ITO, Ward - 38(4), Kolkata, Kolkata v. Sanjib Bhattacherjee, Kolkata

ITA 678/KOL/2010 | 2006-2007
Pronouncement Date: 28-01-2011

Appeal Details

RSA Number 67823514 RSA 2010
Bench Kolkata
Appeal Number ITA 678/KOL/2010
Duration Of Justice 9 month(s) 21 day(s)
Appellant ITO, Ward - 38(4), Kolkata, Kolkata
Respondent Sanjib Bhattacherjee, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Department
Bench Allotted B
Tribunal Order Date 28-01-2011
Assessment Year 2006-2007
Appeal Filed On 07-04-2010
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. 678 (KOL) OF 2010 %& '( / ASSESSMENT YEAR 2006-07 INCOME-TAX OFFICER WARD-38(4) KOLKATA. SANJIB BHATTACHARJEE KOLKATA. (PAN-AABFH6399E) (+ / APPELLANT ) - % - - VERSUS - (/0+ / RESPONDENT ) + 1 2 '/ FOR THE APPELLANT: / SRI PIYUSH KOLHE /0+ 1 2 ' / FOR THE RESPONDENT: / SRI B.K. GHOSH '3 / ORDER ( . . . . . .. . ) (B.R.MITTAL) JUDICIAL MEMBER : THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSME NT YEAR 2006-07 AGAINST THE ORDER OF LD. C.I.T.(A)-XXIV KOLKATA DATED 14/01/20 10. GROUND NO.1 OF THIS REVENUES APPEAL READS AS UNDER :- 1. THE LD. CIT(A) ERRED IN LAW AS WELL AS I N FACT IN DELETING THE ADDITION OF RS.41 65 580/- MADE TO THE TOTAL INCOME ON ACCOUNT OF DIFFERENCES IN CLOSING BALANCE OF PARTIES. 2. THE FACTS RELATING TO THE ABOVE GROUND ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SUPPLYING BOOKS & PERIODICALS UNDER THE NAME AND STYLE OF HIS PROPRIETORSHIP CONCERN M/S. VPH SUBSCRIPTION SERVIC ES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. ISSUED NOTICE U/S. 133(6) TO THE PARTIES AND ON SCRUTINY OF THE REPLIES MADE BY THE FOLLOWING THREE PARTIES THE A.O. FOUND DIFFERENCE TOTALLING TO RS.41 65 580/- IN ACCOUNT BALANCE AS PER DETAILS BE LOW :- NAME OF THE PARTY BALANCE AS PER APPELLANT (RS.) BALANCE AS PER PARTY (RS.) DIFFERENCE (RS.) G S I (CR.) 9 66 363 6 87 601 2 78 762 JADAVPUR UNIVERSITY(CR.) 11 87 437 11 30 366 57 071 NATIONAL LIBRARY (DR.) 38 29 747 NIL 38 29 747 TOTAL 41 65 580 2 ACCORDING TO THE A.O. DESPITE SEVERAL OPPORTUNITIE S PROVIDED THE ASSESSEE FAILED TO PRODUCE ANY RECONCILIATION OR EXPLANATION ON ACCOUN T OF DIFFERENCE IN THE BALANCES SHOWN BY THE ASSESSEE AND THE CONFIRMATION OF BALAN CES SHOWN BY THE RESPECTIVE PARTIES. HE THEREFORE ADDED THE SAID DIFFERENCE OF RS.41 6 5 580/- TO THE TOTAL INCOME OF THE ASSESSEE. 3. THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. C .I.T.(A) AND FILED DETAILED WRITTEN SUBMISSIONS ALONG WITH EVIDENCES IN SUPPORT THEREOF WHICH HAVE BEEN INCORPORATED IN PAGES 3 TO 8 OF HIS ORDER. THE ASSESSEE SUBMITTED T HAT IT WAS POINTED OUT TO THE A.O. THAT BOTH DEBIT BALANCE AND CREDIT BALANCE DIFFERENCE HA S BEEN GIVEN THE SAME TREATMENT AND ADDED TO THE TOTAL INCOME WITHOUT SPECIFYING THE SE CTION UNDER WHICH THE ADDITIONS HAD BEEN MADE. THE ASSESSEE ALSO FILED COPY OF ACCOUNT IN HIS BOOKS IN RESPECT OF GSI AND CLAIMED THAT THE TRANSACTION OF RS.6 87 601/- WAS D ULY REFLECTED IN HIS ACCOUNT. IN REGARD TO DIFFERENCE OF RS.37 18 888/- ON ACCOUNT O F NATIONAL LIBRARY THE ASSESSEE FILED COPY OF ACCOUNT OF THE SAID PARTY AND STATED THAT T HE SAID DIFFERENCE WAS THE OPENING BALANCE IN THE ACCOUNTING REPRESENTING SALES OF EAR LIER YEARS. THE LD. C.I.T.(A) FORWARDED THE WRITTEN SUBMISSIONS OF THE ASSESSEE A ND ITS ENCLOSURES TO THE A.O. TO ENABLE HIM TO FURNISH A REMAND REPORT IN THIS REGAR D. THE A.O. FORWARDED HIS REPORT TO THE C.I.T.(A) ALONG WITH COPIES OF BILLS ACCOUNT S TATEMENTS AND MONEY RECEIPTS RECEIVED FROM THE AFORESAID THREE PARTIES BY STATING AS UND ER :- (I) GSI - AMOUNT OF RS.6 87 601/- IS REFLECTED I N THE STATEMENT WHICH REVEALS THAT THE PAYMENT WAS MADE TO VPH SUBSCRIPTION SERVICES VIDE CHEQUES. (II) NATIONAL LIBRARY - IT IS SEEN FROM THE ST ATEMENT THAT BILLS WERE RAISED BY VPH SUBSCRIPTION SERVICES FOR THE PERIOD 2002 TO 2004 AMOUNTING TO RS.86 62 766. ALL THESE BILLS WERE PAID BY CHEQUES TO VPH SUBSCRIPTIO N SERVICES. COPIES OF RECEIPTS AND BILLS WERE SUBMITTED TO SUBSTANTIATE THE CLAIM THAT PAYMENTS WERE MADE. (III) JADAVPUR UNIVERSITY - IT IS SEEN FROM TH E STATEMENT THAT BILLS AMOUNTING TO RS.1130366 WERE PAID TO VPH SUBSCRIPTION SERVICES VIDE CHEQUES. THE DETAILS FORWARDED BY THE A.O. IN RESPECT OF NAT IONAL LIBRARY REVEALED THAT THE PAYMENTS HAD BEEN MADE TO THE ASSESSEE BY THE SAID PARTY BY CHEQUES AND THE CONTENTION OF THE ASSESSEE WAS THAT NO PAYMENT WAS RECEIVED FR OM THAT PARTY. THE LD. C.I.T.(A) THEREFORE AGAIN ASKED THE A.O. TO ENQUIRE INTO THE MATTER WITH THE BANK AND TO SUBMIT A REPORT AS TO WHOSE ACCOUNT THE CHEQUES WERE CREDITE D AND IN REPLY THE A.O. INFORMED 3 THAT SUCH INFORMATION COULD NOT BE MADE AVAILABLE B Y THE BANK. IN THE ABOVE CONTEXT THE LD. C.I.T.(A) DECIDED THE ISSUE ON THE BASIS OF MATERIALS AVAILABLE ON RECORD. AFTER ELABORATE DISCUSSIONS PARTY-WISE THE LD. C.I.T.(A) DELETED ALL THE ADDITIONS MADE ON ACCOUNT OF DIFFERENCE IN THE BALANCES SHOWN BY THE ASSESSEE IN RESPECT OF THE AFORESAID THREE PARTIES BY OBSERVING AS UNDER :- (1) ADDITION OF RS.2 78 762 /- AS DETAILED IN THE TABLE IN PARA 3.1 THE ADD ITION IS ON ACCOUNT OF DIFFERENCE IN CREDIT BALANCE IN THE ACCOUNT OF GEOLOGICAL SURVEY OF INDIA (MAIN). ACCORDING TO THE BOOKS OF ACCOUNTS OF THE APPELLANT AND DETAILS FILE D WITH THE RETURN THE APPELLANT HAD SHOWN AN AMOUNT OF RS.9 66 363/- AS CLOSING BALANCE OF TRADE ADVANCE RECEIVED FROM THE GSI. ON ENQUIRY GSI FORWARDED A LETTER TO THE AO IN WHICH IT WAS MENTIONED THAT THE DETAILS OF ADVANCE PAYMENT TOWAR DS SUBSCRIPTION OF JOURNALS IN FAVOUR OF THE APPELLANT FOR F.Y. 2005-06 WERE AS UN DER: NAME OF SUPPLIERS YEAR OF ADVANCE AMOUNT OF ADVANCE(RS) UNADJUSTED AMOUNT BILL NO. DATE CHEQUE NO. DATE VPH SUBSCRIP -TION SERVICES 2005-06 6 87 601 N I L PD/128 7.12.05 664534 19.12.05 PERUSAL OF THE COPY OF ACCOUNT OF GSI IN THE BOOKS OF ACCOUNTS OF THE APPELLANT SHOWS THAT THE AMOUNT OF RS.6 87 60L/- IS ALREADY R EFLECTED IN THE ACCOUNT AS A RECEIPT BY CHEQUE NO. 664534 ON 25.01.06. THUS THE ONLY INF ORMATION WHICH HAS BEEN SUPPLIED BY GSI IS FOUND TO BE DULY ACCOUNTED FOR I N THE BOOKS OF THE APPELLANT. ON THE BASIS OF THE ABOVE INFORMATION SUPPLIED BY GSI THERE WAS THEREFORE NO DISCREPANCY IN THE ACCOUNT OF THE TWO PARTIES. THE DIFFERENCE OF RS.2 78 762/- WHICH HAS BEEN ADDED BY THE AO THEREFORE CANNOT BE ATTRIB UTED TO THIS YEAR. AS PER THE APPELLANT HOWEVER THERE WAS AN OPENING BALANCE OF R S.3 92 916/-. AS NO FURTHER INFORMATION FROM GSI HAS BEEN BROUGHT ON RECORD IT CANNOT BE HELD THAT THERE WAS A DISCREPANCY IN THE ACCOUNTS OF THE TWO PARTIES AS T HE INFORMATION SUBMITTED BY GSI DOES NOT AMOUNT TO A COPY OF ACCOUNT OF THE APPELLA NT. CONSIDERING THE ABOVE FACTS AND THE FACT THAT THE AMOUNT OF RS.6 87 601/- IS DU LY FOUND TO BE REFLECTED IN THE BOOKS OF THE APPELLANT THE ADDITION OF RS.2 78.762 /- IS THEREFORE DIRECTED TO BE DELETED. (2) ADDITION OF RS.57 071 /- AS DETAILED IN THE TABLE IN PARA 3.1 THE ADDI TION IS ON ACCOUNT OF DIFFERENCE IN CREDIT BALANCE IN THE ACCOUNT OF JADAVPUR UNIVERSIT Y. ACCORDING TO THE BOOKS OF ACCOUNTS OF THE APPELLANT AND. DETAILS FILED WITH T HE RETURN THE APPELLANT HAD SHOWN AN AMOUNT OF RS.11 87 437/- AS CLOSING BALANCE OF T RADE ADVANCE FROM THE SAID CONCERN. ON ENQUIRY WITH JADAVPUR UNIVERSITY A LETT ER WAS RECEIVED FROM JADAVPUR UNIVERSITY DATED 03.04.08 IN WHICH IT WAS STATED AS UNDER: WITH REFERENCE TO YOUR ABOVE MENTION LETTER I AM ENCLOSING HEREWITH A STATEMENT SHOWING DETAILS OF THE PAYMENT MADE TO M/ S VPH SUBSCRIPTION SERVICES FOR PURCHASE OF JOURNALS FROM THEM DURING THE FINANCIAL YEAR 2005- 2006 AS REQUIRED. 4 ALONG WITH THIS LETTER A STATEMENT OF INVOICES WITH DATE AND AMOUNT AND PAYMENTS WITH DATE AND AMOUNT AND CHEQUES NOS. WAS ALSO ENCL OSED. ON PERUSAL OF THE DETAILS SUBMITTED BY JADAVPUR UNIVERSITY IT WAS SEEN THAT F OR THE FINANCIAL YEAR 2005-06 THE TOTAL PURCHASES WERE RS.L1 30 366/- AND THE TOTAL P AYMENTS WERE ALSO RS.11 30 366/- THE DETAILS WERE VERIFIED WITH RESPECT TO THE COPY OF ACCOUNT OF JADAVPUR UNIVERSITY IN THE BOOKS OF APPELLANT. FROM THIS IT WAS SEEN TH AT ALL PURCHASES SHOWN BY JADAVPUR UNIVERSITY IN ITS STATEMENT WERE RECORDED IN THE BOOKS OF THE APPELLANT EXCEPT FOR ONE PURCHASE OF RS.42 384/-. ON SCRUTINY IT WAS SEEN THAT THE ENTRY IN THE STATEMENT SUBMITTED BY JADAVPUR UNIVERSITY AGAINST THE SAID PURCHASE OF RS.42 384/- WAS AS UNDER: I) JU-CL/2005/01/VPH-46 DT.23.2.05 RS. 42 384.00 THIS INDICATES THAT THIS PARTICULAR BILL DOES NOT P ERTAIN TO THE YEAR UNDER CONSIDERATION. IT APPEARS THAT IN THE COPY OF INFOR MATION SUBMITTED BY JADAVPUR UNIVERSITY THIS HAS BEEN INCLUDED AS PAYMENT OF THE SAID BILL HAS BEEN MADE ON 13.03.06. THIS PARTICULAR PAYMENT HAS NOT BEEN REFL ECTED IN THE ACCOUNT OF JADAVPUR UNIVERSITY AS PER THE BOOKS OF ACCOUNT OF THE APPEL LANT. HOWEVER THE APPEL1ANT EXPLAINED THAT THIS MAY BE ON ACCOUNT OF THE FACT T HAT THE SAID PAYMENT MAY HAVE BEEN REFLECTED IN THE SUBSEQUENT YEAR. HOWEVER AS ALL PURCHASE BY JADAVPUR UNIVERSITY FROM THE APPELLANT HAVE BEEN REFLECTED A S SALES BY THE APPELLANT IN THE ACCOUNT OF JADAVPUR UNIVERSITY MAINTAINED BY HIM IN HIS BOOKS OF ACCOUNT THEREFORE THE ADDITION RS.57 071/- MADE TO THE TOTAL INCOME O N ACCOUNT OF ALLEGED DIFFERENCE IN THE ACCOUNTS THEREFORE CANNOT BE SUSTAINED. THE INF ORMATION SUBMITTED BY JADAVPUR UNIVERSITY DOES NOT GIVE DETAILS OF PAYMENTS MADE I N THE PRECEDING YEAR WHICH THE APPELLANT HAS REFLECTED IN THE SUCCEEDING YEAR. IT ALSO DOES NOT GIVE THE OPENING & CLOSING BALANCE AND THEREFORE IS NOT COMPARABLE WIT H THE COPY OF ACCOUNT. THE ADDITION OF RS.57 071/- IS THEREFORE DIRECTED TO BE DELETED (3) ADDITION OF RS.38 29 747 /- AS DETAILED IN THE TABLE IN PARA 3 1 THE ADD ITION IS ON ACCOUNT OF DIFFERENCE IN DEBIT BALANCE IN THE ACCOUNT OF NATIONAL LIBRARY. A CCORDING TO THE BOOKS OF ACCOUNTS OF THE APPELLANT AND DETAILS FILED WITH THE RETURN THE APPELLANT HAD SHOWN AN AMOUNT OF RS.38 29 747/- AS CLOSING BALANCE OF SUNDRY DEBT ORS IN THE NAME OF NATIONAL LIBRARY KOLKATA. ON ENQUIRY WITH NATIONAL LIBRARY A LETTER WAS RECEIVED FROM NATIONAL LIBRARY DATED 24.04.08 IN WHICH THE SAID I NSTITUTE SUBMITTED A LIST OF BILLS WITH DATE AND AMOUNT AND THE PAYMENTS MADE AGAINST THOSE BILLS. THE SAID STATEMENT CONTAINED DETAILS OF BILL RAISED FROM DEC02 TO SEP 04. THE TOTAL STOOD AT RS.82 62 766/- AND AGAINST THESE BILLS THE DETAILS OF PAYMENT WERE ALSO GIVEN WHICH AGAIN TOTALED TO RS.86 62 766/-. THEREAFTER THERE W ERE NO DETAILS AVAILABLE FROM THIS STATEMENT OF TRANSACTIONS AFTER 27.09.04. THUS THE INFORMATION RECEIVED FROM NATIONAL LIBRARY DID NOT GIVE ANY DETAILS OF TRANSA CTIONS AFTER 27.09.04 ALTHOUGH THE LETTER MENTIONED THAT THE DETAILS RELATED TO FINANC IAL YEAR 2005-06 ALSO. THIS LEADS TO THE CONCLUSION THAT DURING THE FINANCIAL YEAR 2005- 06 THERE WERE NO OTHER TRANSACTIONS WITH NATIONAL LIBRARY. FROM THE COPY O F ACCOUNT OF NATIONAL LIBRARY MAINTAINED BY THE APPELLANT IN ITS BOOKS OF ACCOUNT S IT IS SEEN AS UNDER: 5 DATE PARTICULARS VCH TYPE VCH NO. DEBIT(RS.) CREDIT(RS.) 01-4-2005 TO OPENING BALANCE 37 18 888 31-3-2005 TO ALLAPUZA T.D. MEDICAL COLLEGE JOURNAL 267 1 10 859 38 29 747 BY CLOSING BALANCE 38 29 747 FROM THIS IT IS THUS EVIDENT THAT OUT OF RS.38 29 7 47 ADDED TO THE TOTAL INCOME ON ACCOUNT OF DIFFERENCE IN THE ACCOUNT MAINTAINED BY THE APPELLANT AND THE ACCOUNT DETAILS RECEIVED FROM THE PARTY AN AMOUNT OF RS.37 18 888 IS ON ACCOUNT OF OPENING BALANCE DIFFERENCE AND THUS DOES NOT PERTAIN TO THE YEAR UNDER CONSIDERATION. IT IS A DEBIT BALANCE INDICATING THEREOF THAT THE SAID AMOU NT HAS ALREADY BEEN CONSIDERED BY THE APPELLANT AS PART OF HIS SALES IN AN EARLIER YE AR. THE AMOUNT THEREFORE REFLECTS SUMS WHICH HAVE ALREADY BEEN SUBJECTED TO TAX IN AN EARLIER YEAR. THE CONTENTION OF THE APPELLANT IS THAT AT THE END OF THE YEAR UNDER CONSIDERATION AN AMOUNT OF RS.38 29 747 WAS YET TO BE RECEIVED BY THEM. WHILE ON THE CONTRARY INFORMATION RECEIVED FROM NATIONAL LIBRARY INDICATES THAT ALL P AYMENTS WERE MADE TO THE APPELLANT. THE AO WAS ASKED TO CARRY OUT VERIFICATI ON WITH THE BANK WITH REFERENCE TO THE PAYMENTS MADE BY NATIONAL LIBRARY HOWEVER TH E AO HAS EXPRESSED THAT INFORMATION IS NOT AVAILABLE WITH THE BANK. HOWEVE R LOOKING TO THE FACTS THAT THE ENTIRE AMOUNT OF RS.38 29 747 IS PART OF THE SALE O F THE APPELLANT AND HAS ALREADY BEEN ACCOUNTED FOR AS SALES IN THE BOOKS THE ADDITI ON OF RS.38 29 747 IS DIRECTED TO BE DELETED. THIS GROUND OF THE APPELLANT IS THEREFORE ALLOWED. THE APPELLANT GETS RELIEF OF RS.41 65 580/-. 4. AT THE TIME OF HEARING BEFORE US THE LD. DEPAR TMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE A.O. WHEREAS THE LD. A/R OF THE A SSESSEE RELIED ON THE ORDER OF THE LD. C.I.T.(A). IN REGARD TO DIFFERENCE IN THE BALANCE WITH GSI AND JADAVPUR UNIVERSITY THE LD. A/R SUBMITTED THAT THE A.O. ASKED THE DETAILS O F THE ADVANCES/PAYMENTS MADE TO THE ASSESSEE IN THE RELEVANT FINANCIAL YEAR AND ACCORD INGLY THE PARTIES ONLY INFORMED THE SAME AND THE A.O. CONSIDERED THE SAID AMOUNT AS BAL ANCE. THE SAID PARTIES DID NOT GIVE DETAILS OF THE OPENING BALANCES AND ALSO THE DEBIT ENTRIES. THE LD. C.I.T.(A) CONSIDERED THE SAME AND ACCEPTED THE RESULT SHOWN BY THE ASSES SEE. THEREFORE THE CONTENTION OF THE A.O. WAS NOT CORRECT. IN RESPECT OF BALANCE WI TH NATIONAL LIBRARY THE LD. A/R SUBMITTED THAT OUT OF RS.38 29 747/- SHOWN AS BALAN CE THE OPENING BALANCE ITSELF WAS OF RS.37 18 888/- AND AFTER CONSIDERING THE DEBIT OF R S.1 10 859/- IN THE ASSESSMENT YEAR UNDER CONSIDERATION FOR MAKING SUPPLY ON 31/3/2005 THE CLOSING BALANCE WAS SHOWN AT RS.38 29 647/-. SINCE NO PAYMENT WAS RECEIVED BY T HE ASSESSEE FROM NATIONAL LIBRARY THE SAID PARTY SHOWED THE AMOUNT AS NIL AND THE A.O . ON WRONG APPRECIATION OF FACTS 6 MADE THE ADDITION ON THE ALLEGED GROUND OF DIFFEREN CE IN BALANCE. THE LD. C.I.T.(A) CONSIDERED THE ISSUE IN PROPER PERSPECTIVE AND THE REFORE HIS ORDER DELETING THE ADDITION ON THIS ISSUE SHOULD BE UPHELD. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL PLACED ON RECORD. ON SCRUTINY OF THE ACCOUNT STATEMENTS OBTAINED FROM THE PARTIES THE A.O. FOUND DIFFERENCES IN THEIR CLOSING BALANCE IN COMPARISON TO THE BALANCES SHOWN BY THE ASSESSEE IN HIS ACCOUNTS AGAINST THOSE RESPECTIVE PARTIES WHICH LED HIM TO MAKE ADDITION OF THE BALANCE AMOUNTS IN THE HANDS OF THE ASSESSEE. THE LD. C.I.T.(A) HAS ELABORATELY DEALT WITH THE ISSUES AND THE LD. DEPARTMENTAL REPRESENTATIVE FAILED TO CONVE RT THE SAME BY ADDUCING ANY FURTHER EVIDENCE. 5.1. HOWEVER SO FAR AS DIFFERENCE IN BALANCE OF R S.2 78 762/- WITH G.S.I. IS CONCERNED THE ASSESSEE HAS FILED AT PAGE 41 OF TH E PAPER BOOK LEDGER ACCOUNT OF G.S.I. IN HIS BOOKS SHOWING CLOSING BALANCE IN THE SUM OF RS.9 66 363/- AS UNDER :- PARTICULARS DEBIT(RS.) CREDIT(RS.) OPENING BALANCE 3 92 916 REPAYMENT OF ADVANCE THROUGH D.D. 1 14 883 ADVANCE RECEIVED (CH.NO.664534) 6 87 601 MISC. ADJUSTMENT (JOURNAL ENTRY) 729 1 14 883 10 81 246 CLOSING BALANCE 9 66 363 ________ 10 81 246 10 81 246 THE ASSESSEE ALSO FILED COPY OF STATEMENT OF ADVANC E PAYMENT SUBMITTED BY G.S.I. TO THE A.O. AT PAGE 37 OF THE PAPER BOOK SHOWING ADVANCE P AYMENT OF RS. 6 87 601/- VIDE CHEQUE NO.663534 DATED 19/12/2005. THE A.O. ON THE BASIS OF THE BALANCE STATEMENT OBTAINED FROM G.S.I. CONSIDERED THE SUM OF RS.6 87 601/- AS CLOSING BALANCE OF THE ASSESSEE IN THE BOOKS OF G.S.I. ON PERUSAL OF THES E TWO ACCOUNT STATEMENTS WE OBSERVE THAT G.S.I. SUPPLIED DETAILS OF ADVANCE MADE BY THE M TO THE ASSESSEE DURING THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATIO N BUT THIS STATEMENT DOES NOT REFLECT ANY OPENING AND CLOSING BALANCE OR ANY OTHER PARTIC ULARS IN THIS BEHALF. IN HIS REMAND REPORT THE A.O. SIMPLY STATED THAT THE AMOUNT OF RS.6 87 601/- IS REFLECTED IN THE STATEMENT WHICH REVEALS THAT THE PAYMENT WAS MADE T O VPH SUBSCRIPTION SERVICES VIDE CHEQUE. IT IS THEREFORE EVIDENT THAT THERE WAS NO DISPUTE ABOUT THE ADVANCE PAYMENT 7 MADE OF RS.6 87 601/- DURING THE YEAR BUT AT THE S AME TIME THE A.O. DID NOT BRING ON RECORD ANY EVIDENCE OR INFORMATION FROM THE PARTY C ONCERNED DISCARDING THE OPENING CREDIT BALANCE OF RS.3 92 916/- AND DEBIT ENTRY OF RS.1 14 883/- WITH G.S.I. IN VIEW OF THE ABOVE WE FIND NO JUSTIFICATION TO INTERFERE WI TH THE ORDER OF THE LD. C.I.T.(A) ON THIS ISSUE. WE THEREFORE UPHOLD THE DELETION OF ADDIT ION OF RS.2 78 762/- ON ACCOUNT OF DIFFERENCE IN BALANCE WITH G.S.I. 5.2. IN REGARD TO ADDITION OF RS.57 071/- WE OBSE RVE THAT IN THE LEDGER ACCOUNT OF JADAVPUR UNIVERSITY IN THE BOOKS OF THE ASSESSEE FO R F.Y. 2005-06 PLACED AT PAGE 42 OF THE PAPER BOOK THERE WAS CLOSING BALANCE OF RS.11 87 437/- ON ACCOUNT OF TRADE ADVANCE. FURTHER AS PER DETAILS OF PAYMENTS MADE T O THE ASSESSEE BY JADAVPUR UNIVERSITY OBTAINED BY THE A.O. FROM THE SAID PARTY AND PLACED AT PAGE 38 OF THE PAPER BOOK WE OBSERVE THAT THERE WAS A TOTAL PAYMENT OF RS.11 30 366/- ON DIFFERENT DATES DURING THE FINANCIAL YEAR 2004-05 RELEVANT TO EARL IER ASSESSMENT YEAR 2005-06 WHICH WAS CONSIDERED BY THE A.O. AS CLOSING BALANCE RESU LTING IN DIFFERENCE OF RS.57 071/- [RS.11 87 437 RS.11 30 366]. THE DETAILS OBTAINE D FROM JADAVPUR UNIVERSITY WERE ADMITTEDLY IN RELATION TO PAYMENTS MADE TO THE ASSE SSEE AND THAT TOO IN THE PREVIOUS FINANCIAL YEAR AND NOT DURING THE FINANCIAL YEAR UN DER CONSIDERATION. THEREFORE IN OUR CONSIDERED OPINION THE ACTION OF THE A.O. WAS NOT BASED ON PROPER EVIDENCE ON RECORD. FURTHER THE DETAILS OBTAINED FROM JADAVPUR UNIVERS ITY DO NOT SHOW ANY OPENING AND CLOSING BALANCE FOR THE YEAR UNDER CONSIDERATION. I N THE REMAND REPORT ALSO THE A.O. COULD NOT BRING ON RECORD ANY FURTHER EVIDENCE OR I NFORMATION WHICH MAY JUSTIFY HIS ACTION. IT IS PERTINENT TO MENTION HERE THAT THE LD . C.I.T.(A) ON SCRUTINY OF THE STATEMENT SUBMITTED BY JADAVPUR UNIVERSITY FOUND THAT THERE W AS A PURCHASE OF RS.42 384/- VIDE BILL DATED 23/2/2005 WHICH DOES NOT FALL IN THE AS SESSMENT YEAR UNDER CONSIDERATION. CONSIDERING THE ABOVE WE ARE OF THE OPINION THAT T HE LD. C.I.T.(A) AFTER PROPERLY APPRECIATING THE FACTS OF THE CASE AND EVIDENCE ON RECORD HAS RIGHTLY DELETED THE ADDITION OF RS.57 071/- MADE TO THE TOTAL INCOME OF THE ASSE SSEE ON ACCOUNT OF ALLEGED DIFFERENCE IN THE BALANCE WITH JADAVPUR UNIVERSITY. THAT BEING SO WE UPHOLD HIS ORDER ON THIS ISSUE. 5.3. NOW COMING TO THE ADDITION OF RS.38 29 747/- WE OBSERVE THAT THE ASSESSEE IN HIS BOOKS OF ACCOUNT HAS SHOWN THE SAID AMOUNT IN T HE NAME OF NATIONAL LIBRARY AS SUNDRY DEBTORS CLOSING BALANCE WHICH COMPRISED OF THE FOLLOWING :- 8 01/4/2005 TO OPENING BALANCE RS.37 18 888 31/3/2005 TO ALLAPUZA TD MEDICAL COLLEGE RS. 1 10 859 BY CLOSING BALANCE RS.38 29 747 IT WAS ALSO CLAIMED BY THE ASSESSEE THAT AT THE END OF THE FINANCIAL YEAR UNDER CONSIDERATION THE AFORESAID AMOUNT OF RS.38 29 747 /- WAS YET TO BE RECEIVED FROM NATIONAL LIBRARY. THE A.O. HOWEVER ON THE BASIS O F INFORMATION OBTAINED FROM THE PARTY (PLACED AT PAGES 39 & 40 OF THE PAPER BOOK) WHICH WAS RELATED TO FINANCIAL YEARS 2002-03 & 2003-04 OBSERVED THAT THERE WAS A TOTAL PURCHASE IN THE SUM OF RS. 86 63 766/- FROM THE ASSESSEE AND THE PAYMENTS OF S IMILAR AMOUNT ON DIFFERENT DATES AGAINST THOSE PURCHASES WERE MADE BY THE PARTY. ON PERUSAL OF THE LETTER DATED 24/4/2008 OF NATIONAL LIBRARY ADDRESSED TO THE A.O. FURNISHING INFORMATION ABOUT TRANSACTION WITH THE ASSESSEE IN THE SUM OF RS.86 6 3 766/- PLACED ON PAGES 39 & 40 OF THE PAPER BOOK WE OBSERVE THAT THE PURCHASES AND P AYMENTS COVERED IN SUCH DETAILS WERE PERTAINING TO THE PERIOD FROM 02/12/2002 TO 19 /2/2004 WHICH FELL DURING FINANCIAL YEARS 2002-03 AND 2003-04 WHEREAS THE FINANCIAL YE AR UNDER CONSIDERATION BEFORE US IS 2005-06. IT IS ALSO EVIDENT THAT THE DETAILS FURNIS HED BY NATIONAL LIBRARY DID NOT GIVE ANY DETAILS OF TRANSACTION AFTER 19/2/2004 ALTHOUGH TH E CASE BEFORE US IS PERTAINING TO THE PERIOD 01/4/2005 TO 31/3/2006. FURTHER WE OBSERVE THAT THE DETAILS FURNISHED BY NATIONAL LIBRARY DID NOT SHOW ANY OPENING BALANCE O R CLOSING BALANCE. THEREFORE IN OUR OPINION THE A.O. MISDIRECTED HIMSELF IN ENTIRE LY RELYING ON THE DETAILS OBTAINED FROM NATIONAL LIBRARY WHICH WERE ADMITTEDLY NOT REL ATING TO THE FINANCIAL YEAR UNDER CONSIDERATION BEFORE US AND DISBELIEVING THE ACCOUN T STATEMENT OF THE ASSESSEE FOR THE RELEVANT FINANCIAL YEAR SHOWING OPENING BALANCE AND TRANSACTION ENTERED INTO DURING THAT PERIOD WITHOUT BRINGING ON RECORD ANY EVIDENCE IN S UPPORT OF SUCH REJECTION OF ACCOUNTS. IT IS PERTINENT TO MENTION HERE THAT THE LD. C.I.T. (A) ASKED THE A.O. TO SUBMIT HIS REPORT UPON ENQUIRY FROM BANK AS TO WHOSE ACCOUNT THE PAYM ENTS WERE CREDITED AND IN REPLY THE A.O. INFORMED THAT SUCH INFORMATION COULD NOT B E MADE AVAILABLE BY THE BANK. IN VIEW OF THE ABOVE FACTS AND DETAILS ON RECORD WE O BSERVE THAT THE LD. C.I.T.(A) HAS RIGHTLY HELD THAT THE ENTIRE AMOUNT OF RS.38 29 747 /- IS PART OF THE SALE PROCEEDS OF THE ASSESSEE WHICH HAS ALREADY BEEN ACCOUNTED FOR AS S ALES IN THE BOOKS OF ACCOUNT FOR THE 9 ASSESSMENT YEAR UNDER CONSIDERATION. THE ABOVE FAC TS ALSO GO TO PROVE THE ASSESSEES CONTENTION THAT THE SAID DEBIT BALANCE OF RS.38 29 747/- IS NOTHING BUT ON ACCOUNT OF NET AMOUNT RECOVERABLE FROM NATIONAL LIBRARY IN CONNECT ION WITH SALES WHICH HAS ALREADY BEEN OFFERED FOR TAXATION IN THE RELEVANT YEARS AND HENCE THE SAME DEBIT BALANCE CANNOT BE BROUGHT TO TAX FURTHER. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND EVIDENCES PRODUCED BEFORE US WE FIND NO J USTIFICATION TO INTERFERE WITH THE ORDER OF LD. C.I.T.(A) IN DIRECTING THE A.O. TO DEL ETE THE ADDITION OF RS.38 29 747/-. WE THEREFORE UPHOLD HIS ORDER ON THIS ISSUE. 5.4. IN VIEW OF OUR DISCUSSIONS ABOVE GROUND NO. 1OF THE REVENUES APPEAL IN RELATION TO ADDITION OF RS.41 65 580/- IS DISMISSED . 6. THE ONLY OTHER GROUND RAISED IN THIS APPEAL BY THE REVENUE READS AS UNDER :- 2. THE LD. CIT(A) ERRED IN LAW AS WELL AS I N FACT IN DELETING THE ADDITION OF RS.1 84 238/- ON ACCOUNT OF PARTIAL DISALLOWANCE OF CERTAIN EXPEN SES. 6.1. THE A.O. OBSERVED THAT THE ASSESSEE HAS DEBIT ED THE FOLLOWING EXPENSES IN THE P/L ACCOUNT OF HIS PROPRIETORSHIP CONCERN :- PACKING CHARGES - RS.1 07 280.50 BUSINESS PROMOTION EXPENSES - RS.2 56 100.00 ENTERTAINMENT EXPENSES - RS. 49 819.00 TRAVELLING & CONVEYANCE EXP. - RS.3 42 824.55 LEGAL CHARGES - RS. 33 780.00 RS.7 89 804.05 ACCORDING TO THE A.O. ALTHOUGH THE LEDGER ACCOUNTS IN RESPECT OF THE ABOVE EXPENSES WERE PRODUCED BUT ALL THE SUPPORTING EVIDENCES BI LLS/VOUCHERS WERE NOT PRODUCED. HE THEREFORE RESORTED TO ESTIMATE THE SAID EXPENSES A ND DISALLOWED ON AD HOC BASIS 20% OF THE TOTAL EXPENDITURE OF RS.7 89 804/- UNDER THE AF ORESAID HEADS OF EXPENDITURE WHICH CAME TO RS.1 57 961/-. 6.2. IN ADDITION TO THE ABOVE THE ASSESSEE ALSO C LAIMED EXPENSES OF RS.14 730/- TOWARDS ADVERTISEMENT AND RS.11 547/- ON ACCOUNT OF VISWAKARMA PUJA. THE A.O. FOR WANT OF SUPPORTING EVIDENCE DISALLOWED IN ENTIRETY THE AFORESAID EXPENSES. IN THIS WAY THE A.O. MADE THE TOTAL DISALLOWANCE OF RS.1 87 238 /- [RS.1 57 961 + RS.14 730 + RS. 11 546]. 10 7. ON APPEAL THE LD. C.I.T.(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND EVIDENCES PRODUCED DELETED THE ADDITION OF RS.1 57 961/- MADE UNDER VARIOUS HEADS OF EXPENDITURE BY OBSERVING AS UNDER :- 4.3. FROM THE ABOVE IT IS SEEN THAT THE APPELLANT HAS CONTENDED THAT THE BOOKS OF ACCOUNTS BILLS AND VOUCHERS AS CALLED FOR WERE PRO DUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. FROM THE ASSESSMENT RECORD THIS CONTENTION OF THE APPELLANT IS FOUND TO BE CORRECT AS THE ASSESSMENT RECORD DOES NOT SHOW THE DETAILS OF BILLS AND VOUCHERS WHICH WERE CALLED FOR BY THE AO BUT WERE NOT PRODUCED BY THE ASSESSEE OR WHICH WERE NOT FOUND TO BE AVAILABL E IN THE RECORDS AND DOCUMENTS PRODUCED BY THE APPELLANT. NO SPECIFIC FINDINGS AN D DISCREPANCIES HAVE BEEN NOTED BY THE AO. THE BOOKS OF ACCOUNTS ARE DULY AUDITED. CONSIDERING ALL THE ABOVE FACTS AND EXPLANATION OF THE APPELLANT THE ADDITION IS DIRECTED TO BE DELETED. THESE GROUNDS OF THE APPELLANT ARE THEREFORE ALLOWED. TH E APPELLANT GETS RELIEF OF RS.1 57 961/-. 7.1. IN REGARD TO THE DISALLOWANCE OF RS.14 730/- ON ACCOUNT OF ADVERTISEMENT EXPENSES THE LD. C.I.T.(A) ON PERUSAL OF THE DETAI LS OBSERVED THAT OUT OF THE TOTAL EXPENDITURE TOWARDS ADVERTISEMENT OF RS.14 730/- CL AIMED TO HAVE BEEN MADE TOWARDS PROMOTING SALES ONLY TWO PAYMENTS OF RS.200/- AND RS.300/- WERE MADE IN CASH AND THE BALANCE PAYMENTS WERE MADE BY CHEQUES. HE FURTHER O BSERVED THAT THE A.O. HAS NOT GIVEN ANY SPECIFIC FINDING FOR SUCH ENTIRE DISALLOW ANCE. HE THEREFORE ALLOWED THE CLAIM OF THE ASSESSEE AND DIRECTED THE A.O. TO DELE TE THE DISALLOWANCE. 7.2. IN RESPECT OF DISALLOWANCE OF RS.11 547/- ON ACCOUNT OF VISWAKARMA PUJA THE ASSESSEE CONTENDED BEFORE THE LD. C.I.T.(A) THAT PE RFORMING OF VISWAKARMA PUJA BY THE WORKERS ENGAGED IN HIS BUSINESS HAS A DIRECT NEXUS WITH THEIR WELFARE AND PEACE WHICH IS ESSENTIAL TO CONDUCT BUSINESS SMOOTHLY AND HENCE THIS IS ALLOWABLE AS BUSINESS EXPENDITURE U/S. 37(1) OF THE ACT. THE LD. C.I.T.( A) CONSIDERING THE EXPLANATION OF THE ASSESSEE ALLOWED THE EXPENDITURE AND DIRECTED THE A .O. TO DELETE THE DISALLOWANCE. 8. BEFORE US THE LD. A/R SUBMITTED THAT THE A.O. DISALLOWED EXPENDITURE OF RS.1 57 961/- BEING 20% OF TOTAL EXPENDITURE OF R S.7 89 804/- UNDER VARIOUS HEADS AS MENTIONED IN PARA 6.1 ABOVE ON THE GROUND THAT ALL SUPPORTING BILLS/VOUCHERS WERE NOT FURNISHED. HE FURTHER SUBMITTED THAT ALL VOUCHERS & DOCUMENTS WERE PRODUCED DURING ASSESSMENT PROCEEDINGS AND THERE IS NO SPECIFIC FIN DING GIVEN BY THE A.O. AS TO WHICH EXPENDITURE WAS NOT VERIFIABLE. IN REGARD TO EXPEND ITURE ON ADVERTISEMENT OF RS.14 730/- THE LD. A/R SUBMITTED THAT MOST OF THE PAYMENTS EX CEPTING RS.500/- HAVE BEEN MADE TO 11 VARIOUS CLUBS/INSTITUTIONS BY CHEQUES AND FOR RUNNI NG DAY TO DAY BUSINESS PEACEFULLY AND SMOOTHLY THIS TYPE OF PETTY EXPENDITURE BY WAY OF ADVERTISEMENTS ON SEVERAL OCCASIONS ARE PART OF BUSINESS EXPEDIENCY. SIMILAR WAS THE A RGUMENT IN RESPECT OF DISALLOWANCE OF EXPENDITURE OF RS.11 547/- INCURRED ON VISWAKARMA P UJA PERFORMED BY THE WORKERS OF THE ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE HOWEVER RELIED ON THE ORDER OF THE A.O. 9. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL PLACED ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHO RITIES BELOW. IN REGARD TO THE PARTIAL AD HOC DISALLOWANCE OF EXPENDITURE OF RS.1 57 961/- WE OBSERVE THAT THE A.O. DID NOT POINT OUT ANY SPECIFIC ITEM OF EXPENDITURE WHICH A CCORDING TO HIM WAS INFLATED OR REMAINED UNVOUCHED. IN THAT VIEW OF THE MATTER IN OUR CONSIDERED OPINION THE A.O. WAS NOT JUSTIFIED IN MAKING 20% DISALLOWANCE ON EST IMATE BASIS OUT OF THE EXPENDITURE OF RS.7 89 804/- MORE SO WHEN THE ACCOUNTS OF THE ASSESSEE ARE AUDITED. WE THEREFORE UPHOLD THE ORDER OF LD. C.I.T.(A) ON THIS ISSUE DIR ECTING DELETION OF ADDITION OF RS.1 57 961/-. 9.1. IN REGARD TO OTHER TWO DISALLOWANCES OF RS.1 4 730/- AND RS.11 547/- MADE BY THE A.O. ON ACCOUNT OF ADVERTISEMENT EXPENSES AND EXPEN SES ON VISWAKARMA PUJA RESPECTIVELY WE ARE OF THE OPINION THAT TO RUN TH E BUSINESS SMOOTHLY AND PEACEFULLY THE ASSESSEE IS REQUIRED TO INCUR SUCH TYPE OF EXPENSES FOR HIS BUSINESS EXIGENCY. THEREFORE CONSIDERING THE ABOVE AND SMALLNESS OF THE EXPENDIT URE WE DO NOT FIND ANY JUSTIFICATION TO SUSTAIN ANY AD HOC DISALLOWANCE. THAT BEING SO WE UPHOLD THE ORDER OF LD. C.I.T.(A) DIRECTING DELETION OF DISALLOWANCES OF THE AFORESAI D TWO SUMS. THEREFORE GROUND NO.2 OF THE REVENUES APPEAL STANDS DISMISSED. 10. IN THE RESULT THE APPEAL OF THE REVENUE IS DI SMISSED. 4 '3 #5' 6 5% 7 48 THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON 28.01 .2011. SD/- SD/- ( . .. . ! ! ! !. .. . ) '# ( . . . . . .. . ) (C.D.RAO) ACCOUNTANT MEMBER (B.R.MITTAL) JUDICIAL MEMBER ( (( (!# !# !# !#) )) ) DATE: 28-01-2011 12 $ $ $ $ / ITA NO. 678 (KOL) OF 2010 '3 1 /9 :'9';- COPY OF THE ORDER FORWARDED TO: 1. + / THE APPELLANT : I.T.O. WARD-38(4) KOLKATA. 2 /0+ / THE RESPONDENT : SANJIB BHATTACHARJEE 106 VIVEKAN ANDA ROAD KOL-06 3. 3% () : THE CIT(A)-XXIV 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 .