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TMI Blog2023 (8) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... we are inclined not to interfere in the decision of the Ld. Commissioner in confirming the rejection of books of account by invoking the provisions of section 145(3) of the Act. GP estimation - Though AO considered the aforesaid two cases, but found the same not comparable to the case of the Assessee, however, while determining the GP rate considered the GP of the said two comparable cases and the fact that the sales are verified and not found questionable. Therefore, considering the peculiar facts and circumstances in totality, we deem it appropriate to apply the GP ratio by considering the average of GP ratio declared by the Assessee @ 2% in the F.Y. 2012-13 and 1.03% and 3.99% respectively declared by M/s. Al-Nasir Agro and Mr. Salahuddin Prop. of MDA Exports, whose GP ratio have also been taken into consideration by the AO in determining the GP Ratio and consequently result would come to 2.34% (2%+1.03%+3.99%=7.02/3). Hence the AO is directed to recompute the GP rate accordingly. - SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI N.K. CHOUDHRY, JUDICIAL MEMBER For the Appellant : Mr. Tariq Nafees, Ld. Adv. Mohd. Ammer, Ld. CA For the Respondent : Sh. Jiten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tices were sent to 29 parties, whose addresses were given initially, 22 of them either returned un-complied and did not reply to it. The Assessee was also asked to produce the details of packing material charges amounting to Rs. 1.29 crores and the processing and freezing charges amounting to Rs. 5.31 crores and the details of outstanding sundry creditors. The Assessee was also asked to explain the reason for such sharp fall in GP from 24.4% in the preceding previous year to 2.21% in the concerned previous year and in the N.P. from 6.33% to 0.07%. Though the Assessee filed some details and documents, however, failed to substantiate its claim. Therefore, it was concluded by the Assessing Officer that this proves that all these were fake parties and thus, the books of account produced by the Assessee could not be relied upon and the books of account of the Assessee rejected u/s. 145(3) of the Act by the AO, on the below mentioned reasons : i. The assessee failed to substantiate purchases in proper manner. It is because purchase bills are self made and are not provided by the sellers of meat. In these circumstances the assessee failed to answer specific query raised in this re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee has miserably failed to explain the reason for such sharp fall in G.P. ratio. Though the Assessee before the Assessing Officer also submitted the GP ratio of some cases being comparable, out of which two cases namely, M/s. Al-Nasir Agro and Mr. Salahuddin Prop. of MDA Exports, were not found comparable to the Assessee s case because they are mostly doing local meat sale and their exports are small whereas in the Assessee s case major portion is export sales. The Assessing Officer ultimately by taking into consideration that sales are verified and not found questionable and comparing the Assessee s own case for the preceding previous year wherein the GP ratio was @ 24.40% and GP Ratio @ 1.03% and 3.99% as declared in two comparable cases, determined the GP rate of the Assessee for the assessment year under consideration @ 3%. Resultantly, the Assessing Officer made the addition of Rs. 1,59,87,516/- in the income of the Assessee. 5. The ld. Commissioner on appeal, on the similar footings as done by the Assessing Officer, affirmed the rejection of books of account by invoking the provisions of section 145(3) of the Act as well as the GP rate @ 3% to the turnover of the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the issue raised for the processing and freezing charges incurred of Rs. 5.31 crores, the Assessee provided the ledger copy of suppliers of processing and freezing charges, entries of processing and freezing charges as well as the payments to the respective suppliers through banking channel only, which have been made after deduction of TDS as per the rate applicable on the payee. Therefore, the doubt on the expenses of processing and freezing charges is not justifiable merely on the ground that notices u/s. 133(6) of the Act were returned un-complied. 6.1 With regard to the sundry creditors, the Assessee claimed as under: That payment either for purchase or expenses has been made through banking channel only. Even though five out of 26 creditors replied positively and no ambiguity pointed out by the Assessing Officer on such reply/confirmation, therefore, doubt on sundry creditors is also not justifiable. The books of account of the Assessee have, duly been audited by the Chartered Accountant and all the issues raised by the Assessing Officer, as discussed above, are duly substantiated with the documents and information asked by the Assessing Officer from time to time, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew the presumption against the Assessee s claim. Consequently, on the aforesaid reasons, the Assessing Officer rejected the books of accounts of the Assessee and the ld. Commissioner has also rightly affirmed the rejection of books of account, invoking the provisions of section 145(3) of the Act. Hence, we are inclined not to interfere in the decision of the Ld. Commissioner in confirming the rejection of books of account by invoking the provisions of section 145(3) of the Act. 8. Coming to GP rate of 3% as applied by the Assessing Officer and affirmed by the ld. Commissioner, we observe from the orders passed by the authorities below that the Assessee had declared the GP rate of 2.21% in the year under consideration, which was rejected by the Assessing Officer on the ground that the Assessee has failed to give valid explanation for sharp fall of GP ratio from 24.40% (Last year) to 2.21% (this year). Further, though the Assessee has submitted the GP rates of some of the comparable cases, out of which two cases pertaining to M/s. Al-Nasir Agro and Mr. Salahuddin Prop. of MDA Exports, whose GP rates were 1.03% and 3.99% respectively, were not found comparable to the case of the As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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