TaxTMI 
TaxTMI 
2024 (7) TMI 894
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....he issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are identical except the difference in the amount disputed. The ld. DR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of ITA No. 343/JP/2024 is taken as a lead case. 4. Before moving towards the facts of the case we would like to mention that the assessee has assailed the appeal in ITA No. 343/JP/2024 on the following grounds; "1. Under the facts and circumstances of the case the ld. CIT(A) is not justified in Estimating the Net Profit of Rs. 17095760/- by applying NP rate of 5% on Estimated Gross Receipts of Rs. 341915196/- against net Profit of Rs. 3710130/- as per Audited Profit & Loss Account. 2. Under the facts and circumstances of the case the ld. CIT(A) is not justified in sustaining the Separate Addition of Rs. 317048/- towards Income from Interest and commission. 3. Under the facts and circumstances of the ld. CIT(A) is not justified in sustaining the Separate Addition of Rs. 221800/- Income from Rent." 5. Succinctly, the fact as....
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....dingly, the net profit of the assessee's business comes to Rs. 2,88,00,000/- @ 8 % on turnover of Rs. 36,00,00,000/-. 5.3 Besides as per information available on record, the assessee had also earned Income from interest & commission at Rs. 3,17,048/- and Income from rent at Rs. 2,21,800/-, details of which were also not provided by the assessee, the same was also added in the profit so estimated. Accordingly total income of the assessee was determined at Rs. 2,93,38,850/-. 6. The assessee challenged the finding of the assessing officer before the ld. CIT(A). The appeal of the assessee was allowed in part by the ld. CIT(A). The relevant finding of the ld. CIT(A) is reproduced here in below: "6. DECISION: The order u/s 144 rws 147, statement of facts and the submission furnished by the appellant have been considered. 6.1. The appellant's case was decided by the Commissioner of Income Tax (Appeals)-3, Jaipur vide order dated 28/03/2019. The appeal was dismissed as the appellant had not paid the advance tax payable by the appellant for AY 2014-15. The Hon'ble ITAT observed that the appellant had made tax payment while the appellate proceedings were in progress and suc....
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....ng rent, interest and commission/brokerage of Rs 5,38,848/- the business receipts deposited in the bank were computed at Rs 34,19,15,196/- However, the gross receipts from business were estimated at Rs 36,00,00,000/- to include any cash receipts which the appellant might not have deposited in the bank. The business income of the appellant was estimated @ 8% at 2,88,00,000/- and the other income of Rs 5,38,848/- was added to the same The appellant has raised two substantive grounds of appeal wherein the appellant has averred that there was no justification in estimating the profits @ 8% of the estimated gross receipts and that the net income from interest income & commission was wrongly assessed at Rs 5,38,848/-. The appellant has submitted written submission dated 04/12/2023 on 04/12/2023, 6.3. In the submission dated 04/12/2023, the appellant claims that it was maintaining regular books of accounts which were duly audited. The audited Balance Sheet, Profit & Loss Account and schedules thereto were e-filed as provided under the Companies Act. The appellant has claimed that due to down fall in business and consequent financial hardships, the appellant was unable to pay self-assess....
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....r substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the Assessing Officer) under clause (a) of sub- section (1) of section 251 or the imposition of penalty under section 271. The following issues arise. - (i) The appellant claims to have been prevented by sufficient cause from producing the evidence which is relevant to any ground of appeal. The sufficient cause is stated to health reasons of the Director of the assessee company and his wife. In this regard, it is noted that the appellant has not produced any evidence whatsoever to prove that the Director who was normally instrumental in the finalisation of books of accounts and financial statements was suffering from an illness which prevented him from filing of return of income from the due date for AY 2013-14 i.e. 31/10/2014 till the completion of the re-assessment proceedings on 28/12/2017. Similarly, no evidence has been produced to substantiate the illness of the Director's spouse. It was also not demonstrated that the Audit Report had been uploaded on the Income Tax Portal. The financial constraints leading to non- payment of self-assessment tax w....
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....n exception to the estimation of the receipts and net profit. On going through the assessment order, it is seen that it was found that the total deposits from business in the Bank Accounts of the appellant were Rs 34,19,15,196/-i.e. aggregate of deposits in bank account as reduced by the commission and interest received (342454044 - 538848) It has been further observed that, "Considering the circumstances & fact there may have been cash sale which may have not been deposited in the bank a/c. Thus total bank receipts & other receipts are estimated at Rs 36,00,00,000/- in-spite of Rs 34,19,15,196/- There is no discussion regarding the circumstances and the facts of the case which lead to the conclusion that there was some cash sale which was not deposited in the bank account. Thus, the estimation on the higher side is on the basis of surmises and conjectures and there is no material on record to support such estimation. It is pertinent to note that case was re-opened as there was cash deposit of Rs 3,87,07,178/- in the bank account. Therefore, there exists a reasonable possibility that the cash sale to have been accounted for. In the case of State of Kerala vs C. Velukutty [(1966) 60....
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....decided accordingly. 6.5. In the second ground of appeal raised, the appellant has contested the addition of the commission and interest over and above the estimated profits of the business. It is seen that while estimating the turnover the commission and interest were reduced from the gross deposits in the bank accounts on the premise that the interest & commission received were part of deposits in the bank account. The income of the appellant from the business was computed @ 8% on the turnover estimated at a figure of Rs 25.00 crores. However, the revised computation of the business turnover is the figure of total deposits in bank account as reduced by the receipts from interest & commission. The profit is computed on the balance amount. The appellant has not explained the nature of commission and interest received and the expenses incurred thereon. Therefore, no case is made out for allowing any expenditure against the interest & commission. Hence, the ground raised is rejected. 7. On the basis of the aforesaid discussion the grounds of appeal are decided as under: - (a) The income from business is held to be Rs 1,70,95,760/- as against the amount of 2,88,00,000/- computed....
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....850/-. 7. The assessee preferred appeal before ld. CIT(A)-III Jaipur against the relevant assessment order dated 28.12.2017. 8. The ld. CIT(A)-III Jaipur observed that the assessee has not deposited the Self Assessment/Advance Tax as provided u/s 249(4)(b) of IT Act, therefore vide order dated 28.03.2019 dismissed the appeal of the assessee as un admitted (PB No.5-7) 9. The assessee after depositing the requisite Amount of Tax Equivalent to Advance Tax as provided u/s 249(4)(b) of IT Act 1961, preferred appeal before this Hon. Bench.(PB No.8-12) 10. This Hon. Bench vide order dated 30.07.2021 set aside the matter to the file of the ld. CIT(A) with the directions to verify and consider the payment of taxes towards due discharge of the assessee's liability as per provisions of section 249(4)(b) of the Act and decide the matter on merits. (PB No.13-24) 11. The ld. CIT(A) pursuant to directions of this Hon. Bench issued notice of hearing and the assessee in response of the same submitted following details/documents: (1) Application for admission of Additional Evidences (PB No.25-26) (2) Tax Deposit Challans towards Advance Tax Liability as provided 249(4)(b) of IT Act, 19....
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....r of Companies is generated after filing of the relevant documents, therefore the ld CIT(A) is not justified in holding that the same cannot be treated as acknowledgement for filing of the Financial Statements and existence of the same. 5. The additional Evidences submitted by the assessee goes to the root of determination of correct Income of the assessee, therefore ld. CIT(A) is not justified in rejecting the application for admission of the same on technical/perverse considerations. Ground No.1,2, and 3: 6. The assessee has disclosed Net Profit of Rs. 3710130/- as per Audited Books of Accounts and corresponding Profit & Loss Account incorporating the Business Receipts of Rs. 292291705/- and other Receipts of Rs. 17974934/- as shown in relevant Schedules of Audited Statements. 7. The Total Income of the assessee for the relevant A.Y.2013-14 comes at Rs. 4106749/- including Income from Business & Profession and other Income as per Computation of Total Income. 8. The ld. CIT(A) has assessed Total Income of Rs. 17634608/- against that of Rs. 4106749/- declared by the assessee as per as per Audited Books of Accounts, Financial Statements and corresponding Computation of Tot....
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.... 42-50 9. Computation of Total Income on the Basis of Audited Balance Sheet and Profit & Loss Account. 51-51 9. The ld. AR of the assessee vehemently argued that the assessee was running in financial difficulty, without payment of the self-assessment tax the assessee was unable to file the return. The assessee filed the additional evidence before the ld. CIT(A) under rule 46A(1)(c) and the same was placed in the paper book filed by the assessee [ page 25-26]. As regards the contention that the assessee has not filled any record is incorrect, the assessee has filed the tax audit report on the portal and the printed copy of the same was filed in the paper book page 42-50. Thus, the assessee has already filed all the details related to their income. While dealing with the appeal of the assessee ld. CIT(A) rejected the application for additional evidence filed by the assessee on the pretext that; (i) The appellant claims to have been prevented by sufficient cause from producing the evidence which is relevant to any ground of appeal. The sufficient cause is stated to health reasons of the Director of the assessee company and his wife. In this regard, it is noted that the appellant....
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..... Furthermore, the appellant has also not submitted any evidence to show that the documents sought to be produced are primary evidence which have any bearing on the computation of income done by the assessing officer on the basis of estimation of the gross turnover and the profit margin or which would dislodge the finding that appellant was not maintaining regular books of accounts on the basis of which the Financial Statements were drawn. Hence, the application of the appellant to submit the documents as additional evidence in terms of Rule 46(1)(c) of the Income Tax Act is hereby rejected. Reciting the above finding of the ld. CIT(A) the assessee submitted that the ld. CIT(A) should have admitted the additional evidence and the matter should have been decided based on that audited accounts placed on record. 10. The ld. DR is heard who relied on the findings of the lower authorities and more particularly advanced the similar contentions as stated in the order of the ld. CIT(A). The ld. DR also submitted that the assessee relies and submit that they have filed the tax audit report on portal, but ongoing through that report the details in the column no. 40 being the details of the....
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....e of Chartered Accountant produced, wherein the profit rate is certified based on the records already available in the form of audited accounts for A.Y 2009-10 to 2014-15. The year under dispute relates to A.Y 2013-14, the previous two years net profit declared are more or less similar to the year under consideration. As it is seen that in the A.Y 2012-13, net profit was @ 1.10% whereas in the year under consideration, turn over has increased and net profit shown by the assessee @ 1.19%. Since in the case of the assessee for past years i.e. A.Y 2011-12 & 2012- 13, the profit declared by the assessee was accepted considering the similar set of facts. As it is evident from the first round of litigation that the directors were ill and were passing through severe financial crunch and were not in a position to pay the self assessment tax and thereby the non-compliance and the assessment completed based on estimation of profit. The assessee subsequently when the proceedings were pending before the ld. CIT(A) and that of ITAT paid the taxes and matter was set aside and in that profit in this year profit was estimated @ 5 %. But looking to the past history of profit and assessee's nature o....