ACIT, Circle - 46, Kolkata v. Girdhari Lal Sureka, Howrah

ITA 486/KOL/2009 | 2005-2006
Pronouncement Date: 25-02-2011

Appeal Details

RSA Number 48623514 RSA 2009
Assessee PAN AABCB0323R
Bench Kolkata
Appeal Number ITA 486/KOL/2009
Duration Of Justice 1 year(s) 10 month(s) 23 day(s)
Appellant ACIT, Circle - 46, Kolkata
Respondent Girdhari Lal Sureka, Howrah
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2011
Appeal Filed By Department
Bench Allotted C
Tribunal Order Date 25-02-2011
Date Of Final Hearing 26-02-2010
Next Hearing Date 26-02-2010
Assessment Year 2005-2006
Appeal Filed On 01-04-2009
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL C BE NCH : KOLKATA [BEFORE HONBLE SHRI B.R. MITTAL JM AND HONBLE SH RI C. D. RAO AM] ITA NO. 486 (KOL) OF 2009 : ASSESSMENT YEAR : 2005 -06 ASSTT. COMMISSIONER OF INCOME TAX -VS.- GIRIDHARI LAL SUREKA CIRCLE-46 KOLKATA. HOWRAH [PAN : AABCB 0323 R ] [APPELLANT] [RESPONDENT] APPELLANT BY : SHRI S. BHA DRA RESPONDENT BY : S/SHRI SUBHAS AGARWAL & G.L. SINGHAL PER C. D. RAO A.M. THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSMENT YEAR 2005-06 AGAINST THE ORDER OF THE LD. CIT(A)-XXX KOLKATA DATED 15.12.2009. 2. THE DEPARTMENT HAS TAKEN THE FOLLOWING GROUNDS O F APPEAL :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.3 67 370/- HOLDING THAT THE CASE IS NOT A FIT CASE FOR REJECTION OF BO OKS OF ACCOUNTS AND ESTIMATION OF THE GROSS PROFIT. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE LD. C1T(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS. 1 8 09 225/- HOLDING THAT THE A.O. HAS NOT BROUGHT ANY MATERIAL ON RECOR D TO ITS DISPROVE THE CASH RECONCILIATION STATEMENT AND SUBM ISSION MADE BY THE ASSESSEE AND THEREFORE THE A.O. WAS NOT CORREC T IN ASSESSING THE NEGATIVE CASH BALANCE FOUND ON THE DATE OF SURV EY AND THE CASH FOUND ON THE DATE OF SURVEY AS INCOME. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE LD. C1T(A) WAS NOT JUSTIFIED TO ACCEPT THE CASH RECONCILIATION S SUBMITTED BY ASSESSEE AFTER A SUBSTANTIALLY LONG GAP AFTER THE S URVEY PARTICULARLY WHEN ON THE DATE OF SURVEY OR WITHIN 3 OR 4 DAYS THEREAFTER ON THE BASIS OF THE ROUGH RECORDS FOUND DURING THE SURVEY THE ASSESSEE HAD NOT BEEN ABLE TO RECONCILE THE CASH SHORTAGE IN THE COMPUTERIZED CASH BALANCE AS ON THE DATE OF SURVEY. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE LD. CIT(A) SHOULD HAVE IDEALLY REJECTED THE CASH RECONCILIATIO N AS LOOKED UP AND AFTER THOUGHTS. ITA NO. 486/KOL/20 09 2 3. BRIEF FACTS OF THE CASE ARE THAT WHILE DOING SCR UTINY ASSESSMENT THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS.3 67 370/- ON ACCOUNT OF GROSS PROFIT RS.18 09 225/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE BY OBSERVING THAT ASSESSEE IS IN THE BUSINESS OF WHOLESALE OF CYCLE PARTS. A SURVEY WAS CONDUCTED AT THE BUSINESS PREMI SES OF THE ASSESSEE ON 21.09.2004. THE BOOKS OF ACCOUNT WERE PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN THE COURSE OF SURVEY IT WAS FOUND THAT THE ASSESSEE WAS MAINTAIN ING PARALLEL SETS OF BOOKS IN THE FORM OF KACHA ROUGH KHATA APART FROM THE BOOKS OF ACCOUNT M AINTAINED IN THE COMPUTER. THE BOOKS OF ACCOUNT WERE NOT MAINTAINED REGULARLY AND PROPERLY AND THERE WAS STOCK DISCREPANCY FOUND AT THE TIME OF SURVEY FOR WHICH THE ASSESSEE COULD NOT PROVIDE ANY SATISFACTORY EXPLANATION. THE FACT OF NON-MAINTENANCE OF BOOKS WAS ACCEPTED BY TH E ASSESSEE IN HIS DEPOSITIONS AND STATED THAT KACHA KHATA WERE HIS ROUGH BOOKS. THE ASSESSEE WAS ISSUED A SHOW CAUSE NOTICE TO EXPLAIN WHY HIS BOOKS SHOULD NOT BE REJECTED. THE ASSESSEE SUBMITTED THAT THE BOOKS OF ACCOUNT WERE INCOMPLETE ON THE DATE OF SURVEY. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED AS KACHA KHATAS WITH CASH PURCHASE SALE ENTRIES WERE FOUND I N POSSESSION OF THE ASSESSEE AND ALSO THE ENTRIES IN THE REGULAR BOOKS WERE NOT RECORDED FOR SEVERAL MONTHS. CONSIDERING THE ABOVE THE ASSESSING OFFICER WAS NOT SATISFIED ABOUT THE CORRE CTNESS OF THE BOOKS OF ACCOUNT AND THE SAME WAS REJECTED U/S. 145(3) OF THE ACT AND ACCORDINGLY CONSIDERING THE LINE OF BUSINESS GROSS PROFIT IS TAKEN AT 5.9% OF TURNOVER INSTEAD OF 4.4% AS SHOWN BY THE ASSESSEE. THUS THE DIFFERENCE OF GROSS PROFIT OF RS.3 67 370/- IS ADDE D BACK TO THE INCOME OF THE ASSESSEE. DURING THE COURSE OF SURVEY IT WAS ALSO FOUND THAT CASH I N HAND BALANCE AS REFLECTED ON THE DATE OF SURVEY IN THE BALANCE SHEET OF THE ASSESSEE WAS A N EGATIVE FIGURE OF RS.17 89 375/- AND CASH FOUND AND INVENTORISED AT THAT TIME WAS RS.19 850/- . ON BEING ASKED ASSESSEE STATED THAT SINCE THE BOOKS WERE NOT UPDATED AS THE ENTRIES OF CASH S ALES CASH PURCHASE COLLECTION FROM DEBTORS ETC. WERE NOT ENTERED IN THE COMPUTER. IT ALSO GAVE A RECONCILIATION SHOWING THE ENTRIES RECORDED AFTER THE DATE OF SURVEY. HOWEVER THE EXPLANATION PROVIDED IS NOT ACCEPTABLE. ON ANY GIVEN DATE UPTO WHICH THE ENTRIES HAVE BEEN RECORDED IT CANNOT BE A CASE THAT THE CASH BOOK CAN HAVE A NEGATIVE BALANCE. THUS THE AMOUNT OF RS.17 89 37 5/- IS TREATED AS UNEXPLAINED EXPENDITURE OF THE ASSESSEE AND ADDED BACK TO THE INCOME OF THE ASSESSEE. ALSO PHYSICAL CASH FOUND AT THE TIME OF SURVEY OF RS.19 850/- IS ADDED BACK TO THE INCOME OF THE ASSESSEE. 4. ON APPEAL LD. CIT(A) HAS DELETED THE SAME BY OB SERVING THAT A SURVEY U/S. 133A WAS ITA NO. 486/KOL/20 09 3 CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE. THE ASSESSEE MAINTAINED ROUGH KHATA BOOKS AND ALSO THE ACCOUNTS ARE MAINTAINED IN THE COMPUTE R. ENTRIES IN THE COMPUTER WERE NOT UP TO DATE ON THE DATE OF SURVEY. THE SURVEY U/S. 133A WA S CONDUCTED ON 21.09.2004. THE STOCK INVENTORY DURING SURVEY IS RECONCILED AND STOCK REC ONCILIATION STATEMENT WAS FILED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS NOT BR OUGHT ON RECORD ANY MATERIAL TO ITS DISPROVE THE STOCK INVENTORY RECONCILIATION AND THE SUBMISSI ON MADE BY THE ASSESSEE IN RESPECT OF STOCK. THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE COMPLETED BY 31-3-05. THE BOOKS OF ACCOUNTS ARE AUDITED AND AUDIT REPORT IS SUBMITTED. AS PER AUDIT ED BOOKS OF ACCOUNTS THERE IS NO DISCREPANCY POINTED OUT BY THE AUDITOR OR BY THE ASSESSING OFFI CER. THE ASSESSING OFFICER REFERRED TO INCOMPLETION OF THE BOOKS OF THE ACCOUNT AS ON THE DATE OF SURVEY FOR INVOKING THE PROVISIONS OF SEC. 145(3). THE APPELLANT DISCLOSED GROSS PROFI T OF 4.4% FOR THIS YEAR COMPARED TO 2.17% OF THE EARLIER YEAR. AS PER TRADING RESULT DISCLOSED I N THE AUDITED BOOKS OF ACCOUNTS THE PROFIT DISCLOSED BY THE ASSESSEE IS MORE THAN EARLIER YEAR . THE ASSESSING OFFICER IS NOT CORRECT AS PER LAW IN REJECTING THE BOOKS OF ACCOUNTS MERELY BASED UPON THE REASONS OF INCOMPLETION OF THE BOOKS AS ON THE DATE OF SURVEY. SINCE APPELLANT DIS CLOSED BETTER RESULT AND HIGHER INCOME FOR THIS YEAR COMPARED TO THE EARLIER YEAR AND HAS PROD UCED AUDITED BOOKS OF ACCOUNTS IN WHICH NO SPECIFIC DEFECTS HAS BEEN FOUND BY THE ASSESSING OF FICER THIS IS NOT A FIT CASE FOR REJECTION OF THE BOOKS OF ACCOUNTS AND ESTIMATION OF THE GROSS P ROFIT. THE GROSS PROFIT DISCLOSED BY THE ASSESSEE IS HIGHER THAN THE EARLIER YEAR. THIS IS N OT A FIT CASE FOR ESTIMATING THE GROSS PROFIT. THE A.O IS DIRECTED TO DELETE THE ADDITION OF RS.3 67 3 70/-. IN THE COURSE OF SURVEY CONDUCTED ON 21-9-04 AS PER THE ENTRIES IN THE COMPUTER THE CASH BALANCE WAS NEGATIVE FIGURE OF RS.17 89 375/-. PHYSICAL CASH FOUND DURING SURVEY W AS RS.19 850/-. THE ASSESSEE SUBMITTED THAT ENTRIES REGARDING THE BUSINESS FOUND IN ROUGH KHATA BOOKS WERE NOT ENTERED IN THE COMPUTER AND THE COMPUTER ACCOUNT WERE NOT UPTO DAT E. LATER THE ASSESSEE MADE NECESSARY ENTRIES IN THE COMPUTER. THE APPELLANT SUBMITTED CA SH RECONCILIATION STATEMENT CONSIDERING THE RECEIPT AND PAYMENT AND OTHER ADJUSTMENTS TO RECONC ILE WITH THE CASH FOUND. A COPY OF THE CASH RECONCILIATION STATEMENT SUBMITTED TO ASSESSING OFF ICER IS ALSO FURNISHED DURING APPEAL PROCEEDINGS. THE ASSESSEE ALSO FURNISHED THE LEDGER ACCOUNT OF THE CASH SALES AND OTHER PAYMENTS AND ADJUSTMENTS IN SUPPORT OF THE CASH REC ONCILIATION STATEMENT. A PERUSAL OF CASH RECONCILIATION STATEMENT INDICATES THAT THE APPELLA NT HAS NOT ENTERED CASH SALES COLLECTION MADE FROM THE DEBTORS OPENING CASH BALANCE AND OTHER PA YMENTS MADE. AFTER CONSIDERING THESE ITA NO. 486/KOL/20 09 4 ITEMS THE CASH AS PER THE COMPUTER CASH BOOK TALLIE S WITH THE PHYSICAL CASH FOUND IN THE COURSE OF SURVEY. THE ASSESSING OFFICER HAS NOT CONTRADICT ED THE CASH RECONCILIATION STATEMENT FILED BY THE ASSESSEE. THE ASSESSING OFFICER RELIED UPON THE INCOMPLETION OF THE BOOKS OF ACCOUNTS AS ON THE DATE OF SURVEY I.E. 21-9-04. SUBSEQUENT TO T HE DATE OF SURVEY THE ENTRIES WERE MADE IN THE COMPUTER THE BOOKS OF ACCOUNTS ARE COMPLETED B Y 31-3-05 AND THE BOOKS OF ACCOUNTS WERE ALSO AUDITED. THE CASH RECONCILIATION STATEMENT SUB MITTED BY THE ASSESSEE IS FULLY SUPPORTED BY THE ACCOUNTS MAINTAINED BY THE ASSESSEE. THE ASSESS ING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO ITS DISPROVE THE CASH RECONCILIATION S TATEMENT AND THE SUBMISSIONS MADE BY THE ASSESSEE. SINCE THERE IS NO DISCREPANCY IN CASH AS PER THE CASH RECONCILIATION STATEMENT SUPPORTED BY THE AUDITED BOOKS OF ACCOUNTS THE ASS ESSING OFFICER IS NOT CORRECT IN ASSESSING THE NEGATIVE CASH BALANCE FOUND ON THE DATE OF SURV EY AND THE CASH FOUND ON THE DATE OF SURVEY AS INCOME. THE ASSESSING OFFICER IS DIRECTED TO DEL ETE THE ADDITION OF RS.18 09 225/-. 5. AGGRIEVED BY THIS NOW THE REVENUE IS IN APPEAL BEFORE US. 6. AT THE TIME OF HEARING LD. DEPARTMENTAL REPRESE NTATIVE SUBMITTED THAT THIS IS A FIT CASE FOR REJECTION OF BOOKS OF ACCOUNT AND APPLICATION O F ESTIMATED GROSS PROFIT. THEREFORE THE ASSESSING OFFICER IS JUSTIFIED IN MAKING ADDITION O F RS.3 67 370/-. AS REGARDING ADDITION OF RS.18 09 225/- HE SUBMITTED THAT ASSESSEE HAS NOT OFFERED ANY EXPLANATION FOR NEGATIVE CASH BALANCE FOUND ON THE DATE OF SURVEY. HE FURTHER SUB MITTED THAT LD. CIT(A) WAS NOT JUSTIFIED TO ACCEPT THE CASH RECONCILIATION SUBMITTED BY THE ASS ESSEE FOR A SUBSTANTIALLY LONG GAP AFTER THE SURVEY. THEREFORE HE REQUESTED TO RESTORE THE ORDE R OF THE ASSESSING OFFICER IN RESPECT OF THE ABOVE TWO ISSUES. 7. ON THE OTHER HAND LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE ORDER OF THE LD. CIT(A) AND FURTHER FILED THE CASH FLOW RECONCILIATI ON STATEMENT AS ON 21.09.2004 COPY OF COMPARATIVE CHART FOR GROSS PROFIT FOR THREE YEARS AND COPY OF THE STOCK AS ON 21.09.2004 WHICH WAS PLACED AT PAGES 33 TO 36 OF THE PAPER BOOK AND BASED ON THIS HE SUBMITTED THAT THE ACTION OF THE LD. CIT(A) IS JUSTIFIED ON THE FACTS AND CIR CUMSTANCES OF THE CASE. THEREFORE HE REQUESTED TO UPHELD THE SAME. 8. AFTER HEARING THE RIVAL SUBMISSION AND ON CAREFU L PERUSAL OF THE MATERIAL AVAILABLE ON ITA NO. 486/KOL/20 09 5 RECORD IT IS OBSERVED THAT RECONCILIATION STATEMEN T FILED BEFORE THE LD. CIT(A) WAS ALSO AVAILABLE WITH THE ASSESSING OFFICER SINCE THE ASSE SSEE HAS FURNISHED THE SAME ON 05.10.2004 AT THE TIME OF ASSESSMENT WHICH IS EVIDENT FROM PAGES 33 TO 37 OF THE PAPER BOOK. ON PERUSAL OF THE SAME WE FIND NO INFIRMITY IN THE OBSERVATION O F LD. CIT(A). THEREFORE WE UPHELD THE SAME AND DISMISS THE APPEAL OF THE REVENUE. 9. IN THE RESULT THE APPEAL OF THE DEPARTMENT IS D ISMISSED. ORDER PRONOUNCED IN THE COURT ON 25. 02. 2011. SD/- SD/- [ B. R. MITTAL ] [ C. D. RAO ] JUDICIAL MEMBER ACCOUN TANT MEMBER DATED : 25TH FEBRUARY 2011. COPY FORWARDED TO THE - 1. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-46 3 GOVT. PLACE (WEST) KOLKATA-700 001. 2. GIRIDHARI LAL SUREKA 71 CHINTAMONY DEY ROAD HOWRAH-711101. 3. CIT(A)- (4) CIT- 5. D.R. I.T.A.T. KOLKATA. [TRUE COPY] BY ORDER DEPUTY/ASSISTANT REGISTRAR (KKC) I.T.A.T. KOLKATA.