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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
ORDER Per:Anikesh Banerjee, JM: Both the instant appeals of the same assessee were filed against the order of the ld. Commissioner of Income Tax (Appeals) -1, Amritsar Camp at Jammu,[in brevity the ‘CIT (A)’] order passed u/s 250 (6) of the Income Tax Act 1961, [in & Assessment Years: 2007-08 & 2012-13 2 brevity ‘the Act’] for A.Ys. 2007-08 & 2012-13. Theimpugned order was emanated from the order of the ld. Income Tax Officer, Ward-3(3), Srinagar, [in brevity ‘the AO’] order passed u/s 144of the Act.
At the outset, two appeals are under the same factual backdrop and have a common issue. Both the appeals are taken together, heard together and disposed of together. is taken as lead case.
Brief fact of the case is that the assessment was completed in both the yearsu/s 144 of the Act. The Net Profit (NP) of the assessee was enhanced in both the years. For the assessment year 2007-08, the assessee declared net profit @ 0.16%. The assessee determined the turnover amount of Rs.18,17,54,882/- related to the business of petrol pump and goods carrier. The ld. AO determined the NP @ 0.57% on the turnover for A.Y. 2007-08. For AY 12-13 the assessee declared net profit @ 0.47% on the turnover. The assessment was completed u/s 144 without getting the books of account. The ld. AO determined the NP rate @ 0.75% on the total sale amount of Rs.30,32,34,289/- for AY 2012-13. The assessee had a grievance that the net profit was enhanced without any basis and without considering the rate of earlier years. So, the assessee filed an appeal before the ld. & Assessment Years: 2007-08 & 2012-13 3 CIT(A). The ld. CIT(A) upheld the order of the ld. AO. Being aggrieved assessee filed an appeal before us.
The ld. AR filed a written submission which is kept in the record. The ld. AR first invited our attention in APB page 6. The details chart is reflected the year wise net profit declared by the assessee before Income tax Department. The said chart is extracted as below:
In the assessment year 2007-08, the assessee has grievance that no such any basic comparative was followed to determination the NP. The assessee is maintaining such net profit from earlier years which was duly accepted by revenue.
The above mentioned chart is also the self-explanatory. The assessee calculated the & Assessment Years: 2007-08 & 2012-13 4 average net profit for the assessment year 2007-08 the assessee determined the net profit 0.27% on average basis.
5.1 For A.Y. 2012-13, assessee placed that due to the severe flood in the Kashmir Valley the assessee had lost the books of account and unable to submit before the ld. AO. The ld. AR placed the CBDT Circular F.N.
225/303/2014/ITA.II, dated November, 2014. The particular Circular clearly stated that the advisory for conducting scrutiny assessment proceedings in the State of Jammu and Kahsmir, in the aftermath of floods. The ld. AR argued that the assessee was unable to submit the documents before the revenue authorities for devastating flood in Kashmir Valley. The ld. AR further argued that the assessee has determined net profit 0.47% which is higher in comparable in net profit of preceding year. The NP should be restricted 0.47% related to 2012-13 as declared by assessee.
The ld. DR vehemently argued and relied on the order of the revenue authorities.
We heard the rival submission and relied on the documents available in the record. The assessee has placed a comparative chart starting from A.Y. 2006-07 and there is basis for calculation of net profit for A.Y. 2007-08 on average basis. & Assessment Years: 2007-08 & 2012-13 5 Considering the fact, the net profit is restricted @ 0.27% on turnover for AY 2007- 08.
Related to A.Y. 2012-13 we consider the circular of CBDT. During the appeal hearing the ld. AR respectfully relied on the order of the Hon’ble Privy Council in the case of Commissioner of Income-taxv.LaxminarainBadridas [1937]5 ITR 170 (PC) is reproduced as below: - “Their Lordships can find no justification in the language of the Act for holding that an assessment made by an officer under Section 23(4) without conducting a local inquiry and without recording the details and results of that inquiry cannot have been made to the best of his judgment within the meaning of the section. Nor can they find any such justification in the authorities upon which the Judicial Commissioners appear to have relied.
7.1 Considering the fact of the case and CBDT Circular, for A.Y. 2012-13 the net profit is restricted to @ 0.47% on the turnover.
7.2 In view of the above, the grievance of the assessee is found justified. It is accepted as such. The Orders under first appeals are reversed.
As noted at the beginning of this order, the facts and issue in both these appeals are common. So, our observations qua in are, mutatis mutandis, equally applicable to also. & Assessment Years: 2007-08 & 2012-13 6
In the result, the appeals of the assessee bearing & ITA 114/Asr/2019 are allowed.
Order pronounced in the open court on 07.06.2023