M/s. Bhawani Charan Dutta, Kolkata v. ITO, Ward - 34(1), Kolkata, Kolkata

ITA 177/KOL/2011 | 2006-2007
Pronouncement Date: 25-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 17723514 RSA 2011
Assessee PAN AACFB7623E
Bench Kolkata
Appeal Number ITA 177/KOL/2011
Duration Of Justice 5 month(s) 25 day(s)
Appellant M/s. Bhawani Charan Dutta, Kolkata
Respondent ITO, Ward - 34(1), Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 25-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 25-07-2011
Assessment Year 2006-2007
Appeal Filed On 31-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [ . . . . . .. . ! ! ! ! ] [BEFORE HONBLE SHRI S.V. MEHROTRA AM & HONBLE SHRI MAHAVIR SINGH JM !' !' !' !' / I.T.A. NO. 177/KOL/2011 #$ %& #$ %& #$ %& #$ %&/ // / ASSESSMENT YEAR : 2006-07 M/S. BHAWANI CHARAN DUTTA -VS.- INCOME TAX OFFICER/WARD-34(1) KOLKATA. [PAN : AACFB 7623 E] KOLKATA. [ () /APPELLANT] [ *+()/ RESPONDENT] () / FOR THE APPELLANT : NONE *+() / FOR THE RESPONDENT : / AHRI A.K. PARAMANIK - /O R D E R [ . . . . . .. . ] PER S.V. MEHROTRA AM THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT Y EAR 2006-07 AGAINST ORDER OF CIT(A)-XX KOLKATA DATED 04.11.2010. 2. THE ASSESSEE-FIRM IN THE RELEVANT ASSESSMENT YEA R CARRIED ON BUSINESS AS WHOLE-SALE TRADERS OF FERROUS/NON-FERROUS ITEMS. THE ASSESSEE-FIRM HAD FILED ITS RETURN OF INCOME DECLARING INCOME OF RS.91 360/-. THE ASSESSMENT WAS COMPLETED AT A TOTA L INCOME OF RS.7 98 410/- INTER ALIA MAKING FOLLOWING ADDITIONS :- (1) ADD TRANSPORT CHARGES : ::: RS.3 08 377/- (2) INCOME FROM OTHER SOURCES : ADD : LOAN AS : RS.3 00 000/- ADD : INTEREST ON LOAN : RS. 12 038/- ADD : PURCHASE : RS. 30 638/- ADD : COMMISSION PAID : RS. 56 000/- THE LD. CIT(A) WHILE PARTLY ALLOWING THE ASSESSEES APPEAL CONFIRMED AFORE-MENTIONED ADDITIONS. 3. BEING AGGRIEVED WITH THE ORDER OF LD. CIT(A) AS SESSEE IS IN APPEAL BEFORE US AND HAS FILED WRITTEN SUBMISSION THROUGH HIS AUTHORIZED REPRESENT ATIVE. WE ACCORDINGLY PROCEED TO DECIDE THE APPEAL ON THE BASIS OF WRITTEN SUBMISSION. [ITA NO. 177/KOL/2011] 2 4. THE FIRST GROUND IS AS UNDER :- FOR THAT THE APPELLANT SUBMITTED THE STATEMENT OF ACCOUNS OF SMT. ANITA DAS ALONGWITH COMPUTATION OF INCOME AND RECEIPT OF SUB MISSION & INCOME TAX RETURN THE ASSESSING OFFICER SHOULD NOT HAVE ADDED BACK LOAN RECEIVED BY CHEQUE FROM SMT. DAS FOR RS. 3 00 000/-. IN FACT MR S. DAS DURING THE ENQUIRY NEVER DENIED HAVING MADE THE SAID PAYMENTS TO THE A PPELLANT. IT IS VERY CLEAR THAT THE APPELLANT DID ESTABLISH THE IDENTITY OF THE LEN DER AND GENUINENESS OF THE TRANSACTIONS AND THEREFORE THIS ADDITION FOR LOAN R ECEIVED OF RS.3 00 000/- AND INTEREST OF RS.12 038/- ARE LIABLE TO BE DELETED. 5. BRIEF FACTS APROPOS THIS ISSUE ARE THAT ANITA DA S HAD TENDERED LOAN OF RS.3 00 000/- TO THE ASSESSEE. THE ASSESSING OFFICER SUMMONED THE LENDER AND DEPOSITION WAS RECORDED. HE HAS OBSERVED THAT HE COULD NOT SHOW SOURCE OF INCOME FROM WHERE THE LOAN WAS GIVEN. HE THEREFORE REQUIRED THE ASSESSEE TO EXPLAIN WHY RS.3 00 000/- SHOULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSEE EXPLAINED THAT LENDER HAD ISSUED CROSSED C HEQUE IN FAVOUR OF M/S. BHAWANI CHARAN DUTTA AS LOAN AND HER PAN WAS AEUPD 4109 D. THEREFORE THE Q UESTION REGARDING SOURCE OF LOAN DOES NOT ARISE. THE ASSESSING OFFICER NOTICED THAT THE LOAN HAD BEEN GIVEN BY THE SAID LENDER ON 13.02.2006 AND PRIOR TO THAT ON 10.02.2006 THERE WERE TWO CAS H DEPOSITS AGGREGATING RS.3 70 000/-. TAKING NOTE OF THE FACT THAT THE LENDERS SOURCE OF INCOME WAS ONLY F.D. INTEREST ETC. AND SHE COULD NOT EXPLAIN THE SOURCE OF INCOME FROM WHICH LOAN WAS GIVEN AND SIMPLY STATED I DONT REMEMBER REJECTED THE ASSESSEES EXPLANATION. HE RELIED ON THE DECISION O F HONBLE CALCUTTA HIGH COURT IN THE CASE OF SHANKAR INDUSTRIES VS. CIT [1978] 114 ITR 689 (CAL. ) WHEREIN IT WAS HELD THAT ASSESSEE HAS TO PROVE THE TRANSACTION BY PROVING CREDITWORTHINESS OF THE LOAN CREDITOR. HE THEREFORE TREATED SUM OF RS.3 00 000/- AS INCOME FROM UNDISCLOSED SOURCES. T HE LD. CIT(A) CONFIRMED THE ADDITION. 6. IN THE WRITTEN SUBMISSION IT HAS BEEN SUBMITTED THAT ASSESSEE DID ESTABLISH THE IDENTITY OF THE LENDER AND GENUINENESS OF THE TRANSACTION. THE LEND ER SHOWED THE SAME IN HER BALANCE SHEET FOR THE SAME ASSESSMENT YEAR. IN ADDITION THE LENDER MRS. DAS WAS ASSESSED IN HER INDIVIDUAL CAPACITY UNDER INCOME TAX ACT. THEREFORE HER FAILING TO SHO W THE SOURCE OF MONEY LENT DOES NOT MAKE THE ASSESSEE LIABLE TO PAY TAX FOR THE SAME. HE HAS REL IED ON THE DECISION OF HONBLE PATNA HIGH COURT IN THE CASE OF SAROGI CREDIT CORPORATION VS. CIT [1976 ] 103 ITR 344 (PAT.) WHEREIN IT HAS BEEN HELD AS UNDER :- IF THE CREDIT ENTRY STANDS IN THE NAMES OF THE ASSE SSEES WIFE AND CHILDREN OR IN THE NAME OF ANY OTHER NEAR RELATION OR AN EM PLOYEE OF THE ASSESSEE THE BURDEN LIES ON THE ASSESSEE THOUGH THE ENTRY IS NO T IN HIS OWN NAME TO EXPLAIN SATISFACTORILY THE NATURE AND SOURCE OF THAT ENTRY. BUT IF THE ENTRY STANDS NOT IN THE NAME OF ANY SUCH PERSON HAVING A CLOSE RELATION OR CONNECTION WITH THE ASSESSEE [ITA NO. 177/KOL/2011] 3 BUT IN THE NAME OF AN INDEPENDENT PARTY THE BURDEN WILL STILL LIE UPON HIM TO ESTABLISH THE IDENTITY OF THAT PARTY AND TO SATISFY THE INCOME-TAX OFFICER THAT THE ENTRY IS REAL AND NOT FICTITIOUS. ONCE THE IDENTITY OF THE THIRD PARTY IS ESTABLISHED BEFORE THE INCOME-TAX OFFICER AND OTHER SUCH EVIDEN CE ARE PRIMA FACIE PLACED BEFORE HIM POINTING TO THE FACT THAT THE ENTRY IS N OT FICTITIOUS THE INITIAL BURDEN LYING ON THE ASSESSEE CAN BE SAID TO HAVE BEEN DULY DISCHARGED BY HIM. IT WILL NOT THEREFORE BE FOR THE ASSESSEE TO EXPLAIN FURTHER A S TO HOW OR IN WHAT CIRCUMSTANCES THE THIRD PARTY OBTAINED THE MONEY AN D HOW OR WHY HE CAME TO MAKE AN ADVANCE OF THE MONEY AS A LOAN TO THE ASSES SEE. ONCE SUCH IDENTITY IS ESTABLISHED AND THE CREDITORS AS IN THE INSTANT CA SE HAVE PLEDGED THEIR OATH THAT THEY HAVE ADVANCED THE AMOUNTS IN QUESTION TO THE A SSESSEE THE BURDEN IMMEDIATELY SHIFTS ON TO THE DEPARTMENT TO SHOW AS TO WHY THE ASSESSEES CASE COULD NOT BE ACCEPTED AND AS TO WHY IT MUST BE HELD THAT THE ENTRY THOUGH PURPORTING TO BE IN THE NAME OF A THIRD PARTY STIL L REPRESENTED THE INCOME OF THE ASSESSEE FROM A SUPPRESSED SOURCE. AND IN ORDER TO ARRIVE AT SUCH A CONCLUSION EVEN THE DEPARTMENT HAS TO BE IN POSSESSION OF SUFF ICIENT AND ADEQUATE MATERIALS. AS I HAVE ALREADY INDICATED ABOVE THE INCOME-TAX O FFICERS REJECTION NOT OF THE EXPLANATION OF THE ASSESSEE BUT OF THE EXPLANATION REGARDING THE SOURCE OF INCOME OF THE DEPOSITORS CANNOT BY ITSELF LEAD TO ANY INFERENCE REGARDING THE NON-GENUINE OR FICTITIOUS CHARACTER OF THE ENTRIES IN THE ASSESSEES BOOKS OF ACCOUNT... 7. LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE OR DERS OF THE REVENUE AUTHORITIES. 8. WE HAVE CONSIDERED THE WRITTEN SUBMISSIONS AND S UBMISSIONS MADE BY THE LD. DEPARTMENTAL REPRESENTATIVE. ADMITTEDLY THE LENDER COULD NOT PR OVE THE SOURCE OF CASH DEPOSIT IN HER ACCOUNT AGGREGATING TO RS.3 70 000/- JUST 3 DAYS BEFORE LEN DING MONEY TO THE ASSESSEE. THE ONUS WAS ON THE ASSESSEE TO ESTABLISH THE CREDITWORTHINESS OF THE L ENDER. THE LENDER MERELY STATED THAT SHE DID NOT REMEMBER THE SOURCE OF DEPOSIT OF RS.3 70 000/- IN HER ACCOUNT. FINDINGS OF LOWER REVENUE AUTHORITIES THAT LENDER HAD VERY MEAGER SOURCE IN T HE FORM OF FIXED DEPOSIT INTEREST ETC. IS NOT CONTROVERTED. SINCE SHE COULD NOT PROVE THE SOURCE OF DEPOSIT IN HER ACCOUNT BOTH THE LOWER REVENUE AUTHORITIES RIGHTLY CONCLUDED THAT SUM OF RS.3 00 0 00/- WAS INCOME FROM UNDISCLOSED SOURCES. WE ACCORDINGLY CONFIRM THE ORDER OF LD. CIT(A). 9. GROUND NO.2 IS AS UNDER :- FOR THAT THE APPELLANT PAID ALL TRUCK FARES TO IND IVIDUAL TRUCK DRIVERS WHICH WERE ARRANGED ON ROAD AND THAT THERE WAS NO CONTRAC T WITH THE PARTY REGARDING THE SAME AS THE FREIGHT WAS ALWAYS PAID IN THE CASH TO THE DRIVERS. THIS CUSTOM OF HIRING OF TRUCKS ON THE ROAD AND SETTLING PAYMENTS WITH THE INDIVIDUAL TRUCK DRIVER PREVALENT IN APPELLANTS LINES OF BUSINESS A ND THEREFORE THIS ADDITION FOR RS.3 08 377/- U/S 40A(IA) OF THE INCOME TAX ACT 19 61 WITHOUT ANY DUE CONSIDERATION IS LIABLE TO BE DELETED. 10. THE ASSESSING OFFICER NOTICED THAT SUM OF RS.3 08 377/- WAS PAID TO TRANSPORTER NEW POPULAR ROADWAYS DURING THE RELEVANT PREVIOUS YEAR BUT TDS WAS NOT DEDUCTED. THE ASSESSEE EXPLAINED THAT IT HAD NOT PAID ANY MONEY TO NEW POP ULAR ROADWAYS. THE INDIVIDUAL TRUCK DRIVERS [ITA NO. 177/KOL/2011] 4 COLLECTED FREIGHT AMOUNT IN CASH FROM THE ASSESSEE AFTER UNLOADING THE CONSIGNMENT AT ITS SITE. NEW POPULAR ROADWAYS HAD NO TRUCK AND THEY HAD NOT ISSU ED ANY BILL. THE ASSESSING OFFICER OBSERVED THAT WAY BILL DEPICTS THAT THE TRANSPORTERS WAS NEW POPULAR ROADWAYS. THE MONEY PAID TO NEW POPULAR ROADWAYS EITHER THROUGH DRIVER OR DIRECTLY WAS NOT MATERIAL. HE THEREFORE MADE AN ADDITION OF RS.3 08 377/- U/S. 40(A)(IA) OF THE ACT. LD. CIT (A) CONFIRMED THE ADDITION. 11. THE ASSESSEE IN HIS WRITTEN SUBMISSION HAS INT ER ALIA RELIED ON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. UNITED RICE LAND LTD. [2010] 322 ITR 594 (P&H) WHEREIN IT WAS HELD THAT WHERE ASSESSEE ENGAG ES TRUCKS FOR TRANSPORTATION OF GOODS AND WHERE THERE WAS NO CONTRACT BETWEEN THE ASSESSEE AND THE TRANSPORTERS FOR CARRIAGE OF GOODS THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX. HE HAS ALSO RELIED ON THE FOLLOWING DECISIONS : (I) CIT VS. BHAGWATI STEELS [2010] 326 ITR 108 (P&H ) (II) MYTHRI TRANSPORT CORPORATION VS. ACIT [2010] 001 ITR (TRIB) 290 [ITAT-VISHKA] (III) DCIT VS. SATISH AGGARWAL & CO. [2009] 317 IT R (AT) 196 (ITAT-AMRIT) (IV) INCOME-TAX OFFICER VS. BHORUKA ROADLINES LTD. [2008] 300 ITR (AT)193 [ITAT-MUM) 12. LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE O RDERS OF THE REVENUE AUTHORITIES. 13. WE HAVE CONSIDERED THE WRITTEN SUBMISSIONS AND SUBMISSIONS OF LD. DEPARTMENTAL REPRESENTATIVE. THE ASSESSEE WAS IN THE BUSINESS OF WHOLE-SALE TRADERS OF FERROUS/NON-FERROUS ITEMS. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE P AYMENT MADE TO NEW POPULAR ROADWAYS FOR TRANSPORTATION OF GOODS WAS COVERED BY THE PROVISIO N OF SECTION 194C OF THE ACT AND THEREFORE NON- DEDUCTION OF TAX RESULTED INTO APPLICABILITY OF SEC TION 40(A)(IA) OF THE ACT. THE ASSESSING OFFICER HA D DRAWN THIS CONCLUSION ONLY BECAUSE WAY BILLS WAS IN THE NAME OF NEW POPULAR ROADWAYS ASSUMING THAT THERE WAS AN AGREEMENT. THIS CONCLUSION WAS CO NFIRMED BY THE LD. CIT(A). THE SUBMISSION OF THE ASSESSEE THAT NO TRUCK WAS OWNED BY NEW POPULAR ROADWAYS HAS NOT AT ALL BEEN CONSIDERED BY LOWER REVENUE AUTHORITIES. ONLY ON THE BASIS OF WAY BILLS IT COULD NOT BE INFERRED THAT THERE WAS ANY AGREEMENT PARTICULARLY BECAUSE PAYMENT HAD BEEN MAD E DIRECTLY TO THE DRIVERS. IT IS NOT DENIED THAT THERE WERE NO BILLS RAISED BY NEW POPULAR ROADWAYS. THERE IS NOTHING ON RECORD EXCEPT WAY BILL ON RECORD IN THE NAME OF NEW POPULAR ROADWAYS AND THER EFORE IN OUR OPINION MERELY ON THE BASIS OF WAY BILLS IT COULD NOT BE INFERRED THAT THE PAYMENT WAS MADE THROUGH TRUCK DRIVERS TO NEW POPULAR ROADWAYS IN PURSUANCE TO SOME CONTRACT. THE GENUINE NESS OF THE EXPENDITURE WAS NOT DOUBTED. WE THEREFORE SET ASIDE THE ORDER OF LD. CIT(A) ON THI S ISSUE AND DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION. THIS GROUND OF THE ASSESSEE IS ALLOWED. [ITA NO. 177/KOL/2011] 5 14. GROUND NO.3 READS AS UNDER :- FOR THAT THE ASSESSING OFFICER ERRED IN ADDING BAC K RS. 56 000/- UNDER THE HEAD COMMISSION PAID WHICH RELATES TO IMMEDIATE PRECED ING YEAR AND THIS FACT DULY NOTED/COMMUNICATED DURING THE COURSE OF HEARINGS AN D ACCORDINGLY THIS ADDITION IS LIABLE TO BE DELETED. 15. BRIEF FACTS APROPOS GROUND NO.3 ARE THAT THE AS SESSING OFFICER NOTICED THAT COMMISSION WAS PAID TO ARABINDA DUTTA OF RS.36 000/- AND BARID BAR AN DUTTA OF RS.20 000/-. THE ASSESSEE EXPLAINED THAT HE HAD NOT PAID ANY COMMISSION DURING THE YEAR . THE ASSESSING OFFICER OBSERVED THAT ARBINDA DUTTA & BARID BARAN DUTTA CONFESSED IN COURSE OF TH EIR DEPOSITION THE RECEIPT OF COMMISSION OF RS.30 000/- & RS.20 000/- IN CASH RESPECTIVELY FROM THE FIRM AND THAT WAS REFLECTED IN THEIR RESPECTIVE RETURNS. HOWEVER SINCE ASSESSEE HAD NOT SHOWN THE AMOUNT AS PAYMENT SAME WAS ADDED TO THE ASSESSEES INCOME. THE LD. CIT(A) CONFIRMED THE ASSESSING OFFICERS ACTION. 16. THE MAIN CONTENTION OF THE ASSESSEE IS THAT IT WAS STATED BEFORE THE ASSESSING OFFICER THAT NO SUM WAS PAID TO THESE PARTIES. HOWEVER THESE TWO P ARTIES WERE IN RECEIPT OF COMMISSION IN EARLIER PREVIOUS YEAR. 17. WE HAVE CONSIDERED THE WRITTEN SUBMISSIONS AND SUBMISSIONS OF LD. DEPARTMENTAL REPRESENTATIVE. WE DO NOT FIND ANY REASON TO INTERF ERE WITH THE ORDER OF LD. CIT(A) BECAUSE IN THEIR DEPOSITION BOTH THE PARTIES HAVE CLEARLY ADMITTED T HAT THEY RECEIVED THE COMMISSION DURING THE YEAR FROM THE ASSESSEE. THE ASSESSEE HIMSELF HAS ADMITTE D THAT COMMISSION WAS PAID TO BOTH THE PARTIES IN EARLIER YEARS. THEREFORE VERACITY OF THE STATEMENT S COULD NOT BE DOUBTED. UNDER SUCH CIRCUMSTANCES ADVERSE INFERENCE DRAWN BY THE AUTHORITIES BELOW WA S JUSTIFIED. IT IS PERTINENT TO NOTE THAT ASSESSEE DID NOT ASK FOR ANY CROSS EXAMINATION OF THESE TWO PERSONS. WE ACCORDINGLY CONFIRM THE SAME. 18. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. - - - - . . . . / // / .# .# .# .# 0 0 0 0 1 11 1 ORDER PRONOUNCED IN THE OPEN COURT ON 25.07 .2011. SD/- SD/- [ ! ] [ .. ] [ MAHAVIR SINGH ] [ S.V. MEHROTRA ] JUDICIAL MEMBER ACCOUNTANT MEMBER 2 / DATED : 25TH JULY 2011. [ITA NO. 177/KOL/2011] 6 - 3 * 4 54%6 - COPY OF THE ORDER FORWARDED TO: 1. /APPELLANT- M/S. BHAWANI CHARAN DUTTA 157 N.S. ROAD KOLKATA-700 001. 2 *+() / RESPONDENT : INCOME TAX OFFICER/WARD-34(1) 18 R ABINDRA SARANI PODDAR COURT (4 TH FLOOR) KOLKATA-700 001. 3. -# / CIT(A) 4. -# ( )/ CIT 5. 0 * # / DR KOLKATA BENCHES KOLKATA [ +4 * / TRUE COPY] -#. / BY ORDER 7 / !8 /DEPUTY/ASSTT. REGISTRAR . [KKC 9: #;8 < /SR.PS]