M/S FASHION PALACE,PURBA MEDINIPUR vs. ITO, WD-27(3), HALDIA, HALDIA

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ITA 195/KOL/2016Status: DisposedITAT Kolkata09 February 2024AY 2009-2010Bench: SRI RAJPAL YADAV (Vice President), DR. MANISH BORAD (Accountant Member)3 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that Section 44AF exempts certain retail traders from maintaining books of accounts. Since the total stock did not exceed the prescribed limit and the AO's calculations were flawed, the addition made by the revenue authorities was unsustainable.

What were the facts?

During a survey, the IT department observed excess stock in the assessee's garment retail business. The Assessing Officer (AO) made an addition to the total income based on this observation, which was upheld by the CIT(A). The assessee argued that as they were filing under Section 44AF, they were not required to maintain books of accounts.

What were the issues?

Whether the addition made by the AO on account of excess stock is sustainable when the assessee is covered under Section 44AF and not required to maintain books of accounts. Whether the AO's calculation of excess stock and subsequent addition is valid.

Which sections of the Income-tax Act were involved?

Section 44AF,Section 133A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH, KOLKATA

Before: SRI RAJPAL YADAV & DR. MANISH BORAD

order : February 9th, 2024 ORDER Per Rajpal Yadav, Vice-President (KZ): The assessee is in appeal against the order of the Commissioner of Income Tax (Appeals)-7, Kolkata [in short ld. 'CIT(A)'] dated 20.11.2015 passed for AY 2009-10.

2.

This appeal was earlier listed for hearing on 13.02.2018. The appeal was dismissed for want of prosecution. The assessee could not know about the order of the ITAT. This order was not passed on merit as contemplated in the procedure. But the appeal was dismissed in limine. Therefore, when it came to the notice of the assessee, he filed a Miscellaneous Application I.T.A. No.: 195/KOL/2016 Assessment Year: 2009-10 M/s. Fashion Palace. bearing No. 28/KOL/2023. This application has been allowed by the Tribunal vide its order dated 18.08.2023. This appeal has come up before us for adjudication on merit.

3.

The assessee has raised six grounds of appeal

1.

which are argumentative and descriptive in nature. In brief the grievance of the assessee is whether addition of Rs. 17,82,466/- to the total income of the assessee is sustainable or not.

4. The brief facts of the case are that assessee has filed his return of income on 18.03.2010 declaring total income at Rs. 14,730/-. The assessee was engaged in trading of garments on retail business. A survey u/s 133A of the Act has been carried out on the premises of the assessee. The survey team has observed that there is an excess stock than the one accounted in the register. The AO in the assessment order has observed that stock at the assessee’s business premises was of Rs. 24,79,474/- whereas assessee has shown gross sales at Rs. 29,79,085/-. The AO thereafter, made certain calculations and worked out an addition of Rs. 17,67,736/-. Appeal to ld. CIT(A) did not bring any relief.

5. Before us, ld. Counsel for the assessee has submitted that assessee has been filing his return of income u/s 44AF of the Act and therefore, he was not required to maintain any books of accounts and if he was not required to maintain books of accounts then it is not discernible as to how survey team has worked out excess stock.

6. On the other hand, ld. D/R relied upon the orders of Revenue authorities.

7. We have duly considered the rival contentions and gone through the record carefully. Section 44AF would contemplate that notwithstanding anything contrary to Section 28 to 43C of the Act, in the case of assessee engaged in retail trade in any goods or merchandise, a sum equal to 5% of the total turnover in the previous year on account of such business or, as the case may be, a sum higher then then aforesaid sum as declared by the

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