ITO, Ward-46(1), Kolkata, Kolkata V. Anupam Nandi, Howrah

ITA 774/KOL/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4064 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 22-09-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 15-05-2012
• Court: TRIBUNAL
• Keywords: Gift
• Section: 133(6); 80G; 131; 68

Judgement Text

ITA NO.774/KOL/2012 SHRI ANUPAM NANDI A.Y.2007-08 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SRI ABY T.VARKEY, JM & SHRI M.BAL AGANESH, AM ] I.T.A NO.774/KOL/2012 ASSESSMENT YEAR : 2007-0 8 I.T.O., WARD-46(1) -VS.- SHRI ANUPAM NA NDI KOLKATA KOLKATA [PAN : ABIPN 4303 N] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : MD.GHAYAS UDDIN, JCIT ,SR.DR FOR THE RESPONDENT : SHRI MIRAJ D.SHAH, AR DATE OF HEARING : 15.12.2016. DATE OF PRONOUNCEMENT : 23.12.2016. ORDER PER ABY T.VARKEY, JM THIS IS AN APPEAL PREFERRED BY THE REVENUE AGAINST THE ORDER OF CIT(A)- XXX, KOLKATA DATED 31.01.2012 FOR AY 2007-08. 2. GROUND NO.1 TO 3 HAVE BEEN RAISED BY THE RE VENUE AGAINST THE DELETION OF ADDITION OF RS.1,52,00,082/- MADE BY THE LD. AO U/S 28(IV) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE AS NOTED BY THE A O IS THAT THE ASSESSEE HAS SHOWN HIS CAPITAL AS ON 31.03.2007 AT RS.2,35,07,705/- AS AGAINST THE CAPITAL OF RS.14,33,285/- AS ON 31.03.2006. THE AO ASKED THE A SSESSEE TO EXPLAIN THE HUGE INCREASE IN CAPITAL AS CORRESPONDING INCOME HAS NOT BEEN SHOWN IN A.Y.2007-08. THE ASSESSEE WHILE EXPLAINING HOW THE CAPITAL HAS I NCREASED, ADMITTED THAT THERE WAS MISTAKE IN THE BALANCE SHEET FILED ORIGINALLY A ND SO THE ASSESSEE DULY FILED AUDITED RECONCILIATION STATEMENT BEFORE THE AO. THE ASSESSEES EXPLANATION REGARDING INCREASE IN CAPITAL WAS ATTRIBUTABLE TO I NHERITANCE OF ASSETS WHICH CONSISTS OF LAND AND BUILDING ( ORIGINAL COST RS.25 ,000/- AND REVALUED COST AT ITA NO.774/KOL/2012 SHRI ANUPAM NANDI A.Y.2007-08 2 RS.14.5 LAKHS) AND GOLD ORNAMENT WHICH WERE PAWNED AND PLEDGED OF 27,927 GMS RECEIVED BY THE ASSESSEE FROM HIS GRAND FATHER SHRI KHAGENDRA NATH.NANDI WAS NOT BELIEVED BY THE LD. AO. THE ASSESSEE EXPLAINED BEFO RE THE AO THAT ON 11.07.1997 HIS GRAND FATHER SHRI KHAGENDRA NATH .NANDI EXPIRED LEAVING BEHIND HIS ASSETS IN FAVOUR OF THE ASSESSEE. IT WAS BROUGHT TO THE KNOWL EDGE OF THE AO THAT THE LATE GRAND FATHER WAS AN INCOME TAX RETURNEE AND WAS IN THE BUSINESS OF MONEY LENDING AND USED TO LENT MONEY ON THE BASIS OF GOLD JEWELLE RY BEING PLEDGED BEFORE HIM AS A SECURITY AND WHEN HE DIED THERE WAS 27,927.170 GM S OF GOLD ORNAMENTS WHICH WERE PLEDGED GOLD IN THE MONEY LENDING BUSINESS WAS TRANSFERRED TO THE ASSESSEE WHO TOOK OVER THE BUSINESS OF MONEY LENDING BUSINES S AFTER THE DEMISE OF HIS GRAND-FATHER. IN ORDER TO PROVE THAT THE ASSESSEE I NHERITED THE BUSINESS OF MONEY- LENDING FROM THE LATE GRAND FATHER, THE ASSESSEE PR ODUCED A COPY OF THE NOTARISED AFFIDAVIT WHICH WAS SWORN BY THE UNCLES OF THE ASSE SSEE AND FATHER OF THE ASSESSEE, IN WHICH IT WAS STATED THAT ACCORDING TO THE WISH O F THE LATE GRAND FATHER THE MONEY LENDING BUSINESS AND THE PAWN GOLD WEIGHING 27,975 GMS WHICH WAS IN THE POSSESSION OF THE LATE GRAND FATHER AS PLEDGED GOLD IN THE MONEY LENDING BUSINESS WAS TRANSFERRED TO THE ASSESSEE FOR DOING BUSINESS. THUS THE ASSESSEE EXPLAINED TO THE AO THAT PLEDGED GOLD WHICH WAS REVALUED AND THE LAND AND BUILDING GOT FROM HIS GRAND-FATHER INCREASED THE CAPITAL OF THE ASSES SEE IN THE YEAR UNDER CONSIDERATION, WHICH WAS NOT FULLY ACCEPTED BY THE AO. THE AO BELIEVED THAT THE LAND AND BUILDING WAS BEQUEATHED BY THE ASSESSEE W HICH WAS SUPPORTED BY A REGISTERED GIFT DEED (ORIGINAL COST OF RS.25,000/- AND REVALUED COST AT RS.14.5 LAKHS) AND THE AO ACCEPTED THE FACT THE LATE GRAND FATHER OF THE ASSESSEE WAS AN INCOME TAX ASSESSEE, HOWEVER ACCORDING TO THE AO IT WAS DIFFICULT TO ACCEPT THAT GOLD WEIGHING 27,909 GMS (28 KGS) CAME TO THE ASSES SEE FROM HIS LATE GRAND FATHER. AFTER THE AO STATING THAT IT WAS DIFFICULT TO ACCEPT THAT THE 28 KG OF GOLD CAME TO THE ASSESSEE FROM LATE GRAND FATHER, THE AO IN HIS ORDER AT PAGE-4 OF HIS ORDER CURIOUSLY TAKES AN ABOUT-TURN AND STATES AS B ELOW:- ITA NO.774/KOL/2012 SHRI ANUPAM NANDI A.Y.2007-08 3 EVEN ASSUMING (BUT NOT ADMITTING) THAT THE GRANDFA THER HAD AN ACCUMULATED STOCK OF PAWN ORNAMENTS WEIGHING 27.909 KGS WHICH DEVOLV ED TO THE ASSESSEE, THE FACT WOULD REMAIN THAT SUCH GOLD COULD NOT HAVE BELONGED TO THE ASSESSEE. THE OWNERSHIP WOULD NORMALLY LIE WITH THE BORROWERS OF THE MONEY WHO WOULD HAVE PLEDGED SUCH GOLD TO BE KEPT IN THE CUSTODY OF THE ASSESSEE AND THE ASSESSEE WAS MERELY A CUSTODIAN. IT IS HOWEVER WELL KNOWN IN PAW N BROKING BUSINESS THAT MORE OFTEN THAN NOT, THE BORROWERS WHO LEAVE BEHIND GOLD WITH THE LENDERS DID NOT COME BACK TO RETRIEVE THEIR GOLD AND THE MONEYLENDERS EN JOY SUCH GOLD THROUGH FORFEITURE AND SUCH GOLD BECOMES THEIR OWN ASSETS. IN THE PRESENT CASE, EVEN WITHOUT GOING TO THE DEBATE ON THE FACTUALITY AND THE LEGALITY TO DECIDE THE ISSUE AS TO WHETHER THE PAWN GOLD COULD BE TREATED AS FORFEI TED ASSETS, BY HIS OWN CONDUCT, THE ASSESSEE HAS ESTABLISHED THAT HE HAD INDEED DER IVED THE BENEFIT OF FORFEITURE OF THE PAWN GOLD AND HAS TREATED SUCH GOLD AS A PART O F HIS OWN CAPITAL AS ON 01.04.2006. ON ADMISSION OF THE ASSESSEE, THE GOLD OF 27.909 KG HAD GOT ACCUMULATED IN THE HANDS OF HIS LATE GRANDFATHER WH O WAS CARRYING ON BUSINESS OR PAWN BROKING SINCE INDEPENDENCE OF INDIA. THEREFORE , ON A PREPONDERANCE OF PROBABILITY, IT IS ALMOST CERTAIN THAT SUCH ACCUMUL ATED GOLD DID NOT HAVE ANY CLAIMANT AND WOULD CONSTITUTE FORFEITED GOLD. HOWEVER, IT WAS NOT PROPER TO TREAT SUCH FORFEITURE TO BE A BENEFIT DERIVED BY THE LENDER (ASSESSEE) TILL 01.04.2006, WHEN FINALLY HE TOOK THE GOLD STOCK AS A PART OF HIS OWN CAPITAL. IN VIEW OF THE ABOVE, I HOLD THAT BY FORFEITING THE ALLEGED PAWN GOLD OF 27.909 KGS AND TREATING IT AS A PART OF HIS OWN CAPITAL AS ON 01.04.2006, THE ASSESSEE HAS DERIVED THE BENEFIT OF ITS OWNERSHIP W HICH AROSE FROM HIS BUSINESS AND THE BENEFIT IS CLEARLY CONVERTIBLE MONEY. THE V ALUE OF SUCH BENEFIT AS ON 01.04.2006, AS COMPUTED BY ASSESSEE HIMSELF IS RS.1 ,52,00,082/- WHICH HAS TO BE ASSESSED AS ASSESSEES INCOME ARISING ON 01.04.2006 I.E. FOR THE A/Y 2007-08 U/S 28(IV) OF THE IT ACT, 1961. THEREFORE, THIS WILL BE ADDED TO THE INCOME RETURNED BY THE ASSESEE. ITA NO.774/KOL/2012 SHRI ANUPAM NANDI A.Y.2007-08 4 4. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL B EFORE LD.CIT(A) AND CONTENDED THAT THE ENTIRE CONFUSION IN RESPECT TO THE INCREAS E IN CAPITAL WAS CAUSED DUE TO CERTAIN MISTAKES COMMITTED BY THE AUDITOR BECAUSE O F OVER-SIGHT AND THAT IN THE INSTANT ASSESSMENT YEAR, THE ASSESSEE DEVIATED FROM THE BENGALI CONVERSION SINGLE ENTRY SYSTEM TO THE ENGLISH DOUBLE ENTRY SYSTEMS, S O THE ASSETS WHICH HE GOT FROM HIS LATE GRAND FATHER WAS NOT REFLECTED IN THE PREV IOUS ASSESSMENT YEAR. THE LD. CIT(A) HAVING TAKING NOTE OF THE FACT THAT THE LATE GRAND FATHER OF THE ASSESSEE SHRI KHAGENDRA NATH.NANDI WAS AN INCOME TAX ASSESSEE AND DIED IN 1997 AND TAKING NOTE OF THE AUDITED STATEMENT OF ACCOUNTS OF THE SA ID LATE SHRI KHAGENDRA NATH.NANDI FOR THE YEAR ENDING 31.03.1997 ALONG WIT H THE NOTES OF ACCOUNT SPECIFYING THE FACT OF PLEDGED GOLD WEIGHING 927.17 0 GMS AND ALSO TAKING NOTE INTO ACCOUNT THE PHYSICAL VERIFICATION REPORT DATED 7.5.1997 OF M/S. P.C.ASSOCIATES, CHARTERED ACCOUNTANT REGARDING PLED GED STOCK OF GOLD/JEWELLERY AS ON 31.03.1997 CERTIFYING THAT THE GOLD WEIGHING 27,927.17 GMS OF STOCK OF GOLD WAS IN FACT PLEDGED AND KEPT IN THE CUSTODY OF LATE GRAND FATHER AS ON 31.3.1997. THE LD. CIT(A) ALSO TOOK NOTE OF THE COPY OF THE PL EDGE STOCK REGISTER OF LATE SHRI KHAGENDRA NATH NANDI FOR THE YEAR 1996-97, 1997-98 AND 1998-99 THEREIN THE CONTINUITY OF THE PLEDGED ITEMS AND SUBSEQUENT RELE ASE OF SOME ITEMS BACK TO BORROWERS. THE LD.CIT(A ) ALSO TOOK NOTE OF THE STA TEMENT SHOWING RELEASE OF PLEDGED GOLD FOR THE A.Y.1997-98 AND 1998-99 WHICH FACT WAS CORROBORATED IN THE REMAND REPORT WHEREIN, SIX PERSONS WHO HAVE TAKEN BACK THE PLEDGED GOLD CONFIRMED BEFORE THE AO THE FACT OF REDEMPTION BACK OF THE PLEDGED GOLD. THE LD.CIT(A) ALSO TOOK NOTE OF THE FACT THAT SCRUTINY ASSESSMENT ORDERS HAS BEEN PASSED IN THE CASE OF THE ASSESSEE FOR A.Y.2001-02, 2002-03 AND 2003-04. THE LD. CIT(A) ALSO TOOK NOTE OF THE FACT THAT THE ASSESSEE IS THE GRAND SON OF LATE SHRI KHAGENDRA NATH NANDI. THE ASSESSEES FATHER AND TWO OF HIS BROTHERS WERE IN FACT COULD HAVE INHERITED THE PROPERTY LEFT BY LATE SHRI KHAGENDRA NATH NANDI. HE TOOK NOTE OF THE FACT THAT THE FATHER OF THE ASSESSEE AN D HIS TWO BROTHERS OF THE FATHER HAD BY AN AFFIDAVIT WHICH HAS BEEN NOTARISED HAS CATEGO RICALLY STATED THAT THEY ARE ITA NO.774/KOL/2012 SHRI ANUPAM NANDI A.Y.2007-08 5 WAIVING THEIR SHARE OF INHERITANCE IN THE BUSINESS OF ALL ASSETS AND LIABILITIES INCLUDING PLEDGED GOLD WEIGHING 27,909.070 GMS IN F AVOUR OF THE ASSESSEE. THE LD.CIT(A) AFTER TAKING NOTE OF THE REMAND REPORT AN D DISCUSSING THE LAW ON PLEDGED ITEMS DEMOLISHED THE THEORY OF THE AO THAT IN THE M ONEY LENDING BUSINESS IF THE PLEDGER OF THE GOLD DOES NOT TAKE BACK THE GOLD PL EDGED THEN IT IS FORFEITED TO THE PLEDGEE/MONEY LENDER IN THIS CASE TO THE ASSESSEE H AS BEEN FOUND TO BE ON A TOTALLY WRONG BASIS BOTH ON FACTS AND LAW. THE LD. CIT(A) A FTER DISCUSSING THE CASE LAWS HAS HELD THAT THE PLEDGED ITEM CAN BE CLAIMED BY TH E PLEDGOR ANY TIME AND THE PLEDGEE (MONEY LENDER) HAS TO GIVE BACK THE PLEDGED ITEM AFTER COLLECTING THE DUES. AND IN ANY CASE IF THE PLEDGER IS NOT ABLE TO RETRI EVE THE GOLD BY REMITTING THE AMOUNT AS AGREED UPON THEN THE ASSESSEE MONEY LENDE R HAS TO GIVE NOTICE TO THE PLEDGOR ABOUT THE SALE OF PAWNED ITEMS AND THAT DU RING THE AUCTION THE PLEDGEE (MONEY LENDER) CANNOT EVEN BUY THE PLEDGED ITEMS. B ASED ON THE AFORESAID FACTS THE LD. CIT(A) AGREED TO THE EXPLANATION GIVEN BY T HE ASSESSEE THAT THE ASSESSEE CANNOT BE TERMED AS THE OWNER OF THE PAWNED GOLD WH ICH GOT TRANSFERRED TO THE ASSESSEE FROM HIS GRAND FATHER AND THE SAME IS A CO NTINGENT LIABILITY AND CANNOT BE TAXED IN A.Y.2007-08 AND ORDERED DELETION OF THE AD DITION. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E RECORDS. THE WHOLE CONTROVERSY IS THAT DURING THE ASSESSMENT PROCEEDIN GS THE AO OBSERVED THAT THE ASSESSEE HAS SHOWN IN HIS OWN CAPITAL AS ON 31.03.2 007 AT RS.2,35,09,705/- AS AGAINST THE CAPITAL OF RS.14,33,285/- AS ON 31.03.2 006. THE ASSESSEE PURSUANT TO THE NOTICE ISSUED BY THE AO TO EXPLAIN THE INCREASE IN THE CAPITAL, THE ASSESSEE EXPLAINED THAT UNTIL 31.03.2006 THE ACCOUNTS OF TH E ASSESSEE WERE MAINTAINED IN BENGALI CONVERSION SINGLE ENTRY SYSTEM AND IN THE INSTANT YEAR THE ASSESSEE SWITCHED ON TO ENGLISH DOUBLE ENTRY SYSTEM WHEREIN AS-28 AND AS-29 OF THE ACCOUNTING SYSTEM WAS FOLLOWED. IT WAS POINTED OUT THAT THERE WAS A MISTAKE ON THE PART OF THE AUDITOR WHO HAD ADMITTED THE SAME. THE DESCRIPTION OF THE GOLD ITEMS AS INHERITED STOCK IN THE BALANCE SHEET WAS NOT CORRECT BECAUSE THESE ARE THE ITA NO.774/KOL/2012 SHRI ANUPAM NANDI A.Y.2007-08 6 VERY SAME GOLD ITEMS WHICH HAVE BEEN PAWNED BEFORE THE LATE GRAND FATHER AND LATER ON TRANSFERRED TO HIM AFTER THE DEMISE OF GRA ND FATHER AND THE SAID GOLD IS APPEARING IN THE PLEDGED STOCK REGISTER MAINTAINED DURING THE BUSINESS OF THE LATE GRAND FATHER SHRI KHAGENDRA NATH NANDI OF THE ASSES SEE. THE AUDITOR CLARIFIED THAT THE PLEDGED ITEMS WERE REVALUED AND WRONG DESCRIPTI ON OF THE ITEMS AS INHERITED STOCK OF GOLD WAS A WRONG DESCRIPTION. IT WAS ALSO CLARIFIED BY THE AUDITOR THAT HE OMITTED TO MENTION THAT THE CAPITAL INCLUDES CONTIN GENT LIABILITY TO THE EXTENT OF REVALUED PLEDGED ITEMS AND AS PER THE PROPER ACCOUN TING STANDARDS THE PLEDGED ITEM SHOULD HAVE BEEN SHOWN AS CONTINGENT ASSET AND CORRESPONDING ENTRY ON THE LIABILITY SIDE OUGHT TO HAVE BEEN MADE AS PER AS-28 AND AS-29 LAID BY THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA WHICH WA S NOT ACCEPTED BY THE AO WHO WAS OF THE OPINION THOUGH IT WAS DIFFICULT TO BELIE VE THAT GOLD WAS INHERITED BY THE ASSESSEE FROM LATE GRAND FATHER, THEREAFTER, THOUGH HE RIGHTLY NOTED THAT THE OWNERSHIP OF THE PLEDGED GOLD IS THAT OF THE BORROW ERS, HE WENT ON TO HOLD THAT IF THE BORROWERS DOES NOT REDEEM THE PAWNED ITEMS, THE N BY VIRTUES OF FORFEITURE, THE GOLD NEED TO BE TREATED AS CAPITAL OF THE ASSESSEE AS ON 01.04.2016. THUS HE HELD THAT THE PLEDGED STOCK OF GOLD OF 27,927.170 GMS A S INCOME ARISING ON 01.04.2006 U/S 28(IV) OF THE ACT. THE LD. CIT(A) TOOK NOTE OF THE FACT THAT THE ASSESSEES GRAND FATHER SHRI KHAGENDRA NATH NANDI WAS INTO MONEY LEN DING BUSINESS SINCE INDEPENDENCE AND HE DIED IN 1997 AND THEREAFTER THE MONEY LENDING BUSINESS WAS CARRIED OUT BY THE ASSESSEE, THE GRAND SON AND THE GOLD/JEWELLERY WEIGHTING 27,927.170 GMS WAS REFLECTED IN THE NOTES OF THE AC COUNT SPECIFYING THE PLEDGED STOCK OF GOLD AS ON 31.03.1997. THIS FACT ACCORDING TO THE LD. CIT(A) HAS BEEN CORROBORATED BY THE PHYSICAL VERIFICATION CARRIED O UT BY M/S. P.C.ASSOCIATES, CHARTERED ACCOUNTANTS REGARDING THE PLEDGED STOCK O F GOLD JEWELLERY AS ON 31.03.1997. THE LD. CIT(A) ALSO TOOK NOTE OF THE F ACT THAT THE ASSESSEE GOT THE MONEY LENDING LICENCE ON 21.11.1997 AND THE LD. CIT (A) HAS GONE THROUGH THE STOCK REGISTER OF THE PLEDGED AND RELEASED ITEMS FR OM 1997 ONWARDS AND FOUND THAT IT CONTAINED THE ENTIRE LIST OF PARTIES WHO HAD PLE DGED JEWELLERY FOR AVAILING LOANS ITA NO.774/KOL/2012 SHRI ANUPAM NANDI A.Y.2007-08 7 AND THE BORROWERS WHO HAVE REDEEMED THE PLEDGED GOL D ALSO. THEREAFTER THE LD. CIT(A) AFTER TAKING NOTE OF THE AFFIDAVIT WHICH WAS NOTARISED BY ASSESSEES FATHER AND 2 UNCLES (I.E. TWO BROTHERS OF THE FATHER) WHO HAVE WAIVED THEIR SHARE OF INHERITANCE IN THE BUSINESS WITH ALL ITS ASSETS AND LIABILITIES INCLUDING THAT OF THE PLEDGED GOLD/JEWELLERIES WEIGHING 27,909.070 GMS NO TED THAT THE ASSESSEE WAS RUNNING THE MONEY LENDING BUSINESS AFTER THE DEATH OF HIS GRANDFATHER AND WAS HAVING THE PLEDGED STOCK OF 27,927.170 GMS AS ON 31 .03.1997 ONWARDS. THE LD. CIT(A) TOOK NOTE OF THE FACT THAT IN THE REMAND REP ORT THE AO HAS CONFIRMED FROM SIX BORROWERS WHO HAD REDEEMED THE PLEDGED GOLD FRO M THE ASSESSEE. THE LD. CIT(A) HAS NOT AGREED WITH THE AOS CONCLUSION THAT THE GOLD WHICH HAS NOT BEEN REDEEMED BY THE BORROWERS BECOMES