Five Star Marine Exports Pvt. Ltd., CHENNAI V. DCIT Corporate Circle 2(1), CHENNAI

ITA 966/CHNY/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5192 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 20-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI , , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER & SHRI S.JAYARAMAN , ACCOUNTANT MEMBER ./ I.T.A.NO.966/CHNY/2018 / ASSESSMENT YEAR :2014-15 M/S.FIVE STAR MARINE EXPORTS PVT LTD., NO.55,VENKATESAN STREET, CHINDADRIPET, CHENNAI 600 002. VS. DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-2, CHENNAI. [PAN AAACF 3541 N ] ( / APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR.PHILIP GEORGE, ADVOCATE !' /RESPONDENT BY : MR.R.CLEMENT RAMESHKUMAR, C.I.T DR # $ %& / DATE OF HEARING : 14 - 0 6 - 201 8 '( %& / DATE OF PRONOUNCEMENT : 14 - 0 6 - 201 8 ! / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-6, CHENNAI IN APPEAL ITA NO.966/CHNY/2018 :- 2 -: NO.358/CIT(A)-6/2016-17 DATED 26.12.2017 FOR THE ASSESSMENT YEAR 2014-15. 2. MR.PHILIP GEORGE , REPRESENTED ON BEHALF OF THE ASSESSEE AND MR.R.CLEMENT RAMESHKUMAR REPRESENTED ON BEHALF OF THE REVENUE. 3. IT WAS SUBMITTED BY LD.A.R THAT THE ASSESSEE IS A COMPANY, ENGAGED IN THE BUSINESS OF EXPORT OF SEA FOODS. IT WAS A SUBMISSION THAT IN THE COURSE OF ASSESSMENT, THE LD. ASSESSING OFFICER HAD EXAMINED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND IT WAS NOTICED THAT THE ASSESSEE WAS PAYING COMMISSION TO THE AGEN TS FOR THE PROCUREMENT OF THE RAW MATERIALS REPRESENTING PRAWN S. IT WAS A SUBMISSION THAT ON THE GROUND THAT NO TDS HAD BEEN DEDUCTED, THE LD. ASSESSING OFFICER HAD REJECTED THE ASSESSEES BOOKS OF ACCOUNTS AND ESTIMATED THE ASSESSEES INCOME. IT WAS A SUBMISSI ON THAT WHEN ESTIMATING THE INCOME, THE LD. ASSESSING OFFICER HA D ADOPTED IN ESTIMATING THE INCOME AT 6% OF THE GROSS TURNOVER W ITHOUT ANY COMPARABLE CASE NOR CONSIDERING THE ASSESSEES OWN NET PROFITS FOR THE EARLIER ASSESSMENT YEARS. LD.A.R DREW OUR ATTEN TION TO PAGE-49 OF THE PAPER BOOK, WHICH WAS A COMPUTATION SCHEDULE IN RESPECT OF NET INCOME PERCENTAGE FROM THE FINANCIAL YEAR 1997-98 T O 2016-17. IT WAS A SUBMISSION THAT COMPARED TO THE EARLIER YEARS ; THE ASSESSEE HAD ITA NO.966/CHNY/2018 :- 3 -: DISCLOSED 3.08%, WHICH WAS SUBSTANTIALLY HIGHER. IT WAS A SUBMISSION THAT DURING THE FINANCIAL YEAR 2014-15, THE PERCENT AGE OF NET INCOME WAS 3.51%, ONLY AFTER WHICH THE ASSESSEE WAS CONTIN UOUSLY INCURRING LOSSES. IT WAS A SUBMISSION THAT THE INCOME AS DISC LOSED BY THE ASSESSEE WAS ACCEPTED IN THE FINANCIAL YEARS 2015-1 6 & 2016-17. THUS, THE LD.A.R PRAYED THAT THE ESTIMATION OF INCO ME AT 6% OF THE TOTAL TURNOVER IS EXCESSIVE AND ARBITRARY. 4. IN REPLY, THE LD.D.R VEHEMENTLY SUPPORTED THE O RDERS OF LD.CIT(A) AND THE LD. ASSESSING OFFICER. IT WAS A SUBMISSION THAT THE ASSESSEES NET PROFIT PERCENTAGE OVER THE EARLIER Y EARS SHOULD BE CONSIDERED AS THEY WERE FAR BELOW 3.08% DISCLOSED B Y THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT IF AT ALL, THE NET PERCE NTAGE WAS LIABLE TO BE CONSIDERED, THE SAME SHOULD BE CONSIDERED FOR ASSES SMENT YEAR 2015- 16 (F.Y 2014-15) WHEREIN THE ASSESSEE ITSELF HAD DI SCLOSED 3.51% OF NET INCOME TO TURNOVER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PE RUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE LD. ASSESSING OFFIC ER HAS NOT MADE DISALLOWANCE IN RESPECT OF NON-DEDUCTION OF TDS IN RESPECT OF THE ITA NO.966/CHNY/2018 :- 4 -: COMMISSION PAID TO THE AGENTS FOR THE PROCUREMENT O F RAW MATERIALS. IN PAGE-4 OF THE ASSESSMENT ORDER, THE LD. ASSESSIN G OFFICER HAS WORKED OUT THE SAME TO ` 39.82 LAKHS. HOWEVER, A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE LD. ASSESSING OFFIC ER HAS NOT DISALLOWED THE SAME BY INVOKING THE PROVISIONS OF T HE SECTION 40(A)(IA) OF THE ACT. IT IS ALSO NOT PERMISSIBLE FOR THE TRIB UNAL TO MAKE ANY ADDITION IN RESPECT OF THE SAME ON ACCOUNT OF THE F ACT THAT SUCH AN ADDITION MADE WOULD RESULT IN ENHANCEMENT BY THE TR IBUNAL FOR WHICH THE TRIBUNAL ADMITTEDLY DOES NOT HAVE ANY POWERS. C ONSEQUENTLY, CONSIDERING THE FACTS IN THE PRESENT CASE AS IT IS NOTICED THAT THE NET PROFIT RATE IS DETERMINED BY THE LD. ASSESSING OFFI CER AT 6% IS WITHOUT ANY COMPARABLE CASE, WE ARE OF THE VIEW THAT ASSESS EES OWN CASE FOR THE EARLIER ASSESSMENT YEARS AND SUBSEQUENT YEARS A RE TO BE CONSIDERED AS THE BEST COMPARABLE CASE IN THE CASE OF ASSESSEE. WE ARE UNABLE TO ADOPT THE AVERAGE OF THE EARLIER FIVE YEARS NET PROFIT PERCENTAGE AS THE SAME WOULD BE FAR LOWER THAN THE NET PROFIT DECLARED FOR THE CURRENT ASSESSMENT YEAR. HOWEVER, CONSIDERING THE FACT, NO ADDITION HAS BEEN MADE ON ACCOUNT OF NON-D EDUCTION OF TDS AND CONSIDERING THE FACT, THE ASSESSEE HAS DISCLOS ED HIGHER NET PROFIT RATIO FOR THE IMMEDIATELY SUCCEEDING ASSESSMENT YEA RS, THE NET PROFIT OF THE ASSESSEE IS DETERMINED AT 3.5% OF THE TOTAL TURNOVER. IN THESE CIRCUMSTANCES, THE LD. ASSESSING OFFICER IS DIRECTE D TO ADOPT NET PROFIT ITA NO.966/CHNY/2018 :- 5 -: RATE AT 3.5% OF THE GROSS TURNOVER AS AGAINST 6% AD OPTED BY HIM. CONSEQUENTLY, THE APPEAL OF ASSESSEE IS PARTLY ALLO WED 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 14 TH JUNE, 2018, AT CHENNAI. SD/ - SD/ - ( ) (S. JAYARAMAN) ' # /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) $ # / JUDICIAL MEMBER ) $ / CHENNAI * / DATED: 14 TH JUNE, 2018. K S SUNDARAM + !%,- . -% / COPY TO: 1 . / APPELLANT 3. # /% () / CIT(A) 5. -23 !%4 / DR 2. !' / RESPONDENT 4. # /% / CIT 6. 35 6$ / GF