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TMI Blog2018 (4) TMI 1518X X X X Extracts X X X X X X X X Extracts X X X X ..... the past profitability of the assessee company is not available, the Assessing Officer should bring on his record the comparable businesses where the similar business or activities were carried on, to adopt the net profit ratio. Therefore, we are of the view that it would be appropriate to remit the said issue back to the file of the Assessing Officer with a direction to work out the assessee’s past profitability history and also the comparable of the similar business entities working in similar products and similar environment. - Appeal allowed for statistical purposes. - IT A No.1792/Kol/2016 And IT A No.1758/Kol/2016 - - - Dated:- 25-4-2018 - SHRI A. T VARKEY, JM AND DR. A.L.SAINI, AM For The Assessee : Shri Subash Agarwal, Advoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rhyme. 3. For that the estimation of income @ 45. 74% of the gross receipt by the AO onthe basis of whims, surmises or caprices subsequently estimated @ 37. 97% by the ClT(A) deserves to be rejected and the return lncome deserves to beaccepted on the ground that not only the estimation is highly unjustified,unreasonable, unrealistic and unacceptable in view of the fact that, theestimation based upon sheer assumption and presumption without reference topast records or comparable data or cases is unsustainable in the eye of law. 4. For that the appellant craves leave to add/amend/alter further grounds if any atthe time of hearing of appeal. 4. The Grievances of the Revenue are as follows: 1. In the facts and circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one Chartered Accountant without examining the books of accounts and on the basis of relying on statutory audit report. The statutory audit report was prepared without examining the books of accounts. During the assessment proceedings, the assessee failed to produce basic vouchers, sale memo, bills, day to day production details, stock register, quantitative consumption, register of raw materials, labour register, Bank statements and addresses of purchasers/sellers etc. Therefore, the Assessing Officer observed that it was not possible for him to examine the details of expenses furnished by the assessee. The Assessing Officer also noted that there was organized mismanagement of accounts and complexity of accounts, the valuation of stock is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... providing loan. Therefore, the ld. CIT(A) took the base of the NABARD profitability and restricted the addition of net profit @37. 93%. 8. Aggrieved by the order of the ld. CIT(A), the Assessee as well as Revenue are in appeal before us. The ld. Counsel for the assessee has submitted before us that the net profit addition restricted by the ld. CIT(A) based on the NABARD report at 37. 93% is not authentic. The ld. Counsel pointed out thatNABARD report is only a report and it is not a financial statement, hence it should not be relied. Neither the Assessing Officer nor the CIT(A) worked out net profit by any research or profits of the past years of the assessee. The assessee s past history of profit may be used to determine the net profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was done by the AO. The assessee has been putting more emphasis on application of net profit percentage, based on his past results/profits. We note that the addition made by the Assessing Officer which resulted at net profit @45. 74%, is also not supported by any research or projection of profit by Govt. Agency or by any third party comparable. 11. We note that when the assessing officer rejectsthe books of accounts then best way to make addition, is to estimate the profit of the assessee, based on past financial statements and past profit/loss history and if the same is not available then profitability of the outside comparable businesses may be taken as base. We note that the ld. CIT(A) relied on the NABARD report, to restrict the net ..... X X X X Extracts X X X X X X X X Extracts X X X X
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