2023 (4) TMI 65 - HC - Income Tax

Net profit estimation - ITAT reducing the Net Profit Percentage from 8% as estimated by CIT (A) to 0.6% - whether Net Profit has arrived at by the Tribunal at 0.6% was just and proper? - HELD THAT - On going through the order passed by the Tribunal we find that the Tribunal has not only considered the estimation of the Net Profit in respect of the assessee s sister concern but has also taken note of the Net Profit declared by the assessee for the assessment year 2009-2010 to 2011-2012 which were within the range of 0.2% to 0.29% and even in the scrutiny proceeding of the assessee s case Net Profit was estimated below one per cent. Tribunal found on facts that the business during all the years was the same and there was no change and the books of accounts was duly audited and no error was pointed out by the concerned authority. Thus we find that the entire matter is factually correct and no substantial question of law arises for consideration. Hence, the appeal fails and dismissed.

Summary

Issues:
1. Condoning delay in filing the appeal.
2. Reduction of Net Profit Percentage from 8% to 0.6% by the Income Tax Appellate Tribunal.

Condoning Delay in Filing the Appeal:
The High Court considered the affidavit filed in support of the petition and found sufficient cause for not being able to prefer the appeal within the period of limitation. The delay in filing the appeal was condoned, and the petition was allowed. The appeal was filed under Section 260A of the Income Tax Act, 1961 against the order passed by the Income Tax Appellate Tribunal relating to the Assessment Year 2012-2013.

Reduction of Net Profit Percentage:
The revenue raised a substantial question of law regarding the reduction of Net Profit Percentage from 8% to 0.6% by the Income Tax Appellate Tribunal. The Court analyzed whether the Net Profit arrived at by the Tribunal at 0.6% was just and proper. It was noted that the Tribunal considered the Net Profit declared by the assessee for previous assessment years, which ranged from 0.2% to 0.29%, and even in scrutiny proceedings, Net Profit was estimated below one percent. The Tribunal found that there was no change in the business over the years, the books of accounts were duly audited, and no errors were pointed out. Consequently, the Court held that the matter was factually correct, and no substantial question of law arose for consideration. Therefore, the appeal was dismissed.

Overall, the High Court's judgment involved condoning the delay in filing the appeal and addressing the issue of the reduction of Net Profit Percentage by the Income Tax Appellate Tribunal, ultimately dismissing the appeal based on factual correctness and absence of substantial legal questions.