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Income Tax Appellate Tribunal, CUTTACK ‘SMC’ BENCH,
Before: SHRI N.S SAINI
IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK ‘SMC’ BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER
ITA No.437/CTK/2016 Assessment Year :2010-2011
Shreegopal Mundhra, Prop. Vs. ITO, Angul Ward, Plot Bhutnath Store, Main Road, No.630/83, Kulad, Angul. Angul PAN/GIR No. ACMPM 7192 B (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.
The sole issue involved in this appeal is that the CIT(A) erred in
confirming the order of the Assessing Officer estimating net profit @ 5% of
the turnover after rejecting book results of the assessee thereby making
addition of Rs.2,42,193/- to the income of the assessee.
I have heard the rival submissions and perused the orders of lower
authorities and materials available on record. Brief facts of the case are that
the Assessing Officer asked the assessee to submit the bills and vouchers for
2 ITA No.437 /CT K/20 16 Asse ss ment Y ear :20 10- 201 1 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 @ 5% of gross business receipts of
Rs. 1,18,85,510/- at Rs. 5,94,276/-.
On appeal before the CIT(A), the assessee stated that the net profit
shown by him was @ 3% 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 @
3.04%, 2.77% and 2.64% respectively. The details are as below:
SI. Asst. Year Turnover Net Profit Result No.
1 2010-11 Rs.1,17,23,955/- Rs.3,52,083-(3.0%) Assessed u/s. 143(3) 2. 2009-10 Rs.1,64,58,110/- Rs.4,35,696/- Accepted u/s. (2.64%) 143(1) 3. 2008-09 Rs.1,56,34,160/- Rs.4,33,703/- Accepted u/s. (2.77%) 143(1) Accepted u;s. 4. 2007-08 Rs.1,28,20,009/- Rs.3,90,527/- (3.04%) 143(1)
The CIT(A) after considering the submission of the assessee held that
the assessment made by the Assessing Officer by applying the net rate of
3 ITA No.437 /CT K/20 16 Asse ss ment Y ear :20 10- 201 1 profit @ 5% to the turnover of the assessee for estimating the income was
not excessive.
Before me, ld A.R. of the assessee submitted that the rate of estimation
of net profit @ 5% to the turnover was excessive as compared to the past
accepted results of the assessee.
The Departmental Representative, on the other hand, supported the
order of the CIT(A).
I find that the rejection of books of account of the assessee is not under
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 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 @ 3.04%,
in A.Y. 2008-09 @ 2.77% and in A.Y. 2009-10 @ 2.64%. 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 4% will meet the
ends of justice. I, therefore, modify the order of the CIT(A) accordingly and
partly allow the ground of the appeal of the assessee.
4 ITA No.437 /CT K/20 16 Asse ss ment Y ear :20 10- 201 1 8. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open court on 30/01/2017 in the presence of parties. Sd/- (N.S Saini) ACCOUNTANT MEMBER Cuttack; Dated 30/01 /2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Assessee : Shreegopal Mundhra, Prop. Bhutnath Store, Main Road, Angul 2. The respondent: ITO, Angul Ward, Plot No.630/83, Kulad, Angul. 3. The CIT(A)-2, Bhubaneswar. 4. Pr.CIT2, Bhubaneswar. 5. DR, ITAT, Cuttack 6. Guard file. BY ORDER, //True Copy//
SR.PRIVATE SECRETARY ITAT, Cuttack