TaxTMI 
TaxTMI 
2024 (11) TMI 1293
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.... without appreciating the facts of the case properly. The addition made by AO and partly confirmed by Id. CIT)A( is illegal and not justified. 3. Ld. CIT(A) erred in sustaining addition of Rs. 23,55,100/- by estimating the net profit of @ 6% of turnover in place of that disclosed in the books, without appreciating the facts of the case properly. The addition made by AO and confirmed by Id. CIT(A) is illegal, baseless and not justified. 4. The appellant reserves the right to amend, modify or add any of the ground/s of appeal. 3. Briefly stated, the assessee is an individual, had filed her return of income electronically for the assessment year 2014-15 on 30.11.2014 declaring total income at Rs. 7,03,170/-. Later on, the case was selected for Scrutiny through "CASS" of AST Module, accordingly, notices u/s 143(2) and 142(1) were issued. In response to the said notices counsel of the assessee attended assessment proceedings from time to time wherein the case was discussed, and written submissions filed by the counsel are placed on record. It is observed that the assessee had income from online share trading business and sub-broker in share trading. Besides this the....
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....ant has been given multiple opportunities to file all the details in support of its audited accounts so as to arrive at the correctness or otherwise of the income offered in the return. The A.O. has, during multiple instances, asked for the complete books of accounts with supporting income and expenditure vouchers. In fact, in his narration starting from Page 2 and running through Pages 3, 4, 5 and 6, the A.O. has clearly brought out the fact that despite multiple opportunities, the entire information as sought for by him has not been provided by the appellant. The AO has stated that assessee had prepared mostly self made vouchers; that the books of account were not supported by all original and genuine bills/vouchers of capital as well as revenue expenditure; that details of salary paid and proof of nature of services rendered had not been submitted; that no proof of labour payment had been furnished along with attendance register or payment register; that site wise expenses had not been submitted; that as a matter fact, the books of accounts had not been written on day to day basis and also not fully and truly supported by entire relevant original total bills/vouchers of all clai....
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....acts by the AO that most of the vouchers of expenses are self-made vouchers and therefore their genuineness is not verifiable. 4.7 I have also gone through the case laws cited by the appellant in support of its claim for accepting the returned income. However, it is seen that the facts of these cases are not similar to the facts of the instant case. In the case of Sunil Kumar Agarwal (supra), The ITAT has stated in para 10 of the order that there is not a word of whisper in the assessment order about any defect or irregularity emerging. However, in this case, the AO has pointed out specific defects in the account of the assessee and given a finding of fact that most of the bills and vouchers were self-made, which is not controverted by the assessee with documentary evidences. 4.8 In view of the entire above discussions, I am of the view that ground of raised by the appellant alleging that the A.O. has erred in rejecting the books of accounts in an arbitrary manner does not hold any ground. It is evident that there was a deficiency in the details being furnished and therefore the A.O. was justified in the stand he took. In such a situation, it is not possible to wo....
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....pts as against 10% as applied by the A.O. appears to be reasonable and correct to plug any loopholes and shall serve the purpose of justice. It is therefore directed that for the year in question, the A.O. should workout net profit before interest and depreciation @ 6% of gross receipts of Rs. 7,33,19,299/-. The appellant therefore gets relief for the balance amount of income assessed. The second and third grounds of appeal are therefore partly allowed. 5. In ground no 4, the appellant reserves the right to amend, modify or add any of the ground/s of appeal. No such option has been exercised by the appellant at the appellate stage and, therefore, this ground is not being adjudicated upon and accordingly dismissed. 6. In a result, the appeal of the appellant is treated is partly Allowed. 6. The order of Ld. CIT(A) was not found to be satisfactory by the assessee, therefore, the assessee preferred the present appeal with the grounds of appeal extracted hereinabove. 7. At the commencement of hearing, before us Ld. AR on behalf of the assessee, to support the contentions raised in the appeal, has submitted a written synopsis which is extracted as under: Smt. ....
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.... iii) Addition of Rs. 1.50 lakh made on a/c of labour expenses, which increased GP to 2.96%, which is less than that disclosed for the year under appeal (3.34%). Revised NP rate would be 1.53%. iv) Turnover of this year increased by about 51 %. v) NP declined due to increase in depreciation, from Rs. 1,76,609/- to Rs. 7,43,404/-, affected NP rate by 0.77%. Revised NP rate would be 1.77%, which is better than both declared (1.22%) & assessed NP rate of 1.59% of last year. 2. All expenses debited to trading a/c, except labour charges, paid through cheque. 3. No basis for adopting NP at 6% i) Absolutely no reason given by CIT(A) for estimating NP at 6%. Rate adopted is totally arbitrary, baseless and devoid of any material on record. ii) No reason given by AO for concluding that a higher NP was earned by assessee. 4. Baseless estimate. liable to be quashed Reliance on: - - Dabros Industrial co. (P) Ltd. vs CIT (1977) 108 ITR 424 (Cal.), relevant finding at para no. 7. - Sangrur Vanaspati Mills Ltd. vs ACIT (2003) 133 Taxman 37 (Chd.) (Mag.), PN 123 to 145 of PB - CIT vs Ranicherra Tea....
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....e addition made under illegal, arbitrary, and unjustified rejection of books and by estimating the profit of the assessee without any reasonable basis are merits to be vacated. 9. Ld. Sr. DR on the other hand vehemently supported the orders of revenue authorities. 10. We have considered the rival submissions, perused the material available on record and case laws relied upon by the Ld. AR. On a perusal of the assessment order, it is observed that while rejecting the books of accounts Ld. AO had pointed out defects in the books of accounts of the assessee, which are again thoroughly discussed by the Ld. CIT(A). The issue regarding rejection of books of accounts has been dealt and deliberated by the Ld. CIT(A) at length and has noted that in light of various defects / deficiencies / irregularities a/w assessee's evasive approach towards explanations sought by the Ld. AO, the allegation that the rejection of books was done in arbitrary manner does not hold any ground. Such observations of Ld. CIT(A) are worth accepting, for the reason that in absence of requisite details or non-maintenance of certain prescribed records necessary to find out the true and fair picture of the books....