ITO, Ward - 32(1), Kolkata, Kolkata v. M/s. Kaycee Trading Co., Kolkata

ITA 1840/KOL/2010 | 2007-2008
Pronouncement Date: 15-03-2011 | Result: Allowed

Appeal Details

RSA Number 184023514 RSA 2010
Assessee PAN AADFK1092P
Bench Kolkata
Appeal Number ITA 1840/KOL/2010
Duration Of Justice 5 month(s) 17 day(s)
Appellant ITO, Ward - 32(1), Kolkata, Kolkata
Respondent M/s. Kaycee Trading Co., Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 15-03-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 15-03-2011
Date Of Final Hearing 15-03-2011
Next Hearing Date 15-03-2011
Assessment Year 2007-2008
Appeal Filed On 28-09-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH-A: KO LKATA ( ) . . . . ! ! ! ! ) [BEFORE HONBLE SHRI B.R. MITTAL J.M. & HONBLE SH RI C.D. RAO A.M] ' ' ' ' /I.T.A. NO. 1840/KOL./2010 #$ #$ #$ #$ %& %& %& %& /ASSESSMENT YEAR : 2007-2008 INCOME TAX OFFICER WARD-32(1) -VS.- M/S. KAY CEE TRADING CO. KOLKATA KOLKATA (PAN : AADFK 1092 P) (APPELLANT) (RESPONDENT) & ' ' ' ' / I.T.A. NO. 1869/KOL./2010 #$ #$ #$ #$ %& %& %& %& /ASSESSMENT YEAR : 2007-2008 KAYCEE TRADING CO. KOLKATA -VS.- ADDITIO NAL COMMISSIONER OF INCOME TAX RANGE-32 KOLKATA (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. JHAJHARIA A.R. DEPARTMENT BY : SHRI P.P. SARKAR D.R. ' ' ' ' /O R D E R PER SHRI B. R. MITTAL JUDICIAL MEMBER / . . : THESE CROSS APPEALS ARE FILED BY THE DEPARTMENT AN D THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08 AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIX KOLKATA DATED 29.07.2010 ON THE FOLLOWING GROUNDS :- ITA NO. 1840/KOL./2010 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A.) HAS ERRED IN DELETING THE ADDITION AND DISALLOWING THE ASSESSING OFFICER DECISION TO ESTIMATE THE G.P. RATE OF THE ASSESSEE @ 8% AND DIRECTING THE AO TO ESTIMATE G.P. @ 4%. ITA NOS.1840/KOL.2010 & 1869/KOL./2010 2 ITA NO. 1869/KOL./2010 (1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A.) ERRED IN SUSTAINING THE ADDITION OF RS.84 15 500/- BEING THE ESTIMATED GP CALCULATED @ 4% OF THE TURNOVER INSTEAD OF RS.35 71 318/- AS DISCLOSED BY THE ASSESSEE THEREBY NET ADDITION TO INCOME DUE TO LOWER GP AMOUNTING TO RS.48 44 182/-. (2) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A.) ERRED IN NOT ALLOWING DEDUCTION OF THE LOSS DUE TO FIRE AMOUNTING TO RS.58 91 187/- BEING NET OF THE LOSS OF RS.60 00 0 00/- AND CLAIM SETTLED BY THE INSURANCE COMPANY FOR RS.1 08 813/-. 2. BEFORE WE TAKE UP THE GROUNDS FOR OUR CONSIDERAT ION IT IS RELEVANT TO STATE THAT THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SE CTION 144 OF THE INCOME TAX ACT ASSESSING THE TOTAL INCOME OF RS.1 23 86 720/- AS AGAINST RET URNED INCOME DECLARING LOSS OF RS.8 72 967/-. WHILE MAKING THE ASSESSMENT THE ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF ESTIMATION OF GROSS PROFIT @ 8% INSURANCE CLAIM AND INTEREST INC OME. 3. IN THE APPEAL FILED BEFORE THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) THE ASSESSEE CONTENDED THAT THE NOTICES ISSUED UNDER SECTION 142 (1) AND 143(2) COULD NOT BE COMPLIED WITH FOR THE REASON THAT THE MANAGING PARTNER OF THE ASS ESSEE-FIRM SHRI KULNATH KAPUR HAD A HEART ATTACK THAT HE WAS LOOKING AFTER THE ACCOUNTS AND TAXATION MATTERS OF THE ASSESSEE-FIRM FURTHER THE ACCOUNTANT OF THE FIRM SHRI N.R. PAL ALSO RESIG NED FROM HIS JOB AND SUBSEQUENTLY JOINED AFTER SOMETIME. THAT THERE WAS AN EMPLOYEE WHO WAS A PEON AND HE COULD NOT CONTACT THE MANAGING PARTNER AS HE WAS SERIOUSLY ILL. THEREFORE THE ASSESSEE-FIRM COULD NOT COMPLY WITH NOTICES ISSUED BY THE ASSESSING OFFICER. THE ASSESS EE DISPUTED THE EX-PARTE ASSESSMENT BEFORE THE LD. CIT(APPEALS). HOWEVER THE LD. CIT (APPEALS ) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT WHEN THE ASSESSEE FAILE D TO COMPLY WITH THE NOTICES ISSUED BY THE ASSESSING OFFICER THE ASSESSING OFFICER WAS NOT HA VING ANY OTHER OPTION BUT TO COMPLETE ASSESSMENT EX-PARTE UNDER SECTION 144 OF THE ACT. 4. IT IS ALSO OBSERVED THAT THE ASSESSEE DECLARED G ROSS PROFIT @ 1.70% OF THE TOTAL TURNOVER OF RS.21 03 87 565/-. THE ASSESSEE ALSO SUBMITTED D ETAILS OF GROSS PROFIT DECLARED IN EARLIER YEARS WHICH IS AS UNDER :- ITA NOS.1840/KOL.2010 & 1869/KOL./2010 3 ASSTT. YEAR GP AMOUNT GP RATE 2003-04 28 57 861/- 3.00% 2004-05 31 83 700/- 2.99% 2005-06 35 76 912/- 3.01% 2006-07 60 21 347/- 2.50% IN VIEW OF THE ABOVE THE LD. CIT (APPEALS) HAS ST ATED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ESTIMATING GROSS PROFIT @ 8% WITHOUT C ONSIDERING GROSS PROFIT DECLARED BY THE ASSESSEE IN EARLIER YEARS. HENCE THE LD. CIT(APPEA LS) DIRECTED TO ESTIMATE GROSS PROFIT @ 4% AS AGAINST 8% ESTIMATED BY THE ASSESSING OFFICER. THER EFORE THE DEPARTMENT AS WELL AS THE ASSESSEE HAVE FILED THESE APPEALS. 5. BESIDES ABOVE THE ASSESSING OFFICER ALSO MADE S EPARATE ADDITION OF RS.60 00 000/- ON ACCOUNT OF INSURANCE CLAIM. ON PERUSAL OF THE ORDER OF ASSESSING OFFICER IT IS OBSERVED THAT THE ASSESSING OFFICER HAS NOT MENTIONED ANY DETAILS AND REASONS AS TO WHY ADDITION OF RS.60 00 000/- WAS MADE BY HIM. IT IS OBSERVED THAT THE LD. CIT(APPEALS) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE HAS CONFIRMED THE ADDITI ON OF RS.60 00 000/- MADE BY THE ASSESSING OFFICER VIDE PARA 13 OF THE IMPUGNED ORDER WHICH I S AS UNDER :- 13. I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT AND PERUSED THE ASSESSMENT ORDER. THOUGH THE AO HAS MADE ADDITION O F RS.60 00 000/- ON ACCOUNT OF INSURANCE CLAIM WITHOUT ASSIGNING ANY RE ASON IN THE ASSESSMENT ORDER BUT ON PERUSAL OF PROFIT AND LOSS ACCOUNT FOR YEAR ENDED ON 31.03.2007 IT IS OBSERVED THAT THE APPELLANT HAS CREDITED A SUM OF RS.60 00 000/- IN PROFIT & LOSS ACCOUNT UNDER THE H EAD FINISHED LEATHER DAMAGED IN FIRE AND ARRIVED ON THE GROSS PROFIT OF RS.35 71 318/-. IN THE PROFIT AND LOSS ACCOUNT THE GROSS PROFIT OF RS.35 71 318/- WAS BROUGHT DOWN AND THE SUM OF RS.60 00 000/- WAS CREDITED UND ER THE HEAD INSURANCE CLAIM AND ALSO DEBITED BY SIMILAR ACCOU NT UNDER THE HEAD FINISHED LEATHER DAMAGED BY FIRE. IN THIS MANNER THE APPELLANT HAS MADE THREE ENTRIES IN THE PROFIT AND LOSS ACCOUNT. TWO ENTRIES ARE CREDIT ENTRIES AND ONE ENTRY IS DEBIT ENTRY. IT IS OBSERVE D FROM THE PROFIT AND LOSS ACCOUNT THAT THE APPELLANT HAD BROUGHT DOWN THE GRO SS PROFIT OF RS.35 71 318/- AND ALSO CREDITED RS.60 00 000/- AS INSURANCE CLAIM AND RS.1 00 000/- AS INTEREST ON LOAN. AGAINST THESE TH REE SUMS THE APPELLANT HAS DEBITED THE EXPENSES TO THE EXTENT OF RS.1 05 4 4 286/- WHICH ALSO INCLUDE DEBIT OF RS.60 00 000/- ON ACCOUNT OF LOSS OF FINISHED LEATHER DAMAGED IN FIRE. IN THE ASSESSMENT ORDER THE AO HA S COMPUTED THE GROSS PROFIT OF RS.1 68 31 005/- @ 8% AND FROM THIS AMOUN T HE HAS ALLOWED DEDUCTION OF EXPENSES OF RS.1 05 44 286/- AS CLAIME D BY THE APPELLANT. ITA NOS.1840/KOL.2010 & 1869/KOL./2010 4 THUS THE AO HAS ALLOWED DEDUCTION OF ALL EXPENSES AGAINST THE GROSS PROFIT AND THEREFORE HE HAS ADDED TWO SUMS OF RS.6 0 00 000/- ON ACCOUNT OF INSURANCE CLAIM AND RS.1 00 000/- ON ACCOUNT OF INTEREST SEPARATELY WHICH WERE ALSO CREDITED BY THE APPELLANT IN THE PR OFIT AND LOSS ACCOUNT. IF THE CONTENTION OF THE APPELLANT IS ACCEPTED THAT TH E AO SHOULD HAVE NOT MADE THE ADDITION OF RS.60 00 000/- THEN IN THAT C ASE THE APPELLANT WOULD BE ENTITLED FOR DEDUCTION OF EXPENSES FROM THE ESTI MATED GROSS PROFIT TO THE EXTENT OF RS.45 44 286/- I.E. (RS.1 05 44 286/- - 6 0 00 000/-) AND NOT OF RS.1 05 44 286/- ALLOWED BY THE AO. THEREFORE I D O NOT FIND ANY MISTAKE OR ERROR IN THE ADDITION OF RS.60 00 000/- MADE BY THE AO. THE GROUND NO. 14 IS DISMISSED. HENCE THE ASSESEE HAS ALSO DISPUTED THE AFORESAID ADDITION OF RS.60 00 000/- IN GROUND NO. 2 OF THE APPEAL FILED BEFORE US. 6. AT THE TIME OF HEARING THE LD. AUTHORIZED REPRE SENTATIVE OF THE ASSESSEE SUBMITTED THAT IF THE MATTER IS RESTORED TO THE ASSESSING OFFICER THE ASSESSEE WILL FURNISH THE REQUISITE DETAILS AND THE ADDITIONS AS MADE BY THE AUTHORITIES BELOW ARE NOT JUSTIFIED. HOWEVER THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 7. ON CAREFUL CONSIDERATION OF THE ORDERS OF THE AU THORITIES BELOW AND THE SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES WE ARE OF T HE CONSIDERED VIEW THAT THE ESTIMATION OF GROSS PROFIT AS MADE BY THE ASSESSING OFFICER AND SUBSEQU ENTLY CONFIRMED BY THE LD. CIT(APPEALS) IN PART IS NOT BASED ON THE PAST RESULTS. FURTHER WE ALSO OBSERVE THAT NO REASONS HAVE BEEN STATED TO ESTIMATE GROSS PROFIT @ 4% BY LD. CIT (APPEALS) VIS--VIS THE GROSS PROFIT SHOWN BY THE ASSESSEE IN THE PRECEDING ASSESSMENT YEARS VIZ. AS SESSMENT YEARS 2003-04 TO 2006-07. SIMILARLY IN RESPECT OF THE ADDITION OF RS.60 00 0 00/- ON ACCOUNT OF INSURANCE CLAIM WE OBSERVE THAT ASSESSING OFFICER HAS NOT GIVEN ANY RE ASON IN THE ASSESSMENT ORDER. WE ALSO OBSERVE THAT THE LD. CIT(APPEALS) HAS GIVEN THE REA SONS FOR SUSTAINING THE ADDITION OF RS.60 00 000/- ON ACCOUNT OF THE ENTRIES MADE BY TH E ASSESSEE ON ACCOUNT OF LOSS DUE TO FIRE. SINCE THE LD. CIT(APPEALS) HAS STATED THAT THE GROS S PROFIT HAS BEEN COMPUTED BY THE ASSESSING OFFICER BY APPLYING ESTIMATED GROSS PROFIT THE ASS ESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION INTER ALIA ON ACCOUNT OF INSURANCE CLAIM. IT IS OB SERVED THAT THE LD. CIT(APPEALS) HAS ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN VI EW THEREOF. ITA NOS.1840/KOL.2010 & 1869/KOL./2010 5 8. CONSIDERING THE FACTS IN TOTALITY WE IN THE IN TEREST OF JUSTICE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THE ISSUES TO THE FIL E OF THE ASSESSING OFFICER WITH A DIRECTION THAT HE WILL DECIDE THE SAME AFRESH AFTER GIVING DUE OPP ORTUNITY OF HEARING TO THE ASSESSEE AND CONSIDERING SUCH EVIDENCES AS MAY BE FURNISHED BEFO RE HIM. AT THE TIME OF HEARING THE LD. A.R. HAS UNDERTAKEN THAT ASSESSEE WILL COOPERATE THE ASS ESSING OFFICER. WE MAY STATE THAT IF THE ASSESSEE FAILS TO COOPERATE THE ASSESSING OFFICER THE ASSESSING OFFICER WILL BE AT LIBERTY TO COMPLETE THE ASSESSMENT ON THE BASIS OF THE MATERIA L AVAILABLE BEFORE HIM. 9. IN THE RESULT THE GROUNDS OF APPEAL TAKEN BY TH E DEPARTMENT AS WELL AS BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15.03. 2011. SD/- SD/- [C. D. RAO ( . . )] [ B.R . MITTAL / . . ] ACCOUNTANT MEMBER/ ! ! ! ! JUDICIAL MEMBER/ ] DATED : 15/ 03/ 2011 COPY OF THE ORDER FORWARDED TO: 1. M/S. KAYCEE TRADING CO. 31 KOHINOOR BUILDING 105 PARK STREET KOLKATA-16. 2 ITO WARD-32(1) KOLKATA 2 ND FLOOR 10B MIDDLETON ROW KOLKATA. 3. CIT(A)- KOLKATA 4. CIT- KOLKATA 5. DR KOLKATA BENCHES KOLKATA (TRUE COPY) BY ORDER ASSISTANT REGISTRAR I.T.A.T. KOLKATA. LAHA SR. P.S.