Natbar Nath, Koraput V. ITO, Jeypore

ITA 206/CTK/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7176 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 28-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 22-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: P C SETHI
• Keywords: Business income; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO.206 /CTK/2014 ASSESSMENT YEAR : 2009 - 2010 NATABAR NATH, POST OFFICE ROAD, KORAPUT. VS. ITO, WARD - 2, JEYPORE PAN/GIR NO. ACLPN 1721 G (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.C.SETHI, AR REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 28 /03 / 2017 DATE OF PRONOUNCEMENT : 2 8 /03 / 2017 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGA INST THE ORDER OF CIT( A) - BERHAMPUR, DATED 24.2.2014 FOR THE ASSESSMENT YEAR 2009 - 2010 . 2. IN GROUND NO.1 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER MAKING ADDITION OF RS. 5,94,651/ - AS BOGUS SUNDRY CRED ITORS. 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS DISCLOSED SUNDRY CREDITOR OF RS.5,94,651/ - . HE ALSO FOUND THAT THE IDENTICAL AMOUNT HAS BEEN SHOWN 2 ITA NO.206 /CTK/2014 ASSESSMENT YEAR :2009 - 2010 UNDER THE ASSET SIDE AS GOLD RECEIVED FOR REPAIR AND GOLD RECEIVED REPLACEMENT. THE ASSESSEE DID NOT FURNISH ANY DETAILS OF THE PERSON S FROM WHOM THE GOLD WAS RECEIVED. THEREFORE, THE ASSESSING OFFICER ADDED RS.5,94,651/ - AS BOGUS CREDIT. 4 . ON APPEAL BEFORE THE CIT(A), THE ASSESSEE ARGUED THAT THE ASSESSEE RECEIVED GOLD AND SILVER FOR REPAIR AND REPLACEMENT OF G OLD JEWELLERY W ITH THE NEW ORNAMENTS . DURING THE YEAR, THE ASSESSEE CARRIED OUT THE ACTIVITY OF ACCEPTING THE OLD GOLD FOR REPLACEMENT AND REPAIR. AT THE END OF THE YEAR, THE UNFINISHED WORK WAS ACCOUNTED FOR AND THE VALUE OF GOLD RECEIVED FOR REPAIR AND REPLACEMENT WAS KEPT SEPARATELY. THE NAME, ADDRESS AND PHONE NUMBER S OF THE PERSONS WHOSE GOLD WA S LEFT WITH THE ASSES SEE AT THE END OF THE YEAR WERE FURNISHED TO THE ASSESSING OFFICER. HOWEVER, THE SAME WAS NOT CONSIDERED AND THE ASSESSING OFFICER T REATED THE ENTIRE AMOUNT AS BOGUS AND ADDED TO THE INCOME OF THE ASSESSEE. 5. THE CIT(A) CALLED FOR A REMAND REPORT AND THE ASSESSING OFFICER VIDE LETTER DATED 17.1.2014 STATED THAT THE ADDITION OF RS.5,94,651/ - WAS JUSTIFIED AS THE CREDITORS COULD NOT BE ESTABLISHED DURING THE ASSESSMENT PROCEEDINGS. 6. THE ASSESSEE WAS CONFRONTED WITH THE REMAND REPORT AND IN REPLY TO THE SAME, THE ASSESSEE REITERATED THE SUBMISSIONS MADE EARLIER AND ARGUED 3 ITA NO.206 /CTK/2014 ASSESSMENT YEAR :2009 - 2010 THAT SINCE THE INCOME OF THE ASSESSEE WAS OFFERED TO TAX U/S. 44AF, NO SEPARATE ADDITION TOWARDS SUNDRY CREDITORS CAN BE MADE. 7. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ALSO THE REMAND REPORT OF THE ASSESSING OFFICER OBSERVED THAT HE HAD NO HESITATION IN AGREEING WITH THE AUTHORISED REPRESE NTATIVE OF THE ASSESSEE THAT SUNDRY CREDITORS REPRESENTING PAYABLES CANNOT BE ADDED TO THE BUSINESS INCOME IF THE SAME HAS BEEN OFFERED ON ESTIMATE U/S.44AF OF THE ACT AND THAT FOR THE SAID REASON, HE DELETED THE ADDITION IN RELATED APPEALS IN THE CASE OF SMT. SUNA NATH AND KHETRABASI NATH. HE HELD THAT THE FACTS IN THE INSTANT CASE ARE QUITE DIFFERENT. THE AMOUNT OF RS.5,94,651/ - WAS STRICTLY NOT SUNDRY CREDITORS. THIS AMOUNT REPRESENTS ALLEGEDLY THOSE PERSONS FROM WHOM GOLD OF THE IDENTICAL AMOUNT REC EIVED BY THE ASSESSEE WHICH WAS SHOWN IN THE ASSET SIDE. THIS SUNDRY CREDITOR AMOUNT WAS NOT TOWARDS PURCHASE AND THUS WAS NOT RELATED TO THE PROFIT AND LOSS ACCOUNT TO WHICH THE ESTIMATED PROFITS RELATED TO BUT THIS ENTRY ATTEMPTS TO EXPLAIN THE GOLD OF RS.5,94,561/ - SHOWN BY THE ASSESSEE IN HIS BALANCE SHEET. THEREFORE, IT WA S INCUMBENT ON THE ASSESSEE TO FILE DETAILS OF THE PERSONS AS WELL AS THE CONFIRMATIONS FROM WHOM THIS GOLD WAS RECEIVED. PERUSAL OF ASSESS MENT RECORDS SHOWED THAT NO SUCH DETAILS W ERE FILED NOR THESE DETAILS HAVE BEEN FILED BEFORE HIM. THUS, THE SOURCE OF GOLD OF RS.5,94,651/ - WAS 4 ITA NO.206 /CTK/2014 ASSESSMENT YEAR :2009 - 2010 NOT EXPLAINED BY THE ASSESSEE AND HENCE, HE CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.5,94,651/ - AS UNEXPLAINED GOLD. 8. BEING AGGRIEVED BY THE SAID ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE ME. 9. LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. HE COULD NOT FILE ANY EVIDENC E AND DETAILS OF THE PERSONS FROM WHOM GOLD WAS RECEIVED EVEN BEFORE ME. HENCE, I DO NOT FIND ANY GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED AND GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 10 . IN GROUND NO.2 OF THE APPEAL, TH E GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN ESTIMATING THE INTEREST ON TERM DEPOSIT IN BANK. 11 . I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, ASSESSING OFFICER OBSERVED THAT THE ASSESSEE H AD FIXED DEPOSITS OF RS.3,44,000 / - WITH MICRO FINANCE. HE ESTIMATED THE INT EREST @ 10% ON THE DEPOSIT ON A CCRUAL BASIS AND ADDED RS.34,400 / - TO THE INCOME OF THE ASSESSEE , WHICH WAS CONFIRMED BY THE CIT(A). 5 ITA NO.206 /CTK/2014 ASSESSMENT YEAR :2009 - 2010 12. I FIND THAT THIS ISSUE IS ALSO IDENTICAL TO THE FACTS OF THE CASE OF THE FAMILY MEMBERS OF THE ASSESSEE IN THE CASE OF BHAGABAN NATH IN ITA NO.205/CTK/2014 FOR ASSESSMENT YEAR 2009 - 2010, WHEREIN, I HAVE DECIDED THE ISSUE VIDE ORDER OF EVEN DATE, OBSERVING AS UNDER: IN THE INSTANT CASE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD FIXED DEPOSITS OF RS.1,05,000/ - WITH MICRO FINANCE. HE ESTIMATED THE INTEREST @ 10% ON THE DEPOSIT ON ACCRUAL BASIS AND ADDED RS.10,500/ - TO THE INCOME OF THE ASSESSEE. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE ARGUED THAT THE ASSESSEE SHOWN INCOME FROM FIXED DEPOSIT ON RECEIPT BASIS AS IT WAS FOLLOWING CASH SYSTEM OF ACCOUNTING. THE INTEREST INCOME IS DEEMED TO ACCRUE ONLY ON THE DATE OF DUE DATE OF FIXED DEPOSIT. THE INTEREST INCOME IS NOT CALCULATED YEAR TO YEAR. HE RELIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF DIT VS. CREDIT SUISSE FIRST BOSTON (CYPRUS) LTD., (2012) 23 TAXMAN 424 AND PRAYED THAT THE ADDITION OF RS.10,500/ - SHOULD BE DELETED. THE CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER, WHO VIDE LETTER DATED 17.1.2014 STATED THAT THE ADDITION OF ACCRUED INTEREST OF RS.10,500/ - WAS JUSTIFIED AND DID NOT OFFER ANY COMMENT. THE REMAND REPORT WAS CONFRONTED TO THE ASSESSEE, WHO RE ITERATED THE SUBMISSIONS MADE EARLIER. THE CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND REMAND REPORT OF THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS INVESTED IN FIXED DEPOSIT DURING THE YEAR AND HAS NOT SHOWN ANY INTEREST INCOME FROM TH E SAID DEPOSIT IN THE RETURN. THE INTEREST ON THE FIXED DEPOSIT ACCRUES BY THE END OF THE YEAR AND, THEREFORE, THE ASSESSING OFFICER CANNOT BE FAULTED FOR TAKING SUCH INTEREST ON AN ESTIMATED BASIS ON 10% WHICH IS QUITE REASONABLE AND, ACCORDINGLY, DISMIS SED THE GROUND OF APPEAL OF THE ASSESSEE. BEING AGGRIEVED BY THE SAID ORDER, THE ASSESSEE IS IN APPEAL BEFORE ME. LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. HE CONTENDED THAT INTEREST INCOME O F FIXED DEPOSIT WAS OFFERED TO TAX ON CONSISTENTLY METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE FOR INTEREST AS INCOME 6 ITA NO.206 /CTK/2014 ASSESSMENT YEAR :2009 - 2010 IN THE YEAR OF RECEIPT. WHEN QUESTIONED BY THE BENCH WHAT IS THE EVIDENCE THAT THE ASSESSEE HAS OFFERED TO TAX THE INTEREST INCOME ON F IXED DEPOSIT OF RS.1,05,000/ - IN THE YEAR ON RECEIPT BASIS OR IN THE SUBSEQUENT YEAR, LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE EXPRESSED HIS INABILITY TO PRODUCE ANY SUCH EVIDENCE. IN ABSENCE OF THE SAME, I DO NOT FIND ANY GOOD REASON TO INTERFERE WIT H THE ORDER OF THE CIT(A),WHICH IS HEREBY CONFIRMED AND GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 13. FOLLOWING THE SAME, I CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THE GROUND OF APPEAL OF THE ASSESSEE. 14. IN GROUND NO.3 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING AGRICULTURAL INCOME OF RS.92,300/ - . 15. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILAB LE ON RECORD . THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD DISCLOSED AGRICULTURAL INCOME OF RS.92,300/ - . THE ASSESSEE EXPLAINED THAT THE ASSESSEE HAD AGRICULTURAL LAND OF AC.3.00 FROM WHICH HE HAS PRODUCED SUGAR CANE WORTH RS.1,82,400/ - . THE ASS ESSING OFFICER MADE ENQUIRIES THROUGH INCOME TAX INSPECTOR WHO REPORTED THAT THE ASSESSEE COULD NOT PRODUCE ANY DETAILS OF SUCH LANDED PROPERTY AND OTHER DETAILS RELATING TO AGRICULTURAL INCOME. THEREFORE, THE ASSESSING OFFICER DID NOT ACCEPT THE CLAIM OF THE ASSESSEE ABOUT AGRICULTURAL INCOME AND MADE ADDITION OF RS.92,300/ - AS INCOME FROM OTHER SOURCES, AND ON APPEAL, THE ADDITION WAS CONFIRMED BY THE CIT(A) . 7 ITA NO.206 /CTK/2014 ASSESSMENT YEAR :2009 - 2010 16. I FIND THAT THIS ISSUE IS ALSO IDENTICAL TO THE FACTS OF THE CASE OF THE FAMILY MEMBERS OF THE ASSESSEE IN THE CASE OF BHAGABAN NATH IN ITA NO.205/CTK/2014 FOR ASSESSMENT YEAR 2009 - 2010, WHEREIN, I HAVE DECIDED THE ISSUE VIDE ORDER OF EVEN DATE, OBSERVING AS UNDER: 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 HAD DISCLOSED AGRICULTURAL INCOME OF RS.60,240/ - . THE ASSESSEE EXPLAINED THAT THE ASSESSEE HAD AGRICULTURAL LAND OF AC.2.00 FROM WHICH HE HAS PRODUCED SUGAR C ANE WORTH RS.1,19,400/ - . THE ASSESSING OFFICER MADE ENQUIRIES THROUGH INCOME TAX INSPECTOR WHO REPORTED THAT THE ASSESSEE COULD NOT PRODUCE ANY DETAILS OF SUCH LANDED PROPERTY AND OTHER DETAILS RELATING TO AGRICULTURAL INCOME. THEREFORE, THE ASSESSING OF FICER DID NOT ACCEPT THE CLAIM OF THE ASSESSEE ABOUT AGRICULTURAL INCOME AND MADE ADDITION OF RS.60,240/ - AS INCOME FROM OTHER SOURCES. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT HE CARRIED OUT AGRICULTURAL ACTIVITY AND RECEIVED INCOME FROM THE SAME F OR RS.60,240/ - . HE FURNISHED DETAILS LIKE OWNERSHIP OF THE LAND, AGRICULTURAL ACTIVITY CARRIED OUT AND YIELD RECEIVED ETC. THE ASSESSING OFFICER REJECTED THE CLAIM AND ALLEGED THAT THE ASSESSEE HAS NOT FURNISHED ANY DETAILS. HE RELIED ON THE REPORT FURN ISHED BY THE REPORT OF THE INSPECTOR WHO CONFIRMED THAT THE ASSESSEE DID NOT CARRY THE AGRICULTURAL ACTIVITY DURING THE ASSESSMENT YEAR. WITHOUT KEEPING ANY MATERIAL ON RECORD TO SAY THAT THE ASSESSEE HAS NOT CARRIED OUT THE AGRICULTURAL ACTIVITY, TREATI NG THE AGRICULTURAL INCOME AS TAXABLE INCOME AND ADDED THE SAME TO THE RETURNED INCOME WAS UNJUST AND ARBITRARY. THE CIT(A) CALLED FOR A REMAND REPORT WHO VIDE LETTER DATED 17.1.2014 STATED THAT THE ASSESSEE COULD NOT FURNISH THE SOURCE OF AGRICULTURAL INC OME OF RS.60,240/ - AND THE ADDITION WAS JUSTIFIED AS INCOME FROM OTHER SOURCES.. IN RESPONSE TO THE REMAND REPORT, THE ASSESSEE REITERATED THE SUBMISSIONS MADE EARLIER. 8 ITA NO.206 /CTK/2014 ASSESSMENT YEAR :2009 - 2010 THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT IT WAS A SE TTLED PRINCIPLE OF LAW THAT THE BURDEN IS ON THE ASSESSEE TO PROVE THAT THE INCOME WAS AGRICULTURAL INCOME. HE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. GENKATESWAMY NAIDU, 29 ITR 529 (SC), WHEREIN, IT HAS BEEN HELD THAT IN OR DER TO CLAIM AN INCOME WHICH THE ASSESSEE CONSIDERS AS AGRICULTURAL INCOME, THE ASSESSEE HAS TO PUT BEFORE THE AUTHORITIES MATERIALS WHICH WILL ENABLE THEM