TaxTMI 
TaxTMI 
TaxTMI 
2013 (4) TMI 724
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....e of survey, it was found that the assessee is basically a trader who takes orders from the customers and supply the goods to the customers directly through the main dealers without maintaining any stock. On the basis of the said findings as well as other findings of survey as contained in the survey report, the return of income filed by the assessee for the year under consideration was taken up for scrutiny by the A.O. During the course of assessment proceedings, it was noticed by the A.O. that the assessee had shown gross profit of Rs. 20.61 lacs on the turnover of Rs. 20.56 crores giving a very low GP rate of about 1%. He therefore issued notices u/s 133(6) of the Act to the various parties in order to verify the genuineness of purchases and sales made by the assessee. Many of such notices however returned back by the postal authority citing various reasons such as "left", "wrong address", "in-complete address" etc. The assessee therefore was required by the A.O. to provide the complete address of all these parties and was also asked to produce them with the books of account for cross verification. Although the assessee failed to comply with the said requirements, she filed conf....
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.... that in respect of iron and steel business of the assessee, notices sent to atleast 14 parties were returned unserved. The A.O. also furnished details of comparative GP rates in the remand report showing that the GP rate disclosed by the traders in textile business was in the range of 10.62% to 18.31%. As regards the comparative GP rates of iron and steel business, the A.O. submitted in the remand report that no comparative GP rates of iron and steel business were available on record and GP rate of 10% was applied on the basis of information gathered from the market sources. When the remand report submitted by the A.O. was confronted by the ld. CIT(A) to the assessee, the later explained that the 14 parties pointed out by the A.O. in the remand report were not dealing in iron and steel products but were dealing in textile products. This explanation of the assessee was found evasive by the ld. CIT(A) keeping in view the name and nomenclature of the concerned 14 parties indicating clearly that they are dealing in iron and steel products. The ld. CIT(A) held that even otherwise whatever confirmations filed by the assessee were found to be unreliable by the A.O. during the course of a....
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.... regard, he relied on the decision of the co-ordinate Bench of this Tribunal in the case of ITO vs. Intel Trading Co. (ITA No. 3116/Mum/2005 dtd. 19-6-2008, for A.Y. 2001-02) wherein the GP rate of 1.82% was noted by the Tribunal as disclosed in the case of iron and steel business. He also relied on another decision of the co-ordinate Bench of this Tribunal in the case of ACIT vs. Arya Texturisers and Twisters (ITA No. 29/Mum/2002 dtd. 30-12-2005 for A.Y. 1998-99) wherein GP rate of 3.2% was adopted by the Tribunal as fair and reasonable in respect of textile business. 7. The ld. D.R., on the other hand, strongly supported the orders of the authorities below on this issue. He submitted that a survey u/s 133-A of the Act was carried out successfully in the case of the assessee wherein the assessee was found to be indulging in generating unaccounted money. He submitted that the assessee was found to be the owner of Mercedes Benz Car while the income declared by her was in the range of Rs. 1 to 3 lacs. He submitted that specific defects were pointed out by the A.O. to doubt the genuineness of purchases and sales shown by the assessee and the same altogether with adverse findings of t....
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....d deposits which were without any narration. When this position was confronted by the A.O. to the assessee, the later failed to offer any satisfactory explanation. Having regard to all these specific and material defects pointed out by the A.O., we are of the view that the books of account maintained by the assessee were not reliable and the same were rightly rejected by the authorities below after having satisfied that they are not correct. 9. At the time of hearing before us, the ld. Counsel for the assessee has submitted that none of the notices returned back to the A.O. by the postal authority was pertaining to the iron and steel business of the assessee and therefore the book results of the said business should not be disturbed. However, as specifically noted by the ld. CIT(A) in his impugned order, the confirmations filed by the assessee of the parties pertaining to the iron and steel business were also found to be unreliable by the A.O. for the specific discrepancies pointed out therein which the assessee failed to explain. Moreover, both the iron and steel business and textile business were carried on by the assessee under the name and style of his proprietary concern M/s ....
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....isers and Twisters (supra) wherein the GP rate of 3.2% was accepted by the Tribunal as fair and reasonable. It is however observed that neither the said case nor any other comparable case was cited by the assessee before the A.O. so that the relevant aspects could be considered and verifed by him. Moreover, the A.O. has relied on certain comparable cases of textile business from his own jurisdiction where the GP rate declared was in the range of 10.62 % and 18.31%. In this regard the ld. counsel for the assessee has contended that the application of highest GP rate of 20% is not justified keeping in view this range given by the A.O. We find merit in this contention raised by the ld. Counsel for the assessee. In our opinion, the GP rate of 20% applied by the A.O. in respect of textile business is on the higher side keeping in view the comparative GP rates pointed out by himself which were in the range of 10.62 % and 18.31% and it would be fair and reasonable to adopt the average GP rate to estimate the income from textile business which may be taken at round figure of 15%. 12. As regards the GP rate to be applied in respect of iron and steel trading business, the ld. Counsel for th....
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....tock and since no evidence was filed by the assessee to give even the address of the godown or details of payment made on account of godown rent, the claim of the assessee for godown rent of Rs. 22,000/- was disallowed by the A.O. On appeal, the ld. CIT(A) confirmed the said disallowance as the assessee could not improve her case on this issue by producing the relevant details. Even before us, no evidence whatsoever has been filed by the assessee to show that any godown was actually used for the purpose of the business or any rent for godown was actually paid. We therefore find no justifiable reason to interfere with the impugned order of the ld. CIT(A) confirming the disallowance made by the A.O. on account of godown rent and upholding the same on this issue, we dismiss ground No. 7 of the assessee's appeal. 15. The issue raised in ground No. 8 relates to the disallowance of Rs. 1,64,174/- made by the A.O. and confirmed by the ld. CIT(A) on account of telephone expenses, staff welfare expenses and motor car expenses including depreciation. 16. In the P&L account filed along with the return of income, the assessee had debited the following expenses:- "Personal nature of expenses:....