TaxTMI 
TaxTMI 
2018 (4) TMI 330
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....sed no objection on the admission of revised grounds of appeal. Therefore, we admit the revised grounds of appeal, and accordingly proceed to hear and to dispose of the case. Hence, reproduced the revise grounds of appeal:- "1) For that on the facts of the case the Ld CIT(A) was not justified in sustaining the addition of Net Profit based on comparative case, (when the AO has not made out a case for rejection of books) the book results of the appellant is to be accepted. 2)For that on the facts of the case the ld. CIT(A) was not legally justified in sustaining the addition of Rs. 77,08,718/- on A/c of Bulk Tickets (know as bulk agency bonus), when the entire amount issued by stockiest has been passed down the line to the retailers by way of adjustments and no profit element is embedded in such transactions, the addition made may please be deleted. 3) For that on the facts of the case the Ld. CIT(A) was not justified in sustaining the addition of Rs. 4,31,155/- u/s. 40A(3) of the Act'61, and the same may please be deleted. 4) For that the appellant craves leave to add, alter amend any further grounds of appeal before or at the time of hearing." 2. First issue raised by ....
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....ted to please apply a fair rate and estimate the Net Profit...'. This in turn implies an admission that the GP disclosed by him is not correct. However, I do not find the Assessing Officer's estimate of 2% also to be based on any particular rationale. Under the circumstances, the appellant's disclosed rate of GP cannot be accepted but neither can the rte applied by the AO be confirmed as it is not seen to have any basis. In the fines of things in my opinion, it would be justifiable to look for comparable cases, ascertain the GP disclosed in them and apply an average rate to this case. While applying such rate, the AO is free to take into account Assessment Year distinguishing characteristics of the case, which, in his opinion, would lead to a variance. The appellant has submitted that the Hon'ble Settlement Commission had accepted a profit of 0.27% of the total turnover in one particular case. However, in my opinion, there can be variation between cases owing to their unique characteristics. In my opinion, therefore, acceptance of the rte of profit in one case need not necessarily mean that the same rate is valid for other cases as well. This ground of appeal is allowed sub....
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....tly supported the order of Authorities Below. 6. We have heard the rival contentions of both the parties and perused the material available on record. In the instant case, the AO found that the gross profit declared by assessee is very low. Accordingly, AO required the assessee to furnish the details of purchase and sales to verify the gross profit declared by assessee but the assessee failed to furnish the same. Therefore, AO estimated the profit @ 2% of the total turnover and accordingly the difference of Rs.13,75,424/- was added to the total income of assessee. However, on appeal the Ld. CIT(A) directed the assessee to estimate the profit on the basis of comparable cases and after making a suitable changes applicable to the instant facts of the case. Now the grievance of the assessee before us is that Ld. CIT(A) erred in estimating the profit on comparative basis. As per the assessee once the books of account has not been rejected then the book profit declared by assessee in his books of account should be accepted. It is undisputed fact that assessee was given several opportunities during the course of assessment proceedings to produce his books and details of sales and purcha....
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.... the current year of assessee's business in comparison to earlier years. In view of the above, we observe that justice would be served to assessee if the profit is estimated after taking into consideration the profit of earlier years declared by assessee as well as comparable cases after making the suitable/ necessary adjustments. Hence, this ground of assessee's appeal is allowed for statistical purpose. Accordingly, AO is directed to adjudicate the issue afresh as indicted above. 7. Next issue raised by assessee is that Ld. CIT(A) erred in sustaining addition of Rs.77,08,718/- on account of bulk agency tickets. 8. The assessee purchased lottery tickets only from TA which was classified as creditor in the books of account. The assessee adjusted the credit balance of creditor namely, TA by adjusting with the prize winning ticket, bulk agency bonus and by way of making the payment through cash or Demand Draft. However, the AO observed that the assessee has not shown any income under the head bulk agency bonus whereas the TA in its statement has adjusted the bulk agency bonus for Rs.3,08,34,873/- against the assessee. On question by the AO the assessee submitted that the bulk agenc....
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....ed the additional document in support of bulk agency bonus received by him and distributed among the sellers. These additional documents are explaining the transactions of bulk agency bonus and placed on pages 46 to 49 of the paper book. Ld. AR before us prayed by way of filing a separate application vide letter dated 16.01.2018 for the admission of additional evidence in terms of Rule 29 of ITAT, Rules, 1963. On the other hand, Ld. DR supported the order of Authorities Below. 11. We have heard the rival contentions of both the parties and perused the materials available on record. In this case, addition was made by AO on account of bulk agency bonus received from TA due to fact that same was not shown in the books of accounts. The view taken by the AO was subsequently confirmed by Ld. CIT(A). From the foregoing discussion, we find that assessee has clarified the bulk agency bonus received from TA before the Authorities Below as evident from the details placed on pages 23 to 26 of the paper book. We also observe that the additional documents filed by assessee are crucial for the purpose of adjudication of the instant issue. Moreover, we also note that the necessary details of bul....
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.... find that genuineness of the payment has not been doubted by the lower authorities and various courts have held the same issue in favour of the assessee, where genuineness of the parties to whom payment in cash was not subject matter of the dispute. We find in the similar facts and circumstances where the genuineness has not been doubted, the Hon'ble jurisdictional High Court in the case of Girdharilal Goenka vs. Commissioner of Income Tax (1989) 80 CTR 0140 : (1989) 179 ITR 0122 has held as under : "The ground of disallowance of the payments is that there was a time-lag between the date of the bill and the payment made. The object of the provision of s. 40A(3) is to check evasion of taxes so that the payment is made from the disclosed sources. Both the payer and the payee would be showing in the respective account the payments made and received. It presupposes that the transaction must be genuine transaction. In this case, genuineness of the transactions has not been disputed by the Revenue authorities. The only ground is the delay in making payment. It is not in dispute that it is the first year of the business of the assessee which was started in December, 1973, and the acco....