TO COME TO A CONCLUSION THAT THE INCOME WHICH WAS SOUGHT TO BE ASSESSED WAS AGRICULTURAL INCOME. IT WAS NOT FOR THE AUTHORITIES TO PROVE THAT IT WAS NOT AGRICULTURAL INCOME. HE OBSERVED THAT FROM PERUSAL OF ASSESSMENT RECORDS, IT IS SEEN THAT THE ASSESSEE FILED A LEASE DEED OSTENSIVELY SHOWING THAT HE HAD TAKEN AGRICULTURAL LAND ON LEASE FROM 1.2.2008 TO 31.9.2009 FOR RS.4,000/ - . THE ASSESSEE STATED THAT HE PRODUCED SUGAR CANE ON SUCH LEASED LAND AND THE INCOME WAS DERIVED THEREFROM. HE OBSERVED THAT MOST OF THE FAMILY MEMBERS OF THE ASSESSE, WHOSE APPEALS ARE BEING DISPOSED OF NAMELY, NATABAR NATH, S MT. SUNA NATH, PRADIP KUMAR DAS, KHETRABASI NATH, BATAKRUSHNA NATH AND RANJAN KUMAR NATH HAVE ALL CLAIMED THAT THEY HAD DERIVED AGRICULTURAL INCOME BY WAY OF SALE OF SUGAR CANE OUT OF LEASED LAND. IF THEIR CONTENTIONS ARE ACCEPTED THEN THE TOTAL SUGAR CAN E APPARENTLY SOLD BY THE FAMILY MEMBERS OF THE ASSESSEE WILL EXCEED RS.8 LAKHS. HE OBSERVED THAT IT WAS SURPRISING THAT THE ASSESSEE WAS UNABLE TO GIVE A SHRED OF EVIDENCE IN SUPPORT OF HIS SUGAR CANE CULTIVATION OR IN SUPPORT OF SALE OF SUCH SUGAR CANE W HICH WILL NORMALLY BE TO A SUGAR MILL. IN ABSENCE OF ANY SUCH EVIDENCE, HE WAS NOT INCLINED TO ACCEPT THE CONTENTION OF THE ASSESSEE REGARDING ITS CLAIM OF AGRICULTURAL INCOME. THEREFORE, HE CONFIRMED THE ORDER OF THE ASSESSING OFFICER TREATING THE AGRI CULTURAL INCOME SHOWN BY THE ASSESSEE AS INCOME FROM OTHER SOURCES AND DISMISSED THE GROUND OF APPEAL OF THE ASSESSEE. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE ME. LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFOR E THE LOWER AUTHORITIES. I FIND AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IN TOTALITY THAT THE ASSESSING OFFICER HAS NOT CONSIDERED THE INCOME OF RS.60,240/ - SHOWN BY THE ASSESSEE AS AGRICULTURAL INCOME BUT TREATED THE SAME AS INCOME FROM O THER SOURCES OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE FAILED TO PRODUCE EVIDENCE BEING SUGAR CANE CULTIVATION AND SALE OF SUGAR CANE. BEFORE ME ALSO THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE IN THAT REGARD. THEREFORE, I FIND 9 ITA NO.206 /CTK/2014 ASSESSMENT YEAR :2009 - 2010 NO GOOD AND JU STIFIABLE REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES AND DISMISS THE GROUND OF APPEAL OF THE ASSESSEE. 17. FOLLOWING THE SAME, I CONFIRM THE ORDER OF THE LD CIT(A) AND DISMISS THE GROUND OF APPEAL OF THE ASSESSEE. 18 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT ON 28 /03 /2017 IN THE PRESENCE OF PARTIES. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 2 8 /03 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : NATABAR NATH, POST OFFICE ROAD, KORAPUT 2. THE RESPONDENT. ITO, WARD - 2, JEYPORE 3. THE CITA), BERHAMPUR 4. PR.CIT , BHUBANESWAR. 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//