9911796707
TMI Blog2024 (6) TMI 858X X X X Extracts X X X X X X X X Extracts X X X X ..... t of books sales - HELD THAT:- Revenue has not given any basis to justify applying higher rate of net profit at 12.5%. It is basic common sense that net profit to be applied is to be at justifiable rate depending upon nature of the business and other facts. It cannot be simply an adhoc rate; there has to be a reasonable basis for applying a particular net profit rate in each case. The ld.DR has not supported his contention of applying 12.5% GP rate with any reasonable basis. The decision of Hon ble Gujarat High Court [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] has also not been pointed out to be rendered in the context identical to the activities carried out by the assessee so as to justify his stand of applying the rate held by the Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the quantum of the delay being just 15 days, taking a lenient view in the interest of justice, we condone the delay in filing the CO, and proceed to adjudicate the same on merits. 4. At the outset itself it was stated that the solitary issue in the appeal of the Revenue relates to the deletion by the ld.CIT(A) of the addition made to the income of the assessee by the AO on account of undisclosed sales , restricting the addition to the net profit element in the same. While in the CO the assessee is challenging the restriction of addition by the Ld.CIT(A) seeking in turn deletion of the entire addition made by the AO of unaccounted sales. 5. Drawing our attention to the facts of the case, it was pointed out that during search at the residen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. 4. On the facts and in the circumstances of the case and in law, AO has duly investigated and applied his mind on the report of the DDIT, Investigation wing and after satisfying himself has made the assessment on the basis of cogent material and relevant evidence on record. 5. On the facts and in the circumstances of the case-and in law, learned Commissioner (Appeals) erred in ignoring the facts that the AO has made addition on the basis of Backup of Iphone data where unaccounted transaction were recorded and was also confirmed by the director of the company during the course of search proceedings. 6. The appellant prays that the order of the learned Commissioner (Appeals) on the above ground be set aside and the addition made in the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the nature of taxable income. In the case of the appellant, it is seen that the AO himself in the assessment order has specifically mentioned that the unaccounted sales could not be taxed since probability of purchase cost and other direct and indirect expenses cannot be ruled out, however made the addition under the guise of disallowance of expenses particularly u/s 40A(3). Ironically, he also referred to the instances of unaccounted expenses like scheme discount, marketing expense, salary to staff, commission etc., all such expenses partakes the character of indirect expenses, which affect to Net Profit. Further, in the following cases, Hon'ble Gujarat High Court and other High Courts have held that in case of unaccounted sales, net ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Rs. 5,91,940/- and remaining addition of Rs.68,07,322/- is directed to be deleted. 9. The only argument of the ld.DR against the restriction of addition was in relation to the net profit rate applied by the ld.CIT(A). His contention was that he should have applied net profit at 12.5% and for this purpose purpose, he relied on the decision of Hon ble Gujarat High Court in the case of CIT Vs. Simit P. Sheth, 38 taxmann.com 389. 10. The ld.counsel for the assessee, on the other hand, distinguished the case law relied upon by the ld.DR pointing out that, in the said case, purchases were also found to be bogus and therefore, the Hon ble Court held that profit earned on account of evasion of sales tax was also to be added, and accordingly app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be simply an adhoc rate; there has to be a reasonable basis for applying a particular net profit rate in each case. The ld.DR has not supported his contention of applying 12.5% GP rate with any reasonable basis. The decision of Hon ble Gujarat High Court has also not been pointed out to be rendered in the context identical to the activities carried out by the assessee so as to justify his stand of applying the rate held by the Hon ble High Court to be a justifiable rate in that case. Therefore, we do not find any merit in the contentions of the ld.DR that the ld.CIT(A) ought to have been applied a net profit of 12.5% in the present case. The contention of the ld.DR is, therefore rejected, and the ground raised by the Revenue is acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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