Monoj Karmakar, Durgapur V. Commissinoer of Income tax(A),City Centre, Durgapur

ITA 1019/KOL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3172 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2013
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 06-07-2012
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR JCIT SR DR
• Assessee Lawyers: P K ROY
• Keywords: Rejection of books of accounts; Unexplained investment; Opportunity of being heard; Principle of natural justice; Non passing of speaking order; Revised return
• Section: 144

Judgement Text

1 , , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [ () . .. . . .. . , ,, , , !' ##$ %& ##$ %& ##$ %& ##$ %&, ,, , ] ]] ] [BEFORE HONBLE SRI K.K.GUPTA, AM & HONBLE SRI GEORGE MATHAN, JM] '( '( '( '( /ITA NO.1019/KOL/2012 )&* !+,/ ASSESSMENT YEAR :2008-09 (%. / APPELLANT ) ( /0%. /RESPONDENT) MONOJ KARMAKAR C.I.T. (APPEALS) BANKURA -VERSUS- DURGAPUR (PAN:AOLPK 3103 R) %. 1 2 / FOR THE APPELLANT: SHRI P.K.ROY, ADVOCATE /0%. 1 2 / FOR THE RESPONDENT: SHRI RAJESH KUMAR, JCIT, SR.DR &!3 1 4 /DATE OF HEARING : 22.05.2013 5+ 1 4 /DATE OF PRONOUNCEMENT : 22.05.2013. 6 / ORDER PER BENCH THIS APPEAL BY THE ASSESEE RAISES THE FOLLOWING GRO UNDS :- 1.FOR THAT YOUR PETITIONER DEALER DID NOT GET REAS ONABLY OPPORTUNITY OF BEING HEARD. 2.FOR THAT THE LD.CIT(APPEAL),DURGAPUR HAS PASSED A NON SPEAKING ORDER WHICH DID NOT MAINTAIN ANY NEXUS OF LAW NOR HE HAS CONSID ERED VERBAL ARGUMENT PLACED 3.FOR THAT YOUR PETITIONER DEALER IS A LABOUR SUPPL YING CONTRACTOR IN HAZARDOUS INDUSTRIES IN THE REMOTE AREA OF BANKURA MOSTLY ENG AGED IN WORK AS A COMMISSION AGENT AND USED TO GET 8% PAYMENT AS COMMISSION ON T HE BASIS OF THE LABOUR PAYMENT, SERVICE TAX, ESIC PAYMENT AND OTHER PAYMEN TS ON THE SAID 8% COMMISSION. YOUR PETITIONER HAD TO MAINTAIN STAFF, SITE SUPERVISORS, ACCOUNTANT PAYMENT OF CHARTERED ACCOUNTANT AND LAWYER. 4. FOR THAT WHATEVER PAYMENT RECEIVED 2% INCOME TAX DE DUCTED AT SOURCES FROM THAT 8% OF COMMISSION GIVEN NOT ONLY THAT THE ENTIR E MONETARY DEALING MADE FROM THE SUB-CONTRACTOR INCLUDING ESIC PAYMENTS, PF PAYM ENT AND SERVICE TAX PAYMENT. THAT 2% INCOME TAX DEDUCTING FROM THE PAYM ENT OF MONOJ KARMAKAR AND MONALISA CONSTRUCTION AS A RESULT THE NET PROFIT ST ANDS LESS THAN 4% WHICH THE 2 PETITIONER HAS SHOWN WHILE SUBMITTING THE RETURN AN D PREPARED BALANCE SHEET AND BOOKS OF ACCOUNTS 5. FOR THAT THE CHARTERED ACCOUNTANT BY MISTAKE NOT SH OWN CURTAIN ACCOUNT WHILE 1 ST BALANCE SHEET WAS TYPED BUT IMMEDIATELY AFTER TAKIN G INTO ACCOUNT THE LIABILITIES OF PAYMENT AND THE BANK BALANCES REMAIN RS.17,06,471/- WHICH LD.A.O. HAS ADDED IN FULL AS COPIES OF THE ASSESSEE DURING THE YEAR UNDE R ASSESSMENT WHICH IS FULLY WRONG, BAD IN LAW AND VOID. THEREFORE THE PETITIONER SOUGH T THE APPEAL BEFORE THE CIT(APPEAL) DURGAPUR WHO HAS NOT CONSIDERED ANY POI NTS DISMISSED THE APPEAL 6. FOR THAT YOUR PETITIONER ASSESSEE CRAVE LEAVE TO AD DUCE FURTHER POINTS FACTS AND GROUNDS WITH EVIDENTIAL DOCUMENTS AT THE HEARING ST AGE OF APPEAL BEFORE THE HONBLE COURT. 