ITO, Ward - 12(4), Kolkata, Kolkata V. M/s. Chemico International Pvt. Ltd., Kolkata

ITA 681/KOL/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5627 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 05-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S P LAHIRI
• Assessee Lawyers: SUBASH AGARWAL O R D E
• Keywords: Unexplained investment
• Section: 147; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI P.K.BANSAL, A.M. & SHRI GEORGE MATHAN, J.M. ] I.T.A. NOS.681 & 682/KOL/2011 : ASSESSMENT YEARS 2002-03 TO 2003-04 I.T.O., WARD-12(4), KOL. -VS- M/S. CHEMI CO INTERNATIONAL PVT. LTD.,KOL. PAN : AABCC 1047M ( APPELLANT ) ( RESPONDENT ) DATE OF CONCLUDING THE HEARING : 08.01.2014 DATE OF PRONOUNCING THE ORDER : 15.01.2014 APPEARANCES : FOR THE APPELLANT : SHRI S.P.L AHIRI, JCIT, SR.DR : FOR THE RESPONDENT : SHRI SUBASH AGARWAL , ADVOCATE O R D E R PER SHRI P.K.BANSAL, A.M. : THESE APPEALS HAVE BEEN FILED BY THE REVENUE AGAINS T THE ORDERS OF THE CIT(A)-XII, KOLKATA BOTH DATED 17 TH FEBRUARY, 2011 FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04. SINCE THE ISSUE INVOLVED IN BO TH THE APPEALS FILED BY THE REVENUE IS COMMON, THEREFORE, BOTH THESE APPEALS AR E BEING DISPOSED OF BY THIS COMMON ORDER. 2. THE REVENUE HAS TAKEN THE FOLLOWING COMMON GROUN D OF APPEAL EXCEPT THE CHANGE IN FIGURES FOR BOTH THE YEARS. 1. THAT LD. CIT(A) ERRED IN RESTRICTING THE ADDITIO N OF RS.82,85,534/- ON ACCOUNT OF UNACCOUNTED PURCHASE & EXPENSES U/S.69 O F THE I.T. ACT, 1961 TO RS.4,80,837/- WITHOUT APPRECIATING THE FACTS AND TH E CIRCUMSTANCES OF THE CASE. 3. AT THE TIME OF HEARING, THE LD. D.R. AGREED THAT THE ISSUE INVOLVED IN BOTH THE APPEALS ARE COMMON, THEREFORE, THE APPEAL FOR THE A SSESSMENT YEAR 2003-04 BE DECIDED ON THE BASIS OF THE FACTS RELATING TO THE A SSESSMENT YEAR 2002-03 TO WHICH THE LD. A.R. ALSO AGREED. 2 I.T.A. NOS. 681 & 682/KOL/2011 CHEMICO INTERNATIONAL PVT. LTD . A.YR. 2002-03 TO 2003-04 4. BRIEF FACTS OF THE CASE ARE THAT THE RETURNS FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04 WERE FILED BY THE ASSESSEE AT AN INCOME OF RS.1,43,134/- AND RS.1,92,170/- RESPECTIVELY, WHICH WERE PROCESSED UN DER SECTION 143(1). SUBSEQUENTLY, ASSESSMENTS WERE REOPENED UNDER SECTI ON 147 FOR BOTH THE YEARS. IN RESPONSE TO THE NOTICE UNDER SECTION 148, THE ASSES SEE FILED THE RETURN FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04 BY DISCLOSING THE UNDISCLOSED INCOME AT RS.1,82,006/- AND RS.31,528/- ON RECORDED. THUS, TO TAL INCOME WAS RETURNED FOR THE ASSESSMENT YEAR 2002-03 AT RS.3,25,140/- AND FOR AS SESSMENT YEAR 2003-04 AT RS.2,23,698/-. THE ASSESSMENTS WERE COMPLETED BY TH E AO FOR THE ASSESSMENT YEAR 2002-03 AT THE INCOME OF RS.84,28,668/-, FOR THE AS SESSMENT YEAR 2003-04 AT AN INCOME OF RS.17,44,349/- RESPECTIVELY BY MAKING THE FOLLOWING ADDITIONS. PARTICULARS ASSESSMENT ASSESSMENT YEAR 2002-03 YEAR 2003-04 UNEXPLAINED INVESTMENT FOR UNDISCLOSED/UNRECORDED PURCHASE 80,63,728/- 15,12 ,941/- COOLI AND CARTAGE EXPENSES 81,03,528/- 15,20,651 /- THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) HELD THAT THE PROFIT EARNED ON UNDISCLOSED SALES SHOULD HAVE BEEN ESTIMA TED AND ACCORDINGLY, THE CIT(A) ESTIMATED THE PROFIT FOR BOTH THE ASSESSMENT YEARS @8% I.E. AT RS.6,62,843/- FOR THE ASSESSMENT YEAR 2002-03 AND A T RS.1,39,696/- FOR THE ASSESSMENT YEAR 2003-04. SINCE THE ASSESSEE HAS DIS CLOSED IN THE SUBSEQUENT RETURN RS.1,82,006/- FOR THE ASSESSMENT YEAR 2002-03 AND R S.31,528/- FOR THE ASSESSMENT YEAR 2003-04. THEREFORE, THE ADDITION OF RS.4,08,83 7/- FOR THE ASSESSMENT YEAR 2002-03 AND RS.1,08,168/- FOR THE ASSESSMENT YEAR 2 003-04 WAS SUSTAINED. 5. THE LD. DR BEFORE US VEHEMENTLY CONTENDED THAT T HE AO HAS MADE THE ADDITION IN RESPECT OF INVESTMENT BEING MADE BY THE ASSESSEE FOR THE PURCHASES MADE FOR DOING THE PURCHASES AND SALES OUTSIDE THE BOOKS OF ACCOUNTS. IT IS NOT POSSIBLE THAT WITHOUT MAKING THE INVESTMENT OUTSIDE THE BOOKS FOR PURCHASE AND SALES, THE ASSESSEE WOULD HAVE CARRIED OUT OUTSIDE THE BOOKS PURCHASE AND SALES. 3 I.T.A. NOS. 681 & 682/KOL/2011 CHEMICO INTERNATIONAL PVT. LTD . A.YR. 2002-03 TO 2003-04 6. THE LD. A.R., ON THE OTHER HAND, RELIED ON THE O RDER OF THE CIT(A) AND SUBMITTED THAT THE ASSESSEE IS CARRYING ON THE BUSI NESS OF UNDISCLOSED PURCHASE AND SALES FROM THE ASSESSMENT YEAR 2001-02 AND WHATEVER INITIAL CAPITAL WAS THERE, THAT WAS INTRODUCED IN THE ASSESSMENT YEAR 2001-02 AND I N THE ASSESSMENT YEARS 2002- 03 AND 2003-04 NO SUCH INVESTMENT WAS MADE. THE CIT (A) WAS FAIR ENOUGH TO ESTIMATE THE PROFIT @8%. IT IS ONLY THE PROFIT WHIC H CAN BE ADDED IN RESPECT OF SALES OUTSIDES THE BOOKS OF ACCOUNTS. IN THIS REGAR D, RELIANCE WAS PLACED ON THE DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF C IT-VS-PRESIDENT INDUSTRIES 258 ITR 654(GUJ.) AS WELL AS THAT OF PUNJAB & HARYANA H IGH COURT IN THE CASE OF CIT- VS- RAM PRIYA SATISH KUMAR 257 ITR 768 (P&H). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE CASE LAWS AS RELIED ON BY THE LD. A.R. IT IS NOT RI GHT THAT THE ASSESSEE WAS CARRYING OUT UNDISCLOSED PURCHASE AND SALES. ADDITION IN RES PECT OF PROFIT ON UNDISCLOSED PURCHASE AND SALES HAS ALREADY BEEN CONFIRMED BY TH E CIT(A) TO THE EXTENT OF 8% OF THE UNDISCLOSED SALES. WHEN THE ASSESSEE IS DOIN G CONTINUOUSLY UNDISCLOSED PURCHASE AND SALES, ONE CANNOT PRESUME THAT ALL THE PURCHASES HAVE BEEN MADE BY THE ASSESSEE OUT OF THE UNDISCLOSED SOURCE. IN CONT INUING WITH THE BUSINESS, WHATEVER SALES ARE MADE, THE AMOUNT SO RECEIVED IS BEING UTILIZED FOR MAKING THE FURTHER PURCHASE. IT IS NOT A CASE WHERE THE ASSESS EE HAS CARRIED OUT ONLY ONE TRANSACTION IN ONE TIME IN RESPECT OF UNDISCLOSED P URCHASE AND SALES SO THAT THE SOURCE OF THE PURCHASE MADE BY THE ASSESSEE MAY NOT BE SAID TO HAVE BEEN MADE OUT OF THE UNRECORDED SALES. WE NOTED THAT THE ASSE SSEE HAS GIVE MONTH-WISE DETAILS OF THE CASH SALES AND THE PURCHASES. IN THE MONTH OF APRIL,2001, THE ASSESSEE MAY HAVE MADE UNRECORDED PURCHASE TO THE E XTENT OF RS.6,07,742/- WHILE HE MADE THE SALES AT RS.6,20,641/-. THUS, PURCHASE AND SALES ALSO CONTAIN MULTIPLE TRANSACTIONS. THEREFORE, THE ASSESSEE IS REQUIRED T O MAKE THE INVESTMENT IN THE UNDISCLOSED PURCHASE WHICH THE ASSESSEE MADE ONLY A T THE BEGINNING OF THE YEAR. 4 I.T.A. NOS. 681 & 682/KOL/2011 CHEMICO INTERNATIONAL PVT. LTD . A.YR. 2002-03 TO 2003-04 WE NOTED THAT THIS ASPECT HAS NOT BEEN CONSIDERED B Y THE AO AND EVEN NO SUCH DETAILS WERE BROUGHT ON RECORD. WE DO NOT AGREE WIT H THE LD. A.R. THAT THERE CANNOT BE ANY INITIAL INVESTMENT WHILE MAKING OUT THE PURC HASE AND SALES OUTSIDE THE BOOKS. WE, THEREFORE, IN THE INTEREST OF JUSTICE AN D FAIR PLAY TO BOTH THE PARTIES, ESTIMATE SUCH INVESTMENT AT RS.1 LAKH. IN OUR OPINI ON, IF THE ASSESSEE HAS MADE OUT THOSE TRANSACTIONS IN THE MONTH OF APRIL, THE ASSES SEE WOULD NOT HAVE REQUIRED MORE THAN AN INVESTMENT OF RS.1 LAKH. WE THEREFORE, TO THAT EXTENT, SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO MAKE ADDIT ION OF RS.1` LAKH UNDER SECTION 69 FOR THE ASSESSMENT YEAR 2002-03. IN THE ASSESSMENT YEAR 2003-04, WE NOTED FROM PAGE 16 THAT IN THE MONTH OF APRIL, THER E WAS PURCHASE TO THE EXTENT OF RS.8,41,441/- AND SINCE THE CIT(A) HAS SUSTAINED TH E ADDITION TO THE EXTENT OF RS.4,80,837/- FOR A.Y. 02-03, THIS MONEY, IN OUR OP INION, WAS AVAILABLE WITH THE ASSESSEE FOR MAKING THE INVESTMENT IN UNDISCLOSED I NVESTMENT, IN ADDITION TO THE INITIAL INVESTYMENT FOR WHICH WE HAVE SUSTAINED ADD ITION FOR THE ASSESSMENT YEAR 2002-03. THEREFORE, IN OUR OPINION, ON THE BASIS OF THE SAME LOGIC, THERE CANNOT BE ANY ADDITION IN THE ASSESSMENT YEAR 2003-04. WE ACC ORDINGLY ALLOW THE GROUND TAKEN BY THE REVENUE PARTLY FOR THE ASSESSMENT YEAR 2002-03 WHILE DISMISS THE GROUND TAKEN BY THE REVENUE FOR THE ASSESSMENT YEAR 2003-04. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE F OR THE ASSESSMENT YEAR 2002- 03 IS PARTLY ALLOWED WHEREAS THE APPEAL FILED BY TH E REVENUE FOR THE ASSESSMENT YEAR 2003-04 STANDS DISMISSED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON 15 TH JANUARY, 2014. SD/- SD/- (GEORGE MATHAN) (P. K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 15 TH JANUARY, 2014 5 I.T.A. NOS. 681 & 682/KOL/2011 CHEMICO INTERNATIONAL PVT. LTD . A.YR. 2002-03 TO 2003-04 COPY OF THE ORDER FORWARDED TO: 1. M/S. CHEMICO INTERNATIONAL PVT. LTD.,1/1, VANSITTAR T ROW, 2 ND FLOOR, KOLKATA 700 001. 2. ITO, WARD-12(4), KOLKATA 3. THE CIT(A), KOLKATA 4. CIT, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT, KOLKATA TALUKDAR(SR.P.S.)