ITO, Paradeep V. Chandan Kumar Sahoo, Kendrapada

ITA 93/CTK/2012

• Counselvise Citation: 9322114 RSA 2012
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 28-06-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 02-02-2012
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: R K DAS
• Keywords: Unexplained investment; Income from undisclosed sources; Source of fund; Additional evidence; Revised return

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 93/CTK/2012 (ASSESSMENT YEAR 2008 - 09) INCOME - TAX OFFICER, WARD 2, PARADEEP. VERSUS CHANDAN KUMAR SAHOO, MARSHAGHAI, KENDR APARA PAN: AVKPS 3738 C (APPELLANT) (RESPONDENT) ITA NO. 119/CTK/2012 (ASSESSMENT YEAR 2008 - 09) CHANDAN KUMAR SAHOO, MARSHAGHAI, KENDRAPARA PAN: AVKPS 3738 C VERSUS INCOME - TAX OFFICER, WARD 2, PARADEEP. (APPELLANT) (RESPONDENT) FOR THE DEPARTMENT: SHRI S.C.MOHANTY, DR FOR THE ASSESSEE: SHRI R.K.DAS, AR DATE OF HEARING : 28.06.2012 DATE OF PRONOUNCEMENT : 14.08.2012 ORDER SHRI K.S.S.PRASAD RAO, JM : B OTH THESE APPEALS ONE FILED BY THE REVENUE AND THE OTHER FILED BY THE ASSESSEE AGAINS T THE ORDER DT.25.11.2011 OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) FOR THE ASSESSMENT YEAR 2008 - 09, WERE TAKEN UP TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE REVENUE HAS RAISED THE FOLL OWING GROUND OF APPEAL. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. FIRST APPELLATE AUTHORITY WAS NOT JUSTIFIED IN DELETING THE ADDITIONS OF 78,401 , 20,67,034 AND 33,469 MADE ON ACCOUNT OF DIFFERENCE IN PURCHASE OF LUBRICANTS, M.S. & HSD FROM HPCL AND PROFIT ELEMENT ARISEN THEREON AND ALSO ERRED IN DELETING INTEREST PAID TO SBI AMOUNTING TO 80,294 RELYING ON ONLY THE ASSESSEES SUBMISSION BEFORE HIM - WHEN THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE SAME BEFORE THE AO IN SPITE OF ADEQUATE OPPORT UNITIES OFFERED TO HIM. FURTHER, THE LD. CIT(A) WAS NOT JUSTIFICATION TO ALLOW THE RELIEF TO THE ASSESSEE WITHOUT AFFORDING AN OPPORTUNITY TO THE A.O. TO EXAMINE THE ISSUE IN QUESTION IN CONTRAVENTION OF PROVISIONS OF RULE 46A OF THE I.T. RULE 1962. ITA NO.93/CTK/2012 (BY REVENUE) ITA NO.119/CTK/2012 (BY ASSESSEE) (CROSS APPEALS) 2 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THAT THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS), CUTTACK AND ASSESSING OFFICER ARE BOTH WRONG IN NOT ALLOWING THE OPENING STOCK OF TARINI ENGINEERING AMOUNTING TO 4,03,523 UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT THE ADDITION OF 7,960.74 FOR AS BOOKS CREDITORS IS UNJUSTIFIED UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE . 4 . ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL I N THE LIGHT OF THE SUBMISSIONS OF BOTH THE PARTIES, THE UNDISPUTED FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE IS AN INDIVIDUAL WHO FILED ITS RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING TOTAL INCOME OF 2,67,086, WHICH WAS PROCESSED BY THE ASSESSING OFFICER U/S.143(1) OF THE I.T.ACT,1961 ON 10.3.2010. SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY AND AFTER ISSUE OF STATUTORY NOTICES, ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT. DURING THE SCRUTINY ASSESSMENT, THE ASSESSING OFFICE R COMPARED THE PURCHASES OF PETROLEUM AND LUBRICANTS OBTAINED FROM HPCL WITH THOSE SHOWN IN THE ASSESSEES BOOKS OF ACCOUNT AND FOUND DIFFERENCE OF 20,67,034 IN CASE OF PETROLEUM AND 78,401 IN CASE OF LUBRICANTS TOTALING TO 21,45,435. THE ASSESSING OFFICER HELD THIS EXCESS PURCHASES AS UNACCOUNTED INVESTMENT AND ADDED THE SAME TO THE TOTAL INCOME. FURTHER, THE ASSESSING OFFICER HELD THAT THE EXCE SS PURCHASES OF PETROLEUM AND LUBRICANTS MUST HAVE BEEN SOLD OUTSIDE THE BOOKS OF ACCOUNTS AND THEREFORE, HE ESTIMATED THE PROFIT OF 33,469 BEING 1.56% ON 21,45,435. FURTHER ON VERIFICATION OF THE OPENING STOCK OF THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE CLOSING STOCK OF THE EARLIER ASSESSMENT YEAR, THE ASSESSING OFFICER FOUND DISCREPANCY IN THE CLOSING STOCK AS ON 31.3.2007 AND THE OPENING STOCK AS ON 12.4.2007 AT 4,03,523, WHICH HE HELD AS PURCHASES FROM UNDISCLOSED SOURCES AND SO, HE ADDED THE AMOUNT OF 4,03,523 TO THE TOTAL INCOME OF THE ASSESSEE. BESIDES ABOVE, THE ASSESSING OFFICER ALSO MADE ADDITION OF 7,960 ON ACCOUNT OF ITA NO.93/CTK/2012 (BY REVENUE) ITA NO.119/CTK/2012 (BY ASSESSEE) (CROSS APPEALS) 3 SUNDRY CREDITORS, 10,000 TOWARDS DISALLOWANCE OUT OF TRAVELLING EXPENSES, 80,294 OUT OF INTEREST PAID TO BANKS. 5 . A GGRIEVED, THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY AND THE LEARNED CIT(A) AFTER CONSIDERING THE MATERIAL MADE AVAILABLE TO HIM AND THE SUBMISSIONS OF THE ASSESSEE, DELETED THE ADDITION OF 20,67,034 AND 78,401 MADE ON THE GROUND OF EXCES S PURCHASES OF PETROLEUM AND LUBRICANTS RESPECTIVELY AND ALSO THE PROFIT ESTIMATED AT 33,469. HE ALSO DELETED THE ADDITION OF 80,294 MADE OUT OF INTEREST PAID TO BANKS. HE, HOWEVER, CONFIRMED THE OTHER ADDITIONS. 6. THE REVENUE HAS FILED DISPUTING THE DELETION OF ADDITIONS MADE BY THE LEARNED CIT(A), WHEREAS THE ASSESSEE HAS DISPUTED THE SUSTENANCE OF ADDITIONS MADE BY THE LEARNED CIT(A) AS PER THEIR RESPECTIVE GROUNDS OF APPEAL AS REPRODUCED EARLIER. 7. FIRST WE TAKE UP THE REVENUES APPEAL. THE LEARN ED DR CONTENDED THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITIONS MADE BY THE AO ON THE FINDING OF DIFFERENCE IN PURCHASES OF PETROLEUM AND LUBRICANTS FROM HPCL AND THE ADDITION ON ACCOUNT OF ESTIMATED PROFIT THEREON AND ALSO THE DISALLOW ANCE OF 80,294 OUT OF INTEREST PAID TO BANKS WITHOUT AFFORDING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE ISSUE IN CONTRAVENTION OF PROVISIONS OF RULE 46A OF THE I.T.RULES,1962. THE LEARNED AR OF THE ASSESSEE, ON THE OTHER HAND, SUPPORTED THE IMPUGNED ORDER OF THE LEARNED CIT(A) ON THIS ISSUES. 8. HAVING HEARD BOTH THE PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE ASSESSING OFFICER HAD MADE THE ADDITION ON ACCOUNT OF EXCESS PURCHASE OF PETROLEUM FROM HPCL TOTALING TO 20,67,034.27. THE LEARNED CIT(A) DELETED THE SAME ON THE OBSERVATION THAT THE DIFFERENCE OF 20,67,034.24 HAS ARISEN BECAUSE OF SOME REVERSAL ENTRIES APPEARING IN THE ITA NO.93/CTK/2012 (BY REVENUE) ITA NO.119/CTK/2012 (BY ASSESSEE) (CROSS APPEALS) 4 BOOKS OF ACCOUNT OF HPCL ON DIFFERENT DATES AS MENTIONED IN HIS ORDER AS UNDER: DATE AMO UNT IN 07.06.2007 3,95,465.89 10.06.2007 3,95,465.89 23.07.2007 4,37,957.48 19.10.2007 3,95,492.02 31.10.2007 4,42,652.09 TOTAL: 20,67,034.27 FURTHER THE LEARNED CIT(A) HAS DELETED THE ADDITION OF 78,401 ON VERIFICATION OF THE PURCHASE ACCOUNT OF THE ASSESSEE FOUND THAT THE DIFFERENCE OF 78,401 IN THE PURCHASES OF LUBRICANT IS THE INPUT OVAT CREDIT WHICH HAS BEEN CREDITED BY THE ASSESSEE AND ADJUSTED AGAINST THE OVAT DUE AND COLLECTED ON SALES. NOTHING WAS BROUGHT ON RECORD BY THE REVENUE TO CO NTROVERT SUCH FINDING OF THE LEARNED CIT(A). MOREOVER, THE LEARNED CIT(A) HAS ARRIVED AT SUCH FINDING ON EXAMINATION OF BOOKS OF ACCOUNT, WHICH CANNOT BE TERMED AS ADDITIONAL EVIDENCE AND SO, WE DO NOT FIND ANY MERIT IN THE LEARNED DR THAT THE LEARNED CIT( A) DELETED THE ADDITIONS IN CONTRAVENTION TO RULE 46A OF THE I.T.RULES,1962 WITHOUT GIVING OPPORTUNITY TO THE ASSESSING OFFICER TO HAVE HIS SAY. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER OF THE LEARNED CIT(A) IN DELETING THE ABOVE TWO ADDITIONS AND ALSO THE PROFIT THEREON ESTIMATED AT 33,469. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER OF THE LEARNED CIT(A) IN THIS REGARDS AND DISMISS THE APPEAL OF THE REVENUE BEING DEVOID OF MERIT. 9. NOW ADVERTING TO THE APPEAL OF THE ASSESSEE , GROUND NO.1 RELATES TO CONFIRMATION OF THE ADDITION OF 4,03,523 ON ACCOUNT OF DISCREPANCY IN STOCK. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. T HE ASSESSING OFFICER IN HIS ORDER OBSERVED AS UNDER: 3. DIFFERENCE IN OPENING STOCK : THE ASSESSEE H AS SHOWN OPENING STOCK AMOUNTING TO 16,48,752 FOR THE A.Y.2008 - 09. ON VE RIFICATION OF THE PREVIOUS ITA NO.93/CTK/2012 (BY REVENUE) ITA NO.119/CTK/2012 (BY ASSESSEE) (CROSS APPEALS) 5 YEAR S RETURN, IT WAS FOUND THAT, THE CLOSING STOCK FOR THE A.Y.2007 - 08 WAS 12,45,752. HENCE THE DISCREPANCY IN THE CLOS ING STOCK AS ON 31.3.2007 AND OPENING STOCK AS ON 01.4.2007 OF 4,03,523 HAS BEEN CONFRONTED TO THE ASSESSEE AND A.R. OF THE ASSESSEE AS TO WHY THE ABOVE DIFFERENCE SHALL NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE . THE ASSESSEE HAS STATED IN WRITING THAT, THE RETURN FILED FOR THE ABOVE A.Y. DOES NOT CONTAIN THE TRANSACTIONS OF M/S. TARINI ENGINEERING. THE ASSESSEE HAS NOT ALSO FILED ANY REVISED RETURN FOR THE ABOVE SAID DIFFERENCE. THE ASSESSEE HAS FILED AN AUDIT REPORT OF M/S. SRI BALADEVJEW FUEL CEN TRE ON 25.10.2010 AUDITED BY MR. R.K.DAS, C.A., PARTNER OF M/ S. R. K .DAS & ASSOCIATES WITHOUT ENCLOSING 3C B AND 3CD FORM. HE HAS B EEN REQUESTED TO PRODUCE THE 3CB AND 3CD FORM S. BUT WITHOUT PRODUCING THE 3CB AND 3CD FORMS HE HAS SUBMITTED ANOTHER AUDIT REPORT PREPARED BY A. JENA ,C.A., PARTNER OF M/ S. R.K.DAS AND ASSOCIATES IN WHICH SRI CHANDAN KUMAR SAHOO IS THE PROP. OF THREE CONCERNED SUCH AS M/S. SRI BALADEVJEW FUEL CENTRE, SRI SIDHAVINOYAK TYRES AND TARINI ENGINEERING. THE ABOVE FACT H AS BEEN CO NFRONTED TO THE ASSESSEE AND IN REPLY HE STATED THAT, MR. R.K. DAS, CA HAS BEEN AUDITED THE ACCOUNTS OF SRI BALADEVJEW FUEL CENTRE AND SRI SIDHAVINAYAK TYRES ONLY FOR THE PURPOSE OF LOAN PURPOSE . INFORMATION CALL ED FOR FROM MR. R.K.DAS, C.A. IN T HIS REGARD AND HE STATED THAT HE HAS AUDITED THE ACCOUNTS OF THREE CONCERNED OF SRI CHANDAN KUMAR SAHOO. IF THE ASSESSEE HAS THE IDEA ABO UT