Sachin Rastogi, Lucknow V. Income Tax Officer-VI(4) , Lucknow

ITA 597/LKW/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5754 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 07-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K DEY
• Assessee Lawyers: YOGESH AGARWAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 597/LKW/2012 ASSESSMENT YEAR: 2009 - 10 SACHIN RASTOGI LUCKNOW V. INCOME TAX OFFICER VI(4) LUCKNOW PAN: AIVPR9849P (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. YOGESH AGARWAL, ADVOCATE RESPONDENT BY: SHRI. P. K. DEY, D.R. DATE OF HEARING: 09.01.2014 DATE OF PRONOUNCEMENT: 07.03.2014 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) WHO HAS ESTIMATED THE NET PROFIT RATE OF THE ASSESSEE @ 1.5% OF THE TOTAL TURNOVER OF ` 8,36,26,028. 2 . THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT THE ASSESSEE HAS DECLARED NET PROFIT RATE AT 0.35% ON THE TOTAL TURNOVER WHICH WAS CONSIDERED TO BE ON LOWER SIDE BY THE ASSESSING OFFICER . H AVING REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE, HE APPLIED THE NET PROFIT RATE AT 5% ON THE TOTAL TURNOVER AND ESTIMATED THE INCOME OF THE ASSESSEE AT ` 41,81,300, AGAINST WHICH AN APPEAL WAS FILED BEFORE THE LD. CIT(A). : - 2 - : 3 . THE ASSESSEE HAS FURNISHED THE COMPARATIVE FIGURES OF THE SALE S AND THE NET PROFIT DECLARED IN THE EARLIER ASSESSMENT YEARS. IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT ON ACCOUNT OF INCREASE IN SALE , THE NET PROFIT RATE HAS BEEN REDUCED. IN EARLIER YEARS , THE SALE S WERE BETWEEN ` 4 CRORES AND ` 6.34 CRORES, ON WHICH NET PROFIT RATE WAS SHOWN BETWEEN 0.39% AND 0.41% AND THE SAME WAS ACCEPTED BY THE ASSESSING OFFICER. THE LD. CIT(A) , KEEPING IN ACCOUNT THE PAST RESULT DECLARED BY THE ASSESSEE , REDUCED THE NET PROFIT RATE AND ESTIMATED IT AT 1.5% ON THE TOTAL TURNOVER AND COMPUTED THE INCOME OF THE ASSESSEE AT ` 12,54,390. 4 . THE ASSESSEE , BEING NOT SATISFIED WITH THE ORDER OF THE LD. CIT(A) , HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT THE ASSESSEE HAS PROPERLY MAINTAINED HI S BOOKS OF ACCOUNT BUT THE SAME WAS REJECTED BY THE ASSESSING OFFICER ONLY FOR THE SIMPLE REASON THAT HE WAS NOT CONVINCED WITH THE NET PROFIT RATE DECLARED BY THE ASSESSEE. IT WAS ALSO CONTENDED ON BEHALF OF THE ASSESSEE THAT WHE N EVER SALE WAS SUBSTANTIALLY INCREASED, THE NET PROFIT IS REDUCED. HE HAS ALSO FILED THE COMPARATIVE CHART OF THE PAST RESULTS DECLARED BY HIM AND ACCEPTED BY THE DEPARTMENT. ACCORDING TO HIM, IN ASSESSMENT YEARS 2007 - 08 TO 2008 - 09 THE SALES WERE DECLARED BETWEEN ` 4 CRORES AND ` 6.34 CRORES , ON WHICH NET PROFIT RATE WAS DECLARED BETWEEN 0.39% AND 0.41%. IT WAS ALSO CONTENDED ON BEHALF OF THE ASSESSEE THAT WH ENEVER THE INCOME IS TO BE ESTIMATED, THE PAST RECORD OF THE ASSESSEE IS THE BEST PRECEDENT FOR ESTIMATING THE NET INCOME OF THE ASSESSEE. BUT THE LOWER AUTHORITIES HAVE NOT LOOKED INTO THE PAST RESULTS DECLARED BY THE ASSESSEE. 5 . THE LD. D.R., ON THE OTHER HAND, HAS PLACED HEAVY RELIANCE UPON THE ORDER OF THE LD. CIT(A). 6 . HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES AND THE SUBMISSIONS OF THE RIVAL PARTIES, WE FIND THAT THE ASSESSING OFFICER HAS REJECT ED THE BOOKS OF ACCOUNT FINDING SOME DEF ECT THEREIN AND ACCORDINGLY : - 3 - : NET PROFIT WAS ESTIMATED AT 5% WHICH WAS REDUCED TO 1.5% BY THE LD. CIT(A). THE ASSESSEE IS NOT AGGRIEVED WITH THE REJECTION OF THE BOOKS OF ACCOUNT, BUT HIS MAIN GRIEVANCE IS WITH REGARD TO THE ESTIMATION OF NET PROFIT RATE. THE ASSESSEE HAS FILED THE COMPARATIVE CHART OF THE NET PROFIT RATE DECLARED BY HIM IN THE PAST. IT IS SETTLED POSITION OF LAW THAT WHENEVER THE BOOKS OF ACCOUNT ARE REJECTED, THE PAST RECORD OF THE ASSESSEE SHOULD BE TAKEN INTO ACCOUNT BESIDES THE COMPAR ABLE CASE. IN THE INSTANT CASE, THE ASSESSING OFFICER HAS NOT REFERRED ANY COMPAR ABLE CASE WHILE ESTIMATING THE NET PROFIT RATE. UNDER THESE CIRCUMSTANCES, THE PAST RECORD OF THE ASSESSEE IS THE BEST PRECEDENT FOR ESTIMATING THE NET PROFIT RATE. IN THE IMMEDIATELY PRECEDING YEARS , THE NET PROFIT RATE WAS SHOWN BETWEEN 0.39% AND 0.41% OF THE TOTAL SALES. THEREFORE, IN THE CURRENT ASSESSMENT YEAR THE NET PROFIT ESTIMATED AT 1.5% APPEARS TO BE ON HIGHER SIDE. IT IS ALSO UNDISPUTED FACT THAT THE TOTAL SALE S WERE INCREASED BY ALMOST ` 2 CRORES FROM THE IMMEDIATELY PRECEDING YEARS. IT IS ALSO A FACT THAT WHENEVER THE SALES ARE INCREASED , THE NET PROFIT IS BEING REDUCED. KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VI EW THAT THE NET PROFIT RATE SHOULD BE ESTIMATED AT 0.75% OF THE TOTAL TURNOVER. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO ESTIMATE THE NET PROFIT RATE AT 0.75% OF THE TOTAL TURNOVER AND RECOMPUTE THE TOTAL I NCOME OF THE ASSESSEE. 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 07.03.2014 SD/. SD/. [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 07.03.2014 JJ: 06 03 : - 4 - : COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR