MANJU DEVI CHANDAK,HOWRAH V. INCOME TAX OFFICER, KOLKATA

ITA 390/KOL/2024

AI Insights

The case involves Manju Devi Chandak, who appealed against the order of the CIT(A) which confirmed the AO's addition of Rs. 9,74,157 as unexplained income under section 68 of the Income Tax Act, 1961, and disallowance of deductions under sections 80C and 80TTA. The AO had initially added this amount due to the assessee's failure to provide documentary evidence for large cash deposits during the demonetization period. The CIT(A) partly allowed the appeal by dismissing the addition related to cash deposits but upheld the disallowances under sections 80C and 80TTA, directing the AO to verify the claims. The Tribunal found that the assessee was not given a fair opportunity to present her case and documents before the AO, leading to the decision to set aside the previous orders and restore the case for a fresh assessment.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 36239 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 26-02-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 143(3); 143(2); 250; 68; 80C

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'एसएमसी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA श्री प्रदीप क ुमार चौबे, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER & SRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 390/KOL/2024 Assessment Year: 2017-18 Manju Devi Chandak……………………………………………………….Appellant [PAN: ACXPC 7061 J] Vs. ITO, Kolkata........................................................................Respondent Appearances: Assessee represented by: C.L. Nawal Rathi, FCA. Department represented by: S.B. Chakraborthy, JCIT, Sr. DR. Date of concluding the hearing : August 20th, 2024 Date of pronouncing the order : November 5th, 2024 ORDER Per Pradip Kumar Choubey, Judicial Member: This appeal filed by the assessee pertaining to the Assessment Year (in short ‘AY’) 2017-18 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the ‘Act’) by ld. Commissioner of Income-tax (Appeals)- NFAC, Delhi [in short ld. ‘CIT(A)’] dated 27.12.2023 arising out of the assessment order framed u/s 143(3) of the Act dated 30.12.2019. 1.1. The brief facts of the case of the appellant are that the assessee is involved in the business of trading of food products and spices. The assessee filed return of income for the AY 2017-18 declaring total income of Rs. I.T.A. No.: 390/KOL/2024 Assessment Year: 2017-18 Manju Devi Chandak. Page 2 of 6 7,87,780/-. The case of the assessee was selected for scrutiny to verify large value cash deposits during the demonetization period. Notice u/s 143(2) & 142(1) of the Act were issued. Since the assessee failed to file any documentary evidences with regard to cash deposit, an amount of Rs. 9,72,964/- has been added by the ld. AO and further deduction claimed under Chapter VI of Rs. 1,55,185/- had also been disallowed on account of non- production of any documentary evidence in support of claim. The said order has been challenged by the assessee before the ld. CIT(A) wherein the appeal of the assessee has been partly allowed as addition on account of cash deposit during the demonetization period at Rs. 9,74,157/- has been dismissed. So far, the disallowances of deduction under claim u/s 80C and 80TTA of the Act, ld. CIT(A) has directed the ld. AO to verify the same. Being aggrieved and dissatisfied with the impugned order, the present appeal has been preferred. 1.2. The ld. Counsel for the assessee challenges the impugned order through the following grounds of appeal: “1. Addition in relation to fluctuation of Net Profit Ratio – A) Under the facts and circumstances of the case, the Id. First Appellate Authority as well as Ld. A.O. have grossly erred in making an addition of Rs 9,72,964/- as unexplained Income or credit u/s 68 of the Income Tax Act, 1961 B) Under the facts and circumstances of the case, the ld. First Appellate Authority and Assessing Officer has grossly erred in estimating NP Ratio without rejecting the books of accounts of the assessee without appreciating the fact that the appellant has maintained complete & correct accounts of the business carried by the appellant and the same have been duly audited as per law. C) Under the fact and circumstance of the case, the Id. First Appellate Authority were grossly erred in making addition of Rs. 9,74,157/- by applying NP ratio on gross receipts, which is unwarranted, against the facts & bad at law. 2.D) Surprisingly, the appellant authority has shown a lack of emphasis on the submitted documents, including a detailed comparative chart analysis of the gross profit performance spanning several years, and the notable adjustments made to the business model in recent times. Despite the I.T.A. No.: 390/KOL/2024 Assessment Year: 2017-18 Manju Devi Chandak. Page 3 of 6 meticulous efforts undertaken by the appellant to provide a comprehensive overview of the historical gross profit/Net profit trends and a thorough examination of the modifications in the business model, the authority appears to have overlooked or downplayed the significance of this critical evidence. The absence of due consideration for such detailed documentation raises concerns about the comprehensiveness of the evaluation process, highlighting the need for a more thorough and attentive review by the appellant authority in order to fully grasp the nuances of the presented information.” 