Ajit Prasad Dey, Bankura V. I.T.O Wd - 1,Bankura, Bankura

ITA 2086/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100244 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 09-07-2013
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA PRASAD
• Keywords: Unexplained investment; Business income; Peak credit
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: KOLKATA [BEFORE SHRI MAHAVIR SINGH, JM] I.T.A NO.2086/KOL/2013 ASSESSMENT YEAR: 2009-10 AJIT PRASAD DEY VS. INCOME-TAX OFFICER, WD-1, B ANKURA (PAN: ADAPD9381J) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 09.12.2015 DATE OF PRONOUNCEMENT: 11.12.2015 FOR THE APPELLANT: SHRI SOMNATH GHOSH, ADVOCATE FOR THE RESPONDENT: SHRI RAJENDRA PRASAD, JCIT, SR. DR ORDER THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A), DURGAPUR VIDE APPEAL NO. 189/CIT(A)/DGP/2011-12 DATED 17.04.2013. ASSES SMENT WAS FRAMED BY ITO, WARD-1, BANKURA U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2009-10 VIDE HIS ORDER DA TED 28.12.2011. 2. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE STAT ED THAT HE IS NOT INTEREST IN PROSECUTING GROUND NO.3 QUA THE ADDITION OF COMMISS ION INCOME. AS THE ASSESSEE HAS NOT CONTESTED THIS ISSUE THE SAME IS DISMISSED AS N OT PRESSED. 3. THE TWO INTERCONNECTED ISSUES I.E. ADDITION OF G ROSS PROFIT BY APPLICATION OF PERCENTAGE ON GROSS UNDISCLOSED PURCHASES AND ADDIT ION OF DEPOSITS IN THE BANK ACCOUNT OF ASSESSEES BROTHER AS UNDISCLOSED INVESTMENT. F OR THIS, ASSESSEE HAS RAISED GROUND NOS. 1 AND 2: 1. THAT ON FACTS AND UNDER THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE LD. AO WAS RIGHT IN C ALCULATING THE GROSS PROFIT BY APPLICATION OF A PERCENTAGE ON THE GROSS PURCHASES. 2. THAT ON FACTS AND UNDER THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE LD. AO WAS RIGHT IN ADDING BACK THE CLOSING BALANCE OF A BANK ACCOUNT BELONGING TO THE APPELLANTS BROTHER WHEREA S IT HAD ALREADY BEEN OFFERED FOR TAXATION. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS EN GAGED IN WHOLESALE AND RETAIL TRADE OF EGGS AND OTHER PERISHABLE GOODS. THE ASSESSEE P RODUCED COMPLETE BOOKS OF ACCOUNT I.E. CASH BOOK, LEDGER, CLOSING STOCK STATEMENT, BA NK LEDGER, BANK STATEMENT, PURCHASE BILLS, SALE BILLS AND ALSO FILED OTHER DETAILS OF P URCHASES AND SALES. THE ASSESSEE DECLARED HIS GROSS PROFIT @ 5.37% ON TOTAL SALES OF RS.316.2 4 LACS. THE AO DURING THE COURSE OF 2 ITA NO.2086/K/2013 AJIT PRASAD DEY AY 2009-10 ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HA D MADE PURCHASES TO THE TUNE OF RS.4,07,82,792/- AS PER PURCHASE LEDGER BUT IN THE TRADING ACCOUNT PURCHASES SHOWN WERE AT RS.2,99,19,693/-. ACCORDING TO AO, THERE ARE SUP PRESSED PURCHASES OF RS.1,08,63,099/- INCLUDING DISCOUNT OF RS.3,88,545/ -. ACCORDING TO AO, THE ASSESSEE SOLD THESE PURCHASES AMOUNTING TO RS.1,04,74,554/- OUT OF THE BOOKS OF ACCOUNT AND SALE WAS NOT OFFERED FOR TAXATION. ACCORDINGLY, THE AO ESTIMATED GROSS PROFIT ON ALLEGED SUPPRESSED PURCHASES @ 5.37% AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE AMOUNTING TO RS.5,94,403/- AS GROSS PROFIT. 5. SIMILARLY, THE AO ALSO NOTED DURING THE COURSE O F SCRUTINY THAT ASSESSEES YOUNGER BROTHER NANDALAL DEY IS MAINTAINING BANK AC COUNTS WITH AXIS BANK, BANKURA, A/C. NO. 491010100002554 AND 4910101000056416. ACC ORDING TO AO, THE ASSESSEE HAS PAID TO HIS CREDITORS FROM THESE BANK ACCOUNTS AS WELL AS SALE PROCEEDS OF ASSESSEE ALSO DEPOSITED IN THESE BANK ACCOUNTS. ACCORDINGLY , THE AO TAKING PEAK CREDIT OF THE DEPOSITS IN THESE TWO BANK ACCOUNTS AS ASSESSEES O WN ACCOUNTS MADE ADDITION OF CLOSING BALANCE OF THESE TWO ACCOUNTS AT RS.4,28,40 7/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED INVESTMENT. 6. ON BOTH THE COUNTS, ASSESSEE PREFERRED APPEAL BE FORE CIT(A), WHO CONFIRMED THE ADDITION AS IT IS. AGGRIEVED NOW, ASSESSEE IS IN A PPEAL BEFORE TRIBUNAL. 7. I HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE ME AS WELL AS BEFORE THE LOWER AUTHOR ITIES, THE ASSESSEE CLAIMED THAT THE PURCHASES TO THE TUNE OF RS.1,04,74,554/- TREATED A S SUPPRESSED PURCHASES BY THE ASSESSEE AND NOT DISCLOSED IN THE BOOKS OF ACCOUNT INCLUDES AN AMOUNT OF RS.21,37,500/- BEING THE AMOUNT OF TRANSPORTATION EXPENSES AND THE BALANCE AMOUNT OF RS.87,25,599/- ARE ACTUALLY THE UNRECORDED PURCHASES WHICH ARE ACT UALLY SOLD BY THE ASSESSEE. LD. COUNSEL FOR THE ASSESSEE IN SUPPORT OF HIS CLAIM OF TRANSPORTATION EXPENSES STATED THAT THIS IS NORMAL PROCEDURE IN THE ASSESSEES BUSINESS AND HE CARRIED ME THROUGH PAPER BOOK PAGES WHEREIN PURCHASES ARE DISCLOSED, WHICH I NCLUDES TRANSPORTATION CHARGES. LD. COUNSEL FOR THE ASSESSEE STATED THAT IN THIS TRADE TRANSPORTATION EXPENSES ARE PART OF PURCHASES AS IT IS A TRADING EXPENSE. I AM CONVINC ED WITH THE ARGUMENT OF LD. COUNSEL FOR THE ASSESSEE THAT THIS TRANSPORTATION EXPENSES AMOUNTING TO RS.21,37,500/- BEING PART 3 ITA NO.2086/K/2013 AJIT PRASAD DEY AY 2009-10 OF THE PURCHASES AND INCLUDED IN THE PURCHASES ARE TO BE EXCLUDED FOR THE PURPOSE OF COMPUTATION OF GROSS PROFIT OR APPLICATION OF GROSS PROFIT. ADMITTEDLY, AS ADMITTED BY LD. COUNSEL FOR THE ASSESSEE THAT ASSESSEES GROSS PROFIT IS AT 5.37% IN THE YEAR UNDER CONSIDERATION AND HENCE, TO THE SUPPRESSED PURCHASE S, WHICH ARE EVENTUALLY SOLD OUT AMOUNTING TO RS.87,25,599/- ON WHICH THE GROSS PROF IT IS CALCULATED AT RS.4,68,565/- IS TO BE ESTIMATED. I AM CONVINCED WITH THE REASONS G IVEN BY THE ASSESSEES COUNSEL THAT THERE IS ONLY UNRECORDED PURCHASES AMOUNTING TO RS. 87,25,599/-, WHICH EVENTUALLY ARE SOLD OUT AND NOT RECORDED IN THE BOOKS OF ACCOUNT. THE AO HAS TO APPLY GROSS PROFIT ON THE SAME @ 5.37% AND COMPUTE THE INCOME ACCORDINGLY . I DIRECT THE AO ACCORDINGLY. 8. IN REGARD TO THE UNDISCLOSED BANK DEPOSITS IN AS SESSEES BROTHERS ACCOUNT MAINTAINED WITH AXIS BANK, BANKURA BRANCH I.E. THE TWO BANK ACCOUNTS, THE AO HAS RIGHTLY TREATED THE PEAK AMOUNT OF RS.4,28,406/-, E VENTUALLY WHICH WAS CLOSING BALANCE ALSO AS UNDISCLOSED INCOME OF THE ASSESSEE. BUT IN ANY CASE, AS REQUESTED BY LD. COUNSEL FOR THE ASSESSEE THE SAME IS TO BE TELESCOPED AGAIN ST THE INCOME, WHICH IS ESTIMATED BY ME IN CONSEQUENCE TO GROUND NO.1. I FIND THAT THE GROSS PROFIT COMPUTED ON UNDISCLOSED PURCHASES IS AT RS.4,68,565/- WHICH IS HIGHER THAN THE PEAK AMOUNT ON ACCOUNT OF DEPOSITS IN THESE TWO BANK ACCOUNTS AT RS.4,28,406/ - AND NO FURTHER ADDITION IS REQUIRED ON THIS COUNT. IN TERM OF THE ABOVE, THE AO WILL DE LETE THIS ADDITION AND COMPUTE THE INCOME ACCORDINGLY. I DIRECT THE AO ACCORDINGLY. 9. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLO WED AS INDICATED ABOVE. 10. ORDER IS PRONOUNCED IN THE OPEN COURT ON 11.12. 2015. SD/- (MAHAVIR SINGH) JUDICIAL MEMBER DATED : 11TH DECEMBER, 2015 JD.(SR.P.S.) 4 ITA NO.2086/K/2013 AJIT PRASAD DEY AY 2009-10 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT SHRI AJIT PRASAD DEY, NUTANGANJ, DI ST. BANKURA, PIN- 722101 2 RESPONDENT ITO, WARD-1, BANKURA. 3. THE CIT(A), DURGAPUR 4. 5. CIT , DURGAPUR DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .