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TMI Blog2022 (9) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... d even the Ld. NFAC, although after having duly reproduced the earlier year data, has not considered this aspect. In our considered opinion, the lower authorities would not have ignored the past trends of the assessee. In the case of Shri Gurunanak Truck Operators Union, Sunam [ 2021 (3) TMI 826 - ITAT CHANDIGARH] also held the issue in favour of the assessee by directing that instead of estimated net profit rate of 1.5%, the net profit rate of 1% should be applied. In the present case we note that although the AO has applied the rate of 12% and the Ld. NFAC has reduced it to 5%, no cogent reason has been given for such estimation. The past history/trend of the assessee has not been considered by the lower authorities which makes their orders unsustainable. In our considered view, the application of net profit rate of 2.5% of the gross receipts would meet to the ends of justice in as much as any leakage of revenue would be covered as also the assessee s non production of books of account and vouchers would also be taken care of. Appeal of the assessee is partly allowed. - ITA No.455/CHD/2022 - - - Dated:- 13-9-2022 - Shri Sudhanshu Srivastava, Judicial Member And Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aggrieved, the assessee has now approached this Tribunal, challenging the order of the Ld. NFAC by raising the following grounds of appeal: 1. That the Ld. CIT(A) has erred in applying a net profit rate of 5% on gross receipts of Rs. 4,10,12,477/- ignoring the facts of the case that the assessee is a 'Truck Union' and has been formed for overall benefit of 'truck owners' and has no profit motive at all. 2. That the Ld. CIT(A) has failed to appreciate that the assessee does not own a truck of its own and almost, whatever, freight is received, the same is passed on to the owners of the Truck and, as such, the application of net profit of 5% on the total freight receipts is highly exorbitant. 3. That the Ld. CIT(A) has failed to take the facts of comparable cases in the similar line of 'Truck Union' cases and, thus, the application of 5% as net profit on the receipts is highly exaggerated. 4. That the appellant craves leave to add, amend, or alter any of the above ground or grounds of appeal during the course of appellate proceedings. 3.0 The Ld. Authorized Representative submitted that Ld. NFAC had misdirected itself in directing the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /Chd/2020, wherein vide order dated 18.03.2021, the coordinate bench of the ITAT had considered profit estimation by the AO under similar circumstances and had reduced the estimated net profit from 1.5% to 1% of the gross receipts based on the past history of the assessee. 3.2. The Ld. AR prayed that the estimation of the net profit may suitably be modified to meet the ends of justice. 4. Per contra, the Ld. Sr. Departmental Representative, while supporting the order of the Ld. NFAC, also referred to the observations of the Assessing Officer in the assessment order that the assessee had not only failed to produce the books of account, but had also not produced any vouchers in original to substantiate the various expenses claimed by it. The Ld. Sr. DR further submitted that the assessee had not even filed the audit report within the prescribed time limit and had also filed the return of income belatedly which indicated that the assessee was trying to cover up some discrepancies before filing the return. The Ld. Sr. DR submitted that the Ld. NFAC had already given adequate relief to the assessee by directing the Assessing Officer to restrict the addition by applying net profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer has ignored the past trends and even the Ld. NFAC, although after having duly reproduced the earlier year data, has not considered this aspect. In our considered opinion, the lower authorities would not have ignored the past trends of the assessee. 5.3 We have also gone through the judicial precedents relied upon by the Ld. AR and we note that the facts of this case are identical to the facts of the case in the case of Bhatinda Truck Operator Union vs. ITO (Supra) wherein the Amritsar Bench of the ITAT returned the following findings: 7. We have heard both the parties and given our thoughtful consideration to the rival contentions gone through the evidence and material placed on record and the orders of the authorities below. It is not in dispute that assessee had not produced the books of account, bills and vouchers, copy of bank account etc. The Assessing Officer was, therefore, fully justified for invoking the provisions of section 145(3) of the Act. The assessee has not even disputed this issue before us. Therefore, we agree with the authorities below that provisions of section 145(3) are attracted to this case. 8. Having held so now the question is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iries after confronting the same to assessee. In the present case, the Assessing Officer has neither referred to past history of the case nor has made any independent enquiries. He has also not referred to any comparable case where income was estimated by applying net profit rate of 10 per cent. Therefore, it could be said that income estimated by the Assessing Officer is without any basis and the CIT(A) too has summarily upheld the same without referring to any other case. 10. xxx xxxx x xx x 11. The Ld. counsel has referred to the decision dated 3-102001 of CIT(A), Bhatinda, in the case of the Truck Union Rampura Phul case (supra) for the assessment year 1998-99 (a copy was placed before us) where assessment was completed under section 144 by applying net profit rate of 4 per cent by Assessing Officer on freight contract receipts of Rs. 2,21,20,827. On appeal, the CIT(A) reduced the net profit rate of 3 per cent of the freight receipts. The contention of the Ld. AR that Department has not filed any appeal against the said order of CIT(A) is not disputed by the Revenue. In the case of Berger Paints India Ltd. (supra), it has been held if the Department has not challenge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authorities below and the Ld. counsel for the assessee. The grievance of the assessee is that the Ld. CIT(A) has wrongly sustained the addition 1.5% without taking into consideration the past history of the case of the assessee and that the Ld. CIT(A) has wrongly affirmed the action of the Assessing Officer in rejecting the books of account of the assessee without assigning any reasons. As pointed out by the Ld. counsel, in the past three years, the gross commission of the total receipts remained below 1%. The Ld. CIT(A) has determined the addition @ 1.5% and as per settled law when the books of account are rejected, the profit is determined on estimation basis. Further, in determining the profit on estimation basis, the past history plays a vital role. Therefore, we are of the considered view that the net profit rate of 1.5% sustained by the Ld. CIT(A) is on higher side in view of the past history. Hence, we find merit in the contention of the Ld. counsel that 1.5% profit rate estimated by the Ld. CIT(A) is on higher side. Accordingly, in the interest of justice, we partly allow the appeal of the assessee and modify the order passed by the Ld. CIT(A) and restrict the net prof ..... X X X X Extracts X X X X X X X X Extracts X X X X
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