9911796707
TMI Blog2023 (2) TMI 762X X X X Extracts X X X X X X X X Extracts X X X X ..... l: 1. That on the law, facts and circumstances of the case, the Worthy CIT(A) in Appeal No. 10360/16-17 has erred in passing that order in contravention of the provisions of S. 250(6) of the Income Tax Act, 1961. 2. That on the law, facts and circumstances of the case, the Worthy CIT(A) has erred in confirming the action of Ld. AO wherein he had rejected books of accounts of the appellant and the provisions of s. 145(3) have been wrongly applied. 3. That on the law, facts and circumstances of the case, the Worthy CIT(A) has erred in partly confirming the action of Ld. AO in as much as the Worthy CIT(A) ordered assessment of income @ 15% (Ld. AO made assessment @ 40%) even when the loss declared by the appellant deserved to be accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration and immediately preceding 3 years were filed before Ld. AO which read as under: A.Y. Turnover/Commission Net Profit Net Profit/Loss (%) 2010-11 2,07,30,252.75 10,81,403.78 5.22 2011-12 2,28,87,670.04 9,39,115.93 4.10 2012-13 55,44,772.00 (19,18,772.72) (34.61) 2013-14 28,26,907.41 (37,61,584.06) (133.06) 4. It was submitted that from the above table, it is apparent that the reason for loss in the year under consideration is substantial reduction in turnover but not the commensurate reduction in fixed expenses. The assessee is an immigration consultant which is a service industry. Within 2 years, i.e. from A.Y. 2011-12 to 2013-14, assessee's turnover reduced from Rs. 228.88 lacs to Rs. 28. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of business activity of the said concern. It has already been laid down in the case of CIT vs Agnity India Technologies Pvt. Ltd. [93 DTR 375] (Del HC) that a concern having substantially high turnover than the assessee company cannot be taken as comparable. Therefore, the reliance placed by AO on profitability of M/s. International Education Guidance and Care for estimating profit rate of 40% of the assessee was incorrect and the same deserves to be discarded. It was submitted that where assessee's own subsequent year's assessment order passed u/s. 143(3) exists, it deserves to be given preference over external comparable. Therefore, application of profitability rate of 40% by Ld. AO is extremely high and appropriate relief be gran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate particulars of income. 8. Further our reference was drawn to the findings of the Ld. CIT(A) which are contained at para 5.2.1 which read as under: "The variation in NP rate is from 4.10% to (-) 133.06% and the appellant has failed to produce books of accounts and bills and vouchers under the garb of occurrence of fire on the premises. AO was right in rejecting books of accounts. He has applied NP @ 40% on the basis of comparable. The appellant has failed to rebut the comparable either during assessment proceedings or during appellate proceedings except taking plea of turnover. Further, assessment of subsequent assessment year 2015-16 where appellant has declared Returned Income of Rs. 5,36,950/- cannot have bearing on the present cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is for estimation of profits. In absence thereof, comparable cases in the similar line of business could be considered with proper benchmarking analysis. In the instant case, we find that the AO has not considered the past history of the assessee and has compared the results with an external comparable holding it to be in similar line of business as of the assessee. In our view, merely holding the comparable company in similar line of business is only the first step in undertaking a benchmarking analysis. The analysis also needs to consider various other factors and take into consideration functions, risks, and assets employed which apparently has not been undertaken in the instant case and the assessee has also not been confronted with the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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