Jagdish Chandra Dutta, Dakshin Dinajpur V. I.T.O, Wd -1, Balurghat, Dakshin Dinajpur

ITA 1714/KOL/2013

• Counselvise Citation: 171423514 RSA 2013
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 03-06-2013
• Court: TRIBUNAL
• Department Lawyers: SANJAY SR DR
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: KOLKATA [BEFORE HON BLE SHRI B.P.JAIN, AM] I.T.A NO.1714 /KOL/2013 ASSESSMENT YEAR: 2008 - 09 JAGADISH CHANDRA DUTTA VS I.T.O., WARD - 1, D AKSHIN DINAJPUR BALURGHAT (APPELLANT) ( RES PONDENT) (PAN: AAIFR 1732 N) FOR THE APPELLANT : SHRI SUBASH AGARWAL, ADVOCATE FOR THE RESPONDENT : SHRI SANJAY, SR.DR, ADDL. C.I.T. DATE OF HEARING : 04 .06 .2015. DATE OF PRONOUNCEMENT: 04 .06 .2015. ORDER PER SHRI B.P.JAIN, AM : THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF LD.CIT(A) - JALPAIGURI DATED 01 .03.2013 FOR ASSESSMENT YEAR 2008 - 09. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN DIRECTING THE AO TO APPLY G.P. OF THE LAST YEAR ON THE NET PURCHASE FIGURE OF RS.1,0027,290/ - MINUS CLOSING STOCK AS ON 31.03.2008. 2. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE ACCEPTE D THE NET PROFIT FROM THE ASSES SEE S BUSINESS AS DISCLOSED IN THE AUDITED FINAL ACCOUNTS AS AGAINST THE NET INCOME FROM BUSINESS COMPUTED BY THE LD. A.O. AT RS.7,91,894/ - . 3. FOR THAT THE ACTION OF THE LD. CIT(A) IN RESORTING TO THE ESTIMATION OF GROSS PROFIT OF THE BUSINESS OF ASSESSEE IS ERRONEOUS WITHOUT REJECTION OF THE ASSESSEE S BOOKS. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ALL OR ANY OF THE GROUNDS OF APPEAL. 3 . THE BRIEF FACTS OF THE CASE AS EMANATING FROM AO S ORD ER ARE REPRODUCED HEREIN BELOW FOR THE SAKE OF CONVENIENCE : - A SURVEY OPERATION WAS CONDUCTED ON 11.03.2008 AT BUSINESS PREMISES OF THE SAID ASSESSEE . S O THIS CASE WAS SELECTED UNDER SCRUTINY FOR THE CONCERNED ASSESSMENT YEAR. NOTICES U/S 143(2)AND 142(1 ) OF THE INCOME TAX ACT, 1961 WERE ISSUED AND DULY SERVED UPON THE ASSESSEE. ITA N O. 1714/KOL/2013 JAGADISH CHANDRA DUTTA A.YR. 2008 - 09 2 IN RESPONSE TO THE SAID NOTICES, P.S.CHOWDHURY, ADV, AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME TO EXPLAIN THE RETURN. DURING THE COURSE O F SCRUTINY ASSESSMENT PROCEEDING, AUTHORISED REPRESENTATIVE OF THE ASSESSEE WAS ASKED TO PRODUCE BILL AND VOUCHERS IN SUPPORT OF MAINTAINED BOOKS OF ACCOUNTS. DURING THE COURSE OF HEARING SOME OF THE BILLS IN SUPPORT OF INVENTORISED BOOKS OF ACCOU NTS FROM JCD - 1 TO JCD - 15 WERE PRODUCED, WHICH ARE EXAMINED WITH THE BOOKS OF ACCOUNT OF THE ASSESSEE. AFTER EXAMINATION OF THE BOOKS OF ACCOUNT IT IS SEEN THAT GROSS PROFIT COMES TO RS.7,26,771/ - (11.51%) OUT OF SALES OF RS.63,14,831/ - WHICH IS MUCH LOW IN COMPARISON TO LAST YEAR P/L ACCOUNT WHERE GROSS PROFIT WAS SHOWN @13.52% OF TOTAL SALES. SO AT THE TIME OF SURVEY OPERATION GROSS PROFIT HAS BEEN TAKEN @13.52% O N TOTAL PERIOD WISE SALES FROM 0 1.04.2007 TO 11.03.2008 (DATE OF SURVEY). DURING THE SURVEY OP ERATION AT BUSINESS PREMISES OF THE ASSESSEE, FOLLOWING DATE WISE GROSS PROFIT WERE FOUND. GROSS PROFIT W.E.F. 01.04.2007 TO 31.12.2007 : - AFTER EXAMINATION OF THE RECORDS, IT IS FOUND THAT DURING THE SURVEY OPERATION CASH BOOK AND LEDGER WERE WRITTEN UPTO 31.12.2007 THAT TOTAL PURCHASE AND SALES WERE RECORDED RS.32,80,988/ - AND 35,24,940/ - RESPECTIVELY WHICH ARE EVIDENT FROM THESE BOOKS AND THE SALES TAX VAT RETURN. SO GROSS PROFIT COMES FOR THIS PERIOD 13.52% OF TOTAL SALES I.E. RS.4,76,571/ - . GROSS PROFI T W.E.EF. 01.01.2008 TO 11.03.2008 : - AFTER EXAMINATION OF THE RECORDS, IT IS FOUND THAT DURING THE SURVEY OPERATION, THE SALES FROM 01.01.2008 TO 29.01.2008 WAS RS.4,14,251 WHICH IS EVIDENT FROM THE CASH MEMOS HAVING IDENTIFICATION MARKS JCD - 7, JCD - 8, AND JCD - 13 AND THE PURCHASE FROM 01.01.2008 TO 11.03.2008 WAS RS.32,54,719 WHICH IS EVIDENT FROM THE PURCHASE MEMOS INVENTORISED AS JCD - 1 AND JCD - 3. SO GROSS PROFIT COMES FOR THIS PERIOD @13.52% OF TOTAL SALES I.E. RS.56,006/ - . GROSS PROFIT ON CLOSING STOCK : AFTER EXAMINATION OF THE RECORDS, IT IS SEEN THAT ON THE BASIS OF ABOVE MENTIONED PERIOD CLOSING STOCK COMES TO RS.37,76,040/ - BUT ON PHYSICAL VERIFICATION THE CLOSING STOCK WAS FOUND RS.14,35,943/ - SO SHORTFALL OF STOCK (37,76,040 14,35,943 = 23,40,097 ) ARE UNACCOUNTED SALES OF ASSESSEE. THEREFORE, THE GROSS PROFIT FROM THESE UNACCOUNTED SALES COMES TO RS.13.52% OF 23,40,097 I.E. RS.3,16,381/ - PENAL PROCEEDINGS U/S 271(1)(C) OF THE I.T.ACT 61 IS INITIATED SEPARATELY. AVERAGE GROSS PROFIT W.E.F. 12.03.20 08 TO 31.03.2008 ON THE BASIS OF ABOVE MENTIONED PERIOD TOTAL SALES COMES TO RS.62,79,288/ - SO AVERAGE SALES FOR BALANCE PERIOD COMES TO RS.5,70,840/ - . THEREFORE, GROSS PROFIT COMES TO RS.13.52% OF RS.5,70,840 I.E. RS.77,178/ - . 3.1. THE LD. CIT(A), HOW EVER MADE AN ENHANCEMENT. THE RELEVANT PART IN PARA 6 OF HIS ORDER ARE REPRODUCED HEREIN BELOW : - 6. CONCLUSION I HAVE GONE THROUGH THE ASSESSMENT ORDER, SURVEY FOLDER AND THE SUBMISSIONS OF ASSESSEE. 6.1. THE FACT THAT THE BOOKS WERE WRITTEN ONLY UPTO 31 - 12 - 2007 PROVES THAT THE BOOKS WERE NOT WRITTEN IN REGULAR MANNER. THE BOOKS PRODUCED DURING THE ASSESSMENT PROCEEDINGS ARE THEREFORE DEFECTIVE. THE ASSESSMENT ORDER HAS BEEN FRAMED BY REJECTING THE BOOKS OF ACCOUNT ALTHOUGH IT HAS NOT BEEN SPECIFICALLY ITA N O. 1714/KOL/2013 JAGADISH CHANDRA DUTTA A.YR. 2008 - 09 3 MENTIONED BY AO. IT IS SEEN THAT THE AO HAS BROKEN THE YEAR INTO THREE PARTS AND HAS CALCULATED THE INCOME FOR THESE PARTS BY APPLYING THE GP RATE OF LAST YEAR. THE AO HAS ALSO APPLIED THE SAME GP RATIO TO THE UNACCOUNTED SALES WHICH WAS FOUND DURING THE C OURSE OF SURVEY OPERATION. IN THE ASSESSMENT ORDER, THE AO HAS SOMETIMES REFERRED TO SALE AND AT OTHER TIMES PURCHASE. THIS HAS RESULTED IN VERY COMPLICATED CALCULATIONS. AS PER THE DETAILS FOUND DURING THE SURVEY, THE NET PURCHASES DURING THE YEAR, AS SEE N FROM THE SURVEY FOLDER (MENTIONED IN PARA 5 ABOVE) IS RS.1,00,27,290. THIS INCLUDES THE OPENING STOCK. THE AO IS DIRECTED TO TAKE THIS FIGURE MINUS THE CLOSING STOCK AS ON 31 - 3 - 2008 FOR COMPUTATION OF INCOME BY APPLYING THE GP OF LAST YEAR. THE AO IS FUR THER DIRECTED TO ALLOW THE EXPENSES OF RS.1,34,242 AS ALLOWED IN THE ASSESSMENT ORDER, TO ARRIVE AT THE NET PROFIT. THIS APPEAL ON THIS GROUND IS DISMISSED. 4. THE LD. COUNSEL FOR THE ASSESSEE SHRI SUBASH AGAR WAL ARGUED THAT ON THE DATE OF SURVEY THE BOO KS OF ACCOUNT WERE UN AUDITED AND WERE NOT REJECTED. THE AO HAS FOUND A VERY STRANGE FORMAT OF ESTIMATING THE INCOME IN FOUR PHASES AS REPRODUCED HEREIN ABOVE. HE FURTHER ARGUED THAT THE LD. CIT(A) MADE AN EN HANCEMENT FIRST OF ALL WITHOUT GIVING ANY OPPORTU NITY TO THE ASSESSEE. SECONDLY THE LD. CIT(A) REVISED A NEW FORMAT OTHER THAN THE AO AND ESTIMATED THE INCOME ON THE BASIS OF THE PURCHASE FIGURES AND CALCULATED THE GROSS PROFIT WHICH COMES MORE THAN THE FIGURE AS COMPUTED BY THE AO. 5. THE LD.DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. I HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS OF THE CASE. THE UNDISPUTED FACT S IN THIS CASE ARE THAT ON THE DATE OF SURVEY THE BOOKS OF ACCOUNT WERE UNAUDITED. THE ASSESSEE HAS PRODUCED AUDITED BOOKS OF ACCOUNT IN WHICH NO DEFECT HAS BEEN POINTED OUT. THE AUDITED BOOKS HAVE NOT BEEN REJECTED AND NO PROVISION U/S 145(3) HAS BEEN INVOKED. THE FORMAT DEVISED AS REPRODUCED HEREIN ABOVE FOR ESTIMATING THE INCOME CANNOT BE ACCEPTED THAT TOO RIGHTLY REJECTED BY THE LD . CIT(A). SIMILARLY THE LD. CIT(A) HAD ENHANCED THE INCOME WITHOUT GIVING ANY OPPORTUNITIES TO THE ASSESSEE, THEREFORE THE ADDITION ON ACCOUNT OF ENHANCEMENT MADE BY THE LD. CIT(A) IS REJECTED. HOWEVER, CONFIRMATION MADE BY THE LD.CIT(A) IS ALSO REJECTED , SINCE AO S ESTIMATION HAS ITA N O. 1714/KOL/2013 JAGADISH CHANDRA DUTTA A.YR. 2008 - 09 4 BEEN REJECTED HEREINABOVE BY ME. IN THE CIRCUMSTANCES AND FACTS OF THE CASE AND HAVING POINTED OUT NO DEFECT IN THE BOOKS OF ACCOUNT WITHOUT INVOKING THE PROVISION OF SECTION 145(3) OF THE ACT NO ADDITION CAN BE CALLED FOR. ACCORDINGLY AO IS DIRECTED TO ACCEPT THE BOOK RESULTS DECLARED BY THE ASSESSEE. 7 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN COURT ON 04 .06.2015. SD/ - [ B.P .JAIN ] ACCOUNTANT MEMBER DATE: 04 .06 .2015. R.G.(.P.S.) C OPY OF THE ORDER FORWARDED TO: 1 . JAGADISH CHANDRA DUTTA, MARWARI PATTI, BALURGHAT, DIST.DAKSHIN DINAJPUR, PIN:733101. 2 I.T.O., WARD - (1 ), BALURGHAT. 3 . CIT(A) - JALPAIGURI. 4. CIT - KOLKATA. 5. CIT - DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES