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TMI Blog2019 (9) TMI 1069X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition of Rs. 13,58,97,128/- made consequent to estimation of gross profit." The assessment for impugned AY was framed by Ld. Income Tax Officer-8(1)(1), Mumbai u/s 143(3) read with Section 144 of the Income Tax Act,1961 on 28/03/2013 wherein the income was assessed at Rs. 14.39 crores after certain additions / disallowances as against returned loss of Rs. 12.32 Lacs filed by the assessee on 14/10/2010 which was subsequently revised at the same figures on 12/03/2012 and 30/03/2012 to revise the TDS claim. As evident from ground of appeal, the sole subject matter of appeal before us is Gross Profit addition of Rs. 13.58 Crores as made by learned AO. 2.1 The assessee being resident corporate entity was stated to be engaged in trading of information technology products and providing maintenance services during the year under consideration. The assessee reflected sales receipts under 3 heads as tabulated below: - No. Segment Amount (Rs.) 1. Sale of Hardware, Server & Accessories Rs. 5.29 crores 2. Software sales Rs. 3.41 crores 3. Others Rs. 128.24 crores TOTAL Rs. 136.94 Crores The assessee had reported segment wise quantitative disclosures in S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn that the goods worth Rs. 1,25,89,64,553/- have been sold for Rs. 79,30,67,718/-. Keeping in view the above noted discrepancies, explanations were called from the assessee. 2.2 In defense, the assessee drew attention to the nature of business being carried out by the assessee and explained that it was trading in computer server / hardware / accessories which were procured from multiple sources. Thereafter, these items would be preloaded with software procured from many other sources. Thereafter the different components would be assembled into one composite supply which may be sold against one invoice. Accordingly, this may be termed as 'Many to One' assembly - meaning procuring from many / multiple sources and supply to one source. The books of accounts would capture these multiple procurements against multiple purchase invoices, but may end up having lesser number of invoices. In these circumstances, it was rather difficult to appropriately classify and tie-up or reconcile the purchases with the sales figures, quantitatively. It was further explained that Schedule 19 merely provides quantitative figures of majorly traded products with a residuary class titled as 'Others' in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be not unique to the current financial year but presentation was similar as done in the earlier years. It was also submitted that quantitative details provided in the notes on accounts could not be used to make any useful comparison or analysis as these are different families of components/ items having varied costs/ values, and hence, the same may be considered as statistical data serving no purpose from an assessment or evaluation purpose. A plea was also raised that closing stock was properly valued and there was no error and the valuation was on similar basis as done in earlier years. The assessee also made available digital data containing all the sale as well as purchase invoices. The attention was also drawn to the fact that the accounts were duly audited and no qualification was made by the auditor in their report on the aspect of accounting records. Regarding service income of Rs. 57.71 Crores, it was submitted that the assessee renders technical and support services to its customers which is subjected to Tax withholding. In some case of sale of software, tax has been deducted by the customer. Nevertheless, these figures were already included in the income reflected by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its finding on certain figures reported in financial statements without pointing out any defect in the books of accounts. Therefore, the rejection of books of accounts by learned AO was not justified. 3.3 Regarding estimation of GP rate of 18%, it was held that Ld. AO was incorrect in estimating the rate @18% since the gross profit rate in earlier years was in the range of 9.61% to 10.77% after excluding support services income and therefore, the estimation made by Ld.AO was without any basis. Consequently, the impugned addition made by Ld. AO was deleted. Aggrieved, the revenue is in further appeal before us. 4. The respective representatives have advanced arguments, which we have considered. The Ld. AR has drawn our attention to the sample purchase as well as sale invoices as kept in the paper-book to support the conclusions drawn by Ld. CIT(A). The Ld. DR, on the other hand, has submitted that the conclusions drawn by Ld. AO were based upon figures reflected in assessee's financial statements. The Ld. DR also pleaded for restoration of matter back to the file of Ld. AO for the purpose of reappreciation of factual matrix. 5. We have duly considered the rival submissions and d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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