Shri Bijay Kumar Shaw, Kolkata V. ITO, Ward - 40(1), Kolkata, Kolkata

ITA 364/KOL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2601 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2010
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 17-02-2010
• Court: TRIBUNAL
• Department Lawyers: O P AGARWAL
• Assessee Lawyers: I BAN ERJEE
• Keywords: Opportunity of being heard; Permanent establishment
• Section: 68; 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL 'A BENCH : KOLKATA (BEFORE HONBLE SRI D.K.TYAGI, J.M. AND HONB LE SRI B.C.MEENA, A.M.) I.T.A. NO. 364 /KOL/2010 ASSESSM ENT YEAR : 2006-07 SRI BIJAY KUMAR SHAW VS I TO, WARD 40(1), KOLKATA (PAN NO. BEWPS 0993 H) (APPELLANT) (RESPONDENT) APPELLANT BY : SRI I. BAN ERJEE. RESPONDENT BY : SRI O.P.AGARW AL, CIT (DR). O R D E R PER SHRI B.C.MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE CIT(A)-XII, KOLKATA DATED 29.11.2009 FOR THE ASSESSMENT YEAR 2006-07. 2. GROUNDS RAISED ARE AS FOLLOWS : 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) WAS NOT JUSTIFIED IN DISMISSING THE APPEAL O F THE APPELLANT AND THEREBY UPHOLDING THE ASSESSMENT U/S 144 AS WELL AS THE ADDITIONS AND DISALLOWANCES , BASED ON ARBITRARY, MECHANICAL AND SUPERFICIAL OBSERVATIONS AND CONCLUSIONS WITHOUT EVER HAVING CONFUTED OR DISPROVED THE EXPLANATIONS AND SUBMISSIONS PROVIDED IN THIS BEHALF. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.187763/- REPRESENTING OPENING CAPITAL, U/S 68 AFTER ENDOR SING THE DISBELIEF OF THE VERY FACT AND NATURE OF BUSINESS ACTIVITIES PURSUE D BY THE APPELLANT IN PRIOR YEARS AND THE EXPLANATION AS TO SOURCES THEREOF ON FRIVOLOUS , INCONSISTENT AND ARBITRARY GROUNDS. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) WAS NOT JUSTIFIED IN MAKING AN ARBITRARY ADDITION OF RS.12,000/- UNDER THE HEAD DRAWING WITHOUT BRINGING ANY EVIDEN CE TO THE CONTRARY GIVEN BACKGROUND OF THE APPELLANT. 4. THAT YOUR APPELLANT DOES HEREBY CRAVE LEAV E OF FURNISHING ADDITIONAL GROUND OR GROUNDS OR TO MODIFY OR DELETE ANY OF THE GROUNDS ON OR BEFORE THE FINAL DATE OF HEARING OF THIS APPEAL PETITION . 3. WHILE PLEADING ON BEHALF OF THE ASSESSEE, TH E LEARNED A.R. SUBMITTED THAT THE CIT(A) HAS WRONGLY CONFIRMED THE ADDITION OF RS.1,87,764 WHICH WAS OPENING CAPITAL FOR THE YEAR UNDER CONSIDERATION. THE COPY OF TRADING AND PROFIT 2 AND LOSS ACCOUNT FOR THE FINANCIAL YEAR 1999-2000 TILL THE FINANCIAL YEAR 2004-05 WERE FILED. THE ASSESSEE WAS PURCHASING THE WASTE POLYTHENE FROM THE GARBAGE COLLECTORS AND RESALE THE SAME TO DIFFERENT CU STOMERS BY WAY OF FERRYING DOOR TO DOOR. THE ASSESSEE WAS A HAWKER. THE ASSESSEE WAS NOT HAVING ANY FIXED PLACE OF BUSINESS AND NOT HAVING ANY TRADING LIC ENCE. THE ASSESSEE STARTED HIS BUSINESS SINCE APRIL, 1999 WITH THE INITIAL CAPITA L OF RS.18,000. WHATEVER PROFIT EARNED, THE SURPLUS IS CLUBBED BACK TO THE CAPI TAL OF THE BUSINESS IN ALL THESE FIVE YEARS. THE A.O. IS NOT JUSTIFIED IN MAKING THE A DDITION OF OPENING CAPITAL ON THE FIRST DAY OF THE FINANCIAL YEAR WHICH IS ALSO NOT POSSIBLE TO EARN IN A DAY , I.E. THE FIRST DAY OF THE FINANCIAL YEAR UNDER CONSIDERATION .. THUS THE ADDITION SUSTAINED DESERVES TO BE DELETED. HE FURTHER PLEADED THAT TH E A.O. HAS ALSO MADE ADDITION FOR LOW DRAWINGS OF RS.12,000. HE PLEADED THAT THE ASSESSEE IS A BACHELOR AND THE DRAWINGS SHOWN FOR THE YEAR UNDER CONSIDERATI ON WERE OF RS.48,000 WHICH IS EVIDENT FROM PAGE 10 OF THE PAPER BOOK AND WHICH IS QUITE REASONABLE FOR A BACHELOR LIVING ALONE. THERE IS NO JUSTIFICATION FOR MAKING THE ADDITION FOR LOW DRAWINGS. HE ALSO RELIED ON THE FOLLOWING CASE LA WS FOR PASSING ORDER U/S 144 OF THE I.T.ACT : 1. ITO VS VIJAYA AUTOMOBILES (243 ITR 874) (KE RALA) 2. BRIJ BHUSHAN LAL PARDUMAN KUMAR VS CIT (115 ITR 524) (SC) FOR THE ADDITION OF INITIAL CAPITAL HE RELIED UPON THE FOLLOWING JUDGMENTS : 1. CIT VS USHA STUD AGRICULTURAL FARMS LTD. (301 ITR 384) (DEL) 2. ZORA SINGH VS CIT (173 TAXMAN 76) (PUNJ. & HARYANA) AND HE PLEADED THAT THE ESTIMATE SHOULD BE A REASON ABLE ESTIMATE. BY PASSING ORDER U/S 144 A.O. SHOULD NOT HAVE ASSESSED AT UN REASONABLE FIGURE AND THE EARNING OF THE EARLIER YEARS WHICH IS AVAILABLE IN THE STATEMENT SUBMITTED BEFORE THE A.O. SHOULD NOT BE REJECTED. 4. THE LEARNED D.R. RELIED ON THE ORDERS OF THE A UTHORITIES BELOW. 5. AFTER HEARING BOTH THE SIDES AND GOING THROUGH THE FACTS OF THE CASE, WE FIND THAT THE ASSESSEE HAS SUBMITTED TRADING AND PROFIT & LOSS A/C FOR THE PAST 6 YEARS. HOWEVER, NO OTHER DOCUMENTARY EVIDENCE R EGARDING THE ACTUAL BUSINESS CARRIED OUT BY THE ASSESSEE WAS SUBMITTED IN SUPP ORT OF HIS PROFIT AND LOSS ACCOUNT AND THE BALANCE SHEET. IN THE YEAR UNDER CONSIDERA TION THE OPENING CAPITAL HAS 3 BEEN SHOWN AT RS.1,87,763 WHICH HAS BEEN ASSESSED AS INCOME OF THE CURRENT YEAR. THERE IS NO FINDING ON THE RECORDS WHICH SH OWS THAT ON WHICH DATE THIS CAPITAL WAS UTILIZED FOR THE BUSINESS PURPOSES FOR THE FIRST TIME DURING THE YEAR. THE CASE LAWS RELIED UPON BY THE ASSESSEE ARE AL SO NOT OF MUCH HELP AS THE FACTS OF THIS CASE WERE COMPLETELY DIFFERENT FROM THE ASSESSEES CASE. THE A.O. HAD NOT ESTIMATED THE TURNOVER OR PROFIT. HE HAD ADDE D THE AMOUNT WHICH HAD BEEN PLUGGED INTO THE BUSINESS AS INITIAL CAPITAL. IT IS PECULIAR THAT IN ALL THESE BALANCE SHEETS IN THE PAST YEARS, THE ASSESSEE HAS NOT DISCLOSED ANY BANK ACCOUNT, ALTHOUGH HE IS A RESIDENT OF 113 R, DR. S.C.BANERJEE ROAD, KOLKATA- 700 010. IN THE INTEREST OF JUSTICE AND EQUITY WE RESTORE BACK THE ISSUES TO THE FILE OF THE A.O. TO DECIDE AFRESH AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD. 6. AS FAR AS THE ADDITION OF LOW DRAWINGS IS CON CERNED AFTER HEARING BOTH THE SIDES ON THE ISSUE WE FIND THAT THE ASSESSEE WAS A BACHELOR AND DURING THE YEAR HE HAS SHOWN THE WITHDRAWAL OF RS.48,000 WHICH APPEAR S TO BE SUFFICIENT. IN VIEW OF THESE WE ALLOW THIS GROUND. 6. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7.05.2010 SD/- SD/- (D.K.TYAGI) (B.C.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07.05.2010 COPY FORWARDED TO :- 1) ITO, WARD 40(1),KOLKATA. 2) SRI BIJAY KUMAR SHAW, 113-R, DR. S.C.BANERJEE ROAD, KOLKATA. 3) CIT(A), KOLKATA. 4) CIT, KOLKATA. 5) D.R., ITAT, KOLKATA. BY ORDER ASSISTANT REGISTRAR I.T.AT., KOLKATA. BCD