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Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri M. Balaganesh, AM & Shri K. Narasimha Chary, JM]
ORDER Per Shri K. Narasimha Chary, JM:
This appeal by assessee is arising out of order of CIT(A)-XXX, Kolkata vide appeal No. 517/CIT(A)-XXX/Wd-43(4)/2009-10 dated 18.03.2013. Assessment was framed by ITO, Wd-43(4), Kolkata u/s. 144 of the Income tax Act, 1961 (hereinafter referred to as the “Act”) for AY 2007-08 vide his order dated 29.12.2009.
Assessee is trading in furniture. They filed their income tax return on 01.11.2007 declaring a total income of Rs. 71,913/-. Subsequently the case was selected for compulsory scrutiny, resulting in passing assessment order u/s 144 of the Act on the ground that in spite of several opportunities given, assessed the profits of the assessee at Rs. 40,73,300/- raising a demand for Rs. 17,89,557/-. Aggrieved by the order of learned AO, assessee carried the matter in appeal before the CIT(A) and the learned CIT(A) by way of impugned order confirmed the assessment and dismissed the appeal. Challenging the impugned order, the assessee filed this appeal on the following grounds: “
1. That on the facts and in the circumstances of the case the estimation of net profit for Rs.4073300/- being 1% of Turnover is unjust, based on no evidence and based on incongruous factual premises.
2. That the Assessee crave, leave to add, alter and amend any ground or grounds of appeal before or at the time of hearing.”
3. In respect of ground nos. 1 and 2, it is the argument of the learned AR that the assessee maintains proper books of accounts, but due to the illness of his father, he was away from the business for some time and was unable to pursue the assessment proceedings
M/s. shree Impex, AY 2007-08 by producing the list of documents and other books of accounts resulting in Order under Sec 144 of the Act. She further submitted that when the matter was remanded by the CIT(A) to the learned AO, learned AO by way of letter dated 10.12.2012 submitted that it was not possible for him to go through all the papers in a short time, but submitted that the determination of net profit at 1% on the total turnover was justified. Learned CIT(A) in his order at page No 10 observed that “It is also seen that although various details had been submitted before the AO in remand proceedings, however the books of accounts etc were still not produced before him and the appellant had only given month wise details of purchase and sales in remand proceedings. Therefore the gross profit and Book Profit declared by the Appellant is not substantiated even in Appeal proceedings.”
Learned CIT(A) proceeded on this assumption that books of accounts etc were still not produced before the learned AO during remand proceedings. However, at page No. 6 of his orders, learned CIT(A) had taken cognizance of the grievance of the assessee, which is as follows:
“Further during the course of remand hearing, AO asked various details like Books of Accounts, bills voucher, family members details, details of purchase & sales with complete name and postal address, sundry debtors and creditors. Most of the details were furnished. However AO in remand report stated that due to short time, he was not in a position to go through the papers submitted….”
Learned AR submits that as a matter of fact all the account books were submitted for the consideration of the AO but pleading paucity of time learned AO did not consider the same. In the absence of account books and other relevant material the learned AO resorted to estimate of the net profit and on the same ground the learned CIT(A) also resorted to the same. However, though the account books and other relevant material sought by the learned AO during the remand proceedings were produced by the assessee, the learned AO declined to consider those material and to reach a reasonable tax liability of the assessee stating that it is not possible for him to go through all the papers submitted by the assessee. Once the explanation for the absence of the assessee during assessment proceedings is accepted by the learned CIT(A), documents were received and the documents in support of the claim of assessee was remanded to the learned AO vide office letter dated 29.4.2011, and the learned AO sought the production of some other document which were produced by the assessee, it is not proper not to look into the material and to say that determination of net profit at 1% on the total turnover was justified. In all fairness, the authorities below should have taken
M/s. shree Impex, AY 2007-08 the matter to its logical conclusion, before resorting to determination of net profit at 1% on the total turnover. In these circumstances, in the interest of justice, it is but just and fair to remand the matter to the learned AO for consideration of the entire material to reach just tax liability of the assessee. With this view of the matter, we set aside the issue to learned AO for fresh consideration of the entire material to reach the tax liability of the assessee. It is made clear that it is the last opportunity to the assessee to cooperate with the learned AO to get proper conclusion of assessment proceedings.
In the result, the appeal of the assessee is allowed for statistical purpose.