M/S ANANT METALS PVT LTD,RANCHI vs. DCIT CENT. CIRCLE-1, RANCHI

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ITA 107/RAN/2017Status: DisposedITAT Ranchi30 May 2018AY 2006-075 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found that the matter of estimating profit based on turnover needed further verification by the AO. The AO was directed to consider the assessee's claim regarding net profit rates from preceding and subsequent years.

What were the facts?

The assessee's appeal concerns additions made by the AO and confirmed by the CIT(A). Ground 1 was dismissed as not pressed. Ground 2 relates to the estimation of profit at 8% of turnover by the CIT(A).

What were the issues?

Whether the AO and CIT(A) erred in estimating the assessee's business income at a fixed percentage of turnover without proper consideration of past and subsequent profit rates. The validity of additions made to the assessee's income.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 143(2),Section 142(1),Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RANCHI

Before: SHRI N.S.SAINI & SHRI PAVAN KUMAR GADALE

For Appellant: Shri Vinay Kumar Jalan & Rajiv Ranjan, Adv
For Respondent: Shri P.K.Mondal, JCIT
Hearing: 29.05.2018Pronounced: 30.05.2018

1 ITA No.107/Ran/2017

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI

BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No.107/Ran/2017 A.Y. : 2006-2007 M/s Anant Metals Pvt. Ltd. vs ITO, Ward-1(1), C/o-Sri Vinay Kumar Jalan, Jamshedpur M/s O.P.Jalan & Associates Consultants LLP, 48 Cart Sarai Road, Upper Bazaar, Ranchi, Jharkhand-834001 PAN No. : AABCA 6546 P Respondent (Appellant) .

Assessee by : Shri Vinay Kumar Jalan & Rajiv Ranjan, Adv Revenue by :Shri P.K.Mondal, JCIT Date of Hearing : 29.05.2018 Date of Pronouncement : 30.05.2018

O R D E R Per Pavan Kumar Gadale, JM: This is an appeal by the assessee against the order of CIT(A),

Ranchi, all dated 15.03.2017 for the assessment year 2006-2007, wherein

the assessee has raised the following grounds of appeal :-

1.

For that, the Ld.CIT(A) under the facts and circumstances of the case, erred in confirming the addition of Rs.10,251/- debited by the appellant as other charges such as service tax, demat expenses etc. in the profit and loss account. 2. For that, the Ld.CIT(A) under the facts and circumstances of the case, erred in confirming the addition of Rs.10,21,999/- considering it to be profit @8% of the turnover on an estimate basis in spite of the fact taken on record that the assessee has submitted the voluminous records which was

2 ITA No.107/Ran/2017 verified by the Hon’be CIT(A) by calling for the remand report.

2.

At the outset, ld. AR of the assessee has not pressed the ground

No.1 and made endorsement. Accordingly, we dismiss the ground No.1 as

not pressed.

3.

Brief facts relating to the ground No.2, are that the assessee is

engaged in the business of trading and filed the return of income for the

assessment year 2006-2007 on 30.11.2006 with total income of

Rs.202,982/- and the return of income was duly processed u/s.143(1) of

the Act and the case was selected for scrutiny. Subsequently, notice

u/s.143(2) & 142(1) of the Act were issued to the assessee. In compliance,

the AR of the assessee appeared from time to time and case was

discussed. Thereafter the AO completed the assessment and made

various additions and assessed total income at Rs.36,48,643/- and passed

order u/s.144 of the Act, dated 26.12.2008.

4.

Aggrieved by the assessment order, the assessee has filed an

appeal with the CIT(A). In the appellate proceedings the assessee argued

the grounds and reiterated the submissions made before the AO. The

CIT(A) after considering the submissions of assessee and the findings of

AO, partly allowed the appeal of the assessee.

5.

Aggrieved by the order of CIT(A), the assessee has filed an appeal

before the Tribunal.

3 ITA No.107/Ran/2017

6.

Ld. AR before us submitted that the AO considered the sale of the

assessee from the profit and loss account and estimated the income

irrespective of the fact that the assessee’s books of accounts are audited.

The AO at the time of hearing has found that no books of accounts have

been produced and no submission has been made. Therefore, the AO

estimated the income at 10% of turnover of Rs.1,53,09,970/- and made

addition of Rs.15,30,099/-. On appeal, the ld.CIT(A) has restricted the

addition to the extent of 8% after giving credit to the profit already offered

by the assessee at Rs.2,02,091/-, therefore, effective addition sustained by

the CIT(A) is Rs.12,24,980/-.

7.

Contra, ld.DR relied on the orders of lower authorities.

8.

We heard the rival submissions and perused the material on record.

The sole disputed issue with regard to estimating the income by the AO at

10% on the total turnover, whereas the CIT(A) granted relief restricting the

estimation at 8% as against 10% estimated by the AO. The contention of

the assessee before us that the estimation is at higher side and the

assessee has been offering net profit at the following rates for the

preceding and subsequent years :- Assessment Year Sales NP/Sales Net Profit (Profit % before Tax as per P&L Account) 2016 - 2017 (as on 31.03.2016) 3,86,19,303 2,17,017 0.562 2015 - 2016 (as on 31.03.2015) 5,14,58,514 6,61,549 1.286 2014 - 2015 (as on 31.03.2014) 4,42,49,819 7,05,796 1.595 2013 - 2014 (as on 31.03.2013) 3,69,25,356 6,45,747 1.749 2012 - 2013 (as on 31.03.2012) 2,90,91,405 13,03,886 4.482 2011 - 2012 (as on 31.03.2011) 1,37,02,359 8,02,552 5.857 2010 - 2011 (as on 31.03.2010) 1,46,96,797 4,956 0.034

4 ITA No.107/Ran/2017 2009 - 2010 (as on 31.03.2009) -53,392 1,62,66,757 -0.328 2008 - 2009 (as on 31.03.2008) 17,128 2,27,20,602 0.075 2007 - 2008 (as on 31.03.2007) 9,271 1,69,10,354 0.055 2006 - 2007 (as on 31.03.2006) 9,71,513 1,53,09,970 6.346 2005 - 2006 (as on 31.03.2005) 10,77,862 1,37,88,682 7.817 2004 - 2005 (as on 31.03.2004) 54,739 1,58,60,903 0.345 2003 - 2004 (as on 31.03.2003) 26,960 1,47,29,124 0.183 2002 - 2003 (as on 31.03.2002) 29,083 1,22,32,522 0.238 2001 - 2002 (as on 31.03.2001) 1,23,130 74,42,693 1.654 2000 - 2001 (as on 31.03.2000) 61,809 60,75,630 1.017

Therefore, the ld.AR submitted that the addition made by the AO is higher

and considering the chart given by the assessee regarding net profit rate

offered for the subsequent and preceding assessment years, the net profit

may be estimated at a reasonable rate. Ld. AR before us also filed audit

report, balance sheet and profit and loss account for the assessment year

2006-07 along with computation of income. Ld. AR drew our attention to

the computation of income and submitted that the amount of Rs.2,02,981/-

is the gross total income of the assessee which includes income from

various other sources other than the head profits & gains from business &

profession and also it excludes the incomes which are exempt under the

Income Tax Act. Ld. AR further drew our attention to the profit and loss

account and submitted that the amount of Rs.9,71,513/- is the profit before

tax, which includes profit on sale of long term investments Rs.7,45,252/-,

profit on sale of current investment Rs.1,77,877/-, dividend received

Rs.70,607/- and interest from income tax refund Rs.5,842/- and submitted

that if these amounts are reduced from the aforementioned profit before

tax, the net amount comes to Rs.(-)28,065/- as shown in the computation

5 ITA No.107/Ran/2017 of income. We have perused the chart placed by the assessee containing

the net profit rate shown by the assessee for the different assessment

years and considering the same, we are of the considered view that the

matter needs verification and examination at the end of AO, who shall

consider the claim of the assessee as per the chart placed before us with

respect to net profit on the total turnover shown by the assessee in the

different assessment years. This ground of appeal of the assessee is

allowed for statistical purposes.

9.

In the result, appeal of the assessee is partly allowed for statistical

purposes.

Order pronounced in the open court on 30/05 /2018

Sd/- Sd/- (N.S.SAINI) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Ranchi, Dated 30/05/2018 Prakash Kumar Mishra , Sr. Ps Copy of the Order forwarded to : 1. The Appellant – M/s Anant Metals Pvt. Ltd. C/o-Sri Vinay Kumar Jalan, M/s O.P.Jalan & Associates Consultants LLP, 48 Cart Sarai Road, Upper Bazaar, Ranchi, Jharkhand-834001 2. The Respondent – ITO, Ward-1(1), Jamshedpur 3. The CIT(A) concerned 4. CIT , concerned 5. DR, ITAT, Ranchi 6. Guard file. BY ORDER,

//True Copy// SR.PS, ITAT, RANCHI

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