1.3. The ld. Counsel for the assessee submits that in the assessment year prior to AY 2017-18 the assessee was engaged in the business of trading food products and as a consignment agent of spices. It has further been submitted that after having two years of experience and market development, the assessee decided to shift their business strategy and instead of selling products under a consignment basis, they transitioned into the spices business. The ld. Counsel for the assessee has submitted a comparative chart of the gross profit and net profit for the AY 2017-18, AY 2016-17, AY 2015-16 and AY 2014-15. The ld. Counsel for the assessee has further submitted that Chartered Accountant’s certificate to satisfy the chart of gross profit and net profit for the above assessment years. The ld. Counsel for the assessee further attached audited profit and loss account and balance sheet for the AY 2017- 18, AY 2016-17, AY 2015-16, and AY 2014-15. The ld. Counsel for the assessee has also cited various judicial decisions in this context. The submission of the ld. Counsel for the assessee is that before the ld. AO assessee did not appear as did not receive any notice with regard to the assessment proceedings neither by e-mail nor any post. So, the assessee was not in a position to submit his papers before the ld. AO and ld. AO has calculated the income on the ground that the assessee has failed to produce any documentary evidence. Ld. Counsel for the assessee further submits that ld. CIT(A) has also confirmed the addition only on this ground that the assessee did not furnish any documentary evidence to explain the source of the deposits. Hence, the AO has rightly made the addition of Rs. 9,74,157/-. The prayer of the ld. Counsel for the assessee is to allow the assessee to furnish all those papers before the ld. AO to substantiate his claim. I.T.A. No.: 390/KOL/2024 Assessment Year: 2017-18 Manju Devi Chandak. Page 4 of 6 1.4. Contrary to that, ld. D/R supports the impugned order. 2. We have perused the case of the assessee and find that the assessee is involved in the in the business of trading of food products and spices. The assessee has also filed the following papers in support of his contention which are as follows: a) A comparative chart of the gross profit and net profit ratio for the FY 2016- 17, 2015-16, 2014-15 and 2013-14. b) Chartered Accountant’s certificate certifying the gross/net profit ratio which has been furnished by the assessee in the comparative chart. c) Xerox copy of the audited financial statement for the FY 2013-14, 2014-15, 2015-16 and 2016-17 which are as under: Particular F.Y.2012-13 FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17 Turnover 25217942.90 28947574.50 32694917.90 16697529.48 60884820.40 Cash deposit 19550000.00 20435000.00 22090000.00 13360000.00 37200000.00 % turnover 77.52% 70.59% 67.56% 80.01% 61.10% 2.1. Comparative chart as shown above provides a comprehensive overview of the financial performance over past few years of the assessee. It is also hereby made clear that to ensure the accuracy and reliability of these figures, the assessee has also included the Chartered Accountant’s certificate affirming the veracity of the financial data. It is also not in dispute that the assessee is involved in the business of trading of food products and spices. The sector to which it caters is unorganized and majority of sales are transacted in cash and regular cash deposits are made into the bank accounts. The assessee has also furnished the data of cash deposit and turnover for the FY 2012-13, 2013-14, 2014-15, 2015-16 and 2016-17 which are as follows: Particular F.Y 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17 Turnover 25217942.90 28947574.50 32694917.90 16697529.48 60884820.40 Cash deposit 19550000.00 20435000.00 22090000.00 13360000.00 37200000.00 % turnover 77.52% 70.59% 67.56% 80.01% 61.10% I.T.A. No.: 390/KOL/2024 Assessment Year: 2017-18 Manju Devi Chandak. Page 5 of 6 2.2. The ld. Counsel for the assessee submits that during the AY 2017-18 and during the demonetization period from 09.11.2016 to 30.12.2016 the assessee deposited a total amount of INR 41.50 Lakh out of which Rs. 9 Lakh was deposited in old denomination tender and balance Rs. 32.50 Lakh deposited in the legal tender. 2.3. We have gone through the order of the ld. CIT(A) and we find that the ld. CIT(A) has dismissed the claim of the assessee confirming the order of the ld. AO regarding addition of Rs. 9,74,157/- on the ground that the assessee did not furnish any documentary evidence to explain the source of deposit and to justify the low profit. Under the circumstances, in the absence of any documentary evidence forthcoming from the assessee, we are of this considered opinion that the ld. AO rightly made the impugned addition of Rs. 9,74,157/-. The submission of the ld. Counsel for the assessee is that he has not been served any notices from the ld. AO hence, the assessee could not be able to furnish the documents in support of their case. 3. Keeping in view the facts of the case as well as the documents filed by the assessee as discussed above, we are of this view that the assessee has to be given an opportunity to place all those papers before the ld. AO in support of their claim. Accordingly, the order passed by the ld. AO confirmed by the ld. CIT(A) is hereby set aside. The assessee has been given an opportunity to place his case before the ld. AO. The case is restored back to the file of ld. AO. The ld. AO is directed to hear the assessee and after going over the documents filed by the assessee pass a fresh order. 4. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 5th November, 2024. Sd/- Sd/- [Rakesh Mishra] [Pradip Kumar Choubey] Accountant Member Judicial Member Dated: 05.11.2024 Bidhan (P.S.) I.T.A. No.: 390/KOL/2024 Assessment Year: 2017-18 Manju Devi Chandak. Page 6 of 6 Copy of the order forwarded to: 1. Manju Devi Chandak, Vivek Vihar, Phase-1, Block-C, Flat No. 904, 493C/A G.T. Road, Shibpur, 711102. 2. ITO, Ward-46(3), Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "