ITO, Ward - 1(3), Midnapore v. Sri Uday Ranjan Paul, Paschim Medinipur

ITA 1578/KOL/2009 | 2006-2007
Pronouncement Date: 24-09-2010

Appeal Details

RSA Number 157823514 RSA 2009
Assessee PAN AETPP6110K
Bench Kolkata
Appeal Number ITA 1578/KOL/2009
Duration Of Justice 10 month(s) 1 day(s)
Appellant ITO, Ward - 1(3), Midnapore
Respondent Sri Uday Ranjan Paul, Paschim Medinipur
Appeal Type Income Tax Appeal
Pronouncement Date 24-09-2010
Appeal Filed By Department
Bench Allotted B
Tribunal Order Date 24-09-2010
Date Of Final Hearing 20-05-2010
Next Hearing Date 20-05-2010
Assessment Year 2006-2007
Appeal Filed On 23-11-2009
Judgment Text
1 B IN THE INCOME TAX APPELLATE TRIBUNAL BENCH- B KO LKATA [ . . . . . .. . . .. . ! ! ! !. .. . '# ] BEFORE SHRI B.R.MITTAL JUDICIAL MEMBER & SRI C.D. RAO ACCOUNTANT MEMBER $ $ $ $ / ITA NO. 1578 (KOL) OF 2009 %& '( / ASSESSMENT YEAR 20026-07 INCOME-TAX OFFICER WARD-1(3) MIDNAPORE. SRI UDAY RANJAN PAUL PASCHIM MEDINIPUR. (AETPP6110K) (+ / APPELLANT ) - % - - VERSUS - (/0+ / RESPONDENT ) + 1 2 '/ FOR THE APPELLANT: / SRI PIYUSH KOLHE /0+ 1 2 ' / FOR THE RESPONDENT: N O N E '3 / ORDER ( . . . . . .. . ) (B.R.MITTAL) JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE DEPARTMENT AGAINST TH E ORDER OF LD. C.I.T.(A)-XXXVII KOLKATA DATED 20/05/2009 FOR ASSESSMENT YEAR 2006-0 7 DISPUTING THE DELETION OF VARIOUS ADDITIONS MADE BY THE A.O. THE DEPARTMENT HAS REVI SED THE GROUNDS OF APPEAL WHICH HAVE BEEN CONSIDERED BY US. THESE REVISED GROUNDS ARE AS UNDER :- 1. COMMISSION PAID ON SALE OF TRACTORS :- THE LD. CIT APPEAL HAD ERRED IN DIRECTING THE A.O. TO DELETE THE ADDITION OF RS.1 96 720/- MADE ON ACCOUNT OF FAILURE TO PROVE T HE GENUINENESS OF EXPENDITURE INCURRED ON COMMISSION PAID. 2. BOGUS SUNDRY CREDITORS :- THE LD. CIT APPEAL HAD ERRED IN DIRECTING THE A .O. TO DELETE THE ADDITION MADE UNDER THE HEAD BOGUS SUNDRY CREDITORS. M/S AUTO SUP PLY CO. WAS SHOWN AS CREDITOR FOR OTHER ADVANCE FOR RS.97 000/- NOT AS SUNDRY CRE DITOR. HENCE THERE IS NO REASON TO TREAT M/S AUTO SUPPLY CO. AS SUNDRY CREDITOR FOR THE IDENTICAL AMOUNT INSTEAD OF M/S. AGRO SERVICE CENTRE AND THE ASSESSEE HAD ALSO FAILED TO SUBSTANTIATE HIS CLAIM. SO THE LD. CIT(A) WAS NOT JUSTIFIED IN HIS ACTION. 3. LIABILITY NO LONGER EXISTS : - NO OUTSTANDING LIABILITY FOR ADVANCE OF RS.4 75 074/- WAS SHOWN BY THE ASSESSEE IN THE AUDITED BALANCE SHEET. THE ASSESSEE HAD FAIL ED TO SUBSTANTIATE HIS CLAIM THAT IT 2 WAS INCLUDED UNDER THE HEAD THE SUNDRY CREDITOR. HE NCE THE A.O. HAD RIGHTLY ADDED THE SAME AND THE LD. CIT(A) HAD ERRED IN DIRECTING THE A.O. TO DELETE THE ADDITIONS. 4. LOAN CREDITORS :- THE ASSESSEE TOOK FRESH LOAN FOR RS.5 LAKHS DU RING THE YEAR UNDER OTHER ADVANCES HEAD. AS THE ASSESSEE HAD FAILED TO PROVE HIS ONUS REGARDING GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THE LOAN CREDIT ORS THE ENTIRE LOAN AMOUNT OF RS. 5 LAKHS TAKEN THIS YEAR IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE AS INCOME FROM SOME UNDISCLOSED SOURCE. THEREFORE THE LD. CI T(A) HAD ERRED IN DIRECTING THE A.O. TO DELETE THE ADDITION. 5. UNDISCLOSED INCOME :- IT IS FOUND FROM THE TDS CERTIFICATE ISSUED BY M/S. SWARAJ MAZDA LTD. THAT THE ASSESSEE EARNED INCOME FOR RS.20 750/- U/S.194C. BU T THE SAID INCOME WAS NOT SHOWN IN THE COMPUTATION OF INCOME FILED BY THE ASS ESSEE. HENCE RS.20 750/- HAD RIGHTLY BEEN ADDED BACK TO THE TOTAL INCOME AS UNDI SCLOSED INCOME BY THE ASSESSEE. THE LD. CIT (A) HAD THEREFORE ERRED IN DIRECTING T HE A.O. TO DELETE THE ADDITIONS. FOR ALL THESE GROUNDS THE 2ND APPEAL IS PREFE RRED IN THIS CASE FOR THE INTEREST OF REVENUE. 2. ON THE DATE OF HEARING BEFORE THE TRIBUNAL NON E APPEARED ON BEHALF OF THE ASSESSEE-RESPONDENT THOUGH THE CASE WAS ADJOURNED ON THE REQUEST OF THE ASSESSEE. WE HAVE THEREFORE DECIDED TO DISPOSE OF THE APPEAL EX PARTE QUA THE ASSESSEE AFTER CONSIDERING THE SUBMISSIONS OF THE LD. DEPARTMENTAL REPRESENTATIVE AND THE MATERIAL PLACED ON RECORD. THE LD. DEPARTMENTAL REPRESENTAT IVE RELIED ON THE ORDER OF THE A.O. 3. THE FIRST ISSUE IN THIS REVENUES APPEAL RELATE S TO DELETION OF ADDITION OF RS.1 96 720/- ON ACCOUNT OF COMMISSION ON SALE OF T RACTORS. THE ASSESSEE IS PROPRIETOR OF M/S. JACK PAUL & SONS PASCHIM MEDINIPUR. DURIN G THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE CLAIMED PAYMENT OF COMM ISSION OF RS.1 96 720/- TO ONE SRI AJIT KR. ROY MADE BY ACCOUNT PAYEE CHEQUE. IN SUPPO RT OF SUCH PAYMENT THE ASSESSEE SUBMITTED BEFORE THE A.O. COPY OF BILLS/VOUCHERS L EDGER COPY OF COMMISSION PAID LIST OF TRACTOR SOLD LIST OF SUNDRY CREDITORS & DEBTORS COPY OF ACKNOWLEDGEMENT OF I.T. RETURN OF SRI ROY AND CONFIRMATION FROM THE PAYEE. IT WAS ALSO STATED BY THE ASSESSEE THAT THE COMMISSION WAS PAID ON SALE OF TRACTORS AN D THE EXPENDITURE WAS NECESSARY IN VIEW OF INCREASING SALES IN COMPETITIVE MARKET AND EARLY RELEASE OF STOCKS. IT WAS FURTHER STATED THAT THE COMMISSION WAS PAID AS CIRC UMSTANCES REQUIRED AND IT WAS NOT 3 PAID ON A FIXED RATE. OBSERVING THAT THE COMMISSIO N WAS PAID AT DIFFERENT RATES THE A.O. ISSUED NOTICE U/S. 133(6) TO SRI AJIT KR. ROY CALLI NG FOR THE DETAILS BUT THERE WAS NO RESPONSE FROM HIM. THE A.O. THEREFORE HELD THAT T HE GENUINENESS OF TRANSACTION COULD NOT BE ESTABLISHED BY THE ASSESSEE. HE THUS DISALL OWED THE EXPENDITURE OF RS.1 96 720/- CLAIMED TO HAVE BEEN INCURRED ON PAYMENT OF COMMISS ION AND ADDED BACK THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 3.1. ON APPEAL THE LD. C.I.T.(A) DELETED THE ADDI TION WITH THE FOLLOWING OBSERVATION :- THE APPELLANT CLAIMED PAYMENT OF COMMISSION OF RS. 1 96 720/- TO MR. AJIT KR. ROY. THE AO ISSUED NOTICE U/S. 133(6). IN THE ABSENCE O F RESPONSE THE AO DISALLOWED THE COMMISSION CLAIMED BY THE APPELLANT. IT IS SEEN TH AT THE APPELLANT PAID COMMISSION FOR THE SALE OF TRACTORS. THE APPELLANT FILED COPY OF ACKNOWLEDGEMENT FOR FILING THE RETURN OF BY AJIT KR. ROY. COPY OF THE BANK ACCOUNT AND TH E CONFIRMATION OF THE BANK REGARDING THE CREDIT OF COMMISSION IN THE BANK ACCO UNT OF MR. ROY IS FILED. THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE THAT TH E PAYMENT MADE IS NOT FOR THE PURPOSE OF BUSINESS. IT IS SEEN THAT THE APPELLANT IS REGULARLY PAYING COMMISSION FOR THE SALE OF TRACTORS. IN VIEW OF THE EVIDENCE PRESENTE D BY THE APPELLANT THE PAYMENT MADE TO MR. AJIT KR. ROY IS PROVED. THE AO IS DIRECTED TO ALLOW THE EXPENDITURE OF RS.1 96 720/-. THE AO IS DIRECTED TO DELETE THE AD DITION OF RS.1 96 720/-. 3.2. AT THE TIME OF HEARING BEFORE US THE LD. DEP ARTMENTAL REPRESENTATIVE SUBMITTED THAT THE A.O. FOUND THAT THE ASSESSEE HAD SHOWN PAY MENT OF COMMISSION TO SRI AJIT KR. ROY AT DIFFERENT RATES AND FOR VERIFICATION THE A.O . ISSUED NOTICE U/S. 133(6) TO THE SAID RECEIVER OF COMMISSION WHICH REMAINED UNCOMPLIED W ITH. WHEN INFORMED TO THE ASSESSEE THE ASSESSEE ALSO FAILED TO SUBMIT ANY RE PLY FROM THAT PERSON OR HIS APPEARANCE BEFORE THE A.O. THEREFORE THE ASSESSEE COULD NOT ESTABLISH THE PAYMENT OF COMMISSION AND THE A.O. HAS RIGHTLY DISALLOWED THE SAME. 3.3. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTA TIVE AND PERUSED THE MATERIAL PLACED BEFORE US. THERE IS NO DISPUTE THAT DURING T HE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FURNISHED SEVERAL EVIDENCES IN SUPPORT OF PAYMENT OF COMMISSION BY CHEQUE TO SRI AJIT KR. ROY FOR THE SALE OF TRACTORS WHICH INTER ALIA INCLUDED VOUCHERS LEDGER COPY OF COMMISSION PAID LIST OF SUNDRY CRED ITORS & DEBTORS WITH ADDRESS COPIES OF BANK STATEMENT OF SRI ROY SHOWING CREDIT OF THE AMOUNT AND ACKNOWLEDGEMENT FOR FILING OF RETURN BY HIM FOR THE YEAR UNDER CONSIDER ATION. WE FURTHER OBSERVE THAT THE A.O. HAS NOT DENIED THE NECESSITY OF PAYMENT OF COM MISSION BECAUSE HE HAS NOT 4 BROUGHT ON RECORD ANY MATERIAL TO PROVE THAT THE EX PENDITURE CLAIMED BY THE ASSESSEE WAS NOT FOR THE PURPOSE OF HIS BUSINESS. THE MAIN T HRUST GIVEN BY THE A.O. FOR DISALLOWING THE EXPENDITURE WAS THAT SRI AJIT KT. R OY RECEIVER OF COMMISSION DID NOT COMPLY WITH THE NOTICE ISSUED U/S. 133(6) AND THE A SSESSEEE BY MERELY SAYING THAT THE PAYMENT WAS MADE THROUGH CHEQUE COULD NOT DO ANYTHI NG. IT HAS BEEN STATED BY THE LD. C.I.T.(A) THAT THE ASSESSEE HAS BEEN REGULARLY PAYI NG COMMISSION FOR THE SALE OF TRACTORS. IN VIEW OF THE ABOVE AND CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE HOLD THAT THE LD. C.I.T.(A) HAS RIG HTLY DIRECTED THE A.O. TO DELETE THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF COMMISS ION PAYMENT OF RS.1 96 720/-. WE THEREFORE UPHOLD HIS ORDER ON THIS ISSUE AND G ROUND NO.1 OF THE REVENUES APPEAL IS DISMISSED. 4. THE NEXT GROUND OF THE REVENUES APPEAL RELATES TO DELETION OF ADDITION OF RS.97 000/- ON ACCOUNT OF BOGUS SUNDRY CREDITORS. THE FACTS RELATING TO THIS ISSUE ARE THAT ON VERIFICATION OF THE LIST OF SUNDRY CREDITOR S INCORPORATED IN THE ASSESSEES BALANCE SHEET THE A.O. FOUND THAT THE ASSESSEE HAD SHOWN A N OUTSTANDING BALANCE OF RS.1 02 000/- PAYABLE TO M/S. AGRO SERVICE CENTRE PANSKURA MIDNAPORE. THE A.O. MADE ENQUIRIES BY WAY OF ISSUING NOTICE U/S. 133(6) TO THE SAID M/S. AGRO SERVICE CENTRE WHO DENIED OF ANY SUCH OUTSTANDING BALANCE. WHEN CONFRONTED THE ASSESSEE EXPLAINED THAT THERE WAS A TYPOGRAPHICAL MISTAKE IN MENTIONING THE NAME OF CREDITOR AND THE ACTUAL NAME SHOULD BE M/S. AUTO SUPPLY CO. IN STEAD OF M/S. AGRO SERVICE CENTRE. IT WAS FURTHER STATED THAT THE CREDIT BALANCE OF RS .97 000/- WAS SHOWN IN THE EARLIER YEAR IN THE NAME OF M/S. AUTO SUPPLY CO. WHICH IS ALSO REFLECTED IN THE ACCOUNT OF THE YEAR UNDER CONSIDERATION AND M/S. AGRO SERVICE CENTRE WA S SHOWN AS A CREDITOR WITH OUTSTANDING BALANCE OF RS.5 000/-. THE A.O. HOWEVE R REJECTED THE ASSESSEES EXPLANATION THAT THE NAME OF THE SUNDRY CREDITOR BE TAKEN AS M/S. AUTO SUPPLY CO. INSTEAD OF M/S. AGRO SERVICE CENTRE AND ACCORDIN GLY HELD THAT SINCE M/S. AGRO SERVICE CENTRE DENIED TO HAVE ANY BALANCE PAYABLE B Y THE ASSESSEE THE BALANCE SHOWN IN THE ASSESSEES BALANCE SHEET WAS NOT ACCEPTED BY HIM. HE THUS MADE AN ADDITION OF RS.1 02 000/- AS BOGUS CREDITOR. IT IS PERTINENT T O MENTION HERE THAT IN THE BODY OF THE ASSESSMENT ORDER ON PAGE-3 AMOUNT OF ADDITION IS M ENTIONED AS RS.1 00 000/- WHEREAS 5 IN THE COMPUTATION PART OF THE ORDER ON PAGE-5 THE ADDITION UNDER THE HEAD BOGUS SUNDRY CREDITORS IS MENTIONED AT RS.1 02 000/-. F ROM THE DISCUSSIONS MADE IN THE ASSESSMENT ORDER IN OUR OPINION THE ADDITION MADE BY THE A.O. WAS FOR RS.1 02 000/- AND NOT RS.1 00 000/-. 4.1. ON APPEAL THE LD. C.I.T.(A) AFTER CONSIDERIN G THE SUBMISSIONS OF THE ASSESSEE EVIDENCES ON RECORD AND THE ASSESSMENT ORDER SUSTAI NED THE ADDITION TO THE EXTENT OF RS. 5 000/- AS UNEXPLAINED AND DELETED THE BALANCE ADDI TION OF RS.95 000/- BY OBSERVING AS UNDER :- THE APPELLANT DISCLOSED CREDIT BALANCE OF RS.1 02 0 00/- UNDER SUNDRY CREDITOR IN THE NAME OF AGRO SERVICE CENTRE. THE AO CAUSED ENQUIRI ES BY ISSUING NOTICE U/S. 133(6). M/S. AGRO SERVICE CENTRE REPORTED THAT THERE IS NO BALANCE RECEIVABLE FROM THE APPELLANT. THE AO CALLED FOR THE APPELLANTS EXPLA NATION. THE APPELLANT CONTENDS THAT THE BALANCE RELATES TO AUTO SUPPLY CO. AND NOT AGRO SERVICE CENTRE AS WRONGLY DISCLOSED IN THE BALANCE SHEET. THIS CONTENTION OF THE APPELLANT IS ACCEPTABLE SINCE AGRO SERVICE CENTRE REPORTED THAT THERE IS NO BALAN CE RECEIVABLE FROM THE APPELLANT. IT IS SEEN THAT AS PER BALANCE SHEET OF THE LAST YEAR CREDIT BALANCE OF RS.97 000/- EXISTS IN THE NAME OF THE AUTO SUPPLY CO. IN THIS YEAR THE BA LANCE DISCLOSED IS RS.1 02 000/-. THERE IS NO EXPLANATION FOR THE INCREASE IN THE CRE DIT BALANCE OF RS. 5000/-. HENCE THE INCREASE OF RS.5 000/- IS NOT PROPERLY EXPLAINED BY THE APPELLANT. THE ADDITION OF RS.5 000/- AS BOGUS CREDITOR IS SUSTAINED. THE APP ELLANT GETS RELIEF OF RS.95 000/- [RS.1 00 000 RS.5 000/-] HERE ALSO WE OBSERVE THAT THE LD. C.I.T.(A) CONSIDE RED THE ADDITION OF RS.1 00 000/- INSTEAD OF RS.1 02 000/- RESULTING IN DELETION OF ADDITION OF RS.95 000/- INSTEAD OF RS. 97 000/- [RS.1 02 000 RS.5 000] AFTER SUSTAINING THE ADDITION OF RS.5 000/- AS UNEXPLAINED. WE THEREFORE DEAL WITH THE ACTUAL A DDITION OF RS.97 000/- DELETED BY THE LD. C.I.T.(A). 4.2. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTA TIVE AND PERUSED THE RECORD. AS STATED ABOVE THE ASSESSEE DISCLOSED IN HIS BALANCE SHEET THE CREDIT BALANCE OF RS.1 02 000/- IN THE NAME OF M/S. AGRO SERVICE CENT RE. THE A.O. MADE VERIFICATION FROM M/S. AGRO SERVICE CENTRE AND ACCORDING TO HIM THE SAID M/S. AGRO SERVICE CENTRE DENIED HAVING ANY OUTSTANDING BALANCE PAYABLE BY TH E ASSESSEE TO IT. WHEN CONFRONTED THE ASSESSEE EXPLAINED THE TYPOGRAPHICAL MISTAKE OC CURRED IN THE BALANCE SHEET FOR MENTIONING THE NAME OF M/S. AGRO SERVICE CENTRE INS TEAD OF M/S. AUTO SUPPLY CO. THE A.O. DID NOT ENTERTAIN THE SAID EXPLANATION RESULT ING IN ADDITION OF RS.1 02 000/- AS 6 BOGUS CREDIT. WE OBSERVE THAT THE A.O. HAS NOT MADE ANY ENQUIRY FROM M/S. AUTO SUPPLY CO. TO JUSTIFY THE ASSESSEES VERSION THAT C REDIT BALANCE IS APPEARING IN THE ASSESSEES BALANCE SHEET FROM LAST YEAR IN THE NAME OF THE SAID M/S. AUTO SUPPLY CO. AND DUE TO TYPOGRAPHICAL MISTAKE THE NAME OF THE CR EDITOR VIZ. M/S. AUTO SUPPLY CO. HAS BEEN WRONGLY MENTIONED IN THE BALANCE SHEET AS M/S. AGRO SERVICE CENTRE. HE ACTED ONLY ON THE DENIAL OF M/S. AGRO SERVICES CENTRE. FU RTHER AS STATED BY THE LD. C.I.T.(A) AS PER LAST YEARS BALANCE SHEET OF THE ASSESSEE TH E CREDIT BALANCE OF RS.97 000/- EXISTED IN THE NAME OF M/S. AUTO SUPPLY CO. WHEREAS THE AS SESSEE HAS SHOWN IN HIS BALANCE SHEET FOR THE YEAR UNDER CONSIDERATION THE CREDIT B ALANCE AGAINST THAT PARTY OF RS.1 02 000/- AND THE DIFFERENCE OF RS.5 000/- COUL D NOT BE SATISFACTORILY EXPLAINED BY THE ASSESSEE. IN THAT VIEW OF THE MATTER WE FIND N O JUSTIFICATION TO INTERFERE WITH THE ORDER OF LD. C.I.T.(A) IN SUSTAINING THE ADDITION O F RS.5 000/- AND GIVING RELIEF OF RS.97 000/- TO THE ASSESSEE. THE ORDER OF LD. C.I.T .(A) ON THIS ISSUE IS THEREFORE UPHELD AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSE D. 5. THE NEXT GROUND OF THE REVENUE RELATES TO DELET ION OF ADDITION OF RS.4 75 074/- ON ACCOUNT OF NON-EXISTING LIABILITY. IN THE PREVIO US ASSESSMENT YEAR 2005-06 THE ASSESSEE SHOWED A LIABILITY FOR RS.4 75 074/- ON AC COUNT OF ADVANCES CONSISTING OF THE FOLLOWING FIVE PARTIES :- I) SHRI AMIYA RANJAN PAUL - RS.1 45 072 II) M/S. AUTO SUPPLY CO. - RS. 97 000 III) SHRI CHITTARANJAN PAUL - RS.1 50 000 IV) SMT. JHUMA PAUL - RS. 35 000 V) SMT. JYOTSANA SENGUPTA - RS. 48 002 RS.4 75 074/- THE A.O. NOTICED THAT THE SAID CREDIT BALANCE OF EA RLIER YEAR HAS NOT BEEN DISCLOSED IN THE BALANCE SHEET OF THE ASSESSEE FOR THE ASSESSMENT YE AR UNDER CONSIDERATION. IN REPLY TO QUERY THE ASSESSEE STATED THAT THE AFORESAID ADVAN CES WERE INCLUDED UNDER THE HEAD SUNDRY CREDITOR AND IN SUPPORT OF SUCH EXPLANATIO N COPY OF AUDITORS CERTIFICATE WAS SUBMITTED. THE A.O. FOUND THESE ADVANCES DULY INCL UDED UNDER THE HEAD SUNDRY CREDITOR. HE HOWEVER HELD THAT THE ASSESSEE HAS DELIBERATELY TRANSFERRED HIS LIABILITY OF LOAN CREDITORS OF RS.4 75 074/- TO SUNDRY CREDITORS LIST TO CREATE FAKE LIABILITY AND 7 THEREFORE THE LIABILITY FOR LOAN DID NOT EXIST. H E THUS ADDED BACK THE SUM OF RS.4 75 074 AS BOGUS LIABILITY TO THE TOTAL INCOME OF THE ASSES SEE. 5.1. ON APPEAL THE LD. C.I.T.(A) DELETED THE ADDI TION OF RS.4 65 074/- BY OBSERVING AS UNDER :- THE APPELLANT CONTENDS THAT THE AO ERRED IN ASSESSI NG THE CREDIT BALANCE OF RS.4 75 074/-. IT IS SUBMITTED THAT THE ADVANCE RE CEIVED FROM THESE PERSONS IS DISCLOSED IN THE BALANCE SHEET FOR THE EARLIER YEAR. IT IS S UBMITTED THAT THE LOANS WERE TAKEN DURING EARLIER YEARS AND NOT FOR THIS YEAR. IT IS SUBMITTE D THAT IN THE BALANCE SHEET THESE ADVANCES ARE DISCLOSED UNDER HEAD SUNDRY CREDITOR. IT IS SUBMITTED THAT THE LIABILITY IS NOT WAIVED. IT IS SUBMITTED THAT THE AMOUNT IS STILL PA YABLE. IT IS CONTENDED THAT SINCE THIS LIABILITY IS NOT WAIVED IT IS NOT ASSESSABLE AS NO N-EXISTING LIABILITY. IT IS CONTENDED THAT THE AO HAS NOT CAUSED PROPER ENQUIRIES WITH THE CRE DITORS BEFORE COMING TO SUCH CONCLUSION. IT IS PRAYED THAT THE ADDITION BE DELET ED. THE AO NOTICED AN AMOUNT OF RS.4 75 074/- AS ADVANCE RECEIVED FROM FIVE PARTIES. THIS ADVANCE WAS DISCLOSED IN THE BALANCE SHEET OF THE EARLIER YEAR. THE ADVANCE COULD NOT BE SEEN BY THE AO IN THE BALANCE SHEET IN THIS YEAR. THE AO CALLED FOR THE APPELLANTS EXPLANATION. IT IS EXPLAINED THAT THESE ADVANCES ARE INCLUDED UNDER SUNDRY CREDITOR FOR THIS YEAR. IT IS EVIDENT FROM THE BALA NCE SHEET FROM THIS YEAR THAT THE ADVANCES ARE INCLUDED UNDER SUNDRY CREDITOR. THE AO HAS NOT CAUSED ENQUIRIES AND BROUGHT ANY MATERIAL ON RECORD TO PROVE THAT THE LI ABILITY DOES NOT EXIST. THE AO CAME TO SUCH CONCLUSION ONLY BECAUSE THE ADVANCES ARE IN CLUDED UNDER THE SUNDRY CREDITOR. IN THE ABSENCE OF EVIDENCE TO PROVE THAT THE LIABILITY CEASED TO EXIST IT IS NOT CORRECT TO ASSESS THE AMOUNT. THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.4 75 074/-. 5.2. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTA TIVE AND PERUSED THE ASSESSMENT ORDER AND MATERIAL PLACED ON RECORD. IT WAS THE CAS E OF THE ASSESSEE THAT THE ADVANCES RECEIVED FROM THE AFORESAID FIVE PARTIES DURING EAR LIER YEARS WERE ALREADY DISCLOSED AS LIABILITY IN THE BALANCE SHEET FOR EARLIER YEAR. IN THE BALANCE SHEET FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS SHOWN THE SAME LIAB ILITY UNDER THE HEAD SUNDRY CREDITOR. IT WAS IN THIS CONTEXT THAT THE ASSESSE E CLAIMED THAT THERE WAS NO WAIVER OF LIABILITY AS ALLEGED BY THE A.O. AND THE SAID LIA BILITY IS STILL EXISTING. WE FURTHER OBSERVE THAT THE A.O. BEFORE ALLEGING THE LIABILITY AS NON-EXISTENT DID NOT MAKE ENQUIRIES FROM THE AFORESAID CREDITORS TO JUSTIFY T HE ASSESSEES CLAIM. THEREFORE IN OUR CONSIDERED OPINION THE A.O. WENT WRONG IN TREATING THE SAID LIABILITY DULY RECORDED UNDER THE HEAD SUNDRY CREDITOR AS NON-EXISTING LI ABILITY WITHOUT BRINGING ON RECORD ANY EVIDENCE TO HOLD SO WHICH PROMPTED HIM TO ADD BACK THE SAME TO THE ASSESSEES TOTAL INCOME MORE SO WHEN THERE IS ACTUALLY NO WAIVER OF LIABILITY. IN THIS VIEW OF THE MATTER 8 AND CONSIDERING THE TOTALITY OF THE FACTS AND CIRCU MSTANCES OF THE CASE WE UPHOLD THE ORDER OF LD. C.I.T.(A) IN DELETING THE ADDITION OF RS.4 75 074/-. THE GROUND OF APPEAL OF THE REVENUE ON THIS ISSUE IS THEREFORE DISMISSED. 6. THE NEXT GROUND OF THE REVENUE IS AGAINST DELET ION OF ADDITION OF RS.5 00 000/- ON ACCOUNT OF BOGUS LOAN CREDITORS. THE ASSESSEE HA S CLAIMED TO HAVE RAISED FRESH LOANS OF RS.5 00 000/- DURING THE ASSESSMENT YEAR UNDER C ONSIDERATION FROM THE FOLLOWING TWO PERSONS WHICH WAS ACCOUNTED FOR UNDER THE HEAD OT HER ADVANCES :- I) M/S. JACK PAUL AUTOMOBILES - RS.3 00 000 II) ARCHANA DUTTA - RS.2 00 000 RS.5 00 000/- IN RESPONSE TO SHOW CAUSE NOTICE THE ASSESSEE STAT ED BEFORE THE A.O. THAT THE LOAN FROM THE AFORESAID PARTIES WERE TAKEN FOR HIS BUSINESS P URPOSES AND IN SUPPORT OF THE SAID LOAN TRANSACTION THE ASSESSEE SUBMITTED LOAN CONFIRMATI ON FROM THESE PARTIES. THE A.O. HOWEVER HELD THAT THE ASSESSEE HAS FAILED TO DISCH ARGE HIS ONUS REGARDING GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THE LOAN CRE DITORS. HE THEREFORE ADDED BACK THE ENTIRE SUM OF RS. 5 LAKHS TO THE TOTAL INCOME OF TH E ASSESSEE AS INCOME FROM UNDISCLOSED SOURCES. 6.1. THE ASSESSEE CAME IN APPEAL BEFORE THE LD. C. I.T.(A) AND CONTENDED THAT CONFIRMATION OF LOAN WAS GIVEN TO THE A.O. HE HAS N OT CAUSED ANY ENQUIRY TO PROVE THAT THE CREDIT WAS NOT GENUINE. IT WAS FURTHER CONTEND ED THAT THE CREDITORS WERE ASSESSED TO TAX AND THEY HAVE SUFFICIENT INCOME FOR MAKING ADVA NCE TO THE ASSESSEE. THE ASSESSEE SUBMITTED COPIES OF CONFIRMATION LETTERS CONFIRMAT ION FROM BANKS ACKNOWLEDGEMENT FOR FILING RETURN OF INCOME P/L ACCOUNT AND BALANC E SHEET OF THE CREDITORS AND PASSPORT OF THE CREDITORS. IT WAS THEREFORE SUBMITTED THA T THE ONUS REGARDING THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS WERE ESTABLISHED AND THE ADDITION MADE BY THE A.O. SHOULD BE DELETED. THE LD. C.I.T.(A) DELETED THE A DDITION OF RS.5 00 000/- BY OBSERVING AS UNDER :- THE APPELLANT RECEIVED LOAN OF RS.2 00 000/- FROM A RCHANA DUTTA AND RS.3 00 000/- FROM M/S. JACK PAUL AUTOMOBILES. THE APPELLANT FURN ISHED CONFIRMATION LETTERS OF THE LOANS BEFORE HE AO. THE APPELLANT FURNISHED COPIES OF PASSPORTS OF ARCHANA DUTTA AND JACK PAUL. THIS INDICATES THE IDENTITY OF THE CREDI TOR. THE APPELLANT FILED COPIES OF ACKNOWLEDGEMENT FOR FILING OF RETURN OF INCOME BY T HE CREDITORS AND ALSO THEIR PROFIT & LOSS A/C AND THE BALANCE SHEET. FROM THE DETAILS FI LED IT IS CLEAR THAT THE CREDITORS HAVE 9 CREDITWORTHINESS FOR MAKING TIE LOAN TO THE APPELLA NT. THE LOAN IS GIVEN TO THE APPELLANT BY ACCOUNT PAYEE CHEQUE AND IS REFLECTED IN THE BAN K ACCOUNT. SINCE THE APPELLANT HAS PROVED IDENTITY OF THE CREDITOR CREDITWORTHINESS O F THE CREDITORS AND ALSO GENUINENESS OF THE TRANSACTIONS THE AC IS NOT CORRECT IN ASSESSIN G THE LOAN AMOUNT AS BOGUS LOAN. THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.5 00 00 0/- . 6.2. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTA TIVE AND PERUSED THE ORDER OF THE A.O. AND MATERIAL PLACED ON RECORD. IT IS NOT DISPU TED THAT BOTH THE CREDITORS ARE ASSESSED TO INCOME-TAX AS COPIES OF ACKNOWLEDGEMENT FOR FILI NG OF RETURN OF INCOME BY THESE CREDITORS WERE FILED BY THE ASSESSEE. THE ASSESSEE ALSO FILED COPIES OF PASSPORT OF THESE CREDITORS AND THEREFORE THERE WAS NO DOUBT ABOUT THE IDENTITY OF THESE CREDITORS. IN SUPPORT OF THE TRANSACTIONS THE ASSESSEE ALSO FILE D COPIES OF P/L ACCOUNT AND BALANCE SHEET OF THE CREDITORS DISCLOSING THEREIN THE LOAN TRANSACTIONS WITH THE ASSESSEE WHICH WERE MADE BY ACCOUNT PAYEE CHEQUES. IN THE ABOVE CI RCUMSTANCES IF THE A.O. HAD ANY DOUBT ABOUT THE GENUINENESS OF THE LOAN OR THE CRED ITWORTHINESS OF THE CREDITORS HE COULD HAVE MADE NECESSARY VERIFICATION FROM THE INC OME-TAX RECORDS OF THE CREDITORS AND/OR BY ISSUING NOTICE/SUMMON TO THEM. HOWEVER W E FIND THAT THE A.O. MADE NO EFFORTS AS SUCH. THE A.O. BEING DISSATISFIED WITH T HE EXPLANATION OF THE ASSESSEE IN RESPONSE TO SHOW CAUSE NOTICE AS TO WHY THE RS.5 LA KHS WOULD NOT BE ADDED BACK TO THE TOTAL INCOME AS INCOME FROM SOME UNDISCLOSED SOURCE DISBELIEVED THE TRANSACTION. 6.3. IN THIS CONNECTION THE DECISION OF HONBLE S UPREME COURT IN THE CASE OF CIT VS. ORISSA CORPORATION PVT. LTD. [159 ITR 78 (SC)] WOUL D BE SQUARELY APPLICABLE. THE FACTS IN THE CASE OF ORISSA CORPORATION PVT. LTD. (SUPRA) WERE THAT THE ASSESSEE WAS A PRIVATE LIMITED COMPANY WHICH HAS CLAIMED TO HAVE RECEIVED THE LOAN OF RS.1 50 000/- FROM THREE CREDITORS. THE ASSESSEE HAS PRODUCED BEFORE T HE A.O. THE CONFIRMATION OF THE CREDITORS AND THEIR GIR NOS. THE ASSESSEE COULD NO T PRODUCE THE CREDITORS AND THE SUMMONS ISSUED U/S. 131 BY THE A.O. WERE RETURNED W ITH THE REMARK OF THE POSTAL AUTHORITIES LEFT. THEREFORE THE A.O. TREATED TH E SUM OF RS.1 50 000/- AS UNEXPLAINED CASH CREDIT. THE I.T.A.T. DELETED THE ADDITION. T HE ORDER OF THE I.T.A.T. WAS UPHELD BY THE HIGH COURT. ON APPEAL BY THE REVENUE THEIR LO RDSHIPS OF HONBLE SUPREME COURT HELD AS UNDER :- THAT IN THIS CASE THE RESPONDENT HAD GIVEN THE NAME S AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS 10 WERE INCOME-TAX ASSESSEES. THEIR INDEX NUMBERS WER E IN THE FILE OF THE REVENUE. THE REVENUE APART FROM ISSUING NOTICES UNDER SECTI ON 131 AT THE INSTANCE OF THE RESPONDENT DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO F IND OUT WHETHER THEY WERE CREDITWORTHY. THERE WAS NO EFFORT MADE TO PURSUE T HE SO-CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES THE RESPONDENT COULD NOT DO ANYTHING FURTHER. IN THE PREMISES IF THE TRIBUNAL CAME TO THE CONCLU SION THAT THE RESPONDENT HAD DISCHARGED THE BURDEN THAT LAY ON IT THEN IT COULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. FURTHER IT IS AN ESTABLISHED POSITION THAT FOR ARR IVING AT THE CONCLUSION THAT THE LOANS WERE NOT GENUINE AND THE SAME WERE UNDISCLOSED INCO ME OF THE ASSESSEE THE DEPARTMENT OUGHT TO HAVE BROUGHT ON RECORD EVIDENCE FOR SUCH S PECIFIC FINDING. HERE IN THIS CASE THE DEPARTMENT COULD NOT BRING ON RECORD ANY EVIDEN CE EXCEPT ALLEGING ON PRESUMPTION & SUSPICION THAT THE LOANS WERE NOT GENUINE AND REP RESENTED ASSESSEES UNDISCLOSED INCOME. IN THESE CIRCUMSTANCES THIS CONCLUSION OF THE DEPARTMENT WITHOUT ANY CONCLUSIVE MATERIAL CANNOT LEAD TO THE INFERENCE TH AT THE AMOUNT WAS NOT LOAN BUT UNDISCLOSED INCOME OF THE ASSESSEE. IN THIS CONNEC TION DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. BEDI & CO. P. LTD. [23 0 ITR 580 (SC)] IS RELIED UPON WHEREIN SIMILAR VIEW IS REITERATED BY THE HONBLE S UPREME COURT. FURTHER IN THE CASE OF CIT VS. CURRENCY INVESTMENT CO. LTD. [241 ITR 49 4 (CAL)] THE HONBLE CALCUTTA HIGH COURT HAS TAKEN THE SIMILAR VIEW BY HOLDING TH AT WHEN THE ASSESSEE HAS DISCLOSED THE IDENTITY OF THE PARTIES FROM WHOM IT PURCHASED SHARES AND TO WHOM IT SOLD THE SHARES GENUINENESS OF THE TRANSACTION CANNOT BE DE NIED MERELY BECAUSE THE ASSESSEE COULD NOT PRODUCE THE BROKERS THROUGH WHOM THE SHAR E WERE SOLD. WE MAY REFER TO THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. CARBO INDUSTRIAL HOLDINGS LTD. [244 I.T.R. 422] WHICH WAS FOLLOWED IN SUBSEQUENT DECISION IN THE CASE OF CIT VS. EMERALA COMMERCIAL LTD. [250 ITR 539] W HEREIN IT HAS BEEN HELD AT PAGE 425 AS UNDER :- PAYMENT BY ACCOUNT PAYEE CHEQUE HAS NOT BEEN DISP UTED. PAYMENT ON PURCHASE AND SALE AND PAYMENT RECEIVED BY ACCOUNT P AYEE CHEQUE WAS ON TWO DIFFERENT DATES. IF THE SHARE BROKER EVEN AFTER I SSUE OF SUMMONS DOES NOT APPEAR FOR THAT REASON THE CLAIM OF THE ASSESSEE SHOULD NOT BE DENIED SPECIALLY IN CASES WHEN THE EXISTENCE OF THE BROKER IS NOT IN DISPUTE NOR THE PAYMENT IS IN DISPUTE. MERELY BECAUSE SOME BROKER FAILED TO APPE AR THE ASSESSEE SHOULD NOT 11 BE PUNISHED FOR THE DEFAULT OF A BROKER AND WE ARE IN FULL AGREEMENT WITH THE TRIBUNAL THAT ON MERE SUSPICION THE CLAIM OF THE AS SESSEE SHOULD NOT BE DENIED. IN VIEW OF THE ABOVE AND RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS WE HOLD THAT THE LD. C.I.T.(A) WAS JUSTIFIED IN DIRECTING THE A.O. T O DELETE THE ADDITION OF RS.5 00 000/-. WE THEREFORE UPHOLD HIS ORDER ON THIS ISSUE AND T HE GROUND OF APPEAL OF THE DEPARTMENT IS DISMISSED. 7. THE LAST GROUND RAISED IN THIS REVENUES APPEAL RELATES TO DELETION OF ADDITION OF RS.20 750/- ON ACCOUNT OF UNDISCLOSED INCOME. THE A .O. ON VERIFICATION OF TDS CERTIFICATE ISSUED BY M/S. SWARAJ MAZDA LTD. FOUND THAT THE ASSESSEE EARNED INCOME OF RS.20 750/-U/S. 194C OF THE ACT BUT THE SAID INCOM E WAS NOT SHOWN IN THE COMPUTATION OF INCOME. HE THEREFORE ADDED BACK THE SAID SUM OF RS.20 750/- TO THE TOTAL INCOME OF THE ASSESSEE AS HIS UNDISCLOSED INCOME. 7.1. ON APPEAL THE LD. C.I.T.(A) DELETED THE ADDI TION BY OBSERVING AS UNDER :- THE APPELLANT FILED COPIES OF TDS CERTIFICATES ISSU ED BY M/S. SWARAJ MAZDA LTD. AS PER TDS CERTIFICATES THE AMOUNT PAID IS RS.20 750/- PLUS RS.7 500/-. THE TOTAL AMOUNT IS RS.28 250/-. THE APPELLANT HAS CREDITED AN AMOU NT OF RS.28 250/- IN THE PROFIT & LOSS A/C AS INTEREST ON SECURITY. THE AO IS NOT CO RRECT IN HIS FINDING THAT THE AMOUNT OF RS.20 750/- IS NOT DISCLOSED BY THE APPELLANT. SIN CE THE APPELLANT HAS ALREADY CREDITED THE INTEREST ON SECURITY SHOWN IN THE TDS CERTIFICA TE THE AO IS NOT CORRECT IN ADDING RS.20 750/-. THE AO IS DIRECTED TO DELETE THE ADDI TION. 7.2. AT THE TIME OF HEARING BEFORE US THE LD. DEP ARTMENTAL REPRESENTATIVE COULD NOT CONTROVERT THE ABOVE FINDING OF THE LD. C.I.T.(A). IN THIS VIEW OF THE MATTER WE FIND NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD . C.I.T.(A). HIS ORDER ON THIS ISSUE THEREFORE IS UPHELD. THIS GROUND OF THE REVENUE A LSO FAILS. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. 4 '3 #5' 6 5% 7 48 THIS ORDER IS PRONOUNCED IN OPEN COURT ON 24.09.2010. SD/- SD/- ( . .. . ! ! ! !. .. . ) '# ( . . . . . .. . ) (C.D.RAO) ACCOUNTANT MEMBER (B.R.MITTAL) JUDICIAL MEMBER ( (( (!# !# !# !#) )) ) DATE: 24-09-2010 12 $ $ $ $ / ITA NO. 1578 (KOL) OF 2009 '3 1 /9 :'9';- COPY OF THE ORDER FORWARDED TO : 1. + / THE APPELLANT : THE I.T.O. WARD-1(3) JHARGRAM HOUSE RABINDRANAGAR WEST MIDNAPORE. 2 /0+ / THE RESPONDENT : SRI UDAY RANJAN PAUL PROP. JACK P AUL & SONS RABINDRA NAGAR DIST. PASCHIM MEDINIPUR. 3. 3% () : THE CIT(A)-XXXVII KOLKATA. 4. 3%/ THE CIT KOL- 5 . ?7 /% / DR ITAT KOLKATA BENCHES KOLKATA 6 . GUARD FILE . 09 // TRUE COPY '3%5/ BY ORDER (DKP) @ A / DEPUTY REGISTRAR .