Subrata Purkait, Kolkata V. I.T.O., Ward - 26(3), Kolkata, Kolkata

ITA 103/KOL/2023

AI Insights

The case involves appeals by Subrata Purkait against the orders of the Income Tax Officer, Ward-26(3), Kolkata, for the Assessment Years 2012-13, 2013-14, and 2014-15. The appeals were directed against the orders passed under section 250 of the Income Tax Act, 1961, by the CIT(A), which were primarily ex-parte and did not adequately address the grounds raised by the assessee. The main issues included the alleged concealment of income, incorrect application of statutory deductions, and erroneous additions to the assessee's income. The Tribunal found that the principles of natural justice were not followed in the initial hearings and thus restored the matters to the CIT(A) for a comprehensive re-evaluation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128822 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 01-05-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 06-02-2023
• Other Referred Cases: C.I.T. vs. Ramendra Nath Ghosh - 82 ITR, 888 (SC), Addl. C.I.T. vs. Prem Kumar Rastogi - 124 ITR, 381(AII), C.I.T. vs. Girdharilal - 147 ITR 379 (Raj), Johar Forest Works vs. C.I.T. - 1071.T.R., 409 (J&K)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Principle of natural justice; Reasonable cause
• Section: 148; 143(3); 142(1); 250

Judgement Text

आयकर अपीलीय अधिकरण कोलकाता 'सी' पीठ, कोलकाता म ें IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘C’ BENCH, KOLKATA श्री संजय गग ग , न्याधयक सदस्य एवं डॉ. मनीष बोरड, ल े खा सदस्य क े समक्ष Before SRI SANJAY GARG, JUDICIAL MEMBER & DR. MANISH BORAD, ACCOUNTANT MEMBER I.T.A. Nos.: 101, 102 & 103/KOL/2023 Assessment Years: 2012-13, 2013-14 & 2014-15 Subrata Purkait......................................................Appellant [PAN: AIQPP 6749 K] Vs. ITO, Ward-26(3), Kolkata......................................Respondent Appearances by: Sh. Anath Bandhu Mitra, Adv., appeared on behalf of the Assessee. Smt. Ranu Biswas, Addl. CIT, Sr. D/R, appeared on behalf of the Revenue. Date of concluding the hearing : May 2 nd , 2023 Date of pronouncing the order : May 22 nd , 2023 ORDER Per Manish Borad, Accountant Member: The captioned appeals filed by the assessee pertaining to the Assessment Years (in short “AY”) 2012-13, 2013-14 & 2014-15 are directed against separate orders passed u/s 250 of the Income Tax Act, 1961 (in short the “Act”) by ld. Commissioner of Income-tax (Appeals)-NFAC, Delhi [in short ld. “CIT(A)”]. I.T.A. Nos.: 101, 102 & 103/KOL/2023 Assessment Years: 2012-13, 2013-14 & 2014-15 Subrata Purkait. Page 2 of 9 2. The assessee is in appeal before the Tribunal raising the following grounds: I.T.A. No.: 101/KOL/2023: “1. That the Ld I.T.O Ward no.26 (3) Kolkata ascertained that the assessee has got concealed Income of Rs. 48,38,830/- for the Asst. Yr. 2012-13. He estimated the concealed Income of the assessee on the basis of two expenses namely Coal purchases & earth cutting charges for the A/c Yr. 2011-12. The Ld I.T.O Ward no. 26(3) failed to go through Stock A/c of the assessee & other expenses having direct link with production in order to ascertain actual concealment of Income because the assessee is a manufacturer of Bricks & others. So addition of RS. 48,38,830/- to returned Income on A/c of concealed Income is baseless & required deletion 2. That the Ld I.T.O Ward no. 26(3) Kolkata for wrongly applied the provision of Section 24(a) of the LT. Act & allowed 30% of Gross Rent as Statutory deduction. The Ld I.T.O Ward no. 26(3) arbitrarily disallowed various expenses paid for running hotel & depreciation. Expenses towards running of hotel & depreciation are to be allowed as per LT. Act. 3. The Ld I.T.O Ward no. 26(3) Kolkata wrongly recorded Rs.30,67,281/- as the Opening Capital of Sureswari Bricks & Sureswari Guest House as on 31/3/11 in place of Rs.48,69,380/-. Thus he committed mistake & wrongly added Rs. 18,02,099/- to the returned Income of the assessee. So that requires deletion, iv) That the assessee will put toward other point at the time of hearing.” I.T.A. No.: 102/KOL/2023: “1. (A) Disallowance of Labour Charges of RS.4,09,390/- That the assessee is a manufacturer of Bricks, Jhama etc. He paid Labour Charges of Rs. 5,32,608/- for making various activities. Such as: i) Cutting & procuring mud from field, ii) Preparing mud fit for production of Bricks & others, iii) Production of Raw Bricks from mud. iv) Laying of Raw Bricks in the Brick field with Coal after drying, v) Firing of Bricks, vi) Sorting of Bricks according to quality from brick field. The assessee paid Rs. 5,32,608/- towards labour charge for doing the above said works. Total expenses are supported by acknowledgement of payee. The rate of labour charges for the financial year 2012-13 is not the same as the rate of labour charges paid for financial year 2011-12. So fixation of due & allowable labour I.T.A. Nos.: 101, 102 & 103/KOL/2023 Assessment Years: 2012-13, 2013-14 & 2014-15 Subrata Purkait. Page 3 of 9 charges of a manufacturer of Bricks require careful consideration. So disallowance of Rs.4,09,390/- require deletion 2. Addition of Rs. 5,50,130/- as Income from Hotel B) The assessee earned not profit of Rs. 2,90,059/- from Hotel Business of Puri. He paid various maintenance expenses & charged depreciation from gross receipt collected from visitors of Hotel. The Ld. I.T.O ward no 26(3) Kolkata rejected the Profit & Loss A/c of the assessee for the Business without showing any reason. He calculated the Taxable Income after allowing deduction u/s 24(a) of the I.T Act. The Ld. I.T.O ward no 26(3) did not record any reason for rejection of profit & loss A/c and Balance Sheet of the assessee for the Yr. 2012-13. So this is a mistake done by Ld. I.T.O ward no 26(3) Kolkata. That addition of Rs. 5,50,130/-to return Income is not according to I.T. Act. So that require deletion. C) The assessee will put forward other points at the time of hearing.” I.T.A. No.: 103/KOL/2023: “1. The Ld. ITO ward no. 26(3) Kolkata, arbitrarily assessed the Taxable Income of the assessee from Brick field as Rs. 5,04,734/- against actual Income of Rs. 2,95,369/- for the Asst. yr 2014-15.He calculated the said Income by taking the average method of assuming business Income of four years. He committed mistakes on doing so. So ascertainment of Income from Brick field of Rs. 5,04,734/- by Ld. ITO ward no. 26(3) Kolkata is not correct hence require rectification. 2. The Ld. ITO ward no. 26(3) arbitrarily assessed the taxable Income of the assessee from its Hotel at Puri. He calculated the said Income as Rs. 6,40,000/- by taking average rental Income of three years for the Asst. yr. 2014-15. But actual Taxable of the assessee from its Hotel at Puri was 2,97,037/-. The Income of the assessee is based on actual profit & loss of the Hotel at Puri which was based on Income from visitors & various expenses of the Hotel. Ascertainment of Taxable Income from Sureswari Guest House at Puri of assessee as done by the Ld. ITO ward 26(3) on the basis of average Profit of three years is not correct hence require rectification. 3. The above said loan liabilities as on 31/03/14 are supported by Bank statement of the above said Banks. The assessee disclosed the said loan liabilities as on 31/03/14 in its Balance Sheet. But the Ld. ITO ward no. 26(3) took the figure of said outstanding secured loan of the assessee as on 31/03/14 as Rs. 24,79,502/- arbitrarily and added Rs. 10,29,502/- on A/c of bogus liability of secured loan from Banks. The said addition to taxable Income is to be treated as wrong I.T.A. Nos.: 101, 102 & 103/KOL/2023 Assessment Years: 2012-13, 2013-14 & 2014-15 Subrata Purkait. Page 4 of 9 addition to taxable Income. So that addition is to be deleted, iv) That the assessee has got interest Income of Rs. 78,191.45, as interest due on fixed deposits. But the Ld. ITO ward No. 26(3) Kolkata took the same as Rs. 1,16,679/-. He committed mistake. So addition of Rs.38,488/- on A/c of Int. due on fixed deposit is a wrong addition to taxable Income, hence require deletion. 4. The I.T.O ward no 26 (3) considered the following figures as advance of the assessee as on 31/03/14. Investment in Sureswari Guest House Rs. 18,02,000/- Advance to Shefali Purkait Rs. 04,50,000/- 22,52,000/- He calculated erroneously Interest of Rs. 270965/- on the above said advance. So addition to Taxable Income is baseless and arbitrary, hence require deletion, vi) The assessee will put forward other points on or before hearing.” 3. At the outset, ld. Counsel for the assessee in respect of ITA Nos. 101 & 102/KOL/2023 stated that the impugned order is ex- parte and the assessee did not receive any intimation about the date of hearing. Therefore, principles of natural justice have been violated and, thus, prayed that the matter may be restored back to the file of ld. CIT(A). In support, reliance placed on the following: 1. C.I.T. vs. Ramendra Nath Ghosh - 82 ITR, 888 (SC) 2. Addl. C.I.T. vs. Prem Kumar Rastogi - 124 ITR, 381(AII) 3. C.I.T. vs. Girdharilal - 147 ITR 379 (Raj) 4. Johar Forest Works vs. C.I.T. - 1071.T.R., 409 (J&K) 4. On the other hand, ld. D/R though supported the order of both the lower authorities but did not oppose to the request of the assessee. 5. We have heard rival contentions and perused the records placed before us. From perusal of the impugned order in the case of ITA Nos. 101 & 102/KOL/2023, we find that the order of ld. CIT(A) is ex-parte and ld. CIT(A) without specifically dealing with the grounds of appeal, merely confirmed the additions made by ld. I.T.A. Nos.: 101, 102 & 103/KOL/2023 Assessment Years: 2012-13, 2013-14 & 2014-15 Subrata Purkait. Page 5 of 9 AO observing that the assessee has not appeared even after being granted many opportunities. We, however, considering the fact that the assessee has stated to have not received the notices of hearing, in the interest of justice and being fair to both the parties, restore all the issues in ITA Nos. 101 & 102/KOL/2023 to the file of ld. CIT(A). Needless to mention that proper opportunity of being heard should be provided to the assessee. The assessee is also directed to remain vigilant and file necessary documents, if considered, in support of its grounds of appeal and should not take adjournment, unless otherwise required for reasonable cause. In case after providing sufficient opportunity to the assessee, there is no compliance before the ld. CIT(A), then ld. CIT(A) can pass the speaking order in accordance with law. 6. In the result, the appeals filed by the assessee in ITA Nos. 101 & 102/KOL/2023 are allowed for statistical purposes. 7. Now, we take ITA No. 103/KOL/2023. Ld. Counsel for the assessee stated that though the assessee failed to file any return of income in response to the notice u/s 148 of the Act which resulted in various additions made by ld. AO, the assessee challenged these additions before ld. CIT(A) and filed written submissions giving complete details of the income earned during the year. However, ld. CIT(A) sustained the addition made by ld. AO observing as follows: “6. DECISION:- I have considered the submission of the appellant and passed A.O.’s order u/s 143(3) of the I.T. Act 1961. On perusal of assessment order, it is found that the appellant has not complied with to the statutory notices. First notice u/s 148 was issued on 15-3-2016 and served on the appellant on 17-3-2016.But appellant did not file the return of income in response to the notice u/s148.Further, I.T.A. Nos.: 101, 102 & 103/KOL/2023 Assessment Years: 2012-13, 2013-14 & 2014-15 Subrata Purkait. Page 6 of 9 appellant was reminded the same vide notice u/s 142(1) on 20-5- 2016 which was served upon the appellant on 31-5-2016.However, no response is given by the appellant. Another notice was issued on 2-8-2016 which was served upon the appellant on 4-8-22016.But no response from the appellant to this notice also. In the circumstances , AO had proceeded to complete the assessment proceedings ex-parte u/s 144 of the IT Act 1961.1 have noticed from the assessment order that AO had to take the past record of the appellant as the basis to determine the tax liability for the AY under appeal i.e. AY2014-15.lt is the non- compliance on the part of the appellant forced the AO to determine the tax liability .I have also noticed that AO had also gathered the information through the charge Inspector and used the same. The onus is heavily on the appellant to substantiate its contentions by filing the return of income and other evidence before the AO. Since, the appellant has thoroughly failed to discharge its onus then the AO has rightly completed assessment u/s 144 of the IT Act. Before me the appellant has not given any reasons as to why return of income was not filed in response to notice u/s 148 of the IT Act. It has been stated that addition of Rs 10,29,502 on a/c of secured liability is not correct and needs to be deleted. It has been further stated that bank statement of secured liability is enclosed. In this regard, I have considered the submission of the appellant and found without any substance as the appellant did not comply to any of the notices issued by the AO. Another submission of the appellant is Rs 38,488 being the addition made on account of interest also needs to be deleted as the appellant is stated to have been received interest income due on fixed deposit amounting to Rs 78,191.45 only but not Rs 1,16,699/- as held by the AO. I have considered the submissions of the appellant and found devoid of merits as the appellant did not adduce any evidence before AO. Regarding the additions of RS 5,04,734 on account of GP and an addition of Rs 6,40,000/- on account of income from the guest house, the appellant is appeared to have accepted the additions as no submission was filed contesting the said additions. In view of the foregoing discussion and reasons thereof, I sustain the entire assessment order and also all the additions made by the A.O. As a result, all the grounds of appeal taken by the appellant are dismissed.” I.T.A. Nos.: 101, 102 & 103/KOL/2023 Assessment Years: 2012-13, 2013-14 & 2014-15 Subrata Purkait. Page 7 of 9 8. During the course of hearing ld. Counsel for the assessee prayed that ld. CIT(A) having co-terminus power of the Assessing Officer ought to have examined the details filed by the assessee and should have deleted the additions. 9. On the other hand, ld. D/R submitted that the assessee failed to file the income tax return and thus, cannot plead any relief. 10. We have heard rival contentions and perused the records placed before us. We note that ld. CIT(A) has sustained the addition towards secured liability of Rs. 10,29,502/- even when the assessee has claimed to have filed copy of statement of the secured loan taken from the bank. Similarly, addition for interest income of Rs. 38,488/- has been sustained even when the assessee has stated that the interest income due on the fixed deposits only amounted to Rs. 78,191/- and not Rs. 1,16,699/-. Similarly, with regard to the G.P. addition of Rs. 5,04,734/- and income from guest house of Rs. 6,40,000/-, ld. CIT(A) has held that the assessee has accepted the said additions but before us, the assessee is stating that he has filed the complete details of the income. 11. Under these facts and circumstances of the case, we, in the interest of justice and being fair to both the parties, are of the considered view that the matter needs to be restored back to the file of ld. CIT(A) who shall examine the issue afresh considering the details filed by the assessee and in case the contentions made by the assessee are found to be correct with regard to secured loan, interest on FDR, income from guest house and income from business of bricks and also considering the past trend of business I.T.A. Nos.: 101, 102 & 103/KOL/2023 Assessment Years: 2012-13, 2013-14 & 2014-15 Subrata Purkait. Page 8 of 9 income of the assessee and the same should be decided in accordance with law after providing sufficient opportunity of being heard to the assessee. Needless to mention that proper opportunity of being heard should be provided to the assessee. The assessee is also directed to remain vigilant and file necessary documents, if considered, in support of its grounds of appeal and should not take adjournment, unless otherwise required for reasonable cause. In case after providing sufficient opportunity to the assessee, there is no compliance before the ld. CIT(A), then ld. CIT(A) can pass the speaking order in accordance with law. Thus, the appeal filed by the assessee in ITA No. 103/KOL/2023 is allowed for statistical purposes. 12. In the result, all the appeals filed by the assessee in ITA Nos. 101, 102 & 103/KOL/2023 are allowed for statistical purposes. Kolkata, the 22 nd May, 2023 Sd/- Sd/- [Sanjay Garg] [Manish Borad] Judicial Member Accountant Member Dated: 22.05.2023 Bidhan (P.S.) I.T.A. Nos.: 101, 102 & 103/KOL/2023 Assessment Years: 2012-13, 2013-14 & 2014-15 Subrata Purkait. Page 9 of 9 Copy of the order forwarded to: 1. Subrata Purkait, Tararat, Dhamua, Magrahat, South 24 Parganas, West Bengal-743 610. 2. ITO, Ward-26(3), Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata