9911796707
TMI Blog2015 (9) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act, 1961. The assessee has maintained the Book of Accounts as per section 44AA and got his Books of Accounts audited u/s. 44AB of the Income Tax Act, 1961. 3] On the facts and circumstances and in law, the learned Commissioner of Income Tax (A) - 49 has erred in invoking section 153C of the Income Tax Act, 1961 as there is absence of any incriminating material and hence no addition can be made in the hands of the other person u/s. 153A /153C of the Income Tax Act, 1961 and hence it is bad in law. As it is mandatory to record his satisfaction vis-a-vis the belonging of the material found to be that of other person. 4] On the facts and circumstances and in law, the learnedCommissioner of Income Tax (A) -. 49 has erred as approval of the Joint Commissioner of Income Tax is absent u/s. 153C of Income Tax Act, 1961. 5] On the facts and circumstances and in law, the learned Commissioner of Income Tax (A) - 49 has erred in making addition in the net profit purely on the basis of conjecture and surmises without any supporting material and hence, it is submitted that income to be computed in accordance with Books of accounts maintained u/s.145 of the Income Tax Act, 1961. 6] On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit margin. In the assessment order the AO mentioned that the assessee company has credited total sales of Rs. 1,12,89,203/- for A.Y.2005-06, Rs. 1,48,22,740/- for A.Y.2006-07, Rs. 1,65,11,490/- for A.Y.2007-08, Rs. 1,59,41,080/- for A.Y.2008-09, Rs. 1,94,94,500/- for A.Y.2009-10 and Rs. 2,33,04,050/- for A.Y.2010-11 against which it has shown gross profit of Rs. 10,45,557/- for A.Y.2005-06, Rs. 12,33,890/- for A.Y.2006-07, Rs. 19,93,844/- for A.Y.2007-08, Rs. 10,46,652/- for A.Y.2008-09, Rs. 13,42,019/- for A.Y.2009-10 and Rs. 14,67,807/- for A.Y.2010-11 which worked out to 9.26% for A.Y.2005-06, 8.32% for A.Y.2006-07, 12.08% for A.Y.2007-08, 6.57% for A.Y.2008-09, 6.88% for A.Y.2009-10 and 6.30% for A.Y.2010-11 of the sales. The assessee's sales are in cash. The AO mentioned that during the course of search action conducted on 28.03.2011, the assessee disclosed an additional income of Rs. 75,00,000/- on account of sale suppression over and above the disclosed income. The said disclosure has been reflected in the return for A.Y.2011-12. The NP rate as worked out in all the assessment years is given as under :- 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Ld. AO that any expenditure(s) has been inflated by the assessee and/or sales are not made at the prevailing market rates. Merely because the assessee has made cash sales, the same is not a ground for making addition. {Ref: R. B. Jessaram Fatehchand 75 ITR 33 (Bom.)}. 1) It is submitted that the income of an assessee has to be computed in accordance with the books of account maintained by the assessee- that is the mandate of section 145 of the Act. 2) It is submitted that, it is settled position, that when books are not rejected, no addition can be made to profit rate. Reliance in this regard is placed upon the decision of the Hon'ble Rajasthan High Court in CIT V/so Maharaja Shree Umed Mills 192 ITR 565- (Raj.). The said view was followed by the Hon'ble Tribunal in Mewar Textile Mills 64 TT J (Jp.) 502. 3) It is submitted that the assessee is subjected to tax audit and when no infirmities are pointed out in the audit, there is no warrant to make an addition for N.P. rate on the basis of conjectures & surmises. As held by the Hon'ble jurisdictional High Court, the books of account have to be accepted unless, on verification, they disclosed any faults or def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % GP rate. This judgement shows that GP rate of other assessment years can be adopted as a bench mark for determining the gross profit rate for the current assessment year. Nowhere in the order, the Hon'ble High Court of Rajasthan held that the gross profit rate of later year cannot be adopted. In the case of Inani Marbles (P.) Ltd. gross profit rate of 2.51% was accepted based on finding of the final fact finding authority i.e. ITAT. Similar finding is not available in the case of the appellant, however, the net profit rate was adopted by the AO at 5% of the sales and the same is considered reasonable in comparison to 32.23% of net profit disclosed by the appellant for the assessment year 2011-12. 5.5 Further the assessee raised the ground that the AO did not reject books of account and in spite of that he took 5% profit on turn over. The assessee further mentioned that books of accounts were properly maintained u/s.44AA and audited u/s.44AB. When this ground was raised before the ld. CIT(A), he mentioned as under :- "8.4 In the case of the appellant the AO did not use the word "the books of account are rejected", however, he proceeded to estimate the income at reasonable n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year in which such interest is due to the assessee:] 6 Provided also that nothing contained in this sub- section shall preclude an assessee from being charged to income- tax in respect of any interest on securities received by him in a previous year if such interest had not been charged to income- tax for any earlier previous year.] (2) Where the 7 Assessing] Officer is not satisfied about the correctness or the completeness of the accounts of the assessee, or where no method of accounting, has been regularly employed by the assessee, the 8 Assessing] Officer may make an assessment in the manner provided in section 144. 5.7 As evident from the above section, rejection of books of accounts is necessary by the AO, if he decides to adopt other profit percentage and further as per Section 145(3), assessment under that situation has to be made u/s.144 only. Further for the rejection of books of accounts, books of account have to be examined and a specific defect u/s.145(3) has to be pointed out. 5.8 It is surprising that the AO did not reject books of account and the ld. CIT(A) rejected it without verifying the books of accounts. By simply mentioning that "I reject the books of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of search." 6.2 The CIT(A) observed that :- "12.4 By looking into the above observations of the special bench decision of the Hon'ble ITAT, I am of the view that in a case where the return of income was merely processed u/s.143(1) of the Act, there is a scope for making assessment under original jurisdiction as well as u/s.153A of the Act since no view as such was taken in respect of the income declared in the return of income filed. Any re-appreciation of the facts about an issue already decided will amount to change of opinion. But in a case where no assessment was made earlier and it was only processing of return u/s.143 (1) of the Act, the assessment made u/s.153A of the Act for the first time, the issue of change of opinion does not arise. It appears that in the case of appellant no assessment was completed either u/s.143 (3) or u/s.147 or under any other provisions of the Act except processing of the return of income u/s.139 (1) of the Act. Since no assessment was made in this case for the assessment years 2005-06 to 2010-11 prior to the assessment u/s.153C of the Act which is the first assessment for the years under consideration, the scope of assessment expands to the or ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
