Prayag Dutt Shaw, Kolkata V. ITO, WD-47(4), KOLKATA, Kolkata

ITA 747/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1163 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 19-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACH ARJEEADDL
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Unexplained cash credit; Principle of natural justice; Proportionate interest
• Section: 69C; 68

Judgement Text

ITA NO.747/KOL/2016-PRAYAG DUTT SHAW A.Y.2008-09 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH SMC K OLKATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM] ITA NO.747//KOL/2016 ASSESSMENT YEAR : 2008-09 PRAYAG DUTT SHAW VERSUS- I.T.O., WARD-47(4) KOLKATA KOLKATA (PAN: ALKPS 1197 H) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI MIRAJ D.SHAH, ADVOCATE FOR THE RESPONDENT: SHRI ARINDAM BHATTACHARJEE, AD DL.CIT DATE OF HEARING : 26.07.2017. DATE OF PRONOUNCEMENT : 31.10.2017. ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX-(A)-14, KOLKATA RELATING TO A.Y. 200 8-09 ON THE FOLLOWING GROUNDS :- 1.FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE APPELLATE ORDER PASSED WAS IN VIOLATION OF PRINCIPALS OF NATURAL JUSTICE H ENCE IS BAD IN LAW AND BE QUASHED. 2.FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CA SE THE LD. COMMISSIONER OF INCOME TAX APPEALS ERRED IN UPHOLDING THE ADDITION OF RS.2,10,500/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT 196 1. THE ADDITION IS NOT CALLED FOR HENCE THE SAME BE DELETED. 3. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. COMMISSIONER OF INCOME TAX APPEALS ERRED IN UPHOLDING THE DISALLOWA NCE OF RS.27,040/- ON ACCOUNT OF INTEREST ON LOAN PAID TO FAMILY MEMBERS. THE DISALLOWANCE IS NOT CALLED FOR HENCE THE SAME BE REVERSED. 4.FOR THAT THE ADDITIONS MADE MERELY ON SURVEY STAT EMENTS WAS NOT TENABLE IN LAW AND HENCE SUCH ADDITIONS BE DELETED. 5. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. COMMISSIONER OF INCOME TAX APPEALS ERRED IN UPHOLDING THE ADDITION OF RS.3,68,085/- ON ACCOUNT OF UNEXPLAINED PURCHASE U/S 69C OF THE IT ACT 1961. THE ADDITION IS NOT CALLED FOR HENCE THE SAME BE DELETED. 6. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. COMMISSIONER OF INCOME TAX APPEALS ERRED IN UPHOLDING THE ADDITION OF RS.11, 153 /- BEING PROFIT ITA NO.747/KOL/2016-PRAYAG DUTT SHAW A.Y.2008-09 2 EARNED @ 3.03% OF UNDISCLOSED PURCHASE OF RS.3,68,0 85/-. HE ADDITION IS NOT CALLED FOR HENCE THE SAME BE DELETED. 7. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. COMMISSIONER OF INCOME TAX APPEALS ERRED IN UPHOLDING THE ADDITION OF RS.12,78,362/- ON ACCOUNT OF UNDISCLOSED SALES. THE ADDITION IS NOT C ALLED FOR HENCE THE SAME BE DELETED. 8. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. COMMISSIONER OF INCOME TAX APPEALS ERRED IN UPHOLDING THE ADDITION OF RS.3,12,890/- ON ACCOUNT OF CASH DIFFERENCE. THE ADDITION IS NOT CALLED FOR HENCE THE SAME BE DELETED. 9. FOR THAT THE INTEREST COMPUTED U/S 234A/B/C/D OF THE IT ACT 1961 IS OVER CHARGED AND WRONGLY CALCULATED AND OR IS NOT APPLIC ABLE TO THE ASSESSEE CASE IT BE DIRECTED TO RE-COMPUTE THE INTEREST AS PER LAW. 10. THE APPELLANT CRAVES LEAVE TO PRESS NEW, ADDITI ONAL GROUNDS OF APPEAL OR MODIFY, WITHDRAW ANY OF THE ABOVE GROUNDS AT THE TI ME OF HEARING OF THE APPEAL. 2. AFTER HEARING THE RIVAL CONTENTIONS AND PERUS ING THE PAPERS ON RECORD I HOLD AS FOLLOWS : 2.1. GROUND NO.1 IS GENERAL IN NATURE. GROUND NO .2 IS AGAINST THE ADDITION OF RS.2,10,500/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT, 1961 (ACT). THE ASSESSEE CLAIMS THAT HE HAS RECEIVED UNSECURED LOANS FROM FIVE PERSONS. THE ASSESSEE COULD NOT SUBSTANTIATE THIS CLAIM BY PROVI NG THE CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS. THE LD. CIT(A) HAS HELD THAT ALL THE LOAN CREDITORS ARE MEMBERS OF THE FAMILY INCLUDING LADIES AND THAT THE ASSESSEE WAS RUNNING THEIR FINANCIAL AFFAIRS. BEFORE ME NO EVIDENCE HAS BEEN PRODUCED BY THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE COULD NOT COTROVERT THE FA CTUAL FINDING OF THE LD. CIT(A) THAT THE CREDITWORTHINESS OF THE CREDITORS NOT BEEN PROV ED BY THE ASSESSEE.. THUS I UPHELD THE FINDING AND DISMISS GROUND NO.2 OF THE ASSESSEE . 2.2. GROUND NO.3 IS ON THE ISSUE OF DISALLOWANCE OF PROPORTIONATE INTEREST WHICH IS MENTIONED IN GROUND NO.2. THIS IS CONSEQUENTIAL IN NATURE AND HENCE THIS GROUND IS DISMISSED. ITA NO.747/KOL/2016-PRAYAG DUTT SHAW A.Y.2008-09 3 2.3. NO ARGUMENT WAS ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE ON GROUND NO.4. HENCE THE SAME IS DISMISSED. 2.4. GROUND NO.5 IS AGAINST THE ADDITION MADE ON ACCOUNT OF EXCESS STOCK WHICH WAS HELD AS UNDISCLOSED PURCHASE AMOUNTING TO RS.3,68,0 85/-. THE AO HAS ALSO MADE AN ADDITION ON ACCOUNT OF CASH SHORTAGE ON THE DATE OF SURVEY AT RS.3,12,890/-. THE SAME IS RAISED IN GROUND NO.8 BY THE ASSESSEE. THE CLAIM OF THE ASSESSEE THAT GROUND NO.5 AND 8 HAVE TO BE CONSIDERED TOGETHER AND TELESCOPED HAS FORCE. SHORTAGE OF CASH CAN BE SAID TO HAVE BEEN UTILISED FOR PURCHASE OF STOCK . THUS THESE TWO ADDITIONS ARE TELESCOPED AND THE ADDITION ON ACCOUNT OF CASH SHOR TAGE IS DELETED AND ADDITION ON ACCOUNT OF UNDISCLOSED PURCHASES IS RESTRICTED TO R S.55,195/-. THUS GROUND NOS.5 AND 8 OF THE ASSESSEE ARE ALLOWED IN PART. 2.5. GROUND NO.6 IS N THE ISSUE OF ESTIMATION OF GROSS PROFIT @ 3.03% OF STOCK SHORTAGE ON UNDISCLOSED PURCHASE OF RS.3,68,085/-. AS WE HAVE RESTRICTED THE ADDITION ON ACCOUNT OF UNDISCLOSED PURCHASE, THIS ADDITION B EING CONSEQUENTIAL IN NATURE IS HEREBY RESTRICTED TO RS.1,672/-. 2.6. GROUND NO.7 IS ADDITION MADE ON ACCOUNT OF UNDISCLOSED SOURCES. THERE WAS A SHORTAGE IN STOCK ON THE DATE OF SURVEY AND SUCH SH ORTAGE WAS TREATED AS UNDISCLOSED SALE. IN MY VIEW, THE ADDITION MADE OF THE ENTIRE A MOUNT OF ESTIMATED UNDISCLOSED SALES IS BAD IN LAW. THE AO HAS ESTIMATED THE GROSS PROFIT AT 3.03% OF UNDISCLOSED PURCHASES. APPLYING THE SAME I DIRECT THE AO TO BRI NG TO TAX 3.03% OF RS.12,78,362/- TO TAX AS PROFIT ON UNDISCLOSED SALES. HENCE PROFIT OF RS..38,735/- IS TO BE TAXED. THE BALANCE AMOUNT IS HEREBY DELETED. GROUND NO.7 IS AL LOWED IN PART. 2.7. GROUND NO.9 IS ON THE ISSUE OF LEVYING OF I NTEREST. THIS IS CONSEQUENTIAL IN NATURE. GROUND NO.10 IS GENERAL IN NATURE. ITA NO.747/KOL/2016-PRAYAG DUTT SHAW A.Y.2008-09 4 3. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART. O RDER PRONOUNCED IN THE COURT ON 31.10.2017. SD/- [ J.SUDHAKAR REDDY ] ACCOUNTANT MEMBER DATED : 31.10.2017. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1.PRAYAG DUTT SHAW, (PROP. M/S. SHANTOO RAM SHAW), C/O D.J.SHAH & CO., KALYAN BHAWAN, 2, ELGIN ROAD, KOLKATA-700020. 2. I.T.O., WARD-47(4), KOLKATA. 3. C.I.T.(A)- 14, KOLKATA 4. C.I.T-16, KOLKAT A 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, ITAT KOLKATA BENCHES