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TMI Blog2021 (7) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... and as she came to know she immediately all the exercised which she can do to file the appeal before us. In the case of Vedbai vs. Shantaram Baburam Patil Others [ 2001 (7) TMI 117 - SUPREME COURT ] has again reiterated that the expression sufficient cause should receive a liberal construction. The Hon'ble court has also held that advancing of substantial justice should be of prime importance. If we apply the settled principles as laid down by the Hon'ble Supreme Court as well as other courts on the facts of the present case we find that the assessee has explained cause of delay, therefore, in the facts and circumstances of the case, we condone the delay of 825 days in filing the present appeal and admit the appeal for hearing. Trading addition - whether the sales made or fruits or goods supplied to M/s. KOC fruit, New Delhi and other cities are assessee's own sales or Arat sales? - HELD THAT:- in the totality of the above facts, documents and material placed before us in the form of Trading, P L account of this and earlier years, diaries of transactions, confirmation of KOC Fruit Company, statements referred in assessment order etc. we are of the consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn ₹ 83,840/-. Hence the trading addition is sustained at ₹ 26,140/- (109980-83840) and rest of addition of ₹ 13,19,302/- is hereby deleted. Disallowance of various expenses - issue not been raised before the ld. CIT(A) - HELD THAT:- As considering the fact that the issue under consideration has not been raised before the ld. CIT(A), therefore, we set aside this issue to the ld. CIT(A) for deciding the same in accordance with law. - ITA No. 192/JP/2020 - - - Dated:- 30-6-2021 - Sandeep Gosain, Member (J) And Vikram Singh Yadav, Member (A) For the Appellant : Shravan Kr. Gupta, Adv. For the Respondents : Runi Pal, Addl. CIT ORDER Per Sandeep Gosain , J M This is the appeal filed by the assessee against the order of the ld. CIT(A), Kota dated 21/09/2017 for the A.Y. 2011-12. The grounds taken by the assessee in this appeal are as under: 1. The impugned assessment order u/s. 143(3) dated 15.03.2014 is bad in law and on facts of the case, for want of jurisdiction, being debatable issue and various other reasons and hence the same may kindly be quashed. 2.1 ₹ 13,45,442/-: The Assessing Officer has grossly erred in law as w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand of ₹ 4,75,310/-. Against which the assessee had filed an appeal before the ld. CIT(A) Kota. The ld. CIT(A) has passed the ex parte order of appeal on 21.09.2017 which was served on the local counsel on dt. 22.09.2017. Hence the appeal was to be filed on or before 21.11.2017 but the same could be filed on 14.02.2020 i.e. by delay of about 2 year 3 month late. 2. The reason of late filing was that as the deceased assessee was expired on 12/07/2014 i.e. after filling the appeal and the applicant is being Legal Heir of him was not having any knowledge of any proceedings against the deceased assessee no having any knowledge about the his counsel. It is only after receiving some demand notice from the department and after consulting with the relatives and other advocates she come to know about the matter and despite her best efforts she could locate the counsel at Kota. And after meeting the counsel at Kota and consulting with other advocate she came to know all the proceedings and consequence thereof and after advise of the advocates she asked to prepare the appeal. Because she is not a literate lady and not having the knowledge of law, she has never been an Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier four years, the appeals were filed in time. In the instant case also, the appeal could not be filed in time because of the above time taking a various process which were bona fide and was a sufficient cause and there was no mala fide intention. 6. Recent Decision of Apex Court in a recent decision, the apex court have again reiterated that the expression sufficient cause should receive a liberal construction. The Hon'ble court has also held that advancing of substantial justice should be of prime importance. Kindly refer Vedbai vs. Shantaram Baburam Patil Others 253 ITR 798 (SC). Prayer: In view of above facts and circumstance and with the sympathy and settled legal position, the delay so caused may kindly be condoned. 4. On the other hand, the Ld. DR could not rebut the facts submitted by the assessee before us for seeking condonation of delay. 5. We have considered the rival submissions as well as relevant material on record. From perusal of the record we noticed that the that assessee Late Sh. Mohammed Salim was residing and having his business at Jhalawar, he had filed the appeal before the ld. CIT(A) Kota on 03.04.2014 against the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applied in a meaningful manner which subserves ends of justice and technical considerations should not come on the way of cause of substantial justice. There is no quarrel that the explanation and reasons explained for delay must be bona fide and not merely a device to cover an ulterior purpose such as laches on the part of the litigant or an attempt to save limitation in the underhand way. If the party who is seeking condonation of delay has not acted in mala fide manner and reasons explained are factually correct then the Court should be liberal in construing the sufficient cause and lean in favour of such party. A justice-oriented approach has to be taken while deciding the matter for condonation of delay. However, this does not mean that a litigant gets free right to approach the court at its will. 9. Thus looking to the above facts, position and circumstances there was no default of the legal heir and there was no proper communication by the local counsel and no mala fide intention of the legal heir and there exists a sufficient and reasonable cause. If any person having knowledge that there has been passed an order, due to which a tax liability or penalty has been arose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase of orange from farmers for sale and one diary for the sale of self. The assessee has also filed the list of the farmers from whom purchase of ₹ 67,92,481/- for Arat was made. Out of which, confirmations of some farmers were also filed. The assessee also filed the list of the farmers from whom purchases of ₹ 23,09,383/- were made for self sale. The AO has asked the assessee to produce 4 persons (Sh. Ramratan, Bansilal Patidar, Ishwar Singh Rajput and Bhuralal) out of 16 from whom purchase for Arat was made for examinations. Out of which two persons (Ratan lal and Ishwar Singh Rajput) were produced and their statements were recorded by the AO. The AO has commented on the statements of the above persons and diaries and also on confirmations of M/s. KOC Fruit Merchant. He found some contradiction therein but he ignored some admitted facts vide para 2.5 to 2.17 page 2 to 7 of the assessment order. On the basis of observations in above page or para the AO stated that books of accounts of the assessee is not believable and it is necessary to rejects the books of accounts of the assessee and accordingly thereto the books of accounts of assessee is rejected u/s. 145(3) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and relevant evidences of cash deposits and huge turnover as compared to what was shown in his ROI. Now the assessee is in appeal before the ITAT by taking the aforementioned grounds of appeal. 13. The main grievance of the assessee relates to challenging the order of the ld. CIT(A) in confirming the trading addition of ₹ 13,45,442/-. In this regard, the ld. AR appearing on behalf of the assessee has reiterated the same arguments as were raised in the written submissions filed before the Bench and the contents of the same is as under: A. As in this case the main issue is that the Arat sales made to M/s. KOC fruit New Delhi and other cities are own sales or Arat sales. And whether higher G.P. rate should be applied or N.P. rate on the basis of past history when as per the AO business was on wholesale basis. For this we have to submit as under: 1. Correct facts ignored by the lower authorities: At the very outset it is submitted the correct facts and position of the case and issue which were also available before the lower authorities with the evidence, despite they ignored the same. As the deceased assessee was a fruit merchant and engaged in the business of reta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On perusal of the above chart it is clear that the ld. AO has increased the own sales turnover by 330% in comparison to last year and N.P. by 776% which is not possible as in past maximum increase in turnover was 44.52% and in N.P. 3.72%. And it is general practice that in Arat sale there is only some commission is received on the bulk sale. In commission sale the person only purchase and sale the goods on behalf of other persons in wholesale and for that he received only commission. Hence the ld. AO has wrongly taken the sales at ₹ 1,11,19,528/- as against of ₹ 26,26,670/-. The ld. AO while making the trading addition has applied the G.P. rate and made the trading addition, when he was required to apply the N.P. rate on the basis of past history, because when the turnover has increased the expenses has also increased. Hence he must applied the N.P. rate on the basis of past history. And it is also very settled general principal or General Trade Practice that in the wholesale trade the marine of profit is very low in comparison to retail trading. But the lower authorities has ignored these vital facts. 2. No show cause notice for invoking th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16% Profit on such wholesale business on Arat. When in retail business the assessee had declared 7-8% N.P. rate. The ld. AO has never asked any query or question to M/s. KOC Delhi whether goods or fruit sent by assessee are on Arat basis or sale basis. It is not the case of the ld. AO that the assessee firstly purchased the fruits from farmers, kept in his business place as stock, paid amount to them thereafter sold to M/s. KOC Delhi. Rather the farmers has send the fruits directly to M/s. KOC Delhi through assessee. And it is not the case of the ld. AO that the documents or diaries were made after the year or during the course of assessment proceedings. In the case of ACIT AND ANR. vs. CREAMY FOODS LTD. AND ANR. (2019) 55 CCH 0377 Del Trib held Income--Unaccounted sales--A search was conducted at assessee's premises wherein, daily milk procurement sheets pertaining to period 01.07.2011 to 10.07.2011 and from 21.07.2011 to 31.07.2011 were seized--AO held that assessee was making unaccounted sales and same could be logically extended to entire block period--AO accepted that one of directors, Shri S. had admitted that he was dealing in sale and purchase of milk in his i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... daily milk procurement sheets were found but no document was found wherein Revenue could say that assessee was also making undisclosed purchases--AO in his whims and surmises, had considered extrapolation for only two A.Ys. whereas, if he was so confident about seized documents and income therein, he should have extrapolated for entire block period of six years--AO did not gave any reason for this--CIT(A) rightly deleted additions made by AO but erred in sustaining addition of ₹ 7,86,337/- Revenue's appeal dismissed. 5. Recently the Hon'ble Raj. High Court has also took the view that the average G.P./N.P. rate of five years should be taken in the case of business. Copy of Raj. High Court Order in the case of Sh. Kishan Kumar Saraiwala v/s. CIT in DBIT No. 325 and 338/2011 dt. 28.08.2017 is enclosed. And in the year under consideration the assessee has already declared High N.P. rate of 8% as against average NP rate of 7.24%. However the lower authorities has ignored the same. And applied 16% G.P. rate ignoring the facts that the assessee had to expenses also in incurred so highly estimated turnover. The same has been followed by this Hon'ble bench i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culation based on erroneous presumption. 5.2 In Pankaj Diamond v/s. ACIT 32 DTR 462 (Ahd)(Trib.) It has been held that even after rejecting book results, addition can be made only on the basis of some material and not on the whims and caprice of the assessing authority. Trading results shown by the assessee compares favorably with the past accepted position in the case of assessee. Thus non maintenance of quality wise details of Diamonds did not empower the AO to make addition to the income of the assesses-Also no material was brought on record by the revenue to show that the value of closing stock shown by the assessee was incorrect or that the method of valuation consistently followed by it was incorrect. 6. No Fair additions done-Legal Position: Further it is submitted that even invoking of S. 145 does not confer blind powers upon the AO and he is not at liberty to assess the income at whatever figure he wants. He is bound to make an honest estimation of income, keeping in view of the material available on record, past history of the case, local knowledge, comparable case of same area after confronting with trading results and repute of the assessee. He is also suppose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have heard the ld. Counsels of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. From perusal of the record, we noticed that the deceased assessee was a fruit merchant, engaged in the business of retail trading of fruit in local market and also engaged or earned income from Arat/commission on fruits outside the city in this year first time as submitted by the assessee. During the scrutiny assessment the Assessing Officer has noted that the assessee has shown sale of ₹ 27,10,510/- and as per information with the department there was cash deposits of ₹ 1,00,06,960/- in his bank account from out of station and local station. The Assessing Officer has stated that on perusal of the P L account it has come to know that the appellant assessee shown total sales of ₹ 27,10,510/- out of which the ₹ 83,840/- from Arat and ₹ 26,26,670/- from sale. Sale of ₹ 67,92,481/- on Arat was done to M/s. K.O.C. Fruit Company, B-767 New Sabji Mandi Azadpur D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his books of accounts as sale but has shown this sale on Arat and shown Arat of ₹ 83,840/- on this sale. Thus the assessee shown total sales of ₹ 27,10,510/- (₹ 83,840/- from Arat + ₹ 26,26,670/- from own sales), which is not acceptable. The Assessing Officer has stated that the assessee has also made sale in Jaipur, Agra, Noida because there were cash deposits in bank form these cities. From perusal of the assessment order it is revealed that the Assessing Officer has taken sales of ₹ 27,10,510/- declared by the assessee, sale of ₹ 72,09,018/- made to M/s. KOC Fruit Merchant Delhi and also estimated the sales of ₹ 12,00,000/- made in other states or cities as Jaipur, Agra, Noida by stating that there were cash deposits of ₹ 50,000/-, 50,000/- and 3,000/- respectively from Jaipur Agra, Noida and assumed that the rest of sale has been taken in cash from these cities Jaipur Agra, Noida. Thus he estimated and worked out total sales of the assessee of ₹ 1,11,19,528/- as against ₹ 27,10,510/-. Thereafter he has stated that the assessee has declared 16% gross profit on its sale, hence he also applied the 16% gross profit on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.10 558628 44.52 2008-09 1910660/- 112975/- 5.91 97288 5.36 2009-10 2565310/- 247173/- 9.63 654650 34.26 2010-11 2590370/- 178345/- 6.88 25060 0.97 Average 7.24 2011-12 2626670/- 216850/- 8.00 36300 1.40 By AO for A.Y. 2011- 12 1,11,19,528/- 1562292/- 14.04 8529158 330.00 We have gone through trading and P L accounts of earlier years and also the above chart and noted that the Assessing Officer has increased the own sales turnover by 330% in comparison to last year an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments and material placed before us in the form of Trading, P L account of this and earlier years, diaries of transactions, confirmation of KOC Fruit Company, statements referred in assessment order etc. we are of the considered view that the sales made by the assessee's of farmers outside the cities or Arat sales not own sales and the assessee's has rightly shown commission thereon as no farmers has stated that no Arat sales has been made. Also sales have been made truck to truck not loose or petti as done in his own trading sales. It is also admitted facts that the fruits were sent to M/s. KOC Delhi in bulk i.e. in full truck and assessee had received Arat per Petti and in this business it is not possible to earn 16% Profit on such wholesale commission business on Arat. When in retail business the assessee had declared 7-8% N.P. rate. The Assessing officer has not proved that the assessee has firstly purchased the fruits from farmers, kept in his business place as stock, paid amount to them thereafter sold to M/s. KOC, Delhi. Rather the farmers have send the fruits directly to M/s. KOC Delhi through assessee. It is not the case of the Assessing Officer that the documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Stock Exchange. From the perusal of the statement of Mrs. Pooja Kohli, it leaves no manner of doubt that the share transfer forms were purchased and submitted on 29.1.2007 and the share holding pattern was effected on 3.3.2007, which was duly approved by the Company on 10.3.2007 in the meeting of the Board of the Directors. Similar view has been taken in the case of CIT vs. Oasis Hospitalities (P) LTD. (2011) 333 ITR 0119 wherein it has been held as under: The initial burden is upon the assessee to explain the nature and source of the share application money received by the assessee. In order to discharge this burden, the assessee is required to prove: (a) identity of shareholder; (b) genuineness of transaction; and (c) creditworthiness of shareholders. In case the investor/shareholder is an individual, some documents will have to be filed or the said shareholder will have to be produced before the AO to prove his identity. If the creditor/subscriber is a company, then the details in the form of registered address or PAN identity, etc. can be furnished. Genuineness of the transaction is to be demonstrated by showing that the assessee had, in fact, received money from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee during the assessment proceedings without any suspicion of their being incorrect. During the assessment proceedings, the assessee was never confronted by the AO that there are discrepancies between the bank statements filed and the statements directly called by the AO. However, even after considering the alleged discrepancies, it does not follow that the amount of share capital was the undisclosed income of the assessee. Even the correct bank statements as claimed by the AO reveal that the assessee has received cheques from the shareholders. Therefore, there is no merit in these two appeals, which are accordingly dismissed at the admission stage itself.--CIT vs. K.C. Fibres Ltd. (2010) 187 Taxman 53 (Del) followed. The Coordinate Bench of ITAT Jodhpur in the case of ITO vs. Hitesh Kumar Panchori (2008) I DTR 17 (Jd. ITAT), it has been as under: GP rate being better at 11.08% as against 10.20% in the immediately preceding year, no further addition can be made in the declared result even the books of account are rejected In the case of ACIT AND ANR. vs. CREAMY FOODS LTD. AND ANR. (2019) 55 CCH 0377 Del Trib, wherein the Coordinate Bench of ITAT Delhi as h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs as his undisclosed income which was accepted by AO--This means that undisclosed income was fully covered by disclosure made by Director and, in fact, it was at a much higher figure than what was supposed to be considered by assessee--Entire unaccounted sales could not be added because there had to be some purchases and expenses related therewith--Therefore, making addition on basis of profit margin was more logical and rationale--Moreover, though daily milk procurement sheets were found but no document was found wherein Revenue could say that assessee was also making undisclosed purchases--AO in his whims and surmises, had considered extrapolation for only two AYs whereas, if he was so confident about seized documents and income therein, he should have extrapolated for entire block period of six years--AO did not gave any reason for this--CIT(A) rightly deleted additions made by AO but erred in sustaining addition of ₹ 7,86,337/- Revenue's appeal dismissed. From the above facts and circumstances, we are of the view that the assessee has shown commission of ₹ 83,840/- on the Arat sale of ₹ 67,92,481/- which comes to 1.23%, which appears in odd figure and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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