2018 (12) TMI 411

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....n ITA No.16/Chny/2018, for the Assessment year 2014-15. 2.The Appeal has been filed raising the following Substantial Questions of Law: "1.Whether in law, the Hon'ble ITAT is correct in modifying the AO's order which is nonspeaking order? 2.Whether in law, the Hon'ble ITAT is correct in holding the dis-allowance of the expenses at a percentage arbitrarily without substantiating? 3.Whether in law, the Hon'ble ITAT is correct in rejecting and dishonouring the settled judicial principle that assessment cannot be made on a pure guess and without reference to any evidence or any material at all? 4.Whether on the facts and in the circumstances of the case and in law, the Appellate tribunal wa....

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....16 along with the following documents: "1.Bills supporting expense claim of Business Expense; 2.Bills supporting the expenses towards Clearing and Forwarding expenses made to MML Logistics; 3.The document putting for the closure of Vendor M/s.Ambica Projects - liability towards fixed asset vendor; 4.Bills for purchases in Repairs & Maintenance expense for expenses above Rs. 1 lac." The assessee requested the Assessing Officer to take the above mentioned records and proceed with the matter. However, on a perusal of the assessment order, we find that there is no reference to the records submitted by the assessee. 6.From the list of records produced, we find that the Bills supporting Business Expenses,....

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....by the assessee and deleted the addition stating that there was no sufficient ground to make such a huge addition, especially when no investigation was conducted. On appeal by the Revenue before the Tribunal, the Tribunal came to a conclusion that it cannot be ruled out that the assessee has not inflated the expenses, however, found fault with the Assessing Officer in adopting 5%, pointing out that it is on higher side and directed the Assessing Officer to adopt 2.5%. In our considered view, the order passed by the Assessing Officer as well as the Tribunal are wholly erroneous. A low gross profit rate can at best be a reason for making an enquiry, but it cannot be a sole basis for making an addition. In Symphony Comfort System Ltd., the Hig....