Smt. Arati Jana, Kolkata V. ITO, Ward - 53(1), Kolkata, Kolkata

ITA 500/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54552 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 26-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 11-03-2010
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Assessee Lawyers: S BANDYOPADHYAY
• Keywords: Unexplained cash credit; Business income
• Section: 142(1); 133A; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , . ! . '# ) [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE SHR I C. D. RAO, AM] $ $ $ $ / I.T.A NO. 500/KOL/2010 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR: 2006-07 SMT. ARATI JANA VS. INCOME-TAX OFFICER, WD-53(1 ), KOLKATA (PAN-ACVPJ 6543 J) ( *+ /APPELLANT ) (,-*+/ RESPONDENT ) & $ $ $ $ / I.T.A NO. 691/KOL/2010 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER, WD-53(1), KOLKATA VS. SMT. ARAT I JANA ( *+ /APPELLANT ) (,-*+/ RESPONDENT ) FOR THE ASSESSEE: SHRI S. BANDYOPADHYAY FOR THE REVENUE: SHRI S. K. ROY '. / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THESE CROSS APPEALS BY ASSESSEE AND REVENUE ARE ARI SING OUT OF ORDER OF CIT(A)- XXXIII, KOLKATA IN APPEAL NO.01/CIT(A)-XXXIII/WD-53 (1)/09-10 VIDE DATED 30.12.2009. ASSESSMENT WAS FRAMED BY ITO, WD-53(1), KOLKATA U/S. 133(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) FOR ASSESSMENT YEARS 2006- 07 VIDE HIS ORDER DATED 18.12.2008. FOR THE SAKE OF CONVENIENCE, WE DISPOSE OF BOTH THE APPEALS BY THIS CONSOLIDATED ORDER. 2. FIRST WE TAKE UP ITA NO. 691/K/2010 (REVENUES A PPEAL). FIRST GROUND OF REVENUES APPEAL IS AS REGARD TO DELETION OF ADDITION OF RS.4 2,98,718/- UNDER THE HEAD UNDISCLOSED INCOME. FOR THIS, THE REVENUE HAS RAISED THE FOLL OWING GROUND NO.1: 1) THAT, THE LD. CIT(A)-XXXIII, KOLKATA ERRED IN D ELETING THE ADDITION OF RS.42,98,718/- UNDER THE HEAD UNDISCLOSED INCOME WITHOUT VERIFYI NG THE FACTS ON RECORD. 2 ITA 500-691/K/2010 SMT. ARATI JANA . A.Y.06-07 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT ASSESS EE FILED HER RETURN OF INCOME FOR RELEVANT ASSESSMENT YEAR 2006-07 ON 24.7.2006 DECLARING TOTA L INCOME AT RS.1,64,995/-. SUBSEQUENTLY, ASSESSEES CASE WAS SELECTED FOR SCRUTINY BY ISSUIN G NOTICE U/S. 143(2) AND 142(1) OF THE ACT. ASSESSEE IS OWNER OF TWO PROPRIETORSHIP CONCERNS AN D RUNS SEPARATE BUSINESS UNDER THE NAME AND STYLE OF M/S. GIRISH ICE FACTORY, MANUFACTURING ICE AND GIRISH FISH TRADERS DOING COMMISSION AGENCY BUSINESS FOR SALE OF RAW FISH. A SSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT A SURVEY U/S. 133 A OF THE ACT WAS CONDUCTED ON THE PREMISES OF ASSESSEE ON 24.10.2007 AND BOOKS OF ACC OUNTS IMPOUNDED AND MARKED AS GFT-1 TO 14 AND GTI-1. ACCORDING TO ASSESSING OFFICER, IN I MPOUNDED BOOKS I.E. GFT-1 IS A REGISTER, CONTAINS TRANSACTION OF M/S. GIRISH FISH TRADERS FO R THE PERIOD 29.3.2006 TO 26.11.2006, I.E. LIMITED PERIOD FOR RELEVANT ASSESSMENT YEAR FALLING UNDER 29.3.2006 TO 31.3.2006, ONLY THREE DAYS. THE ASSESSING OFFICER NOTED THAT IN THESE RE GISTERS ASSESSEE HAS NOTED BALANCE RECEIVABLE FROM PIKERS AT RS.42,98,718/- AND ASSESSEE WAS REQU IRED TO EXPLAIN THESE RECEIVABLES FROM PIKERS (BUYERS OF FISH). THE ASSESSEE FILED REPLY THAT SHE IS EARNING ONLY COMMISSION INCOME FROM BUYERS OF FISH I.E. PIKERS ON PERCENTAGE BASIS @ 2.5% TO 3% AND IT DOES NOT EITHER PURCHASE OR SELL FISH OR KEEP STOCK WITH IT. IT WA S CONTENDED BY ASSESSEE THAT SHE IS ENTITLED FOR COMMISSION AGAINST SALES AND SHE IS MERELY A CUSTOD IAN OF MONEY AND IMMEDIATELY HANDED OVER TO THE PURCHASERS AFTER SELLING FISH. SHE IS NEITHE R RECEIVING MONEY NOR PAYING. SHE IS ONLY A FACILITATOR. BUT THE ASSESSING OFFICER HAS NOT ACC EPTED THE PLEA OF THE ASSESSEE AND ADDED ENTIRE RECEIVABLES OF RS.42,72,717/- AS NOTED IN IMPOUNDED REGISTERS MARKED AS GTI-1. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ACCEPT ED THE PLEA OF THE ASSESSEE AND DELETED THE ADDITION. 4. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT ASSESSEE IS IN THE BUSINESS OF COMMISS ION FROM SALE OF RAW FISH AND THIS IS AN ADMITTED FACT. ASSESSEES MODUS OPERANDI OF BUSINE SS IS THAT IT EARNED COMMISSION FROM BUYERS OF FISH I.E. PIKERS ON PERCENTAGE BASIS ON TOTAL SA LES MADE TO THEM. ACCORDING TO HER, FISH SELLERS I.E. TRAWLER OWNERS BRING FISH IN THE SHOP AND SHOP KEEPERS SELL FISH ON THEIR BEHALF TO PIKERS I.E. BUYERS OF FISH EITHER ON CASH OR CREDIT BASIS AND A FTER COLLECTING CASH FROM BUYERS, THESE SHOPKEEPERS TRANSMIT THE SAME TO FISH SELLER I.E. T RAWLER OWNERS. IT WAS THE GTI-1 FOUND DURING SURVEY FROM THE ASSESSEE IS ONLY A REGISTER AND NOT REGULAR BOOKS OF ACCOUNT WHERE ASSESSEE HAS ONLY NOTED NECESSARY TRANSACTIONS MADE WITH PIKERS I.E. BUYERS OF FISH. ASSESSEE IS NEITHER ENTERING INTO PURCHASE OR SALE RATHER IT FACILITATE S PURCHASES AND SALES ON COMMISSION BASIS. EVEN IT IS NOT THE CASE OF THE REVENUE THAT THESE R ECEIVABLES ARE RECORDED IN REGULAR BOOKS OF ACCOUNT. ONCE IT IS A CASE THAT ASSESSEE IS ONLY A COMMISSION AGENT, NO RECEIVABLE CAN BE ADDED 3 ITA 500-691/K/2010 SMT. ARATI JANA . A.Y.06-07 