Om Nath Gupta, V. ITO Ward I,

ITA 654/LKW/2011

• Counselvise Citation: 65423714 RSA 2011
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-01-2012
• Assessment Year: misc
• Appeal Filed On: 27-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K B AJAJ
• Assessee Lawyers: RAMLAL
• Keywords: Business income; Earning of tax free income; Initiation of penalty proceedings; Valuation report
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW SMC BENCH, LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER ITA NO. 654/LKW/2011 ASSESSMENT YEAR: 2005 - 06 OM NATH GUPTA BARWAR ROAD, MOHAMMADI LAKHIMPUR KHERI V. THE INCOME TAX OFFICER WARD 1, LAKHIMPUR KHERI PAN: ACUPG5197Q (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. RAMLAL, ADVOCATE RESPONDENT BY: SHRI. P. K. BAJAJ, D.R. DATE OF HEARING: 12.01.2012 DATE OF PRONOUNCEMENT: 19.01.2012 O R D E R THIS APPEAL IS PREFERRED BY THE ASSESSEE AGA INST THE ORDER OF THE LD. CIT(A) ON VARIOUS GROUNDS WHICH ARE AS UNDER: - (I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) BAREILLY (HERE IN AFTER CALLED CIT(APPEALS) HAS ERRED ON FACTS & IN LAW IN CONFIRMING THE FINALISATION OF ASSESSEE'S BUSINESS INCOME AT RS.210000.00 AGAINST RETURNED BUSINESS INCOME OF ASSESSEE AMOUNTING TO RS. 103640.00 IN THE PRESENT CASE. (II) THAT LEARNED CIT (APPEALS) HAS ERRED ON FACTS & IN LAW IN CONFIRMING INVESTMENT IN HOUSE PROPERTY ESTIMATED BY LEARNED : - 2 - : AO TO HAVE B EEN MADE AND ADDING A SUM OF RS. 17360.00 IN ASSESSEE'S INCOME IN THE PRESENT CASE. (III) THAT LEARNED CIT (APPEALS) OUGHT TO HAVE ACCEPTED THE VALUATION OF PROPERTY SHOWN IN VALUATION REPORT DATED: 23.12.2004, HAVING ACCEPTED BY LEARNED CIT (APPEALS) & ASSESSING OFFICER IN THE PRESENT CASE. (IV) THE LEARNED CIT (APPEALS) HAS ERRED ON FACTS & IN LAW IN NOT ALLOWING 10% SELF SUPERVISION CHARGES FROM VALUE OF CONSTRUCTION, REPRESENTING CONTRACTOR'S MARGIN IN THE PRESENT CASE. (V) THE LEARNED CIT (APPEAL S) HAS ERRED ON FACTS & IN LAW IN CONFIRMING CHARGING OF INTEREST U/S 234A & 234B OF I . T . ACT , 1961 IN THE PRESENT CASE. (VI) THE LEARNED CIT (APPEALS) HAS ERRED ON FACTS & IN LAW IN CONFIRMING INITIATION OF PENALTY PROCEEDINGS U/S 271 (1) (E) OF IT ACT 1961 IN THE PRESENT CASE. (VII) THE LEARNED CIT (APPEALS) HAS WRONGLY DISMISSED THE GROUND RELATING TO AGRICULTURAL INCOME OF RS.4000.00 DISCLOSED BY APPELLANT IN THE PRESENT CASE. 2 . DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS OPTED NOT TO PRESS GROUNDS NO.2 TO 6, THEREFORE, GROUNDS NO.2 TO 6 ARE DISMISSED BEING NOT PRESSED. 3 . NOW I AM LEFT WITH ONLY TWO GROUNDS I.E. GROUNDS NO.1 AND 7. 4 . WITH REGARD TO GROUND NO.1, IT IS NOTICED THAT THE ASSESSEE HAS DISCLOSED TOTAL INCOME OF ` 65,000 O N ESTIMATE BASIS FROM HIS BUSINESS OF AATA CHAKKI, SPELLER AND POLISHER BEING RUN ON JOB WORK BASIS. THE : - 3 - : ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , IN ORDER TO ESTIMATE THE BUSINESS RECEIPTS, THE ASSESS EE WAS ASKED TO SUBMIT THE ELECTRICITY BILLS. THE ASSESSEE HAS SUBMITTED ELECTRICITY BILLS AND THE ASSESSING OFFICER HAS ESTIMATED THE BUSINESS INCOME OF THE ASSESSEE ON THE BASIS OF CONSUMPTION OF ELECTRICITY AND HE ESTIMATED THE ANNUAL GROSS RECEIPTS OF THE BUSINESS AT ` 4.20 LAKHS AND AFTER GIVING 50% OF THE EXPENSES AND RENT, HE CALCULATED THE BUSINESS INCOME OF THE ASSESSEE AT ` 2.10 LAKHS AND AFTER GIVING CREDIT OF ` 65,000 ( THE BUSINESS INCOME DECLARED BY THE ASSESSEE ), T HE ASSESSING OFFICER MADE AN AD DITION OF ` 1,45,000, AGAINST WHICH AN APPEAL WAS FILED BEFORE THE LD. CIT(A), BUT THE ASSESSEE