M/s Kishan Nagori (HUF), Kolkata V. I.T.O.,Ward-29(4), Kolkata

ITA 759/KOL/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1062 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 12-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUCHETA CHATTOPADHYAY
• Assessee Lawyers: S M SURANA
• Keywords: Bogus purchase; Unexplained investment; Unexplained expenditure; Search and seizure
• Section: 69C; 201; 148

Judgement Text

ITA NO. 759/KOL/2019 ASSESSMENT YEAR: 2010-2011 M/S. KISHAN NAGORI (HUF) 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) I.T.A. NO. 759/KOL/2019 ASSESSMENT YEAR: 2010-2011 M/S. KISHAN NAGORI (HUF)........................... .............................APPELLANT 15/2C, CHETLA ROAD, KAMAL KUNJ, KOLKATA-700027 [PAN: AAGHK8142K] -VS.- INCOME TAX OFFICER,................................ ...................................RESPONDENT WARD-29(4), KOLKATA, AAYAKAR BHAWAN DAKSHIN, 2, GARIAHAT ROAD, KOLKATA-700 068 APPEARANCES BY: SHRI S.M. SURANA, ADVOCATE, FOR THE APPELLANT SMT. SUCHETA CHATTOPADHYAY, ADDL.CIT, SR. D.R , FOR THE RESPONDEN T DATE OF CONCLUDING THE HEARING : SEPTEMBER 11, 201 9 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 11, 2019 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-11, KOLKATA DA TED 28.01.2019 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE ADDITION OF RS.3,01,300/- MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF THE ALLEGED BOGUS PURCHASE OF DIAMOND BY TREATING THE SAME AS UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE IN COME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L. ON THE BASIS OF INFORMATION IN HIS POSSESSION THAT THE ASSESSEE WAS A BENEFICIARY OF ACCOMMODATION ENTRY INVOLVING PURCHASE OF DIAMOND T O THE TUNE OF RS.3,01,300/-, A NOTICE UNDER SECTION 148 OF THE AC T WAS ISSUED BY THE ASSESSING OFFICER FOR THE YEAR UNDER CONSIDERATION. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE DID NOT FILE THE RETURN O F INCOME. DURING THE ITA NO. 759/KOL/2019 ASSESSMENT YEAR: 2010-2011 M/S. KISHAN NAGORI (HUF) 2 COURSE OF ASSESSMENT PROCEEDINGS, IT WAS EXPLAINED BY THE ASSESSEE THAT THE PURCHASE OF DIAMOND MADE FROM M/S. NAYAN GEMS W AS GENUINE. A COPY OF THE BILL FOR THE SAID PURCHASE WAS ALSO FUR NISHED BY THE ASSESSEE. AS PER THE INFORMATION IN THE POSSESSION OF THE ASS ESSING OFFICER, THE SAID PURCHASE, HOWEVER, WAS BOGUS AS REVEALED DURING THE COURSE OF SEARCH AND SEIZURE ACTION CONDUCTED IN THE CASE OF SANJOY CHOWDHURY GROUP AND SINCE THE ASSESSEE WAS ONE OF THE BENEFICIARY OF TH E ACCOMMODATION ENTRY RECEIVED FOR THE BOGUS PURCHASE OF DIAMOND TO THE T UNE OF RS.3,01,300/-, HE MADE AN ADDITION OF RS.3,01,300/- TO THE TOTAL I NCOME OF THE ASSESSEE IN THE ASSESSMENT COMPLETED UNDER SECTION 147/144 O F THE ACT VIDE AN ORDER DATED 19.10.2015. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 147/144, AN APPEAL WAS PREFERRED BY THE ASSESSEE BE FORE THE LD. CIT(APPEALS) AND SINCE THE SUBMISSION MADE BY THE A SSESSEE IN SUPPORT OF HIS CASE ON THE ISSUE UNDER CONSIDERATION WAS NO T FOUND ACCEPTABLE BY HIM, THE LD. CIT(APPEALS) CONFIRMED THE ADDITION MA DE BY THE ASSESSING OFFICER, INTER ALIA, FOR THE FOLLOWING REASONS GIVE N IN PARAGRAPH NO. 5.8 TO 5.11 OF HIS IMPUGNED ORDER:- 5.8. ONCE IT HAS BEEN ESTABLISHED THAT BILL ISSUED FOR PURCHASE OF DIAMOND BY NAYAN GEMS WAS BOGUS AND FAK E AND THAT THERE WAS NO PHYSICAL DELIVERY OF DIAMOND BECA USE THE SAID NAYAN GEMS NEVER DEALT IN PHYSICAL SALE OR PUR CHASE OF DIAMOND, AND ONCE IT WAS ALSO ESTABLISHED THAT IN L IEU OF CHEQUE ISSUED BY DESIRING PARTIES SAID NAYAN GEMS O R SRI SANJOY CHOWDHURY CONFESSED OF HAVING RETURNED CASH TO THE ISSUER OF CHEQUE, THE ENTIRE FACADE OF PURCHASE OF DIAMOND COMES CRUMBLING DOWN. 5.9. THE NEXT QUESTION RAISED BY THE A.R IS THAT SI NCE THE DIAMOND IN QUESTION HAS BEEN SHOWN AS ASSET IN THE BALANCE SHEET AND SINCE THE APPELLANT HAS NOT CLAIMED ANY D EDUCTION FOR PURCHASE OF THE SAME, THE LD. A.O COULD NOT HAV E MADE ADDITION ON THAT ACCOUNT. THE ARGUMENT HAS BEEN CAR EFULLY CONSIDERED. IT IS A FACT THAT-THE APPELLANT HAS CLA IMED CERTAIN PURCHASES FOR WHICH THE EXPLANATION OFFERED BY IT HAS NOT BEEN FOUND TO BE CORRECT. THE APPELLANT HAS INC URRED EXPENDITURE FOR PURCHASE OF DIAMOND WHICH HAS ALSO NOT BEEN PROPERLY EXPLAINED. THE THEORY OF PAYMENT MADE BY A /C PAYEE CHEQUE IS FOUND WANTING IN VIEW OF ACCEPTANCE BY THE ITA NO. 759/KOL/2019 ASSESSMENT YEAR: 2010-2011 M/S. KISHAN NAGORI (HUF) 3 RECEIVER AND CHEQUES OF THE FACT THAT IN LIEU OF A/ C PAYEE CHEQUE, HE USED TO RETURN CASH TO THE ISSUR OF CHEQ UES. THEREFORE, IN ESSENCE, THE APPELLANT HAS NOT SPENT THE AMOUNT RECORDED ON ITS CHEQUE, TOWARDS PURCHASE OF DIAMOND IN QUESTION. HENCE, THE CLAIM OF PURCHASE O F DIAMOND IS BOGUS. THE APPELLANT, AS IS EVIDENT FROM THE ABOVE QUOTED STATEMENT OF SHRI SANJAY CHOUDHARY, AP PEARS TO HAVE PURCHASED DIAMOND FROM A FOREIGN PARTY FOR WHICH PAYMENTS HAVE BEEN MADE THROUGH UNACCOUNTED SOURCES . THE BILL AND THE PAYMENT BY CHEQUE HAS BEEN PUT UP TO L END A FACE OF GENUINENESS TO THE TRANSACTION. 5.10 THE SAID DIAMOND, IF AT ALL PURCHASED, WAS PUR CHASED FROM A SOURCE WHICH WAS NOT DISCLOSED BY THE APPELL ANT AND THE EFFORT TO OBTAIN THE ABOVE REFERRED BILL WAS ON LY AIMED AT REGULARISING AND UNEXPLAINED EXPENDITURE TOWARDS PU RCHASE OF DIAMOND BY ARRANGING PAYMENT THROUGH A/C PAYEE C HEQUE FOR WHICH CASH OF EQUIVALENT AMOUNT WAS RECEIVED BY THE APPELLANT. THUS, THE AMOUNT SPENT BY THE APPELLANT ON THE PURCHASE OF DIAMONDS RECORDED IN ITS BOOKS HAVE NOT BEEN EXPLAINED SATISFACTORILY. 