KRISHNAKUMAR & CO., Mumbai V. ITO ,WD 15(3)(1), MUMBAI

ITA 2967/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8805 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 09-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY PRATAP SINGH
• Assessee Lawyers: MATHURIA
• Keywords: Corroborative evidences; Non passing of speaking order
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO. 2967 & 2968 / MUM . /2018 ( ASSESSMENT YEAR : 20 10 11 & 2011 12 ) KRISHNA KUMAR & CO. ISHWAR BHUVAN, 206 BRIGADER ROAD USMAN MARG, NULL BAZAR MUMBAI 400 003 PAN AAEFK6257H . APPELLANT V/S INCOME TAX OFFICER WARD 15 ( 3 ) ( 1 ) , MUMBAI . RESPONDENT ASSESSEE BY : SHRI M.S. MATHURIA REVENUE BY : SHRI AJAY PRATAP SINGH DATE OF HEARING 26 .0 2 .2019 DATE OF ORDER 05.04.2019 O R D E R PER SAKTIJIT DEY, J.M. AFORESAID APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST TWO SEPARATE ORDERS PASSED BY THE LEARNED COMMISSIONER (APPEALS) 57, MUMBAI, FOR THE ASSESSMENT YEAR S 2010 11 AND 2011 12. 2 . THE ONLY COMMON ISSUE IN DISPUTE IN BOTH THE APPEALS RELATE TO THE ADDITION MADE ON ACCOUNT OF ESTIMATION OF NET PROFIT @ 1% OF THE TURNOVER OF SALES. 2 KRISHNA KUMAR & CO. 3 . BRIEF FACTS MORE OR LESS COMMON IN BOTH THE APPEALS ARE, THE ASSESSEE IS A PARTNERSHIP FIRM. IT IS ENGAGED IN THE BUSINESS AS A WHOLESALE DISTRIBUTOR OF CHEW ING TOBACCO. A SURVEY UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 23 RD OCTOBER 2009. IN THE COURSE OF THE SAID SU RVEY OPERATION, CERTAIN DIARIES/ DOCUMENTS WERE IMPOUNDED. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ON VERIFYING THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS OF THE ASSESSEE FOUND THAT THE SALES EFFECTED BY THE ASSESSEE ARE MAINLY IN CASH AND THE DEBTORS SHOWN I N THE BOO KS OF ACCOUNT APPEARED TO BE DOUBTFUL , HENCE, REQUIRE CROSS VERIFICATION WITH RELEVANT BILLS AND CONFIRMATIONS. THEREFORE , HE CALLED UPON THE ASSESSEE TO FURNISH NAMES AND ADDRESS ES OF THE DEBTORS ALONG WITH THE RELEVANT BILLS AND CONFIRMATIONS. AS OBSERVE D BY THE ASSESSING OFFICER, ASSESSEE WAS UNABLE TO FURNISH THE NAMES AND ADDRESS OF THE DEBTORS ALONG WITH RELEVANT BILLS AND CONFIRMATIONS. ALLEGING THAT THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE DEBTORS WITH SUPPORTING EVIDENCE, THE ASSESSING O FFICER HELD THAT THE DEBTORS CANNOT BE CONSIDERED TO BE GENUINE. FURTHER, HE OBSERVED , VARIOUS CASH EXPENSES INCURRED BY THE ASSESSEE WERE NOT SUPPORTED BY PROPER DOCUMENTARY EVIDENCES WHICH CAST DOUBT OVER THE AUTHENTICITY OF THE EXPENSES CLAIMED. HAVING HELD SO, THE ASSESSING OFFICER OBSERVED THAT NET PROFIT SHOWN BY THE ASSESSEE IN THE IMPUGNED ASSESSMENT YEAR S @ 0.28% AND 0.11% ON 3 KRISHNA KUMAR & CO. SALES IS COMPARATIVELY LOWER CONSIDERING THE NATURE OF BUSINESS AND THE INCREASE IN THE SALE S TURNOVER. THEREFORE, HE ESTIMA TED THE NET PROFIT @ 1.2% OF THE SALE S TURNOVER. AS A RESULT, ADDITION S OF ` 14,11,818 IN A.Y. 2010 11 AND ` 13,83,138 IN A.Y. 2011 12, WERE MADE. 4 . THOUGH, THE ASSESSEE CHALLENGED THE AFORESAID ADDITION S BEFORE LEARNED COMMISSIONER (APPEALS), HOWEVER, LEAR NED COMMISSIONER (APPEALS) GRANTED PARTIAL RELIEF TO THE ASSESSEE BY DIRECTING THE ASSESSING OFFICER TO COMPUTE NET PROFIT @ 1% OF THE SALES TURNOVER IN BOTH THE ASSESSMENT YEARS. 5 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , IN THE COURSE OF ASSESSMEN T PROCEEDINGS FOR ASSESSMENT YEAR 2007 08, A SURVEY OPERATION UNDER SECTION 133A OF THE ACT WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE AND ON THE BASIS OF SUCH SURVEY OPERATION, THE ASSESSING OFFICER HAD ESTIMATED PROFIT IN SIMILAR MANNER WHILE COMPLETING ASSESSMENT FOR THE ASSESSMENT YEAR S 2007 08, 2008 09 AND 2009 10. HOWEVER, H E SUBMITTED , THE ADDITIONS MADE BY THE ASSESSING OFFICER WERE DELETED BY THE FIRST APPELLATE AUTHORITY. HE SUBMITTED , THE GROSS PROFIT AND NET PROFIT SHOWN IN THE IMPUG NED ASSESSMENT YEAR S ARE HIGHER THAN THE PRECEDING ASSESSMENT YEAR S . THUS, HE SUBMITTED , THE ADDITIONS MADE BY THE ASSESSING OFFICER 4 KRISHNA KUMAR & CO. WITHOUT ANY REASONING AND PURELY ON ESTIMATE AND PART OF WHICH WAS SUSTAINED BY THE LEARNED COMMISSIONER (APPEALS) IS WHOLL Y UNJUSTIFIED. 6 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE LEARNED COMMISSIONER (APPEALS). 7 . I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD , IN COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2007 08, A SURVEY OPERATION UNDER SECTION 133A OF THE ACT WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE. ON THE BASIS OF DOCUMENTS IMPOUNDED DURING THE SURVEY OPERATION, THE ASSESSING OF FICER WHILE COMPLETING THE ASSESSMENT FOR A.Y. 2007 08 ESTIMATED THE GROSS PROFIT @ 8% AS AGAINST THE GROSS PROFIT SHOWN BY THE ASSESSEE @ 1.99%. SIMILARLY, FOR THE ASSESSMENT YEAR S 2008 09 AND 2009 10, THE ASSESSING OFFICER ESTIMATED THE NET PROFIT @ 1% O F THE SALES TURNOVER. HOWEVER, WHILE DECIDING ASSESSEES APPEAL S AGAINST THE AFORESAID ADDITIONS MADE BY THE ASSESSING OFFICER, LEARNED COMMISSIONER (APPEALS) HAVING FOUND THAT THE ASSESSING OFFICER HAS PROCEEDED TO ESTIMATE THE PROFIT WITHOUT POINTING OUT SPECIFIC DEFECT AND DISCREPANCY IN THE BOOKS OF ACCOUNT DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER. IT IS OBSERVED , I N THE IMPUGNED ASSESSMENT YEARS THE ASSESSING OFFICER HAS PROCEEDED TO ESTIMATE THE PROFIT @ 1.2% OF THE SALES TURNOVER PURELY RE LYING UPON THE FACT THAT IN THE PRECEDING ASSESSMENT YEAR, THE NET PROFIT WAS 5 KRISHNA KUMAR & CO. ESTIMATED @ 1% ON SALES. FURTHER, THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC DEFECT OR DISCREPANCY IN THE BOOKS OF ACCOUNT. MERELY ON ASSUMPTIONS AND PRESUMPTIONS THE ASSESSING OFFICER HAS PROCEEDED TO ESTIMATE THE PROFIT. FURTHER, IT IS OBSERVED , THOUGH BEFORE LEARNED COMMISSIONER (APPEALS) THE ASSESSEE HAD SUBMITTED THAT SIMILAR ADDITIONS MADE IN ASSESSMENT YEAR S 2007 08, 2008 09 AND 2009 10 WERE DELETED BY LEARNED C OMMISSIONER (APPEALS), HOWEVER, LEARNED COMMISSIONER (APPEALS) WITHOUT PROPERLY CONSIDERING AND APPRECIATING THE SUBMISSIONS MADE BY THE ASSESSEE HAS REDUCED THE ESTIMATION OF NET PROFIT TO 1% IN A NON SPEAKING ORDER. IT IS SEEN FROM THE FACTS ON RECORD, T HE GROSS PROFIT AND NET PROFIT SHOWN BY THE ASSESSEE IN THE IMPUGNED ASSESSMENT YEAR S ARE EITHER COMPARABLE OR MORE THAN THE GROSS PROFIT AND NET PROFIT SHOWN IN THE PRECEDING ASSESSMENT YEAR S . THAT BEING ETH CASE, IN MY CONSIDERED OPINION, THE ESTIMATION OF NET PROFIT @ 1% ON SALES TURNOVER WITHOUT ANY REASONABLE BASIS IS UNSUSTAINABLE. ACCORDINGLY, I DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITIONS MADE IN BOTH THE ASSESSMENT YEARS UNDER APPEAL. GROUNDS ARE ALLOWED. 8 . IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05.04.2019 SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 05.04.2019 6 KRISHNA KUMAR & CO. COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI