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Income Tax Appellate Tribunal, “A”, BENCH KOLKATA
Before: SHRI P. M. JAGTAP, V.P & SHRI S. S. GODARA, JM
Appellant by : Shri Miraj D. Shah, AR Respondent by : Shri Dhrubojyoti Ray, JCIT सुनवाई क" तार"ख/ Date of Hearing : 12/02/2019 घोषणा क" तार"ख/Date of Pronouncement : 28/02/2020 आदेश / O R D E R Per Shri S. S. Godara: This assessee’s appeal for assessment year 2013-14 arises against the Commissioner of Income Tax(Appeals)-12, Kolkata’s order dated 28.02.2019 in case no.10017/CIT(A)-12/Wd-40(4)/Kol/2017-18 involving proceedings u/s 144 of the Income Tax Act, 1961 (in short ‘the Act’).
Heard both the parties. Case file perused.
2. The assessee raises the following three substantive grounds in the instant appeal:
“1. FOR THAT, in the fact and circumstances of the case Ld. CIT(A) was not justified in law in sustaining addition to the tune of Rs. 13,38,314/- on Account of profit element embedded in un-reconciled Sale amounting Rs. 22,30,523/- and determining income thereon @ 60% of Rs. 22,30,523/- i.e. to the tune of Rs.13,38,314/- which is highly excessive and liable to be reduced substantially to the extent of Gross profit ratio embedded in such alleged unreconciled Sales determined.
FOR THAT it is well settled law that the Profit element embedded in alleged Sale is liable to be taxed and not 60% of the unreconciled Sale can be subjected to Tax by any stretch of imagination.
Pushpa Devi Rathi 3. FOR THAT in any event, the Ld. A.O. erred in taking total returned income at Rs.390,646/- instead of Rs. 1,40,646/- while computing the assessed income of the Appellant which may be directed to be corrected in this forum.”
Learned authorized representative is fair at the outset in not pressing for the assessee’s third substantive grievance. Coming to the former two substantive grounds challenging the lower authorities’ action and more particularly the CIT(A)’s findings assessing income @60% of the profit rate, our attention is invited to the lower appellate discussion qua this sole surviving issue of estimation of profit rate as under:
11. Ground No.2: Undisclosed sale of Rs.1,49,30,067/- :- The A.O's case is that since Bank accounts show much higher figure of receipts than the sales of her profit & loss account the excess receipt in bank account is undisclosed sale. 11.1. The appellant's case is that most of the sale increases in the receipt as alleged by the A.O is on account of contra entries in the same bank account pursuant to respective bouncing of cheques as is apparent from cursory look at the relevant entries. The appellant has given the aggregate of such contra entries which amounts to Rs.1,20,49,544/-. 11.2. It is apparent that the A.O has jumped to the conclusion without appreciating the nature of entries in the bank account, this being to the above extent of Rs.1,20,49,544/- ,the A.O is wrong. The sale addition figures found by the A.O is thus overstated by that figure. The balance figure of Rs.28,80,523/- is sought to be explained as received from earlier debtors and loan. As the said claim against the balance of Rs.28,80,523/- is not supported by specific details, I may sustain the A.O's view up to this amount of Rs.28,80,523/-, so far as the sales understand is concerned. Out of Rs.28,80,523/-, Rs.6,50,000/- is further claimed as earlier loan received from Mamta Mohta, and is, therefore, also treated as explained. Thus, the sale under-stated totalling to Rs.[ Rs.28,80,523/- - Rs.6,50,000/- = Rs.22,30,523/-], may be treated as such. As regards the income embedded in the aforesaid understated sale derived at Rs.22,30,523/- the A/R's plea is that there are expenses from the bank accounts and the whole sum of sale cannot be treated as income. The corresponding purchase or expenses, according to the A/R, has to be factored in while computing the income to be added to the return of income. Since expenses or purchases are not very clear to me, I confirm the addition made on this account up to 60% of Rs.22,30,523/- being Rs.13,38,314/-.
It is in this backdrop of facts that the only issue that survives for our apt adjudication is the alleged excessive element of the assessee’s profit rate @60% in the lower appellate proceedings. We notice that this assessee is a cloth merchant and proprietor of M/s Geeta Tex Fabrics. Case file suggests that the learned lower authorities have assessed her income derived from cloth trading @0.75% profit rate. That being the case, we are of the opinion that the CIT(A)’s impugned action Pushpa Devi Rathi assessing 60% profit rate is neither based on the assessee’s corresponding books of accounts nor that adopted in preceding and succeeding assessment years. We therefore conclude that a lumpsum profit rate @7.5% of the rates in issue, already double than that accepted @0.75%, would be just and proper keeping in mind the peculiar facts and circumstances involved herein. Necessary computation to follow as per law. It is made clear that our instant estimation shall not be treated as a precedent in other assessment year(s).
This assessee’s appeal is partly allowed in above terms.
Order is pronounced in the open court on 28.02.2020. (P. M. Jagtap) (S. S. Godara) VICE-PRESIDENT JUDICIAL MEMBER कोलकाता /Kolkata; "दनांक/ Date: 28/02/2020 RS