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TMI Blog2010 (5) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer observed that 5 parties (as per Para 5.3 of the assessment order) did not respond to such notices. The Assessing Officer asked the assessee to prove the genuineness of the transactions made with the said 5 parties failing which ex-parte assessment will be made. However, nobody thereafter appeared before him till the passing of the order. The Assessing Officer noted that assessee is a manufacturer and exporter of readymade garments. The Assessing Officer compared financial results in the case of M/s Shah Originals where the GP was shown at 34.61% and net profit at 28.57% for the relevant period. Similarly, in the case of M/s. Anil L Shah (engaged in the business of export of garments) the GP rate was declared at 27.90% and net profit at 22.36% for the relevant period. Since the assessee failed to give proper explanation for fall in the net profit rate and failed to produce books of accounts, bills and vouchers etc. for verification, the Assessing Officer invoked the provisions of section 145 of the Act. He estimated assessee s gross profit @ 15% on the total turnover of ₹ 11.44 crores, which comes to ₹ 1,71,65,294/-. He accordingly made an addition of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses relied on by the assessee are not comparable. 5. The Learned CIT (A) provided the copy of the remand report to the assessee. He observed that the assessee neither produced the regular books of accounts nor produced supporting documents during the assessment proceedings. So, there was no evidence of the book results shown by it in the P L account filed along with the return of income. Since assessee could not explain the reason for extremely low profit, therefore, he held that the Assessing Officer was fully justified in rejecting the book results and as such was justified in estimating the income. He further observed that inspite of being asked to furnish the details of trading in respect of its major items and profit earned thereon, the assessee furnished only the details but did not produce the supporting documents on the basis of which the details were prepared. He observed that one of the major traded items provided by the assessee is garment and the profits shown by M/s. Shah Originals and M/s Anil L Shah engaged in the export of garments were much higher than that of the assessee. He observed that although the assessee has filed profit and loss account of M/s Ganesh Ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has furnished full details for which he referred to the reply given by the assessee on various days, the copies of which are placed in the Paper Book. He referred to the letters addressed to the Assessing Officer vide its reply dated 29th May 2007 (paper book page 7 and 8), reply dated 6th August 2007 (paper book page 9 10), reply dated 21st August 2007 (paper book page 11), reply dated 19th September 2007 (paper book page 12) and 10th December 2007 (paper book page 42). He submitted that the Assessing Officer has not provided the financial results of M/s Shah Originals and M/s Anil L Shah during the course of assessment proceedings to enable the assessee to substantiate its claim as to why and how those cases are not applicable. On the other hand, financial results of M/s Billion exports and M/s Ganesh Garments are comparable cases where the profit shown by them are more or less similar to that of the assessee who is in the same line of business. As regards allegation of the Assessing Officer in the remand report that assessee did not attend the proceedings and filed the details in Tapal, the Learned Counsel for the assessee drew the attention of the Bench to the reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rules. Referring to the assessment order for AY 2007-08, he submitted that the Assessing Officer has accepted the book results shown declared by the assessee. He, accordingly, submitted that the book results by the assessee for the assessment year 2005-06 should be accepted. 9. The Learned Departmental Representative, on the other hand, strongly supported the order of the CIT (A). He submitted that the assessee neither produced the books of account nor produced the supporting bills and vouchers before the Assessing Officer. Mere submission of ledger accounts of various expenses / purchases and sales etc. will not entitle the assessee to say that it has produced full details. He submitted that every item has to be substantiated with supporting bills and vouchers, which assessee failed to do. The comparative cases cited by the assessee cannot be accepted since they do not relate to the assessment year involved nor the turnover is nearer to the turnover of the assessee. Even during the remand proceedings, the assessee did not produce the full details and filed certain details in Tapal only which shows that the assessee has not come out clean. He, accordingly, submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year of either party relates to assessment year 2005-06. Therefore, the same also cannot be compared. 11. We find from the statement showing comparative GP and net profit ratio filed by the assessee for 3 years that the assessee has shown GP rate of 5.70% and NP rate of 0.73% for assessment year 2005-06 on a turnover of ₹ 10,51,00,130/- as against the GP rate of 11.85% and net profit 0.81% during assessment year 2006-07 on turnover of ₹ 4,42,61,681/-. Similarly, the assessee, during assessment year 2007-08 has shown GP rate of 11.32% and net profit at 1.14% on a turnover of ₹ 6,37,98,961/-. Thus, we find the GP rate and net profit rate for the assessment year 2005-06 is much less than that of the assessment year 2006-07 and 2007-08. Therefore, under these circumstances, adoption of GP rate @ 15% of the turnover appears to be on the higher side especially when the accounts of the assessee for the assessment year 2007-08 was scrutinised by the Assessing Officer and the book results were accepted in the order passed u/s 143(3). However, at the same time, since the assessee did not produce the full details and abstained from appearing before the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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