9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (11) TMI 65 - AT - Income TaxRejection of books of accounts - invoking the provision of section 145(3) - GP Estimation - gross turnover for the year as Income from other sources - HELD THAT - As facts pertaining to discrepancies noticed in the financials of the assessee-firm and has also referred to various charts depecting the profitability of the assessee-firm in preceding years vis- -vis other related concerns of the same group and operating in the same field and even the same area. We find merit in the finding of Ld. CIT(A) rejecting the book results and invoking the provision of section 145(3) of the Act and this action of the Ld. CIT(A) has also not been challenged before us by the assessee by raising a specific ground. Assessee miserably failed to controvert the finding of Ld. CIT(A) by placing any material in its support. The only argument made by ld. counsel for the assessee is that the assessee-firm is consistently being allowed to the deduction u/s 80IC of the Act but had not said anything about the correctness of profit earned during the year. The case relied by the assessee in the case of M/s. Goodcare Pharma Pvt. Ltd. 2019 (4) TMI 566 - ITAT KOLKATA is also not be of any benefit to assessee since the fact are not similar and more specifically the issue of rejection of book results was not before the coordinate bench of Kolkata in the case of M/s. Goodcare Pharma Pvt. Ltd. (supra) and, therefore, it shall not be applicable on the instant issue raised before us. Under the given facts and circumstances of the case and detailed enquiry conducted by the Ld. CIT(A), which remained uncontroverted by the ld. counsel for the assessee find no reason to interfere in the finding of Ld. CIT(A) applying the gross profit rate of 40% on the turnover disclosed by the assessee as against the gross profit rate of 57.01% disclosed by the assessee and accordingly has rightly charged the difference of the profit that is 17.01% (57.01% less 40%) on the gross turnover for the year as Income from other sources . Accordingly, ground no. 2, 3 4 raised by the assessee are dismissed. Appeal of the assessee for A.Y. 2013-14 is dismissed. Conditional allowing section 80IC taking 40% G.P. Rate - HELD THAT - As decided in own case we confirm the finding of the Ld. CIT(A) applying the gross profit rate of 40%.
Issues Involved:
1. Deduction under Section 80IC of the Income Tax Act. 2. Rejection of books of accounts under Section 145(3) of the Act. 3. Estimation of gross profit rate at 40% instead of 57.01%. 4. Classification of the difference in profit as "Income from other sources." Detailed Analysis: 1. Deduction under Section 80IC of the Income Tax Act: The assessee, a partnership firm engaged in the coke industry, consistently claimed deduction under Section 80IC of the Income Tax Act. The firm claimed a deduction of ?14,48,09,592/- for the assessment year (A.Y.) 2013-14. The Assessing Officer (AO) denied this deduction, citing anomalies in financial transactions, particularly the genuineness of sales, transportation costs, and purchases from related parties, which were deemed unverifiable and fabricated. The CIT(A) acknowledged the firm's consistent claim since A.Y. 2007-08 and its eligibility for the deduction but was unconvinced by the profits shown during the year. The CIT(A) estimated the gross profit at 40% of the total turnover, directing the difference to be taxed as "Income from other sources." 2. Rejection of Books of Accounts under Section 145(3) of the Act: The AO and CIT(A) noted discrepancies in the assessee's financials, including sales, purchases, and transportation expenses. The CIT(A) rejected the book results under Section 145(3) of the Act due to these discrepancies, estimating the gross profit rate at 40%. The Tribunal upheld this action, noting that the assessee failed to produce books of accounts and other relevant materials to justify the profits earned during the year. 3. Estimation of Gross Profit Rate at 40% Instead of 57.01%: The CIT(A) observed various discrepancies in the assessee's financials, including cash sales without reliable evidence, low manufacturing expenses, and high gross profit percentages compared to related concerns. The CIT(A) concluded that the books of accounts did not reveal the true and correct picture of the profits earned, estimating the gross profit rate at 40%. The Tribunal found merit in this finding, noting that the assessee's counsel failed to controvert the CIT(A)'s findings with any material support. 4. Classification of the Difference in Profit as "Income from other sources": The CIT(A) directed that the difference between the estimated gross profit rate of 40% and the disclosed rate of 57.01% be taxed as "Income from other sources." The Tribunal upheld this decision, dismissing the assessee's appeals for A.Y. 2013-14, 2014-15, and 2015-16, confirming the CIT(A)'s findings and the application of the gross profit rate of 40%. Conclusion: The Tribunal dismissed the appeals, confirming the CIT(A)'s decision to estimate the gross profit rate at 40% and classify the difference as "Income from other sources." The assessee's consistent claim for deduction under Section 80IC was acknowledged, but the discrepancies in financials led to the rejection of the book results and the estimation of a lower gross profit rate. The Tribunal found no reason to interfere with the CIT(A)'s findings, noting the assessee's failure to provide material support to counter the discrepancies noted.
|
