SRI MURLI MANOHAR GANERIWAL,SAHARSA V. I.T.O., SAHARSA

ITA 212/PAT/2013

AI Insights

The case involves Sri Murli Manohar Ganeriwal, an individual engaged in trading of household electronic appliances, who appealed against the order of the Commissioner of Income Tax (Appeals)-I, Patna. The original assessment for AY 2008-09 was significantly higher than the returned income, leading to the appeal. The Tribunal considered various grounds including the rejection of books of account, non-issue of notices, and several additions made by the Assessing Officer under different heads. The Tribunal found merit in applying a net profit rate to the total turnover instead of accepting the additions made under various heads, thus partly allowing the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705351 (ITAT-PATNA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2008-2009
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained investment; Principle of natural justice
• Section: 143(3); 142(1); 234B; 145; 40A(3); 133A

Judgement Text

"आयकर अपीलीय अधिकरण पटना पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH AT KOLKATA [वर्चुअल कोटु] [Virtual Court] श्री जॉजु माथान, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SHRI GEORGE MATHAN, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 212/PAT/2013 Assessment Year: 2008-09 Sri Murli Manohar Ganeriwal Vs. I.T.O., Ward-1, Saharsa (Appellant) (Respondent) PAN: ADKPG5025C Appearances: Assessee represented by : K N Prasad, Adv. and Vishal Kr. Adv. Department represented by : Rinku Singh, CIT DR. Date of concluding the hearing : 03-April-2025 Date of pronouncing the order : 01-July-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)- I, Patna [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2008-09 dated 22.02.2013, which has Page | 2 I.T.A. No.: 212/PAT/2013 Assessment Year: 2008-09 Sri Murli Manohar Ganeriwal. been passed against the assessment order u/s 143(3) of the Act, dated 27.12.2010. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: “01. For that the learned Assessing Officer failed to issue notice under section 143(2)/142(1) as signature of the Assessing officer is not available on order sheet. 02. Certified copy of the order-sheet dated 24.09.2009 itself shows that signature of the Learned AO over order sheet is not available hence notices under section 143(2) and 142(1) was not even issued by the then AO within stipulated time by the Act for issuing notices i.e. 30.09.2009 Issuing notice within stipulated time is main ingredients compulsorily to be followed for getting jurisdiction for passing assessment order under the I.T. Act 1961. 03. For that Learned Assessing Officer has erred in Assessing the appellant on a total Income of Rs 2950300/- as against returned income of Rs.225110/-without issuing notice u/s 143(2) properly. 04. For that the Learned Assessing Officer has arbitrarily ignored books of account maintained on electronic media while passing the impugned order 05. For that the Learned Assessing Officer has erred in passing the impugned order in utter violation of Rule of Natural Justice and fair play. As sufficient and proper opportunity was not provided to the appellant before passing assessment order as well as copy of draft assessment order was also not given to the appellant so that the appellant would have filed his submission/reply. 06. For that the Learned Assessing Officer has erred in rejecting the books of accounts of the appellant and has erred in invoking section 145 of the Income Tax Act. 06. 07. For that the Learned Assessing Officer has erred in alleging suppression of sale payment beyond books of account. 08. For that the Learned Assessing Officer has erred in adding Rs 88425/- on account of expenditure on Salary incurred from undisclosed sources not recorded in the books of account. 09. For that the Learned Assessing Officer has erred in working out peak payment of Rs 562645/- and has erred in alleging that the peak payment Page | 3 I.T.A. No.: 212/PAT/2013 Assessment Year: 2008-09 Sri Murli Manohar Ganeriwal. of Rs 562645/- has been made from undisclosed sources not recorded in the books of accounts. 10. For that the Learned Assessing Officer has erred in adding Rs 49811/- on account of Salary by alleging inflation of expenditure on salary 11. For that the Learned Assessing Officer has erred in adding Rs 400000/- on account of unexplained investment. 12. For that the learned Assessing Officer has erred in holding that the appellant has not offered explanation about the sources of investment. 13. For that the Learned Assessing Officer has erred in disallowing Rs, 241000/-U/s 40A(3) of the Income Tax Act. 14. For that the Learned Assessing Officer has failed to appreciate that the case of the appellant is covered by proviso inserted below sub-section (3A ) of section 40A(3) and hence, the disallowance U/s 40A(3) is contrary to mandate of law. 15. For that the Learned Assessing Officer has erred in adding Rs 72143/- on account of drawing. 16. For that the Learned Assessing Officer has erred in alleging suppression of sales and erred in adding GP of Rs 112276/- on the alleged suppressed sales 17. For that the Learned Assessing Officer has erred in adding Rs 3645/- on account of commission received from TATA SKY connection. 18. For that the Learned Assessing Officer has erred in adding Rs 51069/- on account of service charges. 19. For that the learned Assessing Officer has erred in alleging unaccounted purchases of Rs 1318416/- and has erred in adding peak of such purchases at Rs 1031680/- 20. For that the additions/disallowances made are wrong, illegal and unjustified on the facts and in the circumstances of the appellant's case. 21. For that the Learned Assessing Officer has erred in charging interest U/s 234 B and 234 C amounting to Rs 311025/- and Rs 720/- respectively. 22. For that charging of interest U/s 234B is wrong illegal and unjustified on the facts and in the circumstances of the appellant's case. 23. For that the whole order is bad in fact and low of the case and is fit to be modified. Page | 4 I.T.A. No.: 212/PAT/2013 Assessment Year: 2008-09 Sri Murli Manohar Ganeriwal. 24. For that the other ground, if any, shall be urged at the time of the hearing of the appeal.” 3. Brief facts of the case are that the assessee is an individual engaged in trading of household electronic appliances and had filed the return of income for AY 2008-09 showing total income of ₹ 2,25,110/-. The case was selected for scrutiny. Notices u/s 143(2) and 142(1) of the Act were issued and duly served upon the assessee which were not complied with during the course of the assessment proceedings. A survey u/s 133A of the Act was conducted at the business premises of the assessee and books of account, bills and vouchers were impounded and examined. The Assessing Officer (hereinafter referred to as Ld. 'AO') perused all the records and made additions under various heads. The Ld. AO computed the total income of the assessee at ₹ 29,50,300/- and passed the assessment order u/s 143(3) of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who partly allowed the appeal of the assessee after upholding most of the additions made by the Ld. AO. 4. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before this Tribunal. 5. Rival contentions were heard and the submissions made and the written submission/paper book filed have been examined. It was submitted by the Ld. AR that the books of account were rejected and the Ld. AO reverted to the same books of account for making the addition and after rejection he has estimated the net profit. It is submitted that the Ld. AO has reverted to the same books of account and has made addition under 10 different heads. The Ld. DR submitted that a survey was undertaken and the documents were impounded and the Ld. AO has referred to the impounded documents to make the Page | 5 I.T.A. No.: 212/PAT/2013 Assessment Year: 2008-09 Sri Murli Manohar Ganeriwal. addition. The Ld. AR countered by saying that loose sheets were found and our attention was drawn to page 8 of the assessment order in which unexplained investment has been worked out on the basis of a loose sheet bunch bearing identification mark ‘SP-40’ comprising 1 to 120 pages which are Xerox copies of Fixed Deposit Receipts of Koshi Kshetriya Gramin Bank in the name of Miss Monu and Miss Chotu, both daughters of the assessee. The undisclosed loan added was deleted by the Ld. CIT(A). The Ld. AR submitted that after the addition, the net profit comes to 24.71% as against 2.46% disclosed by the assessee and the impounded documents marked SP-42 were stated to be rough book. The Ld. DR vehemently argued that the order of the Ld. CIT(A) may be upheld and no further relief was allowable to the assessee. 6. We have considered the submissions made. Since incriminating evidence was found containing details of suppressed purchases, suppressed sales and unaccounted payments, most of which related to the business, therefore, there was justification for estimating the income of the assessee and making the addition. However, since the books of account were rejected as is mentioned on page 2 of the assessment order, the Ld. AO should have estimated the profit. The Bench was of the view that net profit rate of 5% would be justified on the total turnover worked out at ₹1,61,92,516/- on page 11 of the assessment order by the Ld. AO after including the sales mentioned in the impounded documents SP-68 and SP-73 and SP-42 etc., which were not disclosed in the books of account to the sales recorded in the books of account as after rejection of books of account the profit is to be estimated. Both the Ld. DR and the Ld. AR were fair enough not to argue against the decision before us. The Ld. AO is, therefore, directed to apply the net profit rate of 5% to the aggregate of the sales shown in the books Page | 6 I.T.A. No.: 212/PAT/2013 Assessment Year: 2008-09 Sri Murli Manohar Ganeriwal. of account and the unrecorded sales found in the impounded documents and reduce the net profit shown by the assessee and add the difference to the total income returned by the assessee. No separate addition on account of any other head of expenditure relating to the trading and profit and loss account would be called for nor on account of low house hold expenses and undisclosed investments in the name of the daughters etc., which would be covered by the enhanced income estimated. The Ld. AO is directed to apply the net profit rate of 5% to the sales as worked out on the basis of these directions and allow consequential relief to the assessee. Hence, the grounds of appeal are partly allowed while the ground relating to the non-issue of notice was not argued. 7. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open Court on 1st July, 2025. Sd/- Sd/- [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 01.07.2025 Bidhan (P.S.) Page | 7 I.T.A. No.: 212/PAT/2013 Assessment Year: 2008-09 Sri Murli Manohar Ganeriwal. Copy of the order forwarded to: 1. Sri Murli Manohar Ganeriwal, Prop. Shree Durga Electronics, D.B. Road, Saharsa, 852201. 2. I.T.O., Ward-1, Saharsa. 3. CIT(A)-I, Patna. 4. CIT- 5. CIT(DR), Patna Bench, Patna. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "