Shri Birendra Prasad, Bokaro V. ITO WARD-3(1), Bokaro

ITA 366/RAN/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9666 (ITAT-RANCHI)
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 17-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MONDAL
• Assessee Lawyers: S K PODDAR
• Keywords: Business income
• Section: 40A(3); 234B

Judgement Text

1 ITA NO. 366 /RAN/ 20 1 6 IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI N.S.SAINI , ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE , JUDICIAL MEMBER ITA NO. 366 /RAN/201 6 A.Y. : 200 8 - 200 9 SRI BIRENDRA PRASAD, PROP: M/S NEW MAA GAYTRI STORES, SADAR BAZAR, CHAS , BOKARO - 837013 V S ITO, WARD - 3 ( 1 ), BOKARO P AN NO. : A IEPP 0099 Q (APPELLANT ) . RESPONDENT ASSESSEE BY : SHRI S.K.PODDAR & DEVESH PODDAR , ADV REVENUE BY :SHRI P.K.MONDAL , JCIT DATE OF HEARING : 2 9 . 05 .201 8 D ATE OF PRONOUNCEMENT : 31 . 05 .201 8 O R D E R PER PAVAN KUMAR GADALE, JM : TH IS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF CIT ( A ) , HAZARIBAG , DATED 07.01.2016 FOR THE ASSESSMENT YEAR 2008 - 09 , WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GRO UNDS OF APPEAL : - 1 . FOR THAT LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING AN ADDITION OF RS. 14,80,000/ - MADE U/S 40A(3) ON THE BASIS OF ACCOUNT OBTAINED FROM THE MANUFACTURE OF PATAKA AT SHIVKASHI. NO REGULAR OF BOOKS OF ACCOUNTS WERE MAINTAINED BY THE APPE LLANT. APPELLANT PURCHASED PATAKA AT BOKARO STEEL CITY FROM THE AGENTS OF THE MANUFACTURERS SELLING THE PRODUCTS ONLY ON CASH BASIS NOT HAVING BANK ACCOUNT IN BOKARO. THE AMOUNT COLLECTED WAS REMITTED BY THEM TO THE MANUFACTURERS. 2 . FOR THAT THE APPELLANT F ILED THE RETURN OF INCOME BY ESTIMATING PROFIT FROM RETAIL BUSINESS AT AROUND 5.5% OF THE TURNOVER ESTIMATED OR FOUND BY THE DEPARTMENT IN COURSE OF SURVEY PROCEEDINGS. THE PROFIT DISCLOSED ON ESTIMATE WAS ACCEPTED. 2 ITA NO. 366 /RAN/ 20 1 6 HOWEVER, LD. A.O. MADE ADDITION FOR THE ALLEGED CASH PAYMENT AS FOUND IN THE BOOKS OF THE MANUFACTURERS. 3 . FOR THAT LD. CIT(A) WAS NOT JUSTIFIED IN BRUSHING ASIDE NUMBER OF DECISIONS SUBMITTED TO SUGGEST THAT PAYMENT MADE FOR PURCHASE OF PATAKA BY THE APPELLANT TO THE AGENT OF THE MANUFACTURER IN CASH, CANNOT BE DISALLOWED U/S 40A(3). APPELLANT HAD NOT MAINTAINED REGULAR BOOKS OF ACCOUNTS. FURTHER, INCOME OF THE APPELLANT WAS ESTIMATED. SINCE APPELLANT HAD NOT MAINTAINED ACCOUNTS, THEY WERE NOT AUDITED. THE ADDITION MADE, THEREFORE, IS UNJUSTIFI ED, ILLEGAL AND INCORRECT. 4 . FOR THAT INTEREST U/S 234A AND 234B CAN ONLY BE CHARGED ON THE RETURNED INCOME AND NOT ON THE ASSESSED INCOME FOLLOWING THE DECISION OF HON'BLE JHARKHAND HIGH COURT. 5. FOR THAT OTHER GROUNDS IN DETAIL WILL BE ARGUED AT THE TIM E OF HEARING. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DERIVES INCOME FROM CRACKER BUSINESS IN THE NAME AND STYLE OF M/S NEW MAA GAYATRI STORES, SADAR BAZAR, CHAS, BOKARO. A SURVEY U/S.133A OF THE ACT WAS CONDUCTED BY THE DDIT(INV.) UNIT - I RANCHI ON 02.11.2010 IN THE BUSINESS PREMISES OF THE ASSESSEE. LATER, THE AO ISSUED NOTICE U/S.148 ON 26.04.2012 AFTER RECORDING THE REASON ON ACCOUNT OF SUPPRESSION OF PURCHASES. IN COMPLIANCE, ASSESSEE FILED RETURN ON 22.05.2012 WITH TOTAL INCOME OF RS.3,32,800 / - FROM CRACKER BUSINESS ON RETAIL BASIS U/S.44AF OF THE ACT ON TOTAL SALES OF RS.61,30,046/ - AND AGRICULTURE INCOME OF RS.15,860/ - . THEREAFTER THE ASSESSMENT WAS COMPLETED U/S.147/143(3) OF THE ACT ON 18.03.2013 AT TOTAL INCOME OF RS.4,55,400/ - ON ESTIMAT E BASIS. SUBSEQUENTLY THE CIT U/S.263 OF THE ACT HAS CANCELLED THE ASSESSMENT WITH DIRECTION TO THE AO TO MAKE A FRESH ASSESSMENT. ACCORDINGLY NOTICE U/S.142(1) OF THE ACT WAS ISSUED. IN RESPONSE, LD.AR OF THE ASSESSEE APPEARED AND PRODUCED THE RELEVANT DO CUMENTS. THE AO CONSIDERING THE 3 ITA NO. 366 /RAN/ 20 1 6 SUBMISSION OF THE ASSESSEE, MADE ADDITION OF RS.14,80,000/ - U/S.40A(3) AND ASSESSED THE TOTAL INCOME AT RS.18,12,800/ - AND PASSED ORDER U/S.263/143(3)/147 OF THE ACT, DATED 28.01.2016. 3 . AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE HAS FILED AN APPEAL WITH THE CIT(A). IN THE APPELLATE PROCEEDINGS THE ASSESSEE ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS MADE BEFORE THE AO. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AND THE FINDINGS OF AO, DISMISSED THE APPEAL OF THE ASSESSEE. 4 . AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. 5 . LD. AR BEFORE US SUBMITTED THAT THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.14,80,000/ - U/S.40A(3) OF THE ACT. THE AO HAS ESTIMATED THE INCOME AS THE ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNTS AND THE PROVISIONS OF SECTION 40A(3) OF THE ACT SHALL NOT BE APPLICABLE IN THE CASE OF ESTIMATION OF INCOME. THE ORDER PASSED BY THE AO IS A CONSEQUENTIAL ORDER PASSED AS PER THE DIRECTIONS OF THE CIT IN REVISION ORDER WHERE THE ASSESSMENT PASSED U/S.143(3) DATED 18.05.2015 IS CANCELLED AND THE AO IS DIRECTED TO MAKE FRESH ASSESSMENT. LD.AR FILED PAPER BOOK REFERRING TO THE ASSESSMENT ORDER AND THE COPY OF THE ORDER U/S.263 OF THE ACT AND PRAYED FOR ALLOWING THE APPEAL. 