ACIT, CIR-27, HALDIA, Purba Medinipur V. Shri Shyamsundar Das, Purba Medinipur

ITA 820/KOL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1693 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 05-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Additional evidence
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI M.BALAGANESH, AM & SHRI S.S. VISWANETHRA RAVI, JM] I.T.A NO. 820/KOL/201 5 ASSESSMENT YEAR : 2011-1 2 ACIT, CIRCLE-27, HALDIA. -VS- SHRI SHYA MSUNDAR DAS [PAN: ACUPD 7469 A] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SALLONG YADEN , ADDL. CIT FOR THE RESPONDENT : SHRI RAVI TULSIYAN, ADVO CATE DATE OF HEARING : 24.01.2018 DATE OF PRONOUNCEMENT : 07.02.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORD ER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-7, KOLKATA [IN SHORT THE LD CIT (A)] IN APPEAL NO.12/CIT(A)- 7/CIR-27/14-15 DATED 31.03.2015 AGAINST THE ORDER P ASSED BY THE ACIT, CIRCLE-27, HALDIA [ IN SHORT THE LD AO] UNDER SECTION 143(3) O F THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 12.03.2014 FOR THE ASSESSMENT YEA R 2011-12. 2 . THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEA L: 1. THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITI ON TO THE TUNE OF RS. 4,71,889/- BEING THE QUANTUM OF LOSS ON ACCOUNT OF SALE OF SHA RES ON THE BASIS OF THE REMAND REPORT ADDRESSED THE ISSUE VERY BLEAKLY & IT APPEAR S TO BE VOGUE ON CERTAIN POINTS. THEREFORE, THE LD. CIT(A) SHOULD NOT HAVE P LACED ABSOLUTE RELIANCE OVER THE REMAND REPORT SUBMITTED BY THE AO WITHOUT GOING INTO THE MERITS OF THE CASE. 2 ITA NO.820/KOL/2015 SHYAMSUNDAR DAS A.YR. 2011-12 2 2. THAT THE LD. CIT(A) SHOULD NOT HAVE DELETED RS. 82,93,494/- ADDED ON ACCOUNT OF UNACCOUNTED SALES BASED ON THE FINDINGS OF REMAN D REPORT. THE LD. CIT(A) ERRED IN PLACING RELIANCE OVER THE REMAND REPORT CO MPLETELY NOT PERUSING THE MERITS OVER THE CASE. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR M ODIFY ANY ONE OR ALL OF THE GROUNDS OF APPEAL MENTIONED ABOVE. 3. THE BRIEF FACTS OF THIS CASE IS THAT THE ASSESSE E IS AN INDIVIDUAL AND ENGAGED IN TRADING BUSINESS. THE ASSESSEE IS A PROPRIETOR OF M/S DAS T UBES. THE ASSESSEE HAS FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 ON 17.03.2012 DECLARING TOTAL INCOME OF RS. 37,38,380/-. THE ASSESSEE HAS ALSO DECLARED CAPITAL GAINS IN ITS RETURN OF INCOME. THE ASSESSEE ALSO CLAIMED LOSS OF RS. 7,06,637/- FR OM SALE OF SHARES, FOR WHICH THE ASSESSEE FILED EXPLANATION ALONG WITH COPY OF TRANS ACTION OF SHARES MADE WITH M/S BMA WEALTH CREATORS PVT. LTD.. THE LD. AO ACCEPTED THE SHARES TRANSACTION CARRIED OUT BY THE ASSESSEE AS BUSINESS OF THE ASSESSEE, BUT ON PE RUSAL OF THE TRANSACTION STATEMENT WITH M/S BMA WEALTH CREATORS PVT. LTD, HE