Sri Harbinder Singh, Purba Medinipur V. ITO, WD-4, Haldia, Haldia

ITA 958/KOL/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3139 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 30-06-2015
• Court: TRIBUNAL
• Assessee Lawyers: S K SAHA
• Keywords: Additional evidence
• Section: 133A

Judgement Text

I.T.A. NO. 958/KOL./2015 ASSESSMENT YEAR: 2007-2008 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SMC BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 958/KOL/ 2015 ASSESSMENT YEAR: 2007-2008 SHRI HARBINDER SINGH,.............................. ...........................APPELLANT VILL. BARISHA, P.O. KOLAGHAT, DIST. PURBA MEDINIPUR-722 134 [PAN : APHPS 1394 B] -VS.- INCOME TAX OFFICER,................................ ............................RESPONDENT WARD-4, HALDIA, BASUDEVPUR, KHANJANCHAWK, HALDIA-721 602 APPEARANCES BY: SHRI S.K. SAHA, FCA, FOR THE ASSESSEE SMT. SARBARI MUKJHERJEE, JCIT, SR. D.R., FOR THE DE PARTMENT DATE OF CONCLUDING THE HEARING : JANUARY 06, 2016 DATE OF PRONOUNCING THE ORDER : FEBRUARY 10, 2016 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-7, KOLKATA DAT ED 18.05.2015 FOR THE ASSESSMENT YEAR 2007-08. 2. THE ISSUE RAISED IN GROUND NO. 1 RELATES TO THE ADDITION OF RS.1,08,500/- MADE BY THE ASSESSING OFFICER AND CON FIRMED BY THE LD. CIT(APPEALS) BY DISALLOWING THE ASSESSEES CLAIM FO R EXEMPTION ON ACCOUNT OF AGRICULTURAL INCOME. 3. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS ENGAGED IN THE HOTEL & LODGING BUSINESS AS WELL AS IN TRADING ACTIVITY. A SURVEY UNDER SECTION 133A WAS CARRIED OUT IN THE BUSINESS PREMISES OF THE ASSESSEE ON 17.10.2006. THEREAFTER THE RETURN OF IN COME FOR THE YEAR I.T.A. NO. 958/KOL./2015 ASSESSMENT YEAR: 2007-2008 PAGE 2 OF 7 UNDER CONSIDERATION WAS FILED BY THE ASSESSEE ON 18 .08.2008 DECLARING TOTAL INCOME OF RS.3,24,460/- AND AGRICULTURAL INCO ME OF RS.1,08,500/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THERE WAS NO AGRICULTURAL LA ND SHOWN BY THE ASSESSEE IN THE BALANCE-SHEET FILED ALONG WITH HIS RETURN OF INCOME. HE, THEREFORE, REQUIRED THE ASSESSEE TO ESTABLISH HIS C LAIM FOR EXEMPTION ON ACCOUNT OF AGRICULTURAL INCOME. IN REPLY, IT WAS EX PLAINED BY THE ASSESSEE THAT HE HAD ACQUIRED THREE ACRES OF ANCESTRAL AGRIC ULTURAL LAND, WHEREIN WHEAT WAS GROWN. IT WAS ALSO EXPLAINED BY THE ASSES SEE THAT HE HAD APPOINTED SOME WORKERS TO DO THE AGRICULTURAL WORK ON CROP SHARING BASIS AND AFTER SELLING HIS SHARE OF WHEAT FOR RS.1 ,22,461/-, NET AGRICULTURAL INCOME OF RS.1,08,500/- WAS EARNED AFT ER REDUCING THE CORRESPONDING EXPENSES. THE ASSESSEE, HOWEVER, COUL D NOT FILE THE COPY OF CROP SHARING AGREEMENT WITH THE WORKERS AS WELL AS OTHER DOCUMENTS, SUCH AS LAND REVENUE PAID RECEIPTS, MANDI BILL ET C. TO SUPPORT AND SUBSTANTIATE HIS CLAIM. THE ASSESSING OFFICER, THER EFORE, DISALLOWED THE CLAIM OF THE ASSESSEE FOR EXEMPTION ON ACCOUNT OF A GRICULTURAL INCOME AND TAXED THE AGRICULTURAL INCOME OF RS.1,08,500/- DECL ARED BY THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES. 4. THE ADDITION MADE BY THE ASSESSING OFFICER BY DI SALLOWING HIS CLAIM FOR EXEMPTION ON ACCOUNT OF AGRICULTURAL INCOME WAS DISPUTED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APP EALS) AND ADDITIONAL EVIDENCE IN THE FORM OF MANDI RECEIPT AND LETTER FROM SARPANCH WAS FILED BY THE ASSESSEE TO SUPPORT AND SUBSTANTIATE H IS CLAIM FOR AGRICULTURAL INCOME. THIS ADDITIONAL EVIDENCE FILED BY THE ASSESSEE WAS FORWARDED BY THE LD. CIT(APPEALS) TO THE ASSESSING OFFICER FOR VERIFICATION AND AFTER TAKING INTO CONSIDERATION THE REMAND REPO RT FILED BY THE ASSESSING OFFICER AS WELL AS COUNTER COMMENTS OFFER ED BY THE ASSESSEE THEREON, THE LD. CIT(APPEALS) HELD THAT THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO FILE ANY EVIDENCE TO ESTABLISH HIS CLAIM OF AGRICULTURAL INCOME. ACCORDINGLY, THE ADDITION MADE BY THE ASSES SING OFFICER ON THIS ISSUE WAS CONFIRMED BY THE LD. CIT(APPEALS). I.T.A. NO. 958/KOL./2015 ASSESSMENT YEAR: 2007-2008 PAGE 3 OF 7 5. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT THE LETTER FROM SARPANCH WAS FILED BY THE ASSESSEE BE FORE THE LD. CIT(APPEALS) AND THE SAME SHOWING CLEARLY THE OWNER SHIP OF AGRICULTURAL LAND BY THE ASSESSEE HAS NOT BEEN PROPERLY APPRECIA TED EITHER BY THE ASSESSING OFFICER IN THE REMAND REPORT OR EVEN BY T HE LD. CIT(APPEALS) IN HIS IMPUGNED ORDER. SIMILARLY, THE MANDI RECEIPT FILED BY THE ASSESSEE IS SUFFICIENT TO SHOW THAT THERE WAS A SALE OF AGRICUL TURAL PRODUCE IN THE FORM OF WHEAT AS CLAIMED BY THE ASSESSEE. IN MY OPI NION, THE DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE IS SUFFICIENT TO SHO W THE OWNERSHIP OF LAND BY THE ASSESSEE AS WELL AS THE SALE OF WHEAT PRODUC ED FROM THE SAID LAND AND THERE WAS NO JUSTIFICATION IN THE ACTION OF THE AUTHORITIES BELOW TO DENY THE CLAIM OF THE ASSESSEE OF HAVING EARNED AGR ICULTURAL INCOME OF RS.1,08,500/-. I, THEREFORE, SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO ACCEPT THE CLAIM OF THE ASSESSEE FOR EXEMPTION ON ACCOUNT OF A GRICULTURAL INCOME. GROUND NO. 1 IS ACCORDINGLY ALLOWED. 6. THE ISSUE RAISED IN GROUND NO. 2 RELATES TO THE ADDITION OF RS.37,524/- MADE BY THE ASSESSING OFFICER AND CONFI RMED BY THE LD. CIT(APPEALS) BY ESTIMATING THE INCOME OF THE ASSESS EE BY APPLYING HIGHER NET PROFIT RATE OF 20% AS AGAINST THE NET PROFIT RA TE OF 15% DECLARED BY THE ASSESSEE. 7. IN CASE OF HIS TRADING ACTIVITY CARRIED OUT IN T HE NAME OF HIS PROPRIETORSHIP CONCERN M/S. H.S. TRADERS, NET PROFI T OF 15% WAS DECLARED BY THE ASSESSEE ON A TURNOVER OF RS.7,54,896/-. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS SUBMITTED BY THE ASS ESSEE BEFORE THE ASSESSING OFFICER THAT NO BOOKS OF ACCOUNT IN RESPE CT OF THE SAID PROPRIETORY BUSINESS WAS MAINTAINED AND PROFIT WAS OFFERED AT 15% ON ESTIMATED BASIS. RELIANCE IN THIS REGARD WAS PLACED BY THE ASSESSEE ON THE PROVISIONS OF SECTION 44AF OF THE ACT. THE ASSESSIN G OFFICER, HOWEVER, I.T.A. NO. 958/KOL./2015 ASSESSMENT YEAR: 2007-2008 PAGE 4 OF 7 NOTED THAT THERE WAS NO MENTION OF SECTION 44AF MAD E BY THE ASSESSEE IN THE RETURN OF INCOME AND SINCE THERE WERE NO BOOKS OF ACCOUNT AVAILABLE FOR VERIFICATION, HE ESTIMATED THE INCOME OF THE AS SESSEE FROM THIS ACTIVITY BY APPLYING NET PROFIT RATE OF 20%, WHICH RESULTED IN THE ADDITION OF RS.37,524/-. ON APPEAL, THE LD. CIT(APPEALS) CON FIRMED THE SAID ADDITION. 8. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT THERE WAS NO BASIS GIVEN BY THE ASSESSING OFFICER F OR ESTIMATING THE INCOME OF THE ASSESSEE BY APPLYING HIGHER NET PROFI T RATE OF 20% AND EVEN THE LD. CIT(APPEALS) HAS ALSO NOT ADOPTED ANY BASIS WHILE UPHOLDING THE SAID RATE. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, NET PROFIT RATE OF 14.84% WAS DECLARED BY THE ASSESSEE IN RESPECT O F THE SAME BUSINESS FOR THE IMMEDIATELY PRECEDING YEAR, I.E. A.Y. 2006- 07 AND THE SAME HAVING BEEN ACCEPTED BY THE ASSESSING OFFICER, I AM OF THE VIEW THAT THE NET PROFIT RATE OF 15% DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS QUITE FAIR AND REASONABLE. I, THE REFORE, DELETE THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRME D BY THE LD. CIT(APPEALS) BY APPLYING HIGHER NET PROFIT RATE OF 20% AND ALLOW GROUND NO. 2 OF THE ASSESSEES APPEAL. 9. THE ISSUE RAISED IN GROUND NO. 3 RELATES TO THE ADDITION OF RS.3,73,384/- MADE BY THE ASSESSING OFFICER AND CON FIRMED BY THE LD. CIT(APPEALS) BY APPLYING THE NET PROFIT RATE OF 20% TO THE ALLEGED UNDISCLOSED RECEIPTS OF THE ASSESESE FROM THE HOTEL SHER PUNJAB INN. 10. DURING THE COURSE OF SURVEY, CERTAIN DOCUMENTS WERE FOUND SHOWING THAT THE ACTUAL RECEIPTS OF THE ASSESSEE FROM HIS H OTEL BUSINESS WERE RS.8,59,296/- FOR THE PERIOD OF 01.04.2006 TO 23.07 .2006 AND 12.10.2006 TO 31.03.2007. BY TAKING AVERAGE OF THIS SALE FOR 1 68 DAYS, THE TOTAL RECEIPTS OF THE ASSESSEE FROM HOTEL BUSINESS FOR TH E ENTIRE YEAR WAS WORKED OUT BY THE ASSESSING OFFICER AT RS.18,66,923 /- AND BY APPLYING THE I.T.A. NO. 958/KOL./2015 ASSESSMENT YEAR: 2007-2008 PAGE 5 OF 7 NET PROFIT RATE OF 20%, HE MADE AN ADDITION OF RS.3 ,73,384/- TO THE TOTAL INCOME OF THE ASSESSEE. 11. BEFORE THE LD. CIT(APPEALS), THE ASSESSEE FILED SOME ADDITIONAL EVIDENCE IN SUPPORT OF HIS CLAIM THAT THE ALLEGED U NDISCLOSED RECEIPTS FROM HOTEL BUSINESS WERE ACTUALLY BELONGING TO HIS FATHER SHRI GURDEV SINGH, WHO WAS SUPPLYING FOOD TO THE CUSTOMERS STAY ING IN THE HOTEL OF THE ASSESSEE. THIS ADDITIONAL EVIDENCE FILED BY THE ASSESSEE WAS FORWARDED BY THE LD. CIT(APPEALS) TO THE ASSESSING OFFICER AND AFTER CONSIDERING THE REMAND REPORT FILED BY THE ASSESSIN G OFFICER AND THE COUNTER COMMENTS OFFERED BY THE ASSESSEE THEREON, T HE LD. CIT(APPEALS) HELD THAT THE CLAIM OF THE ASSESSEE THAT THE ALLEGE D UNDISCLOSED RECEIPTS WERE BELONGING TO THE BUSINESS OF HIS FATHER AND BR OTHER WAS NOT SUPPORTED BY ANY EVIDENCE. HE, THEREFORE, CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS ISSUE. 12. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ALTHOUGH THE LD. COUNSEL FOR THE ASSESSEE HAS REITERATED BEFORE ME T HE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND RELIED ON THE SAME EVIDENCE AS FILED BEFORE THEM, I FIND THAT THE EVIDENCE PLACED ON REC ORD BY HIM IS NOT SUFFICIENT TO ESTABLISH THAT THE ALLEGED UNDISCLOSE D RECEIPTS WERE ACTUALLY BELONGING TO THE BUSINESS OF HIS FATHER AND BROTHER . THERE IS NO RECORD MAINTAINED IN RELATION TO THE BUSINESS OF THE ASSES SEE AS WELL AS HIS BROTHER AND FATHER IN THE FORM OF RELEVANT REGISTER S OR BILLS TO SHOW THAT THE UNDISCLOSED RECEIPTS WERE ACTUALLY BELONGING TO THE BUSINESS OF FATHER AND BROTHER OF THE ASSESSEE AND NOT THAT OF THE BUS INESS OF THE ASSESSEE. IN THE ABSENCE OF SUCH RECORD, I FIND MYSELF IN AGR EEMENT WITH THE LD. CIT(APPEALS) THAT THE UNDISCLOSED RECEIPTS WERE BEL ONGING TO THE BUSINESS OF THE ASSESSEE AS RIGHTLY HELD BY THE ASS ESSING OFFICER. I, HOWEVER, FIND THAT THE NET PROFIT RATE OF 20% APPLI ED BY THE ASSESSING OFFICER AS WELL AS BY THE LD. CIT(APPEALS) TO ESTIM ATE THE INCOME OF THE ASSESSEE FROM SUCH UNDISCLOSED RECEIPTS IS ON THE H IGHER SIDE AND IT WILL I.T.A. NO. 958/KOL./2015 ASSESSMENT YEAR: 2007-2008 PAGE 6 OF 7 BE FAIR AND REASONABLE TO APPLY THE NET PROFIT RATE OF 15% IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY, THE IMPUGN ED ORDER OF THE LD. CIT(APPEALS) IS MODIFIED AND THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE ADDITION MADE ON THIS ISSUE BY APPLYING NET PRO FIT RATE OF 15%. GROUND NO. 3 IS PARTLY ALLOWED. 13. THE ISSUE RAISED IN GROUND NO. 4 RELATES TO THE ADDITION OF RS.65,300/- MADE BY THE ASSESSING OFFICER AND CONFI RMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF WORKING CAPITAL ALLEGEDL Y REQUIRED BY THE ASSESSEE FOR THE PURPOSE OF UNDISCLOSED BUSINESS. 14. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ALTHOUGH THE QUANTUM OF UNDISCLOSED RECEIPTS DETERMINED BY THE ASSESSING OFFICER HAS BEEN CONFIRMED BY ME WHILE DECIDING GROUND NO. 3, I AM O F THE VIEW THAT IN THE ABSENCE OF ANY MATERIAL EITHER FOUND DURING THE COU RSE OF SURVEY OR EVEN BROUGHT ON RECORD BY THE ASSESSING OFFICER DURING T HE COURSE OF ASSESSMENT PROCEEDINGS TO SHOW THAT SOME ADDITIONAL INVESTMENT WAS MADE BY THE ASSESSEE TO EARN UNDISCLOSED RECEIPTS, THE ADDITION ON ACCOUNT OF SUCH CAPITAL ON PRESUMPTION BASIS CANNOT BE MADE. I, THEREFORE, DELETE THE ADDITION MADE BY THE ASSESSIN G OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) ON THIS ISSUE AND ALLOW GROUND NO. 4. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 10, 2016. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 10 TH DAY OF FEBRUARY, 2016 COPIES TO : (1) SHRI HARBINDER SINGH, VILL. BARISHA, P.O. KOLAGHAT, DIST. PURBA MEDINIPUR-722 134 I.T.A. NO. 958/KOL./2015 ASSESSMENT YEAR: 2007-2008 PAGE 7 OF 7 (2) INCOME TAX OFFICER, WARD-4, HALDIA, BASUDEVPUR, KHANJANCHAWK, HALDIA-721 602 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-7, KOLKATA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.