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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: Shri J. Sudhakar Reddy & Shri S.S.Viswanethra Ravi
This appeal by the Revenue is against the order dt: 30-07- 2014 passed by the Commissioner of Income Tax (Appeals), XXXII, Kolkata for the assessment year 2010-11.
In this appeal, the Revenue has raised the following grounds of appeal:-
1. Whether on the facts & circumstances, the Ld. CIT(A) erred in deleting the unaccounted advance received and simultaneously deleting unaccounted purchases found in course of survey.
2. Whether in the facts & circumstances of the case the Ld. CIT(A) was Justified in giving relief to the assessee on the basis of explanation filed by the assessee without seeking remand from the A0. "
1 IT)A No.1960/Kol/2014 Tapas Kumar Mondal
Neither any one appeared on behalf of the Appellant Revenue nor there was any application seeking adjournment. The ld.AR submits that the AO added the entire value of purchase instead of applying the G.P rate. The ld.AR further submits that all the details were submitted before the AO and CIT-A. The AO without considering the same added the impugned addition. The ld.AR of the assessee further submits that the CIT-A considering all the material available on record deleted the said addition. We find that the CIT-A discussed the issue in detail. Therefore, we proceed to hear the case and dispose of the same by perusing the material available on record.
The brief facts of the case: A survey u/s. 133A of the Act was conducted on the Assessee on 17-03-2010. The assessee filed his return on 6-10-2010 by declaring total income of Rs.2,72,060/-. Notices u/s. 143(2) and 142(1) of the Act were issued to assessee. In response, the AR of the assessee appeared and produced audited accounts, books of account, list of sundry creditors and sundry debtors, bills and vouchers and various details. The AO during the course of scrutiny proceedings found that the assessee prepared computerised books of account after the survey and that there were not found during the course of survey. The AO issued show cause notice seeking explanation why an amount of Rs.47,77,383/- should not be treated as undisclosed/unrecorded purchase. The assessee explained as under:- Kindly refer to the above most respectfully it is submitted that the" socalled ledger copy" without seal and signature found during the course of survey proceedings U/S 133A dated 17.03.2010 does not related to us. It may kindly be noted that the contents of this socalled " Ledger copy" are not relatable to me or any other documents, Books of Accounts found during the survey proceedings.
2 IT)A No.1960/Kol/2014 Tapas Kumar Mondal
Even of the socalled "Ledger copy" it is not included in the list of “Inventory of Books of account Annexure -1" dated 17.03.2010 singed by Authorized Officer Mr. S. Paul.
However, it appears from the list of "inventory of Books of Account - Annexure-I" dated 17.03.2010 neither mention the socalled Ledger copy in identification mark is TOM-3 and as well as TOM-9 nor signed by any parties i.e survey party, assessee or any third part. TOM-3 showing purchase register for the financial year 2009-10.
The amount mentioning of this socalled ledger copy is not reflected in to any of the documents i.e ledger copy, cash book etc.
The amount mentioning in the documents are also not relatable to Bank account Le Bank A/C No.06550500017592 and A/C No 15023 with Uco Bank, barasat branch maintain by me.
It is further submitted that the socalled ledger copy does not relate to us neither it is included in the impound documents during the course of survey proceedings u/s 133A dated 17.03.2010 nor the person mention in the socalled ledger copy is known to me and also without seal and signature I never had any business with the person known as S.Paul. Accounting to the provision of evidence Act, 1872 " the signature and every other part of such books of accounts and other documents which purports to be in the hand writing of any particular person are in that persons hand writing, and in the case of documents duly stamped and signed by whom it purports to have been show executed or attested" It may kindly be noted that the documents neither sealed nor duly stamped and therefore it just a waste paper but not a documentary evidence rather.
Point-2 The allege ledger copy found at the time of the survey does not belongs to me Nothing has been done nor has been proved that the document belongs or is connected with me
As per provision of Act that " mere possession of assets is not enough, the belief must be that the assets are wholly or partly undisclosed"
It may kindly be noted that no verification has been made to prove that the document are belongs to me. Therefore, mere possession of documents/assets etc. is not enough the belief must be that the assets are wholly or partly undisclosed. Moreover, where without there being any reason to belief that the documents/ assets which was in possession of a person represented wholly or partly his undisclosed income. This action is to be held to be without jurisdiction. It was decided by the Allahabad High Court in the case of ganga Prasad Maheshwari & Others V CIT( 1983) 139ITR 1043,1050-53.
It is also pleaded that if any documents is found in the possession or controlled of any person in the course of a search, then by legal fiction a presumption has to be drawn that such documents belongs to the person from whose possession or controlled it was found and the contains of such documents are true. However, this presumption is rebuttable. There has been no investigation to prove any connection with me regarding the allege document.
POINT-3 No adverse material on record or taken the basis of disclosure made during the Survey. In absence of any adverse, material on record not proving that the documents belongings to me. Addition could not be made on the basis of disclosure during the Survey. It was held in the case of DCIT v. Samta Marine Kakinada [2007J 18 SOT 135 ( Mum) and also taken a similar view in the case of ACIT v. Smt Usha Rani Talla [2010J 6 ITR(Trib) 37 (Del).
Under the above circumstances the socalled Ledger copy can' not be treated either belonging to me or an evidence. It may treated as 3
IT)A No.1960/Kol/2014 Tapas Kumar Mondal documents not having any relation with me or in fact having any evidential value. PRAYER It is therefore, prayed that the documents found may not be treated belongs to me or connected in my business in any way. In absence of any Seal and Signature is may not be treated as evidence.”
Being not satisfied with the above submissions, the AO added the entire amount of Rs.47,77,383/- reflected in the ledger copy as found at the time of survey to the income of the assessee.
Aggrieved, the assessee preferred an appeal before the CIT-A. Before the CIT-A the assessee reiterated the same submissions as made before the AO. The CIT-A considering the submissions of assessee and deleted the impugned addition made by the AO by observing that the assessee acquired goods on credit and payment was made subsequently to the supplier. Relevant portion of finding of the CIT-A is reproduced herein below:- “On merits of the addition, the assessee claims that the entire set of purchases cannot be added but a gross profit rate should be adopted. The assessee has claimed that since the AO has already added the g.p in respect of the unaccounted purchases of Rs.47,77,383/-, no further addition is required to be made in his case. The AR has also relied on the decision of ITAT Kolkata in the case of The Variety Stores v. ITO in and Pijush Ghana v.ITO in ITA No. 1646/Kol/2006 in support of his claim. The arguments of the assessee have force. The impugned ledger account declares an opening debit balance of Rs.19,82,736/- which indicates that the assessee had already taken goods worth this amount on credit in the financial year immediately preceding the previous year and the assessee during the earlier year or during the previous year under consideration has only converted it into cash and has also paid for the purchases. Therefore the initial corpus with the assessee for the undisclosed business was acquired by the assessee during the F.Y 2008-09 i.e. before the current previous year. The entire ledger account declares that the assessee had purchased goods on credit and thereafter paid for these in cash. Therefore, it cannot be said that the assessee has made any investment that can be treated as assessee’s income. The reason for their conclusion is very simple. The impounded document has either to be accepted in full or should be rejected in full. If the AO accepts the document as a true document of the assessee’s unaccounted business transaction then the A.O also has to accept that the transaction reveal acquiring of goods on credit first and the payment is always made subsequently to the supplier. Under such circumstances and in view of the orders of the ITAT cited by the assessee, it is held that the addition of Rs.47,77,383/- of the Act is not proper and is deleted. The ground of appeal No. 1 is allowed. “ 4
IT)A No.1960/Kol/2014 Tapas Kumar Mondal
The ld.AR before us submits that the AO did not conduct the assessment proceedings properly. He submits that the assessee produced all the details before the AO. But, however, the AO added the entire value of purchase to the income of the assessee. He relied on the order of the CIT-A and submit that the same be upheld.
Heard the ld.AR and perused the material available on record. We find force in the contention of the assessee. The entire quantum of purchase cannot be added, unless the assessee explains the source of purpose. During the course of first appellate proceedings the CIT-A examined the entire ledger account and found that the assessee had purchased goods on credit and thereafter paid for the same. Hence the source of funds for making the purchases are explained. We find that the CIT-A was justified in doing so. Therefore, we do not find any infirmity in the impugned order of the CIT-A and we uphold the same. Ground no.1 of revenue’s appeal is dismissed.
With regard to ground no.2, the Revenue has raised that the CIT-A deleted the said addition on the basis of explanation filed by the assessee without seeking the remand report from the AO.
We find that all the details were filed by the assessee before the AO in response to notices issued by the AO u/s. 142(1) of the Act to assessee. The AO in his order discussed all the details. We find that there was no additional evidence or document filed before the CIT-A by the assessee. The CIT-A considered the material available on record and deleted the said 5 IT)A No.1960/Kol/2014 Tapas Kumar Mondal addition, which is justified. We uphold the same. Ground no.2 raised by the revenue is dismissed.
In the result, the appeal of the revenue is dismissed ORDER PRONOUNCED IN OPEN COURT ON 29/05/2017