2022 (3) TMI 1359

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....rn on 30th September, 2009. Subsequently, the income was revised by the assessee. The assessee-company followed direct marketing business model and derived income from retail trading of various consumer goods. The assessee had declared gross turnover to the tune of Rs. 91,90,10,669/- and the net profit was declared to the tune of Rs. 1,06,69,510/-. Thus, the net profit rate was 1.16%. The Assessing Officer after going through the record, had observed that the assessee had tried to furnish month wise closing stock and had failed to produce/justify/explain/ substantiate the same during the period of assessment. The Assessing Officer had found that the claim of the assessee was incorrect and had concluded that the month wise trading account fi....

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....as observed as under:- "To summarize, the month wise trading account now filed by the assessee in response to the showcause is self contradictory and needs no explanation in the light of the facts discussed at length above. Therefore, this trading account is treated as an afterthought in response to the show cause and even that could not serve the purpose of the assessee for which it was cast. Hence, the gross profits came out to Rs. 36,39,54,887.88 against the sales of Rs. 71,24,69,335.88 which results in a G.P. rate of 51.08%. Therefore the addition proposed to be made vide the show cause notice of the undersigned of Rs. 14.50 Crores at a G.P. rate of 51.16% is now made at a rate of 51.08 % i.e. 14.48 Crores made to the returned ....

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....ister were not mentioned in the audit report. The books of account were, however, test checked but Stock Register was not produced. On the basis of figures available in Profit & Loss Account and details of month-wise purchases and sales provided by the assessee, the Assessing Officer computed the gross profit of 51.16%. The Assessing Officer computed month-wise and quarter-wise trading account for enhancing the GP. The Assessing Officer, however, did not considered that assessee made genuine purchases and sales which were entered into the books of account of the assessee. The Assessing Officer also did not consider the nature of business of assessee, was based on multi level marketing system where the goods were received through-out the yea....

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....sessing Officer found negative stock of analysis of month-wise trading results, assessee itself having offered Rs. 50,000/- for addition, further addition is not sustainable as gross profit on unaccounted sales, if any, would be far less". This order of the Tribunal has been confirmed by Hon'ble Punjab & Haryana High Court vide judgement dated 31.10.2006 (supra). Copies of the orders are placed on record. The Id. CIT (Appeals), therefore, on proper analysis of facts and material on record correctly came to the conclusion that at the most, the Assessing Officer should have rejected the book results under section 145(3) of the Act. The ld. CIT(Appeals) also correctly did not accept the conclusion arrived at by the Assessing Officer by pre....

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....le Punjab & Haryana High Court in the case of Rajinder Prasad Jain 274 ITR 545 held that "Tribunal applying net profit consistent with past history of the assessee justified". 9. Since in the subsequent years, the Revenue Department accepted NP rate in the case of the assessee at 2.53% and 2.99%, therefore, ld. CIT (Appeals) was justified in applying average of the net profit of assessed income of subsequent two years for the purpose of determining the profit of the assessee. The Assessing Officer was, therefore, not justified in adopting GP rate of 51.08% for making addition against the assessee. The Id. CIT (Appeals), on proper appreciation of facts and material on record in the light of the decision of ITAT Chandigarh Bench in t....