AI Drafter 
TaxTMI 
TaxTMI 
2019 (10) TMI 132
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....3,08,751/- as against the addition made @5% on sale of Rs. 96,10,44,645/- by the Assessing Officer keeping in view the decision of Hon'ble ITAT, Indore Bench in the case of Shri Amar Agrawal, Sendhwa in ITA No.611/Ind/2012 dated 20.8.2013. 3. Whether on the facts and in the circumstances of the case Ld. CIT(A) is justified in restricting addition to Rs. 14,77,718/- only out of total addition of Rs. 3,58,90,976/- ignoring the findings in the assessment order. 4. The appellant craves leave to add to or deduct from or otherwise amend the above grounds of appeal. 2. The facts giving rise to the present appeal are that case of the assessee was reopened for assessment and the assessment u/s 147 r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter called as 'the Act') was framed vide order dated 28.12.2016. The basis of reopening of the assessment was that on enquiry by DDIT (Inv.)-II, Indore, it was revealed that entries regarding purchase of goods and its payment to farmers having been recorded in the books of accounts were not found satisfactory. The A.O. while framing the assessment adopted the net profit @ 5% relying on the order of the Tribunal rendered in....
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....d under sub-section (1) of section 142 or section 148 of the Act or to disclose fully and truly all material facts necessary for reassessment for that assessment year. He submitted that all material facts were duly disclosed before the A.O. during the original proceedings. It is not the case where the assessee had concealed any material facts from the assessing officer. Ld. Counsel submitted that the reopening is based upon purely on the ground that DDIT (Inv.) had doubted about the payments to the farmers and applied the decision of this Tribunal rendered in the case of Amar Aggarwal in ITA No.611/Ind/2012 dated 20.8.2013, in which the Tribunal was pleased to apply net profit at 5%. He submitted that facts of the said decision are completely different as in that case, there was lower turnover coupled with the finding that payments to the farmers was made out of undisclosed sources and this is not so in the present case. He submitted that A.O. completely lost sight of the facts that in the present case, major purchases have been made from registered dealers for which various indirect taxes in the form of VAT, CST and entry tax were paid. It is further submitted by the Ld. Counse....
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....aintained by the assessee at Khargaon branch. It is further observed by the A.O. that in the statement partner of the assessee firm Shri Nilesh Gandhi stated that the cash was drawn for payment to farmers from whom cotton was to be purchased and when cotton was not available in the market or the payment could not be made to the farmers, the same withdrawn cash was deposited back in the bank account. It was further observed that in few cases, assessee firm had neither made payment to farmers on the day of actual purchase of cotton, which is mandatory as per Krish Upaj Mandi Act nor made additional payment @ 1% per day of the agricultural produce payable to the seller between the period of purchase and actual payment. It was further observed that Shri Nilesh Gandhi during the statement admitted that cash is paid to the farmers on the same day or within 3 to 4 days but within a maximum time limit of 15 days. He stated that no interest as such was paid to the farmers for delayed payment. Further, the A.O. observed that the total turnover reflected in the books of accounts during the year under consideration is Rs. 71,73,13,479/- and in the judgement of ITAT in the case of Shri Amar Agr....
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....rawal (supra). 9. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the Ld. CIT(A) has elaborately discussed the issue as under in his order: 10. We do not find any fault in the findings arrived at by the Ld. CIT(A) as the Ld. CIT(A) has applied additional net profit on the purchases made through Mandi. Therefore, this ground of the revenue's appeal also deserves to be rejected. 11. Now we take up the assessee's appeal in ITA No.567/Ind/2017 for the A.Y. 2010-11. The assessee has raised following grounds of appeal: 1.00 That, on the fact & circumstances of the case, Hon'ble CIT(A) has erred in law by estimating the Net profit at 2.60% even though reassessment proceedings germane to the additions have been held to be invalid by the Hon'ble CIT(A) himself. 1.01 That, assessment order passed by the Ld. A.O. on 28th December, 2016 was pursuant to the notice issued under section 148 and since the Hon'ble CIT(A) himself, the assessment framed on 28th December, 2016, itself was illegal and invalid and should be quashed." 12. Ground No.1.00 and 1.01 are a....
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....s Rs.96 crores. By any stretch of imagination, a case having a turnover of Rs.9 crore cannot be matched with a case having a turnover almost ten times more. Also, the Amar Agrawal case pertain to A.Y.07-08 while the appellant's case pertain to A.Y.10-11. It would also be relevant to refer to the observation of the Hon'ble ITAT where they have referred to the section 44Af of the I.T.Act, 1961 and have also observed that 'once the turnover exceed this limit, normally it is expected to be less profit.' Further, in the case of Amar Agrawal, it was observed by the Hon'ble bench that 'the assessee paid the amounts to such farmers out of undisclosed sources' while in the present case there was no such issue raised by the AO of making payment to farmers from undisclosed sources. 3.3 The major turnover of the appellant as well as the purchases are coming from Pahur Branch in Maharastra where the provisions of KUMA 1972 does not apply. Thus, out of a total turnover of Rs.96.10crore, only Rs.14.86crores can be related purchase from mandi on which the provisions of KUMA apply. Further, it is also clear that the AO while applying the N.P. ratio....
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....i of M.P. where KUMA 1972 is applicable would be most reasonable and judicious. These grounds of appeal are partly allowed. Document 2 3.2 After going through the submission of the appellant as well as the assessment order, it is crystal clear that the application of the case of Amar Agrawal in the present case is not proper and correct as the facts of the case are different. The turnover of Amar Agrawal for the assessment year under consideration was Rs.9 crore while that of the appellant is Rs.96 crores. By any stretch of imagination, a case having a turnover of Rs.9crore cannot be matched with a case having a turnover almost ten times more. Also, the Amar Agrawal case pertain to A.Y.07-08 while the appellant's case pertain to A.Y.10-11. It would also be relevant to refer to the observation of the Hon'ble ITAT where they have referred to the section 44Af of the I.T.Act, 1961 and have also observed that 'once the turnover exceed this limit, normally it is expected to be less profit.' Further, in the case of Amar Agrawal, it was observed by the Hon'ble bench that 'the assessee paid the amounts to such farmers out of undisclosed sour....