Pradeep Kumar Prusty, Bhubaneswar V. ITO, Ward-1(1), Bhubaneswar

ITA 44/CTK/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3779 (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.44, 45 & 46 /CTK/201 7 ASSESSMENT YEAR : 2009 - 2010 MR PRADEEP KUMAR PRUSTY, 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 /0 5/ 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.44/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.44, 45 & 46/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 TRADING IN GROCERY ITEMS. THE ASSESSEE FILED THE RETURN OF INCOME ON 25.9.2009 SHOWING INCOME OF RS.1,42,390/ - . THE A SSESSING OFFICER OBSERVED THAT EXAMINATION OF BANK ACCOUNTS REVEALED THAT THERE ARE DEPOSITS OF RS.38,79,391/ - IN THE INDUSIND BANK, JANPATH, KHARVELA NAGAR, UNIT - 3, BHUBANESWAR BRANCH. THE ASSESSEE HAS ALSO MADE DEPOSITS OF RS.42,99,000/ - 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. S TATED 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 PROCEEDS OF HIS UNDISCLOSED BUSINESS. HE OBSERVED THAT THE AGGREGATE OF TWO DEPOSITS IS RS .8,1,78,391/ - . 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 BUSI NESS. HENCE, HE ESTIMATED THE NET PROFIT AT RS.8.17,839/ - AND ADDED THE SAME AS INCOME FROM UNDISCLOSED BUSINESS. 4. ON APPEAL, THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT THE ASSESSEE HAS NOT CONTESTED THE ASSESSING OFFICERS OB SERVATION THAT BOOKS OF ACCOUNT AND BILLS AND VOUCHERS WERE NOT FURNISHED 3 ITA NOS.44, 45 & 46/CTK/2017 ASSESSMENT YEAR :2009 - 2010 DURING THE ASSESSMENT PROCEEDINGS. THEREFORE, HE UPHELD THE DECISION OF THE ASSESSING OFFICER TO ESTIMATE THE NET PROFIT. HOWEVER, HE OBSERVED THAT THE NET PROFIT @ 10% OF THE DEPO SITS IN BANK APPEARS TO BE EXCESSIVE AND, THEREFORE, DIRECTED THE ASSESSING OFFICER TO COMPUTE THE NET PROFIT AT 7% OF THE DEPOSITS OF RS.81,78,391/ - AND PARTLY ALLOWED THE ASSESSEES 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, THEREFORE, THE PROFIT OF THE ASSESSEE SHOULD BE ESTIMATED AT 2%. 7. ON THE OTHER H AND, 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 BUSINESS WAS 5% AND NOW HE CANNOT TURN AROUND AND SAY THAT THE PROFIT IN THIS LINE OF B USINESS 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 SHOULD BE CONFIRMED. 8. I FIND THAT THE ASSESSEE HAD MADE DEPOSITS IN TWO BANK ACCOU NTS AGGREGATING TO RS.81,78,391/ - AND THE ASSESSEE REQUIRED TO EXPLAIN THE SOURCE OF THE SAME BY THE ASSESSING OFFICER. THE ASSESSEE SUBMITTED THAT IT WAS THE SALE PROCEEDS OF GROCERY BUSINESS OUTSIDE BOOKS OF ACCOUNT. THE 4 ITA NOS.44, 45 & 46/CTK/2017 ASSESSMENT YEAR :2009 - 2010 ASSESSING OFFICER ACCEPTED THE EXPLANATION OF THE ASSESSEE AND ESTIMATED THE INCOME FROM RECEIPTS OF RS.81,78,391/ - AT 10% OF THE TOTAL RECEIPTS. 9. ON APPEAL, THE CIT(A) REDUCED THE SAME TO 7% OF THE TOTAL RECEIPTS. 10. THE ONLY ARGUMENT BEFORE ME IS THAT THE INCOME SHOULD BE ESTIMAT ED 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 FROM 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.45/CTK/2017, THE GRIEVANC E 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.1,42,390/ - . 12. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECO RD. IN THE INSTANT CASE THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD MADE DEPOSIT OF RS.38,79,391/ - IN THE INDUSIND BANK, JANPATH, KHARVELA NAGAR, UNIT - 3, BHUBANESWAR BR ANCH AND DEPOSIT OF RS.42,99, 000/ - IN THE KOTAK MAHINDRA BANK, BHUBANESWAR. THE ASSESSEE ADMITTED THAT THE TOTAL DEPOSITS IN TWO BANKS AGGREGATING TO RS.81,78,391/ - WAS THE SALE PROCEEDS FROM GROCERY BUSINESS OUTSIDE THE BOOKS OF ACCOUNT. THEREFORE, THE ASSESSING OFFICER 5 ITA NOS.44, 45 & 46/CTK/2017 ASSESSMENT YEAR :2009 - 2010 ESTIMATED THE INCOME BY APPLY ING 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 AND LEVIED PENALTY OF RS.1,42,390/ - . 13. ON APPEAL, THE CIT(A) CONFIRMED THE PENA LTY FOR CONCEALMENT OF INCOME. 14. BEFORE ME, LD A.R. RELIED ON THE DECISION OF HONBLE P&H HIGH COURT IN THE CASE OF CIT VS. SANGRUR VANSSPATI 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 BEEN MADE ON THE BASIS OF ESTIMATE AND NOT ON ACCOUNT OF ANY CONCRETE EVIDENCE OF CONCEAL MENT, 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 SUBMITTED THAT IN THE CASE OF SANGRUR VANSSPATI MILLS LTD (SUPRA), THE HONBLE HIGH COU RT 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 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 6 ITA NOS.44, 45 & 46/CTK/2017 ASSESSMENT YEAR :2009 - 2010 MAINTAINED BOOKS OF ACCOUNT OF THE ASSESSEE. HE SUBMITTED THAT THE ASSE SSEE 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 DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS CLEARLY ADMITTED THE FACT OF DEPOSITS MADE IN TWO BANK ACCOUNTS AGGREGATING TO RS. 81,78,391/ - TOWARDS GROCERY BUSINESS RECEIPTS ARE OUTSIDE THE REGULARLY MAINTAINED BOOKS OF ACCOUNT OF THE ASSESSE E, 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, THER E 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 DECISION 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 MADE TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF LOW YIELD AS COMPARED TO YIELD SHOWN BY THE ASSESSEE IN EARL IER 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, THE ASSESSEE WAS NOT EXIGIBLE TO 7 ITA NOS.44, 45 & 46/CTK/2017 ASSESSMENT YEAR :2009 - 2010 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 THE ASSESSEE IS THAT THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING LEVY OF PENALTY OF RS.2 5,000/ - 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, THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE TURNOVER OF THE ASSESSEE FROM BUSINESS WAS RS.81,78,391/ - . 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 CI T(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER ON THE GROUND THAT NO SUBMISSIONS WERE MADE 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 WITH THE ORDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED AND GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 8 ITA NOS.44, 45 & 46/CTK/2017 ASSESSMENT YEAR :2009 - 2010 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, BHUBANESWAR. 2. THE RESPONDENT. ITO, WARD - 1(1), BHUBANESWAR 3. THE CIT(A) - 2, BHUBANESWAR 4. PR.CIT - 2, BHUBANESWAR. 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY// 9 ITA NOS.44, 45 & 46/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 /PS 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.