High Court orders Tribunal to recompute profit rate & upholds CIT(A)'s decision on penalty.

The High Court directed the Tribunal to recompute the rate of profit for a turnover previously computed by the Assessing Officer. The Tribunal was instructed to reconsider the rate of profit and also consider the penalty issue. The Tribunal upheld the CIT(A)'s decision to delete additions based on the assessee's explanations and dismissed the department's appeal against the penalty, as the basis for the penalty was deleted. The Tribunal's decision on rate of profit computation, deletion of additions, and penalty under section 271(1)(c) of the Income Tax Act was in favor of the assessee.

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Issues:
1. Computation of appropriate rate of profit in respect of turnover.
2. Deletion of addition of commission income and cash receipt difference.
3. Penalty levied under section 271(1)(c) of the Income Tax Act.

Issue 1: Computation of Appropriate Rate of Profit:
The Hon'ble High Court directed the Tribunal to recompute the rate of profit for a turnover of Rs. 3,99,97,585 previously computed by the Assessing Officer. The Tribunal was instructed to reconsider the rate of profit based on the material before it. The High Court remanded the matter for the Tribunal to determine the rate of profit and also consider the penalty issue. The Tribunal proceeded to dispose of the appeals as per the High Court's directions.

Issue 2: Deletion of Addition of Commission Income and Cash Receipt Difference:
The case involved the assessee showing sales of dry fruits in cash to parties that were later found non-traceable. The Assessing Officer alleged that the transactions were conduits for laundering unaccounted money. The AO rejected the books of accounts and estimated income at 1.25% on the deposited cash, adding an amount due to discrepancies in cash receipts. The CIT(A) deleted the additions based on the assessee's explanations, citing previous ITAT orders and verifying the transactions from primary books of accounts and bank statements. The Tribunal upheld the CIT(A)'s decision, finding no defects in the books of accounts and no specific discrepancies in sales declared.

Issue 3: Penalty under Section 271(1)(c) of the Income Tax Act:
The department's appeal against the penalty levied by the AO was dismissed as the basis for the penalty was the quantum additions, which were deleted. Since there was no basis for the penalty after the deletion of additions, the Tribunal upheld the CIT(A)'s decision to delete the penalty under section 271(1)(c) of the Act.

In conclusion, the Tribunal dismissed both appeals of the department, upholding the CIT(A)'s decisions on the rate of profit computation, deletion of additions, and penalty under section 271(1)(c) of the Income Tax Act. The Tribunal's decision was pronounced on 15/05/2015.

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