M/S KESVAN JEWELLERS ,KOLKATA V. ACIT, CIR. 32, KOLKATA

ITA 871/KOL/2024

AI Insights

M/s Kesvan Jewellers appealed against the order of the National Faceless Appeal Centre (CIT(A)), which upheld the additions made by the Assessing Officer under various heads including process loss, disallowed travel expenses, and discrepancies in job workers' payments. The Assessing Officer had treated a significant process loss as payments to manufacturers without TDS, disallowed travel expenses due to incomplete vouchers, and added undisclosed incomes from job workers' payments. The Tribunal noted the assessee's failure to appear before the CIT(A) on multiple occasions and the ex parte nature of the order, leading to the decision to remand the case for a fresh hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 36049 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ASSESSING
• Keywords: Opportunity of being heard; Business expenditure; TDS
• Section: 142(1); 250; 22; 40(a)(ia); 194C

Judgement Text

"आयकर अपीलȣय अͬधकरण, कोलकाता पीठ, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH KOLKATA Before Shri Rajesh Kumar, Accountant Member and Shri Sonjoy Sarma, Judicial Member I.T.A. No.871/Kol/2024 Assessment Year: 2012-13 M/s Kesvan Jewellers….………………………………………..………….……Appellant Room No.6, 2nd Floor, 80, Burtalla Street, Burrabazar, Kol-700007. [PAN: AAEFK3801F] vs. ACIT, Circle-32, Kolkata……..……....….….. ……………….........……...…..…..Respondent Appearances by: Shri Anil Kochar, AR, appeared on behalf of the appellant. Shri H. Robindro Singh, Addl. CIT - DR, appeared on behalf of the Respondent. Date of concluding the hearing : February 06, 2025 Date of pronouncing the order : February 10, 2025 ORDER Per Sonjoy Sarma, Judicial Member: The present appeal has been preferred by the assessee against an order dated 21.02.2024 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. Brief facts of the case are that the assessee is engaged in the business of manufacturing and trading gold, silver, platinum, diamond and precious metals and for the assessment year 2012-13, the assessee filed a return of income declaring income of Rs.47,71,680/-. The case of the assessee was selected for scrutiny under CASS in order to examine a large amount of creditors. Accordingly, notices u/s 143 & 142(1) of the Act were issued along with questionnaire. The assessee in response to the notices filed its reply and represented the case by his authorized representative time to time and the case of the assessee was discussed by the Assessing Officer with the authorized representative. During the I.T.A. No.871/Kol/2024 Assessment Year: 2012-13 M/s Kesvan Jewellers 2 assessment proceedings, the Assessing Officer noted from the tax audit report that a loss of Rs.6658.867 grams of 22 crt. gold value which comes to Rs.1,81,16,446/-. The Assessing Officer raised query as to why the process loss should not be treated as payment made to gold manufacturers without deducting TDS u/s 194C of the Act and consequently why the amount should not be disallowed u/s 40(a)(ia) of the Act. In response to the same, the assessee submitted its reply but the Assessing Officer was not satisfied and therefore, he treated the process loss of Rs.1,81,16,446/- as a payment made to manufacturers without deducting TDS and disallowed the same u/s 40(a)(ia) of the Act and added the amount to the assessee’s total income. Additionally, the Assessing Officer observed that the assessee had incurred travelling expenses of Rs.8,77,054/- which was supported by self-made vouchers having incomplete addresses of recipients. Due to lack of complete verifications, the Assessing Officer disallowed 1/5th of the expenses i.e. 1,75,411/- and also added back the same to the income of the assessee. Further, the Assessing Officer noticed that there was discrepancy in job workers payment wherein the assessee made payment to job workers namely Shri Paran Paul and Shri Biswanath Dhara. Shri Paran Paul received a sum of Rs.1,22,871/- whereas the assessee disclosed a liability of Rs.1,77,881/- in his books of account and the closing balance in the assessee’s book did not match with the credit records which led the Assessing Officer to treat the amount of Rs.1,22,871/- as income from undisclosed income of the assessee. Similarly, Shri Biswanath Dhara had claimed to have received work charges of Rs.1,10,443/- in cash while the assessee denied to show this amount as liability and consequently, the Assessing Officer added the same to the income of the assessee as unexplained payments. Thus, the total addition under this head was at Rs.2,33,314/-. Accordingly, the Assessing Officer made total I.T.A. No.871/Kol/2024 Assessment Year: 2012-13 M/s Kesvan Jewellers 3 addition of Rs.1,85,25,171/- in the hands of the assessee by assessing income at Rs.2,32,96,850/- 3. Dissatisfied with the above order, the assessee preferred an appeal before the ld. CIT(A) against the assessment order. The ld. CIT(A) decided the appeal on merits and upheld the order of the Assessing Officer. 4. Aggrieved by the said order, the assessee filed the present appeal before this Tribunal raising various grounds. However, the primary contention of the ld. AR is that the process loss in gold manufacturing was legitimate business expenses and a clear distinction was made between gold making charges in West Bengal, Gujarat and Maharashtra, where, higher wages accounted for. The Assessing Officer was failed to consider this fact and made the addition erroneously at Rs.1,81,16,446/-, which should be deleted. Similarly, he stated that travelling disallowance of Rs.1,75,411/- was incorrect as the expenses were purely a business expneses and should be allowed. The ld. AR also stated that the addition of Rs.2,33,314/- under discrepancy in job workers payment was unjustified as the Assessing Officer failed to properly verify the same in respect of explanations given by the assessee. The ld. AR, therefore, stated that the appeal of the assessee may be allowed by deleting the aforesaid additions made by the Assessing Officer. 5. On the other hand, the ld. DR objected to assessee’s above plea by arguing that the assessee failed to appear before the ld. CIT(A) on nine occasions and did not furnish necessary supporting documents. He stated that the assessee vide his Ground No.3 has contended that ld. CIT(A) passed an ex parte order without giving proper opportunity of hearing to the assessee, therefore, the assessee failed to substainte his I.T.A. No.871/Kol/2024 Assessment Year: 2012-13 M/s Kesvan Jewellers 4 case. Considering the same, the ld. DR also stated the appeal of the assessee should be dismissed in limine. 6. We, after hearing both the parties and perusing the materials available on record, find that the assessee has failed to appear before the ld. CIT(A) on multiple dates and did not able to furnish supporting documents and the ld. CIT(A) passed an ex parte order. Under the circumstances, in the interests of justice and fair play, we feel it justified to remand the whole issue back to the file of the ld. CIT(A) with a direction that the ld. CIT(A) will examine the issues afresh after providing reasonable opportunity of being heard to the assessee. 7. In terms of the above, the appeal of the assessee is allowed for statistical purposes. Kolkata, the 10th February, 2025. Sd/- Sd/- [Rajesh Kumar] [Sonjoy Sarma] लेखा सदèय/Accountant Member ÛयाǓयक सदèय/Judicial Member Dated: 10.02.2025. RS Copy of the order forwarded to: 1. M/s Kesvan Jewellers 2. ACIT, Circle-32, Kolkata 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches "