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TMI Blog2021 (1) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... ive rate of profit in the same trade/business is a proper guidance for estimation of income. t is settled preposition of law that the past history of the assessee regarding GP/NP is a proper guidance and in the absence of past history the prevailing GP/NP in the same trade/business is also considered as a proper guidance. Therefore, there cannot be different para meters for estimation of income in case of assessee who is maintaining books of account but were rejected by the Assessing Officer and in the case where the assessee is not maintaining the books of account. Estimation of the income of the assessee should be based on some reasonable and proper criteria and not based on an arbitrary rate adopted by the Assessing Officer. The As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in confirming the addition of ₹ 7,06,920/-, excluding the returned income, as made by the ITO, without considering the factual position as narrated before him. 3. BECAUSE the Ld. CIT(A) has erred in law and on facts by holding that profit of earlier year cannot be basis of ascertaining the profit rate of impugned assessment year and confirmed the addition of ₹ 7,06,920/. 4. BECAUSE the appellant was prevented by reasonable clause for making compliance as per the provision of Income Tax Act, 1961 in the impugned assessment year whereas in subsequent assessment year the appellant made full compliance and punishment given by the ITO and confirmed by the Ld. CIT(A) is too harsh and illegal. 5. BECAUSE the in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ividual and proprietor of M/s Jai Krishna Vastralaya. The assessee is dealing in wholesale cloth business and filed his return of income on 28.03.2015 declaring total income of ₹ 2,18,970/-. The assessee has declared the total turnover of ₹ 28,56,255/-. During the course of scrutiny assessment, the Assessing Officer noted that there are various deposit entries in the bank account of the assessee during the year under consideration and total deposit for the year comes to ₹ 1,84,69,376/-. When the Assessing Officer asked the assessee to explain the cash deposit in the bank account the assessee submitted that the deposit is representing the sale proceed of cloth on wholesale basis and offered the income by considering net pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has offered the income on the turnover at N.P. rate of 2% which is proper and justified, whereas the Assessing Officer has not given any basis for adopting the N.P. at 5% which is highly arbitrary and unjustified. The ld. AR has referred to the submissions of the assessee before the CIT(A) and submitted that when the assessee has explained the basis of 2% of N.P which is also supported by the comparative cases then adoption of N.P at 5% is not warranted. Hence, the ld. AR has pleaded that the addition made by the Assessing Officer and confirmed by the ld. CIT(A) may be deleted and N.P. declared by the assessee at 2% may be upheld. 4. On the other hand, ld. DR has submitted that though the assessee has given the comparison NP cases how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of 2% on the total turnover as detected by the Assessing Officer whereas the Assessing Officer has estimated the income of the assessee by adopting NP at 5% on such turnover. There is no quarrel on the point that while estimating the income come the Assessing Officer has to apply some reasonable and proper criteria and the comparative rate of profit in the same trade/business is a proper guidance for estimation of income. In the case in hand, the assessee has produced the comparative cases, which are as under: S. No. Name of Parties F.Y. Turnover Rs. In lac GP Ratio NP Ratio 1. M/s Har ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egarding GP/NP is a proper guidance and in the absence of past history the prevailing GP/NP in the same trade/business is also considered as a proper guidance. Therefore, there cannot be different para meters for estimation of income in case of assessee who is maintaining books of account but were rejected by the Assessing Officer and in the case where the assessee is not maintaining the books of account. Accordingly, the estimation of the income of the assessee should be based on some reasonable and proper criteria and not based on an arbitrary rate adopted by the Assessing Officer. The Assessing Officer has not given any reasonable basis of adopting NP rate at 5% except the fact that the assessee is not maintaining the books of account. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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