Jitendra Kumar , Kurnool V. Income Tax Officer , Ward-1, Kurnool

ITA 741/Hyd/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8764 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 05-03-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 24-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gross profit estimation; Proportionate interest
• Section: 143(3); 143(1); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH SMC - A', HYDERABAD SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 741 /HYD/201 8 ASSESSMENT YEAR: 201 1 - 12 JITENDRA KUMAR, KURNOOL. PAN A BWPK 5944 L VS. INCOME - TAX OFFICER, WARD 1, KURNOOL APPELLANT RESPONDENT ASSESSEE BY: S HRI MOHD. AFZAL REVENUE BY: SHRI SUNIL KUMAR PAN DEY DATE OF HEARING: 16/03/2020 DATE OF PRONOUNCEMENT: 24 /07/2020 O R D E R THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (A), KURNOOL IN APPEAL NO.015/CIT(A)/KNL/2014 - 15, DATED 09/03/2018 PASSED U/S. 250(6) R.W.S 143(3) OF THE ACT FOR THE AY 2011 - 12. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HIS APPEA L AND THEY ARE EXTRACTED HEREIN BELOW: - 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS AGAINST THE LAW, WEIGHT OF EVIDENCE AND PROBABILITIES OF THE CASE. 2. THE LEARNED COMMISSIONER ERRED IN ASSUMING THAT NEITHER THE ASSESSEE PRODU CED BOOKS OF ACCOUNTS NOR THE AO REJECTED BOOKS OF ACCOUNTS, THEREFORE FURTHER ERRED IN CONFIRMING OTHER ADDITIONS MADE FROM THE SAME BOOKS OF ACCOUNTS. 2 ITA NO. 741/HYD/2018 JITENDRA KUMAR, KURNOOL. 3. THE LEARNED COMMISSIONER ERRED IN CONFIRMING THE ADDITION OF RS 2,33,462 / - MADE UNDER SECTION 40(A)(B) OF THE I.T. ACT AS EXCESS AMOUNT PAID TOWARDS INTEREST. 4. THE LEARNED COMMISSIONER ERRED IN CONFIRMING ADDITION OF RS 1,50,000/ - WHICH IS MADE WITH AN ASSUMPTION THAT ASSESSEE HAS NOT WITHDRAWN SUFFICIENTLY FOR HOUSE HOLD EXPENDITURE. 5. THE LEARNED COMMISSIONER ERRED IN CONFIRMING AN AD - HOC DISALLOWANCE OF RS. 3,00,000/ - OUT OF THE CLAIM OF BROKERAGE OF R S. 29,86,796/ - 6 . THE LEARNED COMMISSIONER ERRED IN CONFIRMING AD - HOC DISALLOWANCE OF RS.75, 000 / - FROM THE AMOUNTS PAID TOWARDS PAL ACOOLI, CARTAGE, LABOUR, HAMALI AGGREGATING TO RS.7,10,128/ - . 7. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR MODIFY THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL, IF IT IS CONSIDERED NECESSARY. 2.1 HOWEVER, AT THE TIME OF HEARING THE LD. AR HAD RAISED THE GROUND THAT WHEN THE BOOKS OF ACCOUNTS OF THE ASSESSEE WAS REJECTED AND THE ADDITION WAS MADE BASED ON ESTIMATING THE INCOME OF THE ASSESSEE AT RS. 15,71,800/ - THEN SEPARATE ADDITION UNDER SPECIFIC HEADS IS NOT WARRANTED AND IS ERRONEOUS AS AGAINST ALL THE OTHER GROUNDS RAISED IN THE APPEAL . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING IN COTTON, FILED HIS RETURN OF INCOME ON 28/9/2011 FO R THE AY 2011 - 12 ADMITTING TOTAL INCOME OF RS. 5,49,790/ - . INITIALLY THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT AND THEREAFTER THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY UNDER CASS AND FINALLY ASSESSMENT WAS COMPLETED VIDE ORDER DATED 28/2/201 4 WHEREIN THE LD. AO IN 3 ITA NO. 741/HYD/2018 JITENDRA KUMAR, KURNOOL. ADDITION TO ESTIMATING THE INCOME OF THE ASSESSEE AT RS. 15,71,800/ - ALSO MADE ADDITION OF (A) RS. 2,33,452/ - TOWARDS CONCESSION IN INTEREST CHARGED ON THE AMOUNT ADVANCED TO THE FAMILY MEMBERS AS THE ADVANCES WERE MADE OUT OF HIGHER INTEREST - BEARING FUNDS (B) ELECTRICITY CHARGES INCURRED FOR PERSONAL USE AMOUNTING TO RS. 27,366/ - (C) LOW DRAWINGS WITH RESPECT TO HOUSEHOLD EXPENDITURE RS. 1,50,000/ - (D) RS. 17,170/ - TOWARDS PROPORTIONATE INTEREST ON BORROWINGS UTILISED FOR PERSONAL PURPOSES (E) RS. 75,000/ - TOWARDS EXPENDITURE INCURRED FOR WHICH ONLY SELF - MADE VOUCHERS WERE AVAILABLE (F) RS. 19,026/ - TOWARDS NON - AVAILABILITY OF EVIDENC E FOR BROKERAGE PAID (G) RS. 3 LAKHS TOWARDS NON - AVAILABILITY OF EVIDENCE FOR ANOTHER BROKERAGE PAID AND (H) RS. 2 LAKHS TOWARDS LOW PROFIT DECLARED DURING THE RELEVANT ASSESSMENT YEAR. THE LD.AO MADE ALL THE ABOVE STATED ADDITIONS BECAUSE THE ASSESSEE HAD NOT MAINTAINED PROPER BOOKS OF ACCOUNTS, THERE WERE NO SUPPORTIVE DOCUMENTS WITH COGENT EVIDENCE TO PROVE THE EXPENDITURE CLAIMED AND THE ASSESSEE HAD DISCLOSED LOW INCOME COMPARED TO HIS TURNOVER. 4. BEFORE THE LD. CIT (A) THE ASSESSEE FAILED TO APPE AR AND THEREFORE THE LD. CIT (A) DECIDED THE APPEAL EX - PARTE BASED ON THE WRITTEN SUBMISSIONS AVAILABLE ON RECORD BY DELETING THE ADDITION MADE OF RS. 2 LAKHS ON ACCOUNT OF LOW GP, TAKING INTO CONSIDERATION OF THE FACT THAT THE COTTON TRADED BY THE ASSESSE E IS AN AGRO - COMMODITY WHEREIN PURCHASE PRICE AND SALE PRICE HEAVILY FLUCTUATES DUE TO MARKET AND CLIMATIC CONDITIONS. WITH RESPECT TO THE OTHER GROUNDS RAISED BY THE ASSESSEE THE LD. CIT (A) CONFIRMED THE ORDER OF THE LD. AO BECAUSE THE ASSESSEE HAD 4 ITA NO. 741/HYD/2018 JITENDRA KUMAR, KURNOOL. NEITH ER PRODUCED HIS BOOKS OF ACCOUNTS NOR FURNISHED ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE THE TRANSACTIONS MADE BY HIM. AGGRIEVED BY THE ORDER OF THE LD. CIT (A), THE ASSESSEE HAS COME IN APPEAL BEFORE THE TRIBUNAL RAISING THE ABOVE - MENTIONED GROUNDS. 5. AT THE OUTSET, THE LD. AR VEHEMENTLY ARGUED BEFORE ME BY STATING THAT WHEN THE LD. REVENUE AUTHORITIES HAVE ESTIMATED THE INCOME OF THE ASSESSEE AT RS. 15,71,800/ - BY TAKING INTO CONSIDERING OF THE OVERALL BOOKS OF ACCOUNTS AND TRANSACTIONS MADE BY THE ASS ESSEE THEN THERE WAS NO SCOPE FOR MAKING ADDITIONS WITH RESPECT TO SPECIFIC ISSUES WHICH WAS ALREADY DISCLOSED IN THE BOOKS. IT WAS THEREFORE PLEADED THAT ADDITIONS MADE ON ALL OTHER SPECIFIC ISSUES MAY BE DELETED. FURTHER, THE LD. AR SUBMITTED THAT THE ADDITION MADE IN THE HANDS OF THE ASSESSEE FOR RS. 15,71,800/ - BASED ON ESTIMATION IS ALSO NOT