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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI S.S.GODARA, JM & SHRI DR. DIPAK P. RIPOTE, AM
आदेश / ORDER PER S. S. GODARA, JM :
This assessee’s appeal for A.Y. 2011-12 is directed against the CIT(A) - 1, Pune’s order dated 18/10/2019 passed in case No. PN/CIT(A) -1/DCIT, Circle-1(2)/PN/841/2016-17 involving proceedings u/s. 143(3) of the Income Tax Act, 1961 ; in short “the Act”.
Case called twice. None appears at the assessee’s behest. It is accordingly proceeded ex-parte.
Shri Eknath Chandrayya Bhandari,
Coming to the assessee’s sole substantive grounds that the CIT(A) has erred in law and on facts in affirming the Assessing Officer’s action making the addition in issue of Rs.33,53,255/- to the extent of Rs.24,44,448/-, we note that lower appellate discussion to this effect reads as under.
“7.4 I have carefully considered the submission of the appellant in light of factual matrix of the case and judicial decisions relied upon. From the perusal of the assessment records, it is seen that the Ld AO had invoked the provisions of section 145(3) as the assessee was unable to submit the books of accounts. It is the appellant's case that the books of accounts and supporting documents could not be produced due to fire accident on 18.07.2013. The contention of the appellant was that he cannot produce anything even though the FIR / panchnama do not mention that the document room or office space was burnt. In support the appellant also produced the copy of order from the Sales-Tax Department wherein this fact was mentioned that records were destroyed in fire. However, the contention of the Assessing Officer is that the assessee maintains his sales and purchases electronically on tally software and as such these could have been produced. The Assessing Officer also called for the confirmations from sundry creditors which would have thrown some light on the balances held in the books; however, even those were not submitted. It is also observed that in this order of the Sales-tax submitted by the appellant there was a penalty levied of Rs. 3,93,997/-, the reason of which was not apparent and has not been explained by the appellant. The appellant has tried to demonstrate that since the sales and purchase figures as given in the return of income matched the ones before the Sales- tax Department, therefore, there was no occasion for invoking the provisions of section 145(3). However, this contention is incorrect be the return of income does not comprise of only the sales and the purchases figures but also all other expenses debited therein. It was the duty of the Assessing Officer to enquire into the details of income and expenditure and then to verify whether the return of income has been filed correctly or Shri Eknath Chandrayya Bhandari, not. Here the appellant was unable to produce any details regarding expenditure; therefore, Assessing Officer was left with no other option but to invoke the provisions section 145(3).
7.5 It is also pertinent to note that in the same Sales-tax assessment order u/s 23 of the MVAT Act 2002, there have been discrepancies in the very figure of sales and purchases with reference to the return of income. Following is the chart as per Sales-tax Order
As per Sales-tax order As per the return of income Gross purchases - 5,85,86,262 Net Purchase - 5,78,83,132 As per submission dated 5.10.2015 (based on quarterly statement Gross purchases - 6,75,39,390 Less: - 5,79,45,360 As per Return of Income - Less: Trade discount - 3,74,28,237 CM. Wines - 4,03,15,273 4,63,72,003 Hotel Rachna - 96,50,760 I) 4,99,66,033
The appellant has tried to explain these discrepancies by relying on the sales as per the Sales Tax Department. However, that proposition is not tenable as there is discrepancy in the purchases as per order of the Sales Tax Department and the quarterly returns filed by the appellant. It may be seen that the net purchases of 4,63,72,003/- the table submitted by the appellant has been derived only after setting off trade discount, set office etc. However, it is seen that in the return of income already these particular expenses have been debited from the purchase account, therefore, the purchases as per the two sets of account do not match. However, I find that sales as per audited profit & loss account of Hotel Rachana is Rs. 1,00,72,998/- and C M Wines is Rs.3,87,43,453/- therefore, total sales of the appellant comes to Rs. 4,88,16,451/-. Hence, there is deficiency of Rs 24,44,448/- which has not been explained satisfactorily and, therefore , I find that the order of the AO for Shri Eknath Chandrayya Bhandari, invoking the provision of section 145(3) cannot be faulted with. However, considering the entire facts of the case, the addition is restricted to Rs 24,44,448/-. Hence, the ground of the appeal filed by the appellant is partly, allowed.”
We note with the able assistance from the Revenue’s side that the assessing authority has increased the assessee’s GP @ 15.83%, 1.64 % and 12.26% in hotel, wines and construction business(es) to 30%, 4% & 30% each ; respectively without taking any segmental comparable in consideration. The fact also remains that the assessee has also not been able to the supported the profit rate by filing the all relevant details regarding his business activities. Faced with this situation we deem it appropriate to grant him a lump sum further relief of Rs.4,44,448/- out of that in issue of Rs.24,44,448/- thereby affirming the impugned addition to the tune of Rs.20 lakhs only with a rider that our instant estimation shall not be treated as precedent. Ordered accordingly.
This assessee’s appeal is partly allowed in above terms.
Order pronounced in the Open Court on this 27th day of July, 2022.