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TMI Blog2021 (7) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... a (Addl. CIT) For the Assessee : Sh. Mahendra Gargieya (Adv.) ORDER PER: SANDEEP GOSAIN, JM This is an appeal filed by the Revenue against the order of ld. CIT(A), Kota dated 11.01.2019 for A.Y 2015-16. 2. At the outset, it is noted that the matter was disposed off by the Coordinate Bench vide its order dated 09.12.2019. Subsequently, the assessee moved an miscellaneous petition and the same was disposed off by the Co-ordinate Bench in MA No. 66/JP/2020 dated 05/04/2021 and the relevant finding of the Co-ordinate Bench are contained at para 9 of its order which reads as under:- 9. In view of the aforesaid discussions and in the entirety of facts and circumstances of the case, we deem it appropriate that the order so passed by the Coordinate Bench in ITA No. 479/JP/2019 be recalled and matter be heard afresh for the purposes of adjudication of ground of appeal taken by the Revenue relating to deletion of addition of ₹ 1,88,80,279 out of total addition of ₹ 2,28,55,077 after providing opportunity to both the parties to present its case. 3. The appeal of the Revenue was thus recalled for a fresh hearing and accordingly, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee as reasonable except some addition on account of discrepancies pointed out in the accounts which have resulted in addition @ 0.08%. Thus the ld. CIT (A) has applied the GP at 2.65% as against the declared GP of 2.57% of the assessee. Consequently, the ld CIT(A) has made the addition to the extent of ₹ 39,74,797/- as against the addition of ₹ 2,28,55,077/- made by the AO. Aggrieved by the impugned order of the ld. CIT (A), the Revenue has filed the present appeal. 6. Before us, the ld. D/R has submitted that after rejection of books of account under section 145(3), the AO is required to frame the assessment on the basis of best judgment and estimate the income of the assessee on some proper and reasonable basis. He has further contended that it is settled proposition of law as held by the Courts that the past history of GP declared by the assessee is reasonable and proper guidance for estimating the income. In support of his contention, he has relied upon the decision of Hon ble Jurisdictional High Court in case of CIT vs. Gupta KN Constructions, 371 ITR 325 (Raj.) and Clarity Gold Pvt. Ltd. vs. PCIT, 102 taxmann.com 421. It was submitted that the GP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GP for the year under consideration and our reference was drawn to a chart submitted as part of written submissions (Para 7.2). Thus the ld. A/R has submitted that the ld. CIT (A) has rightly appreciated the reasons for decline in the GP rate by giving a clear finding and has deleted the addition of ₹ 1,88,80,279/- and therefore, the order of the ld CIT(A) be confirmed. 8. It was further submitted that the Tribunal had earlier decided the instant appeal of the Revenue vide its order dated 09.12.19, however, the same was thereafter recalled vide their subsequent order dated 05.04.2021 in MA no. 66/JP/2020. In the misc application, basically two issues were involved. Firstly, the reasons behind lower GP rate and secondly, applicability of the two decisions of the Hon ble Rajasthan High Court. Regarding reasons behind decline in gross profit for the year under consideration, it was reiterated that the same was on account of decrease in the sales realization as compared to last year and the additional cost of Husk incurred this year, which is also explained by way of a chart placed on record showing the figures in absolute terms based on the Tax Audit Report and Audited Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situated businessman/traders, whereas, in the present case, it is an admitted fact on record that there was an additional item in the nature of direct cost incurred on husk as explained earlier which makes the past years results not exactly comparable. Moreover, there was a continuous decline in the GP and NP rate because of the world-wide recession in the trade. These facts have clearly made the current year to be completely distinguishable and non-comparable with the past history of the assessee. This is evident from the observation of the Hon ble Rajasthan High Court in the case of Gupta K N Constructions (supra) in para 9, reading as under: but in a case where the provisions of section 145(3) are invoked, one has to consider either the past history of the assessee or history of similarly situated other businessmen/ traders. The assessment order is totally silent about similarly situated other traders/businessmen showing the net profit over and above what the assessee had shown and compared by the Assessing Officer and no evidence has been brought on record as to how the Assessing Officer was justified in applying the net profit rate at 13.7 per cent .. Aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut also failed to bring on record any comparable case of any other similarly situated businessman/trader. The ld. CIT (A) rightly took note of these changed facts and circumstances of the case and the findings of the ld CIT(A) are just and proper which may be confirmed and the appeal of revenue be dismissed. 12. We have heard the rival submissions and purused the material available on record. The issue of rejection of books of account by invoking the provisions of section 145(3) by the AO is not before us in the present appeal of the Revenue as the ld. CIT (A) has upheld the rejection of books of account. Further, we find that the ld. CIT (A) while sustaining the part addition has given the finding that it would consider an increase in the GP just on the basis of discrepancies pointed out in the accounts and not for any other reasons up by 0.08%. Once the said finding of the ld. CIT (A) is not in dispute, then the discrepancy which was detected by the AO and also taken as the basis of increasing the GP by the ld. CIT (A) is not under challenge by the assessee then the discrepancies as pointed out by the AO and ld. CIT (A) are sufficient for leading to the conclusion that the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- A.Y. G.P. rate 2013-14 3.38% 2014-15 3.16% 2015-16 2.57% Total 9.11 Average 9.11/3 3.03% 15. Thus the AO has worked out the GP for 3 years including the year under consideration which clearly defies the general principle of comparability with past years results wherein the current year GP has to be compared with average GP of past years only which has attained finality. Further, there is no finding given by the AO as to how the earlier year results are comparable in the sense whether the operations in the earlier years were conducted under similar business conditions and environment as in the current year. The assessee in his submissions before the AO has stated that due to sluggish economic conditions, there is continuous fall in gross margins over the past years which have continued during the year resulting in reduced gross margins. Here, it is relevant to note that the AO has accepted declared gross profit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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