Santosh Kumar Prusty, Bhubaneswar V. ITO, Ward-2(1), Bhubaneswar

ITA 256/CTK/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6275 (ITAT-CUTTACK)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 25-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AKSH A YA JETHI
• Keywords: Revised return
• Section: 201

Judgement Text

P A G E 1 | 4 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG , JUDICIAL MEMBER ITA NO. 256 /CTK/201 8 ASSESSMENT YEAR : 2014 - 15 SANTOSH KUMAR PRUSTY, PLOT NO. LB - 44, BHIMATANGI, H.B,. COLONY, OLD TOWN, BHUBANESWAR. VS. ITO, WARD 2(1), BHUBANESWAR. PAN/GIR NO. ABWKPP 0109 G (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI AKSH A YA JETHI, AR REVENUE BY : SHRI SUBHENDU DUTTA, DR DATE OF HEARING : 2 5 / 0 1 / 201 9 DATE OF PRONOUNCEMENT : 2 5 / 01 / 201 9 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 1, BHUBANESWAR D ATED 9.2.2018 FOR THE ASSESSMENT YEAR 201 4 - 1 5 . 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) , CUTTACK WAS NOT JUSTIFIED IN REDUCING THE NET PROFIT TO 4% AS THE NET PROFIT RATE AS PER AUDIT REPORT IS 2%. THEREFORE, THE ASSESSING OFFICER MAY BE DIRECTED TO ESTIM ATE NET PROFIT @ 2%. P A G E 2 | 4 3. I HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. LD A.R. OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE FILED THE RETURN OF INCOME ON THE BASIS OF UNAUDITED ACCOUNTS AND AF TER OBTAINING AUDIT REPORT, THE ASSESSEE COULD NOT FILE THE REVISED RETURN OF INCOME DUE TO IGNORANCE AND LACK OF KNOWLEDGE. LD A.R. SUBMITTED THAT THE ASSESSEE IS IN THE BUSINESS OF TRADING IN RECHARGE VOUCHERS OF MOBILE, WHEREIN, THE ASSESSEE PURCHASED RECHARGE VOUCHERS FROM FRANCHISE HOLDERS AND THEREAFTER SALES IT TO THE RETAILERS LOCATED IN VARIOUS PART OF THE CITY, WHEREIN, PROFIT MARGIN AFTER DEDUCTING OPERATIONAL COST IS VERY MINIMUM I.E. 2%. THEREFORE, THE ASSESSING OFFICER MAY KINDLY BE DIRECTED TO REDUCE THE NET PROFIT OF THE ASSESSEE TO 2%, WHICH IS QUITE REASONABLE AND JUSTIFIED. 4. IN REPLY TO ABOVE SUBMISSION OF LD A.R., LD D.R. SUPPORTING THE ORDER OF THE FIRST APPELLATE AUTHORITY, SUBMITTED THAT THE CIT(A) HAS TAKEN A VERY REASONABLE AND J USTIFIED APPROACH BY REDUCING THE NET PROFIT ESTIMATED BY THE ASSESSING OFFICER FROM 8% TO 4% AND NO FURTHER REDUCTION CAN BE ALLOWED. THEREFORE, THE APPEAL OF THE ASSESSEE BE DISMISSED. 5. ON A CAREFUL CONSIDERATION OF THE MATERIALS AVAILABLE ON RECORD A ND AS PER FINDINGS ARRIVED AT BY THE LOWER AUTHORITIES, I P A G E 3 | 4 OBSERVE THAT THE ASSESSING OFFICER HAS ESTIMATED THE NET PROFIT AT 8% WHICH HAS BEEN REDUCED BY THE CIT(A) TO 4%. UNDISPUTEDLY, THE TURNOVER SHOWN BY THE ASSESSEE IN THE COMPUTATION OF INCOME WAS E NHANCED IN THE AUDIT REPORT AND THE ASSESSEE DID NOT FILE ANY REVISED RETURN SO FAR. LD D.R. HAS NOT DISPUTED THE FACT THAT DURING THE IMMEDIATELY PREVIOUS AND SUCCEEDING ASSESSMENT YEAR, THE NET PROFIT SHOWN BY THE ASSESSEE WAS NEITHER 8% NOR 4% AND THE NET PROFIT WAS LESSER. HOWEVER, THE PECULIAR POSITION IN THE PRESENT CASE IS THAT THERE IS DIFFERENCE BETWEEN THE TURNOVER SHOWN BY THE ASSESSEE IN THE RETURN OF INCOME AND THE TURNOVER TAKEN BY THE AUDITOR IN THE SUBSEQUENT AUDIT REPORT. KEEPING IN VIEW THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED OPINION THAT IN THE TRADING OF MOBILE RECHARGE VOUCHER S I.E. IN THE CAPACITY OF SEMI - WHOLESALER , WHEREIN, THE ASSESSEE PURCHASES BULK QUANTITY OF RECHARGE VOUCHERS FROM MOBILE FRANCHISE DEALER S AND SALES TO THE SMALL RETAILERS LOCATED IN THE VARIOUS PARTS OF THE CITY, THE PROFIT CANNOT BE ESTIMATED EITHER 8% OR 4%. AT THE SAME TIME, I ALSO TAKE NOTE OF THE FACT THAT THERE WAS DISSIMILARITY IN THE TURNOVER SHOWN BY THE ASSESSEE IN THE RETURN OF INCOME AND AUDIT REPORT. KEEPING IN VIEW THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT THE POSSIBILITY OF LEAKAGE OF REVENUE SHOULD BE TAKEN INTO ACCOUNT AND P A G E 4 | 4 SIMULTANEOUSLY THE NET PROFIT EARNED BY THE AS SESSEE IN SUCH KIND OF TRADING AKIN TO THE ASSESSEE SHOULD ALSO BE KEPT IN MIND WHILE ESTIMATING THE NET PROFIT ON THE TOTAL TURNOVER OF THE ASSESSEE. IN MY VIEW, THE ENDS OF JUSTICE WOULD MEET, IF THE NET PROFIT OF THE ASSESSEE IS ESTIMATED @ 3% OF THE T OTAL TURNOVER OF THE ASSESSEE IN THE AUDIT REPORT. I HOLD SO. CONSEQUENTLY, THE ASSESSING OFFICER IS DIRECTED TO RECALCULATE THE NET PROFIT OF THE ASSESSEE AS PER MY DIRECTION GIVEN ABOVE 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED ORDER P RONOUNCED ON 25 / 0 1 /201 9 . SD/ - ( CHANDRA MOHAN GARG ) JUDICIALMEMBER CUTTACK; DATED 25 / 0 1 /20 9 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER SR. PVT. SECRETARY, ITAT, CUTTACK 1. THE APPELLANT : SANTOSH KUMAR PRUSTY, PLOT NO. LB - 44, BHIMATANGI, H.B,. COLONY, OLD TOWN, BHUBANESWAR. 2. THE RESPONDENT. ITO, WARD 2(1), BHUBANESWAR 3. THE CIT(A) - 1, BHUBANESWAR 4. PR.CIT - 1, BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//