Dillip Kumar Swain, Angul V. ITO, Ward-1, Dhenkanal, Dhenkanal

ITA 399/CTK/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5362 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 06-10-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 21-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Section: 143(3)

Judgement Text

1 ITA NO. 399/CTK/2014 ASSESSMENT YEAR : 2010 - 2011 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 399/CTK/2014 ASSESSMENT YEAR : 2010 - 2011 DILLIP KUMAR SWAIN, AT: N.H. COLONY, ANGUL. VS. ITO, WARD - 1, DHENKANAL PAN/GIR NO. AADFD 8412 G (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : NONE REV ENUE BY : SHRI D.K.PRADHAN, DR DATE OF HEARING : 05 /10 / 2017 DATE OF PRONOUNCEMENT : 10 /10 / 2017 O R D E R PER N.S.SAINI, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) - 1,BH UBANESWAR DATED 15.7.2014 FOR THE ASSESSMENT YEAR 2010 - 2011. 2. THE APPEAL WAS DISPOSED OF BY THE TRIBUNAL ON 6.10.2016 DISMISSING THE APPEAL OF THE ASSESSEE DUE TO NON - APPEARANCE BY THE ASSESSEE AND ALSO NON - COMPLIANCE OF DEFECT NOTICE ISSUED BY THE REGISTRY. 3. BY AN ORDER DATED 7.7.2017 IN M.A. NO.01/CTK/2017, THIS TRIBUNAL HAS RECALLED THE A PPEAL AND FIXED THE HEARING ON 30.8.2017. BOTH THE PARTIES WERE INFORMED IN THE OPEN COURT, THEREFORE, THE ISSUE OF NOTICE WAS DISPENSED WITH. 2 ITA NO. 399/CTK/2014 ASSESSMENT YEAR : 2010 - 2011 4.` ON 30.8.2017, WHEN THE MATTER WAS CALLED FOR HEARING, LD A.R. OF THE ASSESSEE SOUGHT TIME TO FILE SOME MORE DETAILS AND THE HEARING WAS ADJOURNED TO 21.9.2017. ON 21.9.2017 ALSO, THERE WAS NO APPEARANCE FROM THE SIDE OF THE ASSESSEE . HENCE, NOTICE OF HEARING WAS ISSUED BY SPEED POST ON 22.9.2017 FIXING THE H EARING ON 5.10.2017. HOWEVER, ON 5.10.2017, WHEN THE MATTER WAS CALLED FOR HEARING, NO ONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY APPLICATION FOR ADJOURNMENT WAS FILED. THE ASSESSEE HAS FILED A WRITTEN SUBMISSION, WHICH IS PLACED ON RECORD. HENCE, WE PROCEED TO DISPOSE OF THE APPEAL OF THE ASSESSEE EXPARTE AFTER HEARING LD D.R. AND ON THE BASIS OF MATERIAL S AVAILABLE ON RECORD. 5. T HE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT, IT RETURN FOR THE ASST. YEAR 2010 - 11 HAS BEEN FILED BEFORE THE ITO, W - I, DKL CIRCLE, DKL VIDE DT. 04.10.2010. 2) THAT, THE ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORDER U/S. 143(3) OF THE IT. ACT. 1961 BY ADDING THE WHOLE AMOUNT AS SHOWN AS BILLS RECOVERABLE FOR RS. 5,11,550/ - (RUPEES FIVE LAKHS ELEVEN THOUSAND FIVE HUNDRED FIFTY ONLY) DURING THAT YEAR. 3) THAT, THE A. O. HAS COMPLETED THE INCOME BY DISALLOWING THE EXPENSES, TO THE TUNE OF RS.2,96,121.00 (RUPEES TWO LAKHS NINETY SIX THOUSAND ONE HUNDRED TWENTY ONE ONLY). 4. THAT, THE A.O. HAS DISALLOWED THE SALARY PAID TO THE PARTNER DURING THE YEAR FOR AN AMOUNT OF RS.4 8,000/ - ERRONEOUSLY. 5) THAT, THE A.O. HAS NOT TAKING IN ACCOUNT THE WHOLE T.D.S. AMOUNT FOR RS.2,19,824.00 (RUPEES TWO LAKHS NINETEEN THOUSAND EIGHT HUNDRED TWENTY FOUR ONLY) WHICH HAS BEEN DEDUCTED FROM THE BILLS WHILE COMPUTING THE ASSESSMENT FOR THE SAID YEAR. 6) THAT, DURING THE TIME OF APPEAL HEARING, THE HONOURABLE COMMISSIONER OF APPEAL - 1, BHUBANESWAR WAS NOT TAKING ANY CONSIDERATION REGARDING THE BILLS OUTSTANDING AMOUNT WHICH WAS DIRECTLY ADDED AS 100% TO THE NET PROFIT OF THE FIRM AND TAX CA LCULATED BY THE A.O. I.T.O. DKL CIRCLE - I, DKL DURING THE 3 ITA NO. 399/CTK/2014 ASSESSMENT YEAR : 2010 - 2011 ASSESSMENT PERIOD. IN THIS REGARD THE ENTIRE OUTSTANDING AMOUNT WAS NOT THE CENT PERCENT PROFIT OF THE FIRM AND IN CONTEXT OF WHICH THE A.O. AND THE COMMISSIONER HAS CHARGED THE WHOLE AMOUNT AS PROFI T OF THE FIRM IS ARBITRARY AND UNETHICATED. 7) THAT, THE APPELLANT AUTHORITY HAS SHOWN IN HIS ORDER, THE ESTIMATED DISALLOWANCE OF EXPENSES IS REASONABLE AND CORRECT WHICH IS VEG AND UNJUSTIFIED AS PER LAW. 5 . THE CIT(A) HAS HELD AS UNDER: THE ASSESSEE FIRM DERIVES INCOME FROM CIVIL CONTRACT BUSINESS AND FILE D ITS RETURN OF INCOME ON 4.10.2010 SHOWING TOTAL INCOME OF RS. 1,42,911/ - . ON VERIFICATION OF BALANCE S HEET, THE ASSESSING OFFICER FOUND THAT BILLS AMOUNTING TO 5,11,550/ - IS OUTSTANDI NG FOR PAYMENT TO THE ASSESSEE. SINCE THE CONTRACT WORKS ARE OVER AND THE ASSESSEE FOLLOWS MERCANTILE SYSTEM OF ACCOUNTING, THE AO ADDED THE AMOUNT OF RS.5,11,550/ - TO THE TOTAL INCOME AS ALL EXPENSES RELATING TO THE CONTRACT WORKS HAVE BEEN INCURRED. THE AO FOUND THAT THE PARTNERS ARE ENTITLED TO GET SALARY OF RS.72,000/ - IN TERMS OF PARTNERSHIP DEED WHEREAS THE ACTUAL SALARY PAYMENT IS RS. 1,20,000/ - . IN VIEW OF THE SAME, THE AO DISALLOWED RS.48,000/ - BEING EXCESS SALARY PAID. THE AO FOUND THAT THE ASSESSEE HAS SHOWN NET PROFIT OF 1.6% AFTER PAYMENT OF INTEREST AND SALARY TO THE PARTNERS. THIS HAS BEEN CONSIDERED AS VERY LOW BY THE AO. THE AO ALSO FOUND THAT THE EXPENSES CLAIMED ARE NOT SUPPORTED WITH ANY BILLS & VOUCHERS. ACCOR DINGLY, THE AO CONSIDERED THAT THE INFLA TION OF EXPENSES CANNOT BE RULED OUT FOR WHICH HE DISALLOWED EXPENSES OF RS.2,96,121/ - @ 3.5% OF THE EXPENSES CLAIMED ON ESTIMATE. . THE AO ALSO FOUND THAT THE PARTNERS ARE ENTITLED TO GET INTEREST @ 12% ON THE CAPITAL INVESTED AS PER PARTNERSHIP DEED. THE AO FOUND THAT THE INTEREST PAID IS MORE THAN 12% FOR WHICH HE DISALLOWED SUCH EXCESS OF INTEREST PAID AMOUNTING TO RS.6,000/ - U/S.40 (B)(IV). 