TaxTMI 
TaxTMI 
2021 (10) TMI 407
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....itted that "No comparative GP rate of such trading in Tobacco is available in any other case" therefore sustaining additions on such admitted observations is against the facts and circumstances of the case and is bad in law. 3. That the Ld. CIT (A) appeal while upholding the addition of Rs. 1,44,13,587.00 in the hands of the Appellant/Assessee, the Ld. CIT (A) completely ignored from its consideration the comparative chart of margins in the same trade placed on record and further did not take into account the settled principles of law that whenever an estimate is to be made it should be arrived at after judicious application of mind which should be legitimate, just and cogent in terms of material available on record and the facts and circumstances of the case. 2. Brief facts of the case are that the assessee is an individual and is engaged in trading in Tobacco under the name & style M/s Himalayan Enterprises. The assessee during the year declared net taxable income of Rs. 6,27,480/-. The case was selected for scrutiny for the reasons of low net profit/loss shown from large gross receipts. During the assessment proceedings, the Assessing Officer observed that the assess....
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....Trading Co. 18.11.2015 Return back with adverse postal comments "No such person". 4 Aggarwal Enterprises 18.11.2015 Return back with adverse postal comments "Left without address". 5 Aryan Sales Corporation 18.11.2015 Return back with adverse postal comments "No such person". 6 B.P.N. Trading Co. 18.11.2015 Return back with adverse postal comments Incomplete Address.. 7 Eastern Trading Co. 18.11.2015 Reminder sent. Received back with adverse postal comments "No such firm". 8 Kumar Sales 18.11.2015 Return back with adverse postal comments "Left without address". 9 Maa Durga Enterprises 18.11.2015 Return back with adverse postal comments "Incomplete address". 10 Naveen International 18.11.2015 Return back with adverse postal comments "Incomplete Address". 11 Paras Sales Corporation 18.11.2015 Return back with adverse postal comments "Incomplete Address". 12 Satyam Enterprises 18.11.2015 Reminder sent on 24.02.2016. Received back with adverse postal comments "No such person". 13 Shiva International 18.11.2015 Reminder sent. Received back with adverse postal com....
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....owever, the Ld. CIT(A) did not get convinced with the submissions of the assessee and dismissed the appeal of the assessee, observing as under:- 6.3.1 The Appellant has taken four grounds of appeal related to the addition of Rs. 1,54,02,266/- against computation of gross profits @ 2% of the sales by the Assessing Officer. The Assessee is engaged in the business of trading of tobacco under the name & style M/s Himalayan Enterprises situated in Burali, Chandigarh,. The Assessing Officer observed that the gross profit declared by the. Assessee was @ 0.13% of total purchases. In the assessment order, the Assessing Officer has noted that the notices issued by him to the sundry creditors / sundry debtors remained unanswered. The parties did not confirm the accounts. The notices in respect of sundry debtors were received back with adverse postal comments. Only two parties sent the replies which were incomplete / defective. The Assessing Officer asked the Assessee to produce the parties to prove the sales / purchases. Nobody appeared from the parties. One sundry debtor M/s Vandana International Exports, Jaipur denied-to have done any business with the Assessee. Two sundry creditor....
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....t the figures supplied by the Ld. ARs have not been supported by the relevant facts and documents. The Ld. ARs have given the example of M/s Kothari Products Limited - manufacturer of gutkha, tobacco and pan-parag to show that their margin is 2.39%. Similarly, the margin in the case of M/s Tirupati Fragrances Private Limited relating to F.Y. 2012-13 was 3.6.5%. It is argued that these two- companies spend a lot on advertisement. If tobacco (packed) price is Rs. 2/ per pouch then cost of* consumption is Rs.l.91 and the profit is 0.046 Paise per pack i.e. 2.3%. It is further submitted that the position of further companies in this trade is same. It is argued that the above margins are for the manufacturer. The Assessing Officer is not entitled to make a pure guess with reference to any evidence or material. There must be something more than mere suspicion to support an assessment order u/s 143(3). Since the Assessee is the first stage person in the marketing sale and has to take care of chunk of profit in supply chain, therefore, the GP earned by him is in consonance and agreement with his trade practices and beyond doubt. 6.3.3 I have gone through the relevant facts of the ....
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....otice of the Assessing Officer denied any transaction, with the Assessee. On these facts and in the circumstances, it is held that the sales figures declared by the Assessee are not reliable at all. In the. absence of rebuttal by the Ld. ARs for the Appellant by giving comparative cases showing the profit in the range shown by the Assessee, I do not have any basis to interfere with the order of the Assessing Officer. Though the comparison of the manufacturers with the Assessee may not be so good for the reason that two activities are different, the profits shown by him show some indication in this line of business. Generally, the profit margin in this line of business is higher than one shown by the manufacturer. Based on the above facts and figures, I uphold the decision of the Assessing Officer and confirm the consequential addition of Rs. 1,44,13,587/-. All the grounds are decided accordingly. (confirmed : Rs. 1,44,13,587/-) 7. In the result, the appeal is dismissed." 6. Being aggrieved by the aforesaid order of the Ld. CIT(A), the assessee is in appeal before us. 7. We have heard the rival contention and gone through the record. It is to be noted that in this cas....