Shri Sunil Kumar Sawa Prop: Universal Hi-tech, Jamshedpur V. ITO WARD-3(4), Jamshedpur

ITA 112/RAN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9702 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 07-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MONDAL
• Assessee Lawyers: S K PODDAR
• Keywords: Rejection of books of accounts; Opportunity of being heard; Question of law
• Section: 142(1); 234B; 2; 11

Judgement Text

1 ITA NO S . 11 2 - 115 /RAN/ 20 1 7 IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI N.S.SAINI , ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE , JUDICIAL MEMBER ITA NO. 11 2 TO 115 /RAN/201 7 A.Y. : 200 7 - 2008 , 2008 - 2009, 2011 - 2012 & 2012 - 2013 SRI SUNIL KUMAR SAWA PROP.UNIV ERSAL HI - TEC, H.NO.75, MAIN ROAD JUGSALAI, JAMSHEDPUR V S ITO, WARD - 3(4), JAMSHEDPUR P AN NO. : AKXPS 9679 J (APPELLANT ) . RESPONDENT ASSESSEE BY : SHRI S.K.PODDAR & DEVESH PODDAR, ADV REVENUE BY :SHRI P.K.MONDAL , JCIT DATE OF HEARIN G : 2 9 . 05 .201 8 DATE OF PRONOUNCEMENT : 30 . 05 .201 8 O R D E R PER PAVAN KUMAR GADALE, JM : TH ESE ARE THE APPEAL S FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT ( A ) , JAMSHEDPUR , ALL DATED 17.04.2017 FOR THE ASSESSMENT YEAR S 2007 - 2008, 2008 - 2009, 2011 - 2012 & 2012 - 2013 . 2. SINCE ALL THE APPEALS ARE INTERCONNECTED AND THE SIMILAR ISSUES ARE INVOLVED, THEREFORE, FOR THE SAKE OF CONVENIENCE WE CONSIDER THE FACTS AND GROUNDS NARRATED IN ITA NO. 112 /RAN/201 7 , WHEREIN THE ASSESSEE HA S RAISED THE FOLLOWING GROUNDS : - 1 . FOR THAT LD. A.O. ESTIMATED PROFIT OF 2.5% ON THE SALES DISCLOSED BY THE APPELLANT. APPELLANT IS A WHOLESALER IN ELECTRONIC AND SOLAR ENERGY ARTICLES. APPELLANT DISCLOSED A NET PROFIT OF 1.4%. THE BOOKS OF ACCOUNTS ARE FUL LY VERIFIABLE, AUDITED PROFIT & LOSS A/C WAS FILED. LD. A.O. APPLIED PROVISION OF SECTION 145(3) ON 2 ITA NO S . 11 2 - 115 /RAN/ 20 1 7 THE GROUND THAT THE APPELLANT DID NOT FURNISH REQUIRED DETAILS OF SUNDRY CREDITORS. THE ESTIMATE OF.PROFIT MADE IS UNJUSTIFIED, ARBITRARY AND ILLEGAL. 2 . FOR THAT APPELLANT HAD MAINTAINED A BANK ACCOUNT IN WHICH CERTAIN DEPOSITS WERE MADE WHICH WERE CONSIDERED AS ADDITIONAL TURNOVER OF THE APPELLANT. THE TOTAL DEPOSIT AMOUNTED TO RS.25,28,770/ - . LD. A.O. ESTIMATED PROFIT OF 2.5% ON THE SAME TURNOVER. LD. CIT(A) ENHANCED THE ESTIMATE OF PROFIT TO 5.88% ON THE GROUND THAT APPELLANT MUST HAVE MADE HIGHER PROFIT SINCE ALL EXPENDITURES WERE CONSIDERED WHILE COMPUTING THE BOOK PROFIT. LD. A.O. WAS NOT JUSTIFIED IN MAKING AN ESTIMATE OF PROFIT. LD. CIT(A) FURTHER WENT OUT OF WAY BY MAKING AN ENHANCEMENT IN THE PROFIT ESTIMATED BY LD. A.O. 3 . FOR THAT LD. CIT(A) MADE AN ADDITION/ENHANCEMENT OF INCOME OF RS. 1,85,612/ - PRESUMING THAT APPELLANT HAD DEPLOYED CAPITAL FOR UNDISCLOSED TURNOVER WHICH WAS ESTIMATED ON THE BASIS OF DEPOSITS IN BANK ACCOUNT. THE ESTIMATE OF CAPITAL WAS MADE @7.34% OF THE UNDISCLOSED TURNOVER OF RS.25,28,770/ - . LD. CIT(A) WAS NOT JUSTIFIED IN MAKING ENHANCEMENT BY ADOPTING A COMPLETELY NEW HEAD OF INCOME. FURTHER, THERE IS NO BASIS OR REASON TO SUGGES T THAT THE APPELLANT HAD DEPLOYED ANY ADDITIONAL CAPITAL FOR THE BUSINESS OR TURNOVER WHICH WAS ESTIMATED ON THE BASIS OF BANK DEPOSITS. 4 . FOR THAT INTEREST U/S 234A AND 234B SHOULD HAVE BEEN CHARGED ON THE RETURNED INCOME AND NOT ON THE ASSESSED INCOME FOL LOWING THE DECISION OF HON'BLE JHARKHAND HIGH COURT. 5. FOR THAT OTHER GROUNDS IN DETAIL WILL BE ARGUED AT THE TIME OF HEARING. 3 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF AGENCY OF ELECTRONICS GOODS. THE AO STATED T HAT AS PER THE INFORMATION AVAILABLE WITH THIS OFFICE DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2007 - 08 THE ASSESSEE HAD NOT DISCLOSED TWO BANK ACCOUNTS INDUSIND BANK BEARING ACCOUNT NO.0068 - H02143 - 001 AND STATE BANK OF INDIA BEARING ACCOUNT NO. 3030 3761141. AFTER OBTAINING PRIOR APPROVAL FROM JCIT, RANGE - 3 JAMSHEDPUR, THE PROCEEDING UNDER SECTION 3 ITA NO S . 11 2 - 115 /RAN/ 20 1 7 148 OF THE ACT WAS INITIATED. THE NOTICE U/S.148 OF THE ACT WAS ISSUED TO THE ASSESSEE. IN COMPLIANCE THE ASSESSEE APPEARED AND SUBMITTED COPY OF ITR - V( ACKNOWLEDGEMENT) OF HIS RETURN OF INCOME WHICH WAS FILED ON 31.10.2007. THE ASSESSEE ALSO PRODUCE D COPY OF COMPUTATION OF INCOME AND AUDIT REPORT WITH PROFIT AND LOSS ACCOUNT AND BALANCE SHEET DECLARING TOTAL INCOME AT RS.2,11,900/ - . SUBSEQUENTLY, THE AO ISSUED NOTICE U/S.143(2) AND 142(1) OF THE ACT TO THE ASSESSEE AND IN COMPLIANCE THE AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND PRODUCED BOOKS OF ACCOUNTS WHICH WAS TEST CHECKED. THEREAFTER THE AO COMPLETED THE ASSESSMENT MAKING VARIOUS ADDITIONS AN D ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS.5,48,87/ - AND PASSED ORDER U/S.147/143(3) OF THE ACT, DATED 09.06.2014. 4 . AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE HAS FILED AN APPEAL WITH THE CIT(A). IN THE APPELLATE PROCEEDINGS THE ASSESSEE AR GUED THE GROUNDS AND REITERATED THE SUBMISSIONS MADE BEFORE THE AO. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AND THE FINDINGS OF AO, DISMISSED THE APPEAL OF THE ASSESSEE. 5 . AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE HAS FILED AN APPEA L BEFORE THE TRIBUNAL. 6 . LD. AR BEFORE US SUBMITTED THAT THE ASSESSEE IS A WHOLESALER IN ELECTRONIC AND SOLAR ENERGY ARTICLES AND DISCLOSED A NET PROFIT OF 1.4% AND THE BOOKS OF ACCOUNTS ARE FULLY VERIFIABLE, AUDITED PROFIT AND LOSS ACCOUNT WAS FILED. LD . AR FURTHER SUBMITTED THAT THE ASSESSEE MAINTAINED A BANK 4 ITA NO S . 11 2 - 115 /RAN/ 20 1 7 ACCOUNT IN WHICH CERTAIN DEPOSITS WERE MADE WHICH WERE CONSIDERED AS ADDITIONAL TURNOVER OF THE ASSESSEE. THE AO ESTIMATED THE PROFIT @2.5% ON THE TOTAL TURNOVER HOWEVER THE CIT(A) ENHANCED THE EST IMATE OF PROFIT TO 5.88% ON THE GROUND THAT THE ASSESSEE MUST HAVE MADE HIGHER PROFIT SINCE ALL EXPENDITURES WERE CONSIDERED WHILE COMPUTING THE BOOK PROFIT . FURTHER ON THE ENHANCEMENT OF INCOME OF RS.1,85,612/ - , THE LD. AR SUBMITTED THAT THE ASSESSEE HA S NOT DEPLOYED ANY ADDITIONAL CAPITAL FOR THE BUSINESS OR TURNOVER WHICH WAS ESTIMATED ON THE BASIS OF BANK DEPOSITS. LD.AR ALSO SUBMITTED THAT THE CIT(A) HAS PASSED THE IMPUGNED ORDER EX - PARTE, THEREFORE, HE PRAYED FOR ALLOWING THE APPEAL. 7 . CONTRA, L D.DR REL IED ON THE ORDERS OF LOWER AUTHORITIES . 8 . WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. PRIMA FACIE, WE FIND THAT THE ASSESSEE HAS NOT APPEARED BEFORE THE CIT(A) NOR HE HAS FURNISHED ANY DETAILS BEFORE HIM, THEREFORE, THE CIT(A) PASS ED THE EX - PARTE ORDER. LD.AR BEFORE US SUBMITTED THAT THE ASSESSEE HAS FILED ALL THE RELEVANT DETAILS BEFORE THE AO AND PRODUCED THE BOOKS OF ACCOUNTS, HOWEVER, THE AO REJECTED THE BOOKS OF ACCOUNTS AND MADE THE ADDITION. ON APPEAL, THE CIT(A) ENHANCED THE ADDITION MADE BY THE AO WITHOUT GIVING SUFFICIENT OPPORTUNITY OF BEING HEARD AND PRAYED FOR ONE MORE OPPORTUNITY TO SUBSTANTIATE ITS CLAIM BEFORE THE CIT(A).CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN THE INTEREST OF SUBSTANTIAL JUSTICE AND FAIRPLAY, WE PROVIDE ONE MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE ITS CLAIM BEFORE THE 5 ITA NO S . 11 2 - 115 /RAN/ 20 1 7 CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF CIT(A) , WHO SHALL EXAMINE AND VERIFY THE DISPUTED ISSUE AND PASS AN O RDER AFTER PROVIDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE IS DIRECTED TO SUBMIT THE INFORMATION AND SUBSTANTIATE ITS CLAIM WITH PROPER EVIDENCE, SO AS TO ENABLE THE CIT(A) TO PASS A SPEAKING ORDER. ACCORDINGLY, GROUND NOS.1 TO 3 OF APPEAL OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 9. GROUND NO.4 IS WITH REGARD TO CHARGING OF INTEREST U/S.234A&234B OF THE ACT, A T THE OUTSET, THE LD.AR SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE ON THE DECISION OF JURIS DICTIONAL HIGH COURT IN CASE OF AJAY PRAKASH VERMA IN ITA NO.38 OF 2010 REPORTED IN 2013(1) TMI 140, WHEREIN THE HONBLE HIGH COURT HAS HELD THAT INTEREST U/S.234B CAN BE LEVIED ONLY ON THE RETURNED INCOME AND NOT ON THE ASSESSED INCOME. LD.AR ALSO RELIED ON THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI GIRDHARI LAL SHARMA VS. ITO, WARD - 1(4), JAMSHEDPUR IN ITA NO. 31/RAN/2013 , DATED 07.05.2012 10 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. PRIMA FACIE THE DISPUTED ISSUE, BEING CHARGING OF INTEREST U/S.234B AS ENVISAGED BY LD. AR, IS COVERED BY THE DECISION OF HOBBLE JURISDICTIONAL HIGH COURT IN THE CASE OF AJAY PRAKASH VERMA IN ITA NO.38 OF 2010 REPORTED IN 2013(1) TMI 140 . THE HONBLE COURT IN PARA23&24 H ELD AS UNDER : - '23. LEARNED COUNSEL FOR THE APPELLANT SUBMITTED THAT IT HAS BEEN ORDERED BY THE AO THAT INTEREST BE CHARGED AS PER RULE. INTEREST CAN BE LEVIED UNDER SECTION 234A AND 234B OF THE ACT. 6 ITA NO S . 11 2 - 115 /RAN/ 20 1 7 IT IS SUBMITTED THAT IN VIEW OF THE JUDGMENT OF FULL BE NCH OF RANCHI BENCH OF PATNA HIGH COURT DELIVERED IN THE CASE OF SMT. TEJ KUMARI VRS. COMMISSIONER OF INCOME - TAX REPORTED IN [2001 ] THE INTEREST CANNOT BE LEVIED OVER THE ASSESSED INCOME AND IT CAN BE LEVIED ONLY ON THE INCOME DECLARED IN THE RETURN. THE REVENUE PREFERRED SLP BEFORE HON'BLE SUPREME COURT AGAINST THE SAID JUDGMENT OF THE FULL BENCH OF PATNA HIGH COURT, WHICH WAS DISMISSED BY THE HON'BLE SUPREME COURT ON MERITS VIDE ORDER DATED 01.08.2000 BY SAYING THAT THERE IS NO MERIT IN THE APPEAL. 24. LEARNED COUNSEL FOR THE REVENUE COULD NOT DISPUTE THIS LEGAL POSITION. THEREFORE, SO FAR AS QUESTION OF LAW INVOLVED IN THIS APPEAL THAT WHETHER THE INTEREST COULD HAVE BEEN LEVIED AGAINST THE ASSESSED INCOME OF THE ASSESSEE UNDER SECTIONS 234A AND 234B IS CONCERNED, IN VIEW OF THE FULL BENCH JUDGMENT OF RANCHI BENCH OF PATNA HIGH COURT DELIVERED IN THE CASE OF SMT. TEJ. KUMARI, THE REVENUE CAN LEVY THE INTEREST ONLY ON THE TOTAL INCOME DECLARED IN THE RETURNS AND NOT ON THE INCOME ASSESSED AND DETERMINE D BY THE AO TO THAT EXTENT. THE ORDERS PASSED BY THE AUTHORITIES BELOW ARE ACCORDINGLY MODIFIED AND INTEREST SHALL BE CHARGEABLE IN THE LIGHT OF THE FULL BENCH JUDGMENT, REFERRED ABOVE.' 11 . WE ALSO FIND THAT COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI GIRDHARI LAL SHARMA VS. ITO, WARD - 1(4), JAMSHEDPUR IN ITA NO. 31/RAN/2013 , ORDER DATED 07.05.2012 IN PARA NO. 6 , RELYING UPON THE ABOVE DECISION OF THE HON'BLE JHARKHAND HIGH COURT , HELD AS UNDER: - 'WE ACCORDINGLY FOLLOWING THE ABOVE DECISION, D IRECT THE ASSESSING OFFICER TO RE - COMPUTE THE INTEREST UNDER SECTION 2348 ON THE BASIS OF THE TOTAL INCOME DECLARED BY THE ASSESSEE IN THE RETURN FILED.' 12 . WE , RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT AND THE DECISION OF COOR DINATE BENCH OF THE TRIBUNAL , ARE OF THE OPINION THAT INTEREST U/S.234B OF THE ACT CAN BE LEVIED ONLY ON THE RETURNED INCOME AND NOT ON THE ASSESSED INCOME. WE DIRECT ACCORDINGLY. 7 ITA NO S . 11 2 - 115 /RAN/ 20 1 7 13 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PU RPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 / 05 /201 8 S D/ - SD/ - ( N.S.SAINI ) ( PAVAN KUMAR GADALE ) ACCOUNTANT MEMBER JUDIC IAL MEMBER RANCHI, DATED 30 / 05 /201 8 PRAKASH KUMAR MISHRA , SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, //TRUE COPY// SR.PS, ITAT, RANCHI 1. THE APPELLANT SRI SUNIL KUMAR SAWA PROP.UN IVERSAL HI - TEC, H.NO.75, MAIN ROAD JUGSALAI, JAMSHEDPUR 2. THE RESPONDENT ITO, WARD - 3(4), JAMSHEDPUR 3. THE CIT(A) CONCERNED 4. CIT , CONCERNED 5. DR, ITAT, RANCHI 6. GUARD FILE.