Baijath Agrawal, Sambalpur V. ACIT, Sambalpur

ITA 444/CTK/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58386 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 10-01-2012
• Assessment Year: misc
• Appeal Filed On: 03-11-2011
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: S N PADHEE
• Keywords: Business income
• Section: 154

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 444/CTK/2011 (ASSESSMENT YEAR 2003 - 04) SRI BAIJNATH AGRAWAL, PROP.PAWAN KUMAR KRISHNA KUMAR, KHETRAJPUR, SAMBALPUR PAN: AE EPA 509 B VERSUS ASST.COMMISSIONER OF INCOME - TAX , CIRCLE 1, SAMBALPUR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI S.N.PADHEE, AR FOR THE RESPONDENT SMT. PARAMITA TRIPATHY, DR DATE OF HEARING : 10.01.2012 DATE OF PRONOUNCEMENT : 13.01.2012 ORDER SHRI K.K.GUPTA, AM : THIS APPEAL BY THE ASSESSEE IS ON THE LEARNED CIT(A) CONFIRMING THE REJECTION OF PETITION FOR CARRYING OUT RECTIFICATION UNDER THE PROVISIONS OF SECTION 154 REJECTED BY THE ASSESSING OFFICER VIDE ORDER DT.18.3.2008. 2. TH E BRIEF FACTS ARE THAT THE ASSESSEE TRADES IN GROCERY AND WAS SUBJECTED TO SEARCH OPERATION ON 4 TH JULY, 2003 WHEN CERTAIN DOCUMENTS INDICAT ING UNDISCLOSED SALES OUTSIDE THE BOOKS OF ACCOUNT WERE BROUGHT TO TAX BY THE ASSESSING OFFICER ON THE BASIS OF ESTI MATING SALES FOR THE IMPUGNED YEAR AT A PARTICULAR RATE OF MARGIN WHICH WAS TAXED AS NET INCOME U/S.143(3). THE ASSESSING OFFICER ALSO SOUGHT TO BRING TO TAX A SUM OF 2 LAKHS AS INVESTMENT MADE IN THE PURPORTED SALES FOR THE PURCHASES. AGGRIEVED, THE AS SESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY WHO COMPUTED THE SUPPRESSION OF SALES BY REDUCING THE SAME FROM 61,55,127 TO 14,57,701 ON WHICH THE LEARNED CIT(A) DIRECTED THE ASSESSING OFFICER TO COMPUTE INCOME AT 3%. THE LEARNED CIT(A) ALSO REDU CED THE PURPORTED INVESTMENT IN THE SALES FROM 2 LAKHS TO 75,000. HAVING GRANTED SUCH RELIEF, THE ASSESSING OFFICER WHILE GIVING APPEAL EFFECT U/S.251 ISSUED DEMAND NOTICE ITA NO.444/CTK/2011 SRI BAIJNATH AGRAWAL V. ACIT (ASSESSMENT YEAR 2003 - 04) 2 DT.30.3.2007 BY HOLDING THE RELIEF GRANTED BY THE LEARNED CIT(A) AT 1,40,922 ON ACCOUNT OF UNACCOUNTED SALES AND 1,25,000 ON ACCOUNT OF PURPORTED INVESTMENT IN THE SALES. HE BEGAN THE COMPUTATION ON THE BASIS OF ASSESSED INCOME AS BROUGHT TO TAX INCLUDING THE 3% MARGIN ON THE TOTAL SALES INCLUDING THE UNDISCLOSED SALES AND THE UN DISCLOSED SOURCE OF INCOME BEING INVESTMENT OF 2 LAKHS. IN OTHER WORDS, HE COMPUTED THE RELIEF GRANTED TO THE ASSESSEE BY THE LEARNED CIT(A) BY HOLDING THE TOTAL INCOME AS PER THE ORIGINAL ORDER U/S.143(3) WAS AT 8,42,800. THE ASSESSEE FILED A PETITION UNDER THE PROVISIONS OF SECTION 154 ASKING THE ASSESSING OFFICER TO RECTIFY ITS MISTAKE IN VIEW OF THE FACT THAT THE NET PROFIT AS PER THE P & L ACCOUNT RETURNED BY THE ASSESSEE WAS 1,38,579 WHICH WAS THE END RESULT OF THE TOTAL SALES AMOUNTING TO 79, 09,502 ALREADY CONSIDERED BY THE LEARNED CIT(A) FROM WHICH THE UNDISCLOSED SALES AS GRANTED RELIEF BY THE LEARNED CIT(A) WAS 14 ,57,701 ALONE WAS TO BE REDUCED FOR THE PURPOSE OF COMPUTING 3% INCOME TO BE TAXED WHEN THE INCOME WAS TO BE COMPUTED AT 44,1 93 AND THE ASSESSEE HAD ALREADY DECLARED THE INCOME OF 38,807 THEREIN. THE ASSESSING OFFICER REJECTING THE PETITION U/S.154 HELD THAT THERE WAS NOTHING SPECIFIC TO THIS EFFECT IN THE ORDER OF THE LEARNED CIT(A) AND THEREFORE, THE RELIEF GRANTED BY THE LE ARNED CIT(A) WAS ONLY 1,25,000 ON ACCOUNT OF PURPORTED INVESTMENT IN SALES AND 1,40,922 BEING THE 3% REDUCTION IN THE UNDISCLOSED SALES FROM 66 LAKHS TO 14 LAKHS BY THE LEARNED CIT(A). VIDE THE IMPUGNED ORDER, THE LEARNED CIT(A) UPHELD THE REJECTIO N OF THE PETITION U/S.154 AGAINST WHICH THE ASSESSE IS IN APPEAL BEFORE THE TRIBUNAL. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT MISTAKE APPARENT FROM RECORD HAS BEEN CONSIDERED OTHERWISE BY THE ASSESSING OFFICER AND THE LEARNED CIT(A) AS AN ES TIMATION OF INCOME AND OPINION WHEN THE MISTAKE APPARENT FROM RECORD IS SUBSTANTIATED BY THE FACTS AND FIGURES WHICH ARE AS ITA NO.444/CTK/2011 SRI BAIJNATH AGRAWAL V. ACIT (ASSESSMENT YEAR 2003 - 04) 3 FOLLOWS. THE LEARNED CIT(A) WAS APPRISED OF THE NET PROFIT DECLARED BY THE ASSESSEE NOT DISCLOSING THE UNACCOUNTED SALES WHICH WAS T O BE COMPUTED BY THE ASSESSING OFFICER LATER. HAVING ADJUDICATED ON THE AMOUNT OF UNACCOUNTED SALES AND ALSO THE RELIEF TO BE GRANTED ON ACCOUNT OF INVESTMENT IN SALES, THE APPEAL EFFECT TO BE GIVEN THEREOF WOULD READ AS FOLLOWS : PARTICULARS AMOUNT IN NET PROFIT AS PER P & L ACCOUNT 1,29,711.08 ESTIMATED INCOME FROM UNACCOUNTED SALES DISCLOSED BY THE ASSESSEE. 38,807.00 INCOME FROM UNACCOUNTED/SUPPRESSED SALES UPHELD BY CIT(A). 5,386.00 1,73,904.68 INCOME FROM OTHER SOURCES UNDISCLOSED INCOME U/S.69 UPHELD BY CIT(A) 75,000.00 INTEREST ON NSCS & FDR 20,868.00 95,868 2,69,772.68 LESS: DEDUCTION U/S.80L 12,000 TOTAL INCOME: 2,57,772.68 OR 2,57 ,773 THE LEARNED CIT(A) THEREFORE MISDIRECTED HIMSELF AS CAN BE PERUSED IN HIS ORDER ON PAGES 6 AND 7, WHEN THE COMPU TATION OF INCOME AT 3% FROM SALES HAVE BEEN ACCEPTED BY HIM AT 4,21,938 AND HE COMBINED THE DISCLOSED SALES ALONG WITH THE UNDISCLOSED SALES AMOUNTING TO 93,67,203 BY COMPUTING INCOME FROM SALES AT 2% AT 2,81,016. THIS CLEARLY INDICATED THAT THE ORI GINAL INCOME AS RETURNED BY THE ASSESSEE ALONG WITH THE INCOME ALREADY DECLARED AT 3% ON THE CONCEALED SALES WAS 38,807 ONLY AND COULD NOT BE MORE THAN THE INCOME AS COMPUTED BY THE LEARNED CIT(A) AT ITA NO.444/CTK/2011 SRI BAIJNATH AGRAWAL V. ACIT (ASSESSMENT YEAR 2003 - 04) 4 2,81,016 WHEN HE WAS TO GRANT RELIEF ON THE ASSESSEE S APPEAL OF TAXING THE INCOME ATRS.4,21,938. THE INCOME THEREFORE, HAS BEEN DOUBLY TAXED IN THE APPEAL EFFECT GIVEN BY THE ASSESSING OFFICER U/S.251 WHICH BEGINS WITH THE COMPUTATION OF INCOME AS ASSESSED U/S.143(3) AT 8,42,800. THE HIGHER FIGURE HAS BE EN TAKEN AND NOT CONSIDERED FOR THE PURPOSE OF RELIE F GRANTED WHICH WAS NOT 1,40, 922 BEING DIFFERENCE OF 4,21,938 LESS 2,81,016 ONLY ARITHMETICALLY . HE SUBMITTED THAT THIS MISTAKE IS APPARENT FROM RECORD AND DOES NOT REQUIRE ANY DELIBERATION WHICH TH E ASSESSING OFFICER HAS HELD AS NOT A SPECIFIC ORDER REGARDING ESTIMATE OF INCOME ON REMAINING SALES. THE PRESENT LEARNED CIT(A) CONFIRMED THIS WITHOUT APPRECIATING AS TO HOW INCOME FROM SALES INCLUDING THE SUPPRESSED SALES AMOUNTING TO 2,81,016 COULD BE REDUCED FROM 4,21,938 WHEN THE PURPORTED DIFFERENCE OF 1,40,922 IS CONSIDERED AS RELIEF GRANTED BY THE LEARNED CIT(A) AS HELD BY HIM FOR GIVING APPEAL EFFECT. HE PRAYED THAT THE AMOUNT OF SALES AS PER ACTUAL FIGURES ASSESSED AND GRANTED RELIEF BE CONS IDERED AS RELIEF OF INVESTMENT OF 75,000 HAS BEEN CONFIRMED BY THE LEARNED CIT(A) CORRECTLY. 4. THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW FOR HER PART OF SUBMISSIONS. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAI LABLE ON RECORD . CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO AGREE WITH THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE FOR THE SIMPLE REASON THAT A RELIEF IS TO BE GRANTED FROM THE INCOME WHICH WAS COMPUTED ON A FIGURE OF SALES WHICH WERE ESTIMATED WERE REDUCED SUBSEQUENTLY BY THE LEARNED CIT(A) THEREFORE REDUCED THE CORRESPONDING INCOME. THE ASSESSING OFFICER IN HIS COMPUTATION THEREFORE HELD A VIEW THAT IT WAS THE 3% INCOME WHICH WAS GRANTED R ELIEF AND NOT THE ESTIMAT ED SALES WHICH HAD BEEN REDUCED WHEN THE LEARNED CIT(A) IN HIS ORDER HAD CLEARLY ITA NO.444/CTK/2011 SRI BAIJNATH AGRAWAL V. ACIT (ASSESSMENT YEAR 2003 - 04) 5 INDICATED THAT THE UNACCOUNTED SALES WERE TO BE AT 14 ,57,701. THE TOTAL SALES THEREFORE COMPUTED BY HIM AT 93,67,203 ON WHICH INCOME OF 2,81,016 WAS TO BE COMPUTED WHEN THE LEARNED CIT(A) SUSTAINING THE ASSESSING OFFICERS GRANTING RELIEF U/S.251 HAD NOT CONSIDERED THE INCOME ASSESSED BY HIM AT 4,21,938 WHEN HE SOUGHT TO COMPUTE HIS GRANTING RELIEF FROM ASSESSED INCOME OF 8,42,800. OBVIOUSLY A HIGHER AMOUNT OF 4,21, 938 COULD NOT HAVE BEEN REDUCED FROM 2,81,016 WAS THE PETITION BY THE ASSESSEE U/S.154 WHICH WAS REJECTED BY THE ASSESSING OFFICER BY HOLDING A VIEW THAT THE SALES SUPPRESSED BY THE ASSESSEE WAS TO BE COMPUTED SEPARATELY RESULTING IN ABSURD FIGURES OF 2 CRORES . HAVING AGREED TO THE PROPOSITION OF GRANTING RELIEF ON ACCOUNT OF INVESTMENT IN THE S ALES FROM 2 LAKHS TO 75,000, THE ASSESSING OFFICER SHOULD HAVE APPRECIATED THAT IT WAS A CORRESPONDING REDUCTION OF GRANTING RELIEF TO THE ASSESSEE TO LIMIT SUPPRESSED SALES ASSESSED AT 61,55,127 WHICH WAS ORIGINALLY APPEALED AGAINST BY THE ASSESSEE BEFORE THE EARLIER CIT(A) STOOD REDUCED TO 14,57,701 WHICH THE ASSESSEE HAD ALREADY DECLARED INCOME @3% AT 38,807 AS AGAINST 44,193 . THIS MISTAKE IS APPA RENT FROM RECORD THEREFORE, WAS BOUND TO BE RECTIFIED BY THE ASSESSING OFFICER. THE LEARNED CIT(A) CONTRADICTED HIS FINDING BY SUSTAINING THE ASSESSING OFFICERS COMPUTATION WHEN THE ASSESSING OFFICER HAS NOT COMPUTED THE INCOME AS PER THE RELIEF GRANTED B Y THE LEARNED CIT(A). WHEN THE VERY SUPPRESSED SALES HAVE BEEN REDUCED IT WAS NOT THE CASE OF THE ASSESSING OFFICER TO ESTIMATE THE TOTAL SALES SUPPRESSED BY THE ASSESSEE WHEN ONLY 3% OF THE SUPPRESSED SALES INCOME WAS ADJUDICATED UPON BY THE LEARNED CIT(A ). THE RELIEF GRANTED BY THE LEARNED CIT(A) WAS THEREFORE ON THE ESTIMATION OF SALES WHICH HAS BEEN CONSIDERED OTHERWISE BY THE ASSESSING OFFICER BY GRANTING RELIEF ONLY TO THE EXTENT OF 3% ON THE SUPPRESSED SALES COMPUTED BY THE LEARNED CIT(A). THE ASSES SING OFFICER WAS THEREFORE TO ITA NO.444/CTK/2011 SRI BAIJNATH AGRAWAL V. ACIT (ASSESSMENT YEAR 2003 - 04) 6 RECTIFY THIS MISTAKE APPARENT FROM RECORD BY GIVING APPEAL EFFECT NOT ON THE INCOME WHICH HE HAD PROPOSED WAS APPEALED AGAINST BEORE THE LEARNED CIT(A). THE LEARNED CIT(A) HAD ACTUALLY GRANTED RELIEF BY COMPUTING THE INCOME @3 % ON THE SALES ESTIMATED BY HIM BY SUBSTAN TIALLY REDUCING THE SUPPRESSED S ALES WHICH HE INSISTED WAS AN OPINION AND NO SPECIFIC ORDER REGARDING ESTIMATION OF INCOME WAS PASSED BY HIM. THE INCOME @3% ALREADY STOOD DECLARED BY THE ASSESSEE THEREFORE COULD N OT BE TAXED AGAIN ON THE BASIS OF ESTIMATION WHICH HE HAD ALREADY APPEALED BEFORE THE LEARNED CIT(A). THE PERCENTAGE OF INCOME REMAINING THE SAME, THE ASSESSEE COULD NOT BE SUBJECTED TO TAX ON THE ALREADY DISCLOSED SALES INCOME @3% ON 79,09,502 WHICH WAS APPARENTLY MISSED BY THE ASSESSING OFFICER IN THE RECTIFICATION CARRIED OUT BY HIM U/S.251. THE SAME IS, THEREFORE, DIRECTED TO BE RECTIFIED AND THE COMPUTATION OF INCOME AS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE , REPRODUCED IN PARAGRAPH - 3 OF T HIS ORDER , IS TO BE ADOPTED FOR GIVING APPEAL EFFECT U/S.154 . IN VIEW OF THE ABOVE, WE DIRECT THE ASSESSING OFFICER ACCORDINGLY , BY SETTING ASIDE THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND ALLOWING THE APPEAL OF THE ASSESSEE . 6. IN THE RESULT, THE AP PEAL OF THE ASSESSEE IS ALLOWED. S D/ - S D/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 13.01.2012 H.K.PADHEE, SENIOR PRIVATE SECRETARY. ITA NO.444/CTK/2011 SRI BAIJNATH AGRAWAL V. ACIT (ASSESSMENT YEAR 2003 - 04) 7 COPY OF THE ORDER FORWARDED TO : 1. T HE APPELLANT: SRI BAIJNATH AGRAWAL, PROP.PAWAN KUMAR KRISHNA KUMAR, KHETRAJPUR, SAMBALPUR 2. THE RESPONDENT: ASST.COMMISSIONER OF INCOME - TAX , CIRCLE 1, SAMBALPUR. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.