BAGRI ENTERPRISE ,KOLKATA vs. ITO, WARD - 34(1), KOLKATA

Appellant by : Shri Soumitra Choudhury, Adv. & Joydeep Chakraborty Respondent by : Shri Dhrubajyoti Ray, JCIT सुनवाई क� तार�ख/ Date of Hearing : 29/01/2020 घोषणा क� तार�ख/Date of Pronouncement : 21/02/2020 आदेश / O R D E R Per Shri S. S. Godara: This assessee’s appeal for assessment year 2014-15 arises against the Commissioner of Income Tax -10, Kolkata’s order dated 03.09.2018 passed in case no.340/CIT(A)-10/Ward-34(1)/2014-15/2016-17/Kol involving proceedings u/s 143(3) of the Income Tax Act, 1961 (in short ‘the Act’).

Heard both the parties. Case file perused.

“05. FINDINGS & DECISION 1 I Have carefully examined the action of the ld. A.O in rejecting the books of accounts and estimating the Net Profit @12% of the turnover. I find that the Ld. A.O has no other option but to arrive at an estimation on account of the non-compliance by the assessee / A.R for the assessee. The appellant has not cared to cooperate in its assessment proceedings before the Ld. A.O and the details have been also recorded by the Ld. A.O.

Bagri Enterprise During the assessment proceedings, the appellant merely furnished the Tax audit Report before the Ld. A.O and did not furnish any of the details as called for by the Ld. A.O. I find that by deliberately delaying the submission of documents, the appellant has willfully prevented any enquiry or verification as intended by the Ld. A.O. In appeal, the appellant has not supplied any material facts countering the observations of the Ld. A.O but has only contested that the estimation of the Net Profit at 12% of the turnover was excessive.

2. Having carefully considered the matter, I find that the statistics supplied by the appellant in terms of the Net Profit for earlier years cannot be relied upon, as there has been no scrutiny carried out in earlier years and no verification of the facts and figures was carried out, so as to give any credence to the NP of earlier years. I find that the appellant has disclosed a NP of only around 1,00,000/- even after payment of salary and interest to the partners, which is a ridiculously Ilow figure on a total sales of Rs.5,10,89,362/-. I find that the appellant is a trader of electrical goods and appliances, and therefore the margin of profit in such activity ranges from 10 to 16%. In the circumstances, I do not wish to fault the Ld. A.O for taking a mean net Profit or 12% when there has been total non-cooperation by the assessee-firm. I accordingly reject the claims of the appellant made in the matter, and confirm the action of the Ld. A.O. The ground of appeal

therefore stands dismissed. The other ground relates to the action of the Ld. A.O in adding back receipts of claims of Commission and discount to the tune of Rs.1,75,622/-. The Ld. A.O has doubted the source of such claims, and therefore the source was to be provided and defended by the appellant. This appellant has not done, and instead is claiming that the Ld. A.O had contradicted himself. I find no such contradiction in the action of the Ld. A.0 which is based on the fact that the appellant refused to produce relevant documents and details. I accordingly reject the claims of the appellant made in the matter, and confirm the action of the Ld. A.O. This ground of appeal also stands dismissed.”

3. We have given our thoughtful consideration to rival contentions against and in support of the impugned addition. We find that neither the Assessing Officer nor the CIT(A) have taken note of the assessee’s corresponding net profits 0.10%, 0.13% and 0.21% adopted and allowed in assessment years i.e. 2012-13, 2013-14 and 2014-15 involving corresponding turnover(s) of Rs.4,59,67,448/-, Rs.5,04,53,465/- and Rs.5,10,89,362/-; respectively from trading of electrical goods. Learned departmental representative fails to dispute that both the lower authorities’ respective adjudications have not taken note of the said clinching fact nor they have pin-pointed any exception in the corresponding details of the impugned assessment year. It has already come on record that the assessee’s net profit rate of 0.21% is excessive than that compared to the preceding two assessment years as well. We also do not see any verification from the Assessing Officer’s side qua assessee’s net profit margin in electrical goods trading business. We therefore conclude that the Assessing Officer and the CIT(A) have erred in estimating assessee’s already excessive net profit margin of 0.21% to 12% in issue. The same is directed to be deleted.

Bagri Enterprise 4. Next comes the latter addition of Rs.1,75,622/- pertaining to income from commission and discount. We notice with the able assistance of the learned authorized representative that the assessee’s trading/P & L A/c for the relevant previous year ending on 31.03.2014 has already included the same as income along with sales, commission and closing stock figures. The same is a clear-cut case of double addition therefore. We accordingly direct the Assessing Officer to delete this latter addition amounting to Rs.1,75,622/- as well.

Order is pronounced in the open court on 21.02.2020.