Swapan Kumar Ghosh, South 24 Parganas V. ITO, Ward-1, Balurghat, Dakshin Dinajpur

ITA 843/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83157 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 25-05-2012
• Court: TRIBUNAL
• Department Lawyers: VARINDAR MEHTA
• Keywords: Unexplained cash credit; Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.843/KOL/2012 ASSESSMENT YEAR:2008-09 SWAPAN KUMAR GHOSH, CHAKBHAWANI, P.O BALUGHAT, DIST. SOUTH DINAJPUR PIN. 733 101 [ PAN NO. AGAPG 6384 M ] / V/S . INCOME TAX OFFICER, WARD-1, BALAURGHAT PIN. 73 101 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI RAVI TULSIYAN, FCA /BY RESPONDENT SHRI VARINDAR MEHTA, CIT-DR /DATE OF HEARING 10-09-2014 /DATE OF PRONOUNCEMENT 21-10-2014 /O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF COMMI SSIONER OF INCOME-TAX (APPEALS)-JALPAIGURI IN APPEAL NO.09/BLG/CIT(A)-/JA L/10-11. ASSESSMENT WAS FRAMED BY INCOME TAX OFFICER WARD-1, BALURGHAT U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) VIDE HIS ORDER DATED 31-12- 2010 FOR THE ASSESSMENT YEAR 2008-09. 2. ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER OF SUNDRY CREDITORS/U NSECURED LOANS. FOR THIS ASSESSEE HAS RAISED FOLLOWING THREE EFFECTIVE GROUN DS:- ITA NO.843/KOL/2012 A.Y. 2008-09 SWAPAN KR. GHOSH V. ITO WD-1, BLG PAGE 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) ERRED IN NOT ADMITTING THE EVIDENCES ADDUCED BEFORE HIM ALTHOUGH THERE WERE SUFFICIENT REASONS FOR THE APPELLANT NOT BEING ABLE TO PRODUCE THE SAI D EVIDENCES AT THE ASSESSMENT STAGE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) ERRED IN COMMENTING THAT THE EXPLANATION OFFERED ON BEHALF O F THE APPELLANT ASSESSEE ON THE BASIS OF THE DOCUMENTS PRODUCED BEFORE THE CIT(A) C OULD NOT BE CONSIDERED TO BE SATISFACTORY, EVEN WITHOUT ADMITTING THE SAID DOCUM ENTS AS EVIDENCE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.34,25,000/- BEING THE AGGREGATE CREDIT BALANCES OF THE SUNDRY CREDITORS, HOWEVER, SHOWN ORIGINALLY AS UNSECURED LOANS THROUGH MISTAKE. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS IN VOLVED IN THE BUSINESS OF GROCERY, STATIONERY AND SUPPLY WORKS. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED FROM THE BALANCE-SHEET THAT IT HAS DISCLOSED UNSECURED LOAN OF RS.34.25 LAKH FROM THIR TY SIX PERSONS. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPLAIN AND ASSESSEE POINTED OUT THAT UNSECURED LOANS DECLARED IN THE BALANCE-SHEET, WHIC H ARE ACTUALLY SUNDRY CREDITORS FOR THE RELEVANT ASSESSMENT YEAR BUT WAS MISTAKENLY DECLARED IN THE BALANCE-SHEET UNDER NOMENCLATURE OF UNSECURED LOAN . THE ASSESSEE BEFORE THE ASSESSING OFFICER POINTED OUT THIS MISTAKE BUT THE AO HAS NOT CONSIDERED THE PLEA OF THE ASSESSEE BY RECORDING THAT, THE PLEA OF SUNDRY CREDITORS TAKEN BY THE ASSESSEE AT THE ELEVENTH HOUR IS NOT ACCEPTABLE . SINCE, THE GENUINENESS OF SUNDRY CREDITORS IS NOT VERIFIABLE AT THIS MOMENT. ACCORDINGLY, AO MADE ADDITION OF UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT FOR AN AMOUNT OF 34.25 LAKH FROM THE THIRTY SIX PERSONS. AGGRIEVED, ASSESS EE PREFERRED APPEAL BEFORE CIT(A) WHO ALSO NOT CONSIDERED THE EVIDENCES FILED BY THE ASSESSEE BEFORE HIM BY STATING THAT:- I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD. AR AND ALSO GONE THROUGH THE ASSESSMENT ORDER. I HAVE ALSO EXAMINED THE DOCUMENT S FILED BY THE LD. AR. REGARDING THE UNSECURED LOAN OF RS.34,25,00/-, THE LD AO ASKE D THE ASSESSEE TO FURNISH DETAILS OF THE LOAN CREDITORS AND ALSO TO PRODUCE THEM IN PERS ONS. EVEN AFTER AVAILING SEVERAL OPPORTUNITIES, THE ASSESSEE COULD NOT PRODUCE THEM IN PERSON OR ANY OTHER EVIDENCE SHOWING THE GENUINENESS OF THE LOAN. BUT ONLY ON 30 .12.2010, WHEN THE LIMITATION DATE WAS 31.12.2010, THE ASSESSEE SUBMITTED THAT THE AMO UNT SHOWN IN THE BALANCE SHEET ITA NO.843/KOL/2012 A.Y. 2008-09 SWAPAN KR. GHOSH V. ITO WD-1, BLG PAGE 3 WAS ACTUALLY TRADE CREDITORS AND BY MISTAKE, THE AM OUNT WAS MENTIONED AS UNSECURED LOAN AND REQUESTED TO CONSIDER THE SAME AS SUNDRY C REDITORS. BUT, STILL THE ASSESSEE FAILED TO FURNISH THE DETAILS OF SUCH TRADE CREDITO RS. THERE IS NO EXPLANATION AS TO WHY THE ASSESSEE DID NOT EXPLAIN THIS MISTAKE BEFORE TH E AO AT THE BEGINNING OF THE ASSESSMENT PROCEEDINGS. OBVIOUSLY, THE SUBMISSION MADE BY THE LD AR AND DOC UMENTS PRODUCED BY HIM ARE FRESH EVIDENCES AND THE SAME CANNOT BE ADMITTED BEC AUSE OF ITS RELIABILITY AND OTHER REASON MENTIONED BELOW: FIRSTLY , THE LD AR DID NOT EXPLAIN IN TERMS OF RULES 46A O F IT RULES, AS TO WHY SUCH EVIDENCE WAS NOT FILED BEFORE THE AO WHEN HE A SKED THE ASSESSEE AGAIN AND AGAIN TO PRODUCE THE DETAILS OF THE CREDITORS. SECONDLY, THE BOOKS OF A/CS OF THE ASSESSEE WERE DULY AUDITED BY CHARTERED ACCOUNTANT AND BALANCE SHEET AND THE P & L A/C WAS DRAWN. IT IS DIFFICULT TO UNDERSTAND, UNDER WHAT CIRCUMSTANCES SUCH A GRAVE M ISTAKE OCCURRED. THIRDLY, THE EVIDENCES FURNISHED BY THE AR ARE SUFFERED FROM SEVERAL SHORTCOMINGS. I) THE CONFIRMATIONS FROM THE ALLEGED CREDITORS WERE M ADE ON PLAIN PAPER, NOT IN THE FORM OF AFFIDAVIT. THE LANGUAGE O F ALL CONFIRMATIONS IS SAME PREPARED BY ONE PERSON. THE ALLEGED CREDITORS HAVE ONLY SIGNED THOSE DOCUMENTS. II) THE CONFIRMATION WAS NOT CORROBORATED BY ANY PAN, I NCOME TAX RECORDS OR ASSESSMENT PARTICULARS OF THE CREDITORS. APPARENTLY, NONE OF THEM ARE ASSESSED TO TAX. III) THE ASSESSEE HAD SHOWN HIS TURNOVER OF RS.1.91 CROR E DURING THE YEAR. IN SUCH CASE, HIS SUPPLIERS ARE EXPECTED TO BE ALSO WELL-ESTABLISHED BUSINESSMEN. BUT AS PER THE SUBMISSION OF THE LD AR , THESE 36 PERSONS ARE PETTY BUSINESSMEN WHO HAD SUPPLIED GROCERY ITEM S TO THE ASSESSEE NONE OF THEM ARE ASSESSED TO INCOME TAX. IV) NO COPY OF A/CS SHOWING THE PREVIOUS OR SUBSEQUENT MONETARY TRANSACTIONS OR SUPPLY OF GOODS TO THE ASSESSEE WAS FILED. V) THE COPY OF CASH BOOK OF THE ASSESSEE WAS NOT PRODU CED SHOWING THE PAYMENTS TO THOSE PARTIES. VI) ALL SUBSEQUENT PAYMENTS CLAIMED TO HAVE BEEN MADE I N THE NEXT FINANCIAL YEAR, I.E., 2008-09 WAS MADE IN CASH WITH IN SHORT INTERVALS KEEPING THE AMOUNT BELOW RS.20,000/- IN EACH CASE C ANNOT ESTABLISH THAT ACTUALLY THE PAYMENTS WERE MADE TO THOSE PART IES. NO TRANSACTION WAS MADE TROUGH BANK. FOURTHLY , IN CASE OF A REGULAR TRADER, MAKING CREDIT PURCHA SES AND SUBSEQUENT PAYMENTS ARE REGULAR FEATURE. IN THIS CASE, AS PER THE SUBMISSION OF THE AR, THERE IS NO SUBSEQUENT PURCHASE FROM THOSE PARTIES AND ANY OUTSTANDING BALANCE AT THE END OF THE FINANCIAL YEAR. IT IS NOT POSSIBLE THAT THE ASSESSEE HAS SEVERED THE BUSINESS TIE WITH ALL THOSE 36 SUPPLIER S AFTER ONE YEAR. IT IS NOT PRACTICALLY POSSIBLE. AGGRIEVED, NOW ASSESSEE PREFERRED APPEAL BEFORE US. ITA NO.843/KOL/2012 A.Y. 2008-09 SWAPAN KR. GHOSH V. ITO WD-1, BLG PAGE 4 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM FACTS OF TH E CASE THAT THE ASSESSEE BEING INVOLVED IN THE BUSINESS OF GROCERY, STATIONERY & S UPPLY WORK HAD PURCHASED RAW MATERIALS FROM 36 PARTIES. ALTHOUGH THE PARTIES WERE HIS SUNDRY CREDITORS, MISTAKENLY THEY WERE SHOWN AS LOAN CREDITORS IN THE BALANCE SHEET FOR THE RELEVANT ASSESSMENT YEAR. THIS FACT WAS EXPLAINED B EFORE AO DURING ASSESSMENT PROCEEDINGS, HOWEVER, NECESSARY PROOF SHOWING THESE 36 LOAN CREDITORS WERE ACTUALLY SUNDRY CREDITORS COULD NOT BE PRODUCED B EFORE HIM DUE TO THE ASSESSEE SUFFERING FROM A DISEASE CALLED NERALGIC PAIN WITH HEMICRARI ASSOCIATED MANIA. THE ASSESSEES COUNSEL SH RAVI T ULSYAN EXPLAINED THAT SINCE ASSESSEE WAS PREVENTED BY A SUFFICIENT CAUSE FROM P RODUCING RELEVANT DOCUMENTS BEFORE AO, BEING COVERED U/R 46A(1)(A) OF THE INCOME TAX RULES,1962(IN SHORT THE RULES), HAD THUS PRODUCED BEFORE CIT(A) DURING APPELLATE PROCEEDINGS:- A) VOTER ID CARDS OF THE SUNDRY CREDITORS; ALONG WITH B) COPIES OF AFFIDAVITS IN PLAIN WHITE PAPERS. HOWEVER, CIT(A), AS EVIDENT FROM APPELLATE PROCEEDI NGS, HAD NOT TAKEN INTO CONSIDERATION ABOVE EVIDENCES SO FIELD ON ACCOUNT O F FRESH EVIDENCES AND MERELY HAD SUSTAINED ADDITIONS OF RS.34,25,000/-. N OW WE HAVE TO CONSIDER RULE 46A OF THE RULES, WHICH READS AS FOLLOWS:- [PRODUCTION OF ADDITIONAL EVIDENCE BEFORE THE [DEPU TY COMMISSIONER (APPEALS) [AND COMMISSIONER (APPEALS)]. 46. (1) THE APPELLANT SHALL NOT BE ENTITLED TO PROD UCE BEFORE THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONE R (APPEALS)], ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF PROCEEDINGS BEFORE THE [ASSESSING OFFICER], EXCEPT IN THE FOLLO WING CIRCUMSTANCES, NAMELY:- (A) WHERE THE [ASSESSING OFFICER] HAS REFUSED TO AD MIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED; OR ITA NO.843/KOL/2012 A.Y. 2008-09 SWAPAN KR. GHOSH V. ITO WD-1, BLG PAGE 5 (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE [ASSESSING OFFICER]; OR WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT C AUSE FROM PRODUCING BEFORE THE [ASSESSING OFFICER] ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL; OR (D) WHERE THE [ASSESSING OFFICER] HAS MADE THE ORDE R APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT TO ADDUCE E VIDENCE RELEVANT TO ANY GROUND OF APPEAL. 5. FROM THE ABOVE RULE AND FACTS OF THE CASE, WE AR E OF THE VIEW THAT, IF ASSESSEES CASE STANDS COVERED UNDER ANY OF THE CLA USES ENUMERATED UNDER RULE 46A(1)(A) TO (D), ADDITIONAL EVIDENCES CAN BE PRODU CED BY AN ASSESSEE AT AN APPELLATE STAGE AND EVEN BEFORE COMMISSIONER (A). IN THAT CASE, ADDITIONAL EVIDENCES MAY BE ADMITTED AND ACCORDINGLY THE MATTE R BE ADJUDICATED UPON. HERE, IN THE GIVEN CASE THE EVIDENCES SO PRODUCED B EFORE THE CIT(A) COULD NOT BE PRODUCED BEFORE THE AO DUE TO THE ASSESSEE SUFFE RING FROM A DISEASE CALLED NERALGIC PAIN WITH HEMICRARI ASSOCIATED MANIA. THE ASSESSEES CAUSE THEREFORE CLEARLY STOOD COVERED UNDER CLAUSE (C) OF RULE 46A OF THE RULES. HENCE, THE CIT(A) HAD ERRED BOTH IN FACTS AND IN LAW IN SUSTAI NING THE ADDITIONS OF RS.34,25,000/- BY NOT ADMITTING THE EVIDENCES SO PR ODUCED BEFORE HIM AT APPELLATE LEVEL. THE ALLEGATION OF REVENUE IS THAT THE AFFIDAVITS WERE FILED BEFORE CIT(A) ARE IN PLAIN PAPERS AND NO PAN CARD, IT RECO RDS WERE SUBMITTED, BUT FROM RECORDS IT IS REVEALED THAT THE ASSESSEE CLEAR LY STATED/ADMITTED THAT THESE 36 SUNDRY CREDITORS WERE NON INCOME TAX ASSESSEES, PRO DUCING THEIR PAN CARD WAS NOT POSSIBLE. NOW LD. COUNSEL FOR THE ASSESSEE STAT ED THAT TO PROVE THEIR IDENTITY AND EXISTENCE INDIVIDUAL VOTER ID CARDS HAVE BEEN D ULY FILED IN THE PAPER BOOK. AS FAR AS AFFIDAVITS OF THE SUNDRY CREDITORS ARE CO NCERNED, THE ASSESSEE STATED THAT AS PER THE OBSERVATIONS OF THE CIT(A), DULY SW ORN AFFIDAVITS OF EACH SUNDRY CREDITORS HAVE BEEN DULY FILED IN STAMP PA PERS IN THE PAPER BOOK. THE DULY SWORN AFFIDAVITS OF 36 SUNDRY CREDITORS IN STA MP PAPERS CLEARLY CONFIRM SUPPLY OF GROCERY MADE BY THEM TO THE ASSESSEE AND THE PURCHASE CONSIDERATION ITA NO.843/KOL/2012 A.Y. 2008-09 SWAPAN KR. GHOSH V. ITO WD-1, BLG PAGE 6 AS MENTIONED BY THEM RESPECTIVELY IN THEIR AFFIDAVI TS CLEARLY MATCH WITH THE DETAILS AVAILABLE WITH THE DEPARTMENT. 