TaxTMI 
TaxTMI 
2025 (2) TMI 1447
X X X X Extracts X X X X
X X X X Extracts X X X X
....terial on record by the assessing officer. The total income of the appellant has been wrongly and illegally computed by the assessing officer at Rs. 3,52,03,212.00 as against declared income of Rs. 15,03,640.00. The CIT(A) erred in partly upheld the same. 3. That, in view of the facts and circumstances, the CIT(A) has erred in law and on facts in upheld the action of rejection of books of accounts U/s 145 of by the assessing officer without pointing out any single discrepancy in the books of accounts maintained by the assessee, which is highly arbitrary, unjust and against the facts and circumstances of the case. 4. That, the Assessing officer/CIT(A) erred in rejecting the books of account U/s 145(3) without pointing out that how it is impossible to deduce the correct income from the books of account maintained by the assessee appellant, which is highly arbitrary, unjust, and against the facts and circumstances of the books. 5. That, the CIT(A) failed to appreciate while uphold the rejection of books of accounts that the assessee is in the business of trading of saleable of live stock and it is impossible from the fact that the assessee used to purchase f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r various sections is also wrongly worked out. 14. The appellant craves leave to add, amend, alter and or modify the grounds of appeal of the said appeal." ITA 3754/Del/2017 (Revenue's appeal): "1. The CIT(A) has erred in law by allowing relief of Rs. 2,23,62,085/- [67,38,3671- 2,68,80,345-1,12,57,127/-] out of additions made by the A.O. by taking the Net Profit 1% as against 0.18% declared by the assessee and disallowing the amount of 10% out of sundry creditors being unverified. 2. The CIT(A) has erred in law by deleting the addition of Rs. 84,000/-mad by the A.O. on account of income from house property u/s 23(1) of the Act. 3. That order of AO. be restored and that of CIT(A) be quashed." 3. Both the cross appeals were heard together and involve same issues, hence are being disposed of by a common order for the sake of convenience. 4. Brief facts of the case are that assessee is engaged in the business of wholesale trading in meat, cattle and other live products through his sole proprietary-ship concern M/s Noorjahan Agro India. The assessee expired on 20.01.2015 and accordingly the legal heirs of the deceased assessee were brought on....
X X X X Extracts X X X X
X X X X Extracts X X X X
....A(3) on account of purchase of ice and loading and unloading charges. e) the assessee has made the payment through bearer cheques and assessing officer has concluded that as to why the such payments are not made through banking channel. However the AO has accepted that the payments made for the purchases are fully covered under rule 6DD of the Income Tax Rule, 1962 f) the vouchers produced by the assessee appellant is unnumbered and drew a conclusion, that, these are made one sitting by a single person. 9. The ld AR of the assessee submitted that the above observations of the assessing officer is based on surmises and conjectures without appreciating the business system, facts and circumstances of the case. The ld AR challenged the rejection of books of account on the following basis: a) the non-mentioning of quantity detail in the Tax Audit Report in clause no.28(a), where the auditor was due to some unavoidable circumstances, shortage of time and not properly guided by the representative counsel during assessment. The assessee has filed, details of Sales and Purchases in weight as required by the assessing officer. b) the sundry creditors of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Vs.CIT, (1975) 101 ITR 525(Pat.)]. viii. CST Vs. Vishnuchandra Vipin Chandra, (1982) 50 STC 345 (All)) unless there be a statutory obligation in that regard [Babu Lal Mahadeo Prasad Vs. CIT, (1982) Tax LR 3182 (All)); 11. Regarding ground no 6 to 10 of the assessee appeal as well as ground 1 of the Revenue appeal in respect of adhoc addition/disallowance @1% i.e. Rs. 67,38,867.00 on account of Estimate Net Profit against the Gross Receipt, the ld AR submitted that the assessing officer has no basis as the assessee is maintaining the regular books of accounts, which are duly audited by the Chartered Accountant. It is also stated that the decline in net profit is due to the availing of credit limit and term loan from bank of Rs. 4 Crores on which the assessee had to pay excess interest of Rs. 57.55 Lacs as compared to previous year. 12. The ld AR argued that the gross profit and net profit shown by the assessee is reasonable and under the parameter of the trade. It is the say of the ld AR that from the comparative details of Turnover, Gross Profit and Net Profit with other parties it is clear that the gross profit shown by the assessee is better than other similar trad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....roperty is not under the living condition. It was further stated that the house was being used for the employees of the assessee, such as driver and labour as and when needed time to time and hence used for business purposes. 16. The ld AR argued without prejudice to the above, that the monthly rent of Rs. 10,000.00 per month is arbitrary, excessive and against the facts and considering its location, it should not be more than Rs. 3,000.00 per month. 17. Per contra, the ld DR relied on the orders of the authorities below. 18. We have heard the rival submissions and perused the materials on record. We find that the CIT(A) has upheld the rejection of books of account u/s 145(3) as follows: "On consideration of facts of the case and submission of the appellant, it has been noted that the appellant did not produce purchase bills/vouchers in support of books of account maintained. Merely stating that as the sales have been accepted and therefore the sundry creditors out of the purchases to make such sales are automatically genuine does not help the case of the appellant. In this case it is undisputed fact that the appellant has not provided the complete details of sund....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iness of the assessee is such that the purchase of live stocks and animal are made from parties who do business in cash, yet the vouchers prepared in consolidated manner for payments do not record day to day activities to show that the books are maintained in regular course of business. The assessee did not produce any single purchase bill nor gave any verifiable address of the creditors. The assessee has relied on several decisions on the proposition of rejection of books but has not been able to substantiate the facts of its case on the basis of material evidences for verification of its vouchers/purchase bill and creditors. 20. We are of the considered view that once the books of account are validly rejected u/s 145(3)as has happened in the instant case, on account of non-verifiability of purchases and other discrepancies noted above, a reasonable, fair and judicious estimate of the gross profit would be permissible in the eyes of law. Considering the facts and circumstances of the case and on the basis of relevant materials, we are of the view that an objective and judicious view suggest that a G.P. rate of 1.5% be taken for the impugned year as against G.P. of 1.38% declare....