Asit Mukherjee, Durgapur V. ITO, Ward - 1(3), Durgapur, Durgapur

ITA 2262/KOL/2010

• Counselvise Citation: 226223514 RSA 2010
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-05-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 24-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V A RAJU
• Assessee Lawyers: R SALARPURIA

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : KOLKATA ( ) . . , . .. . . .. . !' !' !' !' , ,, , $ $ $ $ ,) [BEFORE HONBLE SRI B.R. MITTAL, J.M. & HONBLE SRI S.V. MEHROTRA, A.M.] % % % % / I.T.A NO. 2209/KOL/2010 &' &' &' &' () () () () /ASSESSMENT YEAR : 2007-2008 INCOME TAX OFFICER, WARD-1(3), DURGAPUR -VS.- ASIT MUKHEJEE, DURGAPUR (PAN : AEPPM 8161 B) ( *+ *+ *+ *+ /APPELLANT) ( ,-*+ ,-*+ ,-*+ ,-*+ /RESPONDENT) & % % % % / I.T.A NO. 2262/KOL/2010 &' &' &' &' () () () () /ASSESSMENT YEAR : 2007-2008 ASIT MUKHEJEE, DURGAPUR -VS. INCOME TAX OFFICER, WARD-1(3), DURGAPUR ( *+ *+ *+ *+ /APPELLANT) ( ,-*+ ,-*+ ,-*+ ,-*+ /RESPONDENT) FOR THE ASSESSEE : SHRI R. SALARPURIA, A.R . FOR THE DEPARTMENT : SHRI V.A. RAJU, D.R. . . . . / ORDER PER SHRI B. R. MITTAL, JUDICIAL MEMBER/ . . , : THESE CROSS APPEALS ARE FILED BY THE DEPARTMENT AN D THE ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-DURGAPUR DATED 29.10.2010 ON THE FOLLOWING GROUNDS:- ITA NO. 2209/KOL./2010 (1) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , LD. CIT(A.) HAS ERRED BOTH ON FACTS AND IN LAW BY DELETING THE ADDITION O F RS.24,93,385/- MADE ON THE GROUND OF UNDISCLOSED SALES. (2) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LEARNED CIT(A.) HAS ERRED BOTH ON FACTS AND IN LAW BY DELETING RS.9 ,522/- MADE ON THE GROUND OF UNSUPPORTED EXPENDITURE CLAIMED ON ACCOUN T OF SUBSCRIPTION AND DONATION. ITA NOS. 2209 & 2262/KOL./2010 2 ITA NO. 2262/KOL./2010 (1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CIT(A.) IS JUSTIFIED BY TAKING INCOME @ 25% ON UNDI SCLOSED SALES WITHOUT CONSIDERING CORRESPONDING PURCHASES AND OTHER EXPEN SES WHEN THE APPELLANT DISCLOSED GP @ 13.88%. (2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A.) IS JUSTIFIED BY CONFIRMING THE INCOME @ 25% OF UNDISCLOSED SALES WHEN SALES AS WELL AS PURCHASES REMAIN OUT OF BOOK. (3) THE LD. CIT(A.) IS NOT JUSTIFIED BY TAKING THE INCOME @ 25% ON UNDISCLOSED SALES WHEN THE AO HIMSELF AND THE LD. C IT(A.) FAILED TO FIND OUT ANY INFLATED EXPENDITURE IN THE BOOKS OF ACCOUN T. 2. ON PERUSAL OF GROUNDS OF APPEALS, IT IS OBSERVED THAT THE GROUND OF APPEAL TAKEN BY THE ASSESSEE IS LINKED WITH GROUND NO. 1 OF THE APPEAL TAKEN BY THE DEPARTMENT. 