M/S JAIKRISHNA FEBTEX PVT. LTD.,WEST BENGAL vs. ITO,WARD-3(3), BOKARO STEEL CITY

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ITA 321/RAN/2018Status: DisposedITAT Ranchi03 March 2020AY 2015-162 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The tribunal restored the gross profit addition issue to the Assessing Officer for fresh adjudication to consider cash sales. A lumpsum disallowance of Rs. 50,000 was made for salary paid in cash, without it being a precedent.

What were the facts?

The assessee's appeal concerns an estimated gross profit addition due to stock shortage and a disallowance of salary paid in cash. The stock shortage addition was made without considering cash sales, and the salary disallowance was based solely on cash payment without examining prior/subsequent years.

What were the issues?

Whether the stock shortage addition was correctly made without accounting for cash sales, and if salary paid in cash is entirely disallowable.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, : RANCHI BENCH, RANCHI

Before: SHRI S.S.GODARA

For Appellant: Shri Devesh Poddar, Advocate
Hearing: 03.03.2020Pronounced: 03.03.2020

Date of hearing 03.03.2020 Date of pronouncement 03.03.2020 O R D E R S. S. Godara(Oral): This assessee’s appeal for assessment year 2015-16 arises against the Commissioner of Income Tax (Appeals), Jharkhand dated 08.08.2018 passed in case no.10387HZB/2017- 18 involving proceedings u/s 143(3) of the Income Tax Act, 1961 (in short ‘the Act’). Heard both the parties. Case file perused.

2.

The assessee’s former substantive ground challenges both the lower authorities’ action making estimated gross profit addition of Rs.2,78,724/- @16.72% qua shortage on stock of Rs.16,67,010/-; alleged to have been noticed during the course of survey. Learned counsel’s only case is that neither of the lower authorities have granted credit of either cash sales shown in the books or those recognised through electronic mode(s) of payments. This clinching plea has gone unrebutted from the Revenue side during the course of hearing. I therefore deem it appropriate that the instant former issue requires factual reconciliation at the assessment level. The same is therefore restored to the Assessing Officer for afresh adjudication as per law.

3.

Next comes salary payment disallowance @ 5% made in both the lower proceedings only on the ground that the same had been paid in cash. This cash mode of payment has not been satisfactorily explained from the assessee’s side right from scrutiny till date. The fact also remains that neither of the learned lower authorities has taken note of the M/s Jaikrishna Febtex Pvt. Ltd. corresponding findings in preceding and succeeding assessment year. I therefore deem it appropriate in larger interest of justice that a lumpsum salary disallowance of Rs.50,000/- would meet the ends of justice with a rider that the same shall not be taken as a precedent. Necessary computation including that of interest to follow as per law.

4.

This assessee’s appeal is partly allowed in above terms.

Order is pronounced in the open court on 03.03.2020.

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