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Income Tax Appellate Tribunal, ‘ D’ SMC BENCH : CHENNAI
Before: SHRI GEORGE MATHAN
आदेश / O R D E R
This is an appeal filed by the assessee against the order of the Commissioner of Income-tax (Appeals)-13, Chennai in appeal No.155/C.I.T(A)-13/A.Y 2015-16 dated 30.05.2018 for the assessment year 2015-16.
Shri T.Vasudevan represented on behalf of the Assessee and Smt.M.Subashri represented on behalf of the Revenue.
It was submitted by the ld.AR that assessee is a firm, which is in the business of manufacturing and exporting shoes. Ld.AR submitted that in the course of assessment, the assessee was asked to produce the books of accounts and ledgers in support of its return. It was a submission that one of the partners of the assessee firm had filed a letter on 20.11.2017 stating that there was a major fire accident in the business premises of assessee on 17.02.2017 and they had lost all the relevant financial statements and other documents.
Consequently, the Assessing Officer had compared the ratio of net profit offered for financial year 2014-15 relevant to assessment year 2015-16 with the financial year 2013-14, relevant to the assessment year 2014-15, i.e. the ld.Assessing Officer had compared the assessee’s net profit for the relevant assessment year with that of the immediately preceding assessment year. It was a submission that the assessee had offered low net profit compared to the previous year net profit and consequently the Assessing Officer had adopted the net profit of the assessee for the relevant assessment year to be the same as that of the immediately preceding assessment year. This resulted in an addition of Rs.4,15,852/-. It was a further submission that there had been a drop in the net profit on account of fluctuation in the euro currency rate. Ld.AR placed before me a copy of euro reference exchange rate from 10.08.2013 to 10.08.2015. It was a submission that the euro had dropped from Rs.82.58 to Rs.67.91, drop of Indian currency of nearly rupee 14.67. It was a submission that this has resulted in drop in the net profit.
In reply, ld.DR vehemently supported the order of ld.CIT(A) and the order of ld.Assessing Officer. Ld.DR submitted that just because of drop in the euro rate would not make much difference because the assessee is in the business of not only export, but also doing local sales. It was a submission that the same argument was placed before the ld.CIT(A) and the ld.CIT(A) had dismissed the said argument on ground that the said fluctuation resulting in the drop in the net profit was not supported by the documents like sale invoices and receipts. It was a submission that the assessee’s own net profit for the immediately preceding assessment year, which has been adopted, was the lowest when compared to the earlier assessment years. It was a submission that the orders of the ld.CIT(A) and the ld.Assessing Officer were liable to be sustained.
I have considered the rival submissions. A drop in the euro rate by nearly rupee 14.67 escalates into percentage difference of 17.76%, when the euro rate of 82.58 is considered. When considering the net profit rate of 1.37% is considered as disclosed for immediately preceding assessment year, the drop in the euro rate for the relevant assessment year is to an extent of 17.76% whereas assessee’s net profit has dropped by only few point percentages. Obviously, this is not the reason for the drop in the net profit. Further, as has been mentioned by the ld.CIT(A), the assessee has not been able to substantiate how this drop in euro has affected the net profit margin with any supporting documents like sale invoices and receipts. This being so, I find no error in the order of the ld.CIT(A), which calls for any interference.
In the result, the appeal of the assessee is dismissed.
Order pronounced on 12th July, 2019, at Chennai.