ITO, Tiruppur V. Shri N. Easwaran, Tiruppur

ITA 2154/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5599 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 25-07-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 18-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: T N SEETHARAMAN
• Keywords: Unexplained expenditure
• Section: 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.2154/MDS/2016 ' (' / ASSESSMENT YEAR : 2013-14 THE INCOME TAX OFFICER, WARD 2(2), TIRUPUR. V. SHRI N. EASWARAN, NO.400/1A, CHETTIPALAYAM ROAD, GANAPATHY NAGAR, PALLADAM, TIRUPUR 641 664. PAN : AAGPE 4276 L (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI AR.V. SREENIVASAN, JCIT ,-*+ . / / RESPONDENT BY : SHRI T.N. SEETHARAMAN, ADVOCATE 0 . 1$ / DATE OF HEARING : 12.12.2017 2!( . 1$ / DATE OF PRONOUNCEMENT : 28.12.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -3, COIMBA TORE, DATED 29.04.2016 AND PERTAINS TO ASSESSMENT YEAR 2013-14. 2. SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THERE WAS A SURVEY I N THE PREMISES 2 I.T.A. NO.2154/MDS/16 OF THE ASSESSEE. DURING THE COURSE OF SURVEY OPERA TION, IT WAS FOUND THAT THE ASSESSEE WAS DOING BUSINESS OUTSIDE THE BOOKS OF ACCOUNT. ACCORDING TO THE LD. D.R., IN FACT, THE A SSESSEE ADMITTED THAT THE TURNOVER OF UNACCOUNTED TRANSACTION WAS 3,76,40,205/-. SUBSEQUENTLY, THE ASSESSEE RETRACTED THE ADMISSION MADE DURING THE COURSE OF SURVEY OPERATION. THE LD. D.R. FURTH ER SUBMITTED THAT IN FACT, THE ASSESSEE DEPOSITED 3,76,40,205/- IN THE BANK ACCOUNT. WHILE CALLING UPON THE ASSESSEE TO EXPLAIN THE SOUR CE FOR SUCH DEPOSIT, IT WAS ADMITTED THAT THIS WAS THE TURNOVER OUT OF THE TRANSACTION MADE BY THE ASSESSEE OUTSIDE THE BOOKS. THEREFORE, THE ASSESSING OFFICER MADE AN ADDITION OF 3,76,40,025/-. ON APPEAL BY THE ASSESSEE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) RESTRICTED THE INCOME AT 2.50% OF THE TURNOVER AS AGAINST 2.35% OFFERED BY THE ASSESSEE. REFERRING T O THE ORDER OF THE CIT(APPEALS), THE LD. D.R. SUBMITTED THAT THE G ROSS PROFIT OF THE ASSESSEE WAS 5.37% IN THE EARLIER YEAR AND THIS TRI BUNAL FOR THE ASSESSMENT YEAR 2012-13, ESTIMATED THE PROFIT AT 4. 67%. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEA LS) IS NOT JUSTIFIED IN RESTRICTING THE INCOME AT 2.50% OF THE TURNOVER. 3 I.T.A. NO.2154/MDS/16 3. ON THE CONTRARY, SHRI T.N. SEETHARAMAN, THE LD.C OUNSEL FOR THE ASSESSEE, SUBMITTED THAT ADMITTEDLY THE ASSESSE E COULD NOT DISCLOSE THE TRANSACTION MADE BY FIVE CONCERNS OF T HE ASSESSEE TO THE INCOME-TAX AUTHORITIES. ACCORDING TO THE LD. C OUNSEL, THE ASSESSEE IS MANUFACTURING COTTON CLOTH FOR GREY ARE A. THE REVENUE AUTHORITIES FOUND DEPOSIT OF 3,76,40,025/-. ACCORDING TO THE LD. COUNSEL, ONLY THE INCOME COMPONENT DEPOSITED IN THE BANK CAN BE TAKEN AS INCOME. THE CIT(APPEALS) AFTER CONSIDERIN G THE EXPENDITURE INCURRED BY THE ASSESSEE FOUND THAT 2.5 0% OF THE TURNOVER HAS TO BE CONSIDERED AS INCOME OF THE ASSE SSEE. THEREFORE, ACCORDING TO THE LD. COUNSEL, THERE IS N O ERROR IN THE ORDER OF THIS TRIBUNAL. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. FOR THE ASSESSMENT YEAR 2012-13, SAME ISSUE CAME BEFORE THI S TRIBUNAL IN I.T.A. NO.2117/MDS/2016. THIS TRIBUNAL VIDE ITS OR DER DATED 26.10.2016 HAS FOUND AT PARA 12 OF ITS ORDER AS FOL LOWS:- 12. IN THE CASE OF THE ASSESSEE, IT IS AN ADMITTED F ACT THAT THE ASSESSEE MADE UNACCOUNTED TURNOVER OF 17.66 CRORES. THE ASSESSEE DID NOT FURNISH ANY EVIDENCE BEFORE US IN THE FORM OF PURCHASE AND SALE VOUCHERS. IN THE ABSENCE OF COMPLETE DETAILS OF PURCHASES AND SALES THE ENTI RE 4 I.T.A. NO.2154/MDS/16 CREDITS IN THE BANK ACCOUNT REQUIRED TO BE BROUGHT TO TAX AS PER SECTION 69 OF THE ACT. HOWEVER, THE ASSESSEE ADM ITTED IT AS UNACCOUNTED TURNOVER AND PROFIT OF 82,48,989/- ON UNACCOUNTED TURNOVER OF 17,66,37,879/- @ 4.67% AS INCOME WHICH WAS ACCEPTED BY THE DEPARTMENT. THE L D. A.R. DID NOT FURNISH ANY EVIDENCE TO PROVE THAT THE PROF IT IS LESS THAN THE AMOUNT ADMITTED BY THE ASSESSEE WITH THE D ETAILS OF PURCHASES AND OTHER RELATED EXPENDITURE VOUCHERS. AS PER THE ASSESSEE OWN ADMISSION THE GROSS PROFIT ON ACCOUNTED TURNOVER WAS 5.37% OF SALES FOR THE YEAR UND ER CONSIDERATION IN THE REGULAR TURNOVER AND THE ASSES SEE COULD FURNISH ANY EVIDENCE TO SHOW THAT SOME AMOUNT OF EXPENDITURE RELATING TO UNACCOUNTED TURNOVER WAS REM AINED FOR CONSIDERATION. IN THE ABSENCE OF ANY EVIDENCE IT IS LOGICALLY INFERRED THAT THE ENTIRE EXPENSES RELATING TO BOTH ACCOUNTED AND UNACCOUNTED TURNOVER WAS BOOKED AND N OTHING REMAINED FOR CONSIDERATION. AGAINST THE GROSS PROF IT OF 5.37% THE ASSESSEE ADMITTED THE NET PROFIT @4.67% WHICH MEANS WHILE ADMITTING, THE ASSESSEE HAS CONSIDERED THE ENTIRE UNACCOUNTED EXPENDITURE ALSO. SUCH A FRACTIO N OF PERCENTAGE OF INCOME CANNOT BE ADMITTED BY ANY ORDI NARY BUSINESS MAN UNLESS HE IS SO CONFIDENT OF THE PROFI T HE EARNED. THE ASSESSEE IS AN EXPERIENCED BUSINESS MAN BOTH IN ACCOUNTED AND UNACCOUNTED BUSINESS AND ADMITTED THE NET PROFIT 4.67% AGAINST THE GROSS PROFIT OF 5.37% ON REGULAR SALES AND TAKEN DUE CREDIT FOR THE EXPENSES ALSO FRO M THE GROSS PROFIT. NO EVIDENCE IS BROUGHT ON RECORD TO SHOW THAT THE PROFIT IS LESS THAN 4.67% BY THE ASSESSEE. THEREF ORE, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE LD. A R THAT THE PROFIT WAS LESS THAN 4.67% AND ACCORDINGLY WE SET ASIDE THE ORDER OF THE CIT(A) AND SUSTAIN THE ADDITION MA DE BY THE ASSESSING OFFICER. 5. SUBSEQUENTLY, THE ASSESSEE FILED MISCELLANEOUS P ETITION IN M.P. NO.339/MDS/2016. THE MISCELLANEOUS PETITION W AS DISMISSED ON THE GROUND THAT THE ASSESSING OFFICER CONSIDERED THE DEPOSIT MADE IN THE BANK ACCOUNT AND NOT THE STATEMENT MADE DURING THE 5 I.T.A. NO.2154/MDS/16 COURSE OF SURVEY OPERATION. THE TURNOVER OF THE AS SESSEE ADMITTEDLY WAS 71,01,51,520/-. THE ASSESSEE AGREED BEFORE THE AUTHORITIES THAT ON THE BASIS OF DEPOSIT MADE IN TH E BANK ACCOUNT, THE INCOME WAS 3,76,40,025/- FOR SIX ASSESSMENT YEARS. THE TURNOVER FOR THE YEAR UNDER CONSIDERATION, I.E. 201 3-14 WAS 27,23,40,075/-. THE ASSESSING OFFICER ADOPTED 5.97 % AS INCOME. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT FOR THE ASSESSMENT YEAR 2012-13, THE INCOME WAS TAKEN AT 4.67% ON THE TURNOVER, THEREFORE, FOR THE ASSESSMENT YEAR 2013-14, THE SAM E RATE HAS TO BE ADOPTED IN THE ABSENCE OF ANY OTHER MATERIAL. A CCORDINGLY, THE ORDERS OF BOTH THE AUTHORITIES BELOW ARE MODIFIED. THE ASSESSING OFFICER IS DIRECTED TO ADOPT 4.67% OF THE TURNOVER, I.E. 27,23,40,075/- AS INCOME FOR THE YEAR UNDER CONSIDE RATION. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED. ORDER PRONOUNCED ON 28 TH DECEMBER, 2017 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 28 TH DECEMBER, 2017. KRI. 6 I.T.A. NO.2154/MDS/16 . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-3, COIMBATORE 4. PRINCIPAL CIT-3, COIMBATORE 5. 69 ,1 /DR 6. :' ; /GF.