2018 (1) TMI 452

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....in the business of sale and purchase of agricultural produce. The return of income was e-filed on 30/09/2011 declaring total income of Rs. 13,40,650/-. The case was selected for scrutiny. The assessment U/s 143(3) of the Income Tax Act, 1961 (in short the Act) was finalized on 21/3/2014 at an income of Rs. 27,08,190/- The ld. CIT(A) has partly allowed the appeal of the assessee. 4. Now the assessee is in appeal before ITAT by taking following grounds of appeal: "1. On the facts and in the circumstances of the case and in law, the CIT(A), Kota erred in partly allowing the appeal by restricting Rs. 1,50,000/- addition made by the Assessing Officer and only deleting Rs. 10,94,635/- addition made by the Assessing Officer without app....

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....ter examination of the books of accounts for lack of supporting evidences & vouchers combined with the decline in G.P, rate compared to previous A.Y. 2010-11, rejected the same 8s resorted to estimation of the appellant's income @ 1% & making an addition of Rs. 12,44,635/-. Thus, it is clear from the assessment order that the assessee has not been able to provide complete information during the proceedings. Though the accounts were duly audited, but some of the supporting documents which were an essential part of the scrutiny examination for reaching a proper judgement on the results shown by the assessee, were not produced like details of material stock records, and payment of hammali, discount expenses etc. This was combined with....

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....n assessee with respect to its earlier performance. There are cycles of ups and downs in various sectors of economy and it is important for the Officer to examine this issue. A fall in GP for the assessee may be coupled with a general recession in that sector and hence profits of all the peers may have dipped. Similarly, the year may represent an exceptional year wherein all the peers have made exceptional profits. Hence, while examining gross margins, the assessing officer should not only compare the past margins of the assessee but also the current year margins of other assesses engaged in similar business. This would give an insight into the actual profit margins during the year under reference and would be a correct guide for estimation....

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....tioned about better market conditions, worked out specific other direct expense comparables and then should have resorted to his best estimate of Profits in my opinion because the food grain business is highly volatile and prices are quite fluctuating year to year based on cropping success, monsoons and several other factors involved. In these circumstances, just increasing the Gross Profit based on some average of earlier year's rates without any reasonable basis was uncalled for. Under the facts and circumstances of the case, I do not agree with the A.O's estimation and hold that the addition made needs to be restricted to Rs. 1,50,000/ - to cover up for the possibility of certain expenses being unvouched or fully for bu....