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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI AMIT SHUKLA & SHRI RAJESH KUMAR
आदेश ORDER अिमत शु�ला : �या. स.: PER AMIT SHUKLA, JM: The aforesaid appeal has been filed by the assessee against impugned order dated 18.07.2012, passed by CIT(A)-19 Mumbai, for the quantum of assessment passed under section 144, for the assessment year 2005-06, on the following ground:-
“1. The Learned Commissioner of Income Tax, Appeals has erred in partly confirming the estimated total income of the appellant @ Rs.15,00,000/- against Rs.20,00,000 as assessed by the Assessing Officer”.
2. Despite service of notice through RPAD on the earlier occasions intimating the date to the assessee, none appeared on कलसन इमपे�स 2 Kalson Impex behalf of the assessee. Accordingly, the appeal is being decided on the basis of material on record and the submission made by the Ld. DR.
From the perusal of the assessment order, it is seen that on various occasions, notices under section 142(1) were issued by the AO to the assessee intimating the queries and the dates of hearing, however, on most of the dates, there was either non-appearance or adjournments were sought. Except on one or two occasions on which assessee submitted part details, no proper compliance was made. This aspect has been specifically noted by the AO at page 2 of the order. The assessee’s main contention with regard to the submission of the details like sales, etc. was that, all the records have been destroyed during the floods, which came in the year 2005. AO left with no option and without receiving any information either from the side of the assessee or from the parties to whom notices under section 133(6) were issued, the Ld. AO treated the assessee firm as “AOP” and denied the benefit of remuneration and interest paid to the partners and also estimated the income at Rs.20 lakhs.
4. Before the CIT(A), the assessee furnished the Partnership Deed and some of the details of the ledger accounts of the parties from whom assessee had shown purchases. These details were remanded to the AO for submitting a remand report. In the remand report, the AO submitted that, since the assessee has now submitted the Partnership Deed, therefore, the status of the assessee can be taken as “Partnership firm” instead of AOP. On merits, the assessee’s submission on the remand report was as under:-
“1. As regards the non attendance before the Assessing Officer I have to submit that the undersigned had attended on many occasions and submitted the details कलसन इमपे�स 3 Kalson Impex called for and available with the appellant. However, the details about the purchases were not available with the appellant and the same could not be submitted before the Assessing Office. The necessary affidavit was submitted before the Assessing Officer stating the fact that most or the records have been destroyed due to floods during monsoon in the year 2005 and 2006. Since the Assessing Officer was insisting on the details of the purchases and the same being not available with the appellant the undersigned could not attend before the Assessing Officer on some of the occasions.
As regards the differences of Messrs Khadim Chain Stores Pvt. Ltd. and Khadim Shoe Pvt Ltd, I submit that the difference in the closing balance is only 15591/- (Rupees fifteen thousand five hundred ninety one only). However the total sales shown in the both the accounts are as under: In their books of accounts the total sales shown is Rs.13,32,625/- (Rs.8911,76 + Rs.441449). In our books the total sales shown is Rs.13,32,271/-. The difference is of only Rs.354/-. Further the difference is on account of the goods returned shown in the ledger of Khadim Chain Stores Pvt. Ltd and Khadim Shoe Pvt. Ltd as out books are not available the same cannot be reconciled.
3. As regard the difference in the balance in the ledger account of M/s Teesons Fincap Pvt Ltd. I have to submit that the amount of difference is only Rs.1944/- (Rupees one thousand nine hundred forty four only). Against the total sales of Rs.1,50,1142/- as shown in their ledger.
The Assessing Officer has confirmed the status of the appellant as partnership firm and therefore remuneration and interest on capital to partners may be allowed as deductions from the assessed incomes of the appellant”.
The Ld. CIT(A) looking to the hardships and also the fact that more than 7 years has been elapsed; the books of accounts were destroyed in the flood and the assessee was not in a position to reconstruct its books, he therefore in his wisdom reduced the income to Rs.15 lakhs.
After hearing the Ld. DR and on perusal of the impugned orders we find that, assessee’s main business was dealing in purchase and sale of ladies footwear. The books of accounts and other details have been stated to be destroyed in the great floods of year 2005. It appears that, at a later stage some of the details were received from the parties from whom purchase were made, like M/s Khadim Shoe Pvt. Ltd and Khadim Chain Stores Pvt. Ltd. who in their books of accounts have shown total sale to the assessee at Rs.13,32,625/-, whereas, the assessee has claimed total sales from this party at Rs.13,32,271/-. Further, from the ledger account of Teesons Fincap Pvt Ltd, the sale transaction was approximately was Rs. 15 lakhs and on account of this party also the difference was only Rs.1,944/-. Apart from on that there is no discrepancy in the accounts of purchase from these parties or there is any other material on record to estimate such a high income specifically when the total figures of sales from the two major parties is approximately Rs. 28 lakhs. Under a best judgment assessment, it is incumbent that the income should be assessed on some reasonable basis and on facts and material on record and should not a reason for a high pitch assessment, not commensurate with the overall assesse’s profile and business. The assessee had shown income of Rs.1,54,746/- as against this, income estimated by the AO is Rs.20 lakhs, which has been reduced to Rs.15 lakhs. It has not been brought on record the margin of profit of in assessee’s trade so as to estimate assessee’s income. Under these facts and circumstances, we direct the AO to assess the total income at Rs.5 lakhs inclusive of return of income of Rs.1,54,746/-, leading to net
कलसन इमपे�स 5 Kalson Impex Rs. 3,45,254/-. Accordingly, the assessee gets part relief.
In the result, appeal of the assessee stands partly allowed. Order pronounced in the open court on 26th April, 2016.