Manju Poddar, Kolkata V. ITO,Ward-42(1), Kolkata, Kolkata

CO 61/KOL/2012

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9274 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-01-2014
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 19-06-2012
• Court: TRIBUNAL
• Department Lawyers: P K CHAKRABORTY
• Assessee Lawyers: V SURANA
• Keywords: Rejection of books of accounts
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [BEFORE HONBLE SRI ABRAHAM P.GEORGE, AM & HONBL E SRI GEORGE MATHAN, JM] ITA NO.753/KOL/2012 ASSESSMENT YEAR : 2008-09 ( APPELLANT ) (RESPONDENT) I.T.O., WARD-42(1), -VS- SMT. MANJU PODDAR KOLKATA KOLKATA (PAN AEYPP 7074 H) C.O.NO.61/KOL/2012 A/O ITA NO.753/KOL/2012 ASSESSMENT YEAR : 2008-09 ( APPELLANT ) (RESPONDENT) SMT.MANJU PODDAR . -VS- I.T.O., WARD-42(1), KOLKATA KOLKATA (PAN:AEYPP 7074 H) FOR THE DEPARTMENT SHRI P.K.CHAKRABORTY, JCIT, SR.DR FOR THE ASSESSEE : SHRI V.SURANA, FCA DATE OF HEARING : 16.01.2014 DATE OF PRONOUNCEMENT : 17. 01.2014. ORDER PER SHRI GEORGE MATHAN, JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. C.I.T.(A)- XIV, KOLKATA IN APPEAL NO.946/CIT(A)-XXIV/42(1)/11-12 DA TED 15.02.2012 FOR ASSESSMENT YEAR 2008-09. CROSS OBJECTION NO.61/KOL/ 2012 HAS BEEN FILED BY THE ASSESSEE AGAINST REVENUES APPEAL IN ITA NO.753/KOL /2012. 2. SHRI P.K.CHAKRABORTY, LD.,JCIT, SR.(DR) REPRESE NTED ON BEHALF OF THE REVENUE AND SHRI V.SURANA, FCA REPRESENTED ON BEHALF OF T HE ASSESSEE. ITA NO.753/KOL/2012 (BY THE REVENUE) 3. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL:- 1. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON F ACT IN REDUCTION THE GROSS PROFIT TO 14% OF TURNOVER FROM 18% OF TURNOVER. ITA NO.753/KOL/2012 & C.O.NO.61/KO L/2012 SMT.MANJU PODDAR A.YR.2008-09 2 2. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FA CT IN DELETING THE ADDITION OF RS.28,90,724/- U/S 40(A)(IA) OF THE .T.ACT, 1961. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, DELETE, OTHER OR MODIFY THE GROUNDS OF APPEAL ANY DURING THE APPEAL PROCEEDINGS. 4. IT WAS SUBMITTED BY THE LD. DR THAT IN THE COURS E OF ASSESSMENT THE AO HAD REJECTED THE BOOKS OF ACCOUNTS MAINTAINED BY THE AS SESSEE AND ESTIMATED THE ASSESSEES INCOME AT 18%. IT WAS THE SUBMISSION THAT THE 18% W AS ARRIVED AT BY TAKING INTO CONSIDERATION THE GROSS PROFIT FROM THE IMPOUNDED B OOKS WHEREIN ITEM-WISE COSTING HAS BEEN SHOWN. IT WAS THE SUBMISSION THAT THE IMPO UNDED BOOKS AND DOCUMENTS OF THE ASSESSEE SHOWING GROSS PROFIT MARGIN VARYING 26 % AND 48% WHEREAS THE REGULAR GROSS PROFIT OF THE ASSESSEE SHOWED ONLY 9.20%. IT WAS THE SUBMISSION THAT WITHOUT CONSIDERING THE DETAIL EXPLANATION PROVIDED IN THE ASSESSMENT ORDER FOR THE PURPOSE OF ESTIMATED THE ASSESSEES GROSS PROFIT AT 18% THE LD . CIT(A) HAD REDUCED THE SAME WITHOUT GIVING ANY REASONS TO 14%. IT WAS THE SUBMI SSION THAT THE GROSS PROFIT WAS LIABLE TO BE ASSESSED AT 18% ITSELF AND THE ORDER O F THE LD. CIT(A) BE REVERSED. 4.1. IT WAS THE FURTHER SUBMISSION THAT IN REGARD TO GROUND NO.2 THE AO HAD MADE DISALLOWANCE OF THE LABOUR EMBROIDERY CHARGES PAID TO AN EXTENT OF RS.28,90,724/- AS THE ASSESSEE HAD FAILED TO DEDUCT TDS U/S 194C OF T HE ACT. CONSEQUENTLY THE AO HAD APPLIED THE PROVISION OF SECTION 40(A)(IA) OF THE A CT AND MADE DISALLOWANCE. IT WAS THE SUBMISSION THAT ON APPEAL THE LD. CIT(A) ON THE GRO UND THAT THE ASSESSEES BOOKS OF ACCOUNTS HAVE BEEN REJECTED DELETED THE DISALLOWANC E MADE BY INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE IT ACT. IT WAS THE SUBM ISSION THAT THE DELETION WAS LIABLE TO BE REVERSED. 5. IN REPLY THE LD. AR SUBMITTED THAT THE ASSESSEE HAD MADE PAYMENTS TO THE KARIGARS AND THE PAYMENTS INCLUDED THE COST OF MATE RIALS. IT WAS THE FURTHER SUBMISSION THAT THE BOOKS OF ACCOUNTS HAVE BEEN REJECTED AND A S THE PAYMENT MADE TO THE KARIGARS WERE PART OF THE DIRECT COST, MEANING COST OF PURCH ASE, AND AS THE INCOME OF THE ASSESEE WAS ESTIMATED BY APPLYING THE GROSS PROFIT RATE NO FURTHER DISALLOWANCE BY INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE ACT WAS LIABLE TO BE MADE. HE PLACED RELIANCE UPON THE DECISION OF THE HONBLE ANDHRA PR ADESH HIGH COURT IN THE CASE OF ITA NO.753/KOL/2012 & C.O.NO.61/KO L/2012 SMT.MANJU PODDAR A.YR.2008-09 3 INDWELL CONSTRUCTION VS CIT 232 ITR 776. IT WAS THE FURTHER SUBMISSION THAT THE ISSUE OF GROSS PROFIT WAS ALSO INVOLVED IN THE CROSS OBJE CTION FILED BY THE ASSESSEE. IT WAS THE SUBMISSION THAT THE ASSESSEES GROSS PROFIT WAS 9.2 % AND IT WAS THE FURTHER SUBMISSION THAT THE AO HAVING SPECIFICALLY IDENTIFIED THAT THE GROSS PROFIT IN RESPECT OF THE IMPOUNDED BOOKS SHOWS A VARIATION 26% AND 48% STILL HAD ACCEPTED THE GROSS PROFIT RATE OF 18% WHICH SHOWED THE GROSS PROFIT AS PER TH E IMPOUNDED BOOKS WERE HIGHLY ERRONEOUS. IT WAS THE SUBMISSION THAT THE GROSS PRO FIT FIXED AT 14% BY THE LD. CIT(A) WAS EXCESSIVE AND LIABLE TO BE REDUCED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. A PERUSAL O F THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE AO HAS REJECTED THE BOOKS OF ACCOUNT S. A PERUSAL OF PAGE 2 OF THE ASSESSMENT ORDER SHOWS THAT THE AO HAS VERIFIED THE IMPOUNDED BOOKS AND HAS FOUND THAT THE GROSS PROFIT VARIES BETWEEN 26% AND 48%. H OWEVER, AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE AND IT IS ONLY AFTER CO NSIDERING THE EXPLANATION OF THE ASSESSEE THE AO HAD REDUCED THE GROSS PROFIT TO 18% . THE LD. CIT(A) ALSO REDUCED THIS GROSS PROFIT TO 14%. ADMITTEDLY THE LD. LD. CIT(A) HAS ACCEPTED VARIOUS CONTENTIONS PUT FORWARD BY THE ASSESSEE IN THE APPEAL. IN THE C IRCUMSTANCES CONSIDERING THE FACT THAT THE LD. CIT(A) HAS AFTER CONSIDERING THE EVIDE NCES AND SUBMISSIONS OF THE ASSESSEE REDUCED THE GROSS PROFIT FORM 18% TO 14 AS ALSO ON ACCOUNT OF THE FACT THAT THE ASSESSEE HAS NOT BEEN ABLE TO POINT OUT ANY SPECIFIC DEFECT IN THE ORDER OF THE LD. CIT(A) ON ACCOUNT OF WHICH THE GROSS PROFIT RATE MUST BE FURT HER REDUCED WE ARE OF THE VIEW THAT THE GROSS PROFIT FIXED AT 14% BY THE LD. CIT(A) IS A REASONABLE ONE AND THE SAME IS UPHELD. 6.1. IN REGARD TO THE DISALLOWANCE MADE BY THE AO B Y INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE ACT AND WHICH HAS BEEN DEL ETED BY THE LD. CIT(A) IT IS NOTICED THAT THIS ADDITION IS NOT ON ACCOUNT OF ANY ITEM FO UND IN THE BALANCE SHEET OF THE ASSESSEE. THE DISALLOWANCE IS ON ACCOUNT OF NON DED UCTION OF TDS IN RESPECT OF THE PAYMENTS MADE TO THE KARIGARS. ADMITTEDLY THE BOOKS OF ACCOUNTS OF THE ASSESSEE HAVE BEEN REJECTED. ONCE THE BOOKS OF ACCOUNTS HAVE BEEN REJECTED SUCH ACCOUNTS ARE NO MORE AVAILABLE FOR THE AO TO EXAMINE. NO DISALLOWAN CE ON THE BASIS OF SUCH NON ITA NO.753/KOL/2012 & C.O.NO.61/KO L/2012 SMT.MANJU PODDAR A.YR.2008-09 4 AVAILABILITY OF BOOKS OF ACCOUNTS AND CAN BE MADE. IN THE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION MADE BY INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE IT ACT IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. IN THE CIRCUMSTANCES THE APPEAL O F THE REVENUE STANDS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. . ORDER PRONOUNCED IN THE COURT ON 17.01.2014 SD/- SD/- [ABRAHAM P.GEORGE] [ GEORGE MATHAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 17.01.2014. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1. SMT.MANJU PODDAR, 196A, C.R.AVENUE, KOLKATA-700007. 2 I.T.O., WARD-42(1), KOLKATA 3 . CIT(A)-XIV, KOLKATA 4. CIT - KOLKATA. 5. CIT(A)DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES