MODI COLLECTION,ANGUL vs. ITO, ANGUL WARD, ANGUL

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK ‘SMC’ BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER

ITA No.436/CTK/2016 Assessment Year :2010-2011

Modi Collection, Main Road, Vs. ITO, Angul Ward, Plot Angul. No.630/83, Kulad, Angul. PAN/GIR No. AAKFM 2051 P (Assessee) .. ( Respondent)

Assessee by : Shri D.K.Sheth, AR Revenue by : Shri D.K.Pradhan, DR

Date of Hearing : 30 /01/ 2017 Date of Pronouncement : 30/01/ 2017

O R D E R This is an appeal filed by the assessee against the order of CIT(A)-2,

Bhubaneswar, dated 1.9.2016 for the assessment year 2010-11.

confirming the order of the Assessing Officer estimating net profit @ 3.29%

of the turnover after rejecting book results of the assessee thereby making

addition of Rs.1,36,518/- to the income of the assessee.

authorities and materials available on record. Brief facts of the case are that

2 ITA No.436 /CT K/20 16 Asse ss ment Y ear :20 10- 201 1

the Assessing Officer asked the assessee to submit the bills and vouchers for

verification of expenditure. The assessee stated that the bills and vouchers

are not available for production. Considering this, the Assessing Officer

observed that in absence of bills and vouchers, correctness and genuineness

of expenses is not verifiable. Therefore, he rejected the books of account and

estimated the net profit of the assessee @ 3.29% of gross business receipts

of Rs. 1,88,79,745/- at Rs. 6,21,144/-.

shown by him was @ 2.63% and the Assessing Officer has estimated the net

profit excessively. It was submitted that the net profit shown and accepted by

the department was in A.Y. 2007-08, A.Y. 2008-09 and A.Y. 2009-10 @

2.18%, 2.17% and 2.02% respectively. The details are as below:

SI. Asst. Year Turnover Net Profit Result No.

1 2010-11 Rs.1,88,79,745/- Rs.4,84,626/- Assessed u/s. (2.63%) 143(3) 2. 2009-10 Rs.1,73,60,328/- Rs. 3,51,181/- Accepted u/s. (2.02%) 143(1) 3. 2008-09 Rs.1,22,90,000/- Rs.2,66,337/- Accepted u/s. (2.17%) 143(1) Accepted u;s. 4. 2007-08 Rs.1,09,80,396/- Rs.2,39,771/- (2.1S%) 143(1)

the assessment made by the Assessing Officer by applying the net rate of

3 ITA No.436 /CT K/20 16 Asse ss ment Y ear :20 10- 201 1

profit @ 3.29% to the turnover of the assessee for estimating the income was

not excessive.

of net profit @ 3.29% to the turnover was excessive as compared to the past

accepted results of the assessee.

order of the CIT(A).

challenge before me. The only submission of the ld A.R. of the assessee is

that the net profit rate applied to estimate the income is excessive. It is also

not in dispute that the net profit rate declared and accepted by the department

in the immediately preceding assessment year’s is in A.Y. 2007-08 @ 2.18%,

A.Y. 2008-09 @ 2.17% and A.Y. 2009-10 @ 2.02%. In my considered view,

after rejecting of book results of the assessee, the income of the assessee has

to be estimated by the Assessing Officer but while doing so, he cannot make

a wild guess of the same. The past accepted results are a guide to the

estimation of the income of the assessee. Considering the past accepted

results of the assessee, I am of the considered view that estimation of income

of the assessee by applying the net profit rate of 3% will meet the ends of

4 ITA No.436 /CT K/20 16 Asse ss ment Y ear :20 10- 201 1

justice. I, therefore, modify the order of the CIT(A) accordingly and partly

allow the ground of the appeal of the assessee.

SR.PRIVATE SECRETARY ITAT, Cuttack