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Income Tax Appellate Tribunal, “D” BENCH : KOLKATA
Before: Hon’ble Sri A.T.Varkey, JM & Shri M.Balaganesh, AM ]
This appeal of the assessee arises out of the order of the Learned Commissioner of Income Tax (Appeals) -6 , Kolkata [ in short the ld CITA] in Appeal No. 56/CIT(A)- 6/Kol/15-16. dated 24.11.2016 against the order passed by the Income Tax Officer, Ward 23(4), Hooghly [ in short the ld AO] under section 143(3) of the Act dated 31.03.2015 for the Asst Year 2012-13.
The assessee has raised the following grounds before us :- “1) For that the order of the Ld. CIT(A) is arbitrary, illegal and bad in law. 2) For that the Ld. CIT(A) erred in confirming the addition of RS.12,20,000/- which was totally unjustified, illegal and erroneous and hence it should be deleted. 3) For that the Ld. CIT(A) erred in confirming a sum of Rs.419150/- as expenses disallowed and hence it should be deleted. 4) For that the Ld. CIT(A) erred in confirming the addition u/s. 68 of the I.T. Act 1961 a sum of RS.7,30,000/- as unexplained cash credit which is totally unjustified. 5) That the further confirmation of addition a sum of RS.9,70,000/- in the same identical issue is totally unjustified and illegal and this addition should be deleted. 6) For that the Ld. CIT(A) failed to appreciate the cogent materials on record while confirming his order.
Kallol Pal A.Yr.2012-13 7) For that the order passed by the Ld. CIT(A) was unjust ,unwarranted and suffers from judicial arbitrariness. 8) For that the appellant may urge additional grounds if any before or at the time of hearing.”
The brief facts of this case is that the assessee is engaged in wholesale business of stone chips and trading in potatoes. The return of income for the Asst Year 2012-13 was filed by the assessee on 31.8.2012 declaring taxable income of Rs 3,01,748/-. The assessee had reported turnover of Rs 88,48,581/- and Gross Profit of Rs 6,18,752/- from his Stone Chips business and turnover of Rs 28,60,420/- and Gross Profit of Rs 1,12,881/- from his Potatoes business. The assessee had reported net profit of Rs 3,01,748/- for both the businesses put together and offered the same in the return of income. The return was selected for scrutiny and assessment was completed u/s 143(3) of the Act on 31.3.2015 by making the following additions and determining the total income at Rs 38,30,898/- :- A. Addition towards inflated purchase Rs 90,000 B. Addition towards gift received from father Rs 12,20,000 C. Disallowance u/s 40(a)(ia) Rs 4,19,150 D. Disallowance u/s 40A(3) Rs 1,00,000 E. Addition towards cash deposit made for payment to Mr Joydeb Pal (father of assessee) Rs 17,00,000 ------------------------ Total additions / disallowances Rs 35,29,150 ------------------------ Out of the above, the addition made in A was deleted by the ld CITA. The assessee is contesting only the additions made in respect of B, C & E above before us.
The brief facts of those additions and explanations given by the ld AR and defence given by the ld DR before us are explained below:- 4.1. Addition towards gift received from father – Rs 12,20,000/- The ld AO observed that there was increase in capital account during the year by Rs 14,21,971/- which was due to receipt of Rs 12,20,000/- stated to be gift received from Kallol Pal A.Yr.2012-13 Mr Joydeb Pal (father of the assessee). The factum of gift was disbelieved by the ld AO on the ground that the creditworthiness of the father was not proved by the assessee. This action of the ld AO was confirmed by the ld CITA. Before us, the ld AR filed various documents and evidences to prove that the father had sufficient creditworthiness and that he is an income tax assessee and had also duly disclosed the factum of gift paid to his son in his individual income tax returns and in his balance sheet. The ld AR also furnished an affidavit from Mr Joydeb Pal confirming the gift given to his son on various dates. The ld AR also stated that the fixed deposits belonging to Mr Joydeb Pal on its maturity were credited in his bank account and the cheque was given to assessee as gift to be utilized for his business purposes and accordingly the immediate source of credit of donor is also proved by the assessee. In response to this, the ld DR submitted these facts are fresh evidences filed by the ld AR before this tribunal and are not emanating from the records. 4.2 . Disallowance u/s 40(a)(ia) – Rs 4,19,150/- The ld AO observed that the assessee’s authorized representative stated that assessee is reseller of stone chips and submitted VAT return in support of the same and had stated that he is not liable to deduct tax at source as he is not a contractor. The assessee incurred transportation charges of Rs 4,19,150/- and paid to Sekh Narul Huda . The ld AO called for PAN of the payee which was not produced by the assessee and accordingly disallowance u/s 40(a)(ia) of the Act was made by the ld AO . This action of the ld AO was confirmed by the ld CITA. Before us, the ld AR filed the copy of the invoice raised by Sekh Narul Huda for a sum of Rs 4,19,150/- and also produced a copy of the PAN card of Sekh Narul Huda. He also argued that once the PAN of the transporter is furnished, there is no need to deduct tax at source and hence no disallowance u/s 40(a)(ia) of the Act would come into play. In response to this, the ld DR submitted these facts are fresh evidences filed by the ld AR before this tribunal and are not emanating from the records.
Kallol Pal A.Yr.2012-13 4.3. Addition towards loan transactions with Mr Joydeb Pal (father of the assessee – Rs 17,00,000/- The assessee borrowed loan of Rs 16,00,000/- from Mr Joydeb Pal (father of the assessee) by account payee cheques. The assessee repaid the same during the year on different dates by account payee cheques to the tune of Rs 17,00,000/- . The ld AO observed that there were cash deposits made in the bank account of the assessee for issuing cheques to Mr Joydeb Pal and no proper explanation was given by the assessee for cash deposits and accordingly made an addition of Rs 17,00,000/-. This action of the ld AO was confirmed by the ld CITA. Before us, the ld AR filed copy of the bank statements of assessee and also stated that the assessee received cash from sale of potatoes (one of his businesses) and that cash was deposited in the bank account. He prayed that the entire cash deposits are fully sourced by available cash balance as per books and hence there cannot be any addition. In response to this, the ld DR submitted these facts are fresh evidences filed by the ld AR before this tribunal and are not emanating from the records.
We have heard the rival submissions and perused the materials available on record including the paper book of the ld AR filed before us comprising of income tax return acknowledgement together with Trading, P&L and Balance Sheet of Mr Joydeb Paul for the year ended 31.3.2012 (enclosed in pages 7 & 8 of Paper Book) ; affidavit from Mr Joydeb Pal for giving gift to assessee (enclosed in Pages 9 & 10 of Paper Book) ; details of gift received from father together with the bank statements evidencing the receipt (enclosed in Pages 11 to 13 of Paper Book); transport charges confirmation from Sekh.Narul Huda with copy of his PAN card (enclosed in Pages 14 &15 of Paper Book) ; details of loan received from Mr Joydeb Pal together with the bank statements evidencing the receipt (enclosed in pages 16 to 18 of Paper Book) ; details of loan repayment to Mr Joydeb Pal together with the bank statements evidencing the repayment (enclosed in pages 19 to 21 of Paper Book) and loan confirmation certificate (enclosed in pages 37 & 38 of Paper Book). We find that the aforesaid three additions 4
Kallol Pal A.Yr.2012-13 were made by the ld AO for want of proper furnishing of details by the assessee. Even before the ld CITA, the assessee could not furnish the requisite details. But before us, the ld AR has furnished various additional evidences in support of his contentions that no additions on aforesaid counts could be made thereon. But we find that these evidences were never subjected to verification by the ld AO. Hence we deem it fit and appropriate, in the interest of justice and fairplay, to set aside these issues to the file of the ld AO , to decide these issues afresh , in accordance with law. The assessee is also directed to file the entire paper book filed before this tribunal before the ld AO in order to enable him to appreciate the evidences brought on record. The assessee is also given liberty to furnish any other evidences, if any, in support of his contentions before the ld AO. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 06.06.2017.