What did the Tribunal hold?

The Tribunal noted that the lower appellate proceedings did not consider peak credit and telescoping benefits. Therefore, the AO was directed to re-examine these issues.

The assessee's appeal concerns additions made by the Assessing Officer (AO) to her income for AY 2014-15. The AO treated a significant cash deposit in a savings account, subsequently transferred to a current account, as business receipt and estimated profit at 8% on the total turnover.

What were the issues?

Whether the AO correctly treated cash deposits as business turnover and if peak credit and telescoping benefits were appropriately considered in estimating profit.

Smt. Mitra Pramanik, Diamond… vs I.T.O., Ward-26(3) | ITAT Kolkata 2020

Income Tax Appellate Tribunal, KOLKATA ‘B(SMC

Before: Shri Satbeer Singh Godara

This assessee’s appeal for assessment year 2014-15 arises against the CIT(A), 7, Kolkata’s order dated 01.07.2019 passed in case no. 04/CIT(A)-7/Ward-26(3)/Kol/16-17 involving proceedings u/s 143(3) of the Income-tax Act, 1961 ( in short ‘Act’).

Case called twice. Learned AR has filed an adjournment petition, but there is no body to pursue the same during the course of hearing before me. I, therefore, proceeded ex parte against the assessee.

Learned Senior Departmental Representative ( in short, ld. DR) is very fair in not disputing the assessee’s solemn averment for condoning the delay of 63 days to be attributable to various circumstances beyond her control. The same stands condoned therefore.

4. Coming to merits, the assessee raises the following two substantive grounds:

1. 1. The ld. CIT(A) erred in confirming the additions three amounts, viz. Rs. 4,94,846/- Rs. 1,02,332/- and Rs.2,15,382/- added by the AO as per para (i) para (ii) and para (iii) respectively of the order of assessment.

2. Rhe assessing officer found that turnover is first deposited in a Saving Bank a/c which was immediately transferred to a Current A/c maintained in the same branch of Punjab National Bank. The Assessing Officer noticed that total deposits in current a/c are Rs. 1,14,36,913/-. The ld. CIT(A) erred is not directing the A.O to assess the profit at 8% of the above figure which is the rate adopted by the AO himself.

I notice with the abled assistance of the Sr. DR that the learned CIT(A)’s detailed discussion confirming the impugned addition reads as under:-

These grounds are directed against the action of the AO in treating a deposit of '1,08,56,4301- as business receipt. I have gone through the assessment order as well as the written submission filed by the /\R of the appellant. I find from the assessment order that the AO has clearly detected that there was cash deposit in the savings bank account of the appellant and not disclosed to the department. The AO after considering the unsubstantiated submissions of the AR of the assessee held that the actual turnover of the appellant should be Rs. 1,18,75,692/-. Thereafter, the AO adopted a net profit rate of 8% on the same entire turnover and estimated the same at Rs.4.94,846/- The 2 A.Y 2014-15

proposal to this action was not objected to by the AR appearing before him (as per second para on page 3 of the assessment order). In my considered view the AO has adopted a fair view by estimating the net profit only Before me the AR of the appellant has not disputed this position at all. On the contrary the AR has in a way disputed that the AO should not have considered the excess cash deposit as turnover of the appellant. I do not find any merit in the submission of the AR of the appellant in this regard, in fact the arguments advanced by the AR are of not help to the appellant. Considering the entire gamut of the issue at hand, I am of the opinion that the appellant does not deserve any relief in this case. Consequentially these grounds are dismissed on merits.”

It is clear from perusal of assessee’s pleadings and corresponding lower appellate discussion adopting the assessee’s net profit rate @ 8% of the entire turnover that the corresponding peak credit as well as telescoping benefits have nowhere been considered in the lower proceedings. I, therefore, deem it appropriate in larger interest of justice that the AO should re-examine the foregoing issue(s) as per law within three effective opportunities of hearing. Order accordingly.

In the result, this assessee’s appeal is allowed for statistical purpose in above terms. Order pronounced in the Court on 31 -01-2020

SMT. MITRA PRAMANIK,DIAMOND HARBOUR vs. I.T.O.,WARD-26(3), KOLKATA

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