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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 ..... 4,101 to the assessee, in spite of the fact that the best judgement assessment and the estimation of gross profit in principle have been upheld by the Ld.CIT(A). 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of Rs. 2,00,34,510 being expenditure claimed, disregarding the fact that the assessee did not produce the books of account for verification and did not establish that the expenses claimed were admissible deductions under the provisions of Income Tax Act, 1961. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 4,09,53,611 which represents unexplained cash credit u/s.68 of the I.T.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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re rejected the books of account and estimated the gross profits at the rate of 9.78% of sales as against 7.43% declared by the assessee. 5. In first appeal, the ld. CIT(A), though, upheld the order of the AO in making the best judgment assessment under section 144, however, he, taking into the overall facts and circumstances of the case, reduced the estimated gross profit rate at the rate of 9% as against 9.78% adopted by the AO observing as under: "I have considered the matter. The Assessing Officer compared gross profit with those declared in earlier years and took that at 9.78% as compared to 7.43% declared by the appellant. As stated above, in a best judgment assessment there is always a certain degree 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 Rs. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vide ground No.2, the Revenue has agitated the action of the ld. CIT(A) in deleting the disallowance of expenditure of Rs. 2,00,34,510/-. During the assessment proceedings, the AO observed that the assessee had claimed indirect expenses under various heads. The claim of expenditure was in excess of the claim of the immediately preceding year. He further observed that the assessee's claim of expenditure could not be verified as the assessee had failed to produce the books of accounts, bills, vouchers etc. He therefore disallowed the excess of expenditure claimed during the current year as compared to that of preceding year. 9. In appeal, the ld. 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 correspo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the AO. 14. Before us, the ld. D.R. has contended that while deleting the above additions, the ld. CIT(A) did not verify about the genuineness and creditworthiness of the creditors. On the other hand, the ld. A.R. has relied upon the finding of the ld. CIT(A). 15. After considering the rival contentions of the parties, 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. 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 prejudic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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