TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 656
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....l. Therefore, we condone the delay in filing the appeal before the Tribunal. 3. Brief facts of the case are, the assessee is an individual having income from business and filed his return of income for AY 2011-12 declaring total income of Rs. 8,04,680/-. During the course of assessment proceedings, the AO rejected books of account of the assessee and estimated the income of the assessee at Rs. 3,30,45,676/- i.e. 2% of the total sales of Rs. 1,65,22,83,790/- made by the assessee. Accordingly, assessment order under section 143(3) of the Income-tax Act, 1961 (for short 'the Act') was passed on 27.03.2015 determining total income of Rs. 3,30,45,680/-. The assessee took the matter before CIT(A) and further before the ITAT. The ITAT set aside the matter to the AO and directed that the assessing officer to grant adequate opportunity of hearing to the assessee and to re-frame the assessment order accordingly. Accordingly, the AO issued various notices u/s. 142(1) of the act on 05.03.2021, 13.03.2021, 19.03.2021, 15.07.2021, 27.07.2021 06.08.20218 31.08.2021, however, the assessee did not submit any reply in response to the notices. As the assessee failed to comply with any of the notic....
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....e and found that no proper books of account produced by the assessee in spite of being allowed many opportunities and time, only bought notes and payment slips were produced but only name appear no address were there. In absence of the proper books of account being produced, the correctness of the account maintained by the assessee could not be established. Being dis-satisfied with the correctness of the assessee's books of account, the books of account maintained by the assessee were rejected as per section 145(3) of the Act and estimated the income of the assessee at Rs. 3,30,45,676/- i.e. 2% of the total sales of Rs. 1,65,22,83,790/- made by the assessee. Accordingly, due to non-submission of further details by the assessee, the AO totally depended on the earlier findings on the basis of earlier data available with jurisdictional assessing officer to complete the proceedings. Therefore, the books of account of the assessee was rejected on the finding of earlier assessment order dated 27.03.2015 u/s 145 (3) of the Act and therefore, estimated the income of the assessee at Rs. 3,30,45,676/- i.e. 2% of the total sales of Rs. 1,65,22,83,790/-. Subsequently, the AO completed the asse....
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....led and materials available on record have not been properly construed and judiciously interpreted, hence the addition/disallowance made are uncalled for. 9. That the observation and the additions made are unjust, illegal, arbitrary, bad in law, highly excessive and based on presumptions conjectures and surmises. 10. That, the AO had erred in initiation of penalty proceedings under Section 271(1)(c) of the Act. 11. That interest u/s 234A, 2348 and 2340 of the Act has been wrongly and illegally charged and has been incorrectly computed." 6. At the time of hearing, ld. AR of the assessee submitted as under :- A. Arbitrary Rejection of Comparable Case Without Justification: The assessee had duly submitted a copy of the assessment order in the case of Mohd. Nadir for A.Y. 2012-13assessed by the same Assessing Officer of the same Ward wherein a gross profit (G.P.) rate of 0.21% was accepted. It is most respectfully submitted that the business activities, functional profile, market conditions, and operational structure of Mohd. Nadir are identical to that of the assessee. Despite specific reliance placed on this comparable case, the authori....
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....osed to banking systems at the relevant time; nor there are any organised sector especially dealing with rural people. Assessee is dealing in sale and purchase of meat and also livestock who procures the meat from local butchers or shepherds or farmers who are mostly illiterate and work in a much unorganised sector. In such circumstances it would very difficult to either make the purchases through account payee cheques or get proper bills. Thus, the reasons given by the AO for rejecting the books of accounts on the facts of the present case cannot be sustained. Ld. CIT(A) without properly analysing the facts brought on record by the assessee has simply reiterated the reasoning given by the AO and noted that the assessee did not produce any books of accounts before the AO in order to claim deduction and expenses and therefore AO was justified in rejecting the books of accounts. He has not given any finding about the details and replies filed by the assessee before the AO and also the detailed explanation given before him in the written submissions. Hence reasoning given by the Ld. CIT (A) to uphold the order of the AO is completely de-hors the material and facts placed on record can....
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.... repayment of such sale proceeds does not fall within the purview of section 269T of the Act. 5. However, such unremitted sale proceeds would assume the character of a deposit if the amount is retained by the 'Kachcha Arhatiya' in pursuance of a direction in this regard by the agriculturist, irrespective of whether the amount is retained in the same account or transferred to different accounts and irrespective of whether the directions are to call it a deposit or just to retain the same for future payment. The repayment in such cases will be covered under section 269T of the Act. This clarification by the Board recognizes that a Kachcha Arhtiya- such as the Appellant does not hold funds as a deposit, nor does he act as principal in the sale. He merely acts as a channel through which the goods are routed and payments are facilitated. E. It is submitted that Assessee is acting as an agent of the exporter based in MCD slaughter house and therefore, the commission ought to be the total receipt as against the amount of total sales of livestock. The appellant contended that the title in goods was never transferred to the appellant and the risk of damage....
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....ated Pricing Structure: It is an undisputed fact on record that the assessee's sole customer is the Allana Group, one of the largest exporters of frozen meat in India. The Allana Group publicly declares its daily buying rates for fresh buffalo meat in the open market, which are known to all livestock suppliers at the Ghazipur Slaughterhouse. These rates are transparently fixed, leaving no scope for any manipulation by the assessee. In such a competitive environment, the assessee's profit is necessarily confined to a fixed difference between the procurement cost and sale price, typically 25- 27 paise per kilogram, which amounts to a modest G.P. margin. The authorities below have failed to appreciate this commercial reality and the fundamental pricing structure of the assessee's business model. I. Functional and Financial Dependence on the Buyer: The Allana Group not only provides daily procurement funds to the assessee but also furnishes a fully equipped office near the Ghazipur Slaughterhouse, bearing all associated operational costs. This evidences that the assessee is essentially a procurement facilitator engaged on behalf of the Group. The functional profile of the asse....
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....their agents since the agents had been given discretion to sell the tickets at any rate between the fixed minimum commercial price and the published price and it would be impracticable and unreasonable to expect the assessee to get feedback from their numerous agents in respect of each ticket sold. Further, if the airlines had discretion to sell the tickets at the price lower than the published price then the permission granted to the agent to sell it at a lower price could neither amount to commission nor brokerage at the hands of the agent. Any amount which the agent earned over and above the fixed minimum. commercial price would naturally be income in the hands of the agent and would be tc1xable as such in his hands. The facts of our case are similar to that of Airlines travel agent. Wherein the price at which the principal is going to purchase the meat is fixed on daily basis. The margins in the business is approx. 10-12 paisa per kg. M. It is a largely accepted principle that the Assessing Officer should bring on record specific defects in the books of account of the assessee before invoking the provisions of section 145(3). Reliance in this regard is placed ....
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....rs/local markets and supplies the same at the indent raised by the Allana Group. From the records, we observe that Allana Group raises the indent to the assessee and assessee purchases the live stock and accordingly supplies the carcass/meat/bones to the Allana Group. The main purchaser in this transaction is only Allana Group. Since the Allana Group cannot purchase directly from the villages/local markets, in order to regularize the purchases they appoint middleman/pass through entities like assessee who manages the purchases on behalf of the Allana Group and supplies the same. From the books and records brought on record, we observe that Allana Group makes the payment as advances to the assessee and they adjust the same according to the indent raised by them. Therefore, there is no risk involved in the purchase/processing of the carcass/meat to the assessee. That being the case, the assessee was compensated with competitive percentage of commission or compensation for processing of purchase, rather it can be considered that the compensation is towards regularization of the purchases. From the profit & loss account submitted before us, it indicates that assessee has very little co....