AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (10) TMI 712
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....red to as 'the Act') vide his order dated 27.12.2011 for assessment year 2009-10. The grounds raised by assessee per its appeal are as under:- "1. That the Ld. CIT(A), Asansol has erred in law and on facts by allowing the relief of Rs.49,29,534/- disallowed by the Assessing Officer on account of showing low Net Profit percentage over turnover; 2. That the Ld. CIT(A), Asansolhas erred in law and on facts by allowing the relief of Rs.76,49,136/-, disallowed by the Assessing Officer u/s. 40A(2) on account of excess payments made to relatives and associate concerns." Sri S.M. Surana, Ld. Authorized Representative appeared on behalf of assessee and Shri Dinabandhu Naskar, Ld. Departmental Representative appeared on behalf of Revenue. ....
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...., the less profit shown by the assessee is of Rs. 49,29,534/- (Rs. 54,78,307.00 -8,48,773.00) which was added to the total income of the assessee. 4. Aggrieved, assessee preferred an appeal to ld. CIT(A) who has deleted the addition made by the AO by observing that the AO has nowhere shown any dissatisfaction about the books and also not rejected any books of accounts. Without any defect in the books of accounts turnover or income cannot be estimated. The percentage of profit is estimated @ 3.5% is just a figure of average of 3% to 4% as stated by the partner of the assessee. No logical basis of adoption of this percentage is mentioned anywhere. No definite conclusion can be arrived from AO order. There is no specific material found duri....
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....depreciation and interest element is reduced then the profit is higher than the rate estimated by the AO. The AO failed to bring any defect in the books of accounts. The ld. AR vehemently supported the order of the ld. CIT(A). 6. We have heard the rival contentions of both the parties and perused the materials available on record. From the foregoing discussion we find that the AO has made the addition on the ground that the assessee has declared less profit in comparison to the AY 2010-11. However the ld. CIT granted the relief to the assessee as the AO failed to bring any defect in the books. In the instant case the AO has made addition on his surmise. It is well settled proposition of the law that for making any addition to the total i....
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....ade its estimate by an entirely new process bestowed no thought to the question whether the earlier estimates could properly reflect subsequent profits. It assumed they did. The estimate so made, in the erroneous belief that a formula for an estimate once evolved constitutes an infallible basis for all subsequent estimates, cannot be sustained for the reason that what it overlooked was that, normally, a change in market conditions disturbs the old ratio between the turnover and the profits. There was no material for the Tribunal to set aside the order of the AAC." There is no material to justify the addition made by the IT authorities to the gross profit shown by the assessee in his account books. The additions were made on ad hoc basis ....
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....r different kinds of job name of same people are appearing again and again. It shows that assessee was debiting its account by giving accommodating entries to its family members. Even the assessee has made the payment after deduction of TDS and through banking channel but these have been claimed at inflated amount. Accordingly the AO disallowed all the expenses paid to the family members to the tune of Rs. 76,49,136/- (3,05,96,544 * 25%) and added to the total income of the assessee. 9. Aggrieved, assessee preferred an appeal to ld. CIT(A) and submitted that no bar on the payment to the family member except the provision of Sec. 40A(2) of the Act. The AO has not pointed out any unreasonable amount of payment paid to the parties. The ld. ....