ITO, Ward - 34(3), Kolkata, Kolkata V. Calcutta General Stores, Kolkata

ITA 252/KOL/2011

• Counselvise Citation: 25223514 RSA 2011
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 15-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PIYUSH KOLHE
• Assessee Lawyers: ASHOK KUMAR KHEMKA P ARTNER
• Keywords: Reasonable cause; Condonation of delay
• Section: 144

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA ( ) . . , , , , ) [BEFORE HONBLE SRI B.R. MITTAL, J.M. & HONBLE SRI AKBER BASHA, A.M.] ! ! ! ! / I.T.A NO. 252/KOL/2011 '# $% / ASSESSMENT YEAR : 2006-2007 INCOME TAX OFFICER, WARD-34(3), KOLKATA -VS.- CALCUTTA GENERAL STORES, KOLKATA (PAN : AABFC 8546 L) ( &' /APPELLANT ) ( ()&' / RESPONDENT ) FOR THE APPELLANT : SHRI PIYUSH KOLHE, CIT, D.R. FOR THE RESPONDENT : SHRI ASHOK KUMAR KHEMKA, P ARTNER / ORDER PER SHRI B. R. MITTAL, JUDICIAL MEMBER/ . . , : THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSMEN T YEAR 2006-07 ALONGWITH AN APPLICATION FOR CONDONATION OF DELAY OF 45 DAYS AGA INST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XX, KOLKATA DATED 30.09.2010 O N FOLLOWING GROUNDS :- (1) FOR THE LD. CIT(A.) ERRED IN FACTS AS WELL AS IN LA W IN DELETING THE ADDITION OF RS.6,00,053/- MADE DURING THE ASSESSMEN T. (2) FOR THE LD. CIT(A.) ERRED IN FACTS AS WELL AS IN LA W IN CONSIDERING THE FACT THAT THE ASSESSEE WAS GIVEN ALL POSSIBLE OPPOR TUNITY TO PRESENT HIS CONTENTION TO HELP THE AO TO COME TO THE CONCLU SION THAT THE FACTS PRESENTED BY THE ASSESSEE IS TRUE. (3) FOR THE LD. CIT(A.) ERRED IN FACTS THAT THE ADDITIO NS WERE NOT ARBITRARY AS THE SAME WAS MADE CONSIDERING THE NATU RE OF BUSINESS AND THE ASSESSEE WAS GIVEN OPPORTUNITY TO RAISE OBJ ECTION, IF ANY, AGAINST THE ESTIMATION OF AO ABOUT NET PROFIT. THE FACT THAT THE ASSESSEE DID NOT RAISE ANY OBJECTION AND THEREBY AG REED WITH THE ESTIMATION OF AO. (4) FOR THE LD. CIT(A.) ERRED IN FACTS AS WELL AS IN LA W THAT AUDIT REPORT IS NOT THE FINAL PROOF OF CORRECTNESS AND ALLOWABIL ITY OF EXPENSES. FOR THE FACT THAT THE ASSESSEE IS NON RELIABLE AS ON MA NY OCCASIONS HE TOOK TIME TO PRESENT THE PAPERS BUT NEVER DID SO IN MORE THAN A YEAR. ITA NO. 252/KOL./2011 2 2. IN RESPECT OF CONDONATION OF DELAY, THE DEPARTME NT HAS FILED AN AFFIDAVIT OF SHRI R.K. YADAV, ITO STATING REASONS FOR DELAY. ON BEHALF OF THE ASSESSEE THE PARTNER OF THE ASSESSEE-FIRM WAS PRESENT. CONSIDERING THE SUBMISSIONS OF THE LD. REPRESENTATIVES OF BOTH THE PARTIES AND THE REASONS AS STATED BY THE DEPARTMENT IN THE AFFIDAVI T OF ITO, WE ARE SATISFIED THAT DELAY WAS DUE TO A REASONABLE CAUSE, HENCE WE CONDONE THE DELAY A ND CONSIDER THE APPEAL ON MERIT. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SUPPL YING GOODS TO VARIOUS ORGANIZATION INCLUDING RAILWAYS. IN THE ASSESSMENT YEAR UNDER CO NSIDERATION, THERE WAS A TOTAL SALE OF RS.55,22,639/-. THE ASSESSEE DECLARED NET PROFIT OF RS.22,212/-. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE DEBITED HUGE EXPENSES IN PROFIT & LOSS A/C. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE BOOKS/ PAPERS AND FIX ED THE CASE FOR HEARING ON VARIOUS OCCASIONS, THE DETAILS OF WHICH ARE MENTIONED BY AS SESSING OFFICER IN THE IMPUGNED ORDER. IT IS OBSERVED THAT INSPITE OF VARIOUS OPPORTUNITIES GRAN TED, THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS. THE ASSESSING OFFI CER ISSUED A NOTICE ASKING AS TO WHY THE ASSESSMENT SHOULD NOT BE COMPLETED EX-PARTE UNDER S ECTION 144 OF THE INCOME TAX ACT. THERE WAS NO REPLY FROM THE ASSESSEE. THE ASSESSING OFFIC ER COMPLETED THE ASSESSMENT UNDER SECTION 144 OF THE INCOME TAX ACT BY ESTIMATING NET PROFIT AT 10% OF THE SALES. THUS THE ASSESSING OFFICER ESTIMATED NET PROFIT OF THE BUSINESS AT RS. 5,52,263/- AS AGAINST RS.22,212/- DECLARED BY THE ASSESSEE AND THUS MADE THE ADDITION OF RS.5,30, 051/-. BESIDES ABOVE, THE ASSESSING OFFICER OBSERVED THAT THERE WAS FRESH LOAN OF RS.68,000/- D URING THE YEAR FROM DIFFERENT PERSONS. CONSIDERING THE FACT THAT THERE WAS NO CONFIRMATION , THE ASSESSING OFFICER DISALLOWED THE SAME BY TREATING THE SUM OF RS.68,000/- AS UNDISCLOSED I NCOME OF THE ASSESSEE. HENCE, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT AT RS.6,20,260/-. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE LD. CIT(APPEALS). 4. ON BEHALF OF THE ASSESSEE, IT WAS CONTENDED THAT ONE OF THE PARTNERS SUSHIL KUMAR KHEMKA EXPIRED ON 16.07.2007 AND AS A RESULT OF DEA TH, THE OTHER PARTNER WAS IN THE DARK AS HE ONLY WAS ACQUAINTED WITH THE ACCOUNTS, BUSINESS AND INCOME TAX AND OTHER TAXATION MATTERS. IT WAS ALSO CONTENDED THAT THE NET PROFIT RATE OF 10% APPLIED BY THE ASSESSING OFFICER WAS ARBITRARY AND ILLEGAL. IT WAS ALSO CONTENDED THAT T HE ASSESSEE FILED LOAN CONFIRMATIONS ALONGWITH THE RETURN AND THE ASSESSING OFFICER COULD HAVE CON SIDERED THE SAME BEFORE TREATING IT AS UNDISCLOSED INCOME OF THE ASSESSEE. ITA NO. 252/KOL./2011 3 5. LD. CIT(APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSEE AND HAS HELD THAT THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DEFECTS I N THE AUDITED ACCOUNTS. THAT THE ASSESSING OFFICER HAS FAILED TO BRING ANY MATERIAL OR EVIDENC E ON RECORD TO JUSTIFY HIS ESTIMATION OF NET PROFIT @ 10%. IN REGARD TO ADDITION OF RS.68,000/-, LD. CIT(APPEALS) HAS STATED THAT THE ASSESSEE FILED THE LOAN CONFIRMATIONS ALONGWITH THE RETURN AND THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ADDING THE LOANS. HE HAS ALSO STATED T HAT THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW ANYTHING THAT COULD CAUS E SUSPICION OR DOUBTS ABOUT THE GENUINENESS OF THE LOANS. ACCORDINGLY, LD. CIT(APPEALS) HAS DEL ETED THE ADDITIONS OF RS.5,30,051/- AS WELL AS RS.68,000/- MADE BY THE ASSESSING OFFICER. HENCE , THE DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING, LD. D.R. SUBMITTED THAT THE ASSESEE FAILED TO PRODUCE THE BOOKS OF ACCOUNTS AND OTHER PAPERS AT THE TIME OF ASSESSMENT INSPITE OF GIVING VARIOUS OPPORTUNITIES BY THE ASSESSING OFFICER. HE SUBMITTED THAT THE FINDIN G OF LD. CIT(APPEALS) THAT THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DEFECTS IN THE AUDI TED ACCOUNTS IS NOT JUSTIFIED PARTICULARLY WHEN THE ASSESSEE DID NOT ATTEND THE HEARINGS BEFORE THE ASSESSING OFFICER AND ALSO FAILED TO PRODUCE THE BOOKS OF ACCOUNTS INSPITE OF GIVING VARIOUS OPP ORTUNITIES. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER IN THE FACTS AND CIRCUMSTANCES WA S JUSTIFIED TO CONSIDER THE LOANS OF RS.68,000/- AS INCOME OF THE ASSESSEE AS THE ASSESS EE COULD NOT PRODUCE THE RELEVANT DETAILS CALLED FOR. HE SUBMITTED THAT THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 144 OF THE ACT AFTER GIVING SHOW-CAUSE NOTICE TO THE AS SESSEE AND THE ASSESSEE ADMITTEDLY FAILED TO REPLY TO IT. HE SUBMITTED THAT THE ACTION OF THE AS SESSING OFFICER SHOULD BE CONFIRMED. 7. ON THE OTHER HAND, THE PARTNER OF THE ASSESSEE-F IRM APPEARED IN PERSON AND SUBMITTED THAT THE REQUISITE BOOKS OF ACCOUNTS AND OTHER DETA ILS COULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER AS ONE OF THE PARTNERS, WHO WAS F AMILIAR WITH THE TAXATION MATTERS, HAD EXPIRED. HE SUBMITTED THAT IF THE MATTER IS RESTORE D TO THE ASSESSING OFFICER, THE ASSESSEE WILL PRODUCE THE REQUISITE DETAILS. 8. CONSIDERING THE SUBMISSIONS OF THE LD. REPRESENT ATIVES OF THE PARTIES AND THE ORDERS OF THE AUTHORITIES BELOW, WE ARE OF THE CONSIDERED VIE W THAT IN THE FACTS AND CIRCUMSTANCES OF THE ITA NO. 252/KOL./2011 4 CASE, THE MATTER SHOULD BE RESTORED TO THE ASSESSIN G OFFICER FOR HIS FRESH CONSIDERATION. WE AGREE WITH THE LD. D.R. THAT LD. CIT(APPEALS) WAS N OT JUSTIFIED TO PUT ONUS ON THE ASSESSING OFFICER TO POINT OUT THE MISTAKE IN THE AUDITED ACC OUNTS PARTICULARLY WHEN THE ASSESSEE FAILED TO PRODUCE ANY BOOKS OF ACCOUNTS TO THE ASSESSING OFFI CER INSPITE OF THE FACT THAT CASE WAS ADJOURNED FROM TIME TO TIME. SIMILARLY IN RESPECT O F LOANS, MERELY FILING OF LOAN CONFIRMATIONS ARE NOT SUFFICIENT. SINCE THE DEPARTMENT HAS NOT DI SPUTED THE FACTS THAT ONE OF THE PARTNERS SUSHIL KUMAR KHEMKA EXPIRED AND HE IS STATED TO BE FAMILIAR WITH THE TAXATION MATTERS, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE COULD NOT PRODUCE BOOKS OF ACCOUNTS/ PAPERS BEFORE THE ASSESSING OFFICER DUE TO A REASONABLE CAUSE. WE ALS O HOLD THAT THE LD. CIT(APPEALS) WAS NOT JUSTIFIED TO DIRECT THE ASSESSING OFFICER TO ACCEPT THE INCOME DISCLOSED BY THE ASSESSEE PARTICULARLY WHEN THE ASSESSEE HAS FAILED TO PRODUC E THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS AT THE TIME OF MAKING THE ASSESSMENT. HENCE, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND CONSIDER IT PRUDENT, IN THE INTEREST OF JUSTICE , TO RESTORE THE MATTER TO THE ASSESSING OFFICER FOR HIS FRESH CONSIDERATION. AT THE TIME OF HEARING , THE PARTNER OF THE ASSESSEE ASSURED THAT IF THE MATTER IS RESTORED TO THE ASSESSING OFFICER, THE AS SESSEE WILL COOPERATE THE ASSESSING OFFICER AND WILL PRODUCE SUCH DOCUMENTS AND DETAILS, AS MAY BE REQUIRED BY HIM. 9. THEREFORE, WE SET ASIDE THE ORDERS OF THE AUTHOR ITIES BELOW BY RESTORING THE MATTER TO THE ASSESSING OFFICER WITH A DIRECTION TO MAKE THE FRES H ASSESSMENT ORDER AFTER CONSIDERING SUCH EVIDENCES AS MAY BE FILED BY THE ASSESSEE AND AFTER GIVING DUE OPPORTUNITY OF HEARING. WE MAY STATE THAT IF THE ASSESSEE FAILS TO COOPERATE THE A SSESSING OFFICER, THE ASSESSING OFFICER WILL BE AT LIBERTY TO COMPLETE THE ASSESSMENT ON THE BASIS OF THE MATERIAL AVAILABLE WITH HIM. 10 IN THE RESULT, THE GROUNDS OF APPEAL TAKEN BY TH E DEPARTMENT ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11.05.2011. SD/- SD/- [AKBER BASHA/ ] [ B.R. MITTAL / . . ] ACCOUNTANT MEMBER/ JUDICIAL MEMBER/ DATED : 11/ 05/ 2011 ITA NO. 252/KOL./2011 5 COPY OF THE ORDER FORWARDED TO: 1. CALCUTTA GENERAL STORES, 137, CANNING STORES, KOLKA TA-1, 2 ITO, WARD-34(3), KOLKATA, 18, RABINDRA SARANI, KOLK ATA-1, 3. CIT(A)- ,KOLKATA 4. CIT, KOLKATA- 5. DR, KOLKATA BENCHES, KOLKATA (TRUE COPY) BY ORDER ASSIS TANT REGISTRAR, I.T.A.T., KOLKATA LAHA, SR. P.S.