PRINCIPAL COMMISSIONER OF INCOME TAX-I, AAYKAR BHAWAN, INDORE Vs. FERRO CONCRETE CONSTRUCTION INDIA PRIVATE LIMITED

JUDGEMENT

(1.) This appeal under Section 260-A of the Income Tax Act, 1961 (herein after referred to as "the Act") has been filed by the appellant Department against order dated 15.12.2016 (Annexure 'C'), passed by the learned Income Tax Appellate Tribunal, Indore Bench, Indore in Income Tax Appeal No.509/Indore/2016 and Income Tax Appeal No.672/Indore/2016 for the assessment year 2011-12, by which the learned Appellate Tribunal was of the opinion that the estimation of profits by the Assessing Officer has not been found based on some cogent and relevant material. Therefore, the learned Commissioner of Income Tax (Appeal) was reasonable to increase the profit by 1% which will take the net profit for the relevant year at 6.14% which will still be much higher than 5.5%, the average of two preceding assessment years; and dismissed the appeal of the revenue as well as the assessee.

(2.) Facts of the case are that the respondent assessee filed its return of income for Assessment Year 2011-12 on 30.09.2011, declaring total income of Rs.7,59,97,540/-. Survey proceedings were conducted under Section 133-A of the Act on 008.2011. As per Scrutiny Guidelines, the case was selected for compulsory scrutiny under Section 143 (2) of the Act and accordingly notice was issued on 05.09.2012, which was duly served on the assessee on 06.09.201 Subsequently, notice under Section 142 (1) of the Act and query letters were issued from time to time. Authorized representative of the assessee appeared before the Assessing Officer and filed written submission. The assessee surrendered Rs.5,27,17,556/- on the basis of net profit and Rs.1,51,27,608/- under Section 40-A (3) of the Act. The assessee submitted total expenditure of Rs.213 crores, but was not debited in the books of account, therefore, the difference was surrendered and it was shown in the return of income and after query, the Assessing Officer was of the view that the assessee has carried out the working activities at different sites of Indore, Dhar, Biaora, Rajasthan, etc. and has claimed excessive expenses in respect of all the sites. No register is maintained for separate sites, therefore, the Assessing Officer has rejected the books of accounts and increased the net profit to 2% of the receipts which comes to Rs.1,25,64,214/-.

(3.) The learned Commissioner of Income Tax (Appeal) allowed the appeal filed by the assessee in part and directed the Assessing Officer to recompute the profits by increasing the same at the rate of 1% as against 2% applied in the assessment order. In the appeal filed by the Department, the learned Income Tax Appellate Tribunal, considering the fact that in Assessment Years 2006-07, 2007-08, 2008-09, 2009- 10 and 2010-11, the net profit ratio comes to 4.88%, 4.42%, 5.42%, 5.39%, 5.28% and 5.75% and accordingly, applied 4% net profit rate for Assessment Year 2005-06, and therefore, came to the conclusion that the learned Commissioner of Income Tax (Appeal) is justified in increasing the profit of the assessee by 1%, and dismissed the appeal of the revenue as well as assessee.