DCIT, CIR-8(2), KOLKATA, Kolkata V. M/s Power Max (I) Pvt. Ltd., Kolkata

ITA 566/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0752 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 08-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TR IBUNAL KOLKATA C BENCH, KOLKATA [BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI ABY T. VARKEY, JUDICIAL MEMBER] I.T.A. NO. 566/KOL/2015 ASSESSMENT YEAR: 2010-11 D.C.I.T., CIRCLE-8(2), KOLKATA ... APPELLANT AAYAKAR BHAWAN 4 TH FLOOR P-7, CHOWRINGHEE SQUARE KOLKATA 700 069 M/S. POWER MAX (INDIA) LTD..... ....RESPONDENT 19A, J.L. NEHRU ROAD KOLKATA 700 087 [PAN : AABCP 9559 R] I.T.A. NO. 364/KOL/2015 ASSESSMENT YEAR: 2010-11 M/S. POWER MAX (INDIA) LTD..... ....RESPONDENT 19A, J.L. NEHRU ROAD KOLKATA 700 087 [PAN : AABCP 9559 R] D.C.I.T., CIRCLE-8(2), KOLKATA ... APPELLANT AAYAKAR BHAWAN 4 TH FLOOR P-7, CHOWRINGHEE SQUARE KOLKATA 700 069 APPEARANCES BY: NONE, APPEARED ON BEHALF OF THE ASSESSEE. SHRI DAVID Z. CHAWNGTHU, ADDL. CIT, DR APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : DECEMBER 7 TH , 2017 DATE OF PRONOUNCING THE ORDER : DECEMBER 21 ST , 2017 O R D E R PER J. SUDHAKAR REDDY :- THESE ARE CROSS-APPEALS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-3, KOLKATA, (HEREINAFTER TH E LD. CIT (A)), PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (THE ACT), DT. 16/02/ 2015, FOR THE ASSESSMENT YEAR 2010-11. 2 I.T.A. NO. 566/KOL/2015 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 364/KOL/2015 ASSESSMENT YEAR: 2010-11 M/S. POWER MAX (INDIA) LTD 2. FACTS IN BRIEF:- THE ASSESSEE IS A COMPANY AND FILED ITS RETURN OF I NCOME FOR THE ASSESSMENT YEAR 2010-11 ON 22/12/2010, DECLARING TOTAL INCOME OF RS.1,85,93,534/-. THE ASSESSEE IS IN THE BUSINESS OF ERECTION AND SERVICI NG OF BOILERS AND PIPE LINES. AS THE ASSESSEE CLAIMED THAT A DEVASTATING FIRE HAD DE STROYED ALL HIS DOCUMENTS INCLUDING COMPUTERS, NO DETAILS, AS SOUGHT FOR BY T HE ASSESSING OFFICER COULD BE FILED. THE OBSERVED THAT THE ASSESSEE COMPANY IS AN INCOME TAX ASSESSEE FOR MORE THAN 25 YEARS AND HAD BEEN DECLARING TAXABLE PROFIT MORE THAN THE BOOK PROFIT. THE TABLE OF THE ASSESSEES TURNOVER, BOOK PROFIT, TAXA BLE PROFIT AND TAX PAID IS GIVEN AT PARA 3.1. OF HIS ORDER. HE HELD THAT THE ASSESSEE H AD NO CONTROL OVER THE INCIDENT OF FIRE AND IT IS NOT A CASE OF NON-COOPERATION FROM T HE ASSESSEE. NEVERTHELESS, HE MADE AN ADDITION OF 1 PER CENT OF THE TURNOVER AS I NCOME OF THE ASSESSEE. FURTHER HE MADE A DISALLOWANCE U/S 14A OF THE ACT AND U/S 3 6(1)(VA) OF THE ACT. ON APPEAL THE LD. FIRST APPELLATE AUTHORITY, GRANTE D PART RELIEF BY DIRECTING THE LD. ASSESSING OFFICER TO APPLY THE NET PROFIT R ATE OF THE IMMEDIATELY PRECEDING YEAR TO THE TURNOVER AND TREAT THE SAME AS UNDISCLO SED INCOME OF RS.10,80,378/-, AS AN ADDITION, IN THE PLACE OF ADDITION OF RS.46,9 7,295/-, MADE BY THE ASSESSING OFFICER @ 1 PER CENT OF THE TURNOVER. ON THE DISALL OWANCE U/S 14A OF THE ACT, HE RESTRICTED THE DISALLOWANCE TO RS.32,849/-. 