AARCON INDIA,AMRITSAR vs. INCOME TAX OFFICER,WARD 5 (1), AMRITSAR

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER

I.T.A. No.573/Asr/2018 Assessment Year: 2015-16

M/s Aarcon India E-234, Ranjit Vs. ITO, Ward-5(1), Avenue, Amritsar. Amritsar. [PAN: AAPFA8150N] (Appellant) (Respondent)

Appellant by None. Respondent by Ms. Kanchan Garg, Sr.DR

Date of Hearing 18.10.2022 Date of Pronouncement 11.11.2022

ORDER Per:Anikesh Banerjee, JM:

The instant appeal of the assessee is directed against the order of the ld. Commissioner of Income Tax(Appeals)-2, Amritsar, [in brevity the CIT(A)] bearing appeal No.10356/2017-18, date of order 28.08.2018, the order passed u/s

250(6) of the Income Tax Act 1961, [in brevity the Act] for A.Y. 2015-16.The

I.T.A. No.573/Asr/2018 2 Assessment Year: 2015-16

impugned order was emanated from the order of the ld. Income Tax Officer,Ward

5(1), Amritsar, (in brevity the AO) order passed u/s 144of the Act date of order

01.12.2017. 2. Tersely, we advert the fact of the case. The assessee is a Civil Contractor

and declared turnover for the assessment year amount of Rs.5,24,34,588/-. The net

profit was declared by the assessee @ 5.47 during this assessment year which is

worked out amount of Rs.28,70,875/-. The assessment was initiated. The assessee

was present before the AO and the assessment was completed u/s 144 for non

submission of the books of account and the net profit was calculated @ 12% on the

turnover of the assessee which is worked out amount of Rs.62,92,150/-. The

assessee already declared the net profit Rs.28,70,875/- in return of income. So the

difference amount Rs.34,21,275/- was added back with the total income of the

assessee. The assessee has audited the books of account u/s 44AB of the Act and

submitted the tax audit report with the return of income. Aggrieved assessee filed

an appeal before the ld. CIT(A). The ld. CIT(A) after considering the submission

of the assessee upheld the order of the ld. AO.

I.T.A. No.573/Asr/2018 3 Assessment Year: 2015-16

matter is taken up with the consent of the ld. Sr. DR.

and also the order of both the revenue authorities. The assessee filed the details

submission with ground of appeal and declared the year-wise net profit before the

Bench, which is reproduced as below:

SL NO Ass vr Sales (in Rs) Partners’ Audit Section Net Profit Net profit shown rate salary of Income 2011-12 10,20,500 72,000 0.98 % Tax Act 44AD 1 10,010 2 2012-13 12,81,526 72,000 30,522 2.38 % 44AD 3 2013-14 2,67,05,271 72,000 14,18,539 5.31 % 44AB 4 2014-15 23,65,204 1,00,000 89.216 3.77 % 44AD 5.47 % 5 2015-16 5,24,34,588 6,00,000 28,70,875 44AB

5.1 The main grievance of the assessee is that from assessment year 2011-12 to

2015-16 the assessee’s net profit was varied from 8% to 5.47%. The assessee

maintained the books of account and tax audit was completed which was duly filed

before the assessing authority. The ld. CIT(A) had passed the order without

considering the average net profit of the assessee in each and every year. Only to

I.T.A. No.573/Asr/2018 4 Assessment Year: 2015-16

upheld the order of the ld. AO by confirming the net profit ratio @ 12% of gross turnover. 6. The ld. Sr. DR only relied on the order of the revenue authorities and argued accordingly. 7. After a thoughtful consideration we find that the assessee has average net profit ranging from 0.98% to 5.47% on turn over. The assessee would be under the provision of section 44AD as the turnover is below 40 lacs for this assessment year.Considering the higher Turn Over the assessee is not under perview of section 44AD of the Act for this assessment year. So the applicability@8% net profit on turnover is not applicable suo motu on assessee. Both revenue authorities had not considered the nature of business, area of business, yearwise average net profit of the assessee. Only the net profit ratio 12% was confirmed on suo motu basis without considering the variance factors of the business. We find that considering the nature of the business and the average net profit from the assessment years 2011-12 to 2015-16 could not be @12% for the year under apple. The further opportunity should be allowed to the assessee for ascertaining the profit ratio for this assessment year for A.Y. 2015-16. Accordingly, the issue is setting aside to ld. CIT(A) for further adjudication. The assessee has also grievance for crediting of

I.T.A. No.573/Asr/2018 5 Assessment Year: 2015-16

TDS which was deducted from his turnover. Needless to say the assessee should

get a reasonable opportunity of hearing and documents which would be filed

before the authority should be accepted and considered in accordance with law.

statistical purpose.

Order pronounced in the open court on 11.11.2022

Sd/- Sd/-

(Dr. M. L. Meena) (ANIKESH BANERJEE) Accountant Member Judicial Member

AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T.