MR Debayan Bhattacharya, Kolkata V. ACIT, CIRCLE-50, Kolkata

ITA 32/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1924 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 23-02-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 07-01-2014
• Court: TRIBUNAL
• Department Lawyers: RAJAT KUMAR KUREEL
• Assessee Lawyers: MANISH TIWARI
• Keywords: Opportunity of being heard
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENC H KOLKATA BEFORE SHRI S.S.VISWANETHRA RAVI, JM & DR. A.L.SAI NI, AM ./ ITA NO.32/KOL/2014 ( / ASSESSMENT YEAR :2008-2009) MR. DEBAYAN BHATTACHARYA DB-29/B-4, SECTOR-1, SALT LATE CITY, KOLKATA-700064 VS. ACIT, CIRCLE-50, MANICKTALLA CIVIC CENTRE, UTTARAPAN COMPLEX,DS-II ULTADANGA, KOLKATA-700054 ./ ./PAN/GIR NO. : AAJPB 2128 D ( /APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI MANISH TIWARI, FCA /REVENUE BY : SHRI RAJAT KUMAR KUREEL, JCIT / DATE OF HEARING : 23/02/2017 /DATE OF PRONOUNCEMENT 05/04/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAI NING TO THE ASSESSMENT YEAR 2008-2009, IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXXII, KOL KATA, IN APPEAL NO.226/XXXII/10-11/CIR-50/KOL, DATED 04.10.2013, WH ICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE AO U/S.143(3) OF THE INCO ME TAX ACT 1961, (HEREINAFTER REFERRED TO AS THE ACT), DATED 31.12 .2010. 2. BRIEF FACTS OF THE CASE QUA THE ASSESSEE ARE THA T THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-0 9 ON 10.10.2008 DISCLOSING TOTAL INCOME OF RS.10,46,879/-. THE RETU RN OF ASSESSEE WAS PROCESSED U/S.143(1) OF THE I.T.ACT. LATER ON, THE ASSESSEES CASE WAS SELECTED UNDER SCRUTINY U/S.143(3) OF THE ACT AND T HE AO COMPLETED THE ASSESSMENT BY MAKING ADDITION @ 1.25% OF RS.193,27 9,555 WHICH ITA NO.32/KOL/2014 MR. DEBAYAN BHATTACHARYA 2 COMES AT RS.24,15,994 ( ESTIMATED ADDITION ON UNDIS CLOSED BANK ACCOUNT). 3. NOT BEING SATISFIED WITH THE ORDER PASSED BY TH E AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD CIT(A), WHO HAS CONFI RMED THE ORDER PASSED BY THE AO OBSERVING THE FOLLOWINGS :- 4. DECISION: THE FACTS OF THE CASE ARE DULY CONSIDERED. IT IS SE EN THAT THE ASSESSEE HAS KEPT AT LEAST TWO BUSINESS RELATED BAN K ACCOUNT OUTSIDE HIS BOOKS OF ACCOUNTS. THE TRANSACTIONS ESP ECIALLY INVOLVING CASH DEPOSITS ARE NOT ROUTED THROUGH THE CASH BOOKS . DURING THE APPELLATE PROCEEDINGS THE AR ALSO COULD NOT PRODUCE THE DETAILS CALLED FOR E.G. THE PERSONAL BALANCE SHEET AND THE INCOME & EXPENDITURE STATEMENT OF THE ASSESSEE; DETAILS OF T DS VIOLATIONS (AS SEEN IN ASSESSMENT ORDER FOR 2006-07, 2007-08 A ND 2009-10); DETAILS OF CAPITAL AND CURRENT A/C OF THE ASSESSEE IN HIS PROPRIETORY CONCERNS; ACCOUNT STATEMENT OF THE SUPPLIERS ETC. N O BOOKS OF ACCOUNT WERE PRODUCED OR OFFERED TO BE PRODUCED. TH ERE IS NO ARGUMENT THAT ALL TRANSACTIONS ARE REFLECTED IN THE ASSESSEE'S BOOKS OF ACCOUNT. THE AR IN HIS WRITTEN SUBMISSION HAS GI VEN BREAK-UP OF DEPOSITS IN ONE BANK A/C NO. 34317 BUT THE ACTUAL A CCOUNTS ON WHOSE BASIS THE ADDITIONS HAVE BEEN MADE ARE DIFFER ENT. THE AO HAS, ON TAKING COGNIZANCE OF EVERYTHING, MADE THE A DDITION AS STATED IN THE ASSESSMENT ORDER. DURING APPELLATE PR OCEEDINGS ALSO SEVERAL CRUCIAL DETAILS WERE NOT FILED. THE AR HAS ALSO NOT BEEN ABLE TO SUFFICIENTLY EXPLAIN THE BANK DEPOSITS AND EXPLA INED WHY THE BANKS WERE NOT DECLARED IN THE BALANCE SHEET. THE A O IN HIS REMAND REPORT DATED 01.04.2013 HAS ALSO COMMENTED T HAT THE CASH DEPOSITS & OTHER TRANSACTIONS WERE NOT ROUTED THROU GH THE FIRM'S CASH BOOK. THE ASSESSEE'S WRITTEN SUBMISSIONS ACCEP T THAT THE ACCOUNTS ARE NOT PROPERLY DISCLOSED. UNDER THE CIRC UMSTANCES IT HAS TO BE PRESUMED THAT THE BOOKS OF ACCOUNT OF THE ASS ESSEE ARE UNRELIABLE AND DEFECTIVE OR INCOMPLETE. THE AO MAY NOT HAVE MENTIONED SECTION 145 BUT FOR ALL PRACTICAL PURPOSE S THE AO HAS REJECTED THE BOOKS OF ACCOUNT AND ADOPTED A N.P. RA TE 1.25%. HOWEVER, IT IS SEEN THAT THE AO HAS MADE A FEW MIST AKES WHILE MAKING THE ADDITIONS IN THE ASSESSMENT ORDER. AS PE R THE FINAL ACCOUNTS OF THE TWO PROPRIETORY CONCERNS OF THE ASS ESSEE, THE DETAILS OF TURNOVER AND NET PROFIT-ARE AS-UNDER DETAILS ESDEE ENTERPRISES ESDEE COMMUNICATION TOTAL TURNOVER INCLUDING INCENTIVE 17,52,85,868 1,79,93,687 NET PROFIT DECLARED 8,29,818 4,22,377 NET PROFIT RATIO 0.47% 2.34% ITA NO.32/KOL/2014 MR. DEBAYAN BHATTACHARYA 3 THE TRANSACTIONS IN THE TWO UNREPORTED BANK ACCOUNT RELATE TO M/S ESDEE ENTERPRISES SINCE THESE TWO BANK ACCOUNTS HAV E PAYMENTS RELATED TO M/S VODAFONE ETC. THEREFORE, THE AO SHOU LD HAVE CONSIDERED THE TOTAL CREDIT IN THE TWO BANK ACCOUNT S I.E. RS.6,59,31,882/- AS THE SUPPRESSED TURNOVER OF M/S ESDEE ENTERPRISES AND THEN ADOPTED THE N.P. RATE OF 1.25% . THEREFORE, THE AO SHOULD HAVE CALCULATED THE NET PROFIT FROM M/S E SDEE ENTERPRISES AT RS.30,15,222/- [I.E. 1.25% OF RS.24, 12,17,750/-] AND THE AO SHOULD NOT HAVE DISTURBED THE RESULTS OF M/S ESDEE COMMUNICATION SINCE THE N.P. DECLARED THEREIN IS MU CH MORE THAN 1.25% AND THE TWO BANK ACCOUNTS ARE NOT RELATED TO IT. AS A RESULT, THE INCOME OF THE ASSESSEE SHOULD HAVE BEEN COMPUTED AS UNDER:- PROFIT & GAINS FROM BUSINESS & PROFESSION: 1. NET PROFIT OF M/S ESDEE COMMUNICATION (AS DECLAR ED) RS. 4,22,377/- 2. NET PROFIT @ 1.25% OF THE TOTAL TURNOVER & THE RS.30,15,222/- SUPPRESSED TURNOVER OF M/S ESDEE ENTERPRISES. TOTAL RS. 34,37,599/- THE AO IS DIRECTED TO ADOPT THE FIGURE OF RS.34,37, 599/- AS PROFIT & GAINS FROM BUSINESS & PROFESSION INSTEAD OF RS.24 ,15,994/-. IN ADDITION THE FOLLOWING DIRECTIONS ARE ISSUED TO THE AO FOR COMPLIANCE: 1) TO ALLOW LOSS FROM HOUSE PROPERTY AS CLAIMED BY THE ASSESSEE IN HIS COMPUTATION OF INCOME AFTER ASCERTAINING THE FACTS. 2) TO TAX THE INCOME FROM OTHER SOURCES AS DECLARED BY THE ASSESSEE IN HIS COMPUTATION OF TOTAL INCOME. 3) TO ALLOW THE DEDUCTION UNDER CHAPTER VI A AS CLA IMED BY THE ASSESSEE IN HIS COMPUTATION OF INCOME AFTER VERIFIC ATION. 5. IN THE SUM, THE APPEAL OF THE ASSESSEE IS TREATE D AS PARTLY ALLOWED. 4. NOT BEING SATISFIED WITH THE ORDER OF LD. CIT(A) , THE ASSESSEE IS IN FURTHER APPEAL BEFORE US AND HAS TAKEN THE FOLLOWIN G GROUNDS OF APPEAL :- 1 (A) THAT THE OBSERVATIONS OF LD. CIT(A) THAT ASSE SSING OFFICER ESTIMATED BUSINESS PROFIT @ 1.25% BY REJECTING BOOK S OF ACCOUNT U/S.145 OF I. T. ACT, 1961 ARE ERRONEOUS SI NCE NO SUCH COMMENTS ARE AVAILABLE IN THE ASSESSMENT ORDER. ITA NO.32/KOL/2014 MR. DEBAYAN BHATTACHARYA 4 1(B) THAT THE FINDINGS OF LD. CIT(A) THAT BOOKS OF ACCOUNT ARE UNRECEIVABLE, DEFECTIVE AND INCOMPLETE ARE UNFOUNDE D AND OPPOSED TO HIS OWN OBSERVATION WHICH READS 'NO BOOK S OF ACCOUNTS WERE PRODUCED OR OFFERED TO BE PRODUCED'. 1 (C) THAT THE LD. CIT(A) IS WRONG AND UNJUSTIFIED IN CONFIRMING THE RATE OF NET PROFIT FROM BUSINESS UNIT ESBEE ENTERPR ISES @ 1.25% WITHOUT ADJUDICATING THE CONTENTIONS OF THE APPELLA NT AND WITHOUT A SPEAKING ORDER. 1 (D) THAT THE FINDINGS OF LD. CIT(A) THAT THE ASSE SSEE KEPT SB ALC. NO.43701 0100112864 AND NO. 775010100007675 WITH AX IS BANK OUTSIDE HIS BOOKS OF ACCOUNT ARE CONTRARY TO H IS OWN FINDINGS WHEREIN IT WAS CONCLUDED THAT NO BOOKS OF ACCOUNT WERE PRODUCED. 1(E) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. C.I.T.(A) HAS ERRED IN HOLDING THAT TOTAL CREDITS I N AFORESAID BANK ACCOUNTS REPRESENTED SUPPRESSED TURNOVER OF BUSINES S UNIT ESBEE. ENTERPRISES AND THEREBY RECASTING TAXABLE IN COME OF THIS UNIT AT RS.30,15,222/-. 2. THAT WITHOUT PREJUDICE TO GROUND NO.1 AND ON TH E FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ORDER U/S.250 DT. 04.10.2013 PASSED BY LD. CIT(A) TO DETERMINE ASSESSED TOTAL IN COME AT A HIGHER FIGURE IS BAD IN LAW AND LIABLE TO THE QUASH ED IN THE ABSENCE OF ISSUE OF ANY NOTICE U/S. 251 (2) OF I .T .ACT, 1961. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, ADDUCE OR AMEND ANY GROUND OR GROUNDS ON OR BEFORE THE DATE OF HEAR ING OF THE APPEAL. 5. LD. AR FOR THE ASSESSEE HAS SUBMITTED BEFORE US THAT THE ASSESSEE COULD NOT PRODUCE BOOKS OF ACCOUNTS AND OTHER DETAI LS BEFORE THE ASSESSING OFFICER BECAUSE BOOKS OF ACCOUNTS WERE DE STROYED BY FIRE. THERE WAS A FIRE IN THE OFFICE PREMISES OF THE ASSE SSEE THEREFORE, ALL BOOKS OF ACCOUNTS AND DOCUMENTS WERE DESTROYED BY F IRE. THE LD AR ALSO POINTED OUT THAT THE ASSESSEE`S COMPUTER WAS ALSO C RASHED THEREFORE HE COULD NOT PRODUCE PRINT OUT OF LEDGER ACCOUNTS AND OTHER DETAILS BEFORE THE ASSESSING OFFICER. THE LD AR FOR THE ASSESSEE FURTH ER SUBMITTED THAT THE ASSESSEE USED TO MAINTAIN SAVING ACCOUNT NO.02501 0100296465 WITH ITA NO.32/KOL/2014 MR. DEBAYAN BHATTACHARYA 5 AXIS BANK PANIHATI BRANCH. DURING THE FINANCIAL YEA R 2007-08 TOTAL CREDIT WAS RS.38,03,043/- AND HE ALSO MAINTAINS ANOTHER SA VING ACCOUNTS 025010100296465 WITH AXIS BANK SALT LAKE BRANCH AND IN THIS ACCOUNT DURING THE FINANCIAL YEAR 2007-08 TOTAL CREDIT WAS RS.60,302,970/-. SO TOTAL CREDIT OF HIS TWO SAVING ACCOUNTS COMES TO RS . 6,41,06,013/-. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFF ICER POINTED OUT THAT FROM TRADING ACCOUNT OF M/S ESDEE COMMUNICATIO N AND M/S ESDEE ENTERPRISES TOTAL CREDIT COMES TO RS.17,993,687/- A ND RS.175,285,868/- RESPECTIVELY. SO TOTAL CREDIT COMES TO RS.193,279,5 55/-. BALANCE SHEET OF M/S ESDEE COMMUNICATION AS ON 31.03.2008 FURNISHED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS ENVISAG ES NO BANK ACCOUNTS. ON PERUSAL OF BALANCE SHEET OF M/S ESDEE ENTERPRISES AS ON 31.03.2008 BANK BALANCE APPEARS AT RS.72816. THE AS SESSEE COULD NOT FILE ANY PERSONAL CAPITAL ACCOUNTS AND BALANCE SHEE T AS ON 31.03.2008. BUT ASSESSEE USED TO MAINTAIN BOTH SAVING ACCOUNTS IN HIS OWN NAME. THE ASSESSEE ALSO COULD NOT FILE BANK STATEMENT. AS A RESULT, THE ASSESSING OFFICER COULD NOT ABLE TO MATCH CREDIT OF BOTH PROPRIETARY CONCERN I.E. M/S ESDEE COMMUNICATION AND M/S ESDEE ENTERPRISES TO THE TUNE OF RS.193,279,555/- WITH TOTAL CREDIT WITH BOT H BANKS WHICH COMES TO RS.6,41,06,013/-. THEREFORE, THE AO FOUND LOGICAL T O ESTIMATE @ 1.25% OF RS.193,279,555/-, WHICH COMES RS.24,15,994/-. THE L D AR FOR THE ASSESSEE HAS SUBMITTED THAT THE ESTIMATION @ 1.25% IS NOT ACCEPTABLE BECAUSE THE SAID ESTIMATE IS BASED ON SURMISE, GUES S AND CONJECTURE. ITA NO.32/KOL/2014 MR. DEBAYAN BHATTACHARYA 6 THE LD AR FOR THE ASSESSEE HAS SUBMITTED THAT THE L D CIT(A) HAS ENHANCED THE ASSESSMENT OBSERVING THAT THE TRANSACT IONS IN THE TWO UNREPORTED BANK ACCOUNT RELATE TO M/S ESDEE ENTERPR ISES SINCE THESE TWO BANK ACCOUNTS HAVE PAYMENTS RELATED TO M/S VODAFONE ETC. THEREFORE, THE AO SHOULD HAVE CONSIDERED THE TOTAL CREDIT IN T HE TWO BANK ACCOUNTS I.E. RS.6,59,31,882/- AS THE SUPPRESSED TURNOVER OF M/S ESDEE ENTERPRISES AND THEN ADOPTED THE N.P. RATE OF 1.25% . THEREFORE, THE AO SHOULD HAVE CALCULATED THE NET PROFIT FROM M/S ESDE E ENTERPRISES AT RS.30,15,222/- [I.E. 1.25% OF RS.24,12,17,750/-] AN D THE AO SHOULD NOT HAVE DISTURBED THE RESULTS OF M/S ESDEE COMMUNICATI ON SINCE THE N.P. DECLARED THEREIN IS MUCH MORE THAN 1.25% AND THE TW O BANK