Late Nabani Dhar Mazumdar Rep. by L/H Sri Brojendra Mohan Mazumdar, Burnpur V. DCIT, Circle-1, Asansol, Asansol

ITA 1576/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1866 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 28-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENC H KOLKATA BEFORE SHRI N.V.VASUDEVAN, JM & DR. A.L.SAINI, AM ./ ITA NO.1576/KOL/2014 ( / ASSESSMENT YEAR : 2007-08) LATE NABANI DHAR MAZUMDAR REP.BY L/H. SRI BROJENDRA - MOHAN MAZUMDAR, 19, RADHA NAGAR ROAD, BURNPUR-713325, DIST: BURDWAN VS. DCIT, CIRCLE-1, ASANSOL SAHANA APARTMENT,MOTHER TERESSA SARANI, LOWERCHELIDANGA, ASANSOL- 713304 ./ ./PAN/GIR NO. : AELPM 0077 N ( /APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI RAVI TULSIYAN, AR /REVENUE BY : SHRI RAJAT KUMAR KUREEL, CIT DR / DATE OF HEARING : 04/04/2017 /DATE OF PRONOUNCEMENT 19/04/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAI NING TO ASSESSMENT YEAR 2007-08, IS DIRECTED AGAINST THE OR DER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS),ASANSOL, IN AP PEAL NO.141/CIT(A)/ASL/ACIT/CIR-1/ASL/2009-10,WHICH IN T URN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER U/S.143(3) OF THE INCOME TAX ACT 1961, (HEREINAFTER REFERRED TO AS THE ACT), DATED 30.12.2009. 2. THE BRIEF FACTS OF THE CASE QUA THE ASSESSEE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y.2007-08 ON 30.03 .2009 SHOWING TOTAL INCOME OF RS.96,20,949/-. ASSESSEES CASE WAS SELEC TED FOR SCRUTINY U/S.143(3) OF THE ACT AND THE AO COMPLETED THE ASSE SSMENT BY MAKING ADDITION ON ACCOUNT OF BOGUS OUTSTANDING LIABILITIE S SHOWN BY THE ASSESSEE AT RS.17,51,545/-. THE AO OBSERVED THAT IN RESPECT OF ITA NO.1576/14 LATE NABANI DHAR MAZUMDAR 2 OUTSTANDING LIABILITY THE ASSESSEE DID NOT SUBMIT T HE LIST OF NAMES OF LABOURERS, ID NOS. PF, AND ESI CODE NUMBER OF THE L ABOURERS. THE ASSESSEE ALSO DID NOT FURNISH THE DETAILS REGARDING TIME FRAMED, SITE DETAILS, NUMBER OF MONTHS FOR WHICH LABOUR WAGES WE RE OUTSTANDING, AND THE ASSESSEE ALSO DID NOT FURNISH THE DOCUMENTS REQ UIRED BY THE AO TO VERIFY THE WAGES LIABILITIES AS CLAIMED BY THE ASSE SSEE. THEREFORE, THE AO WORKED OUT THE FICTITIOUS WAGES LIABILITIES BASED O N THE AMOUNT DEBITED IN THE PROFIT AND LOSS ACCOUNT AND THE OUTSTANDING LIA BILITY SHOWN IN THE BALANCE SHEET. THE AO WORKED OUT THE FICTITIOUS LIA BILITIES OF RS.17,51,545/- BEING THE DIFFERENCE BETWEEN LIABILI TY SHOWN IN THE BALANCE SHEET AT RS.2,34,58,716/- AND AMOUNT FUND BLOCKED WHICH INCLUDES BILLS RECEIVABLE, CHEQUE IN HAND AND TDS ETC. AT RS.2,17, 07,171/-. 3. AGGRIEVED FROM THE ORDER OF THE ASSESSING OFFICE R, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A), WHO HELD THAT PO WER OF CIT(A) IS CO- TERMINUS WITH THAT OF THE ASSESSING OFFICER, THEREF ORE, EXERCISING THE POWER OF CO-TERMINUS, THE CIT(A) HIMSELF DID THE BE ST JUDGMENT ASSESSMENT. THEREFORE, LD. CIT(A) TOOK THE AVERAGE DISCLOSED NET PROFIT FOR TAKING TWO PRECEDING AND ONE SUCCEEDING YEAR WHICH CAME TO RS.8.87%. THEREFORE, LD. CIT(A) HELD THAT IF NET PROFIT IS FI XED AT 8.87% THEN ADDITION CAME TO 0.61% OF RS.69,067,485/- WHICH CAME TO RS.4 ,21,312/-. THE LD. CIT(A) OBSERVED THAT THERE ARE OTHER DISALLOWANCE I N THE ASSESSMENT FOR ALL THREE YEARS AND IN ADDITION TO THIS THERE WAS U NSUBSTANTIATED RISE IN WAGES PAYABLE DISPROPORTIONATE TO TURNOVER. HE ENHA NCED THE FIGURE OF RS.4,21,312/- TO BRING IT ON PAR WITH THE PROFIT RA TE OF PRECEDING YEARS AND ITA NO.1576/14 LATE NABANI DHAR MAZUMDAR 3 ALSO ABSORB THE RISE IN WAGES PAYABLE DISPROPORTION ATE TO TURNOVER AND THEREFORE,CONSIDERING THESE FACTS LD. CIT(A) FIXED THE ADDITION AT RS.6,00,000/-. 4. NOT BEING SATISFIED WITH THE ORDER OF THE CIT(A) , THE ASSESSEE IS IN FURTHER APPEAL BEFORE US, AND HAS TAKEN THE FOLLOWI NG GROUNDS OF APPEAL :- 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. C.I.T.(A) ERRED IN SUSTAINING THE ADDITION TO THE E XTENT OF RS.6,00,000/- ON LUMP SUM BASIS AS AGAINST RS.17,51 ,545/- MADE BY THE LD. A.O. IN SPITE OF THE FACT THAT THE A.O. ON HIS ANTICIPATION AND WITHOUT POINTING OUT ANY EXCESS WAGES BEING CLA IMED OR DEBITED TO PIL ACCOUNT ASSUMED THAT THE OUTSTANDING WAGE LIABILITY SHOWN IN THE BALANCE SHEET WAS FICTITIOUS. 2. THAT, THE LD. C.I.T.(A) OUGHT TO HAVE CONSIDERED BEFORE SUSTAINING LUMP SUM ADDITION OF RS.6,00,000/- THAT THE LD. A.O. HAS NOT DOUBTED OR MADE ANY ADDITION ON ACCOUNT OF WAGE S CLAIMED AND DEBITED TO P/L ACCOUNT AND THAT BEING SO, THE A DDITION SUSTAINED ON THE PRETEXT OF FICTITIOUS WAGE LIABILI TY IS UNCALLED FOR, VOID AB INITIO AND LIABLE TO BE DELETED. 3. THAT, THE LD. C.I.T.(A) FURTHER ERRED IN NOT CON SIDERING WHILE SUSTAINING THE ADDITION OF RS.6,00,000/- ON ESTIMAT E BASIS THAT IN PAST AS WELL AS SUBSEQUENT ASSESSMENT YEARS, NO SUC H DISALLOWANCE IN THE GARB OF FICTITIOUS WAGE LIABILI TY WAS EVER MADE IN SCRUTINY ASSESSMENTS FOR THOSE YEARS AND THERE WAS UNIFORMITY/ CONSISTENCY IN MAINTAINING THE AUDITED ACCOUNTS AND CLAIMING WAGES AND OUTSTANDING WAGES IN THE SAME MANNER IN T HOSE YEARS. 4. THAT, WITHOUT ANY PREJUDICE TO THE ABOVE, THE LD . C.I.T.(A) TO SUIT LUMP SUM DISALLOWANCE/ADDITION SUSTAINED BY HIM AT RS.6,00,000/- ESTIMATED THE RATE OF N.P. THIS YEAR AT 8.87% ON AV ERAGE BASIS AS AGAINST 8.26% SHOWN BY THE ASSESSEE AND NOT DISPUTE D BY THE LD. A.O. AND HENCE SUCH ESTIMATION OF N.P. WITHOUT ANY RATIONALE IS ARBITRARY, UNCALLED FOR AND NOT SUSTAINABLE IN LAW. 5. THAT, AS THE ORDER OF LD. C.LT.(A) ON THE ABOVE ISSUES SUFFERS FROM ILLEGALITY AND IS DEVOID OF ANY MERIT, THE SAM E SHOULD BE QUASHED AND YOUR APPELLANT BE GIVEN SUCH RELIEF(S) AS PRAYED FOR. 6. THAT, THE APPELLANT CRAVES LEAVE TO AMEND, ALTER , MODIFY, SUBSTITUTE, ADD TO, ABRIDGE AND/ OR RESCIND ANY OR ALL OF THE ABOVE GROUNDS. ITA NO.1576/14 LATE NABANI DHAR MAZUMDAR 4 5. ALTHOUGH IN THIS APPEAL, THE ASSESSEE HAS RAISED SIX GROUNDS OF APPEAL BUT AT THE TIME OF HEARING THE SOLITARY GRIE VANCE OF THE ASSESSEE HAS BEEN CONFINED TO THE ISSUE THAT LD. CI T(A) MADE THE ADDITION OF RS.6,00,000/- ON ESTIMATED BASIS WITHOU T REJECTING BOOKS OF ACCOUNT OF THE ASSESSEE. 5.1 LD. AR FOR THE ASSESSEE HAS SUBMITTED BEFORE US THAT THE LD. CIT(A) MADE THE ADDITION OF RS.6 LAKHS BASED ON THE ESTIMA TE. THE LD. ASSESSING OFFICER HAS WORKED OUT THE FICTITIOUS LIA BILITY AT RS.17,51,542/- AND FURTHER LD. CIT(A) HAS REDUCED THE ADDITION TO RS.6,00,000/-. THE LD. AR FOR THE ASSESSEE HAS SUBMITTED THAT THE LD. AO W ORKED OUT BOGUS LIABILITIES AT RS.17,51,545/-, WITHOUT POINTING OUT ANY EXCESS WAGES BEING CLAIMED OR DEBITED TO PROFIT AND LOSS ACCOUNT. THE LD. AO PRESUMED THE OUTSTANDING WAGES LIABILITY SHOWN IN THE BALANCE SH EET AS FICTITIOUS WITHOUT ANY BASE. THE LD. AR FOR THE ASSESSEE ALSO SUBMITTE D THAT IN CASE OF ASSESSEE IN SUBSEQUENT YEARS NO SUCH DISALLOWANCE I N THE GRAB OF FICTITIOUS WAGES LIABILITY IS MADE IN SCRUTINY ASSE SSMENT. THERE WAS UNIFORMITY AND CONSISTENCY IN MAINTAINING THE AUDIT ED ACCOUNTS AND CLAIMING WAGES AND SHOWING OUTSTANDING WAGES IN PRE VIOUS YEARS AND SUBSEQUENT YEARS. THE LD. CIT(A) DID THE ADDITION A T RS.6 LAKHS BASED ON ESTIMATED NET PROFIT OF THE ASSESSEE @ 8.87%. THEREFORE, ADDITION BASED ON ESTIMATE WITHOUT REJECTING BOOKS OF ACCOUNTS MAD E BY THE LD. CIT(A) MAY BE DELETED. ITA NO.1576/14 LATE NABANI DHAR MAZUMDAR 5 5.2. ON THE OTHER HAND, LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE CIT(A), WHICH WE HAVE ALREAD Y NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREV ITY. 5.3. HAVING HEARD THE SUBMISSIONS OF LD AR FOR THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORDS, WE ARE O F THE VIEW THAT LD. AO AS WELL AS LD. CIT(A) HAVE MADE THE ADDITION BASED ON THE ESTIMATE AND SURMISE AND CONJECTURE. WE NOTICED THAT LD. AO WORK ED OUT THE FICTITIOUS WAGES LIABILITY BASED ON THE FIGURE DEBITED IN THE PROFIT AND LOSS ACCOUNT AND BASED ON THE OUTSTANDING LIABILITY OF WAGES SHO WN IN THE BALANCE SHEET OBSERVING THAT ASSESSEE DID NOT HAVE ENOUGH M ONEY TO PAY THE LIABILITIES. THE BALANCE SHEET OF THE ASSESSEE DOES NOT CONTAIN ANY DIFFERENCE AND BOTH SIDES OF BALANCE SHEET ( ASSET AND LIABILITY SIDE OF THE BALANCE SHEET) HAS AGREED AND THERE IS NO ANY DIFFE RENCE IN THE BALANCE SHEET WHATSOEVER. THE LD. AO DID NOT BRING ANY COGE NT REASON ON THE RECORD TO SUBSTANTIATE HIS PLEA THAT ASSESSEE HAS S HOWN BOGUS OUTSTANDING LIABILITY. HOWEVER, LD. CIT(A) HAS REDU CED THE ADDITION MADE BY THE AO AT RS.17,51,545/- TO RS.6,00,000/- BASED ON THE ESTIMATED RATE OF NET PROFIT @8.87%. THE LD. CIT(A) ALSO DID THE E STIMATE WITHOUT REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND WITHOUT POINTING OUT ANY SPECIFIC ERROR IN THE BOOKS OF ACCOUNT. THEREFO RE, NEITHER THE AO NOR THE LD. CIT(A) BROUGHT ANY COGENT EVIDENCE ON RECOR D TO SHOW THAT THE ASSESSEE HAS SHOWN FICTITIOUS OUTSTANDING WAGES LIA BILITY. THEREFORE, THE ADDITION MADE ON ESTIMATED BASIS BY THE LD. CIT(A) NEEDS TO BE DELETED. ACCORDINGLY, WE DELETE THE ADDITION MADE BY THE LD CIT(A). ITA NO.1576/14 LATE NABANI DHAR MAZUMDAR 6 5.4. IN THE RESULT, APPEAL FILED BY THE ASSESSEE, IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19/04/ 2017. SD/ - (N.V.VASUDEVAN) SD/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; %& DATED 19/04/2017 ' ()* /PRAKASH MISHRA ,SR.PS. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) % & , / ITAT, KOLKATA 1. / THE APPELLANT-LATE NABANI DHAR MAZUMDAR 2. / THE RESPONDENT.-DCT, CIR-1, ASANSOL 3. 4 ( ) / THE CIT(A), KOLKATA. 4. 4 / CIT 5. 56 7 8 , 8 , / DR, ITAT, KOLKATA 6. 7 9 / GUARD FILE. 5 //TRUE COPY//