ITO, WARD-1(3), Jamshedpur V. M/s Babu Ram & Co., Jamshedpur

ITA 24/RAN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8837 (ITAT-RANCHI)
• Duration Of Justice: 2 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 06-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY PRASAD LD
• Assessee Lawyers: P S PAUL LD
• Keywords: Business income
• Section: 40A(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO. 24/RAN/16 A.Y 2005-06 INCOME TAX OFFICER WARD-1(3), JAMSHEDPUR V S M/S. BABU RAM & CO. PAN:AABFB0126D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJAY PRASAD, LD.DR RESPONDENT BY : SHRI P.S.PAUL, LD.AR DATE OF HEARING : 20-02-2018 DATE OF PRONOUNCEMENT : 28-02-2018 O R D E R PER BENCH : THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER D ATED 28-10- 2015 PASSED BY THE CIT(A), JAMSHEDPUR UNDER THE INC OME-TAX ACT 1961 (ACT) FOR THE A.Y 2005-06 ON THE FOLLOWING GRO UNDS:- A) DELETION OF ADDITION OF RS.83,14,182/- U/S.40A(3) O F THE ACT BY THE LD.CIT(A), AND B) DELETION OF ADDITION OF RS.3,62,791/- ON ACCOUNT OF CONCEALMENT OF PROFIT BY THE LD.CIT(A). 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A FIRM AND ENGAGED IN TRADING IN IRON & STEEL. THE ASSESSEE FI LED ITS RETURN OF INCOME FOR THE A.Y UNDER CONSIDERATION DECLARING TO TAL INCOME OF RS.97,800/-. THE ASSESSING OFFICER DETERMINED THE T OTAL INCOME AT RS.87,74,770/- BY MAKING ADDITIONS OF RS.83,14,182/ - U/S. 40A(3) OF 2 ITA NO. 24/RAN/16 M/S. BABU RAM & CO. THE ACT AND RS.3,62,791/- ON ACCOUNT OF CONCEALMENT OF PROFIT, BY AN ORDER PASSED U/S. 143(3)/147 OF THE ACT. 3. GROUND NO. 1 IS RELATING TO DELETION OF AN ADDIT ION OF RS.83,14,182/-BY THE LD.CIT(A) U/S. 40A(3) OF THE A CT. 4. THE ASSESSING OFFICER MADE THIS ADDITION ON THE GROUND THAT CREDIT BALANCE OF M/S. SANDEEP INDUSTRIES WAS NOT R EFLECTED IN THE ACCOUNTS OF THE ASSESSEE. IT IS NOTICED BY THE ASSE SSING OFFICER FROM THE LEDGER OF M/S. SANDEEP INDUSTRIES THAT THERE IS A BALANCE DUE TO FROM THE ASSESSEE AND THIS BALANCE WAS NOT REFLECTE D IN THE BOOKS OF ACCOUNT OF ASSESSEE. BEFORE THE LD. CIT(A) THE ASSE SSEE CONTENDED THAT THE ASSESSEE HAD, IN FACT, DISCLOSED ALL THE SUNDRY CREDITORS AND SUNDRY DEBTORS IN ITS BOOKS AND THAT BALANCES WITH REGARD TO M/S. SANDEEP INDUSTRIES AND M/S. SHIV RAMA SPONGE IRON CO. WERE DISCLOSED IN FINAL ACCOUNTS ALSO. ON PERUSAL OF THE LIST SUBMITTED BY THE ASSESSEE THE NAME OF M/S. SANDEEP INDUSTRIES APPEARED IN THE LIS T AS CREDITOR AND THE NAME OF M/S. SHIVA RAMA SPONGE IRON CO. APPEARE D AS DEBTOR. THE LIST IS AVAILABLE AT PAGE 5 OF THE LD. CIT(A)S ORDER. THE ASSESSING OFFICER WHILE TAKING THE DIFFERENCE DID NOT CONSIDE R THE IMPUGNED AMOUNT REFLECTED IN THE SECOND COLUMN AND PRESUMED THAT THE ASSESSEE PAID AMOUNT OF CREDIT IN CASH. ON SUCH PRE SUMPTION, HE ADDED THE SAID AMOUNT TO THE TOTAL INCOME OF THE AS SESSEE. BASED ON 3 ITA NO. 24/RAN/16 M/S. BABU RAM & CO. SAID PRESUMPTION THAT CASH PAYMENT HAS BEEN MADE, H E APPLIED SEC. 40A(3) OF THE ACT. 5. WE FIND THAT THE LD. CIT(A) WHILE DEALING THE S AID ISSUE HAS RIGHTLY DELETED THE SAID ADDITION. THE LD. CIT(A) H ELD THAT NO REPAYMENT WAS DONE AND THAT THE CREDIT WAS RIGHTLY DISCLOSED BY THE ASSESSEE. THEREFORE, THE AO WAS NOT JUSTIFIED IN FIRST PRESUM PTION THAT CASH REPAYMENT WAS DONE AND THEN DISALLOWED THE AMOUNT U /S. 40A(3). THUS, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(A) AND UPHOLD THE SAME. THIS GROUND OF THE REVE NUE IS DISMISSED. 6. GROUND NO. 2 IS RELATING TO DELETION OF ADDITION OF RS. 3,62,791/- AS CONCEALED PROFIT. 7. DURING THE A.Y UNDER CONSIDERATION THE AO FOUND THAT THE ASSESSEE HAD CASH SALES AS WELL AS CREDIT SALES WIT H M/S. SHIV RAMA SPONGE IRON CO OF RS.1,25,53,333/-. THE AO FOUND THAT THE ASSESSEE HAD CONCEALED SALE TO M/S. SHIVA RAMA SPONGE IRON P VT. LTD. THUS, THE AO ADDED AN AMOUNT OF RS.3,62,791/- AS CONCEALMENT OF PROFIT AS THE ASSESSEE HAD NOT PUT FORTH ANY REPLY TO HIS QUERY. IN ABSENCE OF SUCH REPLY, THE AO WORKED OUT RS.3,62,791/- I.E. 2.89% O F RS.1,25,53,333/- AS CONCEALMENT OF PROFIT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 8. BEFORE THE CIT-A, THE ASSESSEE GAVE WRITTEN SUBM ISSIONS, WHEREIN HE ADMITTED TO HAVE MADE SALES WORTH RS. 1, 25,23,333/- TO 4 ITA NO. 24/RAN/16 M/S. BABU RAM & CO. M/S. SHIVA RAM SPONGE IRON LTD. ON PERUSAL OF SUCH SUBMISSION, THE CIT(A) FOUND AN AMOUNT OF RS. 28,94,480/- OUT OF S ALES OF RS.1,25,23,333/- WAS RECEIVED BY CHEQUE AND DELE TED THE IMPUGNED ADDITION. 9. THE LD. DR RELIED ON THE ORDER OF THE AO. ON THE OTHER HAND, THE LD. AR SUBMITTED THAT THE ASSESSEE HAD CASH SALES A S WELL AS CREDIT SALES WITH M/S. SHIVA RAM SPONGE IRON LTD. OF RS. 1 ,25,23,333/-. AGAINST WHICH, THE ASSESSEE ALSO PAID INCOME-TAX AN D SALES TAX ON THE SAID SALES. HE ALSO REFERRED TO PAGE-16 PARA 5.3 OF THE LD. CIT(A)S ORDER AND IN VIEW OF THIS, HE ARGUED THAT THERE WAS NO CONCEALMENT OF INCOME AT ALL. HE ALSO SUBMITS THAT SOME OF THE PAY MENTS WERE MADE THROUGH CHEQUES. IN SUPPORT OF THE CONTENTION, HE R ELIED ON THE IMPUGNED ORDER OF THE LD. CIT(A). 10. HEARD RIVAL SUBMISSIONS AND PERUSED THE RECORD. WE FIND THAT THE LD. CIT(A) EXAMINED THE ISSUE IN DETAIL AND FO UND THAT OUT OF TOTAL SALES AN AMOUNT OF RS.28,94,480/- WAS RECEIVED BY C HEQUE AND PAYMENTS THROUGH CHEQUE CANNOT BE FALSIFIED. WE FUR THER FIND THAT THE ASSESSEE FILED ALL THE BILLS AND VOUCHERS BEFORE TH E AO IN THE RE- OPENING PROCEEDINGS U/S. 147. THE AO ESTIMATED THE PROFIT/SALES @ 2.89% I.E. AT RS.3,62,791/- WITHOUT ANY BASIS. THE CIT-A AFTER CONSIDERING DETAILED SUBMISSION OF THE ASSESSEE DEL ETED THE SAID ADDITION. WE DO NOT FIND ANY INFIRMITY IN THE IMPUG NED ORDER OF THE 5 ITA NO. 24/RAN/16 M/S. BABU RAM & CO. LD.CIT(A) AND UPHOLD THE SAME. THEREFORE, GROUND NO . 2 RAISED BY THE REVENUE IS DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 /2/201 8 SD/- SD/- J. SUDHAKAR REDDY S.S .VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER RANCHI , DATED 28 / 02/2018 *PP, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT INCOME TAX OFFICER, WARD 1(3), 47, C.H AREA, JAMSHEDPUR-831001. 2. THE RESPONDENT- M/S. BABU RAM & CO. STATION ROAD, JUGSALAI, JAMSHEDPUR-831003. 3. THE CIT(A) CONCERNED 4. CIT , CONCERNED 5. DR, ITAT, RANCHI 6. GUARD FILE. BY ORDER, //TRUE COPY// SR.PS, ITAT, RANCHI