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TMI Blog2024 (9) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, cross verification from the suppliers, verification by the AO the findings are of course based on a certain assumption and estimate, which cannot be faulted with because the assessee has not been frank enough its true state of affairs. Once the assessee has himself conceded before CIT(A) about the computation of income, he simply cannot turn around and argue against the same before us. Decided against assessee. Estimation of NP on cash deposits - Revenue argued CIT(A) should have confirmed the entire deposit of cash in bank account as done by the AO - As they have not denied the business modal of the assessee. CIT(A) has correctly estimated the net profit which can only be brought into tax. Accordingly, all the grounds raised by the Revenue in its appeal for A.Y. 2009 10 and 2011 12 are dismissed. - Shri V. Durga Rao, Judicial Member And Shri K.M. Roy, Accountant, Member For the Assessee : Shri M.K.M. Agrawal For the Revenue : Shri Kailash C. Kanojiya ORDER PER BENCH Cross appeals have been filed for the assessment year 2009 10 and 2011 12 along with cross objections by the assessee and a separate appeal has also been filed by the assessee for the assessment year 2011 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied Section 69A to the recorded and verifiable transaction which is against the provisions of Section 69A which considers only unrecorded value of money, bullion, Jewellary or other valuation articles in the books of accounts maintained. In view of the above fact we pray your honor to delete the amount of Rs. 5158766.00 added in our income as unexplained deposits. 2. The profit margin applied by honourable CIT(A) on our sales is the Gross profit ration which is not justified and it should be the net profit ration only The GP ration applied is 1.60% on sales of Cigarettes and 3.50% on other items sales. In any business concern there are various expenditures incurred which is deducted from the Gross profit and only net profit is treated as income. Hence we pray that the net profit ration of the year which is 00.39% for the year should be applied to arrive at the profit of the sales. In this connection we referred the case law of Honourable High Court of Gujrat in the case of Income Tax Officer, Ward 3(1) vs. Om Silk Mills dt. 31.3.2015 (2015)55 taxmann.com 295 Gujrat in which the Honourable High Court has given the verdict that While making the best judgement assessment u/s 144, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder. The Assessing Officer filed third remand report dated 15/03/2016, which were reproduced by the learned CIT(A) vide Para 4.7/Page 24 to 28 of his order, in response to which the assessee filed his reply which were reproduced vide Para 4.8/Page 28 to 31 of his order. The Assessing Officer was again asked to examine the details submitted by the assessee and in response to which the Assessing Officer filed his letter dated 01/02/2017, which were reproduced vide Para 4.9/Page 31 to 32 of the order of the learned CIT(A). The learned CIT(A) has reproduced at Para 4.10 / Page 32 to 35, another report of the Assessing Officer darted 09/02/2017. The learned CIT(A), after considering the aforesaid submissions of the assessee and the remand reports filed by the Assessing Officer, vide Para 6.12/Page 49, directed the Assessing Officer to compute the taxable income of the assessee by considering the income of the assessee as well as any other deductions (Chapter VI A) of the Act, upheld the addition of ₹ 51,58,766, by treating the appeal of the assessee as partly allowed. The relevant observations / decision of the learned CIT(A) are reproduced below: 5.0 I have considered the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/01/2014, 03/02/2014, 04/02/2014 12/03/2014 but hearing of the appellant was not recorded. Considering the submission of the appellant, the books of accounts, documents, bills and ledger accounts were allowed to be admitted as evidence, in the interest of justice and fair play. The appellant had pleaded that he should be allowed to explain his case, especially since his submissions had not been taken on record at the assessment stage. Therefore, this case was remanded to the Assessing Officer on 15/04/2015 for his comments. The Assessing Officer vide its remand report dated 05/05/2015 strongly rebutted the submission of the appellant that sufficient opportunity was not provided during the assessment proceedings. The Assessing Officer also mentioned, that during the remand proceedings the appellant produced all books of accounts and other documents. The Assessing Officer requested for rejecting books of accounts submitted by the appellant during the appellate proceedings. 6.2 The appellant submitted a rejoinder to the remand report vide submission dated 21/05/2015. The appellant highlighted the facts that during remand proceedings, he had produced before Assessing Officer complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the appellate and remand proceedings. 6.4 The appellant vide, his rejoinder to remand report dated 06/10/2016 submitted few bills and confirmations which were not submitted during the remand proceedings. The appellant also requested for the case to be referred for special audit under section 142(2A) Another remand report was called vide letter dated 10/10/2016 for giving an opportunity to the Assessing Officer to examine the additional evidence submitted during the appellate proceedings. The Assessing Officer vide letter dated 01/02/2017 submitted a fourth remand report, wherein he has again submitted that the books of accounts are fabricated and should not be relied upon. The Joint Commissioner vide its remand report dated 09/02/2017 strongly rebutted the admission of new evidences. The Joint Commissioner again submitted that the appellant has deliberately not submitted details during the assessment proceedings. 6.5 To obtain clarity on the issues raised, the AR was requested to once again furnish specific details. The appellant submitted a detailed submission on 14/02/2018. The appellant submitted that he was doing business of the ITC products under the name of 'Jagdamba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at follow from accrual of income are well settled. The accrual must be real taking into account the actuality of the situation. Whether an accrual has taken place or not must, in appropriate cases, be judged on the principles of the real income theory. 6.7 In any case, in view of the unwillingness of the Assessing Officer to examine the books of accounts and documentary evidences, the issue is decided strictly on the basis of the following: 1. The summary statements of all bank accounts submitted by the assessee. 2. The ledger accounts and confirmation by ITC. 3. The cash flow statements produced by assessee. 4. The profit and Loss Account and Balance Sheet submitted. 6.8 Although the Assessing Officer has been insistent that the books of accounts produced now should be rejected outright- I am unable to subscribe to such a constricted and unfair plea- as it denies the assessee an opportunity to explain his case. The Income Tax statute itself provides the assessee with an opportunity to state his case, not just at assessment level but also at appellate stages. In fact, the Act provides ample scope to the assessee and the Department to arrive at the true and correct income. If for an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to this order. The appellant is having below mentioned 5 bank accounts. Name of Bank Total Deposits (₹ ) Bank of Baroda-142 4,18,13,179 Janta Sahkari Bank 3,64,515 Bank of Baroda -7528 1,04,34,845 Bank of Baroda -70 56,70,132 Mahila Urban 1,93,24,482 Total 7,76,07,153 As per the working submitted by the appellant total deposits in the bank account is Rs. 7,76,07,153/-.Out of this aggregate, contra entries (interbank transfers) are to the tune of Rs. 2,93,77,151/. Therefore, total deposits for which the appellant owed explanation is Rs. 4,82,30,002/- 6.11 During the appellate proceedings, the appellant submitted that total sales during the year is Rs. 4,30,71,236/-. Therefore, to this extent I consider that the deposits in the bank account pertains to sales. The appellant vide his letter dated 14/02/2018 submitted that the 90% of sales pertains to cigarettes sales where profit margin is roughly 1.6%, whereas remaining 10% pertains to other items where approx. profit margin is 3.5% on average. Therefore, the net business profit is estimated @ 1.60% on 90% turnover and net profit at 3.5% is estimated on remaining turnover. Now the appellant owes an explanation for remaining am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ource of cash so deposited in the bank account which was confirmed by the learned CIT(A). 7. On the other hand, the learned Departmental Representative expressed that the assessee has been showing non cooperative attitude, as the assessment was passed under section 147 of the Act. However, the learned CIT(A) has done a meticulous exercise and no further opportunity should be extended. 8. We have given a thoughtful consideration to the rival arguments made by the parties and perused the material available on record. We find that the assessee never care to file any return of income and not produced any books of account. However, before the learned CIT(A), proceedings took a long period of 3 years for adjudication, remand reports were filed on three occasions and appropriate rebuttals were made by the Assessing Officer, hence, we find no merit in the request of the learned A.R. that there was lake of any opportunity. We are also not aggreable to his proposition of suggesting upon remand as he could not adduce any sort of evidence before the Bench to canvas his arguments. The learned CIT(A) has passed a detailed and meticulous order and has strenuously arrived at the computation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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