OBSERVED THAT THE TOTAL ENTRIES OF DEBIT AND CREDIT THEREON COMES TO RS. 58,79,584/- AND RS. 56, 44,834/- RESPECTIVELY. ACCORDINGLY, HE OBSERVED THAT THE LOSS AS PER THE STATEMENT OF B MA WEALTH CREATORS PVT. LTD. WAS ONLY RS. 2,34,738/- (5879584 5644854). BASED ON T HIS CONCLUSION HE HELD THAT THE ASSESSEE HAD NOT FILED THE CORRECT STATEMENT OF AFF AIRS BEFORE HIM AND HAD ACCORDINGLY CLAIMED EXCESS LOSS OF RS. 4,71,829/- (706637 234 738) WHICH WAS SOUGHT TO BE DISALLOWED BY HIM IN THE ASSESSMENT. 4. A SURVEY U/S 133A WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 28.03.2011 AND CERTAIN BOOKS OF ACCOUNTS IN THE FOR M OF TAX INVOICE BOOK AND BILL BOOKS WERE IMPOUNDED AMONG OTHERS. THE LD. AO OBSERVED TH AT THE EXAMINATION OF THESE IMPOUNDED BOOKS INDICATED THAT THE TURNOVER DECLARE D BY THE ASSESSEE IN THE SUM OF RS. 13,26,76,184/- IS NOT RELIABLE. THE LD. AO CONSIDER ED THE IMPOUNDED SALES BOOK VIDE REFERENCE NO. DT-9/BENGAL(SERIAL NO. 501-600) FOR T HE PERIOD FROM 19.01.2011 TO 3 ITA NO.820/KOL/2015 SHYAMSUNDAR DAS A.YR. 2011-12 3 09.02.2011 WHEREIN THE TOTAL SALES WERE RECORDED IN THAT BOOK FOR RS. 34,08,179/-. THE LD. AO EXTRAPOLATED THE SALES RECORDED IN THE SAID IMPOUNDED DOCUMENTS FOR 22 DAYS AND ESTIMATED TOTAL TRANSACTION FOR THE WHOLE YEAR IN THE SAME PROPORTION AND WORKED OUT THE SALES AT RS. 5,65,44,788/- (3408179/22X365) . 4.1. THE LD. AO VERIFIED THE IMPOUNDED SALES BOOK V IDE REFERENCE DT-15/CENTRAL(SERIAL NO. 1-100) CONTAINING SALES BOOK FOR THE PERIOD 19. 11.2010 TO 29.01.2011 AND WHEREIN THE SALES FOR 72 DAYS WERE RECORDED AT RS. 43,59,75 7/-. THE LD. AO EXTRAPOLATED THE SAID SALES FOR RS. 365 DAYS IN THE SAME PROPORTION AND W ORKED OUT THE SALE OF RS. 2,21,01,545 (4359757/72X365). 4.2. SIMILARLY THE LD. AO VERIFIED THE IMPOUNDED SA LES BOOK VIDE REFERENCE BILL DT/21(SERIAL NOS. 193 TO 240) CONTAINING SALES BOOK FOR THE PERIOD 08.09.2010 TO 26.10.2010, WHEREIN THE SALES FOR 49 DAYS WERE RECO RDED AT RS. 95,09,653/-. THE LD. AO EXTRAPOLATED THE SALES FOR THE WHOLE YEAR ON ESTIMA TED BASIS AND ARRIVED AT THE TOTAL SALES FIGURE OF RS. 7,08,37,211/-(9509653/49X365). 4.3. THE LD. AO ACCORDINGLY BY REFERENCE TO AFORESA ID THREE IMPOUNDED SALES BOOK AS WORKED OUT THE TOTAL SALES OUGHT TO HAVE BEEN MADE BY THE ASSESSEE DURING THE YEAR UNDER APPEAL AT RS. 14,94,83,544/- (56544788 + 2210 1545 + 70837211). THE LD. AO ASSUMED THAT THIS SALE OF RS. 14,94,83,544 WAS INCL USIVE OF VAT AT 4%. ACCORDINGLY, HE EXCLUDED THE VAT PORTION THEREOF AND ARRIVED AT THE NET SALES FIGURES OF RS. 14,37,34,176/- AND COMPARED THE SAME WITH THE TOTAL SALES REPORTED BY THE ASSESSEE AT RS. 13,26,76,184/-. THE LD. AO ACCORDINGLY ARRIVED AT THE DIFFERENCE OF RS. 1,10,57,992/- AS UNACCOUNTED SALES BY THE ASSESSEE. LATER HE ASSUMED THAT THE VOLUME OF SALES WERE NOT AT THE SAME RATE ON EACH AND EVERY D AY AND MOREOVER, THE ASSESSEE HAD CLOSED HIS BUSINESS OPERATION ON CERTAIN DATES, FOR WHICH HE GRANTED 25% REDUCTION ON 4 ITA NO.820/KOL/2015 SHYAMSUNDAR DAS A.YR. 2011-12 4 THAT ACCOUNT AND ACCORDINGLY ARRIVED AT THE NET UNA CCOUNTED SALES FIGURE OF RS. 82,93,494/- AND ADDED THE SAME IN THE ASSESSMENT. 5. BEFORE THE LD. CIT(A) THE ASSESSEE WITH REGARD T O THE FIRST ADDITION MADE IN THE SUM OF RS. 4,71,829/- TOWARDS EXCESS LOSS ON SALE OF SH ARES, THE ASSESSEE PLEADED THAT THE LOSS ON SALE OF SHARES ARE TO BE WORKED OUT ONLY BASED O N PURCHASE AND SALE OF SHARES MADE BY THE ASSESSEE AND NOT BASED ON TOTAL DEBITS AND C REDITS IN THE LEDGER ACCOUNT OF M/S BMA WEALTH CREATORS PVT. LTD.. IT WAS PLEADED THAT THE SAID STATEMENT OF M/S BMA WEALTH CREATORS PVT. LTD. ADMITTEDLY INCLUDED CHEQU ES THAT WERE GIVEN BY THE ASSESSEE FOR WHICH ASSESSEES ACCOUNT HAS BEEN CREDITED, DIV IDEND PAYMENTS THAT WERE CREDITED IN THE SAID STATEMENT ETC. HENCE, IT WAS PLEADED THAT IT WOULD BE INCORRECT ON THE PART OF THE LD. AO TO ASCERTAIN THE LOSS ARISING ON SALE OF SHA RES OUT OF TOTAL OF DEBIT AND CREDITS ENTRIES IN THE SAID TRANSACTION STATEMENT OF M/S BM A WEALTH CREATORS PVT. LTD. THE ASSESSEE ALSO FILED RECONCILIATION STATEMENT IN THA T REGARD BEFORE THE LD. CIT(A). THESE PAPERS WERE TREATED AS ADDITIONAL EVIDENCE SUBMITTE D BY THE LD. CIT(A) AND ACCORDINGLY A REMAND REPORT WAS SOUGHT FROM THE LD. AO IN THAT REGARD. THE LD. AO IN THE REMAND PROCEEDINGS OBSERVED THAT THE ASSESSEE SUBMITTED AL L THE RELEVANT DETAILS IN CONNECTION WITH THE LOSS INCURRED ON ACCOUNT OF SALE OF SHARES . THE LD. AO IN THE REMAND REPORT OBSERVED THAT THE CONTENTION OF THE ASSESSEE IS COR RECT. THE LD. CIT(A) BY PLACING RELIANCE ON THE REMAND REPORT SUBMITTED BY THE LD. AO DELETED THE ADDITION MADE IN THE SUM OF RS. 4,71,829/- TOWARDS EXCESS LOSS ARISING O N ACCOUNT OF SALE OF SHARES. 5.1. WITH REGARD TO THE ADDITION MADE TOWARDS UNACC OUNTED SALES IN THE SUM OF RS. 82,93,494/- ON ESTIMATED BASIS THE ASSESSEE FILED C OMPLETE RECONCILIATION STATEMENT OF SALES VIS--VIS IMPOUNDED DOCUMENTS AND PLEADED THA T THE ENTIRE SALES AS REFLECTED IN THE IMPOUNDED DOCUMENTS WERE DULY ACCOUNTED IN THE BOOK S OF ACCOUNTS OF THE ASSESSEE AND IS ALREADY INCLUDED IN THE TOTAL SALES REPORT BY TH E ASSESSEE IN THE RETURN OF INCOME. THE ASSESSEE ALSO PLEADED THAT IN ANY CASE THE LD. AO H AD ACCORDINGLY ARRIVED AT THE TOTAL 5 ITA NO.820/KOL/2015 SHYAMSUNDAR DAS A.YR. 2011-12 5 SALES FIGURE ON AN ESTIMATED BASIS BY SIMPLY EXTRAP OLATING THE SALES MADE FOR FEW DATES AS REFLECTED IN THE IMPOUNDED MATERIALS FOR THE WHO LE YEAR IN THE SAME PROPORTION, WHICH CANNOT BE THE BASIS FOR MAKING ANY ADDITION U NDER THE ACT. THE LD. CIT(A) FORWARDED THE ADDITIONAL EVIDENCES FILED BY THE ASS ESSEE TO THE LD. AO AND SOUGHT REMAND REPORT IN THAT REGARD. THE LD. AO ACCEPTED T HE STAND OF THE ASSESSEE BY PLACING RELIANCE ON THE REPORT OF THE INSPECTOR WHO WAS DEP UTED TO VERIFY EACH AND EVERY ENTRY IN THE IMPOUNDED MATERIALS VIS--VIS THE SALES RECO RDED IN THE LEDGER ACCOUNT OF THE ASSESSEE. BASED ON THE CLEAN CHIT GIVEN BY THE INS PECTOR IN HIS REPORT, THE LD. AO ACCEPTED THE CONTENTION OF THE ASSESSEE IN THE REMA ND REPORT. THE LD. CIT(A) BY PLACING RELIANCE ON THE SAID REMAND REPORT DELETED THE ADDI TION MADE BY THE LD. AO IN THE SUM OF RS. 82,93,494/- TOWARDS UNACCOUNTED SALES. 6. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. DR BEFORE US ARGUED THAT THE LD. AO HAD NOT PASSED A SPEAKING ORDER IN HIS REMAND REPOR T AS FAR AS FIRST ADDITION IS CONCERNED AND HAD NOT INDEPENDENTLY APPLIED HIS MIND AND HAD MERELY PLACED RELIANCE ON THE REPORT OF THE INSPECTOR OF INCOME TAX AS FAR AS SEC OND ADDITION IS CONCERNED. HE ARGUED THAT SINCE THE REMAND REPORT OF THE ASSESSING OFFIC ER WAS NOT A SPEAKING ORDER, THE RELIANCE ON THE SAME BY THE LD. CIT(A) IS MISPLACED ACCORDINGLY HE PLEADED FOR SETTING ASIDE OF THESE ENTIRE ISSUES TO THE FILE OF LD.AO F OR DE NOVO ADJUDICATION. 7.1. IN RESPONSE TO THIS THE LD. AR MERELY PLACED R ELIANCE ON THE REMAND REPORT OF THE LD. AO AND THE ORDER OF THE LD. CIT(A). 7.3. WE FIND THAT IN RESPONSE TO FIRST ADDITION OF RS. 4,71,899/- TOWARDS EXCESS LOSS ARISING ON SALE OF SHARES, THE SAID LOSS SHOULD BE WORKED OUT BASED ON PURCHASE AND SALES TRANSACTION MADE BY THE ASSESSEE AND NOT BASED ON T OTAL OF DEBITS AND CREDITS IN THE 6 ITA NO.820/KOL/2015 SHYAMSUNDAR DAS A.YR. 2011-12 6 TRANSACTION STATEMENT OF M/S BMA WEALTH CREATORS PV T. LTD. THE LD. AO IN THE REMAND REPORT AFTER DUE EXAMINATION OF THE ENTIRE DOCUMENT S SUBMITTED BEFORE HIM HAD FURNISHED THE REPORT AS UNDER: AS PER THE AO IN RESPECT OF LOSS OF RS. 7,06,637/- ON ACCOUNT OF SALE OF SHARES, THE ASSESSEE HAS NOT SHOWN CORRECT STATEMENT OF FACTS A ND HAD CLAIMED EXCESS LOSS OF RS. 4,71,899/-. ACCORDINGLY THE AO ADDED THIS AMOUNT OF RS. 4,71,899/- TO THE TOTAL INCOME OF THE ASSESSEE. DURING THE REMAND REPORT PROCEEDINGS THE ASSESSEE S UBMITTED THAT ALL THE RELEVANT DETAILS IN CONNECTION WITH THE LOSS INCURRED ON ACC OUNT OF SALE OF SHARES WERE SUBMITTED BEFORE THE AO. HOWEVER, THE AO HAS NOT TAKEN COGNIZ ANCE OF THE ENTIRE FACTS. ON VERIFICATION OF THE DETAILS THE ASSESSEES CONTENTI ON APPEARS TO BE CORRECT. THE STATEMENT FURNISHED BY THE ASSESSEE REGARDING SALE OF SHARES IS REVEALING LOSS AS CLAIMED BY THE ASSESSEE. HENCE, WE HOLD THAT THE LD. CIT(A) HAD RIGHTLY PLAC ED RELIANCE ON THE REMAND REPORT WITH REGARD TO THE ISSUE. WE HOLD THAT THE LD. AO H AVING ACCEPTED THE STAND OF THE ASSESSEE IN THE REMAND REPORT OUGHT NOT TO HAVE PRE FERRED ANY APPEAL BEFORE THIS TRIBUNAL. ACCORDINGLY, GROUND NO. 1 RAISED BY THE R EVENUE IS DISMISSED. 