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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri J. Sudhakar Reddy & Shri S.S. Viswanethra Ravi
For the Assessee : Shri Anil Kochar, Advocate For the Revenue : Shri C. J. Singh, JCIT, Sr. DR Date of hearing : 25.04.2019 Date of pronouncement : 10.07.2019 ORDER PER Shri S.S. Viswanethra Ravi, JM:
Both these appeals by the assessee and Revenue respectively against the common order dated 10.03.2017 passed by the Commissioner of Income Tax (Appeals)-15, Kolkata [‘CIT(A)’] for Assessment Year 2012-13.
Since the issues raised in both the appeals are based on same, identical facts and with the consent of both the parties, we proceed to I.T.A No.736/Kol/2017 & Sri Netai Das hear both the appeals together and pass a consolidated order for the sake of brevity.
First we shall take up by the assessee.
4. Ground Nos.1 and 2 are relating to confirmation of additions in part on account of Dharam Kanta and car parking fees in the facts and circumstances of the case.
Heard both parties and perused the materials available on record. A survey was conducted at the business premises of assessee on 23.03.2012 and impounded the Register (MS)WB-1. The Assessing Officer on the examination of said register found that the assessee’s collection between 01.08.11 to 22.03.12 of Rs.42,20,080/- on account of weighbridge and car parking. The Assessing Officer extrapolated the said amount for the whole year and estimated the gross receipt of Rs.63,30,210/-. By taking into consideration the admission made by the assessee, the Assessing Officer adopted 80% as profit element and estimated the profit at Rs.50,64,096/-.
It was submitted before the CIT(A) that the assessee started weighbridge activity w.e.f. 01.11.11 and parking activities from 20.07.11. The assessee pleaded the gross receipt from weighbridge is Rs.13,15,315/- and parking charges is at Rs.28,08,610/-. Further the assessee pleaded to adopt the net profit at 61.75% and 52.42% for weighbridge and parking charges respectively by placing reliance in the audited accounts. The CIT(A) considering the submissions of the assessee has taken into account the gross receipts as mentioned in the audited accounts and applied the same as 80% net profit rate and restricted the net profit at Rs.33,39,140/- instead of Rs.50,64,096/-.
I.T.A No.736/Kol/2017 & Sri Netai Das 6. Before us the ld. AR submits that the CIT(A) ought have accepted the explanation given by the assessee which was fully evidenced by impounded documents seized during the course of survey proceedings u/s 133A of the Act. Further he contended that the Assessing Officer is wrong in extrapolating the gross receipt for the whole year. The assessee established weighbridge activities only from 01.11.11 and parking activities from 20.07.11 and he argued that the Assessing Officer was wrong in extrapolating the gross receipt for entire year. The CIT(A) should have taken net profit rate as shown by the assessee in the audited account but however he adopted 80% which is unreasonable and highly excessive. The ld. DR relied on the order of Assessing Officer.
We find that the CIT(A) has taken the gross receipts from audited accounts and applied the net profit rate as adopted by the Assessing Officer. In our opinion, when the CIT(A) has taken gross receipts from the audited accounts he should have taken the net profit also as shown by the assessee. Therefore taking into consideration the submissions of ld. AR and facts and circumstances of the case, we deem it proper to apply net profit rate for both the activities at 65% which is in our opinion are reasonable. Therefore the order of CIT(A) is set aside. Ground Nos.1 & 2 raised by the assessee are allowed in part.
Ground No.3 is relating to confirmation of addition made on account of applying net profit rate at 17.67% in the facts and circumstances of the case.
Heard both parties and perused the materials available on record. It is noted from the record that the assessee is engaged in manufacturing and trading in bricks in its proprietary concern under the name and style of M/s D. K. Enterprise. The Assessing Officer
I.T.A No.736/Kol/2017 & Sri Netai Das taking into consideration the impounded documents nos.DKE-1 to DKE-7 calculated the sale figure for entire year at Rs.3,32,36,311/-. The assessee contended that he carried brick business in a partnership firm from 01.04.2011 to 11.08.2011 and thereafter the partnership was dissolved. Again from 12.08.11 the brick business was conducted on proprietary concern. The Assessing Officer taking into consideration the same computed the gross sale at Rs.2,54,04,276/- on account of proprietary concern M/s D.K. Enterprises and applied gross profit rate at 58.28% and estimated net profit at Rs.1,36,64,742/-.
In the first appellate proceedings, the assessee objected to rejection of books and the CIT(A) taking into consideration the net profit rate for three preceding years adopted net profit rate at 17.67% and restricted the addition at Rs.30,02,652/- instead of Rs.1,36,64,742/-.
Before us the ld. AR contended that the assessee conducted under the proprietary from 12.08.11 and CIT(A) taking into consideration the net profit rate of three preceding years of partnership firm is bad and illegal. The ld. DR relied on the order of Assessing Officer.
Having considered the submissions of ld. AR and facts and circumstances as discussed above, we are of the opinion that the assessee started brick business from 12.08.11 in the name of M/s. D. K. Enterprises and the net profit as adopted by the Assessing Officer and CIT(A) is on estimation basis. Therefore taking into consideration the facts and circumstances of the case, we deem it proper to adopt net profit rate at 15%. Therefore the order of CIT(A) is modified accordingly. Thus Ground no.3 is allowed in part.
I.T.A No.736/Kol/2017 & Sri Netai Das 14. Now we shall take up the appeal filed by the Revenue in ITA No.1129/Kol/2017.
15. We find that the Revenue raised four grounds which are related to the issues raised by the assessee in his appeal in wherein we discussed the issue in the aforementioned paragraphs and modified the order of CIT(A). It is noted that the appellant-revenue raised all the four grounds challenging the action of CIT(A) in restricting addition made on account of weighbridge and car parking activities and on account of restricting addition made on account of brick business under proprietary concern, wherein we have taken a decision in modifying the order of CIT(A) in the aforementioned paras and in view of the same the grounds raised by the Revenue becomes academic requiring no adjudication. Therefore grounds raised by the Revenue are dismissed.
In the result, the appeal of the assessee is allowed in part and appeal filed by the Revenue is dismissed.
Order pronounced in the open court on 10.07.2019.