Acit Balasore Circle Balasore v. Shiv Kumar Poddar Balasore

1 In The Income Tax Appellate Tribunal Cuttack Bench Cuttack Before S Shri N S Saini Accountant Member And Pavan Kumar Gadale Judicial Member Ita No 26 Ctk 2016 Assessment Year 20 09 2010 Ita No 25 Ctk 2016 Assessment Year 2011 2012 Shiv Kumar Poddar B C Sen Road Balasore Vs Ito Ward 2 Balasore Odisha Pan Gir No Afvpd 2778 Q Appellant Respondent Ita No 17 Ctk 2016 Assessment Year 20 11 12 Ito Ward 2 Balasore Odisha Vs Shiv Kumar Poddar B C Sen Road Balasore Pan Gir No Afvpd 2778 Q Appellant Respondent Assessee By Shri A Marendra Mohapatra Ar Revenue By Shri S K Bandyopadhyay Dr Date Of Hearing 11 1 2 2017 Date Of Pronouncement 13 1 2 2017 O R D E R Per Pavan Kumar Gadale Jm The Cross Appeals Have Been Filed By The Assessee And Revenue For The Assessment Year 2011 12 Against The Order Dated 30 10 2015 Of The Cit A Cuttack And The Assessee Has Filed Appeal For The Assessment Year 2009 2010 Against The Order Dated 18 6 2015 Of The Cit A Cuttack 2 First We Take Up The Appeals For The Assessment Year 2011 2012 2 The Grievance Of The Assessee Is That The Cit A Has Not Afforded Sufficient Opportunity Of Hearing To The Assessee While Allowing Part Relief To The Assessee 3 The Grievance Of The Revenue Is That The Cit A Is Not Justified In Restricting The Disallow Ance By Relying On The Comparative Chart Of The Turnover Expenses Claimed For The Assessment Year 2010 2011 As Substantial Discrepancy Was Found In Survey Operations Conducted U S 133 A Of The Act On 23 3 2011 4 Brief Facts Of The Case Are That The Assessee Is An Individual Engaged In The Business Of Trading In Kamco Branch Power Tiller And Reaper Honda Pumps In Eastern Enterprises At Bhubaneswar And Balasore And Retail Trading In Airtel Vouchers Sims In Premier World At Balasore The Assesse E Filed The Return Of Income Declaring Income Of Rs 20 73 660 On 30 9 2011 The Case Was Selected For Scrutiny Under Cass Notice U S 143 2 Was Issued On 7 9 2012 In Response The Assessee Filed Hard Cop Y Of I T Return Acknowledgement Of E Filed R Eturn Computation Of Income And Copy Of Bank Statement The Assessee Case Exceeded Rs 15 00 000 And The Case Was Transferred To Jcit Balasore Range Balasore Notices U S 142 1 143 2 Were Issued To The Assessee In Compliance Sri A Mohapatara C A Attended For The Assessee And Filed Reply To The Questionnaire And Case Was Discussed In This Case Survey U S 133 A Of The Act Was Carried Out At The Assessees Business 3 Premises On 23 3 2011 And During The Survey No Cash Book Was Found The Stat Ement Was Recorded From The Brother Of The Assessee Who Evidenced That No Proper Cash Book Is Maintained Before The Assessing Officer The Assessee Produced The Cash Book Ledger Bank Book Purchase Register Sales Register And Hand Made Vouchers Etc The Assessing Officer Noted That On One Occasion The Assessee Was Not Maintaining Proper Books Of Account And On The Other Hand The Assessee Was Debiting Heavy Expenditure To The Profit And Loss Account On Going Through The Details The Assessing Offi Cer Opined That The Vouchers Have Been Prepared By The Accountant Of The Assessee Who Joined The Service Of The Assessee At A Date Subsequent To The Survey Therefore He Observed That The Books Of Account And Bills Vouchers Etc Produced Are Not Relia Ble And Accordingly Rejected The Same U S 145 3 Of The Act And Determined The I Ncome Of The Assessee At Rs 1 70 73 660 As Against The Returned Income Of Rs 20 73 660 Inter Alia By Disallowing Various Expenses Claimed In The Profit And Loss Account Of The Assessee As Under I Carriage Outward Expenses Rs 20 00 000 Ii Turnover Discount Rs 60 00 000 Iii Oil Lubricant For Pdi Rs 25 00 000 Iv Repair Maint Fuel Insurance Rs 5 00 000 V Installation Charges Of Tiller And Reaper Rs 15 00 000 Vi Travelling Conveyance Rs 10 00 000 Vii Salary Rs 15 00 000 5 Being Aggrieved By The Assessment Order The Assessee Carried The Matter In Appeal Before The Cit A 4 6 Before The Cit A Ld A R Of The Assessee Furnished A Comparative Statement Of The Turnover G P And N P Rate Of The Assessee For The Assessment Years 2009 2010 2010 2011 And 2011 12 And Submitted That The Turnover Of The Assessee For The Year Under Consideration Is 164 Compared To Immediate Preceding Financial Year And The Assessee Had Shown Net Profit At 0 64 Of The Turnover As Against Disclosed At 0 32 In The Immediate Preceding Year It Was Also Submitted That No Adverse Findings Such As Excess Suppression Of Stock Debtors Cash And Receivable Etc Were Made By The Survey Team 7 The Cit A Noted That The Assessee Has Not Refuted The Statement Of The Assessing Officer That Bo Oks Of Account Were Not Available At The Time Of Survey And The Same Were Prepared Later On And Therefore He Upheld The Rejection Of Books Of Account By The Assessing Officer However Based On The Comparative Chart Of The Turnover And Expenses Claimed By The Assessee For The Precedent Assessment Year I E 2010 2011 And For The Assessment Year Under Consideration I E 2011 12 The Cit A Directed The Assessing Officer To Restrict The Disallowance Under Various Heads As Under I Carriage Outward Expens Es Rs 10 00 000 Ii Turnover Discount Rs 40 00 000 Iii Oil Lubricant For Pdi Rs 15 00 000 Iv Repair Maint Fuel Insurance Rs 1 00 000 V Installation Charges Of Tiller And Reaper Rs 10 00 000 Vi Travelling Conveyance Rs 5 00 000 Vii Salary Rs 1 0 00 000 5 8 Being Aggrieved Both The Assessee And The Revenue Are In Appeal Before Us 9 At The Time Of Hearing Ld A R Of The Assessee Submitted That There Was Substantial Increase In The Turnover Of The Assessee During The Year Under Appeal Than That Of The Previous Year He Also Submitted That No Adverse Findings Were Made During The Survey Operation U S 133 A Of The Act Therefore The Cit A Was Not Justified In Restricting The Disallowance 10 On The Other Hand Ld D R Supported The Order Of The Assessing Officer 11 We Have Heard The Rival Submissions Perused The Orders Of Lower Authorities And Materials Available On Record In The Instant Case A Survey U S 133 A Was Conducted At The Business Premises Of The Assessee And It Was Found That No Cash Book Was Maintained It Was Further Evidenced By The Brother Of The Assessee On A Statement Recorded At The Time Of Survey Howev Er The Assessee Produced The Cash Book Ledger Bank Book Purchase Register Sales Register And Hand Made Vouchers Etc Which Were Prepared Post Survey Operation Therefore Both The Authorities Were Justified In Rejecting The Books Of Account It Wa S Also Submitted That The Turnover Of The Assessee For The Year Has Substantial Increased To 164 Than Of The Preceding Year We Also Find That The Cit A Based On The Comparative Chart Furnished By The Assessee For The Immediate Preceding Year And That O F The Present Year Under 6 Consideration Wherein The Assessee Has Shown Net Profit At 0 64 As Against 0 32 Shown In The Preceding Year Restricted The Disallowances Before Us Ld A R Could Not Bring Any Positive Material On Record To Show That The Res Triction Of Disallowance Out Of Expenditures Claimed By The Assessee Was Excessive Ld A R Also Could Not Explain With Evidence The Reason Of Increase In Salary To More Than 50 Of The Claim From That Of The Immediate Previous Year Similarly Ld D R Also Could Not Point Out Any Specific Error To Interfere With The Order Of The Cit A Therefore We Do Not Find Any Reason To Interfere With The Order Of The Cit A Which Is Hereby Confirmed And Grounds Of Appeal Of The Assessee And The Grounds Of Appeal Taken By The Revenue Are Dismissed 12 In The Result Both The Appeals Filed By The Assessee And Revenue Are Dismissed Now We Take Up The Appeal Of The Assessee For The Assessment Year 2009 10 13 The Appeal Filed By The Assessee Is Barred By 122 Days The Assessee Has Filed Condonation Affidavit Supported By Prescription Of Treating Doctor Explaining The Reason For Delay In Filing The Appeal Before The Tribunal And Praying To Condone The Delay After Perusing The Condonation Affidavit And Considering The Submissions Of The Parties We Are Satisfied That There Was Reasonable Cause For Not F Iling The Appeal Within The Time Before The Tribunal Therefore We Condone The Delay And Proceed To Dispose Of The Appeal On Merits 14 The Assessee Has Raised The Following Grounds In His Appeal 7 1 That The Order Passed By The Cit A Is Arbitrary Ex Cessive And Bad In Law 2 That The Cit A Has Not Applied His Mind To The Facts Submitted During The Assessment Proceedings 3 That The Cit A Has Not Given Sufficient Opportunity To The Assesse Before Passing The Order 4 That The Cit A Has Erred In A Ssuming The Advance From Customers Outstanding At The End Of The Year To Whom The Sales Have Been Made During Subsequent Year As The Income Of The Assessee 5 That The Cit A Has Erred In Assuming The Loan From The Loan Creditor Carried From Earlier Year And Outstanding At The End Of The Year As The Income Of The Assessee Although The Same Has Been Paid To The Loan Creditor In Subsequent Year 6 That The Cit A Should Have Allowed An Opportunity To The Assessee To Explain The Difference In Receipt If Any From Bharati Airtel Limited And Honda Siel Power Products Ltd 7 The Cit A Should Have Allowed An Opportunity To The Assessee To Explain The Errors Committed By The Ao In Passing The Order 8 That The Cit A Has Erred In Not Allowing The Expenses Disal Lowed By The Ao 9 That The Other Grounds If Any Shall Be Urged At The Time Of Hearing Of Appeal 15 The Brief Facts Of The Case Are That The Assessee Derives Income From Sale Of Power Tiller In Retail As Well As Wholesaling Basis And Income From Mobi Le Voucher Telecom Services The Assessee Filed The Return Of Income On 30 9 2009 Showing Total Income Of Rs 6 51 820 Which Was Processed U S 143 1 On 28 10 2010 Subsequently The Case Was Selected For Scrutiny And Notice U S 143 2 Was Issued And S Erved On The Assessee In Response To The Notices Ld A R Of The Assessee Appeared 8 From Time To Time And Produced Particulars Documents And The Case Was Discussed 16 On Verification Of Financial Statement The Assessing Officer Found That The Assessee Has Shown Rs 4 68 000 Under The Head Advance From Parties In Schedule 3 Of Other Creditors In The Balance Sheet As On 31 3 2009 In Respect Of Premier World However On Details Furnished By The Assessee It Is Revealed That The Assessee Has Taken Advance Of Rs 4 68 000 From Meena Poddar Bhaskarganj Balasore Having Income Tax Particulars Ld A R Submitted The Declaration From Meena Poddar In Respect Of The Advance Made The Assessing Officer On Perusal Of The Assessment Records Of The Meena Poddar Found That There Is No Entry Of Rs 4 68 000 In Her Account And Also Presumed That Meena Poddar Has Not Given Any Advance To The Assessee Since The Assessee Could Not Produce Any Material Evidence In Support Of Payment Acceptance Of Advance Such As Bank Statement In Respect Of Advance From Meena Poddar The Assessing Officer Made Addition Of Rs 4 68 000 As Bogus Advance 17 Similarly The Assessee Has Also Shown Rs 1 35 60 068 As Advance From Parties In Schedule 4 Under The Head Other Credi Tors In The Balance Sheet As On 31 3 2009 The Assessing Officer Called For The Information U S 133 6 From 174 Persons As Per Detailed Postal Address Alongwith Advance Amount Outstanding Against Each Name The Assessing Officer During The Course Of Hea Ring Found That 33 Letters Have Been Returned 9 Back Unserved With The Postal Remarks No Such Addressee Amounting To Rs 25 19 617 31 Persons Intimated That There Has Been No Outstanding Advance As On 31 3 2009 With The Assessee Amounting To Rs 23 14 203 It Was In This Backdrop That The Assessing Officer Treated Rs 48 33 720 Rs 25 19 617 Rs 23 14 203 As Undisclosed Income Of The Assessee 18 The Assessing Officer On Verification Of 26 As Statement Generated From Ast Foun D That The Assessee Has Receive D Rs 12 27 188 As Gross Commission From M S Bharati Airtel Limited Whereas The Assessee Has Shown Rs 9 69 271 As Commission On Sales As Per Schedule 7 Of Profit And Loss Account As On 31 3 209 Thus There Is A Differ Ence Of Rs 2 57 917 Therefore The Assessing Officer Added Rs 2 57 917 To The Income Of The Assessee 19 Similarly The Assessing Officer Made An Addition Of Rs 33 290 As Gross Receipt From Honda Siel Power Products Ltd During The Previous Year 2008 09 Since The Same Has Not Been Accounted For In The Profit Loss Account As On 31 3 2009 The Assessing Officer Added The Same To The Income Of The Assessee 20 Similarly The Assessing Officer Made Addition Of Rs 25 000 U S 40 A 3 Of The Act On The Ground That The Assessee Has Paid Rs 25 000 By Cash Towards Decoration Of Gate And Finally Assessed The Taxable Income At Rs 62 69 750 10 21 Aggrieved By The Order Of The Assessing Officer The Assessee Filed Appeal Before The Cit A The Cit A Called For A Remand Report From The Assessing Officer And After Considering The Same Has Confirmed The Addition And Dismissed The Assessees Appeal 22 Aggrieved By The Order Of The Cit A The Assessee Is In Appeal Before Us 23 At The Time Of Hearing Ld A R Contended That The Assessee Is Maintaining Regular Books Of Account And The Fact That The Assessee Is Receiving Advance From Various Customers Interested In Purchase Of Power Tiller And Reaper Which Are In Huge Demand As The Purchasers Are Eligi Ble For State Government Subsidy In Respect Of Advance Of Rs 4 68 000 From Meena Poddar Ld A R Submitted That The Amount Is Received In Earlier Year And The Assessee Has Discharged His Duty By Giving Evidence Like Pan Address And Creditworthiness O F The Creditor Ld A R Submitted That Both The Assessing Officer And Ld Cit A Have Not Considered The Fact That The Assessee Has Furnished Complete Details And Also Substantiated His Arguments With Paper Book Containing Details Of Advance From Customer S Sample Copy Of Money Receipts Sales Bills Permits Photo Id Subsidy Release Letter From Government Of Odisha Affidavit Of Meena Poddar He Submitted That Although These Documents Were Furnished Before The Authorities Below Same Have Not Been Consi Dered And Prayed That Matter May Be Restored Back To The File Of The Cit A For Fresh Consideration 11 24 Contra Ld D R Opposed The Submission Of Ld A R And Submitted That The Evidences Filed By The Assessee Before The Tribunal Are Additional Evidence An D Prayed For Dismissal Of The Appeal 25 We Have Heard The Rival Submissions Perused The Materials On Record And Orders Of Lower Authorities Below 26 In Respect Of Advance Of Rs 4 68 000 Received From Meena Poddar Ld A R Submitted That Meena Podd Ar Is Related To The Assessee And Assessed To Tax In The Same Ward Where The Assessee Is Assessed To Tax And The Amount Has Been Disclosed He Submitted That These Facts Were Furnished Before T He Cit A How The Money Was Received Ld A R Drew Our Attention To Page 87 Of Pb Where The Assessee Has Written Letter To The Cit A That Rs 4 68 000 Is Outstanding From Financial Year 2004 05 In The Account Of M S Premier World Against The Said Loan Creditor And The Same Is Repaid By Account Payee Chequ E On 16 3 2012 These Facts Have Not Been Considered By Both The Authorities Below While