M/s. Lal Fashions , Kolkata V. ACIT, Circle - 45, Kolkata , Kolkata

ITA 1623/KOL/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8818 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 30-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MADHU MALATI GHOSH

Judgement Text

1 ITA NO. 1623/KOL/2018 M/S. LAL FASHIONS., AY 2011-12 , C(SMC) , IN THE INCOME TAX APPELLATE TRIBUNAL C (SMC) BENCH: KOLKATA ( ) BEFORE . . , ) [BEFORE SHRI A. T. VARKEY, JM] I.T.A. NO. 1623/KOL/2018 ASSESSMENT YEAR: 2011-12 M/S. LAL FASHIONS (PAN: AACFL5723F) VS. ASSISTANT COMMISSIONER OF INCOME- TAX, CIRCLE-45, KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 20.12.2018 DATE OF PRONOUNCEMENT 28.12.2018 FOR THE APPELLANT SHRI SOUMITRA CHOUDHURY, ADVOCATE FOR THE RESPONDENT SMT. MADHUMALATI GHOSH, ADDL. C IT ORDER THIS APPEAL PREFERRED BY THE ASSESSEE IS AGAINST TH E ORDER OF THE LD. CIT(A)-13, KOLKATA DATED 17.04.2018 FOR AY 2011-12. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IS AGAINST TH E ACTION OF THE LD. CIT(A) IN CONFIRMING THE GROSS PROFIT ADDITION MADE BY THE AO AT 48%. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF READYMADE GA RMENTS, CLOTHES OF BRANDS LIKE RAYMONDS AND SAREES. THE ASSESSEE FIRM WAS SURVEYE D ON 01.10.2010 AND THE ASSESSEE AGREED DURING THE SURVEY 52% OF GROSS PROFIT ON THE TURNOVER AS ON THAT DATE AND HAS PAID THE TAX ALSO FOR IT. THE PRESENT DISPUTE IS IN RESPECT TO THE GROSS PROFIT OF THE TURNOVER BETWEEN 01.10.2010 AND 31.03.2011. THE ASSESSEE HAD SHOWN FOR THIS PARTICULAR PERIOD GROSS PROFIT RATE OF 25.97% WHICH WAS NOT ACCEPTED BY THE AO. A ND AFTER HAVING REJECTED THE BOOKS, HE ESTIMATED THE GROSS PROFIT RATE AT 48% KEEPING IN V IEW THE SURRENDER MADE BY THE ASSESSEE DURING THE SURVEY. AGGRIEVED, THE ASSESSEE PREFERR ED AN APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ACTION OF THE AO. AGGRIEVED, THE ASS ESSEE IS BEFORE US. 2 ITA NO. 1623/KOL/2018 M/S. LAL FASHIONS., AY 2011-12 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTS ARE NOT REPEATED FOR THE SAKE OF B REVITY. THE ONLY DISPUTE IS WITH REGARD TO THE GROSS PROFIT OF THE ASSESSEE FOR THE PERIOD BET WEEN 01.10.2010 AND 31.03.2011. SINCE THE ASSESSEE DURING SURVEY ON 01.10.2010 AGREED FOR GRO SS PROFIT RATE AT 52%, THE AO AFTER REJECTING THE BOOKS OF ACCOUNT ESTIMATED THE INCOME AT 48% OF THE TURNOVER. WE TAKE NOTE OF THE EARLIER AND SUBSEQUENT RESULT OF THE ASSESSE E WHICH IS GIVEN IN THE FORM OF CHART AT PAGE 4 OF THE PAPER BOOK WHICH IS REPRODUCED AS UND ER: AY GROSS SALES PERCENTAGE OF GP PERCENTAGE OF NP AC CEPTED IN ASSESSMENT 2012-13 96,01,307.69 25.15% 3.40% YES 2011-12 102,59,033.56 35.36% 18.57% NO 2010-11 93,29,982.61 10.48% 0.88% YES WE NOTE THAT IN THE EARLIER ASSESSMENT YEAR 2010-11 , THE ASSESSEE HAD SHOWN GROSS SALE OF RS.93,29,982/- AND HAS SHOWN A GROSS PROFIT RATE OF 10.48% WHEREIN NET PROFIT @ 0.88% WAS OFFERED BY THE ASSESSEE AND THAT WAS ACCEPTED B Y THE DEPARTMENT. FOR AY 2012-13 (SUBSEQUENT ASSESSMENT YEAR) ASSESSEE HAD SHOWN GRO SS SALES OF RS.96,01,307/- AND HAS SHOWN A GROSS PROFIT RATE AT 25.15% AND NET PROFIT RATE AT 3.40% WHICH WAS ACCEPTED BY THE DEPARTMENT, WHEREAS IN THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN GROSS SALE OF RS.102,59,033/- AND HAS SHOWN A GROSS PROFIT PERCENTAGE OF 35.36% (FOR THE WHOLE YEAR) AND NET PROFIT OF 18.57% WHICH HAS NOT BEEN ACCEPTED BY THE DEPARTMENT. WE NOTE THAT THIS 35.36% GROSS PROFIT IS FOR THE WH OLE YEAR AND FOR THE PERIOD FROM 01.10.2010 TO 31.03.2011 GROSS PROFIT WAS SHOWN AS 25.97%. EVEN THOUGH, WE ACKNOWLEDGE THAT THE AO HAS POWER TO REJECT THE BOO KS AND ESTIMATE THE INCOME OF THE ASSESSEE, IT HAS TO BE AN EXERCISE FAIRLY CONDUCTED BY THE AO. THE ESTIMATION CANNOT BE ARBITRARY AND IT HAS TO BE BASED ON RELEVANT MATERI ALS OR RESULTS FROM COMPARABLES WHICH ARE IN THE SAME KIND OF BUSINESS LIKE THAT OF THE ASSES SEE. WE NOTE THAT THE AO HAS NOT BROUGHT ANY COMPARABLES TO JUSTIFY HIS ACTION OF ESTIMATING 48% GROSS PROFIT. IN THE ABSENCE OF ANY OTHER THIRD PARTY COMPARABLES, THE ASSESSEES RESUL T OF THE EARLIER AND SUBSEQUENT ASSESSMENT YEAR CAN BE TAKEN INTO CONSIDERATION FOR FAIR ESTIM ATION OF G.P. WE NOTE FROM THE CHART GIVEN ABOVE, THE ASSESSEE HAS SHOWN GOOD RESULT IN THIS YEAR, COMPARED WITH THE EARLIER AY 2010-11 AND SUBSEQUENT A.Y.2012-13 WHICH WE NOTE HA S ALREADY BEEN ACCEPTED BY THE 3 ITA NO. 1623/KOL/2018 M/S. LAL FASHIONS., AY 2011-12 DEPARTMENT. ASSESSEE HAS SHOWN IN THIS YEAR GROSS PROFIT RATE OF 35.36% AND NET PROFIT OF 18.57% WHEN IT HAD ONLY 10.48% GROSS PROFIT FOR AY 2010-11 AND NET PROFIT OF 0.88% WHEREAS IN THE SUBSEQUENT YEAR IT WAS ONLY 25.15% GROSS PROFIT AND 3.40% OF NET PROFIT, THEREFORE, WE HOLD THAT G.P. % SHOWN IN THIS ASSESS MENT YEAR WAS BETTER WHEN COMPARED WITH THE EARLIER & SUBSEQUENT A.YS. SO WE DIRECT D ELETION OF THE ADDITION AND DIRECT THE AO TO ACCEPT THE GROSS PROFIT AS COMPUTED BY THE ASSES SEE. NO ADDITION IS THUS WARRANTED IN THE FACTS AND CIRCUMSTANCES AS DISCUSSED ABOVE. APPEAL OF ASSESSEE IS ALLOWED. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 28TH DECE MBER, 2018. SD/- (A. T. VARKEY) JUDICIAL MEMBER DATED: 28 TH DECEMBER, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT M/S. LAL FASHIONS, P-58, CIT ROAD, SCHEME VIIM, KOLKATA-700 054. 2 RESPONDENT ACIT, CIRCLE-45, KOLKATA. 3 4 5 CIT(A)-13, KOLKATA. (SENT THROUGH E-MAIL) CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR