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Income Tax Appellate Tribunal, KOLKATA ‘B’ BENCH, KOLKATA
Before: Shri N.V. Vasudevan, Hon’ble & Shri Waseem Ahmed, Hon’ble]
IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH, KOLKATA [Before Shri N.V. Vasudevan, Hon’ble Judicial Member & Shri Waseem Ahmed, Hon’ble Accountant Member] I.T.A. No. 582/Kol/2015 Assessment Year: 2010-11 & I.T.A. No. 583/Kol/2015 Assessment Year: 2011-12 ACIT, Circle-45, Kolkata……………………..…..………………………………………….…….……...Appellant 3, Government Place West Ground Floor Kolkata – 700 001 Shri Sanjoy Saraf…………..…………………………………………...……..……………………..…. Respondent Prop. of M/s. Dati Corporation P-176, Scheme VII M, CIT Road Ultadanga Kolkata – 700 054 [PAN : BKNPS 7166 M] Appearances by: Shri Dev Kumar Kothari, FCA, appeared on behalf of the assessee. Shri S.Dasgupta, Addl. CIT, DR appearing on behalf of the Revenue. Date of concluding the hearing : February 21st, 2018 Date of pronouncing the order : 1st March, 2018 O R D E R Per N.V. Vasudevan :-
Both these appeals are filed by the revenue directed against two separate orders of the ld. Commissioner of Income Tax (Appeals)-13, Kolkata, (hereinafter the ‘ld. CIT (A)’), both dt. 24/02/2015, passed u/s 250 of the Income Tax Act, 1961 (the ‘Act’), relating to the Assessment Year 2010-11 & 2011-12.
The issues involved in both these appeals are identical and were heard together. We deem it convenient to pass a common order. 3. The assessee is an individual. He carries on business in the name and style of Dati Corporation as a proprietor. The assessee filed the return of income for the Assessment Year 2010-11, declaring total income of Rs.22,45,870/-. The nature of business of the assessee was acting as a commission agent and broker. In the course of assessment proceedings u/s 143(3) of the Act, the Assessing Officer called upon the assessee to explain the discrepancies and also supporting bills and vouchers for the various expenses
2 I.T.A. No. 582/Kol/2015 Assessment Year: 2010-11 & I.T.A. No. 583/Kol/2015 Assessment Year: 2011-12 Shri Sanjoy Saraf claimed in the profit and loss account. The assessee furnished reply in respect of the various queries raised by the Assessing Officer. The Assessing Officer found that several expenses claimed in the profit and loss account were either unreasonable or claimed without any supporting evidence. The Assessing Officer, therefore, rejected the books of accounts and made an assessment u/s 145(3) of the Act, as follows:- “4. In view of the entire facts and circumstances of the case, accounts of the assesse are found to be not correct and are rejected accordingly u/s 145(3) of the Act and income is assessed as under:- Particulars Expenses Particulars Amount allowed Accounting 24000 Commission 18828903 charges received Bank Commission 8206 Intt on loan 130300 and charges Audit fee 30000 Electricity Charges 145050 Depreciation 646370 Rent 100000 Other General 1737112 Expenses Salary Expenses 2154000 Net Profit 14124465 18969203 18969203 Income is assessed at Rs.1,41,24,465/- as above.
3.1. In Assessment Year 2011-12, assessee had filed the return of income of Rs.26,98,245/-. For almost identical reasons as were given in the Assessment Year 2010-11, the Assessing Officer disallowed the claim for deduction of various expenses and determined the total income of the assessee as follows:-
3 I.T.A. No. 582/Kol/2015 Assessment Year: 2010-11 & I.T.A. No. 583/Kol/2015 Assessment Year: 2011-12 Shri Sanjoy Saraf
4 I.T.A. No. 582/Kol/2015 Assessment Year: 2010-11 & I.T.A. No. 583/Kol/2015 Assessment Year: 2011-12 Shri Sanjoy Saraf
5 I.T.A. No. 582/Kol/2015 Assessment Year: 2010-11 & I.T.A. No. 583/Kol/2015 Assessment Year: 2011-12 Shri Sanjoy Saraf
Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the ld. CIT(A). Insofar as Assessment Year 2010-11 is concerned, the ld. CIT(A) upheld the order of the Assessing Officer rejecting the books of accounts of the assessee and estimating the income of the assessee u/s 145(3) of the Act. With regard to the quantum of income estimated by the Assessing Officer, the ld. CIT(A) was of the view that if the addition made by the Assessing Officer was sustained, then it would result in the profits of the assessee being estimated at nearly 75 per cent of receipts which is unlikely in any kind of business. The ld. CIT(A) thereafter noticed that the past history in the assessee’s own case was as follows:- P.Y. Asst. Gross Returned Assessed Assessed Returned Assessed Ended Year Revenue Income Income u/s income Income as % of as % of gross gross revenue revenue 31.03.07 2007-08 10203388 976983 976983 143(1) 9.58 9.58 31.03.08 2008-09 12973681 1768441 1768441 143(1) 13.63 13.63 31.03.09 2009-10 12295240 1483360 1798360 143(3) 12.06 14.62 31.03.10 2010-11 18828903 18828903 14124465 143(3) 11.92 75.01 31.03.11 2011-12 26674892 26674892 18351645 143(3) 10.11 68.78 31.03.12 2012-13 15261679 15261679 2379440 143(3) 14.61 15.59 31.03.13 2013-14 20425966 20425966 3216160 143(3) 13.04 15.74
4.1. He found from the above details that profit of the assessee was ranging between 9.85 per cent to 14.62 per cent in the earlier years. Taking into consideration the turnover of business of the assessee and the findings in the order of the Assessing Officer and the written submissions of the assesse, the
6 I.T.A. No. 582/Kol/2015 Assessment Year: 2010-11 & I.T.A. No. 583/Kol/2015 Assessment Year: 2011-12 Shri Sanjoy Saraf ld. CIT(A) was of the view that it would be reasonable to estimate the profit of the assessee at 14.5 per cent of the turnover.
4.2. As far as the Assessment Year 2011-12 is concerned, the ld. CIT(A) was of the view that the books of account of the assessee were not reliable and he, therefore, rejected the book results and made an estimation of the profits of the assessee u/s 145 (3) of the Act. He found that the action of the Assessing Officer would mean that the assessee earned 69 per cent profit of his receipts which was highly unlikely in any kind of business. Taking note of the assessee’s past history of the case, the ld. CIT(A) estimated the income of the assessee at 14.5 per cent of the receipts.
Aggrieved by the relief allowed by the ld. CIT(A), the revenue has preferred these present appeals before the Tribunal.
The ld. D/R, reiterated the stand of the revenue as reflected in the grounds of appeal referred to above. The ld. Counsel for the assessee relied on the order of the ld. CIT(A). We have given a careful consideration to the rival submissions. It is clear from the grounds of appeal raised by the revenue before the Tribunal that the rejection of books of accounts of the assessee in Assessment Year 2010-11, by the Assessing Officer and the ld. CIT(A) and the rejection of books of accounts in Assessment Year 2011-12 by the ld. CIT(A) have not been challenged by the revenue. In this regard, we are of the view that in the given facts and circumstances of the case, where expenses are unverifiable, and keeping in mind the huge quantum of unverifiable nature of expenses, rejection of the books of accounts was a just and logical conclusion and no fault could be found for invoking Section 145(3) of the Act. As far as the assessment of income of the assessee is concerned, the law is well settled that once the books of accounts of the assessee are rejected the best way to assess the income of the assessee is to go by the past history in the assessee’s own case. The ld. CIT(A), in our view, has taken note of the past history in the assessee’s own case and has rightly come to a conclusion that the estimation of profit at
7 I.T.A. No. 582/Kol/2015 Assessment Year: 2010-11 & I.T.A. No. 583/Kol/2015 Assessment Year: 2011-12 Shri Sanjoy Saraf 14.5 per cent of the receipts would be just and proper in the facts and circumstances of the case. 6.1. We find no grounds to interfere with the reasons of the ld. CIT(A). Consequently, these appeals by the revenue are dismissed.
In the result, the appeals of the revenue are dismissed.
Kolkata, the 1st day of March, 2018.
Sd/- Sd/- [Wassem Ahmed] [N.V. Vasudevan] Judicial Member Accountant Member Dated :01.03.2018 {SC SPS}
Copy of the order forwarded to: 1. ACIT, Circle-45, Kolkata 3, Government Place West Ground Floor Kolkata – 700 001 2. Shri Sanjoy Saraf Prop. of M/s. Dati Corporation P-176, Scheme VII M, CIT Road Ultadanga Kolkata – 700 054 3. CIT(A)- 4. CIT- , 5. CIT(DR), Kolkata Benches, Kolkata.