Mira Shaw, Howrah V. ACIT, CIR-46, KOLKATA, Kolkata

ITA 982/KOL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99784 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 10-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 15-05-2014
• Court: TRIBUNAL
• Department Lawyers: S S ALAM
• Keywords: Opportunity of being heard
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , KOLKATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI M.BALAGANESH, AM ] ITA NO.982/KOL/2014 ASSESSMENT YEAR : 2007 - 08 ( A PPELLANT ) (RESPONDENT) MIRA SHAW - VERSUS - A.C.I.T., CIRCLE - 46, KOLKATA KOLKATA (PAN: ARRPS 2943 N) FOR THE APPELLANT : NONE FOR THE RESPONDENT : SHRI S.S.ALAM, JCIT DATE OF HEARING : 10.09 .2015. DATE OF PRONOUNCEMENT : 16.09.2015. ORDER PER SHRI M.BALAGANESH, AM 1. THIS APPEAL OF THE ASSESSEE AR ISES OUT OF THE ORDER OF THE LEARNED CITA IN APPEAL NO .191/CIT(A) - XXX/CIR - 46/2009 - 10 DATED 07.03.2013 FOR THE ASST YEAR 2007 - 08 ARISING OUT OF THE ORDER OF THE LEARNED ASSESSING OFFICER FRAMED U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS WHETHER AN ADDITION TO GROSS PROFIT COULD BE MADE BY THE LEARNED AO BY REJECTING THE BOOKS OF ACCOUNTS ON THE PREMISE THAT GROSS PROFIT DECLARED DURING THE YEAR UNDER APPEAL IS LESS THAN THAT DECLARED IN THE EARLIER YEAR. 2.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESSEE IS A MANUFACTURER CUM RETAILER OF NON FERROUS METALS AND RUNNING A CONCERN UNDER THE NAME AND STYLE OF M/S MIRA MOULDERS AND TRADERS. THE BOOKS OF ACCOUNTS WER E DULY PRODUCED BY THE ASSESSEE AND THE SAME WERE TEST CHECKED BY THE LEARNED AO. THIS FACT IS DULY MENTIONED IN PARA 2 OF THE ASSESSMENT ORDER. THE LEARNED AO FOUND THAT THE GROSS PROFIT REPORTED FOR THE YEAR UNDER APPEAL WAS 7.51% OF TURNOVER AS AGAINS T 12.6% SHOWN IN THE EARLIER YEAR. ACCORDINGLY, HE PROCEEDED TO REJECT THE BOOKS OF ACCOUNTS AND RESORTED TO MAKE AN ESTIMATION OF GROSS PROFIT AND ADDED RS. 11,06,000/ - BEING 5% OF TURNOVER TO THE ITA NO. 982/KOL/2014 MIRA SHAW . A.YR. 2007 - 08 2 GROSS PROFIT. ON FIRST APPEAL, THE LEARNED CITA RESTRICTE D THE ADDITION TO RS. 8,84,800/ - WORKED OUT AT 4% OF TURNOVER THEREBY GRANTING RELIEF OF RS. 2,21,200/ - . AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 2.2. NONE APPEARED ON BEHALF OF THE ASSESSEE. SHRI.S.S.ALAM, JCIT, THE LEARNED DR ARGUED ON BEHALF OF THE REVENUE. 2.3. THE LEARNED DR ARGUED THAT THE BOOKS OF ACCOUNTS WERE NOT PRODUCED BY THE ASSESSEE BEFORE THE LEARNED AO AND HENCE THE AO IS RIGHT IN MAKING AN ESTIMATION OF GROSS PROFIT AS A PERCENTAGE OF TURNOVER TO BE IN LINE WITH THE GROSS PRO FIT PERCENTAGE REPORTED IN THE EARLIER YEAR. 2.4. WE HAVE HEARD THE LEARNED DR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE BOOKS OF ACCOUNTS WERE INDEED PRODUCED BEFORE THE LEARNED AO BY THE ASSESSEE WHICH WERE ALSO TEST CHECKED B Y THE LEARNED AO. IT IS OBSERVED THAT THE LEARNED AO RESORTED TO REJECT THE BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT WITHOUT POINTING OUT ANY DEFECTS IN THE SAME. ACCORDINGLY, THE ACTION OF LEARNED AO RESORTING TO MAKE AN ESTIMATED ADDITION OF GROSS PROF IT BY ADDING 5% OF TURNOVER TO BE COMPARABLE WITH THE GROSS PROFIT PERCENTAGE DECLARED IN THE EARLIER YEAR IS NOT APPRECIATED. THE ESTIMATION OF GROSS PROFIT AT 5% ON TURNOVER HAS BEEN REDUCED TO 4% ON TURNOVER BY THE LEARNED CIT ( A ) ON THE SAME REASONING. WE FIND THAT THE ASSESSEE HAD PRODUCED THE BOOKS OF ACCOUNTS DURING THE ORIGINAL ASSESSMENT PROCEEDINGS AND THE SAME WERE TEST CHECKED BY THE LEARNED AO WHICH FACT IS DULY MENTIONED BY HIM IN PAR A 2 OF THE ASSESSMENT ORDER. IT IS ALSO OBSERVED THAT THE L EARNED AO HAD ACCEPTED THE BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE BEFORE HIM FOR MAKING THE ADDITION MADE IN THE SUM OF RS. 2,11,026/ - TOWARDS AMOUNTS RECEIVED FROM SUNDRY DEBTORS WHICH ADDITION HAS BEEN SEPARATELY ADJUDICATED HEREIN BELOW. THIS GOES TO PROVE THA T THE LEARNED AO HAD PARTIALLY ACCEPTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IN VIEW OF THIS, WE HOLD THAT WITHOUT POINTING OUT THE DEFECTS, IF ANY, IN THE BOOKS OF ACCOUNTS PRODUCED BEFORE THE LEARNED AO, THE ACTION OF THE LEARNED AO IN RE JECTING THE BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT AND ACCORDINGLY RESORTING TO ITA NO. 982/KOL/2014 MIRA SHAW . A.YR. 2007 - 08 3 MAKE AN ESTIMATION OF GROSS PROFIT TO MAKE IT COMPARABLE WITH THAT OF EARLIER YEAR IS NOT APPRECIATED AND WE HAVE NO HESITATION IN DIRECTING THE LEARNED AO TO DELETE THE ENTIR E ADDITION MADE IN THIS REGARD. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IN THIS REGARD IS ALLOWED. 3. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LEARNED CITA IS CORRECT IN UPHOLDING THE ADDITION MADE IN THE SUM OF RS. 2,11,0 26/ - TOWARDS SUNDRY DEBTORS (LAHA INDUSTRIES) IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESSEE PRODUCED A COPY OF LEDGER ACCOUNT OF M/S LAHA INDUSTRIES WHEREIN A SUM OF RS. 2,11,026.90 WAS SHOWN TO HAV E RECEIVED IN CASH FROM THE SAID SUNDRY DEBTOR PARTY. BUT ON VERIFICATION OF SUNDRY DEBTORS BALANCE AS ON 31.3.2006 FROM THE BALANCE SHEET OF THE ASSESSEE, THE LEARNED AO FOUND THAT THERE WAS NO BALANCE OUTSTANDING AS RECEIVABLE FROM LAHA INDUSTRIES. ACCO RDINGLY HE RESORTED TO MAKE AN ADDITION AS UNEXPLAINED MONEY U/S 69A IN RESPECT OF AMOUNTS RECEIVED FROM LAHA INDUSTRIES TO THE TUNE OF RS. 2,11,026/ - WHICH WAS ALSO UPHELD BY THE LEARNED CIT ( A ) ON FIRST APPEAL. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3.2. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 3.3. WE HAVE HEARD THE LEARNED DR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAD PRODUCED THE LEDGER COPY OF LAHA INDUSTRIES WHEREIN A SUM OF RS. 2,11,026/ - WAS SHOWN TO HAVE BEEN RECEIVED IN CASH DURING THE ASSESSMENT YEAR UNDER APPEAL WHEREAS NO SUM WAS OUTSTANDING AS ON 31.3.2006 IN RESPECT OF THE AFORESAID PARTY. HOWEVER, WE FIND THAT THE SAID LEDGER ACCOUNT IS NOT PRODUCED BEFORE US FOR OUR VERIFICATION. BUT WE FEEL THAT THIS RECEIPT MIGHT HAVE BEEN RECEIVED IN RESPECT OF SALE MADE TO THE SUNDRY DEBTOR LAHA INDUSTRIES DURING THE ASSESSMENT YEAR UNDER APPEAL. THIS UNDERSTANDING OF OURS HAS GOT CREDENCE FROM THE FACT THAT THE SAID RECEIPT OF RS. 2,11,026/ - IS NOT REFLECTED AS OUTSTANDING SUMS PAYABLE TO LAHA INDUSTRIES AS ON 31.3.2007 (I.E THE ASSESSMENT YEAR UNDER APPEAL). SINCE NONE ITA NO. 982/KOL/2014 MIRA SHAW . A.YR. 2007 - 08 4 REPRESENTED ON BEHALF OF THE ASSESSEE, THIS POINT COULD NOT BE CLARIFIED TO THE BENCH. NO FINDING IS ALSO GIVEN WITH REGARD TO THIS FACT EITHER IN THE ASSESSMENT ORDER OR IN THE APPELLATE ORDER. HENCE , WE DEEM IT FIT AND APPROPRIATE, IN THE FACTS AND CIRCUMSTANCES OF THIS CASE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, TO SET ASIDE THIS ISSUE TO THE FILE OF THE LEARNED AO TO DECIDE THIS ISSUE AFRESH IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION THAT THE ASSESSEE BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD IN THIS REGARD. ACCORDINGLY, THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNC ED IN TH E COURT ON 16.09.2015. SD/ - SD/ - [MAHAVIR SINGH] [M.BALAG ANESH] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 16.09.2015. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO : 1 . MIRA SHAW, HOWRAH AMTA ROAD, MAKALI INDUSTRIAL ESTATE, BELITIKURI, HOWRAH - 711402. 2 THE A.C.I.T., CIRCLE - 46, KOLKATA. 3 . THE CIT - XVI , KOLKATA , 4. THE CIT(A) - XXX , KOLKATA. 5 . DR, KOLKATA BENCHES, KOLKATA TRUE COPY , BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES