M/s. K.B. Medical Agency, Kolkata V. ITO, Ward 22(2), Kolkata, Kolkata

ITA 707/KOL/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4745 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 11-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: S M SURANA
• Keywords: Bogus purchase; Rejection of books of accounts; Business income; Tangible material
• Section: 40A(3); 143(3); 133A; 133(6); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENC H KOLKATA BEFORE SHRI S.S.GODARA, JM & DR. A.L.SAINI, AM ./ ITA NOS.1209,1210&1211/KOL/2017 ( / ASSESSMENT YEARS :2010-11 TO 2012-13 ITO, WARD-22(2), KOLKATA 54/1, RAFI AHMED KIDWAI ROAD, KOLKATA-700016 VS. M/S K.B. MEDICAL AGENCY 55/F-9, B.R.B. BASU, 2 ND FLOOR, ROOM NO. H-14, MEHTA BUILDING, KOLKATA-01. ./ ./PAN/GIR NO. :AAGFK 6550 P ( /APPELLANT ) .. ( / RESPONDENT ) C.O. NOS. 68,69,70& 71/KOL/2017 (ARISING OUT OF ITA NOS.1209,1210,1211 &1212/KOL/20 17) ( / ASSESSMENT YEARS : 2010-11 TO2013-14 M/S K.B. MEDICAL AGENCY 55/F-9, B.R.B. BASU, 2 ND FLOOR, ROOM NO. H-14, MEHTA BUILDING, KOLKATA-01. VS. ITO, WARD-22(4), KOLKATA 54/1, RAFI AHMED KIDWAI ROAD, KOLKATA-700016 ./ ./PAN/GIR NO. : AAGFK 6550 P (CROSS OBJECTOR) .. ( / RESPONDENT ) ./ ITA NOS.705,706&707/KOL/2017 ( / ASSESSMENT YEARS : 2011-12, 2012-13 & 2013-14 ITO, WARD-22(2), KOLKATA 54/1, RAFI AHMED KIDWAI ROAD, KOLKATA-700016 VS. M/S K.B. MEDICAL AGENCY 55/F-9, B.R.B. BASU, 2 ND FLOOR, ROOM NO. H-14, MEHTA BUILDING, KOLKATA-01. ./ ./PAN/GIR NO. : AAGFK 6550 P ( /APPELLANT ) .. ( / RESPONDENT ) ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 2 /REVENUE BY : SHRI SAURABH KUMAR, ADDL. CIT DR /ASSESSEE BY : SHRI S.M. SURANA, ADVOCATE / DATE OF HEARING : 17/01/2019 /DATE OF PRONOUNCEMENT : 08/02/2019 / O R D E R PER BENCH: THESE THREE APPEALS FILED BY THE REVENUE PERTAINING TO ASSESSMENT YEARS 2010-11, TO 2012-13, AND THREE APPEALS FILED BY THEASSESSEE PERTAINING TO ASSESSMENT YEARS 2011-12 TO 2013-14 ALONG WITH THE CROSS OBJECTIONS FILED BY THE ASSESSEE PERTAINING TO ASSESSMENT YEARS 2010-11 TO 2013-14 A RE DIRECTED AGAINST THE SEPARATE ORDERS PASSED BY THE COMMISSIONER OF INCOM E TAX (APPEALS), WHICH IN TURN ARISE OUT OF SEPARATE ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER U/S 147 / 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THESE CROSS APPEALS AND CROSS OBJECTIONS, RELATE TO THE SAME ASSESSEE, FOR DIFFERENT ASSESSMENT YEARS, IDENTICAL AND COMMON IS SUES ARE INVOLVED, THEREFORE THESE HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CO NSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF BREVITY AND CONVENIENCE. 4. IN THESE APPEALS, THE REVENUE AS WELL AS ASSESSE E HAVE RAISED MULTIPLE GROUNDS OF APPEAL, BUT AT THE TIME OF HEARING THE MAIN GRIE VANCE OF THE REVENUE AND ASSESSEE ARECONCISED AND SUMMARIZED. THESE SUMMARIZ ED AND COMMON GROUNDS OF REVENUE, ANDASSESSEE ARE GIVEN BELOW: SUMMARIZED AND COMMON GROUNDS OF APPEAL RAISED BY R EVENUE IN I.T.A. NO. 1209,1210&1211/KOL/2017 FOR ASSESSMENT YEARS 20 10-11, 2011-12 & 2012-13 ARE GIVEN BELOW: ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 3 1. THE LD. CIT(A) ERRED IN DELETING ADDITIONS ON ACCOU NT OF DIFFERENCE IN SALES A. ADDITION FOR ASSESSMENT YEAR 2010-11 RS. 45,88,473/ - B. ADDITION FOR ASSESSMENT YEAR 2012-13 RS. 6,50,172/- 2. THE LD. CIT(A) ERRED IN DELETING ADDITION ON ACCOUN T OF DIFFERENCE IN PURCHASES. A. ADDITION FOR ASSESSMENT YEAR 2010-11 RS. 24,35,545/ - B. ADDITION FOR ASSESSMENT YEAR 2012-13 RS. 61,323/- 3. THE LD. CIT(A) ERRED IN DELETING ADDITION ON ACCOUN T OF DIFFERENCE IN CLOSING STOCK AND DIFFERENCE IN OPENING STOCK. A. ADDITION FOR ASSESSMENT YEAR 2010-11, RS. 38,39,828 /-, DIFFERENCE ON ACCOUNT OF CLOSING STOCK. B. ADDITION FOR ASSESSMENT YEAR 2011-12 OF RS. 93,80,3 55/-, DIFFERENCE ON ACCOUNT OF CLOSING STOCK. C. ADDITION FOR ASSESSMENT YEAR 2012-13 OF RS. 93,80,3 55/-, DIFFERENCE ON ACCOUNT OF OPENING STOCK. D. ADDITION FOR ASSESSMENT YEAR 2012-13 OF RS.1,36,14, 608/-, DIFFERENCE ON ACCOUNT OF CLOSING STOCK. 4. THE LD. CIT(A) ERRED IN DELETING ADDITION ON ACCOUN T OF DIFFERENCE IN SUNDRY DEBTORS. A. ADDITION FOR A.Y. 2011-12 OF RS. 1,65,196/-, ON ACC OUNT OF DIFFERENCE IN SUNDRY DEBTORS. B. ADDITION FOR A.Y. 2012-13 OF RS. 9,06,723/-, ON ACC OUNT OF DIFFERENCE IN SUNDRY DEBTORS. 5. THE LD. CIT(A) ERRED IN DELETING ADDITION OF RS. 5, 00,000/- ON ACCOUNT OF PAYMENT MADE BY PARTNER OUT OF BOOKS OF ACCOUNTS (A.Y. 2012-13) SUMMARIZED AND COMMON GROUNDS OF APPEAL RAISED BY ASSESSEE IN I.T.A. NO. 705,706&707/KOL/2017, FOR ASSESSMENT YEA RS, 2011-12 , 2012- 13 & 2013-14 ARE AL FOLLOWS: ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 4 1. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF DISCREPANCY IN SUNDRY CREDITORS. A. ADDITION FOR A.Y. 2011-12 OF RS. 11,53,985/- ON ACC OUNT OF DISCREPANCY IN SUNDRY CREDITORS. B. ADDITION FOR A.Y. 2012-13 OF RS.1,50,417/- ON ACCOU NT OF DISCREPANCY IN SUNDRY CREDITORS. 2. THE LD. CIT(A) ERRED IN CONFIRMING ADDITION AS GROS S PROFIT ON ACCOUNT OF DISCREPANCY IN SALES. A. ADDITION FOR A.Y. 2012-13 OF RS. 13,003/- AS GROSS PROFIT ON ACCOUNT OF DISCREPANCY IS SALES. B. ADDITION FOR A.Y. 2013-14 OF RS.1,06,146/-, AS GROS S PROFIT ON ACCOUNT OF DISCREPANCY IN SALES. 