AI Drafter 
TaxTMI 
TaxTMI 
2025 (6) TMI 649
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....nder the facts and circumstances, rejection of books of accounts is unwarranted and illegal and also for the reason that there existed a reasonable cause for the assessee for not producing the books of accounts and supporting during Asstt., moreso, they were not in access and control of the assessee at that time." 2. The sole issue in this case is whether the estimation of profit is at all justified. 3. The AO had estimated the profit to 10%, the Ld. CIT(A) had considered the matter in details and held as follows: 4.3.2 The remand report was sent through ITBA portal, DIN No. TBA/APL/S/91/2019-20/1020689547(1) dated 19.11.2019 to the assessee for a rejoinder. The rejoinder is reproduced as below:- 1. Reply to remand report Dtd.05.11.19 1. The accounts are audited. The facts and circumstances are similar as in the last year. The comparative G.P. and N.P. has also been given vide earlier submission in Para-1. The declared G.P. and N.P. in this year are better as per the said chart. In A. Y. 13-14, the return was filed at a loss of (-)34.90 Cr. The addition was made for Rs. 39.12 Cr. However CIT(A) has already deleted the said addition. The cop....
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....r of A. Y. 13-14, as per details given in Para-1 of earlier submissions Dtd.08.01.18." 4.3.3 I have gone through the impugned order, facts of the case, submissions filed by the appellant, remand report and rejoinder filed by the assessee. It is seen that the appellant was not been able to produce documents/books of accounts during assessment proceedings. During appeal proceedings, the appellant filed additional evidence under Rule 46A which were remanded to the Assessing Officer. It is seen from the remand report that assessee has not submitted any details to enable the Assessing Officer to examine the veracity of trading result. This led to the estimation of profit by the Assessing Officer. Looking at the trading results of the past years, it can be seen that the estimation of profit made by the Assessing Officer is on the higher side. Therefore, I estimate 6% of the trade turnover (6% of Rs. 2,73,43,57,931/-) i.e. Rs. 16,40,61.475/- as the profit during the year. Therefore, the ground of appeal is partly allowed." 4. The ld. AR did not made any submission whatsoever to attend that the rejection of books of account was improper. When the assessee repeatedly failed to s....
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....accept the system of accounting regularly employed by the assessee, the correctness of which had not been questioned in the past. The officer is not bound by the method followed by the assessee in earlier years. 7.1 It was further held in the case of Awadesh Pratap SinghAbdul Rehman and Bros vs. CIT(1994) 76 Taxman 106 (AIl) that where absence of a stock register, cash memos etc. if coupled with other factors like absence of vouchers in support of expenses and purchases and existence of low profit. may give rise to a legitimate inference that all is not well with the books and the same cannot be relied upon to assess the income. profit or gain of an assessee. the authoritieies would be justified in rejecting the account books u/s. 145(2) and in making the assessment in the manner contemplated in that provision. 7.2 In the case of S.N.N Mamasivayam Chettiar Vs. CIT (1960) 38 ITR 579 (SC) it has been held that keeping of a stock register is of great importance because that is a mean of verifying the assessee's accounts by having a 'quantitative tally' if, after taking into account all the materials including the want of a stock register, it is found that....
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....ons, like slump sale in Rice Mill industry, the rejection of large export to Europe due to pesticide issue, discount of Rs. 1 Cr. given to Soufflet Alinentaire - France on the sales already effected, issue of Khapra Beetle for sales made to USA on account of which heavy discounts had to be offered and ultimately, on account of pesticide issue and khapra beetle issue, more than 6 containers were returned by these importers. For these and many other reasons, fluctuation in prices, huge unsold stocks of earlier years from A.Y.2013-14, the business started incurring losses. Thereafter, w.e.f. A.Y.2014-15, the position went from bad to worse. Huge financial crises made the banks treat loans to appellant as NPA. The turnover in all subsequent years upto A.Y. 2016-17, substantially came down with losses increasing in geometric progression. Ultimately, the factory got auctioned by the banks in September 2016 for recovery of outstanding dues. The business was closed. As on date, there is no business, huge outstanding liabilities and no sources for repaying loans/liabilities. Had the business been running profitably, there was no reason for closing the business and for auction the factory. A....
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....commoditized nature. The industry is characterized by high degree of Govt. Controls both in the domestic as well as International Market. It is also observed during the course of the due diligence exercise that certain purchases of rice were made by the company in the range of Rs. 5,000/- per qt. During the period April and May, 2012 which is higher than the average market rates adopted for the purpose of valuation as on 31.05.2012. There have been varying rates of sales and purchase during the period and it has been explained to us by the Company that after careful analysis of rates and various other factors affecting the Industry, the average rate of Rs. 3528/- per Qtl has been adopted for valuation. In the opinion of M/s Ashwani K. Gupta & Associates, considering the market conditions and based upon the actual average realization price of Rs. 2880/- per Qtl coupled with the fact some sales/purchase are also being affected at price of over Rs. 5000/- per Qtl., the rate adopted at Rs. 3528/- per Qtl as on 31.05.2012 based on Market Price was held to be reasonable. 3.5 The transactions of sale purchase took place in F.Y.2012-13. The notices u/s 33(6) were issued by assessi....