TaxTMI 
TaxTMI 
2025 (1) TMI 969
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....a) The Id. CIT(Appeals) erred in facts and law in confirming the rejection of books of accounts u/s. 145(3) of the Act and estimating the Net Profit @ 5% of/Rs. 64,72,750/- (Rs. 1,24,50,750/- (Turnover as per books of accounts) - Rs. 59, 18,000/- (addition u/s. 69A of the Act)) without pointing out any major discrepancies in books of accounts and has been merely driven by his own suspicion and conjectures. (b) The Id. CIT(Appeals) erred in facts and law in rejecting the books of accounts u/s. 145(3) of the Act on the ground that stock register was not mentioned in Clause 11 of Form 3CD, without appreciating the fact that quantitative details were duly mentioned in Clause 35 of Form 3CD. (c) The Id. CIT(Appeals) erred in facts and law in not appreciating that there is no revision of sales/ purchases and any discrepancy found in the DVAT returns. (d) Without prejudice to Ground No. 1(a) to 1(c), the Id. CIT(Appeals) erred in facts and law in estimating Net Profit @ 5%, which is exorbitantly high considering the fact that the appellant firm is engaged in the business of trading in ball bearings, etc." 3. The brief facts of the case are that the assessee's....
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....details or produced evidences in support of its claim of sales. Accordingly, the Assessing Officer framed assessment u/s 144(1) of the Act. The AO estimated the profit applying GP at 10% of total turnover of Rs. 64,72,750/- i.e. Rs. 1,24,50,750/--Rs. 59,78,000/- and thereby, estimated the profit at Rs. 6,47,275/-. Apart from this, the AO made addition of unexplained money being cash deposit made during demonetization period of Rs. 59.78,000/- u/s 69A of the Act. Aggrieved, assessee preferred appeal before CIT(A). 4. Before CIT(A), assessee contended that the complete details of sales including cash sales were filed before AO and also the details of purchases, sales and comparative chart was filed before the AO. It was contended that the AO has verified the sales made in cash and also compared the turnover of cash sales for the year under consideration as well as previous year. The assessee before the CIT(A) contended that in Financial Year 2015-16 relevant to Asst. Year 2016-17, the turnover was very less because of the initial year of assessee's business and total turnover was Rs. 35.10 lacs. From this year assessee turn over increases and he filed the chart of comparative turn....
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....l as filed complete details including the books of accounts and details of sales and purchases. Also filed comparative turnover quarter wise during the year which reads as under:- Sr. No Quarter Cash Sales Total Sales 1 April 16 to June 16 7,850 88,650 2 July 16 Sep 16 53,437 20,61,254 3 Oct 16 to Dec 16 57,25,332 75,64,020 4 Jan 17 to March 17 26,93,640 27,36,826 Before us, Learned Counsel for the assessee argued that there is variation in sales and purchases but there is in no sudden increase in turnover year after year and he filed the details of turnover and net profit and NP ratio as under:- A.Y. TURNOVER NET PROFIT BEFORE PARTNER'S PREMUNERATION & INTEREST NP Ratio (%) 2016-17 2017-18 2018-19 2019-20 3,510,513 12,450,750 10,235,189 12,523,554 286.671 325,782 241,926 338.772 8.17% 2.62% 2.36% 2.71% From the above, Ld. Counsel for the assessee stated that in Financial Year 2015-16 relevant to Asst. Year 2016-17 turnover was Rs. 35,00,000/- whereas in future years i.e., the year under consideration i.e.,2017-18, the turnover was Rs. 1.24 Cr. and in Asst. ....
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....eference, the same is being reproduced as under:- Detail of Quarterly Purchase for FY 2016-17 with reference to DVAT returns Row no. in DVAT return Page no. DVAT return Cash Purchase DVAT Purchase DVAT Purchase DVAT Local QI 13,790 690 13,790 690 R6.2(2) 2 Local Q2. 22,68,868 1,13,444 22,68,868 1,13,444 R6.2(2) 4 Local Q3 85,69,306 4.28,456 85,69.306 4,28,456 R6.2(2) 6 Local Q4 28.40,988 1,42,211 28,40,988 1,42,211 R6.2(2) 8 Total 28,40,988 1.42,211 1,08,51,964 ....
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.... the bills and vouchers and without verifying the bills and vouchers, sales cannot be denied so lightly and so cannot be disbelieved. At the best this can be a good reason for rejection of books of accounts but sales cannot be disbelieved. Hence, we are of the view that the assessee's sales as per bills and vouchers is at Rs. 1.24 Cr. and even cash sales during October, 2016 to December, 2016 quarter during demonetization period has to be accepted. Accordingly, we assessed the sale at Rs. 1.24 Cr. and estimate the profit rate at 5%. We accept the rejection of books of accounts but rejection of the turnover is without any basis. Despite the fact that the assessee before AO and CIT(A) has filed complete details of sales as well as purchases and there is no reason not to accept this sale of Rs. 1.24 Cr., which has been disclosed by assessee. In term of the above ground of assessee's appeal is partly allowed. 10. Coming to second issue of addition made by AO and confirmed by CIT(A) of cash deposit made during the demonetization period of Rs. 59,78,000/- u/s 69A of the Act as unexplained money. For this assessee has raised the following ground No.2:- "2(a) The Ld. CIT(Appeal....