Subhadip Gandhi, Raniganj, Burdwan (West) V. ITO, Ward-3(1), Asansol, Asansol

ITA 336/KOL/2022

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 8721 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-11-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 05-06-2022
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Presumptive income; Revision of order; Opportunity of being heard; Assessment record
• Section: 263; 144; 44AD; 142(1)

Judgement Text

आयकर अपीलȣय अͬधकरण, कोलकाता पीठ ‘ए’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH KOLKATA Įी संजय गग[, ÛयाǓयक सदèय एवं Įी मनीष बोरड, लेखा सदèय के सम¢ Before Shri Sanjay Garg, Judicial Member and Dr. Manish Borad, Accountant Member I.T.A No.336/Kol/2022 Assessment year: 2017-18 Subhadip Gandhi..........................................................................................Appellant Harbhanga, P.O. Egra Raniganj, Burdwan, WB-713323. [PAN: AOSPG9158D] vs. ITO, Ward-3(1), Asansol......................................................................Respondent Appearances by: Shri U. Dasgupta, Advocate, appeared on behalf of the appellant. Shri D.K. Sonawal, CIT-DR, appeared on behalf of the Respondent. Date of concluding the hearing : November 03, 2022 Date of pronouncing the order : November 10, 2022 आदेश / ORDER संजय गग[, ÛयाǓयक सदèय ɮवारा / Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 26.03.2022 of the Principal Commissioner of Income Tax (hereinafter referred to as the ‘PCIT’) passed u/s 263 of the Income Tax Act (hereinafter referred to as the ‘Act’) exercising his revision jurisdiction. 2. The present appeal is time-barred by 5 days, a separate application for condonation of delay has been filed by the appellant. Considering the said application, the aforesaid delay in filing the present appeal is hereby condoned. 3. The brief facts of the case are that as per the information received by the Assessing Officer under ‘Operation Clean Money’, it reveals that the assessee had deposited a cash of Rs.15,90,580/- in his bank account during the demonetization period i.e. from 9 th November 2016 to I.T.A No.336/Kol/2022 Assessment year: 2017-18 Subhadip Gandhi 2 30 th December 2016. The details of the said deposited currency has been mentioned in table 1 at page 2 to 4 of the assessment order. The Assessing Officer issued notice u/s 142(1) of the Act dated 13.02.2018 calling upon the assessee to prepare true and correct return of income and to furnish the said return of income for the assessment year 2017- 18 in accordance with the Income Tax Act 1961 and Income Tax Rules 1962. However, the assessee did not furnish his return of income. Thereafter the Assessing Officer proceeded to frame the assessment ex parte of the assessee while adopting best judgment rule as per the provisions of section 144 of the Income Tax Act. During the assessment proceedings also, opportunity was given to the assessee to furnish the required details vide various notices/letters as detailed in table 2 at page 5 of the assessment order. However, the assessee furnished only partial information from which it appeared that during financial year 2016-17, the assessee was a distributor of Idea Cellular Ltd. and had sold recharge voucher to sub-dealers as per company guidelines. Thereafter, the Assessing Officer issued another final show-cause notice dated 26.09.2019 to the assessee, however, the assessee failed to comply the said notice also and failed to furnish further required information. Thereafter, the Assessing Officer proceeded to frame the assessment on the basis of material available to him. The Assessing Officer collected the details of bank account, cash deposits etc. from the banker of the assessee and after perusal of the said details, the Assessing Officer treated the total amount of Rs.2,46,31,471/- as assessee’s gross receipts and estimated net profit @5% of the gross receipt at Rs.12,31,574/- and added the said amount into the income of the assessee as unexplained u/s 69 of the Act. Thereafter, the ld. PCIT exercising his revision jurisdiction u/s 263 of the Act on examination of assessment records observed that in this case, the Assessing Officer had calculated net profit @5% on gross receipts I.T.A No.336/Kol/2022 Assessment year: 2017-18 Subhadip Gandhi 3 without any basis. That the net profit disclosed by the assessee in earlier years was @15% and 18% for assessment year 2015-16 and assessment year 2016-17 respectively. The Ld. PCIT observed that considering the earlier profits shown by the assessee, the net profit for assessment year 2017-18 even if, taken u/s 44AD could not have been less than 8% on gross receipts/turnover. The ld. PCIT referred to the Explanation 2 to section 263(1) and observed that in this case, the Assessing Officer had failed to make enquiries which the Assessing Officer was required to make before assessing the net profit of the assessee. He, therefore, set aside the assessment order holding the same being erroneous and prejudicial to the interest of Revenue and further directed the Assessing Officer to frame the assessment afresh after conducting of necessary enquiries and after giving the assessee an opportunity of being heard as per law. 4. The assessee has now come in appeal agitating the alleged revision order passed by the PCIT on the following grounds: “1) For that on the facts of the case the notice assuming jurisdiction u/s 263 of the Act 61, has not been served on the appellant, it was delivered as an attachment to AO letter, by speed post on 23 rd March, 2022, (after the fixation date on 21 March, 2022), nine days before time barring limit, and is bad in law. 2) For that on the facts of the case the assumption of jurisdiction u/s 263 of the Act 61, by the Ld. PCIT, is legally not valid because the assessment order is neither erroneous nor prejudicial to the interest of the revenue, and the 263 order may please be quashed. 3) For that the assumption of jurisdiction u/s 263 of the Act 61, on the issue of estimation of profits, is legally invalid, for the same issue is in challenge before first appellate authority, pending hearing. 4) For that on the facts of the case, the Ld. PCIT, is legally not justified , in substituting his opinion in place of the AO, more so, when the AO has adopted a possible view accepted by law, and the substitution of the same by the opinion of the Ld. PCIT, is bad in law, and the order may please be cancelled. I.T.A No.336/Kol/2022 Assessment year: 2017-18 Subhadip Gandhi 4 5) For that the appellant craves leave to add, alter, amend any further grounds of appeal, before or at the time of hearing.” 5. At the outset, the ld. counsel for the assessee had stated at bar that he does not press Ground no.1 of the appeal. The ld. counsel has further stated that Ground no.2 is also not pressed being general in nature. 6. The only contention raised by the ld. counsel for the assessee/appellant is that there was no error in the assessment order passed by the Assessing Officer and further that the ld. PCIT has substituted his own opinion with the opinion of the Assessing Officer in determining the net rate of profit on estimation basis. 7. We are not convinced with the above contention of the ld. counsel for the appellant. In this case, despite specific notices issued by the Assessing Officer calling upon the assessee to prepare a true and correct return of income and file the same with the Income Tax Authorities as per the provisions of law, the assessee did not file any return of income. On being asked and show-caused time and again, the assessee furnished only partial information to the Assessing Officer. The Assessing Officer also collected certain details about the bank deposits from Axis Bank/concerned banker of the assessee. There was totally non- cooperation and non-compliance on the part of the assessee to furnish the required details to the Assessing Officer so as to enable the Assessing Officer to determine the true and correct income of the assessee. Further, we find that the Assessing Officer estimated the net profit @5% on gross receipts without any basis and without consulting any records either of the assessee’s income in the earlier years or income returned by the other persons having same type of business as that of assessee. The Assessing Officer has not given any basis or reasoning for assessing the net profits of the assessee @5% of the gross receipts on pure estimation I.T.A No.336/Kol/2022 Assessment year: 2017-18 Subhadip Gandhi 5 basis. There was absolutely no effort to collect information or data by the Assessing Officer for estimating the net profits/income of the assessee. No enquiry was made by the Assessing Officer in this respect. 8. The ld. PCIT, however, observed that the data was available to show that in the earlier years, the assessee has returned net profit @15% and 18% in assessment year 2015-16 and assessment year 2016-17 respectively. The ld. PCIT also considered that even in the case of no accounts and presumptive income on ad hoc basis, the minimum net profit should have been determined @8% on gross receipts u/s 44AD of the Act. 9. Now, the contention of the ld. counsel that section 44AD was not applicable as the gross receipts of the assessee were more than the prescribed limit for applicability of provision of section 44AD to determine the income on presumptive basis, in our view, has no force. In this case, the LD. PCIT has not directed the Assessing Officer to determine profits of the assessee as per provision of section 44AD of the Act. The ld. PCIT has just taken note of the provisions of section 44AD to observe that even in the case of no accounts, if the gross receipts are less than the prescribed limit as mentioned under the provisions of section 44AD, even then the minimum net profit should be determined @8% of the gross receipts/turnover. However, the ld. PCIT has restored the matter to the Assessing Officer to frame the assessment afresh after conducting necessary enquiries and even after giving opportunity to the assessee to present his case. Even, as contended by the ld. counsel that the gross receipts are more than the prescribed limit as provided u/s 44AD, the assessee was supposed to maintain his accounts. However, in this case, the assessee has not furnished any details, information/account before the Assessing Officer. The assessee, therefore, cannot be allowed to take benefit of his own wrong. The ld. I.T.A No.336/Kol/2022 Assessment year: 2017-18 Subhadip Gandhi 6 PCIT, in this case, has rightly exercised his revision jurisdiction as per Explanation 2 to section 263(1) which reads as under: “Explanation 2 – for the purpose of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interest of the revenue, if, in the opinion of the Chief Commissioner or Principal Commissioner or Commissioner,- a) The order is passed without making enquiries or verification which should have been made” 10. Since it was a case of no enquiry by the Assessing Officer and even the assessee has failed to furnish the required information to the Assessing Officer for estimation of net profits, therefore, we do not find any reason to interfere with the aforesaid revision order passed by the ld. PCIT. There is no merit in the appeal of the assessee and the same is accordingly hereby dismissed. 11. In the result, the appeal of the assessee stands dismissed. Kolkata, the 10 th November, 2022. Sd/- Sd/- [डॉÈटर मनीष बोरड /Dr. Manish Borad] [संजय गग[ /Sanjay Garg] लेखा सदèय /Accountant Member ÛयाǓयक सदèय /Judicial Member Dated: 10.11.2022. RS Copy of the order forwarded to: 1. Subhadip Gandhi 2. ITO, Ward-3(1), Asansol 3. CIT(A)- 4. CIT- , 5. CIT(DR),