SK Bakar Mahammad, Puri V. ITO, Puri Ward, Puri, Puri

ITA 194/CTK/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 7452 (ITAT-CUTTACK)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 22-10-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 20

Judgement Text

P A G E 1 | 6 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK SMC BENCH, CUTTACK BEFORE S/ SHRI C HANDRA MOHAN GARG , JUDICIAL MEMBER ITA NO . 194/CTK/2020 ASSESSMENT YEAR : 2016 - 17 S K BAKAR MAHAMMAD, AT: RANGA TOTA, PO: GOP, PURI VS. ITO, PURI WARD, PURI PAN/GIR NO. APQPM 2884 P (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.K.MISHRA , AR REVENUE BY : SHRI S.C. MOHANTY, DR DATE OF HEARING : 31 / 3 / 20 2 1 DATE OF PRONOUNCEMENT : 1 / 4 /20 2 1 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE A GAINST THE ORDER OF THE CIT(A) - 2 , BHUBANESWAR DATED 24.8.2020 FOR THE ASSESSMENT YEAR 2016 - 17. 2. IN THE GROUNDS OF APPEAL, THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD CIT(A) WAS NOT JUSTIFIED CONFIRMING THE ESTIMATION OF NET PROFIT @ 8% ON THE GROSS TURNOVER DETERMINED BY THE ASSESSING OFFICER. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A WHOLESALE DEALER OF PATOTO AND ONION. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING T OTAL INCOME OF RS.3,03,000/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ISSUED LETTER U/S.133(6) OF THE ACT TO THE STATE BANK P A G E 2 | 6 OF INDIA, NAYAHAT, PURI CALLING FOR THE STATEMENT OF BANK ACCOUNT NO.31170176592 OF THE ASSESSEE AND O N VERIFICATION, HE FOUND THAT THERE WAS CREDIT OF RS.1,17,92,223/ - . ON VERIFICATION OF RETURN OF INCOME FILED BY THE ASSESSEE, THE AO FOUND THAT THE ASSESSEE HAS SHOWN A GROSS TURNOVER OF RS.39,00,050/ - AND INCOME HAS BEEN SHOWN U/S.44AD @ 8% AT RS.3,12,0 04/ - . IN VIEW OF ABOVE, THE AO TREATED THE DIFFERENTIAL BANK DEPOSIT AS SUPPRESSED SALES TURNOVER AND THE PROFIT ON SUCH SUPPRESSED SALES WAS ESTIMATED @ 8% ON THE DIFFERENTIAL AMOUNT OF RS.78,92,172/ - ( RS.1,17,92,223 RS.39,00,050), WHICH COMES TO RS.6, 31,374/ - . THE AO ACCORDINGLY ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 4. ON APPEAL, THE LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. AT THE TIME OF HEARING, LD A.R. OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS DEALING IN WHOLESALE BUSINESS OF PATOTO AND ONION . THE ASSESSING OFFICER HAS NOT AFFORDED DUE OPPORTUNITY TO THE ASSESSEE DURING COVID PERIOD TO EXPLAIN THAT THE NET PROFIT ON SUCH BUSINESS WOULD BE AROUND 1% TO 2%. HE SUBMITTED THAT ON THE BASIS OF ENQUIRY BY THE INSPECTOR, THE ASSESSING OFFICER HAS DETERMINED THE NET PROFIT @ 8% ON RS.1,17,92,223/ - . HE SUBMITTED THAT THE AO HAS NOT GIVEN ANY COMPARABLE CASES TO ARRIVE AT SUCH ESTIMATION. HE SUBMITTED THAT ALTHOUGH DETAILED WRITTEN SUBMISSIONS WERE FILED BEFO RE THE LD CIT(A) BUT SAME COULD NOT BE CONSIDERED AND FINALLY, THE ESTIMATION DONE BY THE AO WAS CONFIRMED. P A G E 3 | 6 6. LD A.R. OF THE ASSESSEE FURNISHED A COMPARATIVE CHART OF GROSS TURNOVER AND NET PROFIT PERCENTAGE FOR THE SUCCEEDING ASSESSMENT YEARS I.E. 2018 - 19 AND 2019 - 2020 AS UNDER: ASST.YR. GROSS TURNOVER NET PROFIT PERCENTAGE REMARKS 2018 - 19 1,33,81,200 4,49,576 3.36% RETURNED INCOME ACCEPTED U/S.143(1) 2019 - 20 1,36,31,450 4,70,921 3.45% - DO - LD A.R. SUBMITTED THAT THE SALE PRICE OF ONION AND PATATO IS DEPENDING ON THE QUALITY, SIZE, MOISTURE/WATER CONTENT AS WELL AS THE DEMAND AND SUPPLY POSITION OF THE MARKET. BESIDES IT BEING AN AGRICULTURAL PRODUCT, PERISHABLE IN NATURE, ITS SALE PRICE IS NOT STATIC, BUT IS CONSTANTLY FLUCTUATING. THEREFORE, THE RE IS REMOTE CHANCE TO GET HIGHER PERCENTAGE OF PROFIT ON THE TRANSACTION. LD A.R. SUBMITTED THAT THE ESTIMATION MADE BY THE AO IS ABNORMALLY HIGH AND SAME SHOULD BE REDUCED TO 3.36% DECLARED BY THE ASSESSEE AND ACCEPTED BY THE DEPARTMENT FOR THE ASSESSME NT YEAR 2018 - 19. 7. REPLYING TO ABOVE, LD DR SUPPORTED THE ORDERS OF LOWER AUTHORITIES. HE FURTHER SUBMITTED THAT THE ORDER U/S.143(1) IS NOT AN ORDER AND SAME SHOULD NOT BE TAKEN AS CONSIDERATION FOR ACCEPTING THE CLAIM OF THE ASSESSEE. P A G E 4 | 6 8. I HAVE HEARD T HE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES. THE SOLE DISPUTE IN THIS CASE IS THAT ALTHOUGH THE ASSESSEE HAS SHOWN GROSS TURNOVER OF RS. 39,00,050 FOR THE ASSESSMENT YEAR UNDER CONSIDERATION BUT THERE IS A CREDIT OF RS.1,17,92,323/ - I N THE BANK ACCOUNT OF THE ASSESSEE. HENCE, THE AO PRESUMED THAT THE ASSESSEE HAS SUPPRESSED THE SALES TURNOVER WHILE SHOWING IN THE RETURN OF INCOME. THEREFORE, AO TREATED THE DIFFER ENTIAL AMOUNT BETWEEN THE CREDITS IN THE BANK AND AMOUNT SHOWN IN THE RE TURN OF INCOME AS SUPPRESSED INCOME AND ESTIMATED THE NET PROFIT @ 8% ON THE SAME. THE ACTION O F THE AO WAS CONFIRMED IN THE FIRST APPEAL. 9. THE CONTENTION OF THE LD A.R. OF THE ASSESSEE IS THAT IN THIS LINE OF BUSINESS, THE NET PROFIT RATE VARIES FROM 1 .5% TO 2.5% DEPENDING ON MULTIPLE FACTORS. THE ASSESSMENT WAS COMPLETED U/S.144/147 OF THE ACT WITHOUT AFFORDING OPPORTUNITY TO THE ASSESSEE. IN THE FIRST APPELLATE PROCEEDINGS ALSO, ONLY WRITTEN SUBMISSIONS WERE CONSIDERED BUT NO COMPARABLE CASES WERE B ROUGHT ON RECORD TO ESTIMATE THE PROFIT @ 8%. BESIDES, THE ASSESSEE HAS SHOWN NET PROFIT IN T HE SUCCEEDING ASSESSMENT YEARS @ 3. 3 6% AND 3.4 5 % I.E. A.Y. 2018 - 19 & 2019 - 20. THE ASSESSEE IS NOT DISPUTING THE CREDIT SHOWN IN THE BANK ACCOUNT OF RS.1,17,92,223/ - . THE ONLY SUBMISSION IS THAT THE ESTIMATION IS ON HIGHER SIDE AND IT SHOULD BE REDUCED CONSIDERING THE LINE OF BUSINESS UNDERTAKEN BY THE ASSESSEE. CONSIDERING THE CO NSPECTUS OF THE CASE AND THE MATERIALS BEING PERISHABLE P A G E 5 | 6 ITEMS, I OBSERVE THAT THE NET PROFIT DETERMINED BY THE AO IS ON HIGHER SIDE. SIMILARLY, I OBSERVE THAT THE ASSESSEE HAS SHOWN NET PROFIT @ 3.36 IN THE ASSESSMENT YEAR 2018 - 19, WHICH HAS BEEN ACCEPTE D BY THE DEPARTMENT IN THE ASSESSMENT U/S.143(1) OF THE ACT. HOWEVER, TO CONSIDER ALL POSSIBLE OF LEAKAGE OF REVENUE, IT WOULD BE JUST AND PROPER IF THE NET PROFIT IS ESTIMATED @ 5% AS AGAINST 8% DETERMINED BY THE AO. THE ASSESSING OFFICER IS DIRECTED TO ESTIMATE THE NET PROFIT @ 5% OF RS.1,17,92,223/ - . 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 1 / 4 /20 2 1 . SD/ - ( CHANDRA MOHAN GARG ) JUDICIAL MEMBER CUTTACK; DATED 1 / 4 /20 2 1 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER SR . PVT. S ECRETARY ITAT, CUTTACK 1. THE APPELLANT : S K BAKAR MAHAMMAD, AT: RANGA TOTA, PO: GOP, PURI 2. THE RESPONDENT. ITO, PURI WARD, PURI 3. THE CIT(A) - 2 , BHUBANESWAR 4. PR.CIT - 2 , BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY// P A G E 6 | 6