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TMI Blog2025 (4) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... t by not finding any omission or commission either in sales or purchases, the learned A.O. has accepted the gross profit shown by the appellant. 4. For that the learned A.O. has erred in estimating the net profit @2% of the turnover without assigning any reason and adding the difference of Rs. 1,65,09,996/- to the total income appellant. 5. For that by estimating the net profit at the rate of 2 percent of the turnover of Rs. 97,44,07,1268/- and adding the difference of the net profit shown and estimated to the income of the appellant, the learned A.O. has disallowed the expenses to the extent of the addition so made. 6. For that the learned A.O. has made the addition of Rs. 1,65,09,996/-, being the difference of the net profit estimated and shown, without pointing out which of the expenses he has disallowed and why. This disallowance of the expenses without any reason, is unjustified and unreasonable. 7. For that the learned A.O. has erred in making addition of Rs. 1,65,09,996/- on account of additional estimated income, which is unjustified and unreasonable and therefore the same may be deleted. 8. For that the learned A.O. has erred in calculating Net Profit @ 2% of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Since the assessee failed to furnish any explanation but urged for adjournment, which was rejected, hence on the basis of submission and for non-production of bills and vouchers and other documents, the Ld. AO rejected the books of account by applying the proviso to section 145(3) of the Act and considering the facts and the circumstances in this case, he estimated the net income at Rs. 1,94,88,142/- i.e. @ 2% of the gross turnover of Rs. 97,44,07,126/- after considering expenses debited in the trading and profit and loss account and a sum of Rs. 1,65,09,996/- was added to the total income of the assessee and the total income was assessed at Rs. 1,93,38,146/-. 3.1 Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who issued notice for hearing. The assessee filed responses which have been considered by the Ld. CIT(A) who has also reproduced the assessment order. The Ld. CIT(A) also considered the written submissions filed by the assessee and dismissed the appeal of the assessee after observing as under: "12.0 Briefly stated the facts of the case are that the assessee Sri Paras Nath Gupta is an individual engaged in wholesale trading of pad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Since the assessee failed to respond to the notice, the AO had made a downward revision of profit from trading @2% of the gross profit instead of initially proposed rate of 8% by considering the nature of business of the assessee. The appellant is not correct in stating that the AO had not assigned any reason in the assessment order before rejecting the books of account and the gross profit shown by the appellant. The reason for selection of case is perused and the method followed to examine the issues under complete scrutiny is in order. The reason specified in the selection of case under CASS is the basis and a compulsory aspect to examine all the suspicious issues in offering the total income in the return. In the process of scrutinizing the return, the AO called for various accounts and evidences from the assessee but the assessee failed to produce the same before the AO. The AO had given opportunity to the assessee to prove that the income offered in the return is correct and in support of the same all the necessary documents to be submitted by appellant as directed by AO during the assessment proceedings in performing his legitimate duty. In the absence on the part of the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for ready reference. "5.2 Now, so far as the case on behalf of the assessee that under the law, there was no requirement of maintaining the books of account site-wise, is concerned, it is required to be noted that as such on facts and considering the explanation to the queries raised by the Assessing Officer and after giving an opportunity to the appellant and having found that there are defects in the maintenance of the books of account and the assessee has failed to maintain proper books of account to enable the revenue authorities to determine true and correct income and therefore, as such no error and/or illegality has been committed by the authorities below in rejecting the books of account under section 145(3) of the Act on account of the same being incomplete and incorrect. " (III) In the case of Narender Kumar Anand v. PCIT [2022] 145 taxmann.com 213, the Hon'ble High Court of Delhi decide the similar matter i.e., where the assessee is a wholesale trader stating that the rejection of books of account and estimation of income is an issue of fact finding and in the absence of furnishing the confirmations from the sundry debtors and also not furnishing the gross profit ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer, on finding that assessee had not maintained and kept any quantitative details/stock register for goods traded in by it; that there was no evidence on record or document to verify basis of valuation of closing stock shown by assessee; and that GP rate declared by assessee during assessment year did not match result declared by assessee itself in previous assessment years, rejected assessee's books of account and resorted to best judgment assessment under section 144 -Whether since cogent reasons had been given by Assessing Officer for doing so, there was no reason to take a different view - Held, yes" Based on the facts and circumstances of the case and respectfully following the decisions of various high courts and Apex Court as cited above, the ground nos. 2 to 7 raised by the appellant are here by dismissed. 16.0 In result, the appeal filed by the appellant, by Sri Paras Nath Gupta against the order u/s. 143(3) of the Act for the AY 2017-18 is dismissed" 4. Aggrieved with the order of the Ld. CIT(A) the assessee has filed the appeal before the Tribunal. 5. Rival submissions were heard and the record and the submissions made have been examined. During the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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