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TMI Blog2016 (5) TMI 1176X X X X Extracts X X X X X X X X Extracts X X X X ..... it - Held that:- We agree with the contention of the learned authorised representative that the estimation of net profit in any case should be on a reasonable basis and we find that the maximum assessed profits shown by the assessee in the earlier years is 8.42 per cent. Further, since no other reasonable basis has been given by the learned Departmental representative, we hold that the reasonable net profit rate taking into consideration the past history of the assessee be taken at 8.5 per cent. and the income of the assessee be calculated accordingly. - Decided partly in favour of assessee - I. T. A. No. 250/Agr/2012 and Cross Objection No. 49/Agr/12 - - - Dated:- 9-2-2016 - Bhavnesh Saini (Judicial Member) And Annapurna Mehrotra (Accountant Member) For the Petitioner : P. K. Sahgal For the Respondent : Waseem Arshad ORDER Annapurna Mehrotra (Accountant Member) 1. The present appeal filed by the Revenue and the cross objection filed by the assessee is directed against the order of the Commissioner of Income-tax (Appeals)-1, Agra, dated December 19, 2011. 2. Grounds of appeal raised by the Revenue are as under : 1. That the learned Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Grounds of the cross objection raised by the respondent-assessee are as under : 1. That the genuineness of the purchases of raw material was beyond doubt established by the assessee-company with reference to the relevant material/evidences, placed on records and/or produced for verification, thus the authorities below have been erred both in law and on facts in treating the purchases of raw material as unverifiable. 2. That while observing that full verification of purchases shown by the assessee-company could not be made, the learned Commissioner of Income-tax (Appeals)-I, Agra, could not point out even a single specific instance of alleged unverifiable purchase of raw material. 3. That the assessee-company has completely discharged the onus laid on it for proving the genuineness of purchases of raw material by bringing on records all humanly possible evidences/material in support thereof. 4. That the learned Commissioner of Income-tax (Appeals)-I, Agra, has erred both in law and on facts in rejecting the audited books of account of the assessee-company under section 145(3) of the Income- tax Act, 1961, and, thereafter, estimating the net profit at the rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o all the activities of the appellant-company relating to purchase of rock phosphate and production of fertilisers. On my direction, the Assessing Officer has tried to make verification about the purchase of raw mate rials claimed to have been used in production of fertilisers but as the matter was very old and all the supporting documents being not available with regard to purchase of material as well as the parties being mentioned in the records, these parties could not respond to the enquiries started by the Assessing Officer for verification of purchase of raw material and, therefore, it has been reported by the Assessing Officer that the genuineness of purchase of raw material and, therefore, it has been reported by the Assessing Officer that the genuineness of purchase of raw material could not be verified by him. However, the fact of doing production of fertilisers and its subsequent sales cannot be denied in view of the evidences collected from the Trade Tax Department as well as the Central Excise Department who have confirmed the production of fertilisers as well as their sales. Even the case filed against the appellant-company and its officials alleging fraud for showing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these suppliers were not found to be genuine supplier when a survey was carried out in their case by the Income-tax Department. As the manufacturing and sales made by the appellant are proved from the records of the Trade Tax Department and the Excise Department, the only possibility due to non-verification of purchases and considering the findings of survey in the premises of suppliers of raw materials can be said to be that the appellant has inflated purchases by showing certain fictitious purchases of raw material and, therefore, after rejecting the books of account of the appellant under section 145(3) for not getting its purchases verified, I find that in the interest of justice, it would be appropriate to estimate the net profit of the appellant- company at 10 per cent. In view of the above findings, I direct the Assessing Officer to estimate the income of the appellant-company by computing its net profit, taking the net profit rate at 10 per cent. and applying it on its total turnover of ₹ 1,07,66,250 instead of 7.2 per cent. declared by the appellant-company and, accordingly, deter mine the taxable income of the appellant-company. Before us the learned Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejecting the books of the assessee under section 145(3) of the Income-tax Act, 1961. Further, the learned authorised representative alternatively argued that there was no basis with the learned Commissioner of Income-tax (Appeals) for estimating its profit at 10 per cent. and pleaded that the same should be done on a reasonable basis. The learned authorised representative drew our attention to a chart showing assessed net profit rate of the asses see for earlier years and pointed out that the net profit rate never exceeding 8.42 per cent. in the earlier years. The learned authorised representative, therefore, pleaded that estimation of net profit at 10 per cent. in any case was excessive. We have heard the arguments and perused the documents produced before us. We agree with the contention of the learned authorised representative that the estimation of net profit in any case should be on a reasonable basis and we find that the maximum assessed profits shown by the assessee in the earlier years is 8.42 per cent. Further, since no other reasonable basis has been given by the learned Departmental representative, we hold that the reasonable net profit rate taking into consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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