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Income Tax Appellate Tribunal, KOLKATA BENCH “B” KOLKATA
Before: Hon’ble Shri A.T.Varkey & Shri Waseem Ahmed
आदेश /O R D E R
Per Waseem Ahmed, AM
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-Asansol dated 04.06.2013. Assessment was framed by I.T.O., Ward-3(2), Purulia u/s 143(3) of the Income tax Act, 1961 (hereinafter referred to as ‘the Act ‘) vide his order dated 30.12.2011 for assessment year 2009-10. Shri Avikesh Banerjee and Mrs. Saswati Mitra (Dutta), Ld. Advocate appeared on behalf of assessee and Shri M.K. Chandra, Ld. Departmental Representative represented on behalf of Revenue.
At the outset, it is observed that there is a delay of 10 days on the part of the assessee in filing this appeal before the Tribunal. In this regard, the assessee has filed an application seeking condonation of the said delay and keeping in Sri Ranjit Kumar Das A.Y.2009-10 2 view the reasons given therein, which is duly supported by an affidavit filed by the assessee. we are of the view that there is a sufficient cause for the delay on the part of the assessee in filing this appeal. Hence, we condone the said delay and proceed to dispose of this appeal of the assessee on merit. 3. The assessee has raised the following grounds of appeal:-
1. That the learned Commissioner of Income-tax (Appeals), Asansol Range, Asansol is not at all justified in upholding the addition of Rs. 11,42,010/- out of the addition of Rs. 21,38,100/- made by the Assessing Officer.
2. That the learned Commissioner of Income-tax (Appeals), Asansol Range, Asansol has not at all considered that the entire advances were made by the creditors for purchasing goods and subsequently goods have been supplied to them.
That full details of supply of goods to creditor's were furnished. The same should have been considered. 4. That the addition of Rs. 11,42,010/- should be deleted. 5. That the Appellate Order is otherwise bad-in-law and on other grounds, in details, will be urged at the time of hearing.”.
The grounds No. 1 to 4 are inter-related and therefore being taken up together is that the ld.CIT(A) has erred in confirming the order of AO by sustaining the disallowance of Rs.11,42,010/- under the provision of section 68 of the Act.
Briefly stated facts as brought on record are that the assessee, an individual, is engaged in the business of building material. The assessee, in the year under consideration has shown the following advances from the customers in its balance sheet as on 31.03.2009. Sl.No. Name of the customer Amount (in Rs.) 1. Sri Banshidhar Rajak 1,55,390 2. Sri Bikul Mukherjee 1,75,300 3. Sri Dipak Chatterjee 1,27,600 4. Sri Sujit Chakraborty 1,58,620 5. Sri Subrata Das 1,64,800 6. Sri Asthik Bauri 1,26,500 7. Sri Abni Bauri 1,32,600 8. Sri Shakti Pada Chatterjee 1,57,630 Sri Ranjit Kumar Das A.Y.2009-10 3
Sri Chandi Bauri 1,25,900 10. Sri Netai Maji 1,20,960 11. Sri Satya Prakash Cheel 2,46,500 12. Sri Samar Chakraborti 1,42,500 13. Sri Shyama Pada Bauri 1,62,800 14. Sri rajib Banerjee 1,41,000 Total 21,38,100 The Assessing Officer, during the course of assessment proceedings issued notice to all the aforesaid parties u/s 133(6) of the Act to verify the genuineness of the transactions. Notices were served to the parties except the party appearing at sl. No.14 i.e. Shri Rajib Banerjee. Notice was returned back by the postal authorities as unserved with the remark “insufficient address”. Therefore, the AO made addition of Rs.1,41,000/- to the total income of the assessee. The compliance from all other customers was received with the following defects : 1) Parties appearing at sl. Nos. 1 to 5 were Income tax assessees but they failed to furnish the copy of PAN and income tax return for A.Y.2009-10. 2) Parties appearing at sl. Nos. 6 to 13 were not income tax assessees but they failed to furnish the necessary details such as occupation, income earned in the financial year 2008-09 and sources of funds given to the assessee as advances. However, all the parties furnished copy of the ledger in support of their claim for the advances made to the assessee. However, on further verification the AO issued summons u/s 131 of the Act to the parties appearing at sl. Nos. 1 and 2 and similar notices u/s 133(6) of the Act were issued to all the persons appearing at sl. Nos. 3 to 13 as discussed above for further verification.
In some of the cases the reply was received from the parties and the parties to whom summons were issued u/s 131 of the Act were not complied with.
Sri Ranjit Kumar Das A.Y.2009-10 4 However, the AO was of the view that the aforesaid parties failed to prove their creditworthiness and therefore genuineness of the transactions were not established. Accordingly, the AO treated the sum of Rs.21,38,100/- as unexplained cash credit and added to the total income of the assessee.
Aggrieved, assessee preferred an appeal before ld. CIT(A). The assessee before ld. CIT(A) submitted that many parties did not appear before the AO out of their fear and they were apprehending some consequences against themselves. The AO should have issued notices and reminders one more time. The AO should have also conducted such inquiry in order to ascertain the genuineness of the transactions. The assessee also submitted that all the parties are located in a very small place and they do not maintain all the records properly and systematically. However, the ld. CIT(A) after considering the submissions of the assessee had given relief in part by observing as under :- “6. I had considered the comments of applicant submitted during hearing on 04.06.2013. It is on certain practical difficulties in proving transactions. Documentary evidence on financial transaction is sine qua non in any financial transaction. I arrive at a decision as under on facts and evidence. (a) The advance from Sri Bikul Mukherjee, Sri Banshidhar Rajak, Sri Dipak Chatterjee, Sri Satya Prakash Cheel and Sri Subrata Das now accepted by Assessing Officer is treated as genuine. Hence they may be deleted from the addition of Rs.21 ,38,1 00/- made in assessment. (b) Loan from Sri Sujit Chakraborty and Sri Samar Chakraborty do not satisfy test of creditworthiness in any manner. The Assessing Officer is right in stating that creditworthiness is absent. No relief is due to appellant. (c) Loan from Sri Asthik Bauri is stated by Assessing Officer to be not acceptable on account of lack of creditworthiness. The amount is Rs.1,26,500/-. He has renovated the house. He earns Rs.19,000/-per month. Hence I hold the person on creditworthy. Since house was renovated, there is material to hold the transaction as genuine. The Assessing Officer is directed to accept the credit as genuine and delete the addition from Rs.21,38,100/-. (d) Credit entries from Sri Abni Bauri, Sri Chandi Bauri, Sri Netai Maji, Sri Shakti Pada Chatterjee, Sri Shyama Pada Bauri (Bura) and Sri Rajib Banerjee stands unproved as the tests prescribed are not met. The three conditions to accept the credit has failed as even notice u/s 131 issued during enquiry u/s 250(4) failed to elicit response. The addition made by Assessing Officer in these cases is upheld. No relief is due to the appellant. With the above direction grounds 1, 2 and 3 are disposed of.”
Sri Ranjit Kumar Das A.Y.2009-10 5 Being aggrieved by the order of ld. CIT(A) the assessee is in second appeal before us.
The ld. AR before us filed a paper book and other details which are running from pages 1 to 68 and he submitted that the place of business of the assessee is located at Raghunathpur, Purulia which was totally devastated by most naxual. Therefore the customers of the assessee could not provide all the details as desired by the lower authorities. The ld. AR further submitted that the parties from whom the advances were received have been billed in the subsequent financial year. In support of his claim the ld. AR drew our attention on pages 22 to 68 of the paper book where necessary details along with the copies of the ledgers are placed. The ld. AR also submitted that in the subsequent years the sale has been accepted by the lower authorities against which the advances was shown by the assessee. Thus the income has been duly offered to income tax authorities and if the disallowance is made as discussed above will amount to double addition to the total income of the assessee.
On the other hand, the ld. DR submitted that no source of income and advances given to the assessee by the aforesaid parties were furnished at the time of assessment. The aforesaid parties are middle class cultivators and their annual income is of Rs.40,000/- approximately. Therefore they do not have the capacity to make the advances as claimed by the assessee. The ld. DR vehemently supported the orders of the authorities below.
We have considered the rival contentions and perused the material available on record. The issue in this case relates to the advances shown by the assessee which were held as unexplained cash credit by the lower authorities. The advances were treated as cash credit as the assessee failed to furnish the creditworthiness of those parties and therefore the genuineness of the Sri Ranjit Kumar Das A.Y.2009-10 6 transaction was not established. However, on perusal of the details submitted by the assessee we find that all the parties from whom the advances was claimed to have received have been billed in the subsequent years. The assessee has furnished the copies of the ledgers in respect of all the parties which are placed on record. Once the assessee is able to show the source against the advances received in the earlier years then the same cannot be treated as unexplained. In the case on hand the assessee has discharged his burden by giving necessary details of the parties from whom the advances was received and sales made to those parties. The ld. DR has not brought anything contrary to the submissions made by the ld. AR. In view of the above we are of the view that the additions made by the lower authorities are not sustainable as the assessee has furnished the necessary details in support of the advances and the subsequent sales. While holding so, we also find support and guidance from the judgment of Hon’ble jurisdictional High Court of Calcutta in the case of Crystal Networks (P) Ltd vs CIT reported in 35 Taxman 432 (Cal) wherein it was held as under :- “10. We find considerable force of the submissions of the learned counsel for the appellant that the Tribunal has merely noticed that since the summons issued before assessment returned unserved and no one came forward to prove. Therefore, it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter the creditworthiness. As rightly pointed out by the learned counsel that the Commissioner of Income-tax (Appeals) has taken the trouble of examining of all other materials and documents, viz., confirmatory statements, invoices, challans and vouchers showing supply of bidis as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued, in our view, is not important. The important is to prove as to whether the said cash credit was received as against the future sale of the product of the assessee or not. When it was found by the Commissioner of Income-tax (Appeals) on facts having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this fact finding. Indeed the Tribunal did not really touch the aforesaid fact finding of the Commissioner of Income-tax (Appeals) as rightly pointed out by the learned counsel.”
Considering the decisions laid down by the Hon’ble jurisdictional High Court in the case of Crystal Networks (P)Ltd (supra), we find the instant issue is directly Sri Ranjit Kumar Das A.Y.2009-10 7 covered by the aforesaid judgments. The lower authorities have not pointed out any fact in the copies of the ledger and other details submitted by the parties who have given advances to the assessee. Similar notice has not been served or details as desired by the lower authorities were not furnished cannot be the ground for making the aforesaid addition. Therefore, we are inclined to reverse the orders of the authorities below. Hence the ground of appeal is allowed.