Ashok Trading Company, Kolkata V. ITO, Ward-45(2), Kolkata, Kolkata

ITA 2446/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1633 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 30-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts
• Section: 142(1)

Judgement Text

I.T.A. NO. 2446/KOL./2016 ASSESSMENT YEAR: 2010 -2011 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B(SMC) BENCH, KOLKATA BEFORE SHRI S.V. MEHROTRA, VICE-PRESIDENT(KZ) I.T.A. NO. 2446/KOL/ 2016 ASSESSMENT YEAR : 2010-2011 ASHOK TRADING COMPANY,............................. .......APPELLANT 13, NOORMAL LOHIA LANE, KOLKATA-700 027 [PAN : AAGFA 0299 M] -VS.- INCOME TAX OFFICER,................................ ........................RESPONDENT WARD-45(2), KOLKATA, 3, GOVERNMENT PLACE WEST, KOLKATA-700 001 APPEARANCES BY: SHRI V.N. PUROHIT, F.C.A., FOR THE ASSESSEE SHRI ARUP CHATTERJEE, JCIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : MAY 25, 2017 DATE OF PRONOUNCING THE ORDER : JUNE 08, 2017 O R D E R PER SHRI S.V. MEHROTRA, V.P.(KZ): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-13, KOLKATA DA TED 06.09.2016 FOR THE ASSESSMENT YEAR 2010-11. 2. SHRI V.N. PUROHIT, F.C.A., APPEARED ON BEHALF OF THE ASSESSEE AND SHRI ARUP CHATTERJEE, LD. JCIT, D.R. REPRESENTED ON BEHALF OF THE REVENUE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WA S, IN THE RELEVANT ASSESSMENT YEAR, WAS ENGAGED IN IMPORT AND TRADING OF UMBRELLA REQUISITES. IT HAD FILED ITS RETURN OF INCOME, FOR THE YEAR UNDER CONSIDERATION, DECLARING TOTAL INCOME OF RS.1,50,03 3/-. THE ASSESSING OFFICER HAD ISSUED NOTICE UNDER SECTION 142(1) TO T HE ASSESSEE AND IN RESPONSE TO WHICH THE ASSESSEE SUBMITTED PHOTO-COPI ES OF RETURN I.T.A. NO. 2446/KOL./2016 ASSESSMENT YEAR: 2010 -2011 PAGE 2 OF 5 ACKNOWLEDGMENT FOR THE ASSESSMENT YEARS 2008-09, 20 09-10 AND 2010-11 ALONG WITH TAX AUDIT REPORT, AUDITED PROFIT & LOSS ACCOUNT AND BALANCE- SHEET AND PART DETAILS OF SALES MADE BY THE ASSESSE E FOR ITS KOLKATA BRANCH. THE ASSESSING OFFICER HAS OBSERVED THAT PEN DING EXAMINING OF THE DOCUMENTS FILED, THE CASE WAS ADJOURNED ON 03.09.20 12 AND AGAIN THERE WAS NO COMPLIANCE AS SUCH ON THAT DATE. THE ASSESSI NG OFFICER HAS NOTICED FROM THE TAX AUDIT REPORT THAT THE ASSESSEE HAD BRA NCH OFFICE AT DELHI AND GUWAHATI BUT TAX AUDIT REPORT OF THOSE TWO BRAN CHES WERE NOT SUBMITTED. HE OBSERVED THAT AFTER EXAMINING TAX AUD IT REPORT, IT WAS NOTICED THAT THE AUDITORS HAD NOT MENTIONED ANY BRA NCH OFFICE OF THE ASSESSEE-FIRM IN THE AUDIT REPORT AND THEREFORE, AG AIN HE ISSUED A LETTER TO THE ASSESSEE REQUIRING THE DETAILS, INCLUDING ALL I NVOICES REGARDING PURCHASE OF UMBRELLA OF DIFFERENT COMPANIES LOCATED AT CHINA. HE OBSERVED THAT THERE WAS NO COMPLIANCE TO THIS NOTIC E. HOWEVER, IN RESPONSE TO LETTER DATED 21.11.2012, THE ASSESSEE S UBMITTED ITS REPLY REGARDING ACCOUNTING CHARGES RS.24,000/- PAID TO MR . ANIL JHA AT DELHI AND RS.21,600/- TO MR. RAVINDER NATH JHA AT GUWAHAT I BUT DID NOT FILE ANY BRANCH AUDIT REPORT AS REQUIRED. THE ASSESSING OFFI CER AFTER CONSIDERING THE RELEVANT FACTS IN DETAIL CONCLUDED IN HIS ORDER AT PAGE 10 THAT THE RESULT OF THE AUDITED ACCOUNTS FOR GUWAHATI AND DEL HI BRANCH COULD NOT BE INCLUDED IN THE AUDITED ACCOUNTS OF THE HEAD OFFICE KOLKATA UNDER ANY CIRCUMSTANCES, AS THE DATE OF AUDIT BY THE CHARTERE D ACCOUNTANT WAS ON 26.10.2010, WHEREAS THE TAX AUDIT REPORT OF KOLKATA (HEAD OFFICE) WAS DATED 21.09.2010 BASED ON WHICH THE RETURN WAS FILE D ON 27.09.2010. CONSIDERING ALL THESE ASPECTS INCLUDING THE NON-COM PLIANCE OF VARIOUS NOTICES, HE REJECTED THE BOOKS OF ACCOUNT, INTER ALIA, OBSERVING THAT THE DETAILS FURNISHED BY THE ASSESSEE WERE NOT VERIFIAB LE FROM THE ACCOUNTS AND MADE AN ADDITION OF RS.11,66,204/- BY TAKING NE T PROFIT @ 5%. 4. BEFORE THE LD. CIT(APPEALS), THE ASSESSEE HAD, INTER ALIA, SUBMITTED THAT THE ASSESSEE FIRM OF TWO PARTNERS WAS ENGAGED, AS IN PAST, IN IMPORT AND TRADING OF UMBRELLAS AND ITS PARTS. ADMITTEDLY, THE RETURN WAS E-FILED ON 27.09.2010 AND PHOTO COPIES OF RETURN, TAX AUDIT REPORT, AUDITED I.T.A. NO. 2446/KOL./2016 ASSESSMENT YEAR: 2010 -2011 PAGE 3 OF 5 ACCOUNTS AND SALE OF KOLKATA BRANCH WERE FURNISHED. THE ASSESSING OFFICER WRONGLY REJECTED AUDITED ACCOUNT BOOKS AND MADE ASSESSMENT UNDER SECTION 143(3)/145(3) OF THE INCOME TAX ACT, 1961. THE ACCOUNTS REFLECT SEPARATE PURCHASE AND SALES OF HEAD OFFICE AND BRANCHES IN ITS FINAL ACCOUNT. THE ASSESSEE GOT ITS ACCOUNT OF THE BRANCHES SIGNED SEPARATELY TO BE SUBMITTED TO THE SALES TAX AUTHORI TY OF THE RESPECTIVE BRANCHES WHERE THERE WAS REQUIREMENT TO GET SEPARAT E BALANCE SHEET OF ITS BRANCHES. SINCE THE ASSESSING OFFICER INSISTED FOR THE AUDITED ACCOUNTS OF THE BRANCHES SEPARATELY AND, THEREFORE, THE ASSE SSEE HAD SUBMITTED THE AUDITED BRANCH ACCOUNTS SEPARATELY. THIS DOES NOT M EAN THAT THE ACCOUNTS OF THE BRANCHES WERE NOT AUDITED OR INCORPORATED IN THE FINAL ACCOUNTS OF THE FIRM AS A WHOLE. THIS FACT COULD NOT BE UNDERST OOD BY THE ASSESSING OFFICER AND THEREFORE, REJECTED THE BOOKS OF ACCOUN T AND ESTIMATED THE NET PROFIT OF THE ASSESSEE AT THE RATE OF 5% OF THE GRO SS TURNOVER OF THE ASSESSEE. HOWEVER, THE ASSESSEE-FIRM HAD MAINTAINED PROPER BOOKS OF ACCOUNT AND GOT ITS ACCOUNTS AUDITED AS PER THE PRO VISIONS OF THE ACT. BUT THE SAME HAD BEEN REJECTED BY THE ASSESSING OFFICER UNDER WRONG MISUNDERSTANDING THAT AUDITED ACCOUNTS WERE ONLY OF KOLKATA, WHICH, IN FACT, WERE CONSOLIDATED ACCOUNTS OF KOLKATA AND TWO BRANCHES. HE SUBMITTED THAT UNDER UTTERLY WRONG ASSUMPTION AND P RESUMPTIONS, THE ASSESSING OFFICER HAD MADE NUMBER OF ADDITIONS. 5. THE LD. CIT(APPEALS) AFTER CONSIDERING THE ASSES SEES SUBMISSIONS DISMISSED THE ASSESSEES APPEAL, INTER ALIA , OBSERVING THAT ONCE THE ASSESSEE DID NOT FILE DETAILS, THE ASSESSING OFFICE R WAS PREVENTED FROM MAKING INQUIRY. HE DID NOT ACCEPT THE ASSESSEES CO NTENTION THAT NO DEFECT IN BOOKS OF ACCOUNT WAS FOUND. 6. BEING AGGRIEVED WITH THE ORDER OF THE LD. CIT(AP PEALS), THE ASSESSEE HAS PREFERRED APPEAL BEFORE THE TRIBUNAL ON THE FOL LOWING GROUND:- THAT THE CIT(APPEALS)-13 HAS ERRED BOTH ON THE FAC TS AD IN LAW IN REJECTING THE GROUNDS BEFORE HIM, CHALLENGING TH E ACTION OF ASSESSING OFFICER IN (I) REJECTION OF BOOKS OF ACCO UNTS, (II) RESORTING TO PROVISIONS OF SECTION 145(3) OF THE I. T. ACT AND (III) I.T.A. NO. 2446/KOL./2016 ASSESSMENT YEAR: 2010 -2011 PAGE 4 OF 5 ESTIMATING THE TAXABLE INCOME @ 5% OF DISCLOSED TUR NOVER AND THEREBY DISMISSING THE ASSESSEES APPEAL IN ITS ENT IRETY. 7. LD. COUNSEL FOR THE ASSESSEE REFERRED TO PAGES 7 & 8 OF THE PAPER BOOK, WHEREIN THE CONSOLIDATED ACCOUNTS OF THE ASSE SSEE-FIRM DATED 21.09.2010 ARE CONTAINED. HE FURTHER REFERRED TO PA GES 11 & 12 OF THE PAPER BOOK, WHEREIN THE ACCOUNTS RELATING TO DELHI BRANCH DULY AUDITED ON 26.10.2010 ARE CONTAINED. HE FURTHER REFERRED TO PAGES 13 & 14 OF THE PAPER BOOK, WHEREIN THE ACCOUNTS AUDITED ON 26.10.2 010 OF GUWAHATI BRANCH ARE CONTAINED. WITH REFERENCE TO THESE, HE D EMONSTRATED THAT THE CONSOLIDATED ACCOUNTS CONTAINED ALL THE DETAILS IN RESPECT OF THE ADDITIONS. HE FURTHER REFERRED TO PAGE 16 OF THE PA PER BOOK, WHEREIN THE DETAILED CHART REGARDING VARIOUS ITEMS OF PROFIT & LOSS ACCOUNT IN RESPECT OF THREE BRANCHES KOLKATA, GUWAHATI AND DELHI ARE C ONTAINED. WITH REFERENCE TO ALL THESE CONTENTS, HE SUBMITTED THAT THE ASSESSING OFFICER WRONGLY REJECTED THE BOOKS OF ACCOUNTS ON THE GROUN D THAT THE ACCOUNTS FOR DELHI AND GUWAHATI BRANCHES WERE NOT CONSOLIDAT ED WITH THE ACCOUNTS OF KOLKATA HEAD OFFICE. HE FURTHER SUBMITTED THAT T HE MATTER MAY BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO C ONSIDERATION OF THE BOOKS OF ACCOUNT AS REJECTION OF BOOKS OF AC COUNT WAS NOT JUSTIFIED. 8. THE LD. D.R. RELIED ON THE ORDERS OF THE AUTHORI TIES BELOW AND SUBMITTED THAT THE ASSESSEE HAD NOT FURNISHED DETAI LS AS REQUIRED BY THE ASSESSING OFFICER, WHICH IS EVIDENT FROM THE ASSESS MENT ORDER. HE ALSO PRAYED THAT THE MATTER MAY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO ADJUDICATION. 9. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE REJECTION OF BOOKS OF ACCOUNT WAS PRIMARILY ON THE GROUND THAT THE DEL HI AND GUWAHATI BRANCH ACCOUNTS WERE AUDITED SUBSEQUENT TO THE DATE OF AUDIT OF KOLKATA HEAD OFFICE. I AM OF THE CONSIDERED OPINION THAT CO NSOLIDATED ACCOUNTS OF KOLKATA INCLUDED THE ACCOUNT OF DELHI AND GUWAHATI BRANCH AND THERE WAS I.T.A. NO. 2446/KOL./2016 ASSESSMENT YEAR: 2010 -2011 PAGE 5 OF 5 NO REASON FOR THE ASSESSING OFFICER TO COMING TO TH E CONCLUSION THAT THE SAID ACCOUNTS COULD NOT BE INCORPORATED MERELY BECA USE THE DATE OF AUDIT WAS SUBSEQUENT TO THE DATE OF AUDIT OF KOLKATA HEAD OFFICE. I, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) REJECTI NG THE BOOKS OF ACCOUNT ON THE GROUND AS STATED BY THE ASSESSING OFFICER AN D RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER, AS AGREED BY BOT H THE PARTIES, FOR DE NOVO ASSESSMENT. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 08.06.2017. SD/- S.V. MEHROTRA (VICE-PRESIDENT) DATED : 08.06.2017 COPIES TO : (1) M/S. ASHOK TRADING COMPANY, C/O. V.N. PUROHIT & CO., CHARTERED ACCOUNTS, DIAMOND CHAMBERS, UNIT-III, 4 TH FLOOR, SUIT NO. 4G, 4, CHOWRINGHEE LANE, KOLKATA-700 016 (2) INCOME TAX OFFICER, WARD-45(2), KOLKATA, 3, GOVERNMENT PLACE WEST, KOLKATA-700 001 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-13, KOLK ATA (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/DDO, INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.