Shree Madhav Solvextracts (P) Ltd., Paschim Medinipur V. ACIT, CIR-1, Midnapore, Paschim Medinipur

ITA 1762/KOL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1493 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 08-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARJEE CIT REV
• Keywords: Rejection of books of accounts; Business income; Opportunity of being heard; Corroborative evidences
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH (SMC), KOLKATA [BEFORE HONBLE SHRI P.M. JAGTAP] I.T.A. NOS. 1761 & 1762/KOL/2014 ASSESSMENT YEARS : 2005-06 & 2007-08 SHREE MADHAV SOLVEXTRACTS (P) LTD..............................APPELLANT TANTIGERIA, P.O. VIDYASAGAR UNIVERSITY PASCHIM MEDINIPUR - 721102 [PAN : AAHCS6367G] ACIT, CIR 1........................................RESPONDENT RABINDRA NAGAR, MIDNAPORE PASCHIM MEDINIPORE - 721101 KOLKATA - 700001 APPEARANCES BY: SHRI SUBASH AGARWAL, ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE. SHRI ARINDAM BHATTACHARJEE, ADDL CIT APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : AUGUST 18, 2017 DATE OF PRONOUNCING THE ORDER : AUGUST 31, 2017 ORDER THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST TWO SEPARATE ORDERS PASSED BY THE LD. CIT (APPEALS) 36, KOLKATA BOTH DATED 30.06.2014 FOR A.YS. 2005-06 AND 2007-08. SINCE THE ISSUES INVOLVED THEREIN ARE INTERLINKED, THE SAME HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY A SINGLE CONSOLIDATED ORDER. 2. FIRST WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE FOR A.Y. 2005- 06 BEING ITA NO. 1761/KOL/2014 WHICH INVOLVES A SOLITARY ISSUE RELATING TO ESTIMATION OF THE BUSINESS INCOME OF THE ASSESSEE BY APPLYING A HIGHER NET PROFIT RATE OF 1%. 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF EDIBLE AND NON-EDIBLE 2 I.T.A. NOS. 1761 & 1762/KOL/2014 A.YS. 2005-06 & 2007-08 SHREE MADHAV SOLVEXTRACTS P. LTD. OILS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 31.10.2005 DECLARING A LOSS OF RS. 39,08,480/-. IN THE ASSESSMENT ORIGINALLY COMPLETED U/S 143(3) VIDE AN ORDER DATED 28.12.2007, THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY WERE REJECTED BY THE AO BY TREATING THE SAME AS UNRELIABLE AND BUSINESS INCOME OF THE ASSESSEE WAS DETERMINED BY HIM ON ESTIMATED BASIS AT RS. 3,51,380/- BEING 1% OF THE TOTAL TURNOVER OF RS. 3,51,38,078/-. ON APPEAL, THE LD. CIT (A) CONFIRMED THE DETERMINATION OF INCOME BY THE AO ON ESTIMATED BASIS BY APPLYING NET PROFIT RATE OF 1%. ON FURTHER APPEAL, THE TRIBUNAL VIDE ITS ORDER DATED 29.12.2011 PASSED IN ITA NO. 1405/KOL/2009 RESTORED THE ISSUE TO THE FILE OF THE AO WITH THE DIRECTION TO PASS THE FRESH ASSESSMENT ORDER AFTER ALLOWING THE ASSESSEE REASONABLE OPPORTUNITY OF BEING HEARD. 4. DURING THE COURSE OF SET ASIDE PROCEEDINGS, THE AO EXAMINED THE BOOKS OF ACCOUNTS AND OTHER RECORD OF THE ASSESSEE AND NOTED THE FOLLOWING DISCREPANCIES / DEFECTS THEREIN OPENING STOCK OF MOHUA OIL CAKE WAS 597.230 MT AS PER STOCK BOOK. BUT IN THE STATEMENT OF ACCOUNTS SUCH OPENING STOCK WAS SHOWN AT 597.185 MT. LIKEWISE, CLOSING STOCK OF MOHUA OIL CAKE AS PER STOCK BOOK WAS 1474.660 MT, WHEREAS THE SAME WAS SHOWN AT 1474.660 MT IN STATEMENT OF ACCOUNTS. SALES DISCLOSED IN ACCOUNTS WAS RS. 3,51,38,078/- ONLY, AS AGAINST SALES OF RS. 3,55,39,000/- DISCLOSED BEFORE ORIENTAL BANK OF COMMERCE, BURABAZAR BRANCH. BILLS OF PURCHASE OF MOHUA CAKE FOR THE MONTHS OF JULY 2004 AND AUGUST 2004 COULD NOT BE PRODUCED FOR VERIFICATION. A SUM OF RS. 1,37,888/- WAS DEBITED TO PROFIT & LOSS A/C UNDER THE HEAD STOCK TRANSFER EXPENSES. NO SEPARATE ACCOUNT WAS MAINTAINED IN 3 I.T.A. NOS. 1761 & 1762/KOL/2014 A.YS. 2005-06 & 2007-08 SHREE MADHAV SOLVEXTRACTS P. LTD. RESPECT OF CONSIGNMENT SALE, NOR ANY SALES / INCOME DERIVED FROM SUCH ACTIVITY WAS DISCLOSED. 5. WHEN THE ABOVE DISCREPANCIES / DEFECTS WERE POINTED OUT BY THE AO TO THE ASSESSEE, THE LATER OFFERED ITS EXPLANATION AS UNDER: (A) DIFFERENCE IN OPENING STOCK AND CLOSING STOCK OF MOHUA OIL CAKE WAS ONLY 0.045 MT AND THAT IMPACT OF THE MISTAKE WAS NEGLIGIBLE. (B) SALES DISCLOSED IN ACCOUNTS TALLIES WITH ASSESSMENT MADE BY SALES TAX DEPTT. (C) PURCHASE BILLS OF MOHUA OIL CAKE FOR THE MONTHS OF JULY 2004 AND AUGUST 2004 WERE NOT TRACEABLE. (D) THE COMPANY IS ENGAGED IN CONSIGNMENT SALES BESIDES TRADING OF OIL. EXPENSES RELATED TO CONSIGNMENT SALES ARE TAKEN INTO COMMON ACCOUNTS OF ASSESSEE ON THE BASIS OF SALES PATTY SENT BY THE CONSIGNEE. CONSIGNMENT SALES IS INCLUDED IN TOTAL SALES DISCLOSED IN PROFIT & LOSS A/C. 6. THE ABOVE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT FOUND TO BE ACCEPTABLE BY THE AO FOR THE FOLLOWING REASONS GIVEN IN THE ASSESSMENT ORDER: DIFFERENCE IN STOCK THE ASSESSEE CONTENDED THAT DIFFERENCE OF STOCK AS PER STOCK BOOK AND AS PER A/CS IS ONLY 0.045 MT AND ITS IMPACT IS QUITE NEGLIGIBLE. THE MOOT ISSUE IS NOT OF QUANTUM BUT OF CORRECTNESS AND RELIABILITY OF BOOKS OF ACCOUNTS. WHATEVER MAY BE THE QUANTUM OF DIFFERENCE, IT SHOWS THAT STATEMENT OF ACCOUNTS SUBMITTED WITH RETURN OF INCOME IS NOT CORRECT OR RELIABLE. DIFFERENCE IN SALES IT HAS BEEN ARGUED THAT SALES DISCLOSED IN ACCOUNTS HAS BEEN ACCEPTED BY THE SALES TAX AUTHORITIES. BUT ACCEPTANCE BY SALES TAX AUTHORITIES DOES NOT MAKE THE SALES FIGURE SACROSANCT. NOR DOES IT EXPLAIN THE DIFFERENCE IN SALES AS DISCLOSED TO BANK [RS. 3,55,39,000/-] AND THAT REPORTED IN ACCOUNTS [RS. 3,51,38,078/-]. IT IS WORTH MENTIONING IN THIS CONNECTION THAT DURING ORIGINAL ASSESSMENT ALSO, TWO DIFFERENT STATEMENTS CONTAINING 4 I.T.A. NOS. 1761 & 1762/KOL/2014 A.YS. 2005-06 & 2007-08 SHREE MADHAV SOLVEXTRACTS P. LTD. MONTHWISE DETAILS OF SALES WERE FILED, BOTH SIGNED BY THE DIRECTOR OF THE COMPANY ONE ON 29.01.2007 AND THE OTHER ON 18.09.2007. SALES FIGURE OF VARIOUS ITEMS GREATLY VARIED IN TWO STATEMENTS. FOR EXAMPLE, IN THE STATEMENT DATED 29.01.2007, SALES OF MAHUA CAKE OIL IN DECEMBER 2004 WAS REPORTED AT RS. 14,36,328/-, WHEREAS IN STATEMENT DATED 18.09.2007, SAME SALES WAS SHOWN AT NIL. SIMILARLY, SALES OF DE-OILED RICE BRAN FOR THE MONTH OF JUNE 2004 WAS SHOWN AT RS. 1,57,511/- IN STATEMENT DATED 29.01.2007, WHEREAS CORRESPONDING FIGURE IN THE STATEMENT DATED 18.09.2007 WAS DISCLOSED AT RS. 1,72,771/-. ABSENCE OF MANUFACTURING A/C AS NOTED EARLIER, THE ASSESSEE IS ENGAGED IN MANUFACTURING AND TRADING OF EDIBLE AND NON-EDIBLE OIL. HOWEVER, NO SEPARATE ACCOUNTS IN RESPECT OF MANUFACTURING ACTIVITY ARE MAINTAINED. IT IS ALSO PERTINENT TO MENTION IN THIS CONNECTION THAT ALTHOUGH ALL BOOKS OF ACCOUNTS WERE REQUISITIONED AS PER NOTICE U/S 142(1) DATED 04.10.2012 ONLY THE STOCK BOOK WAS PRODUCED FOR VERIFICATION DURING ASSESSMENT PROCEEDINGS. FURTHER, PURCHASE BILLS OF MAHUA CAKE FOR THE MONTHS OF JULY 2004 & AUGUST 2004 COULD NOT BE PRODUCED FOR VERIFICATION. NO EXPLANATION IN THIS REGARD COULD BE OFFERED. ABSENCE OF CONSIGNMENT A/C ON EXAMINATION OF ACCOUNTS IT WAS FOUND THAT EXPENSES TO THE TUNE OF RS. 1,37,888/- HAS BEEN DEBITED UNDER THE HEAD STOCK TRANSFER EXP. THE ASSESSEE STATED THAT THE EXPENDITURE WAS INCURRED BY ASSESSEE COMPANY AS CONSIGNOR IN CONNECTION WITH SALE OF GOODS ON CONSIGNMENT. HOWEVER, NO SEPARATE ACCOUNTS IN RESPECT OF CONSIGNMENT WAS MAINTAINED, NOR ANY SEPARATE SALES HAS BEEN REPORTED BY ASSESSEE. THE ASSESSEE WAS UNABLE TO OFFER ANY EXPLANATION IN THIS REGARD. FOR THE REASONS GIVEN ABOVE THE AO REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE BY TREATING THE SAME AS INCORRECT AND UNRELIABLE AND PROCEEDED TO DETERMINE THE BUSINESS INCOME OF THE ASSESSEE ON ESTIMATED BASIS. IN THIS REGARD, HE RELIED ON THE ASSESSMENT ORDER PASSED ORIGINALLY U/S 143(3) VIDE AN ORDER DATED 28.12.2007 AND ESTIMATED INCOME OF THE ASSESSEE AT RS. 3,51,380/- 5 I.T.A. NOS. 1761 & 1762/KOL/2014 A.YS. 2005-06 & 2007-08 SHREE MADHAV SOLVEXTRACTS P. LTD. BEING 1% OF THE TOTAL TURNOVER VIDE AN ORDER DATED 03.01.2013 PASSED U/S 143(3) / 254 OF THE ACT. 7. AGAINST THE ORDER PASSED BY THE AO U/S 143(3) / 254, AN APPEAL WAS AGAIN PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT (A). DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT (A), THE ACTION OF THE AO IN REJECTING THE BOOKS OF ACCOUNTS WAS CHALLENGED BY THE ASSESSEE ON THE SAME GROUNDS AS RAISED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE LD. CIT (A) HOWEVER DID NOT FIND MERIT IN THE CASE OF THE ASSESSEE AND PROCEEDED TO UPHELD THE ORDER OF THE AO DETERMINING BUSINESS INCOME OF THE ASSESSEE ON ESTIMATED BASIS BY APPLYING A NET PROFIT RATE OF 1% FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO 4.1 OF HIS IMPUGNED ORDER: APPELLANTS SUBMISSION AND FACTS AVAILABLE ON RECORD IS CAREFULLY CONSIDERED. ON PERUSAL OF AOS ORDER THE RELEVANT PORTION OF WHICH WAS EXTRACTED IN PARA 3.0, IT IS EVIDENT THAT THE AO HAD POINTED OUT SEVERAL DEFECTS BEFORE REJECTION OF BOOKS OF ACCOUNTS AND DETERMINATION OF PROFIT U/S 145(2) OF THE I.T. ACT. THEY ARE : (A) EVEN THOUGH THE ASSESSEE WAS A MANUFACTURING CONCERN, NO PRODUCTION ACCOUNT WAS PRODUCED EVEN THOUGH CALLED FOR. EVEN DURING THE APPELLATE PROCEEDING OTHER THAN MAKING LEGAL ARGUMENT, NO MANUFACTURING ACCOUNT WAS PRODUCED OR EVEN CLAIMED TO HAVE BEEN MAINTAINED. PRODUCTION A/C IS AN ESSENTIAL A/C IN A MANUFACTURING BUSINESS. THEY ARE BOUND TO BE PRODUCED WHEN CALLED FOR TO EXPLAIN THE CONSUMPTION OF RAW MATERIAL, WASTAGE ETC. IN ABSENCE OF PRODUCTION OF SUCH VITAL DOCUMENT, THE BOOKS OF ACCOUNT CAN BE REJECTED. THE FOLLOWING DECISIONS ARE CITED IN SUPPORT OF THE ABOVE PROPOSITION. (I) OMAX SHOE FACTORY VS CIT (2006) 281 ITFR 268 (ALL.) (II) MANOHAR DIARY AND RESTAURANT VS ITO (2012) 19 TAXMANN.COM 30. (B) FURTHER, EVEN AFTER SPECIFICALLY BEING ASKED TO PRODUCE ALL BOOKS OF ACCOUNT, ONLY STOCK BOOK WAS PRODUCED. IN OTHER WORDS VITAL BOOKS SUCH AS CASH BOOK, LEDGER, PRODUCTION A/CS WERE NOT PRODUCED. SIMILARLY AS HAS BEEN STATED BY A.O. IN HIS ORDER, BILLS FOR PURCHASE OF MAHUA CAKE WERE NOT 6 I.T.A. NOS. 1761 & 1762/KOL/2014 A.YS. 2005-06 & 2007-08 SHREE MADHAV SOLVEXTRACTS P. LTD. PRODUCED FOR THE MONTHS OF JULY & AUGUST, 2004. AS HAS BEEN CLEARLY STATED IN SECTION 145(3) OF THE I.T. ACT, WHERE THE A.O. IS NOT SATISFIED ABOUT CORRECTNESS AND COMPLETENESS OF ACCOUNT, THE ASSESSING OFFICER MAY MAKE AN ASSESSMENT IN THE MANNER LAID DOWN IN SECTION 144. IN THE PRESENT CASE, AS THE APPELLANT HAD NOT PRODUCED VITAL BOOKS OF A/CS AND PURCHASE BILLS, AO HAD ENOUGH REASON NOT TO BE SATISFIED ABOUT THE CORRECTNESS AND COMPLETENESS OF THE A/C. RELIANCE IS PLACED ON FOLLOWING COURT DECISIONS: (I) NATIONAL PLASTICS INDUSTRIES VS ITO (2009) 309 ITR 191 (BOM) (II) SRI VENKATESHWASR SUGAR MILLS VS CIT (2012) 341 ITR 588 (ALL.) (C) FURTHER, AS HAS BEEN POINTED OUT BY THE AO IN HIS ORDER THE SALES FIGURE SHOWN TO BANK WAS HIGHER THAN SHOWN IN THE PROFIT & LOSS A/C. THE ASSESSEES EXPLANATION THAT IT WAS A CLERICAL ERROR, CANNOT BE ACCEPTED WITHOUT ANY SUPPORTING EVIDENCE. THE DOCUMENT GIVEN TO BANK IS A VITAL DOCUMENT, BASED ON WHICH OVERDRAFT ETC. IS PERMITTED. THEREFORE, SUCH FIGURE CANNOT BE SO LIGHTLY BRUSHED ASIDE BY STATING IT TO BE A CLERICAL ERROR. SIMILAR DIFFERENCES WERE NOTICED IN OPENING STOCK AND CLOSING STOCK FIGURE AS APPEARING IN STOCK BOOK AND AS SHOWN IN THE A/CS FILED ALONGWITH I.T. RETURN. OTHER SUCH DEFECTS HAVE ALSO BEEN HIGHLIGHTED IN A.O.S ORDER. ALL THESE INDICATES, THE ACCOUNTS OF THE ASSESSEE WERE NOT RELIABLE AND THE PROFIT AS SHOWN BY THE ASSESSEE COULD NOT BE ACCEPTED TO BE AUTHENTIC. THEREFORE, THE AO WAS CORRECT IN REJECTION OF BOOK OF ACCOUNT AND DETERMINATION OF PROFIT. THE BOOKS OF A/C CAN BE REJECTED IF THE FIGURES GIVEN TO BANK DOES NOT TALLY WITH FIGURES SHOWN IN ACCOUNTS. - CIT VS BHADRA ENTERPRISE (KER) 228 ITR 717 - SWADESH COTTON MILLS CO. LTD. VS CIT (1980) 125 ITR 33 (ALL) ACCORDINGLY, THE PROFIT WAS REASONABLY ESTIMATED AT 1% BASED ON PROFIT DETERMINED IN THE EARLIER YEAR. AGGRIEVED BY THE ORDER OF THE LD. CIT (A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 8. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE FIRST CONTENTION RAISED 7 I.T.A. NOS. 1761 & 1762/KOL/2014 A.YS. 2005-06 & 2007-08 SHREE MADHAV SOLVEXTRACTS P. LTD. BY THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT THE SCOPE OF SET ASIDE PROCEEDINGS BEFORE THE AO, GOING BY THE OBSERVATIONS OF THE TRIBUNAL AS RECORDED IN THE ORDER DATED 29.12.2011 (SUPRA), WAS LIMITED AND THE AO WHILE MAKING THE ENTIRE ASSESSMENT AFRESH HAS GONE BEYOND THE SCOPE OF THE DIRECTION GIVEN BY THE TRIBUNAL. I AM UNABLE TO ACCEPT THIS CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. THE PERUSAL OF RELEVANT OBSERVATIONS RECORDED BY THE TRIBUNAL IN PARA 6 OF THE ORDER DATED 29.12.2011 (SUPRA) CLEARLY SHOWS THAT THE MATTER WAS RESTORED BY THE TRIBUNAL TO THE FILE OF THE AO FOR CONSIDERING THE SAME AFRESH AFTER TAKING INTO CONSIDERATION THE AUDITORS REMARKS ON THE POINTS RAISED BY HIM AND ANY OTHER DOCUMENTS THAT MAY BE FILED BY THE ASSESSEE DURING THE COURSE OF SET ASIDE PROCEEDINGS. GOING BY THESE OBSERVATIONS OF THE TRIBUNAL, I AM OF THE VIEW THAT THE MATTER WAS RESTORED BY THE TRIBUNAL TO THE FILE OF THE AO FOR CONSIDERING THE SAME AFRESH AND IT CANNOT BE SAID THAT THE SCOPE OF SET ASIDE PROCEEDINGS BEFORE THE ASSESSING OFFICE WAS LIMITED AS SOUGHT TO BE CONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE. 9. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO CHALLENGED THE ACTION OF THE AUTHORITIES BELOW IN REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE BY MAKING THE SAME SUBMISSIONS AS WERE MADE BEFORE THE AUTHORITIES BELOW. HOWEVER, KEEPING IN VIEW THE SPECIFIC AND MATERIAL DEFECTS POINTED OUT BY THE AUTHORITIES BELOW IN THE BOOKS OF ACCOUNTS AND OTHER RECORDS MAINTAINED BY THE COMPANY, I AM OF THE VIEW THAT THE REJECTION OF BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY IS FULLY JUSTIFIED AS THE SAME ARE FOUND TO BE UNRELIABLE AND INCORRECT. THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE LD. CIT (A) IN THIS REGARD ALSO SUPPORT THIS VIEW. 8 I.T.A. NOS. 1761 & 1762/KOL/2014 A.YS. 2005-06 & 2007-08 SHREE MADHAV SOLVEXTRACTS P. LTD. 10. AS REGARDS THE NET PROFIT RATE OF 1% APPLIED BY THE AUTHORITIES BELOW TO ESTIMATE THE BUSINESS INCOME OF THE ASSESSEE, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE SAME IS EXCESSIVE AND UNREASONABLE KEEPING IN VIEW THAT THE NET PROFIT DECLARED BY THE ASSESSEE FOR THE IMMEDIATELY PRECEDING YEAR WAS 0.61% AND THE FACTORY OF THE ASSESSEE WAS CLOSED FOR 131 DAYS DURING THE YEAR UNDER CONSIDERATION. IN THIS REGARD, HE HAS REFERRED TO THE ASSESSMENT ORDER ORIGINALLY PASSED U/S 143(3) VIDE ORDER DATED 28.12.2007 WHEREIN THE FACT THAT THERE WAS NO PRODUCTION IN THE FACTORY OF THE ASSESSEE COMPANY FOR 131 DAYS DURING THE YEAR UNDER CONSIDERATION WAS TAKEN NOTE OF BY THE ASSESSING OFFICER. KEEPING IN VIEW THE SAME AS WELL AS THE OTHER FACTS OF THE ASSESSEES CASE INCLUDING ESPECIALLY THE FACT THAT THE NET PROFIT RATE OF 0.61% DECLARED BY THE ASSESSEE IN THE IMMEDIATELY PRECEDING YEAR WAS ACCEPTED BY THE DEPARTMENT. I AM OF THE VIEW THAT THE NET PROFIT RATE OF 1% APPLIED TO ESTIMATE THE BUSINESS INCOME OF THE ASSESSEE IS UNREASONABLE AND EXCESSIVE AND IT WOULD BE FAIR AND REASONABLE TO ESTIMATE THE BUSINESS INCOME OF THE ASSESSEE BY APPLYING NET PROFIT RATE OF 0.4%. I ACCORDINGLY MODIFY THE IMPUGNED ORDER OF THE LD. CIT (A) ON THIS ISSUE AND ALLOW PARTLY THE APPEAL OF THE ASSESSEE. 11. AS REGARDS THE APPEAL OF THE ASSESSEE FOR A.Y. 2007-08 BEING ITA NO. 1762/KOL/2014, IT IS OBSERVED THAT THE SOLITARY ISSUE INVOLVED THERE IS AS PRESSED BY THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE THE TRIBUNAL RELATING TO THE CLAIM OF THE ASSESSEE FOR THE SET OFF OF BROUGHT FORWARD LOSS OF EARLIER YEAR IS CONSEQUENTIAL TO THE ISSUE RELATING TO DETERMINATION OF THE BUSINESS INCOME OF THE 9 I.T.A. NOS. 1761 & 1762/KOL/2014 A.YS. 2005-06 & 2007-08 SHREE MADHAV SOLVEXTRACTS P. LTD. ASSESSEE FOR A.Y. 2006-07 ON ESTIMATED BASIS AS INVOLVED IN THE APPEAL OF THE ASSESSEE FOR A.Y. 2005-06 WHICH HAS ALREADY BEEN DECIDED BY ME IN THE FOREGOING PORTION OF THIS ORDER. THE ASSESSING OFFICER IS ACCORDINGLY DIRECTED TO ALLOW THE CONSEQUENTIAL RELIEF TO THE ASSESSEE, IF ANY, KEEPING IN VIEW OUR DECISION RENDERED IN A.Y. 2005-06. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR A.Y. 2005-06 IS PARTLY ALLOWED WHILE THE APPEAL OF THE ASSESSEE FOR A.Y. 2007-08 IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST, 2017. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER DATED: 31/08/2017 BISWAJIT, SR. PS COPY OF ORDER FORWARDED TO: 1. SHREE MADHAV SOLVEXTRACTS (P) LTD., TANTIGERIA, VIDYASAGAR UNIVERSITY, PASCHIM MEDINIPUR - 721102 2. ACIT, CIRCLE 1, MIDNAPORE, PASCHIM MEDINIPORE - 721101 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, SR. P.S. / H.O.O. ITAT, KOLKATA