Nagam Pvt. Ltd., CHENNAI V. ITO, CHENNAI

ITA 139/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5965 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-08-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 17-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI , , . , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO. 139/MDS/2017 ( / ASSESSMENT YEAR: 2012-13) M/S. NAGAM PVT. LTD., NEW NO.3, OLD NO.19, 2 ND MAIN ROAD, KOTTUR GARDEN, CHENNAI 600 085. VS THE INCOME TAX OFFICER, CORPORATE WARD 4 (2), CHENNAI. PAN:AABCN2651G ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE /RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT /DATE OF HEARING : 23.10.2017 ! /DATE OF PRONOUNCEMENT : 27.10.2017 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-8, CHENNAI DATED 23.11.2016 IN ITA NO.204 /2015-16 FOR THE ASSESSMENT YEAR 2012-13 PASSED U/S.250(6) R .W.S. 144 OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD.CIT(A) HAS ERRED IN 2 ITA NO. 139/MDS/2017 SUSTAINING THE ORDER OF THE LD.AO WHO HAD ASSESSED THE INCOME OF THE ASSESSEE AT 1% GROSS SALES. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF TRADING IN CEMENTS, FILED ITS RETURN OF INCOME FOR THE ASSESSM ENT YEAR 2012- 13 ON 04.12.2013 ADMITTING TOTAL INCOME OF RS.6,14, 489/-. THE CASE WAS SELECTED FOR SCRUTINY AND FINALLY ASSESSME NT ORDER WAS PASSED U/S.144 OF THE ACT ON 24.03.2015, WHEREIN TH E LD.AO ESTIMATED THE INCOME OF THE ASSESSEE AT 1% OF ITS T URNOVER AMOUNTING TO RS.6,06,53,917/-, WHICH WORKS OUT TO R S.60,06,539/- BECAUSE THE ASSESSEE DID NOT PRODUCE ITS BOOKS OF A CCOUNTS, BILLS & VOUCHERS AND OTHER RELEVANT DOCUMENTS DURING THE ASSESSMENT PROCEEDINGS. ON APPEAL, THE LD.CIT(A) CONFIRMED TH E ORDER OF THE LD.AO BY OBSERVING AS UNDER:- 4.1 I HAVE CONSIDERED THE OBSERVATION OF THE ASSES SING OFFICER AND THE SUBMISSIONS MADE BY THE APPELLANT. THE ONLY IS SUE UNDER CONSIDERATION IS THE ESTIMATION OF INCOME MADE AT 1 % OF THE GROSS SALES BY THE ASSESSING OFFICER IN AN ASSESSMENT MAD E U/S.144. ADMITTEDLY, THE NET PROFIT MARGIN OF THE APPELLANT IN THE PRECEDING FOUR YEARS HAS BEEN AS UNDER: FINANCIAL YEAR ENDING NET PROFIT PERCENTAGE 31.03.2008 0.66 31.03.2009 0.64 31.03.2010 0.51 31.03.2011 0.46 3 ITA NO. 139/MDS/2017 THE AVERAGE NET PROFIT SHOWN BY THE APPELLANT IS 0. 57% FOR THE PRECEDING FOUR ASSESSMENT YEARS. IT IS SEEN THAT TH E APPELLANT NEITHER FILED THE INFORMATION CALLED FOR BY THE ASS ESSING OFFICER NOR RESPONDED TO THE QUERY OF THE ASSESSING OFFICER ASK ING THE APPELLANT TO EXPLAIN THE REASONS AS TO WHY THE 1% OF THE GROS S SALES SHOULD NOT BE CONSIDERED AS THE NET PROFIT FOR THE ASSESSM ENT YEAR UNDER CONSIDERATION. THERE IS A SPECIFIC FINDING BY THE ASSESSING