SUSANTA SAHA,KOLKATA vs. ITO, WD-40(1), KOLKATA, KOLKATA
What did the Tribunal hold?
The Tribunal found that the assessee did not cooperate by providing primary documents. However, the Tribunal also noted that the AO's addition resulted in an abnormally high profit margin. Therefore, the appeal was set aside to the AO for fresh adjudication.
What were the facts?
The assessee, an individual deriving income from contract work, filed a return without financial statements. The AO made a best judgment assessment under Section 144, adding Rs. 96,716/-. The CIT(A) confirmed the addition.
What were the issues?
Whether the addition made by the AO on an estimated basis was justified, considering the lack of cooperation from the assessee and the resulting profit margin.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D”, BENCH KOLKATA
Before: SHRI M. BALAGANESH, AM & SHRI S.S.VISWANETHRA RAVI, JM
सुनवाई क� तार�ख / Date of Hearing : 14/10/2016 घोषणा क� तार�ख/Date of Pronouncement 19/10/2016 आदेश / O R D E R
PER M.BALAGANESH, AM
This appeal of the assessee arises out of the order of Learned CIT(A)-21, Kolkata, in Appeal No.1409/ITO,W-40(1)/CIT(A)-21/KOL/14- 15, dated 03.02.2016 passed against the assessment framed u/s.144 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’).
The only issue involved in this appeal is as to whether the ld.CIT(A) is justified in upholding the addition made in the sum of Rs.96,716/- on estimated basis by the ld. AO in the facts and circumstances of the case.
The brief facts of this issue are that the assessee is an individual deriving income from contract work. The return of income for the assessment year 2006-07 was filed by the assessee declaring taxable income of Rs.1,03,284/-. The assessee had just submitted the computation of total income along with return of income. Ld.AO observed that assessee had not enclosed any profit and loss account and balance sheet along with return of income and accordingly called for the same along with other details by issuing statutory notices under section 143(2)
& 142(1) of the Act. Since there was no compliance from the assessee’s side, ld.AO had no option but to resort to framing of assessment under best judgment assessment u/s.144 of the Act. Accordingly, ld. AO determined the net profit of the assessee at Rs.2 lakhs and accordingly made an addition of Rs.96,716/- in the assessment.
Before the ld. CIT(A) there was no compliance from the part of the assessee in spite of various notices issued thereon. Ld. CIT(A) accordingly confirmed the addition made by the ld. AO. Aggrieved the assessee is in appeal before us.
Ld. AR argued that assessee had already declared net profit of Rs.96,466/- which roughly works out to 25% of total contract receipts of Rs.3,91,133/-. In support of this contention, he placed a copy of balance sheet and profit and loss account of the assessee for the year ended 31.03.2006. He argued that in case if this addition made by the ld. AO is sustained then it would result in an abnormal profit figure of roughly 50% of the total receipts, which is practically not possible to earn in the nature of business carried on by the assessee and also is beyond 8% prescribed u/s.44AD of the Act.
When the case was called on, none appeared on behalf of the revenue and the revenue not even filed any adjournment request either in person or through a written petition. Accordingly, we proceed to hear the appeal on merits and on hearing the ld. AR.
We have heard ld. AR. We find that there was absolutely non- cooperation from the side of the assessee by producing the relevant details in the form of primary documents such as profit and loss account and balance sheet of the proprietary concern to justify the net profit from business disclosed by the assessee. We also find that even before the ld. CIT(A) there was no appearance from the side of the assessee. Ld. AR had filed a copy of the balance sheet and profit and loss account before us for the first time and hence, in the interest of justice and fair play, we deem it fit and appropriate to make these documents available for examination by the ld. AO and accordingly set aside the appeal to the file of ld. AO to decide the same afresh in accordance with law. Needless to mention that assessee be given reasonable opportunity of being heard. Accordingly, grounds raised by the assessee are allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on this 19/10/ 2016.
Sd/- Sd/- (S.S.VISWANETHRA RAVI) (M.BALAGANESH) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER कोलकाता /Kolkata; �दनांक Dated 19/10/2016 �काश �म�ा/Prakash Mishra,�न.स/ PS 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(अपील) / The CIT(A), Kolkata. 4. आयकर आयु�त / CIT �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, कोलकाता / DR, ITAT, Kolkata 5. 6. गाड� फाईल / Guard file. स�या�पत ��त //True Copy// आदेशानुसार/ BY ORDER,
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