SANTOSH KUMAR DUTTA,NADIA vs. I.T.O.,WARD-41(4), KOLKATA

The assessee in the present case is an individual, who is carrying on the business as a Petrol and Diesel Retailer and Tank Operator. The return of income for the year under consideration was filed by him on 07.10.2012 declaring total income of Rs.3,55,404/-. In the said return, Assessment Year: 2012-2013 Santosh Kumar Dutta purchases made from Bharat Petroleum Corporation Limited were shown by the assessee at Rs.6,30,23,984/-. As per the information received by the Assessing Officer, the assessee, however, had actually made total purchases of Rs.7,76,88,466/- from Bharat Petroleum Corporation Limited during the year under consideration. On the basis of the said information, the assessment in the case of the assessee was reopened by the Assessing Officer and a notice under section 148 was issued by him after recording the reasons. In response to the said notice, the return of income was filed by the assessee on 18.03.2015 declaring the same total income of Rs.3,55,404/- as disclosed in the return of income originally filed on 07.10.2012. Along with the said return, profit & loss account was filed by the assessee showing the purchases at Rs.7,76,88,466/- and sales at Rs.7,85,72,550/- as against the purchases of Rs.6,30,23,984/- and sales of Rs.6,39,08,068/- shown in the profit & loss account filed along with the return of income originally filed. During the course of assessment proceedings, it was submitted on behalf of the assesese that there was a clerical mistake in understating the purchases and sales in the profit & loss account filed along with the return of income originally filed and since such under-statement was equal in case of purchases as well as sales, the gross profit as well as net profit remained the same. This explanation of the assessee was not found acceptable by the Assessing Officer in the absence of any documentary evidence or quantitative analysis furnished by the assessee to support and substantiate the same. He accordingly treated the under-statement of purchases amounting to Rs.1,46,64,482/- as undisclosed purchases and by applying the gross profit rate declared by the assessee, the profit from the corresponding undisclosed sales was worked out by him at Rs.1,80,960/-. He also worked out the investment required to be made by the assessee in capital for carrying out the transactions of unaccounted purchases and sales at Rs.5,86,680/- on proportionate basis and added the said amount as well as the amount of profit of Rs.1,80,966/- earned by the assessee from the Assessment Year: 2012-2013 Santosh Kumar Dutta undisclosed transactions of purchases and sales to the total income of the assessee.

The addition made by the Assessing Officer on account of profit from unaccounted transactions of purchases and sales as well as the capital allegedly invested in such transactions was challenged by the assessee in the appeal filed before the ld. CIT(Appeals) and since the submission made by the assessee in support of his case on the issue was not found acceptable by him, the ld. CIT(Appeals) confirmed the said addition made by the Assessing Officer to the total income of the assessee. Aggrieved by the order of the ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal.

I have heard the arguments of both the sides and also perused the relevant material available on record. The ld. Counsel for the assessee has contended that even though the addition made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of profit allegedly earned by the assessee from the unaccounted transactions of purchases and sales can be taken as justified, the addition made on account of the capital allegedly invested by the assessee in such unaccounted transactions is not sustainable. He has contended that no additional investment in capital was required to be made by the assessee for the unaccounted transactions as the infrastructure required for the purpose of carrying out such transactions was very much available with the assessee. I am unable to accept this contention of the ld. Counsel for the assessee. As rightly contended by the ld. D.R., the unaccounted transactions of purchases and sales admittedly made by the assessee required investment in the form of working capital and since the requirement of such capital was worked out by the Assessing Officer on proportionate basis, the addition made on account of such capital deserves to be sustained being fair and reasonable. I, therefore, find no infirmity in the impugned order of the ld. CIT(Appeals) confirming the Assessment Year: 2012-2013 Santosh Kumar Dutta addition made by the Assessing Officer on this issue and upholding the same, I dismiss this appeal filed by the assessee.

In the result, the appeal of the assessee is dismissed. Order pronounced in the open Court on December 18, 2019.