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TMI Blog2014 (9) TMI 1124X X X X Extracts X X X X X X X X Extracts X X X X ..... ., was justified. So we set aside the order of the ld. CIT(A) on this issue and restore the matter to the file of the AO with a direction that AO will verify the correctness etc. of the expenditure claim and thereafter to decide the issue afresh in accordance with law. Unexplained cash credit under section 68 - CIT-A allowed the claim - Held that:- We are of the view that the action of the ld. CIT(A) in deleting the additions on account of unexplained cash credits without verifying the genuineness of the transactions and creditworthiness of the creditors etc. was not justified. So, in our view, the interest of justice will be well served, if, the issue is restored to the file of the AO with a direction to examine the same afresh and decide the same after giving necessary opportunity to the assessee to prove the genuineness and creditworthiness etc. of the creditors. Validity of best judgment assessment under section 144 - Held that:- AO had given ample opportunity to the assessee to produce the necessary details. When in a case, the assessee relies upon certain documents and records in the shape of books of accounts, bills, vouchers etc. and the AO requires the production of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Act, 1961, despite the fact that the assessee did not discharge the primary onus of establishing the identity of creditors, the financial capacity of the creditors and the genuineness of the transaction with requisite evidence. 4. The appellant prays that the order of the CIT(A) be set aside on the grounds mentioned above and that of the Assessing Officer be restored. 5. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary. Ground No.1 4. The facts in brief are that the assessee is engaged in the business of manufacturing extruded brass rods and sections, job woks, trading of scrap and wind power generation. In the scrutiny assessment proceedings under section 143(3) of the Income Tax Act (hereinafter referred to as the Act) , the Assessing Officer (hereinafter referred to as the AO) issued notice under section 142(1) of the Act on 10.07.09 requiring the assessee to file certain details. Thereafter several opportunities were granted by the AO to the assessee to file those details and the hearing was fixed for the said purpose for 21.08.09, then on 03.09.09, 11.09.09, 22.09.09, 06.10.09, 15.10.09, 23.10.09, 27.10.09 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of guess work and it is the assessee himself who is to blame as he did not submit books of accounts or maintain proper accounts. But in my opinion there is some arbitrariness in adopting the GP rate of 9.7% which is higher than the rate of 9.16% in the immediately preceding year even after there has been increase in turnover this year by ₹ 50.83 crores. I agree with the appellant that the GP reduces when turnover increases which is evident from the turnover and GP rate of the appellant in last two years. It would, therefore, be reasonable to adopt the GP rate at 9% instead of 9.7% adopted by the AO. The gross profit at this rate on turnover of ₹ 1,31,88,08,493 works out to ₹ 11,86,92,764. The appellant has shown GP of ₹ 9,80,15,280. The difference comes to ₹ 2,06,77,484. The AO has worked out differential GP of ₹ 3,43,51,585. I, therefore, restrict the addition on account of lower GP to ₹ 2,06,77,484. The appellant gets relief of ₹ 1,36,74,101. 6. Before us, the Revenue, vide ground No.2, has agitated the reduction in the estimated gross profit rate by the ld. CIT(A) to 9% as against adopted by the AO at 9.78% and thereby restric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) observed that the increase in expenditure during the current year, when viewed against the increase in turnover, as compared to that of last year, the corresponding increase of expenditure was reasonable. He therefore deleted the addition so made by the AO. 10. Before us, the ld. D.R. has contended that while deleting the disallowance, the ld. CIT(A) did not examine the bills, vouchers and other details relating to the expenditure in question. He has just adopted the general view that with the increase in turnover, the corresponding increase in expenditure was reasonable. On the other hand, the ld. A.R. has stressed that the findings of the ld. CIT(A) in this respect are correct. 11. In our view, neither the disallowance made by the AO nor the action of the ld. CIT(A), in deleting the disallowance made by the AO in respect of expenditure, without verification of the bills, vouchers etc., was justified. So we set aside the order of the ld. CIT(A) on this issue and restore the matter to the file of the AO with a direction that AO will verify the correctness etc. of the expenditure claim and thereafter to decide the issue afresh in accordance with law. Needless to say ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved, if, the issue is restored to the file of the AO with a direction to examine the same afresh and decide the same after giving necessary opportunity to the assessee to prove the genuineness and creditworthiness etc. of the creditors. We hold accordingly. 16. Ground No.4 5 are general in nature and does not require any adjudication. 17. Now we take up the assessee's appeal. ITA No. 596/M/2011 (Assessment Year: 2007-08) 18. The assessee has taken the following grounds of appeal: All the below mentioned grounds of appeal are independent and without prejudice to each other. 1. The assessment order u/s. 144 is bad in law. 2. The learned Assessing Officer has erred on facts and in law in making ex-parte assessment u/s. 144 and the Hon'ble CIT(A) has in confirming the same. 3. The learned Assessing Officer has failed to apply his best judgment while framing assessment u/s. 144. 4 The learned Assessing Officer has erred on facts and in law in rejecting the books of account u/s. 145(3) and the Hon'ble CIT(A) has erred in confirming the same. 5. The learned Assessing Officer erred in law as well as on facts in making addition of ₹ 3, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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