SMT NIRMALA DEVI,BOKARO vs. ITO WARD-3(2), BOKARO

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ITA 244/RAN/2016Status: DisposedITAT Ranchi21 May 2018AY 2012-134 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that estimation of income is not permissible without rejecting the assessee's books of account. Since the books were not rejected, the Assessing Officer's action was not sustainable.

What were the facts?

The Assessing Officer estimated the assessee's profit at 0.75% on turnover, deeming the disclosed profit of 0.17% too low. The CIT(A) confirmed this estimation without rejecting the assessee's books of account.

What were the issues?

Whether the Assessing Officer can estimate profit without rejecting the assessee's books of account and without framing assessment under Section 144.

Which sections of the Income-tax Act were involved?

Section 144

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI

Before: SHRI N.S SAINI & PAVAN KUMAR GADALE

For Appellant: Shri Devesh Poddar, Adv
For Respondent: Shri P.K.Mondal, JCIT
Hearing: 22/05

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.

2.

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.

3.

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.

4.

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.

5.

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.

6.

Ld D.R. supported the orders of lower authorities.

3 IT A No.2 44/R an/2 016 Asse ssmen t Year: 2 012 -20 13

7.

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.

8.

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.

9.

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.

4 IT A No.2 44/R an/2 016 Asse ssmen t Year: 2 012 -20 13

10.

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

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