THE INCOME OF THREE CONCERNS , HE SHOULD HAVE FILED THE REVISED RETURN FOR THE EXCESS INCOME FOR THE ASSESSMENT YEAR 2007 - 08. HOWEVER, THE EXPLANATION OF THE ASSESSEE IS NOT SATISFACTORY. ACCORDINGLY THE DIFFERENTIAL AMOUNT OF 4,03,523 AS DISCUSSED ABOVE IS TREATED AS STOCK PURCHASED FROM UNDISCLOSED SOURCES OF INCOME AND ADDED BACK TO THE TOTAL INCOME. FROM THE ABOVE , IT IS SEEN THAT THE EXPLANATION AS OFFERED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, IN OUR CONSIDERED VIEW, HAS RIGHTLY BEEN HELD AS NOT CONVINCING BY THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A). THE LEARNED AR OF THE ASSESSEE PRODUCED NO FU RTHER MATERIAL EXCEPT REITERATING THE STAND TAKEN BEFORE THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A). THE AUTHORITIES BELOW ARE RIGHT IN HOLDING THAT IF THE ASSESSEE HAD THE IDEA ABOUT THE INCOME OF THREE CONCERNS, IT SHOULD HAVE FILED REVISED RETU RN FOR THE EXCESS INCOME. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ITA NO.93/CTK/2012 (BY REVENUE) ITA NO.119/CTK/2012 (BY ASSESSEE) (CROSS APPEALS) 6 IMPUGNED ORDER OF THE LEARNED CIT(A) UPHOLDING THE ADDITION OF 4,03,523 BEING STOCK DIFFERENCE AS MENTIONED ABOVE. GROUND NO.1 RAISED BY THE ASSESSEE, THEREFORE, IS DISMIS SED BEING DEVOID OF MERIT. 11. IN GROUND NO.2 THE ASSESSEE HAS DISPUTED THE CONFIRMATION OF THE ADDITION OF 7,960 ON ACCOUNT OF DISCREPANCY IN SUNDRY CREDITORS. 12. HAVING HEARD BOTH THE PARTIES AND PERUSING THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL, WE FIND THAT THE ASSESSEE HAD SHOWN THE CREDIT BALANCE OF 14,91,257.63 AS AGAINST THAT SHOWN BY THE SELLER HPCL AT 14,83,297 AND THUS THERE WAS A EXCESS CREDIT BALANCE SHOWN AT 7,960, WHICH THE ASSESSING OFFICER HELD AS BOGUS CREDIT AND ADDED THE SAME TO THE TOTAL INCOME THE ASSESSEE HAVING FAILED TO OFFER SATISFACTORY EXPLANATION. THE LEARNED CIT(A) HAS ALSO OBSERVED THAT THE ASSESSEE FAILED TO FURNISH SATISFACTORY EXPLANATION. HERE BEFORE US, THE LEARNED AR OF THE ASSESSEE ALSO COULD NOT EXPLAIN THE ABOV E EXCESS CREDIT BALANCE. THEREFORE, GROUND NO.2 IS ALSO DEVOID OF MERIT AND AS SUCH, WE DISMISS THE SAME. 13. IN VIEW OF THE ABOVE, THE APPEAL OF THE ASSESSEE IS DISMISSED. 14. IN THE RESULT, BOTH THE APPEALS BEING ITA NO.93/CTK/2012 FILED BY THE REVENUE A ND ITA NO.119/CTK/2012 FILED BY THE ASSESSEE ARE DISMISSED . S D/ - S D/ - (K.K.GUPTA) ACCOUNTANT MEMBER ( K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 14.08.2012 H.K.PADHEE, SENIOR PRIVATE SECRETARY. ITA NO.93/CTK/2012 (BY REVENUE) ITA NO.119/CTK/2012 (BY ASSESSEE) (CROSS APPEALS) 7 COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE CHANDAN KUMAR SAHOO, MARSHAGHAI, KENDRAPARA PAN: AVKPS 3738 C : 2. THE DEPARTMENT : INCOME - TAX OFFICER, WARD 2, PARADEEP. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLI CATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY. APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 26.07.2012 .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 27.07.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S 14.08.2012 . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 14.08.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..