Pradipta Kumar Rout, Koraput V. ITO, Koraput

ITA 167/CTK/2011

• Counselvise Citation: 16722114 RSA 2011
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 25-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 31-03-2011
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHARJEES C MOHANTYDRS
• Assessee Lawyers: N ANAND RAO

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 167/CTK/2011 AND 461/CTK/2 010 (ASSESSMENT YEAR 2006 - 07) PRADIPTA KUMAR ROUT, QR. NO. A - 25,H.A.L.TOWNSHILP, SUNABDEHA, DIST. KORAPUT. PAN: ACJPR 3958 VERSUS INCOME - TAX OFFICER, WARD 2, AT/P.O. JEYPORE, DIST. KORAPUT. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI N.ANAND RAO, AR FOR THE RESPONDENT SHRI A.BHATTACHARJEE/S.C.MOHANTY,DRS DATE OF HEARING : 25.0 8.2011 DATE OF PRONOUNCEMENT : 16.09.2011 ORDER SHRI K.K.GUPTA, AM : THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST TWO DIFFERENT ORDERS OF THE COMMISSIONER OF INCOME - TAX (APPEALS) FOR THE ASSESSMENT YEAR 2006 - 07, WHICH WERE HEARD TOGETHER AND ARE DISPOSED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.167/CTK/2011 : 2. THE ASSESSEE HAS FILED THIS APPEAL AGAINST ORDER DT.30.12.2010 OF THE LEARNED CIT(A) IN RELATION TO THE ASSESSMENT MADE U/S.144 OF THE INCOME - TAX ACT,1961 FOR THE ASSESSMENT YEAR 2006 - 07. 3. IN THIS APPEAL, THE ASSESSEE HAS RAISED AS MANY AS NINE GROUNDS OF APPEAL, OUT OF WHICH GROUNDS NO.1,2,8 AND 9 ARE BEING OF GENERAL NATURE, THE SAME NEED NO SPECIFIC ADJUDICATION. 4. AT THE TIME OF HEARING, THE LEARNED AR OF THE ASSESSEE DID NOT PRE SS GROUNDS NO.6 AND 7 AND THEREFORE, THEY ARE DISMISSED AS SUCH. 5. GROUNDNO.3 RELATES TO THE CONFIRMATION OF ADDITION OF 9,75,538 MADE BY THE ASSESSING OFFICER UNDER THE HEAD UNDISCLOSED INCOME. 6. THE RELEVANT FACTS IN BRIEF ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE OUTSTANDING LIABILITY ON LABOUR WAGES PAYABLE & EX - PARTN ERS OF 26,77,321 AS ON 01.04.2005 INCLUDES OUTSTANDING DUES OF 2,49078, 2,28,467 , 2,49 ,078 & 2,48,914 PAYABLE TO THE EX - PARTNERS SRI B.B.ROUT, SRI PRAKASH KUMAR ROUT, PRASANNA KUMAR SWAIN, HITESH KUMAR ROUT RESPECTIVELY & THE OUTSTANDING LIABIL ITY OF 5,88,500 FOR LABOUR AND WAGES BY THE END OF THE YEAR UNDER CONSIDERATION SUGGESTS THAT THE ASSESSEE HA D PAID 9,75,538 TO THE E X - PARTNERS THIS YEAR. ITA NO.167/CTK/2011 AND 461/CTK/23010 2 THE ASSESSING OFFICER OBSERVED IN THE ASSESSMENT ORDER PASSED U/S.144 THAT I N THE ABSENCE OF BOO KS OF ACCOUNT OF THE ASSESSEE, RETURN OF INCOME OF THE EX - PARTNERS, THEIR BOOKS OF ACCOUNT, BANK ACCOUNTS ETC, HE COULD NOT VERIFY THE GENUINENESS OF THE TRANSACTION AND ACCORDINGLY, HE TREATED 9,75,538 AS INCOME OF THE ASSESSEE FROM THE UNDISCLOSED SOUR CE UTILIZED FOR LIQUIDATION OF THE OUTSTANDING DUES OF THE EX - PARTNERS. IN APPEAL, THE LEARNED CIT(A) CONFIRMED THE SAME. 7. HEARD BOTH PARTIES AND CAREFULLY PERUSED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW. WE FOUND THAT IN THE ASSESSMENT ORDER THE AS SESSING OFFICER HAS OBSERVED THAT A SUM OF 26,71,321 WAS THE AMOUNT OWED TO THE LABOURERS FOR PAYMENT (INCLUDING EX - PARTNERS) WHICH ARE RECONCILED IN HIS ORDER BY PERUSING THE IMMEDIATELY PRECEDING ASSESSMENT YEARS LIABILITIES. IN THE LIABILITIES , THE AMOUNT STOOD PAID ALONG WITH THE AMOUNT PAYA BLE TO THE EX - PARTNERS WHO HAD BEEN PAID THE SAID AMOUNT IN THE IMPUGNED ASSESSMENT YEAR . HE COMPARE D THE TWO BY INDICA TING THAT DURING THE IMPUGNED ASSESSMENT YEAR THERE WAS A LIABILITY OF 5,88,500 FOR LABOUR AND WAGES PAYMENTS WHICH INDICATED THAT THE ASSESSEE HAD PAID 9,75,538 TO THE EX - PARTNERS AND THE BALANCE OF 17,01,783 TO LABOUR FOR THE WAGES. HE HELD THE SAME AS DOUBTFUL WHICH THEREFORE WAS THE SOLE REASON FOR MAKING THE ADDITION AND WAS THEREFORE CONFIRMED BY THE LEARNED CIT(A) ON THE BASIS OF SAME THAT THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS OF PROVING THE NATURE AND SOURCE OF PAYMENTS TO THE EX - PARTNERS WITH COGENT EVIDENCE. WE ARE OF THE CONSIDERED VIEW THAT THE AUTHORITIES BELOW MISDIRECTED THEMSELVES TO HOLD THAT A LIABILITY CREAT ED IN THE IMMEDIATELY PRECEDING YEAR HAS TO BE PAID FROM THE INCOME GENERATED IN THE IMPUGNED ASSESSMENT YEAR AND NOT NECESSARILY FOR THE PURPOSE OF RENDERING THE SAME TO TAX. IN OTHER WORDS, THE CASH FLOW CANNOT BE AKIN TO P & L ACCOUNT WHICH THE AUTHORIT IES BELOW HAVE HELD AS FROM UNDISCLOSED SOURCES. HAVING ACCEPTED THE PAYMENTS TO LABOURERS AND THE OUTSTANDING AMOUNT TO EX - PARTNERS FOR EARLIER YEAR WHICH WAS TO BE PAID IN THE IMPUGNED ASSESSMENT YEAR , THE ADDITION COULD NOT BE MADE IN THE IMPUGNED ASSES SMENT YEAR ALONE. WE HAVE PERUSED THE TWO FINANCIAL STATEMENTS FOR THE TWO AYS WHICH INDICATE THAT THE AMOUNTS WERE PAID IN ACCORDANCE WITH THE BUSINESS TRANSACTIONS CONDUCTED BY THE ASSESSEE IN THE PREVIOUS YEAR WHEN IT COULD NOT BE SAID THAT THE EX - PARTN ERS HAVE BEEN PAID FROM THE LABOUR AND WAGES ACCOUNT WHICH HAD BEEN SHOWN AS OUTSTANDING. BOTH THE AUTHORITIES ACCEPTED THAT THE PAYMENTS HAVE BEEN MADE THEREFORE ITA NO.167/CTK/2011 AND 461/CTK/23010 3 CANNOT BE A CASE OF MAKING THE ADDITION AS PAYMENT FROM UNDISCLOSED SOURCES. NO EFFORT HAS BE EN MADE EITHER BY THE ASSESSING OFFICER OR THE LEARNED CIT(A) THAT CASH COULD NOT HAVE BEEN PAID TO THE EX - PARTNERS OTHER THAN FROM THE BOOKS OF ACCOUNT WHICH WERE DULY AUDITED AND CERTIFIED U/S.44AB. IN ANY CASE, THE SAME COULD NOT BE CONSIDERED FOR TAXAT ION IN THE IMPUGNED ASSESSMENT YEAR AS THE CAPITAL LIABILITY WAS SHOWN IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR AND WAS PAID IN THE IMPUGNED ASSESSMENT YEAR WHEN THE LIABILITY OF LABOUR AND WAGES (REVENUE) WAS GIVEN CREDENCE BY THE ASSESSING AUTHORITIE S AS CLAIMED BY THE ASSESSEE. FINDING NO MERIT IN THE SAID ADDITION, WE DIRECT THE DELETION OF THE SAME. 8. GROUND NO.5 RELATES TO ESTIMATION OF PROFIT @9%, WHICH ASSESSEE HAS CONTENDED TO BE EXCESSIVE AND ARBITRARY. 9. HAVING HEARD BOTH THE PARTIES AND PE RUSING THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW, WE UPHOLD THE ESTIMATION OF PROFIT AS MADE BY THE AUTHORITIES BELOW @9% AS NO CONTROVERTING MATERIAL COULD BE PRODUCED BY THE LEARNED AR OF THE ASSESSEE FOR HIS PLEADING TO ESTIMATE THE NET PROFIT FROM C ONTRACT WORKS @8%. GROUND NO.5, THEREFORE, IS DISMISSED. 10. IN THE RESULT, ITA NO.167/CTK/2011 IS PARTLY ALLOWED. ITA NO.461/CTK/2010 : 11. THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE ORDER DT.20.10.2010 OF THE COMMISSIONER OF INCOME - TAX (APPEALS) CONF IRMING THE PENALTY OF 10,000 LEVIED U/S.271(1)(B) OF THE INCOME - TAX ACT,1961 FOR THE ASSESSMENT YEAR 2006 - 07 IN THE ABSENCE OF PRODUCTION OF BOOKS OF ACCOUNTS BEFORE THE ASSESSING OFFICER. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSMENT HAS BEEN MADE BY THE ASSESSING OFFICER U/S.144 FOR NON - PRODUCTION OF BOOKS OF ACCOUNT. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE BOOKS OF ACCOUN T ARE MAINTAINED AND GOT AUDITED U/S.44AB OF THE ACT TO WHICH THE LEARNED DR COULD NOT CONTROVERT. THEREFORE, WHEN THE BOOKS OF ACCOUNTS ARE MAINTAINED AND DULY AUDITED BUT COULD NOT BE PRODUCED FOR WHICH THE ASSESSEE HAS EXPLAINED BEFORE THE AUTHORITIES BELOW AND SINCE THERE IS NO DELIBERATE OR WILFULL NEGLIGENCE ON THE PART OF THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT THE PENALTY OF 10,000 LEVIED ITA NO.167/CTK/2011 AND 461/CTK/23010 4 U/S.271(1)(B) IS NOT JUSTIFIED. WE CANCEL THE SAME AND ALLOW THE APPEAL OF THE ASSESSEE. 13. IN THE RESULT, ITA NO.461/CTK/2010 IS ALLOWED. (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 16 TH SEPTEMBER, 2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE A PPELLANT: PRADIPTA KUMAR ROUT, QR. NO. A - 25,H.A.L.TOWNSHILP, SUNABDEHA, DIST.KORAPUT. 2. THE RESPONDENT: INCOME - TAX OFFICER, WARD 2, AT/P.O. JEYPORE, DIST. KORAPUT. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.