TaxTMI 
TaxTMI 
2015 (1) TMI 154
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....e of administrative expenses to the extent of Rs. 9,54,684/-." 2. The brief facts of the case are that the Assessing Officer observed that on verification of the Profit & Loss Account, it is noticed that the assessee has debited an amount of Rs. 38,18,734/- under the head 'Administrative Expenses'. During the course of assessment proceedings, the assessee was specifically requested to furnish the following information vide questionnaire dated 28.08.2009:- "Point No.11 :- Please furnish the details of expenses debited in profit & loss account alongwith ledger account produce bills for verification of each item." 3. The assessee failed to comply with all the points of the questionnaire sent laong with the notice u/s 142(1) of the A....
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....ssing Officer. 6. Before us, the AR of the assessee has filed written submissions, wherein it has been stated that the disallowance of business administrative expenses has been made purely on estimation, presumption, assumption, lump-sum and adhoc basis, which is not tenable in law. The assessee, for the year under appeal, offered appreciably high trading results so far as the GP ratio and NP ratio is concerned and there is no reason to make disallowance arbitrarily which is on the face of it very much on higher side. As a result of such arbitrary and adhoc disallowance, the net profit ratio would come to 2.71%, which is about 3 times more than the NP ratio 0.67 accepted by the Assessing Officer in the immediate earlier assessment year 200....
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.... true that previous year records give a basis for determination of income in case it is to be estimated, at least in the case of the appellant comparisons with the results of the preceding years do not help the appellant. The appellant has tried to compare only macro level results, i.e. net profit as percentage of turnover whereas claims under different heads need to be analysed also. It is seen that expenses incurred under different heads during the year under consideration have increased even though the turnover has substantially reduced. A comparison is given below :- The above chart makes it abundantly clear that there is no connect between turnover and discount allowed. The discount allowed is also not explainable on the basis of disc....
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....e and other related items super stockiest for Cell Force under his proprietary concern M/s Swastik Oil Traders. There is no change in the business activity during the year under appeal as that of in the earlier years. The books of accounts were regularly maintained and duly audited in compliance to the provisions of Section 44 AB of the Act. The return of income of the year under appeal has been filed on 23-03-2009 showing the total taxable income at Rs. 3,52,740/- along with the copy of audit report, computation of income and other relevant documents. In the earlier years also, the returns of income were filed along with the audit report u/s 44AB of the Act and the regular assessments u/s 143(3) of the Act was completed by the same ITO all....
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....oc disallowance to the extent of Rs. 9,54,684/- being 25% of total business administrative expenses taken at Rs. 38,18,734/-, which has been confirmed by the CIT (Appeals). (3) Your honours, the appellant has shown appreciably high Gross Profit and Net Profit ratio as compared to the earlier assessment years wherein the AO has accepted the lower rate of G.P. and N.P. ratio. These very facts is depicted below: SWASTIK OIL TRADERS - BAN (PROPRIETARY CONCERN) Particulars 2005-06 2006-07 2007-08 G.P. ratio 2.25% 3.00% 6.60% N.P. ratio 0.58% 0.67% 1.47% Your honours, all the above details of turnover, Gross Profit and Net Profit in terms of amount and percentage to turnover along with the audit report of the earlier years were furnishe....
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....ant has, for the year under appeal, offered appreciably high trading results so far as the G.P. ratio and N.P. ratio is concerned and there is no reason with both the lower authorities to make disallowance arbitrarily which is, on the face of it very much on higher side. As a result of such arbitrary and adhoc disallowance, the net profit ratio would come to 2.71%, which is about 3 times more than the Net Profit ratio 0.67 accepted by the AO in the immediate earlier assessment year 2006-07 while making assessment u/s 143(3) of the Act. Your honours, both the lower authorizes ought to have considered the very fact that the nature of various business expenses claimed are the same as that of in the earlier years and by the nature of such expen....