Sri Badal Chandra Senapati, Balasore V. ITO, Ward-2, Balasore

ITA 422/CTK/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7205 (ITAT-CUTTACK)
• Duration Of Justice: 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 05-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: P K MISHRA
• Keywords: Capital asset; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO. 422 /CTK/2016 ASSESSMENT YEAR : 2010 - 11 SRI BADAL CHANDRA SENAPATI, C/O. M/S. TARINI BHANDARA, AT: RANAKUTHA, PO: TUKURIHAJIRA, FULBANI, DIST: BALASORE. VS. ITO, WARD - 2, BALASORE. PAN/GIR NO. AOKPS 4890 J (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.K.MISHRA, AR REVENUE BY : SHRI D.K.PRADHAN, DR DATE OF HEARING : 31 /01/ 2017 DATE OF PRONOUNCEMENT : 31 /01/ 2017 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - CUTTACK, DATED 29.1.2016 , FOR THE ASSESSMENT YEAR 2010 - 2011 . 2. THE APPEAL FILED BY THE ASSESSEE IS BARRED BY 221 DAYS. THE ASSESSEE HAS FILED CONDONATION PETITION DATED 5.12.2016 SUPPORT ED BY MEDICAL REPORTS FOR CONDONING THE DELAY IN FILING THE APPEAL. AFTER GOING THROUGH THE CONDONATION PETITION, I FIND THAT THE ASSESSEE HAD REASONABLE CAUSE FOR NOT FILING THE APPEAL WITHIN THE STIPULATED 2 ITA NO. 422/CTK/2016 ASSESSMENT YEAR :2010 - 11 TIME. LD D.R. DID NOT HAVE ANY OBJECTION FOR CONDONING THE DELAY. I, THE REFORE, CONDONE THE DELAY OF 221 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL AN D ADMIT THE APPEAL FOR HEARING. 3 . GROUND NOS.1,7 & 8 OF THE APPEAL ARE GENERAL IN NATURE AND HENCE, REQUIRES NO SEPARATE ADJUDICATION BY ME. 4 . IN GROUND NO.2 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) SHOULD NOT HAVE CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN ESTIMATING THE PROFIT @ 4% OF THE DISCLOSED RECEIPTS WHEN THEY HAD BEEN DULY DISCLOSED AND PROFIT ARISING OUT OF THE SAME HAS ALREADY BEEN TAXED. 5 . I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE ASSESSING OFFICER MADE THE FOLLOWING OBSERVATION S : I) THE ASSESSEE COULD NOT PRODUCE CASH BOOK, LEDGER ACCOUNTS AND RELEVANT BILL/VOUCHER IN ALL RESPECT, FOR VERIFICATION OF GENUINENESS OF ACCOUNTS ALTHOUGH THE SAME WERE CALLED FOR LONG BEFORE THE PHYLINE AND FLOOD. II) ASSESSEE CLAIMED HUGE EXPENSE OF 'RS. 3,72,86,975/ - AND COULD NOT ABLE TO PRODUCE ANY LEDGER ACCOUNTS, ANY MATERIAL EVIDENCE TO JUSTIFY THE SAME EXPENDITURE. MERE FABRICATED LIST OF 85 PERSONS, INCOMPLETE ADDRESS AND ONLY AMOUNT, IS NOT SUFFICIENT TO JUSTIFY THE SAME EXPENDITURE. III) OUT OF 85 NAMES OF P ERSONS AGAINST THE EXPENDITURE RS. 3,72,86,975/ - , ONLY 12 NAMES ARE PRODUCED FOR VERIFICATION. ON VERIFICATION IT IS FOUND THAT NAME OF 5 PERSONS ARE NOT RELATED TO THE EXPENDITURE AND BALANCE IN CASE OF BALANCE 7 NAMES, THE EXPENDITURE FIGURES ARE NOT CLA RIFIED IN ABSOLUTE MANNER. 3 ITA NO. 422/CTK/2016 ASSESSMENT YEAR :2010 - 11 IV ) THE ASSESSEE COULD NOT BE ABLE TO PRODUCE THE COMPLETE ADDRESS OF PERSONS AGAINST WHICH RS.1,85,750/ - HAS BEEN PAID TOWARDS ADDITION OF CAPITAL ASSETS. THEREFORE, HE ESTIMATED THE INCOME BY APPLYING RATE OF 4% TO THE GROSS TURNOVER OF RS.5,91,51,343/ - , WHICH WORKED OUT TO RS.23,66,054/ - . 6 . ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 7 . BEFORE ME, THE ONLY ARGUMENT OF THE ASSESSEE IS THAT THE GROSS RECEIPTS OF RS.5,91,51,343/ - COMPRISES OF RS. 2,18,40,493/ - ON ACCOUNT OF SALE OF PRAWN & POULTRY FEEDS AND OTHER INCOME OF RS.3,73,10,850/ - WAS ON ACCOUNT OF NECESSARY SUPPORT TO THE FARMERS FOR PRODUCTION AS WELL AS SALE ON WHICH THE ASSESSEE ACTS LIKE A MIDDLEMAN BETWEEN FARMERS AND VARIOUS PROCURING COMPANIES. AS THE ASSESSEE WAS HAVING DUES WITH FARMERS AGAINST SUPPLY OF FEEDS & SUPPLEMENTS, COLLECTS THE SALE PROCEEDS FROM VARIOUS COMPANIES AND MAKE NECESSARY PAYMENTS TO FARMERS AFTER DEDU CTION OF PENDING DUES. IT WAS THE SUBMISSION OF THE LD A.R. OF THE ASSESSEE THAT THE ASSESSEE HAS SHOWN INCOME EARNED FROM THIS OTHER RECEIPTS OF RS.3,73,10,850/ - AT RS.23,875/ - AFTER DEDUCTING EXPENDITURE OF RS.3,72,86,975/ - . HE SUBMITTED THAT THE GROSS INJUSTICE HAS BEEN DONE BY THE ASSESSING OFFICER BY ESTIMATING THE INCOME BY APPLYING RATE OF 4% ON THE ENTIRE GROSS RECEIPTS OF RS.5,91,51,343/ - . HENCE, HE PRAYED THAT AS THE INCOME EARNED FROM OTHER RECEIPTS IS VERY MINIMUM, 4 ITA NO. 422/CTK/2016 ASSESSMENT YEAR :2010 - 11 THEREFORE, THE RATE OF GROS S PROFIT APPLIED @ 4% IS HIGHER AND IT WILL BE REASONABLE TO APPLY THE RATE OF 2.5% ON THE ENTIRE RECEIPTS. 8 . ON THE OTHER HAND, LD D.R. DID NOT CONTROVERT THE SUBMISSION OF LD A.R. OF THE ASSESSEE. 9 . I FIND THAT THE ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNT AND THEREAFTER ESTIMATED THE INCOME BY APPLYING THE RATE OF 4% ON THE GROSS RECEIPTS OF RS.5,91,51,343/ - . IT IS ALSO NOT IN DISPUTE THAT THIS COMPRISES OF OTHER RECEIPTS OF RS.3,73, 10,850/ - ON WHICH THE ASSESSEE HAS EARNED VERY MEAGRE INC OME AS THE ASSESSEE WAS ACTING AS MIDDLEMAN BETWEEN THE FARMERS AND VARIOUS SECURING COMPANIES ON WHICH IT EARNED VERY SMALL INCOME. IT IS ALSO OBSERVED THAT THE ASSESSEE HAS HIMSELF SHOWN INCOME @ 2.12% IN THE RETURN OF INCOME FILED ON THE ENTIRE RECEIPT S. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED VIEW THAT APPLICATION OF RATE OF 4% TO THE GROSS RECEIPTS IS VERY HIGH AND THAT IT WILL MEET THE ENDS OF JUSTICE IF THE RATE OF 2.5% IS APPLIED TO THE GROSS RECEIPTS OF RS.5,91,51 ,343/ - . I THEREFORE, MODIFY THE ORDER OF THE CIT(A) AND ACCORDINGLY PARTLY ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE 10 . GROUND NO.3 OF THE APPEAL READS AS UNDER: FOR THAT THE LD CIT(A) SHOULD NOT HAVE TREATED THE ENTIRE RECEIPTS AS INCOME AND SHOULD NOT HAVE ENHANCED THE INCOME OF THE 5 ITA NO. 422/CTK/2016 ASSESSMENT YEAR :2010 - 11 ASSESSEE BY RS.3,73,10,850/ - WITHOUT INTIMATING ANYTHING TO THE ASSESSEE. THE IMPUGNED ENHANCEMENT BEING ILLEGAL AND UNSUSTAINABLE, NEEDS TO BE DELETED IN THE INTEREST OF JUSTICE. 11 . AT THE TIME OF HEARING, LD A.R. OF THE ASSESSEE SUBMITTED THAT THE CIT(A) HAS ENHANCED THE INCOME OF THE ASSESSEE BY RS.3,71,10,850/ - WITHOUT GIVING ANY ENHANCEMENT NOTICE TO THE ASSESSEE. HE SUBMITTED THAT THIS WAS IN VIOLATION OF PROVISIONS OF SECTION 251(2) OF THE INCOME TAX ACT, 196 1 AND, THEREFORE, THE ADDITION MADE CANNOT BE SUSTAINED IN LAW. 12 . THE D.R. ALSO DID NOT CONTROVERT THE SUBMISSION OF THE A.R. OF THE ASSESSEE. 13 . I FIND THAT SECTION 251(2) READS AS UNDER: THE COMMISSIONER (APPEALS) SHALL NOT ENHANCE AN ASSESSMENT OR A PENALTY OR REDUCE THE AMOUNT OF REFUND UNLESS THE APPELLANT HAS HAD A REASONABLE OPPORTUNITY OF SHOWING CAUSE AGAINST SUCH ENHANCEMENT OR REDUCTION. 14 . I FIND THAT IT IS NOT IN DISPUTE THAT NOTICE AS PER PROVISIONS OF SECTION 251(2) HAS NOT BEEN ISSUE D AND SERVED ON THE ASSESSEE. THEREFORE, THE ADDITION ON ACCOUNT OF ENHANCEMENT OF INCOME OF THE ASSESSEE BY RS.3,73,10,850/ - CANNOT BE SUSTAINED IN LAW. I, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND VACATE THE ENHANCEMENT OF DISALLOWANCE AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 6 ITA NO. 422/CTK/2016 ASSESSMENT YEAR :2010 - 11 15 . OTHER GROUNDS RAISED ARE THE ARGUMENTS OF THE ASSESSEE AND DOES NOT REFER TO ANY SPECIFIC GRIEVANCE OF THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) AND HENCE, ARE TAKEN UP BY ADJUDICATING MAIN GROUNDS OF THE ASSESSEE. 16 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCE D IN THE OPEN COURT ON 31 / 01/2017 IN THE PRESENCE OF PARTIES. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 31 /01 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : SRI BADAL CHANDRA SENAPATI, C/O. M/S. TARINI BHANDARA, AT: RANAKUTHA, PO: TUKURIHAJIRA, FULBANI, DIST: BALASORE. 2. THE RESPONDENT: ITO, WARD - 2, BALASORE. 3. THE CIT(A) , CUTTACK 4. PR.CIT , CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//