M/s.Anuj Kumar Agrawal, Batul V. Income Tax Officer , Batul

MA 9/JAB/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3369 (ITAT-JABALPUR)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-09-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 17-02-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K HALDAR
• Assessee Lawyers: H S MODH
• Keywords: Business income; Search and seizure; Set aside
• Section: 143(3); 263; 15

Judgement Text

MA NO.09/JAB/2020 1 ANUJ KUMAR AGRAWAL, BETUL VS. INCOME TAX OFFICER, BE TUL (A.Y.2010-11) IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR BEFORE SHRI NRS GANESAN, JUDICIAL MEMBER & SANJAY ARORA, ACCOUNTANT MEMBER MA NO.09/JAB/2020 (ARISING OUT OF I.T.A. NO. 126/JAB/2018) ASSESSMENT YEAR: 2010-11 ANUJ KUMAR AGRAWAL, BETUL (PAN: AAOFA3419K) VS. INCOME TAX OFFICER, BETUL (APPELLANT ) (RESPONDENT) APPELLANT BY SHRI H.S.MODH, ADV. RESPONDENT BY SHRI S.K.HALDAR, DR DATE OF HEARING 04/09/2020 DATE OF PRONOUNCEMENT 04/09/2020 ORDER PER SANJAY ARORA, AM: THIS IS A MISCELLANEOUS PETITION (MP) BY THE ASSESS EE ARISING OUT OF THE ORDER DATED 24.12.2019 BY THE TRIBUNAL UNDER SECTIO N 254(1) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) DISPOSING THE ASS ESSEES APPEAL FOR ASSESSMENT YEAR (AY) 2010-11. 2.1 IT MAY BE RELEVANT TO SET OUT THE FACTS OF THE CASE IN BRIEF. THE ORIGINAL ASSESSMENT WAS SUBJECT TO REVISION U/S. 263 OF THE ACT, WHEREBY THE ASSESSING OFFICER (AO) WAS DIRECTED TO REFRAME THE ASSESSMENT AFTER CONSIDERING THREE DIFFERENT ASPECTS OF THE ASSESSEES RETURN/AFFAIRS, AGGREGATING TO RS. 5,69,330, MA NO.09/JAB/2020 2 ANUJ KUMAR AGRAWAL, BETUL VS. INCOME TAX OFFICER, BE TUL (A.Y.2010-11) QUA WHICH, IN THE OPINION OF THE REVISION AUTHORITY, T HE ASSESSMENT AS MADE WAS DEFICIENT, INASMUCH AS THE AO HAD: (A) NOT BROUGHT TO TAX OTHER INCOME OF RS.1,77,273/ -, BEING JEEP RENT (RS.59,299) AND BANK INTEREST (RS.1,17,974/-); (B) ALLOWED THE ASSESSEE INTEREST AND REMUNERATION TO PARTNERS AT RS.3,79,557/-, AS DEBITED TO THE PROFIT AND LOSS ACCOUNT, EVEN AS NET PROFIT OF THE BUSINESS HAD BEEN ESTIMATED BY HIM, IMPLYING DEDUCTION OF ALL EXPENSE S, SO THAT THERE WAS NO SCOPE FOR SEPARATE DEDUCTION QUA ANY EXPENDITURE; (C) NOT BRINGING THE PROFIT ON RECEIPT OF RS.2,50,0 00, I.E., AT THE RATE OF 5% OR RS.12,500/-, TO TAX, I.E., AS PART OF THE CONTRACT INCOME, RESULTING IN AN UNDER-ASSESSMENT BY RS.5,69,330, I. E., IN ACCORDANCE WITH LAW, AND AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEA RING TO THE ASSESSEE. IN THE SET ASIDE PROCEEDINGS, THE AO: (A) ESTIMATED THE CONTRACT BUSINESS INCOME AT 8% OF THE TURNOVER, ADOPTING A FIGURE BY INCREASING THE BOOK SALES BY RS.2.50 LACS, I.E., AT RS.367.94 LACS, AS FOUND BY HIM AFTER VERIFICATION; (B) BROUGHT TO TAX THE OTHER INCOME OF RS.1,77,273/ -; AND (C) DID NOT ALLOW ANY DEDUCTION FOR INTEREST AND RE MUNERATION TO THE PARTNERS, ASSESSING, THUS, THE ASSESSEES TOTAL INCOME FOR TH E YEAR AT RS.31,20,757/-. 2.3 IN FIRST APPEAL, THE FIRST APPELLATE AUTHORITY CONFIRMED THE SAME, SAVE THE REVISION IN THE ESTIMATION OF THE NET PROFIT OF THE ASSESSEES CONTRACT BUSINESS FROM 5% (OF THE GROSS RECEIPT) TO 8%, AS THERE WAS NO DIRECTION BY THE REVISIONAL AUTHORITY FOR THE SAME. IN SECOND APPEAL BEFORE THE TRIBUNAL, IT, AFTER CLARIFYING THE SCOPE OF THE PROCEEDINGS BEFORE IT (PARA 4.1 OF THE IMPUGNED ORDER), ADJUDICATED EACH OF THE THREE SURVIVING ASPECTS AS STATED BY THE LD. CIT, THE REVISIONARY AUTHORITY. THE ADDITION OF RS. 12,500 ( PARA 2.1(C)) AND THAT ON ACCOUNT OF INTEREST AND REMUNERATION TO THE PARTNER S (AT RS. 3,79,557) (PARA 2.1(B)), WAS STRUCK DOWN (PER PARA 4.2 AND 4.3). TH E THIRD ADJUSTMENT, AT RS. MA NO.09/JAB/2020 3 ANUJ KUMAR AGRAWAL, BETUL VS. INCOME TAX OFFICER, BE TUL (A.Y.2010-11) 1,77,277 (PARA 2.1(A)), WAS UPHELD (PER PARA 4.4). PARA 5 OF THE TRIBUNALS ORDER CONTAINS ITS CONCLUDING REMARKS. THE SAME, READ WI TH PARA 6, READS AS UNDER: 5. THE ONLY ADJUSTMENT, THEREFORE, THAT OBTAINS CO NSEQUENT TO THE SET ASIDE BY THE LD. CIT IS THE ASSESSMENT OF RS.1,77,273/- AS I NCOME FROM OTHER SOURCES U/S. 56, I.E., AS ASSESSED. THE ASSESSEES BUSINESS INCO ME SHALL CONTINUE TO BE AT RS.14,47,620/-, I.E., AS ORIGINAL ASSESSED. WE ARE CONSCIOUS THAT THE ALLOWANCE OF DEDUCTION FOR REMUNERATION TO PARTNERS, ALLOWED AT RS. 1,30,000, IS TO BE W.R.T. BOOK PROFIT ( EXPLANATION 4 TO S. 40(B)(V)), SO THAT THE ENHANCEMENT IN INCOME UPON ESTIMATION WOULD HAVE NO BEARING ON THE QUANTU M OF THE SAID DEDUCTION. THE SAME, HOWEVER, HAS BEEN CONSIDERED W.R.T. THE ASSES SEES BOOK PROFIT, AND FOUND ALLOWABLE AT THE CLAIMED AMOUNT OF RS. 1,30,000. WE DECIDE ACCORDINGLY. 6. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. 2.4 WITH THE REFERENCE THERETO (PARA 5 SUPRA), IT I S BEING CONTENDED BY AND ON THE BEHALF OF THE ASSESSEE THAT THE TRIBUNAL, WHILE CONCLUDING ITS ORDER HAD OMITTED TO CONSIDER THE DISALLOWANCE OF INTEREST TO PARTNERS, CLAIMED IN THE SUM OF RS. 2,49,557, AND WHICH HAD THEREFORE REMAINED T O BE ADJUDICATED, SO THAT THE SAME BE RECTIFIED ACCORDINGLY. THE SAME WAS IN FACT NOT THE SUBJECT MATTER OF APPEAL BEFORE IT, HAVING BEEN ALLOWED IN THE ORIGIN AL ASSESSMENT ITSELF. THE AO WHILE GIVING APPEAL EFFECT TO THE TRIBUNALS ORDER DATED 24.12.2019, HAS ACCORDINGLY NOT ALLOWED INTEREST TO THE PARTNERS IN ASMUCH AS THERE IS NO ADJUDICATION QUA THIS EXPENDITURE CLAIMED BY THE ASSESSEE. THE TRIB UNALS ORDER, MISTAKEN TO THAT EXTENT, BE RECTIFIED. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL ON RECORD. 3.1 WE ARE, WITH RESPECT, AFRAID TO SAY THAT NEITHE R THE ASSESSEE NOR THE REVENUE HAS PROPERLY UNDERSTOOD THE TRIBUNALS ORDE R. THE CLAIM OF INTEREST TO PARTNERS (ON THEIR CAPITAL), AT RS. 2,49,557, FORMS PART OF THE SUM OF RS. 5,69,330 DIRECTED TO THE EXAMINED AFRESH BY THE LD. CIT, AND INDEED DISALLOWED PER THE IMPUGNED ASSESSMENT U/S. 143(3) R/W S. 263 DATED 15 .7.2015. AS AFORE-NOTED, MA NO.09/JAB/2020 4 ANUJ KUMAR AGRAWAL, BETUL VS. INCOME TAX OFFICER, BE TUL (A.Y.2010-11) THE TRIBUNAL ALLOWED THE SAME PER PARA 4.3 OF THE O RDER, THE LAST SUB-PARA OF WHICH READS AS UNDER: WE, THEREFORE, FIND NO BASIS FOR EITHER A REVIEW O F THE SAID ESTIMATE, REVISED TO 8%, OR FOR REGARDING IT AS HAVING BEEN MADE AFTER T HE ALLOWANCE OF INTEREST AND SALARY TO THE PARTNERS, SO AS TO PRECLUDE THEIR ALL OWANCE, AS ARGUED BY THE REVENUE. NO ADJUSTMENT IN RESPECT THEREOF IS ACCORDINGLY CAL LED FOR. CLEARLY, THEREFORE, NO ADJUSTMENT TO THE RETURNED I NCOME ON ACCOUNT OF INTEREST AND REMUNERATION TO PARTNERS, IT HELD, IS CALLED FO R. PARA 5 OF ITS ORDER ACCORDINGLY CLARIFIES THAT THE BUSINESS INCOME WILL REMAIN THE SAME, I.E., AS ORIGINALLY ASSESSED (AT RS. 14,47,620), WHICH IS AF TER DEDUCTION OF BOTH INTEREST AND REMUNERATION TO PARTNERS, SO THAT THE ONLY ADJU STMENT THAT OBTAINS, POST ITS ORDER, IS FOR RS. 1,77,273, ASSESSABLE U/S. 56. THE REFERENCE TO SALARY TO PARTNERS IN PARA 5 IS IN VIEW OF SECTION 40(B)(V), WHICH LIM ITS THE EXTENT THEREOF WITH REFERENCE TO BOOK PROFIT. IN THIS CONTEXT, IT STAN DS CLARIFIED THAT INASMUCH AS THE ENHANCED ESTIMATION OF BUSINESS INCOME (BY APPLYING THE RATE OF 5 PERCENT OF THE GROSS RECEIPT, AS AGAINST THE RETURNED 2.4%), W OULD NOT IMPACT THE BOOK PROFIT (AS DEFINED IN EXPLANATION (V) TO SECTION 40 (B)(V)), THE REMUNERATION TO THE PARTNERS ALLOWABLE WITH REFERENCE TO THE ASSESS EES BOOK PROFIT IS NOT BREACHED ON THE CLAIMED SUM OF RS. 1,30,000. 3.2 NO RECTIFICATION, EVEN AS CLARIFIED DURING HEA RING IS CALLED FOR; THE ORDER PASSED, AS WOULD BE APPARENT, BEING WITH A VIEW TO SET AT REST THE CONTROVERSY ARISING ON ACCOUNT OF THE MISREADING OF TRIBUNALS ORDER, EVEN AS ASSURED DURING HEARING. 3.3 WE DECIDE ACCORDINGLY. MA NO.09/JAB/2020 5 ANUJ KUMAR AGRAWAL, BETUL VS. INCOME TAX OFFICER, BE TUL (A.Y.2010-11) ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 04, 2020 SD/- SD/- (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 04/09/2020 // TRUE COPY //