M/S. GEETARANI MOHANTY,BARBIL vs. ACIT, CIRCLE- 2(1), CUTTACK

These are These are appeals filed by the assessee against the filed by the assessee against the separate orders of the ld CIT(A) of the ld CIT(A), Cuttack dated 5,8.2019, 31.7.2019 & 30.9.2019 , Cuttack dated 5,8.2019, 31.7.2019 & 30.9.2019 in Appeal No.0215/2017, 0216.2016 0215/2017, 0216.2016-17 & 0218/2016-17 for the assessment year for the assessment years 2008-09, 2010 09, 2010-11 and 2013-14, respectively.

Shri P.C.Sethi, ld AR appeared for the assessee and Shri Shri P.C.Sethi, ld AR appeared for the assessee and Shri Shri P.C.Sethi, ld AR appeared for the assessee and Shri M.K.Gautam, ld CIT DR appeared for the revenue. M.K.Gautam, ld CIT DR appeared for the revenue.

It was the submission by ld AR that the assessee is in the business of mining iron ore. It was the submission that the returns filed by the assessee came to be processed and assessments came to be passed on best judgment, when the income of the assessee had been estimated at 58%. It was the submission that before the ld CIT(A) for all the three assessment years, legal issues had been raised as also grounds on merits. It was the submission that for the assessment year 2008-09, the assessee had disclosed net profit of 13.78%, for the assessment year 2010-2011, the net profit of 16.27% and for the assessment year, it was a loss, whereas the gross profit disclosed was at 7.98%. It was the submission that for the assessment years 2008-09 and 2010-2011, the ld CIT(A) has not given any proper adjudication to the legal issues and had passed a very cryptic order. For the assessment year 2013-14, the ld CIT(A) has not considered the legal issues raised at all. It was the further submission that for all the three assessment years, the ld CIT(A) admittedly has verified the net profit rate from 2001-02 to 2012-13 and found that highest G.P. disclosed for the assessment year 2011-12 at 23.87% and consequently, adopted the net profit rate of 24% for all the three assessment years. It was the very specific submission by ld AR that for the assessment year 2013-14, the G.P. disclosed itself was only 7.98% and the net profit could never have crossed above gross profit rate. It was the submission that the average of the net profit from assessment year 2001-02 to 2011-12 was coming to 11.97%. It

In reply, ld CIT DR submitted that the estimation of the profit as done by the ld CIT(A) is correct and that the ld CIT(A) has followed judicially accepted principles when he has estimated the net profit. It was the further submission that in respect of revenue’s appeals against reduction of the net profit as done by the ld CIT(A) from 58% to 24%, the appeals of the revenue have already been sent back to the ld CIT(A) for re- adjudication. It was the submission that the issues in these appeals should be restored to the file of the ld CIT(A) for re-adjudication especially when ld AR has specifically submitted that the legal issues have not been considered.

We have considered the rival submissions. As it is noticed that the ld CIT(A) has not adjudicated the legal issues raised by the assessee and has passed a very cryptic order in respect of the legal issues raised, we are of P a g e 3 | 5 , 287 & 435/CTK/2019 Assessment Years :2008-09, 2010-11 & 2013-14 the view that interest of justice would be served if the issues are restored to the file of the ld CIT(A) for readjudication.

Coming to the issue of estimation of the income of the assessee on merits, it is noticed that the ld CIT(A) has not considered the fact that the gross profit for the assessment year 2013-14 itself was only 7.98%. This being so and as it is noticed that the ld CIT(A) has adopted the principles of taking highest net profit disclosed in a block of years as against the average, we are of the view that the issues need to be readjudicated by the Ld CIT(A) and on this reason, the issues in these appeals are restored to the file of the ld CIT(A) for re-adjudication after granting the assessee adequate opportunity of hearing.

In the result, appeals of the assessee stand partly allowed for statistical purposes.