TaxTMI 
TaxTMI 
TaxTMI 
2018 (4) TMI 1903
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....reciating the fact that the books of account were not produced during the assessment year under consideration and the assessee had failed to justify the book result being declared by him. ii) Whether on the facts and in respect to the circumstances, the Ld. CIT(A)- 15,Kolkata erred to restrict the addition on sale of DEPB @ 1% on Rs. 42,93,826/-- even when the assessee is not in possessions of the relevant documents like the DEPB license and then value and the entire DEPB has been declared received in one go by the assessee during the year under consideration as Ld. CIT(A) has himself admitted in his order. The assessee could not establish the entire sale during the year and hence, entire value of DEPB at Rs. 42,93,825/- is taxable during the year under consideration as per section 28(iib)." 3. First issue raised by Revenue in ground No. (i) is that Ld. CIT(A) erred in reducing the estimated profit from 5% to 1% of the turnover. 4. Briefly stated facts are that assessee in the present case is an individual and carrying on the export business of rice and pulses under the name and style of M/s R.N.S. Enterprises. The assessee for the year under consideration filed his return of....
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....essee in this connection filed the details of net profit vis-à-vis turnover of the earlier years as reproduced below:- A.Y Net profit Turnover Net profit % 2004-05 2,13,300/- 4,14,70,858/- 0.51% 2005-06 4,94,178/- 2,17,20,4766/- 0.23% 2006-07 1,75,180/- 726,63,305/- 0.24% It is crystal clear from the above chart, that the appellant never achieved a net profit of 5% of turnover in the past. Even the net profit for 3 years on an average works to 0.326% only. Applying the average GP on 0.326% on total turnover of Rs. 7,26,63,305/- the addition on account of net profit cannot exceed Rs. 61,702/- (0.326% of 7,26,63,305 - actual NP i.e. Rs. 1,75,180) Ld. CIT(A) after considering the submission of assessee deleted the addition made by the AO in part by observing as under:- "Ground of Appeal No.3 This ground assails the action of the AO in estimating the business profit of the assessee at Rs. 36,33,165/- calculated @ 5% of the declared turnover after rejecting the trading results claimed. the AO took the figure of the turnover from the profit & loss account of thee assessee at Rs. 7,26,63,305/-. The AO had noted that the net profit declared by the assessee in....
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....uired to make a fair estimate. Though arbitrariness cannot be avoided in such estimates, the name should not appear to be whimsical and erratic. Having regard to the totality of facts and legal position concerning the manner of estimating the net profit and the past records of the assessee it is held that a determination of net profit from trading activity @ 1% of total turnover i.e. Rs. 7,26,333/- will meet the ends of justice and equity. The unprecedented export demand in FY 2005-06 also indicates that the assessee must have enjoyed economics of scale in procurement of goods. As a result the addition on account of the estimated net profit of the assessee from his export trading is restricted to Rs. 7,26,333/-- and the balance amount of Rs. 29,06,832/- (Rs. 36,33,165/- minus Rs. 7,26,333/-) is directed to be deleted. The ground of appeal No. 3 of the assessee is partly allowed as above." The Revenue, being aggrieved is in appeal before us. 6. Ld. DR before us submitted that necessary document as desired by AO during the course of assessment proceeding were not produced therefore the AO had to resort to the provision of Section 144 of the Act while framing the assessment. The as....
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....gaged in the business of retail trading. In the case on hand none of the condition as specified u/s 44AF of the Act was satisfied. Therefore, in our considered view the AO has erred in estimating the income at a rate by taking the shelter u/s 44AF of the Act. It is settled proposition of law that AO while estimating the profit under best judgment assessment has to act judicially and honestly. The audited financial statement of the current year as well as profit declared by assessee in earlier years cannot be ignored while estimating the profit under best judgment assessment. The assessee for all the years had duly filed return of income which was not selected under scrutiny u/s 143(3) of the Act. Regarding the selection for scrutiny proceedings it is the policy of the Revenue and the assessee has no role to play in selecting the same under scrutiny. Therefore, in our considered view, it is imperative to take the guidance from the history of assessee. In this regard we rely on the order of this Co-ordinate Bench in the case of ACIT vs. Sitalamata Rice Mills Pvt. Ltd. in ITA No.2317/Kol/2013 dated 01.01.2015, the relevant extract of the order is reproduced below:- "Now when the b....
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....d other statements on file as well as the past records of the assessee-company. As regards the justification of computation of loss by the Commissioner (Appeals) after looking into the audited accounts as well as the past records himself, it has been held by the Supreme Court in CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225 and reiterated in Jute Corpn. of India Ltd. v. CIT [1991] 187 ITR 688 that the AAC has plenary powers in disposing of an appeal The scope of his power is co-terminus with that of the ITO. He could do what the ITO could do and also direct him to do what he had failed to do in view of these decisions, it was to beheld that in disposing of an appeal from an assessment order under section 144, the first appellate authority need not confine itself only to the materials on record at the time of assessment but it may make such enquiries as it thinks fit. Therefore, the procedure adopted by the Commissioner (Appeals) in the instant case was fully justified in deciding the case on his own instead of remanding the same. In fact, the ITO should have himself followed the same procedure which the Commissioner (Appeals) did." In this regard, we also find support & guida....
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.... of assessee and accordingly applied the profit @ 1% on the sale value of DEPB. Thus, Ld. CIT(A) deleted the addition made by the AO in part by observing as under:- "Ground of Appeal NO.4: In this ground of appeal the assessee assails the action of the AO. in treating the entire declared sale consideration of DEPB license of Rs. 42,93,826/- as Income from Other Sources and in making a separate addition to the estimated incomes from trading. The assessee has argued that the action of the AO. is contrary to the provisions of section 28(iiib) & (iiid) of the Act itself. The assessee has also relied on the decision of the Supreme Court in Topman Exports v. CIT (2012) 18 Taxman.com 120 (SC) wherein it was held that while the face value of the DEPB will fall under clause (iiib) of Section 28. the difference between sale value and the face value of the DEPB will fall under clause (iiid) of Section 28 of IT. Act. 1961. The contentions of the assessee are considered. It is duly noted that, as per the Act, the sale proceeds of the DEPB licenses cannot be treated as Income from Other Sources in view of the mandate of section 28 (iiib) & (iiid) of the Act. There is another angle to thi....
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...., the entire sum received by him on such transfer does not become his profits. It is only the amount that he receives in excess of the DEPB which represents his profits on transfer of the DEPB." Further the Hon'ble Supreme Court of India, in the case of Vikas Sales Corporation v. Commissioner of Commercial Taxes [1996] 102 STC 106;(1996) (2) SUPP. SCR 204 had already held that 'REP licenses' are goods and are chargeable to tax under the State sales tax Act. As per the Import Policy in vogue for the years before the Supreme Court, there were provision for issuance of "Replenishment licences" (for short "REP Licences"). The objective behind the licences was to provide to the registered exporters the facility of importing the essential inputs required for the manufacture of the products exported. The essential idea was to encourage exports and for that purpose import licences called REP. Licences were issued equal to the prescribed percentage of the value of exports. These licences were made freely transferable. The Supreme Court held the REP to be goods. Similarly in the case of Philco Exports v. Sales tax Officer 93 (2001) DLT 56, 2002 (64) DRJ 211, the Hon'ble Delhi High Court held....
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....has recorded in his order that necessary details representing the face value as well as sale value of DEPB were not available. He also submitted that nothing was produced before the AO. Therefore, the matter should be restored back to the file of AO for fresh adjudication. He vehemently relied on the order of AO. On the other hand, Ld. AR submitted that there is no ambiguity under the provision of the Act that the sale value of DEPB is part and parcel of total turnover of the business of assessee. Ld. AR also submitted that assessee in the earlier years has declared profit less than 1% of its total turnover which is inclusive of DEPB. Therefore, for the year under consideration the rate of 1% should be adopted on the above amount of sale of DEPB. He relied on the order of Ld. CIT(A). 12. We have heard the rival contentions of both the parties and perused the materials available on record. In the instant case, AO has treated the revenue from the sale of DEPB as income from other source. However, Ld. CIT(A) reversed the order of AO by holding that the amount of sale for DEPB is part and parcel of the total turnover of assessee. Now the issue before us arises whether the amount of DE....