FORFEITED ASSET O F THE ASSESSEE. THE LD. CIT(A) HAS OBSERVED THAT THE ASSESSEE COULD NOT HAV E FORFEITED THE PAWNED ITEMS AND IN ANY CASE HE CANNOT OWN THE SAME. THE LD. CIT (A) HAS TAKEN NOTE THAT THE ENTIRE CONTROVERSY HAS STARTED BECAUSE IN THE YEAR UNDER CONSIDERATION THE ASSESSEE CHANGED FROM THE SINGLE ENTRY SYSTEM TO DOUBLE ENTR Y SYSTEM AND THE PLEDGED GOLD WAS WRONGLY SHOWN AS INHERITED CAPITAL IN THE BALAN CE SHEET AND WHICH WAS IN FACT A CONTINGENT LIABILITY THE LD. CIT(A) HAS TAKEN NO TE OF THE AUDITORS CLARIFICATION THAT THE DESCRIPTION OF THE INHERITED STOCK OF GOL D AS CAPITAL WAS WRONG WHEN THE FACT WAS THAT THE PLEDGED GOLD WAS A CONTINGENT LIA BILITY. THE AUDITOR CLARIFIED THAT THE CAPITAL INCLUDES THE CONTINGENT LIABILITY OF TH E REVALUED PLEDGED ITEMS AND CORRESPONDING ENTRY ON THE LIABILITY SIDE AS CONTIN GENT LIABILITY AS PER AS 28 AND 29 WAS NOT PROPERLY MADE AND SO THE CONFUSION HAPPENED . THE LD.CIT(A) AFTER APPRECIATING THE FACT THE ASSESSEES GRAND FATHER S HRI KHAGENDRA NATH NANDI HAVE BEEN IN THE MONEY LENDING BUSINESS AND AFTER HIS DE MISE IN 1997 THE ASSESSEES FATHER AND HIS TWO BROTHERS HAVE WAIVED THEIR SHARE OF INHERITANCE AND THE MONEY LENDING BUSINESS TO THE ASSESSEE AND THE ASSESSEE G OT THE LICENCE FOR MONEY LENDING BUSINESS AND THE PLEDGED GOLD WHICH HAS BEEN REVALU ED IN 2007 WAS THE VERY SAME PLEDGED GOLD WHICH HAS BEEN BROUGHT FORWARD FROM 19 97 ONWARDS AND WHICH FACT HAS BEEN CORROBORATED BY THE STOCK REGISTERS FROM A LL THE PLEDGED ITEMS FROM 1996- ITA NO.774/KOL/2012 SHRI ANUPAM NANDI A.Y.2007-08 8 97 ONWARDS. BASED ON THESE FACTS THE LD. CIT(A) HAS DELETED THE ADDITION. THE IMPUGNED FINDINGS OF THE LD. CIT(A) CANNOT BE TERME D BY US AS PERVERSE BECAUSE THE LD. CIT(A) HAS COME TO THE CONCLUSION BASED ON EVIDENCE ON RECORD WHICH HAS BEEN PERUSED BY US. THE WHOLE CONTROVERSY AS EXPLAI NED BY THE LD. AR WAS DUE TO THE ASSESSEE CHANGING IN THE ASSESSMENT YEAR UNDER CONSIDERATION FROM THE BENGALI CONVERSION SINGLE ENTRY SYSTEM TO THE ENGLISH DOUBL E ENTRY SYSTEM AND ERRONEOUSLY THE AUDITOR HAS SHOWN THE PLEDGED GOLD IN THE BALA NCE SHEET AS CAPITAL WHICH WAS IN FACT THE CONTINGENT LIABILITY. IN ORDER TO PRO VE THAT THE AUDITORS MISTAKE CREATED THE WRONG DESCRIPTION OF THE PLEDGED GOLD, THE LD. CIT(A) HAS REPRODUCED THE ADMISSION IN THIS RESPECT OF THE AUDITOR IN THE IMP UGNED ORDER OF THE LD. CIT(A) IN PAGES 26 AND 27. THE QUESTION WHETHER THE ASSESSEE IS INTO THE MONEY LENDING BUSINESS HAS ALSO BEEN PROVED BY THE ASSESSEE BY PR ODUCING THE MONEY LENDING LICENCE WHICH IS ANNEXED AT PAGE 19 OF THE PAPER BO OK AND WE NOTE THAT LICENCE FOR MONEY LENDING WAS GRANTED TO THE ASSESSEE DATED 21. 11.1997. THE ASSESSEES GRAND FATHER SHRI KHAGENDRA NATH NANDI WAS INTO THE BUSIN ESS OF MONEY LENDING ON THE BASIS OF THE GOLD PLEDGE AS SECURITY IS PROVED BY T HE INCOME TAX RETURNS FILED BY THE SAID SHRI KHAGENDRA NATH NANDI AND ALSO FROM THE PL EDGED STOCK REGISTER OF SHRI KHAGHENDRA NATH NANDI FOR THE YEAR 1996-97 AND 1997 -98 WHICH SHOWS THE PLEDGED ITEMS AND SUBSEQUENT RELEASE OF THE SAME WH ICH ARE ANNEXED AT PAGES 55 TO 145 OF THE PAPER BOOK. ON PERUSAL OF THE AUDITE D STATEMENT OF SHRI KHAGENDRA NATH NANDI FOR THE YEAR ENDED 31.03.1997 WHICH IS P LACED AT PAGE 49 AND PERUSAL OF NOTES ON ACCOUNTS REVEALS THE FACT OF STOCK OF G OLD OF 27,927.170 GMS AS ON THAT DATE. THIS FACT HAS BEEN CORROBORATED BY THE CHART ERED ACCOUNTANTS M/S. PC ASSOCIATES WHO HAVE PHYSICALLY VERIFIED THE STOCK HAS GIVEN A CERTIFICATE DATED 7.5.1997 WHICH IS PLACED AT PAGE 50 OF THE PAPER BO OK AND LIST OF GOLD STOCK WHICH IS PLACED FROM 51 TO 54 OF THE PAPER BOOK WHEREIN T HE PRODUCTS, NUMBER OF ITEMS, WEIGHT IN GRAMS HAVE BEEN ENUMERATED. THE LD. AR TO OK OUR ATTENTION FROM PAGES 55 TO 145 OF HIS PAPER BOOK WHICH IS THE PLEDGED S TOCK REGISTER OF LATE SHRI KHAGENDRA NATH NANDI FOR THE YEAR 1996-97, 1997-98 WHICH SHOWS THE CONTINUITY ITA NO.774/KOL/2012 SHRI ANUPAM NANDI A.Y.2007-08 9 OF PLEDGED ITEMS AND SUBSEQUENT REDEMPTION/RELEASE OF SOME OF THE ITEMS BACK TO THE BORROWERS. THE LD. AR TOOK OUR ATTENTION TO THE STATEMENT SHOWING RELEASE OF THE PLEDGED STOCK OF GOLD FOR THE YEAR 1997-98, 1 997-98 AND 1998-99 WHICH ARE PLACED AT PAGES 146 TO 163 OF THE PAPER BOOK. THE L D. AR TOOK OUR ATTENTION THE FACT THAT AFTER THE DEATH OF THE GRAND FATHER THE B USINESS OF MONEY LENDING WAS BEING RUN BY THE ASSESSEE FROM HIS FATHER THAT HE HAD TAKEN THE MONEY LENDING LICENCE ON 21.11.1997 AND THE AFFIDAVIT OF THE LEGA L HEIRS OF SHRI KHAGENDRA NATH NANDI DATED 08.08.2016 WHICH IS PLACED AT PAGES 46 TO 47 OF THE PAPER BOOK WHICH HAS BEEN NOTARIZED. THE LEGAL HEIRS OF THE GRAND F ATHER OF THE ASSESSEE I.E. THE THREE SONS OF LATE SHRI KHAGENDRA NATH NANDI WHO IS ASSES SEES FATHER AND HIS TWO BROTHERS OF THE FATHER OF THE ASSESSEE HAVE SWORN T HE AFFIDAVIT THAT THEY HAVE WAIVED THEIR SHARE OF INHERITANCE IN THE BUSINESS W ITH ALL ITS ASSETS AND LIABILITIES INCLUDING PLEDGED GOLD/JEWELLERIES WEIGHING 27,909. 070 GMS IN FAVOUR OF THE ASSESSEE. WE TAKE NOTE FROM PAGE NOS. 46 AND 4 7 OF THE PAPER BOOK THE AFFIDAVIT AND SO THE IDENTITY NEED NOT BE DISBELIEVED BECAUSE THE AFFIDAVIT HAS BEEN SWORN BEFORE A NOTARY PUBLIC BY THE LEGAL HEIRS OF THE LA TE SHRI KHAGENDRA NATH NANDI. SO THE FACT THAT LATE SHRI KHAGENDRA NATH NANDI EXPIR ED IN 1997 LEAVING BEHIND STOCK OF GOLD OF 27,909.170 GMS WHICH IS DULY REFLECTED I N THE STOCK REGISTER MAINTAINED IN RESPECT TO THE PLEDGED ITEMS OF GOLD HAVE BEEN T RANSFERRED TO THE ASSESSEE TO CONTINUE THE BUSINESS OF MONEY LENDING FROM 1997 ON WARDS AND THEREAFTER WITH THE AFORESAID DOCUMENTS THAT HAS BEEN PRODUCED BEFORE U S THE ASSESSEE WAS ABLE TO ESTABLISH THAT HE HAD 27,927.17GMS OF GOLD IN 1997 WHICH WAS DULY REFLECTED IN THE NOTES FORMING PART OF BALANCE SHEET AS ON 31.03 .2009 ( PAGE 48 AND 49 OF PB) . THEREAFTER WE FIND THAT THE STOCK REGISTER WAS MAIN TAINED CONTINUOUSLY FROM 1997 ONWARDS. THE LD AR, TOOK OUR ATTENTION TO PAGE 22, WHICH IS THE BALANCE SHEET AS ON 31.03.2009 AND WE NOTE THAT THE MONEY LENDED WAS TO THE TUNE OF RS 5,14,857 AND INORDER TO CORROBORRATE THE FIGURES THE LD AR T OOK OUR ATTENTION TO PAGE 146 TO 163 OF THE PB, WHICH ARE THE PLEDGED STOCK REGISTER , WHEREIN WE NOTE THE ENTIRE NAMES OF THE BORROWERS WITH ADDRESS ,DATE , WEIGHT OF GOLD AND AMOUNT LENDED IS ITA NO.774/KOL/2012 SHRI ANUPAM NANDI A.Y.2007-08 1 0 REFLECTED AND WE TAKE NOTE THAT OPENING BALANCE OF GOLD IS 27.927 GMS AND ON 31.03.1999 THE CLOSING STOCK OF GOLD PAWNED WAS 31, 183 GMS AND RS.5,14 ,897/- WAS LENDED BY THE ASSESSEE, WHICH MATCHES WITH THE FIGURES SHOWN IN THE BALANCE SHEET AS ON 31.03.1999 AT PAGE 22 OF THE PAPER BOOK . THUS WE NOTE THAT THE PAWNED JEWELLERY STOCK OF 31,183GMS AS ON 31.3.1999 WAS REDUCED TO APPROX 28 KGMS AS NOTED BY AO AS ON 31.3.2007 PURSUANT TO VAR IOUS REDEMPTIONS THAT HAD HAPPENDED DURING THE PERIOD FROM 1999 TO 2007. THE ASSESSEE DURING THE FINANCIAL YEAR 2006-07 THOUGHT IT FIT MERELY TO REVALUE THE S AID ALREADY ACCOUNTED JEWELLERY AND GIVE THE EFFECT OF REVALUED PORTION OF THE JEWE LLERY TO THE TUNE OF RS.1.52 CRORES AND INCLUDED THE SAME IN THE JEWELLERY ACCOU NT ON ASSETS SIDE AND CORRESPONDING CREDIT TO HIS CAPITAL ACCOUNT. THIS I S MERELY A BOOK ENTRY PASSED BY THE ASSESSEE TO GIVE EFFECT TO THE REVALUATION OF T HE JEWELLERY WHICH WAS ALREADY DISCLOSED IN THE BALANCE SHEET. HENCE IN ANY CASE T HERE IS NO CASE MADE BY THE AO FOR FRAMING AN ADDITION U/S 28 (IV) OF THE ACT. THE ASSESSEE WAS ABLE TO EXPLAIN WITH THE EVIDENCE OF THE AUDITOR WHO HAS ADMITTED T O HAVE MADE MISTAKES IN DESCRIBING THE GOLD PLEDGED AS CAPITAL OF THE ASSES SEE , WHEREAS, IN THE EYES OF LAW IT IS A CONTINGENT LIABILITY AND SINCE THE ERROR HA S BEEN CORRECTED BY AUDITED RECONCILIATION STATEMENT BEFORE THE AO AT THE VERY FIRST INSTANCE ITSELF, WE DO NOTFIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD . CIT(A) IN DIRECTING THE DELETION OF THE ADDITION MADE BY THE AO U/S 28(IV) OF THE AC T. THEREFORE WE CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THE GROUND OF A PPEAL RAISED BY THE REVENUE ON THIS ISSUE. 6. THE LAST ISSUE TO BE DECIDED IN THE APPEAL OF TH E REVENUE IS AS TO WHETHER THE LD CITA IS JUSTIFIED IN DELETING THE ADDITION IN THE S UM OF RS. 49,50,000/- MADE U/S 68 OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD AO OBSERVED THAT IN THE MONEY LENDING BUSINESS, THE ASSESSEE SHOWED DEPOSIT FROM CUSTOMER S AMOUNTING TO RS. ITA NO.774/KOL/2012 SHRI ANUPAM NANDI A.Y.2007-08 1 1 49,50,000/-. THE ASSESSEE WAS ASKED TO FURNISH THE LIST OF CUSTOMERS. THE ASSESSEE FURNISHED A LIST OF CUSTOMERS ALONG WITH H IS LETTER DATED 13.7.2009, WHEREIN THE ASSESSEE REPLIED THAT HE HAD TAKEN ADVA NCE FROM ANAL KANTI DEY FOR RS. 27,50,000/- AND MT GOUTAM PAL FOR RS. 22,00,000 /-. THE LD AO OBSERVED THAT THE ASSESSEE DID NOT MENTION THE DATE OF RECEIPT OF THESE ADVANCES IN HIS REPLY. NOTICE U/S 133(6) OF THE ACT WAS ISSUED BY THE LD A O TO MR ANAL KANTI DEY AND MR GOUTAM PAL ON 20.7.2009. IN RESPONSE TO THE SAI D NOTICE, MR ANAL KANTI DEY REPKIED AND STATED THAT HE HAD GIVEN ADVANCE TO ASS ESSEE OF RS. 27,50,000/- AND THROUGH MR GOUTAM PAL OF RS. 22,00,000/- . HE ALSO FAILED TO FURNISH THE DATE AND MODE OF PAYMENT OF MONIES TO THE ASSESSEE. THE AS SESSEE WHEN CONFRONTED WITH TH SAME STATED THAT THE PARTY HAD GIVEN THIS MONEY TOWARDS ADVANCE FOR PURCHASE OF GOLD. THE LD AO ISSUED SUMMONS U/S 131 OF THE ACT TO MR ANAL KANTI DEY FOR PERSONAL APPEARANCE ALONG WITH BOOKS OF ACCOUNTS, B ANK STATEMENTS AND DOCUMENTS OF ADVANCE GIVEN TO THE ASSESSEE BUT HE F AILED TO APPEAR BEFORE THE LD AO. HE SENT A LETTER IN RESPONSE TO SUMMONS U/S 1 31 OF THE ACT . THE LD AO FURTHER ISSUED A LETTER TO MR ANAL KANTI DEY ON 16. 11.2009 CALLING FOR CERTAIN DETAILS. IN RESPONSE TO THE SAID LETTER, MR ANAL KA NTI DEY REPLIED THAT THE AMOUNT WAS GIVEN PRIOR TO 1.4.2002 AND THE SAME IS BROUGHT FORWARD FROM 1.4.2002 AND OUTSTANDING AS ON 31.3.2007 AND THAT NO INTEREST WA S RECEIVED BY HIM FROM THE ASSESSEE ON THE SAID AMOUNTS. THE LD AO MADE VERI FICATION OF THE INCOME TAX RETURNS OF THE ASSESSEE FOR THE ASST YEARS 2001-02 , 2002-03 , 2003-04 AND 2006- 07 AND OBSERVED THAT NO ADVANCE WAS STATED TO HAVE BEEN SHOWN BY THE ASSESSEEE IN HIS RETURNS OF INCOME. THE LD AO OBSERVED THAT THE ASSESSEE SHOWED / REFLECTED THE ADVANCE FROM CUSTOMERS ONLY IN THE FINANCIAL YE AR 2006-07 RELEVANT TO ASST YEAR 2007-08. THE LD AO CONCLUDED THAT THE IF THE EXPLANATION OF THE ASSESSEE IS ACCEPTED THEN IT IS TO BE HELD THAT THERE WAS AN AG REEMENT BETWEEN THE ASSESSEE AND MR ANAL KANTI DEY FOR RATE OF SALE OF GOLD AND BECA USE THE PRICE OF GOLD IS GRADUALLY INCREASING ON THE HIGHER SIDE, NATURALLY NO BUSINESS WOULD LIKE TO MAKE HIS INVESTMENT REMAIN IDLE. HENCE IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE OF ITA NO.774/KOL/2012 SHRI ANUPAM NANDI A.Y.2007-08 1 2 ADVANCE TO ESTABLISH THE GENUINENESS OF TRANSACTION , THE LD AO ADDED THE ADVANCE AMOUNT OF RS. 49,50,000/- AS UNEXPLAINED CASH CREDI T U/S 68 OF THE ACT. 8. THE LD CITA APPRECIATED THE VARIOUS CONTENTIONS OF THE ASSESSEE TOGETHER WITH THE EVIDENCES SUBMITTED BEFORE HIM IN THE PAPER BOO K AND HELD THAT NO ADDITION U/S 68 OF THE ACT COULD BE MADE IN THE YEAR UNDER APPEA L IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND ACCORDINGLY DELETED T HE ADDITION. AGGRIEVED , THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GRO UND:- 4. THAT THE LD.CIT(A) HAS ERRED IN FACTS AND CIRCU MSTANCES OF THE CASE BY ALLOWING RELIEF RS.49,50,000/- TO THE ASSESSEE THOUGH IN THE ASSESSMENT STAGE AS WELL AS IN REMAND STAGE, SRI ANAL KANTI DEY WAS SPECIFICALLY A SKED TO PROVIDE DETAILS OF HIS TRANSACTION (I.E. DATE AND MODE OF TRANSACTION) WIT H THE APPELLANT AND THE SAID PERSON AS WELL AS THE APPELLANT ASSESSEE FAILED TO DISCHARGE THE ONUS NOT ONLY TO PROVE THE GENUINENESS OF THE TRANSACTION BUT ALSO F AILED TO PROVIDE ALL RELEVANT PARTICULARS IN THIS REGARD. 9. THE LD DR APART FROM REITERATING THE FINDINGS OF THE LD AO STATED THAT THE ASSESSEE IS ENGAGED ONLY IN MONEY LENDING BUSINESS AND NOT IN THE PURCHASE AND SALE OF JEWELLERY BUSINESS. WHETHER THE ASSESSEE HAD SUFFICIENT STOCKS OF JEWELLERY IN HIS BOOKS TO SUBSTANTIATE THE RECEIPT OF ADVANCE FOR SALE OF GOLD ITSELF IS IN DOUBT AND NOT PROVED BY HIM. THE CREDITWOR THINESS OF THE CREDITOR AND GENUINENESS OF TRANSACTION WAS NOT PROVED BY THE AS SESSEE. HE ARGUED THAT HENCE THE PROVISIONS OF SECTION 68 OF THE ACT HAD BEEN RI GHTLY INVOKED BY THE LD AO IN THE INSTANT CASE. HE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS CIT REPORTED IN 214 ITR 80 1 (SC) IN SUPPORT OF HIS CONTENTIONS. THE LD ALSO PLACED RELIANCE ON THE D ECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ROSHAN DI HATTI VS CIT REPORTE D IN (1977) 107 ITR 938 (SC), 10. IN RESPONSE TO THIS, THE LD AR ARGUED THAT T HE DEPOSITS OF RS. 49,50,000/- IN THE BOOKS OF THE ASSESSEE HAS BEEN DULY CONFIRMED B Y MR ANAL KANTI DEY AND HENCE NO ADDITION IS CALLED FOR IN THIS REGARD. WI TH REGARD TO THE NON-APPEARANCE OF THESE ADVANCES FROM CUSTOMERS IN THE BOOKS OF TH E ASSESSEE PRIOR TO FINANCIAL ITA NO.774/KOL/2012 SHRI ANUPAM NANDI A.Y.2007-08 1 3 YEAR 2006-07, HE ARGUED THAT THE ASSESSEE WAS NOT M AINTAINING DOUBLE ENTRY SYSTEM OF ACCOUNTING AND THERE WAS NO PROPER BALANCE SHEE T SHOWING THE FULL ASSETS AND LIABILITIES FOR THE PAST YEARS THAT COULD BE PREPAR ED. HE STATED THAT THE ENTRIES IN THE BOOKS WERE RECORDED ON SINGLE ENTRY SYSTEM IN THE P AST. DURING THE FINANCIAL YEAR 2006-07, THE ASSESSEE THOUGHT IT FIT TO CONVERT FRO M SINGLE ENTRY SYSTEM TO DOUBLE ENTRY SYTEM AND ACCORDINGLY BROUGHT ALL THE ENTRIES FROM THE PAST INTO THE BOOKS OF ACCOUNTS IN THE FINANCIAL YEAR 2006-07 RELEVANT TO ASST YEAR 2007-08. THAT DOES NOT MAKE AUTOMATICALLY FRESH CREDITS FOUND CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE SO AS TO ATTRACT THE PROVISIONS OF SECTION 68 OF THE ACT. HE ARGUED THAT THE ADVANCE FROM CUSTOMER WAS VERY OLD ENTRY AND BR OUGHT FORWARD FROM EARLIER YEARS WHICH HAS ALSO BEEN RIGHTLY CONFIRMED BY MR A NAL KANTI DEY. HE ALSO ARGUED THAT THESE ADVANCES WERE REFLECTED IN THE SI NGLE ENTRY METHOD OF ACCOUNTING IN THE PAST IN THE YEAR OF RECEIPT AND INCOME TAX S CRUTINY ASSESSMENTS WERE COMPLETED ACCORDINGLY FOR ASST YEARS 2001-02 , 2002 -03 & 2003-04 BASED ON THE SAID BOOKS OF ACCOUNTS FINDING THAT THE ADVANCE REC EIVED WERE SATISFACTORILY EXPLAINED IN THE ASSESSMENT. HE ARGUED THAT THE SUBJECT MENTIONED ADVANCE FROM CUSTOMERS HAD NOT ENTERED EITHER THE CASH BOOK OR T HE BANK BOOK OF THE ASSESSEE DURING THE FINANCIAL YEAR 2006-07. THE LD AO ALSO HAD NOT DISPUTED THIS ASPECT. WHILE THAT IS SO, HOW THE PROVISIONS OF SECTION 68 OF THE ACT COULD BE INVOKED IN AS MUCH AS THE SAID SECTION STARTS WITH THE PHRASE WHERE ANY SUM FOUND CREDITED IN THE BOOKS . HE ARGUED THAT THE EXPRESSION SU M MENTIONED IN SECTION 68 OF THE ACT MEANS ONLY SUM OF MONEY AND NOT OTHERWISE , IN SUPPORT OF WHICH HE PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF H.H.SRI RAMA VERMA VS CIT REPORTED IN (1991) 187 IT R 308 (SC) WHEREIN IT WAS HELD :- THE USE OF THE EXPRESSION ANY SUMS PAID CONTEMPLA TES PAYMENT OF AN AMOUNT OF MONEY . ONE OF THE DICTIONARY MEANINGS OF THE EXPRESSION SUM MEANS ANY INDEFINITE AMOUNT OF MONEY. IN THE CONTE XT IN WHICH EXPRESSION SUMS PAID BY THE ASSESSEE HAS BEEN USED MAKE THE LEGISLATIVE INTENT CLEAR THAT IT REFERS TO AMOUNT OF MONEY PAID BY THE ASSES SEE AS DONATION . THE ITA NO.774/KOL/2012 SHRI ANUPAM NANDI A.Y.2007-08 1 4 PLAIN MEANING OF THE WORDS USED IN THE SECTION DOES NOT CONTEMPLATE DONATIONS IN KIND. DONATIONS MAY BE MADE BY SUPPLY ING GOODS OF VARIOUS KINDS INCLUDING BUILDING, VEHICLE OR ANY OTHER TANG IBLE PROPERTY BUT SUCH DONATIONS, THOUGH CONVERTIBLE IN TERMS OF MONEY, DO NOT FALL WITHIN THE SCOPE OF S. 80G(2)(A) ENTITLING AN ASSESSEE TO DEDU CTION. DONATION OF SHARES OF A COMPANY DOES NOT AMOUNT TO PAYMENT OF ANY SUM OR AMOUNT THOUGH THE SHARES, ON THEIR SALE, MAY BE CONVERTED INTO MONEY. BUT THE DONATION SO MADE DOES NOT FALL WITHIN THE AMBIT OF THE AFORESAI D SECTION. SINCE THE EXPRESSION AND LANGUAGE USED IN S. 80G(2)(A) IS PLA IN AND CLEAR, IT IS NOT OPEN TO THE COURTS TO ENLARGE THE SCOPE BY ITS INTE RPRETATIVE PROCESS FOUNDED ON THE BASIS OF THE OBJECT AND PURPOSE UNDERLYING T HE PROVISION FOR GRANTING RELIEF TO AN ASSESSEE. HE ACCORDINGLY ARGUED THAT WHEN NO PHYSICAL SUM OF MONEY WAS RECEIVED IN THE FINANCIAL YEAR 2006-07 FROM MR ANAL KANTI DEY, THE PROVISIONS OF SECTION 68 OF THE ACT CANNOT BE INVOKED. HE ALSO REFERRED TO PAG E3 OF PAPER BOOK ; PAGES 10 & 11 OF PAPER BOOK IN POINT NO. 3 & 6 WHEREIN THE ASS ESSEE HAD CLEARLY DISCLOSED IN THE NOTES ON ACCOUNTS FOR THE YEAR ENDED 31.3.2006 FILED TOGETHER WITH THE BALANCE SHEET AS UNDER:- 3. ACCOUNTS WERE MAINTAINED IN BENGALI CONVERSION S INGLE ENTRY SYSTEM. IT IS NECESSARY TO CONVERT IN TO ENGLISH CONVERSION DO UBLE ENTRY SYSTEM AND ACCORDINGLY EFFECTED TO IN THE ACCOUNTS. ACCOUNTS IS DRAWN UP IN ACCORDANCE WITH I.TAX RETURN MADE TIME TO TIME FOR WHICH EXTRA TAX IS NOT LIABLE FOR CONVERTING SINGLE ENTRY SYSTEM TO DOUBLE ENTRY SYSTEM. 6. BALANCE CREDITORS /DEPOSIT OF RS. 49,50,000/- WA S RECEIVED LONG BACK FROM SRI ANAL KANTI DEY (RS. 27,50,000/- DIRECTLY A ND RS. 22,00,000/- THROUGH SRI GOUTAM PAL) FOR PURCHASING OF GOLD & JE WELLERY. HE ARGUED THAT FROM THE ABOVE, IT WOULD BE CLEAR TH AT THE ADVANCE WAS RECEIVED FROM MR ANAL KANTI DEY IN THE EARLIER YEARS AND TH E SAME HAS BEEN BROUGHT ON RECORD IN THE REGULAR BOOKS OF ACCOUNTS IN THE FINA NCIAL YEAR 2006-07 WITHOUT HAVING ANY IMPACT ON CASH FLOW FOR THE YEAR. HENCE NO ADDITION U/S 68 OF THE ACT COULD BE MADE IN THE FACTS OF THE INSTANT CASE. ITA NO.774/KOL/2012 SHRI ANUPAM NANDI A.Y.2007-08 1 5 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE RELEVANT PAGES OF THE PAPER BO OK FILED BY THE ASSESSEE IN THIS REGARD. WE FIND THAT AT THE OUTSET, THAT THE ASSES SEE HAS BEEN MAINTAINING ACCOUNTS IN BENGALI CONVERSION SINGLE ENTRY SYSTEM AND THE S AME WERE DULY CONVERTED INTO ENGLISH DOUBLE ENTRY SYSTEM DURING THE FINANCIAL YE AR 2006-07 RELEVANT TO ASST YEAR 2007-08. THE LD AR ARGUED THAT THE ADVANCES F ROM MR ANAL KANTI DEY HAD BEEN RECEIVED PRIOR TO 1.4.2002 WHICH FACT HAS BEEN DULY CONFIRMED BY HIM ALSO IN THE REPLY LETTER FILED BY HIM BEFORE THE LD AO IN R ESPONSE TO NOTICE U/S 133(6) OF THE ACT AND PROCEEDINGS THEREAFTER. THIS IS FURTHE R RATIFIED BY THE FACT THAT THE ASSESSEE HAD DULY RECORDED THE RECEIPT OF ADVANCES FROM MR ANAL KANTI DEY IN HIS USUAL STYLE OF BENGALI CONVERSION SINGLE ENTRY SYST EM OF ACCOUNTING AND INCOME TAX RETURNS FILED BASED ON THOSE ACCOUNTS HAVE BEEN DULY SUBJECTED TO SCRUTINY ASSESSMENTS IN ASST YEARS 2001-02 , 2002-03 & 2003- 04 BY THE LD AO. THESE FACTS ARE NOT CONTROVERTED BY THE REVENUE BEFORE US . HENCE THE FACT OF NON- RECEIPT OF ADVANCES IN THE SUM OF RS. 49,50,000/- RECEIVED FROM MR ANAL KANTI DEY DURING THE FINANCIAL YEAR 2006-07 RELEVANT TO ASST YEAR 2007-08 STANDS VERY CLEARLY ESTABLISHED. THE ONLY BASIS FOR THE