ITO, Ward - 42(1), Kolkata, Kolkata v. M/s. Kanchan Traders, Kolkata

ITA 845/KOL/2011 | 2000-2001
Pronouncement Date: 29-12-2011 | Result: Dismissed

Appeal Details

RSA Number 84523514 RSA 2011
Assessee PAN AAABK0103C
Bench Kolkata
Appeal Number ITA 845/KOL/2011
Duration Of Justice 6 month(s) 27 day(s)
Appellant ITO, Ward - 42(1), Kolkata, Kolkata
Respondent M/s. Kanchan Traders, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 29-12-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 29-12-2011
Assessment Year 2000-2001
Appeal Filed On 02-06-2011
Judgment Text
' IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOLKATA ( ) . . ) [BEFORE SRI MAHAVIR SINGH J.M. & SRI C.D. RAO A. M.] ! ! ! ! / I.T.A NO. 845/KOL/2011 '# $% '# $% '# $% '# $% / ASSESSMENT YEAR : 2000-2001 INCOME TAX OFFICER WARD-42(1) KOLKATA -V - M/S. KANCHAN TRADERS KOLKATA (PAN: AAABK 0103 C) ( &' &' &' &' /APPELLANT ) ( ()&' ()&' ()&' ()&' / RESPONDENT ) FOR THE APPELLANT ( &' ) : SHRI A.K. PRAMANICK D.R. FOR THE RESPONDENT ( ()&' ): SMT. SHREYA LAYALKA A.R. *' + *' + *' + *' + /DATE OF HEARING : 14.12.2011 -$ -$ -$ -$ /DATE OF PRONOUNCEMENT: 29 .12.2011 . / ORDER PER SHRI MAHAVIR SINGH JUDICIAL MEMBER/ :- THIS APPEAL OF REVENUE IS ARISING OUT OF ORDER OF CIT(A) KOLKATA IN APPEAL NO. 255/CIT(A.)-XII/42(1)/07-08 DATED 10.03.2011. ASSES SMENT WAS FRAMED BY ITO WARD-42(1) KOLKATA U/S 143(3)/147 OF THE INCOME TAX ACT 1961 (HEREINAFTER TO BE REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2000-01 VIDE ORDER DATED 31.10. 2006. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) DELETING THE ESTIMATED DISALLOWANCE OF EXPENSES OF TRAVELLING AN D CONVEYANCE ETC. FOR THIS REVENUE HAS RAISED FOLLOWING GROUND NO. 1:- THAT THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) EARED IN ALLOWING A TOTAL RELIEF OF RS.59 222/- ON ACCOUNT OF TRAVELING & CONVEYANCE CAR UPKEEP & RUNNING FOODING & LODGING GENERAL CHARGE S & REPAIRS & RENEWALS & LEGAL EXPENSES WITHOUT CONSIDERING THE F ACT THAT THE ASSESSEE HAD NO BUSINESS ACTIVITY AT ALL DURING THE YEAR UND ER CONSIDERATION. ITA NO.845/KOL./2011 2 3. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSING OFFICER JUST ON CONJECTU RE AND SURMISES DISALLOWED 75% ON ACCOUNT OF TRAVELING AND CONVEYANCE EXPENSES CAR UPKEEP AN D RUNNING EXPENSES FOOTING AND LODGING GENERAL CHARGES REPAIRS AND RENEWALS ETC. THE CIT (A) ALLOWED THE CLAIM OF ASSESSEE BY STATING THAT THE DISALLOWANCE HAS BEEN MADE PURELY ON AD HO C BASIS AND WITHOUT ANY MATERIAL ON RECORD TO PROVE THAT EXPENSES ARE IN THE NATURE OF PERSONA L EXPENSES AND NOT FOR PURPOSE OF BUSINESS. WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AS THE ADDITION IS PURELY ON AD HOC BASIS AND JUST ON THE BASIS OF CONJECTURE AND SURMISES. ACCORDINGL Y WE DISMISS THIS ISSUE OF REVENUES APPEAL. 4. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE ADDITION OF FICTITIOUS LIABILITY OF PARTNER ADDED B Y THE ASSESSING OFFICER. FOR THIS REVENUE HAS RAISED FOLLOWING GROUND NO. 2:- THAT THE LD. CIT(A.) ERRED IN DELETING THE ADDITIO N OF RS.15 02 317/- ON ACCOUNT OF FICTITIOUS PARTNER LIABILITY WITHOUT CONSIDERING THE FACT THAT THE SO CALLED PARTNER CATEGORICALLY DENIED ON OATH ABOUT MAKING ANY INVESTMENT IN THE PARTNERSHIP FIRM NAMELY M/S. KANCHAN TRADERS OR RECEIVING ANY SHARE OF PROFIT FROM THE SAID FIRM AS A PARTNER. 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEF FACTS RELATING TO THE ABOVE ISSUE ARE THAT AS SESSING OFFICER FROM ACCOUNTS OF THE ASSESSEE OBSERVED THAT IT HAS SHOWN A LIABILITY OF RS.15 02 317/- BEING PAYABLE TO SHRI SALIL MOHAN SAHA A RETIRED PARTNER OF ASSESSEE-FIRM. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS AO EXAMINED RETIRED PARTNER SHRI SALIL MOHAN SAHA AFTE R ISSUING SUMMONS UNDER SECTION 131 OF THE ACT AND SHRI SALIL MOHAN SAHA IN HIS DEPOSITION RECORDED ON 11.10.2006 STATED THAT HE DID NOT MAKE ANY CAPITAL INTRODUCTION AND DID NOT RECEI VE ANY SHARE PROFIT FROM THE PARTNERSHIP I.E. ASSESSEE FIRM. HE EVEN STATED THAT INVESTMENT MADE IN THE FIRM WAS DONE BY HIS FATHER USING HIS NAME. IN VIEW OF THE ABOVE STATEMENT ASSESSING OFF ICER CONCLUDED THAT SHRI SALIL MOHAN SAHA WAS A FICTITIOUS PARTNER WHO DID NOT MAKE ANY INVE STMENT IN THE FIRM AND ACCORDINGLY ASSESSED THE SAME AS FICTITIOUS LIABILITY AND UNEXPLAINED IN VESTMENT UNDER SECTION 68 OF THE ACT. AGGRIEVED THE ASSESSEE PREFERRED APPEAL BEFORE CIT (A) WHO DELETED THE ADDITION BY HOLDING THAT THIS LIABILITY OF RS.15 02 317/- AROSE IN THE YEAR 1993 WHEN SHRI SALIL MOHAN SAHA RETIRED FROM THE PARTNERSHIP FIRM ON 24.06.1993 FOR THE REL EVANT ASSESSMENT YEAR 1994-95 AND NOT IN THE RELEVANT ASSESSMENT YEAR 2000-01. CIT(A) FURTHE R OBSERVED THAT ASSESSING OFFICER CANNOT ITA NO.845/KOL./2011 3 TREAT THE LIABILITY OF THE ASSESSEE-FIRM AS FICTITI OUS LIABILITY AND IT WAS ACTUAL LIABILITY TO BE PAI D TO RETIRED PARTNER AS IT HAS ALREADY PAID THIS SUM OF RS.15 00 000/- IN THE YEAR 2005. AGGRIEVED AGAINST DELETION REVENUE CAME IN APPEAL BEFORE US. 6. WE FIND THAT AS PER PARTNERSHIP DEED DATED 17.04 .1977 SHRI SALIL MOHAN SAHA SON OF SHRI GOUR MOHAN SAHA WAS INTRODUCED AS THIRD PARTNE R IN THE PARTNERSHIP FIRM M/S. KANCHAN TRADERS. THIS FIRM WAS INCORPORATED IN SEPTEMBER 1 972. FURTHER BY CHANGE IN CONSTITUTION VIDE PARTNERSHIP DEED DATED 25.06.1993 SHRI SALIL MOHAN SAHA DISCONTINUED AS PARTNER AND RETIRED FROM THE PARTNERSHIP FIRM M/S. KANCHAN TRAD ERS. BOTH ORIGINAL COPY OF PARTNERSHIP DEED DATED 17.04.1977 AND CHANGE IN CONSTITUTION BY PART NERSHIP DEED DATED 25.06.1993 ARE ENCLOSED IN THE ASSESSEES PAPER BOOK AND EVEN THESE WERE FI LED BEFORE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE ALSO FILED PARTNERS CAPITAL A/C. AS ON 24.06.1993 WHICH WAS AVAILABLE BEFORE THE ASSESSIN G OFFICER AND NET CAPITAL BALANCE OF SHRI SALIL MOHAN SAHA WAS AT RS.15 02 317/-. LD. SR. D.R . POINTED OUT BEFORE US THAT THIS NET CAPITAL WAS OUTSTANDING AS ON 24.06.1993 AT RS.15 02 317/- AND DURING THE SAME PERIOD THE ASSESSEE- FIRM WAS HAVING SUFFICIENT FUND FOR CLEARING OF THI S LIABILITY AND HE REFERRED TO BANK BALANCE AMOUNTING TO RS.57 12 450/- AVAILABLE AS ON 24.06.1 993. HE REFERRED THAT WHY THIS LIABILITY WAS KEPT OUTSTANDING TILL IT WAS REPAID AS ON 02.09.200 5 02.12.2005 AND 14.12.2005 AMOUNTING TO RS.7 30 000/- RS.3 55 000/- AND RS.4 15 000/- RESP ECTIVELY. LD. SR. D.R. ALSO STATED THAT VIDE LETTER DATED 16.08.2006 THE ERSTWHILE PARTNER SHRI SALIL MOHAN SAHA CLEARLY NARRATED THE FACTS REGARDING REPAYMENT OF CAPITAL OF RS.15 00 000/- ON VARIOUS DATES AND ALSO STATED THAT HE HAS CLAIMED INTEREST AT THE BANK RATE ON UNPAID AMOUNT OF CAPITAL BALANCE FOR MANY YEARS BUT SUBSEQUENTLY WHEN ANSWERING TO VARIOUS QUESTIONS IN RESPONSE TO SUMMONS ISSUED UNDER SECTION 131 OF THE ACT BY ASSESSING OFFICER HE REP LIED VIDE QUESTION-ANSWER NOS. 5 9 10 12 & 13 THAT HE DID NOT HAVE ANY AMOUNT FOR CAPITAL IN TRODUCTION IN THE FIRM AND THERE IS NO OUTSTANDING LIABILITY IN THE FIRM WHICH IS HIS CAP ITAL. HE ALSO ADMITTED THAT EVEN THERE IS NO SHARE ALLOCATION FROM THE FIRM DURING THE PERIOD WH EN HE WAS PARTNER. ON QUERY FROM THE BENCH LD. COUNSEL FOR THE ASSESSEE STATED THAT THI S STATEMENT WAS TAKEN UNDER PRESSURE AND THAT IN EFFECT SHE HAS READY AFFIDAVIT TO BE FILED BEFOR E THE BENCH. WE ARE OF THE VIEW THAT THIS STATEMENT IS OF NO CONSEQUENCE BECAUSE THESE DOCUME NTS WERE FILED BEFORE THE ASSESSING OFFICER I.E. THE PARTNERSHIP DEED CHANGE IN CONST ITUTION OF PARTNERSHIP DEED PARTNERS CAPITAL A/C. AS ON 24.06.1993 DETAILS OF AVAILABILITY OF F UNDS OF F.DS. ON 24.06.1993 AND RE-PAYMENT ITA NO.845/KOL./2011 4 MADE IN 2005 OF RS.15 00 000/- AND QUA THIS THE ASS ESSING OFFICER HAS NOT ASKED ANY QUESTION AND NEVER THESE DOCUMENTS WERE CONFRONTED BY ASSESS ING OFFICER TO ASSESSEE OR TO ERSTWHILE PARTNER SHRI SALIL MOHAN SAHA. IN THE ABSENCE OF TH ESE DETAILS WE ARE OF THE VIEW THAT THERE ARE ENOUGH DOCUMENTARY EVIDENCE WHICH PROVES THAT OUTS TANDING LIABILITY WAS REALLY OUTSTANDING WHICH HAS BEEN CLEARED OFF IN 2005 TO THE EXTENT OF RS.15 00 000/- AND STILL BALANCE IS OUTSTANDING. WE ARE OF THE VIEW THAT THIS CANNOT BE ADDED AS FICTITIOUS LIABILITY AND NOT EVEN UNDER SECTION 68 OF THE ACT. ACCORDINGLY CIT(A) HA S RIGHTLY DELETED THE ADDITION AND WE CONFIRM THE SAME. 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. 0 1 23 4 05 6 5 78 0 1 23 4 05 6 5 78 0 1 23 4 05 6 5 78 0 1 23 4 05 6 5 78 ORDER PRONOUNCED IN THE OPEN COURT ON 29 / 12 / 2011. * 9 : . 29 /12/2011. SD/- SD/- [C.D. RAO/ ( . . ] [MAHAVIR SINGH / ] ACCOUNTANT MEMBER/ JUDICIAL MEMBER/ DATED : 29 / 12/ 2011 COPY OF THE ORDER FORWARDED TO: 1 . M/S. KANCHAN TRADERS 20 KUMARTULLY STREET KOLKAT A-5 2 ITO WARD-42(1) KOLKATA 18 RABINDRA SARANI PODD AR COURT 4 TH FLOOR KOLKATA-1 3. COMMISSIONER OF INCOME-TAX (APPEALS) KOLKATA 4. CIT KOLKATA 5. DR KOLKATA BENCHES KOLKATA (TRUE COPY) BY ORDER ASSISTANT REGISTRAR I.T.A.T. KOLKATA LAHA SR. P.S.