OFFICER WITH REGARD TO NON-FURNISHING OF INFORMATION AND NO N-COMPLIANCE OF THE NOTICES & LETTERS ISSUED. AS OBSERVED IN TH E CASE OF A.R.A.N. CHETTIYAR FIRM V. ITO (2 ITC 477)(RANGOON), WHERE T HE ASSESSEE FURNISHED ONLY APPROXIMATE FIGURES IN THE RETURN OF INCOME THEN A BEST JUDGEMENT MADE BY IGNORING THAT RETURN WAS VAL ID. IN THE CASE OF THE APPELLANT, THE NET PROFIT WAS ARRIVED ON EST IMATE BASIS, AS CLEARLY OBSERVED BY THE ASSESSING OFFICER. THE APP ELLANTS CONTENTION THAT WHILE MAKING A BEST JUDGEMENT ASSES SMENT COMPARABLE CASES HAVE TO BE CONSIDERED IS NOT RELEV ANT IN THE CASE ON HAND SINCE THE ASSESSING OFFICER ESSENTIALLY REL IED ON THE NET PROFIT ADMITTED BY THE APPELLANT IN THE PRECEDING A SSESSMENT YEARS. THE ESTIMATION OF 1% HAS BEEN MADE BY THE ASSESSING OFFICER KEEPING IN VIEW THE FACT THAT THE APPELLANT RECEIVE D A DISCOUNT AMOUNT OF RS.1.38 CRORES IN THE PREVIOUS YEAR RELEV ANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THEREFORE, I FIND THAT THE ASSESSING OFFICER MADE AN HONEST AND FAIR ESTIMATE OF THE PROFITS AND THE ESTIMATION CALLS FOR NO INTERFERENCE WHATSO EVER. IN VIEW OF THE ABOVE, THE ESTIMATION OF INCOME OF THE APPELLAN T AT 1% OF THE GROSS SALES IS CONFIRMATION. THE APPELLANT FAILS O N THIS GROUND. 4. AT THE OUTSET, WE FIND MERIT IN THE ORDER OF THE LD.CIT(A), BECAUSE IN THE ABSENCE OF BOOKS OF ACCOUNTS AND OTH ER RELEVANT DOCUMENTS, THE REVENUE DO NOT HAVE ANY OTHER OPTION BUT TO ESTIMATE THE INCOME OF THE ASSESSEE BASED ON ITS TU RNOVER. IN THE CASE OF THE ASSESSEE, THE LD.REVENUE AUTHORITIES WE RE MAGNANIMOUS AND LIBERAL IN ESTIMATING THE INCOME OF THE 4 ITA NO. 139/MDS/2017 ASSESSEE AT 1% OF ITS TURNOVER. HOWEVER, SINCE THE LD.AR HAS PLEADED STATING THAT THE MATTER MAY BE REMITTED BAC K TO THE FILE OF LD.AO FOR FRESH CONSIDERATION BECAUSE THE ASSESSEE IS IN A POSITION TO PRODUCE ITS BOOKS OF ACCOUNTS AND ALL R ELEVANT DOCUMENTS, IN THE INTEREST OF JUSTICE, WE HEREBY RE MIT THE MATTER BACK TO THE FILE OF LD.AO FOR DE-NOVA CONSIDERATION . HOWEVER, WE ALSO CAUTION THE ASSESSEE TO PROMPTLY CO-OPERATE BE FORE THE REVENUE AUTHORITIES BY PRODUCING THE RELEVANT DOCUM ENTS REQUIRED FOR THE ASSESSMENT PROCEEDINGS, FAILING WH ICH THE LD.REVENUE AUTHORITIES SHALL BE AT LIBERTY TO PASS APPROPRIATE ORDER IN ACCORDANCE WITH LAW & MERITS BASED ON THE MATERIALS PLACED BEFORE THEM. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREIN ABOVE. ORDER PRONOUNCED ON THE 27 TH OCTOBER, 2017 AT CHENNAI. SD/- SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER '# /CHENNAI, $% /DATED 27 TH OCTOBER, 2017 RSR 5 ITA NO. 139/MDS/2017 % '( )( /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. , ( )/CIT(A) 4. , /CIT 5. (-. / /DR 6. .0 /GF