Arun Kumar Choudhury, Bhubaneswar V. ITO, Berhampur

ITA 342/CTK/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7173 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 29-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 23-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: MIHIR KUMAR SAHU

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO.342/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 ARUN KUMAR CHOUDHURY, 3 RD CANAL STREET, GANDHI NAGAR, BERHAMPUR. VS. ITO, WARD - 1, BERHAMPUR PAN/GIR NO. ACLPC 8032 H (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI MIHIR KUMAR SAHU, AR REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 29 /03 / 2017 DATE OF PRONOUNCEMENT : 2 9 /03 / 2017 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 1, BHUBANESWAR , DATED 30.4.2015 , FOR THE ASSESSMENT YEAR 2010 - 2011 . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LEARNED CIT (A) HAS ERRED IN UPHOLDING THE CONTENTI ON OF LEARNED AO WHO HAS MIS - APPRECIATED/MISCONSTRUED THE FACTS AND HIS CONCLUSION THAT THE ARRANGEMENT OF POOLING TURNOVER AND BUSINESS BETWEEN THE FIRM AND ITS PARTNER KARTA IS NOT ACCEPTABLE. THIS HAS CLEARLY LED TO DOUBLE TAXATION AS THE FOLLOWING INCOME IS INCLUDED IN REVENUE OF THE FIRM AND THIS DISALLOWANCE WILL LEAD TO DOUBLE TAXATION AND HENCE THUS HIS AFORESAID CONCLUSION IS UNJUSTIFIED, EXCESSIVE, ARBITRARY, ERRONEOUS AND BAD IN LAW. TH ESE INCOME ARE DETAILED BELOW : 2 ITA NO.342/CTK/2015 ASSESSMENT YEAR :2010 - 2011 A. AN INTEREST INCOME DERIVED FROM THE DEPOSITS MADE FROM THE FUNDS SOURCED FROM THE FIRM WERE RIGHTLY ADDED TO THE FIRM INCOME AND OFFERED TO TAX AS A MATTER OF PRACTICE AND PRECEDENCE. THE LEARNED CIT HAS ERRED IN CONFIRMING THE IMPROPER ADDITION MADE BY THE LEARNED ITO OF RS 12,93,062 AS INTEREST INCOME ALTHOUGH THE SAME WAS INCLUDED IN THE INCOME OF THE FIRM SOURCE OF THE FUNDS BEING TAKEN FROM THE FIRM. THIS CLEARLY LED TO DOUBLE TAXATION AND HENCE BAD IN LAW. B. THE A SSESSEE PROCURED THE CONTRACT BUSINESS AS TECHNICAL ENTREPRENEUR LICENSE HOLDER AND CLUBBED IT WITH THE FIRM TURNOVER AS A MATTER OF PRACTICE AND PRECEDENCE. THE LEARNED CIT HAS ERRED IN CONFIRMING THE IMPROPER ADDITION MADE BY THE LEARNED ITO OF RS 3 8,365 / - AS 8% INCOME ON CONTRACT TURNOVER EXECUTED AND INCLUDED IN THE TURNOVER OF THE FIRM. THIS CLEARLY LED TO DOUBLE TAXATION AND HENCE BAD IN LAW. 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE ASSESSING OFFICE R FOUND FROM FORM 26AS STATEMENT TH A T THE ASSESSEE HAD RECEIVED INTEREST OF RS.7,61,960/ - FROM BANKS AND GROSS CONTRACT RECEIPTS AMOUNTING TO RS.4,79,567/ - FROM THE EXECUTIVE ENGINEER, GANJAM R& B DIVISION - II, BERHAMPUR. THE ASSESSEE DID NOT DISCLOSE INCOME FROM THESE SOURCES IN THE RETURN OF INCOME. THE REFORE, THE ASSESSING OFFICER ADDED RS.12,93,062/ - TO THE INCOME OF THE ASSESSEE. HE FURTHER ESTIMATED THE INCOME AT RS.38,365/ - @ 8% OF THE GR OSS CONTRACT RECEIPTS OF RS. 4,79,567/ - AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 4. BEFORE THE ASSESSING OFFICER, THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A PARTNERSHIP FIRM M/S. JAGANNATH CHOUDHURY AND THE INTEREST AMOUNT OF RS.12,93,062/ - IS INCLUDED IN THE TOTAL INTEREST OF RS.59,74,435/ - 3 ITA NO.342/CTK/2015 ASSESSMENT YEAR :2010 - 2011 WHICH HAS BEEN OFFERED TO TAX IN THE HANDS OF THE FIRM. IT WAS ALSO SUBMITTED THAT THE CONTRACT RECEIPTS OF RS.4,79,567/ - HAS ALSO BEEN INCLUDED IN THE GROSS CONTRACT RECEIPTS OF THE FIRM. THE ASSESSEE DID NOT FURNISH ANY EVIDENCE FOR THE SAID CLAIMS AND, THEREFORE, THE EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER. 5. BEFORE THE CIT(A), THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER. IT WAS SUBMITTED THAT THE ASSESSEE IS AN A - CLASS ENGINEER CONTRACTOR AND IS A PARTNER IN THE FIRM M/S. JAGANNATH CHOUDHU RY. THE INTEREST ADDED BY THE ASSESSING OFFICER AND THE CONTRACT RECEIPTS CONSIDERED IN THE HANDS OF THE APPELLANT ARE ALREADY OFFER ED TO TAX IN THE HANDS OF THE FIRM M/S. JAGANNATH CHOUDHURY AND, THEREFORE, THE A DDITIONS MADE BY THE ASSESSING OFFICER AMOUNTS DOUBLE ADDITION. IT WAS FURTHER STATED THAT AS PER THE AGREEMENT BETWEEN THE FIRM M/S. JAGANN ATH CHOUDHURY AND THE ASSESSEE AS A PARTNER, THE ASSES SEE WAS PROHIBITED TO CARRY ON COMPETING BUSINESS SEPA RATELY AND IF HE GETS ANY INDEPENDENT BUSINESS, THE SAME SHALL BE TRANSFER RED TO THE FIRM. IT WAS SUBMITTED THAT THE CONTRACT RECEIPTS CONSIDERED IN THE HANDS OF THE ASSESSEE HAD BEEN TRANSFERRED TO THE FIRM AND THE INTEREST RECEIPT WAS IN RESPECT OF SECURITY DEPOSITS AND PERFORMANCE GUARANTEE GIVEN OUT OF THE FUNDS OF THE FIRM AND HENCE, INTEREST HAD BEEN OFFERED TO TAX IN THE HANDS OF THE FIRM M/S. JAGANNATH CHOUDHURY. 4 ITA NO.342/CTK/2015 ASSESSMENT YEAR :2010 - 2011 6. THE CIT( A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER. THE ASSESSING OFFICER IN HIS REMAND REPORT DATED 8.10.2013 STATED THAT M/S. JAGANNATH CHOUDHURY HAS OFFERED INTEREST OF RS.59,74,435/ - AND AS PER THE SUB - LEDGER, THE SAME INCLUDES INTEREST OF RS.14 ,87,328/ - ON ACCOUNT OF SRI ARUN KUMAR CHOUDHURY. THE AMOUNT DOES NOT EXACTLY TALLY WITH THE INTEREST ASSESSED IN THE HANDS OF THE ASSESSEE. IT WAS FURTHER STATED THAT AS PER THE RE - CONSTITUTED PARTNERSHIP DEED, ARUN KUMAR CHOUDHURY(HUF) IS A PARTNER AND T HE ASSESSEE IS NOT A PARTNER IN THE FIRM M/S. JAGANNATH CHOUDHURY WHICH CONTRADICTS THE ASSESSEE'S SUBMISSIONS DURING THE ASSESSMENT PROCEEDINGS AS WELL AS APPEAL PROCEEDI NGS. IN VIEW OF THE SAME, THE ASSESSING OFFICER OPINION ED THAT THE ASSESSEE IS NOT CO NTRACTUALLY BOUND TO INCLUDE OR TRANSFER THE CONTRACT BUSINESS SOLICITED OR ACQUIRED BY HIM TO THE FIRM M/S. JAGA NNATH CHOUDHURY. THE CONTRACT IS BETWEEN M/S. JAGANNATH CHOUDHURY AND THE PARTNER ARUN KUMAR CHOUDHURY(HUF) WHICH REQUIRES THE LATTER TO POO L T HE BUSINESS OR TRANSFER THE BUSINESS TO THE FIRM M/S. JAGANNATH CHOUDHURY, HENCE THERE IS NO RESTRAINT ON THE ASSESSEE IN CARRYING OUT INDEPENDENT BUSINESS OUTSIDE THE BUSINESS OF THE FIRM M/S. JAGANNATH CHOUDHURY. 7. THE CIT(A) AFTER CONSIDERING THE SUBM ISSIONS OF THE ASSESSEE AND ALSO THE REMAND REPORT HAS HELD THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS DURING THE COURSE OF APPEAL HEARING SUBMITTED THAT THAT THE ASSESSEE IS A PARTNER IN THE FIRM M/S. JAGANNATH 5 ITA NO.342/CTK/2015 ASSESSMENT YEAR :2010 - 2011 CHOUDHURY IS FALSE AND MISLEA DING AS HAS BEEN FOUND BY THE ASSESSING OFFICER IN THE REM AND REPORT. THE ASSESSEE IS NOT UNDER CONTRACTUAL OBLIGATION TO TRANSFER ANY BUSINESS TO THE FIRM M/S. JAGANNATH CHOUDHURY. HENCE, THE CONTRACT RECEI PTS IN THE NAME OF THE ASSESSEE HAVE TO BE CONSIDER ED IN THE HANDS OF THE ASSESSEE . IT IS NOT THE CASE THAT THE FIRM M/S. JAGANNATH CHOUDHURY HAS EXECUTED THE CONTRACT TA KEN IN THE NAME OF THE ASSESSEE. THE ASSESSEE HAS RECEIVED INTEREST FROM BANKS IN RESPECT OF VARIOUS DEPOSITS IN HIS NAME AND HE IS NOT UNDER CONTRACTUAL OBLIGATION TO TRANSFER SUCH INCOME TO THE FIRM M/S. JAGANNATH CHOUDHURY. IT IS ALSO FOUND THAT TDS HAS BEEN MADE IN RESPECT OF INTEREST PAID IN THE NAME OF THE ASSESSEE AS PER 26AS STATEMENT. THE AGREEMENT BETWEEN THE FIRM AND THE PARTNER ARUN KUMAR CHOUDHURY (HUF) CANNOT BE BINDING ON THE ASSESSEE . THE RECORD SHOWS THAT THE ASSESSEE HAS RECEIVED INTEREST AND EXECUTED CONTRACTS IN HIS NAME AND TDS MADE ON THE INTEREST IS CREDITED IN THE NAME OF THE ASSESSEE. IN VIEW OF THE SAME, THERE IS NO REASON THAT INTEREST OF RS.12,93,062/ - SHOULD NOT BE ASSESSED IN THE HANDS OF THE ASSESSEE. SINCE THE CONTRACT RECEIPTS OF RS.12,93,062/ - HAS BEEN RECEIVED BY THE ASSESSEE FOR THE CONTRACT WORKS EXECUTED BY HIM AND NO ACCOUNTS HAVE BEEN SUBMITTED FOR THE SAME, THE ASSESSING OFFICER IS JUSTIFIED IN ESTIMATING INCOME OF RS.38,365/ - @ 8% WHICH IS REASONABLE. HENCE, HE CONFIRMED THE ADDITION OF RS.12,93,062/ - AND DISMISSED THE APPEAL OF THE ASSESSEE. 6 ITA NO.342/CTK/2015 ASSESSMENT YEAR :2010 - 2011 8. BEFORE ME, LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 9. WHEN ASKED BY THE BENCH ABOUT THE FACT AS OBSERVED BY THE ASSESSING OFFICER IN HIS REMAND REPORT DATED 8.10.2013 SUBMITTED TO THE CIT(A) THAT AS PE R THE RE - CONSTITUTED PARTNERSHIP DEED, ARUN KUMAR CHOUDHURY(HUF) IS A PARTNER AND THE ASSESSEE IS NOT A PARTNER IN THE FIRM M/S. JAGANNATH CHOUDHURY AND, THEREFORE, THE ASSESSEE IS NOT CONTRACTUALLY BOUND TO INCLUDE OR TRANSFER THE CONTRACT BUSINESS SOLICI TED OR ACQUIRED BY HIM TO THE FIRM M/S. JAGA NNATH CHOUDHURY, LD A.R. OF THE ASSESSEE CONCEDED TO THIS FACT. FURTHER, NO SPECIFIC ERROR OR MISTAKE IN THE FINDINGS OF THE CIT(A) COULD BE POINTED OUT BY LD A.R. OF THE ASSESSEE. THEREFORE, I AM OF THE CONSID ERED VIEW THAT NO INTERFERENCE WITH THE ORDER OF THE CIT(A) IS CALLED FOR AND GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED . ORDER PRO NOUNCED IN THE OPEN COURT ON 29 /03 /2017 IN THE PRESENCE OF PARTIES. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 2 9 /03 /2017 B.K.PARIDA, SPS 7 ITA NO.342/CTK/2015 ASSESSMENT YEAR :2010 - 2011 COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : ARUN KUMAR CHOUDHURY, 3 RD CANAL STREET, GANDHI NAGAR, BERHAMPUR. 2. THE RESPONDENT: ITO, WARD - 1, BERHAMPUR 3. THE CIT(A) - 1, BHUBANESWAR. 4. PR.CIT - 1, BHUBANESWAR. 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//