ASSESSEE HAS BEEN COMPUTED BY APPLYING A GROSS PROF IT RATE, THERE IS NO NEED TO LOOK INTO THE PROVISIONS OF SECTION 40A(3) OF THE ACT, 1961, AS A PPLYING THE GROSS PROFIT RATE TAKES CARE OF EXPENDITURE OTHERWISE THAN BY WAY OF CROSSED CHEQUE S ALSO. HENCE, WE ARE OF THE VIEW THAT THE ADDITION MADE BY AO AND CONFIRMED BY CIT(A) BY INVO KING THE PROVISIONS OF SECTION 40A(3) OF THE ACT CANNOT BE SUSTAINED IN THE PRESENT CASE. AC CORDINGLY, WE DELETE THE ADDITION IN ALL THE THREE YEARS AND THIS COMMON ISSUE OF ASSESSEES APP EALS IS ALLOWED. 7. IN THE RESULT, APPEALS OF ASSESSEE ARE PARTLY AL LOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 04.05.201 6 SD/- SD/- (M. BALAGANESH) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 4 TH MAY, 2016 JD. (SR. P.S.) 4 ITA NOS.670-672/KOL/2013 CHITTA RANJAN DAS, AYS 2003-04, 2007-08 & 2008-09 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT SHRI CHITTA RANJAN DAS, P.O. PANIPARUL, P.S., EGRA, PURBA MEDINIPUR-721448 2. RESPONDENT ITO, WARD-1, HALIDA. 3. CIT(A) , KOLKATA 4. CIT , KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .