SHRI SUNIL KUMAR SAWA PROP: UNIVERSAL HI-TECH,,JAMSHEDPUR vs. ITO WARD-3(4), JAMSHEDPUR

1 ITA Nos.112-115/Ran/2017

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI

BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No.112 to 115/Ran/2017 A.Y. : 2007-2008, 2008-2009, 2011-2012 & 2012-2013 Sri Sunil Kumar Sawa vs ITO, Ward-3(4), Prop.Universal Hi-tec, Jamshedpur H.No.75, Main Road Jugsalai, Jamshedpur PAN No. : AKXPS 9679 J Respondent (Appellant) .

Assessee by : Shri S.K.Poddar & Devesh Poddar, Adv Revenue by :Shri P.K.Mondal, JCIT Date of Hearing : 29.05.2018 Date of Pronouncement : 30.05.2018 O R D E R Per Pavan Kumar Gadale, JM: These are the appeals filed by the assessee against the order of

CIT(A), Jamshedpur, all dated 17.04.2017 for the assessment years 2007-

2008, 2008-2009, 2011-2012 & 2012-2013.

involved, therefore, for the sake of convenience we consider the facts and

grounds narrated in ITA No.112/Ran/2017, wherein the assessee has

raised the following grounds :-

For that Ld. A.O. estimated profit of 2.5% on the sales disclosed 1. by the appellant. Appellant is a wholesaler in electronic and solar energy articles. Appellant disclosed a net profit of 1.4%. The Books of Accounts are fully verifiable, audited Profit & Loss A/c was filed. Ld. A.O. applied provision of Section 145(3) on

2 ITA Nos.112-115/Ran/2017 the ground that the appellant did not furnish required details of sundry creditors. The estimate of.profit made is unjustified, arbitrary and illegal. For that appellant had maintained a bank account in which 2. certain deposits were made which were considered as additional turnover of the appellant. The total deposit amounted to Rs.25,28,770/-. Ld. A.O. estimated profit of 2.5% on the same turnover. Ld. CIT(A) enhanced the estimate of profit to 5.88% on the ground that appellant must have made higher profit since all expenditures were considered while computing the book profit. Ld. A.O. was not justified in making an estimate of profit. Ld. CIT(A) further went out of way by making an enhancement in the profit estimated by Ld. A.O. For that Ld. CIT(A) made an addition/enhancement of income of 3. Rs. 1,85,612/- presuming that appellant had deployed capital for undisclosed turnover which was estimated on the basis of deposits in bank account. The estimate of capital was made @7.34% of the undisclosed turnover of Rs.25,28,770/-. Ld. CIT(A) was not justified in making enhancement by adopting a completely new head of income. Further, there is no basis or reason to suggest that the appellant had deployed any additional capital for the business or turnover which was estimated on the basis of bank deposits. For that interest u/s 234A and 234B should have been charged 4. on the returned income and not on the assessed income following the decision of Hon'ble Jharkhand High Court. 5. For that other grounds in detail will be argued at the time of hearing.

business of agency of electronics goods. The AO stated that as per the

information available with this office during the previous year relevant to

assessment year 2007-08 the assessee had not disclosed two bank

accounts Indusind bank bearing account No.0068-H02143-001 and State

Bank of India bearing account no.30303761141. After obtaining prior

approval from JCIT, Range-3 Jamshedpur, the proceeding under section

3 ITA Nos.112-115/Ran/2017 148 of the Act was initiated. The notice u/s.148 of the Act was issued to the

assessee. In compliance the assessee appeared and submitted copy of

ITR-V(Acknowledgement) of his return of income which was filed on

31.10.2007. The assessee also produce d copy of computation of income

and audit report with profit and loss account and balance sheet declaring

total income at Rs.2,11,900/-. Subsequently, the AO issued notice

u/s.143(2) and 142(1) of the Act to the assessee and in compliance the AR

of the assessee appeared from time to time and produced books of

accounts which was test checked. Thereafter the AO completed the

assessment making various additions and assessed the total income of the

assessee at Rs.5,48,87/- and passed order u/s.147/143(3) of the Act,

dated 09.06.2014.

appeal with the CIT(A). In the appellate proceedings the assessee argued

the grounds and reiterated the submissions made before the AO. The

CIT(A) after considering the submissions of assessee and the findings of

AO, dismissed the appeal of the assessee.

before the Tribunal.

electronic and solar energy articles and disclosed a net profit of 1.4% and

the books of accounts are fully verifiable, audited profit and loss account

was filed. Ld. AR further submitted that the assessee maintained a bank

4 ITA Nos.112-115/Ran/2017 account in which certain deposits were made which were considered as

additional turnover of the assessee. The AO estimated the profit @2.5% on

the total turnover however the CIT(A) enhanced the estimate of profit to

5.88% on the ground that the assessee must have made higher profit since

all expenditures were considered while computing the book profit. Further

on the enhancement of income of Rs.1,85,612/-, the ld. AR submitted that

the assessee has not deployed any additional capital for the business or

turnover which was estimated on the basis of bank deposits. Ld.AR also

submitted that the CIT(A) has passed the impugned order ex-parte,

therefore, he prayed for allowing the appeal.

