ITO, Coimbatore V. M/s. Novachem Pharma, Coimbatore

ITA 3109/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7543 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 07-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: RAMACHANDRAN
• Section: 40A(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , ! . , % !& BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER, AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ ITA NO.3109/MDS/2016 / ASSESSMENT YEAR : 2012-13 THE INCOME TAX OFFICER, NON CORPORATE WARD -4 (2), 63-A, RACE COURSE ROAD, COIMBATORE V. M/S. NOVACHEM PHARMA, NO.112, T-140, SHOP NO.1&2, SUNDAKKAMUTHUR VILLAGE, NEIGHBOURHOOD SURVEY, KOVAIPUDUR, COIMBATORE 641042. PAN: AAHFN3405F ( /APPELLANT) ( /RESPONDENT) /APPELLANT BY : SHRI SHIVA SRINIVAS, JCIT /RESPONDENT BY : SHRI RAMACHANDRAN, CA /DATE OF HEARING : 06.03.2017 /DATE OF PRONOUNCEMENT : 15.03.2017 / O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN ITA NO. 167/15- 16 DATED 22.08.2016 PASSED U/S. 250(6) R.W.S. 143(3 ) OF THE ACT. 2. THE REVENUE HAS RAISED FOUR GROUNDS IN ITS APPEA L, HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD. CIT(A) HAS ER RED IN ESTIMATING 2 I.T.A. NO.3109/MDS/2016 THE INCOME OF THE ASSESSEE AT 8% OF ITS TURNOVER RE JECTING THE ADDITION MADE BY THE LD. AO WITHOUT ANY BASIS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL ENGAGED IN WHOLESALE PHARMACEUTICAL BUSI NESS IN THE NAME AND STYLE OF M/S. NOVACHEM PHARMA, FILED HIS R ETURN OF INCOME ELECTRONICALLY ON 27.09.2012 DECLARING INCOM E OF RS.5,53,820/-. INITIALLY THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT AND THEREAFTER THE CASE WAS SELECTED FOR SCRUTI NY THROUGH CASS AND FINALLY ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT ON 30.03.2015, WHEREIN THE LD. AO MADE ADDITION OF RS. 42,11,323/- TOWARDS INFLATING PURCHASES, RS.28,80,050/- FOR PAY MENT MADE BY CASH INVOKING SECTION 40A(3) OF THE ACT, RS.20,39,0 72/- DUE TO NON- AVAILABILITY OF CONFORMATION STATEMENT FROM CREDITO RS AND FINALLY RS.6,84,520/- FOR WANT OF EVIDENCE TOWARDS BUSINESS PROMOTION EXPENSES. 4. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION O F RS.28,80,050/- MADE TOWARDS CASH PAYMENTS BECAUSE I T WAS ESTABLISHED THAT THE ASSESSEE HAD PAID THROUGH BANK ING CHANNEL. THE LD.CIT(A) ALSO DELETED THE ADDITION WITH RESPEC T TO SUNDRY 3 I.T.A. NO.3109/MDS/2016 CREDITORS BECAUSE THE GENUINENESS OF THE SUBSTANTIA L SUNDRY CREDITORS M/S. MEGASYS BIOTEK PVT LTD AND M/S. LANC ER PHARMACEUTICALS PVT LTD WAS ESTABLISHED AS THEY WER E PAID BY CHEQUE DURING THE MONTH OF APRIL 2012 I.E., IN THE SUBSEQUENT ASSESSMENT YEAR. WITH RESPECT TO THE ADDITION MADE FOR RS.42,11,323/- IT WAS OBSERVED BY THE LD. CIT(A) TH AT THERE WAS SOME DUPLICATION IN THE BOOKS OF ACCOUNTS WHICH WAS POINTED OUT BY THE ASSESSEE BEFORE THE LD. AO AND THE LD. AO HAS F AILED TO LOOK INTO THOSE ASPECTS. THEREFORE CONSIDERING THE NATU RE OF BUSINESS THE LD. CIT(A) ESTIMATED THE INCOME OF THE ASSESSEE AT 8% OF THE TOTAL TURNOVER RS.2.36 CRORES WHICH WORKS OUT TO RS .18.88 LAKHS. 5. BEFORE US THE LD. DR VEHEMENTLY ARGUED IN SUPPOR T OF THE LD. AO WHEREAS THE LD. AR RELIED ON THE ORDERS OF T HE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FACTS OF THE CASE IT IS APPEARS THAT BOTH THE LD. AO AND THE LD. CIT(A) HAS NOT ARITHMETICALLY COMPUTED THE PROFIT OF THE ASSESSEE FROM THE BOOKS OF ACCOUNTS AFTER RECTIFYING THE MISTAKES. FURTHER THE ASSESSEE IS ENGAGED IN THE BUSINESS AS WHOLESALE DEALER IN PHAR MACEUTICALS 4 I.T.A. NO.3109/MDS/2016 AND HAS DECLARED NOMINAL PROFIT OF RS.5,53,820/- TH OUGH ITS TURNOVER IS RS.2.36 CRORES. CONSIDERING THE NATURE OF BUSIN ESS, WE ARE OF THE CONSIDERED VIEW THAT 10% PROFIT ON THE SALES TURNOV ER OF RS.2.36 CRORES WOULD SUFFICE IN ORDER TO MEET THE ENDS OF J USTICE AND TO SIMPLIFY THE MATTER. ACCORDINGLY WE HEREBY SUSTAIN THE ADDITION OF RS.23,60,000/- (10% OF THE TURNOVER) AS AGAINST THE ADDITION OF RS.1,03,68,785/- MADE BY THE LD. AO AND THE AMOUNT OF RS.18.88 LAKHS SUSTAINED BY THE LD. CIT(A). 7. IN THE RESULT APPEAL OF THE REVENUE IS PARTLY AL LOWED. ORDER PRONOUNCED ON 15 TH MARCH, 2017 AT CHENNAI. SD/- SD/- ( . ) )) ) (G. PAVAN KUMAR) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER /CHENNAI, /DATED, THE 15 TH MARCH, 2017. JR. /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( ) /CIT(A) 4. /CIT, 5. /DR 6. /GF.