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2016 (4) TMI 852 - ITAT KOLKATA

2016 (4) TMI 852 - ITAT KOLKATA - TMI - Receipts in cash from the allottee newspapers and periodicals - Estimation of income - rejection of books of accounts - Held that:- We find that the assessee had shown receipts in cash from the allottee newspapers and periodicals, it does not mean that the assessee himself was selling the newsprints in cash in unauthorized market. The assessee produced copies of ledger accounts of these parties. The said ledger account was seized during the course of searc .....

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he basis of 3-4 parties out of about 200 allottees, the adverse inference cannot be drawn in the hands of assessee. In the case of assessee, he had maintained proper books of account and there is no material on record to show that the he had made sale of newsprints in unauthorized market. Hence, the books of account of the appellant cannot be rejected by invoking section 145(2) and the turnover/profit cannot be estimated. In view of above, in the absence of any evidence of selling the newsprints .....

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es of Shri Balsinger Singh, Shri A. K. Mullick, Shri S. K. Mullick and Shri Biman Behari Saha. In respect to loan creditor M/s. Mamoni Films of ₹ 7,00,000/- there is a categorical finding recorded by CIT(A) that the loan pertains to AY 1988-89 and not to the relevant AY 1987-88. Once this is the position, the same was confronted to Ld. Sr. DR whether he has some material to controvert the same, he could not reply. In such circumstances, we are of the view that CIT(A) has rightly deleted th .....

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documents of Shri Ram Balak Singh were found from the premises of the assessee but it does not prove that this business belongs to assessee or assessee is benamider of the same. The onus is on revenue to prove that the assessee is benamidar of the Industrial Papers. In view of the above, we are of the view that the CIT(A) has rightly deleted the addition and we confirm the same - Decided in favour of assessee - I.T.A No.388/Kol/2012 - Dated:- 2-3-2016 - Shri Mahavir Singh, JM & Shri M. Balag .....

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ted 30.03.1994. 2. The first issue in this appeal of revenue is against the order of CIT(A) deleting the addition made by AO on estimated profit on estimated turnover of sale of newspaper prints. For this, revenue has raised following ground no.1: 1. Whether on the facts & circumstances of the case Ld. CIT(A)-XIX, Kolkata was justified in deleting the addition of ₹ 50,00,000/-, ignoring the facts brought on record on the basis of investigation which indicates that the assessee has been .....

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ential premises of the assessee on 05.10.1988. During the course of search on the business and residential premises of the assessee books of account, ledger account, cash book etc. were seized and marked as identification no. PTI 1 to 263. The AO during the course of assessment proceedings originally framed assessment u/s. 143(3) of the Act on 27.03.1991 assessing the total income at ₹ 62,92,890/-. Subsequently, this assessment was set aside by CIT(A) to the file of the AO for framing de n .....

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ils in respect to amount payable to STC for the newsprints, interest payable to STC, details of custom duty, details of labour charges and clearing charges, details of local transportation, cost of reel cutting and details of bank interest including assessee s financing, servicing and handling commission charge at 3% from the newspaper companies. Ld. Counsel for the assessee before AO stated that these details are in the seized papers lying with the department but the AO noted that the assessee .....

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d that the assessee could not produce any evidence of having dispatched the newsprints to the numerous papers which runs more than 200 in numbers and there is no record showing the issue of dispatch of newsprints to the respective papers. According to AO, no such documents were found from the seized documents. According to AO, there is no evidence regarding transportation of these newsprints to the respective newspapers having been dispatched through couriers. The AO noticed from the accounts of .....

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xpenses. Hence, he invoked the provisions of section 145 of the Act and estimated the turnover of the assessee at ₹ 5 crore and accordingly, taking a margin of 10% of net profit he estimated the income of the assessee from this business at ₹ 50 lacs. Aggrieved, assessee preferred appeal before CIT(A). 4. The CIT(A) deleted the addition for the reason that the AO has not gone into the seized documents, which were evidenced by the bills and vouchers, books of accounts and other documen .....

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nts were seized during the course of search. According to CIT(A), these parties were supplied newsprints and payment was also received by assessee from them. The assessee collected the newsprints from STC only on the strength of authorization by the consumers and not otherwise. The CIT(A) also examined the Panchnama prepared during the course of search on 05.10.1988 and the inventory of books of accounts and documents seized and observed that large number of books and files were seized as per th .....

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documents which support the view of the AO. Even the ledger account of the parties, the ledger & books of account seized, clearly revealed that the parties mentioned in assessment order like Indian Punch, Buddha Mark, Hamara Nara and Samara Kshetra who denied to have made any payment to the assessee rather clearly recorded in the seized ledger and in that case the parties cannot deny the transaction unless and until all those are examined. In view of these facts, CIT(A) deleted the estimate .....

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o by the Registrar of Newspapers for India under the Ministry of Information & Broadcasting, New Delhi. During the relevant period, newsprint was an item, the distribution of which was regulated by the Government regulations. The State Trading Corporation used to issue the allotment letters to various newspapers and periodicals to lift their requirement of newsprints. The assessee being a handling agent, on the strength of authorization from the consumer newspapers and periodicals, used to c .....

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r collecting from the STC by the assessee, was supplied to the respective allottees. That, the assessee had sold the newsprints in unauthorized market earning much higher income than the income declared in the return of income. We do not agree with the view of the AO, specifically, in the absence of any evidence on record that the assessee had sold the newsprints in the unauthorized, market. If the contention of the AO is accepted, it, would mean that on the authorization of allottees of newspri .....

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not print the newspapers and periodicals? However, it was no so and there is no evidence on record in this regard. Hence, it cannot be said that the newsprints lifted by the assessee from STC was sold by him in the unauthorized market. We find that the assessee before AO had filed confirmations from the allottees of the newsprints and same were not accepted by the AO and doubted their authenticity for the reason that the confirmations were issued in the year 1990 confirming the receipt of newsp .....

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of Panchnama and the Inventory of books of accounts and documents seized in the course of search on 05/10/1988, it is observed that a large number of books and files were seized. As per the description in the inventory, the files were containing documents relating to supply of newsprints and newsprint account of all the papers and periodicals on behalf of whom the assessee had lifted the newsprint from STC. In the assessment order, the AO has not discussed anything about these" seized docum .....

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sue. In fact, in both the assessment orders, i.e., the original order u/s. 143(3) dt. 27/3/1991 and the order under appeal, there is no discussion of any of the seized documents which may support the view of the AO that the assessee, after lifting the newsprints from the STC, was selling the same in the unauthorized market. We find from assessment order, that the AO had made a presumption that generally the citizens are law abiding and hence they would not make payment to the assessee for newspr .....

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newsprints in cash in unauthorized market. The assessee produced copies of ledger accounts of these parties. The said ledger account was seized during the course of search. On perusal of ledger account of these parties it is observed that the newsprint was supplied to them and payment was also received by the assessee. The said ledger account clearly mentioned the authorization number and date, date of receipt, size of paper, number of reels, weight, number and date of memo of delivery and amou .....

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llant cannot be rejected by invoking section 145(2) and the turnover/profit cannot be estimated. In view of above, in the absence of any evidence of selling the newsprints in unauthorized market by the assessee, the CIT(A) had rightly held that the AO was not justified in rejecting the books of account and estimating either the turnover or the profit of the assessee for the year under appeal. Accordingly, we confirm the order of CIT(A) and this issue of revenue s appeal is dismissed. 6. The next .....

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see could not produce anything to support this cash credit, hence, he added the same as unexplained cash credit. Aggrieved, assessee preferred appeal before CIT(A). 8. CIT(A) after going through the loan confirmations and other documents filed by the assessee in support of his claim of genuineness of loan transactions deleted the addition by observing that on perusal of loan confirmations of Shri Balsinger. Singh, Biman Behari Saha, A.K. Mullick and Shri S.K. Mullick, it is observed that the loa .....

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taken by the appellant from the above-mentioned four parties. The AO, is directed to delete the addition of ₹ 86,000/-. Similarly, it is observed that from M/s. Mamoni Films, the appellant had taken loan of ₹ 7 lakh by cheque on 20.5.1987. The said loan was returned by him on 12/11/1987. On perusal of Balance-sheet and Profit & Loss a/c of M/s. Mamoni Films for the year ended 14/4/1987, it is observed that the said concern was engaged in the business of production and film distr .....

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89 and not in the previous year relevant to AY 1987-88. Aggrieved, revenue came in appeal before Tribunal. 9. We have heard rival submissions and gone through facts and circumstances of the case. We find that the CIT(A) after taking loan confirmations and other documents deleted the addition respect to loan creditors to the extent of ₹ 86,000/- in the names of Shri Balsinger Singh, Shri A. K. Mullick, Shri S. K. Mullick and Shri Biman Behari Saha. In respect to loan creditor M/s. Mamoni Fi .....

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peal of revenue is against the order of CIT(A) deleting the addition of unexplained cash credit of ₹ 2 lacs. 11. Briefly stated facts are that the AO noticed from the seized documents that one M/s. Industrial Papers was found to be functioning from assessee s business premises No. 3. Bentinck Street, Kolkata, which is the same address for assessee s concern Paper Process & Industries also. According to this Paper Process & industries, M/s. Industrial paper is under the ownership of .....

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at merely for the reason that certain books or documents of the business of Shri Ram Balak Singh were found at the premises of the appellant, then it would conclusively prove that it was appellant's benami business. I am also of the opinion that to treat business of a person as benami business of another person, the onus is on the AO to prove the same. However, as mentioned above, there is nothing on record to prove the same, except the presumption made in the order u/s. 132(5) of the Act. H .....

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