Sivalingam Surendhar, CHENNAI V. ITO, CHENNAI

ITA 3094/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7623 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 07-11-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: K MEENAKSHISUNDHARAM
• Keywords: Business income; Additional evidence

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI . . . , !'. . # $ % , ' () BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.3094/MDS/2016 * +* /ASSESSMENT YEAR: 2012-13 SHRI SIVALINGAM SURENDHAR, OLD NO.13/NEW NO.8, VARADARAJA PERUMAL KOVIL STREET, TONDIARPET, CHENNAI-600 081. VS. THE INCOME TAX OFFICER, NON-CORPORATE WARD-6(5), CHENNAI. [PAN: BBMPS 6311 J ] ( ,- /APPELLANT) ( ./,- /RESPONDENT) ,- 0 1 / APPELLANT BY : MR.K.MEENAKSHISUNDHARAM ./,- 0 1 /RESPONDENT BY : MR.SHIVA SRINIVAS, JCIT # 0 2' /DATE OF HEARING : 23.01.2017 34+ 0 2' /DATE OF PRONOUNCEMENT : 09.03.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER DATED 09.09.2016 OF COMMISSIONER OF INCOME TAX (APPEALS)- 5, CHENNAI, IN ITA NO.8/CIT(A)-5/15-16 FOR THE AY 2012-13 AND RAISED T HE FOLLOWING GROUNDS OF APPEAL: ITA NO.3094/MDS/2016 :- 2 -: THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S)-5, CHENNAI DATED 9/9/2016 IS OBJECTED TO ON THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OU GHT TO HAVE APPRECIATED THE FACT THAT GROSS PROFIT RATE ALONE IS CONSIDERED FOR COMPARISON PURPOSES AND THE NET PROFIT IS A VARYING FACTOR FROM TRADER TO TRADER IN THE SAME LINE OF BUSINESS OWING TO SEVERAL INDIVIDUAL REASONS AND HENCE COMPARISON OF NET PROFIT RATE OUGHT NOT TO HAVE BEEN ATTEMPTED BY THE ASSESSING OFFICER. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OU GHT TO HAVE APPRECIATED THE FACT THAT OIL SUPPLYING COMPANIES THEMSELVES HAD FIX ED A LOW MARGIN FOR RETAILERS FOR SELLING DIESEL AND PETROL AND THERE HAD BEEN A LOT OF REPRESENTATIONS AND STRIKES FOR A HIKE IN THE COMMISSION RATE TO COVER THE ESCA LATING OPERATION COSTS FOR A LONG TIME. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OU GHT TO HAVE APPRECIATED THE FACT THAT THE ASSESSING OFFICER HAD NEVER COMMUNICAT ED THE DETAILS OF COMPARATIVE CASES THE OFFICER HAS COLLECTED AND DEPENDED UPON FO R ADOPTING A HIGH NET PROFIT RATE OF 1% NOR THE COMMISSIONER OF INCOME TAX (APPE ALS) HAS COMMUNICATED THE CASES WHERE NET PROFIT OF 1% AND MORE HAD BEEN SHOW N FOR ASSESSEES SUBMISSIONS AGAINST SUCH HIGH NET PROFIT RATE. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OU GHT TO HAVE GIVEN DUE CONSIDERATION TO THE FALLING PROFIT MARGINS IN THE PETROLEUM AND DIESEL TRADE WHICH HAD BEEN PLACED BEFORE THE CBDT BY THE CONSORTIUM O F PETROLEUM DEALERS INSTEAD OF SUMMARILY REJECTING THE SUBMISSIONS OF THE APPEL LANT. 5. THE APPELLANT SUBMITS THAT HE HAS A NUMBER OF COMPA RATIVE CASES WHEREIN THE NET PROFIT RATE HAD BEEN LESS THAN 1% AND THE APPELLANT WILL BE PLACING THE DETAILS AT THE TIME OF HEARING BEFORE THE HONBLE TRIBUNAL. 6. THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL GROUN DS AND OR ADDITIONAL EVIDENCES AS THE HEARING PROGRESSES IN CASE A NEED ARISES FOR TH E SAME 7. THE APPELLANT UNDER THE CIRCUMSTANCES SUBMITS THAT THE HONBLE TRIBUNAL MAY BE PLEASED TO REDUCE THE RATE OF NET PROFIT OR GRANT A NY OTHER APPROPRIATE RELIEF TO THE APPELLANT IN THE APPEAL FILED BY HIM. 2.0 ALL THE GROUNDS OF THE APPEAL ARE RELATED TO THE E STIMATION OF INCOME MADE BY THE AO. THE ASSESSE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.13,60,130/-. THE CASE WAS SELECTED FO R SCRUTINY AND NOTICES ARE ISSUED U/S.3(2) WERE ISSUED TO THE ASSESSEE. THE AO CALLED FOR THE VARIOUS DETAILS AND REQUESTED FOR PRODUCTION OF BOO KS OF ACCOUNTS, BUT THE ASSESSEE HAS NOT PRODUCED THE BOOKS OF ACCOUNTS AND THE DETAILS, HENCE, THE AO COMPLETED THE ASSESSMENT ESTIMATING THE NET PROFIT @1% OF TOTAL SALES AND COMPLETED THE ASSESSMENT U/S.144 DATED 3 1.03.2015. ITA NO.3094/MDS/2016 :- 3 -: 3.0 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSE WENT ON APPEAL BEFORE THE LD.CIT(A) AND THE LD.CIT(A) DISMISSED TH E APPEAL SINCE THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO PROVE TH AT THE PROFIT OF THE ASSESSE WAS LESS THAN 1% , EITHER WITH THE BOOKS OF ACCOUNTS OR WITH THE COMPARABLE CASES. 4.0 AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSES SEE FILED APPEAL BEFORE US. APPEARING FOR THE ASSESSE, THE LD.AR ARG UED THAT THE NET PROFIT FROM THE PETROL BUNK HAD BEEN FIXED AT A VERY HIGH RATE, IGNORING THE GROUND REALITY THAT THE GROSS PROFIT RATE WAS BELOW 1% . THE AO COULD HAVE REALIZED THE FACT THAT THE NET PROFIT WOULD BE FAR LESS THAN 1%. THE ASSESSING OFFICER THOUGH STATED THAT THE NET PROFIT OFFERED BY OTHER ASSESSES HAD BEEN MORE, NONE OF THE COMPARABLE CASE HAVE BEEN BROUGHT ON RECORD. THE ESTIMATE OF NET PROFIT AT 1% HAD BEE N ARBITRARY AND FAR ABOVE THE NET PROFIT ADMITTED BY ANY ASSESSEE. THER E WERE DEMONSTRATIONS, REPRESENTATIONS, BUSINESS CLOSURE N OTICES ETC BY THE PETROL BUNK OWNERS FOR THE VERY LOW AND UN-REMUNERA TIVE COMMISSION OF RS.0.70 PAISE PER LITRE OF DIESEL AND JUST RS.1.20 PER LITRE OF PETROL BY THE OIL COMPANIES. THE ASSESSEE HAS NO SAY IN THE PURCH ASE PRICE AND SELLING PRICE OF PETROL AND DIESEL AND THE RATES HAD BEEN F IXED BY THE GOVERNMENT OF INDIA. THE MARGIN FIXED BY THE GOVERNMENT ITSELF WAS VERY LOW AND THE WORKING EXPENSES WERE ESCALATING YEAR AFTER YEAR IM PACTING THE NET PROFIT AND HENCE THE LD.A.R ARGUED THAT THE