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TMI Blog2019 (11) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee also could not substantiate the advertisement expenses incurred by it and could not substantiate that no element of personal use is there in respect of the telephone expenses and the motor car running expenses. We hold that the ld.CIT(A) was fully justified in upholding the action of the Assessing Officer in rejecting the book results and going for estimation of the profits. Rate of profit - HELD THAT:- As books of account of the assessee are audited and the auditors have not pointed out any defects and the turnover of the assessee has gone up substantially during the year as against the immediately preceding assessment years, therefore, we deem it proper to adopt the net profit ratio of 1.88% which is the average of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned assessment year as well as the preceding two assessment years are as under:- A.Y. Total Turnover Gross Profit Net Profit GP Ratio NP Ratio 2008-09 ₹ 7,97,95,635/- ₹ 97,04,256/- ₹ 9,36,512/- 12.16% 1.17% 2009-10 ₹ 9,23,59,949/- ₹ 1,18,02,909/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of ₹ 58,142/- out of the motor car expenses and depreciation on account of probable personal use. He also made disallowance of ₹ 17,929/- out of the telephone expenses being 10% of the total expenditure of ₹ 1,79,294/- on account of element of personal use. Thus, the Assessing Officer determined the total income of the assessee at ₹ 1,37,73,930/-. 3.1 In appeal, the ld.CIT(A) upheld the action of the Assessing Officer in rejecting the book results and addition of ₹ 86,70,755/-. She also upheld the various other additions made by the Assessing Officer on the ground that the probable personal use of telephone and motor car could not be ruled out and that the assessee could not bring any e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned CIT(A) has erred both on facts and in law in confirming the disallowance of an amount of ₹ 7,51,196/- incurred by the assessee on account of commission expenses. ( ii) That the disallowance has been made despite the fact that there is no prohibition by law and the expenses have been incurred wholly and exclusively for the purposes of business only. 6. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the disallowance of an amount of ₹ 76,000/- by AO by invoking the provisions of Section 40(a)(ia) of the Act. 7 (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... register so as to give the details of datewise purchase and sales of items traded and the closing stock balance position on a particular day. Similarly, notices u/s 133(6) were issued to various sundry creditors which were returned unserved on the ground that either they have left or the premises are locked or the addresses were insufficient. It is also an admitted fact that the commission paid to various parties remained unsubstantiated in absence of nature of services rendered by them. Similarly, the assessee also could not substantiate the advertisement expenses incurred by it and could not substantiate that no element of personal use is there in respect of the telephone expenses and the motor car running expenses. Under these circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it proper to adopt the net profit ratio of 1.88% which is the average of the current year as well as the two immediately preceding assessment years. The Assessing Officer is directed to recompute the addition to be made on the basis of the net profit ratio as against the GP ratio adopted by him and upheld by the CIT(A). Since we are going for net profit addition, the various other additions made by the Assessing Officer and sustained by the CIT(A), in our opinion, do not require any separate addition and the same are liable to be deleted. The grounds raised by the assessee are accordingly partly allowed. 7. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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