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Income Tax Appellate Tribunal, KOLKATA BENCH “C” KOLKATA
Before: Shri A.T.Varkey & Shri Waseem Ahmed
आदेश /O R D E R
PER Waseem Ahmed, Accountant Member:-
This appeal by the assessee is arising out of order of Commissioner of Income Tax (Appeals)-XXXVI, Kolkata in appeal No201/CIT(A)- XXXVI/Kol/ACIT, Circle-2/MID/2012-13 dated 27.08.2014. Assessment was framed by ACIT, Circle-2, Midnapore u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 05.12.2008 for assessment year 2010-11. Shri Miraj D. Shah, Ld. Authorized Representative appeared on behalf of assessee and Shri Pravash Roy, Ld. Departmental Representative appeared on behalf of Revenue.
A.Y.2010-11 Smt. Bandana Maikap Vs. ACIT, Cir-2 MID Page 2 2. Issue No. 1 and 2 are general in nature and do not require any adjudication.
Next issue raised by assessee in this appeal is that Ld. CIT(A) erred in confirming the order of Assessing Officer by estimating profit @ 8% on the turnover of the assessee.
Facts in brief are that assessee in the present case is an individual and engaged in business of transportation of fly ash. During the course of assessment proceedings, AO observed that assessee is not maintaining her books of account and in previous assessment year 2009-10 the income was estimated @ 8% which was not challenged in appellate stage. Accordingly AO estimated the income of the assessee @ 8% on gross receipt.
Aggrieved, assessee preferred an appeal before Ld. CIT(A) whereas it was submitted that in previous assessment year 2009-10 the income was disclosed @ 6.68% of the turnover and which was determined by AO u/s. 144 of the Act @ 8% but the difference between income offered by assessee and income determined by AO was not significant enough. Therefore, the assessee did not prefer any appeal before Ld. CIT(A). However, Ld. CIT(A) disregarded the claim of assessee by confirming the order of AO by observing as under:- “4.1 Appellant’s submission and facts available on record is carefully considered. Assessment record was called for and maintained, as admitted by A/R of the assessee in the order sheet before the AO. Even during appellate proceeding, the A/.R of the appellant stated that he had no objection against estimation of profit, but was of the opinion, that estimation at 8% was on higher side.
4.2 Assessee is a contractor who evacuates fly ash from the site of Kolaghat Thermal Power Plant. For such evacuation, assessee uses several excavators of her own. It also claim several expenses, which the AO could not verify due to non production of books of account and other supporting documents. It may be noted that appellants profit was determined at 8% in the immediately preceding year, against which as noted by AO in the order sheet, assessee has not preferred any appeal. In view of the above, AO had correctly determined profit at 8% as done in the immediate preceding year, as the assessee has not been able to produce books of account or other evidence in support of various expense claimed.”
A.Y.2010-11 Smt. Bandana Maikap Vs. ACIT, Cir-2 MID Page 3 Being aggrieved by this, assessee has come up an appeal before us.
Before us Ld AR for the assessee reiterated same submissions as made before Ld. CIT(A) and he stated that the issue may be decided on merit. On the other hand, Ld. DR vehemently relied on the order of Authorities Below.
We have gone through the submissions made by both the sides and order of the lower authorities as well as other materials available on record. In the case on hand the AO has determined the net profit at the rate of 8% of the gross receipts on 2 grounds. Firstly the assessee did not maintain any books of accounts and secondly in the immediate preceding assessment year 2009- 10 the net profit was estimated at the rate of 8% of Gross receipts under section 144 of the Act which was not disputed by the assessee. However the learned AR before us challenged the rate of estimation of net profit that is 8% on gross receipts as discussed above. Now the issue before us arises for adjudication so as to whether the net profit determined and the rate of 8% on the basis of last year assessment is correct in the aforesaid facts and circumstances. From the aforesaid chart given by the learned AR showing the amount of profit declared by the assessee and the profit determined by the revenue, we find that each year the profit was enhanced by the Revenue in terms of percentage as detailed under :
S.No. AY % profit declared % profit estimated Net increase by assessee by Revenue
2008-09 2.84% 5% 2.16% 2. 2009-10 6.69% 8% 1.31% From the above table, we find that in the last two assessment years the net profit was increased by the Revenue in the assessment year 2008-09 and 2009-10 by 2.16% and 1.31% respectively. For the year under consideration the assessee declared the profit @ 4.39% and the same was enhanced to 8% thereby it was increased by 3.61% of the gross receipt. Thus this year the increase was 3.61% which is in excess in comparison to the earlier two years A.Y.2010-11 Smt. Bandana Maikap Vs. ACIT, Cir-2 MID Page 4 as discussed above which appears not reasonable. In view of above we are inclined to maintain the consistency on the basis of last two assessment years and accordingly estimating the profit by enhancing 2.11% of the profit declared by the assessee. Thus, the net profit @ 6.5% of the gross turnover of the assessee is reasonably estimated. The AO is directed accordingly. Hence, the ground of appeal of the assessee is partly allowed in terms of above.