M/s Kumud Bandhu Mohapatra, Bhadrak V. ACIT, Balasore

ITA 268/CTK/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81465 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 29-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S C DAS
• Assessee Lawyers: D DAS
• Keywords: Business income

Judgement Text

1 I.T.A. NO.268 /CTK/2013 ASSESSMENT YEAR: 2008-2009 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH , CUTTACK BEFORE S/SHRI S.V.MEHROTRA (AM) AND GEORGE MATHAN (JM) I.T.A. NO.268 /CTK/2013 ASSESSMENT YEAR: 2008-2009 M/.S. KUMUD BANDHU MOHAPTRA, SARASATIA, RANITAL, BHADRAK. PA NO.AHLXPM 6156 M VS. ACIT, BALASORE CIRCLE, BALASORE APPELLANT RESPONDENT FOR THE APPELLANT: SHRI D.DAS FOR THE RESPONDENT: SHRI S.C. DAS DATE OF HEARING: 20/10/.2014 DATE OF PRONOUNCEMENT: 22 /10/2014 ORDER PER S.V.MEHROTRA, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER DATED 26.12.2012 OF LD CIT(A), CUTTACK FOR THE ASSESSMENT YEAR 2008-2009. 2. THE ASSESSEE HAS FILED DELAY CONDONATION PETITIO N IN WHICH IT IS STATED THAT THE DELAY OF 35 DAYS HAS BEEN CAUSED BECAUSE OF ILLNESS OF THE A SSESSEE AND ON BECOMING WELL, HE HAD REACHED ADVOCATE AT CUTTACK FOR PREPARING THE APPEA L. 3. AFTER CONSIDERING THE SUBMISSIONS OF PARTIES, WE ARE OF THE OPINION THAT ASSESS WAS PREVENTED BY SUFFICIENT CAUSE FROM FILING THE APPEA L BEFORE THE TRIBUNAL. WE, THEREFORE, CONDONE THE DELAY AND PROCEED TO DECIDE THE APPEAL ON MERITS. 4. GROUND NO.1 RELATES TO ESTIMATION OF NET PROFIT @ 8% ON THE GROSS RECEIPT. 5. FACTS IN BRIEF ARE THAT, IN THE RELEVANT ASSESSM ENT YEAR, ASSESSEE HAD FILED HIS RETURN OF INCOME SHOWING INCOME FROM BUSINESS OF RS.6,54,754/ - AND INCOME FROM OTHER SOURCES OF 2 I.T.A. NO.268 /CTK/2013 ASSESSMENT YEAR: 2008-2009 RS.2,65,424/-, TOTALING TO RS.9,20,178/-. THE ASS ESSEE CARRIED ON THE BUSINESS OF CIVIL CONTRACTOR. THE AO INVOKED THE PROVISIONS OF SECTI ON 145(3) TAKING NOTE OF THE FACT THAT THERE WAS ABSENCE OF STOCK REGISTERS, CASH MEMOS, VOUCHER S, ETC. HE DETERMINED THE TOTAL INCOME AT RS.51,54,950/- BY APPLYING NET PROFIT A@ 8% ON GRO SS RECEIPTS OF RS.5,94,04,311/- AND, THUS, DETERMINED THE INCOME AT RS.47,52,344/-. 6. LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 7. AT THE TIME OF HEARING, LD COUNSEL FOR THE ASSES SEE FILED BEFORE US A COPY OF TRIBUNALS ORDER DATED 5.6.2013 IN THE CASE OF BIJAY KUMAR MOH APATRA VS ITO (ITA NO.290/CTK/2013), WHEREIN, UNDER SIMILAR FACTS AND CIRCUMSTANCES, THE NET PROFIT HAS BEEN ESTIMATED AT 4.5%. 8. HAVING HEARD BOTH THE PARTIES, WE FIND THAT UNDE R SIMILAR FACTS, THE TRIBUNAL HAS ESTIMATED THE INCOME OF THE ASSESSEE AT 4.5% OF THE GROSS BILLS, INTER ALIA, OBSERVING AS UNDER: WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSA L OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE AO HAS REJECTED THE ASSESSEE S BOOKS OF ACCOUNT AND HAS ESTIMATED THE INCOME AT 6%. HOWEVER, THE AO HAS NO T BEEN ABLE TO POINT OUT ANY COMPARATIVE CASE WHEN HE ESTIMATED THE INCOME O F THE ASSESSEE AT 6%. A PERUSAL OF THE P&L ACCOUNT IN THE ASSESSEES CASE F OR THE RELEVANT ASSESSMENT YEAR SHOWS A NET PROFIT MARGIN AT 1.35%. AS BOOKS OF ACCOUNT OF THE ASSESSEE HAVE BEEN REJECTED AND CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT INCOME OF THE ASS ESSEE SHOULD BE ESTIMATE AT 4.5% OF THE GROSS BILLS. THE ASSESSEE GETS RELIEF OF 1.5%. 9. RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE A O TO ESTIMATE THE INCOME OF THE ASSESSEE AT 4.5%. THE ASSESSEE GETS RELIEF OF 3.5% . 10. GROUND NO.2 RELATES TO CONFIRMATION OF ADDITION OF RS.3,74,437/- UNDER THE HEAD RECEIPT FROM INSURANCE CLAIM. 3 I.T.A. NO.268 /CTK/2013 ASSESSMENT YEAR: 2008-2009 11. BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESSEE HAD, INTER ALIA, RECEIVED INSURANCE CLAIM OF RS.4,02,605/-. THE ASSESSEES CONTENTION IS THAT T HE INSURANCE CLAIM AMOUNT WAS RECEIVED AGAINST STOCK/WORK-IN-PROGRESS AND THEREFORE, SAME WAS A REVENUE RECEIPT AND NOT INCOME UNDER OTHER SOURCES AND IT SHOULD HAVE BEEN ASSESSE D AS BUSINESS RECEIPT. 12. LD CIT(A) HAS NOT CONSIDERED THE ASSESSEES CON TENTION AND TREATED THE RECEIPT AS INCOME FROM OTHER SORUCES FOLLOWING THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF T.O. ABRAHAM & CO. VS DCIT, 325 ITR 201 (KER). 13. WE HAVE HEARD THE PARTIES AND PERUSED THE RECOR D OF THE CASE. THE DETAILS OF RS.4,02,605 AS ADDED BY THE ASSESSING OFFICER WERE AS UNDER: BY INSURANCE CLAIM RECEIVED : RS. 3,74,437.00 BY INTEREST RECEIVED FROM BANK : RS. 60,240.61 BY INTEREST RECEIVED FROM TDS : RS. 31,530.00 BY ACCRUED INTEREST OF FD : RS. 1,92,930.00 BY ACCRUED INT. OF NSC : RS. 12,254.00 RS.6,71,392.00 PENALTY FOR NON COMPLETION OF CONTRACT (-) RS. 2,68,787 RS.4,02,605 THE ONLY DISPUTE BEFORE US IS REGARDING INSURANCE C LAIM RECEIVED AT RS.3,74,437/-. IN THE CASE OF ACIT VS. TEA AGENCY TRADING CENTRE, JAFFIRBOND, 82 TTJ 210(GAUHATI) , IT HAS BEEN HELD THAT RECEIPT IN RESPECT OF LOSS OF FINISHED GOODS A ND STORES WAS REVENUE INCOME. THEREFORE, THE WHOLE AMOUNT IS TAXABLE BEING IN THE NATURE OF REVE NUE RECEIPTS. ACCORDINGLY, THIS GROUND IS DISMISSED. 4 I.T.A. NO.268 /CTK/2013 ASSESSMENT YEAR: 2008-2009 14. IN THE RESULT, APPEAL IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 22 ND OCTOBER, 2014. SD/- SD/- ( GEORGE MATHAN) (S.V.MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, CUTTACK 22 /10/2014 B.K.PARIDA, SR. PS COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT: M/.S. KUMUD BANDHU MOHAPTRA,SARASAT IA, RANITAL, BHADRAK. 2. THE RESPONDENT: ACIT, BALASORE CIRCLE,BALASORE 3. THE CIT, CUTTACK 4. THE CIT(A),CUTTACK 5. DR, CUTTACK BENCH 6. GUARD FILE. TRUE COPY// BY ORDER