Madan Mohan Paul, Bankura V. I.T.O, Ward - 1, Bankura, Bankura

ITA 337/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48147 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 1993-1994
• Appeal Filed On: 15-02-2010
• Court: TRIBUNAL
• Department Lawyers: H N SINGH
• Assessee Lawyers: S N DUTTA
• Section: 143(3)

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA ( ) BEFORE , /AND , . . !' ) [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE SHR I C. D. RAO, AM] # # # # / I.T.A NOS. 337 & 338/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEARS: 1993-94 & 1994-95 MADAN MOHAN PAUL (PAN-AFTPP 6440 D) ()* /APPELLANT ) VS INCOME-TAX OFFICER, WD-1, BANKURA (+,)*/ RESPONDENT ) FOR THE APPELLANT: SHRI S. N. DUTTA FOR THE RESPONDENT: SHRI H. N. SINGH !- / ORDER PER BENCH: THESE TWO APPEALS FILED BY ASSESSEE ARE ARISING OUT OF THE ORDERS OF CIT(A)- DURGAPUR IN NOS. 275/CIT(A)/DGP/01-02 AND 77/CIT(A) /DGP/03-04 VIDE DATED 15.10.2009. ASSESSMENTS WERE FRAMED FOR ASSESSMENT YEAR 1993-94 BY A.O. WD-1, BANKURA AND FOR ASSESSMENT YEAR 1994-95 BY A.O. WD -2, BANKURA U/S 143(3) AND U/S.144/143(3)/145(3) OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS THE ACT) VIDE THEIR ORDERS DATED 29.3.1996 AND 31.03.2003 RE SPECTIVELY. 2. THE ONLY ISSUE IN THESE APPEALS OF THE ASSESSEE IS THAT THE LOWER AUTHORITIES HAVE ERRED IN CONFIRMING THE ADDITION DESPITE THE FACT T HAT THE BOOKS OF ACCOUNTS WERE NOT REJECTED BY ASSESSING OFFICER. FOR REJECTION OF BO OKS OF ACCOUNT THE ASSESSEE RAISED GROUND NO. 4 IN ITA NO. 337 OF 2010 FOR ASSESSMENT YEAR 1993-94, WHICH READS AS UNDER: 4 .THE ASSESSING OFFICER, IN HIS ORDER DATED 29.03.96 , POINTED OUT NO DAY STOCK REGISTER IS MAINTAINED IS THE FACT AND NOT DISPUTE D. THE ASSUMPTION OF SALE OUTSIDE THE BOOKS OF ACCOUNT CANNOT BE TENABLE IN THE EYES OF L AW. THE POINT IS TO BE THAT THE BOOKS OF ACCOUNT HAS NOT BEEN REJECTED BY THE ITO. EXPLA NATION OF CLOSING STOCK DATED 29.3.96 WAS FILED TO ITO AS WELL AS CIT(A). BESIDE S GROUNDS OF APPEAL TO CIT(A), ONE SUPPLEMENTARY SUBMISSION WAS FILED WRITTEN SUBMISSI ON TO CIT(A) WAS FILED. WRITTEN SUBMISSION TO CIT(A) WAS FILED ON 17.2.2009. ORDE R WAS PASSED BY CIT(A) ON 15.10.2009, AFTER THE LAST HEARING MADE ON 17.02.20 09. AS SUCH DELAY IN PASSING ORDER IS THE POINT ALSO TO BE CONSIDERED BY THE HIGHER AU THORITY TO MEET THE ENDS OF JUSTICE. ITA NOS.337&338/K/ 2010 MADAN MOHAN PAUL A.Y. 1993-94 & 1994-95 2 3. FOR A.Y. 1994-95 IN ITA NO. 338/KOL/2010 THE ASS ESSEE CONTENDED THAT THE ASSESSMENT WAS FRAMED U/S. 144 R.W.S. 143(3) R.W.S. 145(3) WITHOUT REJECTING THE BOOKS OF ACCOUNT. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSMENT WAS FRAMED U /S. 143(3) AND ASSESSING OFFICER FOUND CERTAIN DEFECTS IN THE TRADING ACCOUNT BY STA TING THAT SINCE THERE IS NO DAY TO DAY STOCK REGISTER MAINTAINED, THE ASSESSEES PROFIT UP TO FEBRUARY COMES TO RS.1,95,095/-. HE DREW HIS OWN P & L ACCOUNT FROM THE BOOKS OF ACC OUNT BUT COULD NOT POINT OUT ANY DEFECT IN THE BOOKS OF ACCOUNT EXCEPT THAT THE ASSE SSEE IS NOT MAINTAINING DAY TO DAY STOCK REGISTER. THE CIT(A) HAS ALSO NOT GONE INTO THE ISSUE BUT CONFIRMED THE ESTIMATION OF PROFIT BY STATING IN PARA 4 AS UNDER: 4. THE LEARNED A/R STATED THAT THE ASSESSEE HAD PR ODUCED ITS CASH BOOK LEDGER AND ALL RELEVANT VOUCHERS AND HENCE THERE WAS NO JU STIFICATION FOR DETERMINING THE INCOME BY ESTIMATE. IT WAS ALSO STATED THAT EVE N IF ESTIMATION WAS RESORTED TO, THE GP RATE ADOPTED WAS VERY HIGH AS WOULD BE APPAR ENT FROM THE ASSESSEES EARLIER YEARS RECORD AND OTHER COMPARATIVE CASES. I HAVE CONSIDERED THE MATTER. AS REGARDS THE A.OS RESORTING TO ESTIMATION, I AM OF THE OPINION THAT ONCE THE BOOK RESULTS WERE FOUND TO BE UNRELIABLE, THE A.O. HAD NO OPTION BUT TO RESORT TO ESTIMATION OF INCOME. THE ANDHRA PRADESH HIGH COURT , IN THE CASE OF G.K. PADMARAJU VS. CIT 37 ITR 365 HAS HELD THAT IF THERE WERE SEVERAL DISCREPANCIES/ALTERATIONS ETC. IN THE BOOKS, ESTIMA TE OF INCOME WAS VALID. THE PATNA HIGH COURT IN THE CASE OF CIT VS. WARASAT HUS SAIN 171 TR 405 HAS HELD THAT ASSESSMENT BY ESTIMATE IS ONE OF THE KNOWN PRO CESSES OF ASSESSMENT IN THE TAXATION WORLD. THEIR LORDSHIPS OBSERVED WHERE THE ASSESSEE CONCEALED RELEVANT MATERIAL/EVIDENCE, THE REVENUE HAS NO OPTION BUT TO MAKE A BEST JUDGMENT ASSESSMENT BY ESTIMATE. I, THEREFORE, HOLD THAT THE A.O. RIGHTLY RESORTED TO ESTIMATION OF PROFITS FOR DETERMINING TOTAL INCOME. EVEN THE CIT(A) IN ASSESSMENT YEAR 1994-95 HAS STAT ED THAT ASSESSING OFFICER FOUND MANY DISCREPANCIES IN THE CASH BOOK AND LEDGER AND THE DISCREPANCIES FOUND WERE CONFIRMED FROM THE PARTIES FROM WHOM THE ASSESSEE H AD TRANSACTION. WE FIND THAT THE ASSESSEE WAS NOT PROVIDED ANY OPPORTUNITY TO CROSS EXAMINE THESE PARTIES WHO HAVE CONFIRMED THE DIFFERENCES IN BALANCES. EVEN THE AO HAS NOT ALLOWED OPPORTUNITY TO THE ASSESSEE BY STATING THAT THIS BEING A TIME BARRED A SSESSMENT AND ASSESSEE CANNOT BE GIVEN OPPORTUNITY EXCEPT ON 25.3.2003. FROM THE RE CORDS IT DOES NOT APPEAR THAT THE ASSESSEE IS ALLOWED OPPORTUNITY AND ASSESSMENT WAS COMPLETED AS BEST JUDGMENT BASED ITA NOS.337&338/K/ 2010 MADAN MOHAN PAUL A.Y. 1993-94 & 1994-95 3 ON MATERIAL AVAILABLE ON RECORDS. WE FIND THAT IN CASE THE AO WANTS TO MAKE ESTIMATE A REASONABLE ESTIMATE SHOULD HAVE BEEN MADE. TAKING INTO CIRCUMSTANCES AND FACTS IN THE PRESENT CASE, WE ESTIMATE THE INCOME IN ASSESSMENT YEAR 1993-94 AT RS.1,10,000/-, WHICH WILL COVER THE DIFFERENCE IN CLOSING STOCK AN D IN ASSESSMENT YEAR 1994-95 AT RS.50,000/- AS AGAINST THE RETURNED INCOME OF RS.41 ,990/- AND RS.35,250/- IN THE RESPECTIVE ASSESSMENT YEARS. THE AO IS DIRECTED TO RECOMPUTE THE INCOME ACCORDINGLY AND THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED AS INDICATED ABOVE. 5. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE P ARTLY ALLOWED. 6. ORDER IS PRONOUNCED IN OPEN COURT ON 31.5.2011 SD/- SD/- . . , !' . . . . , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( ' ' ' ') )) ) DATED 31ST MAY, 2011 /0 $12 3 JD.(SR.P.S.) !- 4 +5 6!5&7- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT SHRI MADAN MOHAN PAUL, PROP. M/S. PAUL SURGICAL DOLETOLA, BANKURA-722 101. 2 +,)* / RESPONDENT, ITO, WARD-1, BANKURA . 3 . -$ / CIT, DURGAPUR. 4. -$ ( )/ CIT(A), DURGAPUR. 5 . >? +$ / DR, KOLKATA BENCHES, KOLKATA ,5 +/ TRUE COPY, !-$@/ BY ORDER, 2 /ASSTT. REGISTRAR .