3. I HAVE CONSIDERED THE MATTER CAREFULLY. THE APPELLANT IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING; HENCE ONCE THE CONTRACT WORKS ARE COMPLETE, THE RECEIVABLES ARE REQUIRED TO BE SHOWN IN THE GROSS RECEIPTS. THE APPELLANT HAS FAILED TO DO SO F OR BILLS RECEIVABLE TO THE EXTENT OF RS.5,11,550/ - . THE CONTRACT WORKS ARE OVER AND ALL EXPENSES HAVE BEEN INCURRED. IN VIEW OF THE SAME, THE ADDITION BY THE AO OF RS.5,11,550/ - IS CORRECT, HENCE CONFIRMED. 4 ITA NO. 399/CTK/2014 ASSESSMENT YEAR : 2010 - 2011 AS DISCUSSED BY THE AO THE APPELLANT FAILED TO SU BMIT LEDGER ACCOUNTS FOR EXPENSES, SUPPORTED WITH BILLS & VOUCHERS TO THE EXTENT OF RS.84,60,600/ - . SINCE NET PROFIT SHOWN IS ONLY 1.6% AND INFLATION OF EXPENSES COULD NOT BE RULED OUT IN ABSENCE OF BILLS U VOUCHERS, THE AO DISALLOWED EXPENSES ON ESTIMATE FOR RS.2,96,121/ - @ 3.5% OF THE EXPENSES CLAIMED. THE FINDINGS OF THE AO HAVE NOT BEEN CONTRADICTED BY THE APPELLANT. THE ESTIMATED DISALLOWANCE IS REASONABLE AND CORRECT. IN VIEW OF THE SAME, THE ADDITION OF RS.2,96,121/ - IS CONFIRMED. DURING THE COURSE OF APPEAL HEARING, IT WAS SUBMITTED THAT SALARY AND INTEREST HAVE BEEN PAID TO THE PARTNERS AS PER THE PARTNERSHIP DEED. HOWEVER, THE SUBMISSION HAS NOT BEEN SUPPORTED WITH ANY EVIDENCE. THE AO HAS DISCUSSED THE PARTNERSHIP DEED AND DIS ALLOWED THE EXCESS PAYMENTS WHICH HAVE NOT BEEN CONTRADICTED BY THE APPELLANT WITH ANY DETAILS AND EVIDENCES. IN VIEW OF THE SAME, THE ADDITION OF RS.48,000/ - AS EXCESS SALARY PAID AND RS.6,000/ - AS EXCESS INTEREST PAID TO THE PARTNERS ARE CONFIRMED. THE APPELLANT SUBMITS THAT THE TDS CREDIT HAS NOT BEEN GIVEN. THE AO IS DIRECTED TO V ERIFY THE CLAIM OF TDS AND ALLOW CREDIT AS PER LAW. 6. WE FIND THAT IN THE WRITTEN SUBMISSION FILED BY THE ASSESSEE, HE HAS NOT BEEN ABLE TO POINT OUT ANY SPECIFIC MISTAKE IN THE FINDINGS OF THE CIT(A). HENCE, WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED AND GROUNDS OF APPEALS OF THE ASSESSEE ARE DISMISSED. 7 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUN CED ON 10 /10 /2017. SD/ - SD/ - ( PAVAN KUMAR GADALE) ( N.S SAINI) JUDICIALMEMBER A CCOUNTANT MEMBER CUTTACK; DATED 10 /10 /2017 5 ITA NO. 399/CTK/2014 ASSESSMENT YEAR : 2010 - 2011 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : DILLIP KUMAR SWAIN, AT: N.H. COLONY, ANGUL. 2. THE RESPONDENT. ITO, WARD - 1, DHENKANAL 3. THE CIT(A) - 1, BHUBANESWAR 4. PR.CIT - BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//