DCIT, Circle-2, Siliguri, Siliguri V. Arjun Chettri, Sikkim

ITA 1976/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1717 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2017
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 22-10-2014
• Court: TRIBUNAL
• Assessee Lawyers: S M SURANA
• Section: 143(3)

Judgement Text

1 ITA NO.1976/K/14 ARJUN CHETTRI IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH,KOLKATA BEFORE: SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 1976/KOL/2014 A.Y: 2011-12 DCIT, CIRCLE(2), SILIGURI APPELLANT VS. ARJUN CHETTRI PAN: AETPC6283Q RESPONDENT APPEARANCES BY : NONE FOR THE REVENUE SHRI S.M. SURANA, ADVOCATE, AR FOR THE ASSESSEE DATE OF HEARING : 29-05-2017 DATE OF PRONOUNCEMENT : 29-05-2017 O R D E R SHRI S.S. VISWANETHRA RAVI, JM :- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 28-08-2014 OF THE COMMISSIONER OF INCOME TAX (APPEALS), JALPAIGURI, FOR THE ASSESSMENT YEAR 2011-12. 2. NONE APPEARED FOR THE REVENUE. THERE IS NO PETIT ION FOR ADJOURNMENT EITHER. THOUGH SOME DEPARTMENTAL REPRES ENTATIVES WERE PRESENT IN COURT, THERE WAS NO REQUEST FOR AN ADJOURNMENT. 2 ITA NO.1976/K/14 ARJUN CHETTRI UNDER THESE CIRCUMSTANCES, WE DISPOSE OF THE CASE O N MERITS AFTER HEARING THE LD.AR FOR THE ASSESSEE EXPARTE QUA THE REVENUE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THAT THE AS SESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF CONTRA CTOR, GENERAL ORDER SUPPLIER AND ALSO HAS RETAIL OUTLET OF PETROL . THE ASSESSEE FILED HIS RETURN DECLARING A TOTAL INCOME OF RS.9,6 5,293/- ON 24- 11-2011. SCRUTINY, NOTICE U/S 143(2) WAS ISSUED. IN RESPONSE TO WHICH, THE BOOKS OF ACCOUNT AND RELEVANT EVIDENCES WERE PRODUCED. THE AO ADDED AN AMOUNT OF RS.67,32,811/- FOR NOT EXPLAINING NEGATIVE CASH BALANCE AND AN AMOUNT OF R S.1,57,386/- BY APPLYING RATE AT 11.58% TO THE CONTRACT RECEIPTS AS AGAINST THE CLAIM OF AT 8.83% VIDE HIS ORDER DT:28-03-2014 U/S 143(3) OF THE ACT. 4. GROUND NOS 1 TO 4 ARE RELATING TO THE ADDITION OF RS.67,32,811/- MADE ON ACCOUNT OF NEGATIVE CASH BAL ANCE IN THE 1) PERSONAL CASH BOOK OF THE ASSESSEE OF RS.49,12,4 68/-, 2) CASH BOOK OF THE PROPRIETARY CONCERN OF THE ASSESSEE OF M/S. BHARAT FUEL CENTRE OF RS.14,91,050/- AND 3) CASH BOOK FOR M/S. ARJUN CHETTRI & SONS, A PROPRIETARY CONCERN OF RS.3,29,29 3/-. 5. DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE A O FOUND NEGATIVE CASH BALANCE ON EXAMINATION OF CASH BOOKS OF THE ASSESSEE MAINTAINED IN RESPECT OF IN HIS PERSONAL C APACITY AND OF OTHER TWO PROPRIETARY CONCERNS I.E M/S BHARAT FUEL CENTRE AND M/S 3 ITA NO.1976/K/14 ARJUN CHETTRI ARJUN CHETTRI & SONS FOR AN AMOUNTS OF RS.49,12,468 /-, RS.14,91,050/- AND RS3,29,293/- RESPECTIVELY TOTALL ING TO RS.67,32,811/-. ACCORDING TO AO, THE ASSESSEE DID N OT OFFER ANY EXPLANATION. HENCE, THE AO ADDED THE SAME TO THE T OTAL INCOME OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS INTRODUCED UNACCOUNTED CASH AND THIS WAS USED TO MEET VARIOUS EXPENSES RECORDED IN THE BOOKS AND TO MAKE DEPOSIT IN THE BA NK. 6. IN FIRST APPEAL BEFORE THE CIT-A, THE ASSESSEE C ONTENDED THAT HE CARRIES OUT BUSINESS THROUGH SIX PROPRIETARY CON CERNS IN THE SAME PREMISES AND THAT THE AO HAD EXAMINED THE CASH BOOKS OF THREE CONCERNS ONLY. THE ASSESSEE ALSO CONTENDED TH AT THERE WERE SUFFICIENT CASH BALANCES IN THE BOOKS OF OTHER CONC ERNS AND THE AO DID NOT TAKE INTO CONSIDERATION THE SAME. THE CIT- A DIRECTED THE AO TO EXAMINE ALL THE SIX CASH BOOKS TOGETHER AND A RRIVED AT A RIGHT DECISION. THE RELEVANT PORTION IS REPRODUCED HEREIN BELOW: 5.1. IT IS SEEN THAT, THE ASSESSE RUNS HIS BUSINESS THROUGH SIX PROPRIETARY CONCERNS. THEREFORE, WHAT IS RELEVANT FOR ASSESSMEN T OF INCOME ARE THE BOOKS OF ACCOUNT OF THE ASSESSE AS A WHOLE AND NOT THE IN DIVIDUAL BOOKS OF ACCOUNT OF DIFFERENT PROPRIETARY CONCERNS. THE ASSESSE MAIN TAINS SEPARATE BOOKS OF ACCOUNT FOR BETTER MANAGEMENT OF HIS BUSINESS BUT F OR INCOME TAX ASSESSMENT WHAT MATTERS IS CONSOLIDATED BOOKS OF AC COUNT OF ALL THE BUSINESSES AND OTHER INCOMES. THE AO IS DIRECTED TO EXAMINE THE BOOKS OF ACCOUNTS OF ALL THE BUSINESSES TOGETHER AND SEE WHE THER THERE IS ANY NEGATIVE CASH BALANCE WHEN THE CASH BOOKS ALL THE B USINESSES ARE CONSIDERED. THE AO IS DIRECTED TO RESTRICT THE ADDITION ONLY TO THE NEGATIVE CASH FOUND WHEN THE BOOKS OF ACCOUNT OF ALL THE BUSINESSES ARE EXAMINED TOGETHER. 6. THE LD.AR SUBMITS THAT THE ASSESSEE IS READY TO PRODUCE ALL THE DETAILS BEFORE THE AO AND URGED TO REMAND GROUND NOS 1 TO 4 TO THE FILE OF AO FOR 4 ITA NO.1976/K/14 ARJUN CHETTRI VERIFICATION IN TERMS OF THE DIRECTIONS GIVEN BY TH E CIT-A IN HIS IMPUGNED ORDER. 7. HEARD SUBMISSIONS OF LD.AR AND PERUSED THE MATER IAL AVAILABLE ON RECORD. IT IS AN ADMITTED FACT THAT THE AO EXAMINED THE CASH BOOKS BELONGING TO ONLY THREE CONCERNS AND WHEREAS THE AS SESSEE CONTENDED THAT HE HAS CONDUCTING HIS BUSINESSES THROUGH SIX CONCER NS. IT IS CLEAR FROM THE ORDER OF AO THAT ONLY THREE CASH BOOKS WERE AVAILAB LE ON RECORD IN THE SCRUTINY PROCEEDINGS. IN OUR VIEW THE FINDING OF TH E LD. CIT-A AT PARA 5.1 OF HIS ORDER EXTRACTED ABOVE IS TO BE UPHELD. THE ONL Y ISSUE IS WHETHER THE LD. CIT-A HAS THE POWER TO SET ASIDE THE ISSUE TO THE F ILE OF THE AO FOR FRESH ADJUDICATION. SUCH POWER HAS BEEN WITHDRAWN. HENCE, THE LD. CIT-A HAS NO POWER TO SET ASIDE THE ASSESSMENT TO THE FILE OF T HE AO. BUT, AS HIS FINDING IS CORRECT, WE ARE OUR DISCRETION AND SET ASIDE THE ISSUE TO THE FILE OF THE AO. THE AO SHALL FOLLOW THE DIRECTION SET OUT AT PARA 5 .1 OF THE LD. CIT-AS ORDER. THUS, GROUND NOS 1 TO 4 ARE ALLOWED FOR STATISTICA L PURPOSES. 8. GROUND NOS 5 AND 6 RELATING TO THE MADE ON ACCO UNT OF APPLYING THE GROSS PROFIT RATE AT 11.58% BY THE AO AGAINST THE R ATE ADOPTED THE ASSESSEE AT 8.83%. 9. THE AO ON PERUSAL OF THE AUDITED ACCOUNTS OF M/S BIDYA INTERNATIONAL THE PROPRIETARY CONCERN OF ASSESSEE FOUND DISCREPAN CIES IN DISCLOSING DIFFERENT NET PROFIT RATE FOR THE RECEIPTS OF RS.52 ,12,832/- AND RS.57,24,017/- RECEIVED FOR THE WORKS IN SIKKIM AND WEST BENGAL RESPECTIVELY. THE ASSESSEE DISCLOSED NET PROFIT RAT E OF 11.58% FOR SIKKIM 5 ITA NO.1976/K/14 ARJUN CHETTRI AND OF 8.83% FOR WEST BENGAL. THE AO SHOW CAUSED TH E ASSESSEE AS TO WHY THE RATE OF NET PROFIT ADOPTED FOR THE SIKKIM STATE SHOULD NOT BE APPLIED FOR THE RECEIPTS IN WEST BENGAL. FOR NOT GIVING EXPLANA TION, HE ADDED THE DIFFERENCE OF RS.1,57,386/- (11.58% OF RS.57,24,017 8.83% OF RS.57,24,017) TO THE TOTAL INCOME OF THE ASSESSEE. THE CIT-A DELETED THE ADDITION BY OBSERVING THAT THE ADDITION WAS MADE ON PRESUMPTION. THE RELEVANT PORTION OF WHICH IS REPRODUCED HEREIN BELO W: 5.4 THE ASSESSE HAS EXECUTED WORKS IN SIKKIM AND OU T OF SIKKIM. FOR THE WORKS EXECUTED IN SIKKIM THE NP IS 11.58% WHEREAS FOR THE WORKS EXECU TED IN INDIA OUTSIDE SIKKIM IT IS 8.83%. THE AO WITHOUT FINDING ANY DEFECT IN THE BOOKS OF ACCOU NT, HAS APPLIED THE NP OF WORKS IN SIKKIM TO THE WORKS OUTSIDE SIKKIM. THIS ADDITION IS BASED ON PRESUMPTION ONLY AND THEREFORE DELETED. 10. THE LD.AR SUBMITS THAT THE AO DID NOT POINT OUT A MISTAKE IN THE BOOKS WHICH WERE AUDITED AND SUPPORTED THE ORDER OF CIT-A. 11. HEARD LD.AR AND PERUSED THE RECORD. IT IS RIGHT LY OBSERVED BY THE CIT- A THAT THE AO ON A PRESUMPTION THAT THE COST OF MAT ERIAL AND LABOUR ARE VERY HIGH IN SIKKIM THAN IN WEST BENGAL AND APPLIED THE SAME RATE OF NET PROFIT TO THE RECEIPTS OBTAINED FROM WEST AND IT IS, IN OUR O PINION NOT CORRECT. WE FIND THAT THE AO MADE THE IMPUGNED ADDITION WITHOUT ANY BASIS. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF CIT-A AND ACCORDI NGLY, IT IS JUSTIFIED. THUS, GROUND NOS 5 AND 6 RAISED BY THE APPELLANT REVENUE FAIL AND ARE DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 9-05- 2017 SD/- SD/- J. SUDHAKAR REDDY S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29-05-2017 6 ITA NO.1976/K/14 ARJUN CHETTRI PP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT: DCIT, CIRCLE(2), AYAKAR BHAWAN , PARIBHAHAN NAGAR MATIGARA, SILIGURI, PIN-734 010. 2. RESPONDENT : ARJUN CHETTRI, PAN: AETPC6283Q C/O PANKAJ FUEL CENTRE, MAJITAR, SIKKIM. 3. CIT-A, SILIGURI 4. CIT 5. DR, KOLKATA BENCHES, ITAT / TRUE COPY/ BY ORDER, SR.PS/H.O.O ITAT, KOLKATA