Annapurna Medicine Distributors., ... vs Assessee

M/s. Annapurna Medicine Distributors Vs. J.C.I.T, Range-55, Kolkata PAN: AAFFA 5252K (Appellant) (Respondent)

For the appellant: Sh. Debnath Khanabis.AR For the respondent : Smt. Madhumalti Ghosh, JCIT, ld.Sr.DR

Date of hearing: 01-06-2015

Date of pronouncement: 01-06-2015

ORDER Per Shri P. K. Bansal, AM:

This appeal has been filed by the assessee against the order of CIT(A), Kolkata dated 27-03-2009 by taking following grounds of appeal:-

"1. For that the Authorities below had erred both in law and on facts in the instant case.

2. For that the Authorities below had erred in addition back Rs.6,92,857 (i.e Rs.18,50,000 less Rs.11,57,143) on account of alleged Unaccounted purchases being the difference between Purchases for the month of March, 2005 as per unconfirmed Statement submitted to the financing bank State Bank of India, Uluberia Branch Rs.18,50,000 and Purchases as per books of account Rs.11,57,143.

Books and records of Appellant were verified but no defects could be recorded. Addition on this account was made purely on presumption, surmise and conjecture after summarily rejecting the claim of the Appellant. As such the subject addition of Rs.6,92,857 be deleted in its entirety.

3. For that the Authorities below had erred in adding back Rs.33,192 being Gross Profit @4.72% on alleged Unaccounted Sales for the month of March, 2005 Rs.7,03,230 (i.e Rs.17,91,400 being Sales as per unconfirmed Statement submitted to the financing bank State Bank of India, Uluberia Branch and Rs.10,88,170 being Sales as per books of account. Books and records of Appellant were verified but no defects could be recorded. Addition on this account was made purely on presumption, surmise and conjecture after summarily rejecting the claim of the Appellant.

As such the subject addition of Rs.33,192 be deleted in its entirety."

2. Ground no.1 is general in nature and does not require any adjudication.

3. Ground no.2 relates to the addition of Rs.6,92,857/- on account of alleged purchase.

4. Facts relating to this ground are that the AO noted that the assessee has shown total purchases as per books of accounts at Rs.11,57,143/- while as per monthly statements filed 2 ITA No.288/Kol/2013-SMC M/s. Annapurna Medicine Distributors

with SBI Uluberia Branch, Howrah it was shown at Rs.18,50,000/- for the month of March 2005. The AO, therefore, added the difference of Rs.6,92,857/- as unaccounted purchase.

5. When the matter went before the ld.CIT(A), the assessee contended that the assessee was enjoying cash credit facility from the said State Bank of India, Uluberia against hypothecation of stock of medicines since 1993. It was explained by the assessee that this figure of Rs.18,50,000 was tentative and without considering the credit notes/rejection notes issued subsequently by the suppliers and which were duly considered in the books. The ld.CIT(A) has confirmed the addition.

6. I have heard the rival submissions and carefully considered the same along with the orders of the tax authorities below. I noted that in this case the AO has simply taken the purchases as per assessee's books of account and also issued summon to the bank manager u/s. 131 of the IT Act to submit the stock statement as submitted by the assessee as on 31-03- 2005. The assessee has shown the purchases (for the month of March, 2005) at Rs.18,50,000/-. The AO without calling for the explanation just added the difference amount of Rs.6,92,857/-. I noted that no opportunity was given to the assessee to explain/reconcile why the purchase amount shown in the bank statement as well as the same shown by the assessee in the books of account. I, therefore, in the interest of justice and fair play set aside the order of the ld.CIT(A) and restore the issue to the file of the AO with the direction that the AO shall re- decide this issue after giving proper and sufficient opportunity to the assessee. The assessee will also be free to submit all the necessary submissions/evidences on which he may rely before the AO as may be decided by the AO. This ground of assessee's appeal is allowed for statistical purpose.

7. Second ground relates to the addition of Rs.33,192/- being gross profit.

8. Facts relating to the ground are that the AO in similar manner for the month of March 2005 noted that sales as per the books of account were Rs.10,88,170/- while as per the bank statement these were at Rs.17,91,400/-. Thus, there was a difference of Rs.7,03,230/-. The AO estimated the GP @ 10% and added Rs.33,192/- being 4.72% of Rs.7,03,230/-. This addition was confirmed by the ld.CIT(A) on this issue.

9. After hearing the rival submissions and going through the orders of the tax authorities, I noted in respect of this addition also the AO has not given proper and sufficient opportunity to explain the reasons on the difference. I, therefore, in the interest of justice and fair play set aside the order of the ld.CIT(A) and restore the issue to the file of the AO with the direction 3 ITA No.288/Kol/2013-SMC M/s. Annapurna Medicine Distributors

that the AO shall re-decide this issue in accordance with the law after giving proper and sufficient opportunity to the assessee to explain the reasons why there have been difference in the sales for the month of March, 2005 as per books of account and as per bank statement. The assessee will also be free to submit all the necessary submissions/evidences on which he may rely before the AO. This ground of assessee's appeal is allowed for statistical purpose.

10. In the result, the appeal of assessee is allowed for statistical purpose.

Order is pronounced in the open court on 01-06-2015

Sd/-

( P. K. Bansal ) Accountant Member Dated : 01-06-2015

**PRADIP(Sr.P.S.) Copy of the order forwarded to:

1. Appellant-M/s. Annapurna Medicine Distributors, Bazarpara, Uluberia, Howrah 711316 2 Respondent -Joint Commissioner of Income Tax, Range-55 54/2 Rafi Ahmed Kidwai Road, Kol-16.

3. The CIT(A) concerned

4. The CIT concerned

5. The D.R 6. Guard File

True Copy, By order Asstt. Registrar