3. RELEVANT FACTS ARE THAT THE ASSESSEE WAS ENGAGED IN TRADING OF MACHINERY ITEMS BY SUPPLYING DIFFERENT MACHINERY ITEMS TO DURGAPUR STE EL PLANT THROUGH HIS PROPRIETARY CONCERN UNDER THE NAME AND STYLE OF M/S. MUKHERJEE & CO. DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS REVEALED THAT THE ASSESSEE MADE SALES AGGREGATING RS.33,24,513.92 OUTSIDE BOOKS OF ACCOUNTS. ASSESSING OFFICER WHILE COMPLETI NG THE ASSESSMENT CONSIDERED THE SAID SALES AS INCOME OF THE ASSESSEE AFTER OBSERVING THAT NO F URTHER EXPENDITURE COULD BE ALLOWED AGAINST THAT SUPPRESSED SALES AS ASSESSEE HAS ALREADY DEBIT ED ALL HIS BUSINESS RELATED EXPENDITURE IN HIS AUDITED PROFIT & LOSS A/C. AND BOOKS OF ACCOUNTS. B EING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. LD. CIT(APPEALS) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE CONFIRMED THE FINDINGS OF ASSESSING OFFICER THAT THERE WAS UNDISC LOSED SALES OF RS.33,24,513.92. HOWEVER, LD. CIT(APPEALS) OBSERVED THAT THE ASSESSEE HAS SHOWN G ROSS PROFIT OF AROUND 13.8% WHEREAS HIS NET PROFIT IS AROUND 3.17%. HE OBSERVED THAT NEITHE R OF THESE FIGURES WOULD BE APPROPRIATE IN RESPECT OF SUPPRESSED SALES. HE ALSO STATED THAT AS SESSEES INVESTMENT IN MAKING THESE UNACCOUNTED PURCHASES HAS TO BE CONSIDERED. KEEPING IN VIEW OF THE ABOVE FACTS, LD. CIT(APPEALS) HAS CONSIDERED AN AMOUNT EQUIVALENT TO 25% OF THE UNACCOUNTED SALES AS ASSESSEES UNDISCLOSED INCOME, WHICH COMES TO RS.8, 31,129/-. ACCORDINGLY, HE CONFIRMED THE ADDITION OF RS.8,31,129/- BEING 25% OF UNACCOUNTED SALES AND DELETED THE BALANCE AMOUNT OUT ITA NOS. 2209 & 2262/KOL./2010 3 OF RS.33,24,513.92. HENCE, THE ASSESSEE AS WELL AS THE DEPARTMENT ARE IN APPEALS BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING, LD. A.R. OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE FINALLY AGREED THAT THE SALES OF RS.33,24,513.92 WAS OUTSID E BOOKS OF ACCOUNTS. HE SUBMITTED THAT THE ESTIMATION OF PROFIT @ 25% OF THE SAID AMOUNT IS EX CESSIVE AND IS NOT BASED ON THE PAST RESULTS OF THE ASSESSEE. LD. AR REFERRED TO PAGE 96 OF THE PAPER BOOK, WHICH CONTAINS A COMPARATIVE CHART SHOWING TURNOVER, RATE OF GROSS PROFIT AND NE T PROFIT AND SUBMITTED THAT IN THE PRECEDING ASSESSMENT YEARS AS WELL AS IN THE SUCCEEDING ASSES SMENT YEARS TO THE ASSESSMENT YEAR UNDER CONSIDERATION THE GROSS PROFIT DID NOT EXCEED 15.99 %. HE SUBMITTED THAT KEEPING IN VIEW THE PREVIOUS RESULTS, THE REASONABLE RATE OF GROSS PROF IT SHOULD BE 16% AND ACCORDINGLY THE ADDITION SHOULD BE CONFIRMED TO THAT EXTENT. 6. ON THE OTHER HAND, LD. D.R. RELIED ON THE ORDER OF ASSESSING OFFICER. HE FURTHER SUBMITTED THAT LD. CIT(APPEALS) WAS REASONABLE TO E STIMATE 25% PROFIT OF THE SUPPRESSED SALES. HE SUBMITTED THAT NO SEPARATE ADDITION HAD BEEN MAD E ON ACCOUNT OF ANY INVESTMENT THAT MIGHT HAVE BEEN MADE BY THE ASSESSEE FOR MAKING PURCHASES AND SALES MADE OUTSIDE THE BOOKS OF ACCOUNTS. HE REFERRED PAGE 5 OF THE ORDER OF LD. CI T(APPEALS) AND SUBMITTED THAT LD. CIT(APPEALS) WHILE ESTIMATING 25% AS PROFIT OF THE UNACCOUNTED SALES ALSO KEPT IN VIEW OF ASSESSEES INVESTMENT IN MAKING THE UNACCOUNTED PUR CHASES. HE SUBMITTED THAT THE ORDER OF LD. CIT(APPEALS) SHOULD BE CONFIRMED. 7. WE HAVE CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES. WE OBSERVE THAT THE ASSESSEE HAS NOT DISPUTED THAT THERE WAS UNACCOUNTED SALES AGGREGATING RS.33,24,513.92 IN TH E ASSESSMENT YEAR UNDER CONSIDERATION. AT THE TIME OF HEARING, LD. A.R. SUBMITTED THAT NET PR OFIT RATE OF 25% AS CONSIDERED BY LD. CIT(APPEALS) IS EXCESSIVE. DURING THE COURSE OF HEA RING, HE REFERRED PAGE 96 OF THE PAPER BOOK TO JUSTIFY HIS STAND THAT IN THE PRECEDING AND SUCC EEDING ASSESSMENT YEARS TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE MAXIMUM GROSS PROFIT WAS 15.99%. HOWEVER, WE FIND MERIT IN THE CONTENTION OF LD. D.R. THAT LD. CIT(APPEALS) HA S NOT MADE ANY SEPARATE ADDITION ON ACCOUNT OF ANY INITIAL INVESTMENT THAT MIGHT HAD BEEN MADE BY THE ASSESSEE FOR MAKING INITIAL PURCHASES OUTSIDE BOOKS OF ACCOUNTS. IT IS ALSO A FACT THAT M OST OF EXPENSES HAVE BEEN ACCOUNTED FOR BY THE ITA NOS. 2209 & 2262/KOL./2010 4 ASSESSEE IN RESPECT OF HIS DISCLOSED SALES. CONSIDE RING THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(APPEALS) HAS TAKEN A V ERY REASONABLE ESTIMATE OF 25% AS PROFIT OF THE UNACCOUNTED SALES, ADMITTEDLY THE ASSESSEE HAD IN THE ASSESSMENT YEAR UNDER CONSIDERATION. HENCE, WE CONFIRM THE ORDER OF LD. CIT(APPEALS) BY REJECTING GROUND NO. 1 OF THE APPEAL TAKEN BY THE DEPARTMENT AS WELL AS THE ONLY GROUND OF APP EAL IN ASSESSEES APPEAL. 8. NOW COMING TO GROUND NO. 2 IN THE DEPARTMENTAL A PPEAL DISPUTING RS.9,522/- CLAIMED BY THE ASSESSEE ON ACCOUNT OF SUBSCRIPTION AND DONA TION, WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PARTIES AND HAVE PERUSED THE ORDERS OF AUTHO RITIES BELOW. IT IS A FACT THAT THE ASSESSEE HAS TO CONTRIBUTE PUJA SUBSCRIPTIONS AND DONATIONS AT T HE TIME OF FESTIVALS FOR KEEPING THE PERSONS OF THE LOCALITY HAPPY TO ENABLE THE ASSESSEE TO RUN HI S BUSINESS SMOOTHLY. IN THIS REGARD, WE FIND SUPPORT FROM THE DECISION OF THE HONBLE KOLKATA HI GH COURT IN THE CASE OF CIT VS.- BATA INDIA LIMITED [201 ITR 884]. RESPECTFULLY FOLLOWING THE SAID ORDER OF HONBLE JURISDICTIONAL HIGH COURT (SUPRA), WE DO NOT FIND ANY REASON TO IN TERFERE WITH THE ORDER OF LD. CIT(APPEALS). HENCE, GROUND NO. 2 OF THE APPEAL TAKEN BY THE DEPA RTMENT IS REJECTED. 9. IN THE RESULT, THE APPEALS OF THE DEPARTMENT AS WELL AS OF THE ASSESSEE, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.05. 2011. SD/- SD/- [S.V. MEHROTRA/ . .. . . .. . !' !' !' !' , ,, , ] [ B.R. MITTAL / . . ] ACCOUNTANT MEMBER/ $ $ $ $ JUDICIAL MEMBER/ DATED : 27 / 05/ 2011 COPY OF THE ORDER FORWARDED TO: 1. SHRI ASIT MUKHERJEE, AESBY INDUSTRIAL ESTATE, STATI ON ROAD, DURGAPUR-1, BURDWAN, 2 ITO, WARD-1(3), DURGAPUR, 3. COMMISSIONER OF INCOME-TAX (APPEALS)- , DU RGAPUR, 4 CIT, KOLKATA- 5 . DR, KOLKATA BENCHES, KOLKATA (TRUE COPY) BY ORDER ASSIS TANT REGISTRAR, I.T.A.T., KOLKATA LAHA, SR. P.S.