SMT. PRAGYAN MOHANTY,BHUBANESWAR vs. ITO, BHUBANESWAR

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ITA 446/CTK/2015Status: DisposedITAT Cuttack29 March 2017AY 2011-126 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 additions made by the Assessing Officer and upheld by the CIT(A) as the assessee failed to provide sufficient evidence or explanations to controvert the findings of the lower authorities. The appeal was dismissed on all grounds.

What were the facts?

The Assessing Officer added Rs. 2,56,805/- as estimated profit on undisclosed contract receipts and Rs. 2,34,256/- for excess license fee payment. The CIT(A) upheld these additions. The assessee also failed to explain Rs. 2,07,150/- as undisclosed receivables.

What were the issues?

Whether undisclosed contract receipts and excess license fee payments can be added to the assessee's income. Whether undisclosed receivables can be treated as income.

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 Sunil Mishra, AR
For Respondent: Shri D.K.Pradhan, DR
Pronounced: 29/03

This is an appeal filed by the assessee against the order of CIT(A)-1,

Bhubaneswar, dated 31.8.2015, for the assessment year 2011-12.

2.

Ground Nos. 1 and 6 of the appeal are general in nature and hence,

require no separate adjudication by me.

3.

In Ground No.2 of the appeal, the grievance of the assessee is that

the CIT(A) erred in upholding the addition of Rs.2,56,805/-.

2 ITA No. 446/CT K/ 2015 Asse ssment Year : 20 11- 12

4.

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

authorities and materials available on record. The Assessing Officer on

examination of bank account maintained by the assessee jointly one with

her minor daughter and another with her husband, found that contract

receipts of Rs.32,10,061/- had not been disclosed in the accounts.

Therefore, he estimated the profit/income therefrom at 8% and added

Rs.2,56,805/- to the income of the assessee.

5.

Before the CIT(A), no evidence or materials were produced to take a

different stand. Therefore, he confirmed the action of the Assessing Officer.

6.

Before me, ld Authorised Representative of the assessee has not filed

any positive material to controvert the findings of the CIT(A). Hence, I do

not find any 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.

7.

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

the CIT(A) erred in confirming the addition of Rs.2,34,256/- made by the

Assessing Officer as unexplained money.

8.

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

authorities and materials available on record. The Assessing Officer found

that a sum of Rs.4,47,216/- was debited towards license fees in the profit

and loss account which was in excess by Rs.47,916/-. The actual license

fee per month payable on liquor business during the relevant period was

3 ITA No. 446/CT K/ 2015 Asse ssment Year : 20 11- 12

Rs.32,275/- and therefore, the total expenditure was supposed to be

Rs.3,99,300/-(Rs.33,275 x 12). On verification of payments and receipts

from the State Excise, it was found that a sum of Rs. 1,86,340/- was paid

in advance towards license fees for the next financial year 2011-12 and this

was in the nature of prepaid expenditure to be shown in the balance sheet

as an asset. This was not done and thereby being excess payment of

license fee, the Assessing Officer made an addition of Rs.2,34,256/-

(Rs.1,86,340 + Rs.47,916).

9.

Before the CIT(A), it was contended that Rs.2,34,256/- could not be

treated as unexplained money ignoring the accounting system consistently

followed by the assessee.

10.

The CIT(A) confirmed the order of the Assessing Officer observing

that the discrepancies noticed by the Assessing Officer have not been

explained separately by the assessee by bringing any materials and,

therefore, the contention of the assessee cannot be accepted.

11.

Before me, ld Authorised Representative of the assessee reiterated

the submissions made before the lower authorities.

12.

I find that the Assessing Officer has found that the assessee has paid

license fees of Rs.1,86,340/- for the subsequent financial year 2011-12

and, therefore, this was a prepaid expenditure of the assessee. He also

found that the assessee had paid excess license fees of Rs.47,916/-.

4 ITA No. 446/CT K/ 2015 Asse ssment Year : 20 11- 12

Therefore, the Assessing Officer disallowed Rs.2,34,256/- (Rs.1,86,340 +

Rs.47,916) and added the same to the income of the assessee.

13.

When questioned by the Bench as to what is the method of

accounting followed by the assessee, ld A.R. of the assessee submitted that

the assessee was following mercantile system of accounting. Thus, as per

the consistently followed method of accounting by the assessee, which is

mercantile system, only expenditure which has accrued and became due

during the year is allowable deduction to the assesse as per section 145 of

the Act. Ld A.R. of the assessee has not brought any positive material on

record to controvert the findings of lower authorities that Rs.2,34,256/-

being license fee to State Excise was the expenditure for subsequent

financial year 2011-12 and not for the year under consideration. Hence,

the disallowance made by the Assessing Officer of Rs.2,34,256/- was fully

justified and, therefore, I uphold the order of the CIT(A) and dismiss the

ground of appeal of the assessee.

14.

Ground No.4 of the appeal reads as under:

“ That on the facts and in the circumstances of the case the ld CIT(A) has committed serious error in upholding the addition of Rs.733/- as alleged undisclosed liability which is contrary to the facts.”

15.

At the time of hearing, ld A.R. did not press this ground of appeal

and, therefore, same is dismissed for want of prosecution.

5 ITA No. 446/CT K/ 2015 Asse ssment Year : 20 11- 12

16.

In Ground No.5 of the appeal, the grievance of the assessee is that

the CIT(A) erred in confirming the addition of Rs.2,07,150/- as undisclosed

receivables.

17.

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

authorities and materials available on record. On verification of details of

TDS transactions from 26AS forms, the Assessing Officer found that

contract receipts of Rs.2,07,105/- remained to be credited to the bank

account of the assessee as at the end of the year, which has not been

shown as an asset in the balance sheet. Therefore, he made addition of

Rs.2,07,150/- to the income of the assessee.

18.

Before the CIT(A), the assessee could not offer any explanation or

furnish any evidence to the contrary and, therefore, the CIT(A) confirmed

the order of the Assessing Officer.

19.

Before me, ld Authorised Representative of the assessee could not

point out any error in the order of the CIT(A) or produce any positive

material to controvert the findings of lower authorities. I, therefore, 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.

6 ITA No. 446/CT K/ 2015 Asse ssment Year : 20 11- 12

20.

In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open court on 29/03/2017 in the presence of parties. Sd/- (N.S Saini) ACCOUNTANT MEMBER

Cuttack; Dated 29/03/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Smt. Pragyan Mohanty, Plot No.9/656, Surya Vihar, Gada Mahavir Road, Garage Chhak, Old Town, Bhubaneswar. 2. The Respondent. ITO, Ward 1(2), Aayakar Bhavan, Bhubaneswar 3. The CIT(A)-1, Bhubaneswar 4. Pr.CIT-1, Bhubaneswar 5. DR, ITAT, Cuttack BY ORDER, 6. Guard file. //True Copy// SR.PRIVATE SECRETARY ITAT, Cuttack

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