TaxTMI 
TaxTMI 
2018 (3) TMI 438
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed the Assessing Officer to calculate the net profit accordingly. 3. The facts of the case are that the respondent - assessee has been purchasing cotton and cotton seed through Krishi Upaj Mandi Samiti, Badwah, District- Khargone. It was observed by the Assessing Officer from the purchase register that the same amount was not found reflected in the cash book whereas the payment bills bear the signature of the seller of cotton confirming that the purchases were made and the payments were made on the same day. The Assessing Officer has found number of infirmity of delayed payment in regard to more than 80 persons and the default continued throughout the year. The Assessing Officer proceeded to reject the books of account and proceeded to a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e NP on the total turnover considering the material available with him and prayed for rejection. 6. The learned I.T.A.T relying on the decision in the case of Telelinks versus CIT reported in 377 ITR 158 (P&H) the Punjab & Haryana High Court has held that rejection of books of accounts is a pre-condition and sine qua non for making estimation of net profit. 7. Relying on the aforesaid decision, the learned I.T.A.T. upheld the finding of the Assessing Officer wherein he has rejected the books of accounts of the assessee. The Tribunal after appreciating the record of the case, came to the conclusion that undisputedly, net profit ratio of the assessee was 5.26% and 1.86% in the assessment years 2009-10 and 2010-11 while the net profit ra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e the past tax history of the assessee, if available, assessment orders that may have been passed and accepted by the department, the nature of the assessees' KANCHAN 2014.12.11 15:06 I attest to the accuracy and authenticity of this document Chandigarh ITA No. 269 of 2014 business, an appraisal of the value of the contract, prevailing economic conditions vis-a-vis the assessee's business, the price of raw material, labour etc. the rise in price index as notified by the Central Government from time to time if applicable and if the Assessing Officer proceeds to rely upon assessments of other assessees engaged in similar business to do so only after determining points of similarity etc. At this stage, it would be appropriate to clarif....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it on sales, both by the ITO and the Tribunal, seems to be based on surmises, suspicions and conjectures. It is somewhat surprising that the Tribunal took from the representative of the Department a statement of gross profit rates of other cotton mills without showing that statement to the assessee and without giving him an opportunity to show that statement had no relevancy whatsoever to the case of the mill in question. It is not known whether the mills which had disclosed these rates were situate in Bengal or elsewhere, and whether these mills were similarly situated and circumstanced. Not only did the Tribunal not show the information given by the representative of the Department to the appellant, but it refused even to look at the trun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of previous years' results was not placed before the Tribunal and thus the same could not be considered by the Tribunal while upholding 5% of NP rate. In the present case we cannot ignore that there are huge job work receipts during the assessment years 2009-10 to 2011-12 which was reduced to 0% in the assessment year 2013-14 and the impact of such receipt on the GP ratio cannot be ignored and wiped out. It is also pertinent to mention that in the present case, the Assessing Officer has classified the delayed payment of Rs. 1,25,71,083/- out of total cash purchases of Rs. 19.88 crores wherein detailed facts regarding earlier and subsequent NP ratio and disputed sales have been placed by the assessee on record then the ratio of the order....