SUBRATA DEY,BURDWAN vs. ITO, WARD 1(3), BURDWAN, BURDWAN

The assessee in the present case is an individual, who is engaged in the business of wholesale trading of potatoes. The return of income for the year under consideration was filed by him on 04.10.2013 declaring total income of Rs.2,33,720/-. In the said return, gross sales from the business of wholesale trading of potatoes were shown by the assessee at Rs.96,03,835/- and after claiming deduction on account of purchases and other expenses, gross profit and net profit was declared at 10% and 3.50% respectively. During the course of assessment proceedings, it was found by the Assessing Officer that the assessee has maintained two Current Accounts with State Bank of India and HDFC Bank, which were not disclosed in the books of account. He also noticed that his business transactions were carried out by the assessee through the said two Assessment Year: 2013-2014 Current Accounts. The assessee, therefore, was called upon by the Assessing Officer to explain the transactions reflected in his undisclosed Current Accounts. The assessee, however, did not comply with this requirement of the Assessing Officer. The Assessing Officer, therefore, proceeded to complete the assessment to the best of his judgment under section 144 of the Act. In the assessment so completed vide an order dated 29.03.2016, the credits appearing in the two undisclosed Bank accounts of the assessee aggregating to Rs.3,87,03,903/- were treated by the Assessing Officer as undisclosed turnover of the assessee’s business of wholesale trading of potatoes and income from the same estimated by applying the gross profit rate of 10% amounting to Rs.38,70,790/- was added by him to the total income of the assessee.

Against the order passed by the Assessing Officer under section 144, an appeal was preferred by the assessee before the ld. CIT(Appeals) and since the submission made by the assessee in support of his case on the issue involved in his case relating to the addition of Rs.38,70,390/- made by the Assessing Officer was not found acceptable, the ld. CIT(Appeals) confirmed the said addition made by the Assessing Officer and dismissed the appeal of the assessee.

Aggrieved by the order of the ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal on the following grounds:-

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 submitted that out of total turnover of Rs.3,87,03,903/- as reflected in the undisclosed current accounts, the assessee had already disclosed his turnover to the extent of Rs.96,03,835/- in the return of income and had also declared net profit thereon at 3.50%. He has submitted that the assessee, however, could not properly explain and establish his case on the issue as the order of assessment was completed by the Assessing Officer ex parte under section 144 to the best of his judgment. He has contended that the assessee is in a position to support and substantiate his case on this issue by producing the relevant books of account and other evidence and urged that one more opportunity may be given to the assessee by sending the matter back to the Assessing Officer. He has also contended that the gross profit rate of 10% applied by the Assessing Officer to estimate the income of the assessee from the undisclosed turnover is excessive and unreasonable and he may be directed to apply the net profit rate of 3.50% declared by the assessee. Although the ld. D.R. has strongly opposed the contentions raised by the ld. counsel for the assessee seeking remand of the matter to the Assessing Officer by submitting that sufficient opportunity has already been offered to the assessee by the Assessing Officer as well as by the ld. CIT(Appeals), I am of the view that one more opportunity can justifiably be given to the assesee in the interest of justice to put forth his case before the Assessing Officer keeping in view that the assessment was completed by the Assessing Officer ex parte under section 144 to the best of his judgment and the assessee thus did not get any effective opportunity to put forth his case on the issue under consideration. I, therefore, set aside the impugned order passed by the ld. CIT(Appeals) and restore the matter to the file of the Assessing Officer with a direction to make the assessment afresh after giving proper and sufficient opportunity of being heard to the assessee.

As regards the rate of profit to be applied for estimation of the income of the assessee from the undisclosed turnover, I keep this issue open to the Assessing Officer for deciding the same afresh after taking into consideration all the relevant facts of the case as well as the submissions of the assessee.

In the result, the appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the open Court on 30th day of November, 2017.