ACIT, Circle - 27(1), Haldia, Haldia V. Shri Damodar Dhara, Purba Medinipur

ITA 1995/KOL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0273 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 07-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOWDHURY
• Assessee Lawyers: MIHIR BANDYOPADHAY
• Keywords: Unexplained cash credit; Unexplained investment; Gift; Business income; Income from undisclosed sources
• Section: 143(3); 133A; 143(1); 143(2); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI S.S.GODARA, JM &DR. A.L.SAINI, AM ./ITA NO.1995/KOL/2017 ( / ASSESSMENT YEAR:2012-13) ACIT, CIRCLE-27(1), HALDIA VS. SHRI DAMODAR DHARA THEKUACHAK, KUMARCHAK, TAMLUK, DIST. PURBA MEDINIPUR, PIN-721652 ./ ./PAN/GIR NO.: AIVPD 7241 C (ASSESSEE) .. (REVENUE) ASSESSEE BY : SHRI ROBIN CHOWDHURY, ADDL. CIT SR DR RESPONDENT BY : SHRI MIHIR BANDYOPADHAY, AR / DATE OF HEARING : 29/04/2019 /DATE OF PRONOUNCEMENT : 28/06/2019 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE REVENUE, PERTA INING TO ASSESSMENT YEAR 2012-13, IS DIRECTED AGAINST THE ORDER PASSED BY TH E COMMISSIONER OF INCOME TAX (APPEAL)-7, KOLKATA, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT , 1961 (IN SHORT THE ACT) DATED 19/03/2015. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS FOLLOWS: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,45,54,479/-, ALTHOUGH THE A.O. PASSED A REASONABLE ORDER ON THE BASIS OF STATEMENT GIVEN BY THE ASSESSEE. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 5,00,000/- WI THOUT ANY CONCRETE BASIS AND BY ACCEPTING THE ASSESSEES EXPLANATION. SHRI DAMODARDHARA ITA NO.1995/KOL/2017 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 2 22 2 3. THE DEPARTMENT CRAVES LEAVE TO ADD, AMEND, ALTER , VARY AND/OR WITHDRAW ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL. 3. NOW WE SHALL TAKE GROUNDS NO. 1 RAISED BY THE RE VENUE WHICH RELATES TO ADDITION OF RS. 1,45,54,479/-. 4. BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2012-13 ON 24.09.2015 DECLARING TOT AL INCOME OF RS. 15,87,080/-. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROC ESSED U/S 143(1) ON 08.12.2012. LATER ON, THE ASSESSEES CASE WAS SELEC TED FOR SCRUTINY U/S 143(2) OF THE ACT. IN ASSESSEES CASE A SURVEY OPERATION U/S 133A OF THE ACT WAS CARRIED OUT BY THE DEPARTMENT. DURING THE COURSE OF SURVEY PROC EEDINGS, IN ADDITION TO OTHER DISCREPANCIES SUCH AS STOCK DIFFERENCE ETC, EVIDENC ES REGARDING ASSESSEES UNACCOUNTED INVESTMENTS IN VARIOUS LANDS OVER A PER IOD OF TIME WERE FOUND. ON CONFRONTATION, THE ASSESSEE ADMITTED THIS FACT AND ACCORDINGLY FURNISHED A LETTER DISCLOSING ADDITIONAL INCOME OF RS. 4.16 CRORES IN THREE DIFFERENT FINANCIAL YEARS, VIZ: RS.50LAKHS FOR FINANCIAL YEAR 2011-12, RS. 1.6 6 CRORES FOR FINANCIAL YEAR 2012- 13 AND RS. 2 CRORES FOR FINANCIAL YEAR 2013-14. SIN CE PART OF THE DISCLOSURE IS PERTAINING TO PERIOD UNDER CONSIDERATION I.E. FINAN CIAL YEAR 2011-12 RELEVANT TO ASSESSMENT YEAR 2012-13, THEREFORE, COGNIZANCE OF T HE SAME HAS BEEN TAKEN WHILE ASSESSING THE TOTAL INCOME OF THE ASSESSEE. DURING THE ASSESSMENT PROCEEDINGS AFTER TAKING THE STATEMENT OF SHRI DAMODAR DHARA, PROPRIE TOR OF M/S RAMKRISHNA CEMENT WORKS, THE ASSESSING OFFICER NOTED THAT FROM HIS STATEMENT, THAT THE ONLY SOURCE OF THE UNACCOUNTED INCOME GENERATED BY THE A SSESSEE IS HIS MARBLE BUSINESS AND AS SUCH THE PROFIT MARGIN SHOWN BY HIM TO THE D EPARTMENT THROUGH RETURNS OF INCOME FILED FOR VARIOUS ASSESSMENT YEARS INCLUDING THE PERIOD UNDER CONSIDERATION IS NOT BELIEVABLE. IT IS NOTICED THAT FOR FINANCIAL YEARS 2011-12, 2012-13 AND 2013- 14, THE ASSESSEE HAS MADE HUGE UNACCOUNTED INVESTME NTS IN LANDS, WHEREAS FOR FINANCIAL YEARS 2010-11 AND 2013-14 THE ASSESSEE HA S MADE HUGE UNACCOUNTED INVESTMENT IN STOCK AND THESOURCE OFALL THESE UNAC COUNTED INVESTMENTS IS OBVIOUSLY HIS CONCEALED BUSINESS INCOME. IN VIEW OF THIS, THE PERCENTAGE OF NET PROFIT I.E. 2.67 % SHOWN BY THE ASSESSEE FOR THE YE AR UNDER CONSIDERATION [FY 2011-12 RELEVANT TO AY 2012-13] WAS NOT ACCEPTABLE BY AO FOR THE REASONS SHRI DAMODARDHARA ITA NO.1995/KOL/2017 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 3 33 3 DISCUSSED IN DETAIL IN THE STATEMENT RECORDED ON 25 /02/2015. IN VIEW OF THE SAME, FOR THE PERIOD UNDER CONSIDERATION, THE INCOME OF T HE ASSESSEE WAS WORKED OUT ON THE BASIS OF AVERAGE PROFIT PERCENTAGE THAT THE ASS ESSEE HAS ACTUALLY EARNED DURING FINANCIAL YEARS 2012-13 AND 2013-14.THE AVERAGE PRO FIT PERCENTAGE FOR FY 2012- 13 AND 2013-14 HAS BEEN WORKED OUT AS MENTIONED IN Q. NO. 15 OF THE ASSESSEE'S STATEMENT DATED 25/02/2015 AND THE SAME WORKS OUT A T 24.23%. THEREFORE, THE NET INCOME THAT ASSESSEE HAS EARNED DURING THE FY 2011- 12 RELEVANT TO AY 2012-13 WAS WORKED OUT AT @ 24.23% OF THE GROSS SALES I.E. OF RS.6,00,68,012/- WHICH CAME TO RS. 1,45,54,479/-. NOW SINCE THE ASSESSEE O N HIS OWN HAS SHOWN NET PROFIT OF RS.16,00,899/- IN HIS RETURN OF INCOME FILED AND SUBSEQUENTLY DECLARED RS.50,00,000/- AS AN ADDITIONAL INCOME (AS A RESULT OF SURVEY CONDUCTED ON 11/12/2013),THE BALANCE AMOUNT OF RS.79,53,580/- [R S.1,45,54,479- RS.16,00,899 - RS.50,00,000]WAS ADDED TO ASSESSEE'S TOTAL INCOME AS HIS UNDISCLOSED INCOME FOR THE YEAR UNDER CONSIDERATION. 5. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A), WHO HAS DELETED TH E ADDITION MADE BY ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSING OFFICER IS PARTLY RIGHT IN SAYING THAT THE UNACCOUNTED INCOME DETECTED AS A RESULT OF SURVEY WOULD HAVE CO ME OUT OF THE UNACCOUNTED INCOME FROM THIS BUSINESS OF THE ASSESSEE. HOWEVER, WE NOTE THAT THE ASSESSEE IS RIGHT THAT THERE CAN BE UNACCOUNTED TURNOVER AND PR OFIT ON UNACCOUNTED TURNOVER. THEREFORE, INCREASING THE NET PROFIT RATE MAY NOT B E PROPER. LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT IT IS POSSIBLE TH AT DISCREPANCY DETECTED DURING THE SURVEY MIGHT BE RELATED TO THE UNACCOUNTED INCOME E ARNED IN EARLIER YEARS AND THEREFORE THAT WOULD NOT RESULT INCREASE IN NET PRO FIT OF THE ASSESSEE BY SUCH A LARGE MARGIN IN THE CURRENT YEAR. HOWEVER, LD DR RELIED O N THE STAND TAKEN BY THE ASSESSING OFFICER. THE LD COUNSEL SUBMITTED THAT AC TUALLY THE UNACCOUNTED INCOME OF THE ASSESSEE IS MUCH LESS. HOWEVER, THERE IS A P RACTICE IN THIS AREA TO MAKE SHRI DAMODARDHARA ITA NO.1995/KOL/2017 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 4 44 4 PURCHASE DEED OF LAND AT THE STAMP DUTY RATE WHILE THE ACTUAL CONSIDERATION FOR PURCHASE OF LAND IS MUCH LESS. ACCORDING TO LD COUN SEL, THE ASSESSEE DECLARED THE PURCHASE VALUE OF THE DEED TO BUY A PEACE OF MIND. IN VIEW OF THE ABOVE ALSO IT IS POSSIBLE THAT UNACCOUNTED INCOME OF THE ASSESSEE CA N BE MUCH LOWER THAN WHAT HAS BEEN DECLARED BY THE ASSESSEE. WE NOTE THAT ASSESSEE'S OTHER SOURCE OF INCOME APAR T FROM TILE BUSINESS LIKE PROFIT ON PURCHASE OF LAND AND SALE OF LAND CANNOT BE RULE D OUT. IN VIEW OF THE ABOVE WE ARE OF THE VIEW THAT IT IS NOT RIGHT FOR THE A.O TO MAKE SECONDARY ADJUSTMENT BASED ON GUESS WORK. IN ALL LIKELIHOOD WHATEVER DISCREPAN CY WAS THERE, HAS BEEN CAUGHT AT THE TIME OF SURVEY AND THE ASSESSEE WOULD BE PEN ALIZED FOR THE SAME BY IMPOSING OF TAX, INTEREST, PENALTY AND POSSIBLY PRO SECUTION.IN VIEW OF THE ABOVE, THE ADDITION MADE BY THE A.O IS NOT TENABLE. THAT B EING SO, WE DECLINE TO INTERFERE IN THE ORDER PASSED BY THE LD CIT(A), HIS ORDER ON THIS ISSUE IS HEREBY UPHELD AND THE GROUNDS OF APPEAL RAISED BY THE REVENUE IS DISM ISSED. 7. GROUND NO. 2 RAISED BY THE REVENUE RELATES TO DE LETING OF ADDITION OF RS. 5,00,000/- WITHOUT ANY CONCRETE BASIS AND BY ACCEPT ING THE ASSESSEES EXPLANATION. 8. THE BRIEF FACTS QUA THE ISSUE IS THAT ON PERUSAL OF THE ASSESSEE`S BALANCE SHEET AS ON 31/03/2012, IT WAS OBSERVED BY AO THAT THERE IS AN ADDITION OF RS.5,00,000/- TO THE CAPITAL OF THE ASSESSEE. DURING THE COURSE OF S CRUTINY PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH COMPLETE DETAILS OF SAID CAPIT AL INTRODUCTION. THE ASSESSEE THOUGH EXPLAINED THAT THE AMOUNT REPRESENTS CASH GI FT RECEIVED FROM HIS FATHER, HOWEVER, NO DETAILS WERE SUBMITTED NOR ANY WRITTEN OMISSION WAS MADE IN THIS REGARD. ON BEING ASKED TO SUBSTANTIATE THE SAID ORA L CONTENTION WITH DOCUMENTARY EVIDENCES, THE ASSESSEE DID NOT RESPOND BACK ON THI S ISSUE. THEREFORE, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE COULD NOT FURNISH ANY SATISFACTORY EXPLANATION NOR DID HE SUBSTANTIATE THE SOURCES OF RS.5,00,000/- OF THE CAPITAL INTRODUCED DURING THE PERIOD UNDER CONSIDERATION, T HE SAME WAS TREATED BY AO AS ASSESSEE'S UNEXPLAINED CASH CREDIT AS PER THE PROVI SIONS OF SECTION 68 OF THE I.T ACT AND THESAME AMOUNT I.E. RS.5,00,000/- WAS ADDED BAC K TO THE ASSESSEE'S TOTAL INCOME. SHRI DAMODARDHARA ITA NO.1995/KOL/2017 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 5 55 5 9. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A), WHO HAS DELETED TH E ADDITION MADE BY ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT LD DR FOR THE REVENUE HAS PRIMARILY RE ITERATED THE STAND TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTED IN OU R EARLIER PARA AND NOT BEING REPEATED FOR THE SAKE OF BREVITY. ON THE OTHER HAND , LD COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ASSESSING OFFICER DISB ELIEVED GIFT OF RS. 5,00,000/- RECEIVED FROM THE FATHER OF THE APPELLANT FOR WANT OF DOCUMENTARY EVIDENCE.DURING THE MATERIAL TIME THE APPELLANT`S F ATHER WAS 82 (EIGHTY TWO) YEARS OLD. THE APPELLANT'S FATHER WAS A WELL KNOWN CRAFTS MAN (MISTRY) OF CERAMIC TILES DURING THE LAST 60 (SIXTY) YEARS OR MORE.THE APPELL ANT'S FATHER HAS GIFTED HIS LIFE TIMES SAVINGS, KEPT IN CASH TO HIS SON I.E. THE AP PELLANT. IN VIEW OF THE AFORESAID FACTS, ORDER OF LD CIT(A) SHOULD BE SUSTAINED. WE AGREE WITH THE CONTENTION OF THE APPELLANT THAT FOR 82 YEARS OLD PERSON'S SAVING OF RS.5 LAKHS AND GIFTING OF RS.5 LAKHS TO HIS SON IS NOT EXCESSIVE AND IS QUITE PLAUSIBLE AND ALSO CONSIDERING THE FACT THAT THE AP PELLANT'S INCOME IS IN CRORES OF RUPEES, FURTHER SAVING OF MONEY IN CASH AND GIVING IT TO SON CANNOT BE RULED OUT. THEREFORE, ADDITION OF RS.5,00,000/- IS NOT JUSTIFI ED. THAT BEING SO, WE DECLINE TO INTERFERE IN THE ORDER PASSED BY THE LD CIT(A), HIS ORDER ON THIS ISSUE IS HEREBY UPHELD AND THE GROUNDS OF APPEAL RAISED BY THE REVE NUE IS DISMISSED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED ORDER PRONOUNCED IN THE COURT ON 28.06.2019 SD/- ( S.S.GODARA ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 28/06/2019 ( SB, SR.PS ) SHRI DAMODARDHARA ITA NO.1995/KOL/2017 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 6 66 6 COPY OF THE ORDER FORWARDED TO: 1. ACIT, CIRCLE-27(1), KOLKATA 2. SHRI DAMODARDHARA 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES