CHANCHAL MITRA,SILIGURI, DARJEELING vs. A.O., WARD 1.1, SILIGURI

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 03.09.2024 for the AY 2022-23. 02. The only issue raised in the various grounds of appeal is against the confirmation of addition by ld. CIT (A) of ₹1,03,22,032/- as made by the ld. AO by applying 10% on the gross receipt after rejecting the books of accounts u/s 143(3) of the Act.
03. The facts in brief are that the assessee filed his return of income on 29.09.222, declaring total income at ₹29,84710/-. The case of the assessee was selected under Computer Assisted Scrutiny Selection
(CASS), on account of no income from TCS receipts (liquor). The facts
Chanchal Mitra; A.Y. 2022-23

in brief are that the assessee is engaged in the business of purchase and sale of liquor. The assessee made the purchases from the West
Bengal State Beverages Corporation Limited which is owned by the State Government and total purchase during the year were ₹12,70,02216 of which were subject to TCS. The assessee was not co- operative in the assessment proceedings and the ld. AO estimated the income on the basis of information available before him. Though the audited statements comprising the audited balance sheet profit and loss account and the information of purchase of liquor by the assessee were available before the ld. AO at the time of assessment. The ld. AO noted from the financial statements that during the year the total turnover of the assessee was 12,96,75,358/- and has also shown commission and brokerage income of ₹3,01,337/- and another miscellaneous receipts of ₹7,15,137/- thereby total receipts were shown at ₹130,73,78,832/- after applying rate of 10% under the profits were estimated at ₹130,72,783/- which were added to the income of the assessee in the assessment framed u/s 143(3) read with section 144B of the Act dated 23.03.2024. 04. In the appellate proceedings also the ld. CIT (A) after condoning the delay in filing the appeal upheld the order of the ld. AO when the assessee failed to respond various dates given in the appellate proceedings. The ld. CIT (A) held that the ld. AO has rightly assessed the income of rightly made the addition of ₹103,38,192/- by applying at the rate of 10%.
05. After hearing the rival contentions and perusing the materials available on record, we find that the assessee is undisputedly carrying the business of purchase and sale of liquor. The purchase of liquor is control item and subject to TCS during the year the assessee purchase
Chanchal Mitra; A.Y. 2022-23

the liquor from state government corporation i.e. West Bengal State
Beverages Corporation Ltd. to the tune of ₹12,70,62,216/-, which were duly shown in the audited books of accounts and was duly shown in the P & L account, the copy of which is available at page no.19. We note that against the said purchases, assessee has made total sales of ₹12,96,75,358/-. Besides the income from commission and brokerage shown of ₹12,88,637/- shown at page no. 37 of the Paper Book. The ld. AO added together all these items and on the aggregate amount of ₹1,37,27,832/- a net profit of 10% was applied whereby computing the net profit at ₹1,30,72,783/- and after allowing the deduction of income already declared by the assessee made the addition of Rs.1,03,22,032/- in the assessment order. We note that the net profit margin in the assessee’s case, whereas from 2.24 % to 2.82% in the various assessment years. The details whereas available at page no.76 in the tax audited report filed before the ld. AO the net profit was also shown at 2.40% in the preceding assessment year. The comparative chart of GP and NP, which is available at page no.76 of the Paper Book and the same is extracted below for the sake of ready reference:-
A.Y.
Total receipts
Gross profit
Gross profit%
Net Profit
Net profit%
2019-20
8,55,51,294
34,02,054
3.977%
2418905
2.827%
2020-21
8,20,12800
14,16,200.83
1.727%
2399394
2.926%
2021-22
10,67,26,890
32,56,050
3.051%
2620395
2.455%
2022-23
13,06,91,832
8,94,003
2.980%
3241878
2.481%
2023-24
15,2293,950
52,37,053
3.227%
3648341
2.248%
06. Thus, we note that all the information available before the ld. AO and even in order to make the best judgment assessment the AO has to find out the comparable case and as to base his conclusion on the comparable cases and not based on the views and findings of conjuncture and surmises. Therefore, the order passed by the ld. CIT
(A) upheld the order of the ld. AO cannot be sustained. We note that Chanchal Mitra; A.Y. 2022-23

even the ld. CIT (A) has overlooked the facts on record, since there is an open and shut case before us. Therefore, we are inclined to set aside the order of the ld. CIT (A) and direct the ld. AO to delete the addition. The appeal of the assessee is allowed.
07. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 15.01.2025. (PRADIP KUMAR CHOUBEY)
(RAJESH KUMAR)
(JUDICIAL MEMBER)
(ACCOUNTANT MEMBER)

Kolkata, Dated: 15.01.2025
Sudip Sarkar, Sr.PS
Copy of the Order forwarded to :

Sr. Private Secretary/ Asst.