Kushalraj Devichand Oswal, Bijapur V. ACIT, Bijapur

ITA 9/BANG/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5221 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 02-06-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 04-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C R JANARDHAN

Judgement Text

ITA.9 & 10/B/2010 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'B', BANGALORE BEFORE DR. O. K. NARAYANAN, VICE PRESIDENT AND SHRI. P. MADHAVI DEVI, JUDICIAL MEMBER I.T.A NOS.9 & 10/BANG/2010 (ASSESSMENT YEARS : 2004-05 & 2005-06) SHRI. KUSHALRAJ DEVI CHAND OSWAL, PROP. HEMENDRA KIRAN BHANDAR, KIRANA BAZAR, BIJAPUR 586 101 .. APPELLANT V. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1, BIJAPUR .. RESPONDENT APPELLANT BY : SHRI. RADHESHAN BHATTAD, CHARTERED A CCOUNTANT RESPONDENT BY : SHRI. C. R. JANARDHAN, ADDL. CIT O R D E R PER DR. O. K. NARAYANAN, VICE PRESIDENT : THESE TWO APPEALS ARE FILED BY THE ASSESSEE FOR ASS ESSMENT YEARS 2004-05 AND 2005-06. THESE APPEALS ARE DIRECTED AG AINST THE COMMON ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX(A) A T BELGAUM, ON 28.10.2009. THESE APPEALS ARISE OUT OF THE ASSESSM ENTS COMPLETED U/S.143(3) R.W.S.144 OF THE IT ACT, 1961. 2. THE ASSESSEE IN THIS CASE IS A DEALER IN KIRANA GOODS DOING BUSINESS IN THE NAME OF PROPRIETARY CONCERN M/S. HE MENDRA KIRANA ITA.9 & 10/B/2010 PAGE - 2 BHANDAR. A CASE OF UNACCOUNTED SALES WAS MADE OUT AGAINST THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS UNDER APPEAL . IN THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER ADOPTED A GROSS P ROFIT RATE OF 8.01% FOR THE ASSESSMENT YEAR 2004-05 AND 9.16% FOR THE A SSESSMENT YEAR 2005-06 AGAINST THE UNACCOUNTED SALES TURNOVER. IN THE FIRST APPEAL THE COMMISSIONER OF INCOME-TAX(A) MODIFIED THE PROFIT C OMPUTATION FROM GROSS PROFIT TO NET PROFIT AT THE RATE OF 5% IN RES PECT OF THE SUPPRESSED TURNOVER TAKING CLUE FROM SECTION 44 AF. IN ADDITI ON TO THE QUESTION OF QUANTUM OF PROFIT THE ASSESSEE HAD ALSO RAISED C ONTENTIONS AGAINST THE DISALLOWANCE OF SALES-TAX PAYMENTS. THE COMMIS SIONER OF INCOME-TAX(A) CONFIRMED THE DISALLOWANCE OF SALES-T AX PAYMENTS AS HE HAS ESTIMATED THE NET PROFIT AT A FLAT RATE. TH E ASSESSEE IS AGGRIEVED AND, THEREFORE, THE SECOND APPEALS BEFORE US. 3. THE FACTS OF THE CASE ARE VERY WELL DETAILED IN THE ASSESSMENT ORDER AND IN THE ORDER PASSED BY THE COMMISSIONER O F INCOME-TAX(A). AS RIGHTLY POINTED BY THE COMMISSIONER OF INCOME-TA X(A), EVEN IN THE CASE OF SUPPRESSED TURNOVER, THERE WOULD BE INCIDEN CE OF PROVED EXPENDITURE. ON THAT GROUND, THE COMMISSIONER OF I NCOME-TAX(A) IS JUSTIFIED IN INTERFERING IN THE PROFIT RATIO DETERM INED BY THE ASSESSING OFFICER. THERE IS NO INFIRMITY AS WELL IN CHANGING THE PROFIT COMPUTATION ON THE BASIS OF NET PROFIT INSTEAD OF G ROSS PROFIT. ITA.9 & 10/B/2010 PAGE - 3 4. BUT THE NET PROFIT AT THE RATE OF 5% HAS BEEN DE TERMINED BY THE COMMISSIONER OF INCOME-TAX(A) IN THE LIGHT OF THE L AW STATED IN SECTION 44AF WHERE THE LAW PROVIDES FOR SUMMARY ASS ESSMENT AT 5% NET PROFIT IN RESPECT OF RETAIL TRADE. IT IS A WEL L ACCEPTED PRINCIPLE THAT IN RESPECT OF GROCERY TRADE, THE RATE OF NET PROFIT IS LESS IN WHOLESALE TRADE WHEN COMPARED TO RETAIL TRADE. THE ASSESSEE IS CARRYING ON WHOLESALE TRADE. THEREFORE, WE FIND THAT RATE OF N ET PROFIT ADOPTED BY THE ASSESSING OFFICER AT 5% IS ON THE HIGHER SIDE. TO BE FAIR AND REASONABLE, WE MODIFY THE NET PROFIT RATE TO 3%. S INCE THE INCOME HAS BEEN DETERMINED ON A NET PROFIT RATIO BASIS, NO FUR THER DEDUCTION CAN BE GIVEN ON ACCOUNT OF EXPENSES. THEREFORE, THE COMMI SSIONER OF INCOME-TAX(A) HAS RIGHTLY DISALLOWED THE CLAIM OF S ALES-TAX PAYMENTS. 5. IN RESULT, THESE TWO APPEALS FILED BY THE ASSESS EE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 9TH DAY OF JUNE, 2010, AT BANGALORE. SD/- SD/- (P. MADHAVI DEVI) (DR. O. K. NARAYANAN) JUDICIAL MEMBER VICE PRESIDENT