KOHINOOR SAREES PVT LTD V. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3(4), KOLKATA AND ORS

ITAT/121/2024

AI Insights

The case involves Kohinoor Sarees Pvt Ltd, the appellant, contesting the estimation of gross profit by the Assessing Officer for the assessment year 2013-14. Initially, the Assessing Officer estimated the gross profit at 15.36%, which was later adjusted to 12.16% by the Commissioner of Income Tax (Appeals). The Tribunal dismissed the appellant's appeal, leading to the current appeal before the High Court. The primary legal contention was whether the estimation of gross profit was justified and based on a proper and reasonable basis. The High Court found that the CIT(A) erred in adopting the highest gross profit from a later assessment year and not considering the gross profit as reported by the assessee for the relevant year.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 671048 (HC-CALCUTTA)
• Appeal Type: Others
• Pronouncement Date: 17-05-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: OMNARAYAN RAI
• Assessee Lawyers: S M SURANA; BHASKAR SENGUPTA
• Keywords: Appeal; Assessment Year 2013-14; Commissioner of Income Tax (Appeals); Gross profit estimation; Income Tax; Tribunal
• Section: 260A

Judgement Text

"1 OD-19 IN THE HIGH COURT AT CALCUTTA SPECIAL JURISDICTION [INCOME TAX] ORIGINAL SIDE ITAT/121/2024 IA NO: GA/1/2024 KOHINOOR SAREES PVT LTD. VS ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -3(4), KOLKATA AND ORS BEFORE : THE HON'BLE THE CHIEF JUSTICE T.S SIVAGNANAM AND HON'BLE JUSTICE HIRANMAY BHATTACHARYYA DATE : 17TH MAY, 2024. Appearance : Mr. S. M. Surana, Adv. Mr. Bhaskar Sengupta, Adv. ….for appellant Mr. Om Narayan Rai, Adv. …for respondents. The Court: - This appeal has been filed under Section 260A of the Income Tax Act, 1961 against the order dated 30.11.2023 passed by the Income Tax Appellate Tribunal, “C” Bench, Kolkata in ITA no.138/Kol/2023 for the assessment year 2013-14. The assessee has raised the following substantial questions of law for consideration :- i) Whether the impugned order of the Tribunal is perverse inasmuch as the conclusions of the Ld.Tribunal are based on assumptions, conjectures and surmises and not on the basis of facts available on record and as such liable to be set aside ? ii) Whether on the facts and circumstances of the case the Ld. Tribunal grossly erred in confirming the order of the Ld. Commissioner of Income 2 Tax (Appeals) in not deleting the addition retained on assumption and estimate ? The only question which falls for consideration in the instant case is whether the estimation of the gross profit of the assessee for the assessment year under consideration namely 2013-14 as done by the assessing officer at 15.36% was justified. The assessee being aggrieved by the estimation done by the assessing officer in his order dated 31.12.2017 preferred appeal before the Commissioner of Income Tax (Appeals) CIT(A). The Commissioner by order dated 10.08.2023 allowed the appeal in part by fixing the gross profit at 12.16%. In doing so, the CIT(A) adopted the gross profit as reported by the assessee for the assessment year 2016-17. The assessee being aggrieved by the order passed by the CIT(A) preferred appeal before the learned Tribunal. The Tribunal has dismissed the assessee’s appeal. As could be seen from the order passed by the CIT(A) all the findings are wholly in favour of the assessee. The CIT(A) holds that the books of accounts maintained by the assessee particularly the quantitative details of month-wise purchase and sales have been produced by the assessing officer and the assessing officer himself notes that the purchase/sale bills have also been produced before him. None of the evidence produced by the assessee has been refuted or called in question by the assessing officer. The CIT(A) also noted all transactions were through banking channels and the assessing officer did not reject the books of accounts. The CIT(A) thus came to the conclusion that there is no scope for estimation of profits at 25% of the said purchase and also held that the finding of the Assessing Officer was without any basis. The CIT(A) noted the legal position that while estimating the income or profits of the assessee there should be a proper and reasonable basis. Applying this legal principle the CIT(A) drew a comparative table of the details of the book re-sales from the assessment year 2012-13 to assessment year 2015-16 and adopted the gross profit at 12.16%, which was the 3 gross profit for the assessment year 2016-17. In our considered view if CIT(A) had faulted the assessing officer for not considering all the details and in absence of disbelieving the evidence and books produced by the assessee, the CIT(A) ought to have affirmed overall gross profit as offered by the assessee at 9.64%. That apart, the CIT(A) had adopted the highest gross profit that was for the assessment year 2016-17 whereas the case on hand is with regard to the assessment year 2012-13. Thus, we find that CIT(A) felt in error in doing so for adopting the highest gross profit that too which was for the assessment year 2016-17. In the light of the above, we find overall gross profit as offered by the assessee at 9.64% was just and proper and does not call for any enhancement. For the above reasons the appeal is allowed and the order passed by the learned Tribunal and the CIT(A) and the Assessing Officer are set aside and the gross profit of the assessee is determined at 9.64% for the assessment year under consideration. (T.S. SIVAGNANAM) CHIEF JUSTICE (HIRANMAY BHATTACHARYYA, J.) Pkd/GH. "