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TMI Blog2020 (6) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... t shall lead to estimation of income of the assessed based on some reasonable and proper criteria. Since the average of past history of GP declared by the assessee is considered as a proper and reasonable basis for estimation of income for the year after rejection of books of account, therefore, the GP is estimated at 10.22% as against GP declared by the assessee at 10.04% for the year under consideration and differential trading addition equivalent to GP rate of 0.18% on declared turnover is upheld and the appeal of the assessee is partly allowed. For A.Y 2012-13, the assessee has declared GP of 10.57%. If we consider the average GP for past 5 years which has been declared and accepted by Revenue and has attained finality, excluding A.Y 2009-10 where GP so declared has not been accepted by the Revenue on account of accommodation entries, it comes to 10.15%. Thus, the GP declared by the assessee is more than the average GP of past years and even where the books of accounts are rejected, no trading addition is called for and the appeal of the assessee is thus allowed. For A.Y 2013-14, the assessee has declared GP of 9.01% which is lower than the average GP for past 5 years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessing officer on account of alleged unverifiable purchases of ₹ 50,79,735/- after rejecting books of accounts of the appellant under section 145(3) of the I.T. Act, 1961. ITA No. 1066/JP/2019 1. Whether on the facts and circumstances of the case and in law the ld. CIT(A) was justified in restricting the addition of ₹ 12,69,933/- to ₹ 4,62,549/- against the bogus purchases disallowed by the AO following Hon ble Supreme Court s decision on bogus purchases in the case of Vijay Proteins Pvt. Ltd.? 2. Whether on the facts and circumstances of the case and in law the ld. CIT(A) was justified in deleting the additions made on the basis of corroborative information received from Investigating Wing, Mumbai which is a law enforcement agency under the Ministry of Finance and accordingly the case falls under exception clause 10(e) of Circular 03 of 2018 dated 20.08.2018 ? 3. Briefly stated, the facts of the case are that the assessee filed its return of income declaring loss of ₹ 6,51,298/- which was processed u/s 143(1) of the Act. Subsequently, notice u/s 148 was issued on 08.03.2016 and in response to the said notice, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of appeal by the Department in low-tax effect appeals. The CBDT has specified several instances where appeals have to be filed and prosecuted despite their low-tax effect. The contents thereof read as under: All the Principal Chief Commissioners of Income Tax Subject: Amendment to para 10 of the Circular No. 3 of 2018 dated 11.07.2018-reg: Madam/Sir, Kindly refer to the above. 2. The monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal, High Courts and SLPs/ appeals before Supreme Court have been revised by Board s Circular No. 3 of 2018 dated 11.07.2018. 3. Para 10 of the said Circular provides that adverse judgments relating to the issues enumerated in the said para should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 thereof or there is no tax effect. Para 10 of the Circular No. 3 of 2018 dated 11.07.2018 is hereby amended as under: 10. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that no basis has been given by the Assessing Officer for rejecting the books of accounts and invoking the provisions of section 145(3) of the Act. It was submitted that during the course of assessment proceedings, the assessee has submitted sample purchase bills for the said purchases so made by the assessee and has also submitted that the payment has been made by account payee cheque. However, based on alleged statement of Directors of M/s Rajendra Jain Group of companies, the Assessing Officer has alleged that the assessee has obtained bogus accommodation entry from three concerned as mentioned in the assessment order. It was submitted that the assessee s objection to cross examine the Directors of Rajendra Jain Group of companies was not considered by the AO as well as by the ld. CIT(A) and merely basis the statement recorded by the third party, the books of accounts have been rejected and addition has been made in the hands of the assessee company. 12. Further, during the course of hearing, a chart showing the turnover and gross profit rate for the past years declared by the assessee company was submitted by the ld AR and the contents thereof read as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on entries in all these years, the past history is not totally reliable and the ld. CIT(A) is more than reasonable in estimating the GP rate at 11.5% and no further relief should be granted to the assessee company. The ld. DR further relied on the order of the lower authorities. 14. We have heard the rival contentions and perused the material available on record. For the year under consideration, the assessee has declared total turnover of ₹ 3,17,37,004/- with a gross profit of 10.04%. The A.O. has considered the purchases to the tune of ₹ 50,79,735/- made from these three parties as unverifiable. The A.O. consequently rejected the books of account of the assessee by invoking provisions of Section 145(3) of the Act and made disallowance of 25% of the aforesaid purchases. Hence, the A.O. has made addition of ₹ 12,69,933/-. Though, the assessee has challenged the action of the A.O. before the ld. CIT(A), however, the ld. CIT(A) has confirmed/upheld the disallowance made by the A.O. by observing that the assessee failed to establish the genuineness of the purchases made from these parties. It is pertinent to note that the even if the A.O. has doubted the genuinene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as a proper and reasonable basis for estimation of income for the year after rejection of books of account, therefore, the GP is estimated at 10.22% as against GP declared by the assessee at 10.04% for the year under consideration and differential trading addition equivalent to GP rate of 0.18% on declared turnover is upheld and the appeal of the assessee is partly allowed. 15. Now coming to appeals for other years, namely, A.Y 2012-13, 2013-14, 2014-15, both parties fairly submitted that facts and circumstances of the case are exactly identical to facts and circumstances of the case in A.Y 2009-10 and similar contentions have been advanced by both the parties. 16. Firstly, we find that all the appeals filed by the Revenue are below the prescribed threshold for filing the appeals and are not covered in the exception category, hence, all these appeals filed by the Revenue for respective assessment years are dismissed on account of low tax effect for detailed reasoning given supra in context of A.Y 2009-10. 17. In respect of assessee s appeals, for A.Y 2012-13, the assessee has declared GP of 10.57%. If we consider the average GP for past 5 years which has been declared a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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