ITO, Ward - 56(3), Kolkata, Kolkata V. Shri Surendra Kumar Chowdhary, Howrah

ITA 642/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54529 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 26-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P P SARKAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE . . , !' # # # # /AND $# , !' ) [BEFORE HONBLE SHRI S. V. MEHROTRA, AM & HONBLE S RI MAHAVIR SINGH, JM] #% #% #% #% / I.T.A NO. 642/KOL/2011 $&' () $&' () $&' () $&' ()/ // / ASSESSMENT YEAR: 2007-08 INCOME-TAX OFFICER, WD-56(3), KOLKATA VS SRI SUREND RA KUMAR CHOUDHARY (PAN-AEOPC 0542 D) (+, /APPELLANT ) (-.+,/ RESPONDENT ) FOR THE APPELLANT: SHRI P. P. SARKAR FOR THE RESPONDENT: SHRI SUBASH AGARWAL DATE OF HEARING: 15.09.2011 DATE OF PRONOUNCEMENT: 15.09.2011 !/ / ORDER PER MAHAVIR SINGH, JM ( $# $# $# $#, , , , !' !' !' !' ) THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-XXXVI, KOLKATA IN APPEAL. NO. 899/CIT(A)-XXXVI/KOL/WD.56(3)/09-10 DATED 07.02 .2011. ASSESSMENT WAS FRAMED BY ITO, WARD-56(3), KOLKATA U/S.143(3) OF THE INCOME T AX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007-08 VIDE HIS ORD ER DATED 31.12.2009. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER PASSED BY CIT(A) IN RESTRICTING G.P. AT 1% AS AGAINST ESTIMATED BY ASS ESSING OFFICER AT 1.6%. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND: THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN ABSENCE OF ANY CONCRETE AND VERIFIABLE REASONS GIVEN BY THE ASSESSEE, THE CIT(A ) ERRED IN REDUCING RATE OF G.P. FROM 1.6% (RS.80,59,427/-) TO 1% (RS.50,37,142/-). 3. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEF FACTS ARE THAT ASSESSEE IS A TRANSPORTER AND DOING TRANSPORTATION BUSINESS BY HIRING LORRIES FROM MARKET UNDER THE NAME AND STYLE OF S.S.V ROAD LINES. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE A SSESSEE HAS DEBITED TRANSPORTATION CHARGES AT RS.50,08,95,930/- AS AGAINST TRANSPORTATION INCOME OF RS.50,37,14,220/- IN THE P&L ACCOUNT. ACCORDINGLY, HE NOTED THAT THE DIFFERENCE OF TRANSP ORTATION INCOME AND TRANSPORTATION CHARGES PAID IS RS.28,18,290/- WHICH IS ONLY .56%. THE ASS ESSEE WAS REQUIRED TO EXPLAIN THE REASON FOR LOW PERCENTAGE OF PROFIT IN VIEW OF THE FACT THAT I N THE CASE OF TRANSPORTERS, PROFIT MARGIN IS 3.98% TO 10.55% WHICH IS AS UNDER: 2 ITA 642/K/2011 SRI SURENDRA KR. CHOUDHARY, A.Y.07- 08 NAME OF THE PARTIES MARGIN OF PROFIT 1. GOODWILL TRANSPORT CORPN. 4.92% 2. CONTINENTAL TRANSPORT CORPN. 5.36% 3. SANJAY AGARWAL 3.98% 4. GREEN ROAD CARRIER 10.55% AS THE ASSESSEE COULD NOT EXPLAIN, ASSESSING OFFICE R ESTIMATED PROFIT RATIO AT 1.60% AND ADDED THE SAME TO RETURNED INCOME OF THE ASSESSEE. AGGRI EVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO RESTRICTED THE ESTIMATION OF PROFIT AT 1% BY GIVING FOLLOWING FINDINGS IN HIS APPELLATE ORDER: 6. THE SUBMISSION OF THE APPELLANT HAS BEEN DULY C ONSIDERED IN THE LIGHT OF MATERIAL PLACED BEFORE ME. THE APPELLANT DISCLOSED GROSS PR OFIT OF 0.56% ON TRANSPORTATION RECEIPTS OF RS.5037.14 LAKHS COMPARED TO LAST YEAR S GROSS PROFIT OF 1.60% ON A TURNOVER OF RS.873.41 LAKHS. THE LD. AR OF THE APPELLANT TH OUGH FILED A STATISTIC EXPLAINING THAT THE APPELLANT HAD PAID HIGHER RATE OF HIRE CHARGES AND RECEIVED LESSER RATE OF HIRE CHARGES PER MT COMPARED TO THE LAST YEAR BUT FAILED TO MENTION UNDER WHAT CIRCUMSTANCES THE APPELLANT WAS COMPELLED TO DO SO. THIS IS PRECISELY THE POINT QUERIED BY THE A.O. WHICH THE APPELLANT FAILED TO EXPLAIN S ATISFACTORILY DURING THE TIME OF ASSESSMENT AND EVEN DURING APPEAL PROCEEDINGS. ON THE CONTRARY, THE A.O. THOUGH REFERRED SOME CASES WHERE PROFIT MARGIN VARIED FROM 3.98% TO 10.55%, BUT DID NOT MENTION THE TURNOVER AND NATURE OF GOODS TRANSPORTE D BY THEM. IN ABSENCE OF THESE TWO VITAL POINTS, THE A.O. FAILED TO ESTABLISH THAT THO SE WERE ANALOGOUS CASES. HE ULTIMATELY PREFERRED TO APPLY THE PROFIT RATIO OF 1.60% DISCLO SED BY THE APPELLANT IN THE LAST YEAR FOR ESTIMATION OF CURRENT YEARS PROFIT. HOWEVER, WHIL E DOING SO, THE A.O FAILED TO CONSIDER THAT THE TURNOVER OF THE APPELLANT FOR THE CURRENT YEAR HAS BEEN INCREASED BY 5.73 TIMES OVER LAST YEAR. IT IS WELL ESTABLISHED THAT WITH T HE INCREASE OF TURNOVER, PROFIT DECREASES. THUS, A,OS DECISION OF APPLICATION OF LAST YEARS GROSS PROFIT RATIO ON CURRENT YEARS TURNOVER FOR ESTIMATION OF PROFIT CANNOT BE CONSIDE RED REASONABLE. CONSIDERING ALL THE ISSUES AS DISCUSSED ABOVE, IN MY OPINION, IT WOULD BE A FAIR AND HONEST DECISION IF THE PROFIT IS ESTIMATED AT 1% OF THE TRANSPORTATION CHA RGES RECEIPTS OF RS.50,37,14,220/-, EQUALING TO RS.50,37,142/-. THE A.O. IS DIRECTED A CCORDINGLY. THUS, THE APPELLANT GETS RELIEF OF RS.30,22,.285/- (RS.80,59,427/- MINUS RS. 50,37,142/-). 4. WE FIND THAT THE AO HAS NEITHER REJECTED BOOKS O F ACCOUNT NOR FIND ANY FAULT IN THE BOOKS OF ACCOUNT AND STRAIGHT AWAY APPLIED NP RATE AS DISCLOSED BY ASSESSEE IN EARLIER YEAR. THE CIT(A) RESTRICTED THE NET PROFIT AT 1% BY GIVIN G REASONING THAT ASSESSEES TURNOVER FOR CURRENT YEAR HAS INCREASED TO 5.73 TIMES THAN EARLI ER YEAR AND ACCORDINGLY, HE APPLIED NET PROFIT RATE TO BE REASONABLE AT 1% OF TRANSPORTATION CHARG ES. EVEN, DURING HEARING, LD. DR COULD NOT POINT OUT ANY INFIRMITY IN THE ORDER OF CIT(A) AND ALSO THE REASONS FOR SUPPORTING THE ORDER OF AO. WE FIND THAT THE ASSESSEE HAS FILED COMPLETE S TATISTICS BEFORE THE AO EXPLAINING WHY IT HAD PAID HIGHER RATE OF HIRE CHARGES AND RECEIVED L ESSER RATE OF HIRE CHARGES AS PER LOAD OF METRIC TON AS COMPARED TO LAST YEAR. IN VIEW OF TH ESE REASONS AND ALSO THE FACT THAT THE BOOKS OF ACCOUNT WERE NOT REJECTED, FIND NO REASON TO INTERF ERE IN THE ORDER OF CIT(A) AND ACCORDINGLY THE SAME IS UPHELD. REVENUES APPEAL IS DISMISSED. 3 ITA 642/K/2011 SRI SURENDRA KR. CHOUDHARY, A.Y.07- 08 5. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 6. ORDER IS PRONOUNCED IN OPEN COURT. SD/- SD/- . . !' $# $# $# $# , !' (S. V. MEHROTRA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( 0 0 0 0 ) )) ) DATED : 15 TH SEPTEMBER, 2011 12 $&34 $5 JD.(SR.P.S.) !/ 6 -$$ 7(8- COPY OF THE ORDER FORWARDED TO: 1 . +, / APPELLANT ITO, WARD-56(3), KOLKATA 2 -.+, / RESPONDENT, SHRI SURENDRA KUMAR CHOUDHARY, 1/1/1, SRI MANI BAGAN LANE, HOWRAH 3 . $/& ( )/ THE CIT(A), KOLKATA 4. $/& / CIT, KOLKATA 5 . $> -$& / DR, KOLKATA BENCHES, KOLKATA . -$/ TRUE COPY, !/&?/ BY ORDER, #4 /ASSTT. REGISTRAR .