Ashok Kumar Patra, Bhubaneswar V. ITO, Ward-1(1), Bhubaneswar

ITA 41/CTK/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3784 (ITAT-CUTTACK)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 31-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: B R PANDA
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NOS. 41, 42 & 43 /CTK/201 7 ASSESSMENT YEAR : 2009 - 2010 MR ASHOK KUMAR PATRA , PLOT NO.V - 38, UNIT - IV, MARKET COMPLEX, BHUBANESWAR. VS. ITO, WARD - 1(1), BHUBANESWAR. PAN/GIR NO. AKJPP 4606 J (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI B.R.PANDA, AR REVENUE BY : SHRI D.K.PRADHAN, DR DATE OF HEARING : 23 /05/ 2017 DATE OF PRONOUNCEMENT : 26/05 /2017 O R D E R THESE ARE APPEAL S FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDER S OF CIT(A) - 2, BHUBANESWAR , DATED 13.10.2017, 24.10.2016 & 24.10.2016, FOR THE ASSESSMENT YEAR 2009 - 2010. 2. IN GROUND NO.41 /CTK/2017, T HE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE ESTIMATION OF PROFIT BY APPLYING RATE OF 7% ON GROSS AMOUNT BY THE CIT(A) IS UNREASONABLE AND IMPROPER IN THE FACTS OF THE CASE AS THE PROFIT RATE IN THIS LINE OF BUSINESS WOULD NOT BE EXCEEDED MORE THAN 2% ON GROSS AMOUNT. 2 ITA NOS. 41, 42 & 43 /CTK/2017 ASSESSMENT YEAR :2009 - 2010 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE OR DERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE DERIVES INCOME FROM INTEREST AND SALARY FROM PARTNERSHIP FIRM LAXMI STORES AND TRADING IN GROCERY ITEMS. THE ASSESSEE FILED THE RETURN OF INCOME ON 25.9.20 09 SHOWING INCOME OF RS.1,50,000 / - . THE ASSESSING OFFICER OBSERVED THAT EXAMINATION OF BANK ACCOUNTS REVEALED THAT TH ERE ARE DEPOSITS OF RS.38,50,121 / - IN THE INDUSIND BANK, JANPATH, KHARVELA NAGAR, UNIT - 3, BHUBANESWAR BRANCH A/C NO.0 035N34923 - 001 . THE ASSESSEE HAS ALSO MADE DEPOSITS OF RS.43,89,500 / - IN THE KOTAK MAHINDRA BANK, BHUBANESWAR. THE ASSESSEE WAS REQUIRED TO EXPLAIN THE SOURCE OF SUCH DEPOSITS. LD A.R. ADMITTED THAT THE ASSESSEE HAS CAR RIED ON RETAIL TRADE OF GROCERY I TEM S. SUCH BUSINESS IS OUTSIDE THE BUSINESS OF THE FIRM 'LAXMI STORE'. THE LD A.R. STATED IN WRITING THAT THESE DEPOSITS REPRESENT SALE PROCEEDS OF THE RETAIL BUSINESS. THEREFORE, THE ASSESSING OFFICER INFERRED THAT THE DEPOSITS ARE MADE OUT OF SALE PROCEE DS OF HIS UNDISCLOSED BUSINESS. HE OBSERVED THAT THE AGGREGATE OF TWO DEPOSITS IS RS.82,39,621 / - . HE OBSERVED THAT THE ASSESSEE DOES NOT MAINTAIN ANY BOOKS OF ACCO UNTS AND HAS NOT PRODUCE D ANY BILLS AND VOUCHERS. THEREFORE, THE NET PROFIT IS ESTIMATED @ 10% ON SUCH SALE PROCEEDS AFTER CONSIDERING THE EXPENSES FOR CARRYING ON SUCH BUSINESS. HENCE, HE ESTIMATED THE NET PROFIT AT RS.8,23,962 / - AND ADDED THE SAME AS INCOME FROM UNDISCLOSED BUSINESS. 3 ITA NOS. 41, 42 & 43 /CTK/2017 ASSESSMENT YEAR :2009 - 2010 4. ON APPEAL, THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT THE ASSESSEE HAS NOT CONTESTED THE ASSESSING OFFICERS OBSERVATION THAT BOOKS OF ACCOUNT AND BILLS AND VOUCHERS WERE NOT FURNISHED DURING THE ASSESSMENT PROCEEDINGS. THEREFORE, HE UPHELD THE DECISION OF THE ASSESSING OFFICER TO E STIMATE THE NET PROFIT. HOWEVER, HE OBSERVED THAT THE NET PROFIT @ 10% OF THE DEPOSITS IN BANK APPEARS TO BE EXCESSIVE AND, THEREFORE, DIRECTED THE ASSESSING OFFICER TO COMPUTE THE NET PROFIT AT 7% OF THE DEPOSITS OF RS.82,39,621/ - AND PARTLY ALLOWED THE ASSESSEE S APPEAL 5. BEING AGGRIEVED BY THIS ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE ONLY CONTENTION OF LD A.R. BEFORE ME IS THAT IN THIS LINE OF BUSINESS, THE NET PROFIT EARNED BY THE ASSESSEE IS NOT MORE THAN 2% AND, TH EREFORE, THE PROFIT OF THE ASSESSEE SHOULD BE ESTIMATED AT 2%. 7. ON THE OTHER HAND, LD D.R. CONTROVERTING THE SUBMISSION OF LD A.R. OF THE ASSESSEE SUBMITTED THAT BEFORE THE CIT(A), THE ASSESSEE HIMSELF ADMITTED THAT THE NET PROFIT IN THIS LINE OF BUSIN ESS WAS 5% AND NOW HE CANNOT TURN AROUND AND SAY THAT THE PROFIT IN THIS LINE OF BUSINESS IS 2%. HE SUBMITTED THAT THE ORDER OF THE CIT(A) IS QUITE REASONABLE AND JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE ASSESSEE AND, THEREFORE, SAME SH OULD BE CONFIRMED. 8. I FIND THAT THE ASSESSEE HAD MADE DEPOSITS IN TWO BANK ACCOUNTS AGGREGATING TO RS. RS.82,39,621/ - AND THE ASSESSEE WAS REQUIRED TO EXPLAIN 4 ITA NOS. 41, 42 & 43 /CTK/2017 ASSESSMENT YEAR :2009 - 2010 THE SOURCE OF THE SAME BY THE ASSESSING OFFICER. THE ASSESSEE SUBMITTED THAT IT WAS THE SALE P ROCEEDS OF GROCERY BUSINESS OUTSIDE BOOKS OF ACCOUNT. THE ASSESSING OFFICER ACCEPTED THE EXPLANATION OF THE ASSESSEE AND ESTIMATED THE INCOME FROM RECEIPTS OF RS.82,39,621/ - AT 10% OF THE TOTAL RECEIPTS. 9. ON APPEAL, THE CIT(A) REDUCED THE SAME TO 7% O F THE TOTAL RECEIPTS. 10. THE ONLY ARGUMENT BEFORE ME IS THAT THE INCOME SHOULD BE ESTIMATED BY APPLYING THE RATE OF 2%. LD A.R. OF THE ASSESSEE MISERABLY FAILED TO BRING ANY COGENT AND POSITIVE MATERIAL ON RECORD TO SHOW THAT THE INCOME OF THE ASSESSEE F ROM UNDISCLOSED GROCERY RECEIPTS WILL BE 2% AND NOT 7% AS ESTIMATED BY THE CIT(A). IN THE ABSENCE OF ANY SUCH MATERIAL BEING BROUGHT ON RECORD, I FIND NO GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED AND THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 11. IN ITA NO. 42 /CTK/2017 , THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT OF RS.2,09,410 / - . 12. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD MADE DEPOSIT OF RS.38,50,121 / - IN THE INDUSIND BANK, JANPATH, KHARVELA NA GAR, UNIT - 3, BHUBANESWAR BR ANCH AND DEPOSIT OF RS.43,39,500 / - IN THE KOTAK MAHINDRA 5 ITA NOS. 41, 42 & 43 /CTK/2017 ASSESSMENT YEAR :2009 - 2010 BANK, BHUBANESWAR. THE ASSESSEE ADMITTED THAT THE TOTAL DEPOSITS IN TWO BANKS AGGREGATING TO RS.82,39,621 / - WAS THE SALE PROCEEDS FROM GROCERY BUSINESS OUTSIDE THE BOOKS OF ACCOUNT. THEREFORE, THE ASSESSING OFFICER ESTIMATED THE INCOME BY APPLYING THE RATE OF 10% AS UNDISCLOSED BUSINESS INCOME, WHICH WAS REDUCED TO 7% ON APPEAL BY THE CIT(A). THEREAFTER, THE ASSESSING OFFICER ISSUED NOTICE U/S.271(1)(C) OF THE ACT A ND L EVIED PENALTY OF RS.2,09,410/ - 13. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 14. BEFORE ME, LD A.R. RELIED ON THE DECISION OF HONBLE P&H HIGH COURT IN THE CASE OF CIT VS. SANGRUR VANA SPATI MILLS LTD., 303 ITR 53 (P& H) AND SUBMITTED THAT THE HONBLE HIGH COURT HAS HELD THAT PROVISIONS OF SECTION 271(1)(C) ARE NOT ATTRACTED TO CASES WHERE THE INCOME OF AN ASSESSEE IS ASSESSED ON ESTIMATE BASIS AND ADDITIONS ARE MADE THEREIN. IT WAS HELD THAT WHEN THE ADDITION HAD BEE N MADE ON THE BASIS OF ESTIMATE AND NOT ON ACCOUNT OF ANY CONCRETE EVIDENCE OF CONCEALMENT, THEN THE PENALTY WAS NOT LEVIABLE. 15. ON THE OTHER HAND, LD D.R. ARGUED THAT THE SAID DECISION IS NOT APPLICABLE TO THE PRESENT FACTS OF THE ASSESSEES CASE. HE S UBMITTED THAT IN THE CASE OF SANGRUR VANA SPATI MILLS LTD (SUPRA), THE HONBLE HIGH COURT OBSERVED THAT THE ADDITION MADE ON ACCOUNT OF LOW YIELD COMPARED TO EARLIER ASSESSMENT YEAR OF THE ASSESSEE WAS MADE ON ESTIMATE BASIS AND, THEREFORE, THE PENALTY WAS NOT EXIGIBLE TO THE ASSESSEE U/S.271(1)(C) OF THE 6 ITA NOS. 41, 42 & 43 /CTK/2017 ASSESSMENT YEAR :2009 - 2010 ACT. HE SUBMITTED THAT IN THE FACTS OF THE ASSESSEES CASE, THE ASSESSEE HAS ADMITTED TO THE FACT OF CONCEALMENT OF BUSINESS RECEIPTS FROM GROCERY BUSINESS FROM THE DEPARTMENT AS THEY WERE NOT RECORDED IN THE REGULARLY MAINTAINED BOOKS OF ACCOUNT OF THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE WAS LIABLE TO PENALTY AND THE CIT(A) WAS JUSTIFIED IN CONFIRMING THE SAME. 16. IN THE REJOINDER, LD A.R. COULD NOT CONTROVERT THE ARGUMENTS AND SUBMISSIONS OF LD D.R . 17. I FIND THAT IN THE PRESENT CASE OF THE ASSESSEE, THE ADMITTED FACTS ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS CLEARLY ADMITTED THE FACT OF DEPOSITS MADE IN TWO BANK ACCOUNTS AGGREGATING TO RS. 82,39,621 / - TOWARDS GROCERY B USINESS RECEIPTS ARE OUTSIDE THE REGULARLY MAINTAINED BOOKS OF ACCOUNT OF THE ASSESSEE, WHEN IT WAS REQUIRED TO EXPLAIN THE SOURCE OF DEPOSITS IN THE BANK ACCOUNT. THUS, THE ASSESSEE HAS ADMITTED THE FACT OF CONCEALMENT OF BUSINESS RECEIPTS AND EVADED THE PAYMENT OF TAX ON THE INCOME EMBEDDED IN THIS RECEIPTS TO THE DEPARTMENT. THUS, THERE WAS CLEAR CONCEALMENT OF INCOME BY THE ASSESSEE AND HENCE, THE ASSESSEE WAS CLEARLY EXIGIBLE TO PENALTY FOR CONCEALMENT OF INCOME U/S.271(1)(C) OF THE ACT. THE DECISIO N OF HONBLE P&H HIGH COURT IN THE CASE OF SANGRUR VANASPATI MILLS LTD (SUPRA) RELIED ON BY LD A.R.OF THE ASSESSEE IS NOT APPLICABLE IN THE CASE OF THE ASSESSEES CASE INASMUCH AS IN THAT CASE, THE FACTS WERE THAT THE ADDITIONS WERE MA DE TO THE INCOME OF T HE ASSESSEE ON ACCOUNT OF LOW YIELD AS COMPARED TO YIELD SHOWN BY THE 7 ITA NOS. 41, 42 & 43 /CTK/2017 ASSESSMENT YEAR :2009 - 2010 ASSESSEE IN EARLIER ASSESSMENT YEARS. IN THESE CIRCUMSTANCES , THE HONBLE HIGH COURT OBSERVED THAT AS THE ADDITION WAS MADE TO THE INCOME OF THE ASSESSEE ON ESTIMATE BASIS, THEREFORE, T HE ASSESSEE WAS NOT EXIGIBLE TO PENALTY. HENCE, I FIND NO GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED AND THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 18. IN ITA NO.46/CTK/2017, THE GRIEVANCE OF T HE ASSESSEE IS THAT THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING LEVY OF PENALTY OF RS.25,000/ - U/S.271A OF THE ACT. 19. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, T HE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE TURNOVER OF THE ASSESSE E FROM BUSINESS WAS RS.82,39,621 / - . NO REASON FOR NON - MAINTENANCE OF BOOKS OF ACCOUNT WAS SUBMITTED AND, THEREFORE, HE LEVIED PENALTY FOR NON - MAINTENANCE OF BOOKS OF ACCOUNT U/S.271A OF THE ACT OF RS.25,000/ - . 20. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER ON THE GROUND THAT NO SUBMISSIONS WERE MAD E BEFORE HIM. 21. BEFORE ME, NO PLAUSIBLE REASON HAS BEEN GIVEN BY LD A.R. OF THE ASSESSEE TO EXPLAINED THE REASON FOR NON - MAINTENANCE OF BOOKS OF ACCOUNT BY THE ASSESSEE. HENCE, I FIND NO GOOD AND JUSTIFIABLE REASON TO INTERFERE 8 ITA NOS. 41, 42 & 43 /CTK/2017 ASSESSMENT YEAR :2009 - 2010 WITH THE ORDER OF THE C IT(A), WHICH IS HEREBY CONFIRMED AND GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 22. IN THE RESULT, THE APPEAL S FILED BY THE ASSESSEE ARE DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON 26 /05/2017 IN THE PRESENCE OF PARTIES. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 26 /05/2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : MR PRADEEP KUMAR PRUSTY, PLOT NO.V - 38, UNIT - IV, MARKET COMPLEX, BHU BANESWAR. 2. THE RESPONDENT. ITO, WARD - 1(1), BHUBANESWAR 3. THE CIT(A) - 2, BHUBANESWAR 4. PR.CIT - 2, BHUBANESWAR. 5. DR, ITAT, CUTTACK GUARD FILE. //TRUE COPY// 9 ITA NOS. 41, 42 & 43 /CTK/2017 ASSESSMENT YEAR :2009 - 2010 DATE INITIAL 1. DRAFT DICTATED ON 23 /05 /17 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 23 /05 /17 (DICTATION PAD HAS BEEN ENCLOSED ALONG WITH ORIGINAL FILE) SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/P S 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE H.C. 9. DATE ON WHICH FILE GOES TO THE SPS 10. DATE OF DISPATCH OF ORDER.