8. WITH REGARD TO SECOND ADDITION MADE IN THE SUM O F RS. 82,93,494/- TOWARDS UNACCOUNTED SALES, WE FIND THAT THE LD. AO HAD ACCE PTED THE STAND OF THE ASSESSEE. THE CONTENTS OF HIS REMAND REPORT IN THIS REGARD ARE AS UNDER: DURING THE COURSE OF SCRUTINY PROCEEDINGS, BASED ON IMPOUNDED DOCUMENTS THE AO CONCLUDED THAT THE TURNOVER SHOWN BY THE ASSESSEE IS NOT RELIABLE AND ACCORDINGLY, AO ESTIMATED THE SALES FOR THE FINANCIAL YEAR 2010-11. THE IMPOUNDED SALES BOOK MARKED AS DT-9(BENGAL), DT-15(CENTRAL) AND DT-21 WERE THE BAS IS OF AOS ESTIMATION OF SALES. ON THIS SCORE RS. 82,93,494/- WAS ADDED TO THE TOTA L INCOME OF THE ASSESSEE. DURING THE REMAND REPORT PROCEEDINGS, THE ASSESSEE PLEADED THAT NOT ONLY HIS SALES ARE AS PER SALE REGISTER WHICH HAS BEEN SUBJECTED TO AU DIT BUT ARE AS PER IMPOUNDED MATERIAL MAY BE VERIFIED TO CONFIRM HIS SALES SHOWN IN THE RETURN OF INCOME. ACCORDINGLY, EFFORTS WERE MADE TO VERIFY THE SALES AS PER IMPOUNDED BOOKS AND AS PER SALES REGISTER MAINTAINED BY THE ASSESSEE. THE INS PECTOR ATTACHED TO THE OFFICE WAS DIRECTED NOT ONLY TO VERIFY ALL THE SALES AS PER TH E ABOVE MENTIONED THREE IMPOUNDED BOOKS VIZ. DT-9(BENGAL), DT-15(CENTRAL) AND DT-21 O N THE BASIS OF WHICH THE AO HAS ARRIVED TO SOME CONCLUSION IN THE ASSESSMENT ORDER BUT ALSO TO VERIFY ON RANDOM BASIS THE OTHER IMPOUNDED MATERIAL WITH THE SALES REGISTE R. THE INSPECTOR HAS SUBMITTED HER 7 ITA NO.820/KOL/2015 SHYAMSUNDAR DAS A.YR. 2011-12 7 REPORT STATING THAT ALL THE ENTRIES IN THE IMPOUNDE D MATERIAL INCLUDING THE ABOVE REFERRED THREE IMPOUNDED BOOKS HAVE DULY BEEN REFLE CTED IN THE SALE REGISTER MAINTAINED & HAS BEEN OFFERED BY THE ASSESSEE FOR TAXATION. A S SUCH THE AOS ACTION OF ESTIMATION OF SALES APPEAR TO BE WITHOUT ANY SUPPORTING. HENCE, WE HOLD THAT THE LD. CIT(A) HAD RIGHTLY PLAC ED RELIANCE ON THE REMAND REPORT WITH REGARD TO THE ISSUE. WE HOLD THAT THE LD. AO H AVING ACCEPTED THE STAND OF THE ASSESSEE IN THE REMAND REPORT OUGHT NOT TO HAVE PRE FERRED ANY APPEAL BEFORE THIS TRIBUNAL. ACCORDINGLY, GROUND NO. 2 RAISED BY THE R EVENUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 07.02.2018 SD/- SD/- [S.S. VISWANETHRA RAVI] [ M.BAL AGANESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 07.02.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ACIT, CIRCLE-27, HALDIA, DUBEY HOUSE, BASUDEVPUR , KHANJANCHAK, HALDIA, PURBA MEDINIPUR-721602 2. SHRI SHYAMSUNDAR DAS, EGRA MUNICIPALITY, WARD NO . 13, PURBA MEDINIPUR-721429 3..C.I.T.- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S