WARRANTED BECAUSE THE ASSESSEE HAD PRODUCED HIS BOOKS OF ACCOUNTS AND ALL THE RELEVANT DOCUMENTS TO JUSTIFY THE EXPENDITURE CLAIMED. THE LD . AR FURTHER PLEADED T HAT IF THE BENCH DOES NOT FEEL IT APPROPRIATE TO DELETE THE ADDITION OF RS. 15,71,800/ - THEN SOME RELIEF MAY BE GRANTED KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCE OF THE CASE. THE LD. AR FURTHER REQUESTED THAT THE APPEAL OF THE ASSESSEE MAY BE DECIDED O N MERITS BASED ON THE MATERIALS ON RECORD AND NEED NOT BE REMITTED BACK TO THE FILE OF THE LD. AO FOR DE - NOV O CONSIDERATION THOUGH IT WAS AN EX - PARTE ORDER. THE LD. DR ON THE OTHER HAND FORCIBLY ARGUED IN SUPPORT OF THE ORDER OF THE LD. CIT (A) AND PRAYED FOR CONFIRMING HIS ORDER. 5 ITA NO. 741/HYD/2018 JITENDRA KUMAR, KURNOOL. 6. I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS AVAILABLE ON RECORD AND I FIND MERIT IN THE SUBMISSIONS OF THE LD AR. WHEN THE LD. REVENUE AUTHORITIES HAVE MADE ADDITION OF RS. 15,71,800/ - TAKING INTO CONSIDERATION OF THE ENTIRE ACTIVITIES OF THE ASSESSEE THEN FURTHER ADDITION MADE ON SPECIFIC ISSUES IS NOT APPROPRIATE AS POINTED OUT BY THE LD.AR. THEREFORE , CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, I HEREBY DIRECT THE LD. AO TO DELETE THE ADDITION MADE ON ACCOUNT OF SPECIFIC ISSUES CITED HEREIN ABOVE. FURTHER, KEEPING INTO CONSIDERATION OF THE NATURE OF TRADE THE ASSESSEE IS ENGAGED AND TAKING INTO CONSIDERATION OF THE PRAYER OF THE LD. AR, I AM OF THE VIEW THAT, INCOME OF RS. SEVEN LAK HS WOULD BE APPROPRIATE TO BE ASSESSED IN THE HANDS OF THE ASSESSEE AS AGAINST THE INCOME ESTIMATED BY THE LD. REVENUE AUTHORITIES FOR RS. 15,71,800/ - . ACCORDINGLY, I HEREBY SUSTAIN THE ADDITION OF RS. SEVEN LAKHS IN THE HANDS OF THE ASSESSEE AND DELETE AL L OTHER ADDITIONS MADE AND SUSTAINED IN THE HANDS OF THE ASSESSEE. 7 . BEFORE PARTING, IT IS WORTHWHILE TO MENTION THAT THIS ORDER IS PRONOUNCED AFTER 90 DAYS OF HEARING THE APPEAL, WHICH IS THOUGH AGAINST THE USUAL NORMS, I FIND IT APPROPRIATE, TAKING INTO CONSIDERATION OF THE EXTRA - ORDINARY SITUATION IN THE LIGHT OF THE LOCK - DOWN DUE TO COVID - 19 PANDEMIC. WHILE DOING SO, I HAVE RELIED IN THE DEC ISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. JSW LTD. IN ITA NO.6264/M/2018 AND 6103/M/2018 FOR AY 2013 - 14 ORDER DATED 14TH MAY 2020. 6 ITA NO. 741/HYD/2018 JITENDRA KUMAR, KURNOOL. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AS INDICATED HEREINABOVE . PRONOUNCED IN T HE OPEN COURT ON THE 24 TH JULY, 2020. SD/ - ( A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER HYDERABAD, DATED 24 TH JULY, 2020. OKK COPY FORWARDED TO: 1. SHRI JITENDRA KUMAR, C/O MOHD . AFZAL, ADVOCATE, 11 - 5 - 465, SHERSONS RESIDENCY, FLAT NO. 402, CRIMINAL COURT ROAD, RED HILLS, HYDERABAD 500 004. 2. ITO, WARD 1, ADONI, KURNOOL DT. 3. CIT(A), KURNOOL. 4. 5. PR. CIT, KURNOOL. THE DR, ITAT, HYDERABAD 6. GUARD FILE