SMRITI JAISWAL,KOLKATA V. INCOME TAX OFFICER, WARD-33(2), KOLKATA

ITA 1224/KOL/2024

AI Insights

The case involves Smriti Jaiswal, who appealed against the order of the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, which confirmed the assessment made by the Income Tax Officer for the Assessment Year 2017-2018. The primary issues in the appeal were the application of an 8% net profit rate on gross receipts from cinema ticket sales and the treatment of cash deposits during the demonetization period as unexplained money. The Tribunal found that the estimation of 8% was excessive and reduced it to 5%, considering the net profit rates disclosed by the assessee in previous and subsequent years. Furthermore, the Tribunal accepted the assessee's explanation for the source of the cash deposits as sales receipts from cinema tickets, thereby allowing the deletion of the addition made under section 69A.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26947 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-11-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 28-05-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Set aside; Business income
• Section: 48; 69A

Judgement Text

" ITA No. 1224/KOL/2024 (A.Y. 2017-2018) Smriti Jaiswal 1 THE INCOME TAX APPELLATE TRIBUNAL, ‘SMC’ BENCH, KOLKATA Before Shri Duvvuru RL Reddy, Vice-President (KZ) I.T.A. No. 1224/KOL/2024 Assessment Year: 2017-2018 Smriti Jaiswal,…………………………..…………Appellant Flat 33, 86 Prince Golam Hossain Street, Kolkata-700032 [PAN:AFDPJ6962N] -Vs.- Income Tax Officer,……………………………….Respondent Ward-33(2), Kolkata, 10B, Middleton Road, Kolkata-700071 Appearances by: Shri Sankar Lal Poddar, A.R., appeared on behalf of the assessee Shri Manas Mondal, Addl. CIT, D.R., appeared on behalf of the Revenue Date of concluding the hearing: November 11, 2024 Date of pronouncing the order: November 28, 2024 O R D E R The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 29th December, 2023 passed for Assessment Year 2017-18. ITA No. 1224/KOL/2024 (A.Y. 2017-2018) Smriti Jaiswal 2 2. At the outset, there is a delay of 91 days in filing the appeal filed by the assessee, which was stated to be on account of non- service of the order and the person, Shri Sanjay Agarwal, ld. Counsel, who is handling the taxation matters, was out of Kolkata from January 2024 to April, 2024 due to some personal family problems. After returning to Kolkata, when the Income Tax portal was checked by the ld. Counsel, it was realized that the appellate order was already passed on 29th December, 2023. Thereafter the Advocate was approached to file the appeal and it was finally filed on 28th May, 2024. 3. On the other hand, ld. D.R. objected to this contention of the ld. Counsel for the assessee and contended that the delay should not be condoned. 4. After hearing the rival contentions and perusing the material placed on record, I find that the delay in filing the appeal was happened due to bonafide reason and accordingly the same is condoned. 5. Brief facts of the case are that the assessee is an individual, having house property income and income from proprietary business, M/s. Movie Max, which runs Popkorn Cinema at Galaxia Mall, Ranchi. Further, the assessee is also partner in M/s. Sujata Picture Palace along with another partner, Shri Dushyant Jaiswal. During the year under consideration, Sujata Cinema was gutted in fire on 10.02.2017 before filing of the income tax returns. A copy of the report published in the newspaper on 11.02.2017 is also ITA No. 1224/KOL/2024 (A.Y. 2017-2018) Smriti Jaiswal 3 placed before the Tribunal. The assessee could not file the return of income as all the records placed at Sujata Picture Palace were destroyed in fire. During the course of assessment proceedings, the above facts are brought to notice of ld. Assessing Officer, but he has not convinced and completed the assessment under section 144 vide order dated 12.12.2019 determining the total income at Rs.33,35,710/-. The ld. Assessing Officer made three additions- (i) Cash deposits in Bank Account treated as unexplained money under section 69A read with section 115BBE; (ii) Income from business taken by applying Gross Profit rate 8% on total sales of Rs.2,02,91,160/- of cinema tickets; Aggrieved with the order of ld. Assessing Officer, the assessee filed an appeal before the ld. CIT(Appeals). 6. The ld. CIT(Appeals) after considering the submissions of the assessee dismissed the appeal of the assessee vide order dated 29.12.2023 and confirmed the order of the ld. Assessing Officer. 7. Being aggrieved with the order of ld. CIT(Appeals), the assessee preferred an appeal before the Tribunal raising the following grounds:- (1) In the facts and circumstances of the case the Learned CIT(A) has erred in confirmation the addition of Rs. 16,23,293/- by applying the 8% NP rate of Rs. 2,02,91,160/- which Monthly Summary of Sale of Tickets for F.Y. 2016-17 uploaded on portal by the assessee without considering the submission of the assessee. ITA No. 1224/KOL/2024 (A.Y. 2017-2018) Smriti Jaiswal 4 (2) In the facts and circumstances of the case the Learned CIT(A) has erred in confirmation the addition of Rs. 14,82,000/- made by the Learned Assessing Officer under Section 69A of the Income Tax Act, 1961 by treating the cash deposited in bank account during demonetization period as unexplained money and thereby applying the provisions of section 115BBE of the Income Tax, 1961. (3) In the facts and circumstances of the case the Learned CIT(A) has erred in confirmation the addition of Rs. 14,82,000/- made by the Learned Assessing Officer which tantamount the double addition as 8% NP rate has already been applied on Rs.2,02,91,160/- by treating Monthly Summary of Sale of Tickets for F.Y. 2016-17 as business receipts. 8. It was the submission of the ld. Counsel for the assessee that due to fire accident, the assessee could not file all the evidences as well as the return of income before the ld. Assessing Officer. However, the assessee furnished copy of Profit & Loss Account, Bank reconciliation and computation of income before the ld. Assessing Officer. The Bank Reconciliation Statement filed by the assessee disclosed that against total sales of tickets of Rs.2,02,91,160/-, the sales in cash were of Rs.1,76,02,870/-. Out of these cash sales, Rs.72,90,500/- were deposited in the Bank account in cash. It was further submission of the assessee that the assessee further made payments of Rs.1,15,93,545/- to various distributors and all the details are available in the reconciliation statement. The net receipts in the hands of the assessee were only of Rs.82,73,604/-. He further submitted that these facts have not been considered in correct perspective by the ld. Assessing Officer as well as ld. CIT(Appeals). The ld. Assessing Officer estimated 8% on gross receipts of Rs.2,02,91,160/- and worked out income at Rs.16,23,293/-. The ld. CIT(Appeals) also confirmed the action of ITA No. 1224/KOL/2024 (A.Y. 2017-2018) Smriti Jaiswal 5 the ld. Assessing Officer without considering the facts and circumstances of the case. He further submitted that after the payments made to various distributors, the collection in the hands of the assessee is only to the extent of Rs.82,73,604/-. It is submitted that on these sales, Net Profit rate is required to be estimated based on the assessment year 2014-15, the Net Profit rate disclosed by the assessee was only 1.19%, therefore, the estimation of 8% by the ld. Assessing Officer was on higher side and he pleaded to reduce the Net Profit at 2% on receipts of Rs.82,73,604/-. He pleaded to set aside the orders passed by the ld. CIT(Appeals) relying on the order of ld. Assessing Officer. 9. On the other hand, ld. D.R. submitted that the assessee has not filed any proof to substantiate her claim. Therefore, the ld. Assessing Officer has no option except estimating the Net Profit at 8%. Ld. D.R. further submitted that considering the nature of business of the assessee, the ld. Assessing Officer has rightly estimated Net Profit at 8% on gross receipts of Rs.2,02,91,160/-. Therefore, he pleaded to uphold the orders passed by the ld. CIT(Appeals). 