Shri Partha Paul, North 24 Parganas v. ITO, Ward - 50(2), Kolkata, Kolkata

ITA 728/KOL/2011 | 2005-2006
Pronouncement Date: 28-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 72823514 RSA 2011
Bench Kolkata
Appeal Number ITA 728/KOL/2011
Duration Of Justice 2 month(s) 17 day(s)
Appellant Shri Partha Paul, North 24 Parganas
Respondent ITO, Ward - 50(2), Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 28-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 28-07-2011
Assessment Year 2005-2006
Appeal Filed On 11-05-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [ . . . . . .. . ! ! ! ! ] [BEFORE HONBLE SHRI S.V. MEHROTRA AM & HONBLE SHRI MAHAVIR SINGH JM !' !' !' !' / I.T.A NO. 728/KOL/2011 #$ %& #$ %& #$ %& #$ %&/ // / ASSESSMENT YEAR : 2005-06 SRI PARTHA PAUL -V S.- INCOME TAX OFFICER/WARD-50(2) KOLKATA. WARD-50(2) KOLKATA. [ () () () () /APPELLANT ] ]] ] [ + ++ + () () () ()/ // / RESPONDENT ] ]] ] () () () () / FOR THE APPELLANT : S/SHRI A. K. CHAKRABOR TY & S.K. MAJUMDAR + () + () + () + () / FOR THE RESPONDENT : SHRI S. K. ROY - /ORDER . . . . . .. . PER S. V. MEHROTRA A. M. THE ASSESSEE HAS PREFERRED THIS APPEAL FOR ASSESSM ENT YEAR 2005-06 AGAINST THE ORDER OF LD. CIT(A)-XXXII KOLKATA DATED 19.11.2010. 2. THE ASSESSEE AN INDIVIDUAL IN THE RELEVANT ASS ESSMENT YEAR CARRIED ON THE BUSINESS AS DISTRIBUTOR OF COSMETIC GOODS. HE HAD FILED HIS RET URN OF INCOME SHOWING AN INCOME OF RS.1 01 740/-. THE ASSESSMENT WAS MADE AT A TOTAL I NCOME OF RS.12 79 505 INTER ALIA MAKING FOLLOWING ADDITIONS :- BOGUS PURCHASE : RS. 1 14 982/- BOGUS PURCHASE : RS. 5 230/- BOGUS CREDITOR : RS.10 33 484/- BOGUS CREDITOR : RS. 17 874/- LD. CIT(A) CONFIRMED THE ADDITION. BEING AGGRIEVED WITH THE ORDER OF LD. CIT(A) ASSES SEE IS IN APPEAL BEFORE US AND HAS TAKEN FOLLOWING REVISED GROUNDS OF APPEAL :- (1) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF ASSESSING O FFICER. ITA NO. 728/KOL/2011 2 (2) FOR THAT ON THE FACTS THE RE-AUDITED ACCOUNTS SHOUL D HAVE BEEN CONSIDERED BY LD. CIT(A) FOR THE PROPER ADJUDICATIO N OF THE CASE. (3) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE PERCENTAGE OF PROFIT SHOWN BY THE ASSESSEE AS PER R E-AUDITED ACCOUNTS SHOULD HAVE BEEN ACCEPTED BY THE LD. A.O. IN CONSIDERATION OF THE PREVIOUS YEAR OR SUBSEQUENT YE ARS PROFIT WHICH IS IN THE RECORDS OF THE LD. A.O. ACKNOWLEDGE D YOUR HONOUR ON SUCH ORDER WHICH IS DEEMED FIT AND PROPER. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA D DISCLOSED PURCHASES OF RS.50 33 115/- FROM M/S. HRISHIKESH ENTERPRISE AND FOR RS.8 26 903/- FR OM M/S. VIDUYT METALLICS PVT. LIMITED. ASSESSING OFFICER NOTICED THAT AS PER LIST OF SUNDR Y CREDITORS ASSESSEE HAD CLAIMED RS.10 78 117/- DUE TO M/S. HRISHIKESH ENTERPRISE AND RS.18 322/- A S PAYABLE TO M/S. VIDYUT METALLICS PVT.LIMITED. ASSESSING OFFICER ISSUED LETTER U/S. 1 33(6) ON 23.08.2007 TO BOTH THE PARTIES AND FROM THEIR REPLY NOTICED CERTAIN DISCREPANCIES. HE FOUND THAT M/S. HRISHIKESH ENTERPRISE HAD CONFIRMED THE SALES TO THE TUNE OF RS.49 18 133/- AND OUTSTAN DING BALANCE AT THE END OF THE YEAR OF RS.44 633/-. FURTHER M/S. VIDUYT METALLICS PVT. LI MITED HAD CONFIRMED THE SALES TO THE TUNE OF RS.8 21 673/- AND OUTSTANDING BALANCE OF RS.447/- A T THE END OF THE YEAR. SINCE ASSESSEE FAILED TO OFFER ANY EXPLANATION IN REGARD TO THE DISCREPANCY ASSESSING OFFICER MADE AN ADDITION OF RS.1 14 982/- BEING DIFFERENCE IN THE PURCHASES SHO WN BY THE ASSESSEE AND CONFIRMED BY M/S. HRISHIKESH ENTERPRISE AND TREATED THE SAME AS BOGUS PURCHASES. FURTHER TAKING NOTE OF THE FACT THAT THERE WAS DIFFERENCE BETWEEN THE OUTSTANDING BALANC E OF M/S. HRISHIKESH ENTERPRISE HE TREATED THE SUM OF RS.10 33 484/- AS BOGUS CREDIT. IN REGARD TO THE PURCHASES FROM M/S.VIDUYT METALLICS PVT. LIMITED ASSESSING OFFICER NOTICED THAT ASSESSEE HA D TREATED THE FREE SAMPLES SUPPLIED BY THE PARTY AS ITS PURCHASES. THEREFORE MADE AN ADDITION OF RS .5 230/- ON ACCOUNT OF BOGUS PURCHASES. HE ALSO MADE ADDITION OF RS.17 874/- AS BOGUS SUNDRY C REDIT MADE IN THE NAME OF M/S.VIDUYT METALLICS PVT. LIMITED. BEFORE LD. CIT(A) IT WAS INTER ALIA SUBMITTED THAT ASSESSEE HAD APPOINTED ONE ACCOUNTANT WHO WAS ALSO PREPARING TH E BOOKS OF ACCOUNT OF OTHER NEIGHBOURING BUSINESSMEN. IT WAS POINTED OUT THAT THE SAID ACCOU NTANT WRONGLY POSTED PURCHASES TO THE TUNE OF RS.1 14 982/- FROM M/S. HRISHIKESH ENTERPRISE AND A LSO WRONGLY ENTERED SUNDRY BALANCE IN FINAL BALANCE SHEET FOR RS.10 51 358/- DUE TO WHICH CLOSI NG STOCK WAS ALSO INFLATED. SUBSEQUENTLY THE MISTAKE WAS DETECTED BY COMPARING THE STATEMENT OF STOCK AS ON 31.03.2005 FILED WITH THE BANK ON 18.04.2005 AND ACCORDINGLY RECASTED FINAL ACCOUNT S WERE PREPARED ON THE BASIS OF RELEVANT ITA NO. 728/KOL/2011 3 DOCUMENTS AVAILABLE WITH THE ASSESSEE. THE ACCOUNTA NT FINALLY CONFESSED HIS FAULT AND FILED AN AFFIDAVIT IN THIS REGARD. IT WAS FURTHER POINTED OU T THAT THE SAID ACCOUNTANT ALSO WRONGLY POSTED THE FIGURE OF SALE AT RS.45 17 433.50 AS AGAINST THE OR IGINAL SALE OF RS.55 41 538.08. THE ASSESSEE FURTHER CLARIFIED AS UNDER :- AS THE VALUE OF CLOSING STOCK WAS INFLATED BY THE ACCOUNTANT THE SUNDRY CREDITORS BALANCE WAS PUT AT HIS OWN WILL IN THE B ALANCE SHEET IN ORDER TO MAKE THE VALUE OF ASSETS & LIABILITIES EQUAL WITHOUT GOI NG THROUGH THE ACTUAL STATEMENT OF CLOSING STOCK FILED IN THE BANK AUTHORITIES ACCO RDING TO THE TRANSACTION MADE DURING THE YEAR ALTHOUGH ALMOST ALL THE PAYMENTS AG AINST PURCHASE WERE MADE THROUGH BANK. HENCE IT IS CRYSTAL CLEAR THAT PREVIO US CASH BOOK & LEDGER WERE WRONGLY MADE. THUS IT WAS SUBMITTED THAT THE ENTIRE DISCREPANCIE S CROPPED UP BECAUSE OF MISTAKE IN ACCOUNTS COMMITTED BY THE ACCOUNTANT. THEREFORE ACCOUNTS WE RE REAUDITED AFTER INCORPORATING ALL THE TRANSACTIONS CORRECTLY. THE ASSESSEE HAD FILED REAU DITED FINANCIAL STATEMENT ALSO AND REQUESTED THE SAME TO BE CONSIDERED IN VIEW OF RULE 46(A) SINCE ASSESSING OFFICER DID NOT AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD AND REFUSED TO TAKE RECA STED AUDITED BALANCE SHEET. AFFIDAVIT DATED 10.10.2008 OF NADIA SAHA ACCOUNTANT WAS ALSO FILED BEFORE THE LD. CIT(A). LD. CIT(A) HOWEVER DID NOT ACCEPT THE ASSESSEES CONTENTION F OR THE REASON THAT THE ACCOUNTS OF THE ASSESSEE WERE DULY AUDITED AND INTER ALIA OBSERVING THAT T HERE WAS NO INDUBITABLE EVIDENCE TO CORROBORATE THE ASSESSEES CLAIM THAT ENTRIES IN THE ORIGINAL B OOKS OF ACCOUNT HAD BEEN MADE CORRECTLY BY HIS ACCOUNTANT. HE ACCORDINGLY CONFIRMED THE ASSESSING OFFICERS ACTION. 4. LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE REITERATED THE FACTS AS SUBMITTED BEFORE THE LD. CIT(A). HE REFERRED TO PAGE 7 OF THE PAPER BOOK WHEREIN THE STATEMENT OF HIS STOCK AS ON 31.03.2005 SUBMITTED TO BANK OF INDIA ON 18.04.2005 IS CONTAINED IN WHICH STOCK HAD BEEN SHOWN AT RS.6 19 440/- BUT IN THE ORIGINAL ACCOUNTS CONT AINED AT PAGE 33 OF THE PAPER BOOK THE STOCK HAD BEEN SHOWN AT RS.17 66 174/- WHICH PRIMA FACIE WAS NOT CORRECT. FURTHER HE POINTED OUT THAT THE SALES HAD ALSO WRONGLY BEEN ADOPTED BY THE ACCOUNTA NT AND INSTEAD OF THE SALE TO THE TUNE OF RS.55 41 538.08 THE ACCOUNTANT HAD SHOWN AT RS.45 1 7 433.50. LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT WHEN VARIOUS DISCREP ANCIES WERE BROUGHT TO THE NOTICE OF THE ASSESSEE THEN ON VERIFICATION OF ALL DETAILS HE GO T THE ACCOUNTS REAUDITED CONTAINED AT PAGES 8 TO 22 OF THE PAPER BOOK AFTER INCORPORATING THE CORRECT F IGURES. LD. COUNSEL SUBMITTED THAT BOTH THE LOWER REVENUE AUTHORITIES WRONGLY REJECTED THE REAU DITED ACCOUNTS. IN THIS REGARD HE RELIED ON THE ITA NO. 728/KOL/2011 4 DECISIONS OF I.T.A.T. IN FOLLOWING CASES : (I) IN THE CASE OF ITO VS. SMT. SAHEBJADI DEVI VIDE ITA NO.1988/KOL/2006 ORDER DATED 12.01.2007 FOR ASSESSM ENT YEAR 2002-03. (II) SUDEB GHOSH VS. ITO VIDE ITA NOS. 1182/KOL/04 & 370/KOL/05 ORDER DATED 21.09.2005 FOR ASSESSMENT YEAR 2001-02. 4.1 IN THE ALTERNATIVE LD. COUNSEL REFERRED TO PAG E 4 OF THE PAPER BOOK AND POINTED OUT THAT GROSS PROFIT RATIO FOR EARLIER AND SUBSEQUENT ASSES SMENT YEAR WAS AS UNDER : ASSESSMENT YEAR TURN OVER GROSS PROFIT RATIO 2004-05 8 91 332.44 68 188.00 7.65% 2005-06 55 41 538.08 2 34 917.62 4.24% 2006-07 1 08 22 131.00 5 54 022.00 5.12% 2007-08 1 01 53 776.24 5 48 826.60 5.40% 2008-09 1 27 15 540.70 4 74 209.47 3.73% HE SUBMITTED THAT ASSESSEES GROSS PROFIT MAY BE FI XED AT A REASONABLE RATE. LD. COUNSEL SUBMITTED THAT THE BOOKS WERE REJECTED BY THE ASSESSING OFFIC ER. HE POINTED OUT THAT IN ANY VIEW OF THE MATTER THE ENTIRE PURCHASES COULD NOT BE BOGUS. 5. LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE OR DER OF THE LOWER REVENUE AUTHORITIES AND SUBMITTED THAT BECAUSE OF SPECIFIC DISCREPANCIES T HE ADDITION HAD BEEN MADE. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORDS OF THE CASE. THE ASSESSING OFFICER NOTICED THE DISCREP ANCIES IN THE ACCOUNTS SUBMITTED BY THE ASSESSEE ON THE BASIS OF CONFIRMATIONS RECEIVED FRO M THIRD PARTIES. HE PROCEEDED TO MAKE THE ADDITION ONLY ON THE BASIS OF DISCREPANCIES NOTICED IN PURCHASE ACCOUNT. HOWEVER DISCREPANCY BETWEEN STOCK STATEMENT SUBMITTED TO THE BANK AND S TOCK SHOWN BY THE ASSESSEE IN ITS ACCOUNT WAS NOT CONSIDERED BY THE ASSESSING OFFICER. THIS DISCR EPANCY WAS ALMOST OF THE SAME FIGURE AS WAS DIFFERENCE NOTICED IN THE PURCHASE ACCOUNT. THE ASS ESSEE HAD POINTED OUT THAT THE FIGURES OF SALES WERE ALSO WRONGLY ACCOUNTED FOR IN ITS ORIGINAL ACC OUNT IN-AS-MUCH AS THE ACTUAL SALES WERE MUCH MORE THAN SALES ACCOUNTED FOR IN THE ACCOUNTS. THE ASSESSEE HAD FILED AFFIDAVIT OF ACCOUNTANT WHO ADMITTED ALL THE MISTAKES BEING CREPT IN THE AC COUNTS AND ON THE BASIS OF WHICH FRESH REAUDITED STATEMENT WERE PREPARED BY THE ASSESSEE. IN THE REV ISED FINANCIAL ACCOUNTS WE FIND THAT THOUGH ITA NO. 728/KOL/2011 5 THERE HAD BEEN VARIATION IN THE FIGURES OF PURCHASE S SALES AND CLOSING STOCK BUT THERE WAS NO VARIATION IN THE FIGURES OF G.P. IT IS INCONCEIVABL E THAT EVEN AFTER SO MANY VARIATIONS THE G.P. SHOULD REMAIN SAME. IN VIEW OF THE ABOVE FACTORS W E ARE OF THE OPINION THAT THE ACCOUNTS OF THE ASSESSEE CAN NOT BE RELIED UPON. AT THE SAME TIME WE FIND CONSIDERABLE FORCE IN THE SUBMISSIONS OF LD. COUNSEL THAT ENTIRE DISCREPANCY FOUND IN THE PURCHASES AND SUNDRY CREDITORS COULD NOT BE ADDED. THEREFORE WE CONSIDER IT PROPER TO APPLY G. P. ON THE REVISED TURN OVER OF THE ASSESSEE. KEEPING IN VIEW THE TREND OF G.P. RATIO FROM ASSESS MENT YEAR 2004-05 TO 2008-09 NOTED ABOVE WE ARE OF THE OPINION THAT IT WOULD MEET ENDS OF JUSTI CE IF THE G.P. RATE OF 6% IS APPLIED TO THE TURN OVER OF RS.55 41 538.08. WE DIRECT ACCORDINGLY. 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. - - - - . . . . / .# 0 1 / .# 0 1 / .# 0 1 / .# 0 1 2 2 2 2 ORDER PRONOUNCED IN THE COURT ON 28. 07. 2011. SD/- SD/- [ ! ] [ .. ] [ MAHAVIR SINGH ] [ S.V. MEHROTRA ] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (2 2 2 2) )) ) DATED : 28TH JULY 2011. - 5 + 6 76%/ COPY OF THE ORDER FORWARDED TO: 1. () /APPELLANT : SRI PARTHA PAUL 47/2 JESSORE ROAD P.O. BARASAT DIST. 24-PARGANAS (NOR TH) PIN-700124. 2 + () / RESPONDENT : INCOME TAX OFFICER/WARD-50(2) 169 A.J.C. BOSE ROAD KOLKOTA. 3. -# / CIT 4. -# ()/ CIT(A) KOLKATA. 5. 0 + #/ DR KOLKATA BENCHES KOLKATA [ 6 + / TRUE COPY] -#./ BY ORDER !> /ASSTT REGISTRAR [KKC ?@ #A> B /SR.PS]