TaxTMI 
TaxTMI 
2021 (7) TMI 812
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and without prejudice the ld. CIT(A) further erred in law as well as on the facts of the case in confirming G.P. rate 16% on the estimated turnover of Rs. 1,11,19,528/- as against the turnover declared of Rs. 26,26,670/- and resultant thereto made trading addition of Rs. 13,45,442/- by the Assessing Officer. Hence the addition so made by the Assessing Officer and sustained by the ld. CIT(A) is being totally contrary to the provisions of law and facts on the record and hence the penalty may kindly be deleted in full. 3. Rs. 21,803/-: The Assessing Officer has grossly erred in law as well as on the facts of the case in making the disallowance of various expenses of Rs. 21,803/-. Hence the disallowance so made by the Assessing Officer is being totally contrary to the provisions of law and facts on the record and hence the same may kindly be deleted in full. 4. The ld. CIT(A) has grossly erred in passing the ex parte order without providing the adequate opportunity of being heard to the assessee, which is against the principal of natural justice and hence the same may kindly be quashed. 5. The Assessing Officer has grossly erred in law as well as on the fact....
X X X X Extracts X X X X
X X X X Extracts X X X X
....me Court in the case of Collector, Land & Acquisition v. Mst. Katiji & Others (1987) 167 ITR 471 (SC) has advocated for a very liberal approach while considering a case for condonation of delay. The following observations of the Hon'ble Court are notable: "The legislature has conferred the power to condone delay by enacting section 5 of the Limitation Act 1963 in order to enable the Courts to do substantial justice to parties by disposing of matters on 'merits'. The expression sufficient cause' employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner which subserves the ends of justice-that being the life-purpose of the existence of the institution of Courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court. But, the message does not appear to have percolated down to all the other Courts in the hierarchy." The said judgment is a leading case on the subject and has a binding force on all the officers subordinate thereto. 4. The action or inaction by an assessee, on the advice of its counsel, whether correct or incor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sons, the present appeal has been filed belatedly. For ready, reference, we reproduce the affidavit of the assessee as under: 6. From perusal of the record, we also noticed that the appeal has been decided by the ld. CIT(A)-Kota vide order dated 21.09.2017. The order had been served upon the counsel of the assessee at Kota on 22.09.2017. As per condonation application and affidavit filed by the assessee before us, we are of the view that Smt. Rukshana wife and the legal heir of the deceased assessee was not having any knowledge and information about any order and income tax proceedings against his husband. As the order of the ld. CIT(A) has been served upon on the counsel at Kota not on the assessee or his family at Jhalawar and the ld. counsel could not communicate properly to the assessee or his family. As the wife of the assessee was also not having knowledge about his husband's counsel. 7. We also observe that when she received the recovery notice from TRO Kota in the first time in first week of February 2020, she has come to know about the any income tax proceedings against his husband. Thereafter she tried to locate the earlier counsel at Kota with the help of known....
X X X X Extracts X X X X
X X X X Extracts X X X X
....no compulsion or circumstances which prevent to him to do so. As also in the present case the legal heir was not having knowledge about the order passed by the CIT(A) being the above reasons and as she came to know she immediately all the exercised which she can do to file the appeal before us. In the case of Vedbai vs. Shantaram Baburam Patil & Others 253 ITR 798 (SC), the Hon'ble Apex Court has again reiterated that the expression "sufficient cause" should receive a liberal construction. The Hon'ble court has also held that advancing of substantial justice should be of prime importance. 10. If we apply the settled principles as laid down by the Hon'ble Supreme Court as well as other courts on the facts of the present case we find that the assessee has explained cause of delay, therefore, in the facts and circumstances of the case, we condone the delay of 825 days in filing the present appeal and admit the appeal for hearing. 11. Now coming to the merits of the case. The brief facts of the case are that the deceased assessee was a fruit merchant and engaged in the business of retail trading of fruit in local market. During the year, first time he was also engaged....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../s. KOC. The AO has alleged that the assessee has not recorded this sale in his books of accounts as sale but has shown this sale on Arat and shown Arat of Rs. 83,840/- on this sale. Thus the assessee shown total sales of Rs. 27,10,510/- out of which Rs. 83,840/- from Arat and Rs. 26,26,670/- from own sales, which is not acceptable. The AO has stated that the assessee has also made sale in Jaipur Agra, Noida because there were cash deposits in bank form these cities. Hence the AO has taken sales of Rs. 27,10,510/- declared by the assessee, sale of Rs. 72,09,018/- made to M/s. KOC Fruit Merchant Delhi and also estimated the sales of Rs. 12,00,000/- made in other states or cities as Jaipur, Agra, Noida. Thus he estimated or worked out total sales of Rs. 1,11,19,528/- as against Rs. 27,10,510/-. The AO while estimating the other cities sales of Rs. 12,00,000/- has stated that there were cash deposits of Rs. 50,000/-, 50,000/- and 3,000/- respectively from Jaipur Agra, Noida and the AO has alleged or assumed that the rest of sale has been taken in cash from these cities Jaipur, Agra and Noida. The AO has stated that the assessee has declared the 16% gross profit and he applied 16% gros....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of farmers. However the ld. AO has taken this Arat sale of 84,92,858/- by enhancing from Rs. 67,92,481/- (enhanced by Rs. 17,00,377/-) as his own sale in which he has included (Rs. 72,29,018/- to M/s. KOC, Rs. 12,00,000/- sale in other cities, Rs. 83,840/- arat). The ld. AO has not accepted the Arat business of the assessee in this year. He has taken the same entire sales as own sales on assumption and presumption and applied the G.P. rate for making the trading addition. As for understating we are reproducing herewith a chart for the past history. A.Y. Sales Net Profit N.P. rate Increase in turnover % of increase in turnover 2006-07 1254744/- 96615/- 7.70 2007-08 1813372/- 110676/- 6.10 558628 44.52 2008-09 1910660/- 112975/- 5.91 97288 5.36 2009-10 2565310/- 247173/- 9.63 654650 34.26 2010-11 2590370/- 178345/- 6.88 25060 0.97 Average 7.24 2011-12 2626670/- 216850/- 8.00 36300 1.40 By AO for A.Y. 2011- 12 1,11,19,528/- 1562292/- 14.04 8529158 330.00 On perus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ddition so made may kindly be deleted in full. He relied on the decisions in cases of Sanghi Brothers (Indore) Limited v/s. Inspecting ACIT 122 CTR 19 (MP) Malik Packaging v/s. CIT 284 ITR (All), T.C.N. Menon v/s. ITO 96 ITR 148 (Ker). CIT vs. Vishishth Chay Vyapar Ltd. (2015) 93 CCH 0070 Del HC CIT vs. Oasis Hospitalities (P) LTD. (2011) 238 CTR 0402 : (2011) 51 DTR 0074 : (2011) 333 ITR 0119: 3. Thus in the above matter there is only point that sales made to M/s. KOC Fruit Company Delhi and to others out of cities are own sales or Arat Sales. For this we have already filed various details, accounts and confirmations of the farmers their statements have also been recorded. There may be some difference in statements but facts cannot be denied and no farmers has been stated that no Arat sales has been made. Sales has been made truck to truck not loose or petti. It is not possible to make retail sale of Fruit of Rs. 1.11 Crore outside the Cities. And it is also admitted facts that the Fruits were sent to M/s. KOC Delhi in bulk i.e. in full truck and assessee had received Arat per Petti and in this business it is not possible to earn 16% Pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ilk shown in books of account was 3226341 litres which means unaccounted quantity of milk was 1706464 litres which came to 35% to recorded quantity--Applying said ratio, to quantity of milk sale recorded in books of account, at 5135335 litres came to 1797367 litres, which was wrongly taken by AO as 2716162 litres--If average selling rate per litre as per books of accounts was applied on unaccounted quantity of milk of 1797367 litres, value came to Rs. 4,71 crores whereas same was taken at Rs. 7.11 crores by AO for making addition--If profit margin of 10.56% was applied on such unaccounted sale, same came to Rs. 49 lakhs and director in his individual capacity had accepted unaccounted sale and offered Rs. 93 lakhs as his undisclosed income which was accepted by AO--This means that undisclosed income was fully covered by disclosure made by Director and, in fact, it was at a much higher figure than what was supposed to be considered by assessee--Entire unaccounted sales could not be added because there had to be some purchases and expenses related therewith--Therefore, making addition on basis of profit margin was more logical and rationale--Moreover, though daily milk procurement she....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ions of the assessee were not considered judiciously. The ld. AO has also ignored the very vital facts that in the P&L account the assessee has not claimed any expenditure on account of Sales made through Arat as fright, labour, Godown and so many other expenses. As per the P&L account the assessee has claimed the expenditure of Rs. 2,16,832/- on the turnover of Rs. 27,10,510/- and it is not possible that to obtain turnover of Rs. 1,11,19,528/- there shall be only expenditure of Rs. 2,16,832/- i.e. 1.95% which is not at all possible in this line of business. When the fruits cannot be kept in stock for much time. The fruits become useless after some time and had to throw. In CIT v/s. Mascot (India) Tools & Forgings (P) Ltd. 320 ITR 116 (All) held that Books of account are supported by the purchases vouchers, vouchers for expenses, stock record, and therefore, hypothetical and imaginary calculation of G.P. rate cannot be made unless some specific mistake in the books of account are pointed. In the absence of any specific instances of mistake in the books of accounts and other records, the book results cannot be rejected on the basis of any such hypothetical calculation based....
X X X X Extracts X X X X
X X X X Extracts X X X X
....v/s. Kulwant Rai 291 ITR 36 (Del). In CIT v/s. Shalimar Buildwell Pvt. Ltd. 86 CCH 250(All) it has been held that the AO made the addition merely on suspicion which was not desirable in the eye of law. 8. Blind Estimation of other cities turnover: The ld. AO estimated the other cities sales at Rs. 12,00,000/- when admittedly there was evidence only of Rs. 1,03,000/- (50,000/- + 50,000/- + 3,000) as ld. AO himself stated vide para 2.20 page 8 of assessment order. Then how on assumption, presumption and suspicion the turnover can be increased as stated in above para 10. Hence the turnover of Rs. 10,97,000/- (12,00,000/- less 1,03,000) must be reduced if N.P. rate is held on the Arat Sales. 9. Alternatively and without prejudice to the above at the worst the N.P. rate of 7.24% average of last five years should be applied on the turnover of Rs. 1,00,22,528/- (1,11,19,258/- less 10,97,000/-) 10. Hence in view of the above submissions the trading addition so made by the ld. AO and sustained by the ld. CIT(A) may kindly be deleted in full and oblige." 14. On the other hand, the Ld. DR has vehemently supported the orders of the revenue authorities. 