M/S. I.K.M. INDUSTRIES PVT. LTD., ,HOWRAH vs. ITO, WARD - 13(2), KOLKATA , KOLKATA

The assesse in the present case is a company, which is engaged in contracting business. The return of income for the year under consideration was filed by it on 30-09-2012 declaring total income of Rs.14,41,760/-. During the course of assessment proceedings, it was noticed by the AO that the assessee company has shown contract receipts of Rs.4,33,71,005/- in its audited accounts while the contractual receipts as per From 26AS were shown at Rs.4,29,07,513/-. Thus, there was a difference of Rs.4,63,492/- in the contractual receipts, which was explained by the assesse as income received from extra ordinary sales of Rs.5,55,12,740/- on account of some excisable material supplied to the clients. The AO found that the explanation of the assessee was not substantiated by any documentary evidence. He also was of the opinion that profit of Rs. 4,63,492/- declared on extra ordinary sales of Rs.5,55,12,740/- giving profit margin of 0.833% was abysmally low and absurd. He, therefore, applied the net profit rate of 5% and estimated the profit of the assessee from the extra ordinary sales at Rs.27,75,637/- against profit of Rs.4,63,492/- shown by the assessee. Accordingly, the difference of Rs.23,12,145/- (Rs. 27,75,637 – Rs. 4,63,492) was added by him to the total income of the assessee in the assessment completed u/s. 143(3) vide an order dt. 31-03-2015.

Against the order passed by the AO under section 143(3), an appeal was preferred by the assessee before the Ld. CIT (A) and since there was no compliance on the part of the assessee to the notices issued by him fixing the same for hearing from time to time, the ld. CIT(A) dismissed the appeal of the assessee vide his appellate order dt. 02-02-2018 passed ex parte. Aggrieved by the order of the Ld. CIT (A), the assessee has preferred this appeal before the Tribunal.

I have heard the arguments of both the parties and also perused the material available on record. Besides explaining the non-compliance on the part of the assessee before the CIT(A), the ld. Counsel for the assessee has also contended that the net profit rate of 5% applied by the AO while estimating the profit of the assesse from extra ordinary sales is highly excessive and un reasonable. In support of this contention, he has filed the details of gross profit rate and net profit rate declared by the assessee for the immediately preceding three years as well as immediately succeeding two years. It is, however, observed that the ld. CIT(A) has not decided this issue on merit vide his impugned order passed ex parte. It is also observed that written submission was filed by the assesse during the course of appellate proceedings before the ld. CIT(A) as mentioned by the ld. CIT(A) himself in paragraphs 2 of his impugned order. The ld. CIT(A), however, has not taken the same into consideration while disposing of the appeal of the assessee and there is no decision rendered by him on the merit of the issue involved in this case. I, therefore, consider it fair & proper and in the interest of justice to set aside the impugned order of the ld. CIT(A) passed ex parte and remand the matter back to him for disposing of the appeal of the assessee afresh after giving the assessee one more opportunity of being heard and after considering the written submissions filed by the assessee on record.

In the result, the appeal of the assessee is treated as allowed for statistical purpose.