2024 (10) TMI 692 - AT - Income Tax

Addition of GP shown by the Assessee by increasing GP rate from 3.18% to 3.43% - CIT(A) deleted addition - HELD THAT - We find that the ld. CIT(A) has given a very clear findings on the addition on the basis of GP ratio. He has categorically stated in his order that since the GP rate of the year under consideration is less than the GP ratio of the previous year, therefore, increase in GP ratio on estimated basis by the AO is not justified to the extent the Assessing Officer has done. We have considered the arguments of DR and Assessee on this issue. We have also gone through the findings of the CIT(A) on this issue in his order and we find that the findings given by the CIT(A) on this issue is very logical and thus justified hence it needs no interference. Accordingly, Revenue s appeal on this Ground is dismissed. Addition of cash deposited in bank account of the Assessee u/s 69A - CIT(A) deleted addition - HELD THAT - CIT(A) has followed the decisions of non-jurisdictional High Courts on this issue. Here we want to make it clear that in the absence of an order of the jurisdictional High Court, relevant orders on the same issue of even non-jurisdictional High Court are also accepted. It is a normal practice and thus there is nothing wrong in it. We have also considered the arguments of the Counsel of the Assessee and the findings given by the ld. CIT(A) in his order. We find that it is a matter on record that regarding allegation of bogus sales, nothing has been brought on record by the AO - AO has accepted all the purchases along with opening and closing stock of the Assessee. Then on what basis sales out of such stock / purchases may be rejected without any proof brought on record. Thus, the above findings given by the ld. CIT(A) on this issue in his order is very much justified and needs no interference.

Summary

Issues Involved:
1. Deletion of addition made by the Assessing Officer regarding Gross Profit (GP) rate.
2. Deletion of addition made under Section 69A of the Income Tax Act, 1961, concerning cash deposits during the demonetization period.
3. Rejection of books of accounts under Section 145(3) of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Deletion of Addition Regarding Gross Profit (GP) Rate:
The Revenue challenged the deletion of an addition of Rs. 1,58,607/- made by the Assessing Officer by increasing the GP rate from 3.18% to 3.43%. The Commissioner of Income Tax (Appeals) [CIT(A)] found that the Assessing Officer increased the GP rate without any comparable case or basis. The CIT(A) held that the GP should be estimated at 3.27%, the same as the previous year, rather than 3.43%. The Tribunal upheld the CIT(A)'s decision, stating that the findings were logical and justified, and dismissed the Revenue's appeal on this ground.

2. Deletion of Addition Under Section 69A Regarding Cash Deposits:
The Revenue also contested the deletion of an addition of Rs. 6,89,67,208/- under Section 69A, related to cash deposits during the demonetization period. The CIT(A) noted that the Assessing Officer failed to appreciate that all purchases were properly vouched and that quantitative details were provided. The CIT(A) found that the cash deposits were part of the sale proceeds and that applying Section 69A would result in double taxation. The Tribunal agreed with the CIT(A), emphasizing that the Assessing Officer had not provided evidence of bogus sales and had accepted the opening and closing stock, thus supporting the CIT(A)'s decision to delete the addition.

3. Rejection of Books of Accounts Under Section 145(3):
The Assessee filed cross-objections challenging the rejection of books of accounts under Section 145(3). The CIT(A) upheld the Assessing Officer's decision to reject the books due to discrepancies such as unexplained cash sales, lack of detailed records, and inconsistencies in the Kolkata branch operations. Despite the Assessee's detailed rebuttals, the Tribunal found the CIT(A)'s decision justified and dismissed the Assessee's cross-objections on this issue.

Additional Points:
- The Tribunal condoned a delay in filing the Assessee's cross-objections after considering the reasons provided, including an affidavit from the Assessee's accountant.
- The Tribunal acknowledged that reliance on non-jurisdictional High Court decisions is acceptable in the absence of jurisdictional decisions, supporting the CIT(A)'s approach.
- The Assessee's cross-objections were partly allowed, supporting the CIT(A)'s reliance on non-jurisdictional High Court judgments.

Conclusion:
The Tribunal dismissed the Revenue's appeal and partly allowed the Assessee's cross-objections, upholding the CIT(A)'s decisions on the GP rate and the deletion of the addition under Section 69A, while maintaining the rejection of the books of accounts under Section 145(3).