I.T.O Wd - 53(4),kolkata, Kolkata V. Sri Nirapada Patra, South 24 Parganas

ITA 677/KOL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9143 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 28-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K CHANDA HCIT
• Keywords: Business income; Corroborative evidences
• Section: 44AD; 143(3); 194C

Judgement Text

ITA NO.677/KOL/2013-SRI NIRAPADA PATRA A.Y.2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE HONBLE SHRI A.T.VARKEY, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA. NO. 677 /KOL/2013 ASSESSMENT YEAR : 2009-10 I.T.O., WARD-53(4), AAYAKAR BHAWAN, DAKSHIN, 2, GARIAHAT ROAD SOUTH, KOLKATA-700068. V/S . SHRI NIRAPADA PATRA, UTTAR SRINAGAR, SRINAGAR MAKARPARA KAKDWIP, 24 PARGANAS(S) PIN:743374. PAN NO AWEPP 4330 Q /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI M.K.CHANDA, HCIT SR.DR /BY RESPONDENT NONE /DATE OF HEARING 25.01.2017 /DATE OF PRONOUNCEMENT 17.03.2017 / O R D E R PER WASEEM AHMED, AM THIS APPEAL BY THE REVENUE IS AGAINS T THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XXXIII, KOLKATA DATED 28.01.20 13. ASSESSMENT WAS FRAMED BY ITO WARD-53(4), KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) VIDE HIS OR DER DATED 26.12.2011 FOR ASSESSMENT YEAR 2009-10. 2. AT THE TIME OF HEARING NONE APPEARED ON BEHALF O F ASSESSEE THOUGH NOTICE OF HEARING SENT TO ASSESSEE THROUGH RPAD. SO WE DEC IDE TO HEAR THE PRESENT APPEAL WHERE WE FIND THAT THE HEARING IS POSSIBLE W ITHOUT APPEARANCE OF ASSESSEE OR BY LD. AUTHORIZED REPRESENTATIVE OF ASS ESSEE. SHRI M.K. CHANDRA, LD. DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHA LF OF REVENUE. ITA NO.677/KOL/2013-SRI NIRAPADA PATRA A.Y.2009-10 2 3. THE SOLITARY ISSUE RAISED BY THE REVENUE IN THIS APPEAL IS THAT WHETHER THE LD. CIT(A) IS JUSTIFIED IN REDUCING THE CASH DEPOSI T INCOME OF RS.19,25,125/- AND INCOME ON ACCOUNT OF ABC ENGG. WORKS FOR RS.17,52,0 20/- TO RS.2,94,172/- BEING 8% OF THE GROSS RECEIPTS I.E. RS.36,77,150/- (19,25,125 + 17,52,020). 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IN TH E PRESENT CASE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF LABOUR CONTRACTS. IT WAS REVEALED ON THE BASIS OF AIR INFORMATION THAT THE ASSESSEE HAS DEPOSITED CASH OF RS.19,25,125/- IN HIS SAVING BANK ACCOUNT IN THE YEAR UNDER CONSIDERATION . ON QUESTION BY THE ASSESSING OFFICER ABOUT THE SOURCE OF CASH DEPOSIT THE ASSESSEE SUBMITTED THAT THIS MONEY WAS DEPOSITED IN HIS BANK ACCOUNT BY THE CONTRACTEE. THE ASSESSEE FURTHER IN SUPPORT OF HIS CLAIM SUBMITTED PROFIT AN D LOSS ACCOUNT, BALANCE SHEET, AND REVISED COMPUTATION OF TOTAL INCOME. HOWEVER, T HE AO OBSERVED THAT THE CLAIM OF THE ASSESSEE IS NOT BASED ON ANY RELIABLE DOCUMENTARY EVIDENCES. ACCORDINGLY, HE REJECTED ALL THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND TREATED THE ENTIRE CASH DEPOSIT AS INCOME OF THE ASSESSEE. SIMILARLY, THE AO ALSO OBSERVED THAT ABC ENGG. WORK S HAS DEPOSITED TDS OF RS.19,850/- IN THE NAME OF THE ASSESSEE BUT ITS COR RESPONDING INCOME OF RS.17,52,020/- WAS NOT DISCLOSED IN THE INCOME TAX RETURN AND THE INCOME FROM ABC ENGG. WORKS IS ALSO EVIDENT FROM FORM NO. 26AS. ACCORDINGLY THE AO TREATED THE SAME AS INCOME OF THE ASSESSEE. IN VIEW OF THE ABOVE, THE AO HAS DISALLOWED THE CLAIM OF THE ASSESSEE AND ADDED A SU M OF RS.19,25,125/- AND RS.17,52,020.00 AS INCOME OF THE ASSESSEE. 5. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL TO TH E LD. CIT(A). THE ASSESSEE BEFORE THE LD. CIT(A) SUBMITTED THAT IT IS SHOWING THE COMMISSION INCOME IN ITS BOOKS OF ACCOUNTS. THE COMMISSION INCOME WAS EARNED BY THE ASSESSEE ON THE SUPPLY OF LABOUR TO ITS PARTIES. THE CONTRACTEE DEP OSITED THE MONEY DIRECTLY IN THE ACCOUNTS OF THE ASSESSEE AND THE ASSESSEE MADE THE PAYMENTS TO THE WORKERS AFTER WITHDRAWING THE MONEY FROM THE BANK. AS A RES ULT, THE ASSESSEE HAS SHOWN ITS NET INCOME WHICH WAS ARRIVED AFTER DEDUCTING TH E PAYMENTS TO THE WORKERS ITA NO.677/KOL/2013-SRI NIRAPADA PATRA A.Y.2009-10 3 FROM THE GROSS AMOUNT RECEIVED FROM THE CONTRACTEES . IN FACT THE TOTAL GROSS RECEIPTS OF RS. 95,34,828/- WAS RECEIVED BY WAY OF CHEQUE AND CASH ON ACCOUNT OF LABOUR SUPPLY. THE GROSS RECEIPT IS INCLUSIVE OF THE CHEQUE RECEIVED FROM ABC ENGG. WORDS AND FROM OTHER CONTRACTORS. THE ASSESSE E FURTHER SUBMITTED THAT THEY WERE ILLITERATE PERSONS AND DO NOT UNDERSTAND THE ACCOUNTING SYSTEM AND THEREFORE NECESSARY BOOKS OF ACCOUNTS WERE NEITHER MAINTAINED NOR SUBMITTED. HOWEVER, THE LD. CIT(A) AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE HAS GIVEN RELIEF IN PART BY OBSERVING AS UNDER : 5. I HAVE CONSIDERED THE SUBMISSION MADE. ON PERUSA L OF THE BANK STATEMENT OF THE APPELLANT, IT IS SEEN THAT THERE ARE CONTINUOUS CAS H DEPOSITS AND WITHDRAWALS ON REGULAR BASIS WITH NO SIGNIFICANT AMOUNT REMAINING IN THE A CCOUNT FOR A LONG PERIOD. THUS, THE NATURE OF THE TRANSACTIONS IN THE ACCOUNT DO SUPPOR T THE ASSERTION MADE BY THE APPELLANT THAT THE CREDITS THEREIN WERE ON ACCOUNT OF TURNOVE R OF BUSINESS. IT IS ALSO SEEN THAT THE EXPLANATION THAT CASH WAS DEPOSITED IN THE BANK ACC OUNT BY THE PRINCIPALS FOR PURPOSE OF DISBURSEMENT AMONG LABOUR WAS GIVEN BEFORE THE ASSE SSING OFFICER ALSO AND HE SUMMARILY REJECTED THE SAME WITHOUT POINTING OUT ANY SPECIFIC DISCREPANCY OR MAKING FURTHER INVESTIGATION. SO FAR AS THE AMOUNT OF RS. 17,52,02 0/- FROM ABC ENGINEERING WORKS IS CONCERNED, FORM NO. 26 AS ITSELF SHOWS THAT THE AMO UNT PAID WAS TOWARDS CONTRACT ON WHICH TAX HAVE BEEN DULY DEDUCTED AT SOURCE IN ACCO RDANCE WITH THE PROVISIONS OF SECTION 194C. IT GOES WITHOUT SAYING THAT ENTIRE CONTRACT R ECEIPT CAN NEVER BE INCOME AND ONLY THE NET INCOME AFTER DEDUCTING CORRESPONDING EXPENSES I S TO BE TAXED. FROM THE FOREGOING DISCUSSION, IT IS CLEAR THAT THE AMOUNT RECEIVED FR OM ABC ENGINEERING WORKS WAS IN NATURE OF CONTRACT RECEIPT. SURROUNDING FACTS AND CIRCUMST ANCES SUGGEST THE SAME TO BE TRUE IN RESPECT OF CASH DEPOSITS OF RS. 19,25,125/-. THEREF ORE, THE TWO AMOUNTS ARE TO BE CONSIDERED CONTRACT RECEIPTS AND NOT INCOME AS SUCH . 6. NOW, THE QUESTION ARISES AS TO HOW INCOME FROM T HE ABOVE RECEIPTS IS TO BE ARRIVED AT. THE APPELLANT HAS CLAIMED THAT THE TWO AMOUNTS FROM PART OF GROSS RECEIPT OF THE APPELLANT'S INCOME FROM WHICH HAS ALREADY BEEN OFFE RED FOR TAXATION IN THE NAME OF 'COMMISSION'. HOWEVER, THIS ASSERTION IS NOT BACKED BY ANY SUPPORTING EVIDENCE. IT HAS BEEN ADMITTED BY THE AUTHORIZED REPRESENTATIVE OF T HE APPELLANT THAT DUE TO THE APPELLANT BEING ILLITERATE THE BOOKS OF ACCOUNTS WERE NOT MAI NTAINED IN PROPER MANNER AND THE SYSTEM OF ACCOUNTING FOLLOWED WAS NOT TOTALLY CORRE CT. THE PROFIT AND LOSS A/C FILED WITH THE RETURN WAS NOT SHOWING GROSS RECEIPTS NOT TO TALK O F THEIR PARTY-WISE BREAK UP. HENCE, IT IS NOT PRACTICABLE TO VERIFY THE CLAIM THAT THE RECEIP TS FROM ABC ENGINEERING WORKS AS WELL AS CASH DEPOSITED WERE FORMING PART OF RECEIPTS ACCOUN TED FOR BY THE APPELLANT. THE REVISED PROFIT AND LOSS A/C. SUBMITTED CAN ALSO NOT BE TREA TED AS RELIABLE IN ABSENCE OF PROPER SUPPORTING MATERIAL. THEREFORE, IT IS NOT POSSIBLE TO ACCEPT THE ASSERTION MADE BY THE APPELLANT REGARDING RECEIPTS FROM ABC ENGINEERING W ORKS AND CASH DEPOSITED HAVING BEEN PART OF DULY ACCOUNTED RECEIPTS. THEREFORE, TH E SAID RECEIPTS ARE BEING TREATED AS UNACCOUNTED. AS THE APPELLANT IS NOT MAINTAINING PR OPER BOOKS, IT IS NOT POSSIBLE TO ASCERTAIN TRUE PROFIT ON THE SAME. SINCE THE APPELL ANT IS A LABOUR CONTRACTOR AND THE SAID RECEIPTS ARE CONTRACT RECEIPTS WITH AGGREGATE AMOUN T OF RS. 36,77,145/-, I CONSIDER IT REASONABLE TO APPLY NET PROFIT RATE OF 8% AS PROVID ED U/S. 44AD OF IT ACT. IN COURSE OF THE ITA NO.677/KOL/2013-SRI NIRAPADA PATRA A.Y.2009-10 4 APPELLATE PROCEEDINGS, THE AUTHORIZED REPRESENTATIV E OF THE APPELLANT COULD NOT COUNTER THIS PROPOSITION. THE PROFIT FROM THE SAID RECEIPTS AT T HE RATE OF 8% WORKS OUT TO RS. 2,94,172/-. THE ASSESSING OFFICER IS DIRECTED TO REDUCE THE ADD ITION ACCORDINGLY. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 6. BEFORE US LD DR VEHEMENTLY RELIED ON THE ORDER O F AUTHORITIES BELOW. 7. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIA LS AVAILABLE ON RECORD. THE ISSUE IN THE INSTANT CASE RELATES TO THE ADDITI ONS MADE BY THE AO. THESE ADDITIONS WERE MADE BY THE AO ON ACCOUNT OF 2 COUNT S FIRSTLY THE CASH DEPOSITED BY THE ASSESSEE IN THE BANK SECONDLY ABC ENGG. WORKS HAS SHOWN PAYMENT TO THE ASSESSEE IN FORM 26AS. BOTH THESE AMOUNTS WERE NOT REFLECTING IN THE INCOME TAX RETURN. THEREFORE THE ADDITIONS WERE MAD E BY THE AO. HOWEVER THE LD CIT(A) DURING APPELLATE PROCEEDINGS OBSERVED THAT T HE BALANCE IN THE BANK ACCOUNT OF THE ASSESSEE WAS OF MEAGER AMOUNT CONTIN UOUSLY. THERE WERE DEPOSIT & CASH WITHDRAWAL AS WELL SIMULTANEOUSLY. T HEREFORE ENTIRE ADDITION OF CASH DEPOSIT CANNOT BE TAKEN AS INCOME OF THE ASSES SEE. ADMITTEDLY, THE ASSESSEE HAS NOT MAINTAINED THE BOO KS OF ACCOUNTS IN ITS REGULAR COURSE OF BUSINESS. THEREFORE, THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF CASH DEPOSIT IN THE BANK AND THE AMOUNT SHOWN IN FORM 26 AS IN THE NAME OF M/S ABC ENGG. WORKS ON THE BASIS OF ACCOUNTS. HOWEVER, ON T HE EXAMINATION OF THE ORDERS OF LOWER AUTHORITIES WE FIND THAT THERE IS N O DOUBT THAT THE AFORESAID TWO AMOUNTS REPRESENT OF THE BUSINESS RECEIPT OF THE AS SESSEE. IT IS, BECAUSE THE PARTY ABC ENGG. WORKS IN THE INSTANT CASE HAS DEDUC TED TDS U/S 194C OF THE ACT. THUS, THE CLAIM OF THE ASSESSEE IS THAT HE IS ENGAGED IN THE BUSINESS OF LABOUR SUPPLY GETS FORTIFIED FROM THE DEDUCTION OF TDS MADE BY THE PARTY ABC ENGG. WORKS U/S 194C OF THE ACT. ONCE, IT IS ESTABL ISHED THAT THE AMOUNT OF MONEY REPRESENTS THE BUSINESS RECEIPT THEN IN OUR V IEW ONLY THE PROFIT ELEMENT CAN BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. I T IS BECAUSE THE ENTIRE AMOUNT DEPOSITED WITH THE BANK OR SHOWN IN THE TDS DETAILS CANNOT BE HELD AS BUSINESS INCOME OF THE ASSESSEE. IT WAS ALSO OBSERV ED THAT THERE WAS ONLY ITA NO.677/KOL/2013-SRI NIRAPADA PATRA A.Y.2009-10 5 MEAGER AMOUNT LYING IN THE BANK ACCOUNT OF THE ASSE SSEE AS IS EVIDENT FROM THE FINDING OF LD CIT(A) WHICH JUSTIFIES THAT THE ASSES SEE RECEIVED THE MONEY FROM THE CONTRACTEE AND SUBSEQUENTLY MADE PAYMENT TO THE LAB ORERS. HAD THERE BEEN MONEY LYING IN THE BANK ACCOUNT OF THE ASSESSEE THA N THE POSSIBILITY OF TREATING THE ENTIRE AMOUNT AS INCOME OF THE ASSESSEE WAS THE RE? THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD CIT(A) WAS JUS TIFIED IN TREATING THE AFORESAID AMOUNT AS BUSINESS RECEIPTS OF THE ASSESSEE AND ACC ORDINGLY WORKING OUT THE TOTAL INCOME OF THE ASSESSEE. THUS, WE FIND NO REAS ON TO INTERFERE WITH THE FINDINGS ARRIVED BY THE LD. CIT(A). UNDER THE CIRCU MSTANCES THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 8. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT 17/03/2017 SD/- SD/- ( !') ( !') (A.T.VARKEY) (WASEEM A HMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) *RG.PS/DKP* $!% &- 17/03 //201 7 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ITO WARD-53(4), AAYAKAR BHAWAN, DAKSHIN2 GARIAHAT, ROAD, SOUTH, KOL-68 2. /RESPONDENT-SHRI NIRAPADA PATRA, UTTAR SRINAGAR, SR INAGAR, MAKARPARA, KAKDWIP, 24 PGNS.(S) 3. %.%/0 1 1 2 / CONCERNED CIT 4. 1 1 2- / CIT (A) 5. 567 /0, 1 /0 , KOLKATA / DR, ITAT, KOLKATA 6. 7:; <= / GUARD FILE. BY ORDER/ 1! , /TRUE COPY/ / % 1 /0 ,