ACCOUNTS ARE NOT RELATED TO IT. THEREFORE, THE LD CIT(A) HAS ENHANCED THE ASSESSMEN T AS FOLLOWS: PROFIT & GAINS FROM BUSINESS & PROFESSION: 1. NET PROFIT OF M/S ESDEE COMMUNICATION (AS DECLAR ED) RS. 4,22,377/- 2. NET PROFIT @ 1.25% OF THE TOTAL TURNOVER & THE RS.30,15,222/- SUPPRESSED TURNOVER OF M/S ESDEE ENTERPRISES. TOTAL RS. 34,37,599/- THE AO IS DIRECTED TO ADOPT THE FIGURE OF RS.34,37, 599/- AS PROFIT & GAINS FROM BUSINESS & PROFESSION INSTEAD OF RS.24 ,15,994/-. THE LD AR FOR THE ASSESSEE HAS SUBMITTED THAT, THE LD CIT(A) HAS ENHANCED THE ASSESSMENT AS EXPLAINED ABOVE WITHOUT GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASS ESSING OFFICER COMPUTED THE BUSINESS PROFIT AT RS. 24,15,994/- AN D LD CIT(A) HAS FURTHER ITA NO.32/KOL/2014 MR. DEBAYAN BHATTACHARYA 7 ENHANCED THE SAME AT RS. 34,37,599/- WITHOUT PROVID ING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHICH IS AGAINST THE NA TURAL JUSTICE. THEREFORE, LD AR FOR THE ASSESSEE HAS SUBMITTED THA T ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ORDER U/S.250 DT. 04.10.2013 PASSED BY LD. CIT(A) TO DETERMINE ASSESSED TOTAL INCOME AT A HIGHER FIGURE IS BAD IN LAW AND LIABLE TO THE QUASHED IN THE ABSENCE OF ISS UE OF ANY NOTICE U/S. 251 (2) OF I. .T ACT, 1961. 6. LD. DR FOR THE REVENUE HAS PRIMARILY RELIED ON THE FINDINGS OF THE AO, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 7. HAVING HEARD THE SUBMISSIONS OF LD AR FOR THE ASSES SEE AND PERUSED THE MATERIAL AVAILABLE ON RECORDS, WE ARE O F THE VIEW THAT THERE IS MERIT IN THE SUBMISSIONS OF THE ASSESSE, AS THE PRO POSITIONS CANVASSED BY THE LD AR FOR THE ASSESSE ARE SUPPORTED BY THE FACT S NARRATED BY HIM ABOVE. AS HE POINTED OUT THAT THE ASSESSING OFFICER COMPUTED THE BUSINESS PROFIT AT RS. 24,15,994/- AND LD CIT(A) H AS FURTHER ENHANCED THE SAME AT RS. 34,37,599/- WITHOUT PROVIDING AN OPPORT UNITY OF BEING HEARD TO THE ASSESSEE WHICH IS AGAINST THE NATURAL JUSTIC E. THEREFORE, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES TO BE SENT TO THE FILE OF THE LD CIT(A). WE DIRECT THE LD CIT(A) TO PROVIDE ADEQUATE OPPORTUNIT Y TO THE ASSESSEE TO EXPLAIN, ABOUT THE ENHANCE ASSESSMENT AND ADJUDICA TE THE ISSUE ACCORDINGLY. ITA NO.32/KOL/2014 MR. DEBAYAN BHATTACHARYA 8 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 05/0 4/2017. SD/ - (S.S.VISWANETHRA RAVI) S D/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; $% DATED 05/04/2017 & ()* /PRAKASH MISHRA ,SR.PS. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) & ' , / ITAT, KOLKATA 1. / THE APPELLANT- MR. DEBAYAN BHATTACHARYA 2. / THE RESPONDENT.-ACIT, CIRCLE-50, KOLKATA-54 3. 4 ( ) / THE CIT(A), KOLKATA. 4. 4 / CIT 5. 56 7 8 , 8 , / DR, ITAT, KOLKATA 6. 7 9 / GUARD FILE. 5 //TRUE COPY//