What did the Tribunal hold?

The Tribunal followed a coordinate bench's decision for AY 2010-11, which had restored the issue to the Assessing Officer due to contradictions and lack of basis for sales estimation. The current appeal was also restored to the Assessing Officer for fresh adjudication.

The Assessing Officer made additions by estimating net profit at 10% under Section 144. This estimation was based on the assessment for the previous assessment year, AY 2010-11.

What were the issues?

Whether the estimation of net profit by the Assessing Officer was justified, especially when the basis for estimation was flawed and similar issues were restored in the previous assessment year.

M/S. S.B. Industries… vs ITO | ITAT Delhi 2018

Income Tax Appellate Tribunal, DELHI ‘G’ BENCH,

For Appellant: Shri Ankit Gupta, Adv

Hearing: 29.10.2018Pronounced: 31.10.2018

PER N.K. BILLAIYA, ACCOUNTANT MEMBER,

This appeal by the assessee is preferred against the order of the CIT(A), Muzaffarnagar dated 20.12.2016 pertaining to A.Y 2011-12.

The sum and substance of the grievance of the assessee is that the CIT(A) erred in upholding the additions made by the Assessing Officer.

Facts on record show that the assessment was framed u/s 144 of the Income-tax Act, 1961 [hereinafter referred to as 'the Act'] vide order dated 29.03.2014 by which the Assessing Officer estimated the net profit at 10% following the assessment for A.Y 2010-11.

We find that the dispute in A.Y 2010-11 travelled upto the Tribunal and the Tribunal vide order dated 16.09.2016 in has restored the issue to the file of the Assessing Officer by holding as under:

“After considering rival submissions and perusing relevant material on record, it is observed that there are certain contradictions in recording of the factual position by the AO and the assertions made on behalf of the assessee. Whereas the Assessing Officer has recorded that the assessee produced purchase bills only for Rs. 37.26 lakhs out of total of Rs. 1.42 crores, the ld. counsel for the assessee has placed on record copies of all the invoices and submitted that these were available before the Assessing Officer as well. Similarly, there are contradictions qua the support for expenses. It is also found that the A.O. has not given any basis for estimating sales at Rs. 1.80 crore and further the application of profit rate at 10%. As the assessee now claims to have the entire material available with it enabling the A.O. to complete assessment on the basis of declared results, I consider it expedient to set aside the impugned order and remit the matter to the file of the A0 for determining income as per law on the basis of evidence now available with the assessee. I order accordingly.”

Respectfully following the findings of the coordinate bench and on finding that the assessment is based on A.Y 2010-11, we deem it fit to restore the issue to the file of the Assessing Officer with similar directions as given in A.Y 2010-11 [supra].

In the result, the appeal of the assessee in is allowed for statistical purposes.

The order is pronounced in the open court on 31.10.2018.

M/S. S.B. INDUSTRIES,MUZAFFARNAGAR vs. ITO, MUZAFFARNAGAR

What did the Tribunal hold?

What were the facts?

What were the issues?

Which sections of the Income-tax Act were involved?

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