What did the Tribunal hold?

The Tribunal, considering the assessee's past and future profit trends, reduced the estimated net profit percentages from those determined by the Assessing Officer and CIT(A). The net profit for AY 2003-04 & 2004-05 was fixed at 2.00% and for AY 2005-06 & 2006-07 at 2.5%.

The assessee declared low net profit percentages for assessment years 2003-04 to 2006-07. The Assessing Officer estimated higher net profit percentages, which were upheld by the CIT(A).

What were the issues?

The sole issue was the estimation of the net profit percentage by the Assessing Officer and the correctness of the CIT(A)'s decision in upholding it.

Tag Motors Ltd., Ludhiana vs ACIT | ITAT Chandigarh 2018

आदेश/Order

Per Sanjay Garg, Judicial Member:

The captioned appeals have been preferred by the assessee against the separated orders of the Commissioner of Income Tax (Appeals), Bhatinda [hereinafter referred to as CIT(A)] dated 28.10.2016.

The sole issue raised in all the appeal is regarding the estimation of the net profit percentage for the assessment year under consideration of the assessee.

The assessee declared net profit for assessment year 2003-04 @ -1.0%, for assessment year 2004-05 @ -4.81%, for assessment year 2005-06 @ 0.30% and for assessment year 2006-07 @ 2.31%. However,

ITA Nos. 190 to 193/Chd/2017- M/s Tag Motors Ltd., Ludhiana 2

the Assessing officer was of the view that the assessee had wrongly

declared the net profit at a very lower rate. He, therefore, estimated the

net profit for assessment years 2003-04 & 2004-05 @ 2.50% and for

assessment years 2005-06 & 2006-07 @ 3.0%. The assessee challenged the

aforesaid estimation of net profit by the Assessing officer before the Ld.

CIT(A), however, remained unsuccessful.

Before us, Ld. Counsel for the assessee has furnished the details of

the previous years as well as of the subsequent years to the assessment

years under consideration, wherefrom it is gathered that in the earlier

assessment years, the net profit rate returned by the assessee was in

negative, whereas, in the subsequent assessment years, the assessee has

shown positive income declaring net profit rate ranging from 4.35% in the

assessment year 2007-08 to 0.53% for assessment year 2017-18.

Considering the overall facts and circumstances and the past and

future net profit returned by the assessee, in our view, interest of justice

will be well served if the net profit for assessment years 2003-04 &

2004-05 is taken @ 2.00% as against 2.50% estimated by the Assessing

officer and for assessment years 2005-06 & 2006-07 @ 2.5% as against 3%

estimated by the Assessing officer. The Assessing officer is, therefore,

directed to assess the income of the assessee accordingly for the aforesaid

assessment years 2003-04 to 2006-07.

ITA Nos. 190 to 193/Chd/2017- M/s Tag Motors Ltd., Ludhiana 3

In the result, the appeals of the assessee are treated as partly allowed. Order was pronounced in the Open Court on 29.08.2018

Sd/- Sd/- (अ�नपूणा� गु�ता / ANNAPURNA GUPTA) (संजय गग� / SANJAY GARG) लेखा सद�य/ Accountant Member �या�यक सद�य/ Judicial Member Dated : 28.11.2018 “आर.के.”

आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File

आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar

TAG MOTORS LTD.,LUDHIANA vs. ACIT, LUDHIANA

What did the Tribunal hold?

What were the facts?

What were the issues?

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