BHASKAR TRADERS,KORAPUT vs. ACIT, BERHAMPUR CIRCLE, BERHAMPUR, BERHAMPUR

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No.276/CTK/2014: Assessment Year :2007-08 ITA No.277/CTK/2014: Assessment Year :2008-09 ITA No.278/CTK/2014: Assessment Year :2009-10

Bhaskar Traders, Toshniwala Vs. ACIT, Berhampur Complex, Bye Pass Road, Hatapada, Jeypore. PAN/GIR No. AAFFB 7101 Q (Appellant) .. ( Respondent)

Assessee by : Shri D.K.Sheth, AR Revenue by : Shri Kunal Singh, CIT DR/Shri D.K.Pradhar, DR

Date of Hearing : 13/07/ 2017 Date of Pronouncement : 14 /07/ 2017

O R D E R Per N.S.Saini, AM These are appeals filed by the assessee against separate orders of

CIT(A)-Berhampur, all dated 14.3.2014, for the assessment years 2007-

08, 2008-09 & 2009-2010.

not justified in confirming the order of the Assessing Officer in estimating

income @ 12.5% of the bank deposits amounting to Rs.62,22,570/- for the

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assessment year 2007-08, Rs.89,02,298/- for the assessment year 2008-

09 and Rs.82,71,344/- for the assessment year 2009-2010.

A search and seizure operation was conducted in its business premises and

also the residential premises of its partner Shri G.Bhaskar Rao on

21.1.2009. The Assessing Officer issued notice u/s.153A on 30.6.2009. In

response to the same, the assessee filed return of income for the impugned

assessment years. During the scrutiny proceedings, the Assessing Officer

found that during the course of search and seizure operation, some bank

accounts were found and seized, the details transaction appearing in the

said bank accounts are as under:

S.No Name of the Account Account No Fin.Yr Total amount holder credited during the year (in Rs.) Andhra Bank 1 Sri Komulu Gadaba 300015 2006-07 5,19,557 2007-08 12,02,921 2008-09 19,80,963 2 Sri Nilakantha Bandhani ABG 00112193 2006-07 6,50,073 2007-08 4,35,526 3 Sri Nilambar Gadaba SB 00013091 2006-07 95,520 2007-08 14,14,816 2008-09 20,38,769 4 Doki Nagaraju SB 00052158 2005-06 1,00,981 2006-07 11,44,997 2007-08 13,90,046 2008-09 1,71,825 5 Giridhar Jani SB ABJ/00200854 2008-09 18,22,080 6 Khagapati Pujari SB 00112190 2006-07 7,84,968 2007-08 19,31,948 2008-09 5,00,410 7 G.Venkata Ramana SB ASBP 300004 2006-07 4,72,227 2007-08 4,75,391 Koraput Panchabati Gramya Bank :

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1 Suru Nageswar Rao USS-108 2006-07 7,70,051 2007-08 6,37,954 2008-09 6,10,647 Utkal Gramya Bank, Jeypore 1 D.Ramalingeswar Rao USS-155 2006-07 1,21,161 2007-08 4,99,570 2008-09 6,92,462 Union Bank of India, 1 Jeypore Rupali Jagar Paltnalk SB 8748 2006-07 5,43,359 2007-08 1,64,294 2008-09 2,08,250 Bank of India, Jeypore 1 V.Sekhar & S.Balaji SB 357 2006-07 11,20,657 2007-08 7,49,832 2008-09 2,45,938

that the firm had no business with the bank pass books of Shri Komulu

Gadaba, Nilakantha Bandani, Nilambar Gadaba, Khagupati Pujari, G.

Venkata Ramana, Suru Nageswar Rao, D. Ramalingeswar Rao, Rupali Jagar

Patnaik and V. Sekhar during the course of search conducted at the

premises of the assessee. The modus operandi was that agencies like

NCMSL, OSCSC, etc used to collect the paddy from different cultivators and

give the same to rice mills for its milling. Once the paddy is processed and

the rice is delivered by the said rice mills, agency issues cheques to the

cultivators who have supplied the paddy. The cultivators who used to

supply their paddy to the agencies like NCMSL, OSCSC etc are illiterate and

have no knowledge about the banking operation. The bank cheques

received from the agency against supply of paddy are being deposited into

the bank account with the assistance from accountants and other staff of

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the assessee firm. To minimize the cost of transportation and other

incidental cost, the agencies namely OSCSC and NCMSL have directed the

cultivators to deliver their paddy at asessee 's premises instead of bringing

the same to their storage houses. During the assessment years in question,

the cultivators namely Sri Komulu Gadaba, Nilakantha Bandani, Nilambar

Gadaba, Khagupati Pujari, G Venkata Ramana, Suru Nageswar Rao, D

Ramalingeswar Rao, Rupali Jagar Patnaik and V Sekhar have supplied their

paddy to OSCSC and NCMSL. However, they were asked to deliver the

paddy at assessee's premises. The assessee received the paddy for milling

and after processing, the rice is delivered to the destination of the agency.

Once the rice is received by the agency, the cultivators started getting

cheques from the NCMSL and OSCSC. The cultivators or farmers used to

take assistance from the staff for filling up the bank voucher Therefore, the

assessee has no relation with the transactions made by the above said

cultivators with the agencies.

and observed that during the course of assessment proceedings, statement

on oath was recorded from the Bank account holder, wherein, it was

revealed that they do not possess any agricultural land in their own names.

The agricultural lands are in the names of their respective grandfathers or

taken on lease. The assessee also could not produce any evidence of

having supplied paddy to agencies like NCMSL and OSCSC. He, therefore,

held that the account holders do not have any agricultural produce. The

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deposits in the bank account were the deposits of M/s. Bhaskar Traders and

not of the account holders, as claimed. In view of above, the amount of

Rs.62,22,570/- for the assessment year 2007-08, Rs.89,02,298/- for the

assessment year 2008-09 and Rs.82,71,344/- for the assessment year

2009-2010 credited in the SB accounts of different banks held on different

names were treated as assessee’s undisclosed sales/turnover.

the gross profit varies from 10-15% of the turnover. He keeping the natural

justice in view, estimated the gross profit at 12.5% and, accordingly

estimated the income of the assessee at Rs.7,77,821/- for the assessment

year 2007-08, Rs.11,12,787/- for the assessment year 2008-09 and

Rs.10,33,918/- for the assessment year 2009-2010.

should be estimated @ 8%.

reflected in the books of account of the assessee. The assessee has already

claimed all the expenses relating to its business, therefore, the CIT(A) was

fully justified in estimating gross profit at 12.5% and estimating the income

of the assessee for the assessment years under appeal.

earlier but could not controvert the above submissions made by ld D.R.

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record, we find that no material could be brought on record by ld A.R. of

the assessee to show that estimation of income from undisclosed deposits

in bank accounts found during the course of search by applying the gross

profit @ 12.5% was higher. Further, no material could be brought to

controvert the findings of ld D.R. that every expense relating to the

business of milling of paddy was already claimed by the assessee in its

books of account. In view of above uncontroverted findings, we find no

good reason to interfere with the order of the CIT(A), which is hereby

confirmed and dismiss the ground of appeal of the assessee.

SR.PRIVATE SECRETARY ITAT, Cuttack