AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (7) TMI 812
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....ll 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 facts of the case in charging interest u/s. 234 A, B, C. The appellant totally denies it ....
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....ral 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 incorrect, if caused a delay, has been held to be reasonable and sufficient cause in these cases also. Kindly refer N. Balakrishnan v. M. Krishna Murthy (199....
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....as 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 and relatives and collected the order. Thereafter she consulted with the other counsel who advised to file the appeal with the above reasonable grounds of appeal. The ld. A/R also filed the reco....
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....he 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 or earned income from Arat/commission on fruits outside the city. The assessee has filed his return of income declaring the total income of Rs. 1,96,850/- on 30.03.2012 for the year under consideration.....
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....own 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% gross profit on the alleged or highly estimated sales of Rs. 1,11,19,528/- and determined the gross profit at Rs. 17,79,124/- as against Gross profit of Rs. 4,33,682/- declared by the assessee and made the t....
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....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 perusal of the above chart it is clear that the ld. AO has increased the own sales turnover by 330% in comparison to last year and N.P. by 776% which is not possible as in past maximum increase in turnover was 44.52% and in N.P. 3.72%. And it is general practice that in Arat sale there is only some commission is received on the bulk sale. In commission s....
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....1 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% Profit on such wholesale business on Arat. When in retail business the assessee had declared 7-8% N.P. rate. The ld. AO has never asked any query or question to M/s. KOC Delhi whether goods or fruit sent by assessee are on Arat basis or sale basis. It is not the case of the ld. AO that the assessee firstly purchased the fruits from farmers, kept in his business place as stock, paid amount to them thereaf....
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.... 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 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 A.Ys. 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 b....
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....xpenditure 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 on erroneous presumption. 5.2 In Pankaj Diamond v/s. ACIT 32 DTR 462 (Ahd)(Trib.) It has been held that even after rejecting book results, addition can be made only on the basis of some material and not on the whims and caprice of the assessing authority. Trading results shown by the assessee compares favorably with the past accepted position in the case of assessee. Thus non maintenance of quality wise details of Diamonds did not empower the AO to make addition to the ....
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....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 have heard the ld. Counsels of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. From perusal of the record, we noticed that the deceased assessee was a fruit merchant, engaged in the business of retail trading of fruit in local market and also engaged or earned income from Arat/commission on fruits outside the city....
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....d 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 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/- (Rs. 83,840/- from Arat + Rs. 26,26,670/- from own sales), which is not acceptable. The Assessing Officer has stated that the assessee has also made sale in Jaipur, Agra, Noida because there were cash deposits in bank form these cities. From perusal of the assessment order it is revealed that the Assessing Officer has taken sales of Rs. 27,10,510/- declared by the assessee, sale of Rs. 72,09,018/- made to M/....
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....r 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/- 14.04 8529158 330.00 We have gone through trading and P& L accounts of earlier years and also the above chart and noted that the Assessing Officer has increased the own sales turnover by 330% in comparison to last year and N.P. by 776% which seems to be abnormal if we compare with the past where maximum increase in turnover was 44.52% and in N.P. 3.72%. The lower authorities have also ignored these financial datas. The Assessing officer has also not denied with the past datas. When it was the admitted facts available on record that in the past the assessee has made sale in the local years not out of state or Cities and in the last year....
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....o 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 business place as stock, paid amount to them thereafter sold to M/s. KOC, Delhi. Rather the farmers have send the fruits directly to M/s. KOC Delhi through assessee. It is not the case of the Assessing Officer that the documents or diaries were made after the year or during the course of assessment proceedings. Hence only addition on account of commission is to be added. There may be some defects in the books of accounts but no highly G.P. rate can be applied on the Arat. Thus we hold that the sale made by assessee out of cities are commission. We draw strength from the decision in the case of CIT vs. Paramjit Singh (2014) 90 CCH 0499 PHHC : (201....
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....rein 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/subscriber is a company, then the details in the form of registered address or PAN identity, etc. can be furnished. Genuineness of the transaction is to be demonstrated by showing that the assessee had, in fact, received money from the said shareholder and it came from the coffers from that very shareholder. Other documents showing the genuineness of transaction could be the copies of the shareholders register, share application forms, share transfer register, etc. As far as creditworthiness or financial strength of the creditor/subscriber is concerned, that can be proved by producing the bank statements of the creditors/subscribers showing that it had sufficient b....
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....n 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 preceding year, no further addition can be made in the declared result even the books of account are rejected" In the case of ACIT AND ANR. vs. CREAMY FOODS LTD. AND ANR. (2019) 55 CCH 0377 Del Trib, wherein the Coordinate Bench of ITAT Delhi as held as under: "Income--Unaccounted sales--A search was conducted at assessee's premises wherein, daily milk procurement sheets pertaining to period 01.07.2011 to 10.07.2011 and from 21.07.2011 to 31.07.2011 were seized--AO held that assessee was making unaccounted sales and same could be logically extended to entire block period--AO accepted that one of directors, Shri S. had admitted that he was dealing in sale and purchase of milk in his i....
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....ts 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. From the above facts and circumstances, we are of the view that the assessee has shown commission of Rs. 83,840/- on the Arat sale of Rs. 67,92,481/- which comes to 1.23%, which appears in odd figure and there may be round figure. Hence looking to the defects pointed by the AO, we apply 1.5% on the Arat sale. Further the AO has taken sales (which is Arat Sales) of out station at Rs. 84,92,858/-, which includes (Rs. 72,29,018/- to M/s. KOC, Rs. 12,00,000/- sale in other cities, Rs. 83,840/- Arat). However for Rs. 12,00,000/- sales in other cities the Assessing Officer has brought on record only the evidence of Rs. 1,03,000/- as deposits of Rs. 50,000/-, 50,000/-, and Rs. 3,000/- from these c....