Purna Chandra Sahoo, Kolkata V. ITO, Ward 41(1), Kolkata, Kolkata

ITA 988/KOL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6999 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 08-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T VARKEY J M
• Assessee Lawyers: AKASH BANSAL DR SANKAR HALDER
• Keywords: Unexplained cash credit; Unexplained investment; Unexplained expenditure
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENC H KOLKATA BEFORE SHRI ABY T VARKEY, JM & SHRI M.BALAGANESH, AM ITA NO.988/KOL/2017 ( ASSESSMENT YEAR:2010-11 ) SHRI PURNA CHANDRA SAHOO 43A, BHUPEN BOSE AVENUE KOLKATA 700 004 VS. I.T.O. WARD 41(1) 3, GOVERNMENT PLACE (W) KOLKATA 700 004 PAN/GIR NO. ARKPS6458F (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI AKASH BANSAL REVENUE BY DR. SANKAR HALDER DATE OF HEARING 04/04/2019 DATE OF PRONOUNCEMENT 26/04/2019 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO.988/KOL/2017 FOR A.Y.2010-11 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (AP PEALS)-13, KOLKATA IN APPEAL NO.462/CIT(A)-13/W-44(1)/KOL/2014-15 DATED 2 4/01/2017 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PA SSED U/S.143(3)OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS AC T) DATED 26/03/2013 BY THE LD. ITO, WARD-41(1),KOLKATA (HEREINAFTER REF ERRED TO AS LD. AO). 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING ADDITION MADE ON ACCOUNT OF UNEXPLAINED INCOME IN THE FACTS AND CIRCUMSTANCES O F THE CASE. ITA NO.988/KOL/2017 SHRI PURNA CHANDRA SAHOO 2 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSES SEE IS AN INDIVIDUAL AND HAD FILED HIS RETURN OF INCOME FOR THE A.Y.2010 -11 ON 13/10/2010 DECLARING TOTAL INCOME OF RS.2,12,850/-. THE ASSESS EE IS ENGAGED IN THE BUSINESS OF HIRING OF CRANES, DIGGING EQUIPMENTS AN D OTHER EQUIPMENTS FOR CIVIL CONSTRUCTION. THE LD. AO OBSERVED THAT AS SESSEES AUTHORISED REPRESENTATIVE APPEARED FROM TIME TO TIME AND FURNI SHED BOOKS OF ACCOUNTS AND OTHER DETAILS / DOCUMENTS AS CALLED FO R VIDE NOTICE U/S.142(1) OF THE ACT IN SUPPORT OF THE RETURN OF I NCOME WHICH WERE SUBJECT TO TEST CHECK BY THE LD. AO. 3.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE LD. AO ISSUED LETTERS TO DIFFERENT PARTIES U/S.133(6) OF THE ACT. ON PERUSAL OF AUDITED BALANCE SHEET FOR THE YEAR UNDER APPEAL, THE LD. AO FOUND THAT ASSESSEE HAS SHOWN SUNDRY DEBTORS / BILLS RECEIVABLE ON RS.3 ,10,427/- AGAINST M/S. SIMPLEX INFRASTRUCTURES LTD., WHEREAS AS PER THE BA LANCE SHOWN IN THE BOOKS OF M/S. SIMPLEX INFRASTRUCTURES LTD., THE CLO SING BALANCE WAS RS.41,23,078/- AS PAYABLE TO ASSESSEE. THE ASSESSEE WAS ASKED TO EXPLAIN THE DIFFERENCE OF RS.38,12,651/- (RS. 41,23 ,078 RS. 3,10,427). THE LD. AO ALSO PROVIDED THE STATEMENT OF ACCOUNTS OBTAINED BY HIM U/S.133(6) OF THE ACT FROM M/S. SIMPLEX INFRASTRUCT URES LTD., TO ENABLE THE ASSESSEE TO RECONCILE THE SAME. THE ASSESSEE ST ATED VIDE LETTER DATED 25/03/2013 THAT THERE WAS NO DIFFERENCE IN THE INCO ME OFFERED UNDER HIRE CHARGES RECEIVED BY THE ASSESSEE. IT WAS PLEADED TH AT THE INCOME HAS BEEN DULY RECONCILED AND THE SAME MATCHES WITH THE AUDITED ACCOUNTS OF THE ASSESSEE, HENCE NO ADDITION TOWARDS THE DIFFERE NCE IN CLOSING BALANCE NEED TO BE MADE AS SUGGESTED BY THE LD. AO IN THE S HOW-CAUSE NOTICE ISSUED TO THE ASSESSEE. THE LD. AO DID NOT HEED TO THIS CONTENTION OF THE ASSESSEE AND ACCORDINGLY PROCEEDED TO ADD THE DIFFE RENCE IN SUNDRY DEBTORS FIGURE OF RS.38,12,651/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE IN THE ASSESSMENT. ITA NO.988/KOL/2017 SHRI PURNA CHANDRA SAHOO 3 3.2. THE LD. AO ASKED THE ASSESSEE TO FURNISH EVIDE NCES IN RESPECT OF PURCHASE OF CRANE OF RS.35,71,000/- SHOWN IN THE AS SET SIDE OF THE BALANCE SHEET. HE OBSERVED THAT NO EVIDENCES WERE F URNISHED IN THIS REGARD. THE ASSESSEE WAS AGAIN SHOW-CAUSED VIDE LET TER DATED 12/03/2013 WHEREIN HE WAS REQUESTED TO FURNISH THE EVIDENCES LIKE BILLS / VOUCHERS, BLUE BOOK, COPY OF TRANSFER OF CRANE AND PARTY LEDGER OF THE PERSON FROM CRANE WAS PURCHASED BY THE ASSESSEE ON 15/03/2013. THE ASSESSEE VIDE LETTER DATED 21/03/2013 REPLIED THAT IN CASE OF CRANE, BLUE BOOK AND COPY OF TRANSFER OF CRANE IS NOT REQUIRED. BASED ON THIS STATEMENT, THE LD. AO CONCLUDED THAT ASSESSEE DOES NOT HAVE ANY EVIDENCE IN SUPPORT OF PURCHASE OF CRANE TOGETHER W ITH SOURCE OF PAYMENT FOR THE SAME. ACCORDINGLY, HE TREATED THE SUM OF RS .35,71,000/- AS UNEXPLAINED EXPENDITURE U/S.69C OF THE ACT AND ADDE D THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. BEFORE APPELLATE PROC EEDINGS, THE ASSESSEE PLEADED THAT HE HAD NO KNOWLEDGE REGARDING BOOKS OF ACCOUNTS AND HAD FULLY DEPENDED ON QUALIFIED CHARTERED ACCOUNTANT FO R THE SAME AND HE COULD NOT EXPLAIN THE ENTRIES FOUND IN THE BOOKS OF ACCOUNTS PROPERLY BEFORE THE LD. AO DURING THE COURSE OF ASSESSMENT P ROCEEDINGS. AN AFFIDAVIT IN THIS REGARD WAS ALSO FILED BEFORE THE LD. CIT(A). 3.3. WITH REGARD TO ADDITION MADE TOWARDS DIFFERENC E IN CLOSING BALANCE OF SUNDRY DEBTORS IN THE SUM OF RS.38,12,651/- IT W AS PLEADED THAT THE LD. AO HAD NOT MADE ANY OBJECTION ON THE BALANCE OF SUN DRY DEBTORS AS ON 01/04/2009 AND THERE WAS NO DIFFERENCE IN HIRE CHAR GES RECEIVED DURING THE FINANCIAL YEAR 2009-10 RELEVANT TO A.Y.2010-11. THE ASSESSEE PLEADED THAT THE LD. AO HAD NOT FOUND ANY DEFECTS IN THE BO OKS OF ACCOUNTS PRODUCED BEFORE HIM. HENCE, NO ADDITION COULD BE MA DE MERELY BECAUSE THERE IS DIFFERENCE IN CLOSING BALANCE OF SUNDRY DE BTORS. THE ASSESSEE PLEADED BEFORE THE LD. CIT(A) THAT THE LD. AO FOUND THAT M/S. SIMPLEX INFRASTRUCTURES LTD., HAD SHOWN CLOSING BALANCE OF RS.41,23,078/- WHICH HAD TO BE SHOWN AS DEBTORS OF THE ASSESSEE IN THE B OOKS OF ASSESSEE ITA NO.988/KOL/2017 SHRI PURNA CHANDRA SAHOO 4 ALSO. IT WAS PLEADED THAT THE ASSESSEE HAD CLAIMED PURCHASE OF CRANE IN THE ASSETS SIDE TO THE EXPENDITURE OF RS.35,71,000/ - . IF THE BALANCE SHEET OF THE ASSESSEE IS RECASTED AND ACTUAL DEBTORS ARE SHOWN THEN THERE WOULD BE SHORTAGE OF RS.38,12,651/- ON THE LIABILIT Y SIDE OF THE BALANCE SHEET WHICH MEANS THAT THE ASSESSEE HAD INTRODUCED HIS UNEXPLAINED INCOME TO THE EXTENT OF RS.38,12,651/-. THEREFORE, THE ONLY ADDITION IN THIS REGARD COULD BE SUSTAINED WHICH IS UNEXPLAINED CASH FROM OR UNEXPLAINED INVESTMENT FOR PURCHASE OF PLANT AND MA CHINERY. IT WAS PLEADED THAT THE DEBTORS ARE CORRESPONDINGLY REFLEC TED IN THE FORM OF HIRE CHARGES RECEIVED / SALES BY THE ASSESSEE IN HIS PRO FIT AND LOSS ACCOUNT AND THERE CANNOT BE ANY ADDITION SEPARATELY MADE TOWARD S UNEXPLAINED DEBTORS DUE TO DIFFERENCE IN CLOSING BALANCE BETWEE N THE ASSESSEES BOOKS AND THE BOOKS OF ACCOUNTS OF THE SUNDRY DEBTOR. THE LD. CIT(A) DELETED THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH CR EDIT IN THE SUM OF RS.38,12,651/- FOR THE DIFFERENCE IN SUNDRY DEBTORS BALANCE BY OBSERVING AS UNDER:- THE DEBTORS ARE ALREADY TAKEN IN TO CONSIDERATION OF HIS SALE WHICH CANNOT BE SAID TO BE AS UNEXPLAINED DEBTORS. THE AP PELLANT HAS INTRODUCED PLANT & MACHINERY IN PLACE OF SUNDRY DEB TORS WHICH SHOWS THAT IT WAS AN ATTEMPT TO AVOID UNEXPLAINED CASH CR EDIT ON THE LIABILITY SIDE OF THE BALANCE SHEET BY REPLACING THE FIGURE O F SUNDRY DEBTOR AS PLANT AND MACHINERY. IF DEBTORS AND PLANT & MACHINE RY BOTH ARE SHOWN IN ASSET SIDE OF THE BALANCE SHEET THEN THEIR REMAI NS DEFICIT IN THE LIABILITY SIDE OF RS.38,12,651/-. KEEPING IN VIEW THE AFORESA ID FACT, THE ADDITION MADE ON ACCOUNT OF SUNDRY DEBTORS WHICH IS ALREADY SHOWN AS A PART OF SALE IS HEREBY DELETED AND ADDITION OF UNEXPLAINED CASH CREDIT OF RS.38,12,651/- IS HEREBY DIRECTED TO BE MADE WHICH HAS BEEN UTILISED FOR PURCHASE OF PLANT & MACHINERY. THIS GROUND OF APPEA L IS PARITY ALLOWED. 3.4. THE LD. CIT(A) WITH REGARD TO ADDITION OF RS.3 5,71,000/- ON ACCOUNT OF PURCHASE OF CRANE OBSERVED AS UNDER:- ITA NO.988/KOL/2017 SHRI PURNA CHANDRA SAHOO 5 6.3. GROUND NO.4(C) RELATES TO THE ADDITION OF RS.35,71,000/- ON ACCOUN T OF OF CRANE AS UNEXPLAINED EXPENDITURE U/S 69C OF THE INCOME TAX ACT, 1961 WHICH WAS NOT SUBSTANTIATED BY PURCHASE BILLS. TH E APPELLANT COULD NOT EXPLAIN THE AFORESAID PURCHASE OF MACHINERY. AS IN THE ABOVE PARAS THE CORRESPONDING UNEXPLAINED INVESTMENT CREDIT HAS ALREADY BEEN ADDED, THEREFORE, THE SAME ADDITION AGAINST PURCHASE OF MACHINERY IS TO BE SUSTAINED IN A SENSE THAT THE INVESTMENT IN PLANT A ND MACHINERY WAS UNEXPLAINED. IN NUTSHELL GROUND NOS.4(B) & 4(C), AD DITION HAS BEEN MADE ON UNDISCLOSED DEBTORS AND UNEXPLAINED INVESTMENT FOR PLANT & MACHINERY WHICH CLEARLY SHOWS THAT THE APPELLANT, IN ORDER TO ADJUST HIS BALANCE SHEET FIGURE KEPT HIS DEBTORS OUT OF BOOKS AND AGAINST TH IS FIGURE PLANT & MACHINERY PURCHASED WAS SHOWN WHICH HAS NO CORRESPO NDING SOURCE. WHILE DOING THE AFORESAID INVESTMENT, ON THE LIABILITY SI DE UNEXPLAINED