SRI MITHLESH KUMAR SINGH,PALAMU vs. INCOME TAX OFFICER, WARD-3(4), DALTONGANJ, DALTONGANJ

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ITA 74/RAN/2021Status: DisposedITAT Ranchi28 April 2023AY 2010-114 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal agreed with the assessee and the Revenue's representative that only the profit element of the differential receipts should be taxed. The AO was directed to apply the gross profit rate of 5.57% to the differential figure.

What were the facts?

The assessee's appeal concerned an addition of Rs. 31,74,192/- made by the Assessing Officer (AO) on account of undisclosed gross receipts, based on a difference between the audited profit and loss account and Form 26AS. The assessee argued that even if the receipts in Form 26AS were considered, only the profit element should be taxed, not the entire amount.

What were the issues?

Whether the entire difference between Form 26AS and the assessee's declared receipts should be treated as income, or only the profit element embedded within those receipts.

Which sections of the Income-tax Act were involved?

Section 147,Section 250

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Income Tax Appellate Tribunal, “RANCHI BENCH, RANCHI

Before: Shri Sanjay Garg & Shri Rajesh Kumar

IN THE INCOME TAX APPELLATE TRIBUNAL “RANCHI BENCH, RANCHI VIRTUAL HEARING AT KOLKATA Before Shri Sanjay Garg, Judicial Member and Shri Rajesh Kumar, Accountant Member Assessment Year: 2010-11 Sri Mithlesh Kumar Singh..…………..…...…......................……...…..….. Appellant C/o CA Alok Pasari (L.T), Nawahata, Daltonganj, Palamau, Jharkhand-822101. [PAN: AYDPS6208H] vs. ITO, Ward-3(4), Daltonganj.……………………….……….…………….. Respondent Appearances by: Shri Devesh Poddar, Adv., appeared on behalf of the appellant. Shri Pranob Kumar Koley, Sr. DR, appeared on behalf of the Respondent. Date of concluding the hearing : March 01, 2023 Date of pronouncing the order : April 28, 2023 ORDER

Per Sanjay Garg, Judicial Member:

1.

The present appeal has been preferred by the assessee against the order dated 14.10.2021 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).

2.

The assessee in this appeal has taken the following grounds of appeal:

“1. For that Ld. AO was not justified in reopening the assessment proceeding U/s 147. No new material was brought on record to suggest any escapement of income. The reasons recorded can purely be understood to be a change of opinion. As such, proceeding being initiated U/s 147 is itself void and assessment completed thereby is fit to be cancelled.

Assessment Year: 2010-11 Sri Mithlesh Kumar Singh We submit that the grounds No.1 is a fresh legal ground being challenged for the first time. Since the ground challenges the very validity of assessment, we pray that the same may kindly be admitted in light of the decision of Hon'ble Apex Court in case of NTPC Vs CIT 229 ITR 383(SC).

2. For that Ld. AO was not justified in making the addition of Rs. 31,74,192/- being undisclosed gross receipts on the basis of difference in audited profit and loss account and form 26AS. Details uploaded in form 26AS were uploaded much after the date of getting books audited and filing of the return. As such, the same was not considered by the assessee. As such, Ld. AO was not justified in making the addition.

3.

For that Ld. AO. was not justified in considering the difference amount entirely income of the assessee. Addition if any can be made to tune of our profit disclosed upon the gross receipts by the assessee. No addition can be made considering the difference 4. as the income of the assessee assuming that expenses for same is already considered. As such, the addition made of Rs. 31,74,192/- is fit to be deleted.

5. For that Ld. A.O. was not justified in charging interest on the assessed income. Following the decision of Hon'ble Jharkhand High Court, interest should be charged on the returned income and not on the assessed income.

6. For that other grounds in details will be argued at the time of hearing.”

3. At the outset, the ld. Counsel for the assessee has submitted that the assessee does not press Ground No.1 relating to the validity of the reopening of the assessment. Ground No.1 is, therefore, dismissed as not pressed.

4.

Vide remaining grounds, Ground Nos.2 to 5, the assessee has agitated the confirmation of addition of Rs.31,74,192/- being undisclosed gross receipts on the basis of difference in profit and loss account as compared to Form 26AS.

Assessment Year: 2010-11 Sri Mithlesh Kumar Singh

5.

The ld. Counsel for the assessee, in this respect, has submitted that there was a difference of figures in the Form 26AS in relation to the payments received by the assessee from various parties as compared to the receipts shown by the assessee. The only submission of the ld. AR, in this respect, is that even it is to be assumed that the assessee has received the aforesaid payments as shown in Form 26AS even then the Assessing Officer was not supposed to add the entire receipts as income of the assessee. That only the profit element embedded in those receipts was exigible to the tax.

6.

The ld. DR has fairly agreed with the above contention of the ld. AR.

7.

Both the ld. representatives have submitted that considering the gross profit rate applied in this case to the other income @5.57%, the same rate may be applied to the differential figure as shown in the Form 26AS as compared to the receipts shown by the assessee. In view of the above submissions, the Assessing Officer is directed to tax only the profit element on gross profit rate @ 5.57% on the aforesaid differential receipts.

8.

In the result, the appeal of the assessee is treated as partly allowed.

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