TaxTMI 
TaxTMI 
TaxTMI 
2020 (5) TMI 186
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....2-13 and 2013-14. All these appeals were heard together and are being disposed of by this common order, for the sake of convenience. 2. In both the years, the assessing officer estimated the "net profit" of the assessee by rejecting books of accounts. The Ld CIT(A) confirmed the rejection of books of accounts in AY 2013-14, but he held that the rejection is not justified in AY 2012-13. However, in both the years, the Ld CIT(A) held that the AO should have estimated the "Gross Profit" only. Accordingly the Ld CIT(A) estimated the gross profit in both the years and allowed deduction of expenses. The orders so passed by LD CIT(A) gave partial relief to the assessee. Hence both the parties are in appeal before us assailing the decision of Ld ....
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....held that the rejection of books of accounts in that year is not justified. Before Ld CIT(A), the assessee had taken alternative contention in both the years that the estimate should be made only at Gross Profit level and not at Net profit level as done by the AO. The Ld CIT(A) accepted the above said alternative contentions in both the years and accordingly applied the rate of 4.50% at Gross profit level and allowed deduction of expenses. 6. In the appeal filed by the assessee, the rejection of books of accounts and estimation of income are being contested. In the appeal of the revenue, the relief granted by Ld CIT(A) is being contested. The first issue relates to the rejection of books of accounts. According to the assessee, it has offer....
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....t the search proceedings in the hands of the assessee were conducted as a consequence of search conducted in Challani Group, Chennai. There is no dispute with regard to the fact that the unaccounted diamond studded jewellery found in the hands of Challani was purchased by them from the assessee herein. However, we notice that there is difference with regard to the explanations offered in that regard by Mr. Challani and the assessee, i.e., Mr. Challani has stated that the above said jewellery has already been purchased by him by paying cash to the assessee. However, the assessee has stated that it has sent the jewellery on sale or approval basis to Mr. Challani. From the assessment order, it is not clear as to whether the above said jeweller....
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.... that the assessee has not collected acknowledgements from the Gold smiths for the gold given to them. It was also noticed that the assessee has been using several kinds of vouchers for goods sent on approval basis and some of them have not been included in the computer system for inventory. The search officials have also noticed that the several cash sales bills in the name of Aura Jewels have not been included in the sales reflected in the books of accounts. Accordingly they have stated in the appraisal report that the books of the assessee are not reliable. The AO has also summarised various deficiencies as under:- (a) Difference between value of the stock sent to Mr. Sripal Challani (Rs. 3.21 crores) and as valued by official valuer ....
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....ample, VS (Very Small), VVS (Very Very Small) and going upto E & F which refer to the finest quality). 9. Even though the assessee has offered explanations on various points, we notice that the assessee has roped in its sister concerns to explain the difference in stocks. The explanation given for maintaining different sets of 'approval books" is not convincing. There is no evidence to substantiate the explanations that the goods were given to gold smiths, i.e., it has been claimed that the gold was issued to them without any acknowledgment slip. In any case, the gold smiths are under the control of the assessee only. There is no proper explanation as to why the "approval books" pertaining to the period prior to 1.4.2012 was destroyed. Tho....
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....r view, the deficiencies noticed by the search team cannot be considered to be assessment year specific, since it only revealed a particular pattern followed by the assessee or the general state of affairs of business carried on by the assessee. The AO has also observed that the "approval vouchers' pertaining to the period prior to 1.4.2012 has been destroyed and further the grade wise stock details of diamonds have not been maintained. Since the search team has found out particular pattern followed by the assessee, which is found to be defective and further the state of affairs of business carried on by the assessee is found to be unreliable, in our view, the AO was justified in rejecting the book results for AY 2012-13 also. 11. Next iss....