Sri Partha Mitra, Kolkata V. ITO,Ward-38(3), Kolkata, Kolkata

ITA 848/KOL/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4673 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 15-06-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 28-05-2012
• Court: TRIBUNAL
• Assessee Lawyers: MANISH TIWARI
• Keywords: Revised return
• Section: 148

Judgement Text

I.T.A. NO. 848/KOL./2012 ASSESSMENT YEAR: 2004-2005 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISHWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 848 /KOL/ 2012 ASSESSMENT YEAR: 2004-2005 SHRI PARTHA MITRA,................................. ...................................APPELLANT 58/1/7F, RAJA DINENDRA STREET, KOLKATA-700 006 [PAN: AEAPM 6822 Q]] -VS.- INCOME TAX OFFICER,................................ ................................RESPONDENT WARD-38(3), KOLKATA, 18, RABINDRA SARANI, KOLKATA-700 001 APPEARANCES BY: SHRI MANISH TIWARI, FCA, FOR THE ASSESSEE SHRI KALYAN NATH, ADDITIONAL CIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JUNE 15, 2016 DATE OF PRONOUNCING THE ORDER : AUGUST 10, 2016 O R D E R PER SHRI P.M. JAGTAP, A.M .: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XIV, KOLKATA D ATED 30.03.2012 FOR THE ASSESSMENT YEAR 2004-05. 2. GROUNDS NO. 1 & 5 RAISED BY THE ASSESSEE IN THIS APPEAL ARE GENERAL, WHICH DO NOT CALL FOR ANY SPECIFIC ADJUDICATION. 3. THE ISSUES RAISED IN GROUNDS NO. 2 & 3 RELATE TO THE ADDITIONS OF RS.4,02,008/- AND RS.2,23,500/- MADE BY THE ASSESSI NG OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF DIS ALLOWANCE OF PURCHASES AND RENOVATION EXPENSES RESPECTIVELY. I.T.A. NO. 848/KOL./2012 ASSESSMENT YEAR: 2004-2005 PAGE 2 OF 7 4. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS ENGAGED IN THE BUSINESS OF DEALING IN FOREIGN LIQUOR. THE RETU RN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM ON 31.10. 2004 DECLARING TOTAL INCOME OF RS.3,64,723/-. THE SAID RETURN WAS PROCES SED BY THE ASSESSING OFFICER UNDER SECTION 143(1) ON 07.03.2006. THEREAF TER THE ASSESSEE FILED A REVISED RETURN ON 30.03.2006 SHOWING A TOTAL INCO ME OF RS.4,08,710/- . IN ORDER TO REGULARIZE THE SAID REVISED RETURN, A N OTICE UNDER SECTION 148 WAS ISSUED BY THE ASSESSING OFFICER, IN REPLY TO WH ICH IT WAS SUBMITTED BY THE ASSESSEE THAT THE REVISED RETURN FILED BY HIM O N 30.03.2006 BE TREATED AS THE RETURN FILED IN RESPONSE TO NOTICE UNDER SEC TION 148. IN THE REVISED RETURN, ADDITIONAL EXPENDITURE ON ACCOUNT OF PURCHA SES AMOUNTING TO RS.4,02,008/- WAS CLAIMED BY THE ASSESSEE. IN THIS REGARD, IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFI CER THAT THE RELEVANT GOODS RECEIVED BY HIM BEFORE THE CLOSING DAY OF THE YEAR WERE TAKEN INTO THE STOCKS, BUT THE BILLS IN RESPECT OF SUCH GOODS HAVING BEEN RECEIVED AFTER 31 ST MARCH WERE NOT RECORDED IN THE ACCOUNTS ORIGINALLY FINALIZED. THE ASSESSING OFFICER, HOWEVER, FOUND THAT THE SUND RY CREDITORS IN THE REVISED ACCOUNTS HAD NOT BEEN INCREASED BY THE AMOU NT OF SUCH PURCHASES, THE BILLS IN RESPECT OF WHICH WERE CLAIM ED TO BE RECEIVED BY THE ASSESSEE AFTER 31 ST DAY OF MARCH. HE ALSO NOTED THAT THE GROSS PROFIT RATE OF 12.74% AS DECLARED BY THE ASSESSEE IN THE O RIGINAL ACCOUNT WAS QUITE COMPARABLE WITH THE GROSS PROFIT RATES OF A.Y . 2002-03 AND 2003-04 WHILE THE GROSS PROFIT RATE OF 10.14% AS REFLECTED IN THE REVISED ACCOUNTS WAS COMPARATIVELY LOW. HE, THEREFORE, REJECTED THE REVISED ACCOUNTS OF THE ASSESSEE AS UNRELIABLE AND DISALLOWED THE CLAIM OF THE ASSESSEE FOR ADDITIONAL PURCHASES OF RS.4,02,008/-. SIMILARLY TH E CLAIM OF THE ASSESSEE FOR RENOVATION EXPENSES OF RS.2,23,500/- AS MADE IN THE REVISED RETURN/ACCOUNTS WAS DISALLOWED BY THE ASSESSING OFF ICER AS HE FOUND IT DIFFICULT TO ACCEPT THE STAND OF THE ASSESSEE THAT THE SAID EXPENSES INCURRED IN CASH WERE NOT REFLECTED IN THE ORIGINAL CASH BOOK, WHICH WAS DULY AUDITED. I.T.A. NO. 848/KOL./2012 ASSESSMENT YEAR: 2004-2005 PAGE 3 OF 7 5. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER O N ACCOUNT OF PURCHASES AND RENOVATION EXPENSES AS CLAIMED IN THE REVISED RETURN WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFO RE THE LD. CIT(APPEALS) AND KEEPING IN VIEW THE SUBMISSIONS MADE BY THE ASS ESSEE IN SUPPORT OF HIS CASE ON THESE ISSUES, A REMAND REPORT WAS SOUGH T BY THE LD. CIT(APPEALS) FROM THE ASSESSING OFFICER ON THE REVI SED ACCOUNTS OF THE ASSESSEE. AS REPORTED BY THE ASSESSING OFFICER IN T HE REMAND REPORT, THE FOLLOWING QUESTIONS WERE ASKED BY HIM TO THE ASSESS EE:- (1) THE ASSESSEE CLAIMED DURING SCRUTINY ASSESSMEN T PROCEEDINGS THAT PURCHASES OF RS.4,02,008/- FROM EL EVEN (11) PARTIES WERE NOT CONSIDERED IN THE PURCHASE AC COUNT AS PER ORIGINAL RETURN AS BILLS OF THE SAME WERE RECEI VED IN THE MONTH OF APRIL OF NEXT FINANCIAL YEAR WHEREAS THE A LLEGED PURCHASES WERE INCLUDED IN THE CLOSING STOCK ACCOUN T. OBVIOUSLY A QUESTION WAS PUT FORWARD TO HIM TO EXPL AIN AS TO WHY THE SAID PURCHASES WERE NOT INCLUDED TO THE SUNDRY CREDITORS ACCOUNT IN THE REVISED ACCOUNT IF THE ALL EGED PURCHASES WERE MADE ON CREDIT? ON THE OTHER HAND, I F THE PURCHASES WERE MADE IN CASH IN THE SAID FINANCIAL Y EAR, THEN, HOW HE CAST CASH ACCOUNT AFTER THE END OF THE FINANCIAL YEAR WHEN CASH ACCOUNT IS MANDATORY TO KEEP ON DAY TO DAY BASIS AS PER PRINCIPLE OF ACCOUNTANCY? 