IN THE HANDS OF ASSESSEE. WE AGREE WITH THE FINDIN G OF CIT(A) AND UPHOLD THE SAME. THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 5. THE NEXT ISSUE IN REVENUES APPEAL IS AGAINST TH E ORDER OF CIT(A) DELETING THE ADDITION OF UNEXPLAINED CREDITS ADDED BY ASSESSING OFFICER, WHEREAS THE CLAIM OF ASSESSEE IS THAT THESE ARE SUNDRY CREDITORS. FOR THIS, REVENUE HAS RAISED THE FOLLOWING GROUND NO.2: 2. THAT THE LD. CIT(A)-XXXIII, KOLKATA ERRED IN D ELETING THE ADDITION OF RS.4,74,681/- UNDER THE HEAD UNEXPLAINED CASH CREDIT AS PER SEC TION 68 OF INCOME TAX ACT, 1961 WITHOUT CALLING FOR EVIDENCE TO PROVE IN SUPPORT OF CREDITORS AS CLAIMED BY THE ASSESSEE. 6. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT ASSESSEE HAS SHOWN LIABILITY OF RS.4,7 4,681/- AS ADVANCE FROM PIKERS (FISH BUYERS). THE ASSESSEE HAS FURNISHED NAMES AND ADDRESSES OF P ICKERS FROM WHOM SHE HAS RECEIVED ADVANCE I.E. TRADE CREDITORS AND THIS FACT HAS BEEN ADMITTED BY ASSESSING OFFICER. ONCE IT IS A FACT THAT THESE ARE TRADING CREDITORS AND ASSESSEE HAS FILED COMPLETE DETAILS IN THE SHAPE OF NAMES AND ADDRESSES OF THESE PARTIES AND THEY ARE R EGULAR BUYERS OF ASSESSEE, THIS CANNOT BE ADDED AS UNEXPLAINED CASH CREDITS U/S. 68 OF THE AC T. ANOTHER FACT EXPLAINED BY LD. COUNSEL FOR THE ASSESSEE DURING THE COURSE OF HEARING BEFOR E US, THAT, THESE ADVANCES PERTAIN TO END OF THE YEAR I.E. 31 ST MARCH OF THE YEAR AND ARE SQUARED OFF AGAINST SALE S MADE IN FIRST WEEK OF APRIL NEXT YEAR. THIS FACT, ASSESSEE EXPLAINED BEFORE US AND IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED VIEW THAT CIT(A) HAS RIGHTLY DELETED THE ADDITION AND WE CONFIRM THE SAME. APPEAL OF THE REVENUE IS DISMISSED. 7. NOW, WE ARE COMING TO ITA NO.500/K/2010 (ASSESSE ES APPEAL). THE SOLE ISSUE INVOLVED IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING ADDITION MADE BY ASSESSING OFFICER BY ESTIMATING PROFIT AT RS.13, 53,800/- AS AGAINST PROFIT DISCLOSED BY ASSESSEE AT RS.3,01,556/-. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.1: 1. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.10,52,294/- BY ESTIMATING PROFIT AT RS.13,53,800/- AS AGAINST DISC LOSED PROFIT OF RS.3,01,556/-. 8. BRIEF FACTS RELATING TO THIS ISSUE ARE THAT THE ASSESSEE DISCLOSED COMMISSION INCOME ON SALE OF FISH AT RS.3,01,556/-. THE ASSESSING OFFIC ER IN VIEW OF IMPOUNDED BOOKS OF ACCOUNT I.E. GTI-1 DURING THE COURSE OF SURVEY U/S. 133A OF THE ACT, NOTED THAT ASSESSEE PRACTICALLY HAS RECEIVED MORE COMMISSION IN VIEW OF PAGE NOS. 4, 5 AND 6 OF IMPOUNDED BOOKS FOR THE PERIOD OF 29.3.2006 TO 31.3.2006. ACCORDINGLY, HE ESTIMAT ED OR EXPLODED THE FIGURES TO 200 DAYS AS UNDER: SINCE ASSESSEE HAS NOT PRODUCED COMPLETE SETS OF B OOKS ACCOUNTS IN RESPECT OF HER ARAT COMMISSION EARNED, A REVERSE CALCULATION IS BEING M ADE TO DETERMINE THE ACTUAL ARAT 4 ITA 500-691/K/2010 SMT. ARATI JANA . A.Y.06-07 COMMISSION EARNED BY THE ASSESSEE DURING THE PREVIO US YEAR RELEVANT TO A.Y. 2006-07 AS UNDER: 1) TOTAL SALES COMMISSION MADE BY THE ASSESSEE T O THE ARAT ON 31.3.06 AS PER COL. NO. 5 AT PAGE-6 OF GFT-1 IS RS.2,18,8 70 I.E. 97% OF THE TOTAL SALES OF THE DAY. 2) 100% OF THE SALE OF THE DAY SHOULD BE 97 X X(X) = RS.2,18,870/- 100 = X(X) = 2,18,870 X 100 = RS.2,25,639/- 97 THE COMMISSION ON 31.3.06 CARRIED BY ASSESSEE ON 3 1.3.06 = 225639-218870 = 6,769/- FOR THE ENTIRE YEAR, AS ASSESSEES ARAT IS NOT OPE N AND AS FOR ONE AND HALF MONTH THERE IS CLOSURE OF BUSINESS DUE TO ODD SEASON, CON SIDERING ALSO THAT IN RESPECT OF ARAT COMMISSION, ASSESSEE DID NOT MAINTAIN PROPER BOOKS OF ACCOUNTS, THE COMMISSION AS DETERMINED FROM GFT-1, AS ABOVE, IS APPLIED TO DETE RMINE THE ENTIRE COMMISSION EARNED BY THE ASSESSEE DURING THE PREVIOUS YEAR BY MULTIPL YING THE ABOVE FIGURE BY 200 DAYS. SO, THE ACTUAL ARAT COMMISSION EARNED BY THE ASSESSEE COMES TO RS.6,769/- X 200 DAYS = RS.13,53,800/-. SO, ASSESSEE HAD SUPPRESSED RS.10,52,294/- (RS.13, 53,800 RS.3,01,556) AND THE SAME IS ADDED BACK TO THE TOTAL INCOME AS DISCLOSED IN THE RETURN AND PENALTY PROCEEDING U/S. 271(1)(C) IS BEING INITIATED FOR CONCEALMENT O F INCOME. 9. WE FIND THAT CIT(A) CONFIRMED THE ADDITION ENTIR ELY ON DIFFERENT BASIS THAT THE SAME SHOULD BE ACCEPTED ON ACCRUAL BASIS OR CASH BASIS. WE ARE OF THE VIEW THAT BOTH AUTHORITIES BELOW HAVE MADE BASIS FOR MAKING THIS ADDITION OF S UPPRESSED COMMISSION ON ESTIMATE BASIS I.E. IMPOUNDED DOCUMENT GFT-1 AVAILABLE FOR THREE D AYS FROM 29.3.2006 TO 31.3.2006. THE CIT(A) AS WELL AS ASSESSING OFFICER HAS OPINED THAT 200 WORKING DAYS IN A YEAR SHOULD BE CONSIDERED AND THE SAME BE EXPLODED. ACCORDINGLY, WE ARE OF THE VIEW THAT THE EVIDENCE AVAILABLE WITH THE ASSESSING OFFICER IS FOR THREE D AYS AS IS AVAILABLE IN GFT-1, THE IMPOUNDED DOCUMENT A REASONABLE ESTIMATE OF COMMISSION INCOME SHOULD HAVE BEEN MADE. WE HAVE TO ESTIMATE THE COMMISSION INCOME ON A REASONABLE BASI S AS THE ASSESSEE HAS EARNED COMMISSION AFTER MEETING OUT EXPENDITURE BUT CAN ON THE BASIS OF IMPOUNDED DOCUMENT GFT-1 WHICH INDICATES SUPPRESSION OF COMMISSION FOR THREE DAYS BE EXPLODED TO 200 DAYS AS DONE BY LOWER AUTHORITIES. IN MATTERS OF ESTIMATION SOME AMOUNT OF LATITUDE IS REQUIRED TO BE SHOWN TO AO, PARTICULARLY, WHEN RELEVANT DOCUMENTS ARE NOT FORTH COMING BUT IT DOES NOT MEAN THAT THE AO CAN ARRIVE AT ANY FIGURE WITHOUT ANY BASIS BY ADOPT ING AN ARBITRARY METHOD OF CALCULATION. FROM THE ASSESSMENT ORDER OF AY 2007-08 I.E. IMMEDIATELY NEXT YEAR, IT IS CLEAR THAT THE ASSESSEE HAS ADMITTED UNACCOUNTED COMMISSION INCOME ON THE BASIS OF IMPOUNDED DOCUMENT GFT-1. BUT THIS IS IMPORTANT HOW TO DETERMINE UNACCOUNTED COMM ISSION, IT IS NOT POSSIBLE THAT THE ASSESSEE WILL EARN UNACCOUNTED COMMISSION EVERYDAY, LOWER AU THORITIES HAVE ADOPTED 200 DAYS AS 5 ITA 500-691/K/2010 SMT. ARATI JANA . A.Y.06-07 WORKING FOR CALCULATION OF UNDISCLOSED COMMISSION. BUT TAKING A REASONABLE VIEW, WE ADOPT 100 DAYS AS REASONABLE FOR COMPUTING UNACCOUNTED CO MMISSION AND DIRECT THE AO TO RECOMPUTE THE COMMISSION ACCORDINGLY. THIS ISSUE O F ASSESSEES APPEAL IS PARTLY ALLOWED. 10. THE ASSESSEE HAS ALSO RAISED THE FOLLOWING ADDI TIONAL GROUNDS: A) THAT ON THE FACT AND UNDER THE CIRCUMSTANCES O F THE CASE, THE ORDER PURPORTED TO HAVE BEEN PASSED UNDER SECTION 143(2) OF THE I. T. ACT, 1961 IS BAD IN LAW AS THE NOTICE UNDER SECTION 143(2) ISSUED ON 26.02.2008 WAS SO IS SUED AFTER THE EXPIRY OF TWELVE MONTHS FROM THE ENDED OF THE MONTH IN WHICH RETURN HAD BEEN FILED AND WHICH RETURN HAD BEEN SO FILED ON 24.07.2006. B) THAT WITHOUT ANY PREJUDICE IN ANY MANNER TO ABO VE GROUND, THE ASSESSMENT ALLEGEDLY PASSED ON 18.12.2008 COULD NOT HAVE BEEN SO PASSED INASMUCH AS THAT THE SAME WAS SERVED ON 12.03.2009 WITH ONLY PHOTO COPY OF NOTICE OF DEMAND AND ORIGINAL NOTICE OF DEMAND WAS SERVED ON 01.04.2009. 11. AT THE TIME OF HEARING THESE ADDITIONAL GROUNDS DID NOT PRESS BY LD. AR OF THE ASSESSEE. HENCE, THE SAME ARE DISMISSED AS UNADMITTED. 12. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED A ND THAT OF ASSESSEE IS PARTLY ALLOWED. 13. ORDER PRONOUNCED IN OPEN COURT 09.09.2011. SD/- SD/- . ! . , '# , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( !# !# !# !#) )) ) DATED : 9TH SEPTEMBER, 2011 /0 %12 3 JD.(SR.P.S.) '. 4 ,5 6'5'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT SMT. ARATI JANA, C/O V. N. PUROHIT & CO ., CHARTERED ACCOUNTANTS 32B, GANESH CHANDRA AVENUE, 2 ND FLOOR, KOLKATA-700 013.. 2 ,-*+ / RESPONDENT- ITO, WARD-53(1), KOLKATA. . 3 . .% ( )/ THE CIT(A), KOLKATA 4. .% / CIT, KOLKATA 5 . >? ,% / DR, KOLKATA BENCHES, KOLKATA -5 ,/ TRUE COPY, '.%@/ BY ORDER, 2 /ASSTT. REGISTRAR .