TaxTMI 
TaxTMI 
2025 (6) TMI 1747
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....rief facts of the case of the assessee are that the assessee engaged in the business of trading in gray fabrics and investment in real estate projects, filed its return of income for AY 2017-18 declaring total income of Rs. 1,78,150/-. The case was selected for scrutiny, notices u/s 143(2) and 142(1) were issued, in response to the notices the assessee company filed documents. The AO after going over the documents filed by the assessee held that there is a great variance in the gross profit percentage even the product of company remains the same and AO by taking the average gross profit percentage as disclosed for last three years took it around 0.46% an amount of Rs. 1,01,80,075/- added back to the total income of the assessee. The AO further held that the loan amount of Rs. 39,67,22,381/- as received by the assessee company in the previous year 2016-17 as unsecured loan and added the same in the total income of the assessee. 4. Aggrieved by the said order the assessee preferred an appeal before the Ld. CIT(A) wherein also the appeal of the assessee has been dismissed. Being aggrieved and dissatisfied the assessee preferred an appeal before us. 5. The Ld. Counsel of the asse....
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....he merit of such claim. The fall in GP rate might be a symptom of malice with which the assessee's account would be suffering. However, it is the duty of AO to pin point the malice and bring it out in the assessment order . In the case of low gross profit rate, there could be inflated purchases or unrecorded sales besides manipulation in the valuation of closing stock. Therefore, the Courts expects that the AO shall bring on record specific defects in the books of account of the assessee before invoking the provision of section 145(3). The rejection books of account simply on lower gross profit rate in comparison to earlier years or with other the assessee placed in similar stance would not suffice and will not stand the test of the appeal. The power vested with the AO u/s 145(3) has to be exercised judiciously not arbitrarily. The Hon'ble Karnataka High court in the case of Karnataka State Forest Industries Corporation Ltd. vs. CIT reported in [1993] 201 ITR 674 (Kar) has held that the AO's power under the section are not arbitrarily and he must exercise his discretionary power. The clear finding is necessary before invoking the provision of section 145(3) of the Act. The Hon'ble ....
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....oubted the sales and purchases made from various parties. The submission of the assessee before the AO regarding the low gross profit in the relevant period are that most of the small and medium business specifically textile trade is almost in the sinking condition due to curtailment in demand increasing overhead expenses, staff reduction in the price realization. It is further important to mention here that no one can dictate a business man how he runs business. Going over the order passed by the AO as well as facts of the case of the assessee, we are in this view that rejection of books of account u/s 145(3) of the Act is illegal. Hence the addition of Rs. 1,01,80,075/- is hereby directed to be deleted. 10. The next issue with regard to addition of Rs. 39,67,22,381/- as unexplained cash credit. It is important to mention here that the assessee has claimed credits as interest free unsecured loan in the FY 2016-17 from the Aneri Fincap Ltd. and Indian infotech & Software Ltd. It is further pertinent to mention here that lender company is an NBFC having main business of funding and investments and the assessee has furnished following documents during the course of assessment p....
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....n 253(5) of the Income Tax Act, 1961 praying condonation of delay in filing appeal for the Assessment Year 2017-18 In the matter of : This humble petition of your Petitioner Appellant Company most humbly and respectfully SHEWETHS 1. That the Petitioner Company is regularly assessed to tax by the Income Tax Department vide PAN: AAKCA8447L. 2. That, an Appellate Order dated 19.06.2024 was passed by Ld. National Faceless Appeal Centre, Delhi in the case of Petitioner Company for the Assessment Year 2017-18 dismissing the appeal of the Petitioner Company. The Company started looking for a tax consultant at Kolkata for taking necessary steps. 3. The director viz. Mr. Arvind Upadhayay, who is looking into the accounts and tax affairs of the Assessee Company was able to contact CA Deepak Agarwal for taking necessary action and handed the necessary documents on or around 15th August, 2024. The said CA Deepak Agarwal sought time of about 10 days to go through the papers and prepare the appeal. The said CA Deepak Agarwal prepared the said papers and handed them to staff of Assessee Company on 26th August, 2024. The said CA Deepak Agarwal also arranged for making payment of the....