BALAJEE METALLIC,PCIT vs. PCIT-1, KOLKATA
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Income Tax Appellate Tribunal, ‘C’ BENCH, KOLKATA
Before: Shri Rajpal Yadav, Vice-(KZ) & Shri Rajesh Kumar
Per Rajpal Yadav, Vice-President (KZ):- The present appeal is directed at the instance of assessee against the order of ld. Principal Commissioner of Income Tax, Kolkata-1 dated 9th March, 2022 passed under section 263 of the Income Tax Act in Assessment Year 2017-18.
ITA No. 227/KOL/2022 (A.Y. 2017-2018) Balajee Metallic
In response to the notice of hearing, no one has come present on behalf of the asseessee. We have issued repeated notices, which were returned back with a Postal remark “left”. No fresh address has been given by the assessee to the Tribunal. Therefore, with the assistance of ld. D.R., we have gone through the record carefully and proceed to decide the appeal ex-parte qua the assessee.
The assessee has taken seven grounds of appeal, but in brief, its grievance is that ld. PCIT has erred in taking cognizance under section 263 of the Income Tax Act and thereby setting aside the assessment order dated 28.12.2019 for framing a fresh assessment order.
Brief facts of the case are that the assessee has filed its return of income electronically on 07.11.2017 declaring total income of Rs.7,52,190/-. The case of the assessee was selected for scrutiny assessment and a notice under section 143(2) was issued and served upon the asseessee. The ld. Assessing Officer thereafter passed a scrutiny assessment under section 143(3) whereby he determined the taxable income of the assessee at Rs.12,82,210/-. The ld. Assessing Officer has disallowed certain expenditure out of the alleged business expenditure. The assessment order is running into three pages and, therefore, we take note of the main discussion made by the ld. Assessing Officer on pages no. 2 & 3, which reads as under:- “A close visit to the details furnished by the assessee reveals that during the course of assessment proceeding notices issued to the assessee and he was asked to furnish details of cash deposits as per Letter dated 04/09/2019. 2
ITA No. 227/KOL/2022 (A.Y. 2017-2018) Balajee Metallic The assessee provided details of cash deposits during the financial year 2016-17 in general and during the period from 08/11/2016 to 30/12/2016 in particular. The details submitted by the assessee perused with information available with the Department, documents of the assessee, bank statements and books of accounts. The details submitted for relevant financial year verified with the documents. It is seen that the assessee is having turnover of Rs. 28.21 Crores in the F. Y. 2016-17. Cash deposited during the F. Y. 2016-17 are collected from sales made by it and from sundry debtors. It is also seen that the assessee regularly depositing cash in its bank accounts. Cash deposits during the period of demonetization i.e. 08/11/2016 to 30/12/2016 in SBNs are reflected in the cash book of the assessee on 07/11/2016. The assessee during relevant financial year deposited cash of Rs.6.45 Crores in its banking accounts. The assessee deposited cash of Rs. 4.30 Crores upto the date of 08/11/2016. While on the other hand in respect of custom duty mismatch, the assessee has been confronted and the assessee has submitted that during the financial year 2016-17, the assessee firm has paid custom duty of Rs.4,83,920/- and additional duty of Rs.8,99,631/-. The assessee firm recovered custom duty paid of Rs.4,83,920/- and additional duty paid Rs.3,07,047/- from the party. Balance of additional duty paid shown in assets side of the balance sheet under the head special additional duty. The assessee has filed ledger of import duty and additional custom duty. During the course of assessment proceedings, the assessee was, inter alia, asked to satisfactorily explain the nature and genuineness of the expenses claimed under the heads (a) Travelling & conveyance Expenses (Rs. 4,95,019/-), Commission (Rs.2,82,513/-), Rent (Rs.4,08,333/-), Clearing expenses (Rs.53,75,635/-). The assessee has submitted the ledger copy of the said expenses. Perusal of the details furnished by the assessee in respect of travelling expenses revealed that a good amount of such expenses were incurred through bank, specifically through South Indian Bank Ltd. But the assessee did not mention the exact amount of expenses exclusively for the purpose of business expediency. Therefore, keeping in mind the volume of business, an amount of Rs.2,47,509/- is treated to be genuine expenses and remaining Rs.2,47,509/- is disallowed treating the same as non-business expenditure and added back to the total income of the assessee for the year under consideration.
ITA No. 227/KOL/2022 (A.Y. 2017-2018) Balajee Metallic
The assessee has been asked to produce the details of commission expenses of Rs.2,82,513/- but the assessee neither submitted any documentary evidences for the said expenses nor tendered any explanation for the purpose of the expenses under this head. In view of the non-submission of any details/documents in this respect, the undersigned does have no option but to add the entire expenses treating the same as bogus in nature. Therefore, the said amount is disallowed and added back to the total income of the assessee. Penalty proceeding u/s. 270A of the I.T. Act, 1961 is separately initiated on the above mentioned two expenditures for under reporting. Subject to above discussions, total income of the assessee is computed as below: Total income - as per return of income. Rs. 7,52,190/- Add back: As discussed above. Rs. 5,30,022/- Assessed total income (Rounded off) Rs. 12,82,210/- _______________
The ld. Pr. CIT had perused the record carefully and formed an opinion that assessment order is erroneous and has caused prejudice to the interest of revenue. The ld. PCIT found that the assessee purchased goods having valued of Rs.27,02,36,964/-, whereas it has disclosed the purchases in the VAT return at Rs.21,78,154/- only. The ld. Assessing Officer has not examined this total turnover and how much profit would give rise. The ld. PCIT recorded the reasons and confronted the assessee. In response to that notice, the assessee has filed submission, which has been reproduced by the ld. PCIT and we take note of the relevant submission available on page no. 3 of the impugned order, which reads as under:- “(a) I say that the order of assessment passed m connection to assessment year 2017-18 is neither erroneous nor
ITA No. 227/KOL/2022 (A.Y. 2017-2018) Balajee Metallic prejudicial to the interest of revenue and as such reopening of said assessment is not at all required. (b) In your show cause notice you have indicated that in the relevant financial year. I filed Income Tax Return disclosing and Income of Rs. 7,52,190/- but in the assessment order dated 28 12.2019 and additional of Rs. 5,30,022/- was treated as Income by disallowing certain expenses and as such my income was assessed at Rs 12,82,210/-but it came to your notice that 1 purchased goods of the value of Rs. 27,02,36,964/- as per the Profit and Loss Account but as per my return filed under the provisions of West Bengal Value Added Tax Act. 2003, 1 disclosed purchase of Rs. 21,78,154/- and as such there was a difference between purchase shown in the Profit and loss Account and in the VAT Returns to the tune of Rs. 5,23,41,810 and treating the amount shown in the Profit and Loss Account as my real purchased, you have calculated my income and proposed to made an addition of Rs. 24,96,704/- in my income. (c) You have not disputed the amount of sale disclosed by me and as such the sale figure has been admitted. (d) I say that the difference between the amount of purchased disclosed in the Profit and Loss Account and in the VAT as indicated by you, is not at all absurd. In the relevant financial year I purchased imported goods from unregistered dealers and as such payment of VA T on the goods purchased from unregistered dealers does not arise. So, the purchases from unregistered dealers were not disclosed in the VAT returns and so, the differences between figure of purchase mentioned in Profit and Loss Accounts and VA T returns were apparent. It is not necessary/compulsory to show the unregistered imported purchase figure in the vat return. (e) I say that it is a settled law that if the sale figure is admitted by assessing authority, the figure of purchase can’t be disallowed. In this instant case sale figure has not been disputed and as such figure of purchase as per profit and loss accounts duly audited by qualified Chartered Accountants is liable to be accepted. (3) I say that proposed addition of income is not sustainable in the eye of law and the same is liable to be withdrawn and there was no infirmity in the impugned assessment order passed by the Income Tax Officer, above named and there is no scope of reopening the assessment on the alleged ground of loss of revenue as there was no question of revenue loss.”
ITA No. 227/KOL/2022 (A.Y. 2017-2018) Balajee Metallic 6. On due consideration of the above facts and circumstances, we find that the assessee itself has submitted that there was a difference between purchases shown in the Profit & Loss Account and the VAT returns to the tune of Rs.5,23,41,810/-. This angle has not been examined by the ld. Assessing Officer. It has not been enquired into whether an estimated profit is required to be calculated on this difference as observed by the ld. PCIT in the impugned order under section 263. In other words, whether profit @4.77% of this amount ought to have been estimated by the ld. Assessing Officer for determining the taxable income of the assessee or not. In order to demonstrate that assessment order is totally silent, we have produced the order. It is also observed that the assessee has neither filed paper book submitting the show- cause notice issued by the ld. Assessing Officer under section 142(1) nor its reply or any other material pointing out that all these aspects have been impliedly considered by the ld. Assessing Officer. Therefore, we are of the view that the ld. Pr. CIT has rightly exercised the power under section 263 because the ld. Assessing Officer has not conducted due inquiry, which ought to have been done. We do not find any error in the order of ld. PCIT. Hence, the appeal of the assessee is dismissed.
In the result, the appeal of the assessee is dismissed. Order pronounced in the open Court on 10/09/2024. Sd/- Sd/- (Rajesh Kumar) (Rajpal Yadav) Accountant Member Vice-President (KZ) Kolkata, the 10th day of September, 2024
ITA No. 227/KOL/2022 (A.Y. 2017-2018) Balajee Metallic Copies to :(1) Balajee Metallic, 5A, Hospital Street, Chandni Chawk, Kolkata-700072 (2) Principal Commissioner of Income Tax, Kolkata-1, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700069 (3) CIT - , Kolkata; (4) The Departmental Representative; (5) Guard File TRUE COPY By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.
