Bankula Jaga Rao Reddy, Ganjam V. ITO, New Delhi

ITA 182/CTK/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6380 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 21-04-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 44AD

Judgement Text

आयकर अऩीऱीय अधधकरण, कटक न्यायऩीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER आयकर अऩीऱ सं/ITA No.182/C TK/2024 (ननधाारण वषा / Asses s m ent Year : 2015-2016) Bankula Jaga Rao Reddy, Jagannathpur, Narendrapur, Ganjam-760007 Vs ITO, National Faceless Assessment Centre, Delhi PAN No. :AIRPR 5691 M (अऩीऱाथी /Appellant) .. (प्रत्यथी / Respondent) ननधााररती की ओर से /Assessee by : Shri S.K.Sarangi, CA राजस्व की ओर से /Revenue by : Dr. Abani Kanta Nayak, CIT-DR स ु नवाई की तारीख / Date of Hearing : 24/06/2024 घोषणा की तारीख/Date of Pronouncement : 24/06/2024 आदेश / O R D E R Per Bench : This is an appeal filed by the assessee against the order dated 01.03.2024, passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi in DIN & Order No.ITBA/NFAC/S/250/2023- 24/1061268921(1). 2. It was submitted by the ld. AR that the assessee is engaged in the business of commission agent for prawn seeds. It was the submission that the assessment year 2015-2016 was the first year of the assessee’s business. It was the submission that the return filed by the assessee came to be processed and the assessment came to be completed u/s.143(3) of the Act originally on 28.04.2017 accepting the returned income. The return of the assessee was the subject matter of revision u/s.263 of the Act by the Pr.CIT and vide an order dated 17.03.2020, the ld. Pr.CIT set aside the assessment to the file of AO with a direction to ITA No.182/CTK/2024 2 redo the assessment in regard to two issues, being one the profit of the assessee and secondly to bring to tax the interest from bank accounts which had not been offered to tax by the assessee. It was the submission that the consequential assessment order was passed u/s.143(3) r.w.s.263 of the Act on 01.09.2021, wherein the AO estimated the income of the assessee @8% by applying the provisions of Section 44AD of the Act on the turnover of Rs.6,67,98,896/-. The AO also brought to tax the interest income earned by the assessee from the bank account. It was the submission that on appeal, the ld. CIT(A) though deleted the reference of Section 44AD of the Act by the AO, however, upheld the addition. It was the submission by the ld. AR that he does not want to challenge the addition representing the bank interest. However, in regard to the issue of percentage of net profit, the ld. AR has placed before us the net profit disclosed by the assessee for the subsequent assessment years as follows :- ITA No.182/CTK/2024 3 3. It was the submission that the net profit for the relevant assessment year was 2.23% and for the subsequent assessment years which have been accepted in the intimation u/s.143(1) of the Act wherein from 0.86% to 1.76%. It was the submission that as the assessee itself has disclosed the net profit @2.23%, the returned income is liable to be accepted. 4. In reply, ld. CIT-DR vehemently supported the orders of the AO and CIT(A). It was the submission that the rate profit as adopted by the ld. AO and upheld by the ld. CIT(A) is reasonable. 5. We have considered the rival submissions. At the outset, ld. AR submitted that he does not want to challenge the addition representing the bank interest. Thus, ground raised by the assessee challenging the addition representing the bank interest is dismissed as withdrawn. 6. In regard to the issue of estimation of net profit, a perusal of the facts of the present case clearly shows that neither the AO nor the ld. CIT(A) has considered any comparative case for the purpose of determination of the rate of profit disclosed by the assessee. Normally, the best comparison to determine the net profit by the assessee would be earlier or the subsequent assessment years of the same assessee. In the present case, the impugned assessment year is the first year of assessee’s business. A perusal of the facts also clearly shows that the assessee has shown the highest rate of net profit for the impugned assessment year. This being so, and considering the fact that the income of the assessee has been estimated, we are of the view that in the interest of justice, net profit of the assessee is liable to be estimated ITA No.182/CTK/2024 4 @2.75% on the total turnover of the assessee after reduction of the airport rent cost, thormocol sheet cost and truck rent cost as there is no possibility of assessee earning any income out of the said expenses. Consequently, the AO is directed to estimate the income of the assessee @2.75% on the total turnover of the assessee i.e. Rs.5,63,82,203/- after reduction of the expenses regarding airport rent, thormocol sheet and truck rent, respectively. 7. In the result, appeal of the assessee is partly allowed. Order dictated and pronounced in the open court on 24/06/2024. Sd/- (MANISH AGARWAL) Sd/- (GEORGE MATHAN) ऱेखा सदस्य/ ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनाांक Dated 24/06/2024 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतलऱपऩ अग्रेपषत/Copy of the Order forwarded to : आदेशान ु सार/ BY ORDER, (Assistant Registrar) आयकर अऩीऱीय अधधकरण, कटक/ITAT, Cuttack 1. अऩीऱाथी / The Appellant- Bankula Jaga Rao Reddy, Jagannathpur, Narendrapur, Ganjam-760007 2. प्रत्यथी / The Respondent- ITO, National Faceless Assessment Centre, Delhi 3. आयकर आय ु क्त(अऩीऱ) / The CIT(A), 4. आयकर आय ु क्त / CIT 5. ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, कटक / DR, ITAT, Cuttack 6. गार्ड पाईऱ / Guard file. सत्यावऩत प्रतत //True Copy//