IN INCOME TAX APPELLATE TRIBUNAL KOLKATA B BENCH, KOLKATA (Before Sri J. Sudhakar Reddy, Accountant Member & Sri S.S. Viswanethra Ravi, Judicial Member) ITA No. 1225/Kol/2018 Assessment Year: 2013-14 Asstt. Commissioner of Income Tax, Circle-39, Midnapore. Appellant Vs. M/s. De Son Marketing Pvt. Ltd. Respondent Ichapur Road Kadamtala Howrah PIN 711 101 [PAN AABCD9837E] Appearances by Shri Goutam Kr. Mondal, Addl. CIT Sr. D/R, appearing on behalf of Revenue. Shri Gautam Banerjee, FCA, appeared on behalf of assessee. Date of concluding hearing August 13th, 2019 Date of pronouncing order September 6th, 2019 ORDER Per J. Sudhakar Reddy, AM- This appeal filed by revenue is directed against order of Learned Commissioner of Income Tax (Appeals) - 11, Kolkata, (hereinafter ld.CIT(A) ), passed u/s. 250 of Income Tax Act, 1961 (the Act ), dt. 19/03/2018, for Assessment Year 2013-14. 2. assessee is company and is in business of distribution of iron rods. It filed its return of income electronically on 04/12/2013 disclosing total income of Rs.48,61,510/-. Assessing Officer passed order u/s 144 of Act on 27/03/2016, determining total income at Rs.4,98,21,530/-, interalia making additions on account of advance from customers, trade payables and on account of low profit. assessee carried matter in appeal. ld. First Appellate Authority called for remand report from Assessing Officer and after considering matter deleted additions. 3. Aggrieved revenue is in appeal before us. 2 ITA No. 1225/Kol/2018 Assessment Year: 2013-14 M/s. De Son Marketing Pvt. Ltd. 4. We have heard rival contentions. On careful consideration of facts and circumstances of case, perusal of papers on record, orders of authorities below as well as case law cited, we hold as follows: follows:- 5. Addition tion on account of advance from customers. ld. CIT(A), deleted same after going through details furnished by assessee as well as remand report submitted by Assessing Officer. He held that Assessing Officer has issued show cause notice u/s 133(6) of Act to various parties and had got replies from all of them except in case of three parties. He further mentioned that details of these three parties along with confirmation letters etc. were furnished by assessee assessee.. He has recorded factual finding that advances in question have been adequately explained by assessee. This factual finding could not be controverted by ld. D/R. Hence, we uphold finding of ld. CIT(A) and dismiss Ground No. 1 & 2 o of revenue. 6. Addition of trade payables There was increase in trade payables during year. Assessing Officer added same as he could not receive confirmations to notices u/s 133(6) of Act from three parties. ld. CIT(A) confirmed that all trade payables were verified and that assessee had obtained confirmations from these three parties and furnished same before authorities. For reasons given, he restricted addition to Rs.50,000/-.. We find no infirmity in this or order der of ld. CIT(A). Hence Ground No. 3 of revenue is dismissed. 7. Ground No. 4 & 5 are on issue of estimation of profits. ld. CIT(A) at para 8.1. of his order held as follows: follows:- 8.1 Moreover, net profit declared by appellant over tthehe years have been accepted by Revenue. In order to disturb NP, there should be enough material on record to show that NP declared by appellant was incorrect. In such situation, there should be express satisfaction leading to rejecti rejection of book results u/s 145(3) following which best judgment assessment should be 3 ITA No. 1225/Kol/2018 Assessment Year: 2013-14 M/s. De Son Marketing Pvt. Ltd. made. I find that this has not been done by AO. It is settled principal of law that best judgment assessment has to be based on material on record and should be undertaken rtaken with due care so as to remain as close to reality. Because 'judgment' has to be 'best', it cannot afford to be reckless and arbitrary. AO has talked of exorbitant expenses claimed, but has not considered growth in turnover, he ha hass not carried out ratio analysis, nor has he made any comparative analysis. There is no logic and reason on basis of which AO in 'best of his judgment' concluded that appellant's net profit should be 3% only, not anything less, not anythi anything ng more. With these shortcomings in view, addition made by AO on this account is directed to be deleted. This ground of appeal is allowed. 7.1. We find no infirmity in same, as Assessing Officer has not given Assessment Year basis of estim estimation ation of net profit. It appears that estimation has been made for sole reason that assessee has not appeared before Assessing Officer. Under these circumstances, we uphold finding of ld. CIT(A) and dismiss this ground of revenue. 8. Ground No. 6 is general in nature. 9. In result, appeal of revenue is dismissed. Kolkata, 6th day of September, 2019. Sd/- Sd/- [S.S. Viswanethra Ravi] [J. J. Sudhakar Reddy] Reddy Judicial Member Accountant Member Dated 06.09.2019 {SC SPS} 4 ITA No. 1225/Kol/2018 Assessment Year 2013-14 M/s. De Son Marketing Pvt. Ltd. Copy of order forwarded to 1. M/s. De Son Marketing Pvt. Ltd. Ichapur Road Kadamtala Howrah PIN 711 101 2. Asstt. Commissioner of Income Tax, Circle Circle-39, Midnapore 3. CIT(A)- 4. CIT- , 5. CIT(DR), Kolkata Benches, Kolkata. True copy By order Assistant Registrar ITAT, Kolkata Benches Asstt. Commissioner of Income-tax, Circle-39, Midnapore v. De Son Marketing Pvt. Ltd