TaxTMI 
TaxTMI 
2021 (3) TMI 114
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....ort received from AO. 4. The ld. AO erred in law as well as on the facts of the present case in rejecting the books of accounts of the assessee and applying a GP rate of 0.69% as against 0.38% declared by the assessee and the ld. CIT(A) erred in confirming the same. 5. Rs. 49,56,217/- The ld. AO erred in law as well as on the facts of the present case in making trading addition without proper appreciation of facts on record and the ld. CIT(A) erred in sustaining the same." 2. During the course of hearing, the ld. AR submitted that the assessee didn't want to press the ground Nos. 1 & 2. Further, application for raising additional ground of appeal was withdrawn. Hence, these two grounds are dismissed as not pressed and additional grounds are dismissed as withdrawn at the admission stage. 3. During the course of hearing, the ld A/R submitted that the assessee derives income from trading in various commodities and he has filed the return of the income on 04-09-2012 declaring an income of Rs. 14,07,110/-. The case was taken up for scrutiny and the notice U/s 143(2) was sent on 08-08-2013. However, the same could not be served as the assessee was not found availa....
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....eport. The remand report submitted by the AO is appearing at page 10 of the ld. CIT(A) order and the relevant extract of the same read as under:- "In connection with the remand report, an opportunity was provided to the assessee vide letter no. 1695 dates on 27.01.2017 to submit all supporting documents/evidences for verification which could justify his claim by fixing on 06.02.2017. In response to the same, the A/R of the assessee has submitted the reply on 28.02.2017. I have carefully gone through the submission of the Ld. A/R of the assessee and found satisfactory. All supporting evidences/documents i.e. copy of rent receipt, supporting change of address, copy of ITR along with computation of total income, copy of tax audit report along with balance sheet and profit and loss account for the year ended on dated 31.03.2012, copy of speed post delivery details, sale and purchase bills, confirmations, quantitative details, copies of VAT returns, ledger accounts of commodities etc. have been produced by the assessee for the year under consideration. In view of the above, I want to draw your kind attention that the then Assessing Officer was not justified to make an ....
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.... that the ld. CIT(A) just sent the additional evidences submitted by the assessee to the AO for examination and there is nothing on record to suggest that the additional evidences were to be analyzed in any particular manner. Further there is no other specific direction for the AO. In these circumstances, it is completely unjustified on the part of the ld. CIT(A) to conclude that the ld. AO failed to make proper analysis of the additional evidences whereas the fact is that the remand report of the AO is fully supported by evidences submitted by the assessee. 9. It was further submitted that the ld. CIT(A) kept complete silent before passing of order. It is notable that after receiving of remand report of the ld. AO, the ld. CIT(A) has kept complete silence on the same. The ld. CIT(A) has not communicated anything to the ld. AO to make any further enquiry nor pointed out specific defect in the remand report of the AO. 10. It was further submitted that no specific defect pointed out by the ld. CIT(A). As submitted above, the ld. CIT(A) has not pointed out any defect whatsoever in the details and evidences submitted before him in support of trading results declared by the assess....
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.... year was extraordinarily high as compared to preceding years. The comparative trading results as appearing at page 7 of the assessment order would show the following turnover in three years: A.Y. Turnover G.P. Rate AY 2010-11 Rs. 7832925 11.69% AY 2011-12 Rs. 11671818 11.15% AY 2012-13 Rs. 1573547863 0.38% Thus it can be seen that there has been extraordinary jump in the turnover of the assessee and it has increased almost 130 times during the year under consideration. Thus the trading results of the assessee is not at all comparable from the preceding year and the results are to be seen specifically with regard to circumstances prevailing during the year. 15. It was further submitted that the assessee has maintained complete books of accounts which were duly audited and further day to day quantitative details have also been maintained and therefore, the trading results are to be accepted. However still, the fall in G.P. rate can very well be explained and rather apparent from the books of accounts maintained by the assessee. It was mainly due to fall in prices of cardamom which significantly contributed to the fall in G.P. rate. As would ....
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....lso submit that the assessee was regularly filing the VAT returns and being assessed with the sales tax department. We have placed the copies of quarterly VAT returns which are placed at PB 329- 360 and the annual return is placed at PB 324-328. The complete turnover is fully reconciled with the books of accounts of the assessee as well as the financial statement. We may submit that the assessee has submitted the confirmations from various parties including debtors and creditors which were appearing in the balance sheet of the assessee. It is notable that all such balances as appearing in the balance sheet of the assessee have been fully accepted by the ld. CIT(A) without raising any question. Therefore, it was complete unfair on the part of the ld. CIT(A) not to accept the trading results of the assessee. 19. It was submitted that the ld. CIT(A) has discussed the issue of commodity trading loss of Rs. 15,13,132/- as well as cardamom trading loss of Rs. 21,83,559. In this regard, it was submitted that the ld. CIT(A) has duly accepted the transaction as would appear from the following para of the CIT(A) order at page 16 of its order "xiii) In view of the above discussion....
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....itted that the transaction is fully confirmed by the respective parties and the confirmations and the details of complete transactions are placed from PB 11-15. It is notable that the ld. CIT(A) has nothing to say on these confirmations and further no further enquiry was made by the ld. CIT(A) to suggest that these confirmations were not correct. In any case, the confirmations were fully supported with the documentary evidences on record and therefore the same has to be accepted. It was accordingly submitted that trading additions so sustained by the ld CIT(A) be deleted. 22. Per contra, the ld. DR relied upon the order and findings of ld. CIT(A) which reads as under:- "(iii) During the appellate proceedings, the appellant has filed a number of documents as additional evidences under Rule 46A of the IT Rules, which were forwarded to the AO for its comments and for making necessary enquiries thereof. These additional evidences were admitted as the assessment order was passed u/s 144 of the Act, since no compliance was made by the appellant, during the assessment proceedings, before the AO, on account of change of its earlier address and in the interest of natural justice....
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....assessee and found satisfactory. All supporting evidences/documents i.e. copy of rent receipt, supporting change of address, copy of ITR along with computation of total income, copy of tax audit report along with balance sheet and profit & loss account for the year ended on dated 31.03.2012, copy of speed post delivery details, sale & purchase bills, confirmations, quantitative details, copies of VAT returns, ledger accounts of commodities etc. have been produced by the assessee for the year under consideration. In view of the above, I want to draw your kind attention that the then Assessing Officer was not justified to make an addition on account of trading addition of Rs. 49,56,217/-. All notices was dispatched at the address of B-2, New Grain Mandi, Chandpole, Jaipur instead of D-1, Ilnd Floor, Chandpole Anaj Mandi, Jaipur and that the address was wrong and due to this assessee could not get notices. On perusal of assessment order, there is no specific reason mentioned in the assessment order to take the rate of G.P. at 0.69% of gross receipt whereas, the assessee has shown G.P. rate of 0.38%. The sale of assessee has substantially increased during the year and hence not compara....
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....debited a sure of Rs. 15,13,132/- and Rs. 21,83,559/- on account of 'commodity trading loss' and 'cardamom square off loss trade' respectively in its profit and loss account. The appellant has filed a copy of account of M/s venkatesh Spices wherein loss of Rs. 15,08,175/- was shown in respect of 'cardamom trade'. It is noted that through debit notes, amounts of Rs. 11,25,000/- and Rs. 57,50,000/- were debited in the account of the appellant on 05.04.2011 and 17.04.2011 for purchase of 1000 Kgs and 5000 Kgs. of cardamom respectively. It is further noted that vide credit notes, amounts of Rs. 43,47,775/- and Rs. 9,99,050/- were credited on 24.05.2011 and 08.08.2011 for square off of 5000 Kgs. and 1000 Kgs. of cardamom respectively and in the process a loss of Rs. 15,08,175/- was claimed by the appellant in its profit and loss account. It is pertinent to mention here that except filing the confirmed copy of account, no other document was filed relating to purchase and sale of 6000 (1000+ 5000) Kgs. of cardamom. It is noted that the appellant has also claimed a loss of Rs. 6,75,384/-from Guhan Traders but no documentary evidence was filed by it. It may be mentio....
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....nds with the assessee to make payment to his agent. Accordingly, loss on these transactions has been booked by the assessee as a difference between sales and purchases price. 1.2 Sale and Purchases Transactions with Delivery We have already submitted the confirmed copy of account from Venkatesh Spices and also debit & credit note and confirmation from S Sansirraj (PB. 29-32). It is abundantly clear from the perusal of the communication that they have made transactions on behalf of the assessee acting as an agent and the relationship with the assessee remained as principal to agent. The entire transactions wore delivery transactions entered on instructions of the assessee and as such the assessee was bound by the trade entered into by them and accordingly rightly treated the same as sales and purchases transactions. 1.3 No Transportation Taken Place: We may also submit that in the above cases, there was no transportation of the goods to the assessee and it was only the case where these agents purchased goods on our behalf, stocked them and thereafter sold the goods on instruction of the assessee. Transporting of goods in other states to the place of the assessee wo....
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.... whom these goods were sold by these so called agents. The appellant has not placed on record any accounting standards according to which the sales and purchases made by the agents do not form part of the turnover of the principal. As stated earlier, no document was filed in response to loss of Rs, 6,75,3841- from Guhan Traders. (xiii) In view of the above discussion, it is crystal clear that the loss amounting to Rs. 15,13132/- and Rs. 21,83,559/- claimed by the appellant on account of 'commodity trading loss' and 'cardamom square off trade loss' respectively in its profit and loss account is nothing but a speculative loss, which cannot be allowed to be set off against non-speculative income. Even, the appellant has failed to prove the genuineness of such losses. (xiv) Therefore, in view of the above discussion and looking to the totality of facts and circumstances of the case, it is held that the AO was justified in making trading addition of Rs. 49,56,217/- to the income of the appellant. It is clarified here that no separate addition is required to be made on account of above discussed loss of Rs. 36,96,691/- (21,83,559 + 15,13,132), claimed by....