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Income Tax Appellate Tribunal, BENCH ‘SMC’ KOLKATA
Before: Hon’ble Shri N.V.Vasudevan, JM ]
This is an appeal by the Assessee against the order dated 16.04.2015 of CIT(A)-12, Kolkata relating to A.Y.2009-10.
Grounds of appeal raised by the assessee read as follows :-
“(1) That on the facts and in the circumstances of the case, the Id.CIT(A) erred in passing the order without affording reasonable opportunity to the appellant of being heard. (2) That on the facts and in the circumstances of the case, the Id.CIT(A) failed to apply his mind in proper perspective of the facts of the case. (3) That on the facts and in the circumstances of the case, the Id.CIT(A) erred in confirming the additions on account of 'Unexplained expenditure' u/s.69C of the Income tax Act,1961 amounting to Rs.2,70,000/- without allowing proper and reasonable opportunity to the appellant to represent its case. (4) That on the facts and in the circumstances of the case, the Id.CIT(A) erred in not deleting the entire amount of Rs.3,07,131/- and reducing the addition to the tune of Rs.2,85,356/- on account of 'Difference in closing balance' without considering the facts of the case and without giving reasonable opportunity of being heard.
-Tapan Kumar Sarkar A.Y.2009-10
(5) That on the facts and in the circumstances of the case, the Id. CIT(A) erred in confirming the addition of Rs.80,628/- on account of 'Unexplained Investment' without appreciating the facts of the case and without affording reasonable opportunity to the appellant of being heard. (6) That the order passed by the Ld.CIT(A) was arbitrary, bad in law and unjust. (7) Leave to urge such other ground or grounds before or at the time of hearing of appeal.
The Assessee is an individual. He is carrying on the business of trading in cement and hardware. The AO in the course of assessment proceedings issued notice u/s 133(6) of the Income Tax Act, 1961 (Act) calling for confirmation of balance from the sundry creditors. One of the sundry creditors SPS Steels Rolling Mills Ltd. Showed a debit balance of Rs.6,09,878/- with the assessee. The assessee has shown balance of Rs.3,02,747/- as sundry creditors as on 31.03.2009. The Assessee had purchased material from SPS Steel Rolling Mills Ltd., for which the Assessee had to pay the aforesaid party. When the assessee was confronted with the difference in outstanding shown as shown by SPS Steels Rolling Mills Ltd.. The assessee submitted that the difference is due to mistake in making entries of goods sold by SPS Steel Rolling Mill Ltd., and wrong entry of payment amounting to Rs.2,70,000/-which was not made by the assessee. The AO refused to believe the plea of the Assessee and he added a sum of Rs.3,02,747/- as unexplained expenditure u/s.69C of the Act. On appeal by the Assessee, the CIT(A) confirmed the action of the AO for the reason that the Assessee has not furnished supporting evidence for his explanation and the explanation is not acceptable. The CIT(A) however found from the extract of the assessment order that as per the books of SPS Steels Rolling Mills ltd., the Assessee has made a payment of Rs.2,70,000/- only as per the information furnished by SPS Steels Rolling Mills Ltd which has not been accounted for. The CIT(A) found that the Assessee has not made payment for the entire unaccounted purchases of Rs.3,07,131/-. The CIT(A) therefore held that only the payment of Rs.2,70,000/- which has to be inferred as having been made out of undisclosed sources, that has to be treated as unexplained expenditure u/s 69C of the Act. Accordingly, addition to the extent of Rs.2,70,000/- was confirmed. Kumar Sarkar A.Y.2009-10 The CIT(A) also held that purchases of Rs.3,07,131/ - have been made outside books and the corresponding sales have been suppressed. On this undisclosed sales, the Assessee would have earned undisclosed profit. The CIT(A) found that the exact details of the gross profit margin of the Assessee were not available in the assessment order. Moreover, the sales being undisclosed, the CIT(A) was of the view that Assessee's profit on such sales would be different from the declared gross profit margin. Hence, he thought it fit to consider reasonable an estimate profit on the sales of the undisclosed purchases worth Rs.3,07,131/- @5% of the purchases, which the CIT(A) computed at Rs.15,356/ -. Hence, the total addition of Rs.2,85,356/ - ( i.e. Rs.2,70,000 + Rs.15,356 ) was confirmed by the CIT(A). The balance addition of Rs.2l,775/- was deleted.
Aggrieved by the order of CIT(A) the assessee filed the present appeal before the Tribunal. I have heard the rival submissions. The ld. Counsel for the assessee filed before me an affidavit of the assessee wherein he has specifically affirmed as follows :-
“5. That in the audited statement of accounts for the year ended 31/03/2009 an amount of Rs.13,39,717/- was shown as Sundry Creditors out of which an amount of Rs.3,02,747/- was shown as creditor on account of M/s. SPS Steel Rolling Mills Ltd.
That in course of the assessment proceeding the Ld. Income Tax Officer examined and verified the books of accounts and other documents particularly in terms of the transactions on account of purchase made with M/s. SPS Steel Rolling Mills Ltd.
6. That the Ld. Income Tax Officer obtained the ledger copy of transactions from M/s. SPS Steel Rolling Mills l.td., to ascertain the genuineness of the transactions so made by me in the year 2008-09 and it was found by him that as per the ledger copy of M/s. SPS Steel Rolling Mills. Ltd., an amount of Rs.3,07,131/- over and above Rs.6,03,l71/-, was shown as sale by that company in favour of my account, which was vehemently denied to have been made by me as purchase from M/s. SPS Steel Rolling Mills Ltd., in course of assessment proceedings.
That it was stated in course of the assessment proceedings that I purchased materials for Rs.3,00,424/- and Rs.3,02,747/- from M/s. SPS Steel Rolling Mills Ltd and paid Rs.3,00,424/- by cheque and that these purchases were verified with the bills and bank statements by the Ld. Income Tax Officer. Kumar Sarkar A.Y.2009-10
That in course of the assessment proceedings my Ld. A.R. clarified the transactions so made by me with M/s. SPS Steel Rolling Mills Ltd which was even considered, but the Ld. Income Tax Officer made addition of Rs.3,07,131/- only on the basis of the statement filed by the company ignoring my and/or my Ld. A.R.'s contention and I was not allowed to rebut the contention of the company in terms of its confirmation so obtained by the Ld. Income Tax Officer.”
5. I am of the view that taking note of the above stand taken by the assessee it would be just and proper to set aside the order of CIT(A) and remand the issue to the AO for fresh consideration of the issue. The AO will issue summons u/s 131 of the Act to SPS Steel Rolling Mills Ltd and examine the said party with reference to the stand taken by the assessee as above. The AO will also afford opportunity for cross examination to the assessee if required or so desired by the assessee. For statistical purposes the appeal is treated as allowed.
In the result the appeal of the assesee is treated as allowed for statistical purposes. Order pronounced in the open Court on 02.09.2016.