2. THE ASSESSEE CLAIMED THAT THE ACCOUNT WAS MAINTA INED IN THE COMPUTER. IT WAS POINTED TO HIM THAT WHEN THE S TOCK BOOK WAS UPDATED WITH THE NEW ARRIVALS, THE ACCOUNT ING PACKAGE WOULD AUTOMATICALLY UPDATE THE PURCHASE ACC OUNT, THE CASH OR BANK ACCOUNT AND THE SUNDRY CREDITORS A CCOUNT. MOREOVER, THE AUDITOR WHO HAS AUDITED THE ORIGINAL ACCOUNT HAS TO VERIFY THE STOCK REGISTER AS WELL AS PURCHAS E REGISTER WITH RESPECT TO THE PURCHASE BILLS. IN THIS CASE TH AT WAS NOT DONE. SO, IN VIEW OF FINDINGS IN PARA 1 & 2, IT WAS CONVEYED TO HIM THAT ALLEGED PURCHASES CLAIMED IN THE REVISE D RETURN WERE BOGUS. THIS MATTER WAS PUT FORWARD TO HIM FOR HIS COMMENT. 3. THE ASSESSEE CLAIMED DURING SCRUTINY ASSESSMENT PROCEEDINGS THAT RENOVATION OF RS.2,23,500/- WAS NO T ACCOUNTED FOR IN THE ORIGINAL ACCOUNT DUE TO MISTAK E AND THE SAME WAS INCORPORATED IN THE REVISED ACCOUNT. IN TH IS CONNECTION, THE QUESTION RAISED HOW HE MADE ENTRY I N CASH BOOK AFTER THE END OF FINANCIAL YEAR WHEN CASH ACCO UNT IS MANDATORY TO KEEP ON DAY TO DAY BASIS AS PER PRINCI PLE OF ACCOUNTANCY? I.T.A. NO. 848/KOL./2012 ASSESSMENT YEAR: 2004-2005 PAGE 4 OF 7 4. HE CLAIMED RS.17/ - MORE UNDER THE HEAD TRAVELLI NG & CONVEYANCE IN THE REVISED ACCOUNT. THE QUESTION ROS E ABOUT THE REASON FOR CHANGE AND HOW HE MADE ENTRY IN CASH ACCOUNT AFTER THE END OF THE FINANCIAL YEAR. 5. HE WAS ASKED TO EXPLAIN. THE REASON FOR SQUARING UP THE CREDIT NOTE RECEIVABLE ACCOUNT IN THE REVISED BALAN CE SHEET AND WHERE IT WAS SQUARED UP AND AGAINST WHAT ACCOUN T? 6. HE WAS ASKED TO EXPLAIN THE REASON FOR CHANGE IN ADVANCE TO STAFF ACCOUNT' IN THE REVISED BALANCE SHEET AND TO EXPLAIN HOW THE REFUND TOOK PLACE IN CASH OR BANK ACCOUNT A FTER THE END OF THE FINANCIAL YEAR? 7. ANOTHER QUESTION POINTED OUT TO HIM ABOUT INCREA SE IN DRAWING ACCOUNT IN THE REVISED BALANCE SHEET AND WA S ASKED TO EXPLAIN HOW HE WITHDREW THE CASH OR BANK AFTER T HE END OF THE FINANCIAL YEAR. 8. THE LAST QUESTION PUT FORWARD TO HIM ABOUT CHANG E IN CASH BALANCE AS PER REVISED BALANCE SHEET. IT WAS N OTED THAT THE CASH BALANCE ARRIVED AT THE END OF THE YEAR CAN NOT BE CHANGED UNDER ANY CIRCUMSTANCES AS THE SAME IS MAND ATORY TO KEEP ON DAY TO DAY BASIS. 6. AS FURTHER REPORTED BY THE ASSESSING OFFICER IN THE REMAND REPORT, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE COULD NOT OFFER ANY SATISFACTORY REPLY TO THE QUESTIONS RAISED BY HIM. ON THE OTHER HAND, HE AGREED FOR THE ADDITION OF RS.6,69,516/- ON ACCOUNT OF SUNDRY CREDITORS WRITTEN OFF AMOUNTING TO RS.6,69,516/- AS SHOWN IN THE REVISED ACCOUNTS/RETURN. HE ALSO AGREED THAT THE OTHER CHAN GES MADE IN THE REVISED ACCOUNTS INCLUDING THE ADDITIONAL CLAIM FOR PURCHASES AND RENOVATION EXPENSES WERE MADE WITH A MOTIVE TO ADJU ST THE GAIN ON ACCOUNT OF SUNDRY CREDITORS WRITTEN OFF. KEEPING IN VIEW THESE COMMENTS MADE BY THE ASSESSING OFFICER IN THE REMAND REPORT, THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ADDITIONAL PURC HASES OF RS.4,02,008/- AND RENOVATION EXPENSES OF RS.2,23,500/- WERE CONFI RMED BY THE LD. CIT(APPEALS) TREATING THE SAME AS BOGUS. 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AT THE TIME OF HEARING BEFORE US, I.T.A. NO. 848/KOL./2012 ASSESSMENT YEAR: 2004-2005 PAGE 5 OF 7 THE LD. COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO OFFER ANY SATISFACTORY EXPLANATION AS REGARDS THE FAILURE OF THE ASSESESE TO SUBSTANTIATE THE CLAIMS MADE ON ACCOUNT OF ADDITIONAL PURCHASES AND RENOVATION EXPENSES IN THE REVISED RETURN/ACCOUNTS DURING THE COURSE OF REMAND PROCEEDINGS BEFORE THE ASSESSING OFFICER EXCEPT STATING THAT TH E CASE OF THE ASSESSEE WAS NOT PROPERLY REPRESENTED BEFORE THE ASSESSING O FFICER DURING THE COURSE OF REMAND PROCEEDINGS. IT IS ALSO OBSERVED T HAT SPECIFIC AND PERTINENT QUESTIONS WERE RAISED BY THE ASSESSING OF FICER IN RESPECT OF CLAIMS MADE BY THE ASSESSEE IN THE REVISED ACCOUNTS /RETURN ON ACCOUNT OF ADDITIONAL PURCHASES AND RENOVATION EXPENSES AND NO EXPLANATION WHATSOEVER WAS OFFERED BY THE ASSESSEE TO REPLY OR CLARIFY THE SAME. ON THE OTHER HAND, IT WAS AGREED ON BEHALF OF THE ASSE SSEE BEFORE THE ASSESSING OFFICER THAT THE SAID CLAMS WERE MADE IN ORDER TO ADJUST THE ADDITIONAL INCOME OFFERED IN THE REVISED RETURN ON ACCOUNT OF SUNDRY CREDITORS WRITTEN BACK. HAVING REGARD TO ALL THESE FACTS OF THE CASE, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFI CER ON ACCOUNT OF ADDITIONAL PURCHASES AND RENOVATION EXPENSES AS CLA IMED IN THE REVISED RETURN/ACCOUNTS BY TREATING THE SAME AS BOGUS AND U PHOLDING THE SAME ON THIS ISSUE, WE DISMISS GROUNDS NO. 2 & 3 OF THE ASS ESSEES APPEAL. 8. THE ISSUE RAISED IN GROUND NO. 4 RELATES TO THE ADDITION OF RS.6,69,517/- MADE BY THE LD. CIT(APPEALS) ON ACCOU NT OF SUNDRY CREDITORS WRITTEN BACK BY WAY OF ENHANCEMENT. 