Winsher Sales Pvt. Ltd., Kolkata V. I.T.O., Ward-6(2), Kolkata, Kolkata

ITA 70/KOL/2023

AI Insights

The case involves Winsher Sales Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals) - NFAC, Delhi, confirming an addition of Rs. 11,00,000 to the assessee's income as unexplained cash credit under section 68 of the Income Tax Act. The addition was based on transactions involving M/s Patra Bastralaya and Santosh Agency, where it was alleged that unexplained cash deposits were made. The Tribunal examined whether the addition was correctly attributed to Winsher Sales Pvt. Ltd. or should have been made in the hands of Santosh Agency, which was the actual recipient of the funds.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127254 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-04-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 26-01-2023
• Other Referred Cases: C K Rama Krishna vs. ITO (325 ITR 560), Bharat Krishna Kendra Vs. Union Of India, Amit Kumar Matwani Vs. Income Tax Officer
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Onus to prove
• Section: 147; 68; 263; 144; 143(3)

Judgement Text

आयकर अपील य अ धकरण, कोलकाता पीठ ‘‘एसएमसी’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH: KOLKATA ी राजेश क ु मार, लेखा सद य एवं ी संजय शमा या यक सद य के सम [Before Shri Rajesh Kumar, Accountant Member & Shri Sonjoy Sarma, Judicial Member] I.T.A. No. 70/Kol/2023 Assessment Year: 2011-12 Winsher Sales Pvt. Ltd. (PAN: AAACW 8433 C) Vs. ITO, Ward-6(2), Kolkata Appellant / (अपीलाथ ) Respondent / ( !यथ ) Date of Hearing / स ु नवाई क$ त&थ 05.04.2023 Date of Pronouncement/ आदेश उ)घोषणा क$ त&थ 26.04.2023 For the Appellant/ नधा /रती क$ ओर से Shri Miraj D Shah, A.R For the Respondent/ राज व क$ ओर से Smt. Ranu Biswas, Addl. CITDR ORDER / आदेश Per Rajesh Kumar, AM: This is the appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals) – NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)”] dated 01.12.2022 for the AY 2011-12. 2. The only issue raised in the various grounds of appeal is against the confirmation of Rs. 11,00,000/- by the Ld. CIT(A) as made by the AO u/s 68 of the Act. 3. Facts in brief are that the assessee filed return of income on 23.03.2013 declaring total income of Rs. Nil. The case was reopened u/s 147 of the Act after AO 2 I.T.A. No. 70/Kol/2023 Assessment Year: 2011-12 Winsher Sales Pvt. Ltd. received information from ITO(Inv), Unit-3, Kolkata to the effect that a bank account was opened in Oriental bank of commerce ,Bikaner Ganga Sahar the name of Patra Bastralaya on 3.6.2010 which isdealing in shares and garments. It was also informed that there were cash deposits in multiple entries of just below Rs. 10 lakhs and funds were transferred to group accounts. The AO called for various information/details during the re-aassessment proceedings and framed the assessment u/s 143(3) /147 accepting the returned income of the assessee. Thereafter the PCIT invoked jurisdiction u/s 263 of the Act and revised and set aside the said order passed u/s 143(3)/147 of the Act vide order passed u/s 263 vide dated 26.02.2021. In the set aside proceedings, the AO observed that Rs. 11,00,000/- was transferred from M/s Patra Bastralaya through Santosh Agency and accordingly called upon the assessee to prove the creditworthiness and genuineness of the party and the money transferred. The assessee filed reply on 28.03.2022 online. The AO noted that cash was deposited in the account of M/s Patra Bastralaya and thereafter transferred to Santosh Agency Rs. 6,00,000/- on 8.6.2010 and Rs. 5,00,000/- on 14.06.2010 and thereafter Santosh Agency immediately transferred on 14.06.2010 of Rs. 27,00,000/- to the assessee. The assessee stated before the AO that during the year the assessee has sold 2700 equity shares on 14.06.2010 of M/s Parichay Suppliers Pvt. Ltd. @ Rs. 1000/- each and also filed sale bill dated 5.4.2010 evidencing the sale of shares and hence the assessee has received payments from the said firm as consideration for sale of equity shares. It was also stated that the shares were acquired in the earlier year at the same price and represented brought forward investment from the earlier year however the AO treated only Rs. 11,00,000/- out of the total consideration for sale of shares as an unexplained cash credit u/s 68 of the Act and added the same to the income of the assessee in the assessment framed u/s 143(3)/263 of the Act dated . 4. In the appellate proceedings, the Ld. CIT(A) simply affirmed the order of AO by observing and holding as under: “6. Findings: 3 I.T.A. No. 70/Kol/2023 Assessment Year: 2011-12 Winsher Sales Pvt. Ltd. On considering submission made by the appellant and findings of the assessing officer it is observed that as per the Bank statements of the appellant for the period from 01/04/2010 to 31.03.2011 that cash is deposited multiple times. It is trite that the onus lies on the assessee to explain the source of the cash deposits satisfactorily. The plea of the appellant is as much as Rs. 11,00,000/- (08.06.2010 at Rs. 6,00,000/- and 14.06.2010 at Rs. 5,00,000/-) cash deposit is made in the bank account. The appellant submitted that the Ld. Assessing Officer is completing that assessment by making arbitrary disallowance and addition of Rs. 11,00,000/- u/s 68 of the IT Act, 1961 on such an amount which has never been transacted by the appellant. The AO stated that the basis of the information received from the ITO(Inv) Unit-3, Kolkata letter dated 16/03/2018 in which it is informed that a Current A/c No.08111131001797 was opened in Oriental Bank of Commerce, Bikaner on 03,06.2010 in the name of M/s Patra Bastralaya which is trading in share and garments: An amount of Rs.11,00,000/- is transferred to the assessee account from M/s Patra Bastralaya through M/s Santosh Agents. To confirm creditworthiness and genuineness of the transaction notice 142(1) sent to the appellant, neither there any compliance not has any adjournment petition been fifed from assessee’s end. Thereafter, the final show cause u/s 144 sent to assessee. In response to the show cause notice the assessee clearly stated that the no such transactions made with M/s Patra Bastralaya. Further, verification for creditworthiness and genuineness of the transaction of Rs. 11,00,000/- made with M/s Patra Bastralaya hearing notice sent on 07.10.2022, in response to the notice the appellant has failed to produce books of accounts and bank statement for its claim. The appellant submission cannot be appreciated without proper books of accounts and supportive .evidence. The banks statement and the pass books were extensively analysed and on critical analysis it is found that there is no co-relation between cash withdrawals, cash receipts, and cash deposits and vis-a-vis the claim of the assessee with regard to the stated transactions, in view of the above the appeal stands dismissed. The opinion was upheld by the Hon’ble Mumataka High Court in the judgement of C K Rama Krishna vs. ITO (325 ITR 560), similar opinion was upheld by the High court of Chhattisgarh in the case of Bharat Krishna Kendra Vs. Union Of India, by the High court: of Orissa in the case of Amit Kumar Matwani Vs. Income Tax Officer . It was the ratio decidendi states that the ratio decidends clearly established that the burden of proof on unexplained deposits made in bank is on the assessee to give the satisfactorily explanation for the source. If the explanation offered by the assessed is unbelievable are unattempt to give a false statement the authorities are boundtorejectand the bring to tax such deposits as unexplained.” 5. After hearing the rival contentions and perusing the material on record, we observe that in this case the assessee has sold 2700 equity shares of M/s Parichay Suppliers Pvt. Ltd. which were purchased in the earlier years for a consideration of Rs. 27,00,000/- to Santosh Agency on 14.06.2010 and money was received through banking channel. We also note that M/s Patra Bastralaya transferred Rs. 11,00,000/- in the account of Santosh Agency before the said firm remittedthe money into the assessee’s account. The AO added only Rs. 11,00,000/- to the income of the assessee doubting and stating the same to be unexplained whereas the issue before us is whether the addition could be made in the hands of present assessee qua the money 4 I.T.A. No. 70/Kol/2023 Assessment Year: 2011-12 Winsher Sales Pvt. Ltd. deposited in the account of the buyer by the third party. After analyzing the records before us and taking into account the arguments by both sides , we find that addition if at all is to be made that could have been made in the hands of Santosh Agency who received Rs. 11,00,000/- from M/s Patra Bastralaya . We note that the AO is doubting the source of source and if the source is doubtful that has to be added in the hands of Santosh Agency and not the assessee. Here we note that the assessee has filed name and address, sale bill and all the evidences such as bank statement before the authorities below who have instead of making the addition on the right hands simply added it in the hands of the present assessee i.e. Rs. 11,00,000/- was added to the income of the assessee u/s 68 which his incorrect and cannot be sustained. Accordingly we set aside the order of Ld. CIT(A) and direct the AO to delete the addition of Rs. 11,00,000/-. 6. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 26 th April, 2023 Sd/- Sd/- (Sonjoy Sarma /संजय शमा ) (Rajesh Kumar/राजेश क ु मार) Judicial Member/ या यक सद य Accountant Member/लेखा सद य Dated: 26 th April, 2023 SB, Sr. PS Copy of the order forwarded to: 1. Appellant- Winsher Sales Pvt. Ltd., 3K, 2 nd Floor, Roopchand Roy Street, Kolkata-700069 2. Respondent – ITO, Ward-6(2), Kolkata 3. Ld. CIT(A)-NFAC, Delhi 4. Ld. PCIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata