2025 (7) TMI 1756

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....BA/NFAC/S/250/2024-25/1070506953(1) dated 21.11.2024 for the A.Y.2022-23 arising out of the order passed under section 144 of Income Tax Act, 1961 (in short 'Act') dated 20.03.2024. ITA NO. 517/VIZ/2024 (A.Y. 2022-23) - ASSESSEE APPEAL 2. Facts in brief are, assessee is an individual filed his return of income for the A.Y. 2022-23 on 28.10.2022 admitting a total income of Rs. 14,72,050/-. The return was summarily processed under section 143(1)(a) of the Act. Subsequently, the case was selected for scrutiny through CASS. Notice under section 143(2) of the Act was issued on 01.06.2023 and notice under section 142(1) of the Act was issued on various dates. In response to the notices, assessee submitted part information. Ld. Assessing Officer....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....recting the assessing officer to estimate the net profit @2% of the turnover which comes to Rs. 99,28,041. 3. Without prejudice to the above, the percentage of profit estimated by the learned Commissioner of Income Tax (Appeals) @2% is on higher side. 4. Any other ground that may be urged at the time of appeal hearing." 5. Ground Nos. 1 & 4 are general in nature and needs no adjudication. 6. Ld. Authorised Representative [hereinafter "Ld.AR"] submitted that Ground No. 2 is not pressed and hence dismissed as not pressed. 7. With respect to Ground No. 3, Ld.AR submitted that assessee normally earns profit of 0.3% to 0.5% on the sales made by the assessee. He further submitted that assessee is in the business of trading in fish which is....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....channels which are very high in value shall not be a ground for treating the purchases as genuine. He further submitted that the onus is on the assessee to prove the genuineness of the purchases with substantive documentary evidences and since assessee has not established the genuineness of the purchases claimed, Ld. AO has rightly disallowed 25% as bogus purchases. However, he further submitted that Ld.CIT(A) has erred in estimating the net profit @ 2% merely on the basis of assumption and surmises. He therefore pleaded that the order of the Ld. AO be restored. On the issue Ld.DR relied on the decision of the Hon'ble Bombay High Court in the case of Pr.CIT v. Shree Ganesh Developers [2025] 172 taxmann.com 542 (Bombay). 9. We have heard bo....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....jarat in the case of Yunus Haji Fazawala v. CIT (supra) has held that action of the Assessing Officer in disallowing 25% of purchases by doubting its genuineness without rejecting the books of account cannot be sustained. 12. The underlying rationale behind such an action is to meet the standards of correct computation of accounts for the purpose of a more transparent and precise assessment of income. Therefore, any pick and choose method of rejecting certain entries from the books of account while accepting other, without an appropriate justification, is arbitrary and may lead to an incomplete, unreasonable and erroneous computation of income of an assessee. 13. In the instant case both the disallowance by the Ld.AO and estimation of the....