Indumati Sahu, Berhampur V. ITO, Ward-1, Berhampur

ITA 191/CTK/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4262 (ITAT-CUTTACK)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 16-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: CH TRIPATI PATRA
• Keywords: Business income
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO.191/CTK/2016 ASSESSMENT YEAR : 2009 - 2010 INDUMATI SAHU, PROP. M/S. RABINDRA RICE MILL HARIDAKHANDI, BERHAMPUR VS. ITO, WARD - 1, BERHAMPUR PAN/GIR NO. BDRPS 7544 A (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : CH. TRIPATI PATRA, AR REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 9 /11 / 2016 DATE OF PRONOUNCEMENT : 9 /11 / 2016 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGA INST THE ORDER OF CIT(A) - 1, BHUBANESWAR , DATED 12.2.2016 , FOR THE ASSESSMENT YEAR 2009 - 2010 . 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE LD CIT(A) ERRED IN TREATING RS.24,49,970/ - AS UNDERSTATED SALES TURNOVER & SUSTAINING THE ADDITI ON OF RS.1,64,148/ - BY APPLYING GROSS PROFIT RATIO @ 6.7% THEREON. 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER OBSERVED THAT THE 2 ITA NO.191/CTK/2016 ASSESSMENT YEAR : 2009 - 2010 ASSESSEE HAS DEPOSITED RS.2,36,30,117/ - IN HER BANK ACCOUNT NO.14590500007813 WITH BANK OF BARODA, MAIN BRANCH, BERHAMPUR AND RS.6,90,352/ - IN ACCOUNT NO.027005002506 WITH ICICI BANK, BERHAMPUR DURING THE PREVIOUS YEAR RELATING TO ASSESSMENT YEAR 2009 - 2010. HE HAS ALSO OBSERVED THAT SHE HAS SHOWN CASH BALANCE AT RS.16,99,218/ - AND SUNDRY DEBTORS AT RS.1,24,589/ - . CONSIDERING THE ABOVE FIGURES, THE ASSESSING OFFICER ARRIVED AT THE TOTAL SALES AT RS.2,61,44,276/ - (RS.2,36,30,117 + RS.6,90,352/ - +RS.16,99,218/ - + RS.1,24,589/ - ) OF THE ASSESSEE DURI NG THE YEAR. HE OBSERVED THAT IN THE PROFIT AND LOSS ACCOUNT, T HE ASSESSEE HAD SHOWN SALES AT R S.2,36,94,306/ - . HENCE, HE CONCLUDED THAT THE ASSESSEE HAS UNDERSTATED HER SALES OF RS.24,49,970/ - AND MADE AN ADDITION OF THE SAME TO THE INCOME OF THE ASSESS EE. 4. ON APPEAL, BEFORE THE LD CIT (A), THE ASSESSEE CONTENDED THAT THE ASSESSING OFFICER SHOULD HAVE ACCEPTED THE RECONCILIATION S TATEMENTS AND CASH FLOW STATEMENTS FILED AT THE TIME OF ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER REJECTED THE SAME WIT HOUT GIVING ANY REASONS IN THE ASSESSMENT ORDER. 5. LD CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE HAD FILED DETAILED RECONCILIATION STATEMENT BEFORE THE ASSESSING OFFICER, WHO REJECTED THE SAME ON THE GROUND THAT CASH BOOK WAS NOT MAINTAINED AND, THEREFORE, IT WAS NO T POSSIBLE TO ASCERTAIN THE SOURCE OF 3 ITA NO.191/CTK/2016 ASSESSMENT YEAR : 2009 - 2010 DEPOSITS. HE ALSO OBSERVED THAT THE RECONCILIATION STATEMENT FILED BY THE ASSESSEE IS NOT EASILY COMPREHENSIBLE AND LOADED WITH FIGURES WHICH ARE DIFFICULT TO VERIFY IN THE ABSENCE OF THE CASH BOOK. LD CIT(A) FURTHER OBSERVED THAT THE REASONS RECORDED BY THE ASSESSING OFFICER THAT THE FIGURE OF RS.24,49,970/ - WAS CALCULATED BY THE ASSESSING OFFICER AS UNDERSTATEMENT OR SUPPRESSION OF SALES. BUT IN THE ASSESSMENT ORDER, IT APPEARS THAT HE HAS MADE THE ADDITION OF RS.2 4,49,970/ - REFERRING TO SE CTION 69 OR SECTION 69B OF THE A CT. HE, THEREFORE, OPINED THAT RS.24,49,970/ - MAY BE CONSIDERED AS UNDERSTATEMENT OF SALES BY THE ASSESSEE AS DONE BY THE ASSESSING OFFICER AND ONLY GROSS PROFIT ON THE SAME MAY BE TAXED AS INCOME IN THE ASSESSMENT. HE NOTED THAT IT IS OBSERVED FROM THE COPIES OF AUDITED ACCOUNTS THAT ON A TOTAL SALES OF RS.2,36,94,306 / - , THE GROSS PROFIT DISCLOSED WAS RS.15,78,139/ - AND THE RATE OF GROSS PROFIT ON SALES COMES TO 6.7% APPROX. HENCE, HE SUSTAINED T HE ADDITION @ 6.7% OF THE SUPPRESSION OF SALES OF RS.24,49,970/ - AND RETAINED ADDITION OF RS.1,64,148/ - IN PLACE OF RS.24,49,970/ - DONE BY THE ASSESSING OFFICER. 6. BEFORE ME, LD A.R. REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND SUBMITT ED THAT THE ASSESSING OFFICER HAS NOT C ONSIDERED THE FOLLOWING WHILE ARRIVING AT THE SALES OF THE ASSESSEE: OPENING BALANCE OF CASH IN HAND AS ON 1.4.2008 : RS.15,31,978/ - OPENING BALANCE OF SUNDRY DEBTORS AS ON 1.4.2008: RS. 7,44,495/ - 4 ITA NO.191/CTK/2016 ASSESSMENT YEAR : 2009 - 2010 VAT COLLECTION ON SALES DURING THE YEAR : RS. 9,36,966/ - (NOT INCLUDED IN SALES FIGURE OF RS.2,36,94,306) CUSTOMARY MILLING RECEIPTS DURING THE YEAR : RS.10,03,920/ - UNSECURED LOAN AVAILED DURING THE YEAR : RS. 2,00,000/ - RS.44,17,359/ - 7. HE ALSO PLACED BEFORE ME A COPY OF BALANCE SHEET OF THE ASSESSEE AS ON 31.3.2008 AND AS ON 31.3.2009. HE SUBMITTED THAT FROM THE BALANCE SHEET AS ON 31.3.2008, IT CAN BE SEEN THAT THE OPENING CASH IN HAND WAS RS.15,31,978/ - , SUNDRY DEBTORS AT RS.7,44,495/ - . FURT HER, FROM THE COPY OF PROFIT AND LOSS ACCOUNT AS ON 31.3.2009, HE POINTED OUT THAT VAT OUTPUT CREDITED WAS RS.9,36,955/ - AND CUSTOMARY MILLING CHARGES CREDITED IN THE PROFIT AND LOSS ACCOUNT WAS RS.10,03,920/ - . FURTHER, FR OM THE BALANCE SHEET AS ON 31.3 . 2009, HE POINTED OUT THAT THE ASSESSEE HAS RECEIVED UNSECURED LOAN OF RS.2,00,000/ - FROM M/S. GUPTESWAR PHARMACEUTICALS, JEYPORE. HE SUBMITTED THAT THESE FIGURES AGGREGATE TO RS .44,17,359/ - AND IF THE SAME IS DEDUCTED FROM THE TOTAL TURNOVER OF RS.2,6 1,44 ,276/ - ARRIVED AT BY THE ASSESSI NG OFFICER, WHICH HE SHOULD HAVE DONE, THEN THE TURNOVER FIGURE OF THE ASSESSEE WORKS OUT TO RS.2,17,26,917/ - WHEREAS THE ASSESSEE HAS DISCLOSED SALES TURNOVER IN THE PROFIT AND LOSS ACCOUNT AT RS.2,36,94,306/ - , WHICH IS MUCH HIGHER. HENCE, THERE IS NO SUPPRESSION OF SALES BY THE 5 ITA NO.191/CTK/2016 ASSESSMENT YEAR : 2009 - 2010 A SSESSEE AND, THEREFORE, THE ADDITION SUSTAINED BY THE LD CIT(A) IS TO BE DELETED. 8. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDER OF THE LD CIT(A). 9. I FIND THAT WHILE CALCULATING THE SALES OF THE ASSESSEE, THE ASSESSING OFFICER HAS CONSIDERED THE DEPOS IT OF RS.2,36,30,117/ - IN THE BANK ACCOUNT NO. 14590500007813 WITH BANK OF BARODA, MAIN BRANCH, BERHAMPUR AND DEPOSIT OF RS.6,90,352/ - IN ACCOUNT NO.027005002506 WITH ICICI BANK, BERHAMPUR, CASH BALANCE AT RS.16,99,218/ - AND SUNDRY DEBTORS AT RS.1,24,589/ - . IN MY CONSIDERED VIEW, WHILE DOING SO, HE SHOULD HAVE DEDUCTED THE OPENING CASH BALANCE IN HAND AS ON 1.4.2008 AT RS.15,31,978/ - , OPENING BALANCE OF SUNDRY DEBTORS AS ON 1.4.2008 AT RS.7,44,495/ - , VAT COLLECTION ON SALES DURING THE YEAR AT RS.9,36,966/ - , CUSTOMARY MILLING RECEIPTS AT RS.10,03,920/ - AND UNSECURED LOAN AVAILED DURING THE YEAR AT RS.2,00,000/ - . IF THE SAME IS DEDUCTED FROM THE FIGURE OF RS.2,61,44,276/ - ARRIVED AT BY THE ASSESSING OFFICER, THEN THE FIGURE OF SALES WORKS OUT TO RS. 2,17,26 ,917/ - , WHEREAS THE ASSESSEE HAS SHOWN FIGURE OF SALES AT RS.2,36,94,30 6 / - IN THE PROFIT AND LOSS ACCOUNT WHILE COMPUTING ITS INCOME. HENCE, IN MY CONSIDERED VIEW, THE ADDITION OF RS.1,64,148/ - SUSTAINED BY THE LD CIT (A) BY APPLYING GROSS PROFIT RATE @ 6.7% ON SUPPRESSION OF SALES OF RS.24,49,970/ - IS NOT JUSTIFIED. HENCE, I DELETE THE ADDITION OF RS.1,64,148/ - AND ALLOW GROUND OF APPEAL OF THE ASSESSEE. 6 ITA NO.191/CTK/2016 ASSESSMENT YEAR : 2009 - 2010 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCE D IN THE OPEN COURT ON 9 /11 /2016 IN THE PRESENCE OF PARTIES. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 9 /11 /2016 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT :INDUMATI SAHU, PROP. M/S. RABINDRA RICE MILL HARIDAKHANDI, BERHAMPUR 2. THE RESPONDENT. ITO, WARD - 1, BERHAMPUR 3. THE CIT(A) - 1, BHUBANESWAR 4. CIT , BHUBANESWAR. 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//