7. FOR THAT IN THE CIRCUMSTANCES YOUR PETITIONER MOSTL Y PRAYS :- I) PERPETUAL ORDER FOR SET A SIDING ORDER OF LD. A. O. AND CONSIDER THE SAME AND RESTRAINING THE CIT(APPEAL)DURGAPUR FOR DOING SUCH NON SPEAKING ORDER AGAINST THE DEALER. II) FOR THAT AN ORDER OF DEMAND BE QUASHED AS YOUR PETITIONER IS A GOOD ASSESSEE AND HAD SHOWN INCOME TRULY AND HONESTLY AND AS SUCH THE HONBLE COURT MAY DIM FEET AND PROPER WHICH SHALL NOT BE DETRIMENTAL FOR PETTY ASSESSEE. III) AN ORDER FOR QUASHING OF NOTICE ON PENALTY INI TIATED U/S 271(1)(C) AS THE FACTS AND TRANSACTION WAS ABSOLUTELY BONAFIDE. IV) YOUR PETITIONER I S A B O NAFID E L A BOUR CO NTR AC T O R FOR W HICH NO W ES T BEN GA L VAT NO. WA S A PPLI CA BL E SI N CE HE I S NOT A WORKS CONTRACTOR THEREFORE TH E C O PI ES S H O WN IN TH E B A L A N CE SH EE T B E CAM E UN A LTER E D . IN B O TH TH E CASES FO R N O FA ULT O F Y OUR P E TITI O N E R YO UR PE TI TIO N ER A SS ESSEE S HOULD NOT BE PENALI ZE D. V) FOR THAT SUCH FURTHER ORDER TO BE MADE OR DIRECT ION TO BE GIVEN AS YOUR AFFORD COMPLETE RELIED TO YOUR PETITIONER DEALER. VI) FOR THAT UNLESS ORDER AS PRAYS FOR ARE PASSED Y OUR PETITIONER ASSESSEE WOULD SUFFER IRREVOCABLE LOSS AND INJURY. VII) FOR THAT YOUR PETITIONER PREPARED AND MADE AN APPEAL WELL WITHIN THE TIME OF 60 DAYS AND WELL WITHIN THE JURISDICTION OF HONBLE ME MBERS OF ITAT, KOLKATA, WEST BENGAL. VIII) FOR THAT THE REQUISITE FEES HAS ALREADY BEEN PAID WITH HARDSHIP RS.20,605/- AND THE ORIGINAL CHALLAN IS ENCLOSED. IX) FOR THAT THIS APPLICATION IS MADE BONAFIDE AND IN THE INTEREST OF JUSTICE AS A SOLE PROPRIETOR. X) FOR THAT ACCEPTING THE BALANCE SHEET ON 10.10.20 08 WHICH SHOULD BE ACCEPTED IN TOTALITY AND APPROPRIATE RELIEF SHOULD BE GIVEN TO THE ASSESSEE. XI) THAT THE ADDITION OF RS.1706471/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IS BASELSS AND DID NOT MAINTAIN ANY NEXUS OF LAW SO IT SHOULD BE QUASHED IN FULL AND A FRESH ORDER IN ACCORDANCE WITH LAW SHOULD BE MADE FOR TH E END OF NATURAL JUSTICE. XII) THAT THE PENALTY U/S 271(1) IS NOT APPLICABLE AT ALL SO IT SHOULD BE QUASHED AND CANCELLED. 3 XIII) THAT THE REJECTION OF BOOKS OF ACCOUNTS U/S 1 45(3) AND AT THE SAME TIME PASSING ORDER U/S 144 IS CONTRADICTORY AND IMPOSITION OF PE NALTY U/S 271(1) IS ERRONEOUS SO THE ENTIRE ORDER SHOULD BE QUASHED AND CANCELLED AND A FRESH ORDER IN ACCORDANCE WITH LAW SHOULD BE MADE FOR THE END OF N ATURAL JUSTICE. XIV) THAT THE UNDISCLOSED AND UNEXPLAINED INVESTMEN T AS DISCUSSED BY THE LD. A.O. AND ADDED WITH THE PROFIT AND CHARGE HUGE AMOUNT OF ADD ITIONAL TAXES, INTEREST AND PENALTY WHICH REQUIRED TO BE MODIFIED SO THAT YOUR PETITIONER CAN DO THE BUSINESS PEACEFULLY AND BE FREE FOR DOING BUSINESS WITHOUT H ARASSMENT. XV) FOR THAT YOUR PETITIONER DEALER CRAVES LEAVE TO ADDUCE FURTHER POINTS, FACTS AND GROUNDS IF ANY IN THE HEARING AND ARGUMENT STAGE OF THE APPEAL PETITION. 2. THE LD.COUNSEL FOR THE ASSESSEE INITIATING HIS A RGUMENTS SUBMITTED THE BRIEF FACTS RESULTING INTO THE APPEAL BEFORE THE TRIBUNAL : THE ASSESSEE IS A LABOUR SUPPLY CONTRACTOR WHO EXECUTED WORKS WITH DIFFERENT PRIVATE ORGANIZATIONS DURING THE PERIOD UNDER ASSESSMENT. T HE ENTIRE JOB WAS MECHANICAL IN NATURE. THE MAIN EXPENDITURE TOWARDS EXECUTIONS OF JOB WAS MAINLY AND WHOLLY LABOUR PAYMENT, SERVICE TAXES AND OTHERS. IN THE OCCASION YOUR PETITIONER HAD TO MAINTAIN LABOUR WAGES SHEET AND SCROLL, SERVICE TAX PAYMENT PARTICULARS AND OTHER DOCUMENTS AS REQUIRED. CONSIDERING THE NATURE OF ACTIVITIES THE PROFIT IN THE COMPETITIVE MARKET IS MORE OR LESS 4% OR LITTLE BIT ABOVE. THE LD.AO SELECTED THE CASE FOR SCRUTINY AND RAISED SOME QUESTIONS IN COURSE OF HEARING PROCEEDINGS. YOUR ASSESSEE HAD BY MISTAKE N OT SHOWN THE LIABILITY TOWARDS PAYMENT OF SERVICE TAX, PF, ESIC AND LABOUR CHARGES ETC. IN THE FIRST BALANCE SHEET WHICH WAS THEN RECTIFIED BY THE AUDITOR. THE MAIN P OINT WAS THAT YOUR ASSESSEE IN THE FIRST BALANCE SHEET HAS NOT SHOWN THE LIABILITY FOR PAYMENT OF LABOUR CHARGES, PF, ESIC, AND SERVICE TAX AND AT THE SAME TIME MONEY WAS KEPT IN THE BANK BALANCE. IT IS A FACT THAT IN NORMAL COURSE OF BUSINESS PAYMENT FOR THE P RECEDING MONTH IS CLEARED IN THE NEXT MONTH BY 10 TH DAY. IN THIS SITUATION THE PAYMENT OF MARCH BECAME FALLEN DUE ON 5 TH OF APRIL ONWARDS. THEREFORE THE ERROR WAS RECTIFIED BY THE AUDITOR. IN THE REVISED BALANCE SHEET THE PROFIT OF THE BUSINESS REMAINED A S IT WAS IN THE ORIGINAL BALANCE SHEET. THE LD.AO HAS ESTIMATED PROFIT AT THE RATE OF 8% OF THE GROSS RECEIPT WHICH IS NOT AT ALL ACCEPTABLE AS BECAUSE THE PETITIONER ASSESSEE FIRM IS NOT A CIVIL CONTRACTOR RATHER HE IS A LABOUR SUPPLY CONTRACTOR FOR MECHANICAL TYPE OF JOB AND IN THE COMPETITIVE MARKET 8% PROFIT IS NOT FEASIBLE. THE REVISED BALANCE SHEET DATED 10-10-2008 WAS PREP ARED BEFORE THE INITIATION OF THE SCRUTINY PROCEEDINGS SO IT CANNOT BE CALLED AN AFTE R THOUGHT AND SINCE THE NET PROFIT OF THE BUSINESS REMAINED SAME NO REVISED RETURN WAS SU BMITTED. IN COURSE OF HEARING PROCEEDINGS THAT WAS DULY EXPL AINED BEFORE THE LD.AO SO NO REVISED RETURN APPEARED TO HAVE BEEN SUBMITTED IN C OURSE OF HEARING PROCEEDINGS THE 4 SAME WAS CATEGORICALLY AND PARTICULARLY MENTIONED T HEREIN WHICH THE LD.AO HAS NOT CONSIDERED AND PASSED ORDER ULS 144. A BEST JUDGMEN T ASSESSMENT CANNOT BE PASSED IN A MANNER WHICH THE LD.AO HAS DONE. THE ASSESSEE VEHEMENTLY OPPOSED AGAINST THE DISALLO WANCE OF THE BALANCE SHEET OF 10- 10-2008 IN WHICH EVERY DETAILED TRANSACTION OF THE BUSINESS WERE DULY REFLECTED FOR THE CONSIDERATION OF THE DEPARTMENT AND THE SAME WAS DU LY EXPLAINED AT THE HEARING STAGE FROM TIME TO TIME. IN THIS PERSPECTIVE NO PENALTY PROCEEDINGS U/S27 1 (L)(C) INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME. SO IT SHOULD BE WITHDRAWN BY THE LD.AO AND NATURAL JUSTICE SHOULD BE PROVIDED TO THE ASSESSEE. THE ADDITION OF BANK DEPOSIT OF RS.1706471/- IS ERRONEOUS, HAD IN LAW WHICH REQUIRED TO BE QUASHED AND WHICH SHOULD NOT BE CONSIDERED AS INCOME FROM UNDISCLOSED SOURCE AND UNDISCLOSED INVESTMENT. THERE ARE SEVERAL CASE LAWS AND JUDGMENT OF SUPREME COURT OF INDIA, DIFFERENT HIGH COURTS INCLUDING MAD HYA PRADESH HIGH COURT AND DIFFERENT TAXES TRIBUNAL WHICH YOUR PETITIONER WOUL D LIKE TO PRODUCE AT THE ARGUMENT OF THE CASE BEFORE YOUR HONOUR. THE ORDER DID NOT MAINTAIN ANY NEXUS OF LAW AND IT HAS GONE AGAINST THE PRINCIPALS OF EQUITY AND NATURAL JUSTICE. THE MOTIVE OF THE GOVER NMENT TO COLLECT REVENUE WITH LEAST HARDSHIP TO THE TAX PAYERS BUT IN THE INSTANT CASE THIS HAS NOT HAPPENED AND THE SCENARIO IS QUITE DIFFERENT THAN THAT OF NATURAL JUSTICE. IN THE ORDER OF LD.CIT(APPEAL),DURGAPUR HAVE NOT CO NSIDERED YOUR PETITIONER PRAYER FILED ONLY ON THE GROUND 1 TO 5 AS COMMON ISSUES AR E INVOLVED AS MENTIONED BY THE LD.CIT(APPEAL) BUT TWO MATERIAL FACTS DECIDED BY TH E AO 8% NET PROFIT AND AT THE SAME TIME LD.AO HAS ADDED ENTIRE AMOUNT OF RS.17,06 ,471/- WITH THE BOOK P:ROFIT SHOWN BY YOUR APPELLANT. YOUR APPELLANT HAS SUBMITT ED TWO COPIES OF BALANCE SHEETS BEFORE THE A.O. AT THE HEARING STAGE. HE HAS ONLY T AKEN RS.L7,06,4711- FROM THE REVISED BALANCE SHEET PREPARED BY THE CHARTERED ACCOUNTANT AND THE EXPLANATION WAS GIVEN AT THE HEARING STAGE WHICH WAS NOT TAKEN CARE BY THE A .O. BUT NO WHISPER WAS MADE BY THE APPELLATE COMMISSIONER CIT(APPEAL) AND DID NOT GIVE ANY COGNIZANCE FOR THE SAME WHICH IS BAD IN LAW. LD.CIT(APPEAL) HAS PASSED A NO N SPEAKING BIASED ORDER HAVING NO NEXUS OF LAW AND DISMISSED THE ORDER WITHOUT CONSID ERING THE MERIT OF THE CASE FOR WHICH YOUR PETITIONER PREFERRING APPEAL BEFORE THE ITAT,KOLKATA 3. THE LD. COUNSEL HAS FILED A PAPER BOOK IN SUPPOR T OF THE CLAIM THAT ON HAVING PASSED THE ASSESSMENT U/S 144 OF THE ACT, T HE ASSESSEE HAD BROUGHT ON RECORD