ESTIMATION OF INCOME @1% WAS UNREASONABLE AND BE DELETED AND ACCEPTED THE BOOK R ESULT. ITA NO.3094/MDS/2016 :- 4 -: 5.0 PER CONTRA THE LD.D.R. SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND ARGUED THAT EITHER BEFORE THE AO OR BEFORE THE LD.CIT(A), THE ASSESSE HAS NOT PRODUCED ANY EVIDENCES OR COMPARABLE CASES TO SHOW THAT THE INCOME OF THE ASSESSEE WAS LESS THAN 1% . THOUGH THE ASSESSEE STATED THAT GROSS PROFIT IS LESS THAN 1% NO DOCUMENTS HAVE BEEN FURNISHED TO SUPPORT THE ARGUMENT. THE GROSS PROFIT IS MORE THA N 1% FOR THE AYS 2007-08 TO 2011-12 & 2014-15 TO 2015-16. IN THE YE AR UNDER CONSIDERATION, THE AO HAS CALLED FOR THE BOOKS OF A CCOUNTS BUT THE ASSESSE FAILED TO PRODUCE THE BOOKS OF ACCOUNTS AND THE DET AILS. THERE WAS NO EVIDENCE WITH THE ASSESSE TO PROVE THAT THE PROFIT OF THE ASSESSEE WAS LESS THAN 1%. THE ASSESSEE HAS NEITHER PRODUCED BOOKS O F ACCOUNTS NOR FURNISHED THE DETAILS AND HENCE THE AO HAS NO OPTIO N EXCEPT TO ESTIMATE THE INCOME AND THE AO HAS RIGHTLY ESTIMATED THE INC OME AND BE CONFIRMED. 6.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED ON RECORD. THOUGH, THE AO HAS GIVEN REASONABLE OPPORTUNITIES TO THE ASSESSEE, ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNTS AN D TO SUBSTANTIATE THE TRADING AND P&L A/C RESULTS. THE ASSESSE HAS NOT P RODUCED ANY DETAILS BEFORE THE LD.CIT(A) ALSO. THE ASSESSMENT CANNOT B E COMPLETED BASED ON THE ORAL ARGUMENTS WITHOUT THE SUPPORTING BOOKS OF ACCOUNTS AND RELEVANT EVIDENCES. THE INCOME OF THE ASSESSEE HAS TO BE CO MPUTED WITH THE BOOKS OF ACCOUNTS REGULARLY MAINTAINED BY THE ASSES SEE. IN THE INSTANT ITA NO.3094/MDS/2016 :- 5 -: CASE, THE ASSESSE HAS NOT FURNISHED ANY EVIDENCES E ITHER BEFORE THE AO OR BEFORE THE LD.CIT(A). BEFORE US ALSO, THE ASSESSE HAS NOT PRODUCED ANY EVIDENCES REGARDING THE INCOME AND EXPENDITURE. AS SEEN FROM THE DETAILS FURNISHED BEFORE US, THE GROSS PROFIT WAS A ROUND 1% TO 4% EXCEPT IN THE AYS2012-13 & 2013-14. THOUGH THE ASSESSEE A RGUED THAT THE COMMISSION WAS LESS THAN 1% NO AGREEMENT WAS PLACED BEFORE US. FROM THE QUERY DURING THE BENCH REGARDING PRODUCTION OF EVIDENCES, THE LD.AR OF THE APPELLANT HAS GIVEN A NEGATIVE RESPONSE. IN THE ABSENCE OF ANY EVIDENCE BEFORE THE AO, THE ESTIMATION INCOME @1% M ADE BY THE AO IS REASONABLE AND WE UPHOLD THE ORDERS OF THE LD.CIT(A ) AND DISMISS THE ASSESSEES APPEAL. 7.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH MARCH, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( !' . . # $ % ) (D.S.SUNDER SINGH) ' /ACCOUNTANT MEMBER /CHENNAI, 5 /DATED: 9 TH MARCH, 2017. TLN 0 .2$6 76+2 /COPY TO: 1. ,- /APPELLANT 4. # 82 /CIT 2. ./,- /RESPONDENT 5. 69 .2 /DR 3. # 82 ( ) /CIT(A) 6. '* < /GF