The Deputy Commissioner Of Income Tax, Central Circle- 1, Mangaluru V. Mr. Sajid Samran, Mangaluru

MA 78/BANG/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 8716 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-11-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 22-08-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHI MISHRA
• Assessee Lawyers: SHEETHAL
• Keywords: Unexplained cash credit; Corroborative evidences
• Section: 153A; 143(1); 254(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER M.P Nos.77 & 78/Bang/2021 [In ITA No.04 & 69/Bang/2020] Assessment year : 2010-11 & 2016-17 The Dy. Commissioner of Income-tax. Central Circle-1, Mangaluru. Vs. 1. Smt. Shamshad Begum, Prop: M/s Puttur Supari Industries Kemmai, Near Vishnumurthy Temple, Puttur. PAN – AFSPB 2509 Q 2. Shri Sajid Samran, Prop: M/s Supreme Supari Trading Company, 20-1- 18/1, Azzizuddin Road, Bunder, Mangaluru. PAN – EIIPS 5922 P APPELANT RESPONDENT Assessee by : Smt. Sheethal, Advocate Revenue by : Shri Priyadarshi Mishra, Addl. CIT Date of hearing : 29.10.2021 Date of Pronouncement : 12.11.2021 O R D E R Per Chandra Poojari, Accountant Member By this miscellaneous petitions, revenue seeks to rectify the order of the Tribunal in ITA No.04/Bang/2020 and 69/Bang/2020 dated 1/4/2021. M.P Nos.77 & 78/Bang/2021 Page 2 of 11 2. First, we will take up MP No.77/Bang/2021. 3. In this case, Revenue came in appeal before this Tribunal and raised various grounds, which reads as under:- “1. The order of the learned CIT(A) is opposed to law and facts of the case. 2. The CIT(A) has erred in estimating the profit @ 4% on the unrecorded sales without any basis when the assessee had relied on Section 44AD. 3. The CIT(A) erred in not considering the provisions of Section 23 to assess the vacant property which was held during the Financial Year. 4. The CIT(A) erred in considering the intimation u/s 143(1) as an assessment order. 5. The CIT(A) erred in deleting the addition on account of unexplained cash credits after recording the finding that no evidences were produced by the appellant. 6. The CIT(A) erred in applying the decision in the case of CIT Vs. Balbir Singh Maini though the Joint Development Agreement has been registered with the Sub Registrar, Mangalore Taluk. 7. The CIT(A) erred in holding that the provisions of section 45(5A) were curative in nature and would apply retrospectively. 8. The CIT(A) has erred in holding that the case falls outside the purview of Section 153A without taking note of the decision of the Karnataka High Court in the case of M/ s GMR Energy Limited in ITA No.358 of 2018. 9. For these and other grounds that may be urged upon, the order of the CIT(A) may be reversed and that assessment order to be restored.” M.P Nos.77 & 78/Bang/2021 Page 3 of 11 4. The Tribunal disposed of the above grounds as under:- “3. After hearing both the parties, we are of the opinion that there was an appeal by the assessee in this case for the same Assessment Year against the same impugned order before this Tribunal in ITA No.55 to 61/Bang/2020 and others dated 16.10.2020, wherein the Assessment Order was quashed by observing as follows: “5. Now we reproduce para 5 from page 14 of the Tribunal order rendered in the case of Mr. M. A. Siddique Vs. DCIT (supra). This para reads as under: “5. We have considered the rival submissions. We find that in these two paras, learned CIT (A) has noted several judicial pronouncements cited by the learned AR of the assessee before him and have given a categorical finding that the case of assessee squarely falls outside the purview of section 153A because the assessment has not abated and no new material was found or unearthed during the course of search and hence, these judgments are squarely applicable. These findings of C1T (A) are in favour of the assessee and the same have attained finality because no appeal is filed by the revenue against these findings of CIT (A). But in spite of this finding in para 6 of his order, the learned CIT (A) has held in para 7 of his order that the appeal of the assessee for A. Y. 2012 — 13 is partly allowed. In our considered opinion, after holding this in para 6 that the case of assessee squarely falls outside the purview of section 153A, learned CIT (A) should have held that the assessment order passed by the AO u/s 153A is bad, in law and he should have allowed the appeal of the assessee instead of holding that the appeal is partly allowed. Therefore, we hold that the assessment order passed by the AO u/s 153A is bad in law and therefore, other grounds regarding merit of various addition are academic and no adjudication is called for about those grounds.” 6. We find that in the facts of the present case, this Tribunal order is squarely applicable and hence, respectfully following this Tribunal order, we hold that in the present case also, the Assessment Order passed by the AO under section 153A for M.P Nos.77 & 78/Bang/2021 Page 4 of 11 Assessment Years 2010-11 and 2011-12 are bad in law and therefore, other grounds regarding merits of various additions in these two years are academic and no adjudication is called for about those grounds in these two years.” 5. Now, the contention of the ld.DR is as follows:- “1. The Hon'ble ITAT has held that the order u/s 153A is not maintainable as there is no seized material based upon which assessment could be made. 2. The findings of the ITAT is factually incorrect, as the assessment is done on the basis of material evidences found during the course of search proceedings and there was no scrutiny assessment prior to search action. 3. The order of ITAT is per incuriam as the order is not in accordance with the decision of the Hon'ble High Court in the case of M/s GMR Energy Limited in ITA No.358 of 2018. 4. The orders of ITAT is not in accordance with the decision of Supreme Court in the case of Shri Rajesh Jhaveri - 291 ITR 500 5. As per the provision of section 153A empowers the Assessing Officer to assess or reassess the "total income" and the Assessing Authority can take note of the income disclosed in the earlier return, any undisclosed income found during search or any other inc9eiich is not disclosed in the earlier return. 6. This view is also supported by the decision of the jurisdictional High Court in Canara Housing Development Co. v. Dy. CIT [2014] 49 taxmann.com 98 (Kar). On Percentage of profits from undisclosed turnover 7. The orders u/s 153A were passed consequent upon search action and seizure of material evidences with regard to suppressed turnover of the assessee, based on which the income was estimated. 8. The ITAT erred in not considering cogent reasons given for estimating income at 12% which include the fact that the assessee was doing sales entirely outside books, thereby saving from payment of sales tax, APMC Cess etc., to the extent of 6 to 8%. The undisclosed turnover will have higher percentage of profits as compared to the regular turnover due to the above facts. 9. The 1TAT erred in not considering the fact that the assessee himself has disclosed GP in the range of 6.48% on the M.P Nos.77 & 78/Bang/2021 Page 5 of 11 disclosed turnover for AY 2010-11. The profit on suppressed turnover cannot be less than the profit on declared turnover. 10. For these and any other grounds which may be raised, it is prayed that the ITAT is requested to pass appropriate orders in the interest of justice and equity.” 6. We have heard both the miscellaneous petitions and perused the materials on records. The miscellaneous petition in M.P No.77/Bang/2021 filed by the Revenue is totally misconstrued since the Tribunal dismissed the Revenue’s appeal as infructuous on the reason that the assessee was in appeal before this Tribunal for same asst. year in assessee’s own case and the Tribunal has already quashed the asst. order itself as infructuous. Being so, this miscellaneous petitions filed by the Revenue is also infructuous and deserves to be dismissed since there was no surviving asst. order. 7. Accordingly, miscellaneous petition filed by the Revenue in M.P No.77/Bang/2021 is dismissed. M.P No.78/Bang/2021 8. In this case, the assessee as well as the Revenue came in appeal before this Tribunal in ITA No.69/Bang/2020 and 90/Bang/2020. The Tribunal M.P Nos.77 & 78/Bang/2021 Page 6 of 11 vide order dated 1/4/2021, disposed off these appeals by observing as follows:- “11. We have heard both the parties and perused the material on record. Admittedly, in these cases, the assessee himself offered the income at 10% in his return of income. The assessee has placed reliance on the judgment of Coordinate Bench in the case of Mr. M. A. Siddique cited supra wherein it was held that: “12. In this year, three issues are raised on merit of various additions. As per Ground No. 2, the grievance is about of addition of Rs. 109,05.178/-made by the AO to the extent of 12% of the alleged undisclosed sales turnover of Rs. 908,76.4857- based on data retrieved from the impounded materials. PC of the assessee's business premises at Nagpur. SMS in the cell phones of the employees of at Nagpur wherein contents were mentioned in coded words and numbers. As per para 5.2.9 of his order in this year, although learned CIT (A) has noted that in the business of Arecanut, the books of accounts disclose profit @ 2 - 3% but while computing income of unaccounted turnover. taxes and levies etc. are evaded and therefore. the profit will be higher and he directed the AO to assess income @ 4% of undisclosed turnover as against 12 % rate adopted by the AO. In the written submissions dated 11.06.2020 filed by the learned AR of the assessee for A. Y. 2015 - 16, this is one of the submissions that the coded words and figures found noted in impounded materials were disclosed in audited books of accounts and therefore, no addition is justified in this regard but no evidence was filed before us in support of this contention and therefore, this argument is rejected. This was an alternative oral argument that having noted that in the business of Arecanut, the books of accounts disclose profit 2 - 3%, learned CIT (A) was not justified in directing the AO to assess income a 4% of undisclosed turnover as against 12 % rate adopted by the AO. It was the submission that it should be 2 % only. We find force in this alternative submission because the only basis adopted by CIT (A) to adopt higher percentage is this that in unaccounted business, taxes and levies etc. are evaded but the taxes i.e. VAT etc. are collected from the customer separately when the bill is issued and it is paid to M.P Nos.77 & 78/Bang/2021 Page 7 of 11 government. In unaccounted sales, no bill is issued and therefore, no customer will pay taxes and levies which 'c ill result into higher profit to the seller. Therefore, we hold that adopting the profit rate of 2% will meet the ends of justice in the facts of the Present case and we direct the AO accordingly. On this issue, the assessee gets a part relief. Ground No. 2 is partly allowed.” 9. Now the contention of the ld.DR is as follows:- “The assessee is a an individual and is carrying on the business of trading in arecanut under the name and a search u/s 132 was conducted in this case. Consequently, assessments were made by making additions on account of undisclosed profit from unrecorded sales of Rs. 56,24,892 estimated at 12% and also unexplained receivables of Rs.38,97,934/- 2. The CIT(A) partly allowed assessee's appeal and directed the AO to estimate the profit on the net off of unrecorded sales and undisclosed purchases, instead of @12% of unrecorded sales adapted by AO 3. Further the CIT(A) also held that unexplained receivables of Rs.38,97,934/- and unrecorded credit purchases were part of unrecorded sales and purchases and deleted the additions. 4. The department and the assessee- filed appeal before the ITAT. The ITAT following the profit percentage of earlier three years directed to adopt the average profit percentage @•% instead of 4% worked out by the CIT(A) and arrive at the income on the undisclosed turnover. 5. However, the ITAT has dismissed the department appeal on the issue of unexplained receivables on the ground that there was no corroborative evidences 6. The Hon'ble ITAT erred in not considering the fact with regard to netting of un recorded sales and unrecorded purchases resulting in undisclosed receivables as on the date of search, on the ground that there are no corroborative evidences 7. The ITAT erred in appreciating the fact that the additions in respect of undisclosed receivables on account of unrecorded sales, are made on the basis of material evidences found and examined during the course of search and assessment proceedings and accordingly separate additions M.P Nos.77 & 78/Bang/2021 Page 8 of 11 were made with regard to Undisclosed receivables quantified on the basis of evidences. 8. The ITAT erred in not considering the fact that the amount of receivables is actually quantified out on the basis of material evidences found and examined during search. 9. For these and any other grounds which may be raised, it is prayed that the ITAT is requested to pass appropriate orders in the interest of justice and equity.” 10. He relied on the judgment of the Hon’ble High court in GMR Energy in ITA No.358/Bang/2018 dated 8/11/2019 and also judgment in the case of in the case of ACIT Vs. Rajesh Jhaweri Stock Brokers Pvt. Ltd., 291 ITR 500 (SC) for the proprotiion that processing of return u/s 143(1) cannot be considered as concluded asst. order. 11. The AR relied on the order of the Tribunal. 12. We have heard the rival submissions and perused the material on records. 13. The grievance of the Revenue in this miscellaneous petition is totally misconstrued as the ld.DR wanted to review the order of the Tribunal cited supra on the reason that there should be 3 separate independent additions with regard to the following issues: M.P Nos.77 & 78/Bang/2021 Page 9 of 11 1) Profit on the undisclosed sales 2) Investment on unaccounted purchases 3) Addition on account of receivables from unaccounted sales 14. While deciding the above, the Tribunal observed that the AO should estimate the income from unaccounted turnover on the basis of average net profit declared by the assessee in the immediate last 3 asst. years i.e 2012-13, 2014-15 and 2015-16 which worked out @ 7.33% as against the 4% worked out by the CIT(A). 15. The above computation of the income from unaccounted turnover, @ Rs.7.33% would take care of other additions i.e additions towards investment on unaccounted purchase and addition towards unaccounted receivables and these additions are subsumed or merged with the additions sustained by this Tribunal. There cannot be any further separate addition towards investment in the unaccounted purchases or unaccounted receivables. The Tribunal considered the entire facts and circumstances of the case and decided the issue. Now, by way of this misc. M.P Nos.77 & 78/Bang/2021 Page 10 of 11 petition, the ld.DR wanted to reargue the case, which is not permitted u/s 254(2) of the Income-tax Act. The Tribunal being statutory authority, it cannot review its own earlier orders. Accordingly, the misc. petition filed by the revenue is dismissed. 16. In the result, both the misc. petitions filed by the revenue are dismissed. Order pronounced in the open court on 12 th Nov, 2021. Sd/- Sd/- (BEENA PILLAI) ( CHANDRA POOJARI) Judicial Member Accountant Member Bangalore, Dated, 12 th Nov, 2021 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore. M.P Nos.77 & 78/Bang/2021 Page 11 of 11 1. Date of Dictation ............................................. 2. Date on which the typed draft is placed before the dictating Member ......................... 3. Date on which the approved draft comes to Sr.P.S ................................... 4. Date on which the fair order is placed before the dictating Member .................... 5. Date on which the fair order comes back to the Sr. P.S. ....................... 6. Date of uploading the order on website................................... 7. If not uploaded, furnish the reason for doing so ................................ 8. Date on which the file goes to the Bench Clerk ....................... 9. Date on which order goes for Xerox & endorsement.......................................... 10. Date on which the file goes to the Head Clerk ......................... 11. The date on which the file goes to the Assistant Registrar for signature on the order ..................................... 12. The date on which the file goes to dispatch section for dispatch of the Tribunal Order ............................... 13. Date of Despatch of Order. .....................................................