TaxTMI 
TaxTMI 
2015 (3) TMI 679
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....st Rs. 18,30,818 made by AO, assessee in its C.O. has challenged validity of the proceeding initiated u/s 147 of the Act as well as quantum of addition sustained by ld. CIT(A). 3. Briefly the facts are, assessee is a partnership firm. For the AY in dispute, assessee filed its return of income on 01/11/2014 declaring total income of Rs. 1,50,640. Assessment in case of assessee was completed u/s 143(3) of the Act vide order dated 17/07/2006. While completing assessment, AO noticed that the Gross Profit (GP) declared by assessee works out to 11.69%, AO being of the view that GP shown by assessee is too low when compared the GP shown in similar line of business, fixed the GP rate at 15%, which enhanced the GP to Rs. 10,02,347. Accordingly, t....
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....ing the submissions of assessee in the light of facts and materials brought on record, though, was of the view that no evidence has been brought on record, which suggest the suppression of sales, but, ultimately, he upheld the rejection of books of account and estimation of sales made by AO, of course, he reduced the quantum of addition to Rs. 3 lakhs. The finding of ld. CIT(A) is extracted hereunder for ready reference: "5. I have perused the assessment order as well as the submissions made. The Assessing Officer has based the assessment on the fact that the average value of the closing stock works out to Rs. 55/- per Sq.foot and has hence held that this is the cost price, and the sale price shall be cost + 15%. Based on the same, the A....
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.... system of accounting followed by the assessee is such that the correct profits cannot be deduced there from. Moreover, while exercising the power to reject the books of accounts, the Assessing Officer should adopt a reasonable method to determine what is the true profit of the business, in his opinion. The Assessing Officer cannot be arbitrary or unreasonable in determining income. It is natural in the course of any business that the purchase cost of traded goods will vary during the course of the accounting period. To determine the correct sales based on the valuation of closing stock is, in my opinion, without any basis and totally arbitrary. As pointed out by the appellant, no evidence has been brought on record which would suggest supp....
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....Rs. 3 lakhs on presumptions and surmises. Further, challenging the validity of proceeding initiated u/s 147, ld. AR submitted as in assessee's case original assessment was completed u/s 143(3), reopening could not be made u/s 147 after expiry of four years from the relevant assessment year without establishing the fact that escapement of income was due to failure on the part of assessee to disclose fully and truly all material facts. He submitted, perusal of assessment order will make it clear that there are no tangible material before AO to form the belief that income has escaped assessment. On the basis of materials submitted by assessee along with return of income considered in the original assessment, the AO has reopened the assessment.....