2021 (12) TMI 1287 - AT - Income Tax

Rejection of books of accounts - addition to the extent of 1.00 % of Gross Profit - HELD THAT - AR simply made is submission that addition restricted by the ld. CIT(A) is on higher side and concluded his submissions in a single sentence. We find that even before ld CIT(A), the assessee only submitted that in one of the comparable companies in Hari Om Agro Products Pvt. Ltd., the ld.CIT(A) restricted addition to the extent of 0.5% and in case of Jalaram Cultivation addition was restricted to 1% by the ld.CIT(A). We find that no documentary evidence was furnished before ld CIT(A). In our view the ld. CIT(A), in a very reasonable manner restricted the addition to 1.00 % of total sale/turnover of assessee. Even now neither the copy of order in case of Hari Om Agro Products Pvt. Ltd. nor any other comparable company or the alleged audited accounts of the assessee is placed. At the addition cost of repetition, we may note that this appeal pending appeal for more than five years, the assessee failed to bring any evidence on record to substantiate their plea that their books result should be accepted. In view of the aforesaid discussion, we do not find any reason to interfere with the order of ld. CIT(A), which we affirm. In the result the ground No. 1 2 of the appeal is dismissed.

Summary

Issues Involved:
1. Addition of 1% of gross profit to the appellant's total income.
2. Assessment order passed without proper opportunity of hearing.
3. Ad-hoc estimation of gross profit by the Assessing Officer (AO).
4. Rejection of books of accounts under section 145(3) of the Income Tax Act.
5. Consistency in judgments across similar cases.

Issue-Wise Detailed Analysis:

1. Addition of 1% of Gross Profit to the Appellant's Total Income:
The primary issue across all appeals was the upholding of the addition of 1% of gross profit to the appellant's total income. The appellants argued that their declared gross profit ratios, as shown in their audited financial statements, were correct and should be accepted. They contended that the addition confirmed by the CIT(A) should be deleted. However, the Tribunal upheld the CIT(A)'s decision to restrict the addition to 1% of the total turnover, considering it fair and reasonable given the circumstances.

2. Assessment Order Passed Without Proper Opportunity of Hearing:
Some appellants raised additional grounds, claiming that the assessment order was passed without affording them a proper opportunity of hearing. They argued that the additions made were illegal, bad in law, and without jurisdiction. However, the Tribunal noted that no submissions were made by the appellants either for admitting the additional grounds or in support of them. Consequently, these additional grounds were treated as not pressed and dismissed accordingly.

3. Ad-Hoc Estimation of Gross Profit by the Assessing Officer (AO):
The AO estimated the gross profit at 3% of the total turnover due to the absence of detailed evidence provided by the appellants. The AO noted that the appellants failed to furnish books of accounts and other necessary details, leading to the rejection of the declared profit. The CIT(A) reduced this estimation to 1% after considering comparable cases and the nature of the business. The Tribunal affirmed this decision, finding it reasonable and supported by the facts.

4. Rejection of Books of Accounts under Section 145(3) of the Income Tax Act:
The AO invoked section 145(3) of the Income Tax Act to reject the books of accounts due to the lack of basic details and supporting evidence. The appellants argued that their books were duly audited and should not have been rejected. However, the Tribunal observed that no substantial evidence was provided to support the appellants' claims, and the AO's decision to reject the books of accounts was justified.

5. Consistency in Judgments Across Similar Cases:
The Tribunal consistently dismissed appeals with similar facts and grounds, following the principles of consistency. In each case, the appellants raised identical or similar grounds of appeal, and the Tribunal upheld the CIT(A)'s decision to restrict the addition to 1% of the total turnover. The Tribunal emphasized the lack of evidence provided by the appellants and affirmed the CIT(A)'s orders across all cases.

Conclusion:
The Tribunal dismissed all the appeals filed by the appellants and the cross-appeals filed by the revenue. The consistent approach in upholding the 1% addition of gross profit and rejecting the additional grounds for lack of evidence highlighted the Tribunal's emphasis on the need for substantial documentation and proper hearing opportunities. The judgments reinforced the importance of maintaining detailed records and providing necessary evidence during assessments and appellate proceedings.