D.C.I.T. Cir-47, Kolkata, Kolkata v. Firoj Rahaman Sepai, Howrah

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SRI D. K. TYAGI JM & HONBLE SRI C . D. RAO AM] I.T.A. NO.1901/KOL/2009 ASSESSMENT YEAR: 2006-07 DEPUTY COMMISSIONER OF INCOME-TAX -VS- FIROJ RA HAMAN SEPAI CIRCLE-47 KOLKATA. (PA NO. ALKPS 1142 C) (APPELLANT) (RESPONDENT) & C.O. NO. 19/KOL/2010 IN I.T.A. NO.1901/KOL/2009 ASSESSMENT YEAR: 2006-07 FIROJ RAHAMAN SEPAI -VS- DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-47 KOLKATA. (CROSS OBJECTOR) (RESPONDENT DEPARTMENT BY : SRI NEERAJ SINGH ASSESSEE BY : SRI K. P. GHOSH : O R D E R PER D. K. TYAGI JM: THIS APPEAL AND THE CROSS OBJECTION PREFERRED BY TH E REVENUE AND ASSESSEE RESPECTIVELY ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) KOLKATA DATED 26.08..2009 FOR ASSESSMENT YEAR 2006-07. BOTH THE APPEAL AND T HE CROSS OBJECTION HAVE BEEN DISPOSED OF TOGETHER BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF A PPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT (A) WAS NOT JUSTIFIED IN DECIDING THAT THE GROSS PROFIT RELATABLE TO THE UNDISCLOSED RECEIPT OF RS.6 75 200/- WAS RS.31 059/-. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT(A) ERRED BY NOT TREATING THE ENTIRE UNDISCLOSED RECEIPT OF RS.6 75 200/- AS THE INCOME OF THE ASSESSEE SINCE ALL EXPENDITURE OF THE ASSESSEE HAVE BEEN ALREADY BOOKE D IN THE P & L ACCOUNT AND THERE WAS NO FURTHER EVIDENCE OF UN BOOKED EXPENDITURE. THE ASSESSEE IN HIS CROSS OBJECTION HAS TAKEN THE F OLLOWING SOLE GROUND OF APPEAL : FOR THAT THE LD. CIT(A) KOLKATA ERRED IN LAW WAS NOT JUSTIFIED IN SUSTAINING ADDITION TO THE EXTENT OF RS.4 04 109/- OUT OF TOTAL ADDITIO N OF RS.9 75 907/- ON ACCOUNT OF ALLEGED UNDISCLOSED AND SUPPRESSED G.P. 3. IN RESPECT OF GROUND NO. 1 BRIEF FACTS OF THE CA SE ARE THAT THE AO REFERRED THE INFORMATION RECEIVED BY HIM REGARDING THE TDS IN TH E CASE OF THE ASSESSEE. IN THE ASSESSMENT ORDER THE AO STATED THAT THE QUANTUM OF TAX DEDUCTED IS RS.6 75 000/-. THE AO ESTIMATED THE JOB WORK CHARGES RELATABLE TO THE TAX DEDUCTED. THE AO ARRIVED AT JOB 2 WORK CHARGES OF RS.3 01 42 857/- AS JOB WORK CHARGE S NOT DISCLOSED BY THE ASSESSEE. THE A.O NOTICED THAT THE ASSESSEE HAS DISCLOSED JOB WORK CHARGES OF RS.1 86 52 500/-. THE A.O ALSO NOTICED THAT THE GROSS PROFIT DISCLOSE D BY THE ASSESSEE IS 2% OF THE JOB WORK CHARGES RECEIVED. THE A.O COMPARED THE GROSS P ROFIT DISCLOSED BY THE OTHER ASSESSES. THE A.O GAVE A COMPARATIVE CHART OF DETAI LS OF THE OTHER ASSESSES AT PAGE-2 OF THE ASSESSMENT ORDER. THE PERCENTAGE OF GROSS PROFI T RANGED FROM 4.77% TO 7.01%. THE A.O HELD THAT THE ASSESSEE HAS DISCLOSED GROSS PROF IT WHICH IS LOWER ON COMPARISON WITH THESE PERSONS. THE A.O ADOPTED GROSS PROFIT RATE OF 4.6% ON THE TOTAL TURN OVER OF RS. 4 87 95 357/- (1 86 52 500 + 3 01 42 857). THE A.O MADE AN ADDITION TOWARDS GROSS PROFIT OF RS. 9 75 907/-. IN APPEAL THE LD. CIT(A ) HAS DEALT THE MATTER AS UNDER : THE APPELLANT CONTENDS THAT THE A.O ERRED IN MAKIN G ADDITION TOWARDS SUPPRESSION OF GROSS PROFIT. IT IS CONTENDED THAT THE ADDITION MAD E IS CONTRARY TO FACTS AND IS ARBITRARY. IT IS SUBMITTED THAT THE DETAILS OF THE GROSS PROFIT RELI ED UPON BY THE A.O ARE NOT FURNISHED TO THE APPELLANT FOR EXPLANATION. IT IS SUBMITTED THAT THE A.O ERRED IN ESTIMATING JOB WORK CHARGES OF RS.3.01 42 857/- AS UNDISCLOSED RECEIPT. IT IS S UBMITTED THAT AN AMOUNT OF RS. 6 75 00/- REPRESENTS THE GROSS RECEIPTS RECEIVED BY THE APPEL LANT TOWARDS JOB WORK AND NOT THE TDS. IT IS SUBMITTED THAT THE GROSS PROFIT AS DISCLOSED BY THE APPELLANT BE ACCEPTED. THE APPELLANT DISCLOSED TURNOVER OF RS.1 86 52 500/ -. THE A.O HELD THAT TDS OF RS.6 75 200/- IS NOT DISCLOSED BY THE APPELLANT. ON THE BASIS OF THIS CONCLUSION THE A.O ESTIMATED THE TURNOVER RELATABLE TO THE TDS AMOUNT OF RS.6 75 200/-. DURING APPEAL PROCEEDINGS THE APPELLANTS SUBMISSIONS ARE REFERRE D TO THE A.O FOR VERIFICATION. THE A.O EXAMINED AND FILED HIS REPORT DATED 07.08.2009 SUBM ITTING THAT THE GROSS JOB WORK RECEIPTS ARE RS.6 75 200/-. THIS AMOUNT IS NOT THE TDS. CONS IDERING THIS REPORT THE CONCLUSION DRAWN BY THE A.O THAT JOB WORK RECEIPT OF RS.3 01 4 2 857/- ARE NOT DISCLOSED IS INCORRECT. THE JOB WORK RECEIPT NOT DISCLOSED BY THE APPELLANT IS RS.6 75 200/-AND NOT RS.3 01 42 857/- AS CONCLUDED BY THE A.O. THE A.O EXAMINED THE GROSS PROFIT DISCLOSED BY THE OTHER ASSESSEES IN SIMILAR LINE OF BUSINESS. THE A.O NOTICED THAT THE GROSS PROFIT DIS CLOSED BY THE OTHERS IS HIGHER THAN THE GROSS PROFIT DISCLOSED BY THE APPELLANT. THE SUBMIS SIONS OF THE APPELLANT WERE REFERRED TO THE A.O FOR REMAND REPORT. THE APPELLANT HAS NOT LE D ANY EVIDENCE TO PROVE THE REASONS FOR DISCLOSING LOWER GROSS PROFIT COMPARED TO THE OTHER ASSESSEES RELIED UPON BY THE A.O. IN THE ABSENCE OF SATISFACTORY EVIDENCE THE A.O IS CORRECT AS PER LAW IN ESTIMATING THE GROSS PROFIT OF THE APPELLANT AT 4.6% ON THE BASIS OF PROFIT DIS CLOSED BY THE OTHER ASSESSEES IN SIMILAR BUSINESS. THE A.OS ACTION IN ADOPTING GROSS PROFIT AT 4.6% OF THE TURN OVER IS CORRECT AS PER LAW. HOWEVER THE QUANTIFICATION OF THE GROSS PR OFIT MADE BY THE AO TOWARDS SUPPRESSION REQUIRES TO BE AMENDED. THE TURNOVER O F THE APPELLANT DISCLOSED IS RS. 1 86 52 500/-. THE JOB WORK RECEIPTS NOT DISCLOSED BY THE APPELLANT IS RS.6 75 200/-. THE GROSS PROFIT RELATABLE TO THE UNDISCLOSED RECEIPT O F RS.6 75 200/- AT 4.6% IS RS. 31 059/-. THE GROSS PROFIT NOT DISCLOSED BY THE APPELLANT REL ATABLE TO THE DISCLOSED JOB RECEIPT OF RS. 1 86 52 500/- IS 2% WHICH WORKS OUT TO RS.3 73 050/ -. THUS THE TOTAL ADDITION TOWARDS SUPPRESSION OF GROSS PROFIT WORKS OUT TO RS. 4 04 1 09/- (31 059 + 3 73 050). THE ADDITION TO THE EXTENT OF RS. 4 04 109/- IS SUSTAINED. THE APPE LLANT GETS A RELIEF OF RS.5 71 798/- (9 75 907 - 4 04 109). AGGRIEVED BY THIS ORDER THE REVENUE AND THE ASSESS EE BOTH ARE IN APPEAL BEFORE US. 3 4. AT THE TIME OF HEARING BEFORE US THE LD. DR REL IED ON THE ORDER OF THE AO AND SUBMITTED THAT THE LD. CIT(A) HAS ERRED IN TREATING THE GROSS PROFIT RELATABLE TO THE UNDISCLOSED RECEIPT OF RS.6 75 000/- AT 4.6% WHICH COMES TO RS.31 059/-. HE ALSO SUBMITTED THAT THE AO CALCULATED THE UNDISCLOSED AN D SUPPRESS GP AT RS.9 75 907/- AGAINST WHICH THE LD. CIT(A) WRONGLY CALCULATED THE TOTAL ADDITION OF RS. 4 04 109/- AND GAVE RELIEF TO THE ASSESSEE OF RS.5 71 798/- WH ICH IS UNSUSTAINABLE. 5. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSES SEE IN HIS CROSS OBJECTION SUBMITTED THAT THE LD. CIT(A) OUGHT TO HAVE DELETED THE ADDITION OF RS.4 04 109/- ALSO ON ACCOUNT OF ALLEGED UNDISCLOSED AND SUPPRESSED GP . THE GROSS PROFIT DISCLOSED BY THE ASSESSEE SHOULD BE ACCEPTED AS THE AO ESTIMATED THE JOB WORK CHARGES OF RS.3 01 42 857/- AS UNDISCLOSED RECEIPT AND ALSO A DOPTED GROSS PROFIT RATE OF 4.6% ON THE TOTAL TURNOVER OF RS.4 87 95 357/- (RS.1 86 52 500/- AS DISCLOSED BY THE ASSESSEE PLUS RS.3 01 42 857/- AS ESTIMATED BY THE AO) WHIC H IS ARBITRARY AND ILLEGAL. HE THEREFORE URGED BEFORE THE BENCH TO ADOPT THE GROS S PROFIT AS DISCLOSED BY THE ASSESSEE. 6. AFTER HEARING THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AN D BOTH THE REPRESENTATIVES IN THEIR RESPECTIVE ARGUMENTS DID NOT CONTROVERT THE ABOVE F INDINGS OF THE LD. CIT(A) AND IN THE ABSENCE OF ANY CONTROVERTING MATERIAL WE DO NOT FIN D ANY JUSTIFICATION TO INTERFERE WITH HIS ORDER AND THE SAME IS HEREBY UPHELD. THEREFORE THE GROUND NO. 1 OF THE APPEAL OF THE REVENUE AND THE SOLE GROUND OF THE CROSS OBJECT ION OF THE ASSESSEE ARE DISMISSED. 7. IN THE RESULT BOTH THE APPEAL AND THE CROSS OBJ ECTION ARE DISMISSED. 8. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30. 4.2010 SD/- SD/- (C. D. RAO) (D. K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30TH APRIL 2010 COPY TO : 1. DCIT CIRCLE-47 KOLKATA. 2. FIROJ RAHAMAN SEPAI V. PANCHLA PANCHLA SEPAIPARA HOWRAH-711 322. 3. CIT(A) KOLKATA 4. CIT KOLKATA. 5. D.R. ITAT KOLKATA. TRUE COPY BY ORDER DEPUTY REGISTRAR JD.(SR.P.S.) I.T.AT. KOLKATA