NARENDRA KUMAR BEHERA,BOUDH vs. ITO, PHULBANI WARD, PHULBANI, PHULBANI

This is an appeal filed by the assessee against the order of

the Commissioner of Income Tax(Appeals)-1, Bhubaneswar dated

18.1.2019 for the assessment year 2014-15.

“1. For that the order dated 8.1.2019 for the A.Y. 14-15 passed by the CIT(A) is far from just and legal on the facts and in the circumstances of the case. 2. For that the initiation of reassessment proceedings u/s.147 of the I.T.Act by the AO and confirmation of the

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same by the CIT(A) is illegal and without jurisdiction on the facts and in the circumstances of the case. 3. For that the CIT(A) is not justified to confirm the order of the AO in estimating profit @ 8% u/s.44AD of the I.T.Act when the sales turnover of the assessee has exceeded the monetary limit of Rs.1 crore on the facts and in the circumstances of the case.” 3. At the time of hearing, ld A.R. of the assessee did not press

Ground No.1 and 2 of appeal, hence, same are dismissed as not

pressed.

entire bank deposits.

cash/cheque deposits amounting to Rs.1,48,24,129/- in the bank

accounts of Uco Bank, State Bank of India and Utkal Grameen

Bank, Boudh. The Assessing Officer also observed that the

assessee is not maintaining books of account u/s.44AD and

disclosed turnover of Rs.65,14,665/-. In absence of books of

account, the Assessing Officer estimated the net profit of the

assessee at 8% u/s.44AD of the I.T.Act, 1961 considering the

total bank deposits of Rs.1,48,24,129/-, the Assessing Officer

estimated net profit at 8% u/s.44AD and added Rs.6,64,757/- to

the income of the assessee, which was confirmed in first appeal.

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of net profit at 8% is excessive and same should be reduced to

4% as the assessee is in footware trading business in the Boudh

district. Ld A.R relied on the decision of Hon’ble Delhi High Court

in the case of Mohd Asif Habibr, vs PR.CIT in I.T.A. No.36 of 2015

dated 20.8.2018 and contended that provisions of section 44AD

does not apply as the turnover of the assessee has exceeded Rs.1

crore and net profit @ 8% is illegal.

submitted that the estimation has been made as per the

disclosure of the assessee on a turnover of Rs.65,14,665/-.

of lower authorities, I observe that as per the amendment made

by the legislature in the Finance (No.2)Act, 2014 w.e.f. 1.4.2013,

the turnover of Rs.1 crore has been substituted by Rs.2 crores and

the percentage of estimation of profit has been reduced to 6%. I

also observe that the while applying net profit 2 8%, the

Assessing Officer has not brought on record any comparable

cases. Another aspect has to be taken into consideration that the

assessee is carrying on its business activities in Boudh district, a

remote area, where the profit margin is very low. Therefore,

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looking into the totality of the facts and circumstances of the case

and that considering the fact that the assessee is in foot-ware

trading business, as noted above, I found it appropriate to reduce

the estimation of net profit from 8% to 6%. The Assessing Officer

is directed to recompute the net profit accordingly.

Order pronounced on 13/05/2019. Sd/- (Chandra Mohan Garg) JUDICIALMEMBER Cuttack; Dated 13/05/209 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Narendra Kumar Behera, FCI Road, Phulbani, Dist: Kandhamal

By order

Sr. Pvt. Secretary, ITAT, Cuttack

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