ITO, Ward - 1(3), Siliguri, Siliguri V. Gobinda Das, Darjeeling

ITA 287/KOL/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8081 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 01-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 11-02-2010
• Court: TRIBUNAL
• Department Lawyers: K N JANA
• Assessee Lawyers: MIRAZ D SHAH
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH A, KOLKATA () BEFORE , ,, , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . .. . ! ! ! !. .. . , '# SHRI C.D.RAO, ACCOUNTANT MEMBER $ $ $ $ / ITA NO . 287/KOL/2010 %& '(/ ASSESSMENT YEAR : 2006-07 (*+ / APPELLANT ) I.T.O., WARD-1(3), SILIGURI (,-*+/ RESPONDENT ) GOBINDA DAS, DARJEELING (PAN:AFSPD 6091B) $ $ $ $ / ITA NO . 393/KOL/2010 %& '(/ ASSESSMENT YEAR : 2006-07 (*+ / APPELLANT ) GOBINDA DAS, DARJEELING (PAN:AFSPD 6091B) (,-*+/ RESPONDENT ) I.T.O., WARD-1(3), SILIGURI *+ . / '/ FOR THE DEPARTMENT: SHRI K.N.JANA ,-*+ . / '/ FOR THE ASSESSEE: SHRI MIRAZ D.SHAH 0%1 . !# /DATE OF HEARING : 12.10.2012. 2' . !# /DATE OF PRONOUNCEMENT : 19.10.2012. '3 / ORDER . .. . ! ! ! !. .. . , '# PER SHRI C.D.RAO, AM THE ABOVE CROSS APPEALS ONE FILED BY THE REVENUE AN D THE OTHER FILED BY ASSESSEE ARE AGAINST ORDER DATED 26.10.2009 OF THE LD. CIT-(A)-SILIGURI PERTAINING TO A.YR. 2006-07. 2 2. IN THIS APPEAL THE REVENUE AS WELL AS THE ASSESS EE HAS RAISED THE FOLLOWING GROUNDS :- ITA NO.287/KOL./2010 (BY THE REVENUE ): 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A), SILIGURI ERRED IN GRANTING RELIEF OF RS. 21,37,602/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT WITHOUT CONSIDERING THE FACT THAT THE A.O. HAD MADE THE ADD ITIONS AS PER THE PROVISION OF SECTION 68 OF THE I.T. ACT, 1961. 2. THAT THE LD. CIT(A), SILIGURI WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE U/S 68 ON THE BASIS OF FRESH EVIDENCE PRODUCE BEFORE HIM. DUR ING THE COURSE OF SCRUTINY ASSESSMENT THE ASSESSEE WAS OFFERED AMPLE OPPORTUNI TY TO EXPLAIN, HOWEVER THE ASSESSEE NEVER BOTHERED TO APPEAR FOR HEARING AND EXPLAIN TH E SAME. ITA NO.393/KOL/2010 (BY THE ASSESSEE) : 1. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INC ME TAX (APPEALS), ERRED IN INITIATING ENHANCEMENT PROC EEDINGS. SUCH PROCEEDINGS WERE NOT CALLED FOR AND THE ENHANCEMENT PROCEEDING BE QUASHE D. 2. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS), ERRED BOTH IN LAW AS WELL AS FACTS I N ADDING AND TREATING THE GROSS RECEIPT FROM SUPPLY BUSINESS AS INCOME, WHICH IS UN JUSTIFIED AND UNCALLED FOR AND THE SAID FINDING BE RESERVED.. 3. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE A SSESSING OFFICER BE DIRECTED TO RESTRICT THE INCOME FROM SUPPLY BUSINESS AT 5% OF THE TURNOV ER. 4. FOR THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, ALTER, AMEND OR MODIFY ANY GROUNDS AT THE TIME OF HEARING OF APPEAL. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT WHILE DO ING THE SCRUTINY ASSESSMENT THE AO HAS ADDED AN AMOUNT OF RS.21,37,602/- U/S 68 OF TH E IT ACT AND RS.2,08,380/- BY CALCULATING THE PROFIT AT 8% AND ADJUSTING THE RETU RNED INCOME FROM THE SAID 8% BY OBSERVING THAT SINCE THE ASSESSEE HAS NOT PRODUCED ANY INFORMATION CALLED FOR. THE RELEVANT OBSERVATIONS ARE AS UNDER :- THE ASSESSEE WAS THEREFORE SHOW CAUSED, SO AS TO WHY THE PROFIT & LOSS & BALANCE SHEET AS FILED ALONG WITH THE RETURN OF INCOME FOR THE A.Y. 2006-07 SHALL NOT BE REJECTED & HIS INCOME BE RECOMPUTED AS BELOW. PROFIT SHALL BE CALCULATED @ 8% OF HIS GROSS RECEIP TS FROM CONSTRUCTION WORKS & SUPPLY BUSINESS I.E. 64,89,942 + 4,42,000 = 69,31,9 42 WHICH COMES TO RS.5,54,555/-. AND SECURED LOAN OF RS.21,37,602/- BE ADDED TO THE TOTAL INCOME AS UNEXPLAINED CASH CREDIT U/S 68. THE ASSESSEE NEITHER APPEARED I N ANY OF THE ABOVE OCCASION NOR ANY ADJOURNMENT PETITION FILED. AMPLE OPPORTUNITIES HAV E BEEN GIVEN TO EXPLAIN THE CASE. BUT IT SEEMS THAT THE ASSESSEE HAS NO EXPLANATION T O OFFER IN SUPPORT OF HIS CLAIM OF THE RETURN FILED. 3 3.1. ON APPEAL THE LD. CIT(A) HAS DELETED THE ADDIT ION ON ACCOUNT OF DISALLOWANCE MADE U/S 68 BY OBSERVING THAT I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE AR AND ALSO PERUSED THE ASSESSMENT ORDER. THE LEGAL POSITION CITED BY THE LD AR IS NOT CORRECT. EVEN IF THE TRADING RESULT IS REJECTED AND PROFIT IS ESTIMATED, THERE IS NO BAR T O MAKE ADDITION U/S 68 OF THE ACT. HOWEVER, ON PERUSAL OF THE COPY OF BAN K STATEMENT AND STATEMENT OF ACCOUNTS WITH SREI INFRASTRUCTURE LTD FILED BY THE LD AR IN COURSE OF APPELLATE PROCEEDINGS, IT APPEARS THAT THE LOANS SHOWN BY THE ASSESSEE IN HIS BALANCE SHEET WAS DULY REFLECTED THEREON. THOUGH NO SUCH EVIDENCE WAS FILED BY THE A SSESSEE BEFORE THE LD AO IN COURSE OF ASSESSMENT PROCEEDINGS, SAME CAN NOT BE CONSIDER ED AS FRESH EVIDENCE AND WAS WITH THE ASSESSEE ON THE BASIS OF WHICH THE BALANCE SHEE T WAS PREPARED. THE LOAN WAS SANCTIONED BY THE BANK DURING THE YEAR AND THE ACCO UNT OF THE ASSESSEE WITH SREI INSFRUCTURE WAS A RUNNING ACCOUNT STARTED FROM 01.1 0.2000. THEREFORE, THE EVIDENCES CANNOT BE SAID TO BE FRESH AND THUS, ADMITTED. ON T HE BASIS OF THOSE ACCOUNTS, THE ADDITION MADE BY THE LD AO CANNOT BE SUSTAINED. THE REFORE, THE SAME IS DELETED. 3.2. AND IN RESPECT OF GROSS PROFIT CALCULATED BY T HE AO AT 8% HE RESTRICTED THE SAME TO 5% OF THE GROSS RECEIPTS FROM CONSTRUCTION WORK. BUT HOWEVER, AS REGARDING THE SUPPLY OF BUSINESS IS CONCERNED, HE ENHANCED TH E ADDITION TO THE ENTIRE AMOUNT OF RS.4,42,000/- AS AGAINST 8% TAKEN BY THE AO BY OBSE RVING AS UNDER :- THE ASSESSEE HAS DESCRIBED HIS CREDIT ITEMS IN THE P& L A/C AS BY GROSS RECEIPTS FROM CONSTRUCTION WORKS 6,489,942 .00 BY INCOME FROM SUPPLY BUSINESS 442,000.00 BY OTHER INCOME 8,160.00 IT IS THUS, CLEAR THAT FOLLOWING THE SAME ANALOGY, THE ASSESSEE SHOULD HAVE USED THE TERM RECEIPTS IN CASE OF INCOME OR VICE VERSA. THERE FORE, TWO DIFFERENT DESCRIPTIONS AT THE SAME PLACE IS NOT A CONVINCING ARGUMENT. ON THE OTHER HAND, APART FROM THE DICTIONARY MEANIN G, THE ACCOUNTANCY POLICY GENERALLY BEING FOLLOWED BY THE CAS HAS ALSO TO BE CONSIDERED . NORMALLY, IN CASE OF SALES, THE SAME IS DESCRIBED AS, SALES, RECEIPTS OR TURNOVER, NOT AS INCOME. THEREFORE, I AM UNABLE TO ACCEPT THE SUBMISSION OF THE LD. AR AND T REAT THE AMOUNT AS :INCOME OF THE ASSESSEE FROM SUPPLY BUSINESS. THE LD. AO IS THUS D IRECTED TO TREAT THIS AMOUNT OF RS.4.42,000/- AS INCOME AND REDUCED THE SAME AMOUNT FROM THE TOTAL TURNOVER FOR COMPUTATION FROM INCOME FROM CONTRACTUAL WORKS. 3.3. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL IN RESPECT OF DELETION MADE BY AO U/S 68 OF THE ACT AND THE ASSESSEE IS IN APPEAL IN RESPECT OF ENHANCEMENT OF 8% TO RS.4,42,000/- ON ACCOUNT OF SUPPLY BUSINESS TO THE ENTIRE AMOUNT OF RS.4,42,000/-. 4. AT THE TIME OF HEARING THE LD. DR APPEARING ON B EHALF OF THE REVENUE BY REFERRING TO THE OBSERVATIONS MADE BY LD. CIT(A) CO NTENDED THAT THE ASSESSEE HAS NEVER PRODUCED ANY BOOKS OF ACCOUNT AT THE TIME OF ASSESS MENT AND THE LD. CIT(A) HAS ALSO 4 NOT CALLED FOR THE REMAND REPORT WHILE DELETING THE ADDITION MADE BY AO. THEREFORE, HE REQUESTED TO SET ASIDE THE MATTER IN RESPECT OF THE ADDITION MADE BY AO U/S 68 OF THE IT ACT. 4.1. AS REGARDING THE ENHANCEMENT HE SUPPORTED THE ORDER OF LD. CIT(A). THEREFORE, HE REQUESTED TO UPHELD THE ACTION OF LD. CIT(A) IN RESPECT OF ENHANCEMENT. 5. ON THE OTHER HAND, THE LD. COUNSEL APPEARING ON BEHALF OF ASSESSEE HAS REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT( A) AND SUBMITTED THAT SINCE THE LD. CIT(A) HAS CATEGORICALLY MENTIONED THAT ALL THE DOC UMENTS ARE AVAILABLE WITH AO AND THE LOAN WAS SANCTIONED BY THE BANK DURING THE YEAR AND THE ACCOUNT OF ASSESSEE WITH SREI INFRASTRUCTURE WAS A RUNNING ACCOUNT STARTED F ROM 01.10.2000. THEREFORE, THE EVIDENCES CANNOT BE SAID FRESH AND THUS ADMITTED. T HERE IS NO NEED TO SET ASIDE THIS TO THE LD.AO. 5.1. AS REGARDING THE ENHANCEMENT, THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HIMSELF HAS DECLARED NET PROFIT AS PER THE PROFIT A ND LOSS ACCOUNT AT RS.2,46,175/- AND THE LD. CIT(A) HAS NOT BROUGHT ANY MATERIAL ON RECO RD THAT THE AMOUNT OF RS.4,42,000/- IS RELATING TO THE NET INCOME OF THE ASSESSEE FROM SUPPLYING BUSINESS. IF THIS AMOUNT HAS TO BE TAKEN AS NET AMOUNT THEN NATURALLY THE NE T PROFIT SHOULD NOT BE LESS THAN RS.4,42,000/-. BUT HOWEVER, IN THE P& L ACCOUNT THE DECLARED INCOME IS RS.2,46,.175/- WHICH WAS ACCEPTED BY THE AO. THEREF ORE, HE REQUESTED TO RESTRICT THE ADDITION ON ACCOUNT OF SUPPLY BUSINESS ALSO AT 5% A T RS.4,42,000/-. 6. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIALS AVAILABLE ON RECORD, AS REGARDING THE REVENUES APP EAL WE CONSIDER IT FIT TO SET ASIDE THE ISSUE IN RESPECT OF LOAN RECEIPT BY THE ASSESSEE FR OM SREI INFRASTRUCTURE TO THE EXTENT OF RS.17,60,000/- FOR FRESH VERIFICATION BY THE AO SINCE THE LD. CIT(A) HIMSELF HAS STATED THAT THE ASSESSEE HAS NOT PRODUCED ANY DOCUM ENTS BEFORE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS AND FURTHER DIRECT THE ASSES SEE TO PRODUCE THE DOCUMENTS IN RESPECT OF THE SAID LOAN. WE ORDER ACCORDINGLY. 5 7. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOW ED IN PART FOR STATISTICAL PURPOSES. 8. AS REGARDING THE ASSESSEES APPEAL, SINCE THE RE VENUE HAS ACCEPTED THE NET PROFIT DECLARED BY THE ASESSEE IN PROFIT AND LOSS A CCOUNT AN AMOUNT OF RS.2,46,175/- THE REASONING EITHER BY LD. CIT(A) THAT THE INCOME FROM SUPPLY OF BUSINESS SHOWN BY THE ASSESSEE AT RS.4,42,000/- IS THE NET INCOME AND NOT THE GROSS RECEIPTS CANNOT BE ACCEPTABLE. THEREFORE, WE RESTRICT THE ADDITION ON ACCOUNT OF SUPPLY BUSINESS ALSO AT 5% AS AGAINST 8% ADOPTED BY AO. 8.1. IN THE RESULT THE ASSESSEES APPEAL IS ALLOWED IN PART. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOW ED IN PART FOR STATISTICAL PURPOSES AND THE ASSESSEES APPEAL IS ALLOWED IN PART. ORDER PRONOUNCED IN THE COURT ON 19.10.2012. SD/- SD/- , , , , MAHAVIR SINGH, JUDICIAL MEMBER . .. . ! ! ! !. .. . , , , , '# '# '# '# , C.D.RAO, ACCOUNTANT MEMBER. ( (( (!# !# !# !#) )) ) DATE: 19.10.2012. R.G.(P.S.) 6 '3 . ,4 5'4'6- COPY OF THE ORDER FORWARDED TO: 1. GOBINDA DAS, C/O NARESH CH.DAS, RUPSINGH JOTE, GOSS AINPORE, BAGDOGRA, DIST.:DARJEELING, PIN:735102. 2 I.T.O., WARD-1(3), SILIGURI. 3. THE C.I.T. 4. CIT(A)-I, SILIGURI. 5. THE CIT(DR), KOLKATA BENCHES, KOLKATA -4 ,/ TRUE COPY, '3%0/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES 7