Shri Sandwip Kumar Saha, Kolkata V. ITO, Ward - 49(1), Kolkata, Kolkata

ITA 1481/KOL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9399 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2011
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 23-07-2010
• Court: TRIBUNAL
• Department Lawyers: S BHA DRA
• Assessee Lawyers: V N PUROHIT; S BANDYOPADHYAY

Judgement Text

, SMC , , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH : KOLKATA () BEFORE . . . . . . . . , , , , ) [BEFORE HONBLE SRI D. K. TYAGI, JM] ! ! ! ! / I.T.A NO. 1481/KOL/2010 '#$ %&' '#$ %&' '#$ %&' '#$ %&'/ // / ASSESSMENT YEAR : 2006-07 SRI SANDWIP KUMAR SAHA -VS- INCOME-TAX OFFICER, WD-49(1), KOLKATA (PA NO.ALGPS 1945 M) ()* / APPELLANT ) (+)*/ RESPONDENT ) FOR THE APPELLANT: S/SRI S. BANDYOPADHYAY & V. N . PUROHIT FOR THE RESPONDENT : SRI S. BHADRA , / ORDER THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE LD. CIT(A), KOLKATA DATED 20.04.2010 FOR THE ASSESSMENT YEAR 2 006-07 IN RESPECT OF CONFIRMING THE PENALTY OF RS.80,045/- U/S. 271(1)(C) OF THE I. T. ACT. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS ENGAGED IN THE BUSINESS OF AGARBATI. DURING THE ASSESSMENT PROCEEDING THE ASS ESSING OFFICER LEARNT ABOUT A BANK ACCOUNT WITH STANDARD CHARTERED BANK, CHOWRINGHEE BRANCH BE ARING NO. 32410250620 IN THE NAME OF THE ASSESSEE. THE ASSESSING OFFICER OBTAINED A COP Y OF THE STATEMENT OF THAT ACCOUNT FROM THE BANK. FROM THE SAID STATEMENT THE ASSESSING OFFICE R FOUND THAT DURING THE RELEVANT PERIOD TOTAL CASH DEPOSIT TO THE TUNE OF RS.22,70,100/- WERE MAD E IN THAT ACCOUNT WHILE TOTAL WITHDRAWALS THEREFROM WERE TO THE TUNE OF RS.22,54,615/-. THE ASSESSING OFFICER ALSO FOUND THAT THE ASSESSEE DID NOT DISCLOSE THE SAID ACCOUNT BEFORE T HE DEPARTMENT. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPLAIN THE SOURCES OF DE POSITS IN THAT BANK ACCOUNT AND THE REASONS FOR WITHDRAWALS THERE FROM. IN RESPONSE, THE ASSESSEE S TATED BEFORE THE A.O. THAT DURING THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION HE HAD CONDUCTE D THE BUSINESS IN JUTE ALSO WHICH HE HAD NOT DISCLOSED TO THE DEPARTMENT. HE HAD ALSO FILED AN AFFIDAVIT TO THAT EFFECT BEFORE THE A.O. THE ASSESSEE STATED BEFORE THE A.O. THAT THE DEPOSI TS MADE IN THE SAID BANK ACCOUNT REPRESENTED THE TOTAL LOCAL SALES OF JUTE MADE BY HIM AND THE T OTAL WITHDRAWALS FROM THAT BANK ACCOUNT WERE MADE FOR THE PURPOSE OF PURCHASING RAW MATERIAL FOR HIS JUTE BUSINESS. THE ASSESSEE, THROUGH A DULY SWORN AFFIDAVIT, OFFERED TO THE A.O. THAT THE PROFIT FROM THE JUTE BUSINESS CARRIED BY HIM MAY BE ADDED TO HIS INCOME BY APPLYING THE GROSS PR OFIT RATE OF HIS OTHER (AGARBATI) BUSINESS. IN SUPPORT OF HIS CLAIM OF HAVING CARRIED OUT BUSIN ESS IN JUTE THE ASSESSEE HAD PRODUCED A 2 PROVISIONAL TRADE LICENSE OF JUTE BUSINESS ISSUED B Y JHOWDANGA GRAM PANCHAYAT. ACCORDINGLY, THE A.O. APPLIED THE GROSS PROFIT RATE OF 14.18%, W HICH RATE WAS DISCLOSED BY THE ASSESSEE IN RESPECT OF HIS AGARBATI BUSINESS, TO THE TURNOVER O F RS.22,70,100/-, REPRESENTING THE TOTAL DEPOSITS MADE IN THE ABOVE REFERRED TO UNDISCLOSED BANK ACCOUNT, AND ADDED A SUM OF RS.3,21,900/- AS UNDISCLOSED INCOME OF THE ASSESSEE FROM HIS JUTE BUSINESS. THE A.O. ALSO INITIATED PENALTY PROCEEDINGS U/S.271(1 )(C) OF THE ACT IN RESPECT OF SUCH ADDITION THE A.O. ALSO ADDED THE CLOSING BALANCE OF RS.14,73 1/- IN THE SAID BANK ACCOUNT TO THE INCOME OF THE ASSESSEE AND INITIATED PENALTY PROCEE DINGS U/S.27L(1)(C) IN RESPECT OF THAT ADDITION .ALSO. DURING THE PENALTY PROCEEDINGS, THE ASSESSEE STATED BEFORE THE ASSESSING OFFICER THAT INADVERTENTLY HE COULD NOT DISCLOSE HIS BANK ACCOUN T NO.32410250620 MAINTAINED WITH STANDARD CHARTERED BANK TO THE DEPARTMENT AND THE T AX IMPOSED ON THE INCOME AS A RESULT OF SCRUTINY ASSESSMENT IN HIS CASE HAS ALREADY BEEN PA ID BY HIM AND THAT HE HAD RENDERED FULL COOPERATION TO THE DEPARTMENT AT THE TIME OF ASSESS MENT. AFTER CONSIDERING THE REPLY OF THE ASSESSEE THE ASSESSING OFFICER WAS OF THE VIEW THAT THE INCOME FROM THE JUTE BUSINESS OF THE ASSESSEE REMAINED UNDISCLOSED AND THE INVESTMENT OF RS. 14,731/-, REFLECTED IN THE CLOSING BALANCE IN THE ABOVE BANK ACCOUNT, REPRESENTED UNDI SCLOSED INVESTMENT OF THE ASSESSEE. ACCORDINGLY, THE ASSESSING OFFICER LEVIED PENALTY O F RS.80,045/- BEING 100% OF TAX SOUGHT TO BE EVADED IN THIS CASE. IN APPEAL, THE LD. CIT(A) CONFIRMED THIS ACTION OF THE ASSESSING OFFICER. BEING FURTHER AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE WHILE REITERATING HIS SAME SUBMISSION AS SUBMITTED BEFORE THE LOWER AUTHO RITIES FURTHER SUBMITTED THAT BEING AN ORDINARY SMALL TRADER IN BONGAON, A BORDER AREA WIT H BANGLADESH, NEITHER HE KNOWS NOR HE IS SUPPOSED TO KNOW INTRICACIES OF ACCOUNTS AND TAXATI ON. HE HAD TO HIRE AN EXPERT. ACCORDINGLY ONE MR. K.P. DAW AS ENTRUSTED WITH THE ACCOUNT AND TAXATION WORK AND TO WHOM ALL PAPERS WERE ALSO GIVEN INCLUDING BANK ACCOUNT IS STANDARD CHARTERED BANK. WHY HE HAS NOT OFFERED ANY INCOME FROM SAID BANK ACCOUNT WHICH CONTAINS ON LY RAW JUTE PURCHASE AND SALE TRANSACTIONS IS NOT KNOWN TO ASSESSEE. ON COMING TO KNOW THAT SA ID BANK ACCOUNT WAS NOT DISCLOSED, HE CANCELLED THE POWER OF SRI DAW AND APPOINTED SRI PA RTHA SARATHI CHOWDHURY. NOT ONLY THAT HE AGREED TO BE TAXED ON G. P. AT THE RATE OF 14.18% W HICH PROFIT HE EARNED IN AGARBATI BUSINESS THOUGH SUCH MARGIN IN RAW JUTE IS NOT POSSIBLE AND EVEN IN PLACE OF NET PROFIT AFTER ALLOWING SOME EXPENDITURE, ASSESSEE ACCEPTED TO BE TAXED ON GROSS PROFIT. NOT ONLY THAT, ASSESSEE PAID FULL TAXES WITHIN DUE TIME AND EVEN NOT AGITATED TH E ADDITION OF RS.14,731/- OF CLOSING BALANCE IN SAID NONE-DISCLOSED BANK ACCOUNT THOUGH PROFIT I N JUTE TRANSACTION ALREADY ADDED AS AGREED WITH A.O. HE ALSO CONTENDED THAT ASSESSEE HAS REND ERED FULL CO-OPERATION AT ALL STAGE AND 3 CONSIDERING CORRECTNESS OF PROFITS RETURNED IN AGAR BATI BUSINESS, ACCEPTANCE OF MISTAKE THEN AND THERE, AGREEING TO BE TAXED ON HIGH G.P. RATE OF 14 .18, REMOVAL OF CONSULTANT WHO MADE MISTAKE AND PAYMENT OF FULL TAX IT CANNOT BE SAID THAT ASSE SSEE HAD INTENTIONS TO AVOID HIS TAX LIABILITY. IT IS A CLEAR CASE OF HAVING BEEN LAID DOWN BY HIS TAX CONSULTANT. NON FILING OF APPEAL AGAINST ADDITION CANNOT BE VIEWED AS SUGGESTING THAT ASSESS EE CONCEALED HIS INCOME AND CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES HE PRAYED T O CANCEL THE PENALTY IMPOSED. IN SUPPORT OF HIS SUBMISSIONS HE PLACED RELIANCE ON THE FOLLOWING CASE LAWS : I) CIT VS. VASANT K. HANDIGUND 327 ITR 233 (KARN), II) M. PACHAMUTHU 295 ITR 502 (MAD.), III) JANATA WINE STORES 10 ITD 348 (ITAT, DELHI). IV) DR. HAKEEM S. A. SYED SATTAR 314 ITR (AT) 290 ( ITAT, CHENNAI) V) YOGESHR DEESAI (2010) 002 (TRIB.) 267. IN THE ALTERNATIVE, HE ALSO SUBMITTED THAT THE AMOU NT OF PENALTY IMPOSED IS NOT IN ACCORDANCE WITH LAW AND IS LIABLE TO BE REDUCED. HE ALSO CONT ENDED THAT AS PER SEC. 271(1)(C) PENALTY IS TO BE IMPOSED, IF ASSESSEE HAS CONCEALED THE PARTICULA RS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME, OF THE AMOUNT NOT LESS B UT NOT MORE THAN THREE TIMES OF THE TAX SOUGHT TO BE EVADED BY REASONS OF SUCH CONCEALMENT. EXPLAN ATION 4 TO SAID SECTION DEFINES THE EXPRESSION THE AMOUNT OF TAX SOUGHT TO BE EVADED. AS PER EXPLANATION-4, TAX SOUGHT TO BE EVADED WILL BE DIFFERENCE BETWEEN THE TAX ON THE TO TAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN RED UCED BY THE AMOUNT OF INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. HE ALSO CONTENDED THAT AS DECIDED IN FEW OF ABOVE CITED CASES AND NUMBER OF OTHER DECISIONS PENALTY P ROCEEDINGS ARE DISTINCT FROM ASSESSMENT PROCEEDINGS AND IN PENALTY PROCEEDINGS ADDITION OF SO CALLED CONCEALED INCOME ARE NOT FINAL AND ASSESSEE HAS THE RIGHT TO PROVE THAT ADDITIONS ARE WRONG THOUGH ASSESSEE HAS NOT FILED ANY APPEAL AGAINST QUANTUM OF ADDITIONS. HE ALSO CONTE NDED THAT THE ADDITION OF RS. 14,731/- BEING CLOSING BALANCE OF UNDISCLOSED BANK ACCOUNT CANNOT BE HELD AS CONCEALED INCOME IN AS MUCH AS THAT IT WAS WRONGLY ADDED BY A.O. THE SAID A/C WAS SOLELY FOR JUTE BUSINESS AND CONSIDERING THE DEPOSITS THEREON, ADDITION OF RS.3,21,900/- BEING 1 4.18% OF DEPOSITS HAS ALREADY BEEN MADE. FURTHER ADDITION FROM SAME ACCOUNT WAS WRONGLY MADE AND CANNOT BE HELD AS CONCEALED INCOME. HE ALSO CONTENDED THAT ANOTHER ADDITION OF RS. 3,21,900/- HAS BEEN MADE @ 14.18% OF DEPOSIT IN SAID A/C AS GROSS PROFIT IN JUTE BUSINES S. THIS ADDITION IS PURELY AN ESTIMATE AS PER ASSESSEES STATEMENT TO TAKE THE GROSS PROFIT OF JU TE BUSINESS AT THE RATE OF G.P. IN AGARBATTI BUSINESS AND DECISION IN DR. HAKEEM S.A. SYED SATTE R (SUPRA) REFERRED ABOVE WILL APPLY AND NO PENALTY LIES. HOWEVER, RS.3,21,900/- WAS GROSS PROF IT OF ASSESSEE IN JUTE BUSINESS. IN A BUSINESS GROSS PROFIT IS NOT CONSIDERED AS INCOME BUT NET PR OFIT IS CONSIDERED AS INCOME AS AFTER GROSS PROFIT ASSESSEE HAS TO SPEND SAME AMOUNT AS OVERHEA D/SELLING EXPENSES. THE AO. HAS ACCEPTED 4 G.P. @ 14.18% OF SALES IN AGARBATTI BUSINESS AND N. P. @ 60.71% OF SAID GROSS PROFIT, CONCEALED INCOME, THEREFORE, WILL BE ONLY RS. 1,95, 425/- BEING 60.71% OF GROSS PROFIT OF RS. 3,21,900/- IN JUTE BUSINESS. CONSIDERING THE AFORE SAID SUBMISSIONS HE CALCULATED THE TAX SOUGHT TO BE EVADED AS ASSESSING OFFICER HAS IMPOSED PENA LTY @ 100% THE CORRECT AMOUNT OF PENALTY WILL RS.61,312/- IF AT ALL TO BE IMPOSED BY NOT ACC EPTING ASSESSEES SUBMISSION ZS TO CANCELLATION OF PENALTY. 4. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE RS OF THE LOWER AUTHORITIES AND PRAYED BEFORE THE BENCH TO CONFIRM THE SAME. 5. I HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOT H THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE ME. I FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE HAD NOT DISCLOSED THE INCOME FROM HIS JUTE BUSINESS TO THE DEPARTMENT. HE HAS A LSO NOT DISCLOSED THE BANK ACCOUNT THROUGH WHICH THE TRANSACTION OF THIS BUSINESS WAS CARRIED OUT. WHEN ASSESSEE WAS CONFRONTED WITH THIS FACT, HE ADMITTED HIS MISTAKE AND AGREED TO PA Y THE TAX ON THIS INCOME. NOT ONLY THIS, HE DID NOT FILE ANY APPEAL AGAINST THE ADDITION MADE B Y THE ASSESSING OFFICER ON THIS ACCOUNT. FROM THIS, IT IS CLEAR THAT THE ASSESEE HAD CONCEAL ED HIS INCOME AND, THEREFORE, LOWER AUTHORITIES WERE JUSTIFIED IN IMPOSING THE PENALTY FOR CONCEALM ENT U/S. 271(1)(C) OF THE ACT. THE FACTS OF THE CASE LAWS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ARE TOTALLY DIFFERENT FROM THE FACTS OF THE INSTANT CASE. THEREFORE, I FIND NO INFIRMITY I N THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE PENALTY IMPOSED. I ALSO FIND NO MERIT IN THE ALTER NATIVE GROUND TAKEN BY THE ASSESSEE THAT THE AMOUNT OF TAX SOUGHT TO BE EVADED HAS WRONGLY BEEN CALCULATED BY THE ASSESSING OFFICER FOR IMPOSING THE PENALTY. THE ASSESSEE WAS ASKED TO F ILE HIS CALCULATION IN THIS RESPECT. WHILE MAKING SUCH CALCULATION HE HAS TAKEN LESS CONCEALED INCOME THEN ASSESSED BY THE ASSESSING OFFICER, THEREFORE, ALTERNATIVE GROUND TAKEN BY THE ASSESSEE IS ALSO DEVOID OF ANY MERIT. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED ORDER IS PRONOUNCED IN THE OPEN COURT ON 21.01.2011 SD/- . . , (D. K. TYAGI) JUDI CIAL MEMBER ( - - - -) )) ) DATED : 21ST JANUARY, 2011 %./ '#01 '2% JD.(SR.P.S.) 5 , 3 +''4 54&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT SRI SANDWIP KUMAR SAHA, C/O V. N. PUROHI T & CO., CHARTERED ACCOUNTANTS 32B, GANESH CHANDRA AVENUE, 2 ND FLOOR, KOLKATA-13. 2 +)* / RESPONDENT : ITO, WARD-49(1), KOLKATA. 3 . ',# / THE CIT, , KOLKATA 4 . ',# ( )/ THE CIT(A), KOLKATA 5 . %=' +'# / DR, KOLKATA BENCHES, KOLKATA 4 +'/ TRUE COPY, ,#>/ BY ORDER, ? 1 /DEPUTY REGISTRAR .