S.A.Kumar, Salem V. ITO, Salem

ITA 484/CHNY/2015

• Counselvise Citation: 48421714 RSA 2015
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 04-09-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 09-03-2015
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: G BASKAR
• Section: 148; 69C; 143(3); 133A; 234B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL S M C BENCH : CHENNAI . . . , [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ] ./ I.T.A.NOS.482 & 484/MDS/2015 / ASSESSMENT YEARS : 2002-03 AND 2003-04 SHRI S.A. KUMAR 443, FORT MAIN ROAD SALEM 636 002 VS. THE INCOME TAX OFFICER WARD I(2) SALEM [PAN AEEPK 3823 R ] ( ! / APPELLANT) ( '# ! /RESPONDENT) / APPELLANT BY : SHRI G. BASKAR, ADVOCATE /RESPONDENT BY : DR. B. NISCHAL, JCIT / DATE OF HEARING : 04 - 0 9 - 2015 / DATE OF PRONOUNCEMENT : 11 - 0 9 - 2015 / O R D E R THESE APPEALS OF THE ASSESSEE ARE AGAINST SEPA RATE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS), SALEM, DATED 30.12.2014, RELATING TO ASSESSMENT YEARS 2002-03 AN D 2003-04. SINCE THE ISSUES INVOLVED IN THESE APPEALS ARE COMMON AND SIMILAR, FOR THE SAKE OF CONVENIENCE, THE SAME ARE DISPOSED OF BY TH IS COMPOSITE ORDER. 2. THE BRIEF FACTS OF THE CASE ARE THAT FOR ASSESSMENT YEAR 2002-03, THE ASSESSEE FILED HIS RETURN OF INCOME D ISCLOSING INCOME FROM BUSINESS OF ` 1,51,695/- AND AGRICULTURAL INCOME OF ` 55,000/-. ITA NOS.482 & 484/15 :- 2 -: SUBSEQUENTLY, THE RETURN WAS PROCESSED. THE ASSESS ING OFFICER ISSUED NOTICE U/S 148 OF THE ACT AND RE-ASSESSMENT PROCEED INGS WERE INITIATED BY THE ASSESSING OFFICER AND CONCLUDED THAT THE OBJ ECTIONS RAISED ON VALIDITY OF NOTICE BY THE ASSESSEE ARE NOT VIABLE. IN HEARING PROCEEDINGS, BOOKS OF ACCOUNT WERE PRODUCED AS THE ASSESSEE IS IN THE BUSINESS OF ESSENTIAL COMMODITY DHALL AND ALSO BUSINESS CONNECTIONS IN RESPECT OF PURCHASE OF DHALL FROM M/ S NANDHI DALL MILL, A PARTNERSHIP FIRM. DUE TO DISCREPANCIES IN RESPEC T OF PURCHASES FOUND IN SURVEY OPERATION U/S 133A ON 17.10.2003, THE ASSESSING OFFICER HAS CALLED FOR EXPLANATION OF THE ASSESSE E AND A STATEMENT WAS RECORDED U/S 133A(3)(III) OF THE ACT. AFTER DUE CONSIDERATION OF THE SUBMISSIONS AND CLARIFICATIONS AND BASED ON THE MATERIAL UNEARTHED IN THE SURVEY PROCEEDINGS, THE ASSESSING OFFICER ES TIMATED THE GROSS PROFIT ON THE UNACCOUNTED SALES AT 10%. ACCORDINGL Y, ADDED ` 1,84,742/- TO THE RETURNED INCOME. FURTHER, THE A SSESSING OFFICER TREATED ` 1,18,050/- AS INCOME U/S 69C IN RESPECT OF UNEXPL AINED EXPENDITURE AND BROUGHT TO TAX AND ASSESSED THE TOT AL INCOME AT ` 4,54,487/- AND ALSO DISALLOWED AGRICULTURAL INCOME OF ` 55,000/- AND A DEMAND OF ` 1,47,611/- WAS RAISED. 3. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER PAS SED U/S 143(3) R.W.S 147 OF THE ACT, THE ASSESSEE FILED AP PEAL CHALLENGING THE VALIDITY OF ISSUE OF NOTICE U/S 148 OF THE ACT AND ALSO THE GROSS PROFIT ITA NOS.482 & 484/15 :- 3 -: RATE CONSIDERED BY THE ASSESSING OFFICER AT 10% IS ON HIGHER SIDE AS THE ASSESSEE IS ONLY A TRADER AND HE DOES NOT HAVE ANY MANUFACTURING FACILITY TO PROCESS THE GOODS AND WAS DEPEND ON OTH ERS AND CANNOT SELL THE GOODS FOR MORE THAN HIGHER MARGIN OF 5%. THE A SSESSING OFFICER ALSO NOT CONSIDERED THE AGRICULTURAL INCOME DISCLOS ED TO THE INCOME- TAX DEPARTMENT FROM THE EARLIER ASSESSMENT YEARS 19 99-2000 AND THE SAME IS ACCEPTED BY THE DEPARTMENT AND NOT IN DIS PUTE. THE ASSESSEE SUPPORTED THE SOURCE FOR PURCHASES WITH AN NUAL AGRICULTURAL INCOMES AND DRAWINGS FROM PERSONAL ACCOUNT AND WIFE S PERSONAL ACCOUNT. ON HEARING THE SUBMISSIONS OF THE ASSESS EE, PERUSING THE GROUNDS OF APPEAL AND CONSIDERING THE TYPE OF BUSI NESS, THE CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO REDUCE THE GR OSS PROFIT TO 7.5% AS AGAINST 10%. IN RESPECT OF THE OTHER GROUNDS, TH E CIT(A) HAS SUSTAINED THE ASSESSING OFFICERS ORDER. FURTHER, AGGRIEVED WITH THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEF ORE THE TRIBUNAL RAISING VARIOUS GROUNDS INCLUDING REDUCING OF GROSS PROFIT RATE TO 5% AND TO CONSIDER AGRICULTURAL INCOME AVAILABLE WITH THE ASSESSEE AS DISCLOSED IN THE RETURNS OF INCOME FILED WITH THE D EPARTMENT. 4. THE LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSE E MADE SUBMISSIONS AND HAS NOT PRESSED GROUND NOS.1,2,3,4 & 8. ONLY THE RELATED GROUNDS IN RESPECT OF GROSS PROFIT RATE AND AGRICULTURAL INCOME WERE ARGUED. THE LD. COUNSEL FILED WRITTEN SUBMISS IONS AND CLAIMED ITA NOS.482 & 484/15 :- 4 -: THE CIT(A)S DIRECTIONS TO ADOPT 7.5% GROSS PROFIT IN THE APPELLANTS HANDS WHICH IS ALSO HIGHER. SINCE THE ASSESSEE D OES NOT HAVE INFRASTRUCTURE FACILITY AND NOT A MANUFACTURER TO P ULVERIZE, CLEAN, DRY AND MAKE PACKETS AS AVAILABLE IN OTHER FIRM, REQUE STED THE TRIBUNAL TO CONSIDER 5% OF SALES AS THE NET PROFIT. IN RESPECT OF GROUND NOS. 6 & 7, THE LD. COUNSEL SUBMITTED THAT BEFORE THE CIT(A ) HE HAS ARGUED ON THESE GROUNDS BUT IT WAS WRONGLY OBSERVED BY THE CI T(A) IN THE IMPUGNED ORDER AS NOT PRESSED. HE PRAYED THAT TH E ADDITION OF ` 1,18,050/- WHICH WAS FOR PURCHASE OF GOODS BE SUPPO RTED WITH AGRICULTURAL INCOME AND THE DRAWINGS AVAILABLE WITH THE ASSESSEE. TO SUPPORT HIS SUBMISSIONS, HE FILED COPIES OF RETURN S OF INCOME DISCLOSING AGRICULTURAL INCOME FROM ASSESSMENT YEAR 1999-2000 TO 2003-04. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE SUBMITTED THAT SINCE THE ASSESSEE HAS ALREADY GOT RELIEF IN RESPECT OF GROSS PROFIT RATE AT 7.5% AS AGAINST 10% ADOPTED BY THE ASSESSING OFFICER, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT(A) AND OBJECTED TO GROUNDS RAISED 6 & 7. 6. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTI ES AND ALSO PERUSING THE MATERIAL AVAILABLE ON RECORD, THE TRIBUNAL IS OF THE OPINION THAT CONSIDERING THE BUSINESS OF THE ASSES SEE WHICH IS AN UNORGANIZED SECTOR WHERE THERE IS NO PROPER INFRAST RUCTURE FACILITY ITA NOS.482 & 484/15 :- 5 -: AVAILABLE, 5% OF GROSS PROFIT IS REASONABLE AND DIR ECT THE ASSESSING OFFICER TO ADOPT GROSS PROFIT AT 5%. 7. WITH REGARD TO UNACCOUNTED PURCHASES OF ` 1,18,050/- , THE ASSESSEE IS IN RECEIPT OF AGRICULTURAL INCOME AND F ILING INCOME TAX RETURNS REGULARLY DISCLOSING AGRICULTURAL INCOME WH ICH IS EVIDENT FROM THE COPIES OF RETURNS OF EARLIER ASSESSMENT YEARS F ILED BEFORE THE TRIBUNAL, AND ALSO DRAWINGS AS MENTIONED IN HIS SUB MISSIONS BEFORE THE LOWER AUTHORITIES. IN RESPECT OF AGRICULTURAL I NCOME, AS GROUND NO.7 REGARDING AVAILABILITY OF AGRICULTURAL INCOME WHICH THE CIT(A) HAS OBSERVED AS NOT PRESSED BEFORE HIM, BUT THE FACT RE MAINS THAT THE AGRICULTURAL INCOME IS VERY MUCH AVAILABLE, AND THE REPRESENTATIVE OF THE ASSESSEE WAS NOT AUTHORIZED TO NOT PRESS THE ISSUE BEFORE THE CIT(A). THEREFORE, THE ORDERS OF THE AUTHORITIES B ELOW ARE SET ASIDE AND THE ADDITION OF ` 1,18,050/- IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THE AGRICULTURAL INC OME ON THE BASIS OF MATERIAL EVIDENCE THAT WAS FILED BY THE ASSESSEE. THE ASSESSING OFFICER SHALL DECIDE THE ISSUE AFRESH AS PER LAW AF TER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. 8. FOR ASSESSMENT YEAR 2003-04, IN THE COURSE OF HEARI NG, THE ASSESSEES COUNSEL HAS NOT PRESSED GROUND NOS.1,2, 3,4 AND 7 AND HAS ADVANCED HIS ARGUMENTS ONLY ON OTHER GROUNDS. SINC E THE GROUNDS ARE ITA NOS.482 & 484/15 :- 6 -: SIMILAR AND THE CIT(A) HAS REDUCED THE GROSS PROFIT TO 7.5% OF TURNOVER AS AGAINST 10% ADOPTED BY THE ASSESSING OF FICER. THE ASSESSING OFFICER IS DIRECTED TO ADOPT GROSS PROFIT AT 5% IN THIS YEAR ALSO. THE AGRICULTURAL INCOME IS BEING OFFERED TO TAX IN THE EARLIER ASSESSMENT YEARS AND THE SAME MAY BE UTILIZED BY T HE ASSESSEE FOR HIS BUSINESS OR PERSONAL PURPOSES AND IT IS NOT COR RECT TO TAX AGRICULTURAL INCOME AS REGULAR INCOME. THE ASSESSI NG OFFICER IS THEREFORE, DIRECTED TO DELETE ADDITION OF ` 50,000/- TOWARDS AGRICULTURAL INCOME. THE ASSESSING OFFICER IS REQUIRED TO LEV Y INTEREST U/S 234B AS PER THE PROVISIONS OF THE ACT IN RESPECT OF THE TAX ASSESSED. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE A RE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH OF SEPTEMBER, 2015, AT CHENNAI. SD/- ( . . . ! ) (N.R.S. GANESAN) / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 11 TH SEPTEMBER, 2015 RD %&'' ()'*) / COPY TO: ' 1 . / APPELLANT 4. ' + / CIT 2. / RESPONDENT 5. ),-' . / DR 3. ' +'/! / CIT(A) 6. -0'1 / GF