3. THE LD. CIT(A) ERRED IN CONFIRMING ADDITION MADE BY ASSESSING OFFICER U/S 40A(3) OF THE ACT, ON ACCOUNT OF CASH PAYMENT E XCEEDING THRESHOLD LIMIT OF RS.20,000/- A. ADDITION FOR A.Y. 2012-13 OF RS. 24,08,636/- MADE O N ACCOUNT OF VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE AC T. B. ADDITION FOR A.Y. 2013-14 OF RS. 14,54,806/- MADE O N ACCOUNT OF VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE AC T. 4. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.4,30,819/- ON ACCOUNT OF BOGUS PURCHASES (A.Y. 2013-14) 5. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 38,750/- ON ACCOUNT OF RECONCILED CREDIT NOTES FOR GOODS RETURN ED. (A.Y. 2013-14) WE NOTE THAT CROSS OBJECTIONS FILED BY THE ASSESSEE , IN CROSS OBJECTIONS NOS. 69,70 & 71/KOL/2017, FOR ASSESSMENT YEARS 2011-12, 2012-13 AND 2013-14 RESPECTIVELY ARE COMMON AND IDENTICAL AND ARE BEING DEALT WITH / ADJUDICATED BY US IN ASSESSEES APPEAL IN I.T.A. N OS. 705,706 AND 707/KOL/2017 FOR ASSESSMENT YEAR 2011-12, 2012-13 A ND 2013-14 RESPECTIVELY. HENCE FOR THE SAKE OF BREVITY AND TO AVOID REPETITION, WE DO NOT DEAL THE GROUND RAISED BY THE ASSESSEE IN THESE CROSS OBJECTIONS. ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 5 HOWEVER, THE GROUND RAISED BY THE ASSESSEE IS C.O. NO. 68/KOL/2017, FOR A.Y. 2010-11 IS NOT IDENTICAL AND COMMON, THEREFORE IT WILL BE ADJUDICATED SEPARATELY. THE EFFECTIVE GROUND RAISED BY THE ASSE SSEE IN C.O. NO. 68/KOL/2017 IS AS FOLLOWS: GROUND NO. 2- THE LD. CIT(A) ERRED IN CONFIRMING TH E ADDITION OF RS. 44,118/- ON ACCOUNT OF DISCREPANCY IN SUNDRY CREDIT ORS. 4. FIRST, WE SHALL TAKETHE SUMMARIZED / COMMON GROU NDS OF APPEAL RAISED BY THE REVENUE. GROUND NO. 1 RAISED BY THE REVENUE IS GIVE N BELOW FOR READY REFERENCE. 1. THE LD. CIT(A) ERRED IN DELETING ADDITIONS ON ACCOU NT OF DIFFERENCE IN SALES A. ADDITION FOR ASSESSMENT YEAR 2010-11 RS. 45,88,473/ - B. ADDITION FOR ASSESSMENT YEAR 2012-13 RS. 6,50,172/- 5. THE FACTS OF THE CASE WHICH CAN BE STATED QUITE SHORTLY ARE AS FOLLOWS. IN THE ASSESSEES CASE, A SURVEY WAS CONDUCTED ON 08.01.20 13 IN THE BUSINESS PREMISES OF THE ASSESSEE. IN THE COURSE OF SURVEY,THE COMPUT ERIZED ACCOUNTS FOR THE ASSESSMENT YEAR 2010-11 WAS FOUND. ON EXAMINATION O F COMPUTERIZED ACCOUNTS AND COMPARING WITH E-FILED RETURN OF INCOME INCLUDI NG E-FILED PROFIT AND LOSS ACCOUNT AND BALANCE SHEET, THE ASSESSING OFFICER NO TED SOME DISCREPANCIES,THEREFORE THE ASSESSING OFFICER REOPE NED THE ASSESSEES CASE U/S 147 OF THE ACT. THE REASONS FOR WHICH THE ASSESSMEN T WAS REOPENED ARE GIVEN BELOW: ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 6 THEREFORE ASSESSING OFFICER ISSUED NOTICE U/S 148 O N 18.12.2013 AND REASONS FOR REOPENING WERE ALSO COMMUNICATED TO THE ASSESSEE. 6. IN RESPONSE, THE ASSESSEE SUBMITTED THAT HE WAS MAINTAINING BOOKS OF ACCOUNTS ON SOFTWARE UNISOLVE IN COMPUTERIZED SYSTEM. THE ASSESSEE SUBMITTED THAT UNISOLVE SOFTWARE IS THE SPECIALIZED SOFTWARE CATER ING FOR THE NEED OF THE MEDICINE WHOLE-SELLERS WHEREIN ALL THE MANDATORY RE QUIREMENTS UNDER THE DRUG CONTROL RULES HAVE BEEN INCORPORATED. IT ALSO HAVE FEATURES FOR MAINTENANCE OF FULL-FLEDGED BOOKS OF ACCOUNTS. THE UNISOLVE SOFTW ARE HAS BEEN DEVELOPED BY THE LOCAL IT PROFESSIONAL ON DOS PLATFORM. THE ASSE SSEE SUBMITTED THAT THE SOFTWARE WHICH THEY WERE USING WAS NOT USER FRIENDL Y AND IT USED TO GIVE INCONSISTENT RESULTS AND THEREFORE THE ASSESSEE WAS USING THAT SOFTWARE ONLY FOR THE PURPOSE OF ISSUING SALES BILLS AND UP TO SOME EXTEN T FOR THE PURPOSE OF STOCK. THE ASSESSEE ALSO SUBMITTED THAT HE MAINTAINS HIS BOOKS OF ACCOUNTS IN ITS TALLY SOFTWARE AND ENGAGED A PART TIME ACCOUNTANT. UNFORT UNATELY, THE BOOKS OF ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 7 ACCOUNTS MAINTAINED ON TALLY SYSTEM WAS LAYING AT A CCOUNTANTS OFFICE ON THE DATE OF SURVEY. THE ASSESSEE SUBMITTED BEFORE THE ASSESS ING OFFICER, THE REASONS OF DISCREPANCY IN SALES OF RS. 45,88,473/- AS FOLLOWS: A) THE IMPOUNDED SYSTEM WAS USED BY US ONLY FOR TH E PURPOSE OF RAISING SALES INVOICES AS THE SOFTWARE HAS INBUILT TECHNICAL DEFE CTS AND GENERATE MISLEADING RESULTS. WE THEREFORE, MAINTAIN SALES ACCOUNT SEPAR ATELY IN TALLY SOFTWARE. B) THE SALES RETURN WAS NOT ENTERED AND NOT REFLECT ED AS THE RETURN MEMO WERE PREPARED MANUALLY. C) DURING THE YEAR, THE SALES RETURN WAS AMOUNTING TO RS.22,68,630/- AS PER DETAILS ALREADY SUBMITTED. D) SOMETIME, THE SALES BILLS PREPARED HAS TO BE CAN CELLED AS THE PARTY REFUSES TO TAKE DELIVERY. THE AMOUNT OF SUCH BILLS, THOUGH CAN CELLED CONTINUED TO BE INCLUDED AND REFLECTED IN SALES DUE TO TECHNICAL ER ROR OF THE SOFTWARE. E) CONSIDERING THE VOLUME OF SALES BILLS, INVOLVING LARGE NUMBER OF ITEMS, IT IS NOT PRACTICALLY POSSIBLE FOR US TO IDENTIFY ERRORS IN T HE IMPOUNDED DOCUMENTS AND PREPARE THE RECONCILIATION. F) IN THE CIRCUMSTANCES, WE HUMBLY SUBMIT THAT THE SALES RECORDED IN OUR BOOKS AND SHOWN IN THE AUDITED ACCOUNTS SHOULD BE TREATED AS CORRECT. G) IT IS FURTHER SUBMITTED THAT THE BOOKS OF ACCOUN TS HAS BEEN AUDITED BY AN INDEPENDENT AUDITOR AND THERE WAS NO ADVERSE FINDIN GS AND IN SOME CASES. SALES HAVE ALSO BEEN VERIFIED U/S 133(6) OF I.T. ACT. 7. HOWEVER, THE ASSESSING OFFICER REJECTED THE CONT ENTION OF THE ASSESSEE AND NOTED THAT AS PER COMPUTERIZED ACCOUNT IMPOUNDED ON THE DATE OF SURVEY ON 08.01.2013 SALES WAS FOUND TO THE TUNE OF RS. 15,18 ,97,903/-. WHEREAS THE ASSESSEE FILED RETURN OF INCOME WHERE HE HAS DECLAR ED THE TURNOVER TO THE TUNE OF RS. 4,73,09,430/-, THEREFORE THE DIFFERENCE AMOUNT TO THE TUNE OF RS. 45,88,473/- (RS. 15,18,97,903 RS. 14,73,09,430) WAS ADDED TO THE INCOME OF THE ASSESSEE. 