SMT. ANIMA MOHAPATRA,JAGATSINGHPUR vs. ITO, WARD-1, PARADEEP

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ITA 33/CTK/2016Status: DisposedITAT Cuttack12 April 2017AY 2010-115 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal confirmed the CIT(A)'s order, finding no justifiable reason to interfere. The assessee failed to provide positive material to controvert the findings regarding the estimation of net profit and the treatment of interest and commission as income from other sources.

What were the facts?

The assessee's books of account were rejected due to failure to produce cash book, vouchers, and details of unsecured loans. The Assessing Officer estimated net profit at 2% of gross turnover and added interest on security deposit and commission/brokerage as income from other sources. The CIT(A) confirmed these additions.

What were the issues?

Whether the estimation of net profit at 2% of gross turnover and the addition of interest and commission as income from other sources were justified when the books of account were rejected.

Which sections of the Income-tax Act were involved?

Section 145

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CUTTACK

Before: SHRI N.S SAINI

For Appellant: Shri Natabar Panda, AR
For Respondent: Shri D.K.Pradhan, DR

This is an appeal filed by the assessee against the order of CIT(A)-

Cuttack, dated 16.11.2015, for the assessment year 2010-2011.

2.

Ground Nos.1 & 8 of the appeal are general in nature and hence,

require no separate adjudication by me.

3.

Ground Nos.2,4,6 & 7 of the appeal read as under:

“2. For that the LAO has not afforded reasonable opportunity of hearing to the appellant but completed the assessment U/s 144 of the I.T Act.'61 hastily on 19.12.2012 when time limit was upto 31/03/2013, hence the order passed U/s. 144 is challenged and the

2 ITA No. 33/CT K/ 2016 Asse ssment Year :20 10- 201 1 same is liable to be quashed. Similarly, the LAO also didn't afford reasonable opportunity of heariiwto the appellant while dealing with petition U/s.250(4) of the Act, hence the ordefpassed is liable to be quashed/setaside.

4.

For that the addition of Rs.3,40,000/- i.e. "Un-Secured Loan" without affording reasonable opportunity of hearing to explain the case, is illegal and arbitrary and the addition on this account is liable to be deleted. The LAO as well as CIT(A) dealt the matter light heartedly, hence the matter is liable to be setaside for fresh examination of the creditors.

6.

That Hon'ble ITAT in case of the appellant for the Assessment Year-2008-09 in ITA No.510/CTK/2012 dated:-22/02/2013 in identical circumstances has deleted the separate addition on the same ground, which should have been followed. Having not followed the direction of the Higher Forum the order passed is liable to be quashed / modified.

7.

For that the determination of Total Income at Rs. 14,76,240/- as against returned income of Rs.3,49,500.00, which resulted net tax demand at Rs.4,42,450/-, is baseless, arbitrary and unwarranted hence the order passed is liable to be quashed and return figure is to be accepted in toto.”

4.

At the time of hearing, ld Authorised Representative of the assessee

did not make any submission on the above grounds of appeal and hence,

they are dismissed for want of prosecution.

5.

In Ground No.3 of the appeal, the grievance of the assessee is that

the CIT(A) erred in confirming the order of the Assessing Officer in

estimating the net profit @ 2% of the gross turnover in wholesale business

of M.S.Rod and cement.

6.

I have heard the rival submissions and perused the orders of lower

authorities and materials available on record. In the instant case, the

Assessing Officer observed that the assessee has failed to produce cash

book and related bills and vouchers for verification. The assessee also did

3 ITA No. 33/CT K/ 2016 Asse ssment Year :20 10- 201 1 not furnish the details of unsecured loans such as copies of cheques,

confirmations, sources of such unsecured loan, etc. Therefore, he rejected

the books of account of the assessee by invoking the provisions of section

145 of the Act and estimated the net profit by applying rate of 2% to the

gross receipts observing that in assessment year 2008-09, the Assessing

Officer has estimated the profit of the assessee by applying the rate of 2%,

which was confirmed in appeal by the CIT(A).

7.

On appeal, the CIT(A) confirmed the action of the Assessing Officer.

8.

Before me, the only argument of the Authorised Representative of

the assessee was that applying rate of 2% to the gross receipts to estimate

the net profit was excessive and should be reduced.

9.

Ld Departmental Representative relied on the orders of lower

authorities.

10.

When questioned by the Bench that in the assessment year 2008-09,

the profit of the assessee after rejection of books of account was estimated

by applying the rate of 2% to the gross receipts, which was confirmed by

the CIT(A) and whether the order of the CIT(A) was varied in appeal by the

Tribunal, ld A.R. of the assessee expressed his inability to give information

for the assessment year 2008-09.

11.

In the given facts and circumstances of the case, I find no good and

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

confirmed and ground of appeal of the assessee is dismissed.

4 ITA No. 33/CT K/ 2016 Asse ssment Year :20 10- 201 1 12. In Ground No.5 of the appeal, the grievance of the assessee is that

the CIT(A) erred in confirming the action of the Assessing Officer in adding

Rs.1,92,903/- under the head “ income from other sources”, which is the

amount of interest received on security deposit and commission and

brokerage.

13.

I have heard the rival submissions and perused the orders of lower

authorities and materials available on record. In the instant case, the

Assessing Officer assessed the interest on security deposit of Rs.1,09,116/-

and commission & brokerage of Rs.83,787/- under the head “income from

other sources” both aggregating to Rs.1,92,903/-.

14.

On appeal before the CIT(A), the assessee argued that since the

books of account are rejected and income was estimated on the gross

turnover, there was no reason for treating the above amounts as income

from other sources..

15.

The CIT(A) observed that the Assessing Officer estimated the net

profit of the assessee only from the turnover of wholesale trading in cement

and rods by taking gross sales of Rs.4,65,71,468/-. Therefore, the income

on security deposit and commission & brokerage are, therefore, treated as

income from other sources by the Assessing Officer and, hence, there was

no discrepancy in the order of the Assessing Officer.

16.

Ld Authorised Representative of the assessee reiterated the

submissions made before the lower authorities.

5 ITA No. 33/CT K/ 2016 Asse ssment Year :20 10- 201 1 17. Ld Departmental Representative supported the orders of lower

authorities.

18.

I find that the ld A.R. of the assessee has not produced any positive

material to controvert the findings of the CIT(A) that while estimating the

net profit, the Assessing Officer took the gross sales turnover on wholesale

trading in cement and rods at Rs.4,65,71,468/- and, therefore, has treated

the interest receipt on security deposit and commission and brokerage as

income of the assessee under the head “income from other sources”.

Therefore, I find no good and justifiable reason to interfere with the order

of the CIT(A), which is hereby confirmed and ground of appeal of the

assessee is dismissed.

19.

In the result, the appeal filed by the assessee is dismissed Order pronounced in the open court on 12 /04/2017.

Sd/- (N.S Saini) ACCOUNTANT MEMBER Cuttack; Dated 12 /04/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Smt. Anima Mohapatra, Prop. M/s. Patra Enterprises, At: Tentulipada, PO: Kanakpur, Jagatsinghpur 2. The Respondent. ITO, Ward-1, Paradeep 3. The CIT(A) Cuttack 4. Pr.CIT, Cuttack 5. DR, ITAT, Cuttack 6. Guard file. BY ORDER, //True Copy//

SR.PRIVATE SECRETARY ITAT, Cuttack

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