MR. Bijendra Kumar Agrawal, Indore V. THE ITO 1(3), Indore

ITA 1060/IND/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2312 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 26-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P MOURYA
• Assessee Lawyers: RAJESH SALOT
• Keywords: Business income
• Section: 143(3)

Judgement Text

BIJENDER KUMAR AGRAWAL ITA NO. 1060/IND/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, HONBLE JUDICIAL MEMBER AND SHRI MANISH BORAD, HONBLE ACCOUNTANT MEMB ER ITA NO. 1060/IND/2016 A.Y. 2010-11 BIJENDER KUMAR AGRAWAL INDORE ::: APPELLANT VS ITO 1(3) INDORE ::: RESPONDENT APPELLANT BY SHRI RAJESH SALOT RESPONDENT BY SHRI R.P. MOURYA DATE OF HEARING 15.2.201 8 DATE OF PRONOUNCEMENT 2 8 .2.201 8 O R D E R PER SHRI MANISH BORAD, AM THIS APPEAL OF THE ASSESSEE RELATING TO THE ASSESSMENT YEAR 2010-11 IS DIRECTED AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-22 (HOLDING CONCURRENT JURISDICTION OF CIT(A), INDORE-2), NEW DELHI, BIJENDER KUMAR AGRAWAL ITA NO. 1060/IND/2016 2 DATED 16.2.2016 WHICH IS ARISING OUT OF THE ORDER U/S 143(3) OF THE ACT DATED 30.3.2013 FRAMED BY THE ITO 1 (3), INDORE. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMING THE ADDITION OF RS. 6,19,830/- ON ACCOUNT OF ALLEGED UNDISCLOSED SALES AND THE ADDITION WAS MADE BY THE ASSESSING OFFICER OBSERVING THAT THERE WAS DIFFERENC E IN GROSS FREIGHT RECEIPTS SHOWN IN THE RETURN OF INCOM E VIZ-A- VIZ FREIGHT RECEIPTS SHOWN IN 26-AS FORM WHICH CONT AINS DETAILS OF TAX DEDUCTED AS WELL AS THE GROSS RECEIPTS. 2. BRIEFLY STATED, THE FACTS, AS CULLED OUT FROM RECOR D, ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINE SS OF TRANSPORTATION. THE RETURN OF INCOME FILED ON 15.1 0.2010 DECLARING INCOME AT RS.9,14,640/-. THE CASE SELECTED F OR SCRUTIN7Y THROUGH CASS. NECESSARY NOTICE U/S 143(2) OF BIJENDER KUMAR AGRAWAL ITA NO. 1060/IND/2016 3 THE ACT WERE DULY SERVED ON THE ASSESSEE. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFIC ER OBSERVED THAT IN CASES OF SIX PARTIES WHICH WERE TAKING SERVICES FROM THE ASSESSEE, THERE WAS A DIFFERENCE OF RECEIPTS SHOWN IN THE BOOKS AS AGAINST THE RECEIPTS APPEARING IN FORM NO. 26-AS WHICH CONTAINS DETAILS OF T AX DEDUCTED AT SOURCE. THE ALLEGED DIFFERENCE WASS RS. 6,19,830/-. THE ASSESSEE WAS UNABLE TO CONVINCE THE ASSESSING OFFICER. THE ASSESSING OFFICER ACCORDINGLY MADE ADDITION OF RS.6,19,830/- TOWARDS UNEXPLAINED SALES AND ALSO MADE MINOR ADDITIONS THEREBY ASSESSING THE INCOME AT RS.16,06,130/-. 3. AGAINST THE ORDER OF THE ASSESSING OFFICER, THE AS SESSEE PREFERRED APPEAL ONLY AGAINST ISSUE OF ADDITION OF RS. 6,19,830/- BUT FAILED TO SUCCEED. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. BIJENDER KUMAR AGRAWAL ITA NO. 1060/IND/2016 4 4. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT BOTH THE LOWER AUTHORITIES ERRED IN SUSTAINING THE ADDITION TOWARDS UNEXPLAINED SALES BECAUSE IT HAS BEEN CONSISTENTLY HELD BY VARIOUS COURTS THAT T HE ADDITION SHOULD BE MADE FOR THE PROFIT EARNED ON THE UNRECORDED SALES. RELIANCE WAS PLACED ON THE FOLLOWING JUDGMENTS :- (I) HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF BALCHAND AJIT KUMAR (2003) 263 ITR 610 (MP) (II) MOHAN SADANI VS. CIT (2008) 204 ITR 52 (MP) (III) CIT VS. PRESIDENT INDUSTRIES (2002) 258 ITR 6 54 (GUJ) 5. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 6. WE HAVE HEARD BOTH THE SIDES AND ALSO GONE THROUGH THE JUDGMENTS RELIED UPON BY THE LEARNED COUNSEL FOR THE BIJENDER KUMAR AGRAWAL ITA NO. 1060/IND/2016 5 ASSESSEE. THE SOLE ISSUE BEFORE US IS WITH REGARD TO THE ADDITION OF RS.6,19,830/- SUSTAINED BY THE COMMISSION ER OF INCOME TAX (APPEALS) ON ACCOUNT OF ADDITION TOWARDS UNEXPLAINED SALES MADE BY THE ASSESSING OFFICER. WE OBSERVE THAT THE ASSESSEE HAS NOT DISPUTED THAT THE SALE S OF RS. 6,19,830/- WERE NOT RECORDED IN THE BOOKS. HOWE VER, IT HAS BEEN CONTENDED THAT THE ADDITION SHOULD BE MADE ONLY FOR NET PROFIT EARNED ON THE UNRECORDED SALES. 7. WE OBSERVE THAT THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. PRESIDENT INDUSTRIES (SUPRA) HELD THAT WE ARE IN RESPECTFUL AGREEMENT WITH THE AFORESAID OPIN ION INASMUCH AS THE TOTAL SALES CANNOT BE REGARDED AS T HE PROFIT OF THE ASSESSEE. THE NET PROFIT RATE HAS TO BE ADO PTED AND ONCE A NET PROFIT RATE IS ADOPTED, IT CANNOT BE SAI D THAT THERE IS PERVERSITY OF APPROACH. WHETHER THE RATE IS LOW OR HIGH, IT WOULD DEPEND UPON THE FACTS OF EACH CASE. WE, THEREFORE, BIJENDER KUMAR AGRAWAL ITA NO. 1060/IND/2016 6 RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF PRESIDENT INDUSTRIES (SUPR A), ARE OF THE CONSIDERED VIEW THAT THE ADDITION SHOULD BE SUSTAINED ONLY TO THE PROFIT PORTION EARNED ON THE UNRECORDED SALES. THE ASSESSEE HAS DECLARED NET INCOME OF RS.9,14,604/- ON THE GROSS RECEIPTS OF RS. 3,16,50, 590/- AND THE NET PROFIT RATE WORKS OUT TO 2.88%. HOWEVER, LOOKING TO THE FACT THAT THE ASSESSEE HAS ALREADY CLAIMED ALL OTHER INDIRECT EXPENSES INCURRED DURING THE YEAR IN THE REGULAR BOOKS OF ACCOUNTS WHICH ARE DULY AUDITED AND ONL Y THE PORTION OF DIRECT EXPENSES NEEDS TO BE ALLOWED AG AINST UNRECORDED SALES. WE, THEREFORE, FIND IT JUSTIFIED T O SUSTAIN THE ADDITION BY APPLYING NP RATE OF8% ON THE UNRECORDE D RECEIPTS OF RS.6,19,830/- AND ACCORDINGLY SUSTAIN THE ADDITION TO RS. 49,586/-. BIJENDER KUMAR AGRAWAL ITA NO. 1060/IND/2016 7 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN OPEN COURT ON 28 FEBRUARY, 2018. SD SD (KUL BHARAT) (MANISH BO RAD) JUDICIAL MEMBER ACCOUNTANT MEMBER 28 TH FEBRUARY, 2018 DN/- COPY TO APPELLANT/RESPODENT/PR.CIT/CIT(A)/DR/GUAR D FILE