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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri George George K. & Shri Laxmi Prasad Sahu
Per: L.P. Sahu, A.M.
This is an appeal filed by the assessee against the DIN & order No. ITBA/NFAC/S/250/2021-22/1032150579(1) of the learned CIT(A), NFAC, Delhi dated 02.04.2021 for AY 2014-15.
The assessee has raised the following grounds of appeal: - “1. The order of the learned Commissioner of Income Tax (Appeals) No.ITBAINFAC/S/250/2021-2211032150579(1) dated 02.04.2021 is opposed to law facts and circumstances of the case. 2. The learned CIT(As) in para - 11 of the Appellate Order has observed that, "no direct or circumstantial evidence has been brought on record by the assessee with regard to exercise of any such coercion by the AO" This has no relation to realities. 3. The learned CIT(As) has forgotten, for the sake of convenience, that the hearing before the Assessing Officer has taken place without any witness in the office room. It is not a hearing in the open court as is done before the hon. ITAT. That being the
ITA No. 97/Coch/2021 2 M/s. Central Medical Store case, there is no direct or circumstantial evidence on record is without any reason available on record. Therefore, this contention cannot be accepted. 4. It is respectfully submitted that the signature of Zakir Hussain has been obtained at the threat of penalty, prosecution and committing to civil prison. 5. Sri Zakir Hussain had no alternative but yield to the pressure of the learned ITO to subscribe his signature as dictated by the learned Assessing Officer.” 3. At the outset of hearing we observed that our Registry has pointed out that the appeal is filed delayed by 59 days. Since this period covered by Covid-19 issue as per decision of the Hon’ble Supreme Court of India we condone the delay.
The brief facts of the case are that the assessee filed the return of income on 13.03.2016 electronically disclosing total income of Rs.21,590/- The assessee is running a business in the name and style of M/s. Central Medical Stores which is a partnership firm with S/Shri K.P. Rayin Kutty Haji, K.P. Jamal Mohammed, K.P. Zakir Hussian, K.P. Basheer as partners. The case was selected for scrutiny and statutory notices were issued to the assessee. The assessee filed audit report under Section 44AB of the Income Tax Act, 1961 (hereinafter "the Act"), Profit and Loss Account and Balance Sheet with schedules thereto and copy of KVAT return and also produced books of accounts. The assessee also produced the sale details. The AO concluded the assessment observing as under: -
“It was seen that the gross profit received was not properly accounted on many occasions, it was also seen that the assessee was not maintaining cash book, ledger and Proper vouchers to arrive at correct income from the business. All these resulted in gross under reporting of profits to taxation. All such points and all other relevant aspects of the case have been discussed with the .R. It was explained that even though the accounts are genuine, as the day to day affairs of the busies are primarily managed by staff with rudimentary accounting knowledge, some mistakes/ omissions/discrepancies occurred in the accounts maintained and some of the receipts/expenses were accounted under wrong expense heads. After carefully considering the explanations offered/evidences filed during the course of assessment proceedings, and after taking in to account the various omissions and deficiencies in the
ITA No. 97/Coch/2021 3 M/s. Central Medical Store accounts maintained and considering the facts and circumstances of the case in its totality, the assessment is completed by determining the gross profit from trade at 30% of the turnover of Rs.1,22,18,815/- at Rs.36,65,645/- as agreed to by Shri Zakeer Hussain, partner and the Authorized Representative, as under: - Gross Profit determined as above Rs.36,65,645/- Less G.P. admitted Rs. 7,61,753/- Addition Rs.29,03,892/- Income from business – as return filed Rs. 21,590/- Add: Addition as stated above Rs.29,03,892/- Total Income assessed Rs.29.03,892/- Rounded to Rs.29,25,482/- Demand Payable Rs.13,39,200/- (Tax computation form enclosed) Interest u/s. 234A/234B/234C charged as per law. The above demand should be paid as per the demand notice attached. Penalty proceedings u/s. 271(1)© & 271B are initiated separately by issue of Notice u/s. 274 enclosed.” Aggrieved by the order of the AO the assessee filed appeal before the learned CIT(A).
The observations of the learned CIT(A) are as under: - “9. I have carefully considered the facts of the case, the impugned assessment order and the written submissions of the assessee. In the assessment order, the AO made addition of Rs.29,03,892/- towards difference in gross profit by determining the gross profit from retail trading activity in medicines at 30% of the turnover on the ground that the omissions/deficiencies noticed in the books of accounts have resulted in under reporting of business profits. It was stated by the AO that the partner of the assessee firm Shri Zakir Hussian and the AR of the assessee have agreed for the said addition. 10. In this regard, it is pertinent to state that it has been held by the Hon'ble High Courts in the following cases that no appeal lies against agreed additions unless the assessee proves that the agreement of the assessee was obtained through coercion or that the same was malafide: (i) Rameshchandra & Co. Vs. CIT (Bom) 1687 ITR 375 (ii) Rmlal Kamdar Vs. CIT (Mad) 108 ITR 73 (iii) Mahesh B. Shah Vs. CIT (Ker) 238 ITR 130 (iv) Sterling Machine Tools Vs. CIT (All) 123 ITR 181
ITA No. 97/Coch/2021 4 M/s. Central Medical Store 11. In the present case, the partner of the assessee firm himself accepted the addition proposed by the AO during the course of the assessment proceedings, as clearly stated in the assessment order. Though it was alleged by the assessee during the appellate proceedings that the partner was pressurised to agree to the said addition, no direct or circumstantial evidence has been brought on record by the assessee with regard to exercise of any such coercion by the AO. In the absence of leading of any supporting evidence, the said claim of the assessee remains unsubstantiated. As per the ratio laid down by the Hon'ble High Courts in the above mentioned cases, there can be no appeal in respect of the additions agreed to by the assessee. Hence, respectfully following the above mentioned decisions, it is held that no appeal lies against the addition of Rs.29,03,892/- made by the AO in the assessment order towards difference in gross profit. Consequently, it is held that these grounds of appeal disputing the said agreed addition are not maintainable. Hence, the addition of Rs.29,03,892/- made in the assessment order towards difference in gross profit is hereby upheld. These grounds of appeal are accordingly dismissed as not maintainable.” 6. On a perusal of the orders of the lower authorities we do not find any infirmity in the order of the learned CIT(A). Shri Zakhir Hussian has agreed for 30% addition of the turnover achieved of Rs.1,22,18,865/- amounting to Rs.39,30,892/-. In case of agreed additions appeals cannot be filed and it has been held by various High Courts as quoted by the learned CIT(A) in his order. On perusal of the assessment order the assessee itself appeared before the AO and he was agreed for the addition of 30% of the turnover achieved. The assessee was also unable to prove that the agreement for addition before the AO was obtained by coercion or that the same was malafide at any stage. Accordingly we dismiss the appeal of the assessee as not maintainable.
In the result, the appeal filed by the assessee is dismissed.
Dictated and pronounced in the open Court on 25th July, 2022.
Sd/- Sd/- (George George K.) (Laxmi Prasad Sahu) Judicial Member Accountant Member
Cochin, Dated: 25th July, 2022
ITA No. 97/Coch/2021 5 M/s. Central Medical Store Copy to:
The Appellant 2. The Respondent 3. The CIT(A) -NFAC, Delhi 4. The CIT - 5. The DR, ITAT, Cochin 6. Guard File By Order
//True Copy// Assistant Registrar ITAT, Cochin n.p.