Mahanth Designers Private Limited, , Hyderabad V. Income Tax Officers , Ward-16(3), Hyderabad

ITA 1561/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6793 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Assessment Year: 2016-2017
• Appeal Filed On: 22-10-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: GIRIDHAR TOSHNIVAL
• Section: 143(1); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO. 1561 /H/20 1 9 ASSESSMENT YEAR: 20 1 6 - 1 7 MAHANATH DESIGNERS PVT. LTD., HYDERABAD. PAN - AA JCM 7344 M VS. INCOME - TAX OFFICER, WARD 16(3), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI GIRIDHAR TOSHNIVAL REVENUE BY: SHRI ROHIT MUJUMDAR DATE OF HEARING: 1 6 /0 3 /2021 DATE OF PRONOUNCEMENT: 08 /04/2021 O R D E R PER L.P. SAHU, A.M. : T H I S APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST CIT( A ) - 4 , HYDERABADS ORDER DATED 30 / 0 8 /201 9 INVOLVING PROCEEDINGS U/S 1 43(3) OF THE INCOME TAX ACT, 1961 ; IN SHORT THE ACT WHEREIN THE SOLE ISSUED INVOLVED REGARDING 10% ESTIMATION OF NET PROFIT BY THE AO, WHICH WAS CONFIRMED BY THE CIT(A). 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY ENGAGED IN THE CLOTH RETAILING BUSINESS, FILED ITS ITA NO. 1561 /H YD/ 20 1 9 M/S MAHNATH DESIGNERS PVT. LTD ., HYDERABAD. : - 2 - : RETURN OF INCOME FOR THE AY 2016 - 17 ON 29/09/2016 DECLARING AN INCOME OF RS. 46,17,750/ - , WHICH WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND ACCORDINGLY, STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE, AGAINST WHICH, THE ASSESSEE PRODUCED SOME STATEMENTS AND DID NOT PRODUCE BOOKS OF ACCOUNT. ON VERIFICATION OF THE VOUCHERS SUBMITTED BY THE ASSESS EE, THE AO OBSERVED THAT WHEN THERE WERE NO BOOKS OF ACCOUNTS THE VOUCHERS CANNOT BE VERIFIED AND IN THE AUDIT REPORT, THE ASSESSEE DECLARED A NET PROFIT OF RS. 46,17,750/ - , WHICH ACCORDING TO AO IS A VERY LOW IN THIS LINE OF BUSINESS. THE AO OPINED THAT S INCE IN THE RETAIL CLOTH MERCHANT, THE NET PROFIT MARGIN SHOULD BE RANGES FROM 10% TO 15% AND IN THE ABSENCE OF BOOKS OF ACCOUNT AS WELL AS KEEPING IN VIEW THE NATURE OF ASESSSEES BUSINESS, HE ESTIMATED THE NET PROFIT AT 10% OF THE GROSS TURNOVER OF RS. 1 4,21,42,638/ - WHICH WORKED OUT BE AT RS. 1,42,14,260/ - . ACCORDINGLY, HE ESTIMATED THE NET PROFIT AT RS. 95,96,515/ - (RS. 1,42,14,260 46,17,750/ - ) , WHICH WAS ADDED BACK TO THE INCOME RETURNED BY THE ASSESSEE. 3. WHEN THE ASSESSEE PREFERRED AN APPEAL BE FORE THE CIT(A), THE CIT(A) CONFIRMED THE ORDER OF THE AO BY HOLDING THAT INSPITE OF SEVERAL OPPORTUNITIES ACCORDED NEITHER THE APPELLANT NOR ITS AR RESPONDED OR APPEARED TO THE HEARING NOTICES AND HAS NOT FURNISHED SUBMISSIONS/EVIDENCE TO ITA NO. 1561 /H YD/ 20 1 9 M/S MAHNATH DESIGNERS PVT. LTD ., HYDERABAD. : - 3 - : SUBSTANTIATE THE ADDITION, HENCE, CONFIRMED THE ORDER OF THE AO. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AS WELL AS THE ORDERS OF THE AUTHORITIES BEL OW. SINCE THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNT, THE AO ESTIMATED THE NET PROFIT OF THE ASSESSEE AT RS. 10% OF THE GROSS TURNOVER OF RS. 14,21,42,638/ - , WHICH WORKED OUT TO RS. 1,42,14,260/ - AS AGAINST THE NET PROFIT DECLARED BY THE ASSESSEE AT RS. 46,1 7 ,750/ - , THE DIFFERENCE OF WHICH WAS RS. 95,96,515/ - ADDED TO THE INCOME OF THE ASSESSEE. THE AR OF THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNT DURING THE ASSESSMENT PROCEEDINGS AND APPELLATE PROCEEDINGS TH OUGH SUFFICIENT OPPORTUNITIES WE RE GIVEN TO SUBSTANTIATE ITS CASE WITH DOCUMENTARY EVIDENCE. ON CONSIDERING THE TOTALITY OF THE FACTS OF THE ASSESSEES CASE AND TO MEET THE ENDS OF JUSTICE, WE ARE OF THE VIEW THAT ESTIMATION OF NET PROFIT OF THE ASSESSEE AT 8% OF THE GROSS TURNOVER FOR WHICH THE AR OF THE ASSESSEE GAVE CONSENT, WOULD MEET THE ENDS OF JUSTICE. THEREFORE, WE DIRECT THE AO TO ESTIMATE THE NET PROFIT OF THE ASSESSEE AT 8% OF THE GROSS TURNOVER. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ON THIS ISSUE ARE PARTLY ALLOWED. ITA NO. 1561 /H YD/ 20 1 9 M/S MAHNATH DESIGNERS PVT. LTD ., HYDERABAD. : - 4 - : 6. IN THE RESULT, APPEAL OF THE ASSESSE E IS PARTLY ALLOWED IN ABOVE TERMS. PRONOUNCED IN THE OPEN COURT ON 8 TH APRIL , 2021 . SD/ - SD/ - (S . S . GODARA) (L . P . SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDE RABAD, DATED : 8 TH APRIL , 20 2 1 . KV C OPY TO : 1 M/S MAHNATH DESIGNERS PVT. LTD., H.NO. 4 - 2 - 466/467, BADICHOWADI, HYDERABAD . 2 I T O , WARD 16 ( 3 ), HYDERABAD . 3 CIT( A ) - 4 , HYDERABAD 4 PR. CIT 4 , HYDERABAD. 5 ITAT, DR, HYDERABAD 6 GUARD FILE.