8. ON APPEAL , THE LD. CIT(A) DELETED THE ADDITION. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. BEFORE US,THE LD. DR HAS PRIMARIL Y REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTED I N OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE DEFENDED THE ORDER PASSED BY THE LD. CIT(A). 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE NOTE THAT DURING THE ASSESSMENT PROCEEDINGS IT W AS EXPLAINED BY THE ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 8 ASSESSEETHAT COMPUTERIZED ACCOUNTS WERE MAINTAINED ON UNISOLVE SOFTWARE, WHICH IS A SPECIAL SOFTWARE CATERING TO THE NEEDS T O THE MEDICINE WHOLE- SELLERS WHICH INCORPORATESTHE STATUTORY REQUIREMENT OF DRUG CONTROL RULES. IT WAS STATED THAT THE SOFTWARE USED TO GIVEINCONSISTENT RESULTS AND IT WAS USED ONLY FOR THE PURPOSE OF ISSUING SALES BILLS AND TO SOME EXTENT F OR THE PURPOSE OF MAINTENANCE OF STOCK DETAILS. THE BOOKS OF ACCOUNTS WERE BEING ACTUALLY MAINTAINED ON TALLY SOFTWARE AND BOOKS OF ACCOUNTS WERE LAYING AT THE O FFICE OF THE ACCOUNTANT AT THE TIME OF SURVEY. IT WAS ALSO STATED BY THE ASSESSEE THAT THE GOODS RETURNED TO THE SUPPLIER COMPANY, I.E. PURCHASE RETURN REMAINED IN STOCK AND THEREFORE THE STOCK REGISTER WAS NOT UPDATED. WE NOTE THAT LATER ON, IT WAS ALSO STATED BY THE ASSESSEE THAT THE SALES RETURN WERE ALSO NOT ENTERED IN THEU NISOLVE SOFTWARE AND WERE PREPARED MANUALLY. WE NOTE THAT THE ASSESSEEHAS MA INTAINED THE DETAILS IN UNISOLVE SOFTWARE ONLY FOR THE PURPOSE OF PROPER CO MPLIANCE WITH DRUG CONTROL RULES AND PROPER RECORDS WERE MAINTAINED BY THE ASS ESSEE IN TALLY SOFTWARE, THEREFORE THE SAID DIFFERENCE HAD ARISEN. WE NOTE T HAT ASSESSEE HAS EXPLAINED THE SAID DIFFERENCE AT THE APPELLATE STAGE. WE NOTE THA T THE ASSESSING OFFICER MADE THE ADDITION SOLELY ON THE GROUNDS THAT DIFFERENCE BETWEEN SALE OF RS.15,18,97,903/- AS PER COMPUTERIZED IMPOUNDED ACC OUNT AND SALES OF RS. 14,73,09,430/- AS PER THE BOOKS OF ACCOUNTS MAINTAI NED IN TALLY SOFTWARE FOR THE PURPOSE OF E-FILING OF RETURN THEREFORE THE DIFFERE NCE TO THE TUNE OF RS. 45,88,473/- WAS NOT EXPLAINED SATISFACTORILY. HOWEVER, WE NOTE THAT THE ASSESSEE ALSO PLEADED DURING THE APPELLATE PROCEEDINGS THAT ONLY THE PROF IT ON THE SALES FOUND TO BE UNDISCLOSED BY THE ASSESSING OFFICER COULD HAVE BEE N ADDED AND NOT THE ENTIRE SALES. WE FIND CONSIDERABLE FORCE IN THIS ARGUMENTS OF THE COUNSEL THAT INSTEAD OF ADDING THE ENTIRE SALES ONLY PROFIT ELEMENT IS TO B E ADDED. WE NOTE THAT PROFIT ON THE UNACCOUNTED SALE OF PURCHASES COULD BE BROUGHT TO TAX AND FOR THAT REASON THE LD. CIT(A) HAS RIGHTLY DELETED THE DISCREPANCY IN P URCHASES OF RS. 24,35,545/-, COMPUTED BY THE ASSESSING OFFICER WHICH IS LOWER TH AN THE DISCREPANCY OF RS. 45,88,473/- COMPUTED IN RESPECT OF SALES. THEREFOR E, THE ASSESSING OFFICER HAD ALREADY BEEN DIRECTED TO TAX ONLY THE PROFIT OF RS. 75,710/-, ON THE UNACCOUNTED SALES COMPUTED BY THE ASSESSING OFFICER. THAT BEING SO, WE DECLINE TO INTERFERE IN ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 9 THE ORDER PASSED BY THE LD. CIT(A), HIS ORDER ON TH IS ISSUE IS HEREBY UPHELD AND THEGROUNDS RAISED BY THE REVENUE IS DISMISSED. 10. THE SUMMARIZED / COMMON GROUND NO. 2 RAISED BY THE REVENUE READS FOLLOWS: 2. THE LD. CIT(A) ERRED IN DELETING ADDITION ON ACCOUN T OF DIFFERENCE IN PURCHASE. A. ADDITION FOR ASSESSMENT YEAR 2010-11 RS. 24,35,545/ - B. ADDITION FOR ASSESSMENT YEAR 2012-13 RS. 61,323/- 11. BRIEF FACTS QUA THE ISSUE ARE THAT AS PER COMPU TERIZED ACCOUNT IMPOUNDED DURING THE SURVEYON DATED 08.01.2013, THE SURVEY T EAM FOUND PURCHASES TO THE TUNE OF RS.14,92,68,998/-, WHEREAS AS PER ELECTRONI CALLY RETURN FILED BY THE ASSESSEE IT WAS ONLY RS.14,68,33,453/-. THEREFORE, THE DIFFERENCE TO THE TUNE OF RS. 24,35,545/- (RS.14,92,68,998 RS.14,68,33,453) WAS ADDED AS UNDISCLOSED PURCHASES. ON APPEAL BY THE ASSESSEE, THE LD. CIT(A ) DELETED THE ADDITION ON UNDISCLOSED PURCHASES. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 12. BEFORE US, THE LD. DR FOR THE REVENUE SUBMITTE D THAT THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE HAD MADE UNEX PLAINED INVESTMENT OF RS. 24,35,545/- IN PURCHASES, OUT OF BOOKS OF ACCOUNT A ND ASSESSEEOFFERED NO SATISFACTORILY EXPLANATION ABOUT THE NATURE OF SOUR CE OF INVESTMENT THEREFORE ADDITION MADE BY THE ASSESSING OFFICER SHOULD BE SU STAINED. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE DEFENDED THE ORDER PASSED BY THE LD. CIT(A). 13. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RI VAL SUBMISSIONSAND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT ONLY THE PROFIT ON THE UNACCOUNTED SALES AND THE PURCHASES COULD BE BROUGHT TO TAX. TH E DISCREPANCY IN PURCHASES OF RS. 24,35,545/- COMPUTED BY THE ASSESSING OFFICER W AS LOWER THAN THE DISCREPANCY OF RS.45,88,473/-COMPUTED IN RESPECT OF SALES. THEREFORE, THE ASSESSING OFFICER WAS DIRECTED BY THE LD. CIT(A) TO TAX ONLY THE PROFIT OF RS. 75,710/- ON THE UNACCOUNTED SALES COMPUTED BY THE A SSESSING OFFICER. THE ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 10 LOGICAL INFERENCE THAT CAN BE MADE IS THAT THE PURC HASES OF RS.24,35,545/- COMPUTED BY THE ASSESSING OFFICER AS NOT HAVING BEE N ACCOUNTED FOR WERE ALSO A PART OF UNACCOUNTED SALES OF RS. 45,88,473/- MADE B Y THE ASSESSEE. THEREFORE, THE LD. CIT(A) BY RELYING THE DECISION OF CO-ORDINATE B ENCH OF ITAT, KOLKATA IN THE CASE OF SMT. MAYA SIRKAR IN I.T.A. NO. 995/KOL/2011 , FOR ASSESSMENT YEAR 2007- 08 ORDER DATED 15.10.2015 DELETED THE ADDITION STAT ING THAT NO FURTHER ADDITION OF PROFIT IN RESPECT OF THE DISCREPANCY IN PURCHASE IS WARRANTED, HENCE THE ADDITION OF RS. 24,35,545/- ON ACCOUNT OF DISCREPANCY IN PURCHA SES WAS RIGHTLY DELETED BY THE LD. CIT(A). THAT BEING SO, WE DECLINE TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A), HIS ORDER ON THIS ISSUE IS HEREBY UPHELD AN D THE GROUND RAISED BY THE REVENUE IS DISMISSED. 14. THE SUMMARIZED AND COMMON GROUND NO. 3 RAISED B Y THE REVENUE IS GIVEN BELOW FOR READY REFERENCE. 3. THE LD. CIT(A) ERRED IN DELETING ADDITION ON ACCOUN T OF DIFFERENCE IN CLOSING STOCK AND DIFFERENCE IN OPENING STOCK. A. ADDITION FOR ASSESSMENT YEAR 2010-11,RS. 38,39,828/ - DIFFERENCE ON ACCOUNT OF CLOSING STOCK. B. ADDITION FOR ASSESSMENT YEAR 2011-12 OF RS.93,80,35 5/- DIFFERENCE ON ACCOUNT OF CLOSING STOCK. C. ADDITION FOR ASSESSMENT YEAR 2012-13 OF RS.93,80,35 5/- DIFFERENCE ON ACCOUNT OF OPENING STOCK. D. ADDITION FOR ASSESSMENT YEAR 2012-13 OF RS.1,36,14, 608/- DIFFERENCE ON ACCOUNT OF CLOSING STOCK. 15. THE BRIEF FACTS QUA THE ISSUE ARE THAT ON THE B ASIS OF IMPOUNDED BOOKS OF ACCOUNTS, THE ASSESSING OFFICER CALCULATED THE CLOS ING STOCK AT RS.1,11,69,931/-, AS AGAINST STOCK OF RS.73,30,103/- DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME. ACCORDINGLY, THE EXCESS OF RS. 38,39,828/- ( RS. 1,11,69,931 RS. 73,30,103) WAS ADDED TO THE TOTAL INCOME OF THE ASS ESSEE.ON APPEAL, THE LD. CIT(A) DELETED THE SAID ADDITION BECAUSE THE CALCUL ATION OF CLOSING STOCK MADE BY ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 11 THE ASSESSING OFFICER WAS NOT CORRECT. THE LD. CIT( A) CONCLUDED THAT THE VALUE OF CLOSING STOCK AS PER IMPOUNDED BOOKS OF ACCOUNTS WA S OF RS. 45,79,950/-, WHICH WAS FAR LESS THAN THE VALUE SHOWN BY THE ASSESSEE A S CLOSING STOCK IN HIS RETURN OF INCOME OF RS.73,10,103/-. THEREFORE, THE LD. CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISCREPANCY IN CLOSING STOCK / OPENING STOCK. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 16. BEFORE US,THE LD. DR HAS PRIMARILY REITERATED T HE STANDS TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE DISCUSSED IN OUR EA RLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. ON THE OTH ER HAND, THE LD. AR FOR THE COUNSEL HAS DEFENDED THE ORDER OF THELD CIT(A). 17. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RI VAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEE EXPLAINED THE DIFFERENCES AND SUBMITTED THE EXPLANATION BEFORE TH E ASSESSING OFFICER STATING THAT THE DISCREPANCY IN HIS STOCK WAS MANUALLY REPR ESENTED THE ACCUMULATED EFFECT OF INCORRECT STOCK BROUGHT FORWARD FROM EARLIER YEA RS AND ALSO EFFECT OF PURCHASES OR SALES RETURN NOT ROUTED THROUGH INVENTORY SYSTEM S AS ALSO FREE SAMPLES INCLUDED IN THE STOCK AND VALUED AT PURCHASE RATES. WE NOTE THAT THE ASSESSING OFFICER HAS CALCULATED THE CLOSING STOCK AS PER SUR VEY AT RS.1,11,69,931/- AS AGAINST STOCK OF RS. 73,30,103/- DECLARED BY THE AS SESSEE IN THE RETURN OF INCOME, THEREBY COMPUTING THE EXCESS STOCK OF RS. 38,39,828 /- THE STOCK OF RS. 1,11,69,931/- HAS BEEN COMPUTED BY THE AO AS PER TH E FINDINGS OF SURVEY. WE NOTE THAT T HE COMPUTATION OF CLOSING STOCK AS PER SURVEY FINDI NGS DONE BY THE AO AS ABOVE IS NOT CORRECT BECAUSE OF THE FOLLOWING RE ASONS: A) THE AO HAS COMPUTED THAT ACTUAL CLOSING STOCK IN RESPECT OF THE DETAILS FOUND IN THE COMPUTERIZED ACCOUNTS DURING THE SURVEY, BUT HAS ADOPTED A PICK AND CHOOSE METHOD WITHOUT ANY BASIS FOR THIS PURPOSE. B) THE AO HAS COMPUTED UNREPORTED PURCHASES OF RS. 45,12,763/- BY A RANDOM METHOD WHEREAS THE ACTUAL UNREPORTED PURCHASES EVEN ACCORDING TO THE AO AMOUNTED TO RS. 24,35,545/-(PURCHASES OF RS. 14,92, 68,998/- AS PER COMPUTERIZED ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 12 ACCOUNTS ANDPURCHASES OF RS. 14,68,33,453/- AS PER APPELLANT). WE NOTE THATA SEPARATE ADDITION IN THIS REGARD HAS BEEN MADE BY T HE AO AS ALREADY DISCUSSED ABOVE. IN VIEW OF THESE FACTUAL DETAILS, THE APPELLANTS S UBMISSION TO THE EFFECT THAT ADDITION TO THE VALUE OF CLOSING STOCK IS TAX NEUTR AL AND NEED NOT TO BE EXAMINED. THERE IS NO EVIDENCE OF EXCESS CLOSING STOCK AS PER THE COMPUTERIZED ACCOUNTS FOUND DURING THE SURVEY. HENCE, THE ADDITION OF RS. 38,39,828/- IS DELETED BY LD CIT(A). THAT BEING SO, WE DECLINE TO INTERFERE IN T HE ORDER PASSED BY THE LD. CIT(A), HIS ORDER ON THIS ISSUE IS HEREBY UPHELD AN D GROUND RAISED BY THE REVENUE IS DISMISSED. 18. THE SUMMARIZED/ COMMON GROUND NO. 4 RAISED BY T HE REVENUE IS GIVEN BELOW FOR READY REFERENCE. 4. THE LD. CIT(A) ERRED IN DELETING ADDITION ON ACCOUN T OF DIFFERENCE IN SUNDRY DEBTORS. A. ADDITION FOR A.Y. 2011-12 OF RS.1,65,196/- ON ACCOU NT OF DIFFERENCE IN SUNDRY DEBTORS. B. ADDITION FOR A.Y. 2012-13 OF RS.9,06,723/- ON ACCO UNT OF DIFFERENCE IN SUNDRY DEBTORS. 19. THE BRIEF FACTS QUA THE ISSUE ARE THAT DURING T HE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT AS PER AUDITED BALANCE SHEET SALES WAS SHOWN BY THE ASSESSEE TO THE TUNE OF RS. 17,05,41,061/-, OUT OF WHICH CASH SALES AMOUNTING TO RS.6,15,51,642/- AND CHEQUES WORTH RS.10,89,89,419/ - WERE DEPOSITED. THEREFORE, AS PER ASSESSING OFFICER, THE SUNDRY DEBTORS SHOULD HAVE BEEN ZERO.( RS. 17,05,41,061-RS.6,15,51,642-RS.10,89,89,419). BUT T HE SUNDRY DEBTORS TO THE TUNE OF RS. 1,65,196/- WAS SHOWN BY THE ASSESSEE IN HIS BALANCE SHEET. THE ASSESSING OFFICER ASKED FOR THE EXPLANATION REGARDI NG THE SUNDRY DEBTORS. IN RESPONSE, THE ASSESSEE SUBMITTED THAT THE ACCOUNTS WERE MAINTAINED IN THE TALLY SYSTEM AND NOT INTHE UNISOLVE SOFTWARE. THE SURVEY TEAM TOOK THE FIGURES FROM THE UNISOLVE SOFTWARE MAINTAINED BY THE ASSESSEE WH ICH DOES NOT SHOW CORRECT ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 13 RESULTS. THE ASSESSEE SUBMITTED THAT HE WAS MAINTAI NING BOOKS OF ACCOUNTS SEPARATELY IN TALLY SOFTWARE WHICH WAS HANDLED BY A PART TIME ACCOUNTANT. THEREFORE, THE DIFFERENCE ARISES BECAUSE OF PRINT O UT TAKEN BY THE SURVEY TEAM FROMTHE UNISOLVE SOFTWARE WHICH WAS NOT UPDATED. HO WEVER, THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE AND MADE THE ADDITION TO THE TUNE OF RS. 1,65,196/-.ON APPEAL, LD CIT(A) DELETED THE ADDITION. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 20. THE LD. THE LD. DR HAS PRIMARILY REITERATED THE STANDS TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE DISCUSSED IN OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. ON THE OTHER HAND , THE LD. COUNSEL FOR THE ASSESSEE DEFENDED THE ORDER OF THELD CIT(A). 21. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RI VAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSING OFFICER FOUND THAT SALES AS PER AUDITED BALANCE SHEET AMOUNTED TO RS. 17,05,41,061/-, OUT OF WHICH CASH SALES AMOUNTED TO RS.6,15,51,642/- AND CHEQUES WORTH RS. 10,89,89,419/- WERE DEPOSITED, AS STATED AT PAGE 10 OF THE ASSESS ING OFFICER. HENCE SUNDRY DEBTORS SHOULD HAVE BEEN NIL WHEREAS THE DEBTORS A MOUNTED TO RS. 1,65,196/- WAS SHOWN BY THE ASSESSEE IN HIS BALANCE SHEET.WE NOTE THAT IF WE DEDUCT FROM THE TOTAL SALES TO THE TUNE OF RS. 17,05,41,601/- CASH SALES AND CHEQUES THERE IS NO BALANCE LEFT (BEING RS. 17,05,41,061 RS. 10,89,89 ,419 RS. 6,15,51,642). WE NOTE THAT THE MAIN ALLEGATION OF THE ASSESSING OFFI CER WAS THAT THE ASSESSEE COULD NOT RECONCILE THIS DIFFERENCE THEREFORE THE ADDITIO N WAS MADE. WE NOTE THAT THE LD. CIT(A) STATED THAT NO SPECIFIC UNEXPLAINED DISCREPA NCY WAS FOUND DESPITE ISSUE OF NOTICE U/S 133(6) OF THE ACT IN CASE OF SUNDRY D EBTORS. NO SUNDRY DEBTOR WAS FOUND TO BE BOGUS. WE NOTE THAT THE REASON GIVEN BY THE AO IS VERY GENERAL IN NATURE. WE NOTE THAT IT IS NOT THE CASE OF ASSESSIN G OFFICER THAT THE ASSESSEE HAS INTRODUCED ANY BOGUS CREDIT IN THE BALANCE SHEET WH ICH HAS REFLECTED IN THE FORM OF DEBTORS ON THE DEBIT SIDE OF THE BALANCE SHEET. NO DISCREPANCY HAS BEEN FOUND IN THE CASE OF ANY SPECIFIC DEBTORS. WE ALSO NOTE T HAT THERE IS NO EVIDENCE IN ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 14 UNACCOUNTED SALES AND NO DEBTORHAS BEEN FOUND TO BE BOGUS. THEREFORE, WE NOTE THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITIO N. THAT BEING SO, WE DECLINE TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A), HI S ORDER ON THIS ISSUE, IS HEREBY UPHELD AND THE GROUND RAISED BY THE REVENUE IS DISM ISSED. 22. THE SUMMARIZED / COMMON GROUND NO. 5 RAISED BY THE REVENUE IS GIVEN AS FOLLOWS: 5. THE LD. CIT(A) ERRED IN DELETING ADDITION OF RS. 5, 00,000/- ON ACCOUNT OF PAYMENT MADE BY PARTNER OUT OF BOOKS OF ACCOUNTS (A.Y. 2012-13) 23. THE BRIEF FACTS QUA THE ISSUE ARE THAT DURING T HE COURSE OF SURVEY A DEED OF ASSIGNMENT (KBA-4) HAVE BEEN IMPOUNDED. AS PER DEED OF ASSIGNMENT, SHRI ARUP SAHA, PARTNER OF THE FIRM WAS PAID FULL CONSID ERATION OF RS. 26,00,000/-. SHRI ARUP SAHA DENIED THAT NO PAYMENT MADE TO HIM OTHER THAN RS. 5,00,000/-, WHICH WAS PAID IN CASH OUT OF INCOME GENERATED FROM M/S K .B. MEDICAL. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO EX PLAIN THE REASONS FOR THIS CASH PAYMENT. IN RESPONSE, THE ASSESSEE SUBMITTED T HAT THE NATURE OF TRANSACTION WAS PERSONAL IN NATURE.HOWEVER, THE ASSESSING OFFIC ER REJECTED THE CONTENTION OF THE ASSESSEEAND MADE ADDITION TO THE TUNE OF RS. 5, 00,000/-. ON APPEAL THE LD. CIT(A) DELETED THE ADDITION. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 24. THE LD. THE LD. DR HAS PRIMARILY REITERATED THE STANDS TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE DISCUSSED IN OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. ON THE OTHER HAND , THE LD. AR FOR THE ASSESSEE DEFENDED THE ORDER OF THELD CIT(A). 25. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RI VAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE IN THE RECORD. WE NOTE THAT THE ADDITION OF RS. 5,00,000/- IS IN RESPECT OF DEED OF ASSIGNMENT (KBA-4) FOUND DURI NG THE SURVEY U/S 133A ON 08.01.2013. ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 15 WE NOTE THAT THE DEED WAS EXECUTED BETWEEN ONE SHRI ANINDA CHOWDHURY AND SHRI ARUP SAHA, PARTNER IN THE APPELLANT FIRM. SHRI ARUP SAHA HAD PAID A TOTAL CONSIDERATION OF RS. 26,00,000/- ACCORDING TO THE D EED OF ASSIGNMENT. HOWEVER, SHRI ANUP SAHA STATED DURING THE SURVEY, THAT NO PA YMENT OTHER THAN RS. 5,00,000/- PAID IN CASH OUT OF INCOME GENERATED FRO M M/S. K.B. MEDICAL. IT WAS STATED AT THE STAGE OF ASSESSMENT BY THE APPELLANT THAT THE TRANSACTION WAS A PERSONAL TRANSACTION OF SHRI ARUP SAHA, PARTNER AND THE APPELLANT FIRM HAD NOTHING TO DO WITH THE SAID PAYMENT OF RS. 5,00,000 /-. THE SAME CONTENTION WAS MADE DURING THE APPELLATE PROCEEDINGS. THE AO REJEC TED THE EXPLANATION BY RELYING UPON THE STATEMENT RECORDED DURING THE SURV EY AND OBSERVED THAT NO WITHDRAWAL OF RS. 5,00,000/- FROM THE CAPITAL ACCOU NT OF SHRI ARUP SAHA WAS REFLECTED IN THE APPELLANT'S BALANCE SHEET. WE DO N OT AGREE WITH THE AO'S CONCLUSION. THERE IS NO EVIDENCE OTHER THAN SHRI AR UP SAHA'S STATEMENT RECORDED DURING THE SURVEY THAT AN AMOUNT OF RS. 5,00,000/- WAS PAID OUT OF THE APPELLANT FIRM'S INCOME. THE APPELLANT FIRM HAS DENIED ANY SU CH PAYMENT. FROM THE BRIEF FACTS NARRATED IN THE ASSESSMENT ORDER,IT IS CLEAR THAT THE PAYMENT WAS A PART OF TOTAL PAYMENT OF CONSIDERATION BY SHRI ARUP SAHA IN HIS PERSONAL CAPACITY. AS THE TRANSACTION PERTAINED TO SHRI ARUP SAHA AND NOT THE APPELLANT FIRM, THE ADDITION OF RS. 5,00,000/- COULD NOT HAVE BEEN MADE IN THE HAND S OF THE APPELLANT FIRM WITHOUT ANY CORROBORATIVE EVIDENCE. HENCE, THE ADDI TION OF RS. 5,00,000/- WAS CORRECTLY DELETED BY LD CIT(A). THAT BEING SO, WE DECLINE TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A), HIS ORDER ON THIS ISSUE, IS HEREBY UPHELD AND THE GROUND RAISED BY THE REVENUE IS DISMISSED. 26. NOW WE SHALL TAKE SUMMARIZED /COMMON GROUNDS RA ISED BY THE ASSESSEE. SUMMARIZED GROUND NO. 1 RAISED BY THE ASSESSEE IS G IVEN FOR READY REFERENCE. 1. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF DISCREPANCY IN SUNDRY CREDITORS. A. ADDITION FOR A.Y. 2011-12 OF RS.11,53,985/- ON ACCO UNT OF DISCREPANCY IN SUNDRY CREDITORS. ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 16 B. ADDITION FOR A.Y . 2012-13 OF RS.1,50,417/- ON ACCO UNT OF DISCREPANCY IN SUNDRY CREDITORS. 27. BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE A SSESSMENT PROCEEDINGS THE ASSESSING OFFICER WORKED OUT EXCESS SUNDRY CREDITOR S REFLECTED IN THE BALANCE SHEET OF THE ASSESSEE, AS COMPUTED BY THE ASSESSING OFFICER ON PAGE NO. 9 OF THE ASSESSMENT ORDER. WE NOTE THAT THE ASSESSING OFFICE R ADDED THE PURCHASE TO THE OPENING BALANCE OF THE SUNDRY CREDITORS AND REDUCED PAYMENT MADE AGAINST THE PURCHASES THEREFROM TO ARRIVE AT A CLOSING BALANCE OF SUNDRY CREDITORS OF RS. 40,49,240/- AS ON 31.03.2011, AS AGAINST WHICH THE ASSESSEES BALANCE SHEET REFLECTED SUNDRY CREDITORS OF RS. 52,03,225/-. WE N OTE THAT THE ASSESSEES EXPLANATION IS REJECTED AND THE DIFFERENCE OF RS. 1 1,53,985/- (52,03,225 40,49,240) WAS ADDED. ON APPEAL THE LD. CIT(A) CON FIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 28. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. WHEREAS THE LD. DR FOR THE REVEN UE RELIED ON THE ORDER PASSED BY THE ASSESSING OFFICER. WE HAVE GIVEN A CAREFUL C ONSIDERATION TO THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON R ECORD. WE NOTE THAT THE ASSESSEE HAS EXPLAINED THAT THE DISCREPANCY WAS COM PUTED ON THE BASIS OF ARTIFICIAL CALCULATIONSAND DISCREPANCY AROSE BECAUS E THE ASSESSING OFFICER TREATED THE ENTIRE DEBITS IN THE BANK ACCOUNT AS PAYMENT FO R PURCHASES WHICH WAS NOT CORRECT. WE NOTE THAT THE ASSESSEE SUBMITTED ALL TH E DETAILS OF SUNDRY CREDITORS AND PURCHASES AND WE ALSO NOTE THAT NO SUNDRY CREDI TOR WAS FOUND TO BE BOGUS. THEREFORE, WE NOTE THAT THE ASSESSING OFFICER DID N OT BRING ANY TANGIBLE MATERIAL ON RECORD TO SHOW THAT THERE IS A DISCREPANCY OF RS .11,53,985/-. WE NOTE THAT THE ASSESSEE WAS MAINTAINING BOOKS OF ACCOUNTS IN UNIS OLVE SOFTWARE AS WELL AS TALLY SOFTWARE, AND THE SURVEY TEAM WORKED OUT THE DIFFERENCE BASED ON THE UNISOLVE SOFTWARE WHICH WAS NOT UPDATED. THEREFORE, WE NOTE THAT THE ASSESSING OFFICER HAS FAILED TO BRING ANY TANGIBLE EVIDENCE O N RECORD TO SHOW THAT THERE WAS A DISCREPANCY IN THE SUNDRY CREDITORS SPECIALLY WHE RE THE SUNDRY CREDITORS HAD ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 17 BEEN VERIFIED BY ISSUING THE NOTICE U/S 133(6) OF T HE ACT.THEREFORE, WE DO NOT AGREE WITH THE ASSESSING OFFICER AND THEREFORE THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) T O THE TUNE OF RS. 11,53,985/- IS HEREBY DELETED. HENCE GROUND RAISED BY THE ASSES SEE IN RESPECT OF DISCREPANCY IN SUNDRY CREDITORS FOR ASSESSMENT YEAR 2011-12 AND 2012-13 ARE HEREBY DELETED. 29. THE SUMMARIZED GROUND NO. 2 RAISED BY THE ASSES SEE READS AS UNDER: 2. THE LD. CIT(A) ERRED IN CONFIRMING ADDITION AS GROS S PROFIT ON ACCOUNT OF DISCREPANCY IN SALES. A. ADDITION FOR A.Y. 2012-13 OF RS. 13,003/- AS GROSS PROFIT ON ACCOUNT OF DISCREPANCY IS SALES. B. ADDITION FOR A.Y. 2013-14 OF RS. 1,06,146/- AS GROS S PROFIT ON ACCOUNT OF DISCREPANCY IN SALES. 30. WE NOTE THAT DURING THE COURSE OF SURVEY IT WA S FOUND THAT THE ASSESSEE MAINTAINED ITS ACCOUNTS IN SOFTWARE BY NAME UNISOL VE SYSTEM, WHICH WAS NOT UPDATED. THE UNISOLVE SOFTWARE IS SPECIALIZED IN NA TURE AND CATERING THE NEED OF MEDICINES WHOLESALERS AND RETAILERS WHEREIN ALL THE MANDATORY REQUIREMENTS HAVE BEEN INCORPORATED, BUT THE SAID SOFTWARE WAS NOT UP DATED THEREFORE IT USED TO GIVE UN-CONSISTENCY RESULTS.THE ASSESSEE HAS SUBMITTED T HE RECONCILIATION DURING THE ASSESSMENT PROCEEDINGS AND THE ASSESSING OFFICER DI D NOT COMMENT ANYTHING ADVERSE EXCEPT TO SAY THAT THE ASSESSEES EXPLANAT ION ARE NOT ACCEPTED. THE ASSESSING OFFICER DID NOT GIVE HIS FINDINGS AS TO W HY THE DIFFERENCE WAS BEING ADDED AS UNDISCLOSED SALES OF THE ASSESSEE. WE NOTE THAT THE ASSESSEES BOOKS OF ACCOUNTS WERE AUDITED BY THE CHARTERED ACCOUNTANT A ND ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNTS U/S 145(3) OF THE AC T. MOREOVER, THE ASSESSING OFFICER HAS NOT DOUBTED ON THE GROSS PROFIT DECLARE D BY THE ASSESSEE IN PRECEDING PREVIOUS YEAR THEREFORE WE FIND FORCE IN THE ARGUME NTS IN THE LD. COUNSEL FOR THE ASSESSEE AND DELETE THE ADDITION TO THE TUNE OF RS. 1,06,146/-. ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 18 31. THE SUMMARIZED GROUND NO. 3 RAISED BY THE ASSES SEE IS GIVEN BELOW: THE LD. CIT(A) ERRED IN CONFIRMING ADDITION MADE BY ASSESSING OFFICER U/S 40A(3) OF THE ACT, ON ACCOUNT OF CASH PAYMENT EXCEE DING THRESHOLD LIMIT OF RS.20,000/- (A). ADDITION FOR A.Y. 2012-13 OF RS. 24,08,636/- MADE ON ACCOUNT OF VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE AC T. (B).ADDITION FOR A.Y. 2013-14 O F RS. 14,54,806/- MADE ON ACCOUNT OF VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT. 32. THE BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSE SSEE ENTERED IN LEDGER OF EXPENSES CASH PAYMENT OF RS.10,30,000/- ON 31/03/20 12. THE COMPUTERIZED LEDGER COPY IMPOUNDED (KBA-L) ON 08/01/2013. IN THI S REGARD,ASSESSEE MADE HIS SUBMISSION BEFORE THE AO. THE AO NOTED THAT THE ASS ESSEE HAS QUESTIONED OWN BOOKS OF ACCOUNTS WHICH MAINTAINED IN HIS BUSINESS PREMISES. THEASSESSE PAID RS.13,78,636/- TO 23 PERSONS. SRI ARUP SAHA, PARTNE R OF THE FIRM, FAILED TO EXPLAIN THE VIOLATION OF THE PROVISION OF SECTION 40A(3) OF THE I.T.ACT ON THE DATE OF SURVEY UNDER OATH (Q.34 &ANS.34) AND NO FURTHER EXP LANATION GIVEN IN THIS RESPECT. THEREFORE. THE ENTRY IN EXPENSES LEDGER OF CASH PAYMENT OF RS.24,08,636/- DISALLOWED U/S.40A(3) OF THE I.T.ACT AND ADDED TO RETURNED INCOME OF THE ASSESSE. 33. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ADDITIO N MADE BY THE ASSESSING OFFICER. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 34. THE LD. THE LD. DR HAS PRIMARILY REITERATED THE STANDS TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE DISCUSSED IN OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. ON THE OTHER HAN D THE LD. COUNSEL FOR THE ASSESSEE HAS DEFENDED THE ORDER OF THELD CIT(A). ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 19 35. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE R IVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THIS GROUND OF APPEAL RELATES TO DISALLOWANCE OF RS. 24,08,636/- U/S 40A(3) OF THE ACT. THIS COVERS ADDITION OF CASH PAYMENTS MADE IN EXCESS OF RS. 20,000/-. WE N OTE THAT THE ASSESSEE HAD SUBMITTED BEFORE THE ASSESSING OFFICER THE SOURCES OF SUCH PAYMENTS MADE. DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE ALSO SUBMITTED THAT THE ASSESSEE HAD NOT MADE ANY CASH PAYMENT. WE NOTE THAT ASSESSI NG OFFICER HAS STATED IN THE ASSESSMENT ORDER THAT SHRI ARUP SAHA, PARTNER OF T HE FIRM WAS CONFRONTED WITH THE DETAILS OF PAYMENT DURING THE SURVEY OF 08.01.2 013 IN HIS STATEMENT. WE NOTE THAT THE ASSESSING OFFICER HAS NOT BROUGHT ANY COGE NT EVIDENCE ON RECORD TO PROVE THE STATEMENT MADE BY SHRI ARUP SAHA IS CORRE CT. THERE IS NO CORROBORATIVE EVIDENCE TO PROVE THAT THE STATEMENT MADE BY SHRI A RUP SAHA IS CORRECT THEREFORE WE DO NOT BELIEVE IN THE STATEMENT OF SHRI ARUP SAH A. MOREOVER, THE ASSESSING OFFICER HAS NOT GIVEN OPPORTUNITY TO THE ASSESSEE T O CROSS EXAMINE SHRI ARUP SAHAS STATEMENT. WE NOTE THAT THE MAIN OBJECT OF S ECTION 40A(3) IS TO CURB THE UNACCOUNTED TRANSACTION AND BLACK MONEY. THERE IS N O RESTRICTION ON THE ASSESSEE IN HIS TRADING ACTIVITIES AND PROVISION OF SECTION 40A(3) ARE NOT INTENDED TO RESTRICT THE BUSINESS ACTIVITIES OF THE ASSESSEE. W E ALSO NOTE THAT IN ASSESSEES CASE UNDER CONSIDERATION THE BOOKS OF ACCOUNTS ARE AUDIT ED AND NOT REJECTED BY THE ASSESSING OFFICER. WE ALSO NOTE THAT THE GENUINENES S OF THE TRANSACTIONS AND IDENTITY OF THE SUPPLIERS IS ESTABLISHED THEREFORE, THE PAYMENTS SHOULD NOT BE DISALLOWED AS HELD BY THE HONBLE CALCUTTA HIGH COU RT IN THE CASE OF GIRDHARILALSONI VS. CIT REPORTED IN [1989] 179 ITR 111 (CAL). IN THE CASE UNDER CONSIDERATION SUPPLIER IS IDENTIFIABLE AND THE PAYM ENT HAS BEEN MADE FOR GENUINE TRANSACTION. MOREOVER IN THE ASSESSEES CASE UNDER CONSIDERATION THE SURVEY TEAM WORKED OUT THE DIFFERENCE BETWEEN THE BOOKS IMPOUND ED FROM UNISOLVE SOFTWARE SYSTEM VIS--VIS AUDITED BOOKS OF ACCOUNTS. HENCE I N THE ASSESSEES CASE UNDER CONSIDERATION THE ASSESSING OFFICER HAS NOT ESTABLI SHED WITH COGENT EVIDENCE THAT THE ASSESSEE HAS MADE PAYMENT IN CASH EXCEEDING TO RS.20,000/-. THEREFORE, WE DELETE THE ADDITION MADE BY THE ASSESSING OFFICER A ND SUSTAINED BY THE LD. CIT(A) . ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 20 36. THE SUMMARIZED GROUND NO. 4 RAISED BY THE ASSES SEE IS GIVEN BELOW: 4.THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION O F RS. 4,30,819/- ON ACCOUNT OF BOGUS PURCHASES (A.Y. 2013-14) 37. BRIEF FACTS QUA THE ISSUE ARE THAT FROM THE IMP OUNDED DOCUMENTS IT WAS FOUND THAT THE PURCHASE UP TO 08.01.2013( DATE OF SURVEY) WAS RS. 19,76,37,113.26/- AND FROM 09.01.2013 TO 31.03.2013 PURCHASE WAS RS. 5,31 ,89,504.74/- TOTALLING TO RS. 25,08,26,618/-. WHEREAS THE PURCHASE APPEARED IN TH E AUDIT REPORT FOR THE PERIOD 01.04.2012 TO 31.03.2013 OFRS. 25,12,57,437/-. THUS THE EXCESS PURCHASE SHOWN IN THE AUDIT REPORT AMOUNTING TO RS. 4,30,819/-. TH E ASSESSEE WAS ASKED TO EXPLAIN THE SAME VIDE LETTER DATED 20.01.2016. IN REPLY, TH E ASSESSEE SUBMITTED VIDE HIS LETTER DATED 25.01.2016 RECONCILING THE PURCHASES. FROM WHICH IT TRANSPIRED THAT THE FOLLOWING BILLS WERE ENTERED AFTER 08.01.2013. DETAILS OF WHICH ARE AS UNDER: DURING THE COURSE OF SURVEY ( 08.01.2013) THE BILLS MENTIONED IN ABOVE WERE NOT FOUND FOR ENTRY INTO THE SYSTEM. THEREFORE, AO MADE ADDITION OF RS. 4,30,819/-. 38. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ADDITIO N MADE BY THE ASSESSING OFFICER. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. THE LD. DR HAS PRIMARILY REITERATED THE STANDS TAKEN BY THE ASSESS ING OFFICER WHICH WE HAVE DISCUSSED IN OUR EARLIER PARA AND THE SAME IS NOT B EING REPEATED FOR THE SAKE OF BREVITY. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE DEFENDED THE ORDER OF THE LD CIT(A). ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 21 39. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RI VAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THIS GROUNDS OF APPEAL IS AGAINST THE DISALLOWANCE OF BOGUS PURCHASES OF RS. 4,30,819/-. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD CLAIMED PURCHASES OF RS. 25,1 2,57,437/- IN THE AUDITED BOOKS OF ACCOUNTS. ON THE OTHER HAND, THE PURCHASE WORTH RS. 19,76,37,113/- HAD BEEN MADE DURING THE RELEVANT PREVIOUS YEAR TILL TH E DATE OF SURVEY U/S 133A I.E. ON 08.01.2013 AS PER COMPUTERIZED ACCOUNTS IMPOUNDE D DURING THE SURVEY AND DURING THE PERIOD FROM 09.01.2013 TO 31.03.2013, PU RCHASES AGGREGATING TO RS. 5,31,89,505/- HAD BEEN MADE BY THE ASSESSEE. THEREF ORE THE TOTAL PURCHASE AS EVIDENCED BY THE DOCUMENTS IMPOUNDED DURING THE SUR VEY IMPOUNDED TO RS. 25,08,26,618/-. WE NOTE THAT THE ASSESSEE HAS EXPLA INED DURING THE ASSESSMENT PROCEEDINGS THAT PURCHASES TOTALING TO RS. 4,27,982 /- HAD BEEN MADE ON DATE PRIOR TO 08.01.2013, THE DATE OF SURVEY.WE NOTE THAT ASSE SSEE WAS MAINTAIN BOOKS OF ACCOUNTS IN TALLY SOFTWARE, WHEREAS THE FIGURES TAK EN BY THE ASSESSING OFFICER WERE FROM UNISOLVE SOFTWARE, WHICH WAS NOT UPDATED, AS EXPLAINED BY THE ASSESSEE. THE ASSESSEE SUBMITTED THE RECONCILIATION AND THE DIFFERENCE IS RECONCILIATORY. THE ASSESSING OFFICER DID NOT BRING ANY COGENT EVIDENCE ON RECORD TO SHOW THAT THE DIFFERENCE OF RS. 4,33,819/ - IS ON ACCOUNT OF BOGUS PURCHASES. WE NOTE THAT THE BOOKS OF ACCOUNTS OF TH E ASSESSEE WERE AUDITED AND ASSESSING OFFICER DID NOT REJECT THE BOOKS OF ACCOU NTS. MOREOVER, THE ASSESSING OFFICER HAS NOT DOUBTED THE SALES, IF CORRESPONDING SALES ARE ACCEPTED BY THE AO THEN THE PURCHASE IN RESPECT OF THAT SALE IS GOING TO BE CORRECT. HENCE WE DELETE THE DISALLOWANCE OF RS. 4,30,819/-. 40. THE SUMMARIZED GROUND NO. 5 RAISED BY THE ASSES SEE IS GIVEN BELOW: 5.THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION O F RS. 38,750/- ON ACCOUNT OF RECONCILED CREDIT NOTES FOR GOODS RETURN ED. (A.Y. 2013-14) ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 22 41. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE R IVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEES BOOKS OF ACCOUNTS ARE AUDITED AND ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT. WE HAVE ALSO DELETED THE ADDITIO N MADE ON ACCOUNT OF SALE AND PURCHASE THEREFORE WHATEVER SALES AND PURCHASE SHOW N BY THE ASSESSEE IN AUDITED BOOKS OF ACCOUNTS HAVE BEEN UPHELD BY US. SINCE THE CREDIT NOTES FOR GOODS RETURNED TO SUPPLIERS TO THE TUNE OF RS. 38,750/- R ELATES TO PURCHASE, AND WE HAVE NOT CONFIRMED ANY BOGUS PURCHASES THEREFORE THIS GR OUND IS CONSEQUENTIAL IN NATURE AND THE ADDITION MADE BY THE ASSESSING OFFI CER AND SUSTAINED BY THE LD. CIT(A) NEEDS TO BE DELETED ACCORDINGLY WE DELETE TH E ADDITION. 42. NOW WE SHALL TAKE THE GROUNDS RAISED BY THE ASS ESSEE IN CROSS OBJECTION IN C.O. NO. 68/KOL/2017, FOR ASSESSMENT YEAR 2010-11, WHICH READS AS UNDER: GROUND NO. 2- THE LD. CIT(A) ERRED IN CONFIRMING TH E ADDITION OF RS. 44,118/- ON ACCOUNT OF DISCREPANCY IN SUNDRY CREDIT ORS. 43. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RI VAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEES BOOKS OF ACCOUNTS WERE AUDITED BY CHARTERED ACCOUNTANT. THE BOOKS OF ACCOUNTS WERE NOT REJECTED BY THE ASSESSING OFFICER U/S 145(3) OF THE ACT. WE HAV E DELETED ALL THE ADDITIONS RELATING TO BOGUS PURCHASES AND SALES MADE BY THE A SSESSING OFFICER. THE DISCREPANCY IN SUNDRY CREDITORS TO THE TUNE OF RS. 44,118/- WORKED OUT BY THE ASSESSING OFFICER IS NOT BASED ON ANY COGENT MATERI AL. THIS DISCREPANCY WORKED OUT BY THE ASSESSING OFFICER HAS NOT BEEN CORROBORA TED BY ANY TANGIBLE MATERIAL BY THE ASSESSING OFFICER THEREFORE, WE DELETE THE A DDITION OF RS. 44,118/-. HENCE THE CROSS OBJECTION FILED BY THE ASSESSEE IN C.O. N O. 68/KOL/2017 IS ALLOWED. 44. IN THE RESULT, THE APPEALS OF THE REVENUE IN I. T.A. NO. 1209, 1210&1211/KOL/2017 AND THE CROSS OBJECTIONS OF THE ASSESSEE IN C.O. NOS. ITA NOS.1209TO1211/KOL/2017C.O. NOS.68TO71/KOL/2017 ITA NOS. 705TO707/KOL/2017 M/S K.B. MEDICAL AGENCY A.Y.S2010-11,2011-12, 2012-13 & 2013-14, 23 68,69&70/KOL/2017 ARE DISMISSED AND THE APPEALS OF THE ASSESSEEIN I.T.A. NOS. 705,706&707/KOL/2017 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 08/ 02/2 019. SD/- (S.S.GODARA) SD/- (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; DATED 08/ 02/2019 SB , SR.PS. COPY OF THE ORDER FORWARDED TO: 1. ITO, WARD-22(2),KOLKATA 2. M/S K.B. MEDICAL AGENCY 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES