Ujjal Kumar Kundu, Kolkata V. ITO, Ward-3, Rourkela, Rourkela

ITA 20/CTK/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7234 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 08-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: P R MOHANTY
• Keywords: Unexplained investment; Gift; Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO. 20/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 UJJAL KUMAR KUNDU, DAILY MARKET, DURGA PANDAL, ROURKELA. VS. ITO, WARD - 3, ROURKELA PAN/GIR NO. ABBPK 1455 D (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.R.MOHANTY, AR REVENUE BY : SHRI D.K.PRADHAN, DR DATE OF HEARING : 1 8 /01/ 2017 DATE OF PRONOUNCEMENT : 18 /01/ 2017 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 1, BHUBANESWAR , DATED 30.10.2014 , FOR THE ASSESSMENT YEAR 2010 - 2011 . 2. IN GROUND NO.1 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD CIT(A)WAS NOT JUSTIFIED IN INSTRUCTING THE ASSESSING OFFICER TO ESTIMATE THE BUS INESS PROFIT @ 3.5% OF GROSS RECEIPTS AS THE NATURE OF THE BUSINESS WAS WHOLESALE & RETAIL IN NATURE. 2 ITA NO. 20/CTK/2015 ASSESSMENT YEAR :2010 - 2011 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DERIVES INCOME FROM SALE OF EGGS ON WHOLESALE AND RETAIL BASIS. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PRODUCE BILLS AND VOUCHERS IN RESPECT OF ABOVE PURCHASE S AND SALES EXPENSES CLAIMED IN THE PROFIT AND LOSS ACCOUNT TO JUSTIFY HIS AUDITED BOOKS OF ACCOUNT. SINCE THE ASSESSEE FAILED TO DO SO, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE AND ESTIMATED THE NET PROFIT @ 5% OF THE TOTAL TURNOVER OF RS.4,00,71,441/ - AND ARRIVED AT A N INCOME OF RS.20,03,572/ - . THE ASSESSEE HAD DISCLOSED PROFIT OF RS.4,11,089/ - . THEREFORE, HE MADE AN ADDITION OF THE DIFFERENTIAL AMOUNT OF RS.15,92,483/ - TO THE INCOME OF THE ASSESSEE. 4. ON APPEAL, LD CIT(A) ESTIMATED THE INCOME OF THE ASSESSEE BY APPLYING THE RATE OF 3.5% ON GROSS RECEIPTS, WHICH WORKED OUT TO RS.14,02,500/ - , THEREBY ALLOWED RELIEF OF RS.6,01,072/ - TO THE ASSESSEE. 5. BEING AGGRIEVED BY THE SAID ORDER OF THE LD CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 6. L D A.R. OF THE ASSESSEE AT PAGE 1 OF PAPER BOOK HAS FILED A COMPARATIVE CHART OF PROFIT SHOWN AND ACCEPTED IN THE CASE OF THE ASSESSEE IN THE PAST YEARS. AS PER THE SAID CHART, FOR THE ASSESSMENT YEAR 2007 - 08, THE PROFIT SHOWN WAS 1.18%, FOR THE A.Y 2008 - 0 9, THE PROFIT SHOWN WAS 0.73%, FOR THE 3 ITA NO. 20/CTK/2015 ASSESSMENT YEAR :2010 - 2011 ASSESSMENT YEAR 2009 - 10, IT WAS SHOWN 0.77%, FOR THE A.Y. 2011 - 12, IT WAS SHOWN 1.03% AND FOR THE ASSESSMENT YEAR 2012 - 13, IT WAS SHOWN 0.89%. HENCE, IT WAS HIS PRAYER THAT IN THE YEAR UNDER APPEAL, THE PROFIT CAN B E ESTIMATED BY APPLYING 1.5% TO THE TOTAL TURNOVER OF THE ASSESSEE. 7. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDER OF LD CIT(A). 8. I FIND THAT REJECTION OF BOOK RESULTS BY THE ASSESSING OFFICER BY APPLYING THE PROVISIONS OF SECTION 145(3) OF THE ACT IS NOT UNDER CHALLENGE BEFORE ME. THE ASSESSEE HAS CHALLENGED THE NET PROFIT OF 3.5% APPLIED TO THE TOTAL SALES OF THE ASSESSEE. LD D.R. HAS NOT DISPUTED THE RATE OF PROFIT SHOWN BY THE ASSESSEE IN THE CHART FILED BEFORE ME FOR THE PRECEDING AND SUCCEEDING ASSESSMENT YEARS IN THE CASE OF THE ASSESSEE. I AM OF THE CONSIDERED VIEW THAT AFTER REJECTION OF BOOKS OF ACCOUNT OF THE ASSESSEE, THE ASSESSING OFFICER HAS TO ESTIMATE THE INCOME OF THE ASSESSEE FOR WHICH HE CAN NOT MAKE A WILD GUESS. FOR ESTIMATING TH E INCOME, THE PAST ACCEPTED RESULTS OF THE ASSESSEE IS A GUIDE IN THIS MATTER. I FIND FROM THE ABOVE CHART OF THE ASSESSEE THAT THE NET PROFIT HAS BEEN ACCEPTED RANGING FROM 0.73% TO 1.18%. I, THEREFORE, FIND THE SUBMISSION OF LD A.R. OF THE ASSESSEE REA SONABLE TO ESTIMATE THE NET PROFIT OF THE ASSESSEE BY APPLYING THE RATE OF 1.5% TO THE GROSS RECEIPTS OF THE ASSESSEE. THEREFORE, I SET ASIDE THE ORDER OF LD CIT(A) AND DIRECT THE ASSESSING OFFICER TO ESTIMATE THE INCOME BY APPLYING THE RATE OF 1.5% TO TH E TOTAL SALE RECEIPTS OF THE ASSESSEE . HENCE, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 4 ITA NO. 20/CTK/2015 ASSESSMENT YEAR :2010 - 2011 9. IN GROUND NO.2 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD CIT(A) WAS NOT JUS TIFIED IN ADDING BACK RS.6,31,22 3/ - BEING THE CAPITAL INTRODUCED. 10. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE ASSESSING OFFICER OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS INTRODUCED CAPITAL OF RS.6,31,22 3 / - IN HIS BUSINESS. SINCE THE ASSESSEE COULD NOT SATISFACTORILY EXPLAIN THE SOURCE OF RS.6,31,223 / - , THE ASSESSING OFFICER ADDED THE SAME U/S.69 OF THE ACT AS UNEXPLAINED INVESTMENT IN BUSINESS OF THE ASSESSEE. 11. ON APPEAL, LD CIT(A) CONFIRMED THE ACTIO N OF THE ASSESSING OFFICER. 12. BEFORE ME, LD A.R. OF THE ASSESSEE POINTED OUT FROM THE BALANCE SHEET OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION THAT IT HAS BEEN SHOWN IN THE AUDITED BALANCE SHEET IN SCHEDULE UNDER THE HEAD CAPITAL SUSPENSE A/C. (SO URCE OF CAPITAL INTRODUCE) AS UNDER: UTILISATION OF MATURED VALUE OF KVP : RS.1,50,000 UTILISATION OF ACCUMULATED NET AGRICULTURAL INCOME: RS.3,50,000 GIFT FROM RELATIVES : RS.1,00,000 UNUTILIZED DRAWING FROM LAST YEAR : RS. 31,223 TO TAL: RS.6,31,223 HE FILED BEFORE ME XEROX COPY OF KISAN VIKAS PATRA (KVP) PURCHASED BY THE ASSESSEE ON 13.6.2004 OF RS.10,000/ - EACH TOTALING TO RS.80,000/ - AND 5 ITA NO. 20/CTK/2015 ASSESSMENT YEAR :2010 - 2011 SUBMITTED THAT THE ASSESSEE HAS RECEIVED MATURITY AMOUNT OF KVP AFTER 5 YEARS OF RS.1,60,000/ - DURING THE YEAR UNDER CONSIDERATION. HE SUBMITTED THAT OUT OF RS.1,60,000/ - , RS.1,50,000/ - WAS INVESTED IN THE ASSESSES FIRM. FURTHER, HE FILED BEFORE ME COPY OF RETURN OF INCOME FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2008 - 09 AND POINTE D OUT THEREFROM THAT THE ASSESSEE HAD SHOWN AGRICULTURAL INCOME OF RS.1,28,160/ - . AGAIN HE POINTED OUT FROM 143(1) P ROCESSING OF RETURN OF INCOME UNDER THE INCOME TAX ACT FOR ASSESSMENT YEAR 2009 - 1010, THE ASSESSEE HAD SHOWN AGRICULTURAL INCOME OF RS.1,47 ,500/ - . HE FURTHER POINTED FROM THE PROCESSING OF RETURN U/S.143(1) FOR ASSESSMENT YEAR 2010 - 2011 THAT THE ASSESSEE HAD SHOWN AGRICULTURAL INCOME OF RS.1,65,550/ - . IT WAS HIS SUBMISSION THAT OUT OF THIS AGRICULTURAL INCOME AGGREGATING TO RS.4,41,210/ - , T HE ASSESSEE HAD INVESTED RS.3,50,000/ - IN HIS BUSINESS. FURTHER, HE FILED COPY OF RETURN OF INCOME OF HIS FATHER SHRI DINABANDHU KUNDU FOR ASSESSMENT YEAR 2010 - 2011 TOGETHER WITH COPY OF BALANCE SHEET AS ON 31.3.2010 WHERE HE HAS SHOWN GIFT OF RS.1,00,000 / - TO HIS SON, THE ASSESSEE IN THE PRESENT CASE. HE POINTED OUT THAT HE HAS SHOWN INCOME OF RS.9,31,465/ - DURING THE YEAR UNDER CONSIDERATION AND HAS PAID TAX OF RS.1,52,741/ - . HENCE, IT WAS HIS SUBMISSION THAT RS.1 LAKH GIFT RECEIVED FROM HIS FATHER WAS INVESTED IN THE FIRM AS CAPITAL. FURTHER, HE POINTED OUT FROM THE BALANCE SHEET FOR ASSESSMENT YEAR 2010 - 2011 THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN DRAWINGS OF RS.7,73,386/ - AS WELL AS 6 ITA NO. 20/CTK/2015 ASSESSMENT YEAR :2010 - 2011 THE ASSESSEE HAS EARNED NET PROFIT OF RS.4 ,11,089/ - . HE SUBMITTED THAT OUT OF THIS, THE ASSESSEE HAS INVESTED RS.31,223/ - AS CAPITAL IN THE FIRM. HENCE, HE SUBMITTED THAT THE ENTIRE SOURCE OF RS.6,31,223/ - BEING CAPITAL INTRODUCED IN THE FIRM IS EXPLAINED AND HENCE, THE ADDITION SHOULD BE DELETE D. 13. ON THE OTHER HAND, LD D.R. COULD NOT CONTROVERT THE ABOVE SUBMISSION OF LD A.R. OF THE ASSESSEE. 14. I FIND FORCE IN THE SUBMISSIONS OF LD A.R. OF THE ASSESSEE THAT INTRODUCTION OF RS.6,31,223/ - IN THE CAPITAL OF THE FIRM IS FULLY SUPPORTED BY EVID ENCE IN THE FORM OF REALIZATION PROCEEDS OF KVP, AGRICULTURAL INCOME, GIFT FROM HIS FATHER AND DRAWINGS DURING THE YEAR. THE D.R. COULD NOT CONTROVERT THE SUBMISSION OF LD A.R. OF THE ASSESSEE. THEREFORE, I SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND D ELETE THE ADDITION OF RS.6,31,223/ - AND ALLOW THIS GROUND OF APPEAL. 15. IN GROUND NO.3 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.1,65,650/ - ON ACCOUNT OF AGRICULTURAL INCOME. 16. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS SHOWN AGRICULTURAL INCOME OF RS.1,65,650/ - . HE OBSERVED THAT NO EVIDENCE WAS PROVIDED FOR ACQUISITION OF LAND AND NO EVIDENCE WAS PRODUCED SHOWING THE ANNUAL INCOME FROM THE SAID LAND. IN THE 7 ITA NO. 20/CTK/2015 ASSESSMENT YEAR :2010 - 2011 ABSENCE OF THE SAME, HE ADDED AGRICULTURAL INCOME OF RS.1,65,6 50/ - SHOWN BY THE ASSESSEE AS INCOME FROM OTHER SOURCES. 17. ON APPEAL, LD CIT(A) CONFIRME D THE ACTION OF THE ASSESSING OFFICER. 18. BEFORE ME, LD A.R. OF THE ASSESSEE POINTED OUT FROM THE RETURN OF INCOME FOR ASSESSMENT YEAR 2008 - 09 THAT THE ASSESSEE HAD SHOWN AGRICULTURAL INCOME OF RS. 1,28,160 AND FOR ASSESSMENT YEAR RS. 1,47,500/ - . IN FIN D THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I.E. 2008 - 09 & 2009 - 2010, THE AGRICULTURAL INCOME OF RS.1,28,160/ - AND RS.1,47,500/ - , RESPECTIVELY HAS BEEN ACCEPTED BY THE DEPARTMENT. HENCE, I FIND THAT THERE IS NO GOOD AND JUSTIFIABLE REASON NOT TO ACCEPT THE AGRICULTURAL INCOME OF RS.1,65, 6 50/ - DURING THE YEAR UNDER CONSIDERATION AS THE SAME COMPARES FAVOURABLY WITH THE AGRICULTURAL INCOME SHOWN BY THE ASSESSEE AND ACCEPTED BY THE DEPARTMENT IN THE IMMEDIATELY PRECEDING YEARS . THEREFORE, I SET ASID E THE ORDERS OF LOWER AUTHORITIES AND DELETE THE ADDITION OF RS.1,65,6 50/ - MADE OUT OF AGRICULTURAL INCOME A ND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 19. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCE D IN THE OPEN COURT ON 1 8 / 01/2017 IN THE PRESENCE OF PARTIES. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 18 /01 /2017 8 ITA NO. 20/CTK/2015 ASSESSMENT YEAR :2010 - 2011 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT : UJJAL KUMAR KUNDU, DAILY MARKET, DURGA PANDAL, ROURKELA 2. THE RESPONDENT. ITO, WARD - 3, ROURKELA 3. THE CIT(A) - 1, BHUBANESWAR 4. CIT , SAMBALPUR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//