9911796707
TMI Blog2017 (6) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... For The Assessee : Shri Vinod Bindal, CA For The Revenue : Shri Anil Kumar Sharma, Sr. DR ORDER PER AMIT SHUKLA, JUDICIAL MEMBER: The aforesaid appeal has been filed by the assessee against impugned order dated 10.03.2014, passed by Ld. CIT (Appeals) New Delhi, for the quantum of assessment passed u/s 144 for the A.Y. 2010-11. The assessee in its grounds of appeal has raised following grounds which reads as under:- 1. The CIT (Appeals) erred in law and on facts in confirming an addition of ₹ 12,98,019/- a) by allowing only the employee and selling expenses @ 3% of the turnover as deduction and b) by estimating the net profit @ 10.75% of the turnover as against 7% estimated by the AO though considering the same to be on higher side by holding that the appellant must suffer for all the infractions ignoring the reason explained for such infraction, the facts of the case and the net profit ratio of the earlier years. Thus the addition so made without any enhancement notice should be deleted. 2. Without prejudice to the above ground, if the profit of business is to be estimated, it should be estimated on the basis of net profit declared and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,702/- giving a G.P. rate of 17.89%. The decline in total sales from 201,07,479/- to a mere ₹ 120,76,727/- is neither believable or acceptable The Vat return showing sales of ₹ 1,20,76,727/- is not a conclusive proof as the sales are not recorded in the proper books of account, the assessee s submission is not reported to even VAT Department. What is more, during the period under consideration a sum of ₹ 2,00,000/- has been debited to Dashaant Sales account (as appearing in the books of account of M/s Dharam Leela Sales Corporation) as on 30.04.200 with a narration as being Tempo purchased in Dashaant . It indicates that the business of Dashaant Sales had been on the rise as compared to the last year. The assessee had felt the need for a new tempo to supply the goods. In the absence of books of account, purchase, sale party ledger and vouchers, the sales are not verifiable and hence the total sales this year are estimated at ₹ 220,00,000/-, a 10% increase over the last year s. As regards the applicable net profit rate, last year the assessee produced documents showing a trade discount margin of 5% when the A.O. applied a net profit rate of 2.46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t only that, it was pointed out that the G.P. rate of 6% and NP rate of 2.46% was assessed in the previous year under similar circumstances when there was same allegation of non maintenance of books of accounts. Instead of going by the precedence of the earlier, the Assessing Officer has estimated the G.P. rate of 12.75% and net profit rate of 7% of ₹ 2,20,00,000/- resulting into addition of ₹ 15,40,000/-. 4. In the remand report the Assessing Officer s submission in this regard has been as under:- Illegal addition of ₹ 15.40.000.00 as business income The addition was made in two accounts:- 1) By increase of the turnover to ₹ 2,20,00,000.00 from 1,20,76,727.00 2) By increase of the GP from 6% to 12.75% and NP from 2.46 to 7%. In support of the turnover, the assessee has furnished Sale tax assessment order, sale and vat return, copy of purchase account in Dharam Leela Sales Corporation, copy of purchase bill etc. After verification of the documents no adverse inference is drawn on the issue of turnover. In regard to GP and NP, the assessee has explained that Birthday discount is given near the birthday of Mr. Dharam Pal Gulati, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 76,377/- but applied higher net profit rate of 10.75% of the sales/turnover. Thus, the net profit fate was enhanced from 7% to 10.75%. 7. Before us, the ld. counsel of the assessee, Shri Binod Kumar Bindal, after explaining the entire facts of the case submitted that, now the issue which is mainly involved is how much should be the estimate of net profit rate. He submitted that the assessee is mainly receiving commission and discount like birthday discount which is given at the time birthday of Mr. Dharam Pal Gulati, Chairman of MDH; various trade discounts and cash discounts. So far as the birthday discount is concerned the same is to be passed over to the customer as a matter of trade practice and it is not given on all the products. Therefore, the net profit rate as assessed by the Assessing Officer as well as by the ld. CIT is far too high. He further submitted that in the immediately preceding assessment year, G.P. rate of 6% and N.P. rate of 2.46% has been assessed. Therefore, in light of past precedence the net profit rate should be taken at 2.46%. So far as the estimation of selling expenses are concerned taken at 3% of the turnover, the same is not being challenged by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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