6 . CONTRA, L D.DR RELIED ON THE ORDERS OF LOWER AUTHORITIES AND SUBMITTED THAT THE ORDER PASSED BY THE CIT CANCELLING THE ASSESSMENT U/S.143(3) IS IN 4 ITA NO. 366 /RAN/ 20 1 6 ACCORDANCE WITH LAW , THEREFORE, THE AO WAS CORRECT IN MAKING T HE ADDITION U/S.40A(3) OF THE ACT. 7 . WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. PRIMA FACIE, THERE WAS A SURVEY U/S.133 OF THE ACT ON 2.11.2010 AND IN THE COURSE OF SURVEY U/S.133 OF THE ACT IT WAS OBSERVED THAT THE ASSESSEE HAS SU PPRESSED THE PURCHASE AMOUNTING TO RS.63,00,255/ - , WHICH WAS DISCLOSED IN THE RETURN OF INCOME FILED. THEREFORE, THE AO ISSUED NOTICE U/S.147/148 OF THE ACT ON 26.4.2012 AND THE ASSESSEE FILED RETURN IN RESPONSE TO NOTICE ON 22.05.2012 WITH TOTAL INCOME AT RS.3,48,663/ - AND SUBSEQUENTLY THE AO ISSUED NOTICE U/S.143(2)/142(1) OF THE ACT. LD. ARS CONTENTION THAT THE ASSESSEE HAS ALREADY CONSIDERED THESE FACTS IN THE RETURN OF INCOME AND ALSO INCOME HAS BEEN DISCLOSED UNDER THE PROVISIONS OF SECTION 44AF OF T HE ACT ON A TOTAL SALE OF RS.61,30,046/ - AND WE FOUND THAT THE ASSESSEE HAS PRODUCED THE DETAILS PURCHASES, DETAILS OF SALES, UNSECURED LOAN, DETAILS OF FIXED ASSETS, DETAILS OF SUNDRY CREDITORS, DEBTORS AND LEDGER COPIES OF THE PURCHASES OF CRACKERS FROM DIFFERENT PARTIES OF SIVAKASI AND ALSO EXPLAINED THE REASONS FOR DIFFERENCES OF PURCHASES. THE AO FOUND THAT THE ASSESSEE HAS DISCLOSED INCOME U/S.44AF OF THE ACT AND COULD NOT PRODUCE ANY EVIDENCE TO SUBSTANTIATE ITS TURNOVER AS DISCLOSED IN THE BUSINESS INCOME. THEREFORE, THE AO HAS REJECTED THE COPIES OF BANK ACCOUNT, TRADING ACCOUNT AND OTHER DOCUMENTS UNDER THE PROVISIONS OF SECTION 145(3) OF THE ACT AND ESTIMATED INCOME AT 8% ON RS.61,30,046/ - AS NO EVIDENCE WAS PRODUCED TO TREAT THAT THE INCOME BEING BUSINESS 5 ITA NO. 366 /RAN/ 20 1 6 INCOME. WE ON PERUSAL OF THE ASSESSMENT ORDER FOUND THAT THE AO HAS MADE ADDITION ESTIMATING BY 8% ON TOTAL SALES OF RS.61,30,046/ - , WHEREAS THE ASSESSEE HAS DISCLOSED INCOME UNDER 44AF OF THE ACT ON THE SAID INCOME BUT THE NOTICE U/S.148 OF THE ACT WAS ISSUED IN RESPECT OF SUPPRESSION OF PURCHASES AMOUNTING TO RS.63,00,255/ - , WHICH WAS NOT DISCLOSED IN THE RETURN OF INCOME . ACCORDINGLY, WE REMIT THIS ISSUE TO THE FILE OF CIT(A) WHO SHALL EXAMINE AND VERIFY THE DISPUTED ISSUE AND PASS A REASONED O RDER AFTER AFFORDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE AND THE ASSESSEE SHALL COOPERATED IN SUBMITTING THE INFORMATION. THUS, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8 . IN THE RESULT, APPEAL OF THE ASSESS EE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31 / 05 /201 8 SD/ - SD/ - ( N.S.SAINI ) ( PAVAN KUMAR GADALE ) ACCOUNTANT MEMBER JUDICIAL MEMBER RANCHI, DATED 31 / 05 /201 8 PRAKASH KUMAR MISHRA , SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, //TRUE COPY// SR.PS, ITAT, RANCHI 1. THE APPELLA NT SRI BIRENDRA PRASAD, PROP: M/S NEW MAA GAYTRI STORES, SADAR BAZAR, CHAS, BOKARO - 837013 2. THE RESPONDENT ITO, WARD - 3(1), BOKARO 3. THE CIT(A) CONCERNED 4. CIT , CONCERNED 5. DR, ITAT, RANCHI 6. GUARD FILE.