THE ITO, WARD-1, GANDHIDHAM vs. M/S KANDLA STEEL PVT. LTD., GANDHIDHAM

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ITA 266/RJT/2017Status: DisposedITAT Rajkot14 September 2022AY 2012-133 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the issue was similar to a previous assessment year where the CIT(A)'s order was confirmed. Since no distinguishing facts were presented by the Revenue, their appeal did not survive.

What were the facts?

The Revenue appealed the CIT(A)'s order which restricted the addition made by the AO by estimating Net Profit at 0.22% of sales instead of 7%. The assessee is engaged in trading corrugated sheets, iron and steel, and manpower supply.

What were the issues?

Whether the CIT(A) erred in restricting the Net Profit estimation without comparing with similar businesses, and whether the CIT(A) correctly applied a previous year's ratio without differentiating facts.

Which sections of the Income-tax Act were involved?

Section 145,Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT

Before: Ms. SUCHITRA KAMBLE & SHRI WASEEM AHMED

For Appellant: Shri Karun Ojha, CIT (DR)
Hearing: 04.08.2022Pronounced: 14.09.2022

PER SUCHITRA KAMBLE, JUDICIAL MEMBER :

1.

This appeal is filed by the Revenue against the order dated 03.05.2017 passed by the CIT(A)-3, Rajkot for the Assessment Year 2012-13.

2.

The Revenue has raised the following grounds of appeal:

“1. The Ld. CIT(A) erred in law and facts in restricting the addition made by AO by estimating Net Profit at Rs.1,87,42,378/- @ 0.22% of sales and receipts of Rs.54,66,95,400/- instead of 7% as computed in the assessment order.

2. The Ld. CIT(A) erred in law and facts by estimating the NP @ 0.22% instead of 7% as estimated by the AO, without comparing the NP of other concerns engaged in the same nature of business.

3. The Ld. CIT(A) relied upon his decision of AY 2010-11 which involve the same issue. While deciding the appeal for A.Y. 2010-11, the NP ratio of 0.22% declared by the assessee in the return was revised to 0.5% by Ld. CIT(A). For A.Y. 2012-13, without differentiating any facts and circumstances as compared to A.Y. 2010-11, Ld. CIT(A) just applied the NP ratio of 0.22% which was returned by the appellant for A.Y. 2010-11.

Assessment Year: 2012-13 Page 2 of 3 4. It is therefore prayed that the adoption of profit ratio @ 7% as held in the assessment order be restored.”

3.

The assessee company is engaged in the business of trading corrugated sheets, trading in iron and steel of various kind and hiring and providing manpower on contractual basis. The assessee filed original return of income on 26.09.2012 declaring therein total loss of Rs.4,75,66,269/-. At the time of assessment proceedings the assessee furnished written reply, explanation and details as well as produced books of accounts like computerised cash book, ledger, bank book, journal and files of expenses for verification and scrutiny. The Assessing Officer observed that the provisions of Sub-section (3) of Section 145 are invoked and the books of account of the assessee were rejected, thus, computed the total income from business or profession of the assessee as per Section 144 of the Act. Thus, the Assessing Officer computed the net profit of the assessee from trading sales at Rs.49,32,33,930/- at 7% of the total sales of Rs.7,04,61,98,991/-. The income from depot-direct sales was computed at Rs.3,68,78,471/- after allowing expenses and purchases of Rs.1,40,13,19,074/- from depot-direct sales of Rs.1,43,81,97,545/-. The income from manpower supply services and job work is computed at Rs.1,65,78,035/- after allowing expenses of Rs.1,82,88,603/- from income and from manpower supply and job work of Rs.3,48,66,638/-. Thus, the total income of the assessee chargeable to tax under the head ‘income from business or profession’ was computed at Rs.54,66,90,436/- by the Assessing Officer. The total income of the assessee chargeable to tax under the head ‘income from other sources’ was computed at Rs.4,963/-.

4.

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

5.

At the time of hearing, none appeared on behalf of the assessee, but the Ld. DR submitted that the issue is squarely covered by the earlier Assessment Year i.e. 2010-11 passed by the Tribunal.

6.

We have heard Ld. DR and perused all the relevant material available on record. It is pertinent to note that the issue related to estimating net profit at Rs.1,87,42,378/- at 0.22% sales and receipt of Rs.54,66,95,400/- was similar to the Assessment Year: 2012-13 Page 3 of 3 earlier Assessment Year i.e. 2010-11 as quoted by the CIT(A) in his order at para 5.14. The Tribunal in Assessment Year 2010-11 has confirmed the order of the CIT(A) and hence no distinguishing facts were pointed out by the Ld. DR in the present Assessment Year. Therefore, the appeal filed by the Revenue does not survive.

7.

In the result, appeal of the Revenue is dismissed.

Order pronounced in the open Court on this 14th day of September, 2022.

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