REVENU E TO INVOKE THE PROVISIONS OF SECTION 68 OF THE ACT IN RESPECT OF SUCH ADVANCE IN THE SUM OF RS. 49,50,000/- IS THAT THE ASSESSEE HAD SOUGHT TO REFLECT THE SAID EN TRY IN THE BOOKS OF ACCOUNTS FOR THE FINANCIAL YEAR 2006-07 RELEVANT TO ASST YEAR 20 07-08 FOR THE FIRST TIME. THIS HAD BEEN PROPERLY EXPLAINED BY THE ASSESSEE THAT IT HAD CONVERTED ITS BENGALI CONVERSION SINGLE ENTRY SYSTEM TO ENGLISH DOUBLE EN TRY SYSTEM DURING THE YEAR UNDER APPEAL AND THIS FACT HAS ALSO BEEN DULY MENTI ONED IN THE NOTES ON ACCOUNTS FILED ALONG WITH THE BALANCE SHEET IN THE RETURN OF INCOME. SO IT IS MERELY BY BOOK ENTRY OF BRINGING THE ADVANCE FROM CUSTOMERS I NTO THE BOOKS OF ACCOUNTS OF THE ASSESSEE, THE LD AO IS SEEKING TO TAX THE SAME BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. IT IS WELL SETTLED BY THE D ECISION OF THE HONBLE SUPREME COURT IN 187 ITR 308 (SC) RELIED UPON BY THE LD AR THAT THE EXPRESSION SUM MEANS SUM OF MONEY ONLY . THOUGH THIS DECISION W AS RENDERED IN THE CONTEXT OF ITA NO.774/KOL/2012 SHRI ANUPAM NANDI A.Y.2007-08 1 6 APPLICABILITY OF DEDUCTION U/S 80G OF THE ACT FOR D ONATIONS GIVEN IN KIND, THE PRINCIPLE LAID DOWN AND OBSERVATIONS MADE BY THE HO NBLE SUPREME COURT AS REITERATED SUPRA WOULD BE BINDING AND ANALOGY DRAWN THEREON COULD BE APPLIED TO PROVISIONS OF SECTION 68 OF THE ACT ALSO. IT IS N OT IN DISPUTE THAT THERE WAS NO PHYSICAL RECEIPT OF ANY MONEY IN CASH OR BY CHEQUE DURING THE FINANCIAL YEAR 2006- 07 RELEVANT TO ASST YEAR 2007-08 FROM MR ANAL KANTI DEY TOWARDS ADVANCE FOR PURCHASE OF GOLD. HENCE WE HOLD THAT THE PROVISION S OF SECTION 68 OF THE ACT AS RIGHTLY CONTENDED BY THE LD AR COULD NOT BE INVOKED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE DECISIO N RELIED UPON BY THE LD DR IN THE CASE OF ROSHAN DI HATTI VS CIT SUPRA IS NOT APP LICABLE TO THE FACTS OF THE INSTANT CASE AS IT ONLY HELD THAT WHEN THE NATURE A ND SOURCE OF CREDIT IS NOT PROPERLY EXPLAINED BY THE ASSESSEE, THEN THE SAME COULD BE T AXED U/S 68 OF THE ACT. THE ISSUE AS TO WHETHER THE SAID CREDIT IS IN THE FORM OF SUM OF MONEY OR NOT WAS NOT THE DISPUTE OR THE QUESTION BEFORE THE HONBLE SUPR EME COURT. WE FIND FROM THE FACTS BEFORE THE HONBLE SUPREME COURT IN THAT CASE , THAT THE ASSESSEE THEREON WAS CARRYING ON JEWELLERY BUSINESS IN LAHORE AND HAD MI GRATED TO INDIA IN JUNE 1947 AND HAD BROUGHT THE VALUE OF GOLD AND OTHER JEWELL ERY FROM THE SAID BUSINESS INTO INDIA AND REFLECTED THE SAME IN HIS BALANCE SHEET. THE DOCUMENTARY EVIDENCES IN THAT CASE PROVED THE EXISTENCE OF THAT ASSESSEE CAR RYING ON JEWELLERY BUSINESS IN LAHORE PRIOR TO MIGRATION TO INDIA AND HENCE IT WAS HELD THAT THE VALUE OF THOSE ASSETS (IRRESPECTIVE OF IT GETTING TAXED IN LAHORE OR NOT) THAT WERE BROUGHT INTO INDIA CANNOT BE ADDED U/S 68 OF THE ACT. HENCE WE HOLD THAT THE DECISION RELIED UPON BY THE LD DR DOES NOT ADVANCE THE CASE OF THE REVENUE. IT IS ALSO NOT IN DISPUTE THAT THERE WAS NO PHYSICAL INFLOW OF MONEY EITHER IN CASH OR BY CHEQUE IN RESPECT OF ADVANCE RECEIVED FROM MR ANAL KANTI DEY DURING THE FINANCIAL YEAR 2006-07. TO SUPPORT THIS, MR ANAL KANTI DEY HAD CO NFIRMED TO THE LD AO IN MORE THAN ONE OCCASION THAT THE SAID ADVANCES WERE PAID PRIOR TO 1.4.2002 AND WERE OUTSTANDING AS ON 31.3.2007 WITH THE ASSESSEE. GIV EN THIS FACT AND THE UNDISPUTED FACT THAT THE ASSESSEE WAS MAINTAINING ACCOUNTS UND ER BENGALI CONVERSION SINGLE ITA NO.774/KOL/2012 SHRI ANUPAM NANDI A.Y.2007-08 1 7 ENTRY SYSTEM UPTO ASST YEAR 2006-07 (I.E IMMEDIATEL Y PRECEDING PREVIOUS YEAR) AND GIVEN THE FACT THAT THE SAME WERE DULY CONVERTE D INTO ENGLISH DOUBLE ENTRY SYSTEM DURING THE FINANCIAL YEAR 2006-07 RELEVANT T O ASST YEAR 2007-08 WHEREIN THESE ENTRIES TOGETHER WITH OTHER ENTRIES WERE REFL ECTED IN THE BOOKS , WE ARE PERSUADED TO BELIEVE THE VERSION OF THE ASSESSEE IN THIS REGARD. RESPECTFULLY FOLLOWING THE HONBLE SUPREME COURTS DECISION IN 1 87 ITR 308 (SC) SUPRA , WE HOLD THAT THE PROVISIONS OF SECTION 68 OF THE ACT C ANNOT BE INVOKED IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LD CITA HAD RIGHT LY DELETED THE ADDITION IN THIS REGARD. HENCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CITA. ACCORDINGLY, THE GROUND NO. 2 RAISED BY THE REVENUE IS DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE COURT ON 23.12.2016. SD/- SD/- [M.BALAGANESH] [ ABY T.VARKEY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 23.12.2016. [RG PS] ORDER PRONOUNCED BY SD/- SD/- SSVR(JM) WA(AM) COPY OF THE ORDER FORWARDED TO: 1.SHRI ANUPAM NANDI, PROP OF : ABIR JEWELLERS, BAGN AN STATION ROAD (NORTH), BAGNAN, HOWRAH-711303. 2. I.T.O., WARD-46(1), KOLKATA. 3..CIT(A)-XXX, KOLKATA 4. CIT XVI, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES ITA NO.774/KOL/2012 SHRI ANUPAM NANDI A.Y.2007-08 1 8