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Income Tax Appellate Tribunal, CUTTACK ‘SMC’ BENCH, CUTTACK
Before: SHRI CHANDRA MOHAN GARG
O R D E R This is an appeal filed by the assessee against the order of the CIT(A),1, Bhubaneswar dated 21.10.2019 for the assessment year 2015- 16.
2. Grounds of appeal raised by the assessee are as under:
“ 1. That, the Ld. Authorities Below erred in facts in circumstances in holding that the appellant had suppressed the sales turnover of Rs. 1,50,99,769 and wrong in making additions of estimated gross profit amounting to Rs. 12,07,980 which is liable to be deleted.
That, the additions of Rs. 20,000 confirmed by the Ld. Commissioner of Income Tax (Appeals) as interest on loan is factually not correct, hence the additions of Rs. 20,000 is liable to be deleted.
P a g e 1 | 6 50/CTK/201 9 Assessm ent Y ear : 20 15- 16
3. That, the assessment order passed u/s 143(3) is legally not sustainable in view of the fact that mandatory requirement as prescribed in the CBDT guideline had not been followed by the Ld. Assessing Officer, therefore the assessment order is illegal and liable to be quashed.
4. That, the appellant craves to alter, amend, modify or add any other ground that may be considered necessary in the course of appeal proceeding..
Apropos Ground No.1 of appeal, facts of the case are that the assessee is an individual derives income from running a Dhaba in the name of M/s. Chilka Dhaba and sale of fish. A survey u/s.133A of the Act was conducted on 13.3.2015 in the business premises of the assessee and some incriminating documents/books of account were impounded. On examination of the same, the AO the assessee has recorded day to day sales of Dhaba at pages 73 to 86 of the book for the financial year 2014-15.
The total sales in the Dhaba were recorded at Rs.76,61,846/- for the period from April, 2014 to September. However, after going through the return of income for the assessment year under consideration, the AO noticed that the assessee has disclosed gross receipts at Rs.61,81,214/-. The Assessing Officer required the assessee to submit the month-wise dhaba sales during the financial year 2014-15, which were complied with by the assessee.
The AO found that the sales effected during the financial year were at Rs.98,95,403/-. Before the AO, the assessee submitted that in the month of May, 2014, the business of the assessee was closed for the period from P a g e 2 | 6 50/CTK/201 9 Assessm ent Y ear : 20 15- 16 12.5.14 to 31.5.2014 and also from 3.9.14 to 10.2.2015 due to family dispute. The above contention of the assessee that the business was closed was not acceptable to the AO in the absence of supporting evidence.
However, the AO noticed that the business for the month for 11 days was shown at Rs.7,95,000/- and determined the average sale per day at Rs.72,272/-. Hence, the total sales for the month of May, 2014 was calculated at Rs.22,40,440/- (Rs.7,95,000 + Rs.14,45,440). Similarly for the period from 3rd September, 2014 to 10th February, 2015, the total sales is calculated by taking an average rate of Rs.61,740/- per day which comes to Rs.99,40,140/-(Rs.61,740 x 161 days). Hence, the gross sales for the entire year is taken by the AO at Rs.2,12,80,953/- as against the receipts shown by the assessee at Rs.61,81,214/- . In view of above, the AO opined that the assessee has not disclosed food sales to the tune of Rs.1,50,99,769/- in the return of income for the assessment year 2015-16 and treated the same as suppression of sales.
The AO also noticed that the assessee has declared his profit on presumptive basis u/s.44AD of the Act by applying the rate of 8% on the total sales. Therefore, the AO calculated the net profit of the assessee at Rs.12,07,980/- on suppressed sales of Rs.1,50,99,769/-.
On appeal before the ld CIT(A), it was the submission of the assessee that it is not proper to disbelieve the suspension of sales during the period from 12.5.2014 to 31.5.2014 and 3.9.2014 to 10.2.2015. It was P a g e 3 | 6 50/CTK/201 9 Assessm ent Y ear : 20 15- 16 submitted that the actual suppressed sales will be Rs.37,14,189/- i.e. (actual sales of Rs.98,95,403 – disclosed sales of Rs.61,81,214/-. The ld CIT(A) did not accept the contention of the assessee mainly on the ground that the assessee has incurred expenditure on purchase of consumable items for the Dhaba and confirmed the addition made by the AO.
Ld counsel for the assessee reiterated the submissions made before the ld CIT(A) and further furnished ledger copy of Indian Overseas Bank from 1.4.14 to 31.3.2015 to evidence that no sales were effected by the assessee during the closure of Dhaba.
Replying to above, ld D.R. submitted that the assessee has suppressed his sales by making false statement that the Dhaba was closed.
Hence, the total sales determined by the authorities is correct, which may be confirmed.
On consideration of the rival submissions, I may point out that the department has not produced any documentary evidence to support that the assessee has made sales during the period of closure of Dhaba claimed by the assessee. From the bank statement furnished by the assessee, it is seen that there was no transaction made by the assessee. However, it is admitted by the assessee that if the actual sales determined by the revenue is at Rs.98,95,403/- and minus the sales effected by the assessee at Rs.61,81,214/-, there will be difference of Rs.37,14,189/-, which may be P a g e 4 | 6 50/CTK/201 9 Assessm ent Y ear : 20 15- 16 taken as suppressed sales by the assessee. I find force in the contention of the assessee because the department has made addition on the basis of presumption and surmises. The reason for disbelieving the contention of the assessee by the revenue is that during the closure of Dhaba, the assessee has made some expenditure which is not a valid ground to presume that the sales are effected. It is not the fact that the Dheba has closed for the whole year and due to some family dispute, the Dhaba was closed for the time being as submitted by the assessee. Hence, I am of the opinion that the total sales is to be determined by the department at Rs.98,95,403/- (Rs.61,81,214 + Rs.37,14,189/-) and profit @ 8% is to be calculated. I order accordingly.
As regards to second issue taken in Ground No.2, I find that the assessee has not disclosed the interest on loan in the return of income and, therefore, the addition of Rs.20,000/- on interest income is confirmed.
Ground Nos.3 & 4 are general in nature.
In the result, appeal of the assessee is partly allowed.
Order pronounced on 18 /06/2020.