M/S. Bijay Kumar Kayan & Co., Kolkata V. I.T.O., Ward-43(3), Kolkata, Kolkata

ITA 71/KOL/2015

• Counselvise Citation: 7123514 RSA 2015
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 15-01-2015
• Court: TRIBUNAL
• Department Lawyers: SUCHETA CHATTAOPADHYAY JCITSR
• Keywords: Peak credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH SMC KOLKATA [BEFORE HON BLE SHRI J. SUDHAKAR REDDY, AM ] ITA NO .71/KOL/2015 ASSESSMENT YEAR : 2006 - 07 M/S.BIJAY KUMAR KAYAN & CO. - VERSUS - I.T.O., WARD - 43(3), KOLKATA KOLKATA (PAN AAFFB 0065 K) (AP PELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SUNIL SURANA,ADVOCATE FOR THE RESPONDENT : SMT.SUCHETA CHATTAOPADHYAY ,JCIT,SR.DR DATE OF HEARING : 26 .08 .2015 . DATE OF PRONOUNCEMENT : 27.08.2015. ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - XXX, KOLKATA DATED 10.11.2014 FOR A.Y.2006 - 07. 2. THE ASSESSEE IS A PARTNERSHIP FIRM. THE ISSUES THAT ARISE BEFORE ME FOR ADJUDICATION ARE THAT (A) A DDITION OF RS.4,51,696/ - BEING ESTIMATED GROSS PROFIT ON UNDISCLOSED PURCHASES, BASED ON CASH DEPOSITS MADE IN THE UNDISCLOSED BANK ACCOUNT. (B) ADDITION OF PEAK CREDIT OF RS.4,56,751/ - IN THE UNDISCLOSED BANK ACCOUNT. 3. A FTER HEARING THE SUBMISSIONS I FI ND THAT CIT(A) - XXX, KOLKATA IN HIS ORDER DATED 10.01.2010 FOR A.Y.2007 - 08, IN ASSESSEE S OWN CASE, HAS HELD THAT THE GROSS PROFIT ON THE TURNOVER OF UNACCOUNTED PU RCHASES SHOULD BE ESTIMATED AT 3 .5%. THIS WAS NOT CHALLENGED BY THE REVENUE BY WAY OF AN APPE AL BEFORE ITAT. HENCE, I DEEM IT APPROPRIATE TO DIRECT THE AO TO ADOPT 3.5% OF THE SAID TURNOVER AS NET PROFIT IN PLACE OF 8.5%, FOR SAKE OF CONSISTENCY. THUS GROUND NOS.2 AND 3 ARE ALLOWED IN PART. ITA NO. 71/KOL/2015 M.S.BIJAY KUMAR KAYAN & CO. . A.YR. 2006 - 07 2 4. GROUND NO.4 IS AGAINST THE ADDITION OF PEAK BALANCE IN THE BANK ACCOUNT. 5. THE CIT(A) BY ADJUDICATING THE VERY SAME ISSUE IN THE EARLIER YEAR I.E. 2007 - 08 AT PARA 5.2. TO 5.2.1. HAS HELD AS FOLLOWS : - 5.2. I HAVE DULY CONSIDERED THE SUBMISSION OF THE AR OF THE APPELLANT. THE AO MADE AN EST IMATED ADDITION OF RS.30,89,464/ - ]APPLYING THE RATIO OF CAPITAL TO SALE AS PER RETURN] ON ACCOUNT OF CIRCULATING CAPITAL OUGHT TO HAVE INVESTED BY THE APPELLANT IN THE UNACCOUNTED TRANSACTIONS, WITHOUT BRINGING IN ANY EVIDENCE THAT SUCH INVESTMENT INDEED WAS MADE BY THE APPELLANT. THE AR CITED MANY JUDICIAL PRONOUNCEMENTS WHERE ESTIMATED ADDITION FOR PEAK INVESTMENT HAD BEEN DELETED BY THE HON BLE TRIBUNALS IN SIMILAR TYPE OF CASES. IN THE CASE OF CIT VS. S.M.OMER REPORTED IN 201 ITR 608, THE HON BLE CAL CUTTA HIGH COURT, IT HAS BEEN HELD THAT WHEN THE PROFIT IS ESTIMATED THE AO COULD NOT ADD THE ADDITIONAL SUM BY WAY OF CONCEALED INCOME IN THE SHAPE OF MONEY INVESTED IN PURCHASES. SIMILAR VIEW WAS TAKEN BY THE HON BLE JURISDICTIONAL TRIBUNAL IN THE CASE O F VARIETY STORES VS ITO [ITA NO.2635/KOL/2005]. IN THE CASE OF SRI BABLU KUNDU VS. ITO [ITA NO.1825/KOL/2006], THE JURISDICTIONAL TRIBUNAL, B BENCH HAS QUASHED THE ADDITION MADE FOR PEAK INVESTMENT ON ACCOUNT OF UNACCOUNTED PURCHASES FOR WANT OF EVIDENCE . 5.2.1. IT IS SEEN FROM THE COPY OF THE STATEMENT OF THE UNDISCLOSED BANK ACCOUNT NO.CA122353 WITH UBI, BURRABAZAR BRANCH, THROUGH WHICH PURPORTED UNACCOUNTED TRANSACTIONS OF PURCHASES AND SALES WERE MADE, THAT CASH WERE DEPOSITED IN TWO/THREE INSTALMENT S BEFORE ISSUING CHEQUES TO THE TEA BROKERS. THE SOURCE OF SUCH CASH DEPOSITS WERE UNACCOUNTED SALE PROCEEDS AS EXPLAINED BY THE AR. HIS FURTHER ASSERTION THAT THE APPELLANT HAD ALWAYS BEEN PURCHASING TEA ON CREDIT HAS B EEN VERIFIED FROM THE COPY OF ACCOUN TS OF THE TEA BROKERS. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND CONSIDERING THAT THE AO S ACTION IN TAXING THE PROFIT ON SUCH UNDISCLOSED PURCHASES HAS ALREADY BEEN CONFIRMED TO THE EXTENT OF RS.9,18,468/ - AND ALSO CONSIDERING THE FACT THAT AO DID NOT BRING ANY PROOF THAT THE APPELLANT HAD INTRODUCED ADDITIONAL CAPITAL OR THAT ADDITIONAL INVESTMENT WAS REQUIRED OVER AND ABOVE THE CAPITAL EMPLOYED BY THE APPELLANT FOR SUCH UNACCOUNTED PURCHASES, THE ADDITION OF RS.30,89,464/ - IS DELETED. 6. I AM OF THE OPINION THAT THIS DECISION OF THE FIRST APPELLATE AUTHORITY FOR A.Y.2007 - 08, HAS TO BE APPLIED DURING THE CURRENT ASSESSMENT YEAR ALSO. THUS THE ADDITION OF RS.4,56,751/ - IS DELETED AND GROUND NOS. 4 AND 5 ARE ALLOWED. 7. GROUND NO.6 IS DISMISSED AS NOT PRESSED. 8. GROUND NOS.7, 8 AND 9 ARE GENERAL IN NATURE AND HENCE THE SAME DO NOT REQUIRE ANY ADJUDICATION. ITA NO. 71/KOL/2015 M.S.BIJAY KUMAR KAYAN & CO. . A.YR. 2006 - 07 3 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNC ED IN TH E COURT . SD/ - [ J.S UDHAKAR REDDY ] ACCOUNTANT MEMBER DATE: 27.08.2015. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO : 1 . M/S. BIJAY KUMAR KAYAN & CO., 1, MULLICK S TREET, BURRA BAZAR, KOLKATA - 700007. 2 I.T.O., WARD - 43(3) , KOLKATA. 3 . THE CIT - XV , KOLKATA 4. THE CIT(A) - XXX, KOLKATA. 5 . DR, KOLKATA BENCHES, KOLKATA TRUE COPY , BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES