TaxTMI 
TaxTMI 
2023 (11) TMI 1230
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....-N.F.A.C. acted unlawfully in impliedly sustaining the purported addition of Rs. 1,71,18,489/- made the Ld. Assistant Commissioner of Income Tax, Circle 8(1), Kolkata by invoking the mischief u/s. 43CA of the Income Tax Act, 1961 without satisfying the parameters thereof and the adverse conclusion reached on that behalf in violation of the statutory prescription is completely unfounded, unjustified, and untenable in law. 3. FOR THAT the specious approach of the Ld. Commissioner of Income Tax (Appeals)-N.FA.C. of misreading evidence, considering improper facts, failing to consider proper position in law and thus coming to an erroneous finding in impliedly sustaining the addition of Rs. 4,52,731/- made by the Ld. Assistant Commissioner of Income Tax, Circle 8(1), Kolkata without satisfying the elementary mandate of s. 145(3) of the Income Tax Act, 1961 thereby basing on considerations not relevant to the issue is wholly illegal, illegitimate, and infirm in law. 4. FOR THAT the Ld. Commissioner of Income Tax (Appeals), NFAC failed to appreciate that none of the conditions precedent existed for and/or were fulfilled by the Ld. Assistant Commissioner of Income Tax, Circle 8(1), Kolk....
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....ugist. The addition was made at Rs. 3,76,28,573/-. Accordingly along with other minor additions of Rs. 15,000/-, total additions were made at Rs. 7,54,71,702/- and income assessed at Rs. 9,17,53,930/-. 3.1. Aggrieved, assessee preferred appeal before the ld. CIT(A), challenging various additions except the one at Rs. 15,000/- and filed all necessary details which were filed before the Assessing Officer. However, on account of Covid restrictions, he could not appear through his A/R on various dates of hearing and the ld. CIT(A) confirmed the additions made by the Assessing Officer. 4. Aggrieved the assessee is now in appeal before this Tribunal. 5. The ld. Counsel for the assessee vehemently argued referring to the detailed written submissions placed at page nos. 2 to 9 and also the paper book containing 462 pages and further made submission on each of the issues claiming that the ld. Assessing Officer has made additions merely on surmises and conjectures without rejecting the books of account and the same deserves to be deleted. He also contended that the ld. Assessing Officer erred in applying the provisions of Section 43CA of the Act on all the transactions of sale during the ....
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....e related bank account is Rs. 2,61,06,063/- during the F. Yr. 2015-16. As per disclosed method of recognition of revenue & expenses by the assessee in course of assessment proceedings, whatever materials were purchased during the year was subjected to current year expenses. As such total sundry creditors for such materials & services should have been at Rs. 2,56,07,923/- [(purchase* sundry creditor for goods as on 31.03.2015+labour charges* opening work-in-progress)-(debit amount from bank+ closing work-in-progress)] {(Rs. 3,16,95,298 + Rs. 1,49,95,800 + Rs. 42,11,928+ Rs. 48,07,000) - (Rs. 2,61,06,063+ Rs. 39,96,040)} in place of Rs. 3,48,64,832/-. Hence the excess liability comes to Rs. 92,56,909/-. But due to inadvertent mistyping such amount was written as Rs. 48,69,666/- in the show-cause notice dtd. 06.12.2018. 2.5. The assessee submitted ledger account of inter-proprietorship bank transaction in respect of S. Paik & Co. and Anil Kumar Paik. It is noticed from that an amount of Rs. 1,10,00,000/- was transferred from S. Paik & Co. bank account to Anil Kumar Paik Account. So total debit from the bank account for purchase of raw materials & services comes to Rs. 1,51,06,063/-(....
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.... Officer extracted supra, we notice that the ld. Assessing Officer has disregarded the regular books of account of which the results are arrived at after making entries on day to day basis in cash book, bank book and journal, and finally the trading profit and loss account and audited balance sheet are arrived at which is the final picture of the transactions carried out during the year. It is also judicially settled that the manner of carrying out of the business activity is a prerogative of the business as to in what manner he carries out and even the profitability or incurring of expenditure varies from case to case. Basic requirement is the consistency in maintaining the books of accounts and adopting the proper and regular system of accounting. In assessee's case, undisputedly, the mercantile system of accounting is adopted and entries are consistently made on day to day basis and thus regular books of account are being maintained. Now, the ld. Assessing Officer while examining the profit and loss account and the balance sheet of M/s S. Paik & Co., has on his own made certain calculations by taking the basis of opening work in progress, purchase during the year, closing workin....
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....n the profit and loss account was only Rs. 4,48,37,551/-. In reply, the assessee furnished the information about the flats sold during the year stating that most of the flats were booked in the preceding years and agreement to sale was entered and part of the consideration was received through account payee cheques. For the sake of reference, the names of the customers, date of booking, registry date, amount of sale consideration and market value as adopted by the stamp valuation authority for calculating stamp duty:- 10. From perusal of the above details, we find that so far as the flats sold to customers appearing at S. No. 5 to 16, the date of booking of the flats are prior to 31/03/2013. Assessee has filed the ledger accounts, details of agreement to sale and the proof that part of the consideration have been received through banking channel at the time of booking and in some cases, the said advance or consideration through banking channel has been received prior to financial year 2013-14. We notice that similar issue came up for adjudication before us for Assessment Year 2014-15, wherein we have held that since the agreement for sale was entered prior to 01/04/2015 and the as....
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....the circumstances, in the peculiar I.T.A No.354/Kol/2023 Assessment year: 2015-16 M/s Reegal Construction facts and circumstances, it will not be justified to adopt the stamp duty value as on the date of execution of the sale deed, rather, the object and purpose of the provisions will be achieved by taking the stamp duty value as on the date of execution of the agreement in the light of the peculiar facts and circumstances of this case. Moreover, the issue is otherwise decided by the Coordinate bench of the Tribunal in the case of Disha Construction (supra), wherein, the Coordinate Bench of the Tribunal further relied upon the decision of the Bombay High Court in the case of PCIT vs. Swananda Properties (P) Ltd. [2019] 111 taxmann.com 94 (Bombay) dated 09.09.2019. The relevant part of the order of the Tribunal is reproduced as under: "5. We find that the assessee, along with its written submissions, have placed on record copy of development agreement dated 06/03/2011 entered in to by the assessee with the Society. As per Clause-12 of the agreement, the assessee has agreed to sell additional carpet area of 12350 square feet to 92 members of the society. The additional area was to ....
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....79 taxmann.com 238/246 Taxman 274, the Division Bench of this Court had an occasion to consider the value of the flat in case of sale by the Developer in the context of section 50C and section 56(2)(vii)(b)(ii) of the Act. The Division Bench observed thus: "3. Regarding question No. (i): ** ** ** (f) It is self evident from reading of section 50C of the Act it would not have any application while determining 'Profits and gains of business or profession'. This is so as its application is only limited to computation of income chargeable under the head 'Capital gains' as is evident from specific reference in sub-section (1) of section 50 of the Act to section 48 of the Act i.e. mode of computation of capital gains. In fact section 50C of the Act as observed by the impugned order is placed as part of the Chapter IV-E under the head 'capital gains', it can only govern the valuation of the property to determine capital gains and cannot govern valuation of transfer of assets (other than a capital asset) i.e. stock in trade. This view is further strengthened by the fact that section 43CA has been introduced into the Act w.e.f. 1st April, 2014 which governs ta....
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....cision is shown. 15. As regards the decision in the case of Associated Builders relied upon by the Appellant- Revenue, it arose in the context of valuation of assets including stock in trade on dissolution of a partnership firm. This Court was concerned with the issue whether, when the asset was valued on the basis of book value as provided in the contract between the parties, is it open to the Assessing Officer to ignore it and ascertain whether the valuation done does represent the fair value of the asset. This the Court answered in the affirmative by holding that the contract between the parties will not bind the Revenue, while determining the fair market value of the assets of the partnership firm. In the present case, we are not dealing with the valuation of assets on dissolution of a firm. In case of dissolution, there is no sale as in the case of running business. Thus, the decision in the case of Associated Builders is in different facts and circumstances and would have no application to the present facts. 16. It is to be noted that the Revenue has not made any reference even remotely that the Respondent had received amounts in excess of that shown in the agreements in ....
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....deration was received through account payee cheques, therefore, Section 43CA of the Act will not be applicable and the difference between the amount of sale consideration appearing in the conveyance deed and the value adopted by the stamp valuation authority cannot be added in the hands of the assessee and the same is hereby deleted. 11.1. So far as the remaining four flats are concerned, we find that in the case of first person, namely, Susmita Basu, there is no difference between the amount in the conveyance deed and the market value and both are stated as Rs. 53,10,000/- and, therefore, as there is no difference, no addition is called for. So far as the remaining three parties are concerned, namely, Shri P. Chatterjee, Shri Shibnath Das and Shri Paras Keinth, we notice that the date of booking and the date of registry both falls under FY 2015-16 and there is a difference in the amount of sale consideration stated in the conveyance deed and the market price. Total of such difference come to Rs. 48,31,520/-. The ld. Counsel for the assessee has claimed that the details of payments have not been examined by the ld. Assessing Officer. Considering the location of the flats, the mark....
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....alleged suppressed sales tis uncalled for. Addition of Rs. 4,52,731/- is deleted and the Ground No. 3 raised by the assessee is allowed. 13. Ground No. 4 is raised against the addition of Rs. 3,76,28,573/-. The ld. Assessing Officer firstly referred to three business concerns of the assessee, namely, M/s. Gitanjali Enterprises, M/s. Gitanjali Polyclinics & Diagnotics and M/s Gitanjali Chemist & Drugist and referred to the commission income earned from sale of medicine. Thereafter, the ld. Assessing Officer referred to the total amount of credits in the bank account which amounted to Rs. 13,86,52,917/- and asked the assessee to give a breakup of the same. The assessee filed the details of the two bank accounts held with Oriental Bank of Commerce and three bank accounts held with Allahabad Bank and total of the credits in its bank accounts was Rs. 12,18,31,381/-. Thereafter, the ld. Assessing Officer applied the gross profit rate of 38.22% on a figure of Rs. 9,84,52,571/- observing as follows:- "6.3 It is to note here that the amount of credit claimed in the above reconciliation in respect of S. Paik &Co. is not included into total of Rs. 13,86,52,91 II- as discussed above. So tot....
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....ning of retail trading of medicines under the name of "Gitanjali Chemists & Druggists" and also acting as a Cleanrtg and Forwarding (C&F) agent under the name and style of "Gitanjali Enterprises". The appellant had maintained books of accounts u/s. 44AA of the Income Tax Act, 1961 only in respect to his concern styled "Gitanjali Enterprises" which were duly audited under the statutory requirement of s. 44AB of the Act and the entries made therein were fully supported by proper bills and vouchers. In pursuance of the activities of the appellant, it acts as Clearing and Forwarding agents and receives the payments on behalf of his principal and thereafter, he remits such sum to the principal after keeping his commission. The total receipt disclosed by the appellant in respect of "Gitanjali Polyclinic & Diagnostics" was Rs. 65,57,062/-, "Gitanjali Chemists & Druggists" was Rs. 65,22,864/- and "Gitanjali Enterprises" was Rs. 30,49,764/-during the relevant previous year. The Ld. Assessing Officer misconceived such receipts to be income and thereafter considered the total deposits in the related banks accounts to the tune of Rs. 13,86,52,917/- as revenue, without giving the breakup of suc....
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....hat where the accounts produced by an assessee are not correct and are not complete to the satisfaction of the Assessing Authority, he has to assign reasons for such assumption and thereafter, resort to an estimate of income as contemplated in the provisions of s. 144 of the Act. In other words, the statutory prescription contained in the provisions of s. 145(3) of the Act requires the Assessing Authority to reject the books of accounts maintained by an assessee by recording plausible reasons. Therefore, rejection of books of accounts is a condition precedent for invoking the power and estimation of income is the subsequent condition. Accordingly, unless the books of accounts are rejected by the Assessing Authority and such a rejection is based on sound and cogent reasons, the Assessing Authority does not have the jurisdiction to estimate the profits. Where the books of accounts produced were not rejected nor even a single voucher was found unverifiable, the gross profit cannot be estimated as the books were taken into account [SWADESHI COMMERCIAL CO. LTD. -VS- C.I.T. (I.T.A. NO. 219 OF 2001 DATED 18-12-2008) (CAL)]. In such an event, the estimation of income by the ld. Assessing O....