SHREE SHUBHAM EXPORTS,KOLKATA vs. ITO, WARD-36(2), KOLKATA, KOLKATA

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ITA 2574/KOL/2019Status: DisposedITAT Kolkata09 February 2021AY 2016-173 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal set aside the 15% profit estimation, directing that net profit be estimated on total purchases by considering the average net profit of the preceding three and subsequent two assessment years. The estimated profits are to be set off against carried forward losses.

What were the facts?

The assessee contested an addition of ₹10,66,945/- made by the Assessing Officer on account of estimated profits from the sale of imported goods at 15%. The assessee claimed no sales were made, as the goods were returned due to inferior quality, or alternatively, that the profit estimation was too high.

What were the issues?

The primary issue was the justification and quantum of profit estimation on the sale of imported goods, and whether such profits could be set off against brought forward losses.

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA BENCH “SMC” KOLKATA

आदेश /O R D E R The present appeal has been preferred by the assessee against the order dated 25.09.2019 of the Commissioner of Income-tax (Appeals)-10, Kolkata [hereinafter referred to as ‘CIT(A)’]. 2. None has put in appearance on behalf of the assessee despite notice. In view of this, I proceed to decide the appeal on merits after going through the record and after hearing the Ld. DR.

3.

The assessee in this appeal has contested the addition made by the Assessing Officer on account of estimation of profits earned on sale of import goods @ 15% and thereby making the total addition at ₹10,66,945/-. The assessee has taken the plea that in fact the assessee did not make any sales. The goods, that were imported were Shree Shubham Exports Vs. ITO Wd-36(2), Kol. Page 2 returned by the assessee due to inferior quality. It has been pleaded that since the assessee did not make any sales / purchase, the estimation of profit on sale by the Assessing Officer was not justified. In the alternative, it has been pleaded that the estimation of profit @ 15% was too high, which could have been at the most estimated at 2% of total purchase. It has been further pleaded that even otherwise the assessee is entitled to set off the profits against the carried forward losses of the earlier assessment years.

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