V SARAVANAKUMAR, ERODE V. ACIT, ERODE

ITA 3209/CHNY/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8195 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 26-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHASHRI
• Assessee Lawyers: S SRIDHAR
• Keywords: Principle of natural justice
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI . . . , ! ' # , $ #% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.3275/CHNY/2018 & '& /ASSESSMENT YEAR: 2014-15 SHRI V. SARAVANAKUMAR, 88, EAST KONGALAMMAN KOIL STREET, ERODE 638 001. VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-1, ERODE. [PAN: AMQPS 8501A] ( () /APPELLANT) ( *+() /RESPONDENT) () , - / APPELLANT BY : SHRI S.SRIDHAR, ADVOCATE *+() , - /RESPONDENT BY : MS. SUBHASHRI, JCIT . , /$ /DATE OF HEARING : 04 .03.2019 01' , /$ / DATE OF PRONOUNCEMENT : 27.03.2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -3, COIMBATORE (HEREINAFTER CALLED AS CIT(A)) DATED 08.10.2018 F OR THE ASSESSMENT YEAR (AY) 2014-15. 2. THE APPELLANT RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1) THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS IN LAW AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. ITA NO.3275/CHNY/2018 (AY: 2014-15) :- 2 -: 2) THE LEARNED CIT (A) ERRED IN AT TAKING THE AVERA GE OF THE MINIMUM AND MAXIMUM GROSS PROFIT FOR THE ASST.YEAR 2013-14 AND THE IMPUGNED ASSESSMENT YEAR, WHEN THE GROSS PROFIT OF THE SISTER CONCERN MJS.SRI VINAYAGA TRADERS AT 1.28% WAS ACCEP TED BY,/ THE REVENUE. AND FOR OTHER REASONS THAT MAY BE ADDUCED AT THE TI ME OF HEARING, YOUR APPELLANT PRAYS THAT THE APPEAL BE ADMITTED, C ONSIDERED AND JUSTICE BE RENDERED. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT IS AN INDIVIDUAL DERIVING INCOME AS A COMMISSION AGENT OF GARLIC BUSINESS. THE RETURN OF INCOME FOR THE AY 2014-15 WAS FILED ON 12.03.2015 DECLARING INCOME OF RS. 22,39,4 00/-. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED BY THE ASST. CIT, CIRCLE-1, ERODE VIDE ORDER DATED 17.12.2016 PASSED U/S. 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AT TOTAL INCOME OF RS. 81,50,073/-. WHILE DOING SO, THE AO MADE ADDITION O F RS. 15,10,673/- ESTIMATING THE PROFIT @ 8% OF THE TOTAL TURNOVER OF RS. 10,01,33,418/-. THE AO HAD NOT ACCEPTED THE CONTENTION THAT THE ASS ESSEE IS ONLY A COMMISSION AGENT BUT HELD THAT THE ASSESSEE IS A TR ADER OF GARLIC BUSINESS AND THEREFORE, ESTIMATED THE PROFIT @ 8% O F THE TOTAL TURNOVER. 4. BEING AGGRIEVED, AN APPEAL WAS PREFERRED BEFORE LD. CIT(A), WHO VIDE IMPUGNED ORDER ACCEPTED THE CONTENTION THAT TH E APPELLANT IS A COMMISSION AGENT IN RESPECT OF WHICH COMMISSION INC OME OF RS. 3,48,97,330/- WAS SHOWN ON WHICH PROFIT @ 6% WAS ES TIMATED. WITH REGARD TO THE TRADING TURNOVER OF RS. 6,52,36,088/- , THE LD. CIT(A) ITA NO.3275/CHNY/2018 (AY: 2014-15) :- 3 -: CONSIDERING PROFITABILITY ON THE COMPARABLE INSTANC E OF SRI VINAYAGA TRADERS, WHEREIN FOR THE ASSESSMENT YEAR 2013-14 AN D 2014-15 GROSS PROFIT RANGES FROM 2.8% TO 5.09% DIRECTED THE AO TO ESTIMATE THE PROFIT 3.23% OF THE DECLARED TURNOVER. ACCORDINGLY, HE CON FIRMED THE ADDITION ONLY TO THE EXTENT OF RS. 21,04,226/-. BEING AGGRI EVED, THE APPELLANT IS IN APPEAL BEFORE US IN THE PRESENT APPEAL. 5. IT IS CONTESTED BEFORE US THAT THE ASSESSMENT FO R ASSESSMENT YEAR 2014-15 IN THE CASE OF SRI VINAYAGA TRADERS WAS COM PLETED BY THE SAME AO VIDE ORDER DATED 27.06.2016 PASSED U/S. 143(3) O F THE ACT, WHEREIN ON THE TURNOVER OF RS. 5,83,12,850/- PROFIT OF RS. 3 LAKHS WAS SHOWN WHICH WORKS OUT TO 1.28% OF THE TURNOVER. IN SUPPO RT OF THIS, HE ALSO FILED THE ASSESSMENT ORDER OF THE SAID SRI VINAYAGA TRADE RS. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE PLACED RE LIANCE ON THE ORDER OF LOWER AUTHORITIES. 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. ADMITTEDLY, NO BOOKS OF ACCOUNT ARE MAINTAI NED BY THE ASSESSEE FOR THE BUSINESS OF TRADING IN THE BUSINESS OF GARL IC AS WELL AS COMMISSION AGENT. IN THE CIRCUMSTANCES, THE AO HA D RESORTED TO BEST JUDGMENT ASSESSMENT. THE APPELLANT IS NOT DISPUTING THE BEST JUDGMENT ASSESSMENT. WHAT THE APPELLANT DISPUTING IS THE RA TE OF PROFIT APPLIED BY AO. NO DOUBT, EVEN IN THE BEST JUDGMENT ASSESSMENT , THE ADDITION ITA NO.3275/CHNY/2018 (AY: 2014-15) :- 4 -: SHOULD BE SUPPORTED BY MATERIAL AND THE RATE OF PRO FIT TO BE ADOPTED SHOULD BE COMPARABLE WITH THAT OF ASSESSEE WHO IS E NGAGED IN SIMILAR LINE OF BUSINESS. THE AO HAD TAKEN THE COMPARISON THE PROFITABILITY OF TRADING CONCERN NAMELY SRI VINAYAGA TRADERS. WHILE DOING SO, THE AO HAD NOT TAKEN INTO CONSIDERATION THE PROFITABILITY OF THE ANY COMPARABLES BUT ESTIMATED THE PROFIT @ 8% OF THE TURNOVER FROM THE BUSINESS OF TRADING IN THE GARLIC DISBELIEVING THAT THERE IS NO COMMISSION INCOME FROM AGENCY. IN APPEAL, THE LD. CIT(A) CONSIDERING THE E VIDENCE FILED BEFORE HIM HELD THAT THERE IS INCOME FROM THE BUSINESS OF COMMISSION AGENCY AND DIRECTED THE AO TO COMPUTE THE PROFIT @ 6% OF T HE AGENCY COMMISSION WHICH IS NOT IN DISPUTED BEFORE US. AS REGARDS, THE GARLIC BUSINESS, THE LD. CIT(A) HAD CONSIDERED AVERAGE PRO FIT OF THE SRI VINAYAGA TRADERS FOR THE LAST TWO ASSESSMENT YEAR I .E., ASSESSMENT YEARS 2012-13 & 2013-14 WHEREAS IT IS THE CONTENTIO N OF THE APPELLANT THAT THE CURRENT YEAR PROFIT ALONE OF THE SRI VINAY AGA TRADERS SHOULD TO BE CONSIDERED. WE FIND MERIT IN THE SUBMISSION MADE BY THE ASSESSEE WHEN A DIRECT COMPARISON IS AVAILABLE, THE PROFIT OF THA T COMPARABLE MAY BE TAKEN A GUIDING FACTOR FOR THE PURPOSE OF ADOPTING THE PROFIT FROM THE BUSINESS OF GARLIC THEREFORE, FROM THE EVIDENCE FIL ED BEFORE US, WE NOTE THAT THERE IS INCOME OF RS. 7,50,000/- WAS ASSESSED AGAINST THE TURNOVER OF RS. 5,83,12,850/-, WHICH WORKS TO @ 1.28% OF THE TURNOVER. THEREFORE, WE DIRECT THE AO TO ADOPT THE PROFIT @ 1 .28% OF THE TURNOVER ITA NO.3275/CHNY/2018 (AY: 2014-15) :- 5 -: FROM GARLIC BUSINESS OF THE INCOME RETURNED BY THE ASSESSEE WHICHEVER IS HIGHER. ACCORDINGLY, THE APPEAL FILED BY THE AS SESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 27 TH DAY OF MARCH, 2019 IN CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ! ' # ) (INTURI RAMA RAO) $ /ACCOUNTANT MEMBER /CHENNAI, 2 /DATED: 27 TH MARCH, 2019. EDN, SR. P.S , */34 54'/ /COPY TO: 1. () /APPELLANT 2. *+() /RESPONDENT 3. . 6/ ( )/CIT(A) 4. . 6/ /CIT 5. 47 */ /DR 6. & 8 /GF