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TMI Blog2018 (4) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... iness of trading export of ready-made garments and also Managing Director of a company viz. 'Fibres & Fabrics International Pvt. Ltd.' The return of income for the assessment year 2005-06 was filed on 28/10/2005 declaring total income of Rs. 42,94,86,263/-. Against the said return of income, the assessment was completed vide order dated 12/11/2007 passed u/s. 143(3) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] at Rs. 44,65,64,478/-. While doing so, the Assessing Officer (AO) estimated the profit at 12% on the total turnover of Rs. 12,75,37,442/- by doubting genuineness of commission payment and net profit disclosed for years are very low compared to profits in the immediately preceding year i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g from judicial precedents. Accordingly, the learned CIT(A) erred in confirming the Order of the learned AO. 2.3 The learned CIT(A) has erred in not appreciating the facts of the Appellant's case, while confirming the Order of the learned AO. 2.4 The learned CIT(A) has erred in disregarding the following facts while confirming the Order of the learned AO wherein he has rejected the books of accounts: a) That separate books of accounts were maintained; b) That there were no discrepancy or defects in the books of accounts; c) That the books of accounts were audited periodically; and d) That requisite details pertaining to commission paid were available and furnished by the Appellant to the AO. Ground 3: Adoption of Notional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the learned CIT(A) has erred in issuing directions to the learned AO to adopt a notional profit of 8% of gross sales, without regard to and without appreciating the facts/business of the Appellant and the profits/margins earned by others concerns engaged in same/similar business. Ground 4: Commission payment Without prejudice to the other grounds, the learned CIT(A) has erred by holding that the Appellant was unable to substantiate the claim of payments of commission, without considering the facts of the Appellant's case. Ground 5: No loss to the Revenue Department The learned CIT(A) ought to have appreciated that there is no loss to the Revenue Department as a result of using the proprietorship concerns for carrying on busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es were made from the concern in which the assessee was substantially interested and therefore, the AO was justified in estimating profit at 12% of the turnover. 7. We heard rival submissions and perused the material on record. The issue in appeal is whether the AO is justified in rejecting books results and estimating profit at 12% of the turnover. The AO estimated profits by resorting to estimation of profit taking into consideration the following facts: i. Existence of proprietary concerns is not proved as it is found on inspection by the Inspector that all the concerns are housed under same roof and the name board or concerns were not displaced. ii. The purchases were made from concerns in which the assessee had substantial interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able profits of concerns in the similar line of business. 8. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. 9. The revenue raised the following grounds of appeal in ITA No. 875/Bang/2012: 1. The order of the learned CIT(A) is opposed to law and facts of the case. 2. On the facts and in the circumstances of the case, the CIT(A) erred in directing the Assessing Officer to compute the business income of assessee at 8% instead of 12% of the total turnover of five proprietary firms as computed by the assessing officer, without giving any proper reasoning and despite accepting the fact the assessee could not substantiate the claims of loss and expenses incurred in the name of commission shown in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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