6. FURTHER THE ALLEGATION OF NON PRODUCTION OF CASH BOOK, RESPECTIVE LEDGER ACCOUNTS ARE CONCERNED THE ASSESSEE STATED THAT ALL RELEVANT BILLS/INVOICES, BOOKS OF ACCOUNTS ETC. WERE LOST, IN PURSUANCE A GENERAL DIARY BEING GDE NO. 678 DATED 11-10-2010 HAD BEEN FILED BY HIM BEFORE THE I NSPECTOR-IN-CHARGE, BALURGHAT P.S. HENCE, THE SAME COULD NOT BE FILED B OTH BEFORE THE AO AND CIT(A). THE SAID FACT WAS ALSO BROUGHT TO THE NOTIC E OF THE AO DURING ASSESSMENT, WHICH WOULD BE EVIDENT FROM PARA-2, PAGE 1 OF THE ASSESSMENT ORDER DATED 31-12-2010. 7. IN VIEW OF THE ABOVE, WE FIND THAT, ALTHOUGH THE SUNDRY CREDITORS ARE NOT INCOME-TAX ASSESSEES BUT THEIR VOTER ID CARDS PROVI NG THEIR IDENTITY AND EXISTENCE ALONG WITH AFFIDAVITS IN PLAIN PAPERS WER E DULY PRODUCED BEFORE THE CIT(A) DURING APPELLATE PROCEEDINGS. HOWEVER, HE HA D MADE NO EFFORTS TO EXAMINE THE DETAILS SO PRODUCED AND BY MERELY ALLEG ING THAT AFFIDAVITS WERE NOT IN STAMP PAPERS AND IN PLAIN WHITE PAPERS HAD MEREL Y SUSTAINED ADDITIONS OF RS.34,25,000/- HERE. 8. IN VIEW OF THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE ASSESSEE WAS PREVENTING BY SUFFICIENT CAUSE FROM PRODUCING THESE ADDITIONAL EVIDENCES FILED BEFORE CIT(A) AND EVEN NOW BEFORE US. THESE ADDITI ONAL EVIDENCES ARE ADMITTED WHICH ARE DULY SWORN AFFIDAVIT OF EACH SUN DRY CREDITORS ON STAMP PAPERS. THE ASSESSEE HAS ALSO FILED IDENTITY CARDS I.E. VOTERS CARD TO PROVE THE IDENTITY OF THE SUNDRY CREDITORS. THE ASSESSEE HAS ALSO PLACED THE DOCUMENT OF THE RESPECTIVE PARTIES WHO HAD GIVEN DEPOSITIONS TH AT GROCERIES WERE SUPPLIED TO THEM BY ASSESSEE AND PURCHASE CONSIDERATION WAS MEN TIONED IN THE AFFIDAVITS MATCHED WITH THE DETAILS AVAILABLE WITH THE DEPARTM ENT. TO VERIFY AND EXAMINE ITA NO.843/KOL/2012 A.Y. 2008-09 SWAPAN KR. GHOSH V. ITO WD-1, BLG PAGE 7 THESE DETAILS, THE MATTER IS SET ASIDE TO THE FILE OF THE AO AFRESH ON THIS GROUND ONLY. ACCORDINGLY, THE MATTER IS SET ASIDE TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN TERMS OF LAW AND ORDERS OF THE LOWE R AUTHORITIES ARE REVERSED. 9. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR ST ATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 21/10/2014 SD/- SD/- (SHAMIM YAHYA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER !'# - 21/10/2014 %%& %%& %%& %%& '& '& '& '& / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT SWAPAN KR. GHOSH, CHAKBHAWANI, P.O. BALURGHAT DIST . SOUTH DINAJPUR 2. / RESPONDENT- ITO WARD-1, BALURGHAT 3. ''%( ) / CONCERNED CIT 4. ) - / CIT (A) 5. &*+ %%%( , %( / DR, ITAT, KOLKATA 6. +,- ./ / GUARD FILE. BY ORD ER/ , 0/2 '3 %(,