2020 (12) TMI 302 - AT - Income Tax

Assessee's appeal dismissed for lack of evidence, additions to total income confirmed.

The Tribunal dismissed the assessee's appeal, upholding the decisions of the Commissioner of Income Tax (Appeals) and the Assessing Officer. The appeal ... Estimation of income - addition of gross profit of 1% on local sales - HELD THAT:- On perusal of the submissions made before the A.O and CIT(A),no evidence was filed in spite of providing opportunities of hearing to substantiate the sale price and the goods which were sold are only waste and un-useable material. CIT(A) has dealt on the disputed issues and has confirmed the action of the A.O. We find the CIT(A) has granted relief to the assessee on the alternative ground of appeal but in respect of addition he has sustained the action of the A.O. Considering the overall facts and observations of the CIT(A), we are not inclined to interfere with the order of the CIT(A) and upheld the same and dismiss the grounds of appeal of the assessee. Issues:1. Application of estimated GP rate on local sales2. Addition to total income based on GP rate3. Disallowance of deduction u/s 80HHC4. Lack of evidence to substantiate claims5. Relief granted on alternative ground of appealAnalysis:Issue 1: Application of estimated GP rate on local salesThe assessee appealed against the order of the Commissioner of Income Tax (Appeals) -12, Mumbai, challenging the application of a 1% estimated GP rate on local sales. The assessee argued that the loss in local sales was due to the sale of un-usable materials, such as Acrylic Toe and Synthetic waste, which were waste for the business. The appellant contended that these materials, acquired through bulk buying in previous years, deteriorated due to moisture, rendering them unsuitable for use. Despite explanations provided, no evidence was submitted to substantiate the claims.Issue 2: Addition to total income based on GP rateThe Assessing Officer (A.O) made an addition of Rs. 32,21,938 to the total income, based on the difference in gross profit percentage in the High seas sales. The Commissioner of Income Tax (Appeals) confirmed this addition as the assessee failed to provide supporting evidence for the claims made. The A.O's decision was upheld due to the lack of substantiating evidence regarding the sale price and the nature of the goods sold as waste and unusable material.Issue 3: Disallowance of deduction u/s 80HHCThe assessee had claimed a deduction u/s 80HHC of Rs. 65,23,387 for the proprietary concern M/s. Braun Textile Processors. However, the A.O disallowed this claim and made other additions, resulting in the total income being assessed at Rs. 1,08,04,600. The Commissioner of Income Tax (Appeals) partially allowed the appeal, granting relief on other grounds but confirming the addition related to the gross profit difference.Issue 4: Lack of evidence to substantiate claimsThroughout the proceedings, the assessee failed to provide evidence to substantiate the claims made before the A.O and the Commissioner of Income Tax (Appeals). Despite opportunities for hearings, no supporting details were furnished, leading to the rejection of claims and the confirmation of additions to the total income.Issue 5: Relief granted on alternative ground of appealThe Commissioner of Income Tax (Appeals) granted relief to the assessee on an alternative ground of appeal but upheld the A.O's action regarding the addition based on the gross profit rate. The Tribunal, considering the facts and observations on record, decided not to interfere with the Commissioner's order and dismissed the grounds of appeal filed by the assessee.In conclusion, the appeal filed by the assessee was dismissed by the Tribunal, upholding the decisions made by the Commissioner of Income Tax (Appeals) and the Assessing Officer based on the lack of substantiating evidence and the confirmation of additions to the total income.