TaxTMI 
TaxTMI 
2020 (5) TMI 120
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....ssing Officer had erred at law as well as on facts in applying the net profit rate of 5% as specified U/s 44AF on the declared turnover of Rs. 7,94,47,417/- despite admitting that the assessee's case is covered U/s 44AB. The learned CIT(A) has further erred in not adjudicating and confirming the action of the A.O. 4. That the learned Assessing Officer had erred at law as well on facts in completing the assessment U/s 144 for non-production of books despite that the assessment was reopened beyond 4 years as such the books were not available except the computer accounts. The learned CIT(A) has further erred in not adjudicating but confirming the action of the Assessing Officer. 5. That the learned Assessing Officer had erred at law as well as on facts in making addition to the income of Rs. 34,28,749/- and to complete the assessment on total income of 38,72,370/- as against the returned income of Rs. 4,43,620/- ." 2. Briefly the facts of the case are that the assessee has filed original return of income declaring total income of Rs. 4,43,620/-. Subsequently notice U/s 148 of the IT Act dated 31.03.2017 was issued after seeking necessary permission from the ld. Pr. CIT, Jaipur. I....
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....he Act. During the course of assessment proceedings, various details were filed including extracts of books of accounts, bank account, purchases and sales however, the original books of account could not be produced since the same were not available as the case was reopened after a period of 6 years. It was submitted that the reassessment proceedings were initiated with issuance of notice U/s 142(1) on 18.10.2017 and by that time, the period required for maintaining the books of accounts as specified in Rule 6F(5) got expired. It was accordingly submitted that the finding of the Assessing Officer regarding non-production of bills and vouchers is totally incorrect since the assessee was not required to have such records available with him when the proceedings have been taken up after a period of 6 years. It was further submitted that the entire details relating to the purchases, sales, bank statements and audit report issued U/s 44AB by the independent auditors were filed and relied upon by the Assessing Officer which indicated the assessee has complied with all the provisions of Section 44AA of the Act. It was further submitted that when the books of account were audited and turnov....
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.... but was direct sale of animals and according he was getting a fixed amount of Rs. 80/- to Rs. 100/- per animal as a difference between the purchases and sales prices. Therefore, the G.P has reduced. The fact relating to the change of business was also specified by the Auditors in the Audit Report issued U/s 44AB in the column 8 of business by stating that the assessee was working during this year as a Pakka Aarthia of unproductive animals with effect from 15th August, 2009. Therefore, the trading results as being compared by the A.O. with the preceding year are not applicable since the activity of business of the assessee was totally changed in this year. 8. It was further submitted that the Assessing Officer has made a remark "sales and purchases have been claimed to be made in cash. Huge cash deposits and withdrawals in bank accounts has been made". It was submitted that the statement of the A.O. relating to heavy withdrawals from the bank accounts in cash is not denied since the payment for the animals is being made to the agriculturists always in cash and the same are being exempt as per Rule 6DD and the A.O. purposely had ignored that the withdrawals of cash was used for mak....
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....l available on record. In this case, the assessee had originally filed his return of income on 29.09.2010 declaring total income of Rs. 443,620/-, thereafter, notice u/s 148 was issued on 31.03.2017. The reasons for reopening so recorded by the Assessing officer read as under: " As per the information available with this office, it is found that the assessee has made heavy cash transactions in his bank account amounting to Rs. 3,24,81,500/- during the financial year 2009-10. As per material available on record, it is found that the assessee was not able to explain the heavy cash transactions in his bank accounts. On verification of record, it is found that the return of income has been filed for A.Y 2010-11 declaring total income at Rs. 4,43,620/-. Looking to the facts mentioned above, I have the reasons to believe that the income to the extent of Rs. 3,24,81,500/- has escaped assessment within the meaning of section 147 of the IT Act, 1961 on account of failure on part of the assessee to disclose fully and truly all material facts necessary for his assessment for which notice u/s 148 of the Act is required to be issued." 14. In response to notice u/s 148, the assessee filed....
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....ern M/s AL Rahim & Co. works out to Rs. 39,72,370/ (5% of Rs. 7,94,47,417/-) as against Rs. 5,43,621/- declared by the assessee resulting in addition of Rs. 34,28,749/- to total income of the assessee." 15. We therefore find that the Assessing officer has noticed that there are huge cash transactions in the bank account of the assessee in terms of deposits and withdrawals and has also noticed that the sales and purchases as reflected in the audited financial statements have been made in cash, however, he has not highlighted any discrepancy or mis-match in such transactions. Therefore, the transactions so reflected in the bank account reconciles with the transactions so reflected in the audited financial statements and no addition has been made towards any unrecorded sales transactions or any purchase transactions made out of books and no addition has been made in respect of the reasons for which the matter was reopened in terms of unverified bank deposits, thus, the subsequent estimation of profits on the declared turnover so accepted on account of lower declared profits cannot be sustained and the addition deserved to be set-aside on this account itself. 16. Further, we find tha....