M/s Jagadhartri Automobiles, Hooghly V. I.T.O Wd - 2(1),kolkata., Hooghly

CO 15/KOL/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9854 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 02-09-2014
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 07-02-2013
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL SURANA ACA
• Keywords: Business income; Assessment record
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE SRI SHAMIM YAHYA, AM] ITA NO.133/KOL/2012 ASSESSMENT YEAR : 2003-04 ( APPELLANT ) (RESPONDENT) I.T.O., WARD-2(1), .. -VS- M/S.JAGADHATRI AUTOMO BILES. HOOGHLY HOOGHLY (PAN:AADFJ 4873 H) C.O.NO.15/KOL/2013 A/O ITA NO.133/KOL/2012 ASSESSMENT YEAR : 2003-04 ( CROSS OBJECTOR) (RESPONDENT) M/S.JAGADHATRI AUTOMOBILES. -VS- D.C.I.T., CIRCLE -8, HOOGHLY HOOGHLY (PAN:AADFJ 4873 H) FOR THE DEPARTMENT SHRI VIVEK VERMA, JCIT, SR.DR FOR THE ASSESSEE SHRI SUNIL SURANA, ACA DATE OF HEARING : 28.08.2014 DATE OF PRONOUNCEMENT : 02. 09.2014. ORDER PER SHRI SHAMIM YAHYA, AM THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY T HE ASSESSEE EMANATE OUT OF THE ORDER OF LD. C.I.T.(A)- XXXVI, KOLKATA DT. 2 1.11.2011 AND PERTAIN TO ASSESSMENT YEAR 2003-04. 2. THE GROUNDS OF APPEAL RAISED IN THE REVENUES A PPEAL ARE AS UNDER :- THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED CIT(A) ERRED IN GIVING A RELIEF OF RS.14,05,930/-. IT IS AN ADMITTED POSITIO N THAT THE BOOKS OF ACCOUNTS AND OTHER DETAILS COULD NOT BE PRODUCED AND FURNISHED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDING AS WELL AS THE APPELLATE PROCEEDING. IT LED THE CIT(A) TO INVOKE THE PROVISIONS OF SEC.145(3) OF THE I.T.ACT. ONCE THE A SSESSEES BOOKS OF ACCOUNTS STAND REJECTED BY THE CIT(A), HE ERRED IN LAW AND ALSO IN FACTS TO ESTIMATE THE PROFITS @6% OF THE TURNOVER, WHICH IS QUITE ON THE LOWER SIDE. HEN CE THE RELIEF GRANTED BY THE CIT(A) IS GROSSLY ERRONEOUS AND THUS NOT ACCEPTABLE. ITA.NO.133/KOL/2012 &CO.15/KOL/2013 M/S. JAGADATHRI AUTOMOBILES A.YR.2003-04 2 2.1. THE ISSUE RAISED IN THE CROSS OBJECTION IS AS UNDER :- I.FOR THAT THE LD. CIT(A) IS ARBITRARY, ILLEGAL A ND BAD AND NOT IN ACCORDANCE WITH LAW. 2. FOR THAT THE LD. CIT(A) ERRED IN ESTIMATING THE NET PROFIT AT 6% OF THE TURNOVER WHICH WAS QUIT HIGH IN AUTOMOBILE BUSINESS WHEREIN THE NET PROFIT RATE RANGES @3% TO @4% OF THE TURNOVER. 3. FOR THAT THE INCOME OF THE APPELLANT MAY BE REAS ONABLY ESTIMATED AND SUCH RELIEF MAY BE GIVEN AS MAY BE DEEMED FIT AND PROPER IN THE CIRCUMSTANCES OF THE CASE. 4. FOR THAT THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND ANY GROUND BEFORE OR AT THE TIME OF HEARING. 3. IN THIS CASE THE ASSESSEE HAS RETURNED LOSS OF RS.2,08,708/- WHICH WAS ASSESSED BY AO AT RS.19,03,800/-. THE ASSESSEES APPEAL WAS DISMISSED BY LD.CIT(A). ITAT, KOLKATA VIDE ORDER DATED 30.09.2009 HAS SET ASIDE T HE APPEAL AND RESTORED BACK THE ISSUE TO THE FILE OF THE CIT(A) FOR ADJUDICATION OF THE MATTER AFRESH AFTER AFFORDING REASONABLE OPPORTUNITY TO THE ASSESSEE OF BEING HEA RD. 4. IN THIS CASE IN THE ORIGINAL ORDER PASSED U/S 14 4 OF THE ACT THE AO MADE ADDITION OF RS.16,51,788/- ON ACCOUNT OF UNSUBSTANT IAL ADVANCES RECEIVED FROM SUB- DEALERS AND RS.4,60,721/- FROM SUNDRY DEBTORS. . BE FORE THE LD. CIT(A) THE GIST OF ASSESSEES SUBMISSIONS ARE AS UNDER :- I) DUE TO DISPUTE BETWEEN PARTNERS, NO BOOKS AND D ETAILS/EVIDENCES IN SUPPORT OF THE BALANCE SHEET FILED ALONG WITH THE RETURN COULD BE FILED BY THE PARTNER SHRI MADHU GHOSH WHO IS PURSUING THE APPEAL AS THE BOOKS OF ACCOUNT WERE IN THE CUSTODY OF THE THEN PRINCIPAL PARTNER SHRI BIPIN GUPTA. II) THE FIRM WAS DISSOLVED ON 06/10/2004, DUE TO DI SPUTE BETWEEN PARTNERS. III) THE SUB-DEALERS ADVANCES OF RS.16,51,788/- SHO WN IN THE BALANCE SHEET WERE ORIGINATED IN THE EARLIER TWO YEARS I.E. A.YS. 2001 -02 AND 2002-03 AND THEREFORE, SHOULD NOT HAVE BEEN ADDED IN THE A.Y.2003-04. IV) THE SUNDRY DEBTORS OF RS.4,60,721/- REPRESENTED DEBTORS FOR SALE AND THEREFORE, THERE WAS NO SCOPE FOR ADDITION EVEN IN ABSENCE OF REQUISITE DETAILS AS THE SAID DEBTORS WERE PART OF SALES. V) SINCE THE BALANCE SHEET FILED WAS DULY AUDITED, THE INCOME/LOSS DISCLOSED IN THE RETURN SHOULD BE ACCEPTED. 5. TO EXAMINE THE SUBMISSIONS OF THE ASSESSEE THAT THE SUB-DEALERS ADVANCE OF RS.16,51,788/- WAS A BROUGHT FORWARD BALANCE, THE A SSESSMENT FOLDERS FOR A.Y.2002- 03 AS WELL AS FOR THE CURRENT ASSESSMENT YEAR WAS R EQUISITIONED BY THE LD. CIT(A). THE AO ONLY SENT THE ASSESSMENT FOLDER FOR THE CURRENT ASSESSMENT YEAR WITH THE COMMENTS ITA.NO.133/KOL/2012 &CO.15/KOL/2013 M/S. JAGADATHRI AUTOMOBILES A.YR.2003-04 3 THAT THE ASSESSMENT RECORD FOR THE A.Y.2002-03 IS N OT READILY AVAILABLE. THE LD. CIT(A) HAS HELD AS UNDER :- IN ABSENCE OF THE ASSESSMENT RECORD FOR THE A.Y. 2 002-03, IT IS NOT POSSIBLE TO VERIFY WHETHER ADVANCES FROM SUB-DEALERS AMOUNTING TO RS.1 6,51,788/- WAS ACTUALLY A BROUGHT FORWARD BALANCE AS CLAIMED BY THE AR. HOWEVER, NON- AVAILABILITY OF PAST RECORDS DOES NOT ABSOLVE THE APPELLANT FORM DISCHARGING HIS PRIM ARY ONUS OF FILING THE REQUISITE DETAILS IN SUPPORT OF THE ACCOUNTS SHOWN IN THE BAL ANCE SHEET. IT ALSO APPEARS FROM THE RECORDS THAT THE APPELLANT ALSO FAILED TO FURNISH T HE BASIC DETAILS OF PURCHASES, SALES AND EXPENSES, CASH BOOK, LEDGER ETC. AT THE TIME OF ASS ESSMENT PROCEEDINGS, ON THE PRETEXT OF DISPUTE BETWEEN THE PARTNERS. CONSIDERING ALL THESE ASPECTS IN TOTALITY THAT (I) APPELLANTS CLAIM OF BROUGHT FORWARD ADVANCE FROM SUB-DEALERS CANNOT BE VERIFIED FOR WANT OF RECORDS OF PRECEDING YEAR, (II) SUNDRY DEBTORS FOR SALES COULD NOT BE POSSIBLY BE ADDED, AND (III) SPECIALLY FOR THE REASON THAT THE APPELLA NT HAD FAILED TO FILE THE BASIC DETAILS DURING THE ASSESSMENT PROCEEDING AND EVEN NOW; I FI ND IT IS A FIT CASE FOR INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT AS THE CORR ECTNESS AND COMPLETENESS OF ACCOUNTS FILED BY THE APPELLANT ARE IN DOUBTS. 8. THE APPELLANT WAS A DEALER OF TWO WHEELERS AND THE FIRM WAS DISSOLVED IN THE YEAR 2004. THE APPELLANT FIRM DISCLOSED NET BUSINES S LOSS AT RS.2,08,708.93 ON A TURNOVER OF RS.82,97,847.71, AFTER DEBITING PARTNER S REMUNERATION OF RS.48,000/-. THE AR IN HIS WRITTEN SUBMISSION DATED 18/11/2011 STATE D THAT THE MARGIN OF THE ASSESSEE ON SALE OF ONE TWO WHEE LER WAS ABOUT RS.450/- ON THE SALE VALUE OF ABOUT RS.25,000/-. ABOUT 90% OF SALE WAS O F TWO WHEELERS AND BALANCE WAS THAT OF THE SPARE PARTS. THE MARGIN ON SPARE PARTS SALE WAS ABOUT 4 TO 5%. IT IS EVIDENT FROM THE PROFIT & LOSS ACCOUNT THAT THE ASSESSEES NET PROFIT BEFORE PAYMENT OF SALARY TO PARTNERS WAS ABOUT 0.3% ONLY. I HAVE DULY CONSIDERED THE SUBMISSION OF THE AR OF THE APPELLANT AND NOT INCLINED TO ACCEPT HIS VERSION AS NEITHER ANY EVIDENCE HAS BEEN FILED IN SUPPORT OF HIS CLAIM NOR ANY COMPARABLE CASE HAS BEEN PRESENTED. THE RATIO OF TH E GROSS PROFIT (5.37%) SHOWN IN THE RETURN ITSELF DOES NOT SUPPORT THE ABOVE STATISTICS . IN VIEW OF THE FOREGOING, I FIND IT FAIR AND REASON ABLE IN COMPUTING THE BUSINESS INCOME OF THE APPELLANT FIRM @6% OF THE TURNOVER OF RS.82, 97,848/-, EQUIVALENT TO RS.4,97,871/- CLEAR OF ALL EXPENSES AFTER REJECTING THE BOOKS OF ACCOUNT OF THE APPELLANT FIRM. THE AO IS DIRECTED ACCORDINGLY. THUS, THE APP ELLANT GETS RELIEF OF RS.14,05,930/- [RS.19,03,801/- MINUS RS.4,97,871/-]. 6. AGAINST THE ABOVE ORDER REVENUE HAS FILED AN APP EAL AND ASSESSEE HAS FILED THE CROSS OBJECTION. WE NOTE THAT IN THIS CASE THE AO H AS PASSED AN ORDER U/S 144 OF THE ACT. THE ASSESSEE HAS NOT PRODUCED ANY BOOKS OF ACC OUNT AND OTHER DOCUMENTS. IN THIS SITUATION, IN OUR CONSIDERED OPINION, IT WAS ENCUMB ENT ON THE PART OF THE AO TO MAKE AN ESTIMATE OF INCOME ON A REASONABLE BASIS. BUT AS AGAINST THIS AO CHOSE TO PICK UP THE ITEMS FROM THE BALANCE SHEET AND DISALLOWED THE SAME. IN OUR CONSIDERED OPINION, THIS APPROACH WAS NOT CORRECT. THE LD. CIT(A) HAS R IGHTLY REJECTED THE BOOKS OF ACCOUNT AND THEREAFTER HE HAS MADE AN ESTIMATION OF THE INCOME. ESTIMATION OF INCOME ITA.NO.133/KOL/2012 &CO.15/KOL/2013 M/S. JAGADATHRI AUTOMOBILES A.YR.2003-04 4 NEEDS TO BE MADE BASED ON DETAILS FROM COMPARATIVE SOURCES AS WELL AS PAST HISTORY OF THE ASSESSEE. WE FIND THAT THESE DETAILS ARE NOT AV AILABLE ON RECORD. IN THIS SITUATION THE ASSESSEES REQUEST TO MAKE ESTIMATES AT 4% TO 5% H AS BEEN RIGHTLY REJECTED BY THE LD. CIT(A). THE LD. CIT(A) HAS MADE AN ESTIMATE OF 6% O F THE TURN OVER. THIS, IN OUR CONSIDERED OPINION, ON THE FACTS AND CIRCUMSTANCES OF THE CASE IS SLIGHTLY ON THE LOWER SIDE. ACCORDINGLY WE HOLD THAT IT WOULD BE FAIR AND REASONABLE IN COMPUTING THE INCOME OF THE ASSESSEE @8% OF TURN OVER OF RS.82,97 ,848/- EQUIVALENT TO RS.6,63,827/- CLEAR OF ALL EXPENSES. 7. IN THE RESULT THE APPEAL OF THE REVENUE AND CROS S OBJECTION OF THE ASSESSEE STAND PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 02.09.2014. SD/- SD/- [ MAHAVIR SINGH ] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 02.09.2014. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1. M/S.JAGADHATRI AUTOMOBILES, MUKHERJEE BAGAN, KHADIN AMORE, P.O.-CHINSURAH, DIST.HOOGHLY, PIN-712101. 2 I.T.O., WARD-2(1), HOOGHLY. 3 . CIT(A)-XXXVI, KOLKATA. 4. CIT KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY, BY ORDER, ASST. REGISTRAR , ITAT, KOLKATA BENCHES ITA.NO.133/KOL/2012 &CO.15/KOL/2013 M/S. JAGADATHRI AUTOMOBILES A.YR.2003-04 5