ITO Ward-41(1), Kolkata, Kolkata V. Sri Shyamal Banerjee, Kolkata

ITA 1580/KOL/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4441 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 07-07-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 30-10-2012
• Court: TRIBUNAL
• Keywords: Unexplained investment; Business income
• Section: 133A

Judgement Text

I.T.A. NO. 1580/KOL./2012 ASSESSMENT YEAR: 2003-2004 PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER I.T.A. NO. 1580 /KOL/ 2012 ASSESSMENT YEAR: 2003-2004 INCOME TAX OFFICER,................................ .................................APPELLANT WARD-41(1), KOLKATA, 18, RABINDRA SARANI, KOLKATA-700 001 -VS.- SRI SHYAMAL BANERJEE,.............................. ...............................RESPONDENT 128A, BIDHAN SARANI, KOLKATA-700 004 [PAN:AENPB 8022 L] APPEARANCES BY: SHRI TANUJ KUMAR NEOGI, ADDITIONAL CIT, SR. D.R., F OR THE DEPARTMENT SHRI SUBASH AGARWAL, ADVOCATE, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : AUGUST 25, 2016 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 14, 2016 O R D E R PER SHRI K. NARASIMHA CHARY, J.M .: THIS IS AN APPEAL BY THE REVENUE CHALLENGING THE OR DER DATED 18.06.2012 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -XXX, KOLKATA (HEREINAFTER REFERRED TO AS LEARNED CIT) FOR THE ASSESSMENT YE AR 2003-04. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS DOING BUSINESS IN TEXTILE AND ALSO DERIVING INCOME FROM OTHER SOURCES WHICH SHALL INCL UDE INCOME FROM LODGING BUSINESS CARRIED IN THE NAME OF BANI BHAVAN AT PURI, INCOME FROM PARTNERSHIP FIRM YOUNG BENGAL SOCIETY, JAGAT JYOTI CLOTH DYING AND PRINTING HOUSE , MAA DURGA CANDLE WORKS AND BENGAL PAPER CONVERTERS. ON 18.02.2003 THERE WAS A SURVEY CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE, WHEREIN CERTAIN INCRIMINA TING DOCUMENTS AND EVIDENCES WERE UNEARTHED AND WERE IMPOUNDED WITH IDENTIFICATION MA RKS, INTER ALIA, TCS-2, TCS-4, TCS- 9, TCS-22, TCS-44, AND TCS-48, RELEVANT FOR THE PUR POSE OF THIS APPEAL. THE ASSESSEE FILED HIS RETURN ON 28.11.2003 DECLARING A TOTAL IN COME OF RS.12,28,450/-. BY WAY OF AN I.T.A. NO. 1580/KOL./2012 ASSESSMENT YEAR: 2003-2004 PAGE 2 OF 10 ORDER DATED 28.03.2006 LEARNED AO ASSESSED THE INCO ME OF THE ASSESSEE AT 1,53,77,200/-. AGGRIEVED BY THE SAID ORDER, THE ASS ESSEE CARRIED THE MATTER IN APPEAL TO LEARNED CIT. LD. CIT BY ORDER DATED 5.1.2007 GAVE C ERTAIN RELIEF TO THE ASSESSEE PURSUANT TO WHICH LEARNED AO PASSED AN ORDER UNDER SECTION 251 OF THE ACT GRANTING RELIEF TO A TUNE OF RS.2,99,629/-. MATTER REACHED I TAT IN APPEAL AND THE ITAT BY ORDER DATED 14.12.2007 REMANDED THE MATTER TO LEARNED AO FOR FRESH DISPOSAL AFTER DE NOVO CONSIDERATION. SUBSEQUENTLY, PURSUANT TO THE ORDERS OF THE ITAT, LEARNED AO VIDE ORDER DATED 30.12.2008 MADE CERTAIN ADDITIONS ON ACCOUNT OF RENTAL INCOME AND THE ADVANCES RECEIVED FROM THE PARTIES IN RESPECT OF BANI BHAVAN AT PURI, AND UNEXPLAINED AND UNDISCLOSED INVESTMENTS AND INCOME. HE FRAMED THE A SSESSMENT AT 1,10,35,881/-. SUBSEQUENTLY, ON 2.2.2009 HE MODIFIED THE SAME UNDE R SECTION 154/143(3)/251/254 OF THE ACT AND ASSESSED THE INCOME AT 1,07,20,210/-. 3. AGGRIEVED BY THE SAID ORDER OF LEARNED AO, THE A SSESSEE CARRIED THE MATTER IN APPEAL TO LEARNED CIT AND THE CIT BY WAY OF IMPUGNE D ORDER TREATED THE INCOME FROM BANI BHAWAN AS INCOME FROM BUSINESS AND DELETED THE ADDITIONS MADE ON THAT SCORE. FURTHER, LEARNED CIT CALCULATED THE UNDISCLOSED OR UNEXPLAINED INVESTMENT OR INCOME OF THE ASSESSEE AT RS.39,44,106/- AS AGAINST RS.91,65, 486/- CALCULATED BY LEARNED AO, THEREBY GRANTED A RELIEF TO THE ASSESSEE TO A TUNE OF RS.52,21,380/-. 4. CHALLENGING THESE TWO FINDINGS OF LEARNED CIT IN THE IMPUGNED ORDER, THE REVENUE PREFERRED THIS APPEAL WITH THREE DAYS DELAY BEFORE US ON THE FOLLOWING GROUNDS:- (1) THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FAC TS IN TREATING INCOME FROM BANI BHAWAN, PURI AS INCOME FROM BUS INESS INSTEAD OF INCOME FROM HOUSE PROPERTY. THE ISSUE WAS DISCU SSED IN DETAIL IN ASSESSMENT ORDER. IT IS GATHERED FROM RECORD THAT ON THE SAME ISSUE IN AY 1993-94 ORDER U/S 143(3)/254/251 DATED 29.12. 2006 OF THE I.T. ACT, WAS PASSED AND THE ASSESSEE HAS NOT PREFER RED FURTHER APPEAL AND ACCEPTED THE SAID ORDER. (2) THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS I N ALLOWING RELIEF OF RS.52,21,380/- WITHOUT APPRECIATING THE FACTS THAT THE ADDITION WAS MADE ON THE BASIS OF DIFFERENT DOCUMENTS FOUND DURIN G THE COURSE OF SURVEY U/S 133A OF THE I.T. ACT. 5. THIS APPEAL IS PREFERRED WITH THREE DAYS DELAY. IT IS EXPLAINED BY THE REVENUE THAT THE ORDER OF THE LEARNED CIT IMPUGNED IN THIS APPEAL WAS COMMUNICATED TO THEM ON I.T.A. NO. 1580/KOL./2012 ASSESSMENT YEAR: 2003-2004 PAGE 3 OF 10 27.08.2012 AND THE LAST DAY OF LIMITATION FOR FILIN G APPEAL WAS 26.10.2012. HOWEVER, SINCE 27 TH & 28 TH OCTOBER, 2012 HAPPENED TO BE SATURDAY AND SUNDAY A ND ON 29 TH THE ITO WAS ON LEAVE ON THE OCCASION OF DURGA PUJA AND LAXMI PUJA , THE DELAY OCCURRED. WHEN WE HEARD THE LD. COUNSEL FOR THE ASSESSEE, HE FAIRLY CONCEDED FOR CONDONING THE DELAY AND TO ARGUE THE MATTER ON MERITS. RECORDING THE SAME, AND ACCORDINGLY WE CONDONE THE DELAY AND PROCEED TO HEAR THE APPEAL ON MERITS. 6. IT IS THE ARGUMENT OF THE LD. D.R. THAT THE LEAR NED CIT ERRED IN HOLDING THE INCOME FROM BANI BHAWAN AS THE INCOME FROM BUSINESS INSTEA D OF INCOME FROM HOUSE PROPERTY, SINCE THE ASSESSEE IS RESIDING IN A PART OF THE BUI LDING AND LET OUT THE REMAINING TO OTHERS ON RENTAL BASIS. HE FURTHER ASSAILED THE IMPUGNED ORDER ON THE GROUND THAT THE LEARNED CIT COMMITTED ERROR IN HOLDING THAT THE TOTAL TURNO VER WAS ACCUMULATED THROUGH A PERIODIC CYCLING OF THE SALES AMOUNT TO PURCHASES F OR FOUR TIMES DURING THE FINANCIAL YEAR, INSTEAD OF ADDING THE ENTIRE UNEXPLAINED INVE STMENT AS UNDISCLOSED INCOME. FOR THESE REASONS, LEARNED DR PRAYED TO RESTORE THE ORD ER OF THE LEARNED AO. 7. IT IS THE ARGUMENT OF THE LD. AR THAT THE LEARN ED CIT HAS TAKEN THE TOTAL UNEXPLAINED INVESTMENT AS THE RESULT OF ROTATING T HE SAME AMOUNT FOR FOUR TIMES INSTEAD OF TAKING IT AS ROTATION FOR NINE TIMES IN VIEW OF THE TAX AUDIT REPORT WHERE THE RATIO OF STOCK TO TURNOVER WAS FOUND TO BE 10.10%. HE FURTHER SUBMITTED THAT THE LEARNED CIT INCREASED IN THE GROSS PROFIT RATIO FRO M 10.36% TO 11.55% AND MADE CERTAIN ADDITION ON THIS BASIS. 8. AT THE OUTSET, IT WE WISH TO STATE THAT IN RESPE CT OF THE LEARNED CIT TAKING THE UNDISCLOSED INVESTMENT AS THE INVESTMENT IN FOUR CY CLES INSTEAD OF INVESTMENT IN NINE CYCLES AS PLEADED BY ASSESSEE, AND LEARNED CIT ENHA NCING THE GROSS PROFIT RATIO FROM 10.36% TO 11.55%, THERE IS NO APPEAL PREFERRED BY T HE ASSESSEE. IT IS ONLY THE REVENUE THAT HAS COME IN THIS APPEAL CHALLENGING THE TREATM ENT OF INCOME FROM BANI BHAWAN AND ALSO GRANTING RELIEF TO THE ASSESSEE TO A TUNE OF RS.52,21,380/-. 9. BASING ON THE ABOVE CONTENTIONS AND CIRCUMSTANCE S THE POINTS THAT ARISE FOR OUR CONSIDERATION ARE,- (I) HAS THE LEARNED CIT ERRED IN TREATING THE INCOME FR OM BANI BHAWAN AT PURI AS INCOME FROM BUSINESS INSTEAD OF THE INCOME FROM HOUSE PROPERTY AS FRAMED BY THE LEARNED AO? I.T.A. NO. 1580/KOL./2012 ASSESSMENT YEAR: 2003-2004 PAGE 4 OF 10 (II) HAS THE LEARNED CIT ERRED IN GRANTING RELIEF TO A T UNE OF RS.52,21,380/- TO THE ASSESSEE? ISSUE NO. 1 10. AS COULD BE SEEN FROM THE RECORD BANI BHAWAN IS A LODGE SITUATED ON THE BEACH AT PURI. THE ASSESSEE HAS BEEN CONDUCTING HIS BUSIN ESS IN LETTING OUT THIS PROPERTY ON COMMERCIAL BASIS TO MANY GOVERNMENT, SEMI-GOVERNMEN T AND INSTITUTIONS TO BE USED AS HOLIDAY HOME. SINCE ESTABLISHMENT ABOUT THREE DECAD ES BACK, THE INCOME FROM THE LODGING HOUSE HAS BEEN TREATED AS BUSINESS INCOME B Y THE ASSESSEE AND HAS BEEN ACCEPTED SO BY THE DEPARTMENT. HOWEVER, FROM ABOUT THE ASSESSMENT YEAR 1993-94, THE DEPARTMENT HAS STARTED TREATING SUCH INCOME AS INCO ME FROM HOUSE PROPERTY. DISPUTE HAS REACHED THE LEVEL OF ITAT IN RESPECT OF THE ASS ESSMENT YEARS 1993-94 AND 1995-96, WHEREIN THE ITAT DECIDED THE ISSUE IN FAVOUR OF ASS ESSEE HOLDING THAT THE INCOME FROM BANI BHAWAN BE TREATED AS INCOME FROM BUSINESS AND NOT INCOME FROM HOUSE PROPERTY. 11. IN RESPECT OF THE ASSESSMENT YEAR RELEVANT TO T HIS APPEAL ALSO, THIS ISSUE HAS BEEN CANVASSED BEFORE THE LEARNED CIT. CERTAIN DOCUMENTS WERE PRODUCED BEFORE THE LEARNED CIT AND ALSO BEFORE THIS TRIBUNAL. NOW WE SHALL PRO CEED TO ANALYZE AND APPRECIATE SUCH DOCUMENTARY EVIDENCE. THE ASSESSEE PRODUCED THE COP Y OF LICENSEE FEE RECEIPT AND ALSO THE LICENSES FOR THE YEARS 2003-2004 AND 2006 AS SA MPLES TO SHOW THE TERMS AND CONDITIONS. THESE DOCUMENTS ARE ENUMERATED FROM PAG E NO. 53 TO 56 OF THE PAPER BOOK. IN ALL THESE DOCUMENTS, WHILE GRANTING LICENCE IN F AVOUR OF THE ASSESSEE TO RECEIVED LODGERS/PILGRIMS, THE LICENSING AUTHORITY, I.E. THE MAGISTRATE, LODGING HOUSE FUND, PURI HAD STIPULATED THE FOLLOWING CONDITIONS :- (1) THE LICENSE SHALL BE PRODUCED TO THE MAGISTRATE, T HE MEDICAL OFFICER OR HEALTH OR ANY OTHER PERSONS AUTHORISED TO ENTER AND INSPECT UNDER SECTION 10 OF THE ACT. (2) THE LICENSE IS GRANTED SUBJECT TO THE CONDITIONS PRESCRIBED IN RULE 7 WHICH IS AS FOLLOWS :- (I) THE OWNER, OR IN HIS ABSENCE THE PERSON IN CHARGE OF ANY LICENSED HOUSE, SHALL KEEP ONE SWEEPER FOR EVERY HUNDR ED PILGRIMS. I.T.A. NO. 1580/KOL./2012 ASSESSMENT YEAR: 2003-2004 PAGE 5 OF 10 (II) PROVIDE OPEN KIROSINE TINS TARRED WITHIN AND WI THOUT AT THE RATE OF ONE FOR EVERY TEN PILGRIMS FOR THE COLLEC TIONS OF RUBBISH REFUSE. (III) CAUSE THE LIVING ROOMS, VARANDAHA AND COURT YAR DS TO BE SWEPT AND CLEANED DAILY AND THE COLLECTIONS OF RU BBISH AND REFUSE TO BE REMOVED. (IV) CAUSE ALL WELLS ATTACHED TO THE LICENSED HOUSE T O BE THROUGHLY CLEANED ONCE A YEAR & EXCEPT IN THE CASE OF COVERED WELLS FITTED WITH A PUMP SHALL HAVE ALL WELL DISINFECTED AT SUCH TIMES AND IN SUCH MANNER AS THE MAGISTRATE SHALL PRESCRIBE. (V) CAUSE ALL LATRINES, URINAL, DRAIN CESSPOOLS AND RECEPTACLES FOR RUBBISH TO BE CLEANED DAILY. (VI) DISPLAY ON A CONSPICUOUS PART OF THE MAIN ENTR ANCE OF THE HOUSE, A TICKET SHOWING RED LETTERS NOT LESS THAN S IX INCHES IN HEIGHT: (A) THE REGISTERED NUMBER OF THE LICENSE, (B) THE NUMBER OF PILGRIMS WHICH THE HOUSE IS LICENSED TO ACCOMMODATE. (C) THE PERIOD DURING WHICH THE LICENSE IS IN FORCE. (VII) DISPLAY IN A CONSPICUOUS PLACE ON THE LINTEL O F EACH ROOM OR ON THE POSTS OF EACH VARANDAH LICENSED FOR THE ACCOMMODATION OF PILGRIMS A TICKET SHOWING THE NUMBE R OF PILGRIMS FOR WHICH IT IS LICENSED & SHALL OUR ACCOMMOD ATE MORE THAN THE NUMBER AUTHORISED BY THE MAGISTRATE. (VIII) REPORT IMMEDIATELY TO THE NEAREST POLICE STATI ON ALL CASES OF SERIOUS ILLNESS AND ALL DATES ACCRUING IN THE LICENSED HOUSE. INFORMATION SHALL BE SENT IMMEDIATELY BY THE OF FICER- IN- CHARGE OF THE POLICE STATION TO THE MEDICAL OFFI CER OF HEALTH. (IX) AFFORD ASSISTANCE TO THE MEDICAL OFFICER OF HEA LTH OR HIS ASSISTANT IN REMOVING THE SICK PERSONS, IF NECESSARY , TO HOSPITAL AND IN GETTING THE HOUSE DISINFECTED. 12. THE ASSESSEE ALSO PRODUCED AS MANY AS NINE AGRE EMENTS ENTERED INTO WITH DIFFERENT ORGANIZATIONS WHICH ARE INCORPORATED IN P AGE NOS. 57 TO 96 OF THE PAPER BOOK. I.T.A. NO. 1580/KOL./2012 ASSESSMENT YEAR: 2003-2004 PAGE 6 OF 10 ALL THESE AGREEMENTS INVARIABLY SHOW THAT THE ORGAN IZATIONS TAKING THE PREMISES UNDER THESE AGREEMENTS WERE UNDER AN OBLIGATION TO USE TH E PREMISES FOR THE PURPOSE OF HOLIDAY HOME ONLY. IN SOME AGREEMENTS, THE PURPOSE WAS MENTIONED AS LODGING. SCHEDULED ANNEXED TO ALL THESE AGREEMENTS CLEARLY S HOW THAT THE DEMISED PREMISES CONSISTS OF SOME BED ROOMS, TOILET, KITCHEN, ETC. 13. THE LICENSE GRANTED BY THE MAGISTRATE, LODGING HOUSE FUND CLEARLY SHOWS THAT FOR CARRYING ON THE BUSINESS OF LETTING OUT THE PRO PERTY TO BE USED AS HOLIDAY HOME OR LODGE, SUCH LICENSE WAS GRANTED. THE AGREEMENTS REF ERRED TO ABOVE ALSO CLEARLY SHOW THAT WITH SUCH STIPULATION ONLY THE PROPERTY WAS LE T OUT TO DIFFERENT ORGANISATIONS. FURTHER IS NOT A CASE OF MERE LETTING OUT THE PROPE RTY ON A RENT, BUT THE ASSESSEE ALSO PROVIDED WATCH AND WARD, FURNITURE AND FIXTURES AND OTHER SERVICES. ALL THESE FACTS UNMISTAKEABLY SHOW THE INTENTION OF THE ASSESSEE TH AT HE WAS MAKING USE OF THE PROPERTY FOR BUSINESS OR COMMERCIAL PURPOSE. IT IS WORTH TO NOTE THAT IN SULTAN BROS. PVT. LTD. VS. CIT (1964) 51 ITR 353 AT PAGE NO. 354, THE HONBLE APEX COURT OBSERVED THAT WHETHER A PARTICULAR LETTING IS BUSINESS HAS TO BE DECIDED IN THE CIRCUMSTANCES OF EACH CASE, AND EACH CASE HAS TO BE LOOKED AT FROM A BUSI NESSMENS POINT OF VIEW TO FIND OUT WHETHER THE LETTING WAS THE DOING OF A BUSINESS OR THE EXPLOITATION OF HIS PROPERTY BY AN OWNER. 14. FURTHER, IN THE GROUNDS ITSELF, THE REVENUE PLE ADED THAT ORDER DATED 29.12.2006 UNDER SECTION 143(3)/254/251, IN RESPECT OF ASSESSM ENT YEAR 1993-94 WAS THE SAME, AND THE ASSESSEE ACCEPTED THE SAME WITHOUT PREFERR ING ANY APPEAL. AS A MATTER OF FACT, THE REVENUE HAS NEVER PRODUCED ANY SUCH MATERIAL IN SUPPORT OF ITS CONTENTION. ON THE OTHER HAND, VIDE PAGE NO. 104 AND 106 OF THE PAPER BOOK THE ASSESSEE PRODUCED THE COPY OF AN ORDER IN ITA NO. 49/CAL/2000 IN RESPECT OF ASSESSMENT YEAR 1995-96. IN THIS ORDER, A COORDINATE BENCH OF THIS TRIBUNAL CLEARLY OBSERVED THAT THE COPY OF THE ORDER IN RESPECT OF AY 1993-94 WAS PRODUCED BEFORE THE TRIBUN AL AND THE TRIBUNAL OBSERVED THEREIN THAT THE INCOME FROM THE BANI BHAWAN WAS TR EATED AS BUSINESS INCOME. FURTHER, VIDE NO. 107 TO 114 OF THE PAPER BOOK, THE ASSESSEE PRODUCED THE ORDER DATED 26.2.2010 PASSED BY THE LEARNED CIT IN RESPECT OF AY 2001-02. IN THIS ORDER, VIDE PARA (I) UNDER GROUND NO. 3, THE LEARNED CIT OBSERVED THAT THE PUR I MUNICIPALITY HAS GIVEN LICENCE TO RUN THE COMMERCIAL PROJECT ONLY AS A LODGING/HOLIDA Y HOME RESTRICTING THE NUMBER OF I.T.A. NO. 1580/KOL./2012 ASSESSMENT YEAR: 2003-2004 PAGE 7 OF 10 LODGERS AT 165, AND THE MATTER RELATING TO THE INCO ME OF BANI BHAWAN AS A BUSINESS INCOME HAD ALREADY BEEN DECIDED IN THE PAST BY THE ITAT IN THE AYS. 1993-94 AND 1995- 96. THE LEARNED CIT ALSO REFERRED THEREIN TO THE OR DER IN ITA NO. 49/CAL/2000 FOR AY 1995-96 WHEREIN THE ISSUE WAS HELD IN FAVOUR OF ASS ESSEE. FOLLOWING THE SAME IN RESPECT OF THE AY 2001-02, LEARNED CIT CONCLUDED THAT THE IN COME FROM BANI BHAWAN PURI SHOULD BE TREATED AS BUSINESS INCOME. IN THE IMPUGN ED ORDER LEARNED CIT REFERRED TO ALL THESE FACTS AND CIRCUMSTANCES OF THE CASE. HE ALSO RELIED UPON THE DECISION REPORTED IN NATIONAL STORAGE PVT. LTD. VS CIT (1967) 66 ITR 596 (SC), FOR THE PRINCIPLE THAT EVEN RENTAL INCOME FROM PROPERTY HAVING LIMITATION IN IT S USE IS ASSESSABLE AS BUSINESS INCOME AND NOT INCOME FROM HOUSE PROPERTY. IT IS P ERTINENT TO NOTE THAT IN THIS CASE ALSO THE USE OF PROPERTY IS BURDENED WITH CONDITIONS AS COULD BE FOUND FROM THE LICENSE GRANTED BY THE MAGISTRATE OF THE LODGING HOUSE FUND , PURI, WHICH ARE EXTRACTED ABOVE. 15. HONBLE ALLAHABAD HIGH COURT IN COMMISSIONER OF INCOME TAX VS.- PATESHWARI ELECTRICAL AND ASSOCIATED INDUSTRIES (P) LIMITED 28 2 ITR 61 (ALL) REFERRED TO THE DECISION IN SULTAN BROS. (P) LTD. VS.- CIT [1964] 51 ITR 353, CEPT VS.- SHREE LAKSHMI SILK MILLS LTD. [1951] 20 ITR 451 (SC), CIT VS.- S HANMUGHAM [1984] 147 ITR 692 (MAD.), S.G. MERCANTILE CORPN. (P) LTD. VS.- CIT [ 1972] 83 ITR 700 (SC), AND DISTINGUISHED THE DECISIONS REPORTED IN SHAMBHU INV ESTMENT (P) LTD. [2001] 249 ITR 47 (CAL.) AND CIT VS.- PURSHOTTAM DASS [2001] 247 ITR 516 (DELHI) TO REACH A CONCLUSION THAT WHEN THE PROPERTY WAS USED FOR COMMERCIAL PURP OSE BY LETTING OUT THE SAME WITH A FURNITURE AND FITTINGS AFTER OBTAINING SARAI LICENC E FROM THE DISTRICT MAGISTRATE AS WELL AS FROM THE DIST. HEALTH OFFICER AND RENEWABLE FROM YE AR TO YEAR, THE LEARNED CIT WAS RIGHT IN TREATING THE RECEIPTS AS BUSINESS INCOME. THIS D ECISION IS APPLICATION TO THE FACTS OF THIS CASE ON ALL FOURS. 16. REVENUE COULD NOT PRODUCE THE DOCUMENT, WHICH T HEY ARE RELYING UPON AND AT THE SAME TIME THEY ARE UNABLE TO DEMONISTRATE HOW A ND WHERE THE LEARNED CIT WAS WRONG. VIEWING FROM ANY ANGLE WE DO NOT FIND ANY ER ROR IN THE FINDING OF THE LEARNED CIT THAT THE INCOME FROM BANI BHAWAN PURI CONSTITUTES B USINESS INCOME AND NOT INCOME FROM HOUSE PROPERTY. WE, THEREFORE, UPHOLD THE FIND ING OF LEARNED CIT AND ANSWER THE ISSUE IN FAVOUR OF THE ASSESSEE. I.T.A. NO. 1580/KOL./2012 ASSESSMENT YEAR: 2003-2004 PAGE 8 OF 10 ISSUE NO. 2: 17. NOW COMING TO THE RELIEF TO A TUNE OF RS.52,21 ,380/- GRANTED BY THE LEARNED CIT TO THE ASSESSEE, WE FIND THAT THE LEARNED AO, BASIN G ON THE INCRIMINATING DOCUMENTS WITH IDENTIFICATION MARK TCS-22, TCS-44 AND TCS-48 ASSESSED UNDISCLOSED INVESTMENT AT RS,71,69,487/-. TO THIS AMOUNT, LEARNED AO ALSO ADDED GROSS PROFIT AT 10.36%. LEARNED AO ALSO CONSIDERED PAYMENTS TO ANUJ TEXTILE S AND ADDED THE AMOUNT ALONG WITH GROSS PROFIT RATIO AT 10.36%. FINALLY THE LEAR NED AO ADDED RS.2,60,000/- IN RESPECT OF THE AMOUNT UNDER TCS-2, TO REACH THE FINAL FIGUR E OF RS.91,65,486/- ON ACCOUNT OF UNDISCLOSED OR UNEXPLAINED INVESTMENT OR INCOME. 18. WE HAVE CAREFULLY PERUSED THE ORDER OF THE LEAR NED CIT. AFTER AN ELABORATE DISCUSSION AND COMPREHENSIVE CONSIDERATION OF THE D OCUMENTS UNDER TCS-2, TCS-4, TCS-9, TCS-22, TCS-44 AND TCS-48, THE LEARNED CIT REACHED AT RS.1,00,79,633/- AS THE TOTAL AMOUNT OF TURNOVER. LEARNED CIT DID NOT AGRE E WITH THE LEARNED AO IN RESPECT OF GROSS PROFIT RATIO, AND AS AGAINST THE GROSS PROFIT RATIO OF 10.36% FRAMED BY AO, LEARNED CIT ENHANCED IT TO 11.55% AND ADDED THE DIF FERENCE AMOUNT TO THE INCOME OF THE ASSESSEE. AS ALREADY STATED ABOVE, THE ASSESSEE DOES NOT CHALLENGE THE ENHANCEMENT OF THE TURNOVER FROM RS.95,61,486/- AS FRAMED BY T HE LEARNED AO TO RS.1,00,79,633/- OR ENHANCING THE GROSS PROFIT RATIO FROM 10.36% TO 11 .55%. THE ENTIRE DISPUTE IN THIS APPEAL REVOLVES AROUND THE FINDING OF THE LEARNED C IT THAT THE SAME AMOUNT WAS ROTATED FOR FOUR TIMES TO MAKE THE TOTAL TURN OVER OF RS. 1 ,00,79,633/- AS SUCH OF ONLY ONE FOURTH OF THIS TOTAL TURN OVER ALONE IS THE INVESTMENT WHI CH HAS TO BE ADDED TO THE INCOME OF THE ASSESSEE INSTEAD OF ADDING THE TOTAL TURNOVER TO TH E INCOME OF THE ASSESSEE. FOR THIS PURPOSE, WE HAVE TO LOOK INTO THE ORDER OF THE LEAR NED CIT AND A LINE OF REASONING GIVEN BY HIM TO REACH SUCH A CONCLUSION THAT THE TURNOVER WAS ACCUMULATED BY ROTATING THE SALE AMOUNT TO PURCHASES FOR FOUR TIMES A YEAR, AND THAT RS.25,19,908/- IS THE ACTUAL AMOUNT OF UNDISCLOSED INVESTMENT. 19. IT COULD BE SEEN FROM THE RECORD THAT INITIALLY THE ASSESSEE HAS CLAIMED THAT THE SALES AMOUNT WAS PLOUGHED IN AT LEAST FOUR TIMES FO R PURCHASES DURING THE PERIOD; THEREFORE, THE UNDISCLOSED INVESTMENT SHOULD BE EST IMATED AT 1/4 TH OF THE TURNOVER. HOWEVER, SUBSEQUENTLY HE CHANGED THE VERSION AT CLA IMED THAT THE INVESTMENT BEING I.T.A. NO. 1580/KOL./2012 ASSESSMENT YEAR: 2003-2004 PAGE 9 OF 10 ROTATED NINE TIMES ON THE BASIS OF THE DISCLOSED AC COUNTS AND THE RATIO OF STOCK TO TURNOVER IN THE TAX AUDIT REPORT. LEARNED CIT APPR ECIATED THE RECORD AND ACCOUNT BOOKS OF THE ASSESSEE TO FIND OUT THE TRUTH AND REJECTED THE SECOND VERSION OF THE ASSESSEE. ON VERIFICATION OF THE PAYMENTS MADE BY THE ASSESSEE T HE LEARNED CIT FOUND THAT THE PAYMENTS ARE OF SMALL AMOUNTS AND PERIODIC IN NATUR E AND THE ENTIRE AMOUNT HAS NOT BEEN PAID IN ONE TIME. THE PAYMENTS WERE FROM TO TI ME DURING THE FINANCIAL YEAR. ON CONSIDERING THE PURCHASES AND THE GOODS SOLD LEARNE D CIT FURTHER FOUND THAT THE AMOUNTS REALIZED ON SALE OF GOODS WERE AGAIN PLOUGH ED IN BY WAY OF PURCHASES, AND THIS CYCLE OF SALES AND PURCHASES CONTINUED, HAVING CONS IDERED THE NATURE OF BUSINESS OF THE ASSESSEE, LEARNED CIT CAME TO AN OPINION THAT MONIE S IN SUCH MANNER COULD BE ROTATED FOUR TIMES IN A YEAR. ON THIS PREMISES, LEARNED CIT ESTIMATED UNDISCLOSED INVESTMENT AT RS.25,19,908/- BEING 1/4 TH OF THE TOTAL TURNOVER OF RS.1,00,79,633/-. NEITHER THE REVENUE NOR THE ASSESSEE COULD EXPLAIN TO US AS TO HOW THE LEARNED CIT WAS WRONG IN THIS PROCESS. MERELY BECAUSE THE DOCUMENTS RECOVERE D FROM THE PREMISES OF ASSESSEE IN THE SURVEY CONDUCTED ON 18.902.2003 INDICATE THAT T HERE WAS UNDISCLOSED TURNOVER OF RS.91,65,486/- AS PER LEARNED AO OR RS.1,00,79,633/ - AS PER LEARNED CIT, THE ENTIRE TURNOVER AMOUNT CANNOT TREATED AS THE UNDISCLOSED I NCOME OR INVESTMENT, WITHOUT HAVING REGARD TO THE FACTS AND FIGURES SURROUNDING THE BUSINESS OF THE ASSESSEE. WHILE ASSESSING THE INCOME OF THE ASSESSEE, SHOULD HAVE H AD TO THE COMMON COURSE OF NATURAL ELEMENTS, AND PUBLIC AND PRIVATE BUSINESS IN RELATI ON TO FACTS AND FIGURES OBTAINED IN A PARTICULAR CASE. IT SEEMS LEARNED AO DID NOT CONSID ER THIS ASPECT AND THE LEARNED CIT HAVING GONE THROUGH THE DETAILS RELATING TO THE PUR CHASES SALES AND PAYMENTS IN RESPECT OF THE BUSINESS OF THE ASSESSEE REACHED A CONCLUSIO N THAT THE TOTAL TURNOVER WAS ACCUMULATED THROUGH A PERIODIC CYCLING OF THE SALES AMOUNT TO PURCHASES AND IT GENERALLY TAKES THREE MONTHS FOR EACH CYCLE TO COMP LETE. THIS FINDING OF THE LEARNED CIT IS IN CONFORMITY WITH THE INITIAL PLEA OF THE ASSES SEE THAT THE FUNDS WERE BEING ROTATED AT LEAST FOUR TIMES DURING THE YEAR. 20. NOW COMING TO THE ASPECT OF ENHANCING THE GROSS PROFIT RATIO FROM 10.36% TO 11.55%, LEARNED CIT HAS CONSIDERED THE GROSS PROFIT RATIO RATE BY WORKING THE FORMULA, I.E. GROSS PROFIT RATIO ON SALES X 100/100-GP ON SA LES. BY WORKING OUT LIKE THIS HE ARRIVED AT 11.55% OF GROSS PROFIT RATIO ON THE TOT AL TURNOVER OF RS.1,00,79,633/-. BY CALCULATING THE G.P. IN THAT METHOD AND ADDING SUCH AMOUNT TO THE UNDISCLOSED AMOUNT I.T.A. NO. 1580/KOL./2012 ASSESSMENT YEAR: 2003-2004 PAGE 10 OF 10 OF RS.25,19,908/-, LEARNED CIT REACHED THE AMOUNT T O BE ADDED BACK AT RS.39,44,106/-. BY DOING SO, THE LEARNED CIT GRANTED RELIEF TO A TU NE OF RS.52,21,380/-. WE ARE AT LOSS TO UNDERSTAND WHERE EXACTLY THE LD. CIT ERRED IN THIS PROCESS. THE REASONING ADOPTED BY THE LEARNED CIT IS SCIENTIFIC AND THE FINDINGS REAC HED BY HIM ARE IMPECCABLE. WE UPHOLD THE SAME. WE, THEREFORE, FIND THIS ISSUE AGAINST TH E REVENUE AND DISMISS GROUND NO. 2. 21. IN VIEW OF OUR FINDINGS ON ISSUE NO. 1 & 2, WE DISMISS GROUNDS NO. 1 & 2. CONSEQUENTLY APPEAL IS ALSO DISMISSED, CONFIRMING T HE FINDINGS OF LD. CIT ON THESE ASPECTS. 22. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 14, 2016. SD/- SD/- (WASEEM AHMED) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER KOLKATA, THE 14 TH DAY OF SEPTEMBER, 2016 COPIES TO : (1) INCOME TAX OFFICER, WARD-41(1), KOLKATA, 18, RABINDRA SARANI, KOLKATA-700 001 (2) SRI SHYAMAL BANERJEE, 128A, BIDHAN SARANI, KOLKATA-700 004 (3) COMMISSIONER OF INCOME TAX(APPEALS)-XXX, KOLK ATA (4) CIT- ,KOLKATA; (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.