DCIT, Circle-25, Kolkata, Kolkata V. Shri Prasanto Saha, Kolkata

ITA 1592/KOL/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 2672 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 05-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: B K SAHOO
• Keywords: Business income; Assessment record
• Section: 143(3); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B, KOLKATA [BEFORE SHRI J.S. REDDY, AM & SHRI S.S. VISWANETHRA RAVI, JM] I.T.A. NO. 1591 & 1592/KOL/2016 ASSESSMENT YEARS: 2011-12 & 2012-13 DCIT CIRCLE 25 KOLKATA...........................................................APPELLANT AAYAKAR BHAWAN KAKSHIN, 2, GARIAHAT ROAD, SOUTH, KOLKATA 700 068. [PAN: BIDPS 6663 R] SHRI PRASANTO SAHA................................................RESPONDENT 119/1, CITY GREEN, P.G. SHAH RD., BLOCK 3G, KOLKATA 700 032. APPEARANCES BY: SHRI S. DASGUPTA, ADDL. CIT, DR APPEARING ON BEHALF OF THE REVENUE. SHRI B.K. SAHOO, AR APPEARING ON BEHALF OF THE ASSESSEE. DATE OF CONCLUDING THE HEARING : JULY 19, 2018 DATE OF PRONOUNCING THE ORDER : OCTOBER 10 TH , 2018 ORDER SHRI S.S. VISWANETHRA RAVI, JM THESE TWO APPEALS BY THE REVENUE AGAINST SEPARATE ORDERS EVEN DATED 30.05.2016 PASSED BY THE CIT(A) 7, KOLKATA FOR ASSESSMENT YEARS 2011-12 AND 2012-13. 2. SINCE THE FACTS AND CIRCUMSTANCES AND ISSUES INVOLVED IN BOTH THE APPEALS ARE IDENTICAL AND SIMILAR AND WITH THE CONSENT OF BOTH THE PARTIES, WE PROCEED TO HEAR BOTH THE APPEALS TOGETHER AND PASS CONSOLIDATED ORDERS FOR THE SAKE OF CONVENIENCE. 3. HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 2 I.T.A. NOS. 1591 & 1592/KOL/2016 SHRI PRASANTO SAHA 4. FIRST WE TAKE UP THE FACTS OF THE CASE IN APPEAL NO 1591/KOL/2016. ON PERUSAL OF THE ASSESSMENT RECORD, IT IS OBSERVED THAT THE AO DETERMINED THE INCOME OF THE ASSESSEE BY ADOPTING @ 3% ON SALES OF RS. 23,06,23,240/-. FURTHER THE AO TREATED THE LICENSE FEE OF RS. 3,56,97,927/- UNDER THE HEAD INCOME FROM OTHER BUSINESS. THE CIT(A) DELETED THE ADDITION MADE ON ACCOUNT OF LICENSE FEE AND INCLUDED THE SAME IN COMPUTING THE TOTAL TAXABLE INCOME. THE CIT(A) CONFIRMED THE FINDINGS OF AO IN REJECTING THE BOOKS OF ACCOUNT OF ASSESSEE. THE CIT(A) DIRECTED THE AO TO CONSIDER LICENSE FEE ALONG WITH THE NET SALES AND TO ADOPT 3% OF LICENSE FEES AS GROSS PROFIT. CLAUSE 3(IIIB) TO SECTION 28 EXPLAINS CASH ASSISTANCE BY WHATEVER NAME CALLED RECEIVED OR RECEIVABLE BY ANY PERSON AGAINST EXPORTS UNDER ANY SCHEME OF THE GOVERNMENT OF INDIA IS CHARGEABLE TO INCOME TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS AND PROFESSION. IN THIS REGARD, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AS HE DIRECTED THE AO TO CONSIDER THE LICENSE FEE AS INCOME FROM BUSINESS AS PART OF THE TOTAL TURNOVER. HENCE WE UPHOLD THE ORDER OF CIT(A). FOR BETTER UNDERSTANDING THE FINDING OF CIT(A) IS HEREWITH REPRODUCED BELOW: 6.2 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE AR OF THE APPELLANT AND DO NOT FIND FORCE IN THE ARGUMENT. THE AO HAS ESTIMATED THE GROSS PROFIT @3% ON TOTAL SALES AND ASSESSED THE EXPORT INCENTIVES SEPARATELY. I HAVE GIVEN MY DECISION IN GROUND NO. 3 THAT THE EXPORT INCENTIVES ARE INTEGRAL PART OF THE BUSINESS RECEIPTS AND FORMS PART OF TRADING RECEIPT AND CANNOT BE SEPARATED. THE ADDITION MADE BY THE AO AMOUNTING TO RS. 3,56,97,927/- WAS DELETED BY ME. I HAVE ALSO CONSIDERED THE SUBMISSION OF THE APPELLANT THAT THE SALE PRICE IS DETERMINED TAKING INTO CONSIDERATION OF THE EXPORT INCENTIVES LINKED TO THE SALES. THE TRADER IS INTERESTED IN DISPOSING THE STOCKS RATHER THAN HOARDING IN COMPETITIVE MARKET. THE APPELLANT HAS MAINTAINED THE BOOKS OF ACCOUNTS AND AUDITED U/S 44AB OF I.T. ACT. NO DEFECTS WERE FOUND BY THE AO IN THE BOOKS OF ACCOUNTS. THE APPELLANT RELIED ON THE DECISION IN THE CASE OF HONBLE SUPREME COURT IN THE CASE OF DHAKESWARI COTTON MILLS LTD. VS. CIT 26 ITR 775 (SC) WHEREIN IT WAS HELD THAT IN MAKING ASSESSMENT ORDER U/S 143(3) THE AO IS NOT 3 I.T.A. NOS. 1591 & 1592/KOL/2016 SHRI PRASANTO SAHA ENTITLED TO MAKE A PURE GUESS WITHOUT ANY EVIDENCE AND MATERIAL AT ALL. SIMILARLY, HONBLE CALCUTTA HIGH COURT JUDGEMENT IN THE CASE OF DABROS INDUSTRIAL CO. (P) LTD. VS CIT, (1977) 108 ITR 424 (CAL) HELD THAT ONCE THE BOOKS OF ACCOUNTS ARE REJECTED THE ASSESSING OFFICER HAS TO ESTIMATE THE INCOME REASONABLY ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD AND HE CANNOT RESORT TO GUESS WORK. THE ASSESSING OFFICER DID NOT BRING ANY COMPARABLE CASE ON RECORD. SIMILARLY THE APPELLANT ALSO DID NOT PLACE ANY COMPARABLE CASE TO CONVERT THE ESTIMATION MADE BY THE AO. IN THE CIRCUMSTANCES THE BEST ALTERNATIVE AVAILABLE IS TO ESTIMATE THE INCOME FROM THE INFORMATION AVAILABLE FROM THE APPELLANTS OWN RECORD. IN THE APPELLANTS CASE THE GROSS PROFIT FOR THE AY 2009-10 WAS 1.31% AND FOR THE AY 2010-11 WAS 2.86% AND THE ASSESSING OFFICER ESTIMATED THE GROSS PROFIT @3%. CONSIDERING THE FACTS OF THIS CASE AND THE DEFECTS BROUGHT ON RECORD BY THE AO I HOLD THAT THE ESTIMATION OF GROSS PROFIT @3% ON IS FAIR AND REASONABLE. THE AO ESTIMATED THE GROSS PROFIT ON TOTAL SALES OF RS. 23.06 CRORES. WHILE DECIDING GROUND NO. 3 RELATING TO SALE OF LICENSES I HAVE HELD THAT THE EXPORT INCENTIVES ARE INTEGRAL PART OF TURNOVER AND CANNOT BE EXCLUDED FOR COMPUTING THE TAXABLE INCOME. THEREFORE, FOR THE PURPOSE OF TURNOVER I HOLD THAT THE SALE OF LICENSES AMOUNTING TO RS. 3,56,97,927/- ALSO SHOULD BE INCLUDED TO ESTIMATE THE GROSS PROFIT. ACCORDINGLY THE GROSS PROFIT @3% ON TOTAL TURNOVER OF RS. 26,63,21,167/- (I.E. SALES RS. 23,06,23,240/- PLUS SALE OF LICENSES RS. 3,56,97,927/-) INCLUDING THE SALE OF LICENSE WORKS OUT TO RS. 79,89,635/-. THE APPELLANT HAS DECLARED GROSS PROFIT OF RS. 66,00,425/- AND THE AO ESTIMATED THE GROSS PROFIT OF RS. 6918697/-. I DIRECT THE AO TO ADOPT THE G.P. OF RS. 79,89,635/- IN PLACE OF GROSS PROFIT ESTIMATED BY THE AO AMOUNTING TO RS. 69,18,697/-. IN THE RESULT IN GROUND NO. 2, 4 & 5 THE ASSESSMENT IS ENHANCED BY RS. 10,70,938/- ON ACCOUNT OF ESTIMATION OF GROSS PROFIT. GROUND NO. 2, 4 & 5 STANDS DISPOSED OFF ACCORDINGLY. 5. IN VIEW OF THE ABOVE, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A), GROUNDS 1 TO 3 RAISED BY THE REVENUE ARE DISMISSED. 6. GROUND NO 4 IS GENERAL IN NATURE AND REQUIRES NO ADJUDICATION, HENCE IT IS DISMISSED. 4 I.T.A. NOS. 1591 & 1592/KOL/2016 SHRI PRASANTO SAHA ITA 1592/KOL/2016 7. ITA 1592/K/2016 FOR A.Y. 2012-13 AS DISCUSSED ABOVE, THE FACTS AND CIRCUMSTANCES AND ISSUE RAISED IN THIS APPEAL ARE SIMILAR TO GROUNDS RAISED IN ITA 1591/K/2016. SINCE, WE DECIDED GROUNDS RAISED IN THE ABOVE APPEAL IN THE AFOREMENTIONED PARAGRAPH IN FAVOUR OF ASSESSEE, WE ADOPT THE SAME VIEW IN THIS APPEAL. THEREFORE, THE IMPUGNED ORDER PASSED BY THE CIT(A) IS JUSTIFIED. GROUNDS RAISED 1 TO 3 BY THE REVENUE ARE DISMISSED. GROUND NO. 4 IS GENERAL IN NATURE REQUIRES NO ADJUDICATION, HENCE IT IS DISMISSED. 8. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH OCTOBER, 2018. SD/- SD/- J. SUDHAKAR REDDY S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10/10/2018 BISWAJIT, SR. P.S. COPY OF ORDER FORWARDED TO: 1. SHRI PRASANTO SAHA, 119/1, CITY GREEN, P.G. SHAH RD, BLOCK 3G, KOLKATA 700 032. 2. DCIT, CIR 25, AAYAKAR BHAWAN DAKSHIN, KOLKATA 700 068. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, SR. P.S. / H.O.O. ITAT, KOLKATA