2.1. AGGRIEVED, BOTH THE ASSESSEE AND THE REVENUE A RE IN APPEAL BEFORE US. 3. THE LD. COUNSEL FOR THE ASSESSEE, FILED AN APPLI CATION FOR ADJOURNMENT. WE REJECT THE SAME AS IN OUR VIEW, IT IS NOT A FIT CAS E FOR GRANT OF ADJOURNMENT. ACCORDINGLY, WE DISPOSE OFF THE CASE EX-PARTE , QUA THE ASSESSEE, ON MERITS, AFTER HEARING THE LD. D/R. 4. HEARD THE LD. D/R. THE SUBMISSION OF THE ASSESSE E THAT THERE WAS A FIRE ACCIDENT AND CONSEQUENTLY CERTAIN RECORDS HAVE BEEN DESTROYED AND IT WOULD BE DIFFICULT FOR THE COMPANY TO COMPILE THE DETAILS FR OM 20 DIFFERENT SITES OPERATING DURING THE YEAR, IS NOT DISPUTED BY THE REVENUE. IN FACT, THE ASSESSING OFFICER ACCEPTED THAT THIS ISSUE IS BEYOND THE CONTROL OF T HE ASSESSEE. UNDER THESE CIRCUMSTANCES, MAKING AN ADDITION OF 1 PER CENT OF THE TURNOVER BY THE ASSESSING OFFICER, CANNOT BE UPHELD ON FACTS. THE LD. FIRST A PPELLATE AUTHORITY, HAS DIRECTED 3 I.T.A. NO. 566/KOL/2015 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 364/KOL/2015 ASSESSMENT YEAR: 2010-11 M/S. POWER MAX (INDIA) LTD THE ASSESSING OFFICER TO ADOPT 4.8 PER CENT AS NET PROFIT RATE IN PLACE OF 3.95 PER CENT DECLARED BY THE ASSESSEE. THE ASSESSEE, BEFORE THE LD. CIT(A) FURNISHED THAT THE NET PROFIT RATE FOR THE PREVIOUS 5 YEARS COME T O 3.55 PER CENT. IN OUR VIEW, UNDER THESE CIRCUMSTANCES OF THE CASE, THIS FACTUAL SUBMISSION OF THE ASSESSEE CANNOT BE DISPUTED. THE NET PROFIT RATE DISCLOSED B Y THE ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR, IS 3.95 PER CENT AND IS M ORE THAN 3.55 PER CENT, WHICH IS AN AVERAGE FOR THE LAST 5 YEARS. THUS, NO SEPARA TE ADDITION IS CALLED FOR ON THIS ACCENT. THUS, THE ADDITION ON UNDISCLOSED INCOME TO THE EXTENT SUSTAINED BY THE LD. CIT(A), IS HEREBY DELETED. 4.1. IN THE RESULT, GROUND NO. 1 OF THE REVENUE IS DISMISSED AND GROUND NO. 2 OF THE ASSESSEE IS ALLOWED. 5. THE NEXT ISSUE IS ON THE DISALLOWANCE U/S 14A R .W.R. 8D(2)(II). 5.1. THE LD. CIT(A) HAS COME TO A FACTUAL FINDING T HAT THE ASSESSEES OWN FUNDS ARE MORE THAN THE INVESTMENTS MADE BY IT AND THAT T HE BORROWED FUNDS HAVE NOT BEEN UTILIZED FOR INVESTMENTS. AGAINST SHAREHOLDERS FUNDS OF RS.6.43 CRORES, INVESTMENTS WAS APPROXIMATELY ABOUT RS.65.69 LAKHS. THIS FACTUAL POSITION COULD NOT BE CONTROVERTED BY THE LD. D/R. THUS, WE UPHOLD THIS FINDING OF THE LD. CIT(A) AND DISMISS THIS GROUND OF THE REVENUE. 6. ALL OTHER GROUNDS ARE GENERAL IN NATURE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED AND APPEAL OF THE REVENUE IS DISMISSED. KOLKATA, THE 21 ST DAY OF DECEMBER, 2017. SD/- SD/- [ ABY T. VARKEY ] [ J. SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT M EMBER DATED : 21.12.2017 {SC SPS} 4 I.T.A. NO. 566/KOL/2015 ASSESSMENT YEAR: 2010-11 I.T.A. NO. 364/KOL/2015 ASSESSMENT YEAR: 2010-11 M/S. POWER MAX (INDIA) LTD COPY OF THE ORDER FORWARDED TO: 1. M/S. POWER MAX (INDIA) LTD 19A, J.L. NEHRU ROAD KOLKATA 700 087 2. D.C.I.T., CIRCLE-8(2), KOLKATA AAYAKAR BHAWAN 4 TH FLOOR P-7, CHOWRINGHEE SQUARE KOLKATA 700 069 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE/ D.D.O. ITAT, KOLKATA BENCHES