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Income Tax Appellate Tribunal, KOLKATA BENCH “C” KOLKATA
Before: Shri Mahavir Singh & Shri Waseem Ahmed
आदेश /O R D E R
PER Waseem Ahmed, Accountant Member:-
This appeal by the assessee is arising out of order of Commissioner of Income Tax, Kolkata-XIV u/s 263 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) No.M.No.CIT-XIV/Kol/264/NP/2013-14/5962-5964 dated 31.03.2014. Assessment was framed by ITO Ward-42(3), Kolkata u/s 143(3) vide his order dated 27.12.2011 for assessment year 2009-10.
Shri Monoj K. Tiwari, Ld. Authorized Representative appearing on behalf of assessee and Shri S. Srivastava, Ld. Departmental Representative appearing on behalf of Revenue. A.Y. 2009-10 Sh Nabendu Podder v. CIT-XIV, Kol. Page 2 2. At the time of hearing Ld. AR stated that he has been instructed not to pressed ground No. 1, 2 & 3. Ld. DR raised no objection if Ld. AR does not press these grounds. Hence, we dismiss the grounds No. 1 to 3 as not pressed.
The only issue raised by assessee in his appeal is that order passed by Assessing Officer is neither erroneous not prejudicial to the interest of Revenue, hence, the provision of Sec. 263 of the Act is not applicable in the present case.
The facts, in brief, are that assessee is an individual and engaged in the business of manufacturing of plastic sheet specially used to coating plate made of sal leave and wholesale in the name of Kalpana Plastic”. Ld. CIT found from the records that order passed by AO u/s 143(3) of the Act dated 27.12.2011 is erroneous and prejudicial to the interest of Revenue. Assessee is maintaining two bank accounts bearing No. 221010100080990 with Axis bank and No. 06760100004928 with UCO bank. A sum of Rs. 90,53,286/- was deposited in both account of assessee whereas sales declared by assessee in his return of income is of ₹39,56,542/-. Therefore, the difference of ₹ 50,96,744/- (90,53,286 – 39,56,542) arose between the amount of gross sales declared and the money deposited in bank. Accordingly Ld. CIT sought clarification from assessee by issuing notice u/s. 263 of the Act dated 22.01.2014. In response to the said notice, assessee submitted as under:- (i) That all the books of account and bank statement, cash flow statement and documents and statements were furnished before AO at the time of assessment proceedings. The assessee appeared as many as ten times before AO during the course of assessment proceedings to demonstrate his income. The assessment was completed by the AO after the application of mind. A.Y. 2009-10 Sh Nabendu Podder v. CIT-XIV, Kol. Page 3 (ii) In the bank statement all the deposit entries, apart from the sales are contra-entries as evidenced from the cash and bank book of the assessee. In fact the assessee buys and sales its product in an unorganized market where most of the dealing is done in cash. Therefore, the assessee needs to withdraw and deposit the cash time and again which has given rise to the deposit of cash in bank. Sometime the assessee withdraws the money from the bank for the purchase of goods but could not do the same due to one or other reason therefore the same cash is deposited in the bank account in the evening. The assessee also deposits the sale proceeds in his bank account directly which he received in cash. (iii) The AO at the time of assessment u/s. 143(3) of the Act has already made the addition of undisclosed sales for an amount of ₹ 18,52,288/-. The AO has worked out the gross profit margin @ 8.25% on the aforesaid undisclosed sale. Accordingly, AO added an income of ₹1,52,814/- in the total income of assessee. The AO has worked out the undisclosed sale in the following manner:- Total credit in Axis bank Rs.6666882.00 Total credit in UCO bank Rs.2386404.00 Total credit amount Rs.9053286.00
Less: Sales reflected in Sale register Rs.3956542.00 Purchase reflected In purchase register Rs.3244456.00 Rs.7200998.00 Undisclosed sale Rs.1852288.00
(iv) That assessee has also furnished an affidavit in support of his claim that all cash deposits and cash withdrawals are rightly reflected in the cash book and sale & purchase are rightly reflected in his books of account.
A.Y. 2009-10 Sh Nabendu Podder v. CIT-XIV, Kol. Page 4 However, Ld. CIT disregarded the claim of assessee by observing as under:-
(1) That AO has worked out the undisclosed sale by subtracting the sale amount purchase amount from the total deposit of cash in the bank account which is not correctly done by AO. The necessary detail is depicted in the submission of assessee in point No.4 as stated above. (2) That Ld. CIT observed that there must be some element of undisclosed source of fund used in undisclosed purchase corresponding to undisclosed sale so undisclosed investment has also not been verified and determined by AO.
In view of the above, Ld. CIT restored the matter before AO for fresh adjudication.
Aggrieved assessee preferred an appeal before us.
We have heard both the rival parties and perused the materials available on record. Ld. AR has filed a paper book which is running from page 1 to 48. Before us the ld. AR submitted that AO has duly verified all the bank accounts, books of account and other relevant documents at the time of assessment proceedings and AO made an addition of ₹ 18,52,288/-. Therefore the issue of undisclosed sale raised by Ld. CIT has been duly verified at the time of assessment u/s. 143(3) of the Act. The ld. AR further submitted that deposits of cash in the bank are contra entries and it has nothing to do with the undisclosed sale of the assessee. Therefore treating the amount of cash entries as undisclosed sale will be hardship with assessee. Our attention was drawn on pages No. 42 and 43 of the paper book where cash flow statement was placed by assessee. At the end of hearing the ld. AR requested that proceedings u/s 263 of the Act should be dropped. A.Y. 2009-10 Sh Nabendu Podder v. CIT-XIV, Kol. Page 5 7. On the other hand, Ld. DR submitted that AO has wrongly subtracted the figure of sale and purchase from the total deposits of cash. Therefore, this aspect requires further investigation by AO. Accordingly Ld. CIT has restored the file to AO for further investigation on this aspect. At the end, Ld. DR vehemently relied on the order of Ld. CIT.
From the aforesaid discussion, we find that there was a deposit of ₹ 8. 90,53,286/- in the bank account of the assessee and the turn over declared in the return of income was of ₹ 39,56,542/-. Accordingly, there was a gap of ₹ 50,96,744.00 which in the opinion of the ld. CIT was not verified properly by the AO at the time of assessment. The CIT found that AO has worked out the undisclosed sale by subtracting the sale amount purchase amount from the total deposit of cash in the bank account which is not correct. Besides the Ld. CIT also observed that there must be some element of undisclosed source of fund used in undisclosed purchase corresponding to undisclosed sale so the element of undisclosed investment has also not been verified and determined by AO. In our considered view the action of the AO for subtracting the sales and purchase value from the total deposit of cash in the bank has made the order of the AO erroneous and prejudicial to the interest of Revenue. However for the observation of the ld. CIT that the AO has also overlooked the element of the fund used in the sale & purchase of the goods does not hold any merit. On this count the ld. CIT has not brought anything any specific that there was some element of undisclosed fund. Therefore we do not hold the order of the AO as erroneous and prejudicial to the interest of Revenue on this count. We also find that the AO has worked out the GP @ 8.25% on the undisclosed sale. Therefore we direct the AO to make the addition of the undisclosed sale by reducing the sale declared in the original return plus at the time of assessment under section 143(3) of the Act from the total deposit of cash in the bank.
A.Y. 2009-10 Sh Nabendu Podder v. CIT-XIV, Kol. Page 6 It is also pertinent to mentioned that the facts in the instant case are different with other cases where we have given relief to the other assessee in the similar facts and circumstances. Our decisions should not be linked with this decision. In this view of the matter, this ground of assessee’s appeal is dismissed.