THE UNEXPLAINED INVESTMENT AS DEPOSIT IN THE BANK IN SO FAR AS THE BALANCE IN THE BANK TALLIED WITH THE FINANCIAL STATEMENTS THAT WAS THE BONE OF CONTENTION INITIATING THE PROCEEDINGS AGAINST THE ASESSEE WERE FOR THE DEPOSIT OF CASH IN THE BANK WHICH OBVIOUSLY WERE TO BE THE ASSESSEE BEING A LABOUR CONTRACTOR. IN SUPPORT OF SUCH CLAIM HE HAD FURNISHED FINANCIAL STATEMENTS WHICH INDICATED THAT THE 5 CONTRACT RECEIPTS CANNOT BE CONSIDERED AS CASH DEPO SITS WHEN THE WITHDRAWAL FOR THE PAYMENT OF THE SAME HAS BEEN ENTERED IN THE PRO FIT AND LOSS ACCOUNT AND DULY AUDITED BY THE CHARTERED ACCOUNTANT UNDER THE PROVI SION OF SECTION 44AB OF THE ACT. HE, THEREFORE PRAYED THAT THE CONFIRMATION THE REOF BY THE LD. CIT(A) IS FIT FOR SETTING ASIDE WHO HAS MERELY CONSIDERED THE ERRORS AS POINTED OUT BY THE AO IN THE AUDITED FINANCIAL STATEMENTS WHICH REQUIRE EXPLANAT ION BY THE AUTHORIZED REPRESENTATIVE BEFORE THE AO AND CANNOT BE FOR COMP UTING THE CORRECT INCOME UNDER THE PROVISION OF SECTION 145A OF THE ACT. 4. THE LD. DR DID NOT OPPOSE THE PRAYER OF THE LEAR NED COUNSEL FOR THE ASSESSEE FOR RESTORING THE ISSUE TO THE FILE OF AO FOR CONSI DERATION AFRESH IN THE LIGHT OF THE SUBMISSIONS OF THE LD. COUNSEL WITH RESPECT TO EXPL AINING THE CONTENTS OF THE FINANCIAL STATEMENTS. THE DEPOSITS HAVE BEEN ROUTED THROUGH THE BANK ACCOUNT WHICH BANK ACCOUNT WAS VERIFIED BY THE AO U/S 133(6 ) OF THE IT ACT. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE INCLINED TO ACCEDE TO THE PRAYER O F THE LD. COUNSEL FOR THE SIMPLE REASON THAT HYPOTHETICAL FIGURES HAVE BEEN BROUGHT TO TAX BY THE AO FOR WANT OF EXPLANATION IN SO FAR AS THE DEPOSITS IN THE BANK H AD NOT BEEN EXPLAINED UNDER THE PROVISION OF SECTION 144 OF THE ACT BY THE ASSESSEE . THE TOTAL RECEIPTS ON ACCOUNT OF LABOUR CONTRACT IS APPROXIMATELY 30% WHICH LEADS TO THE ERRONEOUS FINDING THAT MORE THAN 50% WOULD BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE WHICH IS UNJUSTIFIED. WE SET ASIDE THE ORDER OF THE LD.CIT(A ) AND RESTORE THE ISSUES TO THE FILE OF THE AO FOR PASSING ASSESSMENT ORDER AFRESH DENOVO AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD. 6 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22.05.2013. SD/- SD/- [GEORGE MATHAN ] [K.K.GUPTA] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (4 4 4 4) )) ) DATE: 22.05.2013. R.G.(.P.S.) 6 1 /))7 87+9- COPY OF THE ORDER FORWARDED TO: 1. MONOJ KARMAKAR, PROP. OF MONOJ KARMAKAR & M/S.MONA LISA CONSTRUCTION, VILL P.O. GHUTGORIA, BANKURA, PIN NO.722168. 2 C.I.T.(A), DURGAPUR. 3 . CIT. KOLKATA-, 4 . CIT(A)- 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 07 /)/ TRUE COPY, 6&/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES