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Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA
Before: Shri P.M. Jagtap
This appeal filed by the assessee is directed against the order of ld. Commissioner of Income Tax (Appeals)-XXXIII, Kolkata dated 02.04.2014 and the solitary issue involved therein relates to the addition of Rs.10,30,184/- made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of difference in gross receipts shown by the assessee by treating the same as undisclosed income of the assessee.
The assessee in the present case is an individual, who is carrying on the business as a labour contractor. The return of income for the year under consideration was filed by him on 24.09.2009 declaring total income of Rs.6,07,084/-. On the basis of information available on record in the form of AIR and TDS details as well as confirmations received from some of the concerned parties, the Assessing Officer found that the gross ./2014 Assessment year: 2009-2010 Page 2 of 5 contract receipts of the assessee for the year under consideration were to the tune of Rs.2,40,18,272/- as against the gross receipts of Rs.2,29,88,088/- declared by the assessee in the Profit & Loss Account. The assessee, therefore, was called upon by the Assessing Officer to explain/reconcile this difference and since the assessee failed to do so, the difference of Rs.10,30,184/- was added by the Assessing Officer to the total income of the assessee by treating the same as his undisclosed contract receipts in the assessment completed under section 143(3) vide an order dated 15.12.2011.
Against the order passed by the Assessing Officer under section 143(3), an appeal was preferred by the assessee before the ld. CIT(Appeals) challenging the addition of Rs.10,30,184/- made by the Assessing Officer on account of the alleged undisclosed contract receipts. During the course of appellate proceedings before the ld. CIT(Appeals), it was submitted by the assessee that the entire unaccounted receipts could not be treated as his unaccounted income and only the profit element thereof could be added in his hands. In this regard, it was brought to the notice of the ld. CIT(Appeals) by the assessee that profit of 3% of the gross contract receipts was estimated by his predecessor for A.Y. 2008-09 and accordingly it was pleaded by the assessee that the addition made by the Assessing Officer on this issue be restricted to 3% of Rs.10,30,184/-. This contention of the assessee was not found acceptable by the ld. CIT(Appeals) and he proceeded to confirm the addition of Rs.10,30,184/- made by the Assessing Officer for the following reasons given in paragraph no. 3.1 of his impugned order:- “3.1. I have considered the facts of the case and the appellant's submission. The Assessing Officer added the amount of Rs.10,30,184/- as the appellant was not able to furnish any reconciliation or explanation in respect of the higher receipts as per the information available with the Assessing Officer. During the appellate proceedings also no specific party wise reconciliation of receipts has been furnished by the appellant. The appellant had merely relied upon the order of my Ld. predecessor in the appellant's own case for the immediately preceding assessment year 2008-09 wherein profit of 3% was ./2014 Assessment year: 2009-2010 Page 3 of 5
considered to be reasonable estimate in the appellant's case. The appellant has stated that the entire turnover cannot be added and profit margin as considered reasonable by my predecessor should be adopted for determining undisclosed income. The contentions of the appellant's are misplaced. In the Assessment Year 2008-09, the appellant had not furnished any books of accounts or bills/vouchers in support of the profit declared in the return of income. Hence, the books of accounts were rejected and the Assessing Officer determined profit @ 8% on the turnover declared by the appellant which was later on restricted by the Ld. CIT(Appeals) to 3%. The facts relevant to the assessment year under appeal are different. Unlike in the preceding assessment year, the turnover itself has not been found to be correctly declared by the appellant on the basis of information collected by /available with the Assessing Officer. The appellant was not able to furnish any explanation regarding the undisclosed difference in receipts. It is not a case were books of accounts have been rejected or books of accounts etc. were not produced. Under the circumstances, the Assessing Officer has rightly inferred that all the expenses Incurred for earning the receipts have already been debited to the P&L A/c. Hence, the undisclosed receipts were added to the total income correctly. The addition of Rs.10,30,184/- is confirmed”.
Aggrieved by the order of the ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal.
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 although regular books of account for the year under consideration were maintained by the assessee and the difference of Rs.10,30,184/- pointed out by the Assessing Officer in the gross receipts could have been explained by the assessee before the ld. CIT(Appeals), he did not do so keeping in view that the alternative plea raised by him to restrict the addition only to the extent of profit element at 3% would be accepted by the ld. CIT(Appeals). He has contended that one more opportunity may, therefore, be given to the assessee to explain/reconcile the difference by sending the matter back to the ld. CIT(Appeals). The ld. D.R., on the other hand, has raised a strong objection in this regard by pointing out that sufficient and specific opportunity has already been given to the assessee by the authorities below to explain/reconcile the ./2014 Assessment year: 2009-2010 Page 4 of 5 difference in question. Moreover, it is also noted from the submissions made by the assessee before the ld. CIT(Appeals), which is reproduced in para 3 of the ld. CIT(Appeals)’s impugned order, that the difference in gross receipts as pointed out by the Assessing Officer was not at all disputed by the assessee by submitting specifically that the allegation regarding understatement of turnover as indicated in the assessment order is not in dispute. Keeping in view the same, I am of the view that there is no justifiable reason to give one more opportunity to the assessee to explain/reconcile the difference in gross receipts as pointed out by the Assessing Officer, which actually was accepted by the assessee before the ld. CIT(Appals). As regards the alternative claim of the assessee as made before the ld. CIT(Appeals) as well as before me that the addition on this issue be restricted to the profit element of 3%, I find merit in the argument of the ld. D.R. that when the receipts are undisclosed/unaccounted, it does not follow that the corresponding expenditure incurred in relation to the said receipts is also undisclosed/unaccounted. On the other hand, when the books of account are regularly maintained by the assessee, there is a presumption that all the expenses incurred by the assessee during the relevant year are duly accounted for and the onus is on the assessee to rebut such presumption by establishing that even the corresponding expenditure has not been accounted for. In the present case, the assessee has failed to discharge this onus. I, therefore, find no justifiable reason to interfere with the impugned order of the ld. CIT(Appeals) confirming the addition of Rs.10,30,184/- made by the Assessing Officer and upholding the same on the issue, I dismiss this appeal filed by the assessee.