ACIT, Circle - 39, Kolkata, Kolkata V. M/s. Frisco Stores, Kolkata

ITA 790/KOL/2011

• Counselvise Citation: 79023514 RSA 2011
• Duration Of Justice: 4 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 23-05-2011
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA PRASAD
• Keywords: Unexplained cash credit; Unexplained investment; Opportunity of being heard; Commercial expediency
• Section: 68; 40A(3)

Judgement Text

ITA NO.79 0/KOL/2011-C-AM M/S. FRISCO STORES. 1 IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, K OLKATA BEFORE : SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 790/KOL/2011 A.Y 2007-08 THE ACIT, CIR-39, KOLKATA VS. M/S. FRISCO STO RES PAN:AAAFF 5020F (APPELLANT) (RESPONDENT) FOR THE APPELLANT/DEPARTMENT: SHRI RAJENDRA PRAS AD, JCIT, SR.DR FOR THE RESPONDENT : NONE APPEARED DATE OF HEARING: 17-11-2015 DATE OF PRONOUNCEMENT: 24 -11-2 015 ORDER SHRI M.BALAGANESH, AM THIS APPEAL OF THE REVENUE ARISES OUT OF THE ORD ER OF THE LEARNED CIT(A)-IV, KOLKATA IN APPEAL NO. 225/CIT(A)-IV/09-10 DATED 29-10-2010 FOR THE ASST YEAR 2007- 08 AGAINST THE ORDER OF ASSESSMENT FRAMED U/S 143(3 ) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL BEFORE US :- 1. WHETHER THE LD.CIT(A) ERRED IN ALLOWING ADVANCE S RECEIVED FROM PARTIES TREATING THE SAME AS GENUINE, WHEREAS THE A SSESSEE COULD NOT PRODUCED EVIDENCES REGARDING THE RECEIPTS. 2. WHETHER THE LD.CIT(A) ERRED IN ALLOWING THE ASSE SSEE OF UNEXPLAINED INVESTMENT TREATING THE SAME AS WHEREAS THE ASSESSE E COULD NOT PRODUCED EVIDENCES TO SUBSTANTIATE THE INVESTMENTS. 3. WHETHER THE LD.CIT(A) ERRED IN ALLOWING THE ASS ESSEE OF CASH CREDIT WHEREAS THE REFLECTION OF SAME WAS NOT FOUND IN THE INDIVIDUAL BALANCE SHEET OF THE LOANEE. 4. WHETHER THE LD.CIT(A) ERRED IN ALLOWING THE EXPE NSES OF LOADING & UNLOADING CHARGES WHEREAS THE ASSESSEE COULD NOT PR ODUCE ENTIRE BILLS AND VOUCHERS. ITA NO.79 0/KOL/2011-C-AM M/S. FRISCO STORES. 2 5. WHEREAS THE LD.CIT(A) ERRED IN ALLOWING ENTERTA INMENT EXPENSES WHEREAS ASSESSEE HAS FAILED TO ESTABLISH COMMERCIAL EXPEDIENCY FOR THE EXPENDITURE. 3. THE BRIEF FACTS OF THE CASE IS THAT THE ASSESS EE IS A PARTNERSHIP FIRM AND IS WHOLESALER OF IMFL PRODUCTS AND BEERS. THE LEARNE D AO FOUND THAT A SUM OF RS. 7,20,000/- WAS RECEIVED AS ADVANCE FROM CUSTOMERS B Y THE ASSESSEE (GROUND NO. 1 OF THE REVENUE) ON VARIOUS DATES. THE LEARNED AO FELD THA T THE GENUINENESS, CREDITWORTHINESS AND IDENTITY OF THE PARTIES WERE NOT PROVED BY THE ASSESSEE AND ACCORDINGLY SOUGHT TO BRING THE ADVANCES RECEIVED TO TAX U/S 68 OF THE AC T. ON FIRST APPEAL, THE LEARNED CITA FELT THAT ALL THE DETAILS WERE FILED BY THE ASSESS EE AND ALL THESE ADVANCES WERE SUBSEQUENTLY CONVERTED INTO SALES. ACCORDINGLY TH E LEARNED CITA DELETED THE ADDITION. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 3.1. SIMILARLY, WITH REGARD TO THE TRADE ADVANCES GIVEN BY THE ASSESSEE TO VARIOUS PARTIES WHICH ARE DULY REFLECTED IN THE BOOKS OF ACCOUNTS O F THE ASSESSEE TO THE TUNE OF RS. 7,2,0000/- (GROUND NO. 2 OF THE REVENUE), THE ASSES SEE COULD NOT PRODUCE ANY DETAILS BEFORE THE LEARNED AO DURING THE ASSESSMENT PROCEED INGS. ON FIRST APPEAL, THE LEARNED CITA MERELY GRANTED RELIEF TO THE ASSESSEE ON THE G ROUND THAT ALL THE ADVANCES GIVEN BY THE ASSESSEE HAVE BEEN DULY ACCOUNTED IN THE BOOKS OF THE ASSESSEE AND HENCE NO ADDITION NEEDS TO BE MADE BY THE LEARNED AO. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 3.2. WITH REGARD TO THE LOANS RECEIVED BY THE AS SESSEE TO THE TUNE OF RS. 2,45,000/- FROM D.L.SAHA & N.L.SAHA & ORS (GROUND NO. 3 OF THE REVE NUE), THE LEARNED AO FOUND THAT THE SAID TRANSACTION IS NOT REFLECTED IN THE BALANC E SHEET OF D.L.SAHA AND ACCORDINGLY SOUGHT TO BRING THE SAID RECEIPT OF RS. 2,45,000/- TO TAX AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. ON FIRST APPEAL, THE LEARNED CITA MEREL Y ACCEPTED THE VERSION OF THE ASSESSEE WITHOUT GIVING ANY FINDING IN THIS REGARD. AGGRIEV ED, THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE LEARNED DR. WE FIND THAT THE LEARNED CIT(A) WAS CONVINCED WITH THE EVIDENCES THAT WERE SUBMITTED BEFORE HIM B Y THE ASSESSEE WHICH WERE ADMITTEDLY ITA NO.79 0/KOL/2011-C-AM M/S. FRISCO STORES. 3 NOT BEFORE THE LEARNED AO. TO MEET THE ENDS OF JU STICE, WE FIND IN THE FACTS AND CIRCUMSTANCES, TO SET ASIDE THIS ISSUE TO THE FILE OF THE LEARNED AO TO DECIDE THIS ISSUE AFRESH. THE ASSESSEE IS GIVEN LIBERTY TO FILE COMP LETE DETAILS AND FRESH EVIDENCES, IF ANY, IN SUPPORT OF HIS CONTENTIONS. NEEDLESS TO MENTION TH AT THE ASSESSEE BE GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. ACCORDINGLY, THE GROUND NOS.1, 2 & 3 RAISED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 5. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER DISALLOWANCE U/S 40A(3) OF THE ACT COULD BE MADE IN THE SUM OF RS. 1,30,634 /- BEING 20% OF RS. 6,53,174/- INCURRED TOWARDS LOADING AND UNLOADING CHARGES IN T HE FACTS AND CIRCUMSTANCES OF THE CASE. 5.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE AS SESSEE HAD DEBITED A SUM OF RS. 6,53,174/ - TOWARDS LOADING AND UNLOADING CHARGES IN HIS RETURN BUT COULD NOT PRODUCE THE BILLS / VOUCHERS FOR THE SAME BEFORE THE LEARNED AO. THE AS SESSEE MERELY STATED BEFORE THE LEARNED AO THAT EXPENSES WERE INCURRED TOWARDS PAYM ENTS TO LOCAL LABOURERS FOR LOADING AND UNLOADING OF GOODS AND PROPERLY VOUCHED AND STA TED THAT NO SINGLE PAYMENT EXCEEDING RS. 20,000/- WAS MADE TO ANY PARTY IN A S INGLE DAY AND NO PARTY HAS BEEN PAID BEYOND RS. 50,000/- DURING THE FINANCIAL YEAR SO AS TO COME UNDER THE AMBIT OF TDS PROVISIONS THEREON. THE LEARNED AO NOT SATISFIED WITH THIS REPLY SOUGHT TO DISALLOW A SUM OF RS. 1,30,634/- BEING 20% OF RS. 6,53,174/- U /S 40A(3) OF THE ACT. ON FIRST APPEAL, THE LEARNED CIT(A) HELD THAT THE INCURRENCE OF THIS EXPENDITURE IS INEVITABLE IN THE LINE OF BUSINESS CARRIED ON BY THE ASSESSEE AND ACCORDINGLY GRANTED RELIEF TO THE ASSESSEE. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 5.2. WE HAVE HEARD THE LEARNED DR. WE FIND THAT NO DETAILS WERE EITHER SUBMITTED BEFORE THE LEARNED AO OR BEFORE THE LEARNED CIT(A). WE FIND T HAT THE LEARNED CIT(A) HAD MERELY GRANTED RELIEF BY LOOKING FROM THE PROPRIETY ANGLE OF THE E XPENDITURE. EVEN BEFORE LEARNED CIT(A), NO EVIDENCES AT LEAST IN THE FORM OF SELF MADE VOUCHER S WHICH ARE DULY ACKNOWLEDGED BY THE PAYEES WERE FILED. WE HOLD THAT ASSESSEE BE GIVEN ONE LAST OPPORTUNITY AND HENCE WE FIND IN THE FACTS AND CIRCUMSTANCES, TO SET ASIDE THIS ISSUE TO THE FILE OF THE LEARNED AO IN THE INTEREST OF JUSTICE ITA NO.79 0/KOL/2011-C-AM M/S. FRISCO STORES. 4 AND FAIR PLAY, TO DECIDE THIS ISSUE AFRESH. THE ASSESSEE IS GIVE N LIBERTY TO FILE COMPLETE DETAILS AND FRESH EVIDENCES, IF ANY, IN SUPPORT OF HIS CONTENTIONS. NEEDLESS TO MENTION THAT THE ASSESSEE BE GIVEN A REASONABLE OPPORTUNITY OF B EING HEARD. ACCORDINGLY, THE GROUND NO. 4 RAISED BY THE REVENUE IS ALLOWED FOR STATISTI CAL PURPOSES. 6. THE LAST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER DISALLOWANCE OF ENTERTAINMENT EXPENSES IN THE SUM OF RS. 1,17,920/- COULD BE MADE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 6.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE HAD DEBITED A SUM OF RS. 1,17,920/- TOWARDS ENTERTAINMENT EXPENSES IN HIS RETURN. THE ASSESSEE SUBMITTED THE SUPPORTING DOCUMENTS AND ALSO EXPLAINED THE NECESSITY OF INCUR RING SUCH EXPENSES IN ORDER TO MAINTAIN CORDIAL RELATION FOR RUNNING THE BUSINESS SMOOTHLY. THE LEARNED AO SOUGHT TO DISALLOW THE SAME ON THE GROUND THAT FRINGE BENEFIT TAX WAS NOT SUFFERED ON THE SAME. ON FIRST APPEAL, THE LEARNED CITA HELD THAT THE SAI D EXPENDITURE IS INCURRED ON THE GROUND OF COMMERCIAL EXPEDIENCY MORE SO FOR THE LINE OF AC TIVITY IN WHICH THE ASSESSEE IS ENGAGED AND ACCORDINGLY GRANTED RELIEF TO THE ASSES SEE. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 6.2. WE HAVE HEARD THE LEARNED DR. WE FIND FROM T HE ORDERS OF THE LOWER AUTHORITIES THAT THIS EXPENDITURE HAS TO BE NECESSARILY INCURRE D BY THE ASSESSEE IN ORDER TO HAVE SMOOTH CONDUCT OF HIS BUSINESS AND COMMERCIAL EXPED IENCY THEREON IS ALSO PROVED. HENCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) IN THIS REGARD. ACCORDINGLY, THE GROUND NO. 5 RAISED BY THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 24 /11/2 015 DATED 24 /11/2015 SD/- ( MAHAVIR SINGH, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) ITA NO.79 0/KOL/2011-C-AM M/S. FRISCO STORES. 5 COPY OF THE ORDER FORWARDED TO: 1.. THE APPELLANT :SHRI NAYAN JYOTI NATH, ACIT, CI R-39, 8 TH FL, PODDAR COURT, 18 RABINDRA SARANI, KOL-1. 2 THE RESPONDENT- M/S. FRISCO STORES 235/2 B.B GAN GULY ST, KOL-12 3 4.. THE CIT, THE CIT(A) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR ** PRADIP SPS