5.11. IN VIEW OF THE ABOVE DISCUSSED FACTS, THE LD. A.O. IS DIRECTED TO ADD RS.3,01,000/- TO THE TAXABLE INCOME OF THE APPELLANT AS UNEXPLAINED EXPENDITURE FOR PURCHASE O F DIAMOND WITHIN THE MEANING OF SECTION 69C OF THE AC T. THE ADDITION MADE BY THE AO IS UPHELD AND THE APPEAL IS DISMISSED. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS SUBMITTED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(APPEALS) AS WELL AS BEF ORE THE TRIBUNAL, THE PURCHASE OF DIAMOND TREATED TO BE BOGUS WAS NEVER C LAIMED BY THE ASSESSEE AS DEDUCTIBLE EXPENDITURE AND, THEREFORE, THE AMOUNT OF SUCH PURCHASE CANNOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE EVEN IF IT IS FOUND TO BE BOGUS. THE PURCHASE OF DIAMOND WAS TREA TED BY THE ASSESSEE AS HIS INVESTMENT AND THE SAME WAS DULY REFLECTED I N THE BALANCE-SHEET OF THE ASSESSEE AS DEMONSTRATED BY HIS LD. COUNSEL AT THE TIME OF HEARING BEFORE THE TRIBUNAL. THE AMOUNT AGAINST THE SAID PU RCHASE WAS ALSO PAID BY THE ASSESSEE BY AN ACCOUNT PAYEE CHEQUE THROUGH HIS DISCLOSED BANK ITA NO. 759/KOL/2019 ASSESSMENT YEAR: 2010-2011 M/S. KISHAN NAGORI (HUF) 4 ACCOUNT AND IT IS BEYOND ANY COMPREHENSION TO TREAT THE SAME AS UNEXPLAINED INVESTMENT OF THE ASSESSEE MUCH LESS AN UNEXPLAINED EXPENDIUTRE UNDER SECTION 69C. THE SOURCE OF THE AM OUNT UTILIZED FOR MAKING PURCHASE OF DIAMOND WAS DULY EXPLAINED AND D ISCLOSED BY THE ASSESSEE AND THE REASONS GIVEN BY THE LD. CIT(APPEA LS) TO TREAT THE SAME AS UNEXPLAINED EXPENDITURE UNDER SECTION 69C, IN MY OPINION, IS NOTHING BUT A FIGMENT OF IMAGINATION. AT THE TIME OF HEARIN G BEFORE THE TRIBUNAL, EVEN THE LD. D.R. HAS FAILED TO POINT OUT ANY SPECI FIC PROVISION UNDER WHICH THE IMPUGNED ADDITION CAN VALIDLY BE MADE TO THE TOTAL INCOME OF THE ASSESSEE. KEEPING IN VIEW ALL THE FACTS AND CIR CUMSTANCES OF THE CASE, I DELETE THE ADDITION MADE BY THE ASSESSING OFFICER A ND CONFIRMED BY THE LD. CIT(APPEALS) ON THE ISSUE UNDER CONSIDERATION A ND ALLOW THIS APPEAL OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 11, 2019. SD/- (P.M. JAGTAP) VICE-PRESIDENT (KOLKATA ZONE) KOLKATA, THE 11 TH DAY OF SEPTEMBER, 2019 COPIES TO : (1) M/S. KISHAN NAGORI (HUF), 15/2C, CHETLA ROAD, KAMAL KUNJ, KOLKATA-700027 (2) INCOME TAX OFFICER, WARD-29(4), KOLKATA, AAYAKAR BHAWAN DAKSHIN, 2, GARIAHAT ROAD, KOLKATA-700 068 (3) COMMISSIONER OF INCOME TAX (APPEALS)-11, KOLK ATA, (4) COMMISSIONER OF INCOME TAX, KOLKATA- , KOLKATA; (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.