9911796707
TMI Blog2018 (10) TMI 1598X X X X Extracts X X X X X X X X Extracts X X X X ..... GP rate is applied by rejecting the books result, no further addition on account of any item of specific expenses are required to be made because the books of account could not be relied for the purpose of completing the assessment of the assessee and it is for that reason that the AO has resorted to estimation of profit earned by the assessee on the overall sales - Decided against revenue. Estimating the GP rate at 1% instead of 1.5% as estimated by the AO - Held that:- It is noted that the income-tax assessments for the earlier years were framed u/s 143(3) and in those years the trading results of the assessee had been accepted by the Department. From the chart submitted before us, we find that the assessee has disclosed the fair rate of gross profit in comparison to the earlier years. In the circumstances the profit declared by the assessee in earlier years cannot be brushed aside for estimating the profit of the relevant year until and unless, there are changes in the facts and circumstances or the AO brings any results of comparable cases to justify his action, which is not the case here in hand - we find merit in the action of the Ld. CIT(A) in estimating the profit at 1% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as called for and verified. Cash book prepared post survey for his business, and produced before A.O. was also perused. n being asked to clarify the reason for introducing cash in savings bank a/c ( which is treated as personal a/c by assessee) and subsequently transferred to current a/c ( the a/c for his business) ,it was stated that, the bulk of cash on sales was being deposited in his savings bank a/c, in order to avoid charges of bank , which was imposed on deposit of cash beyond a limit in a day in current account. The cash of business deposited in savings a/c was treated as withdrawal from capital a/c of the proprietor. Cash is being withdrawn from business as drawings of proprietor. It is being deposited in personal savings a/c. This is being done to avoid deposit in current a/c for which the bank charged separately if cash deposit excluded a limit. Therefore to avoid the bank charges cash was deposited in savings a/c and subsequently transferred to current ale of business. In this way total cash deposited in savings ale was ₹ 1,36,10,000/-, withdrawn from business, as reflected in cash book. However a sum of ₹ 1 ,07,00,000/- was transferred from savings ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmity in the above findings of the Ld. CIT(A). After going through the facts and material on record, we note that the it is not in dispute that the assessee had offered income of ₹ 70,00,000/- in the course of survey as well as the return of income. Before the AO it was explained that the said offer inter alia included cash disclosure of ₹ 61,00,000/- towards the profit derived from sales made outside the books of accounts and the circulating capital involved therein, which was introduced in the cash book of the assessee post completion of survey. It was submitted that such disclosure of capital of ₹ 61,00,000/- inter alia included the amount of ₹ 31,90,000/- by way of capital introduction in the personal balance sheet of the assessee. A reconciliation statement in respect thereof was furnished at the time of assessment. Before the AO, the assessee submitted that the cash sales made by the assessee on behalf of its proprietorship concern was deposited in his personal savings bank account so as to avoid charges levied by Bank on deposit of cash beyond prescribed limit in current account. The cash deposited in the personal savings account would be accounted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found. With reference to such business conducted outside the regular books, the assessee had disclosed profit of ₹ 70,00,000/-. In the course of assessment the AO however rejected the books of accounts and estimated a higher profit than the profit disclosed and offered to tax by the assessee. Apart from estimating the profits, the AO made specific addition of ₹ 25,70,949/- on account of unaccounted transportation expenses found recorded in the material impounded in the course of survey. On appeal, the Ld. CIT(A) deleted the impugned addition. Aggrieved by the Ld. CIT s action, the Revenue is now in appeal before us. 7. At the time of hearing the Ld. DR vehemently argued that the specific additions made by the Assessing Officer should be confirmed. On the contrary, the Ld. AR of the assessee submitted that when the books of account of the assessee are rejected and the Gross Profit rate is estimated, no other additions by making specific disallowance of the expenses could be made. 8. We have carefully considered the submissions of the learned Representatives of the parties and the orders of the authorities below. It is noted that there is no dispute with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. Aggrieved the assessee preferred appeal against the same before the CIT(A), who taking into account the past history of the assessee and the facts of the case estimated the GP rate of 1%. Aggrieved, the Revenue is in appeal before us. 11. At the time of hearing the Ld. DR vehemently relied on the elaborate reasons set out by the AO in his order rejecting the books of accounts and estimating the profit at 1.5%. The Ld. DR contended that the estimation of GP at 1.5% by the AO was fair and met the ends of justice and be therefore confirmed. On the other hand, the Ld. AR placed reliance on the order of the Ld. CIT(A). The Ld. AR pointed out that the AO has not given any cogent reasoning for estimating the profit at 1.5%. He submitted that the manner of estimation followed by the AO was completely adhoc arbitrary. He drew our attention to the comparative chart placed at Page 22 of the Paper-book and submitted that the GP rate of 0.88% reported by the assessee in the relevant year was comparable to the GP rate of 0.80% and 0.87% earned by the assessee in earlier AYs 2008-09 2009-10 respectively and in that view of the matter the Ld. CIT(A) s action of estimating the GP rate a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
