Income Tax Appellate Tribunal - Chennai
S.Balasubramanian (Huf), , ... vs Assessee on 1 April, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
'D' BENCH, CHENNAI
BEFORE Dr. O.K. NARAYANAN,VICE-PRESIDENT
AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER
ITA No.1026/Mds/2012
(Assessment Year: 2008-09)
Mr. S.Balasubramanian (HUF) Vs. Income Tax Officer,
Kumaran Jewellery, Ward I(2),
149-H, Gandhiji Road, Kumbakonam.
Mayiladuthurai.
PAN: AAAHS2609K
(Appellant) (Respondent)
Appellant by : Mr. S.Sridhar, Advocate
Respondent by : Mr. Dasgupta, JCIT
Date of Hearing : 1st April, 2013
Date of Pronouncement : 5th April, 2013
ORDER
Per Vikas Awasthy, JM:
The appeal has been filed by the assessee impugning the order of the CIT(A), Trichy dated 19.3.2012 relevant to the assessment year 2008-09.
2. The assessee is a retailer in jewellery business. The assessee filed its return of income for the assessment year 2008-09 on 29.7.2008 declaring his income as `2,07,620/-. The case of the assessee was selected for scrutiny and notice under section 143(2) was issued to the assessee on 2 ITA No.1026/Mds/2012 20.4.2009. Since the assessee did not produce books of accounts and the details called for, the Assessing Officer proceeded on to make assessment under section 144 on the basis of the records of the assessee for earlier assessment years and information derived from the assessment of son of the assessee who is also in the same business. The Assessing Officer made gross profit addition of 10.5% on the sale of jewels purchased and sold in lieu of cash disbursement thereby making an addition of `2,10,000/- in the income returned by the assessee.
Aggrieved against the assessment order, the assessee preferred an appeal before the CIT(A). The CIT(A) vide impugned order dismissed the appeal of the assessee. Now, the assessee has come in second appeal before the Tribunal.
3. Shri S.Sridhar appearing on behalf of the assessee submitted that the assessee could not produce books of accounts before the Assessing Officer or the first Appellate Authority for the reason that the entire books of account were washed away in flash floods. The counsel for the assessee submitted that an affidavit to this effect was filed before the 3 ITA No.1026/Mds/2012 CIT(A). But the CIT(A) did not take the same into consideration. The counsel for the assessee further submitted that the assessee is also doing gold chit business. Against the chit receipts, the Assessing Officer has made addition treating the same as sale of gold. The counsel for the assessee placed on record assessment order passed by the Commercial Tax Officer whereby turnover reported by the assessee has been accepted by the Department of Commercial Tax, Tamil Nadu. In the said return, the counsel for the assessee pointed out that the total sales recorded is `10,11,041/-. The counsel for the assessee further contended that even if the turnover determined by the Assessing Officer is taken into consideration, there cannot be addition of more than 5% as provided under the provisions of section 44AF of the Act. The addition of 10.5% made by the Assessing Officer and subsequently confirmed by the CIT(A) on deemed sales is without any logic or reason.
4. On the other hand, Shri S.Dasgupta appearing on behalf of the Revenue submitted that the order of the CIT(A) 4 ITA No.1026/Mds/2012 is a well-reasoned and detailed order. The assessee in the first instance could not produce books of account either before the Assessing Officer or before the CIT(A) nor the assessee could give any plausible reason for the non- production of books of account before either of the authorities. The plea of the assessee that the books were washed away in flash floods is very vague. No evidence was brought on record by the assessee before the authorities below in support of his contentions that the books of the assessee were in fact damaged or lost in the flash floods as claimed by the assessee. The DR submitted that the addition of 10.5% gross profit has been made on the basis of the previous year assessment as well as the income of the son of the assessee who is in same business. The Assessing Officer adopted gross profit of 10.5% in jewel sales in lieu of cash disbursement. The Assessing Officer has made adjustments for jewel sales as well as cash disbursement and it was thereafter on the basis of the previous records, the Assessing Officer has adjusted cash disbursement by the assessee 5 ITA No.1026/Mds/2012 towards jewel sales. The DR strongly supported the order of the CIT(A).
5. We have heard the submissions made by both the parties and have perused the orders of the authorities below. We find that the assessee has failed to place on record any document before the authorities to show that the books of the assessee were in fact damaged or lost in the flash floods. Even before us, the assessee could not place on record any reliable document to show that the books of accounts were in fact lost on account of 'force majeure'. The counsel for the assessee has pointed out that the assessee has filed evidence before the CIT(A). However, we find that except for the affidavit, no other documentary evidence was filed by the assessee before the authorities below . In the absence of the same, the authorities below were constrained to disbelieve the bald statement of the assessee regarding loss of books of account.
6. The next limb of argument of the counsel for the assessee is that for the relevant assessment year the 6 ITA No.1026/Mds/2012 assessee has filed duly audited statement of account although it was not mandatory for the assessee to file the same under section 44AB of the Act, as the turnover of the assessee was far less than the limit prescribed under the said section. The counsel for the assessee further contended that the special provisions for computing the profit and gains of retail business under section 44AF are applicable to the assessee, as the turnover of the assessee is less than `40 lakhs. As per the provisions of said section, a sum equal to 5% of the total turnover in the previous year should be accepted as profits and gains of business of the assessee.
7. We do not agree with the submissions of the counsel for the assessee. As per the provisions of section 44AF(1) a sum equal to 5% of the total turnover in the previous year on account of retail business or a sum higher than the aforesaid sum as declared by the assessee shall be deemed to be the profits of such business chargeable to tax. The Assessing Officer has made addition @ 10.5% of the gross profit on the basis of the records of the assessee for the earlier assessment year. In the previous assessment years, the 7 ITA No.1026/Mds/2012 assessee has declared profits more than 10% . Therefore, the provisions of section 44AF of the Act cannot be made applicable in the facts and circumstances of the present case. The Assessing Officer has even examined the records of the son of the assessee Mr. B.Sankarasuramanian who has filed his return of income in the same ward. The Assessing Officer has observed that even the son of the assessee has admitted gross profit of 10.5% on sale of jewels purchased and sold during the same previous year ended on 31.3.2008. For the assessment year 2008-09, the assessee had shown total creditors on account of jewel saving scheme (chit scheme) as `1,47,86,000/-.Based on the previous year's record, the Assessing Officer has taken the total disbursement to the jewel chit customers as `26,05,750/-, adjustments for jewel sales was estimated at `6 lakhs and the balance amount of `20.00 lakhs was estimated as cash disbursement by the assessee which was adjusted towards jewel sales by the Assessing Officer by taking gross profit of 10.5% of ` 20.00 lakhs . The gross profit worked out by the Assessing Officer is Rs.2,10,000/-.
8 ITA No.1026/Mds/2012
We do not find any error in the principle adopted by the Assessing Officer in determining the addition on the basis of gross profit estimation. We therefore confirm the order of the CIT(A) and dismiss this appeal of the assessee as it is devoid of merit.
8. In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on Friday , the 5th day of April, 2013 at Chennai.
Sd/- Sd/-
( Dr. O.K.Narayanan ) (Vikas Awasthy)
Vice-President Judicial Member
Chennai,
Dated the 5th April, 2013.
somu
Copy to: (1) Appellant (4) CIT(A)
(2) Respondent (5) D.R.
(3) CIT (6) G.F.