Bimal Agrawal, Sambalpur V. DCIT, Sambalpur

ITSSA 111/CTK/2013

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3026 (ITAT-CUTTACK)
• Duration Of Justice: 3 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 28-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER AND SHRI A BY T. VARKEY, JUDICIAL MEMBER IT (SS) A NO. 111/CTK/2013 ASSESSMENT YEAR : 2009 - 10 BIMAL AGARWAL, C/O. SRI NARSHING LAL AGARWAL, NAYAPARA, SAMBALPUR. VS. DCIT, CIRCLE 1(1), SAMBALPUR PAN/GIR NO. AEFPA 1776 G (APPELLANT ) .. ( RESPONDENT ) IT(SS)A NO. 114/CTK/2013 ASSESSMENT YEAR :2009 - 10 AS IS AGARWAL , C/O. SRI NARSHING LAL AGARWAL, NAYAPARA, SAMBALPUR. VS. DCIT, CIRCLE 1(1), SAMBALPUR PAN/GIR NO. ACFPA 1774 L (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.R.MOHANT Y , AR REVENUE BY : SHRI ASIT KUMAR MOHAPATRA, CIT DR DATE OF HEARING : 15 /02 / 2017 DATE OF PRONOUNCEMENT : 17 /02 / 2017 O R D E R PER BENCH THESE ARE APPEAL S FILED BY THE ASSESSEE S AGA INST THE ORDER OF CIT( A) - BERHAMPUR, BOTH DATED 11.3.2013 , FOR THE ASSESSMENT YEAR 2009 - 10 . 2 BIMAL AGARWAL ASIS AGARWAL 2. IN BOTH THE APPEALS, THE COMMON GROUND OF APPEAL TAKEN BY THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER ESTIMATING THE INCOME FROM SALE OF FOOD GRAINS AT THE RATE 3%. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER IN THE CASE OF BIMAL AGARWAL OBSERVED THAT THE ASSESSEE HAS SHOWN GROSS TURNOVER OF RS. 58,43,800/ - AS AGAINST PURCHASE OF RS.49,78,544/ - . HE FURTHER OBSERVED THAT PURCHASES OF RS.31,62,897/ - WAS NOT PAID DURING THE YEAR AND THE ASSESSEE HAS SHOWN IDENTICAL AMOUNT AS ADVANCE FROM THE CUSTOMERS. THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNT, BILLS AND VOUCHERS BEFORE THE ASSESSING OFFICER DESPITE SEVERAL OPPORTUNITIES ALLOWED TO THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER REJECTED THE BOOK RESULTS AND ESTIMATED THE PROFIT @ 3% OF THE TURNOVER WHICH WORKED TO RS.1,75,314/ - . 5. SIMILARLY, IN THE CASE OF SHRI ASIS AGRAWAL, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS A GROSS TR ADING T URNOVER OF RS.83,25,000/ . THE ASSESSEE COULD NOT PRODUCE CASH BOOK, PARTY LEDGER AND STOCK REGISTER AND THE BILLS AND VOUCHERS IN SPITE OF SEVERAL OPPORTUNITIES ALLOWED TO THE ASSESSEE. HE REJECTED THE BOOKS RESULTS AND ESTIMATED THE PROFIT @ 3% OF THE T URNOVER, WHICH WORKED OUT TO RS.2,49,750/ - . 3 BIMAL AGARWAL ASIS AGARWAL 6. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE ARGUED THAT THE ASSESSING OFFICER HAS ESTIMATED THE NET PROFIT @ 3% OF THE DISCLOSED SALES AS AGAINST THE NET PROFIT @ 1.51 % SHOWN BY MATADI TRADERS AND 0.75% SHOWN BY SAMALESWARI ENTERPRISES CITED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER WAS NOT JUSTIFIED IN OBSERVING THAT THE ABOVE CASES ARE NOT COMPARABLE CASES AND THAT THERE IS NO BASIS FOR ADOPTIO N OF NET PROFIT RATE OF 3%. IT WAS FURTHER ARGUED THAT THE SAME ASSESSING OFFICER IN THE CASE OF M/S. UNIFOOD INDIA PVT LTD., FOR THE ASSESSMENT YEAR 2009 - 10, ESTIMATED THE NET PROFIT @ 1.5% WHICH HAS ALSO BEEN DISPUTED IN THE APPEAL FILED. THE ADOPTION OF NET PROFIT @ 3% IN THE CASE OF THE ASSESSEE IS, THEREFORE, PRIMA FACIE, EXORBITANT, ARBITRARY AND EXCESSIVE. 7. THE CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE HELD THAT THE ASSESSING OFFICER HAS BEEN VERY REASONABLE IN ESTIMATING PROFIT @ 3 %. THE ASSESSEE HAD GIVEN CERTAIN CASES BEFORE THE ASSESSING OFFICER WHERE THE PROFIT RATE VARIED FROM 0.66% TO 1.94%. HOWEVER, AS MENTIONED BY THE ASSESSING OFFICER IN HIS ORDER, IN THESE CASES, THE ASSESSEES ARE ENGAGED IN WHOLESALE TRADING OF BRAN WHE REAS THE ASSESSEE IS ENGAGED IN WHOLESALE TRADING IN RICE, MAIZE AND PEAS. THEREFORE, HE HAS CORRECTLY REJECTED THE COMPARISON AND ESTIMATED THE PROFIT @ 3%. 8. BEFORE US, LD A.R. OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIE S. 4 BIMAL AGARWAL ASIS AGARWAL 9. ON THE OTHER HAND, LD CIT DR ARGUED THAT THE CASE OF M/S. UNIFOOD INDIA PVT LTD., WHERE - IN, THE PROFIT WAS ESTIMATED @ 1.5%, THE FACTS WERE TOTALLY DIFFERENT. IN THAT CASE, THE ASSESSEE HAD INCURRED NET LOSS AS IT HAD PROCURED A VERY HIGH QUANTITY OF NON - BASMATI RICE FOR EXPORT. HOWEVER, AS THE EXPORT POLICY WAS CHANGED ON 31.3.2008, BANNING SUCH EXPORT, THE ASSESSEE WAS SADDLED WITH HUGE STOCK AND ALSO THE PRICE OF THE PRODUCE FELL IN THE DOMESTIC MARKET. THE STOCK WAS IMPOUNDED BY THE COLLECTOR , GANJAM FOR ALMOST 4 MONTHS WHICH RESULTED IN DETERIORATION IN QUALITY. THIS RESULTED IN DISTRESS SALE OF PRODUCE WHICH HAS ALSO DETERIORATED IN QUALITY WHICH APPARENTLY RESULTED IN A LOSS. WHEREAS THE FACTS IN THE CASE OF THE ASSESSEE ARE NOT THE SAME A S THE ASSESSEE IS NOT IN THE BUSINESS OF EXPORT OF RICE AND HENCE, THE SAID DECISION WAS NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. 10. IN THE REJOINDER, LD A.R. OF THE ASSESSEE AR GUED THAT AS IN THE CASE OF UNIF OOD INDIA PVT LTD., THE ASSESSEE ALSO HAD TO MAKE DISTRESS SALE IN ORDER TO REPAY THE HUGE LOAN TAKEN BY IT IN THE BUSINESS WHICH RESULTED IN LOW REALIZATION OF SALE PROCEEDS AND, THEREFORE, THE FACTS OF THE ASSESSEE ARE SIMILAR TO THE CASE OF UNIF OOD INDIA PVT LTD. F URTHER, UNIF OOD INDIA PVT LTD., IS ALSO ONE OF THE GROUP CONCERN OF THE ASSESSEE AND, THEREFORE, ON SIMILAR FACTS A DIFFERENT VIEW CANNOT BE ADOPTED BY THE INCOME TAX AUTHORITIES. 11. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIALS ON RE CORD, WE FIND THAT IN THE ABSENCE OF PRODUCTION OF BOOKS OF ACCOUNT BY THE ASSESSEE, THE BOOK RESULTS OF THE ASSESSEE WER E REJECTED BY THE 5 BIMAL AGARWAL ASIS AGARWAL ASSESSING OFFICER AND THE PROFIT WAS ESTIMATED @ 3% OF THE SALES TURNOVER. THE ASSESSEE S S GRIEVANCE IS THAT THE RAT E OF 3% ADOPTED BY THE ASSESSING OFFICER WAS MUCH HIGHER AS IN THE CASE OF BIMAL AGRAWAL, THE ASSESSEE HAS SHOWN THE INCOME @ 0.47% AND SHRI ASIS AGARWAL HAS SHOWN THE PROFIT @ 1.58%. I T IS ALSO THE SUBMISSION OF THE A.R. OF THE ASSESSEE THAT IN THE CASE ONE OF THE GROUP CON CERN OF THE ASSESSEE NAMELY UNIF OOD INDIA PVT LTD., (SUPRA), THE NET PROFIT RATE AT 1% HAS BEEN APPLIED BY THE DEPARTMENT ON SIMILAR FACTS OF THE CASE. THE SUBMISSION OF THE A.R. OF THE ASSESSEE IS THAT THE ARGUMENT OF LD D.R. THAT THE FACTS IN THAT CASE ARE DIFFERENT THAN THE FACTS OF THE ASSESSEESS CASES IS NOT CORRECT AS IN THAT CASE ALSO, THE ASSESSEE HAD ALSO MADE DISTRESS SALE OF GOODS WHICH WAS ALSO IN THE CASE OF PRESENT ASSESSEE AND, THEREFORE, THE SALE REALIZATION WAS LOW. F URTHER, IT WAS HIS SUBMISSION THAT IN THE CASE OF MATADI TRADERS, KHETRAJPUR AND SAMLESWARI ENTERPRISE, BADBAZAR, THE PROFIT RATE APPLIED IS VARIED BETWEEN 1% TO 2.5%. HENCE, IT WAS HIS SUBMISSION THAT CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, THE PROFIT RATE OF 1.5% SHOULD BE APPLIED . WE FIND FORCE IN THE SUBMISSION OF LD A.R. OF THE ASSESSEE. THE ASSESSING OFFICER HAS APPLIED THE RATE OF 3% WHILE ESTIMATING THE INCOME OF THE ASSESSEE WITHOUT GIVING ANY BASIS. ON THE OTHER HAND, WE FIND THAT THE AR OF THE ASSESSEE HAS CITED THE CASE OF UNIF OOD INDIA PVT LTD., MATADI TRAD ERS AND SAMLESWARI ENTERPRISES(SUPRA), WHEREIN, THE PROFIT RATE OF 1% TO 2.5% HAS BEEN ACCEPTED BY THE DEPARTMENT . HENCE, WE MODIFY THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO COMPUTE THE INCOME OF THE 6 BIMAL AGARWAL ASIS AGARWAL ASSESSEE BY APPLYING THE RATE OF 1.5 % ON SALES TURNOVER IN THE CASE OF BIMAL AGRAWAL AND COMPUTE THE INCOME IN THE CASE OF ASIS AGARWAL BY APPLYING THE RATE OF 2% A ND ACCORDINGLY, PARTLY ALLOW THIS GROUND OF APPEAL IN BOTH THE APPEALS. 12. IN THE RESULT, THE APPEAL S FILED BY THE ASSESSEE S AR E PARTLY ALLOWED. ORDER PRONOU NCED IN THE OPEN COURT ON 17 /02 /2017 IN THE PRESENCE OF PARTIES. S D/ - SD/ - ( A BY T. V ARKEY) ( N.S SAINI) JUDICIAL MEMBER A CCOUNTANT MEMBER CUTTACK; DATED 17 /02 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : BIMAL AGARWAL,/ASIS AGRAWAL C/O. SRI NARSHING LAL AGARWAL, NAYAPARA, SAMBALPUR 2. THE RESPONDENT. DCIT, CIRCLE 1(1), SAMBALPUR 3. THE CIT(A) SAMBALPUR 4. CIT , SAMBALPUR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//