TaxTMI 
TaxTMI 
2025 (2) TMI 1675
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.... the fact that assessee had failed to provide the quantitative stock details in the audit report as well as during the assessment proceedings to justify the instances of purchases of items at higher rates and selling the same at lower rates. 2. On the facts and circumstances of the case, the Ld. CIT(A) erred in entirely deleting the addition of Rs. 3,99,71,124/- made by the AO by adopting gross profit ratio 1.24% thereby ignoring the fact that such a rate was arrived at by the AO on the basis of average gross profits disclosed by the assessee itself in the immediately preceding four assessment years. 3. On the facts and circumstances of the case, the Id. CIT(A) failed to appreciate that even during the remand proceedings, the assessee furnished only partial data and failed to furnish the details relating to Actual date of delivery and Rate on date of delivery for the purchases as well as sales vis a-vis the goods which were claimed to have been sold sustaining losses. 4. On the facts and circumstances of the case, the Ld. CITA) failed to appreciate that the assessee has failed to substantiate its claim that majority of the business has been done in wholes....
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....taken for retail repacking. The Gross Profit is derived after deducting the direct expenses which accounts to around 0.72% of the total turnover. The Gross Profit percentage during eh year is lower than the previous year due to the quantum of wholesale trade." 4. Not convinced with the assessee's submissions, ld. AO rejected the books of accounts and proceeded ahead to complete the assessment by estimating the average of the Gross Profit ratio for the last three assessment years and made addition of Rs. 3,99,71,124/-. While doing so, ld. AO observed that the turnover of assessee for the current year is Rs. 355.82 crore which is 10 times higher than the total turnover for A.Y. 2017-18. Ld. AO also observed that the profit ratio in the current year is much higher than the profit ratio shown in earlier years. Thus, he estimated the Gross Profit ratio @1.24% by considering the Gross Profit ratio shown by the assessee in the earlier three assessment years, i.e., 2015-16, 2016-17 and 2017-18. 5. So far as the unsecured loans is concerned, the assessee in response to notice u/s.142(1) furnished confirmation from the parties. Ld. AO issued another notice u/s.142(1) to furnish the con....
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....e entered into wholesale transaction and the quantum of turnover increased manifold. Therefore, application of net profit of the retail business on the wholesale business was totally unjustified in the hands of the assessee. He further submitted that ld.CIT(A)/NFAC has rightly deleted the addition by considering the submissions of the assessee after calling the remand report from the AO. He accordingly submitted that the order of the ld.CIT(A)/NFAC be upheld and the grounds raised by the Revenue be dismissed as devoid of any merit. 9. We have heard the rival contentions and perused the record placed before us. The solitary issue arises for our consideration is whether the ld. Assessing Officer was right in estimating the profits of the assessee on the facts and circumstances of the instant case. In this regard, we have given our thoughtful consideration to the finding given by the ld.CIT(A)/NFAC which reads as under : "8. DETERMINATION: The facts and grounds of the case, arguments of the appellant backed with evidences, remand report and the rejoinder have been gone through carefully. As is evident from the above, one of the reasons of the selection of the case in CASS ....
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....ibed proforma, and therefore, it is alleged that no loss could be ascertained from the details furnished by the appellant. From these findings of the AO, it appears that the AO required the details and observed that the information furnished is inaccurate vis-à-vis contention of the appellant. He further compared the GP with the previous AYs as under:- A.Y. Gross Profit Turnover Ratio 2018-19 4150895 3558227303 0.12% 2017-18 3078216 351035792 0.88% 2016-17 2424517 1706828501 1.42% 2015-16 2384389 1666881881 1.43% 8.2 The AO also called for explanations for the variance of the GP and proposed to adopt the average GP of previous AYs, and believed that no explanation was submitted. However, from the evidences available on record, it is seen that the appellant has submitted before the AO that the GP of the previous years are not comparable to that of the year under consideration as the GPs of the sales of the wholesale and repacked sales i.e. retail are not the same and hence it is not justified to compare the same with the year under consideration. It is also argued that during the year under consideration, th....
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....se main object is to provide credible data and information to file the tax returns. 8.3.1 The appellant has also relied on the judgement of the Hon'ble ITAT: i) Hon'ble Allahabad High Court in the case of ITO Vs. Daya Chand Jain Vaidya reported in [1975] 98 ITR 280 has held that "When a particular explanation furnished by the assessee and evidence in support thereof is adduced, the onus shift of the AO to falsify the said material or bring new material on record. Mere rejection of good explanation does not convert good proof into no proof." ii) Hon'ble ITAT Indore in the case of Himanshu Botadara, HUF VS. ITO in ITA Nos. 155 & 156/Ind/2023 dated 11/12/2023 held that merely making assumptions without any concrete evidence is legally unsustainable. iii) ITAT Ahmedabad in the case of Chirag Nareshbhai Soni vs ITO in ITA No. 19/Ahd/2022 dated 11/10/2023, wherein, Hon'ble Tribunal has nullified the action of the AO in rejecting the books of accounts by holding as under:- iv) It has further relied on the decision of the jurisdictional tribunal order in the case of ACIT Vs Champalal Mukanchand Jain in ITA No. 1238/PN/2011 dated ....
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....cannot step in the shoes of businessman assessee to replace his business strategy to suit his own convenience. Even, on perusal of the remand report, it appears that the AO for the sake of arguments, has submitted his comments without even verifying the contention of the appellant made in the written arguments. He has only reiterated the arguments of the appellant firm in the remand report. In para 5.4, it is submitted by the AO that there might be the case that even audited books may contain various defects, however, the nature of defects in the audited report has not been highlighted. He further corroborates in Para 5.5 and casts the responsibility on the appellant to maintain the quantitative details as called by him to justify his inability to unearth the wrongdoings if at all done by the appellant. It is worthy to mention here that no prudent business man can predict the future requirements of the details by an assessing officer. In the instant case as mentioned above, the appellant has fulfilled all the requirements as mandated by the statutory laws by submitting explanations with supporting evidences before the AO. It is only the issue that the appellant fails to provide the....
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.... only 40.17% but in the year under consideration the sales above Rs. 30 lakhs have grown to 92.36% to the Total sales which means that Sales Invoices of huge amount/volume has been issued during the year and certainly once the invoice value increases and the nature of sales claims to be wholesale in nature then profit margins are bound to decrease. 12. So far as the allegation of not maintaining the quantitative details alleged by the AO is concerned, we note that during the remand proceedings itself assessee has furnished complete quantitative details of goods Inward/Outward and the summary of the purchase and sales in Quantity along with the rates submitted by the assessee before the ld. AO in the remand proceedings are as under : Purchase Sales Quantity Rate Value Quantity Rate Value Finished Goods 90421457.00 1004830215.13 Others 23536835.95 25927458.82 RBD Palmolien Oil Loose 28369645.000 kgs 60.02 1702830304.88 2217832.000 kgs 61.47 1363001930.90 RBD Palmolien Oil Loose (R) 1497900.000 kgs 64.38 96429....