10. I have heard the rival submissions and perused the material placed before me. It is an admitted fact that the assessee is having proprietary concern and has not filed the return of income and also has not placed any evidence to substantiate her claim that the assessee received the total receipts by way of sale of tickets at Rs.2,02,91,160/-. The net profit rates disclosed by the assessee for the assessment years 2014-15 and 2019-20 are at 1.65% and ITA No. 1224/KOL/2024 (A.Y. 2017-2018) Smriti Jaiswal 6 1.19% respectively. Considering the net profit of the assessee for the earlier and subsequent years, I am of the view that the estimation of 8% on the Net Profit is on higher side and at the same time, the plea of the assessee that the ld. Assessing Officer might have estimated the net profit at 2% is also on lower side. Therefore, considering the facts and circumstances of the case and the nature of business of the assessee, I am of the view that 5% of Net Profit on Rs.2,02,91,160/- is reasonable. So far as the other payments of Rs.1,15,93,545/- i.e. payment to distributors is concerned, there is no evidence before me to establish that the assessee made these payments to the Distributors. The assessee has not placed any evidence to that effect therefore, I have no hesitation to come to the conclusion that 5% is reasonable as net profit on Rs.2,02,91,160/- Therefore, this ground raised by the assessee is partly allowed. 11. So far as the 2nd issue is concerned, i.e. deposits made during demonetization period as unexplained money for an amount of Rs.14,82,000/- under section 69A read with section 115BBE of the Act. On this aspect, it was the submission of the ld. Counsel for the assessee that the ld. Assessing Officer has considered the sales of tickets at Rs.2,02,91,160/- but he has failed to consider the telescopic benefit of the assessee. The ld. Assessing Officer simply made the addition of Rs.14,82,000/- as unexplained cash deposits under section 69A read with section 115BBE of the Act, which is not warranted. He further submitted that the assessee has explained the source of cash deposits as sale receipts from the ITA No. 1224/KOL/2024 (A.Y. 2017-2018) Smriti Jaiswal 7 sale of cinema tickets. He pleaded to delete the addition made by the ld. Assessing Officer. 12. On the other hand, ld. D.R. submitted that the assessee is not eligible for telescopic benefit as she has not filed the return of income and not explained the source of cash deposits under receipts. 13. I have heard the rival contentions and gone through the material placed before me. The entire cash deposit amount of Rs.14,82,000/-, which was deposited in the Bank account of the assessee during demonetization period, was out of sale of movie tickets. The assessee submitted that the sales of tickets from 01.04.2016 to 08.11.2016 were to the tune of Rs.1,25,42,190/-. The assessee also filed the copy of statement in this regard, which is available at page no. 48 of the paper book. The assessee also filed the copy of monthly collection of sales of cinema tickets, which is available in the paper book. After considering the above evidences for the source of money, I am of the view that all the sources of cash deposits in the bank being out of cash sales of cinema tickets only. Therefore, the assessee is entitled to get telescopic benefit. 13.1. Considering the above facts and circumstances, I am of the view that the addition made by the ld. Assessing Officer deserves to be deleted. Thus, I direct the ld. Assessing Officer to delete the addition made under section 69A of the Act read with ITA No. 1224/KOL/2024 (A.Y. 2017-2018) Smriti Jaiswal 8 section 115BBE for an amount of Rs.14,82,000/-. Hence, the ground raised by the assessee is allowed. 14. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open Court on 28/11/2024. Sd/- (Duvvuru RL Reddy) Vice-President (KZ) Kolkata, the 28th day of November, 2024 Copies to :(1) Smriti Jaiswal, Flat 33, 86 Prince Golam Hossain Street, Kolkata-700032 (2) Income Tax Officer, Ward-33(2), Kolkata, 10B, Middleton Road, Kolkata-700071 (3) Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi; (4) CIT - , Kolkata; (5) The Departmental Representative; (6) Guard File TRUE COPY By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S. "