ASHOK SHARMA,KOLKATA vs. ITO, WD-47(4), KOLKATA, KOLKATA

Ashok Sharma Appellant [PAN:AKJPS0470K] Vs ITO, Ward-47(4), Kolkata Respondent For the Appellant : Shri Miraj D. Shah, FCA (AR) For the Respondent : Shri C. J. Singh, JCIT, Sr.DR Date of hearing : 07.02.2019 Date of pronouncement : 03.05.2019 ORDER PER Shri S.S. Viswanethra Ravi, JM:

This appeal by the assessee against the order dated 15.04.2016 passed by the Commissioner of Income Tax (Appeals)-18, Kolkata [‘CIT(A)’] for Assessment Year 2010-11.

Ashok Sharma cannot be added as income and all expenses including the expenses relatable to undisclosed receipts from execution of contract job work has to be taken into consideration while arriving at the total income of the assessee. In the such circumstances, the ‘SMC’ Bench of the Tribunal held that the gross profit @31.75% is to be calculated. In the present case, the ld. AR, taking into consideration of the facts and circumstances of the present case, submits that gross profit 18.82% may be adopted for the undisclosed receipts as found by the A.O and confirmed by the CIT(A). The ld. DR reported no objection for the said rate of gross profit. Therefore, taking into consideration of the facts and circumstances of the case and the order of the ‘SMC’ Bench of this Tribunal, the matter is remanded to the file of A.O for calculation of gross profit @18.82% to the gross receipt. Thus, Ground Nos.2 & 3 raised by the assessee are allowed for statistical purposes.

4.1 Heard both parties and perused the materials available on record. It is noted from the record that the A.O on perusal of the balance sheet observed that the assessee has obtained unsecured loan and an advance to an extent of Rs.5,00,000/- & Rs.3,70,000/-. The assessee was requested to show-cause as to why the said loan at advance should not be treated as bogus considering the same as income from undisclosed sources. For not giving satisfactory explanation and for not proving the genuineness, creditworthiness of the transactions, the A.O added the said amount to the total income of the assessee. It is noted from the impugned order, the assessee could not prove genuineness, creditworthiness of the transactions in respect of parties from whom he claimed to have obtained loans and advances. But however it is observed that the assessee has provided loans confirmations, PAN and names of the parties before the Ashok Sharma authorities. Before us, the ld. AR contends that when the gross profit is accepted by placing reliance on the decision of Hon’ble High Court of Calcutta and to the extent of expenditure that telescoping may be applied to the amounts involved in Ground Nos.4 & 5. In our opinion, it is open to the assessee that the loans and advances had been brought into the business activity resulting into only one addition. While dealing with Ground Nos.2 & 3 in the aforementioned paras, we directed the A.O to adopt gross profit @18.82% and the said gross profit must have arisen from conducting business involving the expenditure incurred out of that income, and therefore, method of telescoping is required to be applied in such circumstances. We deem it proper to remand the matter to the file of A.O for telescoping the loans and advances received by the assessee from the parties. Thus, Ground Nos.4 & 5 are allowed for statistical purposes.

5.1 Heard both parties and perused the materials available on record. The contention of the ld. AR is that the assessee deposited cash withdrawals again in the same bank in the same year. No evidence showing the same were before the A.O and CIT(A). Before us, a chart showing deposits of cash withdrawals filed in the Paper Book at page no.60 to 84 and prayed to remand the matter to the file of A.O for his verification. The ld. DR reported no objection in remanding the matter to the file to the A.O for his fresh consideration. Admittedly, there was no material evidence before the A.O to arrive at the conclusion to the issues raised in Ground No.6. Thus taking into consideration, the submissions of ld. AR and DR and the material evidence placed at Paper Book from page 60 to 84, we remand the matter to the file of A.O for his fresh adjudication. The assessee is at liberty to file evidences, if any, in support of his claim.

Ashok Sharma Thus Ground No.6 raised by the assessee is allowed for statistical purposes. 6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 03.05.2019.

Sd/- Sd/- [J. Sudhakar Reddy] [S.S. Viswanethra Ravi] Accountant Member Judicial Member Dated : 03.05.2019 Place : Kolkata RS, Sr.PS Copy of the order forwarded to: 1. Appellant –Ashok Sharma, C/o D. J. Shah & Co, Kalyan Bhavan, 2 Elgin Road, Kolkata – 700020. Respondent – ITO, Ward-47(4), Kolkata. 2 3. The CIT(A), Kolkata 4. CIT , Kolkata 5. DR, Kolkata Benches, Kolkata