15. We h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ajput and the Assessing Officer has recorded their statements. On perusal of the assessment order, it has come to know that the Assessing officer has commented on the statements of the above persons, on diaries and also on confirmations of M/s. KOC Fruit Merchant. The Assessing Officer found some contradiction therein vide para 2.5 to 2.17 page 2 to 7 of the assessment order. On the basis of those observations in above page or para the Assessing Officer was the view that the books of accounts of the assessee is not believable and it is necessary to rejects the books of accounts of the assessee and accordingly thereto the books of accounts of the assessee was rejected u/s. 145(3) of the Act and trading result of the assessee is determined u/s. 144 of the Act. After that the Assessing Officer has noted that in the ledger account of the assessee in the books of M/s. KOC Fruit Merchant there is deposits of Rs. 72,09,018/- in this account in the bank account of the assessee through RTGS/NEFT by M/s. KOC which is against the sale made by assessee to this firm M/s. KOC. The Assessing Officer has stated that the assessee has not recorded this sale in his books of accounts as sale but has s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s discussed above the Assessing Officer has taken these Arat sale as assessee's own sale by enhancing from Rs. 67,92,481/- to Rs. 84,92,858/- (as enhanced by Rs. 17,00,377/-), which includes (Rs. 72,29,018/- to M/s. KOC, Rs. 12,00,000/- sale in other cities, Rs. 83,840/- arat). Thus Assessing Officer has not accepted the Arat business of the assessee in this year. He has taken the entire sales as his own sales and applied the G.P. rate and made the trading addition. Before us the Ld. A/R has filed Trading and P&L A/c of earlier years and following sales and N.P. arte chart of earlier years. A.Y. Sales Net Profit N.P. rate Increase in turnover % of increase in turnover 2006-07 1254744/- 96615/- 7.70 2007-08 1813372/- 110676/- 6.10 558628 44.52 2008-09 1910660/- 112975/- 5.91 97288 5.36 2009-10 2565310/- 247173/- 9.63 654650 34.26 2010-11 2590370/- 178345/- 6.88 25060 0.97 Average 7.24 2011-12 2626670/- 216850/- 8.00 36300 1.40 By AO for A.Y. 2011- 12 1,11,19,528/- 1562292/- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al preposition of law, as an allegation remains a mere allegation unless proved. Howsoever strong the suspicion may be but cannot take the place of reality, is the settled principles. Thus in the totality of the above facts, documents and material placed before us in the form of Trading, P&L account of this and earlier years, diaries of transactions, confirmation of KOC Fruit Company, statements referred in assessment order etc. we are of the considered view that the sales made by the assessee's of farmers outside the cities or Arat sales not own sales and the assessee's has rightly shown commission thereon as no farmers has stated that no Arat sales has been made. Also sales have been made truck to truck not loose or petti as done in his own trading sales. It is also admitted facts that the fruits were sent to M/s. KOC Delhi in bulk i.e. in full truck and assessee had received Arat per Petti and in this business it is not possible to earn 16% Profit on such wholesale commission business on Arat. When in retail business the assessee had declared 7-8% N.P. rate. The Assessing officer has not proved that the assessee has firstly purchased the fruits from farmers, kept in his ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Company to the assessee being deemed income as per provisions of Section 2(22)(e) of the Act. The Commissioner of Income Tax (Appeals) in its order also extracted the statement Mrs. Pooja Kohli, Executive Director of the Ludhiana Stock Exchange. From the perusal of the statement of Mrs. Pooja Kohli, it leaves no manner of doubt that the share transfer forms were purchased and submitted on 29.1.2007 and the share holding pattern was effected on 3.3.2007, which was duly approved by the Company on 10.3.2007 in the meeting of the Board of the Directors. Similar view has been taken in the case of CIT vs. Oasis Hospitalities (P) LTD. (2011) 333 ITR 0119 wherein it has been held as under: The initial burden is upon the assessee to explain the nature and source of the share application money received by the assessee. In order to discharge this burden, the assessee is required to prove: (a) identity of shareholder; (b) genuineness of transaction; and (c) creditworthiness of shareholders. In case the investor/shareholder is an individual, some documents will have to be filed or the said shareholder will have to be produced before the AO to prove his identity. If the creditor/sub....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rds discrepancies found by the AO in the bank statement, suffice is to mention that the bank statements that were filed by the assessee were provided by the shareholders and were computer printed on the bank stationery. The same were filed by the assessee during the assessment proceedings without any suspicion of their being incorrect. During the assessment proceedings, the assessee was never confronted by the AO that there are discrepancies between the bank statements filed and the statements directly called by the AO. However, even after considering the alleged discrepancies, it does not follow that the amount of share capital was the undisclosed income of the assessee. Even the correct bank statements as claimed by the AO reveal that the assessee has received cheques from the shareholders. Therefore, there is no merit in these two appeals, which are accordingly dismissed at the admission stage itself.--CIT vs. K.C. Fibres Ltd. (2010) 187 Taxman 53 (Del) followed. The Coordinate Bench of ITAT Jodhpur in the case of ITO vs. Hitesh Kumar Panchori (2008) I DTR 17 (Jd. ITAT), it has been as under: "GP rate being better at 11.08% as against 10.20% in the immediately preced....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....11 crores by AO for making addition--If profit margin of 10.56% was applied on such unaccounted sale, same came to Rs. 49 lakhs and director in his individual capacity had accepted unaccounted sale and offered Rs. 93 lakhs as his undisclosed income which was accepted by AO--This means that undisclosed income was fully covered by disclosure made by Director and, in fact, it was at a much higher figure than what was supposed to be considered by assessee--Entire unaccounted sales could not be added because there had to be some purchases and expenses related therewith--Therefore, making addition on basis of profit margin was more logical and rationale--Moreover, though daily milk procurement sheets were found but no document was found wherein Revenue could say that assessee was also making undisclosed purchases--AO in his whims and surmises, had considered extrapolation for only two AYs whereas, if he was so confident about seized documents and income therein, he should have extrapolated for entire block period of six years--AO did not gave any reason for this--CIT(A) rightly deleted additions made by AO but erred in sustaining addition of Rs. 7,86,337/- Revenue's appeal dismissed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....¤ªà¤¥ पतà¥à¤° समकà¥à¤· माननीय आयकर अपीलीय अधीकरण जयपà¥à¤° बेनà¥à¤š जयपà¥à¤° राज. ramma मैं रà¥à¤•à¤¸à¤¾à¤¨à¤¾ पतà¥à¤¨à¥€ सà¥à¤µ. शà¥à¤°à¥€ मोहमà¥à¤®à¤¦ सलीम उमà¥à¤° 45 वरà¥à¤· निवासी कà¥à¤¨à¥à¤œà¤¡à¤¾ गली बडा बाजार à¤à¤¾à¤²à¤¾à¤µà¤¾à¤¡à¤¼ जिला à¤à¤¾à¤²à¤¾à¤µà¤¾à¤¡à¤¼ राज. (326001) शपथ पà¥à¤°à¥à¤µà¤• बयान करती हूठ(1) यह की में नियमित आयकर दाता न....
X X X X Extracts X X X X
X X X X Extracts X X X X
....क तरफा पास कर दिया था। (9) यह की उस आदेश की कोपी मेरे पंति के वकील ने 22.09.2017 को पà¥à¤°à¤¾à¤ªà¥à¤¤ कर ली थी। सकसाना Document 2 (ii) यह की मà¥à¤à¥‡ मेरे पति के आयकर से समà¥à¤¬à¤¨à¥à¤§à¤¿à¤¤ किसी à¤à¥€ कारà¥à¤¯à¤µà¤¾à¤¹à¥€ का मालूम नही था। नही में आयकर व उसके नोटीसों के बारे में समà¤à¤¤à¥€ हूठकà¥à¤¯....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ठनही पाई तथा मैं कोटा उनके पास नही जा पाई अतः उस आदेश की गंà¤à¥€à¤°à¤¤à¤¾ को समठनही सकी। (13) यह जब में फरवरी 2020 के पà¥à¤°à¤¥à¤® सपà¥à¤¤à¤¾à¤¹ कोटा वकील साहब से मिली व आदेश की पà¥à¤°à¤¤à¤¿ ली तथा उनà¥à¤¹à¥‹à¤‚ने मà¥à¤à¥‡ इसके बारे में बताया व समà¤à¤¾à¤¯à¤¾à¥¤ (14) यह की हमारे रिशà¥à¤¤à¥‡à¤¦à¤¾à¤°à¥‹à¤‚ ....