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Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI
Before: SHRI N.S SAINI & PAVAN KUMAR GADALE
IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI
BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER
ITA No.244/Ran/2016 Assessment Year: 2012-2013
Smt. Nirmala Devi, M/s. Vs. ITO, Ward -3(2), Bokaro Baba Steel, Puja Niwas, Saraswati Nagar, Chas, Bokaro PAN/GIR No. AGSPD 7467 L (Appellant) .. ( Respondent)
Assessee by: Shri Devesh Poddar, Adv Revenue by : Shri P.K.Mondal, JCIT
Date of Hearing : 22/05/ 2018 Date of Pronouncement : 23 /05/ 2018
O R D E R Per N.S.Saini, AM This is an appeal filed by the assessee against the order dated
23.6.2016 of the CIT(A), Hazaribag, Jharkhand for the assessment year
2012-2013.
The sole issue involved in this appeal is that the CIT(A) erred in
confirming the action of the Assessing Officer in estimating the profit
2 IT A No.2 44/R an/2 016 Asse ssmen t Year: 2 012 -20 13
@0.75% against the profit disclosed as per books of account at 0.17%
without rejecting the books of account of the assessee.
The brief facts of the case are that the Assessing Officer observed that
the assessee has shown 0.17% profit, which was too low as compared to the
same line of business as net profit shown by other assessees is 0.62% and
in the case of M/s. P.S.Ispat, Industrial Area Balidih, Bokaro, it has been
shown at 0.75&. Therefore, he estimated the net profit of the assessee by
applying rate of 0.75% on the gross turnover.
On appeal, the CIT(A) confirmed the action of the Assessing Officer on
the ground that looking to the huge turnover of assessee’s business at
Rs.19,11,93,694/-, he was inclined to uphold the estimated percentage
worked out by the Assessing Officer in the facts and circumstances of the
assessee’s business.
The argument of ld A.R. of the assessee before us is that no estimation
of income of the assessee can be made by the Assessing Officer without
pointing out defects in the regularly maintained books of account of the
assessee and without rejecting the same on the ground that they are
defective and correct income of the assessee cannot be deduced therefrom.
Ld D.R. supported the orders of lower authorities.
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We find that Hon'ble Karnataka High Court in the case of The Income
Tax Officer Versus M/s Anil Kumar And Co ., 386 ITR 702 (Kar) and Hon'ble
Delhi High Court in the case of DLF Hilton Hotels (2016) 240 Taxman
495 (Delhi) have held when the books of accounts of the assessee had not
been rejected and assessment having not been framed under section 144 of
the Act, the said authorities were in error in resorting to an estimation of
income and such exercise undertaken by them was not sustainable.
Further, the Jodhpur Bench of the Tribunal in the case of ACIT v Ercon
Composites (2014) ITAT Jodhpur 49 taxmann.com 489 (Jodh) has held
that where the Assessing Officer had not rejected the books of account nor
mentioned any specific defect in its maintenance, addition on estimate basis
was not justified.
In the instant case, the undisputed facts are that the Assessing Officer
has not rejected the books of account of the assessee. Therefore, in our
considered view, in view of the above quoted decisions, the Assessing Officer
was not justified in estimating the income of the assessee by applying net
profit rate of 0.75%. Hence, we set aside the orders of lower authorities and
direct the Assessing Officer to accept the book results of the assessee and
allow the ground of appeal of the assessee.
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In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 23 /05/2018
Sd/- sd/- (PAVAN KUMAR GADALE) (N.S Saini) JUDICIAL MEMBER ACCOUNTANT MEMBER Ranchi; Dated 23/05 /2018 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Smt. Nirmala Devi, M/s. Baba Steel, Puja Niwas, Saraswati Nagar, Chas, Bokaro 2. The respondent: ITO, Ward -3(2), Bokaro 3. The CIT(A), Hazaribag, 4. Pr. CIT, 5. DR, ITAT, Ranchi 6. Guard file. BY ORDER, //True Copy//
SR.PS, ITAT, CAMP AT RANCHI