ACIT,Circle-2, Durgapur, Durgapur V. M/s Roy Mitra Enterprise, Durgapur

ITA 729/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83124 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 08-05-2012
• Court: TRIBUNAL
• Keywords: Unexplained investment; Capital asset; Cost of acquisition
• Section: 143(3); 142(1); 133(6)

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , ! ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA, AM] ' / I.T.A NO.729/KOL/2012 #$ %&/ ASSESSMENT YEAR: 2008-09 ASSISTANT COMMISSIONER OF INCOME-TAX, VS. M/S. RO Y MITRA ENTERPRISE CIRCLE-2, DURGAPUR. (PAN: AAHFR6703L) (() /APPELLANT ) (*+()/ RESPONDENT ) DATE OF HEARING: 28.08.2014 DATE OF PRONOUNCEMENT: 05.09.2014 FOR THE APPELLANT: SHRI VIVEK VERMA, JCIT, SR. DR FOR THE RESPONDENT:SHRI SOUMITRA CHOUDHURY, ADVO CATE / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A), DURGAPUR IN APPEAL NO. 89/CIT(A)/DGP/2010-11 DATED 16.02.2012. ASSESSMENT WAS FRAMED BY ADDL. CIT, RANGE-2, DURGAPUR U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (H EREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2008-09 VIDE HIS ORDER DATED 30.12. 2010. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) DELETING THE ADDITION OF SUNDRY CREDITORS AT RS.24,01,169/-. FO R THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.1: ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE OF RS.2401169/- AS BOGUS SUNDRY CREDITORS. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS ENGAG ED IN CONTRACT JOB WORK HAVING BRANCHES AT MEGHALAYA AND TRIPURA BESIDES HAVING HEAD OFFICE AT DURGAPUR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO EXAMINED THE BOOKS O F ACCOUNT AND OTHER DOCUMENTS LIKE BILLS, VOUCHERS, THIRD PARTY INFORMATION ETC. WITH REFEREN CE TO STATEMENT OF ACCOUNTS FILED BY THE ASSESSEE. THE AO NOTICED FROM THE BALANCE SHEET THA T THE ASSESSEE HAS DECLARED SUNDRY CREDITORS AT RS.8,96,85,233/- AGAINST THE TOTAL BUS INESS TURNOVER OF RS.20,37,12,500/-, WHICH IS ABOUT 44% OF THE TOTAL TURNOVER OF THE BUSINESS. T HE AO GOT SUSPICION AND ASKED THE DETAILS 2 ITA NO.729/K/2012 M/S. ROY MITRA ENTERPRISE AY 2008-09 LIKE MAILING ADDRESS OF THE SUNDRY CREDITORS. AS T HE ASSESSEE FAILED TO ESTABLISH THE IDENTITY OF THE SUNDRY CREDITORS, THE AO REJECTED THE LIST OF S UNDRY CREDITORS AS BOGUS. ACCORDING TO HIM, NO TRANSACTION FOUND TO HAVE EXISTED DURING THE FIN ANCIAL YEAR UNDER CONSIDERATION WITH THE TWO SUNDRY CREDITORS NAMELY, MR. GOPAL DAS AND MR. MANI KLAL DAS AMOUNTING TO RS.24,01,169/-. AS THE AO FOUND THAT THESE ARE NON-EXISTENT SUNDRY CREDITORS, HE MADE ADDITION OF THE NON- EXISTENT CREDITORS RELATING TO THESE TWO CREDITORS AT RS.24,01,169/- TO THE RETURNED INCOME OF THE ASSESSEE. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFO RE CIT(A), WHO DELETED THE ADDITION OF BOGUS CREDITORS BY OBSERVING AS UNDER: INDER THE CIRCUMSTANCES, I DO NOT FIND ANY MATERIA L TO SUBSCRIBE TO THE A.OS VIEW THAT THE APPELLANT HAD TRIED TO MISLEAD THE AUTHORITY AN D KILL THE VALUABLE TIME OF THE DEPARTMENT. WHAT IS NOT COMPREHENSIBLE IS WHY THE A .O. DID NOT TAKE ANY ACTION ON THE BASIS OF THE REVISED LIST OF ADDRESSES. IN MY OPINI ON, THERE IS NO STATUTORY BAR ON THE APPELLANT SUBMITTING ANY NEW INFORMATION OR RECTIFY ING EARLIER INFORMATION DURING THE TENURE OF ASSESSMENT PROCEEDINGS. ON RECEIPT OF SUC H INFORMATION, IT IS INCUMBENT ON THE A.O. TO VERIFY THE SAME. HOWEVER, N THS CASE, IT IS SEEN THAT THOUGH ADEQUATE TIME WAS AVAILABLE NO ENQUIRIES WERE CONDUCTED ON THE BASS OF THE NEW INFORMATION. THE APPELLANT HAS FURTHER SUBMITTED THAT ONE OF THESE C REDITORS WAS A SUB-CONTRACTOR, WHO WAS PAID BY A/C. PAYEE CHEQUES AFTER DEDUCTION OF T AX AT SOURCE, WHEREAS THE OTHER WAS A SELLER WHO HAD ALSO BEEN PAID BY A/C. PAYEE CHEQU ES. COPY OF BANK ACCOUNTS, IN SUPPORT OF HS SUBMISSION, HAS ALSO BEEN FILED. IT APPEARS FROM THE ORDER THAT THESE ASPECTS HAVE NOT BEEN VERIFED BY THE A.O. WHILE MA KING THE ADDTIONS. NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE A.O. IN SUPPORT OF HI S OBSERVATION THAT THERE WAS A CASH NEXUS OF THE APPELLANT WITH THESE SUNDRY CREDITORS. THE ADDITION ULTIMATELY IS SEEN TO HAVE BEEN MADE ON A SURMISE WITHOUT ANY ENQUIRY TO SUPPORT THE CONCLUSIONS. IN MY VIEW, THEREFORE, THESE ADDITIONS CANNOT BE SUSTAINE D. THE SAME ARE DIRECTED TO BE DELETED. THIS GROUND OF APPEAL IS ALLOWED. AGGRIEVED AGAINST THE ORDER OF CIT(A), REVENUE CAME IN SECOND APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. THE ASSESSEE EXPLAINED THAT THE AO BY ISSUING NOTIC E U/S. 142(1) OF THE ACT DATED 17.06.2010 ASKED DIFFERENT REQUISITIONS, INTER ALIA, LIST OF S UNDRY CREDITORS ALONG WITH CURRENT POSTAL ADDRESS SHOWING THE AMOUNTS PAID DURING THE ACCOUNTING PERI OD 2007-08 RELEVANT TO AY 2008-09 AND OUTSTANDING BALANCE AS ON 31.03.2008. ACCORDINGLY, ON 28.06.2010, SUCH REQUEST WAS COMPLIED WITH. SINCE AO REQUIRED THE CURRENT POSTAL ADDRESSE S, THE ASSESSEE AFTER VERIFYING THE PRESENT WHEREABOUTS OF THESE CREDITORS REVISED THE LIST OF SUNDRY CREDITORS STATING CURRENT POSTAL ADDRESSES AND SUBMITTED CURRENT LIST OF SUNDRY CRED ITORS STATING CURRENT POSTAL ADDRESSES ON 21.07.2010. BUT THE AO ISSUED NOTICES U/S. 133(6) OF THE ACT ON THE OLD ADDRESSES. HENCE, THE SUNDRY CREDITORS COULD NOT BE SERVED WITH THE NOTIC ES. RELYING ON THE ABOVE NOTICES, THE AO MADE ADDITION OF TWO CREDITORS NAMELY SHRI GOPAL DA S AND SHRI MANIK LAL DAS, THE TOTAL AMOUNT OUTSTANDING ON BOTH THE SUNDRY CREDITORS AT RS.24,01,169/- AND TREATED THESE TWO 3 ITA NO.729/K/2012 M/S. ROY MITRA ENTERPRISE AY 2008-09 CREDITORS AS BOGUS SUNDRY CREDITORS. BEFORE US, NOW LD. COUNSEL FOR THE ASSESSEE FILED PAPER BOOK AND AT PAGE 54 AND 55, ASSESSEE FILED THE COPY OF ACCOUNT OF SHRI MANIK LAL DAS WHEREBY VARIOUS TRANSACTIONS VIDE CHEQUE HAVE BEEN ENTERED WITH THE ASSESSEE AND THE CLOSING BALANCE AS ON 31.03.2008 REFLECTS A BALANCE OF RS.20,79,952/-. SIMILAR IS THE POSITION IN THE CASE OF SHRI GOPAL DAS, WHICH IS ENCLOSED AT ASSESSEES PAPER BO OK PAGE 55 AND THE SAME REFLECTS THE BALANCE AT RS.32,12,017/-. FROM THE ABOVE TWO ACCO UNTS, COPIES OF WHICH ARE FILED BEFORE US, I.E. LEDGER ACCOUNTS WHICH CLEARLY REVEALS THAT THE ASSESSEE HAS MADE PAYMENTS BY CHEQUE DURING THE YEAR TO BOTH THE PARTIES AND THE PARTIES HAVE RECEIVED THE PAYMENTS ON VARIOUS OCCASIONS. WHEN THESE DOCUMENTS WERE CONFRONTED TO LD. SR. DR, HE ONLY REQUESTED THAT THE ISSUE CAN BE REMITTED BACK TO THE FILE OF AO. WHEN FURTHER QUERY WAS MADE FROM LD. SR. DR THAT WHETHER THESE DOCUMENTS WERE NOT AVAILABLE BEF ORE THE AO OR THE BOOKS OF ACCOUNT WAS NOT AVAILABLE BEFORE THE AO, HE COULD NOT REPLY RATHER THE BENCH SHOWN THE ASSESSMENT ORDER WHEREBY THE AO ADMITTED THAT THE COMPLETE BOOKS OF ACCOUNTS AND DETAILS WERE PRODUCED BEFORE HIM. IN TERM OF THE ABOVE, THE FACTS ARE VE RY CLEAR THAT THESE PARTIES ARE EXISTENT PARTIES AND LIVE TRANSACTIONS ARE CARRIED OUT BY THE ASSESS EE WITH THESE PARTIES AND THAT ALSO THROUGH CHEQUE PAYMENTS. IN SUCH CIRCUMSTANCES, THESE CRED ITORS CANNOT BE HELD TO BE BOGUS. THESE ARE VERY MUCH EXISTENT CREDITORS AND IN SUCH CIRCUMSTAN CES, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION AND WE CONFIRM THE SAM E. THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 5. THE SECOND ISSUE IN THIS APPEAL OF REVENUE IS AG AINST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY AO ON ACCOUNT OF INVESTMENT MADE I N VIVEKANANDA HOSPITAL IN THE SUPPLY OF BUILDING MATERIAL FOR CONSTRUCTION OF HOSPITAL BUIL DING. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.2: 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE OF RS.30,55,463/- AS INCOME FROM VIVE KANANDA HOSPITAL BASED ON ASSESSEES VERSION THAT THIS IS INVESTMENT IN THE S HAPE OF SUPPLY OF BUILDING MATERIAL IN THE CONSTRUCTION OF HOSPITAL BUILDING. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO ON EXAMINATION OF P&L ACCOUNT O BSERVED THAT THE ASSESSEE HAS GENERATED SHORT TERM CAPITAL GAIN AFTER DISPOSING OF THE ASSE TS AND IN TERM OF THE SAME, THE ASSESSEE WAS REQUIRED TO PRODUCE THE COST OF ACQUISITION AND CON SIDERATION FOR SUCH CAPITAL ASSET. THE AO NOTED FROM THE BANK STATEMENT OF AXIS BANK, DURGAPU R WHERE ASSESSEE HAS MAINTAINED BANK ACCOUNT NO. 213010200003292 AND NOTED THAT A SUM OF RS.67.38 LACS HAS BEEN CREDITED ON 4 ITA NO.729/K/2012 M/S. ROY MITRA ENTERPRISE AY 2008-09 04.10.2007 AND ASSESSEE CLAIMED THE SAME AS SALE CO NSIDERATION OF CAPITAL ASSETS. AS THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE AND AO AFTE R EXAMINING THE LEDGER ACCOUNT, WHEREIN THE OPENING BALANCE AS ON 01.04.2007 WAS RS.35,62,5 00/- TREATED THE DIFFERENTIAL AMOUNT OF RS.30,55,463/- AS INVESTMENT AND MADE ADDITION OF T HIS AMOUNT AS UNEXPLAINED INVESTMENT ON ACCOUNT OF BUILDING MATERIAL SUPPLIED. THE AO ALSO ADDED A PROFIT TO THE TUNE OF RS.1,20,037/-. HENCE, A TOTAL ADDITION WAS MADE AT RS.31,75,500/- 7. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT( A), WHO DELETED THE ADDITION BY OBSERVING AS UNDER: UNDER THOSE CIRCUMSTANCES, I FAIL TO SEE WHY THE S AID AMOUNT SHOULD BE CONSIDERED FOR A DISALLOWANCE. I DO NOT SEE IT TO BE THE A.OIS CAS E THAT THESE SERVICES WERE NEVER RENDERED. WHETHER THE APPELLANT WAS PAID IN MONEY OR EQUIVALENT AMOUNT OF SHARES WERE ISSUED TO IT, IN MY OPINION, IS IMMATERIAL TO THE D ISALLOWANCES THE AO HAS MADE. IN MY VIEW, THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD THAT THE ALLEGED PURCHASE OF MATERIAL WHICH HE HAS DISALLOWED, WAS BOGUS. RATHE R, HIS REFERENCE TO THE LETTERS OF VIVEKANANDA HOSPITALS AS PER PARA 9.1 AND 9.2 OF TH E ASSESSMENT ORDER GIVES CREDENCE TO THE APPELLANTS CONTENTION OF HAVING ACTUALLY SUPPL IED SUCH MATERIALS. THE AO HAS MENTIONED THAT THE JOB ASSIGNED BY VIVEKANANDA HOSP ITALS WAS NOT ACCOUNTED IN THE REGULAR BOOKS OF ACCOUNTS. HE DOES NOT MENTION WHO SE BOOKS OF ACCOUNTS ARE BEING REFERRED TO. HOWEVER, ALL THE INFORMATION IN THE O RDER HAS BEEN GLEANED FROM THE APPELLANTS ACCOUNTS BY THE AO. THEREFORE, IT CANN OT BE THE AOS CASE THAT THE TRANSACTIONS WERE NOT DISCLOSED IN THE APPELLANTS BOOKS OF ACCOUNTS. UNDER THE CIRCUMSTANCES, THE DISALLOWANCES CANNOT BE SUSTAINE D AND IS DIRECTED TO BE DELETED. THESE GROUNDS OF APPEAL ARE ALLOWED. AGGRIEVED, NOW REVENUE IS IN APPEAL BEFORE US. 8. THE FACTS OF THE CASE ARE THAT IN THE LEDGER ACC OUNT OF THE ASSESSEE AS ON 01.04.2007 THERE WAS INVESTMENT TO THE EXTENT OF RS.35,62,500/ - IN THE ACCOUNT OF VIVEKANANDA HOSPITALS PVT. LTD. THE ASSESSEE IS A CONTRACTOR AND INVESTE D A SUM OF RS.30,50,463/- DURING THE YEAR BY CONSTRUCTING A BUILDING AGAINST SHARE APPLICATION M ONEY IN THIS HOSPITAL. THE TOTAL PROFIT DISCLOSED BY THE ASSESSEE WAS AT RS.1,20,037/- AND THE TOTAL BALANCE AS ON 31.03.2008 IN THE SAID HOSPITAL ACCOUNT WAS AT RS.67,38,000/-. THE A O HAS NOT CONSIDERED THIS AS AN INVESTMENT AND TREATED ASSESSEE AS CREDITOR ONLY. ACCORDINGLY , THE AO TREATED THE AMOUNT OF INVESTMENT DURING THE YEAR AT RS.30,55,463/- PLUS THE PROFIT O F RS.1,20,037/- AS ASSESSEES INCOME. WE FIND THAT THE AO HAS NOT DENIED THE INVESTMENT OF RS.31 ,75,500/-, WHICH WAS ON ACCOUNT OF CONSTRUCTION OF BUILDING OF VIVEKANANDA HOSPITAL PV T. LTD. AND RECEIPT OF RS.67.38 LAKHS. WE FIND THAT THESE ARE INVESTMENTS IN THE VIVEKANANDA HOSPITAL PVT. LTD. BY THE ASSESSEE AND NOT AS THE CREDITOR OF THAT PARTY. ADMITTEDLY, THE ASSESS EE HAS SUPPLIED BUILDING MATERIAL TO THE HOSPITAL AND ASSESSEE WAS REIMBURSED BY THAT COMPAN Y BY ISSUANCE OF SHARES, WHICH WAS 5 ITA NO.729/K/2012 M/S. ROY MITRA ENTERPRISE AY 2008-09 SUBSEQUENTLY SOLD RESULTING IN THE CAPITAL GAINS. T HIS IS A CLEAR CUT CASE OF INVESTMENT MADE BY THE ASSESSEE IN THE VIVEKANANDA HOSPITAL PVT. LTD. AND THIS CANNOT BE TERMED AS INCOME OF THE ASSESSEE. ACCORDINGLY, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION AND WE CONFIRM THE SAME. THIS GROUND OF APPEAL OF REVE NUE IS DISMISSED. 9. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 10. ORDER IS PRONOUNCED IN THE OPEN COURT ON 05.09. 2014 SD/- SD/- , ! , (SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 5 TH SEPTEMBER, 2014 ,- #./ 0 JD.(SR.P.S.) 1 *2 3 2%4- COPY OF THE ORDER FORWARDED TO: 1 . () / APPELLANT ACIT, CIRCLE-2, DURGAPUR 2 *+() / RESPONDENT M/S. ROY MITRA ENTERPRISE, BHIRINGHE E, DURGAPUR- 713213 3 . # ( )/ THE CIT(A), DURGAPUR 4. 5. # / CIT DURGAPUR 2:; *# / DR, KOLKATA BENCHES, KOLKATA +2 */ TRUE COPY, #