Sri Mukul Dutta, Kolkata V. ITO, WD-33(3), KOLKATA, Kolkata

ITA 486/KOL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4232 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 07-11-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 24-04-2015
• Court: TRIBUNAL
• Department Lawyers: DEBASISH BANERJEE
• Keywords: Unexplained cash credit

Judgement Text

1 ITA NO.486/KOL/2015 MUKUL DUTTA, AY 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA [BEFORE SHRI M. BALAGANESH, AM & SHRI S. S. VISWAN ETHRA RAVI, JM] I.T.A NO. 486/KOL/2015 ASSESSMENT YEAR: 2010-11 SHRI MUKUL DUTTA VS. INCOME-TAX OFFICER, WD-33( 3), KOLKATA (PAN: AECPD6706L) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 07.11.2016 DATE OF PRONOUNCEMENT: 16.11.2016 FOR THE APPELLANT: SHRI SUBASH AGARWAL, ADVOCA TE FOR THE RESPONDENT: SHRI DEBASISH BANERJEE, JC IT ORDER PER SHRI M. BALAGANESH, AM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-9, KOLKATA VIDE APPEAL NO. 04/CIT(A)-9/WD-33(3)/2014-15 DATED 22.01.2015. ASSE SSMENT WAS FRAMED BY ITO, WARD- 33(3), KOLKATA U/S. 144/145(3) OF THE INCOME TAX AC T, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2010-11 VIDE HIS ORDER DATED 23.01.20 13. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: I. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.14,98,590/- MADE BY T HE LD. A.O. ON ACCOUNT OF ALLEGED UNDISCLOSED RECEIPTS. 2. FOR THAT THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT THE ALLEGED UNDISCLOSED CONTRACTUAL RECEIPTS OF RS.14,98,590/- IS INCLUDED IN THE GROSS RECEIPTS OR THE ASSESSEE INASMUCH AS THE TOTAL RECEIPTS AS PER THE BOOKS OF ACCOUNTS IS RS.4,0 1,25,002/- WHICH EXCEEDS THE TOTAL RECEIPTS DISCLOSED IN FORM 26AS OF RS.1,1 1,70,542/-. 3. WITHOUT PREJUDICE TO GROUND NO. I AND 2, THE LD. CIT(A) INSTEAD OR SUSTAINING THE ENTIRE ADDITION OF RS.14,98,590/- OUGHT TO HAVE APPLIED AP PROPRIATE N .P. PERCENT ON THE SAID SUM. 3. BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESSEE I S A PROPRIETOR OF M/S. A. S. CONSTRUCTION AND THE NATURE OF BUSINESS IS CIVIL GOVERNMENT CONT RACTOR. THE AO OBSERVED FROM THE P&L ACCOUNT OF THE ASSESSEE THAT THE TOTAL TURNOVER OF THE BUSINESS WAS SHOWN AT RS.4,01,25,002/- AND NET PROFIT WAS REFLECTED AT RS .9,43,301/- WHICH WORKED OUT TO 2.35% OF THE TURNOVER. DUE TO VARIOUS DEFICIENCIES IN THE B OOKS OF ACCOUNT SUBMITTED BY THE ASSESSEE 2 ITA NO.486/KOL/2015 MUKUL DUTTA, AY 2010-11 THE AO PROCEEDED TO REJECT THE BOOKS OF ACCOUNT OF THE ASSESSEE IN TERMS OF SECTION 145(3) OF THE ACT WHICH POINT IS NOT DISPUTED BY THE ASSES SEE EITHER BEFORE THE LD. CIT(A) OR BEFORE US. THE AO AFTER DULY CONSIDERING THE PAST HISTORY OF THE PROFIT PERCENTAGE REFLECTED BY THE ASSESSEE AND BY REALIZING THAT THE PROFIT PERCENTAG E DECLARED IN THE YEAR UNDER APPEAL IS LEAST RESORTED TO ESTIMATION AND ACCORDINGLY ESTIMATED TH E NET PROFIT OF THE ASSESSEE AT 3.35% AS AGAINST THE RETURNED PROFIT OF 2.35% AND MADE AN AD DITION OF RS.4,01,250/-. APART FROM THIS, THE LD AO FOUND THAT THE ASSESSEE WAS IN RECEIPT OF MONIES FROM IRCON INTERNATIONAL LTD. TOWARDS CONTRACTUAL PAYMENTS TO THE TUNE OF RS.14, 98,590/-, WHICH WAS ALSO DULY SUBJECT TO TDS THEREON, WHICH WERE REFLECTED IN FORM 26AS OF T HE ASSESSEE. THE LD AO BROUGHT THE SUBJECT MENTIONED RECEIPT OF RS.14,98,590/- TO TAX AS UNEXPLAINED CREDIT AS IT WAS NOT INCLUDED IN THE TURNOVER DISCLOSED BY THE ASSESSEE. BEFORE THE LD. CIT(A), THE ASSESSEE PLEADED THAT THE SUM OF RS.14,98,590/- SHOULD NOT B E TAXED IN FULL AND INSTEAD ONLY THE NET PROFIT DERIVED FROM SUCH CONTRACT RECEIPT SHOULD BE BROUGHT TO TAX. THE LD. CIT(A), HOWEVER, FELT THAT THE RECEIPT OF RS.14,98,590/- WA S NOT INCLUDED IN THE TOTAL RECEIPTS BY THE ASSESSEE AND SINCE ALL THE EXPENSES HAVE ALREADY BE EN CLAIMED BY THE ASSESSEE IN ITS P&L ACCOUNT, NO EXPENSES REMAINED TO BE UNCLAIMED AND H ENCE, THERE IS NO SCOPE FOR MAKING ADDITION ONLY TOWARDS NET PROFIT THEREON. ACCORDIN GLY, HE UPHELD THE ORDER OF THE AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. AR ARGUED THAT THERE IS NO EVIDENCE BROU GHT ON RECORD BY THE LD. CIT(A) THAT ALL EXPENSES HAVE ALREADY BEEN CLAIMED BY THE ASSESSEE AND THERE IS NO CORRESPONDING EXPENDITURE RELATABLE TO THE SUBJECT MENTIONED RECE IPT AND GROSSLY ERRED IN CONFIRMING THE ADDITION MADE TOWARDS TOTAL CONTRACT RECEIPT OF RS. 14,98,590/-. IN RESPONSE TO THIS, THE LD. DR VEHEMENTLY RELIED ON THE ORDER OF LD. CIT(A). 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT IN THE FACTS AND CIRCUMSTANCES T HE LD AO OUGHT TO HAVE ADDED ONLY THE NET PROFIT@ 3.35% ON THE SUBJECT MENTIONED CONTRACT REC EIPT OF RS.14,98,590/-. THIS ADDITION, ONCE MADE WOULD MEET THE ENDS OF JUSTICE. WE ALSO F IND THAT THE AO HAD ALREADY MADE AN ADDITION OF RS.4,01,250/- TOWARDS ESTIMATION OF NET PROFIT AT 3.35% OF TURNOVER AFTER REJECTING THE BOOKS OF ACCOUNT U/S. 145(3) OF THE A CT WHICH IS NOT DISPUTED BEFORE US. WE HOLD THAT THE ADDITION OF RS.50,202/- (I.E. RS.14,9 8,590 X 3.35% ) WOULD HAVE TO BE 3 ITA NO.486/KOL/2015 MUKUL DUTTA, AY 2010-11 TELESCOPED WITH THE ADDITION OF RS.4,01,250/- AS BO TH THE ADDITIONS ARE ON ACCOUNT OF NET PROFIT. HENCE, THE NET ADDITION WOULD BE RS.4,01,2 50/- MINUS RS.50,202/- WHICH WOULD BE RS.3,51,048/-. THE LD AO IS DIRECTED ACCORDINGLY. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED AS INDICATED ABOVE. ORDER IS PRONOUNCED IN THE OPEN COURT ON 16.11.2016 . SD/- SD/- (S.S. VISWANETHRA RAVI) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED : 16TH NOVEMBER, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT SHRI MUKUL DUTTA, C/O, A. S. CONSTRUCTI ON, C-27, CHALANTIKA, GARIA FARTABAD, KOLKATA-700 084.. 2 RESPONDENT ITO, WARD-33(3), KOLKATA 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .