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TMI Blog2020 (5) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... s model of the assessee as compared to the previous year which has apparently escaped the attention of the AO where he has compared the current year results with that of the previous year and in absence of any reasonable basis for estimation of gross profit rate in form of any comparable third party data, the estimation of gross profit rate of 5% cannot be sustained - Appeal filed by the assessee is allowed. - ITA No. 314/JP/2019 - - - Dated:- 28-4-2020 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri S.C. Jain (C.A.) For the Revenue : Miss Chanchal Meena (JCIT) ORDER PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of the ld. CIT(A), Ajmer dated 29.01.2019 for the assessment year 2010-11 wherein the assessee has taken the following grounds of appeal:- 1. That the learned Assessing Officer had erred at law as well as on facts in reopening the assessment u/s 148 and thereby further erred in making the order U/s 144 on totally different aspects beyond the issues covered under reasons recorded U/s 147. The learned CIT(A) has erred in not adjudicating but confirming the action of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of verification of cash transaction in the assessee s bank account, the matter has been reopened. It was submitted that reopening of the assessment for the purpose of verification or making the enquiry is not permissible as per the settled legal proposition as laid down by the various Courts from time to time. It was further submitted that in the reasons so recorded, the Assessing Officer has stated about heavy cash transactions amounting to ₹ 3,24,81,500/- however, he has not indicated as to whether the said transactions relating to deposits or withdrawals. It was submitted that on perusal of the bank statement of the assessee maintained with ICICI Bank, there is total cash deposits of ₹ 6,27,44,261/- and corresponding withdrawal in cash of ₹ 6,01,09,971/-. It was accordingly submitted that while recording the reasons, no proper material or records were looked into and the vague reasons were recorded. It was further submitted that in the reasons so recorded, the Assessing Officer has alleged that the assessee has failed to disclose fully and truly all material fact however, he has not specified what material facts have not been disclosed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he deposit of cash in the bank account and during the course of assessment proceedings, it was clearly specified that the animals are being purchased by the assessee from the producers of live stocks being agriculturists and thereafter the same are sold to the various meat factories and the payments against the purchases are being made in cash to the agriculturists and the cash was deposited directly by the buyers in the account of the assessee who have purchased these animals. The Assessing Officer reopened the case for the reason of deposit of cash whereas while completing the assessment the A.O. had resorted to make the addition to the income by application of NP rate 5% on the declared sales. It clearly indicates that the sales declared by the assessee are not in dispute and collection of the sales proceeds is definitely being deposited in the bank accounts. 6. It was further submitted that it is an admitted fact that the books were subject to audit U/s 44AB and the turnover as being admitted and specified in the assessment order was much beyond the limit as prescribed U/s 44AF, then how for making addition, section 44AF be invoked. 7. It was further submitted that the A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pport, reliance was placed on the following decisions:- CIT v/s Shri Ram Singh (2008) 306 ITR 343. Ranbaxy Laboratories Ltd v/s Commissioner of Income Tax (2011) 336 ITR 136 (Del) CIT v/s Jet Airways India Ltd. (2011) 331 ITR 236 (Bom) CIT v/s Adhunik Niryat Ispat Limited (2011) 63 DTR 212 (Del) 11. It was accordingly submitted that under the circumstances, the entire proceedings taken by the Assessing Officer resorting to make addition by applying the N.P. Rate of 5% is totally unjustified, unwarranted and against the provision of law as well as beyond the scope of section 148 for which the assessment was reopened by recording reasons since no matter was found to be taxable as per reasons recorded about the cash deposits and withdrawals in the bank accounts and therefore, the addition so made deserves to be deleted. 12. Per contra, the ld DR submitted that the matter was reopened by the Assessing officer in view of huge cash transactions made by the assessee in his bank account and thereafter, during the course of proceedings, the assessee was asked to produce books of accounts and vouchers which he failed to produce and in view of the same, the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s has been claimed and gross profit has been declared at ₹ 13,99,979/- giving GP rate 1.76% No other income or receipt has been declared. In P L Account after various expenses net profit of ₹ 5,43,621/- has been declared giving NP rate 68%. During proceeding the bank account of the assessee was analyzed and it was huge cash deposits in the bank account held with ICICI bank and huge withdrawals. The frequency and amount involved in the transactions are unusually high in relation to what would be expected from a normal business activity. All the related facts have been examined. Sales and purchases have been claimed to be made in cash only. Huge cash deposits and withdrawals in bank accounts have been made. The G.P. rate declared by the assessee in earlier year was 4.46% as compared to this year declared 1.76% justification of low G.P. given has already been not considered as per discussed above. During entire assessment proceedings, the books of account have not been produced for verification. Various figures reflected in audit report U/s 44AB, return of income filed and submission made during the course of assessment proceedings could not been verified. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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