TaxTMI 
TaxTMI 
2025 (3) TMI 1865
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....applicable on the same as the assessee has recorded the investment in books of accounts without considering the facts that the assessee has not furnished the nature and source of its investments made during the course of assessment proceedings. 2. On the facts and circumstances of the case and in law, Ld. CIT(A) erred in deleting the addition of Rs. 1,54,28,084/- made by the AO on account of suppression of gross profit by observing that the same was made by AO on estimation as well as assumption basis ignoring the fact that AO has rightly made the addition after analysing of valuation of closing stock after rejecting the books of account of the assessee u/s 145(3) of the Act. 3. On the facts and circumstances of the case and in law, Ld. CIT(A) erred in directing the AO to verify the addition made of Rs. 52,60,990/- on account of mismatch found in the total amount of sales reported in audited report and the submissions made by assessee during the assessment proceedings, after considering the reconciliation statement submitted by the assessee during the appellate proceedings which has been not produced during the course of assessment proceedings by assessee. ....
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.... compliance by 16.12.2019. In para-4 of assessment order, the AO recorded that assessee furnished part-reply through e-assessment module without referring the contents of such reply. The AO recorded that as per sale register, assessee made credit sales of Rs. 5.17 crore and cash sale of Rs. 5.92 crore. Thus, total sales came to Rs. 11.10 crore. But in audited trading account, assessee has shown total sale at Rs. 10.58 crore. Thus, assessee has suppressed sales of Rs. 52,60,999/-. The AO scanned details in his order and recorded that assessee has not furnished reply thereby a difference of actual sales shown by assessee in its return of income and in the audited report i.e. Rs. 52,60,999/- was added to the income of assessee. The AO rejected the books of account and worked out figure of suppressed profit as per the show cause and added Rs. 1.54 crore. While estimating such profit, the AO took his view that assessee has not furnished any ledger, bills, nor explained the source of fund so that rice of fixed asset. The AO also held that there is substantial increase in the fixed asset during the year. And that in response to the show cause notice on such issue, the assessee has not fur....
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....e difference between sales shown in the audited financial statement and details provided during the course of assessment proceedings. The Ld. CIT(A) recorded the reconciliation on pages 20 to 25 of his order. The assessee also contended that difference was noted by AO by committing mistake in considering the entire cash received as "cash sales". Cash sales and the amount of cash received contained various entries which were not cash sales. The assessee submitted that sales reflected in the audited financial statements were exclusively of tax and tax being separately accounted in the books of account. The Ld.CIT(A) noted that reconsideration was not furnished during assessment proceedings which required verification by AO and directed AO to verify the reconciliation of sales to allow relief to the assessee. Thus, said grounds of appeal was treated allowed subject to verification by Assessing Officer i.e., for "statistical purposes". On the rejection of books of account, the Ld. CIT(A) held that AO has not recorded his finding as to why books are found incorrect and thus Assessing Officer was not justified in rejecting the books of account. 5. On the estimation of gross profit and....
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.... owner of any money, bullion, jewellery or other valuable articles and the same is not recorded in the books of account maintained by the assessee. In this case, fixed asset are recorded in the books of account which is not disputed by AO. The AO called a detailed based on the schedule of fixed asset, forming part of the audited financial statements. Thus, necessary conditions of invoking section 69A is not satisfied in the facts of the present case of assessee. For invoking section 69A, Assessing Officer should first come to a finding that assessee has made investment and same are not recorded in the books of account and thereafter he can call for the assessee for an explanation about the nature and source of such investment. As fixed asset has been recorded in the books of account, hence, section 69A is not applicable. On the basis of such observation, Ld.CIT(A) deleted the addition of unexplained investment. Aggrieved by the order of Ld.CIT(A), the revenue has filed present appeal before this Tribunal. 7. We have heard the submission of Ld. Senior Departmental Representative (Ld. Sr-DR) for the Revenue and Ld. Authorized Representative (Ld.AR) for the assessee and have gone t....
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.... of account under section 145(3) of the Act. The Ld. Sr-DR for the revenue supported the order of AO. The Ld. Sr-DR submits that assessee has shown gross profit @ 11.03% only during the year under consideration. During assessment, assessee furnished a chart regarding working of profit on the basis of which, Assessing Officer noted that there is difference between MRP and the sale price, therefore, Assessing Officer in a scientific manner worked out the suppress percentage of sales and after rejecting the books of account estimated in gross profit of Rs. 1.54 crore. The Ld.CIT(A) deleted the addition by accepting the submission of assessee. 11. On the other hand, Ld.AR of the assessee supported the order of Ld.CIT(A). The Ld.AR of the assessee submits that assessee has maintained complete set account, which is duly audited all information and evidence called for or furnished in compliance despite the fact that data was voluminous. The AO has not pointed out any specific defect in the books of account. Thus, rejection of books of account without any specific defect is not justified. On the addition of suppression of book profit, Ld.AR of the assessee submits that difference of gro....
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.... of 14.56%. By applying such difference, the AO worked out addition of Rs. 1.54 crore. As recorded above, before the ld. CIT(A), the assessee not only challenged the addition of GP but also pointed out that there is incorrect calculation on arithmetic basis as well as on documents relied and the realities of retail FMCG Sector. The assessee also explained that if AO performed proper arithmetic, he would have adjusted GP of 25.6% on cost to arrive a GP of 20.39% on sales. Thus, he could have estimated GP of 20.39% on sales as per proper arithmetic. We find that the ld. CIT(A) on considering the submission of assessee held that the AO worked out difference in GP on the basis of MIS report filed before him. The AO considered potential sale value of closing stock which could be realised by assessee in best scenario. The AO worked out GP on assumption of sale rate which the assessee may be expecting (hope) to realise by selling the closing stock in subsequent year. AO assumed that potential sale is realised on the sale made during the year without bringing any evidence on record to show that sales has been understated by the assessee and deleted the addition. We find that once we have a....