ITO, Trichur V. Sri.O.B.Baburaj, Trichur

ITA 453/COCH/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73933 (ITAT-COCHIN)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 21-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LATHA V KUMAR
• Assessee Lawyers: T M SREEDHARAN SENIOR
• Section: 68

Judgement Text

1 ITA NO. 453&454/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 453 & 454/COCH/2013 (ASSESSMENT YEARS 2008-09 & 2009-10) ITO, WD.2(1) VS SHRI O.B. BABURAJ RNGE-2, TRICHUR ORAYAMPURATH HOUSE KOORKENCHERY THRISSUR 680 007 PAN : ADDPB0357P (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. LATHA V KUMAR RESPONDENT BY : SHRI T.M. SREEDHARAN SENIOR COUNSEL DATE OF HEARING : 01-01-2014 DATE OF PRONOUNCEMENT : 28-03-2014 O R D E R PER N.R.S. GANESAN (JM) BOTH THE APPEALS OF THE REVENUE ARE DIRECTED AGAIN ST THE RESPECTIVE ORDERS OF CIT(A) FOR THE ASSESSMENT YEARS 2008-09 A ND 2009-10. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN BOTH THE A PPEALS, THEY WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON O RDER. 2. SMT. LATHA V KUMAR, THE LD.DR SUBMITTED THAT FOR THE ASSESSMENT YEAR 2008-09, THE ASSESSEE FAILED TO INCLUDE AN AMO UNT OF RS.20,98,385 TO 2 ITA NO. 453&454/COCH/2013 THE GROSS RECEIPTS. THEREFORE, THE SAME WAS ADDED TO THE GROSS RECEIPTS OF THE ASSESSEE. ACCORDING TO THE LD.DR, THE ASSES SEE CLAIMED THAT THE CHEQUE WAS DEPOSITED FOR COLLECTION AFTER 31 ST MARCH. IN THE MERCANTILE SYSTEM OF ACCOUNTING, ACCORDING TO THE LD.DR, THE A MOUNT RECEIVED AND RECEIVABLE HAVE TO BE INCLUDED IN THE GROSS RECEIPT . THE ASSESSEE HAS RECEIVED THE CHEQUE BEFORE 31 ST MARCH, IT HAS TO BE TREATED AS RECEIPT SINCE CHEQUE IS THE PRESCRIBED MODE OF PAYMENT FOR THE AM OUNT EXCEEDING RS.20,000. HOWEVER, THE CIT(A), WITHOUT DISCUSSING THE NATURE OF RECEIPT, DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE NET PROFIT ON RS.10,80,331 EVEN THOUGH THE TOTAL RECEIPT WAS RS.20,98,385. AC CORDING TO THE LD.DR, THE CIT(A) FAILED TO MAKE REFERENCE TO THE FACTS BR OUGHT ON RECORD BY THE ASSESSING OFFICER AND TO PASS A SPEAKING ORDER. 3. FOR THE ASSESSMENT YEAR 2009-10, THE ASSESSEE FA ILED TO INCLUDE IN THE RECEIPTS AN AMOUNT OF RS.55,90,507. THEREFORE, THE ASSESSING OFFICER TREATED THE SAME AS RECEIPTS AND ESTIMATED THE GROS S PROFIT AT 8%. THE ASSESSEE HAS TAKEN SEVERAL OTHER GROUNDS BEFORE THE CIT(A) WITH REGARD TO ADDITION U/S 68. THE CIT(A) WITHOUT CONSIDERING TH E FACTS OF THE CASE SIMPLY DIRECTED THE ASSESSING OFFICER TO ESTIMATE T HE INCOME AT 8% ON RS. 55,90,507. ACCORDING TO THE LD.DR, THE CIT(A) OUGH T TO HAVE REFERRED TO THE FACTS OF THE CASE AS HAS BEEN BROUGHT ON RECORD BY THE ASSESSING 3 ITA NO. 453&454/COCH/2013 OFFICER IN THE IMPUGNED ASSESSMENT ORDER AND THEREA FTER DISPOSED OF THE APPEALS BY PASSING A SPEAKING ORDER. 4. ON THE CONTRARY, SHRI T.M. SREEDHARAN, THE LD.SE NIOR COUNSEL FOR THE ASSESSEE SUBMITTED THAT FOR THE ASSESSMENT YEAR 200 8-09, THE ASSESSEE HAS NOT SHOWN THE BILL RECEIVABLE AS ON 31-03-2008 SINCE IT WAS ENHANCED ONLY ON 03-04-2008. ACCORDING TO THE LD.SENIOR COU NSEL, THE ACCOUNTANT COMMITTED AN ERROR AND IGNORED THE CHEQUE IN HAND T O THE EXTENT OF RS.20,90,335. AT THE BEST, ACCORDING TO THE LD.SEN IOR COUNSEL, RS.10,80,331 COULD BE INCLUDED IN THE GROSS RECEIPT AND PROFIT COULD BE ESTIMATED ON THE TOTAL GROSS RECEIPTS. THE CIT(A), AFTER CONSIDERING THE FACTS OF THE CASE HAS DIRECTED THE ASSESSING OFFICE R TO ESTIMATE 8% ON RS.10,80,331 FOR THE ASSESSMENT YEAR 2008-09. SIMIL ARLY, FOR THE ASSESSMENT YEAR 2009-10, THE ASSESSING OFFICER WAS DIRECTED TO ESTIMATE NET PROFIT AT 8% ON RS.55,90,507. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE CAREFULLY GONE THROUGH THE IMPUGNED ORDER OF CIT(A). THE CIT(A), AFTER RE PRODUCING THE SO-CALLED ARGUMENTS NOTE SAID TO BE FILED BY THE ASSESSEE DIR ECTED THE ASSESSING OFFICER TO ADOPT 8% NET PROFIT ON RS.10,80,331 FOR THE ASSESSMENT YEAR 2008-09 AND RS.55,90,507 FOR THE ASSESSMENT YEAR 20 09-10. THE CIT(A) 4 ITA NO. 453&454/COCH/2013 HAS NOT DISCUSSED ANYTHING ABOUT THE NATURE OF RECE IPT AND AS TO WHY IT SHOULD NOT BE INCLUDED IN THE GROSS RECEIPT AS DISC USSED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. FROM THE ORDER OF THE CIT(A) IT APPEARS THAT HE SINGLED OUT THE CHEQUE IN THE HAND OF THE A SSESSEE ON THE LAST DAY OF THE ACCOUNTING YEAR AND DIRECTED THE ASSESSING O FFICER TO TAKE 8% OF NET PROFIT. HE HAS NOT DISCUSSED ANYTHING ABOUT WHAT W OULD HAPPEN TO THE OTHER RECEIPTS FOR THE YEAR UNDER CONSIDERATION. I F 8% NET PROFIT IS TO BE ADOPTED ON THE AMOUNT OMITTED TO BE INCLUDED IN THE GROSS PROFIT, THEN, THE SAME RATIO SHOULD BE APPLIED FOR OTHER AMOUNTS INCL UDED IN THE GROSS RECEIPTS ALSO. AS RIGHTLY POINTED OUT BY THE LD.DR , FOR THE ASSESSMENT YEAR 2009-10, THE ADDITION WAS MADE U/S 68 OF THE INCOME -TAX ACT ON THE BASIS OF THE INCREASE IN NET WEALTH. THOUGH THE ASSESSEE HAS RAISED A SPECIFIC GROUND, THE SAME WAS NOT CONSIDERED BY THE CIT(A). THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) BEING A QUAS I JUDICIAL AUTHORITY IS EXPECTED TO DISCUSS THE FACTS AFTER REFERRING TO TH E MATERIAL AVAILABLE ON RECORD INCLUDING THE IMPUGNED ORDER OF THE ASSESSIN G OFFICER AND THEREAFTER HE HAS TO RECORD HIS REASONS FOR REACHING THE CONCL USION IN EITHER WAY BY ACCEPTING OR REJECTING THE CONTENTIONS OF THE ASSES SEE. THE CIT(A) WITHOUT ANY DISCUSSION SIMPLY DIRECTED THE ASSESSING OFFICE R TO ADOPT 8% ON THE AMOUNT WHICH WAS OMITTED TO BE INCLUDED IN THE GROS S PROFIT. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) HAS TO DISCUSS THE NATURE OF RECEIPTS AS ALSO WHETHER IT HAS TO BE INCLUDED IN T HE GROSS RECEIPT OR NOT 5 ITA NO. 453&454/COCH/2013 AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. THE CIT(A) IS ALSO EXPECTED TO DISCUSS ALL THE ISSUES RAISED BY THE ASSESSEE BEFOR E HIM. THEREFORE, THE ORDERS OF CIT(A) ARE SET ASIDE AND THE ISSUE IS REM ITTED BACK TO THE FILE OF THE CIT(A). THE CIT(A) SHALL RECONSIDER THE ISSUE AFRESH ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD AND THEREAFTER TAK E A DECISION IN ACCORDANCE WITH LAW AFTER HEARING THE ASSESSEE. 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH MARCH, 2014. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 28 TH MARCH, 2014 PK/- COPY TO: 1. ITO, WD.2(1), RANGE-2, TRICHUR 2. SHRI O.B. BABURAJ, ORAYAMPURATH HOUSE, KOORKENCH ERY, THRISSUR 680 007 3. THE COMMISSIONER OF INCOME-TAX, TRICHUR 4. THE COMMISSIONER OF INCOME-TAX(A)-V, KOCHI 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH