M/S Amaresh Rice Mill, Burdwan V. ITO, Ward 1, Burdwan, Burdwan

ITA 985/KOL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1940 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 08-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJAY MUKHERJEE AD DL
• Keywords: Principle of natural justice; Onus to prove
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH : KOLKATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM] I.T.A NO. 985/KOL/201 7 ASSESSMENT YEAR : 2009-1 0 M/S AMARESH RICE MILL -VS- I.T.O., WAR D-1, BURDWAN [PAN: AAMFA 3953 G] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI A.N.CHATTERJEE, FCA SHRI S.D. BANDYAPADHYAY, FCA FOR THE REVENUE : SHRI SANJAY MUKHERJEE, AD DL. CIT DATE OF HEARING : 13.12.2017 DATE OF PRONOUNCEMENT : 05.01.2018 ORDER THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-BURDWAN [ IN S HORT THE LD CITA] DATED 31.01.2017 AGAINST THE ORDER PASSED BY THE I.T.O, W ARD-1(1), BURDWAN [ IN SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX A CT, 1961 (IN SHORT THE ACT) DATED 27.12.2011 FOR THE ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE IS A PARTNERSHIP FIRM AND IS IN THE BUSINESS OF RUNNING A RICE MILL. IT FILED ITS RETURN OF INCOME ON 24.09.2009 DECLARI NG A LOSS OF RS. 12,949/-. ALONG WITH RETURN OF INCOME THE ASSESSEE SUBMITTED TAX AU DIT REPORT, STATEMENT OF ACCOUNTS ETC. THE AO OBSERVED THAT THE ASSESSEE HAS TAKEN A CASH CREDIT LOAN 2 ITA NO.985/KOL/2017 M/S AMARESH RICE MILL A.YR .2009-10 2 FROM M/S UNITED BANK OF INDIA. TO VERIFY THIS LOAN, A NOTICE WAS ISSUED TO THE BRANCH MANAGER OF UNITED BANK OF INDIA U/S 133(6) F OR FURNISHING THE DETAILS OF A STOCK HYPOTHETICATED AGAINST THE CASH CREDITED LO AN. IN REPLY, THE BANK AUTHORITIES SUBMITTED THE DETAILS OF THE STOCK STAT EMENT FURNISHED TO THE BANK FOR AVAILING CASH CREDIT LOAN. THE BANK AUTHORITIES ALS O FURNISHED A COPY OF THE TAX AUDIT REPORT FILED BY THE ASSESSEE ALONG WITH RETU RN OF INCOME IN FORM 3CD. THE TAX AUDIT REPORT FILED BY THE ASSESSEE WITH THE BA NK WAS TOTALLY DIFFERENT FROM THE AUDIT REPORT FILED WITH THE RETURN OF INCOME. BOTH THE AUDIT REPORTS WERE GIVEN BY TWO DIFFERENT AUDITORS. A NOTICE CALLING FOR THE EX PLANATION ON THIS ISSUE WAS GIVEN TO THE ASSESSEE. IN REPLY, THE ASSESSEE SUBM ITTED THAT IT MAINTAINED TWO SETS OF AUDITED ACCOUNTS, ONE FOR INCOME TAX PURPOSES AN D THE OTHER FOR OBTAINING BANK LOAN AND THAT THE STATEMENT OF ACCOUNTS PREPAR ED FOR THE BANK LOAN WERE PROVISIONAL STATEMENTS OF ACCOUNTS AND THAT DETAILS CUSTOMARY PRACTICE TO HAVE TWO SETS STATEMENT OF ACCOUNTS WHICH WERE NOT THE C ORRECT STATEMENTS ARE ONE FOR OBTAINING HIGHER BANK LOAN LIMITS AND THAT THE OTHE R STATEMENTS GIVE THE ACTUAL DETAILS OF TRANSACTION OF THE ASSESSEE. IT WAS CONT ENDED THAT THE WORD PROVISIONAL WAS BY MISTAKE OMITTED IN THE STATEME NT SUBMITTED TO THE BANK. THE AO RELIED ON THE DECISION IN THE CASE OF COIMBATORE SPINNING & WAIVING CO. LTD. VS. CIT(MADRAS) REPORTED IN 95 ITR 375 AND TOO K THE TURN OVER DECLARED BY THE BANK AS TURNOVER OF THE ASSESSEE AND ESTIMATED THE GROSS PROFIT 1.8% OF THE TURN OVER AS INCOME OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL WITHOUT SUCCESS. FURTHER AGGRIEVED THE ASSES SEE IS IN APPEAL BEFORE US. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT, THE WORD PROVISIONAL WAS ERRONEOUSLY NOT MENTIONED IN THE STATEMENTS AND TAX AUDIT REPORT FURNISHED TO THE 3 ITA NO.985/KOL/2017 M/S AMARESH RICE MILL A.YR .2009-10 3 BANK. HE SUBMITTED THAT IT IS COMMON PRACTICE THAT ESTIMATED FIGURES ARE FURNISHED TO THE BANK. IT WAS CONTENDED THAT THE A O SHOULD HAVE CONSIDERED THE ACCOUNTS SUBMITTED ALONG WITH RETURN OF INCOME AND NOT GONE BY THE STATEMENTS SUBMITTED BEFORE THE BANK. AS THE BANK INSISTS ON A CERTIFICATE FROM CHARTERED ACCOUNTANT AND AS THERE IS NO OTHER FORM OR PROCEDU RE FOR CERTIFYING ACCOUNTS, AN AUDIT REPORT U/S 44AB IN FORM NO. 3CD WAS OBTAINED FROM A CA AND THAT THIS AUDIT REPORT IS ONLY ON THE PROVISIONAL STATEMENT. HE ARGUED THAT NO DEFECTS HAVE BEEN POINTED OUT IN THE BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE BY THE AO. HE RELIED ON THE DECISION OF KOLKATA B BENCH OF T HE TRIBUNAL IN THE CASE OF M/S DAMANI & CO. VS. ITO IN I.T.A. NO. 120/KOL/2010 ORDER DATED 10.11.2015 AND SUBMITTED THAT WHEN TWO SETS OF ACCOUNTS ARE MA INTAINED THE CORRECT SET OF ACCOUNTS WAS ONLY TO BE CONSIDERED. ON THE ISSUE OF NET PROFIT HE SUBMITTED FORM THE PAST RECORD, THE PERCENTAGE OF PROFIT AS A PERC ENTAGE OF TURNOVER WAS BETWEEN 1.17% TO 1.87%. HE VEHEMENTLY CONTENDED THAT THE AO HAS FOLLOWED A PICK AND CHOOSE METHOD AND HAS NOT GIVEN A SHOW CAUSE NOTICE AS TO HOW HE WOULD FRAME THE ASSESSMENT ORDER AND THAT THIS WAS A CASE OF V IOLATION OF PRINCIPLES OF NATURAL JUSTICE. 4. THE LD. DR, MR. SANJAY MUKHERJEE, SR. DR ON THE OTHER HAND SUBMITTED THAT THERE WERE TWO SETS OF AUDITED BOOKS OF ACCOUNTS AN D BOTH HAVE BEEN SUBJECT MATTER OF TAX AUDIT BY DIFFERENT CAS. THE ASSESSEE DID NOT LEAD EVIDENCE TO PROVE THAT ONE OF THE ACCOUNTS WERE WRONG. UNDER THE CIRC UMSTANCES, HE SUBMITTED THAT THE ORDER OF THE FIRST APPELLATE AUTHORITY CONFIRMI NG THE ORDER OF THE AO SHOULD BE UPHELD. 4 ITA NO.985/KOL/2017 M/S AMARESH RICE MILL A.YR .2009-10 4 5. AFTER HEARING RIVAL SUBMISSIONS, WE FIND THAT TW O DIFFERENT CAS HAVE GIVEN TWO DIFFERENT TAX AUDIT REPORTS BASED ON TWO SEPARA TE BOOKS OF ACCOUNTS. THERE IS NO MENTION ANYWHERE THAT THE STATEMENT OF ACCOUNTS AND AUDIT REPORTS GIVEN TO BANK ARE PROVISIONAL FIGURES OR THAT THEY WERE PR OJECTIONS. ONE SET OF ACCOUNTS IS CERTIFIED BY P.K. ROY & CO. CA ENROLLMENT NO. 52 424. THIS AUDIT REPORT ALONG WITH AUDITED STATEMENT OF ACCOUNTS WERE FILED BEFOR E THE BANK. SALES OF RICE AS PER THIS TRADING ACCOUNT IS RS. 12,76,63,295/-. TH E REPORT IN FORM 3CD WAS COMPLETE AND CERTIFIED. 3CD REPORT IS NEVER GIVEN A S PROVISIONAL STATEMENTS ON PROJECTIONS. 6. THE SECOND AUDIT REPORT DATED 17.09.2009 HAS BEE N GIVEN BY BRINDABAN MUKHERJEE, CA, MEMBER ENROLLMENT NO. 52853. THIS AU DIT REPORT ALONG WITH THE STATEMENT OF ACCOUNT WERE SUBMITTED ALONG WITH RETU RN OF INCOME. HERE THE SALES DISCLOSE WAS RS. 3,21,70,392/-. CLOSING STOCK IN BO TH THE STATEMENTS IS IDENTICAL. THERE IS VARIATION IN PURCHASES, SALES AND IN EXPE NDITURES. THOUGH THE ASSESSEE ORIGINALLY CLAIMS THAT AUDIT REPORT SIGNED BY SHRI P.K. ROY IS BASED ON PROVISIONAL ACCOUNTS, NO EVIDENCE TO THAT EFFECT HA S BEEN FURNISHED BY HIM. WHEN SUCH A CONTRADICTORY AND CONFLICTING STATEMENT OF A CCOUNTS HAVE BEEN PREPARED BY THE ASSESSEE, BURDEN OF PROOF LIES ON THE ASSESS EE TO DEMONSTRATE AS TO WHICH ONE OF SUCH ACCOUNT STATEMENT IS CORRECT. WHEN THE ASSESSEE DOES NOT DISCHARGE THE BURDEN OF PROOF, THEN THE AO HAS NO OTHER ALTER NATIVE BUT TO TAKE AS WHICHEVER EVIDENCE STATEMENT OF ACCOUNT IS CORRECT AS PER HIS VIEW. IT IS NOT CORRECT TO ARGUE THAT AS THERE IS NO AUDIT REQUIREM ENT FOR THE PARTNERSHIP FIRM AND THAT ANY AUDIT REPORT CANNOT BE GIVEN IN ANY OTHER FORM THAN THAT WHICH IS PRESCRIBED UNDER FORM 3CD OF THE ACT AND RULES. IN THE FORM NO. 3CD R.W.S 5 ITA NO.985/KOL/2017 M/S AMARESH RICE MILL A.YR .2009-10 5 44AB OF THE ACT CERTAIN FACTS HAVE TO BE CERTIFIED BY THE ASSESSEE AS WELL AS THE AUDITOR. A NUMBER OF OTHER METHODS ARE THERE WHICH AUDITORS GENERALLY FOLLOWED TO CERTIFY THE STATEMENT GIVEN TO BANK. UNDER THE C IRCUMSTANCES WE FIND NO MERIT IN THE SUBMISSIONS OF THE ASSESSEE. THE DECISIONS R ELIED UPON BY THE ASSESSEE DOES NOT COME TO HIS RESCUE AS IN CASE OF ITO VS KA LA BARAN BANERJEE IN I.T.A. NO. 102/KOL/2012, THE MATTER WAS REMANDED TO THE F ILE OF THE AO. THE DECISION ON THE CASE OF DAMANI & CO. IS NOT DIFFERENT FACTS. UNDER THE CIRCUMSTANCES WE REJECT THIS CONTENTION OF THE ASSESSEE. HENCE, WE U PHOLD THE ORDER OF THE LD. CIT(A) AS THIS ISSUE AND DISMISS THE GROUND OF THE ASSESSEE. 7. GROUND NO. 2 IS AGAINST THE ESTIMATION OF PROFIT @ 1.8% OF THE TURNOVER. 8. THE ASSESSEES SUBMISSION IS THAT RATE OF PROFI T VARIES BETWEEN 1.17% TO 1.87% FOR THE LAST FEW YEARS. HENCE WE, IN THE INTE REST OF JUSTICE DIRECT THE LD. AO TO ESTIMATE PROFIT @ 1.23% OF TURNOVER. THE ASSE SSEE GETS PART RELIEF. 9. GROUNDS NO. 1 AND 4 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 05.01.2018 SD/- [ J.SUDHAKAR REDDY] ACCOUNTANT MEMBER DATED : 05.01.2018 SB, SR. PS 6 ITA NO.985/KOL/2017 M/S AMARESH RICE MILL A.YR .2009-10 6 COPY OF THE ORDER FORWARDED TO: 1. M/S AMARESH RICE MILL, VILL & POST: BHANDARDIHI, BURDWAN-713426 2. ITO, WARD-1, BURDWAN, AAYAKAR BHAWAN, ANNEXE, 2 ND FLOOR, COURT COMPOUND, BURDWAN,PIN-713101. 3..C.I.T.(A)- , KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S