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TMI Blog2017 (8) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... he turnover has doubled during the year and the appellant has opened one more outlet for which a copy of the lease deed was also filed, I am of the considered opinion that some expenses must have been incurred for the renovation and upkeep of the business purpose, hence it will be appropriate to allow the expenses incurred by cheque and the disallowance of the balance amount is confirmed resulting into partial relief to the appellant. Addition on account of unsecured loans - occurrence of fire - Held that:- Once the tax auditor has audited the books of accounts of assessee much before the fire accident and has mentioned the figure of unsecured loan of ₹ 43,88,880/- from Rakesh Gupta, the contention of the assessee that the assessee received only ₹ 5 lacs from Rakesh Gupta cannot be accepted on the pretext that the reconciliation of the difference could not be made due to dislocation and overlapping of records in the fire accident. The assessee has also placed debtors and creditors list but the same are not found certified by any auditor. Moreover, the PAN mentioned at the confirmation filed before the CIT(A) was found wrong and the assessee at any stage has failed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re destroyed there. The Assessing Officer gave many opportunities for filing requisite details as per questionnaire issued, but the assessee did not comply with the notices. The ld. Assessing Officer also called for the details of the godown and offices. He submitted the details of offices and godowns as per letter dated 01.11.2010 showing the names and addresses and use of the premises. The Assessing Officer noted that the name and address of the premises on which the fire was said to have occurred, did not find place in these details furnished by the assessee. It was submitted by the assessee that since except one backup of books of accounts, which too was not complete, of the previous records and documents up to F.Y. 2008-09 got destroyed in that major fire, they have tried to reproduce all the records from the third parties and incomplete back up, but they were unable to give complete details. The assessee filed some documents in piecemeal fashion. The Assessing Officer issued notice u/s. 133(6) of the Act to six parties for verification of purchases at the addresses provided by the assessee out of which four notices were received back. The assessee filed details of purchases a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he whole credit balance of ledger account stood at ₹ 31.03.2008 of ₹ 7,01,190/- and ₹ 47,53,544/- respectively totaling to ₹ 54,54,734/-, as un-confirmed credit balances. 6. Against the above additions, the assessee appealed before the first appellate authority. The assessee submitted additional evidence before the first appellate authority and remand reports were called from the Assessing Officer and after being satisfied with the submissions of the assessee and considering the remand report, the ld. CIT(A) deleted the trading addition of ₹ 36,19,000/-, gave relief of ₹ 4,07,000/- out of addition of ₹ 5,07,202/- and further gave relief of ₹ 42,41,000/- out of addition of ₹ 43,88,880/- made by the AO as unexplained cash credit. The ld. CIT(A) also deleted the addition of ₹ 54,54,734/- made by the AO as unconfirmed credit balances. Accordingly, the appeal of the assessee was partly allowed. Aggrieved, the Revenue is in appeal before the Tribunal. 7. The ld. DR relied on the order of the Assessing Officer and submitted that the AO has rightly calculated the gross profit rate. The AO had given sufficient opportunity to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account were provided in the remand proceedings. The assessee did not submit correct G.P. rate. He had included all sundry balances write off of ₹ 2,67,692/- and Misc. income of ₹ 62,450/- and discount received of ₹ 23,737/- for calculation of gross profit of the business. These two items are not part of the regular trading activities. He submitted that it has to be excluded. Therefore, correct profit for F.Y. 2005-06 is ₹ 59093/- which given profit rate of 1.51% instead of 9.13%. Accordingly, the AO was not justified for enhancing the income by applying the higher rate of GP. The ld. CIT(A) has elaborately discussed this issue. The ld. AR also submitted in respect of office renovation expenses that it was a repair and maintenance. The details of renovation expenses in the office building were provided before the ld. CIT(A) and the details of all the business premises were also given to the AO. The assessee had taken a new shop at S/F 114, DLF Galleria, DLF-IV, Gurgaon. Lease Deed was submitted before the CIT(A) and the turnover has also been increased from 6.12 crores to 14.53 crores and similar expenses incurred during the last year were allowed. In the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Y. 2005-06 was wrongly mentioned as 9.13 % though as per the audited accounts, the same was 1.51%. He also explained the reason for the calculation error. In the remand report, the ld. AO did not comment on this issue but stated that the audit report date as submitted by the AR is different from the audit report date mentioned in the e-filed return. On this pretext, he did not commented on the error in respect of G.P. rate. The rejoinder of the ld. AR was that there were two dates in the audit report one the for the statutory report and the other for the Tax audit report and both the dates were apparent from the copy of audit reports enclosed in the paper book. I find that the basis of the addition is the average of the G.P. rate taken by the ld. AO from the submission of the ld. AR which was apparently not verified by him from the records and from the copies of the audited balances sheet which were duly accepted by the department in the earlier years, furnished by the appellant. It is seem that the G.P. rate for the earlier two years i.e A.Y. 2006-07 and 2007-08 was 1.51 % and 3.30% respectively and the average of the two comes to 2.40% as against re G.P. rate in the year under c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... many times for filing of books of accounts, but the assessee did not tell about the fire accident and the destruction of books of accounts nor produced any books of account. It was only when the Assessing Officer finally asked the assessee on 20.12.2010 to produce the pending details as required by various notices and to produce the books of account, then the assessee informed the AO about the fire accident occurred in the office cum godown on 12.06.2010 and destruction of records there. We do not find any substance in the contention of the assessee that he raised unsecured loan from Rakesh Gupta only to the tune of ₹ 5,00,000/- instead of ₹ 43,88,880/-. In this context, the AR of the assessee reconciling the above difference with confirmation of Rakesh Gupta, submitted before the ld. CIT(A) as under : The copy of account of Sh. Rakesh Gupta as per the books f accounts is placed at PB 77-78. The confirmation could not be filed at the time of assessment as the actual amount given by Sh. Rakesh Gupta was only ₹ 5 lakhs and the other credits were wrongly entered in his name and same could not be reconciled due to the dislocation and overlapping of records on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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