TAPAN KUMAR SARKAR,MURSHIDABAD vs. ITO, JANGIPUR, MURSHIDABAD, MURSHIDABAD

Grounds of appeal raised by the assessee read as follows :-

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 :-

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.

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

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.