9. KEEPING IN VIEW THE REMAND REPORT SUBMITTED BY T HE ASSESSING OFFICER, WHEREIN THE AUTHORIZED REPRESENTATIVE WAS STATED TO BE AGREED FOR THE ADDITION OF RS.6,69,516/- ON ACCOUNT OF SUN DRY CREDITORS WRITTEN BACK ON SUBSTANTIVE BASIS, ENHANCEMENT NOTICE WAS G IVEN BY THE LD. CIT(APPEALS) TO THE ASSESSEE AND SINCE THERE WAS NO OBJECTION RAISED ON BEHALF OF THE ASSESSEE IN THIS REGARD, THE ASSESSIN G OFFICER WAS DIRECTED BY THE LD. CIT(APPEALS) TO MAKE THE ADDITION OF RS. 6,69,516/- TO THE TOTAL INCOME OF THE ASSESSEE ON SUBSTANTIVE BASIS. I.T.A. NO. 848/KOL./2012 ASSESSMENT YEAR: 2004-2005 PAGE 6 OF 7 10. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LIMITED CONTENTION RAISED BY THE LD. COUNSEL FOR THE ASSESSEE ON THIS ISSUE IS T HAT THE ADDITION OF RS.6,69,516/- WAS ALREADY MADE BY THE ASSESSING OFF ICER ON ACCOUNT OF SUNDRY CREDITORS WRITTEN BACK ON SUBSTANTIVE BASIS VIDE HIS ORDER DATED 12.03.2008 PASSED TO GIVE EFFECT TO THE ORDER OF TH E LD. CIT(APPEALS) DATED 08.02.2008 PASSED IN THE CASE OF THE ASSESSEE FOR A.Y. 2000-01. HE HAS INVITED OUR ATTENTION TO THE COPY OF THE SAID O RDER PLACED AT PAGE NO. 3 OF HIS PAPER BOOK AND SUBMITTED THAT THE DIRECTIO N GIVEN BY THE LD. CIT(APPEALS) VIDE HIS IMPUGNED ORDER TO ADD THE SAM E AMOUNT AGAIN TO THE TOTAL INCOME OF THE ASSESSEE ON SUBSTANTIVE BAS IS, WHICH HAS BEEN DULY COMPLIED BY THE ASSESSING OFFICER WHILE GIVING EFFECT TO THE ORDER OF THE LD. CIT(APPEALS) VIDE HIS ORDER PASSED ON 23.04 .2012 HAS RESULTED IN DOUBLE ADDITION. ALTHOUGH THIS POSITION CLEARLY EVI DENT FROM THE RELEVANT TWO ORDERS PASSED BY THE ASSESSING OFFICER (COPIES PLACED AT PAGE NOS. 1 AND 3 OF THE PAPER BOOK) IS NOT DISPUTED BY THE LD. D.R., HE HAS SUBMITTED THAT THE ASSESSING OFFICER MAY BE GIVEN OPPORTUNITY TO VERIFY THIS ASPECT. SINCE THE LD. COUNSEL FOR THE ASSESSEE HAS NOT RAIS ED ANY OBJECTION IN THIS REGARD, WE RESTORE THIS ISSUE TO THE FILE OF THE AS SESSING OFFICER FOR THE LIMITED PURPOSE OF VERIFYING THE GRIEVANCE OF THE A SSESSEE OF DOUBLE ADDITION AND TO ALLOW APPROPRIATE RELIEF ACCORDINGL Y. GROUND NO. 4 OF THE ASSESSEES APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TR EATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 10, 2 016. SD/- SD/- (S.S. VISHWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT ME MBER KOLKATA, THE 10 TH DAY OF AUGUST, 2016 I.T.A. NO. 848/KOL./2012 ASSESSMENT YEAR: 2004-2005 PAGE 7 OF 7 COPIES TO : (1) SHRI PARTHA MITRA, 58/1/7F, RAJA DINENDRA STREET, KOLKATA-700 006 (2) INCOME TAX OFFICER, WARD-38(3), KOLKATA, 18, RABINDRA SARANI, KOLKATA-700 001 (3) COMMISSIONER OF INCOME TAX(A)-XXIV, KOLKATA; (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.