CASH CREDIT HAS BEEN MADE WITHOUT WHICH MATCHING OF BALANCE SHE ET WAS NOT POSSIBLE. KEEPING IN VIEW THE AFORESAID FACT, THE UNEXPLAINED INVESTMENT IS RAISED TO THE EXTENT OF RS.3812651/- IN PLACE OF RS.3571000/- AS HELD IN GROUND NO. 4(B) OF WHICH IS DIFFERENTIAL OF SUNDRY DEBTORS AND THE SAME IS UPHELD AND THE GROUNDS OF APPEAL IS DISMISSED. THUS, THE TOTAL ADD ITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT WHICH INCLUDES ADDITION ON ACCOUNT OF PURCHASE OF PLANT & MACHINERY IS WORKED OUT TO RS.38,12,651/-ON LY. 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US O N THE FOLLOWING GROUNDS. 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A)15, KOLKATA ERRED IN HOLDING THE TOTAL ADDITION ON ACCO UNT OF UNEXPLAINED CASH CREDIT WHICH INCLUDES ADDITION ON ACCOUNT OF PLANT & MACHINERY. THE LD. C.I.T. (A)-13, KOLKATA RECASTED THE BALANCE SHEET C ONSIDERING ONLY ONE PARTS NOT ALL THE FULL. 2. THAT THE APPELLANT CRAVES THE LEAVE S TO ADD, ALTER, MODIFY, OR DELETE ANY GROUND OF APPEAL. 5. WE HAVE HEARD RIVAL SUBMISSIONS. AT THE OUTSET, WE FIND THAT ASSESSEE HAS FILED A PARTICULAR BALANCE SHEET BEFOR E THE ASSESSING OFFICER AND HAD PLEADED FOR RECASTING OF THE SAID BALANCE S HEET BEFORE THE LD. CIT(A) BY TAKING A PLEA THAT CERTAIN DEBTORS WERE S HOWN AS PURCHASE OF PLANT AND MACHINERY. WE ARE IN PRELIMINARY AGREEMEN T WITH THE ARGUMENT OF THE LD. AR THAT NO ADDITION COULD BE MADE TOWARD S DIFFERENCE IN CLOSING ITA NO.988/KOL/2017 SHRI PURNA CHANDRA SAHOO 6 BALANCE OF THE SUNDRY DEBTORS AS LONG AS THE INCOME COMPONENT IN THE FORM OF HIRE CHARGES RECEIVED DURING THE YEAR TALLI ES IN BOTH THE PARTIES BOOKS. IN OTHER WORDS, IF THE INCOME OF THE YEAR HA S BEEN DULY OFFERED BY THE ASSESSEE CORRECTLY, THEN THERE COULD NOT BE ANY ADDITION SEPARATELY THAT COULD BE MADE TOWARDS DIFFERENCE IN CLOSING BA LANCE OF SUNDRY DEBTORS BETWEEN TWO PARTIES. BUT WE FIND THAT THE L D. AR WAS TRYING TO LINK THIS DIFFERENCE IN SUNDRY DEBTORS WITH THE PUR CHASE OF CRANE IN THE SUM OF RS.35,71,000/- BY STATING THAT DEBTORS ARE B EING SHOWN AS PLANT AND MACHINERY IN THE BALANCE SHEET. WE FIND THAT NO SUCH FINDING HAS BEEN RECORDED BY THE LD. AO IN HIS ASSESSMENT ORDER REGARDING THESE AVERMENTS MADE BY THE ASSESSEE. CONSIDERING THE TOT ALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DEEM IT FIT AND APPRO PRIATE IN THE INTEREST OF JUSTICE AND FAIR PLAY, TO REMAND THIS ISSUE TO THE FILE OF THE LD. AO FOR DENOVO ADJUDICATION AND DECIDE THE SAME IN ACCORDANCE WITH LAW. THE ASSESSEE IS AT LIBERTY TO FURNISH ADDITIONAL EVIDEN CES IN SUPPORT OF HIS CONTENTIONS. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26/04/ 2019 SD/ - ( ABY T VARKEY ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 26/04/2019 ITA NO.988/KOL/2017 SHRI PURNA CHANDRA SAHOO 7 KARUNA SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, KOLKATA 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//