C.Goverdhan cendra, Salem V. ITO, CHENNAI

ITA 1498/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8821 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 26-05-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: T S LAKSHMIVENKATARAMAN
• Section: 44AD; 244A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . . . , ! . '#'$ , % !& ' [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./ I.T.A.NO.1497 & 1498/MDS/2016 / ASSESSMENT YEARS : 2008-09 & 2009-10 SHRI C.GOVERDHAN CENDRA D-28, PUDUKUPPAM VILLAGE 109, THYUMAN CHETTY STREET GNAYURU POST PONNERI (TK) CHENNAI 600 204 VS. THE INCOME TAX OFFICER BUSINESS WARD XIII(2) CHENNAI [PAN AIKPC 0815 B] ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : SHRI T.S LAKSHMI VENKATARAMAN, CA /RESPONDENT BY : SHRI SHIVA SRINIVAS, JCIT / DATE OF HEARING : 02 - 0 8 - 2016 ! / DATE OF PRONOUNCEMENT : 10 - 0 8 - 2016 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER THESE APPEALS OF THE ASSESSEE ARE DIRECTED AGAIN ST SEPARATE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS) -12, CHENNAI, DATED 29.2.2016 FOR ASSESSMENT YEARS 2008-09 AND 2 009-10. 2. FACTS APROPOS ARE THAT THE ASSESSEE, AN INDIVIDUAL ENGAGED IN THE BUSINESS OF PROVIDING CABLE CONNECTIONS FOR TVS USING SET-TOP ITA NO. 1497 & 1498/16 :- 2 -: BOXES FOR THE SUN TV, HAD FILED HIS RETURN DECLARIN G INCOME OF ` 78,350/- FOR ASSESSMENT YEAR 2008-09 AND ` 19,023/- FOR ASSESSMENT YEAR 2009-10. IT SEEMS THAT THE ASSESSEE COULD NO T PRODUCE THE BOOKS OF ACCOUNT IN SUPPORT OF THE RETURN. THE ASS ESSING OFFICER COMPLETED THE ASSESSMENTS AFTER ESTIMATING INCOME @ 30% OF GROSS RECEIPTS FOR ASSESSMENT YEAR 2008-09 AND @ 20% FOR ASSESSMENT YEAR 2009-10. 3. AGGRIEVED, THE ASSESSEE WENT IN APPEAL FOR BOTH TH E ASSESSMENT YEARS BEFORE THE CIT(A). ARGUMENT OF TH E ASSESSEE BEFORE THE CIT(A) WAS THAT THE ESTIMATION OF NET PR OFIT @ 30% AND 20% WERE ON HIGHER SIDE. ACCORDING TO THE ASSESSE E, SECTION 44AD WAS APPLICABLE TO THE ASSESSEE AND 8% OF GROSS TUR NOVER HAS TO BE TAKEN FOR THE PURPOSE OF ESTIMATING THE INCOME. TH E CIT(A) VERIFIED THE PROFIT & LOSS ACCOUNT FILED BY THE ASSESSEE. HE FOUND GROSS RECEIPTS OF THE ASSESSEE FOR ASSESSMENT YEAR 2008- 09 WAS ` 10,49,441/- AND FOR ASSESSMENT YEAR 2009-10 WAS ` 46,36,759/-. OUT OF THE ABOVE, AS PER THE CIT(A) ONLY ` 60,400 WAS RELATABLE TO ANY WORKS CONTRACT FOR ASSESSMENT YEAR 2008-09 AND ` 11,02,400/- FOR ASSESSMENT YEAR 2009-10. THE BALANCE AMOUNT, AS PE R THE CIT(A) WAS COMMISSION RECEIVED FROM M/S SUN DIRECT PVT. LT D. THE CIT(A) WAS OF THE OPINION THAT SEC. 44AD COULD NOT BE APPL IED IN THE ITA NO. 1497 & 1498/16 :- 3 -: ASSESSEES CASE. THE GROSS RECEIPTS RETURNED BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT WAS ` 8,54,352/- FOR ASSESSMENT YEAR 2008-09 AND ` 16,37,100/- FOR ASSESSMENT YEAR 2009-10. THE CIT(A ) WAS OF THE OPINION THAT FORM 26AS FOR THE RESPECTIVE YEARS REF LECTED PAYMENT OF ` 10,49,441/- BY SUN DIRECT PVT. LTD TO THE ASSESSEE FOR ASSESSMENT YEAR 2008-09 AND ` 46,37759/- FOR ASSESSMENT YEAR 2009-10. IN OTHER WORDS, AS PER THE CIT(A), THE ASSESSEE HAD S UPPRESSED TURNOVER OF ` 1,95,089/- FOR ASSESSMENT YEAR 2008-09 AND ` 30,00,659/- FOR ASSESSMENT YEAR 2009-10. AS PER THE CIT(A), THE AS SESSEE HAVING ALREADY BOOKED ALL RELATED EXPENSES IN THE PROFIT & LOSS ACCOUNT THE UNDISCLOSED TURNOVER OF ` 1,95,089/- NEEDED TO BE ADDED TO THE DISCLOSED INCOME OF ` 78,352/- FOR ASSESSMENT YEAR 2008-09 AND UNDISCLOSED TURNOVER OF ` 30,00,659/- TO THE DISCLOSED INCOME OF ` 19,023/- FOR ASSESSMENT YEAR 2009-10. THE CIT(A) HELD THAT THE INCOME FOR ASSESSMENT YEAR 2008-09 COULD BE ASSESSE D AT ` 2,73,441/-. HOWEVER, CONSIDERING THE UNDISCLOSED TURNOVER FOR A SSESSMENT YEAR 2009-10, THE CIT(A) TOOK A VIEW THAT 20% ESTIMATION DONE BY THE ASSESSING OFFICER WAS REASONABLE. FOR THIS, HE REL IED ON HIS OWN DIRECTION FOR ASSESSMENT YEAR 2008-09 WHERE NET P ROFIT OF ` 2,73,441/-WAS WORKED OUT TO 26%. THUS FOR ASSESSME NT YEAR 2008- 09, THE CIT(A) REDUCED THE INCOME ASSESSED BY THE A SSESSING OFFICER ITA NO. 1497 & 1498/16 :- 4 -: TO ` 2,73,443/- WHILE CONFIRMING THE PROFITS DETERMINED BY THE ASSESSING OFFICER FOR ASSESSMENT YEAR 2009-10. 4. NOW BEFORE US, THE LD. AR STRONGLY ASSAILING THE OR DER OF THE CIT(A) SUBMITTED THAT THE RATE OF PROFIT CONSIDERED BY THE LOWER AUTHORITIES WAS MUCH HIGHER THAN WHAT COULD BE EARN ED IN THE SIMILAR LINE OF BUSINESS. FURTHER ACCORDING TO HIM, EVEN I F SEC. 44AD WAS APPLIED WHAT COULD BE ASSESSED AS INCOME WAS 8% OF THE TURNOVER. 5. PER CONTRA, THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. FOR ASSESSMENT YE AR 2008-09, THOUGH THE ASSESSING OFFICER HAD TAKEN 30% AS PROFIT, THE CIT(A) AFTER VERIFYING THE PROFIT & LOSS ACCOUNT FOUND THAT THE TURNOVER DECLARED BY THE ASSESSEE WAS ` 8,54,352/- AGAINST THE ACTUAL TURNOVER OF ` 10,49,441/-. THE CIT(A) HAD ONLY MADE ADDITION OF THE DIFFERENCE AMOUNT TO THE RETURNED PROFIT OF THE ASSESSEE. TH E PROFIT OF THE ASSESSEE AS PER THE PROFIT & LOSS ACCOUNT WAS ` 78,352/-. THE CIT(A) HAD ONLY ADDED THE SUPPRESSED TURNOVER OF ` 1,95,089/- TO THE ABOVE AMOUNT. NO DOUBT, IF PROFIT IS WORKED OUT ON PERCE NTAGE BASIS, IT WOULD COME TO 26%, BUT THE ASSESSEES PLEA THAT IT SHOULD BE COVERED ITA NO. 1497 & 1498/16 :- 5 -: U/S 44AD OF THE ACT CANNOT BE ACCEPTED SINCE THE SA ID SECTION AS IT STOOD AT THE RELEVANT POINT OF TIME APPLIED ONLY TO AN ASSESSEE ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION OR SU PPLY OF LABOUR FOR CIVIL CONSTRUCTION. ADMITTEDLY, ASSESSEE WAS NOT D OING EITHER. THUS, WE ARE UNABLE TO ACCEPT THE ARGUMENT OF THE ASSESSEE THAT INCOME HAS TO BE ASSESSED IN ACCORDANCE WITH SEC. 44AD OF THE ACT. HENCE, WE ARE OF THE OPINION THAT CIT(A) WAS JUSTIFIED IN ASSESSI NG THE INCOME OF THE ASSESSEE FOR ASSESSMENT YEAR 2008-09 AT ` 2,73,441/-. 7. COMING TO ASSESSMENT YEAR 2009-10, THE CIT(A) HAD R ELIED ON THE PROFIT RATIO OF 26% FOR ASSESSMENT YEAR 2008 -09 FOR CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER. IN THE SAID YEAR ALSO THERE WAS SUPPRESSION OF TURNOVER BY THE ASSESSEE. THE SUPPRESSED TURNOVER FOR ASSESSMENT YEAR 2009-10 WAS ` 30,00,659/-. WE ARE OF THE OPINION THAT IN THIS CASE, THE CIT(A) WAS JUSTI FIED IN CONFIRMING THE PROFIT RATE OF 20% WHICH WAS APPLIED BY THE ASSESSI NG OFFICER ON THE TURNOVER OF THE ASSESSEE, WITHOUT RECKONING THE SU PPRESSED TURNOVER. IN THESE CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMIT Y IN THE ORDER OF THE CIT(A) ON THIS ISSUE FOR ASSESSMENT YEAR 2009-10 AL SO. 8. FOR BOTH THE ASSESSMENT YEARS, THE ASSESSEE HAS TA KEN A GROUND THAT INTEREST U/S 244A WAS NOT CORRECTLY CO MPUTED. ITA NO. 1497 & 1498/16 :- 6 -: 9. WE FIND THAT THE MATTER REGARDING INTEREST U/S 244 A REQUIRES FRESH LOOK BY THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL VERIFY AND FIND OUT WHETHER THE INTEREST HAS BEEN CORRECTL Y COMPUTED OR NOT AND GIVE RELIEF TO THE ASSESSEE, IF WARRANTED. AC CORDINGLY, THIS ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. 10. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE A RE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2016, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! . '#'$ ) (ABRAHAM P. GEORGE) % / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 10 TH AUGUST, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF