DEBAYAN RAY,MALDA vs. ITO,WARD(1), MALDA, MALDA

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ITA 1262/KOL/2012Status: DisposedITAT Kolkata28 September 2015AY 2008-20094 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal restored the matter to the AO for fresh adjudication. This was done to provide the assessee, a small businessman, an opportunity to justify his transactions and work out the actual income, considering the low turnover.

What were the facts?

The Assessing Officer (AO) rejected the assessee's books of accounts due to undisclosed fixed deposits and banking transactions. The AO made additions and disallowances, which were largely upheld by the CIT(A). The assessee appealed to the ITAT.

What were the issues?

Whether the rejection of books of accounts by the AO was justified and whether the assessee should be given another opportunity to present his case.

Which sections of the Income-tax Act were involved?

Section 145(3),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA BENCH “B” KOLKATA

Before: Shri Mahavir Singh & Shri Waseem Ahmed

आदेश/O R D E R

PER Waseem Ahmed, Accountant Member:-

1.

This appeal by the assessee is arising out of order of Commissioner of Income Tax (Appeals), Jalpaiguri in appeal No.15/MLD/CIT(A)/JAL/10-11 dated 02.05.2012. Assessment was framed by ITO Ward-I, Malda u/s 145(3)/143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 22.10.2010 for assessment year 2008-09. Assessee has raised several grounds of his appeal that Ld. CIT(A) has erred in confirming the order passed by Assessing Officer u/s. 143(3) of the Act.

A.Y. 2008-09 Debayan Ray v. ITO Wd-1 MLD Page 2 2. Briefly stated facts are that the assessee is an individual and has income from the business. During the assessment proceedings, it was observed that the assessee did not disclose certain facts in his financial statement such as 1. Fixed deposit of Rs. 1 Lac maintained with oriental bank of commerce 2. Banking Transactions of his saving bank account with Axis Bank bearing no. 389010100013299.Therefore the AO was not satisfied with the correctness/ completeness of the cash book/accounts submitted by the assessee. Hence the AO rejected the books of accounts of the assessee and proceeded to frame the assessment on the basis of available information. Therefore the AO completed the assessment after making certain additions/disallowances after giving due opportunity of being heard to the assessee. Aggrieved assessee preferred an appeal before Ld.CIT(A) who has upheld the order of the AO after giving some relief to the assessee.

3.

Now, aggrieved assessee is in second appeal before us on the following grounds of appeal:- “1. For that the order of the Ld. CIT(A) is arbitrary, illegal and bad in law.

2. For that on the facts and circumstances of the case that the Ld. C.I.T(A) erred in confirming the addition of Rs.100000/- being the amount deposited in the TDR Account.

3. For that on the facts and circumstances of the case that the Ld. C.I.T(A) erred in confirming the addition of Rs.3,10,057/- under sec. 9 of the I.T. Act, 1961 ignoring the explanation of the assessee.

4. For that on the facts and circumstances of the case that the Ld. C.I.T(A) erred in confirming in adding back Rs.6,18,804/- as gross profit and in any case the profit determined on such sale was highly excessive.

5. For that on the facts and circumstances of the case particularly when the peak credit was being added further addition of Rs.6,18,804/- was not justified.

6. For that the Ld. C.I.T.(A) erred in directing the AO to treat the bank withdrawals as drawing for the assessee and treat the same as undisclosed withdrawals for which even the assessee was not given any opportunity of being heard.

A.Y. 2008-09 Debayan Ray v. ITO Wd-1 MLD Page 3

7.

For that the Ld. C.I.T.(A) erred in confirming the addition of Rs.1150/- , Rs.2324/-, Rs.1838/- and Rs.4578/- disallowed by the AO.”

Shri S.M. Surana, Ld. Authorized Representative appearing on behalf of assessee Shri Sanjit Kr. Das,Ld. Departmental Representative appearing on behalf of Department.

4.

Before us Ld. AR submitted that the action of AO for rejecting the books of accounts on the grounds that the transactions with the banks were not correctly shown in the books of account was not justified. There were very few transactions which were not shown being personal in nature and had no nexus with the business. Otherwise all the transactions were duly shown in the books of the assessee. The assessee has also submitted that the balance sheet and profit and loss account for the assessment years 2006-07, 2007-08 and 2008-09( only P & L) along with the comparison chart of Gross Profit and Net Profit ratio to justify the actual profit and proof that the AO has made assessment at higher income arbitrarily. Finally Ld. AR prayed to restore the matter to the AO for fresh adjudication as per the law.

5.

We have heard the rival parties and perused the material available on record. It was observed that the assessee could not provide the satisfactorily reply to the AO. Therefore the books of accounts were rejected. However the turnover shown by the assessee is just Rs. 468721.00 only. The law makers wanted to keep free the small assessee from the maintenance of books of accounts, therefore the sections like 44 AF were brought under the Act. So we are inclined to give one more opportunity to the assessee being a small business man to justify his transactions to work out the actual income of the assessee.

6.

Ld. DR conceded the request of Ld.AR and he has raised no objection if the matter may be restored to the file of AO. On query from the Bench and in A.Y. 2008-09 Debayan Ray v. ITO Wd-1 MLD Page 4 the interest of justice, we are of the view that the matter is restored to the file of AO with a direction to adjudicate this issue afresh in accordance with law after providing reasonable opportunity of being heard to assessee.

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