Mamata Sipani, Cuttack V. ITO, Cuttack

ITA 38/CTK/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6336 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-04-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 18-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: B K MAHAPATRA
• Section: 142(1); 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK . . , . . , BEFORE SHRI P.K.BANSAL , AM & SHRI D.T.GARASIA , JM ./ ITA NO. 3 8 / CT K /20 1 3 ( / ASSESSMENT YEAR : 200 8 - 0 9 ) SMT. MAMATA SIPANI , PROP. M/S SURENDRA KUMAR SURESH KUMAR, PITHAPUR, PO - BAXI BAZAAR, CUTTACK VS. ITO WARD - 2(3), CUTTACK ./ ./ PAN/GIR NO. : A JCPS 2917 F ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI B.K.MAHAPATRA /REVENUE BY : SHRI S.C.MOHANTY / DATE OF HEARING : 2 4 TH APRIL , 201 4 / DATE OF PRONOUNCEMENT : 01/05 /2014 / O R D E R PER BENCH : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) DATED 31 - 10 - 2012 BY TAKING THE FOLLOWING GROUNDS : - 1. THAT THE ORDER DATED 31.10.2012 PASSED BY THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS) IN DISMISSI NG THE APPEAL BEFORE HIM IS AGAINST PRINCIPLES OF NATUR AL JUSTICE, CONTRARY TO FACTS, ARBITRARY, ERRONEOUS AND BAD IN LAW. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS MISCONST RUED/ APPRECIATED THE FACTS AND HIS ORDER DATED 31.10.2012 IN SUSTAINING THE ADDITION OF RS.8,08,6937 - MADE BY THE LEARNED ASSESSING OFFICER IS CONTRARY TO FACTS, ARBITRARY, ERRONEOUS AND BAD IN THE LAW. 3. THAT THE ASSESSMENT ORDER PASSED U/S.144 OF THE ACT BY RESORTING TO SEC. 145(3) OF THE ACT AND THE ESTIMATIO N OF GROSS PROFIT OF THE APPELLANT'S BUSINESS @6% BY THE LEARNED ASSESSING OFFICER IS CONTRARY TO FACTS, ARBITRARY, EXCESSIVE, 2 ITA NO. 3 8 /201 3 ERRONEOUS AND BAD IN THE LAW, AND THE CONFIRMING OF THE SAME BY THE ADDITION AL LEARNED COMMISSIONER OF INC OME TAX (APPEALS) IS ERRONEOUS AND BAD IN THE LAW. 4. THAT WITHOUT PREJUDICE TO GROUNDS (1) TO (3) ABOVE, THE DISMISSING OF AP PEAL/ ADJUDICATION OF GROUND NOS. 3 & 4 BY THE LEARNED COMMISSIONER OF INC OME TAX (APPEALS) IS, ARBITRARY, ERRONEOUS AND BAD IN LAW. 5. THAT ON THE F ACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS) OUGHT HAVE HELD THAT THE INCOME AS RETURNED BY THE AS SESSEE BE ACCEPTED BY THE LEARNED ASSESSING OFFICER. 2 . WE HEARD RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE AUTHORITIES BELOW. WE NOTED THAT THE AO HAS ISSUED THE NOTICE TO THE ASSESSEE AND DIRECTED THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNT. THE ASSESSEE DID NOT PRODUCE THE COMPLETE BOOKS OF ACCOUNTS ONLY THE SALES REGIST ER AS WELL AS PURCHASE REGISTER WAS PRODUCED. UNDER THESE CIRCUMSTANCES, THE AO TOOK A VIEW THAT THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNTS AND REJECTED THE SAME BY APPLYING THE PROVISION OF SECTION 145(3) . THE PROFIT HAS BEEN ESTIMATED BY THE AO @ 6% AT RS. 11,81,366/ - . THE ASSESSEE HAS RETURNED THE PROFIT AT RS. 2,12,370/ - . THEREFORE, THE DIFFERENCE OF RS. 