DID NOT FIND FAVOUR WITH HIM. 5 . NOW THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND PLACED A COMPARATIVE CHART OF THE BUSINESS INCOME DECLARED BY THE ASSESSEE AND ESTIMATED BY THE ASSESSING OFFICER IN EARLIER YEARS. FROM THE AFORESAID CHART, IT IS NOTICED THAT THE INCOME FROM BUSINESS RETURNED BY THE ASSESSEE FOR ASSESSMENT YEAR 2002 - 03 WAS ` 51,000 AND ESTIMATED BY THE ASSESSING OFFICER WAS ` 54,000. I N ASSESSMENT YEAR 2003 - 04 , THE BUSINESS INCOME DECLARED BY THE ASSESSEE WAS ` 30,000 AND ESTIMATED BY THE ASSESSING OFFICER WAS ` 60,000. IN ASSESSMENT YEAR 2004 - 05 , THE BUSINESS INCOME DECLARED BY THE ASSESSEE WAS ` 71,800 AND ESTIMATED BY THE ASSESSING OFF ICER WAS ` 1.08 LAKHS BUT IT WAS REDUCED TO ` 72,000 BY THE LD. CIT(A). THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE BUSINESS INCOME OF THE ASSESSEE BE ESTIMATED IN THE LIGHT OF ASSESSEES PAST HISTORY. 6 . THE LD. D.R., ON THE OTHER HAND, HAS SUBMI TTED THAT THE ASSESSING OFFICER HAS ESTIMATED THE BUSINESS INCOME OF THE ASSESSEE ON THE BASIS OF ELECTRICITY CONSUMPTION. THEREFORE, NO INFIRMITY CAN BE POINTED OUT THEREIN. 7 . HAVING GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES AND IN THE LIGHT OF THE RIVAL SUBMISSIONS, I FIND THAT ADMITTEDLY THE ASSESSEE IS NOT : - 4 - : MAINTAINING HIS BOOKS OF ACCOUNT AND EVERY YEAR THE INCOME IS TO BE ESTIMATED. BUT ONCE THE INCOME DECLARED BY THE ASSESSEE IS ESTIMATED BY THE ASSESSING OFFICER DOES NOT MEAN THAT BLANKET CERT IFICATE IS GRANTED TO THE ASSESSEE NOT TO MAINTAIN THE BOOKS OF ACCOUNT. WHEN THE ASSESSEE IS DOING SOME BUSINESS , HE IS REQUIRED TO MAINTAIN PROPER BOOKS OF ACCOUNT WHEREFROM BUSINESS INCOME OF THE ASSESSEE CAN BE ASCERTAINED. BUT THE ASSESSEE ADMITTEDL Y IS NOT MAINTAINING ANY BOOKS OF ACCOUNT. IN THIS YEAR THE ASSESSEE HAS DECLARED HIS INCOME AT ` 65,000 WHICH WAS ESTIMATED AT ` 2.10 LAKHS BY THE ASSESSING OFFICER AND THE SAME WAS CONFIRMED BY THE LD. CIT(A). THOUGH THE ESTIMATION WAS DONE BY THE ASSESS ING OFFICER ON THE BASIS OF CONSUMPTION OF ELECTRICITY, BUT IT APPEARS TO BE ON HIGHER SIDE. KEEPING IN VIEW THE NATURE OF BUSINESS OF THE ASSESSEE AND IN THE LIGHT OF THE PAST RECORD, I ESTIMATE THE BUSINESS INCOME OF THE ASSESSEE AT ` 1.25 LAKHS TO MEET THE ENDS OF JUSTICE. ACCORDINGLY THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER TO RECOMPUTE PROPER ADDITION UNDER THIS HEAD. 8 . WITH REGARD TO GROUND NO.7, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSING OFFICER HAS TREATED HI S AGRICULTURAL INCOME TO BE NORMAL INCOME AND MADE ADDITION OF THE SAME. WHEREAS THE AGRICULTURAL INCOME IS ONLY TO BE TAKEN INTO ACCOUNT FOR THE PURPOSE OF DETERMINATION OF INCOME - TAX. IT CANNOT BE CONSIDERED AS NORMAL INCOME. THEREFORE, A DIRECTION MA Y BE ISSUED TO THE ASSESSING OFFICER TO RECOMPUTE THE TOTAL INCOME OF THE ASSESSEE AFTER TREATING THIS AGRICULTURAL INCOME AS AN EXEMPT INCOME. 9 . THE LD. D.R. HAS PLACED RELIANCE UPON THE ORDER OF THE LD. CIT(A). 10 . HAVING GONE THROUGH THE RECORD AND IN THE L IGHT OF THE RIVAL SUBMISSIONS, I FIND FORCE IN THE CONTENTION OF THE ASSESSEE. AGRICULTURAL INCOME IS NOT A NORMAL INCOME. IT IS ONLY TO BE TAKEN INTO ACCOUNT FOR COMPUTATION OF TAX LIABILITY. THER E FORE, I DIRECT THE ASSESSING OFFICER TO : - 5 - : RECOMPUTE THE I NCOME OF THE ASSESSEE IN THE LIGHT OF THIS AGRICULTURAL INCOME OF ` 4,000. 11 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19.1.2012. S D/ - [ S UNIL KUMAR Y ADAV ] JUDICIAL MEMBER DATED: 19.1.2012 JJ: 1 201 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR