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TMI Blog2017 (2) TMI 1360X X X X Extracts X X X X X X X X Extracts X X X X ..... al high court’s judgment in CIT vs. Dhiraj R. Rungta [2014 (4) TMI 711 - GUJARAT HIGH COURT] holding that in a case where an assessee’s books of accounts are rejected being defective, the very books could not be relied upon to make disallowances/additions. Estimating much higher net profits @ 3% as against 1.5% already declared - Held that:- We find that the same involve ‘raddiwala suppliers’ instead of waste paper suppliers to paper mills as is the instance involved in assessee’s case. It has further come on record that the assessee has even fabricated his books of account whereas he had duly maintained the same in earlier assessment years. We accordingly observe that the CIT(A) has rightly estimating assessee’s net profit @ 3% in the given facts of this batch of six appeals. The assessee’s identical sole substantive ground in all the impugned assessment years is rejected. - IT(SS)A Nos.87 to 92 & 105 to 110/Ahd/2014 - - - Dated:- 10-2-2017 - Shri N. K. Billaiya, Accountant Member, And Shri S. S. Godara, Judicial Member For the Revenue : Ms. Vibha Bhalla, CIT D.R. For the Assessee : Shri M. K. Patel, A.R. ORDER PER S. S. GODARA, JUDICIAL MEMBER T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue before us is to examine correctness of the CIT(A) s order in rejecting assessee s books thereby adopting net profits @ 3% instead of 1.5% already declared. Our view as per hon ble jurisdictional high court s decision stated hereinabove is that in case we uphold CIT(A) s order rejecting assessee s books of account, Revenue s former substantive ground would be rendered academic. 5. Ms. Vibha Bhalla (learned CIT-DR) vehemently argues that the CIT(A) has made altogether a new case in rejecting assessee s books thereby adopting above stated 3% net profit as the same is very much in contravention to his lower appellate jurisdiction vested u/s. 251(1)(a) of the Act postulating the same to be in the nature of confirmation, reduction, enhancement or annulment of an assessment only. She takes us to Form 35 comprising of assessee s pleadings / grounds raised before the lower appellate authority to emphasize that there was no plea before the CIT(A) to proceed for rejection of books. Shri Patel strongly supports CIT(A) s order rejecting assessee s books. He submits that a CIT(A) is very much empowered to decide all such ancillary issues going to root of the case and decide an asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The CIT(A) thereafter rejected assessee s books in order to estimate his net profits @ 3% as under: 5.11 I have carefully considered the submissions made by the learned A.R, in this regard. It is observed that various discrepancies were found in the books of account maintained by the appellant on the basis of which the same are treated as defective and liable for rejection. A reasonable net profit has to be estimated in the case of the appellant considering the nature, modus operandi of the appellant's business. 5.12 It is also observed that the sales which have been made by the appellant to : various paper mills e.g. M/s. R.A.Shaikh Paper Mills Ltd. and M/s.Saiyed Paper Mills Ltd. have not been doubted and the same have been accepted by the concerned Assessing Officers, as intimated by the Assessing Officer of the appellant, it is observed that no opening or closing stock is reflected in any of I.T.Returns or Tax Audit Report and since there is no mention of any stock of goods available at the time of survey action, it can be presumed that the earlier stock purchased was sold out on day today basis to paper mills. The figures of sales as per Sales-tax return, are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Turnover (Rs. In lacs) Net Profit @ 3% 2005-06 222.08 ₹ 6,66,240/- 2006-07 431.69 ₹ 12,52,507/- 2007-08 435.96 ₹ 13,07,080/- 2008-09 811.68 ₹ 24,35,040/- 2009-10 5707.79 Rs.1,71,23,370/- 2010-11 3336.39 Rs.1,00,09,170/- It is seen that this has effect of substantial reduction of profit as worked out by the Assessing Officer in all the assessment years except in A.Y.2008-09, where there is enhancement of income to the extent of ₹ 10,82,338/- [Rs.24,35,040/- as determined above- ₹ 13,52,702/- as determined by the Assessing Officer]. The A.R. has objected to this enhancement of income being done by adopting net profit @ 3%. But it is on record that the A.R. on behalf of the appellant has already accepted the defects in books of account and othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance/addition as made by the Assessing Officer in all the impugned assessment years in view of hon ble jurisdictional high court s decision (supra). We accordingly do not find any merit in its identical two substantive grounds. All of its appeals IT(SS)A Nos. 87 to 92/Ahd/2014 fail. 9. This leaves us with assessee s sole arguments in its as many cross appeal that the CIT(A) has erred in law as well as on facts in estimating much higher net profits @ 3% as against 1.5% already declared. Learned counsel representing assessee places strong reliance on various case laws. We find that the same involve raddiwala suppliers instead of waste paper suppliers to paper mills as is the instance involved in assessee s case. It has further come on record that the assessee has even fabricated his books of account whereas he had duly maintained the same in earlier assessment years. We accordingly observe that the CIT(A) has rightly estimating assessee s net profit @ 3% in the given facts of this batch of six appeals. The assessee s identical sole substantive ground in all the impugned assessment years is rejected. So is the outcome all of his cross appeals IT(SS)A Nos. 105 to 110/Ahd/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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