8,08,693/ - WAS ADDED IN THE INCOME OF THE ASSESSEE. SO FAR AS THE PROPER OPPORTUNITY TO THE ASSESSEE IS CONCERNED, WE NOTED THAT THE AO HAS GIVEN V ARIOUS OPPORTUNITIES TO THE ASSESSEE BUT THE ASSESSEE FAILED TO PRODUCE NECESSARY BOOKS OF ACCOUNTS. IT IS NOT A CASE WHERE THE AO HAS NOT GIVEN OPPORTUNITY TO THE ASSESSEE AND THE INTEREST OF JUSTICE HAS BEEN DENIED. THE PROVISION OF SECTION 144 EMPOWERS THE AO TO FRAME THE ASSESSMENT UNDER SECTION 144 IN THE CASE OF ASSESSEE 3 ITA NO. 3 8 /201 3 FAILED TO COMPLY THE NOTICE ISSUED U/S. 142(1) & 143(2) . THIS IS ALSO A FACT THAT THE ASSESSEE HAS SHOWN THE GROSS PROFIT @3.56 OF THE TOTAL TURNOVER. THE AO TREATED THIS TO BE VERY LO W AS COMPARED TO THE OTHER CASES. 3 . LEARNED AR EVEN THOUGH BEFORE US VEHEMENTLY CONTENDED THAT IN THE EARLIER, NO SUCH ADDITION WAS MADE AND ALSO FACT THAT THE GROSS PROFIT EARNED BY THE DIFFERENT CREDITORS CANNOT BE UNIFORM THEREFORE, CANNOT BE ANY THU MB RULE BUT COULD NOT ADDUCE ANY EVIDENCE WHICH MAY JUSTIFY THE ACCEPTANCE OF THE GROSS PROFIT RATE @3.56% OF THE TURNOVER. IN OUR OPINION ONUS IS ON THE ASSESSEE TO ADDUCE THE EVIDENCE THAT THE GP RATE SHOWN BY HIM IS FAIR AND THE ASSESSEE HAS NOT EARNE D ANY INCOME OVER AND ABOVE THE SAME. 4 . WE HAVE GONE THROUGH THE FACTS OF THE CASE ALONG WITH THE RETURN FILED BY THE ASSESSEE. WE NOTED THAT THE AO HAS JUST ESTIMATED THE GP RATE @6% ON THE BASIS OF PAWAN SYNTHETICS, VIKASH AGRAWAL, SHYAM SUNDAR AGRAWA L BUT HAS NOT GIVEN WHILE ESTIMATING THE GROSS PROFIT RATE, NATURE OF BUSINESS CONCERN AS WELL AS THE QUANTUM OF THE TURNOVER. THE GP RATE EVEN IN THE SAME LINE OF BUSINESS CANNOT BE THE SAME. IT MAY VARY DEPENDING ON THE PERSONS TO PERSON. IN WHOLESALE BU SINESS, THE GP RATE IS BOUND TO BE LESS AS COMPARED TO THE RETAIL BUSINESS BUT THE EXPENSES IN A RETAIL BUSINESS ARE TO BE HIGHER AS COMPARED TO THE WHOLESALE BUSINESS. NO UNIFORM RATE OR THE THUMB RULE CAN BE LAID DOWN. IF THE ASSESSEE WOULD HAVE EARN ED T HE PROFIT OVER AND ABOVE AS 4 ITA NO. 3 8 /201 3 HAS BEEN SHOWN IN THE BOOKS OF ACCOUNTS, THE SAID PROFIT IS EITHER SPENT BY THE ASSESSEE OR MIGHT HAVE BEEN INVESTED IN THE CHAPTER OF CREATION OF CERTAIN ASSETS. WE, THEREFORE, KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THINK IT PROPER THAT IT WILL BE FAIR AND REASONABLE TO ESTIMATE THE GROSS PROFIT @4.78% TO END THE DISPUTE BETWEEN BOTH THE PARTIES. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO ESTIMATE THE GROSS PROFIT @4.78% INSTEAD 6 % AS HAS BEEN ESTIMATED BY THE AO, TO THAT EXTENT THE ADDITIONS ARE SUSTAINED. 5 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 01/05 / 201 4 . 01/05 /2014 SD/ - SD/ - ( . . ) ( D.T.GARASIA ) ( . . ) ( P.K.BANSAL ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 01/05 /2014 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, CUTTACK 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) , CUTTACK 4. / CIT ,CUTTACK 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TR UE COPY//