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TMI Blog2018 (4) TMI 983X X X X Extracts X X X X X X X X Extracts X X X X ..... her. AO also failed to rebut the contentions of the assessee that the said stock was duly showed in the subsequent years and also the sales thereof. When no books of accounts are maintained by the assessee and return is filed under section 44AD of the Act, we are not in a position to sustain the order of Ld. CIT(A) estimating the sales which has no basis at all. Moreover, the AO has also not brought on record any evidences that assessee’s income was more than 8% during the year. - Decided against revenue. - ITA No.1474/M/2016 And ITA No.2272/M/2016 - - - Dated:- 17-4-2018 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER For The Assessee : Shri V.C. Shah, A.R. For The Revenue : Ms. Pooja Swaroop, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44AD are not applicable to the assessee s case and the issue raised in ground No.2 is as regards Ld. CIT(A) estimating the sales at ₹ 86,71,625/- as against the actual sale of ₹ 18,61,745/- by ignoring the fact that there was a closing stock held by the assessee which was sold in the subsequent years and further directing to estimate the net profit at 10% of the said sales. Whereas the issues raised by the Revenue are against estimation of the net profit at 10% of the gross estimated sales by Ld. CIT(A) as against the net profit calculated by the AO on the basis of audited books of accounts for A.Y. 2010-11. As a matter of fact, the assessee suo-moto declared net profit of 88.78% in the immediately preceding year. The facts in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orth ₹ 18,82,945/- as against the Rs.Nil in the tentative balance sheet as on 31.03.2011. The AO came to the conclusion that assessee has deliberately suppressed the sales by not maintaining any books of accounts whereas in the immediately preceding financial year assessee got his books of accounts audited. Finally the AO assessed the income at ₹ 77,18,660/- as against the returned income of ₹ 1,76,740/-. 4. Aggrieved by the order of AO, the assessee filed an appeal before the Ld. CIT(A) who partly allowed the appeal of the assessee by estimating the income on the said sales of ₹ 86,71,625/- @ 10% which worked out to ₹ 8,67,162/- by observing and holding as under: 3.3. I have carefully gone through the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case is covered u/s 44AD. Thereafter when a show cause is received by him he submits what is called roughly worked out balance sheet showing closing stock of ₹ 53,44,955/-. As mentioned in the assessment order the closing stock was shown as Rs. Nil in the tentative balance sheet as on 31.3.2011. This was stated to be personal balance sheet. Considering these facts it is held that the contention of the appellant that his case is covered under the provision of section 44AD cannot be accepted. However, computation of net profit of ₹ 76,98,864/- on an estimated turnover of ₹ 86,71,625/- seems to be unreasonable and overpitched because a net profit rate of 88.78% seems to be extremely unusual in the case of a trader. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - the net profit is estimated at ₹ 8,67,162/-. The addition is accordingly restricted to ₹ 8,67,162/- and the balance is deleted. Grounds of appeal no.1,2,3 4 are accordingly partly allowed. 5. Now against the order of Ld. CIT(A), both the assessee as well as the Revenue are in appeal before the Tribunal. The assessee has challenged the estimation of sales at ₹ 86,71,625/- and also estimation of net profit at 10% whereas the Revenue has challenged the restriction of addition on the said sales at 10%. The undisputed facts are that the assessee has filed the return of income by estimating the net profit of sales of ₹ 18,61,745/- under section 44AD of the Act and showed the same in the return of income but has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 625/- but the income was estimated at 10% of the said sales. Now the Ld. A.R. vehemently submitted before us that the closing stock was not appearing in the tentative balance sheet as the assessee has filed the personal capital account and personal balance sheet before the AO and not as regards the proprietary business of the assessee. Therefore, the said amount of closing stock was not appearing in the tentative balance sheet filed by the assessee. The Ld. A.R. submitted that the said stock was sold in the subsequent years and the sales there from and profit thereon were duly shown in the return of income. The Ld. A.R. also submitted that the AO has not brought anything on record to show that the assessee has made actual sale of ₹ 86 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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