Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “RANCHI BENCH, RANCHI
Before: Shri Sanjay Garg & Shri Rajesh Kumar
order
: April 28, 2023 ORDER
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 21.08.2018 of the Commissioner of Income Tax (Appeals), Jamshedpur [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).
The assessee in this appeal has taken the following grounds of appeal:
“1. For that Ld. CIT(Appeals) was not justified in confirming the estimate of income on the difference of purchases found from comparison of TCS claimed and as appearing in 26AS statement, treating the difference of Rs. 90,95,256/- as sold on net profit of Rs. 12,61,332/- at the GP rate of 12.25%. The goods were purchased from state government agency Jharkhand State Warehousing Corporation Ltd., who controlled the selling price also. The profit rate disclosed and accepted @0.96% by the Ld. AO was normal rate as allowed by the corporation in this line of business. In any view of the matter the profit estimated is astronomical and highly excessive. 1 Assessment Year: 2015-16 Sri Paritosh Dutta 2. That Ld. authorities below erred in not appreciating that under such circumstances after rejecting the books of accounts, net profit rate could have been estimated to arrive at taxable income.
3. For that Ld. authorities below erred in not appreciating that the when the books of accounts are rejected, the same cannot be relied upon and such no addition u/s 68 amounting to Rs. 17,60,000/- could have been made. The addition made is illegal, unjustified and arbitrary.
4. For that without prejudice to aforesaid grounds, Ld. CIT(Appeals) further erred in not telescoping the cash credit addition with the additions made in respect of the estimated of net profit.
5. For that charging of interest u/s 234B on the tax payable on the returned income, instead of tax payable on the returned income, is unjustified.
6. For that other grounds, if any, will be argued/taken up at the time of hearing.”
The brief facts of the case are that the case of the assessee was selected for limited scrutiny for the reasons “mismatch is sales turnover reported in Audit report and ITR, low income from TCS receipts of liquor”. Notices u/s 143(2) was issued and duly served on the assessee. The assessee sells liquor after purchasing from Jharkhand State Beverages Corporation Ltd, Ranchi. The Assessing Officer noted that as per Form 26AS, the tax has been collected on purchase of liquor of Rs.4,73,09,696/- and the above-stated purchase figure was also confirmed from the seller. However, on perusal of the return and tax audit report, it was found by the Assessing Officer that the assessee had shown only purchase of Rs.3,82,74,440/- and the assessee could not clarify the difference. Therefore, the difference of purchase of Rs.90,35,256/- was not explained. Even the assessee did not show any closing stock. The Assessing Officer, therefore, observed that there was concealment of profit. The Assessing Officer further observed that the assessee has shown gross profit @12.25%. He observed that the undisclosed purchases of Rs.90,35,256/- have also 2
Assessment Year: 2015-16 Sri Paritosh Dutta been sold with the same gross profit. He calculated the sales on the said purchases at Rs.1,02,96,588/- and determined the profit at Rs.12,61,332/- and added back the same to the income of the assessee.
Before us, the ld. Counsel for the assessee has submitted that the goods were purchases from the state government agency who controlled the sale price also. That the profit rate disclosed @0.96% by the assessee was normal rate as allowed by the corporation in this line of business. That the profit estimated by the Assessing Officer was highly excessive.
We have considered the submissions of the ld. AR, however we do not agree with the same on the above issue. The Assessing Officer has determined the gross profit rate as shown by the assessee on the corresponding sales, the purchases of which were disclosed by the assessee. We, therefore, do not find any reason to interfere with the order of the CIT(A) on the above issue. The addition made by the Assessing Officer on this issue is upheld.
The second issue raised by the assessee is regarding the addition made by the lower authorities on account of unsecured loan of Rs.17,60,000/- from Sohan Lal Jain and Shri Ashafaque Ansari. Since the assessee could not prove the identity and creditworthiness of the creditors and genuineness of the transaction, therefore, the aforesaid unsecured loan amount was added by the Assessing Officer as undisclosed income of the assessee. The ld. CIT(A) also confirmed the addition so made by the Assessing Officer on this issue.
Before us, the ld. Counsel for the assessee has submitted that the issue of unsecured loan was not covered under the reason for 3
Assessment Year: 2015-16 Sri Paritosh Dutta limited scrutiny assessment. Therefore, the Assessing Officer was not justified in making the addition in respect of unsecured loans as the Assessing Officer was not supposed to examine any other issue except the issue for which the scrutiny assessment was ordered. The Assessing Officer was supposed to get approval of the competent authority for converting the aforesaid limited scrutiny into full scrutiny. We agree with the above contention of the ld. AR. Therefore, the aforesaid addition of unsecured loans is not justified and the same is, therefore, ordered to be deleted.
In the result, the appeal of the assessee is treated as partly allowed.