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TMI Blog2016 (9) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... t business expenses besides the direct cost. The lower authorities have not doubted the amount of loan which assessee has borrowed for the purpose of his smooth running of business. If we analysis the balance-sheet of assessee we find that loan amount has been utilized exclusive for the business. However, at the same time, we cannot ignore the fact that assessee has failed to produce his books of account which was very important aspect for making the scrutiny assessment. We find that assessee has claimed total indirect expense for ₹2,77,086/- which is inclusive of interest element of ₹1,58,833/-. So it means only indirect expense of ₹1,18,253/- has been claimed by assessee. In view of the mater and after considering the facts in totality of the case and in the interest of justice and fair play, we are inclined to limit the net profit @ 4% of assessee’s turnover. - ITA No.1906-1910/Kol /2009 - - - Dated:- 3-8-2016 - Shri N.V.Vasudevan, Judicial Member and Shri Waseem Ahmed, Accountant Member For The Assessee : Shri Subash Agarwal, Advocate For The Respondent : Shri G. Mallikarjuna, CIT-DR ORDER PER Waseem Ahmed, Accountant Member:- Five ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The additional ground of appeal raised now is as follows:- For that the addition of items of regular assessment in the proceedings u/s. 153A when no incriminating documents were found in respect of the disallowed amounts in the search proceedings is liable to be deleted. 5. The issue raised by assessee in ground No.1 and additional ground of appeal appears to be similar, therefore, the same are clubbed together and disposed of by way of this common order. 6. The issue raised in these grounds is that whether the assessment completed u/s 143(1) of the Act can be considered in assessment proceedings u/s 153A of the Act without finding any incriminating materials during search. Both Ld. AR and Ld. DR have advanced their arguments on this point of issue at length and submitted various case laws in support of their respective arguments. However, at the end of hearing, Ld. AR for assessee expressed his willingness to withdraw the issues raised of assessee s appeal. In rejoinder, Ld. DR objected on the withdrawal of the grounds of assessee s appeal and submitted that detailed arguments have already been advanced on this issue, so it is not justified to withdraw the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e evidence of the declaration about these assets under the VDIS 97. At the same time the sale bill is good evidence of the sale of silver utensils and gold ornament. It is not necessary to have evidence of traveling to Delhi for the purpose of such sale. Since the appellant is unable to produce the VDIS 97 certificate issued by the department, the benefit of indexation and presumption about the acquisition of these assets is not available to the appellant. Under the circumstances second ground of appeal is dismissed. Being aggrieved by this order of Ld. CIT(A) assessee came in second appeal before us. 10. Before us Ld AR has filed paper book which is running pages from 1 to 96 and drew our attention on pages 1a to 3 of the paper book where ITR along with financial statements were placed reflecting the aforesaid transactions. The ld. AR stated that the transactions of sale purchase of old ornaments were duly disclosed in his return of income. On the other hand, Ld. DR vehemently relied on the order of Authorities Below. 11. We have heard rival contentions and perused the materials available on record. From the foregoing discussion, we find that assessee, in the instant c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e find no reason to interfere in the order of Ld. CIT(A). We hold accordingly and ground raised by assessee is dismissed. 16. Issue No. 4 and 5 are general in nature and do not require any adjudication. 17. In the result, assessee s appeal is dismissed. Coming to ITA No.1907/Kol/2009 for A.Y 00-01 . 18. The grounds raised by assessee in this appeal and additional ground are reproduced below:- 1. That the Ld. CIT(A) erred in sustaining the part of the addition made by the Ld. AO estimating the higher profit on surmises and conjectures and ignoring the fact that no evidence of higher profit was found during search and seizure operation. 2. That the Ld. CIT(A) erred in not giving cognizance to the interest factor for net loss from M/s Mukta Bricks though the corresponding loans and their utilization were reflected in the Balance Sheet. 3. That the action of Ld. CIT(A) in upholding the estimation of profit @ 9% on a turnover ₹ 478,350/- instead of 12% estimated by the Ld. AO in place of net loss of ₹ 57,403/- declared in the return of income by the appellant is unwarranted and bad in law. 4. That as the order of the Ld. CIT(A) is dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee before the ld. CIT(A) submitted that the loss is arising due to the interest expense for ₹ 1,58,833/- claimed during the year on the loan obtained for the purpose of business. However, the Ld. CIT(A) has rejected the plea of assessee and upheld the action of assessee after giving partial relief to assessee by observing as under:- 3.3 The submissions are carefully considered. The written submission do snot state the basis for the claim of interest far higher than the preceding assessment year. At the same time the assessee is not maintaining books of account. Therefore, some estimate of net profit would not be out of place. In my order for assessment 2004-05, the net profit of 9% was held to be reasonable and acceptable. In relation to the absence of proper explanation about increased interest expenditure it is held that net profit rate of 7% would be appropriate in the present case. The assessing officer is directed to apply this rate to the turnover of ₹ 4,78,356/-. The second ground of appeal is partly allowed. Being aggrieved by this order of Ld. CIT(A) assessee came in second appeal b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pressed. 25. In the result, assessee s appeal allowed partly. Coming to ITA No.1909-1910/Kol/2009 for AYs 03-04 05-06 . 26. In both appeals grounds have been raised out of which grounds No.4 5 in [ ITA No. 1909/Kol/2009 ] and grounds No. 3 to 5 in [ ITA No. 1910/Kol/2009 ] general in nature and do not require separate adjudication. The other grounds in ITA No. 1909/Kol/2009 are as under:- 1. That the Ld. CIT(A) erred in sustaining the part of the addition made by the Ld. AO estimating the higher profit on surmises and conjectures and ignoring the fact that no evidence of higher profit was found during search and seizure operation. 2. That the Ld. CIT(A) erred in not giving cognizance to the interest factor for net loss from M/s Mukta Bricks though the corresponding loans and their utilization were reflected in the Balance sheet. 3. That the action of Ld. CIT(A) in upholding the estimation of profit @ 8% on a turnover ₹ 744,200/- instead of 12% estimated by the Ld. AO in place of net loss of ₹ 84,368/- declared in the return of income by the appellant is unwarranted and bad in law. Further assessee raised additional ground in ITA No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,700/- instead of 12% estimated by the Ld. AO in place of net loss of ₹ 127,647/- declared in the return of income by the appellant is unwarranted and bad in law. 6. That as the order of the Ld. CIT(A) is devoid of merit, and bad in law, the same should be quashed and your appellant be given such relief(s) as prayed for. 7. That the appellant craves your Ld. Permission to add, amend and modify the above grounds on or before the date of hearing of the appeal. Additional ground:- 1. This application of the petitioner/appellant most respectfully prays for admission of the following additional ground of appeal which is purely legal in nature. 2. The additional ground of appeal raised now is as followsITA For that the addition of items of regular assessment in the proceedings u/s. 153A when no incriminating documents were found in respect of the disallowed amounts in the search proceedings is liable to be deleted. 3. This additional ground is in addition to the substantive grounds raise in the Memorandum of Appeal. 30. First we take up inter-connected grounds No. 1 to 3 in this appeal of assessee and the issue raised is that Ld. CIT(A) err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e category of business. Therefore, we are not inclined to uphold the order of Authorities Below. However, we are not interested in sending back the matter to the AO to avoid further litigation. Therefore, in the interest of justice and fair play we restrict the net profit @ 6% which in our considered view is reasonable from the business of assessee after considering the facts and circumstances of the case. Hence, this ground of assessee is allowed in part. AO is directed accordingly. 35. Next inter-connected issue No. 4 5 are as regards that Ld. CIT(A) erred in estimating profit @ 7% on a turnover ₹ 717,700/- instead of 12% estimated by AO.in place of net loss of ₹ 127,647/-. 36. Since we have already discussed same inter-connected issue in ITA No.1907/Kol/2009 for A.Y. 2000-01 in para 19 to 22 of this order and taking a consistent view we allow the appeal of assessee in part and AO is directed accordingly. 37. Next issue No. 6 and 7 are general in nature and do not require any separate adjudication. 38. In the result, assessee s appeal in ITA No.1906/Kol/2009 is dismissed and remaining four appeals are allowed in part. Order pronounced in the open co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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