TaxTMI 
TaxTMI 
2014 (1) TMI 1323
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....ver ratio at 12.17%, and applying estimated N.P. Rate of 7% is wrong, illegal and highly excessive." 2. Briefly, the facts of the case are that the assessee is a partnership firm carrying on the business of marble goods (mainly in small Murties). The assessee is one of the concerns of Sharma Group, on which a survey operation u/s. 133A of the IT Act was carried out on 21.02.2007 at six concerns and seven different places mentioned in the assessment order. The assessee could not produce cash book, ledger and journal. The assessee was issued notice u/s. 142(1) for filing of the return. The assessee filed return of income on 30.03.2009 declaring total income of Rs.72,000/- for assessment year under appeal, i.e., 2007-08 which was filed late....
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....ypothetical manner without considering the history of the assessee. The stock of the assessee is excessive as found by the AO. There was meager deposit in the bank account of the assessee in the assessment year under appeal. The ld. CIT(A) considering the issue in detail found contention of the assessee to be correct that valuation of the stock at Rs.16,57,126/- was not correct, which was modified to Rs.4,85,046/-. Part relief was granted to the assessee and the AO was directed to take stock of the assessee found during the course of survey operation at Rs.4,85,046/- instead of Rs.16,57,126/- as considered in the assessment order. The ld. CIT(A) further taken up the issue of estimation of turnover and found that the AO has applied stock tur....
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....by taking average of two years, the stock turnover ratio was taken at 12.17%. The ld. CIT(A) with regard to net profit rate found that the assessee has adopted 9% and in the preceding assessment year 2006-07, net profit rate was 6.37%. Therefore, 9% NP rate applied by the AO is on higher side. Therefore, considering the past history of the assessee, the NP rate of 7% should have been adopted which would be quite reasonable. NP rate of 5% as per section 44AF was not applied because the NP rate shown by the assessee in earlier year was more than the presumptive rate. The ld. CIT(A), therefore, applying the stock turnover ratio at 12.17% on the stock of Rs.4,85,046/- calculated the total turnover of 326 days at Rs.20,83,515/- and applying prof....
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.... the facts of the case in the light of above decisions, we are of the view that the addition is still on excessive side. The ld. CIT(A) held in the appellate order that in the absence of the regular books of account, income has to be estimated on reasonable basis. The assessee has pleaded before the ld. CIT(A) that the stock taken by the Survey Party in the hands of the assessee on the date of survey was excessively calculated. Claim of the assessee has been found to be correct. The assessee further pleaded that during the year under consideration, the assessee has made bank deposits of Rs.3,35,000/- only, which was considered as turnover in the case of sister concern, M/s. Sharma Handloom Industries by the same AO. Therefore, the AO should....
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....5 days. On the basis of these findings of fact and no adverse material found against the assessee, would clearly show that no evidence was found during the course of survey that the turnover of the assessee has increased substantially as against the turnover declared in the earlier years. Therefore, the authorities below instead of considering the history of the assessee for the purpose of estimating the turnover of the assessee should not have applied the stock turnover ratio method for the purpose of computing turnover of the assessee. Method applied by the authorities below was not proper in the facts and circumstances of the case and in absence of any adverse material on record against the assessee, the proper and reasonable course shou....