Case Law Details
HIGH COURT OF MADHYA PADESH
Premswaroop Khandelwal
versus
Commissioner of Income-tax, Indore
IT Appeal No. 89 of 2012
JANUARY 22, 2013
ORDER
Shantanu Kemkar, J.
Heard on the question of admission.
This appeal is admitted for hearing on the following substantial question of law :-
“Whether on the facts and circumstances of the case, ITAT is justified in dismissing the appellant’s appeal in a summary manner?”
2. With the consent of the parties, the matter is finally disposed of.
3. The appellant claims to have been engaged in the business of trading of Soyabean, Maize and Wheat. He is regularly assessed to Income Tax. He submitted his return of income for the Assessment Year, 2002-03 declaring total income at Rs.1,49,420/-. The Assessing Officer vide assessment order dated 31.03.2005 passed under Section 143(3) of the Income Tax Act, (for short the Act) rejected the books of Accounts by applying provisions of Section 145(3) of the Act and determined total income at Rs.32,66,603/- after making various additions including an addition of Rs.30,61,183/- in respect of the alleged investment made in respect of bogus purchases.
4. Aggrieved by the order of the A.O. the appellant assessee preferred an appeal before the CIT (A). The CIT (A) partly allowed the appellant’s appeal vide order dated 19.03.2010 passed in Appeal No.IT-30/2005-06/445. The CIT (A) upheld the findings of the A.O. in respect of bogus purchases but not against the addition made by A.O. of Rs.30,61,183/-. The CIT (A) directed the A.O. apply net profit rate of 2.5% on the turnover of Rs.7 Crores disclosed by the appellant.
5. The said order passed by CIT (A) was challenged by the appellant by filing further appeal before the Income Tax Appellate Tribunal, (for short the ITAT). In the appeal, the appellant challenged the application of net profit rate of 2.5% as determined by CIT (Appeal). The order of the CIT (Appeal) was also challenged by the respondent revenue by which the appellant’s appeal was partly allowed by CIT (Appeal). Both the appeals were decided by the ITAT by a common order dated 10.04.2012. The ITAT mainly decided the appeal preferred by the revenue and dismissed the same. While dismissing the Revenue’s appeal on the basis of some reference being made about the net profit rate being applied by CIT (Appeal), the ITAT also dismissed the appellant’s appeal by observing that while deciding the appeal of revenue the stand of CIT (Appeal) to this effect has been upheld. Feeling aggrieved by such summary dismissal of the appellant’s appeal by the ITAT in regard to applying net profit rate of 2.5% the appellant has filed this appeal under Section 260-A of the Act.
6. Shri P.M.Choudhary, learned counsel for the petitioner argued that the order passed by the ITAT dismissing the appellant’s appeal in summary manner is wholly arbitrary and unjustified. According to him, even while deciding the revenue’s appeal though it was recorded by the ITAT that net profit for the preceding 4 accounting years was 0.21%, 0.26%, 0.23% and 0.21% respectively still the ITAT failed to decide as to how CIT (Appeal) could have applied net profit of 2.5%. He submits that even Revenue’s appeal and the appellant’s appeal came to be dismissed without going to the question raised by the appellant about application of net profit at 2.5%
7. Shri R.L.Jain, learned Senior counsel for the respondent supported the impugned order of the ITAT upholding the order of CIT (Appeal) for applying net profit rate of 2.5%.
8. Having considered the submissions made by the learned counsel for the parties, we are of the view that the ITAT has committed an error in dismissing the appellant’s appeal merely by observing that while deciding the appeal of revenue the stand of the CIT (Appeal) has been upheld. We find that the appellant’s contention that the net profit at 2.5% could not have been applied by CIT (Appeal) was required to be decided by the ITAT and the appellant’s appeal could not have been dismissed summarily on the basis of the decision in revenue’s appeal without dealing with the appellant’s contention. It is evident from the order of ITAT that while deciding revenue’s appeal also the said question of applying of net profit rate at 2.5% was not dealt with by it.
9. In the circumstances, we answer the question of law in favour of the assessee and against the revenue. The order of the ITAT to that extent is set aside. The matter is remanded back to the ITAT for deciding the appellant’s contention that the CIT (Appeal) has wrongly applied the net profit at 2.5%.
10. Accordingly, the appeal stands allowed. No orders as to costs.
