ITO WD 3(2), MUMBAI V. AKSHAR AUTOMOBILE AGENCY P. LTD, THANE

ITA 6303/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59842 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 22-02-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 23-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASHTRI
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H , MUMBAI BEFORE SHRI RAJENDRA SINGH, A.M. AND SHRI VIJAY PAL RAO, J.M. ITA NO. : 6303/MUM/2010 ASSESSMENT YEAR : 2002-03 ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-1 VARDAAN BLDG., LOWER GROUND FLOOR, WAGLE INDL. ESTATE, MIDC, THANE-400 604. M/S. AKSHAR AUTOMOBILES AGENCY PVT. LTD. PLOT NO.1 MOHAN GALI COM. GHODBUNDER ROAD THANE. PAN NO: AABCA 5019 K (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI V.V. SHASHTRI RESPONDENT BY : NONE DATE OF HEARING : 22.02.2012 DATE OF PRONOUNCEMENT : 22.02.2012 O R D E R PER RAJENDRA SINGH (AM) THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDE R DATED 29.3.2010 OF CIT(A) FOR THE ASSESSMENT YEAR 2002-03. THE ONLY DISPUTE RAISED IN THIS APPEAL IS REGARDING REJECTION OF BOOKS OF ACCOUNT AND ESTIMATION OF PROFITS FROM BUSINESS. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE WHO WAS ENGAGED I N THE BUSINESS OF TRADING AND SERVICE OF MOTOR VEHICLES, HAD NO T PRODUCED BOOKS OF ACCOUNT BEFORE THE AO AT THE TIME OF ASSESSMENT P ROCEEDINGS ON THE GROUND THAT THE SAME HAD GOT CORRUPTED AND NO PRINTOUTS WERE AVAILABLE. THE ASSESSEE HAD SHOWN NET PROFIT RATE OF 1 .25%. THE AO ITA NO. 6303/M/2010 A.Y.02-03 2 THEREFORE, REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED N ET PROFIT @ 2.5% OF THE TOTAL TURNOVER. THE ASSESSEE DISPUTED THE DECISION OF THE AO AND SUBMITTED BEFORE CIT(A) THAT THE AO WAS NOT COR RECT IN REJECTING THE BOOKS OF ACCOUNT AS NO BOOKS OF ACCOUNT WERE PRODUCED. IT WAS ALSO SUBMITTED THAT THE AO HAD NOT GIVEN ANY B ASIS FOR ESTIMATION OF NET PROFIT, AND THEREFORE NET PROFIT SH OULD BE ESTIMATED ON THE BASIS OF PROFIT IN THE EARLIER YEARS. CIT(A) A GREED WITH THE ASSESSEE THAT IN THE ABSENCE OF ANY DEFINITE DISCREPANCIES BE ING POINTED OUT BY THE AO IN THE BOOKS OF ACCOUNT, THE PR OVISIONS OF SECTION 145 COULD NOT BE APPLIED. THE CIT(A) FURTHER OBSERVED THAT THE RIGHT COURSE OF ACTION ON THE PART OF THE AO WOULD HAVE BEEN TO TAKE AVERAGE RATE OF NET PROFIT FOR THE LAST THREE Y EARS AND APPLY THE SAME FOR CURRENT YEAR. CIT(A) THEREFORE, DIRECTED THE AO TO TAKE NET PROFIT RATE AS AVERAGE PROFIT RATE FOR THE LAST THREE YEARS. AGGRIEVED BY THE SAID DECISION, REVENUE IS IN APPEAL BEFORE THE TRIB UNAL. 3. AT THE TIME OF HEARING NO ONE APPEARED ON BEHALF OF THE ASSESSEE TO REPRESENT THE CASE THOUGH NOTICE OF HEARING HA D BEEN GIVEN WELL IN ADVANCE. WE, THEREFORE, PROCEED TO DECI DE THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HE ARING THE LD. DR WHO PLACED RELIANCE ON THE ORDER OF AO. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING ESTIMATI ON OF NET PROFIT FROM THE BUSINESS IN THE ABSENCE OF BOOKS OF ACCOUNT. THERE IS NO DISPUTE THAT THE ASSESSEE HAD NOT PRODUCED BOOKS OF ACCOUNT IN SUPPORT OF P&L ACCOUNT FILED WITH THE RETURN OF INCOME. IN THE ABSENCE OF BOOKS OF ACCOUNT INCLUDING BILLS AND VOUCHERS, IT IS NO T POSSIBLE FOR THE AO TO VERIFY CORRECTNESS OF THE BOOKS AND, THEREFOR E, IN SUCH A ITA NO. 6303/M/2010 A.Y.02-03 3 SITUATION PROVISION OF SECTION 145 CAN BE INVOKED AND PROFIT FROM BUSINESS CAN BE ESTIMATED. HOWEVER, AO HAS TO GIVE BASIS FOR ESTIMATION OF PROFIT. IT IS A SETTLED LEGAL POSITION TH AT EVEN IN CASE OF EXPARTE ASSESSMENTS OR IN CASES WHERE SUPPORTING BOOKS ARE NO T AVAILABLE, AO CAN ESTIMATE INCOME BUT THE ESTIMATION IS TO BE BASED ON SOME MATERIAL AND IT CANNOT BE ARBITRARY. AO IN THIS CASE HAS NOT GIVEN ANY BASIS FOR ESTIMATING NET PROFIT @ 2.5%. CI T(A), HOWEVER, HAS DIRECTED AO TO TAKE NET PROFIT AS AVERAGE NET PRO FIT OF THE LAST THREE YEARS WHICH HAS A REASONABLE BASIS. WE, THEREFORE, DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND SAME IS ACCORDINGLY UPHELD. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.2.2012. SD/- SD/- (VIJAY PAL RAO) JUDICIAL MEMBER (RAJENDRA SINGH) ACCOUNTANT MEMBER MUMBAI, DATED: 22.2.2012. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.