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ITO Ward-2 (2) , Sahoo Bhawan, Medinipur Versus M/s Krishna Trading

2016 (5) TMI 243 - ITAT KOLKATA

Addition u/s 68 - Held that:- Disallowance was on account of unexplained cash credit u/s 68. But the assessee has produced and explained the cash book of sister concern Suman Trading Co where the transactions with the assessee has been duly recorded and matched with the cash book. The ld. DR failed to bring anything contrary to the findings of ld. CIT(A). So we do not find any reason to say that ₹ 60 lakhs is unexplained cash. So we upheld the decision of ld. CIT(A). - Decided in favour of .....

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07 - Dated:- 23-3-2016 - Shri N.V.Vasusdevan, Judicial Member and Shri Waseem Ahmed, Accountant Member For The Appellant Shri Tanuj Neogi, JCIT-SR-DR For The Respondent : Shri Manss Roy, Advocate ORDER PER Waseem Ahmed, Accountant Member:- This appeal by the Revenue is against the order of Commissioner of Income Tax (Appeals)-XXXV, Kolkata dated 14.06.2007. Assessment was framed by ITO Ward-2(2), Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide his order .....

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in deleting the addition of ₹ 9,960/- being commission received on sale of cement. 4) That the Ld. CIT(A) erred in fact and in law in deleting the addition of ₹ 82,582/- being reimbursement of Freight Bills not shown as income during the accounting year. 5) That the Ld. CIT(A) erred in fact and in law in deleting the addition of ₹ 1,50,000/- being security deposit with M/s Shiva Cement Ltd not shown in the Balance Sheet under Undisclosed investment. 6) That the Ld. CIT(A) erred .....

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14,60,312/- being debit entry not shown in the books of account. 2. The facts in brief are that Krishna Trading is a partnership firm and engaged in the business of trading of asbestos, cement etc. Assessee filed its return of income for the assessment year 2003-04 on 13/11/2003 declaring an income of ₹ 28,536.00. The case was selected for scrutiny and notice u/s 143(2) was issued on 19/11/2004. During the assessment proceedings it was observed by the A.O. that in the assessment year under .....

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AO accordingly issued summons u/s 131 of the act to the parties of the unsecured loan for the personal appearance on dated 10/02/2006 with the documentary evidence of advancement of loan to M/s Krishna Trading with a view to verify the genuineness of the loan transaction, credit worthiness of the loan creditors etc. But none appeared before the A.O on the scheduled date. Therefore the AO was not satisfied with the reply given by the partner of M/s Krishna Trading, Shri Smritikona Dey in respons .....

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recorded to the respective concern in their books of accounts. The unsecured loan was basically an inter-firm transfer from Suman Trading Company assessed in ward-1, at Midnapur with GIR No. M-635/S. This was a mistake by the newly appointed accountant which was later identified at the time of auditing and reported in FORM 3 CD. The accountant inadvertently wrote the said transfer in the appellant cash book as unsecured loan receipt and payment. The Ld AR submitted copies of the statements of s .....

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ctions of ₹ 60 lakhs was duly recorded in the books of accounts. Now, Revenue is in Appeal before us. 3. The ld. DR vehemently relied on the order of AO whereas Ld. AR relied on the order of Ld. CIT(A). The ld. AR has submitted index which is running pages 1 to 44. We have heard the rival contention of both the parties and perused the materials available on record. It was observed that disallowance of ₹ 60 lakhs was on account of unexplained cash credit u/s 68. But the assessee has p .....

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and M/s Shiva Cement Ltd.(SCL for short). The additions made by the AO were deleted in the appeal by the ld. CIT(A). 4.1 The assessee during the year was holding the agency for the cement business of SCL. As per the agency agreement the assessee was entitled for commission on sale @ 80.00 Rs. per MT. During the course of assessment the AO sought clarification from SCL by issuing notice under section 133(6) for the business transactions with the assessee. As a result the AO noticed the following .....

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ancial year 2002-03 amounting to ₹ 1,04,956/- will not be added to the total income of the assessee-firm. c) Shiva Cement Ltd., had given reimbursement of freight bill amounting to ₹ 82,582/- and on which TDS amounting to ₹ 1734/- has been deducted. But the assessee-firm had not shown the freight receipt amounting to ₹ 82,582/-. Thus, you are asked to explain why the amount of ₹ 82,582/- will not be added to the total income of the assessee-firm as undisclosed incom .....

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of a/cs. Therefore, you are asked to explain why the amount of ₹ 1,50,000/- will not be added to the total income of the se-firm as undisclosed investment u/s 69B. e) Shiva Cement Ltd has clearly stated that the assessee-firm did not record the purchases amounting to ₹ 10,87,817=71 in respect of which the company has sent the details of the bills along with the copy of bills, challans which are enclosed as per annexure-A by the Shiva Cement Ltd., therefore, you are asked to explain w .....

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rms authorization letter for finalization of accounts. SCL made the account of the assessee debited on various dates for the different transactions for a total amount of ₹ 14,60,312.00 as per the details recorded on page 12 of the AO order but no such transaction was reflected in the assessee books of accounts. The AO accordingly made the addition of the above amounts as discovered from the discrepancies with the accounts of the SCL. Hence the AO has added to the total income of the assess .....

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dditions were deleted by the CIT(A) by observing as under : 4.6 I have given due consideration to the whole issue and various claims and counterclaims made during the assessment proceedings and during the present proceedings. As discussed above the whole dispute relating to transactions entered into with Shiva Cements Ltd arose when the Assessing Officer obtained information from that Shiva Cement Ltd had made sales to the extent of ₹ 10,87,818/- which had not been recorded by the appellan .....

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va Cements Ltd that there was a debit balance of the matching amount on 3.1.3.2003 (supra) to close business and settle the accounts with the appellant. As per the said letter the appellant s account showed balance payable at ₹ 245,049/- as on 13.3.2003 which Shiva Cements Ltd demanded for immediate remittance. The statement of accounts said to be confirmed by appellant s representative shows this debit balance at ₹ 2,45,049/- as on 17.3.03. 4.7 In course of the remand proceedings th .....

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e of ₹ 59,405/- as on 04.9.03 whereas the letter dated 29.11.03 refers to a credit balance of ₹ 2,40,999/- as on the said date. The letter refers to the minute of the meeting dated 4.9.2003 and states that there was mistake in the account as the debit notes for ₹ 25,000/- and ₹ 60,000/- were reversed twice in the said account and the correct credit balance should, therefore, be read only as ₹ 1,55,999/-. The letter further states as per the request of the appellant .....

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Ltd demanded on 13.3.03 a sum of ₹ 2,45,049/- payable by the appellant firm. This debit balance was adjusted to ₹ 1,65,628/- as on 31.3.2003. It was further adjusted on 05.4.2003 to ₹ 1,38,628/-. The statement of account dated 4.9.03 referred earlier show various other credits leading to further adjustment of debit balance to ₹ 59,405/- contrary to all this the letter dated 29.11.03 of Shiva Cements Ltd addressed to the appellant and produced in course of remand mentions .....

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payments made of the matching amount by way of cheques/cash on behalf the 6 dealers listed earlier. This was denied by Shiva Cements Ltd in its letter dated 27.8.05 (supra) stating that it did not have any transactions with the aforesaid dealers. While denying so it also enclosed a copy of its letter dated 13.3.03 addressed to the appellant (supra) wherein it has acknowledged receipt of cheques worth ₹ 67,000/- from two of such dealers, namely Maa Enterprise and Manoj Goswami stating that .....

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of the Shiva Cements Ltd without their confirmation by the appellant firm. The contradiction in versions of Shiva Cement Ltd and the infirmities and inconsistence is accounts maintained by them only support the case of the appellant. 4.10 It is settled that the burden of showing that a receipt or item is income of the assessee is son the Assessing Officer. Reliance is placed on Parimisetti Seetharamannmani vs. CIT 57 ITR 532 (SC). The Assessing Officer has failed to establish that the impugned .....

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02 along with copies of the delivery challans. It is seen that none of the sale bills or the delivery challans has been acknowledged by the appellant firm. The addition made of ₹ 1,50,000/- as unexplained investment has been made in spite of the fact that payment in this regard was made from the bank account which is disclosed and Shiva Cement Ltd confirmed that the amount was adjusted against a sale bill in the month of march. Under the circumstances no question arises for the amount appe .....

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matching amount raised by the last named concern on the appellant. All these bills have been furnished by Shiva Cement Ltd to the Assessing Officer. The addition was made rejecting the contention of the appellant that it was only reimbursement of expenses incurred on behalf of Shiva Cements Ltd which was no charged to the profit and loss account. The Assessing Officer has no shown that the impugned amount was debited to the profit and loss account. 4.11 The discussion made above clearly show tha .....

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erson throws his self-acquisition in hotchpot of the joint family. Reliance is placed on Subramaniam Iyer vs. Commissioner of Gift Tax, 67 ITR 612 (Kerala). The acts brought out above clearly show that the Assessing Officer has not been able to discharge his onus of establish these transactions with cogent and reliable materials. Under the circumstances additions made of variu9s amounts listed in para-1 above in relation to transactions with Shiva Cements Ltd do not stand. They are, therefore, d .....

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which invoked him to make the additions to the total income of the assessee. However the ld. CITA deleted all of them by treating the action of AO unilateral. It is beyond doubt that the discrepancies were observed but the question arises whether these discrepancies amount to the undisclosed income of the assessee. The ld. DR has also not brought on record anything contrary to the findings of the ld. CIT(A). We find pertinent to refer the decision of the Hon ble Supreme Court at this juncture i .....

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