M/S AJAY KUMAR KHATORE HUF,RANCHI vs. ITO, RANCHI

The assessee is a HUF and is an agency business.

The issues that arise before me are as follows: a. Justification of net gross profit estimation confirmed by the Ld. CIT(A). b. Allowability of expenses of undisclosed purchases,

The second issue is whether the assessee has any undisclosed purchases and if so, whether the addition made on account of seed capital utilised for making undisclosed purchases and profit earned on these transactions of unrecorded purchases and sales, is justified. The assessee in this case makes purchases from M/s. Hindustan Coca- Cola Beverages Pvt. Ltd., M/s. Hindustan Lever Ltd., M/s. Adani Wilmer Ltd., M/s. Indexport Ltd. All the seller companies are reputed companies. The undisputed fact is that the assessee has made payments for all the purchases from these companies, by way of cross cheques. The Assessing Officer obtained information u/s 133(6) from these companies and as they were certain unreconciled figures made additions on an assumption that this unreconciled figures are underlined purchases. The assessee submits that it has not been confronted with the information obtained by the A.O under section 133A from the third parties and hence he could not reconcile the figures. On examining of the issue, I find that the Assessing Officer has not pointed out as to which are the alleged purchase which are not recorded in the books of the assessee. The assessee has produced bills and vouchers as well as payment details through banking channels in

Ground no. 6 is on the issue of levy of interest under section 234A and 234B of the Act.

The issue is whether interest u/s 234A and 234B is to be levied only on the total income disclosed by the assessee in the return of income or on the total income determined by the A.O. in the assessment order i.e. assessed income. The Hon’ble Jharkhand High Court in T.A. No. 38 of 2010 order dated 25th July, 2012 in the case of Ajay Prakash Verma vs. ITO, Dhanbad reported in 2013(1) TMI 140 has held that interest u/s 234A and 234B can be levied only on the income declared by the assessee in the return of income. The Hon’ble Jharkhand High Court in I.A. No. 5725 of 2014 in Civil Review No. 66 of 2013 judgment dated 1st September, 2015 dismissed the civil review application filed by the department on this issue in this very case of Ajay Prakash Verma. Respectfully following the propositions of law laid down by the jurisdictional High Court, I direct the A.O. to levy interest u/s 234A and 234B only on the income returned by the assessee and not on the income assessed by the A.O.

In the result, the appeal of the assessee is allowed in part. Order Pronounced in the Open Court on 28th February, 2018.