Sri.Mohammed Sajas, Kottayam V. The ITO,Wd-3, Kottayam

ITA 399/COCH/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6082 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-01-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 27-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Assessee Lawyers: IYPE JOHN
• Keywords: Set aside
• Section: 201; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFOR E S/ SHRI CHANDRA POOJARI , AM & GEORGE GEORGE K., J M I .T . A. NO . 399 / COCH/ 2 01 8 ASSESSMENT YEAR : 201 1 - 12 SHRI MOHAMMED SAJAS , KALARICKAL HOUSE, KANJIRAPPALLY P.O., KOTTAYAM. [PAN:AMAPM 8377Q] VS. THE INCOME TAX OFFICER, WARD - 3, KOTTAYAM (ASSESSEE - APPELLANT) (REVENUE - RESPONDENT) A SSESSEE BY S HRI IYPE JOHN, CA REVENUE BY SMT. A.S. BINDHU, SR. DR D ATE OF HEARING 15 / 01 / 201 9 DATE OF PRONOUNCEMENT 15 / 01 /201 9 O R D E R PER CHANDRA POOJARI, AM: TH IS APP EAL FILED BY THE ASSESSEE IS DIR ECTED AGAINST THE ORDER OF THE CIT(A), KOTTAYAM DATED 18/06/2018 AND PERTAIN S TO THE A SSESSMENT YEAR S 2 0 11 - 12. 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS OPPOSED TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING THE NET PROFIT AT 0.25% OF THE GROSS TURNOVER WITHOUT ANY BASIS OR MATERIAL. I.T.A. NO . 399 /COCH/ 201 8 2 3. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE FOUND THAT THE ASSESSING OFFICER HAD RAISED NO OBJECTIONS ON THE BOOKS OF ACCOUNTS PRODUCED BUT MADE THE ADDITION STATING THAT THE NET PROFIT RATIO IS LOW AS COMPARED TO THE PREVIOUS YEAR. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAV E FOUND THAT THE A SSESSING OFFICER HAS MERELY STATED THAT 'AS THE ASSESSEE WAS NOT MAINTAINING PROPER VOUCHERS FOR MANY EXPENSES, THERE IS A POSSIBILITY OF INFLATED EXPENDITURE WHICH CAN RESULT IN LOW NET PROFIT', WITHOUT POINTING OUT ANY SUCH VOUCHER OR P OSSIBILITY . 5. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE ADVANCED AT THE TIME OF HEARING IT IS RESPECTFULLY SUBMITTED THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) BE SET ASIDE. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICE R ESTIMATED THE INCOME FROM BUSINESS AT 0.25% OF THE GROSS TURNOVER OF RS.55,32,80,611/ - I.E. AT RS.13,83,203 / - ON THE GROUND THAT NO PROPER VOUCHERS WERE MAINTAINED BY THE ASSESSEE FOR MANY EXPENSES SUCH AS TRAVELLING CHARGES, MISCELLANEOUS EXPENSES, SHO P EXPENSES, ETC. AC CORDING TO THE ASSESSING OFFICE R IN THE ABSENCE OF PROPER VOUCHERS, THE ASSESSEE WAS ABLE TO INFLATE THE EXPENDITURE WHICH RESULTED IN LOW NET PROFIT. HENCE, THE ASSESSING OFFICER ESTIMATED THE NET PROFIT AT .25% OF THE GROSS RECEIPTS. 4. ON APPEAL, THE CIT(A) OBSERVED THAT THE NET PROFIT SHOWN BY THE ASSESSEE FOR THE AY 2011 - 12 WAS ABYSMALLY LOW COMPARED TO THE PREVIOUS YEARS. ACCORDING TO THE CIT(A), THE ASSESSING OFFICER HAD GIVEN OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE REASON S FOR SUCH LOW PROFIT BUT, THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THE REASONS FOR THE LOW PROFIT EXCEPT STATING THAT HE HAD I.T.A. NO . 399 /COCH/ 201 8 3 MAINTAINED PROPER BOOKS OF ACCOUNT. IT WAS NOTICED THAT THERE WERE CERTAIN MISTAKES IN THE VOUCHERS PRODUCED BY THE ASSESSEE IN SUPPORT OF THE EXPENDITURE INCURRED. HENCE, THE CIT(A) HELD THAT THE NET PROFIT ESTIMATED BY THE ASSESSING OFFICER AT 0.25% OF THE GROSS RECEIPTS WAS REASONABLE. 5. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. AR REITERATED THE SUBMISSI ONS RAISED BEFORE THE CIT(A). THE LD. DR RELIED ON THE ORDER OF THE CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE DISCLOSED THE INCOME AT .15% DURING THIS YEAR AS AGAINST THE INCOME .48% EARNED DURING T HE EARLIER YEAR FROM THE BUSINESS IN RAW RUBBER. THE ASSESSING OFFICER ESTIMATED THE INCOME AT .25% OF THE GROSS TURNOVER AS THE ASSESSEE WAS NOT MAINTAINING VOUCHERS FOR EXPENSES LIKE TRAVELLING EXPENSES, MISCELLANEOUS EXPENSES, SHOP EXPENSES ETC. HE WA S OF THE OPINION THAT THERE IS EVERY CHANCE OF INFLATING THE EXPENDITURE INCURRED AND THERE IS WIDE GAP BETWEEN THE PERCENTAGE OF INCOME OF THE PRESENT ASSESSMENT YEAR AND THE EARLIER ASSESSMENT YEAR. THE ASSESSEE EXPLAINED THAT THERE WAS WIDE FLUCTUATION OF THE PROFIT MARGIN FROM YEAR TO YEAR ON ACCOUNT OF VOLATILEABILITY IN THE RUBBER BUSINESS. THE ASSESSEE ALSO THRUST UPON THE POINT THAT IT IS NOT POSSIBLE TO HAVE UNIFORM RATE OF PROFIT MARGIN YEAR TO YEAR. THERE SHOULD BE CHANGE OF PERCENTAGE OF PROF IT AND THE AVERAGE RATE OF PROFIT CANNOT BE APPLIED. IT WAS I.T.A. NO . 399 /COCH/ 201 8 4 ALSO SUBMITTED THAT THE ESTIMATION OF INCOME AT .25% OF THE GROSS TURNOVER WAS ON A HIGHER SIDE AND PRAYED TO REDUCE THE SAME. CONSIDERING THE ABOVE ESTIMATION BY THE ASSESSING OFFICER AND VOLA TILEABILITY IN THE RUBBER BUSINESS OF THE ASSESSEE, WE CONSIDER IT REASONABLE TO ESTIMATE THE INCOME AT .20% OF THE GROSS TURNOVER INSTEAD OF .25% AS ESTIMATED BY THE ASSESSING OFFICER. 3 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH JANUARY , 201 9 . SD/ - SD/ - (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 15 TH JANUARY, 2019 GJ COPY TO: 1 . SHRI MOHAMMED SAJAS, KALARICKAL HOUSE, KANJIRAPPALLY P.O., KOTTAYAM. 2 . THE INCOME TAX OFFICER, WARD - 3 , KOTTAYAM . 3 . THE COMMISSIONER OF INCOME - TAX (AP P EALS) , KOTTAYAM . 4 . THE PR. COMMISSIONER OF INCOME - TAX, KOTTAYAM. 5 . D. R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN I.T.A. NO . 399 /COCH/ 201 8 5