The Calcutta High Court (HC) directed AO to calculate the profit estimated in its entirety when AO failed to follow the direction by ITAT to estimate net profit.
Calcutta Urology Research Centre Pvt. Ltd the assessee challengedthe order passed by the Commissioner of Income Tax (Appeals), Kolkata [CIT(A)] dated 28th March 2013 contending that the CIT(A) erred in law in confirming the Assessing Officer’s order in estimating the assessee’s profit.
During the pendency of the appeal, the name of the assessee company has been changed to Lim Real Estate Pvt. Ltd., as certified by the Registrar of Companies, Kolkata vides a certificate dated 29th September 2020.
Mr J.P. Khaitan, senior Counsel appeared for the appellant and Mr Soumen Bhattacharjee,standing Counsel for the respondent.
In those applications, it was contended that there is an apparent omission in the impugned order passed by the tribunal dated January 17, 2014, and the same may be rectified by directing that the net profit determined by the tribunal be applied to the entire receipts of the assessee both disclosed and undisclosed and the separate addition of the gross amount ofundisclosed receipts to the assessee’s taxable income for each of the assessment years 2004-05 to 2008-09 be deleted.
Justice T S Sivagnanam and Justice Hiranmay Bhattacharyya observed that the miscellaneous applications were filed before the tribunal for clarification/rectification of the main order passed by the tribunal dated 17th January 2014 and the assessee before filing the applications before the learned tribunal sought leave from this Court to file such application which leaves was granted by order dated 6th August 2014.
The order passed by the tribunal in the miscellaneous applications dated 20th February 2015 merges with themainorder passed by the tribunal dated 17th January. On perusal of the said order the HC found thatthe tribunal agreed with the assessee by stating that when profit for the assessment year is mentioned, the profit has to be decided for the turnover inits entirety.
As could be seen from the giving effect to the order passed by the assessing officer dated 18th March 2014, the assessing officer had given effect to the order of the tribunal by understanding as if the tribunal directed the net profit estimation only in respect of the disclosed income. The tribunal having clarified that the profit has to be estimated in its entirety, the view taken by the assessing office in its order dated 18th March 2014 is incorrect. The appeal filed by the assessee was allowed and the assessing officer is directed to apply the net profit rate as ordered by the tribunal in its order dated 17th January 2014 therein to the entire receipts of the appellant/assessee both disclosed and undisclosed
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