Bhaskar Traders, Koraput V. ACIT, Berhampur Circle, Berhampur, Berhampur

ITA 276/CTK/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3717 (ITAT-CUTTACK)
• Duration Of Justice: 3 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 27-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: D K SHETH AR SHRI KUNAL SINGH
• Keywords: Search and seizure; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO .276/CTK/2014: ASSESSMENT YEAR : 2007 - 08 ITA NO.2 77 /CTK/2014: ASSESSMENT YEAR : 2008 - 09 ITA NO.2 78 /CTK/2014: ASSESSMENT YEAR : 2009 - 10 BHASKAR TRADERS, TOSHNIWALA COMPLEX, BYE PASS ROAD, HATAPADA, JEYPORE. VS. ACIT, BERHAMPUR PAN/GIR NO. AAFFB 7101 Q (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI D.K.SHETH, AR RE VENUE BY : SHRI KUNAL SINGH, CIT DR /SHRI D.K.PRADHAR, DR DATE OF HEARING : 13 /07 / 2017 DATE OF PRONOUNCEMENT : 14 /07 / 2017 O R D E R PER N.S.SAINI, AM THESE ARE APPEAL S F ILED BY THE ASSESSEE AGAINST SEPARATE ORDER S OF CIT(A) - BERHAMPUR , ALL DATED 14.3.2014 , FOR THE ASSESSMENT YEAR S 2007 - 08, 2008 - 09 & 2009 - 2010. 2. THE COMMON GROUND TAKEN IN ALL THE APPEALS IS THAT THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN ESTIMATING INCOME @ 12.5% OF THE BANK DEPOSITS AMOUNTING TO RS.62 ,22,570/ - FOR THE 2 ITA NO.276/CTK/2014: ASSESSMENT YEAR :2007 - 08 ITA NO.277/CTK/2014: ASSESSMENT YEAR :2008 - 09 ITA NO.278/CTK/2014: ASSESSMENT YEAR :2009 - 10 ASSESSMENT YEAR 2007 - 08, RS.89,02,298/ - FOR THE ASSESSMENT YEAR 2008 - 09 AND RS.82,71,344/ - FOR THE ASSESSMENT YEAR 2009 - 2010. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM OWNS A PADDY UNIT. A SEARCH AND SEIZURE OPERATION WAS CON DUCTED IN ITS BUSINESS PREMISES AND ALSO THE RESIDENTIAL PREMISES OF ITS PARTNER SHRI G.BHASKAR RAO ON 21.1.2009. THE ASSESSING OFFICER ISSUED NOTICE U/S.153A ON 30.6.2009 . IN RESPONSE TO THE SAME, THE ASSESSEE FILED RETURN OF INCOME FOR THE IMPUGNED ASS ESSMENT YEARS. DURING THE SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT DURING THE COURSE OF SEARCH AND SEIZURE OPERATION, SOME BANK ACCOUNTS WERE FOUND AND SEIZED, THE DETAILS TRANSACTION APPEARING IN THE SAID BANK ACCOUNTS ARE AS UNDER: S.NO NAME OF THE ACCOUNT HOLDER ACCOUNT NO FIN.YR TOTAL AMOUNT CREDITED DURING THE YEAR (IN RS.) ANDHRA BANK 1 SRI KOMULU GADABA 300015 2006 - 07 5,19,557 2007 - 08 12,02,921 2008 - 09 19,80,963 2 SRI NILAKANTHA BANDHANI ABG 00112193 2006 - 07 6,50,073 2007 - 08 4,35,526 3 SRI NILAMBAR GADABA SB 00013091 2006 - 07 95,520 2007 - 08 14,14,816 2008 - 09 20,38,769 4 DOKI NAGARAJU SB 00052158 2005 - 06 1,00,981 2006 - 07 11,44,997 2007 - 08 13,90,046 2008 - 09 1,71,825 5 GIRIDHAR JANI SB ABJ/00200854 2008 - 09 18,22,080 6 KHAGAPATI PUJARI SB 00112190 2006 - 07 7,84,968 2007 - 08 19,31,948 2008 - 09 5,00,410 7 G.VENKATA RAMANA SB ASBP 300004 2006 - 07 4,72,227 2007 - 08 4,75,391 KORAPUT PANCHABATI GRAMYA BANK : 3 ITA NO.276/CTK/2014: ASSESSMENT YEAR :2007 - 08 ITA NO.277/CTK/2014: ASSESSMENT YEAR :2008 - 09 ITA NO.278/CTK/2014: ASSESSMENT YEAR :2009 - 10 1 SURU NAGESWAR RAO USS - 108 2006 - 07 7,70,051 2007 - 08 6,37,954 2008 - 09 6,10,647 UTKAL GRAMYA BANK, JEYPORE 1 D.RAMALINGESWAR RAO USS - 155 2006 - 07 1,21,161 2007 - 08 4,99,570 2008 - 09 6,92,462 1 UNION B ANK OF INDIA, JEYPORE RUPALI JAGAR PALTNALK SB 8748 2006 - 07 5,43,359 2007 - 08 1,64,294 2008 - 09 2,08,250 BANK OF INDIA, JEYPORE 1 V.SEKHAR & S.BALAJI SB 357 2006 - 07 11,20,657 2007 - 08 7,49,832 2008 - 09 2,45,938 4. IN REPLY TO THE QUERY OF THE ASSESSING OFFICER, THE ASSESSEE SUBMITTED THAT THE FIRM HAD NO BUSINESS WITH THE BANK PASS BOOKS OF SHRI KOMULU GADABA, NILAKANTHA BANDANI, NILAMBAR GADABA, KHAGUPATI PUJARI, G. VENKATA RAMANA, SURU NAGESWAR RAO, D. RAMALINGESW AR RAO, RUPALI JAGAR PATNAIK AND V. SEKHAR DURING THE COURSE OF SEARCH CONDUCTED AT THE PREMISES OF THE ASSESSEE. THE MODUS OPERANDI WAS THAT AGENCIES LIKE NCMSL, OSCSC, ETC USED TO COLLECT THE PADDY FROM DIFFERENT CULTIVATORS AND GIVE THE SAME TO RICE MI LLS FOR ITS MILLING . ONCE THE PADDY IS PROCESSED AND THE RICE IS DELIVERED BY THE SAID RICE MILLS, AGENCY ISSUES CHEQUES TO THE CULTIVATORS WHO HAVE SUPPLIED THE PADDY. THE CULTIVATORS WHO USE D TO SUPPLY THE IR PADDY TO THE AGENCIES LIKE NCMSL, OSCS C ETC ARE ILLITERATE AND HAVE NO KNOWLEDGE ABOUT THE BANKING OPERATION. THE BANK CHEQUES RECEIVED FROM THE AGENCY AGAINST SUPPLY OF PADDY ARE BEING DEPOSITED INTO THE BANK ACCOUNT WITH THE ASSISTANCE FROM ACCOUNTANTS AND OTHER STAFF OF 4 ITA NO.276/CTK/2014: ASSESSMENT YEAR :2007 - 08 ITA NO.277/CTK/2014: ASSESSMENT YEAR :2008 - 09 ITA NO.278/CTK/2014: ASSESSMENT YEAR :2009 - 10 THE ASSESSEE FIRM. TO MIN IMIZE THE COST OF TRANSPORTATION AND OTHER INCIDEN TAL COST, THE AGENCIES NAMELY OSCSC AND NCM SL HAVE DIRECTED THE CULTIVATORS TO DELIVER THEIR PADDY AT ASESSEE 'S PREMISES INSTEAD OF BRINGING THE SAME TO THEIR STORAGE HOUSES. DURING THE ASSESSMENT YEAR S IN QUESTION, THE CULTIVATORS NAMELY SRI KOMULU GADABA, NILAKANTHA BANDANI, NILAMBAR GADABA, KHAGUPATI PUJARI, G VENKATA RAMANA, SURU NAGESWAR R AO, D RAMALINGESWAR RAO, RUPALI JAGAR PATNAIK AND V SEKHAR HAVE SUPPLIED THEIR PADDY TO OSCSC AND NCMS L. HOWEVER , T HEY WERE ASKED TO DELIVER THE PADDY AT ASSESSEE'S PREMISES. THE ASSESSEE RECEIVED THE PADDY FOR MILLING AND AFTER PROCESSING, THE RICE IS DELIVERED TO THE DESTINATION OF THE AGENCY. ONCE THE RICE IS RECEIVED BY THE AGENCY, THE CULTIVATORS STA RTED GETTING C HEQUES FROM THE NCMSL AND OSC SC. THE CULTIVATORS OR FARMERS USE D TO TAKE ASSISTANCE FROM THE STAFF FOR FILLING UP THE BANK VOUCHER THEREFORE, THE ASSESSEE HAS NO RELATION WITH THE TRANSACTIONS MADE BY THE ABOVE SAID CULTIVATORS WITH THE AGENCIES. 5. THE AS SESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND OBSERVED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, STATEMENT ON OATH WAS RECORDED FROM THE BANK ACCOUNT HOLDER , WHEREIN, IT WAS R EVEALED THAT THEY DO NOT POSSESS ANY AGRICULTURAL LAND IN THEIR OWN NAMES. THE AGRICULTURAL LANDS ARE IN THE NAMES OF THEIR RESPECTIVE GRANDFATHERS OR TAKEN ON LEASE. THE ASSESSEE ALSO COULD NOT PRODUCE ANY EVIDENCE OF HAVING SUPPLIED PADDY TO AGENCIES LIKE NCMSL AND OSCSC. HE, THEREFORE, HELD THAT THE ACCOUNT HOLDERS DO NOT HAVE ANY AGRICULTURAL PRODUCE. THE 5 ITA NO.276/CTK/2014: ASSESSMENT YEAR :2007 - 08 ITA NO.277/CTK/2014: ASSESSMENT YEAR :2008 - 09 ITA NO.278/CTK/2014: ASSESSMENT YEAR :2009 - 10 DEPOSITS IN THE BANK ACCOUNT WERE THE DEPOSITS OF M/S. BHASKAR TRADERS AND NOT OF THE ACCOUNT HOLDERS, AS CLAIMED. IN VIEW OF ABOVE, THE AMOUNT OF RS.62,22,570/ - FOR THE ASSESSMENT YEAR 2007 - 08 , RS.89,02,298/ - FOR THE ASSESSMENT YEAR 2008 - 09 AND RS.82,71,344/ - FO R THE ASSESSMENT YEAR 2009 - 2010 CREDITED IN THE SB ACCOUNTS OF DIFFERENT BANKS HELD ON DIFFERENT NAMES WERE TREATED AS ASSESSEES UNDISCLOSED SALES/TURNOVER. 6. THEREAFTER, THE ASSESSING OFFICER OBSERVED THAT IN THIS LINE OF BUSINESS THE GROSS PROFIT VARIES FROM 10 - 15% OF THE TURNOVER. HE KEEPING THE NATURAL JUSTICE IN VIEW, ESTIMATED THE GROSS PROFIT AT 12.5% AND, ACCORDINGLY ESTIMATED THE INCOME OF THE ASSESSEE AT RS.7,77,821/ - FOR THE ASSESSMENT YEAR 2007 - 08, RS.11,12,787/ - FOR THE ASSESSMENT YEAR 2008 - 09 AND RS.10,33,918/ - FOR THE ASSESSMENT YEAR 2009 - 2010. 7. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 8. BEFORE US, THE ONLY SUBMISSION OF THE ASSESSEE IS THAT THE NET PROFIT SHOULD BE ESTIMATED @ 8%. 9. LD D.R. ARGUED THAT THESE DEPOSITS IN THE BANK ACCOUNTS ARE NOT REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSEE HAS ALREADY CLAIMED ALL THE EXPENSES RELATING TO ITS BUSINESS, THEREFORE, THE CIT( A) WAS FULLY JUSTIFIED IN ESTIMATING GROSS PROFIT AT 12.5% AND ESTIMATING THE INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEARS UNDER APPEAL. 10. IN THE REJOINDER, LD A.R. SIMPLY REITERATED THE SUBMISSIONS MADE EARLIER BUT COULD NOT CONTROVERT THE ABOVE SUBM ISSIONS MADE BY LD D.R. 6 ITA NO.276/CTK/2014: ASSESSMENT YEAR :2007 - 08 ITA NO.277/CTK/2014: ASSESSMENT YEAR :2008 - 09 ITA NO.278/CTK/2014: ASSESSMENT YEAR :2009 - 10 11. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIALS ON RECORD, WE FIND THAT NO MATERIAL COULD BE BROUGHT ON RECORD BY LD A.R. OF THE ASSESSEE TO SHOW THAT ESTIMATION OF INCOME FROM UNDISCLOSED DEPOSITS IN BANK ACCOUNTS FOUND DURING THE COURSE OF SEARCH BY APPLYING THE GROSS PROFIT @ 12.5% WAS HIGHER. FURTHER, NO MATERIAL COULD BE BROUGHT TO CONTROVERT THE FINDINGS OF LD D. R. THAT EVERY EXPENSE RELATING TO THE BUSINESS OF MILLING OF PADDY WAS ALREADY CLAIMED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. IN VIEW OF ABOVE UNCONTROVERTED FINDINGS, WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS HEREBY CON FIRMED AND DISMISS THE GROUND OF APPEAL OF THE ASSESSEE. 12. IN THE RESULT, THE APPEAL S F ILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCE D ON 14 /07 /2017 . SD/ - SD/ - ( PAVAN KUMAR GADALE) ( N.S SAINI) JUDICIALMEMBER A CCOUNTANT MEMBER CUTTACK; DATED 14 /07 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : BHASKAR TRADERS, TOSHNIWALA COMPLEX, BYE PASS ROAD, HATAPADA, JEYPORE. 2. THE RESPONDENT. ACIT, BERHAMPUR 3. THE CIT(A) BERHAMPUR 4. PR.CIT , BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//