COMMISSIONER OF INCOME TAX Vs. SATISH CHANDRA

JUDGEMENT

(1.) THE revenue is in appeal against an order dated 20.06.2014 of the Income Tax Appellate Tribunal (ITAT) in ITA No. 5613/Del./2012. The ITAT had confirmed the order of the Appellate Commissioner. The latter had directed the deletion of the findings of the Assessing Officer (AO) in respect of the assessee's returns for assessment year 2009 -10. The AO had proceeded to work out "after rejection of the assessee's books of account" the gross profit rate at 5.35% and on that basis, determined the net profit to be 1.96% - based upon the previous year's assessments.

(2.) THE assessee deals in electrical goods and lamination and stamping. The assessee's business yields scrap; for the relative period it had sold a quantity of 51,84,336 kg for Rs.2,92,72,696/ -. Noticing that for the previous years, the value of scrap was at Rs.5.65/ - per kg, as opposed to the comparatively substantially higher price of '16 -30/ - per kg in case of other scrap material, the AO finally determined the profit margin to be 1.96%.

(3.) THE assessee's contention was that the addition was unjustified, on account of the fact that the comparison was made with a completely unrelated concern i.e. PVR Ship Breaking Company. The assessee had contended that the scrap generated by it was in the form of thin iron sheets of 0.27 mm to 0.50 mm thick, which remained uncontroverted. The AO had rejected its contentions and proceeded to determine the scrap value at a much higher rate, entirely based upon the amounts earned by PVR Ship Breaking Company.