ITO, Karaikudi V. Shri K.Swaminathan, Karaikudi

ITA 210/CHNY/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4508 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 30-06-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 24-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P N KAMALA DEVI
• Assessee Lawyers: T VASUDEVAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AN D SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 210/MDS/2010 ASSESSMENT YEAR: 2006-07 THE INCOME TAX OFFICER, WARD I(3), KARAIKUDI. VS. SHRI K. SWAMINATHAN, 70, SRI MEENAKSHI ILLAM, T.T. NAGAR, 3 RD ST., KARAIKUDI. [PAN: AGUPS3719C] (APPELLANT) (RESPONDENT) REVENUE BY : SMT. P.N. KAMALA DEVI ASSESSEE BY : SHRI T. VASUDEVAN O R D E R PER GEORGE MATHAN, J.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) I, MADURAI IN APPEAL NO. 170/08-09 DATED 22.12.2009 FO R THE ASSESSMENT YEAR 2006-07. SMT. P.N. KAMALA DEVI LD. DR REPRESENTED O N BEHALF OF THE REVENUE AND SHRI T. VASUDEVAN, ADVOCATE REPRESENTED ON BEHA LF OF THE ASSESSEE. 2. IT WAS SUBMITTED BY THE LD. DR THAT THE ASSESSE E IS A SCULPTOR SPECIALIZED IN TEMPLE STATUES AND ARCHITECTURE. THE ASSESSEE HAS F ILED HIS RETURN OF INCOME DECLARING AN INCOME OF RS.1,56,160/- ON A TOTAL TUR NOVER OF RS.1,60,08,300/-. IN THE COURSE OF ASSESSMENT, THE ASSESSEE HAS BEEN ASK ED TO PRODUCE EVIDENCE IN RESPECT OF THE EXPENSES CLAIMED AND AS THE ASSESSEE WAS UNABLE TO SUBSTANTIATE THE CLAIM OF THE EXPENSES, THE ASSESSING OFFICER HA S ESTIMATED THE INCOME OF THE ASSESSEE AT 10% OF THE TOTAL RECEIPTS. IT WAS THE S UBMISSION THAT THE LD. CIT(A) HAS DELETED THE ADDITION HOLDING THAT THE ASSESSEE S BOOKS OF ACCOUNTS ARE REGULARLY MAINTAINED AND THE BOOKS OF ACCOUNTS WERE AUDITED UNDER SECTION 44AB OF THE ACT AND THE NET PROFIT ADMITTED FOR THE EARL IER AND LATER YEARS WERE VERY I.T.A. N I.T.A. N I.T.A. N I.T.A. NO. O.O. O. 210 210 210 210/MDS/ /MDS/ /MDS/ /MDS/1 11 10 00 0 2 MUCH IN LINE WITH THE NET PROFIT DISCLOSED FOR THE RELEVANT ASSESSMENT YEAR. IT WAS THE SUBMISSION THAT THE BOOKS OF ACCOUNTS WERE NOT PRODUCED. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD. CIT(A) IS LIAB LE TO BE REVERSED AND THAT OF THE ASSESSING OFFICER RESTORED. 3. IN REPLY, THE LD. AR SUBMITTED THAT THE ASSESSE E WAS ONLY A SCULPTOR AND THE ASSESSING OFFICER HAD NOT BROUGHT OUT ANY EVIDE NCE OR ANY COMPARATIVE CASE TO ESTIMATE THE ASSESSEES INCOME AT 10%. IT WAS TH E FURTHER SUBMISSION THAT FOR THE IMMEDIATELY SUCCEEDING YEAR, THE ASSESSEE HAD D ISCLOSED HIS RETURN OF INCOME AT A NET PROFIT RATIO OF 1.1% AND THE SAME W AS ALSO ACCEPTED UNDER SCRUTINY AND AD-HOC ADDITION OF RS.75,000/- WAS ONL Y MADE. IT WAS THE FURTHER SUBMISSION THAT FOR THE RELEVANT ASSESSMENT YEAR, T HE ASSESSEE HAS DISCLOSED 1.72%. HE VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE ASSESSING OFFICER HAS NOT BROUGHT OUT ANY COMPARATIVE CASE FOR ESTIMATING THE INCOME OF THE A SSESSEE AT 10% OF TOTAL RECEIPTS. ASSUMING THAT THE ASSESSEE HAS NOT PRODUC ED THE BOOKS OF ACCOUNTS AND ASSUMING THAT THE ESTIMATE IS TO BE RESORTED TO , THE BEST METHOD OF ESTIMATION WOULD BE TO USE THE ASSESSEES OWN COMPA RATIVE INCOME DECLARED FOR THE EARLIER AND SUBSEQUENT YEARS. IF THAT IS NOT AV AILABLE, A COMPARABLE CASE HAS TO BE APPLIED. HERE, IN THIS PRESENT CASE, IT IS NO TICED THAT THE ASSESSEE HAS DISCLOSED NET PROFIT OF 1.72% FOR THE RELEVANT ASSE SSMENT YEAR. FOR THE ASSESSMENT YEAR 2004-05, THE ASSESSEE HAS DISCLOSED A NET PROFIT OF 1.6%; FOR THE ASSESSMENT YEAR 2005-06 THE ASSESSEE HAS DISCLO SED 2.22% AND FOR THE I.T.A. N I.T.A. N I.T.A. N I.T.A. NO. O.O. O. 210 210 210 210/MDS/ /MDS/ /MDS/ /MDS/1 11 10 00 0 3 ASSESSMENT YEAR 2007-08 THE ASSESSEE HAS DISCLOSED 1.1%. IF AN AVERAGE OF ALL THE FOUR ASSESSMENT YEARS IS CONSIDERED, THE AVERAG E COMES TO 1.65%. AS IT IS NOTICED THAT THE ASSESSEE HAS DISCLOSED A NET PROFI T HIGHER THAN THE AVERAGE OF 1.65%, WE ARE OF THE VIEW THAT THE FINDING OF THE L D. CIT(A) IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. IN THE CIRC UMSTANCES, THE APPEAL OF THE REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.07.2010. SD/- SD/- (ABRAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 09.07.2010. VM/- COPY TO : APPELLANT/RESPONDENT/CIT(A)- /CIT, /DR