Prima facie, we find that the assessee has not appeared before the CIT(A)

nor he has furnished any details before him, therefore, the CIT(A) passed

the ex-parte order. Ld.AR before us submitted that the assessee has filed

all the relevant details before the AO and produced the books of accounts,

however, the AO rejected the books of accounts and made the addition.

On appeal, the CIT(A) enhanced the addition made by the AO without

giving sufficient opportunity of being heard and prayed for one more

opportunity to substantiate its claim before the CIT(A).Considering the

submission of the assessee and the facts and circumstances of the case

as well as in the interest of substantial justice and fairplay, we provide one

more opportunity to the assessee to substantiate its claim before the

5 ITA Nos.112-115/Ran/2017 CIT(A) and remit the matter back to the file of CIT(A), who shall examine

and verify the disputed issue and pass an order after providing adequate

opportunity of hearing to the assessee. The assessee is directed to submit

the information and substantiate its claim with proper evidence, so as to

enable the CIT(A) to pass a speaking order. Accordingly, ground Nos.1 to

3 of appeal of the assessee are allowed for statistical purposes.

the Act, at the outset, the ld.AR submitted that this issue is covered in

favour of the assessee on the decision of jurisdictional High Court in case

of Ajay Prakash Verma in ITA No.38 of 2010 reported in 2013(1) TMI 140,

wherein the hon’ble High Court has held that interest u/s.234B can be

levied only on the returned income and not on the assessed income. Ld.AR

also relied on the decision of coordinate bench of the Tribunal in the case

of Shri Girdhari Lal Sharma vs. ITO, Ward-1(4), Jamshedpur in ITA No.

31/Ran/2013, dated 07.05.2012

record. Prima facie the disputed issue, being charging of interest u/s.234B

as envisaged by ld. AR, is covered by the decision of Hob’ble jurisdictional

High Court in the case of Ajay Prakash Verma in ITA No.38 of 2010

reported in 2013(1) TMI 140. The Hon’ble Court in Para23&24 held as

under :-

"23. Learned counsel for the appellant submitted that it has been ordered by the AO that interest be charged as per rule. Interest can be levied under Section 234A and 234B of the Act.

6 ITA Nos.112-115/Ran/2017 It is submitted that in view of the judgment of Full Bench of Ranchi Bench of Patna High Court delivered in the case of Smt. Tej Kumari Vrs. Commissioner of Income-tax reported in [2001] the interest cannot be levied over the assessed income and it can be levied only on the income declared in the return. The revenue preferred SLP before Hon'ble Supreme Court against the said judgment of the Full Bench of Patna High Court, which was dismissed by the Hon'ble Supreme Court on merits vide order dated 01.08.2000 by saying that there is no merit in the appeal. 24. Learned counsel for the revenue could not dispute this legal position. Therefore, so far as question of law involved in this appeal that whether the interest could have been levied against the assessed income of the assessee under Sections 234A and 234B is concerned, in view of the Full Bench judgment of Ranchi Bench of Patna High Court delivered in the case of Smt. Tej. Kumari, the revenue can levy the interest only on the total income declared in the returns and not on the income assessed and determined by the AO to that extent. The orders passed by the authorities below are accordingly modified and interest shall be chargeable in the light of the Full Bench judgment, referred above." 11. We also find that coordinate bench of the Tribunal in the case of Shri

Girdhari Lal Sharma vs. ITO, Ward-1(4), Jamshedpur in ITA No.

31/Ran/2013, order dated 07.05.2012 in para No. 6, relying upon the

above decision of the Hon'ble Jharkhand High Court, held as under:-

"We accordingly following the above decision, direct the Assessing Officer to re-compute the interest under section 2348 on the basis of the total income declared by the assessee in the return filed." 12. We, respectfully following the decision of the jurisdictional High Court

and the decision of coordinate bench of the Tribunal, are of the opinion that

interest u/s.234B of the Act can be levied only on the returned income and

not on the assessed income. We direct accordingly.

7 ITA Nos.112-115/Ran/2017

purposes.

Order pronounced in the open court on 30/05 /2018

Sd/- Sd/- (N.S.SAINI) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Ranchi, Dated 30/05/2018 Prakash Kumar Mishra , Sr. Ps Copy of the Order forwarded to : 1. The Appellant – Sri Sunil Kumar Sawa Prop.Universal Hi-tec, H.No.75, Main Road Jugsalai, Jamshedpur 2. The Respondent – ITO, Ward-3(4), Jamshedpur 3. The CIT(A) concerned 4. CIT , concerned 5. DR, ITAT, Ranchi BY ORDER, 6. Guard file. //True Copy// SR.PS, ITAT, RANCHI