Disallowing The Claim Of The Assessee Therefore We Consider It Appropriate To Remand This Issue To The Cit A For Fresh Adjudication 27 In Respect Of Second Disp Uted Issue Of Advance From Parties We Find That The Assessee Receives Advances From The Customers Interested In Purchase Of Power Tiller And Reaper And As These Products Were Huge Demand As The Same Is Eligible For Government Subsidy The Assessee Effects Sale By Issuing Sale Bills To The Customers Though The Assessee Has Disclosed As Per The Assessment Order That Advance Of 12 Rs 1 35 60 068 Was Received From 174 Persons The Assessing Officer During The Course Of Hearing Found That 33 Letters Have Been Returned Back Unserved With The Postal Remarks No Such Addressee Amounting To Rs 25 19 617 31 Persons Intimated That There Has Been No Outstanding Advance As On 31 3 2009 On The Assessee Amounting To Rs 23 14 203 During Remand Proceedings Lett Ers Were Again Issued To 31 Persons As Per Revised Address Submitted By The Assessee And In 2 Cases There Was No Revised Address 19 Out Of 31 Envolves Returned As Unserved With The Postal Remark Not Known No Such Addressee Only One Person Has Confir Med Having Paid Advance Of Rs 86 000 On 14 3 2009 Whereas The Assessee Has Claimed The Same At Rs 1 00 000 Therefore The Assessing Officer Gave Credit Of Rs 86 000 And Treated Rs 48 33 720 Rs 25 19 617 Rs 23 14 203 As Undisclosed Income Of The Assessee Which Was Confirmed In Appeal By The Cit A 28 Perusal Of Impugned Orde R Reveals That The Cit A Has Passed Order Exparte As There Was Non Compliance On The Part Of The Assessee On Several Occasions Ld A R Before Us Submitted That He Has Complete Set Of Information And Filed The Same Before The Cit A Whereas Ld Cit A Has Not Given Adequate Opportunity To The Assessee We Are Not Able To Understand That How Despite Giving Several Opportunities By The Cit A The Assessee Did Not Co Ope Rate At The Appellate Stage Having Carefully Heard The Submissions Of The Rival Parties And Perusing The Material Available On Record Including The Paper Book Filed By The Assessee Before Us Containing Details Of Advance From Customers Sample Copy Of Money 13 Receipts Sales Bills Permits Photo Id Subsidy Release Letter From Government Of Odisha We Are Of The View That The Assessee Could Not Substantiate Its Case Before The Cit A As The Order Is Passe D E Xparte Therefore In The Interests Of Justice We Consider It Fair And Reasonable That The Matter Should Go Back To The File Of The Ld Cit A And Accordingly We Set Aside The Order Passed By The Ld Cit A To His File To Decide The Appeal Of The Asse Ssee Afresh And According To Law After Providing Reasonable Opportunity Of Being Heard To The Assessee The Assessee Is Directed To File The Evidences As Has Been Filed Before The Tribunal Before The Cit A And Co Operate With The Cit A For Disposal Of T He Appeal The Grounds Taken By The Assessee Are Therefore Allowed For Statistical Purposes 29 As Regards To The Disputed Additions Of Rs 2 57 917 As The Commission From Bharati Airtel Limited Rs 33 290 As Gross Receipt From Honda Siel Power Produ Cts And Rs 25 000 Made U S 40 A 3 Of The Act Ld A R Of The Assessee Did Not Raise Any Objections Against The Above Additions Therefore We Confirm The Order Of The Cit A On These Issues 30 In The Result Appeal Filed By The Assessee Is Partly Allowed For Statistical Purposes Order Pronounced On 13 1 2 2017 Sd Sd N S Saini Pavan Kumar Gadale A Ccountant Member Judicialmember Cuttack Dated 13 1 2 2017 14 B K Parida Sps Copy Of The Order Forwarded To By Order Sr Private Secretary Itat Cuttack 1 The Appellant Shiv Kumar Poddar B C Sen Road Balasore 2 The Respondent Revenue Ito Ward 2 Balasore Odisha 3 The Cit A Cuttack 4 Pr Cit Cuttack 5 Dr Itat Cuttack 6 Guard File True Copy