Durga Prasad Agarwal, Siliguri V. D.C.I.T CC -XXII,Kolkata, Kolkata

ITA 798/KOL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9526 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-09-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 12-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND AGARWAL
• Keywords: Unexplained investment; Search and seizure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 798 / KOL / 2013 ASSESSMENT YEAR :2010-11 DURGA PRASAD AGARWAL NEHRU ROAD, NR. MOTI MILL, SILIGURI - 734 004 [ PAN NO. ACLPA 2440 B ] V/S . DCIT, CENTRAL CIRCLE- XXII, 110, SHANTIPALLY, .E.M. BYEPASS ROAD, AYAKAR BHAWAN, POORVA, KOLKATA-107 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI ARVIND AGARWAL, ADVOCATE /BY RESPONDENT SHRI G.MALLIKARJUNA, CIT-DR /DATE OF HEARING 16-11-2016 /DATE OF PRONOUNCEMENT 18-01-2017 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER O F COMMISSIONER OF INCOME TAX (APPEALS)-CENTRAL-III, KOLKATA DATED 28. 01.2013. ASSESSMENT WAS FRAMED BY DCIT, CC-XXII, KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER DATED 14.12.2011 FOR ASSESSMENT YEAR 2010-11. SHRI ARVIND AGARWAL, LD. ADVOCATE APPEARED ON BEHAL F OF ASSESSEE AND SHRI G. MALLIKARJUNA, LD. DEPARTMENTAL REPRESENTATIVE AP PEARED ON BEHALF OF REVENUE. ITA NO.798/KOL/2013 A.Y.2010-11 D.P. AGARWAL VS. DCIT CC-XXII, KOL. PAGE 2 2. THE ONLY INTER-CONNECTED ISSUE RAISED BY ASSESSE E IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF ASSESSI NG OFFICER BY SUSTAINING THE DISALLOWANCE OF 8,40,938/- AS UNDISCLOSED INVESTMENT IN THE BUSINE SS OF ASSESSEE. 3. BRIEFLY, THE FACTS ARE THAT THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL AND DERIVED INCOME FROM HOUSE PROPERTY A ND OTHER SOURCE. A SEARCH WAS CONDUCTED AT DIFFERENT RESIDENTIAL AND BUSINESS PREMISES OF BEGRAJ GROUP ON 22.03.2010 AND ON SUBSEQUENT DATES. THE A SSESSEE WAS ONE OF THE SEARCHED PARTY IN THE SEARCH PROCEEDINGS. DURIN G THE COURSE OF SEARCH AND SEIZURE OPERATION, CERTAIN DOCUMENTS WERE INVEN TORIED VIDE IDENTIFICATION MARKED PMB-1 TO PMB-3 SHOWING THE VOUCHERS FOR PURC HASE. THE ASSESSEE HAS CLAIMED THE OWNERSHIP OF THOSE PAPERS AND CALCU LATED UNDISCLOSED PURCHASES FOR RS. 26,69,980/- AND OFFERED FOR TAXES @ 5%. HOWEVER, AO OBSERVED THAT THERE WOULD CERTAIN BE AN ELEMENT OF CAPITAL EMPLOYED IN THE AFORESAID BUSINESS OF ASSESSEE WHICH ALSO NEEDS TO BE BROUGHT UNDER THE TAX NET. ACCORDINGLY THE AO TREATED THE PEAK AMOUNT OF PURCHASE AMOUNTING TO RS.8,40,938/- DATED 17.03.2010 VIDE NO. 34 OF PMB-1 AS UNEXPLAINED INVESTMENT WHICH WAS ADDED TO THE TOTAL INCOME OF A SSESSEE. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHEREAS ASSESSEE SUBMITTED THAT NO RECORD / EVIDENCE WAS FO UND DURING THE COURSE OF SEARCH ON ASSESSEE INDICATING UNDISCLOSED INVESTMEN T IN THE UNDISCLOSED BUSINESS. HOWEVER, LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE DISREGARDED THE PLEA OF ASSESSEE CONFIRMED THE ORDE R OF AO BY OBSERVING AS UNDER:- I HAVE CAREFULLY CONSIDERED THE APPELLANTS ARGUME NTS AND THE ASSESSMENT ORDER. THE APPELLANT HAS CONTENDED THAT HE DID NOT MAKE ALL THE PURCHASE AGAINST SPOT PAYMENTS AND THAT THE PURCHASES WERE BEING MADE ON CREDIT AND THE PAYMENTS WERE MADE AFT ER THE SALE OF GOODS. IN THE SAME VEIN THE APPELLANT ALSO CONTENDE D THAT HIS HARDWARE BUSINESS WAS ORDER BASED AND HE USED TO PURCHASE GO ODS ONLY AFTER RECEIPT OF ORDER FOR THE SAME. IF THE HARDWARE BUSINESS OF THE APPELLANT WAS ORDER BASED, THEN HE WOULD NOT HAVE MADE THE PURCHASES ON REGULAR BASIS. THAT BEING SO, IT ITA NO.798/KOL/2013 A.Y.2010-11 D.P. AGARWAL VS. DCIT CC-XXII, KOL. PAGE 3 IS UNLIKELY THAT HE WOULD BUY ALL THE GOODS ON CRED IT. FURTHER, THE APPELLANT HAS NOT BEEN ABLE TO SHOW THAT IT HAD PUR CHASED ALL THE GOODS ON CREDIT AND THE PAYMENTS FOR THOSE WERE MADE ONLY ON REALIZATION OF THE SALE OF THOSE GOODS. IN THE ABSENCE OF ANY EVID ENCE BROUGHT ON RECORD BY THE APPELLANT TO PROVE HIS CONTENTION THE SAME CANNOT BE ACCEPTED. THEREFORE, IN MY OPINION THE AO HAD RIGHT LY CONSIDERED THE PEAK AMOUNT OF PURCHASES MADE BY THE APPELLANT TO B E APPELLANTS UNDISCLO0SED INVESTMENT IN TRADING BUSINESS. HENCE, THE ADDITION OF RS.8,40,938/- MADE BY THE AO IS CONFIRMED AND THIS GROUND OF APPEAL IS DISMISSED. BEING AGGRIEVED BY THIS, ASSESSEE HAS COME UP IN AP PEAL BEFORE US. 5. BEFORE US LD. AR FOR THE ASSESSEE FILED WRITTEN SUBMISSION AND STATED THAT ASSESSEE HAS ALREADY MADE DISCLOSURE FOR RS.11 ,38,288/- IN ITS DISCLOSURE PETITION MADE U/S. 132(4) OF THE ACT AND THE AMOUNT OF PROFIT @ 5% ON THE UNDISCLOSED BUSINESS OF ASSESSEE HAS ALREADY BEEN O FFERED TO TAX. AS SUCH, THERE IS NO REQUIREMENT TO ADD ANY AMOUNT IN THE NA ME OF UNDISCLOSED INVESTMENT. ON THE OTHER HAND, LD. DR FOR THE REVENUE VEHEMENTL Y RELIED ON THE ORDER OF AUTHORITIES BELOW AND HE LEFT THE ISSUE TO THE DISC RETION OF THE BENCH. 6. WE HAVE GONE THROUGH THE SUBMISSIONS MADE BY BOT H THE PARTIES AND ORDER OF THE LOWER AUTHORITIES AS WELL AS PERUSED T HE MATERIALS AVAILABLE ON RECORD. IN THE PRESENT CASE THE ASSESSEE HAS SHOWN UNDISCLOSED PURCHASE OF RS. 26,69,980.00 AND ON THE SAME UNDISCLOSED PROFIT @ OF 5% WAS OFFERED TO THE TAX. SUBSEQUENTLY THE ISSUE AROSE FOR THE UNDIS CLOSED INVESTMENT MADE BY THE ASSESSEE IN THE AFORESAID UNDISCLOSED PURCHASES . THE AO TREATED THE PEAK AMOUNT OF PURCHASE AS UNDISCLOSED INVESTMENT I N THE BUSINESS OF THE ASSESSEE I.E. 8,40,938.00 BEING PEAK PURCHASE VIDE PAGE NO. 34 O F PMB-1 WHICH WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE . THE VIEW OF THE AO WAS ALSO CONFIRMED BY THE LEARNED CIT(A). NOW THE ISSUE BEFORE US ARISES FOR OUR ADJUDICATION SO AS TO WHETHER THE ADDITION MADE BY THE LOWER AUTHORITIES TOWARDS UNDISCLOSED INVESTMENT EMBEDDED IN THE UNDI SCLOSED PURCHASE ON THE BASIS OF PEAK AMOUNT OF PURCHASE IS CORRECT IN THE AFORESAID FACTS AND ITA NO.798/KOL/2013 A.Y.2010-11 D.P. AGARWAL VS. DCIT CC-XXII, KOL. PAGE 4 CIRCUMSTANCES. ADMITTEDLY, THERE WOULD CERTAINLY BE SOME ELEMENT OF UNDISCLOSED INVESTMENT IN THE UNDISCLOSED BUSINESS OF THE ASSESSEE. THE CRUCIAL ISSUE IS THE DETERMINATION OF SUCH UNDISCLO SED INVESTMENT. THE LOWER AUTHORITIES HAVE TAKEN PEAK AMOUNT OF PURCHASE SHOW N BY THE ASSESSEE IN THE UNDISCLOSED BUSINESS AS UNDISCLOSED INVESTMENT ON THE PRESUMPTION THAT THE ASSESSEE HAS NOT BROUGHT ANYTHING ON RECORD THE AMOUNT INVESTED IN THE UNDISCLOSED BUSINESS. AT THIS JUNCTURE, WE FIND IMP ORTANT TO REPRODUCE THE RELEVANT OBSERVATION OF THE LD. CIT(A) WHICH GOES A S UNDER:- IN THE ABSENCE OF ANY EVIDENCE BROUGHT ON RECORD B Y THE APPELLANT TO PROVE HIS CONTENTION THE SAME CANNOT BE ACCEPTED. T HEREFORE, IN MY OPINION THE AO HAD RIGHTLY CONSIDERED THE PEAK AMOU NT OF PURCHASES MADE BY THE APPELLANT TO BE APPELLANTS UNDISCLOSED INVESTMENT IN TRADING BUSINESS. HENCE, THE ADDITION OF RS.8,40,93 8/- MADE BY THE AO IS CONFIRMED AND THIS GROUND OF APPEAL IS DISMISSED . ON THE SIMILAR LINE OF THOUGHT, WE ALSO FIND THAT T HE LOWER AUTHORITIES HAVE ALSO NOT BROUGHT ANY CONCRETE MATERIAL FOR PRESUMING THE PEAK AMOUNT OF PURCHASES INVESTED IN THE UNDISCLOSED BUSINESS OF T HE ASSESSEE. IN OUR CONSIDERED VIEW THE LOWER AUTHORITIES BEFORE TREATI NG THE PEAK AMOUNT OF PURCHASE AS UNDISCLOSED INVESTMENT SHOULD HAVE CONF IRMED FROM THE PARTIES BOTH FROM THE BUYERS AND SELLERS THE NATURE OF TRAN SACTION WHETHER THE GOODS WERE PURCHASED ON CREDIT AND THE GOODS WERE SOLD ON CREDIT. IN THE AFORESAID FACTS AND CIRCUMSTANCES, THE LOWER AUTHORITIES SHOU LD HAVE ENQUIRED THE PAYMENT PATTERN BOTH FROM THE SUPPLIER AND THE DEBT ORS OF THE ASSESSEE. IN THE ABSENCE OF ANY SPECIFIC MATERIAL, WE ARE NOT IN CLINED TO UPHOLD THE BASIS ADOPTED BY THE LOWER AUTHORITIES FOR WORKING OUT TH E UNDISCLOSED INVESTMENT. HOWEVER, AT THE SAME TIME WE CANNOT IGNORE THE FACT THAT THERE WOULD CERTAINLY BE SOME ELEMENT OF INVESTMENT IN THE UNDI SCLOSED BUSINESS OF THE ASSESSEE. IN OUR VIEW TO DETERMINE SUCH UNDISCLOSED INVESTMENT THE LOWER AUTHORITIES SHOULD TAKE THE GUIDANCE FROM THE HISTO RICAL FINANCIAL DATA OF THE ASSESSEE BY TAKING THE AMOUNT OF INVESTMENT MADE BY THE ASSESSEE IN THE BUSINESS IN RELATION TO PURCHASE AND SALE OF THE BU SINESS. IN VIEW OF ABOVE WERE INCLINED TO RESTORE THE ISSUE TO THE FILE OF AO FOR FRESH ADJUDICATION AS PER ITA NO.798/KOL/2013 A.Y.2010-11 D.P. AGARWAL VS. DCIT CC-XXII, KOL. PAGE 5 LAW WITH THE DIRECTION TO WORK OUT THE UNDISCLOSED INVESTMENT ON THE BASIS OF FINANCIAL DATA OF THE ASSESSEE. THE AO WILL WORK OU T THE NUMBER OF ROTATION OF THE FUND REQUIRED FOR ACHIEVING THE PURCHASES OF 26,69,980.00. IT IS PERTINENT TO NOTE THAT THE ASSESSEE SHOULD CO-OPERATE IN THE ASSESSMENT PROCEEDINGS AS AND WHEN CALL FOR BY AO. HENCE, THIS GROUND OF A PPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 7. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT 18/ 01/2017 SD/- SD/- ( !') ( !') (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S $!% &- 18 / 01 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DURGA PRASD AGARWAL, NEHRU ROAD, NR. MOT I MILL, SILIGURI-734004 2. /RESPONDENT-DCIT, CC-XXII, 110, SHANTIPALLY, E.M BY PASS ROAD, AYAKAR BHAWAN, POORVA, KOLKATA-107 3. %.%/0 1 1 2 / CONCERNED CIT KOLKATA 4. 1 1 2- / CIT (A) KOLKATA 5. 567 /0, 1 /0 , / DR, ITAT, KOLKATA 6. 7:; <= / GUARD FILE. BY ORDER/ 1! , /TRUE COPY/ / % 1 /0 ,