Raman Kumar Malhotra v. Income-tax Officer, Ward-36(1), Kolkata
[Citation -2016-LL-1021-139]

Citation 2016-LL-1021-139
Appellant Name Raman Kumar Malhotra
Respondent Name Income-tax Officer, Ward-36(1), Kolkata
Court ITAT-Kolkata
Relevant Act Income-tax
Date of Order 21/10/2016
Assessment Year 2007-08
Judgment View Judgment
Keyword Tags unexplained cash credit • proprietary concern • revenue authorities • business of trading • net profit rate
Bot Summary: As per the information received by the Assessing Officer, the assessee had deposited substantial cash in his Bank account maintained with Axis Bank Limited during the financial year 2006-07 relevant to assessment year 2007-08. In the said return, the turnover of his proprietary concern was shown by the assessee at Rs.12,11,312/- on which Gross Profit and not Net Profit was declared by the assessee at Rs.1,60,571/- and Rs.5,223/- respectively. The Assessing Officer took the said amount of deposits as turnover of the proprietary concern of the assessee and estimated the business income of the assessee by applying the Net Profit rate of 5 at Rs.2,87,378/-. CIT(Appeals) did not find any merit in the submissions made by the assessee in support of his case, he proceeded to uphold the action of the Assessing Officer in estimating the income of the assessee from business by applying a Net Profit rate of 5 and also confirmed the other additions made by the Assessing Officer to the total income of the assessee. In trading results so declared, the turnover of his proprietary concern was shown by the assessee at Rs.12,11,312/- while in the Bank account of the said concern maintained with Jammu Kashmir Bank, deposits aggregating Rs.57,47,567/- were made by the assessee as found by the Assessing Officer. Since no satisfactory explanation could be offered by the assessee in this regard, the Assessing Officer took the amount of such deposits as the gross turnover of the proprietary concern of the assessee and determined the business income of the assessee on estimated basis by applying the Net Profit rate of 5. In my opinion, once the income of the assessee is determined on estimated basis after rejecting the books of account, the entries in the said books of account again cannot be relied upon to make additions on account of sundry creditors written back under section 41(1), unexplained cash credit under section 68 as well as other additions as made by the Assessing Officer and confirmed by the ld.


I.T. A. No. 1609/KOL./2014 Assessment year: 2007-2008 Page 1 of 4 IN INCOME TAX APPELLATE TRIBUNAL, KOLKATA B(SMC) BENCH, KOLKATA Before Shri P.M. Jagtap, Accountant Member I.T .A. No. 1609/KOL/2014 Assessment Year: 2007-2008 Raman Kumar Malho tra Appellant 3A, Mangoe lane, Kolkata-700 001 [PAN: AFGPM 7356 E] -Vs.- Income Tax Officer Respondent Ward-36(1 ), Kolkata, Aayakar Bhawan, Po orva, 110, Shanti Palli, E. M. By-Pass, Kolkata-700 107 Appearances by: Shri S.M. Surana, Advocate & Shri N .C. Saha, Advocate, for assessee Shri M.K. Chanda, JCIT, D.R., for Department Date of concluding hearing : August 09, 2016 Date of pronouncing order : October 21, 2016 ORDER This appeal filed by assessee is directed against order of ld. Commissioner of Income Tax (Appeals)-XX, Kolkata dated 04.03.2014. 2. assessee in present case is individual, who is engaged in business of trading under name and style of his proprietary concern M/s. Indian Cork Industry. As per information received by Assessing Officer, assessee had deposited substantial cash in his Bank account maintained with Axis Bank Limited during financial year 2006-07 relevant to assessment year 2007-08. Since no return of income for said year was filed by assessee, notice under section I . T. . N o. 1 6 0 9 / KO L . / 2 0 1 4 Assessment year: 2007-2008 Page 2 of 4 148 was issued by Assessing Officer on 12.07.2011. In response to said notice, return of income for year under consideration was filed by assessee declaring total income of Rs.99,929/-. In said return, turnover of his proprietary concern was shown by assessee at Rs.12,11,312/- on which Gross Profit and not Net Profit was declared by assessee at Rs.1,60,571/- and Rs.5,223/- respectively. During course of assessment proceedings, assessee could not produce either books of account or relevant documentary evidence in form of bills, vouchers, etc. for verification of Assessing Officer. It was also noticed by Assessing Officer that assessee had deposited total sum of Rs.57,47,567/- in Bank Account maintained in name of his proprietary concern with Jammu & Kashmir Bank, Kolkata Branch. Assessing Officer, therefore, took said amount of deposits as turnover of proprietary concern of assessee and estimated business income of assessee by applying Net Profit rate of 5% at Rs.2,87,378/-. He also made further additions of Rs.1,92,320/- under section 41(1), Rs.2,31,000/- on account of unexplained deposits found to be made by assessee in his Ban k account, Rs.44,500/- on account of unexplained cash receipts and Rs.16,400/- on account of unexplained cash credit. Accordingly, total income of assessee was determined by Assessing Officer at Rs.8,66,310/- in assessment completed under section 143(3) read with section 147 vide order dated 16.12.2011. 3. Against order passed by Assessing Officer under section 143(3) read with section 147, appeal was preferred by assessee before ld. CIT(Appeals) and since ld. CIT(Appeals) did not find any merit in submissions made by assessee in support of his case, he proceeded to uphold action of Assessing Officer in estimating income of assessee from business by applying Net Profit rate of 5% and also confirmed other additions made by Assessing Officer to total income of assessee. Accordingly, appeal of assessee was dismissed by ld. CIT(Appeals) by his appellate order I . T. . N o. 1 6 0 9 / KO L . / 2 0 1 4 Assessment year: 2007-2008 Page 3 of 4 dated 04.03.2014, which is impugned by assessee in present appeal filed before ld. CIT(Appeals). 4. I have heard arguments of both sides and also perused relevant material available on record. It is observed that neither relevant books of account nor any supporting documents were produced by assessee before Assessing Officer in support of trading results shown to his proprietary concern M/s. Indian Cork Industry. In trading results so declared, turnover of his proprietary concern was shown by assessee at Rs.12,11,312/- while in Bank account of said concern maintained with Jammu & Kashmir Bank, deposits aggregating Rs.57,47,567/- were made by assessee as found by Assessing Officer. Since no satisfactory explanation could be offered by assessee in this regard, Assessing Officer took amount of such deposits as gross turnover of proprietary concern of assessee and determined business income of assessee on estimated basis by applying Net Profit rate of 5%. Before ld. CIT(Appeals) as well as before Tribunal, nothing has been brought on record on behalf of assessee to show that estimate made by Assessing Officer is excessive or unreasonable. It is also observed that turnover of proprietary concern of assessee has been taken by Assessing Officer on basis of total deposits found to be made in Bank account of said concern during year under consideration and even Net Profit rate of 5% has been applied by him by placing reliance on provisions of section 44A of Act. estimate of business income of assessee as made by Assessing Officer thus is well founded and even ld. counsel for assessee has not been able to dispute this position. He, however, has contended that once books of account of assessee are rejected and income of assessee is determined on estimated basis by applying some percentage of profit, there is no justification on part of Revenue authorities to make further additions separately on account of sundry creditors written back under section 41(1), unexplained cash credit under section 68 etc. by relying on I . T. . N o. 1 6 0 9 / KO L . / 2 0 1 4 Assessment year: 2007-2008 Page 4 of 4 books of account of assessee, which have been rejected. I find merit in this contention of ld. counsel for assessee. In my opinion, once income of assessee is determined on estimated basis after rejecting books of account, entries in said books of account again cannot be relied upon to make additions on account of sundry creditors written back under section 41(1), unexplained cash credit under section 68 as well as other additions as made by Assessing Officer and confirmed by ld. CIT(Appeals). I, therefore, delete said additions and allow partly this appeal filed by assessee. 5. In result, appeal of assessee is partly allowed. Order pronounced in open Court on October 21, 2016. Sd/- (P.M. Jagtap) Accountant Member Kolkata, 21 s t day of October, 2016 Copies to : (1) Shri Ram Kum ar Malhotra, 3A, Mangoe lane, Kolkata-700 001 (2) Income Tax Officer, Ward-36(1 ), Kolkata, Aayakar Bhawan, Po orva, 110, Shanti Palli, E. M. By-Pass, Kolkata-700 107 (3) Commissioner of Income Tax(Appeals)-XX, Kolkata; (4) Commissio ner of Income Tax- , (5) Depart ment al Represent ative (6) Guard File By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S. Raman Kumar Malhotra v. Income-tax Officer, Ward-36(1), Kolkata
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