DCIT, CIRCLE-4(1), BHUBANESWAR vs. M/S. JAGANNATH CHAUDHURY, BHUBANESWAR

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER

ITA Nos.476 to 478/CTK/2017 Assessment Years : 2012-13 to 2014-15

DCIT, Circle 4(1), Bhubaneswar. Vs. M/s. Jagannath Chaudhury, 98, Kharvel Nagar, Keshari Talkies Complex, Bhubaneswar. PAN/GIR No.AADFJ 8103 A (Appellant) .. ( Respondent)

Assessee by : Shri B.K.Mohapatra, AR Revenue by : Shri Subhendu Dutta, DR

Date of Hearing : 07/08/ 2019 Date of Pronouncement : 04 /09/ 2019

O R D E R Per C.M.Garg,JM These are appeals filed by the revenue against separate orders of ld

CIT(A)-2, Bhubaneswar all dated 28.8.2017 for the assessment years 2012-13,

2013-14 & 2014-15, respectively.

3.1 for the assessment year 2013-14 and Ground Nos.3 & 3.1 for the assessment

year are common except variance in addition, therefore, for the sake of reference

and for the purpose of adjudication, we take up the issues together. For the sake

of convenience, we reproduce the grounds raised in assessment year 2012-13 as

under:

P a g e 1 | 9

4.1 The Ld. CIT(A) ought to have appreciated that the interest receipts of Rs.37,83,707/- shown separately in the P&L Account by the assessee is distinct and entirely different from the contract receipts and thus the said entire amount is assessable to tax having regard to the decision of the Hon'ble lTAT, Special Bench, Delhi in the case of DCIT Vs. Allied Construction 105 ITD-1(Delhi)(SB).

Assessing Officer noticed that the assessee is engaged in the business of execution

of contract works from government and government agencies. The assessee has

shown Rs.37,83,707.13 as interest receipts. The assessee has not produced cash

book, bank book, other related books of account, ledger copies alongwith

supporting bills/vouchers relating, however contended that the net profit @ 10%

be estimated on gross contract receipts as per the last year but the basis was not

provided by the assessee. The Assessing Officer further noticed that the total

receipt on account of interest received is not under the purview of the provisions

of section 44AD and, therefore, he estimated the income @ 8% and treated the

total receipt on account of interest receipt as income from other sources and

added the same to the total income of the assessee.

P a g e 2 | 9

submitted that the issue is covered in favour of the assessee in its own case for

the assessment year 2008-09 by the ITAT, Cuttack order dated 27.6.2017 in ITA

No.66/CTK/.2015, wherein, it was directed to the AO to estimate the income @

10% of interest income.

CIT(A) directed the AO to treat 10% of interest receipts of Rs.37,87,707/-

amounting to Rs.3,78,771/- as income of the assessee from other sources and

confirmed the addition of Rs.3,78,771/- and deleted the balance addition of

Rs.34,08,929/-.

before us.

out any specific error in the order of the CIT(A). He could not point out any

distinguishing features in the order of the Tribunal quoted by the CIT(A) in his

order. He also could not bring any material on record to show that the order of

the Tribunal relied on by the CIT(A) while estimating the interest income @ 10%

was varied in appeal by any higher forum. Therefore, we find no infirmity in the

order of the CIT(A), which is hereby confirmed and grounds of appeal of the

revenue are dismissed. Consequently, similar Grounds of appeal for assessment

years 2013-14 and 2015 are also dismissed.

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is that the CIT(A) is not justified in deleting the addition of Rs.1,70,45,708/- made

by the AO u/s.69C of the Act.

under the sub-head ‘unsecured loan”. In response to Assessing Officer’s

requisition, the assessee furnished balance sheet as at 31st March, 2012 vis-à-vis at

31st March, 2011. On verification of the same, the AO noticed that the assessee

has unsecured loan of Rs.1,69,16,768/- as at 31.3.2011, which is increased to

Rs.3,60,63,731/- as at 31.3.2012 thereby an addition of Rs.1,91,46,963/- over a

period of time from 01.04.2011 to 31.03.2012. On further asked by the AO, the

assessee also submitted details of Unsecured Loan as on 31.03.2012 the

verification of which revealed that the assessee has shown opening balance of

unsecured loan of Rs.3,39,62,476/- as at 01.04.2012 and shown a sum of

Rs.20,21,255/- as addition from three persons/concerns namely Sri Asit Kumar

Chaudhury of Rs.10,65,142/-, Rs.9,90,473/- from Sri Jagannath Nirman Udyog(P)

Ltd. and shown unsecured loan of Rs.45,640/- from one Shri Prafulla Kumar

Chaudhury, Ind. From the above analysis, it is seen that though the assessee has

shown Rs. 1,69,16,768/- as unsecured loan as at 31.03.2011 yet he has shown

Rs.3,39,62,476/- as opening balance as at 01.04.2011 while furnishing details of

unsecured loans thereby enhancing Rs.1,70,45,708/-. The assessee was required

to furnish the complete name, address, PAN and confirmation from the unsecured

loan creditors. However, inspite of opportunities provided, the assessee could not

furnish any details including confirmations from unsecured loan creditors. The

assessee has also not furnished the reasons for difference in the closing and

P a g e 4 | 9 opening balance of unsecured loan creditors. In view of the above, difference in

unsecured loan introduced during the year amounting to Rs.1,70,45,708/- , the AO

added the same to the total income of the assessee u/s.69C of the I.T. Act, 1961.

year 2011-12, the transfer from capital account of the decreased partner (Rama

Devi) of Rs.1,70,41,808/- has been shown under unsecured loan in the balance

sheet as at 31.3.2012 and details of which was furnished. It was submitted that

the aforesaid amount was stated as transfer from capital account and there is no

introduction of any unsecured loan of Rs.1,70,41,808/-. It was submitted that the

unsecured loan of Rs.3900/- from Jagannath Multiplex Ltd, the confirmation was

submitted.

the capital account of the deceased partner (Rama Devi) of Rs.1,70,41,808/- has

been transferred to unsecured loan, which is part of balance sheet of the assessee.

Regarding small amount of Rs.3900/-, the transaction is with sister concern of the

assessee namely Jaganath Multiplex Ltd. and the assessee has explained increase

in unsecured loan of Rs.1,70,45,708/- and, accordingly, he deleted the addition.

drew our attention towards para 5 at page 5 and submitted that the assessee did

not furnish any difference in the closing and opening balance of unsecured loan

creditors and the difference in unsecured loan introduced during the year,

therefore, same was rightly added to the total income of the assessee u/s.69C of

P a g e 5 | 9 the Act treating the same as unexplained income of the assessee. Ld D.R. further

contended that the CIT(A) has granted relief to the assessee without any justified

reason and basis, therefore, impugned order of the CIT(A) be set aside by

restoring that of the Assessing Officer. Ld D.R. also pointed out that the CIT(A)

has noted irrelevant facts i.e. the capital account of deceased partner has been

transferred to unsecured loan account without any basis, therefore, the findings

arrived at by the CIT(A) has no legs to stand. Thus, same may kindly be dismissed

by confirming the addition made by the Assessing officer.

assessee is a partnership firm, who derives its income from execution of contract

work. Ld A.R. further submitted that it is also not in dispute that Smt. Rama Devi

was partner in the assessee’s firm, who died during the relevant financial period

and credit balance of her capital account was transferred as unsecured loan and

the same was added in the unsecured loan of creditor, which was also shown in

the balance sheet as unsecured loan, which resulted into the difference in the

closing and opening balance of unsecured loan creditors. Ld A.R. submitted that

these facts were noticed and appreciated by the CIT(A) in the right perspective in

the light of documentary evidence and balance sheet of the assessee. Therefore,

the order of the CIT(A) may kindly be confirmed on this count. Ld A.R. drew our

attention towards page 15 of assessee’s paper book, wherein, details of unsecured

loan has been shown and at sl. No.12 the name of late (Smt. Rama Devi, deceased

partner loan) transferred after death amounting to Rs.1,70,41,808/- has been

shown as an amount transferred from capital account after death on 14.5.2011.

The Assessing Officer has not brought any adverse material on record to

P a g e 6 | 9 controvert these detailed unsecured loan and factum of death of partner of

assessee’s firm Smt. Rama Devi and the credit balance of capital account, which

was transferred to the unsecured loan account. In view of these facts and

circumstances, we are of the considered view that the CIT(A) has appreciated the

explanation and documentary evidence filed by the assessee in a right perspective

to arrive at the conclusion that the impugned amount, which was treated as

unexplained investment u/s.69C by the AO is nothing but the amount pertaining

to credit balance of deceased partner Smt. Rama Devi, which was transferred to

unsecured loan after her death, resulting into difference in closing and opening

balance of unsecured loan amount. In view of above, we are unable to see any

ambiguity, perversity in the order of the CIT(A) to interfere. Hence, this ground of

revenue is dismissed.

“ On the facts and in the circumstances of the case and having regards to the reasons stated by the AO in para 3.0 of the assessment order, the CIT(A) is not justified in deleting the addition of Rs.74,94,928/- made by the AO in the assessment from disallowance of expenses claimed under the head other expenses and directing the AO to compute business income from contract receipts in the manner stipulated in para 4.2 of his appellate order.”

of income filed by the assessee, the Assessing Officer noticed that the assessee

has debited a sum of Rs.4,99,66,188/- under the head “ other expenses” during

the year. Since the assessee could not substantiate the claim of expenditure by

producing relevant bills and vouchers and ledger account, the Assessing Officer

P a g e 7 | 9 disallowed 15% of the total expenditure of Rs.4,99,66,188/- which comes to

Rs.74,94,928/- and added the same to the income of the assessee.

‘ I have carefully examined the submission of the appellant and the assessment order. I find that as per the order of Hon’ble Jurisdictional Tribunal dated 4.6.2013, in ITA No.511/CTK/2012 in appellant’s contractual income is to be determined @ 10% and depreciation is to be allowed. Similarly as per another order of Jurisdictional Tribunal dated 27.6.2017 in ITA No.66/CTK./2015, the appellant’s income out of interest receipts is to be determined @ 10%. Considering this the appellant’s business income will be Rs.63,42,707/- ( being 10% of contractual receipts of Rs.5,98,19,082/- + 10% of interest receipts of Rs.36,07,992/-). From this income depreciation of Rs.32,12,426/- is to be allowed. Income from house property is to be taken as per the return of income at Rs.64,049/-.. Accordingly, the grounds of appeal are allowed.” 18. Before us, ld D.R. could not point out any specific error in the findings of

the CIT(A). We find that the CIT(A) has followed the decisions of the Tribunal

cited supra and we are unable to see any valid reason to take a different view on

this issue from the view already taken by the Tribunal in assessee’s own case.

Hence, we find no infirmity to interfere with the order of the CIT(A), which is

hereby upheld. This ground of appeal of the revenue is dismissed.

Order pronounced on 4/09/2019.

Sd/- sd/- (Laxmi Prasad Sahu) (Chandra Mohan Garg) ACCOUNTANT MEMBER JUDICIAL MEMBER

Cuttack; Dated 4 /09/209 B.K.Parida, SPS

P a g e 8 | 9 Copy of the Order forwarded to : 1. The Appellant : DCIT, Circle 4(1), Bhubaneswar

By order

Sr.Pvt.secretary ITAT, Cuttack

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