J.P. ENTERPRISE,PURBA MEDINIPUR vs. ITO, WD-27(3), HALDIA, PURBA MEDINIPUR

आदेश /O R D E R

PER Waseem Ahmed, Accountant Member:-

is dismissed.” A.Y. 2009-10 J.P.Enterprise Vs. ITO Wd-27(3) Haldia Page 3 Being aggrieved, assessee came up in second appeal before us on the following ground of appeal.

1. That under the facts & circumstances of the case the Ld. CIT(A) erred in confirming the addition of Rs.739019.00, as an undisclosed contract work, instead of et profit rate on account of undisclosed contract work. This is quite unjustified, unreasonable and bad in law. So the net profit rate on undisclosed contract work should be allowed.”

6. Before us Ld. AR filed paper book which is running from pages 1 to 40 and reiterated same submissions as made before Ld. CIT(A). On the other hand, Ld. DR vehemently relied on the order of Authorities Below.

Admittedly, the assessee is following mercantile system of accounting and this amount was to be shown in the year under consideration as income. As per the assessee the said amount was received in the subsequent financial year dated 8th April 2009 which was shown in the subsequent assessment year. Indeed as per accounting principal the assessee should have shown this amount as income in the year under consideration but it has been shown in the subsequent assessment year. At the same time there is also no dispute with regard to the amount of the TDS which has been claimed in the year under consideration on such amount. Now the question arises whether the aforesaid amount has been offered to tax in the subsequent year or not if A.Y. 2009-10 J.P.Enterprise Vs. ITO Wd-27(3) Haldia Page 4 the answer is yes then the addition of the same would amount to double taxation i.e. in the year under consideration and subsequent year. It is important to note that this is not the object of the legislature to levy the tax on the same income twice. As per the various principles laid down by the Various Courts the income tax should be levied at the correct income of the assessee. However the learned AR before us has not brought anything on record suggesting that the aforesaid amount has been offered to tax in the subsequent year. However, in the interest of Justice and fair play we’re inclined to restore this issue to the file of AO to adjudicate the matter afresh as per law and to check whether the same amount has been offered to tax in the subsequent year or not. In case it has been offered then there will be no addition in the year under consideration in these facts & circumstances. If it is a case that the assessee inadvertently omitted to show the aforesaid amount as income of the assessee in the year under consideration then the same amount must have been shown as income in the subsequent year. There is no dispute with regard to the payment received by the assessee of the impugned amount. The assessee before us is a partnership firm and its accounts are subject to audit under section 44AB of the Act. Since the amount is coming in the disclosed bank account of the assessee then assessee has to offer the same as income to the tax authorities. The argument of the learned AR that the entire amount cannot be added to the total income of the assessee and only profit element can be added as undisclosed income of the assessee on such amount, is not really convincing. It is because of the fact all the expenses have been duly claimed by the assessee and there is no whisper in the order of lower authorities suggesting that the expenses in relation to the impugned income has not been claimed in the profit and loss account. Therefore if such income needs to be added then the entire amount will be liable to be added in the total income of the assessee as the assessee already has claimed the expenses in relation to such income. In view of above we are inclined to restore this issue to the file of AO for fresh adjudication as per law. Hence, this ground of appeal of the assessee is allowed for the statistical purposes. A.Y. 2009-10 J.P.Enterprise Vs. ITO Wd-27(3) Haldia Page 5

8. Next issue in ground No.2 is not pressed. Hence, same is dismissed as not pressed.

9. Last issue raised by assessee in this appeal is that Ld. CIT(A) erred in confirming the order of AO by sustaining the addition of ₹7,21,874/- on account of various expenses on ad hoc basis.

10. The assessee in the year under consideration has claimed several expenses but failed to substantiate the same on the basis of documentary evidence. Therefore, AO had no option except to make the disallowance @ 5% of total expense (16473483 x 5% = 7,21,874) on estimated basis. The AO accordingly disallowed and added to the total income of assessee.

11. Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee submitted that all expenses were incurred by assessee in the course of business. Similar kind of expenses was also incurred in earlier years and same were accepted by Revenue. The assessee further submitted that disallowance of 5% of the total expenses on estimated basis is very high and unreasonable. However, Ld. CIT(A) confirmed the order of AO by observing as under:- “4.3 I have considered the submissions made by the appellant and gone through the assessment order. The AO disallowed the expenses for the appellant’s failure to submit any evidence in support of the claim of expense under various heads. The appellant has given opportunities t the remand stage to produce the books of account and to prove the genuineness of the expenses. During the remand stage also the appellant did not produce the books of account and furnish the evidences. The appellant has admitted the income of Rs.3,04,090/- against the turnover of Rs.1,60,92,594/- which works out to 1.89% which was very low on comparable cases. Therefore, I do not find any reasons to interfere with the AO and the addition made by the AO is confirmed. This ground of appeal is dismissed.”

Being aggrieved, assessee came in second appeal before us on the following grounds .

12. Ld. AR before us reiterated same submission as made before Ld. CIT(A). On the other hand, Ld. DR relied on the order of Authorities Below.

13. We have heard the rival contentions and perused the materials available on record. The grievance of the assessee in this appeal is with regard to the confirmation of addition of Rs. 7,21,874.00 on ad hoc basis. At the outset we find that the assessee failed to furnish any documentary evidence in support of expenses claimed in the A.Y. 2009-10 J.P.Enterprise Vs. ITO Wd-27(3) Haldia Page 6 profit and loss account before the AO as well as learned CIT(A). The onus lies on the assessee to justify the expense claimed by the assessee on the basis of documentary evidence. In such situations the lower authorities had no option except to make the disallowances on the basis of estimate. Indeed before making any disallowances the AO should have verified the reasonableness of the disallowances after making comparison with the earlier year financial data of the assessee. In the instant case the AO has not made any reference to the earlier year financial data before making any disallowance. However it does not mean the disallowances made by the AO is unreasonable in the given facts & circumstances. The AO had to resort to the disallowances on estimated basis in the absence of any documentary evidence. However in the interest of Justice and fair play we are inclined to give one more opportunity to the assessee to justify the expenses claimed by it before the AO. Therefore we are restoring this issue to the file of AO for fresh adjudication as per law. Hence this ground of appeal of the assessee is allowed for statistical purposes.

13. In the result, assessee’s appeal stands partly allowed for statistical purpose. Order pronounced in open court on 24/02/2017 Sd/- Sd/- (S.S.Viswanethra Ravi) (Waseem Ahmed) Judicial Member Accountant Member *Dkp, Sr.P.S �दनांकः- 24/02/2017 कोलकाता / Kolkata आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. अपीलाथ�/Appellant-J.P. Enterprise, Mecheda, Tamluk, Purba Medinipur-721137 2. ��यथ�/Respondent-ITO Ward-27(3), Basudevpr Khanjanchak, Haldia, Purba Medinipur, Pin-721602 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण कोलकाता / DR, ITAT, Kolkata 6. गाड� फाइल / Guard file. By order/आदेश से,

उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, कोलकाता