Shri Nitish Chandra Saha, Nadia v. ITO, Ward - 1(1), Nadia, Nadia

ITA 1236/KOL/2010 | 2005-2006
Pronouncement Date: 30-03-2011

Appeal Details

RSA Number 123623514 RSA 2010
Bench Kolkata
Appeal Number ITA 1236/KOL/2010
Duration Of Justice 9 month(s) 15 day(s)
Appellant Shri Nitish Chandra Saha, Nadia
Respondent ITO, Ward - 1(1), Nadia, Nadia
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2011
Appeal Filed By Assessee
Bench Allotted SMC
Tribunal Order Date 30-03-2011
Assessment Year 2005-2006
Appeal Filed On 15-06-2010
Judgment Text
1 SMC IN THE INCOME TAX APPELLATE TRIBUNAL BENCH- SMC KOLKATA [ . .. . . .. . ] BEFORE SHRI C.D. RAO ACCOUNTANT MEMBER / ITA NO. 1236 (KOL) OF 2010 !' #$ / ASSESSMENT YEAR 2005-06 SRI NITISH CHANDRA SAHA NADIA. (PAN-ATBPS5616C) INCOME-TAX OFFICER WARD-1(1) NADIA. ('( / APPELLANT ) - ! - - VERSUS - (+ '(/ RESPONDENT ) '( - . / FOR THE APPELLANT: / SRI S.M. SURANA + '( - . / FOR THE RESPONDENT: / SRI PIYUSH KOLHE / / ORDER ( . .. . . .. . ) (C.D. RAO) ACCOUNTANT MEMBER : THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE OR DER DATED 19.03.2010 OF LD. C.I.T.(A)-XXXVI KOLKATA PERTAINING TO ASSESSMENT Y EAR 2005-06. 2. THE FIRST GROUND IN THE ASSESSEES APPEAL PERTA INS TO ADDITION OF RS.77 587/- ON ACCOUNT OF CREDIT NOTES CONFIRMED BY THE LD. C.I.T .(A). AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E WAS THE PROPRIETOR OF M/S. APSARA ELECTRONICS AND HIS WIFE WAS THE PROPRIETOR OF M/S. NEW APSARA ELECTRONICS. THE A.O. NOTED THAT THE ASSESSEE HAS NOT ACCOUNTED FOR CERTA IN CREDIT NOTES RECEIVED FROM THE SUPPLIERS AGGREGATING TO RS.1 26 966/- WHICH HE AD DED TO HIS TOTAL INCOME. AS THE MATTER WAS NOT EXAMINED PROPERLY BY THE A.O. THE L D. C.I.T.(A) CALLED FOR A REMAND REPORT FROM THE A.O. ON PAGES 8 & 9 OF THE APPELLA TE ORDER THE LD. C.I.T.(A) HAS EXTRACTED THE REMAND REPORT GIVING COMPARATIVE CHAR T OF CREDIT NOTES AS PER CREDITORS LEDGER AS ALSO AS PER ASSESSEES STATEMENT. IT WAS EXPLAINED BEFORE THE LD. C.I.T.(A) THAT OUT OF TOTAL CREDIT NOTES AS PER CREDITORS LEDGER OF RS.1 26 966/- SUM OF RS.77 578/- WAS MEANT FOR HIS PROPRIETARY CONCERN M/S. APSARA ELECT RONICS AND THE BALANCE OF RS.49 388/- WAS ON ACCOUNT OF HIS WIFES BUSINESS M /S. NEW APSARA ELECTRONICS. THEREFORE THE CREDIT NOTES IN RESPECT OF NEW APSAR A ELECTRONICS AMOUNTING TO 2 RS.49 388/- SHOULD NOT BE CONSIDERED IN THE HANDS OF THE ASSESSEE. THE LD. C.I.T.(A) CONSIDERING THE ABOVE FACTS RESTRICTED THE ADDITION TO RS.77 587/- [RS.1 26 966 RS. 49 388] AS NOT RECONCILED. 3. I HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL PLACED ON RECORD. ON PERUSAL OF THE COMPARATIVE CHART EXTRACTED FROM LEDGER ACCOUNT S OF THE SUPPLIERS AND REPRODUCED ON PAGE-8 OF THE APPELLATE ORDER IT IS FOUND THAT TOT AL CREDIT NOTES IN THE BOOKS OF THE SUPPLIERS WERE AMOUNTED TO RS.1 26 966/- WHICH WER E COMPRISED OF RS.77 578/- IN THE NAME OF THE ASSESSEES BUSINESS AND THE BALANCE OF RS.49 388/- WAS IN THE NAME OF HIS WIFES BUSINESS. SIMILARLY AS PER ASSESSEES STATEM ENT TOTAL CREDIT NOTES WERE TO THE TUNE OF RS.1 31 574/- WHICH COMPRISED OF RS.65 779/- FO R ASSESSEES OWN BUSINESS AND THE BALANCE OF RS.65 795/- WERE MEANT FOR HIS WIFES BU SINESS IN THE NAME OF M/S. NEW APSARA ELECTRICALS. I FURTHER OBSERVE THAT IN THE R EMAND REPORT THE A.O. HAS STATED AS UNDER :- IT IS EVIDENT FROM THE ABOVE CHART THAT EVEN IF THE CREDIT NOTES ALLOWED TO NEW APSARA ELECTRONICS ARE SEGREGATED FROM THE TOTAL AD DITION OF RS.1 26 966/- THE ASSESSEE HAD AN AMOUNT OF RS.77 578/- OF CREDIT NOT ES IN HIS HAND (AS PER CREDITORS LEDGER) WHICH HE DID NOT INCLUDE IN HIS TOTAL INCO ME. ON PERUSAL OF THE SAID COMMENT OF THE A.O. IT IS O BSERVED THAT HE HIMSELF HAS ADMITTED THE CREDIT NOTES IN THE SUM OF RS.49 388/- TO BE SE GREGATED FROM THE AGGREGATE SUM OF RS.1 26 966/- WHICH HAS RESULTED IN ADDITION OF RS . 77 578/-. HOWEVER I OBSERVE THAT AS PER ASSESSEES STATEMENT THE CREDIT NOTES WERE T O THE TUNE OF RS.65 799/-. THE AUTHORITIES BELOW IN MY OPINION HAVE NOT MADE ANY CROSS-VERIFICATION OF THESE TWO STATEMENTS TO ARRIVE AT THE DIFFERENCE. THEY HAVE N OT POINTED OUT AS TO WHICH CREDIT NOTE REMAINED UNVERIFIED. THE ASSESSEE HAS ALSO FILED D ETAILS OF CREDIT NOTE ON PAGE-3 OF THE PAPER BOOK. CONSIDERING THE TOTALITY OF THE FACTS A ND CIRCUMSTANCES OF THE CASE AND THE ALTERNATE SUBMISSION OF THE LD. COUNSEL I AM OF TH E CONSIDERED OPINION THAT AT BEST THE DIFFERENCE OF CREDIT NOTES BETWEEN THE TWO STATEMEN TS ONE GIVEN BY THE SUPPLIERS AND THE OTHER PRODUCED BY THE ASSESSEE IN RESPECT OF HI S OWN BUSINESS CAN BE CONSIDERED AS NOT BEING RECONCILED. IN THAT VIEW OF THE MATTER THE ADDITION IS RESTRICTED TO RS.11 799/- [RS.77 578 RS.65 779] AND THE ASSESSEE GETS RELIE F OF RS.65 788/-. THE ORDER OF THE LD. 3 C.I.T.(A) IS MODIFIED TO THE ABOVE EXTENT. THIS GRO UND OF THE ASSESSEE IS THEREFORE PARTLY ALLOWED. 4. THE ONLY OTHER GROUND IN THIS APPEAL BY THE ASS ESSEE RELATES TO CONFIRMATION OF ADDITION OF RS.45 395/- BY THE LD. C.I.T.(A) ON ACC OUNT OF DIFFERENCE IN THE CREDITORS BALANCE. DURING THE ASSESSMENT YEAR UNDER APPEAL THE ASSESSEE HAD CLAIMED TO HAVE MADE CREDIT PURCHASES FROM SEVERAL PARTIES. THE A. O. OBTAINED ACCOUNT COPIES FROM THE SUPPLIERS AND NOTED THAT THE BALANCE AMOUNTS SHOWN IN THE ACCOUNTS OF FIVE SUCH SUPPLIERS AS OUTSTANDING FROM THE ASSESSEE AS ON 31 /3/2005 WERE MORE THAN THE BALANCES SHOWN AS PAYABLE IN THE ACCOUNTS OF THE ASSESSEE. H E THEREFORE TREATED THE DIFFERENCE OF RS.1 15 912/- AS REFLECTED ON PAGE-9 OF THE LD. C. I.T.(A)S ORDER AS UNACCOUNTED PURCHASES AND ADDED THE SAME TO THE ASSESSEES TOTA L INCOME. THE LD. C.I.T.(A) OBTAINED REMAND REPORT FROM THE A.O. AND AFTER CONSIDERING T HE SAME AS ALSO THE SUBMISSIONS OF THE ASSESSEE IN THAT REGARD DIRECTED THE A.O. TO TA KE THE UNACCOUNTED PURCHASE TO THE EXTENT OF RS.45 395/- AS AGAINST RS.1 15 912/- TAKE N BY THE A.O. BY OBSERVING AS UNDER:- I HAVE CAREFULLY CONSIDERED THE ABOVE. I HAVE A LSO PERUSED A/C COPIES OF THE APPELLANT AS APPEARING IN THE ACCOUNTS OF 3 SUPPLIE RS I.E. M/S. SHANTI TRADERS M/S JOUTAK AND M/S TIRTHA DISTRIBUTORS. APPARENTLY TH E ASSESSING OFFICER MISTOOK M/S. APSARA (PROPRIETARY CONCERN OF THE APPELLANT) AS M/ S NEW APSARA (PROP. CONCERN OF THE APPELLANTS WIFE). HOWEVER STILL THE BALANCES OF AMOUNTS SHOWN BY THE APPELLANT IN HIS BOOKS AS OUTSTANDING AS ON 31/3/20 05 ARE NOT TALLYING WITH THOSE IN THE SUPPLIERS ACCOUNTS. FOR EXAMPLES THE BOOKS OF ACCOUNT OF M/S. JOUTAK M/S. SHANTI TRADERS AND TRITHA DISTRIBUTORS WERE SHOWING AMOUNTS RECEIVABLE FROM THE APPELLANT AT RS.1 40 521/- RS.1 57 665/- AND RS.70 482/- RESPECTIVELY WHILE THE APPELLANT WAS SHOWING THEM AT RS.1 31 181/- RS.1 2 9 181/- AND RS.65 308/- RESPECTIVELY. FURTHER THE APPELLANT DID NOT FURNI SH ANY RECONCILIATION EXCEPT CONTENDING THAT THE AO MADE MISTAKES. CONSIDERING THE ABOVE AND TAKING INTO ACCOUNT THE CORRECT AMOUNT OF DIFFERENCE IN RESPECT OF M/S. SHANTI TRADERS (I.E. RS.1 57 665 RS.1 29 181)=RS.28 484/- (INSTEAD OF AT RS.99 001/- TAKEN BY THE AO) THE AMOUNT OF LIABILITY UNDERSTATED BY THE APPELLAN T WORKS OUT TO RS.45 395/-. THIS AMOUNT BE TAKEN AS UNACCOUNTED PURCHASES. ACCORDIN GLY THE AO IS DIRECTED TO RESTRICT THE ADDITION TO RS.45 395/- AGAINST RS.1 1 5 912/-. 5. THE LD. COUNSEL SUBMITTED THAT IN ALL THE CASES THE CREDITORS HAVE SHOWN MORE DEBIT BALANCE IN THE NAME OF THE ASSESSEE WHEREAS THE ASSESSEE HAS SHOWN LESS CREDIT IN THEIR NAMES AND THUS THE DIFFERENCE CANNOT BE ADDED AS ASSESSEES INCOME. HE FURTHER SUBMITTED THAT ADDITION CAN BE MADE FOR EXCESS PURC HASES ONLY IF ANY INVESTMENT OR EXPENDITURE IS MADE FOR PURCHASE WHICH IS NOT RECOR DED BY THE ASSESSEE IN HIS BOOKS OF 4 ACCOUNT. ACCORDING TO HIM FURTHER MERELY BECAUSE T HE CREDITORS HAVE SHOWN SOME MORE BALANCE DEBITED TO THE ASSESSEES ACCOUNT IN SPITE OF THE FACT THAT THERE WAS NO EVIDENCE OF MAKING ANY PAYMENT BY THE ASSESSEE DURING THE AS SESSMENT YEAR UNDER APPEAL IT CANNOT BE SAID THAT THERE WAS SOME UNEXPLAINED EXPE NDITURE OR PURCHASE. THE LD. COUNSEL ALTERNATIVELY SUBMITTED THAT EVEN IF UNACCO UNTED PURCHASES ARE ACCEPTED THEN AT BEST THE NET PROFIT ON SUCH ALLEGED UNACCOUNTED PUR CHASES WHICH WAS @ 1.1/2% IN THE YEAR UNDER APPEAL CAN BE ADDED. IN SUPPORT OF HIS SUBMISSIONS THE LD. COUNSEL INTER ALIA RELIED ON THE FOLLOWING DECISIONS COPIES OF WHICH ARE FILED IN THE PAPER BOOK :- C.I.T. VS. S.M. UMER [201 ITR 608 (CAL)] C.I.T. VS. RAM PIYARA SATISH KUMAR [257 ITR 768 (P&H)] EAGLE SEEDS & BIOTECH LTD. VS. ACIT [100 ITD 301 (INDORE)] BABLU KUNDU VS. ITO [ITA NO.1825/KOL/2006 ORDER DATED 29/12/2006] THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND RELIED ON THE ORDER OF LD. C.I.T.(A). 6. I HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL PLACED ON RECORD INCLUDING THE CASE LAWS RELIED UPON BY THE LD. COUNSEL. THE A.O. ON VERIFICATION OF ACCOUNTS OF FIVE OF THE SUPPLIERS IN COMPARISON TO THE BOOKS OF ACCOUNT OF THE ASSESSEE FOUND UNEXPLAINED PURCHASES TO THE EXTENT OF RS.1 15 912/- WHICH HE A DDED TO THE ASSESSEES TOTAL INCOME. THE LD. C.I.T.(A) OBSERVING THAT THE A.O. MISTOOK T HE PURCHASES OF THE BUSINESS OF THE ASSESSEES WIFE IN THE ASSESSEES HAND AND OUTSTAND ING IN THE BOOKS OF SOME OF THE SUPPLIERS NOT BEING TALLIED WITH THAT OF THE ASSESS EE RESTRICTED THE ADDITION TO RS.45 395. IT IS PERTINENT TO MENTION HERE THAT WHEN THERE WER E UNRECORDED PURCHASES SOME EXPENDITURE MUST HAVE BEEN INCURRED IN EFFECTING SA LES OF THOSE UNRECORDED PURCHASES. FROM THE COMPUTATION OF INCOME IN THE ASSESSMENT OR DER IT IS FOUND THAT THE ENTIRE AMOUNT OF UNRECORDED PURCHASE HAS BEEN ADDED AND NO G.P. OR N.P. WAS ADDED TO THE INCOME OF THE ASSESSEE. CONSIDERING THE FACTS OF TH E CASE AND THE ALTERNATIVE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE I AM OF THE CONSI DERED VIEW THAT THE A.O. WAS NOT JUSTIFIED IN ADDING THE UNRECORDED PURCHASE IN ITS ENTIRETY. THE LD. C.I.T.(A) ALTHOUGH DELETED A PORTION OF THE ADDITION AND SUSTAINED A S UM OF RS.45 395/- AS UNACCOUNTED PURCHASES AFTER VERIFICATION OF THE ACCOUNTS OF THE SUPPLIERS AND THE ASSESSEE BUT HE HAS 5 ALSO NOT APPLIED THE GROSS PROFIT RATE ON SUCH UNAC COUNTED PURCHASES FOR THE PURPOSE OF ADDITION IN THIS REGARD. IT IS A SETTLED POSITION THAT UNDISCLOSED INCOME ON ACCOUNT OF UNACCOUNTED PURCHASES IS TO BE WORKED OUT BY APPLYI NG GROSS PROFIT RATE. THE CONTENTION OF THE LD. COUNSEL THAT THE NET PROFIT RATE SHOWN B Y THE ASSESSEE AT 1.1/2% SHOULD BE APPLIED ON SUCH UNRECORDED PURCHASES FOR THE PURPOS E OF ADDITION IS NOT ACCEPTED. ACCORDINGLY I DIRECT THE A.O. TO CHARGE G.P. ON T HE ADDITION OF RS.45 395/- SUSTAINED BY THE LD. C.I.T.(A) ON ACCOUNT UNACCOUNTED PURCHA SE AND TO ADD THE SAME TO THE TOTAL INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDE R APPEAL. THE A.O. SHALL MAKE NECESSARY MODIFICATION IN THE ASSESSMENT. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. 0 / 1 2 1! 3 04 THIS ORDER IS PRONOUNCED IN OPEN COURT ON 30.3.2011. SD/- ( . .. . . .. . ) (C.D.RAO) ACCOUNTANT MEMBER ( (( ( ) )) ) DATE: 30-03-2011 / - + 5 65#7- COPY OF THE ORDER FORWARDED TO : 1. '( / THE APPELLANT : SRI NITISH CH. SAHA M.M.GHOSH STREET (DUTTA MARKET ) MRISHNAGAR N ADIA. 2 + '( / THE RESPONDENT : I.T.O. WARD-1(1) NADIA. 3. /! () : THE CIT(A)-XXXVI KOLKATA. 4. /!/ THE CIT KOL- 5 . ; 3 + ! / DR ITAT KOLKATA BENCHES KOLKATA 6 . GUARD FILE . 5 + / TRUE COPY /!1/ BY ORDER (DKP) < = / DY/ASSTT. REGISTRAR .