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Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA
Before: Sri J. Sudhakar Reddy]
The Rupasi………………………..…………………………….……………..…………………………..……Appellant Kachari Road Katwa Burdwan - 713130 [PAN : AABFT 5214 A] Income Tax Officer, Ward-2(4), Kolkata………….……………….…………….….……......Respondent Aaykar Bhawan Court Compound Burdwan - 713101 Appearances by: Shri Soumitra Choudhury, Advocate, appeared on behalf of the assessee. Shri D.C. Mondal, Addl. CIT, DR appearing on behalf of the Revenue. Date of concluding the hearing : March 15th, 2018 Date of pronouncing the order : April 13th, 2018 O R D E R Per J. Sudhakar Reddy :- Both these appeals are filed by the assessee and are directed against separate but identical orders of the ld. Commissioner of Income Tax(Appeals) Burdwan, (hereinafter the ‘ld. CIT(A)’), passed u/s 250 of the Income Tax Act, 1961 (the ‘Act’), dt. 29/11/2016, for the Assessment Years 2009-10 & 2010-11.
As the issues arising in both these appeals are common, for the sake of convenience, they are heard together and disposed off by way of this common order.
The assessee is a partnership firm and is in the business of retail trading of cloths and garments. A survey was conducted at the premises of the assessee u/s 133A of the Act, on 08/10/2010. Thereafter the Assessing Officer recorded reasons and reopened the assessment u/s 147 of the Act. Notice u/s 148 of the Act, for re-opening the assessment was given on 31/03/2014, for both the Assessment
2 Assessment Year: 2009-10 I.T.A. No. 266/Kol/2017 Assessment Year: 2010-11 The Rupasi Years 2009-10 & 2010-11. The assessee did not file a return in response to these notices. At this juncture, we have to record that the assessee had filed its regular return of income for both the Assessment Years, within the due date for filing of return prescribed u/s 139(1) of the Act.
3.1. As the assessee had not filed a return in response to notice u/s 148 of the Act, notices u/s 142(1) of the Act, dt.03/06/2014, was issued. There was no response from the assessee. The assessee had appeared thereafter through his A/R. on 16/03/2015. The Assessing Officer issued a notice as to why a best judgment assessment should not be done u/s 144 of the Act, for both the Assessment Year for the various reasons mentioned in this notice. Detailed references were made to the impounded material. As per the version of the Assessing Officer the assessee responded by admitting that no return was filed in response to the notices u/s 148 of the Act, within the due date and that they have no other evidence to produce. The Assessing Officer completed the assessment u/s 144 r.w.s. 147 of the Act, on 30/03/2015, determining the total income for the Assessment Year 2009-10 at Rs.20,07,981/- and at Rs.32,63,740/- for the Assessment Year 2010-11. Additions were made on account of profit on sale of undisclosed purchases, difference in sundry creditors, disallowance u/s 40A(3) for both the Assessment Years. For the Assessment Year 2009-10, an addition of Rs.43,000/- was made u/s 69C of the Act. Nominal amount of Rs.100/- was added as interest for both the Assessment Years. Aggrieved the assessee carried the matter in appeal without success.
Further aggrieved the assessee is in appeal before us.
The ld. Counsel for the assessee Shri Soumitra Choudhury, submitted that the assessee had filed a letter dt. 29/04/2014, in response to the notice issued u/s 148 of the Act, wherein the return of income originally filed was requested to be treated as a return filed in response to the notice u/s 148 of the Act. He pointed out that the assessee had requested for reasons recorded for re-opening in this letter and that the same had not been furnished. He argued that the notice u/s 143(2) of the Act, was not issued for both the Assessment Years and hence the assessments are bad in law. He further argued that the addition made on account
3 Assessment Year: 2009-10 I.T.A. No. 266/Kol/2017 Assessment Year: 2010-11 The Rupasi of sundry creditors is bad in law and has to be deleted as admittedly the assessee has purchased goods on credit and it cannot be considered as unexplained credit. On the addition made u/s 40A(3), he submitted that undisclosed purchases were assessed and hence separate addition u/s 40A(3) of the Act, is not warranted.
5.1. In reply, the ld. D/R, submitted that the assessee has never filed a letter dt. 24/04/2014, either asking for reasons of re-opening or that the returns filed originally be treated as returns filed in response to notice issued u/s 148 of the Act. As the return of income has not been filed, he argued that the provisions of Section 143(2) of the Act, do not apply. On merits he relied on the order of the Assessing Officer as well as the ld. CIT(A) and submitted the sundry creditors have been repaid from undisclosed sources and hence the addition can be sustained u/s 40A(3) of the Act. He submitted that as these purchases were admittedly made in cash the same has to be sustained.
Rival contentions heard. The assessee filed before me a copy of the letter dt. 24/04/2014. In my view he had requested that the original returns filed by it for both the Assessment Years for being treated as returns file in response to notice u/s 148 of the Act, and that he had sought reasons for re-opening. The letter contains an inward stamp receipt of the Office of the Income Tax Officer, ward- 2(4), Burdwan. I called for the assessment record and examined whether this letter was at all filed. I find that the Assessing Officer in a showcause notice dt. 16/03/2013 issued for both the Assessment Years, has specifically at para 3 stated that the assessee has not filed return in response to the notice u/s 148 of the Act. In its reply, which was filed on 20th March, 2015, the assessee at para 1 admitted that it missed the due date of filing the return u/s 148 of the Act. Having so admitted, and having not disputed the finding of the Assessing Officer that the assessee has not filed the return of income in response to a notice issued u/s 148 of the Act, and having not asserted so before the ld. CIT(A), I have not hesitation in holding that the alleged letter 24/04/2014, was never filed before the Assessing Officer, specifically when the original of this letter is not produced before me.
4 Assessment Year: 2009-10 I.T.A. No. 266/Kol/2017 Assessment Year: 2010-11 The Rupasi 6.1 When no return of income has been filed in response to the notice u/s 148 of the Act, there is no requirement of service of notice u/s 142(2) of the Act. As no request has been made to the Assessing Officer there is no requirement for furnishing the reasons recorded for re-opening the assessment. Hence both these arguments of the ld. Counsel for the assessee are dismissed as devoid of merit.
Coming to the merits of the case, in my view, the addition of sundry creditors cannot be sustained for the reason that, from the impounded documents, the Assessing Officer found that the assessee had made this credit purchases from various entities. He has listed out the entities also. Among these entities he has also listed out the parties to whom payments were made in excess of Rs.20,000/-, in cash, violating Section 40A(3) of the Act. Some of these credit purchases were recorded in the books of account. This does not warrant any addition. The sundry creditors which are found to be correct cannot be a subject matter of addition. All the credits are explained. Hence this addition is deleted.
The second issue is the disallowance u/s 40A(3) of the Act. The Assessing Officer has recorded that the payments in questions were made outside the books of account. The profit arising out the transactions of purchase and sale not recorded in the books of account has been brought to tax. Hence in my view no separate addition u/s 40A(3) of the Act, is warranted. Thus, I delete this addition for the both the Assessment Years.
As regard the other additions, no specific arguments have been advanced by the assessee; hence I uphold the order of the ld. Revenue Authorities and dismiss this grounds of the assessee.