Ms Neelkanth Promoters & Developers, Jamshepur V. Asst, CIT, Circle-2, Jamshepur

ITA 6/RAN/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0035 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 05-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHOUDHURY ORAN
• Assessee Lawyers: S K PODDAR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH, RANCHI BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI M.BALAGANESH, ACCOUNTANT MEMBER ITA NO. 06 / RAN / 2015 ASSESSMENT YEAR :2010-11 M/S NEELKANTH PROMOTERS & DEVELOPERS, POST OFFICE ROAD, MANGO, JAMSHEDPUR [ PAN NO.AAAFN 8572 C ] V/S . ACIT, CIRCLE-2, JAMSHEDPUR /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI S.K. PODDAR, ADVOCATE & SHRI DEVESH PODDAR, ADVOCATE /BY RESPONDENT SHRI CHOUDHURY ORAN, DR /DATE OF HEARING 06-09-2016 /DATE OF PRONOUNCEMENT 09-09-2016 / O R D E R PER N.V.VASUDEVAN, JUDICIAL MEMBER:- THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED OF COMMISSIONER OF INCOME TAX (APPEALS) JAMSHEDPUR REL ATING TO ASSESSMENT YEAR (AY) 20010-11. 2. ONLY ISSUE THAT ARISES FOR CONSIDERATION IS AS T O WHETHER THE REVENUE AUTHORITY WAS JUSTIFIED IN ESTIMATING THE INCOME OF THE ASSESSEE FROM BUSINESS @ 8% OF THE GROSS RECEIPT OF 7,09,67,000/-. ITA NO.06/RAN/2015 A.Y. 2010-11 M/S NEELKANTH PROMOTERS & DEVELOPERS VS. ACIT CIR L-2 JSR PAGE 2 3. THE ASSESSEE IS AN INDIVIDUAL. HE IS ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPMENT. IN THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHORT), THE AO NOTICED THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE WAS REJECTED BY AO U/S 145( 3) OF THE ACT AS ASSESSEE DID NOT PRODUCE REQUIRED DETAILS BEFORE HI M. THE QUESTION BEFORE THE AO AFTER REJECTING THE BOOKS OF ACCOUNT OF ASSESSEE WAS HOW TO ESTIMATE THE INCOME OF THE ASSESSEE. IT IS NOT IN DISPUTE THAT T HE GROSS RECEIPT OF THE ASSESSEE DURING THE PREVIOUS YEAR WAS AT 7,09,67,0 00/-. THE ASSESSEE HAD DECLARED NET PROFIT OF 31,97,308/- WHICH WAS AT 4. 5% OF THE GROSS RECEIPT. THE AO WAS OF THE VIEW THAT THIS PROFIT DISCLOSED BY AS SESSEE WAS VERY LOW COMPARED TO THE NET PROFIT DECLARED BY THE ASSESSEE S ENGAGED IN SIMILAR LINE OF BUSINESS. THE AO THEREFORE RESORTED TO ESTIMATE OF NET PROFIT OF ASSESSEE AT 8% OF THE GROSS RECEIPT WHICH RESULTED IN THE NET P ROFIT BEING DETERMINED AT 56,77,360/-. SINCE THE ASSESSEE HAD SHOWN NET PROF IT OF 31,97,308/- THE AO ADDED A SUM OF 24,80,052/- TO THE TOTAL INCOME OF ASSESSEE (56,77,360 31,97,308). THE AO HAS NOT GIVEN ANY BASIS FOR APP LYING THE NET PROFIT PERCENTAGE OF 8%. 4. BEFORE LD. CIT(A) ASSESSEE SUBMITTED THAT ESTIMA TION OF PROFIT DONE BY AO WAS ARBITRARY AND EXCESSIVE, LD. CIT(A) HOWEVER CONFIRMED THE ORDER OF AO. 5. AGGRIEVED BY THE ORDER OF LD. CIT(A) ASSESSEE H AS PREFERRED PRESENT APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. LD. COUNSEL FOR THE ASSESSEE FILED BEFOR E US PAST HISTORY OF ASSESSEES CASE AND SUBMITTED THAT WHENEVER THE BOO KS OF ACCOUNT WERE REJECTED AND ESTIMATION OF INCOME IS MADE, THE MOST IMPORTANT FACTOR TO BE CONSIDERED IS THE PAST HISTORY OF ASSESSEES OWN CA SE. ACCORDING TO HIM, IN ITA NO.06/RAN/2015 A.Y. 2010-11 M/S NEELKANTH PROMOTERS & DEVELOPERS VS. ACIT CIR L-2 JSR PAGE 3 THE LIGHT OF THE PAST HISTORY OF ASSESSEES CASE, T HE INCOME DECLARED BY PAST HISTORY OF ASSESSEES CASE. LD. DR RELIED ON THE OR DER OF AO. 7. WE HAVE GIVEN THE CAREFUL CONSIDERATION TO THE R IVAL SUBMISSIONS. AS RIGHTLY CONTENDED BY THE LD. COUNSEL FOR THE ASSESS EE, WHENEVER BOOKS OF ACCOUNT ARE REJECTED AND ESTIMATION OF INCOME IS MA DE, THE MOST IMPORTANT AND RELEVANT CRITERIA FOR DETERMINING INCOME BY WAY OF ESTIMATION WILL BE THE PAST HISTORY IN ASSESSEES OWN CASE. THE PAST HIST ORY OF PROFITS DECLARED AND ACCEPTED BY THE REVENUE IN THE CASE OF THE ASSESSEE IS AS FOLLOWS:- COMPARATIVE CHART OF NET PROFIT PARTICULARS AY 08-09 AY 09-10 AY 10-11 AY 11-12 AY 12-13 NET PROFIT 37,70,529.00 15,47,132.95 31,97 ,308.00 18,78,974.00 6,81,746.39 TURNOVER 6,66,76,040.00 5,03,88,792.00 7,09,67,000. 00 3,55,05,410.00 3,14,80,600.00 PERCENTAGE OF NET PROFIT TO TURNOVER 5.65% 3.07% 4.51% 5.29% 2.17% 8. PERUSAL OF THE AFORESAID CHART WOULD SHOW THAT THE RESULTS DECLARED BY THE ASSESSEE IN THE PREVIOUS YEAR RELEVANT TO AY 2010-1 1 COMPARED TO THE PAST HISTORY OF THE ASSESSEES CASE WAS FAIR AND REASONA BLE AND THEREFORE THE SAME OUGHT TO HAVE BEEN ACCEPTED BY THE REVENUE AUT HORITY. THE TURNOVER AND THE CORRESPONDING INCOME DECLARED IN AY 2010-11 COMPARES FAVOURABLY WITH THE PAST HISTORY OF ASSESSEES CASE. WE ARE T HEREFORE OF THE VIEW THAT THE ESTIMATION OF INCOME AS DONE BY THE REVENUE CANNOT BE SUSTAINED AND THE ADDITION MADE IS DIRECTED TO BE DELETED. 9. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 09 /09/2016 SD/- SD/- ( ) ('# ) (M.BALAGANESH) (N.V.VASUDEVAN) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) RANCHI, *DKP $- 09 / 09 /201 6 RANCHI ITA NO.06/RAN/2015 A.Y. 2010-11 M/S NEELKANTH PROMOTERS & DEVELOPERS VS. ACIT CIR L-2 JSR PAGE 4 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S NEELKANTH PROMOTERS & DEVELOPERS, PO ST OFFICE ROAD, MANGO, JAMSHEDPU R 2. /RESPONDENT-ACIT, CIRCLE-2, JAMSHEDPUR 3. / 2 / CONCERNED CIT RANCHI 4. 2- / CIT (A) RANCHI 5. 5 ##/, /, / DR, ITAT, RANCHI 6. ; / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR.PS , ITAT, RANCHI