Shri Mukesh Kr. Dhuriya, Howrah V. ITO, Ward-48(1), Kolkata, Kolkata

ITA 1046/KOL/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3174 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 21-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 13-07-2012
• Court: TRIBUNAL
• Keywords: Tax effect

Judgement Text

1 ITA NO.1046/KOL/2012 & 842/KOL/2012-SHRI MUKESH KUM AR DHURIA, A.Y.2007-08 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI M.B ALAGANESH, AM ] ITA NO.1046/KOL/2012 ASSESSMENT YEAR : 2007-08 SHRI MUKESH KUMAR DHURIA -VERSUS- I.T.O., WARD-48( 1), KOLKATA KOLKATA (PAN:AIVPD 2485 M) (APPELLANT) (RESPONDENT) ITA NO.842/KOL/2012 ASSESSMENT YEAR : 2007-08 I.T.O., WARD-48(1), -VERSUS- SHRI MUKESH KUMAR D HURIA KOLKATA KOLKATA (PAN:AIVPD 2485M) (APPELLANT) (RESPONDENT) FOR THE ASSESSEE: SHRI SOMNATH GHOSH, ADVOCATE FOR THE DEPARTMENT : NONE DATE OF HEARING : 28.01.2016. DATE OF PRONOUNCEMENT : 03.02.2016. ORDER PER N.V.VASUDEVAN, JM: ITA NO.1046/KOL/2012 IS AN APPEAL BY THE ASSESSEE W HIL4E ITA NO.842/KOL/2012 IS AN APPEAL BY THE REVENUE. BOTH O F THESE ARE AGAINST THE ORDER DATED 09.01.2012 OF CIT(A)-XXX, KOLKATA RELATING TO A.Y.2007-08. 2. AS FAR AS THE APPEAL BY THE REVENUE IS CONCERNED THE TAX EFFECT IN THIS APPEAL IS LESS THAN RS.10 LAKHS. RECENTLY THE CBDT HAS ISSUED CIRCULAR NO. 21/2015, DATED 10TH DECEMBER, 2015, WHEREBY THE MONETARY LIMITS FOR FI LING OF APPEALS BY THE DEPARTMENT BEFORE INCOME TAX APPELLATE TRIBUNAL AND HIGH COUR TS AND SLP BEFORE SUPREME COURT HAVE BEEN INCREASED AS MEASURE FOR REDUCING L ITIGATION. THE REVISED MONETARY 2 ITA NO.1046/KOL/2012 & 842/KOL/2012-SHRI MUKESH KUM AR DHURIA, A.Y.2007-08 LIMITS LAID DOWN IN PARA-3 OF THIS CIRCULAR AND THE MANNER OF COMPUTING TAX EFFECT AS LAID DOWN IN PARA-4 OF THIS CIRCULAR ARE AS FOLLOWS : 3. HENCEFORTH, APPEALS/ SLPS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER: - SL. NO. APPEALS IN INCOME-TAX MATTERS MONETARY LIMIT (IN RS) 1. BEFORE APPELLATE TRIBUNAL 10,00,000/- 2. BEFORE HIGH COURT 20,00,000/- 3. BEFORE SUPREME COURT 25,00,000/- IT IS CLARIFIED THAT AN APPEAL SHOULD NOT BE FILED MERELY BECAUSE THE TAX EFFECT IN A CASE XCEEDS THE MONETARY LIMITS PRESCRIBED ABOVE. FILING OF APP EAL IN SUCH CASES IS TO BE DECIDED ON MERITS OF THE CASE. 4. FOR THIS PURPOSE, 'TAX EFFECT' MEANS THE DIFFERE NCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABL E HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUES AGAIN ST WHICH APPEAL IS INTENDED TO BE FILED (HEREINAFTER REFERRED TO AS 'DISPUTED ISSUES'). HOW EVER THE TAX WILL NOT INCLUDE ANY INTEREST THEREON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITS ELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTEREST IS THE ISSUE UNDER DISPUTE, THE AMOUNT OF INTEREST SHALL BE THE TAX EFFECT. IN CASES WHERE RETURNED LOSS IS REDUCED OR ASSESSED AS INCOM E, THE TAX EFFECT WOULD INCLUDE NOTIONAL TAX ON DISPUTED ADDITIONS. IN CASE OF PENALTY ORDER S, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEA LED AGAINST. 3. IN PARA-10 OF THE SAID CIRCULAR IT HAS BEEN FUR THER BEEN CLARIFIED THAT THE REVISED MONETARY LIMITS WILL APPLY RETROSPECTIVELY. THE RE LEVANT PARA-10 OF THE CIRCULAR READS THUS: 10. THIS INSTRUCTION WILL APPLY RETROSPECTIVELY TO PENDING APPEALS AND APPEALS TO BE FILED HENCEFORTH IN HIGH COURTS/ TRIBUNALS. PENDING APPEA LS BELOW THE SPECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRAWN/ NOT PRESSED. APPEALS BEFO RE THE SUPREME COURT WILL BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT, OPERATIVE AT T HE TIME WHEN SUCH APPEAL WAS FILED. 4. IN THE PRESENT CASE, THE TAX EFFECT IN THIS APP EAL BY THE REVENUE IS LESS THAN RS.10,00,000/-. THOUGH THIS APPEAL HAD BEEN FILED BY THE REVENUE ON 13.07.2012 AND WAS WITHIN THE MONETARY LIMIT IN THE FORM OF TAX EF FECT FOR FILING APPEALS BEFORE TRIBUNAL, IN VIEW OF PARA-10 OF THE CIRCULAR OF CBD T, EVEN SUCH APPEALS WILL BE GOVERNED BY THE NEW MONETARY LIMITS LAID DOWN IN TH E CBDT CIRCULAR NO.21/2015 REFERRED TO ABOVE. 3 ITA NO.1046/KOL/2012 & 842/KOL/2012-SHRI MUKESH KUM AR DHURIA, A.Y.2007-08 5. IT IS A SETTLED LAW THAT THE CIRCULARS ISSUED B Y CBDT ARE BINDING ON THE REVENUE. THIS POSITION WAS CONFIRMED BY THE APEX COURT IN T HE CASE OF COMMISSIONER OF CUSTOMS VS INDIAN OIL CORPORATION LTD. REPORTED IN 267 ITR 272 WHEREIN THEIR LORDSHIPS EXAMINED THE EARLIER DECISIONS OF THE APE X COURT WITH REGARD TO BINDING NATURE OF THE CIRCULAR AND LAID DOWN THAT WHEN A CI RCULAR ISSUED BY THE BOARD REMAINS IN OPERATION THEN THE REVENUE IS BOUND BY IT AND CA NNOT BE ALLOWED TO PLEAD THAT IT IS NOT VALID OR THAT IT IS CONTRARY TO THE TERMS OF TH E STATUTE. THE APPEAL UNDER CONSIDERATION HAS CERTAINLY BEEN FILED CONTRARY TO THE CIRCULAR ISSUED BY THE CBDT CIRCULAR NO.21 DATED 10.12.2015. 6. IN VIEW OF THE ABOVE, WE HOLD THAT THE APPEAL FI LED BY THE DEPARTMENT, AGAINST THE IMPUGNED ORDER OF THE LD. CIT(A), IS CONTRARY T O THE POLICY DECISION OF THE DEPARTMENT AND AS SUCH THE APPEAL FILED BY THE DEPA RTMENT IS DISMISSED IN LIMINE . 7. IN THE RESULT THE APPEAL OF THE REVENUE IS D ISMISSED. 8. AS FAR AS THE APPEAL BY THE ASSESSEE IS CONCERNE D THERE IS A DELAY OF 119 DAYS IN FILING THIS APPEAL BY THE ASSESSEE. THE DELAY IN FI LING THE APPEAL HAS BEEN EXPLAINED BY THE ASSESSEE AS OWING TO SERIOUS ILLNESS OF THE ASS ESSEE. THOUGH THE REQUIRED MEDICAL CERTIFICATE IN THIS REGARD WAS NOT FILED BY THE ASS ESSEE, TAKING THE STATEMENT MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE ACROSS THE BAR , WE CONDONE THE DELAY IN FILING THE APPEAL. NONE APPEARED ON BEHALF OF THE DEPARTMENT. 9. GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THI S APPEAL READS AS FOLLOWS :- 1. FOR THAT THE ORDER OF THE LEARNED CIT(A) IS ARB ITRARY, ILLEGAL AND BAD-IN-LAW.\ 2. FOR THAT THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.3,22,987/- WAS COMPLETELY ERRONEOUS, ILLEGAL AND BASELESS. 10. THE ASSESSEE IS AN INDIVIDUAL. HE CARRIES ON TR ADING IN METAL SCRAPS. DURING THE PREVIOUS YEAR RELEVANT TO A.Y.2007-08 THE ASSSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,30,842/-. IN THE COURSE OF ASS ESSMENT PROCEEDINGS THE AO NOTICED 4 ITA NO.1046/KOL/2012 & 842/KOL/2012-SHRI MUKESH KUM AR DHURIA, A.Y.2007-08 THAT THE GROSS PROFIT AND NET PROFIT SHOWN BY THE A SSESSEE WAS 2.10% AND 1.15%. ACCORDING TO HIM THIS WAS A VERY LOW PROFIT MARGIN CONSIDERING THE TURN OVER OF THE ASSESSEE AND THE PROFIT EARNED GENERALLY IN THE BUS INESS OF TRADING IN METAL SCRAPS. AO NOTICED THAT THE ASSESSEE HAD NOT PRODUCED THE BOOK S OF ACCOUNT TO SUBSTANTIATE VARIOUS EXPENSES CLAIMED IN THE PROFIT AND LOSS ACCOUNT ALO NG WITH SUBSIDIARY RECORDS. IN THE ABOVE CIRCUMSTANCES THE AO ESTIMATED THE PROFIT OF THE ASSESSEE AT 4% OF THE TURN OVER WHICH RESULTED IN AN ADDITION OF RS.3,22,987/- TO T HE TOTAL INCOME OF THE ASSESSEE. (4% OF RS.1,1`3,45,718 = RS.4,,53,829/-). AO OBSERVED T HAT U/S 44AF OF THE ACT WHICH IS APPLICABLE IN A CASE WHERE TURNOVER IS BELOW RS.40 LAKHS AND THE ASSESSEE ENGAGED IN RETAIN TRADING THE PRESUMPTIVE PERCENTAGE OF PROFIT WAS 5% OF THE TURNOVER. TAKING THE CLUE FROM THE AFORESAID PROVISION, THE AO ESTIMATED 4% OF THE TURN OVER AS PROFIT OF THE ASSESSEE. 11. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRMED THE ORDER OF AO. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE IS IN APPEAL BE FORE THE TRIBUNAL. 12. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED CO UNSEL FOR THE ASSESSEE. HIS SUBMISSIONS WAS THAT THE BOOKS OF ACCOUNT OF THE AS SESSEE HAS BEEN AUDITED AND THEREFORE THE ADDITION IN QUESTION WAS NOT JUSTIFIE D. WE HAVE CONSIDERED HIS SUBMISSIONS AND WE FIND THAT WHEN THE BOOKS OF ACCO UNT ARE REJECTED AND INCOME OF THE ASSESSEE IS DETERMINED ON THE BASIS OF ESTIMAT E, THE SUM HAS TO BE MADE KEEPING IN MIND THE PAST HISTORY IN ASSESSEES OWN CASE. AO HA S NOT ADOPTED SUCH COURSE. WE DO NOT HAVE THE BENEFIT OF PROFITS EARNED BY THE ASSES SEE IN THE PAST. TAKING INTO CONSIDERATION ALL ASPECTS OF THE CASE, WE ARE OF TH E VIEW THAT ESTIMATE OF 2.5% OF THE TURNOVER WILL MEET THE ENDS OF JUSTICE. ACCORDINGLY THE ADDITION IS DIRECTED TO BE MADE ADOPTING 2.5% AS NET PROFIT PERCENTAGE TO BE APPLIE D. THUS THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 5 ITA NO.1046/KOL/2012 & 842/KOL/2012-SHRI MUKESH KUM AR DHURIA, A.Y.2007-08 13. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE COURT ON 03.02.2016. SD/- SD/- [M.BALAGANESH ] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 03.02.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.SHRI MUKESH KR.DHURIA,BANKURA, DAKSHINPARA, HOWRA H-711112. 2I.T.O., WARD-48(1), KOLKATA. 3. CIT(A)-XXX, KOLKATA 4. CIT-XVI, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, DEPUTY /ASST. REGISTRAR, ITAT, KOLKATA BENCHES