TaxTMI 
TaxTMI 
2019 (12) TMI 1475
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....his regular tax consultants nor he has decided to file the cross objection within the period of limitation. Subsequently when the Power of Attorney was given to the Counsel to defend the appeal filed by the revenue, he has advised the assessee to file the cross objection and accordingly the cross objection was filed by the assessee belatedly. The ld. A/R has relied upon the decision of Hon'ble Supreme Court in case of Collector Land Acquisition vs. Mst. Katiji & Others, 167 ITR 471 (SC) and submitted that the delay in filing the cross objection is neither intentional nor willful and therefore the same may be condoned. 3. On the other hand, the ld. D/R has objected to the maintainability of the cross objection filed by the assessee and contended that once the assessee was satisfied with the impugned order of the ld. CIT (A), then filing the cross objection after the assessee was proceeded ex parte is nothing but an after-thought. 4. We have considered the rival submissions as well as the relevant material on record. On careful perusal of the record, we find that when the appeal of the revenue was listed for hearing on 30th September, 2019 one Shri Rohit from the Office of Mahendra....
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.... as well as barred by limitation. 5. The revenue has raised the following grounds :- "1. On the facts and in the circumstances of case, the ld. CIT (A) has erred in deleting addition of Rs. 1,88,80,279/- out of total addition of Rs. 2,88,55,077/- made by the AO after rejecting of books of accounts u/s 145(3) without appreciating the facts discussed by the A.O in the assessment order. 2. The appellant craves liberty to raise additional ground and to modify/amend the ground of appeal at the time of hearing." 6. The assessee company is engaged in the business of processing of oil seeds and refining of crude oil for edible use. The assessee has filed its return of income on 30th September, 2015 declaring total income of Rs. 4,26,55,330/-. During the scrutiny assessment, the AO noted that the assessee has shown GP at 2.57% on total turnover of Rs. 496,84,95,171/- as against the GP @ 3.16% declared for the assessment year 2014-15. The AO proceeded to examine the reasons of low GP declared by the assessee for the year under consideration. He has also issued show cause notice to the assessee asking as to why the books of account of the assessee should not be rejected. Finally, the AO....
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....than the average of the preceding years GP declared by the assessee. He has referred to the comparative details of GP declared by the assessee for last 4 years and submitted that if the average of the last 4 years is computed, it will be more than 4% whereas the AO has applied only 3.03%. Thus the ld. D/R has contended that the ld. CIT (A) has deleted the addition without giving a finding as to how the GP declared by the assessee is reasonable for estimation of income while framing the best judgment assessment after rejection of books of account. He has relied upon the order of the AO. 8. On the other hand, the ld. A/R of the assessee has submitted that even after rejection of books of account under section 145(3), it is not mandatory on the part of the AO to make the trading addition but the AO has to make an honest estimation of income keeping in view the material available on record, local knowledge and repute of the assessee. In support of his contention, he has relied upon the decision of Hon'ble Jurisdictional High Court in case of CIT vs. Gotan Lime Khaniz Udyog, 256 ITR 243 (Raj.). Thus the ld. A/R has submitted that mere rejection of books of account need not necessarily ....
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....his appeal therefore, we do not go into the merits of the rejection of books of account. Thus after the rejection of books of account, the AO is duty bound to frame the assessment on best judgment under the provisions of section 145(3) read with section 144 of the IT Act. It is settled proposition of law that the best judgment assessment has to be framed by considering the material on record and the income has to be estimated on a reasonable and proper basis. There are series of binding precedents on this point wherein the Hon'ble Jurisdictional High Court has held that after rejection of books of account the income of the assessee is required to be estimated on a reasonable and proper basis and past history of the GP declared by the assessee is considered as a reasonable and proper guidance for estimation of income. The Hon'ble Jurisdictional High Court in case of CIT vs. Gupta KN Constructions, 371 ITR 325 (Raj.) has held in para 9 to 11 and 18 as under :- "9. In our view, no substantial question of law can be said to arise out of the impugned order as it is essentially a finding of fact by the two appellate authorities. It is admitted fact that the provisions of section 145(3)....
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....nue can be said to be proper and justified that in a case where the assessee manipulates the accounts by keeping the profit margins commensurate with the past assessment years or slightly increases and that itself by a large cannot be a basis for acceptance of the results. But, in the face of the said facts, if it is for the Assessing Officer to bring on record some concrete material/evidence to make a proper addition. We have already noticed hereinabove that the Assessing Officer has merely disallowed 20 per cent. or 10 per cent., as the case may be, out of the various expenses, which, in our view, is not proper and he had to bring on record justifiable basis for making of an addition and bring on record some evidence for making of addition. 18. This court in the case of CIT v. Inani Marbles (P.) Ltd. [2009] 316 ITR 125/[2008] 175 Taxman 56 (Raj.) and also the Delhi High Court in the case of Action Electricals v. Dy. CIT [2002] 258 ITR 188/[2003] 132 Taxman 640 have observed that the past history of the assessee would be one of the reliable guidelines to make or not to make any estimation/addition. We have already referred to hereinabove that the Assessing Officer has failed to ....
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....eceding two years were years of higher profitability. There are cycles of ups and downs in various sectors of economy and it is important for the Officer to examine this issue. A fall in GP for the assessee may be coupled with a general recession in that sector and hence profits of all the peers may have dipped. Similarly, the year may represent an exceptional year wherein all the peers have made exceptional profits. Hence, while examining gross margins, the assessing officer should not only compare the past margins of the assessee but also the current year margins of other assessees engaged in similar business. This would give an insight into the actual profit margins during the year under reference and would be a correct guide for estimation of profits. It has to be noted that a minor addition to the percentage point without actual basis for the finding can make a huge difference in real terms. Hence I do not agree with the estimated increase in G.P. rate to 3.03% in the Assessee's case as against 2.57% shown by the Assessee. No business can have a minimum threshold G.P every year just to satisfy the whims of the Assessing Officer. The working of the A.O. is more theoretical an....