BINOD KUMAR BURNWAL,BURDWAN V. ITO, WARD 2(1), , DURGAPUR

ITA 1154/KOL/2025

AI Insights

The case involves Binod Kumar Burnwal, the appellant, who contested the assessment order passed by the Income Tax Officer (ITO), Ward-2(1), Durgapur, for the assessment year 2010-11. The ITO had estimated the net profit of the assessee at 5% of turnover due to non-compliance and incomplete verification of transactions, leading to an addition of Rs.10,63,586.38 to the assessee's income. The assessee argued that a 5% profit rate was excessive and arbitrary, citing comparable cases where a 2% rate was applied. The Tribunal agreed with the assessee, reducing the estimated net profit rate to 2% and sustaining a lower addition to the income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712259 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2010-2011
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Competent authority
• Section: 144; 142(1); 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL ‘SMC” BENCH KOLKATA Before Shri Sonjoy Sarma, Judicial Member and Shri Rakesh Mishra, Accountant Member I.T.A. No.1154/Kol/2025 Assessment Year: 2010-11 Binod Kumar Burnwal…….……...……..…………………....Appellant C/o Ghanashyam Burnwal, Banagram, Nutandanga, Gogla, Burdwan – 713383. [PAN: AIZPB0692A] vs. ITO, Ward-2(1), Durgapur…………………..………………….…..... Respondent Appearances by: Shri Manoj Tiwari, Advocate, appeared on behalf of the appellant. Shri Kallol Mistry, JCIT, Sr. DR, appeared on behalf of the Respondent. Date of concluding the hearing : July 29, 2025 Date of pronouncing the order : July 31, 2025 आदेश / ORDER Per Sonjoy Sarma, Judicial Member: This appeal by the assessee is directed against the order dated 18.03.2025 passed by the NFAC [in short CIT(A)] under section 250 of the Income-tax Act, 1961. 2. Brief Facts of the case are that the assessee filed its return of income declaring total income of ₹2,89,094, which was processed under Section 143(1) of the Income-tax Act, 1961. Subsequently, the case was selected for scrutiny under CASS with prior approval of the competent authority. Statutory notices under Sections 143(2) and 142(1) were issued, but there was no compliance from the assessee or his authorised representative. In the absence of proper books of account or supporting documents, the Assessing Officer (AO) collected copies of audited financial statements from the assessee’s Chartered Accountant. It was observed that during the year under consideration, the assessee Printed from counselvise.com I.T.A. No.1154/Kol/2025 Binod Kumar Burnwal 2 debited ₹2,61,28,804.25 under the head “Purchase”. The AO initiated verification of purchase transactions by issuing notices to the respective parties under Section 133(6) and examining records from earlier scrutiny assessments. Total purchases of ₹27711502/- were reported from M/s. Dishnet Wireless Ltd. However, due to non-availability of books of accounts and supporting invoices, the AO could not verify the genuineness of the transactions in full. Given the non-compliance and incomplete verification, the AO proceeded to frame the assessment under Section 144 (best judgment assessment). The gross receipt as per the profit and loss account was ₹2,70,53,606 and the assessee had declared a net profit of ₹2,89,093.62, reflecting a net profit rate of 1.06% on turnover. Deeming the declared profit rate to be too low and not reflective of the business reality, the AO estimated net profit at 5% of turnover, resulting in an estimated net profit of ₹13,52,680. Accordingly addition of the total income of Rs.10,63,586.38 (Rs.13,52,680/- - Rs.2,89,093.62) was added in the hands of the assessee. 3. Dissatisfied with the above order assessee went in appeal where appeal of the assessee was dismissed by upholding the order of the AO. 4. Aggrieved by the above order assessee is appeal before this Tribunal. The assessee contended that the application of 5% profit rate was excessive and arbitrary in comparable cases involving similar line of business, net profit was estimated at 2% of turnover. The turnover and financials were not fully disputed; therefore, a lower net profit rate would be fair and justified. The AR furnished a comparative table of net profit and gross profit percentages earned in five years which is in following manner: Printed from counselvise.com I.T.A. No.1154/Kol/2025 Binod Kumar Burnwal 3 5. We after considering the submission of parties and after considering the submission and material on record, we find that a net profit rate of 2% would be reasonable under the facts of the case and accordingly directed the AO to restrict the estimation to 2% of turnover, i.e., ₹2,70,53,606, which comes to ₹5,41,072. The remaining addition was directed to be deleted. Accordingly, addition of Rs.2,51,978.38 (Rs.541072 – Rs.289093.62) is sustained. 6. In the result, the appeal of the assessee is partly allowed. Kolkata, the 31st July, 2025. Sd/- Sd/- [Rakesh Mishra] [Sonjoy Sarma] लेखा सदèय/Accountant Member ÛयाǓयक सदèय/Judicial Member Dated: 31.07.2025. RS Printed from counselvise.com I.T.A. No.1154/Kol/2025 Binod Kumar Burnwal 4 Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3.CIT (A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches Printed from counselvise.com "