ITO, Keonjhar Ward, Keonjhar V. Sushanta Kumar Rath, Keonjhar

ITA 219/CTK/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5380 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 03-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN

Judgement Text

1 ITA NO. 219/CTK/2016 ASSESSMENT YEAR : 2011 - 2012 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 219 /CTK/2016 ASSESSMENT YEAR : 2011 - 2012 INCOME TAX OFFICER, KE O NJHAR WARD, KEONJHAR. VS. SUSHANTA KUMAR RATH, AT: JURUDI, PO: JAJANG, VIA: JODA, DIST: KEONJHAR. PAN/GIR NO. AGAPR 5059 C (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : NONE REV ENUE BY : SHRI D.K.PRADHAN, DR DATE OF HEARING : 12 /10 / 2017 DATE OF PRONOUNCEMENT : 12 /10 / 2017 O R D E R PER N.S.SAINI, AM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) - CUTTACK, DATED 25.3.2016 FOR THE ASSESSMENT YEAR 2011 - 2012 ON THE FOLLOWING GROUNDS OF APPEAL: 01. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE C1T(A) IS JUSTIFIED IN DELETING THE ADDITION MADE FOR RS.57,73,089 AS UNEXPLAINED SUNDRY CREDITORS ON THE GROUND THAT ONCE THE BOOKS OF ACCOUNT OF THE ASSESSEE IS REJECTED, FURTHER DISALLOWANCES ARE NOT TO BE MADE - WHERE THE DISALLOWANCE MADE RELATES TO THE CREDIT ENTRIES AS PER BALANCE SHEET WHERE THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE SAME DURING THE ASSESSMENT PROCEEDINGS. 02. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD, FIRST APPELLATE AUTHORITY IS JUSTIFIED TO HOLD THAT WHERE ASSESSEE FAILED TO ESTABLISH HIS BOOKS RESULTS AS CORRECT AND RELIABLE - WHEN THE A.O HAS DETERMINED THE NET PROFIT ON AN 2 ITA NO. 219/CTK/2016 ASSESSMENT YEAR : 2011 - 2012 ESTIMATED BASIS CAN NOT MAKE SPECIFIC ANALYSIS OF VARIOUS CLAIMS OF EXPENSES REFLECTED IN T HE P&L ACCOUNT AND SPECIFICALLY IN THE BALANCE SHEET. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT IN ABSENCE OF PROPER BOOKS OF ACCOUNT AND BILLS AND VOUCHERS, THE NET PROFIT FROM TRANSPORT CONTRACT BUSINESS AND LOADING CONTRACT BUSINESS IS NOT ACCEPTABLE AS TRUE AND GENUINE. THEREFORE, HE REJECTED THE BOOKS OF ACCOUNT BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT AND PROCEEDED TO ESTIMATE THE NET PROFIT FROM CONTRACT BUSINESS. THEREAFTER, THE ASSESSING OFFICE R MADE ADDITION OF RS. 57,53,689/ - ON ACCOUNT OF SUNDRY CREDITORS SHOWN BY THE ASSESSEE IN THE BALANCE SHEET BY TREATING THEM NOT GENUINE IN ABSENCE OF CONFIRMATION FROM THE CREDITORS. 3. ON APPEAL, THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER: 10. THE AO HAD MADE ADDITION OF RS.57,73,089/ - WHICH WAS CLAIMED BY THE APPELLANT AS SUNDRY CREDITORS IN HIS BALANCE SHEET WITH A FINDING THAT THE ASSESSEE DID NOT FURNISH COMPLETE POSTAL ADDRESS ALONG WITH ACCOUNT CONFIRMATION OF THE CREDITORS. THE APPEL LANT SUBMITTED THAT THE CLOSING BALANCE OF SUNDRY CREDITORS OF THE ABOVE AMOUNT DISCLOSED IN THE BALANCE SHEET COMPRISES OF UNPAID TRADING LIABILITIES TOWARDS DIFFERENT EXPENSES AND ARE NOT LOAN LIABILITIES. THE AO HAD ALREADY REJECTED THE BOOKS OF ACCOUN TS* DISALLOWED THE EXPENSES CLAIMED BY THE ASSESSEE AND HAD ESTIMATED THE NET PROFIT OF THE ASSESSEE FROM THE GROSS RECEIPTS. FURTHER ADDITION OF SUNDRY CREDITORS AMOUNTS TO DISALLOW ONCE OF SUCH EXPENSES ONCE AGAIN AND THE FUTURE EXPENSES WHICH THE APPELL ANT HAS COMMITTED TO PAY. THE ADDITION OF SUNDRY CREDITORS WILL INFLATE THE NET PROFIT OF THE ASSESSEE TO AN AMOUNT WHICH WILL BE BEYOND THE GROSS RECEIPTS RECEIVED BY HIM DURING THE YEAR, WHICH IS IMPOSSIBLE TO ACHIEVE IN THE LINE OF BUSINESS. THE APPELL ANT FURTHER SUBMITTED THAT IT HAS BEEN HELD BY DIFFERENT LOCAL AUTHORITIES THAT ONCE THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE REJECTED, THE AO CANNOT DISALLOW ANY OTHER 3 ITA NO. 219/CTK/2016 ASSESSMENT YEAR : 2011 - 2012 EXPENSES OR AMOUNT FROM THE SAME ACCOUNT,. THE APPELLANT SUBMITTED THE DECISION OF TH E HON'BLE ITAT, CUTTACK IN THE CASE OF GIRISH CHANDRA NAYAK VS. ITO,WARD~2(4), CUTTACK (2012) 28 TAXMAN.COM , 118, IN WHICH THE HONBLE ITAT, CUTTACK CONFIRMED THE ORDER OF THE CIT(A) IN DELETING THE DISALLOWANCE OF SUNDRY CREDITORS AND DIRECTING TO ESTIMATE THE NET INCOME FROM GROSS CONTRACT RECEIPTS OF THE ASSESSEE. IN VIEW OF THE ORDER OF THE HON'BLE IT AT, CUTTACK, WHICH IS BINDING ON ME, THE AO IS DIRECTED TO DELETE THE ADDITION. R 4. LD D.R. RELIED ON THE ORDER OF THE ASSESSING OFFICER WHEREAS NONE APPEARED ON BEHALF OF THE ASSESSEE WHEN THE CASE WAS CALLED FOR HEARING IN SPITE OF NOTICE OF HEARING SENT TO THE ASSESSEE BY SPEED POST ON 15.9.2017. 5. WE HAVE HEARD LD D.R. , PERUSED THE OR DERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. WE FIND THAT NO SPECIFIC ERROR IN THE ORDER OF THE CIT(A) COULD BE POINTED OUT BY LD D.R. THE CIT(A) HAS DELETED THE ADDITION MADE ON ACCOUNT OF SUNDRY CREDITORS BY FOLLOWING THE ORDER OF THIS B ENCH OF THE TRIBUNAL IN THE CASE OF GIRISH CHANDRA NAYAK (SUPRA), WHEREIN, IT WAS HELD THAT ONCE THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE REJECTED, THE ASSESSING OFFICER CANNOT DISALLOW ANY OTHER EXPENSES OR AMOUNT FROM THE SAME ACCOUNT. NO GOOD REASON CO ULD BE SHOWN BY LD D.R. AS TO HOW THE CIT(A) WAS WRONG IN FOLLOWING THE DECISION OF THIS BENCH OF THE TRIBUNAL. THEREFORE, WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED AND GROUNDS OF APPEAL OF THE REV ENUE ARE REJECTED. 4 ITA NO. 219/CTK/2016 ASSESSMENT YEAR : 2011 - 2012 6. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUN CED IN THE OPEN COURT ON 12 /10 /2017. SD/ - SD/ - ( PAVAN KUMAR GADALE) ( N.S SAINI) JUDICIALMEMBER A CCOUNTANT MEMBER CUTTACK; DATED 12 /10 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK T 1. THE APPELLANT : INCOME TAX OFFICER, KEONJHAR WARD, KEONJHAR 2. THE RESPONDENT. SUSHANTA KUMAR RATH, AT: JURUDI, PO: JAJANG, VIA: JODA, DIST: KEONJHAR 3. THE CIT(A) - CUTTACK 4. PR.CIT - CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//